<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 5, 1996
REGISTRATION NO. 333-6309
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
UNIVISION COMMUNICATIONS INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 4830 95-4398884
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>
1999 AVENUE OF THE STARS, SUITE 3050
LOS ANGELES, CALIFORNIA 90067
(310) 556-7600
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICE)
ROBERT V. CAHILL
SECRETARY
UNIVISION COMMUNICATIONS INC.
1999 AVENUE OF THE STARS, SUITE 3050
LOS ANGELES, CALIFORNIA 90067
(310) 556-7600
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
COPIES TO:
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<S> <C>
KENDALL R. BISHOP, ESQ. BRYANT B. EDWARDS, ESQ.
O'MELVENY & MYERS LLP LATHAM & WATKINS
1999 AVENUE OF THE STARS, SUITE 700 633 WEST FIFTH STREET, SUITE 4000
LOS ANGELES, CALIFORNIA 90067 LOS ANGELES, CALIFORNIA 90071
(310) 553-6700 (213) 485-1234
</TABLE>
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE.
------------------------
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: / /
CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER SHARE(1) OFFERING PRICE(1) REGISTRATION FEE
- ------------------------------------------------------------------------------------------------------
Class A Common Stock, 8,912,500 Shares $21.00 $187,162,500 $64,538.80*
par value $.01 per share.... 483,000 $21.00 $ 10,143,000 $ 3,497.60
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</TABLE>
(1) Estimated solely for purposes of determining the registration fee pursuant
to Rule 457 under the Securities Act of 1933, as amended.
* Paid with original filing.
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<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED SEPTEMBER 5, 1996
PROSPECTUS
, 1996
8,170,000 SHARES
UNIVISION COMMUNICATIONS INC.
LOGO CLASS A COMMON STOCK
All of the shares of Class A Common Stock offered hereby (the "Offering")
are being sold by Univision Communications Inc. Prior to the Offering, there has
been no public market for the Class A Common Stock of the Company. It is
currently estimated that the initial public offering price of the Class A Common
Stock will be between $19.00 and $21.00 per share. See "Underwriting" for
information relating to the factors considered in determining the initial public
offering price.
The Class A Common Stock has been approved for listing on the New York
Stock Exchange upon notice of issuance under the symbol "UVN."
SEE "RISK FACTORS" BEGINNING ON PAGE 8 FOR INFORMATION THAT SHOULD BE
CONSIDERED BY PROSPECTIVE INVESTORS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
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<S> <C> <C> <C>
PRICE UNDERWRITING PROCEEDS
TO THE DISCOUNTS AND TO THE
PUBLIC COMMISSIONS(1) COMPANY(2)
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Per Share......................... $ $ $
Total(3).......................... $ $ $
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</TABLE>
(1) The Company has agreed to idemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."
(2) Before deducting expenses payable by the Company, estimated at $1,055,000.
(3) The Company has granted to the Underwriters a 30-day option to purchase up
to 1,225,500 additional shares of Class A Common Stock solely to cover
over-allotments, if any. If such option is exercised in full, the total
Price to the Public, Underwriting Discounts and Commissions and Proceeds to
the Company will be $ , $ and $ , respectively.
See "Underwriting."
The shares of Class A Common Stock are being offered by the several
Underwriters when, as and if delivered to and accepted by the Underwriters,
subject to various prior conditions, including their right to reject any order
in whole or in part. It is expected that delivery of share certificates will be
made in New York, New York, on or about , 1996, against payment
therefor in immediately available funds.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
GOLDMAN, SACHS & CO.
MERRILL LYNCH & CO.
MORGAN STANLEY & CO.
INCORPORATED
<PAGE> 3
Omitted image is a map of the United States with dots showing the locations
of the Company's stations and affiliates.
Information contained in this Prospectus contains "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995, which can be identified by the use of forward-looking terminology such
as "may," "will," "should," "expect," "anticipate," "estimate" or "continue" or
the negative thereof or other variations thereon or comparable terminology. The
matters set forth under the caption "Risk Factors" in the Prospectus constitute
cautionary statements identifying important factors with respect to such
forward-looking statements, including certain risks and uncertainties, that
could cause actual results to differ materially from those in such
forward-looking statements.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE CLASS A COMMON
STOCK OF THE COMPANY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE
OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE OR
OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
2
<PAGE> 4
PROSPECTUS SUMMARY
The following summary information is qualified in its entirety by the more
detailed information, including "Risk Factors" and Consolidated Financial
Statements and notes thereto, appearing elsewhere in this Prospectus. Unless
otherwise indicated, the information in this Prospectus (i) assumes an initial
public offering price of $20.00 per share of Class A Common Stock, (ii) does not
give effect to the exercise of the over-allotment option granted to the
Underwriters as described in "Underwriting," and (iii) is presented on a pro
forma basis giving effect to the Reorganization. Unless otherwise indicated, all
references to the "Company" and "Univision" refer to Univision Communications
Inc. and its consolidated subsidiaries, including its owned and operated
television stations, the Network and Galavision. Unless otherwise indicated,
capitalized terms used herein are defined in the Glossary on page G-1, all
ratings and audience share data are derived from reports produced by Nielsen
Media Research and demographic data are derived from the DRI Study.
THE COMPANY
Univision is the leading Spanish-language television broadcaster in the
U.S., reaching more than 92% of all Hispanic Households and having an
approximate 77% share of the U.S. Spanish-language network television audience.
The Company's Network, which is the most watched television network (English- or
Spanish-language) among Hispanic Households, provides the Univision Affiliates
with 24 hours per day of Spanish-language programming with a prime time schedule
of substantially all first run programming (i.e., no reruns) throughout the
year. As a leading, vertically-integrated television broadcaster, Univision owns
and operates 11 full-power and seven low-power UHF stations (the "O&Os"),
representing approximately 78% of its Network broadcast distribution. The
full-power O&Os are located in 11 of the top 14 designated market areas in terms
of numbers of Hispanic Households -- Los Angeles, New York, Chicago, Miami,
Houston, San Francisco, San Antonio, Dallas, Fresno, Albuquerque and Phoenix.
The Company has Affiliation Agreements with an additional nine full-power and 14
low-power Affiliated Stations and approximately 740 Cable Affiliates. Each of
the Company's full-power O&Os and Affiliated Stations ranks first in Spanish-
language television viewership in its DMA. The Company also owns Galavision, a
Spanish-language cable network that has approximately 1.8 million Hispanic
subscribers, representing approximately 47% of all Hispanic Households that
subscribe to cable television.
The Company believes that the breadth and diversity of its programming
provides it with a competitive advantage over both Spanish-language broadcasters
and English-language broadcasters in appealing to Hispanic viewers. The
Company's programming is similar in format to that of major English-language
networks and includes novelas (long-term mini-series), national and local
newscasts, variety shows, children's programming, mini-series, musical specials,
movies, sporting events and public affairs programs. The Program License
Agreements provide the Company with unparalleled long-term access to first rate
programming produced by Televisa and Venevision. Televisa-produced novelas are
popular throughout the world and are among the Company's highest rated programs.
Univision also produces a variety of programs specifically tailored to meet the
tastes, preferences and information needs of the Hispanic audience, including
national and local news and the highly successful programs Sabado Gigante,
Cristina and Primer Impacto. The Company has also televised World Cup Soccer
since 1978, including the widely watched 1994 World Cup, and recently began
televising the Sunday "Game of the Week" for Major League Soccer.
In 1992, A. Jerrold Perenchio, Televisa and Venevision formed the Company
and UNHP, which acquired UTG and the Network, respectively, in December 1992,
bringing extensive broadcasting, programming and production experience to
Univision. Mr. Perenchio has over 25 years of experience in the U.S. media and
communications industry and has been the chief executive officer or owner of a
number of successful entities, including Chartwell Artists, Tandem Productions,
Inc., Embassy Communications and Loews Theaters. Mr. Perenchio also owned and
operated Spanish-language television stations in Los Angeles and New York from
1975 to 1986. Televisa, which is the world's largest producer of
Spanish-language television programs, is the leading media and entertainment
company in Mexico with an approximate 80% share of Mexico's viewing audience.
Venevision is Venezuela's leading television network with an approximate 59%
share of its viewing audience.
Since the Acquisition, the Company's operating performance has improved
significantly with combined net revenues and pro forma EBITDA increasing to $321
million and $112 million, representing compound annual growth rates of 16% and
36%, respectively, from the 1992 operating results of the Company and its
predecessor. In addition, from November 1992 to May 1996 the Company increased
its audience share of Spanish-language network television viewing from 57% to
77% and increased its share of the 20 most widely watched programs among
Hispanic Households from 30% to 90%.
3
<PAGE> 5
BUSINESS STRATEGY
Univision attributes its recent success to several factors, including
increased emphasis on popular, high quality programming produced by Televisa,
Univision and Venevision, contracting with Nielsen to develop more accurate,
credible rating systems to measure Hispanic audience viewership, increasing
acceptance by advertisers of Spanish-language television, continued growth of
the Hispanic audience and the strengthening of its management team with
executives and sales managers with extensive English-language television and
advertising experience. The Company expects to continue to realize strong
revenue and EBITDA growth by capitalizing on the expected continued growth in
advertising expenditures targeted at the rapidly expanding Hispanic population.
Specifically, the Company's business strategy seeks to capitalize on the
following factors and competitive advantages:
Leading Audience Share Among Hispanics. The Company's emphasis on popular,
high quality programming has enabled it to achieve the highest ratings versus
all other broadcasters (English- or Spanish-language) among Hispanic television
viewers. For instance, for the first five months of 1996, the Company had a 77%
audience share of Spanish-language television viewers and in May 1996 had 18 out
of the top 20 most highly rated television programs (in Spanish or English)
viewed by Hispanic Households. Each of the Company's 20 full-power Broadcast
Affiliates ranks first in Spanish-language television viewership in its DMA.
Investment in Research and Sales Management. Prior to November 1992, there
were no Hispanic audience television rating services comparable to those
measuring television viewership in the general U.S. population. Beginning in
1992, the Company contracted with Nielsen to develop Nielsen ratings measuring
Hispanic viewership both at the Network and local DMA levels. Because these
Nielsen ratings provide advertisers with a more accurate and reliable measure of
Hispanic audience television viewership, they have been important in allowing
the Company to demonstrate to advertisers its ability to reach the Hispanic
audience. The Company believes that continued use of reliable ratings will allow
it to further increase its advertising rates and narrow the gap which has
historically existed between its audience share and its share of advertising
revenues. In addition, the Company has made significant investments in
experienced sales managers and account executives and has provided its sales
professionals with state-of-the-art research tools to continue to attract major
advertisers.
Highly Favorable Demographic Trends. The Hispanic population is currently
one of the fastest growing segments of the U.S. population, growing at
approximately five times the rate of the non-Hispanic population. The Hispanic
population, which consisted of 23.7 million people (9.5% of the U.S. population)
in 1990, is estimated to be 28.4 million people (10.7% of the U.S. population)
in 1996, and is expected to grow to 32.0 million people (11.6% of the U.S.
population) by 2000 and 41.5 million people (13.9% of the U.S. population) by
2010. Hispanic Households on average are larger and younger and spend a greater
percentage of their total household income on consumer products than
non-Hispanic households. Furthermore, approximately 68% of all Hispanics,
regardless of income or educational level, speak Spanish at home. This
percentage is expected to remain relatively constant through 2010. Consequently,
the number of Hispanics speaking Spanish in the home is expected to increase
significantly in the foreseeable future.
Increasing Advertiser Expenditures on Spanish-language Television. Total
advertising expenditures targeting Hispanics grew from $166 million in 1982 to
approximately $1.1 billion in 1995, representing a compound annual growth rate
of 15.6%. Approximately one-half of the $1.1 billion in advertising expenditures
in 1995 targeting Hispanics was directed towards Spanish-language television.
The Company believes that major advertisers have found that Spanish-language
television advertising is a more cost-effective means to target the growing
Hispanic audience than English-language broadcast media. Since the Acquisition,
the Company has added or substantially increased commitments from many national
advertisers, including AT&T, Sears, McDonald's, Ford, Colgate-Palmolive and
Coca-Cola. The Company believes that advertiser interest in the Hispanic
population will continue to grow primarily because Hispanic consumer
expenditures, which are expected to total approximately $325 billion in 1996,
are expected to grow at an annual rate of 8.9% over the next four years to $458
billion in 2000, far outpacing the expected growth in total U.S. consumer
expenditures.
Strategic Acquisition Opportunities. The Company believes that its
knowledge of, and experience with, Hispanic audiences will enable it to identify
strategic acquisitions and successfully integrate them into the Company's
operations. Since the Acquisition, the Company has acquired full-power stations
in two important markets, Chicago and Houston, and used its management
expertise, programming and brand identity to substantially improve the Company's
performance in those DMAs. In addition, the Company has signed a letter of
intent with Entravision to make a $10 million investment in the form of a note
and an option to acquire a 25% equity interest in Entravision. Entravision owns
seven and has agreements to acquire two of the Affiliated Stations, representing
approximately 12% of the Network's distribution. To complement and capitalize on
the Company's existing business and management strengths, the Company expects to
explore both Spanish-language television and other media acquisition
opportunities.
4
<PAGE> 6
The Company was incorporated in Delaware in April 1992 as Perenchio
Communications, Inc. and its name was changed to Univision Communications Inc.
in June 1996. The Company's principal executive offices are located at 1999
Avenue of the Stars, Suite 3050, Los Angeles, California 90067, and its
telephone number is (310) 556-7600.
RISK FACTORS
See "Risk Factors" beginning on page 8 for factors that should be
considered in evaluating the Company and its business.
THE OFFERING
<TABLE>
<S> <C>
Class A Common Stock offered hereby.......... 8,170,000 shares
Common Stock to be outstanding after the
Offering
Class A Common Stock(1)(2)................. 10,396,361 shares
Class P Common Stock....................... 22,071,737 shares
Class T and Class V Common Stock(3)........ 8,918,582 shares
-----------
Total(3)........................... 41,386,680 shares
-----------
-----------
The Class A, Class P, Class T and Class V
Relative rights of Class A, Class P, Class T Common Stock (collectively, the "Common
and Class V Common Stock(1)(4)............. Stock") have identical rights with respect to
cash dividends and in the distribution of
proceeds in any sale or liquidation, but have
different voting rights. The Class A, Class T
and Class V Common Stock are entitled to one
vote per share, while the Class P Common Stock
is entitled to 10 votes per share on all
matters on which stockholders are entitled to
vote, except that in the election of
directors, holders of Class T and Class V
Common Stock, each voting as a separate class,
elect from one to three directors. Perenchio
will have 96% of the voting power of the Class
A and Class P Common Stock and 92% of the
voting power of all Common Stock outstanding
immediately after the Offering. See "Risk
Factors" and "Description of Capital Stock."
The net proceeds from the sale of the Class A
Common Stock, together with borrowings under
Use of proceeds.............................. the New Bank Facility (as defined), will be
used to fund the payments to be made in
connection with the Reorganization. See
"Reorganization" and "Use of Proceeds."
"UVN"
Proposed New York Stock Exchange symbol......
</TABLE>
- ----------------------------
(1) Excludes an aggregate of 5,500,000 shares of Class A Common Stock reserved
for future issuance under the Company's 1996 Performance Award Plan. See
"Management -- 1996 Performance Award Plan."
(2) Excludes an aggregate of 45,431,139 shares of Class A Common Stock issuable
upon conversion of all of the outstanding Class P, Class T and Class V
Common Stock (and shares issuable upon exercise of the Warrants) in
accordance with their terms. See "Certain Transactions -- Warrants" and
"Description of Capital Stock."
(3) Excludes 14,440,820 shares of Class A, Class T and Class V Common Stock
issuable upon the exercise of the Warrants. For restrictions on exercise of
the Warrants, see "Certain Transactions -- Warrants." The Warrants are
exercisable at a price of $0.13 per share. Total shares outstanding assuming
exercise of all Warrants is 55,827,500.
(4) The Class P, Class T and Class V Common Stock can be converted at any time
into Class A Common Stock and will automatically convert into Class A Common
Stock, upon the occurrence of certain events. Additionally, the Class T and
Class V Common Stock will lose their special rights, upon the occurrence of
certain events. See "Description of Capital Stock."
5
<PAGE> 7
SUMMARY PRO FORMA CONSOLIDATED FINANCIAL DATA
The following summary pro forma consolidated financial data of the Company
for the year ended December 31, 1995, the six months ended June 30, 1995 and
1996 and the latest twelve months ended June 30, 1996 are derived from the
Unaudited Pro Forma Consolidated Condensed Financial Statements of the Company
included elsewhere herein and give effect to the Reorganization (including the
consolidation of PCI and UNHP) and the sale of the shares of Class A Common
Stock offered hereby and the application of the net proceeds therefrom as if
such transactions had occurred as of January 1, 1995, in the case of the
statement of operations data, and June 30, 1996, in the case of the balance
sheet data. See "Capitalization" and "Unaudited Pro Forma Consolidated Condensed
Financial Statements" for further details regarding such adjustments. This data
is not necessarily indicative of the results of operations that would have
actually been obtained had the transactions referred to above been consummated
on the dates indicated, nor are they indicative of the results of operations
that may be obtained in the future. Such financial data should be read in
conjunction with the "Unaudited Pro Forma Consolidated Condensed Financial
Statements," "Selected Historical Financial Data" and "Management's Discussion
and Analysis of Financial Condition and Results of Operations," and is qualified
in its entirety by reference to the consolidated financial statements of the
Company and UNHP and the respective notes thereto included elsewhere in this
Prospectus.
SUMMARY PRO FORMA CONSOLIDATED FINANCIAL DATA
<TABLE>
<CAPTION>
PRO FORMA (UNAUDITED)
-------------------------------------------------------------------
SIX MONTHS ENDED
YEAR ENDED JUNE 30, LATEST TWELVE
DECEMBER 31, ----------------------------- MONTHS ENDED
1995 1995 1996 JUNE 30, 1996
------------- ------------ ------------ ---------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenues.......................... $ 321,339 $152,698 $170,856 $ 339,497
Direct operating expenses............. 115,821 53,495 57,281 119,607
Selling, general and
administrative(a)................... 84,250 41,398 47,934 90,786
Corporate charges..................... 9,700 4,125 3,914 9,489
Depreciation and amortization......... 54,249 26,762 28,080 55,567
----------- -------- ---------- - --------
Operating income.................... 57,319 26,918 33,647 64,048
Interest expense, net................. 43,890 22,786 21,876 42,980
Amortization of deferred financing
costs............................... 1,429 714 714 1,429
Provision for taxes................... 5,000 1,450 -- --
----------- -------- ---------- - --------
Income before extraordinary loss on
extinguishment of debt........... $ 7,000 $ 1,968 $ 11,057 $ 19,639
OTHER DATA:
Broadcast cash flow(a)(b)........... $ 121,268 $ 57,805 $ 65,641 $ 129,104
EBITDA(a)(c)........................ 111,568 53,680 61,727 119,615
</TABLE>
<TABLE>
<CAPTION>
AS OF
JUNE 30,
1996
---------------
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total assets.......................... $ 883,777
Long-term debt (including current
maturities)......................... 576,586
Stockholders' equity.................. 203,933
</TABLE>
6
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<TABLE>
<CAPTION>
COMBINED (UNAUDITED)
--------------------- PRO FORMA (UNAUDITED)
--------------------------------------
YEARS ENDED SIX MONTHS ENDED
DECEMBER 31, YEAR ENDED JUNE 30,
--------------------- DECEMBER 31, ---------------------
1993 1994 1995 1995 1996
-------- -------- ------------ -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
CERTAIN FINANCIAL DATA(D):
Net revenues...................... $214,040 $271,753 $321,339 $152,698 $170,856
Capital expenditures.............. 4,898 8,170 16,060 7,017 11,109
OTHER DATA:
Broadcast cash flow(a)(b)......... $ 67,464 $ 93,067 $121,268 $ 57,805 $ 65,641
EBITDA(a)(c)...................... 64,264 86,167 111,568 53,680 61,727
</TABLE>
GROWTH RATE AND MARGIN DATA(D):
<TABLE>
<S> <C> <C> <C> <C> <C>
Net revenues growth............... --% 27.0% 18.2% --% 11.9%
Broadcast cash flow growth........ -- 38.0 30.3 -- 13.6
Broadcast cash flow margin........ 31.5 34.2 37.7 37.9 38.4
EBITDA growth..................... -- 34.1 29.5 -- 15.0
EBITDA margin..................... 30.0 31.7 34.7 35.2 36.1
</TABLE>
- ----------------------------
(a) The management fee charged by the Principal Stockholders to UNHP, which will
terminate as part of the Reorganization, was $6,130, $7,203, $9,521, $4,559,
$5,043 and $10,005 for the years ended December 31, 1993, 1994 and 1995 and
the six month periods ended June 30, 1995 and 1996 and the latest twelve
months ended June 30, 1996, respectively. The management fee has been
eliminated from the appropriate data.
(b) "Broadcast cash flow" is defined as broadcast operating income before
corporate charges and depreciation and amortization. The Company has
presented broadcast cash flow data, which the Company believes are
comparable to the data provided by other companies in the industry, because
such data are commonly used as a measure of performance for broadcast
companies. However, broadcast cash flow should not be construed as an
alternative to operating income (as determined in accordance with generally
accepted accounting principles) as an indicator of operating performance, or
to cash flows from operating activities (as determined in accordance with
generally accepted accounting principles) as a measure of liquidity.
(c) "EBITDA" consists of broadcast cash flow less corporate charges and is
commonly used in the broadcast industry to analyze and compare broadcast
companies on a basis of operating performance, leverage and liquidity.
EBITDA should not be construed as an alternative to operating income (as
determined in accordance with generally accepted accounting principles) as
an indicator of operating performance, or to cash flows from operating
activities (as determined in accordance with generally accepted accounting
principles) as a measure of liquidity.
(d) The 1993 and 1994 data combine PCI's financial data with those of UNHP in
order to be comparable with the other periods presented. See "Selected
Historical Financial Data." Although the Company will not consolidate the
results of UNHP's operations for accounting purposes until after the
Reorganization, the Company has managed UNHP's operations since December
1992.
7
<PAGE> 9
RISK FACTORS
The following factors should be considered carefully in evaluating the
Company and its business before purchasing the shares of Class A Common Stock
offered hereby.
RELIANCE ON LIMITED SOURCES OF PROGRAMMING
A substantial part of the Company's operating strategy depends upon the
continued availability and commercial success of programming from Televisa and
Venevision. In 1995 the Company derived approximately 40% and 8% of its gross
advertising sales from programs produced by Televisa and Venevision,
respectively, under the Program License Agreements; for the six month period
ended June 30, 1996, these percentages were 38% and 9%, respectively. Televisa
and Venevision programming represented approximately 52% and 13%, respectively,
of the Network's non-repeat broadcast hours in 1995; for the six month period
ended June 30, 1996, these percentages were 52% and 12%, respectively. If such
programming were to become unavailable or unsuccessful for any reason, including
political or economic instability, foreign government regulations, or other
trade barriers in Mexico or Venezuela, no assurance can be given that the
Company could obtain alternative programming of equivalent type and popularity
or on terms as favorable to the Company. Consequently, any significant
interruption in the supply or success of programming could have a material
adverse effect on the Company's financial condition and results of operations.
INCREASED COST OF PROGRAMMING
Royalties under the Program License Agreements (net of certain cost sharing
reimbursements which will cease upon the Reorganization) were 9.5%, 8.5%, 9.4%
and 9.5% of Combined Net Time Sales in 1993, 1994, 1995 and the six months ended
June 30, 1996, respectively. From the closing of this Offering through December
1996, aggregate royalties to Televisa and Venevision will equal 11.0% of
Combined Net Time Sales, increasing to 13.5% of Combined Net Time Sales in 1997
and to 15.0% of Combined Net Time Sales in all years thereafter. Such increase
in royalties could have a negative effect on the Company's operating margins.
See "Business -- Program License Agreements."
POTENTIAL COMPETITION WITH OTHER BROADCASTERS USING TELEVISA PROGRAMMING
The Company has enjoyed virtually exclusive access in the United States to
most of Televisa's programs, both new and from Televisa's extensive library.
Subject to the rights of one Los Angeles broadcasting station, Univision has the
right under the Televisa Program License Agreement to fill up to 24 hours of
programs per day on each of the Network's and Galavision's program schedules,
after giving effect to programs obtained from Venevision or third parties and
produced by the Network. Univision also has the right of first refusal for the
Network and Galavision on substantially all other Spanish-language programs
Televisa desires to license in the United States. Subject to these limitations,
Televisa has the right to license Spanish-language programs to other
broadcasters in the United States. Very few Televisa programs have been so
licensed. No assurance can be given that in the future other U.S. broadcasters
will not license more of Televisa's programs, consistent with the terms of the
Televisa Program License Agreement.
Televisa has agreed with several partners, each of whom has substantial
assets, to develop and operate a direct broadcast satellite ("DBS") venture,
which will have a variety of program services, including program services
supplied by Televisa. Televisa is required to offer the Company the opportunity
to acquire a 50% economic interest in Televisa's interest in the joint venture
to the extent it relates to United States Spanish-language broadcasting. While
the Company believes that the Company will be offered such an interest, the
Company has not received any indication as to what the business terms relating
to such interest would be. Accordingly, the Company is not in a position to
state whether it would accept such an offer. If the venture secures a
significant viewership among Hispanic Households, it could have a material
adverse effect on Univision's financial condition and results of operations,
even if Univision decides to acquire this 50% economic interest.
Televisa asserts that the terms and conditions of its Program License
Agreement with Univision allow it, under certain circumstances, to provide any
DBS venture uplinking in Mexico for distribution in the United States with
Televisa program services which contain programs to which Univision believes it
has an exclusive
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<PAGE> 10
first option in the United States. Univision disagrees with Televisa's assertion
and has notified Televisa of its intention to enforce its rights by all
appropriate means including, if necessary, legal action, if Televisa provides
such programs to any such DBS venture. There can be no assurance that Televisa
will desist from providing such programming to its or other DBS ventures, or, if
Televisa were not to desist, that Univision would prevail in court.
Finally, Televisa has initiated the production and limited broadcast of
novelas originally produced in English, using the same storylines and production
facilities in Mexico which are used for novelas to which Univision has an option
for Spanish-language rights. Televisa has announced its intention to secure
broader distribution of this product throughout the United States. There can be
no assurance that Univision's bilingual viewers will not be attracted by
Televisa's English language novelas, resulting in viewership declines for
Univision.
SUBSTANTIAL COMPETITION
The broadcasting and cable business is highly competitive. The Company
competes for viewers and revenues with other Spanish-language and
English-language television stations and networks, including the four principal
English-language television networks, ABC, CBS, NBC and Fox, and in certain
cities, UPN and WB. Certain of these English-language networks and others have
begun producing Spanish-language programming and simulcasting certain
programming in English and Spanish. Several cable broadcasters have recently
commenced Spanish-language services as well. The Company also competes for
viewers and revenues with independent television stations, other video media,
suppliers of cable television programs, direct broadcast systems (including two
which are expected to start in 1996 and in which Televisa and Venevision will
have substantial interests), newspapers, magazines, radio and other forms of
entertainment and advertising. The Univision Affiliates located near the Mexican
border also compete for viewers with television stations operated in Mexico,
many of which are affiliated with a Televisa network and owned by Televisa.
Certain of the Company's competitors have greater financial resources than the
Company. Increased competition for viewers and revenues may have a material
adverse effect on the Company's financial condition and results of operations.
The Company under certain circumstances also could be required to compete
against entities using programming supplied by Televisa or Venevision. See
"-- Potential Competition with Other Broadcasters Using Televisa Programming"
and "Business -- Program License Agreements."
Prior to the Reorganization, the Company's charter documents limited its
business purpose to Spanish-language television broadcasting. The Company's
Restated Certificate of Incorporation allows the Company to engage in all media
related business. However, neither Televisa nor Venevision will be required to
offer opportunities to the Company other than those involving Spanish-language
television broadcasting or a Spanish-language television network in the United
States. Consequently, the Company could compete directly with Televisa and
Venevision, two of its Principal Stockholders, in other media and languages.
Televisa currently publishes and distributes Spanish-language publications and
sells Spanish-language recorded music in the United States. See "Certain
Transactions -- Participation Agreement."
Telemundo Group, Inc. ("Telemundo") is the Company's largest competitor
that broadcasts Spanish-language television programming. Telemundo owns and
operates eight full-power (including one in Puerto Rico) and 13 low-power
television stations and a Spanish-language television network, has affiliation
agreements with 33 stations and 88 cable systems, and reaches approximately 85%
of all Hispanic Households. In most of the Company's DMAs, the Univision
Affiliate competes directly with a station owned by or affiliated with
Telemundo. Upon emergence from bankruptcy in 1995, Telemundo hired a new
management team. The Company is unable to predict what effect, if any, such
change will have on the Company's ratings and share lead over Telemundo.
IMPACT OF NEW TECHNOLOGIES; POTENTIAL COST OF SPECTRUM
In recent years, the Federal Communications Commission ("FCC") has adopted
policies providing for authorization of new technologies and a more favorable
operating environment for certain existing technologies that have the potential
to provide additional competition for television stations. Further advances in
technology such as video compression, direct broadcast satellites and
programming delivered through fiber
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<PAGE> 11
optic telephone lines could facilitate the entry of new channels and encourage
the development of increasingly specialized "niche" programming. In particular,
the Company may be affected by the development of advanced television technology
("ATV") and the adoption of standards and regulations for ATV by the FCC. If ATV
is adopted as anticipated, broadcasters are expected to be required to make the
transition to ATV broadcasting at the end of an extended period (currently
expected to be fifteen years). Such a transition will require significant new
capital investments in ATV broadcasting capacity, and no assurance can be given
that the Company will have adequate financial resources to make such capital
investments. Moreover, broadcasters who elect not to engage in ATV broadcasting
at an early stage could suffer a significant competitive disadvantage. In
addition, certain members of Congress from time to time have offered and
continue to offer various proposals that would require a public auction for the
spectrum necessary to effect the transition to ATV. These proposals could
require broadcasters to make a significant investment in order to obtain
spectrum for ATV, in addition to any capital investment broadcasters would have
to make for ATV-capable equipment. Although the broadcast industry has opposed
such proposals, at this time the Company cannot be assured that it will not have
to bid for the spectrum required for ATV broadcasting. If required to bid, the
Company cannot be assured that it will have adequate resources to make a
successful bid. If such an auction plan were mandated by Congress, it could have
a material adverse effect on the Company. Broadcasters who elect not to engage
in ATV broadcasting could suffer a significant competitive disadvantage. The
Company is unable to predict the effect that technological changes will have on
the broadcast television industry or on the future results of the Company's
operations. See "Business -- Competition" and "Business -- Federal Regulation
and New Technologies."
MANDATORY REDEMPTION OF CLASS A COMMON STOCK
In order to comply with the FCC foreign ownership rules, the Company's
Restated Certificate of Incorporation permits the Company to redeem any shares
of Class A Common Stock owned by foreign nationals, foreign governments, or the
representatives of either (collectively, "Foreign Interests") and to take other
actions designed to ensure its compliance with the foreign ownership
restrictions of the Communications Act of 1934, as amended (the "Communications
Act"), and related FCC rules. The redemption price for such shares is equal to
the lesser of fair market value or, if such shares were purchased within one
year of the redemption date, such stockholder's purchase price, and may be paid
in cash, securities or a combination thereof. See "Business -- Federal
Regulation and New Technologies" and "Description of Capital Stock."
FCC REGULATION
The Company's operations are subject to extensive and changing regulation
on an ongoing basis by the FCC, which enforces the Communications Act. Approval
by the FCC is required for the issuance, renewal and assignment of station
operating licenses and the transfer of control of station licensees. The FCC
licenses held by the Company will come up for renewal from time to time,
primarily within the next two and one-half years, and such renewal may be
subject to challenge on a number of grounds. The FCC also regulates ownership
and control by Foreign Interests. In connection with obtaining the FCC's
approval of the Reorganization, the Company has disclosed to the FCC the
ownership and management interests held by Televisa and Venevision. The Company
also has apprised the FCC of provisions in the Company's Restated Certificate of
Incorporation described in "-- Mandatory Redemption of Class A Common Stock."
Accordingly, the Company believes that it is in compliance with such provisions.
However, if the Company fails to comply with the foreign ownership restrictions
in its Restated Certificate of Incorporation, or if the Company departs from its
representations made to the FCC in connection with its obtaining the FCC's
approval of the Reorganization, the FCC has the ability to enforce such foreign
ownership restrictions through warnings, fines, cancellations of licenses or
other actions. While the Company seeks to comply with such restrictions, it
cannot predict the outcome of any such challenge or any other changes in
regulatory practices that may affect its business and prospects.
Congress and the FCC currently have under consideration and may in the
future adopt new laws or modify existing laws, regulations and policies
regarding a wide variety of matters, including the adoption of attribution
rules, further restricting broadcast station ownership, that could directly or
indirectly adversely
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<PAGE> 12
affect the ownership and operation of the Company's broadcast properties, as
well as the Company's business strategies. For example, pursuant to the
"must-carry" provisions of the Cable Television Consumer Protection and
Competition Act of 1992, a broadcaster may demand carriage on a specific channel
on cable systems within its market. All of the full-power O&Os are currently
exercising their must-carry rights. Accordingly, elimination of the must-carry
provisions could have a material adverse effect on the Company.
The adoption of various measures could accelerate the existing trend toward
vertical integration in the media and home entertainment industries and cause
the Company to face more formidable competition in the future. Such measures
could include (and, in the case of the Telecommunications Act of 1996 (the
"Telcom Act"), do include) the elimination or modification of restrictions on
the offering of multiple network services by the existing major television
networks, the removal or modification of restrictions on the participation by
regional telephone operating companies in cable television and other
direct-to-home video technologies, and the removal or modification of certain
restrictions on broadcast station ownership. The Company is unable to predict
whether these changes or other potential changes in the regulatory environment
could restrict or curtail the ability of the Company to acquire, operate and
dispose of stations or, in general, to compete profitably with other operators
of television stations and other media properties. See "Business -- Federal
Regulation and New Technologies."
LOSS OF AFFILIATED STATIONS
The Company currently provides Network programming to the Affiliated
Stations pursuant to Affiliation Agreements, most of which expire in 1998 and
1999, in exchange for the right to sell generally 50% of the total advertising
time available during such programming. The Company competes with other
broadcasters for relationships with affiliates. The ability of the Company to
cost-effectively renew its affiliations with the Affiliated Stations or attract
new affiliates depends in part on the ability of the Company to provide
programming that will attract a satisfactory viewing audience. Although the
Company expects to continue to be able to renew its Affiliation Agreements, no
assurance can be given that such renewals will be obtained on a cost-effective
basis. See "Business -- The Network -- Affiliation Agreements."
POPULAR PROGRAM LOSS
The Company's productions Sabado Gigante, a variety show hosted by Mario
Kreutzberger, and Cristina, a talk show hosted by Cristina Saralegui, are among
its most successful programs in terms of advertising revenues generated.
Approximately 15% of the total gross advertising revenues generated by Univision
in 1995 and the six months ended June 30, 1996 were accounted for by advertising
aired on these programs. Although the Company has access to replacement
programs, including programs available under the Program License Agreements,
such replacement programs might not have as much appeal to Univision's audience
or advertisers. Consequently, the loss of either of these popular programs, or a
decrease in their popularity, could have a material adverse effect on the
Company's financial condition and results of operations.
FINANCIAL LEVERAGE; RESTRICTIVE COVENANTS
The Company is highly leveraged. On a pro forma basis giving effect to the
Reorganization and the Offering, as of June 30, 1996, the Company had
outstanding total debt in an aggregate principal amount of approximately $576.6
million, representing 74% of its total capitalization. The degree to which the
Company is leveraged could have a material adverse effect on the Company's (i)
ability to obtain additional financing in the future for working capital,
capital expenditures, acquisitions, general corporate or other purposes, (ii)
flexibility to use its cash flow from operations since a substantial portion is
being dedicated to the payment of interest on, and the principal of, its debt,
and (iii) vulnerability to economic downturns, competitive pressures and its
ability to respond to changing business and economic conditions.
The Company's new credit agreement, expected to be entered into prior to
the closing of this Offering (the "New Bank Facility"), provides for aggregate
commitments of up to $600 million, of which $508.8 million will be outstanding
after this Offering and will impose financial and other restrictions on the
Company. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- PCI and
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<PAGE> 13
UNHP Liquidity and Capital Resources." Since the Acquisition, the Company has
been in compliance with the covenants of its existing credit facility (the "Old
Bank Facility") and the Company believes it will be able to comply with the
covenants in the New Bank Facility, but there is no assurance that the Company
will be able to do so. Failure to do so could result in a default under the New
Bank Facility and could lead to acceleration of substantially all indebtedness
of the Company. In such a case, there is no assurance that the Company would be
able to refinance or otherwise repay such indebtedness.
RELIANCE ON SATELLITES AND OTHER EQUIPMENT
The Company broadcasts its programs to the Univision Affiliates on three
separate satellites from four transponders, one of which is owned and three of
which are leased on a long-term basis pursuant to two lease agreements. If the
satellite on which the Company-owned transponder fails, the Company has the
right to migrate to a transponder on another satellite. If the Company-owned
transponder fails and the satellite remains viable, the Company has the right to
migrate to another transponder on the same satellite. If a leased transponder
fails, under one lease agreement covering two transponders, the lessor is
required to provide a back-up for the transponders on the same satellite, and
the lessor may, subject to availability, at its option, provide alternative
transponders on other satellites. Under the other lease agreement, the lessor
may, subject to availability, at its option, provide alternative transponder
capacity. There can be no assurance that such other transponders or satellites
would be available to the Company, or if available, whether the use of such
other transponders or satellites could be obtained on favorable terms. A
disruption of transmission could have a material adverse effect on the Company's
financial condition and results of operations.
The Company owns or leases remote antenna space and microwave transmitter
space near each of the O&Os. The loss of any of these antenna tower leases could
have a material adverse effect on the financial condition and results of
operations of the Company.
POSSIBLE ADVERSE EFFECT OF RAPIDLY CHANGING CONDITIONS IN INDUSTRY
The Company's operations and ability to grow may be affected by numerous
factors, including changes in audience tastes, priorities of advertisers,
reductions in advertisers' budgets, new laws and governmental regulations and
policies, changes in broadcast technical requirements, technological advances,
proposals to eliminate the tax deductibility of certain advertising expenses
incurred by advertisers and changes in the willingness of financial institutions
and other lenders to finance television station acquisitions and operations. The
Company cannot predict which, if any, of these or other factors might have a
significant impact on the television broadcasting industry in the future, nor
can it predict what impact, if any, the occurrence of these or other events
might have on the Company's financial condition and results of operations.
PAYMENT OF PROCEEDS TO EXISTING STOCKHOLDERS
Out of the proceeds of this Offering and the New Bank Facility,
approximately $391.1 million will be paid to the existing stockholders. Of the
amount paid to the existing stockholders, $100.0 million will be distributed and
paid to them as partners of the Network, $129.0 million will be paid to them as
accrued dividends on certain preferred stock issued in connection with the
Acquisition and payment of certain notes issued in payment of certain accrued
dividends owed to them, $147.1 million will be paid to Televisa and Venevision
as payment in full of all amounts owed to them with respect to Sponsor Loans
made to UTG subsequent to the Acquisition, and approximately $15.0 million will
be paid to Televisa representing payment of principal and accrued interest on
the note issued by the Company to Televisa as payment for the acquisition of
Galavision. See "Reorganization" and "Use of Proceeds". The proceeds being paid
to the existing stockholders will not be available for use by the Company in its
business.
CONCENTRATION OF SHARE OWNERSHIP AND CONTROL OF COMPANY
Mr. Perenchio beneficially owns all of the Company's outstanding Class P
Common Stock which gives him 10 votes per share compared to the one vote per
share of Class A Common Stock. The Class A and Class P Common Stock vote
together on all matters. Accordingly, immediately after this Offering,
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<PAGE> 14
Mr. Perenchio will have 96% of the voting power of all holders of Class A and
Class P Common Stock and 92% of the overall voting power of the Company, with
respect to substantially all matters submitted to a vote, including election of
directors, proxy contests, mergers, tender offers, open-market purchase programs
and other purchases of the Company's Common Stock that could give stockholders
of the Company the opportunity to realize a premium over the then prevailing
market price for their shares of Common Stock. The Class T and Class V Common
Stock each vote as a separate class with respect to the election of directors
and with respect to other matters which would adversely affect the special
rights of such class.
Certain activities of the Company are restricted by certain supermajority
voting provisions contained in the Company's Bylaws. The Company's Bylaws
provide that the affirmative vote of a majority of the directors elected by the
holders of the Class T Common Stock (the "Class T Directors") and a majority of
the directors elected by the holders of the Class V Common Stock (the "Class V
Directors") is required for the Company to, among other things, (i) merge,
consolidate, enter into a business combination or otherwise reorganize the
Company, (ii) sell all or substantially all of the assets of the Company, (iii)
create or issue any Common Stock or securities exchangeable into, or that
participate in dividends with, the Common Stock, any preferred stock or phantom
equity or any similar securities or interests, (iv) pay any dividends or redeem
or repurchase any securities of the Company (except for redemption of shares in
accordance with the Company's Restated Certificate of Incorporation to ensure
compliance with the foreign ownership restrictions of the Communications Act),
(v) engage in any business transaction outside of the Company's ordinary course
of business or (vi) dissolve, liquidate or terminate the Company. Additionally,
the Company's Bylaws provide that without the approval of a majority of the
Class T Directors or the Class V Directors, the Company may not, among other
things, (a) acquire or dispose of any assets in any one transaction or series of
related transactions for a purchase price in excess of $50 million, (b) dispose
of any interest in any television station which broadcasts in Spanish in any of
the top 15 markets in terms of Hispanic population, (c) incur any debt (or issue
preferred stock) in excess of five times the Company's EBITDA for the preceding
12-month period, (d) produce or acquire certain new programming (unless the
Company has met certain EBITDA to sales ratios), or (e) enter into any
transaction with Perenchio or any affiliate of, or any person related to,
Perenchio.
Certain of the provisions described above could delay, deter or prevent a
change in control of the Company. See "Description of Capital Stock."
NO PRIOR MARKET; VOLATILITY OF STOCK PRICE
The initial public offering price of the Class A Common Stock will be
determined in negotiations between the Company and the Representatives of the
Underwriters and may not be indicative of the market price of the Class A Common
Stock after this Offering. Prior to this Offering, there has been no public
market for the Class A Common Stock, and although the Class A Common Stock has
been approved for listing on the New York Stock Exchange (the "NYSE") upon
notice of issuance, there can be no assurance that an active public market for
the Class A Common Stock will develop or be sustained after this Offering. There
can be no assurance that the market price of the Class A Common Stock will not
experience significant fluctuations that are unrelated or disproportionate to
the Company's performance.
ADVERSE EFFECT OF SHARES ELIGIBLE FOR FUTURE SALE ON MARKET PRICE OF COMMON
STOCK
Sales of substantial amounts of Common Stock after this Offering could
adversely affect the market price of the Class A Common Stock. The Principal
Stockholders will hold 74.9% of the outstanding shares of Common Stock after
this Offering and a decision by one or more of them to sell its shares could
have a material adverse effect on the market price of the Class A Common Stock.
Following the expiration of certain lock-up agreements between the Company and
the existing stockholders and the Underwriters, all of the shares owned by the
existing stockholders will be eligible for immediate sale in the public market,
subject to compliance with Rule 144 under the Securities Act of 1933, as amended
(the "Securities Act"). See "Principal Stockholders" and "Shares Eligible for
Future Sale." The existing stockholders also have various registration rights.
See "Certain Transactions -- Registration Rights Agreement." The Company's
Restated Certificate of Incorporation provides that upon any sale to a third
party, the Class P, Class T and Class V Common Stock convert into Class A Common
Stock.
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ABSENCE OF DIVIDENDS
The Company does not anticipate declaring or paying any cash dividends on
its Class A Common Stock following this Offering. The New Bank Facility
restricts the payment of cash dividends on the Common Stock. Future dividend
policy will depend on the Company's earnings, capital requirements, financial
condition and other factors considered relevant to the Board of Directors.
Additionally, as described above, the approval of a majority of the Class T
Directors and a majority of the Class V Directors is required for the Company to
pay any dividends on the Common Stock. Since dividends are not payable on the
Warrants, such approval is unlikely so long as the Warrants are held by Televisa
and Venevision. See "Dividend Policy."
IMMEDIATE AND SUBSTANTIAL DILUTION
Investors purchasing shares of the Class A Common Stock offered hereby will
incur immediate and substantial dilution of $30.99 in the net tangible book
value per share of Common Stock. See "Dilution."
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REORGANIZATION
In 1992, A. Jerrold Perenchio, Televisa and Venevision formed the Company
and UNHP which acquired UTG and the Network, respectively, in December 1992.
From and after the Acquisition, UTG and the Network have been operated
separately, have had different management structures and the Principal
Stockholders have controlled both, but have had different ownership interests
therein. In connection with this Offering, the operations of UTG and the Network
will be combined and the ownership thereof reorganized through the following
transactions (the "Reorganization") (all amounts shown are approximate and
assume the Reorganization is completed on July 31, 1996):
(a) The Company will enter into the New Bank Facility and will repay
$165.0 million owing under, and terminate, the Old Bank Facility;
(b) The Company will defease UTG's 11 3/4% Senior Subordinated Notes
due 2001 (the "Senior Subordinated Notes") by, among other things,
depositing $85.1 million with the trustee under the indenture governing
such notes;
(c) The Network will make a distribution to its partners in the amount
of $60.0 million;
(d) The Company will acquire UNHP, which owns the Network, from UNHP's
partners in exchange for 19,014.5 shares of Common Stock and $40.0 million
in cash. UTG will become a wholly-owned subsidiary of the Company, and the
Company will effect a dividend of 227.0 shares on each share of Class P
Common Stock, Class T Common Stock and Class V Common Stock, and the
Warrants will be adjusted to reflect the new capital structure of the
Company;
(e) The Company will pay $86.5 million to the Principal Stockholders
and their affiliates, representing payment of outstanding principal of and
accrued interest on certain debentures and accrued dividends on certain
preferred stock issued by the Company and its subsidiaries in connection
with the Acquisition and approximately $42.5 million to the Principal
Stockholders and their affiliates, representing full payment of outstanding
principal of and interest on certain notes issued in payment of certain
accrued dividends as of December 31, 1995;
(f) The Company will pay $147.1 million to Televisa and Venevision,
representing full payment of outstanding principal of, and accrued interest
on, all amounts owed to them by UTG with respect to Sponsor Loans made
subsequent to the Acquisition, and the obligations to make the Sponsor
Loans will terminate;
(g) The Company will pay $15.0 million, together with interest, to
Televisa, representing full payment of outstanding principal of and accrued
interest on the note issued by the Company to Televisa as payment for the
acquisition of Galavision; and
(h) The Program License Agreements will be amended, the Program Cost
Sharing Agreement (which required Televisa and Venevision to reimburse the
Company for one-half of the cost of certain productions produced or
acquired by the Company) will be terminated and the management fee to the
Principal Stockholders of 3% of Combined Net Time Sales will be eliminated.
Under the amended Program License Agreements, the royalty rate will be 11%
from the closing of this Offering through December 31, 1996 and will
increase to 13.5% for 1997 and to 15% for all years thereafter, and the
Company will receive no cost sharing reimbursements.
Immediately following the Reorganization but without giving effect to the
Closing of this Offering, Perenchio will beneficially own 22,071,737 shares of
Class P Common Stock, representing 46.3% of all fully diluted Common Stock
equivalents, Televisa will beneficially own 4,459,291 shares of Class T Common
Stock and 6,859,425 Warrants, together representing 23.8% of all fully diluted
Common Stock equivalents and Venevision will beneficially own 4,459,291 shares
of Class V Common Stock and 6,859,425 Warrants, together representing 23.8% of
all fully diluted Common Stock equivalents. See "Principal Stockholders."
For the purposes of this Prospectus, all discussion of the Company and its
ownership, business and operations and the number of shares of Common Stock
outstanding, except as otherwise indicated, are discussed on a pro forma basis,
giving effect to the transactions described above. See "Use of Proceeds,"
"Unaudited Pro Forma Consolidated Condensed Financial Statements" and "Certain
Transactions."
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<PAGE> 17
USE OF PROCEEDS
The gross proceeds to the Company from the sale of the shares of Class A
Common Stock offered hereby assuming a public offering price of $20.00 per share
(the midpoint of the estimated public offering range) are estimated to be $163.4
million ($187.9 million if the Underwriters' over-allotment option is exercised
in full). The proceeds from this Offering, together with borrowings under the
New Bank Facility, will be used as set forth below.
The following table sets forth the anticipated sources and uses of funds
(assuming that the Offering and the Reorganization are completed on July 31,
1996):
<TABLE>
<CAPTION>
SOURCES OF FUNDS USES OF FUNDS(1)
- ----------------------------------------------- ---------------------------------------------
(IN MILLIONS)
<S> <C> <C> <C>
New Bank Facility...................... $ 508.8 Payment of Old Bank Facility......... $ 165.0
Defeasance of Senior Subordinated
Offering of Class A Common Stock....... 163.4 Notes(2)............................. 85.1
-------
Distribution and payment to Network
partners............................. 100.0
Payment of notes and accrued
dividends to
Principal Stockholders(3)............ 129.0
Payment of Sponsor Loans(4).......... 147.1
Payment of Galavision note(5)........ 15.0
Investment in Entravision............ 10.0
Estimated fees and expenses.......... 21.0
-------
Total Sources.......................... $ 672.2 Total Uses........................... $ 672.2
====== ======
</TABLE>
- ----------------------------
(1) See Note 5 of Notes to Consolidated Financial Statements of PCI for interest
rates and maturity of debt to be repaid.
(2) The Company intends to use this amount to effect a covenant defeasance of
the Senior Subordinated Notes which are not prepayable prior to January 15,
1997. The Company intends to prepay the notes on that date.
(3) Within the past 12 months, a portion of these notes were issued in payment
of accrued dividends. The remainder of the amounts owed relate to certain
debentures and preferred stock issued by the Company and its subsidiaries in
connection with the Acquisition.
(4) See "Certain Transactions" for use of proceeds from Sponsor Loans.
(5) Issued as of July 1, 1996 in connection with the acquisition of Galavision.
DIVIDEND POLICY
The Company has never declared or paid dividends on its Common Stock. The
New Bank Facility restricts the payment of cash dividends on the Common Stock.
The approval of a majority of the Class T Directors and a majority of the Class
V Directors is required for the Company to pay any dividends on the Common
Stock. Since dividends are not payable on the Warrants, such approval is
unlikely so long as the Warrants are held by Televisa and Venevision. The
Company currently intends to retain any earnings for use in its business and
does not anticipate paying any cash dividends on its Common Stock in the
foreseeable future. Future dividend policy will depend on the Company's
earnings, capital requirements, financial condition and other factors considered
relevant by the Board of Directors.
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DILUTION
As of June 30, 1996, the Company, had a deficit in net tangible book value
of $514.3 million, or $17.81 per share of Common Stock based upon 28,881,181
shares of Common Stock outstanding. The deficit in net tangible book value per
share is determined by dividing the net tangible book value of the Company
(total tangible assets less total liabilities) on such date by the number of
shares of all classes of Common Stock outstanding as of such date giving effect
to the stock dividend and the conversion of the preferred stock into Common
Stock. After giving effect to the Reorganization and the sale by the Company of
the 8,170,000 shares of Class A Common Stock offered hereby, assuming a public
offering price of $20.00 per share (the midpoint of the estimated offering
range) and after deducting underwriting discounts and commissions and estimated
offering expenses payable by the Company, the Company's deficit in net tangible
book value as of June 30, 1996 would have been $454.8 million or $10.99 per
share of Common Stock. This represents an immediate decrease in the deficit in
net tangible book value of $7.29 per share to existing stockholders and an
immediate dilution of $30.99 per share to new investors purchasing shares in
this Offering. The following table gives effect to the stock split and the
conversion of the preferred stock into Common Stock and illustrates this per
share dilution:
<TABLE>
<CAPTION>
ASSUMES NO
EXERCISE
OF
WARRANTS
----------
<S> <C>
Assumed initial public offering price per share................. $ 20.00
----------
Deficit in net tangible book value per share before the
Reorganization and the Offering............................ (17.81)
----------
Increase in deficit in net tangible book value per share
attributable to the Reorganization......................... (0.47)
Pro forma deficit in net tangible book value per share before
the Offering............................................... (18.28)
Decrease in deficit in net tangible book value per share
attributable to new investors............................ 7.29
Pro forma deficit in net tangible book value per share after the
Offering...................................................... (10.99)
----------
Dilution per share to new investors............................. $ 30.99
=========
</TABLE>
The foregoing table excludes 14,440,820 shares of Class A Common Stock
issuable upon exercise of the Warrants. The per share dilution to new investors
assuming that all of the Warrants were exercised is $28.11. See "Certain
Transactions -- Warrants."
The following table sets forth on a pro forma basis, as of June 30, 1996,
the differences in the number of shares purchased from the Company, the total
consideration paid and the average price per share paid by the Company's
existing stockholders and new investors purchasing shares of Class A Common
Stock from the Company in this Offering.
<TABLE>
<CAPTION>
TOTAL
SHARES PURCHASED CONSIDERATION
SHARES (ASSUMING WARRANTS (ASSUMING WARRANTS AVERAGE PRICE
PURCHASED ARE EXERCISED) ARE EXERCISED) PER SHARE
-------------------- -------------------- ------------------------ (ASSUMING WARRANTS
NUMBER PERCENT NUMBER PERCENT AMOUNT PERCENT ARE EXERCISED)
---------- ------- ---------- ------- ------------ ------- -------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Existing
stockholders......... 28,881,181(a) 69.8% 43,322,001 77.6% $ 42,758,214 20.0% $ 0.99
Reorganization......... 4,335,499 10.5 4,335,499 7.8 7,001,902(b) 3.3 1.61
------- ----- ------- ----- -------
Existing stockholders
after
Reorganization....... 33,216,680 80.3 47,657,500 85.4 49,760,116 23.3 1.04
------- -------
New investors.......... 8,170,000 19.7 8,170,000 14.6 163,400,000 76.7 20.00
------- ----- ------- ----- -------
Total......... 41,386,680 100.0% 55,827,500 100.0% $213,160,116 100.0%
======= ===== ======= ===== =======
</TABLE>
- ----------------------------
(a) Reflects the exchange of PTIH common and preferred stock for, and stock
dividend of, PCI common stock concurrent with the Offering and the 227 for 1
stock dividend to existing stockholders.
(b) Represents the consideration paid by the existing stockholders for the
Network in 1992.
The foregoing tables exclude 5,500,000 shares of Class A Common Stock
reserved for future issuance under the 1996 Performance Award Plan. See
"Management -- 1996 Performance Award Plan."
17
<PAGE> 19
CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Company as of June 30, 1996 and as adjusted to give effect to the Reorganization
and the sale of the 8,170,000 shares of Class A Common Stock offered hereby at
an assumed offering price of $20.00 (the midpoint of the estimated public
offering price range) and the application of the estimated net proceeds
therefrom.
<TABLE>
<CAPTION>
AS OF JUNE 30, 1996
----------------------------
CONSOLIDATED AS ADJUSTED
------------ -----------
(IN MILLIONS)
<S> <C> <C>
Long-term debt (including current maturities)
Old Bank Facility................................................. $173.3 $ --
New Bank Facility................................................. -- 476.0
11 3/4% Senior Subordinated Notes................................. 79.4 --
Junior Subordinated Notes......................................... 56.8 56.8
Notes payable to Principal Stockholders........................... 128.3 --
Sponsor Loans..................................................... 131.8 --
Capital leases and other.......................................... 43.8 43.8
--- ---
Total long-term debt...................................... 613.4 576.6
Stockholders' equity(deficit)(1).................................... (57.0) 203.9
--- ---
Total capitalization................................................ $556.4 $ 780.5
=== ===
</TABLE>
- ------------------------------
(1) Excludes (i) 721,970 shares of Class A Common Stock, 6,859,425 shares of
Class T Common Stock and 6,859,425 shares of Class V Common Stock issuable
upon exercise of the Warrants and (ii) 5,500,000 shares of Class A Common
Stock reserved for future issuance under the 1996 Performance Award Plan.
See "Management -- 1996 Performance Award Plan" and "Certain Transactions
-- Warrants."
18
<PAGE> 20
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED
FINANCIAL STATEMENTS
The following unaudited pro forma consolidated condensed statements of
operations and unaudited pro forma consolidated condensed balance sheet
(collectively, the "Pro Forma Statements") give effect to the Reorganization and
the sale of the 8,170,000 shares of Class A Common Stock offered hereby and the
application of the net proceeds therefrom as if such transactions had occurred
as of January 1, 1995, in the case of the statements of operations data, and as
of June 30, 1996, in the case of the balance sheet data.
The Pro Forma Statements do not purport to represent what the Company's
consolidated financial position or results of operations would actually have
been if such transactions in fact had occurred on the dates assumed or to
project consolidated financial position or results of operations for any future
date or period.
The pro forma adjustments are based upon available information and upon
certain assumptions that management of the Company believes are reasonable. The
Reorganization, wherein the Company is acquiring 100% of UNHP and the 20%
minority interests of its subsidiary PTIH, will be accounted for using the
purchase method of accounting. The aggregate fair value of the minority
interests to be acquired is approximately $215 million. Accordingly, the
acquisition of the minority interests will be allocated to the individual assets
and liabilities based on their relative fair values as of the closing of this
Offering. The Pro Forma Consolidated Condensed Balance Sheet reflects
preliminary estimates of the allocation of the fair value of the minority
interests acquired and is subject to the completion of a formal appraisal.
Management has preliminarily allocated the fair value of the minority interests
acquired to intangible assets. Management does not believe that any differences
in the final purchase price allocation will have a material impact on the
Company's financial position or results of operations. Management has concluded
that a 20 year economic useful life for the acquisition of the minority
interests is appropriate based on the competitive environment in which the
Company operates, its highly leveraged nature and the historical performance of
the Company.
The Pro Forma Statements do not reflect the acquisition of Galavision, the
payment of the Galavision note, or the $10 million investment in the form of a
note and an option to acquire a 25% interest in Entravision, as such amounts
were not significant.
The Pro Forma Statements and accompanying notes should be read in
conjunction with the historical consolidated financial statements of PCI and
UNHP, including the notes thereto, included elsewhere herein.
19
<PAGE> 21
UNIVISION COMMUNICATIONS INC.
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
HISTORICAL
---------------------------------- PRO FORMA PRO
PCI UNHP CONSOL. ADJUSTMENTS FORMA
-------- -------- -------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net revenues......................................... $173,108 $148,231 $321,339 $ -- $ 321,339
Direct operating expenses............................ 36,193 79,628 115,821 -- 115,821
Selling, general and administrative.................. 52,254 41,517 93,771 (9,521)(a) 84,250
Corporate charges.................................... 7,300 2,400 9,700 -- 9,700
Depreciation and amortization........................ 33,528 9,971 43,499 10,750(b) 54,249
-------- -------- -------- -------- ------
Operating income................................... 43,833 14,715 58,548 (1,229) 57,319
Interest expense, net................................ 40,222 7,864 48,086 35,467(c) 43,890
(39,663)(d)
Amortization of deferred financing costs............. 3,925 -- 3,925 1,429(e) 1,429
(3,925)(f)
Minority interest.................................... 7,692 -- 7,692 (7,692)(g) --
-------- -------- -------- -------- ------
Income (loss) before income taxes.................. (8,006) 6,851 (1,155) 13,155 12,000
Provision for income taxes(h)........................ -- -- -- 5,000 5,000
-------- -------- -------- -------- ------
Income (loss) before extraordinary loss on
extinguishment of debt........................... $ (8,006) $ 6,851 $ (1,155) $ 8,155 $ 7,000
-------- -------- -------- -------- ------
Earnings (loss) per share before extraordinary loss
on extinguishment of debt.......................... $ (1.23) $ 0.13
Weighted average common shares outstanding(i)........ 6,526,666 55,734,501
Other Data:
Broadcast cash flow................................ $ 84,661 $ 27,086 $111,747 $ 9,521 $ 121,268
EBITDA............................................. 77,361 24,686 102,047 9,521 111,568
</TABLE>
FOR THE SIX MONTHS ENDED JUNE 30, 1995
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
HISTORICAL
---------------------------------- PRO FORMA PRO
PCI UNHP CONSOL. ADJUSTMENTS FORMA
-------- -------- -------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net revenues......................................... $ 82,279 $ 70,419 $152,698 $ -- $ 152,698
Direct operating expenses............................ 15,116 38,379 53,495 -- 53,495
Selling, general and administrative.................. 25,743 20,214 45,957 (4,559)(a) 41,398
Corporate charges.................................... 3,065 1,060 4,125 -- 4,125
Depreciation and amortization........................ 16,537 4,850 21,387 5,375(b) 26,762
------- ------- ------- -------- ----------
Operating income................................... 21,818 5,916 27,734 (816) 26,918
Interest expense, net................................ 20,683 3,851 24,534 18,501(c) 22,786
(20,249)(d)
Amortization of deferred financing costs............. 2,320 -- 2,320 714(e) 714
(2,320)(f)
Minority interest.................................... 489 -- 489 (489)(g) --
------- ------- ------- -------- ----------
Income (loss) before income taxes.................. (1,674) 2,065 391 3,027 3,418
Provision for income taxes(h)........................ -- -- -- 1,450 1,450
Income (loss) before extraordinary loss on
extinguishment of debt........................... $ (1,674) $ 2,065 $ 391 $ 1,577 $ 1,968
------- ------- ------- -------- ----------
Earnings (loss) per share before extraordinary loss
on extinguishment of debt.......................... $(167.40) $ 0.04
Weighted average common shares outstanding(i)........ 10,000 55,734,501
Other Data:
Broadcast cash flow................................ $ 41,420 $ 11,826 $ 53,246 $ 4,559 $ 57,805
EBITDA............................................. 38,355 10,766 49,121 4,559 53,680
</TABLE>
See Notes to Unaudited Pro Forma Consolidated Condensed Statements of
Operations.
20
<PAGE> 22
UNIVISION COMMUNICATIONS INC.
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1996
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
HISTORICAL
---------------------------------- PRO FORMA PRO
PCI UNHP CONSOL. ADJUSTMENTS FORMA
-------- -------- -------- ----------- --------
<S> <C> <C> <C> <C> <C>
Net revenues.......................................... $ 91,420 $ 79,436 $170,856 $ -- $170,856
Direct operating expenses............................. 16,276 41,005 57,281 -- 57,281
Selling, general and administrative................... 30,759 22,218 52,977 (5,043)(a) 47,934
Corporate charges..................................... 3,484 430 3,914 -- 3,914
Depreciation and amortization......................... 17,192 5,513 22,705 5,375(b) 28,080
------- ------- ------- -------- -------
Operating income.................................... 23,709 10,270 33,979 (332) 33,647
Interest expense, net................................. 20,300 4,799 25,099 16,784(c) 21,876
(20,007)(d)
Amortization of deferred financing costs.............. 1,749 -- 1,749 714(e) 714
(1,749)(f)
Minority interest..................................... 265 -- 265 (265)(g) --
------- ------- ------- -------- -------
Income before income taxes.......................... 1,395 5,471 6,866 4,191 11,057
Provision for income taxes(h)......................... 500 -- 500 (500)(h) --
Income before extraordinary loss on
extinguishment of debt............................ $ 895 $ 5,471 $ 6,366 $ 4,691 $ 11,057
------- ------- ------- -------- -------
Earnings per share before extraordinary loss on
extinguishment of debt.............................. $ 0.14 $ 0.20
Weighted average common shares outstanding(i)......... 6,526,666 55,734,501
Other Data:
Broadcast cash flow................................. $ 44,385 $ 16,213 $ 60,598 $ 5,043 $ 65,641
EBITDA.............................................. 40,901 15,783 56,684 5,043 61,727
</TABLE>
FOR THE LATEST TWELVE MONTHS ENDED JUNE 30, 1996
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
HISTORICAL
---------------------------------- PRO FORMA PRO
PCI UNHP CONSOL. ADJUSTMENTS FORMA
-------- -------- -------- ----------- --------
<S> <C> <C> <C> <C> <C>
Net revenues.......................................... $182,249 $157,248 $339,497 $ -- $339,497
Direct operating expenses............................. 37,353 82,254 119,607 -- 119,607
Selling, general and administrative................... 57,270 43,521 100,791 (10,005)(a) 90,786
Corporate charges..................................... 7,719 1,770 9,489 -- 9,489
Depreciation and amortization......................... 34,183 10,634 44,817 10,750(b) 55,567
------- ------- ------- -------- -------
Operating income.................................... 45,724 19,069 64,793 (745) 64,048
Interest expense, net................................. 39,839 8,812 48,651 33,750(c) 42,980
(39,421)(d)
Amortization of deferred financing costs.............. 3,354 -- 3,354 1,429(e) 1,429
(3,354)(f)
Minority interest..................................... 7,468 -- 7,468 (7,468)(g) --
------- ------- ------- -------- -------
Income (loss) before income taxes................... (4,937) 10,257 5,320 14,319 19,639
Provision for income taxes(h)......................... 500 -- 500 (500) --
Income (loss) before extraordinary loss on
extinguishment of debt............................ $ (5,437) $ 10,257 $ 4,820 $ 14,819 $ 19,639
------- ------- ------- -------- -------
Earnings (loss) per share before extraordinary loss on
extinguishment of debt.............................. (0.83) $ 0.35
Weighted average common shares outstanding(i)......... 6,526,666 55,734,501
Other Data:
Broadcast cash flow................................. $ 87,626 $ 31,473 $119,099 $ 10,005 $129,104
EBITDA.............................................. 79,907 29,703 109,610 10,005 119,615
</TABLE>
See Notes to Unaudited Pro Forma Consolidated Condensed Statements of
Operations.
21
<PAGE> 23
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(IN THOUSANDS)
(a) Reverses the historical management fee of $9,521, $4,559, $5,043 and $10,005
provided by the Network for the year ended December 31, 1995, the six month
periods ended June 30, 1995 and June 30, 1996 and the latest twelve months
ended June 30, 1996, respectively. The pro forma adjustment for the effect
of eliminating the historical cost sharing arrangements has not been
presented because the historical license fee, net of the historical cost
sharing, approximates the license fee on a pro forma basis.
(b) Represents the amortization of an additional $215,000 of goodwill arising
from the Company's acquisition of minority interest as if the acquisition
had occurred as of January 1, 1995. The goodwill is being amortized over 20
years.
(c) Records the interest expense of $35,467, $18,501, $16,784 and $33,750 for
the year ended December 31, 1995, the six month periods ended June 30, 1995
and June 30, 1996 and the latest twelve months ended June 30, 1996,
respectively, relating to the borrowings under the New Bank Facility to be
incurred in connection with the Reorganization.
(d) Represents the reversal of the historical interest expense related to the
debt that is being refinanced.
(e) Amortization of $1,429, $714, $714 and $1,429 was recorded for the year
ended December 31, 1995, the six month periods ended June 30, 1995 and June
30, 1996 and the latest twelve months ended June 30, 1996, respectively,
related to the $10,000 pro forma deferred financing costs related to the
borrowings under the New Bank Facility to be incurred in connection with the
Reorganization.
(f) Represents the reversal of the historical amortization of deferred financing
costs relating to debt that is being refinanced.
(g) Eliminates the historical effect of preferred stock dividends to minority
stockholders of PTIH, related party debt interest expense and the minority
interest participation in the income (loss) applicable to common
stockholders.
(h) No provision for income taxes has been recorded on a pro forma basis for the
six months ended June 30, 1996, and the latest twelve months ended June 30,
1996, because the historical debt is assumed to be extinguished as of
January 1, 1995, resulting in the recording of an extraordinary loss on the
extinguishment of debt (net of income tax benefits), at January 1, 1995, and
the utilization of previously unrecognized net operating losses. The
provision for income taxes included in the unaudited pro forma consolidated
condensed statements of operations for the year ended December 31, 1995, and
the six months ended June 30, 1995 is based on an effective tax rate of 40%.
These tax provisions, presented on a pro forma basis, are offset by an
income tax benefit arising from the extraordinary loss on the extinguishment
of debt. However, in accordance with Article 11 of Regulation S-X under the
Securities Act, the extraordinary loss on the extinguishment of debt, net of
related tax benefits is not presented therein.
(i) See Note (d) to Selected Historical Financial Data for an explanation
regarding historical weighted average common shares outstanding. Pro forma
weighted average common shares outstanding for the year ended December 31,
1995, the six month periods ended June 30, 1995 and June 30, 1996 and the
latest twelve months ended June 30, 1996 include the effects of outstanding
Warrants with an exercise price of $0.13 per share. The Warrants are
considered Common Stock equivalents and impact primary weighted average
common shares outstanding by the number of shares issuable upon exercise of
the Warrants less the number of shares that could have been repurchased by
the Company with the proceeds from the exercise of the Warrants based on the
price of Common Stock described below. As there was no market for the Common
Stock during the periods presented, an assumed price of $20.00 per share
(the
22
<PAGE> 24
midpoint of the estimated public offering price range) was utilized for all
periods. Weighted average common shares outstanding has been calculated as
follows:
<TABLE>
<S> <C> <C>
Historical weighted average common shares
outstanding...................................... 126,666
Reorganization stock dividend (227.010528 shares
for each common share)........................... 28,754,515
Reorganization shares issued....................... 4,335,499
Public offering shares issued...................... 8,170,000
-----------
Weighted average common shares before dilutive
effect of common stock equivalents............... 41,386,680
Common stock equivalents:
Warrants......................................... 14,440,820
Consideration upon exercise of Warrants ($0.1288
for each Warrant)............................. $1,859,978
Less: Repurchased shares with proceeds from
Warrants (assuming $20 per share)............. (92,999)
Common stock equivalents......................... 14,347,821
-----------
Pro forma weighted average common shares......... 55,734,501
=========
</TABLE>
23
<PAGE> 25
UNIVISION COMMUNICATIONS INC.
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET
AS OF JUNE 30, 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
HISTORICAL ADJUSTMENTS SUBTOTAL ADJUSTMENTS
------------------------------ FOR PRIOR TO FOR PRO
PCI UNHP CONSOL. REORGANIZATION OFFERING OFFERING(A) FORMA
-------- -------- -------- --------- -------- ------------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Cash and cash equivalents.... $ 14,156 $ 107 $ 14,263 $ 476,000(f) $ 90,292 $ (75,941) $ 14,351
(399,971)(c,e,g,i,j) --
Accounts receivable, net..... 36,386 46,005 82,391 -- 82,391 -- 82,391
Other current assets......... 2,619 6,761 9,380 -- 9,380 -- 9,380
-------- -------- -------- -------- -------- --------
Total current assets....... 53,161 52,873 106,034 76,029 182,063 (75,941) 106,122
Property and equipment,
net........................ 28,704 74,143 102,847 -- 102,847 -- 102,847
Intangible assets, net....... 436,956 6,769 443,725 215,000(b) 658,725 -- 658,725
Deferred tax asset........... 2,000 -- 2,000 -- 2,000 -- 2,000
Other assets................. 13,524 660 14,184 10,000(c) 14,083 -- 14,083
(10,101)(d)
-------- -------- -------- -------- -------- --------
Total assets............... $534,345.. $134,445 $668,790 $ 290,928 $959,718 $ (75,941) $883,777
======== ======== ======== ======== ======== ========
</TABLE>
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Accounts payable and accrued
liabilities................ $ 36,099 $ 33,245 $ 69,344 $ -- $ 69,344 69,344
Current portion of long-term
debt and capital lease
obligations................ 37,477 2,195 39,672 37,250(e) $ 42,422 $ -- 42,422
(40,000)(f) -- --
Due to (from) the Network.... 36,019 (36,019) -- -- -- -- --
Other current liabilities.... 6,465 23,671 30,136 -- 30,136 -- 30,136
Liabilities to be settled
upon Reorganization........ -- -- -- (228,341) 228,341 (228,341) --
-------- -------- -------- --------- -------- ------------- --------
Total current
liabilities............. 116,060 23,092 139,152 (231,091) 370,243 228,341 141,902
Bank debt.................... 136,000 -- 136,000 136,000(e) 436,000 -- 436,000
(436,000)(f)
Capital leases and other..... 848 40,518 41,366 -- 41,366 -- 41,366
Senior Subordinated Notes.... 79,400 -- 79,400 79,400(e) -- -- --
Related party debt........... 117,835.. -- 117,835 117,835(e) -- -- --
Junior Subordinated Notes.... 8,247 48,551 56,798 -- 56,798 -- 56,798
Sponsor loans................ 131,763 -- 131,763 131,763(e) -- -- --
Other liabilities............ 1,832 1,946 3,778 -- 3,778 -- 3,778
Minority interest............ 19,670 -- 19,670 19,670(g) -- -- --
Preferred stock.............. 1 -- 1 1(h) -- -- --
Common Stock................. -- -- -- (332)(h,i) 332 (82) 414
Paid in capital.............. -- 20,338 20,338 100,331(i,j) 144,171 (152,318) 296,489
(224,164)(b,h,i,j)
Accumulated deficit.......... (77,311) -- (77,311) 15,659(k) (92,970) -- (92,970)
-------- -------- -------- --------- -------- ------------- --------
Total stockholders' equity
(deficit)(l)............ (77,310) 20,338 (56,972) 108,505 51,533 (152,400) 203,933
-------- -------- -------- --------- -------- ------------- --------
Total liabilities and
stockholders'
equity................ $534,345 $134,445 $668,790 $ 290,928 $959,718 $ (75,941) $883,777
======== ======== ======== ========= ======== ========= ========
</TABLE>
See Notes to Unaudited Pro Forma Consolidated Condensed Balance Sheet.
24
<PAGE> 26
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET
(IN THOUSANDS)
(a) The adjustments reflected in this column represent the receipt of the
proceeds of the Offering net of related offering costs and the liabilities
incurred in connection with the Reorganization and the payment thereof.
(b) Represents recording of $215,000 of goodwill related to the acquisition of
the minority interests in PTIH and UNHP. Goodwill associated with the 20%
PTIH minority interest acquired is determined using a fair value of PCI of
approximately $763,000 plus the PCI debt of $123,000 to approximate the fair
value of PTIH. The goodwill associated with the 50% UNHP minority interest
acquired is determined using a fair value of $76,200. These fair values are
based upon the estimated market capitalization of PTIH and UNHP prior to the
Offering.
(c) Reflects the recording of $10,000 of pro forma deferred financing costs
related to borrowings under the New Bank Facility to be incurred in
connection with the Reorganization.
(d) Represents the reversal of deferred financing costs related to the debt that
is being refinanced.
(e) Eliminates the debt that is being refinanced.
(f) Records borrowings under the New Bank Facility of $476,000.
(g) Eliminates the effects of historical minority interest of PTIH.
(h) Reflects the reclassification from Preferred to Common Stock of $1.
(i) Records the issuance of Common Stock in connection with the Reorganization
and the Offering offset by
the estimated stock issuance costs of $11,000.
(j) Records the $60,000 distribution from the Network to its partners as of June
30, 1996 and the $40,000 cash payment together with the issuance of
4,335,499 shares of Common Stock in exchange for the partners' interests in
UNHP.
(k) Represents the extraordinary loss on the early extinguishment of debt of
$15,659, which is comprised of the reversal of the deferred financing costs
of $10,101 and the difference between the carrying costs of the debt and the
repayment amount of $5,558. This extraordinary loss is not reflected on the
Unaudited Pro Forma Consolidated Condensed Statements of Operations since it
would be presented below income before extraordinary loss on extinguishment
of debt.
(l) Reconciliation of stockholders' equity (deficit) is as follows:
<TABLE>
<CAPTION>
STOCKHOLDERS'
EQUITY
-------------
<S> <C>
Historical balance.............................................. $ (56,972)
Issuance of Common Stock........................................ 414
Paid in Capital
Records stock proceeds........................................ 163,318
Elimination of Minority Interest.............................. 9,164
Records Goodwill.............................................. 215,000
Records Distribution to Partners.............................. (100,000)
Reclassification of reorganization share value................ (332)
Records Offering Costs........................................ (11,000)
Current Earnings................................................ (15,659)
-------------
Pro Forma balance............................................... $ 203,933
==========
</TABLE>
25
<PAGE> 27
SELECTED HISTORICAL FINANCIAL DATA
Presented below are summary historical financial data of PCI and UNHP. The
data for PCI and UNHP for the years ended December 31, 1993, 1994 and 1995, were
derived from the audited financial statements and related notes included
elsewhere herein, and should be read in conjunction therewith. The data for PCI
and UNHP for the years ended December 31, 1991 and 1992 are derived from the
audited combined financial statements and related notes of the Univision Group,
and the audited financial statements and related notes of PCI for the period
from December 17, 1992 through December 31, 1992, which are not included herein.
The PCI and UNHP financial data for the six months ended June 30, 1995 and
1996 are unaudited, but in the opinion of management such statements have been
prepared on the same basis as the audited financial statements included
elsewhere herein, and include all normal recurring adjustments necessary for a
fair presentation of the financial position and results of operations for that
period. Results for the six months ended June 30, 1996 are not necessarily
indicative of the results for a full year.
The information below should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the consolidated financial statements included herein.
<TABLE>
<CAPTION>
PREDECESSOR COMPANY
(THROUGH DECEMBER
16, 1992)
-------------------
PCI
-----------------------------------------------------
SIX MONTHS ENDED
YEARS ENDED DECEMBER 31, JUNE 30,
---------------------------------------------------- ---------------------
PCI 1991 1992(A) 1993 1994(B) 1995 1995 1996
--------- -------- -------- -------- ---------- -------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenues................... $ 99,667 $105,855 $104,675 $139,007 $ 173,108 $ 82,279 $ 91,420
Direct operating expenses...... 26,646 28,795 26,107 27,129 36,193 15,116 16,276
Selling, general and
administrative............... 33,527 33,109 32,412 41,395 52,254 25,743 30,759
--------- -------- -------- -------- -------- -------- --------
Corporate charges.............. 1,500 1,200 3,200 4,900 7,300 3,065 3,484
--------- -------- -------- -------- -------- -------- --------
Depreciation and
amortization................. 11,978 12,777 33,970 31,719 33,528 16,537 17,192
--------- -------- -------- -------- -------- -------- --------
Operating income............. 26,016 29,974 8,986 33,864 43,833 21,818 23,709
Interest expense, net(c)....... -- 1,597 36,896 37,246 40,222 20,683 20,300
Amortization of deferred
financing costs.............. -- 130 4,580 5,419 3,925 2,320 1,749
Minority interest.............. -- (376) (5,309) (1,202) 7,692 489 265
Provision for taxes............ -- -- -- 140 -- -- 500
Extraordinary charges (net of
tax benefit of $500 in the
six-month period ended June
30, 1996).................... -- -- -- (4,321) (801) -- (681)
--------- -------- -------- -------- -------- -------- --------
Net income (loss)(c)......... $ 26,016 $ 28,623 $(27,181) $(12,060) $ (8,807) $ (1,674) $ 214
========= ======== ======== ======== ======== ======== ========
Earnings (loss) per share
before extraordinary
charges...................... $ 2,602 $ 2,862 $ (2,718) $ (774) $ (1.23) $ (167) $ 0.14
Earnings (loss) per share...... $ 2,602 $ 2,862 $ (2,718) $ (1,206) $ (1.35) $ (167) $ 0.03
Weighted average common shares
outstanding(d)............... 10,000 10,000 10,000 10,000 6,526,666 10,000 6,526,666
--------- -------- -------- -------- -------- -------- --------
OTHER DATA:
Broadcast cash flow(e)....... 39,494 43,951 46,156 70,483 84,661 41,420 44,385
EBITDA(f).................... 37,994 42,751 42,956 65,583 77,361 38,355 40,901
BALANCE SHEET DATA (at end of
period)(g):
Working capital (deficit)...... $ 5,169 $(31,125) $(27,475) $(33,581) $ (11,736) $(29,658) $ (26,880)
Total assets................... 260,022 540,261 510,741 565,856 547,630 549,314 534,345
Long-term debt (including
current maturities)(c)....... 627,655 454,115 413,421 478,307 487,895 493,945 511,570
Stockholders' equity
(deficit)(c)................. (315,752) 20,328 (11,468) (29,171) (75,675) (33,671) (77,310)
</TABLE>
26
<PAGE> 28
<TABLE>
<CAPTION>
PREDECESSOR COMPANY
(THROUGH DECEMBER
16, 1992)
-------------------
UNHP
-----------------------------------------------------
YEARS ENDED DECEMBER 31, SIX MONTHS ENDED
---------------------------------------------------- ---------------------
UNHP 1991 1992(A) 1993 1994(B) 1995 6/30/95 6/30/96
--------- -------- -------- -------- ---------- -------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenues................... $ 88,776 $100,231 $109,365 $132,746 $ 148,231 $ 70,419 $ 79,436
Direct operating expenses...... 56,374 67,638 60,151 78,616 79,628 38,379 41,005
Selling, general and
administrative............... 31,064 30,906 34,036 38,749 41,517 20,214 22,218
--------- -------- -------- -------- -------- -------- --------
Corporate charges.............. -- -- -- 2,000 2,400 1,060 430
--------- -------- -------- -------- -------- -------- --------
Depreciation and
amortization................. 9,949 10,221 7,413 7,702 9,971 4,850 5,513
--------- -------- -------- -------- -------- -------- --------
Operating income (loss)...... (8,611) (8,534) 7,765 5,679 14,715 5,916 10,270
Interest expense, net(c)....... -- 192 4,749 6,233 7,864 3,851 4,799
--------- -------- -------- -------- -------- -------- --------
Net income (loss)(c)......... $ (8,611) $ (8,726) $ 3,016 $ (554) $ 6,851 $ 2,065 $ 5,471
========= ======== ======== ======== ======== ======== ========
OTHER DATA:
Broadcast cash flow(e)....... 1,338 1,687 15,178 15,381 27,086 11,826 16,213
EBITDA(f).................... 1,338 1,687 15,178 13,381 24,686 10,766 15,783
BALANCE SHEET DATA (at end of
period):
Working capital (deficit)...... $ 14,171 $(12,497) $(54,934) $(39,598) $ (41,177) $(17,688) $ (6,238)
Total assets................... 258,392 71,289 75,121 92,761 95,860 101,631 134,445
Long-term debt (including
current maturities)(c)....... -- 32,546 36,095 53,600 65,274 63,304 91,264
Partners' equity
(deficit)(c)................. (158,968) 6,327 9,343 8,789 14,890 10,854 20,338
</TABLE>
- ------------------------------
(a) Represents the addition of the results of operations of the predecessor
company (January 1, 1992 through December 16, 1992) and PCI or UNHP, as the
case may be, for the period of December 17, through December 31, 1992.
(b) In August and September 1994, UTG acquired stations in Chicago ("WGBO") and
Houston ("KXLN"), respectively. The selected historical financial data
presented for periods preceding these dates do not include amounts for WGBO
or KXLN and are therefore not comparable to subsequent periods.
(c) A stockholders' deficit of $171,060 and long-term debt of $627,475 as of
December 31, 1991 and interest expense of $71,493 for the year ended
December 31, 1991 were unallocated between the Stations Group and the
Network by the predecessor company.
(d) Pro forma weighted average common shares outstanding for the year ended
December 31, 1995 and for the six months ended June 30, 1996 have been
adjusted to give retroactive effect to the exchange of PCI preferred stock
and PTIH common and preferred stock outstanding for PCI common stock upon
the Reorganization and the pro forma per share effect of the cash
distributions of $93.0 million and dividends of $35.0 million to be paid to
the principal stockholders of the Company upon the Reorganization, at an
assumed per share price of $20.00.
(e) "Broadcast cash flow" is defined as broadcast operating income before
corporate charges and depreciation and amortization. The Company has
presented broadcast cash flow data, which the Company believes are
comparable to the data provided by other companies in the industry, because
such data are commonly used as a measure of performance for broadcast
companies. However, broadcast cash flow should not be construed as an
alternative to operating income (as determined in accordance with generally
accepted accounting principles) as an indicator of operating performance,
or to cash flows from operating activities (as determined in accordance
with generally accepted accounting principles) as a measure of liquidity.
(f) "EBITDA" consists of broadcast cash flow less corporate charges and is
commonly used in the broadcast industry to analyze and compare broadcast
companies on a basis of operating performance, leverage and liquidity.
EBITDA should not be construed as an alternative to operating income (as
determined in accordance with generally accepted accounting principles) as
an indicator of operating performance, or to cash flows from operating
activities (as determined in accordance with generally accepted accounting
principles) as a measure of liquidity.
(g) PCI has not paid a dividend on the Common Stock during the periods
presented.
27
<PAGE> 29
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
In 1992 Perenchio, Televisa and Venevision formed the Company and UNHP
which acquired UTG and the Network, respectively, in December 1992, and brought
extensive broadcasting, programming and production experience to Univision.
Under the prior owner, UTG and the Network were operated as an integrated
business and therefore reported financial statements as one entity. Although the
business operations of UTG and the Network remain substantially dependent on one
another, since the Acquisition they have been operated separately, have had
different management and ownership structures and, accordingly, have reported
financial information separately. Once the Reorganization is consummated, the
Company will report financial information on a consolidated basis. The separate
results of PCI and UNHP are not necessarily indicative of the results that would
have been obtained had PCI and UNHP reported financial statements on a
consolidated basis for the periods indicated.
Since the Acquisition, the Company's operating performance has improved
significantly with combined net revenues and pro forma EBITDA increasing to $321
million and $112 million, representing compound annual growth rates of 16% and
36%, respectively, from the 1992 operating results of the Company and its
predecessor.
Univision attributes its recent success to several factors, including
increased emphasis on popular, high quality programming produced by Televisa,
Univision and Venevision, contracting with Nielsen to develop more accurate,
credible rating systems to measure Hispanic audience viewership, increasing
acceptance by advertisers of Spanish-language television, continued growth of
the Hispanic audience and the strengthening of its management team with
executives and sales managers with extensive English-language television and
advertising experience.
The following management's discussion and analysis describes the results of
operations of PCI and UNHP for the six month period ended June 30, 1996 as
compared to the six month period ended June 30, 1995, the year ended December
31, 1995 as compared to the year ended December 31, 1994, and the year ended
December 31, 1994 as compared to the year ended December 31, 1993.
RESULTS OF OPERATIONS
PCI's major asset is its investment in UTG and substantially all of its
revenues are derived from UTG. UTG's net revenues are derived from the O&Os and
include gross advertising revenues generated from the sale of national and local
spot advertising time plus an allocation of network gross revenues, net of
agency commissions. UNHP's major asset is its investment in the Network and
substantially all of its revenues are derived from the Network. The Network net
revenues include gross advertising revenues generated from the sale of network
advertising, net of agency commissions and station compensation to the
Affiliated Stations. Based on the current Affiliation Agreements, the Network
and UTG share net advertising revenues. The net advertising revenues shared
consist of the local and national advertising revenues generated by the O&Os and
the portion of Network advertising revenues that is represented by each O&O's
percentage of total Network coverage. These revenues are allocated 62% to the
O&Os and 38% to the Network. For example, if an O&O represents 20% of the
Network's coverage, then the sum of 20% of Network advertising revenues and all
of such O&O's national and local advertising revenues would be allocated 62% to
UTG and 38% to the Network.
Direct operating expenses consist of programming and news costs and general
operating costs.
28
<PAGE> 30
The following tables set forth certain data from the respective historical
statements of operations expressed as a percentage of net revenues:
PCI
<TABLE>
<CAPTION>
YEARS ENDED SIX MONTHS ENDED
DECEMBER 31, JUNE 30,
--------------------------------- ---------------------
1993 1994 1995 1995 1996
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
OPERATING DATA:
Net revenues.................................. 100.0% 100.0% 100.0% 100.0% 100.0%
Direct operating expenses..................... 25.1 19.6 21.0 18.5 17.9
Selling, general and administrative........... 33.9 33.2 34.3 34.9 37.4
Depreciation and amortization................. 32.5 22.8 19.4 20.1 18.8
----- ----- ----- ----- -----
Operating income............................ 8.5 24.4 25.3 26.5 25.9
Interest expense, net......................... 31.8 23.6 20.9 22.5 18.3
Interest expense on related party long-term
debt........................................ 3.4 3.2 2.3 2.6 3.9
Amortization of financing costs............... 4.4 4.0 2.3 2.8 1.9
Minority interest............................. (5.1) (0.9) 4.4 0.6 0.3
Provision for taxes........................... -- 0.1 -- -- 0.5
----- ----- ----- ----- -----
Income (loss) before extraordinary loss on
extinguishment of debt................... (26.0) (5.6) (4.6) (2.0) 1.0
Extraordinary loss............................ -- (3.1) (0.5) -- (0.8)
----- ----- ----- ----- -----
Net income (loss)........................... (26.0)% (8.7)% (5.1)% (2.0)% 0.2%
===== ===== ===== ===== =====
OTHER DATA:
Broadcast cash flow(a)........................ 44.1% 50.7% 48.9% 50.3% 48.6%
Corporate charges............................. 3.1 3.5 4.2 3.7 3.8
----- ----- ----- ----- -----
EBITDA(b)..................................... 41.0% 47.2% 44.7% 46.6% 44.8%
===== ===== ===== ===== =====
</TABLE>
UNHP
<TABLE>
<CAPTION>
YEARS ENDED SIX MONTHS ENDED
DECEMBER 31, JUNE 30,
--------------------------------- ---------------------
1993 1994 1995 1995 1996
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
OPERATING DATA:
Net revenues.................................. 100.0% 100.0% 100.0% 100.0% 100.0%
Direct operating expenses..................... 55.0 59.2 53.7 54.5 51.7
Selling, general and administrative........... 31.1 30.7 29.6 30.2 28.5
Depreciation and amortization................. 6.8 5.8 6.7 6.9 6.9
----- ----- ----- ----- -----
Operating income............................ 7.1 4.3 10.0 8.4 12.9
Interest expense, net......................... 4.3 4.7 5.3 5.5 6.0
----- ----- ----- ----- -----
Net income (loss)........................... 2.8% (0.4)% 4.7% 2.9% 6.9%
----- ----- ----- ----- -----
OTHER DATA:
Broadcast cash flow(a)........................ 13.9% 11.6% 18.3% 16.8% 20.4%
Corporate charges............................. -- 1.5 1.6 1.5 0.5
----- ----- ----- ----- -----
EBITDA(b)..................................... 13.9% 10.1% 16.7% 15.3% 19.9%
===== ===== ===== ===== =====
</TABLE>
- ----------------------------
(a)"Broadcast cash flow" is defined as broadcast operating income before
corporate charges and depreciation and amortization. The Company has
presented broadcast cash flow data, which the Company believes are comparable
to the data provided by other companies in the industry, because such data
are commonly used as a measure of performance for broadcast companies.
However, broadcast cash flow should not be construed as an alternative to
operating income (as determined in accordance with generally accepted
accounting principles) as an indicator of operating performance, or to cash
flows from operating activities (as determined in accordance with generally
accepted accounting principles) as a measure of liquidity.
29
<PAGE> 31
(b) "EBITDA" consists of broadcast cash flow less corporate charges and is
commonly used in the broadcast industry to analyze and compare broadcast
companies on a basis of operating performance, leverage and liquidity.
EBITDA should not be construed as an alternative to operating income (as
determined in accordance with generally accepted accounting principles) as
an indicator of operating performance, or to cash flows from operating
activities (as determined in accordance with generally accepted accounting
principles) as a measure of liquidity.
SIX MONTHS ENDED JUNE 30, 1996 COMPARED TO THE SIX MONTHS ENDED JUNE 30, 1995
PCI CONSOLIDATED
Revenues. Net revenues increased to $91,420,000 for the six months ended
June 30 1996 from $82,279,000 for the same period in 1995, an increase of
$9,141,000 or 11.1%. The increase is due to higher local and national spot net
revenues of $12,092,000, led principally by Los Angeles and Miami, as well as
increases at all other O&Os except for New York, and an increase in its share of
Network net revenues of $1,899,000. These net increases were partially offset by
the Network's share of higher local and national net revenues of $4,732,000.
UTG's increase in gross advertising revenues during the six months ended June
30, 1996 primarily resulted from increased prices for advertising spots of
approximately 26%, offset by a decrease of 7% in the number of spots being sold.
A major initiative has been implemented to improve the performance of the
New York station. In addition to improvements in the station's sales and
research organizations, a significant advertising and promotional campaign has
been implemented to increase the awareness among advertisers about the New York
Hispanic community and the advertisers' ability to reach that audience through
the New York station.
Expenses. Direct operating expenses, before reduction for corporate charges
of $89,000 and $85,000, respectively, increased to $16,365,000 for the six
months ended June 30, 1996 from $15,201,000 for the same period in 1995, an
increase of $1,164,000 or 7.7%. The increase is due principally to increases in
programming and technical costs of $965,000. As a percentage of net revenues,
direct operating expenses decreased from 18.5% in 1995 to 17.9% in 1996.
Selling, general and administrative expenses, before reduction for
corporate charges of $3,395,000 in 1996 and $2,980,000 in 1995, increased to
$34,154,000 for the six months ended June 30, 1996 from $28,723,000 for the same
period in 1995, an increase of $5,431,000 or 18.9%. The increase is primarily
due to increased selling costs associated with higher sales, increases in
corporate sales support and increased research fees. As a percentage of net
revenues, selling, general and administrative expenses increased from 34.9% in
1995 to 37.4% in 1996.
Depreciation and amortization. Depreciation and amortization increased to
$17,192,000 for the six months ended June 30, 1996 from $16,537,000 for the same
period in 1995, an increase or $655,000 or 4.0%, as a result of increased
capital expenditures. As a percentage of net revenues, depreciation and
amortization decreased from 20.1% in 1995 to 18.8% in 1996.
Operating income. As a result of the factors described above, operating
income increased to $23,709,000 for the six months ended June 30, 1996 from
$21,818,000 for the same period in 1995, an increase of $1,891,000 or 8.7%. As a
percentage of net revenues, operating income decreased from 26.5% in 1995 to
25.9% in 1996.
Interest expense. Interest expense decreased to $20,300,000 for the six
months ended June 30, 1996 from $20,683,000 for the same period in 1995, a
decrease of $383,000 or 1.9%. This decrease was primarily a result of lower bank
borrowings partially offset by increased Sponsor Loan balances. As a percentage
of net revenues, interest expense decreased from 25.1% in 1995 to 22.2% in 1996.
Minority Interest. Minority interest in net income of consolidated
subsidiary decreased from $489,000 for the six months ended June 30, 1995 to
$265,000 for the same period in 1996, a decrease of $224,000 or 45.8%. Minority
interest of $489,000 for the six months ended June 30, 1995 consists of the
minority interest in the net income of subsidiary of $131,000 plus preferred
stock dividends attributable to minority stockholders of $358,000. Minority
interest of $265,000 for the six months ended June 30, 1996 consists of the
minority interest in the net income of subsidiary of $174,000 plus preferred
stock dividends attributable to minority stockholders of $91,000.
30
<PAGE> 32
Extraordinary Loss. During the six months ended June 30, 1996, UTG
purchased at a premium $12,650,000 face amount of the Senior Subordinated Notes
due 2001. The purchase resulted in an extraordinary loss, net of tax benefit, of
$681,000, including the write-off of the related deferred financing costs. As a
percentage of net revenues, the loss was .7%.
Net Income/Loss. As a result of the above factors, PCI generated net income
of $214,000 for the six months ended June 30, 1996 as compared to a net loss of
$1,674,000 for the same period in 1995, an improvement of $1,888,000. As a
percentage of net revenues, net income increased from a loss of 2.0% in 1995 to
income of .2% in 1996.
Broadcast Cash Flow. As a result of the above factors, broadcast cash flow
increased to $44,385,000 for the six months ended June 30, 1996 from $41,420,000
for the same period in 1995, an increase of $2,965,000 or 7.2%. As a percentage
of net revenues, broadcast cash flow decreased from 50.3% in 1995 to 48.6% in
1996.
Corporate Charges. Corporate charges increased to $3,484,000 for the six
months ended June 30, 1996 from $3,065,000 for the same period in 1995, an
increase of $419,000 or 13.7%. The increase was primarily due to the accrual of
additional compensation costs. These charges are comprised primarily of
corporate costs that would be duplicated and therefore eliminated if Univision
were acquired by another broadcasting company. As a percentage of net revenues,
corporate charges increased from 3.7% in 1995 to 3.8% in 1996.
EBITDA. As a result of the above factors, EBITDA increased to $40,901,000
for the six months ended June 30, 1996 from $38,355,000 for the same period in
1995, an increase of $2,546,000 or 6.6%. As a percentage of net revenues, EBITDA
decreased from 46.6% in 1995 to 44.7% in 1996.
UNHP CONSOLIDATED
Revenues. Net revenues increased to $79,436,000 for the six months ended
June 30, 1996 from $70,419,000 for the same period in 1995, an increase of
$9,017,000 or 12.8% This increase resulted from the Network's higher share of
UTG's local and national spot net revenues of $4,732,000 as well as higher
Network advertising net revenues of $5,680,000, that were partially offset by
UTG's share of higher Network sales of $1,899,000. The Network's increase in
gross advertising revenues during the six months ended June 30, 1996 resulted
from a combination of rate increases and increased volume on previously lower
demand dayparts as compared to the same period in 1995.
Expenses. Direct operating expenses increased to $41,005,000 for the six
months ended June 30, 1996 from $38,379,000 for the same period in 1995, an
increase of $2,626,000 or 6.8%. This increase was primarily due to a higher
license fee payable to Televisa and Venevision under the Program License
Agreements of $2,422,000 based on higher Combined Net Time Sales. As a
percentage of net revenues, direct expenses decreased from 54.5% in 1995 to
51.7% in 1996.
Selling, general and administrative expenses, before reduction for
corporate charges of $430,000 for the six months ended June 30, 1996 and
$1,060,000 for the same period in 1995, increased to $22,648,000 for the six
months ended June 30, 1996 from $21,274,000 for the same period in 1995, an
increase of $1,374,000 or 6.5%. The increase results primarily from a $1,045,000
increase in sales force expense and a $484,000 increase in the management fee
payable to the Principal Stockholders, offset partially by the timing of various
expenditures for all other general and administrative functions of $157,000. As
a percentage of net revenues, selling, general and administrative expenses
decreased from 30.2% in 1995 to 28.5% in 1996.
Depreciation and amortization. Depreciation and amortization increased to
$5,513,000 for the six months ended June 30, 1996 from $4,850,000 for the same
period in 1995, an increase of $663,000 or 13.7%. The increase is primarily due
to the addition of two additional transponders capitalized in January 1996. As a
percentage of net revenues, depreciation and amortization remained at 6.9% in
1995 and 1996.
Operating income. As a result of the factors described above, UNHP
generated operating income of $10,270,000 for the six months ended June 30, 1996
compared $5,916,000 for the same period in 1995, an increase of $4,354,000 or
73.6%. As a percentage of net revenues, operating income increased from 8.4% in
1995 to 12.9% in 1996.
Interest expense. Interest expense increased to $4,799,000 for the six
months ended June 30, 1996 from $3,851,000 for the same period in 1995, an
increase of $948,000 or 24.6%. The increase was due to the addition
31
<PAGE> 33
of the two Network transponder leases. As a percentage of net revenues, interest
expense increased from 5.5% in 1995 to 6.0% in 1996.
Net income. As a result of the above factors, UNHP generated net income of
$5,471,000 for the six months ended June 30, 1996 as compared to net income of
$2,065,000 for the same period in 1995, an improvement of $3,406,000 or 164.9%.
As a percentage of net revenues, net income increased from 2.9% in 1995 to 6.9%
in 1996.
Broadcast Cash Flow. As a result of the above factors, broadcast cash flow
increased to $16,213,000 for the six months ended June 30, 1996 from $11,826,000
for the same period in 1995, an increase of $4,387,000 or 37.1%. As a percentage
of net revenues, broadcast cash flow increased from 16.8% in 1995 to 20.4% in
1996.
Corporate Charges. Corporate charges decreased to $430,000 for the six
months ended June 30, 1996 from $1,060,000 for the same period in 1995, a
decrease of $630,000 or 59.4%. This decrease was primarily due to reduced costs
of the CEO position. These charges are comprised primarily of corporate costs
that would be duplicated and therefore eliminated if Univision were acquired by
another broadcasting company. As a percentage of net revenues, corporate charges
decreased from 1.5% in 1995 to .5% in 1996.
EBITDA. As a result of the above factors, EBITDA increased to $15,782,000
for the six months ended June 30, 1996 from $10,766,000 for the same period in
1995, an increase of $5,016,000 or 46.6%. As a percentage of net revenues,
EBITDA increased from 15.3% in 1995 to 19.9% in 1996.
YEAR ENDED DECEMBER 31, 1995 ("1995") COMPARED TO THE YEAR ENDED DECEMBER 31,
1994 ("1994")
PCI CONSOLIDATED
Revenues. Net revenues increased to $173,108,000 in 1995 from $139,007,000
in 1994, an increase of $34,101,000 or 24.5%. Of this increase, $16,124,000 or
47.3% is attributable to the acquisition of the Chicago and Houston stations,
which were acquired in the third quarter of 1994. This 47.3% increase is
attributable to the higher local and national spot net revenues of $14,162,000
and the stations' share of Network net revenues of $8,651,000, partially offset
by the Network's share of higher local and national net revenues from Chicago
and Houston of $6,689,000.
The remaining nine O&Os reflected higher local and national spot net
revenues of $15,801,000, led principally by Los Angeles and Miami, and an
increase in the O&Os' allocated share of Network's net revenues of $7,934,000.
These increases were partially offset by the Network's share of higher local and
national net revenues from the nine stations of $6,573,000. Since 1994 included
allocated Network compensation for the World Cup of $5,200,000, the year-to-year
comparable increase in the UTG share of Network net revenue was $21,785,000.
Excluding the increase in net revenues attributable to the Chicago and Houston
station acquisitions in late 1994, the increase in net revenues would have been
$17,977,000 or 13.3% for 1995.
The increase in gross advertising revenues during 1995 results from a
combination of increased prices for advertising spots of approximately 25%
offset in part by approximately 10% fewer number of spots being sold.
Expenses. Direct operating expenses, before reduction for corporate charges
of $170,000 and $150,000 for the years ended December 31, 1995 and 1994,
respectively, increased to $36,363,000 in 1995 from $27,279,000 in 1994, an
increase of $9,084,000 or 33.3%. Of this increase, $5,048,000 is attributable to
the acquisition of the Chicago and Houston stations in 1994 and the remaining
increase is due to news coverage, technical costs, and station promotional and
production costs. As a percentage of net revenues, direct operating expenses
increased from 19.6% in 1994 to 21.0% in 1995.
Selling, general and administrative expenses, before reduction for
corporate charges of $7,130,000 and $4,750,000 for the years ended December 31,
1995 and 1994, respectively, increased to $59,384,000 in 1995 from $46,145,000
in 1994, an increase of $13,239,000 or 28.7%. Of this increase, $6,700,000 or
50.6% is attributable to the acquisition of the Chicago and Houston stations in
1994. The remaining increase is primarily a result of increased selling and
research costs of $3,700,000 associated with increased sales and staff levels,
increased management bonuses of $1,800,000, and increased legal costs of
$3,000,000 (primarily resulting from the settlement of a lawsuit), partially
offset by severance associated with operational changes of
32
<PAGE> 34
$2,100,000. As a percentage of net revenues, selling, general and administrative
expenses increased from 33.2% in 1994 to 34.3% in 1995.
Depreciation and Amortization. Depreciation and amortization increased to
$33,528,000 in 1995 from $31,719,000 in 1994, an increase of $1,809,000 or 5.7%.
The increase is due primarily to goodwill amortization and depreciation
associated with the station acquisitions. As a percentage of net revenues,
depreciation and amortization decreased from 22.8% in 1994 to 19.4% in 1995.
Operating Income. As a result of the factors described above, operating
income increased to $43,833,000 in 1995 from $33,864,000 in 1994, an increase of
$9,969,000 or 29.4%. As a percentage net revenues, operating income increased
from 24.4% in 1994 to 25.3% in 1995.
Interest Expense. Interest expense increased to $40,222,000 in 1995 from
$37,246,000 in 1994, an increase of $2,976,000 or 8.0% . The increase is
primarily a result of higher Sponsor Loan balances and higher interest rates
which were partially offset by lower borrowing balances on the Old Bank
Facility. As a percentage of net revenues, interest expense decreased from 26.8%
in 1994 to 23.2% in 1995.
Minority Interest. Minority interest changed by $8,894,000 from a
$1,202,000 minority interest in net loss of consolidated subsidiary in 1994 to a
$7,692,000 minority interest in net income of consolidated subsidiary in 1995.
Minority interest of $1,202,000 in 1994 consists of the minority interest in the
net loss of subsidiary of $1,917,000 offset by preferred stock dividends
attributable to minority stockholders of $715,000. Minority interest of
$7,692,000 in 1995 consists of the minority interest in the net income of
subsidiary of $1,216,000 and the preferred stock dividends attributable to
minority stockholders of $8,908,000.
Extraordinary Loss. For the year 1995, during the quarters ended September
30, 1995 and December 31, 1995, UTG purchased, at a premium, $4,050,000 and
$3,500,000 face amount, respectively of Senior Subordinated Notes. The purchases
resulted in extraordinary losses of $433,000 and $368,000, respectively,
including the write off of the related deferred financing costs. For the year
1994, during the quarters ended June 30, 1994 and December 31, 1994, UTG
purchased at a premium $37,200,000 and $3,200,000 face amount, respectively, of
its Senior Subordinated Notes. The purchases resulted in extraordinary losses of
$4,081,000 and $240,000, respectively, including the write off of the related
deferred financing costs. As a percentage of net revenues, extraordinary losses
decreased from 3.1% in 1994 to 0.5% in 1995.
Net Loss. As a result of the above factors, PCI generated a net loss of
$8,807,000 in 1995 as compared to a net loss of $12,060,000 in 1994, an
improvement of $3,253,000 or 27.0%. As a percentage of net revenues, the net
loss decreased from 8.7% in 1994 to 5.1% in 1995.
Broadcast Cash Flow. As a result of the above factors, broadcast cash flow
increased in 1995 to $84,661,000 from $70,483,000 in 1994, an increase of
$14,178,000 or 20.1%. As a percentage of net revenues, broadcast cash flow
decreased from 50.7% in 1994 to 48.9% in 1995.
Corporate Charges. Corporate charges increased to $7,300,000 in 1995 from
$4,900,000 in 1994, an increase of $2,400,000 or 49.0%. This increase is
primarily attributable to additions of personnel in sales and marketing of
$1,000,000, a fully staffed legal department of $400,000, corporate staff
salaries of $400,000, and higher management bonuses of $750,000. As a percentage
of net revenues, corporate charges increased from 3.5% in 1994 to 4.2% in 1995.
EBITDA. As a result of the above, EBITDA increased in 1995 to $77,361,000
from $65,583,000 in 1994, an increase of $11,778,000 or 18.0%. As a percentage
of net revenues, EBITDA decreased from 47.2% in 1994 to 44.7% in 1995.
UNHP CONSOLIDATED
Revenues. Net revenues increased to $148,231,000 in 1995 as compared to
$132,746,000 in 1994, an increase of $15,485,000 or 11.7%. The increase resulted
primarily from higher Network advertising revenues of $17,684,000, net of agency
commissions. Furthermore, the Network had increased revenues of $13,262,000 from
its share of the O&Os local and national spot revenues which were offset by the
O&Os share of higher Network sales of $16,585,000. Net revenue reflected in 1994
is net of station compensation to UTG of $5,200,000 for coverage of the World
Cup. Additionally, due to a change in the formula with substantially all of the
Affiliated Stations, the Network received $6,571,000 less from its share of
Affiliated Stations revenues in 1995 offset by $8,048,000 less in Affiliated
Stations share of Network sales during that year.
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The increase in gross advertising revenues during 1995 results almost
entirely from an increase in prices for advertising spots sold.
Expenses. Direct operating expenses increased to $79,628,000 in 1995 from
$78,616,000 in 1994, an increase of $1,012,000 or 1.3%. The principal reason for
the increase was attributable to an increase in license fees of $11,586,000 due
to increased revenues and World Cup replacement programming of $1,816,000,
offset by the absence of costs to carry the World Cup games of $12,921,000. As a
percentage of net revenues, direct operating expenses decreased from 59.2% in
1994 to 53.7% in 1995.
Selling, general and administrative expenses, before reduction for
corporate charges of $2,400,000 and $2,000,000 for the years ended December 31,
1995 and 1994, respectively, increased to $43,917,000 in 1995 from $40,749,000
in 1994, an increase of $3,168,000 or 7.8%. The increase is primarily a result
of higher Management Fees to the Principal Stockholders of $2,318,000 and higher
sales compensation due to increased Network sales. As a percentage of net
revenues, selling general and administrative expenses decreased from 30.7% in
1994 to 29.6% in 1995.
Depreciation and Amortization. Depreciation and amortization expenses
increased to $9,971,000 in 1995 from $7,702,000 in 1994, an increase of
$2,269,000 or 29.5%. Depreciation increased by $2,262,000 due to a new Network
transponder capitalized in January 1995. As a percentage of net revenues,
depreciation and amortization increased from 5.8% in 1994 to 6.7% in 1995.
Operating Income. As a result of the factors described above, operating
income increased to $14,715,000 in 1995 from $5,679,000 in 1994 an increase of
$9,036,000 or 159.1%. As a percentage of net revenues, operating income
increased from 4.3% in 1994 to 10.0% in 1995.
Interest Expense. Interest expense increased to $7,864,000 in 1995 from
$6,233,000 in 1994, an increase of $1,631,000 or 26.2%. The increase is
primarily due to the interest portion of the capital lease related to the
Network's transponder launched during 1995. As a percentage of net revenues,
interest expense increased from 4.7% in 1994 to 5.3% in 1995.
Net Income/Loss. As a result of the above factors, UNHP generated net
income of $6,851,000 in 1995 as compared to a net loss of $554,000 in 1994, an
improvement of $7,405,000. As a percentage of net revenues, net income increased
from a loss of 0.4% in 1994 to income of 4.7% in 1995.
Broadcast Cash Flow. As a result of the above factors, broadcast cash flow
increased in 1995 to $27,086,000 from $15,381,000 in 1994, an increase of
$11,705,000 or 76.1%. As a percentage of net revenues, broadcast cash flow
increased from 11.6% in 1994 to 18.3% in 1995.
Corporate Charges. Corporate charges increased to $2,400,000 in 1995 from
$2,000,000 in 1994, an increase of $400,000 or 20.0%. This increase is primarily
attributable to increased compensation. As a percentage of net revenues,
corporate charges increased from 1.5% in 1994 to 1.6% in 1995.
EBITDA. As a result of the above, EBITDA increased in 1995 to $24,686,000
from $13,381,000 in 1994, an increase of $11,305,000 or 84.5%. As a percentage
of net revenues, EBITDA increased from 10.1% in 1994 to 16.7% in 1995.
YEAR ENDED DECEMBER 31, 1994 ("1994") COMPARED TO THE YEAR ENDED DECEMBER 31,
1993 ("1993")
PCI CONSOLIDATED
Revenues. Net revenues increased to $139,007,000 in 1994 from $104,675,000
in 1993, an increase of $34,332,000 or 32.8%. Of this increase, approximately
$9,300,000 or 27.1%, is attributable to the increase in sharing of revenues with
UNHP from 57% to 62% of net advertising revenues, and approximately $3,800,000
or 11.1% is attributable to the acquisition of the Chicago and Houston stations
acquired in the third quarter of 1994. In addition, net revenues in 1994
included $5,200,000 in compensation from UNHP to carry 52 World Cup matches in
June and July pursuant to an agreement between UTG and UNHP. The remainder of
the increase primarily results from higher local and national spot net revenues
of $24,500,000 which increased by 25.1% reflecting increases at all the O&Os.
These increases were partially offset by the Network's share of
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<PAGE> 36
higher local and national net revenues of $4,400,000. If the Affiliation
Agreements had not been amended, net revenues would have increased by 22.8%.
Offsetting the above net increase was a decrease in miscellaneous revenues in
each of UTG's large markets and elimination of revenues from certain special
event programming in Los Angeles, all of which totaled approximately $3,500,000.
Expenses. Direct operating expenses, before reduction for corporate charges
of $150,000 and $140,000 for the years ended December 31, 1994 and 1993,
respectively, increased to $27,279,000 in 1994 from $26,247,000 in 1993, an
increase of $1,032,000 or 3.9%. The increase is due primarily to news coverage
and technical costs in addition to the Chicago and Houston station acquisitions
which represented $345,000 of the increase during 1994, offset in part by the
elimination of certain special event programming costs. As a percentage of net
revenues, direct operating expenses decreased from 25.1% in 1993 to 19.6% in
1994.
Selling, general and administrative expenses, before reduction for
corporate charges of $4,750,000 and $3,060,000 for the years ended December 31,
1994 and 1993, respectively, increased to $46,145,000 in 1994 from $35,472,000
in 1993, an increase of $10,673,000 or 30.1%. This increase is due primarily to
increased selling costs of $2,850,000 resulting from higher sales and additional
selling staff, increased management bonuses of $2,000,000, a full year of UTG's
legal department of $1,300,000 and severance associated with operational changes
of $2,100,000. As a percentage of net revenues, selling, general and
administrative expenses decreased from 33.9% in 1993 to 33.2% in 1994.
Depreciation and Amortization. Depreciation and amortization decreased to
$31,719,000 in 1994 from $33,970,000 in 1993, a decrease of $2,251,000 or 6.6%.
Included in 1993 was the amortization of pre-sold advertising of $4,734,000 that
was fully amortized in the first quarter of 1993. This decline was partially
offset by the additional amortization related to the Chicago and Houston
acquisitions. As a percentage of net revenues, depreciation and amortization
expenses decreased from 32.5% in 1993 to 22.8% in 1994.
Operating Income. As a result of the factors described above, operating
income increased to $33,864,000 in 1994 from $8,986,000 in 1993, an increase of
$24,878,000 or 276.9%. As a percentage of net revenues, operating income
increased from 8.5% in 1993 to 24.4% in 1994.
Interest Expense. Interest Expense increased to $37,246,000 in 1994 from
$36,896,000 in 1993, an increase of $350,000 or 1.0%. The increase is primarily
a result of higher interest on Sponsor Loans and related party debt, offset in
part by lower interest on bank borrowings in 1994 as compared to 1993. As a
percentage of net revenues, interest expense decreased from 35.2% in 1993 to
26.8% in 1994.
Minority Interest. Minority interest in net loss of consolidated subsidiary
decreased to $1,202,000 for 1994 from $5,309,000 for 1993, an increase of
$4,107,000 or 77.4%. Minority interest of $5,309,000 in 1993 consists of the
minority interest in the net loss of subsidiary of $5,894,000 offset by
preferred stock dividends attributable minority stockholders of $585,000.
Minority interest of $1,202,000 in 1994 consists of the minority interest in the
net loss of subsidiary of $1,917,000 offset by preferred stock dividends
attributable to minority stockholders of $715,000.
Extraordinary Loss. For the year 1994, during the quarters ended June 30,
1994 and December 31, 1994, UTG purchased at a premium $37,200,000 and
$3,200,000 face amount, respectively, of its Senior Subordinated Notes. The
purchases resulted in extraordinary losses of $4,081,000 and $240,000,
respectively, including the write off of the related deferred financing costs.
As a percentage of net revenues, the extraordinary loss was 3.1% in 1994.
Net Loss. As a result of the above factors, PCI generated a net loss of
$12,060,000 in 1994 compared to a net loss of $27,181,000 in 1993, a decrease of
$15,121,000 or 55.6%. As a percentage of net revenues, the net loss decreased
from 26.0% in 1993 to 8.7% in 1994.
Broadcast Cash Flow. As a result of the above factors, broadcast cash flow
increased in 1994 to $70,483,000 from $46,156,000 in 1993, an increase of
$24,327,000 or 52.7%. As a percentage of net revenues, broadcast cash flow
increased from 44.1% in 1993 to 50.7% in 1994.
Corporate Charges. Corporate charges increased to $4,900,000 in 1994 from
$3,200,000 in 1993, an increase of $1,700,000 or 53.1%. This increase is
primarily attributable to additions in salary, bonus and travel
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<PAGE> 37
and the staffing of the legal department. As a percentage of net revenues,
corporate charges increased from 3.1% in 1993 to 3.5% in 1994.
EBITDA. As a result of the above, EBITDA increased in 1994 to $65,583,000
from $42,956,000 in 1993, an increase of $22,627,000 or 52.7%. As a percentage
on net revenues, EBITDA increased from 41.0% in 1993 to 47.2% in 1994.
UNHP CONSOLIDATED
Revenues. Net revenues increased to $132,746,000 in 1994 from $109,365,000
in 1993, an increase of $23,381,000 or 21.4%. The increase resulted primarily
from higher Network advertising net revenues of $33,400,000 of which the World
Cup games represented $17,800,000 or 53.3%. Furthermore, the Network had
increased revenues from its share of the O&Os' local and national spot revenues
of $4,400,000. The change in the sharing formula from 1993 to 1994 reduced this
shared amount by $6,200,000. The Network's share of Affiliated Stations revenues
increased by $1,400,000 in 1994. These increases were offset by $5,200,000 of
compensation paid to UTG to carry the World Cup games. In addition, the O&Os'
share of Network sales increased by $9,300,000, of which $4,300,000 was
attributable to the change in the sharing formula. The Affiliated Stations share
of Network sales increased by $2,400,000 in 1994 and all other miscellaneous
revenues were up $1,300,000. If the Affiliation Agreements had not been amended,
net revenues would have increased 31%.
Expenses. Direct operating expenses increased to $78,616,000 in 1994 from
$60,151,000 in 1993, an increase of $18,465,000 or 30.7%. The increase is
primarily attributable to World Cup related expenses of $12,921,000, which
consisted of rights fees and production costs and an increase in license fees of
$5,369,000, attributable to the increased revenues. As a percentage of net
revenues, direct operating expenses increased from 55.0% in 1993 to 59.2% in
1994.
Selling, general and administrative expenses, before reduction for
corporate charges of $2,000,000 and $0 for the years ended December 31, 1994 and
1993, respectively, increased to $40,749,000 in 1994 from $34,036,000 in 1993,
an increase of $6,713,000 or 19.7%. This increase is primarily a result of
additions to the management staff and general salary increases at a cost of
$2,000,000, increased management bonus awards of $1,000,000, additional
contributions of $200,000 and higher management fees to the Principal
Stockholders of $1,200,000. As a percentage of net revenues, selling, general
and administrative expenses decreased from 31.1% in 1993 to 30.7% in 1994.
Depreciation and Amortization. Depreciation and amortization expenses
increased to $7,702,000 in 1994 from $7,413,000 in 1993, an increase of $289,000
or 3.9%. Depreciation increased by $905,000 due to a new Network transponder
launched in March of 1994. Amortization decreased by $626,000 as a result of a
decrease in the amortization of pre-sold advertising of $4,626,000 (which became
fully amortized in 1993) offset by an increase in the amortization of the
Galavision management agreement with Televisa of $4,000,000 (which became
effective in 1994). As a percentage of net revenues, depreciation and
amortization expenses decreased from 6.8% in 1993 to 5.8% in 1994.
Operating Income. As a result of the factors described above, operating
income decreased to $5,679,000 in 1994 from $7,765,000 in 1993, a decrease of
$2,086,000 or 26.9%. As a percentage of net revenues, operating income decreased
from 7.1% in 1993 to 4.3% in 1994.
Interest Expense. Interest expense increased to $6,233,000 in 1994 from
$4,749,000 in 1993, an increase of $1,484,000 or 31.2%. The increase is
primarily due to the interest portion of the capital lease related to the
Network's transponder launched during 1994. As a percentage of net revenues,
interest expense increased from 4.3% in 1993 to 4.7% in 1994.
Net Income (Loss). As a result of the above factors, UNHP generated a loss
of $554,000 in 1994 compared to net income of $3,016,000 in 1993, a decrease of
$3,570,000, or 118.4%. As a percentage of net revenues, net income decreased
from 2.8% in 1993 to (0.4%) in 1994.
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Broadcast Cash Flow. As a result of the above factors, broadcast cash flow
increased in 1994 to $15,381,000 from $15,178,000 in 1993, an increase of
$203,000 or 1.3%. As a percentage of net revenues, broadcast cash flow decreased
from 13.9% in 1993 to 11.6% in 1994.
Corporate Charges. Corporate charges increased to $2,000,000 in 1994 from
$0 in 1993. This increase is attributable to salary, bonus and travel for
executives previously paid by the partners. As a percentage of net revenues,
corporate charges increased from 0% in 1993 to 1.5% in 1994.
EBITDA. As a result of the above, EBITDA decreased in 1994 to $13,381,000
from $15,178,000 in 1993, a decrease of $1,797,000 or 11.8%. As a percentage on
net revenues, EBITDA decreased from 13.9% in 1993 to 10.1% in 1994.
PCI AND UNHP LIQUIDITY AND CAPITAL RESOURCES
Univision's primary source of cash flow is its broadcasting operations.
Funds for debt service, capital expenditures and operations historically have
been provided by income from operations and by borrowings.
The proceeds of the Offering and borrowings under the New Bank Facility,
along with cash flow from operations, are expected to provide the resources
necessary to repay the amounts owing under and to terminate the Old Bank
Facility, to defease the Senior Subordinated Notes, make a $100 million
distribution and payment to the Network partners, pay all outstanding principal
and accrued interest on all amounts loaned by the Principal Stockholders to UTG
as Sponsor Loans, reclassify the preferred stock and pay accrued dividends
thereon and repay other related party debt, pay the Galavision note, and to fund
the Entravision investment. Additional amounts under the New Bank Facility,
together with cash flow from operations, will be used for debt service, capital
expenditures, working capital and other general corporate purposes.
Capital expenditures, net of dispositions, totaled $11,109,000 and
$7,017,000 (excluding capitalized transponder lease obligations) for the six
month periods ended June 30, 1996 and 1995, respectively. Univision anticipates
that total capital expenditures for 1996 will be approximately $27,000,000. In
addition to normal capital maintenance and several tower and antenna
replacements, the Company is also in the process of upgrading and relocating
several of its television station facilities. Capital spending in 1997 may
approximate $20,000,000 to $24,000,000 pending decisions on station relocations,
while expenditures for maintenance and replacement in 1998 and 1999 are expected
to be approximately $15,000,000 plus the impact of inflation each year.
In connection with the Reorganization, the Company expects to enter into
the New Bank Facility with a syndicate of commercial banks and other lenders.
The New Bank Facility will consist of a $400 million amortizing term loan (the
"Term Facility") with a final maturity of December 31, 2003 and a $200 million
reducing revolving credit facility (the "Revolving Credit Facility") maturing on
the same date. The New Bank Facility will also permit the lenders thereunder to
advance up to an additional $250 million of term loans (the "Incremental
Facility") although there are no commitments at this time to lend any such
additional amounts.
The Term Facility will amortize quarterly commencing in 1997 with $40
million required to be repaid during 1997. The Revolving Credit Facility will
have quarterly scheduled reductions in availability beginning in 1999. If any
loans are made available under the Incremental Facility, such loans will be
amortized beginning on March 31, 1999 and will be repaid in full on or before
August 31, 2004.
In addition to the scheduled amortization of the Term Facility and
scheduled reductions of the Revolving Credit Facility described above, 66 2/3%
of "excess cash flow" of the Company (50% if certain leverage tests are
satisfied) will be applied each year first to ratably reduce loans made under
the Term Facility and the Incremental Facility and thereafter to reduce the
availability under the Revolving Credit Facility. In addition, proceeds from the
sale or other disposition of assets outside of the ordinary course of business
and 80% of the proceeds of equity offerings by the Company (other than the
Offering) will be similarly applied. Any such mandatory prepayments will ratably
reduce each remaining installment or scheduled reduction of the Term Facility,
the Revolving Credit Facility or the Incremental Facility, as the case may be.
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The New Bank Facility may be voluntarily prepaid by the Company at any time
without premium or penalty.
Loans made under the New Bank Facility will bear interest at rates
determined by reference to the ratio of the Company's total indebtedness to
EBITDA for the four fiscal quarters most recently concluded (the "Leverage
Ratio"). Interest rates will range from a reserve-adjusted Eurodollar rate plus
0.75% to 1.50% per annum. The Company will have the option to elect a prime rate
also determined by reference to the Leverage Ratio. Under such option interest
rates will range from the prime rate to the prime rate plus 0.25% per annum.
The New Bank Facility will be guaranteed by the Company's subsidiaries and
will be secured by a security interest in substantially all of the personal
property assets of the Company and its subsidiaries (subject to limitations of
federal law in the case of FCC licenses of the O&Os).
The New Bank Facility will contain limitations on the incurrence of debt
and liens by the Company and its subsidiaries, the payment of dividends and the
disposition of assets, financial performance tests and other restrictions
typical of leveraged credits.
In addition to customary events of default, it will be an event of default
if a change of control occurs (defined as a person or person other than A.
Jerrold Perenchio or his permitted transferees gaining voting control of the
Company).
Financing activities to fund Univision's operations are anticipated to be
favorably impacted by the increased availability of funds under the New Bank
Facility, partially offset by additional cash requirements for the New Bank
Facility in the form of debt acquisition costs, additional quarterly principal
payments and monthly interest as contrasted with semi-annual interest payments
on the Senior Subordinated Notes and deferred interest on the Sponsor Loans.
The Company expects to explore both Spanish-language television and other
media acquisition opportunities to complement and capitalize on the Company's
existing business and management. The purchase price for such acquisitions may
be paid (i) with cash derived from operating cash flow, proceeds available under
the New Bank Facility or proceeds from future debt or equity offerings or (ii)
with equity or debt securities of the Company or (iii) with any combination
thereof.
The Company has a series of long term contracts for its O&Os and the
Network with Nielsen Media Research through the end of 1999 requiring total
payments of approximately $22,700,000.
The management committee of the Network from time to time has considered
which programs are to be produced under the Program Cost Sharing Agreement. This
agreement is to be terminated upon completion of the Reorganization. For the
period commencing January 1, 1996 through the consummation of this Offering, the
Network, Televisa and Venevision have agreed that in lieu of cash payments under
the Program Cost Sharing Agreement, Univision will instead receive payment in
the form of Sponsor Loans having a principal amount equal to the costs that
would have been funded by Televisa and Venevision under the Program Cost Sharing
Agreement. As a result, the Company was not reimbursed in cash for these
programming expenditures of approximately $9,700,000 during the six months ended
June 30, 1996. For the balance of 1996, prior to the Reorganization, Univision
will similarly not be reimbursed in cash for such programming costs of
approximately $5,000,000 per quarter. Consequently, these programming costs will
be funded through the operations of the Company.
As a result of net operating loss carryforwards attributable to the
Acquisition, net operating losses since the Acquisition and anticipated tax
consequences of the Reorganization, the Company will have available a deferred
tax asset of approximately $90,000,000 to offset future taxes arising from
operations.
Future free cash flows of the Company will be substantially different from
historical free cash flows after the Reorganization and revision of the various
agreements among the Principal Stockholders due to the (i) amendments in the
Program License Agreements, (ii) discontinuance of Sponsor Loans to the Company,
(iii) elimination of the management fee, (iv) termination of the Program Cost
Sharing Agreement, and (v) changes in debt and capital structure.
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SEASONALITY
The advertising revenues of Univision vary over the calendar year.
Historically, approximately 30% of total advertising revenues have been
generated in the fourth quarter and 20% in the first quarter with the remainder
approximately equally split between the second and third quarters. Because of
the relatively fixed nature of the costs of the Company's business, seasonal
variations in operating income are more pronounced than those of revenues.
IMPACT OF INFLATION
Management believes that the impact of inflation on the Company's business
has not been material.
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BUSINESS
Univision is the leading Spanish-language television broadcaster in the
U.S., reaching more than 92% of all Hispanic Households and having an
approximate 77% share of the U.S. Spanish-language network television audience.
The Company's Network, which is the most watched television network (English- or
Spanish-language) among Hispanic Households, provides the Univision Affiliates
with 24 hours per day of Spanish-language programming with a prime time schedule
of substantially all first run programming (i.e., no reruns) throughout the
year. As a leading, vertically-integrated television broadcaster, Univision owns
and operates 11 full-power and seven low-power UHF stations, representing
approximately 78% of its Network broadcast distribution. The full-power O&Os are
located in 11 of the top 14 DMAs in terms of numbers of Hispanic
Households -- Los Angeles, New York, Chicago, Miami, Houston, San Francisco, San
Antonio, Dallas, Fresno, Albuquerque and Phoenix. The Company has Affiliation
Agreements with an additional nine full-power and 14 low-power Affiliated
Stations and approximately 740 Cable Affiliates. Each of the Company's fullpower
O&Os and Affiliated Stations ranks first in Spanish-language television
viewership in its DMA. The Company also owns Galavision, a Spanish-language
cable network that has approximately 1.8 million Hispanic subscribers,
representing approximately 47% of all Hispanic Households that subscribe to
cable television.
The Company believes that the breadth and diversity of its programming
provides it with a competitive advantage over both Spanish-language broadcasters
and English-language broadcasters in appealing to Hispanic viewers. The
Company's programming is similar to that of major English-language networks and
includes novelas (long-term mini-series), national and local newscasts, variety
shows, children's programming, mini-series, musical specials, movies, sporting
events and public affairs programs. The Program License Agreements provide the
Company with unparalleled long-term access to first rate programming produced by
Televisa and Venevision. Televisa-produced novelas are popular throughout the
world and are among the Company's highest rated programs. Univision also
produces a variety of programs specifically tailored to meet the tastes,
preferences and information needs of the Hispanic audience, including national
and local news and the highly successful programs Sabado Gigante, Cristina and
Primer Impacto. The Company has also televised World Cup Soccer since 1978,
including the widely watched 1994 World Cup, and recently began televising the
Sunday "Game of the Week" for Major League Soccer.
In 1992, Perenchio, Televisa and Venevision formed the Company and UNHP,
which acquired UTG and the Network, respectively, in December 1992, bringing
extensive broadcasting, programming and production experience to Univision. Mr.
Perenchio has over 25 years of experience in the U.S. media and communications
industry and has been the chief executive officer or owner of a number of
successful entities, including Chartwell Artists, Tandem Productions, Inc.,
Embassy Communications and Loews Theaters. Mr. Perenchio also owned and operated
Spanish-language television stations in Los Angeles and New York from 1975 to
1986. Televisa, which is the world's largest producer of Spanish-language
television programs, is the leading media and entertainment company in Mexico
with an approximate 80% share of Mexico's viewing audience. Venevision is
Venezuela's leading television network with an approximate 59% share of its
viewing audience.
Since the Acquisition, the Company's operating performance has improved
significantly with combined net revenues and pro forma EBITDA increasing to $321
million and $112 million, representing compound annual growth rates of 16% and
36%, respectively, from the 1992 operating results of the Company and its
predecessor. In addition, from November 1992 to May 1996 the Company increased
its audience share of Spanish-language network television viewing from 57% to
77% and increased its share of the 20 most widely watched programs among
Hispanic Households from 30% to 90%.
Univision attributes its recent success to several factors, including
increased emphasis on popular, high quality programming produced by Televisa,
Univision and Venevision, contracting with Nielsen to develop more accurate,
credible rating systems to measure Hispanic audience viewership, increasing
acceptance by advertisers of Spanish-language television, continued growth of
the Hispanic audience and the strengthening of its management team with
executives and sales managers with extensive English-language television and
advertising experience. The Company expects to continue to realize strong
revenue and EBITDA growth by capitalizing on the expected continued growth in
advertising expenditures targeted at the rapidly expanding Hispanic population.
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<PAGE> 42
The Company believes that its knowledge of, and experience with, Hispanic
audiences will enable it to identify strategic acquisitions and successfully
integrate them into the Company's operations. Since the Acquisition, the Company
has acquired full-power stations in two important markets, Chicago and Houston,
and used its management expertise, programming and brand identity to
substantially improve the Company's performance in those DMAs. In addition, the
Company has signed a letter of intent with Entravision to make a $10 million
investment in the form of a note and an option to acquire a 25% equity interest
in Entravision. Entravision owns seven and has agreements to acquire two of the
Affiliated Stations, representing approximately 12% of the Network's
distribution. To complement and capitalize on the Company's existing business
and management strengths, the Company expects to explore both Spanish-language
television and other media acquisition opportunities.
THE HISPANIC AUDIENCE IN THE UNITED STATES
Management believes that Spanish-language television, in general, and the
Company, in particular, have benefited and will continue to benefit from a
number of factors, including projected Hispanic population growth, high
Spanish-language retention among Hispanics, increasing Hispanic buying power and
greater advertiser spending on Spanish-language media.
Hispanic Population Growth and Concentration. The Company's audience
consists almost exclusively of Hispanics, one of the most rapidly growing
segments of the U.S. population. The 1996 Hispanic population is estimated to be
28.4 million (10.7% of the total U.S. population), an increase of 19.7% from
23.7 million (9.5% of the total U.S. population) in 1990. The overall Hispanic
population is growing at approximately five times the rate of the non-Hispanic
U.S. population and is expected to grow to 32.0 million and 41.5 million (11.6%
and 13.9% of the total U.S. population) in 2000 and 2010, respectively.
Approximately 50% of all Hispanics are located in the seven U.S. cities with the
largest Hispanic populations, and Univision owns stations in each of these
cities.
Spanish Language Use. Approximately 68% of all Hispanics, regardless of
income or educational level, speak Spanish at home. This percentage is expected
to remain relatively constant through 2010. Consequently the number of Hispanics
speaking Spanish in the home is expected to increase significantly in the
foreseeable future. As shown in the chart below, the number of Hispanics who
speak Spanish in the home is expected to grow from 16.2 million in 1990 to 21.9
million in 2000 and 28.5 million in 2010. The Company believes that the strong
Spanish-language retention among Hispanics indicates that the Spanish-language
media has been and will continue to be an important source of news, sports and
entertainment for Hispanics.
SPANISH LANGUAGE USE
<TABLE>
<CAPTION>
MEASUREMENT PERIOD SPEAK SPAN-
(FISCAL YEAR COVERED) POPULATION ISH AT HOME
<S> <C> <C>
1980 15.648 10.551
1985 19.335 13.230
1990 23.736 16.202
1995 27.524 18.769
2000 31.988 21.922
2005 36.622 25.146
2010 41.547 28.494
</TABLE>
41
<PAGE> 43
Greater Hispanic Buying Power. The Hispanic population represents estimated
total consumer expenditures of $325 billion in 1996 (6.3% of the total U.S.
consumer expenditures), an increase of 52.6% since 1990. Hispanics are expected
to account for $458 billion (7.1% of the U.S. total consumer expenditures) by
2000, and $965 billion (8.8% of the U.S. total consumer expenditures) by 2010,
far outpacing the expected growth in total U.S. consumer expenditures.
In addition to the anticipated growth of the Hispanic population, the
Hispanic audience has several other characteristics that the Company believes
make it attractive to advertisers. The Company believes the larger size
(averaging 3.4 persons per household compared to the general public's average of
2.5 persons per household) and younger age of Hispanic Households leads
Hispanics to spend more per household on many categories of goods. The average
Hispanic Household spends 20.6% more per year on food at home, 42% more on
children's clothing, 20.2% more on footwear, 11.3% more on phone services, and
27.8% more on laundry and household cleaning products than the average
non-Hispanic household. Hispanics are expected to continue to account for a
disproportionate share of growth in spending nationwide in many important
consumer categories as the Hispanic population and its disposable income
continue to grow. These factors make Hispanics an attractive target audience for
many major U.S. advertisers.
Increased Spanish-language Advertising. According to published sources,
$953 million (an increase of 32% over 1993) of total advertising expenditures
were directed towards Spanish-language media in 1994, and an estimated $1.1
billion (an increase of 15% over 1994) of total advertising expenditures were
directed towards Spanish-language media in 1995. Of these amounts, nearly half
was targeted towards Spanish-language television advertising. The Company
believes that major advertisers have found that Spanish-language television
advertising is a more cost-effective means to target the growing Hispanic
audience than English-language broadcast media. See "-- Advertising."
HISPANIC AUDIENCE RESEARCH
Univision, like all television stations and networks, derives its revenues
primarily from selling advertising time. See "-- Advertising." The relative
advertising rates charged by competing stations within a DMA depend primarily on
four factors: (i) the station's ratings (households and/or people viewing its
programs as a percentage of total television households and/or people in the
viewing area); (ii) audience share (households and/or people viewing its
programs as a percentage of households and/or people actually watching
television at a specific time); (iii) the time of day the advertising will run;
and (iv) the demographic qualities of a program's viewers (primarily age and
gender).
Prior to November 1992, there were no Hispanic audience television rating
services comparable to those measuring television viewership in the general U.S.
population. Beginning in 1992, the Company contracted with Nielsen to develop
Nielsen ratings measuring Hispanic viewership both at the Network and local DMA
levels. Because these Nielsen ratings provide advertisers with a more accurate
and reliable measure of Hispanic audience television viewership, they have been
important in allowing the Company to demonstrate to advertisers its ability to
reach the Hispanic audience. The Company believes that continued use of
accurate, reliable ratings will allow it to further increase its advertising
rates and narrow the gap which has historically existed between its audience
share and its share of advertising revenues. In addition, the Company has made
significant investments in experienced sales managers and account executives and
has provided its sales professionals with state-of-the-art research tools to
continue to attract major advertisers.
The various rating services purchased from Nielsen are described below:
Nielsen Hispanic Television Index (NHTI). The NHTI service, which began in
November 1992, measures national network viewing in Hispanic Households. NHTI is
the Network's primary sales tool since it demonstrates Univision's significant
success in attracting Hispanic viewership against both English- and
Spanish-language competition. NHTI is stratified by language usage so that
Spanish-dominant, bilingual, and English-dominant Hispanic Households are
represented in the sample in the same proportion that exists among Hispanic
Households generally.
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<PAGE> 44
Nielsen Hispanic Station Index (NHSI). The NHSI service is similar to the
NHTI, except that NHSI measures Hispanic Household viewing at the local market
level. Like NHTI, each NHSI sample also reflects the varying levels of language
usage by Hispanics in each DMA in order to more accurately reflect the Hispanic
Household population in the relevant DMA. The NHSI service was implemented
beginning with Los Angeles in November 1992 and was phased in at the Company's
other full-power O&Os by November 1994. Because the Company believes there is a
time lag between the availability of new rating services and advertisers'
reliance thereon, the NHSI rating service is expected to continue to have an
increasing beneficial impact on its future results.
NHSI and NHTI only measure the audience viewing of Hispanic Households,
that is, households where the head of the household is of Hispanic descent or
origin. Although the NHSI and NHTI reflect improvements over previous
measurement indices, the Company believes they still under-report the number of
viewers watching Univision programs because many of the Company's viewers do not
live in Hispanic Households.
Nielsen Station Index (NSI). The NSI service measures local station viewing
of all households in a specific DMA. The Company buys NSI in all of the DMAs in
which its full-power O&Os are located in order to effectively position its
viewing against both English- and Spanish-language competitors. While Hispanic
Households are present in proportion to their percentage of total households
within a DMA in NSI, this rating service is not language stratified and
generally under-represents Spanish-speaking households. As a result, the Company
believes that NSI typically under-reports viewing of Spanish-language
television. Despite this limitation, NSI demonstrates that many full-power
Broadcast Affiliates achieve total market ratings that are fully comparable with
their English-language counterparts, with three of the fullpower O&Os ranking
among the top two stations in their respective DMAs. See "-- The O&Os."
RATINGS
Since the beginning of the NHTI service in November 1992, Univision has
consistently ranked first in prime time among all Hispanic adults. In addition,
Univision has successfully increased its audience ratings compared to both
Telemundo and the English-language broadcast networks. Spanish-language
television prime time is from 7 p.m. to 11 p.m. Sunday through Saturday.
English-language television prime time is from 8 p.m. to 11 p.m. Monday through
Saturday and 7 p.m. to 11 p.m. Sunday. The following table shows that Univision
prime time audience ratings, Sunday through Saturday, among Hispanic adults aged
18 to 49, the age segment most targeted by advertisers, have increased compared
to the other networks:
NHTI PRIME TIME RATINGS AMONG HISPANIC ADULTS AGED 18 TO 49
<TABLE>
<CAPTION>
JANUARY 1, 1996-
NETWORK 1993 1994 1995 MAY 26, 1996
------------------------ ----- ----- ----- ----------------
<S> <C> <C> <C> <C>
Univision............... 6.6 8.6 9.6 9.3
ABC..................... 3.8 3.3 3.1 2.9
CBS..................... 2.9 2.2 1.8 1.9
FOX..................... 4.0 3.6 3.4 3.6
NBC..................... 3.3 2.7 2.9 3.3
Telemundo............... 4.1 3.1 2.6 2.3
Univision share......... 26.7% 36.6% 41.0% 39.9%
</TABLE>
43
<PAGE> 45
A further indication of Univision's growing strength against Telemundo and
its English-language competitors is its improved performance among bilingual
Hispanics. As the table below indicates, since 1993 the Network advanced from
fifth place to first place in prime time audience ratings, Sunday through
Saturday, among bilingual Hispanic adults aged 18 to 49:
NHTI PRIME TIME RATINGS AMONG BILINGUAL HISPANIC ADULTS AGED 18 TO 49
<TABLE>
<CAPTION>
JANUARY 1, 1996-
NETWORK 1993 1994 1995 MAY 26, 1996
---------------- ---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Univision....... 3.7 6.4 7.5 7.6
ABC............. 5.0 4.6 3.7 3.4
CBS............. 4.0 2.9 2.1 2.1
FOX............. 5.0 4.4 3.8 4.0
NBC............. 4.9 3.6 3.2 4.2
Telemundo....... 2.6 1.9 1.3 1.1
Univision
share......... 14.7% 26.9% 34.7% 33.9%
</TABLE>
In addition, as shown in the following table, the Company has increased its
share of the 20 most widely watched programs among all Hispanic Households from
30% in November 1992 to 90% in May 1996:
THE 20 MOST WIDELY WATCHED PROGRAMS
AMONG HISPANIC HOUSEHOLDS BY NETWORK
<TABLE>
<CAPTION>
PROGRAM NOVEMBER NOVEMBER NOVEMBER NOVEMBER MAY
RANK 1992 1993 1994 1995 1996
- --------- ---------- ---------- ---------- ---------- --------
<C> <S> <C> <C> <C> <C>
1 ABC FOX UVN (1) UVN UVN
2 UVN UVN UVN UVN UVN
3 FOX FOX UVN UVN UVN
4 UVN UVN UVN UVN UVN
5 FOX FOX UVN UVN UVN
6 FOX UVN UVN UVN UVN
7 FOX UVN UVN UVN UVN
8 ABC FOX UVN UVN UVN
9 FOX FOX UVN UVN UVN
10 UVN FOX UVN UVN UVN
11 ABC FOX FOX UVN UVN
12 FOX UVN FOX UVN UVN
13 UVN NBC UVN UVN UVN
14 UVN FOX UVN UVN UVN
15 UVN NBC UVN NBC UVN
16 NBC FOX UVN UVN UVN
17 FOX FOX UVN UVN NBC
18 ABC ABC FOX UVN NBC
19 TEL (2) FOX FOX UVN UVN
20 FOX FOX FOX FOX UVN
</TABLE>
- ------------------------------
Source: NHTI
(1) Univision
(2) Telemundo
44
<PAGE> 46
THE NETWORK
The Network is the leading Spanish-language television network in the U.S.
From its operations center in Miami, the Network provides the Univision
Affiliates via satellite with 24 hours of Spanish-language programming per
broadcast day with a prime time schedule of substantially all first-run
programming (i.e., no re-runs) throughout the year. The operations center also
provides extensive production facilities for the Network's news and
entertainment programming.
The Network produces and acquires programs, makes those programs available
to the Univision Affiliates, sells network advertising and represents the
Broadcast Affiliates in the sale of national spot advertising. Each Broadcast
Affiliate has a right of first refusal in its DMA to use the Network's
programming. The full-power Broadcast Affiliates together reach approximately
5.3 million, or approximately 74%, of Hispanic Households. The low-power
Broadcast Affiliates (including translators) together reach approximately
501,000, or approximately 7%, of Hispanic Households. The Cable Affiliates reach
approximately 826,000, or approximately 12%, of Hispanic Households. Through the
Company's ownership of the O&Os, it controls approximately 78% of the Network's
broadcast distribution.
Affiliation Agreements. Each Univision Affiliate has the right to preempt
(i.e., to decline to broadcast at all or at the time scheduled by the Network),
without prior Network permission, any and all Network programming that it deems
unsatisfactory, unsuitable or contrary to the public interest or to substitute
programming it believes is of greater local interest, provided that the Network
must consent to any rescheduling of preempted programming. If a Univision
Affiliate preempts a Network program and no suitable substitute broadcast time
is mutually agreed upon, the Network is permitted to offer the program to any
other television station or cable service in the DMA served by such Univision
Affiliate.
Each Affiliation Agreement grants the Univision Affiliate the right of
first refusal to the Network's entire program schedule. The Affiliation
Agreements generally provide that 50% of all advertising time be retained by the
Network for Network advertising and 50% of such time be allocated to the
Univision Affiliate for local and national spot advertising. However, this
allocation may be modified at the Company's discretion.
The Affiliated Stations retain 100% of all local advertising revenues, and
the Network retains 100% of Network advertising revenues. The Network acts as
the representative of the Univision Affiliates for national spot sales and
receives a commission of 15% of net revenues after agency commission in return
for such services from its Affiliated Stations.
The Network from time to time may enter into Affiliation Agreements with
additional stations in new DMAs based upon its perception of the market for
Spanish-language television and the Hispanic market in the station's DMA.
Cable Affiliates. The Network has historically used Cable Affiliates to
reach communities which could not support a Broadcast Affiliate because of the
relatively small number of Hispanic Households. Cable Affiliation Agreements may
cover an individual system operator or a multiple system operator. Cable
Affiliation Agreements are for the most part non-exclusive, thereby giving the
Network the right to license all forms of distribution in cable markets. Cable
Affiliates generally receive the Network's programming for a fee based on the
number of subscribers. The Network retains 100% of the allocation of Network
advertising revenues attributable to Cable Affiliates and provides certain Cable
Affiliates with two minutes of local advertising time per hour. Cable Affiliates
retain 100% of local and national advertising revenues. However, the Company
represents certain cable affiliates in national spot sales for varying fees.
45
<PAGE> 47
Univision Affiliate Coverage and Rank. The table below sets forth certain
information with respect to the Univision Affiliates' coverage and rank.
UNIVISION AFFILIATES' COVERAGE AND RANK AMONG HISPANIC HOUSEHOLDS
<TABLE>
<CAPTION>
HISPANIC SPANISH-
HOUSEHOLDS HISPANIC LANGUAGE
COVERED(B) HOUSEHOLDS TELEVISION
DMA(A) STATION (IN THOUSANDS) COVERED(B) RANK(C)
------------------------------------ ------- -------------- ---------- ----------
<S> <C> <C> <C> <C>
FULL-POWER O&OS
Los Angeles (1)................... KMEX 1,306 18.1% 1
New York (2)...................... WXTV 913 12.7 1
Miami(3).......................... WLTV 434 6.0 1
Houston (4)....................... KXLN 278 3.9 1
San Antonio (5)................... KWEX 274 3.8 1
San Francisco (6)................. KDTV 272 3.8 1
Chicago (7)....................... WGBO 270 3.7 1
Dallas/Ft. Worth (9).............. KUVN 187 2.6 1
Albuquerque (10).................. KLUZ 185 2.6 1
Phoenix (13)...................... KTVW 149 2.1 1
Fresno (14)....................... KFTV 148 2.1 1
----- -----
Total full-power O&Os.......... 4,416 61.4
FULL-POWER AFFILIATED STATIONS
McAllen/Brownsville (8)(d)........ KNVO 193 2.7 1
El Paso (11)(d)................... KINT 168 2.3 1
Sacramento (15)................... KCSO 136 1.9 1
Denver (16)(e).................... KCEC 117 1.6 1
Corpus Christi (18)............... KORO 91 1.3 1
Boston (20)....................... WUNI 81 1.1 1
Salinas/Monterey (26)(e).......... KSMS 46 0.6 1
Yuma/El Centro (29)(e)............ KVYE 40 0.6 -- (f)
Las Vegas (31)(e)................. KINC 39 0.5 1
----- -----
Total full-power Affiliated
Stations..................... 911 12.6
CABLE AFFILIATES(G)................. 826 11.5
LOW-POWER BROADCAST AFFILIATES(H)... 501 6.9
----- -----
TOTAL UNIVISION AFFILIATES........ 6,654 92.4%
===== =====
</TABLE>
- ------------------------------
(a) Numbers in parentheses represent Hispanic DMA rank by number of Hispanic
Households.
(b) Source: Nielsen Media Research, Black & Hispanic DMA Market and Demographic
Rank, January 1996.
(c) Rank within the DMA by number of viewing Hispanic Households. Source: NHSI,
May 1996.
(d) Entravision has an agreement to acquire.
(e) Owned by Entravision.
(f) Not applicable because Affiliated Station signed on air in July 1996.
(g) Source: Company estimate derived from Nielsen Cable On-Line Data Exchange.
(h) Source: Company estimate derived from Nielsen Media Research, Black and
Hispanic DMA Market and Demographic Rank, January 1996.
46
<PAGE> 48
GALAVISION NETWORK
Galavision is the leading U.S. Spanish-language basic cable television
network, reaching approximately 6 million subscribers, of whom 1.8 million are
Hispanic. According to Nielsen, Galavision reaches over 47% of all Hispanic
Households that subscribe to cable. The Company programs Galavision so that
Galavision and the Network generally do not run the same type of show
simultaneously. For example, while the Network is running a novela, Galavision
may run sports or news. As a result of this counter-programming, many Spanish-
language television viewers have a choice of two Univision networks at any one
time. Additionally, Univision cross-promotes the Galavision service five times
daily.
From December 17, 1992 through June 30, 1996, the Company managed
Galavision (during such time, a Televisa affiliate) by generally selecting the
programming schedule, including programming supplied pursuant to the Program
License Agreements (subject to Galavision's obligation prior to January 1, 1996
to run 85 hours per week of programming of ECO, a 24-hour news, information and
entertainment service operated by Televisa), and providing sales, affiliate
relations and other services. The Company acquired Galavision as of July 1, 1996
pursuant to a 1992 Option Agreement with a Televisa affiliate. The $15 million
purchase price was paid with a note that will be due and payable immediately
following the closing of this Offering. The Company moved all Galavision
operations from Mexico to the Network's operations center in Miami in July 1996.
Galavision is the only Spanish-language cable service subscribing to
Nielsen. Nielsen uses a subset of the NHTI sample to produce the Nielsen
Hispanic Home Video Index, which reports viewing of Galavision in Hispanic
Households with cable. The Company believes that its use of Nielsen to measure
Galavision's ratings assists the Company in obtaining advertisers for the cable
network and in selecting programs that meet its audience's taste. Twenty of the
top 25 Univision advertisers advertise on Galavision.
PROGRAMMING
The Company directs its programming toward its young, family-oriented
audience. It begins daily with children's programming Monday through Friday,
followed by situation comedies, game shows and novelas. In the late afternoon
and early evening, the Network offers talk shows, a news-magazine and local and
national news. Weekend daytime programming begins with children's programming,
followed by sports, variety, teen lifestyle shows and movies in the afternoon.
During prime time, Univision airs novelas, variety shows, specials or movies.
Prime time is followed by late news and a late night talk show. Overnight
programming consists of novelas and repeats of programming aired earlier in the
day.
Eight hours of programming per weekday, including a substantial portion of
weekday prime time, are currently programmed with novelas supplied primarily by
Televisa. Although novelas have been compared to daytime soap operas on ABC, NBC
or CBS, the differences are significant. Novelas, originally developed as
serialized books, have a beginning, middle and end, generally run five days per
week, and conclude four to eight months after they begin. Novelas also have a
much broader audience appeal than soap operas, delivering audiences that contain
large numbers of men, children and teens in addition to women.
The Hispanic population is primarily young and family-oriented. Univision's
programming has changed dramatically over the past three years in order to
attract and retain this audience. Last year, Univision began to air the
Spanish-language version of Sesame Street, co-produced by Televisa in
cooperation with Children's Television Workshop. Plaza Sesamo now airs five
mornings per week. The Company's broadcasting of educational children's
programming has put it well ahead of the other commercial networks in meeting
the potential requirement of three hours of weekly educational programming being
considered by Congress and the FCC. The Company's success in attracting a young
audience is demonstrated by a 29% increase in NHTI ratings among Hispanic adults
aged 18 to 34, Sunday through Saturday 9 a.m. to midnight, since November 1992.
In 1995 the Company derived approximately 40% and 8% of its gross
advertising sales from programs produced by Televisa and Venevision,
respectively, under the Program License Agreements; for the six month period
ended June 30, 1996, these percentages were 38% and 9%, respectively.
Programming supplied by
47
<PAGE> 49
Televisa and Venevision under the Program License Agreements and programs
produced by the Company currently represent in the aggregate approximately 90%
of the Network's non-repeat broadcast hours. The remainder primarily consists of
movies acquired from independent third-party suppliers. Three of the Company's
own productions, Sabado Gigante, a variety show hosted by Mario Kreutzberger,
Primer Impacto, a news magazine program, and Cristina, a talk show hosted by
Cristina Saralegui, are among its most successful programs in terms of
advertising revenues generated. Approximately 45% and 46% of the Company's gross
advertising sales in 1995 and the six months ended June 30, 1996, respectively,
were generated by programs it produced.
Univision news programming is generally produced either at the Network
facility in Miami or the local stations. The Network produces an early evening
network newscast seven days per week and a late network newscast Monday through
Friday. All full-power O&Os produce local newscasts that reflect the communities
they serve. A national public affairs program, Temas y Debates, is also produced
weekly by the Network in Washington, D.C.
The Company produces a Sunday afternoon sports anthology show and a Sunday
night sports wrap-up show. Live sports programming primarily consists of boxing
and soccer. The 1994 World Cup soccer coverage broadcast by Univision garnered
the Company's highest sports ratings and the Company's current coverage of the
Sunday afternoon nationally televised Major League Soccer "Game of the Week" is
also delivering strong ratings and revenues.
PROGRAM LICENSE AGREEMENTS
Through the Program License Agreements, Univision has the first right until
December 2017 to air in the U.S. all Spanish-language programming produced by or
for Televisa and Venevision (with certain exceptions). The Program License
Agreements provide the Network and Galavision with access to programming to fill
up to 100% of their program schedules. Televisa and Venevision programming
represented approximately 52% and 13%, respectively, of the Network's non-repeat
broadcast hours in 1995 and 52% and 12%, respectively in the six months ended
June 30, 1996.
The Program License Agreements allow the Company unparalleled long-term
access to Televisa and Venevision programs and the ability to terminate
unsuccessful programs and replace them with other Televisa and Venevision
programs without paying for the episodes that are not broadcast. Accordingly,
the Company has more programs available to it and greater programming
flexibility than any of its competitors. This program availability and
flexibility have permitted the Company to adjust programming to best meet the
tastes of its viewers.
Univision's quarterly option on Televisa's programming has two components.
The Company has an initial option on all Televisa produced programs which, when
aggregated with programs obtained from Venevision, is sufficient to fill 18
hours of programming per day for the Network and Galavision combined. See,
however, "Risk Factors -- Reliance on Limited Sources and Cost of Programming."
Univision has the right to allocate these 18 hours of programming between the
Network and Galavision. In addition, this option covers all Televisa news
programs without limitation as to the number of hours of such programming. After
Univision has exercised its rights under the initial Televisa option, Televisa
is contractually obligated until December 1997 to make available to the owners
and operators of KWHY-TV Channel 22 in Los Angeles ("KWHY"), a station that,
prior to December 1992, had been a Galavision Network affiliate to which
Televisa supplied programming, all Televisa programming that is not acquired by
Univision pursuant to its initial option (other than news programs) to enable
KWHY to fill one 85-hour per week time schedule. The Company then has an
additional option on all Televisa programs not licensed by KWHY for use on the
Network and Galavision. Thus, under the Program License Agreements, Univision
may license programming from Televisa and Venevision that, when added to (i)
local programs produced by the O&Os and used on the Network, (ii) any programs
produced by Univision and (iii) any programs purchased by Univision other than
from Televisa and Venevision, will be sufficient to fill a twenty-four hour per
day, seven day per week time schedule for each of the Network and Galavision.
48
<PAGE> 50
The Company's initial and additional Televisa options and its Venevision
option are prior to all third parties' rights to obtain Televisa and Venevision
produced programming for broadcast in the U.S., except with respect to
programming licensed by Televisa to KWHY. Generally, Univision also has a right
of first refusal to acquire any program for which Univision did not exercise its
option before Televisa or Venevision can license such program to any third party
(except with respect to programming licensed to KWHY as described above). To the
extent that Televisa or Venevision uses, or licenses a third party to use, its
programming in the United States in accordance with the terms of the Program
License Agreements, the Company would compete against such entity. See "Risk
Factors -- Substantial Competition."
Televisa and Venevision programs available to Univision are defined under
the Program License Agreements as all programs produced by or for each of them
in the Spanish language or with Spanish subtitles other than programs for which
they do not own U.S. broadcast rights or as to which third parties have a right
to a portion of the revenues from U.S. broadcasts ("Co-produced Programs").
Televisa and Venevision have also agreed through their affiliates to use their
best efforts to coordinate with Univision to permit Univision to acquire U.S.
Spanish-language rights to certain Co-produced Programs and to special events
produced by others, sporting events, political conventions, election coverage,
parades, pageants and variety shows.
In consideration of access to the programming of Televisa and Venevision,
the Company pays Televisa and Venevision aggregate royalties based upon Combined
Net Time Sales. Prior to the Reorganization, the royalties (net of certain cost
sharing reimbursements which will cease upon completion of the Reorganization)
were 9.5%, 8.5%, 9.4% and 9.5% of Combined Net Time Sales in 1993, 1994, 1995
and the six months ended June 30, 1996, respectively. From the closing of this
Offering through December 31, 1996, aggregate royalties to Televisa and
Venevision will equal 11.0% of Combined Net Time Sales, increasing to 13.5% of
Combined Net Time Sales in 1997, and in all years thereafter the royalty to
Televisa and Venevision will be 15.0% of Combined Net Time Sales. The Network is
obligated to pay such aggregate royalties to Televisa and Venevision each year
throughout the term regardless of the amount of Televisa and Venevision
programming used by the Company.
The Program License Agreements are between affiliates of the Company,
Televisa and Venevision and the performance of their affiliates has been
unconditionally guaranteed by the Company, Televisa and Venevision,
respectively. Pursuant to their respective guarantees, Televisa has agreed to
use commercially reasonable efforts to continue to produce programs available to
the Network at least to the same extent in terms of quality and quantity as in
calendar years 1989, 1990 and 1991 and Venevision has agreed to use commercially
reasonable efforts to produce or acquire programming sufficient to provide at
least nine hours per day of programs to the Network.
THE O&OS
The Company owns and operates eleven full-power O&Os, each of which
broadcasts Network programming, produces local news and other programming of
local importance, covers special events and may acquire programs from other
suppliers. Each of the full-power O&Os is the leading Spanish-language
television station in its DMA.
A full-power O&O's ability to compete in terms of NSI ratings with the
English-language stations in a particular market is a function of the level of
Spanish-language use in the DMA which is affected in part by Hispanic Household
density. In DMAs where households that speak Spanish at least 50% of the time
exceed 15% of all households in the DMA, the full-power O&Os, in general, have
audience delivery comparable with the leading English-language network
affiliated stations in that DMA. In a DMA where the households that speak
Spanish at least 50% of the time is between 10% and 15% of all households in
that DMA, the full-power O&Os, in general, have audience delivery comparable
with the leading independent stations in the DMA. In a DMA where households that
speak Spanish at least 50% of the time is between 5% and 10% of all households
in that DMA, the full-power O&Os, in general, have audience delivery comparable
with the lower rated
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independent stations in the DMA. As shown on the following table, three of the
full-power O&Os rank among the top two stations in their respective DMAs.
FULL-POWER O&OS' COVERAGE AND RANK AMONG HISPANICS
<TABLE>
<CAPTION>
UNIVISION
SHARE ADULTS 18 TO
DMA RANK 1996 HISPANIC 1996 HISPANIC HISPANIC SPANISH- OF SPANISH- 49
(BY NUMBER OF POPULATION HOUSEHOLDS HOUSEHOLD LANGUAGE LANGUAGE TOTAL AUDIENCE
DMA HISPANICS)(A)(B) (IN THOUSANDS)(B) (IN THOUSANDS) DENSITY(C) USE(D) VIEWING(E) MARKET RANK(F)
- ------ ---------------- ----------------- ----------------- ----------- -------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Los
Angeles... 1 5,306 1,306 27.0% 19.1% 67%(g) 1(h)
New
York... 2 2,895 913 13.6 10.1 75 7
Miami... 3 1,253 434 32.3 27.7 80 1(h)
Chicago... 4 995 270 8.7 5.6 78 7(h)
Houston... 5 982 278 17.6 11.3 89 5(h)
San
Francisco... 6 976 272 12.0 6.8 73 7(h)
San
Antonio... 7 903 274 43.0 20.4 64 6
Dallas/Ft. Worth... 9 675 187 10.2 5.9 85 7(h)
Fresno... 11 569 148 30.6 18.5 90 1
Albuquerque... 13 553 185 33.3 12.3 100 5
Phoenix... 14 519 149 12.7 6.4 92 6(h)
</TABLE>
- ----------------------------
(a) The other DMAs ranked among the top fifteen by number of Hispanics are
McAllen/Brownsville (8th), El Paso (10th), San Diego (12th) and Sacramento
(15th).
(b) Source: Nielsen Media Research, Black & Hispanic DMA Market and Demographic
Rank, January 1996. In deriving its figures, Nielsen only counts persons
present in Hispanic Households.
(c) Percentage of total households that are Hispanic Households. Source:
Nielsen Media Research, Black & Hispanic DMA Market and Demographic Rank,
January 1996.
(d) Represents the percentage of all households in a DMA where the Spanish
language is spoken at least 50% of the time by adults. Source: Nielsen
Enumeration Study 1994, which sets forth demographic attributes of Hispanic
population.
(e) Source: NHSI, May 1996.
(f) Source: NSI, adults 18 to 49, May 1996.
(g) The Los Angeles market has three full-power Spanish-language television
stations.
(h) Tied.
The following table shows the total audience share and the percentage of
total market revenues garnered by each of the O&Os. As reflected in the table,
none of the O&Os currently receives its proportionate share of advertising
revenues commensurate with its audience share. The Company believes that the
continued utilization of reliable rating services and the addition of
salespeople with English-language television and advertising expertise will
further enable the Company to demonstrate to advertisers its ability to reach
the Hispanic audience, thereby allowing the Company to narrow the gap between
its share of advertising revenues and its audience share.
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O&OS' SHARE OF TOTAL MARKET REVENUES AND AUDIENCE
<TABLE>
<CAPTION>
TOTAL TELEVISION O&O SHARE O&O SHARE OF
MARKET REVENUE(1) OF TOTAL SUN-SAT/9A.M.-MIDNIGHT
DMA (IN THOUSANDS) MARKET REVENUE(1) TOTAL AUDIENCE(2)
--------------------------- ----------------- ----------------- -----------------------
<S> <C> <C> <C>
Los Angeles................ $ 1,242,200 5% 14%
New York................... 1,229,000 2 4
Chicago.................... 759,500 1 4
San Francisco.............. 491,000 2 2
Dallas..................... 419,900 1 4
Houston.................... 370,800 3 8
Miami...................... 366,500 9 13
Phoenix.................... 251,000 3 5
San Antonio................ 115,300 6 4
Albuquerque................ 70,000 2 6
Fresno..................... 57,300 8 19
</TABLE>
- ----------------------------
(1) Company estimates.
(2) Source: NSI, adults 18 to 49, May 1996.
Set forth below is information, including ratings and performance
information based on most recently available data, for the Company's top five
O&Os.
Los Angeles. The Los Angeles DMA has the largest Hispanic population in the
U.S., estimated by Nielsen to be 5.3 million people as of the beginning of 1996,
and is the second largest U.S. television market overall. Between 1980 and 1990,
the Hispanic population of Los Angeles grew approximately seven times faster
than its non-Hispanic population. According to the U.S. Census Bureau, 78% of
Hispanics in Los Angeles are of Mexican origin. The Hispanic population in Los
Angeles represents 37% of that DMA's total population and 21% of the total U.S.
Hispanic population.
The Los Angeles DMA has three Spanish-language, full-power UHF television
stations. In May 1996, the Company's Los Angeles O&O, Univision-KMEX, posted a
67% share of the homes tuned to Spanish-language television from 9 a.m. to
midnight Sunday through Saturday, while Telemundo-KVEA posted a 19% share and
KWHY (which only broadcasts in Spanish from 3 p.m. to 11 p.m. and is provided
certain programming from Televisa) posted a 14% share. Compared to all general
market television stations in the May 1996 NSI Report, KMEX was tied for first
in adult aged 18 to 34 ratings and adult aged 18 to 49 ratings and was tied for
fifth in households in the Los Angeles DMA Sunday through Saturday 9 a.m. to
midnight.
A total of 20 television stations currently operate in the Los Angeles DMA.
Some of these stations simulcast their news programs and certain entertainment
programs in both English and Spanish. In addition, Nielsen estimates that cable
penetration among Hispanic Households in the Los Angeles DMA is 35%.
New York. The New York DMA has the second largest Hispanic population in
the U.S., estimated by Nielsen to be 2.9 million people at the beginning of
1996, and is the largest U.S. television market overall. The New York Hispanic
community tends to be more fragmented into groups from many different Latin
American countries, including Puerto Rico, Cuba, the Dominican Republic and
Mexico, who have settled in different neighborhoods in the DMA. This
fragmentation distinguishes the New York market from Los Angeles and Miami where
the Hispanic population is predominantly Mexican and Cuban, respectively. The
Hispanic population in New York represents 16% of that DMA's total population
and 12% of the total U.S Hispanic population.
In May 1996, Univision-WXTV was the leading station with a 75% share of the
audience watching Spanish-language television (9 a.m. to midnight, Sunday
through Saturday). While Univision-WXTV broadcasts full time in Spanish,
Telemundo-WNJU broadcasts only 15 hours per day in Spanish Monday through
Friday, and less on the weekend. The remainder of time on Telemundo-WNJU is used
for paid
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<PAGE> 53
programming and programs in a variety of other languages. Compared to general
market television stations in the May 1996 NSI Report, WXTV ranked seventh in
the New York market in adults aged 18 to 49, Sunday through Saturday, 9 a.m. to
midnight.
A total of 16 television stations service the New York DMA. In addition to
Univision-WXTV and Telemundo-WNJU, one other television station shows some
originally-produced Spanish-language programming. According to Nielsen, cable
penetration among Hispanic Households in the New York DMA is approximately 53%.
