Exhibit 10.11
1996 ANCILLARY AGREEMENT AMONG PARTNERS
THIS 1996 ANCILLARY AGREEMENT AMONG PARTNERS (this "Agreement"), dated
as of October 18, 1996, by and among Primestar Partners L.P., a Delaware limited
partnership ("Primestar") and the general and limited partners of Primestar
listed on the signature page hereof under the heading PARTICIPATING PARTNERS
(the "Participating Partners"), GE Americom Services, Inc., a Delaware
corporation ("GEA"), and its affiliate, GE American Communications, Inc., a
Delaware corporation ("GE"),
W I T N E S S E T H :
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WHEREAS, the Participating Partners and GEA are the general and
limited partners of Primestar, a Delaware limited partnership formed pursuant to
the Limited Partnership Agreement, dated February 8, 1990, as amended (the
"Partnership Agreement"); and
WHEREAS, Primestar and GE propose to enter into an Amended and
Restated Memorandum of Agreement (as the same may be amended from time to time,
the "MOA") and, as provided in the MOA, a Service Agreement (as the same may be
amended from time to time, the "Service Agreement") pursuant to which GE will
provide, and Primestar will take, transponder service on the communications
satellite denominated as GE-2 and potentially other GE satellites, which
Primestar intends to use to provide services to its subscribers; and
WHEREAS, GE's willingness to enter into the MOA and the Service
Agreement and to provide transponder service pursuant thereto depends in
material part on (i) the execution and delivery of a proposed Addendum Regarding
Letters of Credit (herein such Addendum (including all schedules, exhibits and
annexes thereto), as the same may be amended or modified from time to time, is
referred to as the "LC Addendum") to be made and effective as of the ____ day of
October, 1996, by GE and Primestar and (ii) the issuance for the benefit of GE
of Letters of Credit in the Required LC Amount (as those terms are defined in
the LC Addendum) to be in effect at the times specified in the LC Addendum; and
WHEREAS, the LC Addendum contemplates that Primestar may (i) provide
Primestar Primary LC's (as herein defined) for its own account to be issued for
the benefit of GE in the Required LC
Amount or (ii) cause each Participating Partner to arrange for Partner Primary
LC's (as herein defined) to be issued for the account of such Participating
Partner or one or more of its affiliates in the amounts from time to time which
are the product of (a) the Letter of Credit Percentage set forth opposite its
name on Schedule 1 to the LC Addendum and (b) the Required LC Amount or (iii)
provide a combination of Primestar Primary LC's and Partner Primary LC's in an
aggregate amount not less than the Required LC Amount; and
WHEREAS, in order for Primestar to provide Primestar Primary LC's, it
may be necessary for each Participating Partner to provide, for the benefit of
the issuer of a Primestar Primary LC, a Secondary LC (as herein defined) to be
issued for the account of such Participating Partner or one or more of its
affiliates; and
WHEREAS, the Participating Partners and such affiliates (for the
account of which there may be issued either Partner Primary LC's or Secondary
LC's), through their direct and indirect ownership interests in Primestar,
expect to derive substantial benefits from the MOA and the Service Agreement;
and
WHEREAS, the willingness of the Participating Partners to arrange for
such Partner Primary LC's or Secondary LC's is conditioned upon the execution
and delivery of this Agreement;
NOW, THEREFORE, the parties hereto, in consideration of the foregoing
and the mutual covenants hereinafter set forth, agree as follows:
1. Definitions. As used in this Agreement, the following terms
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shall have the following respective meanings:
A. "Affiliate" shall have the meaning specified in the Partnership
Agreement.
B. "Collateral Account" shall mean the GE Collateral Account or the
Secondary LC Collateral Account, as the case may be.
C. "GE Collateral Account" shall mean the cash collateral account
referred to in Section 2D of the LC Addendum, together with any
related accounts, documents and agreements.
D. "Letter of Credit" shall have the meaning specified in the LC
Addendum, and shall
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not include a Secondary LC.
