EXHIBIT 10.6

 

EXECUTION COPY

 

INNOVA HOLDINGS, S. DE R.L. DE C.V.

INNOVA, S. DE R.L. DE C.V.

Insurgentes Sur No. 694

Colonia Del Valle C.P.

03100 Mexico, D.F.

Mexico

 

October 8, 2004

Grupo Televisa, S.A.

Avenida Vasco de Quiroga 2000

Edificio A, Cuarto Piso

Colonia Santa Fe Zedec

01210 Mexico, D.F.

Attn: Juan S. Mijares Ortega, General Counsel

 

The News Corporation Limited

1211 Avenue of the Americas

New York, New York 10036

Attn: Arthur M. Siskind, Esq.

 

The DIRECTV Group, Inc.

200 North Sepulveda Boulevard

El Segundo, CA 90245

Attn: Larry Hunter, Esq.

 

                Re: Option Agreement

 

Gentlemen:

 

Reference is hereby made to the Option Agreement, dated as of the date hereof
(the “Option Agreement”), by and among Innova, S. de R.L. de C.V. (“Innova”),
Innova Holdings, S. de R.L. de C.V. and The News Corporation Limited (“News”).
Capitalized terms used in this letter agreement and not otherwise defined herein
shall have the meanings ascribed to them in the DTH Agreement, the Purchase
Agreement, the Option Agreement, the Post-Migration Payments Agreement or the
Social Part Holders Agreement.

 

The parties to this letter agreement hereby agree as follows:

 

1. Exercise or Termination of Options.

 

(a) The Optionee (as hereinafter defined) shall exercise the Options in full as
promptly as practicable after all of the conditions to the exercise of the
Options have been satisfied in accordance with the Option Agreement, unless the
Options are terminated pursuant to clauses (c)(i) or (c)(ii) below.

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(b) If a Regulatory Challenge (as hereinafter defined) is commenced, each of
Televisa and News shall use commercially reasonable efforts to contest
vigorously any court or governmental order that would have the effect of
preventing or materially inhibiting or delaying the exercise of the Options
and/or the issuance of equity interests thereunder, either alone or in
combination with other transactions contemplated by the agreements referred to
in this Agreement.

 

(c) If a Regulatory Challenge results in a final, nonappealable court or
governmental order that the grant or exercise of the Options and/or the issuance
of equity interests thereunder, either alone or in combination with other
transactions contemplated by the agreements referred to in this Agreement,
violates any law, statute, rule, or regulation or any order of any court,
governmental or regulatory body, then:

 

(i) the Options may be terminated at the election of the Optionee; provided,
however, that this right of termination shall not be available if News has not
fulfilled its obligations under clause (b) above;

 

(ii) the Options may be terminated at the election of Televisa; provided,
however, that this right of termination shall not be available (A) if Televisa
has not fulfilled its obligations under clause (b) above, or (B) if (1) Televisa
shall have received an opinion of counsel acceptable to Televisa to the effect
that none of Televisa, Innova, Innova Holdings, their Controlled Affiliates or
any of their respective officers, directors, employees or representatives may be
subject to any criminal prosecution or liability as a result of such Regulatory
Challenge, (2) such order would not result in any liability (other than monetary
liabilities) that would (x) have a material adverse effect on Innova, Innova
Holdings and their Controlled Affiliates, taken as a whole, or (y) in Televisa’s
judgment, have any adverse effect on Televisa or any of its Affiliates (other
than Innova, Innova Holdings and their Controlled Affiliates), including but not
limited to any requirement which (I) grants rights (including with respect to
Innova, Innova Holdings and their Controlled Affiliates) to any Person which
competes, or any of whose Affiliates compete, with Televisa or any of its
Affiliates or (II) restricts or imposes requirements on Televisa or any of its
Affiliates (other than Innova, Innova Holdings and their Controlled Affiliates),
(3) the Optionee shall have agreed to indemnify, defend and hold harmless
Televisa, Innova, Innova Holdings, their Controlled Affiliates and their
respective officers, directors, employees and representatives from and against
any and all Losses (including consequential damages) arising out of, resulting
from or relating to such Regulatory Challenge and (4) the shareholders of Innova
and Innova Holdings shall have agreed, through unanimous written resolutions,
that the percentage equity interest of Innova and Innova Holdings held by the
Optionee shall automatically be reduced by an amount corresponding to the
aggregate amount of such Losses (including consequential damages), if and to the
extent the Optionee fails for any reason to satisfy its indemnification
obligations under clause (3) above;

 

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(iii) If the Options are terminated pursuant to subparagraphs (i) or (ii) above,
then the Optionee shall be entitled to receive the payment provided for in
Section 1(e) of this letter agreement; and

 

(iv) If neither the Optionee nor Televisa elects to terminate the Options, then
the Optionee shall exercise the Options in full as promptly as practicable in
accordance with the Option Agreement.

 

(d) For purposes of this Agreement:

 

“Regulatory Challenge” means any claim or challenge that the grant or exercise
of the Options and/or the issuance of equity interests thereunder, either alone
or in combination with other transactions contemplated by the agreements
referred to in this Agreement, violates any law, statute, rule, or regulation or
any order of any court, governmental or regulatory body.

 

“Optionee” means News, for so long as it or one of its Controlled Affiliates
owns or exercises the Options, and means DIRECTV, from and after the Transfer of
the Options to the DIRECTV Transferee.