Miami. The Miami DMA has the third largest Hispanic population in the U.S.,
estimated by Nielsen to be 1.3 million people as of the beginning of 1996, and
is the sixteenth largest U.S. television market overall. According to the Census
Bureau, 56% of Hispanics in Miami are of Cuban origin. The Hispanic population
in Miami represents 37% of that DMA's total population and 5% of the total U.S.
Hispanic population.
In May 1996, the Company's Miami O&O, Univision-WLTV, had an 80% share of
the audience watching Spanish-language television from 9 a.m. to midnight,
Sunday through Saturday. Compared to all general market television stations in
the May 1996 NSI Report, WLTV was in a three-way tie for first place in adults
aged 18 to 49, tied with two other stations for first in adults aged 18 to 34
ratings while placing second in household share in the Miami market Sunday
through Saturday, 9 a.m. to midnight. WLTV is fully competitive with all
English-language stations in the Miami DMA in all major dayparts.
A total of 13 television stations service the Miami DMA. In addition to
Univision-WLTV and Telemundo-WSCV, three other television stations show some
Spanish-language programming. According to Nielsen, cable penetration among
Hispanic Households in Miami is approximately 56%.
Chicago. The Chicago DMA has the fourth-largest Hispanic population in the
U.S., estimated by Nielsen to be 995,000 people at the beginning of 1996, and is
the third largest U.S. television market overall. The Hispanic population in
Chicago represents 12% of that DMA's population and 4% of the total U.S.
Hispanic population.
In 1994, the Company acquired an English-language independent television
station, WGBO, which it converted to a Spanish-language format on January 1,
1995. In May 1996, Univision-WGBO posted a 78% share of the audience watching
Spanish-language television 9 a.m. to midnight, Sunday through Saturday. WGBO
has one Spanish-language competitor, Telemundo-WSNS. Compared to all general
market television stations in the Chicago DMA in the May 1996 NSI report, WGBO
tied for seventh with one other station. WGBO is fully competitive with certain
English-language stations in the delivery of young demographics in the Chicago
DMA, particularly adults aged 18 to 34.
A total of 13 television stations service the Chicago DMA. According to
Nielsen, cable penetration among Hispanic Households in Chicago is approximately
44%.
Houston. Houston has the fifth largest Hispanic population in the U.S.,
estimated by Nielsen to be 982,000 people, and is the eleventh largest U.S.
television market overall. The Hispanic population in Houston represents 23% of
that DMA's total population and 4% of the total U.S. Hispanic population.
In 1994, the Company acquired its Affiliated Station, KXLN, in Houston. In
May 1996, Univision-KXLN posted an 89% share of the audience watching
Spanish-language television 9 a.m. to midnight, Sunday through Saturday. KXLN
has one Spanish-language competitor, the Telemundo affiliate KTMD. In May 1996,
KXLN was tied for first with four major network affiliates in the delivery of
adults aged 18 to 34.
A total of 15 television stations service the Houston DMA. According to
Nielsen, cable penetration among Hispanic Households in Houston is approximately
37%.
The Company exercises its "must carry" rights in each DMA in which it
operates a full-power O&O.
The Company continues to analyze potential acquisitions of stations in
strategic markets. If consummated, any such acquisitions are expected to be
financed under the New Bank Facility. The Company has signed a letter of intent
with Entravision to make a $10 million investment in the form of a note and an
option
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<PAGE> 54
to acquire a 25% interest in Entravision. Entravision owns seven Affiliated
Stations, representing approximately 6% of the Network's distribution.
Univision's seven low-power O&Os are located in Philadelphia, Hartford,
Austin, Bakersfield, Tucson, Albuquerque and Fort Worth. A low-power station is
a low-power broadcast facility that may originate programming and commercial
matter but that often transmits programming received from elsewhere (including
via satellite). The low-power O&Os, in the aggregate, accounted for less than 1%
of the Company's net revenues in 1995 and contribute 2.5% of the Network
broadcast distribution.
ADVERTISING
The Company's top 10 advertisers are Procter & Gamble, AT&T, MCI
Communications, Sears, McDonald's, Anheuser-Busch, Ford, Colgate-Palmolive, U.S.
Sprint and Coca-Cola, most of which have substantially increased advertising
commitments to the Company since the Acquisition. No single advertiser accounted
for more than 10% of the Company's gross advertising revenues. Approximately
98.5% of Univision's gross revenues for each of 1995 and the first six months of
1996, consist of Network, national spot and local advertising revenues.
Network Advertising. Network advertising revenues represented 50.6% of the
Company's gross revenues in 1995 and for the six month period ended June 30,
1996. The Company attracts advertising expenditures from diverse industries,
with advertising for food and beverages, personal care products, transportation
services, other household goods and telephone services representing the majority
of Network advertising.
Spot Advertising. National spot advertising represents time sold to
national and regional advertisers based outside a station's DMA. National spot
advertising revenues represented 14.8% and 15.8%, of the Company's gross
revenues for 1995 and for the six month period ended June 30, 1996,
respectively. National spot advertising primarily comes from new advertisers
wishing to test a market and advertisers who are regional retailers and
manufacturers without national distribution. To a lesser degree, national spot
advertising comes from advertisers who have the need to enhance network
advertising in a given market. National spot advertising is the means by which
most new national and regional advertisers begin marketing to Hispanics.
Local Advertising. Local advertising revenues are generated by both local
merchants and service providers and regional and national businesses and
advertising agencies located in a particular DMA. Local advertising revenues
represented 33.1% and 32.1% of the Company's gross revenues for 1995 and for the
six month period ended June 30, 1996, respectively.
MARKETING
The Company increased by 43% the number of its marketing professionals from
146 to 209 over the past two years, including approximately 30 employees hired
in connection with the acquisition of the Chicago and Houston O&Os and
Galavision. The Company's account executives are divided into three groups:
Network sales; national spot sales; and local sales. The account executives
responsible for Network sales target and negotiate with accounts that advertise
nationally. The national spot sales force represents Broadcast Affiliates for
all sales placed from outside their respective DMAs. The local sales force
represents an O&O for all sales placed from within its DMA.
In addition, the Company's sales department utilizes research, including
both ratings and demographic information analyzed by the Company's research
department, to negotiate sales contracts as well as target major national
advertisers that are not purchasing advertising time or who are under-purchasing
advertising time on Spanish-language television.
The Company maintains Network and national sales offices in Atlanta,
Chicago, Dallas, Detroit, Irvine (California), Los Angeles, Miami, New York, San
Antonio and San Francisco.
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COMPETITION
The broadcasting business is highly competitive. The Company competes for
viewers and revenues with other television networks and stations and other video
media, suppliers of cable television programs, newspapers, magazines, radio and
other forms of entertainment and advertising. Competition for advertising
revenues is based on the size of the market that the particular medium can
reach, the cost of such advertising and the effectiveness of such medium. See
"Risk Factors -- Potential Competition with Other Broadcasters Using Televisa
Programming" and "Risk Factors -- Substantial Competition." The Company believes
that it is competitive in the size of market it reaches and the cost and
effectiveness of advertising time it sells.
The rules and policies of the FCC also encourage increased competition
among different electronic communications media. As a result of rapidly
developing technology, the Company may experience increased competition from
other free or pay systems by which information and entertainment are delivered
to consumers, such as direct broadcast satellite and video dial tone services.
See "Risk Factors -- Impact of New Technologies; Spectrum Auctions."
MATERIAL PATENTS, TRADEMARKS, LICENSES, FRANCHISES AND CONCESSIONS
In the course of its business, the Company uses various trademarks, trade
names and service marks, including its logos in its advertising and promotions.
The Company believes the strength of its trademarks, trade names and service
marks are important to its business and intends to continue to protect and
promote its marks as appropriate. The Company does not hold or depend upon any
material patent, government license, franchise or concession, except the
licenses granted by the FCC to the O&Os.
EMPLOYEES
As of June 30, 1996 the Company employed approximately 1,315 full-time
employees. Approximately 10% of the Company's employees, located at its New York
and Los Angeles O&Os, are covered by collective bargaining agreements and the
Company is negotiating collective bargaining agreements with respect to its
employees at the Chicago O&O. Management believes that its relations with its
employees and their representatives are good.
FEDERAL REGULATION AND NEW TECHNOLOGIES
The ownership, operation and sale of TV stations, including those licensed
to subsidiaries of the Company, are subject to the jurisdiction of the FCC under
authority granted it pursuant to the Communications Act. Matters subject to FCC
oversight include, but are not limited to, the assignment of frequency bands for
broadcast television; the approval of a TV station's frequency, location and
operating power; the issuance, renewal, revocation or modification of a TV
station's FCC license; the approval of changes in the ownership or control of a
TV station's licensee; the regulation of equipment used by TV stations; and the
adoption and implementation of regulations and policies concerning the
ownership, operation and employment practices of TV stations. The FCC has the
power to impose penalties, including fines or license revocations, upon a
licensee of a TV station for violations of the FCC's rules and regulations.
Programming and Operation. The Communications Act requires broadcasters to
serve the "public interest." Since the late 1970s, the FCC gradually has relaxed
or eliminated many of the more formalized procedures it had developed to promote
the broadcast of certain types of programming responsive to the needs of a
station's community of license. However, broadcast station licensees continue to
be required to present programming that is responsive to local community
problems, needs and interests and to maintain certain records demonstrating such
responsiveness. Complaints from viewers concerning a station's programming often
will be considered by the FCC when it evaluates license renewal applications of
a licensee, although such complaints may be filed at any time and generally may
be considered by the FCC at any time. Stations also must follow various rules
promulgated under the Communications Act that regulate, among other things,
political advertising, sponsorship identifications, the advertisement of
contests and lotteries, programming directed to children, obscene and indecent
broadcasts and technical operations, including limits on radio frequency
radiation. In addition, most broadcast licensees, including the Company's
licensees, must develop
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<PAGE> 56
and implement affirmative action programs designed to promote equal employment
opportunities and must submit reports to the FCC with respect to these matters
on an annual basis and in connection with a license renewal application.
While the following sets forth the material provisions of the
Communications Act and other statutes or rules, regulations and policies of the
FCC and other governmental agencies applicable to the Company and its
operations, it does not purport to be a complete summary of such provisions. In
particular, for further information, reference is made to the Communications
Act, the Telcom Act, and the rules, regulations and written policies of the FCC.
Management is unable at this time to predict the outcome of any of the pending
FCC rulemaking proceedings referenced below, the outcome of any reconsideration
or appellate proceedings concerning any of the changes in FCC rules or policies
noted below, the possible outcome of any proposed or pending Congressional
legislation, or the impact of any of those changes on Univision's television
broadcast operations.
License Renewal. Under existing FCC rules, television station licenses are
issued for an initial period of up to five years, subject to renewal upon
application therefor. FCC rulemaking is underway to implement the Telcom Act
which authorizes an initial license term and subsequent renewal terms not to
exceed eight years. In its rulemaking notice, the FCC has proposed that
broadcast licenses ordinarily should be renewed for the maximum eight-year term
(subject to short-term renewals in certain circumstances, such as those
involving serious violations of FCC rules by the licensee). The FCC has further
proposed to apply any changes resulting from the rulemaking to all license
renewals that are granted after such changes are finally adopted (regardless of
when the renewal application was filed), as well as retroactively to licenses
for which the renewal application was filed on or after October 1, 1995 if the
renewal was granted prior to the date such changes are adopted.
With respect to broadcast renewal applications filed after May 1, 1995, the
FCC adopted new rules on April 12, 1996 to implement certain statutory changes
effected by the Telcom Act. Under these new rules, no person may submit a
competing application for the frequency licensed to the renewal applicant unless
and until the FCC has determined that the incumbent is not qualified to continue
to hold the license. However, during a certain period while the renewal
application is still pending, petitions to deny the renewal application may be
filed with the FCC. In recent years, representatives of various community groups
and others often have filed petitions to deny renewal applications of broadcast
stations. The FCC will grant the renewal application and dismiss the petitions
to deny if it determines that the licensee meets statutory renewal standards
based on a review of the preceding license term.
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Set forth below are the license expiration dates of each O&O:
O&O LICENSE EXPIRATION DATES
<TABLE>
<CAPTION>
LICENSE
DMA STATION EXPIRATION DATE
----------------------------------------------- ------------ ---------------
<S> <C> <C>
Albuquerque.................................... KLUZ 10/01/98
Albuquerque.................................... K48AM(1) 8/01/97
Austin......................................... K30C3(1) 10/01/98
Bakersfield.................................... KABE-LP(1) 4/01/98
Chicago........................................ WGBO 12/01/97
Dallas/Fort Worth.............................. KUVN 8/01/98
Fort Worth..................................... KUVN-LP(1) 10/1/98
Fresno......................................... KFTV 12/01/98
Hartford....................................... W47AD(1) 6/01/98
Houston........................................ KXLN 8/01/98
Los Angeles.................................... KMEX 12/01/98
Miami.......................................... WLTV 2/01/97
New York....................................... WXTV 6/01/99
Philadelphia................................... WXTV-LP(1) 1/15/97(2)
Phoenix........................................ KTVW 10/01/98
San Antonio.................................... KWEX 8/01/98
San Francisco.................................. KDTV 12/01/98
Tucson......................................... K40AC(1) 10/18/96(3)
</TABLE>
- ------------------------------
(1) Low-power O&O.
(2) The Philadelphia station (formerly W35AB) is currently operating pursuant to
a special temporary authorization.
(3) The Tucson station is currently operating pursuant to a special temporary
authorization as K52AO.
In each case, renewal applications must be filed with the FCC at least four
months before the expiration date of the license, and any petitions to deny must
be filed at least one month prior to the expiration date. The FCC usually does
not act on renewal applications until after the expiration date, and in the
interim, the licenses remain in effect.
Ownership Restrictions. The Communications Act prohibits the assignment of
a broadcast license or the transfer of control of a broadcast license without
prior FCC approval. Under the Communications Act, a broadcast license may not be
granted to or held by a Foreign Interest if the FCC finds that the public
interest will be served by the refusal or revocation of such license. The FCC
has interpreted this provision to require an affirmative public interest finding
before a broadcast license may be granted to or held by any such Foreign
Interest. The FCC has rarely, if ever, made such an affirmative finding. As
presently organized, the Company complies with these restrictions. In
particular, the Company's Restated Certificate of Incorporation contains
provisions that permit the Company to redeem any shares of capital stock other
than Class T and Class V Common Stock owned by Foreign Interests and to take
other actions necessary to ensure its compliance with the foreign ownership
restrictions of the Communications Act and related FCC rules.
The FCC's "multiple ownership" rules generally provide that a license for a
television station will not be granted if the applicant (or a party with an
"attributable interest" in the applicant) owns, or has an "attributable
interest" in, another station of the same type which covers a similar service
area. The Telcom Act directs the FCC to conduct a rulemaking proceeding to
determine whether to retain, modify, or eliminate its limitations on the number
of television stations that a person or entity may own, operate, or control, or
have an "attributable interest" in, within the same television market. In
addition, there is an outstanding FCC proceeding addressing whether to change
local television multiple ownership rules. Under present duopoly regulations,
the FCC prohibits ownership interests in television stations with overlapping
signals of specified
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strengths. Among the options being considered are proposals to increase the
signal strength permitted before a prohibited overlap occurs, to permit a single
entity to own two UHF television stations in the same television market, and to
permit a single entity to own one UHF and one VHF television station in the same
market. Substantially all Univision Affiliates operate in the UHF band. Whether,
or when, the FCC will adopt such changes in its regulations is unknown.
The FCC recently conformed its national television stations multiple
ownership rules with the Telcom Act. Specifically, a single entity may hold
"attributable interests" in an unlimited number of U.S. television stations
provided that those stations operate in markets containing cumulatively no more
than 35% of the television homes in the U.S. For this purpose, only 50% of the
television households in a market are counted towards the 35% national
restriction if the owned station is a UHF station (as are the O&Os). None of the
Principal Stockholders presently holds attributable interests in any other U.S.
television stations.
The FCC's rules provide that, with certain exceptions, the power to vote or
control the vote of 5% or more of the outstanding voting stock of a licensee is
the test for determining whether an entity has an "attributable interest" in a
licensee's stations for purposes of the multiple ownership rules. However, the
FCC's rules permit certain passive institutional investors (i.e., qualifying
investment companies, insurance companies or bank trust departments) to vote or
control the vote of up to 10% of the outstanding voting stock of a broadcast
company before they will be deemed to have an "attributable interest." In March
1992, the FCC initiated a proceeding to consider, inter alia proposals (i) to
increase the general "attributable interest" threshold to 10% of the outstanding
voting stock of a broadcast licensee and (ii) to increase the threshold for
certain passive institutional investors to 20%. The FCC has taken no final
action in that proceeding.
The FCC recently conformed its "dual network rule" with the Telcom Act.
Under these new rules, a broadcast licensee may affiliate with an entity that
maintains two or more networks of television broadcast stations unless such
multiple networks are composed of (i) two or more network entities meeting a
specific definition of a network as of February 8, 1996, or (ii) a network
meeting such definition and certain other English-language program distribution
services. The Network does not fall into either category.
The Telcom Act also modified the general prohibitions on network-cable
cross-ownership so as to permit television networks to own cable systems.
Network Affiliate Issues. Several FCC rules impose restrictions on network
affiliation agreements. Among other things, those rules prohibit a television
station from entering into any affiliation agreements that (i) require the
station to clear time for network programming that the station had previously
scheduled for other use, (ii) preclude the preemption of any network programs
that the station believes are unsuitable for its audience, or (iii) preclude the
station from substituting for network programming a program that it believes is
of greater local or national importance.
In addition, the FCC is currently reviewing several of its rules governing
the relationship between broadcast television networks and their affiliates.
Specifically, the FCC is reviewing four rules including (i) the "right to reject
rule," which provides that affiliation arrangements between a broadcast network
and a broadcast licensee generally must permit the licensee to reject
programming provided by the network, (ii) the "time option rule," which
prohibits arrangements whereby a network reserves an option to use specified
amounts of an affiliate's broadcast time, (iii) the "exclusive affiliation
rule," which prohibits arrangements that forbid an affiliate from broadcasting
the programming of another network, and (iv) the "network territorial
exclusivity rule," which proscribes arrangements whereby a network affiliate may
prevent other stations in its community from broadcasting programming the
affiliate rejects, and arrangements that inhibit the ability of stations outside
of the affiliate's community to broadcast network programming.
The FCC's so-called "spot sale rule" prohibits a network from representing
its affiliates in the sale of non-network advertising time unless such
affiliates are owned by or under common control with the network. In late 1990,
the FCC granted a permanent waiver to the Company's predecessor permitting
non-owned and operated affiliates of the Network to be represented by the
Network in the spot sales market. In 1992, as part of its approval of the
Acquisition, the FCC granted the Company's request to extend the permanent
waiver of
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the spot sale rule so as to permit the Network to continue to act as a national
sales representative for each Univision Affiliate.
Advanced Television Technology. At present, U.S. television stations
broadcast signals using the "NTSC" system, named for the National Television
Systems Committee, an industry group established in 1940 to develop the first
U.S. television technical broadcast standards. The FCC is presently conducting
several rulemaking proceedings in order to implement ATV, a broadcasting
technology that would constitute a significant improvement over the audio and
video quality provided by the NTSC system. In May 1996, the FCC issued its Fifth
Further Notice of Proposed Rulemaking in its ATV proceeding, wherein the FCC
proposed to adopt the ATSC DTV standard, a standard for providing ATV service
capable of offering broadcasting formats ranging from one channel with a picture
quality approaching that of 35mm film and audio quality equal to that of compact
discs to four to five channels with picture and sound quality similar to that
currently available. The ATSC DTV standard is incompatible with the existing
NTSC standard (i.e., NTSC equipment will be unable to broadcast ATV and existing
television sets will be unable to receive it without modification). Thus, ATV
broadcasting will require broadcasters electing to engage in ATV broadcasting to
make significant new capital investments in ATV broadcasting capacity. The ATSC
DTV standard has, however, not yet been adopted by the FCC. Several
Commissioners and broadcasting industry groups have voiced their concerns
regarding the adoption of a single standard for ATV, and the FCC has asked for
comment on whether the single standard requirement should sunset after several
years, thus allowing broadcasters to use different ATV standards that do not
interfere with the ATSC DTV standard.
Under the FCC's current plans as set forth in the FCC's Fourth Further
Notice of Proposed Rulemaking and Third Notice of Inquiry in its ATV proceeding
released in August 1995, existing full-power commercial stations would be
guaranteed licenses to construct and operate ATV stations so long as they
continued to operate their NTSC operations as well. Once ATV channel allocations
are determined, the FCC's current plan gives existing stations a three-year
period to apply for ATV licenses and a three-year period thereafter to complete
construction. Any existing broadcast station that fails to make the additional
investment in constructing and operating an ATV station would likely suffer
long-term adverse competitive effects, since other competing television stations
in the market (as well as other competing video delivery modes) would likely be
able to provide to consumers the more advanced ATV programming. All television
stations must convert to ATV within a defined transition period (presently
anticipated to be 15 years). During this transition period, television stations
will be required to broadcast both an NTSC and an ATV signal. At the end of the
transition period, the television station will be required to return to the FCC
its license for the NTSC signal.
However, certain members of Congress from time to time have offered and
continue to offer various proposals that would require incumbent broadcasters to
bid at a public auction for the spectrum necessary to effect the transition to
ATV. The Clinton Administration has not endorsed these proposals. Although the
broadcast industry has opposed such proposals, at this time the Company cannot
be assured that it will not have to bid for the spectrum required for ATV
broadcasting or, if required to bid, that it will have adequate financial
resources to make a successful bid. If such an auction plan were mandated by
Congress, it could have a material adverse effect on the Company. Under certain
circumstances, conversion to ATV operations may reduce a station's geographical
coverage area. In addition, the FCC's current implementation plan would maintain
the secondary status of low-power stations in connection with its allotment of
ATV channels. The FCC has acknowledged that ATV channel allotment may involve
displacement of existing low-power stations, particularly in major television
markets. Accordingly, the Company's low-power Broadcast Affiliates may be
materially adversely affected.
Direct Broadcast Satellite Systems. There are currently in operation
several DBS systems that serve the United States, and it is anticipated that
additional systems will become operational over the next several years.
Furthermore, several Spanish-language DBS systems are underway to serve Latin
America and such systems may have signals which spill over into the southern
U.S. DBS systems provide programming on a subscription basis to those who have
purchased and installed a satellite signal receiving dish and associated decoder
equipment. DBS systems claim to provide visual picture quality comparable to
that found in movie theaters and aural quality comparable to digital audio
compact discs. DBS systems do not, except in certain instances, provide the
signals of traditional over-the-air broadcast stations, and thus are generally
restricted to providing
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the programming of premium services such as HBO and other traditionally
cable-oriented satellite programming services. In the future, competition from
DBS systems could have a material adverse effect on the financial condition and
results of operations of the Company. See "Risk Factors -- Potential Competition
with Other Broadcasters Using Televisa Programming" and "Risk
Factors -- Substantial Competition."
PROPERTIES
The principal buildings owned or leased by Univision are described below:
PRINCIPAL UNIVISION PROPERTIES
<TABLE>
<CAPTION>
AGGREGATE
SIZE OF PROPERTY OWNED LEASE
IN SQUARE FEET OR EXPIRATION
LOCATION (APPROXIMATE) LEASED DATE
-------------------------------- ---------------- ------------ ----------
<S> <C> <C> <C>
Miami, FL....................... 134,100 Owned/Leased(1) 12/31/00(2)
Los Angeles, CA................. 52,709 Leased 9/30/02(2)
New York, NY.................... 35,814 Leased 6/30/10
Secaucus, NJ.................... 29,660 Leased 6/30/09
</TABLE>
- ------------------------------
(1) Represents two separate properties, of which 112,000 square feet are owned.
(2) Option to renew available.
The Company owns or leases remote antenna space and microwave transmitter
space near each of the O&Os. Additionally, the Company leases space in public
warehouses and storage facilities, as needed, near some of the O&Os.
The Network began transmitting from its operations center in Miami, Florida
in January 1991, after acquiring approximately seven acres and an existing
50,000 square foot facility and building an additional 62,000 square feet. The
Miami facility houses Network administration, operations (including the
Network's uplink facility), sales, production, news, Galavision operations and
WLTV, the Miami station. The Company broadcasts its programs to the Univision
Affiliates on three separate satellites from four transponders, one of which is
owned and three of which are leased pursuant to two lease agreements which
expire in 2004.
The Company has recently entered into negotiations for leases to relocate
its stations in Dallas and San Francisco. The Company believes that its
principal properties, whether owned or leased, are suitable and adequate for the
purposes for which they are used and are suitably maintained for such purposes.
Except for the inability to renew any leases of property on which antenna towers
stand or under which the Company leases transponders, the inability to renew any
lease would not have a material adverse effect on the Company's financial
condition or results of operations since the Company believes alternative space
on reasonable terms is available in each city. See "Risk Factors -- Reliance on
Satellites and Other Equipment."
LEGAL PROCEEDINGS
The Company is involved in certain litigation arising in the ordinary
course of business. Management does not believe that any of such litigation,
either alone or in the aggregate, is material to the Company.
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<PAGE> 61
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The executive officers of the Company serve at the discretion of its Board
of Directors. Each director of the Company serves until his successor is elected
and qualified or until his death, retirement, resignation or removal. Except as
set forth below, the directors of the Company do not receive any compensation
for their services in such capacity.
The executive officers and directors of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- --------------------- --- -----------------------------------------------
<S> <C> <C>
A. Jerrold Perenchio 65 Chairman of the Board, President and Chief
Executive Officer (Class A/P)
George W. Blank 45 Executive Vice President and Chief Financial
Officer
Robert V. Cahill 65 Class A/P Director, Vice President and
Secretary
Ray Rodriguez 45 Class A/P Director, President of the Network
Gustavo Cisneros 51 Class V Director
Lawrence W. Dam 49 Class T Director
Alan F. Horn 53 Class A/P Director
John G. Perenchio 41 Class A/P Director
Alejandro Rivera 53 Alternate Class V Director
Emilio Romano 31 Alternate Class T Director
</TABLE>
Mr. Perenchio has owned and been active in Chartwell Partners since it was
formed in 1983. Chartwell Partners is an investment firm that is active in the
media and communications industry. Mr. Perenchio has over 25 years of experience
in the U.S. media and communications industry. During his career, Mr. Perenchio
has been the chief executive officer of a number of successful entities involved
in the production and syndication of television programming, and from 1975 to
1986 owned and operated Spanish-language television stations in Los Angeles and
New York. A. Jerrold Perenchio is John G. Perenchio's father. For further
information regarding Mr. Perenchio, see "Business -- General."
Since the Acquisition, Mr. Blank has been Executive Vice President and
Chief Financial Officer of UTG and, since 1995, the Network. Mr. Blank joined
Hallmark Cards Incorporated in March 1987 as a consultant. In September 1987, he
became Vice President, Finance and Chief Financial Officer of Univision
Holdings, Inc., the Company's predecessor ("UHI"). In addition, from May 1992
through the Acquisition, Mr. Blank held the position of Chief Operating Officer
of UTG.
Mr. Cahill has been Executive Vice President and General Counsel of
Chartwell Partners, an affiliate of Perenchio, since 1985. While at Chartwell
Partners, he has also been the Vice President of various other corporations and
partnerships affiliated with Perenchio that, among other things, engage in
businesses in the media and communications industry. Mr. Cahill has been an
associate of Mr. Perenchio for 25 years.
Since the Acquisition, Mr. Rodriguez has been President and Chief Operating
Officer of the Network. In August 1990 Mr. Rodriguez joined the Network's
predecessor as Vice President and Director of Talent Relations. In September
1991, he became Senior Vice President and Operating Manager of the Network. In
May 1992, Mr. Rodriguez became President and Chief Executive Officer of UHI.
Prior to joining UHI, he owned and operated a management consulting and
production company which produced Spanish-language television programs. From
1983 to 1989, he was Julio Iglesias' manager and Chief Executive Officer of that
performer's organization.
Mr. Cisneros, together with other members of his family, owns a controlling
interest in Venevision as well as interests in a wide variety of other business
enterprises. For more than five years, Mr. Cisneros has been a direct or
indirect beneficial owner of interests in and a director of certain of the
companies that own or are engaged in a number of diverse commercial enterprises
principally in Venezuela, the United States, Brazil, Chile and Mexico (the
"Cisneros Group"). Mr. Cisneros, together with other members of his family,
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<PAGE> 62
indirectly beneficially owns Venevision. Mr. Cisneros is the Chairman of the
Board of Directors of Pueblo Xtra International, Inc.
Mr. Dam has been President and Chief Operating Officer of Univisa, Inc., a
wholly-owned subsidiary of Televisa, since 1993. From 1987 to 1993 he was Vice
President and General Counsel of Univisa, Inc. From 1963 to 1988, Univisa, Inc.
and its predecessors owned and operated the Network. Mr. Dam is a member of the
Boards of Directors of Verdugo Banking Company and PanAmSat Corporation.
Mr. Horn has been Chairman and Chief Executive Officer of Castle Rock
Entertainment since January 1994. Mr. Horn has also been a member of the
Executive Committee and the Planning Committee of Turner Broadcasting Systems,
Inc. since January 1994. From 1987 until January 1994, Mr. Horn was the Chairman
of the Management Committee of Castle Rock Entertainment. From 1985 to 1987, Mr.
Horn was the President and Chief Operating Officer of Twentieth Century Fox Film
Corporation. Prior to such time, he was an executive of Embassy Communications
and its predecessor, TAT Communications Company, and Tandem Productions. From
1982 to 1985 he served as Chief Executive Officer and Chairman of the Board of
Directors of Embassy.
Mr. John G. Perenchio has been an executive at Chartwell Partners and Vice
President of Malibu Bay Company (a real estate development and management
company) since 1990. From 1985 to 1990 he was a Business Affairs executive and
subsequently, a Director of Contemporary Music at Triad Artists, Inc. John G.
Perenchio is the son of A. Jerrold Perenchio.
Mr. Rivera has served in executive positions with companies in the Cisneros
Group, including Venevision, since 1976.
Mr. Romano joined Televisa in June 1995, and since that time he has been
responsible for mergers and acquisitions and new project development. From
January 1993 until March 1995, Mr. Romano served as General Director of Revenue
Policy and International Fiscal Affairs, and then as Federal Fiscal Attorney, in
the Mexican Ministry of Finance. Mr. Romano headed the representative office of
the Mexican Ministry of Finance in Washington D.C. from May 1991 until December
1992.
COMPOSITION OF THE BOARD OF DIRECTORS
The Board presently is composed of eight members. The Company's Restated
Certificate of Incorporation provides that the holders of the Class A Common
Stock and Class P Common Stock, voting together as a class, have the right to
elect six directors (and six alternate directors) of the Company (and no less
than 50% of the entire Board), the holders of the Class T Common Stock have the
right to elect one director (and one alternate director) and the holders of the
Class V Common Stock have the right to elect one director (and one alternate
director), subject to increase in certain circumstances. Each director of the
Company holds office until his or her term expires or until his or her successor
is elected and qualified. See "Description of Capital Stock."
The Company's Restated Certificate of Incorporation provides that an
alternate director may act in the place of the director for whom he is an
alternate if such director is absent. While so acting at such meeting, such
alternate director has all of the rights, duties, privileges and powers of the
director for whom he is acting as an alternate, including the right to vote at
such meeting, and while so acting is counted as a director elected by the same
class of stock as the director for whom he is an alternate for the purpose of
determining a quorum of the Board. Except when acting as a director as described
above, no alternate director is entitled to attend, or vote at, a meeting of the
Board of Directors and is not counted as a member of the Board for the purpose
of determining a quorum. Mr. Rivera is a Class V alternate director and Mr.
Romano is a Class T alternate director of the Company's Board of Directors. At
the present time, Perenchio does not intend to nominate any alternate Class
A/Class P Directors.
COMMITTEES OF THE BOARD OF DIRECTORS
Audit Committee. The Company intends to establish an Audit Committee
comprised of at least two independent directors to make recommendations
concerning the engagement of independent public account-
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<PAGE> 63
ants, review with the independent public accountants the plans and results of
the audit engagement, approve professional services provided by the independent
public accountants, review independence of the independent public accountants,
consider the range of audit and non-audit fees and review the adequacy of the
Company's internal accounting controls.
Compensation Committee. The Company intends to establish a Compensation
Committee, consisting of at least two independent directors, to determine
compensation of the Company's executive officers and to administer the 1996
Stock Incentive Plan. The current executive officer salaries were set by the
Board of Directors prior to establishment of the Compensation Committee.
DIRECTOR COMPENSATION
In consideration for acting as a director of the Company, each director who
is not affiliated with Perenchio, Televisa or Venevision will be paid $50,000
for each year of service.
EXECUTIVE COMPENSATION
The following table shows the compensation paid or accrued by the Company
during fiscal 1995, 1994 and 1993 to each of the Company's executive officers as
of December 31, 1995 (collectively, the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION ------------
NAME AND -------------------------------------------------- SECURITIES
PRINCIPAL OTHER ANNUAL UNDERLYING ALL OTHER
POSITION YEAR SALARY BONUSES COMPENSATION(1) OPTIONS/SARS COMPENSATION
- ---------------------- ---- -------- -------- --------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
A. Jerrold
Perenchio(2)........ 1995 $ 0 $ 0 None None None
Chairman of the 1994 0 0 None None None
Board, President 1993 0 0 None None None
and Chief
Executive Officer
George W. Blank(3).... 1995 499,992 500,000(4) None None $4,500(6)
Executive Vice 1994 480,124 300,000(4) None $350,000(5) 3,000(6)
President and 1993 430,122 100,000(4) None 157,500(5) 4,497(6)
Chief Financial
Officer
Robert V. Cahill(7)... 1995 500,000 500,000 None None None
Vice President and 1994 300,000 500,000 None None None
Secretary 1993 300,000 0 None None None
Jaime Davila(8)....... 1995 800,000 600,000 None None None
Chairman of the 1994 600,000 600,000 None None None
Network 1993 500,000 300,000 None None None
Ray Rodriguez(9)...... 1995 574,992 600,000(4) None None 4,500(6)
President of the 1994 530,115 400,000(4) None 385,000(5) 3,000(6)
Network 1993 484,510 300,000(4) None 175,000(5) 4,497(6)
</TABLE>
- ----------------------------
(1) Other annual compensation did not exceed the lesser of $50,000 or 10% of the
total salary and bonuses of any Named Executive Officer.
(2) The services of Mr. Perenchio were provided by Perenchio pursuant to the
informal arrangement described in " -- Employment Agreements and
Arrangements." Mr. Perenchio was not compensated for his services in any
employment capacity at UTG or the Network. However, one of his affiliates
that was a partner of the Network received $3,174,000, $2,401,000 and
$2,043,000 in 1995, 1994 and 1993, respectively, as a management fee from
the Network. See Note 3 of Notes to Consolidated Financial Statements of
UNHP.
(3) Mr. Blank was paid by UTG.
(4) Includes a performance bonus earned in 1993, 1994 and 1995 pursuant to his
previous employment agreement.
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<PAGE> 64
(5) Includes deferred compensation earned in 1993 and 1994 pursuant to his
previous employment agreement.
(6) Matching contribution pursuant to 401(k) Plan. See "-- 401(k) Savings and
Thrift Plan."
(7) The services of Mr. Cahill were provided by Perenchio pursuant to the
informal arrangement among the Principal Stockholders described below. Mr.
Cahill was paid a total of $500,000, $300,000 and $300,000 by Perenchio in
1995, 1994 and 1993, respectively, for all of the services he performed for
UTG and the Network. Beginning in 1995 UTG was charged for one-half of Mr.
Cahill's salary. A bonus, earned in 1995 and 1994, of $500,000 each year was
paid in 1996 and 1995 to Mr. Cahill. See "-- Employment Agreements and
Arrangements."
(8) Mr. Davila's salary and bonus were paid by Televisa and his bonus was
reimbursed by the Company in 1993. In 1994 and 1995, Mr. Davila's salary was
paid by Televisa and reimbursed by the Company. His 1994 and 1995 bonuses
were paid directly by the Company. Mr. Davila, an officer of Televisa, has
resigned from Univision, effective upon the closing of the Offering.
(9) Mr. Rodriguez was paid by the Network.
EMPLOYMENT AGREEMENTS AND ARRANGEMENTS
The Company has agreed to pay Mr. Perenchio $100,000 per month for up to a
maximum of six months following the closing of this Offering for his services as
Chief Executive Officer. The Company has commenced a search for a new Chief
Executive Officer. If a new Chief Executive Officer is found, Mr. Perenchio is
expected to continue to serve as Chairman of Board.
On January 1, 1995 Messrs. Blank and Rodriguez entered into amended
employment agreements with the Company, each of which expires on December 31,
1998. Mr. Blank's and Mr. Rodriguez's base salary under their respective amended
employment agreements is $500,000 and $600,000 for 1996 and 1997 and $550,000
and $650,000 for 1998, respectively. In addition, based upon an annual review of
each individual's performance and the results of operations and prospects of the
Company, the Company may in its sole discretion grant Mr. Blank and Mr.
Rodriguez a bonus. Each employment agreement may be terminated for cause, upon
death or disability or without cause. In the case of a termination without
cause, each of Mr. Blank and Mr. Rodriguez shall, subject to certain conditions
regarding confidentiality, trade secrets and competitive activities, be entitled
to receive his base salary for the remainder of the term of the employment
agreement.
Pursuant to an informal arrangement among the Principal Stockholders, the
services of Messrs. Cahill and A. Jerrold Perenchio were provided by Perenchio
in 1995, 1994 and 1993. Except as set forth below, neither individual was
compensated in such capacity and none of the compensation paid to the
above-named executive officers was paid by UTG in 1994 and 1993. Mr. Cahill was
paid a total of $300,000 in each of 1994 and 1993 by Perenchio for the services
he performed as an executive officer of UTG and the Network. In 1995, Mr. Cahill
was paid $500,000 by Perenchio for services as an executive officer of UTG and
the Network and one-half was charged to UTG. In addition, UTG paid a bonus to
Mr. Cahill in 1996 and 1995 of $500,000 for each year for his services in 1995
and 1994.
401(K) SAVINGS AND THRIFT PLAN
The Company presently has a retirement savings plan (the "401(k) Plan")
covering all employees who have completed one year of service. The 401(k) Plan
allows all employees to defer up to 15% of the total annual compensation that
would otherwise be paid to the employee, which deferral in 1996 can not exceed
$9,500. Employee contributions are invested in selected mutual funds according
to the direction of the employee. The 401(k) Plan permits the Company each year
to match up to the first 4% of the first 15% of the employee's salary, subject
to certain limitations imposed by the Internal Revenue Service. During 1993,
1994, 1995 and 1996, the Company offered matching contributions to each eligible
employee of 50%, 50%, 75% and 75%, respectively, of the first 4% of the first
15% of such employee's salary, subject to certain limitations imposed by the
Internal Revenue Service.
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1996 PERFORMANCE AWARD PLAN
The Company has established the 1996 Performance Award Plan (the "Plan") to
attract, reward and retain talented and experienced officers, other key
employees and certain other eligible persons ("Eligible Persons") who may be
granted awards from time to time by the Company's Board of Directors or the
Committee (as defined below).
Awards under the Plan may be in the form of nonqualified stock options,
incentive stock options, stock appreciation rights (SARs), restricted stock,
performance shares, stock bonuses and cash bonuses. Awards may be granted singly
or in combination with other awards, consistent with the terms of the Plan. Each
award will be evidenced by an award agreement entered into between the Company
and the recipient setting forth the specific terms and conditions applicable to
that award. Cash bonuses will be paid based upon the extent to which performance
goals set by the Committee are met during the performance period. Awards under
the Plan generally will be nontransferable by a holder (other than by will or
the laws of descent and distribution) and rights thereunder generally will be
exercisable, during the holder's lifetime, only by the holder, subject to such
exceptions as (consistent with applicable legal considerations) may be
authorized from time to time by the Committee.
Administration; Change in Control. The Plan provides that it will be
administered by the Board of Directors or a committee appointed by the Company's
Board of Directors ("Committee"); the Board of Directors intends to appoint the
Company's Compensation Committee to serve as the Committee under the Plan. The
Committee will have the authority within the terms and limitations of the Plan
to (i) designate recipients of awards, (ii) determine or modify the form,
amount, terms, conditions, restrictions, and limitations of awards, including
vesting provisions, terms of exercise of an award and expiration dates, (iii)
approve the form of award agreement for each Eligible Person, and (iv) construe
and interpret the Plan. Such authority includes the discretion to accelerate and
extend the exercisability or term and establish the events of termination or
reversion of outstanding awards.
Unless prior to a Change in Control Event the Committee determines that
benefits under awards made under the Plan will not accelerate or the Committee
provides otherwise in an award agreement, then upon a Change in Control Event
each option and SAR will become immediately exercisable, restricted stock will
immediately vest free of restrictions and the number of shares, cash or other
property covered by each performance share award will be issued to the grantee
of such award. A Change in Control Event under the Plan is defined generally to
include the acquisition of 50% or more of the outstanding voting securities of
the Company by any person other than a person who is the beneficial owner of
more than 20% of the Class A Common Stock at the time the Plan is adopted, a
transfer of substantially all of the Company's assets, the dissolution or
liquidation of the Company, or a merger, consolidation or reorganization whereby
stockholders immediately prior to such event own less than 50% of the
outstanding voting securities of the surviving entity after such event.
Plan Amendment; Termination and Term. The Company's Board will have the
authority to amend, suspend or discontinue the Plan at any time, provided that
no such action will affect any outstanding award in any manner adverse to the
participant without the consent of the participant. The Plan may be amended by
the Board without further stockholder approval unless such approval is required
by applicable law or is deemed necessary or advisable by the Board.
The Plan will remain in existence as to all outstanding awards until such
awards are exercised or terminated. The maximum term of unvested or unexercised
options, SARs and other rights to acquire Class A Common Stock under the Plan is
10 years after the initial date of award. No award can be made after the tenth
anniversary of the date on which the Board of Directors approved the Plan.
Authorized Shares and Other Provisions. The number of shares of Class A
Common Stock that may be issued in respect of awards under the Plan will not
exceed 5,500,000 shares (subject to certain anti-dilution adjustments). The
number of shares of Class A Common Stock subject to options and SARs granted to
any individual in any calendar year is limited to 500,000 and after 1996 the
number of shares of Class A Common
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<PAGE> 66
Stock that may be subject to awards granted in any calendar year may not exceed
1,375,000 (excluding any Eligible Person hired in that year as the chief
executive officer of the Company).
The number and kind of shares available for grant and the shares subject to
outstanding awards (as well as individual share and share unit limits on awards,
performance standards and exercise prices of awards) will be adjusted to reflect
the effect of a stock dividend, split, recapitalization, merger, consolidation,
reorganization, combination or exchange of shares, extraordinary dividend or
other distribution or other similar transaction. If any option or other right to
acquire shares of Class A Common Stock under or receive cash or shares in
respect of any award expires or is cancelled or terminated without having been
exercised or paid in full; or if any Class A Common Stock subject to a
restricted stock award does not vest or is not delivered, the unpurchased,
unvested or undelivered shares will again be available for award under the Plan.
No award may be granted at a price that is less than fair market value on the
date of grant.
No award, other than those described in "Grant of Options" or awards
granted in lieu of cash bonuses, may vest more quickly than 25% per year.
Federal Tax Consequences. The current federal income tax consequences of
awards authorized under the Plan follow certain basic patterns. Generally,
awards under the Plan that are includable in income of the recipient at the time
of award or exercise (such as nonqualified stock options, SARs, restricted stock
and performance-awards) are deductible by the Company, and awards that are not
required to be included in income of the recipient at such times (such as
incentive stock options) are not deductible by the Company.
Grant of Options. On the day the Company and the Underwriters agree on the
initial public offering price of the shares of Class A Common Stock, the
Committee intends to grant 10-year options relating to up to 2.0 million shares
of Class A Common Stock to Eligible Persons. The exercise price of each option
granted will be the initial public offering price per share of the Class A
Common Stock offered hereby. Such options will vest in two equal installments
over a period of two years.
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CERTAIN TRANSACTIONS
While the following is a description of the material terms of certain
agreements among the Principal Stockholders, certain of which are filed as
exhibits to the Registration Statement of which this Prospectus is a part, the
descriptions set forth below do not purport to be a complete summary of all such
agreements.
PROGRAM LICENSE AGREEMENTS
For a discussion of programming provisions of the Program License
Agreements, see "Business -- Program License Agreements." Additionally, pursuant
to the Program License Agreements, Televisa and Venevision have the right to
use, without charge, advertising time that is not sold to advertisers or used by
the Company. There are limitations on the ability of Televisa and Venevision to
use such time for telemarketing products and such time may be preempted to the
extent sold to a paying advertiser. Televisa and Venevision may each also
purchase for its own use non-preemptable time at the lowest spot rate for the
applicable time period.
INTERNATIONAL PROGRAM RIGHTS AGREEMENT
As part of an agreement with Televisa and Venevision to amend and restate
the Program License Agreements to reduce royalties payable by Univision
thereunder from a maximum of 20% of Combined Net Time Sales to a maximum of 15%
of Combined Net Time Sales, the Company agreed to grant foreign rights in
Univision-produced programs to Televisa and Venevision. With respect to
Univision-produced programs that are on the air as of the date of the Offering,
as well as Univision-produced programs that are deemed to replace such programs
because they share two or more characteristics such as talent, format and theme,
daypart or title with such replaced programs ("Grandfathered Programs"),
Televisa will own Mexican rights, Venevision will own Venezuelan rights and
Televisa and Venevision will each own undivided interests in the rights in all
other territories (other than the U.S. territory), including Puerto Rico. With
respect to programs produced by Univision other than Grandfathered Programs, (i)
subject to clause (ii), Univision will own worldwide rights in such programs,
and (ii) Televisa will have the exclusive right to broadcast such programs on a
royalty-free basis in Mexico, Venevision will have the exclusive right to
broadcast such programs on a royalty-free basis in Venezuela, and each of
Televisa and Venevision will have merchandising rights in such programs in their
respective territories. With respect to Grandfathered Programs, the rights
described above will revert back to the Company from Televisa or Venevision, as
the case may be, when the Program License Agreement to which Televisa or
Venevision, as the case may be, is a party terminates. With respect to other
programs, the rights described above will revert back to the Company from
Televisa or Venevision, as the case may be, when Televisa or Venevision, as the
case may be, owns less than the Required Amount.
PARTICIPATION AGREEMENT
Pursuant to a Participation Agreement (the "Participation Agreement")
Perenchio, Televisa and Venevision have agreed that none of them will enter into
certain transactions involving Spanish-language television broadcasting or a
Spanish-language television network in the U.S. (each, an "Exclusive
Transaction") without first offering the Company the opportunity to acquire a
50% economic interest. For instance, Televisa is required to offer the Company
the opportunity to acquire a 50% economic interest in Televisa's interest in the
Televisa DBS joint venture to the extent it relates to U.S. Spanish-language
broadcasting. The Participation Agreement provides that if the Company elects to
participate in an Exclusive Transaction, the offeror party will have substantial
control over management of such transaction.
To the maximum extent permitted by law, subject to the obligations of the
Principal Stockholders under the Participation Agreement and other agreements
described herein, the Principal Stockholders, their respective affiliates and
the stockholders, officers, directors and employees of the Principal
Stockholders and their respective affiliates (i) may engage in any activity,
including but not limited to competing with Univision and its subsidiaries, (ii)
may acquire, own, broker, lease or operate any business and (iii) shall not be
under any obligation to communicate or present any opportunity or potential
transaction or matter to the Company.
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WARRANTS
In connection with the Acquisition, Televisa and Venevision were issued
Warrants to purchase Common Stock, which if exercised would have increased the
ownership of each of them in the Company to 25%. The Warrants are not
exercisable unless it is lawful for the holder to own the number of shares
issuable as a result of such exercise and such exercise would not violate the
Communications Act. Subject to applicable securities laws, the Warrants are
freely transferable. The Warrants are exercisable for Class T Common Stock and
Class V Common Stock, as the case may be. However, at the option of Televisa or
Venevision, or if the Warrants are not held by Televisa or Venevision or their
permitted transferees, the Warrants are exercisable for Class A Common Stock. As
part of the Reorganization, the Warrants have been adjusted so that after the
Offering they will be exercisable for Common Stock at an exercise price of $0.13
per share and, if fully exercised, Televisa and Venevision would each own 20.3%
of the Common Stock of the Company.
REGISTRATION RIGHTS AGREEMENT
After this Offering, all existing stockholders will be entitled, upon
expiration of the lock-up agreements with the Underwriters, to certain rights
with respect to the registration of their shares under the Securities Act. Under
the terms of the Registration Rights Agreement to which each of the existing
stockholders of the Company is a party, Perenchio will have the right to cause
the Company to file registration statements with respect to Perenchio's Common
Stock on four separate occasions and each of Televisa and Venevision will have
the right to cause the Company to register their shares of Common Stock on two
separate occasions. Additionally, if the Company proposes to register any of its
securities under the Securities Act, either for its own account or for the
account of others, each of the Principal Stockholders is entitled, subject to
certain limitations and exceptions, to notice of such registration and is
entitled to include shares of Common Stock therein. In addition, at any time
after the Company becomes eligible to file registration statements on Form S-3
under the Securities Act, the Principal Stockholders may request that the
Company file a registration statement on Form S-3 with respect to their shares
of Common Stock, provided that the registration statement with respect to such
offering shall contain only the information required by such Form S-3, and the
Company is required to use its best efforts to effect such registration, subject
to certain conditions and limitations. In general, all fees, costs and expenses
of such registration (other than underwriting fees and commissions) will be
borne by the Company except for registration statements under Form S-3 in which
case such registration expenses will be borne by the persons registering
securities under such registration statements.
SPONSOR LOANS
Televisa and Venevision, pursuant to certain agreements, agreed to enhance
UTG's cash flow by providing the Sponsor Loans each quarter in an amount
required by its lenders, subject to certain limitations. Each Sponsor Loan is
subordinated to all third-party acquisition financing, has an initial term of 15
years, bears interest at the lesser of the prime rate (as defined therein) and
10% and requires no payment of interest or principal until maturity. The Sponsor
Loans have been used to repay indebtedness under the Old Bank Facility. The
Sponsor Loans will be repaid in connection with the Reorganization, and Televisa
and Venevision will have no further obligations to make Sponsor Loans subsequent
thereto. See "Reorganization" and Note 6 of Notes to Consolidated Financial
Statements of PCI.
PROGRAM COST SHARING AGREEMENT
Under the Program Cost Sharing Agreement (which will be terminated as part
of the Reorganization) the Network had the right, subject to certain exceptions,
to cause Televisa and Venevision to pay one-half of the direct and indirect
costs of any Company produced programs or programs acquired from third parties.
The Network paid the remaining one-half of such costs. The Network owns all
available U.S. rights, except in Puerto Rico, to programs produced or acquired
under the Program Cost Sharing Agreement, Televisa owns the Mexican rights,
Venevision owns the Venezuelan rights and Televisa and Venevision each own
undivided interests in the rights with respect to the rest of the world. The
Network does not share in any revenues from exploitation of these programs
outside the U.S. From January 1, 1996 through the consummation of the
Reorganization, the Network, Televisa and Venevision have agreed that in lieu of
cash payments under the
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Program Cost Sharing Agreement, UTG will receive payment in the form of notes
issued as Sponsor Loans equal to the costs to be funded under the Program Cost
Sharing Agreement by Televisa and Venevision. See Note 3 of Notes to
Consolidated Financial Statements of PCI.
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PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding beneficial
ownership of the Common Stock as of June 30, 1996 (after giving effect to the
Reorganization) by (i) each person who is known by the Company to own
beneficially 5% or more of the outstanding shares of any class of the Common
Stock, (ii) each of the Company's directors and executive officers who own any
shares of any class of the Common Stock, and (iii) all directors and executive
officers as a group. Since the Class P Common Stock has 10 votes per share on
substantially all matters submitted to stockholders, Perenchio will have, after
giving effect to the issuance of the shares offered hereby, 96% of the aggregate
voting power of the Class A and the Class P Common Stock combined and 92% of the
aggregate voting power of the Common Stock. Except as indicated in the footnotes
to the table, the persons named in the table have sole voting and investment
power with respect to all shares of Common Stock shown as beneficially owned by
them, subject to community property laws where applicable.
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF PERCENT OF CLASS A
SHARES CLASS A COMMON STOCK
OF CLASS A COMMON BENEFICIALLY
COMMON STOCK STOCK OWNED
BENEFICIALLY BENEFICIALLY POST-OFFERING
OWNED OWNED ASSUMING WARRANTS
NAME AND ADDRESS TITLE OF CLASS PRE-OFFERING(1)(2) POST-OFFERING(2) ARE EXERCISED(2)
- ------------------------------ -------------- ------------------- ----------------- ------------------
<S> <C> <C> <C> <C>
A. Jerrold Perenchio Class P 22,071,737(3) 53.3% 39.5%
1999 Avenue of the Stars, Common Stock
Suite 3050
Los Angeles,
California 90067
Grupo Televisa, S.A. Class T 4,459,291(3)(4) 10.8 20.3(6)
Avenida Chapultepec, No. 28 Common Stock
06724 Mexico, D.F.
Mexico
Venevision Class V 4,459,291(3)(4)(5) 10.8 20.3(6)
c/o Finser Corporation Common Stock
550 Biltmore Way,
9th Floor
Coral Gables,
Florida 33134
The Davila Family, LLC Class A, P, T 1,065,007(3)(4) 2.6 3.2
c/o Suite 2500 and V
One New York Plaza Common Stock
New York, New York 10004
Stephen P. Rader Class A 1,161,354 2.8 2.1
1999 Avenue of the Stars, Common Stock
Suite 3050
Los Angeles,
California 90067
All directors and Class P and 26,531,028(3)(4) 64.1 59.8(6)
executive officers as a Class V
group (8 persons) Common Stock
</TABLE>
- ----------------------------
(1) Each of the listed stockholders will beneficially own 100% of their
respective class, both before and after the Offering, except The Davila
Family, LLC and Mr. Rader, who will own 10.2% and 11.2%, respectively, of
the Class A Common Stock outstanding immediately after the Offering.
(2) Assumes the Class P, Class T and Class V Common Stock are converted into
Class A Common Stock since this may be done at any time in accordance with
their terms. See "Description of Capital Stock."
(3) Perenchio, Televisa and Venevision have each formed a partnership in which
they are the general partner and The Davila Family, LLC is the managing
general and limited partner. The partnership with Perenchio owns 595,659
shares of Class A Common Stock and 6,017 shares of Class P Common Stock. The
partnerships with Televisa and Venevision each own 234,674 shares of Class A
Common Stock and 2,371 shares of Class T and Class V Common Stock,
respectively. The partnerships with Televisa and
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<PAGE> 71
Venevision also each own Warrants to purchase 360,985 shares of Class A
Common Stock and 3,646 shares of Class T and Class V Common Stock,
respectively. The Davila Family, LLC has full dispositive and voting power
over the shares of Class A Common Stock owned by the partnerships and
Perenchio, Televisa and Venevision each has full dispositive and voting
power over the shares of Class P Common Stock, Class T Common Stock and
Class V Common Stock owned by the partnership in which it is a partner.
(4) Excludes 6,859,425 shares of Class T Common Stock, 6,859,425 shares of Class
V Common Stock and 721,970 shares of Class A Common Stock, issuable upon
exercise of the Warrants held by Televisa, Venevision and The Davila Family,
LLC. Such shares may be exercised by either Televisa or Venevision, so long
as the aggregate shares owned by Televisa, Venevision and all non-U.S.
aliens do not represent more than 25% of the outstanding stock.
(5) A trust for the benefit of the family of Gustavo A. Cisneros and a trust for
the benefit of the family of Ricardo Cisneros each owns a 50% indirect
beneficial ownership interest in the equity of the Venevision affiliates
that own these shares.
(6) The Warrants to purchase Class T Common Stock and Class V Common Stock are
subject to certain exercise restrictions. See "Certain
Transactions -- Warrants."
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DESCRIPTION OF CAPITAL STOCK
While the following description of the Company's capital stock is a summary
of the material terms of such stock, it does not purport to be complete and is
subject in all respects to applicable Delaware law and the provisions of the
Company's Restated Certificate of Incorporation and Bylaws, copies of which have
been filed as exhibits to the Registration Statement of which this Prospectus is
a part.
The Restated Certificate of Incorporation of the Company provides for three
classes of directors: six Directors to be elected by the holders of the Class A
Common Stock and the Class P Common Stock (the "Class A/P Directors"); one to
three Directors to be elected by the holders of the Class T Common Stock (the
"Class T Directors"); and one to three Directors to be elected by the holders of
the Class V Common Stock (the "Class V Directors").
Effective upon the closing of this Offering, the authorized capital stock
of the Company will consist of 150,000,000 shares of Common Stock, par value
$.01 per share, and 10,000,000 shares of preferred stock, par value $.01 per
share. The Common Stock is divided into four classes, Class A Common Stock,
Class P Common Stock, Class T Common Stock and Class V Common Stock. Giving
effect to the Reorganization but not this Offering, the Company's issued and
outstanding capital stock consisted of (i) 2,226,361 shares of Class A Common
Stock, none of which were owned by the Principal Stockholders, (ii) 22,071,737
shares of Class P Common Stock, all of which were owned by Perenchio, (iii)
4,459,291 shares of Class T Common Stock, all of which were owned by Televisa,
and (iv) 4,459,291 shares of Class V Common Stock, all of which were owned by
Venevision. See "Principal Stockholders." An additional 721,970 shares of Class
A Common Stock, 6,859,425 shares of Class T Common Stock and 6,859,425 shares of
Class V Common Stock are available for issuance upon exercise of the Warrants
held by The Davila Family, LLC, Televisa and Venevision, respectively. See
"Management -- 1996 Performance Award Plan" and "Certain Transactions --
Warrants."
COMMON STOCK
Class A Common Stock. Holders of Class A Common Stock are entitled to
receive such dividends as may from time to time be declared by the Board out of
funds legally available therefor. Holders of Class A Common Stock are entitled
to one vote per share on all matters on which they are entitled to vote. The
holders of the Class A Common Stock, voting together with the holders of the
Class P Common Stock (and the Class T Common Stock and the Class V Common Stock
to the extent a Voting Conversion has occurred with respect to such class),
elect the Class A/P Directors (and alternate directors) of the Company. The
Class A/P Directors presently constitute six of the eight directors of the
Corporation, but in no event will constitute less than 50% of the Board of
Directors. Holders of Class A Common Stock have no preemptive, conversion,
redemption or sinking funds rights. In the event of a liquidation, dissolution
or winding-up of the Company, holders of Class A Common Stock are entitled to
share with all other holders of any class of Common Stock equally and ratably in
the assets of the Company, if any, remaining after the payment of all debts and
liabilities of the Company and the liquidation preference of any outstanding
Preferred Stock. The outstanding shares of Class A Common Stock are, and the
shares of Class A Common Stock offered by the Company hereby when issued will
be, fully paid and nonassessable. The rights, preferences and privileges of
holders of Class A Common Stock are subject to any series of Preferred Stock
that the Company may issue in the future.
Class P Common Stock. Holders of the Class P Common Stock are entitled to
the same rights, privileges and preferences as holders of the Class A Common
Stock, except that holders of Class P Common Stock are entitled to 10 votes per
share on all matters on which they are entitled to vote; provided that at any
time that Perenchio is incapacitated (defined as Perenchio being subject to a
conservatorship of the estate under applicable state law), the holders of the
Class P Common Stock shall only be entitled to one vote per share. As mentioned
above, the holders of Class P Common Stock and the holders of Class A Common
Stock (and the Class T Common Stock and the Class V Common Stock to the extent a
Voting Conversion has occurred with respect to such class) voting together,
elect the Class A/P Directors (and alternate directors). Each share of Class P
Common Stock is convertible at the option of the holder thereof into one share
of
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Class A Common Stock. In addition, each share of Class P Common Stock will
convert automatically into one share of Class A Common Stock upon the sale of
such share of Class P Common Stock to a person that is not a Permitted
Transferee (as defined below) of Mr. Perenchio. Additionally, each share of
Class P Common Stock will convert automatically into one share of Class A Common
Stock (i) upon the death of Mr. Perenchio or (ii) if Perenchio (and his
Permitted Transferees) cease to own beneficially at least the Required Amount
(as defined).
Class T and Class V Common Stock. Holders of the Class T and Class V Common
Stock are entitled to the same rights, privileges, and preferences as the
holders of the Class A and Class P Common Stock, except (i) unless there has
been a Voting Conversion with respect to any class, holders of Class T Common
Stock and Class V Common Stock, each voting as a separate class, each elect one
director and one alternate director (but no less than 12.5% of the Board);
provided that at such time as the Communications Act permits at least 37.5% but
less than 50% alien ownership of the Company's capital stock, the holders of
Class T Common Stock and Class V Common Stock, each voting as a separate class,
each elect two directors and two alternate directors (but no less than 20% of
the Board) and at such time as the Communications Act permits 50% or more alien
ownership of the Company's capital stock, the holders of Class T Common Stock
and Class V Common Stock, each voting as a separate class, each elect three
directors and three alternate directors (but no less than 25% of the Board),
(ii) unless there has been a Voting Conversion with respect to any class,
holders of the Class T Common Stock and Class V Common Stock each votes as a
separate class on matters which would adversely affect the special rights of
such class, (iii) each share of Class T Common Stock will convert automatically
into one share of Class A Common Stock upon the sale of any such shares to a
person that is not a Permitted Transferee of Televisa and (iv) each share of
Class V Common Stock will convert automatically into one share of Class A Common
Stock upon the sale of any such shares to a person that is not a Permitted
Transferee of Venevision.
For purposes hereof, "Required Amount" with respect to a person means a
number of shares equal to 30% of the number of shares owned by such person as of
the closing of the Offering, subject to adjustments for stock splits and stock
dividends, "Permitted Transferee" means (i) any entity all of the equity of
which is directly or indirectly owned by the transferor, (ii) in the case of a
transferor who is an individual, (a) such transferor's spouse and lineal
descendants, personal representatives and heirs, (b) any trustee of any trust
created primarily for the benefit of any, some or all of such spouse and lineal
descendants (but which may include beneficiaries which are charities) or of any
revocable trust created by such transferor, (c) following the death of such
transferor, all beneficiaries under either such trust, (d) the transferor, in
the case of a transfer from any Permitted Transferee back to its transferor and
(e) any entity all of the equity of which is directly or indirectly owned by any
of the foregoing and "Voting Conversion" means with respect to the Class T
Common Stock or the Class V Common Stock that the holders of such class own less
than the Required Amount or have elected to relinquish their special voting
rights, including the right to elect Class T or Class V Directors.
PREFERRED STOCK
The Board is authorized to provide for the issuance of Preferred Stock in
one or more series and to fix the designations, preferences, powers and relative
participating, optional and other rights, qualifications, limitations and
restrictions thereof, including the dividend rate, conversion rights, voting
rights, redemption price and liquidation preference, and to fix the number of
shares to be included in any such series. Any Preferred Stock so issued may rank
senior to the Common Stock with respect to the payment of dividends or amounts
upon liquidation, dissolution or winding up, or both. In addition, any such
shares of Preferred Stock may have class or series voting rights. Issuances of
Preferred Stock, while providing the Company with flexibility in connection with
general corporate purposes, may, among other things, have an adverse effect on
the rights of holders of Common Stock, may have the effect of delaying,
deterring or preventing a change in control of the Company without further
action by the stockholders, may discourage bids for the Company's Common Stock
at a premium over the market price of the Common Stock, and may adversely affect
the market price and the voting and other rights of the holders of Common Stock.
Upon the consummation of the Reorganization, the
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<PAGE> 74
Company will not have any shares of Preferred Stock outstanding and has no plans
to issue any shares of Preferred Stock.
CERTAIN PROVISIONS OF DELAWARE LAW
The Company is a Delaware corporation and is subject to Section 203 of the
Delaware General Corporation Law ("Delaware Law"). In general, Section 203
prevents an "interested stockholder" (defined generally as a person owning 15%
or more of a corporation's outstanding voting stock) from engaging in a
"business combination" (as defined) with a Delaware corporation for three years
following the date such person became an interested stockholder unless (i)
before such person became an interested stockholder, the board of directors of
the corporation approved the transaction in which the interested stockholder
became an interested stockholder or approved the business combination; (ii) upon
consummation of the transaction that resulted in the interested stockholder
becoming an interested stockholder, the interested stockholder owns at least 85%
of the voting stock of the corporation outstanding at the time the transaction
commenced (excluding shares owned by persons who are both officers and directors
of the corporation and shares held by certain employee stock ownership plans);
or (iii) following the transaction in which such person became an interested
stockholder, the business combination is approved by the board of directors of
the corporation and authorized at a meeting of stockholders by the affirmative
vote of the holders of at least two-thirds of the outstanding voting stock of
the corporation not owned by the interested stockholder.
CERTAIN PROVISIONS OF THE CERTIFICATE OF INCORPORATION AND THE BYLAWS RELATING
TO FOREIGN OWNERSHIP OF COMMON STOCK
The Restated Certificate of Incorporation contains provisions designed to
assist the Company in complying with the provisions of the Communications Act
regulating the ownership of broadcasting companies by aliens. See
"Business -- Federal Regulation and New Technologies." The following is a
summary of these provisions of the Restated Certificate of Incorporation and the
Bylaws.
Under the Communications Act, a broadcast license may not be granted to or
held by any corporation that is controlled, directly or indirectly, by any other
corporation more than one-fourth of whose capital stock is owned or voted by
non-U.S. citizens or their representatives, by foreign governments or their
representatives, or by non-U.S. corporations, if the FCC finds that the public
interest will be served by the refusal or revocation of such license. The FCC
has interpreted this provision to require an affirmative public interest finding
before a broadcast license may be granted to or held by any such corporation.
The FCC has rarely if ever made such an affirmative finding. For the purpose of
monitoring compliance with this provision, the Restated Certificate of
Incorporation requires the Corporation, as promptly as practicable after shares
of Common Stock are first held by more than 100 holders of record, to implement
the procedures described below in this paragraph. The Restated Certificate of
Incorporation requires the Company to maintain separate stock records for alien
stockholders and non-alien stockholders. In addition, the Restated Certificate
of Incorporation requires the Company to place on each certificate representing
shares of stock owned, voted or otherwise controlled by an alien the legend
"Foreign Share Certificate" and to place on each other stock certificate the
legend "Domestic Share Certificate." Pursuant to the Restated Certificate of
Incorporation, the holder of any shares of Company stock (other than Class T
Common Stock or Class V Common Stock) represented by a Domestic Share
Certificate is required, if such shares are owned, voted or otherwise controlled
by an alien, to deliver such certificate to the Company to be replaced by a
Foreign Share Certificate. Any holder of Foreign Share Certificates representing
shares of the Class A Common that are not owned, voted or otherwise controlled
by aliens, may deliver such Foreign Share Certificates to the Company or its
agent to be replaced by Domestic Share Certificates. Any Foreign Share
Certificates delivered to the Company for replacement with Domestic Share
Certificates must be accompanied by an affidavit stating that the shares of the
Company's stock represented by the Foreign Share Certificate are not owned,
voted or otherwise controlled by an alien.
The Restated Certificate of Incorporation provides that the Company will
have the right to determine, by vote of the Company's Board of Directors or in
conformity with regulations prescribed by the Company's
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Board, whether any person is an alien, whether any shares of stock of the
Company are owned, voted or otherwise controlled by aliens and whether any
affidavit described above is false.
Outstanding shares of Class A Common Stock held by a Disqualified Holder
(as defined below) are subject to redemption by the Company, by action of the
Board of Directors or in conformity with regulations prescribed by the Board of
Directors to the extent necessary to prevent the loss or secure the
reinstatement of any license or franchise from any governmental agency held by
the Company or any of its subsidiaries, which license or franchise is
conditioned upon some or all of the holders of the Company's stock possessing
prescribed qualifications. The Restated Certificate of Incorporation prescribes
the following terms and conditions for any such redemption: (a) the redemption
price of the shares to be redeemed shall be equal to the lesser of (i) the Fair
Market Value (as defined below) of such shares or (ii) if such stock was
purchased by such Disqualified Holder within one year of the redemption date,
such Disqualified Holder's purchase price for such shares; (b) the redemption
price of such shares may be paid in cash, securities (valued according to a
specified method) or any combination thereof; (c) if less than all the shares
held by Disqualified Holders are to be redeemed, the shares to be redeemed will
be selected in such manner as is determined by the Board of Directors or in
conformity with regulations prescribed by the Board of Directors, which may
include selection first of the most recently purchased shares thereof, selection
by lot, selection based upon failure to comply with the provisions described in
this paragraph or selection in any other manner determined by the Board of
Directors or in conformity with regulations prescribed by the Board of
Directors; (d) at least 30 days written notice of the redemption date must be
given to the record holders of the shares selected to be redeemed (unless waived
in writing by any such holder), except that the redemption date may be the date
on which written notice is given to such record holders if cash, securities or a
combination thereof sufficient to effect the redemption is deposited in trust
for the benefit of such record holders and subject to immediate withdrawal by
them upon surrender of the stock certificates for their shares to be redeemed;
(e) from and after the redemption date, any and all rights of whatever nature,
which may be held by the owners of shares called for redemption (including
without limitation any rights to vote or participate in dividends declared on
stock of the same class or series as such shares), will cease and terminate and
such owners will thenceforth be entitled only to receive the cash, securities or
a combination thereof payable in respect of such redemption; and (f) such other
terms and conditions as the Board of Directors may determine.
For purposes of the foregoing provisions of the Restated Certificate of
Incorporation, the following meanings are assigned to certain terms:
"Disqualified Holder" means any holder of capital stock (other than Class T
Common Stock or Class V Common Stock) whose holding of such stock, either
individually or when taken together with the holding of shares of any class or
series of stock of the Company by any other holders, may result, in the judgment
of the Board of Directors, in the loss of, or the failure to secure the
reinstatement of, any license or franchise from any governmental agency held by
the Company or any of its subsidiaries to conduct any portion of its business.
"Fair Market Value" of a share of any class or series of stock of the Company
means the average closing price for such a share for each of the 45 most recent
days on which shares of stock of such class or series were traded preceding the
fifth day prior to the day on which notice of redemption is given, except that
if shares of stock of such class or series are not traded on any securities
exchange or in the over-the-counter market, "Fair Market Value" is any value
determined by the Board of Directors in good faith.
The Restated Certificate of Incorporation also authorizes the Board of
Directors to adopt such other provisions as the Board of Directors may deem
necessary or desirable to avoid violation of the alien ownership provisions of
the Communications Act and to carry out the provisions of the Restated
Certificate of Incorporation relating to alien ownership.
BYLAW SUPERMAJORITY VOTING PROVISIONS
The Bylaws of the Company provide that without the approval of the Board by
a vote which includes, in addition to any other required vote of directors, the
affirmative vote of a majority of the Class T Director(s) (so long as there has
not been a Voting Conversion with respect to holders of Class T Common Stock)
and a majority of the Class V Director(s) (so long as there has not been a
Voting Conversion with respect to Class V Common Stock), the Company shall not
(subject to certain exceptions) directly or through its
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subsidiaries: (i) merge or consolidate, enter into a business combination with,
or otherwise reorganize the Company with or into one or more entities; (ii) sell
all or substantially all of the Company's assets to an entity that is not a
wholly owned subsidiary of the Company; (iii) create, designate, issue, or sell
out of treasury Common Stock of the Company or any of its subsidiaries or any
equity securities (or securities with equity features) of the Company or any of
its subsidiaries (other than to the Company or its wholly owned subsidiaries);
(iv) pay any dividend or make any distribution to holders of any equity
securities of the Company including by way of redemption or repurchase of
securities; (v) engage in any business transaction outside of the Company's
ordinary course of business (which for purposes hereof, shall mean any media,
communications and broadcast businesses) or (vi) dissolve, liquidate or
terminate the Company.
The Bylaws of the Company also provide that without the approval of the
Board by a vote which includes, in addition to any other required vote of
directors, the affirmative vote of a majority of the Class T Directors (so long
as a Voting Conversion has not occurred with respect to the Class T Common
Stock) or a majority of the Class V Director(s) (so long as a Voting Conversion
has not occurred with respect to the Class V Common Stock), the Company shall
not directly or through its subsidiaries: (i) acquire or dispose of assets in
any one transaction or series of related transactions for a purchase or sale
price in excess of $50 million, (ii) dispose of any interest in any television
station which broadcasts in Spanish in any of the top 15 markets in terms of
Hispanic population, (iii) incur debt (or issue preferred stock) (other than
capitalized lease obligations for satellite transponders) as of any date in
excess of (x) the Company's EBITDA for the twelve-month period ending on the
last day of the quarter preceding such date, multiplied by (y) five, (iv)
produce or acquire certain programs (as described below), (v) enter into any
transaction with Perenchio or any person related to Perenchio or any of their
respective affiliates, or (vi) employ or set compensation or severance levels
for (a) any relatives of any executive officer of, or consultant to, the
Company, or any employee of such consultant, or (b) any part-time executive of
the Company, or (c) any employees or relatives of Perenchio, Televisa or
Venevision or any of their respective affiliates. For purposes of subparagraph
(iii) above, EBITDA means the sum of net income, total depreciation expense,
amortization expense, interest expense and taxes as determined in conformity
with U.S. Generally Accepted Accounting Principles ("GAAP"); provided that in
the case of debt incurred for the purposes of an acquisition, EBITDA shall be
determined on a pro-forma basis giving effect to such acquisition.
Production or acquisition of programs by the Company will not require
approval of the Class T Directors or Class V Directors if such programs are
Grandfathered Programs. Moreover, such consent will not be required for the
production or acquisition of any other programs by the Company unless (i)
incremental EBITDA in any fiscal year is less than 30% of the incremental sales
in that year and (ii) total EBITDA in the year in question as a percentage of
total sales is less than the greater of (a) 30% or (b) five percentage points
below the average of the three highest consecutive years within the prior ten
years (or since 1992 if less than ten years) (the "Three Year Margin"). For
purposes of determining EBITDA and sales, only the results of the Network, the
O&Os and Galavision are included. All other businesses and certain special
programming are to be disregarded. The special voting rights set forth above
with respect to special programming are to continue in effect until the Company,
in any subsequent fiscal year, increases its overall ratio of EBITDA to sales to
the higher of (x) 2.5% or less below the Three Year Margin or (y) 32.5%. All
determinations are to be made based upon the Company's audited financial
statements.
LIMITATION OF LIABILITY AND INDEMNIFICATION AGREEMENTS
The Company's Restated Certificate of Incorporation provides that to the
fullest extent permitted by Delaware Law, a director of the Company shall not be
liable to the Company or its stockholders for monetary damages for breach of
fiduciary duty as a director. Under current Delaware Law, liability of a
director may not be limited (i) for any breach of the director's duty of loyalty
to the Company or its stockholders, (ii) for acts or omissions not in good faith
or that involve intentional misconduct or a knowing violation of law, (iii) in
respect of certain unlawful dividend payments or stock redemptions or
repurchases and (iv) for any transaction from which the director derives an
improper personal benefit. The effect of the provisions of the Company's
Restated Certificate of Incorporation is to eliminate the rights of the Company
and its stockholders (through stockholders' derivative suits on behalf of the
Company) to recover monetary damages
75
<PAGE> 77
against a director for breach of the fiduciary duty of care as a director
(including breaches resulting from negligent or grossly negligent behavior),
except in the situations described in clauses (i) through (iv) above. This
provision does not limit or eliminate the rights of the Company or any
stockholder to seek nonmonetary relief such as an injunction or rescission in
the event of a breach of a director's duty of care. In addition, the Company's
Restated Certificate of Incorporation provides that the Company shall indemnify
its directors, officers, employees and agents against losses incurred by any
such person by reason of the fact that such person was acting in such capacity.
The Company has entered into agreements (the "Indemnification Agreements")
with each of the directors and officers of the Company pursuant to which the
Company has agreed to indemnify such director or officer from claims,
liabilities, damages, expenses, losses, costs, penalties or amounts paid in
settlement incurred by such director or officer in or arising out of his
capacity as a director, officer, employee and/or agent of the Company or any
other corporation of which he is a director or officer at the request of the
Company to the maximum extent provided by applicable law. In addition, such
director or officer is entitled to an advance of expenses to the maximum extent
authorized or permitted by law.
CERTAIN ANTI-TAKEOVER EFFECTS
The provisions of the Articles of Incorporation and the Bylaws of the
Company summarized above may be deemed to have anti-takeover effects and may
delay, defer or prevent a tender offer or takeover attempt that a stockholder
might consider to be in such stockholder's best interest, including those
attempts that might result in a premium over the market price for the shares
held by stockholders.
TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar for the Class A Common Stock is The Bank
of New York.
LISTING
There is no established public trading market for the Company's Common
Stock. The Class A Common Stock has been approved for listing on the NYSE upon
notice of issuance under the symbol "UVN."
SHARES ELIGIBLE FOR FUTURE SALE
Sales of substantial amounts of Common Stock after this Offering could
adversely affect the market price of the Class A Common Stock and could impair
the Company's future ability to raise capital through the sale of its equity
securities. Upon the closing of this Offering, the Company will have outstanding
41,386,680 shares of Common Stock. All of the shares of Class A Common Stock
sold in this Offering will be freely tradeable under the Securities Act, unless
purchased by "affiliates" of the Company as that term is defined under the
Securities Act. Upon the expiration of lock-up agreements between the Company
and the existing stockholders and the Underwriters, which will occur 180 days
after the date of this Prospectus (the "Effective Date"), all of the shares of
Common Stock owned by existing stockholders (the "Restricted Shares") will
become eligible for sale, subject to compliance with Rule 144 of the Securities
Act as described below.
In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated) who has beneficially owned Restricted Shares for at
least two years, will be entitled to sell in any three-month period a number of
shares that does not exceed the greater of: (i) 1% of the number of shares of
Class A Common Stock then outstanding (approximately 103,964 shares immediately
after this Offering) or (ii) the average weekly trading volume of the Company's
Class A Common Stock on the NYSE during the four calendar weeks immediately
preceding the date on which notice of the sale is filed with the Securities and
Exchange Commission. Sales pursuant to Rule 144 are subject to certain
requirements relating to manner of sale, notice and availability of current
public information about the Company. A person (or persons whose shares are
aggregated) who is not deemed to have been an affiliate of the Company at any
time during the 90 days immediately preceding the sale and who has beneficially
owned Restricted Shares for at least three
76
<PAGE> 78
years is entitled to sell such shares pursuant to Rule 144(k) without regard to
the limitations and requirements described above.
The Company and the existing stockholders have agreed with the Underwriters
that until 180 days after the Effective Date they will not directly or
indirectly, issue, offer, sell, contract to sell, grant any option to purchase
or otherwise dispose of any Common Stock (including, without limitation, shares
of Common Stock which may be deemed to be beneficially owned by such person in
accordance with the rules and regulations of the Securities and Exchange
Commission (the "Commission") and shares of Common Stock which may be issued
upon exercise of a stock option or warrant) or any securities convertible into
or exercisable or exchangeable for such Common Stock or, in any manner, transfer
all or a portion of the economic consequences associated with the ownership of
the Common Stock, without the prior written consent of Donaldson, Lufkin &
Jenrette Securities Corporation. However, the Company may issue shares of Common
Stock upon the exercise of outstanding Warrants, grant options pursuant to the
Company's stock option plans described herein and issue shares of Common Stock
upon the exercise of options described herein as outstanding on the date of the
closing of the Offering, and the existing stockholders may transfer shares of
Common Stock to affiliates or members of such stockholders' immediate family.
The lock-up agreements with the Representatives may be released at any time as
to all or any portion of the shares subject to such agreements at the sole
discretion of Donaldson, Lufkin & Jenrette Securities Corporation. After this
Offering, all existing stockholders will be entitled, upon expiration of the
lock-up agreements with the Underwriters, to certain rights with respect to
registration of their shares under the Securities Act. See "Certain Transactions
- -- Registration Rights Agreement."
77
<PAGE> 79
UNDERWRITING
Subject to certain terms and conditions contained in an underwriting
agreement (the "Underwriting Agreement"), a syndicate of Underwriters named
below (the "Underwriters") for whom Donaldson, Lufkin & Jenrette Securities
Corporation, Goldman, Sachs & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated and Morgan Stanley & Co. Incorporated are acting as representatives
(the "Representatives"), have severally agreed to purchase from the Company an
aggregate of 8,170,000 shares of Class A Common Stock. The number of shares of
Class A Common Stock that each Underwriter has agreed to purchase is set forth
opposite its name below.
<TABLE>
<CAPTION>
NUMBER
UNDERWRITER OF SHARES
---------------------------------------------------------------- ---------
<S> <C>
Donaldson, Lufkin & Jenrette Securities Corporation.............
Goldman, Sachs & Co.............................................
Merrill Lynch, Pierce, Fenner & Smith Incorporated..............
Morgan Stanley & Co. Incorporated...............................
-------
Total................................................. 8,170,000
=======
</TABLE>
The Underwriting Agreement provides that the obligations of the several
Underwriters to purchase shares of Class A Common Stock are subject to the
approval of certain legal matters by counsel and to certain other conditions. If
any of the shares of Class A Common Stock are purchased by the Underwriters
pursuant to the Underwriting Agreement, all such shares of Class A Common Stock
(other than the shares of Class A Common Stock covered by the over-allotment
option described below) must be so purchased.
Prior to this Offering, there has been no established trading market for
the Class A Common Stock. The initial price to the public for the Class A Common
Stock offered hereby was determined by negotiation between the Company and the
Representatives. The factors considered in determining the initial price to the
public included the history of and the prospects for the industry in which the
Company competes, the ability of the Company's management, the past and present
operations of the Company, the historical results of operations of the Company,
the prospects for future earnings of the Company, the general condition of the
securities markets at the time of this Offering and the recent market prices of
securities of generally comparable companies.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act, or to contribute to
payments that the Underwriters may be required to make in respect thereof.
The Company has been advised by the Representatives that the Underwriters
propose to offer the shares of Class A Common Stock to the public initially at
the price to the public set forth on the cover page of this Prospectus and to
certain dealers (who may include the Underwriters) as such price less a
concession not to exceed $ per share. The Underwriters may allow, and
such dealers may reallow, discounts not in excess of $ per share to any
other Underwriter and certain other dealers.
78
<PAGE> 80
The Company has granted to the Underwriters an option to purchase up to an
aggregate of 1,225,500 additional shares of Class A Common Stock at the initial
public offering price less underwriting discounts and commissions solely to
cover over-allotments. Such option may be exercised in whole or in part from
time to time during the 30-day period after the date of this Prospectus. To the
extent that the Underwriters exercise such option, each of the Underwriters will
be committed, subject to certain conditions, to purchase a number of option
shares proportionate to such Underwriter's initial commitment as indicated in
the preceding table.
The Company and the existing stockholders have agreed not to issue, offer,
sell, contract to sell or otherwise dispose of any shares of Common Stock or any
securities convertible into or exchangeable for Common Stock for 180 days after
the Effective Date without the prior written consent of Donaldson, Lufkin &
Jenrette Securities Corporation and provided that the Company may issue shares
of Common Stock upon the exercise of outstanding Warrants, grant options
pursuant to the Company's stock option plans described herein and issue shares
of Common Stock upon the exercise of options described herein as outstanding on
the date of the closing of the Offering. See "Shares Eligible for Future Sale."
Up to an aggregate of 400,330 shares of Common Stock, or approximately 4.9%
of the shares offered hereby, have been reserved for sale to certain employees
of the Company and its affiliates and other persons designated by the Company.
The price per share of the shares to be sold to these persons is the same as the
price to the public in the Offering. The maximum investment of any such person
may be limited by the Company in its sole discretion. This program will be
administered by Donaldson, Lufkin & Jenrette Securities Corporation.
The Representatives have informed the Company that they do not expect to
make sales to accounts over which they exercise discretionary authority in
excess of 5% of the number of shares of Class A Common Stock offered hereby.
LEGAL MATTERS
The validity of the shares of the Class A Common Stock offered hereby will
be passed upon for the Company by O'Melveny & Myers LLP, Los Angeles,
California. Certain legal matters will be passed upon for the Underwriters by
Latham & Watkins, Los Angeles, California.
EXPERTS
The consolidated financial statements and schedules of Perenchio
Communications, Inc. and The Univision Network Holding Limited Partnership as of
December 31, 1994 and 1995, and for each of the years ended December 31, 1993,
1994 and 1995, included in the Prospectus have been audited by Arthur Andersen
LLP, independent certified public accountants, as indicated in their reports
with respect thereto, and are included herein in reliance upon the authority of
said firm as experts in giving said reports.
AVAILABLE INFORMATION
The Company has filed with the Commission a Registration Statement on Form
S-1 (together with all amendments, exhibits, schedules and supplements thereto,
the "Registration Statement"), of which this Prospectus forms a part, covering
the Class A Common Stock to be sold pursuant to the Offering. As permitted by
the rules and regulations of the Commission, this Prospectus omits certain
information, exhibits and undertakings contained in the Registration Statement.
Such additional information, exhibits and undertakings can be inspected at and
obtained from the Commission at prescribed rates at the public reference
facilities maintained by the Commission at Room 1024, 450 Fifth Street, N.W.,
Judiciary Plaza, Washington, D.C. 20549 and at certain regional offices of the
Commission located at Northwestern Atrium Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661 and 13th Floor and 7 World Trade Center, New York,
New York, 10048. The Commission maintains a Web site at http://www.sec.gov that
contains reports, proxy and information statements and other information
regarding registrants that file electronically with the
79
<PAGE> 81
Commission. In addition, the Company's Class A Common Stock has been approved
for listing on the NYSE upon notice of issuance, and reports and other
information concerning the Company may be inspected at the offices of such
exchange. For additional information with respect to the Company, the Class A
Common Stock and related matters and documents, reference is made to the
Registration Statement and the exhibits thereto. Statements contained herein
concerning any such document are not necessarily complete and, in each instance,
reference is made to the copy of such document filed as an exhibit to the
Registration Statement. Each such statement is qualified in its entirety by such
reference.
The Company will issue to its stockholders annual reports and unaudited
quarterly reports for the first three quarters of each fiscal year. Annual
reports will include audited consolidated financial statements prepared in
accordance with accounting principles generally accepted in the United States
and a report of its independent public accountants with respect to the
examination of such financial statements. In addition, the Company will issue to
its stockholders such other interim reports as it deems appropriate.
80
<PAGE> 82
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<S> <C>
PERENCHIO COMMUNICATION, INC. AND SUBSIDIARIES
Report of Independent Public Accountants............................................ F-2
Consolidated Balance Sheets at December 31, 1994, 1995 and June 30, 1996............ F-3
Consolidated Statements of Operations for the Years Ended December 31, 1993, 1994,
1995 and the Six Month Periods Ended June 30, 1995 and 1996...................... F-4
Consolidated Statements of Changes in Stockholders' Deficit For the Years Ended
December 31, 1993, 1994, 1995 and the Six Month Period Ended June 30, 1996....... F-5
Consolidated Statements of Cash Flows For the Years Ended December 31, 1993, 1994,
1995 and the Six Month Periods Ended June 30, 1995 and 1996...................... F-6
Notes to Consolidated Financial Statements.......................................... F-7
UNIVISION NETWORK HOLDING LIMITED PARTNERSHIP AND SUBSIDIARY
Report of Independent Public Accountants............................................ F-22
Consolidated Balance Sheets at December 31, 1994, 1995 and June 30, 1996............ F-23
Consolidated Statements of Operations for the Years Ended December 31, 1993, 1994,
1995 and the Six Month Periods Ended June 30, 1995 and 1996...................... F-24
Consolidated Statements of Changes in Partners' Equity For the Years Ended December
31, 1993, 1994, 1995 and the Six Month Period Ended June 30, 1996................ F-25
Consolidated Statements of Cash Flows For the Years Ended December 31, 1993, 1994,
1995 and the Six Month Periods Ended June 30, 1995 and 1996...................... F-26
Notes to Consolidated Financial Statements.......................................... F-27
</TABLE>
F-1
<PAGE> 83
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Perenchio Communications, Inc.:
We have audited the accompanying consolidated balance sheets of Perenchio
Communications, Inc. (a Delaware Corporation) and subsidiaries as of December
31, 1994 and 1995, and the related consolidated statements of operations,
changes in stockholders' deficit and cash flows for each of the three years in
the period ended December 31, 1995. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Perenchio Communications, Inc.
and subsidiaries as of December 31, 1994 and 1995, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1995 in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Roseland, New Jersey
January 31, 1996
(Except with respect to the
matters discussed in Note 12, as to
which the date is June 17, 1996.)
F-2
<PAGE> 84
PERENCHIO COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1994, 1995 AND JUNE 30, 1996
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
------------------- ------------
1994 1995 1996
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.................................... $ 5,869 $ 14,029 $ 14,156
Accounts receivable, less allowance for doubtful accounts of
$5,090 in 1994, $3,853 in 1995 and $4,672 in 1996.......... 34,136 37,951 36,386
Prepaid expenses and other................................... 2,624 3,043 2,619
-------- -------- --------
Total current assets......................................... 42,629 55,023 53,161
Property and equipment, less accumulated depreciation of
$8,676 in 1994, $13,888 in 1995 and $16,918 in 1996........ 21,332 25,557 28,704
Intangible assets, less accumulated amortization of $58,234
in 1994, $86,520 in 1995 and $100,675 in 1996.............. 484,034 451,111 436,956
Deferred financing costs, less accumulated amortization of
$9,793 in 1994, $13,597 in 1995 and $15,103 in 1996........ 16,273 12,193 10,182
Deferred income taxes........................................ -- 2,000 2,000
Other assets................................................. 1,588 1,746 3,342
-------- -------- --------
Total assets................................................. $565,856 $547,630 $534,345
======== ======== ========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable and accrued liabilities..................... $ 34,135 $ 41,266 $ 36,099
Due to the Network........................................... 51,340 64,505 36,019
Accrued interest............................................. 6,943 6,281 5,488
Current portion of program rights obligations................ 5,099 1,899 977
Current portion long-term debt............................... 30,033 17,313 37,477
-------- -------- --------
Total current liabilities.................................... 127,550 131,264 116,060
Long-term debt, net of current portion and including accrued
interest................................................... 317,070 249,840 224,495
Related party long-term debt, including accrued interest and
accrued and variable dividends payable..................... 70,722 112,381 117,835
Sponsor loans, including accrued interest.................... 60,482 108,361 131,763
Program rights obligations, net of current portion........... 5,717 753 485
Other long-term liabilities.................................. 1,773 1,301 1,347
Minority interest (including subsidiary's preferred stock and
related dividends due minority stockholders of $715 in
1994, $8,908 in 1995 and $91 in 1996)...................... 11,713 19,405 19,670
Stockholders' deficit:
Common stock; $.01 par value, 10,000 shares authorized,
issued and outstanding..................................... -- -- --
Preferred stock: $.01 par value, 108,000 shares authorized,
90,000 issued and outstanding.............................. 1 1 1
Paid-in-capital.............................................. 22,297 -- --
Accumulated deficit.......................................... (51,469) (75,676) (77,311)
-------- -------- --------
Total stockholders' deficit.................................. (29,171) (75,675) (77,310)
-------- -------- --------
Total liabilities and stockholders' deficit.................. $565,856 $547,630 $534,345
======== ======== ========
</TABLE>
See notes to consolidated financial statements.
F-3
<PAGE> 85
PERENCHIO COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1993, 1994, 1995 AND THE
THREE MONTH PERIODS ENDED JUNE 30, 1995 AND 1996
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
------------------------------------------ ---------------------------
1993 1994 1995 1995 1996
<S> <C> <C> <C> <C> <C>
(UNAUDITED) (UNAUDITED)
Net revenues............... $ 104,675 $ 139,007 $ 173,108 $ 82,279 $ 91,420
Direct operating
expenses................. 26,247 27,279 36,363 15,201 16,365
Selling, general and
administrative
expenses................. 35,472 46,145 59,384 28,723 34,154
Depreciation and
amortization............. 33,970 31,719 33,528 16,537 17,192
-------- -------- -------- ------- -------
Operating income........... 8,986 33,864 43,833 21,818 23,709
Interest expense, net...... 33,291 32,852 36,260 18,483 16,695
Interest expense on related
party long-term debt..... 3,605 4,394 3,962 2,200 3,605
Amortization of deferred
financing costs.......... 4,580 5,419 3,925 2,320 1,749
Minority interest in net
income (loss) of
consolidated
subsidiary............... (5,309) (1,202) 7,692 489 265
Provision for income
taxes.................... -- 140 -- -- 500
-------- -------- -------- ------- -------
Income (loss) before
extraordinary loss on
extinguishment of debt... (27,181) (7,739) (8,006) (1,674) 895
Extraordinary loss on
extinguishment of debt
(net of tax benefit of
$500 in the six-month
period ended 6/30/96).... -- (4,321) (801) -- (681)
-------- -------- -------- ------- -------
Net income (loss)
applicable to common
stockholders............. $ (27,181) $ (12,060) $ (8,807) $ (1,674) $ 214
======== ======== ======== ======= =======
Income (loss) per share
before extraordinary
loss..................... $ (2,718.10) $ (773.90) $ (1.23) $ (167.40) $ 0.14
Income (loss) per share.... $ (2,718.10) $ (1,206.00) $ (1.35) $ (167.40) $ 0.03
Weighted average number of
common shares outstanding
(Note 12)................ 10,000 10,000 6,526,666 10,000 6,526,666
</TABLE>
See notes to consolidated financial statements.
F-4
<PAGE> 86
PERENCHIO COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
FOR THE YEARS ENDED DECEMBER 31, 1993, 1994, 1995 AND THE
SIX MONTH PERIOD ENDED JUNE 30, 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
COMMON PREFERRED PAID-IN- ACCUMULATED
STOCK STOCK CAPITAL DEFICIT TOTAL
<S> <C> <C> <C> <C> <C>
Balance, January 1, 1993.............. $ -- $ 1 $ 22,297 $ (1,970) $ 20,328
Dividends declared.................... -- -- -- (4,615) (4,615)
Net loss for the year................. -- -- -- (27,181) (27,181)
------- ------- ------- -------- --------
Balance, December 31, 1993............ -- 1 22,297 (33,766) (11,468)
Dividends declared.................... -- -- -- (5,643) (5,643)
Net loss for the year................. -- -- -- (12,060) (12,060)
------- ------- ------- -------- --------
Balance, December 31, 1994............ -- 1 22,297 (51,469) (29,171)
Dividends declared.................... -- -- (22,297) (15,400) (37,697)
Net loss for the year................. -- -- -- (8,807) (8,807)
------- ------- ------- -------- --------
Balance, December 31, 1995............ -- 1 -- (75,676) (75,675)
Dividends declared (unaudited)........ -- -- -- (1,849) (1,849)
Net income for the six month period
(unaudited)......................... -- -- -- 214 214
------- ------- ------- -------- --------
Balance, June 30, 1996 (unaudited).... $ -- $ 1 $ -- $ (77,311) $(77,310)
======= ======= ======= ======== ========
</TABLE>
See notes to consolidated financial statements.
F-5
<PAGE> 87
PERENCHIO COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1993, 1994, 1995 AND THE
SIX MONTH PERIODS ENDED JUNE 30, 1995 AND 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
---------------------------------- ---------------------------
1993 1994 1995 1995 1996
<S> <C> <C> <C> <C> <C>
(UNAUDITED) (UNAUDITED)
Net income (loss)...................................... $(27,181) $(12,060) $ (8,807) $ (1,674) $ 214
Adjustments to reconcile net income (loss) to net cash
from operating activities:
Depreciation........................................... 4,063 4,379 5,243 2,430 3,037
Amortization of intangible assets and deferred
financing costs...................................... 34,487 32,759 32,210 16,427 15,904
Accretion of interest on sponsor loans................. 629 3,125 7,298 3,140 4,642
Minority interest...................................... (5,309) (1,202) 7,692 489 265
Extraordinary loss on extinguishment of debt........... -- 1,450 801 -- 1,181
Changes in assets and liabilities:
Accounts receivable.................................. (6,643) (1,671) (3,155) (1,827) 1,565
Due from the Network................................. 42,884 47,349 60,336 27,688 34,697
Due to the Network................................... (45,941) (61,699) (75,319) (32,388) (46,399)
Intangible assets.................................... -- -- 2,000 -- --
Deferred income taxes................................ -- -- (2,000) -- --
Prepaid and other assets............................. 173 (1,521) (264) 655 (1,172)
Accounts payable and accrued liabilities............. 6,374 5,740 4,605 (4,016) (5,960)
Accrued interest portion of long-term debt........... 4,285 5,155 4,819 2,626 4,084
Obligations for program rights....................... -- 8,069 (4,417) (2,289) (1,190)
Other, net........................................... (87) (769) 440 648 47
-------- -------- -------- -------- --------
Net cash provided by operating activities.............. 7,734 29,104 31,482 11,909 10,915
Cash flows from investing activities:
Acquisition of WGBO, including acquisition costs, net
of cash acquired................................... -- (45,042) -- -- --
Acquisition of KXLN, including acquisition costs, net
of cash acquired................................... -- (21,171) -- -- --
Acquisition of property and equipment................ (1,877) (5,379) (10,064) (4,872) (6,183)
Organizational costs................................... -- (3,000) -- -- --
-------- -------- -------- -------- --------
Net cash used in investing activities.................. (1,877) (74,592) (10,064) (4,872) (6,183)
Cash flows from financing activities:
Proceeds from issuance of long term debt............. 31,000 176,000 39,000 30,000 29,000
Proceeds from sponsor loans.......................... 22,792 33,936 45,251 20,544 23,834
Reduction in sponsor loans -- cost sharing
agreement.......................................... -- -- (4,670) -- (5,074)
Repayment of long term debt.......................... (104,014) (161,846) (120,925) (44,039) (35,499)
Advances from the Network............................ 58,582 48,829 51,307 22,457 48,355
Repayments of advances from the Network.............. (10,476) (44,830) (23,159) (36,177) (65,139)
Deferred financing costs............................. (5,834) (2,428) (62) (62) (82)
-------- -------- -------- -------- --------
Net cash (used in) provided by financing activities.... (7,950) 49,661 (13,258) (7,277) (4,605)
Net increase (decrease) in cash........................ (2,093) 4,173 8,160 (240) 127
Cash and cash equivalents, beginning of period......... 3,789 1,696 5,869 5,869 14,029
-------- -------- -------- -------- --------
Cash and cash equivalents, end of period............... $ 1,696 $ 5,869 $ 14,029 $ 5,629 $ 14,156
======== ======== ======== ======== ========
Supplemental disclosure of cash flow information:
Interest paid during the period...................... $ 24,808 $ 29,402 $ 28,108 $ 15,456 $ 11,987
======== ======== ======== ======== ========
Supplemental disclosure of non-cash transactions:
Related party notes issued in payment of preferred
stock dividends (Note 5)........................... $ 4,615 $ 5,643 $ 37,697 $ 2,827 $ 1,849
======== ======== ======== ======== ========
Supplemental disclosure of non cash activity regarding
acquisitions:
Total assets acquired, net of cash..................... $ -- $ 82,117 $ -- $ -- $ --
Liabilities assumed.................................... -- (11,774) -- -- --
Net assets acquired.................................... -- 70,343 -- -- --
Accrued acquisition costs.............................. -- (4,130) -- -- --
-------- -------- -------- -------- --------
$ -- $ 66,213 $ -- $ -- $ --
======== ======== ======== ======== ========
</TABLE>
See notes to consolidated financial statements.
F-6
<PAGE> 88
PERENCHIO COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1993, 1994, 1995 AND JUNE 30, 1995 AND 1996
(ALL DATA WITH RESPECT TO JUNE 30, 1995 AND 1996 ARE UNAUDITED)
1. ORGANIZATION AND ACQUISITION
Perenchio Communications, Inc. ("PCI") and its 80% owned subsidiary, PTI
Holdings, Inc. ("PTIH") are beneficially owned by affiliates of A. Jerrold
Perenchio (together with his affiliates "Perenchio"), affiliates of Grupo
Televisa, S.A. de C.V. (together with its affiliates, "Televisa") and Dennevar,
B.V., an affiliate of Venevision International Limited (together with its
affiliates, "Venevision"), (collectively, the "Principal Stockholders").
Perenchio Television, Inc. ("PTI") is a wholly-owned subsidiary of PTIH and
Univision Television Group, Inc. ("UTG") is a wholly-owned subsidiary of PTI.
PCI, PTIH and PTI are holding companies and otherwise inactive. PCI and its
subsidiaries are referred to as "the Company".
PTIH is owned by PCI and affiliates of Televisa and Venevision. In total,
Perenchio indirectly owns 76% of PTIH and Televisa and Venevision each
indirectly own 12%. Each of Televisa and Venevision also own warrants to acquire
from PCI an additional 13% of PTIH, which warrants cannot be exercised by either
Televisa or Venevision (or by any other non-U.S. citizen) unless the foreign
ownership restrictions of the Communications Act of 1934 are amended to permit
increased alien ownership. Subject to certain restrictions, Televisa and
Venevision may transfer such warrants. In the event Televisa and Venevision
exercise these warrants, their ultimate ownership of PTIH would be 25% each.
On December 17, 1992 (effective close of business December 16, 1992),
Univision Station Group, Inc. ("USG") and KTVW, Inc. ("KTVW") were acquired by
PCI with USG as the ultimate surviving corporation changing its name to UTG.
PCI and its subsidiaries had no operations prior to the acquisitions. The
aggregate purchase price for USG and KTVW was approximately $489,000,000,
including approximately $11,000,000 of acquisition costs. A subordinated note
due from PTIH to the seller (which was subsequently sold to a third party and
then sold to the public as a series of notes) financed $5,442,000 of the
purchase price. These subordinated notes are not guaranteed in any form by PTI
nor secured by its assets. The acquisition was accounted for under the purchase
method of accounting. Accordingly, the assets acquired and liabilities assumed
have been recorded at the fair values at the date of the acquisition. In
addition to current assets and liabilities, the purchase price was allocated
principally to property and equipment of approximately $22,000,000 and
intangible assets of approximately $473,000,000.
On August 2, 1994, the Company completed its acquisition of all of the
stock of Combined Broadcasting of Chicago, Inc. The purchase price was
approximately $36,000,000 plus the assumption of program rights obligations
totaling approximately $11,000,000. The unpaid portion of program rights
obligations is payable in varying amounts through the year 1999. The acquisition
was financed with borrowings from the Bank Facilities. Substantially all of the
purchase price has been allocated to intangible assets.
On September 30, 1994, the Company completed its acquisition of all the
stock of Pueblo Broadcasting Corporation which owns and operates a television
station affiliated with the Network serving Houston, Texas. The purchase price
was approximately $20,000,000 and was financed with borrowings from the Bank
Facilities and cash generated through operations. Substantially all of the
purchase price has been allocated to intangible assets. The impact of the
Chicago and Houston acquisitions were not material to the Company financial
statements taken as a whole.
The Company owns and operates eleven Spanish-language full-power television
stations serving New York, Los Angeles, Miami, San Antonio, San Francisco,
Fresno, Dallas, Phoenix, Albuquerque, Houston and Chicago and six
Spanish-language low-power television stations serving Hartford, Philadelphia,
Tucson, Austin, Albuquerque and Bakersfield. The Company's television stations
are affiliated with the Spanish-
F-7
<PAGE> 89
PERENCHIO COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1993, 1994, 1995 AND JUNE 30, 1995 AND 1996
(ALL DATA WITH RESPECT TO JUNE 30, 1995 AND 1996 ARE UNAUDITED)
language television network owned and operated by The Univision Network Limited
Partnership (the "Network"), which is also ultimately beneficially owned by the
Principal Stockholders. See Note 3.
The businesses of the Company and the Network are under separate management
and ownership structures. Notwithstanding this separation, the business
operations of the Company and the Network remain substantially dependent on one
another. The Company is dependent on the Network for programming and advertising
sales support while the Company represents 72% and 71% of the Network's total
coverage of Hispanic households in the U.S. for 1995 and 1996, respectively. The
Company and the Network are collectively referred to herein as the "Univision
Group."
2. SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The consolidated financial statements include the accounts and operations
of the Company and reflect the acquisitions described above under the purchase
method of accounting. All significant intercompany accounts and transactions
have been eliminated. Certain reclassifications have been made to the prior year
financial statements to conform with current presentation.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.
The Company's operations and its ability to grow may be affected by
numerous factors, including changes in audience tastes, priorities of
advertisers, new laws and governmental regulations and policies, changes in
broadcast technical requirements, technological advances, proposals to eliminate
the tax deductibility of certain advertising expenses incurred by advertisers
and changes in the willingness of financial institutions and other lenders to
finance television station acquisitions and operations. The Company cannot
predict which, if any, of these or other factors might have a significant impact
on the television industry in the future, nor can it predict what impact, if
any, the occurrence of these or other events might have on the Company's
operations.
Property and Equipment and Related Depreciation
Property and equipment is carried on the basis of cost. Depreciation is
provided using the straight-line method over the estimated useful lives of the
assets. Buildings and improvements are depreciated over 5 to 20 years; broadcast
and other equipment over 3 to 7 years. Leasehold improvements are amortized over
the remaining life of the lease. Depreciation and amortization include
depreciation on property and equipment of $4,063,000, $4,379,000, $5,243,000,
$2,430,000 and $3,037,000 for the years ended December 31, 1993, 1994, 1995 and
the six month periods ended June 30, 1995 and 1996, respectively, of which
$3,535,000, $3,826,000, $4,581,000, $2,123,000 and $2,654,000 relate to direct
operating expense and $528,000, $553,000, $662,000, $307,000 and $383,000 relate
to selling, general and administrative expenses for the years ended December 31,
1993, 1994, 1995 and the six month periods ended June 30, 1995 and 1996,
respectively.
F-8
<PAGE> 90
PERENCHIO COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1993, 1994, 1995 AND JUNE 30, 1995 AND 1996
(ALL DATA WITH RESPECT TO JUNE 30, 1995 AND 1996 ARE UNAUDITED)
Intangible Assets
Intangible assets consist of amounts by which the cost of acquisitions
exceeded the values assigned to net tangible assets. The intangible assets
primarily represent broadcasting licenses, network affiliation agreements,
pre-sold advertising contracts, organization costs and goodwill. Pre-sold
advertising contracts were amortized over a three month period ($4,734,000 in
1993 and $836,000 in 1994), organization costs of $11,164,000 are amortized over
a five year period and all other intangible assets are being amortized on the
straight-line method over 20 years.
Subsequent to the acquisitions, the Company continually evaluates whether
later events and circumstances have occurred that indicate the remaining
estimated useful life of intangible assets may warrant revision or that the
remaining balance of such assets may not be recoverable. When factors indicate
that intangible assets should be evaluated for possible impairment, the Company
uses an estimate of the undiscounted operating income over the remaining life of
the intangible assets in measuring whether the intangible assets are
recoverable.
Deferred Financing Costs
Deferred financing costs are amortized over the life of the related debt
or, in the case of interest rate protection instruments, over the period of the
instrument.
Accounts Payable and Accrued Liabilities
As of December 31, 1994, 1995 and June 30, 1996 accounts payable and
accrued liabilities is comprised of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
------------------- JUNE 30,
1994 1995 1996
<S> <C> <C> <C>
Trade accounts payable and accruals........... $15,432 $15,324 $ 15,373
Severance and litigation costs................ 5,658 8,204 7,731
Acquired stations integration costs (see note
1).......................................... 3,170 4,055 3,862
Facility consolidation costs.................. 3,885 4,138 2,147
Research costs................................ 1,140 612 355
Other......................................... 4,850 8,933 6,631
------- ------- -------
$34,135 $41,266 $ 36,099
======= ======= =======
</TABLE>
Minority Interest
Minority interest represents the 20% interest in PTIH held by minority
stockholders. Additionally, it includes the PTIH consolidated preferred stock
and related dividends due minority stockholders. To the extent that the minority
interest in the book value of PTIH, represents an asset, the Company charges the
asset against the majority interest. Subsequent profits earned by PTIH
applicable to the minority interest are allocated to the majority interest to
the extent that minority losses have been previously absorbed by the majority
stockholder.
Net Revenues
Net revenues represent gross revenues, including an allocation of network
revenues, less agency commissions and a network service fee. Gross revenues and
the related agency commissions and network
F-9
<PAGE> 91
PERENCHIO COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1993, 1994, 1995 AND JUNE 30, 1995 AND 1996
(ALL DATA WITH RESPECT TO JUNE 30, 1995 AND 1996 ARE UNAUDITED)
service fees are recognized when advertising spots are broadcast. Agency
commissions totaled $29,319, $35,390, $47,114, $22,318 and $24,966 for the years
ended December 31, 1993, 1994 and 1995 and the six month periods ended June 30,
1995 and 1996, respectively. Network service fees totaled $74,645, $73,459,
$105,274, $49,742 and $55,637 for the years ended December 31, 1993, 1994 and
1995 and the six month periods ended June 30, 1995 and 1996, respectively.
Barter Transactions
The Company exchanges broadcast time for certain merchandise and services.
Barter revenue and the related receivables are recorded when spots air at the
fair value of the goods or services received or time aired, whichever is more
readily determinable. Barter expense and the related liability are recorded when
the goods or services are used or received.
Accounting for Impairment of Long-lived Assets
The Financial Accounting Standards Board (FASB) has issued Statement of
Financial Accounting Standards (SFAS) No. 121 -- "Accounting for the Impairment
of Long-lived Assets and for Long-lived Assets to be Disposed of." This
statement requires long-lived assets to be held and be reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable. Measurement of an impairment loss for
long-lived assets and identifiable intangibles to be held and used should be
based on the fair value of the asset. It also requires that those long-lived
assets and identifiable intangibles to be disposed of should be reported at the
lower of carrying amount or fair value less cost to sell. This standard is
required to be adopted in 1996. Management estimates that the adoption of this
standard will not have a material effect on the Company's financial statements.
Earnings Per Share
The effect of the warrants on the earnings per share calculation for 1993,
1994 and 1995 has not been presented as it was anti-dilutive.
3. RELATED PARTY TRANSACTIONS
In the normal course of business, the Company engages in significant
transactions with the Network and, through other agreements, with the Principal
Stockholders, as described below.
(a) NETWORK
Network Affiliation Agreements
Pursuant to Network Affiliation Agreements, the Network acts as the
Company's exclusive sales representative for the sale of all national spot and
network advertising. The Network allocates a portion of network advertising
revenues to the Company's stations based on a formula. National spot sales
represent time sold on behalf of the Company's stations by sales representatives
employed by the Network. Proceeds of Network sales are remitted to the Company
by the Network, net of an agency commission and a network service fee, as
described below.
The Network is obligated to offer programming to the Company and its
Affiliated Stations for a minimum of 84 hours per week. For this service, the
Company incurs a network service fee due the Network of 43% in 1993 and 38% in
1994, 1995 and first half 1996, of its net local, national and network sales
revenues, subject to certain adjustments. The Network receives two minutes of
air time for its own use each hour for
F-10
<PAGE> 92
PERENCHIO COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1993, 1994, 1995 AND JUNE 30, 1995 AND 1996
(ALL DATA WITH RESPECT TO JUNE 30, 1995 AND 1996 ARE UNAUDITED)
which no compensation is received by the Company. Net revenues for the years
ended December 31, 1993, 1994, 1995 and the six month periods ended June 30,
1995 and 1996 includes $88,569,000, $99,127,000, $140,465,000, $69,882,000 and
$73,484,000, respectively, in gross revenues representing the Company's
allocation of network sales, partially offset by a network service fee of
$74,645,000, $73,459,000, $105,274,000, $49,742,000 and $55,637,000 for the
years ended December 31, 1993, 1994, 1995, and the six month periods ended June
30, 1995 and 1996, respectively.
Cash Management
The Company and the Network share a cash management system under which all
excess cash at the Network is loaned daily on a subordinated basis from the
Network to the Company (and cash shortfalls at the Network are funded by
repayments or by subordinated loans from the Company to the Network). No
interest is incurred on these subordinated loans. The net amount transferred to
(from) the Company for the years ended December 31, 1993, 1994, 1995 and the six
month periods ended June 30, 1995 and 1996 totaled $48,106,000, $3,999,000,
$28,148,000, $(13,720,000) and $(16,784,000), respectively. In 1993, 1994 and
1995, the net cash transferred from the Network to the Company was impacted by
the transfer of net cash generated by the Network's operations, the proceeds
from amounts received by the Network under the Program Cost Sharing Agreements,
and the proceeds from an advertiser prepayment covering the first half of 1994,
1995 and 1996.
The amounts loaned to the Network pursuant to the Program Cost Sharing
Agreements were repaid to Televisa, with interest, on January 28, 1994, at which
time the Company had to make available to the Network approximately $16,200,000.
In addition, on January 18, 1994, on January 18, 1995 and on January 18, 1996,
the Network paid the fourth quarter 1993, 1994 and 1995 license fees totaling
$8,708,000, $10,737,000, and $12,986,000, respectively, which the Company had to
make available to the Network. The net cash transferred to the Company from the
Network was also impacted by a change to Univision Group's cash management
system during 1993, wherein the Network's depository accounts system was
replaced by the Company's system. Payments received are remitted through the
cash transfer system described above.
Other
The Company and the Network share certain financial and administrative
personnel and facilities, and are parties to certain combined agreements. For
the years ended December 31, 1993, 1994, 1995 and the six month periods ended
June 30, 1995 and 1996, the Company charged the Network (net) $2,326,000,
$3,541,000, $3,330,000, $1,648,000 and $1,722,000, respectively, for costs
related to these items. These amounts are based upon management's estimates of
the actual costs of such services provided.
(b) PRINCIPAL STOCKHOLDERS
Senior Subordinated and Subordinated Notes Payable -- see Note 5.
Sponsor Loans
In connection with the acquisition of UTG and the Network, and the related
financing, Televisa and Venevision have agreed to provide loans to UTG
approximately 15 days after the end of each quarter in amounts as required by
its senior lenders subject to certain thresholds (as defined) of the Univision
Group ("Sponsor Loans"). The obligation to make such loans terminates at such
time as the Company and the Network have distributed to the Principal
Stockholders the aggregate amount of $100 million through dividends or other
distributions (the "Return of Initial Financing"). Each Sponsor Loan is
subordinated to all bank debt and Senior Subordinated Notes (third party
acquisition financing), has an initial term of 15 years,
F-11
<PAGE> 93
PERENCHIO COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1993, 1994, 1995 AND JUNE 30, 1995 AND 1996
(ALL DATA WITH RESPECT TO JUNE 30, 1995 AND 1996 ARE UNAUDITED)
bears interest at a rate of the lesser of the prime rate or 10%, and requires no
payment of interest or principal until maturity. The Sponsor Loans are
guaranteed by the Network and PTIH. Such guarantees are subordinated to the
Network guarantee of third party acquisition financing. Upon the Return of
Initial Financing, the holders of the Sponsor Loans may convert them to
conversion notes, which will be similar to the Sponsor Loans with respect to
subordination and interest, but will be payable in seven annual installments,
subject to certain restrictions. The Sponsor Loans are made quarterly in arrears
approximately fifteen days after quarter end. There were no Sponsor Loans made
through December 31, 1992. During 1993, 1994, 1995 and the first half of 1996,
Sponsor Loans were made totaling $22,792,000, $33,936,000, $45,251,000 and
$23,834,000, respectively. As of December 31, 1993, 1994, 1995 and June 30, 1996
accrued interest on these loans totaled $629,000, $3,754,000, $11,052,000 and
$15,694,000, respectively. In December 1995 and March 1996, Televisa and
Venevision assigned to the Network $4,670,000 and $5,074,000, respectively, of
Sponsor Loans owed to them by the Company. The assignment was in lieu of payment
for program production costs, under the Program Cost Sharing Agreements to be
incurred by the Network in the first quarter of 1996. This assignment is shown
as a reduction to the Company's Sponsor Loans amount and an increase in the Due
to the Network liability of $9,744,000 at June 30, 1996.
Other
The Principal Stockholders incurred financing and acquisition costs prior
to the acquisitions. The Principal Stockholders were reimbursed on December 17,
1992 for all of these costs except for $1,000,000 withheld from each. This
$3,000,000 was paid to the Principal Stockholders on March 14, 1994.
4. PROPERTY AND EQUIPMENT
Property and equipment, and accumulated depreciation and amortization,
consist of the following as of December 31, 1994, 1995 and June 30, 1996 (in
thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------- JUNE 30,
1994 1995 1996
<S> <C> <C> <C>
Land and improvements....................... $ 2,394 $ 2,394 $ 2,394
Building and improvements................... 3,689 4,666 4,963
Broadcast equipment......................... 20,060 27,699 32,065
Other equipment............................. 2,519 4,022 4,563
Construction in progress.................... 1,346 664 1,637
------- -------- --------
30,008 39,445 45,622
Accumulated depreciation and amortization... (8,676) (13,888) (16,918)
------- -------- --------
$21,332 $ 25,557 $ 28,704
======= ======== ========
</TABLE>
F-12
<PAGE> 94
PERENCHIO COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1993, 1994, 1995 AND JUNE 30, 1995 AND 1996
(ALL DATA WITH RESPECT TO JUNE 30, 1995 AND 1996 ARE UNAUDITED)
5. DEBT
Long-term debt (excluding the Sponsor Loans) consists of the following at
December 31, 1994, 1995 and June 30, 1996 (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------- JUNE 30,
1994 1995 1996
<S> <C> <C> <C>
Bank term facility......................... $155,000 $107,250 $107,250
Standby term facility...................... 50,000 50,000 50,000
Bank working capital facility.............. 35,000 9,000 16,000
Senior subordinated notes.................. 99,600 92,050 79,400
Junior subordinated notes payable including
accrued interest......................... 6,911 7,768 8,247
Related party senior subordinated notes.... 39,425 65,204 65,204
Related party subordinated debt............ 12,677 19,530 19,530
Accrued interest -- related party senior
subordinated notes and related party
subordinated debt........................ 8,158 12,120 15,725
Variable dividend payable.................. 10,462 15,527 17,376
Other...................................... 592 1,085 1,075
-------- -------- --------
417,825 379,534 379,807
Less current portion....................... (30,033) (17,313) (37,477)
-------- -------- --------
Long term debt............................. $387,792 $362,221 $342,330
======== ======== ========
</TABLE>
The bank facilities consisted of a $210 million five-year amortizing term
loan ("Term Facility") and a $65 million six-year revolving credit loan
("Working Capital Facility," and together with the Term Facility, the "Bank
Facilities"). The Term Facility and a portion of the Working Capital Facility
were used to finance the acquisitions described in Note 1. The Bank Facilities
require, among other things, mandatory prepayments equal to 75% of excess cash
flow (as defined) of the Univision Group, in addition to net proceeds (as
defined) received by the Univision Group in certain situations from the sale or
other disposition of assets, to be applied to ratably reduce the Term Facility
and the availability under the Working Capital Facility. Any such mandatory
prepayments reduce the scheduled amortization of the Term Facility in inverse
order of maturity.
UTG amended its Bank Facilities during the 1994 period. The amended Bank
Facilities, which total $400 million, consist of a $180 million five-year
amortizing term loan, a $70 million six-year revolving credit loan, a $30
million six-year term loan, a $20 million five and one-half year term loan and a
$100 million five and one-half year term loan available under a revolving credit
facility, which to-date has not been borrowed against. The amendments, among
other things, lengthened the maturity of the loans, adjusted certain financial
covenants and lowered the applicable margin, as defined, on reference rate loans
(to 0% to .5% per annum) and Eurodollar rate loans (to 1% to 1.75% per annum).
Proceeds from the refinancing were also used to fund the station acquisitions,
described in Note 1, provide the Network with cash to repay advances, made under
the Program Cost Sharing Agreements together with accrued interest and to pay
fees associated with these amendments. (See Note 3.)
Interest is payable on fixed-rate borrowings at maturity of the borrowing,
up to a maximum of three months, and payable quarterly on floating rate loans.
At December 31, 1995, interest rates were 6.60% to 8.50% on the Bank Facilities.
In January 1993, the Company purchased interest rate protection covering
borrowings under the Bank Facilities of $165,000,000 through January 1995, and
of $75,000,000 from
F-13
<PAGE> 95
PERENCHIO COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1993, 1994, 1995 AND JUNE 30, 1995 AND 1996
(ALL DATA WITH RESPECT TO JUNE 30, 1995 AND 1996 ARE UNAUDITED)
January 1995 through January 1996, which caps Eurodollar rates at 4 3/8%, 6% and
6 7/8% for each of the three years in the period, respectively. The fee paid for
the interest rate protection instruments of $1,330,000 was capitalized as
deferred financing costs and is being amortized over the period of the
instruments on the straight line basis. A commitment fee is payable on the
unused portion of the Working Capital Facility equal to one half of one percent
of such amount.
The Bank Facilities are secured by a security interest in substantially all
of the assets of the Univision Group (subject to limitations of federal law in
the case of the FCC licenses of the Company), and the rights of the Univision
Group under certain Program License Agreements and Program Cost Sharing
Agreements between the Network and Televisa and Venevision. The Bank Facilities
are also guaranteed by UNHP and PTI.
As of December 31, 1995 the Company had $161.0 million available under the
Bank Facilities.
The Senior Subordinated Notes mature on January 15, 2001 and are
subordinate to all Senior Indebtedness of the Company, including amounts
outstanding under the Bank Facilities. The Notes accrue interest at a rate of
11 3/4%, payable semi-annually on January 15 and July 15. The first payment was
made on July 15, 1993. The Notes are jointly, severally and unconditionally
guaranteed by the Network, UNHP and PTI and may be redeemed at a premium at the
option of the Company, either in whole or in part, beginning in January 1997.
The Company may be required to repurchase all or part of the Senior Subordinated
Notes outstanding in the event of a change in control (as defined). As of
December 31, 1994, 1995 and June 30, 1996 there were $99,600,000, $92,050,000
and $79,400,000, respectively, of these notes outstanding.
The Junior Subordinated Notes, which have a face value of $10,306,000 and
bear simple interest at 7%, were originally payable by PTIH to Hallmark Cards,
Inc. ("Hallmark") in connection with the acquisition from the previous owner.
The previous owner has since sold these Junior Subordinated Notes to a third
party, which resold them to the public as a series of notes. The Junior
Subordinated Notes are unsecured and all interest and principal is due on
December 17, 2002. The Junior Subordinated Notes were discounted at an effective
rate of approximately 12.5% in accordance with the purchase method of accounting
described in Note 1. The discount ($3,395,000, $2,538,000 and $2,059,000) at
December 31, 1994, 1995 and June 30, 1996, respectively), which is shown as a
reduction of the related debt, is being amortized under the interest method over
the term of the Junior Subordinated Notes.
Related party senior subordinated notes represents notes due to affiliates
of Televisa and Venevision. These mature on December 16, 2003 and are
subordinated to all Senior Indebtedness of the Company, including amounts
outstanding under the Bank Facilities. The Notes accrue interest at a rate equal
to the AFR average rate which was 7.26%, 6.99% and 6.99% at December 31, 1994,
1995 and June 30, 1996, respectively, payable on December 16, 2005 and were
$39,425,000 at December 31, 1994, 1995 and June 30, 1996, respectively. Also,
notes to the Principal Stockholders (at the PCI level) that mature on December
17, 2003 and accrue interest at a rate of 6.36% payable on December 16, 2003
were $0, $25,779,000 and $25,779,000 at December 31, 1994, 1995 and June 30,
1996, respectively.
Related party subordinated debt represents debt due to affiliates of
Televisa and Venevision. These notes mature on December 16, 2005 and are
subordinated to all indebtedness of the Company, including amounts outstanding
under the Bank Facilities. The related party subordinated debt accrues interest
at a rate equal to 0.5% per annum in excess of the AFR average rate which was
7.76%, 7.49% and 7.49% at December 31, 1994, 1995 and June 30, 1996,
respectively, payable on December 16, 2005 and were $12,677,000 at December 31,
1994, 1995 and June 30, 1996, respectively. Also, notes to Principal
Stockholders mature on December 31,
F-14
<PAGE> 96
PERENCHIO COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1993, 1994, 1995 AND JUNE 30, 1995 AND 1996
(ALL DATA WITH RESPECT TO JUNE 30, 1995 AND 1996 ARE UNAUDITED)
2005 and accrue interest at a rate of 6.86% payable on December 16, 2005, were
$0, $6,853,000 and $6,853,000 at December 31, 1994, 1995 and June 30, 1996,
respectively.
The accrued interest payable on the Related Party Senior Subordinated Notes
and the Related Party Subordinated Debt was $8,158,000, $12,120,000 and
$15,725,000 at December 31, 1994, 1995 and June 30, 1996, respectively. Interest
expense was $3,605,000, $4,394,000 $3,962,000, $2,200,000 and $3,605,000 for the
years ended December 31, 1993, 1994, 1995 and the six month periods ended June
30, 1995 and 1996, respectively.
The Senior Subordinated Debt - Principal Stockholders (at the PTIH level)
matures on December 16, 2003 and is subordinated to all Senior Indebtedness of
the Company, including amounts outstanding under the Bank Facilities. The Senior
Subordinated Debt-Principal Stockholders accrued interest at a rate of 6.66% and
is payable on December 16, 2003. This debt arose from the preferred stock
dividends which were declared by PTIH to the minority stockholders effective
December 31, 1995. These dividends have been reflected as minority interest in
PCI's 1995 financial statements.
Long-term debt matures as follows (in thousands):
<TABLE>
<CAPTION>
AT
DECEMBER 31,
1995
------------
<S> <C>
1996............................ $ 17,313
1997............................ 40,341
1998............................ 50,343
1999............................ 59,292
2000............................ 31
Thereafter...................... 212,214
--------
Total........................... $379,534
========
</TABLE>
The Bank Facilities and Notes place various limitations and other
restrictions on the Univision Group, PTI and UNHP regarding, among other things,
the incurrence of indebtedness and liens, payment of dividends, disposition of
assets, and transactions with affiliates. In addition, the Bank Facilities
contain several performance tests based upon the Univision Group's operating
cash flow (as defined).
The Company estimates that the fair value of the bank debt at December 31,
1995 approximates book value. The fair value and the carrying value of the Notes
is approximately $103,600,000 and $99,600,000, respectively, as of December 31,
1994, $98,500,000 and $92,050,000 respectively, as of December 31, 1995 and
$85,000,000 and $79,400,000, respectively, as of June 30, 1996. The fair value
of the Sponsor Loans due to Televisa and Venevision as of December 31, 1994 and
1995 is not determinable due to the unique provisions contained in the loan
agreements.
F-15
<PAGE> 97
PERENCHIO COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1993, 1994, 1995 AND JUNE 30, 1995 AND 1996
(ALL DATA WITH RESPECT TO JUNE 30, 1995 AND 1996 ARE UNAUDITED)
Interest expense, net, reflected in the accompanying consolidated
statements of operations is comprised of the following for the years ended
December 31, 1993, 1994, 1995 and the six month periods ended June 30, 1995 and
1996 (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
------------------------------- -------------------
1993 1994 1995 1995 1996
<S> <C> <C> <C> <C> <C>
Bank Facilities.......... $15,476 $15,194 $16,884 $ 9,031 $ 6,702
Notes.................... 16,450 13,752 11,519 5,878 5,058
Sponsor Loans............ 629 3,125 7,298 3,140 4,642
Junior Subordinated
Notes.................. 679 763 857 426 479
Other - Net.............. 57 18 (298) 8 (186)
------- ------- ------- ------ ------
$33,291 $32,852 $36,260 $18,483 $16,695
======= ======= ======= ====== ======
</TABLE>
Condensed financial information of UNHP and subsidiary is presented below
(in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------- JUNE 30,
1994 1995 1996
<S> <C> <C> <C>
Current assets........................... $ 89,516 $102,149 $ 88,892
Intangible assets........................ 13,397 8,977 6,769
Other assets............................. 41,188 49,239 74,803
-------- -------- --------
Total assets............................. $144,101 $160,365 $170,464
======== ======== ========
Current liabilities...................... $ 77,774 $ 78,821 $ 59,111
Non current liabilities.................. 57,538 66,654 91,015
Total liabilities........................ 135,312 145,475 150,126
Partnership equity....................... 8,789 14,890 20,338
-------- -------- --------
Total liabilities and partnership
equity................................. $144,101 $160,365 $170,464
======== ======== ========
</TABLE>
For the years ended December 31, 1993, 1994, 1995 and for the six month
periods ended June 30, 1995 and 1996 (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
---------------------------------- -------------------
1993 1994 1995 1995 1996
<S> <C> <C> <C> <C> <C>
Net revenues........................ $109,365 $132,746 $148,231 $70,419 $79,436
======== ======== ======== ======= =======
Net income (loss)................... $ 3,016 $ (554) $ 6,851 $ 2,065 $ 5,471
======== ======== ======== ======= =======
</TABLE>
F-16
<PAGE> 98
PERENCHIO COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1993, 1994, 1995 AND JUNE 30, 1995 AND 1996
(ALL DATA WITH RESPECT TO JUNE 30, 1995 AND 1996 ARE UNAUDITED)
6. COMMITMENTS
The Company is obligated under long-term leases expiring at various dates
through 2015 for office, studio, automobile and tower rentals. The following is
a schedule by year of future annual rentals under leases as of December 31, 1995
(in thousands):
<TABLE>
<CAPTION>
OPERATING
Year Ending December 31: LEASES
<S> <C>
1996............................................................... $ 3,895
1997............................................................... 3,809
1998............................................................... 3,920
1999............................................................... 3,766
2000............................................................... 3,239
Thereafter......................................................... 16,806
-------
Total minimum lease payments....................................... $35,435
-------
</TABLE>
Rent expense totalled $2,403,000, $2,718,000, $4,460,000, $2,399,000 and
$2,006,000 for the years ended December 31, 1993, 1994, 1995 and the six month
periods ended June 30, 1995 and 1996, respectively.
7. EMPLOYEE BENEFITS
The Company has a 401(k) retirement savings plan (the "Plan") covering all
employees who have completed one year of service. The Plan allows the employees
to defer a portion of their annual compensation, and the Company may match a
portion of the employees' contributions. During 1993, 1994, 1995 and first half
of 1996 the Company made matching contributions to the Plan totalling $99,000,
$171,000, $478,000 and $293,000, respectively. No contributions were made for
periods prior to 1993.
8. CONTINGENCIES
On August 4, 1995, a jury in the 57th District Court of Bexar County, Texas
returned an adverse verdict against Univision Television Group, the successor to
Univision Station Group, in Emilio Nicolas, Jr. v. Univision Station Group. The
lawsuit, among other things, alleged breach of a September 1990 separation
agreement following the plaintiff's termination from USG's Los Angeles station.
The jury found USG had breached certain provisions of the agreement. It also
found that USG inflicted emotional distress, and violated California Labor Code
Section 1050, by making a misrepresentation to a prospective employer to prevent
plaintiff's employment. Under that Section any damages amount for a violation is
trebled. If a judgment had been entered on all issues, the total amount after
the statutory trebling would have been $6,800,000, plus prejudgment interest and
attorneys fees, in an amount as yet undetermined.
The events which led to the plaintiff's lawsuit occurred before the current
ownership took control of UTG. The Company strongly disagreed with the verdict
and filed pleadings requesting the trial court to enter judgment in the
Company's favor notwithstanding the jury's verdict.
On December 12, 1995 the trial court partially granted the Company's motion
for judgment notwithstanding the verdict. Accordingly, the trial court rendered
judgment that plaintiff recover $5,425,000, denied the plaintiff's motion to
recover an additional $1,400,000 and denied the plaintiff's motion to recover
prejudgment interest and attorneys fees. Both parties then filed motions for a
new trial but agreed to pursue mediation before having those motions decided. As
a result of the mediation, the parties reached a compromise agreement on
February 15, 1996 settling the litigation, without any admission of wrongdoing
on
F-17
<PAGE> 99
PERENCHIO COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1993, 1994, 1995 AND JUNE 30, 1995 AND 1996
(ALL DATA WITH RESPECT TO JUNE 30, 1995 AND 1996 ARE UNAUDITED)
the part of the Company. Pursuant to that settlement, the trial court entered an
agreed upon modified judgment providing that plaintiff recover $2,975,000 in
full satisfaction of his claims. Thereafter, the Company paid the recovery
awarded in the modified judgment, in consideration for which plaintiff released
the Company from the modified judgment and from any and all claims. After
consummation of the settlement, the trial court rendered an agreed upon final
judgment that plaintiff take nothing from the Company.
There are various legal actions and other claims pending against the
Company incidental to its business and operations. In the opinion of management,
the resolution of these matters will not have a material effect on its
consolidated financial position or results of operations.
The Company's television station serving Los Angeles, California accounted
for 35%, 35%, 36%, 36% and 38% of the Company's gross advertising revenues for
the years ended December 31, 1993, 1994, 1995 and the six month periods ended
June 30, 1995 and 1996, respectively, and 34%, 33% and 37% of trade accounts
receivable as of December 31, 1994, 1995 and June 30, 1996, respectively. The
Company's television station serving Miami, Florida accounted for 17%, 17%, 20%,
20% and 20% of the Company's gross advertising revenues for the years ended
December 31, 1993, 1994, 1995 and the six month periods ended June 30, 1995 and
1996, respectively, and 20%, 22% and 19% as of December 31, 1994, 1995 and June
30, 1996, respectively.
9. INCOME TAXES
The Company files a consolidated Federal income tax return.
The Company accounts for income taxes under the liability method pursuant
to Statement of Financial Accounting Standards (SFAS) No. 109, "Accounting for
Income Taxes." Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes. Significant
components of the Company's deferred tax liabilities and assets as of December
31, 1994, 1995 and June 30, 1996 are as follows (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------- JUNE 30,
Deferred tax assets: 1994 1995 1996
<S> <C> <C> <C>
Tax basis of property and equipment in
excess of book basis..................... $ 400 $ 100 $ --
Accrued insurance and litigation........... 1,700 3,100 3,700
Accrued vacation........................... 400 300 300
Deferred compensation...................... 600 300 300
Purchase accounting accruals............... 4,800 3,300 2,500
Allowance for bad debts.................... 1,700 1,300 1,600
Net operating loss carryforwards........... 40,000 41,100 41,100
------- ------- -------
Total deferred tax assets.................. 49,600 49,500 49,500
Valuation allowance for deferred tax
assets................................... (49,600) (47,500) (47,500)
------- ------- -------
Net deferred tax assets.................... $ 0 $ 2,000 $ 2,000
======= ======= =======
</TABLE>
No federal income taxes have been provided for the years ended December 31,
1995, 1994 and 1993, as the Company had a loss for both financial reporting and
tax purposes.
At December 31, 1995, the Company has net operating loss carryforwards of
$80,000,000 that expire in years 2002 through 2005, resulting from prior
acquisitions. When realized, the tax benefit of those items will be applied to
reduce goodwill related to the acquisitions. The Company also has net operating
loss carryforwards of approximately $45,500,000 for financial reporting purposes
and $52,000,000 for income tax
F-18
<PAGE> 100
PERENCHIO COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1993, 1994, 1995 AND JUNE 30, 1995 AND 1996
(ALL DATA WITH RESPECT TO JUNE 30, 1995 AND 1996 ARE UNAUDITED)
purposes which were generated subsequent to the above-mentioned acquisitions,
that expire in years 2007 through 2010. At December 31, 1995 the Company
recorded a deferred tax asset of $2,000,000 for the benefit, management believes
more likely than not, will be realized from these net operating loss
carryforwards. The realization of any loss carryforwards is contingent upon the
Company generating income in future years, and further, may be limited by the
impact of the ownership change resulting from the acquisitions described in Note
1 and by the tax allocation agreement described above.
For financial reporting purposes, a valuation allowance of approximately
$47,500,000 at December 31, 1995 has been recognized to offset the deferred tax
assets related to these carryforwards and other temporary differences. The
amount of the deferred tax assets considered realizable, however, could be
reduced in the near term if estimates of future taxable income during the
carryforward period are reduced.
For financial reporting purposes, as of December 31, 1995, the Company has
intangible assets of approximately $451,000,000 which are being amortized over a
20 year period. For tax purposes, the Company has remaining intangible assets of
approximately $42,000,000 which will be deducted over the next three years.
10. EARLY EXTINGUISHMENT OF DEBT
During the quarter ended June 30, 1994, UTG purchased at a premium
$37,200,000 face amount of its 11 3/4% Senior Subordinated Notes due 2001. The
purchase resulted in an extraordinary loss of $4,081,000, including the write
off of the related deferred financing costs. During the quarter ended September
30, 1995, UTG purchased at a premium an additional $4,050,000 face amount of
Senior Subordinated Notes. The purchase resulted in an extraordinary loss of
$433,000, including the write off of the related deferred financing costs.
During the quarters ended December 31, 1995 and 1994, UTG purchased at a premium
an additional $3,500,000 and $3,200,000 face amount of Senior Subordinated
Notes. The purchases resulted in an extraordinary loss of $368,000 and $240,000,
including the write off of the related deferred financing costs at December 31,
1995 and 1994, respectively. During the quarter ended March 31, 1996, UTG
purchased at a premium $3,000,000 face amount of its 11 3/4% Senior Subordinated
Notes due 2001. The purchase resulted in an extraordinary loss of $283,000
including the write off of the related deferred financing costs. During the
quarter ended June 30, 1996 UTG purchased at a premium $12,650,000 face amount
of its 11 3/4% Senior Subordinated Notes due 2001. The purchase resulted in an
extraordinary loss of $1,181,000 including the write off of the related deferred
financing costs.
11. PREFERRED STOCK AND RELATED PARTY DEBT
At December 31, 1995 and 1994, PTIH had 108,000 shares of preferred stock
authorized and 90,553 shares issued and outstanding. Of the amount issued and
outstanding, 72,553 shares, 9,000 shares and 9,000 shares have been designated
Class P, T and V Participating Preferred Stock ("Preferred Stock"),
respectively. The Class P shares are held by PCI. The Preferred Stock is
entitled to a fixed dividend of $1,167.89 per share for the Class P shares and
$459.27 per share for both the Class T and V shares ("Fixed Dividends"), in
addition to a cumulative annual dividend based upon a variable interest rate
("Variable Dividends") in an amount equal to interest on Class P, T and V
"Assumed Principal Amounts" from December 17, 1992 until paid. All Fixed and
Variable Dividends are payable prior to the payment of any common stock
dividends, in which the Preferred Stock generally participates on a
share-for-share basis, including any such dividends resulting from a liquidation
or dissolution of PTIH. All shares of Preferred Stock have the same voting
rights as common stock, generally on a share-for-share basis.
F-19
<PAGE> 101
PERENCHIO COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1993, 1994, 1995 AND JUNE 30, 1995 AND 1996
(ALL DATA WITH RESPECT TO JUNE 30, 1995 AND 1996 ARE UNAUDITED)
At December 31, 1995 and 1994, PCI had 108,000 shares of preferred stock
authorized and 90,000 shares issued and outstanding. Of the amount issued and
outstanding, 85,500 shares, 2,250 shares and 2,250 shares have been designated
Class P, T and V Participating Preferred Stock ("Preferred Stock"),
respectively. The Preferred Stock is entitled to a fixed dividend of $362.58 per
share for the Class P, T and V shares ("Fixed Dividends"), in addition to a
cumulative annual dividend based upon a variable interest rate ("Variable
Dividends") in an amount equal to interest on Class P, T, and V "Assumed
Principal Amounts" from December 17, 1992 until paid. All Fixed and Variable
Dividends are payable prior to the payment of any common stock dividends, in
which the Preferred Stock generally participates on a share-for-share basis,
including any such dividends resulting from a liquidation or dissolution of PCI.
All shares of Preferred Stock have the same voting rights as common stock,
generally on a share-for-share basis.
Effective December 31, 1995, the Fixed Dividends aggregating $40,899,060
were paid in the form of Senior Subordinated and Subordinated Notes (see Note
5).
12. THE OFFERING
In June 1996, the name of PCI was changed to Univision Communications Inc.
In June 1996, the Company filed a registration statement on Form S-1 with
the Securities and Exchange Commission and later amended it for the sale of up
to 8,170,000 shares of Class A common stock. The net proceeds to the Company
from this offering are intended, along with the proceeds from a new credit
facility, to be used to refinance the existing Bank Facility, to re-pay existing
long-term debt, to fund capital expenditures and for general corporate and
working capital purposes.
Concurrent with the Offering, the Company intends to exchange PCI preferred
stock and PTIH common and preferred stock outstanding for PCI common stock
resulting in 126,666 common shares outstanding prior to the Reorganization. Pro
forma earnings per share for the year ended December 31, 1995 and for the six
months ended June 30, 1996 have been presented to reflect the conversion. Also,
pro forma earnings per share for those periods have been presented to reflect
the distribution of $93.0 million and the payment of $35.0 million in dividends
to be paid to the principal stockholders out of the proceeds of the Offering, at
an assumed price of $20.00 per share.
Additionally, in June 1996 UNLP signed a letter of intent with Entravision,
which owns and operates seven of the Affiliated Stations, to make a $10 million
investment in the form of a note and an option to acquire a 25% equity interest
in Entravision.
The Company intends to consummate the following transactions concurrent
with the offering:
(a) The Company will enter into the New Bank Facility and will repay
$165 million owing under, and terminate, the Old Bank Facility;
(b) The Company will defease UTG's 11 3/4% Senior Subordinated Notes
due 2001 (the "Senior Subordinated Notes") by, among other things,
depositing $85.1 million with the trustee under the indenture governing
such notes;
(c) The Network will make a distribution to its partners in the amount
of $60.0 million;
(d) The Company will acquire the Network from its partners in exchange
for 19,014.5 shares of Common Stock and $40.0 million in cash, UTG will
become a wholly-owned subsidiary of the Company, and the Company will
effect a dividend of 227.0 shares on each share of Class P Common Stock,
Class T Common Stock and Class V Common Stock, and the Warrants will be
adjusted to reflect the new capital structure of the Company;
F-20
<PAGE> 102
PERENCHIO COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1993, 1994, 1995 AND JUNE 30, 1995 AND 1996
(ALL DATA WITH RESPECT TO JUNE 30, 1995 AND 1996 ARE UNAUDITED)
(e) The Company will pay $86.5 million to the Principal Stockholders
and their affiliates, representing payment of outstanding principal of and
accrued interest on certain debentures and accrued dividends on certain
preferred stock issued by the Company and its subsidiaries in connection
with the Acquisition and approximately $42.5 million to the Principal
Stockholders and their affiliates, representing full payment of outstanding
principal of, and interest on, certain notes issued in payment of certain
accrued dividends as of December 31, 1995;
(f) The Company will pay $147.1 million to Televisa and Venevision,
representing full payment of outstanding principal of, and accrued interest
on, all amounts owed to them by UTG with respect to Sponsor Loans made
subsequent to the Acquisition, and the obligations to make the Sponsor
Loans will terminate;
(g) The Company will pay $15.0 million, together with interest, to
Televisa, representing full payment of outstanding principal of and accrued
interest on the note issued by the Company as of July 1, 1996 to Televisa
as payment for the acquisition of Galavision; and
(h) The Program License Agreements will be amended, the Program Cost
Sharing Agreement (which required Televisa and Venevision to reimburse the
Company for one-half of the cost of certain productions produced or
acquired by the Company) will be terminated and the management fee to the
Principal Stockholders of 3% of Combined Net Time Sales will be eliminated.
Under the amended Program License Agreements, the royalty rate will be 11%
from the closing of this Offering through December 31, 1996 and will
increase to 13.5% for 1997 and to 15% for all years thereafter, and the
Company will receive no cost sharing reimbursements.
F-21
<PAGE> 103
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To The Univision Network Holding Limited Partnership:
We have audited the accompanying consolidated balance sheets of The
Univision Network Holding Limited Partnership (a Delaware partnership) and
subsidiary as of December 31, 1994 and 1995, and the related consolidated
statements of operations, changes in partners' equity and cash flows for each of
the three years in the period ended December 31, 1995. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of The Univision Network
Holding Limited Partnership and subsidiary as of December 31, 1994 and 1995, and
the results of their operations and their cash flows for each of the three years
in the period ended December 31, 1995 in conformity with generally accepted
accounting principles.
ARTHUR ANDERSEN LLP
Roseland, New Jersey
February 15, 1996
(Except with respect to the
matters discussed in Note 10,
as to which the date is June 17, 1996.)
F-22
<PAGE> 104
THE UNIVISION NETWORK HOLDING LIMITED PARTNERSHIP
(A LIMITED PARTNERSHIP) AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1994, 1995 AND JUNE 30, 1996
(IN THOUSANDS)
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
--------------------- 1996
1994 1995 -----------
(UNAUDITED)
<S> <C> <C> <C>
Current assets:
Cash...................................................... $ 40 $ 29 $ 21
Short-term investments, at market......................... 81 85 86
Accounts receivable, less allowance for doubtful accounts
of $3,864 in 1994, $3,633 in 1995 and $3,606 in 1996.... 32,815 32,675 46,005
Due from UTG.............................................. 51,340 64,505 36,019
Program rights............................................ 2,919 2,899 4,516
Prepaid expenses and other................................ 2,321 1,956 2,245
-------- -------- --------
Total current assets............................ 89,516 102,149 88,892
Property and equipment, less accumulated depreciation of
$5,829 in 1994, $11,324 in 1995 and $14,637 in 1996..... 40,646 48,618 74,143
Intangible assets, less accumulated amortization of $9,466
in 1994, $13,886 in 1995 and $16,094 in 1996............ 13,397 8,977 6,769
Other assets.............................................. 542 621 660
-------- -------- --------
Total assets.................................... $144,101 $160,365 $ 170,464
======== ======== ========
LIABILITIES AND PARTNERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities.................. $ 36,767 $ 37,977 $ 33,245
Deferred advertising revenues............................. 12,658 9,603 --
Program cost sharing advance.............................. 3,813 4,157 1,966
Obligations for program rights............................ 803 236 116
Accrued station compensation.............................. 5,112 2,988 4,081
Management and license fees payable....................... 18,015 22,536 17,508
Current portion of capital lease obligations.............. 606 1,324 2,195
-------- -------- --------
Total current liabilities....................... 77,774 78,821 59,111
Subordinated notes, including accrued interest............ 40,592 45,704 48,551
Other liabilities:
Capital lease obligations, net of current portion....... 12,402 18,246 40,518
Other long term liabilities............................. 3,307 732 --
Deferred compensation payable........................... 1,237 1,972 1,946
General partners' equity.................................. 8,788 14,889 20,337
Limited partners' equity.................................. 1 1 1
-------- -------- --------
Total liabilities and partners' equity.......... $144,101 $160,365 $ 170,464
======== ======== ========
</TABLE>
See notes to consolidated financial statements.
F-23
<PAGE> 105
THE UNIVISION NETWORK HOLDING LIMITED PARTNERSHIP
(A LIMITED PARTNERSHIP) AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1993, 1994, 1995 AND
THE SIX MONTH PERIODS ENDED JUNE 30, 1995 AND 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
------------------------------ -------------------------
1993 1994 1995 1995 1996
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net revenues.............................. $109,365 $132,746 $148,231 $70,419 $79,436
Direct operating expenses................. 60,151 78,616 79,628 38,379 41,005
Selling, general and administrative
expenses................................ 34,036 40,749 43,917 21,274 22,648
Depreciation and amortization............. 7,413 7,702 9,971 4,850 5,513
-------- -------- -------- ------- -------
Operating income.......................... 7,765 5,679 14,715 5,916 10,270
Interest expense.......................... 4,749 6,233 7,864 3,851 4,799
-------- -------- -------- ------- -------
Net income (loss)
(allocable to the general partners)..... $ 3,016 $ (554) $ 6,851 $ 2,065 $ 5,471
======== ======== ======== ======= =======
</TABLE>
See notes to consolidated financial statements.
F-24
<PAGE> 106
THE UNIVISION NETWORK HOLDING LIMITED PARTNERSHIP
(A LIMITED PARTNERSHIP) AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1993, 1994, 1995 AND
THE SIX MONTH PERIOD ENDED JUNE 30, 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
GENERAL LIMITED
PARTNERS PARTNER TOTAL
<S> <C> <C> <C>
Balance, January 1, 1993...................................... $ 6,326 $ 1 $ 6,327
Net income for the year..................................... 3,016 -- 3,016
------- ------- -------
Balance, December 31, 1993.................................... 9,342 1 9,343
Net loss for the year....................................... (554) -- (554)
------- ------- -------
Balance, December 31, 1994.................................... 8,788 1 8,789
Net income for the year..................................... 6,851 -- 6,851
Distribution payable to Partners............................ (750) -- (750)
------- ------- -------
Balance, December 31, 1995.................................... 14,889 1 14,890
Net income for the six month period (unaudited)............. 5,471 -- 5,471
Distribution payable to Partners (unaudited)................ (23) -- (23)
------- ------- -------
Balance, June 30, 1996 (unaudited)............................ $ 20,337 $ 1 $20,338
======= ======= =======
</TABLE>
See notes to consolidated financial statements.
F-25
<PAGE> 107
THE UNIVISION NETWORK HOLDING LIMITED PARTNERSHIP
(A LIMITED PARTNERSHIP) AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1993, 1994, 1995 AND
THE SIX MONTH PERIODS ENDED JUNE 30, 1995 AND 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
------------------------------ -------------------------
1993 1994 1995 1995 1996
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net income (loss)......................... $ 3,016 $ (554) $ 6,851 $ 2,065 $ 5,471
Adjustments to reconcile net income (loss)
to net cash from operating activities:
Depreciation expense.................... 2,384 3,290 5,551 2,640 3,305
Amortization of intangible assets....... 5,029 4,412 4,420 2,210 2,208
Accretion of interest on program cost
sharing loans........................ 533 -- -- -- --
Accretion of interest on subordinated
notes................................ 4,018 4,498 5,111 2,530 2,847
Changes in assets and liabilities:
Accounts receivable..................... 1,199 (6,566) 140 (4,839) (13,330)
Due from UTG............................ 45,941 61,699 75,319 32,388 46,399
Due to UTG.............................. (42,884) (47,349) (60,336) (27,688) (34,697)
Program rights.......................... (1,108) (1,502) 20 273 (1,617)
Accounts payable and accrued
liabilities.......................... (3,552) 5,050 (556) (4,126) (4,531)
Deferred advertising revenues........... 12,495 163 (3,055) (12,658) (9,603)
Management and license fees payable..... 36,779 43,245 56,975 27,284 30,311
Payment of license fees................. (22,792) (33,936) (45,251) (20,544) (23,834)
Payment of management fees.............. -- (6,300) (7,203) (7,203) (11,505)
Obligations for program cost sharing
advance.............................. (168) 317 344 (99) (2,191)
Accrued station compensation............ 209 893 (2,124) (1,601) 1,093
Program rights and other related
obligations.......................... (2,071) 759 (567) (514) (120)
Other, net.............................. 720 (4,775) (315) 1,167 (1,075)
-------- -------- -------- -------- --------
Net cash provided by (used in)
operating activities.......... 39,748 23,344 35,324 (8,715) (10,869)
Cash flows from investing activities:
Repayments of advances made to UTG...... 10,476 44,830 23,159 36,177 65,139
Advances to UTG......................... (58,582) (48,829) (51,307) (22,457) (48,355)
Capital expenditures.................... (3,021) (2,791) (5,996) (2,145) (4,926)
-------- -------- -------- -------- --------
Net cash provided by (used in)
investing activities.......... (51,127) (6,790) (34,144) 11,575 11,858
Cash flows from financing activities:
Program cost sharing loans from
Televisa............................. 11,884 (16,158) -- -- --
Repayment of long term debt............. (469) (416) (1,191) -- --
Principal payments of capital lease
obligations.......................... -- -- (2,870) (997)
-------- -------- -------- -------- --------
Net cash provided by (used in)
financing activities.......... 11,415 (16,574) (1,191) (2,870) (997)
Net increase (decrease) in cash........... 36 (20) (11) (10) (8)
Cash, beginning of year................... 24 60 40 40 29
-------- -------- -------- -------- --------
Cash, end of period....................... $ 60 $ 40 $ 29 $ 30 $ 21
======== ======== ======== ======== ========
</TABLE>
See notes to consolidated financial statements.
F-26
<PAGE> 108
THE UNIVISION NETWORK HOLDING LIMITED PARTNERSHIP
(A LIMITED PARTNERSHIP) AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1993, 1994, 1995 AND JUNE 30, 1995 AND 1996
(ALL DATA WITH RESPECT TO JUNE 30, 1995 AND 1996 ARE UNAUDITED)
1. ORGANIZATION AND ACQUISITION
The Univision Network Holding Limited Partnership (the "Partnership" or
"UNHP") was formed on December 7, 1992 pursuant to the laws of the State of
Delaware for the purpose of owning and operating a Spanish-language television
network in the United States. The General Partners of UNHP are affiliates of A.
Jerrold Perenchio (together with his affiliates, "Perenchio"), Grupo Televisa,
S.A. de C.V. (together with its affiliates, "Televisa") and Venevision
International, Inc. (together with its affiliates, "Venevision"), respectively
(collectively, the "Principal Stockholders"). The Principal Stockholders
initially contributed a cash capital contribution of approximately $7,002,000.
On December 17, 1992 (effective close of business December 16, 1992), UNHP
purchased the stock of Univision, Inc. and certain other assets from Univision
Holdings, Inc. (which continues to be owned by its then parent company) for an
aggregate purchase price of approximately $38,684,000, including $273,000 of
acquisition costs. A portion of the total purchase price was financed by a 7%
subordinated note with a face amount of $61,094,000 due to the seller (which
note was subsequently sold to a third party and then to the public as a series
of notes), which was discounted for financial reporting purposes to $31,911,000
(12.5% effective rate). The stock and other assets were immediately contributed
by UNHP to The Univision Network Limited Partnership (the "Network"), of which
UNHP is the sole general partner. Univision, Inc. then liquidated and
distributed its assets to the Network (which also assumed all of the liabilities
of Univision, Inc., including tax attributable to its liquidation). The
acquisition was accounted for under the purchase method of accounting.
Accordingly, the assets acquired and liabilities assumed have been recorded at
the fair values at the date of the acquisition. In addition to current assets
and liabilities, the purchase price was allocated principally to property and
equipment of approximately $27,000,000 and intangible assets of approximately
$13,000,000.
UNHP is the sole general partner of the Network. As a result of the
acquisitions, the Network owns and operates a Spanish-language television
network which is affiliated with 19 full-power television stations and 18
low-power television stations, including eleven full-power stations and six
low-power stations owned and operated by Univision Television Group, Inc.
("UTG"). UTG is ultimately owned by Perenchio Communications, Inc. ("the
Company") which is owned by Perenchio, Televisa and Venevision.
The businesses of the Company and the Network are under separate management
and ownership structures. Notwithstanding this separation, the business
operations of the Company and the Network remain substantially dependent on one
another. The Company is dependent on the Network for programming and advertising
sales support while the Company represents 72% and 71% of the Network's total
coverage of Hispanic households in the U.S. for 1995 and 1996, respectively.
(See Note 3.)
The Network and the Company are collectively referred to herein as the
"Univision Group."
Subject to certain special allocations, net losses of the Partnership are
first allocated to reduce partners' capital accounts to the amount of
unrecovered capital contributions, and thereafter to the General Partners in
equal proportions, and net income is first allocated to offset any prior net
losses and thereafter to the Partners in accordance with their Ownership
Percentage Interests. Various provisions of the Partnership agreement govern the
allocation of gains and losses to the individual partners for tax purposes. Upon
dissolution of the Partnership, the assets of the Partnership shall be
distributed to the partners, after payment of all debts and other obligations,
first to reduce their respective capital contributions, and thereafter, in
accordance with their respective Ownership Percentage Interests. Subject to
obtaining any necessary consents from lenders to the
F-27
<PAGE> 109
THE UNIVISION NETWORK HOLDING LIMITED PARTNERSHIP
(A LIMITED PARTNERSHIP) AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1993, 1994, 1995 AND JUNE 30, 1995 AND 1996
(ALL DATA WITH RESPECT TO JUNE 30, 1995 AND 1996 ARE UNAUDITED)
Partnership, the Partnership is required to make sufficient cash distributions
on a quarterly basis to fund the partners' tax liabilities attributable to their
ownership interests in the Partnership.
UNHP holds a 99.99% general partner interest in the Network. The remaining
limited partner interest is held by the Network Limited Partner, Inc. which is
owned by Perenchio, Televisa and Venevision. UNHP and the Network had no
operations or transactions prior to the acquisitions described above.
2. SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The consolidated financial statements include the accounts of UNHP and its
subsidiary and reflect the acquisitions described above under the purchase
method of accounting. All significant intercompany accounts and transactions
have been eliminated. Certain reclassifications have been made to the prior year
financial statements to conform with the current presentation.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.
The Company's operations and it ability to grow may be affected by numerous
factors, including changes in audience tastes, priorities of advertisers, new
laws and governmental regulations and policies, changes in broadcast technical
requirements, technological advances, proposals to eliminate the tax
deductibility of certain advertising expenses incurred by advertisers and
changes in the willingness of financial institutions and other lenders to
finance television station acquisitions and operations. The Company cannot
predict which, if any, of these or other factors might have a significant impact
on the television industry in the future, nor can it predict what impact, if
any, the occurrence of these or other events might have on the Company's
operations.
Property and Equipment and Related Depreciation
Property and equipment is carried on the basis of cost. Depreciation is
provided using the straight-line method over the estimated useful lives of the
assets. Buildings and improvements are depreciated over 5 to 20 years; broadcast
and other equipment over 3 to 7 years. Leasehold improvements are amortized over
the remaining life of the lease.
Depreciation and amortization includes depreciation on property and
equipment of $2,384,000, $3,290,000, $5,551,000, $2,640,000 and $3,305,000 for
the years ended December 31, 1993, 1994, 1995 and the six month periods ended
June 30, 1995 and 1996, respectively, of which $1,740,000, $2,665,000,
$4,796,844, $2,135,000 and $2,816,000 relate to direct operating expenses and
$644,000, $625,000, $754,156, $505,000 and $489,000 relate to selling, general
and administrative expenses for the years ended December 31, 1993, 1994, 1995
and the six month periods ended June 30, 1995 and 1996, respectively.
F-28
<PAGE> 110
THE UNIVISION NETWORK HOLDING LIMITED PARTNERSHIP
(A LIMITED PARTNERSHIP) AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1993, 1994, 1995 AND JUNE 30, 1995 AND 1996
(ALL DATA WITH RESPECT TO JUNE 30, 1995 AND 1996 ARE UNAUDITED)
Intangible Assets
Intangible assets consist of amounts by which the cost of acquisitions
exceeded the values assigned to net tangible assets. The intangible assets
primarily represent network affiliation agreements, a management agreement with
respect to Galavision (see Note 3) and goodwill. Intangible assets are being
amortized on the straight-line method over 20 years. Subsequent to the
acquisitions, UNHP continually evaluates whether later events and circumstances
have occurred that indicate the remaining estimated useful life of intangible
assets may warrant revision or that the remaining balance of such assets may not
be recoverable. When factors indicate that intangible assets should be evaluated
for possible impairment, UNHP uses an estimate of the undiscounted operating
income over the remaining life of the intangible assets in measuring whether the
intangible assets are recoverable.
Program Rights for Television Broadcast
Costs incurred in connection with the production of or purchase of rights
to programs to be broadcast on television within one year are classified as
current assets, while costs of those programs to be broadcast subsequently are
considered non-current. Program costs are charged to expense as the programs are
broadcast.
Accounts Payable and Accrued Liabilities
As of December 31, 1994, 1995 and June 30, 1996, accounts payable and
accrued liabilities is comprised of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
------------------- JUNE 30,
1994 1995 1996
<S> <C> <C> <C>
Trade accounts payable and accruals........... $23,100 $26,027 $ 23,446
Facility consolidation costs.................. 3,286 2,503 2,496
Severance and litigation costs................ 2,961 2,286 2,326
Nielsen accrual (See Note 7).................. 6,032 5,155 3,574
Other......................................... 1,388 2,006 1,403
------- ------- -------
$36,767 $37,977 $ 33,245
======= ======= =======
</TABLE>
Net Revenues
Net revenues represents gross revenues, including a network service fee
payable to the Network by the affiliates, less agency commissions and an
allocation of network revenues to the affiliates. Gross revenues and the related
agency commissions and allocation to the affiliates are recognized when
advertising spots are broadcast. One advertiser represented approximately 22%,
17%, 15%, 16% and 11% of gross advertising revenues for the years ended December
31, 1993, 1994, 1995 and the six month periods ended June 30, 1995 and 1996,
respectively. Agency commissions totaled $20,151, $25,355, $28,776, $14,311 and
$15,478 for the years ended December 31, 1993, 1994 and 1995 and the six month
periods ended June 30, 1995 and June 1996.
Accounting for Impairment of Long-lived Assets
The Financial Accounting Standard Board (FASB) has issued Statement of
Financial Accounting Standards (SFAS) No. 121 - "Accounting for the Impairment
of Long-lived Assets and for Long-lived Assets to be Disposed of." This
statement requires that these long-lived assets be held and be reviewed for
F-29
<PAGE> 111
THE UNIVISION NETWORK HOLDING LIMITED PARTNERSHIP
(A LIMITED PARTNERSHIP) AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1993, 1994, 1995 AND JUNE 30, 1995 AND 1996
(ALL DATA WITH RESPECT TO JUNE 30, 1995 AND 1996 ARE UNAUDITED)
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. Measurement of an impairment
loss for long-lived assets and identifiable intangibles to be held and used be
based on the fair value of the asset. It also requires that those long-lived
assets and identifiable intangibles to be disposed of should be reported at the
lower of carrying amount or fair value less cost to sell. This standard is
required to be adopted in 1996. Management estimates that the adoption of this
standard will not be material.
Income Taxes
For 1993, 1994 and 1995 there are no income taxes provided in the
accompanying Partnership financial statements, as all such taxes are the
liability of the partners of UNHP. In accordance with the Partnership agreement,
UNHP is required to make sufficient cash distributions to fund the partners' tax
liabilities attributable to their ownership interest in the Partnership. Cash
distributions for 1995 of $773,000 were made in April, 1996, the first quarter
of 1996 were $750,000 and $23,000, respectively. No cash distributions were
required for 1993 and 1994 as the Partnership incurred tax losses for those
years. As of December 31, 1994, 1995 and June 30, 1996, the value of the net
assets of UNHP and UNP on a tax basis were less than the value on a financial
reporting basis by approximately $13,000,000, $11,000,000 and $11,000,000,
respectively.
3. RELATED PARTY TRANSACTIONS
In the normal course of business, the Network engages in significant
transactions with the Company and, through other agreements, with the Principal
Stockholders, as described below.
(a) THE COMPANY
Network Affiliation Agreements
Pursuant to Network Affiliation Agreements, the Network acts as the
affiliates' exclusive sales representative for the sale of all national spot and
network advertising. The Network allocates a portion of network advertising
revenues to its affiliated stations based on a formula. National spot sales
represent time sold on behalf of the affiliated stations by sales
representatives employed by the Network. Proceeds of network sales are remitted
to the affiliates by the Network, net of an agency commission and a network
service fee, as described below.
The Network offers programming to its affiliates each week. For this
service, the Company affiliated stations incur a network service fee due the
Network of 43% in 1993 and 38% in 1994, 1995 and first six months 1996, and, of
their net local, national and network sales revenues, subject to certain
adjustments. The Network receives two minutes of air time for its own use each
hour for which no compensation is received by the affiliates. Net revenues
includes a network service fee of $74,645,000, $73,459,000, $105,274,000,
$49,742,000 and $55,637,000 for the years ended December 31, 1993, 1994, 1995
and the six month periods ended June 30, 1995 and 1996, respectively, due from
the Company, reduced by $88,569,000, $99,127,000, $140,465,000, $69,892,000 and
$73,484,000 for the for the years ended December 31, 1993, 1994, 1995 and the
six month periods ended June 30, 1995 and 1996, respectively, representing the
Company's allocation of Network sales, pursuant to the Network Affiliation
Agreements.
F-30
<PAGE> 112
THE UNIVISION NETWORK HOLDING LIMITED PARTNERSHIP
(A LIMITED PARTNERSHIP) AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1993, 1994, 1995 AND JUNE 30, 1995 AND 1996
(ALL DATA WITH RESPECT TO JUNE 30, 1995 AND 1996 ARE UNAUDITED)
Cash Management
The Company and the Network share a cash management system under which all
excess cash at the Network is loaned daily on a subordinated basis from the
Network to the Company (and cash shortfalls at the Network are funded by
repayments or by subordinated loans from the Company to the Network). No
interest is incurred on these subordinated loans. The net amount transferred to
and (from) the Company for the years ended December 31, 1993, 1994, 1995 and the
six month periods ended June 30, 1995 and 1996, totaled $48,106,000, $3,999,000,
$28,148,000, $(13,720,000) and $(16,784,000), respectively. In 1993, 1994, 1995
and first six months 1996, the net cash transferred from the Network to the
Company was impacted by the transfer of net cash generated by the Network's
operations, the proceeds from amounts received by the Network under the Program
Cost Sharing Agreements and the proceeds from an advertiser prepayment covering
the first half of each of 1995 and 1996. The amounts loaned to the Network
pursuant to the Program Cost Sharing Agreements were repaid to Televisa, with
interest, on January 28, 1994, at which time the Company had to make available
to the Network $16,234,000 to pay Televisa. The net cash transferred to the
Company from the Network was also impacted by a change to Univision Group's cash
management system during 1993, wherein the Network's depository accounts system
was replaced by the Company's system. Payments received are remitted through the
cash transfer system described above.
Other
The Company and the Network share certain financial and administrative
personnel and facilities, and are parties to certain combined agreements. For
the years ended December 31, 1993, 1994, 1995 and the six month periods ended
June 30, 1995 and 1996 the Company charged the Network (net) $2,326,000,
$3,541,000, $3,330,000, $1,648,000 and $1,722,000, respectively, for costs
related to these items. These amounts are based upon management's estimates of
the actual costs of such services provided.
(b) PRINCIPAL STOCKHOLDERS
Program License Agreements
Pursuant to Program License Agreements, the Network has the first right for
25 years to air in the U.S. (with certain exceptions) all Spanish-language
television programming produced by Televisa and Venevision, for a fee equal to
15% of the Univision Group's combined net time sales (as defined). Such fee
amounted to $30,649,000, $36,018,000, $47,604,000, $22,794,000 and $25,216,000
for the years ended December 31, 1993, 1994, 1995 and for the six month periods
ended June 30, 1995 and 1996, respectively. As of December 31, 1995, the Network
has an accrual of $13,165,000 for the fourth quarter of which $12,986,000 was
paid on January 18, 1996, and the balance of $178,000 was paid in April 1996.
The fee increases to 20% of combined net time sales for each year after the
Company and the Network have distributed to the Principal Stockholders the
aggregate amount of $100 million through dividends or other distributions and
annual combined net time sales exceed $200 million.
Program Cost Sharing Agreements
Pursuant to Program Cost Sharing Agreements, the Network has the right
(subject to the unanimous approval of the Principal Stockholders) to cause
Televisa and Venevision to produce or acquire programming on behalf of the
Network. The Network is responsible for one-half of the costs to acquire or
produce the programming and Televisa and Venevision, collectively, are
responsible for the remainder (except for certain programming for which Televisa
and Venevision contribute a fixed amount of $1 million per year).