E. "Letter of Credit Expiration Draw" means (i) with respect to a
Primestar Primary LC or a Partner Primary LC, any draw pursuant to
clause (a) of the third sentence of Article 2D of the LC Addendum
and (ii) with respect to a Secondary LC, any draw, pursuant to the
terms of a related Primestar Primary LC Reimbursement Agreement,
which results from no replacement letter of credit having been
issued for such Secondary LC within the period prior to expiration
of such Secondary LC which is specified in the condition to such
draw.
F. "Letter of Credit Payment Draw" means with respect to a Primestar
Primary LC or a Partner Primary LC, any draw under such Letter of
Credit other than a draw pursuant to Section 2D of the LC
Addendum.
G. "Letter of Credit Rating Decline Draw" means (i) with respect to a
Primestar Primary LC or a Partner Primary LC, any draw under such
Letter of Credit pursuant to clause (b) of the third sentence of
Article 2D of the LC Addendum and (ii) with respect to a Secondary
LC, any draw pursuant to the terms of a related Primestar Primary
LC Reimbursement Agreement which results from the failure of the
issuer of such Secondary LC to maintain a required rating
specified in the condition to such draw.
H. "Non-Recourse Advance" means an advance by a Participating Partner
to Primestar contemplated by the provisions of Section 5.06 of the
Partnership Agreement which is a recourse obligation of Primestar
only and not a recourse obligation of any partner of Primestar or
any other person, as contemplated by Section 4 of the form of note
attached as Exhibit I to the Partnership Agreement.
I. "Participating Partner Notes" means any
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notes issued by Primestar pursuant to the provisions of this
Agreement.
J. "Partners Committee" shall have the meaning specified in the
Partnership Agreement.
K. "Partnership Interests" shall have the meaning specified in the
Partnership Agreement.
L. "Partner Primary LC" means a Letter of Credit issued for the
account of a Participating Partner or one of its Affiliates and
for the benefit of GE.
M. "Primestar Primary LC" means a Letter of Credit issued for the
account of Primestar and for the benefit of GE.
N. "Primestar Primary LC Reimbursement Agreement" means an agreement
pursuant to which Primestar is obligated to reimburse the issuer
of a Primestar Primary LC for draws thereon.
O. "Required LC Amount" shall have the meaning specified in the LC
Addendum.
P. "Responsible Participating Partner" means, with respect to a
particular letter of credit, the Participating Partner for whose
account the letter of credit is issued. For this purpose, a
letter of credit issued for the account of one or more Affiliates
of such Participating Partner shall be deemed to have been issued
for the account of such Participating Partner.
Q. "Secondary LC" means a letter of credit issued for the account of
a Participating Partner or one or more of its Affiliates and for
the benefit of the issuer of a Primestar Primary LC and issued in
connection with a Primestar Primary LC Reimbursement Agreement.
R. "Secondary LC Collateral Account" shall mean a cash collateral
account (and related accounts, documents and agreements)
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established in connection with a Primestar Primary LC
Reimbursement Agreement for the purpose of receiving deposits of
proceeds of draws on Secondary LC's which are not immediately
applied to the payment of reimbursement obligations owing by
Primestar under such Reimbursement Agreement but which rather are
to be held as collateral security for the payment of such
reimbursement obligations.
