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DHJV Company LLC Limited Liability Company Agreement

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EXHIBIT 10.1


" *************" DENOTE MATERIAL THAT HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT UNDER RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.


DHJV COMPANY LLC

LIMITED LIABILITY COMPANY AGREEMENT


Dated as of May 22, 2009


TABLE OF CONTENTS

ARTICLE 1 Definitions


1.01.

Definitions


1.02.

Construction


ARTICLE 2 Organization


2.01.

Formation


2.02.

Name


2.03.

Principal Office


2.04.

Registered Agent for Service of Process


2.05.

Mission


2.06.

Purposes


2.07.

Term


2.08.

Limited Liability Company Agreement


ARTICLE 3 Initial Business Plan; Annual Budget; Common Units; Capital Contributions


3.01.

Initial Business Plan


3.02.

Annual Budget .


3.03.

Common Units


3.04.

Deemed Initial Capital Contributions; Tax Treatment


3.05.

Additional Capital Contributions; Funding Commitment


3.06.

No Third Party Beneficiaries


3.07.

Return of Contributions


ARTICLE 4 Members; Membership Interests


4.01.

Voting Rights of Members


4.02.

Meetings of Members


4.03.

Proxies


4.04.

Action of Members by Written Consent


4.05.

Liability to Third Parties


4.06.

Lack of Authority


ARTICLE 5 Distributions


5.01.

Distributions


5.02.

Tax Withholding


ARTICLE 6 Capital Accounts; Allocations of Profit and Loss


6.01.

Capital Account


6.02.

In General


6.03.

Special Allocations


6.04.

Curative Allocations


6.05.

Other Allocation Rules


6.06.

Tax Allocations: Code Section 704(c)


6.07.

Interim Allocations Due to Percentage Interest Adjustment


TABLE OF CONTENTS
(Continued)


6.08.

Section 754 Election


6.09.

Deficit Capital Accounts


ARTICLE 7 Management and Operations


7.01.

Management by the Board


7.02.

Board


7.03.

Board Vote .


7.04.

Actions by the Board; Committees; Delegation and Duties


7.05.

Meetings; Alternates; Observers


7.06.

Removal; Vacancies; Resignation .


7.07.

Action by Written Consent or Telephone Conference


7.08.

Compensation of Directors


7.09.

Officers


7.10.

Actions of Subsidiaries


7.11.

Affiliation Agreements


7.12.

Programming Guidelines


7.13.

Related-Party Transactions


7.14.

Operation of the Network After the Formation Date


7.15.

Network Programming .


7.16.

************** Commitments


7.17.

Network Content


7.18.

Transmission of the Network


7.19.

Cross Promotion


7.20.

Other Discovery-Hasbro Relationships


7.21.

Future Merchandising Rights


ARTICLE 8 Transfers; Restrictions on Transfer


8.01.

Limitation on Transfers


8.02.

Assignee' s Rights


8.03.

Transferor' s Rights and Obligations


8.04.

Compliance with Law


8.05.

Prohibited Transfer; Invalid Transfer


8.06.

Admission Procedure


8.07.

Certain Rights and Obligations not Transferable


ARTICLE 9 Withdrawal and Resignation of Members


ARTICLE 10 Limitation on Liability and Indemnification


10.01.

Limitation on Liability


10.02.

Duty of Directors


10.03.

Indemnification by the Company; Non-Exclusivity of Rights


10.04.

Insurance


10.05.

Savings Clause


TABLE OF CONTENTS
(Continued)

ARTICLE 11 Taxes


11.01.

Tax Returns


11.02.

Tax Elections


11.03.

Tax Matters Partner


ARTICLE 12 Books, Records, Reports, Accounts


12.01.

Records and Accounting


12.02.

Member Reports


12.03.

Accounts


12.04.

Other Information


ARTICLE 13 Exclusivity Covenants


13.01.

Exclusivity Covenants of Discovery .


13.02.

Exclusivity Covenants of Hasbro


13.03.

Other Opportunities


ARTICLE 14 Confidentiality


14.01.

Confidentiality


ARTICLE 15 Termination, Dissolution and Liquidation


15.01.

Termination


15.02.

Effect of Termination


15.03.

Buy-Sell (" Jump Ball" )


15.04.

Auction


15.05.

Effect of Sale


15.06.

Winding Up


15.07.

Deferment


15.08.

Certificate of Cancellation


15.09.

Reasonable Time for Winding Up


15.10.