F-31
<PAGE> 113
THE UNIVISION NETWORK HOLDING LIMITED PARTNERSHIP
(A LIMITED PARTNERSHIP) AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1993, 1994, 1995 AND JUNE 30, 1995 AND 1996
(ALL DATA WITH RESPECT TO JUNE 30, 1995 AND 1996 ARE UNAUDITED)
Further, through December 31, 1993, Televisa funded, on a quarterly basis
in advance, the total estimated production and acquisition costs for the
following quarter (including the Network's share). The Network's share of these
costs totaled $15,609,000 as of December 31, 1993, which amount was paid to
Televisa on January 28, 1994, together with accrued interest at a rate of 6 3/8%
through the date of repayment. Funding for the second quarter of 1994 and all
subsequent funding is on a quarterly basis in advance at 50% of the total
estimated production and acquisition costs for the following quarter. Commencing
with the first quarter of 1996, Televisa and Venevision's portion of such
programming costs to be shared shall be paid to the Network via assignment of
notes issued by the Company to Televisa and Venevision pursuant to that certain
Scheduled Loan Agreement dated as of December 17, 1992 between the Company and
Grupo Televisa S.A. and that certain Scheduled Loan Agreement dated as of
December 17, 1992 between the Company and Pack-A-Snack N.V., having an aggregate
principal amount equal to the costs being funded thereunder for such period. At
June 30, 1996, such assignment amounted to $9,744,000 and is shown as a
reduction of programming costs and an increase in the Due from the Company
receivable in the accompanying 1995 financial statements.
Management Fee
UNHP is required to pay an annual management fee to the General Partners
equal to 3% of the combined net time sales (as defined) of the Univision Group,
for all management services provided to the Network. This fee is paid in arrears
on an annual basis subject to compliance with all covenants in the Bank
Facility, and the Company is not separately charged for any portion of this fee.
Such fee amounted to $6,130,000, $7,203,000, $9,521,000, $4,559,000 and
$5,043,000 for the years ended December 31, 1993, 1994, 1995 and for the six
month periods ended June 30, 1995 and 1996. Beginning in 1996 the management fee
will be paid on a quarterly basis in arrears.
Galavision
Univisa, Inc. (ultimately a wholly-owned subsidiary of Televisa) has
entered into a management agreement with the Network covering the operation of
Televisa's U.S. Spanish language cable network, Galavision. In consideration for
this management agreement, the Network agreed to provide Univisa with
advertising time totaling $10,000,000 during a ten year period. The Network
recorded a liability of $10,000,000 for its obligation to provide advertising
time to Univisa and an intangible asset of $10,000,000. During 1994, 1995 and
the first six months of 1995 and 1996, advertising time totaling $3,662,000,
$2,552,000, $1,640,000 and $732,000, respectively, was utilized and recorded in
gross revenue. Amortization of the intangible asset amounted to $4,000,000,
$4,000,000, $2,000,000 and $2,000,000 during 1994, 1995 and the first six months
of 1995 and 1996, respectively. Based on a formula provided for in the
Management Agreement, the Network receives a management fee equal to a portion
of Galavision's net income generated during the management period. Such
management fee was not material to the results of the operations of the Network
in 1993, 1994, 1995 and 1996.
The Network has the option to acquire the assets of Galavision for
$15,000,000, exercisable at any time between January 1, 1996 and July 1, 1996.
Under certain circumstances, Univisa has the right to require the Network to
acquire such assets between January 1, 1997 and July 1, 1997 for $14,000,000.
The management agreement described above terminates at the earlier of the
exercise of the option to acquire or the right to sell.
F-32
<PAGE> 114
THE UNIVISION NETWORK HOLDING LIMITED PARTNERSHIP
(A LIMITED PARTNERSHIP) AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1993, 1994, 1995 AND JUNE 30, 1995 AND 1996
(ALL DATA WITH RESPECT TO JUNE 30, 1995 AND 1996 ARE UNAUDITED)
Other
In addition to Televisa's obligations under the Program Cost Sharing
Agreement, Televisa reimburses the Network for certain direct costs incurred by
the Network to produce programming for Mexico. During 1993, this reimbursement
totaled $688,000. During 1993, the Network acquired from Televisa the rights to
certain sports programming for $592,000. During 1994, this reimbursement totaled
$625,000 of which $407,000 remained unpaid at December 31, 1994. During 1995,
this reimbursement totaled $209,000 of which $67,000 remains unpaid at December
31, 1995. During the first six months of 1996 this reimbursement totaled 0 and 0
remains unpaid at June 30, 1996.
The Network had an agreement with Univisa, Inc. (ultimately a wholly-owned
subsidiary of Televisa) to acquire broadcast rights to the 1994 World Cup soccer
tournament. The agreement called for a fixed payment of $8,500,000, plus a
percentage of combined net revenues, as defined in the agreement, of the Company
and the Network in excess of a specified level, which level the Network
exceeded. The total amount payable under this agreement was $11,447,000 of which
the Network paid all but $30,000 to Televisa in 1994 and the balance was paid in
1995.
For the years ended December 31, 1993, 1994, 1995 and the six month periods
ended June 30, 1995 and 1996, the Network generated gross revenues of, $413,000,
$3,662,000, $2,552,000, $1,640,000 and $732,000, respectively, from affiliates
of Televisa, and $192,000 from affiliates of Venevision in 1993. Accounts
receivable from Televisa totaled $652,000, $104,462 and 104,462 as of December
31, 1994, 1995 and June 30, 1996, respectively. In addition to the revenues
described above, the Principal Stockholders entered into an agreement under
which the Principal Stockholders may use any available advertising time on the
Network to promote products of affiliates of the Principal Stockholders for no
cash compensation.
See Note 6.
4. PROPERTY AND EQUIPMENT
Property and equipment, and accumulated depreciation and amortization,
consists of the following as of December 31, 1994, 1995 and June 30, 1996 (in
thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------- JUNE 30,
1994 1995 1996
<S> <C> <C> <C>
Land....................................... $ 3,780 $ 3,780 $ 3,780
Building and improvements.................. 16,524 16,672 17,307
Broadcast equipment........................ 23,413 36,022 63,939
Other equipment............................ 2,758 3,468 3,754
-------- -------- --------
46,475 59,942 88,780
Accumulated depreciation and
amortization............................. (5,829) (11,324) (14,637)
-------- -------- --------
$ 40,646 $ 48,618 $ 74,143
======== ======== ========
</TABLE>
F-33
<PAGE> 115
THE UNIVISION NETWORK HOLDING LIMITED PARTNERSHIP
(A LIMITED PARTNERSHIP) AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1993, 1994, 1995 AND JUNE 30, 1995 AND 1996
(ALL DATA WITH RESPECT TO JUNE 30, 1995 AND 1996 ARE UNAUDITED)
5. DEBT
Debt consists of the following at December 31, 1994, 1995 and June 30, 1996
(in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
------------------- JUNE 30,
1994 1995 1996
<S> <C> <C> <C>
Subordinated notes, including accrued interest................ $40,592 $45,704 $ 48,551
Less current portion.......................................... -- -- --
------- ------- -------
Long-term debt................................................ $40,592 $45,704 $ 48,551
======= ======= =======
</TABLE>
The Subordinated Notes (the "Notes"), which have a face value of
$61,094,000 and bear simple interest at 7%, were originally payable by UNHP to
Hallmark Cards, Inc. ("Hallmark") in connection with the acquisitions described
in Note 1. Hallmark has since sold the Notes to a third party, which resold them
to the public as a series of notes. The Notes are unsecured and all interest and
principal is due on December 17, 2002. The Notes were discounted at an effective
rate of approximately 12.5% in accordance with the purchase method of
accounting. The discount ($29,195,000, $28,383,000 and $27,659,000 at December
31, 1994, 1995 and June 30, 1996, respectively), which is shown as a reduction
of the related debt, is being amortized under the interest method over the term
of the Notes.
UNHP estimates that the fair value of the Notes at December 31, 1994, 1995
and June 30, 1996 approximates the book value.
6. GUARANTEE OF THE COMPANY OBLIGATIONS
UNHP and UNP have guaranteed a substantial amount of the obligations of
UTG, including bank borrowings of up to $275,000,000 and $140,000,000 of Senior
Subordinated Notes (the "UTG Notes"). The bank borrowings consisted of a
$210,000,000 five-year amortizing term loan ("Term Facility"), and a $65,000,000
six-year revolving credit loan ("Working Capital Facility," and together with
the Term Facility, the "Bank Facilities"). During 1994, UTG amended its' Bank
Facilities. The amended Bank Facilities, which total $400,000,000, consist of a
$180,000,000 five-year amortizing term loan, a $70,000,000 six-year revolving
credit loan, a $30,000,000 six-year term loan, a $20,000,000 five and one-half
year term loan and a $100,000,000 five and one-half year term loan available
under a revolving credit facility, which to-date has not been borrowed against.
The amendments, among other things, lengthened the maturity of the loans,
adjusted certain financial covenants and lowered the applicable margin, as
defined, on reference rate loans (to 0% to .5% per annum) and Eurodollar rate
loans (to 1% to 1.75% per annum).
The Bank Facilities require mandatory prepayments equal to 75% of excess
cash flow (as defined) of the Univision Group, in addition to net proceeds (as
defined) received by the Univision Group in certain situations from the sale or
other disposition of assets, to be applied to ratably reduce the Term Facility
and the availability under the Working Capital Facility. Any such mandatory
prepayments reduce the scheduled amortization of the Term Facility in inverse
order of maturity.
The Bank Facilities are secured by a security interest in substantially all
of the assets of the Univision Group (subject to limitations of federal law in
the case of the FCC licenses of the Company), and the rights of the Univision
Group under the Program License Agreements and Program Cost Sharing Agreements.
The Bank Facilities are also guaranteed by Perenchio Television, Inc. ("PTI").
UNHP, UNP, and PTI have also jointly, severally and unconditionally
guaranteed UTG Notes, which pay interest semi-annually and mature on January 15,
2001. UTG Notes may be redeemed at a premium at
F-34
<PAGE> 116
THE UNIVISION NETWORK HOLDING LIMITED PARTNERSHIP
(A LIMITED PARTNERSHIP) AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1993, 1994, 1995 AND JUNE 30, 1995 AND 1996
(ALL DATA WITH RESPECT TO JUNE 30, 1995 AND 1996 ARE UNAUDITED)
the option of UTG, either in whole or in part, beginning in January 1997. UTG
may be required to repurchase all or part of UTG Notes outstanding in the event
of a change in control (as defined).
The Bank Facilities and UTG Notes place various limitations and other
restrictions on the Univision Group, PTI and UNHP regarding, among other things,
the incurrence of indebtedness and liens, payment of dividends, disposition of
assets and transactions with affiliates. In addition, the Bank Facilities
contain several performance tests based upon the Univision Group's operating
cash flow (as defined).
In addition, Televisa and Venevision have agreed to provide loans to UTG
approximately fifteen days after the end of each quarter in amounts as required
by its senior lenders subject to certain limitations ("Sponsor Loans"), until
the Return of Initial Financing. The Sponsor Loans are guaranteed by UNP and by
PTI Holdings, Inc. ("PTIH"). Each Sponsor Loan is subordinated to all UTG bank
debt and UTG Notes, has an initial term of 15 years, bears interest at a rate of
the lesser of prime or 10%, and requires no payment of interest or principal
until maturity. Upon the return of Initial Financing, the holders of the Sponsor
Notes may convert them to conversion notes, which will be similar to the Sponsor
Loans with respect to subordination and interest rate, but will be payable in
seven annual installments, subject to certain restrictions. There were no
Sponsor Loans advanced to UTG through December 31, 1992. As of December 31,
1994, 1995 and June 30, 1996 Sponsor Loans and related accrued interest totaled
$60,482,000, $108,361,000 (net of the $9,744,000 assignment related to program
costs sharing - see Note 3), and $131,763,000 respectively.
Condensed consolidated financial information of PCI and subsidiaries is
presented below (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------- JUNE 30,
1994 1995 1996
<S> <C> <C> <C>
Current assets............................ $ 42,629 $ 55,023 $ 53,161
Intangible assets......................... 484,034 451,111 436,956
Other assets.............................. 39,193 41,496 44,228
-------- -------- --------
Total assets.................... $565,856 $547,630 $ 534,345
======== ======== ========
Current liabilities....................... $127,550 $131,264 $ 116,060
Long term-debt, net of current portion and
including accrued interest.............. 317,070 249,840 224,495
Related party long-term debt including
accrued interest and accrued and
variable dividends payable.............. 70,722 112,381 117,835
Sponsor Loans, including accrued
interest................................ 60,482 108,361 131,763
Program rights obligation................. 5,717 753 485
Other long term liabilities............... 1,773 1,301 1,347
Minority interest......................... 11,713 19,405 19,670
-------- -------- --------
Total liabilities......................... 595,027 623,305 611,655
Stockholders' deficit..................... (29,171) (75,675) (77,310)
-------- -------- --------
Total liabilities and
stockholders' deficit......... $565,856 $547,630 $ 534,345
======== ======== ========
</TABLE>
F-35
<PAGE> 117
THE UNIVISION NETWORK HOLDING LIMITED PARTNERSHIP
(A LIMITED PARTNERSHIP) AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1993, 1994, 1995 AND JUNE 30, 1995 AND 1996
(ALL DATA WITH RESPECT TO JUNE 30, 1995 AND 1996 ARE UNAUDITED)
For the years ended December 31, 1993, 1994, 1995 and the six month periods
ended June 30, 1995 and 1996 (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
------------------------------ -------------------------
1993 1994 1995 1995 1996
<S> <C> <C> <C> <C> <C>
Net revenues.............................. $104,675 $139,007 $173,108 $ 82,279 $ 91,420
Total operating expenses.................. 95,689 105,143 129,275 60,461 67,711
-------- -------- -------- ------- -------
Operating income.......................... 8,986 33,864 43,833 21,818 23,709
Interest expense and amortization of
deferred financing
costs and minority interest............. 36,167 41,463 51,839 23,492 22,314
Provision for income taxes................ -- 140 -- -- 500
-------- -------- -------- ------- -------
Income (loss) before extraordinary loss on
early extinguishment of debt............ (27,181) (7,739) (8,006) (1,674) 895
Extraordinary loss on extinguishment of
debt.................................... -- (4,321) (801) -- (681)
-------- -------- -------- ------- -------
Net income (loss)......................... $(27,181) $(12,060) $ (8,807) $ (1,674) $ 214
======== ======== ======== ======= =======
</TABLE>
7. COMMITMENTS
The Network is obligated under long-term operating leases expiring at
various dates through the year 2000 for office, studio, automobile, tower, and
transponder rentals. The Network is also obligated under long term capital lease
obligations through the year 2006. The following is a schedule by year of future
annual rentals under operating and capital leases as of December 31, 1995 (in
thousands):
<TABLE>
<CAPTION>
OPERATING CAPITAL
LEASES LEASES
<S> <C> <C>
Year ending December 31:
1996.................................................... $ 1,607 $ 3,576
1997.................................................... 1,467 3,576
1998.................................................... 1,237 3,576
1999.................................................... 1,043 3,576
2000.................................................... 391 3,576
Thereafter.............................................. -- 15,746
------ ------
Total minimum lease payments............................ $ 5,745 $33,626
------
Less: interest and executory costs...................... (14,056)
------
Total present value of minimum lease payments........... 19,570
Current portion......................................... (1,324)
------
Capital lease obligation, net of current portion........ $18,246
======
</TABLE>
Rent expense totaled $1,980,000, $1,797,000, $2,075,240, $873,000 and
$725,000 for the years ended December 31, 1993, 1994, 1995 and the six month
periods ended June 30, 1995 and 1996, respectively.
In addition to the operating and capital leases outlined above, the Network
has entered into a transponder agreement which qualifies as a capital lease
obligation. The agreement, for two transponders, begins when those transponders
become commercially operational. Payments under this agreement began in January
1996
F-36
<PAGE> 118
THE UNIVISION NETWORK HOLDING LIMITED PARTNERSHIP
(A LIMITED PARTNERSHIP) AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1993, 1994, 1995 AND JUNE 30, 1995 AND 1996
(ALL DATA WITH RESPECT TO JUNE 30, 1995 AND 1996 ARE UNAUDITED)
when the transponders became commercially operational, and will aggregate
approximately $42,000,000 million over the life of the lease.
The Network has entered into an agreement with Nielsen Media Research
("Nielsen") to provide television audience measurement services for a five year
period beginning in November 1992. Pursuant to this agreement, the Network and a
competitor are each obligated to pay Nielsen $18,400,000 in increasing annual
amounts from November 1992 through October 1997. As of December 31, 1994, 1995
and June 30, 1996, included in accrued liabilities are $6,032,000, $5,155,000
and $3,574,000, respectively, related to this agreement.
As of December 31, 1995, the Network is committed to pay amounts
approximating $1,400,000 pursuant to long-term talent contracts through December
31, 1996. These payments do not include amounts payable upon the attainment of
certain annual revenue levels or upon the performance of other contractual
provisions. The talent contract for Mario Kreutzberger expired on December 31,
1995 and a new agreement is currently being finalized.
8. EMPLOYEE BENEFITS
The Network has a 401(k) retirement savings plan (the "Plan") covering all
employees who have completed one year of service. The Plan allows the employees
to defer a portion of their annual compensation, and the Network may match a
portion of the employees' contributions. During 1993, 1994, 1995 and the first
six months ended June 30, 1996 the Network made matching contributions to the
Plan totaling $113,000, $219,000, $452,000 and $263,000, respectively. No
contributions were made for periods prior to 1993.
9. CONTINGENCIES
On August 4, 1995, a jury in the 57th District Court of Bexar County, Texas
returned an adverse verdict against Univision Television Group, the successor to
Univision Station Group, in Emilio Nicolas, Jr. v. Univision Station Group. The
lawsuit, among other things, alleged breach of a September 1990 separation
agreement following the plaintiff's termination from USG's Los Angeles station.
The jury found USG had breached certain provisions of the agreement. It also
found that USG inflicted emotional distress, and violated California Labor Code
Section 1050, by making a misrepresentation to a prospective employer to prevent
plaintiff's employment. Under that Section any damages amount for a violation is
trebled. If a judgment had been entered on all issues, the total amount after
the statutory trebling would have been $6,800,000, plus prejudgment interest and
attorneys fees, in an amount as yet undetermined.
The events which led to the plaintiff's lawsuit occurred before the current
ownership took control of the Company. The Company strongly disagrees with the
verdict and filed pleadings requesting the trial court to enter judgment in the
Company's favor notwithstanding the jury's verdict.
On December 12, 1995 the trial court partially granted the Company's motion
for judgment notwithstanding the verdict. Accordingly, the trial court rendered
judgment that plaintiff recover $5,425,000, denied the plaintiff's motion to
recover an additional $1,400,000 and denied the plaintiff's motion to recover
prejudgment interest and attorneys fees. Both parties then filed motions for a
new trial but agreed to pursue mediation before having those motions decided. As
a result of the mediation, the parties reached a compromise agreement on
February 15, 1996 settling the litigation, without any admission of wrongdoing
on the part of the Company. Pursuant to that settlement, the trial court entered
an agreed upon modified judgment providing that plaintiff recover $2,975,000 in
full satisfaction of his claims. Thereafter, the Company paid the recovery
awarded in the modified judgment, in consideration for which plaintiff released
the
F-37
<PAGE> 119
THE UNIVISION NETWORK HOLDING LIMITED PARTNERSHIP
(A LIMITED PARTNERSHIP) AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1993, 1994, 1995 AND JUNE 30, 1995 AND 1996
(ALL DATA WITH RESPECT TO JUNE 30, 1995 AND 1996 ARE UNAUDITED)
Company from the modified judgment and from any and all claims. After
consummation of the settlement, the trial court rendered an agreed upon final
judgment that plaintiff take nothing from the Company.
There are various legal actions and other claims pending against the
Network incidental to its business and operations. In the opinion of management,
the resolution of these matters will not have a material effect on the
consolidated financial statements.
10. THE OFFERING
In June, 1996, the name of the Company was changed to Univision
Communications Inc.
In June 1996, the Company filed a registration statement on Form S-1 with
the Securities and Exchange Commission and later amended it for the sale of up
to 8,170,000 shares of Class A common stock. The net proceeds to the Company
from this offering are intended, along with the proceeds from a new credit
facility, to be used to refinance the existing Bank Facility, to re-pay existing
long-term debt, to fund capital expenditures and for general corporate and
working capital purposes.
Additionally, in June 1996 UNLP signed a letter of intent with Entravision,
which owns and operates seven of the Affiliated Stations, to make a $10 million
investment in the form of a note and an option to acquire a 25% equity interest
in Entravision.
The Company intends to consummate the following transactions concurrent
with the offering:
(a) The Company will enter into the New Bank Facility and will repay
$165.0 million owing under, and terminate, the Old Bank Facility;
(b) The Company will defease UTG's 11 3/4% Senior Subordinated Notes
due 2001 (the "Senior Subordinated Notes") by, among other things,
depositing $85.1 million with the trustee under the indenture governing
such notes;
(c) The Network will make a distribution to its partners in the amount
of $60.0 million;
(d) The Company will acquire the Network from its partners in exchange
for 19,014.5 shares of Common Stock and $40.0 million in cash, UTG will
become a wholly-owned subsidiary of the Company, and the Company will
effect a dividend of 227.0 shares on each share of Class P Common Stock,
Class T Common Stock and Class V Common Stock, and the Warrants will be
adjusted to reflect the new capital structure of the Company;
(e) The Company will pay $86.5 million to the Principal Stockholders
and their affiliates, representing payment of outstanding principal of and
accrued interest on certain debentures and accrued dividends on certain
preferred stock issued by the Company and its subsidiaries in connection
with the Acquisition and approximately $42.5 million to the Principal
Stockholders and their affiliates, representing full payment of outstanding
principal of and interest on certain notes issued in payment of certain
accrued dividends as of December 31, 1995;
(f) The Company will pay $147.1 million to Televisa and Venevision,
representing full payment of outstanding principal of, and accrued interest
on, all amounts owed to them by UTG with respect to Sponsor Loans made
subsequent to the Acquisition, and the obligations to make the Sponsor
Loans will terminate;
(g) The Company will pay $15.0 million, together with interest, to
Televisa, representing full payment of outstanding principal of and accrued
interest on the note issued by the Company as of July 1, 1996 to Televisa
as payment for the acquisition of Galavision; and
F-38
<PAGE> 120
THE UNIVISION NETWORK HOLDING LIMITED PARTNERSHIP
(A LIMITED PARTNERSHIP) AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1993, 1994, 1995 AND JUNE 30, 1995 AND 1996
(ALL DATA WITH RESPECT TO JUNE 30, 1995 AND 1996 ARE UNAUDITED)
(h) The Program License Agreements will be amended, the Program Cost
Sharing Agreement (which required Televisa and Venevision to reimburse the
Company for one-half of the cost of certain productions produced or
acquired by the Company) will be terminated and the management fee to the
Principal Stockholders of 3% of Combined Net Time Sales will be eliminated.
Under the amended Program License Agreements, the royalty rate will be 11%
from the closing of this Offering through December 31, 1996 and will
increase to 13.5% for 1997 and to 15% for all years thereafter, and the
Company will receive no cost sharing reimbursements.
F-39
<PAGE> 121
GLOSSARY
"Acquisition" means the December 1992 acquisition of the Network and UTG
(excluding the Chicago and Houston O&Os) by Perenchio, Televisa and Venevision.
"Affiliated Stations" means the nine full-power and 14 low-power television
stations with which the Company has Affiliation Agreements.
"Affiliation Agreements" means the affiliation agreements between the
Company and each Affiliated Station and Cable Affiliate.
"Broadcast Affiliates" means the O&Os and the Affiliated Stations.
"Cable Affiliates" means the approximately 740 cable television systems
with which Univision has Affiliation Agreements. These cable television systems
retransmit the Network satellite signal and are not located in DMAs where the
Company has full-power Broadcast Affiliates.
"Combined Net Time Sales" means time sales of the Company from
broadcasting, including barter and trade and television subscription revenues,
less advertising commissions, certain special event revenues, music license
fees, outside affiliate compensation and taxes other than withholding taxes.
"DMA" means a Designated Market Area or the area in which television
stations licensed to a particular city have a greater audience share than
television stations licensed to another city.
"DRI Study" means the Company-commissioned study published by the
econometric firm DRI/McGraw Hill in 1995.
"EBITDA" means earnings before interest, taxes, depreciation and
amortization.
"Entravision" means Entravision Communications Company, L.L.C.
"Galavision" means the Galavision Spanish-language general entertainment
basic cable network owned by the Company effective as of July 1, 1996.
"Hispanic" means all persons in the U.S. of Hispanic descent or origin.
"Hispanic Households" means all U.S. households with a head of household
who is of Hispanic descent or origin, regardless of the language spoken in the
household.
"Network" means the Univision Spanish-language television network owned by
the Company; the Network is owned by a partnership and prior to the
Reorganization, the Principal Stockholders controlled the partnership.
"Nielsen" means Nielsen Media Research which publishes television ratings,
audience share and demographic information.
"O&Os" means the 11 full-power and seven low-power television stations
owned and operated by the Company.
"PCI" means Perenchio Communications, Inc. which changed its name to
Univision Communications Inc. in June 1996.
"Perenchio" means A. Jerrold Perenchio and his affiliates.
"Principal Stockholders" means Perenchio, Televisa and Venevision.
"Program Cost Sharing Agreement" means the cost sharing agreement among the
Network, Televisa and Venevision (which will be terminated as part of the
Reorganization).
"Program License Agreements" means the amended and restated program license
agreements between the Company and Televisa and the Company and Venevision.
"PTIH" means PTI Holdings, Inc.
"Reorganization" means the reorganization of the Company immediately prior
to the closing of this Offering.
G-1
<PAGE> 122
"Sponsor Loans" means the loans made to the Company by Televisa and
Venevision each quarter since the Acquisition.
"Televisa" means Grupo Televisa, S.A. and its affiliates.
"Univision" or the "Company" means Univision Communications Inc. and its
wholly-owned subsidiaries, after giving effect to the Reorganization.
"Univision Affiliates" means the Broadcast Affiliates and the Cable
Affiliates.
"UTG" means Univision Television Group, Inc., the Company's subsidiary that
owns and operates the O&Os.
"UNHP" means The Univision Network Holding Limited Partnership, the entity
(wholly-owned by the Company) that owned substantially all of the partnership
interests in the Network prior to the Reorganization.
"Venevision" means Corporacion Venezolana de Television, C.A. (Venevision)
and its affiliates.
"Warrants" means the warrants to purchase 721,970 shares of Class A Common
Stock, 6,859,425 shares of Class T Common Stock and 6,859,425 shares of Class V
Common Stock at a price of $0.13 per share held by The Davila Family, LLC,
Televisa and Venevision, respectively.
G-2
<PAGE> 123
Omitted chart is the Company's program schedule, listing the day and time
of broadcast and the provider of all of the Company's programs.
<PAGE> 124
- ------------------------------------------------------
- ------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE UNDERWRITERS.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF ANY
OFFER TO BUY, THE CLASS A COMMON STOCK IN ANY JURISDICTION WHERE, OR TO ANY
PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION. NEITHER
THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN THE
FACTS SET FORTH IN THIS PROSPECTUS OR IN THE AFFAIRS OF THE COMPANY SINCE THE
DATE HEREOF.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Prospectus Summary................... 3
Risk Factors......................... 8
Reorganization....................... 15
Use of Proceeds...................... 16
Dividend Policy...................... 16
Dilution............................. 17
Capitalization....................... 18
Unaudited Pro Forma Consolidated
Condensed Financial Statements..... 19
Selected Historical Financial
Data............................... 26
Management's Discussion and Analysis
of Financial Condition and Results
of Operations...................... 28
Business............................. 40
Management........................... 60
Certain Transactions................. 66
Principal Stockholders............... 69
Description of Capital Stock......... 71
Shares Eligible for Future Sale...... 76
Underwriting......................... 78
Legal Matters........................ 79
Experts.............................. 79
Available Information................ 79
Index to Financial Statements........ F-1
Glossary............................. G-1
</TABLE>
------------------
UNTIL , 1996 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE CLASS A COMMON STOCK, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
8,170,000 SHARES
UNIVISION
COMMUNICATIONS INC.
LOGO
CLASS A COMMON STOCK
------------------------
PROSPECTUS
------------------------
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
GOLDMAN, SACHS & CO.
MERRILL LYNCH & CO.
MORGAN STANLEY & CO.
INCORPORATED
, 1996
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 125
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the expenses, other than underwriting
discounts and commissions, payable by the Company in connection with the
issuance and distribution of the Class A Common Stock being registered. All
amounts are estimates except the Securities and Exchange Commission registration
fee, the NASD filing fee and the NYSE listing fee.
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee.............. 68,286
NASD filing fee.................................................. 20,231
NYSE listing fee................................................. 105,600
Accounting fees and expenses..................................... 300,000
Legal fees and expenses.......................................... 300,000
Blue Sky qualification fees and expenses......................... 15,000
Printing and engraving expenses.................................. 150,000
Transfer agent and registrar fees................................ 7,500
D&O Insurance.................................................... 81,000
Miscellaneous.................................................... 7,383
--------
Total.................................................. $1,055,000
========
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Restated Certificate of Incorporation provides that to the
fullest extent permitted by Delaware Law, a director of the Company shall not be
liable to the Company or its stockholders for monetary damages for breach of
fiduciary duty as a director. Under current Delaware Law, liability of a
director may not be limited (i) for any breach of the director's duty of loyalty
to the Company or its stockholders, (ii) for acts or omissions not in good faith
or that involve intentional misconduct or a knowing violation of law, (iii) in
respect of certain unlawful dividend payments or stock redemptions or
repurchases and (iv) for any transaction from which the director derives an
improper personal benefit. The effect of the provisions of the Company's
Restated Certificate of Incorporation is to eliminate the rights of the Company
and its stockholders (through stockholders' derivative suits on behalf of the
Company) to recover monetary damages against a director for breach of the
fiduciary duty of care as a director (including breaches resulting from
negligent or grossly negligent behavior), except in the situations described in
clauses (i) through (iv) above. This provision does not limit or eliminate the
rights of the Company or any stockholder to seek nonmonetary relief such as an
injunction or rescission in the event of a breach of a director's duty of care.
In addition, the Company's Restated Certificate of Incorporation provides that
the Company shall indemnify its directors, officers, employees and agents
against losses incurred by any such person by reason of the fact that such
person was acting in such capacity.
The Company has entered into agreements (the "Indemnification Agreements")
with each of the directors and officers of the Company pursuant to which the
Company has agreed to indemnify such director or officer from claims,
liabilities, damages, expenses, losses, costs, penalties or amounts paid in
settlement incurred by such director or officer in or arising out of his
capacity as a director, officer, employee and/or agent of the Company or any
other corporation of which he is a director or officer at the request of the
Company to the maximum extent provided by applicable law. In addition, such
director or officer is entitled to an advance of expenses to the maximum extent
authorized or permitted by law.
To the extent that the Board of Directors or the stockholders of the
Company may in the future wish to limit or repeal the ability of the Company to
provide indemnification as set forth in the Company's Restated Certificate of
Incorporation, such repeal or limitation may not be effective as to directors
and officers who are parties to the Indemnification Agreements, because their
rights to full protection would be contractually
II-1
<PAGE> 126
assured by the Indemnification Agreements. It is anticipated that similar
contracts may be entered into, from time to time, with future directors of the
Company.
The Form of Underwriting Agreement filed as Exhibit 1.1 to this
Registration Statement provides for indemnification by the Underwriters of the
Company and its directors and officers for certain liabilities arising under the
Securities Act or otherwise.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
Immediately prior to the closing of this Offering, in connection with a
reorganization of the Company, the Company intends to issue an aggregate of
shares of the Company's Common Stock to the Company's stockholders or such
stockholders' affiliates. See "Reorganization." The Company intends to issue the
shares without registration and under the Securities Act, in reliance upon the
exemption provided by Sections 3(a)(9) and 4(2) of the Securities Act.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
-------- ------------------------------------------------------------------------
<C> <S>
1.1 Form of Underwriting Agreement
2.1 Form of Agreement and Plan of Reorganization
3.1 Amended and Restated Articles of Incorporation of the Company
3.2 Amended and Restated Bylaws of the Company
4.1 Form of specimen stock certificate
4.2(1) Indenture dated as of December 15, 1992 relating to Univision Television
Group Inc.'s 11 3/4% Senior Subordinated Notes due 2001 (including the
form of notes)
4.3(1) First Supplemental Indenture dated as of December 17, 1992 relating to
Univision Television Group, Inc.'s 11 3/4% Senior Subordinated Notes due
2001
4.4(2) Indenture dated as of December 17, 1992 relating to PTI Holdings, Inc.'s
Subordinated Ten Year Notes due 2002 (including the form of notes)
4.5(3) Indenture dated as of December 17, 1992 relating to The Univision
Network Holding Limited Partnership's Subordinated Ten Year Notes due
2002 (including form of notes)
4.6(4) First Supplemental Indenture dated as of October 1, 1993 relating to PTI
Holdings, Inc.'s Subordinated Ten Year Notes due 2002
4.7(4) First Supplemental Indenture dated as of October 1, 1993 relating to The
Univision Network Holding Limited Partnership's Subordinated Ten Year
Notes due 2002
4.8(5) Second Supplemental Indenture dated as of July 8, 1994 relating to
Univision Television Group, Inc.'s 11 3/4% Senior Subordinated Notes due
2001
4.9(5) Third Supplemental Indenture dated as of August 8, 1994 relating to
Univision Television Group, Inc.'s 11 3/4% Senior Subordinated Notes due
2001
5.1 Opinion of O'Melveny & Myers LLP
10.1 Form of Indemnity Agreement between the Company and each of its
executive officers and directors
10.2 Form of Registration Rights Agreement
10.3 1996 Performance Award Plan
10.4(6) Employment Agreement dated as of January 1, 1995, between Univision
Television Group, Inc. and George W. Blank
</TABLE>
II-2
<PAGE> 127
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
-------- ------------------------------------------------------------------------
<C> <S>
10.5(6) Amended Employment Agreement dated as of January 1, 1996, between
Univision Television Group, Inc. and George W. Blank
10.6 Form of Amended and Restated Program License Agreement by and between
Dennevar B.V. and the Company
10.7 Form of Amended and Restated Program License Agreement by and between
Univisa, Inc. and the Company
10.8 Form of Participation Agreement by and among the Company, Perenchio,
Televisa, Venevision and certain of their affiliates
10.9 Form of International Program Rights Agreement by and among the Company,
Venevision and Televisa
10.10 Form of Amended and Restated Warrants issued to Televisa
10.11 Form of Amended and Restated Warrants issued to Venevision
10.12 Form of Credit Agreement among Univision Communications Inc., the banks
and other financial institutions parties thereto (the "Lenders"), The
Chase Manhattan Bank, N.A., a national banking association ("Chase"), as
a managing agent and Banque Paribas, a French banking corporation
("Paribas"), as a managing agent, and Chase as administrative agent
10.13 Form of Security Agreement to be executed by Univision Communications
Inc. and the Guarantors (as defined therein) in favor of the
Administrative Agent, for the benefit of the Lenders
10.14 Form of Guarantee to be executed by the Guarantors in favor of the
Administrative Agent for the benefit of the Lenders
10.15(7) Employment Agreement dated as of January 1, 1995 between the Network and
Ray Rodriguez
10.16(7) Amendment to Employment Agreement dated as of January 1, 1996 between
the Network and Ray Rodriguez
10.17 Warrants dated as of issued to The Davila Family, LLC
10.18(6) Transponder Purchase Agreement between Univision, Inc. and Hughes
Communications Satellite Services, Inc. dated as of January 17, 1990 and
assumed by the Network
10.19(6) Transponder Service Agreement between Univision, Inc. dated as of
January 17, 1990 and assumed by the Network
11 Statement re Computation of Per Share Earnings
21 Subsidiaries of the Company
23.1 Consent of Arthur Andersen LLP
23.2 Consent of O'Melveny & Myers LLP (included in Exhibit 5.1)
24.1 Power of Attorney (contained on page II-5 in original Registration
Statement relating to this filing)
27.1 Financial Data Schedule
99.1 Consent of Alejandro Rivera to be named as an alternate director
99.2 Consent of Emilio Romano to be named as an alternate director
</TABLE>
- ------------------------------
(1) Previously filed as an exhibit to the Registration Statement on Form S-1 of
Univision Television Group, Inc. (File No. 33-59534)
II-3
<PAGE> 128
(2) Previously filed as an exhibit to the Registration Statement on Form S-1 of
PTI Holdings, Inc. (File No. 33-66432)
(3) Previously filed as an exhibit to the Registration Statement on From S-1 of
The Univision Network Holding Limited Partnership (File No. 33-66434)
(4) Previously filed as an exhibit to PTI Holdings, Inc.'s Annual Report on Form
10K for the year ended December 31, 1993
(5) Previously filed as an exhibit to Univision Television Group, Inc.'s Annual
Report on Form 10K for the year ended December 31, 1994
(6) Previously filed as an exhibit to Univision Television Group, Inc.'s Annual
Report on Form 10K for the year ended December 31, 1995
(7) Filed on June 19, 1996 as an exhibit to the original Registration Statement
relating to this filing
(B) FINANCIAL STATEMENT SCHEDULES.
Set forth below is the financial statement schedule included as part of the
Registration Statement:
Schedule II
All other schedules are omitted because they are not required, are not
applicable, or the information is included in the Consolidated Financial
Statements or notes thereto.
ITEM 17. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes to provide to the
Underwriters at the closing specified in the Underwriting Agreement certificates
in such denominations and registered in such names as required by the
Underwriters to permit prompt delivery to each purchaser.
(b) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
(c) The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of a
registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of the
registration statement as of the time it was declared effective.
(2) For purposes of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-4
<PAGE> 129
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Amendment No. 1 to the Registration Statement to
be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Los Angeles, County of Los Angeles, State of California, on the 5th day
of September, 1996.
UNIVISION COMMUNICATIONS INC.
By: /s/ A. Jerrold Perenchio
A. Jerrold Perenchio
Chairman, President, Chief Executive
Officer
and Chief Operating Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
Amendment No. 1 to the Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
* Chairman of the Board, President, September 5, 1996
A. Jerrold Perenchio Chief Executive Officer and Chief
Operating Officer
* Executive Vice President and September 5, 1996
George W. Blank Chief Financial Officer, in his
capacities as chief financial
officer and principal accounting
officer
/s/ Robert V. Director September 5, 1996
Cahill
Robert V. Cahill
* Director September 5, 1996
Gustavo Cisneros
* Director September 5, 1996
Lawrence Dam
* Director September 5, 1996
Alan Horn
* Director September 5, 1996
John Perenchio
* Director September 5, 1996
Ray Rodriguez
*/s/ Robert V.
Cahill
Robert V. Cahill
Attorney-in-fact
</TABLE>
II-5
<PAGE> 130
REPORT OF INDEPENDENT PUBLIC ACCOUNTS ON SCHEDULE
To Perenchio Communications, Inc.:
We have audited in accordance with generally accepted auditing standards,
the consolidated financial statements of Perenchio Communications, Inc. and
subsidiaries for the years ended December 31, 1995, 1994 and 1993 included in
this registration statement and have issued our report thereon dated January 31,
1996 (except with respect to the matters discussed in Note 12, as to which the
date is June 17, 1996.) Our audits were made for purpose of forming an opinion
on the basic consolidated financial statements taken as a whole. The schedule
listed in the index to the exhibits is the responsibility of the Company's
management and is presented for the purposes of complying with the Securities
and Exchange Commission's rules and is not part of the basic consolidated
financial statements. The schedule for the years ended December 31, 1995, 1994,
and 1993 has been subjected to the auditing procedures applied in the audit of
the basic consolidated financial statements, and in our opinion, fairly states
in all material respects the financial data required to be set forth therein in
relation to the basic consolidated financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Roseland, New Jersey
January 31, 1996
(Except with respect
to the information in
Note 12, as to which
the date is June 17, 1996.)
S-1
<PAGE> 131
PERENCHIO COMMUNICATIONS, INC. AND SUBSIDIARIES
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(IN THOUSANDS)
<TABLE>
<CAPTION>
ADDITIONS
-------------------------
BALANCE AT CHARGED TO CHARGED TO BALANCE
BEGINNING COSTS AND OTHER AT END OF
DESCRIPTION OF PERIOD EXPENSES ACCOUNTS DEDUCTIONS PERIOD
<S> <C> <C> <C> <C> <C>
FOR THE YEAR ENDED DECEMBER 31,
1993:
Allowance for doubtful accounts... $ (4,796) $ (1,733) $ -- $ 1,349(1) $ (5,180)
Accumulated amortization of
intangible assets............... $ (986) $(29,908) $ -- $ -- $ (30,894)
Accumulated amortization of
deferred financing costs........ $ (130) $ (4,580) $ -- $ -- $ (4,710)
Allowance for deferred tax
asset........................... $ (7,800) $ (8,700) $ -- $ -- $ (16,500)
FOR THE YEAR ENDED DECEMBER 31,
1994:
Allowance for doubtful accounts... $ (5,180) $ (2,038) $ -- $ 2,128(1) $ (5,090)
Accumulated amortization of
intangible assets............... $(30,894) $(27,340) $ -- $ -- $ (58,234)
Accumulated amortization of
deferred financing costs........ $ (4,710) $ (5,419) $ -- $ 336(2) $ (9,793)
Allowance for deferred tax
asset........................... $(16,500) $(10,100) $ -- $ -- $ (26,600)
FOR THE YEAR ENDED DECEMBER 31,
1995:
Allowance for doubtful accounts... $ (5,090) $ (2,809) $ -- $ 4,046(1) $ (3,853)
Accumulated amortization of
intangible assets............... $(58,234) $(28,286) $ -- $ -- $ (86,520)
Accumulated amortization of
deferred financing costs........ $ (9,793) $ (3,925) $ -- $ 121(2) $ (13,597)
Allowance for deferred tax
asset........................... $(26,600) $(17,700) $ -- $ -- $ (44,300)
</TABLE>
- ------------------------------
(1) Represents write-offs of accounts receivable, net of recoveries.
(2) Represents write-offs of deferred financing costs in connection with the
extinguishment of debt.
S-2
<PAGE> 132
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULE
To The Univision Network Holding Limited Partnership:
We have audited in accordance with generally accepted auditing standards,
the consolidated financial statements of The Univision Network Holding Limited
Partnership and subsidiary for the years ended December 31, 1995, 1994 and 1993
included in this registration statement and have issued our report thereon dated
February 15, 1996 (except with respect to the matters discussed in Note 10, as
to which the date is June 17, 1996). Our audits were made to the purpose of
forming an opinion on the basic consolidated statements taken as a whole. The
schedule listed in the index to the exhibits of this registration statement is
the responsibility of the Company's management and is presented for purposes of
complying with the Securities and Exchange Commission's rules and is not part of
the basic consolidated financial statements. The schedule for the years ended
December 31, 1995, 1994 and 1993 has been subject to the auditing procedures
applied in the audit of the basic consolidated financial statements and, in our
opinion, fairly states in all material respects the financial data required to
be set forth therein in relation to the basic consolidated financial statements
taken as a whole.
ARTHUR ANDERSEN LLP
Roseland, New Jersey
February 15, 1996
(Except with respect to the
information in Note 10, as to
which the date is June 17, 1996.)
S-3
<PAGE> 133
UNIVISION NETWORK HOLDING LIMITED PARTNERSHIP
(A LIMITED PARTNERSHIP) AND SUBSIDIARY
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(IN THOUSANDS)
<TABLE>
<CAPTION>
ADDITIONS
-------------------------
BALANCE AT CHARGED TO CHARGED TO BALANCE
BEGINNING COSTS AND OTHER AT END OF
DESCRIPTION OF PERIOD EXPENSES ACCOUNTS DEDUCTIONS PERIOD
<S> <C> <C> <C> <C> <C>
FOR THE YEAR ENDED DECEMBER 31,
1993:
Allowance for doubtful accounts... $ (2,100) $ (1,124) $ (36) $ 261(1) $ (2,999)
Accumulated amortization of
intangible assets............... $ (26) $ (5,029) $ -- $ -- $ (5,055)
FOR THE YEAR ENDED DECEMBER 31,
1994:
Allowance for doubtful accounts... $ (2,999) $ (705) $ -- $ (160)(1) $ (3,864)
Accumulated amortization of
intangible assets............... $ (5,055) $ (4,411) $ -- $ -- $ (9,466)
FOR THE YEAR ENDED DECEMBER 31,
1995:
Allowance for doubtful accounts... $ (3,864) $ (313) $ -- $ 544(1) $ (3,633)
Accumulated amortization of
intangible assets............... $ (9,466) $ (4,420) $ -- $ 4,626(2) $ (9,260)
</TABLE>
- ------------------------------
(1) Represents write-offs of accounts receivable, net of recoveries.
(2) Represents elimination of fully amortized presold advertising.
S-4
<PAGE> 134
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
-------------
<S> <C> <C>
1.1 Form of Underwriting Agreement......................................
2.1 Form of Agreement and Plan of Reorganization........................
3.1 Amended and Restated Articles of Incorporation of the Company.......
3.2 Amended and Restated Bylaws of the Company..........................
4.1 Form of specimen stock certificate..................................
4.2(1) Indenture dated as of December 15, 1992 relating to Univision
Television Group Inc.'s 11 3/4% Senior Subordinated Notes due 2001
(including the form of notes).......................................
4.3(1) First Supplemental Indenture dated as of December 17, 1992 relating
to Univision Television Group, Inc.'s 11 3/4% Senior Subordinated
Notes due 2001......................................................
4.4(2) Indenture dated as of December 17, 1992 relating to PTI Holdings,
Inc.'s Subordinated Ten Year Notes due 2002 (including the form of
notes)..............................................................
4.5(3) Indenture dated as of December 17, 1992 relating to The Univision
Network Holding Limited Partnership's Subordinated Ten Year Notes
due 2002 (including form of notes)..................................
4.6(4) First Supplemental Indenture dated as of October 1, 1993 relating to
PTI Holdings, Inc.'s Subordinated Ten Year Notes due 2002...........
4.7(4) First Supplemental Indenture dated as of October 1, 1993 relating to
The Univision Network Holding Limited Partnership's Subordinated Ten
Year Notes due 2002.................................................
4.8(5) Second Supplemental Indenture dated as of July 8, 1994 relating to
Univision Television Group, Inc.'s 11 3/4% Senior Subordinated Notes
due 2001............................................................
4.9(5) Third Supplemental Indenture dated as of August 8, 1994 relating to
Univision Television Group, Inc.'s 11 3/4% Senior Subordinated Notes
due 2001............................................................
5.1 Opinion of O'Melveny & Myers LLP....................................
10.1 Form of Indemnity Agreement between the Company and each of its
executive officers and directors....................................
10.2 Form of Registration Rights Agreement...............................
10.3 1996 Performance Award Plan.........................................
10.4(6) Employment Agreement dated as of January 1, 1995, between Univision
Television Group, Inc. and George W. Blank..........................
10.5(6) Amended Employment Agreement dated as of January 1, 1996, between
Univision Television Group, Inc. and George W. Blank................
10.6 Form of Amended and Restated Program License Agreement by and
between Dennevar B.V. and the Company...............................
10.7 Form of Amended and Restated Program License Agreement by and
between Univisa Inc. and the Company................................
10.8 Form of Participation Agreement by and among the Company, Perenchio,
Televisa, Venevision and certain of their affiliates................
10.9 Form of International Program Rights Agreement by and among the
Company, Venevision and Televisa....................................
10.10 Form of Amended and Restated Warrants issued to Televisa............
10.11 Form of Amended and Restated Warrants issued to Venevision..........
</TABLE>
<PAGE> 135
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
-------------
<S> <C> <C>
10.12 Form of Credit Agreement among Univision Communications Inc., the
banks and other financial institutions parties thereto (the
"Lenders"), The Chase Manhattan Bank, N.A., a national banking
association ("Chase"), as a managing agent and Banque Paribas, a
French banking corporation ("Paribas"), as a managing agent, and
Chase as administrative agent.......................................
10.13 Form of Security Agreement to be executed by Univision
Communications Inc. and the Guarantors (as defined therein) in favor
of the Administrative Agent, for the benefit of the Lenders.........
10.14 Form of Guarantee to be executed by the Guarantors in favor of the
Administrative Agent for the benefit of the Lenders.................
10.15(7) Employment Agreement dated as of January 1, 1995 between the Network
and Ray Rodriguez...................................................
10.16(7) Amendment to Employment Agreement dated as of January 1, 1996
between the Network and Ray Rodriguez...............................
10.17 Warrants dated as of issued to The Davila Family,
LLC.................................................................
10.18(6) Transponder Purchase Agreement between Univision, Inc. and Hughes
Communications Galaxy, Inc. dated as of January 17, 1990 and assumed
by Network
10.19(6) Transponder Service Agreement between Univision, Inc. and Hughes
Communications Satellite Services, Inc. dated as of January 17, 1990
and assumed by the Network
11.1 Statement re Computation of Per Share Earnings......................
21.1 Subsidiaries of the Company.........................................
23.1 Consent of Arthur Andersen LLP......................................
23.2 Consent of O'Melveny & Myers LLP (included in Exhibit 5.1)..........
24.1 Power of Attorney (contained on page II-5 in original Registration
Statement relating to this filing)..................................
27.1 Financial Data Schedule.............................................
99.1 Consent of Alejandro Rivera to be named as an alternate director....
99.2 Consent of Emilio Romano to be named as an alternate director.......
</TABLE>
- ------------------------------
(1) Previously filed as an exhibit to the Registration Statement on Form S-1 of
Univision Television Group, Inc. (File No. 33-59534)
(2) Previously filed as an exhibit to the Registration Statement on Form S-1 of
PTI Holdings, Inc. (File No. 33-66432)
(3) Previously filed as an exhibit to the Registration Statement on From S-1 of
The Univision Network Holding Limited Partnership (File No. 33-66434)
(4) Previously filed as an exhibit to PTI Holdings, Inc.'s Annual Report on Form
10K for the year ended December 31, 1993
(5) Previously filed as an exhibit to Univision Television Group, Inc.'s Annual
Report on Form 10K for the year ended December 31, 1994
(6) Previously filed as an exhibit to Univision Television Group, Inc.'s Annual
Report on Form 10K for the year ended December 31, 1995
(7) Filed on June 19, 1996 as an exhibit to the original Registration Statement
relating to this filing
<PAGE> 1
EXHIBIT 1.1
8,170,000 Shares
UNIVISION COMMUNICATIONS INC.
Class A Common Stock
UNDERWRITING AGREEMENT
September __, 1996
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
GOLDMAN SACHS & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
MORGAN STANLEY & CO. INCORPORATED
As representatives of the
several underwriters
named in Schedule I hereto
c/o Donaldson, Lufkin & Jenrette Securities Corporation
277 Park Avenue
New York, New York 10172
Dear Sirs:
Univision Communications Inc., a Delaware corporation (the "Company"),
proposes to issue and sell 8,170,000 shares (the "Firm Shares") of its Class A
Common Stock, par value $0.01 per share, to the several underwriters named in
Schedule I hereto (the "Underwriters"). The Company also proposes to issue and
sell to the several Underwriters not more than 1,225,500 additional shares of
its Class A Common Stock, par value $0.01 per share (the "Additional Shares"),
if requested by the Underwriters as provided in Section 2 hereof. The Firm
Shares and the Additional Shares are herein collectively called the Shares. The
shares of common stock of the Company to be outstanding after giving effect to
the sales contemplated hereby are hereinafter referred to as the Common Stock.
1. Registration Statement and Prospectus. The Company has prepared and
filed with the Securities and Exchange Commission (the "Commission") in
accordance with the provisions of the Securities Act of 1933, as amended, and
the rules and regulations of the Commission thereunder (collectively called the
"Act"), a registration statement on Form S-1 including a prospectus relating to
the Shares, which may be amended. The registration statement as amended at the
time when it becomes effective, including a
<PAGE> 2
registration statement (if any) filed pursuant to Rule 462(b) under the Act
increasing the size of the offering registered under the Act and information (if
any) deemed to be part of the registration statement at the time of
effectiveness pursuant to Rule 430A under the Act, is hereinafter referred to as
the Registration Statement; and the prospectus in the form first used to confirm
sales of Shares is hereinafter referred as the Prospectus.
2. Agreements to Sell and Purchase. On the basis of the representations
and warranties contained in this Agreement, and subject to its terms and
conditions, the Company agrees to issue and sell, and each Underwriter agrees,
severally and not jointly, to purchase from the Company at a price per share of
$______ (the "Purchase Price") the number of Firm Shares set forth opposite the
name of such Underwriter in Schedule I hereto.
On the basis of the representations and warranties contained in this
Agreement, and subject to the terms and conditions hereof, the Company agrees to
issue and sell the Additional Shares and the Underwriters shall have the right
to purchase, severally and not jointly, up to 1,225,500 Additional Shares from
the Company at the Purchase Price. Additional Shares may be purchased solely for
the purpose of covering over-allotments made in connection with the offering of
the Firm Shares. The Underwriters may exercise their right to purchase
Additional Shares in whole or in part from time to time (but not more than
twice) by giving written notice thereof to the Company within 30 days after the
date of this Agreement; provided however, that if the Underwriters exercise
their right to purchase additional shares in part on more than one occasion,
the Underwriters shall pay all of the incremental expenses of the closing with
respect to the second exercise of such right. You shall give any such notice on
behalf of the Underwriters and such notice shall specify the aggregate number
of Additional Shares to be purchased pursuant to such exercise and the date for
payment and delivery thereof. The date specified in any such notice shall be a
business day (a) no earlier than the Closing Date (as hereinafter defined), (b)
no later than ten business days after such notice has been given and (c) no
earlier than two business days after such notice has been given. If any
Additional Shares are to be purchased, each Underwriter, severally and not
jointly, agrees to purchase from the Company the number of Additional Shares
(subject to such adjustments to eliminate fractional shares as you may
determine) which bears the same proportion to the total number of Additional
Shares to be purchased from the Company as the number of Firm Shares set forth
opposite the name of such Underwriter in Schedule I bears to the total number
of Firm Shares.
The Company hereby agrees and the Company shall, concurrently with the
execution of this Agreement, deliver an agreement executed by each of the
stockholders of the Company, pursuant to which each such person agrees not to
issue, offer, sell, contract to sell, grant any option to purchase, or otherwise
dispose of any common stock of the Company or any securities convertible into or
exercisable or exchangeable for such common stock or in any other manner
transfer all or a portion of the economic consequences associated with the
ownership of any such common stock, except to the Underwriters pursuant to this
Agreement, for a period of 180 days after the date of the Prospectus without the
prior written consent of Donaldson, Lufkin & Jenrette Securities Corporation.
Notwithstanding the foregoing, during such period (i) each stockholder of the
Company may transfer shares of Common Stock to one or more affiliates or one or
more members of such stockholder's immediate family, or a trust, the sole
beneficiaries of which
2
<PAGE> 3
are members of such stockholder's immediate family, if the transferee agrees in
writing to be bound by the terms of such lock-up agreement, (ii) the Company may
grant stock options pursuant to the Company's stock option plans described in
the Prospectus, and (iii) the Company may issue shares of its common stock upon
the exercise of an option or warrant or the conversion of a security in each
case, described in the Prospectus as outstanding or to be outstanding on the
Closing Date.
3. Terms of Public Offering. The Company is advised by you that the
Underwriters propose (a) to make a public offering of their respective portions
of the Shares as soon after the effective date of the Registration Statement as
in your judgment is advisable and (b) initially to offer the Shares upon the
terms set forth in the Prospectus. Each Underwriter agrees that it will not
knowingly sell any of the Shares to any (i) corporation, joint stock company or
association organized under the laws of a country other than the United States,
(ii) individual who is a non-U.S citizen, (iii) mutual fund organized outside of
the United States, (iv) corporation, joint stock company or association
controlled by a non-U.S. citizen, (v) partnership that has a non-U.S. citizen as
its general partner or that has a general partner controlled by a non-U.S.
citizen, (vi) limited liability company that has a non-U.S. citizen as one of
its managing members, (vii) trust that has a non-U.S. citizen as a trustee, or
(viii) other entity controlled by non-U.S. citizens; provided, however, that the
Underwriters shall be under no duty to investigate the citizenship, foreign
ownership or control or any other matter with respect to the nature of any
purchaser of the Shares.
4. Delivery and Payment. Delivery to the Underwriters of and payment
for the Firm Shares shall be made at 10:00 A.M., New York City time, on the
third or fourth business day unless otherwise permitted by the Commission
pursuant to Rule 15c6-1 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") following the date of the initial public offering (the "Closing
Date"), at such place as you shall designate. The Closing Date and the location
of delivery of and the form of payment for the Firm Shares may be varied by
agreement between you and the Company.
Delivery to the Underwriters of and payment for any Additional Shares
to be purchased by the Underwriters shall be made at such place as you shall
designate at 10:00 a.m., New York City time, on the date specified in the
applicable exercise notice given by you pursuant to Section 2 (an "Option
Closing Date"). Any such Option Closing Date and the location of delivery of and
the form of payment for such Additional Shares may be varied by agreement
between you and the Company.
Certificates for the Shares shall be registered in such names and
issued in such denominations as you shall request in writing not later than two
full business days prior to the Closing Date or an Option Closing Date, as the
case may be. Such certificates shall be made available to you for inspection not
later than 9:30 a.m., New York City time, on the business day next preceding the
Closing Date or the applicable Option Closing Date, as the case may be.
Certificates in definitive form evidencing the Shares shall be delivered to you
on the Closing Date or the applicable Option Closing Date, as the case may be,
with any transfer taxes thereon duly paid by the Company, for the respective
accounts of the
3
<PAGE> 4
several Underwriters, against payment of the Purchase Price therefor by wire
transfer or certified or official bank checks payable in Federal funds to the
order of the Company.
5. Agreements of the Company. The Company agrees with you:
(a) To use its best efforts to cause the Registration Statement to
become effective at the earliest possible time.
(b) To advise you promptly and, if requested by you, to confirm such
advice in writing, (i) when the Registration Statement has become effective and
when any post-effective amendment to it becomes effective, (ii) of any request
by the Commission for amendments to the Registration Statement or amendments or
supplements to the Prospectus or for additional information, (iii) of the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement or of the suspension of qualification of the Shares for
offering or sale in any jurisdiction, or the initiation of any proceeding for
such purposes, and (iv) of the happening of any event during the period referred
to in paragraph (e) below which makes any statement of a material fact made in
the Registration Statement or the Prospectus untrue or which requires the making
of any additions to or changes in the Registration Statement or the Prospectus
in order to make the statements therein not misleading. If at any time the
Commission shall issue any stop order suspending the effectiveness of the
Registration Statement, the Company will make every reasonable effort to obtain
the withdrawal or lifting of such order at the earliest possible time.
(c) To furnish to you, without charge, five signed copies of the
Registration Statement as first filed with the Commission and of each amendment
to it, including all exhibits, and to furnish to you and each Underwriter
designated by you such number of conformed copies of the Registration Statement
as so filed and of each amendment to it, without exhibits, as you may reasonably
request.
(d) Not to file any amendment or supplement to the Registration
Statement, whether before or after the time when it becomes effective, or to
make any amendment or supplement to the Prospectus of which you shall not
previously have been advised or to which you shall reasonably object; and to
prepare and file with the Commission, promptly upon your reasonable request, any
amendment to the Registration Statement or supplement to the Prospectus which
may be necessary or advisable in connection with the distribution of the Shares
by you, and to use its best efforts to cause the same to become promptly
effective.
(e) Promptly after the Registration Statement becomes effective, and
from time to time thereafter for such period as in the opinion of counsel for
the Underwriters a prospectus is required by law to be delivered in connection
with sales by an Underwriter or a dealer, to furnish to each Underwriter and
dealer as many copies of the Prospectus (and of any amendment or supplement to
the Prospectus) as such Underwriter or dealer may reasonably request.
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(f) If during the period specified in paragraph (e) any event shall
occur as a result of which, in the opinion of counsel for the Underwriters it
becomes necessary to amend or supplement the Prospectus in order to make the
statements therein, in the light of the circumstances when the Prospectus is
delivered to a purchaser, not misleading, or if it is necessary to amend or
supplement the Prospectus to comply with any law, forthwith to prepare and file
with the Commission an appropriate amendment or supplement to the Prospectus so
that the statements in the Prospectus, as so amended or supplemented, will not
in the light of the circumstances when it is so delivered, be misleading, or so
that the Prospectus will comply with law, and to furnish to each Underwriter and
to such dealers as you shall specify, such number of copies thereof as such
Underwriter or dealers may reasonably request.
(g) Prior to any public offering of the Shares, to cooperate with you
and counsel for the Underwriters in connection with the registration or
qualification of the Shares for offer and sale by the several Underwriters and
by dealers under the state securities or Blue Sky laws of such jurisdictions as
you may request, to continue such qualification in effect so long as required
for distribution of the Shares and to file such consents to service of process
or other documents as may be necessary in order to effect such registration or
qualification. Notwithstanding the foregoing, the Company shall not be required
to qualify as a foreign corporation or to file a general consent to service of
process in any such jurisdiction where it is not presently qualified or where it
would be subject to taxation as a foreign corporation.
(h) To make generally available to its stockholders as soon as
reasonably practicable an earnings statement covering a period of at least
twelve months after the effective date of the Registration Statement (but in no
event commencing later than 90 days after such date) which shall satisfy the
provisions of Section 11(a) of the Act, and to advise you in writing when such
statement has been so made available.
(i) During the period of five years after the date of this Agreement,
to mail as soon as reasonably practicable after the end of each fiscal year
to the record holders of its Common Stock a financial report of the Company and
its subsidiaries on a consolidated basis (and a similar financial report of all
unconsolidated subsidiaries, if any), all such financial reports to include a
consolidated balance sheet, a consolidated statement of operations, a
consolidated statement of cash flows and a consolidated statement of
stockholders' equity as of the end of and for such fiscal year, together with
comparable information as of the end of and for the preceding year, certified by
independent certified public accountants.
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<PAGE> 6
(j) During the period referred to in paragraph (i), to furnish to you
as soon as available a copy of each report or other publicly available
information of the Company mailed to the holders of Common Stock or filed with
the Commission and such other publicly available information concerning the
Company and its subsidiaries as you may reasonably request.
(k) To pay all costs, expenses, fees and taxes incident to (i) the
preparation, printing, filing and distribution under the Act of the Registration
Statement (including financial statements and exhibits), each preliminary
prospectus and all amendments and supplements to any of them prior to or during
the period specified in paragraph (e), (ii) the printing and delivery of the
Prospectus and all amendments or supplements to it during the period specified
in paragraph (e), (iii) the printing and delivery of this Agreement, the
Preliminary and Supplemental Blue Sky Memoranda and all other agreements,
memoranda, correspondence and other documents printed and delivered in
connection with the offering of the Shares (including in each case any
disbursements of counsel for the Underwriters relating to such printing and
delivery), (iv) the registration or qualification of the Shares for offer and
sale under the securities or Blue Sky laws of the several states (including in
each case the fees and disbursements of counsel for the Underwriters relating to
such registration or qualification and memoranda relating thereto), (v) filings
and clearance with the National Association of Securities Dealers, Inc. in
connection with the offering, (vi) the listing of the Shares on the New York
Stock Exchange and (vii) furnishing such copies of the Registration Statement,
the Prospectus and all amendments and supplements thereto as may be requested
for use in connection with the offering or sale of the Shares by the
Underwriters or by dealers to whom Shares may be sold. Except as provided in
this Section 5(k) and Sections 7 and 10 hereof, the Underwriters shall pay all
of their own expenses, including the fees and disbursements of their counsel.
(l) To use its best efforts to maintain the inclusion of such Common
Stock on the New York Stock Exchange for a period of five years after the
effective date of the Registration Statement.
(m) To use its best efforts to do and perform all things required or
necessary to be done and performed under this Agreement by the Company prior to
the Closing Date or any Option Closing Date, as the case may be, and to satisfy
all conditions precedent to the delivery of the Shares.
6. Representations and Warranties of the Company and Certain of its
Subsidiaries. The Company and each subsidiary of the Company named on the
signature pages hereto, jointly and severally, represent and warrant to each
Underwriter that:
(a) The Registration Statement has become effective; no stop order
suspending the effectiveness of the Registration Statement is in effect; and no
proceedings for such purpose are pending before or threatened by the Commission.
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<PAGE> 7
(b) (i) Each part of the Registration Statement, when such part became
effective, did not contain and each such part, as amended or supplemented, if
applicable, will not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading, (ii) the Registration Statement and the
Prospectus comply and, as amended or supplemented, if applicable, will comply in
all material respects with the Act and (iii) the Prospectus does not contain
and, as amended or supplemented, if applicable, will not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading, except that the representations and warranties set forth
in this paragraph (b) do not apply to statements or omissions in the
Registration Statement or the Prospectus based upon information relating to any
Underwriter furnished to the Company in writing by such Underwriter through you
expressly for use therein.
(c) Each preliminary prospectus filed as part of the registration
statement as originally filed or as part of any amendment thereto, or filed
pursuant to Rule 424 under the Act, and each Registration Statement filed
pursuant to Rule 462(b) under the Act, if any, complied when so filed in all
material respects with the Act; and did not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
(d) The Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of its jurisdiction of incorporation
and has the corporate power and authority to carry on its business as it is
currently being conducted and to own, lease and operate its properties, and is
duly qualified and is in good standing as a foreign corporation authorized to do
business in each jurisdiction in which the nature of its business or its
ownership or leasing of property requires such qualification, except where the
failure to be so qualified would not have a material adverse effect on the
Company and the Subsidiaries (as defined below), taken as a whole.
(e) As of the Closing Date, all of the Company's subsidiaries will be
those subsidiaries listed on Exhibit 21 to the Registration Statement (each a
"Subsidiary" and collectively, the "Subsidiaries"). Each of the corporate
Subsidiaries has been duly incorporated and is validly existing as a corporation
in good standing under the laws of its jurisdiction of incorporation, and each
partnership Subsidiary is a duly formed general partnership and is validly
existing as a general partnership under the laws of the state of its
organization, each with full power and authority (corporate or partnership and
other) to own, lease and operate its properties and each of the Subsidiaries is
duly qualified and is in good standing as a foreign corporation or a foreign
partnership, as the case may be, in each jurisdiction in which the nature of its
business or its ownership or leasing of property requires such qualification,
except where the failure to be so qualified would not have a material adverse
effect upon the Company and the Subsidiaries, taken as a whole.
(f) All of the outstanding shares of capital stock of each corporate
Subsidiary have been duly authorized and validly issued and are fully paid and
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<PAGE> 8
non-assessable, all of the outstanding partnership interests in each partnership
Subsidiary have been duly authorized by such partnership and, except as
disclosed in the Prospectus, all of such shares of capital stock and partnership
interests are owned by the Company, free and clear of any security interest,
claim, lien, encumbrance or adverse interest of any nature.
(g) All the outstanding shares of capital stock of the Company have
been duly authorized and validly issued and are fully paid, non-assessable and
not subject to any preemptive or similar rights; and the Shares have been duly
authorized and, when issued and delivered to the Underwriters against payment
therefor as provided by this Agreement, will be validly issued, fully paid and
non-assessable, and the issuance of such Shares will not be subject to any
preemptive or similar rights.
(h) Immediately prior to the Closing Date, the authorized capital stock
of the Company, including the Common Stock, will conform as to legal matters to
the description thereof contained in the Prospectus.
(i) Neither the Company nor any of the Subsidiaries is in violation of
its respective charter or bylaws or in default in the performance of any
obligation, agreement or condition contained in any bond, debenture, note or any
other evidence of indebtedness or in any other agreement, indenture or
instrument to which the Company or any Subsidiary is a party or by which it or
any Subsidiary or their respective property is bound, which violation or default
would have a material adverse effect on the Company and the Subsidiaries, taken
as a whole.
(j) The execution, delivery and performance of this Agreement,
compliance by the Company with all the provisions hereof and the consummation of
the transactions contemplated hereby (including, without limitation, the
Reorganization) will not require any consent, approval, authorization or other
order of any court, regulatory body, administrative agency or other governmental
body (except the registration of the Shares under the Act and except as may be
required under the securities or Blue Sky laws of the various states) and will
not conflict with or constitute a breach of any of the terms or provisions of,
or a default under, the charter or bylaws of the Company or any of its corporate
Subsidiaries or, except as to defaults, violations or conflicts which
individually or in the aggregate would not be material to the Company and the
Subsidiaries, taken as a whole, any agreement, indenture or other instrument to
which the Company or any Subsidiary is a party or by which it or any Subsidiary
or their respective property is bound, or violate or conflict with any laws,
administrative regulations or rulings or court decrees applicable to the
Company, any Subsidiary or their respective property.
(k) Except as otherwise set forth in the Prospectus, there are no legal
or governmental proceedings pending to which the Company or any Subsidiary is a
party or of which any of their respective property is the subject, and, to the
best of the Company's knowledge, no such proceedings are threatened or
contemplated, which proceedings, individually or in the aggregate, might result
in any material adverse change in the business, prospects, financial condition
or results of operations of the Company and the
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<PAGE> 9
Subsidiaries, taken as a whole. No contract or document of a character required
to be described in the Registration Statement or the Prospectus or to be filed
as an exhibit to the Registration Statement is not so described or filed as
required.
(l) Neither the Company nor any Subsidiary has violated any foreign,
federal, state or local law or regulation relating to the protection of human
health and safety, the environment or hazardous or toxic substances or wastes,
pollutants or contaminants ("Environmental Laws"), nor any federal or state law
relating to discrimination in the hiring, promotion or pay of employees nor any
applicable federal or state wages and hours laws, nor any provisions of the
Employee Retirement Income Security Act or the rules and regulations promulgated
thereunder, which in each case might result in any material adverse change in
the business, prospects, financial condition or results of operations of the
Company and the Subsidiaries, taken as a whole.
(m) The Company and each Subsidiary has such permits, licenses,
franchises and authorizations of governmental or regulatory authorities
("permits"), including, without limitation, under any applicable Environmental
Laws, as are necessary to own, lease and operate its respective properties and
to conduct its business except where the failure to have such permits would not
have a material adverse effect on the Company and the Subsidiaries, taken as a
whole; the Company and each Subsidiary has fulfilled and performed all of its
material obligations with respect to such permits and no event has occurred
which allows, or after notice or lapse of time would allow, revocation or
termination thereof or results in any other material impairment of the rights of
the holder of any such permit; and the Prospectus includes an accurate
description of all such permits, including, without limitation, an accurate
description of any restrictions contained in such permits, compliance with which
would have a material adverse effect on the Company and the Subsidiaries, taken
as a whole.
(n) The costs and liabilities associated with any capital or operating
expenditures required for clean-up, closure of properties or compliance with
Environmental Laws or any permit, license or approval, any related constraints
on operating activities and any potential liabilities to third parties under
Environmental Laws will not, singly or in the aggregate, have a material adverse
effect on the Company and the Subsidiaries, taken as a whole.
(o) Except as otherwise set forth in the Prospectus or such as are not
material to the business, prospects, financial condition or results of
operations of the Company and the Subsidiaries, taken as a whole, the Company
and each Subsidiary has good and marketable title, free and clear of all liens,
claims, encumbrances and restrictions except liens for taxes not yet due and
payable, to all property and assets described in the Registration Statement as
being owned by it. All leases to which the Company or any Subsidiary is a party
are valid and binding and no default has occurred or is continuing thereunder,
which might result in any material adverse change in the business, prospects,
financial condition or results of operations of the Company and the Subsidiaries
taken as a whole, and the Company and the Subsidiaries enjoy peaceful and
undisturbed possession
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under all such leases to which any of them is a party as lessee with such
exceptions as do not materially interfere with the use made by the Company or
such Subsidiary.
(p) The Company and each Subsidiary maintains insurance of the types
and in the amounts generally deemed adequate for its business.
(q) Arthur Anderson LLP are independent public accountants with respect
to the Company as required by the Act.
(r) The financial statements, together with related schedules and notes
forming part of the Registration Statement and the Prospectus (and any amendment
or supplement thereto), present fairly the consolidated financial position,
results of operations and changes in financial position of the Company and the
Subsidiaries on the basis stated in the Registration Statement at the respective
dates or for the respective periods to which they apply; such statements and
related schedules and notes have been prepared in accordance with generally
accepted accounting principles consistently applied throughout the periods
involved, except as disclosed therein; and the other financial and statistical
information and data set forth in the Registration Statement and the Prospectus
(and any amendment or supplement thereto) is, in all material respects,
accurately presented and prepared on a basis consistent with such financial
statements and the books and records of the Company.
(s) The Company is not an "investment company" or a company
"controlled" by an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
(t) Except as set forth in the Prospectus, no holder of any security of
the Company has any right to require registration of shares of Common Stock or
any other security of the Company.
(u) The Company has complied with all provisions of Section 517.075,
Florida Statutes (Chapter 92-198, Laws of Florida).
(v) There is (i) no significant unfair labor practice complaint pending
against the Company or any Subsidiary or, to the best knowledge of the Company,
threatened against any of them, before the National Labor Relations Board or any
state or local labor relations board, and no significant grievance or more
significant arbitration proceeding arising out of or under any collective
bargaining agreement is so pending against the Company or any Subsidiary or, to
the best knowledge of the Company, threatened against any of them, and (ii) no
significant strike, labor dispute, slowdown or stoppage pending against the
Company or any Subsidiary or, to the best knowledge of the Company, threatened
against it or any Subsidiary except for such actions specified in clause (i) or
(ii) above, which, singly or in the aggregate could not reasonably be expected
to have a material adverse effect on the Company and the Subsidiaries, taken as
a whole.
(w) The Company and each Subsidiary maintains a system of internal
accounting controls sufficient to provide reasonable assurance that (i)
transactions are
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executed in accordance with management's general or specific authorizations;
(ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain asset accountability; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(x) All material tax returns required to be filed by the Company and
each Subsidiary in any jurisdiction have been filed, other than those filings
being contested in good faith, and all material taxes, including withholding
taxes, penalties and interest, assessments, fees and other charges due pursuant
to such returns or pursuant to any assessment received by the Company or any
Subsidiary have been paid, other than those being contested in good faith and
for which adequate reserves have been provided.
(y) There are no outstanding subscriptions, rights, warrants, options,
calls, convertible securities, commitments of sale or liens related to or
entitling any person to purchase or otherwise to acquire any shares of the
capital stock of, or other ownership interest in, the Company or any Subsidiary,
except as otherwise disclosed in the Prospectus.
(z) Except as disclosed in the Prospectus, there are no business
relationships or related party transactions required to be disclosed therein by
Item 404 of Regulation S-K of the Commission.
(aa) The Company has filed a registration statement pursuant to
Section 12(g) of the Exchange Act, to register the Common Stock, has filed an
application to list the Shares on the New York Stock Exchange and has received
notification that the listing has been approved, subject to notice of issuance
of the Shares.
(bb) The Company has delivered to the Underwriters true and correct
copies of the form of the Bank Credit Agreement to be entered into by and among
the banks, financial institutions and other institutional lenders listed on the
signature pages thereof, ___________, as syndication agent, and ___________, as
administrative agent, to be entered into prior to or concurrently with the
issuance and sale of Shares hereunder (the "Bank Credit Agreement"); the
representations and warranties contained in the Bank Credit Agreement are all
true and correct and are incorporated herein by reference.
(cc) The Company and the Subsidiaries possess, or possess the right to
use, the patents, patent rights, licenses, inventions, copyrights, know-how
(including trade secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures), trademarks, service marks and
trade names (collectively, "Intellectual Property") presently employed by them
in connection with the businesses now operated by them, and neither the Company
nor any of the Subsidiaries has received any notice of infringement of or
conflict with asserted rights of others with respect to the foregoing which,
singly or in the aggregate, if the subject of an unfavorable decision, ruling or
finding, would result in a material adverse change in the business, prospects,
financial
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condition or results of operations of the Company and the Subsidiaries, taken as
a whole. The use of such Intellectual Property in connection with the business
and operations of the Company and the Subsidiaries does not, to the Company's
knowledge, infringe on the rights of any person.
7. Indemnification. (a) The Company and each Subsidiary named on the
signature pages hereto agree, jointly and severally, to indemnify and hold
harmless each Underwriter and each person, if any, who controls any Underwriter
within the meaning of Section 15 of the Act or Section 20 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), from and against any and
all losses, claims, damages, liabilities and judgments caused by any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement or the Prospectus (as amended or supplemented if the
Company shall have furnished any amendments or supplements thereto) or any
preliminary prospectus, or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as such losses, claims,
damages, liabilities or judgments are caused by any such untrue statement or
omission or alleged untrue statement or omission based upon information relating
to any Underwriters furnished in writing to the Company by or on behalf of any
Underwriter through you expressly for use therein; provided, however, that the
foregoing indemnity agreement with respect to any preliminary prospectus shall
not inure to the benefit of any Underwriter from whom the person asserting any
such losses, claims, damages, liabilities and judgments purchased Shares, or any
person controlling such Underwriter, if a copy of the Prospectus (as then
amended or supplemented if the Company shall have furnished any amendments or
supplements thereto) was not sent or given by or on behalf of such Underwriter
to such person, if required by law so to have been delivered, at or prior to the
written confirmation of the sale of the Shares to such person, and if the
Prospectus (as so amended and supplemented) would have cured the defect giving
rise to such loss, claim, damage, liability or judgment.
(b) In case any action shall be brought against any Underwriter or any
person controlling such Underwriter, based upon any preliminary prospectus, the
Registration Statement or the Prospectus or any amendment or supplement thereto
and with respect to which indemnity may be sought against the Company or any
Subsidiary, such Underwriter shall promptly notify the Company or such
Subsidiary in writing and the Company or such Subsidiary shall assume the
defense thereof, including the employment of counsel reasonably satisfactory to
such indemnified party and payment of all fees and expenses. Any Underwriter or
any such controlling person shall have the right to employ separate counsel in
any such action and participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such Underwriter or such
controlling person unless (i) the employment of such counsel shall have been
specifically authorized in writing by the Company or such Subsidiary, (ii) the
Company or such Subsidiary shall have failed to assume the defense and employ
counsel, or (iii) the named parties to any such action (including any impleaded
parties) include both such Underwriter or such controlling person and the
Company or such Subsidiary and such Underwriter or such controlling person shall
have been advised by such counsel that there may be one or more legal defenses
available to it which are different from or additional to those available to the
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Company or such Subsidiary (in which case the Company or such Subsidiary shall
not have the right to assume the defense of such action on behalf of such
Underwriter or such controlling person, it being understood, however, that the
Company or such Subsidiary shall not, in connection with any one such action or
separate but substantially similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances, be liable for the
fees and expenses of more than one separate firm of attorneys (in addition to
any local counsel reasonably necessary for the defense of any such action) for
all such Underwriters and controlling persons, which firm shall be designated in
writing by Donaldson, Lufkin & Jenrette Securities Corporation and that all such
fees and expenses shall be reimbursed as they are incurred). The Company or such
Subsidiary shall not be liable for any settlement of any such action effected
without their written consent but if settled with the written consent of the
Company or such Subsidiary, the Company or such Subsidiary agrees to indemnify
and hold harmless any Underwriter and any such controlling person from and
against any loss or liability by reason of such settlement. No indemnifying
party shall, without the prior written consent of the indemnified party, effect
any settlement of any pending or threatened proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such proceeding.
(c) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company, its directors, its officers who sign the
Registration Statement and any person controlling the Company within the meaning
of Section 15 of the Act or Section 20 of the Exchange Act, to the same extent
as the foregoing indemnity from the Company to each Underwriter but only with
reference to information relating to such Underwriter furnished in writing by or
on behalf of such Underwriter through you expressly for use in the Registration
Statement, the Prospectus or any preliminary prospectus. In case any action
shall be brought against the Company, any of its directors, any such officer or
any person controlling the Company based on the Registration Statement, the
Prospectus or any preliminary prospectus and in respect of which indemnity may
be sought against any Underwriter, the Underwriter shall have the rights and
duties given to the Company (except that if the Company shall have assumed the
defense thereof, such Underwriter shall not be required to do so, but may employ
separate counsel therein and participate in the defense thereof but the fees and
expenses of such counsel shall be at the expense of such Underwriter), and the
Company, its directors, any such officers and any person controlling the Company
shall have the rights and duties given to the Underwriter, by Section 7(b)
hereof.
(d) If the indemnification provided for in this Section 7 is
unavailable to an indemnified party in respect of any losses, claims, damages,
liabilities or judgments referred to therein, then each indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to the amount paid
or payable by such indemnified party as a result of such losses, claims,
damages, liabilities and judgments (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company on the one hand and the
Underwriters on the other hand from the offering of the Shares or (ii) if the
allocation
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provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Company and the
Subsidiaries, and the Underwriters in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities or
judgments, as well as any other relevant equitable considerations. The relative
benefits received by the Company and the Subsidiaries and the Underwriters shall
be deemed to be in the same proportion as the total net proceeds from the
offering (before deducting expenses) received by the Company, and the total
underwriting discounts and commissions received by the Underwriters, bear to the
total price to the public of the Shares, in each case as set forth in the table
on the cover page of the Prospectus. The relative fault of the Company and the
Subsidiaries and the Underwriters shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission to state a material fact relates to information supplied by the
Company or any Subsidiary or the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The Company, the Subsidiaries named on the signature pages hereto and
the Underwriters agree that it would not be just and equitable if contribution
pursuant to this Section 7(d) were determined by pro rata allocation (even if
the Underwriters were treated as one entity for such purpose) or by any other
method of allocation which does not take account of the equitable considerations
referred to in the immediately preceding paragraph. The amount paid or payable
by an indemnified party as a result of the losses, claims, damages, liabilities
or judgments referred to in the immediately preceding paragraph shall be deemed
to include, subject to the limitations set forth above, any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 7, no Underwriter shall be required to contribute any
amount in excess of the amount by which the total price at which the Shares
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages which such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The
Underwriters' obligations to contribute pursuant to this Section 7(d) are
several in proportion to the respective number of Shares purchased by each of
the Underwriters hereunder and not joint.
8. Conditions of Underwriters' Obligations. The several obligations of
the Underwriters to purchase the Firm Shares under this Agreement are subject to
the satisfaction of each of the following conditions:
(a) All the representations and warranties of the Company contained in
this Agreement shall be true and correct on the Closing Date with the same force
and effect as if made on and as of the Closing Date.
(b) The Registration Statement shall have become effective not later
than 5:00 P.M. (and in the case of a Registration Statement filed under Rule
462(b) of the Act,
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not later than 10:00 p.m.), New York City time, on the date of this Agreement or
at such later date and time as you may approve in writing, and at the Closing
Date no stop order suspending the effectiveness of the Registration Statement
shall have been issued and no proceedings for that purpose shall have been
commenced or shall be pending before or contemplated by the Commission.
(c) (i) Since the date of the latest balance sheet included in the
Registration Statement and the Prospectus, there shall not have been any
material adverse change, or any development involving a prospective material
adverse change, in the condition, financial or otherwise, or in the earnings,
affairs or business prospects, whether or not arising in the ordinary course of
business, of the Company, (ii) since the date of the latest balance sheet
included in the Registration Statement and the Prospectus there shall not have
been any change, or any development involving a prospective material adverse
change, in the capital stock or in the long-term debt of the Company from that
set forth in the Registration Statement and Prospectus, (iii) the Company and
the Subsidiaries shall have no liability or obligation, direct or contingent,
which is material to the Company and the Subsidiaries, taken as a whole, other
than those reflected in the Registration Statement and the Prospectus and (iv)
on the Closing Date you shall have received a certificate dated the Closing
Date, signed by A. Jerrold Perenchio and George Blank, in their capacities as
President and Chief Financial Officer of the Company, respectively, confirming
the matters set forth in paragraphs (a), (b), and (c) of this Section 8.
(d) You shall have received on the Closing Date an opinion
(satisfactory to you and counsel for the Underwriters), dated the Closing Date,
of O'Melveny & Myers LLP, counsel for the Company, to the effect that:
(i) The Company and each of its corporate
Subsidiaries have been duly incorporated, and each is validly
existing and in good standing under the laws of its state of
incorporation, with corporate power to own its properties and
assets and to carry on its business as described in the
Registration Statement.
(ii) The outstanding shares of the capital stock of
each corporate Subsidiary have been duly authorized by all
necessary corporate action on the part of such corporation, are
validly issued, fully-paid and nonassessable, and are owned
directly or indirectly of record by the Company and the
outstanding partnership interests in each partnership Subsidiary
have been duly authorized by such partnership and are owned
directly or indirectly of record by the Company.
(iii) The outstanding shares of the capital stock
of the Company have been duly authorized by all necessary
corporate action on the part of the Company and are validly
issued, fully paid and nonassessable.
(iv) The Shares have been duly authorized by all
necessary corporate action on the part of the Company and, upon
payment for and delivery of the Shares in accordance with the
Agreement and the countersigning of the certificate or
certificates representing the Shares by a duly authorized
signatory of the registrar for
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<PAGE> 16
the Company's Common Stock, the Shares will be validly issued,
fully paid and nonassessable. Holders of the capital stock of the
Company are not entitled to any preemptive right to subscribe to
any additional shares of the Company's capital stock under the
Company's Restated Certificate of Incorporation or By-laws, any
New York, California or Delaware statute or regulation or any of
the Filed Agreements (as hereinafter defined).
(v) The execution, delivery and performance of this
Agreement have been duly authorized by all necessary corporate
action on the part of the Company and the Subsidiaries, this
Agreement has been duly executed and delivered by the Company and
the Subsidiaries [and this Agreement is enforceable in accordance
with its terms (except as rights to indemnity and contribution
hereunder may be limited by applicable law)].
(vi) The Registration Statement has been declared
effective under the Act and, to our knowledge, no stop order
suspending the effectiveness of the Registration Statement has
been issued or threatened by the Commission.
(vii) The statements in the Prospectus under the
captions "Risk Factors-- Potential Competition with Other
Broadcasters Using Televisa Programming," "Risk
Factors--Mandatory Redemption of Class A Common Stock," "Risk
Factors--FCC Regulation," "Risk Factors--Concentration of Share
Ownership and Control of Company," "Risk Factors--Adverse Effect
of Shares Eligible for Future Sale on Market Price of Common
Stock," "Reorganization," "Certain Transactions," "Description of
Capital Stock," "Shares Eligible for Future Sale," and
"Underwriting" in the Prospectus and Items 14 and 15 of Part II
of the Registration Statement, insofar as such statements
summarize the Restated Certificate of Incorporation, By-laws,
Plan of Reorganization, Program License Agreements, International
Program Rights Agreement, Participation Agreement, Warrants,
Registration Rights Agreement, Sponsor Loans, Program Cost
Sharing Agreement and Indemnification Agreements (each as defined
in the Registration Statement) or the provisions of any statute
or regulation referred to therein fairly present the information
required by Form S-1.
(viii) No order, consent, permit or approval of any
New York, California, Delaware or federal governmental authority
that we have, in the exercise of customary professional
diligence, recognized as applicable to the Company, the
Subsidiaries or transactions of the type contemplated by this
Agreement is required on the part of the Company or any of the
Subsidiaries for the consummation of the Reorganization or the
execution and delivery of, and performance of their respective
obligations under, this Agreement. The consummation of the
Reorganization and the Company's and the Subsidiaries' execution
and delivery of, and performance of their obligations under, this
Agreement do not and will not (A) violate the Company's or any
Subsidiary's charter or bylaws, (B) violate, breach, or result in
a default under, any existing obligation of or restriction on the
Company or any Subsidiary under any agreement filed as an Exhibit
to the Registration Statement (the "Filed
16
<PAGE> 17
Agreements"), or (C) breach or otherwise violate any existing
obligation of or restriction on the Company or any Subsidiary
under any order, judgment or decree of any New York, Delaware or
federal court or governmental authority binding on the Company or
the Subsidiaries. The consummation of the Reorganization and the
execution and delivery by the Company and the Subsidiaries of,
and performance of their obligations under, this Agreement do not
violate any New York, California, Delaware or federal statute or
regulation that we have, in the exercise of customary
professional diligence, recognized as applicable to the Company
or any Subsidiary or the transactions of the type contemplated by
this Agreement (including, without limitation, the
Reorganization), except that, we express no opinion regarding any
federal securities laws or Blue Sky or state securities laws
except as otherwise expressly stated herein.
(ix) We do not know of any legal or governmental
proceeding pending or threatened to which the Company or any
Subsidiary is a party or to which any of their respective
property is subject which is required to be described in the
Registration Statement or the Prospectus and is not so described,
or of any contract or other document of a character required to
be filed as an exhibit to the Registration Statement which is not
filed as required.
(x) The Company is not an "investment company"
within the meaning of the Investment Company Act of 1940, as
amended.
(xi) The Registration Statement on the date it was
filed, complied in all material respects with the requirements as
to form for registration statements on Form S-1 under the Act and
the related rules and regulations in effect on the date of
filing, except that such counsel need express no opinion
concerning the financial statements and other financial
information contained or incorporated by reference therein.
(xii) The Reorganization has been duly and validly
authorized by all necessary corporate action on the part of the
Company and the Subsidiaries.
(xiii) To the best of such counsel's knowledge, no
holder of any security of the Company has any right to require
registration of shares of Common Stock or any other security of
the Company other than as described in the Prospectus.
(xiv) The Subsidiaries of the Company identified on
Schedule II hereto hold the Federal Communications Commission
("FCC") licenses, permits and authorizations specified on such
Schedule II (the "FCC Licenses").
(xv) The FCC Licenses are in full force and effect.
(xvi) The FCC Licenses include all material FCC
licenses, permits and authorizations necessary for the Company's
respective Subsidiaries identified on
17
<PAGE> 18
Schedule II hereto to operate television broadcast stations of
the type indicated on the respective channels in the communities
of license listed on such Schedule II.
(xvii) The FCC has granted the Company's
application on FCC Form 316 filed pursuant to 47 C.F.R. Section
73.3540(f) (1995) in connection with the Reorganization and the
Offering (the "Application"), and thereby has consented to the
changes in ownership interests in the Company effected by the
Reorganization and the Offering.
(xiii) The FCC's consent is in full force and
effect. Such consent constitutes all necessary material consents,
approvals and authorizations required under the Communications
Act of 1934, as amended, for the Reorganization and the Offering
to occur.
(xix) Based solely upon a review of the records in
the public reference rooms of the FCC available for inspection on
________________, 1996, appropriate files of this firm,
certificates of officers or other representatives of the Company
or its Subsidiaries, and an inquiry of lawyers in this firm who
have substantial responsibility for the Company's legal matters
handled by this firm, we confirm that: (A) there is no proceeding
(including any rulemaking proceeding), complaint or investigation
against the Company or any of its Subsidiaries or in respect of
the station licenses or any of the FCC Licenses pending or
threatened before the FCC (including any pending judicial review
of such an action by the FCC) with respect to which the outcome,
if determined adversely to the Company or any of its
Subsidiaries, would have a material adverse effect on the
operations of the Company and its Subsidiaries (except for
proceedings affecting the television industry generally to which
neither the Company nor any of its Subsidiaries is a specific
party); and (B) neither the Company nor any of the Subsidiaries
has been the subject of any final adverse order, decree or ruling
of the FCC (including any notice of forfeiture that has been
paid) since the last renewal of the FCC Licenses which had a
material adverse effect on the operations of the Company and its
Subsidiaries.
(xx) The Company has confirmed to such counsel
that, to the best of its knowledge, upon consummation of the
Reorganization and the Offering, the only equity interests in the
Company that will be owned or voted, directly or indirectly, by
aliens, entities organized under the laws of foreign governments,
or the representatives of either (within the meaning of the
Communications Act of 1934, as amended, and the rules,
regulations, written policies and decisions of the FCC
(collectively, the "Communications Act")) will be (A) those
shares of Class T Common Stock owned by Univisa, Inc. and Univisa
Broadcasting, L.P. and (B) those shares of Class V Common Stock
owned by Venevision International, Ltd., Dennevar B.V. and Bravo
Enterprises, Inc. Based upon such confirmation and the approval
of the Application by the FCC, upon consummation of the
Reorganization and the Offering, the Company will comply with
Section 310(b) of the Communications Act with respect to the
collective equity interests in the Company
18
<PAGE> 19
owned or voted, directly or indirectly, by aliens, entities
organized under the laws of foreign governments, or the
representatives of either.
In addition, such opinion shall contain a statement to the effect that
in connection with such counsel's participation in the preparation of the
Registration Statement and the Prospectus, they have not independently verified
the accuracy, completeness or fairness of the statements contained therein, and
the limitations inherent in the examination made by such counsel and the
knowledge available to such counsel are such that such counsel is unable to
assume, and does not assume, any responsibility for such accuracy, completeness
or fairness, except as otherwise specifically stated in clause (vii) above.
However, on the basis of such counsel's review and participation in conferences
in connection with the preparation of the Registration Statement and the
Prospectus, and relying as to materiality to a large extent upon opinions of
officers and other representatives of the Company, such counsel does not believe
that the Registration Statement as of its effective date contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
such counsel does not believe that the Prospectus on the date hereof contains
any untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. Such
counsel need express no opinion or belief as to the financial statements and
other financial information contained in the Registration Statement or the
Prospectus.
The opinion of O'Melveny & Myers described in paragraph (d) above shall
be rendered to you at the request of the Company and shall so state therein.
(e) You shall have received on the Closing Date an opinion, dated the
Closing Date, of Latham & Watkins, counsel for the Underwriters, as to the
matters referred to in clauses (iv), (v), (vi), (vii) (but only with respect to
the statements under the caption "Description of Capital Stock" and
"Underwriting"), (xi) and the penultimate subparagraph of the foregoing
paragraph (d). In giving such opinion with respect to the matters covered by
clause (xi) and the penultimate subparagraph of paragraph (d), such counsel may
state that their opinion and belief are based upon their participation in the
preparation of the Registration Statement and Prospectus and any amendments or
supplements thereto and review and discussion of the contents thereof, but are
without independent check or verification except as specified.
(f) You shall have received a letter on and as of the Closing Date, in
form and substance satisfactory to you, from Arthur Anderson LLP, independent
public accountants, with respect to the financial statements and certain
financial information contained in the Registration Statement and the Prospectus
and substantially in the form and substance of the letter delivered to you by
Arthur Anderson LLP on the date of this Agreement.
(g) The Company shall have delivered to you the agreements specified in
Section 2 hereof.
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<PAGE> 20
(h) The Company shall not have failed at or prior to the Closing Date
to perform or comply with any of the agreements herein contained and required to
be performed or complied with by the Company at or prior to the Closing Date.
(i) The Reorganization (as defined in the Prospectus) including,
without limitation, the refinancing of the Company's credit facility with
borrowings under the Bank Credit Agreement, shall have been consummated as
contemplated by the Plan of Reorganization and there shall have been no
amendments, alterations, modifications or waivers to the form of the Bank Credit
Agreement delivered to the Underwriters on or prior to the date hereof of in the
exhibits or schedules thereto.
(j) You shall have received complete sets of all closing documents,
including, without limitation, all opinions, required to be delivered in
connection with the Bank Credit Agreement, together, in the case of any legal
opinions, with appropriate reliance letters addressed to the Underwriters.
The several obligations of the Underwriters to purchase any Additional Shares
hereunder are subject to the delivery to you on the applicable Option Closing
Date of such documents as you may reasonably request with respect to the good
standing of the Company, the due authorization and issuance of such Additional
Shares and other matters related to the issuance of such Additional Shares.
9. Effective Date of Agreement and Termination. This Agreement shall
become effective upon the later of (a) execution of this Agreement and (b) when
notification of the effectiveness of the Registration Statement has been
released by the Commission.
This Agreement may be terminated at any time prior to the Closing Date
by you by written notice to the Company if any of the following has occurred:
(a) since the respective dates as of which information is given in the
Registration Statement and the Prospectus, any material adverse change or
development involving a prospective material adverse change in the condition,
financial or otherwise, of the Company and the Subsidiaries, taken as a whole,
or the earnings, affairs, or business prospects of the Company and the
Subsidiaries, taken as a whole, whether or not arising in the ordinary course of
business, which would, in your judgment, make it impracticable to market the
Shares on the terms and in the manner contemplated in the Prospectus; (b) any
outbreak or escalation of hostilities or other national or international
calamity or crisis or change in economic conditions or in the financial markets
of the United States or elsewhere that, in your judgment, is material and
adverse and would, in your judgment, make it impracticable to market the Shares
on the terms and in the manner contemplated in the Prospectus; (c) the
suspension or material limitation of trading in securities on the New York Stock
Exchange, the American Stock Exchange or the Nasdaq National Market or
limitation on prices for securities on any such exchange or Nasdaq National
Market; (d) the enactment, publication, decree or other promulgation of any
federal or state statute, regulation, rule or order of any court or other
governmental authority which in your opinion materially and adversely affects,
or will materially and adversely affect, the business or operations of the
Company
20
<PAGE> 21
or any Subsidiary; (e) the declaration of a banking moratorium by either federal
or New York State authorities; or (f) the taking of any action by any federal,
state or local government or agency in respect of its monetary or fiscal affairs
which in your opinion has a material adverse effect on the financial markets in
the United States.
If on the Closing Date or on an Option Closing Date, as the case may
be, any one or more of the Underwriters shall fail or refuse to purchase the
Firm Shares or Additional Shares, as the case may be, which it or they have
agreed to purchase hereunder on such date and the aggregate number of Firm
Shares or Additional Shares, as the case may be, which such defaulting
Underwriter or Underwriters, as the case may be, agreed but failed or refused to
purchase is not more than one-tenth of the total number of Shares to be
purchased on such date by all Underwriters, each non-defaulting Underwriter
shall be obligated severally, in the proportion which the number of Firm Shares
set forth opposite its name in Schedule I bears to the total number of Firm
Shares which all the non-defaulting Underwriters, as the case may be, have
agreed to purchase, or in such other proportion as you may specify, to purchase
the Firm Shares or Additional Shares, as the case may be, which such defaulting
Underwriter or Underwriters, as the case may be, agreed but failed or refused to
purchase on such date; provided that in no event shall the number of Firm Shares
or Additional Shares, as the case may be, which any Underwriter has agreed to
purchase pursuant to Section 2 hereof be increased pursuant to this Section 9 by
an amount in excess of one-ninth of such number of Firm Shares or Additional
Shares, as the case may be, without the written consent of such Underwriter. If
on the Closing Date or on an Option Closing Date, as the case may be, any
Underwriter or Underwriters shall fail or refuse to purchase Firm Shares, or
Additional Shares, as the case may be, and the aggregate number of Firm Shares
or Additional Shares, as the case may be, with respect to which such default
occurs is more than one-tenth of the aggregate number of Shares to be purchased
on such date by all Underwriters and arrangements satisfactory to you and the
Company for purchase of such Shares are not made within 48 hours after such
default, this Agreement will terminate without liability on the part of any
non-defaulting Underwriter and the Company. In any such case which does not
result in termination of this Agreement, either you or the Company shall have
the right to postpone the Closing Date or the applicable Option Closing Date, as
the case may be, but in no event for longer than seven days, in order that the
required changes, if any, in the Registration Statement and the Prospectus or
any other documents or arrangements may be effected. Any action taken under this
paragraph shall not relieve any defaulting Underwriter from liability in respect
of any default of any such Underwriter under this Agreement.
10. Miscellaneous. Notices given pursuant to any provision of this
Agreement shall be addressed as follows: (a) if to the Company, to Univision
Communications Inc., 1999 Avenue of the Stars, Suite 3050, Los Angeles,
California 90067, Attention: _____________, with a copy to Univision
Communications Inc., 6701 Center Drive West, 15th Floor, Los Angeles, California
90045, Attention: General Counsel and (b) if to any Underwriter or to you, to
you c/o Donaldson, Lufkin & Jenrette Securities Corporation, 277 Park Avenue,
New York, New York 10172, Attention: Syndicate Department, or in any case to
such other address as the person to be notified may have requested in writing.
21
<PAGE> 22
The respective indemnities, contribution agreements, representations,
warranties and other statements of the Company, the Subsidiaries named on the
signature pages hereof, their officers and directors and of the several
Underwriters set forth in or made pursuant to this Agreement shall remain
operative and in full force and effect, and will survive delivery of and payment
for the Shares, regardless of (a) any investigation, or statement as to the
results thereof, made by or on behalf of any Underwriter or by or on behalf of
the Company, the officers or directors of the Company or any controlling person
of the Company, (b) acceptance of the Shares and payment for them hereunder and
(c) termination of this Agreement.
If this Agreement shall be terminated by the Underwriters because of
any failure or refusal on the part of the Company to comply with the terms or to
fulfill any of the conditions of this Agreement, the Company agrees to reimburse
the several Underwriters for all out-of-pocket expenses (including the fees and
disbursements of counsel) reasonably incurred by them.
Except as otherwise provided, this Agreement has been and is made
solely for the benefit of and shall be binding upon the Company, the
Underwriters, any controlling persons referred to herein and their respective
successors and assigns, all as and to the extent provided in this Agreement, and
no other person shall acquire or have any right under or by virtue of this
Agreement. The term "successors and assigns" shall not include a purchaser of
any of the Shares from any of the several Underwriters merely because of such
purchase.
This Agreement shall be governed and construed in accordance with the
laws of the State of New York.
This Agreement may be signed in various counterparts which together
shall constitute one and the same instrument.
22
<PAGE> 23
Please confirm that the foregoing correctly sets forth the agreement
between the Company, the Subsidiaries named below and the several Underwriters.
Very truly yours,
UNIVISION COMMUNICATIONS INC.
By___________________________________
Name:
Title:
UNIVISION TELEVISION GROUP, INC.
By___________________________________
Name:
Title:
GALAVISION, INC.
By___________________________________
Name:
Title:
THE UNIVISION NETWORK LIMITED PARTNERSHIP
By___________________________________
Name:
Title:
23
<PAGE> 24
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
GOLDMAN SACHS & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
MORGAN STANLEY & CO. INCORPORATED
Acting severally on behalf of
themselves and the several
Underwriters named in
Schedule I hereto
By DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By_____________________________________
Name:
Title:
24
<PAGE> 25
SCHEDULE I
Number of Firm Shares
Underwriter to be Purchased
Donaldson, Lufkin & Jenrette
Securities Corporation
Goldman Sachs & Co.
Merrill Lynch, Pierce, Fenner
& Smith Incorporated
Morgan Stanley & Co. Incorporated
TOTAL 8,170,000
25
<PAGE> 26
SCHEDULE II
26
<PAGE> 1
Exhibit 2.1
AGREEMENT AND PLAN OF REORGANIZATION
This AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is
entered into as of ______ __, 1996 by and among A. Jerrold Perenchio
("Perenchio"), Sunshine Acquisition L.P., a California limited partnership
("SALP"), Sunshine Acquisition Corp., a California corporation ("SAC"),
Univision Special Partnership I, L.P., a Delaware limited partnership ("USPI",
and together with Perenchio, SALP and SAC, the "Perenchio Entities"), Grupo
Televisa S.A., a Mexican corporation ("Grupo Televisa"), Univisa, Inc., a
Delaware corporation ("Univisa"), Grupo Telesistema S.A. de C.V., a Mexican
corporation ("Telesistema"), Univisa Broadcasting L.P, a Delaware limited
partnership ("Univisa Broadcasting"), Univision Special Partnership II, L.P., a
Delaware limited partnership ("USPII", and together with Grupo Televisa,
Univisa, Telesistema and Univisa Broadcasting, the "Televisa Entities"), Ricardo
Cisneros, Gustavo Cisneros (together with Ricardo Cisneros, the "Cisneros
Brothers"), Venevision International Limited, a British Virgin Islands
corporation ("Venevision International Limited"), Pack-A-Snack N.V., a
Netherlands Antilles corporation ("Pack- A-Snack"), Dennevar B.V., a Netherlands
corporation ("Dennevar"), Venevision International, Inc., a Florida Corporation
("Venevision International, Inc."), Bravo Enterprises, Inc., a Delaware
corporation ("Bravo"), Univision Special Partnership III, L.P., a Delaware
limited partnership ("USPIII", and together with the Cisneros Brothers,
Venevision International Limited, Pack-A-Snack, Dennevar, Venevision
International, Inc. and Bravo, the "Venevision Entities"), Stephen P. Rader
("Rader"), Davila Family L.L.C., a New York limited liability company ("Davila
LLC"), Univision Communications Inc., a Delaware corporation ("UCI"), PTI
Holdings, Inc., a Delaware corporation ("PTIH"), Univision Television Group,
Inc., a Delaware corporation ("UTG"), The Univision Network Holding Limited
Partnership, a Delaware limited partnership ("UNHLP"), The Univision Network
Limited Partnership, a Delaware limited partnership ("UNLP"), and Network
Limited Partner, Inc., a Delaware corporation ("NLPI", and together with UCI,
PTIH, UTG, UNHLP and UNLP, the "Univision Entities").
R E C I T A L S
WHEREAS, UCI has filed a registration statement (the "Registration
Statement") with the Securities and Exchange Commission (the "SEC") with respect
to an initial public offering of Class A Common Stock of UCI (the "Offering").
WHEREAS, the parties hereto have agreed to reorganize the Univision
Entities to facilitate the Offering (the "Reorganization").
NOW, THEREFORE, in consideration of the mutual promises and
covenants herein contained, the parties hereto agree as follows:
1
<PAGE> 2
I. DEFINITIONS.
"AFFILIATE" means any person or entity directly or indirectly
controlling or controlled by or under direct or indirect common control with
another Person.
"AMENDED AND RESTATED PROGRAM LICENSE AGREEMENTS" means the Amended
and Restated Program License Agreement to be entered into by and between Univisa
and UNLP, and the Amended and Restated Program License Agreement to be entered
into by and between Dennevar and UNLP.
"GALAVISION" means Galavision, Inc., a Delaware corporation.
"INTERNATIONAL PROGRAM RIGHTS AGREEMENT" means the International
Program Rights Agreement to be entered into by and between UNLP, Grupo Televisa
(or an Affiliate of Grupo Televisa) and Venevision or an Affiliate of
Venevision).
"PACK-A-SNACK SENIOR DEBENTURE" means the UCI Senior Subordinated
Debenture Due 2003 in Principal Amount of $19,719,198 in favor of Pack-A-Snack.
"PACK-A-SNACK SPONSOR NOTES" means the notes in favor of
Pack-A-Snack made pursuant to the Sponsor Loan Agreements.
"PACK-A-SNACK SUBORDINATED DEBENTURE" means the UCI Subordinated
Debenture Due 2005 in Principal Amount of $6,338,634 in favor of Pack-A-Snack.
"PARTICIPATION AGREEMENT" means the Participation Agreement to be
entered into by and among UCI, Perenchio, Grupo Televisa, the Cisneros Brothers
and Corporacion Venezolana de Television (Venevision) C.A.
"PERENCHIO SENIOR NOTE" means the UCI Senior Subordinated Note Due
2003 in Principal Amount of $24,490,466.10 in favor of Perenchio.
"PERENCHIO SUBORDINATED NOTE" means the UCI Subordinated Note Due
2005 in Principal Amount of $6,510,123.90 in favor of Perenchio.
"PERSON" means an individual, a corporation, a partnership, an
association, a limited liability company or a trust.
"PROGRAM LICENSE AGREEMENTS" means the Program License Agreement,
dated as of December 17, 1992, by and between Univisa and UNLP, and the Program
License Agreement, dated as of December 17, 1992, by and between Dennevar and
UNLP.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement to be entered into by and among UCI and certain stockholders of UCI.
2
<PAGE> 3
"SECURITIES ACT" means the Securities Act of 1933, as amended and
the rules and the regulations of the Securities and Exchange Commission
thereunder.
"SPONSOR LOAN AGREEMENTS" means that certain Scheduled Loan
Agreement [Televisa] dated as of December 17, 1992 between UTG and Grupo
Televisa, that certain Scheduled Loan Agreement [Venevision] dated as of
December 17, 1992 between UTG and Pack-A-Snack, that certain Additional Loan
Agreement [Televisa] dated as of December 17, 1992 between UTG and Grupo
Televisa, and that certain Additional Loan Agreement [Venevision] dated as of
December 17, 1992 between UTG and Pack-A-Snack.
"TELEVISA AND VENEVISION WARRANTS" means the Amended and Restated
Warrants to purchase 6,855,779, 6,855,779, 364,631 and 364,631 shares of UCI
common stock to be granted by UCI in favor of Telesistema, Venevision
International Limited, USPII and USPIII respectively.
"TELEVISA SENIOR DEBENTURE" means the UCI Senior Subordinated
Debenture Due 2003 in Principal Amount of $19,719,198 in favor of Grupo
Televisa.
"TELEVISA SPONSOR NOTES" means the notes in favor of Grupo Televisa
made pursuant to the Sponsor Loan Agreements.
"TELEVISA SUBORDINATED DEBENTURE" means the UCI Subordinated
Debenture Due 2005 in Principal Amount of $6,338,634 in favor of Grupo Televisa.
"TRANSACTION AGREEMENTS" means the Amended and Restated Program
License Agreements, the International Program Rights Agreement, the
Participation Agreement, and the Registration Rights Agreement and the other
documents and agreements referred to herein.
"UNIVISA SENIOR NOTE" means, as the context requires, the UCI Senior
Subordinated Note Due 2003 in Principal Amount of $644,485.95 in favor of
Univisa, or the PTIH Senior Subordinated Note Due 2003 in Principal Amount of
$4,133,430 in favor of Univisa.
"UNIVISA SUBORDINATED NOTE" means the UCI Subordinated Note Due 2005
in Principal Amount of $171,319.05 in favor of Univisa.
"UNIVISION EQUITY SECURITIES" means, as the context requires, the
partnership interests in UNHLP, the shares of Common Stock and Preferred Stock
of PTIH and the shares of Common Stock and Preferred Stock of UCI, including
shares of Common Stock of UCI being issued pursuant to the Reorganization.
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<PAGE> 4
"UNIVISION SECURITIES" means, as the context requires, the
partnership interests in UNHLP, the shares of Common Stock and Preferred Stock
of PTIH and UCI, the Pack-A-Snack Senior Debenture, Pack-A-Snack Sponsor Notes,
Pack-A-Snack Subordinated Debenture, Perenchio Senior Note, Perenchio
Subordinated Note, Televisa Senior Debenture, Televisa Subordinated Debenture,
Televisa Sponsor Notes, Univisa Senior Note, Univisa Subordinated Note,
Venevision Senior Note, and/or Venevision Subordinated Note.
"VENEVISION SENIOR NOTE" means, as the context requires, the UCI
Senior Subordinated Note Due 2003 in Principal Amount of $644,485.95 in favor of
Venevision International Limited, or the PTIH Senior Subordinated Note Due 2003
in Principal Amount of $4,133,430 in favor of Venevision International Limited.
"VENEVISION SUBORDINATED NOTE" means the UCI Subordinated Note Due
2005 in Principal Amount of $171,319.05 in favor of Venevision International
Limited.
II. THE REORGANIZATION.
A. On the second business day after the execution of the
underwriting agreement by UCI and the underwriters with respect to the Offering,
the parties shall cause the following transactions to occur in the order set
forth below:
1. UCI, UTG and UNLP will enter into a new credit facility on the
terms set forth in the commitment letter attached as Exhibit A
hereto (the "New Facility").
2. UTG will draw the full term loan amount under the New
Facility.
3. UTG will pay off all amounts owing to the lender under UTG's
existing bank facility and UTG will terminate such facility.
4. UTG will deposit approximately $85,000,000 with the trustee
and take all other required action to defease UTG's 11 3/4%
Notes.
5. UTG will pay all intercompany debt owed to UNLP.
6. NLPI will be dissolved and its assets (UNLP and UNHLP
partnership interests) will be distributed to SALP, Univisa
Broadcasting and Bravo.
7. UNHLP will pay to SALP, Bravo and Univisa Broadcasting all
management fees accrued to such date pursuant to the UNHLP
Partnership Agreement.
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8. UNLP will pay to Univisa and Dennevar all license fees accrued
to such date pursuant to the Program License Agreements (net
of amounts due to UNLP under the Cost Sharing Agreement).
9. Subject to applicable withholding, the following Network
distributions will be made:
a. $60,000,000 distribution from UNLP to its partners
($59,994,000 to UNHLP, $3,000 to SALP, $1,500 to Univisa
Broadcasting and $1,500 to Bravo).
b. $59,994,000 distribution from UNHLP to its partners
($28,103,293 to SALP, $14,794,499 to Univisa
Broadcasting and $14,794,499 to Bravo, $727,989 to USPI,
$786,858 to USPII and $786,858 to USPIII).
c. $28,106,293 distribution from SALP to its partners
($25,365,929 to Perenchio, $1,405,314 to Rader and
$1,335,049 to SAC).
d. $1,335,049 dividend from SAC to Perenchio.
e. Distribution of management fee paid to SALP in Section
A(7) above to Perenchio.
10. The Restated Certificate of Incorporation of UCI will be
amended as set forth on Exhibit B hereto to authorize
additional shares of Class P Common Stock, Class T Common
Stock and Class V Common Stock (sufficient to create enough
shares to effectuate the issuance described in Sections B(1),
B(6), and B(7) and the stock dividend described in Section
B(9).
11. The Restated Certificate of Incorporation of PTIH will be
amended as set forth on Exhibit C hereto to authorize
additional shares of Class P Common Stock (sufficient to
create enough shares to effectuate the issuance described in
Section B(8).
B. On the fourth business day after the execution of the
underwriting agreement with respect to the Offering by UCI and the underwriters,
the parties shall cause the following transactions to occur in the order set
forth below:
1. Subject to applicable withholding, the following contributions
to, and issuances by, UCI will be made:
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<PAGE> 6
a. Univisa Broadcasting will contribute its UNHLP and UNLP
partnership interests in exchange for 4,513.6 shares of
UCI Class T Common Stock and $9,495,000 in cash.
b. Bravo will contribute its UNHLP and UNLP partnership
interests in exchange for 4,513.6 shares of UCI Class V
Common Stock and $9,495,000 in cash.
c. USPI will contribute its UNHLP partnership interests in
exchange for 240.1 shares of UCI Class P Common Stock
and $505,000 in cash.
d. USPII will contribute its UNHLP partnership interests in
exchange for 240.1 shares of UCI Class T Common Stock
and $505,000 in cash.
e. USPIII will contribute its UNHLP partnership interests
in exchange for 240.1 shares of UCI Class V Common Stock
and $505,000 in cash.
f. Perenchio will contribute his partnership interest in
SALP in exchange for 8,363.6 shares of UCI Class P
Common Stock and $17,594,237 in cash.
g. Perenchio will contribute his stock of SAC in exchange
for 440.2 shares of UCI Class P Common Stock and
$926,012 in cash.
h. Rader will contribute his partnership interest in SALP
in exchange for 463.4 shares of UCI Class P Common Stock
and $974,750 in cash.
2. UNHLP will be liquidated and its assets will be distributed to
UCI and SALP (with UCI assuming all obligations under the
UNHLP Hallmark Note).
3. The UNLP Partnership Agreement will be amended to reflect UCI
as general partner having a 71.85% interest in UNLP and SALP
as a limited partner having a 28.15% interest in UNLP and an
Amended Certificate of Limited Partnership will be filed.
4. Variable Dividends will be declared on UCI Class P Preferred
Stock, Class T Preferred Stock and Class V Preferred Stock
($16,827,723 on Class P, $442,834 on Class T and $442,834 on
Class
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<PAGE> 7
V, in each case subject to adjustment in accordance with
Section C below) (see Section B(30) for payment of these
dividends).
5. Variable Dividends will be declared on PTIH Class T Preferred
Stock and Class V Preferred Stock ($980,791 on Class T and
$980,791 on Class V, in each case subject to adjustment in
accordance with Section C below) (see Section B(32) for
payment of these dividends).
6. The following contributions to, and issuances by, UCI will be
made:
a. Univisa will contribute 495 shares of PTIH Class T
Common Stock to UCI in exchange for 660 shares of UCI
Class T Common Stock.
b. Univisa will contribute 9,000 shares of PTIH Class T
Preferred Stock to UCI in exchange for 12,000 shares of
UCI Class T Common Stock.
c. Dennevar will contribute 495 shares of PTIH Class V
Common Stock to UCI in exchange for 660 shares of UCI
Class V Common Stock.
d. Venevision International Limited will contribute 9,000
shares of PTIH Class V Preferred Stock to UCI in
exchange for 12,000 shares of UCI Class V Common Stock.
e. USPII will contribute 505 shares of PTIH Class T Common
Stock to UCI in exchange for 673 shares of UCI Class T
Common Stock.
f. USPIII will contribute 505 shares of PTIH Class V Common
Stock to UCI in exchange for 673 shares of UCI Class V
Common Stock.
7. Each share of UCI Class P, T and V Preferred Stock held by the
Perenchio Entities, Televisa Entities and Venevision Entities
will be exchanged for a share of UCI Class P, T and V Common
Stock, respectively.
8. Each share of PTIH Class T and V Common Stock and each share
of Class P, T and V Preferred Stock held by UCI will be
exchanged for 1/100 of a share of PTIH Class P Common Stock.
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<PAGE> 8
9. There will be a stock dividend of 227.010528 shares on each
share of UCI Class P, T and V Common Stock.
10. UCI's Restated Certificate of Incorporation will be Amended
and Restated as set forth on Exhibit D hereto.
11. UCI's Bylaws will be amended as set forth on Exhibit E hereto.
12. PTIH's Restated Certificate of Incorporation will be amended
as set forth on Exhibit F hereto.
13. PTIH's Bylaws will be amended as set forth on Exhibit G
hereto.
14. PTI will be merged with and into PTIH.
15. The Amended and Restated Program License Agreements, the
Registration Rights Agreement, the Participation Agreement,
the International Program Rights Agreement, as set forth on
Exhibits H through L hereto, will be entered into by and among
the parties thereto.
16. Televisa and Venevision Warrants will be entered into as set
forth on Exhibits M(a)-(d) hereto.
17. UTG's Restated Certificate of Incorporation will be amended as
set forth on Exhibit N hereto.
18. UTG's Bylaws will be amended as set forth on Exhibit O hereto.
19. Rader will convert each share of UCI Class P Common Stock
owned by him into one share of UCI Class A Common Stock.
20. The USPI Partnership Agreement will be amended to name Davila
LLC as the managing general partner thereof and USPI will
convert 595,659 shares of UCI Class P Common Stock into the
same number of shares of UCI Class A Common Stock.
21. The USPII Partnership Agreement will be amended to name Davila
LLC as the managing general partner thereof and USPII will
convert 234,675 shares of UCI Class T Common Stock into the
same number of shares of UCI Class A Common Stock.
22. The USPIII Partnership Agreement will be amended to name
Davila LLC as the managing general partner thereof and USPIII
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<PAGE> 9
will convert 234,675 shares of UCI Class V Common Stock into
the same number of shares of UCI Class A Common Stock.
23. USPI, USPII and USPIII will each enter into a voting agreement
with UCI in the form of Exhibit P hereto.
24. UCI will close the Offering.
25. UCI will draw down a sufficient amount under the revolver
portion of the New Facility that, when added to the remainder
of the term portion previously drawn and the net proceeds from
the Offering, will give UCI and its subsidiaries sufficient
funds to make the payments described in Sections B(29), (30),
(31), (32), (33) and (34).
26. UCI will contribute a sufficient amount to PTIH (to pay
amounts described in Sections B(32) and (33)).
27. UTG will borrow a sufficient amount from UCI (to pay amounts
described in Section B(34)).
28. UCI will advance sufficient amount to UNLP to allow UNLP to
pay principal and interest on the note issued to Univisa in
connection with the acquisition of Galavision and UNLP will
repay such note.
29. UNLP will transfer Galavision stock to UCI in repayment of the
advance.
30. Subject to applicable withholding, UCI will pay dividends on
UCI Class P, T and V Preferred Stock declared in Section B(4).
31. Subject to applicable withholding, UCI will repay principal
and interest on its debt securities as follows, with all
amounts subject to adjustment as provided in Section C below:
a. $25,202,588 to Grupo Televisa as repayment of Televisa
Senior Debenture.
b. $8,239,959 to Grupo Televisa as repayment of Televisa
Subordinated Debenture.
c. $25,202,588 to Pack-A-Snack as repayment of Pack-A-Snack
Senior Debenture.
d. $8,239,959 to Pack-A-Snack as repayment of Pack-A-Snack
Subordinated Debenture.
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<PAGE> 10
e. $668,405 to Univisa as repayment of Univisa Senior Note.
f. $178,177 to Univisa as repayment of Univisa Subordinated
Note.
g. $668,405 to Venevision International Limited as
repayment of Venevision Senior Note.
h. $178,177 to Venevision International Limited as
repayment of Venevision Subordinated Note.
i. $25,399,418 to Perenchio as repayment of Perenchio
Senior Note.
j. $6,670,739 to Perenchio as repayment of Perenchio
Subordinated Note.
32. Subject to applicable withholding, PTIH will pay dividends on
PTIH Preferred Stock declared in Section B(5).
33. Subject to applicable withholding, PTIH will repay principal
and interest on its debt securities as follows, with all
amounts subject to adjustment as provided in Section C below:
a. $4,302,036 to Univisa as repayment of Univisa Senior
Note.
b. $4,302,036 to Venevision International Limited as
repayment of Venevision Senior Note.
34. Subject to applicable withholding, UTG will repay principal
and interest on its debt securities as follows, with all
amounts subject to adjustment as provided in Section C below:
a. $103,632,461 to Grupo Televisa as repayment of Televisa
Sponsor Notes.
b. $ 43,512,960 to Pack-A-Snack as repayment of
Pack-A-Snack Sponsor Notes.
C. Calculations of accrued interest and dividends in this Agreement
were made with an assumption that such accrued interest and dividends would be
paid on July 31, 1996. To the extent such payments are made on a different date,
the amount of accrued interest and dividends payable hereunder will be adjusted
in accordance with the terms of the applicable instrument.
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<PAGE> 11
III. REPRESENTATIONS AND WARRANTIES.
A. Perenchio represents and warrants to the other parties hereto as
follows:
1. Each corporation and other entity listed on Schedule 2 is
an Affiliate of Perenchio, and all right, title and interest therein is
beneficially owned by Mr. A. Jerrold Perenchio, except as set forth on Schedule
2.
2. Each corporation and other entity listed on Schedule 2 is
duly organized, validly existing and in good standing under the laws of its
jurisdiction of organization. Each such corporation and other entity has all
necessary power and authority to own the Univision Securities that it owns and
to execute, deliver and perform the Transaction Agreements to which it is a
party, and is duly qualified or licensed to do business as a foreign corporation
or other entity and in good standing in all jurisdictions where such
qualification is necessary in connection with such ownership or performance.
3. The execution, delivery and performance of this Agreement
and each of the Transaction Agreements and the sale or transfer of the Univision
Securities by each Perenchio Entity who is doing so has been duly and validly
authorized by the Board of Directors or other appropriate authority of, and by
all other necessary action on the part of, each such Perenchio Entity. This
Agreement and each of the Transaction Agreements to which Perenchio or any
Perenchio Entity is a party constitutes the legally valid and binding obligation
of Perenchio or such Perenchio Entity, enforceable against Perenchio or such
Perenchio Entity in accordance with its terms, except as such enforceability may
be limited by bankruptcy, insolvency, reorganization, moratorium and other
similar laws and equitable principles relating to or limiting creditors' rights
generally. The execution, delivery and performance of the Transaction Agreements
by Perenchio and such Perenchio Entities, and the transfer or sale of the
Univision Securities by Perenchio or the Perenchio Entities will not violate, or
constitute a breach or default (whether upon lapse of time and/or the occurrence
of any act or event or otherwise) under, the charter documents or by-laws of any
such Perenchio Entity or any contract or agreement to which Perenchio or any
such Perenchio Entity may be a party, result in the imposition of any lien or
encumbrance against any assets or properties of Perenchio or any such Perenchio
Entity, or violate any applicable law, rule or regulation. Except for filings
with the Federal Communications Commission, the United States Department of
Justice and the Federal Trade Commission, which have been duly made, the
execution, delivery and performance of this Agreement and the Transaction
Agreements by Perenchio and such Perenchio Entities and the sale or transfer of
the Univision Securities by Perenchio or such Perenchio Entities will not
require filing or registration with, or the issuance of any permit or other
authorization by, any third party or governmental authority.
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<PAGE> 12
4. Perenchio and such Perenchio Entities that are transferring
Univision Securities hereunder, own such securities, and are transferring such
securities free and clear of any liens.
5. The shares Common Stock of UCI being acquired by the Perenchio
Entities hereunder (i) are being acquired for the own account of such Perenchio
Entities, for investment purposes and without a view towards resale thereof and
(ii) will not be sold or otherwise disposed of by such Perenchio Entities except
in compliance with the Securities Act and other applicable securities laws.
B. Grupo Televisa represents and warrants to the other parties
hereto as follows:
1. Each corporation and other entity listed on Schedule 3 is
an Affiliate of Grupo Televisa, and all right, title and interest therein is
beneficially owned by Grupo Televisa, except as set forth on Schedule 3.
2. Each corporation and other entity listed on Schedule 3 is
duly organized, validly existing and in good standing under the laws of its
jurisdiction of organization. Each such corporation and other entity has all
necessary power and authority to own the Univision Securities that it owns and
to execute, deliver and perform the Transaction Agreements to which it is a
party, and is duly qualified or licensed to do business as a foreign corporation
or other entity and in good standing in all jurisdictions where such
qualification is necessary in connection with such ownership or performance.
3. The execution, delivery and performance of this Agreement
and each of the Transaction Agreements and the sale or transfer of the Univision
Securities by Grupo Televisa and each Televisa Entity who is doing so has been
duly and validly authorized by the Board of Directors or other appropriate
authority of, and by all other necessary action on the part of, each such
Televisa Entity. This Agreement and each of the Transaction Agreements to which
Grupo Televisa and such Televisa Entity is a party constitutes the legally valid
and binding obligation of Grupo Televisa or such Televisa Entity, enforceable
against Grupo Televisa or such Televisa Entity in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws and equitable principles
relating to or limiting creditors' rights generally. The execution, delivery and
performance of the Transaction Agreements by Grupo Televisa and such Televisa
Entities, and the transfer or sale of the Univision Securities by Grupo Televisa
or the Televisa Entities will not violate, or constitute a breach or default
(whether upon lapse of time and/or the occurrence of any act or event or
otherwise) under, the charter documents or by-laws of Grupo Televisa or any such
Televisa Entity or any contract or agreement to which Grupo Televisa or any such
Televisa Entity may be a party, result in the imposition of any lien or
encumbrance against any assets or properties of Grupo Televisa or any such
Televisa Entity, or violate any applicable law, rule or regulation.
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<PAGE> 13
Except for filings with the Federal Communications Commission, the United States
Department of Justice and the Federal Trade Commission, which have been duly
made, the execution, delivery and performance of this Agreement and the
Transaction Agreements by Grupo Televisa and such Televisa Entities and the sale
or transfer of the Univision Securities by Grupo Televisa and such Televisa
Entities will not require filing or registration with, or the issuance of any
permit or other authorization by, any third party or governmental authority.
4. Grupo Televisa and such Televisa Entities that are transferring
Univision Securities hereunder, own such securities, and are transferring such
securities free and clear of any liens.
5. The shares Common Stock of UCI being acquired by the Televisa
Entities hereunder (i) are being acquired for the own account of such Televisa
Entities, for investment purposes and without a view towards resale thereof and
(ii) will not be sold or otherwise disposed of by such Televisa Entities except
in compliance with the Securities Act and other applicable securities laws.
C. Each of the Cisneros Brothers represents and warrants to the
other parties hereto as follows:
1. Each corporation and other entity listed on Schedule 4 is
an Affiliate of the Cisneros Brothers, except as set forth on Schedule 4.
2. Each corporation and other entity listed on Schedule 4 is
duly organized, validly existing and in good standing under the laws of its
jurisdiction of organization. Each such corporation and other entity has all
necessary power and authority to own the Univision Securities that it owns and
to execute, deliver and perform the Transaction Agreements to which it is a
party, and is duly qualified or licensed to do business as a foreign corporation
or other entity and in good standing in all jurisdictions where such
qualification is necessary in connection with such ownership or performance.
3. The execution, delivery and performance of this Agreement
and each of the Transaction Agreements and the sale or transfer of the Univision
Securities by each Venevision Entity who is doing so has been duly and validly
authorized by the Board of Directors or other appropriate authority of, and by
all other necessary action on the part of, each such Venevision Entity. This
Agreement and each of the Transaction Agreements to which the Cisneros Brothers
or a Venevision Entity is a party constitutes the legally valid and binding
obligation of the Cisneros Brothers or such Venevision Entity, enforceable
against the Cisneros Brothers or such Venevision Entity in accordance with its
terms, except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws and equitable principles
relating to or limiting creditors' rights generally. The execution, delivery and
performance of the Transaction Agreements by the Cisneros Brothers and such
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<PAGE> 14
Venevision Entities, and the transfer or sale of the Univision Securities by the
Cisneros Brothers or the Venevision Entities will not violate, or constitute a
breach or default (whether upon lapse of time and/or the occurrence of any act
or event or otherwise) under, the charter documents or by-laws of any such
Venevision Entity or any contract or agreement to which the Cisneros Brothers or
any such Venevision Entity may be a party, result in the imposition of any lien
or encumbrance against any assets or properties of the Cisneros Brothers or any
such Venevision Entity, or violate any applicable law, rule or regulation.
Except for filings with the Federal Communications Commission, the United States
Department of Justice and the Federal Trade Commission, which have been duly
made, the execution, delivery and performance of this Agreement and the
Transaction Agreements by the Cisneros Brothers and such Venevision Entities and
the sale or transfer of the Univision Securities by the Cisneros Brothers or any
such Venevision Entity will not require filing or registration with, or the
issuance of any permit or other authorization by, any third party or
governmental authority.
4. The Cisneros Brothers and such Venevision Entities that are
transferring Univision Securities hereunder, own such securities, and are
transferring such securities free and clear of any liens.
5. The shares Common Stock of UCI being acquired by the Venevision
Entities hereunder (i) are being acquired for the own account of such Venevision
Entities, for investment purposes and without a view towards resale thereof and
(ii) will not be sold or otherwise disposed of by such Venevision Entities
except in compliance with the Securities Act and other applicable securities
laws.
D. Rader represents and warrants to the other parties hereto as follows:
1. This Agreement and each of the Transaction Agreements to which
Rader is a party constitutes the legally valid and binding obligation of Rader,
enforceable against Rader in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws and equitable principles relating to or
limiting creditors' rights generally. The execution, delivery and performance of
the Transaction Agreements by Rader, and the transfer or sale of the Univision
Securities by Rader will not violate, or constitute a breach or default (whether
upon lapse of time and/or the occurrence of any act or event or otherwise) under
any contract or agreement to which Rader may be a party, result in the
imposition of any lien or encumbrance against any assets or properties of Rader,
or violate any applicable law, rule or regulation. Except for filings with the
Federal Communications Commission, the United States Department of Justice and
the Federal Trade Commission, which have been duly made, the execution, delivery
and performance of this Agreement and the Transaction Agreements by Rader and
the sale or transfer of the Univision Securities by Rader will not require
filing or registration with, or the issuance of any permit or other
authorization by, any third party or governmental authority.
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<PAGE> 15
2. Rader owns the Univision Securities being transferred by Rader
hereunder, and is transferring such securities free and clear of any liens.
3. The shares Common Stock of UCI being acquired by Rader hereunder
(i) are being acquired for Rader's own account, for investment purposes and
without a view towards resale thereof and (ii) will not be sold or otherwise
disposed of by Rader except in compliance with the Securities Act and other
applicable securities laws.
E. Davila LLC represents and warrants to the other parties hereto as
follows:
1. Davila LLC is duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization. Davila LLC has all
necessary power and authority to execute, deliver and perform the Transaction
Agreements to which it is a party, and is duly qualified or licensed to do
business as a foreign corporation or other entity and in good standing in all
jurisdictions where such qualification is necessary in connection with such
ownership or performance.
2. The execution, delivery and performance of this Agreement
and each of the Transaction Agreements by Davila LLC has been duly and validly
authorized by the appropriate authority of, and by all other necessary action on
the part of, Davila LLC. This Agreement and each of the Transaction Agreements
to which Davila LLC is a party constitutes the legally valid and binding
obligation of Davila LLC, enforceable against Davila LLC in accordance with its
terms, except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws and equitable principles
relating to or limiting creditors' rights generally. The execution, delivery and
performance of the Transaction Agreements by Davila LLC will not violate, or
constitute a breach or default (whether upon lapse of time and/or the occurrence
of any act or event or otherwise) under any contract or agreement to which
Davila LLC may be a party, result in the imposition of any lien or encumbrance
against any assets or properties of Davila LLC, or violate any applicable law,
rule or regulation. Except for filings with the Federal Communications
Commission, the United States Department of Justice and the Federal Trade
Commission, which have been duly made, the execution, delivery and performance
of this Agreement and the Transaction Agreements by Davila LLC will not require
filing or registration with, or the issuance of any permit or other
authorization by, any third party or governmental authority.
F. Each Univision Entity represents and warrants to the other
parties hereto as follows:
1. Such Univision Entity is duly organized, validly existing
and in good standing under the laws of its jurisdiction of organization. Such
Univision Entity has all necessary power and authority to own the Univision
Securities which it owns and
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<PAGE> 16
to execute, deliver and perform the Transaction Agreements to which it is a
party, and is duly qualified or licensed to do business as a foreign corporation
or other entity and in good standing in all jurisdictions where such
qualification is necessary in connection with such ownership or performance.
2. The execution, delivery and performance of this Agreement
and each of the Transaction Agreements and the issuance of the Univision
Securities by such Univision Entity who is doing so has been duly and validly
authorized by the Board of Directors or other appropriate authority of, and by
all other necessary action on the part of, each such Univision Entity. This
Agreement and each of the Transaction Agreements to which such Univision Entity
is a party constitutes the legally valid and binding obligation of such
Univision Entity, enforceable against such Univision Entity in accordance with
its terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium and other similar laws and equitable
principles relating to or limiting creditors' rights generally. The execution,
delivery and performance of the Transaction Agreements by such Univision Entity,
and the issuance of the Univision Securities by such Univision Entity will not
violate, or constitute a breach or default (whether upon lapse of time and/or
the occurrence of any act or event or otherwise) under, the charter documents or
by-laws of any such Univision Entity or any contract or agreement to which such
Univision Entity may be a party, result in the imposition of any lien or
encumbrance against any assets or properties of such Univision Entity, or
violate any applicable law, rule or regulation. Except for filings with the
Federal Communications Commission, the United States Department of Justice and
the Federal Trade Commission, which have been duly made, the execution, delivery
and performance of this Agreement and the Transaction Agreements by such
Univision Entity and the sale or transfer of the Univision Securities by such
Univision Entity will not require filing or registration with, or the issuance
of any permit or other authorization by, any third party or governmental
authority.
3. The common stock of UCI being issued hereunder will be upon
issuance, validly issued, fully paid and non-assessable.
IV. Tax Matters.
A. The parties hereto agree that all payments made with respect to
the Univision Securities will be treated and reported for federal, state and
local income or franchise tax purposes in accordance with their form or
characterization as set forth in the documents pertaining thereto, and no party
hereto shall make any statement or take any position, or permit any of its
Affiliates to make any statement or take any position, inconsistent therewith in
connection with any tax matter, including but not limited to any tax return or
in the course of any audit by a taxing authority within the United States;
provided that the foregoing shall not apply if (i) such treatment is contrary to
a "determination" within the meaning of Section 1313 of the Internal Revenue
Code (or equivalent state law provision), (ii) any party provides an unqualified
opinion of nationally recognized tax counsel that there is no reasonable basis
for such treatment,
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<PAGE> 17
and none of the other parties provides an opinion of nationally recognized tax
counsel to the contrary, or (iii) the parties hereto unanimously consent to a
different treatment.
B. Other than as set forth on Schedule 1, each of the undersigned
represents and warrants that such Person has not transferred any of the
Univision Equity Securities since December 17, 1992. Other than as set forth in
this Agreement, each of the undersigned represents and warrants that such Person
does not currently have, and will not have at the time of the Reorganization, a
plan, intention or arrangement to sell, exchange, transfer, distribute, pledge
or otherwise dispose of any of the Univision Equity Securities, including the
shares of UCI's stock that such Person will receive in the Reorganization, and
in no event will the undersigned sell any of such shares of UCI stock within the
six month period following the date of the closing of the Offering, except, in
each case, for transfers of Univision Equity Securities to Affiliates of any of
the parties hereto; provided that, prior to any such transfer, the transferor
(the "Intragroup Transferor") delivers to UCI an unqualified opinion of (w)
Fried, Frank, Harris, Shriver & Jacobson, (x) Milbank, Tweed, Hadley & McCloy,
(y) O'Melveny & Myers LLP or (z) other nationally recognized tax counsel which
other counsel shall be reasonably acceptable to UCI, that such transfer will not
reduce the number of shares of UCI received, held, owned and/or deemed owned
"immediately after" the Reorganization by a party treated as a transferor of
property in exchange for UCI stock for purposes of determining "control" under
Section 351 of the Internal Revenue Code, other than, in the case of Grupo
Televisa and its Affiliates and Venevision and its Affiliates, transfers to
Grupo Televisa or its Affiliates or Venevision or its Affiliates, as the case
may be, of (i) shares of UCI owned by such Intragroup Transferor prior to the
date hereof, (ii) shares of UCI received pursuant to Section II(B)(1) hereof and
(iii) shares of UCI received as a dividend on the shares described in clauses
(i) and (ii) above pursuant to Section II(B)(9) hereof.
C. The parties agree that (i) the contributions to UCI described in
Article II(B)(1) and (6) above, (ii) the Offering and (iii) the transactions
contemplated by that certain Purchase Agreement among UCI and the partners of
Sainte Limited, a California limited partnership, are intended to constitute
interdependent components of a single integrated plan for the capitalization of
UCI under Section 351 of the Internal Revenue Code.
V. Miscellaneous.
A. Entire Agreement. The express provisions of this Agreement and
the Transaction Agreements, and the documents delivered in connection with any
thereof, constitute the entire agreement among the parties and their Affiliates,
and supersede all other agreements and understandings, both written and oral,
among the parties and their Affiliates, or any of them, with respect to the
subject matter hereof and thereof. No implied agreements shall be deemed to
exist with respect to such subject
17
<PAGE> 18
matter. All references to sections, subsections and schedules shall be deemed
references to such part of this Agreement, unless the context shall otherwise
require.
B. Assignments. Neither this Agreement nor any rights or obligations
hereunder may be assigned or delegated by any of the parties, in whole or in
part, whether voluntarily, by operation of law or otherwise, except for (i)
assignments or delegations to transferees of Univision Equity Securities in
connection with transfers of Univision Equity Securities made in compliance with
Section IV(B) above and (ii) assignments or delegations to transferees of
Univision Securities (other than Univision Equity Securities) in connection with
transfers of such Univision Securities made in compliance with the agreements
and instruments governing such Univision Securities. Any attempted assignment or
delegation in violation of this prohibition shall be null and void. Subject to
the foregoing, all of the terms and provisions hereof shall be binding upon, and
inure to the benefit of, the permitted successors and assigns of the parties.
Nothing contained herein, express or implied, is intended to confer on any
Person other than the parties or their respective permitted successors and
assigns, any rights, remedies, obligations or liabilities under or by reason of
this Agreement.
C. Jurisdiction; Venue; Service of Process. Each of the parties
irrevocably submits to the jurisdiction of any California State or United States
Federal court sitting in Los Angeles County in any action or proceeding arising
out of or relating to this Agreement or the transactions contemplated hereby,
and irrevocably agrees that any such action or proceeding may be heard and
determined only in such California State or Federal court. Each of the parties
irrevocably waives, to the fullest extent it may effectively do so, the defense
of an inconvenient forum to the maintenance of any such action or proceeding.
Each of the parties irrevocably appoints CT Corporation System (the "Process
Agent"), with an office on the date hereof at 818 West 7th Street, Los Angeles,
CA 90017 as his or its agent to receive on behalf of him or it and his or its
property service of copies of the summons and complaint and any other process
which may be served in any such action or proceeding. Such service may be made
by delivering a copy of such process to any of the parties in care of the
Process Agent at the Process Agent's above address or such other address the
Process Agent may have in the future, and each of the parties irrevocably
authorizes and directs the Process Agent to accept such service on its behalf.
As an alternate method of service, each of the parties consents to the service
of copies of the summons and complaint and any other process which may be served
in any such action or proceeding by the mailing or delivering of a copy of the
such process to such party at its address specified in or in accordance with
Section V.D. Each of the parties agrees that a final judgment in any such action
or proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law.
D. Notification. All notices and other communications required or
permitted hereunder shall be in writing, shall be deemed duly given upon actual
receipt, and shall be delivered (a) in person, (b) by registered or certified
mail (air mail if addressed to an address outside of the country in which
mailed), postage prepaid, return
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<PAGE> 19
receipt requested, (c) by a generally recognized overnight courier service which
provides written acknowledgement by the addressee of receipt, or (d) by
facsimile or other generally accepted means of electronic transmission (provided
that a copy of any notice delivered pursuant to this clause (d) shall also be
sent pursuant to clause (b)), addressed as set forth on Schedule 1 hereto or to
such other addresses as may be specified by like notice to the other parties.
E. Indemnification. Each of the parties (an "Indemnifying Party")
indemnifies each of the other parties, their respective Affiliates, the
officers, directors, shareholders, agents, employees and attorneys of each of
the other parties and their respective Affiliates, and their respective heirs,
administrators, successors and assigns, and agrees to hold each of them
harmless, from and against any and all Losses which any of them may incur or
suffer, or which may be asserted against or imposed on any of them, directly or
indirectly, arising out of, as a result of or based upon any inaccuracy in or
breach or nonperformance of any of the representations, warranties, covenants or
agreements made by the Indemnifying Party in this Agreement. As used in this
Agreement, "Losses" refers to any and all liability, losses, costs,
deficiencies, damages, demands, claims, actions, judgments, causes of action and
expenses (including, without limitation, attorneys' and accountants' fees, costs
incurred to investigate or defend, and costs incurred to enforce the provision
hereof).
F. Invalidity. If any provision of this Agreement is too broad to
permit enforcement to its full extent, such provision shall nevertheless be
enforced to the maximum extent permitted by law, and each party agrees that such
provisions may be judicially modified accordingly in any proceeding brought to
enforce this Agreement. If any portion of this Agreement shall be held to be
indefinite, invalid or otherwise entirely unenforceable, the entire Agreement
shall not fail on account thereof. The balance of this Agreement shall continue
in full force and effect.
G. Amendments and Waivers. No modification, amendment, termination
or waiver of any provision of this Agreement, nor consent to any departure
therefrom, shall in any event be effective unless the same shall be in writing
and signed by the parties, and then such waiver or consent shall be effective
only in the specific instance and for the purpose for which given. Neither any
course of dealing nor any failure or delay on the part of any of the parties in
exercising any right, power or privilege hereunder shall impair any such power,
right or privilege or operate as a waiver thereof or as a waiver or acquiescence
in any default, nor shall any single or partial exercise thereof preclude any
other or further exercise of any other right, power or privilege. No notice to
or demand on any of the parties in any case shall entitle such party to any
other or further notice or demand in the same, similar or other circumstances.
H. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall
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<PAGE> 20
become effective when one or more counterparts have been signed by each party
and delivered to each party.
I. Further Actions. Subject to the terms and conditions of this
Agreement, each of the parties agrees to use all commercially reasonable efforts
to take, or cause to be taken, all action necessary, proper or advisable to
consummate and make effective the transactions contemplated by this Agreement.
J. Specific Performance. The parties hereby acknowledge that each
party would suffer irreparable injury and would not have an adequate remedy at
law for money damages if the provisions of this Agreement were not performed in
accordance with their terms. Each party agrees that the others shall be entitled
to specific enforcement of the terms of this Agreement in addition to any other
remedy to which they are entitled, at law or in equity. Furthermore, if any
action or proceeding shall be instituted to enforce the provisions hereof, any
party against whom such action or proceeding is brought hereby waives the claim
or defense therein that there is an adequate remedy at law, and agrees not to
urge in any such action or proceeding the claim or defense that such remedy at
law exists.
K. Section and Other Headings. Section titles are for descriptive
purposes only and shall not control or alter the meaning of this Agreement as
set forth in the text.
L. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of California applicable to contracts
between California parties made and performed in that State, without regard to
conflict of laws principles.
M. Attorneys' Fees; Costs and Expenses. In any action or proceeding
brought to enforce any provision of the Agreement, or where any provision hereof
is validly asserted as a defense, the successful party shall be entitled to
recover reasonable attorneys' fees in addition to its cost and expense and any
other available remedy.
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<PAGE> 21
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
________________________________
A. JERROLD PERENCHIO
SUNSHINE ACQUISITION L.P.
By: Sunshine Acquisition Corp.,
its General partner
By: ___________________________
Title: ________________________
SUNSHINE ACQUISITION CORP.
By: ___________________________
Title: ________________________
UNIVISION SPECIAL PARTNERSHIP I, L.P.
By: ___________________________
Its: __________________________
By:_______________________
Title: ___________________
S-1
<PAGE> 22
GRUPO TELEVISA S.A.
By: ___________________________
Title: ________________________
UNIVISA, INC.
By: ___________________________
Title: ________________________
GRUPO TELESISTEMA S.A. DE C.V.
By: ___________________________
Title: ________________________
UNIVISA BROADCASTING L.P.
By: ___________________________
Its: __________________________
By:______________________
Title: __________________
S-2
<PAGE> 23
UNIVISION SPECIAL PARTNERSHIP II,
L.P.
By: __________________________
Its:__________________________
By:_______________________
Title: ___________________
________________________________
RICARDO CISNEROS
________________________________
GUSTAVO CISNEROS
VENEVISION INTERNATIONAL LIMITED
By: __________________________
Title: _______________________
PACK-A-SNACK N.V.
By: __________________________
Title: _______________________
S-3
<PAGE> 24
DENNEVAR B.V.
By: ___________________________
Title: ________________________
VENEVISION INTERNATIONAL, INC.
By: ___________________________
Title: ________________________
BRAVO ENTERPRISES, INC.
By: ___________________________
Title: ________________________
UNIVISION SPECIAL PARTNERSHIP III,
L.P.
By: __________________________
Its: _________________________
By:_______________________
Title: ___________________
________________________________
STEPHEN P. RADER
S-4
<PAGE> 25
UNIVISION COMMUNICATIONS INC.
By: __________________________
Title: _______________________
PTI HOLDINGS, INC.
By: __________________________
Title: _______________________
UNIVISION TELEVISION GROUP, INC.
By: __________________________
Title: _______________________
THE UNIVISION NETWORK HOLDING
LIMITED PARTNERSHIP
By: __________________________
Its: _________________________
By:_______________________
Title: ___________________
S-5
<PAGE> 26
THE UNIVISION NETWORK LIMITED
PARTNERSHIP
By: __________________________
Its: _________________________
By:_______________________
Title: ___________________
NETWORK LIMITED PARTNER, INC.
By: __________________________
Title: _______________________
THE DAVILA FAMILY L.L.C.
By: __________________________
Title: _______________________
S-6
<PAGE> 27
EXHIBIT INDEX
Exhibit A - Commitment Letter for New Facility
Exhibit B - Amendment to UCI Certificate to Authorize Additional Shares
Exhibit C - Amendment to PTIH Certificate to Authorize Addtional Shares
Exhibit D - UCI Restated Certificate of Incorporation
Exhibit E - UCI Amended Bylaws
Exhibit F - PTIH Restated Certificate of Incorporation
Exhibit G - PTIH Amended Bylaws
Exhibit H - Univisa Amended and Restated Program License Agreement
Exhibit I - Dennevar Amended and Restated Program License Agreement
Exhibit J - Registration Rights Agreement
Exhibit K - Participation Agreement
Exhibit L - International Program Rights Agreement
Exhibit M(a) - Televisa Amended and Restated Warrant
Exhibit M(b) - Venevision Amended and Restated Warrant
Exhibit M(c) - Televisa Amended and Restated Warrant
Exhibit M(d) - Venevision Amended and Restated Warrant
Exhibit N - UTG Restated Certificate of Incorporation
Exhibit O - UTG Amended Bylaws
Exhibit P - Voting Agreement
S-7
<PAGE> 1
Exhibit 3.1
FORM OF
RESTATED
CERTIFICATE OF INCORPORATION
of
UNIVISION COMMUNICATIONS INC.
UNIVISION COMMUNICATIONS INC., a Delaware corporation, hereby certifies
as follows:
1. The name of the Corporation is UNIVISION COMMUNICATIONS
INC. The original Certificate of Incorporation of the Corporation was filed with
the Secretary of State of the State of Delaware on April 30, 1992.
2. This Restated Certificate of Incorporation of UNIVISION
COMMUNICATIONS INC. amends and restates the provisions of the Restated
Certificate of Incorporation of the Corporation, as amended, and was duly
adopted in accordance with Sections 242 and 245 of the General Corporation Law
of the State of Delaware and by unanimous written consent of the Stockholders in
accordance with Section 228 of the General Corporation Law of the State of
Delaware.
3. The text of the Restated Certificate of Incorporation is
hereby amended and restated to read in its entirety as follows:
FIRST: The name of the Corporation is UNIVISION
COMMUNICATIONS INC.
SECOND: The registered office of the Corporation in the State
of Delaware is located at: 1013 Centre Road, Wilmington, County of New Castle
19805. The registered agent of the Corporation at that address is the
Corporation Service Company.
THIRD: The purpose of the Corporation is to engage in any
lawful act or activity for which corporations may be organized under the General
Corporation Law of the State of Delaware (the "GCL").
FOURTH: The Corporation shall have the authority to issue
[_____________] shares of Common Stock, par value [$.01] per share, divided into
the following classes:
(i) [__________] shares of Class A Common Stock (the
"Class A Common Stock");
<PAGE> 2
(ii) [__________] shares of Class P Common Stock (the
"Class P Common Stock");
(iii) [__________] shares of Class T Common Stock (the
"Class T Common Stock"); and
(iv) [__________] shares of Class V Common Stock (the
"Class V Common Stock" and together with the Class A Common Stock, the
Class P Common Stock and the Class T Common Stock, the "Common Stock").
The Corporation shall also have the authority to issue
[__________] shares of Preferred Stock, par value [$___] per share (the
"Preferred Stock").
I. Common Stock
Except as otherwise provided by law or by this Restated
Certificate of Incorporation, each of the shares of the Common Stock shall be
identical in all respects, including with respect to dividends and upon
liquidation.
(i) Stock Dividends; Stock Splits.
(a) A dividend of Common Stock on any share of Common
Stock shall be declared and paid only in an equal per share amount on
the then outstanding shares of each class of Common Stock and only in
shares of the same class of Common Stock as the shares on which the
dividend is being declared and paid. For example, if and when a
dividend of Class A Common Stock is declared and paid to the then
outstanding shares of Common Stock: (1) the dividend of Class A Common
Stock shall be paid solely to the outstanding shares of Class A Common
Stock; and (2) a dividend of Class P Common Stock, Class T Common
Stock, and Class V Common Stock shall similarly be declared and paid in
an equal per share amount solely to the then outstanding shares of
Class P Common Stock, Class T Common Stock, and Class V Common Stock,
respectively.
(b) If the Corporation shall in any manner subdivide
or combine, or make a rights offering with respect to, the outstanding
shares of Class A Common Stock, Class P Common Stock, Class T Common
Stock, or Class V Common Stock, the outstanding shares of the other
classes of Common Stock shall be proportionally subdivided or combined,
or a rights offering shall be made, in the same manner and on the same
basis as the outstanding shares of Class A Common Stock, Class P Common
Stock, Class T Common Stock, or Class V Common Stock, as the case may
be, that have been subdivided or combined or made subject to a rights
offering.
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<PAGE> 3
(ii) Voting Rights.
(a) The holders of the Class A Common Stock,
the Class T Common Stock, and the Class V Common Stock shall
have one (1) vote for each share held, whereas, the holders of
the Class P Common Stock shall have ten (10) votes for each
share held; provided, however, that during any time period
that A. Jerrold Perenchio is Incapacitated, the Class P Common
Stock shall only have one (1) vote per share.
(b) Members of the Board of Directors of the
Corporation shall be elected as set forth in Section III of
this Article FOURTH.
(c) Article III, Section 2 and Article III,
Section 12 of the Bylaws shall not be amended by action of the
stockholders without (i) unless a Class T Voting Conversion
has occurred, the approval of holders of a majority of the
outstanding Class T Common Stock (voting as a separate class)
and (ii) unless a Class V Voting Conversion has occurred, the
approval of holders of a majority of the outstanding Class V
Common Stock (voting as a separate class).
(iii) Conversion Rights.
(a) Voluntary Conversion. Each share of
Class P Common Stock, Class T Common Stock, and Class V Common
Stock shall be convertible into one fully paid and
non-assessable share of Class A Common Stock at any time at
the option of the holder thereof.
(b) Automatic Conversion. Each share of
Class P Common Stock, Class T Common Stock, and Class V Common
Stock shall convert automatically into one fully paid and
non-assessable share of Class A Common Stock upon its Transfer
(as defined below) to any party other than a Permitted
Transferee (as defined below) of the holder thereof. Each
share of Class P Common Stock shall convert automatically into
one fully paid and non-assessable share of Class A Common
Stock upon the death of A. Jerrold Perenchio or when the Class
P Holders (as defined below) own less than the Required Amount
(as defined below).
(c) Unconverted Shares. If less than all of
the shares of Class P Common Stock, Class T Common Stock, or
Class V Common Stock are converted under subparagraph (a) or
(b) above, and such shares are evidenced by a certificate
surrendered to the Corporation in accordance with procedures
as the Board of Directors may determine, representing shares
in excess of the shares being converted, the Corporation shall
execute and deliver to or upon the written order of the holder
of such certificate, without charge to the holder, a new
certificate
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<PAGE> 4
evidencing the number of shares of Class P Common Stock, Class
T Common Stock, or Class V Common Stock, as the case may be,
not converted.
(d) Reservation. The Corporation hereby
reserves and shall at all times reserve and keep available,
out of its authorized and unissued shares of Class A Common
Stock, to effect conversions, such number of duly authorized
shares of Class A Common Stock as shall from time to time be
sufficient to effect the conversion of all outstanding shares
of Class P Common Stock, Class T Common Stock, and Class V
Common Stock. The Corporation covenants that all of the shares
of Class A Common Stock so issuable shall, when so issued, be
duly and validly issued, fully paid, and non-assessable, and
free from liens and charges with respect to the issue. The
Corporation will take all such action as may be necessary to
assure that all such shares of Class A Common Stock may be so
issued without violation of any applicable law or regulation.
(iv) Elimination of Class Rights.
(a) Class T Common Stock. Upon the
occurrence of a Class T Voting Election (as defined below),
the rights of the Class T Holders to vote as a separate class
with respect to any matter (except as required by law) shall
cease and be eliminated. The "Class T Voting Election" shall
be conclusively deemed to have occurred upon receipt by the
secretary of the Corporation of a written consent signed by
the record holders of a majority of the outstanding shares of
Class T Common Stock electing to eliminate the voting rights
of the Class T Common Stock as provided in the preceding
sentence and such election shall be irrevocable. Additionally,
if at any time the Class T Holders own (or would own upon
exercise of any warrants to purchase Class T Common Stock)
less than the Class T Required Amount (a "Class T Voting
Event", and together with a Class T Voting Election, a "Class
T Voting Conversion"), the rights of the Class T Holders to
vote as a separate class with respect to any matter (except as
required by law) shall cease and be eliminated. From and after
a Class T Voting Conversion, the Class T Holders shall vote
together as a class with the holders of the Class A Common
Stock and the Class P Common Stock (and, if a Class V Voting
Conversion has occurred, the Class V Holders), except as
required by law.
(b) Class V Common Stock. Upon the
occurrence of a Class V Voting Election (as defined below),
the rights of the Class V Holders to vote as a separate class
with respect to any matter (except as required by law) shall
cease and be eliminated. The "Class V Voting Election" shall
be conclusively deemed to have occurred upon receipt by the
secretary of the Corporation of a written consent signed by
the record
4
<PAGE> 5
holders of a majority of the outstanding shares of Class V
Common Stock electing to eliminate the voting rights of the
Class V Common Stock as provided in the preceding sentence and
such election shall be irrevocable. Additionally, if at any
time the Class V Holders own (or would own upon exercise of
any warrants to purchase Class V Common Stock) less than the
Class V Required Amount (a "Class V Voting Event", and
together with a Class V Voting Election, a "Class V Voting
Conversion"), the rights of the Class V Holders to vote as a
separate class with respect to any matter (except as required
by law) shall cease and be eliminated. From and after a Class
V Voting Conversion, the Class V Holders shall vote together
as a class with the holders of the Class A Common Stock and
the Class P Common Stock (and, if a Class T Voting Conversion
has occurred, the Class T Holders), except as required by law.
II. Preferred Stock.
The Board of Directors is authorized, subject to limitations
prescribed by law and the provisions of this Restated Certificate of
Incorporation and the Bylaws, by resolution or resolutions of the Board of
Directors, from time to time to provide for the issuance of the shares of the
Preferred Stock in one or more series and to establish the number of shares to
be included in each such series and to fix the designation, powers, preferences
and rights of the shares of each such series and the qualifications, limitations
or restrictions thereof.
The authority of the Board with respect to each series shall
include, but not be limited to, determination of the following:
(i) The number of shares constituting that series and the
distinctive designation of that series;
(ii) The dividend rate, if any, on the shares of that
series, whether dividends shall be cumulative, and, if so, from which date or
dates, and the relative rights of priority, if any, of payment of dividends on
shares of that series;
(iii) Whether that series shall have voting rights, in
addition to the voting rights provided by law, and, if so, the terms of such
voting rights;
(iv) Whether that series shall be subject to conversion or
exchange, and, if so, the terms and conditions of such conversion or exchange,
including provision for adjustment of the conversion or exchange rate in such
events as the Board of Directors shall determine;
(v) Whether or not the shares of that series shall be
redeemable, and, if so, the terms and conditions of such redemption, including
the date or dates upon or after which they shall be redeemable, and the type and
amount of consideration per
5
<PAGE> 6
share payable in case of redemption, which amount may vary under different
conditions and at different redemption dates;
(vi) Whether that series shall have a sinking fund for the
redemption or purchase of shares of that series, and, if so, the terms and
amount of such sinking fund;
(vii) The rights, if any, of the shares of that series in
the event of voluntary or involuntary liquidation, dissolution or winding up of
the Corporation, and the relative rights of priority, if any, of payment of
shares of that series; and
(viii) Any other relative rights, preferences and
limitations, if any, of that series.
III. Election of Directors
The Directors of the Corporation shall be elected as follows:
(i) Subject to Sections III(ii) and (iii) below, the holders
of the Class A Common Stock and the Class P Common Stock, voting
together as a separate class, shall be entitled to elect a number of
directors (and alternate directors) equal to the greater of (a) six (6)
or (b) 50% of the then authorized number of directors that constitutes
the Entire Board (rounding any number that is not a whole number to the
next highest whole number). The directors that the holders of the Class
A Common Stock and the Class P Common Stock, have the right to elect
hereunder are referred to as the "Class A/P Director(s)" and the
alternate directors that the holders of the Class A Common Stock and
Class P Common Stock have the right to elect hereunder are referred to
as the "Class A/P Alternate Director(s)." Subject to Sections III(ii)
and (iii) below, the holders of the Class A Common Stock and the Class
P Common Stock, voting together as a separate class, shall also have
the sole right to remove any Class A/P Director or Class A/P Alternate
Director without cause. Subject to Sections III(ii) and (iii) below,
any vacancy in the office of a Class A/P Director or Class A/P
Alternate Director or any newly created Class A/P directorship or
alternate directorship shall be filled solely by (x) the holders of the
Class A Common Stock and the Class P Common Stock (and if a Class T
Voting Conversion or a Class V Voting Conversion has occurred, the
Class T Common Stock or Class V Common Stock, as the case may be),
voting together as a separate class, or (y) a majority of the remaining
Class A/P Directors or the sole remaining Class A/P Director.
(ii) Unless a Class T Voting Conversion has occurred, the
holders of the Class T Common Stock, voting as a separate class, shall
be entitled to elect one (1) director and one (1) alternate director;
provided, however, that at such time as the Communications Act of 1934,
and the rules, regulations, decisions and written policies of the
Federal Communications Commission thereunder (as the same may
6
<PAGE> 7
be amended from time to time, the "Communications Act") permits Aliens
(as defined below) to own at least thirty-seven and one-half percent
(37.5%) but less than fifty percent (50%) of the Corporation's capital
stock, unless a Class T Voting Conversion has occurred, the holders of
the Class T Common Stock, voting as a separate class, shall be entitled
to elect a number of directors (and alternate directors) equal to the
greater of (a) two (2) or (b) 20% of the then authorized number of
directors that constitutes the Entire Board (rounding any number that
is not a whole number to the next highest whole number); provided,
further, that at such time as the Communications Act permits Aliens to
own at least fifty percent (50%) of the Corporation's capital stock,
unless a Class T Voting Conversion has occurred, the holders of the
Class T Common Stock, voting as a separate class, shall be entitled to
elect a number of directors (and alternate directors) equal to the
greater of (a) three (3) or (b) 25% of the then authorized number of
directors that constitutes the Entire Board (rounding any number that
is not a whole number to the next highest whole number). The directors
that the holders of the Class T Common Stock have the right to elect
hereunder are referred to as the "Class T Director(s)" and the
alternate directors that the holders of the Class T Common Stock have
the right to elect hereunder are referred to as the "Class T Alternate
Director(s)". Unless a Class T Voting Conversion has occurred, the
holders of the Class T Common Stock, voting as a separate class, shall
also have the sole right to remove any Class T Director or Class T
Alternate Director without cause. Any vacancy in the office of a Class
T Director or Class T Alternate Director or any newly created Class T
directorship or alternate directorship shall be filled solely by (x)
the holders of the Class T Common Stock, voting as a separate class, or
(y) a majority of the remaining Class T Directors or the sole Class T
Director (as the case may be) unless a Class T Voting Conversion has
occurred. At such time as a Class T Voting Conversion has occurred, the
Class T Directors and Class T Alternate Directors shall be redesignated
as Class A/P Directors and Class A/P Alternate Directors, respectively,
and the number of Class A/P Directors (and Class A/P Alternate
Directors), shall be increased by the number of Class T Directors (and
Class T Alternate Directors) so redesignated.
(iii) Unless a Class V Voting Conversion has occurred, the holders
of the Class V Common Stock, voting as a separate class, shall be
entitled to elect one (1) director and one (1) alternate director;
provided, however, that at such time as the Communications Act permits
Aliens to own at least thirty-seven and one-half percent (37.5%) but
less than fifty percent (50%) of the Corporation's capital stock,
unless a Class V Voting Conversion has occurred, the holders of the
Class V Common Stock, voting as a separate class, shall be entitled to
elect a number of directors (and alternate directors) equal to the
greater of (a) two (2) or (b) 20% of the then authorized number of
directors that constitutes the Entire Board (rounding any number that
is not a whole number to the next highest whole number); provided,
further that at such time as the Communications Act permits Aliens to
own at least fifty percent (50%) of the Corporation's capital stock,
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unless a Class V Voting Conversion has occurred, the holders of the
Class V Common Stock, voting as a separate class, shall be entitled to
elect a number of directors (and alternate directors) equal to the
greater of (a) three (3) or (b) 25% of the then authorized number of
directors that constitutes the Entire Board (rounding any number that
is not a whole number to the next highest whole number). The directors
that the holders of the Class V Common Stock have the right to elect
hereunder are referred to as the "Class V Director(s)" and the
alternate directors that the holders of the Class V Common Stock have
the right to elect hereunder are referred to as the "Class V Alternate
Director(s)". Unless a Class V Voting Conversion has occurred, the
holders of the Class V Common Stock, voting as a separate class, shall
also have the sole right to remove any Class V Director or Class V
Alternate Director without cause. Any vacancy in the office of a Class
V Director or Class V Alternate Director or any newly created Class V
directorship or alternate directorship shall be filled solely by (x)
the holders of the Class V Common Stock, voting as a separate class, or
(y) a majority of the remaining Class V Directors or the sole Class V
Director (as the case may be) unless a Class V Voting Conversion has
occurred. At such time as a Class V Voting Conversion has occurred, the
Class V Directors and Class V Alternate Directors shall be redesignated
as Class A/P Directors and Class A/P Alternate Directors, respectively,
and the number of Class A/P Directors (and Class A/P Alternate
Directors), shall be increased by the number of Class V Directors (and
Class V Alternate Directors) so redesignated
IV. Certain Definitions
As used in this Restated Certificate of Incorporation, the following
terms have the meanings indicated:
"Affiliate" means any person or entity directly or indirectly
controlling or controlled by or under direct or indirect common control with
another Person.
"Alien" shall have the meaning given to such term from time to
time under the Communications Act.
"Class P Holders" means (i) A. Jerrold Perenchio, and/or (ii)
any Permitted Transferee of A. Jerrold Perenchio.
"Class T Holders" means (i) Grupo Televisa, S.A., and/or (ii)
any Permitted Transferee of Grupo Televisa, S.A.
"Class V Holders" means (i) Gustavo A. Cisneros and Ricardo
J. Cisneros (the "Cisneros Brothers") and/or (ii) any Permitted Transferee of
the Cisneros Brothers.
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"Entire Board" means that number of directors of the
Corporation which would be in office if there are no vacancies on the Board of
Directors and no unfilled newly created directorships.
"Incapacitated" with respect to A. Jerrold Perenchio means
that a conservator of the estate with respect to A. Jerrold Perenchio has been
appointed under the provisions of Section 1800 et. seq. of the California
Probate Code (or similar provision under the applicable law of the state where
A. Jerrold Perenchio is then domiciled) and that such conservatorship has not
been rescinded.
"Participation Agreement" means that certain Participation
Agreement to be entered into among A. Jerrold Perenchio, Grupo Televisa, Ricardo
and Gustavo Cisneros and Venevision, dated as of ______, as such agreement may
be amended and modified or supplemented.
"Permitted Transferee" means
(i) any entity all of the equity (other than
directors' qualifying shares) of which is directly or indirectly owned
by the transferor and that is not an Affiliate of any other Person;
(ii) in the case of a transferor who is an
individual, (a) such transferor's spouse and lineal descendants, (b)
subject to Article FOURTH, Section I(iii)(b) in the case of A. Jerrold
Perenchio, such transferor's personal representatives and heirs, (c)
any trustee of any trust created primarily for the benefit of any, some
or all of such spouse and lineal descendants (but which may include
beneficiaries which are charities) or of any revocable trust created by
such transferor, (d) subject to Article FOURTH, Section I(iii)(b) in
the case of A. Jerrold Perenchio, following the death of such
transferor, all beneficiaries under either such trust, (e) the
transferor, in the case of a transfer from any Permitted Transferee
back to its transferor and (f) any entity all of the equity of which is
directly or indirectly owned by any of the foregoing which is not an
Affiliate of any Person other than the Person described in clauses
(a)-(e) above; and
(iii) (a) in the case of the Class P Common Stock, A.