2. Letter of Credit Rating Decline Draw; Letter of Credit Expiration
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Draw. (A) In the event that there shall occur, with respect to a Partner
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Primary LC or a Secondary LC, a Letter of Credit Rating Decline Draw or a Letter
of Credit Expiration Draw:
(i) such draw shall be deemed to be a Non-Recourse Advance (approved
by the Partners Committee) by the Responsible Participating
Partner in the amount of such draw, which Non-Recourse Advance
shall bear no interest for the first 90 days after the date of
such draw, repayable as follows:
(a) on the date on which any proceeds of such draw (and related
investments) are remitted to Primestar or its designee, an
aggregate amount of principal and interest on such Non-
Recourse Advance (to be applied first to accrued and unpaid
interest and thereafter to principal) up to the amount of
such proceeds (and related investments) shall be payable by
Primestar (any amount of such proceeds and investments in
excess of the principal of and interest accrued under the
stated terms of the note evidencing such Advance to be paid
as additional interest thereon); provided that, if any of
such proceeds are remitted to such Responsible Participating
Partner or one of its Affiliates (as the designee of
Primestar or otherwise), such remittance shall be deemed to
be a payment by Primestar on such Non-Recourse Advance and
shall be applied in accordance with the terms of this clause
(a);
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(b) subject to Section 4 hereof and Annex A hereto, on the date
60 days after the date on which any proceeds of such a draw
with respect to a Partner Primary LC (and related
investments) are withdrawn from the GE Collateral Account
and applied by GE together, if appropriate, with the
proceeds of one or more Letter of Credit Payment Draws to
amounts due under the MOA and Service Agreement, an
aggregate amount of principal and interest on such Non-
Recourse Advance (to be applied first to accrued and unpaid
interest and thereafter to principal) equal to the amount of
such proceeds (and related investments) so applied shall be
payable by Primestar (any amount of such proceeds and
investments in excess of the principal of and interest
accrued under the stated terms of the note evidencing such
Advance to be paid as additional interest thereon);
(c) subject to Section 4 hereof and Annex A hereto, on the date
60 days after the date on which any proceeds of such draw
with respect to a Secondary LC (and related investments) are
withdrawn from a Secondary LC Collateral Account and applied
(together, if appropriate, with the proceeds of one or more
contemporaneous draws on other Secondary LC's) to reimburse
an issuing bank for a Letter of Credit Payment Draw with
respect to a Primestar Primary LC, an aggregate amount of
principal and interest on such Non-Recourse Advance with
respect to such Secondary LC (to be applied first to accrued
and unpaid interest and thereafter to principal) equal to
the amount of such proceeds (and related investments) so
applied shall be payable by Primestar (any amount of such
proceeds and investments in excess of the principal of and
interest accrued under the stated terms of the note
evidencing such Advance to be paid as additional interest
thereon); and
(d) the balance, if any, shall be payable by Primestar as
specified in Section 2(B) hereof;
(ii) Primestar shall promptly issue to such Responsible Participating
Partner a note substantially in the form of Exhibit I to the
Partnership
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Agreement (modified to incorporate by reference the
relevant provisions of this Agreement including Annex A hereto)
payable to the order of such Responsible Participating Partner in
the principal amount of, and dated the date of, such draw; and
(iii) In the event that any proceeds of such draw (and/or related
investments) are available to be remitted to Primestar or its
designee at any time, under the terms of Article 2D of the LC
Addendum or any comparable terms of a related Primestar Primary
LC Reimbursement Agreement or Secondary LC Collateral Account
agreement, Primestar, upon the request to Primestar of any
Participating Partner, shall request that such amount be remitted
to such Responsible Participating Partner in accordance with the
LC Addendum or such Reimbursement Agreement or Secondary LC
Collateral Account agreement.
(B) In the event that there shall occur, with respect to a Primestar
Primary LC, a Letter of Credit Rating Decline Draw or a Letter of Credit
Expiration Draw, and such draw shall cause a draw on one or more Secondary LC's
and/or a withdrawal from a Secondary LC Collateral Account of any proceeds of a
Secondary LC draw (and related investments):
(i) such draw on each such Secondary LC shall be deemed to be a Non-
Recourse Advance (approved by the Partners Committee) by the
Responsible Participating Partner in the amount of such draw on
such Secondary LC, which Non-Recourse Advance shall bear no
interest for the first 90 days after the date of such draw, and
each such Non-Recourse Advance, and each Non-Recourses Advance
which (under Section 2(A)(i) hereof) is deemed to have been made
by the Responsible Participating Partner with respect to the
Secondary LC the proceeds of which are so withdrawn, shall be
repayable as follows:
(a) on the date on which any proceeds of such draw on such
Primestar Primary LC (and related investments) are remitted
to Primestar or its designee, an aggregate amount of
principal and interest on all such Non-Recourse Advances by
all such Responsible Participating Partners (to be applied
first to accrued and unpaid interest and thereafter to
principal) up to the amount of such proceeds (and related
investments) shall be payable by Primestar to all such
Responsible Participating Partners pro rata based on the
outstanding principal amounts of such Advances (any amount
of such proceeds and investments in excess of the principal
of and interest accrued under the stated terms of the notes
evidencing such Advances to be retained by Primestar); and
(b) subject to Section 4 hereof and Annex A hereto, on the date
60 days after the date on which any proceeds of such draw on
such
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Primestar Primary LC (and related investments) are
withdrawn from the GE Collateral Account and applied by
GE together, if appropriate, with the proceeds of one or
more Letter of Credit Payment Draws to amounts due under
the MOA and Service Agreement, an aggregate amount of
principal and interest on all such Non-Recourse Advances
by all such Responsible Participating Partners (to be
applied first to accrued and unpaid interest and
thereafter to principal) equal to the amount of such
proceeds (and related investments) so applied shall be
payable by Primestar to all such Responsible
Participating Partners pro rata based on the outstanding
principal amounts of such Advances (any amount of such
proceeds and investments in excess of the principal of
and interest accrued under the stated terms of the notes
evidencing such Advances to be retained by Primestar);
(ii) Primestar shall promptly issue to each such Responsible
Participating Partner which is deemed to have made a Non-
Recourse Advance in the amount of a draw on a Secondary LC
under the preceding clause (i) a note substantially in the
form of Exhibit I to the Partnership Agreement (modified to
incorporate by reference the relevant provisions of this
Agreement including Annex A hereto) payable to the order of
such Responsible Participating Partner in the principal
amount of, and dated the date of, such draw; and
(iii) In the event that any proceeds of such draw on such
Primestar Primary LC (and/or related investments) are
available to be remitted to Primestar or its designee at any
time under the terms of Article 2D of the LC Addendum,
Primestar, upon the request to Primestar of any
Participating Partner, shall request that such amount be
remitted to such Responsible Participating Partner in
accordance with the LC Addendum.
3. Letter of Credit Payment Draw. (A) In the event that there
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shall occur, with respect to a Partner Primary LC, a Letter of Credit Payment
Draw:
(i) such Letter of Credit Payment Draw shall be deemed to be a
Non-Recourse Advance
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(approved by the Partners Committee) by the Responsible
Participating Partner in the amount of such Letter of Credit
Payment Draw repayable by Primestar, subject to Section 4
hereof and Annex A hereto, 60 days after the date of such
Letter of Credit Payment Draw; and
(ii) Primestar shall promptly issue to such Responsible
Participating Partner a note substantially in the form of
Exhibit I to the Partnership Agreement (modified to
incorporate by reference the relevant provisions of this
Agreement including Annex A hereto) payable to the order of
such Responsible Participating Partner in the principal
amount of, and dated the date of, such Letter of Credit
Payment Draw.
(B) In the event that there shall occur, with respect to a
Primestar Primary LC, a Letter of Credit Payment Draw, and such draw shall cause
a draw on one or more Secondary LC's:
(i) such draw on each such Secondary LC shall be deemed to be a
Non-Recourse Advance (approved by the Partners Committee) by
the Responsible Participating Partner in the amount of such
draw repayable by Primestar (subject to Section 4 hereof and
Annex A hereto) 60 days after the date of such Letter of
Credit Payment Draw on such Primestar Primary LC; and
(ii) Primestar shall promptly issue to each such Responsible
Participating Partner a note substantially in the form of
Exhibit I to the Partnership Agreement (modified to
incorporate by reference the relevant provisions of this
Agreement including Annex A
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hereto) payable to the order of such Responsible
Participating Partner in the principal amount of such Non-
Recourse Advance and dated the date of such Letter of Credit
Payment Draw on such Primestar Primary LC.
4. Subordination of Participating Partner Advances to MOA/Service
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Agreement Obligations. The obligations of Primestar to make payments to the
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Participating Partners in connection with the Non-Recourse Advances referred to
in Sections 2 and 3 hereof, shall be subordinate and subject in right of
payment, in the manner and to the extent set forth in Annex A hereto (which is
by reference incorporated in and made a part hereof), to the obligations of
Primestar to make payments to GE under the MOA and Service Agreement.
