EXHIBIT 4.6
EXECUTION COPY
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AMENDED AND RESTATED
SOCIAL PART HOLDERS AGREEMENT
by and among
GRUPO TELEVISA, S.A.,
SKY DTH, S. de X.X. de C.V.,
THE NEWS CORPORATION LIMITED,
NEWS DTH (MEXICO) INVESTMENT LIMITED,
and
INNOVA, S. de X.X. de C.V.
Dated as of October 8, 2004
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TABLE OF CONTENTS
Page
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ARTICLE I Definitions.......................................................... 1
Section 1.1 Definitions.................................................... 1
Section 1.2 Additional Definitions......................................... 8
Section 1.3 Interpretation and Construction of Terms....................... 9
ARTICLE II Continuation of the Company.......................................... 9
Section 2.1 Continuation of the Company.................................... 10
Section 2.2 Organizational Documents....................................... 10
Section 2.3 Subsidiary Boards and Bylaws................................... 10
ARTICLE III Capital Subscription................................................. 10
Section 3.1 Initial Subscription for Company Social Parts.................. 10
Section 3.2 Additional Capital Contributions............................... 10
Section 3.3 Defaults....................................................... 12
Section 3.4 No Additional Capital Obligations.............................. 12
Section 3.5 Annual Budgets................................................. 12
Section 3.6 Additional Partners............................................ 13
Section 3.7 Refinancing Debt............................................... 13
Section 3.8 True-Up........................................................ 13
ARTICLE IV Programming Matters.................................................. 14
Section 4.1 Programming Committee.......................................... 14
Section 4.2 Programming Plan............................................... 14
Section 4.3 Access to Programming.......................................... 14
Section 4.4 Carriage of Program Services................................... 15
Section 4.5 Reserved Channels.............................................. 16
Section 4.6 Open Channels.................................................. 17
Section 4.7 Reclamation of Open Channels................................... 17
Section 4.8 Loss of Channels............................................... 17
Section 4.9 Substitution................................................... 18
Section 4.10 Certain Limitations............................................ 18
Section 4.11 Deadlocks...................................................... 18
ARTICLE V Management and Administration........................................ 18
Section 5.1 Board of Managers.............................................. 18
Section 5.2 Quorum......................................................... 18
Section 5.3 Affiliated Transactions........................................ 19
ARTICLE VI Agreements of the Parent Entities.................................... 19
Section 6.1 Additional Equity Holders...................................... 19
Section 6.2 Transfers...................................................... 19
Section 6.3 Parent Guarantees of Affiliates' Obligations................... 21
Section 6.4 Exclusivity.................................................... 21
Section 6.5 Cable/MMDS Carriage............................................ 22
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Section 6.6 Distribution................................................... 22
Section 6.7 Limitation on Restrictions..................................... 23
Section 6.8 Technology..................................................... 23
Section 6.9 Initial Public Offering........................................ 23
ARTICLE VII Dividends; Accounting; Books and Records............................. 24
Section 7.1 Dividends...................................................... 24
Section 7.2 Accountants; Reports to Partners............................... 24
Section 7.3 Books and Records.............................................. 25
ARTICLE VIII Other Matters........................................................ 25
Section 8.1 Confidentiality................................................ 25
Section 8.2 License Agreement.............................................. 26
Section 8.3 Consents and Approvals......................................... 27
ARTICLE IX Representations and Warranties....................................... 27
Section 9.1 Representations and Warranties of All Parties.................. 27
Section 9.2 Certain Representations of the Partners........................ 28
ARTICLE X Indemnification...................................................... 28
Section 10.1 Indemnification................................................ 28
Section 10.2 Procedure for Indemnification.................................. 29
ARTICLE XI Miscellaneous........................................................ 30
Section 11.1 Notice......................................................... 30
Section 11.2 Waiver, Amendment, etc......................................... 31
Section 11.3 Binding Agreement; Assignment; No Third Party Beneficiaries.... 32
Section 11.4 Governing Law; Dispute Resolution; Equitable Relief............ 32
Section 11.5 Arbitration of Certain Disputes................................ 33
Section 11.6 Severability................................................... 34
Section 11.7 Table of Contents; Headings.................................... 34
Section 11.8 Counterparts................................................... 34
Section 11.9 Entire Agreement............................................... 34
Section 11.10 Further Assurances............................................. 34
Section 11.11 Survival of Rights, Duties and Obligations..................... 35
Section 11.12 Costs and Expenses............................................. 35
Exhibit A Bylaws
Exhibit B Bylaws of Innova Holdings
Exhibit C Form of Carriage Agreement
Schedule 3.1 Current Capital Contributions
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AMENDED AND RESTATED
SOCIAL PART HOLDERS AGREEMENT
AMENDED AND RESTATED SOCIAL PART HOLDERS AGREEMENT, dated as of
October 8, 2004 (this "Agreement") by and among Grupo Televisa, S.A., a Mexican
corporation ("Televisa"), SKY DTH, S. de X. X. de C.V., a Sociedad de
Responsabilidad Limitada de Capital Variable formed under the laws of Mexico
("Televisa Sub"), The News Corporation Limited, an Australian corporation ("News
Corp"), News DTH (Mexico) Investment Limited, a Cayman Islands company ("News
Sub"), and Innova, S. de X. X. de C.V., a Sociedad de Responsabilidad Limitada
de Capital Variable formed under the laws of Mexico (the "Company"). Capitalized
terms used herein have the meanings ascribed to them in Article I hereof.
RECITALS
WHEREAS, the Parties hereto (or their predecessors or assignors)
entered into the Social Part Holders Agreement dated as of March 6, 1997, as
amended (the "Original Agreement"), pursuant to which they operated the Company
since the date thereof as contemplated by such agreement and by the North
American Platform MOU;
WHEREAS, concurrently with the execution and delivery by the Parties
of this Agreement, the North American Platform MOU was terminated; and
WHEREAS, the Parties wish to amend and restate the Original
Agreement to provide for their continued operation of the Company and for their
rights and obligations related thereto, all in accordance with the terms and
conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises herein contained
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, and intending to be legally bound hereby, each of
the parties hereto agrees as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. As used herein, the following terms shall
have the meanings set forth below:
"Active Channels" means Reserved Channels actually used by a
Programming Party (or its Affiliated Program Providers).
"Affiliate" means, with respect to any Person, any other Person,
directly or indirectly, through one or more intermediaries, controlling,
controlled by or under common control with such Person (it being understood that
for all purposes of this Agreement (i) Innova
Holdings, the Company and their respective subsidiaries shall be deemed not to
be Affiliates of Televisa, (ii) DIRECTV, and its subsidiaries shall be deemed
not to be Affiliates of News, and (iii) News and subsidiaries of News (other
than DIRECTV and its subsidiaries) shall be deemed not to be Affiliates of
DIRECTV.
"Affiliated Program Provider" means with respect to each Programming
Party, any Program Provider that is a Controlled Affiliate of such Programming
Party's Parent Entity. For the avoidance of doubt, from and after the DIRECTV
Transfer, News and its Controlled Affiliates shall be deemed Affiliated Program
Providers of DIRECTV and its Affiliates.
"Agreement" means this Amended and Restated Social Part Holders
Agreement, as hereafter amended, supplemented or restated from time to time as
provided herein.
"Annual Budget" means the annual budget for the Company which is
contained in the Business Plan and each subsequent annual budget approved in
accordance with this Agreement and the Bylaws.
"Available Cash" means, for any Fiscal Year or other period, net
income (or loss) of the Company determined in accordance with Mexican GAAP,
adjusted, without duplication, by adding (i) depreciation, amortization and
other non-cash charges to the extent deducted in determining net income and
deducting (ii) (A) the current portion of indebtedness of the Company, (B)
payments required to be made by the Company within one year after the date of
calculation, (C) prepaid expenses and other cash expenditures to the extent not
deducted in determining net income or loss and (D) reasonable reserves for
working capital and contingent liabilities.
"Board of Managers" means El Consejo de Gerentes of the Company;
reference to a "Director" shall refer to any Consejero or member of the Board of
Managers.
"Business Day" means any day on which banking institutions in New
York City and Mexico City are not authorized or obligated by law to close.
"Business Plan" means the business plan of the Company and all
amendments thereto which have been approved in accordance with this Agreement
and the Bylaws.
"Bylaws" means the Estatutos Sociales of the Company, as in effect
on the date hereof (it being understood that, immediately following the
execution of this Agreement, the Bylaws shall be in the form attached hereto as
Exhibit A) and as the same may be amended from time to time.
"Carriage Agreement" means an agreement between the Company and a
Program Provider, pursuant to which the Program Provider provides Program
Services to the Company and the Company carries the Program Service to
subscribers on a Channel. Any Carriage Agreement between the Company and any
Programming Party (or its Affiliated Program Provider) shall be negotiated in
good faith and shall be on terms (other than financial terms) which, when taken
as a whole, are not less favorable to such Programming Party (or Affiliated
Program Provider) than terms (other than financial terms) made available to
other Programming Parties (and their Affiliated Program Providers) providing
comparable Program Services (other
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than terms applicable to over-the-air Channels made available by Televisa or its
Controlled Affiliates).
"Central American Countries" means Panama, Costa Rica, Nicaragua,
Guatemala, Honduras, El Salvador, Belize, Haiti, the Dominican Republic and
Cuba.
"Channel" means each channel which is capable of being transmitted
via a Signal available to the Company.
"Company" means Innova, S. de X.X. de C.V., a Sociedad de
Responsabilidad Limitada de Capital Variable formed under the laws of Mexico,
and its successors and permitted assigns.
"Competitive Activity" means to, directly or indirectly, acquire or
own, manage, operate, join, control, or finance or participate in the ownership,
management, operation, control or financing of, or be connected as a principal,
agent, representative, consultant, beneficial owner of an interest in, any
Person, or otherwise with (including but not limited through local operation
agreements and similar arrangements), any business or enterprise which operates
a DTH Business serving any of the Territory.
"Contribution Agreement" means the Contribution Agreement, dated as
of September 3, 2003, by and among the Company, Corporacion Novavision, S. de
X.X. de C.V., a Sociedad de Responsabilidad Limitada de Capital Variable formed
under the laws of Mexico and a wholly-owned subsidiary of the Company, Televisa,
Factum Mas, S.A. de C.V., a Sociedad Anonima de Capital Variable formed under
the laws of Mexico and a wholly-owned subsidiary of Televisa ("Factum"), Sky
DTH, S. de X. X. de C.V., a Sociedad de Responsabilidad Limitada de Capital
Variable formed under the laws of Mexico and a wholly-owned subsidiary of
Factum, News, News America Incorporated, a Delaware corporation, News DTH, and
Liberty Mexico DTH, Inc., a Colorado corporation.
"control" (including the terms "controlling," "controlled by" and
"under common control with") means with respect to any Person, the possession,
directly or indirectly, of the power to direct or cause the direction of the
management or policies of the controlled Person, whether through the ownership
of voting securities, by contract, or otherwise.
"Controlled Affiliate" means, with respect to any Person, any
Affiliate of such Person which is controlled by such Person.
"Dedicated Channels" means those Channels reserved for pay-per-view
use, local over-the-air broadcasts, or other uses required by applicable law,
all as set forth in the Business Plan.
"DIRECTV" means The DIRECTV Group, Inc., a Delaware corporation, and
its successors and permitted assigns.
"Distribution Services" include, but are not limited to, the Signal
distribution system (encoding, scrambling, encryption, multiplexing, uplink,
space segment, conditional
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access, broadcasting control automation, playback facilities, subscriber
management services and bank interface), marketing and advertising.
"DTH Agreement" means the DTH Agreement, dated the date hereof, by
and among Televisa, News, the Company, DIRECTV and DTVLA, as the same may be
amended, modified or supplemented from time to time.
