EXHIBIT 10.1
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SECOND AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
DIRECTV LATIN AMERICA, LLC
A DELAWARE LIMITED LIABILITY COMPANY
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TABLE OF CONTENTS
PAGE
Article 1 DEFINITIONS...............................................................................................2
Section 1.1 Defined Terms..............................................................................2
Article 2 FORMATION OF THE COMPANY.................................................................................17
Section 2.1 Name......................................................................................17
Section 2.2 Formation; Admission......................................................................17
Section 2.3 Purpose...................................................................................18
Section 2.4 Powers....................................................................................18
Section 2.5 Principal Office..........................................................................18
Section 2.6 Registered Office.........................................................................18
Section 2.7 Registered Agent..........................................................................18
Section 2.8 Qualifications in Other Jurisdictions.....................................................18
Section 2.9 Term......................................................................................18
Section 2.10 Nature of Members' Interests..............................................................18
Section 2.11 Capacity of the Members...................................................................18
Section 2.12 Limited Liability.........................................................................18
Section 2.13 Non-Voting Equity.........................................................................19
Section 2.14 Master Contribution Agreement.............................................................19
Article 3 PERCENTAGE INTERESTS.....................................................................................19
Section 3.1 Percentage Interests of Members; Authorized Equity Interests..............................19
Article 4 CAPITAL CONTRIBUTIONS....................................................................................19
Section 4.1 Capital Contributions.....................................................................19
Section 4.2 Capital Contributions by Additional Members...............................................19
Section 4.3 No Interest...............................................................................19
Section 4.4 No Withdrawal of Capital..................................................................19
Section 4.5 Use of Capital Contributions..............................................................20
Section 4.6 Capital Accounts..........................................................................20
Section 4.7 Loans by Members..........................................................................21
Section 4.8 Loans by Third Parties....................................................................23
Section 4.9 Additional Funding and Capital Contributions..............................................23
Article 5 MANAGEMENT OF THE COMPANY................................................................................24
Section 5.1 Executive Committee.......................................................................24
Section 5.2 Number of Executive Committee Members; Term of Office.....................................26
Section 5.3 Removal...................................................................................27
Section 5.4 Delegation of Authority...................................................................27
Section 5.5 Compensation..............................................................................27
Section 5.6 Special Meetings..........................................................................27
Section 5.7 Officers..................................................................................27
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TABLE OF CONTENTS
(CONTINUED)
PAGE
Section 5.8 Conversion to Corporate Form..............................................................29
Section 5.9 Approval of Programming Agreements........................................................30
Section 5.10 Other Business............................................................................30
Section 5.11 Exculpation and Indemnification...........................................................30
Section 5.12 Covenant Not to Compete...................................................................31
Section 5.13 Transactions with Affiliates..............................................................32
Section 5.14 Expenses..................................................................................33
Section 5.15 Telephonic Meetings.......................................................................33
Section 5.16 Minutes of the Meetings...................................................................33
Section 5.17 By-Laws Eliminated........................................................................33
Article 6 TRANSFERS AND ENCUMBRANCES OF LLC INTEREST...............................................................33
Section 6.1 Transfers.................................................................................33
Section 6.2 Encumbrances..............................................................................34
Section 6.3 Transfers of LLC Interests and Other Equity Interests.....................................34
Section 6.4 Tag Along Rights Prior to the First Anniversary of the Closing Date.......................37
Section 6.5 Rights To Cause a Liquidity Event.........................................................38
Section 6.6 Complete Sale; Qualifying IPO.............................................................41
Section 6.7 Sky Deal..................................................................................45
Section 6.8 Valuation Procedure.......................................................................47
Section 6.9 Fair Market Value Determination...........................................................48
Article 7 Distributions............................................................................................49
Section 7.1 Distribution Rights.......................................................................49
Section 7.2 Distributions Upon Final Liquidation......................................................49
Section 7.3 Distributions in Kind.....................................................................49
Section 7.4 Right to Withhold.........................................................................49
Section 7.5 Certain Non-U.S. Withholding Taxes........................................................49
Article 8 ALLOCATIONS..............................................................................................49
Section 8.1 Timing and Amount of Allocations of Net Income and Net Loss...............................49
Section 8.2 General Allocations.......................................................................50
Section 8.3 Additional Allocation Provisions..........................................................51
Section 8.4 Members' Tax Reporting....................................................................54
Article 9 BOOKS AND RECORDS........................................................................................54
Section 9.1 Fiscal Year...............................................................................54
Section 9.2 Books and Records.........................................................................54
Section 9.3 Inspection................................................................................54
Section 9.4 Accounting................................................................................54
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TABLE OF CONTENTS
(CONTINUED)
PAGE
Section 9.5 Statements and Reports....................................................................55
Section 9.6 Tax Returns...............................................................................55
Section 9.7 Tax Matters Partner.......................................................................55
Article 10 ADDITIONAL AND SUBSTITUTE MEMBERS; ASSIGNEES; ETC........................................................59
Section 10.1 Admission of Additional Members...........................................................59
Section 10.2 Admission of Substitute Members...........................................................60
Section 10.3 Rights of Assignees.......................................................................60
Section 10.4 Withdrawal of a Member....................................................................60
Article 11 DISSOLUTION AND LIQUIDATION..............................................................................61
Section 11.1 Dissolution...............................................................................61
Section 11.2 Winding Up................................................................................61
Section 11.3 Effect of Dissolution.....................................................................62
Section 11.4 No Capital Contribution Upon Dissolution..................................................62
Section 11.5 Notice of Dissolution.....................................................................62
Section 11.6 Reasonable Time for Winding-Up............................................................63
Section 11.7 Special Purchase Right....................................................................63
Article 12 INDEMNIFICATION; LIABILITY...............................................................................63
Section 12.1 Claims....................................................................................63
Section 12.2 Conditions................................................................................63
Section 12.3 Limitation of Liability...................................................................64
Section 12.4 Liability of Members......................................................................64
Article 13 MISCELLANEOUS............................................................................................64
Section 13.1 Consummation of a Liquidity Event.........................................................64
Section 13.2 Waiver of Partition.......................................................................65
Section 13.3 Further Assurances........................................................................65
Section 13.4 Successors and Assigns....................................................................65
Section 13.5 Waivers...................................................................................65
Section 13.6 Amendments................................................................................65
Section 13.7 Notices...................................................................................65
Section 13.8 Governing Law.............................................................................67
Section 13.9 Certain Rules of Construction.............................................................67
Section 13.10 Entire Agreement..........................................................................67
Section 13.11 Severability..............................................................................68
Section 13.12 Counterparts..............................................................................68
Section 13.13 No Third Party Beneficiaries..............................................................68
Section 13.14 English Language..........................................................................68
Section 13.15 Required Approvals........................................................................68
Section 13.16 Dispute Resolution........................................................................68
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TABLE OF CONTENTS
(CONTINUED)
PAGE
Section 13.17 Consent to Jurisdiction and Service of Process............................................70
Section 13.18 Confidentiality and Nondisclosure.........................................................71
Section 13.19 Voting Agreements.........................................................................73
Section 13.20 Late Payments; Interest...................................................................73
Section 13.21 Effect on the Master Contribution Agreement...............................................73
Section 13.22 Survival of Provisions....................................................................73
ANNEX A MEMBERS AND PERCENTAGE INTERESTS................................................................................A-1
ANNEX B EXECUTIVE COMMITTEE MEMBERS.....................................................................................B-1
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SECOND AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
DIRECTV LATIN AMERICA, LLC
This SECOND AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT
(this "Agreement") of DIRECTV Latin America, LLC, a Delaware limited liability
company (the "Company"), dated as of February 24, 2004, is entered into by and
between DIRECTV LATIN AMERICA HOLDINGS, INC., a California corporation (the
"▇▇▇▇▇▇ Member"); ▇▇▇▇▇▇ ELECTRONICS CORPORATION, a Delaware corporation
("▇▇▇▇▇▇"); and ▇▇▇▇▇▇▇ INVESTMENTS LLC, a Cayman Islands limited liability
company (the "▇▇▇▇▇▇▇ Member"), together with any other Persons who become
Members of the Company as provided herein.
RECITALS
WHEREAS, the Company originally was formed as the Predecessor
Partnership pursuant to a Partnership Agreement dated as of February 13, 1995,
and amended on December 14, 1995 and as of April 11, 1997;
WHEREAS, on April 11, 1997, the Predecessor Partnership was merged
with and into a Delaware limited liability company formed pursuant to that
certain Limited Liability Company Agreement, dated as of April 11, 1997 (the
"Original LLC Agreement");
WHEREAS, on December 27, 2000, the parties to the Original LLC
Agreement entered into an amendment and restatement of the Original LLC
Agreement (the "First Amended and Restated LLC Agreement");
WHEREAS, the Company commenced a case under chapter 11 of title 11 of
the United States Code currently pending before the United States Bankruptcy
Court for the District of Delaware Case No. 03-10805(PJW) (the "Chapter 11
Case");
WHEREAS, as of April 18, 2003, ▇▇▇▇▇▇ and the ▇▇▇▇▇▇▇ Member entered
into that certain Master Contribution Agreement (as supplemented and modified by
the letter agreement dated as of October 20, 2003, between ▇▇▇▇▇▇ and the
▇▇▇▇▇▇▇ Member, and as otherwise amended, supplemented or otherwise modified
from time to time, the "Master Contribution Agreement"), providing, among other
things, for (i) the amendment of the First Amended and Restated LLC Agreement
and (ii) the contribution to the Company of certain rights and property
including, without limitation, equity in certain entities and rights to receive
payments of certain indebtedness;
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WHEREAS, in connection with the Chapter 11 Case and pursuant to the
Master Contribution Agreement, the Membership Interests were issued to the
▇▇▇▇▇▇ Member and the ▇▇▇▇▇▇▇ Member only, who are the sole Members of the
Company on the date hereof and all of the membership interests in the Company at
the time of the filing of the Petition were extinguished;
WHEREAS, the Court Order (as defined herein) was entered in the
Chapter 11 Case on February 13, 2004;
WHEREAS, the Members have executed this Agreement in connection with
the consummation of the Plan and pursuant to the Court Order;
WHEREAS, the Parties hereto agree that this Agreement shall become
effective upon the consummation of the Plan; and
WHEREAS, the parties hereto desire to amend and restate the First
Amended and Restated LLC Agreement upon the consummation of the Plan and upon
the terms contained herein.
AGREEMENT
In consideration of the mutual promises set forth below and other
valuable consideration, the receipt and adequacy of which is hereby
acknowledged, the parties hereby mutually agree as follows:
ARTICLE 1
DEFINITIONS
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SECTION 1.1 DEFINED TERMS. As used in this Agreement, the following
terms have the following meanings:
"Act" means the Delaware Limited Liability Company Act (6
Del.C.ss.18-101 et seq.), as previously or hereafter amended.
"Additional Capital Contribution" is defined in Section 4.9.B hereof.
"Additional/Substitute Member Competing Business" means the business
of providing video, audio or data programming of primarily entertainment content
by satellite transmission, cable, wireline, fiber optic, wireless or other
analogous form of concurrent distribution to residences of individual consumers
(including homes, apartment buildings, hospitals and hotels) or to places of
public accommodation (including restaurants and bars) which in turn make such
programming available to consumers in such places of public accommodation;
provided, however, that "Additional/Substitute Member Competing Business" shall
not include any of the following: (i) over-the-air television or radio
broadcasts, (ii) point-to-point communications not involving or containing
entertainment programming, including video programming (e.g., videoconferencing,
voicemail, e-mail and facsimile), (iii) telephone services (e.g., trunking,
switching, networking and related value added services), (iv) data services to
businesses, (v) personal voice and data communications systems, such as cellular
telephone, and (vi) Internet service.
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"Additional Funds" is defined in Section 4.9.A hereof.
"Additional Members" is defined in Section 10.1.A hereof.
"Adjusted Capital Account Deficit" means, with respect to any Member,
the deficit balance, if any, in such Member's Capital Account as of the end of
the relevant Fiscal Year, after giving effect to the following adjustments:
(i) decrease such deficit by any amounts which such Member
is obligated to restore pursuant to this Agreement or is deemed to be
obligated to restore pursuant to the penultimate sentence of each of
Treasury Regulation Sections 1.704-2(i)(5) and 1.704-2(g)(1); and
(ii) increase such deficit by the items described in
Treasury Regulation Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6).
The foregoing definition of Adjusted Capital Account Deficit is intended to
comply with the provisions of Treasury Regulation Section 1.704-1(b)(2)(ii)(d)
and shall be interpreted consistently therewith.
"Adjustment Date" is defined in Section 4.9.B(ii) hereof.
"Affected Member" is defined in Section 9.7.B(v) hereof.
"Affiliate," as applied to any specified Person, means any other
Person directly or indirectly Controlling or Controlled by or under direct or
indirect common Control with such specified Person and, in the case of a Person
or an Affiliate who is an individual, shall also include (i) such specified
Person's or Affiliate's Family Members, and (ii) trusts, the trustee or settlor
and all beneficiaries of which are such specified Person or Affiliate, or such
specified Person's or Affiliate's Family Members or charities (and, following
the death of such specified individual or other vesting of the trust corpus,
such beneficiaries). Notwithstanding anything to the contrary herein: (i) none
of the Company or any Tier II Local Operating Company or any of their respective
direct or indirect Subsidiaries shall be deemed to be Affiliates of the ▇▇▇▇▇▇
Member or the ▇▇▇▇▇▇▇ Member or their respective Affiliates; (ii) based upon the
ownership and management arrangements in effect on the date hereof, each of Sky
Multi-Country Partners and NetSat Servicios Ltda. shall be deemed to be an
Affiliate of TNCL; (iii) ▇▇▇▇▇▇ shall be deemed to be an Affiliate of the ▇▇▇▇▇▇
Member and (iv) TNCL shall be deemed to be an Affiliate of the ▇▇▇▇▇▇ Member
except as to any action or transaction which the Audit Committee of the Board of
Directors of ▇▇▇▇▇▇ determines is fair to the Company (without consideration of
other factors affecting ▇▇▇▇▇▇ only and not the Company) and which are approved
or ratified in accordance with the policies and procedures established by such
Audit Committee. Notwithstanding the foregoing, Section 5.13 shall govern
certain transactions with TNCL as described therein.
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"Agreement" is defined in the Preamble.
"Appeal" is defined in Section 13.16.J hereof.
"Appeal Panel" is defined in Section 13.16.J hereof.
"Applicable Percentage" means such percentage as the Executive
Committee determines to be a reasonable approximation of the effective income
taxation rates generally payable by the most highly taxed Member under Chapter 1
of the Code and comparable applicable state tax provisions with respect to its
Taxable Income Allocation.
"Appraisal Process" is defined in Section 6.5.B hereof.
"Argentina LOC" means Galaxy Entertainment Argentina, S.A., an
Argentine sociedad anonima.
"Assignee" means any Person (i) to which a Member (or assignee
thereof) Transfers all or any part of its LLC Interest, and (ii) which has not
been admitted to the Company as a Substitute Member pursuant to Section 10.2
hereof.
"Award" is defined in Section 13.17 hereof.
"Bankruptcy Code" means title 11 of the United States Code (11 U.S.C.
ss. 101 et. seq.).
"Bessemer" means Bessemer Securities LLC, a Delaware limited
liability company.
"Bessemer Permitted Transferees" means BD Common LLC, an Affiliate of
Bessemer, BD Preferred LLC, an Affiliate of Bessemer, and any Affiliate thereof.
"Business" is defined in Section 2.3 hereof.
"Business Day" means any day except a Saturday, Sunday or other day
on which commercial banks in Los Angeles, California or New York, New York are
authorized or required by law to be closed.
"Call Purchase" is defined in Section 6.5.B(ii)(b) hereof.
"Call Right" is defined in Section 6.5.B(ii)(b) hereof.
"Call Right Exercise Notice" is defined in Section 6.5.B(ii)(b)
hereof.
"Capital Account" is defined in Section 4.6.A hereof.
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"Capital Contribution" means, with respect to any Member, the total
amount of money and the initial Carrying Value of any property (determined net
of any liabilities secured by such Property that the Company is considered to
assume or take subject to and determined consistently with Section 752(c) of the
Code and without regard to Section 7701(g) of the Code) contributed to the
Company by such Member (or the predecessor holder of the LLC Interest of such
Member), and any additional Capital Contributions made or contributed to the
Company by or on behalf of such Member pursuant to Article IV.
"Carrying Value" means, with respect to any Company Asset, such
asset's adjusted basis for U.S. federal income tax purposes, except as follows:
(a) The Carrying Values of assets contributed to the
Company as Capital Contributions shall be the fair market value of
such assets, as determined by mutual agreement of the Members or, in
the absence of such mutual agreement, as determined by the Tax
Matters Partner.
(b) The Carrying Values of all Company Assets shall be
adjusted to equal their respective fair market values, as determined
by the Executive Committee, and the resulting unrecognized gain or
loss allocated to the Capital Accounts of the Members as though such
assets had been sold for their respective fair market values as of
the following times: (i) the acquisition of an additional interest in
the Company by any new or existing Member in exchange for more than a
de minimis capital contribution; and (ii) the distribution by the
Company to a Member of more than a de minimis amount of Company
Assets.
(c) The Carrying Value of all Company Assets shall be
adjusted to equal their respective fair market values, as determined
by the Executive Committee, and the resulting unrecognized gain or
loss allocated to the Capital Accounts of the Members as though such
assets had been sold for their respective fair market values as of
the following times: (i) the date the Company is liquidated within
the meaning of Treasury Regulation Section 1.704-l(b)(2)(ii)(g); and
(ii) the termination of the Company pursuant to the provisions of
this Agreement.
(d) The Carrying Value of Company Assets shall be increased
or decreased to the extent required under Treasury Regulation Section
1.704-1(b)(2)(iv)(m) in the event that the adjusted tax basis of
Company Assets are adjusted pursuant to Code Sections 732, 734 or
743.
(e) The Carrying Value of a Company Asset that is
distributed (whether in liquidation of the Company or otherwise) to
one or more Members shall be adjusted to equal its fair market value,
as determined by the Executive Committee, and the resulting
unrecognized gain or loss allocated to the Capital Accounts of the
Members as though such asset had been sold for such fair market
value.
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(f) The Carrying Value of a Company Asset shall be adjusted
by the Depreciation, if any, taken into account by the Company with
respect to computing Net Income or Net Loss.
"CBC" means California Broadcast Center, LLC, a Delaware limited
liability company.
"Certificate" is defined in Section 2.2 hereof.
"Chapter 11 Case" is defined in the Recitals.
"▇▇▇▇▇▇▇▇ Group" means individually or collectively, Glenville
Investments LLC, Georgetown Investments LLC, any ▇▇▇▇▇▇▇▇ Permitted Transferee
and any Affiliate of the foregoing.
"▇▇▇▇▇▇▇▇ Permitted Transferees" means ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, members of their immediate families and/or any of their lineal
descendants, individually or collectively, and/or any trusts, foundations or
other entities established primarily for the benefit of any one or more of the
foregoing persons, and/or any Persons, majority owned or otherwise Controlled by
any one or more of the foregoing, and/or any Affiliate of any one or more of the
foregoing Persons, including any member of the ▇▇▇▇▇▇▇▇ Group, and as of the
date hereof, Glenville Investments LLC and Georgetown Investments LLC.
"Closing Date" means February 24, 2004.
"Code" means the Internal Revenue Code of 1986, as amended (or any
corresponding provision or provisions of succeeding law).
"Colombian LOC" means Galaxy de Colombia, Ltda., a sociedad limitada.
"Company" is defined in the Preamble.
"Company Assets" means all interests in real and personal property
owned by the Company from time to time, and shall include both tangible and
intangible property (including cash).
"Company Minimum Gain" has the meaning set forth in Regulations
Sections 1.704-2(b)(2) and 1.704-2(d) for the phrase "partnership minimum gain."
"Competing Business" means the business of distributing pay
television programming by satellite transmission, cable or MMDS technology
directly to residences of individual consumers (including homes, apartment
buildings, hospitals and hotels) or to places of public accommodation (including
restaurants and bars) which in turn make such programming available to consumers
in such places of public accommodation; provided, however, that "Competing
Business" shall not include any of the following: (i) over the air television or
radio broadcasts, (ii) point to point communications not involving or containing
6
entertainment programming, including video programming (e.g., videoconferencing,
voicemail, e-mail and facsimile), (iii) telephone services (e.g., trunking,
switching, networking and related value added services), (iv) audio and data
services, (v) personal voice and data communications systems, such as cellular
telephone, (vi) the production or acquisition of entertainment programming and
the sale or license thereof other than directly to consumers or places of public
accommodations by satellite transmission, cable or MMDS technology, and (vii)
the business of providing access (irrespective of the transmission media, which
may include satellite) to online or internet services and content to end users
of personal computers, television platform and mobile access devices.
"Complete Sale" means any transaction or series of related
transactions involving or resulting in a sale or other disposition of the
Company as a whole to a Person that is not an Affiliate of either the ▇▇▇▇▇▇
Member or the ▇▇▇▇▇▇▇ Member, whether by means of a stock sale, merger,
consolidation or a sale or other disposition of all or substantially all of its
assets.
"Confidential Information" is defined in Section 13.18.B hereof.
"Confidentiality Agreements" mean (i) the Confidentiality Agreement,
dated as of July 2, 2003, as amended from time to time, among ▇▇▇▇▇▇, the
Company, the ▇▇▇▇▇▇▇ Member, Globo Comunicacoes e Participacoes S.A. ("Globo"),
Grupo Televisa, S.A. ("Televisa") and TNCL, (ii) the Confidentiality Agreement,
dated as of July 2, 2003, as amended from time to time, among ▇▇▇▇▇▇, the
Company, the ▇▇▇▇▇▇▇ Member, Globo and TNCL and (iii) the Confidentiality
Agreement, dated as of July 23, 2003, as amended from time to time, among
▇▇▇▇▇▇, the Company, the ▇▇▇▇▇▇▇ Member, Televisa and TNCL.
"Contributing Member" is defined in Section 8.3.B(ii) hereof.
"Control," when used with respect to any Person, means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "Controlling" and "Controlled" have meanings correlative to the
foregoing.
"Convertible Debt" is defined in Section 4.7.H(i) hereof.
"Costa Rica LOC" means Servicios Directos de Satelites, S.A. (Costa
Rica), a Costa Rican sociedad anonima.
"Costs" is defined in Section 5.11.A hereof.
"Court Order" means the order entered February 13, 2004 by the U.S.
Bankruptcy Court exercising jurisdiction over the Chapter 11 Case.
"Covenant Not to Compete" means the provision set forth in Section
5.12 hereof.
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"Credit Agreement" is defined in Section 4.7.G hereof.
"Customer Lists" is defined in Section 13.18.E hereof.
"▇▇▇▇▇▇▇ Buyout" is defined in Section 5.12.A hereof.
"▇▇▇▇▇▇▇ Floor Value" is defined in Section 6.5.C(ii) hereof.
"▇▇▇▇▇▇▇ Group" means collectively, the ▇▇▇▇▇▇▇ Member, the ▇▇▇▇▇▇▇▇
Group, Bessemer, the ▇▇▇▇▇▇▇▇ Permitted Transferees and the Bessemer Permitted
Transferees.
"▇▇▇▇▇▇▇ IPO Complete Sale Amount" is defined in Section 6.6.C(iii)
hereof.
"▇▇▇▇▇▇▇ IPO Value" is defined in Section 6.6.C(iii) hereof.
"▇▇▇▇▇▇▇ Member" is defined in the Preamble.
"▇▇▇▇▇▇▇ Minimum Amount" means Four Hundred Million Dollars
(US$400,000,000) minus the aggregate amount of any proceeds (whether in the form
of cash or publicly traded debt or equity securities, valued as provided in
Section 6.6.D hereof) received, collectively, by all members of the ▇▇▇▇▇▇▇
Group, as a distribution of cash or other assets by the Company or in any
disposition of any of their respective Equity Interests in the Company after the
Closing.
"▇▇▇▇▇▇▇ Share" at any time means a percentage equal to (i) the
aggregate Equity Interests in the Company owned by all members of the ▇▇▇▇▇▇▇
Group at such time divided by (ii) the sum of the aggregate Equity Interests in
the Company owned by any member of the ▇▇▇▇▇▇▇ Group and ▇▇▇▇▇▇ and ▇▇▇▇▇▇'
Affiliates at such time, excluding any Excluded Equity. As of the Closing Date,
the ▇▇▇▇▇▇▇ Share is 17.391%.
"Defaulting Member" means any Member who fails to make any
indemnification payment due to the Tax Matters Partner.
"Deficit" is defined in Section 4.7.E hereof.
"Depreciation" means, for each Fiscal Year or other period, an amount
equal to the federal income tax depreciation, amortization or other cost
recovery deduction allowable with respect to an asset for such Fiscal Year or
other period, except that (1) with respect to any asset whose Carrying Value
differs from its adjusted basis for federal income tax purposes and which
difference is being eliminated by use of the "remedial method" defined by
Regulations Section 1.704-3(d), Depreciation for such Fiscal Year or other
period, shall be the amount of book basis recovered for such Fiscal Year or
other period under the rules prescribed by Regulations Section 1.704-3(d)(2),
and (2) with respect to any other asset whose Carrying Value differs from its
adjusted basis for federal income tax purposes at the beginning of such Fiscal
Year or other period, Depreciation shall be an amount that bears the same ratio
to such beginning Carrying Value as the federal income tax depreciation,
amortization or other cost recovery deduction for such year or other period
bears to such beginning adjusted tax basis; provided, however, that if the
federal income tax depreciation, amortization or other cost recovery deduction
for such year or other period is zero, Depreciation shall be determined with
reference to such beginning Carrying Value using any reasonable method selected
by the Executive Committee.