Jerrold Perenchio, (b) in the case of the Class T Common Stock, Grupo
Televisa S.A. and its wholly-owned subsidiaries and (c) in the case of
Class V Common Stock, the Cisneros Brothers. For the purposes of this
definition, if an entity is directly or indirectly owned by either of
the Cisneros Brothers, it shall be deemed owned by both of them.
"Person" means an individual, a corporation, a partnership, an
association, a limited liability company or a trust.
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"Required Amount" means,
(i) in the case of the Class P Holders, a number of
shares of Class P Common Stock equal to 30% of the Class P Base Amount.
The "Class P Base Amount" shall be equal to _____ shares of Class P
Common Stock, but shall be increased to give effect to stock dividends
and stock splits and shall be decreased to give effect to reverse stock
splits and repurchases by the Corporation of Class P Common Stock
approved by the Board of Directors in accordance with the Bylaws;
(ii) in the case of the Class T Holders, a number of
shares of Class T Common Stock equal to 30% of the Class T Base Amount.
The "Class T Base Amount" shall be equal to _____ shares of Class T
Common Stock, but shall be increased to give effect to stock dividends
and stock splits and shall be decreased to give effect to reverse stock
splits and repurchases by the Corporation of Class T Common Stock and
Warrants to purchase Class T Common Stock approved by the Board of
Directors in accordance with the Bylaws; and
(iii) in the case of the Class V Holders, a number of
shares of Class V Common Stock equal to 30% of the Class V Base Amount.
The "Class V Base Amount" shall be equal to _____ shares of Class V
Common Stock, but shall be increased to give effect to stock dividends
and stock splits and shall be decreased to give effect to reverse stock
splits and repurchases by the Corporation of Class V Common Stock and
Warrants to purchase Class V Common Stock approved by the Board of
Directors in accordance with the Bylaws.
"Transfer" means any direct or indirect sale, pledge,
hypothecation, delegation or other transfer, whether voluntary or involuntary
and whether by merger or other operation of law, other than a bona fide pledge
of shares to secure financing; provided that a foreclosure on such pledged
shares shall constitute a Transfer. An indirect Transfer includes, without
limitation, the transfer of a direct or indirect interest in an owner of Common
Stock but shall exclude (x) transfers of interests in Grupo Televisa, S.A., or
any other entity whose common equity is publicly traded and whose business does
not primarily consist of ownership of Common Stock; and (y) a transfer to any
purchaser of all of the television media business of the Cisneros Brothers which
includes the Class V Common Stock and Warrants to purchase Class V Common
Stock); provided that such purchaser agrees to be bound by the terms of the
Participation Agreement.
FIFTH: The business and affairs of the Corporation shall be
managed by or under the direction of the Board of Directors.
The directors need not be elected by written ballot unless
required by the bylaws of the Corporation.
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In the event that any Class A/P Director, Class T Director or
Class V Director is absent from any meeting of the Board of Directors (or any
committee thereof of which such director is a member) for any reason, then the
Class A/P Directors, Class T Director(s) or Class V Director(s) present at such
meeting, respectively, may designate one Class A/P Alternate Director, Class T
Alternate Director or Class V Alternate Director, as the case may be, to act at
such meeting of the Board of Directors (or committee thereof) in place of each
of the Class A/P Directors, Class T Director(s) or Class V Director(s), as the
case may be, who are absent from such meeting. In the event that all the Class
A/P Directors, Class T Directors or Class V Directors are absent from a meeting
of the Board of Directors, then each of the Class A/P Alternate Directors, Class
T Alternate Directors or Class V Alternate Directors (each an "Alternate
Director" and collectively the "Alternate Directors"), as the case may be, who
is present at such meeting may act in place of one of the Class A/P Directors,
Class T Directors or Class V Directors, as the case may be, who is absent from
such meeting. If, pursuant to the foregoing provisions of this paragraph, an
Alternate Director is designated to act or is entitled to act in the place of a
Class A/P Director, Class T Director or Class V Director who is absent from a
meeting of the Board of Directors (or any committee thereof), then, while so
acting at such meeting, such Alternate Director shall have and may exercise all
of the rights, duties, privileges and powers of the Class A/P Director, Class T
Director or Class V Director, as the case may be, in whose place such Alternate
Director is acting, including, without limitation, the right to vote at such
meeting, and while so acting at such meeting such Alternate Director shall be
deemed a Class A/P Director, Class T Director or Class V Director, as the case
may be, and shall be counted as a Class A/P Director, Class T Director or Class
V Director, as the case may be, for the purpose of determining whether a quorum
is present at such meeting. Except when attending and acting in the place of a
director at a meeting of the Board of Directors (or any committee thereof)
pursuant to the foregoing provisions of this subparagraph and except as
otherwise provided in the Bylaws, an Alternate Director shall not be entitled to
attend, or vote at, any meeting of the Board of Directors or any committee
thereof and shall not be counted as a member of the Board of Directors for the
purpose of determining whether a quorum is present at any meeting of the Board
of Directors; provided, however, that at any time there is only one Class T
Director or one Class V Director in office, a Class T Alternate Director or
Class V Alternate Director shall always be entitled to attend (but not vote at)
meetings of the Board (but not committees thereof) along with such Class T
Director or Class V Director, as the case may be.
SIXTH: For the purpose of monitoring compliance with the Alien
Entity ownership restrictions of the Communications Act, the Corporation shall,
as promptly as practicable after shares of Common Stock are first held by more
than 100 holders of record, implement the following procedures:
(a) The Corporation shall maintain separate stock
records with respect to all classes of stock (other than the Class T
Common Stock and the Class V Common Stock): a domestic record covering
non-Alien Entity stockholders and a foreign record covering Alien
Entity stockholders. Every
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certificate representing shares of stock (other than shares of Class T
Common Stock and Class V Common Stock) determined to be owned of record
or beneficially or voted by or for the account of, or otherwise
controlled directly or indirectly by, an Alien Entity shall be marked
"Foreign Share Certificate". Every certificate (other than for shares
of Class T Common Stock and the Class V Common Stock) issued not marked
"Foreign Share Certificate" shall be marked "Domestic Share
Certificate".
(b) Any holder of shares of any Class or series of
stock of the Corporation (other than the Class T Common Stock and the
Class V Common Stock) that are owned of record or beneficially or voted
by or for the account of, or otherwise controlled directly or
indirectly by, an Alien Entity shall deliver any Domestic Share
Certificates representing such shares to the Corporation to be replaced
by Foreign Share Certificates.
(c) Any holder of Foreign Share Certificates
representing shares of any class or series of stock of the Corporation
(other than shares of Class T Common Stock and Class V Common Stock)
that are not owned of record or beneficially or voted by or for the
account of, or otherwise controlled directly or indirectly by, an Alien
Entity may deliver such Foreign Share Certificates to the Corporation
to be replaced by Domestic Share Certificates. Any delivery of Foreign
Share Certificates pursuant to this paragraph must be accompanied by an
affidavit in form and substance reasonably satisfactory to the
Corporation stating that the shares of stock of the Corporation
represented by the Foreign Share Certificate are not owned of record or
beneficially or voted by or for the account of, or otherwise controlled
directly or indirectly by, an Alien Entity.
The Corporation shall have the right to determine, by vote of
the Board of Directors or in conformity with regulations prescribed by the Board
of Directors, (i) whether any person is an Alien Entity, (ii) whether any shares
of stock of the Corporation are owned of record or beneficially or voted by or
for the account of, or otherwise controlled directly or indirectly by, Alien
Entities and (iii) whether any affidavit delivered pursuant to paragraph (c) of
this Article SIXTH is false.
SEVENTH: For purposes of Article SIXTH and this Article
SEVENTH:
(i) "Alien Entity" means any individual not a citizen of the
United States of America; any partnership or limited liability company
controlled by Aliens; a foreign government; a corporation, joint-stock
company or association organized under the laws of a foreign country;
any other corporation controlled by Aliens; and any corporation,
joint-stock company, partnership, limited liability company, trust,
association or other entity controlled directly or indirectly by one or
more of the above.
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(ii) "Disqualified Holder" shall mean any holder of
outstanding shares of any class or series of stock of the Corporation
(other than Class T Common Stock and Class V Common Stock) whose
holding of such stock, either individually or when taken together with
the holding of shares of any class or series of stock of the
Corporation by any other holders, may result, in the judgment of the
Board of Directors, in the loss of, or the failure to secure the
reinstatement of, any license or franchise from any governmental agency
held by the Corporation or any of its subsidiaries to conduct any
portion of the business of the Corporation or any of its subsidiaries.
(iii) "Fair Market Value" of a share of any class or series of
stock of the Corporation shall mean the average Closing Price for such
a share for each of the 45 most recent days on which shares of stock of
such class or series shall have been traded preceding the day on which
notice of redemption shall be given pursuant to paragraph (d) of this
Article SEVENTH; provided, however, that if shares of stock of such
class or series are not traded on any securities exchange or in the
over-the-counter market, "Fair Market Value" shall be determined by the
Board of Directors in good faith. "Closing Price" on any day means the
reported closing sales price or, in case no such sale takes place, the
average of the reported closing bid and asked prices on the principal
United States securities exchange registered under the Securities
Exchange Act of 1934, as amended, on which such stock is listed, or, if
such stock is not listed on any such exchange, the highest closing
sales price or bid quotation for such stock on the National Association
of Securities Dealers, Inc. Automated Quotation System or any similar
system then in use, or if no such prices or quotations are available,
the fair market value on the day in question as determined by the Board
of Directors in good faith.
(iv) "Redemption Date" shall mean the date fixed by the
Board of Directors for the redemption of any shares of stock of the
Corporation pursuant to this Article SEVENTH.
(v) "Redemption Securities" shall mean any debt or
equity securities of the Corporation, any of its subsidiaries or any
other corporation, or any combination thereof, having such terms and
conditions as shall be approved by the Board of Directors and which,
together with any cash to be paid as part of the redemption price, in
the opinion of any nationally recognized investment banking firm
selected by the Board of Directors (which may be a firm which provides
other investment banking, brokerage or other services to the
Corporation), has a value, at the time notice of redemption is given
pursuant to paragraph (d) of this Article SEVENTH, at least equal to
the price required to be paid pursuant to paragraph (a) of this Article
SEVENTH (assuming, in the case of Redemption Securities to be publicly
traded, such Redemption Securities were fully distributed and subject
only to normal trading activity).
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Notwithstanding any other provision of this Restated
Certificate of Incorporation to the contrary, outstanding shares of any class or
series of stock of the Corporation (other than shares of Class T Common Stock
and Class V Common Stock) held by a Disqualified Holder shall always be subject
to redemption by the Corporation, by action of the Board of Directors, or in
conformity with regulations prescribed by the Board of Directors to the extent
necessary to prevent the loss or secure the reinstatement of any license or
franchise from any governmental agency held by the Corporation or any of its
subsidiaries to conduct any portion of the business of the Corporation or any of
its subsidiaries, which license or franchise is conditioned upon some or all of
the holders of the Corporation's stock possessing prescribed qualifications. The
terms and conditions of such redemption shall be as follows:
(a) the redemption price of the shares to be redeemed
pursuant to this Article SEVENTH shall be equal to the lesser of (i)
the Fair Market Value of such shares or (ii) if such shares were
purchased by such Disqualified Holder within one year of the Redemption
Date, such Disqualified Holder's purchase price for such shares;
(b) the redemption price of such shares may be paid
in cash, Redemption Securities or any combination thereof;
(c) if less than all the shares held by Disqualified
Holders are to be redeemed, the shares to be redeemed and the identity
of the Disqualified Holders from whom shares will be redeemed shall be
selected in such manner as shall be determined by the Board of
Directors or in conformity with regulations prescribed by the Board of
Directors, which may include selection first of the most recently
purchased shares thereof, selection by lot, selection based upon
failure to comply with Article SIXTH of the Restated Certificate of
Incorporation or selection in any other manner determined by the Board
of Directors or in conformity with regulations prescribed by the Board
of Directors, which determination shall be conclusive;
(d) at least 30 days written notice of the Redemption
Date shall be given to the record holders of the shares selected to be
redeemed (unless waived in writing by any such holder), provided that
the Redemption Date may be the date on which written notice shall be
given to such record holders if cash, Redemption Securities or a
combination thereof sufficient to effect the redemption shall have been
deposited in trust for the benefit of such record holders and subject
to immediate withdrawal by them upon surrender of the stock
certificates for their shares to be redeemed;
(e) from and after the Redemption Date, any and all
rights of whatever nature, of the holders of shares so called for
redemption (including without limitation any rights to vote or
participate in dividends declared on stock of the same class or series
as such shares), shall cease and terminate and such
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<PAGE> 15
owners shall thenceforth be entitled only to receive the cash,
Redemption Securities or combination thereof payable in respect of such
redemption; and
(f) such other terms and conditions as the Board of
Directors shall determine.
The Board of Directors, by a vote which includes, in addition
to any other required vote of directors, the affirmative vote of a majority of
the Class T Director(s) (so long as a Class T Voting Conversion has not
occurred) or a majority of the Class V Director(s) (so long as a Class V Voting
Conversion has not occurred), shall be authorized at any time and from time to
time to adopt such other provisions as the Board of Directors may deem necessary
or desirable to avoid violation of the provisions of Section 310(b) of the
Communications Act as now in effect or as it may hereafter from time to time be
amended, and to carry out the provisions of Articles SIXTH and SEVENTH of this
Restated Certificate of Incorporation; provided that no such provision shall
result in shares of Class T Common Stock or Class V Common Stock being subject
to redemption under this Article SEVENTH.
EIGHTH: In furtherance and not in limitation of the powers
conferred by the laws of the State of Delaware, the Board of Directors is
expressly authorized to make, amend and repeal the Bylaws; provided no such
amendment made by the Board of Directors may adversely affect the rights
accorded under the Bylaws to the holders of the Class T Common Stock or the
Class V Common Stock that affect such class differently from the other classes
of Common Stock of the Corporation without (i) so long as a Class T Voting
Conversion has not occurred, the affirmative vote of a majority of the Class T
Directors and (ii) so long as a Class V Voting Conversion has not occurred, the
affirmative vote of a majority of the Class V Directors, as the case may be.
NINTH: The Corporation reserves the right to amend or repeal
any provision contained in this Restated Certificate of Incorporation in the
manner prescribed herein and by the laws of the State of Delaware; provided that
no amendment may adversely affect the rights accorded to the holders of the
Class T Common Stock or the Class V Common Stock which affect such class
differently from the other classes of Common Stock of the Corporation without
the affirmative vote or consent of the holders of a majority of the outstanding
shares of Class T Common Stock or Class V Common Stock, as the case may be. All
rights granted herein are subject to this reservation.
TENTH: A director of the Corporation shall not be liable to
the Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except to the extent that exemption from such liability or
limitation thereof is not permitted under the GCL as the same exists or may
hereafter be amended. Any repeal or modification of the foregoing provision of
this Article TENTH shall not adversely affect any right or protection of a
director of the Corporation in respect of any act or omission occurring prior to
the time of such repeal or modification. The provisions of this Article TENTH
shall not be deemed to limit or preclude
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indemnification of a director by the Corporation for any liability as a director
that has not been eliminated by the provisions of this Article TENTH.
ELEVENTH: (i) Each person who was or is a party or is
threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative, or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she, or a person
of whom he or she is the legal representative, is or was a director, officer,
employee or agent of the Corporation or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another corporation or
of a partnership, joint venture, trust or other enterprise, including service
with respect to employee benefit plans, whether the basis of such proceeding is
alleged action or inaction in an official capacity or in any other capacity
while serving as a director, officer, employee or agent of the Corporation or
such other enterprise (each, an "Indemnified Person"), shall be indemnified and
held harmless by the Corporation to the fullest extent permitted by the laws of
the State of Delaware, as the same exist or may hereafter be amended, or by
other applicable law as then in effect, against all costs, charges, expenses,
liabilities and losses (including attorneys' fees, judgments, fines, ERISA
excise taxes or penalties and amounts paid or to be paid in settlement) actually
and reasonably incurred or suffered by such person in connection therewith, and
such indemnification shall continue as to a person who has ceased to be a
director, officer, employee or agent of the Corporation or such other enterprise
and shall inure to the benefit of his or her heirs, executors and
administrators; provided, however, that the Corporation shall not be required to
indemnify a person (i) in connection with a proceeding (or part thereof)
initiated by such person if the initiation of the proceeding (or part thereof)
was not authorized by the Board of Directors of the Corporation or (ii) if such
person has not met the applicable standard of conduct set forth in the GCL, as
the same exists or hereafter may be amended. Such determination shall be made
(a) by a majority vote of the directors who are not parties to such action, suit
or proceeding ("Disinterested Directors"), even though less than a quorum, or
(b) if there are no such directors, or if such directors so direct, by
independent legal counsel in a written opinion, or (c) by the stockholders.
Expenses incurred by an Indemnified Person in defending any such proceeding
shall be paid by the Corporation in advance of its final disposition; provided,
however, that, if the GCL requires, the payment of such expenses incurred by a
director or officer in his or her capacity as a director or officer (and not in
any other capacity in which service was or is rendered by such person while a
director or officer, including, without limitation, service to an employee
benefit plan) in advance of the final disposition of a proceeding shall be made
only upon delivery to the Corporation of an undertaking, by or on behalf of such
director or officer, to repay all amounts so advanced if it shall ultimately be
determined that such director or officer is not entitled to be indemnified under
this Section or otherwise. The Corporation may, by action of its Board of
Directors, provide indemnification to employees and agents of the Corporation
with the same scope and effect as the foregoing indemnification of directors and
officers.
(ii) If a claim under paragraph (i) of this Article ELEVENTH
is not paid in full by the Corporation within thirty days after a written claim
has been received
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by the Corporation, the claimant may at any time thereafter bring suit against
the Corporation to recover the unpaid amount of the claim and, if successful in
whole or in part, the claimant shall be entitled to be paid also the expense of
prosecuting such claim. In any such action, the Corporation shall have the
burden of proving that the claimant was not entitled to the requested
indemnification or payment of expenses under applicable law. Neither the failure
of the Corporation (including the Disinterested Directors, its independent legal
counsel and its stockholders) to have made a determination that indemnification
of the claimant is proper in the circumstances because he/she has met the
applicable standard of conduct set forth in the GCL, as the same exists or
hereafter may be amended, nor the fact that there has been an actual
determination by the Corporation (including the Disinterested Directors, its
independent legal counsel and its stockholders) that the claimant has not met
such applicable standard of conduct, shall create a presumption that the
claimant has not met the applicable standard of conduct.
(iii) The right to indemnification and the right to payment of
expenses incurred in defending a proceeding in advance of its final disposition
conferred in paragraph (i) of this Article ELEVENTH shall not be exclusive of
any other right which any person may have or hereafter acquire under any
statute, provision of this Restated Certificate of Incorporation, bylaw,
agreement, vote of stockholders or disinterested directors or otherwise. All
rights to indemnification under this Article ELEVENTH shall be deemed to be a
contract between the Corporation and each director, officer, employee or agent
of the Corporation who serves or served in such capacity at any time while this
Article ELEVENTH is in effect. Any repeal or modification of this Article
ELEVENTH shall not in any way diminish any rights to indemnification of such
director, officer, employee or agent or the obligations of the Corporation
arising hereunder with respect to any action, suit or proceeding arising out of,
or relating to, any actions, transactions or facts occurring prior to the final
adoption of such modification or repeal.
(iv) The Corporation may maintain insurance, at its expense,
to protect itself and any director, officer, employee or agent of the
Corporation or another corporation, partnership, joint venture, trust or other
enterprise against any such expense, liability, loss, whether or not the
Corporation would have the power to indemnify such person against such expense,
liability or loss under Delaware law.
(v) To the extent that any director, officer, employee or
agent of the Corporation is by reason of such position, or a position with
another entity at the request of the Corporation, a witness in any action, suit
or proceeding, he or she shall be indemnified against all costs and expenses
actually and reasonably incurred by him or her or on his or her behalf in
connection therewith.
(vi) The Corporation may enter into agreements with any
director, officer, employee or agent of the Corporation providing for
indemnification to the full extent permitted by Delaware law.
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(vii) If this Article ELEVENTH or any portion hereof shall be
invalidated on any ground by any court of competent jurisdiction, then the
Corporation shall nevertheless indemnify each person entitled to indemnification
under the first paragraph of this Article ELEVENTH as to all expense, liability
and loss (including attorneys' fees, judgments, fines, ERISA excise taxes or
penalties and amounts paid or to be paid in settlement) actually and reasonably
incurred or suffered by such person and for which indemnification is available
to such person pursuant to Article ELEVENTH to the full extent permitted by any
applicable portion of this Article ELEVENTH that shall not have been invalidated
and to the full extent permitted by applicable law.
TWELFTH: To the maximum extent permitted by law, subject to the
obligations of the parties (the "Principals") to that certain Participation
Agreement and their Affiliates under the Transaction Agreements (as defined in
the Participation Agreement), the Principals, their respective Affiliates and
the shareholders, officers, directors and employees of the Principals and their
respective Affiliates (i) may engage in any activity, including but not limited
to competing with the Corporation and its subsidiaries, (ii) may acquire, own,
broker, lease or operate any business and (iii) shall not be under any
obligation to communicate or present any opportunity or potential transaction or
matter to the Corporation or its subsidiaries.
IN WITNESS WHEREOF, UNIVISION COMMUNICATIONS INC. has caused
this certificate to be signed by Stephen Rader, its Vice President and Treasurer
and attested to by Robert Cahill, its Vice President and Secretary, this __ day
of ________, 199_.
UNIVISION COMMUNICATIONS INC.
By:_________________________________
Name:
Title:
Attest:
By:______________________
Name:
Title:
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Exhibit 3.2
FORM OF
BYLAWS
of
UNIVISION COMMUNICATIONS INC.
a Delaware corporation
ARTICLE I
OFFICES
Section 1. Registered Office. The registered office of the
Corporation shall be in the State of Delaware, located at Corporation Service
Company, 1013 Centre Road, Wilmington, County of New Castle 19805 and the name
of the resident agent in charge thereof is the agent named in the Certificate of
Incorporation until changed by the Board of Directors (the "Board").
Section 2. Principal Office. The principal office for the
transaction of the business of the Corporation shall be at such place as may be
established by the Board. The Board is granted full power and authority to
change said principal office from one location to another.
Section 3. Other Offices. The Corporation may also have an
office or offices at such other places, either within or without the State of
Delaware, as the Board may from time to time designate or the business of the
Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Place of Meetings. Meetings of stockholders shall
be held at such time and place, within or without the State of Delaware, as
shall be stated in the notice of the meeting or in a duly executed waiver of
notice thereof.
Section 2. Annual Meetings. An annual meeting of stockholders
shall be held for the election of directors at such date, time and place, either
within or without the state of Delaware, as may be designated by resolution of
the Board from time to time. Any other proper business may be transacted at the
annual meeting.
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Section 3. Special Meetings. Special meetings of the
stockholders of the Corporation for any purpose or purposes may be called at any
time by the Board and shall be called by the president or secretary at the
request in writing of (i) the Chairman of the Board, (ii) a majority of the
Class T Directors or Class V Directors, or (iii) stockholders owning a majority
in voting power of the issued and outstanding shares of Common Stock of the
Corporation.
Section 4. Stockholder Lists. The officer who has charge of
the stock ledger of the Corporation shall prepare, at least ten days before
every meeting of stockholders, a complete list, by class, of stockholders
entitled to vote at the meeting, arranged in alphabetical order and showing the
address of each stockholder and the number of shares registered in the name of
each stockholder. Such list shall be open to the examination of any stockholder,
for any purpose germane to the meeting during ordinary business hours for a
period of at least ten days prior to the meeting, either at a place within the
city where the meeting is to be held, which place shall be specified in the
notice of the meeting, or at the place of the meeting, and the list shall also
be available at the meeting during the whole time thereof and may be inspected
by any stockholder who is present.
Section 5. Notice of Meetings. Written notice of each meeting
of stockholders, whether annual or special, stating the place, date and hour of
the meeting, and in the case of a special meeting, the purpose of such meeting,
shall be given to each stockholder entitled to vote at such meeting not less
than ten (or such other period as may be required under applicable law) nor more
than sixty days before the date of the meeting.
Section 6. Quorum and Adjournment. Except as set forth below,
the holders of a majority in voting interest of capital stock of the Corporation
entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum for holding all meetings of stockholders, except as
otherwise provided by applicable law, these Bylaws or the Restated Certificate
of Incorporation. Notwithstanding the above, holders of a majority of the voting
interest of the Corporation's Class A Common Stock and Class P Common Stock
(voting together a separate class), Class T Common Stock and Class V Common
Stock, as the case may be, shall each constitute a quorum for the holding of a
meeting of stockholders of such class(es) for the sole purpose of electing or
removing without cause the director or directors that such class(es) has the
right to elect or to fill a vacancy or a newly created directorship which such
class has a right to fill. If it shall appear that such quorum is not present or
represented at any meeting of stockholders, the Chairman of the meeting shall
have the power to adjourn the meeting from time to time, without notice other
than announcement at the meeting, until a quorum shall be present or
represented. At such adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might have been transacted at
the meeting as originally noticed. If the adjournment is for more than thirty
days, or if after the adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to each stockholder of
record entitled to vote at the meeting.
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Section 7. Voting. In all matters other than the election of
directors, the vote of the holders of a majority in voting interest of the
capital stock of the Corporation that are present in person or represented by
proxy at a meeting at which a quorum is present, shall decide any question
brought before such meeting of stockholders, unless the question is one upon
which by express provision of applicable law, of the Restated Certificate of
Incorporation or of these Bylaws a different vote is required, in which case
such express provision shall govern and control the decision of such question.
Each director of the Corporation shall be elected (i) by a plurality of the
votes of the shares of the class(es) of stock which has the right to elect such
director, present in person or represented by proxy at a meeting at which a
quorum is present or (ii) by the written consent of the holders of a majority in
voting interest of the outstanding shares of such class(es). Unless otherwise
provided in the Restated Certificate of Incorporation, each stockholder shall be
entitled to cast one vote for each share of the capital stock entitled to vote
held by such stockholder upon the matter in question. The presiding officer at a
meeting of stockholders, in his or her discretion, may require that any votes
cast at such meeting shall be cast by written ballot.
Section 8. Proxies. Each stockholder entitled to vote at a
meeting of stockholders may authorize another person or persons to act for him
or her by proxy, but no proxy shall be voted or acted upon after three years
from its date, unless the person executing the proxy specifies therein a longer
period of time for which it is to continue in force. A proxy shall be
irrevocable if it states that it is irrevocable and if, and only as long as, it
is coupled with an interest sufficient in law to support an irrevocable power. A
stockholder may revoke any proxy which is not irrevocable by attending the
meeting and voting in person or by filing an instrument in writing revoking the
proxy or by delivering a proxy in accordance with applicable law bearing a later
date to the Secretary of the Corporation.
Section 9. Inspector of Election. The Board shall, if required
by law, appoint an Inspector or Inspectors of Election for any meeting of
stockholders. Such Inspectors shall decide upon the qualification of the voters
and report the number of shares represented at the meeting and entitled to vote,
shall conduct the voting and accept the votes, and when the voting is completed
shall ascertain and report the number of shares voted respectively for and
against each position upon which a vote is taken by ballot. An Inspector need
not be a stockholder, and any officer of the Corporation may be an Inspector on
any position other than a vote for or against a proposal in which he or she
shall have a material interest.
Section 10. Action Without Meeting. Subject to Section 228 of
the Delaware General Corporation Law, any action which may be taken at any
annual or special meeting of stockholders may be taken without a meeting,
without prior notice and without a vote if a consent or consents in writing
setting forth the action so taken, shall be signed by the holders of outstanding
capital stock having not less than the minimum number of votes that
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would be necessary to authorize or take such action at a meeting at which all
shares entitled to vote thereon were present and voted and shall be delivered to
the Corporation by delivery to its registered office in the State of Delaware
(by hand or by certified or registered mail, return receipt requested), its
principal place of business, or an officer or agent of the Corporation having
custody of the book in which proceedings of meetings of stockholders are
recorded. Prompt notice of the taking of corporate action without a meeting by
less than unanimous written consent shall, to the extent required by law, be
given to those stockholders who have not consented in writing.
ARTICLE III
DIRECTORS
Section 1. Powers. Subject to any limitations set forth in the
Restated Certificate of Incorporation, the Board shall have the power to manage
or direct the management of the property, business and affairs of the
Corporation and, except as expressly limited by law, to exercise all of its
corporate powers. Subject to applicable law, the Board may establish procedures
and rules or may authorize the Chairman of any meeting of stockholders to
establish procedures and rules, for the fair and orderly conduct of any
stockholders' meeting, including without limitation, registration of the
stockholders attending the meeting, adoption of an agenda, establishing the
order of business at the meeting, recessing and adjourning the meeting for the
purposes of tabulating any votes and receiving the result thereof, the timing of
the opening and closing of the polls and the physical layout of the facilities
for the meeting.
Section 2. Number, Term and Classes. The Board shall consist
of not less than eight nor more than twelve members, as shall be determined from
time to time by resolution of the Board. Until otherwise determined by such
resolution, the Board shall consist of eight members; provided, however, that at
such time as the holders of Class T Common Stock and Class V Common Stock are
entitled to elect one or more additional members of the Board of Directors as
provided in the Restated Certificate of Incorporation of the Corporation, the
number of members of the Board of Directors shall be increased to add the number
of additional members provided for in the Restated Certificate of Incorporation,
to a maximum of twelve. Except as provided in the Restated Certificate of
Incorporation, there shall be three classes of directors: Class A/P Directors,
Class T Directors, and Class V Directors, all of which shall be elected as
provided in the Restated Certificate of Incorporation.
Section 3. Qualifications. Directors need not be
stockholders, and each director shall serve until his or her successor is
elected and qualified or until his or her earlier death, retirement, resignation
or removal.
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Section 4. Vacancies and Newly Created Directorships. Any
vacancy on the Board or in the position of an Alternate Director (as that term
is defined in the Restated Certificate of Incorporation of the Corporation)
caused by death, resignation or removal and any newly created directorship or
alternate directorship may be filled as provided in the Restated Certificate of
Incorporation of the Corporation. A director or Alternate Director so elected to
fill a vacancy or a newly created directorship or alternate directorship shall
serve until his or her successor is elected and qualified or until his or her
earlier death, retirement, resignation or removal.
Section 5. Regular Meetings. Regular meetings of the Board
shall be held without call or notice at such time and place within or without
the State of Delaware as shall from time to time be fixed by standing resolution
of the Board.
Section 6. Special Meetings. Special meetings of the Board may
be held at any time or place within or without the State of Delaware whenever
called by the Chairman of the Board, a majority of the Class A/P Directors, a
majority of the Class T Directors or a majority of the Class V Directors. Notice
of a special meeting of the Board shall be given to all Directors and Alternate
Directors by the person or persons calling the meeting at least seventy-two
hours before the special meeting.
Section 7. Telephonic Meetings. Members of the Board or any
committee thereof may, and shall be given the opportunity to, participate in a
regular or special meeting of such Board or committee by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other. Participation in a meeting
pursuant to this Section shall constitute presence in person at such meeting.
Section 8. Quorum. At all meetings of the Board a majority of
the Entire Board (as defined in the Restated Certificate of Incorporation) shall
constitute a quorum for the transaction of business. Except as otherwise set
forth in these Bylaws, the vote of a majority of the directors present at a
meeting at which a quorum is present shall be the act of the Board. Any meeting
of the Board may be adjourned to meet again at a stated day and hour. Notice of
any adjourned meeting need not be given.
Section 9. Fees and Expenses. Each director (and each
Alternate Director attending a meeting in place of a director) and each member
of a committee of the Board, shall receive reimbursement of reasonable
out-of-pocket expenses incurred in connection with attending meetings. Each
director (and each Alternate Director attending a meeting in place of a
director) and each member of a committee of the Board, in each case who is
neither (i) an owner of more than a 5% direct or indirect beneficial interest in
the stock of the Corporation (or the spouse, child or other family member of
such an owner (a "Related Person")); (ii) an employee (a) of the Corporation,
(b) of any direct or indirect subsidiary of the Corporation, or (c) of such an
owner or Related Person or an Affiliate of such owner
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or Related Person; nor (iii) any person who controls any such owner and the
spouse, child or other family members of any such person, shall also receive a
fee to be determined by the Board for attending any meeting of the Board or any
such committee (provided that no director shall be entitled to receive such fee
if such director is receiving a fee for attending a meeting of the board of
directors or any other committee of this corporation held on the same day).
Other than as set forth above, no director, Alternate Director, or stockholder
of the Corporation shall be reimbursed for any expenses incurred by it in its
role as an investor or director.
Section 10. Committees. Subject to the Restated Certificate of
Incorporation, the Board may, by resolution passed by a majority of the Entire
Board, designate one or more committees, each committee to consist of one or
more of the directors of the Corporation. The Board may designate one or more
directors as alternate members of any committee who may replace any absent or
disqualified member at any meeting of the committee. Except as provided below
with respect to the compensation committee of the Board, if any, a Class T
Director and a Class V Director shall sit on all committees of the Board. At
least one Class T Director or one Class V Director shall sit on the compensation
committee of the Board, if any. Any such committee, to the extent provided in a
resolution of the Board and to the extent permitted by law and not inconsistent
with the Restated Certificate of Incorporation, shall have and may exercise all
the powers and authority of the Board in the management of the business and
affairs of the Corporation, and may authorize the seal of the Corporation to be
affixed to all papers which may require it. If the compensation committee of the
Board does not include both a Class T Director and a Class V Director, then the
class of directors not so represented on such committee shall be entitled to
notice of, and one, but no more than one, director of such class (or an
alternate director of such class) shall be entitled to be in attendance at (but
not vote at), all meetings of the compensation committee of the Board. At such
time as the Communications Act of 1934, and the rules and regulations of the
Federal Communications Commission thereunder (as the same may be amended from
time to time, the "Communications Act") permits Aliens (as defined under the
Communications Act) to own fifty percent (50%) or more of the Corporation's
capital stock, the Class T Directors and Class V Directors shall be entitled to
constitute 50% of any Board committee.
Section 11. Action Without Meetings. Unless otherwise
restricted by applicable law, the Restated Certificate of Incorporation or these
Bylaws, any action required or permitted to be taken at any meeting of the Board
or of any committee thereof may be taken without a meeting if all members of the
Board or of such committee, as the case may be, consent thereto in writing and
the writing or writings are filed with the minutes of proceedings of the Board
or committee.
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Section 12. Super Majority Board Approvals.
(a) Without the approval of the Board (or where permitted
under applicable law, a duly constituted committee of the Board which includes
at least one Class T Director and one Class V Director) by a vote which
includes, in addition to any other required vote of directors, the affirmative
vote of a majority of the Class T Director(s) (so long as a Class T Voting
Conversion has not occurred) and a majority of the Class V Director(s) (so long
as a Class V Voting Conversion has not occurred) on the Board or such committee,
as the case may be, the Corporation shall not directly or through its
subsidiaries engage in any of the following acts or transactions:
(i) Merge, consolidate or enter into a business
combination, or otherwise reorganize the Corporation with or into one
or more entities (other than a merger of a wholly-owned subsidiary of
the Corporation into another wholly-owned subsidiary of the
Corporation);
(ii) Sell all or substantially all of the
Corporation's assets to a person or entity that is not a wholly-owned
subsidiary of the Corporation;
(iii) Create, designate, issue, or sell out of
treasury any Common Stock or Preferred Stock (other than
non-convertible preferred stock containing none of the features
described in this clause (iii) and not entitling the holders thereof to
elect more than two directors upon an event of default) of, or other
equity interests in, the Corporation or any of its subsidiaries, any
securities that are convertible into, exchangeable for, or participate
in dividends with, the Common Stock or Preferred Stock of, or other
equity interests in, the Corporation or any of its subsidiaries, any
stock appreciation rights or phantom equity interests in the
Corporation or any of its subsidiaries, any other right or
participation in the profits, income, cash flow, or revenues of the
Corporation or any of its subsidiaries (other than, in each case, cash
payments in the ordinary course of the Corporation's business,
consistent with past practice, in the nature of sales commissions,
music license fees, affiliate station compensation and participations
paid to talent or intellectual property rightsholders), or any options
or conversion, exchange or other rights in respect of the foregoing
(other than pursuant to an employee benefit plan or securities issued
upon conversion or exchange of securities (in accordance with the terms
of such securities) approved in accordance with the provisions of this
Article III, Section 12(a)); provided that nothing in this Article III,
Section 12(a)(iii) shall require approval for the issuance of any
security by any subsidiary of the Corporation to the Corporation or to
a wholly-owned subsidiary of the Corporation;
(iv) Pay any dividend or make any distribution to
holders of any equity securities of the Corporation, including by way
of redemption or repurchase of securities (other than a redemption or
repurchase in accordance with Article
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SEVENTH of the Restated Certificate of Incorporation of the Corporation
or a dividend, redemption or repurchase required by the terms of any
security the issuance of which was approved in accordance with this
Article III, Section 12(a)), or make any payments in respect of any
such equity securities, including payments relating to options or
derivatives in respect of such equity securities; provided, however,
that at such time as no warrants to purchase Class T Common Stock are
outstanding, the approval of a majority of the Class T Directors under
this Article III, Section 12(a)(iv) shall not be required, and that at
such time as no warrants to purchase Class V Common Stock are
outstanding, the approval of a majority of the Class V Directors under
this Article III, Section 12(a)(iv) shall not be required;
(v) Other than as provided in the proviso to the
second sentence of Article III, Section 2 of these Bylaws, increase the
number of members of the of the Board of Directors;
(vi) Engage in any business transaction outside
of the Corporation's ordinary course of business. For purposes of this
subparagraph (vi), the Corporation's ordinary course of business shall
mean any media or communications business and shall include, but not be
limited to, radio and television broadcasting, cable networking, cable
programming, television programming and syndication, interactive
television, direct broadcast satellite, pay-per-view television, sports
promotion, home shopping, print and on-line publishing or broadcasting,
billboards, recorded music and music publishing;
(vii) Dissolve, liquidate or terminate the
Corporation; or
(viii) Amend this Article III, Section 12 of these
Bylaws by action of the Board.
(b) Without the approval of the Board (or where permitted
under applicable law, a duly constituted committee of the Board which includes
at least one Class T Director and one Class V Director) by a vote which
includes, in addition to any other required vote of directors, the affirmative
vote of a majority of the Class T Director(s) (so long as a Class T Voting
Conversion has not occurred) or a majority of the Class V Director(s) (so long
as a Class V Voting Conversion has not occurred) on the Board or such committee,
as the case may be, the Corporation shall not directly or through its
subsidiaries engage in any of the following acts or transactions:
(i) Acquire or dispose of assets in any one
transaction or series of related transactions for a purchase or sale
price in excess of $50 million;
(ii) Dispose of any interest in any television
station which broadcasts in the Spanish language in any of the top 15
Hispanic markets in the United States;
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(iii) Incur debt (other than capitalized lease
obligations in respect of satellite transponders) or issue preferred
stock (not required to be approved under Section 12(a)(iii)) as of any
date in an aggregate amount outstanding in excess of (x) the
Corporation's EBITDA for the twelve-month period ending on the last day
of the quarter preceding such date, multiplied by (y) five. For
purposes of this subparagraph (ii), EBITDA means the sum of net income,
total depreciation expense, total amortization expense, interest
expense, and taxes as determined in conformity with Generally Accepted
Accounting Principles ("GAAP"); provided that in the case of debt
incurred for the purposes of an acquisition, EBITDA shall be determined
on a pro-forma basis giving effect to such acquisition;
(iv) Subject to the provisions of paragraph (c)
below, produce or acquire any New Program;
(v) Enter into any transaction with A. Jerrold
Perenchio or any of his Related Persons, any Affiliates of A. Jerrold
Perenchio or any such Related Person or any officer, director or
employee of any of the foregoing;
(vi) Employ or set the compensation or severance
level of any Affiliated Person, (as defined below). For the purposes
hereof, an "Affiliated Person" shall mean any person (i) who is a
relative of any person who then is or has previously been an executive
officer of the Corporation or any of its subsidiaries or who is then or
has previously been a consultant receiving in excess of $25,000 per
year from the Corporation or any of its subsidiaries (or any employee
of any such consultant), (ii) who is being hired as a part-time
executive of the Corporation or (iii) who is then or has previously
been an employee or relative of A. Jerrold Perenchio, Grupo Televisa,
S.A. or Gustavo or Ricardo Cisneros (or any of their respective
Affiliates).
(c) The super-majority vote described in subparagraph (b)(iv)
above (the "Production Approval") shall be required as follows:
(i) Until the Corporation's audited financial
statements for 1996 are available, the Production Approval shall not be
required.
(ii) If (x) the Corporation's audited financial
statements for any fiscal year disclose that Incremental EBITDA (as
defined below) for such fiscal year is equal to or greater than 30% of
Incremental Sales (as defined below) for such fiscal year, or (y) the
Corporation's Adjusted Sales decrease in any fiscal year but the
Corporation's EBITDA/Sales Margin in such year remains the same or
increases, the Production Approval shall not be required prior to the
issuance of the Corporation's audited financial statements for the
subsequent fiscal year.
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(iii) If the Corporation's audited financial
statements for any fiscal year disclose that (x) Incremental EBITDA for
such fiscal year is less than 30% of Incremental Sales for such fiscal
year and (y) the EBITDA/Sales Margin (as defined below) for such fiscal
year is less than the greater of (A) 30% or (B) five points below the
average EBITDA/Sales Margin of the three highest consecutive years of
EBITDA/Sales Margin within the prior ten years (or since 1992 if less
than 10 years) (the "Three Year Margin"), then the Production Approval
shall be required.
(iv) If the Production Approval is applicable, such
approval shall remain applicable until the Corporation's audited
financial statements for any fiscal year of the Corporation thereafter
disclose that during such fiscal year, the Corporation's EBITDA/Sales
Margin is equal to the greater of (x) 32.5% or (y) 2.5% below the Three
Year Margin. Thereafter, the Production Approval shall not be
applicable until it again becomes applicable pursuant to the provisions
of this clause (c).
(v) All allocations and determinations under this
paragraph (c) shall be made in accordance with GAAP in a manner
consistent with past practices by the Corporation's chief financial
officer as soon as practicable after Corporation's audited financial
statements are made available to the Corporation. When such
determinations are made, the Corporation's auditors shall provide a
certification to the Board as to whether the Programming Approval will
be applicable, such certification to include a statement from the
auditor as to the reasonableness of such allocations and
determinations.
For the purposes of this Article III, Section 12, the following definitions
shall apply:
"Adjusted EBITDA" for any fiscal year means the sum of net income, total
depreciation expense, amortization expense, interest expense, and taxes for such
fiscal year (as determined in conformity with GAAP) of the Corporation's
Univision and Galavision Spanish language broadcast television business, without
giving effect to earnings from Excepted Special Programs.
"Adjusted Sales" for any fiscal year means the net revenue for such fiscal year
as determined in conformity with GAAP) of the Corporation's Univision and
Galavision Spanish language broadcast television business, without giving effect
to sales from Excepted Special Programs.
"EBITDA/Sales Margin" for any fiscal year means the ratio (calculated as a
percentage) of Adjusted EBITDA to Adjusted Sales for such fiscal year.
"Excepted Special Programs" means (i) Special Programs (as defined in the
Amended and Restated Program License Agreements dated as of ____ among The
Univision Network Limited Partnership ("UNLP") and Univisa, Inc. ("Univisa") and
UNLP and Dennevar, B.V.
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("Dennevar"), respectively, that are licensed from Univisa or Dennevar as
contemplated by such agreements including, but not limited to World Cup
telecasts, and (ii) Special Programs, the production or acquisition of which are
approved by a Class T Director or a Class V Director.
"Grandfathered Programs" shall have the meaning given to such term in the
International Rights and License Agreement dated as of ____ among UNLP,
[Televisa] and [Venevision].
"Incremental EBITDA" for any fiscal year means the increase in Adjusted EBITDA
for such fiscal year over the Adjusted EBITDA for the previous fiscal year.
"Incremental Sales" for any fiscal year means the increase in Adjusted Sales for
such fiscal year over the Adjusted Sales for the previous fiscal year.
"New Programs" shall have the meaning given to such term in the International
Rights and License Agreement dated as of ____ among [UNLP], [Televisa] and
[Venevision].
All other capitalized terms not defined shall have the meaning given to such
terms in the Restated Certificate of Incorporation.
ARTICLE IV
OFFICERS
Section 1. Officers. The Corporation shall have a Chairman of
the Board, a President, one or more Vice Presidents, a Secretary and a
Treasurer. The Corporation may also have, at the discretion of the Board, one or
more Assistant Secretaries, one or more Assistant Treasurers and such other
officers as may be elected or appointed in accordance with the provisions of
Section 2 of this Article. Any two or more of such offices may be held by the
same person.
Section 2. Election. The officers of the Corporation shall be
elected annually by the Board and, subject to whatever rights an officer may
have under a contract of employment with the Corporation, all officers shall
serve at the pleasure of the Board.
Section 3. Removal and Resignation. Any officer may be
removed, either with or without cause, by the Board at any time. Any such
removal shall be without prejudice to the rights, if any, of the officer under
any contract of employment of the officer.
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Any officer may resign at any time by giving written notice to
the Corporation, but without prejudice to the rights, if any, of the Corporation
under any contract to which the officer is a party. Any such resignation shall
take effect at the date of the receipt of such notice or at any later time
specified therein and, unless otherwise specified therein, the acceptance of
such resignation shall not be necessary to make it effective.
Section 4. Vacancies. A vacancy in any office because of
death, resignation, removal, disqualification or any other cause shall be filled
in the manner prescribed in these Bylaws for regular election or appointment to
such office.
Section 5. Chairman of the Board. The Chairman of the Board
shall preside at all meetings of the stockholders and of the Board and shall be
the chief executive officer of the Corporation unless the President is the chief
executive officer.
Section 6. President. The President shall be the chief
operating officer of the Corporation and, if designated by the Board, the chief
executive officer of the Corporation. Subject to the control of the Board (and
to the chief executive officer, if the President does not hold such office) and
to the powers vested by the Board in any committee or committees appointed by
the Board, the President shall have general supervision, direction and control
of the business and officers of the Corporation. The President shall have the
general powers and duties of management usually vested in the chief executive
officer of a corporation and shall have such other powers and duties as may be
prescribed by the Board or these Bylaws. Subject to Article III, Section
12(b)(vi), the President shall have the authority to hire and fire all employees
of and consultants to the Corporation and its subsidiaries.
Section 7. Vice Presidents. In the absence or disability of
the President, the Vice Presidents, in order of their rank as fixed by the
Board, or, if not ranked, the Vice President designated by the Board shall
perform all the duties of the President and when so acting shall have all of the
powers of and be subject to all of the restrictions upon the President. The Vice
Presidents shall have such other powers and perform such duties as may be
prescribed for them, respectively, from time to time, by the Board, the
President or these Bylaws.
Section 8. Secretary. The Secretary shall keep, or cause to be
kept, at the principal executive office and such other place as the Board may
order, a book of minutes of all meetings of stockholders, the Board and its
committees, with the time and place of holding, whether regular or special, and
if special, how authorized, the notice thereof given, the names of those present
at Board and committee meetings, the number of shares present or represented at
stockholders' meetings, and the proceedings thereof. The Secretary shall keep,
or cause to be kept, a copy of these Bylaws of the Corporation at the principal
executive office or business office.
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The Secretary shall keep, or cause to be kept, at the
principal executive office or at the office of the Corporation's transfer agent
or registrar, if one be appointed, a share register or a duplicate share
register showing the names of the stockholders and their addresses, the number
and classes of shares held by each, the number and date of certificates issued
for the same, and the number and date of cancellation of every certificate
surrendered for cancellation.
The Secretary shall give, or cause to be given, notice of all
meetings of the stockholders and of the Board and any committees thereof
required by these Bylaws or by law to be given, shall keep the seal of the
Corporation in safe custody, and shall have such other powers and perform such
other duties as may be prescribed by the Board.
Section 9. Treasurer. The Treasurer is the chief financial
officer of the Corporation and shall keep and maintain, or cause to be kept and
maintained, adequate and correct accounts of the properties and business
transactions of the Corporation and shall send or cause to be sent to the
stockholders of the Corporation such financial statements and reports as are by
law or these Bylaws required to be sent to them. The books of account shall at
all times be open to inspection by any director.
The Treasurer shall deposit all moneys and other valuables in
the name and to the credit of the Corporation with such depositaries as may be
designated by the Board. The Treasurer shall disburse the funds of the
Corporation as may be ordered by the Board, shall render to the President and
the directors, whenever they request it, an account of all transactions as
Treasurer and of the financial condition of the Corporation and shall have such
other powers and perform such other duties as may be prescribed by the Board.
ARTICLE V
FORM OF STOCK CERTIFICATE
Every holder of capital stock in the Corporation shall be
entitled to have a certificate signed by, or in the name of, the Corporation by
the President or a Vice President and by the Treasurer or an Assistant Treasurer
or the Secretary or an Assistant Secretary of the Corporation certifying the
number of shares owned by him or her in the Corporation. Any or all of the
signatures on the certificate may be a facsimile. In case any officer, transfer
agent, or registrar who has signed or whose facsimile signature has been placed
upon a certificate shall have ceased to be such officer, transfer agent, or
registrar before such certificate is issued, it may be issued by the Corporation
with the same effect as if he or she were such officer, transfer agent, or
registrar at the date of the issue.
13
<PAGE> 14
ARTICLE VI
REPRESENTATION OF SHARES OF OTHER CORPORATIONS
The chief executive officer or any other officer or officers
authorized by the Board are each authorized to vote, represent, and exercise on
behalf of the Corporation all rights incident to any and all shares of any other
corporation or corporations standing in the name of the Corporation. The
authority herein granted may be exercised either by any such officer in person
or by any other person authorized so to do by proxy or power of attorney duly
executed by said officer.
ARTICLE VII
TRANSFERS OF STOCK
Subject to any restrictions on transfer applicable thereto,
upon surrender to the Corporation or a transfer agent of the Corporation of a
certificate for shares duly endorsed or accompanied by proper evidence of
succession, assignment, or authority to transfer, it shall be the duty of the
Corporation to issue a new certificate to the person entitled thereto, cancel
the old certificate, and record the transaction upon its books.
ARTICLE VIII
LOST, STOLEN, OR DESTROYED CERTIFICATES
The Corporation may direct a new certificate or certificates
to be issued in place of any certificate or certificates theretofore issued by
the Corporation alleged to have been lost, stolen, or destroyed, upon the making
of an affidavit of the fact by the person claiming the certificate of stock to
be lost, stolen, or destroyed. When authorizing such issue of a new certificate
or certificates, the Board may, in its discretion and as a condition precedent
to the issuance thereof, require the owner of such lost, stolen, or destroyed
certificate or certificates, or his or her legal representative, to give the
Corporation a bond in such sum as it may direct as indemnity against any claim
that may be made against the Corporation with respect to the certificate alleged
to have been lost, stolen, or destroyed.
14
<PAGE> 15
ARTICLE IX
RECORD DATE
In order that the Corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the Board may fix a record date, which record date shall
not precede the date upon which the resolution fixing the record date is adopted
by the Board and which record date: (1) in the case of determination of
stockholders entitled to vote at any meeting of stockholders or adjournment
thereof, shall, unless otherwise required by law, not be more than sixty nor
less than ten days before the date of such meeting; (2) in the case of
determination of stockholders entitled to express consent to corporate action in
writing without a meeting, shall not be more than ten days from the date upon
which the resolution fixing the record date is adopted by the Board; and (3) in
the case of any other action, shall not be more than sixty days prior to such
other action. If no record date is fixed: (1) the record date for determining
stockholders entitled to notice of or to vote at a meeting of stockholders shall
be at the close of business on the day next preceding the day on which notice is
given, or, if notice is waived, at the close of business on the day next
preceding the day on which the meeting is held; (2) the record date for
determining stockholders entitled to express consent to corporate action in
writing without a meeting when no prior action of the Board is required by law,
shall be the first date on which a signed written consent setting forth the
action taken or proposed to be taken is delivered to the Corporation in
accordance with applicable law, or, if prior action by the Board is required by
law, shall be at the close of business on the day on which the Board adopts the
resolution taking such prior action; and (3) the record date for determining
stockholders for any other purpose shall be at the close of business on the day
on which the Board adopts the resolution relating thereto. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided, however,
that the Board may fix a new record date for the adjourned meeting.
ARTICLE X
REGISTERED STOCKHOLDERS
The Corporation shall be entitled to treat the holder of
record of any share or shares of stock as the holder in fact thereof and,
accordingly, shall not be bound to recognize any equitable or other claim to or
interest in such share on the part of any other person, whether or not it shall
have express or other notice thereof, save as expressly provided by applicable
law.
15
<PAGE> 16
ARTICLE XI
NOTICES
Section 1. Manner of Notice. Whenever under the provisions of
applicable law, the Restated Certificate of Incorporation or these Bylaws,
notice is required to be given to any director, committee member, officer, or
stockholder, it shall not be construed to mean personal notice, but such notice
may be given, in the case of stockholders, in writing, by mail, by depositing
the same in the post office or letter box, in a postpaid sealed wrapper,
addressed to such stockholder, at such address as appears on the books of the
Corporation, and, in the case of directors, committee members and officers, by
telephone, by telecopy or other electronic transmission, or by recognized
delivery service to the last business address known to the Secretary of the
Corporation, and such notice shall be deemed to be given at the time when the
same shall be thus mailed, telephoned, telecopied, or transmitted or delivered.
Section 2. Waiver of Notice. Whenever any notice is required
to be given under the provisions of applicable law, the Restated Certificate of
Incorporation or these Bylaws, a waiver thereof in writing, signed by the person
or persons entitled to said notice, whether before or after the time stated
therein, shall be deemed equivalent thereto.
ARTICLE XII
AMENDMENTS
Subject to the provisions of the Restated Certificate of
Incorporation and Article III, Sections 12(a) and (b) of these Bylaws, the Board
shall have the power to make, adopt, alter, amend and repeal from time to time
these Bylaws, subject to the right of the stockholders entitled to vote with
respect thereto to adopt, alter, amend, and repeal Bylaws made by the Board,
provided no amendment made by the Board may adversely affect the rights accorded
to the holders of the Class T Common Stock or the Class V Common Stock which
affects such class differently from the other classes of Common Stock of the
Corporation without the consent of a majority of the Class T Directors (unless a
Class T Voting Conversion has occurred) and a majority of the Class V Directors
(unless a Class V Voting Conversion has occurred), as the case may be.
16
<PAGE> 17
ARTICLE XIII
MISCELLANEOUS
Section 1. Fiscal Year. The fiscal year of the Corporation
shall be determined by resolution of the Board.
Section 2. Seal. The corporate seal shall have the name of
the Corporation inscribed thereon and shall be in such form as may be approved
from time to time by the Board.
Section 3. Waiver of Notice of Meetings of Stockholders,
Directors and Committees. Any written waiver of notice, signed by the person
entitled to notice, whether before or after the time stated therein, shall be
deemed equivalent to notice. Attendance of a person at a meeting shall
constitute a waiver of notice of such meeting, except when the person attends a
meeting for the express purpose of objecting, at the beginning of the meeting,
to the transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at nor the purpose of any
regular or special meeting of the stockholders, directors, or members of a
committee of directors need be specified in any written waiver of notice.
Section 4. Form of Records. Any records maintained by the
Corporation in the regular course of its business, including its stock ledger,
books of account, and minute books, may be kept on, or be in the form of, punch
cards, magnetic tape, photographs, microphotographs, or any other information
storage device, provided that the records so kept can be converted into clearly
legible form within a reasonable time.
17
<PAGE> 18
CERTIFICATE OF SECRETARY
of
UNIVISION COMMUNICATIONS INC.
a Delaware corporation
I hereby certify that I am the duly elected and acting
secretary of said corporation and that the foregoing Bylaws constitute the
Bylaws of said corporation as duly adopted by the Board of Directors on
_________ ___, 1996.
Dated: __________________ ____________________________
Secretary
<PAGE> 19
BYLAWS
OF
UNIVISION COMMUNICATIONS INC.
a Delaware corporation
<PAGE> 20
BYLAWS
OF
UNIVISION COMMUNICATIONS INC.
a Delaware corporation
<TABLE>
<CAPTION>
Table of Contents
-----------------
Page
----
<S> <C> <C>
ARTICLE I Offices................................................................ 1
ARTICLE II Meetings of Stockholders............................................... 1
ARTICLE III Directors.............................................................. 4
ARTICLE IV Officers............................................................... 6
ARTICLE V Form of Stock Certificate.............................................. 9
ARTICLE VI Representation of Shares of
Other Corporations................................................... 9
ARTICLE VII Transfers of Stock .................................................... 10
ARTICLE VIII Lost, Stolen, or Destroyed Certificates............................... 10
ARTICLE IX Record Date............................................................ 10
ARTICLE X Registered Stockholders................................................ 11
ARTICLE XI Notices................................................................ 11
ARTICLE XII Amendments............................................................. 12
ARTICLE XIII Miscellaneous.......................................................... 12
</TABLE>
i
<PAGE> 1
Exhibit 4.1
[SPECIMEN STOCK CERTIFICATE]
THE TRANSFERABILITY OF THESE SHARES IS SUBJECT TO
THE CONDITIONS SET FORTH ON THE REVERSE SIDE
CLASS A CLASS A
COMMON STOCK COMMON STOCK
PAR VALUE $.01 PAR VALUE $.01
NUMBER SHARES
UC [ ] [ ]
INCORPORATED UNDER THE LAWS SEE REVERSE FOR
OF THE STATE OF DELAWARE CERTAIN DEFINITIONS
DOMESTIC SHARE
CERTIFICATE UNIVISION COMMUNICATIONS INC. CUSIP 914906 10 2
THIS CERTIFIES THAT
IS THE RECORD HOLDER OF
FULLY PAID AND NONASSESSABLE SHARES OF THE CLASS A COMMON STOCK OF
Univision Communications Inc., transferable on the books of the Corporation in
person or by duly authorized attorney upon surrender of this Certificate
properly endorsed. This Certificate is not valid until countersigned by the
Transfer Agent and registered by the Registrar.
[CERTIFICATE OF STOCK]
Witness the facsimile seal of the Corporation and
the facsimile signatures of its duly authorized officers.
[UNIVISION COMMUNICATIONS INC.]
[ CORPORATE SEAL ]
[ 1992 ]
[ DELAWARE ]
Dated:
/s/ Robert Cahill /s/ Illegible Signature
SECRETARY PRESIDENT
COUNTERSIGNED AND REGISTERED:
THE BANK OF NEW YORK
TRANSFER AGENT AND REGISTRAR
BY
AUTHORIZED SIGNATURE
<PAGE> 2
The Corporation will furnish without charge to each stockholder who so
requests the powers, designations, preferences and relative, participating,
optional, or other special rights of each class of stock or series thereof and
the qualifications, limitations or restrictions of such preferences and/or
rights. Such requests shall be made to the Corporation's Secretary at the
principal office of the Corporation.
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM -- as tenants in common
TEN ENT -- as tenants by the entireties
JT TEN -- as joint tenants with right of survivorship
and not as tenants in common
UNIF GIFT MIN ACT -- _________________Custodian____________________
(Cust) (Minor)
under Uniform Gifts to Minors
Act __________________________________________
(State)
UNIF TRF MIN ACT -- _________________Custodian (until age________)
(Cust)
_______________________under Uniform Transfers
(Minor)
to Minors Act_________________________________
(State)
Additional abbreviations may also be used though not in the above list.
FOR VALUE RECEIVED, __________________hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
_____________________________________
_____________________________________
____________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________Shares
of the common stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint
___________________________________________________________________Attorney
to transfer the said stock on the books of the within named Corporation with
full power of substitution in the premises.
Dated_________________________
X _________________________________________
X _________________________________________
NOTICE: THE SIGNATURE(S) TO THIS ASSIGNMENT MUST
CORRESPOND WITH THE NAME(S) AS WRITTEN UPON
THE PAGE OF THE CERTIFICATE IN EVERY
PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT
OR ANY CHANGE WHATEVER.
Signature(s) Guaranteed
By__________________________________________________
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE
GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS
AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP
IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM,
PURSUANT TO S.E.C. RULE 17AB16.
===============================================================================
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE REDEEMABLE BY THE
COMPANY UPON THE OCCURRENCE OF CERTAIN EVENTS AS SET FORTH IN THE RESTATED
CERTIFICATE OF INCORPORATION OF THE COMPANY, AS AMENDED FROM TIME TO TIME (A
COPY OF WHICH IS ON FILE WITH THE TRANSFER AGENT).
NO TRANSFER OF THE SHARES REPRESENTED BY THIS CERTIFICATE WILL BE
REGISTERED ON THE BOOKS OF THE CORPORATION UNLESS AN APPLICATION FOR TRANSFER
OF SHARES HAS BEEN EXECUTED BY THE ASSIGNEE. ANY ASSIGNEE WHO CANNOT EXECUTE
THE APPLICATION SET FORTH BELOW SHOULD CONTACT THE TRANSFER AGENT WHO WILL
PROVIDE AN ALTERNATIVE FORM OF TRANSFER APPLICATION FREE OF CHARGE.
===============================================================================
APPLICATION FOR TRANSFER OF SHARES OF COMMON STOCK
THE UNDERSIGNED ASSIGNEE HEREBY MAKES APPLICATION FOR THE TRANSFER TO
THE NAME OF THE UNDERSIGNED OF THE SHARES OF COMMON STOCK REPRESENTED BY THE
WITHIN CERTIFICATE ("THE SHARES") AND HEREBY CERTIFIES TO UNIVISION
COMMUNICATIONS INC. THAT:
(1) ASSIGNEE IS A UNITED STATES CITIZEN AND IS NOT THE REPRESENTATIVE
OF AN ALIEN OR A FOREIGN GOVERNMENT
(2) IF ASSIGNEE HOLDS THE SHARES AS THE NOMINEE OF, OR SUBJECT TO THE
DIRECTION OR CONTROL OF, ANY OTHER PERSON, SUCH PERSON IS A UNITED
STATES CITIZEN AND IS NOT THE REPRESENTATIVE OF AN ALIEN OR A
FOREIGN GOVERNMENT
__________________________ ________________________________________
DATE NAME OF ASSIGNEE (PLEASE PRINT)
________________________________________
SIGNATURE
________________________________________
TITLE (IF APPLICABLE)
<PAGE> 3
[SPECIMEN STOCK CERTIFICATE]
THE TRANSFERABILITY OF THESE SHARES IS SUBJECT TO
THE CONDITIONS SET FORTH ON THE REVERSE SIDE
CLASS A CLASS A
COMMON STOCK COMMON STOCK
PAR VALUE $.01 PAR VALUE $.01
NUMBER SHARES
FC [ ] [ ]
INCORPORATED UNDER THE LAWS SEE REVERSE FOR
OF THE STATE OF DELAWARE CERTAIN DEFINITIONS
FOREIGN SHARE
CERTIFICATE UNIVISION COMMUNICATIONS INC. CUSIP 914906 10 2
THIS CERTIFIES THAT
IS THE RECORD HOLDER OF
FULLY PAID AND NONASSESSABLE SHARES OF THE CLASS A COMMON STOCK OF
Univision Communications Inc., transferable on the books of the Corporation in
person or by duly authorized attorney upon surrender of this Certificate
properly endorsed. This Certificate is not valid until countersigned by the
Transfer Agent and registered by the Registrar.
[CERTIFICATE OF STOCK]
Witness the facsimile seal of the Corporation and
the facsimile signatures of its duly authorized officers.
[UNIVISION COMMUNICATIONS INC.]
[ CORPORATE SEAL ]
[ 1992 ]
[ DELAWARE ]
Dated:
/s/ Robert Cahill /s/ Illegible Signature
SECRETARY PRESIDENT
COUNTERSIGNED AND REGISTERED:
THE BANK OF NEW YORK
TRANSFER AGENT AND REGISTRAR
BY
AUTHORIZED SIGNATURE
<PAGE> 4
The Corporation will furnish without charge to each stockholder who so
requests the powers, designations, preferences and relative, participating,
optional, or other special rights of each class of stock or series thereof and
the qualifications, limitations or restrictions of such preferences and/or
rights. Such requests shall be made to the Corporation's Secretary at the
principal office of the Corporation.
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM -- as tenants in common
TEN ENT -- as tenants by the entireties
JT TEN -- as joint tenants with right of survivorship
and not as tenants in common
UNIF GIFT MIN ACT -- _________________Custodian____________________
(Cust) (Minor)
under Uniform Gifts to Minors
Act __________________________________________
(State)
UNIF TRF MIN ACT -- _________________Custodian (until age________)
(Cust)
_______________________under Uniform Transfers
(Minor)
to Minors Act_________________________________
(State)
Additional abbreviations may also be used though not in the above list.
FOR VALUE RECEIVED, __________________hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
_____________________________________
_____________________________________
____________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________Shares
of the common stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint
___________________________________________________________________Attorney
to transfer the said stock on the books of the within named Corporation with
full power of substitution in the premises.
Dated_________________________
X _________________________________________
X _________________________________________
NOTICE: THE SIGNATURE(S) TO THIS ASSIGNMENT MUST
CORRESPOND WITH THE NAME(S) AS WRITTEN UPON
THE PAGE OF THE CERTIFICATE IN EVERY
PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT
OR ANY CHANGE WHATEVER.
Signature(s) Guaranteed
By__________________________________________________
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE
GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS
AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP
IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM,
PURSUANT TO S.E.C. RULE 17AB16.
===============================================================================
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE REDEEMABLE BY THE
COMPANY UPON THE OCCURRENCE OF CERTAIN EVENTS AS SET FORTH IN THE RESTATED
CERTIFICATE OF INCORPORATION OF THE COMPANY, AS AMENDED FROM TIME TO TIME (A
COPY OF WHICH IS ON FILE WITH THE TRANSFER AGENT).
NO TRANSFER OF THE SHARES REPRESENTED BY THIS CERTIFICATE WILL BE
REGISTERED ON THE BOOKS OF THE CORPORATION UNLESS AN APPLICATION FOR TRANSFER
OF SHARES HAS BEEN EXECUTED BY THE ASSIGNEE. ANY ASSIGNEE WHO CANNOT EXECUTE
THE APPLICATION SET FORTH BELOW SHOULD CONTACT THE TRANSFER AGENT WHO WILL
PROVIDE AN ALTERNATIVE FORM OF TRANSFER APPLICATION FREE OF CHARGE.
===============================================================================
APPLICATION FOR TRANSFER OF SHARES OF COMMON STOCK
THE UNDERSIGNED ASSIGNEE HEREBY MAKES APPLICATION FOR THE TRANSFER TO
THE NAME OF THE UNDERSIGNED OF THE SHARES OF COMMON STOCK REPRESENTED BY THE
WITHIN CERTIFICATE ("THE SHARES") AND HEREBY CERTIFIES TO UNIVISION
COMMUNICATIONS INC. THAT:
(1) ASSIGNEE IS A UNITED STATES CITIZEN AND IS NOT THE REPRESENTATIVE
OF AN ALIEN OR A FOREIGN GOVERNMENT
(2) IF ASSIGNEE HOLDS THE SHARES AS THE NOMINEE OF, OR SUBJECT TO THE
DIRECTION OR CONTROL OF, ANY OTHER PERSON, SUCH PERSON IS A UNITED
STATES CITIZEN AND IS NOT THE REPRESENTATIVE OF AN ALIEN OR A
FOREIGN GOVERNMENT
__________________________ ________________________________________
DATE NAME OF ASSIGNEE (PLEASE PRINT)
________________________________________
SIGNATURE
________________________________________
TITLE (IF APPLICABLE)
<PAGE> 1
[O'MELVENY & MYERS LLP LETTERHEAD] EXHIBIT 5.1
July 24th 1996
Writers Direct Dial Number
(310) 553-6700 Our File Number
884,097-026
Univision Communications Inc.
1999 Avenue of the Stars, Suite 3050
Los Angeles, CA 90067
Dear Ladies and Gentlemen:
In connection with the registration of up to 8,912,500 shares of
Class A Common Stock of Univision Communications Inc. (the "Company"), par value
$0.01 per share (the "Shares"), under the Securities Act of 1933, as amended
(the "Act"), pursuant to a Registration Statement on Form S-1 (the "Registration
Statement"), filed with the Securities and Exchange Commission on June 19, 1996,
to be sold by the Company, you have requested our opinion with respect to the
matters set forth below.
We have examined such matters of fact and questions of law as we
have considered appropriate for purposes of rendering the opinion expressed
below.
We are opining herein as to the effect on the subject transaction of
only the General Corporation Law of the State of Delaware and we express no
opinion with respect to the applicability thereto for the effect thereon of any
other laws or as to any matters of municipal law or any other local agencies
within any state.
Subject to the foregoing and in reliance thereon, it is our opinion
that the Shares have been duly authorized by all necessary corporate action on
the part of the Company and, upon payment for and delivery of the Shares as
contemplated in the Registration Statement and the countersigning of the
certificate or certificates representing the Shares by a duly authorized
signatory of the registrar for the Company's Common Stock, the Shares will be
validly issued, fully paid and non-assessable.
/s/ O'Melveny & Myers LLP
<PAGE> 1
EXHIBIT 10.1
UNIVISION COMMUNICATIONS INC.
INDEMNIFICATION AGREEMENT
This Indemnification Agreement (this "Agreement") is made as of
___________________, by and between Univision Communications Inc., a Delaware
corporation (the "Company"), and the individual whose name appears below the
word "Indemnitee" on the signature page hereto (the "Indemnitee"), a director
and/or officer of the Company.
BACKGROUND
A. The Indemnitee has agreed to serve as a director and/or officer of
the Company and in such capacity has rendered and/or will render valuable
services to the Company.
B. The Company has investigated the availability and sufficiency of
liability insurance and Delaware statutory indemnification provisions to provide
its directors and officers with adequate protection against various legal risks
and potential liabilities to which directors and officers are subject due to
their position with the Company and has concluded that insurance and statutory
provisions may provide inadequate and unacceptable protection to certain
individuals requested to serve as its directors and officers.
C. In order to induce and encourage highly experienced and capable
persons such as the Indemnitee to serve as a director and/or officer of the
Company, the Board of Directors has determined, after due consideration and
investigation of the terms and provisions of this Agreement and the various
other options available to the Company and the Indemnitee in lieu of this
Agreement, that this Agreement is not only reasonable and prudent but necessary
to promote and ensure the best interests of the Company and its stockholders.
1
<PAGE> 2
AGREEMENT
In consideration of the continued services of the Indemnitee and in
order to induce the Indemnitee to continue to serve as a director and/or
officer, the Company and the Indemnitee agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement:
(a) A "Change in Control" shall be deemed to have occurred if
(i) any "person" (as that term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")), other than a
trustee or other fiduciary holding securities under an employee benefit plan of
the Company or a corporation owned directly or indirectly by the stockholders of
the Company in substantially the same proportions as their ownership of stock of
the Company, is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the Company
representing 20% or more of the total voting power represented by the Company's
then outstanding voting securities, or (ii) during any period of two consecutive
years, individuals who at the beginning of the two year period constitute the
Board of Directors of the Company and any new director whose election by the
Board of Directors or nomination for election by the Company's stockholders was
approved by a vote of at least two-thirds (2/3) of the directors then still in
office who either were directors at the beginning of the period or whose
election or nomination for election was previously so approved, cease for any
reason to constitute a majority of the Board of Directors, or (iii) the
stockholders of the Company approve a merger or consolidation of the Company
with any other corporation, other than a merger or consolidation which would
result in the voting securities of the Company outstanding immediately prior to
such a merger or consolidation continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving
entity)
2
<PAGE> 3
at least 80% of the total voting power represented by the voting securities of
the Company or the surviving entity outstanding immediately after the merger or
consolidation, or the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company (in one transaction or a series of transactions) of all or substantially
all the Company's assets.
(b) The term "Expenses" includes, without limitation,
attorneys' fees, disbursements and retainers, accounting and witness fees,
travel and deposition costs, expenses of investigations, judicial or
administrative proceedings or appeals, amounts paid in settlement by or on
behalf of Indemnitee, and any expenses of establishing a right to
indemnification, pursuant to this Agreement. The term "Expenses" does not
include the amount of judgments, fines, penalties or ERISA excise taxes actually
levied against the Indemnitee.
(c) A "Potential Change in Control" shall be deemed to have
occurred if (i) the Company enters into an agreement or arrangement, the
consummation of which would result in the occurrence of a Change in Control;
(ii) any person (including the Company) publicly announces an intention to take
or to consider taking actions which if consummated would constitute a Change in
Control; (iii) any person (other than a trustee or other fiduciary holding
securities under an employee benefit plan of the Company acting in such capacity
or a corporation owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their ownership of stock of the
Company), who is or becomes the beneficial owner, directly or indirectly, of
securities of the Company representing 10% or more of the combined voting power
of the Company's then outstanding voting securities increases his or her
beneficial ownership of the securities by 5% or more over the percentage so
owned by that person on the date this Agreement is executed; or (iv) the Board
adopts a resolution to the effect that, for purposes of this Agreement, a
Potential Change in Control has occurred.
3
<PAGE> 4
(d) The term "Proceeding" shall include any threatened,
pending or completed action, suit or proceeding, whether brought by or in the
name of the Company or otherwise and whether of a civil, criminal or
administrative or investigative nature, by reason of the fact that the
Indemnitee is or was a director, officer, employee or agent of the Company, or
is or was serving at the request of the Company as a director, officer, employee
or agent of another enterprise, whether or not he or she is serving in such
capacity at the time any liability or Expense is incurred for which
indemnification or reimbursement is to be provided under this Agreement.
SECTION 2. INDEMNIFICATION
2.1 INDEMNIFICATION IN THIRD PARTY ACTIONS
The Company shall indemnify the Indemnitee if the Indemnitee is a party
to or is threatened to be made a party to, or is a witness or other participant
in, or is otherwise involved in any Proceeding (other than a Proceeding by or in
the name of the Corporation to procure a judgment in its favor), by reason of
the fact that the Indemnitee is or was a director, officer, employee or agent of
the Company, or is or was serving at the request of the Company as a director,
officer, employee or agent of another enterprise against all Expenses,
judgments, fines, penalties and ERISA excise tax actually and reasonably
incurred by the Indemnitee in connection with the defense or settlement of the
Proceeding, to the fullest extent permitted by applicable law; provided that any
settlement be approved in writing by the Company.
2.2 INDEMNIFICATION IN PROCEEDINGS BY OR IN THE NAME OF THE COMPANY
The Company shall indemnify the Indemnitee if the Indemnitee is a party
to or is threatened to be made a party to, or is a witness or other participant
in, or is otherwise involved in any Proceeding by or in the name of the Company
to procure a judgment in its favor by reason of the fact that Indemnitee was or
is a director, officer, employee or agent of the Company, or is or was serving
at the request of the Company as a director, officer, employee or agent of
another enterprise, against all Expenses
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actually and reasonably incurred by Indemnitee in connection with the defense or
settlement of the Proceeding, to the fullest extent permitted by applicable law.
2.3 PARTIAL INDEMNIFICATION
If the Indemnitee is entitled under any provision of this Agreement to
indemnification by the Company for some or a portion of, but not the total
amount of, the Expenses, judgments, fines, penalties or ERISA excise taxes
actually and reasonably incurred by him or her in the investigation, defense,
appeal or settlement of any Proceeding, the Company shall nevertheless indemnify
the Indemnitee for the portion of the Expenses, judgments, fines, penalties or
ERISA excise taxes to which the Indemnitee is entitled.
2.4 INDEMNIFICATION HEREUNDER NOT EXCLUSIVE
The indemnification provided by this Agreement shall not be deemed
exclusive of any other rights to which the Indemnitee may be entitled under the
Articles of Incorporation, the Bylaws, any agreement, any vote of stockholders
or disinterested directors, applicable law, or otherwise, both as to action in
his or her official capacity and as to action in another capacity on behalf of
the Company while holding office.
2.5 INDEMNIFICATION OF EXPENSES OF SUCCESSFUL PARTY
Notwithstanding any other provisions of this Agreement, to the extent
that the Indemnitee has been successful in defense of any Proceeding or in
defense of any claim, issue or matter in the Proceeding, on the merits or
otherwise, including the dismissal of a Proceeding without prejudice, the
Indemnitee shall be indemnified against all Expenses incurred in connection
therewith to the fullest extent permitted by applicable law.
SECTION 3. PRESUMPTIONS
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3.1 PRESUMPTION REGARDING STANDARD OF CONDUCT
The Indemnitee shall be conclusively presumed to have met the relevant
standards of conduct as defined by applicable law for indemnification pursuant
to this Agreement, unless a determination that the Indemnitee has not met the
relevant standards is made by (i) the Board of Directors of the Company by a
majority vote of a quorum consisting of directors who were not parties to the
Proceedings, (ii) the stockholders of the Company by majority vote, or (iii) in
a written opinion by independent legal counsel, selection of whom has been
approved by the Indemnitee in writing.
3.2 DETERMINATION OF RIGHT TO INDEMNIFICATION
If a claim under this Agreement is not paid by the Company within 30
days of receipt of written notice, the right to indemnification as provided by
this Agreement shall be enforceable by the Indemnitee in any court of competent
jurisdiction. The burden of proving by clear and convincing evidence that
indemnification or advances are not appropriate shall be on the Company. Neither
the failure of the directors nor stockholders of the Company or independent
legal counsel to have made a determination prior to the commencement of the
action that indemnification or advances are proper in the circumstances because
the Indemnitee has met the applicable standard of conduct, nor an actual
determination by the directors or stockholders of the Company nor independent
legal counsel that the Indemnitee has not met the applicable standard of
conduct, shall be a defense to the action or create a presumption that the
Indemnitee has not met the applicable standard of conduct.
(a) The Indemnitee's Expenses incurred in connection with any
Proceeding concerning his or her right to indemnification or advances in whole
or in part pursuant to this Agreement shall also be indemnified by the Company
regardless of the outcome of the Proceeding, unless a court of competent
jurisdiction determines that each of the material assertions made by the
Indemnitee in the Proceeding was not made in good faith or was frivolous.
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SECTION 4. ADVANCES OF EXPENSES
The Expenses incurred by the Indemnitee in any Proceeding shall be paid
promptly by the Company in advance of the final disposition of the Proceeding at
the written request of the Indemnitee to the fullest extent permitted by
applicable law. Indemnitee hereby undertakes to repay such amounts advanced only
if, and to the extent that, it shall be determined ultimately that Indemnitee is
not entitled to be indemnified by the Company pursuant to this Agreement. The
advances to be made hereunder shall be paid by the Company to Indemnitee within
(30) days following delivery of the referenced written request by Indemnitee to
the Company.
SECTION 5. CHANGE IN CONTROL
The Company agrees that if there is a Change in Control or a Potential
Change in Control of the Company (other than a Change in Control or Potential
Change in Control which has been approved by a majority of the Company's Board
of Directors who were directors immediately prior to the Change in Control or
Potential Change in Control) then with respect to all matters thereafter arising
concerning the rights of Indemnitee to indemnity payments and Expense advances
under this Agreement or any other agreement, the Company's Articles of
Incorporation, or the Company's Bylaws in effect relating to claims for
indemnifiable events, the Company shall seek legal advice only from independent
counsel selected by Indemnitee, and reasonably satisfactory to the Company, and
who has not otherwise performed services for the Company or Indemnitee within
the last five years (other than in connection with such matters) ("Special
Independent Counsel"). The Special Independent Counsel, among other things,
shall render its written opinion to the Company and Indemnitee as to whether and
to what extent the Indemnitee would be permitted to be indemnified under
applicable law. The Company agrees to pay the reasonable fees of the Special
Independent Counsel referred to above and may fully indemnify the Special
Independent Counsel against any and all
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expenses (including attorneys' fees), claims, liabilities and damages arising
out of or relating to this Agreement.
SECTION 6. INDEMNIFICATION PROCEDURE
6.1 NOTICE
Promptly after receipt by the Indemnitee of notice of the commencement
of any Proceeding, the Indemnitee will, if a claim is to be made against the
Company under this Agreement, notify the Company of the commencement of the
Proceeding. The omission to notify the Company will not relieve it from any
liability which it may have to the Indemnitee otherwise than under this
Agreement.
6.2 COMPANY PARTICIPATION
With respect to any Proceeding for which indemnification is requested,
the Company will be entitled to participate in the Proceeding at its own expense
and, except as otherwise provided below, to the extent that it may wish, the
Company may assume the defense of the Proceeding, with counsel reasonably
satisfactory to the Indemnitee. After notice from the Company to the Indemnitee
of its election to assume the defense of a Proceeding, during the Company's good
faith active defense the Company will not be liable to the Indemnitee under this
Agreement for any legal or other expenses subsequently incurred by the
Indemnitee in connection with the defense of the Proceeding, other than
reasonable costs of investigation or as otherwise provided below. The Company
shall not settle any Proceeding in any manner which would impose any penalty or
limitation on the Indemnitee without the Indemnitee's written consent. The
Indemnitee shall have the right to employ his or her counsel in any Proceeding
but the fees and expenses of the counsel incurred after notice from the Company
of its assumption of the defense of the Proceeding shall be at the expense of
the Indemnitee, unless (i) the employment of counsel by the Indemnitee has been
authorized by the Company, (ii) the Indemnitee shall have reasonably concluded
that there may be a conflict of interest between the Company and the Indemnitee
in the conduct of the
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defense of a Proceeding, or (iii) the Company shall not in fact have employed
counsel to assume the defense of a Proceeding, in each of which cases the fees
and expenses of the Indemnitee's counsel shall be at the expense of the Company.
The Company shall not be entitled to assume the defense of any Proceeding
brought by or on behalf of the Company or as to which the Indemnitee has made
the conclusion that there may be a conflict of interest between the Company and
the Indemnitee.
6.3 SUBROGATION
In the event of payment of Expenses under this Agreement, the Company
shall be subrogated to the extent of such payment to all of the rights of
recovery of Indemnitee vis a vis a third party, and Indemnitee shall do all
things that may be necessary to secure such rights, including the execution of
such documents necessary to enable the Company effectively to bring suit to
enforce such rights.
SECTION 7. LIMITATIONS ON INDEMNIFICATION
No payments pursuant to this Agreement shall be made by the Company:
(a) to indemnify or advance Expenses to the Indemnitee with respect to
Proceedings initiated or brought voluntarily by the Indemnitee and not by way of
defense, except with respect to Proceedings brought to establish or enforce a
right to indemnification under this Agreement or any other statute or law or
otherwise as required under applicable law, but the indemnification or
advancement of Expenses may be provided by the Company in specific cases if the
Board of Directors finds it to be appropriate;
(b) to indemnify the Indemnitee for any Expenses, judgments, fines,
penalties or ERISA excise taxes for which payment is actually made to the
Indemnitee under a valid and collectible insurance policy, except in respect of
any excess beyond the amount of payment under the insurance;
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(c) to indemnify the Indemnitee for any Expenses, judgments, fines or
penalties sustained in any Proceeding for an accounting of profits made from the
purchase or sale by Indemnitee of securities of the Company pursuant to the
provisions of Section 16(b) of the Securities Exchange Act of 1934, the rules
and regulations promulgated thereunder and amendments thereto or similar
provisions of any federal, state or local statutory law;
(d) to indemnify the Indemnitee for any Expenses, judgments, fines,
penalties or ERISA excise taxes resulting from Indemnitee's conduct which is
finally adjudged to have been willful misconduct, knowingly fraudulent or
deliberately dishonest; or
(e) if a court of competent jurisdiction shall finally determine that
any indemnification hereunder is unlawful.
SECTION 8. MAINTENANCE OF LIABILITY INSURANCE
8.1 AFFIRMATIVE COVENANT OF THE COMPANY
The Company covenants and agrees that, as long as the Indemnitee shall
continue to serve as a director of the Company and thereafter so long as the
Indemnitee shall be subject to any possible Proceeding, the Company, subject to
subsection 8.3 of this Agreement, shall promptly obtain and maintain in full
force and effect directors' and officers' liability insurance ("D&O Insurance")
in reasonable amounts from established and reputable insurers.
8.2 INDEMNITEE NAMED AS INSURED
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In all D&O Insurance policies, the Indemnitee shall be named as an
insured in a manner that provides the Indemnitee the same rights and benefits as
are accorded to the most favorably insured of the Company's directors.
8.3 EXEMPTION FROM MAINTENANCE OF INSURANCE
Notwithstanding the foregoing, the Company shall have no obligation to
obtain or maintain D&O Insurance if the Company determines in good faith that
insurance is not reasonably available, the premium costs for insurance are
disproportionate to the amount of coverage provided, the coverage provided by
insurance is so limited by exclusions that it provides an insufficient benefit,
or the Indemnitee is covered by similar insurance maintained by a subsidiary of
the Company.
SECTION 9. MISCELLANEOUS
9.1 AGREEMENT TO SERVE
Indemnitee agrees to serve or continue to serve as a director and/or
officer of the Company for so long as he or she is duly elected or appointed or
until such time as he or she voluntarily resigns. Indemnitee agrees to tender
written notice to the Company at least thirty (30) days prior to voluntarily
resigning.
9.2 EFFECT OF THIS AGREEMENT ON EMPLOYMENT AGREEMENT
The terms of any existing employment agreement between the Indemnitee
and the Company shall continue in effect but shall be modified or supplemented
by the terms of this Agreement. Nothing contained in this Agreement is intended
to create in Indemnitee any right of continued employment.
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9.3 SUCCESSORS AND ASSIGNS
This Agreement shall be binding upon, and shall inure to the benefit of
the Indemnitee and his or her heirs, personal representatives and assigns, and
the Company and its successors and assigns.
9.4 SEPARABILITY
Each provision of this Agreement is a separate and distinct agreement
and independent of the others, so that if any provision of this Agreement shall
be held to be invalid or unenforceable for any reason, the invalidity or
unenforceability shall not affect the validity or enforceability of the other
provisions of this Agreement. To the extent required, any provision of this
Agreement may be modified by a court of competent jurisdiction to preserve its
validity and to provide the Indemnitee with the broadest possible
indemnification permitted under applicable law.
9.5 SAVINGS CLAUSE
If this Agreement or any portion of it is invalidated on any ground by
any court of competent jurisdiction, then the Company shall nevertheless
indemnify Indemnitee as to Expenses, judgments, fines, penalties or ERISA excise
taxes with respect to any Proceeding to the full extent permitted by any
applicable portion of this Agreement that shall not have been invalidated or by
any other applicable law.
9.6 INTERPRETATION; GOVERNING LAW
This Agreement shall be construed as a whole and in accordance with its
fair meaning. Headings are for convenience only and shall not be used in
construing meaning. This Agreement shall be governed and interpreted in
accordance with the laws of the State of Delaware.
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9.7 AMENDMENTS
No amendment, waiver, modification, termination or cancellation of this
Agreement shall be effective unless in writing signed by the party against whom
enforcement is sought. The indemnification rights afforded to the Indemnitee by
this Agreement are contract rights and may not be diminished, eliminated or
otherwise affected by amendments to the Company's Certificate of Incorporation,
Bylaws or agreements including D&O Insurance policies.
9.8 COUNTERPARTS
This Agreement may be executed in one or more counterparts, all of
which shall be considered one and the same agreement and shall become effective
when one or more counterparts have been signed by each party and delivered to
the other.
9.9 NOTICES
Any notice to be given hereunder shall be directed as follows (or to
another address as either shall designate in writing):
If to Univision Communications Inc.:
1999 Avenue of the Stars, Suite 3050
Los Angeles, CA 90067
Attention: Robert Cahill
with a copy to:
6701 Center Drive West, Suite 1600
Los Angeles, CA 90045
Attention: General Counsel
If to Indemnitee:
At the Indemnitee's most recent address on the books and records of the
Company.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
INDEMNITEE
___________________________________
Print Name: _______________________
UNIVISION COMMUNICATIONS INC.
By:________________________________
Title:_____________________________
S-1
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EXHIBIT 10.2
FORM OF
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is
entered into as of (__________), 1996, by and among Univision Communications
Inc., a Delaware corporation (the "Company"), A. Jerrold Perenchio, [Televisa],
[Venevision] and the holders of Common Stock of the Company named on the
signature pages hereof (collectively, the "Holders", and individually, a
"Holder").
RECITALS
WHEREAS, the Holders own shares of the Company's Class P
Common Stock, Class T Common Stock, Class V Common Stock and Class A Common
Stock of the Company (the "Original Common Stock");
WHEREAS, the Original Common Stock was issued without
registration under the Securities Act, and therefore, the resale thereof by the
Holders is subject to restrictions under the Securities Act; and
WHEREAS, in connection with the Company's initial Offering of
its Class A Common Stock the Company has agreed to enter into this Agreement
with the Holders;
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
AGREEMENT
Section 1 Certain Definitions. As used in this Agreement,
unless the context otherwise requires:
"Affiliate" means any Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
another Person.
"Business Day" means any day on which commercial banks are not
authorized or required to close in Los Angeles, California.
"Commission" means the Securities and Exchange Commission or
any other similar or successor agency of the United States government
administering the Securities Act.
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"Common Stock" means the Class A Common Stock, the Class P
Common Stock, the Class T Common Stock and the Class V Common Stock of the
Company, par value [$____] per share.
"Davila LLC" means the Davila Family LLC and its Permitted
Transferees.
"Exchange Act" means the Securities Exchange Act of 1934, and
any similar or successor federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time
"Initiating Holders" means those Holders who have given a
Demand Notice pursuant to Section 2.1.
"Offering" with respect to any of the Company's securities
means the registration of such securities, whether underwritten or not, for sale
to the public.
"Ordinary S-3 Registration Statement" means a Registration
Statement on Form S-3 that includes only those items and that information that
is required to be included in Parts I and II of such Form, and does not include
any additional or extraneous items or information (e.g., a description of the
Company or the Company's business).
"Perenchio" means A. Jerrold Perenchio and his Permitted
Transferees.
"Perenchio Initiating Holders" means Holders of Perenchio
Registerable Securities who, in the aggregate, own at least a majority of
Perenchio Registrable Securities then held by all Holders of Perenchio
Registrable Securities and who have given a Demand Notice pursuant to Section
2.1.
"Perenchio Registerable Securities" means Registerable
Securities held by Perenchio, Rader and Davila LLC; provided that in the case of
Davila LLC, Perenchio Registerable Securities shall be limited to _____ shares
of Class A Common Stock (adjusted for stock splits and stock dividends).
"Permitted Transferee" means
(i) any entity all of the equity (other than directors'
qualifying shares) of which is directly or indirectly owned by the
transferor and that is not an Affiliate of any other Person;
(ii) in the case of a transferor who is an individual,
(a) such transferor's spouse and lineal descendants, (b) such
transferor's successors, personal representatives and heirs, (c) any
trustee of any trust created primarily for the benefit of any, some or
all of such spouse and lineal descendants (but which may include
beneficiaries which are charities) or of any revocable trust created
by such transferor, (d) following the death of such transferor, all
beneficiaries under either such trust, (e)
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the transferor, in the case of a transfer from any Permitted
Transferee back to its transferor and (f) any entity all of the equity
of which is directly or indirectly owned by any of the foregoing
which is not an Affiliate of any other person;
(iii) (a) in the case of the Class P Common Stock, A.
Jerrold Perenchio, (b) in the case of the Class T Common Stock, Grupo
Televisa S.A., and (c) in the case of Class V Common Stock, Gustavo A.
Cisneros and Ricardo J. Cisneros (the "Cisneros Brothers"). For the
purposes of this definition, if an entity is directly or indirectly
owned by either of the Cisneros Brothers, it shall be deemed owned by
both of them; and
(iv) in the case of Davila LLC, (a) Jaime Davila, (b)
Jaime Davila's spouse, (c) Jaime Davila's lineal descendants, (d) the
successors, personal representatives and heirs of any of the
individuals referred to in subclauses (a) through (c) of this clause
(iv), (e) any trustee of any trust created solely for the benefit of
any, some or all of the Persons referred to in this clause (iv) and
the collateral relatives of such Persons (but which may include
beneficiaries which are charities) or any revocable trust created by
any, some or all of the Persons referred to in subclauses (a) through
(c) of this clause (iv), (f) following the death of any individual
referred to in subclauses (a) through (c) of this clause (iv), all
beneficiaries under either such trust, and (g) any entity all of the
equity of which is directly or indirectly owned by any of the
foregoing which is not an Affiliate of any other Person.
"Person" means a corporation, an association, a trust, a
partnership, a joint venture, an organization, a business, an individual, a
government or political subdivision thereof or a governmental body.
"Prospectus" means the prospectus included in any Registration
Statement, as amended or supplemented by any prospectus supplement with respect
to the terms of the Offering of any portion of the Registrable Securities
covered by the Registration Statement and by all other amendments and
supplements to the prospectus, including post-effective amendments and all
material incorporated by reference in such Prospectus.
"Rader" means Stephen P. Rader and his Permitted Transferees.
"Registering Holders" means Holders who are participating in
the particular Registration Statement under Section 2 of this Agreement.
"Registrable Securities" means shares of the Class A Common
Stock of the Company held by the Holders or otherwise acquired by the Holders
including by way of conversion of shares of the Class P Common Stock, the Class
T Common Stock and the Class V Common Stock of the Company (collectively, the
"Shares") and any securities issued or issuable with respect to the Shares by
way of a stock dividend or stock split or in connection with a combination of
shares, recapitalization, merger, consolidation,
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reclassification or other reorganization; provided, however, that a security
shall cease to be a Registrable Security at such time as it (i) has been
effectively registered under the Securities Act and disposed of in accordance
with the Registration Statement covering it, (ii) is distributed to the public
pursuant to Rule 144 (or any similar provision then in force) under the
Securities Act, (iii) has otherwise been transferred and a new certificate or
other evidence of ownership for it not bearing a restrictive legend and not
subject to any stop transfer order lawfully has been delivered by or on behalf
of the Company and no other restriction on transfer exists, or (iv) has ceased
to be outstanding.
"Registration Statement" shall mean a registration statement filed by
the Company with the Commission at the time such registration becomes effective,
as amended and supplemented by any post-effective amendment.
"Securities Act" means the Securities Act of 1933, as amended, or any
similar Federal statue, and the rules and regulations of the Commission
promulgated thereunder, all as the same shall be in effect at the time.
"Televisa" means _______ and its Permitted Transferees.
"Televisa Initiating Holders" means Holders of Televisa Registerable
Securities who, in the aggregate, own at least a majority of Televisa
Registrable Securities then held by all Holders of Televisa Registrable
Securities and who have given a Demand Notice pursuant to Section 2.1.
"Televisa Registerable Securities" means Registerable Securities held
by Televisa and Davila LLC; provided that in the case of Davila LLC, Televisa
Registerable Securities shall be limited to ______ shares of Class A Common
Stock (adjusted for stock splits and stock dividends).
"Venevision" means ______ and its Permitted Transferees.
"Venevision" Initiating Holders" means Holders of Venevision
Registerable Securities who, in the aggregate, own at least a majority of
Venevision Registrable Securities then held by all Holders of Venevision
Registrable Securities and who have given a Demand Notice pursuant to Section
2.1.
"Venevision Registerable Securities" means Registerable Securities
held by Venevision and Davila LLC; provided that in the case of Davila LLC,
Venevision Registerable Securities shall be limited to ________ shares of Class
A Common Stock (adjusted for stock splits and stock dividends).
Other Definitions. The following terms shall have the meanings ascribed
to them in the sections indicated below:
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Definition Section
"Company" Introduction
"Controlling Person" 6.1
"Demand Notice" 2.1
"Demand Registration Statement" 2.1
"Original Common Stock" Recitals
"Other Holders" 2.1
"Other Shares" 2.2.1
"Piggyback Notice" 2.1.2
"Piggyback Registration Statement" 2.2
"Registration Expenses" 5
"Shares" 1
Section 2 Registration Rights.
2.1 Demand Registration. Commencing six months after the initial
Offering of the Class A Common Stock of the Company, the Perenchio Initiating
Holders, the Televisa Initiating Holders or the Venevision Initiating Holders
may, by written notice to the Company (the "Demand Notice"), demand that the
Company file, and the Company shall file, a Registration Statement as soon as
practicable but no later than 90 days following such demand, covering the
Registrable Securities specified in the Demand Notice by the Initiating Holders
on such form as shall be appropriate under the Securities Act (a "Demand
Registration Statement"). The Perenchio Holders shall be entitled to demand that
the Company file and cause to be declared effective such Demand Registration
Statements on four (4) separate occasions, the Televisa Holders shall be
entitled to demand that the Company file and cause to be declared effective such
Demand Registration Statements on two (2) separate occasions and the Venevision
Holders shall be entitled to demand that the Company file and cause to be
declared effective such Demand Registration Statements on two (2) separate
occasions. In addition, each Holder shall be entitled to demand that the Company
file and cause to be declared effective Ordinary S-3 Registration Statements as
provided herein. The Company shall use its best efforts to cause the Demand
Registration Statement to be declared effective on the date requested by the
managing underwriter for the Offering (no earlier than 60 days from the date of
the Demand Notice), or, if such Offering is not underwritten, as soon as
practicable after the filing thereof with the Commission, and shall keep such
Demand Registration Statement effective for so long as the Offering has not been
completed (but in no event longer than 180 days from the effective date of such
Demand Registration Statement).
Upon receipt of a Demand Notice, the Company shall provide notice
thereof to the Holders other than the Initiating Holders (the "Other Holders").
The Other Holders and the Company shall be permitted to register equity
securities of the Company in any Demand Registration Statement or to participate
in the Offering, but only as provided in this
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Section 2.1, by requesting that any of their Registrable Securities be included
in the Demand Registration Statement for sale in the Offering on the following
terms and conditions:
2.1.1 Each such Other Holder and/or the Company must give written
notice of such election to the Initiating Holders within 15 days of the date
notice of the Demand Notice was given by the Company to the Holders, such notice
to specify the number of Shares proposed to be sold by each Other Holder and/or
the Company in the Offering (the "Other Shares");
2.1.2 As a condition to participation in a Demand Registration
Statement, each such Other Holder and/or the Company must agree to sell such
Other Shares on the same basis provided in the underwriting arrangements
approved by the Initiating Holders and the Company (including the standard
indemnification provisions contained therein) and to timely complete and execute
all questionnaires, powers of attorney, indemnities, holdback agreements,
underwriting agreements and other documents required under the terms of such
underwriting arrangements or by the Commission or by any state securities
regulatory body;
2.1.3 If the managing underwriter of the Offering determines that
marketing factors require a limitation of the number of shares to be
underwritten, the number of Shares that may be sold by the Other Holders and/or
the Company in the Offering shall be limited to such number of Shares as the
managing underwriter determines may be included therein. In such event, the
Company shall so advise the Other Holders, and the number of Shares that may be
sold in the Offering shall be allocated first, pro rata among the Initiating
Holders and Holders of the same category of Registrable Securities as those held
by the Initiating Holders, second, to the extent available, to the Company and,
third, pro-rata among the Other Holders not included in the first category above
and fourth, to any other party having registration rights with respect to Shares
based upon the respective number of Shares sought to be included in such
Offering; and
2.1.4 If any Other Holder and/or the Company desires to withdraw its
Other Shares from the Demand Registration Statement, it may do so only during
the time period and on the terms to be determined by the Initiating Holders.
Notwithstanding the generality of the foregoing, the Holders shall not be
entitled to request the Company to file and cause to be effective a Demand
Registration Statement unless the proposed size of the offering of the Class A
Common Stock that relates to the Demand Notice is equal to or greater than
$20,000,000 (based upon the reported trading price of such stock at the time of
the Demand Notice).
Notwithstanding anything contained in this Section 2.1 to the contrary, the
Company may delay the registration of the Registrable Securities to which a
Demand Notice relates if upon receipt of such Demand Notice (i) the Company
notifies the Holders in writing that it is contemplating filing a registration
statement within 120 days of such demand (which shall not affect the Holders'
other rights hereunder, including without limi-
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tation the Holders' rights under Section 2.2 below), (ii) the Company notifies
the Holders that a material event has occurred or is likely to occur that has
not been publicly disclosed and if disclosed would have a material adverse
effect on the Company and its ability to consummate the Offering under the
Demand Registration Statement or (iii) the Company determines that the
registration and offering could interfere with any financing, acquisition,
disposition, corporate reorganization or other material transaction involving
the Company or its subsidiaries. In the case of clause (i) of this paragraph,
the Company shall use its best efforts, as soon as practicable, upon the first
to occur of the abandonment by the Company of its contemplated registration
statement or the expiration of the 120-day period above to register the
Registrable Securities to which a Demand Notice relates, unless such Demand
Notice is withdrawn by the Initiating Holders. In the case of clause (ii) or
clause (iii) of this paragraph, the Company may not delay the filing of the
Demand Registration Statement for more than 120 days from the date of the Demand
Notice unless such Demand Notice is withdrawn by the Initiating Holders. The
Company cannot exercise the rights of postponement set forth above more than
once in any 12-month period. If there is a postponement under either clause
(i), (ii), or (iii) above, the Demand Notice may be withdrawn by the Initiating
Holders by notice to the Company. In such case, no demand shall have been made
for the purposes of Section 2.1.
2.2 "Piggyback" Registration. If at any time, or from time to
time, the Company shall determine to file a Registration Statement covering any
shares of its Common Stock (other than a registration statement on Form S-4 or
S-8, or any form substituted therefor) for its own account or for the account of
any stockholder or a Registration Statement filed upon a demand pursuant to
Section 2.1 hereof (a "Piggyback Registration Statement"), the Holders shall be
entitled to include their Registrable Securities in such registration and
related underwritten Offering, if any, on the following terms and conditions:
2.2.1 The Company shall promptly give written notice of such
determination to the Holders (a "Piggyback Notice") and the Holders shall have
the right to request, by written notice given to the Company within ten (10)
Business Days of the date the Piggyback Notice was given by the Company to the
Holders, that a specific number of Registrable Securities held by the Holders be
included in the Piggyback Registration Statement and related underwritten
Offering, if any;
2.2.2 If the Piggyback Registration Statement relates to an
underwritten Offering, the Piggyback Notice shall specify the name of the
managing underwriter for such Offering. The Piggyback Notice shall also specify
the number of securities to be registered for the account of the Company and for
the account of any stockholder, and the intended method of disposition of such
securities;
2.2.3 If the Piggyback Registration Statement relates to an
underwritten Offering, as a condition to participation in such Piggyback
Registration Statement, the Holders must agree to sell their Registrable
Securities on the same basis provided in the underwriting arrangements approved
by the Company (including the standard indemnification provisions contained
therein) and to timely complete and execute all questionnaires, powers
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of attorney, indemnities, holdback agreements, underwriting agreements and other
documents required under the terms of such underwriting arrangements or by the
Commission or by any state securities regulatory body;
2.2.4 The Company shall use its best efforts to include the
Registrable Securities requested to be registered in the Piggyback Registration
Statement. However, if the managing underwriter for any underwritten Offering
under the Piggyback Registration Statement reasonably determines that inclusion
of all or any portion of the Registrable Securities in such Offering would
materially adversely affect the ability of the underwriter for such Offering to
sell all of the securities requested to be included for sale in such Offering,
and delivers to the Holders its written opinion to such effect, the number of
shares that may be sold in such Offering shall be allocated, first, to the
Company (or, if the Offering is being made principally for the account of
another Person, to such Person), second to the Holders pro rata among the
Holders based upon the respective number of shares sought by each to be included
in the Offering and, third, to any other third party having registration rights
with respect to Shares;
2.2.5 The Holders shall have the right to withdraw their
Registrable Securities from the Piggyback Registration Statement, but if the
same relates to an underwritten Offering, they may only do so during the time
period and on terms agreed upon by the Holders and the underwriters for such
underwritten Offering.
Notwithstanding the foregoing, the Company shall, on five (5)
Business Days notice to the Holders, have the right to withdraw any Piggyback
Registration Statement filed pursuant to this Section 2.2 at any time prior to
the effective date thereof.
2.3 Selection of Underwriters. If the Registrable Securities
covered by a Demand Registration Statement are to be sold in an underwritten
Offering, the managing underwriter of such Offering may be designated by the
Initiating Holder which underwriter shall be reasonably acceptable to the
Company. Alternatively, if the Registrable Securities included in a Piggyback
Registration Statement are to be sold in an underwritten Offering, the managing
underwriter of such Offering shall be designated by the Company.
Section 3 Holdback Agreements.
3.1 Restrictions on Public Sale by the Company. The Company agrees
not to effect any public or private sale or distribution of securities of the
same class as the Registrable Securities, or securities convertible into or
exchangeable or exercisable for securities of the same class as the Registrable
Securities, including a sale pursuant to Regulation D under the Securities Act,
during the 10-day period prior to, and during the 90-day period beginning on the
closing date of, an Offering made pursuant to Section 2.1 herein.
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3.2 Restrictions on Public Sale by the Holders. The Holders
agree, if requested by the managing underwriter of an underwritten Offering
(including, but not limited to, the Company's initial Offering), not to effect
any public sale or distribution of securities of the same class (or securities
exchangeable or exercisable for or convertible into securities of the same
class) as the securities included in the Offering, including, but not limited
to, a sale pursuant to Rule 144 of the Securities Act (except as part of such
underwritten Offering), during the 10-day period prior to, and during the
180-day period (in the case of the Company's initial Offering) and 90-day period
(in the case of subsequent Offerings) (or shorter period requested by the
underwriter) beginning on the effective date of, such Offering.
Section 4 Registration Procedures. In connection with the Company's
registration obligations pursuant to Section 2 hereof, the Company will use its
best efforts to effect such registration to permit the sale of the Registrable
Securities covered thereby in accordance with the intended method or methods of
disposition thereof, and pursuant thereto the Company will as promptly as
practicable:
4.1 At least five (5) Business Days before filing a Registration
Statement or Prospectus or any amendments or supplements thereto, furnish to the
Holders who are participating in such Registration Statement (the "Registering
Holders") and the underwriters, if any, copies of all such documents proposed to
be filed, which documents will be subject to the review of the Registering
Holders and such underwriters (and their respective counsel), and the Company
will not file any Registration Statement or amendment thereto or any Prospectus
or any supplement thereto to which the Registering Holders or the underwriters,
if any, shall reasonably object; except that if the Registration Statement is a
Piggyback Registration Statement relating to an underwritten Offering and the
underwriters do not agree with such objection by the Registering Holders and the
Registering Holders are permitted to withdraw any Registrable Securities from
such Offering, the Company can file the Piggyback Registration Statement
notwithstanding such objection by the Registering Holders;
4.1.1 Prepare and file with the Commission such amendments
and post-effective amendments to the Registration Statement as may be necessary
to keep the Registration Statement effective for the applicable time period
required herein; cause the Prospectus to be supplemented by any required
Prospectus supplement, and as so supplemented to be filed pursuant to Rule 424
under the Securities Act; and comply with the provisions of the Securities Act
with respect to the disposition of all securities covered by such Registration
Statement during the applicable period in accordance with the intended methods
of disposition by the Registering Holders set forth in such Registration
Statement or Prospectus supplement;
4.1.2 Promptly notify the Registering Holders and the
managing underwriters, and (if requested by any such Person) confirm such advice
in writing, (a) when the Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect to the Registration
Statement or any post-effective amendment, when the
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same has become effective; (b) of any request by the Commission for amendments
or supplements to the Registration Statement or the Prospectus or for additional
information; (c) of the issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement or the initiation of any
proceedings for that purpose; (d) if at any time the representations and
warranties of the Company contemplated by Section 8 below cease to be true and
correct; (e) of the receipt by the Company of any notification with respect to
the suspension of the qualification of the Registrable Securities for sale in
any jurisdiction or the initiation or threatening of any proceeding for such
purpose; and (f) of the happening of any event which makes any material
statement made in the Registration Statement, the Prospectus or any document
incorporated therein by reference untrue or which requires the making of any
changes in the Registration Statement, the Prospectus or any document
incorporated therein by reference in order to make the statements therein not
misleading in any materia respect;
4.1.3 Make every reasonable effort to obtain the withdrawal
of any order suspending the effectiveness of the Registration Statement at the
earliest possible moment;
4.1.4 If requested by the managing underwriters or the
Registering Holders, immediately incorporate in a Prospectus supplement or
post-effective amendment such information as the managing underwriters and the
Registering Holders agree should be included therein relating to the sale of the
Registrable Securities, including, without limitation, information with respect
to the number of Registrable Securities being sold to such underwriters or other
Persons, the purchase price being paid therefor by such underwriters or other
Persons and any other terms of the distribution of the Registrable Securities to
be sold in such Offering including, if applicable, any required disclosure of
arrangements with underwriters; and make all required filings of such Prospectus
supplement or post-effective amendment as promptly as practicable after being
notified of the matters to be incorporated in such Prospectus supplement or
post-effective amendment;
4.1.5 Promptly furnish to the Registering Holders and each
managing underwriter without charge, at least one signed copy of the
Registration Statement and any post-effective amendment thereto, including
financial statements and schedules, all documents incorporated therein by
reference and all exhibits (including those incorporated by reference);
4.1.6 Promptly deliver to the Registering Holders and the
underwriters without charge, as many copies of the Prospectus (including each
preliminary Prospectus) and any amendment or supplement thereto as such Persons
may reasonably request; the Company consents to the use of the Prospectus or any
amendment or supplement thereto by the Registering Holders and the underwriters
in connection with the Offering and sale of the Registrable Securities covered
by the Prospectus or any amendment or supplement thereto;
4.1.7 Prior to any Offering of Registrable Securities
covered by a Registration Statement under Section 2, register or qualify or
cooperate with the Registering
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Holders, the underwriters and their respective counsel in connection with the
registration or qualification of such Registrable Securities for offer and sale
under the securities or blue sky laws of such jurisdictions as the Registering
Holders or underwriter reasonably requests in writing and do any and all other
acts or things necessary or advisable to enable the disposition in such
jurisdictions of Registrable Securities covered by the Registration Statement,
except that the Company shall not be required to take any actions under this
paragraph 4.1.7 if such actions would require it to submit to the general
taxation of such jurisdiction or to file therein any general consent to service
of process, unless this limitation means that the Registrable Securities would
not be qualified for offer and sale in at least 20 states;
4.1.8 Use its best efforts to cause the Registrable
Securities covered by the Registration Statement to be registered with or
approved by such governmental agencies or authorities other than the Commission
and state securities regulatory bodies as may be necessary to enable the
Registering Holders or the underwriters to consummate the disposition of such
Registrable Securities;
4.1.9 Cooperate with the Registering Holders and the
managing underwriter to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be sold which do not bear
any restrictive legends; and cause such Registrable Securities to be in such
denominations and registered in such names as the managing underwriter may
request at least two business days prior to any sale of Registrable Securities
to the underwriters;
4.1.10 Upon the occurrence of any event contemplated by
paragraph 4.1.2(f) above, promptly prepare a supplement or post-effective
amendment to the Registration Statement or the Prospectus or any document
incorporated therein by reference or file any other required document so that,
as thereafter delivered to the purchasers of the Registrable Securities, the
Prospectus will not contain an untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein not misleading;
4.1.11 (a) In addition to the representations and
warranties contained herein, make such representations and warranties to the
Registering Holders and the underwriters as are customarily made by issuers to
underwriters in primary underwritten offerings (or as may be reasonably
requested by the underwriters); (b) obtain opinions of counsel to the Company
and updates thereof (which counsel and opinions shall be reasonably satisfactory
to the Registering Holders); (c) obtain "cold comfort" letters and updates
thereof from the Company's independent certified public accountants addressed to
the underwriters, such letters to be in customary form and covering matters of
the type customarily requested in "cold comfort" letters by underwriters in
connection with primary underwritten offerings (or as may be reasonably
requested by the underwriters) and to use its best efforts to obtain such a
letter for the Registering Holders or to obtain a letter from such accountants
authorizing the Registering Holders to rely on such "cold comfort" letter; (d)
if an underwriting agreement is entered into, ensure that the same shall set
forth in full the indemnification provisions and procedures of Section 6 hereof
with respect to the Company
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and the Registering Holders; and (e) deliver such documents and certificates as
may be requested by the Registering Holders and the managing underwriter to
evidence compliance with clause (a) above and with any customary conditions
contained in the underwriting agreement or other agreement entered into by the
Company with the Registering Holders. The above shall be done in connection with
each closing under such underwriting or similar agreement or as and to the
extent required thereunder;
4.1.12 Make available for inspection by the Registering Holders, any
underwriter participating in any disposition pursuant to such Registration
Statement, and any attorney or accountant retained by the Registering Holders or
managing underwriter, all financial and other records, pertinent corporate
documents and properties of the Company, and cause the Company's officers,
directors and employees to be available to discuss and to supply all information
reasonably requested by any such representative, underwriter, attorney or
accountant (or their respective representatives) in connection with the
Registration Statement; provided, that all such records, information or
documents shall be subject to standard confidentiality arrangements;
4.1.13 Otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission and state securities regulatory bodies;
and
4.1.14 Make generally available to its stockholders earnings
statements satisfying the provisions of Section 11(a) of the Securities Act no
later than 30 days after the end of any 12-month period (or 60 days, if such
period is a fiscal year) (a) commencing at the end of any fiscal quarter in
which Registrable Securities are sold to underwriters in a firm or best efforts
underwritten Offering, or, if not sold to underwriters in such an Offering, (b)
beginning with the first month of the Company's first fiscal quarter commencing
after the effective date of the Registration Statement, which statements shall
cover such 12-month period.
The Registering Holders agree that, upon receipt of any notice from the
Company of the happening of any event of the kind described in paragraph
4.1.2(f) hereof, the Registering Holders will forthwith discontinue disposition
of Registrable Securities under the Prospectus related to the applicable
Registration Statement until the Registering Holders' receipt of the copies of
the supplemented or amended Prospectus contemplated by paragraph 4.1.10 hereof,
or until it is advised in writing by the Company that the use of the Prospectus
may be resumed, and has received copies of any additional or supplemental
filings which are incorporated by reference in the Prospectus. The period
during which distribution of the Shares is suspended pursuant to this paragraph
shall not be counted toward completion of the required period of effectiveness
for any registration statement.
Section 5 Registration Expenses. Except as provided in the next to
last sentence of this Section 5, all expenses incident to the Company's
performance of or compliance with this Agreement, including without limitation
all registration and filing fees, fees and expenses of compliance with
securities or blue sky laws, printing expenses,
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messenger expenses, telephone and delivery expenses, and fees and disbursements
of Company counsel and of independent certified public accountants of the
Company (including the expenses of any special audit required by or incident to
such performance), shall be borne by the Company. The Company will also pay its
internal expenses, the expense of any annual audit and the fees and expenses of
any Person retained by the Company. In addition, the Company agrees to pay all
reasonable fees and disbursements of one counsel (designated by the Initiating
Holders, and if there is no Initiating Holder, by a majority of the Holders
participating in an Offering) to the Holders. All such expenses are referred to
herein as "Registration Expenses." Notwithstanding the foregoing, if a Holder
demands that the Company file and cause to be declared effective an Ordinary S-3
Registration Statement pursuant to Section 2.1, such Holder shall bear all
Registration Expenses related thereto (other than the registration fees relating
to the Shares to be registered by any Other Holders, which shall be borne by
such Other Holders). All underwriting fees and commissions with respect to an
underwritten Offering, and transfer taxes, if any, shall be borne by the Company
and each Holder in proportion to the number of Registrable Securities sold by
the Company and such Holder.
Section 6 Indemnification.
6.1 Indemnification by the Company. The Company agrees to
indemnify and hold harmless the Holders, their officers, directors, agents
(including counsel) and employees and each Person who controls the Holders
(within the meaning of Section 15 of the Securities Act) (each, a "Controlling
Person") from and against any and all losses, claims, damages and liabilities
(including any investigation, legal or other expenses ("Losses") reasonably
incurred in connection with, and any amount paid in settlement of, any action,
suit or proceeding or any claim asserted) to which the Holders may become
subject under the Securities Act, the Exchange Act or other federal or state
statutory law or regulation, at common law or otherwise, insofar as such Losses
arise out of or are based upon (a) any untrue statement or alleged untrue
statement of a material fact contained in any Registration Statement, Prospectus
or preliminary prospectus or any amendment of supplement thereto or the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading or (b) any
violation by the Company of the Securities Act or the Exchange Act, or other
federal or state law applicable to the Company and relating to any action or
inaction required of the Company in connection with such registration, and shall
reimburse the Holders or such officer, director, agent (including counsel),
employee or Controlling Person for any legal or other expenses incurred by such
Person in connection with investigating or defending any such Loss; provided,
however, that the Company shall not be liable to the Holders in any such case
only to the extent that any such Loss arises out of or is based upon any alleged
untrue statement or alleged omission made in such Registration Statement,
preliminary Prospectus, Prospectus, or amendment or supplement in reliance upon
and in conformity with written information furnished to the Company by the
Holders specifically for use therein. Such indemnity shall remain in full force
and effect regardless of any investigation made by or on behalf of the Holders
or such officer, director, agent (including counsel), employee or Controlling
Person, and shall
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survive the transfer of such securities by the Holders. The Company will also
indemnify underwriters, selling brokers, dealer managers and similar securities
industry professionals participating in the distribution, their officers and
directors and each Person who controls such Persons (within the meaning of
Section 15 of the Securities Act) to the same extent customarily requested by
such Persons in similar circumstances.
6.2 Indemnification by Holder of Registrable Securities. If
the Holders sell Registrable Securities under a Prospectus which is part of a
Registration Statement, then the Holders, by exercising their registration
rights hereunder, agree to indemnify and hold harmless the Company, its
directors and each officer who signed such Registration Statement and each
Person who controls the Company (within the meaning of Section 15 of the
Securities Act) under the same circumstances as the foregoing indemnity from the
Company to the Holders to the extent, but only to the extent, that such Losses
arise out of or are based upon any untrue statement of a material fact or
omission of a material fact that was made in the Prospectus, the Registration
Statement, or any amendment or supplement thereto, in reliance upon and in
conformity with written information relating to the Holders furnished to the
Company by the Holders expressly for use therein. In no event shall the
aggregate liability of the Holders exceed the amount of the net proceeds
received by the Holders upon the sale of the Registrable Securities giving rise
to such indemnification obligation. Such indemnity shall remain in full force
and effect regardless of any investigation made by or on behalf of the Company
or such officer, director, employee or Controlling Person, and shall survive the
transfer of such securities by the Holders. The Company and the Holders shall
be entitled to receive indemnities from underwriters, selling brokers, dealer
managers and similar securities industry professionals participating in the
distribution, to the same extent as customarily furnished by such Persons in
similar circumstances.
6.3 Contribution. If the indemnification provided for in
Sections 6.1 or 6.2 is unavailable to an indemnified party or is insufficient to
hold such indemnified party harmless for any Losses in respect of which Section
6.1 or 6.2 would otherwise apply by its terms (other than by reason of
exceptions provided in Section 6.1 or 6.2), then each applicable indemnifying
party, in lieu of indemnifying such indemnified party, shall have a joint and
several obligation to contribute to the amount paid or payable by such
indemnified party as a result of such Losses, in such proportion as is
appropriate to reflect the relative fault of the indemnifying party, on the one
hand, and such indemnified party, on the other hand, in connection with the
actions, statements or omissions that resulted in such Losses as well as any
other relevant equitable considerations. The relative fault of such
indemnifying party, on the one hand, and indemnified party, on the other hand,
shall be determined by reference to, among other things, whether any action in
question, including any untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact, has been taken or made
by, or relates to information supplied by, such indemnifying party or
indemnified party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent any such action, statement or
omission. The amount paid or payable by a party as a result of any Losses shall
be deemed to include any legal or other fees or expenses incurred by such party
in connection with any investigation or
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proceeding, to the extent such party would have been indemnified for such
expenses if the indemnification provided for in Section 6.1 or 6.2 was available
to such party.
6.4 Conduct of Indemnification Proceedings. Any Person entitled to
indemnification hereunder will (a) give prompt notice to the indemnifying party
of any claim with respect to which it seeks indemnification and (b) permit such
indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party; provided, however, that any Person
entitled to indemnification hereunder shall have the right to employ separate
counsel and to participate in the defense of such claim, but the fees and
expenses of such counsel shall be at the expense of such Person and not of the
indemnifying party unless(i) the indemnifying party has agreed to pay such fees
or expenses, (ii) the indemnifying party shall have failed to assume the defense
of such claim and employ counsel reasonably satisfactory to such Person, or
(iii) in the opinion of counsel of the Person to be indemnified, a conflict of
interest may exist between such Person and the indemnifying party with respect
to such claims (in which case, if the Person notifies the indemnifying party in
writing that such Person elects to employ separate counsel at the expense of the
indemnifying party, the indemnifying party shall not have the right to assume
the defense of such claim on behalf of such Person). If such defense is not
assumed by the indemnifying party, the indemnifying party will not be subject to
any liability for any settlement made without its consent (but such consent will
not be unreasonably withheld). No indemnified party will be required to consent
to entry of any judgement or enter into any settlement which does not include as
an unconditional term thereof the giving by all claimants or plaintiffs to such
indemnified party of a release from all liability in respect to such claim or
litigation. Any indemnifying party who is not entitled to , or elects not to,
assume the defense of a claim will not be obligated to pay the fees and expenses
of more than one counsel for all parties indemnified by such indemnifying party
with respect to such claim. As used in this Section 6, the terms "indemnifying
party," "indemnified party" and other terms of similar import are intended to
include only the Company (and its officers, directors, employees and each
Control Person of the Company as set forth above) on the one hand, and the
Holders (and their officers, directors, agents (including counsel) employees and
each Control Person of each Holder as set forth above) on the other hand, as
applicable.
Section 7 Rule 144. The Company covenants that it will file, on a
timely basis, all reports required to be filed by it under the Securities Act
and the Exchange Act, and it will take such further action and provide such
documents as any holder of Registerable Securities may request, all to the
extent required from time to time to enable the Holders to sell Registerable
Securities without registration under the Securities Act within the limitation
of the conditions provided by (a) Rule 144 under the Securities Act, as such
rules may be amended from time to time, or (b) any similar rule or regulation
hereafter adopted by the Commission. Upon the request of the Holders, the
Company will deliver to the Holders a written statement verifying that it has
complied with such information and requirements.
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Section 8 Representations and Warranties of Company. The Company
represent and warrants to and agrees with the Holders that this Agreement has
been duly and validly executed and delivered by the Company and constitutes a
valid and binding agreement of the Company enforceable in accordance with its
terms (except in each such case as enforceability may be limited to bankruptcy,
insolvency, reorganization and other similar laws now or hereafter in effect
relating to or affecting creditors' rights generally and except that the remedy
of specific performance and injunctive and other forms of equitable relief are
subject to certain equitable defenses and to the discretion of the court before
which any proceeding therefor may be brought and except as rights to indemnity
and contribution hereunder may be limited by federal or state securities laws).
Section 9 Miscellaneous
9.1 Specific Performance. The Holders, in addition to being entitled
to exercise all rights provided herein or granted by law, including recovery of
damages, will be entitled to specific performance of their rights under this
Agreement. The Company agrees that monetary damages would not be adequate
compensation for any loss incurred by reasons of a breach by it of the
provisions of this Agreement and hereby agrees to waive the defense in any
action for specific performance that a remedy at law would be adequate.
9.2 No Inconsistent Agreements. The Company has not previously entered
into, and will not on or after the date of this Agreement enter into, any
agreement with respect to its securities which is inconsistent with the terms
of this Agreement, including any agreement which impairs or limits the
registration rights granted to the Holders or which otherwise conflicts with the
provisions hereof or would preclude the Company from discharging its obligations
hereunder.
9.3 Furnish Information. The Company agrees that it shall promptly
deliver to the Holders copies of all financial statements, reports and proxy
statements which the Company is required to send to its stockholders generally.
9.4 Amendments. The terms of this Agreement may be amended, and the
observance of any term therein may be waived, but only with the written consent
of Holders of a majority of the then outstanding Perenchio Registerable
Securities, Holders of a majority of the then outstanding Televisa Registerable
Securities, Holders of a majority of the then outstanding Venevision
Registerable Securities and the Company.
9.5 Notices. Any notice, demand or delivery pursuant to the provisions
hereof shall be sufficiently delivered or made if and when delivered in person
or by recognized overnight courier, addressed to each the Holders at its last
known address appearing on the books of the Company, or, except as herein
otherwise expressly provided, to the Company at its principal executive office.
[insert address], or such other address as shall have been furnished to the
party giving or making such notice, demand or delivery.
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9.6 Assignment. This Agreement is assignable by the parties hereto to
their respective Permitted Transferees, and upon assignment such Permitted
Transferees shall become Holders under this Agreement, so long as such Permitted
Transferees agree in writing to be bound by the terms hereof. Other than as set
forth above, this Agreement shall not be assignable.
9.7 Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
9.8 Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
9.9 Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of California.
9.10 Severability. If any one or more of the provisions contained
herein, or the application thereof in any circumstance, is held invalid, illegal
or unenforceable, the validity, legality and enforceability of any such
provision in every other and of the remaining provisions contained herein shall
not be affected or impaired thereby.
9.11 Jurisdiction: Venue: Service of Process. Each of the parties
irrevocably submits to the jurisdiction of any California State or United States
Federal court sitting in Los Angeles County in any action or proceeding arising
out of or relating to this Agreement or the transactions contemplated hereby,
and irrevocably agrees that any such action or proceeding may be heard and
determined only in such California State or Federal court. Each of the parties
irrevocably waives, to the fullest extent it may effectively do so, the defense
of an inconvenient forum to the maintenance of any such action or proceeding.
Each of the parties consents to the service of copies of the summons and
complaint and any other process which may be served in any such action or
proceeding by delivering of a copy of the such process to such party at its
address specified in or pursuant to Section 10.3. Each of the parties agrees
that a final judgment in any such action or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law.
9.12 Entire Agreement. This Agreement is intended by the parties as a
final expression of their agreement and is intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein with respect to the Registrable Securities. This Agreement supersedes
all prior agreements and understandings between the parties with respect to such
subject matter.
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9.13 Attorney's fees. In the event of any action, controversy, claim,
counter claim, appeal, arbitration, mediation or dispute between the parties
hereto arising out of or relating to this Agreement or any of the documents
provided for herein, or the breach thereof, the prevailing party shall be
entitled to recover from the other party reasonable attorneys' fees, expenses
and costs incurred in bringing and prosecuting such action and/or enforcing any
judgment, order, ruling or award.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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<PAGE> 19
IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first above written.
UNIVISION COMMUNICATIONS INC.
_____________________________
By:
Its:
"HOLDERS"
Of the Class P Common Stock:
A. Jerrold Perenchio
By:_________________________
Title:______________________
Of the Class T Common Stock:
[Televisa]
By:________________________
Title:_____________________
Of the Class V Common Stock:
[Venevision]
By:________________________
Title:_____________________
Of the Class A Common Stock:
___________________________
<PAGE> 20
Signature page to Registration Rights Agreement.
The undersigned agrees to be a party to and be bound by all provisions of the
foregoing Registration Rights Agreement.
Date:________ "HOLDER"
[__________________]
____________________________
By:_________________________
Title:______________________
20
<PAGE> 1
EXHIBIT 10.3
UNIVISION COMMUNICATIONS INC.
1996 PERFORMANCE AWARD PLAN
<PAGE> 2
TABLE OF CONTENTS
Page
I. THE PLAN.......................................................... 1
1.1 Purpose............................................... 1
1.2 Administration and Authorization; Power and
Procedure............................................. 1
1.3 Participation......................................... 2
1.4 Shares Available for Awards........................... 3
1.5 Grant of Awards....................................... 3
1.6 Award Period.......................................... 4
1.7 Limitations on Exercise and Vesting of
Awards................................................ 4
1.8 No Transferability.................................... 5
1.9 Pricing Limits........................................ 5
II. EMPLOYEE OPTIONS.................................................. 6
2.1 Grants................................................ 6
2.2 Option Payment Provisions............................. 6
2.3 Limitations on Grant and Terms of Incentive
Stock Options......................................... 6
2.4 Limits on 10% Holders................................. 7
2.5 Option Repricing/Cancellation and
Regrant/Waiver of Restrictions........................ 7
2.6 Options and Rights in Substitution for Stock
Options Granted by Other Corporations................. 7
III. STOCK APPRECIATION RIGHTS......................................... 8
3.1 Grants................................................ 8
3.2 Exercise of SARs...................................... 8
3.3 Payment............................................... 8
3.4 Limited SARs.......................................... 9
IV. RESTRICTED STOCK AWARDS........................................... 9
4.1 Grants................................................ 9
4.2 Restrictions.......................................... 10
4.3 Return to the Corporation............................. 10
V. PERFORMANCE SHARE AWARDS, STOCK BONUSES, AND CASH
BONUS AWARDS...................................................... 11
5.1 Grants of Performance Share Awards.................... 11
5.2 Grants of Stock Bonuses............................... 11
5.3 Deferred Payments..................................... 11
5.4 Special Performance-Based Share Awards................ 11
5.5 Cash Bonus Awards..................................... 12
VI. OTHER PROVISIONS.................................................. 13
6.1 Rights of Eligible Employees, Participants
and Beneficiaries..................................... 13
6.2 Adjustments; Acceleration............................. 14
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Page
----
6.3 Termination of Employment; Termination of
Subsidiary Status; Discretionary Provisions... 15
6.4 Compliance With Laws.......................... 16
6.5 Tax Withholding............................... 16
6.6 Plan Amendment, Termination and Suspension.... 17
6.7 Privileges of Stock Ownership................. 18
6.8 Effective Date of this Plan................... 18
6.9 Term of this Plan............................. 18
6.10 Governing Law/Construction/Severability....... 18
6.11 Captions...................................... 19
6.12 Non-Exclusivity of Plan....................... 19
VII. DEFINITIONS............................................... 19
7.1 Definitions................................... 19
ii
<PAGE> 4
UNIVISION COMMUNICATIONS INC.
1996 PERFORMANCE AWARD PLAN
I. THE PLAN.
1.1 Purpose.
The purpose of this Plan is to promote the success of
the Company and the interests of its stockholders by attracting, motivating,
retaining and rewarding key employees by providing them incentives to improve
the financial performance of the Company. "Corporation" means Univision
Communications Inc., a Delaware corporation, and its successors, and "Company"
means the Corporation and its Subsidiaries, collectively. These terms and other
capitalized terms are defined in Article VII.
1.2 Administration and Authorization; Power and Procedure.
(a) Committee. This Plan shall be administered
by the Committee. Action of the Committee with respect to the administration of
this Plan shall be taken pursuant to a majority vote or by written consent of
its members.
(b) Plan Awards; Interpretation; Powers of
Committee. Subject to the express provisions and limitations of this Plan, the
Committee shall have the authority:
(i) to determine the particular Eligible
Employees who will receive Awards;
(ii) to grant Awards to Eligible Employees,
determine the price at which securities will be offered or awarded
and the amount of securities to be offered or awarded to any of
such persons, and determine the other specific terms and conditions
of such Awards consistent with the express limits of this Plan, and
establish the installments (if any) in which such Awards shall
become exercisable or shall vest, or determine that no delayed
exercisability or vesting is required, and establish the events of
termination or reversion of such Awards;
(iii) to approve the forms of Award Agreements
(which need not be identical either as to type of Award or among
Participants);
(iv) to construe and interpret this Plan and any
agreements defining the rights and obligations of the Company and
Employee Participants under this Plan, further define the terms
used in this Plan, and prescribe, amend and
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rescind rules and regulations relating to the administration of
this Plan;
(v) to cancel, modify, or waive the
Corporation's rights with respect to, or modify, discontinue,
suspend, or terminate any or all outstanding Awards held by
Eligible Employees, subject to any required consent under Section
6.6;
(vi) to accelerate or extend the exercisability
or extend the term of any or all such outstanding Awards within the
maximum ten-year term of Awards under Section 1.6; and
(vii) to make all other determinations and take
such other action as contemplated by this Plan or as may be
necessary or advisable for the administration of this Plan and the
effectuation of its purposes.
(c) Binding Determinations. Any action taken
by, or inaction of, the Corporation, any Subsidiary, the Board or the Committee
relating or pursuant to this Plan shall be within the absolute discretion of
that entity or body and shall be conclusive and binding upon all persons. No
member of the Board or Committee, or officer of the Corporation or any
Subsidiary, shall be liable for any such action or inaction of the entity or
body, of another person or, except in circumstances involving bad faith, of
himself or herself. Subject only to compliance with the express provisions
hereof, the Board and Committee may act in their absolute discretion in matters
within their authority related to this Plan.
(d) Reliance on Experts. In making any
determination or in taking or not taking any action under this Plan, the
Committee or the Board, as the case may be, may obtain and may rely upon the
advice of experts, including professional advisors to the Corporation. No
director, officer or agent of the Company shall be liable for any such action or
determination taken or made or omitted in good faith.
(e) Delegation. The Committee may delegate
ministerial, non-discretionary functions to individuals who are officers or
employees of the Company.
1.3 Participation.
Awards may be granted by the Committee only to those
persons that the Committee determines to be Eligible Employees. An Eligible
Employee who has been granted an Award may, if otherwise eligible, be granted
additional Awards if the Committee shall so determine.
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1.4 Shares Available for Awards.
Subject to the provisions of Section 6.2, the capital
stock that may be delivered under this Plan shall be shares of the Corporation's
authorized but unissued Class A Common Stock and any shares of its Class A
Common Stock held as treasury shares.
(a) Number of Shares. The maximum number of
shares of Class A Common Stock that may be delivered pursuant to Awards granted
to Eligible Employees under this Plan shall not exceed 5,500,000 shares. The
maximum number of shares of Class A Common Stock that may be the subject of
Awards granted to any individual during any calendar year shall be limited to
500,000. The maximum number of shares of Class A Common Stock that may be the
subject of Awards granted to Eligible Employees in calendar year 1996 shall be
limited to 2,000,000. For any calendar year beginning after 1996, the maximum
number of shares of Class A Common Stock that may be the subject of Awards
granted that year shall not exceed 1,375,000, excluding for this purpose any
Awards granted to an Eligible Employee who is hired in that year to become the
chief executive officer of the Company. Each of the foregoing numerical limits
shall be subject to adjustment as contemplated by this Section 1.4 and Section
6.2.
(b) Calculation of Available Shares and
Replenishment. Shares subject to outstanding Awards payable in shares shall be
reserved for issuance. If any Option or other right to acquire shares of Class A
Common Stock under or receive cash or shares in respect of an Award shall expire
or be cancelled or terminated without having been exercised or paid in full, or
any Class A Common Stock subject to a Restricted Stock Award or other Award
shall not vest or be delivered, the unpurchased, unvested or undelivered shares
of Class A Common Stock subject thereto shall again be available for the
purposes of this Plan, subject only to any applicable limitations under Section
162(m) of the Code. If the Corporation withholds shares of Class A Common Stock
pursuant to Section 6.5, the number of shares that would have been deliverable
with respect to an Award but that are withheld pursuant to the provisions of
Section 6.5 may in effect not be issued, but the aggregate number of shares
issuable with respect to the applicable Award and under this Plan shall be
reduced by the number of shares withheld and such shares shall not be available
for additional Awards under this Plan.
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1.5 Grant of Awards.
Subject to the express provisions of this Plan, the
Committee has the authority to determine those individuals who are Eligible
Employees, whether any of them will receive an Award and if so the type of
Award, the number of shares of Class A Common Stock subject to each Award, the
price (if any) to be paid for the shares or the Award, the other terms of the
Award, and, in the case of Performance Share Awards, in addition to the matters
addressed in Section 1.2(b), the specific objectives, goals and performance
criteria (such as the performance of the Company on a consolidated, segment,
subsidiary, division, or station basis with reference to revenues, net earnings
(before or after interest, taxes, depreciation, or amortization), cash flow,
return on equity or assets or net investment, market value or book value over a
base period, the years of service before vesting, the relevant job
classification or level of responsibility or other factors) that further define
the terms of the Performance Share Award. Each Award shall be evidenced by an
Award Agreement signed by the Corporation and, if required by the Committee, by
the Participant. The Award Agreement shall set forth the material terms and
conditions of the Award established by the Committee consistent with the
specific provisions of this Plan. The Committee shall not have any authority,
absent the unanimous resolution of the Board of Directors, to make a grant of
any Award that does not comply with the provisions and limitations of this Plan.
1.6 Award Period.
Each Award and all executory rights or obligations
under the related Award Agreement shall expire on such date (if any) as shall be
determined by the Committee, but in the case of Options, SARs or other rights to
acquire Class A Common Stock not later than 10 years after the Award Date.
1.7 Limitations on Exercise and Vesting of Awards.
(a) Provisions for Exercise. No Award may vest
more quickly than 25% on each anniversary date of the grant; provided that,
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<PAGE> 8
in the case of Options issued in connection with the initial public offering of
the Company's Class A Common Stock or Awards granted in lieu of cash bonuses,
such Options and Awards may vest at the rate of 50% a year. For the purpose of
the preceding sentence, vesting shall only be measured with reference to an
Eligible Employee's employment with the Company or a subsidiary, so that an
Eligible Employee shall cease earning the right to additional vesting upon the
termination of employment. Notwithstanding the preceding two sentences, Awards
(1) may provide for quicker vesting in the event that the Participant is
terminated without cause and (2) may be accelerated pursuant to Section 6.2(b)
in the event of a Change in Control.
(b) Procedure. Any exercisable Award shall be
deemed to be exercised when the Corporation receives written notice of such
exercise from the Participant, together with any required payment made in
accordance with Section 2.2.
(c) Fractional Shares/Minimum Issue. Fractional
share interests shall be disregarded, but may be accumulated. The Committee,
however, may determine in the case of Eligible Employees that cash, other
securities, or other property will be paid or transferred in lieu of any
fractional share interests. No fewer than 10 shares may be purchased on exercise
of any Award at one time unless the number purchased is the total number at the
time available for purchase under the Award.
1.8 No Transferability.
(a) Limit On Exercise. Except as provided in
Section 1.9(b) and subject to Section 6.10, Awards may be exercised only by, and
amounts payable or shares issuable pursuant to an Award shall be paid only to
(or for the account of), the Participant or, if the Participant has died, the
Participant's Beneficiary or, if the Participant has suffered a Disability, the
Participant's Personal Representative, if any, or if there is none, the
Participant. Subject to Section 6.4 and 6.10, the Committee may by express
written authorization permit Awards to be exercised by and/or paid to certain
persons or entities related to the Participant who are transferees of the
Participant without consideration, or to such other persons as the Committee
deems appropriate, pursuant to such conditions and procedures as the Committee
in writing may establish and set forth in or by amendment to an Award Agreement.
(b) Limit On Transfer. No option, right or
other Award granted under this Plan including, without limitation, any
undistributed performance share or share of Restricted Stock that has not
vested, shall be transferrable by the Participant or shall be subject in any
manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance or charge (other than to the Corporation), except (i) by will or the
laws of descent and distribution, or (ii) pursuant to any other exception to
transfer restrictions expressly permitted by the Committee and set forth in
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the Award Agreement (or an amendment thereto), and (iii) in the case of Awards
comprising Incentive Stock Options, as permitted by the Code. Any attempted
transfer in violation of these provisions shall be void and the Corporation
shall disregard any attempt at transfer, assignment or other alienation so
prohibited.
(c) Designation of Beneficiary. The designation
of a Beneficiary shall not constitute a transfer prohibited by the foregoing
provisions.
1.9 Pricing Limits.
The purchase price per share of the Class A Common
Stock covered by any Award shall be determined by the Committee at the time of
the Award, but in all cases shall not be less than 100% of the Fair Market Value
of the Class A Common Stock on the date of grant (110% in the case of an
Incentive Stock Option for a Participant described in Section 2.4)
II. EMPLOYEE OPTIONS
2.1 Grants.
One or more Options may be granted under this Article
to any Eligible Employee. Each Option granted shall be designated by the
Committee in the applicable Award Agreement as either a Nonqualified Stock
Option or an Incentive Stock Option.
2.2 Option Payment Provisions.
The purchase price of any shares purchased on
exercise of an Option granted under this Article shall be paid in full at the
time of each purchase in one or a combination of the following methods: (i) in
cash or by electronic funds transfer; (ii) by certified or cashier's check
payable to the order of the Corporation; or (iii) by the delivery of shares of
Class A Common Stock of the Corporation already owned by the Participant,
provided, however, that the Committee may in its absolute discretion limit the
Participant's ability to exercise an Award by delivering such shares, and
provided further that any shares delivered which were initially acquired upon
exercise of a stock option must have been owned by the Participant at least six
months as of the date of delivery. Shares of Class A Common Stock used to
satisfy the exercise price of an Option shall be valued at their
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<PAGE> 10
Fair Market Value on the date of exercise. In addition to the payment methods
described above, the Committee may provide that the Option can be exercised and
payment made by delivering a properly executed exercise notice together with
irrevocable instructions to a broker to promptly deliver to the Corporation the
amount of sale proceeds necessary to pay the exercise price and, unless
otherwise prohibited by the Committee or applicable law, any applicable tax
withholding under Section 6.5. The Corporation shall not be obligated to deliver
certificates for the shares unless and until it receives full payment of the
exercise price therefor and any related withholding obligations have been
satisfied.
2.3 Limitations on Grant and Terms of Incentive Stock
Options.
(a) $100,000 Limit. To the extent that the
aggregate Fair Market Value of stock with respect to which incentive stock
options first become exercisable by a Participant in any calendar year exceeds
$100,000, taking into account both Class A Common Stock subject to Incentive
Stock Options under this Plan and stock subject to incentive stock options under
all other plans of the Company or any parent corporation, such options shall be
treated as nonqualified stock options. For this purpose, the Fair Market Value
of the stock subject to options shall be determined as of the date the options
were awarded. In reducing the number of options treated as incentive stock
options to meet the $100,000 limit, the most recently granted options shall be
reduced first. To the extent a reduction of simultaneously granted options is
necessary to meet the $100,000 limit, the Committee may, in the manner and to
the extent permitted by law, designate which shares of Class A Common Stock are
to be treated as shares acquired pursuant to the exercise of an Incentive Stock
Option.
(b) Option Period. Each Option and all rights
thereunder shall expire no later than 10 years after the Award Date.
(c) Other Code Limits. There shall be imposed
in any Award Agreement relating to Incentive Stock Options such terms and
conditions as from time to time are required in order that the Option be an
"incentive stock option" as that term is defined in Section 422 of the Code.
2.4 Limits on 10% Holders.
No Incentive Stock Option may be granted to any
person who, at the time the Option is granted, owns (or is deemed to own under
Section 424(d) of the Code) shares of outstanding Class A Common Stock
possessing more than 10% of the total combined voting power of all classes of
stock of the Corporation, unless the exercise price of such Option is at least
110% of the Fair Market Value of the stock subject to the Option and such Option
by its
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terms is not exercisable after the expiration of five years from the date such
Option is granted.
2.5 Option Repricing/Cancellation and Regrant/Waiver of
Restrictions.
Subject to Section 1.4, Section 1.7(a), Section 2.2
and Section 6.6 and the specific limitations on Awards contained in this Plan,
the Committee from time to time may authorize, generally or in specific cases
only, for the benefit of any Eligible Employee any adjustment in the exercise or
purchase price, the vesting schedule, the number of shares subject to, the
restrictions upon or the term of, an Award granted under this Article by
cancellation of an outstanding Award and a subsequent regranting of an Award, by
amendment, by substitution of an outstanding Award, by waiver or by other
legally valid means. Such amendment or other action may result among other
changes in an exercise or purchase price which is higher or lower than the
exercise or purchase price of the original or prior Award, provide for a greater
or lesser number of shares subject to the Award, or provide for a longer or
shorter vesting or exercise period.
2.6 Options and Rights in Substitution for Stock Options
Granted by Other Corporations.
Options and Stock Appreciation Rights may be granted
to Eligible Employees under this Plan in substitution for employee stock options
granted by other entities to persons who are or who become employees of the
Company, in connection with a merger or reorganization by or with the granting
entity or an affiliated entity, or the acquisition by the Company, directly or
indirectly, of all or a substantial part of the stock or assets of the employing
entity.
III. STOCK APPRECIATION RIGHTS.
3.1 Grants.
In its discretion, the Committee may grant to any
Eligible Employee stock appreciation rights ("SARs") concurrently with the grant
of Options or other Awards or in respect of an outstanding Award, in whole or in
part, or independently of any other Award, all on such terms as set forth by the
Committee in the Award Agreement. Any SAR granted in connection with an
Incentive Stock Option shall contain such terms as may be required to comply
with the provisions of Section 422 of the Code and the regulations promulgated
thereunder, unless the holder otherwise agrees.
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3.2 Exercise of SARs.
(a) Exercisability. A Stock Appreciation Right
granted independently of any other Award shall be exercisable pursuant to the
terms of the Award Agreement. Unless the Award Agreement or the Committee
otherwise provides, an SAR related to another Award shall be exercisable at such
time or times, and to the extent, that the related Award shall be exercisable
and only when the Fair Market Value of the stock subject to the related Award
exceeds the base price of the SAR.
(b) Effect on Available Shares. To the extent
that a SAR is exercised, the number of shares of Class A Common Stock subject to
any related Award shall be charged against the maximum amount of Class A Common
Stock that may be delivered pursuant to Awards under this Plan. The number of
shares subject to the SAR and the related Award of the Participant shall also be
reduced by such number of shares, unless the Award Agreement otherwise provides.
(c) Proportionate Reduction. If an SAR extends
to less than all the shares covered by the related Award and if a portion of the
related Award is thereafter exercised, the number of shares subject to the
unexercised SAR shall be reduced only if and to the extent that the remaining
number of shares covered by such related Award is less than the remaining number
of shares subject to such SAR.
3.3 Payment.
(a) Amount. Unless the Committee otherwise
provides, upon exercise of an SAR and surrender of an exercisable portion of any
related Award (to the extent required by Section 3.2), the Participant shall be
entitled to receive subject to Section 6.5 payment of an amount determined by
multiplying
(i) the difference obtained by subtracting
the base price per share of Class A Common Stock under
the SAR from the Fair Market Value of a share of Class
A Common Stock on the date of exercise of the SAR, by
(ii) the number of shares with respect to
which the SAR shall have been exercised.
(b) Form of Payment. Unless otherwise provided
in the Award Agreement, the Committee, in its sole discretion, shall determine
the form in which payment shall be made of the amount determined under paragraph
(a) above, either solely in cash, solely in shares of Class A Common Stock
(valued at Fair Market Value on the date of exercise of the SAR), or partly in
such shares and partly in cash, provided that the Committee shall have
determined that such exercise and payment are consistent with applicable law.
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If the Committee permits the Participant to elect to receive cash or shares (or
a combination thereof) on such exercise, any such election shall be subject to
such conditions as the Committee may impose.
3.4 Limited SARs.
The Committee may grant to any Eligible Employee SARs
exercisable only upon or in respect of a change in control or any other
specified event ("Limited SARs") and such Limited SARs may relate to or operate
in tandem or combination with or substitution for Options, other SARs or other
Awards (or any combination thereof), and may be payable in cash or shares based
on the spread between the base price of the SAR and a price based upon or equal
to the Fair Market Value of the Shares during a specified period or at a
specified time within a specified period before, after or including the date of
such event.
IV. RESTRICTED STOCK AWARDS.
4.1 Grants.
The Committee may, in its discretion, grant one or
more Restricted Stock Awards to any Eligible Employee. Each Restricted Stock
Award Agreement shall specify the number of shares of Class A Common Stock to be
issued to the Participant, the date of such issuance, the consideration for such
shares (but not less than the minimum lawful consideration under applicable
state law) by the Participant, the extent (if any) to which and the time (if
ever) at which the Participant shall be entitled to dividends, voting and other
rights in respect of the shares prior to vesting, and the restrictions (which
may be based on performance criteria, passage of time or other factors or any
combination thereof) imposed on such shares and the conditions of release or
lapse of such restrictions. Such restrictions shall not lapse earlier than one
year after the Award Date, except to the extent the Committee may otherwise
provide. Stock certificates evidencing shares of Restricted Stock pending the
lapse of the restrictions ("Restricted Shares") shall bear a legend making the
appropriate reference to the restrictions imposed hereunder and shall be held by
the Corporation or by a third party designated by the Committee until the
restrictions on such shares shall have lapsed and the shares shall have vested
in accordance with the provisions of the Award and Section 1.7. Upon issuance of
the Restricted Stock Award, the Participant may be required to provide such
further assurance and documents as the Committee may require to enforce the
restrictions.
4.2 Restrictions.
(a) Pre-Vesting Restraints. Except as provided
in Section 4.1 and 1.9, restricted shares comprising any Restricted Stock Award
may not be sold, assigned, transferred, pledged or
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otherwise disposed of or encumbered, either voluntarily or involuntarily, until
the restrictions on such shares have lapsed and the shares become vested.
(b) Dividend and Voting Rights. Unless
otherwise provided in the applicable Award Agreement, a Participant receiving a
Restricted Stock Award shall not be entitled to dividends for any of the shares
(which dividends shall be retained in a restricted account until the shares have
vested and shall revert to the Corporation if they fail to vest), but shall be
entitled to vote such shares prior to vesting.
(c) Cash Payments. If the Participant shall
have paid or received cash (including any dividends) in connection with the
Restricted Stock Award, the Award Agreement shall specify whether and to what
extent such cash shall be returned (with or without an earnings factor) as to
any restricted shares which cease to be eligible for vesting.
4.3 Return to the Corporation.
Unless the Committee otherwise expressly provides,
shares of Restricted Stock that are subject to restrictions at the time of
termination of employment or are subject to other conditions to vesting that
have not been satisfied by the time specified in the applicable Award Agreement
shall not vest and shall be returned to the Corporation in such manner and on
such terms as the Committee shall therein provide.
V. PERFORMANCE SHARE AWARDS, STOCK BONUSES, AND CASH BONUS AWARDS.
5.1 Grants of Performance Share Awards.
The Committee may, in its discretion, grant Performance
Share Awards to Eligible Employees. An Award Agreement shall specify the maximum
number of shares of Class A Common Stock (if any) subject to the Performance
Share Award, the consideration (but not less than the minimum lawful
consideration) to be paid for any such shares as may be issuable to the
Participant, the duration of the Award and the conditions upon which delivery of
any shares or cash to the Participant shall be based. The amount of cash or
shares or other property that may be deliverable pursuant to such Award shall be
based upon the degree of attainment over a specified period of not more than 10
years (a "performance cycle") as may be established by the Committee of such
measure(s) of the performance of the Company (or any part thereof) or the
Participant as may be established by the Committee. The Committee may provide
for full or partial credit, prior to completion of such performance cycle or the
attainment of the performance achievement specified in the Award, in the event
of the Participant's death, Retirement, or Total Disability, a Change in Control
Event or in such other
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circumstances as the Committee (consistent with Section 6.10(c)(2), if
applicable) may determine.
5.2 Grants of Stock Bonuses.
The Committee may grant a Stock Bonus to any Eligible
Employee to reward exceptional or special services, contributions or
achievements in the manner and on such terms and conditions (including any
restrictions on such shares) as determined from time to time by the Committee.
The number of shares so awarded shall be determined by the Committee. The Award
may be granted independently or in lieu of a cash bonus.
5.3 Deferred Payments.
The Committee may authorize for the benefit of any
Eligible Employee the deferral of any payment of cash or shares that may become
due or of cash otherwise payable under this Plan, and provide for accreted
benefits thereon based upon such deferment, at the election or at the request of
such Participant, subject to the other terms of this Plan. Such deferment shall
be subject to such further conditions, restrictions or requirements as the
Committee may impose, subject to any then vested rights of Participants.
5.4 Special Performance-Based Share Awards
Without limiting the generality of the foregoing, and
in addition to awards granted under other provisions of this Plan, other
performance-based awards within the meaning of Section 162(m) of the Code
("Performance-Based Awards"), whether in the form of restricted stock,
performance stock, phantom stock or other rights, the vesting of which depends
on the performance of the Company on a consolidated, segment, subsidiary,
division, or station basis with reference to revenues, net earnings (before or
after interest, taxes, depreciation, or amortization), cash flow, return on
equity or on assets or on net investment, or cost containment or reduction, or
any combination thereof (the criteria) relative to pre-established performance
goals, may be granted under this Plan. The applicable business criteria and
specific performance goal or goals ("targets") must be approved by the Committee
in advance of applicable deadlines under the Code and while the performance
relating to such targets remains substantially uncertain. The applicable
performance measurement period may be not less than one nor more than 10 years.
Performance targets may be adjusted to mitigate the unbudgeted impact of
material, unusual or nonrecurring gains and losses, accounting changes or other
extraordinary events not foreseen at the time the targets were set.
(a) Eligible Class. The eligible class of persons for
Awards under this Section shall be executive officers of the Company.
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(b) Maximum Award. In no event shall grants made in any
fiscal year to any eligible person under this Section 5.4 relate to more than
500,000 shares or a cash amount of more than $20 million.
(c) Committee Certification. Before any
Performance-Based Award under this Section 5.4 is paid, the Committee must
certify that the material terms of the Performance-Based Award were satisfied.
(d) Terms and Conditions of Awards. The Committee will
have discretion to determine the restrictions or other limitations of the
individual Awards under this Section 5.4, including the authority to reduce
Awards, payouts or vesting or to pay no Awards, in its sole discretion, if the
Committee preserves such authority at the time of grant by language to this
effect in its authorizing resolutions or otherwise.
5.5 Cash Bonus Awards.
(a) The Committee may establish a program of annual
incentive awards that are payable in cash to Eligible Employees based upon the
extent to which performance goals are met during the performance period. The
performance goals may depend upon the performance of the Company on a
consolidated, segment, subsidiary, division, or station basis with reference to
revenues, net earnings (before or after interest, taxes, depreciation, or
amortization), cash flow, return on equity or on assets or net investment, cost
containment or reduction, or achievement of strategic goals (or any combination
of such factors). In addition, the award may depend upon the Eligible Employee's
individual performance.
(b) In no event shall awards payable for any year to
any Eligible Employee exceed $20 million.
(c) In lieu of cash payment of the awards, the
Committee may require or allow a portion of the award to be paid in the form of
a Restricted Stock Award.
VI. OTHER PROVISIONS.
6.1 Rights of Eligible Employees, Participants and
Beneficiaries.
(a) Employment Status. Status as an Eligible Employee
shall not be construed as a commitment that any Award will be made under this
Plan to an Eligible Employee or to Eligible Employees generally.
(b) No Employment Contract. Nothing contained in this
Plan (or in any other documents related to this Plan or to any
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<PAGE> 17
Award) shall confer upon any Eligible Employee or other Participant any right to
continue in the employ or other service of the Company or constitute any
contract or agreement of employment or other service, nor shall interfere in any
way with any right of the Company to otherwise change such person's compensation
or other benefits or to terminate the employment of such person, with or without
cause, but nothing contained in this Plan or any document related hereto shall
adversely affect any independent contractual right of such person without his or
her consent thereto.
(c) Plan Not Funded. Awards payable under this Plan
shall be payable in shares or from the general assets of the Corporation, and
(except as provided in Section 1.4(b)) no special or separate reserve, fund or
deposit shall be made to assure payment of such Awards. No Participant,
Beneficiary or other person shall have any right, title or interest in any fund
or in any specific asset (including shares of Class A Common Stock, except as
expressly otherwise provided) of the Company by reason of any Award hereunder.
Neither the provisions of this Plan (or of any related documents), nor the
creation or adoption of this Plan, nor any action taken pursuant to the
provisions of this Plan shall create, or be construed to create, a trust of any
kind or a fiduciary relationship between the Company and any Participant,
Beneficiary or other person. To the extent that a Participant, Beneficiary or
other person acquires a right to receive payment pursuant to any Award
hereunder, such right shall be no greater than the right of any unsecured
general creditor of the Company.
6.2 Adjustments; Acceleration.
(a) Adjustments. If there shall occur any extraordinary
dividend or other extraordinary distribution in respect of the Class A Common
Stock (whether in the form of cash, Class A Common Stock, other securities, or
other property), or any reclassification, recapitalization, stock split
(including a stock split in the form of a stock dividend), reverse stock split,
reorganization, merger, combination, consolidation, split-up, spin-off,
combination, repurchase, or exchange of Class A Common Stock or other securities
of the Corporation, or there shall occur any similar extraordinary corporate
transaction (or event in respect of the Class A Common Stock) or a sale of
substantially all the assets of the Corporation as an entirety, then the
Committee shall, in such manner and to such extent (if any) as it deems
appropriate and equitable (1) proportionately adjust any or all of (a) the
number and type of shares of Class A Common Stock (or other securities) which
thereafter may be made the subject of Awards (including the specific maxima and
numbers of shares set forth elsewhere in this Plan), (b) the number, amount and
type of shares of Class A Common Stock (or other securities or property) subject
to any or all outstanding Awards, (c) the grant, purchase, or exercise price of
any or all outstanding Awards, (d) the securities, cash or other property
deliverable upon exercise of any outstanding Awards, or (e) the performance
standards appropriate to any outstanding
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<PAGE> 18
Awards, or (2) in the case of an extraordinary dividend or other distribution,
recapitalization, reclassification, reorganization, merger, consolidation,
combination, sale of assets, split up, exchange, or spin off, make provision for
a cash payment or for the substitution or exchange of any or all outstanding
Awards or the cash, securities or property deliverable to the holder of any or
all outstanding Awards based upon the distribution or consideration payable to
holders of the Class A Common Stock of the Corporation upon or in respect of
such event; provided, however, in each case, that with respect to Awards of
Incentive Stock Options, no such adjustment shall be made which would cause the
Plan to violate Section 424(a) of the Code or any successor provisions thereto
without the written consent of holders materially adversely affected thereby. In
any of such events, the Committee may take such action sufficiently prior to
such event if necessary to permit the Participant to realize the benefits
intended to be conveyed with respect to the underlying shares in the same manner
as is available to shareholders generally.
(b) Acceleration of Awards Upon Change in Control.
Unless prior to a Change in Control Event the Committee determines that, upon
its occurrence, there shall be no acceleration of benefits under Awards or
determines that only certain or limited benefits under Awards shall be
accelerated (which limits may differ among Eligible Employees) and the extent to
which they shall be accelerated, and/or establishes a different time in respect
of such Event for such acceleration, then upon the occurrence of a Change in
Control Event
(i) each Option and SAR shall become immediately
exercisable,
(ii) Restricted Stock shall immediately vest free of
restrictions, and
(iii) the number of shares, cash or other property
covered by each Performance Share Award shall be issued to the
Participant.
The Committee may override the limitations on acceleration in this Section
6.2(b) by express provision in the Award Agreement and may accord any Eligible
Employee a right to refuse any acceleration, whether pursuant to the Award
Agreement or otherwise, in such circumstances as the Committee may approve. Any
acceleration of Awards shall comply with applicable legal requirements.
(c) Possible Early Termination of Accelerated Awards.
If any Option or other right to acquire Class A Common Stock under this Plan has
been fully accelerated as permitted by Section 6.2(b) but is not exercised prior
to (i) a dissolution of the Corporation, or (ii) an event described in Section
6.2(a) that the Corporation does not survive, or (iii) the consummation of an
event described in Section 6.2(a) that results in a Change of
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<PAGE> 19
Control approved by the Board, such Option or right shall thereupon terminate.
Notwithstanding the foregoing, the Committee may, in any such event, expressly
provide for the survival, substitution, exchange or other settlement of such
Option or right.
6.3 Termination of Employment; Termination of Subsidiary
Status; Discretionary Provisions.
(a) Options - Resignation or Dismissal. If the
Participant's employment by the Company terminates for any reason other than
Retirement, Total Disability or death, the Participant shall have, unless
otherwise provided in the Award Agreement and subject to earlier termination
pursuant to or as contemplated by Section 1.6, three months from the date of
termination of employment to exercise any Option to the extent it shall have
become exercisable on the date of termination of employment, and any Option to
the extent not exercisable on that date shall terminate.
(b) Options - Retirement, Death or Disability. If the
Participant's employment by the Company terminates as a result of Retirement,
Total Disability or death, the Participant, Participant's Personal
Representative or his or her Beneficiary, as the case may be, shall have, unless
otherwise provided in the Award Agreement and subject to earlier termination
pursuant to or as contemplated by Section 1.6, 12 months from the date of
termination of employment to exercise any Option to the extent it shall have
become exercisable by the date of termination of employment, and any Option to
the extent not exercisable on that date, or such later date as may be provided
in the Award Agreement, shall terminate.
(c) Certain SARs. Each SAR granted concurrently or in
tandem with an Option shall have the same post-termination provisions and
exercisability periods as the Option to which it relates, unless the Committee
otherwise provides.
(d) Other Awards. The Committee shall establish in
respect of each other Award granted hereunder the Participant's rights and
benefits (if any) in the event of a termination of employment and in so doing
may make distinctions based upon the cause of termination and the nature of the
Award.
(e) Change in Subsidiary Status. For purposes of this
Plan and any Award hereunder, if an entity ceases to be a Subsidiary, a
termination of employment shall be deemed to have occurred with respect to each
employee of such Subsidiary who does not continue as an employee of another
entity owned, controlled by or under common control with the Company.
(f) Committee Discretion. Notwithstanding the foregoing
provisions of this Section 6.3, in the event of, or in anticipation of, a
termination of employment with the Company for any reason, other than discharge
for cause, the Committee may, in
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<PAGE> 20
its discretion, increase the portion of the Participant's Award available to the
Participant, or Participant's Beneficiary or Personal Representative, as the
case may be, or, subject to the provisions of Section 1.6, extend the
exercisability period upon such terms as the Committee shall determine and
expressly set forth in or by amendment to the Award Agreement. The Committee
discretion in this subsection is subject to the limitations of Section 1.7(a)
and (b).
6.4 Compliance With Laws.
This Plan, the granting and vesting of Awards under
this Plan and the offer, issuance and delivery of shares of Class A Common Stock
and/or the payment of money under this Plan or under Awards granted hereunder
are subject to compliance with all applicable federal and state laws, rules and
regulations (including but not limited to state and federal securities law and
federal margin requirements) and to such approvals by any listing, agency or any
regulatory or governmental authority as may, in the opinion of counsel for the
Corporation, be necessary or advisable in connection therewith. Any securities
delivered under this Plan shall be subject to such restrictions, and the person
acquiring such securities shall, if requested by the Corporation, provide such
assurances and representations to the Corporation as the Corporation may deem
necessary or desirable to assure compliance with all applicable legal
requirements.
6.5 Tax Withholding.
Upon any exercise, vesting, or payment of any Award
(or upon the disposition of shares of Class A Common Stock acquired pursuant to
the exercise of an Incentive Stock Option prior to satisfaction of the holding
period requirements of Section 422 of the Code), the Company shall have the
right at its option to (i) require the Participant (or Personal Representative
or Beneficiary, as the case may be) to pay or provide for payment of the amount
of any taxes which the Company may be required to withhold with respect to such
Award event or payment or (ii) deduct from any amount payable the amount of any
taxes which the Company may be required to withhold with respect to such cash
payment. In any case where a tax is required to be withheld in connection with
the delivery of shares of Class A Common Stock under this Plan, the Committee
may in its sole discretion grant (either at the time of the Award or thereafter)
to the Participant the right to elect, pursuant to such rules and subject to
such conditions as the Committee may establish, to have the Corporation reduce
the number of shares to be delivered by (or otherwise reacquire) the appropriate
number of shares valued at their then Fair Market Value, to satisfy such
withholding obligation.
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6.6 Plan Amendment, Termination and Suspension.
(a) Board or Committee Authorization. The Board may, at
any time, terminate or, from time to time, amend, modify or suspend this Plan,
in whole or in part. Any decision to amend, modify or suspend the provisions of
Section 1.4, 1.7, 1.9 and/or 2.2 shall require unanimous approval of the Board.
No Awards may be granted during any suspension of this Plan or after
termination of this Plan, but the Committee shall retain jurisdiction as to
Awards then outstanding in accordance with the terms of this Plan.
(b) Shareholder Approval. To the extent then required
under Sections 422 and 424 of the Code or any other applicable law, or deemed
necessary or advisable by the Board, any amendment to this Plan shall be subject
to shareholder approval.
(c) Amendments to Awards. Without limiting any other
express authority of the Committee under but subject to the express limits of
this Plan, the Committee by agreement or resolution may waive conditions of or
limitations on Awards to Eligible Employees that the Committee in the prior
exercise of its discretion has imposed, without the consent of a Participant,
and may make other changes to the terms and conditions of Awards that do not
affect, in any manner materially adverse to the Employee Participant, his or her
rights and benefits under an Award.
(d) Limitations on Amendments to Plan and Awards. No
amendment, suspension or termination of this Plan or change of or affecting any
outstanding Award shall, without written consent of the Participant, affect in
any manner materially adverse to the Participant any rights or benefits of the
Participant or obligations of the Corporation under any Award granted under this
Plan prior to the effective date of such change. Changes contemplated by Section
6.2 shall not be deemed to constitute changes or amendments for purposes of this
Section 6.6.
6.7 Privileges of Stock Ownership.
Except as otherwise expressly authorized by the
Committee or this Plan, a Participant shall not be entitled to any privilege of
stock ownership as to any shares of Class A Common Stock not actually delivered
to and held of record by him or her. No adjustment will be made for dividends or
other rights as a shareholder for which a record date is prior to such date of
delivery.
6.8 Effective Date of this Plan.
This Plan shall be effective as of the date it is
approved by the Board, subject to approval of the shareholders of
the Corporation.
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<PAGE> 22
6.9 Term of this Plan.
No Award shall be granted under this Plan after the
date that is the 10th anniversary of the date that this Plan is approved by the
Board (the "termination date"). Unless otherwise expressly provided in this Plan
or in an applicable Award Agreement, any Award granted prior to the termination
date may extend beyond such date, and all authority of the Committee with
respect to Awards hereunder, including the authority to amend an Award, shall
continue during any suspension of this Plan and shall continue in respect of
Awards outstanding on the termination date.
6.10 Governing Law/Construction/Severability.
(a) Choice of Law. This Plan, the Awards, all documents
evidencing Awards and all other related documents shall be governed by, and
construed in accordance with the laws of the State of California.
(b) Severability. If any provision shall be held by a
court of competent jurisdiction to be invalid and unenforceable, the remaining
provisions of this Plan shall continue in effect.
(c) Plan Construction.
(1) Rule 16b-3; Bifurcation. It is the intent of the
Corporation that the Awards hereunder satisfy and be interpreted in a manner
that, in the case of Participants who are or may be subject to Section 16 of the
Exchange Act, satisfies the applicable requirements of Rule 16b-3 so that such
persons (unless they otherwise agree) will be entitled to the benefits of Rule
16b-3 or other exemptive rules under Section 16 of the Exchange Act and will not
be subjected to avoidable liability thereunder. Notwithstanding anything to the
contrary in this Plan, the provisions of this Plan may at any time be bifurcated
by the Board or the Committee in any manner so that certain provisions of any
Award Agreement intended (or required in order) to satisfy the applicable
requirements of Rule 16b-3 are only applicable to Section 16 Persons and to
those Awards to Section 16 Persons intended to satisfy the requirements of Rule
16b-3.