"DTH Business" means any business or enterprise which owns or
operates a direct-to-home satellite system which transmits multiple television
Channels via satellite directly to integrated decoders/receivers operated by
end-viewers in a manner that allows multiple Channels to be carried on a single
satellite transponder and allows end-viewers to access television Channels to
which they subscribe (whether on a tiered, a la carte or pay-per-view basis),
provided that the following shall not, on its own, be deemed to be DTH
Businesses for the purposes of this Agreement: (a) the ownership or operation of
one or more satellites or satellite transponders; (b) the provision of satellite
transponder services to any Person or Persons; (c) the ownership or operation of
one or more Internet services, sites or portals; (d) the ownership or operation
of one or more television Channels or other television programming services,
whether or not they are provided to one or more direct-to-home satellite
systems; and (e) the ownership or operation of any means of distributing or
delivering television Channels or other television programming Signal other than
through a direct-to-home satellite system which transmits multiple television
Channels as provided above.
"DTH System" means the Company's direct-to-home satellite television
system operating a DTH Business, as further contemplated by the Business Plan.
"DTVLA" means DIRECTV Latin America LLC, a Delaware limited
liability company, and its successors and assigns.
"Fiscal Year" means the period commencing January 1 of any year and
ending on December 31 of such year, except that the first Fiscal Year shall
commence on the date of incorporation of the Company and end on December 31 of
such year.
"GAAP" means generally accepted accounting principles, applied
consistently.
"Galaxy Mexico" means Grupo Galaxy Mexicana, S. R.L. de C.V., a
Mexican limited liability company with variable capital, and its successors and
permitted assigns.
"Governmental Authority" means any nation or government, any state
or other political subdivision thereof, and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"IH Bylaws" means the Estatutos Sociales of Innova Holdings, as in
effect on the date hereof (it being understood that, immediately following the
execution of this Agreement, the Bylaws shall be in the form attached hereto as
Exhibit B) and as the same may be amended from time to time.
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"Innova Holdings" means Innova Holdings, S. de X.X. de C.V., a
Sociedad de Responsabilidad Limitada de Capital Variable formed under the laws
of Mexico, and its successors and permitted assigns.
"Liberty" means Liberty Media International, Inc. a Delaware
corporation (formerly known as Tele-Communications International, Inc.), and its
successors and permitted assigns.
"Liberty Partners" means Liberty Sub and any other wholly owned
subsidiary of Liberty to whom a Social Part is issued or transferred and who is
admitted as a Partner pursuant to this Agreement and the Bylaws (so long as each
of the foregoing owns a Social Part); reference to a Liberty Partner shall refer
to any of the Liberty Partners.
"Liberty Sub" means Liberty Mexico DTH, Inc., a Colorado
Corporation, and its successors and permitted assigns.
"License Agreement" means the Trademark License Agreement, dated
March 6, 1997, by and between News America Publishing Incorporated and the
Company, pursuant to which an Affiliate of News has granted to the Company a
perpetual and exclusive license to use the names "Sky" and "Sky Entertainment
Services" and any derivatives thereof in connection with the Company's DTH
System.
"Major Partners" means the Partners holding the Sub-Series A-1 or
B-1 Social Parts.
"MFN Basis" means, with respect to any contractual arrangement
between the Company and another Party (or an Affiliate thereof), pursuant to
terms, when taken as a whole, are no less favorable to the Company than those in
effect between such other Party (or Affiliate thereof) and any unaffiliated
third parties, determined with reference to all similar arrangements in effect
on the date hereof or entered into from time to time hereafter, in each case
with an unaffiliated third party.
"MMDS" means multichannel multipoint distribution service.
"News" means (i) prior to the consummation of the News
Reorganization, News Corp, and (ii) from and after the consummation of the News
Reorganization, News Parent.
"News Corp" means The News Corporation Limited, an Australian
corporation, and its successors and permitted assigns.
"News Parent" means a publicly-traded corporation newly-incorporated
in the United States by an Affiliate of News Corp. and which becomes the
ultimate controlling parent of News Corp. pursuant to the News Reorganization.
"News Partners" means News Sub and any other wholly owned subsidiary
of News to whom a Social Part is issued or transferred and who is admitted as a
Partner pursuant to this Agreement and the Bylaws (so long as each of the
foregoing owns a Social Part). Reference to a "News Partner" shall refer to any
of the News Partners.
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"News Reorganization" means a corporate reorganization pursuant to
which News Parent becomes the ultimate controlling parent of News Corp and the
ultimate parent of News Corp's subsidiaries.
"News Sub" means (i) prior to the DIRECTV Transfer, News DTH
(Mexico) Investment Limited, a Cayman Islands company, and its successors and
permitted assigns and (ii) from and after the DIRECTV Transfer, DIRECTV, DTVLA
or any wholly-owned subsidiary of DIRECTV or DTVLA to which a Social Part is
issued or transferred pursuant to the DIRECTV Transfer, and its or their
respective successors and permitted assigns.
"North American Platform MOU" means that certain memorandum of
understanding dated as of July __, 1996 by and between Televisa, News and
Liberty, as amended.
"Notes" means the promissory notes made by the Company payable to
Galaxy Mexico and delivered pursuant to the Purchase Agreement.
"Open Channels" means all (i) Reserved Channels not actually used by
a Programming Party (or its Affiliated Program Providers) and designated by the
Programming Party as "Open Channels" and (ii) all Dedicated Channels.
"Option Agreement" means the Option Agreement, dated the date
hereof, by and among the Company, Innova Holdings, and News, as the same may be
amended, modified or supplemental from time to time.
"Options" means, collectively, the options exercisable for equity
interests in each of the Company and Innova Holdings granted to News pursuant to
the terms of the Option Agreement.
"PanAmSat" means PanAmSat International Systems, Inc., a Delaware
corporation (formerly known as PanAmSat Corporation), and its successors and
permitted assigns.
"Parent Entity" means (i) with respect to a Televisa Partner,
Televisa, (ii) with respect to a News Partner, News; provided, that from and
after the DIRECTV Transfer, for purposes of this defined term as used in this
Agreement, the Parent Entity of the News Partner shall be deemed to be DIRECTV
(although News shall have continuing obligations as a Parent Entity in
accordance with Section 6.2(b)), and (iii) with respect to any Person admitted
as a Partner of the Company after the date hereof, either such Person or any
controlling Affiliate of such Person, as may be determined by the Major
Partners, at the time such Person is admitted as a Partner of the Company.
"Partners" means the Televisa Partners, the News Partners and any
other Person to whom a Social Part is issued or transferred and who is admitted
as a Partner pursuant to this Agreement and the Bylaws (so long as each of the
foregoing owns a Social Part). Reference to a "Partner" shall refer to any of
the Partners.
"Party" means (i) prior to the DIRECTV Transfer, Televisa, each
Televisa Partner, News, each News Partner and the Company, and (ii) from and
after the DIRECTV Transfer,
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Televisa, each Televisa Partner, News (as specified in Section 6.2 only), each
News Partner, DIRECTV and the Company.
"Percentage Interest" of a Partner means, as of any time, a fraction
(expressed as a percentage), the numerator of which is the amount of the
Company's capital represented by the Social Parts directly or indirectly owned
by such Partner's Parent Entity as of such time, and the denominator of which is
the total amount of capital of the Company represented by all Social Parts
outstanding as of such time.
"Person" means any individual, corporation, partnership, limited
liability company, trust, joint stock company, business trust, unincorporated
association, joint venture Governmental Authority or other entity of any nature
whatsoever.
"Program Provider" means any Person that provides Program Services
to the Company.
"Programming Party" means (i) Televisa, and (ii) News or, from and
after the DIRECTV Transfer, News (for purposes of Sections 4.3(a) and (b), 4.4
and 6.5 only) and DIRECTV.
"Purchase Agreement" means the Purchase and Sale Agreement, dated
the date hereof, by and between the Company and Galaxy Mexico, as the same may
be amended, modified or supplemented from time to time.
"Reserved Channels" means (i) with respect to Televisa Sub, that
number of Channels (in addition to the over-the-air Channels carried by the
Company pursuant to Section 4.3(c)) equal to ten percent of the number of Total
Channels, and (ii) with respect to News Sub, that number of Channels equal to
six and two-thirds percent of the number of Total Channels.
"Series A Social Parts" means partes sociales de la serie "A", which
represent an undivided interest in the capital of the Company; reference to a
"Series A Social Part" shall refer to any of the Sub-Series A-1 or A-2 Social
Parts.
"Series B Social Parts" means partes sociales de la serie "B", which
represent an undivided interest in the capital of the Company; reference to a
"Series B Social Part" shall refer to any of the Sub-Series B-1 or B-2 Social
Parts.
"Series C Social Parts" means partes sociales de la serie "C", which
represent an undivided interest in the capital of the Company.
"Signals" mean compressed encoded video, sound and data signals
transmitted via satellite to subscribers.
"Social Parts" means the Series A Social Parts, the Series B Social
Parts and the Series C Social Parts Reference to a "Social Part" shall refer to
any of the Social Parts.
"Televisa" means Grupo Televisa, S.A., a Mexican corporation, and
its successors and permitted assigns.
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"Televisa Partners" means Televisa Sub and any other wholly owned
subsidiary of Televisa to whom a Social Part is issued or transferred and who is
admitted as a Partner pursuant to this Agreement and the Bylaws (so long as each
of the foregoing owns a Social Part). Reference to a "Televisa Partner" shall
refer to any of the Televisa Partners.
"Televisa Sub" means SKY DTH, S. de X. X. de C.V., a Sociedad de
Responsabilidad Limitada de Capital Variable formed under the laws of Mexico,
and its successors and permitted assigns.
"Territory" means (i) Mexico, and (ii) the Central American
Countries.
"Total Channels" means all of the Channels in the Company's DTH
System.
"Transponder Agreements" means (i) the Transponder Service
Agreement, dated as of February 8, 1999, by and among PanAmSat and Xxxxxxxxxxx
xx Xxxxx x Xxxxxxxxxx xxx Xxxxx xx Xxxxxx, S. de X.X. de C.V., and (ii) any
other agreements pursuant to which satellite transponders will be made available
to the Company, in each case, as such agreements may be amended, modified or
restated from time to time.
Section 1.2 Additional Definitions. The following additional
capitalized terms used in this Agreement shall have the meanings set forth in
the Section, Recital or Preamble referred to below:
Defined Term Defined In
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Acquiring Party..................................... Section 6.4(c)
Acquisition Target.................................. Section 6.4(c)
Additional Capital Contribution..................... Section 3.2(a)
Capital Call........................................ Section 3.2(b)
Capital Call Notice................................. Section 3.2(b)
Capital Call Period................................. Section 3.2(b)
Confidential Information............................ Section 8.1(a)
Cure Period......................................... Section 3.2(b)
Default Loan........................................ Section 3.2(d)
Defaulting Partner.................................. Section 3.2(b)
Dispute............................................. Section 11.5
DIRECTV Transfer.................................... Section 6.2
Distributor......................................... Section 6.6
Funding Breach...................................... Section 3.2(b)
Funding Default..................................... Section 3.2(c)
Indemnified Parties................................. Section 10.1
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Indemnifying Party.................................. Section 10.2(a)
License Agreement................................... Section 8.2
Minimum Holding..................................... Section 4.3(c)
net subscription revenue............................ Section 4.4(b)
Non-Defaulting Partners............................. Section 3.2(c)
Original Agreement.................................. Recitals
Process Agent....................................... Section 11.4(b)
Programming Committee............................... Section 4.1
Programming Plan.................................... Section 4.2
Program Services.................................... Section 4.3(a)
Proposed Budget..................................... Section 3.5
Providing Party..................................... Section 8.1(a)
Receiving Party..................................... Section 8.1(a)
Reclamation Notice.................................. Section 4.7
Refinancing Debt.................................... Section 3.7
Representatives..................................... Section 8.1(a)
Transfer............................................ Section 6.2
Section 1.3 Interpretation and Construction of Terms. The
definitions in Section 1.1 and 1.2 shall apply equally to both the singular and
plural forms of the terms defined. Whenever the context may require, any pronoun
shall include the corresponding masculine, feminine and neuter forms. The words
"include," "includes" and "including" shall be deemed to be followed by the
phrase "without limitation." All references herein to Articles, Sections,
Exhibits and Schedules shall be deemed to be references to Articles, Sections,
Exhibits and Schedules to this Agreement unless the context shall otherwise
require. The table of contents and headings are inserted for convenience of
reference only and are not intended to be a part of or affect the meaning or
interpretation of this Agreement. Unless the context shall otherwise require,
any reference to any agreement or other instrument or statute or regulation is
to such agreement, instrument, statute or regulation as amended and supplemented
from time to time (and, in the case of a statute or regulation, to any successor
provision). Any reference in this Agreement to a "day" or a number of "days"
(without the explicit qualification of "Business") shall be interpreted as a
reference to a calendar day or number of calendar days. If any action or notice
is to be taken or given on or by a particular calendar day, and such calendar
day is not a Business Day, then such action or notice shall be deferred until,
or may be taken or given, on the next Business Day.