5. Rights of GE to Draw on Letters of Credit to Survive Primestar
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Bankruptcy; Participating Partners Entitled to Benefit of GE Mitigation
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Obligation. Each of the Participating Partners acknowledges and agrees that if
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at any time the MOA, Service Agreement and/or LC Addendum shall have been
rejected or deemed rejected in any bankruptcy proceeding of Primestar, GE shall
be entitled to make draws under the Letters of Credit and withdrawals from the
GE Collateral Account in accordance with the terms of the LC Addendum (including
without limitation Article 3F thereof) as if such rejection or deemed rejection
had not occurred. GE, Primestar, and each of the Participating Partners agree
that any duty GE may have to Primestar, a Participating Partner or any affiliate
thereof to mitigate damages arising from any breach of the MOA, Service
Agreement or LC Addendum by Primestar (including but not limited to any breach
resulting from a rejection or deemed rejection) shall be limited to GE's
mitigation obligation as specified in Article 3F of the LC Addendum. GE further
agrees that such mitigation obligation shall run to the benefit of each
Participating Partner and each such affiliate.
6. Warranties of GE in Connection with Draws on Letters of Credit and
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Withdrawals from GE Collateral Account. In connection with any draw by GE on a
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Letter of Credit issued for the account of Primestar, with respect to which
Primestar's reimbursement obligations are backed by Secondary LC's, guarantees
of Participating Partners (or their affiliates), and/or collateral pledged by
Participating Partners (or their affiliates), or for the account of a
Participating Partner (or an affiliate thereof) and in connection with any
withdrawal by GE from the GE Cash Collateral Account, GE makes the following
warranties to Primestar and each such Participating Partner (i) effective upon
presentment of its demand and drawing certificate or withdrawal notice, GE
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warrants that GE's presentation is not materially fraudulent and that honor of
such presentation would not facilitate a fraud by GE on the issuer of the
applicable Letter of Credit or on Primestar or such Participating Partner or its
affiliate for whose account the Letter of Credit was issued; and (ii) effective
at the time such Letter of Credit drawing or withdrawal of cash collateral is
honored, GE warrants that such drawing or withdrawal does not violate the
provisions of the LC Addendum. Except as provided in this Section 6, GE makes
no warranties of any kind hereunder to any Participating Partner in connection
with any draw by GE on any Letter of Credit or withdrawal by GE from the GE Cash
Collateral Account.
7. Partnership Agreement Amendment. If and to the extent that any
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provisions of this Agreement are inconsistent with any provision of the
Partnership Agreement, to the extent necessary to give effect to the terms and
interest of this Agreement, but only to such extent, the provisions of this
Agreement shall govern, and the conflicting provisions of the Partnership
Agreement shall be deemed amended accordingly.
8. Further Assurances. Each of the parties to this Agreement agrees
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that at any time and from time to time upon written request of any other party,
it will execute and deliver such further documents and do such further acts and
things as such other party may reasonably request in order to effect the
purposes of this Agreement.
9. Miscellaneous. This Agreement may not be amended or modified in
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any way, and none of the provisions herein may be waived, except in writing
signed (i) by an authorized representative of the party against which the
amendment, modification or waiver is sought to be enforced and (ii) in the case
of any amendment, modification or waiver which is in effect an amendment to the
Partnership Agreement, by the persons whose approval is then required under the
provisions of the Partnership Agreement to effect an amendment to the
Partnership Agreement; provided, however, that, unless GEA or GE, as the case
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may be, would be adversely affected thereby, (a) any provision of this Agreement
except Sections 4, 5 and 6 and this Section 9, may be amended, modified or
waived without the consent of GE, (b) the consent of GEA shall not be required
for any amendment, modification or waiver of any provision of this Agreement
except Section 7 and clauses (b) and (c) of this Section 9 and (c) any provision
of this Agreement which is not inconsistent with any provision of the
Partnership Agreement may be amended or modified without the consent of GEA.
