Exhibit 10.7

SECOND AMENDMENT AND AGREEMENT REGARDING WARRANTS

THIS SECONDAMENDMENT AND AGREEMENT REGARDING WARRANTS (this "Amendment") isdated as of April 17, 2001, by and among Hispanic Television Network, Inc., aDelaware corporation (the "Company") and Goff Moore StrategicPartners, L.P. and GAINSCO, Inc. (collectively, "WarrantholderRepresentatives"), representing all holders of that certain series ofwarrants to purchase shares of Company common stock dated July 25, 2000(collectively, as amended, supplemented or modified to the date hereof, the"Warrants") and issued by the Company in connection with the OriginalLoan Agreement (as defined below), and representing the parties, other than theCompany, to the Registration Rights Agreement and the Second Amendment (each asdefined below).

W I T N E S S E T H:

WHEREAS, theCompany and the Warrant Representatives and the other lenders set forth thereinentered into that certain Loan Agreement dated as of July 25, 2000 (as amended,supplemented or modified to the date hereof, the "Original LoanAgreement");

WHEREAS, inconnection with the Original Loan Agreement, the Company issued the Warrants tothe Warrantholder Representatives and the other lenders thereunder;

WHEREAS, theWarrants have previously been amended from time to time in connection withamendments to the Original Loan Agreement among the Company and the WarrantRepresentatives, including under (i) that certain Second Amendment to LoanAgreement and Agreement dated as of November 6, 2000 (the "SecondAmendment"), (ii) that certain Third Amendment to Loan Agreement andAgreement dated as of December 15, 2000 (the "Third Amendment") and(iii) that certain Amendment and Agreement Regarding Warrants dated January 31,2001 (the "First Warrant Amendment");

WHEREAS, theCompany, the Warrant Representatives and the lenders represented by the WarrantRepresentatives entered into that certain Registration Rights Agreement datedas of July 25, 2000 (the "Registration Rights Agreement");

WHEREAS,the  First Warrant Amendment waspredicated upon the consummation of certain proposed underlying transactionsthat were in fact ultimately not consummated; and

WHEREAS, theCompany and Warrantholder Representatives desire to further amend the Warrants(as amended by the Second Amendment, the Third Amendment and the First WarrantAmendment) and the Registration Rights Agreement as described herein;

NOW,THEREFORE, in consideration of the premises and the mutual covenants andagreements contained herein and in the Seventh Amendment to Loan Agreement andAmendment of Notes of even date herewith (the "Seventh Amendment"),and for other good and valuable consideration, the receipt and sufficiency ofwhich are hereby acknowledged, the parties hereto do hereby agree as follows:

 

1.             Prior Amendmentsto Warrant Provisions Superseded and Canceled.  Article II.A. of the Second Amendment (Agreements Relating to theWarrants),  Article II.A. of the ThirdAmendment (Agreements Relating to the Warrants) and the entire First Warrant Amendmentare each hereby deleted in their entirety and shall be of no further force oreffect.

2.             Terms Defined inthe Warrants.  Unless the contextotherwise requires or unless otherwise expressly defined herein, the termsdefined in the Warrants shall have the same meanings whenever used in thisAmendment.

3.             Amendments toDefined Terms.  The definitions of"Exercise Price", "Loan Agreement" and "Shares"in Section 1 of the Warrants are deleted in their entirety and replaced withthe definitions set forth below and the definitions of "Fully DilutedShares", "Series Shares" and "Series Warrants" areadded as set forth below:

"Exercise Price" shall meanthe exercise price per share of Common Stock, which shall equal $.01 (one cent)per share.

"Fully Diluted Shares" shallmean (i) the shares of Common Stock outstanding as of a specified date, (ii)shares of Common Stock into or for which rights, options, warrants,indebtedness or other securities outstanding as of such date are or may becomeexercisable, exchangeable or convertible (including the Series Shares), and(iii) shares of Common Stock designated or set aside as of such date forissuance pursuant to any option plan, equity incentive plan or other planpursuant to which shares of Common Stock may become issued.