ARTICLE II
CONTINUATION OF THE COMPANY
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Section 2.1 Continuation of the Company. The Company was established
as a Sociedad de Responsabilidad Limitada in accordance with the laws of the
United Mexican States on July 25, 1996 and was transformed to a Sociedad de
Responsabilidad Limitada de Capital Variable on December 22, 1998. The Partners
shall continue to operate the Company on the terms and conditions hereof.
Section 2.2 Organizational Documents. The Company's Bylaws that
shall be effective immediately following the date hereof shall be as set forth
in Exhibit A attached to this Agreement, as they may be amended from time to
time in accordance with the provisions thereof. On or prior to the date hereof,
each Parent Entity shall have taken such action, and shall have caused its
relevant Affiliates to have taken such action, as is required under the laws of
Mexico to modify, amend, adopt and ratify the Company's Bylaws in the form
attached hereto as Exhibit A and to modify, amend, adopt and ratify the IH
Bylaws in the form attached hereto as Exhibit B. Notwithstanding anything herein
or in the Bylaws to the contrary, to the extent that any provision of the Bylaws
conflicts with, or otherwise is inconsistent with, any provision of this
Agreement, or this Agreement covers any matter that is not covered in the
Bylaws, the provisions of this Agreement shall control and shall be binding upon
each of the Parties hereto, to the extent permitted by law, and the Bylaws will
be modified accordingly with the appropriate corporate action.
Section 2.3 Subsidiary Boards and Bylaws. The Company shall cause
the board of directors or board of managers, as the case may be, of each of its
subsidiaries to consist of ten (10) persons, six (6) of whom shall be appointed
by Televisa, and four (4) of whom shall be appointed by News. The Company shall
also cause the bylaws of each of its Subsidiaries to be amended consistent with
this Section 2.3 and the Bylaws.
ARTICLE III
CAPITAL SUBSCRIPTION
Section 3.1 Initial Subscription for Company Social Parts. Each of
the Partners and Innova Holdings has previously contributed to the Company the
amount set forth opposite such Partner's name on Schedule 3.1 hereto in exchange
for the issuance of a Social Part of the series indicated opposite such
Partner's name and which represents the Percentage Interest set forth opposite
such Partner's name on Schedule 3.1. Each Partner shall hold a single Social
Part, which shall be recorded on the corporate books in accordance with Mexican
law but shall not be evidenced by any negotiable instrument.
Section 3.2 Additional Capital Contributions. (a) Each Partner
agrees to make additional contributions to the capital of the Company
("Additional Capital Contributions") from time to time of its pro rata share
(based on Percentage Interests on a fully diluted basis, assuming full exercise
of the options granted pursuant to the Option Agreement) of amounts necessary to
fund negative cash flow of the Company which is not funded from reserves of the
Company as contemplated by the Business Plan or Annual Budget. Additional
Capital Contributions made pursuant to this Section 3.2 shall be in the form of
cash in U.S. dollars converted to pesos at the prevailing rate as of the date of
the contribution unless otherwise authorized by the Partners.
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Each Partner shall cause the Company to take all such actions as are necessary
or advisable to cause the Additional Capital Contributions to be made in
accordance with this Agreement and the Bylaws. The Additional Capital
Contributions required to be made pursuant to this Section 3.2 shall be made in
the form of payments for additional capital and shall be allocated as a capital
increase on the appropriate books and records of the Company as set forth in the
applicable resolutions authorizing any such capital increase.
(b) The Board of Managers may require the Partners to make
Additional Capital Contributions to the Company in such amounts and at such
times as shall be approved by the Partners at a Partners' Meeting (each such
requirement, a "Capital Call"). If the Board of Managers determines to make a
Capital Call, the Board of Managers shall send to each Partner a written notice
(a "Capital Call Notice") which shall set forth the amount of Additional Capital
Contributions to be made by each of the Partners and the period (the "Capital
Call Period") within which such Additional Capital Contributions shall be made,
which Capital Call Period shall not end less than ten (10) days after the date
on which the Capital Call Notice is given. Following the expiration of the
Capital Call Period, the Company shall promptly notify each of the Partners of
the failure by any Partner (a "Defaulting Partner") to make its respective
Additional Capital Contribution pursuant to the Capital Call Notice (such
failure to make an Additional Capital Contribution is referred to herein as a
"Funding Breach"). The Defaulting Partner shall have thirty (30) days from the
date of delivery of the Company's written notice to each of the Partners of the
Funding Breach (the "Cure Period") to cure such Funding Breach by delivering to
the Company the Additional Capital Contribution required under the Capital Call
Notice together with simple interest thereon calculated at the rate of thirty
percent (30%) per annum from and including the date of the termination of the
Capital Call Period to but excluding the date of payment.
(c) If a Defaulting Partner shall fail to deliver its Additional
Capital Contribution together with interest thereon as provided in paragraph (b)
of this Section 3.2 within the Cure Period, then a funding default (a "Funding
Default") shall have occurred and all rights of the Defaulting Partner to
receive additional equity interests in the Company pursuant to such Capital Call
shall cease and, for a period of ninety (90) days after the occurrence of a
Funding Default, the non-defaulting Partners (the "Non-Defaulting Partners")
shall not be required but shall have the option (i) to contribute all or any
part of the Defaulting Partner's Additional Capital Contribution that is the
subject of the Funding Default to the Company without the payment of any
interest, (ii) to loan all or any part of the Defaulting Partner's Additional
Capital Contribution that is the subject of the Funding Default to the Company,
or (iii) to contribute all or any part of the Defaulting Partner's Additional
Capital Contribution that is the subject of the Funding Default to the Company,
on behalf of the Defaulting Partner, and treat such amount as a loan pursuant to
subsection (d) below from the Non-Defaulting Partner to the Defaulting Partner.
The right of the Non-Defaulting Partners to take the actions referred to in the
preceding sentence shall be allocated among the Non-Defaulting Partners in such
proportion as may be agreed in writing among them or, in the absence of such an
agreement, ratably based on the Percentage Interests then held by such
Non-Defaulting Partners.
(d) Any loan made by a Non-Defaulting Partner to the Company
(pursuant to clause (c)(ii) of this Section 3.2) or to the Defaulting Partner
(pursuant to clause (c)(iii) of this
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Section 3.2) (a "Default Loan") shall bear simple interest, payable quarterly,
at the rate of thirty percent (30%) per annum, shall have a maturity, not less
than one year, determined by the Non-Defaulting Partner making the Default Loan,
and shall be prepayable in whole or in part, without penalty. No dividend or
other distribution by the Company shall be paid to any Partner while any Default
Loan made by a Non-Defaulting Partner to the Company (pursuant to clause (c)(ii)
of this Section 3.2) is outstanding.
(e) If any Default Loan made by a Non-Defaulting Partner to a
Defaulting Partner (pursuant to clause (c)(iii) of this Section 3.2) is
outstanding at the time any dividend or other distribution by the Company is
payable to any Partner, the Defaulting Partner hereby authorizes the Company to
pay, and the Company shall pay, the amount of such dividend or distribution
payable to the Defaulting Partner (up to the aggregate amount of principal of
and accrued interest on such Default Loan) directly to the Non-Defaulting
Partner in repayment of that amount of the outstanding interest on and principal
of the Default Loan.
(f) If and to the extent the Company is required to make any
payments to Galaxy Mexico (or its successors or permitted assigns) under the
Purchase Agreement, the Notes executed and delivered pursuant thereto, the
Option Agreement, or any other agreement or instrument executed and delivered in
connection with the transactions contemplated thereby, or the Company requires
additional funds to pay costs and expenses in connection with the migration of
Galaxy Mexico's subscribers to the Company's DTH System or the Company otherwise
requires funds to meet its obligations under the Option Agreement, the Purchase
Agreement, the DTH Agreement and the other Ancillary Agreements (as defined
therein), each Partner agrees to make contributions to the capital of the
Company and Innova Holdings from time to time of amounts necessary to fund such
payments in proportion to such Partner's Percentage Interest on a fully-diluted
basis, assuming the Options are exercised in full.
Section 3.3 Defaults. If any Partner shall fail to timely contribute
any Additional Capital Contribution required to be contributed by it pursuant to
Section 3.2 or the Bylaws, then the Company and the other Partners shall have,
in addition to the foregoing, the rights and remedies set forth in the Bylaws.
Section 3.4 No Additional Capital Obligations. Except as expressly
provided in Section 3.2 of this Agreement or the Bylaws, neither any Partner nor
any of their respective Affiliates shall have any obligation or commitment to
make any Additional Capital Contribution or investment in, the Company,
regardless of the needs of the Company.
Section 3.5 Annual Budgets. At least 60 days prior to the
commencement of each Fiscal Year, the Company's Chief Executive Officer shall
submit to the Board of Managers a proposed Annual Budget for the upcoming Fiscal
Year (a "Proposed Budget"). Each Proposed Budget shall be substantially in the
form of the prior Fiscal Year's Annual Budget. The Major Partners agree to
negotiate each Proposed Budget in good faith. Each Proposed Budget that is
approved by the Board of Managers in accordance with the Bylaws shall be the
Annual Budget for the applicable Fiscal Year. If any Proposed Budget is not
approved by the Board of Managers in accordance with the Bylaws, then until an
Annual Budget for such Fiscal Year is approved by the Board of Managers in
accordance with the Bylaws, the Annual Budget for such
- 12 -
Fiscal Year shall be the Annual Budget from the immediately prior Fiscal Year,
provided that (i) each line item thereof denominated in Mexican pesos shall be
adjusted to reflect the rate of inflation in Mexico, based on the Mexican
National Consumer Price Index, during the immediately preceding Fiscal Year, and
(ii) each line item thereof denominated in U.S. dollars shall be adjusted to
reflect the difference between the then current dollar/peso exchange rate and
the dollar/peso exchange rate used to prepare the Annual Budget during the
immediately preceding Fiscal Year.
Section 3.6 Additional Partners. Subject to the approval required by
the Bylaws, the Company may from time to time issue additional Social Parts to
Persons who shall thereby become Partners of the Company. Subject to the
approval required by the Bylaws, any such admission shall be effected on such
terms and conditions as the Major Partners shall approve (and shall, in any
event, require execution and delivery by the new Partner and its Parent Entity
of the agreement and other documents contemplated by Section 6.1(ii) of this
Agreement).