(2) Section 162(m). It is the further intent of the
Company that Options or SARs with an exercise or base price not less than Fair
Market Value on the date of grant and performance awards under Section 5.4 and
5.5 of this Plan that are granted to or held by a person subject to Section
162(m) of the Code shall qualify as performance-based compensation under Section
162(m) of the Code, and this Plan shall be interpreted consistent with such
intent.
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6.11 Captions.
Captions and headings are given to the sections and
subsections of this Plan solely as a convenience to facilitate reference. Such
headings shall not be deemed in any way material or relevant to the construction
or interpretation of this Plan or any provision thereof.
6.12 Non-Exclusivity of Plan.
Nothing in this Plan shall limit or be deemed to
limit the authority of the Board or the Committee to grant awards or authorize
any other compensation, with or without reference to the Class A Common Stock,
under any other plan or authority; provided that any other Award or compensation
shall be made in accordance with the Company's Certificate of Incorporation and
Bylaws.
VII. DEFINITIONS.
7.1 Definitions.
(a) "Award" shall mean an award of any Option, SAR,
Restricted Stock, Stock Bonus, Performance Share Award, Phantom Stock, dividend
equivalent or deferred payment right or other right or security that is measured
by the value of or appreciation in the value of the Corporation's Class A Common
Stock or would otherwise constitute a "derivative security" under Rule 16a-1(c)
of the Exchange Act, or any combination thereof, whether alternative or
cumulative, authorized by and granted under this Plan.
(b) "Award Agreement" shall mean any writing setting
forth the terms of an Award that has been authorized by the Committee.
(c) "Award Date" shall mean the date upon which the
Committee took the action granting an Award or such later date as the Committee
designates as the Award Date.
(d) "Award Period" shall mean the period beginning on
an Award Date and ending on the expiration date of such Award.
(e) "Beneficiary" shall mean the person, persons, trust
or trusts designated by a Participant or, in the absence of a designation,
entitled by will or the laws of descent and distribution, to receive the
benefits specified in the Award Agreement and under this Plan in the event of a
Participant's death, and shall mean the Participant's executor or administrator
if no other Beneficiary is designated and able to act under the circumstances.
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(f) "Board" shall mean the Board of Directors of the
Corporation.
(g) "Change in Control Event" shall mean any of the
following:
(1) Approval by the shareholders of the Corporation of
the dissolution or liquidation of the Corporation;
(2) Approval by the shareholders of the Corporation of
an agreement to merge or consolidate, or otherwise reorganize, with or into one
or more entities that are not Subsidiaries or other affiliates, as a result of
which less than 50% of the outstanding voting securities of the surviving or
resulting entity immediately after the reorganization are, or will be, owned,
directly or indirectly, by shareholders of the Corporation immediately before
such reorganization (assuming for purposes of such determination that there is
no change in the record ownership of the Corporation's securities from the
record date for such approval until such reorganization and that such record
owners hold no securities of the other parties to such reorganization, but
including in such determination any securities of the other parties to such
reorganization held by affiliates of the Corporation);
(3) Approval by the shareholders of the Corporation of
the sale of substantially all of the Corporation's business and/or assets to a
person or entity which is not a Subsidiary or other affiliate; or
(4) Any "person" (as such term is used in Sections
13(d) and 14(d) of the Exchange Act but excluding any person described in and
satisfying the conditions of Rule 13d-1(b)(1) thereunder), other than a person
who is the beneficial owner (as defined in Rule 13d-3 under the Exchange Act) of
more than 20% of the outstanding Shares of Class A Common Stock at the time of
adoption of this Plan (or an affiliate, successor, heir, descendent or related
party of or to any such person), becomes the beneficial owner (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the
Corporation representing more than 50% of the combined voting power of the
Corporation's then outstanding securities entitled to then vote generally in the
election of directors of the Corporation.
(h) "Class A Common Stock" shall mean the Class A
Common Stock of the Corporation and such other securities or property as may
become the subject of Awards, or become subject to Awards, pursuant to an
adjustment made under Section 6.2 of this Plan.
(i) "Code" shall mean the Internal Revenue Code of
1986, as amended from time to time.
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(j) "Commission" shall mean the Securities and Exchange
Commission.
(k) "Committee" shall mean the Board or a committee
appointed by the Board to administer this Plan, which committee shall be
comprised of at least two directors.
(l) "Company" shall mean, collectively, the Corporation
and its Subsidiaries.
(m) "Corporation" shall mean Univision Communications
Inc., a Delaware corporation, and its successors.
(n) "Eligible Employee" shall mean an officer (whether
or not a director) or key employee of the Company, or any Other Eligible Person,
as determined by the Committee in its discretion.
(o) "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended.
(p) "Exchange Act" shall mean the Securities Exchange
Act of 1934, as amended from time to time.
(q) "Fair Market Value" on any date shall mean (i) if
the stock is listed or admitted to trade on a national securities exchange, the
closing price of the stock on the Composite Tape, as published in the Western
Edition of The Wall Street Journal, of the principal national securities
exchange on which the stock is so listed or admitted to trade, on such date, or,
if there is no trading of the stock on such date, then the closing price of the
stock as quoted on such Composite Tape on the next preceding date on which there
was trading in such shares; (ii) if the stock is not listed or admitted to trade
on a national securities exchange, the last price for the stock on such date, as
furnished by the National Association of Securities Dealers, Inc. ("NASD")
through the NASDAQ National Market Reporting System or a similar organization if
the NASD is no longer reporting such information; (iii) if the stock is not
listed or admitted to trade on a national securities exchange and is not
reported on the National Market Reporting System, the mean between the bid and
asked price for the stock on such date, as furnished by the NASD or a similar
organization; or (iv) if the stock is not listed or admitted to trade on a
national securities exchange, is not reported on the National Market Reporting
System and if bid and asked prices for the stock are not furnished by the NASD
or a similar organization, the value as established by the Committee at such
time for purposes of this Plan.
(r) "Incentive Stock Option" shall mean an Option which
is designated and intended as an incentive stock option within the meaning of
Section 422 of the Code, the award of which contains such provisions (including
but not limited to the receipt
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<PAGE> 26
of shareholder approval of this Plan, if the award is made prior to such
approval) and is made under such circumstances and to such persons as may be
necessary to comply with that section.
(s) "Nonqualified Stock Option" shall mean an Option
that is designated as a Nonqualified Stock Option and shall include any Option
intended as an Incentive Stock Option that fails to meet the applicable legal
requirements thereof. Any Option granted hereunder that is not designated as an
incentive stock option shall be deemed to be designated a nonqualified stock
option under this Plan and not an incentive stock option under the Code.
(t) "Option" shall mean an option to purchase Class A
Common Stock under this Plan. The Committee shall designate any Option granted
to an Eligible Employee as a Nonqualified Stock Option or an Incentive Stock
Option.
(u) "Other Eligible Person" shall mean any non-employee
individual consultant or advisor, or (to the extent provided in the next
sentence) agent, who renders or has rendered bona fide services (other than
services in connection with the offering or sale of securities of the Company in
a capital raising transaction) to the Company, and who is selected to
participate in this Plan by the Committee. A non-employee agent providing bona
fide services to the Company (other than as an eligible advisor or consultant)
may also be selected as an Other Eligible Person if such agent's participation
in this Plan would not adversely affect (x) the Corporation's eligibility to use
Form S-8 to register under the Securities Act the offer and sale by the Company
of shares issuable under this Plan or (y) the Corporation's compliance with any
other applicable laws.
(v) "Participant" shall mean an Eligible Employee who
has been granted an Award under this Plan.
(w) "Performance Share Award" shall mean an award of a
right to receive shares of Class A Common Stock under Section 5.1, or to receive
shares of Class A Common Stock or other compensation (including cash) under
Section 5.4, the issuance or payment of which is contingent upon, among other
conditions, the attainment of performance objectives specified by the Committee.
(x) "Personal Representative" shall mean the person or
persons who, upon the disability or incompetence of a Participant, shall have
acquired on behalf of the Participant, by legal proceeding or otherwise, the
power to exercise the rights or receive benefits under this Plan by virtue of
having become the legal representative of the Participant.
(y) "Phantom Stock" shall mean an award or right to
receive a cash bonus where the Eligible Employee is awarded units and the amount
of the cash bonus equals the value of a share of the Class A Common Stock on the
date of award times the number
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<PAGE> 27
of units that the Eligible Employee has earned on the date of payment.
(z) "Plan" shall mean this Univision Communications
Inc. 1996 Performance Award Plan.
(aa) "Restricted Stock" shall mean shares of Class A
Common Stock awarded to a Participant subject to payment of such consideration,
if any, and such conditions on vesting (which may include, among others, the
passage of time, specified performance objectives or other factors) and such
transfer and other restrictions as are established in or pursuant to this Plan
and the related Award Agreement, for so long as such shares remain unvested
under the terms of the applicable Award Agreement.
(bb) "Retirement" shall mean retirement with the
consent of the Company or, from active service as an employee or officer of the
Company on or after attaining age 55 with ten or more years of service or age
65.
(cc) "Rule 16b-3" shall mean Rule 16b-3 as promulgated
by the Commission pursuant to the Exchange Act, as amended from time to time,
but subject to any applicable transition rules.
(dd) "Section 16 Person" shall mean a person subject to
Section 16(a) of the Exchange Act.
(ee) "Securities Act" shall mean the Securities Act of
1933, as amended from time to time.
(ff) "Stock Appreciation Right" or "SAR" shall mean a
right authorized under this Plan to receive a number of shares of Class A Common
Stock or an amount of cash, or a combination of shares and cash, the aggregate
amount or value of which is determined by reference to a change in the Fair
Market Value of the Class A Common Stock.
(gg) "Stock Bonus" shall mean an Award of shares of
Class A Common Stock for no consideration other than past services and without
restriction other than such transfer or other restrictions as the Committee may
deem advisable to assure compliance with law.
(hh) "Subsidiary" shall mean any corporation or other
entity a majority of whose outstanding voting stock or voting power or equity
interest is beneficially owned directly or indirectly by the Corporation.
(ii) "Total Disability" shall mean a "permanent and
total disability" within the meaning of Section 22(e)(3) of the Code and such
other disabilities, infirmities, afflictions or conditions as the Committee by
rule may include.
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UNIVISION COMMUNICATIONS INC.
NONSTATUTORY STOCK OPTION AGREEMENT
THIS AGREEMENT (the "Agreement") is dated as of the ______ day of
______________, 1996, by and between Univision Communications Inc., a Delaware
corporation (the "Corporation"), and ___________________________ (the
"Optionee").
W I T N E S E T H:
WHEREAS, on __________________, 1996, pursuant to the Corporation's
1996 Performance Award Plan (the "Plan"), the Compensation Committee of the
Corporation's Board of Directors (the "Committee") has granted to the Optionee,
effective as of ______ ___________, 1996 (the "Award Date") a nonstatutory stock
option (the "Option") to purchase all or any part of an aggregate of ______
shares of the Corporation's Class A Common Stock (the "Aggregate Grant"), $____
par value, upon the terms and conditions herein and in the Plan;
NOW, THEREFORE, in consideration of the mutual promises and covenants
made herein and the mutual benefits to be derived herefrom, the parties hereto
agree as follows:
1. Grant of Option. The Corporation has granted to the Optionee as a
matter of separate inducement and agreement in connection with his or her
employment, and not in lieu of any salary or other compensation for his or her
services, the right and option to purchase, in accordance with the Plan and on
the terms and conditions of the Plan and those hereinafter set forth, all or any
part of the Aggregate Grant at a price equal to $_____ per share, exercisable
from time to time subject to the provisions of this Agreement prior to the close
of business on a date not later than the day before the tenth anniversary of the
Award Date (the "Expiration Date"). Such price equals the value established by
the Committee for purposes of granting options under the Plan and is at least
100% of the Fair Market Value of the Class A Common Stock on the Award Date. The
effectiveness of this grant is subject to shareholder approval of the Plan.
2. Exercisability of Option.
Except as earlier permitted by or pursuant to the Plan or by resolution
of the Committee adopted after the date hereof, the Option may be exercised from
time to time and for the number of shares as follows: 50% of the Aggregate Grant
on the first anniversary of the Award Date and 50% on the second anniversary of
the Award Date.
<PAGE> 29
To the extent the Optionee does not in any year purchase all or any
part of the shares to which the Employee is entitled, the Optionee has the right
cumulatively thereafter to purchase any shares not so purchased and such right
shall continue until the Option terminates or expires. Fractional share
interests shall be disregarded, but may be cumulated. No fewer than 10 shares
may be purchased at any one time, unless the number purchased is the total
number at the time available for purchase under the Option.
3. Change in Control Event. Notwithstanding any provisions in this
Agreement to the contrary, unless prior to a Change in Control Event (as that
term is defined in the Plan) the Committee determines that, upon its occurrence,
there shall be no acceleration of benefits or determines that only certain or
limited benefits shall be accelerated and the extent to which they shall be
accelerated, and/or establishes a different time in respect of such Event for
such acceleration, then upon the occurrence of a Change in Control Event each
outstanding Option granted to the Optionee shall become exercisable, and the
total number of shares subject thereto shall be purchasable immediately.
4. Method of Exercise of Option and Payment of Purchase Price. Subject
to such further limitations and rules or procedures as the Committee may from
time to time establish, the exercise of all or any portion of the Option shall
be by means of written notice of exercise delivered to the Corporation,
specifying the number of whole shares with respect to which the Option is being
exercised, together with any written statements required pursuant to Section 6.4
of the Plan (regarding compliance with applicable law) and payment of the
purchase price according to the following terms:
(a) in cash or by electronic funds transfer;
(b) by certified or cashier's check payable to the order of the
Corporation;
(c) by the delivery of shares of Class A Common Stock of the
Corporation already owned by the Optionee, provided, however, that the
Committee may in its absolute discretion limit the Optionee's ability to
exercise the Option by delivering such shares, and provided further that
any shares delivered which were initially acquired upon exercise of a stock
option must have been owned by the Optionee at least six months as of the
date of delivery; or
(d) by notice and third party payment in such manner as may be
authorized by the Committee.
5. Continuance of Employment. Nothing contained in this Agreement or in
the Plan shall confer upon the Optionee any
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<PAGE> 30
right to continue in the employ of the Corporation or applicable Subsidiary (as
that term is defined in the Plan) or interfere in any way with the rights of the
Corporation or applicable Subsidiary, which are hereby expressly reserved, to
reduce the Optionee's compensation from the rate in existence at any time or to
terminate the Optionee's employment for any reason, except to the extent that
such rights are modified by other contracts.
6. Effect of Termination of Relationship. The Option and all other
rights hereunder, to the extent such rights shall not have been exercised, shall
terminate and become null and void at such time as the Optionee ceases to be
employed by the Corporation or applicable Subsidiary. Notwithstanding the
preceding, if the Optionee's employment is not discharged for cause (as defined
by the Committee), the Optionee (or, in the event of Optionee's death, his
Beneficiary) may exercise the Option within any applicable period specified in
(a), (b), (c) or (d) below to the extent the Option was exercisable at the date
of Optionee's termination of employment (for any reason other than discharge for
cause) either by its terms or pursuant to a determination by the Committee
(within a reasonable period after such termination) in its discretion to
accelerate its exercisability as follows:
(a) up to three months after termination other than termination for
Retirement, Total Disability, or death;
(b) up to 12 months after such termination if such termination occurs
as a result of Retirement;
(c) up to 12 months after such termination if such termination occurs
by reason of Total Disability; or
(d) up to 12 months after the Optionee's death, if the Optionee dies
while in the employ of the Corporation or Subsidiary or during the period
referred to in clauses (a), (b) or (c) of this Section 6. Exercise under
this clause (d) shall be by the Optionee's Beneficiary under the Plan;
provided, however, that in no event may the Option be exercised by anyone under
this Section 6 or otherwise after the Expiration Date. If the Optionee is
employed by an entity which ceases to be a Subsidiary, such event shall be
deemed for purposes of this Section 6 to be a termination of employment
described in subsection (a) in respect of Optionee. Absence from work caused by
military service or authorized sick leave shall not be considered as a
termination of employment for purposes of this Section .
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7. Transferability of Option. Subject to the provisions of Section 6
above and of the Plan, the Option and the rights and privileges conferred hereby
are not transferable or assignable and may not be offered, sold, pledged,
hypothecated or otherwise disposed of in any way (whether by operation of law or
otherwise) and shall not be subject to execution, attachment, garnishment, levy
or similar process. Except as provided by the Plan, the Option may be exercised
only by (i) the Optionee, (ii) the Optionee's Personal Representative, if any,
if the Optionee has suffered a Disability, or (iii) to the extent provided by
Section 6(d), by the Optionee's transferees by will or under the laws of descent
and distribution. In the event that the spouse of the Optionee shall have
acquired a community property interest in the Option, the Optionee or such
transferees may exercise it on behalf of the spouse of the Optionee or such
spouse's successor in interest.
8. Termination of Option Under Certain Circumstances. Subject to
Section 6.2(c) of the Plan, the Option shall terminate to the extent not
previously exercised upon an event or transaction which the Corporation does not
survive.
9. Notices. Any notice to be given under the terms of this Agreement or
pursuant to the Plan shall be in writing and addressed to the Secretary of the
Corporation at its principal office, and any notice to be given to the Optionee
shall be addressed to him or her at the address given beneath the Optionee's
signature hereto or at such other address as either party may hereafter
designate in writing to the other party. Any such notice shall be deemed to have
been duly given when enclosed in a properly sealed envelope addressed as
aforesaid, registered or certified, and deposited (postage and registry or
certification fee prepaid) in a post office or branch post office regularly
maintained by the United States Government.
10. Tax Withholding. Subject to the provisions of Section 6.5 of the
Plan, withholding requirements in connection with the exercise of the Option may
be satisfied by any of the following methods:
(a) deduction of required withholding amounts by the Corporation from
any cash payment by the Corporation;
(b) payments by the Optionee prior to exercise of the Option of such
amounts in cash or in shares; or
(c) reduction of the number of shares to be received pursuant to the
exercise of the Option.
11. 1996 Performance Award Plan. The Option and all rights of Optionee
thereunder are subject to, and the Optionee
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<PAGE> 32
agrees to be bound by, all of the terms and conditions of the provisions of the
Plan, incorporated herein by this reference, to the extent such provisions are
applicable to options granted to Eligible Employees. The Optionee acknowledges
receipt of a copy of the Plan, which is made a part hereof by this reference,
and agrees to be bound by the terms thereof. Unless otherwise expressly provided
in other Sections of this Agreement, provisions of the Plan that confer
discretionary authority on the Committee do not (and shall not be deemed to)
create any rights in the Optionee unless such rights are expressly set forth
herein or are otherwise in the sole discretion of the Committee so conferred by
appropriate action of the Committee under the Plan after the date hereof.
12. Compliance with Law. No shares may be purchased by exercise of the
Option and no shares shall be issued and delivered to Optionee pursuant to this
Agreement unless and until (i) a registration statement under the Securities Act
of 1933 with respect to the Class A Common Stock issuable under the Plan shall
have become effective with the Securities and Exchange Commission, and (ii) any
applicable requirements under the securities laws of any state of the United
States shall have been satisfied.
13. Defined Terms. Capitalized terms used herein and not otherwise
defined herein shall have the meaning assigned to such terms in the Plan.
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IN WITNESS WHEREOF, the Corporation has caused this Agreement to be
executed on its behalf by a duly authorized officer and the Optionee has
hereunto set his or her hand as of the day and year first above written.
UNIVISION COMMUNICATIONS INC.
By:________________________________
Title:_____________________________
OPTIONEE
__________________________________________
(Signature)
__________________________________________
(Print Name)
__________________________________________
(Address)
__________________________________________
(City, State, Zip Code)
__________________________________________
(Social Security Number)
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CONSENT OF SPOUSE
In consideration of the execution of the foregoing Nonstatutory Stock
Option Agreement by Univision Communications Inc., I, _________________ the
spouse of the Optionee herein named, do hereby join with my spouse in executing
the foregoing Nonstatutory Stock Option Agreement and do hereby agree to be
bound by all of the terms and provisions thereof and of the Plan.
Date: _________________ __________________________________
Signature of Spouse
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<PAGE> 1
Exhibit 10.6
FORM OF
AMENDED AND RESTATED PROGRAM LICENSE AGREEMENT
This AMENDED AND RESTATED PROGRAM LICENSE AGREEMENT is entered into as
of _______ by and between DENNEVAR B.V., a Netherlands corporation, (hereinafter
"Licensor") and THE UNIVISION NETWORK LIMITED PARTNERSHIP, a Delaware limited
partnership ("Licensee"), and amends and restates that certain PROGRAM LICENSE
AGREEMENT made as of the 17th day of December, 1992 by and between Licensor and
Licensee.
WHEREAS, Licensor has or will have rights in the United States of
America, including all territories and possessions thereof other than Puerto
Rico (the "Territory"), to license certain television programs in the Spanish
language or with Spanish subtitles produced by and to be produced by CORPORACION
VENEZOLANA DE TELEVISION, C.A. (VENEVISION) ("CVT") and other entities
controlled by CVT (CVT and all of the companies it controls, and Licensor being
hereinafter referred to collectively as "Venevision").
WHEREAS, Licensee operates the Univision Spanish language television
network and the Galavision Spanish language television network of affiliated
television broadcast stations and cable television systems (such networks being
hereinafter referred to as the "Networks" and those television broadcast
stations affiliated with such Networks that are now or hereafter directly or
indirectly majority owned and operated by Univision Communications Inc. ("UCI")
or a direct or indirect subsidiary of UCI or with respect to which UCI or a
direct or indirect subsidiary of UCI has the right to designate a majority of
the board or similar governing body, and in each case, which broadcast in the
Spanish language format being hereinafter referred to as the "Stations") and
desires to acquire the right to broadcast certain of the programs produced, to
be produced or otherwise marketed by Televisa over the Networks in the Territory
and Licensor is willing to grant such a license upon the terms, provisions and
conditions herein set forth.
WHEREAS, Univisa, Inc. ("Univisa") is simultaneously herewith entering
into an Amended and Restated Program License Agreement, dated as of the date
hereof (the "Univisa Agreement"), with the Licensee to license certain
television programming for broadcast over the Networks.
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained, the parties hereto agree as follows:
1. Right of First Offer of Programming.
1.1 Pursuant to the terms and conditions hereof, Licensor hereby
grants Licensee the option to obtain an exclusive license for the broadcast over
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<PAGE> 2
Networks in the Territory of all Programs (as hereinafter defined). The option
may be exercised as follows:
(a) First, Licensee will have a first option to accept for
exclusive license in the Territory, subject to all the other terms and
conditions of this Agreement: (i) Programs in an amount that, when aggregated
with Programs accepted pursuant to Section 1.1(a) of the Univisa Agreement, will
be sufficient to fill 18 hours of programming per day in aggregate for the two
Networks combined, and (ii) any news Programs.
(b) Second, Licensee will have a first option, subject to all
the other terms and conditions of this Agreement, to accept for exclusive
license in the Territory, any Programs in an amount which, when aggregated with
the amount of Programs accepted pursuant to paragraph (a) above, will be
sufficient to satisfy the representation and warranty included in Section 7.3
hereof.
1.2 For purposes of this Agreement only:
(a) "Programs" means (i) programs initially produced in the
Spanish language or programs with Spanish subtitles produced by third parties or
co- produced by Venevision with third parties to which Venevision owns sole
television broadcast rights in the Territory (and which is not a Co-Produced
Program (as defined below)); (ii) all television programs in the Spanish
language or programs with Spanish subtitles, previously produced directly or
indirectly by or for Venevision and to be produced directly or indirectly by or
for Venevision for broadcast at any time to which Venevision or Licensor owns
television broadcast rights in the Territory and which are available for
broadcast including, without limitation, in the following categories: novelas,
musicals, variety shows, situation comedies, game shows, talk shows, children's
shows, news shows, cultural and educational programs, and sports programs; and
(iii) movies produced by Venevision and for which Venevision or Licensor owns
the television broadcast rights in the Territory, from and after the time that
such movies become available for free television broadcast in the Territory.
Each Program shall be available for license to Licensee in the Territory
pursuant to the terms of this Agreement upon the first to occur of (i) the date
when such Program is initially broadcast by Venevision or (ii) the date when
such Program is first made available for broadcast by any third party. Except as
provided in the following paragraph, if Licensor or Venevision shall produce
directly or indirectly any Spanish Language or Spanish subtitled programming for
broadcast in the Territory it shall be deemed a Program subject to the terms and
conditions of this Agreement.
The term "Programs" does not include Special Programs (other than
Venevision Produced U.S. Special Programs, as defined below), Co-Produced
Programs or Default Programs (each as defined below) or local news or public
affairs programs (it being understood that all such local programs will be
produced or acquired by Licensee or its affiliated stations). "Co-Produced
Programs" means programs originally produced for
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<PAGE> 3
broadcast in the Spanish language or with Spanish subtitles, previously
produced, or to be produced, by Venevision for broadcast pursuant to
co-production agreements with unaffiliated third parties or produced by
unaffiliated third parties (in each case, other than any broadcaster in and to
the Territory) (i) under which Venevision does not own the right to permit the
broadcast of such program in the Territory and/or (ii) under which Venevision is
required to share with such third parties the revenue derived from the broadcast
of such program in the Territory. No program that would otherwise be a Program
under Section 1.2(a)(ii) shall become a Co-Produced Program solely because
Venevision or Licensor licenses or sells distribution rights in the Territory
prior to or during production of such program and neither Venevision nor
Licensor shall enter into any agreement to the contrary. In order for a program
to be a Co-Produced Program, some material underlying property right of such
program must be provided by such unaffiliated third party and such unaffiliated
third party must participate in the development and production of the Program in
exchange for such third party's distribution rights in the Territory or
participation in distribution revenues from the Territory. Nothing contained in
this Agreement shall prevent Licensor or Venevision from licensing broadcast
rights (in exchange for cash or in-kind services or property other than
Programs) for territories other than the Territory to programs initially
produced in the Spanish language or programs with Spanish language subtitles
that are developed and produced in the Territory by unaffiliated third party
producers located in the Territory, including broadcasters, provided that
neither Licensor nor Venevision has participated in any way in the development
or production of any such program. Venevision agrees that it will use its good
faith efforts not to structure agreements with respect to programs in a manner
intended to cause such programs not to be considered Programs hereunder.
(b) "broadcast" or "network broadcast" means all electronic
forms or other means now known or hereafter developed of transmission and
re-transmission, including but not limited to over-the-air television, cable
television, low power television, multi-point distribution systems, wire, fiber
optics, microwave, and satellite, except for purposes of delivery of the
Programs pursuant to Section 4.
(c) "Affiliate" of a person means any person that directly or
indirectly controls, is controlled by, or is under common control with the
person in question. For the purposes of this definition, "control", when used
with respect to any person, means the power to direct the management and
policies of such person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise. Affiliate shall not mean any
television station that has entered into an affiliation agreement with the
Networks but is otherwise not an Affiliate of UCI any Person that controls CVT
or any person under common control with, but not directly or indirectly
controlled by, CVT.
1.3 Licensor and its Affiliates shall have the right and ability to,
and to permit others to: (i) transmit or re-transmit in any electronic form or
other means, from any television station in Venezuela, or via satellite which
receives its signal from any earth station or other facility in Venezuela, any
Programs which may also be covered by
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<PAGE> 4
this Agreement, notwithstanding the fact that such transmissions or
re-transmissions may be viewed in the Territory, provided that neither Licensor
nor its Affiliates consent to the re-transmission of such Programs by any
television station in the Territory or by any cable system in the Territory; and
(ii) market and promote and otherwise generate revenues (including, but not
limited to the sale of advertising time) attributable to the ability of viewers
in the Territory to receive such Programs.
2. Notification, Acceptance and Licensing of Programming. Not less than
once in each calendar quarter during the term of this Agreement, Licensor will
deliver a written notice (an "Availability Notice") to Licensee specifying all
Programs which (a) have become available for license by Licensee since the
delivery of the preceding Availability Notice or (b) may no longer be available
to Licensee on an exclusive basis. Such notice shall be accompanied, if
practicable, by a video tape pilot or representative episode of each of the new
Programs (except for live Programs). If Licensee desires to license any
Programs, it must notify Licensor of its acceptance in writing (an "Acceptance")
within thirty days of receipt of the Availability Notice. Such Acceptance shall
specify the name of the Accepted Program, the name of the Network on which it is
to be broadcast, the date and time period in which Licensee intends to commence
the broadcast of the Accepted Program (which date shall be not more than 180
days from the date of Acceptance with respect to Programs other than novelas and
shall be not more than 270 days from the date of Acceptance with respect to
novelas), and such other information as may reasonably be requested by Licensor.
An Acceptance shall constitute the exercise by Licensee of its option for the
Program(s) accepted and upon receipt by Licensor of such Acceptance, the
Program(s) covered by each such Acceptance shall without further action be
automatically licensed to Licensee on the terms and conditions of this
Agreement. Subject to the terms and conditions set forth herein, Licensee shall
have exclusivity in the carriage of all accepted Programs ("Accepted Programs")
for broadcast in the Territory from the date of acceptance to the conclusion of
the applicable Broadcast Period. If no such Acceptance is received with respect
to any or all available Programs, Licensor shall be free to license all such
unaccepted Programs ("Unaccepted Programs") to others in the Territory for not
more than one run over a period of one year (which license, in the case of
novelas, may also provide for one rerun), subject to Licensee's right of first
refusal described in Section 3; provided, however, that during the Broadcast
Period of a Program licensed by Licensee, Licensor shall not license any other
person or entity to broadcast in the Territory reruns of such Program or other
Programs of the same series as such Program.
In order to avoid the "warehousing" of Programs by the Licensee, (A)
Licensee shall not issue Acceptance Notices without specifying the intended
broadcast commencement date and time period; however, Licensee shall have the
right at any time for any bona fide reason, on not less than 10 days' written
notice to Licensor at least 60 days prior to the intended broadcast date, (i) to
switch dates and times among previously Accepted Programs or among previously
Accepted Programs and programs acquired from another source, provided that after
giving effect to such switch all other requirements with
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<PAGE> 5
respect to broadcast and scheduling of Programs contained in this Agreement
continue to be satisfied and/or (ii) to rescind Acceptance with respect to any
Program, and to issue an Acceptance Notice with respect to a substitute Program,
provided that (x) the substitute Program shall be broadcast in the time slot
originally reserved for the rescinded Program and (y) the rescinded Program
shall thereafter constitute a Default Program, (B) Licensee shall not issue
Acceptance Notices with respect to more Programs than it is capable of airing
over the Networks; and (C) Licensee shall not broadcast any First-Run Program
(other than news) on either of the Networks (X) between the hours of 1:00 a.m.
and 9:00 a.m. unless Licensee can demonstrate that it is commercially reasonable
to broadcast such program during such period or (Y) during any other time period
during which Licensee cannot reasonably expect the 70% broadcast coverage
requirement described in the following paragraph to be satisfied.
Subject to the preceding paragraph, with respect to any Accepted
Program, Licensee must commence the broadcast of the Program on one of the
Networks over at least 70% of such Network's coverage (as determined by the
number of Hispanic television households potentially reached by the applicable
Network) within 180 days following notice of its Acceptance (except for novelas
where the time for commencement may be extended for an additional 90 days
because of scheduling problems) and shall continue to broadcast the Program
without substantial interruption over such minimum of 70% Network coverage until
the conclusion of the Broadcast Period (as defined below). Should Licensee fail
to comply with the broadcast commencement, 70% coverage and continuous broadcast
provisions of this paragraph, Licensee's license with respect to the Program (a
"Default Program") shall be terminated 10 days following written notice of
non-compliance unless Licensee demonstrates compliance or excusable
non-compliance with such provisions. In the event of termination, the Default
Program shall be subject to re-license by Licensor to others at any time or from
time to time (without any right of first refusal or other right applicable to
Licensee, whether pursuant to Section 3 or otherwise). The parties acknowledge
that this provision is designed to avoid "warehousing" of product by Licensee
and that in the event Licensee breaches the provisions of this paragraph,
Licensor's damages are incapable of calculation and the remedies set forth
herein are appropriate under the circumstances.
For purposes of this Agreement only:
(a) "Broadcast Period" means (i) for novelas or other Programs
with a plot line continuing through more than one episode, the time necessary to
broadcast all episodes on a continuing basis without substantial interruption
and (ii) for all other programs (excluding one-program shows), (x) for weekly
programs, the time period necessary to broadcast 26 episodes of the Program
without substantial interruption, which under normal circumstances is expected
to be 26 continuous weeks and (y) for daily programs (Monday through Friday), 26
weeks.
(b) "without substantial interruption" means that the Programs
will be scheduled and run on a continuing periodic basis except for occasional
network
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<PAGE> 6
preemption to accommodate one-time specials or programs which, because of their
nature or timeliness or because of FCC Rules, must in Licensee's reasonable
judgment be broadcast in lieu of the regularly scheduled Program.
3. Right of First Refusal. If any other person or entity wishes to
accept for broadcast in the Territory any Unaccepted Programs which Licensor has
offered to it pursuant to Section 2, Licensor shall send a written notice (a
"Second Chance Notice") to Licensee specifying the name of any such Programs and
the license terms offered by such person or entity that wishes to accept such
Unaccepted Programs. Licensee shall have a right of first refusal, good for
three business days from receipt of the Second Chance Notice to acquire such
Unaccepted Program, subject to the same conditions offered by such other person
or entity, for the Program Royalty (as defined in Section 5) plus the amount, if
any, by which the license fee offered by such other person or entity exceeds the
Program Royalty attributable to combined net time sales for the time slot in
which such Program is broadcast. Any such Unaccepted Programs which are not
accepted in writing by Licensee within three business days of receiving a Second
Chance Notice may be licensed to such other person or entity. Rights to exploit
Unaccepted Programs will be granted to other persons or entities for not more
than one run over a period of one year (provided that, in the case of novelas,
such rights may include the right to one rerun), and if the same Program is
offered thereafter in the Territory, it will once again be offered to Licensee
pursuant to Section 1 hereof. All episodes of a novela which are to be shown
within one year from the showing of the first episode shall be deemed to be the
same Program for the purposes of the requirement to offer all programming first
to Licensee.
4. Delivery, Expenses And Use Of Programs.
4.1 Following Licensee's acceptance of Programs pursuant to Sections
2 or 3 of this Agreement, Licensor shall deliver to Licensee, at Licensee's
expense, and in accordance with Licensee's reasonable and customary
instructions, a visual and aural reproduction of each such Program or Program
episode via satellite or video tape suitable for broadcast and formatted for
U.S. broadcast in accordance with past practices, at least ten days prior to
Licensee's scheduled broadcast, except for live broadcasts or as otherwise
agreed by the parties. Programs will be deemed delivered by Licensor when
transmitted to the satellite when actually received if shipped by freight, or
when made available through permission to re-transmit the signal of an affiliate
of Licensee.
4.2 Licensee agrees that as soon as practicable following receipt of
each satellite transmission or video tape delivery, it will examine it to
determine whether it is physically suitable for broadcasting and notify Licensor
immediately upon detecting any defect rendering such copy unsuitable for
telecast. In such cases, Licensor shall promptly deliver at its own expense
either a physically suitable tape or (except in the case of novelas) a tape of
another Program in the same series, subject to verification of the defect.
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<PAGE> 7
4.3 Licensee agrees to return each video tape delivered by Licensor
to Licensor on the reels and in the containers in which it was shipped, in the
same condition as received, reasonable wear and tear through proper use
excepted, as soon as practicable after telecast. Licensee shall pay all costs of
returning the tapes to Licensor. Should Licensor request that the video tape be
sent to a location other than Licensor's warehouse, Licensor will bear
responsibility for shipping costs above those which would have been applicable
for shipping the video tape to Licensor's warehouse.
4.4 The video tapes shall at all times remain the property of
Licensor subject to Licensee's rights as herein provided. The risk of loss,
damage, destruction or disappearance of any tape shall be borne by Licensee from
the time of delivery to Licensee until the return thereof to Licensor or
Licensor's designee and as to any tape or part thereof lost, stolen, destroyed
or damaged after delivery to Licensee and before the return thereof, Licensee
shall pay Licensor the cost of replacement thereof, which payment shall be
limited to the cost of replacing the raw video tape.
4.5 Licensee will not, and will not authorize others to copy,
duplicate or re-license any Program unless necessary for Licensee's own network
broadcast. Any duplicate or copy of any part of the Program (including trailers)
made by Licensee for its own purposes will be erased following the broadcast of
the Program. Upon receipt of written request from Licensor, an officer of
Licensee shall certify in writing the destruction of all such copies.
4.6 Licensor will furnish to Licensee glossy prints of still photos,
synopses, casts and all other promotional material for the promotion and
exploitation of the Programs, if available. Licensor grants to Licensee the
right to use and license others to use Licensor's name and, unless Licensee is
advised by Licensor that the rights of Licensor are limited (in which case, to
the extent not limited), to use and license others to use the name and likeness
of, and biographical material concerning, each star, featured performer, writer,
director and producer in the Programs and the titles of each program and
fictitious persons and locales therein, for advertising and publicity, of the
Programs, and any broadcaster or sponsor thereof, but not for direct endorsement
of any product or service, provided that any such use will protect the
copyrights of Licensor. To the extent available to Licensor after reasonable
efforts, Licensor will furnish Licensee with music cue sheets for the Programs
and the information necessary for administration of rights payments and
compliance with Section 507 of the Federal Communications Act of 1934, as
amended concerning broadcast matter and disclosures required thereunder, insofar
as that Section applies to persons furnishing program material for television
broadcasting ("Section 507"). Subject to the foregoing and subject to Licensor's
reasonable prior approval, Licensee shall have the right to produce its own
promotional material for or from the Programs.
4.7 Licensee agrees to include in its broadcast of Accepted Programs
all copyright notices and all credits made part of each Accepted Program
including but not limited to stars, directors, producers and writers. Licensee
shall exhibit
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<PAGE> 8
the Accepted Program as delivered in the Spanish language or with Spanish
subtitles and no change, alteration or addition may be made to any Program
without Licensor's consent except as may be necessary for the insertion of
commercials during natural breaks in the Program, or except as may be necessary
to comply with Licensee's broadcast standards and practices and applicable
government rules and regulations.
4.8 Subject to Section 7.1 and 7.3 and Licensee's remedies for a
breach thereof, Licensor may, at its sole and absolute discretion, withdraw any
Program and terminate any license with respect to such Program if Licensor
reasonably determines that the broadcast thereof is likely to: (i) infringe the
rights of third parties, (ii) violate any law, court order, governmental
regulation or ruling of any governmental agency, (iii) otherwise subject the
Licensor to any material liability. In addition, Licensor reserves the right to
withdraw any Program prior to the conclusion of the applicable Broadcast Period
if, for any reason, the program is no longer being produced by or available to
Venevision or Licensor. In the event of any such withdrawal or termination,
Licensor shall give Licensee as much notice as possible, and the parties shall
have no obligations to each other with regard to Programs not produced, subject
to Section 7.1 and 7.3 and Licensee's remedies for a breach thereof. No Program
that is withdrawn pursuant to this Section 4.8 shall be relicensed to a third
party in the Territory without being first offered to Licensee pursuant to
Section 1.
4.9 The license granted to Licensee with respect to each Accepted
Program (other than novelas) shall be for one Network broadcast of each Program
or Program episode, subject only to FCC rules and regulations and to tape delay
in certain of Licensee's affiliated outlets to accommodate time zone
differences. In addition, within 24 hours of the original broadcast, Licensee
may broadcast a repeat of any Program, free of the restrictions contained herein
regarding Network coverage. Except as herein provided, without the express
permission of Licensor, not to be unreasonably withheld, no Program or Program
episode may be rerun during any Broadcast Period.
Notwithstanding the prohibition on reruns during a Broadcast Period,
Licensee will have the option at the end of any Broadcast Period to license one
(1) rerun of each novela (herein "Protected Rerun"). Such option must be
exercised in writing not later than thirty (30) days before the end of the
Broadcast Period for each such novela. The terms of such Protected Rerun license
shall be the same as for the original license, except that the time during which
the broadcast must commence will be one (1) year instead of one hundred and
eighty (180) days.
5. Royalties.
5.1 Licensee shall pay Licensor a royalty in cash for the Programs
offered to it (the "Program Royalty") in an amount equal to a percentage of
"combined net time sales" as Licensor and Televisa shall from time to time
designate in a joint written notice to Licensee (which designation shall not be
made more frequently than annually); provided that aggregate percentage
royalties paid under this Section 5 and
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Section 5 of the Televisa Agreement shall not exceed 11% of combined net time
sales for the period commencing on the date hereof and ending on December 31,
1996, 13.5% of combined net time sales for the period commencing on January 1,
1997 and ending on December 31, 1997, and 15% of combined net time sales for all
periods commencing on or after January 1, 1998 until the termination of this
Agreement. For purposes of this Agreement, "combined net time sales" shall mean
all time sales of the Stations and the Networks, including barter and trade and
television subscription revenue (including, without limitation, satellite
subscription revenue), less advertising commissions, Special Event Revenue (as
defined below), music license fees, outside affiliate compensation, and taxes
(other than withholding taxes) paid by Licensee pursuant to Section 5.3 hereof
and similar taxes paid by the Stations calculated in accordance with U.S.
generally accepted accounting principles ("GAAP"). Notwithstanding the
foregoing, no revenues of the Galavision Network received prior to the closing
of the acquisition of the assets of the Galavision Network by Licensee pursuant
to the Galavision Network Option Agreement between Univisa and Licensee entered
into as of December 17, 1992 shall be included in combined net times sales for
purposes of computing the Program Royalty. Unless otherwise agreed in writing
between the parties, barter and trade sales shall be valued at the fair market
value of the goods or services received by the Licensee or the Stations.
5.2 Program Royalties shall be paid currently on a monthly basis on
the twelfth business day after the end of each month in a single payment to
Licensor based upon the parties' good faith best estimate at such time of the
amounts accrued. Appropriate adjustment (the "Adjustment") will be made to
Program Royalties on a quarterly basis within 45 days after the end of each
quarter, and the full amount thereof shall be paid or credited, as the case may
be, with the next monthly payment of Program Royalties for any difference
between the amounts so paid and those finally determined to have accrued. In all
cases, the calculation of the Adjustment will be made as promptly as practicable
by Licensee, and in the event of any disputes the determination shall be made by
a nationally recognized independent certified public accounting firm mutually
selected by Licensor and Licensee (or, if they fail to designate such a firm
within 10 days after written notice of a dispute, by such firm designated by the
President of the American Arbitration Association (or his designee)), whose
determination will be final and binding upon the parties. The fees and expenses
of such firm shall be paid one-half by Licensor and one-half by Licensee, unless
such firm determines it would be more equitable to otherwise allocate such fees
and expenses.
5.3 All payments made pursuant to this section shall be in cash in
U.S. currency with accompanying back-up information in reasonable detail of
combined net time sales for the applicable period. Such payments shall be
calculated as provided above regardless of the amount of Programs licensed
hereunder or whether any such Programs are broadcast. In order to assure
compliance with the terms of this Agreement, Licensor shall have the right to
receive once each year a certificate from Licensee's independent certified
public accounting firm, which certificate shall attest to the combined net time
sales for the year. Licensee shall pay for the preparation of such certificate
and its delivery to Licensor. Licensor may request additional certificates and
services either
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from Licensee's accounting firm or from a firm of certified public accountants
chosen by Licensor. The fees and expenses of the certified public accountants
providing such additional certificates and performing such additional services
pursuant to this Section 5.3 shall be paid by Licensor, unless such verification
results in an adjustment in Licensor's favor equal or greater than 5% of the
amount originally computed by Licensee, in which case such fee will be paid by
Licensee. Licensee agrees to provide any certified public accountants designated
by Licensor with access to all business records of Licensor related to the
computation of combined net time sales. Licensor agrees to maintain the
confidentiality of all information learned from Licensee in connection with the
performance of this Agreement, other than information (i) which becomes public
(unless it becomes public because of a breach of this covenant by Licensor),
(ii) which otherwise becomes known to Licensor (unless Licensor knows that the
information has been disclosed in violation of a confidentiality agreement with
Licensee), or (iii) which Licensor is required by law, order or administrative
law request or by stock exchange rule or regulation to divulge.
5.4 Any and all sums payable on account of sales, use or other
similar taxes arising out of or relating to the licensing or exhibition by
Licensee of the Programs, in addition to any personal property or other tax
assessed or levied by any governmental unit arising out of or relating to the
storage or possession of the Programs thereof by Licensee shall be paid by
Licensee.
5.5 Licensee may deduct and withhold from any payment to or for the
account of Licensor with respect to the Program Royalties such amounts as it in
good faith determines it is required to withhold with respect to such payment
under applicable United States and state tax withholding laws, and shall
promptly remit such amounts to the appropriate taxing authority. Within 30 days
of any such remittance Licensee shall furnish to Licensor the original or
certified copy of a receipt evidencing payment, or other evidence of payment
reasonably satisfactory to Licensor. If Licensor has timely filed with Licensee
a duly completed Form 4224, 1001, W-8 or W-9, of the Internal Revenue Service
(or successor form thereto) or has complied with applicable procedures under
state law, entitling it to exemption from, or a reduced rate of, withholding
under the applicable law or regulations, the amount withheld shall be
accordingly limited. Licensee shall cooperate in any reasonable manner requested
by Licensor to minimize Licensor's withholding tax liability.
5.7 If Licensee is more than 30 days late in paying any amount due
to Licensor under this Section 5, such late amounts shall thereafter bear
interest at a rate equal to LIBOR plus 5%, plus any applicable withholding.
6. Special Programs and Co-Produced Programs.
6.1 For purposes of this Agreement:
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(a) "Special Programs" means special programs such as the World
Cup, other sporting events, political conventions, election coverage, parades,
pageants, special variety shows and other non-episodic and non-continuing shows.
(b) "Non-Venevision-Produced Special Programs" means Special
Programs not produced directly or indirectly by or for Venevision.
(c) "Venevision-Produced U.S. Special Programs" means
Venevision-Produced Special Programs for which Licensor has adequate rights to
license such Special Programs to Licensee under the terms of this Agreement.
(d) "Venevision-Produced Non-U.S. Special Programs" means
Venevision-Produced Special Programs for which Licensor does not have adequate
rights to license such Special Programs to Licensee under the terms of this
Agreement.
(e) "Venevision-Produced Special Programs" means Special
Programs directly or indirectly produced by or for Venevision.
(f) "Special Event Revenue" means net time sales for
Non-Venevision-Produced Special Programs and Non-Televisa-Produced Special
Programs as defined in the Univisa Agreement broadcast by Licensee on either
Network.
6.2 Licensor shall use its best efforts, and shall cause its
Affiliates to use their best efforts, to coordinate its Non-Venevision-Produced
Special Program acquisitions with those of Licensee, so as to permit Licensee to
participate therein and to acquire rights in the Territory to such programs on
an advantageous basis and on terms satisfactory to Licensee; provided, however,
that the obligation to use "best efforts" shall not be interpreted to include
any obligation of Licensor or its Affiliates to expend additional money to
permit Licensee's participation or to acquire rights on an advantageous basis.
6.3 Venevision-Produced U.S. Special Programs shall be "Programs"
for all purposes of this Agreement.
6.4 At the request of Licensee, Licensor shall use its best efforts,
and shall cause its Affiliates to use their best efforts, to acquire broadcast
rights in the Territory on terms satisfactory to Licensee for
Venevision-Produced Non-U.S. Special Programs and any Co-Produced Program that
falls within clause (i) (but not clause (ii)) of the definition of "Co-Produced
Program" in Section 1.2 (a); provided, however, that the obligation to use its
"best efforts" shall not be interpreted to include any obligation of Licensor to
expend additional money, except to the extent reimbursed by the "Special Event
Fee" (as defined below). Such programs accepted by Licensee shall be licensed
hereunder to Licensee for the Program Royalty plus a fee (the "Special Event
Fee") in the amount of the cost to Licensor of the acquisition of broadcast
rights in the Territory to such program, such costs to be determined by the
parties in good faith based on the
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portion of the total amount paid by Licensor for broadcast rights that is
reasonably allocated to the acquisition of broadcast rights in the Territory.
6.5 Licensor shall offer Licensee in accordance with all applicable
provisions of this Agreement all Co-Produced Programs that fall within clause
(ii) of the definition of "Co-Produced Program" in Section 1.2(a) for which
program Licensor has or can obtain adequate rights and licensing authority to
offer such programs to Licensee in compliance with the terms and conditions of
this Agreement, except that the Program Royalty specified in Section 5 hereof
shall not include the license fee for Co-Produced Programs. Compensation to
Licensor for all Co-Produced Programs accepted by Licensee shall be computed and
paid in accordance with such terms as the parties may mutually agree in writing.
If the parties are unable to agree on the royalty for any Co-Produced Program
within 10 days after such program is offered by Licensor, such program may be
sold to others in the Territory, so long as Licensor in good faith determines
that the terms and conditions applicable to such sale are more favorable to the
Licensor than those offered by the Licensee in writing within such 10-day
period.
7. Representations and Warranties of Licensor.
7.1 Licensor hereby agrees, warrants and represents as follows:
(a) Subject to Section 1.4 hereof Licensor is free to enter into
and fully perform this Agreement;
(b) Licensor has or will have the right to grant to Licensee the
broadcast rights to the Accepted Programs in the Territory set forth in this
Agreement, including but not limited to the necessary literary, artistic,
technological and intellectual property rights and has secured or will secure
all necessary written consents, permissions and approvals for incorporation into
such Programs of the names, trademarks, likenesses and/or biographies of all
persons, firms, products, companies and organizations depicted or displayed in
such Programs, and any preexisting film or video footage produced by third
parties;
(c) There are no and will not be any pending claims, liens,
charges, restrictions or encumbrances on the Accepted Programs that conflict
with the broadcast rights granted hereunder to such Programs in the Territory;
(d) Licensor has paid or will pay all compensation, residuals,
reuse fees, synchronization royalties, and other payments which must be made in
connection with the Accepted Programs and in connection with exploitation of the
rights herein granted to Licensee to any third parties including, but not
limited to, musicians, directors, writers, producers, announcers, publishers,
composers, on-camera and off-camera performers and other persons who
participated in production of such Programs, and to any applicable unions,
guilds or other labor organizations; provided, however, that Licensor has not
acquired performing rights for performance in the Territory of the music
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contained in such Programs, which rights shall be obtained by Licensee;
provided, further, however, that Licensor warrants and represents that all music
is available for licensing through ASCAP, BMI or SESAC (or any successor or
similar entity in the United States) or is in the public domain or is owned or
controlled by Licensor to the extent necessary to permit broadcasts hereunder in
the Territory and no additional clearance or payment is required for such
broadcast;
(e) The main and end titles of the Accepted Programs and all
publicity, promotion, advertising and packaging information and materials
supplied by Licensor will contain all necessary and proper credits for the
actors, directors, writers and all other persons appearing in or connected with
the production of such Programs who are entitled to receive credit and comply
with all applicable contractual, guild, union and statutory requirements and
agreements;
(f) Exercise of the broadcast rights to the Accepted Programs in
the Territory will not infringe on any rights of any third party, including but
not limited to copyright, patent, trademark, unfair competition, contract,
property, defamation, privacy, publicity or "moral rights" (to the extent such
moral rights are recognized by U.S. law);
(g) Except to the extent expressly permitted by this Agreement,
Licensor has not and will not grant or license to others, and will not itself
exercise, any rights to broadcast the Accepted Programs in or to the Territory;
(h) Each and every one of the representations and warranties
made by Licensor herein shall survive the Broadcast Period for each Accepted
Program;
(i) To the extent Section 507 (as defined in Section 4.6 above)
is applicable, no Accepted Program includes or will include any matter for which
any money, service or other valuable consideration is directly or indirectly
paid or promised to Licensor by a third party, or accepted from or charged to a
third party by Licensor, unless such is disclosed in accordance with Section
507. Licensor shall exercise reasonable diligence to inform its employees, and
other persons with whom it deals directly in connection with such programs, of
the requirements of Section 507; provided, however, that no act of any such
employee or of any independent contractor connected with any of the programs, in
contravention of the provisions of Section 507, shall constitute a breach of the
provisions of this paragraph unless Licensor has actual notice thereof and fails
promptly to disclose such act to Licensee. As used in this paragraph, the term
"service or other valuable consideration" shall not include any service or
property furnished without charge or at a nominal charge for use in, or in
connection with, any of the programs "unless it is so furnished in consideration
for an identification in a broadcast of any person, product, service, trademark
or brand name beyond an identification which is reasonably related to the use of
such service or property on the broadcast," as such
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terms are used in Section 507. No inadvertent failure by Licensor to comply with
this paragraph shall be deemed a breach of this Agreement; and
(j) For purposes of this Section 7.1 only, "Accepted Programs"
shall be deemed to include Venevision Produced U.S. Special Programs to the
extent broadcast by Licensee.
7.2 Licensor further agrees that, while it has no obligation to do
so, if it secures a producer's (Errors and Omissions) liability policy covering
the Programs, or any part thereof, it will cause Licensee to be named as an
additional insured on such policy and will cause a certificate of insurance to
be promptly furnished to Licensee, provided, however, that the inclusion of
Licensee as an additional insured does not result in any additional cost or
expense to Licensor. Licensor will notify Licensee when such insurance is
obtained and, after obtained if canceled. Any such insurance as to which
Licensee is an additional insured shall be primary as to Licensee and not in
excess of or contributory to any other insurance provided for the benefit of or
by Licensee.
7.3 Licensor warrants that the amount of Programs made available
throughout the term hereunder for license hereunder, when aggregated with (i)
the amount of Programs (as defined in the Univisa Agreement) made available for
license by Univisa pursuant to the Univisa Agreement, (ii) any local-produced
programming by the Stations to the extent such locally produced programming is
used on either of the Networks, (iii) any programs produced by Licensee, and
(iv) any programs purchased by Licensee other than from Licensor, will be
sufficient (when including an estimated six hours of repeat broadcasting) to
fill a twenty-four hour a day, seven day a week time schedule for each of the
Univision Network and the Galavision Network (as currently operated), which such
time schedules as between the two networks shall be separate and
non-duplicative.
8. Indemnification.
8.1 Licensor agrees to hold Licensee, its partners, the partners of
any partnership that is a partner of Licensee, officers, employees, and agents
and the shareholders, officers, directors, employees and agents of the partners
or any corporation or partnership that is a partner of Licensee (collectively
the "Licensee Indemnitees"), harmless, from any claims, deficiencies,
assessments, liabilities, losses, damages, expenses (including, without
limitation, reasonable fees and expenses of counsel) (collectively "Losses")
which any Licensee Indemnitee may suffer by reason of Licensor's breach of, or
non-compliance with, any covenant or provision herein contained or the
inaccuracy of any warranty or representation made in this Agreement and any such
damages shall be reduced by: (i) the amount of any net tax benefit ultimately
accruing to Licensee on account of Licensee's payment of such claim; (ii)
insurance proceeds which Licensee has or will receive in connection with such
claim, and (iii) any recovery from third parties in connection with such claim;
provided, however, that Licensor shall not delay payment of its indemnification
obligations hereunder pending resolution of any tax benefit or
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insurance or third party claim if Licensee provides Licensor with an undertaking
to reimburse Licensor for the amount of any such claim ultimately received; and
provided, further, that Licensee shall have no obligation to obtain any such
insurance proceeds or recovery from third parties if and to the extent Licensor
is subrogated (in form and substance satisfactory to Licensor) to Licensee
claims in respect of such insurance or third parties.
8.2 Licensee agrees to indemnify Licensor, its direct and indirect
shareholders and all officers, directors, employees and agents of any of the
foregoing (the "Licensor Indemnitees") against and hold the Licensor Indemnitees
harmless from any and all Losses incurred or suffered by any Licensor Indemnitee
arising out of a breach by Licensee of the representations, warranties,
covenants or agreements made or to be performed by it pursuant hereto, or
arising out of any program or commercial material (apart from the Programs)
furnished by Licensee and any such damages shall be reduced by: (i) the amount
of any net tax benefit ultimately accruing to Licensor on account of Licensor's
payment of such claim; (ii) insurance proceeds which Licensor has or will
receive in connection with such claim, and (iii) any recovery from third parties
in connection with such claim; provided, however, that Licensee shall not delay
payment of its indemnification obligations hereunder pending resolution of any
tax benefit or insurance or third party claim if Licensor provides Licensee with
an undertaking to reimburse Licensee for the amount of any such claim ultimately
received; and provided, further, that Licensor shall have no obligation to
obtain any such insurance proceeds or recovery from third parties if and to the
extent Licensee is subrogated (in form and substance satisfactory to Licensee)
to Licensor claims in respect of such insurance or third parties.
8.3 The following procedures shall govern all claims for
indemnification made under any provision of this Agreement. A written notice (an
"Indemnification Notice") with respect to any claim for indemnification shall be
given by the party seeking indemnification (the "Indemnitee") to the party from
which indemnification is sought (the "Indemnitor") within thirty (30) days of
the discovery by the Indemnitee of such claim which Indemnification Notice shall
set forth the facts relating to such claim then known to the Indemnitee
(provided that failure to give such Indemnification Notice as aforesaid shall
not release the Indemnitor from its indemnification obligations hereunder unless
and to the extent the Indemnitor has been prejudiced thereby). The party
receiving an Indemnification Notice shall send a written response to the party
seeking indemnification stating whether it agrees with or rejects such claim in
whole or in part. Failure to give such response within ninety (90) days after
receipt of the Indemnification Notice shall be conclusively deemed to constitute
acknowledgment of the validity of such claim. If any such claim shall arise by
reason of any claim made by third parties, the Indemnitor shall have the right,
upon written notice to Indemnitee within 30 days after receipt of the
Indemnification Notice, to assume the defense of the matter giving rise to the
claim for indemnification through counsel of its selection reasonably acceptable
to Indemnitee, at Indemnitor's expense, and the Indemnitee shall have the right,
at its own expense, to employ counsel to represent it;
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provided, however, that if any action shall include both the Indemnitor and the
Indemnitee and there is a conflict of interest because of the availability of
different or additional defenses to the Indemnitee, the Indemnitee shall have
the right to select separate counsel to participate in the defense of such
action on its behalf, at the Indemnitor's expense. The Indemnitee shall
cooperate fully to make available to the Indemnitor all pertinent information
under the Indemnitee's control as to the claim and shall make appropriate
personnel available for any discovery, trial or appeal. If the Indemnitor does
not elect to undertake the defense as set forth above, the Indemnitee shall have
the right to assume the defense of such matter on behalf of and for the account
of the Indemnitor; provided, however, the Indemnitee shall not settle or
compromise any claim without the consent of the Indemnitor, which consent shall
not be unreasonably withheld. The Indemnitor may settle any claim at any time at
its expense, so long as such settlement includes as an unconditional term
thereof the giving by the claimant of a release of the Indemnitee from all
liability with respect to such claim.
9. Term. The term of this Agreement shall be until December 17, 2017.
Any license in effect for any Program at the date of termination of this
Agreement shall continue through the Broadcast Period for such Program, with no
right of re-license or extension at the end thereof, and all of the rights and
obligations of the parties under this Agreement with respect to such license
will continue through the Broadcast Period for such Program, it being agreed
that the parties shall enter into mutually satisfactory royalty arrangements
with respect to the Broadcast Period following the termination of this Agreement
in order to compensate Licensor for the use of Programs during such period and,
if the parties are unable to agree upon such royalty arrangements, the amount
thereof shall be determined based on prevailing market conditions.
In addition this Agreement may be terminated by either party in the
event that the other party (i) materially breaches its obligations hereunder and
fails to cure such breach within 180 days of notice thereof (90 days for failure
to pay the Program Royalty when due) by the party seeking termination (which
notice shall describe the breach in reasonable detail); provided, however, that
the inaccuracy of any of Licensor's representations and warranties contained in
Section 7 hereof shall not be deemed to be a breach of its obligations for
purposes of this Section 9 to the extent that Licensor satisfies its
indemnification obligations with respect to such inaccuracy, or (ii) asserts
Force Majeure under Section 10 as a relief from substantially all of its
obligations hereunder for a period in excess of one year. Any notice of material
breach referred to in (i) above shall concurrently be sent to the Managing
Agents for any lenders providing financing to the Stations and the Networks, and
the Managing Agents on behalf of such lenders shall have the right to cure such
alleged material breach within such 30-day or 180-day cure period. Any notice of
termination for Force Majeure pursuant to (ii) above shall concurrently be sent
to such Managing Agents.
10. Force Majeure. Neither party hereto shall be liable for or suffer
any penalty or termination of rights hereunder by reason of any failure or delay
in performing any of its obligations hereunder if such failure or delay is
occasioned by compliance with
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governmental regulation or order, or by circumstances beyond the reasonable
control of the party (except in the case of Section 7.3 a Force Majeure Event
affecting Univisa shall be deemed to be a Force Majeure Event beyond the
reasonable control of Licensor) so failing or delaying, including but not
limited to acts of God, war, insurrection, fire, flood, accident, strike or
other labor disturbance, interruption of or delay in transportation (a "Force
Majeure Event"). Each party shall promptly notify the other in writing of any
such event of force majeure, the expected duration thereof, and its anticipated
effect on the party affected and make reasonable efforts to remedy any such
event, except that neither party shall be under any obligation to settle a labor
dispute. If Licensor is prevented by a Force Majeure Event from delivering any
Accepted Program to Licensee, the running of the time period for purposes of
computing the applicable Broadcast Period for such Program shall be suspended
and, if such Force Majeure Event prevents Licensor from delivering any
substitute Programs to Licensee, then Licensee's obligations to pay the Program
Royalty under Section 5.1 hereof shall be reduced (but not below zero) for the
time period or periods so affected to the extent necessary to compensate
Licensee for the cost of obtaining substitute programming. Any notice of Force
Majeure sent pursuant to this Section 10 shall concurrently be sent to the
Managing Agents referred to in Section 9 above.
11. Modification. This Agreement shall not be modified or waived in
whole or in part except in writing signed by an officer of the party to be bound
by such modification or waiver.
12. Waiver of Breach. A waiver by either party of any breach or default
by the other party shall not be construed as a waiver of any other breach or
default whether or not similar and whether or not occurring before or after the
subject breach.
13. Jurisdiction; Venue; Service of Process. Each of the parties
irrevocably submits to the jurisdiction of any California State or United States
Federal court sitting in Los Angeles County in any action or proceeding arising
out of or relating to this Agreement or the transactions contemplated hereby,
and irrevocably agrees that any such action or proceeding may be heard and
determined only in such California State or Federal court. Each of the parties
irrevocably waives, to the fullest extent it may effectively do so, the defense
of an inconvenient forum to the maintenance of any such action or proceeding.
Each of the parties irrevocably appoints CT Corporation System (the "Process
Agent"), with an office on the date hereof at 818 West 7th Street, Los Angeles,
CA 90017 as his or its agent to receive on behalf of him or it and his or its
property service of copies of the summons and complaint and any other process
which may be served in any such action or proceeding. Such service may be made
by delivering a copy of such process to any of the parties in care of the
Process Agent at the Process Agent's above address, and each of the parties
irrevocably authorizes and directs the Process Agent to accept such service on
its behalf. As an alternate method of service, each of the parties consents to
the service of copies of the summons and complaint and any other process which
may be served in any such action or proceeding by the mailing or delivering of a
copy of such process to such party at its address specified in or pursuant to
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Section 14. Each of the parties agrees that a final judgment in any such action
or proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law.
14. Notices. All notices and other communications required or permitted
hereunder shall be in writing, shall be deemed duly given upon actual receipt,
and shall be delivered (a) in person, (b) by registered or certified mail (air
mail if addressed to an address outside of the country in which mailed), postage
prepaid, return receipt requested, (c) by a generally recognized overnight
courier service which provides written acknowledgment by the addressee of
receipt, or (d) by facsimile or other generally accepted means of electronic
transmission (provided that a copy of any notice delivered pursuant to this
clause (d) shall also be sent pursuant to clause (b)), addressed as set forth in
Schedule 1 or to such other addresses as may be specified by like notice to the
other parties.
15. Assignments. Either of the parties may assign its rights hereunder
and delegate its duties hereunder, in whole or in part, to an Affiliate capable
to perform the assignor's obligations hereunder, and either of the parties may
assign its rights hereunder and delegate its duties hereunder to any person or
entity to which all or substantially all of such party's businesses and assets
are pledged or transferred. No such assignment or delegation shall relieve any
party of its obligations hereunder. Any such assignment or delegation authorized
pursuant to this Section 15 shall be pursuant to a written agreement in form and
substance reasonably satisfactory to the parties [and to the Managing Agents
referred to in Section 9 above]. Except as otherwise expressly provided herein,
neither this Agreement nor any rights, duties or obligations hereunder may be
assigned or delegated by any of the parties, in whole or in part, whether
voluntarily, by operation of law or otherwise; provided, however, that Licensor
may assign, grant a security interest in or otherwise transfer its rights to
payment hereunder in connection with one or more financings. Any attempted
assignment or delegation in violation of this prohibition shall be null and
void. Subject to the foregoing, all of the terms and provisions hereof shall be
binding upon, and inure to the benefit of, the successors and assigns of the
parties. Nothing contained herein, express or implied, is intended to confer on
any person other than the parties or their respective successors and permitted
assigns, any rights, remedies, obligations or liabilities under or by reason of
this Agreement.
16. Governing Law. This Agreement and the legal relations among the
parties shall be governed by and construed in accordance with the laws of the
State of California applicable to contracts between California parties made and
performed in that State, without regard to conflict of laws principles.
17. Further Assurances. Each party hereto agrees to execute any and all
additional documents and do all things and perform all acts necessary or proper
to further effectuate on evidence this Agreement including any required filings
with the U.S. Copyright Office.
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18. Counterparts. This Agreement may be executed in counterparts, each
of which shall be an original instrument and all of which, when taken together,
shall constitute one and the same agreement.
19. Severability. If any provision of this Agreement, or the
application thereof, shall for any reason or to any extent be invalid or
unenforceable, then the remainder of this Agreement and application of such
provision to other persons or circumstances shall continue in full force and
effect and in no way be affected, impaired or invalidated; provided that the
aggregate of all such provisions found to be invalid or unenforceable does not
materially affect the benefits and obligations of the parties of the Agreement
taken as a whole.
20. Specific Performance. The parties hereto agree that irreparable
damage may occur in the event that any of the provisions of this Agreement were
not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties may be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof in any court of the United States
or any state having jurisdiction pursuant to Section 13, this being in addition
to any other remedy to which they are entitled at law or in equity.
21. Acknowledgement of Security Interest. Pursuant to the financing
documents referred to in Section 9 above, the Administrative Agent (for the
benefit of the various lenders) has been granted a security interest in and to
all of Licensee's rights in this Agreement. The parties hereto acknowledge and
consent to the grant of such security interest.
22. Participation Agreement. All the terms and conditions of this
Agreement shall at all times be subject to the terms and conditions of the
Participation Agreement of even date herewith among Univision Television
Holdings, Inc., A. Jerrold Perenchio, Grupo Televisa, S.A., and Messrs. Gustavo
A. Cisneros and Ricardo J. Cisneros, and if there is any inconsistency between
any terms and conditions of this Agreement and the terms and conditions of the
Participation Agreement, the Participation Agreement shall prevail.
23. Venevision Advertising. Advertising time which is not sold to
advertisers or used by the Network or the Stations for their own purposes will
be made available without charge to Venevision and its Affiliates. Other than as
set forth in the following sentence, such time may be used for promotion or
direct sale (i.e., telemarketing) of products or services now or hereafter owned
or being provided by Venevision or its Affiliates (including, without
limitation, theatrical motion pictures produced or being distributed by any of
them). Such time, however, will not be available for any product or service that
is marketed primarily by telemarketing that was not owned or being provided by
Venevision or its Affiliates as of December 17, 1992, and provided, further,
that such time may be preempted by the Network or any Station to the extent that
19
<PAGE> 20
such time is to be sold to a paying advertiser. Venevision and its Affiliates
will be permitted to purchase for such purposes advertising time which cannot be
preempted by the Network or the Stations for the lowest spot rate then being
offered for a non- preemptable spot in the program during which such time is
sold. Venevision may not, however, directly or indirectly make such free or
purchased time available to Persons other than its Affiliates. All material
provided for broadcast by Venevision or its Affiliates shall comply with the
quality standards for unaffiliated advertisers established by the Network or the
Stations from time to time. The Board of Directors of Licensee, by a vote which
includes, in addition to any other required vote of directors, the affirmative
vote of a majority of the Class T Director(s) (so long as a Class T Voting
Conversion (as defined in the Restated Certificate of Incorporation of UCI) has
not occurred) or a majority of the Class V Director(s) (so long as a Class V
Voting Conversion (as defined in the Restated Certificate of Incorporation of
UCI) has not occurred, may make such rules in connection with the use of such
time by Venevision and its Affiliates as it determines to be appropriate,
including, without limitation, rules for the fair allocation of such time
between Venevision and [Televisa] and their respective Affiliates.
IN WITNESS WHEREOF, the parties have set their hands as of the day and
year first above written.
DENNEVAR, B.V.
By:_________________________________
Title: _____________________________
THE UNIVISION NETWORK LIMITED
PARTNERSHIP
By:_________________________________
Its: _______________________________
20
<PAGE> 21
GUARANTY
For and in consideration of the execution by UNIVISION ("Licensee") of
that Amended and Restated Program License Agreement (the "License Agreement"),
between Licensee and DENNEVAR B.V. ("Licensor"), of even date herewith,
CORPORACION VENEZOLANA DE TELEVISION, C.A. (VENEVISION) ("Guarantor") hereby
agrees as follows:
1. Guarantor confirms and joins in the representations and warranties made by
Licensor in Section 7 of the License Agreement.
2. Guarantor agrees that for the term of the License Agreement it will use
commercially reasonable efforts to produce or acquire Programs for
Licensor's use sufficient to enable Licensor to provide at least nine (9)
hours per day of Programs to satisfy its obligations under Section
1.1(a)(i) of the License Agreement.
3. Guarantor guarantees the full performance by Licensor of all of its
obligations under the License Agreement and further agrees to be bound, and
cause its Affiliates to be bound, by the provisions of the License
Agreement applicable to it or such Affiliates, as the case may be.
4. Guarantor irrevocably submits to the jurisdiction of any California State
or United States Federal court sitting in Los Angeles County in any action
or proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby, and irrevocably agrees that any such
action or proceeding may be heard and determined only in such California
State or Federal court. Guarantor irrevocably waives, to the fullest extent
it may effectively do so, the defense of an inconvenient forum to the
maintenance of any such action or proceeding. Guarantor irrevocably
appoints CT Corporation System (the "Process Agent"), with an office on the
date hereof at 818 West 7th Street, Los Angeles, CA 90017 as its agent to
receive on behalf of it and its property service of copies of the summons
and complaint and any other process which may be served in any such action
or proceeding. Such service may be made by delivering a copy of such
process to Guarantor in care of the Process Agent at the Process Agent's
above address, and Guarantor irrevocably authorizes and directs the Process
Agent to accept such service on its behalf. As an alternate method of
service, Guarantor consents to the service of copies of the summons and
complaint and any other process which may be served in any such action or
proceeding by the mailing or delivering of a copy of such process to
Licensor at its address specified in or pursuant to Section 14 of the
License Agreement. Guarantor agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by
law.
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<PAGE> 22
5. This Agreement and the legal relations among the parties shall be governed
by and construed in accordance with the laws of the State of California
applicable to contracts between California parties made and performed in
that State, without regard to conflict of laws principles.
6. Guarantor agrees that its obligations hereunder (the "Obligations") are
irrevocable, absolute, independent, unconditional and continuing, and shall
not be subject to any limitation, impairment or discharge for any reason,
including any circumstance which constitutes a legal or equitable discharge
of a guarantor or surety other than indefeasible performance in full of the
Obligations. Guarantor hereby waives notice of acceptance of this guaranty,
presentments, notices of default, nonpayment, partial payments and protest,
all other notices or formalities, any right to require prosecution of
collection or remedies against Licensor or any other person or entity or to
pursue any other remedy in Licensee's power. Without limiting the
generality of any other waiver or provision set forth herein, Guarantor
hereby waives, to the maximum extent such waiver is permitted by law, any
and all defenses arising directly or indirectly under any one or more of
California Civil CodeSectionSection2808, 2809, 2810, 2815, 2819, 2839,
2849, 2850, 2899 and 3433. Guarantor agrees that one or more, and
successive and/or concurrent, actions may be brought against it, either in
the same action in which Licensor or any other person is sued on in
separate actions and that the cessation of the liability of Licensor for
any reason, other than full payment and performance of the Obligations,
shall not in any way affect the liability of the undersigned hereunder.
The rights, powers and remedies given to Licensee by this Guaranty are
cumulative and shall be in addition to and independent of all rights, powers and
remedies given to Licensee by virtue of any statute or rule of law or in the
License Agreement. Any forbearance or failure to exercise, or any delay by
Licensee in exercising, any right, power or remedy hereunder shall not impair
any such right, power or remedy or be construed to be a waiver thereof, nor
shall it preclude the further exercise of any such right, power or remedy.
In case any provision in or Obligation under this Guaranty shall be
invalid, illegal or unenforceable in any jurisdictions the validity, legality
and enforceability of the remaining provisions or Obligations, or of such
provision or Obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
This Guaranty is a continuing guaranty and shall be binding upon
Guarantor and its successors and assigns. This Guaranty shall inure to the
benefit of Licensee and its successors and assigns.
To the extent Guarantor is guaranteeing payment obligations of Licensor
under the terms of the License Agreement ("Payment Obligations"), this guaranty
is a guaranty of payment when due and not of collectibility. Licensee may from
time to time, without notice or demand and without affecting the validity or
enforceability of this
2
<PAGE> 23
Guaranty or giving rise to any limitation, impairment or discharge of
Guarantor's liability hereunder, (i) settle, compromise, release or discharge,
or accept or refuse any offer of performance with respect to, or substitutions
for, the obligations of Licensor or any agreement relating thereto; (ii) have
stayed or enjoined, by order of court, by operation of law or otherwise, the
exercise or enforcement of, any claim or demand or any right, power or remedy
with respect to the obligations of Licensor or any agreement relating thereto;
(iii) waive, amend or modify, or consent to departure from, any of the terms or
provisions of the License Agreement; and (iv) omit or delay in doing any act or
thing, which may or might in any manner or to any extent vary the risk of
Guarantor as an obligor in respect of the Obligations.
Guarantor hereby waives, for the benefit of the Licensee: (i) any
defense arising by reason of the incapacity or lack of authority of Licensor;
(ii) any defense based upon any statute or rule of law which provides that the
obligation of a surety must be neither larger in amount nor in other respects
more burdensome than that of the principal; and (iii) any principles or
provisions of law, statutory or otherwise, which are or might be in conflict
with the terms of this Guaranty and any legal or equitable discharge of
Guarantor's Obligations hereunder.
Until any Payment Obligations shall have been paid in full, Guarantor
shall withhold exercise of any right of subrogation. Guarantor further agrees
that, to the extent the withholding of its rights of subrogation as set forth
herein is found by a court of competent jurisdiction to be void or voidable for
any reason, any rights of subrogation Guarantor may have against Licensor shall
be junior and subordinate to any rights Licensee may have against Licensor.
In the event that all or any portion of any Payment Obligations are
paid by Licensor, the obligations of Guarantor hereunder shall continue and
remain in full force and effect or be reinstated, as the case may be, in the
event that all or any part of such payment(s) are rescinded or recovered
directly or indirectly from Licensee as a preference, fraudulent transfer or
otherwise, and any such payments which are so rescinded or recovered shall
constitute Payment Obligations for all purposes under this Guaranty.
7. Guarantor shall not be liable for or suffer any penalty or termination of
rights hereunder by reason of any failure or delay in performing any of its
obligations hereunder if such failure or delay is occasioned by compliance
with governmental regulation or order, or by circumstances beyond the
reasonable control of Guarantor, including but not limited to acts of God,
war, insurrection, fire, flood, accident, strike or other labor
disturbance, interruption of or delay in transportation. Guarantor shall
promptly notify Licensee in writing of any such event of force majeure, the
expected duration thereof, and its anticipated effect on Licensee and make
reasonable efforts to remedy any such event, except Guarantor shall be
under no obligation to settle a labor dispute.
3
<PAGE> 24
8. Pursuant to the financing documents referred to in Section 9 of the License
Agreement, the Administrative Agent (for the benefit of the various
lenders) has been granted a security interest in and to all of Licensee's
rights in the License Agreement. The parties hereto acknowledge and consent
to the grant of such security interest.
DATED:
CORPORACION VENEZOLANA
DE TELEVISION, C.A. (VENEVISION)
By:______________________________
Name:
Title:
Accepted and Agreed:
UNIVISION
By:___________________________
Its:__________________________
4
<PAGE> 25
GUARANTY
For and in consideration of the execution by DENNEVAR B.V. ("Licensor")
of that Amended and Restated Program License Agreement (the "License
Agreement"), between Licensor and THE UNIVISION NETWORK LIMITED PARTNERSHIP
("Licensee"), of even date herewith, UNIVISION COMMUNICATIONS INC. ("Guarantor")
hereby agrees as follows:
1. Guarantor guarantees the full performance by Licensee of all of its
obligations under the License Agreement and further agrees to be bound, and
cause its Affiliates to be bound, by the provisions of the License
Agreement applicable to it or such Affiliates, as the case may be.
2. Guarantor irrevocably submits to the jurisdiction of any California
State or United States Federal court sitting in Los Angeles County in any
action or proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby, and irrevocably agrees that any such
action or proceeding may be heard and determined only in such California
State or Federal court. Guarantor irrevocably waives, to the fullest extent
it may effectively do so, the defense of an inconvenient forum to the
maintenance of any such action or proceeding. Guarantor irrevocably
appoints CT Corporation System (the "Process Agent"), with an office on the
date hereof at 818 West 7th Street, Los Angeles, CA 90017 as its agent to
receive on behalf of it and its property service of copies of the summons
and complaint and any other process which may be served in any such action
or proceeding. Such service may be made by delivering a copy of such
process to Guarantor in care of the Process Agent at the Process Agent's
above address, and Guarantor irrevocably authorizes and directs the Process
Agent to accept such service on its behalf. As an alternate method of
service, Guarantor consents to the service of copies of the summons and
complaint and any other process which may be served in any such action or
proceeding by the mailing or delivering of a copy of such process to
Licensee at its address specified in or pursuant to Section 14 of the
License Agreement. Guarantor agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by
law.
3. This Agreement and the legal relations among the parties shall be
governed by and construed in accordance with the laws of the State of
California applicable to contracts between California parties made and
performed in that State, without regard to conflict of laws principles.
4. Guarantor agrees that its obligations hereunder (the "Obligations") are
irrevocable, absolute, independent, unconditional and continuing, and shall
not be subject to any limitation, impairment or discharge for any reason,
including any circumstance which constitutes a legal or equitable discharge
of a guarantor or
1
<PAGE> 26
surety other than indefeasible performance in full of the Obligations. Guarantor
hereby waives notice of acceptance of this guaranty, presentments, notices of
default, nonpayment, partial payments and protest, all other notices or
formalities, any right to require prosecution of collection or remedies against
Licensee or any other person or entity or to pursue any other remedy in
Licensor's power. Without limiting the generality of any other waiver or
provision set forth herein, Guarantor hereby waives, to the maximum extent such
waiver is permitted by law, any and all defenses arising directly or indirectly
under any one or more of California Civil Code SectionSection 2808, 2809, 2810,
2815, 2819, 2839, 2849, 2850, 2899 and 3433. Guarantor agrees that one or more,
and successive and/or concurrent, actions may be brought against it, either in
the same action in which Licensee or any other person is sued or in separate
actions and that the cessation of the liability of Licensee for any reason,
other than full payment and performance of the Obligations, shall not in any way
affect the liability of the undersigned hereunder.
The rights, powers and remedies given to Licensor by this Guaranty are
cumulative and shall be in addition to and independent of all rights, powers and
remedies given to Licensor by virtue of any statute or rule of law or in the
License Agreement. Any forbearance or failure to exercise, or any delay by
Licensor in exercising, any right, power or remedy hereunder shall not impair
any such right, power or remedy or be construed to be a waiver thereof, nor
shall it preclude the further exercise of any such right, power or remedy.
In case any provision in or Obligation under this Guaranty shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or Obligations, or of such
provision or Obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
This Guaranty is a continuing guaranty and shall be binding upon
Guarantor and its successors and assigns. This Guaranty shall inure to the
benefit of Licensor and its successors and assigns.
To the extent Guarantor is guaranteeing payment obligations of Licensee
under the terms of the License Agreement ("Payment Obligations"), this guaranty
is a guaranty of payment when due and not of collectibility. Licensor may from
time to time, without notice or demand and without affecting the validity or
enforceability of this Guaranty or giving rise to any limitation, impairment or
discharge of Guarantor's liability hereunder, (i) settle, compromise, release or
discharge, or accept or refuse any offer of performance with respect to, or
substitutions for, the obligations of Licensee or any agreement relating
thereto; (ii) have stayed or enjoined, by order of court, by operation of law or
otherwise, the exercise or enforcement of, any claim or demand or any right,
power or remedy with respect to the obligations of Licensee or any agreement
relating thereto; (iii) waive, amend or modify, or consent to departure from,
any of the terms or provisions of the License Agreement; and (iv) omit or delay
in doing any act or
2
<PAGE> 27
thing, which may or might in any manner or to any extent vary the risk of
Guarantor as an obligor in respect of the obligations.
Guarantor hereby waives, for the benefit of the Licensor: (i) any
defense arising by reason of the incapacity or lack of authority of Licensee;
(ii) any defense based upon any statute or rule of law which provides that the
obligation of a surety must be neither larger in amount nor in other respects
more burdensome than that of the principal; and (iii) any principles or
provisions of law, statutory or otherwise, which are or might be in conflict
with the terms of this Guaranty and any legal or equitable discharge of
Guarantor's obligations hereunder.
Until any Payment Obligations shall have been paid in full, Guarantor
shall withhold exercise of any right of subrogation. Guarantor further agrees
that, to the extent the withholding of its rights of subrogation as set forth
herein is found by a court of competent jurisdiction to be void or voidable for
any reason, any rights of subrogation Guarantor may have against Licensee shall
be junior and subordinate to any rights Licensor may have against Licensee.
In the event that all or any portion of any Payment Obligations are
paid by Licensee, the Obligations of Guarantor hereunder shall continue and
remain in full force and effect or be reinstated, as the case may be, in the
event that all or any part of such payment(s) are rescinded or recovered
directly or indirectly from Licensor as a preference, fraudulent transfer or
otherwise, and any such payments which are so rescinded or recovered shall
constitute Payment Obligations for all purposes under this Guaranty.
5. Guarantor shall not be liable for or suffer any penalty or
termination of rights hereunder by reason of any failure or delay in performing
any of its Obligations hereunder if such failure or delay is occasioned by
compliance with governmental regulation or order, or by circumstances beyond the
reasonable control of Guarantor, including but not limited to acts of God, war,
insurrection, fire, flood, accident, strike or other labor disturbance,
interruption of or delay in transportation. Guarantor shall promptly notify
Licensor in writing of any such event of force majeure, the expected duration
thereof, and its anticipated effect on
3
<PAGE> 28
Licensor and make reasonable efforts to remedy any such event, except
Guarantor shall be under no obligation to settle a labor dispute.
DATED:
UNIVISION COMMUNICATIONS INC.
By:_________________________________
Name:
Title:
Accepted and Agreed:
DENNEVAR B.V.
By:___________________________
Its:__________________________
4
<PAGE> 29
SCHEDULE 1
NOTICES
(i) If to Licensee:
1901 Avenue of the Stars, Suite 680
Los Angeles, California 90067
Attn: Robert V. Cahill
Telecopier: (310) 556-3568
with a copy to:
O'Melveny & Myers
1999 Avenue of the Stars, Suite 700
Los Angeles, California 90067
Attn: Donald V. Petroni
Telecopier: (310) 246-6779
(ii) If to Licensor:
c/o Venevision International, Inc.
550 Biltmore Way
Coral Gables, Florida 33134
Attn: Alejandro Rivera
Telecopier: (305) 445-9667
with copies to:
Venevision International, Inc.
550 Biltmore Way
Coral Gables, Florida 33134
Attn: James G. Naro, Esq.
Telecopier: (305) 447-1389
and
Milbank, Tweed, Hadley & McCloy
One Chase Manhattan Plaza
New York, New York 10005
Attention: Robert S. O'Hara, Jr., Esq.
Telecopier: (212) 530-5219
5
<PAGE> 1
Exhibit 10.7
FORM OF
AMENDED AND RESTATED PROGRAM LICENSE AGREEMENT
This AMENDED AND RESTATED PROGRAM LICENSE AGREEMENT is entered into as
of _______ by and between UNIVISA, INC., a Delaware corporation, (hereinafter
"Licensor") and THE UNIVISION NETWORK LIMITED PARTNERSHIP, a Delaware limited
partnership ("Licensee"), and amends and restates that certain PROGRAM LICENSE
AGREEMENT made as of the 17th day of December, 1992 by and between Licensor and
Licensee.
WHEREAS, Licensor has or will have rights in the United States of
America, including all territories and possessions thereof other than Puerto
Rico (the "Territory"), to license certain television programs in the Spanish
language or with Spanish subtitles produced by and to be produced by Televisa,
S.A. and other entities controlled by Grupo Televisa, S.A. ("GT") (GT and all of
the companies it controls, including Televisa, S.A., and Licensor being
hereinafter referred to collectively as "Televisa").
WHEREAS, Licensee operates the Univision Spanish language television
network and the Galavision Spanish language television network of affiliated
television broadcast stations and cable television systems (such networks being
hereinafter referred to as the "Networks" and those television broadcast
stations affiliated with such Networks that are now or hereafter directly or
indirectly majority owned and operated by Univision Communications Inc. ("UCI")
or a direct or indirect subsidiary of UCI or with respect to which UCI or a
direct or indirect subsidiary of UCI has the right to designate a majority of
the board or similar governing body, and in each case, which broadcast in the
Spanish language format being hereinafter referred to as the "Stations") and
desires to acquire the right to broadcast certain of the programs produced, to
be produced or otherwise marketed by Televisa over the Networks in the Territory
and Licensor is willing to grant such a license upon the terms, provisions and
conditions herein set forth.
WHEREAS, Dennevar B.V. ("Venevision") is simultaneously herewith
entering into an Amended and Restated Program License Agreement, dated as of the
date hereof (the "Venevision Agreement"), with the Licensee to license certain
television programming for broadcast over the Networks.
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained, the parties hereto agree as follows:
1. Right of First Offer of Programming.
<PAGE> 2
1.1 Pursuant to the terms and conditions hereof, Licensor hereby
grants Licensee the option to obtain an exclusive license for the broadcast over
the Networks in the Territory of all Programs (as hereinafter defined). The
option may be exercised as follows:
(a) First, Licensee will have a first option to accept for
exclusive license in the Territory, subject to all the other terms and
conditions of this Agreement: (i) Programs in an amount that, when aggregated
with Programs accepted pursuant to Section 1.1(a) of the Venevision Agreement,
will be sufficient to fill 18 hours of programming per day in aggregate for the
two Networks combined, and (ii) any news Programs.
(b) Second, Licensor may make available for license to the
owners and operators of KWHY-TV, Channel 22 ("KWHY") all Programs (other than
news Programs) not accepted by Licensee pursuant to paragraph (a) above for
exclusive use in the Los Angeles ADI; provided, however, that during the
Broadcast Period (as defined below) of any Program licensed by Licensee,
Licensor shall not license KWHY to broadcast reruns of such Program or Programs
of the same series as such Program. KWHY will be entitled to accept an amount of
programs that will be sufficient to fill up to one 85 hour-per-week time
schedule. The terms of the license to KWHY will provide for payment by KWHY of a
license royalty at a price to be negotiated between Licensor and KWHY. The
license will be assignable by Licensee with a transfer of control of KWHY. The
term of Licensor's obligation to offer Programs to KWHY on the terms described
herein shall not exceed five years from December 17, 1992.
(c) After selection by KWHY of Programs pursuant to paragraph
(b) above, Licensee will have a first option, subject to all the other terms and
conditions of this Agreement, including the 70% coverage requirement set forth
in Section 2 below (determined as provided therein), to accept for exclusive
license in the Territory, any Programs (i) for markets outside of KWHY's Los
Angeles ADI, Programs accepted by KWHY pursuant to paragraph (b) above and (ii)
when paragraph (b) above is no longer applicable, any Programs for all markets,
including Los Angeles, in an amount which, when aggregated with the amount of
Programs accepted pursuant to paragraph (a) above, will be sufficient to satisfy
the representation and warranty included in Section 7.3 hereof.
1.2 For purposes of this Agreement only:
(a) "Programs" means (i) programs initially produced in the
Spanish language or programs with Spanish subtitles produced by third parties or
co- produced by Televisa with third parties to which Televisa owns sole
television broadcast rights in the Territory (and which is not a Co-Produced
Program (as defined below)); (ii) all programs initially produced in the Spanish
language or programs with Spanish subtitles, previously produced directly or
indirectly by or for Televisa and to be produced directly or
2
<PAGE> 3
indirectly by or for Televisa for broadcast at any time to which Televisa owns
television broadcast rights in the Territory and which are available for
broadcast including, without limitation, in the following categories: novelas,
musicals, variety shows, situation comedies, game shows, talk shows, children's
shows, news shows, cultural and educational programs, and sports programs; and
(iii) movies produced by Televisa and for which Televisa owns the television
broadcast rights in the Territory, from and after the time that such movies
become available for free television broadcast in the Territory. Each Program
shall be available for license to Licensee in the Territory pursuant to the
terms of this Agreement upon the first to occur of (i) the date when such
Program is initially broadcast by Televisa or (ii) the date when such Program is
first made available for broadcast by any third party. Except as provided in the
following paragraph, if Licensor or Televisa shall produce directly or
indirectly any Spanish Language or Spanish subtitled programming for broadcast
in the Territory it shall be deemed a Program subject to the terms and
conditions of this Agreement.
The term "Programs" does not include Special Programs (other
than Televisa Produced U.S. Special Programs, as defined below), Co-Produced
Programs or Default Programs (each as defined below) or local news or public
affairs programs (it being understood that all such local programs will be
produced or acquired by Licensee or its affiliated stations). "Co-Produced
Programs" means programs originally produced for broadcast in the Spanish
language or with Spanish subtitles, previously produced, or to be produced, by
Televisa for broadcast pursuant to co-production agreements with unaffiliated
third parties or produced by unaffiliated third parties (in each case, other
than any broadcaster in and to the Territory) (i) under which Televisa does not
own the right to permit the broadcast of such program in the Territory and/or
(ii) under which Televisa is required to share with such third parties the
revenue derived from the broadcast of such program in the Territory. No program
that would otherwise be a Program under Section 1.2(a)(ii) shall become a
Co-Produced Program solely because Televisa or Licensor licenses or sells
distribution rights in the Territory prior to or during production of such
program and neither Televisa nor Licensor shall enter into any agreement to the
contrary. In order for a program to be a Co-Produced Program, some material
underlying property right of such program must be provided by such unaffiliated
third party and such unaffiliated third party must participate in the
development and production of the Program in exchange for such third party's
distribution rights in the Territory or participation in distribution revenues
from the Territory. Nothing contained in this Agreement shall prevent Licensor
or Televisa from licensing broadcast rights (in exchange for cash or in-kind
services or property other than Programs) for territories other than the
Territory to programs initially produced in the Spanish language or programs
with Spanish language subtitles that are developed and produced in the Territory
by unaffiliated third party producers located in the Territory, including
broadcasters, provided that neither Licensor nor Televisa has participated in
any way in the development or production of any such program. Televisa agrees
that it will use its good faith efforts not to structure agreements with respect
to programs in a manner intended to cause such programs not to be considered
Programs hereunder.
3
<PAGE> 4
(b) "broadcast" or "network broadcast" means all electronic
forms or other means now known or hereafter developed of transmission and
re-transmission, including but not limited to over-the-air television, cable
television, low power television, multi-point distribution systems, wire, fiber
optics, microwave, and satellite, except for purposes of delivery of the
Programs pursuant to Section 4.
(c) "Affiliate" of a person means any person that directly or
indirectly controls, is controlled by, or is under common control with the
person in question. For the purposes of this definition, "control", when used
with respect to any person, means the power to direct the management and
policies of such person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise. Affiliate shall not mean any
television station that has entered into an affiliation agreement with the
Networks but is otherwise not an Affiliate of UCI, any Person that controls
Grupo Televisa S.A. or any person under common control with, but not directly or
indirectly controlled by, Grupo Televisa S.A.
1.3 Licensor and its Affiliates shall have the right and ability to,
and to permit others to: (i) transmit or re-transmit in any electronic form or
other means, from any television station in Mexico, or via satellite which
receives its signal from any earth station or other facility in Mexico, any
Programs which may also be covered by this Agreement, notwithstanding the fact
that such transmissions or re-transmissions may be viewed in the Territory,
provided that neither Licensor nor its Affiliates consent to the retransmission
of such Programs by any television station in the Territory or by any cable
system in the Territory that is located beyond 35 miles from the community of
license of any transmitting television station in Mexico transmitting the
Programs (any such cable re-transmission within such 35 mile limit being hereby
expressly permitted); and (ii) market and promote and otherwise generate
revenues (including, but not limited to, the sale of advertising time)
attributable to the ability of viewers in the Territory to receive such
Programs.
2. Notification, Acceptance and Licensing of Programming. Not less than
once in each calendar quarter during the term of this Agreement, Licensor will
deliver a written notice (an "Availability Notice") to Licensee specifying all
Programs which (a) have become available for license by Licensee since the
delivery of the preceding Availability Notice or (b) may no longer be available
to Licensee on an exclusive basis. Such notice shall be accompanied, if
practicable, by a video tape pilot or representative episode of each of the new
Programs (except for live Programs). If Licensee desires to license any
Programs, it must notify Licensor of its acceptance in writing (an "Acceptance")
within thirty days of receipt of the Availability Notice. Such Acceptance shall
specify the name of the Accepted Program, the name of the Network on which it is
to be broadcast, the date and time period in which Licensee intends to commence
the broadcast of the Accepted Program (which date shall be not more than 180
days from the date of Acceptance with respect to Programs other than novelas and
shall be not more than 270 days from the date of
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Acceptance with respect to novelas), and such other information as may
reasonably be requested by Licensor. An Acceptance shall constitute the exercise
by Licensee of its option for the Program(s) accepted and upon receipt by
Licensor of such Acceptance, the Program(s) covered by each such Acceptance
shall without further action be automatically licensed to Licensee on the terms
and conditions of this Agreement. Subject to the terms and conditions set forth
herein, Licensee shall have exclusivity in the carriage of all accepted Programs
("Accepted Programs") for broadcast in the Territory from the date of acceptance
to the conclusion of the applicable Broadcast Period. If no such Acceptance is
received with respect to any or all available Programs, Licensor shall be free
to license all such unaccepted Programs ("Unaccepted Programs") to others in the
Territory for not more than one run over a period of one year (which license, in
the case of novelas, may also provide for one rerun), subject to Licensee's
right of first refusal described in Section 3; provided, however, that during
the Broadcast Period of a Program licensed by Licensee, Licensor shall not
license any other person or entity to broadcast in the Territory reruns of such
Program or other Programs of the same series as such Program.
In order to avoid the "warehousing" of Programs by the Licensee, (A)
Licensee shall not issue Acceptance Notices without specifying the intended
broadcast commencement date and time period; however, Licensee shall have the
right at any time for any bona fide reason, on not less than 10 days' written
notice to Licensor at least 60 days prior to the intended broadcast date, (i) to
switch dates and times among previously Accepted Programs or among previously
Accepted Programs and programs acquired from another source, provided that after
giving effect to such switch all other requirements with respect to broadcast
and scheduling of Programs contained in this Agreement continue to be satisfied
and/or (ii) to rescind Acceptance with respect to any Program and to issue an
Acceptance Notice with respect to a substitute Program, provided that (x) the
substitute Program shall be broadcast in the time slot originally reserved for
the rescinded Program and (y) the rescinded Program shall thereafter constitute
a Default Program, (B) Licensee shall not issue Acceptance Notices with respect
to more Programs than it is capable of airing over the Networks, and (C)
Licensee shall not broadcast any First-Run Program (other than news) on either
of the Networks (X) between the hours of 1:00 a.m. and 9:00 a.m. unless Licensee
can demonstrate that it is commercially reasonable to broadcast such program
during such period, or (Y) during any other time period during which Licensee
cannot reasonably expect the 70% broadcast coverage requirement described in the
following paragraph to be satisfied.
Subject to the preceding paragraph, with respect to any Accepted
Program, Licensee must commence the broadcast of the Program on one of the
Networks over at least 70% of such Network's coverage (as determined by the
number of Hispanic television households potentially reached by the applicable
Network) within 180 days following notice of its Acceptance (except for novelas
where the time for commencement may be extended for an additional 90 days
because of scheduling problems) and shall continue to broadcast the Program
without substantial interruption over such minimum of 70% Network coverage
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until the conclusion of the Broadcast Period (as defined below). Should Licensee
fail to comply with the broadcast commencement, 70% coverage and continuous
broadcast provisions of this paragraph, Licensee's license with respect to the
Program (a "Default Program") shall be terminated 10 days following written
notice of non-compliance unless Licensee demonstrates compliance or excusable
non-compliance with such provisions. In the event of termination, the Default
Program shall be subject to re-license by Licensor to others at any time or from
time to time (without any right of first refusal or other right applicable to
Licensee, whether pursuant to Section 3 or otherwise). The parties acknowledge
that this provision is designed to avoid "warehousing" of product by Licensee
and that in the event Licensee breaches the provisions of this paragraph,
Licensor's damages are incapable of calculation and the remedies set forth
herein are appropriate under the circumstances.
For purposes of this Agreement only:
(a) "Broadcast Period" means (i) for novelas or other Programs
with a plot line continuing through more than one episode, the time necessary to
broadcast all episodes on a continuing basis without substantial interruption
and (ii) for all other programs (excluding one-program shows), (x) for weekly
programs, the time period necessary to broadcast 26 episodes of the Program
without substantial interruption, which under normal circumstances is expected
to be 26 continuous weeks and (y) for daily programs (Monday through Friday), 26
weeks.
(b) "without substantial interruption" means that the Programs
will be scheduled and run on a continuing periodic basis except for occasional
network preemption to accommodate one-time specials or programs which, because
of their nature or timeliness or because of FCC Rules, must in Licensee's
reasonable judgment be broadcast in lieu of the regularly scheduled Program.
3. Right of First Refusal. If any other person or entity (other than
KWHY, or its assignees, with respect to Programs licensed by it pursuant to
Section 1.1(b) hereof) wishes to accept for broadcast in the Territory any
Unaccepted Programs which Licensor has offered to it pursuant to Section 2,
Licensor shall send a written notice (a "Second Chance Notice") to Licensee
specifying the name of any such Programs and the license terms offered by such
person or entity that wishes to accept such Unaccepted Programs. Licensee shall
have a right of first refusal, good for three business days from receipt of the
Second Chance Notice to acquire such Unaccepted Program, subject to the same
conditions offered by such other person or entity, for the Program Royalty (as
defined in Section 5) plus the amount, if any, by which the license fee offered
by such other person or entity exceeds the Program Royalty attributable to
combined net time sales for the time slot in which such Program is broadcast.
Any such Unaccepted Programs which are not accepted in writing by Licensee
within three business days of receiving a Second Chance Notice may be licensed
to such other person or entity. Rights to exploit Unaccepted
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Programs will be granted to other persons or entities for not more than one run
over a period of one year (provided that, in the case of novelas, such rights
may include the right to one rerun), and if the same Program is offered
thereafter in the Territory, it will once again be offered to Licensee pursuant
to Section I hereof. All episodes of a novela which are to be shown within one
year from the showing of the first episode shall be deemed to be the same
Program for the purposes of the requirement to offer all programming first to
Licensee.
4. Delivery, Expenses And Use Of Programs.
4.1 Following Licensee's acceptance of Programs pursuant to Sections
2 or 3 of this Agreement, Licensor shall deliver to Licensee, at Licensee's
expense, and in accordance with Licensee's reasonable and customary
instructions, a visual and aural reproduction of each such Program or Program
episode via satellite or video tape suitable for broadcast and formatted for
U.S. broadcast in accordance with past practices, at least ten days prior to
Licensee's scheduled broadcast, except for live broadcasts or as otherwise
agreed by the parties. Programs will be deemed delivered by Licensor when
transmitted to the satellite, when actually received if shipped by freight, or
when made available through permission to re-transmit the signal of an affiliate
of Licensee.
4.2 Licensee agrees that as soon as practicable following receipt of
each satellite transmission or video tape delivery, it will examine it to
determine whether it is physically suitable for broadcasting and notify Licensor
immediately upon detecting any defect rendering such copy unsuitable for
telecast. In such cases, Licensor shall promptly deliver at its own expense
either a physically suitable tape or (except in the case of novelas) a tape of
another Program in the same series, subject to verification of the defect.
4.3 Licensee agrees to return each video tape delivered by Licensor
to Licensor on the reels and in the containers in which it was shipped, in the
same condition as received, reasonable wear and tear through proper use
excepted, as soon as practicable after telecast. Licensee shall pay all costs of
returning the tapes to Licensor. Should Licensor request that the video tape be
sent to a location other than Licensor's warehouse, Licensor will bear
responsibility for shipping costs above those which would have been applicable
for shipping the video tape to Licensor's warehouse.
4.4 The video tapes shall at all times remain the property of
Licensor subject to Licensee's rights as herein provided. The risk of loss,
damage, destruction or disappearance of any tape shall be borne by Licensee from
the time of delivery to Licensee until the return thereof to Licensor or
Licensor's designee and as to any tape or part thereof lost, stolen, destroyed
or damaged after delivery to Licensee and before the return thereof, Licensee
shall pay Licensor the cost of replacement thereof, which payment shall be
limited to the cost of replacing the raw video tape.
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4.5 Licensee will not, and will not authorize others to copy,
duplicate or re-license any Program unless necessary for Licensee's own network
broadcast. Any duplicate or copy of any part of the Program (including trailers)
made by Licensee for its own purposes will be erased following the broadcast of
the Program. Upon receipt of written request from Licensor, an officer of
Licensee shall certify in writing the destruction of all such copies.
4.6 Licensor will furnish to Licensee glossy prints of still photos,
synopses, casts and all other promotional material for the promotion and
exploitation of the Programs, if available. Licensor grants to Licensee the
right to use and license others to use Licensor's name and, unless Licensee is
advised by Licensor that the rights of Licensor are limited (in which case, to
the extent not limited), to use and license others to use the name and likeness
of, and biographical material concerning, each star, featured performer, writer,
director and producer in the Programs and the titles of each program and
fictitious persons and locales therein, for advertising and publicity, of the
Programs, and any broadcaster or sponsor thereof, but not for direct endorsement
of any product or service, provided that any such use will protect the
copyrights of Licensor. To the extent available to Licensor after reasonable
efforts, Licensor will furnish Licensee with music cue sheets for the Programs
and the information necessary for administration of rights payments and
compliance with Section 507 of the Federal Communications Act of 1934, as
amended concerning broadcast matter and disclosures required thereunder, insofar
as that Section applies to persons furnishing program material for television
broadcasting ("Section 507"). Subject to the foregoing and subject to Licensor's
reasonable prior approval, Licensee shall have the right to produce its own
promotional material for or from the Programs.
4.7 Licensee agrees to include in its broadcast of Accepted Programs
all copyright notices and all credits made part of each Accepted Program
including but not limited to stars, directors, producers and writers. Licensee
shall exhibit the Accepted Program as delivered in the Spanish language or with
Spanish subtitles and no change, alteration or addition may be made to any
Program without Licensor's consent except as may be necessary for the insertion
of commercials during natural breaks in the Program or except as may be
necessary to comply with Licensee's broadcast standards and practices and
applicable government rules and regulations.
4.8 Subject to Section 7.1 and 7.3 and Licensee's remedies for a
breach thereof, Licensor may, at its sole and absolute discretion, withdraw any
Program and terminate any license with respect to such Program if Licensor
reasonably determines that the broadcast thereof is likely to: (i) infringe the
rights of third parties, (ii) violate any law, court order, governmental
regulation or ruling of any governmental agency, (iii) otherwise subject the
Licensor to any material liability. In addition Licensor reserves the right to
withdraw any Program prior to the conclusion of the applicable Broadcast Period
if, for any reason, the program is no longer being produced by or available to
Televisa. In the event of any such withdrawal or termination, Licensor shall
give Licensee as much notice as
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possible, and the parties shall have no obligations to each other with regard to
Programs not produced, subject to Section 7.1 and 7.3 and Licensee's remedies
for a breach thereof. No Program that is withdrawn pursuant to this Section 4.8
shall be relicensed to a third party in the Territory without being first
offered to Licensee pursuant to Section 1.
4.9 The license granted to Licensee with respect to each Accepted
Program (other than novelas) shall be for one Network broadcast of each Program
or Program episode, subject only to FCC rules and regulations and to tape delay
in certain of Licensee's affiliated outlets to accommodate time zone
differences. In addition, within 24 hours of the original broadcast, Licensee
may broadcast a repeat of any Program, free of the restrictions contained herein
regarding Network coverage. Except as herein provided, without the express
permission of Licensor, not to be unreasonably withheld, no Program or Program
episode may be rerun during any Broadcast Period.
Notwithstanding the prohibition on reruns during a Broadcast Period,
Licensee will have the option at the end of any Broadcast Period to license one
(1) rerun of each novela (herein "Protected Rerun"). Such option must be
exercised in writing not later than thirty (30) days before the end of the
Broadcast Period for each such novela. The terms of such Protected Rerun license
shall be the same as for the original license, except that the time during which
the broadcast must commence will be one (1) year instead of one hundred and
eighty (180) days.
5. Royalties.
5.1 Licensee shall pay Licensor a royalty in cash for the Programs
offered to it (the "Program Royalty") in an amount equal to a percentage of
"combined net time sales" as Licensor and Venevision shall from time to time
designate in a joint written notice to Licensee (which designation shall not be
made more frequently than annually); provided that aggregate percentage
royalties paid under this Section 5 and Section 5 of the Venevision Agreement
shall not exceed 11% of combined net time sales for the period commencing on the
date hereof and ending on December 31, 1996, 13.5% of combined net time sales
for the period commencing on January 1, 1997 and ending on December 31, 1997,
and 15% of combined net time sales for all periods commencing on or after
January 1, 1998 until the termination of this Agreement. For purposes of this
Agreement, "combined net time sales" shall mean all time sales of the Stations
and the Networks, including barter and trade and television subscription revenue
(including, without limitation, satellite subscription revenue), less
advertising commissions, Special Event Revenue (as defined below), music license
fees, outside affiliate compensation, and taxes (other than withholding taxes)
paid by Licensee pursuant to Section 5.3 hereof and similar taxes paid by the
Stations calculated in accordance with U.S. generally accepted accounting
principles ("GAAP"). Notwithstanding the foregoing, no revenues of the
Galavision Network received prior to the closing of the acquisition of the
assets of the Galavision Network by Licensee pursuant to the Galavision Network
Option Agreement between Univisa and Licensee entered into as
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of December 17, 1992 shall be included in combined net times sales for purposes
of computing the Program Royalty. Unless otherwise agreed in writing between the
parties, barter and trade sales shall be valued at the fair market value of the
goods or services received by the Licensee or the Stations.
5.2 Program Royalties shall be paid currently on a monthly basis on
the twelfth business day after the end of each month in a single payment to
Licensor based upon the parties' good faith best estimate at such time of the
amounts accrued. Appropriate adjustment (the "Adjustment") will be made to
Program Royalties on a quarterly basis within 45 days after the end of each
quarter, and the full amount thereof shall be paid or credited, as the case may
be, with the next monthly payment of Program Royalties for any difference
between the amounts so paid and those finally determined to have accrued. In all
cases, the calculation of the Adjustment will be made as promptly as practicable
by Licensee, and in the event of any disputes the determination shall be made by
a nationally recognized independent certified public accounting firm mutually
selected by Licensor and Licensee (or, if they fail to designate such a firm
within 10 days after written notice of a dispute, by such firm designated by the
President of the American Arbitration Association (or his designee)), whose
determination will be final and binding upon the parties. The fees and expenses
of such firm shall be paid one-half by Licensor and one-half by Licensee, unless
such firm determines it would be more equitable to otherwise allocate such fees
and expenses.
5.3 All payments made pursuant to this section shall be in cash in
U.S. currency with accompanying back-up information in reasonable detail of
combined net time sales for the applicable period. Such payments shall be
calculated as provided above regardless of the amount of Programs licensed
hereunder or whether any such Programs are broadcast. In order to assure
compliance with the terms of this Agreement, Licensor shall have the right to
receive once each year a certificate from Licensee's independent certified
public accounting firm, which certificate shall attest to the combined net time
sales for the year. Licensee shall pay for the preparation of such certificate
and its delivery to Licensor. Licensor may request additional certificates and
services either from Licensee's accounting firm or from a firm of certified
public accountants chosen by Licensor. The fees and expenses of the certified
public accountants providing such additional certificates and performing such
additional services pursuant to this Section 5.3 shall be paid by Licensor,
unless such verification results in an adjustment in Licensor's favor equal or
greater than 5% of the amount originally computed by Licensee, in which case
such fee will be paid by Licensee. Licensee agrees to provide any certified
public accountants designated by Licensor with access to all business records of
Licensor related to the computation of combined net time sales. Licensor agrees
to maintain the confidentiality of all information learned from Licensee in
connection with the performance of this Agreement, other than information (i)
which becomes public (unless it becomes public because of a breach of this
covenant by Licensor), (ii) which otherwise becomes known to Licensor (unless
Licensor knows that the information has been disclosed in violation of a
confidentiality agreement
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with Licensee), or (iii) which Licensor is required by law, order or
administrative law request or by stock exchange rule or regulation to divulge.
5.4 Any and all sums payable on account of sales, use or other
similar taxes arising out of or relating to the licensing or exhibition by
Licensee of the Programs, in addition to any personal property or other tax
assessed or levied by any governmental unit arising out of or relating to the
storage or possession of the Programs thereof by Licensee shall be paid by
Licensee.
5.5 Licensee may deduct and withhold from any payment to or for the
account of Licensor with respect to the Program Royalties such amounts as it in
good faith determines it is required to withhold with respect to such payment
under applicable United States and state tax withholding laws, and shall
promptly remit such amounts to the appropriate taxing authority. Within 30 days
of any such remittance Licensee shall furnish to Licensor the original or
certified copy of a receipt evidencing payment, or other evidence of payment
reasonably satisfactory to Licensor. If Licensor has timely filed with Licensee
a duly completed Form 4224, 1001, W-8 or W-9, of the Internal Revenue Service
(or successor form thereto) or has complied with applicable procedures under
state law, entitling it to exemption from, or a reduced rate of, withholding
under the applicable law or regulations, the amount withheld shall be
accordingly limited. Licensee shall cooperate in any reasonable manner requested
by Licensor to minimize Licensor's withholding tax liability.
5.7 If Licensee is more than 30 days late in paying any amount due
to Licensor under this Section 5, such late amounts shall thereafter bear
interest at a rate equal to LIBOR plus 5%, plus any applicable withholding.
6. Special Programs and Co-Produced Programs.
6.1 For purposes of this Agreement:
(a) "Special Programs" means special programs such as the World
Cup, other sporting events, political conventions, election coverage, parades,
pageants, special variety shows and other non-episodic and non-continuing shows.
(b) "Non-Televisa-Produced Special Programs" means Special
Programs not produced directly or indirectly by or for Televisa.
(c) "Televisa-Produced U.S. Special Programs" means
Televisa-Produced Special Programs for which Licensor has adequate rights to
license such Special Programs to Licensee under the terms of this Agreement.
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(d) "Televisa-Produced Non-U.S. Special Programs" means
Televisa-Produced Special Programs for which Licensor does not have adequate
rights to license such Special Programs to Licensee under the terms of this
Agreement.
(e) "Televisa-Produced Special Programs" means Special Programs
directly or indirectly produced by or for Televisa.
(f) "Special Event Revenue" means net time sales for
Non-Televisa-Produced Special Programs and Non-Venevision-Produced Special
Programs as defined in the Venevision Agreement broadcast by Licensee on either
Network.
6.2 Licensor shall use its best efforts, and shall cause its
Affiliates to use their best efforts, to coordinate its Non-Televisa-Produced
Special Program acquisitions with those of Licensee, so as to permit Licensee to
participate therein and to acquire rights in the Territory to such programs on
an advantageous basis and on terms satisfactory to Licensee; provided, however,
that the obligation to use "best efforts" shall not be interpreted to include
any obligation of Licensor or its Affiliates to expend additional money to
permit Licensee's participation or to acquire rights on an advantageous basis.
6.3 Televisa-Produced U.S. Special Programs shall be "Programs" for
all purposes of this Agreement.
6.4 At the request of Licensee, Licensor shall use its best efforts,
and shall cause its Affiliates to use their best efforts, to acquire broadcast
rights in the Territory on terms satisfactory to Licensee for Televisa-Produced
Non-U.S. Special Programs and any Co-Produced Program that falls within clause
(i) (but not clause (ii)) of the definition of "Co-Produced Program" in Section
1.2(a); provided, however, that the obligation to use its "best efforts" shall
not be interpreted to include any obligation of Licensor to expend additional
money, except to the extent reimbursed by the "Special Event Fee" (as defined
below). Such programs accepted by Licensee shall be licensed hereunder to
Licensee for the Program Royalty plus a fee (the "Special Event Fee") in the
amount of the cost to Licensor of the acquisition of broadcast rights in the
Territory to such program, such costs to be determined by the parties in good
faith based on the portion of the total amount paid by Licensor for broadcast
rights that is reasonably allocated to the acquisition of broadcast rights in
the Territory.
6.5 Licensor shall offer Licensee in accordance with all applicable
provisions of this Agreement all Co-Produced Programs that fall within clause
(ii) of the definition of "Co-Produced Program" in Section 1.2(a) for which
program Licensor has or can obtain adequate rights and licensing authority to
offer such programs to Licensee in compliance with the terms and conditions of
this Agreement, except that the Program Royalty specified in Section 5 hereof
shall not include the license fee for Co-Produced Programs. Compensation to
Licensor for all Co-Produced Programs accepted by Licensee
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shall be computed and paid in accordance with such terms as the parties may
mutually agree in writing. If the parties are unable to agree on the royalty for
any Co-Produced Program within 10 days after such program is offered by
Licensor, such program may be sold to others in the Territory, so long as
Licensor in good faith determines that the terms and conditions applicable to
such sale are more favorable to the Licensor than those offered by the Licensee
in writing within such 10-day period.
7. Representations and Warranties of Licensor.
7.1 Licensor hereby agrees, warrants and represents as follows:
(a) Subject to Section 1.4 hereof Licensor is free to enter into
and fully perform this Agreement;
(b) Licensor has or will have the right to grant to Licensee the
broadcast rights to the Accepted Programs in the Territory set forth in this
Agreement, including but not limited to the necessary literary, artistic,
technological and intellectual property rights and has secured or will secure
all necessary written consents, permissions and approvals for incorporation into
such Programs of the names, trademarks, likenesses and/or biographies of all
persons, firms, products, companies and organizations depicted or displayed in
such Programs, and any preexisting film or video footage produced by third
parties;
(c) There are no and will not be any pending claims, liens,
charges, restrictions or encumbrances on the Accepted Programs that conflict
with the broadcast rights granted hereunder to such Programs in the Territory;
(d) Licensor has paid or will pay all compensation, residuals,
reuse fees, synchronization royalties, and other payments which must be made in
connection with the Accepted Programs and in connection with exploitation of the
rights herein granted to Licensee to any third parties including, but not
limited to, musicians, directors, writers, producers, announcers, publishers,
composers, on-camera and off-camera performers and other persons who
participated in production of such Programs, and to any applicable unions,
guilds or other labor organizations; provided, however, that Licensor has not
acquired performing rights for performance in the Territory of the music
contained in such Programs, which rights shall be obtained by Licensee;
provided, further, however, that Licensor warrants and represents that all music
is available for licensing through ASCAP, BMI or SESAC (or any successor or
similar entity in the United States) or is in the public domain or is owned or
controlled by Licensor to the extent necessary to permit broadcasts hereunder in
the Territory and no additional clearance or payment is required for such
broadcast;
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(e) The main and end titles of the Accepted Programs and all
publicity, promotion, advertising and packaging information and materials
supplied by Licensor will contain all necessary and proper credits for the
actors, directors, writers and all other persons appearing in or connected with
the production of such Programs who are entitled to receive credit and comply
with all applicable contractual, guild, union and statutory requirements and
agreements;
(f) Exercise of the broadcast rights to the Accepted Programs in
the Territory will not infringe on any rights of any third party, including but
not limited to copyright, patent, trademark, unfair competition, contract,
property, defamation, privacy, publicity or "moral rights" (to the extent such
moral rights are recognized by U.S. law);
(g) Except to the extent expressly permitted by this Agreement,
Licensor has not and will not grant or license to others, and will not itself
exercise, any rights to broadcast the Accepted Programs in or to the Territory;
(h) Each and every one of the representations and warranties
made by Licensor herein shall survive the Broadcast Period for each Accepted
Program;
(i) To the extent Section 507 (as defined in Section 4.6 above)
is applicable, no Accepted Program includes or will include any matter for which
any money, service or other valuable consideration is directly or indirectly
paid or promised to Licensor by a third party, or accepted from or charged to a
third party by Licensor, unless such is disclosed in accordance with Section
507. Licensor shall exercise reasonable diligence to inform its employees, and
other persons with whom it deals directly in connection with such programs, of
the requirements of Section 507; provided, however, that no act of any such
employee or of any independent contractor connected with any of the programs, in
contravention of the provisions of Section 507, shall constitute a breach of the
provisions of this paragraph unless Licensor has actual notice thereof and fails
promptly to disclose such act to Licensee. As used in this paragraph, the term
"service or other valuable consideration" shall not include any service or
property furnished without charge or at a nominal charge for use in, or in
connection with, any of the programs "unless it is so furnished in consideration
for an identification in a broadcast of any person, product, service, trademark
or brand name beyond an identification which is reasonably related to the use of
such service or property on the broadcast," as such terms are used in Section
507. No inadvertent failure by Licensor to comply with this paragraph shall be
deemed a breach of this Agreement; and
(j) For purposes of this Section 7.1 only, "Accepted Programs"
shall be deemed to include Televisa Produced U.S. Special Programs to the extent
broadcast by Licensee.
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7.2 Licensor further agrees that, while it has no obligation to
do so, if it secures a producer's (Errors and Omissions) liability policy
covering the Programs, or any part thereof, it will cause Licensee to be named
as an additional insured on such policy and will cause a certificate of
insurance to be promptly furnished to Licensee, provided, however, that the
inclusion of Licensee as an additional insured does not result in any additional
cost or expense to Licensor. Licensor will notify Licensee when such insurance
is obtained and, after obtained if cancelled. Any such insurance as to which
Licensee is an additional insured shall be primary as to Licensee and not in
excess of or contributory to any other insurance provided for the benefit of or
by Licensee.
7.3 Licensor warrants that the amount of Programs made available
throughout the term hereunder for license hereunder, when aggregated with (i)
the amount of Programs (as defined in the Venevision Agreement) made available
for license by Venevision pursuant to the Venevision Agreement, (ii) any
local-produced programming by the Stations to the extent such locally produced
programming is used on either of the Networks, (iii) any programs produced by
Licensee, and (iv) any programs purchased by Licensee other than from Licensor,
will be sufficient to fill a twenty-four hour a day, seven day a week time
schedule for each of the Univision Network and the Galavision Network, which
such time schedules as between the two networks shall be separate and
non-duplicative.
8. Indemnification.
8.1 Licensor agrees to hold Licensee, [its partners, the partners of
any partnership that is a partner of Licensee, officers, employees, and agents
and the shareholders, officers, directors, employees and agents of the partners
or any corporation or partnership that is a partner of Licensee (collectively
the "Licensee Indemnitees"), harmless, from any claims, deficiencies,
assessments, liabilities, losses, damages, expenses (including, without
limitation, reasonable fees and expenses of counsel) (collectively, "Losses")
which any Licensee Indemnitee may suffer by reason of Licensor's breach of, or
non-compliance with, any covenant or provision herein contained or the
inaccuracy of any warranty or representation made in this Agreement and any such
damages shall be reduced by: (i) the amount of any net tax benefit ultimately
accruing to Licensee on account of Licensee's payment of such claim; (ii)
insurance proceeds which Licensee has or will receive in connection with such
claim, and (iii) any recovery from third parties in connection with such claim;
provided, however, that Licensor shall not delay payment of its indemnification
obligations hereunder pending resolution of any tax benefit or insurance or
third party claim if Licensee provides Licensor with an undertaking to reimburse
Licensor for the amount of any such claim ultimately received; and provided,
further, that Licensee shall have no obligation to obtain any such insurance
proceeds or recovery from third parties if and to the extent Licensor is
subrogated (in form and substance satisfactory to Licensor) to Licensee claims
in respect of such insurance or third parties.
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<PAGE> 16
8.2 Licensee agrees to indemnify Licensor, its direct and indirect
shareholders and all officers, directors, employees and agents of any of the
foregoing (the "Licensor Indemnitees") against and hold the Licensor Indemnitees
harmless from any and all Losses incurred or suffered by any Licensor Indemnitee
arising out of a breach by Licensee of the representations, warranties,
covenants or agreements made or to be performed by it pursuant hereto, or
arising out of any program or commercial material (apart from the Programs)
furnished by Licensee and any such damages shall be reduced by: (i) the amount
of any net tax benefit ultimately accruing to Licensor on account of Licensor's
payment of such claim; (ii) insurance proceeds which Licensor has or will
receive in connection with such claim, and (iii) any recovery from third parties
in connection with such claim; provided, however, that Licensee shall not delay
payment of its indemnification obligations hereunder pending resolution of any
tax benefit or insurance or third party claim if Licensor provides Licensee with
an undertaking to reimburse Licensee for the amount of any such claim ultimately
received; and provided, further, that Licensor shall have no obligation to
obtain any such insurance proceeds or recovery from third parties if and to the
extent Licensee is subrogated (in form and substance satisfactory to Licensee)
to Licensor claims in respect of such insurance or third parties.
8.3 The following procedures shall govern all claims for
indemnification made under any provision of this Agreement. A written notice (an
"Indemnification Notice") with respect to any claim for indemnification shall be
given by the party seeking indemnification (the "Indemnitee") to the party from
which indemnification is sought (the "Indemnitor") within thirty (30) days of
the discovery by the Indemnitee of such claim, which Indemnification Notice
shall set forth the facts relating to such claim then known to the Indemnitee
(provided that failure to give such Indemnification Notice as aforesaid shall
not release the Indemnitor from its indemnification obligations hereunder unless
and to the extent the Indemnitor has been prejudiced thereby). The party
receiving an Indemnification Notice shall send a written response to the party
seeking indemnification stating whether it agrees with or rejects such claim in
whole or in part. Failure to give such response within ninety (90) days after
receipt of the Indemnification Notice shall be conclusively deemed to constitute
acknowledgment of the validity of such claim. If any such claim shall arise by
reason of any claim made by third parties, the Indemnitor shall have the right,
upon written notice to Indemnitee within 30 days after receipt of the
Indemnification Notice, to assume the defense of the matter giving rise to the
claim for indemnification through counsel of its selection reasonably acceptable
to Indemnitee, at Indemnitor's expense, and the Indemnitee shall have the right,
at its own expense, to employ counsel to represent it; provided, however, that
if any action shall include both the Indemnitor and the Indemnitee and there is
a conflict of interest because of the availability of different or additional
defenses to the Indemnitee, the Indemnitee shall have the right to select
separate counsel to participate in the defense of such action on its behalf, at
the Indemnitor's expense. The Indemnitee shall cooperate fully to make available
to the Indemnitor all pertinent information under the Indemnitee's control as to
the claim and shall make appropriate personnel available for any discovery,
trial or appeal. If the Indemnitor does
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<PAGE> 17
not elect to undertake the defense as set forth above, the Indemnitee shall have
the right to assume the defense of such matter on behalf of and for the account
of the Indemnitor; provided, however, the Indemnitee shall not settle or
compromise any claim without the consent of the Indemnitor, which consent shall
not be unreasonably withheld. The Indemnitor may settle any claim at any time at
its expense, so long as such settlement includes as an unconditional term
thereof the giving by the claimant of a release of the Indemnitee from all
liability with respect to such claim.
9. Term. The term of this Agreement shall be until December 17, 2017.
Any license in effect for any Program at the date of termination of this
Agreement shall continue through the Broadcast Period for such Program, with no
right of re-license or extension at the end thereof, and all of the rights and
obligations of the parties under this Agreement with respect to such license
will continue through the Broadcast Period for such Program, it being agreed
that the parties shall enter into mutually satisfactory royalty arrangements
with respect to the Broadcast Period following the termination of this Agreement
in order to compensate Licensor for the use of Programs during such period and,
if the parties are unable to agree upon such royalty arrangements, the amount
thereof shall be determined based on prevailing market conditions.
In addition this Agreement may be terminated by either party in the
event that the other party (i) materially breaches its obligations hereunder and
fails to cure such breach within 180 days of notice thereof (90 days for failure
to pay the Program Royalty when due) by the party seeking termination (which
notice shall describe the breach in reasonable detail); provided, however, that
the inaccuracy of any of Licensor's representations and warranties contained in
Section 7 hereof shall not be deemed to be a breach of its obligations for
purposes of this Section 9 to the extent that Licensor satisfies its
indemnification obligations with respect to such inaccuracy, or (ii) asserts
Force Majeure under Section 10 as a relief from substantially all of its
obligations hereunder for a period in excess of one year. Any notice of material
breach referred to in (i) above shall concurrently be sent to the Managing
Agents for any lenders providing financing to the Stations and the Networks, and
the Managing Agents on behalf of such lenders shall have the right to cure such
alleged material breach within such 30-day or 180-day cure period. Any notice of
termination for Force Majeure pursuant to (ii) above shall concurrently be sent
to such Managing Agents.
10. Force Majeure. Neither party hereto shall be liable for or suffer
any penalty or termination of rights hereunder by reason of any failure or delay
in performing any of its obligations hereunder if such failure or delay is
occasioned by compliance with governmental regulation or order, or by
circumstances beyond the reasonable control of the party so failing or delaying,
including but not limited to acts of God, war, insurrection, fire, flood,
accident, strike or other labor disturbance, interruption of or delay in
transportation (a "Force Majeure Event"). Each party shall promptly notify the
other in writing of any such event of force majeure, the expected duration
thereof, and its anticipated effect on the party
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<PAGE> 18
affected and make reasonable efforts to remedy any such event, except that
neither party shall be under any obligation to settle a labor dispute. If
Licensor is prevented by a Force Majeure Event from delivering any Accepted
Program to Licensee, the running of the time period for purposes of computing
the applicable Broadcast Period for such Program shall be suspended and, if such
Force Majeure Event prevents Licensor from delivering any substitute Programs to
Licensee, then Licensee's obligations to pay the Program Royalty under Section
5.1 hereof shall be reduced (but not below zero) for the time period or periods
so affected to the extent necessary to compensate Licensee for the cost of
obtaining substitute programming. Any notice of Force Majeure sent pursuant to
this Section 10 shall concurrently be sent to the Managing Agents referred to in
Section 9 above.
11. Modification. This Agreement shall not be modified or waived in
whole or in part except in writing signed by an officer of the party to be bound
by such modification or waiver.
12. Waiver of Breach. A waiver by either party of any breach or default
by the other party shall not be construed as a waiver of any other breach or
default whether or not similar and whether or not occurring before or after the
subject breach.
13. Jurisdiction; Venue; Service of Process. Each of the parties
irrevocably submits to the jurisdiction of any California State or United States
Federal court sitting in Los Angeles County in any action or proceeding arising
out of or relating to this Agreement or the transactions contemplated hereby,
and irrevocably agrees that any such action or proceeding may be heard and
determined only in such California State or Federal court. Each of the parties
irrevocably waives, to the fullest extent it may effectively do so, the defense
of an inconvenient forum to the maintenance of any such action or proceeding.
Each of the parties irrevocably appoints CT Corporation System (the "Process
Agent"), with an office on the date hereof at 818 West 7th Street, Los Angeles,
CA, 90017 as his or its agent to receive on behalf of him or it and his or its
property service of copies of the summons and complaint and any other process
which may be served in any such action or proceeding. Such service may be made
by delivering a copy of such process to any of the parties in care of the
Process Agent at the Process Agent's above address, and each of the parties
irrevocably authorizes and directs the Process Agent to accept such service on
its behalf. As an alternate method of service, each of the parties consents to
the service of copies of the summons and complaint and any other process which
may be served in any such action or proceeding by the mailing or delivering of a
copy of such process to such party at its address specified in or pursuant to
Section 14. Each of the parties agrees that a final judgment in any such action
or proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law.
14. Notices. All notices and other communications required or permitted
hereunder shall be in writing, shall be deemed duly given upon actual receipt,
and shall be delivered (a) in person, (b) by registered or certified mail (air
mail if addressed to an
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<PAGE> 19
address outside of the country in which mailed), postage prepaid, return receipt
requested, (c) by a generally recognized overnight courier service which
provides written acknowledgment by the addressee of receipt, or (d) by facsimile
or other generally accepted means of electronic transmission (provided that a
copy of any notice delivered pursuant to this clause (d) shall also be sent
pursuant to clause (b)), addressed as set forth in Schedule 1 or to such other
addresses as may be specified by like notice to the other parties.
15. Assignments. Either of the parties may assign its rights hereunder
and delegate its duties hereunder, in whole or in part, to an Affiliate capable
to perform the assignor's obligations hereunder, and either of the parties may
assign its rights hereunder and delegate its duties hereunder to any person or
entity to which all or substantially all of such party's businesses and assets
are pledged or transferred. No such assignment or delegation shall relieve any
party of its obligations hereunder. Any such assignment or delegation authorized
pursuant to this Section 15 shall be pursuant to a written agreement in form and
substance reasonably satisfactory to the parties [and to the Managing Agents
referred to in Section 9 above]. Except as otherwise expressly provided herein,
neither this Agreement nor any rights, duties or obligations hereunder may be
assigned or delegated by any of the parties, in whole or in part, whether
voluntarily, by operation of law or otherwise; provided, however, that Licensor
may assign, grant a security interest in or otherwise transfer its rights to
payment hereunder in connection with one or more financings. Any attempted
assignment or delegation in violation of this prohibition shall be null and
void. Subject to the foregoing, all of the terms and provisions hereof shall be
binding upon, and inure to the benefit of, the successors and assigns of the
parties. Nothing contained herein, express or implied, is intended to confer on
any person other than the parties or their respective successors and permitted
assigns, any rights, remedies, obligations or liabilities under or by reason of
this Agreement.
16. Governing Law. This Agreement and the legal relations among the
parties shall be governed by and construed in accordance with the laws of the
State of California applicable to contracts between California parties made and
performed in that State, without regard to conflict of laws principles.
17. Further Assurances. Each party hereto agrees to execute any and all
additional documents and do all things and perform all acts necessary or proper
to further effectuate or evidence this Agreement including any required filings
with the U.S. Copyright Office.
18. Counterparts. This Agreement may be executed in counterparts, each
of which shall be an original instrument and all of which, when taken together,
shall constitute one and the same agreement.
19. Severability. If any provision of this Agreement, or the
application thereof, shall for any reason or to any extent be invalid or
unenforceable, then the
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remainder of this Agreement and application of such provision to other persons
or circumstances shall continue in full force and effect and in no way be
affected, impaired or invalidated; provided that the aggregate of all such
provisions found to be invalid or unenforceable does not materially affect the
benefits and obligations of the parties of the Agreement taken as a whole.
20. Specific Performance. The parties hereto agree that irreparable
damage may occur in the event that any of the provisions of this Agreement were
not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties may be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof in any court of the United States
or any state having jurisdiction pursuant to Section 13, this being in addition
to any other remedy to which they are entitled at law or in equity.
21. Acknowledgement of Security Interest. Pursuant to the financing
documents referred to in Section 9 above, the Administrative Agent (for the
benefit of the various lenders) has been granted a security interest in and to
all of Licensee's rights in this Agreement. The parties hereto acknowledge and
consent to the grant of such security interest.
22. Participation Agreement. All the terms and conditions of this
Agreement shall at all times be subject to the terms and conditions of the
Participation Agreement of even date herewith among Univision Television
Holdings, Inc, A. Jerrold Perenchio, Grupo Televisa, S.A., and Messrs. Gustavo
A. Cisneros and Ricardo J. Cisneros, and if there is any inconsistency between
any terms and conditions of this Agreement and the terms and conditions of the
Participation Agreement, the Participation Agreement shall prevail.
23. Televisa Advertising. Advertising time which is not sold to
advertisers or used by the Network or the Stations for their own purposes will
be made available without charge to Televisa and its Affiliates. Other than as
set forth in the following sentence, such time may be used for promotion or
direct sale (i.e., telemarketing) of products or services now or hereafter owned
or being provided by Televisa or its Affiliates (including, without limitation,
theatrical motion pictures produced or being distributed by any of them). Such
time, however, will not be available for any product or service that is marketed
primarily by telemarketing that was not owned or being provided by Televisa or
its Affiliates as of December 17, 1992, and provided, further, that such time
may be preempted by the Network or any Station to the extent that such time is
to be sold to a paying advertiser. Televisa and its Affiliates will be permitted
to purchase for such purposes advertising time which cannot be preempted by the
Network or the Stations for the lowest spot rate then being offered for a
non-preemptable spot in the program during which such time is sold. Televisa may
not, however, directly or indirectly make such free or purchased time available
to Persons other than its Affiliates. All material provided for broadcast by
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<PAGE> 21
the Televisa or its Affiliates shall comply with the quality standards for
unaffiliated advertisers established by the Network or the Stations from time to
time. The Board of Directors of Licensee, by a vote which includes, in addition
to any other required vote of directors, the affirmative vote of a majority of
the Class T Director(s) (so long as a Class T Voting Conversion (as defined in
the Restated Certificate of Incorporation of UCI) has not occurred) or a
majority of the Class V Director(s) (so long as a Class V Voting Conversion (as
defined in the Restated Certificate of Incorporation of UCI) has not occurred,
may make such rules in connection with the use of such time by Televisa and its
Affiliates as it determines to be appropriate, including, without limitation,
rules for the fair allocation of such time between Televisa and [Venevision] and
their respective Affiliates.
IN WITNESS WHEREOF, the parties have set their hands as of the day and
year first above written.
UNIVISA, INC.
By:___________________________
Title:________________________
THE UNIVISION NETWORK LIMITED
PARTNERSHIP
By:___________________________
Its:__________________________
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<PAGE> 22
GUARANTY
For and in consideration of the execution by UNIVISION _____
("Licensee") of that Amended and Restated Program License Agreement (the
"License Agreement"), between Licensee and UNIVISA, INC. ("Licensor"), of even
date herewith, GRUPO TELEVISA, S.A. ("Guarantor") hereby agrees as follows:
1. Guarantor confirms and joins in the representations and
warranties made by Licensor in Section 7 of the License Agreement;
2. Guarantor agrees that for the term of the License Agreement it
will use commercially reasonable efforts to continue to produce
Programs for Licensor's use at least to the same extent including
quantity and quality as in calendar 1989, 1990 and 1991, provided
nothing herein shall require Guarantor to produce any particular type
or mix of programs. In any event the amount of Programs provided for
Licensor's use shall be sufficient to enable Licensor to satisfy its
obligations under Sections 7.3 and 1.1(a) of the License Agreement.
3. Guarantor guarantees the full performance by Licensor of all
of its obligations under the License Agreement and further agrees to be
bound, and cause its Affiliates to be bound, by the provisions of the
License Agreement applicable to it or such Affiliates, as the case may
be.
4. Guarantor irrevocably submits to the jurisdiction of any
California State or United States Federal court sitting in Los Angeles
County in any action or proceeding arising out of or relating to this
Agreement or the transactions contemplated hereby, and irrevocably
agrees that any such action or proceeding may be heard and determined
only in such California State or Federal court. Guarantor irrevocably
waives, to the fullest extent it may effectively do so, the defense of
an inconvenient forum to the maintenance of any such action or
proceeding. Guarantor irrevocably appoints CT Corporation System (the
"Process Agent"), with an office on the date hereof at 818 West 7th
Street, Los Angeles, CA 90017 as its agent to receive on behalf of it
and its property service of copies of the summons and complaint and any
other process which may be served in any such action or proceeding.
Such service may be made by delivering a copy of such process to
Guarantor in care of the Process Agent at the Process Agent's above
address, and Guarantor irrevocably authorizes and directs the Process
Agent to accept such service on its behalf. As an alternate method of
service, Guarantor consents to the service of copies of the summons and
complaint and any other process which may be served in any such action
or proceeding by the mailing or delivering of a copy of such process to
Licensor at its address specified in or pursuant to Section 14 of the
License Agreement. Guarantor agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced
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in other jurisdictions by suit on the judgment or in any other manner
provided by law.
5. This Agreement and the legal relations among the parties shall
be governed by and construed in accordance with the laws of the State
of California applicable to contracts between California parties made
and performed in that State, without regard to conflict of laws
principles.
6. Guarantor agrees that its obligations hereunder (the
"Obligations) are irrevocable, absolute, independent, unconditional and
continuing, and shall not be subject to any limitation, impairment or
discharge for any reason, including any circumstance which constitutes
a legal or equitable discharge of a guarantor or surety other than
indefeasible performance in full of the Obligations. Guarantor hereby
waives notice of acceptance of this guaranty, presentments, notices of
default, nonpayment, partial payments and protest, all other notices or
formalities, any right to require prosecution of collection or remedies
against Licensor or any other person or entity or to pursue any other
remedy in Licensee's power. Without limiting the generality of any
other waiver or provision set forth herein, Guarantor hereby waives, to
the maximum extent such waiver is permitted by law, any and all
defenses arising directly or indirectly under any one or more of
California Civil Code Sections 2808, 2809, 2810, 2815, 2819,
2839, 2849, 2850, 2899 and 3433. Guarantor agrees that one or more, and
successive and/or concurrent, actions may be brought against it, either
in the same action in which Licensor or any other person is sued on in
separate actions and that the cessation of the liability of Licensor
for any reason, other than full payment and performance of the
obligations, shall not in any way affect the liability of the
undersigned hereunder.
The rights, powers and remedies given to Licensee by this
Guaranty are cumulative and shall be in addition to and independent of
all rights, powers and remedies given to Licensee by virtue of any
statute or rule of law or in the license agreement. Any forbearance or
failure to exercise, or any delay by Licensee in exercising, any right,
power or remedy hereunder shall not impair any such right, power or
remedy or be construed to be a waiver thereof, nor shall it preclude
the further exercise of any such right, power or remedy.
In case any provision in or Obligation under this Guaranty
shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
Obligations, or of such provision or Obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.
This Guaranty is a continuing guaranty and shall be binding
upon Guarantor and its successors and assigns. This Guaranty shall
inure to the benefit of Licensee and its successors and assigns.
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<PAGE> 24
To the extent Guarantor is guaranteeing payment obligations of
Licensor under the terms of the License Agreement ("Payment
Obligations"), this guaranty is a guaranty of payment when due and not
of collectibility. Licensee may from time to time, without notice or
demand and without affecting the validity or enforceability of this
Guaranty or giving rise to any limitation, impairment or discharge of
Guarantor's liability hereunder, (i) settle, compromise, release or
discharge, or accept or refuse any offer of performance with respect
to, or substitutions for, the obligations of Licensor or any agreement
relating thereto; (ii) have stayed or enjoined, by order of court, by
operation of law or otherwise, the exercise or enforcement of, any
claim or demand or any right, power or remedy with respect to the
obligations of Licensor or any agreement relating thereto; (iii) waive,
amend or modify, or consent to departure from, any of the terms or
provisions of the License Agreement; and (iv) omit or delay in doing
any act or thing, which may or might in any manner or to any extent
vary the risk of Guarantor as an obligor in respect of the obligations.
Guarantor hereby waives, for the benefit of the Licensee: (i)
any defense arising by reason of the incapacity or lack of authority of
Licensor; (ii) any defense based upon any statute or rule of law which
provides that the obligation of a surety must be neither larger in
amount nor in other respects more burdensome than that of the
principal; and (iii) any principles or provisions of law, statutory or
otherwise, which are or might be in conflict with the terms of this
Guaranty and any legal or equitable discharge of Guarantor's
obligations hereunder.
Until any Payment Obligations shall have been paid in full,
Guarantor shall withhold exercise of any right of subrogation.
Guarantor further agrees that, to the extent the withholding of its
rights of subrogation as set forth herein is found by a court of
competent jurisdiction to be void or voidable for any reason, any
rights of subrogation Guarantor may have against Licensor shall be
junior and subordinate to any rights Licensee may have against
Licensor.
In the event that all or any portion of any Payment
Obligations are paid by Licensor, the obligations of Guarantor
hereunder shall continue and remain in full force and effect or be
reinstated, as the case may be, in the event that all or any part of
such payment(s) are rescinded or recovered directly or indirectly from
Licensee as a preference, fraudulent transfer or otherwise, and any
such payments which are so rescinded or recovered shall constitute
Payment Obligations for all purposes under this Guaranty.
7. Guarantor shall not be liable for or suffer any penalty or
termination of rights hereunder by reason of any failure or delay in
performing any of its obligations hereunder if such failure or delay is
occasioned by compliance with governmental regulation or order, or by
circumstances beyond the reasonable control of Guarantor,
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<PAGE> 25
including but not limited to acts of God, war, insurrection, fire,
flood, accident, strike or other labor disturbance, interruption of or
delay in transportation. Guarantor shall promptly notify Licensee in
writing of any such event of force majeure, the expected duration
thereof, and its anticipated effect on Licensee and make reasonable
efforts to remedy any such event, except Guarantor shall be under no
obligation to settle a labor dispute.
8. Pursuant to the financing documents referred to in Section 9 of the
License Agreement, the Administrative Agent (for the benefit of the
various lenders) has been granted a security interest in and to all of
Licensee's rights in the License Agreement. The parties hereto
acknowledge and consent to the grant of such security interest.
DATED:
GRUPO TELEVISA, S.A.
By:____________________________________
Name:
Title:
Accepted and Agreed:
UNIVISION ______
By:___________________________
Its:__________________________
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<PAGE> 26
GUARANTY
For and in consideration of the execution by UNIVISA, INC.
("Licensor") of that Amended and Restated Program License Agreement (the
"License Agreement"), between Licensor and THE UNIVISION NETWORK LIMITED
PARTNERSHIP ("Licensee"), of even date herewith, UNIVISION COMMUNICATIONS INC.
("Guarantor") hereby agrees as follows:
1. Guarantor guarantees the full performance by Licensee of all
of its obligations under the License Agreement and further agrees to be
bound, and cause its Affiliates to be bound, by the provisions of the
License Agreement applicable to it or such Affiliates, as the case may
be.
2. Guarantor irrevocably submits to the jurisdiction of any
California State or United States Federal court sitting in Los Angeles
County in any action or proceeding arising out of or relating to this
Agreement or the transactions contemplated hereby, and irrevocably
agrees that any such action or proceeding may be heard and determined
only in such California State or Federal court. Guarantor irrevocably
waives, to the fullest extent it may effectively do so, the defense of
an inconvenient forum to the maintenance of any such action or
proceeding. Guarantor irrevocably appoints CT Corporation System (the
"Process Agent"), with an office on the date hereof at 818 West 7th
Street, Los Angeles, CA 90017 as its agent to receive on behalf of it
and its property service of copies of the summons and complaint and any
other process which may be served in any such action or proceeding.
Such service may be made by delivering a copy of such process to
Guarantor in care of the Process Agent at the Process Agent's above
address, and Guarantor irrevocably authorizes and directs the Process
Agent to accept such service on its behalf. As an alternate method of
service, Guarantor consents to the service of copies of the summons and
complaint and any other process which may be served in any such action
or proceeding by the mailing or delivering of a copy of such process to
Licensee at its address specified in or pursuant to Section 14 of the
License Agreement. Guarantor agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided
by law.
3. This Agreement and the legal relations among the parties shall
be governed by and construed in accordance with the laws of the State
of California applicable to contracts between California parties made
and performed in that State, without regard to conflict of laws
principles.
4. Guarantor agrees that its obligations hereunder (the
"Obligations") are irrevocable, absolute, independent, unconditional
and continuing, and shall not be subject to any limitation, impairment
or discharge for any reason, including any
1
<PAGE> 27
circumstance which constitutes a legal or equitable discharge of a
guarantor or surety other than indefeasible performance in full of the
Obligations. Guarantor hereby waives notice of acceptance of this
guaranty, presentments, notices of default, nonpayment, partial
payments and protest, all other notices or formalities, any right to
require prosecution of collection or remedies against Licensee or any
other person or entity or to pursue any other remedy in Licensor's
power. Without limiting the generality of any other waiver or provision
set forth herein, Guarantor hereby waives, to the maximum extent such
waiver is permitted by law, any and all defenses arising directly or
indirectly under any one or more of California Civil Code
Sections 2808, 2809, 2810, 2815, 2819, 2839, 2849, 2850, 2899 and
3433. Guarantor agrees that one or more, and successive and/or
concurrent, actions may be brought against it, either in the same
action in which Licensee or any other person is sued or in separate
actions and that the cessation of the liability of Licensee for any
reason, other than full payment and performance of the Obligations,
shall not in any way affect the liability of the undersigned hereunder.
The rights, powers and remedies given to Licensor by this
Guaranty are cumulative and shall be in addition to and independent of
all rights, powers and remedies given to Licensor by virtue of any
statute or rule of law or in the License Agreement. Any forbearance or
failure to exercise, or any delay by Licensor in exercising, any right,
power or remedy hereunder shall not impair any such right, power or
remedy or be construed to be a waiver thereof, nor shall it preclude
the further exercise of any such right, power or remedy.
In case any provision in or Obligation under this Guaranty
shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
Obligations, or of such provision or Obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.
This Guaranty is a continuing guaranty and shall be binding
upon Guarantor and its successors and assigns. This Guaranty shall
inure to the benefit of Licensor and its successors and assigns.
To the extent Guarantor is guaranteeing payment obligations of
Licensee under the terms of the License Agreement ("Payment
Obligations"), this guaranty is a guaranty of payment when due and not
of collectibility. Licensor may from time to time, without notice or
demand and without affecting the validity or enforceability of this
Guaranty or giving rise to any limitation, impairment or discharge of
Guarantor's liability hereunder, (i) settle, compromise, release or
discharge, or accept or refuse any offer of performance with respect
to, or substitutions for, the obligations of Licensee or any agreement
relating thereto; (ii) have stayed or enjoined, by order of court, by
operation of law or otherwise, the exercise or enforcement of, any
claim or demand or any right, power or remedy with respect to
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the obligations of Licensee or any agreement relating thereto; (iii)
waive, amend or modify, or consent to departure from, any of the terms
or provisions of the License Agreement; and (iv) omit or delay in doing
any act or thing, which may or might in any manner or to any extent
vary the risk of Guarantor as an obligor in respect of the obligations.
Guarantor hereby waives, for the benefit of the Licensor: (i)
any defense arising by reason of the incapacity or lack of authority of
Licensee; (ii) any defense based upon any statute or rule of law which
provides that the obligation of a surety must be neither larger in
amount nor in other respects more burdensome than that of the
principal; and (iii) any principles or provisions of law, statutory or
otherwise, which are or might be in conflict with the terms of this
Guaranty and any legal or equitable discharge of Guarantor's
obligations hereunder.
Until any Payment Obligations shall have been paid in full,
Guarantor shall withhold exercise of any right of subrogation.
Guarantor further agrees that, to the extent the withholding of its
rights of subrogation as set forth herein is found by a court of
competent jurisdiction to be void or voidable for any reason, any
rights of subrogation Guarantor may have against Licensee shall be
junior and subordinate to any rights Licensor may have against
Licensee.
In the event that all or any portion of any Payment
Obligations are paid by Licensee, the Obligations of Guarantor
hereunder shall continue and remain in full force and effect or be
reinstated, as the case may be, in the event that all or any part of
such payment(s) are rescinded or recovered directly or indirectly from
Licensor as a preference, fraudulent transfer or otherwise, and any
such payments which are so rescinded or recovered shall constitute
Payment Obligations for all purposes under this Guaranty.
5. Guarantor shall not be liable for or suffer any penalty or
termination of rights hereunder by reason of any failure or delay in
performing any of its Obligations hereunder if such failure or delay is
occasioned by compliance with governmental regulation or order, or by
circumstances beyond the reasonable control of Guarantor, including but
not limited to acts of God, war, insurrection, fire, flood, accident,
strike or other labor disturbance, interruption of or delay in
transportation. Guarantor shall promptly notify Licensor in writing of
any such event of force majeure, the expected duration thereof, and its
anticipated effect on Licensor and make
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reasonable efforts to remedy any such event, except Guarantor shall be
under no obligation to settle a labor dispute.
DATED:
UNIVISION COMMUNICATIONS INC.
By:____________________________________
Name:
Title:
Accepted and Agreed:
UNIVISA, INC.
By:___________________________
Its:__________________________
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Schedule 1
NOTICES
(i) If to Licensee:
1999 Avenue of the Stars, Suite 3050
Los Angeles, California 90067
Attn: Robert V. Cahill, Esq.
Telecopier: (310) 556-3568
with a copy to:
O'Melveny & Myers LLP
1999 Avenue of the Stars, Suite 700
Los Angeles, California 90067
Attn: Donald V. Petroni
Telecopier: (310) 246-6779
(ii) If to Licensor:
c/o Univisa, Inc.
2121 Avenue of the Stars, Suite 3300
Los Angeles, California 90067
Attn: Lawrence W. Dam
Telecopier: (310) 286-2892
with copies to:
Univisa, Inc.
2121 Avenue of the Stars, Suite 3300
Los Angeles, California 90067
Attn:
Telecopier: (310) 286-1615
and
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, New York 10004-1980
Attn: Joseph A. Stern
Telecopier: (212) 747-1526
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<PAGE> 1
EXHIBIT 10.8
FORM OF
PARTICIPATION AGREEMENT
This PARTICIPATION AGREEMENT (this "Agreement") is made and
entered into as of the __th day of ______, 1996, by and among Univision
Communications Inc., a Delaware corporation ("Univision"), Mr. A. Jerrold
Perenchio ("Perenchio"), Grupo Televisa S.A., a Mexican corporation
("Televisa"), and Messrs. Gustavo A. Cisneros and Ricardo J. Cisneros (the
"Cisneros Brothers") and Corporacion Venezolana de Television (Venevision) C.A.
("Venevision") and together with Perenchio, Televisa and the Cisneros Brothers,
the "Principals"), with reference to the following facts:
A. In December 1992, Perenchio, Televisa and the
Cisneros Brothers jointly undertook the acquisition from Hallmark Cards and
subsequent operation of nine full power and six low power Spanish language
television stations (the "Stations") and the Univision Spanish language
television network (the "Network").
B. The Stations and the Network are being reorganized in
connection with an initial public offering of the Common Stock of Univision,
which will be the parent company of the Stations and the Network.
NOW, THEREFORE, in consideration of the mutual promises and
covenants herein contained, the parties hereto agree as follows:
1. Exclusive Transactions.
1.1 Each of the Principals acknowledges that the various
arrangements and agreements referred to above and the other relationships of the
Principals and their Affiliates to Univision continue to create a fiduciary
relationship between the Principals and their respective Affiliates, on one
hand, and Univision on the other hand, with respect to entering into certain
activities in competition with Univision which would make it inappropriate for
any of them, directly or indirectly, to act independently of the others in
connection with an Exclusive Transaction. Accordingly, none of the Principals
will, and each of the Principals will cause its Affiliates not to, directly or
indirectly, engage or participate in any Exclusive Transaction otherwise than as
permitted in this Agreement, or without first permitting Univision to
participate therein on the terms provided below.
1.2 If any of the Principals or any of their respective
Affiliates, intends to engage in an Exclusive Transaction, such Principal (the
"Offeror") shall, or shall cause its Affiliate to, offer to Univision the
opportunity to participate in such transaction. Univision shall have thirty days
after the Offeror gives it notice in accordance with
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Section 5.4 of the material terms and conditions of a transaction in reasonable
detail within which to decide whether or not it wishes to participate therein
and to give notice to the Offeror, in accordance with Section 5.4, of its
decision. Univision shall have only the right to elect to participate in the
entire opportunity offered to it on substantially the same terms available to
the Offeror, and the failure to give any notice in accordance with Section 5.4
within such thirty days, or any response other than a timely unqualified
acceptance, shall constitute an election not to participate. If Univision does
not notify the Offeror that it wishes to participate in any such transaction
prior to the end of the thirtieth day following the business day on which such
notice is given, the Offeror and its Affiliates may pursue the transaction for
their own accounts. However, if the material terms and conditions of such
transaction change from the material terms and conditions that Univision failed
to accept, the opportunity shall again be offered to Univision as set forth
above, except that Univision shall have only seven days after receiving such
notice within which to give notice to the Offeror in accordance with Section 5.4
that it will participate. The preceding sentence shall continue to apply to
subsequent changes in the material terms of such transaction prior to the
closing thereof. Not less than seven days prior to first offering any such
opportunity to Univision, the Offeror will notify Univision that an opportunity
may be presented, and will make available to it the information that the Offeror
has about the potential transaction which is reasonably necessary so that
Univision can familiarize itself with such opportunity and prepare to make
decisions hereunder. However, if the Offeror has less than fifteen business days
notice of a potential transaction, the Offeror shall comply with the preceding
sentence as soon as practicable after it determines that it wishes to evaluate
whether or not to participate in such potential transaction itself.
Notwithstanding the foregoing, (i) if an Exclusive Transaction
offered by Televisa or an Affiliate of Televisa is presented to the Univision
board of Directors and such Exclusive Transaction fails to receive the requisite
approval required by Article III, Section 12(a) of the Bylaws of Univision on
account of the failure to obtain the approval of the Class T Directors, then
neither Televisa nor any of its Affiliates shall be entitled to engage in such
Exclusive Transaction; (ii) if an Exclusive Transaction offered by the Cisneros
Brothers or an Affiliate of the Cisneros Brothers is presented to the Univision
Board of Directors and such Transaction fails to receive the requisite approval
required by Article III, Section 12(a) of the Bylaws of Univision on account of
the failure to obtain the approval of the Class V Directors, then neither the
Cisneros Brothers nor any of their Affiliates shall be entitled to engage in
such Exclusive Transaction; and (iii) if an Exclusive Transaction offered by
Perenchio or an Affiliate of Perenchio is presented to the Univision Board of
Directors and such Transaction fails to receive the requisite approval required
by Article III, Section 12(a) of the Bylaws of Univision on account of the
failure to obtain the approval of the Class A/P Directors, then neither
Perenchio nor any of his Affiliates shall be entitled to engage in such
Exclusive Transaction.
The parties hereto agree that until the second anniversary of
this Agreement, Univision may participate for its own account in 100% of, and
none of the Principals nor any of their Affiliates may participate for their own
account in, any
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Exclusive Transaction that is discussed by the Univision Board of Directors and
reflected in the minutes of a Univision Board meeting prior to the date of this
Agreement; provided that if the reason that the transactions described herein
have not occurred by the second anniversary of this Agreement is that such
transactions (or any portion thereof, including the financing, thereof) have
failed to receive the requisite approval required by Article III, Section 12(a)
of the Bylaws of Univision on account of the failure to obtain the approval of
the Class T Directors and/or the Class V Directors required thereunder,
Univision shall have the right described herein until the fifth anniversary of
this Agreement.
1.3 If Univision accepts the opportunity to participate in an
Exclusive Transaction, then such opportunity shall be taken by Univision (or one
of its subsidiaries, as determined by the Board of Directors of Univision). In
such case, unless the Offeror and Univision agree otherwise, the Offeror and
Univision will enter into a joint venture to participate in such Exclusive
Transaction on substantially the following terms:
(a) the Offeror and Univision will each have a 50% economic
interest in the joint venture;
(b) the Offeror will control the joint venture either through
contract or through the right to designate a majority of directors or
similar persons;
(c) the Offeror will owe to Univision the same duty that a
majority shareholder owes to a minority shareholder;
(d) Univision will have approval rights over material transactions
relating to the joint venture and the business or entity subject to the
joint venture (the "Target Business") to the same extent as the
approval of the Class T and/or Class V Directors of Univision would be
required in respect of Univision; provided that if one or more Persons
which are not affiliated with the Offeror own in the aggregate 25% or
more of the common equity in the Target Business, Univision's sole
approval rights will be with respect to the joint venture owning the
interest of Univision and the Offeror in the Target Business and the
right to approve a change in the line(s) of business engaged in by the
Target Business from the line(s) of business disclosed in the offer
made pursuant to Section 1.2 with respect to such Exclusive Transaction
(to the extent the Offeror has such right), it being agreed that the
Offeror shall be entitled to make all other decisions concerning such
Target Business. Without limiting the foregoing, Univision shall be
under no obligation to make capital contributions or provide financing
to the joint venture except as set forth in such offer, and the Offeror
may make such capital contributions or provide such financing, for its
own account, if such transaction is made the subject of an offer
pursuant to Section 1.2 and Univision elects not to accept such offer
in accordance with the terms hereof.
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(e) the parties will have customary tag along rights, drag along
rights and rights of first refusal.
1.4 (a) If, in compliance with Sections 1.2 and 1.3, any of
the Principals, or any of their Affiliates, acquires an interest in any means of
Broadcasting in an Exclusive Station Transaction, the means of Broadcasting
which is the subject matter of such Exclusive Station Transaction must promptly
become subject to an affiliation agreement with the Network. If it does not do
so for any reason whatsoever, the Principal who, or whose Affiliates, has an
interest in such means will cause it to Broadcast less than 10 hours of
Programming per week.
(b) If any of the Principals, or any of their Affiliates,
acquires an interest in any means of Broadcasting, and such acquisition is not
an Exclusive Station Transaction because at the time of such acquisition there
is not an intention that such means will Broadcast at least 10 hours of
Programming per week on a regular basis, then there is no obligation to offer
Univision the opportunity to participate in such acquisition pursuant to Section
1.2. However, if such means thereafter begins to Broadcast at least 10 hours of
Programming per week on a regular basis, so that the ownership and operation of
such means is an Exclusive Station Transaction, such means must promptly become
subject to an affiliation agreement with the Network and remain subject to such
an affiliation agreement for so long as such means continues to Broadcast at
least 10 hours of Programming per week on a regular basis. If it does not do so
for any reason whatsoever, the Principal who, or whose Affiliates, has an
interest in such means will use their best efforts to cause it to Broadcast less
than 10 hours of Programming per week.
(c) The affiliation agreements contemplated by Sections 1.4(a)
and 1.4(b) above will be in the standard form used by the Network from time to
time for similar means of Broadcasting which are not owned by Univision, with
any items left for negotiation in such standard form being on terms which would
be fair and reasonable between unrelated parties dealing at arm's length in the
market conditions prevailing at the various times of entering into and renewing
such affiliation agreement. If the Network has no standard form of such
affiliation agreement and the parties cannot agree on an appropriate form, or if
items left for negotiation cannot be agreed upon, at the request of any party
all issues pertaining to such affiliation agreement on which the parties cannot
agree shall be submitted to arbitration as provided in Section 1.4(d) below. Any
arbitrator hereunder shall be experienced in the television industry, and shall
be bound by the terms of this Agreement. Any such arbitration shall be final and
binding upon the parties.
(d) Any arbitration provided for in this Agreement shall be
conducted by a single arbitrator in Los Angeles, California in accordance with
the Commercial Arbitration Rules (the "Arbitration Rules") of the American
Arbitration Association (the "AAA") in effect on the date that such notice is
given, with the following exception: the party that requests arbitration shall
in writing in such notice nominate a competent person to act as the arbitrator.
Within seven days after receipt of such written notice,
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<PAGE> 5
the other party shall indicate in writing its concurrence or non-concurrence in
the arbitrator nominated by the other party. If the parties concur on the
proposed arbitrator, that arbitrator shall promptly decide all such issues on
which the parties cannot agree in accordance with the Arbitration Rules. If the
parties fail to concur on the proposed arbitrator within fourteen days of the
receipt of such notice, then upon application by either party all such issues on
which the parties cannot agree shall be referred for resolution by a single
arbitrator appointed in accordance with the Arbitration Rules by the AAA. Each
party shall pay the fees of its own attorneys, expenses of its witnesses and all
other expenses connected with the presentation of such party's case. The other
costs of any arbitration shall be paid as the arbitrator may direct.
1.5 The provisions of this Section 1 are not intended to
prevent Televisa and its Affiliates from owning the television stations
presently owned in northern Mexico close to the border with the United States or
from acquiring for their own accounts additional television stations in
communities in northern Mexico which are close to the border; provided that
Televisa shall not consent to the transmission or further retransmission by
translator or otherwise of the Programming broadcast by such stations beyond
each such station's equivalent to a Grade B Contour (as such term is currently
defined by the Federal Communications Commission), to the extent such equivalent
to a Grade B Contour is in the United States, or by a cable system in the United
States whose principal head-end is located beyond 35 miles from the community of
license of any transmitting television station in Mexico transmitting the
Programming (any such cable retransmission within such 35 mile limit being
hereby expressly permitted). Televisa agrees to take commercially reasonable
action to prevent any such transmission or further retransmission beyond such
reception areas.
1.6 The provisions of this Section 1 are not intended to
prevent Televisa or the Cisneros Brothers or their respective Affiliates from
delivering Programming to Broadcasters or viewers that are outside the United
States by satellite or any other means of Broadcasting originating outside the
United States, provided that except as hereinafter provided neither Televisa,
the Cisneros Brothers nor their respective Affiliates will, during the term of
this Agreement, consent to reception in the United States of such Programming by
a viewer or Broadcaster, including, without limitation, any cable system, master
antenna or multi-point distribution system, and Televisa, the Cisneros Brothers
and their respective Affiliates agree to take commercially reasonable action to
prevent any such Broadcaster from further transmitting such Programming to
viewers in the United States. In the event that Televisa, the Cisneros Brothers
or any of their respective Affiliates desires to engage in the business of
Broadcasting Programming to viewers in the United States from outside the United
States via satellite or any other means of Broadcasting (except to the limited
extent provided in Section 1.5 above) on any pay, subscription or advertising
supported basis, or any combination thereof, then Televisa, the Cisneros
Brothers and their respective Affiliates, as the case may be, shall first offer
to Univision pursuant to Section 1.2 the opportunity to participate in such
business on reasonable terms and conditions. The terms and conditions of
Sections 1.2
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and 1.3 shall apply with respect to such offer except that the thirty days and
seven business days periods provided for in Section 1.2 shall for this purpose
be 60 days and 10 business days respectively.
1.7 The provisions of this Section 1 shall not prevent
Televisa, the Cisneros Brothers or their respective Affiliates from selling time
to advertisers on Broadcasts of Programming originating outside the United
States based on the available viewers ("audience") incidentally available for
such Broadcasts in the United States as well as the audience outside the United
States provided that such audience in the United States has the legal right to
receive such Broadcast (for this purpose, individuals with the current type of
satellite reception antenna commonly called "back-yard dishes" are deemed to
have the legal right to receive such broadcast), and Univision shall not have
the right to share in any incremental revenue to Televisa, the Cisneros Brothers
or their respective Affiliates attributable to such audience in the United
States. If, however, Televisa, the Cisneros Brothers or any of their respective
Affiliates sell time to any advertiser based on its own audience outside the
United States for the Broadcast of Programming and Univision's audience for the
Broadcast of such Programming, the revenue for Broadcasting to the combined
audiences shall be allocated between Univision and Televisa, the Cisneros
Brothers or their respective Affiliates, as the case may be, on the basis of
their respective rate cards for the time period(s) during which such advertising
is carried. Neither Univision, Televisa, the Cisneros Brothers nor their
respective Affiliates shall be required to carry any such advertising without
its prior written approval.
1.8 The provisions of Sections 1.5, 1.6 and 1.7 hereof shall
also apply mutatis mutandis to television station affiliates of the Network and
television stations owned by Univision on the United States side of the northern
border of Mexico; Univision delivering Programming to Broadcasters or viewers
inside the United States by satellite or any other means of Broadcasting
originating inside the United States; and Univision selling time to advertisers
on Broadcasts of Programming originating inside the United States based on the
available viewers incidentally available for such Broadcasts outside the United
States.
1.9 The provisions of Section 1 shall not prohibit any Person
from acting as an employee, agent, advisor or otherwise for any business or
investment vehicle which neither engages in Exclusive Network Transactions nor
owns or operates any means of Broadcasting which regularly broadcasts at least
10 hours of Programming per week. The provisions of Section 1 shall also not
prohibit any Person from owning a less than 5%, beneficial ownership interest in
any business or investment vehicle, and the provisions of Section 1 shall not
apply to any transaction by any such business or investment vehicle.
1.10 To the maximum extent permitted by law, subject to the
obligations of the Principals and their Affiliates under the Transaction
Agreements, the Principals, their respective Affiliates and the shareholders,
officers, directors and employees of the
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Principals and their respective Affiliates (i) may engage in any activity,
including but not limited to competing with Univision and its subsidiaries, (ii)
may acquire, own, broker, lease or operate any business and (iii) shall not be
under any obligation to communicate or present any opportunity or potential
transaction or matter to Univision or its subsidiaries.
2. Compliance by Affiliates. Each of the parties will cause
all of its Affiliates to comply with all of the Transaction Agreements.
3. Representations and Warranties.
3.1 Perenchio represents and warrants to Televisa, the
Cisneros Brothers and Venevision as follows:
(a) Each corporation and other entity listed on
Schedule 3.1 is an Affiliate of Perenchio, and all right, title and interest
therein is beneficially owned by Mr. A. Jerrold Perenchio.
(b) Each corporation and other entity listed on
Schedule 3.1 is duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization. Each such corporation and other entity
has all necessary power and authority to execute, deliver and perform the
Transaction Agreements to which it is a party, and is duly qualified or licensed
to do business as a foreign corporation or other entity and in good standing in
all jurisdictions where such qualification is necessary in connection with such
ownership or performance.
(c) The execution, delivery and performance of each
of the Transaction Agreements by each Affiliate of Perenchio who is doing so has
been duly and validly authorized by the Board of Directors or other appropriate
authority of, and by all other necessary action on the part of, each such
Affiliate. This Agreement and each of the Transaction Agreements to which
Perenchio or an Affiliate of Perenchio is a party constitutes the legally valid
and binding obligation of Perenchio or such Affiliate, enforceable against
Perenchio or such Affiliate in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws and equitable principles relating to or
limiting creditors rights generally. The execution, delivery and performance of
the Transaction Agreements by Perenchio and such Affiliates, will not violate,
or constitute a breach or default (whether upon lapse of time and/or the
occurrence of any act or event or otherwise) under, the charter documents or
by-laws of any such Affiliate or any contract or agreement to which Perenchio or
any such Affiliate may be a party, result in the imposition of any lien or
encumbrance against any assets or properties of Perenchio or any such Affiliate,
or violate any applicable law, rule or regulation. Except for filings with the
Federal Communications Commission, the United States Department of Justice and
the Federal Trade Commission, which have been duly made, the execution, delivery
and performance of this Agreement and the Transaction Agreements by Perenchio
and such Affiliates will
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not require filing or registration with, or the issuance of any permit or other
authorization by, any third party or governmental authority.