Remedies for Breach


ARTICLE 16 General Provisions


16.01.

Amendment or Modification


16.02.

Notices


16.03.

Public Announcements


16.04.

Enforcement of Company' s Rights


16.05.

Entire Agreement


16.06.

Waiver


16.07.

Injunctive and Other Relief


16.08.

Alternative Dispute Resolution


16.09.

Limitation of Liability


16.10.

Binding Effect


16.11.

Governing Law; Waiver of Jury


TABLE OF CONTENTS
(Continued)


16.12.

Consent to Jurisdiction and Service of Process


16.13.

Severability


16.14.

Further Assurances


16.15.

No Third-Party Beneficiaries


16.16.

Waiver of Certain Rights


16.17.

Opt-out of Article 8 of the Uniform Commercial Code


16.18.

Delivery by Facsimile


16.19.

Counterparts


16.20.

No Presumption


16.21.

Expenses


16.22.

DCI Guarantee


Schedule A

Members' Schedule

Schedule B

RESERVED

Schedule C

Benchmarks

Schedule D

Revenue Share Payments

Schedule E

Programming Guidelines

Schedule 1.01

Permitted Holders

Schedule 7.3(b)(10)

Affiliation Agreements

Schedule 7.15(e)

Hasbro Core Brands

Schedule 7.17

Network Content

Schedule 7.21

Future Merchandising Rights


LIMITED LIABILITY COMPANY AGREEMENT
OF
DHJV Company LLC


This LIMITED LIABILITY COMPANY AGREEMENT (this " Agreement" ) of DHJV Company LLC (the " Company" ), is made and entered into as of May 22, 2009, by and among Discovery Communications, LLC, a Delaware limited liability company (" Discovery" ), and Hasbro, Inc., a Rhode Island corporation (" Hasbro," and together with Discovery, each a " Member" ), the Company, and, for the purposes set forth herein, Discovery Communications, Inc., a Delaware corporation (" DCI" ).

WHEREAS, the Company was formed by Discovery as a limited liability company pursuant to and in accordance with the Delaware Limited Liability Company Act, as it may be succeeded or amended from time to time (the " Act" ), by the filing of a certificate of formation (the " Certificate" ) in the office of the Secretary of State of the State of Delaware on April 24, 2009;

WHEREAS, as contemplated by the Purchase Agreement (as defined below), Discovery has assigned to the Company all of its right, title and interest in and to certain assets relating to the Discovery Kids Network (as defined below) (including the Affiliation Agreements (as defined below)), and the Company has assumed certain related liabilities, pursuant to the Assignment and Assumption Agreement (as defined below), and Hasbro has purchased a fifty percent (50%) Membership Interest (as defined below) in the Company from Discovery; and

WHEREAS, the parties hereto intend that this Agreement shall set forth the understandings among the Members with respect to the terms and conditions of each Member' s interest, rights and obligations with respect to the Company, the management and operation of the Company and the economic arrangement among the parties hereto with respect to the Company.

NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:

ARTICLE 1
Definitions

1.01. Definitions . As used in this Agreement, the following terms have the meanings set forth below (and other terms defined herein have the meanings so given them):


" AAA" has the meaning set forth in Section 16.08.

" Adjusted Capital Account" means, with respect to any Member, the balance in such Member' s Capital Account as of the end of the relevant Fiscal Year or other period, after giving effect to the following adjustments:


(a)

Crediting to such Capital Account any amounts which such Member is obligated to restore to the Company pursuant to any provision of this Agreement or is deemed to be obligated to restore pursuant to the penultimate sentences of Treasury Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5); and

(b)

Debiting to such Capital Account the items described in Treasury Regulations Sections 1.704-1(b)(2)(ii)( d )( 4 ), 1.704-1(b)(2)(ii)( d )( 5 ) and 1.704-1(b)(2)(ii)( d )( 6 ).

This definition of Adjusted Capital Account is intended to comply with the provisions of Treasury Regulations Section 1.704-1(b)(2)(ii)( d ) and shall be interpreted consistently therewith.

" Admission Date" has the meaning set forth in Section 8.03.

" Affiliate" of a Person means any Person that directly or indirectly controls, is controlled by, or is under common control with the Person in question, except that no Member nor any Affiliate of any Member shall be deemed to be an Affiliate of any other Member solely by virtue of the Member' s Membership Interest. The term " Affiliated" and similar variations shall have correlative meanings. For purposes of this Agreement, " control" (including with correlative meanings, the terms " controlling ," " controlled by" or " under common control with" ) as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such P erson, whether through the ownership of voting securities or by contract or otherwise.

