EXHIBIT 10.1
INDEMNIFICATION AGREEMENT
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Indemnification Agreement (this "Agreement"), dated as of
____________, 1996, between TCI Satellite Entertainment, Inc., a Delaware
corporation (the "Company") and TCI UA 1, Inc., a Colorado corporation (the
"Account Party").
RECITALS
A. Tele-Communications, Inc. ("TCI") owns all the issued and
outstanding capital stock of the Company (the "Company Stock"). TCI intends to
distribute (the "Distribution") the Company Stock to the holders of its Tele-
Communications, Inc. Series A TCI Group Common Stock and Tele-Communications,
Inc. Series B TCI Group Common Stock. As a result of the Distribution, the
Company will cease to be a subsidiary of TCI, and TCI and the Company will be
separate public companies.
B. The Account Party is a wholly owned subsidiary of TCI
Development Corporation, an indirect subsidiary of TCI. The Account Party has
arranged for the issuance by Chemical Bank (the "Issuing Bank") of its
Irrevocable Transferable Letter of Credit No. T-253097, dated February 26, 1996
(the "Letter of Credit"). The beneficiary of the Letter of Credit is Chemical
Bank, as Administrative Agent (the "Administrative Agent") under the Credit
Agreement dated as of March 9, 1994 (the "Credit Agreement") among PRIMESTAR
Partners, L.P. ("PRIMESTAR"), the Banks listed on the signature pages thereof,
The Bank of New York, Chemical Bank and Citibank, N.A., as Managing Agents, and
the Administrative Agent. The Letter of Credit provides collateral security for
the obligations of PRIMESTAR under the Credit Agreement. The Account Party is
obligated to reimburse the Issuing Bank for any drawings made under the Letter
of Credit pursuant to the Amended and Restated Reimbursement Agreement dated as
of March 1, 1995, only the Account Party, the Issuing Bank and The Toronto
Dominion Bank (the "Reimbursement Agreement"). The obligations of the Account
Party under the Reimbursement Agreement are secured by a pledge of certain
shares of capital stock of TCI owned of record by the Account Party.
C. In connection with the Distribution, certain subsidiaries of
TCI have agreed to transfer to subsidiaries of the Company an aggregate 20.86%
partnership interest in PRIMESTAR, constituting TCI's entire ownership interest
in PRIMESTAR. In that connection, the Company desires to assume all obligations
of the Account Party under the Reimbursement Agreement and to indemnify
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the Account Party for any and all losses, claims, damages, liabilities,
deficiencies, obligations, costs and expenses (collectively, "Losses") of the
Account Party relating thereto.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
SECTION 1. REIMBURSEMENT AGREEMENT.
(a) The Company hereby assumes, and hereby covenants and agrees
to satisfy and discharge in full when due, all payment obligations of the
Account Party under the Reimbursement Agreement and the Letter of Credit,
whether now existing or hereafter arising. As soon as practicable after receipt
of any demand by the Issuing Bank for payment under the Reimbursement Agreement,
or after receipt of notice of any drawing or demand for payment under the Letter
of Credit, the Account Party shall give written notice thereof (or telephonic
notice, promptly confirmed in writing) to the Company (a "Payment Notice"),
setting forth the amount of the payment due under the Reimbursement Agreement in
respect of such event (the "Payment Amount"), the date and time such payment is
due, and the section of the Reimbursement Agreement under which such payment
obligation arises. Any failure or delay by the Account Party in giving any
Payment Notice hereunder shall not excuse the Company from any obligation of the
Company to the Account Party hereunder, except to the extent that such failure
or delay actually prejudices the Company.