Section 3.7 Refinancing Debt. The Company shall refinance U.S. $88
million principal amount of dollar-denominated indebtedness represented by its
notes dated April 1, 1997 (together with interest thereon and all related costs
and expenses) with an equivalent amount of peso-denominated indebtedness on
commercially reasonable terms and conditions, which terms and conditions shall
be subject to the prior written approval of the Major Partners, which approval
shall not be unreasonably withheld (the "Refinancing Debt"). Upon such
refinancing, Televisa and News shall enter into a written agreement by which
they shall guarantee, severally and not jointly, 51% and 49%, respectively, of
such Refinancing Debt. Televisa and the Company agree to consent to the Transfer
by News to DIRECTV of all of News' obligation to guaranty any portion of the
Refinancing Debt provided that (i) DIRECTV executes a written agreement to
assume such obligations in form reasonably satisfactory to Televisa and the
Company and (ii) DIRECTV agrees to indemnify, defend and hold harmless Televisa,
the Company and their Controlled Affiliates from and against any and all
liabilities, costs or expenses arising out of, resulting from or relating to the
transfer of such guaranty obligation.
Section 3.8 True-Up. From the date hereof until the Options are
exercised, terminated or expire (the "Option Period"), all capital contributions
to the Company or Innova Holdings shall be based upon the Partners' respective
Percentage Interests (assuming full exercise of the Options). After the Options
have been exercised or terminated or have expired, if the actual Percentage
Interests of the Partners are different than the percentages upon which capital
contributions were made, then, with respect to each capital contribution made
during the Option Period, Televisa shall cause the Televisa Partner to pay to
the News Partner an amount in cash equal to the True-Up Amount (as defined
below) plus interest at a rate per annum equal to LIBOR plus one percent per
annum from the date of such contribution up to and including the date such
payment is made. For purposes of this Section 3.8, with respect to each capital
contribution made during the Option Period, the "True-Up Amount" means the
excess of (i) the amount that would have been contributed by the Televisa
Partner had its contribution been made based upon Percentage Interests after the
exercise, termination or expiration of the Options, over (ii) the amount
actually contributed by the Televisa Partner. To the extent Televisa or News
makes any payment in respect of its guarantee of the Refinancing Debt or of any
obligations of Innova or its subsidiaries under the Transponder Agreements, such
payments shall be treated as
- 13 -
capital contributions for purposes of this Section 3.8. "LIBOR" means the rate
of interest per annum (rounded to the nearest 1/8 of 1%) at which U.S. dollar
deposits in an amount approximately equal to the aggregate True-Up Amount and
offered for one-month periods in the London Interbank currency market, as such
rate is reported in Telerate page 3750 on the first day of such month.
ARTICLE IV
PROGRAMMING MATTERS
Section 4.1 Programming Committee. A committee consisting of two
individuals appointed by Televisa Sub and two individuals appointed by News Sub
(the "Programming Committee"), shall determine the Programming Plan (as defined
in Section 4.2). The Programming Committee shall be responsible for negotiating
and obtaining programming rights which are consistent with the best interests of
the Company and provide the Company with a competitive advantage over other DTH
Businesses in the Territory. Approval of any action of the Programming Committee
shall be valid if adopted by a majority vote. In the event of a deadlock on any
matter to be decided by the Programming Committee, the matter shall be resolved
in accordance with Section 4.11.
Section 4.2 Programming Plan. The programming plan of the Company
(the "Programming Plan") shall consist of (i) a plan for the sale and
distribution of the Company's Program Services, which may be offered on an a la
carte basis, in tiers (such as basic, super-basic, expanded basic, etc.), on a
pay-per-view basis or otherwise, (ii) the prices to be charged to subscribers,
and (iii) the terms and conditions on which Program Services will be licensed
from Programming Parties (or their Affiliated Program Providers) and other
persons.
Section 4.3 Access to Programming.
(a) Except as otherwise required by law, each Programming
Party will offer and, to the extent such offer is accepted, license or otherwise
make available, each of its existing and future program services (including
over-the-air, cable, sports, and pay-per-view (subject to the last sentence of
Section 4.4) program services) and Channels, other than productions which are
not yet a program service or Channel (collectively, the "Program Services"), to
the Company on arm's length terms and conditions (subject to Sections 4.3(b) and
(c)) and on an exclusive basis as to any DTH Business serving the Territory.
Notwithstanding the foregoing, no Programming Party may license or otherwise
make available any of its Program Services (whether or not licensed or otherwise
made available to the Company) to any other DTH Business in the Territory, other
than in the case of News or any News Partner only, in each Central American
Country, during the Forbearance Period (as defined in the DTH Agreement) with
respect to such Central American Country, pursuant to any LOA as in effect on
the date of this Agreement.
(b) The Company shall have guaranteed access to the same
Program Services or Channels made available by each Programming Party (or its
Affiliated Program
- 14 -
Providers) to cable and MMDS systems in the Territory (excluding any over the
air Channels made available by Televisa or its Controlled Affiliates, which
shall be governed by paragraph (c) of this Section 4.3), at a price not in
excess of the price at which such Program Services or Channels are made
available to cable or MMDS systems, to the extent such Programming Party (or its
Affiliated Program Providers) may have such rights, it being understood that
such Programming Party will use good faith efforts to obtain such rights.
(c) Effective as of the date of this Agreement, Televisa shall
be entitled to cash fees payable monthly for carriage of Televisa's over the air
channels on Innova in Mexico for so long as either (x) Televisa and its
Affiliates own, in the aggregate, at least 51% of the voting equity securities
of the Company or (y) Televisa and its Affiliates have not disposed to third
parties of more than 50% of the equity of the Company which they own on the date
hereof ((x) or (y) being the "Minimum Holding"), on the terms and subject to the
conditions more fully described in a Carriage Agreement to be entered into by
the Company, on the one hand, and Televisa or one or more of its Controlled
Affiliates, on the other hand, substantially in the form attached hereto as
Exhibit C.
Thereafter, the Company shall have the right to carry Televisa's over-the-air
Channels on commercially reasonable terms. If Televisa and the Company are
unable to agree on the terms and conditions of such carriage, then the terms
shall be determined through arbitration in accordance with Section 11.5.
Notwithstanding anything to the contrary in this Agreement, if Televisa ceases
to be paid the fees for carriage of its over the air channels as provided above,
Televisa may terminate carriage of such channels by the Company. All monthly
fees paid by the Company to Televisa or its Controlled Affiliates in respect of
over the air channels shall be allocated among such over the air channels as
Televisa, in its sole and absolute discretion, shall determine.
Section 4.4 Carriage of Program Services. Subject to Section 4.3(a)
and (b), Program Services of any Programming Party or Program Provider may be
carried by the Company as follows:
(a) Subject to the approval of the Programming Committee or
the Board of Managers under the Company's Bylaws, the Company may license
Program Services from a Program Provider for a fee (which may be fixed, based on
subscriber fees, advertising sales and/or any other basis determined by the
Programming Committee; it being understood that, initially, Program Services
provided by any Programming Party under this Section 4.4(a) to be carried on
such Programming Party's Reserved Channels will be priced as low as reasonably
possible and increased periodically, subject to Section 4.3(b) above).
(b) A Programming Party may use Distribution Services of the
Company for a fee equal to the fully allocated cost (including an allocation of
general and administrative expenses) of such Distribution Services plus an
agreed upon spread, as determined by the Programming Committee, and will pay the
Company an additional fee equal to 5% of net subscription revenue from such
Program Service (such percentage to be reviewed by the Programming Committee
from time to time). For purposes of this Section 4.4(b), "net subscription
revenue" from a Program Service means gross subscription revenue from such
Program Service collected from subscribers by the Company, its agents and/or its
distributors
- 15 -
(without deduction for, among other things, any commissions, or services fees
that may be payable to, or retained by, any agent or distributor) less only
sales tax, value-added tax and similar taxes imposed on the Company, gross
receipts tax and concession title duties based on such subscription revenue. In
addition, to the extent the Company is not able to realize the tax benefit of
any withholding tax (i.e., however denominated, a tax payable by a recipient of
revenues in respect of the purchase or use of goods or services by the person
who paid the revenues) in conjunction with the calculation of net subscriber
revenue, the amount of net subscriber revenue shall be calculated net of
withholding taxes. Program Services carried under this Section 4.4(b) shall be
offered as a separate tier to the Company's subscribers, the Programming Party
shall be entitled to make all pricing decisions with respect to such tier and
the Programming Party shall be entitled to retain all revenue derived from such
tier after deduction of the fees and expenses described above. All promotion and
advertising for any such tier will be coordinated with and conducted by the
Company in a manner agreed upon in good faith between the Programming Party and
the Company.
(c) A Programming Party may pay the Company the fully
allocated cost of Distribution Services for a Program Service plus an agreed
upon spread, as determined by the Programming Committee, and such Program
Service will be offered free of charge to the Company's subscribers.
(d) Subject to the approval of the Programming Committee, a
Programming Party may offer its Program Service free of charge to the Company,
which will bear the cost of Distribution Services, and the division of
subscriber fees and advertising sales will be negotiated on a case by case basis
between the Programming Party and the Company.
Any Program Service (whether or not carried on a Reserved Channel)
obtained from a Programming Party (or its Affiliated Program Provider) will be
carried as provided in subsections (a), (c) or (d) above of this Section 4.4;
provided, however, that if the Programming Party (or its Affiliated Program
Provider) and the Programming Committee are unable to agree upon the license
fees for such program under Section 4.4(a), the Programming Party (or Affiliated
Program Provider), in its sole discretion, may elect to have the Program Service
carried under Section 4.4(b) above. The Company will provide all pay-per-view
programming carried by the Company, except that any Programming Party (or its
Affiliated Program Providers) may use the Company's DTH System for pay-per-view
services owned by such Programming Party (or deemed owned by such Programming
Party, as provided in Section 4.5 below).
Section 4.5 Reserved Channels. Each Programming Party (together with
its Affiliated Program Providers) may use such Programming Party's Reserved
Channels to offer, pursuant to the terms of a Carriage Agreement to be
negotiated in good faith by such Programming Party and the Company, any Program
Service owned either solely by such Programming Party (or its Affiliated Program
Provider) or by such Programming Party (or its Affiliated Program Provider) with
another Programming Party. For purposes of this Agreement, (i) a Program Service
shall be deemed owned by a Programming Party if the Programming Party or its
Affiliated Program Provider has a 40% or greater equity interest in such Program
Service and (ii) a Program Service shall be deemed not owned by a Programming
Party if the Programming Party or its Affiliated Program Provider, has licensed
such service from a third
- 16 -
party or acquired from a third party distribution rights for such service. Each
Programming Party's rights with respect to its Reserved Channels are personal to
such Programming Party and may not be transferred or assigned except to the
Company, to that Programming Party's Affiliated Program Providers, to that
Programming Party's Parent Entity or as otherwise contemplated by Section 11.3.
Notwithstanding any provision of this Agreement to the contrary, the Company
shall not be required to carry any Program Service as a Reserved Channel unless
such Programming Party (or its Affiliated Program Provider) has complied with
Section 4.3(a) as to such Program Service.
Section 4.6 Open Channels. Use of the Open Channels shall be
determined with the goal of selecting program services which create the optimal
overall program package for customers in order to maximize the Company's
business. Televisa Sub shall determine the programming line-up for 60% of the
Open Channels, in good faith and consistent with the best interests of the
Company, subject to the approval of News Sub, not to be unreasonably withheld,
and the Programming Committee shall determine the programming line-up for the
remaining 40% of the Open Channels.