"Loan Agreement" shall meanthat certain Loan Agreement dated as of July 25, 2000, between the Company andcertain lenders set forth therein, as may be amended from time to time.

"SeriesShares" shall mean the aggregate number of shares of Common Stocksubject to all Series Warrants calculated as follows.  In the event that the entire amount of principal and interestoutstanding under the Loan Agreement is repaid by the Company (i) on or beforeMay 31, 2001, the number of Series Shares shall be equal to 5% of the FullyDiluted Shares, (ii) after May 31, 2001 but on or before June 30, 2001, thenumber of Series Shares shall be equal to 7.5% of the Fully Diluted Shares,(iii) after June 30, 2001 but on or before July 31, 2001, the number of SeriesShares shall be equal to 10% of the Fully Diluted Shares, or (iv) after July31, 2001 but on or before August 31, 2001, the number of Series Shares shall beequal to 12.5% of the Fully Diluted Shares. The percentage as may from time to time be determined to be applicableunder clauses (i)-(iv) of the immediately preceding sentence shall be referredto herein as the "Applicable Percentage".

 

"Series Warrants" shallmean, collectively, all of the outstanding warrants of the same series as thisWarrant, specifically those warrants originally issued in connection with theLoan Agreement and dated July 25, 2000, or any warrants substituted therefor.

"Shares" shall mean**,**subject to adjustment as provided underSection 3, the number of shares of Common Stock subject to this Warrant.  The number of Shares shall equal, at anypoint in time, the number of Series Shares *multipliedby* (c) a fraction (i) the numerator being the total maximumprincipal amount loaned or committed to be loaned to the Company *by Purchaser* (including the Initial LoanAmount and the Escrowed Funds, as such terms are defined in the LoanAgreement), plus the aggregate interest payable by the Company on such loanuntil such time as the loan is repaid in full, and (ii) the denominator beingthe total maximum principal amount loaned or committed to be loaned to theCompany by *all Lenders*(includingthe Initial Loan Amount and the Escrowed Funds, as such terms are defined inthe Loan Agreement), plus the aggregate interest payable by the Company on suchloans until such time as the loans are repaid in full.  *Forexample*, if Purchaser loaned $950,000 to the Company and theinterest payable under such loan was $50,000, the total amount loaned to theCompany under the Loan Agreement was $4.75 million and the interest payableunder such loans was $250,000, and the number of Series Shares was 5,000,000,then the number of Shares would be 1,000,000 (i.e., 5,000,000 Series Sharesmultiplied by $1,000,000/$5,000,000).

4.             Exercise ofWarrant. Section 2(a) of the Warrants is hereby deleted in its entirety andreplaced with the following:

(a)           At any time after the date hereofthrough and including the Expiration Date, Warrantholder may from time to timeexercise this Warrant, in whole or in part. In the event that the Warrantholder elects to exercise this Warrant atany time that the number of Shares has not been finally determined, the Companyshall be obligated to permit the Warrantholder to exercise its right topurchase the maximum number of Shares that may be covered by this Warrant atthe time of exercise, and the Company shall promptly issue such Warrantholder anew Warrant representing the right to purchase any unexercised or additionalShares that may be determined subsequent to such exercise.

5.             Adjustment ofSeries Shares; Anti-Dilution. Section 3 of the Warrants is hereby deleted in its entirety and replacedwith the following:

Section 3.               Adjustment of Series Shares;Anti-Dilution.

(a)           If, at any timeprior to the Expiration Date, the number of outstanding shares of Common Stockis increased by a stock dividend payable in shares of Common Stock or by asubdivision or split-up of shares of Common Stock, then, immediately followingsuch action, the number of Series Shares as determined immediately prior to suchaction shall be proportionately increased.