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"Direct Damages" is defined in Section 12.3 hereof.
"Disclosing Members" is defined in Section 13.18.B hereof.
"Disney Guaranty" means the Brazil Revenue Shortfall Guaranty
Agreement, dated as of December 23, 2003, as amended from time to time, among
the Company, ▇▇▇▇▇▇ and Buena Vista International Inc.
"Dispute Resolution Procedures" is defined in Section 13.16 hereof.
"Dissolution Election" is defined in Section 11.1.A hereof.
"Early Conversion Shares" is defined in Section 4.7.E hereof.
"Early Conversion Value" is defined in Section 4.7.E hereof.
"Early Equity Proceeds" is defined in Section 6.6.A(iii) hereof.
"Early Sale Proceeds" is defined in Section 6.6.A(i) hereof.
"Economic Interest" means a Person's right to share in the Net
Income, Net Loss, or similar items of, and to receive distributions from, the
Company, but does not include any other rights of a Member including, without
limitation, the right to vote or to participate in the management of the Company
or, except as specifically provided in this Agreement or required under the Act,
any right to information concerning the business and affairs of the Company.
"Ecuador LOC" means Galaxy Ecuador S.A., an Ecuadorian sociedad
anonima.
"Encumbrance" means a pledge, alienation, mortgage, hypothecation,
encumbrance or similar collateral assignment by any other means, whether for
value or no value and whether voluntary or involuntary (including, without
limitation, by operation of law or by judgment, levy, attachment, garnishment,
bankruptcy or other legal or equitable proceedings).
"Equity Interests" means shares, other participations, options,
warrants or interests, howsoever designated, in corporate stock, partnership
interests or limited liability company interests; provided, however, that
convertible debt and the purchase rights under Section 4.7 hereof shall not be
included in the definition of "Equity Interests."
"Equity Proceeds" is defined in Section 6.6.B(iii) hereof.
9
"Equity Value of the Company" means the Fair Market Value of all of
the outstanding Equity Interests of the Company, minus the ▇▇▇▇▇▇ Excluded
Equity Amount.
"Excluded Equity"is defined in Section 4.7.F(i).
"Event of Termination" is defined in Section 11.1 hereof.
"Executive Committee" is defined in Section 5.1.B(i) hereof.
"Ex-Member" is defined in Section 13.18.C(iv) hereof.
"Expert" is defined in Section 6.8.A hereof.
"Failed Funding" means the occurrence of the following events: (i)
the ▇▇▇▇▇▇ Member and its Affiliates shall have fulfilled all of their
respective obligations under the Credit Agreement and have notified the ▇▇▇▇▇▇▇
Member in writing that they will not provide further funding to the Company and
(ii) the Company shall have been unable, after using commercially reasonable
efforts, to obtain third-party or other funding required for its operations.
"Failed Funding Liquidity Event" means a liquidation of the Company
or a dissolution of the Company's business, in each case in connection with a
Sky Deal and in each case (i) resulting from a Failed Funding and (ii) where no
Equity Interests are distributed to or received by the ▇▇▇▇▇▇ Member, the
▇▇▇▇▇▇▇ Member or their respective Affiliates or any equity holders of the
Company, directly or indirectly, in connection with such liquidation or
dissolution.
"Fair Market Value" has the meaning assigned to it in Section 6.8.A
hereof.
"Family Members" means, with respect to an individual, such
individual's immediate family and, in the case of the ▇▇▇▇▇▇▇ Member or its
Affiliates, includes lineal descendants of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, individually
or collectively, and/or any trusts, foundations or other entities established
primarily for the benefit of any one or more of the foregoing persons, and/or
any Persons, majority owned or otherwise Controlled by any one or more of the
foregoing, and/or any Affiliate of any one or more of the foregoing Persons,
including any member of the ▇▇▇▇▇▇▇▇ Group, and as of the date hereof, Glenville
Investments LLC and Georgetown Investments LLC.
"First Amended and Restated LLC Agreement" is defined in the
Recitals.
"Fiscal Year" is defined in Section 9.1 hereof.
"Funding Date" is defined in Section 4.9.B(i) hereof.
"Funding Notice" is defined in Section 4.9.B(i) hereof.
10
"HBO Guaranty" means the Revenue Shortfall Guaranty Agreement, dated
as of February 12, 2004, as amended from time to time, by ▇▇▇▇▇▇ in favor of
Brazil Distribution L.L.C.
"▇▇▇▇▇▇" is defined in the Preamble.
"▇▇▇▇▇▇ Excluded Equity Amount" means $384,802,817, plus, as of any
date of determination, interest that would have accrued on such amount from the
Closing Date through the date of determination at a rate equal to the Prime Rate
as in effect from time to time as published in the Wall Street Journal plus 3%.
"▇▇▇▇▇▇ Guaranty Agreements" means the HBO Guaranty, the Disney
Guaranty and the PAS Guaranty.
"▇▇▇▇▇▇ Guaranty Obligations" means the payments, if any, made by
▇▇▇▇▇▇ or its Affiliates (and not reimbursed or repaid to ▇▇▇▇▇▇ or its
Affiliates by the Company or its Subsidiaries) under the ▇▇▇▇▇▇ Guaranty
Agreements.
"▇▇▇▇▇▇ Member" is defined in the Preamble.
"▇▇▇▇▇▇ Share" at any time means the percentage equal to 100% minus
the ▇▇▇▇▇▇▇ Share at such time. As of the Closing Date, the ▇▇▇▇▇▇ Share is
82.609%.
"Indemnified Agents" means any agent acting on behalf of the Tax
Matters Partner of the Company.
"Initial Experts" is defined in Section 6.8.B(i) hereof.
"IPO" is defined in Section 5.8.B hereof.
"IPO Price" is defined in Section 6.6.C(ii) hereof.
"JAMS" is defined in Section 13.16.C hereof.
"Liquidity Consummation Notice" is defined in Section 6.5.C hereof.
"Liquidity Event" means (i) a Qualifying IPO, (ii) a Complete Sale or
(iii) any liquidation of the Company or dissolution of its business other than a
liquidation of the Company, or a dissolution of the Company's business, in
either case in clause (iii) in connection with a Sky Deal that is not a Failed
Funding Liquidity Event.
"Liquidity Period" is defined in Section 6.5.A hereof.
"LLC Interest" means the entire ownership interest of a Member in the
Company at any particular time, including the right of such Member to any and
all benefits to which such Member may be entitled as provided in this Agreement,
together with the obligations of such Member to comply with all of the terms and
provisions of this Agreement.
11
"Loss" is defined in Section 5.11.A hereof.
"Master Contribution Agreement" is defined in the Recitals.
"Member Loan" means a loan made by one or more Members to the Company
at such times and in such amounts as shall be authorized by the Executive
Committee.
"Member Minimum Gain" means an amount, with respect to each Member
Nonrecourse Debt, equal to the Company Minimum Gain that would result if the
Member Nonrecourse Debt were treated as a Nonrecourse Liability, determined in
accordance with Regulations Section 1.704-2(i)(3).
"Member Nonrecourse Debt" has the meaning set forth in Regulations
Section 1.704-2(b)(4) for the phrase "partner nonrecourse debt."
"Member Nonrecourse Deduction" has the meaning set forth in
Regulations Sections 1.704-2(i)(1) and 1.704-2(i)(2) for "partner nonrecourse
deduction."
"Members" means any Person or Persons who, from time to time, shall
have acquired ownership interests in the Company and become a Member pursuant to
and in accordance with the terms of this Agreement, and shall not have ceased to
be a Member under the terms of this Agreement or any applicable law. The Members
on the date of this Agreement are identified on Annex A, each of whom shall
individually be referred to herein as a "Member."
"Mexican LOC" means Grupo Galaxy Mexicana S. de ▇.▇. de C.V., a
Mexican sociedad de responsabilidad limitada de capital variable.
"Mexico" means the United Mexican States.
"Net Income" and "Net Loss" mean for each Fiscal Year or other
period, an amount equal to the Company's taxable income or loss for such year or
period determined in accordance with Code Section 703(a) (for this purpose, all
items of income, gain, loss or deduction required to be stated separately
pursuant to Code Section 703(a)(1) shall be included in taxable income or loss),
with the following adjustments:
(a) Any income of the Company that is exempt from federal
income tax and not otherwise taken into account in computing Net
Income or Net Loss pursuant to this definition shall be added to such
taxable income or loss;
(b) Any expenditure of the Company described in Code
Section 705(a)(2)(B) or treated as Code Section 705(a)(2)(B)
expenditures pursuant to Regulations Section 1.704-1(b)(2)(iv)(i),
and not otherwise taken into account in computing Net Income or Net
Loss pursuant to this definition, shall be subtracted from such
taxable income or loss;
12
(c) Gain or loss resulting from any disposition of Company
Assets where such gain or loss is recognized for federal income tax
purposes shall be computed by reference to the Carrying Value of the
Company Assets disposed of, notwithstanding that the adjusted tax
basis of such Company Assets differs from its Carrying Value;
(d) In lieu of the depreciation, amortization and other
cost recovery deductions taken into account in computing such taxable
income or loss, there shall be taken into account Depreciation for
such Fiscal Year;
(e) To the extent an adjustment to the adjusted tax basis
of any asset included in Company Assets pursuant to Code Section
734(b) or Code Section 743(b) is required pursuant to Regulations
Section 1.704-1(b)(2)(iv)(m)(4) to be taken into account in
determining Capital Accounts as a result of a distribution other than
in liquidation of a Member's LLC Interest, the amount of such
adjustment shall be treated as an item of gain (if the adjustment
increases the basis of the asset) or loss (if the adjustment
decreases the basis of the asset) from the disposition of the asset
and shall be taken into account for the purposes of computing Net
Income and Net Loss;
(f) If the Carrying Value of any Company Asset is adjusted
in accordance with any of clauses (b), (c) or (e) of the definition
of "Carrying Value", the amount of such adjustment shall be taken
into account in the taxable year of such adjustment as gain or loss
from the disposition of such asset for purposes of computing Net
Income or Net Loss; and
(g) Notwithstanding any other provision of this definition,
any items that are specially allocated pursuant to Section 8.3.A or
8.3.B hereof shall not be taken into account in computing Net Income
or Net Loss.
"New ▇▇▇▇▇▇▇ Financing Amount" at any time means the outstanding
principal balance at such time of any debt financing provided by the ▇▇▇▇▇▇▇
Member or any of its Affiliates to the Company or any of the Company's
Subsidiaries after the Closing Date, including pursuant to Section 4.7.D hereof,
plus accrued and unpaid interest thereon. For purposes of this definition,
convertible debt that has been converted shall no longer be treated as debt.
"New Debt" means the aggregate of the New ▇▇▇▇▇▇ Financing Amount and
the New ▇▇▇▇▇▇▇ Financing Amount.
"New ▇▇▇▇▇▇ Financing Amount" at any time means (x) the ▇▇▇▇▇▇
Excluded Equity Amount plus (y) the outstanding principal amounts at such time
of the Post-Closing Financing, plus accrued and unpaid interest thereon, which
interest rate for purposes of the ▇▇▇▇▇▇ Guaranty Agreements, shall be the Prime
Rate in effect from time to time, as published in the Wall Street Journal plus
3%.
13
"News" means TNCL or any Affiliate thereof, alone or with other
Persons acting together.
"News Deal" means the acquisition by TNCL, as of December 22, 2003,
of 34 percent of the outstanding common stock of ▇▇▇▇▇▇.
"Nicaragua LOC" means Galaxy Nicaragua, S.A., a Nicaraguan sociedad
anonima.
"Nonrecourse Deductions" has the meaning set forth in Regulations
Sections 1.704-2(b)(1) and 1.704-2(c).
"Nonrecourse Liability" has the meaning set forth in Regulations
Section 1.752-1(a)(2).
"Nontriggering Party" is defined in Section 6.5.A hereof.
"Officers" is defined in Section 5.7.A hereof.
"Option Exercise Conditions" is defined in Section 11.7.A hereof.
"Original LLC Agreement" is defined in the Recitals.
"Other Members" is defined in Section 13.18.B hereof.
"Panama LOC" means Direct Vision S.A., a Panamanian sociedad anonima.
"PAS Guaranty" means the Guarantee Agreement dated December 22, 2003,
as amended from time to time, including by that certain Supplemental Guarantee
Agreement dated February 7, 2004, by ▇▇▇▇▇▇ in favor of PanAmSat Corporation.
"Percentage Interest" means that aggregate percentage interest as set
forth opposite each Member's name in Annex A attached hereto, subject to
adjustment as provided in this Agreement.
"Permitted Transferee" means, with respect to any Member, any
Affiliate of such Member, and in the case of the ▇▇▇▇▇▇▇ Member, any member of
the ▇▇▇▇▇▇▇ Group.
"Person" shall mean an individual or a corporation, partnership,
limited liability company, trust, or any other entity or organization, including
a government or political subdivision or an agency or instrumentality thereof.
"Plan" means the Plan of Reorganization of the Company under Chapter
11 of the Bankruptcy Code, dated December 11, 2003, as amended.
"Post-Closing Financing" means (x) loans (including convertible
loans) made by ▇▇▇▇▇▇ or its Affiliates (and not reimbursed or repaid to ▇▇▇▇▇▇
or its Affiliates by the Company or its Subsidiaries), but not other equity
14
funding, to the Company after the Closing Date (including under the Credit
Agreement) in accordance with Section 4.7.B hereof, (y) 100% of the payments, if
any, made by ▇▇▇▇▇▇ or its Affiliates under the HBO Guaranty and the Disney
Guaranty (and not reimbursed or repaid to ▇▇▇▇▇▇ or its Affiliates by the
Company or its Subsidiaries) and (z) 19% of the payments, if any, made by ▇▇▇▇▇▇
or its Affiliates under the PAS Guaranty (and not reimbursed or repaid to ▇▇▇▇▇▇
or its Affiliates by the Company or its Subsidiaries).
"Predecessor Partnership" means Galaxy Latin America, a Delaware
general partnership, the predecessor of the Company.
"PR-LOC" means Satellites de Puerto Rico Ltd., a British Virgin
Islands international business company.
"Primary Proceeds" is defined in Section 6.6.C(i) hereof.
"Primary Proceeds Repayment" is defined in Section 6.6.C(i) hereof.
"Purchasing Members" is defined in Section 11.7.A hereof.
"Qualified Offer" is defined in Section 6.4.A hereof.
"Qualifying IPO" means an initial public offering of Equity Interests
of the Company, including primary and, as applicable, secondary shares, if the
initial public offering price would imply a total market value of the
outstanding Equity Interests of the Company of at least One Billion Two Hundred
Fifty Million Dollars (US$1,250,000,000) in excess of the ▇▇▇▇▇▇ Excluded Equity
Amount.
"Regulations" or "Treasury Regulations" means the Income Tax
Regulations, including Temporary Regulations, promulgated under the Code, as
such Regulations may be amended from time to time (including corresponding
provisions of succeeding regulations).
"Regulatory Allocations" is defined in Section 8.3.A(vii) hereof.
"Remaining ▇▇▇▇▇▇▇ Debt" is defined in Section 6.6.C(i) hereof.
"Remaining ▇▇▇▇▇▇ Debt" is defined in Section 6.6.C(i) hereof.
"Representatives" is defined in Section 13.18.C(i) hereof.
"Restructuring" means the restructuring of the capitalization of the
Company through the Chapter 11 Case pursuant to the Court Order.
"Return Certificate" is defined in Section 13.18.C(iv) hereof.
"Roll-Up Companies" means, collectively, CBC, the Mexican LOC,
SurFin, the Venezuelan LOC, the PR LOC, the Colombian LOC and the Argentina LOC.
15
"Sale" is defined in Section 6.3.B hereof.
"Sale Proceeds" is defined in Section 6.6.B(i) hereof.
"Secondary Proceeds" is defined in Section 6.6.C(i) hereof.
"Sell" is defined in Section 6.3.B hereof.
"Selling Holders" is defined in Section 6.4.A hereof.
"SGS III R" means Servicios Galaxy Sat III R, C.A., a Venezuelan
compania anonima.
"Sky" means (i) Innova S. de ▇.▇. de C.V., Sky Multi-Country Partners
and NetSat Servicios Ltda., taken together, or (ii) Innova S. de ▇.▇. de C.V. or
NetSat Servicios Ltda., individually or taken together.
"Sky Business" means the Latin American direct to home satellite
television business of Sky.
"Sky Call Right" is defined in Section 6.7.C hereof.
"Sky Deal" is defined in Section 6.7.A hereof.
"Sky Put Right" is defined in Section 6.7.B hereof.
"Sold" is defined in Section 6.3.B hereof.
"Special Purchase Right Notice" is defined in Section 11.7.A hereof.
"Subsidiary" of any Person means any corporation, association,
limited liability company, partnership, joint venture or other business entity
(i) of which more than 50% of the total voting power of Equity Interests
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof or to vote in the management
thereof is at the time owned or controlled, directly or indirectly, by (A) such
Person, (B) such Person and one or more Subsidiaries of such Person or (C) one
or more Subsidiaries of such Person or (ii) which is Controlled by such Person.
"Substitute Member" means any transferee of an interest in the
Company that has been admitted to the Company pursuant to Section 10.2 hereof.
"SurFin" means SurFin, Ltd., an international business corporation
organized and existing in accordance with the laws of the Bahamas.
"Tag-Along Notice" is defined in Section 6.4.A hereof.
"Tag-Along Right" is defined in Section 6.4.B hereof.
16
"Tag-Along Shortfall" is defined in Section 6.4.D hereof.
"Taxable Income Allocations" means, with respect to any Member, the
cumulative allocations of Company U.S. federal taxable income (net of federal
taxable losses) made to such Member pursuant to Article VIII with respect to
income and losses generated by the Company (directly or indirectly).
"Tax Liability Deficiency" means, with respect to any Member, the
excess, (if any) of (i) the product of such Member's Taxable Income Allocations
multiplied by the Applicable Percentage, over (ii) the cumulative amount of cash
distributed or deemed distributed to such Member pursuant to this Agreement.
"Tax Matters" is defined in Section 9.7.B(i) hereof.
"Tax Matters Partner" is defined in Section 9.7.A hereof.
"Territory" means Mexico, Central America, South America and the
Caribbean.
"Third Expert" is defined in Section 6.8.B(i) hereof.
"Third Party" means any Person other than a Permitted Transferee.
"Tier II Local Operating Companies" means, collectively, Ecuador LOC,
Panama LOC, Costa Rica LOC and Nicaragua LOC.
"TNCL" means The News Corporation Limited, an Australian corporation.
"Transfer" means any direct or indirect sale, transfer, conveyance,
hypothecation, pledge, assignment, gift, bequest or other disposition by any
means, whether for value or no value and whether voluntary or involuntary
(including, without limitation, by realization upon any Encumbrance or by
operation of law or by judgment, levy, attachment, garnishment, bankruptcy or
other legal or equitable proceedings).
"Triggering Party" is defined in Section 6.5.A hereof.
"Trigger Notice" is defined in Section 6.5.A hereof.
"Venezuelan LOC" means, collectively, Galaxy Entertainment de
Venezuela, C.A., a Venezuelan compania anonima, and SGS III R.
"Voting Agreement" is defined in Section 13.19 hereof.
"Withholding Matter Decision" is defined in Section 9.7.B(v) hereof.
ARTICLE 2
FORMATION OF THE COMPANY
------------------------
17
SECTION 2.1 NAME. The name of the Company is "DIRECTV Latin America,
LLC".
SECTION 2.2 FORMATION; ADMISSION. The Executive Committee caused to
be executed and filed a Certificate of Formation (the "Certificate") on May 29,
1996 in the Office of the Delaware Secretary of State as required by the Act.
The Company has been formed as a limited liability company under and pursuant to
the provisions of the Act, and the rights, duties, obligations and liabilities
of the Members shall be as provided in the Act, except as provided herein.
▇▇▇▇▇▇ and the ▇▇▇▇▇▇▇ Member have entered into the Master Contribution
Agreement, which, subject to Section 13.21 hereof, sets forth certain rights
obligations and agreements of ▇▇▇▇▇▇ and the ▇▇▇▇▇▇▇ Member.
SECTION 2.3. PURPOSE. The purpose of the Company is to undertake the
provision of direct-to-home programming in the Territory by means of
direct-to-home satellite transmission and to engage in any other activities
related or incident thereto (the "Business").
SECTION 2.4 POWERS. The Company shall have the power to do any and
all acts reasonably necessary, appropriate, proper, advisable, incidental or
convenient to or for the furtherance of the purpose and business described
herein and for the protection and benefit of the Company.
SECTION 2.5. PRINCIPAL OFFICE. The Company's principal office shall
be in such place as the Executive Committee shall specify from time to time.
SECTION 2.6 REGISTERED OFFICE. The address of the registered office
of the Company in the State of Delaware is ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇.
SECTION 2.7 REGISTERED AGENT. The name and address of the registered
agent of the Company for service of process on the Company in the State of
Delaware is The Corporation Trust Company, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇.
SECTION 2.8 QUALIFICATIONS IN OTHER JURISDICTIONS. The Executive
Committee shall cause the Company to be registered or qualified under its own
name or under an assumed or fictitious name pursuant to a foreign limited
liability company statute or similar laws in any jurisdictions in which the
Company owns property or transacts business if such registration or
qualification is necessary to protect the limited liability of the Members or to
permit the Company lawfully to own property or transact business in such
jurisdiction or is otherwise advisable as determined by the Executive Committee.
SECTION 2.9 TERM. The term of the Company commenced as of the date
that the Certificate was filed with the Office of the Delaware Secretary of
State and shall continue until the Company is dissolved pursuant to Article XI.
SECTION 2.10 NATURE OF MEMBERS' INTERESTS. The LLC Interest of each
of the Members shall be personal property for all purposes. All property owned
by the Company, whether real or personal, tangible or intangible, will be owned
by the Company as an entity, and no Member, individually, will have any
ownership interest in such property.
18
SECTION 2.11 CAPACITY OF THE MEMBERS. No Member shall have the
authority to act for, or to assume any obligation or responsibility on behalf of
any other Member or the Company, except as expressly provided for, and only to
the extent provided for, in this Agreement.
SECTION 2.12 LIMITED LIABILITY. Except as otherwise provided by the
Act, the debts, obligations and liabilities of the Company, whether arising in
contract, tort or otherwise, shall be solely the debts, obligations and
liabilities of the Company, and none of the Members, Executive Committee
members, Officers, employees or agents of the Company (including a person having
more than one such capacity) shall be obligated personally for any such debt,
obligation or liability of the Company solely by reason of acting in such
capacity.
SECTION 2.13 NON-VOTING EQUITY. To the extent required by section
1123(a) of the Bankruptcy Code, the Company shall not issue non-voting equity
securities.
SECTION 2.14 MASTER CONTRIBUTION AGREEMENT. ▇▇▇▇▇▇, the ▇▇▇▇▇▇ Member
and the ▇▇▇▇▇▇▇ Member agree that none of them shall, and each of them shall use
commercially reasonable efforts to cause their Affiliates not to, exercise any
right hereunder or fulfill any obligation hereunder in a manner inconsistent
with the provisions of the Master Contribution Agreement, taking into account
the effect of Section 13.21 hereof.
ARTICLE 3
PERCENTAGE INTERESTS
--------------------
SECTION 3.1 PERCENTAGE INTERESTS OF MEMBERS; AUTHORIZED EQUITY
INTERESTS.
A. Each Member has the Percentage Interest in the Company as set
forth on Annex A, which Percentage Interest shall be adjusted on Annex A from
time to time by the Executive Committee to the extent necessary to reflect
accurately any exchanges, redemptions, Capital Contributions, admission of
Additional Members or similar events having an effect on the Members' Percentage
Interests.
B. The Company shall be authorized to issue only one class of Equity
Interests, which shall be the class of Equity Interests issued to the Members as
of the date of this Agreement.
ARTICLE 4
CAPITAL CONTRIBUTIONS
---------------------
SECTION 4.1 CAPITAL CONTRIBUTIONS. The Members have made the Capital
Contributions as contemplated by the Master Contribution Agreement and the Plan.
19
SECTION 4.2 CAPITAL CONTRIBUTIONS BY ADDITIONAL MEMBERS. A Person may
be admitted to the Company as an Additional Member pursuant to Section 10.1
hereof and shall make Capital Contributions to the Company in such amounts, and
subject to such other terms and conditions, as are required in accordance
therewith.
SECTION 4.3 NO INTEREST. No interest shall be paid by the Company on
Capital Contributions, balances in Members' Capital Accounts or any other funds
contributed to the Company or distributed or distributable by the Company,
except as may be specifically provided in this Agreement. Nothing in this
Section 4.3 hereof shall be construed to prohibit the payment by the Company of
interest to any Member on account of any borrowing by the Company payable to
such Member.
SECTION 4.4 NO WITHDRAWAL OF CAPITAL. Except as specifically provided
in this Agreement, the Company shall not redeem or repurchase any LLC Interest
and no Member shall have the right to withdraw or receive any return of all or
any part of its Capital Contributions from the Company, nor shall any Member
have any right to demand and receive property other than cash as a return of its
Capital Contributions.
SECTION 4.5 USE OF CAPITAL CONTRIBUTIONS. The Capital Contributions
of the Members and all proceeds of the Company borrowings will be used for any
Company purpose as determined by the Executive Committee.