3.2 Televisa represents and warrants to Perenchio, the
Cisneros Brothers and Venevision as follows:
(a) Each corporation and other entity listed on
Schedule 3.2 is an Affiliate of Televisa, and all right, title and interest
therein is beneficially owned by Televisa.
(b) Each corporation and other entity listed on
Schedule 3.2 is duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization. Each such corporation and other entity
has all necessary power and authority to execute, deliver and perform the
Transaction Agreements to which it is a party, and is duly qualified or licensed
to do business as a foreign corporation or other entity and in good standing in
all jurisdictions where such qualification is necessary in connection with such
ownership or performance.
(c) The execution, delivery and performance of this
Agreement and each of the Transaction Agreements by Televisa, has been duly and
validly authorized by the Board of Directors of Televisa and by all other
necessary action on the part of Televisa. The execution, delivery and
performance of each of the Transaction Agreements by each Affiliate of Televisa
which is doing so has been duly and validly authorized by the Board of Directors
or other appropriate authority of, and by all other necessary action on the part
of, each such Affiliate. This Agreement and each of the Transaction Agreements
to which Televisa or an Affiliate of Televisa is a party constitutes the legally
valid and binding obligation of Televisa or such Affiliate, enforceable against
Televisa or such Affiliate in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws and equitable principles relating to or
limiting creditors rights generally. The execution, delivery and performance of
the Transaction Agreements by Televisa and such Affiliates, will not violate, or
constitute a breach or default (whether upon lapse of time and/or the occurrence
of any act or event or otherwise) under, the charter documents or by-laws of
Televisa or any such Affiliate or any contract or agreement to which Televisa or
any such Affiliate may be a party, result in the imposition of any lien or
encumbrance against any assets or properties of Televisa or any such Affiliate,
or violate any applicable law, rule or regulation. Except for filings with the
Federal Communications Commission, the United States Department of Justice and
the Federal Trade Commission, which have been duly made, the execution, delivery
and performance of this Agreement and the Transaction Agreements by Televisa and
such Affiliates will not require filing or registration with, or the issuance of
any permit or other authorization by, any third party or governmental authority.
3.3 Each of the Cisneros Brothers represents and warrants to
Televisa and Perenchio as follows:
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(a) Each corporation and other entity listed on
Schedule 3.3 is an Affiliate of the Cisneros Brothers.
(b) Each corporation and other entity listed on
Schedule 3.3 is duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization. Each such corporation and other entity
has all necessary power and authority to execute, deliver and perform the
Transaction Agreements to which it is a party, and is duly qualified or licensed
to do business as a foreign corporation or other entity and in good standing in
all jurisdictions where such qualification is necessary in connection with such
ownership or performance.
(c) The execution, delivery and performance of each
of the Transaction Agreements by each Affiliate of the Cisneros Brothers which
is doing so has been duly and validly authorized by the Board of Directors or
other appropriate authority of, and by all other necessary action on the part
of, each such Affiliate. This Agreement and each of the Transaction Agreements
to which the Cisneros Brothers or any such Affiliate is a party constitutes the
legally valid and binding obligation of the Cisneros Brothers or such Affiliate,
enforceable against the Cisneros Brothers or such Affiliate in accordance with
its terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium and other similar laws and equitable
principles relating to or limiting creditors rights generally. The execution,
delivery and performance of the Transaction Agreements by the Cisneros Brothers
and such Affiliates, will not violate, or constitute a breach or default
(whether upon lapse of time and/or the occurrence of any act or event or
otherwise) under, the charter documents or by-laws of any such Affiliate or any
contract or agreement to which the Cisneros Brothers or any such Affiliate may
be a party, result in the imposition of any lien or encumbrance against any
assets or properties of the Cisneros Brothers or any such Affiliate, or violate
any applicable law, rule or regulation. Except for filings with the Federal
Communications Commission, which have been duly made, the execution, delivery
and performance of this Agreement and the Transaction Agreements by the Cisneros
Brothers and such Affiliates will not require filing or registration with, or
the issuance of any permit or other authorization by, any third party or
governmental authority.
4. Definitions.
4.1 When used in this Agreement, the following terms shall
have the meanings set forth below, except as otherwise expressly modified
herein, and include the plural as well as the singular:
"Affiliate" of a Person means any Person that is, directly or
indirectly, controlled by the Person in question. For the purposes of this
definition, (i) "control," when used with respect to any Person, means the power
to direct the management and policies of such Person, whether through the direct
or indirect ownership of voting securities, by contract or otherwise and (ii)
Univision and its controlled Affiliates shall
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not be deemed to be Affiliates of any of the parties or any of the Affiliates of
any of the parties.
"Broadcast" or "Broadcasting" means transmitting or otherwise
delivering or distributing Programming, either free or on any pay or
subscription basis, directly to viewers in the United States by any means now
known or hereafter developed, including, without limitation, by means of
over-the-air television, HDTV, cable and cable systems, master antennas,
satellite, microwave, closed circuit, multi-point distribution, wire, fiber
optic, direct broadcast satellites and any means subject to regulation under the
Communications Act as then in effect or successor legislation or then subject to
regulation by the Federal Communications Commission or successor agency.
Broadcast and Broadcasting shall include, without limitation, delivery of
Programming either free or on any pay or subscription basis to viewers in the
United States in any manner in which the time of reception of the Programming by
the viewer is determined by such viewer. For purposes of illustration (and not
limitation) of the previous sentence, a technology now existing or hereafter
developed that enables a television viewer to order a program for viewing at the
time of his choice is Broadcasting. Broadcast or Broadcasting, however, does not
include the production or distribution of theatrical motion pictures, including
distribution of such motion pictures to any Person for Broadcasting, or the
manufacture or distribution to the public of Programming recorded on a physical
device like a video cassette or a laser disc for home video use. A "Broadcaster"
is a Person that Broadcasts.
"Communications Act" means the Communications Act of 1934, as
amended, or any similar Federal statute, and the rules, regulations and policies
of the Federal Communications Commission thereunder.
"Dennevar" means Dennevar B.V, a Netherlands corporation.
"Exclusive Network Transactions" means supplying Programming
to any Person for the purpose of Broadcasting whether by such Person or by a
direct or remote transferee from such Person unless such supplying of
Programming results solely from a party's interest in a satellite or common
carrier facility with respect to which it has no direct or indirect control over
or interest in the content of what is being transmitted by such
telecommunications facility. Exclusive Network Transactions do not, however,
include the supply, by satellite or otherwise, by Univisa, Dennevar or their
respective Affiliates (a "Supplier" of Programming), strictly in compliance with
the Program License Agreements and Section 1.6 hereof, which does not contain
advertising sold by the Supplier or an Affiliate of the Supplier, to Persons
other than the Partnership so long as that in supplying such Programming (a) the
Supplier does not act, directly or indirectly, as a network, or lease or broker
time on a network (whether such Programming is provided on a free or any pay
basis), or (b) if such Programming is a live program it is supplied on an
individual basis and not as a group of more than one live programs. For the
purpose of the preceding sentence, "network" means an entity which transmits the
same Programming for simultaneous retransmission by more than one Broadcaster or
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which otherwise provides the same Programming to more than one Broadcaster and
designates the time for Broadcast of such Programming.
"Exclusive Station Transactions" means the acquisition,
ownership, brokerage, leasing or operation of any means of Broadcasting, now
known or hereafter developed other than a satellite or common carrier facility
with respect to which the party having an interest therein has no direct or
indirect control over the content of what is being transmitted by such satellite
or common carrier facility. Exclusive Station Transactions, however, do not
include the acquisition of any such means of Broadcasting so long as at the time
of such acquisition there is not an intention that such means will broadcast at
least 10 hours of Programming per week on a regular basis, or the ownership,
brokerage, leasing or operation of any such means of Broadcasting so long as
such means does not broadcast at least 10 hours of Programming per week on a
regular basis.
Exclusive Transactions" means Exclusive Network Transactions
and Exclusive Station Transactions.
"Person" means an individual, a corporation, a partnership, an
association, a trust, or any other entity or organization, including a
government or political subdivision or an agency or instrumentality thereof.
"Programming" means television programming in any form, in
Spanish (whether directly recorded or dubbed) or with Spanish subtitles, of the
type Broadcast at any time in the United States. Television programming means
programming of every kind appearing on television.
"Program License Agreements" means the agreements to be
entered into between The Univision Network Limited Partnership and Univisa and
The Univision Network Limited Partnership and Dennevar with respect to the
furnishing to Univision of program material for exploitation by the Network.
"Transaction Agreements" means this Agreement and the
agreements and instruments listed in Schedule A hereto, as they may be amended,
supplemented or superseded from time to time.
"United States" means the 50 states plus all territories of
the United States except Puerto Rico.
"Univisa" means Univisa, Inc., a Delaware corporation.
5. Miscellaneous.
5.1 Entire Agreement. The express provisions of this Agreement
and the Transaction Agreements, and the documents delivered in connection with
any
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thereof, constitute the entire agreement among the parties and their Affiliates,
and supersede all other agreements and understandings, both written and oral,
among the parties and their Affiliates, or any of them, with respect to the
subject matter hereof and thereof. No implied agreements shall be deemed to
exist with respect to such subject matter. All references to sections,
subsections and schedules shall be deemed references to such part of this
Agreement, unless the context shall otherwise require.
5.2 Assignments. Except as otherwise expressly provided in
Section 2, neither this Agreement nor any rights or obligations hereunder may be
assigned or delegated by any of the parties, in whole or in part, whether
voluntarily, by operation of law or otherwise. Any attempted assignment or
delegation in violation of this prohibition shall be null and void. Subject to
the foregoing, all of the terms and provisions hereof shall be binding upon, and
inure to the benefit of, the permitted successors and assigns of the parties.
Nothing contained herein, express or implied, is intended to confer on any
Person other than the parties or their respective permitted successors and
assigns, any rights, remedies, obligations or liabilities under or by reason of
this Agreement.
5.3 Jurisdiction; Venue; Service of Process. Each of the
parties irrevocably submits to the jurisdiction of any California State or
United States Federal court sitting in Los Angeles County in any action or
proceeding arising out of or relating to this Agreement or the transactions
contemplated hereby, and irrevocably agrees that any such action or proceeding
may be heard and determined only in such California State or Federal court. Each
of the parties irrevocably waives, to the fullest extent it may effectively do
so, the defense of an inconvenient forum to the maintenance of any such action
or proceeding. Each of the parties irrevocably appoints CT Corporation System
(the "Process Agent"), with an office on the date hereof at 818 West 7th Street,
Los Angeles, CA 90017 as his or its agent to receive on behalf of him or it and
his or its property service of copies of the summons and complaint and any other
process which may be served in any such action or proceeding. Such service may
be made by delivering a copy of such process to any of the parties in care of
the Process Agent at the Process Agent's above address or such other address the
Process Agent may have in the future, and each of the parties irrevocably
authorizes and directs the Process Agent to accept such service on its behalf.
As an alternate method of service, each of the parties consents to the service
of copies of the summons and complaint and any other process which may be served
in any such action or proceeding by the mailing or delivering of a copy of the
such process to such party at its address specified in or in accordance with
Section 5.4. Each of the parties agrees that a final judgment in any such action
or proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law.
5.4 Notification. All notices and other communications
required or permitted hereunder shall be in writing, shall be deemed duly given
upon actual receipt, and shall be delivered (a) in person, (b) by registered or
certified mail (air mail if addressed to an address outside of the country in
which mailed), postage prepaid, return
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receipt requested, (c) by a generally recognized overnight courier service which
provides written acknowledgement by the addressee of receipt, or (d) by
facsimile or other generally accepted means of electronic transmission (provided
that a copy of any notice delivered pursuant to this clause (d) shall also be
sent pursuant to clause (b)), addressed as set forth on Schedule 1 hereto or to
such other addresses as may be specified by like notice to the other parties.
5.5 Indemnification. Each of the parties (an "Indemnifying
Party") indemnifies each of the other parties, their respective Affiliates, the
officers, directors, shareholders, agents, employees and attorneys of each of
the other parties and their respective Affiliates, and their respective heirs,
administrators, successors and assigns, and agrees to hold each of them
harmless, from and against any and all Losses which any of them may incur or
suffer, or which may be asserted against or imposed on any of them, directly or
indirectly, arising out of, as a result of or based upon any inaccuracy in or
breach or nonperformance of any of the representations, warranties, covenants or
agreements made by the Indemnifying Party in this Agreement. As used in this
Agreement, "Losses" refers to any and all liability, losses, costs,
deficiencies, damages, demands, claims, actions, judgments, causes of action and
expenses (including, without limitation, attorneys' and accountants' fees, costs
incurred to investigate or defend, and costs incurred to enforce the provision
hereof).
5.6 Invalidity. If any provision of this Agreement is too
broad to permit enforcement to its full extent, such provision shall
nevertheless be enforced to the maximum extent permitted by law, and each party
agrees that such provisions may be judicially modified accordingly in any
proceeding brought to enforce this Agreement. If any portion of this Agreement
shall be held to be indefinite, invalid or otherwise entirely unenforceable, the
entire Agreement shall not fail on account thereof. The balance of this
Agreement shall continue in full force and effect.
5.7 Amendments and Waivers. No modification, amendment,
termination or waiver of any provision of this Agreement, nor consent to any
departure therefrom, shall in any event be effective unless the same shall be in
writing and signed by the parties, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given.
Neither any course of dealing nor any failure or delay on the part of any of the
parties in exercising any right, power or privilege hereunder shall impair any
such power, right or privilege or operate as a waiver thereof or as a waiver or
acquiescence in any default, nor shall any single or partial exercise thereof
preclude any other or further exercise of any other right, power or privilege.
No notice to or demand on any of the parties in any case shall entitle such
party to any other or further notice or demand in the same, similar or other
circumstances.
5.8 Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement,
and shall
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become effective when one or more counterparts have been signed by each party
and delivered to each party.
5.9 Further Actions. Subject to the terms and conditions of
this Agreement, each of the parties agrees to use all commercially reasonable
efforts to take, or cause to be taken, all action necessary, proper or advisable
to consummate and make effective the transactions contemplated by this
Agreement.
5.10 Publicity. The parties will coordinate, and no party will
issue, or allow the issuance of, any press release, publicity statement, letter
to shareholders or other public notice relating to the Transaction Agreement or
the transactions contemplated thereby without the concurrence of the other
parties. Notwithstanding the foregoing, a party may issue such press release,
publicity statement, letter to shareholders or other public notice if it
believes, based upon the advice of such party's counsel, that the issuance
thereof is required by applicable law, rule or stock exchange regulation,
provided, however, to the extent reasonably practicable within the requirements
of the law, rule or stock exchange regulation, such party shall give the other
parties the opportunity to review and comment on any such press release,
publicity statement, letter or notice and shall revise it to the extent
reasonably practicable within the requirements of the applicable law, rule or
stock exchange regulation to reflect their concern.
5.11 Specific Performance. The parties hereby acknowledge that
each party would suffer irreparable injury and would not have an adequate remedy
at law for money damages if the provisions of this Agreement (including, without
limitation Sections 1 and 2) were not performed in accordance with their terms.
Each party agrees that the others shall be entitled to specific enforcement of
the terms of this Agreement in addition to any other remedy to which they are
entitled, at law or in equity. Furthermore, if any action or proceeding shall be
instituted to enforce the provisions hereof, any party against whom such action
or proceeding is brought hereby waives the claim or defense therein that there
is an adequate remedy at law, and agrees not to urge in any such action or
proceeding the claim or defense that such remedy at law exists.
5.12 Section and Other Headings. Section titles are for
descriptive purposes only and shall not control or alter the meaning of this
Agreement as set forth in the text.
5.13 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California applicable to
contracts between California parties made and performed in that State, without
regard to conflict of laws principles.
5.14 Attorneys' Fees; Costs and Expenses. In any action or
proceeding brought to enforce any provision of the Agreement, or where any
provision hereof is validly asserted as a defense, the successful party shall be
entitled to recover reasonable attorneys' fees in addition to its cost and
expense and any other available remedy.
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5.15 Term. With respect to Exclusive Transactions relating to
direct broadcast satellite or direct to home satellite to the U.S. market, this
Agreement shall no longer apply to Televisa or the Cisneros Brothers or their
respective Affiliates when the Amended and Restated Program License Agreement to
which an Affiliate of such Principal is a party terminates and shall no longer
apply to Perenchio or his Affiliates when both such Amended and Restated Program
License Agreements terminate. With respect to any other Exclusive Transaction,
this Agreement shall no longer apply to a Principal or its Affiliates when such
Principal no longer owns the Required Amount (as that term is defined in
Univision's Restated Certificate of Incorporation) as determined pursuant to
Univision's Restated Certificate of Incorporation.
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IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed as of the date first above written.
____________________________________
A. Jerrold Perenchio
Grupo Televisa S.A.
By: _______________________________
Name: ______________________________
Title: _____________________________
____________________________________
Gustavo A. Cisneros
____________________________________
Ricardo J. Cisneros
Univision Communications Inc.
By: _______________________________
Name: ______________________________
Title: _____________________________
Corporacion Venezolana de Television,
C.A.(Venevision)
By: ________________________________
Name: ______________________________
Title: _____________________________
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Schedule 1
NOTICES
(i) if to Perenchio:
c/o Chartwell Partners
1999 Avenue of the Stars, 30th Floor
Los Angeles, California 90067
Attn: Robert V. Cahill
Telecopier: (310) 556-3568
with a copy to:
O'Melveny & Myers LLP
1999 Avenue of the Stars, Suite 700
Los Angeles, California 90067
Attn: Donald V. Petroni, Esq.
Telecopier: (310) 246-6779
(ii) if to Televisa:
Grupo Televisa S.A.
Avenida Chapultepec No. 28
06724 Mexico, D.F.
Attn: Alejandro Sada
Telecopier: (011) (525) 709-1157
with copies to:
Univisa, Inc.
2121 Avenue of the Stars, Suite 3300
Los Angeles, California 90067
Attn: Lawrence Dam, Esq.
Telecopier: (310) 286-1615
and
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, New York 10004-1980
Attn: Joseph A. Stern, Esq.
Telecopier: (212) 747-1526
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(iii) if to the Cisneros Brothers or Venevision:
c/o Corporacion Venezolana de Television
Avenida La Salle
Edificio Venevision
Colina de los Caobos
Caracas, Venezuela
Attn: Alejandro Rivera
Telecopier: (582) 781-8286
with copies to:
Finser Corp.
Biltmore Way, 9th Floor
Coral Gables, Florida 33134
Attn: William T. Keon
Telecopier: (305) 447-1389
and
Milbank, Tweed, Hadley & McCloy
1 Chase Manhattan Plaza
New York, New York 10005
Attn: Robert O'Hara, Esq.
Telecopier: (212) 530-5219
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Exhibit 10.9
INTERNATIONAL PROGRAM RIGHTS AGREEMENT
This INTERNATIONAL PROGRAM RIGHTS AGREEMENT is entered into as
of _______ by and between UNIVISION COMMUNICATIONS INC., a Delaware corporation
("UCI" and other entities directly or indirectly controlled by UCI including The
Univision Network Limited Partnership being hereinafter referred to collectively
as "Univision"), Grupo Televisa, S.A. ("Televisa") and Venevision International,
Inc. ("Venevision").
1. Grandfathered Programs.
1.1 The parties hereto agree that with respect to each
Grandfathered Program to which Univision has applicable rights (i) Univision
shall own in the United States and its territories and possessions, excluding
Puerto Rico (the "Univision Territory") in perpetuity all rights of every kind
and nature, including without limitation all television, theatrical motion
picture, live stage, merchandising, music, publication, sequel, remake,
spin-off, ancillary and subsidiary rights, in and to such Grandfathered Program
and (ii) to the extent Univision has acquired the applicable rights in each
applicable territory, Televisa shall own in Mexico (the "Televisa Territory"),
Venevision shall own in Venezuela (the "Venevision Territory"), and Televisa and
Venevision shall each own an undivided interest in 100% of the remainder of the
world outside the Univision Territory, Mexico and Venezuela (the "Remainder
Territory") in such respective percentages as Televisa and Venevision shall from
time to time designate in a joint notice to Univision, corresponding rights and
the copyrights, renewals and extensions of copyrights in all such Grandfathered
Programs for the period described in Section 1.2 below. Without limiting the
generality of the foregoing, the holders of the respective rights described
above have the sole, exclusive and unencumbered right in their respective
Territories to distribute, cut, edit, telecast, exhibit, sell, use, license and
otherwise exploit each Grandfathered Program and all rights therein in any
medium, whether now known or hereafter devised, and in such manner and to the
extent, if at all, as the party(ies) holding such rights shall determine in its
sole discretion. Notwithstanding the foregoing, a remake, sequel, prequel,
spinoff or other derivative work (each, a "derivative work") based on a
Grandfathered Program, shall not be a Grandfathered Program hereunder unless
such derivative work, if produced by Univision, by its own terms falls within
the definition of a Grandfathered Program under this Agreement. Univision,
Televisa and Venevision shall execute or cause to be executed such further
documents and instruments as any one thereof may reasonably request in order to
effectuate the terms and intentions of this Section 1.1. Subject to Section 6,
Univision agrees to use commercially reasonable efforts to obtain the rights in
the Territories for all Grandfathered Programs and agrees to use good faith
efforts not to structure agreements with respect to Grandfathered Programs in a
manner intended to cause such rights not to be available. The parties
acknowledge that Univision has no rights in Chile to the Program "Sabado
Gigante."
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1.2 (a) At such time as the Televisa Program License is
terminated, all rights in Grandfathered Programs granted to Televisa pursuant to
paragraph 1.1 above, shall revert to Univision, and subject to Section 10,
Televisa shall have no further right to any Grandfathered Program under this
Agreement.
(b) At such time as the Venevision Program License
Agreement is terminated, all rights in Grandfathered Programs granted to
Venevision pursuant to paragraph 1.1 above, shall revert to Univision, and
subject to Section 10, Venevision shall have no further right to any
Grandfathered Program under this Agreement.
2. New Programs.
2.1 The parties hereto agree that with respect to each New
Program to which Univision has applicable rights (i) subject to clause (ii)
below, Univision shall own in perpetuity all worldwide rights of every kind and
nature, including without limitation all television, theatrical motion picture,
live stage, merchandising, music, publication, sequel, remake, spin-off,
ancillary and subsidiary rights, in and to such New Program and (ii) to the
extent Univision has acquired the applicable rights in each applicable
territory, (x) Televisa and Venevision shall have the sole, exclusive and
unencumbered right to Broadcast (as defined in the Program License Agreements)
the New Program(s) in their respective Territories and the right to cut and edit
such New Program(s) for such Broadcast and (y) Televisa and Venevision shall
have merchandising rights in such New Program(s) in their respective
Territories. Univision, Televisa and Venevision shall execute or cause to be
executed such further documents and instruments as any one thereof may
reasonably request in order to effectuate the terms and intentions of this
Section 2.1. Subject to Section 6, Univision agrees to use commercially
reasonable efforts to obtain the rights in the Territories for all New Programs
and agrees to use good faith efforts not to structure agreements with respect to
New Programs in a manner intended to cause such rights not to be available.
2.2 (a) At such time as Televisa and its Affiliates no longer
own the Required Amount, all rights in New Programs granted to Televisa pursuant
to Section 2.1 above, shall revert to Univision, and subject to Section 10,
Televisa shall have no further right to any New Program under this Agreement.
(b) At such time as the Cisneros Brothers and their
Affiliates no longer own the Required Amount, all rights in New Programs granted
to Venevision pursuant to Section 2.1 above, shall revert to Univision, and
subject to Section 10, Venevision shall have no further right to any New Program
under this Agreement.
3. Univision Rights. Univision and its Affiliates shall have
the right and ability to, and to permit others to: (i) transmit or re-transmit
in any electronic form or other means, from any television station in the United
States, or via satellite which receives its signal from any earth station or
other facility in the United States any Programs which may also be covered by
this Agreement, notwithstanding the fact that
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such transmissions or re-transmissions may be viewed in Territories other than
the Univision Territory; provided that neither Univision nor its Affiliates
consent to the retransmission of such Programs by any television station in any
Territory other than the Univision Territory or by any cable system in any
Territory other than the Univision Territory that is located beyond 35 miles
from the community of license of any transmitting television station in the
United States transmitting the Programs (any such cable re-transmission within
such 35 mile limit being hereby expressly permitted); and (ii) market and
promote and otherwise generate revenues (including, but not limited to, the sale
of advertising time) attributable to the ability of viewers in the Territories
other than the Univision Territory to receive such Programs.
4. Other Networks. (a) If Univision forms any network (an
"Other Network") other than the Univision Network or the Galavision Network,
subject to the provisions of this Section 4 and Section 5(b) below, neither
Televisa nor Venevision shall have any rights in or to any program produced or
acquired by Univision for any Other Network in accordance with the terms of this
Agreement.
(b) Univision shall not be entitled to air any
Grandfathered Program, New Program or Designated Special, or any remake, sequel,
prequel or spinoff (as those terms are customarily defined in the television
broadcast industry) of any Grandfathered Program, New Program or Designated
Special on any Other Network without the consent of Televisa and Venevision.
(c) Univision shall not be entitled to air any program on
the Univision Network or the Galavision Network (i) that has previously been
aired on any Other Network and (ii) for which broadcast rights have been
licensed by Univision to a third party in either Mexico or Venezuela without the
consent of Televisa or Venevision, respectively.
5. Rights of First Negotiation and Offer.
(a) If Univision wishes to engage a third party
distributor to distribute Programs in which Univision has rights in any
Territory other than in the Univision Territory, Univision will first offer to
Televisa and Venevision a joint right of first negotiation to act as distributor
for Univision in such Territories. If Televisa and Venevision wish to negotiate
with Univision to act as distributor to Univision, Univision, Televisa and
Venevision will negotiate in good faith for a period of 30 days to reach
agreement on the terms of a distribution arrangement. If Univision, Televisa and
Venevision cannot reach agreement on the terms of a distribution arrangement
within such 30 day period, Univision shall be free to enter into a distribution
arrangement with a third party distributor on terms no less favorable to
Univision than those offered by Televisa and Venevision.
(b) If Univision wishes to license any program not
broadcast on the Univision Network or the Galavision Network in Mexico or
Venezuela, Univision
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will first offer to Televisa and/or Venevision, as applicable, a right of first
offer to license such program in Mexico or Venezuela, as the case may be.
Televisa and Venevision will have a period of 10 business days to make an offer
with respect to the license of such program. If Univision does not wish to
accept such offer, Univision shall be free to license such program to a third
party for broadcast in Mexico or Venezuela on terms no less favorable to
Univision than those offered by Televisa or Venevision, as the case may be.
6. Cost Obligations. To the extent any costs are incurred or
payment or clearances are required with respect to the exploitation of any
Program in any the Remainder Territory, the Televisa Territory or the Venevision
Territory, including, but not limited to, residual or royalty obligations and
participations, the party or parties having the rights to exploit such Program
in such Territory shall be responsible for all such costs, payments or
clearances, as applicable. Notwithstanding the generality of the foregoing,
Univision shall not have the ability to commit Televisa or Venevision to any of
the foregoing costs, payments or clearances with respect to any Program unless
(i) Televisa or Venevision, as the case may be, gives prior approval or (ii)
Televisa or Venevision, as the case may be, airs or licenses such Program.
7. Definitions.
"Affiliates" of a person means any person that directly or
indirectly controls, is controlled by, or is under common control with the
person in question. For the purposes of this definition, "control", when used
with respect to any person, means the power to direct the management and
policies of such person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise.
"Broadcast Period" means (i) for novelas or other Programs
with a plot line continuing through more than one episode, the time necessary to
broadcast all episodes on a continuing basis without substantial interruption
and (ii) for all other programs (excluding one-program shows), (x) for weekly
programs, the time period necessary to broadcast 26 episodes of the Program
without substantial interruption, which under normal circumstances is expected
to be 26 continuous weeks and (y) for daily programs (Monday through Friday), 26
weeks.
"Designated Specials" means the Specials set forth on Schedule
1 hereto (to the extent and frequency described on such schedule), and if such
specials are not produced on the frequency set forth on Schedule 1, such other
specials having the same format, theme and frequency as the specials not so
produced. Univision agrees to determine the frequency of specials in the
ordinary course and use good faith in determining Designated Specials.
"Existing Programs" means all Programs being produced by
Univision as set forth on Schedule 1 hereto.
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"Grandfathered Programs" means all Existing Programs, all
Replacement Programs and all Designated Specials.
"New Programs" means all Programs other than Grandfathered
Programs.
"Program License Agreements" means the Televisa Program
License Agreement and the Venevision Program License Agreement.
"Programs" means television programs initially produced in the
Spanish language or programs with Spanish subtitles produced directly or
indirectly by or for the Univision Network or the Galavision Network and to be
produced directly or indirectly by or for the Univision Network or the
Galavision Network for broadcast at any time and which are available for
broadcast and to which the Univision Network or the Galavision Network has the
rights to Broadcast in an applicable Territory including, without limitation, in
the following categories: novelas, musicals, variety shows, situation comedies,
game shows, talk shows, children's shows, news shows, cultural and educational
programs, and sports programs. Programs do not include programs acquired by
Univision from Televisa or Venevision.
"Replacement Program" means any Program that (A) shares at
least two out of four of the following characteristics with an Existing Program
or another Replacement Program (each, a "Replaced Program") (i) it has a
substantially similar format and theme to such Replaced Program, (ii) it shares
a material amount of talent with such Replaced Program, (iii) it is in the same
day-part as such Replaced Program and (iv) it shares the same or a substantially
similar name with such Replaced Program; and (B) commences broadcast on
Univision Network or Galavision Network within six months prior to or within six
months after the termination of broadcast of such Replaced Program on such
network. A special will only be required to comply with clause (A) above.
"Required Amount" in the case of Televisa and Venevision shall
have the meaning given to such term in the Restated Certificate of Incorporation
of Univision Communications Inc.
"Televisa Program License Agreement" that certain Amended and
Restated Program License Agreement between Univisa, Inc. and The Univision
Network Limited Partnership dated as of the date hereof, as it may be amended
from time to time.
"Territories" means the Univision Territory, the Televisa
Territory, the Venevision Territory and the Remainder Territory.
"Venevision Program License Agreement" that certain Amended
and Restated Program License Agreement between Dennevar, B.V., and The Univision
Network Limited Partnership dated as of the date hereof, as it may be amended
from time to time.
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"without substantial interruption" means that the Programs
will be scheduled and run on a continuing periodic basis except for occasional
network preemption to accommodate one-time specials or programs which, because
of their nature or timeliness or because of applicable rules, must in a person's
reasonable judgment be broadcast in lieu of the regularly scheduled Program.
8. Representations and Warranties of Univision.
8.1 To the extent Univision is granting rights
hereunder, Univision hereby agrees, warrants and represents as follows:
(a) Univision has or will have the right to grant
to Televisa and Venevision the rights to the Programs in the applicable
Territories set forth in this Agreement, including but not limited to the
necessary literary, artistic, technological and intellectual property rights and
has secured or will secure all necessary written consents, permissions and
approvals for incorporation into such Programs of the names, trademarks,
likenesses and/or biographies of all persons, firms, products, companies and
organizations depicted or displayed in such Programs, and any preexisting film
or video footage produced by third parties;
(b) There are no and will not be any pending
claims, liens, charges, restrictions or encumbrances on the Programs that
conflict with the rights granted hereunder to such Programs in the applicable
Territories;
(c) The main and end titles of the Programs and
all publicity, promotion, advertising and packaging information and materials
supplied by Univision will (i) contain all necessary and proper credits for the
actors, directors, writers and all other persons appearing in or connected with
the production of such Programs who are entitled to receive credit and (ii)
comply with all applicable contractual, guild, union and statutory requirements
and agreements;
(d) The broadcast of Programs in the applicable
Territories will not infringe on the rights of any third party, (including but
not limited to copyright, patent, trademark, unfair competition, contract,
property, defamation, privacy, publicity or "moral rights" (to the extent such
moral rights are recognized by United States law));
(e) Except to the extent expressly permitted by
this Agreement, Univision has not and will not grant or license to others, and
will not itself exercise, any rights to broadcast the Programs in the applicable
Territories; and
(f) All Programs (and elements thereof) will be
delivered as reasonably agreed to by the parties in a manner consistent with
customary practice.
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9. Indemnification.
9.1 Univision agrees to hold Televisa and Venevision and their
respective directors, officers, employees, agents and shareholders (collectively
the "Televisa and Venevision Indemnitees") harmless, from any claims,
deficiencies, assessments, liabilities, losses, damages, expenses (including,
without limitation, reasonable fees and expenses of counsel) (collectively,
"Losses") which any Televisa or Venevision Indemnitee may suffer by reason of
Univision's breach of, or non-compliance with, any covenant or provision herein
contained or the inaccuracy of any warranty or representation made in this
Agreement and any such damages shall be reduced by: (i) the amount of any net
tax benefit ultimately accruing to such Televisa or Venevision Indemnitee on
account of such Televisa or Venevision Indemnitee's payment of such claim; (ii)
insurance proceeds which such Televisa or Venevision Indemnitee has or will
receive in connection with such claim, and (iii) any recovery from third parties
in connection with such claim; provided, however, that Univision shall not delay
payment of its indemnification obligations hereunder pending resolution of any
tax benefit or insurance or third party claim if such Televisa or Venevision
Indemnitee provides Univision with an undertaking to reimburse Univision for the
amount of any such claim ultimately received; and provided, further, that no
Televisa or Venevision Indemnitee shall have any obligation to obtain any such
insurance proceeds or recovery from third parties if and to the extent Univision
is subrogated (in form and substance satisfactory to Univision) to such Televisa
or Venevision Indemnitee's claims in respect of such insurance or third parties.
9.2 Televisa and Venevision agree to indemnify Univision, its
direct and indirect partners or shareholders and all officers, directors,
employees and agents of any of the foregoing (the "Univision Indemnitees")
against and hold the Univision Indemnitees harmless from any and all Losses
incurred or suffered by any Univision Indemnitee arising out of any program or
commercial material (apart from the Programs) furnished by such person and any
such damages shall be reduced by: (i) the amount of any net tax benefit
ultimately accruing to such Univision Indemnitee on account of such Univision
Indemnitee's payment of such claim; (ii) insurance proceeds which such Univision
Indemnitee has or will receive in connection with such claim, and (iii) any
recovery from third parties in connection with such claim; provided, however,
that neither Televisa nor Venevision shall delay payment of its indemnification
obligations hereunder pending resolution of any tax benefit or insurance or
third party claim if such Univision Indemnitee provides Televisa or Venevision,
as the case may be, with an undertaking to reimburse Televisa or Venevision, as
the case may be, for the amount of any such claim ultimately received; and
provided, further, that such Univision Indemnitee shall have no obligation to
obtain any such insurance proceeds or recovery from third parties if and to the
extent Televisa or Venevision is subrogated (in form and substance satisfactory
to Televisa or Venevision) to such Univision Indemnitee's claims in respect of
such insurance or third parties.
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9.3 The following procedures shall govern all claims
for indemnification made under any provision of this Agreement. A written notice
(an "Indemnification Notice") with respect to any claim for indemnification
shall be given by the party seeking indemnification (the "Indemnitee") to the
party from which indemnification is sought (the "Indemnitor") within thirty (30)
days of the discovery by the Indemnitee of such claim, which Indemnification
Notice shall set forth the facts relating to such claim then known to the
Indemnitee (provided that failure to give such Indemnification Notice as
aforesaid shall not release the Indemnitor from its indemnification obligations
hereunder unless and to the extent the Indemnitor has been prejudiced thereby).
The party receiving an Indemnification Notice shall send a written response to
the party seeking indemnification stating whether it agrees with or rejects such
claim in whole or in part. Failure to give such response within ninety (90) days
after receipt of the Indemnification Notice shall be conclusively deemed to
constitute acknowledgment of the validity of such claim. If any such claim shall
arise by reason of any claim made by third parties, the Indemnitor shall have
the right, upon written notice to Indemnitee within thirty (30) days after
receipt of the Indemnification Notice, to assume the defense of the matter
giving rise to the claim for indemnification through counsel of its selection
reasonably acceptable to Indemnitee, at Indemnitor's expense, and the Indemnitee
shall have the right, at its own expense, to employ counsel to represent it;
provided, however, that if any action shall include both the Indemnitor and the
Indemnitee and there is a conflict of interest because of the availability of
different or additional defenses to the Indemnitee, the Indemnitee shall have
the right to select separate counsel to participate in the defense of such
action on its behalf, at the Indemnitor's expense. The Indemnitee shall
cooperate fully to make available to the Indemnitor all pertinent information
under the Indemnitee's control as to the claim and shall make appropriate
personnel available for any discovery, trial or appeal. If the Indemnitor does
not elect to undertake the defense as set forth above, the Indemnitee shall have
the right to assume the defense of such matter on behalf of and for the account
of the Indemnitor; provided, however, the Indemnitee shall not settle or
compromise any claim without the consent of the Indemnitor, which consent shall
not be unreasonably withheld. The Indemnitor may settle any claim at any time at
its expense, so long as such settlement includes as an unconditional term
thereof the giving by the claimant of a release of the Indemnitee from all
liability with respect to such claim.
10. Term. Subject to Sections 1.2 and 2.2, the term of this
Agreement shall be until December 17, 2017. Any license in effect for any
Program at the date of termination of this Agreement (or the termination of any
rights under this Agreement) shall continue through the Broadcast Period for
such Program, with no right of re-license or extension at the end thereof and
all of the rights and obligations of the parties under this Agreement with
respect to such license will continue through the Broadcast Period for such
Program, it being agreed that the parties shall enter into mutually satisfactory
royalty arrangements with respect to the Broadcast Period following the
termination of this Agreement in order to compensate Univision for the use of
Programs during such period and, if the parties are unable to agree upon such
royalty arrangements, the amount thereof shall be determined based on prevailing
market conditions.
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In addition this Agreement may be terminated by Univision with
respect to Televisa or Venevision, as the case may be, if Televisa or
Venevision, as the case may be (i) materially breaches its obligations hereunder
and fails to cure such breach within 180 days of notice thereof by the party
seeking termination (which notice shall describe the breach in reasonable
detail); or (ii) asserts a Force Majeure Event under Section 11 as a relief from
substantially all of its obligations hereunder for a period in excess of one
year and this Agreement may be terminated by Televisa and Venevision with
respect to Univision, if Univision (i) materially breaches its obligations
hereunder and fails to cure such breach within 180 days of notice thereof by the
party seeking termination (which notice shall describe the breach in reasonable
detail); or (ii) asserts a Force Majeure Event under Section 11 as a relief from
substantially all of its obligations hereunder for a period in excess of one
year.
11. Force Majeure. No party hereto shall be liable for or
suffer any penalty or termination of rights hereunder by reason of any failure
or delay in performing any of its obligations hereunder if such failure or delay
is occasioned by compliance with governmental regulation or order, or by
circumstances beyond the reasonable control of the party so failing or delaying,
including but not limited to acts of God, war, insurrection, fire, flood,
accident, strike or other labor disturbance, interruption of or delay in
transportation (a "Force Majeure Event"). Each party shall promptly notify the
others in writing of any such Force Majeure Event, the expected duration
thereof, and its anticipated effect on the party affected and make reasonable
efforts to remedy any such event, except that no party shall be under any
obligation to settle a labor dispute.
12. Modification. This Agreement shall not be modified or
waived in whole or in part except in writing signed by an officer of the party
to be bound by such modification or waiver.
13. Waiver of Breach. A waiver by one party of any breach or
default by another party shall not be construed as a waiver of any other breach
or default whether or not similar and whether or not occurring before or after
the subject breach.
14. Jurisdiction; Venue; Service of Process. Each of the
parties irrevocably submits to the jurisdiction of any California State or
United States Federal court sitting in Los Angeles County in any action or
proceeding arising out of our relating to this Agreement or the transactions
contemplated hereby, and irrevocably agrees that any such action or proceeding
may be heard and determined only in such California State or Federal court. Each
of the parties irrevocably waives, to the fullest extent it may effectively do
so, the defense of an inconvenient forum to the maintenance of any such action
or proceeding. Each of the parties irrevocably appoints CT Corporation System
(the "Process Agent"), with an office on the date hereof at 818 West 7th Street,
Los Angeles, CA, 90017 as his or its agent to receive on behalf of him or it and
his or its property service of copies of the summons and complaint and any other
process which may be served in any such action or proceeding. Such service may
be
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made by delivering a copy of such process to any of the parties in care of the
Process Agent at the Process Agent's above address, and each of the parties
irrevocably authorizes and directs the Process Agent to accept such service on
its behalf. As an alternate method of service, each of the parties consents to
the service of copies of the summons and complaint and any other process which
may be served in any such action or proceeding by the mailing or delivering of a
copy of such process to such party at its address specified in or pursuant to
Section 15. Each of the parties agrees that a final judgment in any such action
or proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law.
15. Notices. All notices and other communications required or
permitted hereunder shall be in writing, shall be deemed duly given upon actual
receipt, and shall be delivered (a) in person, (b) by registered or certified
mail (air mail if addressed to an address outside of the country in which
mailed), postage prepaid, return receipt requested, (c) by a generally
recognized overnight courier service which provides written acknowledgment by
the addressee of receipt, or (d) by facsimile or other generally accepted means
of electronic transmission (provided that a copy of any notice delivered
pursuant to this clause (d) shall also be sent pursuant to clause (b)),
addressed as set forth on Schedule 1 or to such other addresses as may be
specified by like notice to the other parties.
16. Assignments. Any party may assign its rights hereunder and
delegate its duties hereunder, in whole or in part, to an Affiliate able to
perform the assignor's obligations hereunder, and any party may assign its
rights hereunder and delegate its duties hereunder to any person or entity to
which all or substantially all of such party's businesses and assets are pledged
or transferred. No such assignment or delegation shall relieve any party of its
obligations hereunder. Any such assignment or delegation authorized pursuant to
this Section 16 shall be pursuant to a written agreement in form and substance
reasonably satisfactory to the parties. Except as otherwise expressly provided
herein, neither this Agreement nor any rights, duties or obligations hereunder
may be assigned or delegated by any of the parties, in whole or in part, whether
voluntarily, by operation of law or otherwise. Any attempted assignment or
delegation in violation of this prohibition shall be null and void. Subject to
the foregoing, all of the terms and provisions hereof shall be binding upon, and
inure to the benefit of, the successors and assigns of the parties. Nothing
contained herein, express or implied, is intended to confer on any person other
than the parties or their respective successors and permitted assigns, any
rights, remedies, obligations or liabilities under or by reason of this
Agreement.
17. Governing Law. This Agreement and the legal relations
among the parties shall be governed by and construed in accordance with the laws
of the State of California applicable to contracts between California parties
made and performed in that State, without regard to conflict of laws principles.
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18. Further Assurances. Each party hereto agrees to execute
any and all additional documents and do all things and perform all acts
necessary or proper to further effectuate or evidence this Agreement including
any required filings with the United States Copyright Office.
19. Counterparts. This Agreement may be executed in
counterparts, each of which shall be an original instrument and all of which,
when taken together, shall constitute one and the same agreement.
20. Severability. If any provision of this Agreement, or the
application thereof, shall for any reason or to any extent be invalid or
unenforceable, then the remainder of this Agreement and application of such
provision to other persons or circumstances shall continue in full force and
effect and in no way be affected, impaired or invalidated; provided that the
aggregate of all such provisions found to be invalid or unenforceable does not
materially affect the benefits and obligations of the parties of the Agreement
taken as a whole.
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21. Specific Performance. The parties hereto agree that
irreparable damage may occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties may be entitled to
an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the United
States or any state having jurisdiction pursuant to Section 14, this being in
addition to any other remedy to which they are entitled at law or in equity.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
UNIVISION COMMUNICATIONS INC.
By: __________________________
Title: _______________________
GRUPO TELEVISA S.A.
By: __________________________
Title: _______________________
VENEVISION INTERNATIONAL, INC.
By: __________________________
Title: _______________________
S-1
<PAGE> 1
Exhibit 10.10
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR REGISTERED OR QUALIFIED UNDER ANY STATE SECURITIES LAWS. THIS
WARRANT MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS THE
PROPOSED TRANSACTION DOES NOT REQUIRE REGISTRATION OR QUALIFICATION UNDER
APPLICABLE FEDERAL OR STATE SECURITIES LAWS.
FORM OF
AMENDED AND RESTATED WARRANT
TO PURCHASE COMMON STOCK OF
UNIVISION COMMUNICATIONS INC.,
A DELAWARE CORPORATION
THIS IS TO CERTIFY THAT: Grupo Telesistema, S.A. de C.V., a Mexican
corporation ("Televisa") or registered transferees (the "Holder") is entitled to
purchase from Univision Communications Inc., a Delaware corporation (the
"Company"), at any time and from time to time on and after the date hereof an
aggregate of _____ shares of Class T Common Stock (or Class A Common Stock as
provided herein) at a purchase price of $[.12878] per share, all on the terms
and conditions and subject to the adjustments provided herein. This Amended and
Restated Warrant (this "Warrant") is executed and delivered with reference to
the following facts:
A. On December 17, 1992, the Company issued warrants to Televisa to
purchase up to 35,000 shares of Class T Comon Stock of the Company (the
"Original Warrant").
B. The Original Warrant contemplated the merger of PTI Holdings
Inc., a Delaware corporation that is 80% owned by the Company, ("PTIH") with the
Company.
C. Prior to such merger, the number of shares of Class T Common
Stock issuable upon exercise of the Original Warrant was limited to 26,000
shares.
D. The Original Warrant contained provisions regarding adjustment to
the number of shares issuable upon exercise of the Original Warrant upon the
merger of PTIH and the Company.
E. The Original Warrant provided that if PTIH merged into the
Company, the number of shares which could be purchased upon exercise of this
Warrant would be reduced in accordance with the terms of the Original Warrant.
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F. The Company and PTIH are combining other than through a merger and
the Company will be the sole owner of PTIH.
G. The Company and the Holder wish to amend and restate the Original
Warrant to reflect the combination of PTIH and the Company and accurately to
reflect the number of shares of Common Stock that will be issuable upon exercise
of this Warrant.
SECTION 1. CERTAIN DEFINITIONS. As used in this Warrant, unless the
context otherwise requires:
"Affiliate" means, with respect to a specified Person, any other
Person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person. For purposes of this
definition, "control" when used with respect to any specified Person means the
power to direct the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.
"Business Day" means any day on which commercial banks are not
authorized or required to close in Los Angeles, California.
"Class A Common Stock" means the Company's authorized Class A
Common Stock, par value $.01 per share.
"Class P Common Stock" means the Company's authorized Class P
Common Stock, par value $.01 per share.
"Class T Common Stock" means the Company's authorized Class T
Common Stock, par value $.01 per share.
"Class V Common Stock" means the Company's authorized Class V
Common Stock, par value $.01 per share.
"Common Stock" means the Class A Common Stock, Class P Common
Stock, Class T Common Stock and Class V Common Stock.
"Communications Act" means the Federal Communications Act of 1934, as
amended, or any other similar Federal statute, and the rules and regulations of
the Federal Comunications Commission promulgated thereunder.
"Exercise Price" means, on the date hereof, the purchase price per
share as set forth on the first page of this Warrant and thereafter shall mean
such amount as adjusted pursuant to Section 4.
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"Permitted Holder" means Grupo Televisa S.A. and its wholly-owned
subsidiaries.
"Person" means a corporation, an association, a trust, a partnership,
a joint venture, an organization, a business, an individual, a government or
political subdivision thereof or a governmental body.
"Securities Act" means the Securities Act of 1933, as amended, or any
similar Federal statute, and the rules and regulations of the Securities and
Exchange Commission promulgated thereunder, all as the same shall be in effect
at the time.
"Warrant Shares" at any time means the shares of Class T Common Stock
or Class A Common Stock then purchasable by the Holder upon the exercise of this
Warrant.
SECTION 2. EXERCISE OF WARRANT.
2.1 Conditions of Exercise. The Holder may at any time on and after
the date hereof exercise this Warrant in whole or in part from time to time, for
the number of Warrant Shares which the Holder is then entitled to purchase
hereunder; provided, however, that this Warrant may not be exercised unless at
the time of such exercise all of the following conditions are met:
(a) it is lawful at the time of exercise for the Holder to own the
number of shares of Common Stock which the Holder would own upon such
exercise of this Warrant, and the exercise of this Warrant and such
Holder's acquisition of such shares hereunder does not violate the
Communications Act or other applicable law, rule or regulation;
(b) the Company has received such evidence as it may reasonably
request confirming the foregoing, including, without limitation, an opinion
in form and substance, and from counsel, reasonably satisfactory to the
Company and, if the Company requests, an agreement from the Holder
reasonably satisfactory to the Company indemnifying the Company against
losses in the event the exercise of this Warrant violates the
Communications Act; and
(c) any required approval from the Federal Communications Commission
has been received.
In the event that the Company declines to permit the exercise of this Warrant
because it believes that paragraphs (a) or (b) above have not been satisfied and
a procedure exists for obtaining a binding determination of whether or not such
exercise will cause a violation of applicable law, including, without
limitation, obtaining a declaratory ruling from the Federal Communications
Commission under Rule 1.2 of the rules promulgated under the Communications Act
(or any successor rule), then at the request of the Holder
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or the Company, the Company and the Holder will use reasonable efforts to obtain
such determination. Any such efforts shall be at the expense of the Holder,
unless the Company is unreasonable in refusing to rely on the assurances
provided pursuant to paragraph (b), in which case such efforts shall be at the
expense of the Company.
2.2 Method of Exercise. The Holder may exercise this Warrant
in whole or in part by delivering to the Company (i) a written notice of the
Holder's election to exercise this Warrant, which notice shall specify the
number of Warrant Shares to be purchased, (ii) this Warrant, (iii) the evidence
and agreement requested by the Company referred to in Section 2.1(b) above and
(iv) a sum equal to the Exercise Price for all Warrant Shares being purchased
pursuant to the exercise of this Warrant in the form of a cashiers' check or
wire transfer.
2.3 Issuance of Warrant Shares. Upon the Holder's exercise of
this Warrant, the Company shall issue the Warrant Shares so purchased to the
Holder and within two Business Days shall cause to be executed and delivered to
the Holder a certificate of certificates representing the aggregate number of
fully-paid and non-assessable shares of Common Stock issuable upon such
exercise. The stock certificate or certificates for Warrant Shares so delivered
shall be in such denominations as may be specified in such notice and shall be
registered in the name of the Holder. Such certificate or certificates
shall be deemed to have been issued and the Holder shall be deemed to have
become a holder of record of such shares, with the right, to the extent
permitted by law, to vote such shares or to consent or to receive notice as a
stockholder, as of the close of business on the date all of the conditions
referred to in Section 2.1 are satisfied (including, without limitation, the
obtaining of any requested declaratory ruling from the Federal Communications
Commission) and all of the items specified in Section 2.2 above are delivered to
the Company. If this Warrant shall have been exercised only in part the Company
shall, within two Business Days of delivery of such certificate or certificates,
deliver to the Holder either (i) a new warrant dated the date it is issued
evidencing the rights of the Holder to purchase the remaining Warrant
Shares called for by this Warrant or (ii) this Warrant bearing an appropriate
notation of such partial exercise. The Holder shall pay all expenses, transfer
taxes and other charges payable in connection with the preparation, issuance and
delivery of stock certificates under this Section 2.
2.4 Class of Shares Issued. If the Holder is a Permitted
Holder, the Holder may elect to receive shares of Class T Common Stock or
shares of Class A Common Stock upon exercise of this Warrant. If the Holder
is not a Permitted Holder, the Company shall issue to the Holder shares of
Class A Common Stock upon exercise of this Warrant.
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SECTION 3. TRANSFER OF WARRANT.
3.1 Restrictions on Transfer. Subject to Section 5 hereof, this
Warrant and all Warrant Shares issued hereunder may be sold, transferred,
pledged or hypothecated (collectively, "Transferred") to any third party. Any
certificate for any Warrant Shares issued hereunder shall be stamped or
otherwise imprinted with legends in substantially the form of the legends
contained on the first page hereof.
3.2 Mechanics of Transfers. Subject to satisfaction of the
conditions set forth in Section 3.1, this Warrant and all rights hereunder are
transferable, in whole or in part, on the books of the Company to be maintained
for such purpose, upon surrender of this Warrant at the office of the Company,
together with a written assignment of this Warrant duly executed by the Holder
or its agent or attorney. Upon such surrender, the Company shall execute and
deliver a new Warrant or Warrants in the name of the assignee or assignees and
in the denominations specified in such instrument of assignment, and this
Warrant shall promptly be canceled. This Warrant, if properly Transferred in
compliance with this Section 3, may be exercised by an assignee for the purchase
of Warrant Shares without having a new Warrant issued.
SECTION 4. ADJUSTMENT OF WARRANT SHARES; ANTI-DILUTION PROVISIONS.
If any of the following events occurs at any time hereafter prior to
the full exercise of this Warrant, then the Exercise Price and/or the number of
Warrant Shares remaining to be purchased hereunder immediately prior to such
event shall be adjusted as described below:
4.1 Redemptions and Repurchases. If at any time there is a pro rata
(based upon the respective number of outstanding shares of each class)
redemption or repurchase of the Class A Common Stock, Class P Common Stock,
Class T Common Stock, and Class V Common Stock, the number of Warrant Shares
remaining to be purchased hereunder shall be decreased by a percentage equal to
the percentage of Common Stock so redeemed or repurchased.
4.2 Stock Subdivisions or Stock Consolidations. If at any time the
outstanding shares of Class A Common Stock, Class P Common Stock, Class T Common
Stock, and Class V Common Stock are subdivided into a greater number of shares,
whether by stock split, stock dividend or otherwise, then the Exercise Price
will be reduced proportionately and the number of Warrant Shares remaining to be
purchased hereunder, will be increased proportionately. Conversely, if at any
time the outstanding shares of Class A Common Stock, Class P Common Stock, Class
T Comon Stock, and Class V Common Stock are consolidated into a smaller number
of shares, then the Exercise Price will be increased proportionately and the
number of Warrant Shares remaining to be purchased hereunder, will be reduced
proportionately. Each adjustment to the Exercise Price and the number of Warrant
Shares shall be effective on the record
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date, or if there is no record date, the effective date for such subdivision or
consolidation.
4.3 Consolidaion, Merger or Sale of Assets. If the Company shall at
any time (i) consolidate with or merge into another corporation or (ii) merge
with another corporation and be the surviving corporation in such merger, and in
connection therewith all or part of the Class T Common Stock or Class A Common
Stock shall be changed into or exchanged for securities of any other entity or
cash or other property, the Holder of this Warrant will thereafter receive, upon
the exercise hereof in accordance with the terms hereof, the securities, cash or
other property to which the holder of the number of shares of Common Stock then
deliverable upon the exercise of this Warrant would have received upon such
consolidation or merger, and the Company shall take such steps in connection
with such consolidation or merger, and the Company shall take such steps in
connection with such consolidation or merger as may be necessary to assure that
the provisions thereof shall thereafter be applicable, as nearly as reasonably
may be, in relation to any securities or property thereafter deliverable upon
the exercise of this Warrant. The Company or the successor corporation, as the
case may be, shall execute and deliver to the Holder a supplemental Warrant so
providing. A sale of all or substantially all the assets of the Company for a
consideration (apart from the assumption of obligations) consisting primarily of
securities shall be deemed a consolidation or merger for the foregoing purposes.
The provisions of this Section 4.3 similarly shall apply to successive mergers
or consolidations or sales or other transfers.
4.4 Dividends. If the Company proposes to declare a dividend on or
make a distribution with respect to the Class T Common Stock or Class A Common
Stock, whether in cash, property or securities, the Company will deliver written
notice of such proposed event, in reasonable detail, to the Holder not less than
fifteen (15) days prior to the record date for such dividend or distribution.
4.5 Notices. When any adjustments are required to be made under this
Section 4, the Company shall as promptly as practicable (i) determine such
adjustments, (ii) prepare a statement describing in reasonable detail the method
used in arriving at the adjustment and setting forth the calculation thereof;
and (iii) cause a copy of such statement to be mailed to the Holder.
4.6 Computations and Adjustments. Upon each computation of an
adjustment under this Section 4, the Exercise Price shall be computed to the
nearest 1/1000 cent and the number of Warrant Shares shall be calculated to the
nearest whole share (i.e., fractions of less than one-half shall be disregarded
and fractions of one-half of greater shall be treated as being the next greater
integer). However, the fractional amount shall be used in calculating any
future adjustments.
SECTION 5. SECURITIES LAWS. The Holder of this Warrant, by
acceptance hereof, acknowledges that this Warrant and the Warrant Shares which
may be issued pursuant thereto have not been registered under the Securities
Act, or applicable state securities laws. The Holder of this Warrant, by
acceptance hereof, represents that it is
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fully informed as to the applicable limitations upon any distribution or resale
of the Warrant Shares under the Securities Act or any applicable state
securities laws and agrees not to distribute or resell any Warrant Shares if
such distribution or resale would constitute a violation of the Securities Act
or any applicable state securities laws or would cause the issuance by the
Company of the Warrant or the Warrant Shares to be in violation of the
Securities Act or any applicable state securities laws. The Holder agrees that
all certificates representing Warrant Shares will carry an appropriate legend
substantially in the form of the first legend contained on the first page
hereof. Any exercise hereof by the Holder shall constitute a representation by
the Holder that the Warrant Shares are not being acquired with the view to, or
for resale in connection with, any distribution or public offering thereof in
violation of the Securities Act or applicable state securities laws.
SECTION 6. NO VOTING RIGHTS. This Warrant shall not entitle the
holder hereof to any voting rights or other rights as a stockholder of the
Company.
SECTION 7. RESERVATION OF WARRANT SHARES. The Company has reserved
and will keep available, out of the authorized and unissued shares of Common
Stock, the full number of shares sufficient to provide for the exercise of the
rights of purchase represented by this Warrant. Upon issuance and delivery
against payment pursuant to the terms of this Warrant, all Warrant Shares will
be validly issued, fully paid and nonassessable.
SECTION 8. LOSS, DESTRUCTION OF WARRANT. Upon receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of any Warrant and, in the case of any such loss, theft or
destruction, upon receipt of an indemnity satisfactory to the Company or, in the
case of any such mutilation, upon surrender and cancellation of such Warrant,
the Company will make and deliver, in lieu of such lost, stolen, destroyed or
mutilated Warrant, a new Warrant of like tenor and representing the right to
purchase the same aggregate number of shares of Common Stock.
SECTION 9. MISCELLANEOUS PROVISIONS.
9.1 AMENDMENTS. The terms of this Warrant may be amended, and the
observance of any term herein may be waived, but only with the written consent
of the Holder and the Company. If at any time this Warrant is split into
multiple Warrants, any consent to be given by the Holder with respect to any
amendment hereto shall be made by the Holders of Warrants exercisable for a
majority of the unissued Warrant Shares, provided that no amendment may change
the number of Warrant Shares or the Exercise Price without the writen consent
of the Holders all Warrants.
9.2 JURISDICTION: VENUE; SERVICE OF PROCESS. The Company and the
Holder each irrevocably submits to the jurisdiction of any California State or
United
7
<PAGE> 8
States Federal court sitting in Los Angeles County in any action or proceeding
arising out of or relating to this Warrant or the transactions contemplated
hereby, and irrevocably agrees that any such action or proceeding may be heard
and determined only in such California State or Federal court. Each of the
parties irrevocably waives, to the fullest extent it may effectively do so, the
defense of an inconvenient forum to the maintenance of any such action or
proceeding. Each of the parties irrevocably appoints CT Corporation System (the
"Process Agent"), with an office on the date hereof at 818 West 7th Street, Los
Angeles, CA 90017 as his or its agent to receive on behalf of him or it and his
or its property service of copies of the summons and complaint and any other
process which may be served in any such action or proceeding. Such service may
be made by delivering a copy of such process to any of the parties in care of
the Process Agent at the Process Agent's above address, and each of the parties
irrevocably authorizes and directs the Process Agent to accept such service on
its behalf. As an alternate method of service, each of the parties consents to
the service of copies of the summons and complaint and any other process which
may be served in any such action or proceeding by the mailing or delivering of a
copy of such process to such party at its address specified in or pursuant to
Section 9.3. Each of the parties agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
9.3 Notices. All notices and other communications required or
permitted hereunder shall be in writing, shall be deemed duly given upon actual
receipt, and shall be delivered (a) in person, (b) by registered or certified
mail (air mail if addressed to an address outside of the country in which
mailed), postage prepaid, return receipt requested, (c) by a generally
recognized overnight courier service which provides written acknowledgement by
the addressee of receipt, or (d) by facsimile or other generally accepted means
of electronic transmission (provided that a copy of any notice delivered
pursuant to this clause (d) shall also be sent pursuant to clause (b)),
addressed as follows:
(1) If to the Company:
1999 Avenue of the Stars, Suite 3050
Los Angeles, California 90067
Attn: Robert V. Cahill, Esq.
Telecopier: (310) 556-3568
with a copy to:
O'Melveny & Myers
1999 Avenue of the Stars, Suite 700
Los Angeles, California 90067
Attn: Donald V. Petroni, Esq.
Telecopier: (310) 246-6779
8
<PAGE> 9
(ii) If to the Holder
Avenida Chapultepec No. 28
06724 Mexico, D.F.
Attn: Alejandro Sada
Telecopier: (011) (525) 709-1157
with copies to:
Univisa, Inc.
2121 Avenue of the Stars, Suite 3300
Los Angeles, California 90067
Attn: Lawrence W. Dam
Telecopier: (305) 286-1615
and
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, New York 10004-1980
Attn: Joseph A. Stern
Telecopier: (212) 747-1526
or to such other addresses as may be specified by like notice to the other
parties.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed in
its name by its President or Vice President.
Dated:__________________, 1996
UNIVISION COMMUNICATIONS INC.
By:__________________________
Name:
Title:
9
<PAGE> 1
EXHIBIT 10.11
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR REGISTERED OR QUALIFIED UNDER ANY STATE SECURITIES LAWS. THIS
WARRANT MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS THE
PROPOSED TRANSACTION DOES NOT REQUIRE REGISTRATION OR QUALIFICATION UNDER
APPLICABLE FEDERAL OR STATE SECURITIES LAWS.
FORM OF
AMENDED AND RESTATED WARRANT
TO PURCHASE COMMON STOCK OF
UNIVISION COMMUNICATIONS INC.,
A DELAWARE CORPORATION
THIS IS TO CERTIFY THAT: Venevision International Limited, a British
Virgin Islands Corporation ("Venevision") or registered transferees (the
"Holder") is entitled to purchase from Univision Communications Inc., a Delaware
corporation (the "Company"), at any time and from time to time on and after the
date hereof an aggregate of ____________ shares of Class V Common Stock (or
Class A Common Stock as provided herein) at a purchase price of $[.12878] per
share, all on the terms and conditions and subject to the adjustments provided
herein. This Amended and Restated Warrant (this "Warrant") is executed and
delivered with reference to the following facts:
A. On December 17, 1992, the Company issued warrants to Venevision
to purchase up to 35,000 shares of Class V Common Stock of the Company (the
"Original Warrant").
B. The Original Warrant contemplated the merger of PTI Holdings
Inc., a Delaware corporation that is 80% owned by the Company, ("PTIH") with the
Company.
C. Prior to such merger, the number of shares of Class V Common
Stock issuable upon exercise of the Original Warrant was limited to 26,000
shares.
D. The Original Warrant contained provisions regarding adjustment
to the number of shares issuable upon exercise of the Original Warrant upon the
merger of PTIH and the Company.
E. The Original Warrant provided that if PTIH merged into the
Company, the number of shares which could be purchased upon exercise of this
Warrant would be reduced in accordance with the terms of the Original Warrant.
1
<PAGE> 2
F. The Company and PTIH are combining other than through a
merger and the Company will be the sole owner of PTIH.
G. The Company and the Holder wish to amend and restate the Original
Warrant to reflect the combination of PTIH and the Company and accurately to
reflect the number of shares of Common Stock that will be issuable upon
exercise of this Warrant.
SECTION 1. CERTAIN DEFINITIONS. As used in this Warrant, unless the
context otherwise requires:
"Affiliate" means, with respect to a specified Person, any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.
"Business Day" means any day on which commercial banks are not
authorized or required to close in Los Angeles, California.
"Class A Common Stock" means the Company's authorized Class A Common
Stock, par value $.01 per share.
"Class P Common Stock" means the Company's authorized Class P Common
Stock, par value $.01 per share.
"Class T Common Stock" means the Company's authorized Class T Common
Stock, par value $.01 per share.
"Class V Common Stock" means the Company's authorized Class V Common
Stock, par value $.01 per share.
"Common Stock" means the Class A Common Stock, Class P Common Stock,
Class T Common Stock and Class V Common Stock.
"Communications Act" means the Federal Communications Act of 1934, as
amended, or any other similar Federal statute, and the rules and regulations of
the Federal Communications Commission promulgated thereunder.
"Exercise Price" means, on the date hereof, the purchase price per
share as set forth on the first page of this Warrant and thereafter shall mean
such amount as adjusted pursuant to Section 4.
2
<PAGE> 3
"Permitted Holder" means
(i) Gustavo A. Cisneros, Ricardo J. Cisneros (each a "Cisneros
Brother"), and any entity all of the equity (other than directors'
qualifying shares) of which is directly or indirectly owned by a
Cisneros Brother, or both of them, and that is not an Affiliate of any
other Person;
(ii)(a) the spouse and lineal descendants of each Cisneros
Brother, (b) the personal representative and heirs of each Cisneros
Brother, (c) any trustee of any trust created primarily for the benefit
of any, some or all of such spouse and lineal descendants (but which may
include beneficiaries which are charities) or of any revocable trust
created by such Cisneros Brother, (d) following the death of such
Cisneros Brother, all beneficiaries under either such trust, (e) any
entity all of the equity of which is directly or indirectly owned by any
of the foregoing which is not an Affiliate of any Person other than the
Person described in clauses (a)-(d) above.
"Person" means a corporation, an association, a trust, a
partnership, a joint venture, an organization, a business, an individual, a
government or political subdivision thereof or a governmental body.
"Securities Act" means the Securities Act of 1933, as amended,
or any similar Federal statute, and the rules and regulations of the Securities
and Exchange Commission promulgated thereunder, all as the same shall be in
effect at the time.
"Warrant Shares" at any time means the shares of Class V Common
Stock or Class A Common Stock then purchasable by the Holder upon the exercise
of this Warrant.
SECTION 2. EXERCISE OF WARRANT.
2.1 Conditions of Exercise. The Holder may at any time on and
after the date hereof exercise this Warrant in whole or in part from time to
time, for the number of Warrant Shares which the Holder is then entitled to
purchase hereunder; provided, however, that this Warrant may not be exercised
unless at the time of such exercise all of the following conditions are met:
(a) it is lawful at the time of exercise for the Holder to own
the number of shares of Common Stock which the Holder would own upon
such exercise of this Warrant, and the exercise of this Warrant and such
Holder's acquisition of such shares hereunder does not violate the
Communications Act or other applicable law, rule or regulation;
(b) the Company has received such evidence as it may reasonably
request confirming the foregoing, including, without limitation, an
opinion in form
3
<PAGE> 4
and substance, and from counsel, reasonably satisfactory to the Company
and, if the Company requests, an agreement from the Holder reasonably
satisfactory to the Company indemnifying the Company against losses in
the event the exercise of this Warrant violates the Communications Act;
and
(c) any required approval from the Federal Communications
Commission has been received.
In the event that the Company declines to permit the exercise of this Warrant
because it believes that paragraphs (a) or (b) above have not been satisfied and
a procedure exists for obtaining a binding determination of whether or not such
exercise will cause a violation of applicable law, including, without
limitation, obtaining a declaratory ruling from the Federal Communications
Commission under Rule 1.2 of the rules promulgated under the Communications Act
(or any successor rule), then at the request of the Holder or the Company, the
Company and the Holder will use reasonable efforts to obtain such determination.
Any such efforts shall be at the expense of the Holder, unless the Company is
unreasonable in refusing to rely on the assurances provided pursuant to
paragraph (b), in which case such efforts shall be at the expense of the
Company.
2.2 Method of Exercise. The Holder may exercise this Warrant in
whole or in part by delivering to the Company (i) a written notice of the
Holder's election to exercise this Warrant, which notice shall specify the
number of Warrant Shares to be purchased, (ii) this Warrant, (iii) the evidence
and agreement requested by the Company referred to in Section 2.1(b) above and
(iv) a sum equal to the Exercise Price for all Warrant Shares being purchased
pursuant to the exercise of this Warrant in the form of a cashiers' check or
wire transfer.
2.3 Issuance of Warrant Shares. Upon the Holder's exercise of this
Warrant, the Company shall issue the Warrant Shares so purchased to the Holder
and within two Business Days shall cause to be executed and delivered to the
Holder a certificate or certificates representing the aggregate number of
fully-paid and nonassessable shares of Common Stock issuable upon such exercise.
The stock certificate or certificates for Warrant Shares so delivered shall be
in such denominations as may be specified in such notice and shall be registered
in the name of the Holder. Such certificate or certificates shall be deemed to
have been issued and the Holder shall be deemed to have become a holder of
record of such shares, with the right, to the extent permitted by law, to vote
such shares or to consent or to receive notice as a stockholder, as of the close
of business on the date all of the conditions referred to in Section 2.1 are
satisfied (including, without limitation, the obtaining of any requested
declaratory ruling from the Federal Communications Commission) and all of the
items specified in Section 2.2 above are delivered to the Company. If this
Warrant shall have been exercised only in part the Company shall, within two
Business Days of delivery of such certificate or certificates, deliver to the
Holder either (i) a new warrant dated the date it is issued evidencing the
rights of the Holder to purchase the remaining Warrant Shares called for by this
Warrant or (ii) this Warrant bearing an appropriate notation of
4
<PAGE> 5
such partial exercise. The Holder shall pay all expenses, transfer taxes and
other charges payable in connection with the preparation, issuance and delivery
of stock certificates under this Section 2.
2.4 Class of Shares Issued. If the Holder is a Permitted Holder, the
Holder may elect to receive shares of Class V Common Stock or shares of Class A
Common Stock upon exercise of this Warrant. If the Holder is not a Permitted
Holder, the Company shall issue to the Holder shares of Class A Common Stock
upon exercise of this Warrant.
SECTION 3. TRANSFER OF WARRANT.
3.1 Restrictions on Transfer. Subject to Section 5 hereof, this
Warrant and all Warrant Shares issued hereunder may be sold, transferred,
pledged or hypothecated (collectively, "Transferred") to any third party. Any
certificate for any Warrant Shares issued hereunder shall be stamped or
otherwise imprinted with legends in substantially the form of the legends
contained on the first page hereof.
3.2 Mechanics of Transfers. Subject to satisfaction of the
conditions set forth in Section 3.1, this Warrant and all rights hereunder are
transferable, in whole or in part, on the books of the Company to be maintained
for such purpose, upon surrender of this Warrant at the office of the Company,
together with a written assignment of this Warrant duly executed by the Holder
or its agent or attorney. Upon such surrender, the Company shall execute and
deliver a new Warrant or Warrants in the name of the assignee or assignees and
in the denominations specified in such instrument of assignment, and this
Warrant shall promptly be canceled. This Warrant, if properly Transferred in
compliance with this Section 3, may be exercised by an assignee for the purchase
of Warrant Shares without having a new Warrant issued.
SECTION 4. ADJUSTMENT OF WARRANT SHARES; ANTI-DILUTION PROVISIONS.
If any of the following events occurs at any time hereafter prior to
the full exercise of this Warrant, then the Exercise Price and/or the number of
Warrant Shares remaining to be purchased hereunder immediately prior to such
event shall be adjusted as described below:
4.1 Redemptions and Repurchases. If at any time there is a pro rata
(based upon the respective number of outstanding shares of each class)
redemption or repurchase of the Class A Common Stock, Class P Common Stock,
Class T Common Stock, and Class V Common Stock, the number of Warrant Shares
remaining to be purchased hereunder shall be decreased by a percentage equal to
the percentage of Common Stock so redeemed or repurchased.
4.2 Stock Subdivisions or Stock Consolidations. If at any time the
outstanding shares of Class A Common Stock, Class P Common Stock, Class T Common
5
<PAGE> 6
Stock, and Class V Common Stock are subdivided into a greater number of shares,
whether by stock split, stock dividend or otherwise, then the Exercise Price
will be reduced proportionately and the number of Warrant Shares remaining to be
purchased hereunder, will be increased proportionately. Conversely, if at any
time the outstanding shares of Class A Common Stock, Class P Common Stock,
Class T Common Stock, and Class V Common Stock are consolidated into a smaller
number of shares, then the Exercise Price will be increased proportionately and
the number of Warrant Shares remaining to be purchased hereunder, will be
reduced proportionately. Each adjustment to the Exercise Price and the number of
Warrant Shares shall be effective on the record date, or if there is no record
date, the effective date for such subdivision or consolidation.
4.3 Consolidation, Merger or Sale of Assets. If the Company shall at
any time (i) consolidate with or merge into another corporation or (ii) merge
with another corporation and be the surviving corporation in such merger, and in
connection therewith all or part of the Class V Common Stock or Class A Common
Stock shall be changed into or exchanged for securities of any other entity or
cash or other property, the Holder of this Warrant will thereafter receive, upon
the exercise hereof in accordance with the terms hereof, the securities, cash or
other property to which the holder of the number of shares of Common Stock then
deliverable upon the exercise of this Warrant would have received upon such
consolidation or merger, and the Company shall take such steps in connection
with such consolidation or merger as may be necessary to assure that the
provisions thereof shall thereafter be applicable, as nearly as reasonably may
be, in relation to any securities or property thereafter deliverable upon the
exercise of this Warrant. The Company or the successor corporation, as the case
may be, shall execute and deliver to the Holder a supplemental Warrant so
providing. A sale of all or substantially all the assets of the Company for a
consideration (apart from the assumption of obligations) consisting primarily of
securities shall be deemed a consolidation or merger for the foregoing purposes.
The provisions of this Section 4.3 similarly shall apply to successive mergers
or consolidations or sales or other transfers.
4.4 Dividends. If the Company proposes to declare a dividend on or
make a distribution with respect to the Class V Common Stock or Class A Common
Stock, whether in cash, property or securities, the Company will deliver written
notice of such proposed event, in reasonable detail, to the Holder not less than
fifteen (15) days prior to the record date for such dividend or distribution.
4.5 Notices. When any adjustments are required to be made under this
Section 4, the Company shall as promptly as practicable (i) determine such
adjustments, (ii) prepare a statement describing in reasonable detail the method
used in arriving at the adjustment and setting forth the calculation thereof;
and (iii) cause a copy of such statement to be mailed to the Holder.
6
<PAGE> 7
4.6 Computations and Adjustments. Upon each computation of an
adjustment under this Section 4, the Exercise Price shall be computed to the
nearest 1/1000 cent and the number of Warrant Shares shall be calculated to the
nearest whole share (i.e., fractions of less than one-half shall be disregarded
and fractions of one-half or greater shall be treated as being the next greater
integer). However, the fractional amount shall be used in calculating any future
adjustments.
SECTION 5. SECURITIES LAWS. The Holder of this Warrant, by acceptance
hereof, acknowledges that this Warrant and the Warrant Shares which may be
issued pursuant thereto have not been registered under the Securities Act, or
applicable state securities laws. The Holder of this Warrant, by acceptance
hereof, represents that it is fully informed as to the applicable limitations
upon any distribution or resale of the Warrant Shares under the Securities Act
or any applicable state securities laws and agrees to to distribute or resell
any Warrant Shares if such distribution or resale would constitute a violation
of the Securities Act or any applicable state securities laws or would cause the
issuance by the Company of the Warrant or the Warrant Shares to be in violation
of the Securities Act or any applicable state securities laws. The Holder agrees
that all certificates representing Warrant Shares will carry an appropriate
legend substantially in the form of the first legend contained on the first page
hereof. Any exercise hereof by the Holder shall constitute a representation by
the Holder that the Warrant Shares are not being acquired with the view to, or
for resale or in connection with, any distribution or public offering thereof in
violation of the Securities Act or applicable state securities laws.
SECTION 6. NO VOTING RIGHTS. This Warrant shall not entitle the holder
hereof to any voting rights or other rights as a stockholder of the Company.
SECTION 7. RESERVATION OF WARRANT SHARES. The Company has reserved and
will keep available, out of the authorized and unissued shares of Common Stock,
the full number of shares sufficient to provide for the exercise of the rights
of purchase represented by this Warrant. Upon issuance and delivery against
payment pursuant to the terms of this Warrant, all Warrant Shares will be
validly issued, fully paid and nonassessable.
SECTION 8. LOSS, DESTRUCTION OF WARRANT. Upon receipt of evidence
reasonable satisfactory to the Company of the loss, theft, destruction or
mutilation of any Warrant and, in the case of any such loss, theft or
destruction, upon receipt of an indemnity satisfactory to the Company or, in the
case of any such mutilation, upon surrender and cancellation of such Warrant,
the Company will make and deliver, in lieu of such lost, stolen, destroyed or
mutilated Warrant, a new Warrant of like tenor and representing the right to
purchase the same aggregate number of shares of Common Stock.
7
<PAGE> 8
SECTION 9. MISCELLANEOUS PROVISIONS.
9.1 Amendments. The terms of this Warrant may be amended, and the
observance of any term herein may be waived, but only with the written consent
of the Holder and the Company. If at any time this Warrant is split into
multiple Warrants, any consent to be given by the Holder with respect to any
amendment hereto shall be made by the Holders of Warrants exercisable for a
majority of the unissued Warrant Shares, provided that no amendment may change
the number of Warrant Shares or the Exercise Price without the written consent
of the Holders all Warrants.
9.2 Jurisdiction; Venue; Service of Process. The Company and the
Holder each irrevocably submits to the jurisdiction of any California State or
United States Federal court sitting in Los Angeles County in any action or
proceeding arising out of or relating to this Warrant or the transactions
contemplated hereby, and irrevocably agrees that any such action or proceeding
may be heard and determined only in such California State or Federal court. Each
of the parties irrevocably waives, to the fullest extent it may effectively do
so, the defense of an inconvenient forum to the maintenance of any such action
or proceeding. Each of the parties irrevocably appoints CT Corporation System
(the "Process Agent"), with an office on the date hereof at 818 West 7th Street,
Los Angeles, CA 90017 as his or its agent to receive on behalf of him or it and
his or its property service of copies of the summons and complaint and any other
process which may be served in any such action or proceeding. Such service may
be made by delivering a copy of such process to any of the parties in care of
the Process Agent at the Process Agent's above address, and each of the parties
irrevocably authorizes and directs the Process Agent to accept such service on
its behalf. As an alternate method of service, each of the parties consents to
the service of copies of the summons and complaint and any other process which
may be served in any such action or proceeding by the mailing or delivering of a
copy of such process to such party at its address specified in or pursuant to
Section 9.3. Each of the parties agrees that a final judgment in any such action
or proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law.
9.3 Notices. All notices and other communications required or
permitted hereunder shall be in writing, shall be deemed duly given upon actual
receipt, and shall be delivered (a) in person, (b) by registered or certified
mail (air mail if addressed to an address outside of the country in which
mailed), postage prepaid, return receipt requested, (c) by a generally
recognized overnight courier service which provides written acknowledgement by
the addressee of receipt, or (d) by facsimile or other generally accepted means
of electronic transmission (provided that a copy of any notice delivered
pursuant to this clause (d) shall also be sent pursuant to clause (b)),
addressed as follows:
8
<PAGE> 9
(i) If to the Company:
1999 Avenue of the Stars, Suite 3050
Los Angeles, California 90067
Attn: Robert V. Cahill, Esq.
Telecopier: (310) 556-3568
with a copy to:
O'Melveny & Myers
1999 Avenue of the Stars, Suite 700
Los Angeles, California 90067
Attn: Donald V. Petroni, Esq.
Telecopier: (310) 246-6779
(ii) If to the Holder:
Venevision International Limited
550 Biltmore Way, 9th Floor
Coral Gables, Florida 33134
Attn: Alejandro Rivera
Telecopier: (305) 447-1389
with copies to:
Finser Corp.
550 Biltmore Way, 9th Floor
Coral Gables, Florida 33134
Attn: James G. Naro, Esq.
Telecopier: (305) 447-1389
and
Milbank, Tweed, Hadley & McCloy
1 Chase Manhattan Plaza
New York, New York 10005
Attn: Robert O'Hara
Telecopier: (212) 530-5219
or to such other addresses as may be specified by like notice to the other
parties.
9
<PAGE> 10
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed in
its name by its President or a Vice President.
Dated:_________________,1996
UNIVISION COMMUNICATIONS INC.
By:_________________________
Name:
Title:
10
<PAGE> 1
Exhibit 10.12
================================================================
CREDIT AGREEMENT
among
UNIVISION COMMUNICATIONS INC.
THE LENDERS PARTIES HERETO,
BANQUE PARIBAS
THE CHASE MANHATTAN BANK
as Managing Agents
and
THE CHASE MANHATTAN BANK
as Administrative Agent
Dated as of September __, 1996
================================================================
<PAGE> 2
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
----
<S> <C>
SECTION 1. DEFINITIONS....................................................................................... 2
1.1 Defined Terms................................................................................... 2
1.2 Other Definitional Provisions................................................................... 31
SECTION 2. AMOUNT AND TERMS OF LOANS AND LETTERS OF
CREDIT; COMMITMENT AMOUNTS........................................................................... 31
2.1 Revolving Loans and Letters of Credit; Revolving
Loan Commitment Amounts......................................................................... 31
2.2 Term Loans; Term Loan Commitment................................................................ 36
2.3 Incremental Loan Facility....................................................................... 38
2.4 Issuance of Letters of Credit................................................................... 42
2.5 Optional Prepayments............................................................................ 45
2.6 Mandatory Prepayments........................................................................... 46
2.7 Conversion and Continuation Options............................................................. 48
2.8 Minimum Amounts of Tranches..................................................................... 49
2.9 Interest Rates and Payment Dates................................................................ 49
2.10 Computation of Interest and Fees................................................................ 50
2.11 Inability to Determine Interest Rate............................................................ 51
2.12 Pro Rata Treatment and Payments................................................................. 51
2.13 Illegality...................................................................................... 52
2.14 Increased Costs................................................................................. 52
2.15 Taxes........................................................................................... 54
2.16 Indemnity....................................................................................... 55
2.17 Unused Commitment Fees.......................................................................... 56
2.18 Mitigation of Costs............................................................................. 56
SECTION 3. REPRESENTATIONS AND WARRANTIES.................................................................... 57
3.1 Financial Condition............................................................................. 57
3.2 No Change....................................................................................... 58
3.3 Corporate Existence; Compliance with Law........................................................ 58
3.4 Corporate/Partnership Power; Authorization;
Enforceable Obligations......................................................................... 58
3.5 No Legal Bar.................................................................................... 59
3.6 No Material Litigation.......................................................................... 59
3.7 Ownership of Property; Liens.................................................................... 59
3.8 Intellectual Property........................................................................... 60
3.9 Taxes........................................................................................... 60
3.10 Federal Regulations............................................................................. 61
3.11 ERISA........................................................................................... 61
3.12 Investment Company Act; Other Regulations....................................................... 61
3.13 Material Agreements............................................................................. 61
3.14 Subsidiaries.................................................................................... 62
3.15 Purpose of Loans................................................................................ 62
3.16 Environmental Matters........................................................................... 63
3.17 Accuracy and Completeness of Information........................................................ 63
3.18 Real Property Assets............................................................................ 64
</TABLE>
-i-
<PAGE> 3
<TABLE>
<S> <C>
3.19 Permits, Etc................................................................................... 64
3.20 Patents, Trademarks, Etc....................................................................... 65
3.21 Copyright Act Requirements..................................................................... 65
3.22 Nature of Business............................................................................. 65
3.23 FCC Matters; Media Licenses.................................................................... 66
3.24 Ranking of Loans............................................................................... 66
3.25 Executive Offices.............................................................................. 66
3.26 Insolvency..................................................................................... 66
3.27 Labor Matters.................................................................................. 66
3.28 Condemnation................................................................................... 67
3.29 Leases, Licenses, Permits, Site Use Agreements
and Other Occupancy Agreements.............................................................. 67
3.30 Corporate Organization......................................................................... 67
4.1 Conditions to Initial Closing Date............................................................. 67
4.2 Conditions to Second Closing Date.............................................................. 73
4.3 Conditions to Incremental Loans................................................................ 75
4.4 Conditions to Each Loan or Letter of Credit.................................................... 77
SECTION 5. AFFIRMATIVE COVENANTS............................................................................. 78
5.1 Financial Statements............................................................................ 78
5.2 Certificates; Other Information................................................................. 79
5.3 Payment of Obligations.......................................................................... 82
5.4 Conduct of Business and Maintenance of Existence................................................ 82
5.5 Maintenance of Property; Insurance.............................................................. 82
5.6 Inspection of Property; Books and Records;
Discussions................................................................................. 84
5.7 Environmental Laws.............................................................................. 84
5.8 Use of Proceeds................................................................................. 85
5.9 Compliance With Laws, Etc....................................................................... 85
5.10 Media Licenses.................................................................................. 85
5.11 Guarantees, Etc................................................................................. 86
5.12 License Subsidiaries............................................................................ 86
5.13 Interest Rate Protection........................................................................ 86
5.14 Acquisition of Real Property in Fee Simple...................................................... 87
5.15 Leases and Licenses............................................................................. 87
5.16 Notices......................................................................................... 87
5.17 Accounts........................................................................................ 88
5.18 Sponsor Loans................................................................................... 88
SECTION 6. NEGATIVE COVENANTS................................................................................ 88
6.1 Financial Condition Covenants................................................................... 88
6.2 Limitation on Indebtedness...................................................................... 90
6.3 Limitation on Liens............................................................................. 92
6.4 Limitation on Fundamental Changes............................................................... 93
6.5 Limitation on Sale of Assets.................................................................... 95
6.6 Limitation on Dividends......................................................................... 95
6.7 Limitation on Investments, Loans and Advances................................................... 96
6.8 Limitation on Modifications of Debt Instruments;
Repurchase of Junior Subordinated Notes; Payment
of Programming Costs Under Program Cost Sharing
Agreement....................................................................................... 98
6.9 Transactions with Affiliates.................................................................... 98
</TABLE>
<PAGE> 4
<TABLE>
<S> <C>
6.10 Fiscal Year.................................................................................... 98
6.11 Restrictions Affecting Subsidiaries............................................................ 99
6.12 Lease Obligations.............................................................................. 99
6.13 Unfunded Liabilities........................................................................... 99
6.14 Management Fees................................................................................ 99
6.15 Material Agreements............................................................................ 99
6.16 Limitation on Equity Offerings.................................................................100
SECTION 7. EVENTS OF DEFAULT.................................................................................100
SECTION 8. THE ADMINISTRATIVE AGENT AND THE MANAGING
AGENTS...............................................................................................104
8.1 Appointment.....................................................................................104
8.2 Delegation of Duties............................................................................105
8.3 Exculpatory Provisions..........................................................................105
8.4 Reliance by Administrative Agent and Managing
Agents..........................................................................................105
8.5 Notice of Default...............................................................................106
8.6 Non-Reliance on Administrative Agent, Managing
Agents and Other Lenders........................................................................106
8.7 Indemnification.................................................................................107
8.8 Administrative Agent and Managing Agents in Their
Individual Capacities...........................................................................108
8.9 Successor Administrative Agent or Managing
Agents..........................................................................................108
8.10 Managing Agents.................................................................................109
SECTION 9. MISCELLANEOUS.....................................................................................110
9.1 Amendments and Waivers..........................................................................110
9.2 Notices.........................................................................................111
9.3 No Waiver; Cumulative Remedies..................................................................112
9.4 Survival of Representations and Warranties......................................................112
9.5 Payment of Expenses and Taxes...................................................................112
9.6 Successors and Assigns; Participations;
Purchasing Lenders; Additional Incremental
Lenders.........................................................................................114
9.7 Adjustments; Set-Off............................................................................118
9.8 Counterparts....................................................................................119
9.9 Severability....................................................................................119
9.10 Integration.....................................................................................119
9.11 GOVERNING LAW...................................................................................120
9.12 Submission to Jurisdiction; Waivers; Appointment
of Process Agent................................................................................120
9.13 Acknowledgements................................................................................120
9.14 WAIVERS OF JURY TRIAL...........................................................................121
9.15 Headings........................................................................................121
9.16 Conflict of Terms...............................................................................121
9.17 Copies of Certificates, Etc.....................................................................121
9.18 Confidentiality.................................................................................121
9.19 Publicity.......................................................................................122
............................................................................................123
</TABLE>
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<PAGE> 5
Exhibits
A Form of Revolving Note
B Form of Term Note
C Form of Incremental Note
D Form of Assignment and Acceptance
E Form of Joining Lender Agreement
F Form of No Default/Representation Certificate
G Form of Covenant Compliance Certificate
H Form of Continuation Notice
I Form of Letter of Credit Request
J Form of Activation Notice
K Form of Opinion of Counsel to Borrower and Guarantors
L Form of Excess Cash Flow Certificate
Schedules
1 Revolving Loan Commitments
2 Term Loan Commitments
3 Lender Notice Addresses
4 Borrower Subsidiaries
5 Borrower Indebtedness
6 Borrower Liens
7 Loan Parties' Permits and Approvals
8 Loan Parties' Real Property Assets
9 Borrower Stations/Media Licenses
10 Borrower's and Subsidiaries' Executive Offices
11 Borrower Litigation/FCC Proceedings
12 Borrowers' and Subsidiaries' Investments
13 Transponder Leases
-iv-
<PAGE> 6
CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of September __, 1996, among UNIVISION
COMMUNICATIONS INC., a Delaware corporation (the "Borrower"), the several banks
and other financial institutions from time to time parties to this Agreement
(the "Lenders"), BANQUE PARIBAS, a French banking corporation ("Paribas"), and
THE CHASE MANHATTAN BANK, a New York banking corporation ("Chase"), as managing
agents for the Lenders hereunder (in such capacity, the "Managing Agents"), THE
BANK OF NEW YORK, a New York banking corporation, and NATIONSBANK OF TEXAS,
N.A., a national banking association, as co-agents for the Lenders hereunder (in
such capacity, the "Co-Agents") and CHASE, as administrative agent for the
Lenders hereunder (in such capacity, the "Administrative Agent").
W I T N E S S E T H:
WHEREAS, the Borrower plans to issue 7,750,000 shares of its Class A
Common Stock pursuant to an initial public offering (the "IPO") on or about
September __, 1996;
WHEREAS, the Borrower has requested that the Lenders extend loans to it
prior to the consummation of the IPO for the purpose of enabling certain of its
subsidiaries to repay indebtedness, and making other expenditures, as follows:
(i) for Univision Television Group, Inc., a Delaware corporation ("UTG") to
repay all obligations under that certain Amended and Restated Credit Agreement
dated as of February 14, 1996 (the "Existing Credit Agreement") among UTG,
Paribas and Chase, as Managing Agents, and the financial institutions parties
thereto, which Existing Credit Agreement shall then be canceled, (ii) for UTG to
defease all its 11-3/4% Senior Subordinated Notes due 2001 (the "Senior
Subordinated Notes"), (iii) for UTG to repay all its indebtedness to The
Univision Network Limited Partnership, a Delaware limited partnership
("Network"), which payments will be used by Network to make distributions to its
partners, (iv) for the Borrower to purchase partnership interests in Network and
(v) to pay fees and expenses payable in connection with the execution of this
Agreement;
WHEREAS, the Borrower has requested that the Lenders extend loans to it
upon consummation of the IPO for the purpose of enabling it and its subsidiaries
to repay indebtedness, make investments and make distributions to certain
owners, as follows: (i) for UTG to repay all its obligations to Pack-a-Snack
N.V., a Netherlands Antilles corporation ("Pack-a-Snack") and Grupo Televisa
S.A. de C.V. ("Televisa"), (ii) for the Borrower to make certain distributions
to its shareholders,
<PAGE> 7
(iii) for Network to repay all principal and interest under that certain
promissory note dated July 1, 1996 in the principal amount of $15,000,000 made
by Network and payable to Univisa, Inc., a Delaware corporation ("Univisa") (the
"Galavision Note") in connection with Network's purchase of Galavision Inc., a
Delaware corporation ("Galavision"), (iv) for the Borrower to invest in
Entravision Communications Company LLC, a Delaware limited liability company and
(v) for general corporate purposes.
WHEREAS, the Borrower has requested that the Lenders extend loans and
make available letters of credit to it from time to time upon and subsequent to
the consummation of the IPO for certain acquisitions, the repayment of certain
indebtedness and general corporate purposes of the Borrower and its
subsidiaries, in each case on the terms and conditions set forth below;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the following terms shall
have the following meanings:
"Accountants": Arthur Andersen LLP or such other firm of independent
certified public accountants of recognized national standing as shall be
selected by the Borrower and satisfactory to the Managing Agents.
"Acquisitions": (i) the acquisition by, or investment in, any
Media/Communications Business by the Borrower or its Subsidiaries or (ii) the
entering into by the Borrower or its Subsidiaries of any Program Services
Agreement, in each case as permitted by Section 6.7(g).
"Activation Date": the date set forth in the Activation Notice as the
effective date of the Aggregate Incremental Loan Commitment, which date must be
during the period from and including the Second Closing Date to but excluding
the Incremental Loan Commitment Termination Date.
"Activation Notice": a notice given by the Borrower and each
Incremental Loan Lender to the Administrative Agent, substantially in the form
of Exhibit J.
"Additional Incremental Lender": as defined in Section 9.6(c).
"Administrative Agent": as defined in the preamble hereto.
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<PAGE> 8
"Affiliate": as to any Person, (a) any other Person (other than a
Subsidiary) which, directly or indirectly, is in control of, is controlled by,
or is under common control with, such Person or (b) any Person who is a
director, officer, shareholder or partner (i) of such Person, (ii) of any
Subsidiary of such Person or (iii) of any Person described in the preceding
clause (a). For purposes of this definition, "control" of a Person means the
power, directly or indirectly, either to (i) vote securities having 10% or more
of the ordinary voting power for the election of directors of such Person or
(ii) direct or cause the direction of the management and policies of such Person
whether by contract or otherwise; provided, however, that Perenchio, his
Permitted Transferees and each of their respective Affiliates shall be deemed to
be Affiliates of the Borrower and each other Loan Party.
"Affiliated Stations": the twenty full-power television stations, the
nineteen low-power television stations and the approximately 740 cable
television systems with which Network has Affiliation Agreements and any other
Stations which hereafter enter into an Affiliation Agreement with Network.
"Affiliation Agreements": the Affiliation Agreements between Network and
the Affiliated Stations, as such agreements may be amended or otherwise modified
from time to time.
"Aggregate Available Revolving Loan Commitment": the sum of the
Available Revolving Loan Commitments of each Lender.
"Aggregate Commitment": the sum of the Aggregate Revolving Loan
Commitment, the Aggregate Term Loan Commitment and, if activated, the Aggregate
Incremental Loan Commitment.
"Aggregate Incremental Loan Commitment": the sum of the Incremental Loan
Commitments set forth in the Activation Notice, as the same may be adjusted from
time to time pursuant to the provisions hereof, provided that the Aggregate
Incremental Loan Commitment shall not exceed the Maximum Incremental Loan
Facility.
"Aggregate Revolving Loan Commitment": the sum of the Revolving Loan
Commitments set forth on Schedule 1, as the same may be adjusted from time to
time pursuant to the provisions hereof.
"Aggregate Term Loan Commitment": the sum of the Term Loan Commitments
set forth on Schedule 2.
"Agreement": this Credit Agreement, as amended, waived, supplemented or
otherwise modified from time to time.
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<PAGE> 9
"Alternate Base Rate": for any day, a rate per annum (rounded upwards,
if necessary, to the next 1/16 of 1%) equal to the greater of (a) the Prime
Commercial Lending Rate in effect on such day and (b) the Federal Funds
Effective Rate in effect on such day plus 1/2 of 1%. "Prime Commercial Lending
Rate" shall mean the rate of interest per annum publicly announced from time to
time by Chase as its prime commercial lending rate in effect at its principal
office in New York City. "Federal Funds Effective Rate" shall mean, for any day,
the weighted average of the rates on overnight federal funds transactions with
members of the Federal Reserve System arranged by federal funds brokers, as
published on the next succeeding Business Day by the Federal Reserve Bank of New
York, or, if such rate is not so published for any day which is a Business Day,
the average of the quotations for the day of such transactions received by the
Administrative Agent from three federal funds brokers of recognized standing
selected by it. If, for any reason, the Administrative Agent shall have
determined (which determination shall be conclusive absent manifest error) that
it is unable to ascertain the Federal Funds Effective Rate for any reason,
including, without limitation, the inability or failure of the Administrative
Agent to obtain sufficient quotations in accordance with the terms hereof, the
Alternate Base Rate shall be determined without regard to clause (b) of the
first sentence of this definition until the circumstances giving rise to such
inability no longer exist. Any change in the Alternate Base Rate due to a change
in the Prime Commercial Lending Rate or the Federal Funds Effective Rate shall
be effective on the effective date of such change in the Prime Commercial
Lending Rate or the Federal Funds Effective Rate, respectively.
"Alternate Base Rate Loans": Loans the rate of interest applicable to
which is based upon the Alternate Base Rate.
"Applicable Lending Office": for any Lender, its offices for LIBOR
Loans, Alternate Base Rate Loans and participations in Letters of Credit,
specified in Schedule 1 or 2 or in the Assignment and Acceptance or Joining
Lender Agreement pursuant to which it became a party hereto, as the case may be,
any of which offices may, upon 10 days' prior written notice to the
Administrative Agent and the Borrower, be changed by such Lender.
"Applicable Margin": for each LIBOR Loan and for each Alternate Base
Rate Loan as set forth below:
<TABLE>
<CAPTION>
Alternate
Leverage Level LIBOR Base Rate
-------------- ----- ---------
<S> <C> <C>
1(greater than =5.00:1) +1.500% +.250%
2(less than 5.00:1- greater than =4.50:1) +1.375% +.125%
3(less than 4.50:1- greater than =4.00:1) +1.125% 0
</TABLE>
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<PAGE> 10
<TABLE>
<S> <C> <C>
4(less than 4.00:1- greater than =3.50:1) +1.000% 0
5(less than 3.50:1- greater than =3.00:1) +0.875% 0
6(less than 3.00:1) +0.750% 0
</TABLE>
"Asset Disposition": the sale, sale and leaseback, transfer, conveyance,
exchange, long-term lease accorded sales treatment under GAAP or similar
disposition (including by means of a merger, consolidation, amalgamation, joint
venture or other substantive combination) of any of the Properties, business or
assets (other than marketable securities, including "margin stock" within the
meaning of Regulation U, liquid investments and other financial instruments but,
including, without limitation, the assignment of any lease, license or permit
relating to the Properties) of the Borrower or any of its Subsidiaries to any
Person or Persons other than to the Borrower or any of its Subsidiaries;
provided that Asset Dispositions shall not include (i) the sale in the ordinary
course of business of equipment and vehicles, the proceeds of sale of which are
used within 90 days after the sale date to refinance Indebtedness (including
Revolving Loans) incurred to purchase or to commit to purchase, replacement
equipment and vehicles to be used in the ordinary course of business and (ii)
other sales of assets in the ordinary course of business which do not have a
fair market value exceeding $2,000,000 in the aggregate in any fiscal year or
$10,000,000 in the aggregate from the period from the Initial Closing Date
through the Incremental Loan Maturity Date.
"Assignment and Acceptance": an Assignment and Acceptance in the form of
Exhibit D to this Agreement.
"Available Incremental Loan Commitment": with respect to each
Incremental Loan Lender on the date of determination thereof, the amount by
which (a) the Incremental Loan Commitment of such Lender on such date exceeds
(b) the principal sum of such Lender's Incremental Loans outstanding.
"Available Revolving Loan Commitment": with respect to each Lender
having a Revolving Loan Commitment on the date of determination thereof, the
amount by which (a) the Revolving Loan Commitment of such Lender on such date
exceeds (b) the principal sum of such Lender's (i) Revolving Loans outstanding,
(ii) Revolving Loan Commitment Percentage of the aggregate Letter of Credit
Amount of all Letters of Credit outstanding and (iii) Revolving Loan Commitment
Percentage of the aggregate amount of unreimbursed drawings under all Letters of
Credit on such date.
"Available Term Loan Commitment": on the Second Closing Date, with
respect to each Lender having a Term Loan Commitment, the amount by which (a)
the Term Loan Commitment of such Lender
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<PAGE> 11
on such date exceeds (b) the principal sum of such Lender's Term Loans
outstanding.
"Borrower": as defined in the preamble hereto.
"Business Day": a day other than a Saturday, Sunday or other day on
which commercial banks in New York City or the State of California are
authorized or required by law to close and which, in the case of a LIBOR Loan,
is a Eurodollar Business Day.
"Capital Expenditures": for any period, collectively, for any Person,
the aggregate of all expenditures which are made during such period (whether
paid in cash or accrued as liabilities), and all contractual commitments for
such expenditures which are entered into during such period (provided that if
any such commitment is included in one fiscal year, the actual payment in a
later fiscal year shall not be included in such later fiscal year), by such
Person, for property, plant or equipment and which would be reflected as
additions to property, plant or equipment on a balance sheet of such Person
prepared in accordance with GAAP (including, without limitation, all such
property held under capital leases); provided, however, that Capital
Expenditures shall exclude (i) any expenditures which arise from Program Rights
Obligations and (ii) any expenditures permitted hereunder with respect to
Transponder Leases.
"Capitalized Lease Obligations": obligations for the payment of rent for
any real or personal property under leases or agreements to lease that, in
accordance with GAAP, have been or should be capitalized on the books of the
lessee and, for purposes hereof, the amount of any such obligation shall be the
capitalized amount thereof determined in accordance with GAAP; provided, that
"Capitalized Lease Obligations" shall not include any such obligations relating
to Transponder Leases.
"Capital Stock": any and all shares, interests, participations or other
equivalents (however designated) of capital stock of a corporation, any and all
equivalent ownership interests in a Person (other than a corporation), any and
all warrants, options or rights to purchase or any other securities convertible
into any of the foregoing.
"Cash Collateral Deposit": cash deposits made by the Borrower to the
Administrative Agent, to be held by the Administrative Agent as Collateral
pursuant to the Security Agreement, for the reimbursement of drawings under
Letters of Credit.
"Cash Income Taxes": cash income taxes paid by the Borrower and its
consolidated Subsidiaries during the fiscal
-6-
<PAGE> 12
quarter most recently ended and the immediately preceding three fiscal quarters.
"Change in Control": (a) any "person" or "group" (as such terms are used
for purposes of Sections 13(d) and 14(d) of the Securities Exchange Act of 1934,
whether or not applicable) other than Perenchio and any Person or group of
Persons that are Permitted Transferees of Perenchio or are as of the date hereof
Affiliates of Perenchio, is or becomes the beneficial owner, directly or
indirectly, of more than 50% of the total Voting Power of the Borrower or (b)
the Borrower shall cease to be the beneficial owner, directly or indirectly, of
100% of the total Voting Power of each Guarantor.
"Chase": as defined in the preamble hereto.
"Code": the Internal Revenue Code of 1986, as amended from time to time.
"Collateral": all of the property (tangible or intangible) purported to
be subject to the lien or security interest purported to be created by any
mortgage, deed of trust, security agreement, pledge agreement, assignment or
other security document heretofore or hereafter executed by the Borrower as
security for all or part of the Obligations.
"Collateral Documents": the Security Agreement, all notices of security
interests in deposit accounts requested by the Administrative Agent pursuant to
the Security Agreement, Form UCC-1 Financing Statements and amendments thereto
and any other document encumbering the Collateral or evidencing or perfecting a
security interest therein for the benefit of the Lenders executed by the
Borrower.
"Combined Entities": UTG, Network and their respective Subsidiaries are
herein referred to collectively as the "Combined Entities" with regard to
periods prior to consummation of the IPO. Financial calculations relating to the
Combined Entities shall give effect to eliminations in the combination of
accounts of such entities in accordance with GAAP.
"Combined Entities Loan Agreement": the Loan Agreement between UTG and
Network, dated as of December 17, 1992, pursuant to which each of UTG and
Network have agreed to make loans, under certain conditions set forth therein,
to each other, which loans shall be subordinate in all respects to the Loans by
the Lenders, as the same may be modified or amended from time to time in
accordance with the terms hereof.
"Combined Entities Loans": loans made pursuant to the terms of the
Combined Entities Loan Agreement.
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<PAGE> 13
"Combined Net Time Sales": for any period, all time sales, including
barter and trade and television subscription revenue, less advertising
commissions, Special Event Revenue, music license fees, outside affiliate
compensation and taxes (other than withholding taxes) paid by Network pursuant
to Section 5.4 of the Program License Agreements and similar taxes paid by UTG,
calculated in accordance with GAAP, of the Borrower and its Subsidiaries, for
such period. Unless otherwise agreed in writing between the parties, barter and
trade sales shall be valued at the fair market value of the goods or services
received by the Borrower and its Subsidiaries.
"Commitment Percentage": as to any Lender at any time, the percentage of
the Aggregate Commitment then constituted by such Lender's Commitments.
"Commitments": as to any Lender, its Revolving Loan Commitment, its Term
Loan Commitment and, if it is an Incremental Loan Lender, its Incremental Loan
Commitment.
"Commonly Controlled Entity": as to any Person, an entity, whether or
not incorporated, which is under common control with such Person within the
meaning of Section 4001 of ERISA or is part of a group which includes such
Person and which is treated as a single employer under Section 414 of the Code.
"Communications Act": the Communications Act of 1934, as amended, and
the rules and regulations issued thereunder, as from time to time in effect.
"Consents": the consents in form and substance reasonably satisfactory
to the Managing Agents, executed by the counterparties to such contracts,
leases, licenses, permits or other agreements listed on Schedule D to the
Security Agreement and the Guarantor Security Agreements.
"Consideration": with respect to any Acquisition, the aggregate
consideration, in whatever form (including, without limitation, cash payments,
the principal amount of promissory notes and Indebtedness assumed, the aggregate
amounts payable to acquire, extend and exercise any option, the aggregate amount
payable under Non-Compete Agreements and management agreements, and the fair
market value of other property delivered) paid, delivered or assumed by the
Borrower and its Subsidiaries for such Acquisition and the expenses associated
therewith, including all brokerage commissions, legal fees and similar expenses.
Notwithstanding anything herein to the contrary, no Acquisition involving the
assumption of debt by the Borrower or its Subsidiaries shall be permitted if
such assumption would violate the terms of this Agreement.
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<PAGE> 14
"Continuation Notice": a request for continuation or conversion of a
Loan as set forth in Section 2.9, substantially in the form of Exhibit H.
"Contractual Obligation": as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"Covenant Compliance Certificate": a certificate of the Chief Financial
Officer of the Borrower substantially in the form of Exhibit G hereto.
"Default": any of the events specified in Section 7, whether or not any
requirement for the giving of notice, the lapse of time, or both, or any other
condition, has been satisfied.
"Dennevar B.V.": Dennevar B.V., a Dutch corporation wholly- owned
indirectly by Venevision.
"Dollars" and "$": dollars in lawful currency of the United States.
"Drawing Lender": as defined in Section 2.4(c).
"EBITDA": for any period, for the fiscal quarter most recently ended and
the immediately preceding three fiscal quarters, the sum of (1) Net Income after
eliminating extraordinary gains and losses and all non-cash programming payments
pursuant to the Program Cost Sharing Agreement, plus (i) provisions for taxes,
(ii) depreciation and amortization (including amortization of Program Rights
Payments), (iii) Interest Expense, (iv) permitted termination payments owing by
the Borrower or its Subsidiaries resulting from early termination of a time
brokerage agreement, local marketing agreement or similar agreement, (v)
payments made pursuant to Non-Compete Agreements and (vi) other non-cash
charges, all to the extent deducted from the computation of Net Income, but
after deducting (A) Program Rights Payments made or scheduled to be made, (B)
non-cash revenues (to the extent included in the calculation of Net Income) and
(C) principal payments for Transponder Leases and (2) proceeds from Sponsor
Loans made to UTG (such proceeds to be calculated for such calculation period
without any setoff for Sponsor Loans reduced pursuant to the Program Cost
Sharing Agreement Waiver).
"Election Notice": as defined in Section 2.3(f).
"Entravision": as defined in the recitals hereto.
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<PAGE> 15
"Environmental Laws": any and all foreign, federal, state, local or
municipal laws, rules, orders, regulations, statutes, ordinances, codes,
decrees, requirements of any Governmental Authority or Requirements of Law
(including common law) regulating, relating to or imposing liability or
standards of conduct concerning protection of human health or the environment,
as now or at any time hereafter in effect.
"Equity Offering": all public offerings of the Capital Stock of any
Person from time to time, other than the IPO.
"ERISA": the Employee Retirement Income Security Act of 1974, as amended
from time to time.
"ERISA Affiliate": as to any Person, each trade or business including
such Person, whether or not incorporated, which together with such Person would
be treated as a single employer under Section 4001(a)(14) of ERISA.
"Event of Default": any of the events specified in Section 7, provided
that any requirement for the giving of notice, the lapse of time, or both, or
any other condition, has been satisfied.
"Eurodollar Business Day": shall mean any day on which banks are open
for dealings in Dollar deposits in the London Interbank Market.
"Excess Cash Flow": for any period, for the Borrower and its
Subsidiaries on a consolidated basis, an amount equal to EBITDA (provided that
Program Rights Payments deducted in the calculation thereof shall be limited to
Program Rights Payments actually made) for such period, less, during such period
(in each case, without duplication), (i) Total Debt Service, (ii) Cash Income
Taxes, (iii) Capital Expenditures (other than those made with the proceeds of a
financing covered by Section 6.3(j)), not in excess of the amount permitted by
the Loan Documents, (iv) increases (or plus decreases) in Net Working Investment
and (v) Restricted Payments under Section 6.6(iii).
"Excluded Taxes": all taxes imposed on or by reference to the net income
of the Administrative Agent, each Managing Agent or any Lender or its Applicable
Lending Office and all franchise taxes, taxes on doing business or taxes
measured by capital or net worth imposed on any Lender or its Applicable Lending
Office, in each case, imposed:
(i) by the jurisdiction in which the Applicable Lending Office
or other branch of such Person is located or in which such Person is
organized or has its principal or registered office;
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<PAGE> 16
(ii) by reason of any connection between the jurisdiction imposing
such tax and such Lender other than a connection arising solely from
this Agreement or any transaction contemplated hereby;
(iii) by the United States or any political subdivision thereof or
therein including without limitation, branch profits taxes imposed by
the United States or similar taxes imposed by any subdivision thereof;
or
(iv) by reason of the failure of any Lender to provide accurate
documentation required to be provided by such Lender pursuant to
Section 2.15(b) or Section 9.6.
"Existing Credit Agreement": as defined in the recitals hereto.
"FCC": the Federal Communications Commission or any successor thereto.
"Federal Funds Effective Rate": as defined in the definition of
"Alternate Base Rate" contained in this Section 1.1.
"Financial Statements": as defined in Section 3.1.
"Fixed Charge Coverage Ratio": for the Borrower and its Subsidiaries on
a consolidated basis, the ratio of EBITDA for the fiscal quarter most recently
ended and the immediately preceding three fiscal quarters to the sum of (i)
Total Debt Service for the fiscal quarter most recently ended and the
immediately preceding three fiscal quarters, (ii) Capital Expenditures for the
fiscal quarter most recently ended and the immediately preceding three fiscal
quarters, (iii) Cash Income Taxes for the fiscal quarter most recently ended and
the immediately preceding three fiscal quarters and (iv) Restricted Payments
under Section 6.6(iii) paid by the Borrower or any Subsidiary for the fiscal
quarter most recently ended and the immediately preceding three fiscal quarters.
"Funded Debt": the sum of the outstanding principal balance of all
Capitalized Lease Obligations, and all Indebtedness of the Borrowers and its
Subsidiaries other than (A) Indebtedness described in clauses (h), (j), (k),
(l), (m) and (n) of Section 6.2 and (B) the defeased Subordinated Notes.
"GAAP": generally accepted accounting principles in the United States in
effect from time to time. If, at any time, GAAP changes in a manner which will
materially affect the calculations determining compliance by the Borrower with
any of its covenants in Section 6.1, such covenants shall continue to
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<PAGE> 17
be calculated in accordance with GAAP in effect prior to such changes in GAAP.
"Galavision": as defined in the recitals hereto.
"Galavision Note": as defined in the recitals hereto.
"Governmental Authority": any nation or government, any federal, state
or other political subdivision thereof and any federal, state or local entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Guarantee Obligation": as to any Person (the "guaranteeing person"),
any obligation of (a) the guaranteeing person or (b) another Person (including,
without limitation, any bank under any letter of credit) to induce the creation
of which the guaranteeing person has issued a reimbursement, counterindemnity or
similar obligation, in either case guaranteeing or in effect guaranteeing any
Indebtedness, leases, dividends or other obligations (the "primary obligations")
of any other third Person (the "primary obligor") in any manner, whether
directly or indirectly, including, without limitation, any obligation of the
guaranteeing person, whether or not contingent, (i) to purchase any such primary
obligation or any property constituting direct or indirect security therefor,
(ii) to advance or supply funds for the purchase or payment of any such primary
obligation or to maintain working capital or equity capital of the primary
obligor or otherwise to maintain the net worth or solvency of the primary
obligor, (iii) to purchase property, securities or services primarily for the
purpose of assuring the owner of any such primary obligation of the ability of
the primary obligor to make payment of such primary obligation or (iv) otherwise
to assure or hold harmless the owner of any such primary obligation against loss
in respect thereof; provided, however, that the term Guarantee Obligation shall
not include endorsements of instruments for deposit or collection in the
ordinary course of business. The amount of any Guarantee Obligation of any
guaranteeing person shall be deemed to be the lesser of (a) an amount equal to
the stated or determinable amount of the primary obligation in respect of which
such Guarantee Obligation is made and (b) the maximum amount for which such
guaranteeing person may be liable pursuant to the terms of the instrument
embodying such Guarantee Obligation, unless such primary obligation and the
maximum amount for which such guaranteeing person may be liable are not stated
or determinable, in which case the amount of such Guarantee Obligation shall be
such guaranteeing person's maximum reasonably anticipated liability in respect
thereof as determined by the Borrower in good faith.
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"Guarantees": the guarantees made by each of the Guarantors and all
other guarantees executed by a Guarantor in favor of the Lenders or the
Administrative Agent for the benefit of the Lenders, in form and substance
reasonably satisfactory to the Majority Lenders, as the same may be amended or
modified from time to time in accordance with the terms hereof.
"Guarantor Collateral": all of the property (tangible or intangible)
purported to be subject to the lien or security interest purported to be created
by any mortgage, deed of trust, security agreement, pledge agreement, assignment
or other security document heretofore or hereafter executed by any Guarantor as
security for all or part of the Obligations or the Guarantees.
"Guarantor Collateral Documents": the Guarantor Security Agreements, all
notices of security interests in deposit accounts requested by the
Administrative Agent pursuant to the Guarantor Security Agreements, Form UCC-1
Financial Statements and amendments thereto and any other document encumbering
the Guarantor Collateral or evidencing or perfecting a security interest therein
for the benefit of the Lenders executed by any Guarantor.
"Guarantors": (a) prior to the Second Closing Date, PTI, UTG, PTI
Holdings, Galavision, Sunshine, Sunshine L.P., Network, Network Holding, each
Subsidiary of the foregoing (other than License Subsidiaries) and all other
Persons that guarantee all or part of the Obligations prior to the Second
Closing Date and (b) on and after the Second Closing Date, UTG, PTI Holdings,
Galavision, Sunshine, Sunshine L.P., Network, each Subsidiary of the foregoing
entities referred to in this clause (b) (other than License Subsidiaries) and
all other Persons that guarantee all or part of the Obligations from time to
time.
"Guarantor Security Agreements": the Guarantor Security Agreements, in
form and substance reasonably satisfactory to the Majority Lenders, made by each
Guarantor in favor of the Administrative Agent, for the benefit of the Lenders,
in respect of the tangible and intangible personal property of the Guarantors
encumbered thereby, as the same may be amended from time to time in accordance
with the terms hereof.
"Incremental Loan": as defined in Section 2.3(a).
"Incremental Loan Commitment": the commitment of each Incremental Loan
Lender to make Incremental Loans hereunder through its Applicable Lending
Office, as indicated in the Activation Notice.
"Incremental Loan Commitment Percentage": with respect to each
Incremental Loan Lender, the percentage equivalent of the
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ratio which such Incremental Loan Lender's Incremental Loan Commitment bears to
the Aggregate Incremental Loan Commitment.
"Incremental Loan Commitment Termination Date": June 30, 1999 or such
earlier date as the Aggregate Incremental Loan Commitment may expire (whether by
acceleration, reduction to zero or otherwise).
"Incremental Loan Lender": each Lender having an Incremental Loan
Commitment and/or which shall have Incremental Loans outstanding.
"Incremental Loan Maturity Date": August 31, 2004 or such earlier date
on the Aggregate Incremental Loan Commitment shall expire (whether by
acceleration, reduction to zero or otherwise.
"Incremental Loan Reduction Dates": the dates on which scheduled
principal payments of the Incremental Loans are due, as set forth in the table
in Section 2.3(d).
"Incremental Note" and "Incremental Notes": as defined in Section
2.3(c).
"Indebtedness": of any Person at any date, without duplication, (a) all
indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services (other than (i) current trade liabilities incurred
in the ordinary course of business and payable in accordance with customary
practices and (ii) current income taxes) or which is evidenced by a note, bond,
debenture or similar instrument, excluding Program Rights Obligations, (b) all
obligations of such Person under Capitalized Lease Obligations, (c) all
obligations of such Person in respect of acceptances issued or created for the
account of such Person, (d) all liabilities secured by any Lien on any property
owned by such Person even though such Person has not assumed or otherwise become
liable for the payment thereof, (e) all obligations of such Person, whether
absolute or contingent, in respect of letters of credit opened for the account
of such Person (other than any letters of credit opened for the purpose of
facilitating the purchase of goods and services in the ordinary course of
business and having a term of not more than 360 days), (f) all obligations of
such Person under Non-Compete Agreements and (g) all Guarantee Obligations of
such Person in respect of any indebtedness, obligations or liabilities of any
other Person of the type referred to in clauses (a) through (g) of this
definition; provided that "Indebtedness" shall not include payments (to the
extent included above) to be made by Network pursuant to the Program Cost
Sharing Agreement and the Program License Agreements or payments made to
Affiliated Stations under the Affiliation Agreements.
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"Initial Closing Date": the date on which the conditions precedent set
forth in Section 4.1 have been satisfied.
"Insolvency": with respect to any Multiemployer Plan, the condition that
such Plan is insolvent within the meaning of Section 4245 of ERISA.
"Insolvent": pertaining to a condition of Insolvency.
"Intellectual Property": as defined in Section 3.8.
"Intercreditor Agreement": an Intercreditor Agreement, in form and
substance reasonably satisfactory to the Majority Lenders with regard to the
Junior Subordinated Notes, the license fees payable by Network under the Program
License Agreements, the Galavision Note and Sponsor Loans, as such document may
be amended or otherwise modified from time to time in accordance with the terms
hereof.
"Interest Expense": as of any date, for the fiscal quarter most recently
ended and the immediately preceding three fiscal quarters, (A) the sum of (i)
the amount of all interest on Funded Debt which was paid, payable and/or accrued
for such period (without duplication of previous amounts), (ii) all commitment,
letter of credit or line of credit fees paid, payable and/or accrued for such
period (without duplication of previous amounts) to any lender in exchange for
such lender's commitment to lend and (iii) net amounts payable (or receivable)
under all Interest Rate Agreements, less (B) all interest income.
"Interest Payment Date": (a) as to any Alternate Base Rate Loan, the
last day of each March, June, September and December to occur while the Term
Loans, the Incremental Loans or the Revolving Loans are outstanding, (b) as to
any LIBOR Loan having an Interest Period of three months or less, the last day
of such Interest Period, (c) as to any LIBOR Loan having an Interest Period
longer than three months, each day which is at the end of each three
month-period within such Interest Period after the first day of such Interest
Period and the last day of such Interest Period and, (d) for each of (a), (b)
and (c) above, on the day on which the Term Loans, the Incremental Loans and the
Revolving Loans become due and payable in full and are paid or prepaid in full.
"Interest Period": with respect to any LIBOR Loan:
(a) initially, the period commencing on the borrowing or conversion
date, as the case may be, with respect to such LIBOR Loan and ending one, two,
three or six months (or, if reasonably available to all Lenders, nine or twelve
months) thereafter, as selected by the Borrower in its notice of borrowing or
its
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Continuation Notice, as the case may be, given with respect thereto; and
(b) thereafter, each period commencing on the last day of the next
preceding Interest Period applicable to such LIBOR Loan and ending one, two,
three or six months (or, if reasonably available to all Lenders, nine or twelve
months) thereafter, as selected by the Borrower by irrevocable notice to the
Administrative Agent not less than three Eurodollar Business Days prior to the
last day of the then current Interest Period with respect thereto;
provided that, all of the foregoing provisions relating to
Interest Periods are subject to the following:
(i) if any Interest Period pertaining to a LIBOR Loan would
otherwise end on a day that is not a Business Day, such Interest Period
shall be extended to the next succeeding Business Day unless the result
of such extension would be to carry such Interest Period into another
calendar month in which event such Interest Period shall end on the
immediately preceding Business Day;
(ii) any Interest Period that would otherwise extend beyond the date
final payment is due on the Term Loans, the Incremental Loans or the
Revolving Loans, as applicable, shall end on the date of such final
payment;
(iii) any Interest Period pertaining to a LIBOR Loan that begins on
the last Business Day of a calendar month (or on a day for which there
is no numerically corresponding day in the calendar month at the end of
such Interest Period) shall end on the last Business Day of a calendar
month; and
(iv) the Borrower shall select Interest Periods so as not to require
a payment or prepayment of any LIBOR Loan during an Interest Period for
the Term Loans, the Incremental Loans or the Revolving Loans.
"Interest Rate Agreement": any interest rate protection agreement,
interest rate future, interest rate option, interest rate swap, interest rate
cap or other interest rate hedge or arrangement under which the Borrower is a
party or a beneficiary.
"International Program Rights Agreement": the International Program
Rights Agreement dated as of September __, 1996 among the Borrower, [Televisa]
and [Venevision], as such agreement may be amended or otherwise modified from
time to time in accordance with the terms hereof.
- ---------------------------------------------------------------.
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"Investment Company Act": as defined in Section 3.12.
"Joining Lender Agreement": a Joining Lender Agreement in
he form of Exhibit E to this Agreement.
"Junior Subordinated Notes": collectively, (i) that certain Subordinated
Ten Year Note due December 17, 2002, dated December 17, 1992, executed by
Network Holding and payable to the order of Univision Holdings, Inc., in the
initial principal amount of $62,528,997, as replaced by those certain
Subordinated Ten Year Notes due 2002 issued by Network Holding in an aggregate
amount of $61,094,000 pursuant to an Indenture dated as of December 17, 1992
executed by Network Holding to First Trust National Association, as Trustee, the
obligations under which have been assumed by the Borrower and (ii) that certain
Subordinated Ten Year Note due December 17, 2002, dated December 17, 1992,
executed by PTI Holdings and payable to the order of Univision Holdings, Inc.,
in the initial principal amount of $8,871,003, as replaced by those certain
Subordinated Ten Year Notes due 2002 issued by PTI Holdings in an aggregate
amount of $10,306,000 pursuant to an Indenture dated as of December 17, 1992
executed by PTI Holdings to First Trust National Association, as Trustee, as
such notes and/or such Indentures may be amended or otherwise modified from time
to time in accordance with the terms hereof.
"Lease Expense": for any period, the aggregate minimum rental
obligations payable in respect of such period under leases of real and/or
personal property (net of income from subleases thereof), whether or not such
obligations are reflected as liabilities or commitments on a consolidated
balance sheet or in the notes thereto.
"Lenders": as defined in the preamble hereto and Section 8.8 hereof.
"Letter of Credit Amount": the stated maximum amount available to be
drawn under a particular Letter of Credit, as such amount may be reduced or
reinstated from time to time in accordance with the terms of such Letter of
Credit.
"Letter of Credit Request": a request by the Borrower for the issuance
of a Letter of Credit, on the Administrative Agent's standard form of Standby or
Performance Letter of Credit Application and Agreement, the current form of
which is attached hereto as Exhibit I, and containing terms and conditions
satisfactory to the Administrative Agent in its sole discretion.
"Letter of Credit": as defined in Section 2.1(a).
"Leverage Level": if the Total Debt Ratio shall be greater than or equal
to 5.00:1, the Leverage Level shall be l; if the
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Total Debt Ratio shall be less than 5.00:1 and greater than or equal to 4.50:1,
the Leverage Level shall be 2; if the Total Debt Ratio shall be less than 4.50:1
and greater than or equal to 4.00:1, the Leverage Level shall be 3; if the Total
Debt Ratio shall be less than 4.00:1 and greater than or equal to 3.50:1, the
Leverage Level shall be 4; if the Total Debt Ratio shall be less than 3.50:1 and
greater than or equal to 3.00:1, the Leverage Level shall be 5; and if the Total
Debt Ratio shall be less than 3.00:1, the Leverage Level shall be 6.
"LIBOR": with respect to each day during each Interest Period pertaining
to a LIBOR Loan, the rate per annum equal to the average (rounded upward to the
nearest 1/16th of 1%) of the respective rates notified to the Administrative
Agent by each of the Reference Banks as the rate at which such Reference Bank is
offered Dollar deposits at or about 11:00 A.M., London time, two Eurodollar
Business Days prior to the beginning of such Interest Period in the London
Interbank Market for delivery on the first day of such Interest Period for the
number of days comprised therein and in an amount comparable to the amount of
its LIBOR Loan to be outstanding during such Interest Period.
"LIBOR Adjusted Rate": with respect to each day during each Interest
Period pertaining to a LIBOR Loan, a rate per annum determined for such day in
accordance with the following formula (rounded upward to the nearest 1/100th of
1%):
LIBOR
---------------------------------
1.00 - LIBOR Reserve Requirements
"LIBOR Loans": Loans the rate of interest applicable to which is based
upon LIBOR.
"LIBOR Reserve Requirements": for any day as applied to a LIBOR Loan,
the aggregate (without duplication) of the maximum rates (expressed as a decimal
fraction) of reserve requirements in effect on such day (including, without
limitation, basic, supplemental, marginal and emergency reserves under any
regulations of the Board of Governors of the Federal Reserve System or other
Governmental Authority having jurisdiction with respect thereto) dealing with
reserve requirements prescribed for eurocurrency funding (currently referred to
as "Eurocurrency Liabilities" in Regulation D of such Board) maintained by a
member bank of such Federal Reserve System. As at the Initial Closing Date,
there are no such reserve requirements.
"License Fee Guarantees": collectively, (i) the Guaranty dated as of
September __, 1996 executed by the Borrower in favor of Univisa with respect to
Network's obligations under the Program License Agreement with Univisa and (ii)
the Guaranty dated as of September __, 1996 executed by the Borrower in favor of
Dennevar B.V. with respect to Network's obligations under the
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Program License Agreement with Dennevar B.V., as such Guarantees may be amended
or otherwise modified from time to time in accordance with the terms of the Loan
Documents, and which Guarantees shall be unsecured and subordinated to the
Obligations on the terms set forth in the Intercreditor Agreement.
"License Subsidiaries": the Subsidiaries of the Borrower
holding Media Licenses.
"Lien": any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), or preference, priority or
other security agreement or preferential arrangement of any kind or nature
whatsoever (including, without limitation, any conditional sale or other title
retention agreement, any Capitalized Lease Obligation having substantially the
same economic effect as any of the foregoing, and the filing of any financing
statement under the Uniform Commercial Code or comparable law of any
jurisdiction in respect of any of the foregoing).
"Loan": a Revolving Loan, a Term Loan or an Incremental
Loan.
"Loan Documents": this Agreement, the Notes, any Letter of Credit
Requests that are executed by the Borrower, the Letters of Credit, the
Collateral Documents, the Intercreditor Agreement, the Guarantor Collateral
Documents and the Guarantees and any other agreement executed by a Loan Party in
connection therewith and herewith including, but not limited to, UCC-1 Financing
Statements, as such agreements and documents may be amended, supplemented and
otherwise modified from time to time in accordance with the terms hereof.
"Loan Parties": the Borrower, the Guarantors and their respective
Subsidiaries.
"Majority Incremental Loan Lenders": Incremental Lenders having
Incremental Loan Commitments equal to or more than 51% of the Aggregate
Incremental Loan Commitment, or, if the Incremental Loan Commitments have
terminated, Incremental Lenders with outstanding Incremental Loans having an
unpaid principal balance equal to or more than 51% of the sum of the unpaid
principal balance of all Incremental Loans outstanding, excluding from such
calculation Incremental Lenders which have failed or refused to fund an
Incremental Loan when required to do so.
"Majority Lenders": Lenders having Commitments equal to or more than 51%
of the Aggregate Commitment, or, if any Commitment has terminated, with respect
to such Commitment, Lenders with outstanding Loans and/or participations in
Letters of Credit (if
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applicable) having an unpaid principal balance equal to or more than 51% of the
sum of (i) the unpaid principal balance of all Loans outstanding and (ii) the
aggregate Letter of Credit Amount (if applicable), excluding from such
calculation Lenders which have failed or refused to fund a Loan when required to
do so.
"Majority Revolving Loan Lenders": Revolving Loan Lenders having
Revolving Loan Commitments equal to or more than 51% of the Aggregate Revolving
Loan Commitment, or, if the Revolving Loan Commitments have terminated, Lenders
with outstanding Revolving Loans and/or participations in Letters of Credit
having an unpaid principal balance equal to or more than 51% of the sum of (i)
the unpaid principal balance of all Revolving Loans outstanding and (ii) the
aggregate Letter of Credit Amount, excluding from such calculation Lenders which
have failed or refused to fund a Revolving Loan when required to do so.
"Management Fees": all management fees payable by Network to Network
Holding prior to the occurrence of the Second Closing Date pursuant to Network's
partnership agreement.
"Managing Agents": as defined in the preamble hereto.
"Margin Stock": as defined in Regulation U.
"Material Adverse Effect": a material adverse effect on (a) the
business, operations, property, condition or prospects (financial or otherwise)
of the Borrower and its Subsidiaries taken as a whole, (b) the ability of the
Borrower or any of its Subsidiaries to perform its respective obligations under
the Loan Documents, or (c) the validity or enforceability of the Loan Documents
or the rights or remedies of the Administrative Agent, the Managing Agents or
the Lenders hereunder or thereunder.
"Material Agreements": (i) the Program License Agreements, the
Participation Agreement and the International Program Rights Agreement, (ii)
prior to consummation of the IPO, the Program Cost Sharing Agreement, the
Underwriting Agreement, the Plan of Reorganization, the Combined Entities Loan
Agreement, the Tax Allocation Agreement and the Registration Statement and (iii)
prior to the Second Closing Date, the Sponsor Loan Documents.
"Material Media Licenses": all FCC licenses necessary to operate
broadcast television or radio stations, including all FCC broadcast auxiliary
licenses, all licenses for radio and television translators and all low-power
FCC television licenses.
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"Material Occupancy Agreements": as defined in Section 5.15.
"Maturity": in respect of any Note, the date such Note shall become due
and payable, whether at stated maturity, by acceleration or otherwise.
"Maximum Incremental Loan Facility": $250,000,000.
"Media/Communications Business": the ownership and operation of radio
and television stations, cable networking, cable programming, television
programming and syndication, interactive television, direct broadcast satellite,
pay-per-view television, sports promotion, home shopping, print and on-line
publishing or broadcasting, billboards and recorded music and music publishing;
provided that each of the foregoing shall only involve assets located in, or
businesses operating in, the United States; and provided, further, that,
acquisition of, or investment in, recorded music and/or music publishing shall
not exceed $100,000,000 in the aggregate during the term of this Agreement.
"Media Licenses": any franchise, license, permit, certificate,
ordinance, approval or other authorization, or any renewal or extension thereof,
from any federal, state or local government or governmental agency, department
or body that is necessary for the broadcast or other operations of the Borrower
or any of its Subsidiaries.
"Multiemployer Plan": a plan which is a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.
"Net Income": for the Borrower and its Subsidiaries on a consolidated
basis, net income as determined in accordance with GAAP and in a manner
consistent with the calculation of operating income as set forth in the
Financial Statements.
"Net Proceeds": (A) with respect to any Asset Disposition, the net
amount equal to the aggregate amount received in cash (including any cash
received by way of deferred payment pursuant to a note receivable, other
non-cash consideration or otherwise, but only as and when such cash is so
received) in connection with such Asset Disposition minus the sum of (a) the
reasonable fees, commissions and other out-of-pocket expenses incurred by the
Borrower or any of its Subsidiaries in connection with such Asset Disposition
(other than amounts payable to Affiliates of the Person making such
disposition), (b) Indebtedness, other than the Loans, required to be paid as a
result of such Asset Disposition and (c) federal, state and local taxes incurred
and paid in connection with such Asset Disposition; and (B) with respect to any
Equity Offering, the net amount equal to the aggregate amount received in cash
(including any cash received
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by way of deferred payment pursuant to a note receivable, other non-cash
consideration or otherwise, but only as and when such cash is so received) in
connection with such Equity Offering minus the reasonable fees, commissions and
other out-of-pocket expenses incurred by the Borrower in connection with such
Equity Offering (other than amounts payable to Affiliates of the Person making
such Equity Offering).
"Network": as defined in the recitals hereto.
"Network Holding": The Univision Network Holding Limited Partnership, a
Delaware limited partnership.
"Net Working Investment": for the Borrower on a consolidated basis, (i)
current assets (excluding cash and investments permitted under Section 6.7(b))
less (ii) current liabilities (excluding the current portion of Funded Debt).
"Non-Compete Agreements": all agreements pursuant to which the Borrower,
any of its Subsidiaries or any Station has agreed to make payments (whether in
cash or in kind) to another Person for the agreement of such Person not to
compete with the Borrower, such Subsidiary or such Station in a given area.
"Non-Revolving Loans": the Term Loans and the Incremental Loans.
"Note": a Revolving Note, a Term Note or an Incremental Note, as the
case may be, and "Notes" shall mean the Revolving Notes and/or the Term Notes
and/or the Incremental Notes, as the case may be.
"Obligations": the unpaid principal of and interest on (including,
without limitation, interest accruing after the maturity of the Term Loans, the
Incremental Loans and the Revolving Loans and interest accruing on or after the
filing of any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to the Borrower, whether or not a
claim for post-filing or post-petition interest is allowed in such proceeding
and whether or not at a default rate) the Notes, the obligation to reimburse
drawings under Letters of Credit (including the contingent obligation to
reimburse any drawings under outstanding Letters of Credit) and all other
obligations and liabilities of the Borrower to the Administrative Agent, the
Managing Agents and the Lenders, whether direct or indirect, absolute or
contingent, due or to become due, or now existing or hereafter incurred, which
may arise under, out of, or in connection with, this Agreement, the Notes, the
Letters of Credit, any other Loan Document and any other document made,
delivered or given in connection herewith or therewith, whether on account of
principal, interest, reimbursement obligations, fees,
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indemnities, costs, expenses (including, without limitation, all reasonable fees
and disbursements of counsel, and the allocated reasonable cost of internal
counsel, to the Administrative Agent, the Managing Agents or the Lenders that
are required to be paid by the Borrower pursuant to the terms of this Agreement)
or otherwise.
"Occupancy Agreements": as defined in Section 5.15.
"Participation Agreement": the Participation Agreement dated as of
September __, 1996 among the Borrower, Perenchio, Televisa, Gustavo A. Cisneros,
Ricardo J. Cisneros and Venevision, as such agreement may be amended or
otherwise modified from time to time in accordance with the terms hereof.
"Pack-A-Snack": as defined in the recitals hereto.
"Paribas": as defined in the preamble hereto.
"Participant": as defined in Section 9.6(b).
"PBGC": the Pension Benefit Guaranty Corporation established pursuant to
Subtitle A of Title IV of ERISA or any successor thereto.
"PCI": Perenchio Communications, Inc., a Delaware corporation.
"Perenchio": A. Jerrold Perenchio.
"Permitted Transferees": (i) Perenchio's spouse and lineal descendants,
(ii) Perenchio's personal representatives and heirs, (iii) any trustee of any
trust created primarily for the benefit of any, some or all of such spouse and
lineal descendants or of any revocable trust created by Perenchio, (iv)
following the death of Perenchio, all beneficiaries under any such trust, (v)
Perenchio, in the case of a transfer from any transferee back to Perenchio and
(vi) any entity, all of the equity of which is directly or indirectly owned by
any of the foregoing which is not an Affiliate of any other Person.
"Person": any individual, firm, partnership, joint venture, corporation,
association, business enterprise trust, unincorporated organization, government
or department or agency thereof or other entity, whether acting in an
individual, fiduciary or other capacity.
"Plan": as to any Person, any plan (other than a Multiemployer Plan)
subject to Title IV of ERISA maintained for employees of such Person or any
ERISA Affiliate of such Person (and any such plan no longer maintained by such
Person or any of
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such Person's ERISA Affiliates to which such Person or any of such Person's
ERISA Affiliates has made or was required to make any contributions within any
of the five preceding years).
"Plan of Reorganization": the Agreement and Plan of Reorganization dated
as of ____________, 1996 between __________________ and ________________.
"Primary Station": any full power television station now or hereafter
owned, leased or operated by the Borrower or any of its Subsidiaries.
"Program Cost Sharing Agreement": the Agreement Concerning Production
and Acquisition of Programs dated as of December 17, 1992 among Network,
Univisa, Perenchio and Venevision International, as amended by the Program Cost
Sharing Agreement Waiver, pursuant to which the parties thereto have agreed to
co finance the cost of the production or acquisition of, and exploit, specified
programs, on and subject to the terms contained therein, as such agreement may
be further amended or otherwise modified from time to time in accordance with
the terms hereof, the Guaranty dated as of December 17, 1992 by Televisa
relating thereto, as such Guaranty may be amended or modified from time to time
in accordance with the terms hereof and the Guaranty dated as of December 17,
1992 by Venevision relating thereto, as such Guaranty may be amended or modified
from time to time in accordance with the terms hereof.
"Program Cost Sharing Agreement Waiver": that certain waiver to the
Program Cost Sharing Agreement dated January 25, 1996, as modified by that
certain letter dated February 8, 1996.
"Program License Agreements": Program License Agreements each dated as
of December 17, 1992, entered into between (i) Network and Univisa and (ii)
Network and Dennevar B.V., as each has been amended and restated by those
certain Amended and Restated Program License Agreements each dated as of
________, 1996, pursuant to which Univisa and Dennevar B.V. shall make certain
current and library programming available to Network, in form and substance
reasonably satisfactory to the Majority Lenders, as such agreements may be
further amended or modified from time to time in accordance with the terms
hereof and the Guaranty by Venevision and the Guaranty by Televisa, each dated
as of December 17, 1992, as replaced by the Guaranty by Venevision and the
Guaranty by Televisa, each dated as of __________, 1996, each such Guarantees in
form and substance reasonably satisfactory to the Majority Lenders, and as such
Guarantees may be further amended or modified from time to time in accordance
with the terms hereof.
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"Program Rights Obligations": all obligations, whether fixed or
contingent, of the Borrower and its Subsidiaries in respect of the right to
broadcast programs and films produced or supplied by any Person (other than a
Loan Party, Televisa, Venevision or their respective Affiliates).
"Program Rights Payments": for any period, the sum (determined on a
consolidated basis and without duplication) of all payments by the Borrower and
its Subsidiaries made or scheduled to be made during such period in respect of
Program Rights Obligations; provided that (a) if the payment schedule for a
Program Rights Obligation is modified at no cost (including, but not limited to,
interest costs) to the Borrower or any of its Subsidiaries, then the payments
with respect to such Program Rights Obligation shall be deemed to be scheduled
to be made pursuant to such modified schedule and (b) any down payment on a
Program Rights Obligation shall be equally allocated over the term of the
payment period for such Program Rights Obligation in amount per month during
such payment period equal to the amount of such down payment divided by the
number of months during such payment period.
"Program Services Agreements": any local marketing agreement, time
brokerage agreement, program services agreement or similar agreement providing
for the Borrower or any of its Subsidiaries (other than License Subsidiaries) to
program or sell advertising on all or any portion of the broadcast time of any
television or radio station.
"Properties": the collective reference to the real and personal property
owned, leased, used, occupied or operated, under license or permit, by the
Borrower, the Guarantors or any of their respective Subsidiaries.
"PTI": Perenchio Television, Inc., a Delaware corporation.
"PTI Holdings": PTI Holdings, Inc., a Delaware corporation.
"Purchasing Lenders": as defined in Section 9.6(c).
"Reference Banks": Chase and Paribas.
"Reference Banks Rate": the rate per annum equal to the average (rounded
upward to the nearest 1/16th of 1%) of the respective rates notified to the
Administrative Agent by each of the Reference Banks as the cost of funds at
which such Reference Bank is able to fund an amount comparable to the amount of
its LIBOR Loan to be converted to this rate, plus the Applicable Margin for
LIBOR Loans.
"Register": as defined in Section 9.6(d).
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<PAGE> 31
"Registration Statement": as defined in Section 4.1(n).
"Regulation D": Regulation D of the Board of Governors of the Federal
Reserve System, as the same is from time to time in effect, and all official
rulings and interpretations thereunder or thereof and any successor regulation
thereto.
"Regulation U": Regulation U of the Board of Governors of the Federal
Reserve System, as the same is from time to time in effect, and all official
rulings and interpretations thereunder or thereof and any successor regulation
thereto.
"Reorganization": with respect to any Multiemployer Plan, the condition
that such plan is in reorganization within the meaning of Section 4241 of ERISA.
"Reportable Event": any of the events set forth in Section 4043(b) of
ERISA, other than those events as to which the thirty day notice period is
waived under PBGC regulations.
"Requirement of Law": as to any Person, the Certificate of Incorporation
and By-Laws or other organizational or governing documents of such Person, and
any law, treaty, rule or regulation, determination or policy statement or
interpretation of an arbitrator or a court or other Governmental Authority, in
each case applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject.
"Responsible Officer": the chief executive officer, the president, any
executive vice president, any senior vice president or any vice president of
each of the Borrower or the Guarantors, as applicable, or, with respect to
financial matters, the chief financial officer, treasurer or controller of the
Borrower or the Guarantors, as applicable.
"Restricted Payments": as defined in Section 6.6.
"Revolving Loan": as defined in Section 2.1(a).
"Revolving Loan Commitment": the commitment of each Lender listed on
Schedule 1 to make Revolving Loans and participate in Letters of Credit
hereunder through its Applicable Lending Office as set forth on Schedule 1, as
the same shall be adjusted from time to time pursuant to this Agreement.
"Revolving Loan Commitment Expiration Date": December 31, 2003 or such
earlier date as the Aggregate Revolving Loan Commitment shall expire (whether by
acceleration, reduction to zero or otherwise).
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<PAGE> 32
"Revolving Loan Commitment Percentage": with respect to each Revolving
Loan Lender, the percentage equivalent of the ratio which such Revolving Loan
Lender's Revolving Loan Commitment bears to the Aggregate Revolving Loan
Commitment, as such Revolving Loan Lender's Revolving Loan Commitment and the
Aggregate Revolving Loan Commitment may be adjusted from time to time pursuant
to the terms hereof.
"Revolving Loan Lender": each Lender having a Revolving Loan Commitment
and/or which shall have (i) Revolving Loans outstanding and/or (ii)
participations in Letters of Credit which are outstanding.
"Revolving Note" and "Revolving Notes": as defined in Section 2.1(c).
"Second Closing Date": the date on which the conditions precedent set
forth in Section 4.2 have been satisfied.
"Secondary Station": any Station other than a Primary Station.
"Security Agreement": the Security Agreement in form and substance
reasonably satisfactory to the Majority Lenders, made by the Borrower in favor
of the Administrative Agent, for the benefit of the Lenders, in respect of the
tangible and intangible personal property of the Borrower described therein, as
the same may be amended from time to time in accordance with the terms hereof.
"Senior Debt": Funded Debt other than Subordinated Indebtedness.
"Senior Subordinated Notes": as defined in the recitals hereto.
"Single Employer Plan": any Plan which is covered by Title IV of ERISA,
but which is not a Multiemployer Plan.
"Solvent": when used with respect to any Person, that:
(i) the present fair salable value of such Person's
assets is in excess of the total amount of the probable
liability on such Person's liabilities;
(ii) such Person is able to pay its debts as they
become due; and
(iii) such Person does not have unreasonably small capital to carry
on such Person's business as theretofore operated and all businesses in
which such Person is about to engage.
-27-
<PAGE> 33
"Special Event Revenue": net time sales for Special Programs broadcast
by Network on any Station.
"Special Programs": programs such as the World Cup, other sporting
events, political conventions, election coverage, parades, pageants, special
variety shows and other non-episodic and non-continuing shows broadcast by
Network and not produced by Televisa or Venevision or their respective
Affiliates.
"Sponsor Loan Documents": the Scheduled Loan Agreement dated as of
December 17, 1992, between UTG and Televisa, the Scheduled Loan Agreement dated
as of December 17, 1992, between UTG and Pack-A-Snack, the Additional Loan
Agreement dated as of December 17, 1992, between UTG and Televisa, the
Additional Loan Agreement dated as of December 17, 1992, between UTG and
Pack-A-Snack, the Televisa Scheduled Loan Note dated December 17, 1992, the
Pack-A-Snack Scheduled Loan Note dated December 17, 1992, the Scheduled Loan
Guaranty dated as of December 17, 1992 by Network and PTI Holdings in favor of
Televisa, the Scheduled Loan Guaranty dated as of December 17, 1992 of Network
and PTI Holdings in favor of Pack-A-Snack, the Televisa Additional Loan Note
dated December 17, 1992, the Pack-A-Snack Additional Loan Note dated December
17, 1992, the Additional Loan Guaranty dated as of December 17, 1992 by Network
and PTI Holdings in favor of Televisa, the Additional Loan Guaranty dated as of
December 17, 1992 by Network and PTI Holdings in favor of Pack-A-Snack, the
Back-Up Loan and Security Agreement dated as of December 17, 1992 among Univisa,
Televisa, UTG and Network and the Back-Up Loan and Security Agreement dated as
of December 17, 1992 among Pack-A-Snack, Dennevar B.V., UTG and Network, all in
form and substance reasonably satisfactory to the Majority Lenders and as such
documents may be amended or otherwise modified from time to time in accordance
with the terms hereof.
"Sponsor Loans": loans made to UTG pursuant to the Sponsor Loan
Documents and subordinated to Senior Debt.
"Station": any full power television station, low power television
station, any translator and any other television system now or hereafter owned,
leased or operated by the Borrower or any of its Subsidiaries.
"Subordinated Incremental Indebtedness": unsecured Indebtedness of the
Borrower in a principal amount not to exceed the difference between the
Aggregate Incremental Loan Commitment and the Maximum Incremental Loan Facility,
which Indebtedness is subordinated to the payment of the Obligation on terms and
conditions satisfactory to the Majority Lenders as evidenced by their written
consent thereto prior to the incurrence of such Indebtedness; provided that no
such Indebtedness shall be incurred unless the Lenders shall have declined, in
writing, to
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<PAGE> 34
activate Incremental Loan Commitments in an amount equal to the
Maximum Incremental Loan Facility.
"Subordinated Indebtedness": the sum of (i) the Sponsor Loans and all
other obligations of UTG and its Subsidiaries under the Sponsor Loan Documents,
(ii) the Junior Subordinated Notes, (iii) any Subordinated Incremental
Indebtedness, (iv) the License Fee Guarantees and (v) all other Indebtedness of
the Borrower and its Subsidiaries which is subordinated to the payment of the
Obligations on terms and conditions satisfactory to the Majority Lenders as
evidenced by their written consent thereto prior to the incurrence of such
Indebtedness.
"Subsidiary": as to any Person at any time of determination, a
corporation, partnership or other entity of which shares of stock or other
ownership interests having ordinary Voting Power (other than stock or such other
ownership interests having such power only by reason of the happening of a
contingency) to elect a majority of the board of directors or other managers of
such corporation, partnership or other entity are at the time owned, or the
management of which is otherwise controlled, directly or indirectly through one
or more intermediaries or Subsidiaries, or both, by such Person. Unless
otherwise qualified, all references to a "subsidiary" or to "subsidiaries" in
this Agreement shall refer to a Subsidiary or Subsidiaries of the Borrower.
"Sunshine": Sunshine Acquisition Corp., a Delaware corporation.
"Sunshine L.P.": Sunshine Acquisition, L.P., a California limited
partnership.
"Tax Allocation Agreement": the Tax Allocation Agreement dated as of
December 17, 1992 among UTG, PTI, PTI Holdings and the Borrower, as such
document may be amended or otherwise modified from time to time in accordance
with the terms hereof.
"Taxes": as defined in Section 2.15(a).
"Televisa": as defined in the recitals hereto.
"Termination Event": (i) a Reportable Event, (ii) the institution of
proceedings to terminate a Single Employer Plan by the PBGC under Section 4042
of ERISA, (iii) the appointment by the PBGC of a trustee to administer any
Single Employer Plan or (iv) the existence of any other event or condition that
would reasonably be expected to constitute grounds under Section 4042 of ERISA
for the termination of, or the appointment by the PBGC of a trustee to
administer, any Single Employer Plan.
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<PAGE> 35
"Term Loan": as defined in Section 2.2(a).
"Term Loan Commitment": the commitment of each Lender listed on Schedule
2 to make a Term Loan hereunder through its Applicable Lending Office as set
forth in Schedule 2, as the same may be adjusted pursuant to the provisions
hereof.
"Term Loan Commitment Percentage": with respect to each Term Loan
Lender, the percentage equivalent of the ratio which such Term Loan Lender's
Term Loan Commitment bears to the Aggregate Term Loan Commitment.
"Term Loan Lenders": each Lender having a Term Loan Commitment and/or
which shall have Term Loans outstanding.
"Term Loan Maturity Date": December 31, 2003 or such earlier date as the
Aggregate Term Loan Commitment shall expire (whether by acceleration, reduction
to zero or otherwise).
"Term Loan Reduction Dates": the dates on which scheduled principal
payments of the Term Loans are due, as set forth in the table in Section 2.2(d).
"Term Note" and "Term Notes": as defined in Section 2.2(c).
"Total Debt Ratio": for the Borrower and its Subsidiaries on a
consolidated basis, the ratio of Funded Debt outstanding at such time to EBITDA.
"Total Debt Service": as of any date, for the fiscal quarter most
recently ended and the immediately preceding three fiscal quarters, the sum of
(i) all Interest Expense and (ii) regularly scheduled principal payments due on
Funded Debt (which result in permanent reductions in availability) (other than
payments made pursuant to Section 2.5 and 2.6) and (iii) principal payments on
Revolving Loans due under Section 2.1(h)(ii).
"Total Interest Coverage Ratio": the ratio of EBITDA to Interest
Expense.
"Tranche": the collective reference to LIBOR Loans the Interest Periods
with respect to all of which begin on the same date and end on the same later
date (whether or not such LIBOR Loans shall originally have been made on the
same day).
"Transferee": as defined in Section 9.6(f).
"Transponder Leases": collectively, the long-term capital leases for
Network of satellite transponders more specifically set forth on Schedule 13.
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<PAGE> 36
"Type": as to any Term Loan, any Revolving Loan or any Incremental Loan,
its nature as an Alternate Base Rate Loan or a LIBOR Loan.
"Underwriting Agreements": as defined in Section 4.1(n).
"Univisa": as defined in the Recitals hereto.
"Univision Holdings": as defined in the recitals hereto.
"Venevision": Corporacion Venezolana de Television (Venevision) C.A.
"Venevision International": Venevision International, Inc.,
a Florida corporation.
"Voting Power": the aggregate number of votes of all
classes of Capital Stock of such Person which ordinarily has
voting power for the election of directors of such Person.
1.2 Other Definitional Provisions. (a) Unless otherwise specified
therein, all terms defined in this Agreement shall have the defined meanings
when used in the Notes, any other Loan Document or any certificate or other
document made or delivered pursuant hereto or thereto.
(b) As used herein, in the Notes, in any other Loan Document, and in any
certificate or other document made or delivered pursuant hereto or thereto,
accounting terms not defined in Section 1.1 and accounting terms partly defined
in Section 1.1, to the extent not defined, shall have the respective meanings
given to them under GAAP.
(c) The words "hereof," "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and Section , subsection,
Schedule and Exhibit references are to this Agreement unless otherwise
specified.
(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
SECTION 2. AMOUNT AND TERMS OF LOANS AND LETTERS OF CREDIT; COMMITMENT
AMOUNTS
2.1 Revolving Loans and Letters of Credit; Revolving Loan Commitment
Amounts. (a) Subject to the terms and conditions hereof, each Lender having a
Revolving Loan Commitment severally agrees to (i) make loans on a revolving
credit basis through its Applicable Lending Office to the Borrower from time to
time from
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<PAGE> 37
and including the Initial Closing Date to but excluding the Revolving Loan
Commitment Expiration Date (each a "Revolving Loan", and collectively, the
"Revolving Loans") in accordance with the provisions of this Agreement (provided
that the aggregate principal amount of Revolving Loans made by the Revolving
Loan Lenders prior to the occurrence of the Second Closing Date shall not exceed
$400,000,000, less the aggregate principal amount of Term Loans made on the
Initial Closing Date) and (ii) participate through its Applicable Lending Office
in letters of credit issued for the account of the Borrower pursuant to Section
2.4 from time to time from and including the Second Closing Date to but
excluding the Revolving Loan Commitment Expiration Date (each a "Letter of
Credit", and collectively, the "Letters of Credit"); provided, however, that the
sum of (A) the aggregate principal amount of all Revolving Loans outstanding,
(B) the aggregate Letter of Credit Amount of all Letters of Credit outstanding
and (C) the aggregate amount of unreimbursed drawings under all Letters of
Credit shall not exceed the Aggregate Revolving Loan Commitment at any time; and
provided, further, that the sum of (x) the aggregate Letter of Credit Amount of
all Letters of Credit outstanding and (y) the aggregate amount of unreimbursed
drawings under all Letters of Credit shall not exceed $50,000,000 at any time.
Within the limits of each Revolving Loan Lender's Revolving Loan Commitment, the
Borrower may borrow, have Letters of Credit issued for the Borrower's account,
prepay Revolving Loans, reborrow Revolving Loans, and have additional Letters of
Credit issued for the Borrower's account after the expiration of previously
issued Letters of Credit.
The principal amount of each Revolving Loan Lender's (A) Revolving Loan
and (B) participation in a Letter of Credit shall be in an amount equal to the
product of (i) such Revolving Loan Lender's Revolving Loan Commitment Percentage
(expressed as a fraction) and (ii) the total amount of the Revolving Loan or
Revolving Loans, or the Letter of Credit or Letters of Credit, requested;
provided that in no event shall any Revolving Loan Lender be obligated to make a
Revolving Loan or participate in a Letter of Credit if after giving effect to
such Revolving Loan or such participation the sum of such Revolving Loan
Lender's (x) Revolving Loans outstanding, (y) Revolving Loan Commitment
Percentage of the aggregate Letter of Credit Amount of all Letters of Credit
outstanding and (z) Revolving Loan Commitment Percentage of the aggregate amount
of unreimbursed drawings under all Letters of Credit would exceed its Revolving
Loan Commitment or if the amount of such requested Revolving Loan or such
Revolving Loan Lender's Revolving Loan Commitment Percentage of such Letter of
Credit is in excess of such Revolving Loan Lender's Available Revolving Loan
Commitment.
(b) Subject to Sections 2.11 and 2.13, the Revolving Loans may from time
to time be (i) LIBOR Loans, (ii) Alternate Base
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<PAGE> 38
Rate Loans or (iii) a combination thereof, as determined by the Borrower and
notified to the Administrative Agent in accordance with either Section 2.1(d) or
2.7. Notwithstanding the foregoing, the initial Revolving Loans made on or after
the Initial Closing Date shall be made as Alternate Base Rate Loans and shall be
subject to conversion to LIBOR Loans pursuant to Section 2.7. Each Revolving
Loan Lender may make or maintain its Revolving Loans or participate in Letters
of Credit to or for the account of the Borrower by or through any Applicable
Lending Office.
(c) The Revolving Loans made by each Revolving Loan Lender to the
Borrower shall be evidenced by a promissory note of the Borrower, substantially
in the form of Exhibit A (a "Revolving Note"), with appropriate insertions
therein as to payee, date and principal amount, payable to the order of such
Revolving Loan Lender and representing the obligation of the Borrower to pay the
aggregate unpaid principal amount of all Revolving Loans made by such Revolving
Loan Lender to the Borrower pursuant to Section 2.1(a) or 2.4(c), with interest
thereon as prescribed in Sections 2.9 and 2.10. Each Revolving Loan Lender is
hereby authorized (but not required) to record the date and amount of each
payment or prepayment of principal of its Revolving Loans made to the Borrower,
each continuation thereof, each conversion of all or a portion thereof to
another Type and, in the case of LIBOR Loans, the length of each Interest Period
with respect thereto, in the books and records of such Revolving Loan Lender,
and any such recordation shall constitute prima facie evidence of the accuracy
of the information so recorded. The failure of any Revolving Loan Lender to make
any such recordation or notation in the books and records of the Revolving Loan
Lender (or any error in such recordation or notation) shall not affect the
obligations of the Borrower hereunder or under the Revolving Notes. Each
Revolving Note shall (i) be dated the Initial Closing Date, (ii) provide for the
payment of interest in accordance with Sections 2.9 and 2.10 and (iii) be stated
to be payable on the Revolving Loan Commitment Expiration Date.
(d) The Borrower shall give the Administrative Agent irrevocable written
notice (which notice must be received by the Administrative Agent prior to 10:00
A.M., New York City time, one Business Day prior to each proposed borrowing date
or, if all or any part of the Revolving Loans are requested to be made as LIBOR
Loans, three Eurodollar Business Days prior to each proposed borrowing date)
requesting that the Revolving Loan Lenders make the Revolving Loans on the
proposed borrowing date and specifying (i) the aggregate amount of Revolving
Loans requested to be made, (ii) subject to Section 2.1(b), whether the
Revolving Loans are to be LIBOR Loans, Alternate Base Rate Loans or a
combination thereof and (iii) if the Revolving Loans are to be entirely or
partly LIBOR Loans, the respective amounts of each such Type of Revolving Loan
and the respective lengths
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<PAGE> 39
of the initial Interest Periods therefor. On receipt of such notice, the
Administrative Agent shall promptly notify each Revolving Loan Lender thereof
not later than 11:00 A.M., New York City time on the date of receipt of such
notice. On the proposed borrowing date, not later than 12:00 noon, New York City
time, each Revolving Loan Lender shall make available to the Administrative
Agent at its office specified in Section 9.2 the amount of such Revolving Loan
Lender's pro rata share of the aggregate borrowing amount (as determined in
accordance with the second paragraph of Section 2.1(a)) in immediately available
funds. The Administrative Agent may, in the absence of notification from any
Revolving Loan Lender that such Revolving Loan Lender has not made its pro rata
share available to the Administrative Agent, on such date, credit the account of
the Borrower on the books of such office of the Administrative Agent with the
aggregate amount of Revolving Loans.
(e) On each date set forth below, the Aggregate Revolving Loan
Commitment shall automatically reduce to the corresponding amount set forth
below (if not previously reduced to or below such amount pursuant to Section
2.1(f)):
<TABLE>
<CAPTION>
Reduced Aggregate
Effective Date of Reduction Revolving Loan Commitment
--------------------------- -------------------------
<S> <C>
March 31, 1999 197,500,000
June 30, 1999 195,000,000
September 30, 1999 192,500,000
December 31, 1999 190,000,000
March 31, 2000 187,500,000
June 30, 2000 185,000,000
September 30, 2000 182,500,000
December 31, 2000 180,000,000
March 31, 2001 175,000,000
June 30, 2001 170,000,000
September 30, 2001 165,000,000
December 31, 2001 160,000,000
March 31, 2002 152,500,000
June 30, 2002 145,000,000
September 30, 2002 137,500,000
December 31, 2002 130,000,000
March 31, 2003 97,500,000
June 30, 2003 65,000,000
September 30, 2003 32,500,000
December 31, 2003 0
</TABLE>
(f) At the Borrower's option and upon at least one Business Day's prior
irrevocable written notice to the Administrative Agent, with such notice
specifying the amount and the date of such reduction, the Borrower may
permanently reduce the Aggregate Revolving Loan Commitment in whole at any time
or
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<PAGE> 40
in part from time to time; provided, however, that each partial reduction of
the Aggregate Revolving Loan Commitment shall be in an aggregate amount equal to
at least $5,000,000 or an integral multiple of $1,000,000. The Administrative
Agent shall promptly notify each Revolving Loan Lender (by telecopy or by
telephone) of such requested Revolving Loan Commitment reduction.
(g) Reductions of the Aggregate Revolving Loan Commitment pursuant to
this Section 2.1 or Section 2.7 shall automatically effect a reduction of the
Revolving Loan Commitment of each Revolving Loan Lender to an amount equal to
the product of (i) the Aggregate Revolving Loan Commitment of all Revolving Loan
Lenders, as reduced pursuant to this Section 2.1 or Section 2.7 and (ii) the
Revolving Loan Commitment Percentage of such Revolving Loan Lender, in each case
determined immediately prior to such reduction of the Aggregate Revolving Loan
Commitment on such date.
(h) Upon each reduction of the Aggregate Revolving Loan Commitment, the
Borrower shall (i) pay the unused commitment fee, payable pursuant to Section
2.17, accrued on the amount of the Aggregate Revolving Loan Commitment so
reduced through the date of such reduction, (ii) prepay the amount, if any, by
which the sum of (A) the aggregate unpaid principal amount of the Revolving
Loans, (B) the aggregate Letter of Credit Amount of all Letters of Credit
outstanding and (C) the aggregate amount of unreimbursed drawings under all
Letters of Credit exceeds the amount of the Aggregate Revolving Loan Commitment
as so reduced, together with accrued interest on the amount being prepaid to the
date of such prepayment (or, with respect to outstanding Letters of Credit, make
a Cash Collateral Deposit in an amount equal to such excess to the extent such
excess is not corrected by the foregoing prepayment) and (iii) compensate the
Revolving Loan Lenders for their funding costs, if any, in accordance with
Section 2.16.
(i) Neither the Administrative Agent, the Managing Agents nor any
Revolving Loan Lender shall be responsible for the obligation or Available
Revolving Loan Commitment of any other Revolving Loan Lender hereunder, nor will
the failure of any Revolving Loan Lender to comply with the terms of this
Agreement relieve any other Revolving Loan Lender or the Borrower of its
obligations under this Agreement and the Revolving Notes. Nothing herein shall
be deemed to relieve any Revolving Loan Lender from its obligation to fulfill
its Commitments hereunder or to prejudice any rights which the Borrower may have
against any Revolving Loan Lender as a result of any default by such Revolving
Loan Lender hereunder.
(j) The Revolving Loan Commitment of each Revolving Loan
Lender and the Aggregate Revolving Loan Commitment shall
terminate on the Revolving Loan Commitment Expiration Date.
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<PAGE> 41
2.2 Term Loans; Term Loan Commitment. (a) Subject to the terms and
conditions hereof, each Lender having a Term Loan Commitment severally agrees to
make a term loan (each, a "Term Loan" and, collectively, the "Term Loans") to
the Borrower on the Initial Closing Date and, if requested by the Borrower, on
the Second Closing Date in an aggregate principal amount equal to the amount of
the Term Loan Commitment of such Lender; provided that the aggregate principal
amount of Term Loans made by the Term Loan Lenders on the Initial Closing Date
shall not exceed $400,000,000, less the aggregate principal amount of Revolving
Loans made on the Initial Closing Date.
The principal amount of each Term Loan Lender's Term Loan shall be in
an amount equal to the product of (i) such Term Loan Lender's Term Loan
Commitment Percentage (expressed as a fraction) and (ii) the total amount of the
Term Loans requested; provided that in no event shall any Term Loan Lender be
obligated to make a Term Loan if after giving effect to such Term Loan the sum
of such Term Loan Lender's Term Loans outstanding would exceed its Term Loan
Commitment or if the amount of such requested Term Loan is in excess of such
Term Loan Lender's Available Term Loan Commitment.
(b) Subject to Sections 2.11 and 2.13, the Term Loans may from time to
time be (i) LIBOR Loans, (ii) Alternate Base Rate Loans or (iii) a combination
thereof, as determined by the Borrower and notified to the Administrative Agent
in accordance with either Section 2.2(e) or 2.7. Notwithstanding the foregoing,
the initial Term Loans made on the Initial Closing Date and on the Second
Closing Date, as the case may be, shall be made as Alternate Base Rate Loans and
shall be subject to conversion to LIBOR Loans pursuant to Section 2.7. Each Term
Loan Lender may make or maintain its Term Loan to the Borrower by or through any
Applicable Lending Office.
(c) The Term Loan made by each Term Loan Lender to the Borrower shall
be evidenced by a promissory note of the Borrower, substantially in the form of
Exhibit B (a "Term Note"), with appropriate insertions therein as to payee, date
and principal amount, payable to the order of such Term Loan Lender and
representing the obligation of the Borrower to pay the aggregate unpaid
principal amount of the Term Loan made by such Term Loan Lender to the Borrower
pursuant to Section 2.2(a), with interest thereon as prescribed in Sections 2.9
and 2.10. Each Term Loan Lender is hereby authorized (but not required) to
record the date and amount of each payment or prepayment of principal of its
Term Loan made to the Borrower, each continuation thereof, each conversion of
all or a portion thereof to another Type and, in the case of LIBOR Loans, the
length of each Interest Period with respect thereto, in the books and records of
such Term Loan Lender, and any such recordation shall constitute prima facie
evidence of the
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<PAGE> 42
accuracy of the information so recorded. The failure of any Term Loan Lender to
make any such recordation or notation in the books and records of the Term Loan
Lender (or any error in such recordation or notation) shall not affect the
obligations of the Borrower hereunder or under the Term Notes. Each Term Note
shall (i) be dated the Initial Closing Date, (ii) provide for the payment of
interest in accordance with Sections 2.9 and 2.10 and (iii) be stated to be
payable in installments of principal in accordance with, and subject to the
provisions of, Section 2.2(d).
(d) On each Term Loan Reduction Date, the Borrower shall repay the
principal of the Term Notes in an aggregate amount equal to the amount set forth
below opposite such Term Loan Reduction Date:
<TABLE>
<CAPTION>
Principal
Term Loan Reduction Date Payment
------------------------ -------
<S> <C>
(i) March 31, June 30, September 30 $10,000,000
and December 31, 1997
(ii) March 31, June 30, September 30 12,500,000
and December 31, 1998
(iii) March 31, June 30, September 30 12,500,000
and December 31, 1999
(iv) March 31, June 30, September 30 15,000,000
and December 31, 2000
(v) March 31, June 30, September 30 17,500,000
and December 31, 2001
(vi) March 31, June 30, September 30 20,000,000
and December 31, 2002
(vii) March 31, June 30, September 30 12,500,000
and December 31, 2003
</TABLE>
; provided, that the final installment paid shall be in an amount equal to all
amounts owed by the Borrower on the Term Notes.
