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EXHIBIT 2.4
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ACQUISITION AGREEMENT AND PLAN OF MERGER
by and among
Entravision Communications Corporation,
Entravision Communications Company, L.L.C.,
ZSPN Acquisition Corporation,
Z-Spanish Media Corporation and its Stockholders
dated
April 20, 2000
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ACQUISITION AGREEMENT AND PLAN OF MERGER
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This Acquisition Agreement and Plan of Merger (the "Agreement") is entered
as of April 20, 2000 (the "Execution Date") by and among Entravision
Communications Corporation, a Delaware corporation (the "Corporation") and
Entravision Communications Company, L.L.C., a Delaware limited liability company
(the "Company") (with the Corporation and the Company collectively referred to
herein at times as "Entravision"), and ZSPN Acquisition Corporation, a Delaware
corporation ("Acquisition Co."), on the one hand, and Z-Spanish Media
Corporation, a Delaware corporation ("ZSPN"), and the individuals and entities
set forth on the signature pages hereto, who are stockholders of ZSPN owning
approximately seventy-nine percent (79%) of the issued and outstanding shares of
common stock of ZSPN as of the Execution Date (the "Major Stockholders"), on the
other hand, with respect to the following facts:
WHEREAS, the Company is a Delaware limited liability company principally
engaged in the ownership and operation of television and radio stations (the
"Entravision Media Properties").
WHEREAS, the Corporation is a Delaware corporation which has been formed to
consummate the IPO (as defined below) and will become successor-in-interest to
the Company in connection with the Roll-Up (as defined below).
WHEREAS, Acquisition Co. is a Delaware corporation formed by Entravision
for the purpose of effecting the Merger (as defined below) contemplated by this
Agreement, with authorized capital stock consisting of 1,000 shares of Common
Stock, $0.001 par value per share, of which 1,000 shares are duly and validly
issued and outstanding, and all of which shares are held by Entravision as of
the date hereof.
WHEREAS, ZSPN is a duly incorporated Delaware corporation that owns and
operates the radio stations (the "Radio Stations"), the outdoor advertising
properties (the "Outdoor Business") and the Internet sites (the "Internet
Sites") listed on Schedule "A" attached hereto and incorporated herein by this
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reference, with authorized capital stock consisting of 62,010,000 shares of
Common Stock, $0.01 par value per share, of which 29,635,454 shares are duly
authorized, issued and outstanding, and all of which are held by the
Stockholders as of the date hereof.
WHEREAS, the Executive Committee of the Company and the respective Boards
of Directors of the Corporation, Acquisition Co. and ZSPN and a majority of the
stockholders of ZSPN have approved the merger of Acquisition Co. with and into
ZSPN pursuant to applicable Delaware law and the terms and conditions of this
Agreement (the "Merger").
WHEREAS, the Merger and the Roll-Up is intended to qualify under Section
351(a) of the IRC (as such term is defined below).
WHEREAS, the parties hereto desire to make certain representations,
warranties and agreements in connection with the Merger and also to prescribe
certain conditions with respect thereto.
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NOW, THEREFORE, in consideration of the mutual covenants herein contained,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged by each signatory hereto, the parties hereto
covenant and agree as follows:
ARTICLE 1.
DEFINITIONS
For purposes of this Agreement, the following terms shall have the
following meanings:
1.1 "Applicable Entravision Contract" means any Contract (as defined
below) under which Entravision or the Entravision Subsidiaries (as defined
below) has any material rights or have become subject to any material obligation
or liability or by which Entravision, the Entravision Subsidiaries or any of the
material assets owned or used by them are bound.
1.2 "Applicable ZSPN Contract" means any Contract (as defined below) under
which ZSPN or the ZSPN Subsidiaries (as defined below) has any material rights
or have become subject to any material obligation or liability or by which ZSPN,
the ZSPN Subsidiaries or any of the material assets owned or used by them are
bound.
1.3 "Approved ZSPN Acquisition" means any acquisitions of a radio station
or television station by ZSPN after the Execution Date and before the Closing
which receives the prior written approval of Entravision, which approval shall
not be unreasonably withheld.
1.4 "Bank of Montreal Credit Facilities" shall mean all amounts due
pursuant to revolving credit facilities or term facilities of ZSPN, Vista Media
Group, Inc. or any other ZSPN Subsidiary with the Bank of Montreal as the lender
or agent.
1.5 "Best Efforts" means the efforts that a prudent Person (as defined
below) desirous of achieving a result would use in similar circumstances to
ensure that such result is achieved as expeditiously as possible.
1.6 "Breach" means a breach of a representation, warranty, covenant,
obligation or other provision of this Agreement or any instrument delivered
pursuant to this Agreement and will be deemed to have occurred if there is or
has been any material inaccuracy in or material breach of, or any material
failure to perform or comply with, such representation, warranty, covenant,
obligation or other provision.
1.7 "Cash Consideration" shall have the meaning set forth in Section 2.7
of this Agreement.
1.8 "Certificate" shall have the meaning set forth in Section 3.2 of this
Agreement.
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1.9 "Certificate of Merger" means the Certificate of Merger to be filed
with the Delaware Secretary of State to perfect the Merger, substantially in the
form attached hereto as Exhibit "A" and incorporated herein by this reference.
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1.10 "City National Bank/Union Bank Credit Facilities" shall mean all
amounts due pursuant to revolving credit facilities or term facilities of ZSPN
or the ZSPN Subsidiaries with respect to which City National Bank and/or Union
Bank of California are the lenders or agents.
1.11 "Closing" shall have the meaning set forth in Section 3.1 of this
Agreement.
1.12 "Closing Date" means the date and time as of which the Closing (as
defined below) actually takes place.
1.13 "Confidential Information" means information of substantial value
regarding the Radio Stations, the Outdoor Business, the Internet Sites and the
Entravision Media Properties, which is not generally known and which gives
Entravision and ZSPN or their respective Subsidiaries an advantage over
competitors who do not know it, including, without limitation, computer
programs, names and expertise of employees and consultants, know-how, trade
secrets, formulae, processes, ideas, inventions and other sales, business,
financial, customer product developments, plans, lists, forecasts, strategies
and information of Entravision and ZSPN and their respective Subsidiaries, but
shall not include information which is (i) generally or readily obtainable by
the public or the trade, or (ii) publicly known or becomes known, through no
fault or activity of the Stockholders or the other parties hereto.
1.14 "Confidentiality Agreement" shall have the meaning set forth in
Section 7.1 of this Agreement.
1.15 "Consent" means any approval, consent, ratification, waiver or other
authorization (including the FCC Consent (as defined below), the expiration or
termination of the applicable waiting period required under the HSR Act (as
defined below) and any other necessary Governmental Authorization (as defined
below).
1.16 "Contemplated Transactions" means (i) the Merger, (ii) the execution,
delivery and performance of the Noncompetition Agreements (as defined below)
(iii) the execution, delivery and performance of the Investor Rights Agreement,
(iv) the filing of the Certificate (if required), and (v) the performance by the
parties hereto of their respective covenants and obligations under this
Agreement.
1.17 "Contract" means any material agreement, contract, obligation,
promise or undertaking (whether written or oral and whether express or implied)
that is legally binding, but excluding the Real Property Leases and Outdoor
Leases.
1.18 "Delaware Code" means the Delaware General Corporation Law, as
amended.
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1.19 "Dissenting Shares" shall have the meaning set forth in Section 2.10
of this Agreement.
1.20 "Employee Benefit Plan" means any "employee benefit plan" as defined
in Section 3(3) of ERISA (as defined below) of either ZSPN or Entravision or
their respective Subsidiaries and any other material plan, policy, program,
practice or arrangement providing compensation or other benefits to any current
or former officer or employee of either ZSPN or Entravision or any of their
respective Subsidiaries or any beneficiary or dependent thereof that is or was
maintained by either ZSPN or Entravision or any of their respective
Subsidiaries.
1.21 "Encumbrances" means any and all material encumbrances, charges,
claims, penalties, community property interests, conditions, equitable
interests, liens, options, pledges, security interests or rights of first
refusal, other than Permitted Encumbrances (as defined below).
1.22 "Entravision Equity Value" means Eight Hundred Ten Million Dollars
($810,000,000.00).
1.23 "Entravision Financial Statements" means (i) the audited balance
sheets of Entravision as of December 31, 1999, and the related statements of
income and cash flows for the period then ended (including notes thereto),
included in the Registration Statement as audited by McGladrey & Pullen, L.L.P.
certified public accountants.
1.24 "Entravision Fully-Diluted Shares" means the fully-diluted shares of
Common Stock of Entravision Communications Corporation outstanding immediately
prior to the closing of the Merger and immediately after issuance of shares of
Class A, Class B and Class C Common Stock of the Corporation in the Roll-Up
(including upon exchange of the subordinated note currently held by Univision
Communications Inc.), but excluding any shares issued in exchange for the 80,168
Class D units issued prior to the Execution Date by the Company to employees,
directors or consultants of the Company.
1.25 "Entravision Material Adverse Effect" means one or more events,
occurrences, facts, conditions, changes or effects which cumulatively have a
material adverse effect on the assets, liabilities or properties of Entravision
and the Entravision Subsidiaries collectively, excluding matters affecting the
broadcasting or print industries generally and excluding general economic
conditions.
1.26 "Entravision Media Properties" shall have the meaning set forth in
the recitals to this Agreement.
1.27 "Entravision Share Consideration" means the Entravision Equity Value
divided by the number of Entravision Fully-Diluted Shares.
1.28 "Entravision Subsidiary" means any direct or indirect subsidiary of
Entravision.
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1.29 "Entravision Subsidiary Shares" shall have the meaning set forth in
Section 5.5(b) of this Agreement.
1.30 "Environmental Clean-Up Amount" shall have the meaning set forth in
Section 7.14 of this Agreement.
1.31 "Environmental Law(s)" means all federal, state and local laws,
statutes, common law duties, rules, regulations, ordinances and codes, together
with all administrative orders, directives, requests, licenses, authorizations,
permits and agreements issued or signed by any federal, state or local
government authority, relating to environmental, health or safety matters,
including, without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, the Clean Water Act of 1977, the Clean
Air Act, the Resource Conservation and Recovery Act of 1976, the Federal
Insecticide, Fungicide and Rodenticide Act, the Toxic Substances Control Act,
the Emergency Planning and Community Right-to-Know Act of 1986, the Occupational
Safety and Health Act of 1970 and the Safe Drinking Water Act, and state and
local counterparts to such acts.
1.32 "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, or any successor law, and the rules and regulations issued pursuant to
that act or any successor law.
1.33 "Exchange Agreement" shall mean that certain Exchange Agreement of
even date herewith by and among the Company, its members and Univision
Communications Inc. attached hereto as Exhibit "B" attached hereto and
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incorporated herein by this reference.
1.34 "Exchange Ratio" shall have the meaning set forth in Section 2.8(b)
of this Agreement.
1.35 "Existing Employment Agreements" shall mean all existing employments
agreement or arrangements by and between ZSPN or any of the ZSPN Subsidiaries
and Amador S. Bustos, John Bustos and Glenn Emanuel through and including the
Closing.
1.36 "FCC" means the Federal Communications Commission, or any successor
agency.
1.37 "FCC Consent" means the written consent to the assignment of FCC
licenses held by ZSPN (or any of the ZSPN Subsidiaries, as the case may be) from
ZSPN (or any of the ZSPN Subsidiaries, as the case may be) to Holdings.
1.38 "Final Order" means an order, action or decision of the FCC that has
not been reversed, stayed, enjoined, annulled or suspended and as to which (i)
no timely request for stay, appeal, petition for reconsideration, application
for review or reconsideration by the FCC on its own motion is pending and (ii)
the time for filing any such request, appeal, petition or application or for
reconsideration by the FCC on its own motion, has expired.
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1.39 "GAAP" means generally accepted accounting principles, applied on a
consistent basis.
1.40 "Governmental Authorization" means any material approval, consent,
license, permit, waiver or other authorization issued, granted, given or
otherwise made available by or under the authority of the FCC, any Governmental
Body or pursuant to any Legal Requirement, each as defined below.
1.41 "Governmental Body" means (i) any nation or state, (ii) any federal,
state or foreign government, (iii) any federal, state or foreign governmental or
quasi-governmental authority of any nature (including any governmental agency,
branch, department or entity and any court or other tribunal), (iv) any federal,
state or foreign body exercising, or entitled to exercise, any administrative,
executive, judicial, legislative, police, regulatory or taxing authority or (v)
the FCC.
1.42 "Hazardous Substance(s)" means (i) any substance, the presence of
which requires investigation or remediation under any Environmental Law or under
common law, (ii) any dangerous, toxic, explosive, corrosive, flammable,
infectious, radioactive, carcinogenic, mutagenic or otherwise hazardous
substance which is regulated by any Environmental Law, (iii) any substance, the
presence of which causes or threatens to cause a nuisance upon property
presently and/or previously owned, leased or otherwise used by the Sellers (or
poses or threatens to pose a hazard to the health or safety of persons on or
about the property or adjacent properties) and (iv) radon, ureaformaldehyde,
polychlorinated biphenyls, asbestos or asbestos-containing materials, petroleum
and petroleum products.
1.43 "Holdings" shall mean Entravision Holdings, L.L.C., a California
limited liability company and wholly-owned subsidiary of Entravision and its
managing members or any successors thereto.
1.44 "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
1.45 "Indebtedness" means all amounts due pursuant the City National
Bank/Union Bank Credit Facilities and the Bank of Montreal Credit Facilities,
with respect to ZSPN, and the secured credit facilities with Union Bank of
California, with respect to Entravision.
1.46 "Interim Closing" shall have the meaning set forth in Section 3.2 of
this Agreement.
1.47 "Interim Closing Deadline" shall have the meaning set forth in
Section 3.2 of this Agreement.
1.48 "Internet Sites" shall have the meaning set forth in the recitals to
this Agreement.
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1.49 "Investor Rights Agreement" means the Investor Rights Agreement,
substantially in the form attached hereto as Exhibit "C" and incorporated herein
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by this reference.
1.50 "IPO" means the underwritten initial public offering of Class A
Common Stock by Entravision Communications Corporation.
1.51 "IRC" means the Internal Revenue Code of 1986, as amended, or any
successor law, and the rules and regulations issued by the IRS (as defined
below) pursuant to the IRC or any successor law.
1.52 "IRS" means the United States Internal Revenue Service, or any
successor agency, and, to the extent relevant, the United States Department of
the Treasury.
1.53 "Knowledge" means with respect to a party, the actual knowledge of
such party and its Subsidiaries after reasonable inquiry of such party and its
Subsidiaries, directors and officers who could reasonably be expected to have
knowledge of such matters.
1.54 "Legal Requirement" means any material FCC, federal, state or foreign
order, law, ordinance, regulation or statute.
1.55 "Liabilities" means, as to any Person, all material liabilities,
debts and obligations to pay money, direct, indirect, absolute, contingent or
otherwise, of such Person, whether accrued, vested or otherwise, whether in
Contract, tort, strict liability or otherwise and whether or not actually
reflected, or required by the federal income tax method of accounting to be
reflected, in such Person's balance sheets or other books and records.
1.56 "Major Stockholder" shall mean each of Z-Spanish Media Holdings, LLC,
TSG Associates II, Inc., TSG Associates III, LLC, TSG Capital Fund III, L.P.,
TSG Ventures, L.P., TSG Capital Fund II, L.P., Amador S. Bustos, Salvador H.
Campos, John S. Bustos, Glenn Emanuel, Arthur Rockwell and Bustos Asset
Management, LLC.
1.57 "Material Consent" shall have the meaning set forth in Section 4.2 of
this Agreement.
1.58 "Material Environmental Compliance" shall have the meaning set forth
in Section 7.14 of this Agreement.
1.59 "Merger" shall be as defined in the recitals to this Agreement.
1.60 "Noncompetition Agreement(s)" means the Noncompetition Agreement to
be executed by each of Amador S. Bustos, John Bustos and Glenn Emanuel,
substantially in the form attached hereto as Exhibit "D" and incorporated herein
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by this reference.
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1.61 "Option Roll-Over Amount" means the aggregate amount of shares of
Class A Common Stock of Entravision subject to options substituted for ZSPN
Options pursuant to Section 9.3 below, multiplied by the Entravision Share
Consideration less an amount equal to the aggregate amount payable to
Entravision upon exercise of all such substituted options.
1.62 "Order" means any material award, decision, injunction, judgment,
order, ruling, subpoena or verdict entered, issued, made or rendered by any
court, administrative agency or other Governmental Body or by any arbitrator.
1.63 "Ordinary Course of Business" means an action taken by a Person will
be deemed to have been taken in the "Ordinary Course of Business" only if (i)
such action is consistent with the past practices of such Person and is taken in
the ordinary course of the normal day-to-day operations of such Person, (ii)
such action is not required to be authorized by the board of directors of such
Person (or by any Person or group of Persons exercising similar authority) and
(iii) such action is similar in nature and magnitude to actions customarily
taken, without any authorization by the board of directors of such Person (or by
any Person or group of Persons exercising similar authority), in the ordinary
course of the normal day-to-day operations of other Persons that are in the same
line of business as such Person.
1.64 "Organizational Documents" means (i) the articles or certificate of
incorporation and the bylaws of a corporation, (ii) the partnership agreement
and any statement of partnership of a general partnership, (iii) the limited
partnership agreement and the certificate of limited partnership of a limited
partnership, (iv) the articles of organization or certificate of formation and
the operating agreement of a limited liability company, (v) any charter or
similar document adopted or filed in connection with the creation, formation or
organization of a Person or (vi) any amendment to any of the foregoing.
1.65 "Outdoor Business" shall have the meaning set forth in the recitals
to this Agreement.
1.66 "Outdoor Leases" shall mean all leases for bulletins, billboards and
other outdoor advertising space and facilities.
1.67 "Per Share Cash Merger Consideration" shall have the meaning set
forth in Section 2.8(b) of this Agreement.
1.68 "Permitted Encumbrances" means Encumbrances (i) set forth on either
party's Schedules, (ii) liens for Taxes, assessments and other governmental
charges not yet due and payable or being contested in good faith by appropriate
proceedings and (iii) Encumbrances created by FCC licenses or other Governmental
Authorizations.
1.69 "Person" means any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union or other entity
or Governmental Body.
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1.70 "Proceeding" means any material action, litigation, arbitration,
formal mediation, bankruptcy, or suit (whether civil, criminal or
administrative) commenced, brought, conducted or heard by or before, or
otherwise involving, any Governmental Body or arbitrator.
1.71 "Radio Stations" shall have the meaning set forth in the recitals to
this Agreement.
1.72 "Real Property" means all of the land, buildings, plants, facilities,
installations, fixtures and other structures and improvements owned by either
party, which in any case is material to the operations of such party.
1.73 "Real Property Leases" shall mean, collectively, any material written
real property leases other than Outdoor Leases to which either Entravision or
ZSPN or any of their respective Subsidiaries is a party.
1.74 "Registration Statement" shall mean the Corporation's most recent
draft registration statement on Form S-1 prepared prior to the date of this
Agreement in connection with the IPO which has been made available to the
Stockholders and their counsel.
1.75 "Related Person" means an "affiliate" (as such term is defined in the
rules promulgated under the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) of a Person.
1.76 "Release" means the Release substantially in the form attached hereto
as Exhibit "E" and incorporated herein by this reference.
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1.77 "Representative" means with respect to a particular Person, any
director, officer, employee, agent, consultant, advisor or other representative
of such Person, including legal counsel, accountants and financial advisors.
1.78 "Restricted Business" shall have the meaning set forth in Section 9.2
of this Agreement.
1.79 "Roll-Up" means the closing of the transactions in accordance with
the Exchange Agreement.
1.80 "Schedules" means the schedules attached hereto and incorporated
herein by this reference relating to the representations and warranties of the
parties hereto.
1.81 "Securities Act" means the Securities Act of 1933, as amended, or any
successor law, and the rules and regulations issued pursuant to that act or any
successor law.
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1.82 "Shares" means all of the issued and outstanding Common Stock of
ZSPN.
1.83 "Stock Consideration Value" shall have the meaning set forth in
Section 2.7 of this Agreement.
1.84 "Stockholders" shall mean all of the stockholders of ZSPN.
1.85 "Stockholders Agreement" shall mean that certain Third Amended and
Restated Stockholders Agreement dated as of December 31, 1999 by and between
ZSPN and certain of its stockholders, as amended.
1.86 "Stockholder Notice" shall have the meaning set forth in Section 2.10
of this Agreement.
1.87 "Subsidiary(ies)" means any corporation, limited liability company or
other entity with respect to which a specified Person (or a Subsidiary thereof)
owns a majority of the Common Stock or other equity ownership interest or has
the power to vote or direct the voting of sufficient securities to elect a
majority of the directors, managing members or managers.
1.88 "Subsidiary Shares" shall have the meaning set forth in Section
4.6(b) of this Agreement.
1.89 "Surviving Corporation" means ZSPN as the surviving corporation
following the Merger.