 

(b)           (i)            If, at any time prior to theExpiration Date, the Company issues or sells shares of Common Stock, or in anymanner grants any warrants, options or other rights (collectively,"Options") to acquire shares of Common Stock or any other securitiesconvertible into or exchangeable for Common Stock ("ConvertibleSecurities"), and such Common Stock, or the shares of Common Stockunderlying such Options or Convertible Securities, are issued or may under anypossible circumstances be subject to issuance for less than $2.00 per sharecash consideration (such calculation disregarding the value, if any, of anyportion of consideration paid in any form other than cash) to the Company forsuch shares (such amount, as subject to adjustment hereunder, the "MinimumPrice"), then the number of Series Shares as calculated immediately priorto such action shall be adjusted immediately after such action by adding anumber of additional shares equal to:

(Themaximum number of shares of Common Stock issued or potentially issuable(pursuant to exercise, conversion or exchange of an Option or ConvertibleSecurity or otherwise) at less than the Minimum Price resulting from suchaction *multiplied by* theApplicable Percentage)  *divided by*  (1 *minus* the Applicable Percentage)

(ii)           For purposes ofdetermining whether any shares of Common Stock issuable upon exercise,conversion or exchange of Options or Convertible Securities are subject toissuance for less than the Minimum Price, the following rules shall apply.  First, the consideration paid for suchshares of Common Stock shall be deemed to include the total amount of cashconsideration, if any, received or receivable by the Company as considerationfor the issue or grant of such Options and Convertible Securities, plus theminimum aggregate amount of additional consideration payable to the Companyupon the exercise of such Options and the conversion or exchange of suchConvertible Securities, including, in the case of any such Options which relateto Convertible Securities, the minimum aggregate amount of additionalconsideration, if any, payable to the Company upon the conversion or exchangeof such Convertible Securities (such calculation disregarding the value, ifany, of any portion of consideration paid in any form other than cash).  Second, in the event that the Company issuesindebtedness or other securities that are not Options or Convertible Securities(the “Other Securities”) concurrently with the issuance of Options or ConvertibleSecurities, the Company shall allocate the face amount of such indebtedness orthe liquidation preference of such Other Securities, whichever is greater, tosuch Other Securities, and shall allocate the remaining consideration to theOptions or Convertible Securities for the purposes of this subsection(ii).  Third, in the event that theCompany concurrently issues Options or Convertible Securities that containdifferent exercise prices, then the Options or Convertible Securities withseparate conversion prices shall be treated as a separate issuance for purposesof this Section 3.

 

(iii)          If, at any timeprior to the Expiration Date, the number of outstanding shares of Common Stockis decreased by a combination of shares (by reverse stock split or otherwise)of Common Stock, then, immediately following such action, the Minimum Price ineffect immediately prior to such action will be proportionately increased.

 

(iv)          At any time prior tothe Expiration Date that the Company sells or issues shares of Common Stock,Options or Convertible Securities, the Company shall provide to eachWarrantholder, within fifteen calendar days of such action, written notice ofsuch sale or issuance, including a reasonable description of the substance ofsuch sale or issuance, including the amount and form of any consideration paidto the Company in connection with such action, and the terms and conditions ofexercise, conversion or exchange related to any Options or ConvertibleSecurities sold or issued in such action.

 

(v)           Notwithstanding theforegoing provisions of this Section 3(b), if the entire amount of principaland interest outstanding under the Loan Agreement and all other Obligations (asdefined in the Loan Agreement) are repaid by the Company in full on or beforeApril 30, 2001, this Section 3(b) shall terminate one year prior to theExpiration Date.

 

6.             Reservation andAuthorization of Capital Stock. Section 6 of the Warrants is hereby deleted in its entirety and replacedwith the following:

Section6.  Reservation and Authorization of CapitalStock.  The Company shall at alltimes reserve and keep available for issuance such number of its authorized butunissued shares of Common Stock as will be sufficient to permit the exercisefor in full for Series Shares of all outstanding Series Warrants.

7.             RegistrationRights.  Section 9 of the Warrantsis hereby deleted in its entirety and replaced with the following:

Section9.               RegistrationRights.  The Warrant Stock issuableupon exercise of this Warrant shall be deemed to constitute "RegistrableShares" as defined under and subject to the provisions of a certainRegistration Rights Agreement, dated the same date as this Warrant, by andamong the Company, Purchaser and the other Lenders.