Any Participating Partner may assign all of its rights and obligations
under this Agreement in connection with the
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transfer of its entire Partnership Interest in accordance with the terms of the
Partnership Agreement, to the transferee or transferees of such Partnership
Interest, provided (x) any Partner Primary LC or Secondary LC issued for the
account of such Participating Partner or one or more of its Affiliates shall
have been replaced by a Partner Primary LC or Secondary LC, as the case may be,
issued for the account of such transferee or transferees, and such replacement
shall not have caused Primestar to fail to be in compliance with the LC Addendum
or a Primestar Primary LC Reimbursement Agreement, (y) in the event there has
been any draw under a Partner Primary LC or Secondary LC issued for the account
of such Participating Partner or one or more of its Affiliates, the
Participating Partner and such Affiliate(s) shall have irrevocably assigned to
the transferee or transferees or one or more of their Affiliates all of their
rights and obligations with respect to, or arising in connection with, all such
draws, including without limitation with respect to all Non-Recourse Advances
made or deemed to have been made by such Participating Partner under Section 2
or Section 3 of this Agreement which have not been repaid in accordance with the
terms of this Agreement (including Section 4 and Annex A) and all Participating
Partner Notes issued in connection therewith, any and all interest of the
Participating Partner and its affiliates in amounts held in any Collateral
Account, and any rights of the Participating Partner and its Affiliates under
Section 5 of this Agreement, and (z) such transferee or transferees shall have
executed and delivered to each other party hereto an instrument pursuant to
which each such transferee agrees to be bound by all of the terms of this
Agreement as an additional party hereto. Upon such an assignment of its rights
and obligations under this Agreement in accordance with the foregoing, such
Participating Partner shall be released from all obligations under this
Agreement. Subject to the foregoing, no party hereto shall assign this Agreement
or any part hereof without the prior written consent of the other parties.
Except as otherwise provided herein, this Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns (including, without limitation, successors and permitted
assigns of a Participating Partner's interest hereunder and in its Partnership
Interests and successors and permitted assigns of the interests of the
Participating Partner or its Affiliates in deemed Non-Recourse Advances).
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All notices, demands, requests, and other communications hereunder
shall be in writing and shall be given as specified in Section 13.02 of the
Partnership Agreement and, in the case of GE, to it at the following address
(fax number) or such other address (fax number) as GE may designate in writing:
Manager, Customer Contracts
GE American Communications, Inc.
Four Xxxxxxxx Xxx
Xxxxxxxxx, Xxx Xxxxxx 00000-0000
Fax: (000) 000-0000
Phone: (000) 000-0000
with a copy to:
Vice President and General Counsel
GE American Communications, Inc.
Four Xxxxxxxx Xxx
Xxxxxxxxx, Xxx Xxxxxx 00000-0000
Fax: (000) 000-0000
Phone: (000) 000-0000
Any waiver or failure to enforce any provision of this Agreement shall
not be construed as a continuing waiver.
If any provision of this Agreement or the application thereof to any
person or circumstances shall be invalid or unenforceable to any extent, the
remainder of this Agreement and the application of such provisions to other
persons or circumstances shall not be affected thereby and shall be enforced to
the fullest extent permitted by law.
This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Delaware (without giving effect to its
choice of law principles.)
This Agreement may be executed in as many counterparts as may be
deemed necessary and convenient, and by the different parties hereto on separate
counterparts, each of which, when so executed, shall be deemed an original, but
all such counterparts shall constitute but one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto, intending to be legally bound,
have caused this Agreement to be executed by their duly authorized officers as
of the date first above written.
PRIMESTAR PARTNERS L.P.
By
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Name:
Title:
GE AMERICOM SERVICES, INC.
By
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Name:
Title:
GE AMERICAN COMMUNICATIONS, INC.
By
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Name:
Title:
PARTICIPATING PARTNERS
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COMCAST DBS, INC. TCI K-1, Inc.
By By
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Name: Name:
Title: Title:
CONTINENTAL SATELLITE TW PROGRAMMING CO.
COMPANY, INC.
By
By -----------------------------
------------------------------- a general partner
Name:
Title: By
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Name:
Title:
COX SATELLITE, INC.
UNITED ARTISTS K-1
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By INVESTMENTS, INC.
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Name:
Title:
By
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Name:
Title
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NEW VISION SATELLITE
By: XXXXXXXX SATELLITE, INC.,
a general partner
By
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Name:
Title:
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