1.90 "Tax(es)" means taxes of any kind, accrued or accruing, including any
and all federal, state or local taxes, charges, fees, levies or other
assessments of any nature whatsoever (including, without limitation, all net
income, gross income, gross receipts, sales, use, ad valorem, transfer,
franchise, profits, license, withholding, payroll, employment, excise,
estimated, severance, stamp, occupation, property or other taxes, customs,
duties, fees, assessments or charges of any kind whatsoever) together with any
interest and any penalties, additions to tax or additional amounts imposed by
any taxing authority (domestic or foreign) upon the entity to which reference is
being made or any affiliate thereof or upon any consolidated, combined or
unitary group of which any such entity is or was a member, and any and all
protest expenses (of any nature whatsoever) incurred in connection therewith.
1.91 "Tax Return" means any return (including any information return),
report, statement, schedule, notice, form or other document or information filed
with or submitted to, or required to be filed with or submitted to, any
Governmental Body in connection with the determination, assessment, collection
or payment of any Tax or in connection with the administration, implementation
or enforcement of or compliance with any Legal Requirement relating to any Tax.
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1.92 "Termination Payments" shall mean, subject to the agreement of even
date herewith among Entravision and ZSPN (the "Termination Payment Agreement")
all accrued bonuses, termination payments, severance payments, "stay" bonuses
and similar amounts payable to any director, employee or consultant of ZSPN or
the ZSPN Subsidiaries and attributable to periods prior to the Closing or as a
result of the consummation of the Contemplated Transactions (including, without
limitation, approximately Four Hundred Ninety Five Thousand Dollars ($495,000)
of bonuses accrued as of May, 1998). Certain mechanics of payment hereunder are
subject to the Termination Payment Agreement.
1.93 "Threatened" means a claim, Proceeding, dispute or other matter will
be deemed to have been "Threatened" if any demand or statement has been made in
writing or any notice has been given in writing.
1.94 "TSG" shall mean TSG Associates II, Inc., TSG Associates III, LLC,
TSG Capital Fund III, L.P., TSG Ventures, L.P., TSG Capital Fund II, L.P. and
all successors thereto.
1.95 "TSG Loan" shall mean amounts advanced by Z-Spanish Media Holdings
L.L.C. to ZSPN in the aggregate amount of Nine Hundred Forty-Six Thousand Forty-
Five Dollars ($946,045) and any interest payable thereon prior to the Closing.
1.96 "Units" shall have the meaning set forth in Section 5.4(b) of this
Agreement.
1.97 "Univision" shall mean Univision Communications Inc.
1.98 "ZSPN Equity Consideration" shall have the meaning set forth in
Section 2.7 of this Agreement.
1.99 "ZSPN Financial Statements" means (i) the audited balance sheets of
ZSPN as of December 31, 1999, and the related statements of income and cash
flows for the period then ended as compiled by Deloitte & Touche LLP, certified
public accountants, and the unaudited balance sheets of ZSPN as of February 29,
2000, and the related statements of income and cash flows for the period then
ended (including notes thereto).
1.100 "ZSPN Material Adverse Effect" means one or more events,
occurrences, facts, conditions, changes or effects which cumulatively have a
material adverse effect on the assets, liabilities or properties of ZSPN and the
ZSPN Subsidiaries collectively, excluding matters affecting the broadcasting or
outdoor advertising industries generally and excluding general economic
conditions.
1.101 "ZSPN Options" means all options to acquire shares in ZSPN
outstanding pursuant to the terms of the ZSPN 1999 Stock Incentive Plan as of
the Closing.
1.102 "ZSPN Outstanding Shares" means the fully-diluted shares of Common
Stock of ZSPN outstanding immediately prior to the closing of the Merger,
excluding the ZSPN Options.
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1.103 "ZSPN Representatives" shall have the meaning set forth in Section
2.9(b) of this Agreement.
1.104 "ZSPN Share Consideration" means ZSPN Equity Consideration divided
by the number of ZSPN Outstanding Shares.
1.105 "ZSPN Subsidiary" means any direct or indirect Subsidiary of ZSPN.
ARTICLE 2.
MERGER
2.1 Merger. Subject to the terms and conditions hereof, the Merger
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shall be consummated in accordance with the Delaware Code. Effective as of
Closing, subject to the terms and conditions of this Agreement and in accordance
with the applicable laws of the State of Delaware, Acquisition Co. shall be
merged with and into ZSPN, which shall be the Surviving Corporation.
2.2 Execution of Certificate of Merger. At the Closing, ZSPN shall
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execute the Certificate of Merger, and counsel for Entravision shall cause the
Certificate of Merger to be delivered to the Delaware Secretary of State for
filing. The time of acceptance by the Secretary of State of Delaware of such
filing shall be referred to herein as the "Effective Time."
2.3 Effect of the Merger. The Merger shall have the effects set forth
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in Section 259 of the Delaware Code.
2.4 Certificate of Incorporation; Bylaws. As of the Effective Time, the
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Certificate of Incorporation of ZSPN, as amended by the Certificate of Merger,
shall be the Certificate of Incorporation of the Surviving Corporation and the
Bylaws of Acquisition Co. shall be the Bylaws of the Surviving Corporation.
2.5 Directors. The directors of Acquisition Co. as of the Effective Time
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shall be the directors of the Surviving Corporation and the existing directors
of ZSPN shall resign effective as of the Effective Time.
2.6 Officers. The officers of the Surviving Corporation as of the
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Effective Time shall be the officers of Acquisition Co., and the existing
officers of ZSPN shall resign effective as of the Effective Time.
2.7 Acquisition Consideration. The aggregate consideration to be paid
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in the Merger for the Shares shall be an amount equal to Three Hundred Sixty-Six
Million Three Hundred Twenty-Nine Thousand Eight Hundred Eighty-Three Dollars
($366,329,883.00) less the sum of
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(i) the Option Roll-Over Amount, (ii) the Termination Payments (the "ZSPN Equity
Consideration") and (iii) the TSG Loan. The ZSPN Equity Consideration shall be
paid as follows: (i) seventy percent (70%) of the ZSPN Equity Consideration in
cash (the "Cash Consideration Value"), plus (ii) thirty percent (30%) of the
ZSPN Equity Consideration in newly issued Entravision Class A Common Stock (the
"Stock Consideration Value"). Notwithstanding the foregoing, the Cash
Consideration Value shall be reduced on a dollar-for-dollar basis for all
amounts of ZSPN Indebtedness in excess of One Hundred Eight Million Six Hundred
Seventy Thousand One Hundred Seventeen Dollars ($108,670,117.00) incurred by
ZSPN after receipt of Entravision's written consent pursuant to Section 7.2
below and not repaid prior to the Closing. The number of newly issued shares of
Class A Common Stock issued as the Stock Consideration Value shall be the Stock
Consideration Value divided by the Entravision Share Consideration.
2.8 Conversion of Shares. At the Effective Time, by virtue of the Merger
--------------------
and without any action on the part of any party:
(a) Each share of Common Stock, $0.001 par value per share, of
Acquisition Co. issued and outstanding immediately prior to the Closing Date
shall remain outstanding and shall represent one share of Common Stock, $0.001
par value per share, of the Surviving Corporation, so that from and after the
Closing Date, Entravision shall be the holder of all of the issued and
outstanding shares of the Common Stock of the Surviving Corporation.
(b) Each of the Shares issued and outstanding immediately prior to the
Effective Time (other than the Dissenting Shares) will be cancelled and
extinguished and be converted automatically into the right to receive (i) cash
in an amount equal to the Cash Consideration Value divided by the number of ZSPN
Outstanding Shares (the "Per Share Cash Merger Consideration") and (ii) an
amount equal to (A) the Stock Consideration Value divided by the Entravision
Share Consideration, divided by (B) the number of ZSPN Outstanding Shares (the
"Exchange Ratio") of fully paid and non-assessable shares of Entravision Class A
Common Stock, upon surrender of the certificate representing such Shares of ZSPN
Common Stock in the manner provided for in Section 2.9 below, provided, however,
that Entravision acknowledges and agrees that the Stockholders will receive the
Cash Consideration Value and the Stock Consideration Value in different
proportions as mutually agreed upon by all such Stockholders. All illustration
of the above calculation is attached hereto as Annex I.
-------
(c) The Exchange Ratio shall be adjusted to reflect fully the effect
of any stock split, reverse split, stock dividend (including any dividend or
distribution of securities convertible into Entravision Class A Common Stock),
recapitalization or other like change without the receipt of consideration with
respect to Entravision Class A Common Stock occurring after the date hereof and
prior to the Closing Date.
(d) No certificate representing fractional shares of Entravision Class
A Common Stock shall be issued upon the surrender for exchange of the Shares,
and such fractional share interests will not entitle the owner thereof to vote
or have any rights of a
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<PAGE>
stockholder of Entravision. Notwithstanding any of the provisions of this
Agreement, each holder of shares of ZSPN Common Stock exchanged pursuant to the
Merger who would have otherwise been entitled to receive a fraction of a share
of Entravision Class A Common Stock (after taking into account all certificates
delivered by such holder) shall receive, in lieu thereof, cash (without
interest) in an amount equal to such fractional share of Entravision Class A
Common Stock multiplied by the Entravision Share Consideration.
(e) As soon as practicable, ZSPN shall deliver to Entravision a
certificate setting forth the allocation of the Cash Consideration Value and the
Stock Consideration Value among the Stockholders. Prior to the Closing,
Entravision shall deliver to ZSPN a certificate setting forth the Entravision
Fully-Diluted Shares.
(f) On or before the Closing, Entravision and ZSPN shall mutually
prepare and agree upon a schedule calculating the exact amount of the ZSPN
Equity Consideration, Cash Consideration Value, Stock Consideration Value,
Entravision Share Consideration and the Option Roll-Over Amount. In the event
that Entravision and ZSPN do not agree with each of the exact amounts specified
above, Entravision and ZSPN shall submit such dispute and all working papers
prepared in connection with their respective calculations to Arthur Andersen
LLP, in Los Angeles, California, and the determination of such accounting firm
will be set forth in writing by Arthur Andersen LLP, as soon as practicable and
will be conclusive and binding upon the parties.
(g) As of the Effective Time, all then outstanding options to purchase
ZSPN Common Stock issued under the ZSPN 1999 Stock Incentive Plan, as amended,
not exercised as of the Effective Time will be substituted for options under the
Entravision Communications Corporation 2000 Omnibus Equity Incentive Plan in
accordance with Section 9.3 below.
2.9 Exchange Procedures.
-------------------
(a) Subject to the allocation of Cash Consideration Value and Stock
Consideration Value among the Stockholders in accordance with the certificate
referred to in the first sentence of Section 2.8(e), Each holder of a
Certificate (as defined in Section 2.9(b) below) which immediately prior to the
Effective Time represented Shares will be entitled to receive (subject to any
adjustment required by Section 2.8(b)), upon surrender to the ZSPN
Representatives (as defined in Section 2.9(b) below) of such Certificate for
cancellation, and in accordance with the terms of this Agreement, (i) cash in an
amount equal to the product of the number of Shares previously represented by
such Certificate multiplied by the Per Share Cash Merger Consideration and (ii)
Class A Common Stock of Entravision in an amount equal to the product of the
number of Shares previously represented by such certificate multiplied by the
Exchange Ratio. All payments to holders of Certificates shall be subject to any
required withholding of taxes. No interest shall accrue or be paid on the cash
payable upon the surrender of Certificates. Neither the ZSPN Representatives
nor any party hereto shall be liable to a holder of Shares for any cash or
interest thereon delivered to a public official pursuant to any applicable
abandoned property, escheat or similar laws.
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<PAGE>
(b) The ZSPN Representatives shall be Amador S. Bustos and Darryl B.
Thompson (the "ZSPN Representatives"). At the Closing (or, if later, at the
time of delivery of the applicable stock certificate(s)) Entravision will, as
directed by the ZSPN Representatives, pay by wire transfer of immediately
available funds (in the case of the Cash Consideration Value) or deliver (in the
case of the Stock Consideration Value) for exchange in accordance with this
Section 2.9, the Cash Consideration Value and the Stock Consideration Value in
the form of shares of Entravision Class A Common Stock upon delivery to
Entravision of the stock certificate(s) (a "Certificate(s)") pursuant to Section
3.4(a) below, which immediately prior to the Effective Time represented the
number of Shares held by such Stockholder. Notwithstanding the foregoing, all
parties acknowledge and agree that Entravision will withhold from the Cash
Consideration Value otherwise payable pursuant to this Section 2.9(b), an amount
equal to the principal and all accrued interest due pursuant to the loans from
ZSPN or a ZSPN Subsidiary to each of John Vuko and Peter Davidson, with the
amount so withheld to be applied to the payment in full of such loans pursuant
to Section 3.4(f).
2.10 Termination Payments. At the Closing Entravision will, as directed
--------------------
by the ZSPN Representatives, fund by wire transfer of immediately available
funds all of the Termination Payments to be paid to ZSPN employees entitled
thereto by the ZSPN Representatives on behalf of ZSPN and its Subsidiaries.
2.11 TSG Loan. At the Closing or thereafter Entravision will, as directed
--------
by the ZSPN Representatives, fund by wire transfer or immediately available
funds the amount of the TSG Loan to be repaid to TSG by the ZSPN Representatives
on behalf of ZSPN.
2.12 Appraisal Rights. Subject to compliance with the terms of the
----------------
Stockholders Agreement, including, without limitation, Section 3.5 providing TSG
the right to compel sale of the Shares in certain instances, and notwithstanding
any provision of this Agreement to the contrary, any Shares that are held
immediately prior to the Closing Date by a holder who has neither voted in favor
of the Merger nor consented thereto in writing and who has demanded and
perfected the right, if any, for appraisal of such Shares within twenty (20)
days after the date of mailing of notice to such holder of the effective date of
the Merger (the "Stockholder Notice") in accordance with the provisions of
Section 262 of the Delaware Code and has not withdrawn or lost such right to
such appraisal ("Dissenting Shares") shall not be converted into or represent a
right to receive an allocable portion of the ZSPN Merger Consideration
represented thereby, but the holder of such Shares shall only be entitled to
such appraisal rights as are granted by the Delaware Code. If a holder of
Shares who demands appraisal of such Shares under the Delaware Code shall
thereafter effectively withdraw or lose (through failure to perfect or
otherwise) the right to appraisal with respect to such Shares, then, as of the
occurrence of such event, such Shares shall be deemed to have been converted
into and represent only the right to receive such Shares' allocable portion of
the ZSPN Merger Consideration, without interest, upon the surrender of the
Certificate or Certificates representing such Shares and upon delivery of a duly
executed Letter of Transmittal. In accordance with the provisions of Sections
228(d) and 262(d)(2) of the Delaware Code, not later than the third (3rd)
business day following the Closing Date, the
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<PAGE>
Surviving Corporation shall mail the Stockholder Notice to all holders of
Certificates which were not previously surrendered to the ZSPN Representatives.
2.13 Closing of Transfer Books. From and after the Effective Time, the
-------------------------
stock transfer books of ZSPN shall be closed and no transfer of ZSPN Common
Stock shall thereafter be made.
2.14 FCC Licenses, Permits and Authorizations. The parties hereto
----------------------------------------
acknowledge and agree that, in connection with the FCC Consent, Entravision
shall assign all of its right, title and interest in and to all FCC licenses,
permits and authorizations (and the call letters with respect thereto) held by
ZSPN and the ZSPN Subsidiaries to Holdings, and that the FCC Consent will
reflect Holdings as the assignee of the FCC licenses held by ZSPN and the ZSPN
Subsidiaries.
ARTICLE 3.
CLOSING OBLIGATIONS
3.1 Closing. The closing of the Merger provided for in this Agreement
-------
(the "Closing") will take place at the offices of Zevnik Horton Guibord McGovern
Palmer & Fognani, L.L.P. in Los Angeles, California at 10:00 a.m. (Pacific Time)
on the day on which each of the following has occurred (or is occurring
concurrently): (i) the IPO has closed, (ii) the Roll-Up has closed, (iii) the
FCC Consent becomes a Final Order and (iv) the applicable waiting period under
the HSR Act has expired or been terminated, or such date as Entravision and ZSPN
may mutually agree, or at such other time and place as Entravision and ZSPN may
mutually agree, and Entravision, Acquisition Co. and ZSPN agree to cooperate and
use their Best Efforts to close the Contemplated Transactions as soon as
practicable after the FCC Consent becomes a Final Order; provided, however, that
Entravision and ZSPN, by mutual agreement, may waive the condition to Closing
that the FCC Consent be a Final Order and, in such case, the Closing shall occur
at such time and place as the parties may mutually agree after grant of FCC
Consent and upon the occurrence of all other required conditions to closing.
Subject to the provisions of Article 11 below, failure to consummate the Merger
on the date and time and at the place determined pursuant to this section will
not result in the termination of this Agreement and will not relieve any party
of any obligation under this Agreement.
3.2 Interim Closing. If the Closing has not taken place by the Interim
---------------
Closing Deadline (as defined below) due to any reason other than failure to
satisfy the conditions set forth in Section 10.1 below, ZSPN may elect, in its
discretion, to waive the IPO as a condition to Closing and to require
Entravision to proceed, within fifteen (15) days of written notice delivered by
hand to Entravision by ZSPN, with the Closing of the Contemplated Transactions
and the closing of the Roll-Up (the "Interim Closing") on the terms set forth
herein and the Exchange Agreement with the following modifications to the
Contemplated Transactions: (i) Ninety Million Dollars ($90,000,000.00) of the
Cash Consideration Value will be paid in cash with the remaining portion of the
Cash Consideration Value payable by issuance of PIK Preferred Stock in
Entravision, which will be issued by Entravision in accordance with the terms of
the Certificate of Designation of Preferences and Rights (the "Certificate"),
substantially in the form
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<PAGE>
attached hereto as Exhibit "F" and incorporated herein by this reference, and
-----------
(ii) following the Interim Closing, Entravision, Acquisition Co. and ZSPN shall
continue to use Best Efforts to complete the IPO at the earliest practicable
time, at which time the PIK Preferred Stock of Entravision issued to the
Stockholders will be fully redeemed in accordance with the Certificate. In the
event of an Interim Closing, all references in this Agreement to the Closing
(except as expressly provided herein) shall apply to the Closing. The Interim
Closing Deadline shall mean September 30, 2000 or, if the lead underwriter in
the IPO advises ZSPN in writing on one (1) or more occasions that the marketing
of the IPO has commenced or is expected to commence in the near future and that
consummation of the Roll-Up would interfere in a material fashion or jeopardize
the consummation of the IPO, such later date or dates (but not later than
December 15, 2000) as may be specified by the lead underwriter from time to time
in order to avoid such interference.
3.3 Financial Undertaking. Upon thirty (30) days prior written notice
---------------------
from ZSPN on or after July 1, 2000, Entravision shall provide a third party
financial undertaking to ZSPN from a source reasonably acceptable to ZSPN in
form and substance reasonably acceptable to ZSPN in good faith (other than fees
and equity consideration payable or issuable, with respect to which ZSPN shall
have no approval right), guaranteeing or otherwise committing to payment of the
Ninety Million Dollars ($90,000,000.00) cash portion of the Per Share Cash
Merger Consideration payable to the Stockholders in cash at the Interim Closing.
If Entravision shall fail to secure such financial undertaking on or before the
later of August 31, 2000 or thirty (30) days after receipt of the appropriate
written notice from ZSPN described in this Section 3.3, the Corporation shall
issue the warrant contemplated by the warrant agreement attached hereto as
Exhibit "G", incorporated herein by this reference to the ZSPN Representatives
-----------
for the benefit of the Stockholders on the date on which the Closing or Interim
Closing is required to occur hereunder.
3.4 Closing Obligations of ZSPN and the Major Stockholders. At the
------------------------------------------------------
Closing, ZSPN and the Major Stockholders will deliver or cause to be delivered
to Entravision:
(a) the original Certificates representing the Shares owned by the
Stockholders, duly endorsed in blank (or accompanied by duly executed stock
powers);
(b) the Noncompetition Agreements, executed by Amador S. Bustos, John
Bustos and Glenn Emanuel;
(c) the Investor Rights Agreement, executed by each of the
Stockholders;
(d) the Release, executed by each of the Major Stockholders and ZSPN
and the ZSPN Subsidiaries;
(e) a resignation letter of each of the officers and directors of
ZSPN and each of the ZSPN Subsidiaries dated effective as of the Closing Date;
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<PAGE>
(f) any and all required third-party Consents listed on Schedule 4.2
------------
and marked thereon as "Material Consents;"
(g) the Certificate of Merger, executed by ZSPN;
(h) the closing certificate required by Section 10.1(c) below;
(i) a certificate of the Secretary of ZSPN attesting to (i) the
incumbency of the officers executing the Agreement and the other agreements and
certificates delivered by ZSPN at the Closing and (ii) the authenticity of the
Organizational Documents of ZSPN;
(j) minutes of the Stockholders and written resolutions or minutes of
the Board of Directors of ZSPN authorizing the execution, delivery and
performance of this Agreement, certified by the Secretary of ZSPN;
(k) a certificate of good standing for ZSPN issued by the Delaware
Secretary of State not more than ten (10) days prior to the Closing Date;
(l) the written legal opinions of Proskauer Rose LLP, corporate
counsel for ZSPN and the Stockholders, and Shaw Pittman, FCC counsel for ZSPN
and the Stockholders, substantially in the forms attached hereto as Exhibits "H-
-----------
1" and "H-2" and incorporated herein by this reference;
------------
(m) the original Promissory Notes executed by John Vuko and Peter
Davidson in favor of ZSPN or a ZSPN Subsidiary marked cancelled and a
certificate or agreement executed by John Vuko and Peter Davidson acknowledging
and agreeing that all principal and interest accrued under such notes may be
deducted from the ZSPN Merger Consideration allocable to each of John Vuko and
Peter Davidson;
(n) documentation executed by Glenn Emanuel and in form and substance
acceptable to Entravision and its counsel evidencing the continuation of the
stock purchase indebtedness of Glenn Emanuel in favor of the Surviving
Corporation and substituting Class A Common Stock of the Corporation to be
received by Glenn Emanuel and Arthur Rockwell in the Merger for the Shares
pledged to ZSPN prior to the Merger; and
(o) such other documents as may be reasonably requested by counsel
for Entravision as necessary to consummate the Contemplated Transactions.