(b) Promptly upon receipt of any Payment Notice hereunder, the
Company shall confirm to the Account Party the Company's intention to pay the
Payment Amount in accordance with the Reimbursement Agreement. If the Company
fails to give such confirmation by (i) 5:00 p.m., New York time, on the same day
that it receives any Payment Notice, if such Payment Notice is received by 11:00
a.m., New York time, on a business day, or (ii) 5:00 p.m., New York time, on the
next business day, if such Payment Notice is received after 11:00 a.m., New York
time, or on a day that is not a business day, or if, having given such
confirmation, the Company fails to make such payment by the later of (x) the
date such payment was due under the Reimbursement Agreement and (y) the second
business day after the date of such confirmation, then the Account Party shall
have the right (but not the obligation) to pay the Payment Amount (or any
portion thereof) in accordance with the Reimbursement Agreement, and, in such
event, the Company shall reimburse the Account Party for any amounts so paid,
plus interest thereon at an annual rate equal to the rate per annum from time to
time announced in New York City by The Bank of New York as its prime lending
rate, plus 2%. The Account Party shall not otherwise make any payment under the
Reimbursement Agreement without the consent of the Company, which shall not
unreasonably be withheld or delayed.
(c) The Account Party shall not consent to any modification or
amendment of the Reimbursement Agreement without the prior written consent of
the Company, which shall not unreasonably be withheld or delayed.
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SECTION 2. INDEMNIFICATION.
(a) The Company hereby agrees to indemnify and hold
harmless, to the fullest extent permitted by law, the Account Party and its
officers, directors, employees and agents, and each person who controls any of
the foregoing persons (each, an "Indemnified Party"), from and against any and
all Losses arising out of or relating to (i) any breach by the Company of its
obligations under Section 1 hereof, or (ii) any claim, action, suit or
proceeding by the Issuing Bank or any other third party (a "Claim") in
connection with the Reimbursement Agreement or the Letter of Credit. The Company
will reimburse each such Indemnified Party for all legal or other expenses
reasonably incurred by such Indemnified Party in connection with investigating
or defending any Claims as they become due, including, subject to the last
sentence of Section 2(b), below, any amounts paid in settlement of a claim.
(b) Promptly after the receipt by any Indemnified Party of
notice of any Claim that is subject to indemnification hereunder, such
Indemnified Party shall give reasonable written notice to the Company. The
Indemnified Party shall be entitled, at the sole expense and liability of the
Company, to exercise full control of the defense, compromise or settlement of
any such Claim unless the Company, within a reasonable time after the giving of
such notice by the Indemnified Party, shall (i)acknowledge in writing to the
Indemnified Party the Company's liability to the Indemnified Party for such
Claim under the terms of this Section 2, (ii) notify the Indemnified Party in
writing of the Company's intention to assume the defense thereof, and (iii)
retain legal counsel reasonably satisfactory to the Indemnified Party to conduct
the defense of such Claim. The Indemnified Party shall cooperate with the
Company in assuming the defense, compromise or settlement of any such Claim in
accordance herewith in any manner that the Company may reasonably request. If
the Company so assumes the defense of any such Claim, the Indemnified Party
shall have the right to employ separate counsel and to participate in (but not
control) the defense, compromise, or settlement thereof, but the fees and
expenses of such counsel shall be the expense of the Indemnified Party unless
(i) the Company has agreed to pay such fees and expenses, (ii) any relief other
than the payment of money damages is sought against the Indemnified Party, or
(iii) the Indemnified Party shall have been advised by its counsel that there
may be one or more legal defenses available to it that are different from or
additional to those available to the Company, and in any such case the fees and
expenses of such separate counsel shall be borne by the Company. The Company
shall not settle or compromise any such claim in which any relief other than the
payment of money damages is sought against any Indemnified Party unless the
Indemnified Party consents in writing to such compromise or settlement. No
Indemnified Party shall settle or compromise any claim for which it is entitled
to indemnification hereunder without the prior written consent of the Company,
unless the Company shall have failed, after reasonable notice thereof, to
undertake control of such Claim in the manner provided above in this Section 2.
(c) As a condition to asserting any rights under this
Section 2, each Indemnified Party must appoint TCI as its sole agent for all
matters relating to any claim hereunder.
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SECTION 3. MISCELLANEOUS.