8.             Amendment to Registration RightsAgreement.  The definition of"Registrable Shares" in Section 1(f) of the Registration RightsAgreement is hereby deleted in its entirety and replaced with the following:

 

(f)            "Registrable Shares" meansat any time any Common Stock owned by any Holder which is or may be acquiredthrough the exercise of the Warrants, or otherwise issued pursuant to anyprovision in the Warrants as they may from time to time be amended, and anyother shares of Common Stock issued in respect of such shares by way of a stockdividend or stock split, or in connection with a combination of shares,recapitalization, merger, consolidation or reorganization; provided, however,that shares of Common Stock shall cease to be Registrable Shares as soon asthey are: (i) eligible for sale without restriction under Rule 144(k) of theSecurities Act (provided that the Company's Secretary or transfer agent hasremoved all transfer restrictions and restrictive legends with respect to suchCommon Stock); (ii) sold or otherwise disposed of pursuant to a registrationstatement that was filed with the Commission and declared effective under theSecurities Act (provided that the Company's Secretary or transfer agent hasremoved all transfer restrictions and restrictive legends with respect to suchCommon Stock); (iii) sold, transferred or disposed of by a Holder to any Personthat is not a Purchaser or an Affiliate of a Purchaser; or (iv) no longeroutstanding.

9.             Request forDemand Registration.  TheWarrantholder Representatives, representing the holders of a majority ofRegistrable Securities (as defined under the Registration Rights Agreement, asamended) hereby notify the Company of their request that a Required Shelf (asdefined in the Registration Rights Agreement) be filed by the Company inaccordance with Section 2(a)(i) of the Registration Rights Agreement.

10.           Effective Date.  This Amendment shall become effective if andwhen, and only if and when, the Seventh Amendment becomes effective.

11.           Effect of Eventof Default Under Loan Agreement . Upon the occurrence of an "Event of Default" as defined underthe Original Loan Agreement, as may be amended from time to time from and afterthe date hereof (including under the Seventh Amendment), the following shalloccur:

(a)           Sections 3, 4, 5 and 6 of thisAmendment shall be canceled in their entirety and shall be of no further forceor effect;

(b)           The Warrants shall thereafter begoverned (unless later amended) by their original terms and provisions as ineffect prior to any amendments thereto, provided that the Warrants shall herebybe amended as follows:

(i)            Notwithstanding anything to thecontrary contained in the definition of Shares (as such term is defined in theWarrants), the number of Shares that each Warrant is exercisable into upon the finalapplication of the calculations set forth in such definition shall bemultiplied by an additional one hundred and twenty five percent (125%).

 

(ii)           Withrespect to the definition of Exercise Price in Section 1 of the Warrant, thefirst event to occur under the various alternative calculation methods setforth in clauses (a) through (e) of such definition is clause (c), theoccurrence of January 31, 2001. Accordingly, the parties hereto hereby agree that the proper calculationof Exercise Price pursuant to such clause (c) would be $.41 per share (subjectto adjustment pursuant to the provisions of Section 3 of the Warrant, as may beamended from time to time, which Section 3 will be applied retroactively to thedate of the original issuance of the Warrant).

12.           Expenses ofCounsel.  In connection with thisAmendment, the Company shall have the obligation to reimburse the WarrantholderRepresentatives for the fees and expenses of their counsel.  The Company shall pay this amount toWarrantholder Representatives on or prior to April 30, 2001.

13.           Representationsand Warranties.  In order to induceWarrantholder Representatives to enter into this Amendment on behalf ofthemselves and the other holders of Warrants, the Company represents andwarrants to each holder of an Warrant as follows:

(1)           The Company is duly authorized toexecute and deliver this Amendment and is and will continue to be dulyauthorized to perform its obligations under the Warrants and the RegistrationRights Agreement as hereby amended.  TheCompany has duly taken all corporate action necessary to authorize theexecution and delivery of this Amendment and to authorize the performance ofthe obligations of the Company hereunder.