3.5 Closing Obligations of Entravision and Acquisition Co. At the
------------------------------------------------------
Closing, Entravision and Acquisition Co. will deliver or cause to be delivered
to ZSPN and the Stockholders:
(a) the ZSPN Equity Consideration;
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<PAGE>
(b) the Noncompetition Agreements, executed by Entravision;
(c) the Investor Rights Agreement, executed by Entravision;
(d) the closing certificate required by Section 8.3(c) below;
(e) a certificate of the Secretary of each of Entravision and
Acquisition Co. attesting to (i) the incumbency of the officers executing the
Agreement and the other agreements and certificates delivered by Entravision and
Acquisition Co. at the Closing and (ii) the authenticity of the Organizational
Documents of each of Entravision and Acquisition Co.;
(f) written resolutions or minutes of the Board of Directors of
Entravision and written resolutions or minutes of the sole stockholder and Board
of Directors of Acquisition Co. authorizing the execution, delivery and
performance of this Agreement and evidencing the election of Amador S. Bustos as
the Corporation's President of the Radio Division and Glenn Emanuel as the
Corporation's President of the Outdoor Division, each certified by the Secretary
of Entravision and Acquisition Co., as the case may be;
(g) a certificate of good standing for each of Entravision and
Acquisition Co. issued by the Delaware Secretary of State not more than ten (10)
days prior to the Closing Date;
(h) the written legal opinion of Zevnik Horton Guibord McGovern
Palmer & Fognani, L.L.P., counsel for Entravision and Acquisition Co., and
Thompson, Hine & Flory, FCC counsel for Entravision, substantially in the form
attached hereto as Exhibits "I-1" and "I-2" and incorporated herein by this
------------------------
reference;
(i) any Consents required for the Closing, including, consents of the
Entravision Board of Directors, stockholders and lenders;
(j) documentation executed by the Corporation in form and substance
acceptable to Glenn Emanuel and counsel for ZSPN evidencing the continuation of
the stock purchase indebtedness of Glenn Emanuel in favor of the Surviving
Corporation and substituting Class A Common of the Corporation to be received by
Glenn Emanuel in the Merger for Shares pledged to ZSPN prior to the Merger; and
(k) such other documents as may be reasonably requested by counsel
for ZSPN as necessary to consummate the Contemplated Transactions, including any
necessary lien releases by ZSPN's banks.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF ZSPN
ZSPN hereby represents and warrants to Entravision and Acquisition Co. as
follows:
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4.1 Organization and Good Standing. ZSPN is a corporation duly organized,
------------------------------
validly existing and in good standing under the laws of the State of Delaware,
and has full corporate power and authority to own, lease and operate its assets
and properties and to carry on its businesses existing as of the date hereof.
Each ZSPN Subsidiary set forth on Schedule 4.1 is a corporation (or limited
------------
liability company) duly organized, validly existing and in good standing under
the laws of the state of its incorporation (or formation) as set forth on
Schedule 4.1, and has full corporate power and authority to own, lease and
------------
operate its assets and properties and to carry on its businesses existing as of
the date hereof.
4.2 Authority; No Conflict; Consents.
--------------------------------
(a) This Agreement constitutes the legal, valid and binding
obligation of ZSPN and the Stockholders, enforceable against ZSPN and the
Stockholders in accordance with its terms, except to the extent that such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to creditors' rights generally and is
subject to general principles of equity. ZSPN and the Stockholders have the
absolute and unrestricted right, power, authority and capacity to execute and
deliver this Agreement and to perform their respective obligations thereunder.
(b) Neither the execution and delivery of this Agreement by ZSPN or
the Stockholders nor the consummation or performance of any of the Contemplated
Transactions by ZSPN or the Stockholders will violate, Breach or conflict with:
(i) any provision of the Organizational Documents of ZSPN or the ZSPN
Subsidiaries; (ii) any resolution adopted by the stockholders or the Board of
Directors of ZSPN or the ZSPN Subsidiaries; (iii) any Legal Requirement or Order
to which ZSPN or the ZSPN Subsidiaries may be subject; or (iv) any Contract to
which ZSPN or the ZSPN Subsidiaries is a party or by which ZSPN or the ZSPN
Subsidiaries may be bound.
(c) Except for the filing of the FCC Consent, the filing of the
Certificate of Merger with the Delaware Secretary of State, the filing required
by the HSR Act and obtaining any necessary third party consents set forth on
Schedule 4.2, neither ZSPN, the ZSPN Subsidiaries nor the Stockholders will be
------------
required to give any notice to or obtain any third-party Consents from any
Person in connection with the execution and delivery of this Agreement or the
consummation or performance of any of the Contemplated Transactions, including,
without limitation, the sale of the Shares to Acquisition Co., the transfer of
the ownership and operation of the Radio Stations, the Outdoor Business and the
Internet Sites to Entravision via the Merger, and assignment of all Applicable
ZSPN Contracts to the Surviving Corporation. Schedule 4.2 identifies any
------------
Consent which is material to the operation of the Radio Stations, the Outdoor
Business or the Internet Sites as a "Material Consent."
4.3 Broker's or Finder's Fees. Neither ZSPN, the ZSPN Subsidiaries, the
-------------------------
Stockholders nor their agents have incurred any Liabilities for broker's or
finder's fees or agents commissions or other similar payment in connection with
this Agreement.
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<PAGE>
4.4 Qualifications To Do Business. ZSPN and the ZSPN Subsidiaries are
-----------------------------
qualified to do business and are in good standing in each jurisdiction (listed
on Schedule 4.4 to this Agreement) where the character or location of property
------------
owned and leased, the employment of personnel or the nature of the business and
activities conducted by ZSPN and the ZSPN Subsidiaries require such
qualification, licensing or domestication, except in such jurisdictions where
the failure to be so qualified, licensed or domesticated and to be in good
standing, individually or in the aggregate, would not have a ZSPN Material
Adverse Effect. Except as set forth on Schedule 4.4, ZSPN and the ZSPN
------------
Subsidiaries do not file franchise, income or other tax returns in any
jurisdiction based upon the ownership or use of property therein or the
derivation of income therefrom.
4.5 Capitalization.
--------------
(a) The authorized capital stock of ZSPN consists of 62,010,000
shares of capital stock consisting of (i) 31,000,000 of Class A Common Stock,
par value $0.01 per share, 1,068 of which are duly authorized, issued and
outstanding, (ii) 20,000,000 shares of Class B Common Stock, par value $0.01 per
share, 19,488,436 of which are duly authorized, issued and outstanding, (iii)
5,000,000 shares of Class C Common Stock, par value of $0.01 per share,
4,545,454 of which are duly authorized, issued and outstanding, (iv) 6,000,000
shares of Class D Common Stock, par value $0.01 per share, 5,600,496 of which
are duly authorized, issued and outstanding and (v) 10,000 shares of Preferred
Stock, par value $0.01 per share, none of which are issued and outstanding. The
Stockholders are and will be on the Closing Date the record and beneficial
owners and holders of all of the Shares, which will be at Closing free and clear
of all Encumbrances. No legend or other reference to any purported Encumbrance
appears upon any Certificate representing the Shares. All of the Shares have
been duly authorized and validly issued and are fully paid and nonassessable.
None of the Shares were issued in violation of the Securities Act or any other
Legal Requirement.
(b) Except as set forth in deliveries by ZSPN to Zevnik Horton
Guibord McGovern Palmer & Fognani, L.L.P. prior to the Execution Date, (i) there
are no other options, warrants, stock appreciation rights, subscriptions,
convertible debentures or other rights, commitments or any other similar
agreements for the purchase of any securities of ZSPN, (ii) there are no
Contracts relating to the issuance, sale, registration or transfer of any equity
securities or other securities of ZSPN and (iii) there are no voting trust
agreements or other Contracts, agreements or arrangements restricting voting
rights or transferability with respect to ZSPN. Schedule 4.5 sets forth the
------------
exercise price of each stock option for which stock options of the Corporation
will be substituted pursuant to Section 9.3 below.
4.6 ZSPN Subsidiaries.
-----------------
(a) Schedule 4.6 sets forth a list of all the ZSPN Subsidiaries.
------------
Except as set forth on Schedule 4.6, ZSPN owns, either directly or indirectly
------------
through one or more of the ZSPN Subsidiaries, all of the capital stock or
membership interests of each of the ZSPN Subsidiaries free and clear of any
Encumbrances.
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(b) The authorized capital stock and number of outstanding shares or
membership interests of each of the ZSPN Subsidiaries is set forth on Schedule
--------
4.6 (the "Subsidiary Shares"). ZSPN is and will be on the Closing Date the
---
record and beneficial owner and holder of all of the Subsidiary Shares, which
will be at Closing free and clear of all Encumbrances. No legend or other
reference to any purported Encumbrance appears upon any stock certificate
representing the Subsidiary Shares. All of the Subsidiary Shares have been duly
authorized and validly issued and are fully paid and nonassessable. None of the
Subsidiary Shares were issued in violation of the Securities Act or any other
Legal Requirement.
(c) Except as set forth on Schedule 4.6, (i) there are no options,
------------
warrants, stock appreciation rights, subscriptions, convertible debentures,
registration rights agreements, or other rights, commitments or any other
similar agreements for the purchase of any securities of any of the ZSPN
Subsidiaries, (ii) there are no Contracts relating to the issuance, sale or
transfer of any equity securities or other securities of any of the ZSPN
Subsidiaries and (iii) there are no voting trust agreements or other Contracts,
agreements or arrangements restricting voting rights or transferability with
respect to any of the ZSPN Subsidiaries.
4.7 ZSPN Financial Statements. ZSPN has delivered to Entravision true,
-------------------------
complete and correct copies of the ZSPN Financial Statements. ZSPN has
delivered to Entravision and Zevnik Horton Guibord McGovern Palmer & Fognani,
L.L.P. true and correct copies of the ZSPN Financial Statements fairly present
in all material respects the consolidated financial condition of ZSPN and the
ZSPN Subsidiaries and the assets and liabilities of ZSPN and the ZSPN
Subsidiaries as of the respective dates thereof and the results of operations,
changes in stockholders' equity and cash flows for the periods therein
specified, and have been prepared from the books and records of ZSPN and the
ZSPN Subsidiaries in accordance with GAAP. The ZSPN Financial Statements
reflect the consistent application of such accounting principles throughout the
periods involved, except as disclosed in the notes to such financial statements,
and except that the unaudited ZSPN Financial Statements were prepared on an
interim basis, are subject to normal year-end adjustments and do not contain all
of the footnote disclosures required by GAAP.
4.8 Books and Records. The books of account, minute books, stock record
-----------------
books and other records of ZSPN and the ZSPN Subsidiaries, true, complete and
correct copies of which have been made available to Entravision, are complete
and correct and have been maintained in accordance with sound business
practices, including the maintenance of an adequate system of internal controls.
The minute books of ZSPN and the ZSPN Subsidiaries contain accurate and complete
records of all meetings held of, and corporate action taken by, the stockholders
and Board of Directors of ZSPN and the ZSPN Subsidiaries, and no such meetings
have been held for which minutes have not been prepared and are not contained in
such minute books. Within five (5) business days of the Closing, all of those
original books and records will be delivered to Entravision.
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4.9 Ownership, Condition and Sufficiency of Assets. Except as set forth
----------------------------------------------
on Schedule 4.9, ZSPN or the ZSPN Subsidiaries, as the case may be, own all of
------------
their material assets free and clear of all Encumbrances. The material assets
of ZSPN and the ZSPN Subsidiaries are structurally sound, are in reasonably good
operating condition and repair and are reasonably adequate for the uses to which
they are being put, and none of such assets is in need of maintenance or repairs
except for ordinary, routine maintenance and repairs that are not material in
nature or cost. The assets of ZSPN and the ZSPN Subsidiaries are sufficient for
the continued conduct of businesses of the Radio Stations, the Outdoor Business
and the Internet Sites after the Closing in substantially the same manner as
conducted prior to the Closing.
4.10 No Undisclosed Liabilities. Except as set forth on Schedule 4.10,
-------------------------- -------------
ZSPN and the ZSPN Subsidiaries do not have any liabilities, either accrued or
contingent (whether or not required to be reflected in financial statements in
accordance with GAAP), and whether due to become due, which individually or in
the aggregate could reasonably be expected to have a ZSPN Material Adverse
Effect, other than (i) liabilities reflected in the ZSPN Financial Statements,
(ii) liabilities specifically described in this Agreement or in the ZSPN
Schedules or (iii) normal or recurring liabilities incurred since the date of
the ZSPN Financial Statements in the Ordinary Course of Business.
4.11 Taxes. Except as set forth on Schedule 4.11:
----- -------------
(a) Each of ZSPN and the ZSPN Subsidiaries have accurately prepared
and timely filed (or will so file) all material Tax Returns required to be filed
at or before the Effective Time relating to any and all Taxes concerning or
attributable to ZSPN or any of the ZSPN Subsidiaries or to their operations, and
such Returns are true and correct in all material respects and have been
completed in all material respects in accordance with applicable law. ZSPN has
delivered to Entravision true, complete and correct copies of all such Tax
Returns filed by ZSPN and the ZSPN Subsidiaries in the past three (3) years.
(b) There is no Tax sharing agreement that will require any payment
by ZSPN or any of the ZSPN subsidiaries after the date of this Agreement.
(c) Each of ZSPN and the ZSPN Subsidiaries as of the Effective Time:
(i) will have paid all Taxes it is required to pay prior to the Effective Time
and (ii) will have withheld with respect to its employees all federal and state
income taxes, FICA, FUTA and other Taxes required to be withheld, except in each
case for Taxes contested in good faith by appropriate proceedings for which
adequate reserves have been taken and except where the failure (if any) to pay
or withhold such Taxes could not reasonably be expected to have a ZSPN Material
Adverse Effect.
(d) There is no Tax deficiency outstanding, proposed or assessed
against ZSPN or any of the ZSPN Subsidiaries that is not reflected as a
liability on the ZSPN Closing Balance Sheet nor has ZSPN or any of the ZSPN
Subsidiaries executed any waiver of any statute of limitations on or extending
the period for the assessment or collection of any Tax.
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<PAGE>
(e) Neither ZSPN nor any of the ZSPN Subsidiaries has any material
liability for unpaid federal, state, local or foreign Taxes that has not been
accrued for or reserved on the ZSPN Financial Statements, whether asserted or
unasserted, contingent or otherwise.
4.12 Employee Benefit Plans.
----------------------
(a) ZSPN has made available to Entravision all employee benefit
plans (as defined in Section 3(3) of ERISA) and all bonus, stock option, stock
purchase, incentive, deferred compensation, supplemental retirement, severance
and other similar employee benefit plans, and all unexpired severance
agreements, written or otherwise, for the benefit of, or relating to, any
current or former employee of ZSPN or any of the ZSPN Subsidiaries or any trade
or business (whether or not incorporated) which is a member or which is under
common control with ZSPN within the meaning of Section 414 of the IRC (together,
the "ZSPN Employee Plans"). ZSPN does not maintain and has never maintained or
contributed to any employee benefit plan subject to Title IV of ERISA (including
a multiemployer plan as defined in Section 3(37) of ERISA).
(b) With respect to each ZSPN Employee Plan, ZSPN has made available
to Entravision, a true and correct copy of (i) the most recent annual report
(Form 5500) filed with the IRS with respect to a ZSPN Employee Plan subject to
such filing requirement, (ii) such ZSPN Employee Plan, (iii) each trust
agreement and group annuity contract, if any, relating to such ZSPN Employee
Plan, and (iv) the most recent determination letter issued with respect to any
plan which is intended to be qualified under Section 401(a) of the IRC.
(c) With respect to the ZSPN Employee Plans, individually and in the
aggregate, no event has occurred, and to the Knowledge of ZSPN there exists no
condition or set of circumstances, in connection with which ZSPN or any of the
ZSPN Subsidiaries could be subject to any material liability under ERISA, the
IRC or any other applicable Legal Requirement.
(d) With respect to the ZSPN Employee Plans, individually and in the
aggregate, there are no material funded benefit obligations for which
contributions have not been made or properly accrued and there are no material
unfunded benefit obligations which have not been accounted for by reserves, or
otherwise properly footnoted in accordance with GAAP, on the ZSPN Financial
Statements.
(e) Except as set forth in Schedule 4.12 or in deliveries made by
-------------
ZSPN to Zevnik Horton Guibord McGovern Palmer & Fognani, L.L.P. prior to the
Execution Date, and except as provided for in this Agreement, (A) neither ZSPN
nor any of the ZSPN Subsidiaries is a party to any oral or written (i) union or
collective bargaining agreement, (ii) agreement with any officer or other key
employee of ZSPN or any of the ZSPN Subsidiaries, the benefits of which
-24-
<PAGE>
are contingent, or the terms of which are materially altered, upon the
occurrence of a transaction involving ZSPN of the nature contemplated by this
Agreement, (iii) agreement with any officer of ZSPN or any of the ZSPN
Subsidiaries providing any term of employment or compensation guarantee
extending for a period longer than one year from the date hereof or for the
payment of compensation in excess of One Hundred Thousand Dollars ($100,000.00)
per annum or (iv) agreement or plan, including any stock option plan, stock
appreciation rights plan, restricted stock plan or stock purchase plan, any of
the benefits of which will be increased, or the vesting of the benefits of which
will be accelerated, by the occurrence of any of the transactions contemplated
by this Agreement or the value of any of the benefits of which will be
calculated on the basis of any of the transactions contemplated by this
Agreement; and (B) as of the Effective Time, there will not be any contract,
agreement, plan or arrangement covering any employee or former employee of ZSPN
or any of the ZSPN Subsidiaries that, individually or collectively, could give
rise to the payment of any amount that would not be deductible pursuant to the
Section 280G of the IRC or the limitations in Section 162(b) through (l) of the
IRC.
4.13 Compliance with Legal Requirements. (i) ZSPN and the ZSPN
----------------------------------
Subsidiaries are in compliance in all material respects with each Legal
Requirement that is or was applicable to them; (ii) to the Knowledge of ZSPN, no
event has occurred or circumstance exists that (with or without notice or lapse
of time) constitutes or results in a material violation by ZSPN of, or a
material failure on the part of ZSPN or the ZSPN Subsidiaries to comply with,
any Legal Requirement or gives rise to any obligation on the part of ZSPN or the
ZSPN Subsidiaries to undertake, or to bear all or any portion of the cost of,
any remedial action of any material nature; and (iii) neither ZSPN nor any of
the ZSPN Subsidiaries has received any written notice or other written
communication from any Governmental Body or any other Person regarding any
actual or alleged material violation of, or material failure to comply with, any
Legal Requirement, any actual, alleged, possible or potential material
obligation on the part of ZSPN or any of the ZSPN Subsidiaries to undertake, or
to bear all or any portion of the cost of, any remedial action of any material
nature.
4.14 Governmental Authorizations. Schedule 4.14 contains a complete and
--------------------------- -------------
accurate list of each Governmental Authorization that is held by ZSPN or the
ZSPN Subsidiaries. Each Governmental Authorization listed or required to be
listed on Schedule 4.14 is valid and in full force and effect in all material
-------------
respects. Except as set forth on Schedule 4.14 ZSPN and each of the ZSPN
-------------
Subsidiaries is and at all times since May 28, 1998 has been in compliance in
all material respects with all of the terms and requirements of each
Governmental Authorization identified or required to be identified on Schedule
--------
4.14, and, to the Knowledge of ZSPN or the Stockholders, no event has occurred
----
or circumstance exists that is reasonably likely to (with or without notice or
lapse of time) constitute or result in a material violation of or a material
failure to comply with any term or requirement of any Governmental Authorization
listed or required to be listed on Schedule 4.14 or result in the revocation,
-------------
withdrawal, suspension, cancellation, termination of or any adverse modification
to, any Governmental Authorization listed or required to be listed on Schedule
--------
4.14. The Governmental Authorizations listed on Schedule 4.14 collectively
---- -------------
constitute all of the Governmental Authorizations necessary to permit ZSPN and
the
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<PAGE>
ZSPN Subsidiaries to lawfully conduct and operate the Radio Stations, the
Outdoor Business and the Internet Sites in the manner currently conducted.