SECTION 4.6 CAPITAL ACCOUNTS.
A. There shall be established for each Member on the books of the
Company, as of the date hereof, a capital account (the "Capital Account")
reflecting the excess (deficit) of (a) the sum of (i) such Member's Capital
Contributions, (ii) such Member's share of Net Income and any items in the
nature of income or gain that are specifically allocated to such Member and
(iii) the amount of any Company liabilities assumed by such Member or which are
secured by any property distributed to such Member over (b) the sum of (i) such
Member's share of Net Losses and any items in the nature of losses or expenses
that are specifically allocated to such Member, (ii) any distributions to such
Member and (iii) liabilities of such Member assumed by the Company or which are
secured by any property contributed by such Member to the Company; provided,
however, each such Member's Capital Account shall be adjusted by such Member's
share of income, gain, deduction or loss described in Regulations Section
1.704-l(b)(2)(iv)(g). In determining the amount of any liability for purposes of
this Section 4.6.A, there shall be taken into account Code Section 752(c) and
any other applicable provisions of the Code and Regulations. Members will have
no obligations to restore any negative balance in their respective Capital
Accounts.
B. Notwithstanding any other provision in this Section 4.6 or
elsewhere in this Agreement, each Member's Capital Account shall be maintained
and adjusted in accordance with the Code and the Regulations thereunder,
including Regulations Sections 1.704-l(b)(2)(iv) and 1.704-2. It is intended
that appropriate adjustments shall thereby be made to Capital Accounts to give
effect to any income, gain, loss or deduction (or items thereof) that is
allocated pursuant to this Agreement. Each Member's Capital Account shall
include that of any predecessor holders of the LLC Interest of such Member. A
Member who has more than one interest in the Company shall have a single Capital
Account that reflects all such interests regardless of the time or manner in
which such interests were acquired.
20
C. A Member's Capital Account shall be reduced by the Carrying Value
(determined without regard to Section 7701(g) of the Code) of any property
distributed by the Company to such Member, whether in connection with a
liquidation of the Company or of such Member's LLC Interest or otherwise.
Accordingly, as set forth in the definition of "Carrying Value", Capital
Accounts shall be first adjusted to reflect the manner in which the unrealized
income, gain, loss and deduction inherent in such property (that has not been
previously reflected in Capital Accounts) would be allocated pursuant to Article
VIII among the Members if there were a taxable disposition of such property for
its Carrying Value (taking Section 7701(g) of the Code into account) on the date
of distribution.
SECTION 4.7 LOANS BY MEMBERS.
A. General. The Executive Committee, from time to time, may cause the
Company to borrow funds or enter into similar credit, guarantee, financing or
refinancing arrangements for any Company purpose from any Member or its
Affiliates on commercially reasonable terms and rates in light of the
then-applicable credit status of the Company. Each such loan made by any Member
or its Affiliates shall be segregated into a separate loans payable account. No
such loan shall be deemed to be a Capital Contribution to the Company.
B. Notwithstanding anything to the contrary in Section 4.7.A hereof,
and except for the Credit Agreement and the ▇▇▇▇▇▇ Guaranty Agreements (the
execution, delivery and funding of which have been approved by the Executive
Committee and the ▇▇▇▇▇▇▇ Member), for so long as the ▇▇▇▇▇▇▇ Member or any of
its Affiliates is a Member, the Company shall use its commercially reasonable
efforts to obtain third-party funding required for its operations. If the
Company is unable to obtain such funding using such efforts, ▇▇▇▇▇▇ or its
Affiliates may, in each of their sole discretion, make Post-Closing Financing
available to the Company; provided, however, that such funding must be on
commercially reasonable terms and must be approved by the Executive Committee.
If ▇▇▇▇▇▇ or any Affiliate of ▇▇▇▇▇▇ provides loans that are convertible into
the equity of the Company, such loans may, in the sole discretion of the ▇▇▇▇▇▇
Member, be converted into the Company's equity only on terms agreed to by the
▇▇▇▇▇▇ Member and the ▇▇▇▇▇▇▇ Member in writing at or prior to the time of
execution of definitive documentation of such loan; provided, however, that any
conversion of debt pursuant to Section 6.6.C(ii) hereof shall be deemed agreed
to by the ▇▇▇▇▇▇ Member and the ▇▇▇▇▇▇▇ Member for purposes of this Section
4.7.B. The provisions of this Section 4.7.B are for the exclusive benefit of the
▇▇▇▇▇▇ Member and the ▇▇▇▇▇▇▇ Member, are non transferable and shall be of no
further force or effect at such time as no such Member or its Affiliates is a
Member.
21
C. Prior to ▇▇▇▇▇▇ or any of its Affiliates providing any
Post-Closing Financing (other than pursuant to the Credit Agreement or the
▇▇▇▇▇▇ Guaranty Obligations), the ▇▇▇▇▇▇ Member shall notify the ▇▇▇▇▇▇▇ Member
and, subject to the provisions of Section 4.7.D hereof, the ▇▇▇▇▇▇▇ Member shall
have the right to participate in such Post-Closing Financing pro rata, in
proportion to the ▇▇▇▇▇▇▇ Group's ownership of Equity Interests in the Company
relative to the ▇▇▇▇▇▇ Member's and its Affiliates' aggregate ownership of such
Equity Interests (ignoring for the purposes of calculating such proportions all
Excluded Equity and Equity Interests in the Company acquired upon conversion of
any Post-Closing Financing). The parties agree that, as of the Closing Date,
this Section 4.7.C would have permitted the Darlene Member to participate in
17.391% of such Post-Closing Financing.
D. At any time prior to and including the completion of the first
Liquidity Event, the ▇▇▇▇▇▇▇ Member shall have the right to purchase from the
▇▇▇▇▇▇ Member and its Affiliates up to the ▇▇▇▇▇▇▇ Group's pro rata share, in
proportion to its aggregate ownership of Equity Interests in the Company
relative to the ▇▇▇▇▇▇ Member's and its Affiliates' aggregate ownership of
Equity Interests in the Company (ignoring for the purposes of calculating such
proportions all Excluded Equity and any Equity Interests acquired upon
conversion of any Post-Closing Financing), of (x) any Post-Closing Financing
payable by the Company or its Subsidiaries to ▇▇▇▇▇▇ or any of its Affiliates or
(y) equity issued upon conversion of any indebtedness underlying the New ▇▇▇▇▇▇
Financing Amount, upon payment of a purchase price, in immediately available
funds, of the principal amount thereof plus any accrued and unpaid interest
thereon or an amount equivalent to such interest as would have accrued since the
date of conversion at the rate applicable to the convertible debt if the loans
have been converted to equity. The parties agree that, as of the Closing Date,
this Section 4.7.D would have permitted the Darlene Member to purchase up to
17.391% of such financing or equity.
E. If, prior to the completion of the first Liquidity Event, (i)
▇▇▇▇▇▇, the ▇▇▇▇▇▇ Member or any of its Affiliates converts any Post-Closing
Financing in which the ▇▇▇▇▇▇▇ Member has not elected to participate or
purchase, into Equity Interests of the Company (the "Early Conversion Shares")
at a value (the "Early Conversion Value") less than the Fair Market Value of
such Equity Interests in the Company at the time of a Liquidity Event, and (ii)
a Liquidity Event is completed after such conversion in connection with which
the ▇▇▇▇▇▇▇ Group receives less than the ▇▇▇▇▇▇▇ Minimum Amount (the amount by
which the ▇▇▇▇▇▇▇ Minimum Amount exceeds the value received by the ▇▇▇▇▇▇▇ Group
being the "Deficit"), ▇▇▇▇▇▇ shall deliver to the ▇▇▇▇▇▇▇ Group
contemporaneously with the consummation of the Liquidity Event a number of Early
Conversion Shares equal in value (the value of such Early Conversion Shares to
be determined at the Fair Market Value at the time of the Liquidity Event) to
the lesser of (x) the Deficit and (y) the amount by which the Fair Market Value
of the Early Conversion Shares at the time of the Liquidity Event exceeds the
Early Conversion Value of the Early Conversion Shares.
22
▇. ▇▇▇▇▇▇ and the ▇▇▇▇▇▇▇ Member acknowledge that $384,802,817 of
obligations owed to or advanced by ▇▇▇▇▇▇ or its Affiliates prior to the Closing
Date, including $300,000,000 of which was advanced under the Company's DIP
Credit Agreement (as defined in the Master Contribution Agreement), has been
converted into Equity Interests in the Company. Such converted obligations shall
continue to be deemed for all purposes of Sections 6.5 and 6.6 hereof to be debt
and not to have been converted, and the Equity Interests into which such
convertible debt has been converted shall constitute "Excluded Equity," which
equals 18.855% of the aggregate Equity Interests in the Company issued to the
▇▇▇▇▇▇ Member and the ▇▇▇▇▇▇▇ Member on the Closing Date.
G. Post-Closing Funding. The Members acknowledge that (x) ▇▇▇▇▇▇ has
agreed to make, or cause to be made, revolving loans to, and arrange for letters
of credit to be issued on behalf of, the Company pursuant to that certain credit
agreement, dated as of the Closing Date (the "Credit Agreement"), entered into
by and among the Company, its Material Subsidiaries (as defined therein) and
▇▇▇▇▇▇ in order to fund, among other things, distribution of cash made pursuant
to the Plan and (y) ▇▇▇▇▇▇ has entered into the ▇▇▇▇▇▇ Guaranty Agreements.
▇▇▇▇▇▇ agrees that if it incurs a ▇▇▇▇▇▇ Guaranty Obligation, that will not
reduce availability under the Credit Agreement.
H. Transfers of Convertible Debt.
(i) No Member or Affiliate of any Member may Transfer debt that
is convertible into Equity Interests of the Company ("Convertible Debt") prior
to the first anniversary of the Closing Date without the prior written consent
of the ▇▇▇▇▇▇ Member and the ▇▇▇▇▇▇▇ Member.
(ii) After the first anniversary of the Closing Date, any Member
may Transfer Convertible Debt as if such Convertible Debt were Equity Interests
in the Company in accordance with the limitations on Transfer set forth in
Article VI.
SECTION 4.8 LOANS BY THIRD PARTIES. The Company may borrow funds or
enter into similar credit, guarantee, financing or refinancing arrangements for
any purpose from any Person that is not a Member or an Affiliate of a Member
upon such terms as the Executive Committee determines appropriate.
SECTION 4.9 ADDITIONAL FUNDING AND CAPITAL CONTRIBUTIONS.
A. General. The Executive Committee may, at any time and from time to
time, determine that the Company requires additional funds for Company purposes
("Additional Funds"). Such Additional Funds may be raised by the Company, at the
election of the Executive Committee, in any manner, subject to the restrictions
contained in this Article IV and Section 10.1 hereof. No Person shall have any
preemptive, preferential or similar right or rights to subscribe for or acquire
any LLC Interest, except as set forth in this Section 4.9.
23
B. Additional Capital Contributions. In the event that the Executive
Committee determines that any Additional Funds should be raised in the form of
Capital Contributions ("Additional Capital Contributions"), the right offered to
any Member to make Additional Capital Contributions shall be first offered by
the Company to then-existing Members on a pro rata basis so that each Member
will be given the opportunity to maintain their respective Percentage Interests
in the Company.
(i) Procedure. In the event that the Executive Committee
determines to raise all or any portion of the Additional Funds in the form of
Additional Capital Contributions, the Executive Committee shall send written
notice (the "Funding Notice") to the Members of the need for Additional Funds.
Each Member shall be entitled, but shall not be required, to make its respective
pro rata share of the Additional Capital Contributions not later than the date
specified in the Funding Notice (the "Funding Date"), which Funding Date shall
be at least ten (10) Business Days after the date that the Funding Notice is
given to such Member. Such Additional Capital Contribution shall be in the form
of cash or other property, if acceptable to the Executive Committee, from the
Members pro rata in proportion to each Member's then-existing Percentage
Interest. Subject to the terms of this Section 4.9, the Executive Committee
shall determine the amount, terms and conditions of such Additional Capital
Contributions (including, without limitation, the Percentage Interests of the
Members upon acceptance of such Additional Capital Contributions) at the Fair
Market Value thereof.
(ii) Percentage Interest Adjustments. Upon the acceptance of
Additional Capital Contributions pursuant to this Section 4.9, the Percentage
Interest of each Member shall be changed to equal a fraction, the numerator of
which is equal to (i) such Member's Percentage Interest multiplied by the Fair
Market Value of the Company determined pursuant to Section 6.8 hereof as of the
Business Day immediately preceding the Funding Date, before any Additional Funds
are contributed (the "Adjustment Date"), plus (ii) the value of such Additional
Funds, if any, contributed by that Member, and the denominator of which is equal
to the sum of (1) the Fair Market Value of the Company (as determined pursuant
to Section 6.8 hereof) as of the Business Day immediately preceding the
Adjustment Date plus (2) the aggregate value of all Additional Funds contributed
to the Company as of such Adjustment Date. The Executive Committee shall
promptly give each Member written notice of the Percentage Interests of the
Members, as adjusted, and shall amend Annex A hereto to reflect such
adjustments.
C. ▇▇▇▇▇▇▇ Member Consent. Notwithstanding anything to the contrary
in this Section 4.9, for so long as the ▇▇▇▇▇▇▇ Member or any of its Affiliates
or any ▇▇▇▇▇▇▇ Permitted Transferee is a Member, the ▇▇▇▇▇▇ Member and its
Affiliates shall not be permitted to make any additional capital contributions
to the Company which would reduce the ▇▇▇▇▇▇▇ Member's Equity Interest in the
Company without the prior written consent of the ▇▇▇▇▇▇▇ Member. The provisions
of this Section 4.9.C shall operate for the exclusive benefit of the ▇▇▇▇▇▇▇
Group, are non-transferable and shall terminate when no member of the ▇▇▇▇▇▇▇
Group is a Member.
24
D. Other Capital Contributions. Except as required by the Act or as
otherwise provided in this Section 4.9, no Member shall be required or permitted
to make any Capital Contributions to the Company in addition to those that have
been made as of the date hereof.
ARTICLE 5
MANAGEMENT OF THE COMPANY
-------------------------
SECTION 5.1 EXECUTIVE COMMITTEE.
A. Each of the ▇▇▇▇▇▇▇ Member, ▇▇▇▇▇▇ and the ▇▇▇▇▇▇ Member shall
take, or cause the Company and the appropriate officers and Executive Committee
members of the Company to take, all actions necessary to convene a meeting of
the Executive Committee (or any board of directors or governing body performing
the analogous function) of the Company (i) no less than once each calendar
quarter and (ii) upon 30 days' written notice by the ▇▇▇▇▇▇▇ Member to the
▇▇▇▇▇▇ Member and the Company of its desire to convene such a meeting.
B. (i) Except as otherwise explicitly provided by law or by this
Agreement, the management of the business and affairs of the Company shall be
exercised by or under the direction of a manager (within the meaning of Section
18-402 of the Act), which manager shall be a committee of individuals (the
"Executive Committee"), each of whom, subject to the provisions of Section
13.18.F, shall be appointed by the ▇▇▇▇▇▇ Member.
(ii) Notwithstanding the foregoing clause (i), the ▇▇▇▇▇▇▇ Member
shall have the right to appoint a number of members of the Executive Committee
equal to the greater of: (A) such members as would constitute representation on
such governing body commensurate with the ▇▇▇▇▇▇▇ Group's ownership of Equity
Interests in the Company (rounded down to the nearest whole number) and (B) two
(2).
(iii) In the event the Company is converted into a corporation or
other entity, ▇▇▇▇▇▇ and the ▇▇▇▇▇▇ Member agree to vote and to use commercially
reasonable efforts to cause their respective Affiliates to vote all Equity
Interests in the Company owned by it or its Affiliates, and to take whatever
other lawful actions are necessary to cause the election as directors (or
members of any governing body performing the analogous function) of the Company,
the greater of: (A) such nominees of the ▇▇▇▇▇▇▇ Member as would constitute
representation on such governing body commensurate with the ▇▇▇▇▇▇▇ Group's
ownership of Equity Interests in the Company (rounded down to the nearest whole
number) and (B) two (2) nominees of the ▇▇▇▇▇▇▇ Member as members of such
governing body.
(iv) The ▇▇▇▇▇▇▇ Member agrees to vote, and to use commercially
reasonable efforts to cause the other members of the ▇▇▇▇▇▇▇ Group to vote, all
Equity Interests in the Company owned by the ▇▇▇▇▇▇▇ Group, and to take whatever
other lawful actions are necessary to cause the election as directors (or
members of any governing body performing the analogous function) of the Company
each nominee of the ▇▇▇▇▇▇ Member.
25
(v) Each member of the Executive Committee, upon his or her
appointment, shall be designated by the Executive Committee in connection with
such appointment as a representative of a Member. The Executive Committee shall
have the power to do any and all acts necessary or convenient, to or for the
furtherance of the purposes of the Company set forth in this Agreement.
C. The rights provided to the ▇▇▇▇▇▇ Member and its Affiliates in
Section 5.1.B(iv) and the ▇▇▇▇▇▇▇ Group in Sections 5.1.A and 5.1.B(v) are for
the exclusive benefit of the ▇▇▇▇▇▇ Member and its Affiliates and the ▇▇▇▇▇▇▇
Group, as the case may be, are non transferable and shall be of no further force
or effect at the time when no such Member or its Affiliates is a Member. In
addition, the provisions of Section 5.1.B(ii) and (iii) hereof shall operate
only to the benefit of the members of the ▇▇▇▇▇▇▇ Group, are nontransferable
outside the ▇▇▇▇▇▇▇ Group and shall become void and of no further force or
effect at such time as the ▇▇▇▇▇▇▇ Group owns (as adjusted to negate the effect
of any reductions in their combined Equity Interests from admission of
additional shareholders, members or other equity holders, conversion of debt,
conversion of securities, stock splits, mergers, consolidations and similar
changes) less than one-half of the Equity Interests owned by the ▇▇▇▇▇▇▇ Group:
(x) in the Company as of the Closing Date or (y) in the surviving entity of a
Sky Deal upon its consummation.
D. Executive Committee members representing Members holding a
majority of the Percentage Interests shall constitute a quorum. The vote of
Executive Committee members representing a majority of the Percentage Interests
in attendance at a meeting at which a quorum is present shall be the act of the
Executive Committee; provided, however, that any representative of a Member in
attendance at an Executive Committee meeting may cast a vote at such meeting on
behalf of each member of the Executive Committee that is a representative of
such Member and who is not in attendance at such meeting, who shall for purposes
of this Section 5.1.D, be deemed to be present at such meeting.
SECTION 5.2 NUMBER OF EXECUTIVE COMMITTEE MEMBERS; TERM OF OFFICE.
The Executive Committee shall consist of six members, or such other number of
members as the Executive Committee shall from time to time determine. The
Members hereby acknowledge and agree that the persons listed on Annex B hereto
are the members of the Executive Committee as of the date hereof and are the
representative of the Members identified next to such person's name. The members
of the Executive Committee shall hold office until their respective successors
are appointed and qualified or until their earlier death, resignation or
removal; provided, however, that in the event any Executive Committee member
appointed by the ▇▇▇▇▇▇ Member that is an officer, director or employee of
▇▇▇▇▇▇ or its Affiliates (either at the time of appointment to the Executive
Committee or at any time thereafter while serving as a member of the Executive
Committee) shall cease to be an officer, director or employee of ▇▇▇▇▇▇ or its
Affiliates, then such Executive Committee member shall cease to be qualified to
26
serve as a member of the Executive Committee and shall automatically be removed
from such office, without any action on the part of any Member or the Executive
Committee, with the removal of such Executive Committee member to take place
upon the earlier of (i) such Executive Committee member's cessation of
employment or service as a director or officer or (ii) delivery by such
Executive Committee member of a notice of resignation of employment or from
service as a director or officer. Any member of the Executive Committee may
resign at any time by giving written notice to the Executive Committee, and such
resignation shall take effect at the date of the receipt of that notice or any
later time specified in that notice; provided, however, that unless otherwise
specified in such notice, the acceptance of the resignation shall not be
necessary to make it effective. Any vacancy caused by any such resignation or by
the death of any member of the Executive Committee or any vacancy for any other
reason shall be filled by the ▇▇▇▇▇▇ Member; provided, however, that with
respect to a vacancy of a designee of the ▇▇▇▇▇▇▇ Member, only the ▇▇▇▇▇▇▇
Member shall have the right to appoint a new designee to fill such vacancy if at
the time of such vacancy the ▇▇▇▇▇▇▇ Member had the right to appoint Executive
Committee members pursuant to Section 5.1.B(ii) and (iii) hereof, and any member
so elected to fill any such vacancy shall hold office until his or her successor
is elected or until his earlier death, resignation or removal.
SECTION 5.3 REMOVAL.
(a) The ▇▇▇▇▇▇ Member may at any time, and from time to time,
remove or replace any or all of the Executive Committee members.
(b) Notwithstanding the foregoing clause (a), for so long as
the ▇▇▇▇▇▇▇ Member has a right to appoint an Executive Committee member pursuant
to Sections 5.1.B(ii) and 5.1.B(iii), only the ▇▇▇▇▇▇▇ Member may remove or
replace an Executive Committee member designated by such Member.
SECTION 5.4 DELEGATION OF AUTHORITY. From time to time the Executive
Committee, by a resolution adopted by a majority of the entire Executive
Committee, may appoint any committee or committees which, to the extent lawful,
shall be constituted and shall have powers as shall be determined and specified
by the Executive Committee in the resolution of appointment. If a Member has
appointed any then-serving Executive Committee members, none of whom is a member
of a committee established pursuant to this Section 5.4, the Member shall have
the right to cause one such then-serving Executive Committee member to attend
and be present, but not vote, at any meeting of such committee.
SECTION 5.5 COMPENSATION. No member of the Executive Committee shall
be entitled to compensation for actions taken on behalf of the Company.
SECTION 5.6 SPECIAL MEETINGS. Special meetings of the Executive
Committee may be called by the Chairman, the President or the Executive
Committee on forty-eight (48) hours' notice to each member of the Executive
Committee.
SECTION 5.7 OFFICERS.
27
A. Appointment of Officers. The Executive Committee may appoint
individuals as officers ("Officers") of the Company, including a Chairman or a
President, or both, a Chief Executive Officer, a Chief Financial Officer, a
General Counsel, a Secretary, Assistant Secretaries, a Treasurer and Assistant
Treasurers, and such other officers as the Executive Committee shall deem
appropriate. In the event there are two or more Vice Presidents, then one or
more may be designated as Executive Vice President, Senior Vice President, or
other similar or dissimilar title. At the time of the election of officers, the
Executive Committee may by resolution determine the order of their rank. Any
numbers of offices may be held by the same person.
B. Duties of Officers Generally. Under the direction of and, at all
times, subject to the authority of the Executive Committee and any limitations
or restrictions set forth in this Agreement, the Officers shall have full and
complete discretion to manage and control the day-to-day business, operations
and affairs of the Company in the ordinary course of its business, to make all
decisions affecting the day-to-day business, operations and affairs of the
Company in the ordinary course of its business and to take all such actions as
he or she deems necessary or appropriate to accomplish the foregoing. Each
Officer shall have such individual powers and duties as may be prescribed by the
Executive Committee or this Agreement or, subject to the foregoing, as may be
prescribed by the Chief Executive Officer.
C. Authority of Officers. Any Officer of the Company shall have the
right, power and authority to transact business in the name of the Company or to
execute agreements on behalf of the Company, with respect to those agreements
that are commonly signed by such officers of a business incorporated in
Delaware. With respect to all matters within the ordinary course of business of
the Company, third parties dealing with the Company may rely conclusively upon
any certificate of any such other Officer to the effect that such Officer is
acting on behalf of the Company.
D. Removal, Resignation and Filling of Vacancy of Officers. The
Executive Committee may remove any Officer, for any reason or for no reason, at
any time. Any Officer may resign at any time by giving written notice to the
Executive Committee, and such resignation shall take effect at the date of the
receipt of that notice or any later time specified in that notice; provided,
however, that unless otherwise specified in that notice, the acceptance of the
resignation shall not be necessary to make it effective. Any such resignation
shall be without prejudice to the rights, if any, of the Company or such Officer
under this Agreement. A vacancy in any office because of death, resignation,
removal or otherwise shall be filled in the manner prescribed in this Agreement
for regular appointments to that office.
E. Compensation of Officers. The Officers shall be entitled to
receive compensation from the Company as determined or authorized by the
Executive Committee.
F. Chairman. The Chairman shall, if present, preside at all meetings
of the Executive Committee and exercise and perform such other powers and duties
as may be from time to time assigned to him by the Executive Committee. In the
absence of the Chairman, the Executive Committee members that are present at a
28
meeting shall act to choose an Executive Committee member to preside over the
meeting. If there is no President, the Chairman shall, in addition, be the Chief
Executive Officer of the Company and shall have the powers and duties prescribed
by the Executive Committee. The Chairman shall be a member of the Executive
Committee.
G. President. Subject to such supervisory powers, if any, as may be
given by the Executive Committee to the Chairman, the President shall be the
Chief Executive Officer of the Company and shall, subject to the control of the
Executive Committee, have general supervision, direction and the control of the
business and Officers of the Company. The President shall have the general
powers and duties of management usually vested in the office of President and
Chief Executive Officer of corporations, and shall have such other powers and
duties as may be prescribed by the Executive Committee.