Section 4.7 Reclamation of Open Channels. If an Open Channel becomes
available, whether as a result of discontinuance of any Program Service,
termination of a Carriage Agreement relating to a Program Service, technical
innovations which result in the availability of new Channels, or otherwise, the
Company's Chief Executive Officer shall notify the Programming Parties in
writing of such availability. Upon receipt of such notice, each Programming
Party that has not used all of its Reserved Channels shall have the right to
reclaim the unused Open Channel as a Reserved Channel in order or accommodate a
Program Service not then carried by the Company's DTH System. In order to so
reclaim an Open Channel, a Programming Party must deliver a written notice (a
"Reclamation Notice") to the Company identifying the Open Channel it wishes to
reclaim and setting forth a reasonably detailed description of the new Program
Service which it or an Affiliated Program Provider wishes to offer on the Open
Channel. Upon receipt of a Reclamation Notice, the Company's Chief Executive
Officer shall forward copies of it to each other Programming Party who shall
have 45 days from delivery to notify the Company and the other Programming
Parties in writing whether such Programming Party also wishes to reclaim the
Open Channel and, if so, setting forth a reasonably detailed description of the
Program Service it wishes to offer on the Open Channel. If no other Programming
Parties respond within such 45-day period, the Programming Party that delivered
the Reclamation Notice may reclaim the Open Channel as an Active Channel at the
end of such 45-day period. If any other Programming Party that has not used all
of its Reserved Channels notifies the Company in writing within the 45-day
period that it also wishes to reclaim the Open Channel, the Programming
Committee will award the Open Channel (i) to the Programming Party with the
lowest ratio of Active Channels to Reserved Channels or (ii) if the foregoing
ratios are the same, the Programming Committee shall make a determination, which
shall be final and binding on the Programming Parties, based on the Programming
Committee's good faith judgment as to which Program Service would provide the
Company with the best overall package for subscribers.
Section 4.8 Loss of Channels. If at any time after the date hereof
the Company has available to it fewer Total Channels than contemplated by the
Programming Plan as then in effect, then such Channels shall be allocated as
follows: first, the Programming Committee shall
- 17 -
allocate as required all Channels whose uses are required by law; second, the
Programming Committee shall propose a new Programming Plan based on the then
available number of Total Channels. Such Programming Plan will be intended to
give priority to allocating Channels to Programming Parties that have Active
Channels.
Section 4.9 Substitution. In the event that any Program Service that
is owned by a Programming Party or its Affiliated Program Provider (as
determined pursuant to Section 4.5) and is offered by the Company shall be
discontinued in accordance with the terms of the Carriage Agreement applicable
to such Program Service, then such Programming Party may replace such
discontinued Program Service with a different Program Service by notifying the
Programming Committee or the Board of Managers in writing of its intent to
provide a substitute Program Service. Televisa Sub and News Sub shall cause
their representatives on the Programming Committee or the Board of Managers to
negotiate in good faith any amendment to the Programming Plan required by such
substitution.
Section 4.10 Certain Limitations. No Programming Party (or its
Affiliated Program Providers) will be given exclusivity as to program genre by
the Company. No Channel offered by the Company in Mexico may be used for any
Program Service that is directed toward pornography or religious or political
advocacy, unless approved by the Board of Managers or Programming Committee.
Section 4.11 Deadlocks. When the Programming Committee is unable to
decide any matter to be decided by the Programming Committee pursuant to this
Article IV, the following provisions shall apply: When the disagreement is
sustained at two consecutive meetings of the Programming Committee at which
votes are taken on the same decision, the members of the Programming Committee
shall consult in good faith on a regular basis with respect to such disagreement
for a period of 60 days, and if the disagreement remains unresolved at the end
of such 60 day period, the Chairmen of Televisa and News shall consult with each
other in good faith on a regular basis with respect to such disagreement,
including at least one personal meeting, during the 120-day period following the
60-day period.
ARTICLE V
MANAGEMENT AND ADMINISTRATION
Section 5.1 Board of Managers. The Company's Board of Managers shall
consist of such number of directors as set forth in the Company's Bylaws. The
directors shall be appointed by the holders of Social Parts in accordance with
the Company's Bylaws. The Board of Managers shall have such authority and
responsibilities as set forth in the Company's Bylaws.
Section 5.2 Quorum. Each of the Parties agrees to use all reasonable
efforts to attend, or cause its representatives to attend, all meetings of the
Partners, the Board or any committee thereof duly called in accordance with the
Bylaws, to ensure that a quorum as defined in the Bylaws is present for the
transaction of business at such meetings.
- 18 -
Section 5.3 Affiliated Transactions. Notwithstanding anything
contained in this Agreement, if the Company seeks to enforce its rights under,
or take or abstain from taking any other action in connection with, any
agreement or transaction between the Company and a Partner (or any Controlled
Affiliate of such Partner's Parent Entity), then the Company shall take or
abstain from taking action in connection therewith, only according to the vote
of a majority in interest of those other Partners which are not Controlled
Affiliates of such Partners' Parent Entity or as otherwise permitted under the
Company's Bylaws.
ARTICLE VI
AGREEMENTS OF THE PARENT ENTITIES
Section 6.1 Additional Equity Holders. After the date hereof, no
Person may be issued any Social Part in the Company unless (i) such issuance is
effected in accordance with the Bylaws and this Agreement, and (ii) such new
Partner and its Parent Entity have delivered to the Company and the other
Partners (x) an agreement executed by such new Partner and its Parent Entity, in
form and substance satisfactory to the Major Partners, pursuant to which such
new Partner and its Parent Entity agree to be bound by all of the terms and
conditions of this Agreement, and (y) such other documents, in form and
substance satisfactory to the Major Partners, as are reasonably necessary or
appropriate to effect such transaction.
Section 6.2 Transfers.
(a) No Parent Entity shall, and each Parent Entity shall cause
its Controlled Affiliates not to, directly or indirectly, sell, assign, pledge,
encumber or otherwise transfer (each such transaction being referred to as a
"Transfer") to any Person any direct or indirect interest in the Company, Innova
Holdings or in the Partner of which such Parent Entity is the Parent Entity,
except for any Transfer to such Parent Entity or a direct or indirect wholly
owned subsidiary of such Parent Entity. Nothing contained in this Agreement
shall limit or restrict in any way Transfers of direct or indirect interests in
the Parent Entities.
(b) Notwithstanding anything to the contrary contained in this
Agreement or the Contribution Agreement, the Partners agree that, after the
Galaxy Mexico Shut-Down Date (as defined in the DTH Agreement), News and its
wholly owned subsidiaries may Transfer all but not less than all of their direct
and indirect interests in the Company and Innova Holdings (including the Options
if they have not been exercised and have not expired):
(i) to DIRECTV or a wholly owned subsidiary thereof;
or
(ii) so long as DIRECTV continues to own at least 80%
of the equity and voting securities of DTVLA, to
DTVLA or a wholly owned subsidiary of DTVLA (in
the case of clause (i) or (ii), such transferee
being referred to as a "DIRECTV Transferee");
provided that, as conditions precedent to any such Transfer (the "DIRECTV
Transfer") (x) there shall not be in effect any statute, rule, regulation or
order of any court, which prohibits or makes illegal such Transfer (y) there
shall not be in effect any order of any governmental or regulatory
- 19 -
body (other than a court order) which prohibits such Transfer and (A) would be
expected, in Televisa's judgment, to result in criminal liability or prosecution
of any of Televisa, Innova, Innova Holdings, their Controlled Affiliates or any
of their respective officers, directors, employees or representatives or (B)
would result in any liability (other than monetary liabilities) that would (x)
have a material adverse effect on Innova, Innova Holdings and their Controlled
Affiliates, taken as a whole, or (y) in Televisa's judgment, have any adverse
effect on Televisa or any of its Affiliates (other than Innova, Innova Holdings
and their Controlled Affiliates), including but not limited to any requirement
which (I) grants rights (including with respect to Innova, Innova Holdings and
their Controlled Affiliates) to any Person which competes, or any of whose
Affiliates competes, with Televisa or any of its Affiliates or (II) restricts or
imposes requirements on Televisa or any of its Affiliates (other than Innova,
Innova Holdings and their Controlled Affiliates), and (z) News shall have
executed and delivered, and shall have caused the DIRECTV Transferee and DIRECTV
to execute and deliver, to the Company, Innova Holdings and the other Partners
of the Company and Innova Holdings, as applicable, one or more instruments, in
each case in form and substance reasonably acceptable to the Company, Innova
Holdings and the relevant other Partners of the Company and Innova Holdings, as
applicable, confirming the following:
(i) that News shall continue to be bound by, and
shall continue to have rights and benefits
under, Sections 3.7 (except as provided
therein), 4.3(a) and (b), 6.3 (with respect to
these continuing rights or obligations, only),
6.4, 6.5, 6.7, 6.8, 8.1 and 8.2 and Articles X
(with respect to these continuing rights and
obligations and attributable to any prior
period) and XI of the this Agreement (as a
Partner and as a Parent Entity, as appropriate);
(ii) that such DIRECTV Transferee shall assume and be
bound by, and shall be entitled to the benefits
of, the rights and obligations of News Sub under
this Agreement, the Option Agreement, the
Company Bylaws, the IH Bylaws and Section 20 of
the Contribution Agreement; and
(iii) that DIRECTV shall assume and be bound by, and
shall be entitled to the benefits of, the rights
and obligations of News under this Agreement (as
a Parent Entity), the Option Agreement, the
Company Bylaws, the IH Bylaws and Section 20 of
the Contribution Agreement (as a Parent Entity).
Notwithstanding the foregoing, News shall be permitted to grant to
DIRECTV or any DIRECTV Transferee the right and option to acquire from News all
of News' direct and indirect interests in the Company and Innova Holdings
(including the Options if they have not been exercised and have not expired)
without the consent of the other Parties, but subject to this Section 6.2(b) in
the case of the consummation of the exercise of such right and option.
- 20 -
(c) In the event that a direct interest in the Company or
Innova Holdings is Transferred by any Parent Entity or any Controlled Affiliate
of such Parent Entity that in either case is not a resident of Mexico for
purposes of the Mexican Income Tax Law, such Parent Entity shall, or shall cause
such Controlled Affiliate to, promptly provide to the Company or Innova
Holdings, as applicable, (x) the documentation required under the Mexican Income
Tax Law that shows that such Parent Entity or such Controlled Affiliate, as the
case may be, has paid in accordance with the Mexican Income Tax Law the
applicable income tax imposed, levied or assessed by Mexico or any political
subdivision or taxing authority thereof or therein arising out of, relating to
or resulting from such Transfer and/or (y) if and to the extent such Transfer is
exempt from Mexican income tax pursuant to the income tax treaty between the
United States and Mexico, as in effect on the date of such Transfer, a written
certificate that such Transfer is so exempt and certificates of residency for
the transferor in such Transfer issued by the U.S. Internal Revenue Service
dated during the tax year in which such Transfer occurred and with respect to
the tax year in which such Transfer occurred, and such Parent Entity shall
indemnify, defend and hold harmless the Company and Innova Holdings and their
respective officers, directors, shareholders, partners, members, agents and
representatives from and against any and all income taxes imposed, levied or
assessed by Mexico or any political subdivision or taxing authority thereof or
therein arising out of, relating to or resulting from such Transfer.
Section 6.3 Parent Guarantees of Affiliates' Obligations. Each
Parent Entity hereby irrevocably and unconditionally guarantees to the Company,
to each Partner, and to each other Parent Entity that each of such Parent
Entity's Affiliates shall pay and perform as required thereby, each and every
one of such Affiliate's respective covenants, agreements and obligations
contained in the Bylaws or this Agreement. This guaranty (i) is an absolute,
unconditional, present and continuing guarantee of payment and performance and
not of collectibility, (ii) is in no way conditioned or contingent upon any
attempts to collect or upon any other condition or contingency, and (iii) shall
not be affected in any way by any time or indulgence granted to the underlying
obligor or any variation, compromise or release of any underlying obligation.
Section 6.4 Exclusivity.
(a) Neither any Parent Entity nor any of its Controlled
Affiliates shall engage in any Competitive Activity in the Territory, except (i)
through the Company and (ii) as permitted in Section 6.4(b).