(2)           The execution and delivery by theCompany of this Amendment, the performance by the Company of its obligationshereunder and the consummation of the transactions contemplated hereby do notand will not conflict with any provision of law, statute, rule or regulation orof the certificate of incorporation and bylaws of the Company, or of anymaterial agreement, judgment, license, order or permit applicable to or bindingupon the Company, or result in the creation of any lien, charge or encumbranceupon any assets or properties of the Company. Except for those which have been obtained, no consent, approval,authorization or order of any court or governmental authority or third party isrequired in connection with the execution and delivery by the Company of thisAmendment or to consummate the transactions contemplated hereby.

(3)           When duly executed and delivered,this Amendment will be a legal and binding obligation of the Company,enforceable in accordance with its terms, except as limited by bankruptcy,insolvency or similar laws of general application relating to the enforcementof creditors' rights and by equitable principles of general application.

(4)           Attached as ExhibitA hereto is a true and correct listing and description (i.e., the number ofshares of outstanding Common Stock, the number of shares of Common Stocksubject to outstanding employee options, etc.) as of the date indicated on suchexhibit (which date shall not be earlier than 10 days prior to the date hereof)of all Fully Diluted Shares (as defined above).  The parties recognize that the total number of Series Shares willnot be determined until such time as the entire amount of the principal andinterest outstanding under the Loan Agreement is repaid in full, and thus thetotal number of Series Shares will be calculated based on the number of FullyDiluted Shares at such time.

 

14.           Survival.  All representations, warranties, covenantsand agreements contained herein shall survive the execution and delivery ofthis Amendment and the performance hereof.

15.           Governing Law.  This Amendment shall be governed by andconstrued in accordance the laws of the State of Texas and any applicable lawsof the United States of America in all respects, including construction,validity and performance.

16.           Counterparts; Fax.  This Amendment may be separately executed incounterparts and by the different parties hereto in separate counterparts, eachof which when so executed shall be deemed to constitute one and the sameAmendment.  This Amendment may bevalidly executed by facsimile or other electronic transmission.

 

 

**                THIS AMENDMENT AND THE OTHER LOAN DOCUMENTSREPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTEDBY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THEPARTIES.  THERE ARE NO UNWRITTEN ORALAGREEMENTS OF THE PARTIES.**

 

                IN WITNESS WHEREOF, this Amendment isexecuted as of the date first above written.

 

 

 
|   |   |   | **THE COMPANY:**                    |
|--------|--------|--------|-------------------------------------|
|   |   |   |                                |   |
|   |   |   | HISPANIC TELEVISION NETWORK, INC.   |
|   |   |   |                                |   |
|   |   |   |                                |   |
|   |   |   | By:                                 |   |
|   |   |   |                                |    Name: |
|   |   |   |                                |    Title: |
|   |   |   |                                |   |
|   |   |   | **WARRANTHOLDER REPRESENTATIVES:**  |
|   |   |   |                                |
|   |   |   | GOFF MOORE STRATEGIC PARTNERS, L.P. |
|   |   |   |                                |
|   |   |   | By:                                 | GMSP Operating Partners, L.P., its general  partner |
|   |   |   |                                |   |
|   |   |   | By:                                 | GMSP, L.L.C. |
|   |   |   |                                |   |
|   |   |   |                                |   |
|   |   |   | By:                                 |   |
|   |   |   |                                |   J.  Randall Chappel, Principal |
|   |   |   |                                |   |
|   |   |   | GAINSCO, INC.                       |
|   |   |   |                                |   |
|   |   |   |                                |   |
|   |   |   | By:                                 |   |
|   |   |   |                                |    Name: |
|   |   |   |                                |    Title: |
|        |        |        |                                     |  |  |

 

 

**EXHIBITA**

 

Schedule of "FullyDiluted Shares" as of April 13, 2001