H. Vice Presidents. In the absence or disability of the President,
the Vice Presidents in order of their rank as fixed by the Executive Committee,
and if not ranked, the Vice President designated by the Executive Committee,
shall perform all the duties of the President, and when so acting shall have all
the powers and be subject to all the restrictions upon the President. The Vice
Presidents shall have such other duties as from time to time may be prescribed
for them by the Executive Committee.
I. Treasurer. The Treasurer shall have the custody of the Company
funds and shall keep full and accurate accounts of receipts and disbursements in
books belonging to the Company and shall deposit all moneys, and other valuable
effects in the name and to the credit of the Company, in such depositories as
may be designated by the Executive Committee. He shall disburse the funds of the
Company as may be ordered by the Executive Committee, taking proper vouchers for
such disbursements and shall render to the Executive Committee, at its regular
meetings, or when the Executive Committee so requires, an account of all his
transactions as Treasurer and of the financial condition of the Company. If
required by the Executive Committee, he shall give the Company a bond, in such
sum and with such surety or sureties as shall be satisfactory to the Executive
Committee, for the faithful performance of the duties of his office and for the
restoration to the Company, in case of his death, resignation, retirement or
removal from office, of all books, papers, vouchers, money and other property of
whatever kind in his possession or under his control belonging to the Company.
J. Assistant Treasurer. The Assistant Treasurer, or if there shall be
more than one, the Assistant Treasurers in the order determined by the Executive
Committee, or if there be no such determination, the Assistant Treasurer
designated by the Executive Committee, shall, in the absence or disability of
the Treasurer, perform the duties and exercise the powers of the Treasurer and
shall perform such other duties and have such other powers as the Executive
Committee may from time to time prescribe.
K. Secretary. The Secretary shall attend all sessions of the
Executive Committee and record all votes and the minutes of all proceedings in a
book to be kept for that purpose; and shall perform like duties for the standing
committees when required by the Executive Committee. He shall give, or cause to
be given, notice of all meetings of the Executive Committee, and shall perform
such other duties as may be prescribed by the Executive Committee.
29
L. Assistant Secretary. The Assistant Secretary, or if there be more
than one, the Assistant Secretaries in the order determined by the Executive
Committee, or if there by no such determination, the Assistant Secretary
designated by the Executive Committee, shall, in the absence or disability of
the Secretary, perform the duties and exercise the powers of the Secretary and
shall such other duties and have such other powers as the Executive Committee
may from time to time prescribe.
SECTION 5.8 CONVERSION TO CORPORATE FORM.
A. So long as ▇▇▇▇▇▇, together with members of its consolidated group
for U.S. federal income tax purposes, owns eighty percent (80%) or more of the
Percentage Interests of the Company, then, upon the delivery to the Company of
written notice from ▇▇▇▇▇▇, the Company shall promptly take any and all acts
necessary or deemed advisable by the Executive Committee, such that the Company
shall be treated as a corporation for purposes of United States federal, state
and local income taxes and other taxes, to the extent applicable.
B. The Company shall convert, without the consent of any Member, into
a corporation prior to any initial public offering of its equity (an "IPO");
provided, however, that this Section 5.8.B shall not be read to require any such
conversion in the event of the public offering of securities of any entity other
than the Company. For so long as the ▇▇▇▇▇▇▇ Group owns any Equity Interests in
the Company, the Company shall not effect (without the consent of the ▇▇▇▇▇▇▇
Member) an IPO that is not a Qualifying IPO.
C. In the event the Company is converted to a corporate or other
legal form, the Members agree to execute a shareholders' or other agreement
providing to each of them all of the applicable substantive rights, and agreeing
to undertake all of the applicable substantive obligations, set forth in this
Agreement except if such conversion is effected in connection with a Qualifying
IPO and provided that, subject to Section 13.1, any such agreement shall
terminate in connection with any Qualifying IPO.
D. Other than pursuant to Sections 5.8.A and 5.8.B hereof, the
Company may not elect to be treated as a corporation for tax purposes or change
the form of its legal existence without the prior written consent of the ▇▇▇▇▇▇▇
Member.
SECTION 5.9 APPROVAL OF PROGRAMMING AGREEMENTS. The Company shall
not, during the Liquidity Period, enter into any material programming agreement
or any programming agreement with Globo Communicaoes E Participacoes Ltda.,
Grupo Televisa, S.A. or any of their respective Affiliates, unless the Executive
Committee shall approve or ratify the material terms of such programming
agreement. For purposes of this Section 5.9, a "material programming agreement"
shall be a programming agreement with an initial term exceeding three (3) years
or a programming agreement requiring annual payments by the Company in excess of
Four Million Dollars (US$4,000,000).
30
SECTION 5.10 OTHER BUSINESS. Except as otherwise provided herein and
subject to the terms of any employment or noncompetition agreement with the
Company, a Member may engage in or possess an interest in other business
ventures (unconnected to the Company) of every kind and description,
independently or with others. The Company shall not have any rights in or to
such independent ventures or the income or profits therefrom by virtue of this
Agreement.
SECTION 5.11 EXCULPATION AND INDEMNIFICATION.
A. None of the Members, Executive Committee members or Officers (each
an "Indemnified Party") shall be liable to the Company or any other Person that
has an interest in the Company for any loss, damage or claim (a "Loss") or any
expenses or costs associated with a Loss ("Costs") incurred by reason of any act
or omission performed or omitted by such Indemnified Party in good faith on
behalf of the Company and in a manner reasonably believed to be within the scope
of the authority conferred on such Indemnified Party by this Agreement or
applicable law. To the fullest extent permitted by applicable law, an
Indemnified Party shall be entitled to indemnification from the Company for any
Loss or Costs incurred by such Indemnified Party by reason of any act or
omission performed or omitted by such Indemnified Party in good faith on behalf
of the Company and in a manner reasonably believed to be within the scope of the
authority conferred on such Indemnified Party by this Agreement or applicable
law, provided, however, any indemnity under this Section 5.11 shall be provided
out of and to the extent of the Company assets only, and no Member, Executive
Committee member or Officer shall have personal liability on account thereof.
The Company shall advance Costs incurred by or on behalf of an Indemnified Party
in connection with any loss after receipt by the Company from the Indemnified
Party of a statement requesting such advances from time to time, provided that
such statement provides reasonable documentary evidence of such Costs and
provides a written undertaking by the Indemnified Party to repay any and all
advanced Costs in the event such Indemnified Party is ultimately determined not
to be entitled to indemnification by the Company.
B. For the purposes of this Section 5.11, references to "the Company"
shall include, in addition to the Company, any constituent entity (including any
constituent of a constituent) absorbed in a consolidation or merger which, if
its separate existence had continued, would have had power and authority to
indemnify its members, executive committee members, officers or persons
performing comparable functions, so that any Person who is or was an executive
committee member, officer or person performing a comparable function of such
constituent entity shall stand in the same position under the provisions of this
Section 5.11 with respect to the resulting or surviving entity as he would have
with respect to such constituent entity if its separate existence had continued.
SECTION 5.12 COVENANT NOT TO COMPETE.
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A. In the event that the ▇▇▇▇▇▇ Member or any Affiliate thereof shall
acquire directly or indirectly (by purchase, business combination or otherwise)
all of the Equity Interests in the Company owned by the ▇▇▇▇▇▇▇ Group for cash
or marketable securities (a "▇▇▇▇▇▇▇ Buyout") then, until the second anniversary
of the consummation of the ▇▇▇▇▇▇▇ Buyout, no member of the ▇▇▇▇▇▇▇ Group shall
engage, and each member of the ▇▇▇▇▇▇▇ Group shall cause its Affiliates not to
engage, in any Competing Business in the Territory, or own any interest in,
finance, operate, manage, develop or provide material advice to any entity which
engages in any Competing Business in the Territory; provided, however, that this
Section 5.12.A shall not prohibit (i) any activities contemplated by this
Agreement (excluding Section 5.10) or (ii) ownership of capital stock or any
other type of securities in companies listed on a national securities exchange
or national stock quotations system representing less than 2% of the outstanding
capital stock or other securities of the issuing entity. Notwithstanding the
foregoing, this Section 5.12. shall not prohibit any member of the ▇▇▇▇▇▇▇ Group
or its Affiliates from engaging in a Competing Business in the Territory or
owning an interest in, financing, operating, managing, developing in a material
manner or providing material advice to, any entity or business, which may
include a Competing Business, provided that such Person was engaging in,
financing, operating, managing, developing in a material manner or providing
material advice to any entity in, such Competing Business in the Territory or
owned such interest or entity or business prior to and at the time of the
▇▇▇▇▇▇▇ Buyout.
B. An Additional Member or Substitute Member that is not a Permitted
Transferee shall not engage, and shall cause its Affiliates not to engage, in
any Additional/Substitute Member Competing Business in the Territory, or own any
interest in, finance, operate, manage, develop or provide material advice to any
entity which engages in any Additional/Substitute Member Competing Business in
the Territory; provided, however, that this Section 5.12.B shall not prohibit
(i) any activities contemplated by this Agreement (excluding Section 5.10) or
(ii) ownership of capital stock or any other type of securities in companies
listed on a national securities exchange or national stock quotations system
representing less than 2% of the outstanding capital stock or other securities
of the issuing entity.
C. The Members agree that if any provision contained in this Section
5.12 shall for any reason be held invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other provisions of this Agreement, but this Agreement shall be construed as if
such invalid, illegal or unenforceable provision had never been contained
herein. It is the intention of the Members that if any of the restrictions or
covenants contained herein is held to cover a geographic area or to be for a
length of time which is not permitted by applicable law, or in any way construed
to be too broad or to any extent invalid, such provision shall not be construed
to be null, void and of no effect, but to the extent such provision would be
valid or enforceable under applicable law, a court of competent jurisdiction
shall construe and interpret or reform this Agreement to provide for a covenant
having the maximum enforceable geographic area, time period and other provisions
(not greater than those contained herein) as shall be valid and enforceable
under such applicable law. The Members acknowledge that the Company would be
32
irreparably harmed by any breach of this Section 5.12 and that there would be no
adequate remedy at law for any such breach and that money damages would not
provide an adequate remedy to the Company, and in recognition of this fact, the
Members agree that, in the event of such breach, and in addition to any remedies
at law the Company may have, the Company, without posting a bond, shall be
entitled to obtain equitable relief in the form of specific performance, a
temporary restraining order, a temporary or permanent injunction or any other
equitable relief available, and the Members consent to the entry of any thereof.
D. The Members acknowledge and agree that the provisions of this
Section 5.12 have been negotiated in good faith by the parties to this
Agreement, and are reasonable and are not more restrictive or broader than is
necessary to protect the interests of the Company, and would not achieve their
intended purpose if they were on different terms or for periods of time shorter
than the periods of time provided herein or applied in more restrictive
geographical areas than are provided herein.
SECTION 5.13 TRANSACTIONS WITH AFFILIATES.
A. The Company will not and will not permit any of its Subsidiaries
to, directly or indirectly, enter into any transaction with: (i) ▇▇▇▇▇▇ or a
Subsidiary of ▇▇▇▇▇▇ (a "Non- NewsCorp Affiliate Transaction") unless either (x)
the ▇▇▇▇▇▇▇ Member shall consent in writing thereto or (y) such Non-NewsCorp
Affiliate Transaction is Fair to the Company (and the burden of proof shall
always be on ▇▇▇▇▇▇ for the satisfaction of this clause (y)) or (ii) TNCL or any
of its Affiliates other than ▇▇▇▇▇▇ and its Subsidiaries (a "News Corp
Transaction", and together with a Non- NewsCorp Affiliate Transaction, an
"Affiliate Transaction") unless such NewsCorp Transaction is determined to be
Fair to the Company by the Audit Committee of the Board of Directors of ▇▇▇▇▇▇
(the "▇▇▇▇▇▇ Audit Committee"). Notwithstanding any provision to the contrary in
this Section 5.13.A, a Sky Deal shall not be subject to this Section 5.13 and
this Section 5.13 shall not apply to the Credit Agreement and other agreements
with ▇▇▇▇▇▇ and its Subsidiaries as in effect on the Closing Date.
B. For purposes of Section 5.13.A, "Fair" shall mean that an
Affiliate Transaction is fair to the Company (without consideration of other
factors affecting ▇▇▇▇▇▇ or any of its Affiliates other than the Company) (i) at
the time an agreement to effect a Non-NewsCorp Affiliate Transaction is executed
and delivered by the Company or (ii) at the time the determination required by
Section 5.13.A is made by the ▇▇▇▇▇▇ Audit Committee with respect to a NewsCorp
Affiliate Transaction.
SECTION 5.14 EXPENSES. Executive Committee members shall be
reimbursed their reasonable expenses, if any, of attendance at each meeting of
the Executive Committee, upon presentation of reasonable documentary evidence of
such expenses.
SECTION 5.15 TELEPHONIC MEETINGS. Executive Committee members may
participate in a meeting of the Executive Committee by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and such participation in a
meeting shall constitute presence in person at such meeting.
33
SECTION 5.16 MINUTES OF THE MEETINGS. The Executive Committee shall
keep regular minutes and deliver a copy of the same to the Secretary of the
Company.
SECTION 5.17 BY-LAWS ELIMINATED. The By-laws of the Company in effect
prior to the Closing Date are hereby eliminated.
ARTICLE 6
TRANSFERS AND ENCUMBRANCES OF LLC INTEREST
------------------------------------------
SECTION 6.1 TRANSFERS.
A. No Member or any other holder of an LLC Interest may Transfer all
or any portion of its LLC Interest (or any beneficial interest therein) or other
Equity Interests in the Company (including voting rights hereunder) except as
set forth in this Article VI. Any purported Transfer which is not in accordance
with this Article VI shall be null and void ab initio.
▇. ▇▇▇▇▇▇ may not Transfer all or any portion of its direct or
indirect Equity Interests in the Company other than (i) a Transfer by the ▇▇▇▇▇▇
Member or any Member that is an Affiliate of ▇▇▇▇▇▇ in accordance with this
Article VI or (ii) with the prior written consent of the ▇▇▇▇▇▇▇ Member.
SECTION 6.2 ENCUMBRANCES. Except as set forth in this Agreement, no
Member may create an Encumbrance affecting all or any portion of its LLC
Interest (or any beneficial interest therein) or other Equity Interests in the
Company unless the Executive Committee consents in writing thereto, which
consent may be given or withheld, or made subject to such conditions as are
determined by the Executive Committee. Any purported Encumbrance that is not in
accordance with this Agreement shall be null and void ab initio.
SECTION 6.3 TRANSFERS OF LLC INTERESTS AND OTHER EQUITY INTERESTS.
A. Transfers to Permitted Transferees. Any Member may Transfer all or
any portion of its LLC Interest or other Equity Interests in the Company to a
Permitted Transferee at any time subject to Section 6.3.F hereof. The admission
of any such Permitted Transferee (and any subsequent Permitted Transferee) to
the Company as a Substitute Member shall be governed by Section 10.2 hereof and
such Permitted Transferee shall also be bound by the restrictions on Transfers
of LLC Interests and other Equity Interests set forth herein. Notwithstanding
any such Transfer by the ▇▇▇▇▇▇ Member or its Affiliates or any member of the
▇▇▇▇▇▇▇ Group, the rights provided under this Agreement to ▇▇▇▇▇▇ and its
Affiliates and the ▇▇▇▇▇▇▇ Group shall remain exercisable only by the ▇▇▇▇▇▇
Member and the ▇▇▇▇▇▇▇ Member.
B. Transfers Prior to the Liquidity Period. From the date of this
Agreement until the first anniversary of the Closing Date, the ▇▇▇▇▇▇ Member
may, at any time, sell, transfer or otherwise dispose of (for the avoidance of
doubt, such a sale, transfer or other disposition does not include a disposition
by hypothecation) ("Sell" and any such sale, transfer or disposition, a "Sale";
34
"Sold" to have the correlative meaning) Equity Interests in the Company subject
to Sections 6.3.F and 6.4 hereof. From the date of this Agreement until the
first anniversary of the Closing Date, no other Member may Transfer Equity
Interests in the Company except in accordance with Sections 6.3.A, 6.3.E and
6.3.F.
C. Transfers During the Liquidity Period. After the first anniversary
of the Closing Date and prior to the expiration of the Liquidity Period, no
Member may Transfer any of its Equity Interests except in accordance with
Sections 6.3.A, 6.3.E, 6.3.F, 6.5, 6.6 and 6.7 hereof.
D. Transfers After Termination of the Liquidity Period. From and
after the termination of the Liquidity Period, any Member or other holder of an
LLC Interest may Transfer Equity Interests in the Company, subject to Section
6.3.F hereof; provided, however, that, except as provided in Section 6.7 hereof,
no such Transfer may be made by any Member to a Competing Business or Affiliate
thereof or by any Additional or Substitute Member to an Additional/Substitute
Member Competing Business.
E. Other Transfers.
(i) The ▇▇▇▇▇▇▇ Member and its Affiliates that are Members may,
in connection with a bona fide financing, at any time, assign, transfer,
hypothecate, rehypothecate or otherwise dispose of its rights set forth in
Section 6.5 hereof to one or more bona fide financial institutions, and, in
connection therewith, all or a portion of such Member's Equity Interests (or
successor interests) may be pledged, or a security interest otherwise granted
therein, to one or more bona fide financial institutions for the benefit of such
bona fide financial institutions; provided, however, that the transferees of
such interests shall be subject to the same terms applicable to the ▇▇▇▇▇▇▇
Member with respect to such interests, including the provisions set forth in
Section 6.5 hereof.
(ii) The ▇▇▇▇▇▇ Member and its Affiliates that are Members may,
in connection with a bona fide financing, at any time, assign, transfer,
hypothecate, rehypothecate or otherwise dispose of any or all of its interest in
the Company to one or more bona fide financial institution, and, in connection
therewith, all or a portion of such Member's membership interests (or successor
interests) may be pledged, or a security interest otherwise granted therein, to
one or more bona fide financial institutions for the benefit of such bona fide
financial institutions; provided, however, that the transferees of such
interests shall be subject to the same terms applicable to the ▇▇▇▇▇▇ Member
with respect to such interests, including the provisions set forth in Section
6.5 hereof.
F. Transfer Conditions. Except pursuant to Section 5.8 hereof, no
Transfer of any LLC Interest or other Equity Interests of the Company shall be
permitted pursuant to this Section 6.3, and any such purported Transfer shall be
null and void ab initio, unless such Transfer satisfies each of the following
conditions:
35
(i) Such Transfer does not require the registration of such LLC
Interest or other Equity Interests pursuant to any applicable federal or state
securities laws;
(ii) Such Transfer does not, in the opinion of the Tax Matters
Partner (or its counsel), cause the Company to cease to be classified as a
partnership for federal or state income tax purposes;
(iii) Such Transfer does not cause the Company to become a
"Publicly Traded Partnership," as such term is defined in Section 469(k)(2) or
7704(b) of the Code;
(iv) Such Transfer does not cause the Company to (A) have more
than one hundred (100) "partners" (for purposes of this Section 6.3.F(iv), the
term "partners" includes those Persons indirectly owning an LLC Interest in the
Company through a partnership, limited liability company, "S" corporation or
grantor trust (each such entity, a "flow-through entity"), but only if
substantially all of the value of such Person's interest in the flow-through
entity is attributable to the flow-through entity's LLC Interest (direct or
indirect) in the Company) or (B) have more than five hundred (500) partners (for
purposes of this Section 6.3.F(iv), the term "partners" includes those persons
indirectly owning an interest in the Company through a flow-through entity);
(v) Such Transfer does not involve LLC Interests or other Equity
Interests being traded on an "established securities market" or a "secondary
market or the substantial equivalent thereof" as those terms are defined in
Regulations Section 1.7704 1 (in addition, such Transfers shall not be
"recognized" (as that term is defined in Regulations Section 1.7704 1(d)(2)) by
the Company);
(vi) Such Transfer does not result in a violation of applicable
laws;
(vii) Such Transfer does not cause the Company to become subject
to regulation under the Investment Company Act of 1940, the Investment Advisors
Act of 1940 or the Employee Retirement Income Security Act of 1974, each as
amended;
(viii) Any restrictions on Transfers contained in this Agreement
are complied with, and any conditions to Transfers contained in this Agreement
are met;
(ix) Such Transfer is not made to any Person who lacks the legal
right, power or capacity to own such LLC Interest or other Equity Interests;
(x) The Executive Committee reasonably determines that any
proposed transferee pursuant to Section 6.3.D hereof is not engaged, nor is any
Affiliate thereof engaged, in a Competing Business if the Transferring Member is
the ▇▇▇▇▇▇ Member, the ▇▇▇▇▇▇▇ Member or any of their Permitted Transferees or
otherwise, an Additional/Substitute Member Competing Business in the Territory
if such Transfer would not be permitted under Section 6.3.D;
36
(xi) The Executive Committee and each Member receives written
instruments evidencing the proposed transferee's consent to be bound, as an
Assignee, by this Agreement and by all other then-existing agreements among all
Members, as applicable, which instruments shall be in form and content
reasonably acceptable to the Executive Committee; and
(xii) Notwithstanding the foregoing, clauses (ii) through (v)
shall only be in effect during such time as the Company is taxed as a
partnership for federal or state income tax purposes. G. Admission of Substitute
Members. The admission of any Permitted Transferee, to whom LLC Interests have
been transferred in accordance with this Agreement, to the Company as a
Substitute Member shall be governed by Section 10.2 hereof and such Permitted
Transferee shall also be bound by the restrictions on Transfers of LLC Interests
set forth in this Section 6.3.
SECTION 6.4 TAG ALONG RIGHTS PRIOR TO THE FIRST ANNIVERSARY OF THE
CLOSING DATE.
A. If, prior to the first anniversary of the Closing Date, the ▇▇▇▇▇▇
Member and any of ▇▇▇▇▇▇' Affiliates that are Members (collectively, the
"Selling Holders") propose to Sell, in one transaction or a series of related
transactions, at least twenty-five percent (25%) of the aggregate Equity
Interests held by ▇▇▇▇▇▇ and such Affiliates in the Company, other than to an
Affiliate of such Selling Holder, then if the ▇▇▇▇▇▇▇ Member or any Member of
the ▇▇▇▇▇▇▇ Group shall own any Equity Interests in the Company at such time,
the Selling Holders shall not Sell such Equity Interests unless the terms and
conditions of such Sale to the Proposed Purchaser shall include (i) a purchase
price for such Equity Interests that implies a total value of the outstanding
Equity Interests in the Company of at least One Billion Two Hundred Fifty
Million Dollars (US$1,250,000,000) in excess of the ▇▇▇▇▇▇ Excluded Equity
Amount and (ii) a requirement that the Proposed Purchaser offer to the ▇▇▇▇▇▇▇
Member the right to include, at the option of the ▇▇▇▇▇▇▇ Member, in the Sale to
the Proposed Purchaser, in accordance with this Section 6.4, the same proportion
of Equity Interests owned by the members of the ▇▇▇▇▇▇▇ Group in accordance with
and subject to the provisions of this Section 6.4 (a "Qualified Offer"). The
Selling Holder(s) shall cause the Qualified Offer to be reduced to writing
(which writing shall include an offer to purchase or otherwise acquire Equity
Interests from the ▇▇▇▇▇▇▇ Group according to the terms and conditions of
Sections 6.4.B and 6.4.C hereof) and shall deliver written notice of the
Qualified Offer (the "Tag-Along Notice") to the ▇▇▇▇▇▇▇ Member. The Tag-Along
Notice shall be accompanied by a copy of the Qualified Offer. Within ten (10)
Business Days after receipt of the Tag-Along Notice, the ▇▇▇▇▇▇▇ Member may
accept the offer included in the Tag-Along Notice for such Equity Interests as
is determined in accordance with the provisions of Section 6.4.B hereof by
delivering written notice of such acceptance to the Selling Holder together with
the documentation necessary to effectuate such sale, and a limited
power-of-attorney authorizing the Selling Holders to Sell the Equity Interests
to be sold pursuant to the terms of the Qualified Offer. A failure to deliver
such written notice within ten (10) Business Days shall be deemed an irrevocable
waiver of Darlene's Tag-Along Right.
37
B. The ▇▇▇▇▇▇▇ Member shall have the right (the "Tag-Along Right")
pursuant to Section 6.4.A hereof, to Sell in the event of a proposed Sale
pursuant to the Qualified Offer, Equity Interests equal to the product of (i)
the amount of Equity Interests to be acquired by the Proposed Purchaser and (ii)
a fraction, the numerator of which shall be the aggregate amount of Equity
Interests then owned by the ▇▇▇▇▇▇▇ Member and the other members of the ▇▇▇▇▇▇▇
Group, and the denominator of which shall be the aggregate amount of Equity
Interests then owned by the Selling Holders and ▇▇▇▇▇▇▇ and its Affiliates
collectively. The Selling Holders shall have the right, pursuant to Section
6.4.A hereof, to Sell pursuant to the Qualified Offer, the aggregate amount of
equity to be acquired by the Proposed Purchaser minus the amount thereof to be
sold by the ▇▇▇▇▇▇▇ Member and its Affiliates in connection with the exercise of
rights pursuant to this Section 6.4.
C. The Sale by the ▇▇▇▇▇▇▇ Member and the other members of the
▇▇▇▇▇▇▇ Group pursuant to this Section 6.4 shall be on all of the same terms and
conditions, including price, form of consideration, scope of representations,
indemnification and the date of Sale, that apply to the Selling Holders and are
stated in the Qualified Offer accompanying the Tag-Along Notice provided to
them.