4.15 Legal Proceedings. Except as set forth on Schedule 4.15, there is no
----------------- -------------
action, suit or proceeding, claim, arbitration or, to the Knowledge of ZSPN,
investigation against ZSPN or any of the ZSPN Subsidiaries pending or, to the
Knowledge of ZSPN, threatened, or as to which ZSPN or any of the ZSPN
Subsidiaries has received any written notice of assertion, which, if decided
adversely to ZSPN or such Subsidiary, could reasonably be expected to have a
ZSPN Material Adverse Effect or a material adverse effect on the ability of ZSPN
to consummate the transactions contemplated by this Agreement.
4.16 Orders. There is no Order to which ZSPN or the ZSPN Subsidiaries are
------
subject. Except as set forth on Schedule 4.16: (i) ZSPN and the ZSPN
-------------
Subsidiaries are in material compliance with all of the terms and requirements
of each Order to which any of them has been subject; (ii) to the Knowledge of
ZSPN, no event has occurred or circumstance exists that would be reasonably
likely to constitute or result in (with or without notice or lapse of time) a
material violation of or material failure to comply with any term or requirement
of any Order to which ZSPN or the ZSPN Subsidiaries are subject; and (iii)
neither ZSPN nor any of the ZSPN Subsidiaries has received, at any time any
written notice or written communication from any Governmental Body or any other
Person regarding any actual or alleged material violation of, or material
failure to comply with, any term or requirement of any Order to which any of
them is or has been subject which has not been cured, waived or otherwise
resolved in all material respects.
4.17 Absence of Certain Changes and Events. Except as contemplated by
-------------------------------------
this Agreement and as set forth on Schedule 4.17 or delivered to Zevnik Horton
-------------
Guibord McGovern Palmer & Fognani, L.L.P. prior to the Execution Date (which
schedule may set forth in addition to past matters, matters which occur between
the date hereof and Closing), since December 31, 1999, ZSPN and the ZSPN
Subsidiaries have conducted the businesses of the Radio Stations, the Outdoor
Business and the Internet Sites only in the Ordinary Course of Business and
there has not been any:
(a) material transaction by ZSPN except in the Ordinary Course of
Business and consistent with past practices;
(b) amendments or changes to the Certificate of Incorporation or
Bylaws of ZSPN;
(c) capital expenditure or commitment by ZSPN or any of the ZSPN
Subsidiaries, either individually or in the aggregate, exceeding One Hundred
Thousand Dollars ($100,000.00);
(d) destruction of, material damage to or loss of any material
assets or business of ZSPN or any of the ZSPN Subsidiaries (whether or not
covered by insurance);
-26-
<PAGE>
(e) institution of a suit or other administrative proceeding claiming
wrongful discharge or other unlawful labor practice or Breach of collective
bargaining agreement by ZSPN or any ZSPN subsidiary;
(f) change in accounting methods or practices (including any change
in depreciation or amortization policies or rates) by ZSPN or any of the ZSPN
Subsidiaries;
(g) revaluation by ZSPN or any of the ZSPN Subsidiaries of any of
their respective assets;
(h) declaration, setting aside or payment of a dividend or other
distribution with respect to the capital stock of ZSPN, or any direct or
indirect redemption, purchase or other acquisition by ZSPN of any of its capital
stock other than pursuant to any stock or agreement with an employee;
(i) increase in the salary or other compensation payable or to become
payable to any of the officers, directors, employees or consultants of ZSPN or
any of the ZSPN Subsidiaries whose annual compensation in any individual case
exceeds One Hundred Thousand Dollars ($100,000) per annum, or the declaration,
payment or commitment or obligation of any kind for the payment of a bonus or
other additional salary or compensation to any such person except as, in any
such case, (i) otherwise contemplated by this Agreement or (ii) consistent with
the prior practice of ZSPN or such ZSPN subsidiary;
(j) sale, lease, license or other material disposition of any of the
assets or properties of ZSPN or the ZSPN Subsidiaries, except in the Ordinary
Course of Business as conducted on that date and consistent with past practices;
(k) amendment or termination of any Contract or material Real
Property Lease or Outdoor Lease to which ZSPN or any of the ZSPN Subsidiaries is
a party or by which they are bound;
(l) loan by ZSPN to any person or entity, incurring by ZSPN of any
indebtedness, guaranteeing by ZSPN of any indebtedness, issuance or sale of any
debt securities of ZSPN or guaranteeing of any debt securities of others, except
for advances to employees for travel and business expenses in the Ordinary
Course of Business and except pursuant to currently outstanding credit
facilities and refinancings and extensions thereof;
(m) waiver or release of any material right or claim of ZSPN or the
ZSPN Subsidiaries, including any compromise of any account receivable of ZSPN or
any of the ZSPN Subsidiaries, except in the Ordinary Course of Business and
consistent with past practices;
(n) commencement or notice of commencement of any lawsuit or
proceeding against or investigation of ZSPN or the ZSPN Subsidiaries involving
an amount in controversy of over Fifty Thousand Dollars ($50,000);
-27-
<PAGE>
(o) notice of any claim of ownership by a third party of the ZSPN
Intellectual Property Assets (as defined in Section 4.24 below) or of
infringement by ZSPN of any third party's Intellectual Property Assets;
(p) issuance or sale by ZSPN or any of the ZSPN Subsidiaries of any
of their respective shares of capital stock, or securities exchangeable,
convertible or exercisable therefor, or of any other of its securities other
than pursuant to currently outstanding ZSPN Options; or
(q) agreement by ZSPN or any officer or employees thereof to do any
of the things described in the preceding clauses (a) through (p).
4.18 Applicable Contracts; No Defaults.
---------------------------------
(a) Schedule 4.18 contains a complete and accurate list, and ZSPN
-------------
has delivered to Entravision, true, complete and correct copies of each
Applicable ZSPN Contract. Each Applicable ZSPN Contract identified or required
to be identified on Schedule 4.18 is in full force and effect and is valid and
-------------
enforceable in accordance with its terms.
(b) Except as set forth on Schedule 4.18 or delivered to Zevnik
-------------
Horton Guibord McGovern Palmer & Fognani, L.L.P. prior to the Execution Date:
(i) ZSPN or the ZSPN Subsidiaries, as the case may be, are, and at all times
since May 28, 1998 have been, in material compliance with the applicable terms
and requirements of each Applicable ZSPN Contract; (ii) to the Knowledge of ZSPN
or the Stockholders, no event has occurred or circumstance exists that (with or
without notice or lapse of time) would be reasonably likely to contravene,
conflict with or result in a violation or Breach of, or give ZSPN or the ZSPN
Subsidiaries, as the case may be, or other Person the right to declare a default
or exercise any materially adverse remedy under, or to accelerate the maturity
or performance of, or to cancel, terminate or modify, any Applicable ZSPN
Contract; and (iii) ZSPN and the ZSPN Subsidiaries, as the case may be, have not
given to or received from any other Person any written notice or other written
communication regarding any actual, alleged, possible or potential violation or
Breach of, or default under, any Applicable ZSPN Contract, which has not been
cured, waived or otherwise resolved in all material respects.
4.19 Insurance.
---------
(a) ZSPN has delivered to Entravision true, complete and correct
copies of all policies of insurance relating to ZSPN and the ZSPN Subsidiaries
to which ZSPN or the ZSPN Subsidiaries are a party or under which they are or
have been covered at any time since May 28, 1998.
(b) Except as set forth on Schedule 4.19, all such policies of
-------------
insurance: (i) are
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<PAGE>
valid, outstanding and enforceable; (ii) are issued by an insurer that is
financially sound and reputable; (iii) taken together, provide adequate
insurance coverage for the operations of the Radio Stations, the Outdoor
Business and the Internet Sites for all risks normally insured against by a
Person carrying on the same businesses as the Radio Stations, the Outdoor
Business and the Internet Sites; (iv) are sufficient for compliance with all
Legal Requirements and Contracts to which ZSPN and the ZSPN Subsidiaries are a
party or by which they are bound; (v) if the Closing occurs during the policy
term, will continue in full force and effect following the consummation of the
Contemplated Transactions; (vi) do not provide for any retrospective premium
adjustment or other experienced-based liability on the part of ZSPN or the ZSPN
Subsidiaries; (vii) ZSPN and the ZSPN Subsidiaries have not received any refusal
of coverage or any notice that a defense will be afforded with reservation of
rights or any notice of cancellation or any other indication that any insurance
policy is no longer in full force or effect or will not be renewed or that the
issuer of any policy is not willing or able to perform its obligations
thereunder; and (viii) ZSPN and the ZSPN Subsidiaries have paid all premiums
due, and has otherwise performed all of their respective obligations, under each
such policy. Schedule 4.19 sets forth, by year, for the current policy year and
-------------
each of the two (2) preceding policy years, a summary of the loss experience
under each such insurance policy.
4.20 Real Property Matters.
---------------------
(a) Schedule 4.20 contains a complete and accurate list of all Real
-------------
Property and Real Property Leases owned by ZSPN and the ZSPN Subsidiaries. ZSPN
has delivered or made available to Entravision true, complete and copies of the
deeds and other instruments (as recorded) by which either ZSPN or the ZSPN
Subsidiaries, as the case may be, acquired such real property interests, and
true, complete and copies of all title insurance policies, opinions, abstracts
and surveys in the possession of ZSPN relating to such properties or interests.
ZSPN or the ZSPN Subsidiaries, as the case may be, own and have good and
marketable title to all of the Real Property. All buildings, plants and
structures owned by ZSPN or the ZSPN Subsidiaries, as the case may be, lie
wholly within the boundaries of the Real Property owned by ZSPN or the ZSPN
Subsidiaries, as the case may be, and do not encroach in any material respect
upon the property of, or otherwise conflict with the property rights of, any
other Person. The Real Property includes all land (other than leased land) used
for the conduct of the business and operations of ZSPN and the ZSPN
Subsidiaries.
(b) ZSPN has delivered to Entravision true, complete and correct
copies of the Real Property Leases and true, complete and correct copies of all
reports of any engineers, environmental consultants or other consultants in its
possession relating to any of the Real Property. Each of the Real Property
Leases is valid and enforceable in accordance with its terms, ZSPN and the ZSPN
Subsidiaries have not received any notice of any, and there exists no event of
default or event which constitutes or would constitute (with notice or lapse of
time or both) a default in any material respect under any Real Property Lease
and all lessors under the Real Property Leases have consented (where such
consent is necessary) to the consummation of the Contemplated Transactions
without requiring modification in the rights or obligations thereunder
-29-
<PAGE>
(except where the failure to obtain such consent would not constitute a ZSPN
Material Adverse Effect). The Outdoor Leases of ZSPN and the ZSPN subsidiaries
are sufficient to permit the continued operation of the Outdoor Business by such
Persons substantially as the Outdoor Business is currently conducted. To the
Knowledge of ZSPN or the Stockholders, none of the Real Property is subject to
any material Encumbrance, easement, right-of-way, building or use restriction,
exception, variance, reservation or limitation as would reasonable be expected
to in any material respect interfere with or impair the present and continued
use thereof in the usual and normal conduct of the business and operations of
ZSPN and the ZSPN Subsidiaries. All mortgages, notes or other security interests
with respect to such Real Property are shown on the balance sheets set forth in
the Financial Statements, and no default, or event that, with notice or lapse of
time or both, would constitute an event of default, exists.
4.21 Compliance with Environmental Laws. Except as set forth on Schedule
---------------------------------- --------
4.21: (i) all of the operations ZSPN and the ZSPN Subsidiaries are and have been
----
in material compliance with all Environmental Laws as currently in effect, (ii)
neither ZSPN, the ZSPN Subsidiaries nor any of their predecessors used, released
or disposed of any Hazardous Substance in any manner that could reasonably be
expected to result in material liability, (iii) none of the material property
owned, leased or operated by ZSPN or the ZSPN Subsidiaries is contaminated by
any Hazardous Substance, (iv) none of the material property owned, leased or
operated by ZSPN or the ZSPN Subsidiaries is affected by any condition that
could reasonably be expected to result in material liability under any
Environmental Law as currently in effect and (v) there is and has been no
condition, activity or event respecting ZSPN or the ZSPN Subsidiaries that could
reasonably be expected to subject Entravision or the Surviving Corporation to
any material liability under any Environmental Law as currently in effect.
4.22 Employees. To the Knowledge of ZSPN, ZSPN and the ZSPN Subsidiaries
---------
are in compliance in all material respects with applicable Legal Requirements
respecting employment, employment practices, terms and conditions of employment
and wages and hours, nondiscrimination, immigration, collective bargaining,
benefits, occupational safety and health and planned closings, in each case,
with respect to its employees. Neither ZSPN nor any of the ZSPN Subsidiaries is
liable for payment to any trust or other fund or to any governmental or
administrative authority, with respect to unemployment compensation benefits,
social security or other benefits or obligations for its employees (other than
routine payments to be made in the Ordinary Course of Business). To the
Knowledge of ZSPN, no employee of ZSPN or any of the ZSPN Subsidiaries is in
violation of any term of any employment contract, patent disclosure agreement,
noncompetition agreement or any restrictive covenant to a former employer
relating to the right of such employee to be employed by ZSPN or the ZSPN
Subsidiaries, because of the nature of the business conducted or presently
proposed to be conducted by ZSPN or the ZSPN Subsidiaries or the use of any
trade secrets or proprietary information of others. None of the officers or
executive employees of ZSPN or any of the ZSPN Subsidiaries named on Schedule
--------
4.22 has given notice to ZSPN or the ZSPN Subsidiaries that such employee
----
intends to terminate his or her employment with ZSPN or the ZSPN Subsidiaries.
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<PAGE>
4.23 Labor Relations; Compliance. Except as set forth on Schedule 4.23,
--------------------------- -------------
since May 28, 1998, neither ZSPN nor any of the ZSPN Subsidiaries has been party
to any collective bargaining or other labor Contract. With respect to ZSPN and
the ZSPN Subsidiaries, since May 28, 1998, except as set forth on Schedule 4.23,
-------------
there has not been, there is not presently pending or existing, and to the
Knowledge of ZSPN or the Stockholders, there is not Threatened, (i) any strike,
slowdown, picketing, work stoppage or employee grievance process involving any
union or group of employees, (ii) any Proceeding relating to the alleged
violation of any Legal Requirement pertaining to labor relations or employment
matters, including any charge or complaint filed by an employee or union with
the National Labor Relations Board, the Equal Employment Opportunity Commission
or any comparable Governmental Body, organizational activity or other labor or
employment dispute against or affecting the Radio Stations, the Outdoor Business
or the Internet Sites or (iii) any application for certification of a collective
bargaining agent.
4.24 Intellectual Property.
---------------------
(a) The term "ZSPN Intellectual Property Assets" includes the
following proprietary items of ZSPN and the ZSPN Subsidiaries: (i) the name and
FCC call letters of each broadcast property, all fictional business names,
trading names, domain names or URLs, registered and unregistered trademarks,
service marks and applications; (ii) all patents, patent applications and
inventions and discoveries that may be patentable; (iii) all copyrights in both
published works and unpublished works; (iv) all rights in mask works; and (v)
all know-how, trade secrets, confidential information, customer lists, software,
technical information, data, process technology, plans, drawings and blue prints
owned, used or licensed by ZSPN or the ZSPN Subsidiaries as licensee or
licensor, all as listed on Schedule 4.24 other than Intellectual Property
-------------
defined in subsection (v).
(b) Schedule 4.24 contains a complete and accurate list and summary
-------------
description, including any royalties paid or received by ZSPN or the ZSPN
Subsidiaries under all Contracts relating to the ZSPN Intellectual Property
Assets to which ZSPN or the ZSPN Subsidiaries are a party or by which ZSPN or
the ZSPN Subsidiaries are bound, except for any license implied by the sale of a
product and perpetual, paid-up licenses for commonly available software programs
under which ZSPN or an ZSPN Subsidiary is the licensee. There are no
outstanding and, to the Knowledge of ZSPN, no Threatened disputes or
disagreements with respect to any such agreement. The ZSPN Intellectual
Property Assets are all those necessary for the operation of the businesses of
the Radio Stations, the Outdoor Business and the Internet Sites, as they are
currently conducted. ZSPN and the ZSPN Subsidiaries are the owners of all
right, title and interest in and to each of the ZSPN Intellectual Property
Assets, free and clear of all Encumbrances, and have the right to use without
payment to a third-party all of the ZSPN Intellectual Property Assets.
4.25 Relationships With Related Persons. Except as set forth in Schedule
---------------------------------- --------
4.25, no Related Person of ZSPN, the ZSPN Subsidiaries or the Stockholders has
----
had any interest in any
-31-
<PAGE>
property (whether real, personal or mixed and whether tangible or intangible),
used in or pertaining to the businesses of the Radio Stations, the Outdoor
Business or the Internet Sites. No Related Person of ZSPN, the ZSPN Subsidiaries
or the Stockholders has owned (of record or as a beneficial owner) an equity
interest or any other financial or profit interest in, a Person that has (i) had
business dealings or a material financial interest in any transaction with the
Radio Stations, the Outdoor Business or the Internet Sites other than business
dealings or transactions conducted in the Ordinary Course of Business with the
Radio Stations, the Outdoor Business or the Internet Sites at substantially
prevailing market prices and on substantially prevailing market terms or (ii)
engaged in competition with the businesses of the Radio Stations, the Outdoor
Business or the Internet Sites (a "ZSPN Competing Business") in any market
presently served by the Radio Stations, the Outdoor Business and the Internet
Sites except for less than five percent (5%) of the outstanding capital stock of
any ZSPN Competing Business that is publicly traded on any recognized exchange
or in the over-the-counter market. Except as set forth on Schedule 4.25, no
-------------
Related Person of ZSPN, the ZSPN Subsidiaries or the Stockholders is a party to
any Contract with, or has any claim or right against, the Radio Stations, the
Outdoor Business or the Internet Sites. All information regarding all
outstanding loans from the Company to any Related Person and all accrued but
unpaid compensation, bonuses or similar amounts owed by the Company to any
Related Person has been delivered to Zevnik Horton Guibord McGovern Palmer &
Fognani, L.L.P. prior to the Execution Date.
4.26 Bank and Brokerage Accounts. ZSPN has provided Entravision a list of
---------------------------
(i) the names and addresses of all banks and brokerage firms in which ZSPN and
the ZSPN Subsidiaries have accounts or safe deposit boxes, lock boxes, vaults
and the account numbers relating thereto, (ii) the name of each Person
authorized to draw on any such account or have access to any such boxes or
vaults and (iii) the names of all Persons, if any, holding Tax or other powers
of attorney from ZSPN or the ZSPN Subsidiaries and a summary of the terms
thereof.
4.27 FCC Qualification. ZSPN and the ZSPN Subsidiaries are (i) qualified
-----------------
under the rules and regulations of the FCC to enter into this Agreement and
consummate the transactions contemplated herein and (ii) no waivers or
exemptions by ZSPN or the ZSPN Subsidiaries of such FCC rules or regulations are
required for the FCC to grant the FCC Consent.
4.28 Other Consents. Prior to execution and delivery of this Agreement,
--------------
ZSPN has delivered consents of its Board of Directors, lenders and stockholders
to Entravision necessary to approve the Contemplated Transactions.
4.29 Disclosure. None of the representations or warranties made by ZSPN
----------
(as modified by the Schedules), nor any statement made in any schedule or
certificate furnished by ZSPN pursuant to this Agreement, or furnished in
connection with the documents mailed or delivered to the Stockholders in
connection with soliciting their consent to this Agreement and the Merger (to
the extent such documents were prepared by or include information provided by
ZSPN), contains or will contain at the Effective Time, any material untrue
statement or omits, or will omit at the Effective Time to state any material
fact necessary in order to make the statements contained therein not materially
misleading.
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ARTICLE 5.
REPRESENTATIONS AND WARRANTIES
OF ENTRAVISION AND ACQUISITION CO.
Except as set forth in the Registration Statement, Entravision and
Acquisition Co., jointly and severally, hereby represent and warrant to ZSPN and
the Stockholders as follows (it being expressly understood that in no event will
the representations of Entravision and Acquisition Co. extend to or include the
business assets, properties, liabilities, operations or prospects of Latin
Communications Group Inc. existing as of the Execution Date or as of the
Closing):
5.1 Organization and Good Standing. Each of Entravision and Holdings is a
------------------------------
limited liability company duly organized, validly existing and in good standing
under the laws of the State of Delaware. Acquisition Co. is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware.
5.2 Authority; No Conflict; Consents.
--------------------------------
(a) This Agreement constitutes the legal, valid and binding obligation
of Entravision and Acquisition Co., enforceable against Entravision and
Acquisition Co. in accordance with its terms, except to the extent that such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to creditors' rights generally and is
subject to general principles of equity. Entravision and Acquisition Co. have
the absolute and unrestricted right, power, authority and capacity to execute
and deliver this Agreement and to perform their respective obligations
thereunder.