All outstanding Term Loans shall be due and payable, to the extent not
previously paid in accordance with the terms hereof, on the Term Loan Maturity
Date. The aggregate amount payable to any Term Loan Lender on any Term Loan
Reduction Date shall be determined in accordance with the provisions of Section
2.12.
(e) The Borrower shall give the Administrative Agent irrevocable
written notice (which notice must be received by the
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Administrative Agent prior to 10:00 A.M., New York City time, one Business Day
prior to the Initial Closing Date or the Second Closing Date, as the case may
be) requesting that the Term Loan Lenders make the Terms Loans on the Initial
Closing Date or the Second Closing Date, as applicable, and specifying the
aggregate amount of Term Loans requested to be made (which amount shall not
exceed the amount permitted under Sections 2.2(a) and 3.15 (a)(i)). Upon receipt
of such notice the Administrative Agent shall promptly notify each Term Loan
Lender thereof not later than 11:00 A.M., New York City time on the date of
receipt of such notice. Not later than 12:00 noon, New York City time, on the
Initial Closing Date or the Second Closing Date, as applicable, each Term Loan
Lender shall make available to the Administrative Agent at its office specified
in Section 9.2 the amount of such Term Loan Lender's pro rata share of the
aggregate borrowing amount (as determined in accordance with the second
paragraph of Section 2.2(a)) in immediately available funds. The Administrative
Agent may, in the absence of notification from any Term Loan Lender that such
Term Loan Lender has not made its pro rata share available to the Administrative
Agent, on such date, credit the account of the Borrower on the books of such
office of the Administrative Agent with the aggregate Term Loans.
(f) Neither the Administrative Agent nor any Term Loan Lender shall be
responsible for the obligations or Term Loan Commitment of any other Term Loan
Lender hereunder, nor will the failure of any Term Loan Lender to comply with
the terms of this Agreement relieve any other Term Loan Lender or the Borrower
of its obligations under this Agreement and the Term Notes. Nothing herein shall
be deemed to relieve any Term Loan Lender from its obligation to fulfill its
Commitments hereunder or to prejudice any rights which the Borrower may have
against any Term Loan Lender as a result of any default by such Term Loan Lender
hereunder.
(g) The Term Loan Commitment of each Lender and the Aggregate Term Loan
Commitment shall terminate on the completion of the Term Loan borrowing, if any,
on the Second Closing Date.
2.3 Incremental Loan Facility. (a) The Borrower and all or certain of
the Lenders selected by the Borrower may, with the consent of the Administrative
Agent and the Managing Agents, such consent not to be unreasonably withheld, at
any one time during the period from and including the Second Closing Date to but
excluding the Incremental Loan Commitment Termination Date agree that such
Lenders shall become Incremental Loan Lenders by executing and delivering to the
Administrative Agent an Activation Notice specifying the respective Incremental
Loan Commitments of the Incremental Loan Lenders and the Activation Date, and
otherwise duly completed. Each Incremental Loan Lender severally agrees, on the
terms and conditions of this
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Agreement, to make one or more term loans to the Borrower (as requested by the
Borrower) under Section 2.3(e) during the period from and including the
Activation Date to but excluding the Incremental Loan Commitment Termination
Date in an aggregate principal amount up to but not exceeding the Incremental
Loan Commitment. Incremental Loans that are prepaid may not be reborrowed.
Nothing in this Section 2.3(a) shall be construed to obligate any Lender to
execute an Activation Notice.
The principal amount of each Incremental Loan Lender's Incremental Loan
shall be in an amount equal to the product of (i) such Incremental Loan Lender's
Incremental Loan Commitment Percentage (expressed as a fraction) and (ii) the
total amount of the Incremental Loan or Incremental Loans requested; provided
that in no event shall any Incremental Loan Lender be obligated to make an
Incremental Loan if after giving effect to such Incremental Loan such
Incremental Loan Lender's Incremental Loans outstanding would exceed its
Incremental Loan Commitment or if the amount of such requested Incremental Loan
is in excess of such Incremental Loan Lender's Available Incremental Loan
Commitment.
(b) Subject to Sections 2.11 and 2.13, any Incremental Loans made
hereunder may from time to time be (i) LIBOR Loans, (ii) Alternate Base Rate
Loans or (iii) a combination thereof, as determined by the Borrower and notified
to the Administrative Agent in accordance with either Section 2.3(e) or 2.7.
Notwithstanding the foregoing, any Incremental Loans made hereunder (other than
those made pursuant to Section 2.7) shall be made as Alternate Base Rate Loans
and shall be subject to conversion to LIBOR Loans pursuant to Section 2.7. Each
Incremental Loan Lender may make or maintain its Incremental Loans to the
Borrower by or through any Applicable Lending Office.
(c) The Incremental Loans made by each Incremental Loan Lender to the
Borrower shall be evidenced by a promissory note of the Borrower, substantially
in the form of Exhibit C (each an "Incremental Note" and, collectively, the
"Incremental Notes"), with appropriate insertions therein as to payee and
principal amount, payable to the order of such Incremental Loan Lender and
representing the obligation of the Borrower to pay the aggregate unpaid
principal amount of all Incremental Loans made by such Incremental Loan Lender
to the Borrower pursuant to Section 2.3(a), with interest thereon as prescribed
in Sections 2.9 and 2.10. Each Incremental Loan Lender is hereby authorized (but
not required) to record the date and amount of each payment or prepayment of
principal of its Incremental Loans made to the Borrower, each continuation
thereof, each conversion of all or a portion thereof to another Type and, in the
case of LIBOR Loans, the length of each Interest Period with respect thereto, in
the books and records of such Incremental Loan Lender, and any such
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recordation shall constitute prima facie evidence of the accuracy of the
information so recorded. The failure of any Incremental Loan Lender to make any
such recordation or notation in the books and records of such Incremental Loan
Lender (or any error in such recordation or notation) shall not affect the
obligations of the Borrower hereunder or under the Incremental Notes. Each
Incremental Loan Note shall (i) be dated the date of issuance thereof, (ii)
provide for the payment of interest in accordance with Sections 2.9 and 2.10 and
(iii) be stated to be payable on the Incremental Loan Maturity Date.
(d) On each Incremental Loan Reduction Date, the Borrower shall repay
the principal of the Incremental Notes in an aggregate amount equal to the
lesser of (A) the product of (x) the outstanding principal balance of
Incremental Loans as of the close of business on June 30, 1999 (after giving
effect to any Incremental Loan made on such date) and (y) the amount set forth
in column A below and (B) the amount set forth in column B below (or an amount
equal to the aggregate principal amount of Incremental Loans outstanding if such
amount shall be less than the lesser of the amounts set forth in (A) and (B)),
in each case as set forth below opposite such Incremental Loan Reduction Date:
<TABLE>
<CAPTION>
Incremental Loan Reduction Date A B
------------------------------- --- ---
<S> <C> <C> <C>
(i) September 30 .010 $ 5,000,000
and December 31, 1999
(ii) March 31, June 30, September 30 .015 3,750,000
and December 31, 2000
(iii) March 31, June 30, September 30 .025 6,250,000
and December 31, 2001
(iv) March 31, June 30, September 30 .025 6,250,000
and December 31, 2002
(v) March 31, June 30, September 30 .025 6,250,000
and December 15, 2003
(vi) March 31, June 30 and August .200 50,000,000
31, 2004
</TABLE>
; provided, that the final installment paid shall be in an amount equal to all
amounts owed by the Borrower on the Incremental Notes. All outstanding
Incremental Loans shall be due and payable, to the extent not previously paid in
accordance with the terms hereof, on the Incremental Loan Maturity Date.
(e) The Borrower shall give the Administrative Agent irrevocable
written notice (which notice must be received by the
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Administrative Agent prior to 10:00 A.M., New York City time, one Business Day
prior to each proposed borrowing date or, if all or any part of the Incremental
Loans are requested to be made as LIBOR Loans, three Eurodollar Business Days
prior to the applicable proposed borrowing date) requesting that the Incremental
Lenders make Incremental Loans on the proposed borrowing date and specifying (i)
the aggregate amount of Incremental Loans requested to be made, (ii) subject to
Section 2.3(b), whether the Incremental Loans are to be LIBOR Loans, Alternate
Base Rate Loans or a combination thereof and (iii) if the Incremental Loans are
to be entirely or partly LIBOR Loans, the respective amounts of each such Type
of Incremental Loan and the respective lengths of the initial Interest Periods
therefor. On receipt of such notice, the Administrative Agent shall promptly
notify each Incremental Loan Lender thereof not later than 11:00 A.M., New York
City time, on the date of receipt of such notice.
(f) On the proposed borrowing date, not later than 12:00 noon, New York
City time, each Incremental Lender shall make available to the Administrative
Agent at its office specified in Section 9.2 the amount of such Incremental Loan
Lender's pro rata share of the aggregate borrowing amount (as determined in
accordance with the second paragraph of Section 2.3(a)) in immediately available
funds. The Administrative Agent may, in the absence of notification from any
Incremental Loan Lender that such Incremental Loan Lender has not made its
Incremental Loans available to the Administrative Agent, on such date, credit
the account of the Borrower on the books of such office of the Administrative
Agent with the aggregate amount of the requested Incremental Loans.
(g) Neither the Administrative Agent, the Managing Agents nor any
Incremental Loan Lender shall be responsible for the obligation or Incremental
Loan Commitment of any other Incremental Lender hereunder, nor will the failure
of any Incremental Loan Lender to comply with the terms of this Agreement
relieve any other Incremental Loan Lender or the Borrower of its obligations
under this Agreement and the Incremental Loan Notes. Nothing in this subsection
(g) shall be deemed to relieve any Incremental Loan Lender from its obligation
to fulfill its Incremental Loan Commitment hereunder or to prejudice any rights
which the Borrower may have against any Incremental Loan Lender as a result of
any default of such Incremental Loan Lender hereunder.
(h) The Incremental Loan Commitment of each Incremental Loan Lender and
the Aggregate Incremental Loan Commitment shall terminate on the Incremental
Loan Commitment Termination Date.
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2.4 Issuance of Letters of Credit.
(a) The Borrower shall be entitled to request the issuance of Letters
of Credit from time to time from and including the Second Closing Date to but
excluding the date which is two Business Days prior to the Revolving Loan
Commitment Expiration Date, by giving the Administrative Agent a Letter of
Credit Request at least three (3) Business Days before the requested date of
issuance of such Letter of Credit (which shall be a Business Day). Any Letter of
Credit Request received by the Administrative Agent later than 10:00 a.m., New
York City time, shall be deemed to have been received on the next Business Day.
Each Letter of Credit Request shall be made in writing, shall be signed by a
Responsible Officer, shall be irrevocable and shall be effective upon receipt by
the Administrative Agent. Provided that a valid Letter of Credit Request has
been received by the Administrative Agent and upon fulfillment of the other
applicable conditions set forth in Section 4.4, the Administrative Agent will
issue the requested Letter of Credit from its office specified in Section 9.2.
No Letter of Credit shall have an expiration date later than two Business Days
prior to the Revolving Loan Commitment Expiration Date.
(b) Immediately upon the issuance of each Letter of Credit, the
Administrative Agent shall be deemed to have sold and transferred to each
Revolving Loan Lender, and each Revolving Loan Lender shall be deemed to have
purchased and received from the Administrative Agent, in each case irrevocably
and without any further action by any party, an undivided interest and
participation in such Letter of Credit, each drawing thereunder and the
obligations of the Borrower under this Agreement in respect thereof in an amount
equal to the product of (i) such Revolving Loan Lender's Revolving Loan
Commitment Percentage and (ii) the maximum amount available to be drawn under
such Letter of Credit (assuming compliance with all conditions to drawing). The
Administrative Agent shall promptly advise each Revolving Loan Lender of the
issuance of each Letter of Credit, the Letter of Credit Amount of such Letter of
Credit, any change in the face amount or expiration date of such Letter of
Credit, the cancellation or other termination of such Letter of Credit and any
drawing under such Letter of Credit.
(c) The payment by the Administrative Agent of a draft drawn under any
Letter of Credit shall first be made from any Cash Collateral Deposit held by
the Administrative Agent with respect to such Letter of Credit. After any such
Cash Collateral Deposit has been applied, the payment by the Administrative
Agent of a draft drawn under any Letter of Credit shall constitute for all
purposes of this Agreement the making by the Administrative Agent in its
individual capacity as a Lender hereunder (in such capacity, the "Drawing
Lender") of an
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Alternate Base Rate Loan in the amount of such payment (but without any
requirement of compliance with the conditions set forth in Section 4.4). In the
event that any such Loan by the Drawing Lender resulting from a drawing under
any Letter of Credit is not repaid by the Borrower by 12:00 noon, New York City
time, on the day of payment of such drawing, the Administrative Agent shall
promptly notify each other Revolving Loan Lender. Each Revolving Loan Lender
shall, on the day of such notification (or if such notification is not given by
3:00 p.m., New York City time, on such day, then on the next succeeding Business
Day), make an Alternate Base Rate Loan, which shall be used to repay the
applicable portion of the Alternate Base Rate Loan of the Drawing Lender with
respect to such Letter of Credit drawing, in an amount equal to the amount of
such Revolving Loan Lender's participation in such drawing for application to
repay the Drawing Lender (but without any requirement of compliance with the
applicable conditions set forth in Section 4.4) and shall deliver to the
Administrative Agent for the account of the Drawing Lender, on the day of such
notification (or if such notification is not given by 3:00 p.m., New York City
time, on such day, then on the next succeeding Business Day) and in immediately
available funds, the amount of such Alternate Base Rate Loan. In the event that
any Revolving Loan Lender fails to make available to the Administrative Agent
for the account of the Drawing Lender the amount of such Alternate Base Rate
Loan, the Drawing Lender shall be entitled to recover such amount on demand from
such Revolving Loan Lender together with interest thereon at the Federal Funds
Effective Rate for each day such amount remains outstanding.
(d) The obligations of the Borrower with respect to any Letter of
Credit, any Letter of Credit Request and any other agreement or instrument
relating to any Letter of Credit and any Alternate Base Rate Loan made under
Section 2.5(c) shall be absolute, unconditional and irrevocable and shall be
paid strictly in accordance with the terms of the aforementioned documents under
all circumstances, including the following:
(i) any lack of validity or enforceability of any Letter of
Credit, this Agreement or any other Loan Document;
(ii) the existence of any claim, setoff, defense or other right
that the Borrower may have at any time against any beneficiary or transferee of
any Letter of Credit (or any Person for whom any such beneficiary or transferee
may be acting), the Administrative Agent, any Lender (other than the defense of
payment to a Lender in accordance with the terms of this Agreement) or any other
Person, whether in connection with this Agreement, any other Loan Document, the
transactions contemplated hereby or thereby or any unrelated transaction;
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(iii) any statement or other document presented under any Letter of
Credit proving to be forged, fraudulent, invalid or insufficient in any respect,
or any statement therein being untrue or inaccurate in any respect whatsoever;
(iv) payment by the Administrative Agent under any Letter of Credit
against presentation of a draft or certificate that does not comply on its face
with the terms of such Letter of Credit;
(v) any exchange, release or nonperfection of any Collateral or
other collateral, or any release, amendment or waiver of or consent to departure
from any Guarantee, other Loan Document or other guaranty, for any of the
Obligations of the Borrower in respect of the Letters of Credit; and
(vi) any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing.
(e) The Borrower shall pay to the Administrative Agent for the account
of the Revolving Loan Lenders with respect to each Letter of Credit issued
hereunder, for the period from and including the day such Letter of Credit is
issued to but excluding the day such Letter of Credit expires, a letter of
credit fee equal to the product of (i) the Applicable Margin for LIBOR Loans per
annum and (ii) the Letter of Credit Amount of such Letter of Credit from time to
time, such letter of credit fee to be payable quarterly in arrears on the last
day of each March, June, September and December and on the expiration date of
such Letter of Credit.
(f) The Borrower shall pay to the Administrative Agent for its own
account with respect to each Letter of Credit issued hereunder, for the period
from and including the day such Letter of Credit is issued to but excluding the
day such Letter of Credit expires, (i) a letter of credit fee equal to the
product of (A) three sixteenths of one percent (0.1875%) per annum and (B) the
Letter of Credit Amount of such Letter of Credit from time to time, such letter
of credit fee to be payable on the date such Letter of Credit is issued and on
each anniversary thereof and (ii) from time to time, such additional fees and
charges (including cable charges) as are generally associated with letters of
credit, in accordance with the Administrative Agent's standard internal charge
guidelines and the related Letter of Credit Request.
(g) The Borrower agrees to the provisions in the Letter of Credit
Request form; provided, however, that the terms of the Loan Documents shall take
precedence if there is any inconsistency between the terms of the Loan Documents
and the terms of said form.
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<PAGE> 50
(h) The Borrower assumes all risks of the acts or omissions of any
beneficiary or transferee of any Letter of Credit with respect to its use of
such Letter of Credit. Neither the Administrative Agent nor any Lender nor any
of their respective officers or directors shall be liable or responsible for (i)
the use that may be made of any Letter of Credit or any acts or omissions of any
beneficiary or transferee in connection therewith; (ii) the validity,
sufficiency or genuineness of documents, or of any endorsement thereof, even if
such documents should prove to be in any or all respects invalid, insufficient,
fraudulent or forged; (iii) payment by the Administrative Agent against
presentation of documents that do not comply with the terms of any Letter of
Credit, including failure of any documents to bear any reference or adequate
reference to any Letter of Credit; or (iv) any other circumstance whatsoever in
making or failing to make payment under any Letter of Credit. In furtherance and
not in limitation of the foregoing, the Administrative Agent may accept any
document that appears on its face to be in order, without responsibility for
further investigation, regardless of any notice or information to the contrary.
2.5 Optional Prepayments. The Borrower may on the last day of any
Interest Period with respect thereto, in the case of LIBOR Loans, or at any time
and from time to time, in the case of Alternate Base Rate Loans, prepay the
Loans, in whole or in part, without premium or penalty, upon at least three
Business Days' irrevocable written notice, in the case of LIBOR Loans, and upon
at least one Business Day's irrevocable written notice, in the case of Alternate
Base Rate Loans, from the Borrower to the Administrative Agent, specifying the
date and amount of prepayment and whether the prepayment is of LIBOR Loans,
Alternate Base Rate Loans or a combination thereof, and, if of a combination
thereof, the amount allocable to each and whether the prepayment is of
Non-Revolving Loans or Revolving Loans, or a combination thereof, and, if a
combination thereof, the amount allocable to each; provided that any prepayment
of Non-Revolving Loans shall be applied pro rata between outstanding Term Loans
and outstanding Incremental Loans, based on the aggregate principal amounts of
Term Loans and Incremental Loans then outstanding, respectively. Upon receipt of
any such notice from the Borrower, the Administrative Agent shall promptly
notify each Lender thereof. If any such notice is given, the amount specified in
such notice shall be due and payable by the Borrower on the date specified
therein, together with accrued interest to such date on the amount prepaid.
Partial prepayments of Non-Revolving Loans shall be applied to the installments
of principal thereof, first, in the forward order of their scheduled maturities
with respect to the next two succeeding quarterly payments due under Section
2.2(d) or 2.3(d), respectively and, thereafter, pro rata with respect to all
respective remaining principal installments thereof.
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Amounts prepaid on account of the Non-Revolving Loans may not be reborrowed.
Partial prepayments of Revolving Loans shall be in an aggregate principal amount
of $1,000,000 or an integral multiple thereof and partial prepayments of Term
Loans or Incremental Loans shall be in an aggregate principal amount of
$5,000,000 or an integral multiple of $1,000,000.
2.6 Mandatory Prepayments. (a) On the day of receipt (or the
ninety-first day after receipt, in the case of Net Proceeds from Asset
Dispositions described in (i) of the definition of "Asset Disposition") by the
Borrower or any of its Subsidiaries of any Net Proceeds with respect to an Asset
Disposition, the Borrower shall prepay the Loans (and such prepayment shall be
applied as set forth in Section 2.6(f)) and, after all Loans have been prepaid,
make a Cash Collateral Deposit, in an amount equal to 100% of such Net Proceeds.
On or prior to the date of any prepayment required by this Section 2.6(a), the
Borrower agrees to provide the Administrative Agent with calculations used by
the Borrower in determining the amount of any such prepayment.
(b) In the event that at the end of any fiscal year of the Borrower
ending after December 31, 1996 there shall exist Excess Cash Flow with respect
to such fiscal year, then on the date which is ten Business Days after the
earlier to occur of (i) the date upon which the audited financial statements of
the Borrower with respect to such fiscal year become available and (ii) the
ninetieth day after the end of such fiscal year, the Borrower shall prepay the
Loans (and such prepayment shall be applied as set forth in Section 2.6(f)) and,
after all Loans have been prepaid, make a Cash Collateral Deposit, in an amount
equal to (x) if the Total Debt Ratio as of the end of such fiscal year is
greater than or equal to 4.00:1, 66 2/3% of such Excess Cash Flow or (y) if the
Total Debt Ratio is less than 4.00:1, 50% of such Excess Cash Flow. On or prior
to the date of any prepayment required by this Section 2.6(b), the Borrower
agrees to provide the Administrative Agent with the calculations, substantially
in the form of Exhibit L hereto, used by the Borrower in determining the amount
of any such prepayment.
(c) If the Borrower or any of its Subsidiaries receives insurance
proceeds or condemnation proceeds with respect to any of its or their Properties
which are not fully applied toward the repair or replacement of such damaged or
condemned Property within 90 days of the receipt thereof, the Borrower shall, on
such 90th day prepay the Loans and, after all Loans have been prepaid, make a
Cash Collateral Deposit, in an amount equal to the amount of such proceeds not
so applied (and such prepayment shall be applied as set forth in Section
2.6(f)).
(d) In the event that the Borrower or any of its Subsidiaries makes an
Equity Offering not all of the Net
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Proceeds of which are applied towards an Acquisition permitted by
Section 6.7(g), the Borrower shall, within ten Business Days of such Equity
Offering, prepay the Loans and, after all Loans have been prepaid, make a Cash
Collateral Deposit, in an amount equal to 80% of the Net Proceeds not so applied
(and such prepayment shall be applied as set forth in Section 2.6(f)).
(e) On the day on which the Borrower or any of its Subsidiaries shall
incur Indebtedness permitted by Section 6.2(o), the Borrower shall prepay the
Loans and, after all Loans have been prepaid, make a Cash Collateral Deposit, in
an amount equal to 100% of such Indebtedness (and such prepayment shall be
applied as set forth in Section 2.6(f)); provided, however, that 50% of up to
$10,000,000 of such Indebtedness (but not, in any case, to exceed an aggregate
amount equal to $5,000,000), shall not be required hereunder to be used to
prepay the Loans and reduce the Commitments as set forth in Section 2.6(f) or
make a Cash Collateral Deposit.
(f) Each prepayment of the Loans pursuant to this Section 2.6 shall be
applied, first, to the outstanding amounts of Non-Revolving Loans (on a pro rata
basis determined on the basis of amounts Term Loans, on the one hand, and
Incremental Loans, on the other hand, outstanding at the time of such
prepayment), second, to the outstanding amounts of Revolving Loans and
thereafter, to make a Cash Collateral Deposit. If, at any time, the Loans are
repaid in full, the Aggregate Revolving Loan Commitment shall be permanently
reduced by an amount equal to what such prepayment would have been under this
Section 2.6 if Loans had been outstanding against which to apply such
prepayment. Each prepayment applied to the Revolving Loans and each Cash
Collateral Deposit shall permanently reduce the Aggregate Revolving Loan
Commitment and the provisions of Section 2.1(f) shall be applicable. Each
prepayment of the Non-Revolving Loans shall be applied pro rata to each
remaining installment of principal of Non-Revolving Loans. Such prepaid
Non-Revolving Loans may not be reborrowed. Each prepayment shall be accompanied
by payment in full of all accrued interest and accrued commitment fees thereon
to and including the date of such prepayment, together with any additional
amounts owing pursuant to Section 2.16. Cash Collateral Deposits held by the
Administrative Agent shall be applied to reimburse drawings on Letters of Credit
in the order in which such drawings are presented to the Administrative Agent.
Upon written request of the Borrower with regard to any Letter of Credit for
which the Administrative Agent is holding a Cash Collateral Deposit, the
Administrative Agent shall release to the Borrower any portion of such Deposit
not applied to reimburse drawings thereunder upon the earlier of (i) fourteen
days following expiration of such Letter of Credit according to its terms and
(ii) receipt by the Administrative Agent of written acknowledgement from the
beneficiary of such Letter of Credit requesting the cancellation
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thereof and relinquishing all its rights thereunder, which written
acknowledgement shall be accompanied by the original of such Letter of Credit;
provided that, in either case, no Default has occurred and is continuing.
2.7 Conversion and Continuation Options. (a) The Borrower may elect
from time to time to convert LIBOR Loans to Alternate Base Rate Loans, by the
Borrower giving the Administrative Agent at least two Business Days' prior
irrevocable written notice of such election pursuant to a Continuation Notice,
provided that any such conversion of LIBOR Loans may only be made on the last
day of an Interest Period with respect thereto. The Borrower may elect from time
to time to convert Alternate Base Rate Loans to LIBOR Loans by the Borrower
giving the Administrative Agent at least three Eurodollar Business Days' prior
irrevocable written notice of such election pursuant to a Continuation Notice.
Any such notice of conversion to LIBOR Loans shall specify the length of the
initial Interest Period or Interest Periods therefor. Upon receipt of any such
notice the Administrative Agent shall promptly notify each Lender thereof. All
or any part of outstanding LIBOR Loans and Alternate Base Rate Loans may be
converted as provided herein, provided that (i) any such conversion may only be
made if, after giving effect thereto, Section 2.8 shall not have been
contravened, (ii) no Term Loan or Incremental Loan may be converted into a LIBOR
Loan after the date that is one month prior to the due date of the final
installment of principal of the Term Loans or the Incremental Loans, as
applicable, (iii) no Revolving Loan may be converted into a LIBOR Loan after the
date that is one month prior to the Revolving Loan Commitment Expiration Date
and (iv) the Borrower shall not have the right to elect to continue at the end
of the applicable Interest Period, or to convert to, a LIBOR Loan if a Default
shall have occurred and be continuing.
(b) Any LIBOR Loan may be continued as such upon the expiration of the
then current Interest Period with respect thereto by the Borrower giving notice
to the Administrative Agent, in accordance with the applicable provisions of the
term "Interest Period" set forth in Section 1.1, of the length of the next
Interest Period to be applicable to such LIBOR Loan, provided that no LIBOR Loan
may be continued as such (i) if, after giving effect thereto, Section 2.8 would
be contravened, (ii) after the date that is one month prior to the due date of
the final installment of principal of the Term Loans or the Incremental Loans,
as applicable, (iii) after the date that is one month prior to the Revolving
Loan Commitment Expiration Date or (iv) if a Default shall have occurred and be
continuing and provided, further, that if the Borrower shall fail to give any
required notice as described above in this Section or if such continuation is
not permitted pursuant to the preceding proviso, such Loans shall be
automatically converted to Alternate Base
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Rate Loans on the last day of such then-expiring Interest Period.
2.8 Minimum Amounts of Tranches. All borrowings, conversions and
continuations of Loans hereunder and all selections of Interest Periods
hereunder shall be in such amounts and be made pursuant to such elections so
that, after giving effect thereto, the aggregate principal amount of the Loans
comprising each Tranche (except Loans made pursuant to Section 2.4(c)) shall be
equal to $1,000,000 or a whole multiple of $1,000,000 in excess thereof and, in
any case, there shall not be more than 12 Tranches.
2.9 Interest Rates and Payment Dates. (a) Each LIBOR Loan shall bear
interest for each day during each Interest Period with respect thereto at a rate
per annum equal to the LIBOR Adjusted Rate plus the Applicable Margin.
(b) Each Alternate Base Rate Loan shall bear interest at a rate per
annum equal to the Alternate Base Rate plus the Applicable Margin.
(c) (i) If all or a portion of the principal amount of any Loan or any
interest payable on the Loans shall not be paid when due (whether at the stated
maturity, by acceleration or otherwise), all amounts outstanding shall bear
interest at a rate per annum which is the rate described in paragraph (b) of
this Section plus 2% from the date of such non-payment until such amount is paid
in full (after as well as before judgment).
(ii) If any Default (other than a Default described in clause (i) if
this Section 2.9(c)) shall have occurred and be continuing, all amounts
outstanding shall bear interest at a rate per annum which is the rate described
in paragraph (b) of this Section plus 1% from the date which is 45 days after
the occurrence of such Default until such Default is no longer continuing (after
as well as before judgment).
(d) Interest shall be payable in arrears on each Interest Payment Date,
provided that interest accruing pursuant to paragraph (c) of this Section shall
be payable on demand.
(e) For purposes of determining the Applicable Margin for all Loans,
interest rates on the Loans shall be calculated on the basis of the Total Debt
Ratio set forth in the most recent certificate of a Responsible Officer of the
Borrower delivered pursuant to Section 5.2(a)(i) (a "Leverage Level
Certificate"). For accrued and unpaid interest only (no changes being made for
interest payments previously made), changes in interest rates on the Loans
attributable to changes in the Applicable Margin caused by changes in the
applicable Leverage Level shall be calculated upon the delivery of a Leverage
Level Certificate and
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such change shall be effective (y) in the case of an Alternate Base Rate Loan,
from the first day subsequent to the last day covered by the Leverage Level
Certificate and (z) in the case of a LIBOR Loan, from the first day of the
Interest Period applicable to such LIBOR Loans subsequent to the last day
covered by the Leverage Level Certificate. If, for any reason, the Borrower
shall fail to deliver a Leverage Level Certificate when due in accordance with
Section 5.2(a)(i), and such failure shall continue for a period of twenty days,
the Leverage Level shall be deemed to be Level 1, retroactive to the date on
which the Borrower should have delivered such Leverage Level Certificate and
shall continue until a Leverage Level Certificate indicating a different
Leverage Level is delivered to the Administrative Agent.
2.10 Computation of Interest and Fees. (a) Interest on Alternate Base
Rate Loans (other than Alternate Base Rate Loans based on the Federal Funds
Effective Rate) shall be calculated on the basis of a 365- (or 366-, as the case
may be), day year for the actual days elapsed and interest on LIBOR Loans,
unused commitment fees and all other Obligations of the Borrower shall be
calculated on the basis of a 360-day year for the actual days elapsed. The
Administrative Agent shall as soon as practicable notify the Borrower and the
Lenders of each determination of a LIBOR Adjusted Rate. Any change in the
interest rate on a Loan resulting from a change in the Alternate Base Rate or
the LIBOR Reserve Requirements shall become effective as of the opening of
business on the day on which such change in the Alternate Base Rate is announced
or such change in the LIBOR Reserve Requirements becomes effective, as the case
may be. The Administrative Agent shall as soon as practicable notify the
Borrower and the Lenders of the effective date and the amount of each such
change in interest rate.
(b) Each determination of an interest rate by the Administrative Agent
pursuant to any provision of this Agreement shall be conclusive and binding on
the Borrower and the Lenders in the absence of manifest error.
(c) If any Reference Bank's Commitment shall terminate or all of its
Loans and participations in Letters of Credit shall be assigned for any reason
whatsoever, such Reference Bank shall thereupon cease to be a Reference Bank,
and if, as a result of the foregoing, there would only be one Reference Bank
remaining, the Administrative Agent and the Managing Agents (after consultation
with the Borrower and the Lenders) shall, by notice to the Borrower and the
Lenders, designate another Lender reasonably acceptable to the Borrower as a
Reference Bank so that there shall at all times be at least two Reference Banks.
(d) Each Reference Bank shall use its best efforts to furnish
quotations of rates to the Administrative Agent as
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contemplated hereby. If any of the Reference Banks shall be unable or shall
otherwise fail to supply such rates to the Administrative Agent upon its
request, the rate of interest shall be determined on the basis of the quotations
of the remaining Reference Banks or Reference Bank.
2.11 Inability to Determine Interest Rate. In the event that prior to
the first day of any Interest Period:
(a) the Administrative Agent shall have determined (which determination
shall be conclusive and binding upon the Borrower absent manifest error) that,
by reason of circumstances affecting the relevant market, adequate and
reasonable means do not exist for ascertaining the LIBOR Adjusted Rate for such
Interest Period, or
(b) the Administrative Agent shall have received notice from the
Majority Lenders that the LIBOR Adjusted Rate determined or to be determined for
such Interest Period will not adequately and fairly reflect the cost to such
Lenders (as conclusively certified by such Lenders) of making or maintaining
their affected Loans during such Interest Period,
the Administrative Agent shall give telecopy or telephonic notice thereof to the
Borrower and the Lenders as soon as practicable thereafter. If such notice is
given (x) any LIBOR Loans requested to be made on the first day of such Interest
Period shall accrue interest at the Reference Banks Rate, (y) Loans that were to
have been converted on the first day of such Interest Period to LIBOR Loans
shall be converted to Loans accruing interest at the Reference Banks Rate or
continued as Alternate Base Rate Loans, as the Borrower shall select and (z) any
outstanding LIBOR Loans shall be converted, on the first day of such Interest
Period, to Loans accruing interest at the Reference Banks Rate or to Alternate
Base Rate Loans, as the Borrower shall select. Until such notice has been
withdrawn by the Administrative Agent, no further LIBOR Loans shall be made or
continued as such, nor shall the Borrower have the right to convert Alternate
Base Rate Loans to LIBOR Loans.
2.12 Pro Rata Treatment and Payments. Each borrowing by the Borrower
from the Lenders hereunder and any reduction of the Commitments of the Lenders
(in the case of the Aggregate Term Loan Commitment and the Aggregate Revolving
Loan Commitment) shall be made pro rata according to the respective Commitment
Percentages of the applicable Lenders. Each payment (including each prepayment)
by the Borrower on account of principal of and interest on the Loans shall be
made pro rata according to the respective outstanding principal and interest
amounts of such Loans then held by the Lenders. All payments (including
prepayments) to be made by the Borrower hereunder and under the Notes, whether
on account of principal, interest, fees or
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otherwise, shall be made without set off or counterclaim and shall be made prior
to 12:00 Noon, New York City time, on the due date thereof to the Administrative
Agent, for the account of the applicable Lenders, at the Administrative Agent's
office specified in Section 9.2, in Dollars and in immediately available funds.
The Administrative Agent shall distribute such payments to the applicable
Lenders promptly upon receipt in like funds as received. If any payment
hereunder (other than payments on the LIBOR Loans) becomes due and payable on a
day other than a Business Day, such payment shall be extended to the next
succeeding Business Day, and, with respect to payments of principal, interest
thereon shall be payable at the then applicable rate during such extension. If
any payment on a LIBOR Loan becomes due and payable on a day other than a
Eurodollar Business Day, the maturity thereof shall be extended to the next
succeeding Eurodollar Business Day (and interest shall continue to accrue
thereon at the applicable rate) unless the result of such extension would be to
extend such payment into another calendar month, in which event such payment
shall be made on the immediately preceding Eurodollar Business Day.
2.13 Illegality. Notwithstanding any other provision herein, if any
change after the Initial Closing Date in any Requirement of Law or in the
interpretation or application thereof shall make it unlawful for any Lender or
Applicable Lending Office to make or maintain LIBOR Loans as contemplated by
this Agreement, (a) the commitment of such Lender hereunder to make LIBOR Loans,
continue LIBOR Loans as such and convert Alternate Base Rate Loans to LIBOR
Loans shall forthwith be suspended during such period of illegality and (b) the
Loans of such Lender or Applicable Lending Office then outstanding as LIBOR
Loans, if any, shall be converted automatically to Alternate Base Rate Loans on
the respective last days of the then current Interest Periods with respect to
such Loans or within such earlier period as required by law. If any such
conversion of a LIBOR Loan occurs on a day which is not the last day of the then
current Interest Period with respect thereto, the Borrower shall pay to such
Lender such amounts, if any, as may be required pursuant to Section 2.16. To the
extent that a Lender's LIBOR Loans have been converted to Alternate Base Rate
Loans pursuant to this Section 2.13, all payments and prepayments of principal
that otherwise would be applied to such Lender's LIBOR Loans shall be applied
instead to its Alternate Base Rate Loans.
2.14 Increased Costs. (a) In the event that any change after the
Initial Closing Date in any Requirement of Law or in the interpretation or
application thereof or compliance by any Lender with any request or directive
(whether or not having the force of law but, if not having the force of law,
generally applicable to and complied with by banks and financial institutions of
the same general type as such Lender in the
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relevant jurisdiction) from any central bank or other Governmental Authority
made subsequent to the date hereof:
(i) shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirements against assets held
by, letters of credit or guarantees issued by, deposits or other
liabilities in or for the account of, advances, loans or other
extensions of credit by, or any other acquisition of funds by, any
office of such Lender or Applicable Lending Office which is not
otherwise included in the determination of the LIBOR Adjusted Rate
hereunder; or
(ii) shall impose on such Lender or Applicable Lending Office any
other condition;
and the result of any of the foregoing is to increase the cost to the
Administrative Agent of issuing or maintaining any Letter of Credit by an amount
which the Administrative Agent deems to be material, or to such Lender or
Applicable Lending Office, by an amount which such Lender deems to be material,
of making, converting into, continuing or maintaining LIBOR Loans, or purchasing
or maintaining any participation in a Letter of Credit, or to reduce any amount
receivable hereunder in respect thereof then, in any such case, the Borrower
shall immediately pay to the Administrative Agent, for its own account or on
behalf of such Lender or Applicable Lending Office, as applicable, upon the
demand of the Administrative Agent for itself or at the request of such Lender,
as applicable, any additional amounts necessary to compensate such Lender or the
Administrative Agent, as applicable, for such increased cost or reduced amount
receivable. If the Administrative Agent, any Lender or any Applicable Lending
Office becomes entitled to claim any additional amounts pursuant to this
Section, it shall promptly notify the Borrower, through the Administrative
Agent, of the event by reason of which it has become so entitled. A certificate
as to any additional amounts payable pursuant to this Section submitted by the
Administrative Agent or such Lender or Applicable Lending Office, through the
Administrative Agent, to the Borrower shall be conclusive evidence of the
accuracy of the information so recorded, absent manifest error. This covenant
shall survive the termination of this Agreement, expiration of the Letters of
Credit and the payment of the Notes and all other amounts payable hereunder.
(b) If, after the date of this Agreement, the introduction of or any
change in any applicable law, rule, regulation or guideline regarding capital
adequacy, or any change in the interpretation or administration thereof by any
Governmental Authority charged with the interpretation or administration
thereof, affects the amount of capital required or expected to be maintained by
any Lender or any corporation controlling any
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Lender, and such Lender (taking into consideration such Lender's or such
corporation's policies with respect to capital adequacy) determines that the
amount of capital maintained by such Lender or such corporation which is
attributable to or based upon the Loans, the Letters of Credit, the Commitments
or this Agreement must be increased as a consequence of such introduction or
change by an amount deemed by such Lender to be material, then, upon demand of
the Administrative Agent at the request of such Lender, the Borrower shall
immediately pay to the Administrative Agent on behalf of such Lender, additional
amounts sufficient to compensate such Lender or such corporation for the
increased costs to such Lender or corporation of such increased capital. Any
such demand shall be accompanied by a certificate of such Lender setting forth
in reasonable detail the computation of any such increased costs, which
certificate shall be conclusive, absent manifest error. This obligation of the
Borrower under this Section 2.14(b) shall survive repayment of the Loans,
expiration of the Letters of Credit and all other amounts hereunder in full and
the termination of this Agreement.
2.15 Taxes. (a) All payments made by the Borrower in respect of the
Obligations shall be made free and clear of, and without deduction or
withholding for or on account of, any present or future income, stamp or other
taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now
or hereafter imposed, levied, collected, withheld or assessed by any
Governmental Authority or any political subdivision or taxing authority thereof
or therein, other than Excluded Taxes (all such non-Excluded Taxes being
hereinafter called "Taxes"). If any Taxes are required to be withheld from any
amounts payable to the Administrative Agent, any Managing Agent or any Lender in
respect of the Obligations, the amounts so payable to the Administrative Agent,
such Managing Agent or such Lender shall be increased to the extent necessary to
yield to the Administrative Agent, any Managing Agent or such Lender (after
payment of all Taxes) interest or any such other amounts payable hereunder at
the rates or in the amounts specified in this Agreement and the Notes. The
Administrative Agent, a Managing Agent or a Lender, as the case may be, shall
deliver to the Borrower a certificate setting forth the amount of such Taxes,
the calculation of such Taxes and an explanation of the requirement therefor,
all in reasonable detail and such certificate shall be conclusive, absent
manifest error. Whenever any Taxes are payable by the Borrower, as promptly as
possible thereafter, the Borrower shall send to the Administrative Agent, for
its own account or for the account of such Managing Agent or such Lender, as the
case may be, a copy of an original official receipt received by the Borrower
showing payment thereof or such other evidence of payment reasonably
satisfactory to the Administrative Agent. If the Borrower fails to pay any Taxes
when due to the appropriate taxing authority or fails to remit to the
Administrative Agent the required receipts
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or other required documentary evidence, the Borrower shall indemnify the
Administrative Agent, the Managing Agents and the Lenders for any incremental
taxes, interest or penalties (and related reasonable fees and expenses of
counsel) that may become payable by the Administrative Agent, the Managing
Agents or any Lender as a result of any such failure. The agreements in this
Section shall survive the termination of this Agreement, the expiration of the
Letters of Credit and the payment of the Notes and all other amounts payable
hereunder.
(b) Each Lender that is not organized under the laws of the United
States of America or a state thereof agrees that it will deliver to the Borrower
and the Administrative Agent (i) two duly completed copies of United States
Internal Revenue Service Form 1001 or 4224 or successor applicable form, as the
case may be, and (ii) an Internal Revenue Service Form W-8 or W-9 or successor
applicable form. Each such Lender also agrees to deliver to the Borrower and the
Administrative Agent two further copies of the said Form 1001 or 4224 and Form
W-8 or W-9, or successor applicable forms or other manner or certification, as
the case may be, on or before the date that any such form expires or becomes
obsolete or after the occurrence of any event requiring a change in the most
recent form previously delivered by it to the Borrower and the Administrative
Agent, and such extensions or renewals thereof as may reasonably be requested by
the Borrower or the Administrative Agent, unless in any such case an event
beyond the control of such Lender (including, without limitation, any change in
treaty, law or regulation) has occurred prior to the date on which any such
delivery would otherwise be required which renders all such forms inapplicable
or which would prevent such Lender from duly completing and delivering any such
form with respect to it and such Lender so advised the Borrower and the
Administrative Agent. Each such Lender shall certify (i) in the case of a Form
1001 or 4224, that it is entitled to receive payments under this Agreement
without deduction or withholding of any United States federal income taxes and
(ii) in the case of a Form W-8 or W-9, that it is entitled to an exemption from
United States backup withholding tax.
(c) The Borrower shall not be required to pay any additional amounts to
any Person in respect of United States withholding tax pursuant to Section
2.15(a) if the obligation to pay such additional amounts would not have arisen
but for a failure by such Person to comply with the requirements of Section
2.15(b) (including the accuracy of the certificate described in the final
sentence thereof).
2.16 Indemnity. The Borrower agrees to indemnify each Lender and to
hold each Lender harmless from and to pay each Lender within 5 days of such
Lender's demand the amount of any liability, loss or expense arising from the
reemployment of
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funds obtained by it or from fees payable to terminate the deposits from which
such funds were obtained (including reasonable fees and expenses of counsel)
which such Lender may sustain or incur as a consequence of (a) default by the
Borrower in payment when due of the principal amount of or interest on any LIBOR
Loan, (b) default by the Borrower in making a borrowing of, conversion into or
continuation of LIBOR Loans after the Borrower has given a notice requesting the
same in accordance with the provisions of this Agreement, (c) default by the
Borrower in making any prepayment after the Borrower has given a notice thereof
in accordance with the provisions of this Agreement or (d) the making by the
Borrower of a prepayment or conversion of LIBOR Loans on a day which is not the
last day of an Interest Period with respect thereto. A Lender's certificate as
to such liability, loss or expense shall be deemed conclusive, absent manifest
error. This covenant shall survive the termination of this Agreement and the
payment of the Notes and all other amounts payable hereunder.
2.17 Unused Commitment Fees. The Borrower agrees to pay (i) to the
Revolving Loan Lenders an unused commitment fee to be shared pro rata among the
Revolving Loan Lenders with respect to the Revolving Loan Commitments for the
period from and including the Second Closing Date to but excluding the Revolving
Loan Commitment Expiration Date, computed at the rate of 3/8% of the average
daily aggregate amount of the unused Aggregate Revolving Loan Commitment from
time to time in effect, to be payable quarterly in arrears on the last day of
each March, June, September and December and on the Revolving Loan Commitment
Expiration Date, commencing on the first such date to occur after the Second
Closing Date and (ii) in the event that the Incremental Loan facility set forth
in Section 2.3 is activated, to the Incremental Loan Lenders an unused
commitment fee to be shared pro rata among the Incremental Loan Lenders with
respect to the Incremental Loan Commitments for the period from and including
the Activation Date to but excluding the Incremental Loan Commitment Termination
Date, computed at the rate of 3/8% of the average daily aggregate amount of the
unused Aggregate Incremental Loan Commitment from the time to time in effect, to
be payable quarterly in arrears on the last day of each March, June, September
and December and on the Incremental Loan Commitment Termination Date, commencing
on the first such date to occur after the Activation Date.
2.18 Mitigation of Costs. If any Lender, by changing its Applicable
Lending Office or taking any other reasonable action, so long as making such
change or taking such other action is not disadvantageous to it in any
financial, regulatory or other respect, can mitigate any adverse effect on the
Borrower under Section 2.11, 2.13, 2.14, or 2.15, such Lender shall take such
action.
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SECTION 3. REPRESENTATIONS AND WARRANTIES
To induce the Lenders to enter into this Agreement and to make the
Loans and participate in the Letters of Credit, and to induce the Administrative
Agent to issue the Letters of Credit, the Borrower hereby represents and
warrants to the Administrative Agent, the Managing Agents and each Lender that:
3.1 Financial Condition. (a) The respective audited consolidated
balance sheets of PCI and Network Holding as at December 31, 1995, and the
related respective audited consolidated statements of operations, changes in
stockholders' deficit (in the case of PCI), changes in partners' equity (in the
case of Network Holding) and statements of cash flows for the fiscal year ended
on such date, certified by the Accountants and to the best of its knowledge by a
Responsible Officer of each of PCI and Network Holding, respectively, copies of
which have heretofore been furnished to each Lender, present fairly the
respective consolidated financial condition of PCI and Network Holding as at
such date in all material respects, the respective consolidated results of their
operations, PCI's consolidated changes in stockholders' deficit, Network
Holdings' changes in partners' equity and their respective consolidated cash
flows for the fiscal year then ended in all material respects. The unaudited
consolidated balance sheets of each of the Borrower, UTG and Network Holding as
at June 30, 1996 and the related respective unaudited consolidated statements of
operation and cash flows for the six-month period ended on such date, certified
to the best of its knowledge by a Responsible Officer of each of the Borrower,
UTG and Network Holding, respectively, copies of which have heretofore been
furnished to each Lender, present fairly the respective consolidated financial
condition of such entities as at such date in all material respects, and the
respective consolidated results of their operations and their respective
consolidated cash flows for the six-month period then ended. All such financial
statements (the "Financial Statements"), including the related schedules and
notes thereto, have been prepared in accordance with GAAP applied consistently
throughout the periods involved (except as approved by such Accountants or
Responsible Officers, as the case may be, and as disclosed therein and for the
absence of notes). None of the Borrower, UTG or Network Holding, each on a
consolidated basis, had, at the date of the most recent balance sheet referred
to above, any material Guarantee Obligation, contingent liability or liability
for taxes, or any long-term lease or unusual forward or long-term commitment,
including, without limitation, any interest rate or foreign currency swap or
exchange transaction, which is not reflected in the foregoing statements or in
the notes thereto and which is material in relation to the respective
consolidated financial condition of such entities at such date.
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(b) The pro forma consolidated balance sheet of the Borrower and its
Subsidiaries as at December 31, 1995, and the related consolidated statements of
income and of cash flows for the fiscal year ended on such date, and the pro
forma balance sheet of the Borrower and its Subsidiaries as at June 30, 1996,
and the related consolidated statements of income and cash flows for the
three-month period ended as such date, copies of which have heretofore been
furnished to each Lender, present fairly, in the opinion of the Borrower, the
pro forma consolidated financial condition of the Borrower and its Subsidiaries
as at such dates, assuming that the Loans had been made, the IPO had been
consummated (with the resulting gross proceeds thereof being $155,000,000) and
the reorganization referred to in Section 5.19 had been completed immediately
prior to December 31, 1995.
3.2 No Change. Since June 30, 1996 there has been no event or condition
resulting in a Material Adverse Effect.
3.3 Corporate Existence; Compliance with Law. Each of the Loan Parties
(a) is duly organized, validly existing and in good standing under the laws of
the jurisdiction of its organization, (b) has the corporate or partnership power
(as applicable) and authority, and the legal right, to own and operate its
Properties, to lease the property it operates as lessee and to conduct the
business in which it is currently engaged and in which it proposes to be engaged
after the Initial Closing Date, (c) is duly qualified as a foreign entity and in
good standing under the laws of each jurisdiction where its ownership, lease or
operation of property or the conduct of its business requires such qualification
except to the extent that the failure to comply thereunder could not, in the
aggregate, reasonably be expected to have a Material Adverse Effect and (d) is
in compliance with all Requirements of Law except to the extent that the failure
to comply therewith could not, in the aggregate, reasonably be expected to have
a Material Adverse Effect.
3.4 Corporate/Partnership Power; Authorization; Enforceable
Obligations. Each of the Loan Parties has the corporate or partnership power and
authority (as applicable), and the legal right, to make, deliver and perform the
Loan Documents to which it is or will be a party and to obtain extensions of
credit hereunder and to consummate the IPO on the terms set forth in the
Registration Statement (in the case of the Borrower) and has taken all necessary
corporate and partnership action to authorize (i) in the case of the Borrower,
the borrowings and other extensions of credit on the terms and conditions of
this Agreement and the Notes and the consummation of the IPO on the terms set
forth in the Registration Statement and (ii) the execution, delivery and
performance of the Loan Documents to which it is or will be a party. Except as
set
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forth on Schedule 7, no consent or authorization of, filing with or other act by
or in respect of, any Governmental Authority or any other Person is required in
connection with the borrowings and other extensions of credit hereunder or with
the execution, delivery, performance, validity or enforceability of this
Agreement, the Notes or the other Loan Documents or in connection with the
consummation of the IPO. This Agreement has been, and each of the Notes and the
other Loan Documents to which it is or will be a party will be, duly executed
and delivered on behalf of each relevant Loan Party. This Agreement constitutes,
and each of the Notes and the other Loan Documents when executed and delivered
will constitute, a legal, valid and binding obligation of each Loan Party
thereto enforceable against such Loan Party in accordance with its terms, except
as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).
3.5 No Legal Bar. The execution, delivery and performance of this
Agreement, the Notes, the Material Agreements and the other Loan Documents, the
borrowings and other extensions of credit hereunder and the use of the proceeds
thereof and the consummation of the IPO will not violate any Requirement of Law
or Contractual Obligations of the Borrower or any of its Subsidiaries which
could reasonably be expected to have a Material Adverse Effect and will not
result in, or require, the creation or imposition of any Lien on any of its or
their respective properties or revenues pursuant to any such Requirement of Law
or Contractual Obligation, except pursuant to the Loan Documents or except as
otherwise permitted pursuant to Section 6.3, which Lien could reasonably be
expected to have a Material Adverse Effect.
3.6 No Material Litigation. Except as set forth in Schedule 11, no
litigation, investigation or proceeding of or before any arbitrator or
Governmental Authority is pending or, to the knowledge of the Borrower,
threatened by or against the Borrower or any of its Subsidiaries or against any
of its or their respective properties or revenues, (a) on the Initial Closing
Date or the Second Closing Date, as applicable, with respect to this Agreement,
the Notes or the other Loan Documents or any of the transactions contemplated
hereby or thereby, including the IPO or (b) which could reasonably be expected
to have a Material Adverse Effect.
3.7 Ownership of Property; Liens. To the Borrower's knowledge, each of
the Borrower and the Guarantors and their respective Subsidiaries shall, on the
Initial Closing Date and on the Second Closing Date, as applicable, have (i)
with respect to real property interests, good record and marketable title in
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fee simple to, a valid leasehold interest in or rights as a permittee or
licensee to and (ii) with respect to personal property interests, good title to,
all such real or personal property which is material to its business, except for
those the failure of which to have good title could not reasonably be expected
to have a Material Adverse Effect, and none of such property is subject to any
Lien except as permitted by Section 6.3.
3.8 Intellectual Property. The Borrower and each of its Subsidiaries
owns, or is licensed to use, all trademarks, trade names, patents and copyrights
necessary for the conduct of its business as currently conducted except for
those the failure to own or license which could not reasonably be expected to
have a Material Adverse Effect (the "Intellectual Property"). To the Borrower's
knowledge, no claim which could reasonably be expected to have a Material
Adverse Effect has been asserted and is pending by any Person challenging or
questioning the use of any such Intellectual Property or the validity or
effectiveness of any such Intellectual Property, nor does the Borrower know of
any valid basis for any such claim. To the Borrower's knowledge, the use of such
Intellectual Property by the Borrower and its Subsidiaries does not infringe on
the rights of any Person, except for such claims and infringements that, in the
aggregate, could not reasonably be expected to have a Material Adverse Effect,
nor, to the Borrower's knowledge, do the use by other Persons of such
Intellectual Property infringe on the rights of the Borrower and its
Subsidiaries, except for such claims and infringements that, in the aggregate,
could not reasonably be expected to have a Material Adverse Effect.
3.9 Taxes. (a) Each of the Borrower and its Subsidiaries has filed or
caused to be filed all material tax returns which, to the knowledge of the
Borrower, are required to be filed and has paid all taxes shown to be due and
payable on said returns or on any assessments made against it or any of its
property and all other taxes, fees or other charges imposed on it or any of its
property by any Governmental Authority (other than any not yet delinquent or the
amount or validity of which are currently being contested in good faith by
appropriate proceedings and with respect to which reserves in conformity with
GAAP have been provided on the books of the Borrower or its Subsidiaries, as the
case may be); and to the knowledge of Borrower, no tax Lien has been filed, and
no claim is being asserted with respect to any such tax, fee or other charge
which could reasonably be expected to have a Material Adverse Effect.
(b) There are no Taxes imposed on the Borrower or its Subsidiaries by
any political subdivision or taxing authority due or payable either on or by
virtue of the execution and delivery by the Borrower, the Administrative Agent,
the Managing Agents or the Lenders of this Agreement or any other Loan
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Document to which the Borrower is a party or on any payment to be made by the
Borrower pursuant hereto or thereto.
3.10 Federal Regulations. No Letter of Credit and no part of the
proceeds of any Loans are intended to be or will be used, directly or indirectly
for any purpose which violates the provisions of the Regulations of the Board of
Governors of the Federal Reserve System. If requested by any Lender, any
Managing Agent or the Administrative Agent, and in any event upon consummation
of any Acquisition involving the purchase of stock by the Borrower or any
Subsidiary, the Borrower will furnish to the Administrative Agent, the Managing
Agents and each Lender a statement to the foregoing effect in conformity with
the requirements of Form U-1 referred to in Regulation U.
3.11 ERISA. No Reportable Event has occurred during the five-year
period prior to the date on which this representation is made with respect to
any Plan which has or would likely result in a Material Adverse Effect. Each
Plan has complied in all material respects with the applicable provisions of
ERISA and the Code. The present value of all accrued benefits under all Single
Employer Plans maintained by the Borrower or any Commonly Controlled Entity
(based on those assumptions used to fund the Plans) did not, as of the last
annual valuation date prior to the date on which this representation is made,
exceed the value of the assets of such Plans by an aggregate amount greater than
$1,000,000. Neither the Borrower nor any Commonly Controlled Entity has had a
complete or partial withdrawal from any Multiemployer Plan which has or would
likely result in a Material Adverse Effect. The present value (determined using
actuarial and other assumptions which are reasonable in respect of the benefits
provided and the employees participating) of the liability of the Borrower and
each Commonly Controlled Entity for post retirement benefits (excluding benefits
required by Section 4980B of the Code) to be profited to their current and
former employees under Plans which are welfare benefit plans (as defined in
Section 3(a) of ERISA) does not, in the aggregate, exceed the assets under all
such Plans allocable to such benefits by an amount which has a Material Adverse
Effect.
3.12 Investment Company Act; Other Regulations. None of the Loan
Parties is an "investment company", or a company "controlled" by an "investment
company", within the meaning of the Investment Company Act of 1940, as amended
(the "Investment Company Act").
3.13 Material Agreements. Each of the Material Agreements to which the
Borrower or any other Loan Party is a party is a legal, valid and binding
obligation of the parties thereto enforceable against such parties in accordance
with their terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar
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laws affecting the enforcement of creditors' rights generally and by general
equitable principles (whether enforcement is sought by proceedings in equity or
at law); and neither the Borrower nor any other Loan Party is in breach or
violation of or in default under any Material Agreement in any material respect
which would individually or in the aggregate have a Material Adverse Effect.
Each of the Lenders, the Managing Agents and the Administrative Agent has
received a complete and correct copy of each of the Material Agreements and the
Junior Subordinated Notes (including in each case all exhibits, schedules and
disclosure letters referred to therein or delivered pursuant thereto, if any)
and all amendments thereto and other side letters or agreements affecting the
terms thereof. As of the Initial Closing Date and the Second Closing Date, as
applicable, neither the Borrower nor any of its Subsidiaries is party to any
Program Services Agreement.
3.14 Subsidiaries. The Subsidiaries listed on Schedule 4 constitute all
of the direct and indirect Subsidiaries of the Borrower.
3.15 Purpose of Loans.
(a) (i) Prior to the Second Closing Date proceeds of the Term Loans
and/or Revolving Loans shall be used only as follows: (A) $ ____________, to
make advances to UTG to be used by UTG to repay all obligations under the
Existing Credit Agreement, which Existing Credit Agreement shall then be
canceled, (B) $_____________ to make advances to UTG to be used by UTG to
defease the Senior Subordinated Notes, (C) $_____________ to make advances to
UTG to be used by UTG to repay all its indebtedness to Network, (D) $________
for the Borrower to purchase partnership interests in Network and (E) to pay
fees and expenses payable in connection with the execution of this Agreement.
(ii) Upon the Second Closing Date, the proceeds of the Term Loans
and/or Revolving Loans shall be used as follows: first, (A) $__________ to make
advances to UTG to be used by UTG to repay all Sponsor Loans, (B) $_________ to
make advances to the Borrower's shareholders, (C) $__________ to make advances
to UTG to repay all principal and interest under the Galavision Note, (D)
$__________ for the Borrower to invest in Entravision and (E) for general
corporate purposes, then as set forth in Section 3.15(c).
(b) The proceeds of the Incremental Loans shall be used only as
follows: (i) subject to Section 6.8, to repurchase its Junior Subordinated Notes
and/or for the repurchase by PTI Holdings of its Junior Subordinated Notes and
(ii) Acquisitions permitted under this Agreement.
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(c) The proceeds of the Revolving Loans shall be used as follows: (i)
as set forth in Section 3.15(a), (ii) subject to Section 6.8, to repurchase its
Junior Subordinated Notes and/or for the repurchase by PTI Holdings of its
Junior Subordinated Notes, (iii) Acquisitions permitted under this Agreement and
(iv) for general corporate purposes.
3.16 Environmental Matters. Except as set forth on Schedule 8, to the
Borrower's knowledge after reasonable inquiry:
(a) The Properties and all operations at the Properties are in
compliance in all material respects with all applicable Environmental Laws, and
there is no contamination at, under or about the Properties, or violation of any
Environmental Law with respect to the Properties or the business conducted at
the Properties which involves a matter or matters which has caused or are
reasonably likely to cause a Material Adverse Effect.
(b) Neither the Borrower nor any of its Subsidiaries has received any
notice of violation, alleged violation, non-compliance, liability or potential
liability regarding environmental matters or compliance with Environmental Laws
with regard to any of the Properties or the business conducted at the Properties
which involves a matter or matters which has caused or are reasonably likely to
cause a Material Adverse Effect, nor does the Borrower have knowledge or reason
to believe that any such notice will be received or is being threatened except
insofar as such notice or threatened notice, or any aggregation thereof, does
not involve a matter or matters that is or are reasonably likely to cause a
Material Adverse Effect.
(c) No judicial proceedings or governmental or administrative action is
pending, or, to the knowledge of the Borrower, threatened, under any
Environmental Law to which the Borrower or any of its Subsidiaries is named as a
party with respect to the Properties or the business conducted at the Properties
which involves a matter or matters which has caused or are reasonably likely to
cause a Material Adverse Effect, nor are there any consent decrees or other
decrees, consent orders, administrative orders or other orders, or other
administrative or judicial requirements outstanding under any Environmental Law
with respect to the Properties or such business except insofar as such
proceeding, action, decree, order or other requirement, or any aggregation
thereof, is not reasonably likely to cause a Material Adverse Effect.
3.17 Accuracy and Completeness of Information. The documents furnished
and the statements made in writing to the Lenders by the Borrower in connection
with the negotiation, preparation or execution of this Agreement or any of the
other Loan Documents taken as a whole do not contain any untrue
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statement of fact material to the creditworthiness of the Borrower or omit to
state any such material fact necessary in order to make the statements contained
therein not misleading, in either case which has not been corrected,
supplemented or remedied by subsequent documents furnished or statements made in
writing to the Lenders prior to the date hereof. The projections and pro forma
financial information contained in such materials are based upon good faith
estimates and assumptions believed by the Borrower to be reasonable at the time
made and as of the Initial Closing Date and the Second Closing Date, as
applicable, it being recognized that such projections as to future events are
not to be viewed as facts and that actual results during the period or periods
covered by any such projections may differ from the projected results.
3.18 Real Property Assets. Schedule 8 sets forth all real property
that, as of the Initial Closing Date and the Second Closing Date, as applicable,
will be acquired, owned, leased, occupied, used, controlled, managed or operated
by the Borrower, any Guarantor or any of their respective Subsidiaries and each
Primary Station; provided, however, that this representation and warranty shall
not be breached unless the failure to list (or the incorrect listing of) a
Property on Schedule 8 would reasonably be expected to cause a Material Adverse
Effect.
3.19 Permits, Etc. Except as set forth on Schedule 7, each Loan Party
has all permits, licenses, authorizations and approvals required for it lawfully
to acquire, own, lease, control, manage or operate each Primary Station
currently owned, leased, controlled, managed or operated by such Loan Party
(including, without limitation, all Media Licenses) except for such permits,
licenses, authorizations or approvals required for the lawful ownership, lease,
control, management or operation of a Primary Station, the failure to obtain or
maintain which will not have a Material Adverse Effect. Each such Primary
Station is in compliance in all material respects with all such permits,
licenses, authorizations and approvals. Each Loan Party has duly and timely
filed all reports and documents required by the Communications Act with respect
to the ownership, lease, management or operation of each Primary Station owned
by such Loan Party, except for such reports or documents the failure to file
which will not have a Material Adverse Effect. No condition exists or event has
occurred which, in itself or with the giving of notice or lapse of time or both,
would result in the suspension, revocation, impairment, forfeiture or
non-renewal of any such permit, license, authorization or approval required for
the lawful ownership, lease, control, management or operation of a Primary
Station, and, except as set forth in Schedule 11, there is no claim that any
thereof is not in full force and effect, except for such of the immediately
preceding matters which are not likely or reasonably likely to cause a Material
Adverse Effect. Except as set forth in Schedule 11 and
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except for such of the immediately preceding matters which are not likely or
reasonably likely to cause a Material Adverse Effect, there are (i) no
judgments, decrees or orders issued or to the Borrower's knowledge threatened by
the FCC with respect to the Borrower, any Subsidiary or any of the Primary
Stations, (ii) no complaints, petitions, filings or other proceedings pending or
to the Borrower's knowledge threatened before the FCC (other than rule making of
general applicability to the broadcast industry) with respect to the Borrower,
any Subsidiary or any of the Primary Stations and (iii) no events that have
occurred that could result in the imposition of any financial penalty by the FCC
upon the Borrower, any Subsidiary or any of the Primary Stations.
3.20 Patents, Trademarks, Etc. Schedules A, B and C to the Guarantor
Security Agreements executed by UTG, Galavision and Network, respectively,
accurately and completely list all material patents, trademarks, service marks,
trade names and copyrights owned by or licensed to any Loan Party (other than
rights relating to film rights, software program rights and copyrights with
respect to the content of news and other programs broadcast by a Station) on the
Initial Closing Date and the Second Closing Date, as applicable, that are
necessary in the operation of any Primary Station.
3.21 Copyright Act Requirements. Each Loan Party that owns, leases,
manages or operates a Primary Station has recorded or deposited with and paid to
the United States Copyright Office, the Registrar of Copyrights, the Copyright
Royalty Tribunal, the Patent and Trademark Office, the American Society of
Composers, Authors and Publishers, Broadcast Music, Inc. and/or any other
licensors of copyrighted materials, all notices, statements of account, royalty
fees and other documents and instruments required under the terms and conditions
of any patent, trademark, service mark, trade name and copyright used in the
operation of a Primary Station and/or the Copyright Act of 1976, as amended from
time to time, and the rules and regulations promulgated thereunder and, except
as disclosed in writing to the Administrative Agent, is not liable to any Person
for copyright infringement under any law, rule, regulation, contract or license
as a result of its business operation, all except to the extent that
non-compliance with the preceding requirements would not, in the aggregate, be
reasonably expected to have a Material Adverse Effect.
3.22 Nature of Business. Neither the Borrower nor any of its
Subsidiaries is engaged in any material business other than the ownership and
operation of Spanish-language television networks, cable networks, stations and
translators, the acquisition, financing, production and exploitation of
programming, the ownership of stock of or other interests in
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companies that own and operate such facilities and, after the Second Closing
Date, any Media/Communications Business.
3.23 FCC Matters; Media Licenses. The Borrower and its Subsidiaries are
in all material respects in compliance with the Communications Act, including,
without limitation, the rules, regulations and published policies of the FCC
relating to the transmission of television signals, all except to the extent
that non-compliance with the preceding requirements would not, in the aggregate,
be reasonably expected to have a Material Adverse Effect. Each Station owned by
the Borrower or any of its Subsidiaries on the Initial Closing Date and the
Second Closing Date, as applicable, is set forth on Schedule 9. All Material
Media Licenses owned by the Borrower or its Subsidiaries are held in License
Subsidiaries.
3.24 Ranking of Loans. This Agreement and the other Loan Documents to
which the Borrower is a party, when executed, and the Loans, when borrowed are
and will be the direct and general obligations of the Borrower. The Borrower's
obligations hereunder and thereunder rank and will rank at least pari passu in
priority of payment to all other Senior Debt.
3.25 Executive Offices. The current location of the Borrower's and each
of its Subsidiaries' executive office and principal place of business as of the
Initial Closing Date or the Second Closing Date, as applicable, is as set forth
on Schedule 10.
3.26 Insolvency. (a) After giving effect to the funding of the Term
Loans to be funded on the Initial Closing Date, the existence of the Junior
Subordinated Notes and the payment of all estimated legal, investment banking,
underwriting, accounting and other fees related hereto and thereto, the Borrower
and each other Loan Party will be Solvent as of and on the Initial Closing Date.
(b) After giving effect to the funding of the Term Loans on the Initial
Closing Date and the Second Closing Date, the funding of any Incremental Loans
to be funded on the Second Closing Date, the funding of any Revolving Loans to
be funded on the Second Closing Date, the aggregate Letter of Credit Amount of
any Letters of Credit to be issued on the Second Closing Date, and the payment
of all estimated legal, investment banking, underwriting, accounting and other
fees related hereto, thereto and to the IPO, the Borrower and each other Loan
Party will be Solvent as of and on the Second Closing Date.
3.27 Labor Matters. As of the Initial Closing Date and the Second
Closing Date, as applicable, there are no strikes or other labor disputes
against the Borrower or any of its
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Subsidiaries pending or, to the Borrower's knowledge, threatened against any
Loan Party.
3.28 Condemnation. To the Borrower's knowledge and except as set forth
in Schedule 8, no taking of any of the Properties or any part thereof through
eminent domain, conveyance in lieu thereof, condemnation or similar proceeding
is pending or, to the knowledge of the Borrower, threatened by any Governmental
Authority which would reasonably be expected to have a Material Adverse Effect.
3.29 Leases, Licenses, Permits, Site Use Agreements and Other Occupancy
Agreements. To the Borrower's knowledge and except as set forth on Schedule 8,
any and all leases, licenses, permits, site use agreements and any other type of
occupancy permit to which the Borrower, any Guarantor or any of their respective
Subsidiaries is a party are in full force and effect with no material defaults
existing thereunder which individually or in the aggregate would have a Material
Adverse Effect.
3.30 Corporate Organization. (a) On the Initial Closing Date, (i) the
Borrower owns 80.11% of PTI Holdings, (ii) PTI Holdings owns 100% of PTI, (iii)
PTI owns 100% of UTG, (iv) PTI owns .01% of each of the License Subsidiaries set
forth in Part __ of Schedule 4, (v) UTG owns 99.99% of each of the License
Subsidiaries set forth in Part __ of Schedule 4, (vi) Sunshine Acquisition owns
4.75% of Sunshine L.P., (vii) Sunshine L.P. owns 48.745% of Network Holding,
(viii) Network Holding owns 99.99% of Network and (ix) Network owns 100% of
Galavision.
(b) On the Second Closing Date, (i) the Borrower owns 100% of PTI
Holdings, Galavision and Sunshine Acquisition and 95.25 of Sunshine L.P., (ii)
PTI Holdings owns 100% of UTG, (iii) PTI Holdings owns .01% of the License
Subsidiaries set forth in Part __ of Schedule 4, (iv) UTG owns 99.99% of the
License Subsidiaries set forth in Part __ of Schedule 4, (v) the Borrower owns
71.85% of Network, (vi) Sunshine L.P. owns 28.15% of Network, (vii) Sunshine
Acquisition owns 4.75% of Sunshine L.P., (viii) PTI has been merged into PTI
Holdings and (ix) Network Holding has been liquidated and its assets distributed
to the Borrower and Sunshine L.P..
SECTION 4. CONDITIONS PRECEDENT
4.1 Conditions to Initial Closing Date. The agreement of each Lender to
make the Term Loans and/or Revolving Loans requested to be made by it on the
Initial Closing Date is subject to the satisfaction, immediately prior to or
concurrently with the making of such Loans on the Initial Closing Date (except
as otherwise expressly provided hereunder), of the following conditions
precedent:
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(a) Credit Agreement. The Administrative Agent shall have received this
Agreement, executed and delivered by an officer of the Borrower as of the
Initial Closing Date, with a counterpart for each Lender, and such officer shall
be covered by an incumbency certificate which shall have been executed and
delivered to the Administrative Agent.
(b) Other Loan Documents. The Administrative Agent shall have received
the Term Notes, the Revolving Notes, the Guarantees, the Guarantor Collateral
Documents, the Collateral Documents, the Intercreditor Agreement and all UCC-1
Financing Statements and other agreements or instruments required to create or
perfect a security interest in the Collateral executed in connection herewith,
in each case executed and delivered by an officer of the relevant Loan Party
with a counterpart for each Lender, and such officer shall be covered by an
incumbency certificate which shall have been executed and delivered to the
Administrative Agent.
(c) Incumbency Certificates. The Administrative Agent shall have
received, with an executed counterpart for each Lender, an incumbency
certificate of the Borrower and the Guarantors, in each case dated the Initial
Closing Date, executed by one of its Responsible Officers or its Secretary or
Assistant Secretary or its general partner, as applicable.
(d) Corporate/Partnership Proceedings. The Administrative Agent shall
have received, with a counterpart for each Lender, a copy of the resolutions of
the Board of Directors of each of the corporate Loan Parties and a copy of the
partnership authorization of each partner of each of the partnership Loan
Parties, each dated as of the Initial Closing Date authorizing (i) the IPO, (ii)
the Loan Documents to which it is or will be a party and (iii) the borrowings
contemplated hereunder (in the case of the Borrower), in each case certified by
the Secretary or an Assistant Secretary or a general partner, as applicable, of
such Loan Party as of the Initial Closing Date, which certificate states that
the resolutions and partnership authorizations thereby certified have not been
amended, modified, revoked or rescinded and are in full force and effect.
(e) Organizational Documents. The Administrative Agent shall have
received, with a counterpart for each Lender, copies of the certificate of
incorporation and by-laws of each corporate Loan Party and copies of all
partnership agreements of each partnership Loan Party, certified as of the
Initial Closing Date as complete and correct copies thereof by the Secretary or
an Assistant Secretary of such corporate Loan Party and a general partner of
each partnership Loan Party.
(f) Fees and Costs. The Managing Agents and the Administrative Agent
shall have received payment of all fees,
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costs, expenses and taxes accrued and unpaid and otherwise due and payable on or
before the Initial Closing Date by the Borrower in connection with this
Agreement.
(g) Legal Opinions. The Administrative Agent shall have received, with
a counterpart for each Lender, the following executed legal opinions:
(i) the executed legal opinion of O'Melveny & Myers, counsel to
the Borrower and the Guarantors, substantially in the form of Exhibit K
and reasonably acceptable to the Majority Lenders;
(ii) the executed legal opinion of O'Melveny & Myers, FCC counsel
to the Borrower and the Guarantors, in form and substance reasonably
satisfactory to the Majority Lenders; and
(iii) such other legal opinions as the Managing Agents may
reasonably request.
(h) Material Agreements. The Administrative Agent shall have received,
with a counterpart for each Lender, copies of the Galavision Note, each of the
Material Agreements and each of the other contracts listed in Schedule D to the
Security Agreement and each Guarantor Security Agreement, in form and substance
satisfactory to the Managing Agents, and each of the documents evidencing the
Junior Subordinated Notes, all as certified as true and correct by the Borrower
and all in form and substance satisfactory to the Majority Lenders, all of which
Material Agreements (other than the Underwriting Agreement and the Registration
Statement) shall have been assigned by the applicable Loan Parties to the
Lenders as collateral under the Loan Documents.
(i) Recording. The Administrative Agent shall have received as of the
Initial Closing Date evidence of the recording, or of the provision acceptable
to the Administrative Agent for the recording, of each document reasonably
necessary to be recorded in such office or offices as may be necessary or, in
the reasonable opinion of the Administrative Agent, desirable to perfect each
Lien purported to be created thereby or to otherwise protect the rights of the
Administrative Agent and the Lenders thereunder and evidence of the filing, or
of provision acceptable to the Administrative Agent for the filing, of
appropriate financing statements on Form UCC-1 naming the Administrative Agent,
for the benefit of the Lenders, as secured party, duly executed by each debtor
under a Security Agreement or a Guarantor Security Agreement, in such office or
offices as may be necessary or, in the reasonable opinion of the Administrative
Agent, desirable to perfect the security
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interests purported to be created by any of the Collateral Documents or the
Guarantor Collateral Documents.
(j) Lien Searches. The Administrative Agent shall have received (i)
certified copies of requests for information from all relevant jurisdictions,
listing all effective financing statements which name the Borrower or any
Guarantor, as debtor, together with copies of such financing statements, none of
which, except for Liens permitted by Section 6.3 or as otherwise agreed to in
writing by the Managing Agents, shall cover any of the Collateral and (ii)
official searches of the United States Copyright Office and the United States
Patent and Trademark Office, in form and substance reasonably satisfactory to
the Managing Agents.
(k) Stock Certificates. The Administrative Agent shall have received
original stock certificates representing all outstanding shares of stock of PTI
Holdings, PTI, UTG, Galavision, Sunshine and each corporate License Subsidiary
pledged to the Administrative Agent pursuant to the Collateral Documents or the
Guarantor Collateral Documents (which shall be delivered to, and subject to the
satisfaction of, the Administrative Agent), together with an undated stock power
for each of such certificates, duly executed in blank by an authorized officer
of the pledgor.
(l) Good Standing Certificates. The Administrative Agent shall have
received a certificate, dated a recent date, of the Secretary of State of the
States of Delaware, California and, unless otherwise waived by the Managing
Agents, each other jurisdiction where a Loan Party is required to be qualified
to do business under such jurisdiction's law, certifying as to the existence and
good standing of, and the payment of taxes by, each Loan Party in such state and
listing all charter documents of such Loan Party on file with such officials.
(m) Tax and Legal Structure; Litigation. The Lenders shall have
reviewed, and be reasonably satisfied with, (i) the state and federal tax
assumptions of the Borrower and each Subsidiary, (ii) the ownership, capital,
organizational and legal structure of the Borrower and its Subsidiaries and
(iii) the nature and status of any litigation affecting the Borrower and its
Subsidiaries and/or this Agreement and the transactions contemplated hereby,
including the IPO.
(n) IPO. The Administrative Agent shall have received with regard to
the IPO (i) copies of binding agreements with underwriters (collectively, the
"Underwriters Agreements") to effect an initial public offering of the
Borrower's capital stock yielding gross proceeds of at least $125,000,000 and
(ii) a copy of the Form S-1 Registration Statement (the "Registration
Statement") relating thereto and evidence that
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such Registration Statement has been filed with the Securities and Exchange
Commission, in each case certified as true and correct by the Borrower.
(o) Existing Indebtedness. The Administrative Agent shall have received
evidence reasonably satisfactory to it of (i) full repayment of all existing
Indebtedness of UTG under the Existing Credit Agreement, (ii) defeasance of the
Senior Subordinated Notes and (iii) repayment of the Borrowers Indebtedness to
Network referred to in Section 3.15(a)(i)(C).
(p) No Default/Representations. No Default shall have occurred and be
continuing on the Initial Closing Date or would occur after giving effect to the
Loans requested to be made on the Initial Closing Date and the representations
and warranties contained in this Agreement and each other Loan Document and
certificate or other writing delivered to the Lenders in satisfaction of the
conditions set forth in this Section 4.1 prior to or on the Initial Closing Date
shall be correct in all material respects on and as of the Initial Closing Date,
and the Administrative Agent shall have received a certificate of the Borrower
to such effect in the form of Exhibit F, dated as of the Initial Closing Date
and executed by a Responsible Officer of the Borrower.
(q) No Prohibitions. No statute, rule, regulation, order, decree or
preliminary or permanent injunction of any court or administrative agency or, to
the best knowledge of the Borrower, any such action threatened by any Person,
shall be in effect that prohibits the Lenders from consummating the transactions
contemplated by this Agreement or any other Loan Document or prohibits the IPO.
(r) Solvency Certificate. The Administrative Agent shall have received
for distribution to the Lenders a certificate of the Chief Financial Officer of
the Borrower to the effect that each Loan Party is Solvent after giving effect
to the funding of the Term Loans and the Revolving Loans, if any, on the Initial
Closing Date hereunder, the existence of the Junior Subordinated Notes, the
Sponsor Loans and the Galavision Note, the execution and delivery of the
Guarantees, the making of all Restricted Payments which are to be made prior to
consummation of the IPO, and the payment of all estimated legal, investment
banking, accounting, underwriting and other fees related hereto and thereto.
(s) Insurance Policies. The Administrative Agent shall have received
evidence that the insurance policies provided for in Section 5.5 and in the
other Loan Documents are in full force and effect, certified by the insurance
broker therefor, together with appropriate evidence showing the Administrative
Agent as an additional named insured or loss payee, as appropriate, for the
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benefit of the Lenders, all in form and substance reasonably satisfactory to the
Administrative Agent.
(t) Operational Consents. The Administrative Agent shall have received
evidence, in form and substance reasonably satisfactory to the Administrative
Agent that (i) the Borrower and its Subsidiaries have obtained all FCC consents
and licenses required by law or necessary for the operation of the Borrower and
its Subsidiaries and (ii) the Borrower and its Subsidiaries have obtained all
other consents and licenses required by law or necessary for the operation of
the Borrower and its Subsidiaries, the failure of which to obtain would have a
Material Adverse Effect.
(u) Financial Certificates. The Administrative Agent shall have
received the following certificates, in each case signed by a Responsible
Officer of the Borrower and in form, substance and detail acceptable to the
Managing Agents:
(i) A Certificate indicating that after giving effect to the
transactions contemplated to occur on (A) the Initial Closing Date and
(B) the Second Closing Date, pro forma EBITDA for the Borrower and its
Subsidiaries on a consolidated basis for the fiscal quarter ending
immediately prior to the Initial Closing Date and the Second Closing
Date, respectively, and the immediately preceding three fiscal quarter
is at least $115,000,000;
(ii) A Certificate indicating that after giving effect to the
transactions contemplated to occur (A) on the Initial Closing Date and
(B) on the Second Closing Date, pro forma Funded Debt for the Borrower
and its Subsidiaries on a consolidated basis will not exceed
$600,000,000 on and as of the Initial Closing Date and the Second
Closing Date, respectively;
(iii) A Certificate indicating that the Financial Statements
accurately reflect the financial condition and performance of the
Borrower and its Subsidiaries for fiscal year 1995 in accordance with
GAAP consistently applied;
(iv) A Certificate setting forth actual EBITDA of the Borrower
and each of its Subsidiaries for fiscal year 1995, and further
certifying that such actual EBITDA for fiscal year 1995 is accurately
calculated; and
(v) A Covenant Compliance Certificate showing compliance with
the covenants referred to therein, on a pro forma basis, as of the
Initial Closing Date and the Second Closing Date, respectively.
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(v) Non-Foreign Entity; Tax Identification Number. The Administrative
Agent shall have received, reviewed and approved a certificate from the Borrower
and each Subsidiary regarding such entity's domestic status, which certificate
shall also include such entity's tax identification number.
(w) Additional Proceedings. The Administrative Agent shall have
received such other approvals, opinions and documents as any Lender, through the
Administrative Agent, may reasonably request and all legal matters incident to
the making of such Loans shall be reasonably satisfactory to the Administrative
Agent and the Managing Agents.
4.2 Conditions to Second Closing Date. The agreement of each Lender to
make (i) any Term Loans and any Revolving Loans requested to be made by it on
the Second Closing Date, and participate in any Letters of Credit issued on the
Second Closing Date, and the agreement of the Administrative Agent to issue any
Letter of Credit requested to be issued on the Second Closing Date are subject
to the satisfaction, immediately prior to or concurrently with the making of
such Loans and the issuance of such Letter(s) of Credit and the effectiveness of
such Commitment on the Second Closing Date (except as otherwise expressly
provided hereunder), of the following conditions precedent:
(a) Initial Closing Date. The Initial Closing Date shall have occurred.
(b) Loan Documents. The Administrative Agent shall have received such
amendments or supplements to the Loan Documents and the formation documents of
the Loan Parties, or recordings or filings with respect thereto, as may be
necessary to accurately reflect the legal and ownership structure of the
Borrower and its Subsidiaries as of the Second Closing Date or effect or confirm
the Lenders' perfected security interests in the Collateral, in each case
executed and delivered by an officer of the relevant Loan Party with a
counterpart for each Lender.
(c) Omnibus Certificate. The Administrative Agent shall have received
an Omnibus Certificate of each Loan Party, with an executed counterpart for each
Lender, dated the Second Closing Date, stating that (i) the certificate of
incorporation and by-laws, or partnership agreement, as the case may be, of such
Loan Party, its Resolutions or partnership authorization, as the case may be,
and its Incumbency Certificate in each case delivered to the Administrative
Agent on the Initial Closing Date remain true and correct and in full force and
effect with no amendments thereto (or, if amended, attaching copies of such
amendments), (ii) the copies of the Material Agreements, the
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other contracts referred to in Schedule D to the Security Agreement and each of
the Guarantor Security Agreements and the Indentures pursuant to which the
Junior Subordinated Notes were issued to the Administrative Agent on the Initial
Closing Date remain true and correct and in full force and effect with no
amendments thereto (other than Material Agreements which cease to be included in
the definition of "Material Agreements" on the Second Closing Date) and such
Material Agreements constitute all Material Agreements of such Loan Party, (iii)
no change has occurred with respect to the insurance program of such Loan Party
since information with respect thereto was delivered to the Administrative Agent
in connection with the Initial Closing Date and (iv) no change in such Loan
Party's financial condition or otherwise has occurred which would make any
financial certificate delivered to the Administrative Agent in connection with
the Initial Closing Date incorrect or misleading.
(d) Costs. The Managing Agents and the Administrative Agent shall have
received payment of all costs, expenses and taxes accrued and unpaid and
otherwise due and payable on or before the Second Closing Date by the Borrower
pursuant to this Agreement.
(e) Legal Opinions. The Administrative Agent shall have received, with
a counterpart for each Lender, the following:
(i) a letter of O'Melveny & Myers, counsel to the Borrower and the
Guarantors, downdating the opinions provided by such firm on the
Initial Closing Date and addressing such other matters arising with
regard to the Second Closing Date as the Managing Agent may reasonably
request; and
(ii) such other legal opinions as the Managing Agents may
reasonably request.
(f) Stock Certificates. The Administrative Agent shall have received
original stock certificates representing all outstanding shares of stock of PTI
Holdings, UTG, Galavision, Sunshine and each corporate License Subsidiary
pledged to the Administrative Agent pursuant to the Collateral Documents or the
Guarantor Collateral Documents (which shall be delivered to, and subject to the
satisfaction of, the Administrative Agent), together with an undated stock power
for each of such certificates, duly executed in blank by an authorized officer
of the pledgor.
(g) IPO. The Administrative Agent shall have received evidence
reasonably satisfactory to the Managing Agents that the IPO has been consummated
and the Borrower has received gross proceeds of at least $125,000,000 in
connection therewith.
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(h) Existing Indebtedness. The Administrative Agent shall have received
evidence reasonably satisfactory to it of full repayment of all Sponsor Loans
and cancellation of the Sponsor Loan Documents, the Combined Entities Loan
Agreement, the Program Cost Sharing Agreement and the Galavision Note.
(i) No Default/Representations. No Default shall have occurred and be
continuing on the Second Closing Date or would occur after giving effect to the
Loans requested to be made and any Letters Credit requested to be issued on the
Second Closing Date and the representations and warranties contained in this
Agreement and each other Loan Document and certificate or other writing
delivered to the Lenders in satisfaction of the conditions set forth in Section
4.1 or this Section 4.2 prior to or on the Second Closing Date shall be correct
in all material respects on and as of the Second Closing Date, and the
Administrative Agent shall have received a certificate of the Borrower to such
effect in the form of Exhibit F, dated as of the Second Closing Date and
executed by a Responsible Officer of the Borrower.
(j) No Prohibitions. No statute, rule, regulation, order, decree or
preliminary or permanent injunction of any court or administrative agency or, to
the best knowledge of the Borrower, any such action threatened by any Person,
shall be in effect that prohibits the Lenders from consummating the transactions
contemplated by this Agreement or any other Loan Document or prohibits the IPO.
(k) Solvency Certificate. The Administrative Agent shall have received
for distribution to the Lenders a certificate of the Chief Financial Officer of
the Borrower to the effect that each Loan Party is Solvent after giving effect
to the funding of any Term Loans or Revolving Loans on the Second Closing Date,
the existence of the Junior Subordinated Notes, the execution and delivery of
the Guarantees, the making of all Restricted Payment to be made on the Second
Closing Date, the consummation of the IPO and the payment of all estimated
legal, investment banking, accounting, underwriting and other fees related
hereto and thereto.
(l) Additional Proceedings. The Administrative Agent shall have
received such other approvals, opinions and documents as any Lender, through the
Administrative Agent, may reasonably request and all legal matters incident to
the making of such Loans and the issuance of any Letters of Credit shall be
reasonably satisfactory to the Administrative Agent and the Managing Agents.
4.3 Conditions to Incremental Loans. The Incremental Lenders'
consideration of a request for the initial Incremental Loans shall be subject to
the following, in each case to the
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satisfaction of the Administrative Agent, the Managing Agents and the
Incremental Lenders:
(a) Initial Closing Date and Second Closing Date. The Initial Closing
Date and the Second Closing Date shall have occurred.
(b) Incremental Notes. The Administrative Agent shall have received,
for each Incremental Lender, an Incremental Note duly executed by the Borrower
in favor of such Lender in a principal amount equal to such Incremental Lender's
Incremental Loan Commitment.
(c) Incumbency Certificate. The Administrative Agent shall have
received, with an executed counterpart for each Incremental Lender, an
incumbency certificate of the Borrower dated as of the date of such initial
borrowing, executed by one of its Responsible Officers or its Secretary or
Assistant Secretary.
(d) Corporate Proceedings. The Administrative Agent shall have
received, with an executed counterpart for each Incremental Lender, a copy of
the resolutions of the board of directors of the Borrower dated as of the date
of such initial borrowing authorizing the borrowing of Incremental Loans
pursuant to the Incremental Loan Commitments and certified by the Secretary or
an Assistant Secretary of the Borrower, which certificate states that such
resolutions have not been amended, modified, revoked or rescinded and are in
full force and effect.
(e) No Default/Representations. No Default shall have occurred and be
continuing on the date of such initial borrowing or would occur after giving
effect to the Incremental Loans proposed to be made on the date of such
borrowing and the representations and warranties contained in this Agreement and
each other Loan Document and certificate or other writing delivered to the
Incremental Lenders in satisfaction of the conditions set forth in this Section
4.3 prior to or on the date of such initial borrowing shall be correct in all
material respects on and as of the date of such initial borrowing and the
Administrative Agent shall have received a Covenant Compliance Certificate dated
as of the date of such initial borrowing.
(f) Form U-1. If required or requested under Section 3.10, a Form U-1
for each of the Administrative Agent, the Managing Agents and each Lender.
(g) Additional Proceedings. The Administrative Agent shall have
received such other approvals, opinions and documents as any Incremental Lender,
through the Administrative Agent, may reasonably request and all legal matters
incident to the making of such Incremental Loans shall be reasonably
satisfactory to
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the Administrative Agent, the Managing Agents and each Incremental Lender.
4.4 Conditions to Each Loan or Letter of Credit. The agreement of each
Lender to make each Loan and to participate in each Letter of Credit, and the
agreement of the Administrative Agent to issue each Letter of Credit, requested
to be made, issued or participated in by it is subject to the satisfaction,
immediately prior to or concurrently with the making of such Loan or the
issuance or participation in such Letter of Credit, of the following conditions
precedent:
(a) Representations and Warranties; No Event of Default. The following
statements shall be true and the Borrower's acceptance of the proceeds of such
Loan or its delivery of an executed Letter of Credit Request shall be deemed to
be a representation and warranty of the Borrower on the date of such Loan or as
of the date of issuance of such Letter of Credit, as applicable, that:
(i) The representations and warranties contained in this
Agreement and in each other Loan Document and certificate or other
writing delivered to the Lenders prior to, on or after the Initial
Closing Date pursuant hereto and on or prior to the date for such Loan
or the issuance of such Letter of Credit are correct on and as of such
date in all material respects as though made on and as of such date
except to the extent that such representations and warranties expressly
relate to an earlier date; and
(ii) No Default has occurred and is continuing or would result
from the making of the Loan to be made on such date or the issuance of
such Letter of Credit as of such date
(b) Legality. The making of such Loan or the issuance of such Letter of
Credit, as applicable, shall not contravene any law, rule or regulation
applicable to any Lender or the Borrower or any other Loan Party.
(c) Borrowing Notice/Letter of Credit Request. The Administrative Agent
shall have received a borrowing notice or Letter of Credit Request, as
applicable, pursuant to the provisions of this Agreement from the Borrower.
(d) Approvals. With respect to a borrowing in connection with an
Acquisition of television or radio stations, the Administrative Agent shall have
received copies of all FCC and regulatory approvals and licenses necessary in
connection with any such Acquisition and all shareholder approvals necessary in
connection with any such acquisition.
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(e) Collateral Documentation. With respect to a borrowing in connection
with an Acquisition, the Administrative Agent shall have received, reviewed and
approved all documents reasonably necessary to insure that the Lenders have a
first priority security interest in, and assignment of, all material real
property and all other assets and interests acquired, including consents of
third parties if reasonably requested by the Managing Agents.
SECTION 5. AFFIRMATIVE COVENANTS
The Borrower hereby agrees that from and after the Initial Closing
Date, so long as any Commitments remain in effect, any Note remains outstanding
and unpaid or any other amount is owing to any Lender, the Administrative Agent
or the Managing Agents hereunder, or any Letter of Credit remains outstanding:
5.1 Financial Statements. The Borrower shall furnish to the Managing
Agents (for distribution to each Lender):
(a) as soon as available, but in any event within 90 days after the end
of each fiscal year of the Borrower, a copy of the consolidated and
consolidating balance sheet of the Borrower and its consolidated Subsidiaries as
at the end of such year and the related consolidated and consolidating
statements of operations and retained earnings, stockholders' equity and of cash
flows for such year, setting forth in each case in comparative form the figures
for the previous year, audited without a "going concern" or like qualification
or exception, or other qualification arising out of the scope of the audit, by
the Accountants, accompanied by a certificate of a Responsible Officer of the
Borrower substantially in the form of Exhibit L setting forth the calculation of
Excess Cash Flow for such fiscal year;
(b) as soon as available, but in any event not later than 45 days after
the end of each of the first three quarterly periods of each fiscal year of the
Borrower, the unaudited consolidated and consolidating balance sheet of the
Borrower and its consolidated Subsidiaries as at the end of such quarter and the
related unaudited consolidated and consolidating statements of operations,
retained earnings, stockholders' equity and of cash flows of the Borrower and
its consolidated Subsidiaries for such quarter and the portion of the fiscal
year through the end of such quarter, setting forth in each case in comparative
form the figures for the previous year, certified by a Responsible Officer of
the Borrower as being fairly stated in all material respects (subject to normal
year-end audit adjustments);
(c) as soon as available, but in any event within 90 days after the end
of each fiscal year of the Borrower, a certificate
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from the Accountants verifying compliance by the Borrower and its Subsidiaries
on a consolidated basis with each financial covenant set forth in Section 6.1
and, based on their review of the financial reports of the Borrower and its
Subsidiaries on a consolidated basis, an opinion of the Accountants that no
Default shall have occurred under any Loan Document; provided, that the
Accountants shall not be required, as a result of delivering such opinion, to
undertake any special investigation in addition to their normal audit
examination; and
(d) as soon as available, but in any event within 45 days after the end
of each fiscal quarter of the Borrower, financial reports, consistent with the
relevant Loan Parties' internal reporting practices as in effect on the Initial
Closing Date, relating to the operations of each Primary Station as at the end
of such quarter and the portion of the fiscal year through the end of such
quarter, certified by a Responsible Officer of such Loan Party as being fairly
stated in all material respects (subject to normal year-end audit adjustments);
all such financial statements to be complete and correct in all material
respects and to be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein and with prior
periods (except as approved by the Accountants or Responsible Officer, as the
case may be, and disclosed therein).
5.2 Certificates; Other Information. The Borrower shall:
(a) furnish to the Managing Agents (for distribution to each Lender)
concurrently with the delivery of the financial statements referred to in
Sections 5.1(a) and 5.1(b), a certificate of a Responsible Officer of the
Borrower stating that, (i) to the best of such Officer's knowledge, each Loan
Party during such period has observed or performed all of its covenants
(including calculations substantially in the form of Exhibit G regarding all
financial covenants) and other agreements, and satisfied every condition,
contained in this Agreement and in the Notes and the other Loan Documents to
which it is a party to be observed, performed or satisfied by it, and that such
Responsible Officer has obtained no knowledge of any Default except as specified
in such certificate and (ii) to the best of such Officer's knowledge, no Default
has occurred and the Loan Parties are in compliance with their respective
covenants in the Loan Documents to which they are a party;
(b) at least once during each fiscal year of the Borrower, convene a
bank meeting among the Lenders upon reasonable notice to the Lenders, or attend
such a meeting convened by the Managing Agents, and present a report discussing
the views of the Borrower concerning the recent performance and near and
intermediate term prospects of (i) the businesses in which the
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Borrower and its Subsidiaries are principally engaged and (ii) trends concerning
assets under management, advisory fees, competition and strategic initiatives by
the Borrower and its Subsidiaries;
(c) furnish to the Managing Agents (for distribution to each Lender)
within five days after the same are filed, copies of all financial statements
and reports which the Borrower or any Subsidiary may make to, or file with, the
Securities and Exchange Commission or any successor or analogous Governmental
Authority;
(d) furnish to the Managing Agents (for distribution to each Lender)
promptly but, in any event, within 5 Business Days, after receipt thereof,
copies of all financial reports (including, without limitation, management
letters), if any, submitted to the Borrower or any of its Subsidiaries by the
Accountants in connection with any annual or interim audit of the books thereof;
(e) furnish to the Managing Agents (for distribution to each Lender) as
soon as available and in any event not later than January 31 of each year,
commencing with the fiscal year ending on December 31, 1997, a copy of the
annual operating budgets for the Borrower and its Subsidiaries for such fiscal
year, detailed by quarter and a copy of the three-year annual operating budgets
for the Borrower and its Subsidiaries for such three-year period;
(f) furnish to the Managing Agents (for distribution to each Lender) as
soon as possible and in any event within five days after the occurrence of a
Default or, in the good faith determination of a Responsible Officer of the
Borrower, a Material Adverse Effect, the written statement by a Responsible
Officer of the Borrower, setting forth the details of such Default or Material
Adverse Effect and the action which the Borrower proposes to take with respect
thereto;
(g) furnish to the Managing Agents (for distribution to each Lender)
promptly but, in any event, within 5 Business Days, after the same become
available, copies of all statements, reports and other information which the
Borrower or any of its Subsidiaries sends to any holders, as holders, of its
Indebtedness or its securities;
(h) furnish to the Managing Agents (for distribution to each Lender)
(A) as soon as possible and in any event within 30 days after the Borrower knows
or has reason to know that any Termination Event with respect to any Plan has
occurred, a statement of a Responsible Officer of the Borrower describing such
Termination Event and the action, if any, which the Borrower proposes to take
with respect thereto, (B) promptly and
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in any event within ten Business Days after receipt thereof by the Borrower or
any of its ERISA Affiliates from the PBGC, copies of each notice received by the
Borrower or any of its ERISA Affiliates of the PBGC's intention to terminate any
Plan or to have a trustee appointed to administer any Plan, (C) promptly and in
any event within 30 days after the filing thereof with the Internal Revenue
Service, copies of each Schedule B (Actuarial Information) to the annual report
(Form 5500 Series) with respect to each Single Employer Plan maintained for or
covering employees of the Borrower or any of its Subsidiaries if the present
value of the accrued benefits under the Plan exceeds its assets by an amount in
excess of $1,000,000 and (D) promptly and in any event within fifteen Business
Days after receipt thereof by the Borrower or any of its ERISA Affiliates from a
sponsor of a Multiemployer Plan or from the PBGC, a copy of each notice received
by the Borrower or any of its ERISA Affiliates concerning the imposition or
amount of withdrawal liability under Section 4202 of ERISA or indicating that
such Multiemployer Plan may enter reorganization status under Section 4241 of
ERISA;
(i) furnish to the Managing Agents (for distribution to each Lender)
promptly after the commencement thereof, but in any event not later than five
Business Days after service of process with respect thereto on, or the obtaining
of knowledge by, the Borrower or any of its Subsidiaries, notice of each action,
suit or proceeding before any court or governmental authority or other
regulatory body or any arbitrator as to which there is a reasonable possibility
of a determination that would have a Material Adverse Effect;
(j) furnish to the Managing Agents (for distribution to each Lender)
promptly after the sending or filing thereof, but in any event not later than
ten Business Days following such sending or filing, copies of (A) all Ownership
Reports on FCC Form 323 (or any similar form which may be adopted by the FCC
from time to time) and any supplements thereto, and (B) all statements, reports
and other information filed by or on behalf of the Borrower or any of its
Subsidiaries with the FCC if such statement, report or other information
indicates a material change in the condition, financial or otherwise, or
operations of the Borrower or any of its Subsidiaries;
(k) furnish to the Managing Agents (for distribution to each Lender)
promptly upon receipt thereof, but in any event not later than five Business
Days following such receipt, copies of all notices and other communications that
the Borrower or any of its Subsidiaries shall have received from the FCC with
respect to any FCC hearing, order or dispute (A) directly concerning the
Borrower, any of its Subsidiaries, any Station, any Media License or (B) that
may have a Material Adverse Effect;
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(l) furnish to the Managing Agents (for distribution to each Lender) no
later than 10 days prior to the formation or acquisition of any Subsidiary of
the Borrower or a Subsidiary of a Subsidiary, a supplement to Schedule 4,
setting forth the information with respect to each such Subsidiary reasonably
required by the Majority Lenders;
(m) furnish to the Managing Agents (for distribution to each Lender) no
later than 30 days prior to the acquisition of a Media License or Primary
Station by the Borrower or any Subsidiary, a supplement to Schedule 9, setting
forth the information with respect to each Primary Station or Media License
reasonably required by the Majority Lenders; and
(n) furnish to the Managing Agents (for distribution to each Lender)
promptly, such additional financial and other information as any Lender, through
the Administrative Agent, may from time to time reasonably request.
5.3 Payment of Obligations. The Borrower shall, and shall cause each of
its Subsidiaries to, pay, discharge or otherwise satisfy at or before maturity
or before they become delinquent, as the case may be, all its obligations of
whatever nature, except where the failure to so satisfy such obligations would
not have a Material Adverse Effect or except where the amount or validity
thereof is currently being contested in good faith by appropriate proceedings
and reserves in conformity with GAAP with respect thereto have been provided on
the books of the Borrower or its Subsidiaries, as the case may be.
5.4 Conduct of Business and Maintenance of Existence. The Borrower
shall, and shall cause each of its Subsidiaries to, continue to engage in
business of the same general type as conducted by the Borrower and its
Subsidiaries as of the Initial Closing Date and preserve, renew and keep in full
force and effect its corporate existence and take all reasonable action to
maintain all rights, registrations, licenses, privileges and franchises
necessary or desirable in the normal conduct of its business, except to the
extent that a failure to maintain such rights, registrations, licenses,
privileges and franchises would not have a Material Adverse Effect or except as
otherwise permitted pursuant to Section 6.5, and comply with all Contractual
Obligations and Requirements of Law except to the extent that failure to comply
therewith would not, in the aggregate, have a Material Adverse Effect. The
Borrower shall effect the corporate restructure detailed in Section 3.30(b)
within three Business Days following the Initial Closing Date.
5.5 Maintenance of Property; Insurance. The Borrower shall, and shall
cause each of its Subsidiaries to, keep all property useful or necessary in its
business in good working order and condition (ordinary wear and tear excepted);
maintain
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with financially sound and reputable insurance companies or associations
insurance on such of its property in at least such amounts and against such
risks as are usually insured against in the same general area by companies
engaged in the same or a similar business; and furnish to the Administrative
Agent, upon written request, full information as to the insurance carried. All
such policies of insurance on the property of the Borrower and the Subsidiaries
shall contain an endorsement, in form and substance reasonably satisfactory to
the Administrative Agent in its sole discretion, showing the Administrative
Agent, on behalf of the Lenders, as additional insured or loss payee, as
appropriate, or as its interests appear. Such endorsement, or an independent
instrument furnished to the Administrative Agent, shall provide that the
insurance companies will endeavor to give the Administrative Agent at least 30
days' prior written notice before any such policy or policies of insurance shall
be altered or canceled. All policies of insurance required to be maintained
under this Agreement shall be in customary form and with insurers recognized as
adequate by the Administrative Agent and all such policies shall be in such
amounts as shall be customary for similar companies in the same or similar
business in the same geographical area. The Borrower and its Subsidiaries shall
deliver to the Administrative Agent insurance certificates certified by the
Borrower's or such Subsidiary's insurance brokers, as to the existence and
effectiveness of each policy of insurance and evidence of payment of all
premiums then due and payable therefor. In addition, the Borrower shall notify
the Administrative Agent promptly of any occurrence causing a material loss of
any insured Property and the estimated (or actual, if available) amount of such
loss. Further, the Borrower and its Subsidiaries shall maintain all insurance
required under the other Loan Documents.
(i) Each policy for liability insurance shall provide for all
losses to be paid on behalf of the Administrative Agent and the Borrower or its
Subsidiary (as the case may be), as their respective interests may appear, and
each policy for property damage insurance shall, to the extent applicable to
equipment and inventory, provide for all losses (except for losses of less than
$1,000,000 per occurrence, which may be paid directly to the Borrower or such
Subsidiary (as applicable)) to be paid directly to the Administrative Agent.
(ii) Reimbursement under any liability insurance maintained by
the Borrower or its Subsidiaries pursuant to this Section 5.5 may be paid
directly to the Person who shall have incurred liability covered by such
insurance. In the case of any loss involving damage to equipment or inventory as
to which clause (iii) of this Section 5.5 is not applicable, the Borrower will
make or cause to be made the necessary repairs to or replacements of such
equipment or inventory, and any proceeds of insurance maintained by the Borrower
or its Subsidiaries
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pursuant to this Section 5.5 shall be paid by the Administrative Agent to the
Borrower, upon presentation of invoices and other evidence of obligations, as
reimbursement for the costs of such repairs or replacements.
(iii) Upon the occurrence and during the continuance of a
Default, all insurance proceeds in respect of such equipment or inventory shall
be paid to the Administrative Agent and applied in repayment of the
Non-Revolving Loans, as the Majority Lenders shall direct.
5.6 Inspection of Property; Books and Records; Discussions. The
Borrower shall, and shall cause each of its Subsidiaries to, keep proper books
of records and account in which full, true and correct entries in conformity
with GAAP and all Requirements of Law shall be made of all material dealings and
transactions in relation to its business and activities; and upon reasonable
notice and at such reasonable times during usual business hours, permit
representatives of any Lender to visit and inspect any of its properties and
examine and make abstracts from any of its books and records at any reasonable
time and as often as may reasonably be desired and to discuss the business,
operations, properties and financial and other condition of the Borrower and its
Subsidiaries with officers and employees of the Borrower and its Subsidiaries
and with its Accountants (as long as a member of senior management of the
Borrower is present during such discussion).
5.7 Environmental Laws. The Borrower shall, and shall cause each of
its Subsidiaries to:
(a) Comply with, and ensure compliance by all tenants and subtenants,
if any, with, all applicable Environmental Laws and obtain and comply in all
material respects with any and all licenses, approvals, notifications,
registrations or permits required by applicable Environmental Laws except to the
extent that failure to do so could not be reasonably expected to have a Material
Adverse Effect;
(b) Conduct and complete all investigations, studies, sampling and
testing, and all remedial, removal and other actions required under
Environmental Laws and promptly comply in all material respects with all lawful
orders and directives of all Governmental Authorities regarding Environmental
Laws except to the extent that the same are being contested in good faith by
appropriate proceedings; and
(c) Defend, indemnify and hold harmless the Administrative Agent, the
Managing Agents and the Lenders, and their respective employees, agents,
officers and directors, from and against any and all claims, demands, penalties,
fines, liabilities, settlements, damages, costs and expenses of whatever kind or
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nature known or unknown, contingent or otherwise, arising out of, or in any way
relating to the violation of, noncompliance with or liability under any
Environmental Laws applicable to the operations of the Borrower or any of its
Subsidiaries, or the Borrower's or any of its Subsidiaries' interest in
Properties, or any orders, requirements or demands of Governmental Authorities
related thereto, including, without limitation, attorney's and consultant's
fees, investigation and laboratory fees, response costs, court costs and
litigation expenses, except to the extent that any of the foregoing arise out of
the gross negligence or willful misconduct of the party seeking indemnification
therefor. This indemnity shall continue in full force and effect regardless of
the termination of this Agreement.
5.8 Use of Proceeds. The Borrower will use, and cause its Subsidiaries
to use, the proceeds of the Loans as set forth in Section 3.15, but not for the
purchasing or carrying of any Margin Stock. The Borrower will not use any Letter
of Credit for the purchasing or carrying of Margin Stock.
5.9 Compliance With Laws, Etc. Except as set forth in Section 5.7
relating specifically to Environmental Laws, the Borrower shall comply, and
shall cause each of its Subsidiaries to comply, in all material respects with
all applicable laws, rules, regulations and orders except where noncompliance
would not reasonably be expected to have a Material Adverse Effect, such
compliance to include, without limitation (i) paying before the same become
delinquent all taxes, assessments and governmental charges or levies imposed
upon it or upon its income or profits or upon any of its Properties and (ii)
paying all lawful claims which if unpaid might become a Lien upon any of its
Properties; provided, however, that neither the Borrower nor any of its
Subsidiaries shall be required to pay and discharge or to cause to be paid and
discharged any such tax, assessment, charge, levy or claim so long as (A) the
validity or applicability thereof is being contested in good faith by
appropriate proceedings or the failure to pay such tax, assessment, charge, levy
or claim would not have a Material Adverse Effect and (B) the Borrower or such
Subsidiary shall, to the extent required by GAAP, have set aside on its books
adequate reserves with respect thereto.
5.10 Media Licenses. The Borrower will obtain, maintain and preserve,
and cause each of its Subsidiaries to obtain, maintain and preserve, all Media
Licenses, including without limitation, by filing with the FCC (i) those of the
Loan Documents required to be filed under the FCC's rules and regulations within
30 days after the Initial Closing Date and the Second Closing Date, as
applicable, and (ii) all reports (including Ownership Reports on Form 323) and
other documents required to be filed by the Communications Act in connection
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with the transactions contemplated hereby and maintaining public records and
files in accordance with Communications Act and the rules and regulations of the
FCC, except for such Media Licenses in respect of the Primary Stations the
failure of which to obtain, maintain or preserve will not have a Material
Adverse Effect.
5.11 Guarantees, Etc. The Borrower will cause each of its Subsidiaries
hereafter formed or acquired (except the License Subsidiaries) to execute and
deliver to the Administrative Agent promptly upon the formation or acquisition
thereof (i) a Guarantee in form and substance satisfactory to the Majority
Lenders, guaranteeing the Obligations, (ii) a Guarantor Security Agreement, in
form and substance satisfactory to the Majority Lenders, granting to the
Administrative Agent, for the benefit of the Lenders, a security interest in the
tangible and intangible personal property of such Subsidiary, together with
appropriate Lien searches requested by the Administrative Agent indicating the
Lenders' first priority (except for Liens or other security interests permitted
under Section 6.3 which have priority by operation of law and except for any
pari passu Lien permitted by Section 6.3(l)) Lien on such personal property and
(iii) UCC-1 Financing Statements, duly executed by such Subsidiary, in form and
substance reasonably satisfactory to the Managing Agents and, in connection with
such deliveries, cause to be delivered to the Administrative Agent (A) the stock
certificates representing the issued and outstanding shares of stock of such
Subsidiaries, together with undated stock powers executed in blank, (B) a
favorable written opinion of counsel reasonably satisfactory to the Managing
Agents as to such matters relating thereto as any Lender through the
Administrative Agent may reasonably request, in form and substance reasonably
satisfactory to the Managing Agents and (C) such other agreements, instruments,
approvals or other documents as any Lender through the Administrative Agent may
reasonably request.
5.12 License Subsidiaries. The Borrower will cause (i) all Material
Media Licenses owned by the Borrower or its Subsidiaries on the Initial Closing
Date, and (ii) all Media Licenses acquired by the Borrower or its Subsidiaries
on or after the Initial Closing Date, to be held in License Subsidiaries at all
times.
5.13 Interest Rate Protection. (a) As soon as possible, and in any case
within 45 days after the Initial Closing Date, the Borrower shall enter into
Interest Rate Agreements, each in form and substance reasonably satisfactory to
the Managing Agents, covering a minimum of 50% of the outstanding Term Loans and
Revolving Loans at such time for a minimum period of two years at a maximum
blended average all-in rate of 8.5%.
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(b) As soon as possible, and in any case within 15 days after receipt
of a written request from the Administrative Agent, the Borrower shall enter
into Interest Rate Agreements with respect to 50% of the outstanding Incremental
Loans at such time which are not subject to Interest Rate Agreements for a
minimum period of two years at such rate as shall be acceptable to the Managing
Agents.
5.14 Acquisition of Real Property in Fee Simple. The Borrower and its
Subsidiaries shall submit to the Managing Agents for their prior approval any
documents relating to any fee simple real property interest to be acquired by
the Borrower or any of its Subsidiaries having a purchase price (together with
the assumption of Indebtedness or purchase money Indebtedness relating thereto)
in excess of $10,000,000. Each such document shall be subject to the approval of
the Managing Agents, which approval shall not be unreasonably withheld or
delayed. In the event the Managing Agents fail to respond within 10 Business
Days following receipt of such document, then such document shall be deemed
approved. The Managing Agents may request that any fee simple real property
interest having a purchase price in excess of $10,000,000 shall become part of
the Collateral or the Guarantor Collateral and the Borrower and its Subsidiaries
shall provide or cause to be provided any and all information relating to such
real property interest and any and all Collateral Documents or Guarantor
Collateral Documents and other documents to be executed in connection therewith
requested by the Managing Agents and provide the Managing Agents with title
insurance as a condition to approval.
5.15 Leases and Licenses. The Borrower shall or shall cause its
Subsidiaries to perform and carry out all of the provisions of all of the
leases, licenses, permits and any other occupancy agreements relating to real
property or real property interests (the "Occupancy Agreements") to be performed
by the Borrower or any of its Subsidiaries and shall appear in and defend any
action in which the validity of any of the Occupancy Agreements relating to any
real property or real property interests is at issue and shall commence and
maintain any action or proceeding necessary to establish or maintain the
validity of any of such Occupancy Agreements and to enforce the provisions
thereof.
5.16 Notices. The Borrower will provide, and will cause its
Subsidiaries to provide to the Managing Agents, within 5 days following receipt
by the Borrower or such Subsidiary, copies of all notices received by the
Borrower or such Subsidiary (i) under any Material Agreement, relating to any
default, any claimed force majeure or any other material provision thereof and
(ii) from the Internal Revenue Service or
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other taxing authority relating to any dispute regarding deductions, audits or
any other material matter which, if adversely determined against the Borrower or
such Subsidiary, would have a Material Adverse Effect.
5.17 Accounts. The Borrower shall maintain, and shall cause its
Subsidiaries to maintain, a cash management system reasonably satisfactory to
the Managing Agents and will cause all operating and checking accounts (except
for payroll accounts and other local Station accounts and petty cash accounts)
designated by the Managing Agents to be maintained with the Administrative
Agent, a Managing Agent or a Lender and, as of the Initial Closing Date, all
accounts of the Borrower and each Subsidiary shall be pledged in favor of the
Administrative Agent, for the benefit of the Lenders pursuant to the Security
Agreement or a Guarantor Security Agreement, as applicable.
5.18 Sponsor Loans. Prior to the Second Closing Date, the Lenders
hereby require the applicable lenders under the Sponsor Loan Documents to make
the Sponsor Loans in an amount equal to 15% of Combined Net Time Sales at the
times and on the dates specified in the Sponsor Loan Documents.
SECTION 6. NEGATIVE COVENANTS
The Borrower hereby agrees that from and after the Initial Closing
Date, so long as any Commitments remain in effect, any Note remains outstanding
and unpaid or any other amount is owing to any Lender, the Managing Agents or
the Administrative Agent hereunder, or any Letter of Credit remains outstanding:
6.1 Financial Condition Covenants. The Borrower shall not:
(a) Maximum Total Debt Ratio. Permit the Total Debt Ratio at any time
(but EBITDA shall be as of the end of the last fiscal quarter for which
financial statements under Section 5.1(c) shall have been required to be
delivered, unless a covenant compliance certificate together with financial
statements for the relevant period shall have been delivered to the Lenders for
a more recent period, in which case EBITDA set forth therein shall be used for
calculating this ratio) of the Borrower and its Subsidiaries on a consolidated
basis to exceed the following levels for the periods indicated:
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<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
Initial Closing Date to and including
December 30, 1997 5.50:1
December 31, 1997 to and including
December 30, 1998 5.25:1
December 31, 1998 to and including
December 30, 1999 4.75:1
December 31, 1999 to and including
December 30, 2000 4.25:1
December 31, 2000 and thereafter 4.00:1
</TABLE>
; provided that, prior to the first anniversary of the Initial Closing Date
EBITDA, as used in the Total Debt Ratio, will be calculated on a pro forma basis
giving effect to the following adjustments (as so adjusted, "Pro Forma EBITDA"):
(x) EBITDA will be calculated for the Combined Entities for the fiscal quarter
most recently ended at the immediately preceding three fiscal quarters, (y)
proceeds of Sponsor Loans will be subtracted to the extent included in EBITDA
and (z) accrued management fees shall be added to the extent such fees reduced
Net Income.
(b) Minimum Total Interest Coverage Ratio. Permit the Total Interest
Coverage Ratio as of the end of any fiscal quarter of the Borrower and its
Subsidiaries to be less than the following levels for the periods indicated:
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<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
Initial Closing Date to and including
December 30, 1996 2.00:1
December 31, 1996 to and including
December 30, 1997 2.20:1
December 31, 1997 to and including
December 30, 1998 2.40:1
December 31, 1998 and thereafter 2.60:1
</TABLE>
; provided that, prior to the first anniversary of the Initial Closing Date, (i)
EBITDA, as used in Total Interest Coverage Ratio will be Pro Forma EBITDA and
(ii) Interest Expense, as used in Total Interest Coverage Ratio, will be
calculated on an annualized basis.
(c) Minimum Fixed Charge Coverage Ratio. Permit the Fixed Charge
Coverage Ratio as of the end of any fiscal quarter of the Borrower and its
Subsidiaries to be less than 1.10:1; provided that, prior to the first
anniversary of the Initial Closing Date (i) EBITDA, as used in the Fixed Charge
Coverage Ratio will be Pro Forma EBITDA, (ii) Capital Expenditures and Cash
Income Taxes will be calculated for the Combined Entities for the fiscal quarter
most recently ended and the immediately preceding three fiscal quarters, (iii)
Restricted Payments will be calculated for the Combined Entities for the fiscal
quarter most recently ended and the immediately preceding three fiscal quarters
and (iv) Interest Expense, as used in the calculation of Fixed Charge Coverage
Ratio, will be on an annualized basis.
6.2 Limitation on Indebtedness. The Borrower shall not create, incur,
assume or suffer to exist any Indebtedness, and shall not permit any of its
Subsidiaries to create, incur, assume or suffer to exist any Indebtedness,
except for:
(a) Indebtedness created hereunder and under the Notes;
(b) Indebtedness of the Borrower or any of its Subsidiaries secured by
Liens permitted with respect to the Borrower or its Subsidiaries by Section 6.3;
(c) Subordinated Incremental Indebtedness of the Borrower;
(d) Indebtedness of the Borrower (other than Indebtedness referred to
in Section 6.2(a)) approved in advance by the Majority Lenders, in an aggregate
principal amount not exceeding $20,000,000 at any time outstanding in favor of
any Lender or
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Lenders, which Indebtedness shall be secured on a pari passu basis= with the
Loans;
(e) unsecured Indebtedness of the Borrower in an aggregate principal
amount not exceeding $100,000,000 at any time outstanding;
(f) Indebtedness of the Borrower outstanding on the Initial Closing
Date and listed on Schedule 5 or reflected in the pro forma financial statements
referred to in Section 3.1(b);
(g) Indebtedness of a Person which becomes a Subsidiary after the date
hereof, provided that (i) such Indebtedness existed at the time such Person
became a Subsidiary and was not created in anticipation thereof and (ii)
immediately after giving effect to the acquisition of such Person by the
Borrower or any existing Subsidiary no Default shall have occurred and be
continuing;
(h) unsecured Indebtedness of any Subsidiary owing to the Borrower or
any other Subsidiary or secured Indebtedness of any Subsidiary owing to the
Borrower or any Guarantor or any Indebtedness of the Borrower to any Subsidiary
of any Guarantor;
(i) the License Fee Guarantees; the Senior Subordinated Notes (which
shall be defeased on the Initial Closing Date); the Junior Subordinated Notes,
in amounts in existence on the Initial Closing Date; and, until the Second
Closing Date, the Galavision Note;
(j) prior to the Second Closing Date, the Sponsor Loans and
Indebtedness under the Program Cost Sharing Agreement;
(k) Indebtedness (i) under any Interest Rate Agreement required
pursuant to Section 5.13, (ii) evidenced by performance bonds or letters of
credit issued in the ordinary course of business or reimbursement obligations in
respect thereof, (iii) evidenced by a letter of credit facility related to
insurance associated with claims for work-related injuries or (iv) for bank
overdrafts incurred in the ordinary course of business that are promptly repaid;
(l) trade credit incurred to acquire goods, supplies, services and
incurred in the ordinary and normal course of business;
(m) Lease Expenses which the Borrower or its Subsidiaries are not
prohibited from incurring pursuant to Section 6.12;
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(n) all deferred taxes (where such deferral is otherwise permitted
under the terms of this Agreement and under applicable law); and
(o) Indebtedness of the Borrower not to exceed in aggregate amount
$20,000,000 secured by any purchase money Lien incurred in connection with the
acquisition (after the Initial Closing Date) by the Borrower of real or personal
property (provided, that the mandatory prepayment of the Loans required by
Section 2.6(e) shall have been made);
Notwithstanding the foregoing, the License Subsidiaries shall not be permitted,
under any circumstances, to create, incur, assume or suffer to exist any
Indebtedness.
6.3 Limitation on Liens. The Borrower shall not, and shall not permit
any of its Subsidiaries to, create, incur, assume or suffer to exist any Lien
upon any of its property, assets or revenues, whether now owned or hereafter
acquired, except for:
(a) Liens created hereunder or under any of the other Loan Documents;
(b) Liens existing on any Property at the time of its acquisition and
not created in anticipation of such acquisition;
(c) Liens arising pursuant to any order of attachment, distraint or
similar legal process arising in connection with court proceedings so long as
the execution or other enforcement thereof is effectively stayed and claims
secured thereby are being contested in good faith by appropriate proceedings;
(d) Liens for taxes not yet due or which are being contested in good
faith by appropriate proceedings, provided that adequate reserves with respect
thereto are maintained on the books of the Borrower or its Subsidiaries, as the
case may be, in conformity with GAAP;
(e) Liens created by operation of law not securing the payment of
Indebtedness for money borrowed or guaranteed, including carriers',
warehousemen's, mechanics', materialmen's, repairmen's or other like Liens
arising in the ordinary course of business which are not overdue for a period of
more than 45 days or which are being contested in good faith by appropriate
proceedings;
(f) pledges or deposits in connection with workers' compensation,
unemployment insurance and other social security legislation and deposits
securing liability to insurance carriers under insurance or self-insurance
arrangements;
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(g) deposits to secure the performance of bids, trade contracts (other
than for borrowed money), leases, statutory obligations, surety and appeal
bonds, performance bonds and other obligations of a like nature incurred in the
ordinary course of business;
(h) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, would not cause a Material Adverse Effect;
(i) Liens on the Borrower's assets in existence on the Initial Closing
Date listed on Schedule 6 or described in the pro forma financial statements
referred to in Section 3.1(b) or in any notes thereto, securing Indebtedness
permitted by Section 6.2(f), provided that no such Lien is spread to cover any
additional property after the Initial Closing Date and that the amount of
Indebtedness secured thereby is not increased;
(j) Liens securing Indebtedness of the Borrower permitted by Section
6.2(o) incurred to finance the acquisition of fixed or capital assets, provided
that (i) such Liens shall be created substantially simultaneously with the
acquisition of such fixed or capital assets, (ii) such Liens do not at any time
encumber any Property other than the property financed by such Indebtedness,
(iii) the amount of Indebtedness secured thereby is not increased and (iv) the
principal amount of Indebtedness secured by any such Lien shall at no time
exceed the purchase price of such Property;
(k) Liens on the Property or assets of a Person which becomes a
Subsidiary after the date hereof securing Indebtedness permitted by Section
6.2(g), provided that (i) such Liens existed at the time such Person became a
Subsidiary and were not created in anticipation thereof, (ii) any such Lien is
not spread to cover any property or assets of such Person after the time such
Person becomes a Subsidiary and (iii) the amount of Indebtedness secured thereby
is not increased;
(l) Liens on Property or assets securing Indebtedness permitted under
Section 6.2(d); and
(m) Liens on Property or assets securing leases permitted pursuant to
Section 6.12(i).
Notwithstanding the foregoing, the License Subsidiaries shall not be permitted,
under any circumstances, to incur any consensual Liens or Liens securing the
payment of Indebtedness for money borrowed or guaranteed.
6.4 Limitation on Fundamental Changes. The Borrower shall not, and
shall not permit any of its Subsidiaries to, enter into
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any merger, consolidation or amalgamation, or liquidate, wind up or dissolve
itself (or suffer any liquidation or dissolution), or convey, sell, lease,
assign, transfer or otherwise dispose of, all or substantially all of its
property, business or assets, except, so long as no Default or Event of Default
has occurred and is continuing or would result therefrom:
(a) that the Borrower and its Subsidiaries may effect the corporate
reorganization described in Section 3.30 on or prior to the Second Closing Date;
and
(b) that, upon at least 15 days' prior notice to the Managing Agents,
any Subsidiary of the Borrower may merge into the Borrower or into any other
wholly-owned Subsidiary of the Borrower, provided that the obligations of the
merging entity are assumed by the Borrower or such wholly-owned Subsidiary, as
applicable.
Notwithstanding the foregoing, the License Subsidiaries shall not
merge, consolidate, amalgamate or liquidate, wind up
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or dissolve or convey, sell, lease, assign (except pursuant to the Loan
Documents), transfer or otherwise dispose of, all or substantially all of their
respective property or assets.
6.5 Limitation on Sale of Assets. The Borrower shall not, and shall not
permit any of its Subsidiaries to, make any Asset Disposition, unless the
Borrower makes the mandatory prepayment, if any, required in connection
therewith pursuant to Section 2.6 and unless such Asset Disposition shall be for
fair market value. Fair market value shall be determined by the Board of
Directors of the Borrower or its management committee, in the case of Asset
Dispositions relating to assets having a book value of $10,000,000 or less, and
by an independent appraisal firm reasonably satisfactory to the Majority
Lenders, in the case of Asset Dispositions relating to assets having a book
value over $10,000,000. In any case, the Borrower may not sell, and will not
permit any of its Subsidiaries to sell, any Primary Station or the stock or
partnership interests of any License Subsidiary.
6.6 Limitation on Dividends. The Borrower shall not, and shall not
permit any of its Subsidiaries to, (a) if a corporation, declare or pay any
dividend (other than dividends payable solely in common stock of the Borrower or
its Subsidiaries) on, or make any payment on account of, or set apart assets for
a sinking or other analogous fund for, the purchase, redemption, defeasance,
retirement or other acquisition of, any shares of any class of Capital Stock of
the Borrower or its Subsidiaries or any warrants or options to purchase any such
Capital Stock, whether now or hereafter outstanding (except only such dividends,
payments or other amounts payable to the Borrower or a wholly-owned Subsidiary
of the Borrower), and (b) if a partnership, make any distribution with respect
to the ownership interests therein, or, in either case, any other distribution
in respect thereof, either directly or indirectly, whether in cash or property
or in obligations of the Borrower or any Subsidiary (except distributions to the
Borrower or any wholly-owned Subsidiary of the Borrower) (such declarations,
payments, setting apart, purchases, redemptions, defeasance, retirements,
acquisitions and distributions being herein called "Restricted Payments"),
except for:
(i) Restricted Payments in an aggregate amount not exceeding
$250,000,000 made by the Borrower and/or its Subsidiaries on the Initial Closing
Date and/or the Second Closing Date in connection with the transactions
contemplated hereby;
(ii) Restricted Payments paid by the Borrower to PTI Holdings for the
repurchase of its Junior Subordinated Note in accordance with Sections 3.15 and
6.8; and
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(iii) such other Restricted Payments as the Borrower or its
Subsidiaries may elect to make, provided that (x) the Total Debt Ratio as of the
date of the most recent quarterly or annual financial statements delivered
pursuant to Section 5.1 after giving effect to the making of such Restricted
Payment is less than 3.50:1, (y) no Default has occurred and its continuing or
would result from the making of such Restricted Payment, and (z) the Borrower is
in compliance with the Fixed Charge Coverage Ratio (calculated on a basis so as
to include such Restricted Payments as a fixed charge) as of the date thereof.
Notwithstanding anything herein to the contrary, neither the Borrower nor its
Subsidiaries shall make or permit Restricted payments (i) in excess of
$100,000,000 prior to the Second Closing Date or (ii) in excess of $250,000,000
(less Restricted Payments made pursuant to clause (i)) on the Second Closing
Date.
6.7 Limitation on Investments, Loans and Advances. The Borrower shall
not, and shall not permit any of its Subsidiaries to, make any advance, loan,
extension of credit or capital contribution to, or purchase any stock, bonds,
notes, debentures or other securities of or any assets constituting a business
unit of, or make any other investment in (any of the foregoing, an
"investment"), any Person, except for:
(a) the Borrower's ownership interest in its Subsidiaries and certain
Subsidiaries' ownership interests in certain other Subsidiaries, in each case on
or prior to the Second Closing Date and as set forth in Section 3.30;
(b) investments in marketable securities, liquid investments and other
financial instruments that are acquired for investment purposes and that have a
value which may be readily established and which are investment grade, including
any such investment that may be readily sold or otherwise liquidated;
(c) extensions of trade credit in the ordinary course of business;
(d) advances to employees of the Borrower or its Subsidiaries for
travel, entertainment and relocation expenses in the ordinary course of
business;
(e) investments constituting non-cash consideration received in
connection with an Asset Disposition, provided that such non-cash consideration
shall not exceed 15% of the aggregate consideration received for such Asset
Disposition; and provided further that the aggregate amount of any such non-cash
consideration with respect to all Asset Dispositions shall not exceed $5,000,000
at any one time outstanding;
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(f) investments in existence as of the Initial Closing Date, as set
forth on Schedule 12;
(g) Acquisitions; provided that (i) the aggregate Consideration with
respect to any Acquisition shall not exceed the sum of (A) the Net Proceeds of
any Equity Offerings available for such purpose, (B) 25% of Excess Cash Flow not
required for the mandatory repayment described in Section 2.6(b) and otherwise
available for such purpose, (C) the Aggregate Available Revolving Loan
Commitment at such time less $25,000,000 and (D) the Aggregate Incremental Loan
Commitment less the aggregate principal amount of Incremental Loans, if any,
made hereunder (regardless of whether such Incremental Loans have been repaid or
are outstanding); (ii) no Default has occurred and is continuing or would result
from the consummation of such Acquisition (and the Borrower shall have delivered
a Covenant Compliance Certificate showing pro forma calculations assuming such
Acquisition had been consummated to the Administrative Agent); (iii) the
Acquisition (if of a radio or television station), has received final FCC
approval and evidence thereof satisfactory to the Administrative Agent has been
provided to the Administrative Agent; (iv) the Administrative Agent shall have
received, reviewed and approved (such approval not to be unreasonably withheld)
the form of all documents setting forth the terms of, effecting or otherwise
relating to, such Acquisition; (v) the Borrower shall be in compliance with the
Total Debt Ratio on a pro forma basis assuming such Acquisition had been
consummated; and (vi) the Administrative Agent shall have received, reviewed and
approved all documents reasonably requested by the Administrative Agent to
insure that the Lenders have a first priority security interest in, and
assignment of, any Program Services Agreements and all material real property
and all other assets and interests acquired, including consents of third parties
if reasonably requested by the Managing Agents;
(h) investments permitted under Section 6.2(h);
(i) investments not otherwise referred to in this Section 6.7 in an
aggregate amount not to exceed $50,000,000 during the term of this Agreement,
provided that no such investment shall be permitted if at the time of the making
thereof a Default has occurred and is continuing or would result from the making
of such investment; and
(j) investments in Entravision permitted by Section 3.15(a)(ii)(D).
Notwithstanding the foregoing, the License Subsidiaries shall not be permitted,
under any circumstances, to make any investments.
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6.8 Limitation on Modifications of Debt Instruments; Repurchase of
Junior Subordinated Notes; Payment of Programming Costs Under Program Cost
Sharing Agreement. (a) The Borrower shall not, and shall not permit any
Subsidiary to amend the subordination provisions of the Subordinated
Indebtedness or any guarantee thereof.
(b) Notwithstanding anything to the contrary contained herein, the
Borrower shall not repurchase, or permit PTI Holdings to repurchase, any Junior
Subordinated Note if the aggregate purchase price paid for the Junior
Subordinated Notes would exceed the accreted value thereof or if any Default has
occurred and is continuing, or would result from such repurchase.
(c) Notwithstanding any other provision in this Section to the
contrary, UTG may, with respect to the payment of programming costs due from
Univisa or Venevision pursuant to the Program Cost Sharing Agreement, in the
absence of any Default, permit the outstanding principal balance of the Sponsor
Loans to be reduced in an amount equal to, and in lieu of, such cash payments,
in accordance with the terms of the Program Cost Sharing Agreement Waiver.
6.9 Transactions with Affiliates. The Borrower shall not, and shall not
permit any of its Subsidiaries to, enter into any transaction, including,
without limitation, any purchase, sale, lease or exchange of property or the
rendering of any service, with any Affiliate or any Subsidiary less than
wholly-owned, directly or indirectly, by the Borrower, unless such transaction
(i) is otherwise permitted under this Agreement or (ii) is in the ordinary
course of the Borrower's or such Subsidiary's business and is upon terms no less
favorable to the Borrower or such Subsidiary, as the case may be, than it would
obtain in a comparable arm's length transaction with a Person not an Affiliate
or (iii) is pursuant to any Material Agreement.
6.10 Fiscal Year. The Borrower shall not permit the fiscal year of the
Borrower or any of its consolidated Subsidiaries to end on a day other than
December 31, except with the consent of the Majority Lenders (which consent
shall not be unreasonably withheld and which consent may be conditioned upon
adjusting the covenants in a manner to give each of the parties hereto
substantially the same protection and benefits as were in effect prior to any
such change in the fiscal year of the Borrower or any of its consolidated
Subsidiaries).
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6.11 Restrictions Affecting Subsidiaries. The Borrower shall not, and
shall not permit any of its Subsidiaries to, enter into, or suffer to exist, any
agreement (other than this Agreement) with any Person other than the Lenders
which prohibits or limits the ability of any Subsidiary to (a) pay dividends or
make other distributions or pay any Indebtedness owed to the Borrower or any
other Subsidiary, (b) make loans or advances to the Borrower or any other
Subsidiary or (c) transfer any of its properties or assets to the Borrower or
any other Subsidiary.
6.12 Lease Obligations. The Borrower shall not, and shall not permit
any of its Subsidiaries to, sell, assign or otherwise transfer any of its
Properties, rights or assets (whether now owned or hereafter acquired) to any
Person and thereafter directly or indirectly lease back the same or similar
property; or create, incur or suffer to exist, or permit any of the Subsidiaries
to create, incur or suffer to exist, any obligations as lessee for the payment
of Lease Expenses for any real or personal property under leases or arrangements
to lease, other than (i) Indebtedness permitted under Section 6.2(o) which might
constitute Capitalized Lease Obligations, (ii) rental expense with respect to
Capitalized Lease Obligations, provided that the aggregate amount thereof shall
not exceed $5,000,000 in any fiscal year, (iii) Lease Expenses for long-term
operating leases (other than Transponder Leases), provided that the aggregate
amount thereof shall not exceed $7,000,000 in any fiscal year and (iv) Lease
Expenses under Transponder Leases.
6.13 Unfunded Liabilities. The Borrower shall not permit unfunded
liabilities for any and all Plans maintained for or covering employees of the
Borrower or any Subsidiary to exceed $5,000,000 at any time.
6.14 Management Fees. The Borrower shall not, and shall not permit any
of its Subsidiaries to, pay any management fees for services rendered other than
(i) management fees to Persons not Affiliates for services rendered and incurred
in an arm's length transaction and in the ordinary course of the Borrower's or
such Subsidiaries' business, (ii) management fees payable by Subsidiaries of the
Borrower to the Borrower or a wholly-owned Subsidiary of the Borrower and (iii)
accrued Management Fees to be paid on the Second Closing Date.
6.15 Material Agreements. The Borrower shall not, and shall not permit
any of its Subsidiaries or any other Loan Party to, enter into or permit (i) any
termination of the Material Agreements (except as such agreements may terminate
in accordance with their terms and except for such agreements which cease to be
included in the definition of "Material Agreements" upon the occurrence of the
Second Closing Date), (ii) any modification or amendment of any provision of any
Material
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Agreement, which modification or amendment would have a Material Adverse Effect,
(iii) any modification or amendment of any Sponsor Loan Document, (iv) any
modification or amendment of (a) the Program Cost Sharing Agreement (other than
the Program Cost Sharing Agreement Waiver) which would change the terms of any
payment thereunder, which would be adverse to the Lenders or which would be
material or (b) the Program License Agreements which would change the terms of
any payment thereunder, which would decrease the availability of programming
thereunder, which would be adverse to the Lenders or which would be material or
(v) any other modification or amendment of any provision of any Material
Agreement (provided, that the Borrower shall give the Managing Agents (who
shall, in turn, promptly notify the Lenders), at least 10 days' prior notice of
all such proposed modifications and amendments under this clause (v) and if the
Majority Lenders do not vote to disapprove such proposed modification or
amendments within such 10-day notice period, the Lenders shall be deemed to have
approved such proposed modifications or amendments). Further, the Sponsor Loans
shall not be converted, under any circumstances, as currently provided in
Section 4 of the Televisa Scheduled Loan Note and the Venevision Scheduled Loan
Note, each dated as of December 15, 1992 (which are both Sponsor Loan
Documents).
6.16 Limitation on Equity Offerings. The Borrower shall not, and shall
not permit any of its Subsidiaries to, consummate, agree to consummate, or enter
into any underwriting agreement or similar agreement for any Equity Offering of
the Capital Stock of the Borrower or any Subsidiary, except for Equity Offerings
in which (i) 100% of the Net Proceeds thereof are used for Acquisitions
permitted by Section 6.7(g) or (ii) 80% of the Net Proceeds thereof are used to
make the prepayment required by Section 2.6(d); provided that the Borrower or
any Subsidiary may use less than 100% of the Net Proceeds of an Equity Offering
for an Acquisition permitted by Section 6.7(g) if 80% of that portion of such
Net Proceeds not used for an Acquisition are used to make the prepayment
required by Section 2.6(d).
SECTION 7. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) The Borrower shall fail to pay any principal on any Note when due
or the Borrower shall fail to pay any interest on any Note within two Business
Days after any such interest becomes due in accordance with the terms thereof
and hereof or the Borrower shall fail to pay any other amount payable hereunder
within five Business Days after any such other amount becomes due; or
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(b) Any representation or warranty made or deemed made by any Loan
Party herein or in any other Loan Document or which is contained in any
certificate, document or financial or other statement furnished at any time
under or in connection with this Agreement or any other Loan Document shall
prove to have been incorrect in any material respect when made or deemed made;
or
(c) The Borrower shall default in the observance or performance of any
agreement contained in Section 5.2(f), 5.3, 5.4, 5.8, 5.9, 5.10, 5.12, 5.13, or
any provision of Section 6; or
(d) Any Loan Party shall default in the observance or performance of
any other agreement contained in this Agreement or the other Loan Documents
(other than as provided in paragraphs (a) through (c) of this Section ), and
such default shall continue unremedied for a period of 30 days after the
earlier of (i) notice thereof from the Administrative Agent to the Borrower and
(ii) actual knowledge thereof by a senior officer of such Loan Party or any
provision of any Loan Document shall at any time for any reason be declared
null and void, or the validity or enforceability of any Loan Document shall at
any time be contested by any Loan Party, or a proceeding shall be commenced by
any Loan Party, or by any Governmental Authority or other Person having
jurisdiction over any Loan Party, seeking to establish the invalidity or
unenforceability thereof, or any Loan Party shall deny that it has any
liability or obligation purported to be created under any Loan Document; or
(e) Any Guarantee shall cease, for any reason, to be in full force and
effect; or
(f) The Borrower or any other Loan Party shall (i) default in any
payment of principal or interest, regardless of the amount, due in respect of
any (A) Indebtedness (other than the Notes), issued under the same indenture or
other agreement, if the original principal amount of Indebtedness covered by
such indenture or agreement is $5,000,000 or greater or (B) any Guarantee
Obligation with respect to an amount of $5,000,000 or greater, beyond the period
of grace, if any, provided in the instrument or agreement under which such
Indebtedness or Guarantee Obligation was created, whether or not such default
has been waived by the holders of such Indebtedness or Guarantee Obligation; or
(ii) default in the observance or performance of any other agreement or
condition relating to any such Indebtedness or Guarantee Obligation or contained
in any instrument or agreement evidencing, securing or relating thereto, or any
other event shall occur or condition exist, the effect of which default or other
event or condition is to cause, or to permit the holder or holders of such
Indebtedness or beneficiary or beneficiaries of such Guarantee Obligation (or a
trustee or agent on behalf of such holder or holders or
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beneficiary or beneficiaries) to cause, with the giving of notice if required,
such Indebtedness to become due prior to its stated maturity or such Guarantee
Obligation to become payable or such Indebtedness to be required to be defeased
or purchased; or
(g) (i) The Borrower or any other Loan Party shall commence any case,
proceeding or other action (A) under any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order for relief entered
with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or
seeking reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to it or its debts, or (B)
seeking appointment of a receiver, trustee, custodian or other similar official
for it or for all or any substantial part of its assets, or the Borrower or any
other Loan Party shall make a general assignment for the benefit of its
creditors; or (ii) there shall be commenced against the Borrower or any other
Loan Party any case, proceeding or other action of a nature referred to in
clause (i) above which (A) results in the entry of an order for relief or any
such adjudication or appointment or (B) remains undismissed, undischarged,
unstayed or unbounded for a period of 60 days; or (iii) there shall be commenced
against the Borrower or any other Loan Party any case, proceeding or other
action seeking issuance of a warrant of attachment, execution, distraint or
similar process against all or any substantial part of its assets which results
in the entry of an order for any such relief which shall not have been vacated,
discharged, stayed or bonded pending appeal within 60 days from the entry
thereof; or (iv) the Borrower or any other Loan Party shall take any action in
furtherance of, or indicating its consent to, approval of, or acquiescence in,
any of the acts set forth in clause (i), (ii), or (iii) above; or (v) the
Borrower or any other Loan Party shall generally not, or shall be unable to, or
shall admit in writing its inability to, pay its debts as they become due or
there shall be a general assignment for the benefit of creditors; or
(h) (i) Any Person shall engage in any non-exempt "prohibited
transaction" (as defined in Section 406 of ERISA or Section 4975 of the Code)
involving any Plan, (ii) any "accumulated funding deficiency" (as defined in
Section 302 of ERISA), whether or not waived, shall exist with respect to any
Plan, (iii) a Reportable Event shall occur with respect to, or proceedings shall
commence to have a trustee appointed, or a trustee shall be appointed, to
administer or to terminate any Single Employer Plan, which Reportable Event or
commencement of proceedings or appointment of a trustee would reasonably be
expected to result in the termination of such Plan for purposes of Title IV of
ERISA, (iv) any Single Employer Plan shall
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terminate for purposes of Title IV of ERISA (other than a standard termination)
or (v) the Borrower or any Commonly Controlled Entity would reasonably be
expected to incur any liability in connection with a withdrawal from, or the
Insolvency or Reorganization of, a Multiemployer Plan; and in each case
regarding clauses (i) through (v) above, such event or condition, together with
all other such events or conditions, if any, would reasonably be expected to
subject the Borrower or any other Loan Party to any tax, penalty or other
liabilities in the aggregate to exceed $5,000,000; or
(i) One or more judgments or decrees shall be entered against the
Borrower or any other Loan Party involving in the aggregate a liability (not
paid or fully covered by insurance) of $5,000,000 or more, and all such
judgments or decrees shall not have been vacated, discharged, stayed or bonded
pending appeal within 60 days from the entry thereof or in any event five days
before the date of any sale pursuant to such judgment or decree or any
non-monetary judgment or order shall be entered against the Borrower or any
other Loan Party that is reasonably likely to have a Material Adverse Effect and
either (i) enforcement proceedings shall have been commenced by any Person upon
such judgment which has not been stayed pending appeal or (ii) there shall be
any period of 10 consecutive days during which a stay of enforcement of such
judgment or order, by reason of a pending appeal or otherwise, shall not be in
effect; or
(j) There shall occur any default in the material observance or
material performance of any Material Agreement or any such Material Agreement
shall terminate or otherwise no longer be in full force and effect; or
(k) Any Media License required for the lawful ownership, lease,
control, use, operation, management or maintenance of a Primary Station shall be
canceled, terminated, rescinded, annulled, revoked, suspended or limited, or
amended or otherwise modified in any material adverse respect, or shall fail to
be renewed for any reason whatsoever; or any such Media License, the loss of
which would have a Material Adverse Effect, shall no longer be in full force and
effect; or the grant of any such Media License, the loss of which would have a
Material Adverse Effect, shall have been stayed, vacated or reversed, or
modified in any material adverse respect, by judicial or administrative
proceedings; or
(l) Any material provision of any Loan Document, after delivery thereof
pursuant to the provisions hereof, shall, for any reason other than an act or
omission by the Administrative Agent, cease to be valid or enforceable in
accordance with its terms and such cessation shall have a Material Adverse
Effect, or any security interest created under any Loan Document shall for any
reason other than an act or omission by the
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Administrative Agent, cease to be a valid and perfected first priority (except
for any pari passu Liens permitted by Section 6.3(l) and any Lien or security
interests permitted under any of the Loan Documents, which have priority by
operation of law) security interest or Lien (except as otherwise stated or
permitted herein or therein) in any material portion of the Collateral, the
Guarantor Collateral or the property purported to be covered thereby; or
(m) A Change in Control shall have occurred;
then, and in any such event, (A) if such event is an Event of Default specified
in paragraph (g) above, automatically the Commitments to the Borrower and the
commitment to issue Letters of Credit shall immediately terminate and the Loans
made to the Borrower hereunder (with accrued interest thereon) and all other
Obligations shall immediately become due and payable, and (B) if such event is
any other Event of Default, with the consent of the Majority Lenders, the
Administrative Agent may, or upon the request of the Majority Lenders, the
Administrative Agent shall, take any or all of the following actions: (i) by
notice to the Borrower declare the Commitments to the Borrower and the
commitment to issue Letters of Credit to be terminated forthwith, whereupon such
Commitments and the commitment to issue Letters of Credit shall immediately
terminate; and (ii) by notice of default to the Borrower, declare the Loans
(with accrued interest thereon) and all other Obligations under this Agreement
and the Notes to be due and payable forthwith, whereupon (x) the same shall
immediately become due and payable and (y) to the extent any Letters of Credit
are then outstanding, the Borrower shall make a Cash Collateral Deposit in an
amount equal to the aggregate Letter of Credit Amount. In all cases, with the
consent of the Majority Lenders, the Administrative Agent may enforce any or all
of the Liens and security interests and other rights and remedies created
pursuant to any Loan Document or available at law or in equity. Except as
expressly provided above in this Section , presentment, demand, protest and all
other notices of any kind are hereby expressly waived by the Borrower.
SECTION 8. THE ADMINISTRATIVE AGENT AND THE MANAGING AGENTS
8.1 Appointment. Each Lender hereby irrevocably designates and appoints
Chase as Administrative Agent and Chase and Paribas as the Managing Agents of
such Lender under this Agreement and the other Loan Documents, and each such
Lender irrevocably authorizes Chase, as the Administrative Agent, and Chase and
Paribas, as the Managing Agents, for such Lender, to take such action on its
behalf under the provisions of this Agreement and the other Loan Documents and
to exercise such powers and perform such duties as are expressly delegated to
the
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Administrative Agent or the Managing Agents, as the case may be, by the terms of
this Agreement and the other Loan Documents, together with such other powers as
are reasonably incidental thereto. Notwithstanding any provision to the contrary
elsewhere in this Agreement, neither the Administrative Agent nor the Managing
Agents shall have any duties or responsibilities, except those expressly set
forth herein, or any fiduciary relationship with any Lender, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities shall
be read into this Agreement or any other Loan Document or otherwise exist
against the Administrative Agent or the Managing Agents in such respective
capacities.
8.2 Delegation of Duties. The Administrative Agent and the Managing
Agents may execute any of their respective duties under this Agreement and the
other Loan Documents by or through agents or attorneys-in-fact and shall be
entitled to advice of counsel concerning all matters pertaining to such duties.
Neither the Administrative Agent nor the Managing Agents shall be responsible
for the negligence or misconduct of any agents or attorneys-in-fact selected by
it with reasonable care.
8.3 Exculpatory Provisions. Neither the Administrative Agent, the
Managing Agents nor any of their respective officers, directors, employees,
agents, attorneys-in-fact or Affiliates shall be (i) liable for any action
lawfully taken or omitted to be taken by it or such Person under or in
connection with this Agreement or any other Loan Document (except for its or
such Person's own gross negligence or willful misconduct) or (ii) responsible in
any manner to any of the Lenders for any recitals, statements, representations
or warranties made by the Borrower, any Subsidiary or any Guarantor or any
officer thereof contained in this Agreement or any other Loan Document or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Administrative Agent or the Managing Agents under or in
connection with, this Agreement or any other Loan Document or for the value,
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or the Notes or any other Loan Document or for any failure of the
Borrower, any Subsidiary or any Guarantor to perform its obligations hereunder
or thereunder. Neither the Administrative Agent nor the Managing Agents shall be
under any obligation to any Lender to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions
of, this Agreement or any other Loan Document, or to inspect the properties,
books or records of the Borrower, any Subsidiary or any Guarantor.
8.4 Reliance by Administrative Agent and Managing Agents. The
Administrative Agent and the Managing Agents shall be entitled to rely, and
shall be fully protected in relying, upon any note, writing, resolution, notice,
consent, certificate,
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affidavit, letter, cablegram, telegram, telecopy, telex or teletype message,
statement, order or other document or conversation believed by any of them to be
genuine and correct and to have been signed, sent or made by the proper Person
or Persons and upon advice and statements of legal counsel (including, without
limitation, counsel to the Borrower), the Accountants and independent
accountants and other experts selected by the Administrative Agent or the
Managing Agents. The Administrative Agent and the Managing Agents may deem and
treat the payee of any Note as the owner thereof for all purposes unless a
written notice of assignment, negotiation or transfer thereof shall have been
filed with the Administrative Agent. The Administrative Agent or the Managing
Agents shall be fully justified in failing or refusing to take any action under
this Agreement or any other Loan Document unless it shall first receive such
advice or concurrence of the Majority Lenders or all Lenders, as it deems
appropriate, or it shall first be indemnified to its satisfaction by the Lenders
against any and all liability and expense (except those incurred solely as a
result of the Administrative Agent's or any Managing Agent's gross negligence or
willful misconduct) which may be incurred by it by reason of taking or
continuing to take any such action. The Administrative Agent and the Managing
Agents shall in all cases be fully protected in acting, or in refraining from
acting, under this Agreement and the Notes and the other Loan Documents in
accordance with a request of the Majority Lenders or all Lenders, as may be
required, and such request and any action taken or failure to act pursuant
thereto shall be binding upon all the Lenders and all future holders of the
Notes.
8.5 Notice of Default. Neither the Administrative Agent nor the
Managing Agents shall be deemed to have knowledge or notice of the occurrence of
any Default hereunder unless the Administrative Agent has received notice from a
Lender or the Borrower referring to this Agreement, describing such Default and
stating that such notice is a "notice of default". In the event that the
Administrative Agent receives such a notice, the Administrative Agent shall give
notice thereof to the Managing Agents and the Lenders. The Administrative Agent
shall take such action with respect to such Default as shall be reasonably
directed by the Majority Lenders or all Lenders as appropriate; provided that
unless and until the Administrative Agent shall have received such directions,
the Administrative Agent may (but shall not be obligated to) take such action,
or refrain from taking such action, with respect to such Default as it shall
deem advisable in the best interests of the Lenders or as the Administrative
Agent shall believe necessary to protect the Lenders' interests in the
Collateral or the Guarantor Collateral.
8.6 Non-Reliance on Administrative Agent, Managing Agents and Other
Lenders. Each Lender expressly acknowledges that none
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of the Administrative Agent, the Managing Agents or any of their respective
officers, directors, employees, agents, attorneys-in-fact or Affiliates has made
any representations or warranties to it and that no act by the Administrative
Agent or the Managing Agents hereafter taken, including any review of the
affairs of the Borrower, any Subsidiary or the Guarantors, shall be deemed to
constitute any representation or warranty by the Administrative Agent or the
Managing Agents to any Lender. Each Lender represents to the Administrative
Agent and the Managing Agents that it has, independently and without reliance
upon the Administrative Agent or the Managing Agents or any other Lender, and
based on such documents and information as it has deemed appropriate, made its
own appraisal of and investigation into the business, operations, property,
financial and other condition and creditworthiness of the Borrower, any
Subsidiary and the Guarantors and made its own decision to make its Loans, and
participate in Letters of Credit, hereunder and enter into this Agreement. Each
Lender also represents that it will, independently and without reliance upon the
Administrative Agent or the Managing Agents or any other Lender, and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or
not taking action under this Agreement and the other Loan Documents, and to make
such investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition and creditworthiness of the
Borrower, its Subsidiaries and the Guarantors. Except for notices, reports and
other documents expressly required to be furnished to the Lenders by the
Administrative Agent or the Managing Agents hereunder, the Administrative Agent
and the Managing Agents shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the business, operations,
property, condition (financial or otherwise), prospects or creditworthiness of
the Borrower, any Subsidiary or any Guarantor which may come into the possession
of the Administrative Agent or the Managing Agents or any of their respective
officers, directors, employees, agents, attorneys-in-fact or Affiliates.
8.7 Indemnification. The Lenders agree to indemnify the Administrative
Agent and the Managing Agents in their respective capacities as such (to the
extent not reimbursed by the Borrower, the Subsidiaries or the Guarantors and
without limiting the obligation of such Persons to do so), ratably according to
the respective amounts of their Commitments, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs (including, without limitation, the allocated cost of internal counsel),
expenses or disbursements of any kind whatsoever which may at any time
(including, without limitation, at any time following the payment of the Notes)
be imposed on, incurred by or asserted
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against the Administrative Agent or the Managing Agents, in their respective
capacities as Administrative Agent and Managing Agents, but not as Lenders
hereunder, in any way relating to or arising out of this Agreement, any of the
other Loan Documents or any documents contemplated by or referred to herein or
therein or the transactions contemplated hereby or thereby or any action taken
or omitted by the Administrative Agent or the Managing Agents under or in
connection with any of the foregoing; provided that no Lender shall be liable
for the payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting solely from the Administrative Agent's or the Managing Agents' gross
negligence or willful misconduct. The agreements in this Section shall survive
the payment of the Notes and all other amounts payable hereunder and the
expiration of the Letters of Credit.
8.8 Administrative Agent and Managing Agents in Their Individual
Capacities. The Administrative Agent, each Managing Agent and their respective
Affiliates may make loans to, accept deposits from and generally engage in any
kind of business with the Borrower, any Subsidiary and the Guarantors as though
the Administrative Agent and such Managing Agent were not the Administrative
Agent and a Managing Agent, respectively, hereunder and under the other Loan
Documents. With respect to the Administrative Agent or any Managing Agent the
Loans made or renewed and the Letters of Credit issued or participated in by the
Administrative Agent or such Managing Agent, as applicable, and any Note issued
to any of the Administrative Agent or the Managing Agents, as the case may be,
shall have the same rights and powers under this Agreement and the other Loan
Documents as any Lender and may exercise the same as though it were not the
Administrative Agent or a Managing Agent, as the case may be, and the terms
"Lender" and "Lenders" shall include the Administrative Agent and the Managing
Agents in their individual capacities.
8.9 Successor Administrative Agent or Managing Agents. The
Administrative Agent or any Managing Agent may resign as Administrative Agent or
Managing Agent, respectively, upon 30 days' notice to the Lenders and the
Lenders having Commitments equal to or more than 51% of the Aggregate Commitment
and, at any time Loans or Letters of Credit are outstanding, Lenders with
outstanding Loans (or outstanding Letter of Credit participations) having an
unpaid principal balance (plus, with respect to Letters of Credit, having
participations therein representing available undrawn balances or unreimbursed
drawings) equal to more than 51% of all Loans, undrawn balances and unreimbursed
drawings outstanding (excluding from such calculation Lenders which have failed
or refused to fund a Loan or participate in a Letter of Credit when required to
do so) may at any time remove the Administrative Agent or either or both of
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the Managing Agents. If the Administrative Agent or any Managing Agent shall be
removed or shall resign as Administrative Agent or Managing Agent under this
Agreement and the other Loan Documents, then the Majority Lenders shall appoint
from among the Lenders a successor administrative agent or managing agent, as
the case may be, for the Lenders, which successor administrative agent or
managing agent, as the case may be, shall be approved by the Borrower (which
consent shall not be unreasonably withheld), whereupon such successor
administrative agent or managing agent, as the case may be, shall succeed to the
rights, powers and duties of the Administrative Agent and the Managing Agent and
the term "Administrative Agent" or "Managing Agent" shall mean such successor
administrative agent or managing agent, as the case may be, effective upon its
appointment, and the former Administrative Agent's or Managing Agent's rights,
powers and duties as Administrative Agent or Managing Agent, as the case may be,
shall be terminated, without any other or further act or deed on the part of
such former Administrative Agent or Managing Agent or any of the parties to this
Agreement or any holders of the Notes. After any retiring Administrative Agent's
or Managing Agent's removal or resignation as Administrative Agent or Managing
Agent, the provisions of this Section shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Administrative Agent or
Managing Agent, as the case may be, under this Agreement and the other Loan
Documents. Further, if the Administrative Agent or any Managing Agent no longer
has any Loans, Letter of Credit participations or Commitments hereunder, the
Administrative Agent or such Managing Agent shall immediately resign and shall
be replaced, and have the benefits, as set forth in this Section 8.9. In
addition, after the replacement of an Administrative Agent hereunder, the
retiring Administrative Agent shall remain a party hereto and shall continue to
have all the rights and obligations of an Administrative Agent under this
Agreement with respect to Letters of Credit issued by it prior to such
replacement, but shall not be required to issue additional Letters of Credit.
8.10 Managing Agents. Without limiting any provision contained in this
Section 8, none of the Lenders identified in this Agreement as a "Managing
Agent" or a "Co-Agent" shall have, except as and to the limited extent expressly
provided herein, any obligation, responsibility or duty under this Agreement
other than those applicable to all Lenders as such. Each Lender acknowledges
that it has not relied, and will not rely, on any of the Lenders so identified
in deciding to enter into this Agreement or in taking or not taking action
hereunder.
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SECTION 9. MISCELLANEOUS
9.1 Amendments and Waivers. Neither this Agreement, any Note, any other
Loan Document, nor any terms hereof or thereof may be amended, supplemented or
modified except in accordance with the provisions of this Section . With the
prior written consent of the Majority Lenders and the Borrower (and, in the case
of any Loan Document other than this Agreement, the relevant Loan Party), the
Borrower may, from time to time, enter into written amendments, supplements or
modifications hereto and to the Notes and the other Loan Documents for the
purposes of adding any provisions to this Agreement or the Notes or the other
Loan Documents or changing in any manner the rights of the Lenders, the Borrower
or any other Loan Party hereunder or thereunder or waiving, on such terms and
conditions as may be specified in such instrument, any of the requirements of
this Agreement or the Notes or the other Loan Documents or any Default and its
consequences; provided, however, that no such waiver and no such amendment,
supplement or modification shall (i) (a) reduce the amount or extend the
maturity of any Note or any installment due thereon, or reduce the rate or
extend the time of payment of interest thereon, or reduce the amount or extend
the time of payment of any fee, indemnity or reimbursement payable to any Lender
hereunder, or change the amount of any Lender's Commitment, or amend, modify or
waive any provision of Section 2.5 or 2.6(f), in each case without the written
consent of the Lender affected thereby; or (b) amend, modify or waive any
provision of this Section 9.1 or reduce the percentage specified in or otherwise
modify the definition of Majority Lenders, or consent to the assignment or
transfer by any Loan Party of any of its rights and obligations under this
Agreement and the other Loan Documents (except as permitted under Section 6.4);
or (c) release any Loan Party from any liability under its respective Loan
Documents; or (d) release any material portion of the Collateral or any material
portion of the Guarantor Collateral, except for any Asset Disposition or release
of Lien permitted by this Agreement or any other Loan Document; or (e) amend,
modify or waive, directly or indirectly, any of the provisions of Section
2.1(i), 2.2(f), 2.3(g), or 2.12; or (f) amend, modify or waive any provision of
this Agreement requiring the consent or approval of all Lenders, in each case
set forth in clauses (i)(b) through (i)(f) above without the written consent of
all the Lenders; or (ii) amend, modify or waive any provision of Section 4.4
with respect to the making of a Revolving Loan, or reduce the percentage
specified in, or otherwise modify the definition of, Majority Revolving Loan
Lenders, without the written consent of the Majority Revolving Loan Lenders; or
(iii) amend, modify or waive any provision of Section 4.3 or 4.4 with respect to
the making of an Incremental Loan, or reduce the percentage specified in, or
otherwise modify the determination of, Majority Incremental Loan Lenders,
without the written consent of the Majority Incremental
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Loan Lenders; or (iv) amend, modify or waive any provision of Section 8 without
the written consent of the then Administrative Agent and the then Managing
Agents, or any provision affecting the rights and duties of the Administrative
Agent as the issuer of Letters of Credit without the consent of the then
Administrative Agent. Any such waiver and any such amendment, supplement or
modification shall apply equally to each of the Lenders and shall be binding
upon the Borrower, the other Loan Parties, the Lenders, the Administrative
Agent, the Managing Agents and all future holders of the Notes. In the case of
any waiver, the Borrower, the other Loan Parties or the Lenders, the Managing
Agents and the Administrative Agent, shall be restored to their former position
and rights hereunder and under the outstanding Notes and any other Loan
Documents, and any Default waived shall be deemed to be cured and not
continuing; but no such waiver shall extend to any subsequent or other Default,
or impair any right consequent thereon.
9.2 Notices. All notices, requests and demands or other communications
to or upon the respective parties hereto to be effective shall be in writing
(including by telecopy), and, unless otherwise expressly provided herein, shall
be deemed to have been duly given or made when delivered by hand, or 3 days
after being deposited in the United States mail, certified and postage prepaid
and return receipt requested, or, in the case of telecopy notice, when received,
in each case addressed as follows in the case of the Borrower, the Managing
Agents and the Administrative Agent, and as set forth in Schedule 3, or in the
Assignment and Acceptance pursuant to which a Person becomes a party hereto, in
the case of the other parties hereto, or to such other address as may be
hereafter notified by the respective parties hereto and any future holders of
the Notes:
The Borrower: Univision Communications Inc.
c/o Chartwell Partners
1901 Avenue of the Stars
Suite 680
Los Angeles, California 90067
Attention: Stephen P. Rader
Telecopy: (213) 556-3568
Chase, as The Chase Manhattan Bank
Administrative Agent 1 Chase Manhattan Plaza
and a Managing Agent: 4th Floor
New York, New York 10081
Attention: Stephen P. Mumblow
Telecopy: (212) 552-4905
with a copy to:
Agent Bank Services Group
140 East 45th Street, 29th Floor
New York, New York 10017
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Attention: Janet Belden
Telecopy: (212) 622-0002
Paribas, as Banque Paribas
a Managing Agent: 101 California Street, Suite 3150
San Francisco, California 94111
Attention: Linda L. Aleshire
Telecopy: (415) 398-4240
provided that any notice, request or demand to or upon the Administrative Agent,
the Managing Agents or the Lenders pursuant to Section 2.1, 2.2, 2.4, 2.5, 2.7,
2.11 and 2.14 or any notice to the Borrower pursuant to Section 7 shall not be
effective until received.
9.3 No Waiver; Cumulative Remedies. No failure to exercise and no delay
in exercising, on the part of the Administrative Agent, any Managing Agent or
any Lender, any right, remedy, power or privilege hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any right, remedy,
power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege. The rights,
remedies, powers and privileges herein provided are cumulative and not exclusive
of any rights, remedies, powers and privileges provided by law.
9.4 Survival of Representations and Warranties. All representations and
warranties made hereunder and in any document, certificate or statement
delivered pursuant hereto or in connection herewith shall survive the execution
and delivery of this Agreement and the Notes (but shall not be deemed to be
restated unless otherwise expressly provided for).
9.5 Payment of Expenses and Taxes. The Borrower agrees (a) to pay or
reimburse the Administrative Agent and the Managing Agents for all their
reasonable costs and out-of-pocket expenses incurred in connection with the
development, preparation and execution of, and any amendment, supplement or
modification to, this Agreement and the Notes and the other Loan Documents and
any other documents prepared in connection herewith or therewith, and the
consummation and administration of the transactions contemplated hereby and
thereby, including, without limitation, the reasonable fees and disbursements of
counsel to the Administrative Agent and the Managing Agents, (b) after the
occurrence and during the continuance of a Default, to pay or reimburse each
Managing Agent, each Co-Agent, the Administrative Agent and each Lender, for all
its reasonable costs and out-of-pocket expenses incurred in connection with the
enforcement or preservation of any rights under this Agreement, the Notes, the
other Loan Documents and any such other documents or in connection with any
refinancing or restructuring of the credit arrangements provided under this
Agreement in the nature
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of a "work-out" or of any insolvency or bankruptcy proceeding, including,
without limitation, reasonable legal fees and disbursements of counsel to the
Administrative Agent, the Managing Agents, the Co-Agents and each Lender and the
allocated reasonable cost of internal counsel to the Managing Agents, the
Administrative Agent, the Co-Agents and each Lender, (c) to pay, and indemnify
and hold harmless each Lender, each Managing Agent and the Administrative Agent
from, any and all recording and filing fees and any and all liabilities with
respect to, or resulting from any delay in paying, stamp, excise and other
taxes, if any, which may be payable or determined to be payable in connection
with the execution and delivery of, or consummation or administration of any of
the transactions contemplated by, or any amendment, supplement or modification
of, or any waiver or consent under or in respect of, this Agreement, the Notes,
the other Loan Documents and any such other documents and (d) to pay, and
indemnify and hold harmless each Lender, each Managing Agent and the
Administrative Agent from and against, any and all other liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs
(including, without limitation, the allocated reasonable cost of internal
counsel and the reasonable legal fees and disbursements of outside counsel to
the Lenders, the Managing Agents and the Administrative Agent), expenses or
disbursements of any kind or nature whatsoever with respect to the execution,
delivery, enforcement, performance and administration of this Agreement, the
Notes, the other Loan Documents, the IPO or the use of the proceeds of the Loans
or the Letters of Credit and any such other documents (all the foregoing,
collectively, the "indemnified liabilities"), provided, that the Borrower shall
have no obligation hereunder to the Administrative Agent, any Managing Agent or
any Lender with respect to indemnified liabilities arising from (i) the gross
negligence or willful misconduct of the Administrative Agent, such Managing
Agent, such Co-Agent or such Lender or their agents or attorneys-in-fact, (ii)
legal proceedings commenced against the Administrative Agent, any Managing Agent
or any Lender by any security holder or creditor thereof arising out of and
based upon rights afforded any such security holder or creditor solely in its
capacity as such or (iii) legal proceedings commenced against any Lender, the
Administrative Agent or any Managing Agent by any other Managing Agent or Lender
or the Administrative Agent with respect to fee arrangements and other payment
obligations between the Administrative Agent, the Managing Agents and the
Lenders. The agreements in this Section shall survive repayment of the Notes and
all other amounts payable hereunder. The Administrative Agent, the Managing
Agents and the Lenders agree to provide reasonable details and supporting
information concerning any costs and expenses required to be paid by the
Borrower pursuant to the terms hereof.