 

(e) If the Options expire, and no Option Equity shall have been issued or be
issuable thereunder, Novavision will within ten (10) days of the Expiration Date
pay to Galaxy Mexico, or at Galaxy Mexico’s direction, pay to News, an amount in
U.S. dollars equal to the excess, if any, of (A) U.S. $137,725,000 multiplied by
the Subscriber Fraction over (B) U.S. Dollar-equivalent of the aggregate
principal amount of Note A and Note B (calculated based on the 30-day average
exchange rate as of the date of payment). “Subscriber Fraction” shall mean the
lesser of (a) 1 and (b) a fraction, the numerator of which is equal to the
number of Good Subscribers as of the Measurement Date, and the denominator of
which is equal to 175,000. Any payment made by Novavisión pursuant to this
Section 3(e) shall be treated for purposes of value added taxes and all other
taxes imposed, levied or assessed by Mexico or any political subdivision or
taxing authority thereof or therein as part of the purchase price paid by
Novavisión to Galaxy Mexico for the Subscriber List transferred and sold by
Galaxy Mexico to Novavisión pursuant to the Purchase Agreement. In furtherance
of the foregoing, Novavisión shall pay to Galaxy Mexico in cash the
corresponding value added tax imposed by Mexico or any political subdivision or
taxing authority thereof or therein if and when Novavisión actually makes any
payment pursuant to this Section 3(e). Each of the parties hereto and each of
the parties to the DTH Agreement, the Purchase Agreement, the Option Agreement,
the Post-Migration Payments Agreement and the Social Part Holders Agreement
shall be responsible for its own income tax liabilities arising out of, relating
to or resulting from any payment made pursuant to this Section 3(e).

 

2. Indemnification.

 

(a) Losses Relating to Exercise of Options. The Optionee will indemnify, defend
and hold harmless Televisa, Innova, Innova Holdings, their Controlled Affiliates
and their respective officers, directors, employees, shareholders, partners,
members, agents and

 

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representatives (other than News, DIRECTV or their Controlled Affiliates) from
and against any and all Losses arising out of, resulting from or relating to any
claim or challenge that the grant or exercise of the Options and/or the issuance
of equity interests thereunder violates any law, statute, rule, or regulation or
any order of any court, governmental or regulatory body.

 

(b) Losses Relating to Transfer of Equity Interests. News and DIRECTV, jointly
and severally, will indemnify, defend and hold harmless Televisa, Innova, Innova
Holdings, their Controlled Affiliates and their respective officers, directors,
employees, shareholders, partners, members, agents and representatives (other
than News, DIRECTV or their Controlled Affiliates) from and against any and all
Losses arising out of, resulting from or relating to any claim or challenge that
the Transfer by News or its Controlled Affiliates to DIRECTV or its Controlled
Affiliates of any direct or indirect equity interest in Innova and/or Innova
Holdings (including the equity interests currently held by News and the equity
interests issuable upon exercise of the Options) violates any law, statute,
rule, regulation or any order of any court, governmental or regulatory body.

 

(c) No Consequential Damages. Solely for purposes of Sections 2(a) and (b) of
this Agreement, the term “Losses” shall not include consequential damages except
for consequential damages arising out of an order described in Section 1(c).

 

3. Miscellaneous. The parties hereto agree that this letter agreement
constitutes an Ancillary Agreement (as defined in that certain DTH Agreement,
dated the date hereof, by and among Televisa, News, Innova, DIRECTV and DTVLA
(the “DTH Agreement”)). The provisions set forth in Article V (Representations
and Warranties), Article VI (Indemnification) and Article VII (Miscellaneous) of
the DTH Agreement shall be applicable to this letter agreement, mutatis
mutandis, as if set forth, herein. Except as set forth in Sections 2(a) and
2(b), nothing expressed or implied herein is intended or will be construed to
confer upon or give any third party any rights or remedies by virtue hereof.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

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Kindly sign below to confirm your acknowledgement and acceptance of and
agreement to the terms set forth above.

 

Very truly yours, INNOVA S. de R.L. de C.V. By:  

/s/ Alexandre Moreira Penna da Silva

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Name:   Alexandre Moreira Penna da Silva Title:   Attorney-in-Fact By:  

/s/ Carlos Ferreiro Rivas

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Name:   Carlos Ferreiro Rivas Title:   Attorney-in-Fact INNOVA HOLDINGS, S. de
R.L. de C.V. By:  

/s/ Alexandre Moreira Penna da Silva

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Name:   Alexandre Moreira Penna da Silva Title:   Attorney-in-Fact By:  

/s/ Carlos Ferreiro Rivas

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Name:   Carlos Ferreiro Rivas Title:   Attorney-in-Fact

 

[Letter Agreement re: Option Agreement]

 

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Acknowledged, accepted and agreed to as of the date first written above: GRUPO
TELEVISA, S.A. By:  

/s/ Alfonso de Angoitia Noriega

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Name:   Alfonso de Angoitia Noriega Title:   Attorney-in-Fact By:  

/s/ Salvi Rafael Folch Noriega

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Name:   Salvi Rafael Folch Noriega Title:   Attorney-in-Fact THE NEWS
CORPORATION LIMITED By:  

/s/ Arthur Siskind

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Name:   Arthur Siskind Title:   Senior Executive Vice President and Group
General Counsel THE DIRECTV GROUP, INC. By:  

/s/ Bruce B. Churchill

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Name:   Bruce B. Churchill Title:  

Executive Vice President and Chief Financial Officer

 

[Letter Agreement re: Option Agreement]

 

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