(b) The restrictions in Section 6.4(a) of this Agreement shall
not prohibit any of the following activities:
(i) ownership by Televisa (or any Affiliate thereof) of
any interest in PanAmSat or Univision Communications Inc. or their
successors or assigns or any Person which owns a controlling interest in
PanAmSat or Univision Communications Inc., as such ownership exists as of
the date of this Agreement (or resulting from the conversion, exchange or
other transaction involving such interest) and the acquisition or
ownership by Televisa (or any Affiliate thereof) of any additional
interest in Univision Communications Inc. as a result of the exercise of
warrants currently held by Televisa (or an Affiliate thereof) or the
acquisition or ownership of other equity interests in PanAmSat or
Univision Communications Inc. currently held by an employee of Televisa or
any of
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its Affiliates, by members of such employee's family or by a corporation,
limited liability company, partnership or trust owned by or for the
benefit of such persons (or resulting from the conversion, exchange or
other transaction involving such interest);
(ii) ownership by News (or any Affiliate thereof) or
DIRECTV (or any Affiliate thereof) of any interest in PanAmSat or its
successors or assigns or any Person which owns a controlling interest in
PanAmSat, as such ownership exists as of the date of this Agreement (or
resulting from the conversion, exchange or other transaction involving
such interest) or the acquisition or ownership of other equity interests
in PanAmSat currently held by an employee of News or any of its
Affiliates, by members of such employee's family or by a corporation,
limited liability company, partnership or trust owned by or for the
benefit of such persons (or resulting from the conversion, exchange or
other transaction involving such interest);
(iii) the provision of Program Services by any Party to
another Person, provided that such activity is in compliance with, or
contemplated by, Section 4.3(a) of this Agreement; and
(iv) the acquisition or ownership by any Party (directly
or indirectly through an Affiliate) of any securities of a publicly held
Person, if such securities, together with all other securities of such
publicly held Person owned by such Party's Parent Entity or Controlled
Affiliates thereof, (x) do not represent more than 5% of the aggregate
voting power of the outstanding equity securities of such Person (assuming
the conversion, exercise or exchange of all securities held by such Party
or its Affiliates that are convertible, exercisable or exchangeable into
or for voting securities) and (y) in the case of debt securities, entitle
the holder thereof to receive only interest or other returns that are not
based upon the value or results of operations of such Person.
Section 6.5 Cable/MMDS Carriage. Each Programming Party will use
reasonable efforts to carry, or cause its Controlled Affiliates to carry, any
Program Services (partly or wholly owned by a Programming Party or its
Affiliated Program Providers) which are carried on by the Company, on
commercially reasonable terms and conditions (including pricing and tiering), on
any cable or MMDS systems in the Territory owned by such Programming Party or
its Controlled Affiliates. Without limiting the generality of the foregoing,
Televisa will use reasonable efforts to carry any Program Services (partly or
wholly-owned by a Programming Party) which are carried by the Company, on
commercially reasonable terms and conditions (including pricing and tiering) on
Televisa-owned cable and MMDS systems in the Territory.
Section 6.6 Distribution. The Parties will agree on the most
effective and efficient manner to distribute all proprietary, jointly-owned and
third party owned Program Services to DTH distributors and, where appropriate,
cable and MMDS distributors in the Territory. The Company may have one or more
local distributors (each, a "Distributor"). Each Distributor will be responsible
for distribution and related services as agreed among the Parties. The Company
will act as the Distributor in Mexico and may obtain ancillary services from
Televisa or its Affiliates on an MFN Basis or at fair market value, whichever is
more favorable to the Company. Any entity in which Televisa has a significant
equity interest may act (but shall not be required to act) as Distributor in its
area of operation, in each case on terms and conditions
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no more favorable to such entity than those which would pertain in an arm's
length transaction with a third party Distributor in such area. For its
services, each Distributor which is not an Affiliate of Televisa will be paid a
fee to cover its associated costs, the structure and details of which will be
set forth in the Business Plan.
Section 6.7 Limitation on Restrictions. Except to the extent
provided in this Agreement, no Parent Entity nor any Affiliate thereof, nor any
of their respective officers, directors, shareholders, partners or employees
shall be subject to any legal restriction among themselves regarding exclusivity
or competition and may freely exploit any opportunity for its own account or
with others.
Section 6.8 Technology.
(a) The Parties have agreed that any subscriber management
systems, management information systems, conditional access and programming
uplink services and related technology and equipment required by the Company and
its Affiliates will be designed to serve the best interests of the Company and
to achieve a system which provides for flexibility, growth and future
technological development. The Parties shall make available such additional
technologies as may be required by the Company and its Affiliates. Any
technology or services acquired or licensed from a Party or any of its
Affiliates (including News Digital Systems Limited and News Datacom technology)
shall be made available on an MFN Basis. Such technology shall be provided
pursuant to a license to utilize such technology in the DTH Business in the
Territory and to manufacture and sell, or authorize others to manufacture and
sell, equipment using or relying upon such technology. The Parties acknowledge
that the successful operation of the Company's DTH System is dependent upon the
total integration, interworking and interoperability of all parts of technology
used. The Company and its Affiliates will obtain indemnities and remedies in the
event that any technology is defective, fails to operate on an integrated basis
or fails to function as required to achieve the objectives of the Business Plan.
Equipment for the Company and its Affiliates may be manufactured by the Parties
(or their Affiliates) and/or by third parties, depending upon the best interests
of the Company.
(b) News will make any existing or future technology developed
by it or its Affiliates (including News Datacom and News Digital Systems Ltd.)
available on an MFN Basis to the Company, its Affiliates and any other DTH
Business in which both Televisa and News own a significant interest.
Section 6.9. Initial Public Offering. In order to facilitate an
initial public offering of equity securities of the Company, Televisa may
propose amendments to the Company's Bylaws, this Agreement and other
organizational documents to implement changes in the Company's capital
structure, including through the use of non-voting shares, CPOs or other
arrangements of the type generally used by Mexican issuers in connection with
public offerings of equity securities. News shall not, and shall cause its
Affiliates not to, unreasonably withhold their consent to a proposed public
offering by the Company, if requested by Televisa, or to any related Bylaw
amendments, changes in capital structure or other arrangements, requested by
Televisa in connection with such public offering.
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ARTICLE VII
DIVIDENDS; ACCOUNTING; BOOKS AND RECORDS
Section 7.1 Dividends. Dividends of Available Cash shall be paid to
the Partners and Innova Holdings within 45 days of the end of each Company
fiscal quarter pro rata based on such Partners' and Innova Holdings' respective
equity interests, provided that such dividends shall only be paid to the extent
permitted by applicable law and contracts, agreements and instruments to which
the Company is a party or to which its assets are subject. The amount of
Available Cash, if any, shall be determined by the Major Partners in accordance
with the Bylaws. The Company shall comply with all tax withholding requirements
under applicable law and shall supply to the Partners proof of payment of any
such withholding taxes and copies of all reports or forms filed by the Company
in connection with any such payment.
Section 7.2 Accountants; Reports to Partners.
(a) The books of account and records of the Company shall be
audited as of the end of each Fiscal Year by an independent public accounting
firm which is one of the Big Four United States accounting firms (or its Mexican
affiliate) and is selected by the Board of Managers in accordance with the
Bylaws. All Company financial statements shall be prepared in accordance with
Mexican GAAP and reconciled to U.S. GAAP and shall include information
permitting such statements to be reconciled to Australian GAAP for so long as
News Parent has reporting obligations in Australia.
(b) As promptly as practicable, but in no event later than 90
days after the end of each Fiscal Year (or, upon reasonable prior written notice
from a Partner to the Company, such shorter period as may be required by
applicable law, rule or regulation for a Partner to timely file its financial
reports for such Fiscal Year), the Company shall cause its independent public
accountants to prepare and mail to each Partner a report including the audited
financial statements of the Company for such Fiscal Year and such other United
States federal and state income tax reporting information, if any, as is
required by applicable law.
(c) As promptly as practicable, but in no event later than 45
days after the end of each quarter of each Fiscal Year (or upon reasonable prior
written notice from a Partner to the Company, such shorter period as may be
required by applicable law, rule or regulation for a Partner to timely file its
financial reports for such quarter of such Fiscal Year), the Company shall
prepare and mail, or cause to be prepared and mailed, to each Partner a report
containing unaudited financial statements of the Company for each quarter and
for the period from the beginning of the then current Fiscal Year through the
end of such quarter, prepared on a basis consistent with Innova's annual audited
financial statements.
(d) Notwithstanding the foregoing, each Partner and the
Company agree that, from and after the date hereof, the Company will continue to
provide to each Partner the financial and other information, in substantially
the same form and for the comparable time periods, that it provides to News as
of the date hereof, prepared on a basis consistent with the annual audited
financial statements of the Company for such periods. Such financial and other
- 24 -
information shall be provided in addition to any financial or other information
required to be provided to each Partner under the Bylaws or otherwise.
Section 7.3 Books and Records. The Company shall keep, or cause to
be kept, accurate and complete records and books of account of all transactions
of the Company. The Company books and records shall be kept in accordance with
generally accepted accounting principles applicable thereto, shall be maintained
at the principal place of business of the Company and shall be available for
inspection and examination, for a proper purpose and at reasonable times during
usual business hours, by Partners or their duly authorized representatives. Such
information shall be kept confidential and shall be used for Company purposes
only, subject to applicable laws and stock exchange regulations.
Section 7.4 Tax Filings. (a) From and after the date hereof and at
all times prior to any initial public offering of equity securities of the
Company, each Party agrees that it will use commercially reasonable efforts
(without incurring any material monetary or other liability or obligation or
assuming any material risk thereof) to establish and maintain the Company's
classification as a partnership (and not as an association taxable as a
corporation) and each of the Company's wholly-owned Controlled Affiliates
classification as disregarded as an entity separate from its sole beneficial
owner (and not as an association taxable as a corporation), in each case for
United States federal income tax purposes (and any applicable United States
state and local income and franchise tax purposes) to the extent permitted by
the applicable United States federal, state and/or local tax law, including the
execution and filing of form 8832 with the Internal Revenue Service, in each
case if and when the filing of such form 8832 to elect to classify the Company
as a partnership or to elect to classify a wholly-owned Controlled Affiliate of
the Company as such a disregarded entity is permitted under United States
Treasury Regulation section 301.7701-3.
(b) The Board of Managers is specifically directed and authorized to
file all returns, forms and documents required or permitted to be filed pursuant
to applicable tax laws, and to take all actions in respect of tax reporting and
proceedings before all taxing authorities, within the scope of its authority
under this Agreement.
ARTICLE VIII
OTHER MATTERS
Section 8.1 Confidentiality.
(a) Each Party (a "Receiving Party") shall keep confidential
and shall cause its Representatives (as defined below) to keep confidential and
shall not disclose any information of a confidential or proprietary nature
heretofore or hereafter received from the Company or any other Party (the
"Providing Party") concerning the Company or its business (collectively referred
to as "Confidential Information"). The term "Confidential Information" also
includes all analyses, compilations, studies or other material prepared by the
Receiving Party or its directors, officers, employees, agents, advisors, or
representatives of such Party's advisors (collectively, such Receiving Party's
"Representatives") containing, based on or reflecting any information furnished
by any Providing Party or its representatives. The term
- 25 -
"Confidential Information" does not include information which (i) is already in
any Receiving Party's possession, provided that such information is not known by
such Receiving Party to be subject to another confidentiality agreement with or
other obligation of secrecy to the Company or another party, or (ii) is or
becomes generally available to the public other than as a result of a disclosure
by the Receiving Party or its Representatives in violation of this Agreement, or
(iii) becomes available to the Receiving Party on a non-confidential basis from
a source other than any Providing Party or its advisors, provided that such
source is not known by such Receiving Party to be bound by a confidentiality
agreement with or other obligation of secrecy to any Party or another Person.
(b) Each Party agrees that the Confidential Information will
be used solely in connection with the business of the Company, and that such
information will be kept confidential by such Party and its Representatives;
provided, however, that any of such information may be disclosed by a Party:
(i) to any of its Representatives who need to know such
information (and only to the extent that any such Representative has a
need to know) for the purpose of consummating the transactions
contemplated by the DTH Agreement or hereby; provided, that (x) such
Representatives shall be informed by such Party of the confidential nature
of the Confidential Information and the requirement that it not be used
other than for the Company's business, (y) such Representatives shall be
required to agree to and be bound by the terms of this Section 8.1 as a
condition to receiving the Confidential Information, and (z) in any event,
each Party shall be responsible for any breach of this Section 8.1 by any
of its Representatives; or
(ii) to regulatory authorities or the general public if
and to the extent a Party is required by law or securities exchange rules
to make such disclosures (including, but not limited to, in connection
with a public offering); provided that such Party, to the extent
practicable, notifies and consults with the other Parties prior to making
any such disclosure.