(b) Neither the execution and delivery of this Agreement by
Entravision or Acquisition Co. nor the consummation or performance of any of the
Contemplated Transactions by Entravision or Acquisition Co. will give any Person
the right to prevent, delay or otherwise interfere with any of the Contemplated
Transactions or the Roll-Up pursuant to: (i) any provision of the respective
Organizational Documents of Entravision and Acquisition Co.; (ii) any resolution
adopted by the members, stockholders or the Board of Directors of Entravision or
Acquisition Co., as the case may be; (iii) any Legal Requirement or Order to
which Entravision or Acquisition Co. may be subject; or (iv) any Contract to
which Entravision or Acquisition Co. is a party or by which Entravision or
Acquisition Co. may be bound.
(c) Except for the FCC Consent, the filings required by the HSR Act,
and the consent of Union Bank of California, Entravision and Acquisition Co. are
not and will not be required to give any notice to or obtain any third-party
Consents from any Person in connection with the execution and delivery of this
Agreement or the consummation or performance of any of the Contemplated
Transactions or the Roll-Up.
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5.3 Broker's or Finder's Fees. Neither Entravision, Acquisition Co. nor
-------------------------
their agents have incurred any Liabilities for broker's or finder's fees or
agents commissions or other similar payment in connection with this Agreement.
5.4 Capitalization.
--------------
(a) The authorized capital stock of Entravision Communications
Corporation consists of (i) 305,000,000 shares of Class A Common Stock, $0.0001
par value per share, none of which are issued and outstanding, (ii) 60,000,000
shares of Class B Common Stock, $0.0001 par value per share, none of which are
issued and outstanding, (iii) 50,000,000 shares of Class C Common Stock, $0.0001
par value per share, none of which are issued and outstanding and (iv)
50,000,000 shares of Preferred Stock $0.0001 par value per share, none of which
are issued and outstanding.
(b) Schedule 5.4(b) sets for a pro forma fully-diluted capitalization
---------------
of the Corporation as of the Closing (but without giving effect to the IPO)
subject only to adjustment of the Exchange Number (as defined in the Exchange
Agreement). The "Entravision Fully-Diluted Shares" as defined in this Agreement
shall be as of the Closing as set forth on Schedule 5.4(b).
(c) The outstanding units of membership interest in Entravision
Communications Company, L.L.C. (the "Units") consist of an aggregate of
2,019,879 Units, 1,555,037 of which are designated Class A Units, none of which
are designated Class B Units, 286,206 of which are designated Class C Units,
168,323 of which are designated Class D Units, 10,313 of which are designated
Class E Units and 10,313 of which are designated Class F Units.
(d) Except as set forth on Schedule 5.4(d), (i) there are no other
---------------
options, warrants, stock appreciation rights, subscriptions, convertible
debentures or other rights, commitments or any other similar agreements for the
purchase of any securities of Entravision, (ii) there are no Contracts relating
to the issuance, sale, registration or transfer of any equity securities or
other securities of Entravision and (iii) there are no voting trust agreements
or other Contracts, agreements or arrangements restricting voting rights or
transferability with respect to Entravision.
(e) The shares of Class A Common Stock of the Corporation issuable as
the ZSPN Equity Consideration and the shares of Series B Preferred Stock
issuable pursuant to the Certificate, when issued, sold and delivered in
accordance with the terms of this Agreement, will be duly and validly issued,
fully-paid and nonassessable, and will be free of restrictions on transfer other
than restrictions on transfer under this Agreement, the Investor Rights
Agreement and applicable federal and state securities laws and will not have
been issued in violation of any preemptive rights.
5.5 Entravision Subsidiaries.
------------------------
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(a) Schedule 5.5 sets forth a list of all of the Entravision
------------
Subsidiaries. Except as set forth on Schedule 5.5, Entravision owns, either
------------
directly or indirectly through one or more of the Entravision Subsidiaries, all
of the capital stock or membership interests of each of the Entravision
Subsidiaries free and clear of any Encumbrances.
(b) The authorized capital stock and number of outstanding shares or
membership interests of each of the Entravision Subsidiaries is set forth on
Schedule 5.5 (the "Entravision Subsidiary Shares"). Entravision is and will be
------------
on the Closing Date the record and beneficial owner and holder of all of the
Entravision Subsidiary Shares, which will be at Closing free and clear of all
Encumbrances. No legend or other reference to any purported Encumbrance appears
upon any stock certificate representing the Entravision Subsidiary Shares. All
of the Entravision Subsidiary Shares have been duly authorized and validly
issued and are fully paid and nonassessable. None of the Entravision Subsidiary
Shares were issued in violation of the Securities Act or any other Legal
Requirement.
(c) Except as set forth on Schedule 5.5, (i) there are no options,
------------
warrants, stock appreciation rights, subscriptions, convertible debentures,
registration rights agreements, or other rights, commitments or any other
similar agreements for the purchase of any securities of any of the Entravision
Subsidiaries, (ii) there are no Contracts relating to the issuance, sale or
transfer of any equity securities or other securities of any of the Entravision
Subsidiaries and (iii) there are no voting trust agreements or other Contracts,
agreements or arrangements restricting voting rights or transferability with
respect to any of the Entravision Subsidiaries.
5.6 Entravision Financial Statements. Entravision has delivered to ZSPN
--------------------------------
true, complete and correct copies of the Entravision Financial Statements.
Except as set forth on Schedule 5.6, the Entravision Financial Statements fairly
------------
present in all material respects the consolidated financial condition of
Entravision and the Entravision Subsidiaries and the assets and liabilities of
Entravision and the Entravision Subsidiaries as of the respective dates thereof
and the results of operations, changes in stockholders' equity and cash flows
for the periods therein specified, and have been prepared from the books and
records of Entravision and the Entravision Subsidiaries in accordance with GAAP.
The Entravision Financial Statements reflect the consistent application of such
accounting principles throughout the periods involved, except as disclosed in
the notes to such financial statements, and except that the unaudited
Entravision Financial Statements were prepared on an interim basis, are subject
to normal year-end adjustments and do not contain all of the footnote
disclosures required by GAAP.
5.7 No Undisclosed Liabilities. Except as set forth on Schedule 5.7,
-------------------------- ------------
Entravision and the Entravision Subsidiaries do not have any liabilities, either
accrued or contingent (whether or not required to be reflected in financial
statements in accordance with GAAP), and whether due to become due, which
individually or in the aggregate could reasonably be expected to have an
Entravision Material Adverse Effect, other than (i) liabilities reflected in the
Entravision Financial Statements, (ii) liabilities specifically described in
this Agreement or in the Entravision Schedules or (iii) normal or recurring
liabilities incurred since the date of the Entravision Financial Statements in
the Ordinary Course of Business.
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5.8 Taxes.
-----
(a) Each of Entravision and the Entravision Subsidiaries have
accurately prepared and timely filed (or will so file) all material Tax Returns
required to be filed at or before the Effective Time relating to any and all
Taxes concerning or attributable to Entravision or any of the Entravision
Subsidiaries or to their operations, and such Tax Returns are true and correct
in all material respects and have been completed in all material respects in
accordance with applicable law. Entravision has made available to ZSPN true,
complete and correct copies of all such Tax Returns filed by Entravision and the
Entravision Subsidiaries in the past three (3) years.
(b) There is no Tax sharing agreement that will require any payment by
Entravision or any of the Entravision Subsidiaries after the date of this
Agreement.
(c) Each of Entravision and the Entravision Subsidiaries as of the
Effective Time: (i) will have paid all Taxes it is required to pay prior to the
Effective Time and (ii) will have withheld with respect to its employees all
federal and state income taxes, FICA, FUTA and other Taxes required to be
withheld, except in each case for Taxes contested in good faith by appropriate
proceedings for which adequate reserves have been taken and except where the
failure (if any) to pay or withhold such Taxes could not reasonably be expected
to have an Entravision Material Adverse Effect.
(d) There is no Tax deficiency outstanding, proposed or assessed
against Entravision or any of the Entravision Subsidiaries that is not reflected
as a liability on the most recently prepared balance sheet of Entravision nor
has Entravision or any of the Entravision Subsidiaries executed any waiver of
any statute of limitations on or extending the period for the assessment or
collection of any Tax.
(e) Neither Entravision nor any of the Entravision Subsidiaries has
any material liability for unpaid federal, state, local or foreign Taxes that
has not been accrued for or reserved on the Entravision Financial Statements,
whether asserted or unasserted, contingent or otherwise.
5.9 Employee Benefit Plans.
----------------------
(a) Entravision has made available to ZSPN all employee benefit plans
(as defined in Section 3(3) of ERISA) and all bonus, stock option, stock
purchase, incentive, deferred compensation, supplemental retirement, severance
and other similar employee benefit plans, and all unexpired severance
agreements, written or otherwise, for the benefit of, or relating to, any
current or former employee of Entravision or any of the Entravision Subsidiaries
or any trade or business (whether or not incorporated) which is a member or
which is under common control with Entravision within the meaning of Section 414
of the IRC (together, the
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"Entravision Employee Plans"). Entravision does not maintain and has never
maintained or contributed to any employee benefit plan subject to Title IV of
ERISA (including a multiemployer plan as defined in Section 3(37) of ERISA).
(b) With respect to each Entravision Employee Plan, Entravision has
made available to ZSPN, a true and correct copy of (i) the most recent annual
report (Form 5500) filed with the IRS with respect to an Entravision Employee
Plan subject to such filing requirement, (ii) such Entravision Employee Plan,
(iii) each trust agreement and group annuity contract, if any, relating to such
Entravision Employee Plan, and (iv) the most recent determination letter issued
with respect to any plan which is intended to be qualified under Section 401(a)
of the IRC.
(c) With respect to the Entravision Employee Plans, individually and
in the aggregate, no event has occurred, and to the Knowledge of Entravision
there exists no condition or set of circumstances, in connection with which
Entravision or any of the Entravision Subsidiaries could be subject to any
material liability under ERISA, the IRC or any other applicable law.
(d) With respect to the Entravision Employee Plans, individually and
in the aggregate, there are no material funded benefit obligations for which
contributions have not been made or properly accrued and there are no material
unfunded benefit obligations which have not been accounted for by reserves, or
otherwise properly footnoted in accordance with GAAP, on the Entravision
Financial Statements.
(e) Except as set forth in Schedule 5.9, and except as provided for
------------
in this Agreement, neither Entravision nor any of the Entravision Subsidiaries
is a party to any oral or written (i) union or collective bargaining agreement,
(ii) agreement with any officer or other key employee of Entravision or any of
the Entravision Subsidiaries, the benefits of which are contingent, or the terms
of which are materially altered, upon the occurrence of a transaction involving
Entravision of the nature contemplated by this Agreement, (iii) agreement with
any officer of Entravision or any of the Entravision Subsidiaries providing any
term of employment or compensation guarantee extending for a period longer than
one year from the date hereof or for the payment of compensation in excess of
One Hundred Thousand Dollar ($100,000.00) per annum, or (iv) agreement or plan,
including any stock option plan, stock appreciation rights plan, restricted
stock plan or stock purchase plan, any of the benefits of which will be
increased, or the vesting of the benefits of which will be accelerated, by the
occurrence of any of the transactions contemplated by this Agreement or the
value of any of the benefits of which will be calculated on the basis of any of
the transactions contemplated by this Agreement.
5.10 Compliance with Legal Requirements. Except as set forth on Schedule
---------------------------------- --------
5.10: (i) Entravision and the Entravision Subsidiaries are in compliance in all
----
material respects with each Legal Requirement that is or was applicable to them;
(ii) to the Knowledge of Entravision, no event has occurred or circumstance
exists that (with or without notice or lapse of time) constitutes or results in
a material violation by Entravision of, or a material failure on the part of
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Entravision or the Entravision Subsidiaries to comply with, any Legal
Requirement or gives rise to any obligation on the part of Entravision or the
Entravision Subsidiaries to undertake, or to bear all or any portion of the cost
of, any remedial action of any material nature; and (iii) neither Entravision
nor any of the Entravision Subsidiaries has received any written notice or other
written communication from any Governmental Body or any other Person regarding
any actual or alleged material violation of, or material failure to comply with,
any Legal Requirement, any actual, alleged, possible or potential material
obligation on the part of Entravision or any of the Entravision Subsidiaries to
undertake, or to bear all or any portion of the cost of, any remedial action of
any material nature.
5.11 Legal Proceedings. There is no action, suit or proceeding, claim,
-----------------
arbitration or, to the Knowledge of Entravision, investigation against
Entravision or any of the Entravision Subsidiaries pending or, to the Knowledge
of Entravision, threatened, or as to which Entravision or any of the Entravision
Subsidiaries has received any written notice of assertion, which, if decided
adversely to Entravision or such Subsidiary, could reasonably be expected to
have an Entravision Material Adverse Effect or a material adverse effect on the
ability of Entravision to consummate the transactions contemplated by this
Agreement.
5.12 Applicable Contracts; No Defaults.
---------------------------------
(a) Entravision has made available to ZSPN, true, complete and
correct copies of each Applicable Entravision Contract. Each Applicable
Entravision Contract is in full force and effect and is valid and enforceable in
accordance with its terms.
(b) Except as set forth on Schedule 5.12: (i) Entravision or the
-------------
Entravision Subsidiaries, as the case may be, are, and at all times during the
last two (2) years have been, in material compliance with the applicable terms
and requirements of each Applicable Entravision Contract; (ii) to the Knowledge
of Entravision, no event has occurred or circumstance exists that (with or
without notice or lapse of time) would be reasonably likely to contravene,
conflict with or result in a violation or Breach of, or give Entravision or the
Entravision Subsidiaries, as the case may be, or other Person the right to
declare a default or exercise any materially adverse remedy under, or to
accelerate the maturity or performance of, or to cancel, terminate or modify,
any Applicable Entravision Contract; and (iii) Entravision and the Entravision
Subsidiaries, as the case may be, have not given to or received from any other
Person any written notice or other written communication regarding any actual,
alleged, possible or potential violation or Breach of, or default under, any
Applicable Entravision Contract, which has not been cured, waived or otherwise
resolved in all material respects.
5.13 Compliance with Environmental Laws. Except as set forth on Schedule
---------------------------------- --------
5.13, (i) all of the operations Entravision and the Entravision Subsidiaries are
----
and have been in material compliance with all Environmental Laws as currently in
effect, (ii) neither Entravision, the Entravision Subsidiaries nor any of their
predecessors used, released or disposed of any Hazardous Substance in any manner
that could reasonably be expected to result in material
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liability, (iii) none of the material property owned, leased or operated by
Entravision or the Entravision Subsidiaries is contaminated by any Hazardous
Substance, (iv) none of the material property owned, leased or operated by
Entravision or the Entravision Subsidiaries is affected by any condition that
could reasonably be expected to result in material liability under any
Environmental Law as currently in effect and (v) there is and has been no
condition, activity or event respecting Entravision or the Entravision
Subsidiaries that could reasonably be expected to subject ZSPN or the Surviving
Corporation to any material liability under any Environmental Law as currently
in effect.
5.14 Intellectual Property.
---------------------
(a) The term "Entravision Intellectual Property Assets" includes the
following proprietary items of Entravision and the Entravision Subsidiaries: (i)
the name and FCC call letters listed on Schedule 5.14, all fictional business
-------------
names, trading names, domain names or URLs, registered and unregistered
trademarks, service marks and applications; (ii) all patents, patent
applications and inventions and discoveries that may be patentable; (iii) all
copyrights in both published works and unpublished works; (iv) all rights in
mask works; (v) all know-how, trade secrets, confidential information, customer
lists, software, technical information, data, process technology, plans,
drawings and blue prints owned, used or licensed by Entravision or the
Entravision Subsidiaries as licensee or licensor.
(b) There are no outstanding and, to the Knowledge of Entravision, no
Threatened disputes or disagreements with respect to any Applicable Entravision
Contract related to the Entravision Intellectual Property Assets. The
Entravision Intellectual Property Assets are all those necessary for the
operation of the businesses of the Entravision Media Properties as they are
currently conducted. Entravision and the Entravision Subsidiaries are the
owners of all right, title and interest in and to each of the Entravision
Intellectual Property Assets, free and clear of all Encumbrances, and have the
right to use without payment to a third-party all of the Entravision
Intellectual Property Assets.
5.15 Relationships With Related Persons. Except as set forth in Schedule
---------------------------------- --------
5.15, no Related Person of Entravision or the Entravision Subsidiaries has had
----
any interest in any property (whether real, personal or mixed and whether
tangible or intangible), used in or pertaining to the businesses of the
Entravision Media Properties. No Related Person of Entravision or the
Entravision Subsidiaries has owned (of record or as a beneficial owner) an
equity interest or any other financial or profit interest in, a Person that has
(i) had business dealings or a material financial interest in any transaction
with the Entravision Media Properties other than business dealings or
transactions conducted in the Ordinary Course of Business with the Entravision
Media Properties at substantially prevailing market prices and on substantially
prevailing market terms or (ii) engaged in competition with the businesses of
the Entravision Media Properties (a "Competing Business") in any market
presently served by the Entravision Media Properties except for less than five
percent (5%) of the outstanding capital stock of any Competing Business that is
publicly traded on any recognized exchange or in the over-the-counter market.
Except as
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set forth on Schedule 5.15, no Related Person of Entravision or the Entravision
-------------
Subsidiaries is a party to any Contract with, or has any claim or right against,
the Entravision Media Properties.
5.16 FCC Qualification. Except as required to comply with the FCC's
-----------------
multiple ownership rules, Entravision and Holdings are (i) qualified under the
rules and regulations of the FCC to enter into this Agreement and consummate the
transactions contemplated herein and (ii) no waivers or exemptions of such FCC
rules or regulations are required for the FCC to grant the FCC Consent.
5.17 Other Consents. Prior to execution and delivery of this Agreement,
--------------
Entravision has delivered consents of Entravision's and Acquisition Co.'s Boards
of Directors, stockholders, Executive Committee and Univision necessary to
approve the Contemplated Transactions.
5.18 Latin Communications Group. That certain Agreement and Plan of
--------------------------
Merger dated December 21, 1999 by and among the Company, LCG Acquisition
Corporation, Latin Communications Group Inc. and certain of its representatives
is in full force and effect and has not been amended or any provision waived as
of the Execution Date (other than an amendment to extend the closing of the
acquisition of certain Nevada radio stations), and the Company has not received
written notice of a breach of representation or warranty or misrepresentation by
Latin Communications Group Inc. under such agreement.
5.19 Disclosure. None of the representations or warranties made by
----------
Entravision (as modified by the Schedules), nor any statement made in the
Registration Statement or any schedule or certificate furnished by Entravision
pursuant to this Agreement, contains or will contain at the Effective Time, any
material untrue statement or omits, or will omit at the Effective Time to state
any material fact necessary in order to make the statements contained therein
not materially misleading.
ARTICLE 6.
REPRESENTATIONS AND WARRANTIES
OF THE MAJOR STOCKHOLDERS
Each Major Stockholder hereby severally represents and warrants to
Entravision and Acquisition Co. as follows (such representations and warranties
do not lessen or obviate the representations and warranties of ZSPN set forth in
Article 4 above):
6.1 Requisite Power and Authority. Such Major Stockholder has all
-----------------------------
necessary power and authority under all applicable provisions of law to execute
and deliver this Agreement and to carry out its obligations thereunder. All
action on such Major Stockholder's part required for the lawful execution and
delivery of this Agreement has been or will be effectively taken prior to the
Closing. Upon execution and delivery, this Agreement will be the valid and
binding obligation of such Major Stockholder, enforceable in accordance with its
terms (except as such enforcement may be limited by applicable bankruptcy,
insolvency, moratorium or similar laws affecting the rights of creditors
generally or by general principles of equity).
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6.2 Investment Representations. Such Major Stockholder understands that
--------------------------
the shares Entravision Class A Common Stock have not been registered under the
Securities Act. Such Major Stockholder also understands that the shares of
Entravision Class A Common Stock are being offered and sold pursuant to an
exemption from registration contained in the Securities Act based in part upon
such Major Stockholder's representations and warranties contained in this
Agreement. Such Major Stockholder hereby represents and warrants as follows:
(a) Except for the Major Stockholders who are listed (and whose stock
ownership is shown) on Schedule 6.2, such Major Stockholder is an "accredited
------------
investor" as defined in Rule 501(a) of the Securities Act.
(b) He, she or it is capable of evaluating the merits and risks of
his, her or its investment in Entravision and has the capacity to protect his,
her or its own interests. Such Major Stockholder must bear the economic risk of
this investment indefinitely unless the shares of Entravision Class A Common
Stock are registered pursuant to the Securities Act, or an exemption from
registration is available. Such Major Stockholder understands that Entravision
has no present intention of registering the shares of Entravision Class A Common
Stock except as expressly specified in the Investor Rights Agreement. Such
Major Stockholder also understands that there is no assurance that any exemption
from registration under the Securities Act will be available and that, even if
available, such exemption may not allow such Major Stockholder to transfer all
or any portion of the shares of Entravision Class A Common Stock under the
circumstances, in the amounts or at the times such Major Stockholder might
propose.