D. Notwithstanding any provision to the contrary in this Section 6.4,
if the ▇▇▇▇▇▇▇ Member exercises its Tag-Along Right hereunder, and the cash
proceeds to be received by the ▇▇▇▇▇▇▇ Member and the other members of the
▇▇▇▇▇▇▇ Group in respect thereof shall not equal or exceed the cash proceeds
that the ▇▇▇▇▇▇▇ Member would have received in respect of a like number of
shares if there would have been a Complete Sale during the period beginning the
date of the Closing and ending on the first anniversary thereof for cash in an
amount implying a per-share value equal to the per-share purchase price
specified in or determinable from the Qualified Offer (the difference of such
aggregate cash proceeds to be received pursuant to exercise of the Tag-Along
Right and to such proceeds as would have been received in such Complete Sale in
respect of a like number of shares, the "Tag-Along Shortfall"), then the ▇▇▇▇▇▇
Member and its Affiliates shall not consummate such Sale unless,
contemporaneously with the consummation thereof, ▇▇▇▇▇▇ shall cause to be paid
to the ▇▇▇▇▇▇▇ Member an amount in cash in immediately available funds equal to
the Tag-Along Shortfall.
E. If the ▇▇▇▇▇▇▇ Member elects not to exercise its Tag-Along Right
under this Section 6.4, the ▇▇▇▇▇▇▇ Member shall have a Call Right with respect
to the Equity Interests proposed to be sold by any Selling Holder, on the same
terms and conditions as contemplated in Section 6.5 hereof.
F. Any and all Equity Interests in the Company Sold by ▇▇▇▇▇▇ or any
of its Affiliates pursuant to this Section 6.4 or otherwise prior to the first
anniversary of the Closing Date shall, for purposes of Sections 6.6 and 6.7
hereof, be treated as still owned by the ▇▇▇▇▇▇ Member and not Sold.
38
G. The provisions of Section 6.4.A through 6.4.F hereof shall operate
exclusively to the benefit of the ▇▇▇▇▇▇▇ Group, are nontransferable outside of
the ▇▇▇▇▇▇▇ Group and shall become void and of no further force or effect as
such time as no member of the ▇▇▇▇▇▇▇ Group is a Member.
SECTION 6.5 RIGHTS TO CAUSE A LIQUIDITY EVENT.
A. Liquidity Event. From the first anniversary of the Closing through
and including the sixth anniversary of the Closing (the "Liquidity Period"),
either the ▇▇▇▇▇▇ Member or the ▇▇▇▇▇▇▇ Member (the "Triggering Party") shall
have the right to deliver a notice in writing (the "Trigger Notice") to the
other (the "Nontriggering Party") that the Triggering Party desires to use its
commercially reasonable efforts to either: (i) cause the Company to complete a
Qualifying IPO or (ii) cause the Company to enter into a Complete Sale. More
than one Trigger Notice may be given, although no Trigger Notice shall be
effective sooner than three months following the later to occur of (x) delivery
of the preceding Trigger Notice and (y) the conclusion of the process for
determination of Fair Market Value pursuant to Section 6.8 hereof in connection
with the delivery of the preceding Trigger Notice.
B. Call Right.
(i) If a Trigger Notice is delivered, the Nontriggering Party
shall have the right, for a period of 30 days after delivery of the Trigger
Notice by the Triggering Party, to initiate, by delivering a notice in writing
to the Triggering Party, an appraisal of the Fair Market Value of all the Equity
Interests of the Company as provided in Section 6.5.B(ii) hereof (the "Appraisal
Process"), and as therein provided, to exercise the Call Right. The Triggering
Party shall not, during the pendency of the Appraisal Process or a Call Right,
cause to be consummated the applicable Liquidity Event or enter any binding
agreement with respect thereto.
(ii) Upon initiation of the Appraisal Process:
(a) The Parties shall cause the Fair Market Value of all of
the Equity Interests in the Company to be determined in accordance with Section
6.8 hereof.
(b) If the determination of Fair Market Value of all the
Equity Interests in the Company shall indicate that the Equity Value of the
Company is in excess of One Billion Two Hundred Fifty Million Dollars
(US$1,250,000,000), the Nontriggering Party shall have the right, exercisable by
written notice delivered (the "Call Right Exercise Notice") to the Triggering
Party not later than twenty (20) days after the determination of Fair Market
Value (the "Call Right"), to acquire all, but not less than all, of the
Triggering Party's Equity Interests in the Company (the "Call Purchase") upon
payment, in accordance herewith, in immediately available funds of a purchase
price equal to:
39
If the ▇▇▇▇▇▇ Member is exercising the Call Right, the greater of: (x) the
amount the ▇▇▇▇▇▇▇ Group would have received in payment for its Equity Interests
in the Company, in accordance with Section 6.6.B hereof, as if there had been a
Complete Sale of all the Equity Interests in the Company for cash at the Fair
Market Value determined in the Appraisal Process, including the effect of the
▇▇▇▇▇▇▇ Floor Value if relevant, and taking into account the ▇▇▇▇▇▇▇ Member's
right to acquire additional Equity Interests in the Company under Section 4.7.D
hereof, if relevant, and (y) the ▇▇▇▇▇▇▇ Minimum Amount at such time.
If the ▇▇▇▇▇▇▇ Member is exercising the Call Right, the amount the ▇▇▇▇▇▇ Member
and its Affiliates would have received in payment for its Equity Interests in
the Company (other than any Excluded Equity), in accordance with Section 6.6.B
hereof, as if there had been a Complete Sale of all the Equity Interests in the
Company for cash at the Fair Market Value determined in the Appraisal Process.
For avoidance of doubt the determination of such amount shall give effect to the
▇▇▇▇▇▇▇ Floor Value, if relevant, and take into account the ▇▇▇▇▇▇▇ Member's
right to acquire additional Equity Interests in the Company under Section 4.7.D
hereof, if relevant.
(c) At or prior to the consummation of such Call Purchase:
(1) any guarantees by, or other financial obligations of, the Triggering Party
in favor of the Company and/or its Subsidiaries shall be released or indemnified
in a manner reasonably satisfactory in form and substance to the Triggering
Party, (2) any outstanding indebtedness of the Company and/or its Subsidiaries
payable to the Triggering Party and its Affiliates shall be repaid in full or
acquired by the Member exercising the Call Right by payment to the Triggering
Party, in immediately available funds, of an amount equal to the unpaid balance
of principal under such indebtedness together with accrued and unpaid interest
thereon, (3) if the Triggering Party is the ▇▇▇▇▇▇ Member, all Excluded Equity
shall be acquired by the ▇▇▇▇▇▇▇ Member for a cash amount equal to the ▇▇▇▇▇▇
Excluded Equity Amount and (4) if any indebtedness is acquired by the Member
exercising the Call Right pursuant to clause (2), the Triggering Party shall
transfer and assign to the Member exercising the Call Right all such
indebtedness and the Member exercising the Call Right shall use its commercially
reasonable efforts to obtain releases of guarantees and other obligations of the
Triggering Party in connection therewith in form and substance reasonably
satisfactory to the Triggering Party; provided, however, that in the event and
to the extent that the Member exercising the Call Right shall not cause the
Triggering Party to be so released, effective upon the consummation of the Call
Purchase, the Member exercising the Call Right (or if such Member is the ▇▇▇▇▇▇
Member ▇▇▇▇▇▇), shall indemnify and hold harmless the Triggering Party (in
accordance with the procedures for indemnification established in Section 6.2 of
the Master Contribution Agreement) from any Losses arising from such guarantees
and other financial obligations. The ▇▇▇▇▇▇▇ Member, if it shall be the Party
exercising the Call Right, shall provide to the ▇▇▇▇▇▇ Member such other
assurances that the ▇▇▇▇▇▇▇ Member is able to satisfy such indemnification
obligations as the ▇▇▇▇▇▇ Member may, from time to time, reasonably request
including a letter of credit in form and substance reasonably satisfactory to
the ▇▇▇▇▇▇ Member.
40
(d) The Call Purchase shall be consummated as promptly as
is practicable after the Call Right is exercised and the exercise price thereof
established, subject to receipt of any material regulatory approvals required to
consummate the Call Purchase. ▇▇▇▇▇▇ and each of the Members shall use, and
shall use commercially reasonable efforts to cause each of their respective
Affiliates to use, its commercially reasonable efforts (i) to obtain promptly
all required regulatory approvals, (ii) to make timely filings pursuant to the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act in connection with the Call Purchase (the initial filing
in no event to be made later than 20 days after delivery of the Call Right
Exercise Notice), if such filings are required, and (iii) to consummate such
purchase and the related transactions set forth in Section 6.5.B(ii) hereof. At
the closing of the Call Purchase, the Triggering Party shall deliver to the
Member exercising the Call Right certificates representing the Equity Interests
to be transferred, duly endorsed and in proper form for transfer (or, in the
case of any Equity Interests not represented by a certificate, appropriate
evidence of the registration of transfer or other transfer of such interest,
including evidence of each related filing and/or approval in accordance with
applicable Law), appropriate documentation in connection with any other
interests to be transferred and such other documents and instruments as may
reasonably be requested by Party exercising the Call Right in connection
therewith. If the Call Purchase has not been consummated within twenty (20) days
after the later to occur of (i) delivery of the Call Right Exercise Notice or
(ii) the date of completion of all actions required pursuant to Section
6.5.B(ii)(d) hereof within the control of the Triggering Party, the Call Right
shall be deemed not exercised and the associated Call Purchase shall not be
consummated.
C. Failure to Exercise Call Right; Consummation of Complete Sale or
Qualifying IPO. If the Call Right has not been exercised by the latest date
permitted by Section 6.5.B(ii)(b) hereof or is deemed not exercised pursuant to
Section 6.5.B(ii)(d) hereof, and either the ▇▇▇▇▇▇ Member or the ▇▇▇▇▇▇▇ Member
shall thereafter notify the other in writing that it desires to consummate the
applicable Liquidity Event (a "Liquidity Consummation Notice"), then the Members
shall cooperate and use their respective commercially reasonable efforts to
cause the Company to complete the applicable Liquidity Event as expeditiously as
practicable in accordance with this Section 6.5.C; provided, however, that:
(i) no such Liquidity Event shall be consummated unless and
until all guarantees or other financial obligations of each of the ▇▇▇▇▇▇
Member, the ▇▇▇▇▇▇▇ Member and their respective Affiliates in favor of, or for
the benefit of, the Company or its Subsidiaries shall be released or indemnified
to the reasonable satisfaction of such Member, respectively; and
(ii) the ▇▇▇▇▇▇ Member shall have the right to veto consummation
of any Complete Sale in respect of which the ▇▇▇▇▇▇▇ Member has delivered to the
▇▇▇▇▇▇ Member the applicable Liquidity Consummation Notice if the applicable
cash purchase price payable in connection with such Complete Sale (without
41
giving effect to debt to be assumed by the proposed purchaser in connection with
such Complete Sale) minus the ▇▇▇▇▇▇ Excluded Equity Amount shall be less than
One Billion Two Hundred Fifty Million Dollars (US$1,250,000,000). The ▇▇▇▇▇▇
Member may exercise such veto by delivery to the ▇▇▇▇▇▇▇ Member of notice in
writing at any time within five (5) days after delivery to the ▇▇▇▇▇▇ Member of
the applicable Liquidity Consummation Notice, in which case such Complete Sale
shall not thereafter be consummated. In the event such a veto is exercised by
the ▇▇▇▇▇▇ Member with respect to a bona fide offer to acquire the Company in a
Complete Sale that had been received from a third party, the proceeds that the
Darlene Member would have received pursuant to Section 6.6 hereof in the event
such Complete Sale had been consummated shall be the "▇▇▇▇▇▇▇ Floor Value." The
▇▇▇▇▇▇▇ Floor Value, once established, shall not thereafter be changed by any
subsequent exercises by the ▇▇▇▇▇▇ Member of its veto right hereunder.
SECTION 6.6 COMPLETE SALE; QUALIFYING IPO.
A. Complete Sale Prior to Liquidity Period. In the event a Liquidity
Event (other than a Qualifying IPO) is consummated during the period beginning
on the Closing Date and ending on the first anniversary thereof, the Members
shall cause the following sequence of events to occur, as promptly as
practicable thereafter:
(i) First, the aggregate amount of the net proceeds, whether in
cash, property or securities, to be paid to each of the Members and their
respective Affiliates in connection with such Liquidity Event in respect of
their respective ownership of Equity Interests and debt of the Company and its
Subsidiaries shall be determined. The aggregate amount of such net proceeds to
be paid to the ▇▇▇▇▇▇ Member, the ▇▇▇▇▇▇▇ Member and their respective Affiliates
is referred to as the "Early Sale Proceeds."
(ii) Second, the Early Sale Proceeds, to the extent sufficient
therefor, shall be applied to pay (x) the New ▇▇▇▇▇▇ Financing Amount, (y) the
▇▇▇▇▇▇▇ Minimum Amount, and (z) the New ▇▇▇▇▇▇▇ Financing Amount on a pro rata
basis in proportion to the amount of each.
(iii) Third, the amount, if any, of any Early Sale Proceeds
remaining after payment of the New ▇▇▇▇▇▇ Financing Amount, the ▇▇▇▇▇▇▇ Minimum
Amount and the New ▇▇▇▇▇▇▇ Financing Amount (the "Early Equity Proceeds"), shall
be applied as follows, to the extent sufficient therefor:
(a) First, Early Equity Proceeds shall be paid to the
▇▇▇▇▇▇ Member and the ▇▇▇▇▇▇▇ Member, pro rata, in a percentage equal to (x) the
▇▇▇▇▇▇ Share plus 13% but no more than 100% and (y) the ▇▇▇▇▇▇▇ Share minus 13%
but no less than 0%, respectively, until the ▇▇▇▇▇▇ Member shall have received a
portion of the Early Equity Proceeds equal to Two Billion Two Hundred Million
Dollars (US$2,200,000,000); and
42
(b) Second, any remaining Early Equity Proceeds (after
application of subparagraph (a) above) shall be paid to each of the ▇▇▇▇▇▇
Member and the ▇▇▇▇▇▇▇ Member pro rata in proportion to the ▇▇▇▇▇▇ Share and the
▇▇▇▇▇▇▇ Share, respectively.
(iv) Fourth, amounts determined in Section 6.6.A(i) hereof to be
payable to Members other than the ▇▇▇▇▇▇▇ Member, the ▇▇▇▇▇▇ Member and their
respective Affiliates shall be paid to the applicable Members.
B. Complete Sale During Liquidity Period. In the event a Liquidity
Event (other than a Qualifying IPO) is consummated during the Liquidity Period,
the Members shall cause the following sequence of events to occur as promptly as
practicable thereafter (provided, however, that, in the event a ▇▇▇▇▇▇▇ Floor
Value shall have been established, if the ▇▇▇▇▇▇▇ Floor Value exceeds the amount
that the ▇▇▇▇▇▇▇ Member would receive pursuant to this Section 6.6.B, then
▇▇▇▇▇▇ shall pay to the ▇▇▇▇▇▇▇ Member in cash in immediately available funds
the amount of such excess upon the consummation of the Complete Sale):
(i) First, the aggregate amount of the net proceeds to be paid
to each of the Members and their respective Affiliates in respect of their
respective ownership of Equity Interests and debt of the Company, whether in
cash, property or securities shall be determined. The aggregate amount of such
net proceeds to be paid to the ▇▇▇▇▇▇ Member, the ▇▇▇▇▇▇▇ Member and their
respective Affiliates is referred to as the "Sale Proceeds".
(ii) Second, the Sale Proceeds, to the extent sufficient
therefor, shall first be applied to pay (x) the New ▇▇▇▇▇▇ Financing Amount and
(y) the New ▇▇▇▇▇▇▇ Financing Amount, on a pro rata basis in proportion to the
amount of each.
(iii) Third, the amount, if any, of Sale Proceeds remaining
after payment of the New ▇▇▇▇▇▇ Financing Amount and the New ▇▇▇▇▇▇▇ Financing
Amount (the "Equity Proceeds") shall be applied as follows, to the extent
sufficient therefor:
(a) First, the ▇▇▇▇▇▇▇ Member shall be paid a portion of
the Equity Proceeds equal to the ▇▇▇▇▇▇▇ Minimum Amount;
(b) Second, any remaining Equity Proceeds (after
application of subparagraph (a) above) shall be paid to the ▇▇▇▇▇▇ Member and
the ▇▇▇▇▇▇▇ Member, pro rata, in a percentage equal to (x) the ▇▇▇▇▇▇ Share plus
13% but no more than 100% and (y) the ▇▇▇▇▇▇▇ Share minus 13% but no less than
0%, respectively, until the ▇▇▇▇▇▇ Member shall have received a portion of the
Equity Proceeds (including amounts paid under subparagraph (a) above) equal to
Two Billion Two Hundred Million Dollars (US$2,200,000,000); and
(c) Third, any remaining Equity Proceeds (after application
of subparagraphs (a) and (b) above) shall be paid to each of the ▇▇▇▇▇▇ Member
and the ▇▇▇▇▇▇▇ Member pro rata in proportion to the ▇▇▇▇▇▇ Share and the
▇▇▇▇▇▇▇ Share, respectively.
43
(iv) Fourth, amounts determined in Section 6.6.B(i) hereof to be
payable to Members other than the ▇▇▇▇▇▇▇ Member, the ▇▇▇▇▇▇ Member and their
respective Affiliates shall be paid to the applicable Members.
C. Qualifying IPO. In the event that a Qualifying IPO is consummated
prior to the end of the Liquidity Period:
(i) First, the underwriter(s) for the Qualifying IPO shall
determine, in consultation with the ▇▇▇▇▇▇ Member and the ▇▇▇▇▇▇▇ Member, (x)
the aggregate size of the offering, what portion should be primary ("Primary
Proceeds") and what portion, if any, should be secondary ("Secondary Proceeds"),
(y) the aggregate amount of the Primary Proceeds that may be applied to repay
the New Debt (excluding the ▇▇▇▇▇▇ Excluded Equity Amount), with such repayment
to be made pro rata to the holders thereof in proportion to the New Debt
(excluding the ▇▇▇▇▇▇ Excluded Equity Amount) held by each ("Primary Proceeds
Repayment"), and (z) the aggregate amount of the New Debt (excluding the ▇▇▇▇▇▇
Excluded Equity Amount) that may remain outstanding as debt of the Company,
after the Qualifying IPO (which shall consist of portions of the New ▇▇▇▇▇▇
Financing Amount (excluding the ▇▇▇▇▇▇ Excluded Equity Amount) and New ▇▇▇▇▇▇▇
Financing Amount in proportion to the respective amount of each), in order to
maximize the value of the Company's common equity (such portion thereof owed to
the ▇▇▇▇▇▇ Member or its Affiliates is referred to as "Remaining ▇▇▇▇▇▇ Debt"
and such portion thereof, if any, owed to ▇▇▇▇▇▇▇ or its Affiliates is referred
to as "Remaining ▇▇▇▇▇▇▇ Debt").
(ii) Second, simultaneously with the closing of the Qualifying
IPO, the Executive Committee shall cause the Company to either: (x) make the
Primary Proceeds Repayment, retain any Remaining ▇▇▇▇▇▇ Debt and Remaining
▇▇▇▇▇▇▇ Debt and cause any other portion of the New ▇▇▇▇▇▇ Financing Amount
(excluding the Remaining ▇▇▇▇▇▇ Debt and the ▇▇▇▇▇▇ Excluded Equity Amount) and
any other portion of the New ▇▇▇▇▇▇▇ Financing Amount (excluding the Remaining
▇▇▇▇▇▇▇ Debt) to be converted into common equity of the Company at the initial
public offering price ("IPO Price"), or (y) convert the entire New ▇▇▇▇▇▇
Financing Amount (excluding the ▇▇▇▇▇▇ Excluded Equity Amount) and the New
▇▇▇▇▇▇▇ Financing Amount into common equity of the Company at the IPO Price.
(iii) Third, if Darlene's Equity Interests in the Company,
valued at the IPO Price (the "▇▇▇▇▇▇▇ IPO Value"), shall have a value that is
less than the amount ▇▇▇▇▇▇▇ would receive pursuant to Section 6.6.B hereof in
the event of a Complete Sale (without giving effect to the Qualified IPO) of all
of the Equity Interests in the Company at the per-share IPO Price (and assuming
the repayment of all New Debt, excluding the ▇▇▇▇▇▇ Excluded Equity Amount),
taking into account the ▇▇▇▇▇▇▇ Floor Value, if relevant (the "▇▇▇▇▇▇▇ IPO
Complete Sale Amount"), then, immediately prior to the closing of such
Qualifying IPO, ▇▇▇▇▇▇ shall transfer to the ▇▇▇▇▇▇▇ Member a number of shares
of the ▇▇▇▇▇▇ Member's or its Affiliates Equity Interests in the Company equal
44
in value (at the IPO Price) to the amount by which the ▇▇▇▇▇▇▇ IPO Complete Sale
Amount exceeds the ▇▇▇▇▇▇▇ IPO Value. For the avoidance of doubt, the ▇▇▇▇▇▇
Member and the ▇▇▇▇▇▇▇ Member acknowledge that the ▇▇▇▇▇▇▇ IPO Complete Sale
Amount shall be calculated after giving effect to the value recovery by the
▇▇▇▇▇▇ Member of the ▇▇▇▇▇▇ Excluded Equity Amount.
D. Value of Publicly Traded Securities or Other Property. For
purposes of Sections 6.6.A, 6.6.B, 6.8.A and 6.8.B hereof, publicly traded
securities shall be deemed valued in accordance with the valuation method
prescribed in the agreement governing such sale or, if not so prescribed, equal
to the average closing price over the five (5)-day period ending on the day
immediately prior to the closing of such sale, and other property or securities
shall be deemed valued at the fair market value thereof as determined in good
faith by the ▇▇▇▇▇▇ Member and the ▇▇▇▇▇▇▇ Member.
E. Failure of Liquidity Event to Occur During Liquidity Period. If at
the expiration of the Liquidity Period no Liquidity Event shall have been
consummated, ▇▇▇▇▇▇ shall, as soon as practicable thereafter, unless notified in
writing by the ▇▇▇▇▇▇▇ Member that it is waiving its rights under this Section
6.6.E, pay to the ▇▇▇▇▇▇▇ Member in immediately available funds an amount equal
to the ▇▇▇▇▇▇▇ Floor Value (if and only to the extent that such ▇▇▇▇▇▇▇ Floor
Value shall have been established) upon delivery to the ▇▇▇▇▇▇ Member of all of
the Equity Interests in the Company owned by the ▇▇▇▇▇▇▇ Member and its
Affiliates. For avoidance of doubt, the Parties acknowledge that, in the event
no ▇▇▇▇▇▇▇ Floor Value shall then have been established, ▇▇▇▇▇▇ shall have no
such obligation pursuant to this Section 6.6.E regardless of whether a Liquidity
Event shall have occurred.
SECTION 6.7 SKY DEAL.
A. Limitation on Sky Deal. Any combination of the business or
operations of the Company (by merger, consolidation, sale, acquisition or
otherwise) with substantially all of the Sky Business or the operations of Sky,
in one or more transactions (collectively, a "Sky Deal") shall be consummated
only if the following conditions are satisfied: (x) the Audit Committee of the
Board of Directors of ▇▇▇▇▇▇ shall have approved the Sky Deal, (y) upon
consummation of a Sky Deal involving the business or operations of both Innova
S. de ▇.▇. de C.V. and NetSat Servicios Ltda., the ▇▇▇▇▇▇▇ Group's percentage
share of the Equity Interests of the Company (or, in the event the Company
merges with or into another entity or sells all or substantially all of its
assets to another entity in connection with a Sky Deal, such surviving or
successor entity) shall not be less than 7% (or a proportionate lesser amount if
the ▇▇▇▇▇▇▇ Group shall have transferred any of its Equity Interests in the
Company prior to consummation of the Sky Deal) and (z) upon consummation of a
Sky Deal which does not involve the business or operations of both Innova S. de.
▇.▇. de C.V. and NetSat Servicios Ltda., the ▇▇▇▇▇▇▇ Group's percentage share of
the Equity Interests of the Company (or, in the event the Company merges with or
into another entity or sells all or substantially all of its assets to another
entity in connection with a Sky Deal, such surviving or successor entity) shall
not be less than 10% (or a proportionate lesser amount if the ▇▇▇▇▇▇▇ Group
shall have transferred any of its Equity Interests in the Company prior to
consummation of the Sky Deal). Notwithstanding the foregoing, the provisions in
this Section 6.7.A shall not apply to a Failed Funding Liquidity Event.
45
B. The ▇▇▇▇▇▇▇ Member's Sky Put Right. The ▇▇▇▇▇▇▇ Member may require
▇▇▇▇▇▇ to purchase (x) all, but not less than all, of the ▇▇▇▇▇▇▇ Group's Equity
Interests in the Company (or the surviving entity of a Sky Deal) and (y) all
outstanding indebtedness of the Company and its Subsidiaries payable to the
▇▇▇▇▇▇▇ Member or any of its Affiliates, if (a) a Sky Deal shall be consummated
and a Liquidity Event (other than a Failed Funding Liquidity Event) shall not,
prior thereto, have occurred or (b) there is an unfair shift of value away from
the Company because of actions or inactions of ▇▇▇▇▇▇, its Affiliates and/or
News and that reasonably can be considered different from actions or inactions
that would have been pursued if there were no News Deal (the "Sky Put Right"). A
Sky Put Right arising pursuant to this Section 6.7.B shall be exercisable only
one time, and only under the circumstances set forth in Section 6.7.B(i),
6.7.B(ii) or 6.7.B(iii) hereof, subject to the exercise by ▇▇▇▇▇▇ of the Sky
Call Right pursuant to Section 6.7.C hereof before consummation of the Sky Put
Right. A Sky Put Right exercised in connection with the circumstances described
in clause (b) above shall be exercisable through the sixth anniversary of the
Closing Date.