(c) There will be no public announcement made concerning the
matters contemplated by this Agreement without the consent of Televisa and News
(including in relation to the content of any such announcement), except that a
Party will be entitled to make any disclosure required by law or by the rules of
any relevant securities exchange, provided that such Party, to the extent
practicable, notifies and consults with the other Parties prior to making any
such disclosure or announcement (including in relation to the content of such
announcement).
Section 8.2 License Agreement. Within 30 days after the date hereof,
the Company and News (or its Affiliate) shall enter into an amendment to the
License Agreement, pursuant to which the territory covered by the License
Agreement shall be expanded to cover Mexico and the Central American Countries,
to the extent News (or any Affiliates of News) has the right to grant such
additional rights. In any event, the license granted under the License Agreement
shall remain a perpetual, royalty-free and exclusive license. From time to time
after the date hereof, at the request and expense of the Company, News shall,
and shall cause its Affiliates to, obtain rights to use the "Sky" name and
trademark in the Central American Countries.
- 26 -
Section 8.3 Consents and Approvals. The Parties acknowledge that the
operation of the Company's DTH System as contemplated hereunder will require
obtaining all necessary regulatory and governmental approvals. Each Party will
provide such information, cooperation and assistance as may reasonably be
required to obtain approval or permits required by or made necessary as a result
of this Agreement.
ARTICLE IX
REPRESENTATIONS AND WARRANTIES
Section 9.1 Representations and Warranties of All Parties. Each
Party to this Agreement represents and warrants to the other Parties as follows:
(a) Due Incorporation. Such Party is duly incorporated or
otherwise duly organized and validly existing under the laws of the jurisdiction
of its incorporation or organization and has the power and lawful authority to
own its assets and properties and to carry on its business as now conducted.
Such Party is duly licensed or qualified to do business in each jurisdiction,
except where the failure to be licensed or qualified would not, individually or
in the aggregate, have a material adverse effect on its financial condition or
its ability to perform its obligations hereunder.
(b) Power; Authority; Execution; Delivery; Enforceability.
Such Party has the full right, power, authority and approval required to enter
into, execute and deliver this Agreement and to perform fully such Party's
obligations hereunder. This Agreement has been duly executed and delivered by
such Party and, assuming the due execution and delivery by the other Parties
hereto, constitutes the valid and binding obligation of such Party, enforceable
in accordance with its terms, except as (i) such enforceability may be limited
by bankruptcy, insolvency, reorganization or moratorium or other similar laws
affecting the enforcement of creditors' rights generally and (ii) the
availability of equitable remedies may be limited by equitable principles of
general applicability.
(c) Consents. No approval or consent of any foreign, federal,
state, county, local or other governmental or regulatory body or of any other
Person is required in connection with the execution and delivery by such Party
of this Agreement and the consummation and performance by such Party of the
transactions contemplated hereby, except such consents and approvals which if
not obtained would not materially impair such Party's ability to perform its
obligations under this Agreement or have a material adverse effect on the
financial position of such Party or the Company.
(d) No Conflicts. The execution and delivery of this
Agreement, the consummation of the transactions contemplated hereunder and the
performance by such Party of this Agreement in accordance with its terms and
conditions will not conflict with or result in the breach or violation of any of
the terms or conditions of, or constitute (or with notice or lapse of time or
both would constitute) a default under, (i) the Certificate of Incorporation,
By-laws or documents analogous to the foregoing documents of such Party, (ii)
any instrument, contract or other agreement to which such Party is a party or by
or to which it or its assets or properties are bound or subject, or (iii) any
statute or any regulation, order, judgment or decree of any court or
- 27 -
governmental or regulatory body, except conflicts, breaches or violations as to
which requisite waivers or consents have been obtained or which would not,
individually or in the aggregate, materially impair such Party's ability to
perform its obligations under this Agreement or have a material adverse effect
on the financial position of such Party or the Company.
(e) Litigation. As of the date hereof, (i) there are no
actions, suits, proceedings or investigations pending or, to the knowledge of
such Party or the Affiliates of such Party, threatened against or affecting such
Party or the Affiliates of such Party or their respective properties, assets or
businesses in any court or before or by any governmental department, board,
agency or instrumentality or arbitrator which could, if adversely determined
(or, in the case of an investigation would lead to any action, suit or
proceeding, which if adversely determined) reasonably be expected to materially
impair such Party's ability to perform its obligations under this Agreement, and
(ii) such Party or the Affiliates of such Party have not received any currently
effective notice of any default, and such Party and the Affiliates of such Party
are not in default, under any applicable order, writ, injunction, decree,
permit, determination or award of any court, any governmental department, board,
agency or instrumentality or arbitrator which would reasonably be expected to
materially impair such Party's ability to perform its obligations under this
Agreement.
Section 9.2 Certain Representations of the Partners. Each Partner
represents and warrants to each of the other Parties hereto that the Social Part
acquired by such Partner was acquired for investment purposes only and not with
a view to the resale of such Social Part (or any part thereof or interest
therein) in violation of any applicable securities laws.
ARTICLE X
INDEMNIFICATION
Section 10.1 Indemnification. Each Party will indemnify and hold
Innova, Innova Holdings, each other Party, and their respective Affiliates,
officers, directors, employees and representatives, including individuals
nominated to serve on the Board of Managers (collectively, the "Indemnified
Parties") harmless, and agrees to protect, save and keep harmless the
Indemnified Parties from payment, and hereby assumes liability for the payment,
of any or all liabilities (including all interest and expenses together with any
tax thereon), obligations, losses, damages, penalties, claims, actions, suits,
judgments or settlements of any nature or kind, whether known or unknown,
absolute or contingent, accrued or unaccrued, liquidated or unliquidated and
including all costs, expenses and disbursements (including cost of investigation
by, and attorneys', accountants' and expert witnesses' reasonable fees and
expenses payable to, third parties), arising out of, resulting from or in
connection with (a) any breach by such Party of a representation or warranty
contained herein, or (b) any failure by such Party to perform any agreement or
covenant contained herein, except to the extent such performance is prevented or
impeded by another Party's willful misconduct, in which case such other Party
shall be responsible for such misconduct.
- 28 -
Section 10.2 Procedure for Indemnification.
(a) For purposes of this Article X, any Person liable to
indemnify an Indemnified Party shall be known as an "Indemnifying Party." The
Indemnified Party shall notify the Indemnifying Party as soon as practicable
after the Indemnified Party receives notice of or otherwise has actual knowledge
of such claim, and shall provide to the Indemnifying Party as soon thereafter as
practicable all information and documentation necessary to support and verify
the claim being asserted, and the Indemnifying Party shall be given access to
all books and records in the possession or control of the Indemnified Party
which the Indemnifying Party reasonably determines to be related to such claim.
(b) Promptly after receipt by an Indemnified Party of notice
of the commencement by any third party of any action, suit or proceeding which
might result in the Indemnifying Party becoming obligated to indemnify or make
any other payment to the Indemnified Party under this Article X, the Indemnified
Party shall, if a claim in respect thereof is to be made against the
Indemnifying Party, notify the Indemnifying Party promptly in writing of the
commencement thereof. The failure of the Indemnified Party to so notify the
Indemnifying Party shall not relieve the Indemnifying Party from any liability
that it may have on account of this indemnification or otherwise, except to the
extent that the Indemnifying Party is materially prejudiced thereby. The
Indemnifying Party shall have the right, within thirty (30) days after being so
notified, to assume the defense of such litigation or proceeding with counsel
reasonably satisfactory to the Indemnified Party. In any such litigation or
proceeding the defense of which has been assumed by the Indemnifying Party, the
Indemnified Party shall have the right to participate therein and retain its own
counsel at its own expense, provided that such Indemnified Party's counsel shall
be retained at the Indemnifying Party's expense if (i) the Indemnified Party and
the Indemnifying Party so agree or (ii) the named parties to any such litigation
or proceeding (including any impleaded parties) include both the Indemnified
Party and the Indemnifying Party and representation of both the Indemnified
Party and the Indemnifying Party by the same counsel would be inappropriate due
to actual or potential differing interests between them, provided further that
in no event shall an Indemnifying Party be obligated to pay for more than one
firm of counsel (in addition to any local counsel) for all such Indemnified
Parties, unless the representation of all Indemnified Parties by the same firm
of counsel would be inappropriate due to actual or potential differing interests
between them or each such Indemnified Party is named party to any such
litigation or proceeding. To the extent that the settlement of such an action or
proceeding, the defense of which has been assumed by the Indemnifying Party,
involves payment of money, the Indemnifying Party shall have the right, in
consultation with the Indemnified Party, to settle those aspects dealing only
with the payment of money. Notwithstanding the foregoing, in connection with any
such defense or settlement, the Indemnifying Party shall not enter into a
consent decree or any settlement involving injunctive or other non-monetary
relief or consent to an injunction or settlement without the Indemnified Party's
written consent, which consent shall not be unreasonably withheld. The
Indemnified Party shall cooperate, and shall use its reasonable efforts to cause
its employees and the employees of any of its respective Affiliates to cooperate
with the Indemnifying Party in the defense of any action, suit or proceeding
assumed by the Indemnifying Party.
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(c) Each Indemnifying Party's obligation under this Article X
shall not affect the other Parties' right to seek any other remedy upon a
default by the Indemnifying Party under this Agreement.
(d) All sums payable by the Indemnifying Party in accordance
with this Article X shall be paid without any deduction, withholding,
counterclaim or set off.
ARTICLE XI
MISCELLANEOUS
Section 11.1 Notice. All notices and other communications required
or permitted hereunder shall be in writing, shall be deemed duly given upon
actual receipt, and shall be delivered (a) in person, (b) by registered or
certified mail (air mail if addressed to an address outside of the country in
which mailed), postage prepaid, return receipt requested, (c) by a generally
recognized overnight courier service which provides written acknowledgment by
the addressee of receipt, or (d) by facsimile or other generally accepted means
of electronic transmission (provided that a copy of any notice delivered
pursuant to this clause (d) shall also be sent pursuant to clause (b) or (c)),
addressed as follows:
(i) if to the Company, to:
Innova, S. de X.X. de C.V.
Insurgentes Xxx Xx. 000
Xxxxxxx Xxx Xxxxx X.X. 00000
Mexico, D.F.
Attention: Director Juridico
with copies to:
Grupo Televisa, S.A.
Xxxxxxx Xxxxx xx Xxxxxxx 0000
Xxxxxxxx A, Cuarto Piso
Colonia Santa Fe Zedec
01210 Mexico, D.F.
Attn: Xxxx X. Xxxxxxx Xxxxxx, General Counsel
Telecopier: (00-00) 0000-0000
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx, LLP
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attn: Xxxxxx X. Xxxxx, Esq.
Telecopier: (000) 000-0000
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(ii) if to Televisa or the Televisa Partners, to:
c/o Grupo Televisa, S.A.
Xxxxxxx Xxxxx xx Xxxxxxx 0000
Xxxxxxxx A, Cuarto Piso
Colonia Santa Fe Zedec
01210 Mexico, D.F.
Attn: Xxxx X. Xxxxxxx Xxxxxx, General Counsel
Telecopier: (00-00) 0000-0000
with copies to:
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx, LLP
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attn: Xxxxxx X. Xxxxx, Esq.
Telecopier: (000) 000-0000
(iii) if to News or the News Partners, to:
c/o The News Corporation Limited
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxxx, Esq.
Telecopier: (000) 000-0000
with copies to:
Xxxxx & Xxxxxxx L.L.P.