(c) Such Major Stockholder is acquiring the shares of Entravision
Class A Common Stock for such Major Stockholder's own account for investment
only, and not with a view towards their distribution in violation of the
Securities Act.
(d) Such Major Stockholder is aware of no publication of any
advertisement in connection with the transactions contemplated in the Agreement.
(e) Such Major Stockholder has received and fully reviewed a copy of
the Registration Statement.
(f) Such Major Stockholder has been provided an opportunity to discuss
Entravision's business, management and financial affairs with directors,
officers and management of Entravision and has had the opportunity to review
Entravision's operations and facilities. Such Major Stockholder has also been
provided the opportunity to ask questions of and receive answers from
Entravision and its management regarding the terms and conditions of this
investment.
(g) Such Major Stockholder acknowledges and agrees that the shares of
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Entravision Class A Common Stock must be held indefinitely unless they are
subsequently registered under the Securities Act or an exemption from such
registration is available. Such Major Stockholder has been advised or is aware
of the provisions of Rule 144 and 145 promulgated under the Securities Act as in
effect from time to time, which will subject the shares of Entravision Class A
Common Stock acquired by such Major Stockholder to certain restrictions.
(h) Such Major Stockholder resides in the state or province identified
in the address of such Major Stockholder set forth on the signature page to this
Agreement.
6.3 No Dispositions. Each Major Stockholder does not currently have, and
---------------
at the Closing will not have, any plan, agreement, commitment, intention or
arrangement, whether written or oral, to dispose of any of the shares of the
Common Stock to be received by such Major Stockholder. For purposes of this
representation, a "disposition" shall include any direct or indirect offer,
offer to sell, sale, contract of sale or grant of any option to purchase, gift,
transfer, pledge or other disposition, including any disposition of the economic
or other risks of ownership through hedging transactions or derivatives and any
other transaction that would constitute a "constructive sale" within the meaning
of Section 1259 of the Code, including, without limitation, a short-sale,
forward sale, equity swap or other derivative contract with respect to the
Common Stock or substantially identical property, or other transaction having
substantially the same effect as the foregoing.
6.4 Transfer Restrictions. Such Major Stockholder acknowledges and agrees
---------------------
that the shares of Entravision Class A Common Stock are subject to restrictions
on transfer set forth in this Section 6.3. Such Major Stockholder agrees not to
make any disposition of all or any portion of the shares of Entravision Class A
Common Stock unless and until (i) there is then in effect a registration
statement under the Securities Act covering such proposed disposition and such
disposition is made in accordance with such registration statement, (ii)
transfers are in compliance with Rule 144 or 145, or (iii) the transferee
(except for transfers in compliance with Rule 144 and 145) has agreed in writing
to be bound by the terms of this Section 6.3, such Major Stockholder shall have
notified Entravision of the proposed disposition and shall have furnished
Entravision with a reasonably detailed statement of the circumstances
surrounding the proposed disposition and if reasonably requested by Entravision,
such Major Stockholder shall have furnished Entravision with an opinion of
counsel, reasonably satisfactory to Entravision, that such disposition will not
require registration of such shares under the Securities Act. Notwithstanding
the provisions of clauses (i) and (ii) above, no such registration statement or
opinion of counsel shall be necessary for a transfer by such Major Stockholder
to a Related Person, a shareholder, a member or a partner of such Major
Stockholder or a family member of such Major Stockholder or trust for the
benefit of such Major Stockholder; provided, however, that in each case the
transferee will be subject to the terms of this Section 6.3 to the same extent
as if he, she or it were an original Major Stockholder hereunder.
Notwithstanding the foregoing, such Major Stockholder shall have registration
rights for the shares of Entravision Class A Common Stock as set forth in the
Investor Rights Agreement. At such time as a registration
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statement for the shares of Entravision Class A Common Stock has been declared
effective in accordance with the terms and conditions of the Investor Rights
Agreement, the provisions of this Section 6.3 above shall cease to apply to the
shares of Entravision Class A Common Stock. Any Major Stockholder who is an
officer or director of Entravision after the Closing shall, in any event, comply
with Entravision's published insider trading policies.
ARTICLE 7.
COVENANTS OF ZSPN AND THE
MAJOR STOCKHOLDERS PRIOR TO CLOSING DATE
7.1 Access and Investigation. Between the date of this Agreement and the
------------------------
Closing Date, ZSPN will, and will cause its Representatives to, (i) afford
Entravision and its Representatives reasonable access during normal business
hours to the personnel, properties (including subsurface testing), Contracts,
books and records and other documents and data of ZSPN, (ii) furnish Entravision
and its Representatives with true, complete and correct copies of all such
Contracts, books and records and other existing documents and data as they may
reasonably request and (iii) furnish Entravision and its Representatives with
such additional financial, operating and other data and information as they may
reasonably request. ZSPN agrees that prior to consummation of the Contemplated
Transactions, to the extent available, Entravision will be furnished with such
accounting information and reports to the extent Entravision deems necessary to
enable Entravision to satisfy the disclosure or exemption requirements of any
lender providing financing, or state or federal securities regulators. Nothing
in this Section 7.1 shall require ZSPN to compile accounting information or
prepare reports that it would not otherwise compile or prepare. All such
information is delivered subject to that certain Confidentiality Agreement dated
December 17, 1999 (the "Confidentiality Agreement") by and between Entravision
and ZSPN.
7.2 Operation of Business. Without the written consent of Entravision
---------------------
(not to be unreasonably withheld), (i) ZSPN will not and will cause each of the
ZSPN Subsidiaries not to engage in any material practice, take any material
action or enter into any material transaction outside the Ordinary Course of
Business; and (ii) ZSPN will not increase its Indebtedness over One Hundred
Eight Million Six Hundred Seventy Thousand One Hundred Seventeen Dollars
($108,670,117.00).
7.3 Preservation of Business. Except for items set forth on Schedule 7.3,
------------------------ ------------
except for transactions involving the disposition of ZSPN assets which may be
approved in writing by Entravision between the date of this Agreement and the
Closing, ZSPN will, and will cause the ZSPN Subsidiaries to, use commercially
reasonable efforts to keep their business and properties substantially intact,
including its present operations, physical facilities, working conditions and
relationships with lessors, licensors, licensees, suppliers, listeners,
customers and employees, in each instance where the failure to comply with this
Section 7.3 is to ZSPN's Knowledge reasonably likely to result in, and in fact
results in a ZSPN Material Adverse Effect.
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<PAGE>
7.4 Negative Covenant. Except as otherwise expressly permitted by this
-----------------
Agreement, between the date of this Agreement and the Closing Date, ZSPN will
not, without the prior written consent of Entravision, which shall not be
unreasonably withheld, take any affirmative action, or fail to take any
reasonable action within their control, that is to ZSPN's Knowledge to be
reasonably likely to result in, and in fact results in any of the changes or
events listed in Section 4.17 above. Upon provision of Entravision's written
consent pursuant to this Section 7.4 and modification of the ZSPN Schedules
pursuant to Section 7.5 below, Entravision will be deemed to have waived any
misrepresentation directly related to the action consented to.
7.5 Notification. Between the date of this Agreement and the Closing
------------
Date, ZSPN and each Major Stockholder will promptly notify Entravision in
writing if it becomes aware of any fact or condition that causes or constitutes
a material Breach of any of its representations and warranties made by such
party in this Agreement, or if it becomes aware of the occurrence after the date
of this Agreement of any fact or condition that would (except as expressly
contemplated by this Agreement) cause or constitute such a Breach of any such
representation or warranty had such representation or warranty been made as of
the time of occurrence or discovery of such fact or condition. Should any such
fact or condition disclosed to Entravision by ZSPN as set forth above, or any
fact or condition that is discovered by Entravision independently prior to the
Closing Date, require any change in the ZSPN Schedules if the ZSPN Schedules
were dated the date of the occurrence or discovery of any such fact or condition
between the date of this Agreement and the Closing Date, ZSPN will promptly
deliver to Entravision a supplement to the Schedules specifying such change;
provided, however, that no disclosure by ZSPN or the Major Stockholders of any
fact or condition pursuant to this Section 7.5 shall be deemed to amend or
supplement the Schedules or to prevent or cure any misrepresentation or Breach
of any representation or warranty if such fact or condition would have, or would
reasonably be expected to have a ZSPN Material Adverse Effect as reflected in
the representations and warranties of ZSPN in Article 4 above or of the Major
Stockholders in Article 6 above.
7.6 No Negotiation. Until the Closing Date, or such time, if any, as this
--------------
Agreement is terminated (or ZSPN has the right to terminate this Agreement)
pursuant to Article 11 below, ZSPN and its Major Stockholders will not, and will
use all reasonable best efforts to cause each of their Representatives not to,
directly or indirectly solicit, initiate or encourage any inquiries or proposals
from, discuss or negotiate with, provide any non-public information to or
consider the merits of any unsolicited inquiries or proposals from, any Person
(other than Entravision, Acquisition Co. or their Related Persons) relating to
any transaction involving the sale of the business or assets (other than in the
Ordinary Course of Business) of ZSPN, or any merger, consolidation, business
combination, sale of ownership interests or similar transaction involving ZSPN,
any of the ZSPN Subsidiaries or the Shares.
7.7 Best Efforts. Between the date of this Agreement and the Closing
------------
Date, ZSPN will use its Best Efforts to cause the conditions in Section 10.1
below to be satisfied. Between the date of this Agreement and the Closing Date,
the Major Stockholders will use their Best Efforts to cause the conditions in
Section 10.1 below relevant to the Major Stockholders to be satisfied.
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<PAGE>
7.8 Application for FCC Consent. As soon as practicable after the
---------------------------
Execution Date, ZSPN agrees, jointly with Entravision and Holdings to file an
application as is required to obtain the FCC Consent. ZSPN will diligently
take, or cooperate in the taking of, all steps that are necessary, proper or
desirable to expedite the preparation of such application to obtain FCC Consent.
ZSPN will promptly provide Entravision with a true, complete and correct copy of
any pleading or other document served on it relating to such application. If
the FCC Consent imposes any condition on ZSPN or the Major Stockholders, ZSPN or
the Major Stockholders, as the case may be, shall use their Best Efforts to
comply with such condition prior to the Closing. If reconsideration or judicial
review is sought with respect to the FCC Consent, and such reconsideration or
review relates to ZSPN, the Major Stockholders or the operations of the Radio
Stations, ZSPN and the Major Stockholders shall vigorously oppose such
reconsideration or judicial review at their own expense. Entravision shall pay
for or reimburse ZSPN for all FCC filing fees.
7.9 Filing Under HSR Act. As soon as practicable after the Execution
--------------------
Date, ZSPN agrees to make a separate filing of the Notification and Report Form
pursuant to the HSR Act with respect to the Contemplated Transactions as
promptly as practicable and supply any additional information or documentary
material that may be required under the HSR Act and to take all other actions as
reasonably necessary to cause the expiration or termination of the applicable
waiting period under the HSR Act as soon as possible. ZSPN will use its Best
Efforts to cooperate in all respects with Entravision in conjunction with any
such filing submission or other inquiry and to promptly notify Entravision of
any communication received from or given to the Antitrust Department of the
Department of Justice or the Federal Trade Commission and to permit the other
party to review such communication. All HSR filing fees and expenses shall be
borne fifty percent (50%) by Entravision and fifty percent (50%) by ZSPN.
7.10 Required Approvals. As soon as practicable after the Execution Date,
------------------
ZSPN will make all other filings required by Legal Requirements to be made by
ZSPN or any of the ZSPN Subsidiaries in order to consummate the Contemplated
Transactions or the Roll-Up. Between the date of this Agreement and the Closing
Date, ZSPN will cooperate with Entravision and Acquisition Co. with respect to
all filings that Entravision or Acquisition Co. elect to make or are required by
Legal Requirements to make in connection with the Contemplated Transactions.
7.11 Third-Party Consents. ZSPN shall obtain, or cause to be obtained
--------------------
prior to the Closing Date, any and all required third-party Consents listed on
Schedule 4.2 as "Material Consents." Entravision acknowledges that Schedule 4.2
------------ ------------
is incomplete as of the Execution Date and shall be amended pursuant to the
procedure set forth in Section 7.5 above to include all Material Consents within
thirty (30) days of the Execution Date.
7.12 Notice of Certain Developments. Between the date of this Agreement
------------------------------
and the Closing Date, ZSPN shall give prompt written notice to Entravision (i)
if any of the assets of the
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<PAGE>
Radio Stations, the Outdoor Business or the Internet Sites shall have suffered
damage on account of fire, explosion or other cause of any nature which is
sufficient to prevent operation of the Radio Stations, the Outdoor Business or
the Internet Sites for twenty-four (24) continuous hours or more and (ii) if the
regular broadcast transmission of the Radio Stations in the normal and usual
manner in which they heretofore have been operating is interrupted for a period
of five (5) continuous hours or more.
7.13 No Inconsistent Action. Between the date of this Agreement and the
----------------------
Closing Date, ZSPN will not take any action which is materially inconsistent
with their obligations under this Agreement, or that would reasonably be
expected to materially hinder or delay the consummation of the Contemplated
Transactions, the IPO or the Roll-Up. ZSPN will not take any action that would
disqualify or impair ZSPN as the assignor of the Radio Stations or as owners and
operators of the Radio Stations.
7.14 Environmental Audit/Engineering/Soils Investigation. At its sole
---------------------------------------------------
option, within forty-five (45) days of the execution of this Agreement,
Entravision may commission a Phase I (or Phase II, if necessary) environmental
audit and an engineering and soils and geotechnical investigation of any of the
Real Property owned or leased by ZSPN, to be conducted by a company selected by
Entravision (and reasonably acceptable to ZSPN and to be conducted under
protocols reasonably approved by ZSPN) and at Entravision's sole expense. If
such environmental audit discloses the presence of any Hazardous Substances in
violation of the Environmental Laws on any such Real Property which would have a
ZSPN Material Adverse Effect, ZSPN shall at its own expense use Best Efforts to
promptly comply with the applicable Environmental Laws to bring such property
into such compliance as would prevent a ZSPN Material Adverse Effect ("Material
Environmental Compliance"). If such property is not brought into Material
Environmental Compliance by the Closing Date, the Closing will nonetheless occur
(notwithstanding any possible Breach of Section 4.21 or other Breach of warranty
or misrepresentation hereunder relating to such Hazardous Substances) and (i)
the Cash Consideration Value will be reduced by an amount (the "Environmental
Clean-Up Amount") which represents a reasonable estimate of the reasonable out-
of-pocket costs and expenses of bringing such property into Material
Environmental Compliance plus a contingency reserve of fifteen percent (15%) of
such estimated costs and expenses, (ii) the Environmental Clean-Up Amount will
be deposited into escrow under arrangements satisfactory to the ZSPN
Representatives and Entravision, (iii) Entravision will continue to use Best
Efforts (but at an out-of-pocket cost limited to the Environmental Clean-Up
Amount) to promptly achieve Material Environmental Compliance under a plan and
utilizing such contractor(s) as may be reasonably agreed upon by Entravision and
the ZSPN Representatives, and (iv) the balance of the Environmental Clean-Up
Amount, if any, remaining upon the achieving of Material Environmental
Compliance shall be promptly distributed to the Major Stockholders as directed
by the ZSPN Representatives in writing. Any dispute under this Section 7.14
shall be resolved by Arthur Andersen LLP, which determination shall be
conclusive and binding on all parties, and the fees and expenses of whom shall
be borne equally by Entravision and ZSPN before the Closing and paid out of the
Environmental Clean-Up Amount after the Closing.
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<PAGE>
7.15 Post-Closing Covenants. After the Closing, ZSPN and the Major
----------------------
Stockholders will execute any further documents consistent with this Agreement,
provide any further reasonably available information and take any other actions
not imposing significant financial or operational obligations in excess of the
other obligations imposed by this Agreement, upon the request of Entravision
based upon its reasonable determination that those actions are required to
enable Entravision or the Surviving Corporation to effectuate this Agreement.
7.16 Affiliate Agreements. Schedule 7.16 sets forth those persons who, in
-------------------- -------------
ZSPN's reasonable judgment, are or may be "affiliates" of ZSPN within the
meaning of Rule 145 (each such person an "Affiliate") promulgated under the
Securities Act. ZSPN shall provide Entravision such information and documents
as Entravision shall reasonably request for purposes of reviewing such lists.
Each Major Stockholder who is an Affiliate shall deliver to Entravision prior to
the Closing, an executed Affiliate Agreement, substantially in the form attached
hereto as Exhibit "J" and incorporated herein by this reference. Entravision
-----------
shall be entitled to place appropriate legends on the certificates evidencing
any Entravision Class A Common Stock to be received by such Affiliates pursuant
to the terms of this Agreement, and to issue appropriate stop transfer
instructions to the transfer agent for Entravision Class A Common Stock,
consistent with the terms of such Affiliate Agreements.
7.17 Termination of the Stockholders Agreement. The Stockholders
-----------------------------------------
Agreement shall be terminated concurrently with the Closing and thereafter shall
be of no further force or effect.
ARTICLE 8.
COVENANTS OF ENTRAVISION AND ACQUISITION CO.
PRIOR TO CLOSING DATE
8.1 Access and Investigation. Between the date of this Agreement and the
------------------------
Closing Date, Entravision will, and will cause its Representatives to, (i)
afford ZSPN and its Representatives reasonable access during normal business
hours to the personnel, properties (including subsurface testing), Contracts,
books and records and other documents and data of Entravision, (ii) furnish ZSPN
and its Representatives with true, complete and correct copies of all such
Contracts, books and records and other existing documents and data as they may
reasonably request and (iii) furnish ZSPN and its Representatives with such
additional financial, operating and other data and information as they may
reasonably request. Entravision agrees that prior to consummation of the
Contemplated Transactions, to the extent available, ZSPN will be furnished with
such accounting information and reports to the extent ZSPN deems necessary to
enable ZSPN to satisfy the disclosure or exemption requirements of any lender
providing financing, or state or federal securities regulators. Nothing in this
Section 8.1 shall require Entravision to compile accounting information or
prepare reports that it would not otherwise compile or prepare. All such
information is delivered subject to the Confidentiality Agreement.
8.2 Notification. Between the date of this Agreement and the Closing
------------
Date, Entravision will promptly notify ZSPN in writing if Entravision become
aware of any fact or
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<PAGE>
condition that causes or constitutes a Breach of any of the representations and
warranties of Entravision or Acquisition Co. in this Agreement, or if
Entravision becomes aware of the occurrence after the date of this Agreement of
any fact or condition that would (except as expressly contemplated by this
Agreement) cause or constitute a Breach of any such representation or warranty
had such representation or warranty been made as of the time of occurrence or
discovery of such fact or condition. If any such fact or condition is disclosed
to ZSPN by Entravision as set forth above, or any fact or condition that is
discovered by ZSPN independently prior to the Closing Date, require any change
in the Entravision Schedules if the Entravision Schedules were dated the date of
the occurrence or discovery of any such fact or condition between the date of
this Agreement and the Closing Date, Entravision will promptly deliver to ZSPN a
supplement to the Schedules specifying such change; provided, however, that no
disclosure by Entravision of any fact or condition pursuant to this Section 8.2
shall be deemed to amend or supplement the Schedules or prevent or cure any
misrepresentation or Breach of any representation or warranty if such fact or
condition would have, or would reasonably be expected to have, an Entravision
Material Effect as reflected in the representations and warranties of
Entravision in Article 5 above.
8.3 Preservation of Business. Entravision will and will cause the
------------------------
Entravision Subsidiaries to use commercially reasonable efforts to keep their
business and properties substantially intact, in each instance where the failure
to comply with this Section 8.3 is known to Entravision to be reasonably likely
to result in, and in fact results in an Entravision Material Adverse Effect.
8.4 Indebtedness of Entravision. Without the consent of ZSPN (not to be
---------------------------
unreasonably withheld) Entravision will not increase its Indebtedness after the
Execution Date, except in connection with the acquisitions of television or
radio properties by Entravision.
8.5 Best Efforts. Between the date of this Agreement and the Closing
------------
Date, Entravision and Acquisition Co. will use their Best Efforts to cause the
conditions in Section 10.2 below to be satisfied. Notwithstanding anything to
the contrary contained herein and without limiting the foregoing, it shall be
Entravision's responsibility to arrange to assume, continue, replace, refinance
or repay the City National Bank/Union Bank Credit Facilities and the Bank of
Montreal Credit Facilities.