(a) No Offset. The due payment and performance in full of the
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Company's obligations to the Account Party hereunder shall be without regard to
any counterclaim, right of offset or any other claim whatsoever that the Company
may now or hereafter have against the Account Party or any other person, and no
such counterclaim or offset shall be asserted by the Company in any action, suit
or proceeding instituted by the Account Party or any other Indemnified Party for
payment of the Company's obligations under this Agreement or otherwise.
(b) Entire Agreement. This Agreement constitutes the entire
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agreement between the parties hereto with respect to the subject matter hereof
and supersedes all prior negotiations, agreements and understandings, oral and
written, between the parties hereto with respect to the subject matter hereof.
(c) No Waiver. No waiver by either party hereto of any term or
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condition of this Agreement, in any one or more instances, shall operate as a
waiver of such term or condition at any other time.
(d) Notices. Except as otherwise expressly provided herein, all
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notices, requests, demands, waivers and other communications under this
Agreement shall be in writing and shall be deemed to have been duly given: (i)
on the date of service if served personally on the party to whom notice is to be
given; (ii) on the day of transmission if sent via facsimile transmission to the
facsimile number given below, and telephonic confirmation of receipt is obtained
promptly after completion of transmission; (iii) on the day after sending by
Federal Express or similar overnight courier or the Express Mail service of the
United States Postal Service; or (iv) on the fifth day after mailing, if mailed
to the party to whom notice is to be given, by first class mail, registered or
certified, postage prepaid and properly addressed, to the party as follows:
If to the Account Party:
TCI UA, Inc.
c/o Telecommunications, Inc.
0000 XXX Xxxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: General Counsel
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If to the Company:
TCI Satellite Entertainment, Inc.
0000 Xxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
Facsimile (000) 000-0000
Attention: President
with a copy to the Company's Corporate Counsel at the same address.
A party may change its address for the purposes of this Agreement
by giving the other party written notice of its new address in the manner set
forth above. Notice of change of address shall be effective upon receipt
thereof.
(e) Amendment. This Agreement may not be amended or modified in
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any respect except by a written agreement signed by the parties hereto.
(f) Successors and Assigns; No Third-Party Beneficiaries. This
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Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns. Nothing contained in this
Agreement is intended to confer upon any other persons other than the parties
hereto or their respective successors and permitted assigns any rights,
remedies, obligations or liabilities under or by reason of this Agreement, other
than rights conferred upon Indemnified Parties under Section 2.
(g) Governing Law. This Agreement and the legal relations
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between the parties hereto shall be governed by and construed in accordance with
the laws of the State of Colorado, without giving effect to conflicts of laws.
(h) Severability. If any provision of this Agreement shall be
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invalid or unenforceable, such invalidity or unenforceability shall not render
the entire Agreement invalid. Rather, the Agreement shall be construed as if not
containing the particular invalid or unenforceable provisions, and the rights
and obligations of each party shall be construed and enforced accordingly.
(i) No Joint Venture. Nothing contained herein shall constitute
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either party an employee, agent or partner of, or joint venturer with, the other
party.
(j) Headings. The section headings contained in this Agreement
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are inserted for reference purposes only and shall not effect the meaning or
interpretation of this Agreement.
(k) Counterparts. This Agreement may be executed in one or more
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counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(l) Subordination. Each of TCI and the Company, for itself, its
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successors and assigns, covenants and agrees that all payment obligations of the
Company to TCI hereunder are and shall be subordinated in right of payment to
the prior payment in full of all indebtedness of the Company, whether now
existing or hereafter arising, to any financial institution (a "Senior Lender")
to which the Company may from time to time be indebted for borrowed money,
including principal, accrued interest and any other amounts with respect thereto
(the "Senior Debt"). In that connection, TCI hereby agrees to execute and
deliver any and all agreements regarding the subordination of the Company's
payment obligations hereunder to the Senior Debt as may from time to time be
reasonably requested by the Senior Lender.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed as of the day and year first above written.
TCI UA 1, INC.
By: _____________________________
Name:
Title:
TCI SATELLITE ENTERTAINMENT, INC.
By: _____________________________
Name:
Title:
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