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxx X. Xxxxxxxxx, Esq.
Xxxxxxxx X. Xxxx, Esq.
Telecopier: (000) 000-0000
or to such other addresses as may be specified by like notice to the other
parties.
Section 11.2 Waiver, Amendment, etc. This Agreement may not be
amended or supplemented, and no waivers of or consents to departures from the
provisions hereof shall be effective, unless set forth in a writing signed by,
and delivered to, all the Parties hereto. No failure or delay of any Party in
exercising any power or right under this Agreement will operate as a waiver
thereof, nor will any single or partial exercise of any right or power, or any
abandonment or discontinuance of steps to enforce such right or power, preclude
any other or further exercise thereof of the exercise of any other right or
power.
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Section 11.3 Binding Agreement; Assignment; No Third Party
Beneficiaries. This Agreement will be binding upon and inure to the benefit of
the Parties hereto and their successors and permitted assigns. Except as set
forth herein and by operation of law, no party to this Agreement may assign or
delegate all or any portion of its rights, obligations or liabilities under this
Agreement without the prior written consent of each other party to this
Agreement. Nothing expressed or implied herein is intended or will be construed
to confer upon or to give to any third party any rights or remedies by virtue
hereof. Promptly upon consummation of the News Reorganization, News Corp shall
Transfer its rights and obligations under this Agreement to News Parent, which
rights and obligations shall be accepted and assumed by News Parent in writing,
and News Corp's rights and obligations under this Agreement shall terminate in
their entirety immediately upon consummation of such Transfer and the acceptance
and assumption by News Parent. Notwithstanding the foregoing or anything in this
Agreement to the contrary, News (and any Affiliate thereof) may assign any of
its rights and obligations (whether presently held or subsequently acquired) in,
to and under this Agreement to any DIRECTV Transferee pursuant to the DIRECTV
Transfer without the prior written consent of the Parties hereto.
Section 11.4 Governing Law; Dispute Resolution; Equitable Relief.
(a) This Agreement shall be governed by and construed in
accordance with the laws of the State of New York (regardless of the laws that
might otherwise govern under applicable principles of conflicts of law).
(b) Subject to Section 11.5, each Party to this Agreement
irrevocably consents and agrees that any legal action, suit or proceeding by it
against any of the other Parties with respect to its rights, obligations or
liabilities under or arising out of or in connection with this agreement shall
be brought by such Party only in the United States District Court for the
Southern District of New York or, in the event (but only in the event) such
court does not have subject matter jurisdiction over such action, suit or
proceeding, in the courts of the State of New York sitting in New York City, and
each Party to this Agreement hereby irrevocably accepts and submits to the
jurisdiction of each of the aforesaid courts in personam, with respect to any
such action, suit or proceeding (including, without limitation, claims for
interim relief, counterclaims, actions with multiple defendants and actions in
which such party is implied). Each Party hereto irrevocably and unconditionally
waives any right that it may have to a jury trial in any legal action, suit or
proceeding with respect to, or arising out of or in connection with this
agreement. Each of the Parties hereby irrevocably designates CT Corporation
System ("Process Agent") with an office at 000 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000 as its designee, appointee and agent to receive, for and on its behalf
service of process in such jurisdiction in any legal action or proceedings with
respect to this Agreement, and such service shall be deemed complete upon
delivery thereof to the Process Agent, provided that in the case of any such
service upon the Process Agent, the Party effecting such service shall also
deliver a copy thereof to the intended recipient in the manner provided in
Section 11.1. Each of the Parties shall take all such action as may be necessary
to continue said appointment in full force and effect or to appoint another
agent so that each Party will at all times have an agent for service of process
for the above purposes in New York, New York. In the event of the transfer of
all or substantially all of the assets and business of the process agent to any
other corporation by consolidation, merger, sale of assets or otherwise, such
other corporation shall be substituted hereunder for the process agent
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with the same effect as if named herein in place of the Process Agent. Each of
the Parties further irrevocably consents to the service of process out of any of
the aforementioned courts in any such action or proceeding by the mailing of
copies thereof by registered airmail, postage prepaid, to such Party at its
address set forth in this Agreement, such service of process to be effective
upon acknowledgment of receipt of such registered mail. Nothing herein shall
affect the right of any Party to serve process in any other manner permitted by
applicable laws. Each of the Parties expressly acknowledges that the foregoing
waiver is intended to be irrevocable under the laws of the State of New York and
of the United States of America.
(c) Each Party hereto agrees that money damages would not be a
sufficient remedy for the other Parties hereto for any breach of this Agreement
by it, and that in additional to all other remedies the other Parties hereto may
have, they shall be entitled to specific performance and to injunctive or other
equitable relief as a remedy for any such breach. Each Party hereto agrees not
to oppose the granting of such relief in the event a court determines that such
a breach has occurred, and to waive any requirement for the securing or posting
of any bond in connection with such remedy.
Section 11.5 Arbitration of Certain Disputes. If the Parties are
unable to reach agreement under Section 4.3(c) concerning the terms of a
carriage agreement (a "Dispute"), the Dispute shall be resolved in accordance
with the following procedures:
(a) All Disputes shall be finally settled under the Rules of
Arbitration of the International Chamber of Commerce by a single arbitrator
appointed in accordance with such Rules (the "Arbitrator").
(b) The site of the arbitration shall be New York, New York or
such other location as the Parties may mutually agree in writing, any award
shall be deemed to have been made there, and the language to be used in the
arbitration proceedings shall be the English language.
(c) Within 30 days after the appointment of the Arbitrator
(the "Submission Period"), each party to the Dispute shall submit to the
Arbitrator, in a sealed envelope, a written statement setting forth such Party's
good faith proposal for the resolution of the contested issue.
(d) Such submissions shall remain secret until after the
Arbitrator has received each Party's proposal, at which time the Arbitrator
shall inform each Party of the other's proposal. No such proposal may be amended
after it is submitted to the Arbitrator. If any Party fails to submit its
proposal by the end of the Submission Period, the Arbitrator shall order the
adoption of the other Party's proposal. The Arbitrator may rely upon such
evidence as the Arbitrator may choose in his or her discretion in making such
determination. Within 10 days after the Arbitrator informs each Party of the
other's proposal, either Party may also submit to the Arbitrator such written
evidence in support of its position as it deems appropriate. The Arbitrator
shall be empowered to convene a hearing not to exceed three (3) days in length
at which the Arbitrator shall be permitted to question either Party regarding
their respective positions or, in lieu of such hearing, to submit written
questions to either Party.
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(e) Within fifteen (15) days after the closing of the
arbitration hearing, the Arbitrator will prepare and distribute to the parties a
writing setting forth the Arbitrator's decision relating to the Dispute. The
Arbitrator shall compare the proposals and shall determine which proposal he or
she believes to be the resolution most closely in accordance with the relevant
provisions of this Agreement and shall order the adoption of such proposal as
the relief granted.
(f) Any award rendered by the Arbitrator will be final,
conclusive and binding upon the Parties and any judgment thereon may be entered
and enforced in any court of competent jurisdiction.
(g) The non-prevailing party will bear all fees, costs and
expenses of the Arbitration, and all the fees, costs and expenses of its own
attorneys, experts and witnesses; and will reimburse all reasonable attorney's
fees and expenses incurred by the prevailing party in connection with such
proceedings, in addition to any other relief to which it may be entitled.
(h) Notwithstanding anything to the contrary in this Section
11.5, either party may seek injunctive relief from a court of competent
jurisdiction (in accordance with Section 11.4) at any time without complying
with the foregoing provisions.
Section 11.6 Severability. The invalidity or unenforceability of any
provision hereof in any jurisdiction will not affect the validity or
enforceability of the remainder hereof in that jurisdiction or the validity or
enforceability of this Agreement, including that provision, in any other
jurisdiction. To the extent permitted by applicable law, each Party hereto
waives any provision of applicable law that renders any provision hereof
prohibited or unenforceable in any respect. If any provision of this Agreement
is held to be unenforceable for any reason, it shall be adjusted rather than
voided, if possible, in order to achieve the intent of the parties to this
Agreement to the extent possible.
Section 11.7 Table of Contents; Headings. The table of contents and
the headings in this Agreement are for convenience of reference only and will
not affect the construction of any provisions hereof.
Section 11.8 Counterparts. This Agreement may be executed in one or
more counterparts, each of which when so executed and delivered will be deemed
an original but all of which will constitute one and the same Agreement.
Delivery of an executed counterpart of a signature page of this Agreement by
facsimile transmission shall be effective as delivery of a manually executed
counterpart of this Agreement.
Section 11.9 Entire Agreement. This Agreement embodies the entire
agreement and understanding of the Parties hereto in respect of the subject
matter contained herein, and supersedes the Social Part Holders Agreement, dated
as of March 6, 1997.
Section 11.10 Further Assurances. Each Party to this Agreement
agrees to execute, acknowledge, deliver, file and record such further
certificates, amendments, instruments,
- 34 -
agreements and documents, and to do all such other acts and things, as may be
required by law or as may be necessary or advisable to carry out the intent and
purposes of this Agreement.
Section 11.11 Survival of Rights, Duties and Obligations.
Dissolution or termination of the Company for any cause shall not release any
Party from any liability which at the time of dissolution or termination had
already accrued to any other Party or which thereafter may accrue in respect of
any act or omission prior to such dissolution or termination.
Section 11.12 Costs and Expenses. Each party hereto shall bear its
own fees and expenses in connection with the negotiation, preparation,
execution, delivery and performance of this Agreement and any agreements,
instruments or documents executed or delivered in connection herewith, except as
otherwise specifically provided herein or therein.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date first above written.
INNOVA, S. de X.X. de C.V.
By: /s/ Xxxxxxxxx Xxxxxxx Penna xx Xxxxx
-------------------------------------
By: /s/ Xxxxxx Xxxxxxxx Xxxxx
-------------------------------------
GRUPO TELEVISA, S.A.
By: /s/ Xxxxxxx de Angoitia Xxxxxxx
-------------------------------------
By: /s/ Xxxxx Xxxxxx Folch Xxxxxxx
-------------------------------------
SKY DTH, S. de X.X., de C.V.
By: /s/ Xxxx Xxxxxxxxx Xxxxxxx Xxxxxx
-------------------------------------
THE NEWS CORPORATION LIMITED
By: /s/ Xxxxxx Xxxxxxx
-------------------------------------
[Amended and Restated Social Part Holders Agreement]
- 36 -
NEWS DTH (MEXICO) INVESTMENT LIMITED
By: /s/ Xxxxxx Xxxxxxx
-------------------------------------
- 37 -
EXHIBIT A
Bylaws of Innova
EXHIBIT B
Bylaws of Innova Holdings
EXHIBIT C
Form of Carriage Agreement
SCHEDULE 3.1
Current Capital Contributions
VALUE OF SOCIAL PARTS
---------------------------------
CLASE "I" CLASE "II" % VALOR TOTAL
---------- ---------- -- -----------
SOCIOS SERIE A-1
SKY DTH, S. DE X.X. DE
C.V. Ps. 496,650,000 Ps. 277,066,200 13.921488 Ps. 773,716,200
SOCIOS SERIE B-1
NEWS DTH (MEXICO)
INVESTMENT, LTD. Ps. 248,325,000 Ps. 138,533,100 6.960744 Ps. 386,858,100
SOCIOS SERIE B-2
LIBERTY MEXICO DTH, INC. Ps. 82,775,000 Ps. 46,177,700 2.320248 Ps. 128,952,700
SOCIOS SERIE C
INNOVA HOLDINGS, S. DE
X.X. DE C.V. Ps. 0 Ps. 4,268,185,000 76.797520 Ps. 4,268,185,000
--------------- ----------------- --------- -----------------
TOTAL : Ps. 827,750,000 Ps. 4,729,962,000 100% Ps. 5,557,712,000
--------------- ----------------- --------- -----------------