8.6 Application for FCC Consent. As soon as practicable after the
---------------------------
Execution Date, Entravision shall, and shall cause Holdings to, jointly with
ZSPN file the FCC Consent. Entravision will diligently take, or cooperate in the
taking of, or shall cause Holdings to diligently take, or cooperate in the
taking of all steps that are necessary, proper or desirable to expedite the
preparation of such application and to obtain FCC Consent, including, without
limitation, all steps necessary to comply with the FCC's multiple ownership
rules; provided, however, that in no event shall Entravision be required by the
terms of this Agreement to dispose of more than three (3) radio stations in the
Monterey/Salinas DMA or more than one (1) radio station in the Sacramento DMA
(with such limitations referred to herein as the "Maximum
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<PAGE>
Required Dispositions"). Entravision will promptly provide, and shall cause
Holdings to promptly provide, ZSPN with a true, complete and correct copy of any
pleading or other document served on it relating to such application. If the FCC
Consent imposes any condition on Entravision, Acquisition Co. or Holdings,
Entravision or Acquisition Co. shall use their Best Efforts to comply, and shall
cause Holdings to comply, with such condition prior to the Closing; provided,
however, such efforts shall not require Entravision or dispose of assets of
Entravision or the Surviving Corporation in excess of the Maximum Required
Dispositions. If reconsideration or judicial review is sought with respect to
the FCC Consent, and such reconsideration or review relates to Entravision,
Acquisition Co. or Holdings, Entravision or Acquisition Co. shall vigorously
oppose, and shall cause Holdings to oppose, such reconsideration or judicial
review at their own expense.
8.7 Filing Under HSR Act. As soon as practicable after full execution of
--------------------
this Agreement, Entravision agrees to make a separate filing of the Notification
and Report Form pursuant to the HSR Act with respect to the Contemplated
Transactions as promptly as practicable and supply any additional information or
documentary material that may be required under the HSR Act and to take all
other actions as reasonably necessary to cause the expiration or termination of
the applicable waiting period under the HSR Act as soon as possible.
Entravision will use its Best Efforts to cooperate in all respects with ZSPN in
conjunction with any such filing submission or other inquiry and to promptly
notify ZSPN of any communication received from or given to the Antitrust
Department of the Department of Justice or the Federal Trade Commission and to
permit the other party to review such communication. All HSR filing fees and
expenses will be borne fifty percent (50%) by Entravision and fifty percent
(50%) by ZSPN.
8.8 Required Approvals. As soon as practicable after the Execution Date,
------------------
Entravision will make all other filings required by Legal Requirements to be
made by Entravision or any of the Entravision Subsidiaries in order to
consummate the Contemplated Transactions. Between the date of this Agreement
and the Closing Date, Entravision will cooperate with ZSPN with respect to all
filings that ZSPN elects to make or is required by Legal Requirements to make in
connection with the Contemplated Transactions.
8.9 No Inconsistent Action. Entravision and Acquisition Co. will not
----------------------
take any action which is materially inconsistent with their obligations under
this Agreement or the Exchange Agreement, or that would hinder or delay the
consummation of the Contemplated Transactions or the Roll-Up, including, without
limitation, consenting to an amendment, waiver of termination of the Exchange
Agreement in a fashion which has an adverse effect on ZSPN or the Stockholders.
Entravision and Acquisition Co. will not take any action that would disqualify
or impair Entravision or Holdings as the assignees of the Radio Stations or as
the owner and operator of the Radio Stations. Immediately prior to the
consummation of the Roll-Up, the Corporation will have no material assets and no
liabilities.
8.10 Bank Consent. Entravision shall obtain the Consent of Union Bank of
------------
California to the Contemplated Transactions within sixty (60) days of the
Execution Date.
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<PAGE>
8.11 Acquisition of Entravision. Prior to the Closing, Entravision will
--------------------------
not enter into an agreement regarding the sale of its business or assets (other
than in the Ordinary Course of Business) or any merger, consolidation, business
combination, sale of ownership interest or similar transaction involving
Entravision unless provision shall be made so that the Stockholders shall be
entitled to receive cash in an amount equal to the Cash Consideration Value and
either cash, securities or other property in the form and in an amount equal to
that (and with substantially the same rights) which such Stockholders would have
been entitled to receive as holders of the Class A Common Stock of the
Corporation issuable to the Stockholders hereunder in the Merger and had the
sale or similar transaction occurred after the Roll-Up.
ARTICLE 9.
POST-CLOSING COVENANTS
The parties hereby agree as follows with respect to the period following
the Closing:
9.1 Further Assurances. In case at any time after the Closing any
------------------
further action is necessary or desirable to carry out the purposes of this
Agreement, each of the parties will take such further action (including the
execution and delivery of such further instruments and documents) as the other
party reasonably may request, all the sole cost and expense of the requesting
party.
9.2 Major Stockholder Confidentiality and Non-Solicitation. Each of the
------------------------------------------------------
Major Stockholders will regard and preserve as confidential all Confidential
Information of Entravision and ZSPN or their respective subsidiaries and refrain
from publishing or disclosing any part of it or for using, copying or
duplicating it in any way or by any means or for any purposes other than those
expressly set forth in this Agreement. From and after the Closing and for a
period of four (4) years thereafter, without the prior written consent of the
Corporation, TSG: (i) will not wilfully or knowingly induce or attempt to induce
any lessor, licensor, customer, supplier or other business associate of
Entravision, the Surviving Corporation or any of their respective Subsidiaries
to cease doing business with any such party; (ii) will not wilfully or knowingly
interfere in a material fashion with any portion of the business of Entravision,
the Surviving Corporation or any of their respective Subsidiaries after the
Closing; or (iii) will not solicit any person who is or who was an employee of
Entravision or induce or attempt to induce any employee of Entravision, the
Surviving Corporation or any of their respective Subsidiaries to terminate his
or her employment with such party. In no event will any investment by TSG in a
portfolio company or the role of any affiliate of TSG as a director or advisor
thereto cause the actions or activities of any such portfolio company to be
attributed to TSG for purposes of this Section 9.2, nor shall this Section 9.2
apply to any future investment fund organized by the principals of TSG.
9.3 Stock Plans and Options.
-----------------------
(a) Entravision shall provide to each holder of an outstanding option
to
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<PAGE>
purchase ZSPN Common Stock (a "ZSPN Option") under the ZSPN 1999 Stock Incentive
Plan the notice (if any) required pursuant to such plan.
(b) From and after the Effective Time, each outstanding ZSPN Option
shall be assumed by Entravision and shall be deemed to constitute a substitute
option under the Entravision Communications Corporation 2000 Omnibus Equity
Incentive Plan to acquire, on the same terms and conditions as were applicable
under such ZSPN Option (including credit for vesting periods elapsed under the
ZSPN 1999 Stock Incentive Plan), a number of shares of Entravision Class A
Common Stock (rounded down to the nearest whole number) equal to the product of
(i) the number of ZSPN shares pursuant to such ZSPN Option and (ii) ZSPN Share
Consideration divided by (iii) the Entravision Share Consideration. The
exercise price per share of Entravision Class A Common Stock (rounded up to the
nearest whole cent) pursuant to such newly issued Entravision option shall be
calculated as the quotient of (a) the exercise price per share of ZSPN Common
Stock pursuant to such ZSPN Option and (b) the quotient of ZSPN Share
Consideration and the Entravision Share Consideration. An illustration of the
above calculation is attached hereto as Annex II.
--------
(c) As soon as practicable after the Effective Time, Entravision shall
deliver to the participants in the ZSPN 1999 Stock Incentive Plan an appropriate
notice setting forth such participants' rights pursuant thereto and the
substitute grants pursuant to the Entravision Communications Corporation 2000
Omnibus Equity Incentive Plan shall continue in effect on the same terms and
conditions (including vesting and repurchase rights, restrictions on transfer
and other contractual obligations, and subject to the adjustments required by
this Section 9.3 after giving effect to the Merger). Entravision shall provide
in the substitute option agreements that ZSPN Options which qualified as
incentive stock options pursuant to Section 422 of the IRC prior to the
Effective Time will continue to so qualify after the Effective Time.
(d) Entravision shall take all corporate action necessary to reserve
and make available for issuance a sufficient number of shares of Entravision
Class A Common Stock for delivery upon the exercise of options substituted for
the ZSPN Options assumed in accordance with this Section 9.3. As soon as
practicable after the expiration of a one hundred eighty (180) day period
following the IPO, Entravision shall use reasonable and diligent efforts to file
a registration statement on Form S-8 (or any successor or other appropriate
form) with respect to the shares of Entravision Class A Common Stock subject to
options substituted for the ZSPN Options pursuant to this Section 9.3 and shall
use its reasonable and diligent efforts to maintain the effectiveness of such
registration statement or registration statements (and maintain the current
status of the prospectus or prospectuses contained therein) for as long as the
options substituted for ZSPN Options remain outstanding. With respect to those
individuals, if any, who subsequent to the Merger will be subject to the
reporting requirements under Section 16(a) of the Exchange Act, where
applicable, Entravision shall administer options substituted for ZSPN Options
pursuant to this Section 9.3 in a manner that complies with Rule 16b-3
promulgated under the Exchange Act.
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<PAGE>
ARTICLE 10.
CONDITIONS PRECEDENT TO
PARTIES' OBLIGATIONS TO CLOSE
10.1 Conditions Precedent to the Obligation of Entravision and Acquisition
---------------------------------------------------------------------
Co. to Close. The obligation of Entravision and Acquisition Co. to effect the
------------
Contemplated Transactions and to take the other actions required to be taken by
Entravision and Acquisition Co. at the Closing is subject to the satisfaction,
at or prior to the Closing, of each of the following conditions (any of which
may be waived by Entravision, in whole or in part, where permissible):
(a) Representations and Warranties. Representations and warranties of
------------------------------
ZSPN and the Stockholders set forth in this Agreement shall be true and correct
in all material respects as of the date of this Agreement and (except to the
extent such representations and warranties expressly speak of an earlier date)
as of the Closing Date as though made on and as of the Closing Date, except (i)
for changes contemplated by this Agreement or (ii) where the failure to be true
and correct could not reasonably be expected to have a ZSPN Material Adverse
Effect or a material adverse effect upon the parties' ability to consummate the
Merger in accordance with this Agreement.
(b) Performance. All of the covenants and obligations that ZSPN and
-----------
the Stockholders are required to perform or to comply with pursuant to this
Agreement at or prior to the Closing, considered collectively, and each of these
covenants and obligations, considered individually, must have been duly
performed and complied with in all material respects, including, without
limitation, the obligations of ZSPN and the Stockholders pursuant to Section 3.4
above.
(c) Closing Certificate. Entravision shall have received from a duly-
-------------------
authorized officer of ZSPN a certificate, dated as of the Closing, certifying
that the conditions specified in Sections 10.1(a) and 10.1(b) above have been
fulfilled.
(d) No Injunctions or Restraints; Illegality. No temporary
----------------------------------------
restraining order, preliminary or permanent injunction or other order issued by
any court of competent jurisdiction or other legal or regulatory restraint or
prohibition preventing or prohibiting the consummation of the Merger or limiting
or restricting in a material fashion Entravision's conduct or operation of the
business of Entravision or ZSPN after the Merger shall have been issued and be
in effect, nor shall any proceeding brought by the Governmental Body seeking any
of the foregoing be pending; nor shall any action have been taken or any
statute, rule, regulation or order have been enacted, and entered or enforced or
deemed applicable to the Merger which makes the consummation of the Merger
illegal or prevents or prohibits the Merger.
(e) No Adverse Claims. There must not have been made or Threatened by
-----------------
any Person (other than ZSPN or the Stockholders, as the case may be) any claim
asserting that such Person (i) is the holder or the beneficial owner of, or has
the right to acquire or to obtain beneficial ownership of any material number of
the Shares or the Subsidiary Shares or (ii) is
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<PAGE>
entitled to all or any material portion of the ZSPN Equity Consideration unless
the Stockholders shall have supplied Entravision with an unconditional indemnity
against such claim, liabilities, damages, reasonable costs and expenses
(including reasonable attorney's fees) arising out of such claim reasonably
satisfactory to Entravision and its counsel.
(f) Consents. The FCC Consent shall have become a Final Order unless
--------
Entravision and ZSPN shall have by mutual written agreement agreed to close on
the initial FCC Consent. The applicable waiting period under the HSR Act shall
have expired or been terminated and all other material consents, approvals,
authorizations, exemptions and waivers from any Governmental Body that shall be
required in order to enable Entravision or Acquisition Co. to consummate the
Contemplated Transactions shall have been obtained.
(g) IPO. The IPO shall have closed (unless ZSPN elects to proceed
---
with the Interim Closing as set forth in Section 3.2 above).
(h) Roll-Up. The Roll-Up shall have closed (provided that nothing in
-------
this Section 10.1(h) shall be deemed to limit ZSPN's right under this Agreement
to require Entravision to proceed with the Closing and Roll-Up).
10.2 Conditions Precedent to the Obligation of ZSPN and Major Stockholders
---------------------------------------------------------------------
to Close. The obligation of ZSPN and the Major Stockholders to effect the
--------
Contemplated Transactions and to take the other actions required to be taken by
ZSPN and the Major Stockholders at the Closing is subject to the satisfaction,
at or prior to the Closing, of each of the following conditions (any of which
may be waived by ZSPN, in whole or in part, where permissible):
(a) Representations and Warranties. Representations and warranties
------------------------------
of Entravision set forth in this Agreement shall be true and correct in all
material respects as of the date of this Agreement and (except to the extent
such representations and warranties expressly speak of an earlier date) as of
the Closing Date as though made on and as of the Closing Date, except (i) for
changes contemplated by this Agreement or (ii) where the failure to be true and
correct could not reasonably be expected to have an Entravision Material Adverse
Effect or a material adverse effect upon the parties' ability to consummate the
Merger in accordance with this Agreement.
(b) Performance. All of the covenants and obligations that
-----------
Entravision and Acquisition Co. are required to perform or to comply with
pursuant to this Agreement at or prior to the Closing, considered collectively,
and each of these covenants and obligations, considered individually, must have
been performed and complied with in all material respects, including, without
limitation, the obligations of Entravision and Acquisition Co. pursuant to
Section 3.5 above.
(c) Closing Certificate. ZSPN shall have received from a duly-
-------------------
authorized
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<PAGE>
officer of Entravision a certificate, dated as of the Closing, certifying that
the conditions specified in Sections 10.2(a) and 10.2(b) above have been
fulfilled.
(d) No Injunctions or Restraints; Illegality. No temporary
----------------------------------------
restraining order, preliminary or permanent injunction or other order issued by
any court of competent jurisdiction or other legal or regulatory restraint or
prohibition preventing or prohibiting the consummation of the Merger or limiting
or restriction Entravision's conduct or operation of the business of Entravision
of ZSPN after the Merger shall have been issued and be in effect; nor shall any
action have been taken or any statute, rule, regulation or order have been
enacted, and entered or enforced or deemed applicable to the Merger which makes
the consummation of the Merger illegal or prevents or prohibits the Merger.
(e) Consents. The FCC Consent shall have become a Final Order unless
--------
Entravision and ZSPN shall have by mutual written agreement agreed to close on
the initial FCC Consent. The applicable waiting period under the HSR Act shall
have expired or been terminated and all other consents, approvals,
authorizations, exemptions and waivers from any Governmental Body that shall be
required in order to enable ZSPN or the Stockholders to consummate the
Contemplated Transactions shall have been obtained.
(f) IPO. The IPO shall have closed (unless ZSPN elects to proceed
---
with the Interim Closing as set forth in Section 3.2 above).
(g) Roll-Up. The Roll-Up shall have closed.
-------
(h) Credit Facilities. Provision shall have been made by Entravision
-----------------
to repay the City National Bank/Union Bank Credit Facilities and the Bank of
Montreal Credit Facilities concurrently with the Closing.
(i) Fully-Diluted Capitalization. The fully-diluted capitalization
----------------------------
of the Corporation as of the Closing (but without giving effect to the IPO)
shall be as set forth in Schedule 5.4(b) subject only to adjustment to reflect
---------------
the change in the Exchange Number, or the issuance of warrants to a bridge
lender in connection with the closing of the Citicasters Radio acquisition.
ARTICLE 11.
TERMINATION
11.1 Termination Events. This Agreement may, by written notice given
------------------
prior to or at the Closing, be terminated:
(a) by Entravision: (i) if there shall have been a material Breach by
ZSPN or the Stockholders of any representation, warranty, covenant or agreement
which could be reasonably expected to have a ZSPN Material Adverse Effect or
material adverse effect upon the
-54-
<PAGE>
parties' ability to consummate the Merger in accordance with the terms of this
Agreement or the IPO, which Breach by its nature cannot be cured or shall not
have been cured on the date immediately preceding the scheduled Closing Date;
(ii) if the FCC dismisses or denies the application for the FCC Consent and such
order is a Final Order; or (iii) if there shall be any final decree or order
that would prevent or make unlawful the Closing;
(b) by ZSPN: (i) if there shall have been a material Breach by
Entravision or Acquisition Co. of any representation, warranty, covenant or
agreement which could be reasonably expected to have an Entravision Material
Adverse Effect or material adverse effect upon the parties' ability to
consummate the Merger in accordance with the terms of this Agreement or the
Roll-Up in accordance with the terms of the Exchange Agreement, which Breach by
its nature cannot be cured or shall not have been cured within twenty (20) days
following receipt by the breaching party of notice of such Breach or on the date
immediately preceding the scheduled Closing Date, whichever is earlier; (ii) if
the FCC dismisses or denies the application for the FCC Consent and such order
is a Final Order; (iii) if there shall be any final decree or order that would
prevent or make unlawful the Closing; (iv) if Entravision Communications
Corporation has not filed a Form S-1 Registration Statement by April 30, 2000;
(v) if Entravision Communications Company, L.L.C. has not closed the acquisition
of Latin Communications Group Inc. on or before May 31, 2000; or (vi) the
parties have not received the FCC Consent and/or the expiration or early
termination of the applicable waiting period under the HSR Act on or before
December 31, 2000.
(c) by mutual written consent of Entravision and ZSPN;
(d) by either Entravision or ZSPN if the Closing has not occurred
(other than through the failure of any party seeking to terminate this Agreement
to comply fully with its obligations under this Agreement) on or before March
31, 2001, or such later date as the parties may agree upon; provided, however,
that this section may not be utilized by any party at such time as such party is
in Breach of or default under this Agreement in any material respect.
11.2 Rights of Parties for Nonperformance or Upon Termination.
--------------------------------------------------------
(a) In addition to any other remedies provided by law, if ZSPN does
not have a right to terminate under Section 11.1 above, but ZSPN or the
Stockholders refuse to close the Contemplated Transactions or prevent the
Closing due to a Breach of this Agreement, Entravision shall have the right to
waive any grounds they may have to terminate under Section 11.1 above and to
obtain specific performance of the obligations of ZSPN and the Stockholders to
consummate the Contemplated Transactions. ZSPN and the Stockholders acknowledge
and agree that the Radio Stations, the Outdoor Business and the Internet Sites
are unique assets and ZSPN and the Stockholders expressly agree monetary damages
would be inadequate to compensate Entravision for the refusal of ZSPN or the
Stockholders to perform the obligations for which the remedy of specific
performance is granted herein. Accordingly, ZSPN and the Stockholders
acknowledge and agree that such refusals to perform will cause irreparable
injury to
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<PAGE>
Entravision and that Entravision shall be entitled to obtain injunctive relief
for specific performance of the obligations specifically listed in this Section
11.2.
(b) In addition to any other remedies provided by law, if Entravision
does not have a right to terminate pursuant to Section 11.1 above, but
Entravision refuses to close the Contemplated Transactions or prevent the
Closing due to a Breach of this Agreement, ZSPN shall have the right to waive
any grounds they may have to terminate under Section 11.1 above and to obtain
specific performance of the obligations of Entravision to consummate the
contemplated transaction in accordance with the terms hereof. Entravision
acknowledges and agrees that any such refusal to perform will cause irreparable
injury to ZSPN and the Stockholders and ZSPN shall be entitled to obtain
injunctive relief for specific performance of the obligations specifically
listed in this Section 11.2.
(c) If this Agreement is terminated pursuant to Section 11.1, the
Contemplated Transactions shall be abandoned without further action, rights or
obligations by the parties hereto to one another, and all filings, applications
and other submissions made hereunder shall, to the extent practicable, be
withdrawn from the persons to which they were made, except that the last
sentence of Section 7.1, the second sentence of Section 13.1, Sections 13.2 and
13.14, this Section 11.2 and the Confidentiality Agreement shall remain in
effect, and provided that nothing herein shall relieve any party from liability
for any breach of any representation, warranty, covenant or agreement in this
Agreement prior to such termination.
ARTICLE 12.