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9.6 Successors and Assigns; Participations; Purchasing Lenders;
Additional Incremental Lenders.
(a) This Agreement shall be binding upon and inure to the benefit of
the Borrower, the Lenders, the Managing Agents, the Administrative Agent, all
future holders of the Notes and their respective successors and assigns, except
that the Borrower may not assign, transfer or delegate any of its rights or
obligations under this Agreement without the prior written consent of each
Lender except as permitted pursuant to Section 6.4.
(b) Any Lender may, in the ordinary course of its commercial banking or
finance business and in accordance with applicable law, at any time sell to one
or more banks or other entities ("Participants") participating interests in any
Loan owing to such Lender, any Letter of Credit participated in by such Lender,
any Note held by such Lender, any Commitment of such Lender or any other
interest of such Lender hereunder and under the other Loan Documents; provided
that the holder of any such participation, other than an Affiliate of such
Lender, shall not be entitled to require such Lender to take or omit to take any
action hereunder except action directly affecting the extension of the maturity
of any portion of the principal amount of a Loan or Commitment, the expiration
of a Letter of Credit or any portion of interest or fees related thereto
allocated to such participation or a reduction of the principal amount or
principal payment amount of or the rate of interest payable on the Loans or any
fees related thereto or reduction of the amount to be reimbursed under any
Letter of Credit, or a release of any Loan Party or any substantial portion of
the Collateral or any increase in participation amounts. In the event of any
such sale by a Lender of participating interests to a Participant, such Lender's
obligations under this Agreement to the other parties to this Agreement shall
remain unchanged, such Lender shall remain solely responsible for the
performance thereof, such Lender shall remain the holder of any such Note and
the participant in any such Letter of Credit for all purposes under this
Agreement and the other Loan Documents, and the Borrower, the Managing Agents
and the Administrative Agent shall continue to deal solely and directly with
such Lender in connection with such Lender's rights and obligations under this
Agreement and the other Loan Documents. The Borrower agrees that if amounts
outstanding under this Agreement and the Notes are due or unpaid, or shall have
been declared or shall have become due and payable upon the occurrence of an
Event of Default, each Participant shall be deemed to have the right of setoff
in respect of its participating interest in amounts owing under this Agreement
and any Note to the same extent as if the amount continuing of its participating
interest were owing directly to it as a Lender under this Agreement or any Note,
provided that such Participant shall only be entitled to such right of setoff
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if it shall have agreed in the agreement pursuant to which it shall have
acquired its participating interest to share with the Lenders the proceeds
thereof as provided in Section 9.7. The Borrower also agrees that each
Participant shall be entitled to the benefits of Sections 2.13, 2.15, 2.16,
2.17, 2.18 and 9.5 with respect to its participation in the Commitments and the
Loans and the Letters of Credit outstanding from time to time; provided, that no
Participant shall be entitled to receive any greater amount pursuant to such
Sections than the transferor Lender would have been entitled to receive in
respect of the amount of the participation transferred by such transferor Lender
to such Participant had no such transfer occurred.
(c) Any Lender may, in the ordinary course of its commercial banking
business and in accordance with applicable law, at any time sell to any of its
Affiliates or to any Lender, any Affiliate thereof or to one or more additional
lenders or financial institutions, which additional lenders shall be subject to
the consent of the Borrower, such consent not to be unreasonably withheld and
not to be required if a Default has occurred and is continuing ("Purchasing
Lenders") all or any part of its rights and obligations under this Agreement,
the Notes and the other Loan Documents pursuant to an Assignment and Acceptance
substantially in the form of Exhibit D, executed by such Purchasing Lender and
such transferor Lender and delivered to the Administrative Agent for its
acceptance and recording in the Register (as defined in (d) below), provided,
that any such sale must result in the Purchasing Lender having at least
$5,000,000 in aggregate amount of obligations under this Agreement, the Notes
and the other Loan Documents. Upon such execution, delivery, acceptance and
recording, from and after the transfer effective date determined pursuant to
such Assignment and Acceptance, (x) the Purchasing Lender thereunder shall be a
party hereto and, to the extent provided in such Assignment and Acceptance, have
the rights and obligations of a Lender hereunder with a Commitment as set forth
therein, and (y) the transferor Lender thereunder shall, to the extent of such
assigned portion and as provided in such Assignment and Acceptance, be released
from its obligations under this Agreement and the other Loan Documents (and, in
the case of an Assignment and Acceptance covering all or the remaining portion
of a transferor Lender's rights and obligations under this Agreement, such
transferor Lender shall cease to be a party hereto). Such Assignment and
Acceptance shall be deemed to amend this Agreement to the extent, and only to
the extent, necessary to reflect the addition of such Purchasing Lender and the
resulting adjustment of Commitment Percentages arising from the purchase by such
Purchasing Lender of all or a portion of the rights and obligations of such
transferor Lender under this Agreement, the Notes and the other Loan Documents.
On or prior to the transfer effective date determined pursuant to such
Assignment and Acceptance, the Borrower, at its own expense,
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shall execute and deliver to the Administrative Agent in exchange for the
surrendered Note or Notes a new Note or Notes to the order of such Purchasing
Lender in an amount equal to the Commitments assumed by it pursuant to such
Assignment and Acceptance (or, with regard to the transfer of Incremental Loans,
the portion of such Loans transferred), and if the transferor Lender has
retained a Commitment hereunder (or Incremental Loans hereunder), new Notes to
the order of the transferor Lender in an amount equal to the Commitments (or
such Incremental Loans) retained by it hereunder. Such new Notes shall be dated
the Closing Date (or, with respect to Incremental Loans, the original issuance
date thereof) and shall otherwise be in the form of the Notes replaced thereby.
The Notes surrendered by the transferor Lender shall be returned by the
Administrative Agent to the Borrower marked "canceled."
(d) At the request of the Borrower, one or more additional lenders or
financial institutions approved by the Managing Agents, such approval not to the
unreasonably withheld ("Additional Incremental Lenders") shall become
Incremental Lenders hereunder pursuant to a Joining Lender Agreement
substantially in the form of Exhibit E, executed by such Additional Incremental
Lender and the Borrower and delivered to the Administrative Agent for its
acceptance and recording in the Register (as defined in (e) below), provided,
that (i) any such Additional Incremental Lender must have an Incremental Loan
Commitment of at least $5,000,000, and (ii) such Additional Incremental Lender's
Incremental Loan Commitment will not cause the Maximum Incremental Loan Facility
to be exceeded. Upon such execution, delivery, acceptance and recording, from
and after the effective date determined pursuant to such Joining Lender
Agreement, the Additional Incremental Lender thereunder shall be a party hereto
and shall have the rights and obligations of an Incremental Loan Lender
hereunder with an Incremental Loan Commitment as set forth therein. Such Joining
Lender Agreement shall be deemed to amend this Agreement to the extent, and only
to the extent, necessary to reflect the addition of such Additional Incremental
Lender and the resulting adjustment of Incremental Loan Commitment Percentages.
On or prior to the effective date determined pursuant to such Joining Lender
Agreement, the Borrower, at its own expense, shall execute and deliver to the
Administrative Agent an Incremental Loan Note to the order of such Additional
Incremental Lender in an amount equal to the Incremental Loan Commitment of such
Lender as set forth in the Joining Lender Agreement. Such Incremental Loan Note
shall be dated the issuance date thereof.
(e) The Administrative Agent shall maintain at its address referred to
in Section 9.2 a copy of each Assignment and Acceptance and each Joining Lender
Agreement delivered to it and a register (the "Register") for the recordation of
the names and addresses of the Lenders and the Commitments of, and principal
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amount of the Loans owing to, and, if applicable, the Letters of Credit
participated in by, each Lender from time to time. The entries in the Register
shall be conclusive, in the absence of manifest error, and the Borrower, the
Administrative Agent, the Managing Agents and the Lenders may treat each Person
whose name is recorded in the Register as the owner of the Loans and the
participant in the Letters of Credit, if applicable, recorded therein for all
purposes of this Agreement. The Register shall be available for inspection by
the Borrower or any Lender at any reasonable time and from time to time upon
reasonable prior notice.
(f) Upon its receipt of an Assignment and Acceptance executed by a
transferor Lender and Purchasing Lender (and, in the case of a Purchasing Lender
that is not then a Lender or an Affiliate thereof, by the Borrower and the
Administrative Agent) or a Joining Lender Agreement executed by an Additional
Incremental Lender and the Borrower, together with payment to the Administrative
Agent (except in the case of a Lender assigning to its Affiliate) of a
registration and processing fee of $2,500, the Administrative Agent shall (i)
promptly accept such Assignment and Acceptance or Joining Lender Agreement, as
the case may be, and (ii) on the effective date determined pursuant thereto
record the information contained therein in the Register and give notice of such
acceptance and recordation to the Lenders and the Borrower.
(g) The Borrower authorizes each Lender to disclose to any Participant
or Purchasing Lender (each, a "Transferee") and any prospective Transferee any
and all financial information in such Lender's possession concerning the
Borrower and its Subsidiaries and its Affiliates which has been delivered to
such Lender by or on behalf of the Borrower pursuant to this Agreement or any
other Loan Document or which has been delivered to such Lender by or on behalf
of the Borrower in connection with such Lender's credit evaluation of the
Borrower and its Subsidiaries and its Affiliates prior to becoming a party to
this Agreement; provided that such Transferee or prospective Transferee agrees
to maintain the confidentiality of such information in accordance with the
provisions of Section 9.18.
(h) If, pursuant to this Section , any interest in this Agreement, any
Letter of Credit or any Note is transferred to any Transferee, or a Joining
Lender Agreement is executed by any Additional Incremental Lender which is
organized under the laws of any jurisdiction other than the United States or any
state thereof, the transferor Lender shall cause such Transferee, or the
Borrower shall cause such Additional Incremental Lender, concurrently with the
effectiveness of such transfer or Joining Lender Agreement, (i) to represent to
the transferor Lender or the Administrative Agent (as applicable) (for the
benefit of the transferor Lender, the Administrative Agent, the Managing Agents
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and the Borrower) that under applicable law and treaties no taxes will be
required to be withheld by the Administrative Agent, the Managing Agents, the
Borrower, if applicable, or the transferor Lender with respect to any payments
to be made to such Transferee or Additional Incremental Lender in respect of the
Loans or, if applicable, the Letters of Credit, (ii) to furnish to the
transferor Lender or the Administrative Agent (as applicable) (and, in the case
of any Purchasing Lender registered in the Register, the Administrative Agent
and the Borrower) either U.S. Internal Revenue Service Form 4224 or U.S.
Internal Revenue Service Form 1001 (wherein such Transferee or Additional
Incremental Lender claims entitlement to complete exemption from U.S. federal
withholding tax on all interest payments hereunder) and (iii) to agree (for the
benefit of the transferor Lender, if applicable, the Administrative Agent, the
Managing Agents and the Borrower) to provide the transferor Lender or the
Administrative Agent (as applicable) (and, in the case of any Purchasing Lender
registered in the Register, the Administrative Agent and the Borrower) a new
Form 4224 or Form 1001 upon the expiration or obsolescence of any previously
delivered form and comparable statements in accordance with applicable U.S. laws
and regulations and amendments duly executed and completed by such Transferee or
Additional Incremental Lender, and to comply from time to time with all
applicable U.S. laws and regulations with regard to such withholding tax
exemption.
(i) Nothing herein shall prohibit any Lender from pledging or assigning
any of its rights under its Note, or, if applicable, its participation in any
Letter of Credit, to any Federal Reserve Bank in accordance with applicable law.
9.7 Adjustments; Set-Off.
(a) If any Lender (a "benefitted Lender") shall at any time receive any
payment of all or part of its Loans, its participations in Letters of Credit, or
interest thereon, or fees, or receive any collateral in respect thereof (whether
voluntarily or involuntarily, by set-off, pursuant to events or proceedings of
the nature referred to in Section 7(f), or otherwise), in a greater proportion
than any such payment to or collateral received by any other Lender, if any, in
respect of such other Lender's Loans, its participations in Letters of Credit,
or interest thereon, or fees, such benefitted Lender shall purchase for cash
from the other Lenders such portion of each such other Lender's Loans,
participations in Letters of Credit, or fees, or shall provide such other
Lenders with the benefits of any such collateral, or the proceeds thereof, as
shall be necessary to cause such benefitted Lender to share the excess payment
or benefits of such collateral or proceeds ratably with each of the Lenders;
provided, however, that if all or any portion of such excess payment or benefits
is thereafter
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recovered from such benefitted Lender, such purchase shall be rescinded, and the
purchase price and benefits returned, to the extent of such recovery, but
without interest. The Borrower agrees that each Lender so purchasing a portion
of another Lender's Loan or its participations in Letters of Credit may exercise
all rights of payment (including, without limitation, rights of set-off) with
respect to such portion as fully as if such Lender were the direct holder of
such portion.
(b) In addition to any rights and remedies of the Lenders provided by
law, with the prior consent of the Majority Lenders, each Lender shall have the
right, exercisable upon the occurrence and during the continuance of an Event of
Default and acceleration of the Obligations pursuant to Section 7, without prior
notice to the Borrower, any such notice being expressly waived by the Borrower
to the extent permitted by applicable law, to set-off and appropriate and apply
against any such Obligations any and all deposits (general or special, time or
demand, provisional or final), in any currency, and any other credits,
indebtedness or claims in any currency, in each case whether direct or indirect,
absolute or contingent, matured or unmatured, at any time held or owing by such
Lender or any branch or agency thereof or bank controlling such Lender to or for
the credit or the account of the Borrower. Each Lender agrees promptly to notify
the Borrower after any such set-off and application made by such Lender,
provided that the failure to give such notice shall not affect the validity of
such set-off and application.
9.8 Counterparts. This Agreement may be executed by one or more of the
parties to this Agreement on any number of separate counterparts, and all of
said counterparts taken together shall be deemed to constitute one and the same
instrument. A set of the copies of this Agreement signed by all the parties
shall be lodged with the Borrower and the Administrative Agent.
9.9 Severability. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
9.10 Integration. This Agreement represents the entire agreement of the
Borrower, the Administrative Agent, the Managing Agents and the Lenders with
respect to the subject matter hereof, and there are no promises, undertakings,
representations or warranties by the Administrative Agent, the Managing Agents
or any Lender relative to the subject matter
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hereof not expressly set forth or referred to herein or in the other Loan
Documents.
9.11 GOVERNING LAW. THIS AGREEMENT AND THE NOTES AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED
BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
NEW YORK (WITHOUT REFERENCE TO ITS CHOICE OF LAW RULES).
9.12 Submission to Jurisdiction; Waivers; Appointment of Process Agent.
(a) The Borrower to the extent permitted by applicable law, hereby irrevocably
and unconditionally:
(i) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to
which it is a party, or for recognition and enforcement of any judgment
in respect thereof, to the non-exclusive general jurisdiction of the
Courts of the States of California and New York, the courts of the
United States of America for the Central District of California and the
Southern District of New York, and appellate courts from any thereof;
(ii) consents that any such action or proceeding may be
brought in such courts and waives any objection that it may now or
hereafter have to the venue of any such action or proceeding in any
such court or that such action or proceeding in any such court was
brought in an inconvenient court and agrees not to plead or claim the
same; and
(iii) agrees that nothing herein shall affect the right to
effect service of process in any manner permitted by law or shall limit
the right to sue in any other jurisdiction.
9.13 Acknowledgements. The Borrower hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the Notes and the other Loan Documents; (b)
neither the Administrative Agent, any Managing Agent nor any Lender has any
fiduciary relationship to the Borrower solely by virtue of any of the Loan
Documents, and the relationship pursuant to the Loan Documents between the
Administrative Agent, the Managing Agents and the Lenders, on one hand, and the
Borrower on the other hand, is solely that of creditor and debtor; and
(c) no joint venture exists among the Lenders or among the Borrower and
the Lenders.
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9.14 WAIVERS OF JURY TRIAL. THE BORROWER, THE ADMINISTRATIVE AGENT, THE
MANAGING AGENTS AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE
TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR
THE NOTES OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
9.15 Headings. Section headings herein are included for convenience of
reference only and shall not constitute a part of this Agreement for any other
purpose.
9.16 Conflict of Terms. Except as otherwise provided in this Agreement
or any of the other Loan Documents by specific reference to the applicable
provisions of this Agreement, if any provision contained in this Agreement is in
conflict with, or inconsistent with, any provision in any of the other Loan
Documents, the provision contained in this Agreement shall govern and control.
9.17 Copies of Certificates, Etc. Whenever the Borrower is required to
deliver notices, certificates, opinions, statements or other information
hereunder to the Administrative Agent or to the Managing Agents for delivery to
any Lender, it shall do so in such number of copies as the Administrative Agent
or the Managing Agents shall reasonably specify (provided, that if, for any
reason, the Administrative Agent or the Managing Agents do not deliver such
notices, certificates, opinions, statements or other information to any Lender,
the Borrower shall deliver such items to such Lender upon the request of such
Lender). Whenever the Administrative Agent or the Managing Agents receives from
any Loan Party notices, certificates, opinions, statements or other information
hereunder or under any other Loan Document for delivery to the Lenders, the
Administrative Agent or the Managing Agents shall promptly deliver such items to
each Lender, unless the Borrower is required by the terms hereof to deliver such
items to such Lender itself.
9.18 Confidentiality. The Lenders shall take normal and reasonable
precautions to maintain the confidentiality of all non-public information
obtained pursuant to the requirements of this Agreement which has been
identified as such by any Loan Party but may, in any event, make disclosures (i)
reasonably required by any bona fide transferee, assignee or participant in
connection with the contemplated transfer or assignment of any of the
Commitments or Loans or participations therein or participations in Letters of
Credit or (ii) as required or requested by any governmental agency or
representative thereof or as required pursuant to legal process or (iii) to its
attorneys and accountants or (iv) as required by law or (v) in connection with
litigation involving any Lender; provided that (a) such transferee, assignee or
participant agrees to comply with the provisions of this Section 9.18 unless
specifically
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prohibited by applicable law or court order, (b) each Lender shall use its best
efforts to notify the Borrower of any requirement or request by any governmental
agency or representative thereof (other than any such request in connection with
an examination of such Lender by such governmental agency) and any requirement
pursuant to legal process of or for disclosure of such information (other than
in connection with litigation between any Loan Party and any Lender) and (c) in
no event shall any Lender be obligated or required to return any materials
furnished by the Borrower and its Subsidiaries.
9.19 Publicity. The Managing Agents shall have the right to review and
approve (such approval not to be unreasonably withheld or delayed), in advance,
any public announcements (in any form) and any filings describing or quoting
from the credit arrangements reflected in this Agreement and the other Loan
Documents, provided, however, that the Borrower (i) shall be permitted to file
copies of any Loan Document with the SEC, the FCC or any other governmental
agency as required by law and
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(ii) shall also be permitted to disclose information concerning the Loan
Documents if the Borrower's attorneys reasonably believe that such disclosure is
required by law.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered in Los Angeles, California by their proper and duly
authorized officers as of the day and year first above written.
UNIVISION COMMUNICATIONS INC.
By_________________________
Name:
Title:
THE CHASE MANHATTAN BANK,
as Administrative Agent, as
a Managing Agent and as a Lender
By_________________________
Name:
Title:
BANQUE PARIBAS, as a Managing Agent
and as a Lender
By_________________________
Name:
Title:
By_________________________
Name:
Title:
THE BANK OF NEW YORK, as a
Co-Agent and as a Lender
By_________________________
Name:
Title:
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NATIONSBANK OF TEXAS, N.A., as a
Co-Agent and as a Lender
By_________________________
Name:
Title:
[additional Co-Agents, if any, and Lenders to be added]
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Exhibit 10.13
SECURITY AGREEMENT
This SECURITY AGREEMENT ("Agreement") dated as of ____________, 1996, is
made between UNIVISION COMMUNICATIONS INC., a Delaware corporation ("Grantor"),
and THE CHASE MANHATTAN BANK, a New York banking corporation, as administrative
agent (the "Agent") for the Lenders (as defined in the Credit Agreement referred
to below, the "Lenders").
RECITALS
A. The Chase Manhattan Bank, a New York banking corporation, as a
managing agent, Banque Paribas, a French banking corporation, as a managing
agent (collectively, the "Managing Agents"), the Agent and the Lenders have
entered into a Credit Agreement dated as of ____________, 1996 (said Agreement,
as it may hereafter be amended or otherwise modified from time to time, being
called the "Credit Agreement") with the Grantor.
B. It is a condition precedent to the extension of credit by the Lenders
under the Credit Agreement that the Grantor shall have executed and delivered
this Agreement.
C. Terms defined in the Credit Agreement and not otherwise defined
herein have the same respective meanings when used herein, and the rules of
interpretation set forth in Section 1.2 of the Credit Agreement are incorporated
herein by reference.
AGREEMENT
NOW, THEREFORE, in order to induce the Lenders to enter into the Credit
Agreement and for other good and valuable consideration, the receipt and
adequacy of which hereby is acknowledged, Grantor hereby represents, warrants,
covenants, agrees, assigns and grants as follows:
1. Definitions. Unless the context otherwise requires, terms defined in
the Uniform Commercial Code of the State of New York (the "Uniform Commercial
Code") and not otherwise defined in this Agreement or in the Credit Agreement
shall have the meanings defined for those terms in the Uniform Commercial Code.
In addition, the following terms shall have the meanings respectively set forth
after each:
"Certificates" means all certificates, instruments and other documents
now or hereafter representing or evidencing any Pledged Securities.
<PAGE> 2
"Collateral" means and includes all present and future right, title and
interest of Grantor in or to any personal property or assets whatsoever, whether
now owned or existing or hereafter arising or acquired and wheresoever located,
and all rights and powers of Grantor to transfer any interest in or to any
personal property or assets whatsoever, including, without limitation, any and
all of the following personal property:
(a) All present and future accounts, accounts receivable,
agreements, guarantees, contracts (including without limitation the
Material Contracts), leases, contract rights and rights to payment
(collectively, the "Accounts"), together with all instruments,
documents, chattel paper, security agreements, guaranties, undertakings,
surety bonds, insurance policies, notes and drafts, and all forms of
obligations owing to Grantor or in which Grantor may have any interest,
however created or arising;
(b) All present and future general intangibles, including
without limitation the proprietary rights of the Grantor in all Media
Licenses (including without limitation the FCC licenses for the Primary
Stations described in Schedule E attached hereto and made a part hereof
and including, without limitation, goodwill, going concern value, all of
Grantor's rights under or relating to any Media License and the proceeds
of any Media License; provided, however, that the Collateral does not
include at any time any license granted by the FCC to the extent, but
only to the extent, that the Grantor is prohibited at that time from
granting a security interest therein pursuant to the Communications Act
of 1934, as amended, and the policies and regulations promulgated
thereunder, but includes, to the maximum extent permitted by law, all
rights incident or appurtenant to such Media License and the rights to
receive all proceeds derived from or in connection with the sale,
assignment or transfer of such Media License), all tax refunds of every
kind and nature to which Grantor now or hereafter may become entitled,
however arising, all other refunds, all commitments to extend financing
to the Grantor, and all deposits, goodwill, choses in action, trade
secrets, computer programs, software, customer lists, trademarks, trade
names, patents, licenses, copyrights, technology, processes, proprietary
information and insurance proceeds, including, without limitation, the
Copyrights, the Patents, the Marks and the Programs, and the goodwill of
Grantor's business connected with and symbolized by the Marks;
(c) All present and future demand, time, savings, passbook,
deposit and like accounts (general or special) (collectively, the
"Deposit Accounts") in which Grantor has any interest which are
maintained with any bank, savings and loan association, credit union or
like organization,
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<PAGE> 3
including, without limitation, each account listed on Schedule K
attached hereto and made a part hereof, and all money, cash and cash
equivalents of Grantor, whether or not deposited in any Deposit Account;
(d) All present and future books and records, including, without
limitation, books of account and ledgers of every kind and nature, all
electronically recorded data relating to Grantor or the business
thereof, all receptacles and containers for such records, and all files
and correspondence;
(e) All present and future goods, including, without limitation,
all equipment, machinery, cameras, recording equipment, transmitters,
satellite transponders, transmitting towers, transmitters, broadcasting
equipment, videotapes, audio tapes and other recorded media, tools,
molds, dies, furniture, furnishings, fixtures, trade fixtures, motor
vehicles and all other goods used in connection with or in the conduct
of Grantor's business, including, but not limited to, all goods as
defined in Section 9-109(2) of the Uniform Commercial Code
(collectively, the "Equipment");
(f) All present and future inventory and merchandise, including,
without limitation, all present and future goods held for sale or lease
or to be furnished under a contract of service, all videotapes, audio
tapes and other recorded media, all raw materials, work in process and
finished goods, all packing materials, supplies and containers relating
to or used in connection with any of the foregoing, and all bills of
lading, warehouse receipts and documents of title relating to any of the
foregoing (collectively, the "Inventory");
(g) All present and future stocks, bonds, debentures,
securities, subscription rights, options, warrants, puts, calls,
certificates, partnership interests, joint venture interests and
investment and/or brokerage accounts, including without limitation the
Certificates, the Pledged Securities and the Pledged Partnership
Interests, and all rights, preferences, privileges, dividends,
distributions (in cash or in kind), redemption payments or liquidation
payments with respect thereto;
(h) All present and future accessions, appurtenances,
components, repairs, repair parts, spare parts, replacements,
substitutions, additions, issue and/or improvements to or of or with
respect to any of the foregoing;
(i) All other tangible and intangible personal property of
Grantor;
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<PAGE> 4
(j) All rights, remedies, powers and/or privileges of Grantor
with respect to any of the foregoing; and
(k) Any and all proceeds and products of the foregoing,
including without limitation, all money, accounts, general intangibles,
deposit accounts, documents, instruments, chattel paper, goods,
insurance proceeds and any other tangible or intangible property
received upon the sale or disposition of any of the foregoing;
provided that the term "Collateral", as used in this Agreement, shall not
include real property or any interest therein.
"Copyrights" means all:
(i) copyrights, whether or not published or registered under the
Copyright Act of 1976, 17 U.S.C. Section 101 et seq., as the same shall
be amended from time to time, and any predecessor or successor statute
thereto (the "Copyright Act"), and applications for registration of
copyrights, and all works of authorship and other intellectual property
rights therein, including, without limitation, copyrights for computer
programs, source code and object code data bases and related materials
and documentation and including, without limitation, the registered
copyrights and copyright applications listed on Schedule A attached
hereto and made a part hereof, and (a) all renewals, revisions,
derivative works, enhancements, modifications, updates, new releases and
other revisions thereof, (b) all income, royalties, damages and payments
now and hereafter due and/or payable with respect thereto, including,
without limitation, payments under all licenses entered into in
connection therewith and damages and payments for past or future
infringements thereof, (c) the right to sue for past, present and future
infringements thereof and (d) all of Grantor's rights corresponding
thereto throughout the world;
(ii) rights under or interests in any copyright license
agreements with any other party, whether Grantor is a licensee or
licensor under any such license agreement, including, without
limitation, the copyright license agreements listed on Schedule A
attached hereto and made a part hereof, and the right to use the
foregoing in connection with the enforcement of the Lenders' rights
under the Loan Documents; and
(iii) copyrightable materials now or hereafter owned by Grantor,
including Programs not copyrighted, all tangible property embodying the
copyrights described in clause (i) hereof or such copyrightable
materials, and all tangible property covered by the licenses described
in clause (ii) hereof.
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<PAGE> 5
"Marks" means all (i) trademarks, trademark registrations, interests
under trademark license agreements, tradenames, trademark applications, service
marks, business names, trade styles, designs, logos and other source or business
identifiers for which registrations have been issued or applied for in the
United States Patent and Trademark Office or in any other office or with any
other official anywhere in the world or which are used in the United States or
any state, territory or possession thereof, or in any other place, nation or
jurisdiction anywhere in the world including, without limitation, the
trademarks, trademark registrations, applications, service marks, business
names, trade styles, design logos and other source or business identifiers
listed on Schedule B attached hereto and made a part hereof, (ii) licenses
pertaining to any such mark whether Grantor is licensor or licensee including,
without limitation, the licenses listed on Schedule B hereto, (iii) all income,
royalties, damages and payments now and hereafter due and/or payable with
respect to any such mark or any such license, including, without limitation,
damages and payments for past, present or future infringements thereof, (iv)
rights to sue for past, present and future infringements thereof, (v) rights
corresponding thereto throughout the world, (vi) all product specification
documents and production and quality control manuals used in the manufacture of
products sold under or in connection with such marks, (vii) all documents that
reveal the name and address of all sources of supply of, and all terms of
purchase and delivery for, all materials and components used in the production
of products sold under or in connection with such marks, (viii) all documents
constituting or concerning the then current or proposed advertising and
promotion by Grantor, its subsidiaries or licensees of products sold under or in
connection with such marks, including, without limitation, all documents that
reveal the media used or to be used and the cost for all such advertising
conducted within the described period or planned for such products and (ix)
renewals and proceeds of any of the foregoing.
"Material Contracts" means the contracts set forth on Schedule D
attached hereto and made a part hereof and all contracts entered into by Grantor
in the future which are material and necessary to the conduct of Grantor's
business.
"Patents" means all (i) letters patent, design patents, utility patents,
inventions and trade secrets, all patents and patent applications in the United
States Patent and Trademark Office, and interests under patent license
agreements, including, without limitation, the inventions and improvements
described and claimed therein, including, without limitation, those patents
listed on Schedule C attached hereto and made a part hereof, (ii) licenses
pertaining to any patent whether Grantor is licensor or licensee, (iii) income,
royalties, damages and payments now and hereafter due and/or payable under and
with respect thereto, including, without limitation, damages and payments for
past, present or future infringements thereof,
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<PAGE> 6
(iv) rights to sue for past, present and future infringements thereof, (v)
rights corresponding thereto throughout the world in all jurisdictions in which
such patents have been issued or applied for and (vi) the reissues, divisions,
continuations, renewals, extensions and continuations-in-part of any of the
foregoing.
"Pledged Collateral" means the Certificates, the Pledged Securities and
the Pledged Partnership Interests.
"Pledged Partnership Interests" means all interests in any partnership
or joint venture held by Grantor including but not limited to those partnerships
and/or joint ventures identified in Schedule F attached hereto and made a part
hereof, as such Schedule may be supplemented from time to time in accordance
with the terms of this Agreement, and all dividends, cash, instruments and other
properties from time to time received, to be received or otherwise distributed
in respect of or in exchange for any or all of such interests.
"Pledged Securities" means all shares of capital stock of any issuer in
which Grantor has an interest, including but not limited to, those shares of
stock identified in Schedule F attached hereto, as such Schedule may be
supplemented from time to time in accordance with the terms of this Agreement,
and all dividends, cash, instruments and other properties from time to time
received, to be received or otherwise distributed in respect of or in exchange
for any or all of such shares.
"Programs" means all (a) media broadcasting programs originating from
the Grantor or any Affiliate of the Grantor, all other general intangibles of a
like nature, and all recordings and renewals thereof; and (b) licenses,
contracts or other agreements, whether written or oral, naming the Grantor as
licensee or licensor and providing for the grant of any right to produce, use,
sell, broadcast or rebroadcast any media or broadcasting programs.
"Secured Party" means, collectively, the Agent, the Managing
Agents and the Lenders.
2.[A.] Creation of Security Interest. Grantor hereby pledges to the
Agent for the ratable benefit of the Lenders, and grants to the Agent for the
ratable benefit of the Lenders a security interest in and to, all right, title
and interest of Grantor in and to all presently existing and hereafter acquired
Collateral. The security interest and pledge created by this Section 2 shall
continue in effect so long as any Obligation (as defined below) remains unpaid
or any Commitment remains in effect or any Letter of Credit remains outstanding.
[2.B Permitted Pari Passu Liens. In the event Grantor grants or incurs
any Liens or security interests on all or any portion of the Collateral
permitted under Section 6.3(l) of the
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<PAGE> 7
Credit Agreement which are on a pari passu basis with the Lien and security
interest granted to Agent for the benefit of Lenders hereunder, Agent agrees to
execute an appropriate amendment to this Security Agreement, in form and
substance reasonably satisfactory to the Majority Lenders and the Grantor, to
permit such other pari passu Liens or security interests and that provides for
rights and remedies to the holder(s) of such other pari passu Liens or security
interests equal to those of the Agent and the Lenders with respect to the
Collateral subject to such pari passu Liens or security interests.](1)
3. Security for Obligations. This Agreement and the security interests
granted herein secure the prompt payment, in full in cash, and full performance
of, all obligations of Grantor now or hereafter existing under any Loan
Document, whether for principal, interest, fees, expenses or otherwise,
including without limitation all obligations of Grantor now or hereafter
existing under this Agreement, and all interest that accrues (whether or not
allowed) at the then applicable rate (including interest at the rate for overdue
payments described in Section 2.9(c) of the Credit Agreement) specified in the
Credit Agreement on all or any part of any of such obligations after the filing
of any petition or pleading against Grantor for a proceeding under any
bankruptcy or related law (collectively, the "Obligations").
4. Delivery of Pledged Collateral.
(a) Each Certificate shall, on or before the earliest of (i) the Initial
Closing Date, (ii) the Second Closing Date and (iii) the day on which such
Certificate shall be received or acquired by the Grantor, be delivered to and
held by the Agent on behalf of the Lenders and shall be in suitable form for
transfer by delivery, or shall be accompanied by duly executed undated
endorsements, instruments of transfer or assignment in blank, all in form and
substance reasonably satisfactory to the Managing Agents.
(b) Subject to any necessary prior approval of the FCC, the Managing
Agents shall have the right, upon the occurrence and during the continuance of
an Event of Default, without notice to the Grantor, to transfer to or to direct
the Grantor or any nominee of the Grantor to register or cause to be registered
in the name of the Agent or any of its nominees any or all of the Pledged
Securities. In addition, the Managing Agents shall have the right at any time to
exchange certificates or instruments representing or evidencing Pledged
Securities for certificates or instruments of smaller or larger denominations.
- --------
(1) To be included in UCI Security Agreement only.
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<PAGE> 8
5. Further Assurances.
(a) At any time and from time to time at the reasonable written request
of the Agent, Grantor shall execute and deliver to the Agent, at Grantor's
expense, all such financing statements and other instruments, certificates and
documents (including notices to financial institutions holding deposit accounts
of Grantor as to the security interest granted hereby) in form and substance
reasonably satisfactory to the Agent, and perform all such other acts as shall
be necessary or reasonably desirable to fully perfect or protect or maintain,
when filed, recorded, delivered or performed, the Secured Party's security
interests granted pursuant to this Agreement or to enable the Lenders to
exercise and enforce their rights and remedies hereunder with respect to any
Collateral. Without limiting the generality of the foregoing, Grantor shall: (i)
at the request of the Agent, mark conspicuously each document included in the
Inventory and each other contract relating to the Accounts, and all chattel
paper, instruments and other documents and each of its records pertaining to the
Collateral with a legend, in form and substance satisfactory to the Agent,
indicating that such document, contract, chattel paper, instrument or Collateral
is subject to the security interest granted hereby; (ii) at the request of the
Agent, if any Account or contract or other writing relating thereto shall be
evidenced by a promissory note or other instrument, deliver and pledge to the
Agent, for the ratable benefit of the Lenders, such note or other instrument
duly endorsed and accompanied by duly executed undated instruments of transfer
or assignment, all in form and substance reasonably satisfactory to the Agent;
(iii) execute and file such financing or continuation statements, or amendments
thereto, and such other instruments or notices, as may be necessary or
desirable, or as the Agent may reasonably request, in order to perfect and
preserve, with the required priority, the security interests granted, or
purported to be granted hereby; (iv) upon Grantor's registration, or application
therefor, of any copyright under the Copyright Act, at the Agent's request
execute and deliver to the Agent for recordation and filing in the United States
Copyright Office a copy of this Agreement or another appropriate copyright
mortgage document in form and substance reasonably satisfactory to the Managing
Agents; (v) upon Grantor's registration, or application therefor, of any Patent
or Mark, execute and deliver to the Agent for recordation and filing in the
United States Patent and Trademark Office a copy of this Agreement or another
appropriate patent or trademark mortgage document, as applicable, in form and
substance reasonably satisfactory to the Managing Agents; and (vi) with respect
to any Material Contract in which Grantor now has or hereafter acquires an
interest which by its terms prohibits assignment, Grantor will use reasonable
efforts to procure the consent of the counterparty to such contract (a
"Consent") in the form attached as Schedule J hereto and made a part hereof.
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<PAGE> 9
(b) At any time and from time to time, the Agent shall be entitled to
file and/or record any or all such financing statements, instruments and
documents held by it, and any or all such further financing statements,
documents and instruments, relative to the Collateral or any part thereof in
each instance, and to take all such other actions as the Agent may reasonably
deem appropriate to perfect and to maintain perfected the security interests
granted herein.
(c) Grantor hereby authorizes the Agent to file one or more financing or
continuation statements, and amendments thereto, relative to all or any part of
the Collateral without the signature of Grantor where permitted by law. A
carbon, photographic or other reproduction of this Agreement or any financing
statement covering the Collateral or any part thereof shall be sufficient as a
financing statement where permitted by law.
(d) Grantor shall furnish to the Agent from time to time statements and
schedules further identifying and describing the Collateral and such other
reports in connection with the Collateral as the Agent may reasonably request.
Upon Grantor's publication or registration, or application for registration, of
any copyright under the Copyright Act, Grantor shall, in addition to all other
acts required to be performed in respect thereof pursuant to this Agreement,
supplement Schedule A to this Agreement to reflect the publication or
registration of such copyright or application therefor. Upon Grantor's obtaining
any rights and interests in any additional Marks, Grantor shall, in addition to
all other acts required to be performed in respect thereof pursuant to this
Agreement, supplement Schedule B to this Agreement to reflect such additional
Marks. Upon Grantor's obtaining any rights and interests in any additional
Patents, Grantor shall, in addition to all other acts required to be performed
in respect thereof pursuant to this Agreement, supplement Schedule C to this
Agreement to reflect such additional Patents. Upon Grantor's receipt or
acquisition of any additional shares of capital stock of any Person or any
additional partnership interests in any partnership or joint venture, Grantor
shall, in addition to all other acts required to be performed in respect thereof
pursuant to this Agreement, supplement Schedule F to this Agreement to reflect
such additional Pledged Collateral. Grantor shall promptly give Agent notice of
any Material Contract to which it becomes party after the Closing Date and, in
addition to all other acts required to be performed in respect thereof pursuant
to this Agreement, upon request of the Agent, shall supplement Schedule D to
this Agreement to reflect such additional contract.
(e) With respect to any Collateral consisting of certificates of title
or the like as to which Secured Party's security interest need be perfected by,
or the priority thereof need be assured by, notation on the certificate of title
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<PAGE> 10
pertaining to such Collateral, Grantor will upon demand of the Agent note the
lien on such certificate of title in favor of the Lenders.
(f) With respect to any Collateral consisting of securities,
instruments, partnership or joint venture interests or the like, Grantor hereby
consents and agrees that, upon the occurrence and during the continuance of an
Event of Default, subject to any necessary prior approval of the FCC, the
issuers of, or obligors on, any such Collateral, or any registrar or transfer
agent or trustee for any such Collateral, shall be entitled to accept the
provisions of this Agreement as conclusive evidence of the right of the Agent to
effect any transfer or exercise any right hereunder or with respect to any such
Collateral subject to the terms hereof, notwithstanding any other notice or
direction to the contrary heretofore or hereafter given by Grantor or any other
Person to such issuers or such obligors or to any such registrar or transfer
agent or trustee.
6. Voting Rights; Dividends; etc. Subject to any necessary prior
approval from the FCC, so long as no Event of Default shall have occurred and be
continuing:
(a) Voting Rights. Grantor shall be entitled to exercise any and all
voting and other consensual rights pertaining to the Pledged Securities or the
Pledged Partnership Interests, or any part thereof, for any purpose not
inconsistent with the terms of this Agreement, the Credit Agreement or the other
Loan Documents; provided, however, that Grantor shall not exercise, or shall
refrain from exercising, any such right if it would result in a Default.
(b) Dividend and Distribution Rights. Subject to the terms of the Credit
Agreement, Grantor shall be entitled to receive and to retain and use any and
all dividends or distributions paid in respect of the Pledged Securities or the
Pledged Partnership Interests; provided, however, that any and all
(i) non-cash dividends or distributions in the form of capital
stock, instruments or other property received, receivable or otherwise
distributed in respect of, or in exchange for, any Pledged Securities or
Pledged Partnership Interests,
(ii) dividends and other distributions paid or payable in cash
in respect of any Pledged Securities or Pledged Partnership Interests in
connection with a partial or total liquidation or dissolution or in
connection with a reduction of capital, capital surplus or
paid-in-surplus, and
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<PAGE> 11
(iii) cash paid, payable or otherwise distributed in redemption of,
or in exchange for, any Pledged Securities or Pledged Partnership
Interests,
shall, except as otherwise provided for in the Credit Agreement or the other
Loan Documents, forthwith be delivered to the Agent, in the case of (i) above,
to be held as Collateral and shall, if received by Grantor, be received in trust
for the benefit of Secured Party, be segregated from the other property of
Grantor and forthwith be delivered to the Agent as Collateral in the same form
as so received (with any necessary endorsements), and in the case of (ii) and
(iii) above, to be applied to the Obligations to the extent permitted by the
Credit Agreement or otherwise to be held as Collateral.
7. Rights as to Pledged Collateral During Event of Default. When an
Event of Default has occurred and is continuing, subject to any necessary prior
approval of the FCC:
(a) Voting, Dividend and Distribution Rights. At the option of the
Agent, all rights of Grantor to exercise the voting and other consensual rights
which it would otherwise be entitled to exercise pursuant to Section 6(a) above,
and to receive the dividends and distributions which it would otherwise be
authorized to receive and retain pursuant to Section 6(b) above, shall cease,
and all such rights shall thereupon become vested in the Agent who shall
thereupon have the sole right to exercise such voting and other consensual
rights and to receive and to hold as Pledged Collateral such dividends and
distributions during the continuance of such Event of Default.
(b) Dividends and Distributions Held in Trust. All dividends and other
distributions which are received by Grantor contrary to the provisions of
Section 7(a) of this Agreement shall be received in trust for the benefit of
Secured Party, shall be segregated from other funds of Grantor and forthwith
shall be paid over to the Agent as Collateral in the same form as so received
(with any necessary endorsements).
8. Irrevocable Proxy. Grantor hereby revokes all previous proxies with
regard to the Pledged Securities and, subject to any necessary prior approval of
the FCC, appoints the Agent as its proxyholder to attend and vote at any and all
meetings of the shareholders of the corporation(s) which issued the Pledged
Securities, and any adjournments thereof, held on or after the date of the
giving of this proxy and prior to the termination of this proxy and to execute
any and all written consents of shareholders of such corporation(s) executed on
or after the date of the giving of this proxy and prior to the termination of
this proxy, with the same effect as if Grantor had personally attended the
meetings or had personally voted its shares or had personally signed the written
consents; provided, however, that the Agent as proxyholder shall have rights
hereunder only upon the occurrence and during the continuance of an Event of
Default
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<PAGE> 12
and subject to Section 16(j) hereof. Grantor hereby authorizes the Agent to
substitute another Person (which Person shall be a successor to the rights of
the Agent hereunder, a nominee appointed by the Agent to serve as proxyholder,
or otherwise as approved by the Grantor in writing, such approval not to be
unreasonably withheld) as the proxyholder and, upon the occurrence or during the
continuance of any Event of Default, hereby authorizes and directs the
proxyholder to file this proxy and the substitution instrument with the
secretary of the appropriate corporation. This proxy is coupled with an interest
and is irrevocable until such time as no part of any Commitment remains
outstanding, all Obligations have been indefeasibly paid in full and no Letter
of Credit remains outstanding.
9. Copyrights.
(a) Royalties. Grantor hereby agrees that the use by the Agent or any
Lender of the Copyrights as authorized hereunder in connection with the Agent's
or the Lenders' exercise of their rights and remedies hereunder shall be without
any liability for royalties or other related charges from the Agent or the
Lenders to Grantor.
(b) Restrictions on Future Agreements. Subject to the terms hereof and
of the Credit Agreement, Grantor shall be permitted to manage, license and
administer its Copyrights, Patents and Marks in such manner as Grantor in its
reasonable business judgment deems desirable; provided, however, that Grantor
will not, without the Agent's prior written consent, such consent not to be
unreasonably withheld or delayed, (a) enter into any copyright license
agreements except license agreements entered into in the ordinary course of its
business consistent with past practices and containing such additional
provisions to protect the Lenders' interest hereunder as the Agent may from time
to time reasonably request or (b) take any action, or permit any action to be
taken by others, including, without limitation, licensees, or fail to take any
action, which would customarily be taken by a Person in the same business and in
similar circumstances as the Grantor, which could in any respect reasonably be
expected to have a Material Adverse Effect.
(c) Duties of Grantor. Grantor shall have the duty to: (i) prosecute
diligently any copyright application included in the Copyrights, (ii) upon the
occurrence and during the continuance of an Event of Default, at the request of
the Agent, make application for registration of such uncopyrighted but
copyrightable material owned by Grantor as the Managing Agents reasonably deem
appropriate if the failure to do so could reasonably be expected to have a
Material Adverse Effect, (iii) place notices of copyright on all copyrightable
property produced or owned by Grantor embodying the Copyrights and use diligent
reasonable efforts to have its licensees do the same and (iv) take all
reasonable action necessary in Grantor's
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<PAGE> 13
reasonable business judgment consistent with past practices to preserve and
maintain all of Grantor's rights in the Copyrights that are or shall be
necessary in the operation of Grantor's business, including, without limitation,
making timely filings for renewals and extensions of registered Copyrights and
diligently monitoring unauthorized use thereof, unless the failure to do so
could not reasonably be expected to have a Material Adverse Effect. Any expenses
incurred in connection with the foregoing shall be borne by Grantor. Neither the
Agent nor the Lenders shall have any duty with respect to the Copyrights other
than to act lawfully and without gross negligence or willful misconduct. Without
limiting the generality of the foregoing, neither the Agent nor the Lenders
shall be under any obligation to take any steps necessary to preserve rights in
the Copyrights against any other parties, but the Agent may do so at its option
upon the occurrence and during the continuance of an Event of Default, and all
reasonable expenses incurred in connection therewith shall be for the sole
account of Grantor and shall be added to the Obligations.
10. Patents and Marks.
(a) Royalties. Grantor hereby agrees that any rights granted hereunder
to the Lenders with respect to Patents and Marks shall be applicable to all
territories in which the Grantor has the right to use such Patents and Marks,
from time to time, and without any liability for royalties or other related
charges from the Lenders to Grantor.
(b) Restrictions on Future Agreements. Grantor will not, without the
Agent's prior written consent, such consent not to be unreasonably withheld or
delayed, abandon any Patent or Mark in which Grantor now owns or hereafter
acquires any rights or interests if such abandonment could reasonably be
expected to have a Material Adverse Effect or enter into any agreement,
including, without limitation, any license agreement, which is inconsistent with
Grantor's obligations under this Agreement, if such actions could reasonably be
expected to have a Material Adverse Effect, and Grantor further agrees that it
will not take any action, or permit any action to be taken by others subject to
its control, including licensees, or fail to take any action which would
customarily be taken by a Person in the same business and in similar
circumstances as the Grantor, which could reasonably be expected to have a
Material Adverse Effect.
(c) Duties of Grantor. Grantor shall have the duty to (i) prosecute
diligently any patent application or trademark application pending as of the
date hereof or thereafter until the Obligations shall have been indefeasibly
paid in full, no Commitment remains and no Letter of Credit remains outstanding,
(ii) upon the occurrence and during the continuance of an Event of Default, make
application on unpatented but patentable inventions owned by the Grantor and on
Marks, as the case may be, as the Managing Agents reasonably deem appropriate,
(iii)
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<PAGE> 14
file and prosecute opposition and cancellation proceedings if the failure to do
so could reasonably be expected to have a Material Adverse Effect and (iv) take
all reasonable action necessary in Grantor's reasonable business judgment
consistent with past practices to preserve and maintain all rights in patent
applications of the Patents and in applications for registrations of the Marks
unless the failure so to do could not reasonably be expected to have a Material
Adverse Effect. Any expenses incurred in connection with such applications shall
be borne by Grantor. Grantor shall not abandon any right to file a Patent
application or Mark application without the consent of the Agent, which consent
shall not be unreasonably withheld or delayed, if such abandonment could
reasonably be expected to have a Material Adverse Effect. Grantor shall give
proper statutory notice in connection with its use of each of the Marks to the
extent necessary for the protection of each of the Marks. Grantor shall notify
the Agent of any suits it commences to enforce the Patents and Marks and shall
provide the Agent with copies of any documents reasonably requested by the Agent
relating to such suits.
11. Grantor's Representations and Warranties. Grantor represents and
warrants as follows:
(a) (i) The locations listed on Schedule G attached hereto and
made a part hereof constitute all locations at which Inventory and/or
Equipment are located; (ii) the chief executive office of the Grantor,
where the Grantor keeps its records concerning the Collateral and the
chattel paper evidencing the Collateral, is located at the address set
forth for Grantor on Schedule H attached hereto and made a part hereof;
(iii) all records concerning any Account, any Material Contract and all
originals of all contracts and other writings which evidence any Account
are located at the addresses listed on Schedule H hereto; and (iv) the
Grantor has exclusive possession and control of the Equipment and the
Inventory.
(b) The Grantor currently conducts business only under its own
name and the trade names listed on Part 1 of Schedule I attached hereto
and made a part hereof. Neither the Grantor nor any corporate
predecessor has, during the preceding five years, been known as or used
any other corporate or fictitious name, except the names disclosed on
Part 2 of Schedule I hereto.
(c) The Grantor is the legal and beneficial owner of the
Collateral free and clear of all Liens except for Liens permitted by
Section 6.3 of the Credit Agreement. Grantor has the power, authority
and legal right to grant the security interests in the Collateral
purported to be granted hereby, and to execute, deliver and perform this
Agreement. The pledge of the Collateral pursuant to this Agreement
creates a valid security interest in the
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<PAGE> 15
Collateral. That Collateral the perfection of which is governed by the
Uniform Commercial Code as in effect in the applicable jurisdictions in
the United States, or federal copyright, trademark and patent law, will
be a first-priority (except for any Liens or security interests
permitted under Section 6.3 of the Credit Agreement which have priority
by operation of law [and any pari passu Liens or security interests
permitted under Section 6.3 of the Credit Agreement)](2) perfected
security interest in such Collateral upon taking the appropriate actions
pursuant to Sections 9- 301, 9-302, 9-304, 9-305, 9-306, 8-313 or 8-321
of the Uniform Commercial Code, as applicable, (or the equivalent code
sections as in effect in the applicable jurisdictions) and the
recordation of appropriate documentation (including all appropriate
registrations of Marks, Patents and Copyrights, to the extent such have
not been previously registered) with the United States Copyright Office
and the United States Patent and Trademark Office, as applicable.
(d) The Pledged Securities have been duly authorized and validly
issued and are fully paid and nonassessable.
(e) No consent of any Person, including any partner in a
partnership with respect to which Grantor has pledged its interest as a
Pledged Partnership Interest, is required for the pledge by Grantor of
the Collateral other than consents required under the agreements
described on Schedule M hereto.
(f) The Pledged Securities described on Schedule F constitute
(i) all of the shares of capital stock of any Person owned by Grantor
and (ii) that percentage of the issued and outstanding shares of the
respective issuers thereof indicated on Schedule F hereto, and there is
no other class of shares issued and outstanding of the respective
issuers thereof except as set forth on Schedule F. The Pledged
Partnership Interests described on Schedule F constitute all of the
partnerships or joint ventures in which Grantor has an interest, and
Grantor's respective percentage interest in each such partnership or
joint venture is as set forth on such Schedule F.
(g) Upon the filing of UCC-1 Financing Statements in the filing
offices set forth on Schedule L hereto, all appropriate financing
statements will have been filed in the necessary jurisdictions with
respect to the Collateral as to which financing statements are required
to be filed, so that the security interest granted pursuant to this
Agreement, to the extent it may be perfected by filing financing
statements in the necessary jurisdictions,
- --------
(2) To be included in UCI Security Agreement only.
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<PAGE> 16
constitutes a valid, continuing and perfected first-priority (except for
any Liens or security interests permitted under Section 6.3 of the
Credit Agreement which have priority by operation of law [and any pari
passu Liens or security interests permitted under Section 6.3 of the
Credit Agreement])(3) security interest in and lien on the Collateral to
the extent a security interest can be created therein under the Uniform
Commercial Code as in effect in the applicable jurisdictions in the
United States, securing the payment of the Obligations. All other
actions necessary or requested by the Agent to perfect the security
interest granted hereby in each item of Collateral with respect to which
perfection is governed by the filing of financing statements under the
Uniform Commercial Code and in the Pledged Securities have been duly
taken or waived in writing by the Agent.
(h) Subject to Section 16(j) hereof, no authorization, approval
or other action by, and no notice to or filing with, any Governmental
Authority (other than such authorizations, approvals and other actions
as have already been taken and are in full force and effect) is required
(A) for the pledge of the Collateral or the grant of the security
interest in the Collateral by the Grantor hereby or for the execution,
delivery or performance of this Agreement by the Grantor, or (B) for the
exercise by the Agent of the voting rights in the Pledged Securities or
of any other rights or remedies in respect of the Collateral hereunder
except as may be required in connection with any disposition of
Collateral consisting of securities by laws affecting the offering and
sale of securities generally.
(i) The Patents listed on Schedule C constitute all of the
Patents material and necessary for the conduct of Grantor's business as
currently conducted (the "Material Patents") and applications therefor
now owned or applied for by Grantor, and Grantor is the sole owner or
licensee of all Material Patents except for those the failure to own or
license which could not reasonably be expected to have a Material
Adverse Effect . The Patent license agreements listed on Schedule C
constitute all of the material licenses entered into by Grantor with
respect to the Material Patents. The Marks listed on Schedule B
constitute all of the Marks material and necessary for the conduct of
Grantor's business as currently conducted (the "Material Marks") and
applications therefor now owned or applied for by Grantor, and Grantor
is the sole owner or licensee of all Material Marks except for those the
failure to own or license which could not reasonably be expected to have
a Material Adverse Effect. The Mark license
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(3) To be included in UCI Security Agreement only.
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<PAGE> 17
agreements listed on Schedule B constitute all of the material licenses
entered into by Grantor with respect to the Marks. Upon the filing of
this Agreement (or another appropriate patent or trademark mortgage
document, as applicable, in form and substance reasonably satisfactory
to the Managing Agents) with the United States Patent and Trademark
Office and the filing of appropriate UCC financing statements, all
appropriate documents will have been filed with any Governmental
Authority with respect to the United States Material Marks listed on
Schedule B as to which appropriate registrations have been made as to
the underlying mark and Grantor's interest therein (the "Registered
Material Marks"), so that the security interest in such Registered
Material Marks granted pursuant to this Agreement constitutes a valid,
continuing and perfected first-priority (except for any Liens or
security interests permitted under Section 6.3 of the Credit Agreement
which have priority by operation of law [or any pari passu Liens or
security interests permitted under Section 6.3 of the Credit Agreement])
security interest in and lien on such Registered Material Marks,
securing the payment of the Obligations. Subject to the foregoing, all
other actions necessary or reasonably requested by the Agent to perfect
such security interest in the Registered Material Marks have been duly
taken.
(j) The Copyrights and applications therefor listed on Schedule
A constitute all of the copyrights material and necessary for the
conduct of Grantor's business as currently conducted ("Material
Copyrights") and applications therefor now owned or held by Grantor. The
Copyright license agreements listed on Schedule A constitute all of the
licenses material and necessary to the conduct of Grantor's business
entered into by Grantor with respect to the Copyrights. Upon the filing
of this Agreement with the United States Copyright Office, all
appropriate documents will have been filed with the United States
Copyright Office with respect to the United States Copyrights and
applications listed on Schedule A as to which appropriate registrations
have been made as to the underlying copyright and Grantor's interest
therein (the "Registered Material Copyrights"), so that the security
interest in such Registered Material Copyrights and applications granted
pursuant to this Agreement constitutes a valid, continuing and perfected
first-priority (except for any Liens or security interests permitted
under Section 6.3 of the Credit Agreement which have priority by
operation of law or any pari passu Liens [or security interests
permitted under Section 6.3 of Credit Agreement])(4) security interest
in and lien upon such copyrights and applications, securing the payment
of the
- --------
(4) To be included in UCI Security Agreement only.
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<PAGE> 18
Obligations. Subject to the foregoing, all other actions necessary or
reasonably requested by the Agent to perfect such security interest in
such Registered Material Copyrights have been duly taken.
(k) The deposit accounts listed on Schedule K hereto constitute
all deposit accounts maintained by Grantor.
(l) The contracts set forth on Schedule D constitute all
contracts to which Grantor is party which are material and necessary for
the conduct of Grantor's business as currently conducted. None of the
Material Contracts contains provisions prohibiting the assignment
thereof by Grantor to Lenders following foreclosure by Lenders hereunder
which has not been waived by the counterparty thereto pursuant to a
Consent or disclosed on Schedule M hereto. All the Material Contracts
set forth on Schedule D are in full force and effect, were duly executed
by Grantor pursuant to due authorization and constitute the legal and
binding obligations of Grantor.
(m) The broadcast licenses described on Schedule E constitute
all Media Licenses issued or granted by the FCC in connection with the
Primary Stations owned or held by Grantor and are in full force and
effect.
12. Grantor's Covenants. In addition to the other covenants and
agreements set forth herein and in the other Loan Documents, Grantor covenants
and agrees as follows:
(a) Grantor will pay, prior to delinquency, all taxes, charges,
Liens and assessments against the Collateral owned by it, except those
with respect to which the amount or validity is being contested in good
faith by appropriate proceedings and with respect to which reserves in
conformity with GAAP have been provided on the books of Grantor and
except those which could not reasonably be expected to have a Material
Adverse Effect.
(b) The Collateral will not be used in violation of any material
law, regulation or ordinance or any Requirement of Law applicable to
Grantor, nor used in any way that will void or impair any insurance
required to be carried in connection therewith.
(c) Grantor will keep the Collateral in reasonably good repair,
working order and operating condition (normal wear and tear excluded),
and from time to time make all necessary and proper repairs, renewals,
replacements, additions and improvements thereto and, as appropriate and
applicable, will otherwise deal with the Collateral in all such ways as
are considered customary practice by owners of like property.
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<PAGE> 19
(d) Grantor will take all reasonable steps to preserve and
protect the Collateral except where the failure to do so could not
reasonably be expected to have a Material Adverse Effect.
(e) Grantor will maintain all insurance coverage required
pursuant to Section 5.5 of the Credit Agreement.
(f) Grantor will promptly notify the Agent in writing in the
event of any material damage to the Collateral from any source
whatsoever.
(g) Grantor will not (i) establish any location of Inventory or
Equipment not listed on Schedule G hereto, (ii) move its principal place
of business, chief executive offices or any other office listed on
Schedule H hereto or (iii) adopt, use or conduct business under any
trade name or other corporate or fictitious name not disclosed on
Schedule I hereto, except upon not less than 30 days prior notice to the
Agent and Grantor's prior compliance with all applicable requirements of
Section 5 hereof necessary to perfect the Lender's security interest
hereunder.
(h) Subject to the provisions of Section 16(j) hereof, the
Grantor agrees to take any action which the Agent may reasonably request
in order to obtain from the FCC such approval as may be necessary to
enable the Lenders to exercise and enjoy the full rights and benefits
granted to them by this Agreement, including the use of the Grantor's
best efforts to assist in obtaining the approval of the FCC for any
action or transaction contemplated by this Agreement for which such
approval is required by law.
13. Agent's Rights Regarding Collateral. At any time and from time to
time, the Agent (for the benefit of Secured Party) may, to the extent necessary
or desirable to protect the security hereunder, but the Agent shall not be
obligated to: (a) (whether or not a Default has occurred) itself or through its
representatives, at its own expense, upon reasonable notice and at such
reasonable times during usual business hours, visit and inspect any of the
Grantor's properties and examine and make abstracts from any of its books and
records at any reasonable time and as often as may reasonably be desired and
discuss the business, operations, properties and financial and other condition
of the Grantor and its Subsidiaries with officers and employees of the Grantor
and its Subsidiaries and with its Accountants (as long as a member of senior
management of the Grantor is present during such discussion) or (b) if an Event
of Default has occurred and is continuing, at the expense of the Grantor,
perform any obligation of Grantor under this Agreement. At any time and from
time to time, at the expense of Grantor, the Agent (for the benefit of Secured
Party) may, to the extent necessary or desirable to protect the security
hereunder, but the Agent shall not be obligated to: (i) notify obligors on the
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<PAGE> 20
Collateral that the Collateral has been assigned as security to the Agent for
the benefit of Secured Party; (ii) after an Event of Default has occurred and is
continuing, at any time and from time to time request from obligors on the
Collateral, in the name of Grantor or in the name of Secured Party, information
concerning the Collateral and the amounts owing thereon; and (iii) after an
Event of Default has occurred and is continuing, direct obligors under the
contracts included in the Collateral to which Grantor is party to direct their
performance to the Agent or the Lenders. Grantor shall keep proper books and
records and accounts in which full, true and correct entries in conformity with
GAAP and all Requirements of Law shall be made of all material dealings and
transactions pertaining to the Collateral. The Agent shall at all reasonable
times on reasonable notice have full access to and the right to audit any and
all of Grantor's books and records pertaining to the Collateral, and to confirm
and verify the value of the Collateral. Neither the Agent nor the Lenders shall
be under any duty or obligation whatsoever to take any action to preserve any
rights of or against any prior or other parties in connection with the
Collateral, to exercise any voting rights or managerial rights with respect to
any Collateral or to make or give any presentments for payment, demands for
performance, notices of non-performance, protests, notices of protest, notices
of dishonor or notices of any other nature whatsoever in connection with the
Collateral or the Obligations. Neither the Agent nor the Lenders shall be under
any duty or obligation whatsoever to take any action to protect or preserve the
Collateral or any rights of Grantor therein, or to make collections or enforce
payment thereon, or to participate in any foreclosure or other proceeding in
connection therewith. Nothing contained herein or in any Consent shall
constitute an assumption by the Lenders of any of Grantor's obligations under
the contracts assigned hereunder unless the Agent shall have given written
notice to the counterparty to such assigned contract of the Lenders' intention
to assume such contract. Grantor shall continue to be liable for performance of
its obligations under such contracts.
14. Collections on the Collateral. Except as provided to the contrary in
the Credit Agreement, Grantor shall have the right to use and to continue to
make collections on and receive dividends and other proceeds of all of the
Collateral in the ordinary course of business so long as no Event of Default
shall have occurred and be continuing. Upon the occurrence and during the
continuance of an Event of Default, at the option of the Agent, Grantor's right
to make collections on and receive dividends and other proceeds of the
Collateral and to use or dispose of such collections and proceeds shall
terminate, and any and all dividends, proceeds and collections, including all
partial or total prepayments, then held or thereafter received on or on account
of the Collateral will be held or received by Grantor in trust for Secured Party
and immediately delivered in kind to the Agent (duly endorsed to the Agent, if
required), to
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<PAGE> 21
be applied to the Obligations or held as Collateral, as the Agent shall elect.
Upon the occurrence and during the continuance of an Event of Default, the Agent
shall have the right at all times to receive, receipt for, endorse, assign,
deposit and deliver, in the name of the Agent or the Lenders or in the name of
Grantor, any and all checks, notes, drafts and other instruments for the payment
of money constituting proceeds of or otherwise relating to the Collateral; and
Grantor hereby authorizes the Agent to affix, by facsimile signature or
otherwise, the general or special endorsement of Grantor, in such manner as the
Agent shall deem advisable, to any such instrument in the event the same has
been delivered to or obtained by the Agent without appropriate endorsement, and
the Agent and any collecting bank are hereby authorized to consider such
endorsement to be a sufficient, valid and effective endorsement by Grantor, to
the same extent as though it were manually executed by the duly authorized
representative of Grantor, regardless of by whom or under what circumstances or
by what authority such endorsement actually is affixed, without duty of inquiry
or responsibility as to such matters, and Grantor hereby expressly waives
demand, presentment, protest and notice of protest or dishonor and all other
notices of every kind and nature with respect to any such instrument.
15. Possession of Collateral by Agent. All the Collateral now,
heretofore or hereafter delivered to the Agent shall be held by the Agent in its
possession, custody and control. Any or all of the Collateral delivered to the
Agent constituting cash or cash equivalents shall, prior to the occurrence of
any Event of Default, be held in an interest-bearing account with one or more of
the Lenders, and shall be, upon Grantor's request, invested in investments
permitted by Section 6.7(b) of the Credit Agreement. The Grantor shall be
permitted to withdraw any of such Collateral from time to time, provided that no
Event of Default has occurred and is continuing and Grantor has not received
written notice from the Agent prohibiting such withdrawal. Nothing herein shall
obligate Agent to obtain any particular return thereon. Upon the occurrence and
during the continuance of an Event of Default, whenever any of the Collateral is
in the Agent's possession, custody or control, the Agent may use, operate and
consume the Collateral, whether for the purpose of preserving and/or protecting
the Collateral, or for the purpose of performing any of Grantor's obligations
with respect thereto, or otherwise, and, subject to the terms of Section 9.7 of
the Credit Agreement, any or all of the Collateral delivered to the Agent
constituting cash or cash equivalents shall be applied by the Agent to payment
of the Obligations to the extent permitted by the terms of the Credit Agreement
or otherwise held as Collateral as the Agent shall elect. The Agent may at any
time deliver or redeliver the Collateral or any part thereof to Grantor, and the
receipt of any of the same by Grantor shall be complete and full acquittance for
the Collateral so delivered, and the Agent thereafter shall be discharged from
any liability or
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<PAGE> 22
responsibility arising after such delivery to Grantor. So long as the Agent
exercises reasonable care with respect to any Collateral in its possession,
custody or control, neither the Agent nor the Lenders shall have any liability
for any loss of or damage to any Collateral, and in no event shall the Agent or
the Lenders have liability for any diminution in value of Collateral occasioned
by economic or market conditions or events, absent the gross negligence or
willful misconduct of the Agent or any of the Lenders. The Agent shall be deemed
to have exercised reasonable care within the meaning of the preceding sentence
if the Collateral in the possession, custody or control of the Agent is accorded
treatment substantially equal to that which the Agent accords similar property
for its own account, it being understood that neither the Agent nor the Lenders
shall have any responsibility for (a) ascertaining or taking action with respect
to calls, conversions, exchanges, maturities, tenders or other matters relating
to any Collateral, whether or not the Agent or any Lender has or is deemed to
have knowledge of such matters, or (b) taking any necessary steps to preserve
rights against any Person with respect to any Collateral.
16. Remedies.
(a) Rights Upon Event of Default. Upon the occurrence and during the
continuance of an Event of Default, Grantor shall be in default hereunder and
the Agent for the benefit of the Secured Party shall have, in any jurisdiction
where enforcement is sought, in addition to all other rights and remedies that
the Agent on behalf of Secured Party may have under this Agreement and under
applicable laws or in equity, all rights and remedies of a secured party under
the Uniform Commercial Code as enacted in any such jurisdiction in effect at
that time, and in addition the following rights and remedies, all of which may
be exercised with or without further notice to Grantor except such notice as may
be specifically required by applicable law: (a) to foreclose the Liens and
security interests created hereunder or under any other Loan Document by any
available judicial procedure or without judicial process; (b) to enter any
premises where any Collateral may be located for the purpose of securing,
protecting, inventorying, appraising, inspecting, repairing, preserving,
storing, preparing, processing, taking possession of or removing the same; (c)
to sell, assign, lease or otherwise dispose of any Collateral or any part
thereof, either at public or private sale or at any broker's board, in lot or in
bulk, for cash, on credit or otherwise, with or without representations or
warranties and upon such terms as shall be commercially reasonable; (d) to
notify obligors on the Collateral that the Collateral has been assigned to the
Agent for the benefit of Secured Party and that all payments thereon, or
performance with respect thereto, are to be made directly and exclusively to the
Agent for the account of Secured Party; (e) to collect by legal proceedings or
otherwise all dividends, distributions, interest, principal or other sums now or
hereafter payable upon or on account of the Collateral; (f) to enter into any
extension,
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<PAGE> 23
reorganization, disposition, merger or consolidation agreement, or any other
agreement relating to or affecting the Collateral, and in connection therewith
the Agent may deposit or surrender control of the Collateral and/or accept other
property in exchange for the Collateral as the Agent reasonably deems
appropriate and is commercially reasonable; (g) to settle, compromise or
release, on terms acceptable to the Managing Agents, in whole or in part, any
amounts owing on the Collateral and/or any disputes with respect thereto; (h) to
extend the time of payment, make allowances and adjustments and issue credits in
connection with the Collateral in the name of the Agent for the benefit of
Secured Party or in the name of Grantor; (i) to enforce payment and prosecute
any action or proceeding with respect to any or all of the Collateral and take
or bring, in the name of Secured Party or in the name of Grantor, any and all
steps, actions, suits or proceedings deemed necessary or reasonably desirable by
the Managing Agents to effect collection of or to realize upon the Collateral,
including any judicial or nonjudicial foreclosure thereof or thereon, and
Grantor specifically consents to any nonjudicial foreclosure of any or all of
the Collateral or any other action taken by the Lenders which may release any
obligor from personal liability on any of the Collateral, and Grantor waives, to
the extent permitted by applicable law, any right to receive notice of any
public or private judicial or nonjudicial sale or foreclosure of any security or
any of the Collateral, and any money or other property received by the Agent in
exchange for or on account of the Collateral, whether representing collections
or proceeds of Collateral, and whether resulting from voluntary payments or
foreclosure proceedings or other legal action taken by Agent or Grantor may be
applied by the Agent, without notice to Grantor, to the Obligations in such
order and manner as the Managing Agents in their sole discretion shall
determine; (j) to insure, protect and preserve the Collateral; (k) to exercise
all rights, remedies, powers or privileges provided under any of the Loan
Documents; and (l) to remove, from any premises where the same may be located,
the Collateral and any and all documents, instruments, files and records, and
any receptacles and cabinets containing the same, relating to the Collateral,
and the Agent may, at the cost and expense of Grantor, use such of its supplies,
equipment, facilities and space at its places of business as may be necessary or
appropriate to properly administer, process, store, control, prepare for sale or
disposition and/or sell or dispose of the Collateral or to properly administer
and control the handling of collections and realizations thereon, and the Agent
shall be deemed to have a rent-free tenancy of any premises of Grantor for such
purposes and for such periods of time as reasonably required by the Agent.
Grantor will, at the Agent's request, assemble the Collateral and make it
available to the Agent at places which the Agent may designate, whether at the
premises of Grantor or elsewhere, and will make available to the Agent, free of
cost, all premises, equipment and facilities of Grantor for the purpose of the
Agent's taking possession of the Collateral or
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<PAGE> 24
storing the same or removing or putting the Collateral in salable form or
selling or disposing of the same.
Nothing herein contained shall be construed to give the Agent, the
Managing Agents or the Lenders or any purchaser of the Collateral the right to
operate any of the Stations without the prior consent of the FCC, to the extent
required by law or the terms of any Media License.
(b) Possession by Agent. Upon the occurrence and during the continuance
of an Event of Default, the Agent also shall have the right, without notice or
demand, either in person, by agent or by a receiver to be appointed by a court
in accordance with the provisions of applicable law (and Grantor hereby
expressly consents, to the fullest extent permitted by applicable law, upon the
occurrence and during the continuance of an Event of Default to the appointment
of such a receiver), and, to the extent permitted by applicable law, without
regard to the adequacy of any security for the Obligations, to take possession
of the Collateral or any part thereof and to collect and receive the rents,
issues, profits, income and proceeds thereof. The taking possession of the
Collateral by the Agent shall not cure or waive any Event of Default or notice
thereof or invalidate any act done pursuant to such notice. The rights, remedies
and powers of any receiver appointed by a court shall be as ordered by said
court.
(c) Sale of Collateral. Any public or private sale or other disposition
of the Collateral may be held at any office of Agent, or at Grantor's place of
business, or at any other place permitted by applicable law, and without the
necessity of the Collateral's being within the view of prospective purchasers.
The Agent may direct the order and manner of sale of the Collateral, or portions
thereof, as it in its sole and absolute discretion may determine provided such
sale is commercially reasonable, and Grantor expressly waives, to the extent
permitted by applicable law, any right to direct the order and manner of sale of
any Collateral. The Agent or any Person acting on the Agent's behalf may bid and
purchase at any such sale or other disposition. In addition to the other rights
of the Agent and the Lenders hereunder, Grantor hereby grants to the Agent and
the Lenders a license or other right to use, without charge, Grantor's labels,
copyrights, patents, rights of use of any name, trade names, trademarks and
advertising matter, or any property of a similar nature, including, without
limitation, the Copyrights, the Patents and the Marks in advertising for sale
and selling any Collateral.
(d) Notice of Sale. Unless the Collateral is perishable or threatens to
decline speedily in value or is of a type customarily sold on a recognized
market, the Agent will give Grantor reasonable notice of the time and place of
any public sale thereof or of the time on or after which any private sale
thereof is to be made. The requirement of reasonable notice
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<PAGE> 25
conclusively shall be met if such notice is mailed, certified mail, postage
prepaid, to Grantor at its address set forth on the signature page hereto or
delivered or otherwise sent to Grantor, at least five (5) days before the date
of the sale. Grantor expressly waives, to the fullest extent permitted by
applicable law, any right to receive notice of any public or private sale of any
Collateral or other security for the Obligations except as expressly provided
for in this paragraph. The Agent shall not be obligated to make any sale of the
Collateral if it shall determine not to do so regardless of the fact that notice
of sale of the Collateral may have been given. The Agent may, without notice or
publication, except as required by applicable law, adjourn the sale from time to
time by announcement at the time and place fixed for sale, and such sale may,
without further notice (except as required by applicable law), be made at the
time and place to which the same was so adjourned.
(e) Private Sales. With respect to any Collateral consisting of
securities, partnership interests, joint venture interests or the like, and
whether or not any of such Collateral has been effectively registered under the
Securities Act of 1933, as amended, or other applicable laws, the Agent may, in
its sole and absolute discretion, sell all or any part of such Collateral at
private sale in such manner and under such circumstances as the Agent may deem
necessary or advisable in order that the sale may be lawfully conducted in a
commercially reasonable manner. Without limiting the foregoing, the Agent may
(i) approach and negotiate with a limited number of potential purchasers, and
(ii) restrict the prospective bidders or purchasers to persons who will
represent and agree that they are purchasing such Collateral for their own
account for investment and not with a view to the distribution or resale
thereof. In the event that any such Collateral is sold at private sale, Grantor
agrees to the extent permitted by applicable law that if such Collateral is sold
for a price which is commercially reasonable, then (A) Grantor shall not be
entitled to a credit against the Obligations in an amount in excess of the
purchase price, and (B) the Lenders shall not incur any liability or
responsibility to Grantor in connection therewith, notwithstanding the
possibility that a substantially higher price might have been realized at a
public sale. Grantor recognizes that a ready market may not exist for such
Collateral if it is not regularly traded on a recognized securities exchange,
and that a sale by the Agent of any such Collateral for an amount substantially
less than a pro rata share of the fair market value of the issuer's assets minus
liabilities may be commercially reasonable in view of the difficulties that may
be encountered in attempting to sell a large amount of such Collateral or
Collateral that is privately traded.
(f) Title of Purchasers. Upon consummation of any sale of Collateral
hereunder, the Agent on behalf of Secured Party shall have the right to assign,
transfer and deliver to the purchaser
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<PAGE> 26
or purchasers thereof the Collateral so sold. Each such purchaser at any such
sale shall hold the Collateral so sold absolutely free from any claim or right
upon the part of Grantor or any other Person claiming through Grantor, and
Grantor hereby waives (to the extent permitted by applicable laws) all rights of
redemption, stay and appraisal which it now has or may at any time in the future
have under any rule of law or statute now existing or hereafter enacted. If the
sale of all or any part of the Collateral is made on credit or for future
delivery, the Agent shall not be required to apply any portion of the sale price
to the Obligations until such amount actually is received by the Agent, and any
Collateral so sold may be retained by the Agent until the sale price is paid in
full by the purchaser or purchasers thereof. Secured Party shall not incur any
liability in case any such purchaser or purchasers shall fail to pay for the
Collateral so sold, and, in case of any such failure, the Collateral may be sold
again.
(g) Disposition of Proceeds of Sale. The proceeds resulting from the
collection, liquidation, sale or other disposition of the Collateral shall be
applied, first, to the reasonable costs and expenses (including reasonable
attorneys' fees) of retaking, holding, storing, processing and preparing for
sale, selling, collecting and liquidating the Collateral, and the like; second,
to the satisfaction of all Obligations; and third, any surplus remaining after
the satisfaction of all Obligations, provided no Commitment exists and no Letter
of Credit remains outstanding, to be paid over to Grantor or to whomsoever may
be lawfully entitled to receive such surplus.
(h) Certain Waivers. To the extent permitted by applicable law, Grantor
waives all claims, damages and demands against the Agent and the Lenders arising
out of the repossession, retention or sale of the Collateral, or any part or
parts thereof, except to the extent any such claims, damages and awards arise
out of the gross negligence or willful misconduct of the Agent or the Lenders.
(i) Remedies Cumulative. The rights and remedies provided under this
Agreement are cumulative and may be exercised singly or concurrently, and are
not exclusive of any other rights and remedies provided by law or equity.
(j) Compliance with Communications Act and FCC Rules and Regulations.
(i) Notwithstanding any other provision of this Agreement, any
foreclosure on, sale, transfer or other disposition of, or the exercise
of any right to vote or consent with respect to, any of the Collateral
as provided herein or any other action taken or proposed to be taken by
the Agent hereunder which would affect the operational, voting or other
control of any entity holding a Media License shall be made in
accordance with the Communications
- 26 -
<PAGE> 27
Act of 1934, as amended, the terms of each Media License, and any
applicable rules and regulations of the FCC, including, to the extent
applicable under rules and regulations of the FCC in effect at the time
of a Default, any requirement that there be a public or private sale.
(ii) Notwithstanding anything to the contrary contained in this
Agreement, or in the Credit Agreement or the other Loan Documents or in
any other related instrument, the Agent shall not, without first
obtaining any consent or approval of the FCC, take any action pursuant
to this Agreement which would constitute or result in any change of
control of a Subsidiary holding a Media License if any such change in
control would require, under then existing law, the prior approval of
the FCC.
(iii) If an Event of Default shall have occurred and be
continuing, the Grantor shall take any action which the Agent may
request in the exercise of its rights and remedies under this Agreement
in order to transfer and assign to the Agent or to one or more third
parties as the Agent may designate, or to a combination of the
foregoing, the Collateral for the purposes of a public or private sale.
To enforce the provisions of this Section 16, the Agent is empowered to
request, and the Grantor agrees to authorize, the appointment of a
receiver or trustee from any court of competent jurisdiction. Such
receiver or trustee shall be instructed to seek from the FCC (and any
other Governmental Authority, if required) its consent to an involuntary
transfer of control or assignment of any Media License or of any entity
whose stock, partnership interests or other securities are subject to
this Agreement, for the purpose of seeking a bona fide purchaser to whom
such Media License or control of such entity ultimately will be
transferred or assigned in connection with a public or private sale. The
Grantor hereby agrees to authorize (including Grantor's execution of any
necessary or appropriate applications or other instruments) such an
involuntary transfer of control or assignment upon the request of the
receiver or trustee so appointed; and, if the Grantor's approval is
required by the court and the Grantor shall refuse to authorize such
transfer or assignment, then, to the extent permitted by the
Communications Act and the rules and regulations of the FCC in effect at
such time and provided that the Grantor has been given 2 Business Days'
prior written notice telecopied to its telecopier number set forth on
the signature page hereof and the Grantor has not responded by executing
any such applications or other instruments, the clerk of the court may
execute in the place of Grantor any application or other instrument
necessary or appropriate for the obtaining of such consent. Upon the
occurrence and during the continuance of an Event of Default, Grantor
shall further use its best efforts to assist in obtaining the
- 27 -
<PAGE> 28
approval of the FCC (and that required by any other Governmental
Authority) for any action or transaction contemplated by this Agreement,
including without limitation, the preparation, execution and filing with
the FCC of the assignor's or transferor's portion of any application or
applications for consent to the assignment of any Media License or
transfer of control of any entity holding or controlling any Media
License as may be necessary or appropriate under the FCC's rules and
regulations for approval of the transfer or assignment of any portion of
the Collateral or any Media License. Grantor further agrees that,
because of the unique nature of its undertaking in this Section 16, the
same may be specifically enforced, and it hereby waives, and agrees to
waive, any claim or defense that the Agent, the Managing Agents or the
Lenders would have an adequate remedy at law for the breach of this
undertaking and any requirement for the posting of bond or other
security. This Section 16 shall not be deemed to limit any other rights
of the Agent, the Managing Agents and the Lenders available under
applicable law and consistent with the Communications Act of 1934, as
amended, and the applicable rules and regulations of the FCC.
(k) Notice. The Agent shall use reasonable efforts to give the Grantor
prior written notice of the exercise of any remedy provided for herein, provided
that the failure to give such notice shall not subject the Agent or any Lender
to liability and shall not affect the validity or exercise of any remedy
hereunder.
17. Agent Appointed Attorney-in-Fact. To the full extent permitted by
applicable law, including the Communications Act and FCC regulations, and
subject to Section 16(j) hereof, Grantor hereby irrevocably appoints the Agent
as Grantor's attorney-in-fact, effective upon and during continuance of an Event
of Default, with full authority in the place and stead of Grantor, and in the
name of Grantor, or otherwise, from time to time, in the Agent's sole and
absolute discretion to do any of the following acts or things: (a) to do all
acts and things and to execute all documents necessary or advisable to perfect
and continue perfected the security interests created by this Agreement and to
preserve, maintain and protect the Collateral; (b) to do any and every act which
Grantor is obligated to do under this Agreement; (c) to prepare, sign, file and
record, in Grantor's name, any financing statement covering the Collateral; (d)
to endorse and transfer the Collateral upon foreclosure by the Agent; (e) to
grant or issue an exclusive or nonexclusive license under the Copyrights, the
Programs, the Patents or the Marks to anyone upon foreclosure by the Agent; (f)
to assign, pledge, convey or otherwise transfer title in or dispose of the
Copyrights, the Programs, the Patents or the Marks to anyone upon foreclosure by
the Agent; and (g) to file any claims or take any action or institute any
proceedings which the Agent may
- 28 -
<PAGE> 29
reasonably deem necessary or desirable for the protection or enforcement of any
of the rights of the Lenders with respect to any of the Copyrights, the
Programs, the Patents and the Marks; provided, however, that the Agent shall be
under no obligation whatsoever to take any of the foregoing actions, and neither
the Agent nor the Lenders shall have any liability or responsibility for any act
or omission (other than the Agent's or the Lenders' own gross negligence or
willful misconduct) taken with respect thereto. Grantor hereby agrees to repay
within 5 Business Days after demand all reasonable out-of-pocket costs and
expenses (including attorneys' fees) incurred or expended by the Agent in
exercising any right or taking any action under this Agreement.
18. Costs and Expenses. After the occurrence and during the continuance
of a Default, Grantor agrees to pay to the Agent all reasonable costs and
out-of-pocket expenses (including, without limitation, reasonable attorneys'
fees and disbursements) incurred by the Agent in the enforcement or attempted
enforcement of this Agreement, whether or not an action is filed in connection
therewith, and in connection with any waiver or amendment of any term or
provision hereof. All reasonable advances, charges, costs and expenses,
including reasonable attorneys' fees and disbursements, incurred or paid by the
Agent in exercising any right, privilege, power or remedy conferred by this
Agreement (including, without limitation, the right to perform any Obligation of
Grantor under the Loan Documents), or in the enforcement or attempted
enforcement thereof, shall be secured hereby and shall become a part of the
Obligations and shall be due and payable to the Agent by Grantor on demand
therefor.
19. Transfers and Other Liens. Grantor agrees that, except as
specifically permitted under the Credit Agreement or any other Loan Document, it
will not (i) sell, assign, exchange, transfer or otherwise dispose of, or
contract to sell, assign, exchange, transfer or otherwise dispose of, or grant
any option with respect to, any of the Collateral, or (ii) create or permit to
exist any Lien upon or with respect to any of the Collateral, except for Liens
in favor of the Agent for the benefit of the Lender or otherwise permitted under
the Credit Agreement or any other Loan Document.
20. Other Agreements. Nothing herein shall in any way modify or limit
the effect of terms or conditions set forth in any other Loan Document executed
by Grantor or any other Person in connection with the Obligations, but each and
every term and condition hereof shall be in addition thereto. In the event of
inconsistency between this Agreement and the Credit Agreement, the Credit
Agreement shall govern.
21. [Intentionally Omitted.]
22. Understandings With Respect to Waivers and Consents. Grantor
warrants and agrees that each of the waivers and
- 29 -
<PAGE> 30
consents set forth herein are made with full knowledge of their significance and
consequences, with the understanding that events giving rise to any defense or
right waived may diminish, destroy or otherwise adversely affect rights which
Grantor otherwise may have against Secured Party or others, or against any
Collateral. If any of the waivers or consents herein are determined to be
unenforceable under applicable law, such waivers and consents shall be effective
to the maximum extent permitted by law.
23. Indemnity. Grantor agrees to indemnify the Agent and the Lenders
from and against any and all claims, losses and liabilities growing out of or
resulting from this Agreement (including, without limitation, enforcement of
this Agreement), except to the extent such claims, losses or liabilities result
from the Agent's or the Lenders' gross negligence or willful misconduct.
24. Amendments, Etc. No amendment or waiver of any provision of this
Agreement nor consent to any departure by Grantor herefrom (other than
supplements to the Schedules hereto in accordance with the terms of this
Agreement) shall in any event be effective unless the same shall be in writing
and made in accordance with Section 9.1 of the Credit Agreement, and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given.
25. Notices. All notices and other communications provided for hereunder
shall be given in the manner set forth in Section 9.2 of the Credit Agreement,
and if to the Agent, to the address set forth for it in Section 9.2 of the
Credit Agreement and if to the Grantor, to the address set forth for it on the
signature page hereof.
26. Continuing Security Interest: Transfer of Notes; Termination. (a)
This Agreement shall create a continuing security interest in the Collateral and
shall (i) remain in full force and effect until indefeasible payment in full of
the Obligations and the termination or expiration of the Commitments and the
Letters of Credit, (ii) be binding upon Grantor, its successors and assigns and
(iii) inure, together with the rights and remedies of the Lenders hereunder, to
the benefit of the Agent, any successor Agent and the Lenders, subject to the
terms and conditions of the Credit Agreement. Subject to the terms of the Credit
Agreement, any Lender may assign or otherwise transfer any Loans, Commitments,
participations in Letters of Credit or any rights in Collateral held by it to
any other Person, and such other Person shall thereupon become vested with all
the benefits in respect thereof granted to such Agent or Lender herein or
otherwise. Nothing set forth herein or in any other Loan Document is intended or
shall be construed to give to any other party any right, remedy or claim under,
to or in respect of this Agreement or any other Loan Document or any Collateral.
Grantor's successors and assigns shall include,
- 30 -
<PAGE> 31
without limitation, a receiver, trustee or debtor-in-possession thereof or
therefor, provided that, except as otherwise permitted under the Credit
Agreement or any other Loan Document, none of the rights or obligations of the
Grantor hereunder may be assigned or otherwise transferred without the prior
written consent of the Lenders.
27. Release of Grantor. (a) This Agreement and all obligations of
Grantor hereunder and all security interests granted hereby shall be released
and terminated when all Obligations have been indefeasibly paid in full in cash
and when all Commitments and all Letters of Credit have expired or have
otherwise been terminated. Upon such release and termination of all Obligations
and such expiration or termination of all Commitments and all Letters of Credit
and the security interest hereunder, all rights in and to the Collateral pledged
or assigned by Grantor hereunder shall automatically revert to the Grantor, and
the Agent and the Lenders shall return any pledged Collateral in their
possession to Grantor, or to the Person or Persons legally entitled thereto, and
shall endorse, execute, deliver, record and file all instruments and documents,
and do all other acts and things, reasonably required for the return of the
Collateral to Grantor, or to the Person or Persons legally entitled thereto, and
to evidence or document the release of the interests of Secured Party arising
under this Agreement, all as reasonably requested by, and at the sole expense
of, Grantor.
(b) Agent agrees that if an Asset Disposition or other sale or
disposition of any personal property or assets constituting Collateral permitted
under the Credit Agreement occurs, Agent shall release the Collateral that is
the subject of such Asset Disposition or other sale or disposition to Grantor
free and clear of the Lien and security interest under this Agreement, provided
that so long as any Obligations remain outstanding under the Credit Agreement or
any Commitment or Letter of Credit remains outstanding, Agent shall have no
obligation to make such release until arrangements reasonably satisfactory to it
have been made for delivery to it of any Net Proceeds of any Asset Disposition
required to be used to prepay the Loans pursuant to Section 2.6(a) of the Credit
Agreement.
28. Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of New York (without reference to its
choice of law provisions), except as otherwise required by mandatory provisions
of law and except to the extent that remedies provided by the laws of a
jurisdiction other than the State of New York are governed by the laws of such
jurisdiction.
29. Covenant Not to Issue Uncertificated Securities. Grantor represents
and warrants to the Lenders that all of the Pledged Securities are in
certificated form (as contemplated by Article 8 of the Uniform Commercial Code),
and covenants to the Lenders that it will not permit any of its Subsidiaries
which
- 31 -
<PAGE> 32
are issuers of Pledged Securities to issue any securities in uncertificated form
or seek to convert all or any part of any Pledged Securities into uncertificated
form (as contemplated by Article 8 of the Uniform Commercial Code).
30. Covenant Not to Dilute Interests of Secured Party in Securities.
Grantor represents, warrants and covenants to Secured Party that it will (i) not
at any time cause or permit any Subsidiary that is an issuer of Pledged
Securities to issue any additional capital stock or any warrant options or other
rights to acquire any additional capital stock, other than to Grantor or as
otherwise permitted under the Credit Agreement and (ii) pledge to the Agent in
accordance with the terms hereof, immediately upon its acquisition (directly or
indirectly) thereof, any and all additional shares of stock or other securities
of each issuer of the Pledged Securities.
31. WAIVERS OF JURY TRIAL. THE GRANTOR AND THE AGENT HEREBY IRREVOCABLY
AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING
RELATING TO THIS AGREEMENT OR ANY DOCUMENT EXECUTED IN CONNECTION HEREWITH AND
FOR ANY COUNTERCLAIM THEREIN.
32. Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which shall be deemed to be an original, but all of which taken together shall
constitute one and the same agreement.
33. Copies of Certificates, Etc. Whenever the Grantor is required to
deliver notices, certificates, opinions, statements or other information
hereunder to the Agent or to the Agent or to the Managing Agents for delivery to
any Lender, it shall do so in such number of copies as the Agent shall
reasonably specify.
* "Security Interest Absolute" paragraph to be added to each Guarantor Security
Agreement.
- 32 -
<PAGE> 33
IN WITNESS WHEREOF, Grantor and Agent have executed this Agreement by
their duly authorized representatives as of the date first written above.
UNIVISION COMMUNICATIONS INC.
By:_____________________________
Name:___________________________
Title:__________________________
Address for Notices:
24 Meadowland Parkway, Third Floor
Secaucus, New Jersey 07094
Telecopier: (201) 348-4098
Attention: George Blank
THE CHASE MANHATTAN BANK,
as Administrative Agent
By:_____________________________
Name:___________________________
Title:__________________________
- 33 -
<PAGE> 34
STATE OF CALIFORNIA, )
) ss.
County of Los Angeles )
On ____________, 1996, before me, _____________
__________________________, a Notary Public in and for the State of California,
personally appeared ________________ __________________________, personally
known to me (or proved to me on the basis of satisfactory evidence) to be the
person whose name is subscribed to the within instrument, and acknowledged to me
that he or she executed the within instrument in his or her authorized capacity
and that, by his or her signature on the within instrument, the person or entity
upon behalf of which he or she acted executed the within instrument.
WITNESS my hand and official seal.
Signature _________________________ (Seal)
STATE OF CALIFORNIA, )
) ss.
County of Los Angeles )
On __________, 1996, before me, _____________
__________________________, a Notary Public in and for the State of California,
personally appeared ________________ __________________________, personally
known to me (or proved to me on the basis of satisfactory evidence) to be the
person whose name is subscribed to the within instrument, and acknowledged to me
that he or she executed the within instrument in his or her authorized capacity
and that, by his or her signature on the within instrument, the person or entity
upon behalf of which he or she acted executed the within instrument.
WITNESS my hand and official seal.
Signature _________________________ (Seal)
<PAGE> 35
SCHEDULE A
COPYRIGHTS
[TO BE PROVIDED BY GRANTOR]
1. Federal Copyright Registrations
Title/Description Registration No.
2. Federal Copyright Applications
Title/Description Registration No.
3. Copyright License Agreements
4. Foreign Copyrights or Copyright Applications
<TABLE>
<CAPTION>
Country Title/Description Reg. or Filing No. Reg. or Filing Date
<S> <C> <C> <C>
</TABLE>
A-1
<PAGE> 36
SCHEDULE B
MARKS
[TO BE PROVIDED BY GRANTOR]
1. Federal Mark Registrations
Title/Description Registration No. Registration Date
2. Federal Mark Applications
Title/Description Serial No. Filing Date
3. Federal Mark License Agreements
4. State Mark Registrations
<TABLE>
<CAPTION>
State Title/Description Registration No. Registration Date
<S> <C> <C> <C>
</TABLE>
5. State Mark Applications
<TABLE>
<CAPTION>
State Title/Description Serial No. Filing Date
<S> <C> <C> <C>
</TABLE>
6. State Mark License Agreements
7. Foreign Mark Registrations
<TABLE>
<CAPTION>
Country Title/Description Registration No. Registration Date
<S> <C> <C> <C>
</TABLE>
B-1
<PAGE> 37
8. Foreign Mark Applications
<TABLE>
<CAPTION>
Country Title/Description Serial No. Filing Date
<S> <C> <C> <C>
</TABLE>
9. Foreign Mark License Agreements
B-2
<PAGE> 38
SCHEDULE C
PATENTS
[TO BE PROVIDED BY GRANTOR]
1. Registered Patents
Title/Description Registration No.
2. Patent Applications
Title/Description Registration No.
3. Patent License Agreements
4. Foreign Patents or Patent Applications
C-1
<PAGE> 39
SCHEDULE D
MATERIAL CONTRACTS
[TO BE PROVIDED BY GRANTOR]
D-1
<PAGE> 40
SCHEDULE E
BROADCAST LICENSES
[TO BE PROVIDED BY GRANTOR]
E-1
<PAGE> 41
SCHEDULE F
PLEDGED COLLATERAL
[TO BE PROVIDED BY GRANTOR]
1. Pledged Shares
<TABLE>
<CAPTION>
Percentage Other
Interest in Classes of
Issues Certificate No. No of Shares Issuer Shares
<S> <C> <C> <C>
</TABLE>
2. Pledged Partnership Interests
Percentage Interest
Name of Partnership in Partnership
F-1
<PAGE> 42
SCHEDULE G
LOCATIONS OF EQUIPMENT AND INVENTORY
[TO BE PROVIDED BY GRANTOR]
G-1
<PAGE> 43
SCHEDULE H
LOCATIONS OF BOOKS AND RECORDS
[TO BE PROVIDED BY GRANTOR]
1. Chief Executive Office
2. Locations of Account Records and Chattel Paper
H-1
<PAGE> 44
SCHEDULE I
TRADE NAMES AND OTHER FICTITIOUS NAMES
[TO BE PROVIDED BY GRANTOR]
1. Tradenames
2. Corporate and Other Fictitious Names
I-1
<PAGE> 45
SCHEDULE J
FORM OF CONSENT
Date: __________________
_________________
_________________
_________________
_________________
RE: Agreement between _____________________ and
___________________ dated as of ____________
Dear [Counterparty]:
As you are aware, [Univision Communications Inc., a Delaware
corporation](5) ("Univision"), is a party to the following Agreement(s):
1. _________________________________________________
2. _________________________________________________
[and so on] (collectively, the "Agreements")
The Lenders, under that certain Credit Agreement dated as of
______________, 1996 among The Chase Manhattan Bank ("Chase"), as the
administrative agent (the "Administrative Agent") and a managing agent, Banque
Paribas, as a managing agent, the Lenders parties thereto (the "Lenders") and
Univision Communications Inc. (the "Credit Agreement") will be granted a
security interest in the Agreements, as security for the obligations of
Univision Communications Inc. under the Credit Agreement.
In connection with the granting of such security interests, we are
requesting that you sign this letter in order to provide the Lenders with
certain assurances with respect to the status and good standing of the
Agreements. We are hereby giving you notice that a security interest in such
Agreements will be granted to the Lenders concurrently with the closing of the
Credit Agreement transaction. By signing this letter, you are
- --------
(5) Name of relevant Guarantor to be substituted.
J-1
<PAGE> 46
hereby (if and to the extent required under the Agreements), consenting to the
foregoing grant to the Lenders of a security interest in the Agreements, and any
transfer of the Agreements to an assignee of the Lenders following any exercise
by the Lenders of their rights under the Credit Agreement on the express
condition that any subsequent transfer or assignment will be subject to the
terms and conditions set forth in that Agreements. You further acknowledge,
agree, and certify that the following statements are true and accurate and may
be relied upon by Univision, Lenders and each of their respective successors and
assigns:
1. The Agreements are in full force and effect and neither you
nor Univision is presently in default thereunder.
2. All conditions under the Agreements to be performed by
Univision as of the date hereof have been satisfied.
3. True and correct copies of the Agreements are attached hereto
as Exhibit A.
4. Your interest in the Agreements has not been assigned,
pledged or transferred.
5. You acknowledge and consent to the grant of a security
interest in the Agreements to the Lenders.
Please review this letter in detail, particularly Exhibit A. Exhibit A
shows all of the documents constituting the Agreements, including modifications,
if any.
If the terms of this letter are acceptable, please execute all four (4)
originals in the area indicated by the "sign here" tabs. After execution, please
return to the undersigned three (3) of the copies.
Thank you for your assistance in this matter.
Sincerely yours,
[SIGNATURE OF COUNTERPARTY]
J-2
<PAGE> 47
By: ______________________
Its: _____________________
Dated: ___________________
J-3
<PAGE> 48
SCHEDULE K
DEPOSIT ACCOUNTS
Name and Address of
Institution Holding Account Account No.
[TO BE PROVIDED BY GRANTOR]
K-1
<PAGE> 49
SCHEDULE L
UCC FILING OFFICES
[To be provided by Grantor]
L-1
<PAGE> 50
SCHEDULE M
REQUIRED CONSENTS
M-1
<PAGE> 1
Exhibit 10.14
GUARANTEE
(PERENCHIO TELEVISION, INC.)
This GUARANTEE ("Guarantee"), dated as of ___________, 1996, is made by
PERENCHIO TELEVISION, INC., a Delaware corporation (the "Guarantor"), in favor
of THE CHASE MANHATTAN BANK, a New York banking corporation, as administrative
agent (the "Agent") for the benefit of the Lenders (as defined in the Credit
Agreement referred to below, the "Lenders").
RECITALS
A. The Chase Manhattan Bank, a New York banking corporation, as a
managing agent, Banque Paribas, a French banking corporation, as a managing
agent (collectively, the "Managing Agents"), the Agent and the Lenders have
entered into a Credit Agreement dated as of ___________, 1996 (said Agreement,
as it may hereafter be amended or otherwise modified from time to time, being
called the "Credit Agreement") with Univision Communications Inc., a Delaware
corporation (the "Borrower").
[B. Guarantor previously executed that certain Guarantee dated as of
December 17, 1992 (the "Prior Guarantee"), in favor of the Agent for the benefit
of certain financial institutions party to a Credit Agreement dated as of
December 17, 1992 among such financial institutions, the Agent, as agent
therefor, the Managing Agents and Univision Television Group, Inc., as amended
(the "Prior Credit Agreement"). Concurrently herewith, borrowings under the
Credit Agreement are being used to repay indebtedness under the Prior Credit
Agreement. This Guarantee is being given in exchange for the release of the
Prior Guarantee.]*
C. It is a condition precedent to the extension of credit by the
Lenders under the Credit Agreement that the Guarantor shall have executed and
delivered this Guarantee. [Guarantor desires to execute this Guarantee because
it is interested in the financial success of the Borrower and, in addition,
anticipates that extensions of credit under the Credit Agreement may be
distributed by the Borrower to it or its Subsidiaries, including Univision
Television Group, Inc., for use in their respective businesses.]**
- --------
* To be included in Guarantees executed by PTI, Network and
Network Holding. Similar language to be included in UTG
Guarantee.
** To be adapted for each Guarantor.
<PAGE> 2
D. Terms defined in the Credit Agreement and not otherwise defined
herein have the same respective meanings when used herein, and the rules of
interpretation set forth in Section 1.2 of the Credit Agreement are incorporated
herein by reference.
AGREEMENT
NOW, THEREFORE, in order to induce the Lenders to enter into the Credit
Agreement and for other good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, Guarantor hereby agrees as follows:
SECTION 1. Guarantee.
(a) The Guarantor hereby unconditionally, continually and
irrevocably guarantees the punctual payment when due, whether at stated
maturity, by acceleration or otherwise, of all obligations of the Borrower now
or hereafter existing under the Credit Agreement, the Notes and the other Loan
Documents, whether for principal, interest, fees, reimbursement under Letters of
Credit, expenses or otherwise and whether accruing before or after the filing of
a petition initiating any insolvency, bankruptcy, reorganization or similar
proceeding affecting the Borrower or the Guarantor (collectively, the
"Obligations"); provided, however, that the Guarantor's liability hereunder in
respect of the Obligations shall not exceed at any time the greater of (i) the
net benefit realized by the Guarantor from proceeds of working capital advances
made by the Borrower from the proceeds of extensions of credit under the Credit
Agreement to the Guarantor or any of its Subsidiaries from time to time and (ii)
the lesser of (A) the Obligations or (B) 95% of (1) the fair salable value of
the property of the Guarantor from time to time minus (2) the total liabilities
of the Guarantor (including contingent liabilities, but excluding the
obligations of the Guarantor hereunder and under any Subordinated Indebtedness
of the Guarantor) from time to time. This is a guaranty of payment and not of
collection only.
(b) In addition to the amount stated above, after the
occurrence and during the continuance of a Default, the Guarantor agrees to pay
or reimburse each Managing Agent, the Agent and each Lender for all its
reasonable costs and out-of-pocket expenses incurred in connection with the
enforcement or preservation of any rights under this Guarantee and any other
documents executed in connection herewith or in connection with any refinancing
or restructuring of the credit arrangements provided under the Credit Agreement
involving this Guarantee in the nature of a "work-out" or of any insolvency or
bankruptcy proceeding, including, without limitation, reasonable legal fees and
disbursements of counsel to the Agent, the Managing Agents and each Lender and
the allocated reasonable cost of internal counsel to the Managing Agents, the
Agent and each Lender.
(c) Without limiting the generality of the foregoing, this
Guarantee guarantees, to the extent provided herein, the
<PAGE> 3
payment of all amounts which constitute part of the Obligations and would be
owed by the Borrower to the Lenders under any Loan Document but for the fact
that they are unenforceable or not allowable due to the existence of a
bankruptcy, reorganization or similar proceeding involving the Borrower or the
Guarantor.
(d) This Guarantee is secured by, among other things, the
Guarantor Security Agreement executed by Guarantor in connection herewith and
may be secured from time to time in the future by leasehold and/or fee deeds of
trust or mortgages on forms and containing terms and conditions acceptable to
the Majority Lenders which Guarantor shall provide to the Agent for the benefit
of the Lenders, all as more particularly set forth and described in the Credit
Agreement.
SECTION 2. Guarantee Absolute. The Guarantor guarantees that the
Obligations will be paid strictly in accordance with the terms of the Credit
Agreement, the Notes and the other Loan Documents, regardless of any Requirement
of Law now or hereafter in effect in any jurisdiction affecting any of such
terms or the rights of the Lenders with respect thereto. The obligations of the
Guarantor hereunder shall remain in full force and effect without regard to, and
shall not be affected or impaired by the following, any of which may be taken
without the consent of, or notice to, the Guarantor, nor shall any of the
following give the Guarantor any recourse or right of action against the
Lenders:
(a) any lack of validity or enforceability of, or any release
or discharge of the Borrower or any other Loan Party from liability under, the
Credit Agreement or any other Loan Document;
(b) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Obligations or any other amendment or
waiver of, or any consent to departure from, the Credit Agreement or any other
Loan Document;
(c) any subordination, compromise, exchange, release,
nonperfection or liquidation of any collateral, or any release, amendment or
waiver of, or consent to departure from, any other guaranty, for any or all of
the Obligations;
(d) any express or implied amendment, modification, renewal,
supplement, extension or acceleration of the Obligations or any of the Loan
Documents;
(e) any exercise or nonexercise by the Lenders of any right or
privilege under this Guarantee or any of the other Loan Documents;
(f) any bankruptcy, insolvency, reorganization, composition,
adjustment, dissolution, liquidation or other like proceeding relating to the
Guarantor, the Borrower or any other guarantor of the Obligations or any action
taken with respect to
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<PAGE> 4
this Guarantee by any trustee, receiver or court in any such proceeding, whether
or not the Guarantor shall have had notice or knowledge of any of the foregoing;
(g) any assignment or other transfer, in whole or in part, of
this Guarantee or any of the other Loan Documents;
(h) any acceptance of partial performance of the Obligations;
(i) any consent to the transfer of, or any bid or purchase at
sale of, any collateral for the Obligations; or
(j) any other circumstance that might otherwise constitute a
defense available to, or a discharge of, the Borrower or any guarantor (other
than payment by the Borrower or any other Loan Party of the Obligations).
So long as any of the obligations guaranteed hereunder shall be owing to the
Lenders, or any Commitment or Letter of Credit shall be outstanding, the
Guarantor shall not, without the prior written consent of the Lenders, commence
or join with any other party in commencing any bankruptcy, reorganization or
insolvency proceedings of or against the Borrower. The Guarantor understands and
acknowledges that by virtue of this Guarantee, it has specifically assumed any
and all risks of a bankruptcy or reorganization case or proceeding with respect
to the Borrower. As an example and not in any way of limitation, a subsequent
modification of the Obligations not consented to by the required number of
Lenders under the Credit Agreement in any reorganization case concerning the
Borrower shall not affect the obligation of the Guarantor to pay and perform the
Obligations in accordance with their respective terms prior to such
reorganization case. If claim is ever made upon the Lenders for repayment of any
amount or amounts received by the Lenders in payment of the Obligations and the
Lenders repay all or any part of said amount, then, notwithstanding any
revocation or termination of this Guarantee or any other instrument evidencing
the Obligations, the Guarantor shall be and remain liable to the Lenders for the
amount so repaid to the same extent as if such amount had never originally been
received by the Lenders.
SECTION 3. Waivers. The Guarantor unconditionally waives
any defense to the enforcement of this Guarantee, including the
following:
(a) all presentments, demands for performance, notices of
nonperformance, protests, notices of protest, notices of dishonor and notices of
acceptance of this Guarantee;
(b) any right to require the Lenders to proceed against the
Borrower or any other guarantor of the Obligations at any time, to proceed
against or exhaust any security held by the
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<PAGE> 5
Lenders at any time or to pursue any other remedy whatsoever at any time;
(c) the defense of any statute of limitations affecting the
liability of the Guarantor hereunder, the liability of the Borrower or any other
guarantor of the Obligations or the enforcement hereof, to the extent permitted
by law;
(d) any defense arising by reason of any invalidity or
unenforceability of any of the Loan Documents, any disability of the Borrower or
any other guarantor of the Obligations, any manner in which the Lenders have
exercised their rights and remedies under the Loan Documents or any cessation
from any cause whatsoever of the liability of the Borrower or any other
guarantor of the Obligations;
(e) any defense based upon an election of remedies by the
Lenders, including any election to proceed by judicial or nonjudicial
foreclosure of any Lien, whether on real property or personal property, or by
deed in lieu thereof, whether or not every aspect of any foreclosure sale is
commercially reasonable, or any election of remedies, including remedies
relating to real-property or personal-property security, that destroys or
otherwise impairs any subrogation rights of the Guarantor or any rights of the
Guarantor to proceed against the Borrower or any other guarantor of the
Obligations for reimbursement, or both (including California Code of Civil
Procedure Sections 580a, 580b, 580d and 726);
(f) any duty of the Lenders to advise the Guarantor of any
information known to the Lenders regarding the financial condition of the
Borrower or any other circumstance affecting the Borrower's ability to perform
its obligations to the Lenders, it being agreed that the Guarantor assumes
responsibility for being and keeping informed regarding such condition or any
such circumstance;
(g) any right of subrogation, contribution, indemnity or
otherwise against the Borrower that may arise out of or be caused by this
Guarantee, all rights and/or claims against the Borrower which may arise against
the Borrower by reason of this Guarantee, any right to enforce any remedy that
the Lenders now have or may hereafter have against the Borrower and any benefit
of, and any right to participate in, any security now or hereafter held by the
Lenders;
(h) any failure by the Lenders to perfect or continue the
perfection of any lien or security interest in any collateral, including, but
not limited to, the collateral given under the Loan Documents or any failure by
the Lenders to protect the property covered by any such lien or security
interest;
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<PAGE> 6
(i) any right to interpose any defense, counter-claim or
offset of any nature and description which the Guarantor may now have or which
may exist between and among the Lenders and the Loan Parties (other than payment
by the Borrower or any other Loan Party of the Obligations); and
(j) in furtherance and not in limitation of the foregoing, the
Guarantor waives all rights and defenses arising out of an election of remedies
by the Lenders, even though that election of remedies, such as a nonjudicial
foreclosure with respect to any mortgages or deeds of trust securing the
Obligations from time to time, has destroyed the Guarantor's rights of
subrogation and reimbursement against the Borrower by the operation of Section
580d of the California Code of Civil Procedure or otherwise.
SECTION 4. Payments in Trust. If any amount shall be paid to the
Guarantor contrary to the provisions of Section 3(g), such amount shall be held
in trust for the benefit of the Lenders and shall forthwith be paid to the Agent
to be credited and applied to the Obligations, whether matured or unmatured, in
accordance with the terms of the Credit Agreement.
SECTION 5. Continuing Guarantee; Successors. The obligations of the
Guarantor under this Guarantee and any Guarantor Collateral Documents executed
by Guarantor in connection herewith shall continue in full force and effect
until the Obligations shall have been fully paid and performed, the Commitments
and any Letters of Credit shall have been terminated or shall have expired and
the expiration of the period of time during which payments by the Borrower to
the Lenders may be deemed to be preferential payments under the United States
Bankruptcy Code or other similar applicable laws. This Guarantee shall be
binding upon the Guarantor and its successors and assigns (provided that the
Guarantor may not assign this Guarantee without the prior written consent of
each of the Lenders) and shall inure to the benefit of and be enforceable by the
Lenders and their successors, transferees and assigns. Without limiting the
generality of the foregoing, and without notice to the Guarantor, the Lenders
may assign or otherwise transfer any of their rights and obligations under the
Loan Documents to any other person or entity in accordance with the terms of the
Credit Agreement, and such other person or entity shall thereupon become vested
with all the rights in respect thereof granted to the Lenders herein or
otherwise. The term "Borrower" shall mean both the named Borrower and any other
person or entity at any time assuming or otherwise becoming primarily liable on
all or any part of the Obligations.
SECTION 6. Subordination. Any indebtedness of the Borrower now or
hereafter held by the Guarantor is hereby subordinated to the prior payment and
performance in full of the Obligations. The Guarantor agrees not to ask for,
demand, sue for, take or
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<PAGE> 7
receive from the Borrower, directly or indirectly, in cash or other property, by
setoff or in any other manner (including, without limitation, from or by way of
collateral), payment of all or any of such indebtedness of the Borrower unless
and until the Obligations shall have been paid in full. If the Guarantor shall
receive any payments from the Borrower in violation of the preceding sentence,
the Guarantor shall act as trustee for the Lenders and immediately pay over to
the Agent for the benefit of the Lenders any amounts received by the Guarantor
to be applied against the Obligations. However, no such payment shall reduce or
affect in any manner the absolute, unconditional and independent liability of
the Guarantor hereunder except to the extent such payment is applied against the
Obligations.
SECTION 7. Payments. It is understood that the Obligations may at any
time and from time to time exceed the aggregate liability of the Guarantor
hereunder without impairing this Guarantee. The Guarantor agrees that whenever
the Guarantor shall make any payment to the Agent for the benefit of the Lenders
hereunder on account of the liability hereunder, the Guarantor will deliver such
payment to the Agent at the address provided for it in Section 11 below and
notify the Agent in writing that such payment is made under this Guarantee for
such purpose. It is understood that the Agent, without impairing this Guarantee,
may apply payments from the Borrower to the Obligations or to such other
obligations owed by the Borrower to the Lenders in such amounts and in such
order as the Lenders in their complete discretion determine. No payment made
hereunder by the Guarantor to the Agent or the Lenders shall constitute the
Guarantor as a creditor of the Agent, the Lenders or the Borrower.
SECTION 8. Representations and Warranties. The Guarantor
hereby represents and warrants as follows:
(a) Solvency. The execution and delivery of this Guarantee and
the other Loan Documents to which Guarantor is party will not (i) render the
Guarantor insolvent under generally accepted accounting principles nor render it
Insolvent (as defined below), (ii) leave the Guarantor with remaining assets
which constitute unreasonably small capital given the nature of the Guarantor's
business, or (iii) result in the incurrence of Debts (as defined below) beyond
the Guarantor's ability to pay them when and as they mature. For the purposes of
this Section, "Insolvent" means that the present fair salable value of assets is
less than the amount that will be required to pay the probable liability on
existing Debts as they become absolute and matured. For the purposes of this
Section, "Debts" includes any legal liability for indebtedness, whether matured
or unmatured, liquidated or unliquidated, absolute, fixed or contingent.
(b) Financial or other Benefit or Advantage. The Guarantor
hereby acknowledges and warrants that it has derived or
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<PAGE> 8
expects to derive a financial or other benefit or advantage from the Credit
Agreement and from each and every renewal, extension, release of collateral or
other relinquishment of legal rights made or granted or to be made or granted by
the Lenders to the Borrower in connection with the Credit Agreement.
(c) Existence and Rights. The Guarantor is a [corporation]*
duly organized, validly existing and in good standing under the laws of the
State of [Delaware]. The Guarantor has the [corporate] power and authority and
legal right to own its property and to carry on its business as now owned and
carried on and in which it proposes to be engaged after the Initial Closing Date
and is duly qualified and in good standing in each jurisdiction in which the
property owned by it or the business conducted by it makes such qualification
necessary (except to the extent the failure to qualify thereunder could not, in
the aggregate, reasonably be expected to have a material adverse effect on the
financial condition or business of the Guarantor or its ability to perform under
this Guarantee or any other Guarantor Collateral Document executed by the
Guarantor (a "Material Adverse Effect")) and the Guarantor has the [corporate]
power and authority to make and carry out this Guarantee and the other Loan
Documents to which Guarantor is party.
(d) Guarantee Authorized and Binding; Compliance with Law. The
execution, delivery and performance of each of this Guarantee and the other Loan
Documents to which the Guarantor is party has been duly authorized and, except
as set forth on [Schedule 7] to the Credit Agreement, does not require the
consent or approval of any Governmental Authority (including, without
limitation, the FCC) and is not in contravention of, or in conflict with, any
Requirement of Law. The Guarantor is in compliance with all Requirements of Law
except to the extent that a failure to comply therewith could not, in the
aggregate, reasonably be expected to have a Material Adverse Effect. Each of
this Guarantee and the other Loan Documents to which the Guarantor is party is a
valid and legally binding obligation of the Guarantor enforceable in accordance
with its terms, subject to and limited by the effect of bankruptcy, insolvency,
reorganization, receivership, conservatorship, arrangement, moratorium or other
laws affecting or relating to the rights of creditors generally and by general
equitable principles (whether enforcement is sought by proceedings in equity or
at law).
(e) No Conflict. The execution and delivery of this Guarantee
and the other Loan Documents to which the Guarantor is party are not, and the
performance of this Guarantee and the other Loan Documents to which the
Guarantor is party will not be, in contravention of, or in conflict with, any
agreement,
- --------
* To be adapted for each Guarantor.
-8-
<PAGE> 9
indenture or undertaking to which the Guarantor is a party or by which it or any
of its property is or may be bound or affected and do not, and will not cause
any Lien to be created or imposed upon any such property, other than security
interests imposed by the Loan Documents.
(f) Litigation. Except as set forth on Schedule 1 hereto,
there is no litigation or other proceeding pending or, to the knowledge of the
Guarantor, threatened against, or affecting, it or its properties (a) on the
Initial Closing Date with respect to this Guarantee or any other Guarantor
Collateral Document executed by the Guarantor or (b) which, if determined
adversely to the Guarantor, would, individually or in the aggregate, have a
Materially Adverse Effect, and the Guarantor is not in default with respect to
any order, writ, injunction, decree or demand of any court or other Governmental
Authority which default could reasonably be expected to have a Material Adverse
Effect.
(g) Ownership of Guarantor. PTI Holdings, Inc. owns 100% of
the outstanding capital stock of the Guarantor*.
SECTION 9. Covenants. The Guarantor covenants and agrees that, so long
as any part of the Obligations shall remain unpaid or any Commitment shall
remain in effect or any Letter of Credit shall remain outstanding the Guarantor
will, unless the Majority Lenders shall otherwise consent in writing:
(a) Reporting Requirements. The Guarantor will furnish to the
Agent (i) as soon as available and in any event within 90 days after the end of
each fiscal year of the Guarantor, a copy of the financial statements of the
Guarantor for such period and (ii) such other information respecting the
financial condition or business of the Guarantor as any Lender, through the
Agent, may from time to time request.
(b) Notice of Proceedings. The Guarantor will promptly give
notice in writing to the Agent of all litigation, arbitral proceedings and
regulatory proceedings not otherwise described on Schedule 1 hereto affecting
the Guarantor or the properties of the Guarantor, except litigation or
proceedings that, if adversely determined, could not reasonably be expected to
have a Material Adverse Effect.
(c) Limitations on Fundamental Changes. Except as permitted
under the Credit Agreement, the Guarantor shall not, and shall not permit any of
its Subsidiaries to, enter into any merger, consolidation or amalgamation, or
liquidate, wind up or dissolve itself (or suffer any liquidation or
dissolution), or convey, sell, lease, assign, transfer or otherwise dispose of,
all or substantially all of its property, business or assets.
- --------
* To be adapted for each Guarantor.
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<PAGE> 10
(d) Limitation on Distributions. The Guarantor shall not, and
shall not permit any of its Subsidiaries to, except as otherwise permitted
pursuant to the Credit Agreement, declare or pay any dividend on, or make any
payment on account of, or set apart assets for a sinking or other analogous fund
for, the purchase, redemption, defeasance, retirement or other acquisition of,
any shares of any class of its stock or any warrants or options to purchase any
such stock, whether now or hereafter outstanding, or any other distribution in
respect thereof, either directly or indirectly, whether in cash or property.
SECTION 10. Amendments, Etc. No amendment or waiver of any provision of
this Guarantee or consent to any departure by the Guarantor therefrom shall in
any event be effective unless the same shall be in writing and otherwise in
accordance with Section 9.1 of the Credit Agreement, and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given.
SECTION 11. Addresses for Notices. All notices, requests and demands or
other communications hereunder to be effective shall be in writing (including by
telecopy), and, unless otherwise expressly provided herein, shall be deemed to
have been duly given or made when delivered by hand, or 3 days after being
deposited in the United States mail, certified and postage prepaid and return
receipt requested, or, in the case of telecopy notice, when received, in each
case addressed as follows: if to the Guarantor to it at its address or
telecopier number set forth on the signature page hereof, and if to the Agent,
to it at the address or telecopier number specified for the Agent in the Credit
Agreement; or, as to each party, to it at such other address as shall be
designated by such party in a written notice to the other party.
SECTION 12. No Waiver; Remedies. No failure on the part of the Lenders
to exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof, and no single or partial exercise of any right hereunder shall
preclude any other or further exercise thereof or the exercise of any other
right. The remedies provided herein are cumulative and not exclusive of any
remedies provided by law.
SECTION 13. Right of Setoff. In addition to any rights and remedies of
the Lenders provided by law, with the prior consent of the Majority Lenders,
each Lender shall have the right, exercisable upon the occurrence and during the
continuance of an Event of Default and acceleration of the Obligations pursuant
to Section 7 of the Credit Agreement, without prior notice to the Guarantor, any
such notice being expressly waived by the Guarantor to the extent permitted by
applicable law, to set off and appropriate and apply against any such
Obligations any and all deposits (general or special, time or demand,
provisional or final), in any currency, and any other credits, indebtedness or
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<PAGE> 11
claims in any currency, in each case whether direct or indirect, absolute or
contingent, matured or unmatured, at any time held or owing by such Lender or
any branch or agency thereof or bank controlling such Lender to or for the
credit or the account of the Guarantor. Each Lender agrees promptly to notify
the Guarantor after any such set-off and application made by such Lender,
provided that the failure to give such notice shall not affect the validity of
such set-off and application.
SECTION 14. Consent to Jurisdiction.
(a) The Guarantor, to the extent permitted by applicable law,
hereby irrevocably submits to the non-exclusive general jurisdiction of the
courts of the States of California and New York, the courts of the United States
of America for the Central District of California and the Southern District of
New York and appellate courts from any thereof in any legal action or proceeding
arising out of or relating to this Guarantee, and the Guarantor hereby
irrevocably agrees that all claims in respect of such action or proceeding may
be heard and determined in such California, New York or federal court. The
Guarantor hereby irrevocably waives, to the fullest extent it may effectively do
so, the defense of an inconvenient forum to the maintenance of such action or
proceeding and any objection to venue of such action or proceeding.
(b) Nothing in this Section shall affect the right of the
Lenders to serve legal process in any manner permitted by law or affect the
right of the Lenders to bring any action or proceeding against the Guarantor or
its property in the courts of any other jurisdictions.
SECTION 15. Governing Law. This Guarantee shall be governed by, and
construed in accordance with, the laws of the State of New York (without
reference to its choice of law rules).
SECTION 16. Complete Agreement. This Guarantee supersedes any prior
negotiations, discussions or communications between the Guarantor and the
Lenders and constitutes the entire agreement between the Guarantor and the
Lenders with respect to the guarantee of the Obligations.
SECTION 17. WAIVER OF JURY TRIAL. THE GUARANTOR, THE AGENT, THE
MANAGING AGENTS AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE
TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS GUARANTEE OR
ANY DOCUMENT EXECUTED IN CONNECTION HEREWITH AND FOR ANY COUNTERCLAIM THEREIN.
SECTION 18. Severability. Any provision of this Guarantee which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the
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<PAGE> 12
remaining portions hereof or thereof or affecting the validity or enforceability
of such provision in any other jurisdiction.
SECTION 19. Counterparts. This Guarantee may be executed in any number
of counterparts and by different parties hereto in separate counterparts, each
of which shall be deemed to be an original, but all of which taken together
shall constitute one and the same agreement.
SECTION 20. Copies of Certificates, Etc. Whenever the Guarantor is
required to deliver notices, certificates, opinions, statements or other
information hereunder to the Agent or to the Managing Agents for delivery to any
Lender, it shall do so in such number of copies as the Agent or the Managing
Agents shall reasonably specify.
IN WITNESS WHEREOF, the Guarantor has caused this Guarantee to be
executed by its duly authorized representative as of the date first above
written.
PERENCHIO TELEVISION, INC.
By: ______________________
Name: ____________________
Title: ___________________
Address for Notices:
Chartwell Partners
1999 Avenue of the Stars, Suite 3050
Los Angeles, California 90067
Telecopier: (310) 556-3568
Attention: [Stephen P. Rader, Esq.]
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<PAGE> 13
Schedule 1 to
Guarantee
Guarantor Litigation
<PAGE> 1
EXHIBIT 10.17
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR REGISTERED OR QUALIFIED UNDER ANY STATE SECURITIES LAWS. THIS
WARRANT MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS THE
PROPOSED TRANSACTION DOES NOT REQUIRE REGISTRATION OR QUALIFICATION UNDER
APPLICABLE FEDERAL OR STATE SECURITIES LAWS.
AMENDED AND RESTATED WARRANT
TO PURCHASE COMMON STOCK OF
UNIVISION COMMUNICATIONS INC.,
A DELAWARE CORPORATION
THIS IS TO CERTIFY THAT: Univision Special Partnership III, L.P., a
Delaware limited partnership ("USPIII") or registered transferees (the "Holder")
is entitled to purchase from Univision Communications Inc., a Delaware
corporation (the "Company"), at any time and from time to time on and after the
date hereof an aggregate of _______ shares of Class V Common Stock (or Class A
Common Stock as provided herein) at a purchase price of $[.12878] per share, all
on the terms and conditions and subject to the adjustments provided herein. This
Amended and Restated Warrant (this "Warrant") is executed and delivered with
reference to the following facts:
A. Prior to the date hereof the Company issued warrants to USPIII to
purchase up to 1,767 shares of Class V Common Stock of the Company (the
"Original Warrant").
B. The Original Warrant contemplated the merger of PTI Holdings
Inc., a Delaware corporation that is 80% owned by the Company, ("PTIH") with the
Company.
C. Prior to such merger, the number of shares of Class V Common
Stock issuable upon exercise of the Original Warrant was limited to 1,767
shares.
D. The Original Warrant contained provisions regarding adjustment to
the number of shares issuable upon exercise of the Original Warrant upon the
merger of PTIH and the Company.
1
<PAGE> 2
E. The Original Warrant provided that if PTIH merged into the
Company, the number of shares which could be purchased upon exercise of this
Warrant would be reduced in accordance with the terms of the Original Warrant.
F. The Company and PTIH are combining other than through a merger
and the Company will be the sole owner of PTIH.
G. The Company and the Holder wish to amend and restate the Original
Warrant to reflect the combination of PTIH and the Company and accurately to
reflect the number of shares of Common Stock that will be issuable upon exercise
of this Warrant.
SECTION 1. CERTAIN DEFINITIONS. As used in this Warrant, unless the
context otherwise requires:
"Affiliate" means, with respect to a specified Person, any other
Person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person. For purposes of this
definition, "control" when used with respect to any specified Person means the
power to direct the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.
"Business Day" means any day on which commercial banks are not
authorized or required to close in Los Angeles, California.
"Class A Common Stock" means the Company's authorized Class A Common
Stock, par value $.01 per share.
"Class P Common Stock" means the Company's authorized Class P Common
Stock, par value $.01 per share.
"Class T Common Stock" means the Company's authorized Class T Common
Stock, par value $.01 per share.
"Class V Common Stock" means the Company's authorized Class V Common
Stock, par value $.01 per share.
"Common Stock" means the Class A Common Stock, Class P Common Stock,
Class T Common Stock and Class V Common Stock.
"Communications Act" means the Federal Communications Act of 1934,
as amended, or any other similar Federal statute, and the rules and regulations
of the Federal Communications Commission promulgated thereunder.
2
<PAGE> 3
"Exercise Price" means, on the date hereof, the purchase price per
share as set forth on the first page of this Warrant and thereafter shall mean
such amount as adjusted pursuant to Section 4.
"Permitted Holder" means
(i) Gustavo A. Cisneros, Ricardo J. Cisneros (each a "Cisneros
Brother"), and any entity all of the equity (other than directors'
qualifying shares) of which is directly or indirectly owned by a Cisneros
Brother, or both of them, and that is not an Affiliate of any other
Person;
(ii) (a) the spouse and lineal descendants of each Cisneros
Brother, (b) the personal representative and heirs of each Cisneros
Brother, (c) any trustee of any trust created primarily for the benefit of
any, some or all of such spouse and lineal descendants (but which may
include beneficiaries which are charities) or of any revocable trust
created by such Cisneros Brother, (d) following the death of such Cisneros
Brother, all beneficiaries under either such trust, (e) any entity all of
the equity of which is directly or indirectly owned by any of the
foregoing which is not an Affiliate of any Person other than the Person
described in clauses (a)-(d) above; and
(iii) USPIII.
"Person" means a corporation, an association, a trust, a
partnership, a joint venture, an organization, a business, an individual, a
government or political subdivision thereof or a governmental body.
"Securities Act" means the Securities Act of 1933, as amended, or
any similar Federal statute, and the rules and regulations of the Securities and
Exchange Commission promulgated thereunder, all as the same shall be in effect
at the time.
"Warrant Shares" at any time means the shares of Class V Common
Stock or Class A Common Stock then purchasable by the Holder upon the exercise
of this Warrant.
SECTION 2. EXERCISE OF WARRANT.
2.1 Conditions of Exercise. The Holder may at any time on and after
the date hereof exercise this Warrant in whole or in part from time to time, for
the number of Warrant Shares which the Holder is then entitled to purchase
hereunder; provided, however, that this Warrant may not be exercised unless at
the time of such exercise all of the following conditions are met:
3
<PAGE> 4
(a) it is lawful at the time of exercise for the Holder to own the
number of shares of Common Stock which the Holder would own upon such
exercise of this Warrant, and the exercise of this Warrant and such
Holder's acquisition of such shares hereunder does not violate the
Communications Act or other applicable law, rule or regulation;
(b) the Company has received such evidence as it may reasonably
request confirming the foregoing, including, without limitation, an
opinion in form and substance, and from counsel, reasonably satisfactory
to the Company and, if the Company requests, an agreement from the Holder
reasonably satisfactory to the Company indemnifying the Company against
losses in the event the exercise of this Warrant violates the
Communications Act; and
(c) any required approval from the Federal Communications Commission
has been received.
In the event that the Company declines to permit the exercise of this Warrant
because it believes that paragraphs (a) or (b) above have not been satisfied and
a procedure exists for obtaining a binding determination of whether or not such
exercise will cause a violation of applicable law, including, without
limitation, obtaining a declaratory ruling from the Federal Communications
Commission under Rule 1.2 of the rules promulgated under the Communications Act
(or any successor rule), then at the request of the Holder or the Company, the
Company and the Holder will use reasonable efforts to obtain such determination.
Any such efforts shall be at the expense of the Holder, unless the Company is
unreasonable in refusing to rely on the assurances provided pursuant to
paragraph (b), in which case such efforts shall be at the expense of the
Company.
2.2 Method of Exercise. The Holder may exercise this Warrant in
whole or in part by delivering to the Company (i) a written notice of the
Holder's election to exercise this Warrant, which notice shall specify the
number of Warrant Shares to be purchased, (ii) this Warrant, (iii) the evidence
and agreement requested by the Company referred to in Section 2.1(b) above and
(iv) a sum equal to the Exercise Price for all Warrant Shares being purchased
pursuant to the exercise of this Warrant in the form of a cashiers' check or
wire transfer.
2.3 Issuance of Warrant Shares. Upon the Holder's exercise of this
Warrant, the Company shall issue the Warrant Shares so purchased to the Holder
and within two Business Days shall cause to be executed and delivered to the
Holder a certificate or certificates representing the aggregate number of
fully-paid and nonassessable shares of Common Stock issuable upon such exercise.
The stock certificate or certificates for Warrant Shares so delivered shall be
in such denominations as may be specified in such notice and shall be registered
in the name of the Holder. Such certificate or certificates shall be deemed to
have been issued and the Holder shall be deemed to have become a holder of
record of such shares, with the right, to the extent permitted by law, to vote
such shares or to consent or to receive notice as a
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<PAGE> 5
stockholder, as of the close of business on the date all of the conditions
referred to in Section 2.1 are satisfied (including, without limitation, the
obtaining of any requested declaratory ruling from the Federal Communications
Commission) and all of the items specified in Section 2.2 above are delivered to
the Company. If this Warrant shall have been exercised only in part the Company
shall, within two Business Days of delivery of such certificate or certificates,
deliver to the Holder either (i) a new warrant dated the date it is issued
evidencing the rights of the Holder to purchase the remaining Warrant Shares
called for by this Warrant or (ii) this Warrant bearing an appropriate notation
of such partial exercise. The Holder shall pay all expenses, transfer taxes and
other charges payable in connection with the preparation, issuance and delivery
of stock certificates under this Section 2.
2.4 Class of Shares Issued. If the Holder is a Permitted Holder, the
Holder may elect to receive shares of Class V Common Stock or shares of Class A
Common Stock upon exercise of this Warrant. If the Holder is not a Permitted
Holder, the Company shall issue to the Holder shares of Class A Common Stock
upon exercise of this Warrant.
SECTION 3. TRANSFER OF WARRANT.
3.1 Restrictions on Transfer. Subject to Section 5 hereof, this
Warrant and all Warrant Shares issued hereunder may be sold, transferred,
pledged or hypothecated (collectively, "Transferred") to any third party. Any
certificate for any Warrant Shares issued hereunder shall be stamped or
otherwise imprinted with legends in substantially the form of the legends
contained on the first page hereof.
3.2 Mechanics of Transfers. Subject to satisfaction of the
conditions set forth in Section 3.1, this Warrant and all rights hereunder are
transferable, in whole or in part, on the books of the Company to be maintained
for such purpose, upon surrender of this Warrant at the office of the Company,
together with a written assignment of this Warrant duly executed by the Holder
or its agent or attorney. Upon such surrender, the Company shall execute and
deliver a new Warrant or Warrants in the name of the assignee or assignees and
in the denominations specified in such instrument of assignment, and this
Warrant shall promptly be canceled. This Warrant, if properly Transferred in
compliance with this Section 3, may be exercised by an assignee for the purchase
of Warrant Shares without having a new Warrant issued.
SECTION 4. ADJUSTMENT OF WARRANT SHARES; ANTI-DILUTION PROVISIONS.
If any of the following events occurs at any time hereafter prior to
the full exercise of this Warrant, then the Exercise Price and/or the number of
Warrant Shares remaining to be purchased hereunder immediately prior to such
event shall be adjusted as described below:
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<PAGE> 6
4.1 Redemptions and Repurchases. If at any time there is a pro rata
(based upon the respective number of outstanding shares of each class)
redemption or repurchase of the Class A Common Stock, Class P Common Stock,
Class T Common Stock, and Class V Common Stock, the number of Warrant Shares
remaining to be purchased hereunder shall be decreased by a percentage equal to
the percentage of Common Stock so redeemed or repurchased.
4.2 Stock Subdivisions or Stock Consolidations. If at any time the
outstanding shares of Class A Common Stock, Class P Common Stock, Class T Common
Stock, and Class V Common Stock are subdivided into a greater number of shares,
whether by stock split, stock dividend or otherwise, then the Exercise Price
will be reduced proportionately and the number of Warrant Shares remaining to be
purchased hereunder, will be increased proportionately. Conversely, if at any
time the outstanding shares of Class A Common Stock, Class P Common Stock, Class
T Common Stock, and Class V Common Stock are consolidated into a smaller number
of shares, then the Exercise Price will be increased proportionately and the
number of Warrant Shares remaining to be purchased hereunder, will be reduced
proportionately. Each adjustment to the Exercise Price and the number of Warrant
Shares shall be effective on the record date, or if there is no record date, the
effective date for such subdivision or consolidation.
4.3 Consolidation, Merger or Sale of Assets. If the Company shall at
any time (i) consolidate with or merge into another corporation or (ii) merge
with another corporation and be the surviving corporation in such merger, and in
connection therewith all or part of the Class V Common Stock or Class A Common
Stock shall be changed into or exchanged for securities of any other entity or
cash or other property, the Holder of this Warrant will thereafter receive, upon
the exercise hereof in accordance with the terms hereof, the securities, cash or
other property to which the holder of the number of shares of Common Stock then
deliverable upon the exercise of this Warrant would have received upon such
consolidation or merger, and the Company shall take such steps in connection
with such consolidation or merger as may be necessary to assure that the
provisions thereof shall thereafter be applicable, as nearly as reasonably may
be, in relation to any securities or property thereafter deliverable upon the
exercise of this Warrant. The Company or the successor corporation, as the case
may be, shall execute and deliver to the Holder a supplemental Warrant so
providing. A sale of all or substantially all the assets of the Company for a
consideration (apart from the assumption of obligations) consisting primarily of
securities shall be deemed a consolidation or merger for the foregoing purposes.
The provisions of this Section 4.3 similarly shall apply to successive mergers
or consolidations or sales or other transfers.
4.4 Dividends. If the Company proposes to declare a dividend on or
make a distribution with respect to the Class V Common Stock or Class A Common
Stock, whether in cash, property or securities, the Company will deliver written
notice of such proposed event, in reasonable detail, to the Holder not less than
fifteen (15) days prior to the record date for such dividend or distribution.
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<PAGE> 7
4.5 Notices. When any adjustments are required to be made under this
Section 4, the Company shall as promptly as practicable (i) determine such
adjustments, (ii) prepare a statement describing in reasonable detail the method
used in arriving at the adjustment and setting forth the calculation thereof;
and (iii) cause a copy of such statement to be mailed to the Holder.
4.6 Computations and Adjustments. Upon each computation of an
adjustment under this Section 4, the Exercise Price shall be computed to the
nearest 1/1000 cent and the number of Warrant Shares shall be calculated to the
nearest whole share (i.e., fractions of less than one-half shall be disregarded
and fractions of one-half or greater shall be treated as being the next greater
integer). However, the fractional amount shall be used in calculating any future
adjustments.
SECTION 5. SECURITIES LAWS. The Holder of this Warrant, by
acceptance hereof, acknowledges that this Warrant and the Warrant Shares which
may be issued pursuant thereto have not been registered under the Securities
Act, or applicable state securities laws. The Holder of this Warrant, by
acceptance hereof, represents that it is fully informed as to the applicable
limitations upon any distribution or resale of the Warrant Shares under the
Securities Act or any applicable state securities laws and agrees not to
distribute or resell any Warrant Shares if such distribution or resale would
constitute a violation of the Securities Act or any applicable state securities
laws or would cause the issuance by the Company of the Warrant or the Warrant
Shares to be in violation of the Securities Act or any applicable state
securities laws. The Holder agrees that all certificates representing Warrant
Shares will carry an appropriate legend substantially in the form of the first
legend contained on the first page hereof. Any exercise hereof by the Holder
shall constitute a representation by the Holder that the Warrant Shares are not
being acquired with the view to, or for resale in connection with, any
distribution or public offering thereof in violation of the Securities Act or
applicable state securities laws.
SECTION 6. NO VOTING RIGHTS. This Warrant shall not entitle the
holder hereof to any voting rights or other rights as a stockholder of the
Company.
SECTION 7. RESERVATION OF WARRANT SHARES. The Company has reserved
and will keep available, out of the authorized and unissued shares of Common
Stock, the full number of shares sufficient to provide for the exercise of the
rights of purchase represented by this Warrant. Upon issuance and delivery
against payment pursuant to the terms of this Warrant, all Warrant Shares will
be validly issued, fully paid and nonassessable.
SECTION 8. LOSS, DESTRUCTION OF WARRANT. Upon receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of any Warrant and, in the case of any such loss, theft or
destruction, upon receipt of an indemnity satisfactory to the Company or, in the
case of any such mutilation, upon
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<PAGE> 8
surrender and cancellation of such Warrant, the Company will make and deliver,
in lieu of such lost, stolen, destroyed or mutilated Warrant, a new Warrant of
like tenor and representing the right to purchase the same aggregate number of
shares of Common Stock.
SECTION 9. MISCELLANEOUS PROVISIONS.
9.1 Amendments. The terms of this Warrant may be amended, and the
observance of any term herein may be waived, but only with the written consent
of the Holder and the Company. If at any time this Warrant is split into
multiple Warrants, any consent to be given by the Holder with respect to any
amendment hereto shall be made by the Holders of Warrants exercisable for a
majority of the unissued Warrant Shares, provided that no amendment may change
the number of Warrant Shares or the Exercise Price without the written consent
of the Holders all Warrants.
9.2 Jurisdiction; Venue; Service of Process. The Company and the
Holder each irrevocably submits to the jurisdiction of any California State or
United States Federal court sitting in Los Angeles County in any action or
proceeding arising out of or relating to this Warrant or the transactions
contemplated hereby, and irrevocably agrees that any such action or proceeding
may be heard and determined only in such California State or Federal court. Each
of the parties irrevocably waives, to the fullest extent it may effectively do
so, the defense of an inconvenient forum to the maintenance of any such action
or proceeding. Each of the parties irrevocably appoints CT Corporation System
(the "Process Agent"), with an office on the date hereof at 818 West 7th Street,
Los Angeles, CA 90017 as his or its agent to receive on behalf of him or it and
his or its property service of copies of the summons and complaint and any other
process which may be served in any such action or proceeding. Such service may
be made by delivering a copy of such process to any of the parties in care of
the Process Agent at the Process Agent's above address, and each of the parties
irrevocably authorizes and directs the Process Agent to accept such service on
its behalf. As an alternate method of service, each of the parties consents to
the service of copies of the summons and complaint and any other process which
may be served in any such action or proceeding by the mailing or delivering of a
copy of such process to such party at its address specified in or pursuant to
Section 9.3. Each of the parties agrees that a final judgment in any such action
or proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law.
9.3 Notices. All notices and other communications required or
permitted hereunder shall be in writing, shall be deemed duly given upon actual
receipt, and shall be delivered (a) in person, (b) by registered or certified
mail (air mail if addressed to an address outside of the country in which
mailed), postage prepaid, return receipt requested, (c) by a generally
recognized overnight courier service which provides written acknowledgement by
the addressee of receipt, or (d) by facsimile or other generally accepted means
of electronic transmission (provided that a copy of any notice delivered
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<PAGE> 9
pursuant to this clause (d) shall also be sent pursuant to clause (b)),
addressed as follows:
(i) If to the Company:
1999 Avenue of the Stars, Suite 3050
Los Angeles, California 90067
Attn: Robert V. Cahill, Esq.
Telecopier: (310) 556-3568
with a copy to:
O'Melveny & Myers
1999 Avenue of the Stars, Suite 700
Los Angeles, California 90067
Attn: Donald V. Petroni, Esq.
Telecopier: (310) 246-6779
(ii) If to the Holder:
Univision Special Partnership III, L.P.
550 Biltmore Way, 9th Floor
Coral Gables, Florida 33134
Attn: Alejandro Rivera
Telecopier: (305) 447-1389
with copies to:
Finser Corp.
550 Biltmore Way, 9th Floor
Coral Gables, Florida 33134
Attn: James G. Naro, Esq.
Telecopier: (305) 447-1389
and
Milbank, Tweed, Hadley & McCloy
1 Chase Manhattan Plaza
New York, New York 10005
Attn: Robert O'Hara
Telecopier: (212) 530 5219
or to such other addresses as may be specified by like notice to the other
parties.
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<PAGE> 10
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed
in its name by its President or a Vice President.
Dated: _____________, 1996
UNIVISION COMMUNICATIONS INC.
By: _______________________________
Name:
Title:
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<PAGE> 11
EXHIBIT M(c)
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR REGISTERED OR QUALIFIED UNDER ANY STATE SECURITIES LAWS. THIS
WARRANT MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS THE
PROPOSED TRANSACTION DOES NOT REQUIRE REGISTRATION OR QUALIFICATION UNDER
APPLICABLE FEDERAL OR STATE SECURITIES LAWS.
AMENDED AND RESTATED WARRANT
TO PURCHASE COMMON STOCK OF
UNIVISION COMMUNICATIONS INC.,
A DELAWARE CORPORATION
THIS IS TO CERTIFY THAT: Univision Special Partnership II, L.P., a
Delaware limited partnership ("USPII") or registered transferees (the "Holder")
is entitled to purchase from Univision Communications Inc., a Delaware
corporation (the "Company"), at any time and from time to time on and after the
date hereof an aggregate of ______ shares of Class T Common Stock (or Class A
Common Stock as provided herein) at a purchase price of $[.12878] per share, all
on the terms and conditions and subject to the adjustments provided herein. This
Amended and Restated Warrant (this "Warrant") is executed and delivered with
reference to the following facts:
A. Prior to the date hereof the Company issued warrants to USPII to
purchase up to 1,767 shares of Class T Common Stock of the Company (the
"Original Warrant").
B. The Original Warrant contemplated the merger of PTI Holdings
Inc., a Delaware corporation that is 80% owned by the Company, ("PTIH") with the
Company.
C. Prior to such merger, the number of shares of Class T Common
Stock issuable upon exercise of the Original Warrant was limited to 1,767
shares.
D. The Original Warrant contained provisions regarding adjustment to
the number of shares issuable upon exercise of the Original Warrant upon the
merger of PTIH and the Company.
E. The Original Warrant provided that if PTIH merged into the
Company, the number of shares which could be purchased upon exercise of this
Warrant would be reduced in accordance with the terms of the Original Warrant.
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<PAGE> 12
F. The Company and PTIH are combining other than through a merger
and the Company will be the sole owner of PTIH.
G The Company and the Holder wish to amend and restate the Original
Warrant to reflect the combination of PTIH and the Company and accurately to
reflect the number of shares of Common Stock that will be issuable upon exercise
of this Warrant.
SECTION 1. CERTAIN DEFINITIONS. As used in this Warrant, unless the
context otherwise requires:
"Affiliate" means, with respect to a specified Person, any other
Person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person. For purposes of this
definition, "control" when used with respect to any specified Person means the
power to direct the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.
"Business Day" means any day on which commercial banks are not
authorized or required to close in Los Angeles, California.
"Class A Common Stock" means the Company's authorized Class A Common
Stock, par value $.01 per share.
"Class P Common Stock" means the Company's authorized Class P Common
Stock, par value $.01 per share.
"Class T Common Stock" means the Company's authorized Class T Common
Stock, par value $.01 per share.
"Class V Common Stock" means the Company's authorized Class V Common
Stock, par value $.01 per share.
"Common Stock" means the Class A Common Stock, Class P Common Stock,
Class T Common Stock and Class V Common Stock.
"Communications Act" means the Federal Communications Act of 1934,
as amended, or any other similar Federal statute, and the rules and regulations
of the Federal Communications Commission promulgated thereunder.
"Exercise Price" means, on the date hereof, the purchase price per
share as set forth on the first page of this Warrant and thereafter shall mean
such amount as adjusted pursuant to Section 4.
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<PAGE> 13
"Permitted Holder" means (i) Grupo Televisa S.A. and its
wholly-owned subsidiaries and (ii) USPII.
"Person" means a corporation, an association, a trust, a
partnership, a joint venture, an organization, a business, an individual, a
government or political subdivision thereof or a governmental body.
"Securities Act" means the Securities Act of 1933, as amended, or
any similar Federal statute, and the rules and regulations of the Securities and
Exchange Commission promulgated thereunder, all as the same shall be in effect
at the time.
"Warrant Shares" at any time means the shares of Class T Common
Stock or Class A Common Stock then purchasable by the Holder upon the exercise
of this Warrant.
SECTION 2. EXERCISE OF WARRANT.
2.1 Conditions of Exercise. The Holder may at any time on and after
the date hereof exercise this Warrant in whole or in part from time to time, for
the number of Warrant Shares which the Holder is then entitled to purchase
hereunder; provided, however, that this Warrant may not be exercised unless at
the time of such exercise all of the following conditions are met:
(a) it is lawful at the time of exercise for the Holder to own the
number of shares of Common Stock which the Holder would own upon such
exercise of this Warrant, and the exercise of this Warrant and such
Holder's acquisition of such shares hereunder does not violate the
Communications Act or other applicable law, rule or regulation;
(b) the Company has received such evidence as it may reasonably
request confirming the foregoing, including, without limitation, an
opinion in form and substance, and from counsel, reasonably satisfactory
to the Company and, if the Company requests, an agreement from the Holder
reasonably satisfactory to the Company indemnifying the Company against
losses in the event the exercise of this Warrant violates the
Communications Act; and
(c) any required approval from the Federal Communications
Commission has been received.
In the event that the Company declines to permit the exercise of this Warrant
because it believes that paragraphs (a) or (b) above have not been satisfied and
a procedure exists for obtaining a binding determination of whether or not such
exercise will cause a violation of applicable law, including, without
limitation, obtaining a declaratory ruling from the Federal Communications
Commission under Rule 1.2 of the rules promulgated under the Communications Act
(or any successor rule), then at the request of the Holder
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<PAGE> 14
or the Company, the Company and the Holder will use reasonable efforts to obtain
such determination. Any such efforts shall be at the expense of the Holder,
unless the Company is unreasonable in refusing to rely on the assurances
provided pursuant to paragraph (b), in which case such efforts shall be at the
expense of the Company.
2.2 Method of Exercise. The Holder may exercise this Warrant in
whole or in part by delivering to the Company (i) a written notice of the
Holder's election to exercise this Warrant, which notice shall specify the
number of Warrant Shares to be purchased, (ii) this Warrant, (iii) the evidence
and agreement requested by the Company referred to in Section 2.1(b) above and
(iv) a sum equal to the Exercise Price for all Warrant Shares being purchased
pursuant to the exercise of this Warrant in the form of a cashiers' check or
wire transfer.
2.3 Issuance of Warrant Shares. Upon the Holder's exercise of this
Warrant, the Company shall issue the Warrant Shares so purchased to the Holder
and within two Business Days shall cause to be executed and delivered to the
Holder a certificate or certificates representing the aggregate number of
fully-paid and non-assessable shares of Common Stock issuable upon such
exercise. The stock certificate or certificates for Warrant Shares so delivered
shall be in such denominations as may be specified in such notice and shall be
registered in the name of the Holder. Such certificate or certificates shall be
deemed to have been issued and the Holder shall be deemed to have become a
holder of record of such shares, with the right, to the extent permitted by law,
to vote such shares or to consent or to receive notice as a stockholder, as of
the close of business on the date all of the conditions referred to in Section
2.1 are satisfied (including, without limitation, the obtaining of any requested
declaratory ruling from the Federal Communications Commission) and all of the
items specified in Section 2.2 above are delivered to the Company. If this
Warrant shall have been exercised only in part the Company shall, within two
Business Days of delivery of such certificate or certificates, deliver to the
Holder either (i) a new warrant dated the date it is issued evidencing the
rights of the Holder to purchase the remaining Warrant Shares called for by this
Warrant or (ii) this Warrant bearing an appropriate notation of such partial
exercise. The Holder shall pay all expenses, transfer taxes and other charges
payable in connection with the preparation, issuance and delivery of stock
certificates under this Section 2.
2.4 Class of Shares Issued. If the Holder is a Permitted Holder, the
Holder may elect to receive shares of Class T Common Stock or shares of Class A
Common Stock upon exercise of this Warrant. If the Holder is not a Permitted
Holder, the Company shall issue to the Holder shares of Class A Common Stock
upon exercise of this Warrant.
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<PAGE> 15
SECTION 3. TRANSFER OF WARRANT.
3.1 Restrictions on Transfer. Subject to Section 5 hereof, this
Warrant and all Warrant Shares issued hereunder may be sold, transferred,
pledged or hypothecated (collectively, "Transferred") to any third party. Any
certificate for any Warrant Shares issued hereunder shall be stamped or
otherwise imprinted with legends in substantially the form of the legends
contained on the first page hereof.
3.2 Mechanics of Transfers. Subject to satisfaction of the
conditions set forth in Section 3.1, this Warrant and all rights hereunder are
transferable, in whole or in part, on the books of the Company to be maintained
for such purpose, upon surrender of this Warrant at the office of the Company,
together with a written assignment of this Warrant duly executed by the Holder
or its agent or attorney. Upon such surrender, the Company shall execute and
deliver a new Warrant or Warrants in the name of the assignee or assignees and
in the denominations specified in such instrument of assignment, and this
Warrant shall promptly be canceled. This Warrant, if properly Transferred in
compliance with this Section 3, may be exercised by an assignee for the purchase
of Warrant Shares without having a new Warrant issued.
SECTION 4. ADJUSTMENT OF WARRANT SHARES; ANTI-DILUTION PROVISIONS.
If any of the following events occurs at any time hereafter prior to
the full exercise of this Warrant, then the Exercise Price and/or the number of
Warrant Shares remaining to be purchased hereunder immediately prior to such
event shall be adjusted as described below:
4.1 Redemptions and Repurchases. If at any time there is a pro rata
(based upon the respective number of outstanding shares of each class)
redemption or repurchase of the Class A Common Stock, Class P Common Stock,
Class T Common Stock, and Class V Common Stock, the number of Warrant Shares
remaining to be purchased hereunder shall be decreased by a percentage equal to
the percentage of Common Stock so redeemed or repurchased.
4.2 Stock Subdivisions or Stock Consolidations. If at any time the
outstanding shares of Class A Common Stock, Class P Common Stock, Class T Common
Stock, and Class V Common Stock are subdivided into a greater number of shares,
whether by stock split, stock dividend or otherwise, then the Exercise Price
will be reduced proportionately and the number of Warrant Shares remaining to be
purchased hereunder, will be increased proportionately. Conversely, if at any
time the outstanding shares of Class A Common Stock, Class P Common Stock, Class
T Common Stock, and Class V Common Stock are consolidated into a smaller number
of shares, then the Exercise Price will be increased proportionately and the
number of Warrant Shares remaining to be purchased hereunder, will be reduced
proportionately. Each adjustment to the Exercise Price and the number of Warrant
Shares shall be effective on the record
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<PAGE> 16
date, or if there is no record date, the effective date for such subdivision or
consolidation.
4.3 Consolidation, Merger or Sale of Assets. If the Company shall at
any time (i) consolidate with or merge into another corporation or (ii) merge
with another corporation and be the surviving corporation in such merger, and in
connection therewith all or part of the Class T Common Stock or Class A Common
Stock shall be changed into or exchanged for securities of any other entity or
cash or other property, the Holder of this Warrant will thereafter receive, upon
the exercise hereof in accordance with the terms hereof, the securities, cash or
other property to which the holder of the number of shares of Common Stock then
deliverable upon the exercise of this Warrant would have received upon such
consolidation or merger, and the Company shall take such steps in connection
with such consolidation or merger as may be necessary to assure that the
provisions thereof shall thereafter be applicable, as nearly as reasonably may
be, in relation to any securities or property thereafter deliverable upon the
exercise of this Warrant. The Company or the successor corporation, as the case
may be, shall execute and deliver to the Holder a supplemental Warrant so
providing. A sale of all or substantially all the assets of the Company for a
consideration (apart from the assumption of obligations) consisting primarily of
securities shall be deemed a consolidation or merger for the foregoing purposes.
The provisions of this Section 4.3 similarly shall apply to successive mergers
or consolidations or sales or other transfers.
4.4 Dividends. If the Company proposes to declare a dividend on or
make a distribution with respect to the Class T Common Stock or Class A Common
Stock, whether in cash, property or securities, the Company will deliver written
notice of such proposed event, in reasonable detail, to the Holder not less than
fifteen (15) days prior to the record date for such dividend or distribution.
4.5 Notices. When any adjustments are required to be made under this
Section 4, the Company shall as promptly as practicable (i) determine such
adjustments, (ii) prepare a statement describing in reasonable detail the method
used in arriving at the adjustment and setting forth the calculation thereof;
and (iii) cause a copy of such statement to be mailed to the Holder.
4.6 Computations and Adjustments. Upon each computation of an
adjustment under this Section 4, the Exercise Price shall be computed to the
nearest 1/1000 cent and the number of Warrant Shares shall be calculated to the
nearest whole share (i.e., fractions of less than one-half shall be disregarded
and fractions of one-half or greater shall be treated as being the next greater
integer). However, the fractional amount shall be used in calculating any future
adjustments.
SECTION 5. SECURITIES LAWS. The Holder of this Warrant, by
acceptance hereof, acknowledges that this Warrant and the Warrant Shares which
may be issued pursuant thereto have not been registered under the Securities
Act, or applicable state securities laws. The Holder of this Warrant, by
acceptance hereof, represents that it is
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<PAGE> 17
fully informed as to the applicable limitations upon any distribution or resale
of the Warrant Shares under the Securities Act or any applicable state
securities laws and agrees not to distribute or resell any Warrant Shares if
such distribution or resale would constitute a violation of the Securities Act
or any applicable state securities laws or would cause the issuance by the
Company of the Warrant or the Warrant Shares to be in violation of the
Securities Act or any applicable state securities laws. The Holder agrees that
all certificates representing Warrant Shares will carry an appropriate legend
substantially in the form of the first legend contained on the first page
hereof. Any exercise hereof by the Holder shall constitute a representation by
the Holder that the Warrant Shares are not being acquired with the view to, or
for resale in connection with, any distribution or public offering thereof in
violation of the Securities Act or applicable state securities laws.
SECTION 6. NO VOTING RIGHTS. This Warrant shall not entitle the
holder hereof to any voting rights or other rights as a stockholder of the
Company.
SECTION 7. RESERVATION OF WARRANT SHARES. The Company has reserved
and will keep available, out of the authorized and unissued shares of Common
Stock, the full number of shares sufficient to provide for the exercise of the
rights of purchase represented by this Warrant. Upon issuance and delivery
against payment pursuant to the terms of this Warrant, all Warrant Shares will
be validly issued, fully paid and nonassessable.
SECTION 8. LOSS, DESTRUCTION OF WARRANT. Upon receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of any Warrant and, in the case of any such loss, theft or
destruction, upon receipt of an indemnity satisfactory to the Company or, in the
case of any such mutilation, upon surrender and cancellation of such Warrant,
the Company will make and deliver, in lieu of such lost, stolen, destroyed or
mutilated Warrant, a new Warrant of like tenor and representing the right to
purchase the same aggregate number of shares of Common Stock.
SECTION 9. MISCELLANEOUS PROVISIONS.
9.1 Amendments. The terms of this Warrant may be amended, and the
observance of any term herein may be waived, but only with the written consent
of the Holder and the Company. If at any time this Warrant is split into
multiple Warrants, any consent to be given by the Holder with respect to any
amendment hereto shall be made by the Holders of Warrants exercisable for a
majority of the unissued Warrant Shares, provided that no amendment may change
the number of Warrant Shares or the Exercise Price without the written consent
of the Holders all Warrants.
9.2 Jurisdiction; Venue; Service of Process. The Company and the
Holder each irrevocably submits to the jurisdiction of any California State or
United
7
<PAGE> 18
States Federal court sitting in Los Angeles County in any action or proceeding
arising out of or relating to this Warrant or the transactions contemplated
hereby, and irrevocably agrees that any such action or proceeding may be heard
and determined only in such California State or Federal court. Each of the
parties irrevocably waives, to the fullest extent it may effectively do so, the
defense of an inconvenient forum to the maintenance of any such action or
proceeding. Each of the parties irrevocably appoints CT Corporation System (the
"Process Agent"), with an office on the date hereof at 818 West 7th Street, Los
Angeles, CA 90017 as his or its agent to receive on behalf of him or it and his
or its property service of copies of the summons and complaint and any other
process which may be served in any such action or proceeding. Such service may
be made by delivering a copy of such process to any of the parties in care of
the Process Agent at the Process Agent's above address, and each of the parties
irrevocably authorizes and directs the Process Agent to accept such service on
its behalf. As an alternate method of service, each of the parties consents to
the service of copies of the summons and complaint and any other process which
may be served in any such action or proceeding by the mailing or delivering of a
copy of such process to such party at its address specified in or pursuant to
Section 9.3. Each of the parties agrees that a final judgment in any such action
or proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law.
9.3 Notices. All notices and other communications required or
permitted hereunder shall be in writing, shall be deemed duly given upon actual
receipt, and shall be delivered (a) in person, (b) by registered or certified
mail (air mail if addressed to an address outside of the country in which
mailed), postage prepaid, return receipt requested, (c) by a generally
recognized overnight courier service which provides written acknowledgement by
the addressee of receipt, or (d) by facsimile or other generally accepted means
of electronic transmission (provided that a copy of any notice delivered
pursuant to this clause (d) shall also be sent pursuant to clause (b)),
addressed as follows:
(i) If to the Company:
1999 Avenue of the Stars, Suite 3050
Los Angeles, California 90067
Attn: Robert V. Cahill, Esq.
Telecopier: (310) 556-3568
with a copy to:
O'Melveny & Myers
1999 Avenue of the Stars, Suite 700
Los Angeles, California 90067
Attn: Donald V. Petroni, Esq.
Telecopier: (310) 246-6779
8
<PAGE> 19
(ii) If to the Holder:
Avenida Chapultepec No. 28
06724 Mexico, D.F.
Attn: Alejandro Sada
Telecopier: (011) (525) 709-1157
with copies to:
Univisa, Inc.
2121 Avenue of the Stars, Suite 3300
Los Angeles, California 90067
Attn: Lawrence W. Dam
Telecopier: (305) 286-1615
and
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, New York 10004-1980
Attn: Joseph A. Stern
Telecopier: (212) 747-1526
or to such other addresses as may be specified by like notice to the other
parties.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed
in its name by its President or a Vice President.
Dated: _____________, 1996
UNIVISION COMMUNICATIONS INC.
By: _______________________________
Name:
Title:
9
<PAGE> 1
EXHIBIT 11.1
UNIVISION COMMUNICATIONS INC.
CALCULATION OF PRO FORMA EARNINGS PER SHARE
FOR THE YEAR ENDED DECEMBER 31, 1995, THE SIX MONTH PERIODS ENDED JUNE 30, 1995
AND 1996 AND THE LAST TWELVE MONTHS ENDED JUNE 30, 1996
<TABLE>
<CAPTION>
PRO FORMA (UNAUDITED)
---------------------------------------------------------
YEARS ENDED THREE MONTHS ENDED LATEST TWELVE
DECEMBER 31, ------------------------ MONTHS ENDED
1995 6/30/95 6/30/96 6/30/96
------------ ---------- ---------- -------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Income before extraordinary loss on
extinguishment of debt.................... $ 7,000 $ 1,968 $ 11,057 $ 19,639
Earnings per share before extraordinary loss
on extinguishment of debt................. $0.13 $0.04 $0.20 $0.35
Weighted average common shares
outstanding............................... 55,734,501 55,734,501 55,734,501 55,734,501
========== ========== ========== ==========
</TABLE>
CALCULATION OF PRO FORMA WEIGHTED AVERAGE SHARES OUTSTANDING
<TABLE>
<CAPTION>
NUMBER OF SHARES
----------------
<S> <C>
Historical................................................................... 28,881,181
Additional Shares Issued Pursuant to the Reorganization...................... 4,335,499
----------
Total Shares Outstanding After Reorganization and Before Offering............ 33,216,680
Total Shares Issued Pursuant to the Offering................................. 8,170,000
----------
Total Shares Issued.......................................................... 41,386,680
Common Stock Equivalents(a).................................................. 14,347,821
----------
Pro Forma Weighted Average Common Shares Outstanding......................... 55,734,501
==========
</TABLE>
(a) Includes the effects of outstanding warrants to purchase 14,440,820 shares
of PCI Common Stock with an exercise price of $0.13 per share. The warrants
are considered common stock equivalents and impact primary weighted average
common shares outstanding by the number of shares issuable on exercise of
the warrants less the number of shares that could have been purchased with
the proceeds from the exercise of the warrants based on the average price of
common stock during the year. Fully diluted average number of shares
outstanding is determined in the same manner except that purchases of common
stock from the proceeds of the exercise of the warrants are assumed to have
been made at the year-end price. As there was no market for the common stock
of PCI during the periods presented, an assumed price of $20.00 (the
proposed offering price per share) was utilized for primary and fully
diluted earnings per share for all periods.
<PAGE> 1
EHIBIT 21.1
SUBSIDIARIES OF UNIVISION COMMUNICATIONS INC.
(after giving effect to the Reorganization)
PTI Holdings, Inc., a Delaware corporation
Univision Television Group, Inc., a Delaware corporation
KWEX License Partnership, G.P., a California general partnership
KUVN License Partnership, G.P., a California general partnership
KLUZ License Partnership, G.P., a California general partnership
KMEX License Partnership, G.P., a California general partnership
KDTV License Partnership, G.P., a California general partnership
KFTV License Partnership, G.P., a California general partnership
KTVW License Partnership, G.P., a California general partnership
KXLN License Partnership, G.P., a California general partnership
WGBO License Partnership, G.P., a California general partnership
WXTV License Partnership, G.P., a California general partnership
WLTV License Partnership, G.P., a California general partnership
The Univision Network Limited Partnership
Galavision, Inc.
Sunshine Acquisition, L.P.
Sunshine Acquisition Corp.
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Univision Communications Inc.:
As independent public accountants, we hereby consent to the use of our
reports and to all references to our firm included in or made a part of this
Registration Statement.
ARTHUR ANDERSEN LLP
Roseland, New Jersey
September 4, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS OF PERENCHIO COMMUNICATIONS, INC. AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<EXCHANGE-RATE> 1
<CASH> 14,156
<SECURITIES> 0
<RECEIVABLES> 41,058
<ALLOWANCES> 4,672
<INVENTORY> 0
<CURRENT-ASSETS> 53,161
<PP&E> 45,622
<DEPRECIATION> 16,918
<TOTAL-ASSETS> 534,345
<CURRENT-LIABILITIES> 116,060
<BONDS> 474,093
0
0
<COMMON> 0
<OTHER-SE> 77,310
<TOTAL-LIABILITY-AND-EQUITY> 534,345
<SALES> 91,420
<TOTAL-REVENUES> 91,420
<CGS> 16,365
<TOTAL-COSTS> 16,365
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,132
<INTEREST-EXPENSE> 20,300
<INCOME-PRETAX> 1,395
<INCOME-TAX> 500
<INCOME-CONTINUING> 895
<DISCONTINUED> 0
<EXTRAORDINARY> (681)
<CHANGES> 0
<NET-INCOME> 214
<EPS-PRIMARY> .03
<EPS-DILUTED> 0
</TABLE>
<PAGE> 1
EXHIBIT 99.1
CONSENT OF ALTERNATE DIRECTOR
To Univision Communications Inc.:
I hereby consent to the use of my name as alternate director in this
Registration Statement on Form S-1 of Univision Communications Inc.,
registration number 333-6309.
_______,1996
/s/ Alejandro Rivera
--------------------------------
Alejandro Rivera
<PAGE> 1
EXHIBIT 99.2
CONSENT OF ALTERNATE DIRECTOR
To Univision Communications Inc.:
I hereby consent to the use of my name as alternate director in this
Registration Statement on form S-1 of Univision Communications Inc.,
registration number 333-6309.
__________,1996
/s/ Emilio Romano
-----------------------------------------------
Emilio Romano