(i) If a Sky Deal shall be consummated and, upon such
consummation, the aggregate Equity Interests of ▇▇▇▇▇▇ and its Subsidiaries in
the surviving entity shall be less than 20% of the issued and outstanding Equity
Interests, the Sky Put Right exercisable in the circumstances described in
clause (a) of the preceding paragraph shall remain exercisable for a period of
two (2) years after the closing of the Sky Deal.
(ii) If there is an unfair shift of value away from the Company
because of actions or inactions of ▇▇▇▇▇▇, its Affiliates and/or News and that
reasonably can be considered different from actions or inactions that would have
been pursued if there were no Sky Deal, the Sky Put Right exercisable in the
circumstances described in clause (a) of first paragraph of this Section 6.7.B
shall remain exercisable through the sixth anniversary of the Closing Date.
(iii) If the provisions of clauses (i) and (ii) of this Section
6.7.B both apply, the Sky Put Right shall remain exercisable until the Sky Put
Right is no longer in effect under either clause.
(iv) The ▇▇▇▇▇▇▇ Member may exercise its Sky Put Right by
delivery to the ▇▇▇▇▇▇ Member of written notice of exercise, in which case, upon
the closing thereof and upon delivery by the ▇▇▇▇▇▇▇ Member of all of the Equity
Interests of the ▇▇▇▇▇▇▇ Group in the Company, ▇▇▇▇▇▇ shall pay to the ▇▇▇▇▇▇▇
Member Two Hundred Million Dollars (US$200,000,000) as consideration for the
▇▇▇▇▇▇▇ Group Equity Interests in the Company plus the unpaid principal balance
of all outstanding indebtedness of the Company and its Subsidiaries payable to
the ▇▇▇▇▇▇▇ Member or any of its Affiliates together with accrued and unpaid
interest thereon in immediately available funds not later than one hundred
twenty (120) days after the ▇▇▇▇▇▇▇ Member delivers such written notice of
exercise of such Sky Put Right.
46
(v) The ▇▇▇▇▇▇▇ Member may, at any time, irrevocably waive the
Sky Put Right by delivering notice in writing to the ▇▇▇▇▇▇ Member.
▇. ▇▇▇▇▇▇' Sky Call Right. At any time that the ▇▇▇▇▇▇▇ Member shall
have a Sky Put Right, notwithstanding any prior receipt by the ▇▇▇▇▇▇ Member of
notice from the ▇▇▇▇▇▇▇ Member of its intent to exercise the Sky Put Right,
▇▇▇▇▇▇ shall have a right coterminous therewith, to acquire (a) all of the
▇▇▇▇▇▇▇ Group's Equity Interests in the Company and (b) all outstanding
indebtedness of the Company and any of its Subsidiaries payable to the ▇▇▇▇▇▇▇
Member or its Affiliates upon payment in immediately available funds, as herein
provided, of Four Hundred Million Dollars (US$400,000,000) as consideration for
the ▇▇▇▇▇▇▇ Group's Equity Interests in the Company plus the unpaid balance of
principal under such indebtedness together with accrued and unpaid interest
thereon (a "Sky Call Right"), and ▇▇▇▇▇▇ shall thereupon purchase and pay such
amount to the ▇▇▇▇▇▇▇ Member upon delivery of such Equity Interests, which shall
occur not later than one hundred twenty (120) days after ▇▇▇▇▇▇ Member delivers
to the ▇▇▇▇▇▇▇ Member a written notice that it is exercising such Sky Call
Right. The ▇▇▇▇▇▇▇ Member's Sky Put Right shall be permanently extinguished upon
payment to the ▇▇▇▇▇▇▇ Member in immediately available funds of the amount
herein provided upon exercise by ▇▇▇▇▇▇ of ▇▇▇▇▇▇' Sky Call Right.
D. Closing of Sky Put Right or Sky Call Right Exercise. The
completion of closing of any sale and purchase upon exercise of a Sky Put Right
or Sky Call Right shall occur at a place to be agreed upon by the ▇▇▇▇▇▇▇ Member
and ▇▇▇▇▇▇ (and if not so agreed, at the offices of U.S. counsel to the selling
Member) on a date and at a time agreed upon by the ▇▇▇▇▇▇▇ Member and ▇▇▇▇▇▇
(and if not so agreed, at 10:00 a.m. on the latest date for the closing of such
Sky Put Right or Sky Call Right provided in Section 6.7.B or 6.7.C hereof,
respectively). At such closing, the ▇▇▇▇▇▇▇ Member shall deliver to ▇▇▇▇▇▇
certificates representing the Equity Interests to be transferred, duly endorsed
and in proper form for transfer (or, in the case of any Equity Interests not
represented by a certificate, appropriate evidence of the registration of
transfer or other transfer of such interest, including evidence of each related
filing and/or approval in accordance with applicable law) and such other
documents and instruments as may reasonably be requested by ▇▇▇▇▇▇ in connection
therewith.
E. Liquidity Right, After a Sky Deal. ▇▇▇▇▇▇ and the ▇▇▇▇▇▇▇ Member
agree that if a Sky Deal occurs prior to the consummation of a Liquidity Event,
subject to the next sentence, the ▇▇▇▇▇▇▇ Member shall continue to have rights
comparable to those rights set forth in Section 6.4, 6.5 and 6.6 and the ▇▇▇▇▇▇▇
Member shall continue to have the rights set forth in this Section 6.7. If a Sky
Deal is completed, ▇▇▇▇▇▇ and the ▇▇▇▇▇▇▇ Member agree to determine in good
faith the modifications necessary to the provisions set forth in Sections 6.4,
6.5 and 6.6 in order to implement comparable provisions to such terms that would
apply to a Qualified Offer or a Liquidity Event with respect to the Equity
Interests in the surviving entity of the Sky Deal, after considering the terms
47
of the Sky Deal applicable to ▇▇▇▇▇▇ and the ▇▇▇▇▇▇▇ Member (but not limiting
the rights hereunder). ▇▇▇▇▇▇ and the ▇▇▇▇▇▇▇ Member further agree that the
modifications to Section 6.6 would include modifying the definition of New
▇▇▇▇▇▇ Financing Amount to exclude the ▇▇▇▇▇▇ Guaranty Obligations and
increasing the $2,200,000,000 amount reflected in Section 6.6A and 6.6B to an
amount equal to the sum of (x) $2,200,000,000, (y) 100% of the amounts, if any,
paid by ▇▇▇▇▇▇ or its Affiliates (and not reimbursed or repaid to ▇▇▇▇▇▇ or its
Affiliates by the Company or its Subsidiaries) under the HBO Guaranty and the
Disney Guaranty and (z) 19% of the amount, if any, paid by ▇▇▇▇▇▇ or its
Affiliates (and not reimbursed or repaid to ▇▇▇▇▇▇ or its Affiliates by the
Company or its Subsidiaries) under the PAS Guaranty.
SECTION 6.8 VALUATION PROCEDURE. In the event the Fair Market Value
is to be determined pursuant to this Agreement:
A. As soon as is practicable after the receipt of any notice of an
intent to convert debt to equity pursuant to Section 4.7 hereof or notice
initiating the Appraisal Process pursuant to Section 6.6 hereof or to otherwise
determine the fair market value of assets under this Agreement, the ▇▇▇▇▇▇
Member and the ▇▇▇▇▇▇▇ Member shall confer in good faith and use their
commercially reasonable efforts to determine the fair market value of the equity
of the Company based on a fully-distributed public market valuation (which
valuation shall not give effect to any illiquidity, minority interest, or
related discount), on the applicable date (the "Fair Market Value"); provided,
however, that if the ▇▇▇▇▇▇ Member and the ▇▇▇▇▇▇▇ Member are unable to agree on
the Fair Market Value within thirty (30) days after delivery of any such notice,
or earlier, if they shall so agree, then the ▇▇▇▇▇▇ Member and the ▇▇▇▇▇▇▇
Member shall consult for the purpose of appointing a mutually acceptable
qualified independent expert (the "Expert") who shall determine the Fair Market
Value as soon after such Expert's appointment as is reasonably practicable.
B. If the ▇▇▇▇▇▇ Member and the ▇▇▇▇▇▇▇ Member shall be unable to
agree on a single Expert within fifteen (15) Business Days, the Fair Market
Value shall be determined as follows:
(i) each of the ▇▇▇▇▇▇ Member and the ▇▇▇▇▇▇▇ Member shall
select one Expert (together, the "Initial Experts") not later than three (3)
Business Days after the expiration of such fifteen (15) Business Day period (or
agreed upon shorter period). The Initial Experts shall each provide their
written conclusions as to the Fair Market Value not later than thirty (30) days
after their engagement as Experts. If the Fair Market Values calculated by the
Initial Experts differ by less than 15% of the larger calculated Fair Market
Value, the Fair Market Value shall equal the average of the two. If such
calculated Fair Market Values differ by more than 15% of the larger calculated
Fair Market Value, a third expert (the "Third Expert") shall be selected
promptly by the Initial Experts and such Third Expert shall provide a calculated
Fair Market Value within twenty (20) days after the delivery of the Fair Market
Value calculations delivered by the Initial Experts. The Fair Market Value shall
be the average of the value calculated by such third Expert and the closest of
48
the values previously provided by the Initial Experts; the valuation of the
other Expert shall be excluded from the calculation of Fair Market Value. The
Third Expert's valuation shall be made independently of the valuations of the
Initial Experts and the Third Expert shall not consult with, or view any
findings of, either Initial Expert in connection with the Third Expert's
valuation.
(ii) in the event that the Initial Experts shall be unable to
agree upon a Third Expert within twenty (20) days after delivery of their
calculations of Fair Market Value, both the ▇▇▇▇▇▇ Member and the ▇▇▇▇▇▇▇ Member
shall notify the International Chamber of Commerce of such disagreement and the
International Chamber of Commerce (or its successor) shall appoint the Third
Expert within ten (10) days of its engagement.
SECTION 6.9 FAIR MARKET VALUE DETERMINATION. The determination of
Fair Market Value in accordance with this Section 6.9 shall be final and binding
upon the Parties. If either the ▇▇▇▇▇▇ Member or the ▇▇▇▇▇▇▇ Member hereto fails
to appoint an Initial Expert within the time period contemplated by Section
6.8.B(i) hereof, no other Expert shall be appointed and the Appraisal shall be
made solely by the Initial Expert appointed by the other Member. Each of the
▇▇▇▇▇▇ Member and the ▇▇▇▇▇▇▇ Member shall bear the fees and expenses of the
Expert chosen by such Member, and the fees of the Third Expert (if any) will be
paid by the Member that appointed the Expert whose valuation shall be excluded
from the computation referred to in Section 6.8.B(i) hereof. In the event that a
single Expert is selected and determines Fair Market Value in accordance with
Section 6.8.A hereof, the fees and expenses of such sole Expert shall be borne
equally by the ▇▇▇▇▇▇ Member and the ▇▇▇▇▇▇▇ Member.
ARTICLE 7
DISTRIBUTIONS
-------------
SECTION 7.1 DISTRIBUTION RIGHTS. Except as provided in Sections 6.5,
6.6 and 11.2 hereof, the Company may (to the extent permitted by law, including
the Act) make distributions to each Member in accordance with their Percentage
Interests or, with respect to the ▇▇▇▇▇▇▇ Member and its Affiliates that are
Members and the ▇▇▇▇▇▇ Member and its Affiliates that are Members, in accordance
with the ▇▇▇▇▇▇▇ Share and the ▇▇▇▇▇▇ Share, as applicable, only at such times
as the Executive Committee deems appropriate; provided, however, that, subject
to Sections 6.5, 6.6, 7.2 and Article XI hereof, the Executive Committee shall
make such distributions until each Member has received distributions at least
equal to such Member's Tax Liability Deficiency, if any. Except as provided in
Section 6.5, 6.6 and this 7.1, such distributions shall be made to each Member
pro rata in proportion to each Member's Percentage Interest. Distributions made
pursuant to this Section 7.1 are not intended to be guaranteed payments pursuant
to Section 707(c) of the Code.
SECTION 7.2 DISTRIBUTIONS UPON FINAL LIQUIDATION. Distributions in
connection with a final liquidation of the Company shall be made in accordance
with Sections 6.5, 6.6 and 11.2 hereof.
49
SECTION 7.3 DISTRIBUTIONS IN KIND. Except as described in Section
11.2 hereof, no right is given to any Member to demand and receive property
other than cash. Subject to Section 11.2 hereof and except where this Agreement
expressly provides for a cash payment, the Executive Committee may determine to
make a distribution in kind to the Members of Company Assets other than cash.
SECTION 7.4 RIGHT TO WITHHOLD. The Company shall withhold from any
distribution such amounts as are required to be withheld by the laws of any
taxing jurisdiction.
SECTION 7.5 CERTAIN NON-U.S. WITHHOLDING TAXES. In the event that
payments to the Company are subject to non-U.S. withholding taxes and such
payments to the Company are not grossed-up for the foreign withholding taxes
withheld then, for purposes of pro rata distributions in accordance with Section
7.1 hereof, allocations of tax credits to a Member under Section 8.3.B hereof
shall be treated as distributions of cash equal to the amount of taxes withheld
and paid which generated such tax credits.
ARTICLE 8
ALLOCATIONS
-----------
SECTION 8.1 TIMING AND AMOUNT OF ALLOCATIONS OF NET INCOME AND NET
LOSS. Net Income and Net Loss of the Company shall be determined and allocated
with respect to each Fiscal Year of the Company as of the end of each such year.
Subject to the other provisions of this Article VIII, an allocation to a Member
of a share of Net Income or Net Loss shall be treated as an allocation of the
same share of each item of income, gain, loss or deduction that is taken into
account in computing Net Income or Net Loss. For each Fiscal Year, the
Regulatory Allocations in Section 8.3.A hereof shall be made immediately prior
to the general allocations of Section 8.2 hereof. The Tax Matters Partner shall
distribute to each Member proposed allocations in accordance with this Article
VIII with respect to each taxable year of the Company at least 15 days prior to
the date the Company is required to file its partnership tax return with respect
to such taxable year.
SECTION 8.2 GENERAL ALLOCATIONS.
A. Hypothetical Liquidation. The items of income, expense, gain and
loss of the Company comprising Net Income or Net Loss for a Fiscal Year shall be
allocated among the Persons which were Members during such Fiscal Year in a
manner that will, as nearly as possible, cause the Capital Account balance of
each Member at the end of such Fiscal Year to equal the excess (which may be
negative) of:
(i) the hypothetical distribution (if any) that such Member
would receive if, on the last day of the Fiscal Year, (w) all Company assets,
including cash, were sold for cash equal to their Carrying Values, taking into
account any adjustments thereto for such Fiscal Year, (x) all Company
liabilities were satisfied in cash according to their terms (limited, with
respect to each nonrecourse liability, to the Carrying Value of the assets
securing such liability) and (y) the net proceeds thereof (after satisfaction of
such liabilities) were distributed in full pursuant to Section 11.2 hereof.
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(ii) the sum of (x) the amount, if any, which such Member is
obligated to contribute to the capital of the Company, (y) such Member's share
of the Company Minimum Gain determined pursuant to Regulations Section
1.704-2(g), and (z) such Member's share of Member Nonrecourse Debt Minimum Gain
determined pursuant to Regulations Section 1.704-2(i)(5), all computed
immediately prior to the hypothetical sale described in Section 8.2.A(i) above.
B. Determination of Items Comprising Allocations.
(i) In the event that the Company has Net Income for a Fiscal
Year,
(A) for any Member as to whom the allocation pursuant to Section
8.2.A hereof would reduce its Capital Account, such allocation shall be
comprised of a proportionate share of each of the Company's items of expense or
loss entering into the computation of Net Income for such Fiscal Year; and
(B) the allocation pursuant to Section 8.2.A hereof in respect
of each Member (other than a Member referred to in Section 8.2.B(i)(A) hereof)
shall be comprised of a proportionate share of each Company item of income,
gain, expense and loss entering into the computation of Net Income for such
Fiscal Year (other than the portion of each Company item of expense and loss, if
any, that is allocated pursuant to Section 8.2.B(i)(A) hereof).
(ii) In the event that the Company has a Net Loss for a Fiscal
Year,
(A) for any Member as to whom the allocation pursuant to Section
8.2.A hereof would increase its Capital Account, such allocation shall be
comprised of a proportionate share of the Company's items of income and gain
entering into the computation of Net Loss for such Fiscal Year; and
(B) the allocation pursuant to Section 8.2.A hereof in respect
of each Member (other than a Member referred to in Section 8.2.B(ii)(A) hereof)
shall be comprised of a proportionate share of each Company item of income,
gain, expense and loss entering into the computation of Net Loss for such Fiscal
Year (other than the portion of each Company item of income and gain, if any,
that is allocated pursuant to Section 8.2.B(ii)(A) hereof).
(iii) If the allocation of Net Loss to a Member as provided in
this Section 8.2 would create or increase an Adjusted Capital Account Deficit,
there shall be allocated to such Member only that amount of Net Loss as will not
create or increase an Adjusted Capital Account Deficit. The Net Loss that would,
absent the application of the preceding sentence, otherwise be allocated to such
Member shall be allocated to the other Members in accordance with their relative
Percentage Interests, subject to the limitations of Section 8.3 hereof.
51
SECTION 8.3 ADDITIONAL ALLOCATION PROVISIONS.
A. Regulatory Allocations. Notwithstanding the foregoing provisions
of this Article VIII, the following special allocations shall be made in the
following order of priority:
(i) If there is a net decrease in Company Minimum Gain during a
Fiscal Year, then each Member shall be allocated items of Company income and
gain for such taxable year (and, if necessary, for subsequent years) in an
amount equal to such Member's share of the net decrease in Company Minimum Gain,
determined in accordance with Regulations Section 1.704-2(g)(2). This Section
8.3.A(i) is intended to comply with the minimum gain chargeback requirement of
Regulations Section 1.704-2(f) and shall be interpreted consistently therewith.
(ii) If there is a net decrease in Member Minimum Gain
attributable to a Member Nonrecourse Debt during any Company taxable year, each
Member who has a share of the Member Minimum Gain attributable to such Member
Nonrecourse Debt, determined in accordance with Regulations Section
1.704-2(i)(5), shall be specially allocated items of Company income and gain for
such taxable year (and, if necessary, subsequent years) in an amount equal to
such Member's share of the net decrease in Member Minimum Gain attributable to
such Member Nonrecourse Debt, determined in a manner consistent with the
provisions of Regulations Section 1.704-2(g)(2). This Section 8.3.A(ii) is
intended to comply with the partner nonrecourse debt minimum gain chargeback
requirement of Regulations Section 1.704-2(i)(4) and shall be interpreted
consistently therewith.
(iii) If any Member unexpectedly receives an adjustment,
allocation, or distribution of the type contemplated by Regulations Section
1.704-1(b)(2)(ii)(d)(4), (5) or (6), items of income and gain shall be allocated
to all such Members (in proportion to the amounts of their respective Adjusted
Capital Account Deficits) in an amount and manner sufficient to eliminate the
Adjusted Capital Account Deficit of such Member as quickly as possible. It is
intended that this Section 8.3.A(iii) qualify and be construed as a "qualified
income offset" within the meaning of Regulations Section 1.704-l(b)(2)(ii)(d).
(iv) To the extent that an adjustment to the adjusted tax basis
of any Company Assets pursuant to Code Section 734(b) or Code Section 743(b) is
required, pursuant to Regulations Section 1.704-1(b)(2)(iv)(m)(2) or Regulations
Section 1.704-l(b)(2)(iv)(m)(4), to be taken into account in determining Capital
Accounts as the result of a distribution to a Member in complete liquidation of
its LLC Interest in the Company, the amount of such adjustment to the Capital
Accounts shall be treated as an item of gain (if the adjustment increases the
basis of the asset) or loss (if the adjustment decreases such basis), and such
gain or loss shall be specially allocated to the Members in accordance with
their interests in the Company in the event that Regulations Section
1.704-l(b)(2)(iv)(m)(2) applies, or to the Members to whom such distribution was
made in the event that Regulations Section 1.704-1(b)(2)(iv)(m)(4) applies.
52
(v) The Nonrecourse Deductions for each taxable year of the
Company shall be allocated to the Members in proportion to their Percentage
Interests.
(vi) The Member Nonrecourse Deductions shall be allocated each
year to the Member that bears the economic risk of loss (within the meaning of
Regulations Section 1.752-2) for the Member Nonrecourse Debt to which such
Member Nonrecourse Deductions are attributable.
(vii) The allocations set forth in Sections 8.3.A(i) through
(vii) hereof (the "Regulatory Allocations") are intended to comply with certain
requirements of Regulations Sections 1.704-1(b) and 1.704-2(i). Notwithstanding
the provisions of Section 8.2 hereof, the Regulatory Allocations shall be taken
into account in allocating other items of income, gain, loss and deduction among
the Members so that, to the extent possible, the net amount of such allocations
of other items and the Regulatory Allocations to each Member shall be equal to
the net amount that would have been allocated to each such Member if the
Regulatory Allocations had not occurred.
B. Tax Allocations.
(i) Except as provided in Section 8.3.B(ii) hereof, for income
tax purposes under the Code and the Regulations each Company item of income,
gain, loss and deduction shall be allocated between the Members as its
correlative item of "book" income, gain, loss or deduction is allocated pursuant
to this Article VIII.
(ii) Tax items with respect to Company Assets that are
contributed to the Company with a Carrying Value that varies from its basis in
the hands of the Member making the Capital Contribution (the "Contributing
Member") immediately preceding the date of contribution shall be allocated
between the Members for income tax purposes pursuant to Regulations promulgated
under Code Section 704(c) so as to take into account such variation. The Company
shall account for such variation under any method approved under Code Section
704(c) and the applicable Regulations as chosen by the Tax Matters Partner. If
the Carrying Value of any Company Asset is adjusted pursuant to subsection (b)
or subsection (c) of the definition of Carrying Value, subsequent allocations of
income, gain, loss and deduction with respect to such Company Asset shall take
account of any variation between the adjusted basis of such Company Asset for
federal income tax purposes and its Carrying Value in the same manner as under
Code Section 704(c) and the Regulations promulgated thereunder under any method
approved under Code Section 704(c) and the applicable Regulations as chosen by
the Tax Matters Partner. Allocations pursuant to this Section 8.3.B(ii) are
solely for purposes of federal, state and local taxes and shall not affect, or
in any way be taken into account in computing, any Member's Capital Account or
share of Net Income, Net Losses and any other items or distributions pursuant to
any provision of this Agreement.
53
C. Other Provisions.
(i) For any Fiscal Year during which any part of an LLC Interest
or Economic Interest is transferred between the Members or to another Person,
the portion of the Net Income, Net Losses and other items of income, gain, loss,
deduction and credit that are allocable with respect to such part of an LLC
Interest or Economic Interest shall be apportioned between the transferor and
the transferee under any method allowed pursuant to Section 706 of the Code and
the applicable Regulations as determined by the Executive Committee.
(ii) In the event that the Code or any Regulations require
allocations of items of income, gain, loss, deduction or credit different from
those set forth in this Article VIII, the Tax Matters Partner is hereby
authorized to make new allocations in reliance on the Code and such Regulations,
and no such new allocation shall give rise to any claim or cause of action by
any Member.
(iii) For purposes of determining a Member's proportional share
of the Company's "excess nonrecourse liabilities" within the meaning of
Regulations Section 1.752-3(a)(3), each Member's interest in Net Income shall be
such Member's Percentage Interest.
(iv) In the event that any adjustment of income, gain, loss or
deduction under Section 482 of the Code (or other analogous Code provision or
provision of state or local law) is required in respect of any actual or deemed
transaction between a Member or an Affiliate of a Member and the Company, or if
any transaction is recharacterized as a Company item, any correlative adjustment
shall be specially allocated to the Member (or its Affiliate) which entered into
the transaction to which such adjustment relates and the Capital Account of such
Member shall be adjusted for all related deemed contributions and distributions.
SECTION 8.4 MEMBERS' TAX REPORTING. The Members acknowledge and are
aware of the income tax consequences of the allocations made by this Article
VIII and hereby agree to be bound by the provisions of this Article VIII in
reporting their shares of Company income, gain, loss and deductions for federal,
state and local income tax purposes, and each Member agrees not to take a
position in preparing a tax return that requires it to file a notice of
inconsistent treatment under Code Section 6222(b) taking a position for federal
income tax purposes as to treatment of a partnership item (within the meaning of
Code Section 623l(a)(3)) that is inconsistent with the treatment of that item by
the Company.
ARTICLE 9
BOOKS AND RECORDS
-----------------
SECTION 9.1 FISCAL YEAR. The Company's annual accounting period (the
"Fiscal Year") shall be the calendar year, unless otherwise approved by the
Executive Committee or otherwise required by the Code.
54
SECTION 9.2 BOOKS AND RECORDS. All books of account and all other
records of the Company (including an executed counterpart of this Agreement and
all amendments hereto) will at all times be kept at the Company's principal
office.