" Affiliation Agreements" means all carriage, affiliation, distribution and similar agreements with Channel Affiliates for the retransmission of the Network in the United States on a linear or, to the extent specifically for the provision of programming by the Network, non-linear (e.g., video-on-demand) basis, to which any Discovery Controlled Affiliate or the Company is a party as of such time, in each case, solely to the extent relating to the Network; it being understood that (a) certain Affiliation Agreements may provide for the retransmission of the Network and other networks of Discovery Controlled Affiliates and (b) certain Affiliation Agreements may provide for the retransmission solely of the Network.

" Agreed Name" means the re-branded name of the Company or Network, or any derivation of such name that is used as the name of the Network, in each case, which has been mutually agreed to by Discovery and Hasbro in accordance with the Agreed Name Letter Agreement or such other name as may be mutually agreed to by Discovery and Hasbro.

" Agreed Name Letter Agreement" means the Agreed Name Letter Agreement between Discovery and Hasbro dated as of even date herewith.

" Ancillary Agreements" means each of the Purchase Agreement, the Assignment Agreement, the Hasbro Studios Programming Agreement, the Trademark License Agreement, the Hasbro Programming License Agreement, Discovery Programming Letter Agreements, the Discovery Programming License Agreement, the Discovery Services Agreement, the Agreed Name Letter Agreement, the Letter Agreement, the Digital Agreement, the Hasbro-Discovery Agreement and each other agreement to be entered into among or between the Members and the Company and their Affiliates in connection with the Purchase Agreement or this Agreement.


" Animal and Science Programming" means ********************************************************************************************************************* ********************************************************************************************************************* ********************************************************************************************************************* ********************************************************************************************************************* ******************************************************************************


" Annual Budget" means the annual operating and capital budget of the Company for each Fiscal Year or portion thereof, which budget shall be prepared and adopted in accordance with Section 3.02, setting forth, among other things, the estimated receipts and expenditures of the Company for such Fiscal Year, including all programming and marketing expenditures, and any anticipated funding requirements and sources thereof, in each case, on a quarterly basis.

" Acquired Network" has the meaning set forth in Section 13.01(b).

" Assignee" means a Person to whom Membership Interests have been Transferred in accordance with Article 8 but who has not become a Substituted Member pursuant to Section 8.06.

" Assignment Agreement" means the Assignment and Assumption Agreement, dated as of the Formation Date, by and between Discovery and the Company.

" Auction Interests" has the meaning set forth in Section 15.04(a).

" Board" has the meaning set forth in Section 7.01.

" Broadcast Television" means free, over-the-air broadcast television networks and local television stations (whether digital or otherwise) in the United States that are licensed by the FCC, regardless of whether a viewer accesses the signal of such networks or stations over-the-air or through other means.

" Business" means the business of programming and distributing the Network in the United States, conducting the Company activities contemplated by this Agreement and the Ancillary Agreements and conducting any other ancillary activities that are approved by the Board, all for the purpose of undertaking and furthering the Mission.

" Business Day" means any day other than a Saturday, a Sunday or a holiday on which commercial banks in New York City are authorized or required by law to close.

" Cable Television Network" means a branded television service for the delivery of audio-visual television programming (including linear television services and television video-on-demand services) that is distributed in the United States by any Multichannel Video Programming Distributor (as defined by the FCC, including any successor terminology) and/or by any distributor using MVPD Technology (collectively, an " MVPD" ) to authorized


subscribers of such MVPD, excluding Broadcast Television. Notwithstanding anything to the contrary, the parties acknowledge and agree that the distribution (including streaming and/or downloading) of video, audio-visual and other programming via the public Internet (but not via an IPTV System), mobile wireless platforms, or any successor technology ( e.g. , YouTube, Google Video, AOL Video, video webinars), including via any website or online service accessible over the public Internet, regardless of whether that site or service requires user registration or payment for access to such programming, shall not be considered distribution via a Cable Television Network.

" Capital Account" has the meaning set forth in Section 6.01(a).

" Capital Contribution" means the contribution or deemed contribution in cash or property to the capital of the Company made by or on behalf of a Member.

" Changed Elements" has the meaning set forth in the Hasbro Studios Programming Agreement.