REPRESENTATIVES
By virtue of the approval of this Agreement and the Merger by the Board of
Directors of ZSPN, the approval of this Agreement by the Major Stockholders
pursuant to the Certificate of Incorporation and Bylaws of ZSPN and the
applicable provisions of the Delaware Code and the execution of this Agreement,
each Major Stockholder agrees:
12.1 Authorization of the ZSPN Representatives. Upon adoption of this
-----------------------------------------
Agreement by the Board of Directors of ZSPN and approval of this Agreement by
the Major Stockholders pursuant to the Certificate of Incorporation and Bylaws
of ZSPN and the applicable provisions of the Delaware Code, the ZSPN
Representatives (and each successor appointed in accordance with Section 12.3
below) hereby is appointed, authorized and empowered to act, by decision of both
of the ZSPN Representatives (if there is more than one), as the ZSPN
Representatives, on behalf of the Major Stockholders, in connection with and to
facilitate the consummation of the Contemplated Transactions, for the purposes
and with the powers and authority hereinafter set forth in this Article 12,
which shall include the power and authority:
(a) to deliver all Certificates representing the Shares tendered
therewith to Entravision and to collect and receive all moneys and stock payable
to the Major Stockholders pursuant to Section 2.8 above to disburse and pay the
same to each of the Major Stockholders pursuant to Section 2.8 above; and
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<PAGE>
(b) to make, execute, acknowledge and deliver all such other
agreements, guarantees, orders, receipts, endorsements, notices, requests,
instructions, certificates, stock powers, letters and other writings, and, in
general, to do any and all things and to take any and all action that the ZSPN
Representatives, in their sole and absolute discretion, may consider necessary
or proper or convenient in connection with or to carry out the activities
described in paragraph (a) above and the Contemplated Transactions.
The grant of authority provided for in this Section 12.1: (i) is coupled
with an interest and is being granted, in part, as an inducement to Entravision
and Acquisition Co. to enter into this Agreement, and shall be irrevocable and
survive the death, incompetency, bankruptcy or liquidation of any Major
Stockholder and shall be binding on any successor thereto; and (ii) subject to
the provisions of Section 12.3 below, may be exercised by any of the ZSPN
Representatives acting by signing as an ZSPN Representative of each of the Major
Stockholders.
12.2 Compensation; Exculpation; Indemnity.
------------------------------------
(a) The ZSPN Representatives shall not be entitled to any fee,
commission or other compensation for the performance of their services
hereunder, but shall be entitled to the payment of all of their out-of-pocket
expenses incurred as ZSPN Representatives, and in furtherance of the foregoing,
may pay or cause to be paid or reimburse themselves for the payment of any and
all such expenses.
(b) In dealing with this Agreement and any instruments, agreements or
documents relating thereto, and in exercising or failing to exercise all or any
of the powers conferred upon the ZSPN Representatives hereunder or thereunder,
(i) the ZSPN Representatives shall not assume any, and shall incur no,
responsibility whatsoever to any Major Stockholder by reason of any error in
judgment or other act or omission performed or omitted hereunder or in
connection with this Agreement or any such other agreement, instrument or
document and (iii) the ZSPN Representatives shall be entitled to rely on the
advice of counsel, public accountants or other independent experts experienced
in the matter at issue, and any error in judgment or other act or omission of
the ZSPN Representatives pursuant to such advice shall in no event subject the
ZSPN Representatives to liability to any Major Stockholder.
(c) Each Major Stockholder, jointly and severally, shall indemnify
the ZSPN Representatives up to, but not exceeding, an amount equal to the
aggregate Share Merger Consideration received by such Person hereunder against
any and all damages, liabilities, claims, obligations, costs and expenses,
including reasonable attorneys, accountants and other experts fees in the amount
of any judgment against them, of any nature whatsoever, arising out of or in
connection with any claim, investigation, challenge, action or proceeding or in
connection with the appeal thereof, relating to the acts or omissions of the
ZSPN Representatives hereunder. All of the exculpations, indemnities, immunities
and powers granted to the ZSPN Representatives under this Agreement shall
survive the Closing and/or any termination of this Agreement.
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<PAGE>
(d) Entravision and the Surviving Corporation shall have the right to
rely upon all actions taken or omitted to be taken by the ZSPN Representatives
pursuant to this Agreement or any applicable ancillary document, and
notwithstanding anything herein to the contrary, neither Entravision,
Acquisition Co., ZSPN nor the Surviving Corporation shall have any
responsibility or obligation whatsoever to any Major Stockholder or to any other
party with respect to or arising out of any actions taken or any inaction by the
ZSPN Representatives.
12.3 Removal and Replacement of a ZSPN Representatives; Successor ZSPN
-----------------------------------------------------------------
Representatives; Action by ZSPN Representatives.
-----------------------------------------------
(a) If one or more of the ZSPN Representatives is unable or
unavailable to perform his, her or its duties hereunder, the remaining ZSPN
Representatives shall have the power to act until the appointment of one or more
successor ZSPN Representatives in accordance with this Section 12.3. A
successor ZSPN Representative, who shall be a Major Stockholder or a
representative of a non-individual Major Stockholder, shall be appointed by the
remaining ZSPN Representative unless such person is unable or unwilling to
accept such appointment.
(b) Any ZSPN Representative or all of them may be removed at any time
by a written notice delivered by the holders of a majority of the Shares to the
ZSPN Representatives, the other Major Stockholders, Entravision and the
Surviving Corporation. ZSPN Representatives so removed shall be replaced
promptly by the holders of a majority of the Shares by written notice delivered
to all of the Major Stockholders, Entravision and the Surviving Corporation.
Notwithstanding the foregoing, no ZSPN Representative may be removed if such
removal would result in all ZSPN Representative positions being vacant.
(c) Any successor ZSPN Representative shall have all of the authority
and responsibilities conferred upon or delegated to a ZSPN Representative
pursuant to this Article 12.
ARTICLE 13.
GENERAL PROVISIONS
13.1 Tax Matters. The parties hereto intend the Merger and the Roll-Up to
-----------
qualify under Section 351(a) of the Code and will use all reasonable efforts to
cause the Merger and the Roll-Up to so qualify. Each party hereto will not
take, and will cause such party's affiliates and representatives not to take,
any actions or positions which may be expected to cause the Merger and the Roll-
Up not to so qualify. Each of the parties agrees to take all actions and
execute all documents deemed reasonably necessary to effectuate such
qualification.
13.2 Survival of Representations and Warranties. The representations and
------------------------------------------
warranties contained herein and in any certificate or other writing delivered
pursuant to this Agreement shall
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<PAGE>
not survive the Closing Date. All other covenants and agreements contained
herein which by their terms are to be performed in whole or in part, or which
prohibit actions, subsequent to the Closing Date, shall survive the Merger in
accordance with their terms.
13.3 Expenses. Except as otherwise expressly provided in this Agreement,
--------
each party to this Agreement shall separately bear its own expenses incurred in
connection with the preparation, execution and performance of this Agreement and
the Contemplated Transactions, including all fees and expenses of agents,
representatives, counsel and accountants, regardless of whether the Contemplated
Transactions are consummated. All HSR filing fees and expenses will be borne
fifty percent (50%) by Entravision and fifty percent (50%) by ZSPN.
13.4 Public Announcements. Other than those incidental to filings
--------------------
required to comply with Legal Requirements, any public announcement or similar
publicity with respect to this Agreement or the Contemplated Transactions will
be issued, if at all, at such time and in such manner as the parties mutually
determine. Unless consented to by the other parties in advance or required by
Legal Requirements, prior to the Closing, the parties hereto shall keep this
Agreement strictly confidential and may not make any disclosure of this
Agreement to any Person. The parties will consult with each other concerning
the means by which the employees, customers and suppliers of ZSPN and others
having dealings with ZSPN will be informed of the Contemplated Transactions, and
Entravision shall have the right to be present for any such communication.
13.5 Confidentiality. Between the date of this Agreement and the Closing
---------------
Date, the parties will abide by the terms and conditions of the Confidentiality
Agreement. If the Contemplated Transactions are not consummated, each party
will promptly return or destroy all such written information furnished by the
other party.
13.6 Notices. All notices, consents, waivers and other communications
-------
under this Agreement must be in writing and will be deemed to have been duly
given when (i) delivered by hand (with written confirmation of receipt), (ii)
sent by facsimile (with written confirmation of receipt), provided that a copy
is mailed by certified mail, return receipt requested, or (iii) when received by
the addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the appropriate addresses and facsimile
numbers set forth below (or to such other addresses and facsimile numbers as a
party may designate by notice to the other parties):
<TABLE>
<S> <C>
If to Entravision or Acquisition Co: Entravision Communications Company, L.L.C.
Attention: Walter F. Ulloa and Philip C. Wilkinson
2425 Olympic Boulevard, Suite 6000 West
Santa Monica, California 90404
Telephone: (310) 447-3870
Facsimile: (310) 447-3899
</TABLE>
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<PAGE>
with a required copy to: Zevnik Horton Guibord McGovern
Palmer & Fognani, L.L.P.
Attention: Steven G. Rowles, Esq.
101 West Broadway, 17th Floor
San Diego, California 92101
Telephone: (619) 515-9600
Facsimile: (619) 515-9628
If to ZSPN: Z-Spanish Media Corporation
Attention: Amador S. Bustos
Catherine J.K. Sandoval
Gabriel Nacht
1436 Auburn Boulevard
Sacramento, California 95815
Telephone: (916) 648-6090
Facsimile: (916) 646-3230
and with a required copy to: Proskauer Rose LLP
Attention: Peter G. Samuels, Esq.
1585 Broadway
New York, New York 10036-8299
Telephone: (212) 969-3000
Facsimile: (212) 969-2900
and with a required copy to: Shaw Pittman
Attention: David Oxenford, Esq.
2001 Pennsylvania Avenue, 4th Floor
Washington, D.C. 20006
Telephone: (202) 775-3546
Facsimile: (202) 296-6518
If to the Stockholders: TSG Capital Group, L.L.C.
Attention: Darryl B. Thompson
177 Broad Street, 12th Floor
Stamford, Connecticut 06901
Telephone: (203) 541-1535
Facsimile: (203) 541-1590
If to the ZSPN Representatives: Amador S. Bustos
Z-Spanish Media Corporation
1436 Auburn Boulevard
Sacramento, California 95815
Telephone: (916) 648-6090
Facsimile: (916) 646-3230
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<PAGE>
Darryl B. Thompson
TSG Capital Group, L.L.C.
177 Broad Street, 12th Floor
Stamford, Connecticut 06901
Telephone: (203) 541-1535
Facsimile: (203) 541-1590
13.7 Further Assurances. The parties agree to furnish upon request to
------------------
each other such further information, execute and deliver to each other such
other documents and to do such other acts and things, all as the other party may
reasonably request for the purpose of carrying out the intent of this Agreement
and the documents referred to in this Agreement.
13.8 Waiver. The rights and remedies of the parties to this Agreement are
------
cumulative and not alternative. Neither the failure nor any delay by any party
in exercising any right, power or privilege under this Agreement or the
documents referred to in this Agreement will operate as a waiver of such right,
power or privilege, and no single or partial exercise of any such right, power
or privilege will preclude any other or further exercise of such right, power or
privilege or the exercise of any other right, power or privilege. To the
maximum extent permitted by applicable law, (i) no claim or right arising out of
this Agreement or the documents referred to in this Agreement can be discharged
by one party, in whole or in part, by a waiver or renunciation of the claim or
right unless in writing signed by the other party, (ii) no waiver that may be
given by a party will be applicable except in the specific instance for which it
is given and (iii) no notice to or demand on one party will be deemed to be a
waiver of any obligation of such party or of the right of the party giving such
notice or demand to take further action without notice or demand as provided in
this Agreement or the documents referred to in this Agreement.
13.9 Entire Agreement and Modification. This Agreement supersedes all
---------------------------------
prior agreements between the parties with respect to its subject matter,
including, without limitation, that certain Letter of Intent dated February 24,
2000, as amended, except for the Confidentiality Agreement, and constitutes
(along with the Confidentiality Agreement and recitals hereto, and the exhibits,
Schedules and documents referred to in this Agreement) a complete and exclusive
statement of the terms of the agreement between the parties with respect to its
subject matter. This Agreement may not be amended except by a written agreement
executed by the party to be charged with the amendment.
13.10 Schedules. The Schedules are hereby incorporated by reference into
---------
this Agreement in their entirety. The disclosures in the Schedules must relate
only to the representations and warranties in the section of the Agreement to
which they expressly relate and not to any other representation or warranty in
this Agreement. In the event of any inconsistency between the statements in the
body of this Agreement and those in the Schedules (other than an exception
expressly set forth as such in the Schedules with respect to a specifically
identified representation or warranty), the statements in the body of this
Agreement will control.
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<PAGE>
13.11 Assignment, Successors and No Third-Party Rights. No party may
------------------------------------------------
assign any of its rights under this Agreement without the prior consent of the
other parties, which will not be unreasonably withheld or delayed. Subject to
the preceding sentence, this Agreement will apply to, be binding in all respects
upon, and inure to the benefit of the successors and permitted assigns of the
parties. Nothing expressed or referred to in this Agreement will be construed
to give any Person other than the parties to this Agreement any legal or
equitable right, remedy or claim under or with respect to this Agreement or any
provision of this Agreement. This Agreement and all of its provisions and
conditions are for the sole and exclusive benefit of the parties to this
Agreement and their successors and assigns.
13.12 Severability. If any provision of this Agreement is held invalid or
------------
unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.
13.13 Section Headings; Construction. The headings of sections in this
------------------------------
Agreement are provided for convenience only and will not affect its construction
or interpretation. All references to "Section" or "Sections" refer to the
corresponding section or sections of this Agreement. All words used in this
Agreement will be construed to be of such gender or number as the circumstances
require. Unless otherwise expressly provided, the word "including" does not
limit the preceding words or terms.
13.14 Time of Essence. With regard to all dates and time periods set
---------------
forth or referred to in this Agreement, time is of the essence.
13.15 Attorney's Fees. The prevailing party(ies) in any Proceeding
---------------
relating to the enforcement or interpretation of this Agreement may recover from
the unsuccessful party(ies) all costs, expenses and actual attorney's fees
(including expert witness and other consultants fees and costs) relating to or
arising out of (i) the Proceeding (whether or not the Proceeding results in a
judgment) and (ii) any post-judgment or post-award Proceeding including, without
limitation, one to enforce or collect any judgment or award resulting from the
Proceeding. All such judgments and awards shall contain a specific provision
for the recovery of all such subsequently incurred costs, expenses and actual
attorney's fees.
13.16 Governing Law. This Agreement will be governed by the laws of the
-------------
State of Delaware without regard to conflicts of laws principles.
13.17 Jurisdiction; Service of Process. Any Proceeding seeking to enforce
--------------------------------
any provision of, or based on any right arising out of, this Agreement must be
brought against any of the parties in the United States District Court for the
Central District of California, and each of the parties consents to the
jurisdiction of such courts (and of the appropriate appellate courts) in any
such
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<PAGE>
Proceeding and waives any objection to venue laid therein. Process in any
Proceeding referred to in the preceding sentence may be served on any party
anywhere in the world. In the event that the dispute fails to meet the
jurisdictional threshold requirements of the federal courts, venue shall lie in
the appropriate state courts sitting in Los Angeles County, California.
13.18 Counterparts; Facsimile. This Agreement may be executed in one or
-----------------------
more counterparts, all of which when fully executed and delivered by all parties
hereto and taken together shall constitute a single agreement, binding against
each of the parties. To the maximum extent permitted by law or by any
applicable governmental authority, this Agreement may be signed and transmitted
by facsimile with the same validity as if it were an ink-signed document. Each
signatory below represents and warrants by his or her signature that he or she
is duly authorized (on behalf of the respective entity for which such signatory
has acted) to execute and deliver this instrument and any other document related
to this transaction, thereby fully binding each such respective entity.
[Remainder of Page Intentionally Left Blank]
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<PAGE>
IN WITNESS WHEREOF, the parties have executed and delivered this
Acquisition Agreement and Plan of Merger as of the date first written above.
Entravision ENTRAVISION COMMUNICATIONS CORPORATION,
a Delaware corporation
By:/s/ Walter F. Ulloa
---------------------------------------------------------
Walter F. Ulloa, Chairman and Chief Executive Officer
By:/s/ Jeanette L. Tully
---------------------------------------------------------
Jeanette L. Tully, Chief Financial Officer
ENTRAVISION COMMUNICATIONS COMPANY, L.L.C.,
a Delaware limited liability company
By:/s/ Walter F. Ulloa
---------------------------------------------------------
Walter F. Ulloa, Chairman and Chief Executive Officer
By:/s/ Jeanette L. Tully
---------------------------------------------------------
Jeanette L. Tully, Chief Financial Officer
Acquisition Co. ZSPN ACQUISITION CORPORATION,
a Delaware corporation
By:/s/ Walter F. Ulloa
---------------------------------------------------------
Walter F. Ulloa, Chairman and Chief Executive Officer
By:/s/ Jeanette L. Tully
---------------------------------------------------------
Jeanette L. Tully, Chief Financial Officer
ZSPN Z-SPANISH MEDIA CORPORATION,
a Delaware corporation
By:/s/ Amador S. Bustos
---------------------------------------------------------
Name: Amador S. Bustos
-----------------------------------------------------
Title: President & CEO
-----------------------------------------------------
[Counterpart Signature Page to Acquisition Agreement and Plan of Merger]
<PAGE>
Major Stockholders Z-SPANISH MEDIA HOLDINGS, L.L.C.
By:/s/ Darryl B. Thompson
------------------------------------------------------
Name:
----------------------------------------------------
Title:
---------------------------------------------------
TSG ASSOCIATES II, INC.
By:/s/ Darryl B. Thompson
------------------------------------------------------
Name:
----------------------------------------------------
Title:
---------------------------------------------------
TSG ASSOCIATES III, LLC
By:/s/ Darryl B. Thompson
------------------------------------------------------
Name:
----------------------------------------------------
Title:
---------------------------------------------------
TSG CAPITAL FUND III, L.P.
By: TSG Associates III, LLC, its General Partner
By:/s/ Darryl B. Thompson
------------------------------------------------------
Name:
----------------------------------------------------
Title:
---------------------------------------------------
TSG VENTURES, L.P.
By: TSGVI Associates, Inc., its General Partner
By:/s/ Duane Hill
------------------------------------------------------
Name:
----------------------------------------------------
Title:
---------------------------------------------------
[Counterpart Signature Page to Acquisition Agreement and Plan of Merger]
<PAGE>
TSG CAPITAL FUND II, L.P.
By: TSG Associates II, L.P., its General Partner
By: TSG Associates II, Inc., its General Partner
By:/s/ Darryl B. Thompson
------------------------------------------------------
Name:
----------------------------------------------------
Title:
---------------------------------------------------
/s/ Amador S. Bustos
---------------------------------------------------------
Amador S. Bustos
/s/ Salvador H. Campos
---------------------------------------------------------
Salvador H. Campos
/s/ John S. Bustos
---------------------------------------------------------
John S. Bustos
---------------------------------------------------------
Glenn Emanuel
/s/ Arthur Rockwell
---------------------------------------------------------
Arthur Rockwell
BUSTOS ASSET MANAGEMENT, LLC
By:/s/ Amador S. Bustos
------------------------------------------------------
Name: Amador S. Bustos
--------------------------------------------------
Title: President
--------------------------------------------------
[Counterpart Signature Page to Acquisition Agreement and Plan of Merger]
<PAGE>
Exhibit A Certificate of Merger
Exhibit B Exchange Agreement
Exhibit C Investor Rights Agreement
Exhibit D Noncompetition Agreement
Exhibit E Release
Exhibit F Certificate of Designation of Preferences and Rights
Exhibit G Warrant
Exhibit H-1 Legal Opinion of Counsel for ZSPN
Exhibit H-2 Legal Opinion of FCC Counsel for ZSPN
Exhibit I-1 Opinion of Counsel for Entravision and Acquisition Co.
Exhibit I-2 Opinion of FCC Counsel for Entravision and Acquisition Co.
Exhibit J Affiliate Agreement
Annex I Illustration of Conversion of Shares
Annex II Illustration of Option Conversion Calculation
Schedule 4.1 ZSPN Subsidiaries
Schedule 4.2 Third Party Consents
Schedule 4.4 Qualifications to do Business
Schedule 4.6 ZSPN Subsidiaries
Schedule 4.9 Liens on Property
Schedule 4.10 Undisclosed Liabilities
Schedule 4.11 Taxes
Schedule 4.12 Employee related matters
Schedule 4.14 Government Authorizations
Schedule 4.15 Litigation
Schedule 4.17 Absence of Certain Changes and Events
Schedule 4.18 Material Contracts
Schedule 4.19 Insurance Matters
Schedule 4.20 Real Property Matters
Schedule 4.21 Environmental Laws
Schedule 4.23 Labor Relations
Schedule 4.24 Intellectual Property Assets
Schedule 4.25 Related Party Transactions
Schedule 6.2 Non-Accredited Investors
Schedule 7.3 Preservation of Business
Schedule 7.16 Affiliate Agreements
Schedule 5.4(d) Options, Convertible Debentures, Contracts for Sale of
Securities and Voting Trusts
Schedule 5.5 Corporate Structure and Capitalization
Schedule 5.6 Financial Statements
Schedule 5.7 Potential Liabilities
Schedule 5.9 Employee Benefit Plans
Schedule 5.10 Compliance with Legal Requirements
Schedule 5.12 Material Contracts
Schedule 5.13 Environmental Law Compliance
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Schedule 5.14 Intellectual Property
Schedule 5.15 Relationships with Related Persons
The registrant hereby agrees to furnish a copy of any omitted schedule or
exhibit upon request.