SECTION 9.3 INSPECTION. Any Member and its representatives may, upon
reasonable notice and during regular business hours, make a reasonable
inspection of the books and records of the Company, and each Member and its
auditors may, during regular business hours, and upon reasonable notice, conduct
a reasonable audit of such books and records at its own expense. Whenever any
such audit is conducted by any Member and its auditors, such Member shall advise
the other Members and permit the other Members and their auditors to be present
during such audit. In addition, each of the ▇▇▇▇▇▇ Member and the ▇▇▇▇▇▇▇ Member
shall be entitled to have access to all documents, books, records (including tax
records), agreements and financial data of any sort relating to any Roll-Up
Company or Tier II Local Operating Company in respect of which the Company shall
have exercised its Tier II LOC Option under the Master Contribution Agreement,
upon reasonable notice and for any reasonable business purpose after delivery to
the Company of a confidentiality agreement in customary form that shall be
reasonably satisfactory to the Company.
SECTION 9.4 ACCOUNTING. Except as may be otherwise agreed to by the
Executive Committee, the Company will maintain books and records as necessary to
prepare, and will prepare, financial statements on the accrual method of
accounting. Appropriate records will be kept so that upon each closing of the
Company books it is possible to determine, among other items defined in this
Agreement, (i) the amount of each Member's Capital Contributions; (ii) the
amount of cash or the Carrying Value of other property distributed to each
Member; (iii) the effect of all Company items of income, gain, loss, deduction
or credit on each Member's Capital Account; and (iv) all pertinent expenses and
cash disbursement accounts.
SECTION 9.5 STATEMENTS AND REPORTS. Except as may be otherwise agreed
by all Members, within 90 days after the close of each Fiscal Year, the Company
will cause to be prepared and will have furnished to each of the Members, with
respect to such period, (i) a profit and loss statement, (ii) a statement of
cash flows, (iii) a Company balance sheet as of the close of such period, and
(iv) such other statements showing in reasonable detail each Member's interest
in each of the items described in Section 9.4 hereof. Unless the Executive
Committee shall otherwise determine, the foregoing statements will be prepared
in accordance with United States generally accepted accounting principles,
consistently applied, and audited by a certified public accounting firm of
national reputation that shall be designated by the Executive Committee, and the
cost of preparing the statements and of each such audit will be paid by the
Company. In addition, unaudited monthly financial reports and updates with
respect to the Company's business (including current and projected budgets and
management reports) shall be prepared and furnished to each Member not later
than 15 days following the close of each month.
55
SECTION 9.6 TAX RETURNS. Except upon either a conversion of the
Company into a Corporation or an election to be treated as a corporation for
purposes of United States federal, state and local income taxes and other taxes,
each pursuant to Section 5.8 hereof, the Company shall be treated and shall file
its tax returns as a partnership for U.S. federal, state and municipal income
tax and other purposes. The Executive Committee shall prepare or cause to be
prepared, on an accrual basis, all federal, state and local partnership tax
returns required to be filed and shall file such returns as soon as practicable
following the close of the Fiscal Year of the Company, but in no event later
than the extended due date of such returns. The Company will provide an estimate
to the Members of all income, expense and other tax attributes no later than 90
days after the close of the Company's Fiscal Year. The Executive Committee shall
use its reasonable best efforts to furnish drafts of such returns to the Members
for their review and comment at least 30 days prior to filing such returns. No
action by the Members shall be necessary for the Company to file the forms
necessary to extend the time for the filing of the Company returns. Each Member,
or the Company, as the case may be, shall provide notice to the other Members
upon receipt of any notice of tax examination of the Company by federal, state
or local authorities.
SECTION 9.7 TAX MATTERS PARTNER.
A. Tax Matters Partner. The ▇▇▇▇▇▇ Member shall be the "Tax Matters
Partner" of the Company for federal income tax purposes under Code Section 6231
and in such capacity shall represent the Company in any disputes, controversies
or proceedings with the Internal Revenue Service. Expenses of such disputes,
controversies or proceedings undertaken by the Tax Matters Partner shall be
borne by the Company. The Tax Matters Partner may make all elections for federal
income and all other tax purposes, including, without limitation, elections
pursuant to Section 754 of the Code. The Tax Matters Partner shall make an
election under Section 754 of the Code upon the request of a permitted assignee
of an LLC Interest. Only the Tax Matters Partner may file with the Internal
Revenue Service, pursuant to Section 6227 of the Code, a request for
administrative adjustment of any Company tax items or file a petition under
Sections 6226, 6228 or any other sections of the Code with respect to any tax
matters involving the Company, but any such filing by the Tax Matters Partner
shall occur only upon prior approval of the Executive Committee. The Tax Matters
Partner shall comply with the requirements of Sections 6221 and 6233 of the
Code. No settlement of any tax issues involving the Company, however, shall be
made by any Member except upon the approval of the Executive Committee. Each
Member shall provide to the Tax Matters Partner such information as the Tax
Matters Partner deems necessary in connection with its activities as Tax Matters
Partner. The Tax Matters Partner shall use its reasonable best efforts to cause
each Member to become a notice partner entitled to receive direct communications
with respect to any tax dispute. The Tax Matters Partner shall receive no
compensation for its services. Subject to the provisions of any agreement
concerning tax indemnification entered into by the Members, all third party
costs and expenses incurred by the Tax Matters Partner in performing its duties
as such (including legal and accounting fees) shall be borne by the Company.
Nothing herein shall be construed to restrict the Company from engaging an
accounting or law firm to assist the Tax Matters Partner in discharging its
56
duties hereunder, so long as the compensation paid by the Company for such
services is reasonable. The provisions of this Section 9.7 shall survive the
termination or dissolution of the Company and shall remain binding on the
Members for such period of time as is necessary to resolve any and all matters
regarding United States income taxation of the Company.
B. Tax Matters Partners' Liability; Indemnification.
(i) General. The Tax Matters Partner and all Indemnified Agents
acting on its or the Company's behalf with respect to any tax or accounting
related matters pertaining to, or otherwise affecting, the Company ("Tax
Matters"), shall not be liable, responsible, or accountable, in damages or
otherwise, to the Company or any other Member(s) for doing any act or failing to
do any act with respect to Tax Matters, the effect of which may cause or result
in loss or damage to the Company or any Member(s). As used herein, "Indemnified
Agents" means any agent acting on behalf of the Tax Matters Partner or the
Company as described in the preceding sentence (other than a tax professional of
independent status) whom the Tax Matters Partner has determined should be
indemnified as set forth in this Article IX. Subject to the provisions of any
agreement concerning tax indemnification entered into by the Members, the Tax
Matters Partner and any such Indemnified Agent shall be indemnified by the
Company and the other Members (including the Tax Matters Partner in all cases as
to its pro rata share only) to the extent permitted by law against any liability
or loss as a result of any claim or legal proceeding by any Person (including by
or through the Company and any Member(s)) relating to the performance or
nonperformance of any act concerning the Tax Matters of the Company. The
indemnification authorized by this Section 9.7.B shall include any judgment,
award, settlement, the payment of reasonable attorneys' fees and other
reasonable expense (not limited to taxable costs) incurred in settling or
defending any claims, threatened action or finally adjudicated legal proceeding.
Notwithstanding the foregoing, the Tax Matters Partner and all agents acting on
its or the Company's behalf with respect to Tax Matters may be held liable for,
and shall not be entitled to indemnity with respect to, conduct by it which is
determined by a final non-appealable decision of a court of competent
jurisdiction to be willful misconduct or in bad faith. From time to time, as
requested by any Person (including the Tax Matters Partner) eligible for
indemnification hereunder, such attorney's fees and other expenses shall be
advanced by the Company (and, to the extent the Company Assets are insufficient,
or the Company is otherwise unavailable, to so advance the funds, by the
Members, including the Tax Matters Partner, pro rata in proportion to each
Member's Percentage Interest) prior to the final disposition of such claims,
actions or proceedings upon receipt by the Company of an undertaking by or on
behalf of such Person eligible to be indemnified to repay such amounts if it
shall be determined that such Person is not entitled to be indemnified as
authorized in this Section 9.7.B, provided, however, that, during the pendency
of any claim, action or proceeding, such Person shall not have to prove or
otherwise establish that the conduct upon which such claim, action or proceeding
is based does not constitute willful misconduct or bad faith in order to be
eligible for such advances.
57
(ii) Source of Indemnification. Subject to the provisions of any
agreement concerning tax indemnification entered into by the Members, the
indemnification of the Tax Matters Partner, and the Indemnified Agents, as
provided in subsection (i) above, shall be made first from the Company Assets or
otherwise at the expense of the Company, and, to the extent the Company Assets
are insufficient therefor, second, from the Members (including the Tax Matters
Partner in all cases as to its pro rata share only), pro rata in proportion to
their respective Percentage Interests in the Company. The Tax Matters Partner
shall use its reasonable best efforts to collect any indemnification due
pursuant to this Section 9.7.B from all Members owing such indemnification on a
pro rata basis (based on each Member's Percentage Interest, including the Tax
Matters Partner, at the time such indemnification is sought). If any Member
fails to make any indemnification payment due to the Tax Matters Partner (a
"Defaulting Member"), then the Tax Matters Partner shall have the right to seek
such indemnification from the other Members (including the Tax Matters Partner
in all cases as to its pro rata share only) pro rata in proportion to each
Member's Percentage Interest. If one or more Members fail to make an
indemnification payment to the Tax Matters Partner equal to its pro rata share
of any missed indemnification payment, then (i) such Member(s) shall also be
deemed a Defaulting Member, and (ii) the Tax Matters Partner shall again have
the right to seek such missed indemnification payment from the remaining Members
(including the Tax Matters Partner in all cases as to its pro rata share only)
pro rata in proportion to such Member's Percentage Interest. This process shall
continue until the Tax Matters Partner has received the entire indemnification
payment to which it is entitled. Upon any Member's payment of any portion of the
indemnification payment not made by one or more Defaulting Members, such Member
shall be subrogated to the Tax Matters Partner's right of recovery against the
Defaulting Member(s) to the extent of the payment made by such Member. In
addition to all other legal and equitable rights and remedies the Company, the
Tax Matters Partner and the non-Defaulting Members may have against the
Defaulting Member, the Company, the Tax Matters Partner and the non-Defaulting
Members shall have the right to offset any claims any of them may have against a
Defaulting Member for failure to make any payment due under this Section 9.7.B,
or any other provision of this Agreement requiring payment, against (or to
recover from) any payments otherwise due to such Defaulting Members or against
(or from) such Defaulting Member's LLC Interest.
(iii) Right to Withhold. The Company shall withhold and pay over
distributions or portions thereof, or in the case of withholding taxes based on
allocations of income, pay such taxes, if it determines that it is or may be
required to do so by any applicable rule, regulation, or law, and each Member
hereby authorizes the Company to withhold from and pay over or pay on behalf of
or with respect to such Member any amount of federal, state, local or foreign
taxes that the Company so determines it is, or may be, required to withhold or
pay with respect to any amount distributable or allocable to such Member
pursuant to this Agreement. In the event the Internal Revenue Service or other
applicable tax authority later determines that the amount required to be
withheld is more than the amount actually withheld, the Member(s) with respect
to whom such determination applies shall, upon not less than 15 days' notice,
pay the Company at least three business days sooner than the date the Company is
58
required to pay over such amount to the Internal Revenue Service or other
applicable tax authority such amount (including penalties and interest) as the
Internal Revenue Service or other applicable tax authority determines should
have been withheld. The Company and the Tax Matters Partner shall cooperate with
such Member to obtain a refund of any such amounts at the sole cost and expense
of such Member. Any amount paid on behalf of or with respect to a Member shall
constitute a loan by the Company to such Member, which loan shall be repaid by
such Member within fifteen (15) days after notice from the Company that such
payment must be made unless (i) the Company withholds the full amount of such
payment from a distribution which would otherwise be made to the Member or (ii)
the Company determines that the full amount of such payment will be satisfied
out of the available funds of the Company which would, but for such payment, be
distributed to the Member. Any amounts withheld pursuant to this Section 9.7.B
shall be treated as having been distributed to such Member. In the event that a
Member fails to pay any amounts owed to the Company pursuant to this Section
9.7.B when due, the Tax Matters Partner and all other non-Defaulting Members, on
a pro rata basis, may elect to make the payment to the Company on behalf of such
Defaulting Member, and in such event shall be deemed to have loaned such amount
to such Defaulting Member and shall succeed to all rights and remedies of the
Company as against such Defaulting Member (including, without limitation, the
right to receive distributions); or, at the election of each non-Defaulting
Member who has made any such payments, each as to its respective payment only,
the Company shall treat such deficiency payment as a Capital Contribution and
shall adjust each Member's Percentage Interest accordingly; or, at the election
of the Tax Matters Partner and all other non-Defaulting Members who have made
any such payments, each as to their respective payments only, each such Member
shall be deemed to have purchased a portion of the Defaulting Member's LLC
Interest at its fair market value (as of the date of such payment) to the extent
of their respective payments on behalf of the Defaulting Member. Any amounts
payable by a Member hereunder shall bear interest at the overnight London
Interbank Offered Rate as published in The Wall Street Journal from time to
time, plus 6 percentage points (but not higher than the maximum lawful rate)
from the date such amount is due (i.e., 15 days after demand) until such amount
is paid in full. Each Member shall take such actions as the Company shall
request in order to perfect or enforce the security interest created hereunder.
A Member's obligations hereunder shall survive the dissolution, liquidation, or
winding up of the Company. The Company shall furnish upon written request such
evidence of the withholding and payment of withholding taxes as such Member
shall reasonably request.
(iv) No Intended Third Party Benefits. The indemnification
contained in this Section 9.7.B is for the benefit of the Company, the Tax
Matters Partner, and all Indemnified Agents, and their respective assignees, and
shall not be deemed to create any right to indemnification, or any other rights
or benefits, for any other Person.
(v) Benefit to Other Members. In cases involving the exercise of
business judgment by the Tax Matters Partner, where the Tax Matters Partner
determines that any such business judgment will have no economic impact on it or
59
the Company, but will have an economic impact on another Member (the "Affected
Member"), then the Tax Matters Partner shall, upon the request of the Affected
Member, and except as to decisions involving withholding of distributions or
other decisions by the Tax Matters Partner set forth in Section 9.7.B(iii)
hereof (a "Withholding Matter Decision"), make the business judgment in the
manner reasonably requested by the Affected Member; provided (i) the Affected
Member agrees to fully indemnify the Tax Matters Partner, all other Members and
the Company from the consequences of such business judgment; (ii) each of the
Company and its tax counsel determines that the request of the Affected Member
is and the actions of the Company in complying therewith are reasonable under
the circumstances; and (iii) no other Member is adversely affected as a result.
Any Withholding Matter Decision made by the Company shall not be subject to
change upon the request of any Affected Member.
ARTICLE 10
ADDITIONAL AND SUBSTITUTE MEMBERS; ASSIGNEES; ETC.
--------------------------------------------------
SECTION 10.1 ADMISSION OF ADDITIONAL MEMBERS.
A. Additional Persons may receive interests in the Company directly
from the Company and may be admitted to the Company as Members ("Additional
Members"), only upon such terms and conditions as the Executive Committee
approves (which approval may be given or withheld, or made subject to such
conditions as are determined by the Executive Committee.) Without in any way
limiting the terms and conditions that may be applicable to such admission, such
terms and conditions (i) shall include the amount of Capital Contributions, if
any, to be made by such Additional Member; (ii) shall include the Percentage
Interest to be received by any such Additional Member and the effect thereof
upon the Percentage Interests of all other Members; and (iii) may include the
offering of preemptive rights to the existing Members to make such Capital
Contributions in lieu of admitting such Additional Members.
B. Notwithstanding Section 10.1.A hereof, none of ▇▇▇▇▇▇, any
Affiliate of ▇▇▇▇▇▇ and any entity in which ▇▇▇▇▇▇ or any of its Affiliates has
any ownership interest may be admitted as an Additional Member, other than (i)
in connection with the conversion of convertible debt pursuant to and in
accordance with Section 4.7 and 4.9 hereof or (ii) with the prior written
approval of the ▇▇▇▇▇▇▇ Member.
SECTION 10.2 ADMISSION OF SUBSTITUTE MEMBERS. Notwithstanding
anything to the contrary contained in this Agreement, transferees receiving all
or any portion of any LLC Interest from any Person other than the ▇▇▇▇▇▇ Member
(or its successors or assigns) or the ▇▇▇▇▇▇▇ Member (or its successors or
assigns) shall be admitted to the Company as Substitute Members only if: (i) the
Executive Committee reasonably determines that the proposed Substitute Member is
not engaged in a Additional/Substitute Member Competing Business in the
Territory, and such Transfer would not be harmful to the Company; and (ii) such
admission has been approved in writing by the ▇▇▇▇▇▇ Member, which approval may
be given or withheld in the sole and absolute discretion of the ▇▇▇▇▇▇ Member.
Permitted Transferees receiving all or any portion of any LLC Interest from the
▇▇▇▇▇▇ Member (or its successors or assigns), or the ▇▇▇▇▇▇▇ Member (or its
60
successors and assigns) shall be admitted to the Company as Substitute Members
effective upon the transfer of any such LLC Interest in compliance with the
terms of this Agreement. No Person shall become a Substitute Member unless prior
thereto, such Person shall have delivered to the Company a counterpart signature
page to this Agreement.
SECTION 10.3 RIGHTS OF ASSIGNEES. Until such time, if any, as a
transferee of any Transfer permitted pursuant to Article VI is admitted to the
Company as a Substitute Member pursuant to Section 10.2 hereof: (i) such
transferee shall be an Assignee only, and only shall receive, to the extent
Transferred, the distributions and allocations of income, gain, loss, deduction,
credit, or similar item to which the Member which Transferred its Economic
Interest would be entitled, and (ii) such Assignee shall not be entitled or
enabled to exercise any other rights or powers of a Member, such other rights
remaining with the transferring Member. In such a case, the transferring Member
shall remain a Member even if it has transferred its entire Economic Interest in
the Company to one or more Assignees. In the event any Assignee desires to make
a further assignment of any Economic Interest in the Company, such Assignee
shall be subject to all of the provisions of this Agreement to the same extent
and in the same manner as any Member desiring to make such an assignment.
SECTION 10.4 WITHDRAWAL OF A MEMBER. If a Member has Transferred
(other than by hypothecation) all of its LLC Interest to one or more Assignees
in accordance with the terms of this Agreement, then such Member shall withdraw
from the Company if and when all such Assignees have been admitted as Substitute
Members in accordance with this Agreement. Except as set forth in the
immediately preceding sentence, no Member shall be entitled to retire or
withdraw from being a Member of the Company without the written consent of the
Executive Committee which consent may be given or withheld in the Executive
Committee's sole and absolute discretion. Any purported admission, withdrawal or
removal which is not in accordance with this Agreement shall be null and void ab
initio. If any Member attempts to withdraw from the Company (other than as
specifically allowed by the provisions hereof) without the consent of the
Executive Committee, then, notwithstanding the preceding sentence, the Executive
Committee may permit such withdrawal (without waiving, in any manner, any other
rights available to it or the Company at law or in equity and in addition to,
and not in lieu of, any other remedies to which it or the Company may be
entitled); provided, however, that such withdrawing Member shall not be entitled
to any termination payment or any other compensation, or returns of capital,
whatsoever in consideration for its terminated LLC Interest.
ARTICLE 11
DISSOLUTION AND LIQUIDATION
---------------------------
SECTION 11.1 DISSOLUTION. The Company shall dissolve, and its affairs
shall be wound up pursuant to Section 11.2 hereof, upon the first to occur of
any of the following events (each an "Event of Termination"):
61
A. an election to dissolve the Company made by Members holding a
majority of the Percentage Interests if a determination has been made by the
Executive Committee, acting reasonably, that a fundamental adverse change has
occurred in the Business and that such change makes it unreasonable for the
Company to continue in the Business (the "Dissolution Election");
B. entry of a decree of judicial dissolution of the Company pursuant
to the provisions of the Act; or
C. any sale or other disposition of all or substantially all of the
assets of the Company or a related series of transactions that, taken together,
result in the sale or other disposition of all or substantially all of the
assets of the Company;
Neither the admission of any Member to this Company nor the withdrawal of any
Member, whether in accordance with this Agreement or not, shall cause the
dissolution of the Company. The dissolution of this Company by any action not
specifically set forth above, shall be a dissolution in contravention of this
Agreement.
SECTION 11.2 WINDING UP.
A. Upon the occurrence of an Event of Termination, the Company shall
continue solely for the purposes of winding up its affairs in an orderly manner,
liquidating its assets, and satisfying the claims of its creditors and Members.
No Member shall take any action that is inconsistent with, or not necessary to
or appropriate for, the winding up of the Company's business and affairs. The
Executive Committee shall be responsible for overseeing the winding up and
dissolution of the Company and shall take full account of the Company Assets and
the Company's liabilities and the Company Assets shall be liquidated as promptly
as is consistent with obtaining the fair value thereof, and subject to Sections
6.5 and 6.6 hereof, the proceeds therefrom shall be applied and distributed in
the following order, ratably within each enumerated class:
(i) First, to the payment and discharge of or provision for all
of the Company's debts and liabilities to creditors including, without
limitation, Members, in respect of Member Loans; and
(ii) The balance, if any, to the Members in accordance with
their Percentage Interests, either in cash or in kind, as determined by the
Executive Committee, with any assets distributed in kind to be valued for this
purpose at their fair market value as determined pursuant to Section 11.2.C
hereof.
If any Company Assets are to be distributed in kind, such assets shall be deemed
to have been sold as of the date of dissolution for their fair market value, and
the Capital Accounts of the Members shall be adjusted pursuant to the provisions
of Section 4.6.B hereof to reflect such deemed sale.
62
B. Notwithstanding Section 11.2.A hereof, in the event that the
Executive Committee determines that an immediate sale of all or any portion of
the Company Assets would cause undue loss to the Members, the Executive
Committee, in order to avoid such loss, may, after giving notice to all of the
Members, to the extent not then prohibited by the Act, either defer liquidation
of and withhold from distribution for a reasonable time any Company Assets
except those necessary to satisfy the Company's debts and obligations, or
distribute the assets to the Members in kind.
C. If any Company Assets are to be distributed in kind, such assets
shall be distributed on the basis of the Fair Market Value thereof, and any
Member entitled to any interest in such assets shall receive an interest therein
as a tenant-in-common with all other Members so entitled.
SECTION 11.3 EFFECT OF DISSOLUTION. The dissolution of the Company
shall be effective on the day on which the Event of Termination occurs giving
rise to the dissolution, but the Company shall not terminate until this
Agreement has been cancelled and the Company Assets shall have been distributed
as provided in Section 11.2, 6.5 or 6.6 hereof. Notwithstanding the dissolution
of the Company, prior to the termination of the Company, the business of the
Company and the affairs of the Members, as such, shall continue to be governed
by this Agreement.
SECTION 11.4 NO CAPITAL CONTRIBUTION UPON DISSOLUTION. Except as
otherwise provided pursuant to Sections 6.5 and 6.6 hereof, each Member shall
look solely to the Company Assets for all distributions with respect to the
Company, its Capital Contribution thereto, its Capital Account and its share of
Net Income or Net Losses, and shall have no recourse therefor (upon dissolution
or otherwise) against any other Member.
SECTION 11.5 NOTICE OF DISSOLUTION. If an Event of Termination
occurs, the Executive Committee shall cause the Company, within 30 days
thereafter, to provide written notice thereof to each of the Members and to all
other parties with whom the Company regularly conducts business (as determined
in the discretion of the Executive Committee) and shall publish notice thereof
in a newspaper of general circulation in each place in which the Company
regularly conducts business (as determined in the discretion of the Executive
Committee).
SECTION 11.6 REASONABLE TIME FOR WINDING-UP. A reasonable time shall
be allowed for the orderly winding-up of the business and affairs of the Company
and the liquidation of its assets pursuant to Section 11.2 hereof, in order to
minimize any losses otherwise attendant upon such winding-up, and the provisions
of this Agreement shall remain in effect between the Members during the period
of liquidation.
SECTION 11.7 SPECIAL PURCHASE RIGHT.
A. If a Dissolution Election is made by the Company under Section
11.1.A hereof, then, prior to any Company Assets being sold to Third Parties by
the Company as part of such dissolution, the Members who voted against the
Dissolution Election, and who wish to do so (the "Purchasing Members"), shall
have the option, exercisable by giving, no later than ten (10) days after the
notice required by Section 11.1 hereof, a notice in writing to the Company and
63
each other Member ("Special Purchase Right Notice"), to purchase all of the
Company Assets and/or the non-Purchasing Members' LLC Interests at their Fair
Market Value, provided, however, that all conditions to the option exercise are
met (the "Option Exercise Conditions").
B. The Option Exercise Conditions shall be as follows:
(i) The Purchasing Member(s) shall have voted against the
Dissolution Election and shall collectively own 20% or more of all the
Percentage Interests;
(ii) the purchase price shall be paid in cash and, concurrently
with such purchase, all debts incurred by the Company to the Members voting for
the Dissolution Election shall be paid in full; and
(iii) the purchase shall be completed within 15 calendar days
after the Fair Market Value has been determined as set forth in Section 6.8.A
hereof, or 75 days from the date of the Dissolution Election, whichever is
later.