" Change of Control Transaction" means:

(a)

with respect to Discovery Ultimate Parent, Hasbro Ultimate Parent or any of their respective Affiliates that hold a Membership Interest, any transaction or a series of related transactions (including a merger or consolidation) or other event that results in any single Person or " group" (as such term is used for purposes of Rule 13d-5 under the Exchange Act) consisting of any Person, other than one or more Permitted Holders, becoming the " beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a Person shall be deemed to have " beneficial ownership" of all securities that such Person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of thirty percent (30%) or more of the total voting power of the outstanding equity securi ties of Discovery Ultimate Parent, Hasbro Ultimate Parent or any of their respective Affiliates that hold a Membership Interest, as applicable (exclusive of any voting power retained exclusively by any Permitted Holders, directly or indirectly), and such voting power is greater than the aggregate total voting power of the outstanding equity securities of Discovery Ultimate Parent, Hasbro Ultimate Parent or any of their respective Affiliates that hold a Membership Interest, as applicable, owned or controlled, directly or indirectly, by the Permitted Holders (exclusive of any voting power retained, directly or indirectly, by other members of such " group" other than the Permitted Holders); provided that for purposes of this clause (a), with respect to preferred stock or other securities convertible into common stock of Discovery Ultimate Parent or Hasbro Ultimate Parent, the percentage of total voting power of any common stock, preferred stock or other securities convertible into common stock o f the Discovery Ultimate Parent or Hasbro Ultimate Parent, as applicable, shall be equal to the total voting power that such stock would represent after giving effect to the conversion of all such preferred stock or other securities convertible into common stock in accordance with its terms.

(b)

with respect to Discovery Ultimate Parent, Hasbro Ultimate Parent or any of their respective Affiliates that hold a Membership Interest, any transaction or a series of related transactions (including a merger or consolidation) or other event the result of


which is that any single Person or " group" (as such term is used for purposes of Rule 13d-5 under the Exchange Act) consisting of any Person, other than one or more Permitted Holders has the right, directly or indirectly, to elect a number of individuals to the board of directors (or similar governing body) of Discovery Ultimate Parent, Hasbro Ultimate Parent or any of their respective Affiliates that hold a Membership Interest, as applicable, such that such individuals (whether new or continuing as directors) would, if elected, constitute a majority of the board of directors (or similar governing body) of such subject Person;

(c)

with respect to Discovery Ultimate Parent, Hasbro Ultimate Parent or any of their respective Affiliates that hold a Membership Interest, the direct or indirect sale, transfer, conveyance or other disposition (other than by way of merger or consolidation) of all or substantially all of the assets of Discovery Ultimate Parent, Hasbro Ultimate Parent or any of their respective Affiliates that hold a Membership Interest, as applicable, to any other Person, other than to one or more Permitted Holders, in one transaction or a series of related transactions;

(d)

with respect to Discovery Ultimate Parent, any act or failure to act that constitutes a violation of Section 13.01(b) by any Discovery Controlled Affiliate; or

(e)

with respect to Hasbro Ultimate Parent, any act or failure to act that constitutes a violation of Section 13.02(b) by any Hasbro Controlled Affiliate.

In the event of the occurrence of a Change of Control Transaction, if the Member(s) entitled to make a termination election pursuant to Section 15.01(i) or 15.01(j), as the case may be, decline(s) to do so within the applicable specified election period, then the definitions of " Change of Control Transaction" and, if applicable, " Permitted Holders" and " Permitted Transferees" and, if applicable, Section 1.02(b) shall be modified appropriately by good faith agreement of the Members to reflect the new holders, direct and indirect, of the affected Membership Interests .

" Channel Affiliate" has the meaning set forth in Schedule 1 to the Discovery Services Agreement.

" Chief Executive Officer" has the meaning set forth in Section 3.01.

" Code" means the Internal Revenue Code of 1986, as amended from time to time (or any corresponding provision of succeeding law).

" Common Unit" has the meaning set forth in Section 3.03.

" Company Intellectual Property" has the meaning set forth in Section 7.21.

" Company Minimum Gain" has the meaning of " partnership minimum gain" that is set forth in Treasury Regulations Section 1.704-2(b)(2). The amount of Company Minimum Gain shall be determined in accordance with Treasury Regulations Section 1.704-2(d).

" Comparable Frequency" means, with respect to the airing of any HS Licensed Program licensed pursuant to the Hasbro Studios Programming Agreement or any Program


licensed pursuant to the Hasbro Programming License Agreement, that the buyer in a Sale has aired such HS Licensed Program or Program during the one-year period following the consummation of such Sale in question with comparable or greater frequency to or than the average frequency that such HS Licensed Program or Program was aired by the Company during the two-year period ending on the date of the consummation of such Sale; provided that if such HS Licensed Program or Program was aired by the Company for less than two years prior to the date of consummation of such Sale, such two-year period shall be deemed reduced for purposes of this definition to the actual period that the Company aired such HS Licensed Program or Program.

" Competitive Cable Television Network" means ****************************************************************************************************************** ****************************************************************************************************************** ****************************************************************************************************************** ****************************************************************************************************************** ******************************************************************************************

" Competitive Person" means (a) with respect to Discovery, any Person that directly or indirectly owns, operates, controls, manages or programs a Cable Television Network and (b) with respect to Hasbro, any Person that directly or indirectly owns, operates, controls or manages a toy or game manufacturer or distributor.

" Confidential Information" has the meaning set forth in Section 14.01(a).

" Consolidating Member" has the meaning set forth in Section 12.02(b).

" Contributed Assets" has the meaning set forth in the Assignment Agreement.

" Controlled Affiliate" of a Person means any Affiliate of the Person in question that is directly or indirectly, through one or more intermediaries, controlled by the Person in question.

" Covered Person" means a Member, Director, Officer or Affiliate of any Member and any officers, directors, stockholders, partners, members, employees, representatives or agents of a Member or its Affiliates, or any Person who was, at the time of the act or omission in question, such a Person.

" DCI" has the meaning set forth in the preamble hereof.

" Delaware GCL" means the Delaware General Corporation Law, as it may be succeeded or amended from time to time.

" Depreciation" means, for each Fiscal Year, an amount equal to the depreciation, amortization, or other cost recovery deduction allowable with respect to an asset for such Fiscal


Year, except that if the Gross Asset Value of an asset differs from its adjusted basis for federal income tax purposes at the beginning of such Fiscal Year, Depreciation shall be determined in the manner described in Treasury Regulations Section 1.704-1(b)(2)(iv)( g )( 3 ) or Treasury Regulations Section 1.704-3(d)(2), as applicable.

" Digital Agreement" has the meaning set forth in the Purchase Agreement (if the Digital Agreement has been executed or, to the extent the Digital Agreement has not been executed, shall mean the Digital Term Sheet).

" Digital Term Sheet" has the meaning set forth in the Purchase Agreement.

" Director" means an individual appointed by a Member to manage the activities and affairs of the Company as a member of the Board pursuant to Article 7.

" Discovery Controlled Affiliate" means Discovery Ultimate Parent and any of its Controlled Affiliates.

" Discovery Disclosure Letter" has the meaning set forth in the Purchase Agreement.

" Discovery Estimated Tax Amount" has the meaning set forth in Section 5.01(a)(1).

" Discovery Final Tax Amount" has the meaning set forth in Section 5.01(b)(1).

" Discovery Kids Network" means the English-language Cable Television Network currently distributed by Discovery in the United States known as " Discovery Kids Channel."

" Discovery Kids Programming Library" has the meaning set forth in the Assignment Agreement.

" Discovery License" has the meaning set forth in Section 15.05(a)(4).

" Discovery Licensed Programming" means (a) the Underlying Works (as such term is defined in the Discovery Programming License Agreement) and (b) the programming licensed by Discovery to the Company pursuant to the Discovery Programming Letter Agreements.

" Discovery Material Breach" means:

(i)

in the case of a termination election by Hasbro pursuant to Section 15.01(g) prior to the Launch Date, a material breach by Discovery or its Controlled Affiliates of this Agreement or the Discovery Services Agreement that, individually or in the aggregate, has a material adverse effect on the Company, taken as a whole, or on Hasbro, taken as a whole; or

(ii)

in the case of a termination election by Hasbro pursuant to Section 15.01(g) after the Launch Date, (x) material and repeated breaches by Discovery or its Controlled Affiliates of material covenants or obligations of Discovery or its Controlled Affiliates in this Agreement that cause material harm to the Company or Hasbro or (y) the


termination of the Discovery Services Agreement by the Company (in accordance with the terms thereof) resulting from Discovery' s or its Controlled Affiliates material breach thereof.

" Discovery Network" means any English-language Cable Television Network owned, operated or programmed by any Discovery Controlled Affiliate and distribut
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