ARTICLE 12
INDEMNIFICATION; LIABILITY
--------------------------
SECTION 12.1 CLAIMS. Each Member hereby indemnifies and holds
harmless the Company and each other Member from and against all claims, loss,
damage, demands, liabilities, obligations or rights of actions which may arise
as a result of breach of this Agreement or anything done or omitted to be done
through the negligence or willful misconduct of such indemnifying Member or by
its agents, employees or other representatives
SECTION 12.2 CONDITIONS. Payment or performance shall not be a
condition to the right to seek indemnity under Section 12.1 hereof, provided
that (i) the Company or the indemnified Member, as the case may be, shall
promptly notify the indemnifying Member of the existence of any claims, loss,
damage, demands, liabilities, obligations or rights of action for which the
Company or such Member seeks indemnity, (ii) such indemnifying Member shall,
provided it can demonstrate to the Executive Committee's reasonable satisfaction
that it is financially capable of providing, if required to do so, the amount of
the indemnification, be given the opportunity to defend, at its expense, any
claim for which such indemnifying Member is alleged to be responsible, (iii) the
Company and all Members shall cooperate in the defense of any such claim (except
any Member who is making such claim), and (iv) neither the Company nor the
indemnified Member shall settle any such claim without the consent of the
indemnifying Member (which consent shall not be unreasonably withheld).
SECTION 12.3 LIMITATION OF LIABILITY. In the event of a breach of
this Agreement, the non-breaching party shall be entitled to recover the damages
proximately caused by the breach ("Direct Damages"), but not incidental or
consequential damages, regardless of the foreseeability thereof. Incidental and
consequential damages, as used herein, means those damages which are not Direct
Damages, which includes those damages having only a remote and indirect
connection to the breach.
64
SECTION 12.4 LIABILITY OF MEMBERS. Except as otherwise required by
any non-waivable provision of the Act (or other applicable law) or as otherwise
expressly provided for herein: (a) no Member shall be personally liable in any
manner whatsoever for any debt, liability or other obligation of the Company,
whether such debt, liability or other obligation arises in contract, tort, or
otherwise; and (b) no Member shall in any event have any liability whatsoever in
its capacity as a Member of the Company in excess of (i) the amount of its
Capital Contributions, (ii) its share of any assets and undistributed profits of
the Company, and (iii) the amount of any wrongful distribution to such Member,
if, and only to the extent, such Member has actual knowledge (at the time of the
distribution) that such distribution was made in violation of Section 18-607 of
the Act.
ARTICLE 13
MISCELLANEOUS
-------------
SECTION 13.1 CONSUMMATION OF A LIQUIDITY EVENT. Upon the completion
of (i) the consummation of a Liquidity Event other than a Failed Funding
Liquidity Event and (ii) the fulfillment by each of the Parties of all of its
then applicable obligations under this Agreement in connection with the
consummation of such Liquidity Event, the following provisions shall no longer
be of any force or effect: Sections 4.7.B-4.7.F, 5.1B(ii), (iii) and (iv), 6.4,
6.5, 6.6, 6.7 and 6.3E. Notwithstanding the foregoing, Section 6.7 hereof shall
not terminate upon the consummation of a Liquidity Event that is a Qualifying
IPO consummated after the occurrence of a Sky Deal. Upon the completion of (i) a
Failed Funding Liquidity Event and (ii) the fulfillment by each of the Parties
of all of its then applicable obligations under this Agreement in connection
with the consummation of such Liquidity Event, the following provisions shall no
longer be of any force or effect: Sections 4.7.B-4.7.F, 5.1.B(ii), (iii) and
(iv), 6.4, 6.5, 6.6 and 6.7.A. For the avoidance of doubt, the provisions of
Section 6.7 hereof (other than Section 6.7.A hereof) shall, if applicable at the
time of a Failed Funding Liquidity Event, survive the consummation of such
Failed Funding Liquidity Event and ▇▇▇▇▇▇▇ shall have the right to exchange all
consideration received by ▇▇▇▇▇▇▇ and its Affiliates in connection with such
Failed Funding Liquidity Event pursuant to Section 6.6.A or 6.6.B hereof, as
applicable, with ▇▇▇▇▇▇ for the amount that would have been payable upon the
exercise of the Sky Put Right pursuant to Section 6.7.B hereof, upon delivery by
▇▇▇▇▇▇▇ to ▇▇▇▇▇▇ of written notice of the exercise of such right at any time
within two years after consummation of the Failed Funding Liquidity Event.
SECTION 13.2 WAIVER OF PARTITION. Except as may be otherwise provided
in law in connection with the winding-up, liquidation and dissolution of the
Company, no Member shall have the right while this Agreement remains in effect
to have any property of the Company partitioned or to file a complaint or
institute any proceedings at law or in equity for partition of any of the
property of the Company, and each Member hereby irrevocably waives any and all
such rights.
65
SECTION 13.3 FURTHER ASSURANCES. Each party covenants that at any
time, and from time to time, after the date hereof, it will execute such
additional instruments and take such actions as may be reasonably requested by
the other parties to confirm or perfect or otherwise carry out the intent and
purposes of this Agreement.
SECTION 13.4 SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto, and their respective
successors and permitted assigns; provided, however, that neither this Agreement
nor any rights or obligations hereunder may be transferred or assigned by the
Company (except by operation of law), ▇▇▇▇▇▇ or any Member, except that any
Member may transfer and assign its rights and obligations hereunder to a Person
who assumes the obligations of the Member hereunder with respect to the LLC
Interest so transferred in accordance with, and who otherwise fulfills, the
requirements of Article VI and Article X hereof.
SECTION 13.5 WAIVERS. Any failure on the part of any party hereto to
comply with any of its obligations, agreements or conditions hereunder may be
waived by any other party to whom such compliance is owed. No failure or delay
by any party in exercising any right, power or privilege hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise thereof preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege. The rights and remedies herein provided shall be cumulative and
not exclusive of any rights or remedies provided by law.
SECTION 13.6 AMENDMENTS. This Agreement may not be amended, modified
or supplemented (other than to reflect the admission, substitution, termination
or withdrawal of Members pursuant to Article X, or to reflect changes in
Members' Percentage Interests as set forth on Annex A hereto) other than by a
written instrument signed by the ▇▇▇▇▇▇ Member and the ▇▇▇▇▇▇▇ Member.
SECTION 13.7 NOTICES. All notices or other communications required or
permitted by this Agreement shall be in writing and shall be deemed to have been
duly given upon receipt if delivered in person, by facsimile transmission, by
Federal Express or other reputable overnight courier, or mailed by certified or
registered mail, return receipt requested, postage pre-paid, and addressed as
follows:
If to the Company: DIRECTV Latin America, LLC
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to the ▇▇▇▇▇▇ Member: DIRECTV Latin America Holdings, Inc.
c/o DIRECTV International, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: General Counsel
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
66
with a copy (which shall not constitute
notice) to:
Weil, Gotshal & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to ▇▇▇▇▇▇▇ Member : ▇▇▇▇▇▇▇ Investments LLC
CIBC Bank and Trust Company (Cayman) Limited
▇.▇. ▇▇▇ ▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
British West Indies
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Manager Offshore Bank
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (which shall not constitute
notice) to:
Finser Corp.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: General Counsel
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
and
Bessemer Holdings, L.P.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
and
Milbank Tweed Hadley & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. Spring, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
67
and
Cravath, Swaine & ▇▇▇▇▇ LLP
Worldwide Plaza
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
SECTION 13.8 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD
TO PRINCIPLES OF CONFLICT OF LAWS.
SECTION 13.9 CERTAIN RULES OF CONSTRUCTION. Any ambiguities shall be
resolved without reference to which party may have drafted this Agreement. All
Article or Section titles or captions contained in this Agreement are for
convenience only, and they shall not be deemed part of this Agreement and in no
way define, limit, extend or describe the scope or limit of any provisions
hereof. Unless the context otherwise requires: (i) a term has the meaning
assigned to it; (ii) an accounting term not otherwise defined has the meaning
assigned to it in United States generally accepted accounting principles; (iii)
"or" is not exclusive; (iv) words in the singular include the plural, and words
in the plural include the singular; (v) provisions apply to successive events
and transactions; (vi) "herein," "hereof" and other words of similar import
refer to this Agreement as a whole and not to any particular Article, Section or
other subdivision; (vii) all references to "Articles" or "Sections" refer to
Articles and Sections of this Agreement unless otherwise specifically indicated;
(viii) any pronoun used in this Agreement shall include the corresponding
masculine, feminine and neuter forms; (ix) any reference to any agreement shall
refer to such agreement as it may be amended from time to time; (x) the words
"including", "includes", "included" and "include" are deemed to be followed by
the words "without limitation" and (xi) references to entities herein include
their successors and permitted assigns.
SECTION 13.10 ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement and understanding of the parties with respect to the subject matter
hereof and supersedes all prior agreements (other than the Master Contribution
Agreement after giving effect to Section 13.21 hereof) and understandings of the
parties relating to the subject matter hereof.
SECTION 13.11 SEVERABILITY. Any term or provision of this Agreement
which is invalid or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or affecting the validity or enforceability of
any of the terms or provisions of this Agreement in any other jurisdictions, it
being intended that all rights and obligations of the parties hereunder shall be
enforceable to the fullest extent permitted by law.
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SECTION 13.12 COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall constitute an original and which together
shall constitute one and the same agreement.
SECTION 13.13 NO THIRD PARTY BENEFICIARIES. This Agreement shall not
confer any rights or remedies upon any person other than the parties hereto and
their respective successors and permitted assigns.
SECTION 13.14 ENGLISH LANGUAGE. This Agreement is in the English
language only, which language shall be controlling in all respects. No
translation of this Agreement into any other language will be of any force and
effect in the interpretation of this Agreement or in a determination of the
intent of the parties hereto.
SECTION 13.15 REQUIRED APPROVALS. If approval of this Agreement or
any of the transactions contemplated hereby shall be required by any
governmental agency or instrumentality or is considered to be necessary or
advisable by any of the parties hereto, all parties hereto shall use their
commercially reasonable efforts to obtain such approval. If any required
approval is not obtained or it becomes clear that such approval will not be
granted, the affected party shall immediately give the other parties hereto
notice and the parties hereto shall promptly meet and negotiate in good faith to
modify their respective obligations as necessary.
SECTION 13.16 DISPUTE RESOLUTION. The parties hereby agree to submit
any claim or dispute arising out, relating to or in connection with, this
Agreement, including any claim or dispute concerning the interpretation,
existence, validity, scope and/or termination of this Agreement, and any tort
claims, to private and confidential arbitration in accordance with the following
procedures (the "Dispute Resolution Procedures"). Decisions resulting from the
Dispute Resolution Procedures shall be final and binding on all parties to this
Agreement, and judgment thereon may be entered in any court having jurisdiction.
The Dispute Resolution Procedures are intended to be the exclusive method of
resolving disputes arising out of this Agreement, including any claim for breach
of this Agreement.
A. If a dispute, controversy or claim arises out of or relates to
this Agreement, or the breach hereof or thereof, and such dispute, controversy
or claim cannot be resolved promptly to the mutual satisfaction of the parties
involved, then any party involved may submit such dispute, controversy or claim
to the top executive officer of each party so involved, who shall attempt in
good faith to resolve such issues.
B. If all remaining issues are not resolved within fifteen (15)
Business Days after their submission to such Persons, then the parties shall
submit any remaining issues to non-binding mediation, to be conducted in Miami,
Florida. The parties will select one mediator from an internationally recognized
accounting firm that does not perform services for any party involved within ten
(10) Business Days after the failure of such Persons to resolve such issues. If
the parties cannot agree on a mediator, one will be selected promptly and
jointly by the parties to such dispute, from their respective list of neutral
mediators.
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C. Any dispute, controversy or claim continuing between the parties
following non-binding mediation, shall be settled in Miami, Florida in
accordance with the Comprehensive Arbitration Rules and Procedures of JAMS
("JAMS") by three (3) arbitrators, unless the amount in question is less than
Three Million Dollars (US$3,000,000), in which case, there will be only one (1)
arbitrator. Where there is conflict between the JAMS rules and this clause, the
provisions of this clause shall govern. In the event that there is a procedural
rule or other matter not covered herein or in the JAMS rules, Delaware law shall
govern.
D. The arbitrator(s) will be chosen pursuant to Rule 15 of JAMS
rules. Each arbitrator shall be an attorney with at least ten (10) years of
experience in international commercial law, and shall have knowledge of the laws
of the State of Delaware.
E. All proceedings shall be conducted in English.
F. The award of arbitrator(s) may be, alternatively or cumulatively,
for monetary damages, an order requiring the performance of non-mandatory
obligations (including specific performance) or any other appropriate order or
remedy. The arbitrator(s) may issue interim awards and order any provisional
measures which should be taken to preserve the respective right of any party.
The parties may also seek appropriate injunctive relief, where necessary, in any
court of competent jurisdiction.
G. The parties acknowledge and agree that no party shall be
responsible for, and each party hereby waives any right that it may have at any
time to claim, any consequential, special or punitive damages in connection with
this Agreement or any breach or purported breach thereof.
H. Any monetary award rendered by the arbitrator(s) shall be stated
and payable in U.S. dollars and shall be in writing, setting forth the reasons
for the award, and shall be the final disposition on the merits. Judgment upon
the award rendered may be in any court having jurisdiction, or application may
be made to any such court for a judicial acceptance of the award and an order of
enforcement, as the case may be. Any and all service of process and any other
notice in such arbitration, action, suit or proceeding shall be effective
against any party if given personally or by registered or certified mail, return
receipt requested, or by any other means of mail that requires a signed receipt,
postage prepaid, mailed to such party as herein provided, or by personal service
on an agent designated in writing by such party with a copy of such process
mailed to such party by first class mail or registered or certified mail, return
receipt requested, postage prepaid. Nothing herein contained shall be deemed to
affect the right of any party to serve process in any manner permitted by law.
I. The arbitrator(s) shall award to the prevailing party on any
claim, as determined by the arbitrator(s), all of its reasonable expenses
relating to that claim, including all fees of the arbitrator(s), arbitration
fees, travel expenses, out-of-pocket expenses such as attorneys' fees and
disbursements relating to that claim. In addition, the prevailing party on a
claim shall be awarded interest on any damages incurred for breach or other
70
violation of this Agreement from the date of award until paid in full, at the
prevailing statutory rate of interest under the laws of the State of New York.
If there are multiple claims at issue, the parties shall submit a statement
allocating fees and expenses attributable to each claim. The arbitrator(s) shall
provide the same allocation as to the arbitrator(s)' time and fees. Any costs,
fees or taxes incident to enforcing an award shall, to the maximum extent
permitted by law, be charged against the party resisting such enforcement.
J. Any decision awarding, or relating to, a claim in excess of Three
Million Dollars (US$3,000,000) shall be subject to appeal (the "Appeal") by any
party. Appeals shall be submitted to an appeal panel (the "Appeal Panel") and
shall be governed by the JAMS Optional Arbitration Appeal Procedure.
K. The arbitration proceeding will be confidential and the
arbitrator(s) will issue appropriate protective orders to safeguard each party's
confidential information. Except as required by law, no party will disclose (or
instruct the arbitrator(s) to disclose) to any non-participants in the
arbitration of the fact, conduct or outcome of the arbitration without the prior
written consent of each other party. The existence of any dispute submitted to
arbitration will be kept in confidence by the parties, the arbitrator(s) and the
Appeal Panel, except as required in connection with enforcement of such award or
as otherwise required by applicable law. Any party that fails to observe the
confidentiality restrictions in this Agreement shall be subject to the
imposition of monetary sanctions by arbitrator(s).
SECTION 13.17 CONSENT TO JURISDICTION AND SERVICE OF PROCESS. Any
legal action, suit or proceeding arising out of or relating to any judgment or
award obtained pursuant to Section 13.16 hereof (an "Award") may be instituted
in any federal or state court of California, U.S.A., and each party agrees not
to assert, by way of motion, as a defense or otherwise, in any such action, suit
or proceeding, any claim that it is not subject personally to the jurisdiction
of such court, that the action, suit or proceeding is brought in an inconvenient
forum, that the venue of the action, suit or proceeding is improper or that this
Agreement or the subject matter hereof may not be enforced in or by such court.
Each party further irrevocably submits to the jurisdiction of such court in any
such action, suit or proceeding. Any and all service of process and any other
notice in any such action, suit or proceeding shall be effective against any
party if given personally or by registered or certified mail, return receipt
requested, or by any other means of mail that requires a signed receipt, postage
prepaid, mailed to such party as herein provided, or by personal service on an
agent designated in writing by such party with a copy of such process mailed to
such party by first class mail or registered or certified mail, return receipt
requested, postage prepaid. Nothing herein contained shall be deemed to affect
the right of any party to serve process in any manner permitted by law or to
commence legal proceedings or otherwise proceed against any other party in any
other jurisdiction to enforce an Award.
SECTION 13.18 CONFIDENTIALITY AND NONDISCLOSURE.
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A. No Member shall issue any press release or make any public
statement regarding the specific terms of this Agreement or specific events or
circumstances which may occur hereafter which is not truthful or not in
conformance with instructions from the Executive Committee, where the Executive
Committee has determined that such terms, events or circumstances require a
uniform response from the Members and has so notified the Members in writing.
B. The Company has developed and will in the future develop, and some
Members have developed and may in the future develop (such Members are
hereinafter individually and collectively referred to as the "Disclosing
Members"), original concepts and regulatory and business strategies related to
the Business, including technical, financial and business information and
models, names of potential partners, business plans, market projections,
specifications, data, models, reports, memoranda, work, work products and other
confidential and proprietary information (the "Confidential Information"). The
Confidential Information shall also include information developed by any other
Member (such other Members are hereinafter individually and collectively
referred to as the "Other Members") containing or based on the Confidential
Information created by the Company or any Disclosing Member.
C. The Confidential Information is non-public, confidential and
proprietary, and disclosure of the Confidential Information to third parties
would harm the Company or the Disclosing Members, or both, competitively. In
order to allow the Other Members to participate in the Company and to effectuate
the intent of this Agreement, the Company and the Disclosing Members have made
and may continue to make available to the Other Members certain Confidential
Information. Each of the Other Members therefore agrees to the following, and
agrees to cause its Representatives (as defined below) to abide by the
following:
(i) Without the prior written consent of the Company or the
Disclosing Members, depending on whose Confidential Information it is, it will
not disclose to any third party, other than to its officers, directors, agents,
employees and representatives, including financial and legal advisers, in each
case with a need to know (collectively, the "Representatives") any Confidential
Information and will cause its Representatives to not disclose to any third
party any Confidential Information.
(ii) It will use the Confidential Information only for the
limited purpose of effectuating the intent of this Agreement.
(iii) The confidentiality obligations of this Section 13.18
shall not, as to any Other Member, extend to any Confidential Information if it
can be established by written records that (A) such Other Member possessed such
information before it was provided by the Company and the Disclosing Members,
(B) such information is or becomes a matter of public knowledge without such
Other Member having breached its obligations under this Section 13.18, (C) such
Other Member independently developed such information, or (D) such Other Member
received such information from a third party who did not breach a duty of
confidentiality in disclosing it.
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(iv) Except with respect to Customer Lists as set forth in
Section 13.18.E hereof, all Confidential Information (including tangible copies
and computerized or electronic versions thereof) shall remain the property of
the Company and/or the Disclosing Members, as the case may be, depending on
which entity developed the Confidential Information. Within 10 days following
the receipt of a written request from the Disclosing Members, the Other Members
will deliver to the Disclosing Members all tangible materials containing or
embodying the Confidential Information of such Disclosing Member, together with
a certificate executed by the president or any vice president, or an analogous
representative, of such Other Member certifying that all such materials in the
Other Member's possession or control have been delivered to the Disclosing
Members or have been destroyed (a "Return Certificate"). Where the Confidential
Information of a Disclosing Member has been developed based upon the
Confidential Information of an Other Member or the Company, then each party
shall be entitled to claim as its Confidential Information only the information
that it developed. Upon any Member ceasing to be a Member (an "Ex-Member"), such
Ex-Member shall immediately return to the Company all tangible materials
containing or embodying all Confidential Information of the Company, together
with a Return Certificate, except as required for any tax or accounting
requirements.
(v) The Company shall enforce the terms of the Confidentiality
Agreements and any Confidential Information disclosed to the parties thereto
shall be subject to such Confidentiality Agreements.
D. Nothing contained in this Section 13.18 shall prohibit any
disclosure required by law or by any rules of any applicable securities exchange
or national market quotation system.
E. The Members acknowledge that the customer lists generated by the
Company or any Subsidiary of the Company (the "Customer Lists") shall constitute
a Company Asset. As a result, the Company shall be free to sell or otherwise
transfer its Customer Lists to Third Parties selected by it on such terms as it
may determine, provided that, except in the case of Complete Sale, a Sky Deal or
a liquidation of the Company or a dissolution of its business, it will not sell
or otherwise transfer a Customer List to a Third Party engaged in a Competing
Business and, if it makes a Customer List available to a Third Party it shall
use it commercially reasonable efforts to impose on such Third Party an
obligation not to use such Customer List in a Competing Business. The Company
shall have the right to make such Customer List available to any new operator it
has the authority to authorize to operate on such terms as it may determine.
F. With respect to any Affiliate of ▇▇▇▇▇▇ that is a Member, its
Representatives who receive Confidential Information may not include any
officer, director, agent, employee or other Representative of Sky, other than,
to the extent otherwise prohibited under this Section 13.18, TNCL.
SECTION 13.19 VOTING AGREEMENTS. No Member shall enter into any
proxy, voting trust or any other agreement (excluding the Master Contribution
Agreement) or arrangement requiring such Member to vote its LLC Interest as
directed by, or in conjunction with, any other Member or Third Party except as
73
contemplated by the Master Contribution Agreement (a "Voting Agreement"). The
Members hereby agree that any such Voting Agreement shall be invalid and
non-binding, and shall be deemed a material breach of such Member's obligations
under this Agreement. In the event any Member does enter into any Voting
Agreement, it shall immediately notify the Company, and the Company and all
other Members shall have the right to seek all remedies at law or in equity
against the Member that is a party to the Voting Agreement.
SECTION 13.20 LATE PAYMENTS; INTEREST. Any late payment made by (i)
the ▇▇▇▇▇▇ Member or any of its Affiliates to the ▇▇▇▇▇▇▇ Member or any of its
Affiliates or (ii) the ▇▇▇▇▇▇▇ Member or any of its Affiliates to the ▇▇▇▇▇▇
Member or any of its Affiliates under this Agreement shall bear interest at a
rate per annum equal to 10% (computed on the basis of a 365-day year and the
actual number of days elapsed). Any other amount under this Agreement which
bears interest and for which an interest rate is not otherwise specified shall
bear interest at a rate per annum equal to 10% (computed on the basis of a
365-day year and the actual number of days elapsed).
SECTION 13.21 EFFECT ON THE MASTER CONTRIBUTION AGREEMENT. ▇▇▇▇▇▇ and
the ▇▇▇▇▇▇▇ Member agree that Sections 4.7, 5.1.B, 5.1.C, 5.8, 6.3, 6.4, 6.5,
6.6, 6.7, 6.8 and 6.9 (and the related defined terms used in those sections)
shall supersede Sections 6.6, 6.7, 6.8, 6.9, 6.10, 6.11, 6.12, 6.13 and 9.10
(and the related defined terms used in those sections), of the Master
Contribution Agreement. Each of ▇▇▇▇▇▇ and the ▇▇▇▇▇▇▇ Member hereby agrees that
Sections 6.6, 6.7, 6.8, 6.9, 6.10, 6.11, 6.12, 6.13, 9.10 and 9.18 of the Master
Contribution Agreement shall henceforth have no force and effect. Except as
expressly provided in this Section 13.21, the Master Contribution Agreement
shall continue in full force and effect in accordance with the provisions
thereof; provided, however, that each reference to "Section 6.6(b)(ii)(C)" set
forth in Section 6.2 of the Master Contribution Agreement shall henceforth be
deemed to be a reference to Section 6.5B(ii)(c) of this Agreement. ▇▇▇▇▇▇ and
the ▇▇▇▇▇▇▇ Member acknowledge that Article II Transactions (as defined in the
Master Contribution Agreement) shall have occurred as of the Closing Date.
SECTION 13.22 SURVIVAL OF PROVISIONS. The provisions of Article VI
and this Article XIII shall survive any liquidation of the Company or
dissolution of its business except to the extent any such provision therein has
terminated pursuant to Section 13.1 hereof.
(signature page follows)
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IN WITNESS WHEREOF, the Members hereof and the Company and ▇▇▇▇▇▇
have caused this Agreement to be executed as of the date first above written.
DIRECTV LATIN AMERICA, LLC
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Sr. Vice President and General
Counsel
DIRECTV LATIN AMERICA HOLDINGS, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
▇▇▇▇▇▇ ELECTRONICS CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Attorney-in-Fact
▇▇▇▇▇▇▇ INVESTMENTS LLC
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Director
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇
Title: Authorized Signatory
S-1
ANNEX A
MEMBERS AND PERCENTAGE INTERESTS
----------------------------------------------------------------------
MEMBER PERCENTAGE INTEREST
------ -------------------
----------------------------------------------------------------------
DIRECTV LATIN AMERICA HOLDINGS, INC 85.888%
----------------------------------------------------------------------
----------------------------------------------------------------------
▇▇▇▇▇▇▇ INVESTMENTS LLC 14.112%
----------------------------------------------------------------------
A-1
ANNEX B
EXECUTIVE COMMITTEE MEMBERS
-------------------------------------------- -----------------------------------
Name Representative of
-------------------------------------------- -----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Member
-------------------------------------------- -----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Member
-------------------------------------------- -----------------------------------
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Member
-------------------------------------------- -----------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Member
-------------------------------------------- -----------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Member
-------------------------------------------- -----------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Member
-------------------------------------------- -----------------------------------
B-1