THIRD AMENDED AND RESTATED
AGREEMENT
OF
LIMITED PARTNERSHIP
OF
INTERNATIONAL PRIVATE SATELLITE PARTNERS, L.P.
TABLE OF CONTENTS
Page
----
ARTICLE I CERTAIN DEFINITIONS.................................................2
ARTICLE II PARTNERSHIP CONTINUATION, NAME, PLACE OF
BUSINESS........................................9
2.01. Continuation of Partnership; Certificate of Limited
Partnership; Determination of Partnership Rights and
Duties............................................................9
2.02. Name of Partnership...............................................9
2.03. Place of Business................................................10
2.04. Registered Office and Registered Agent...........................10
ARTICLE III PURPOSES AND POWERS OF PARTNERSHIP...............................10
3.01. Purposes.........................................................10
3.02. Powers...........................................................10
3.03. Limitation on Powers of the Partnership..........................12
ARTICLE IV TERM OF PARTNERSHIP..............................................12
4.01. Term.............................................................12
ARTICLE V CAPITAL..........................................................12
5.01. Capital Contribution of General Partner..........................12
5.02. [Intentionally omitted.].........................................12
5.03. Capital Contributions of Limited Partners........................12
5.04. Capital Accounts.................................................13
5.05. Negative Capital Accounts........................................15
5.06. No Interest on Amounts in Capital Account........................16
5.07. Advances to Partnership..........................................16
5.08. Liability of Limited Partners....................................16
5.09. Return of Capital................................................16
ARTICLE VI ALLOCATION OF PROFITS AND LOSSES;
DISTRIBUTIONS OF CASH FLOW AND CERTAIN PROCEEDS........................17
6.01. Certain Definitions..............................................17
6.02. Allocation of Net Income or Net Loss.............................18
6.03. Allocation of Income and Loss With Respect to Partnership
Interests Transferred............................................20
6.04. Distribution of Cash Flow........................................20
6.05. Distribution of Proceeds from Terminating Capital
Transactions.....................................................21
6.06. Special Allocation Rules.........................................22
6.07. Contributed Property; Revaluations Pursuant to Section
704(b) Regulations...............................................26
6.08. Taxes............................................................26
ARTICLE VII MANAGEMENT.......................................................28
7.01. Management and Control of Partnership Business...................28
7.02. Powers of General Partner........................................29
7.03. Power of Attorney................................................30
-i-
7.04. Limitation on Authority of General Partner.......................32
7.05. Working Capital Reserve..........................................33
7.06. Other Activities of Partners.....................................33
7.07. Transactions with General Partner or Affiliates..................34
7.08. Liability of General Partner and Affiliates to Partnership
and Limited Partners.............................................34
7.09. Indemnification of General Partner and Limited Partners..........35
7.10. No Management by Limited Partners................................36
7.11. Partners Planning and Policy Review Committee....................37
7.12. Meetings of Limited Partners.....................................40
7.13. Transfer of Limited Partnership Interest to the General
Partner..........................................................41
7.14. Technical Committee..............................................41
ARTICLE VIII COMPENSATION OF GENERAL PARTNER;
PAYMENT OF PARTNERSHIP EXPENSES.........................................43
8.01. Compensation of General Partner..................................43
8.02. Partnership Expenses.............................................43
8.03. Acquisition, Organizational, and Offering Expenses...............43
ARTICLE IX BANK ACCOUNTS; BOOKS AND RECORDS;
STATEMENTS; TAXES; FISCAL YEAR; ANNUAL BUDGET...........................43
9.01. Bank Accounts and Investments....................................43
9.02. Books and Records................................................44
9.03. Financial Statements and Information.............................44
9.04. Accounting Decisions.............................................46
9.05. Where Maintained.................................................46
9.06. Tax Returns and Tax Matters......................................46
9.07. Federal Income Tax Elections.....................................47
9.08. Fiscal Year......................................................47
9.09. Annual Budget....................................................47
ARTICLE X TRANSFER OF INTERESTS..............................................49
10.01. Transfer........................................................49
10.02. Transfer of Interest of General Partner.........................50
10.03. Transfer of Interest of Limited Partner.........................50
10.04. Partners' Rights of First Refusal...............................51
10.05. Restriction on Certain Transfers................................53
ARTICLE XI OFFERING OF ADDITIONAL PARTNERSHIP
INTERESTS; ADMISSION OF ADDITIONAL PARTNERS;
WITHDRAWAL OF PARTNERS; REMOVAL OF GENERAL
PARTNER.................................................................53
11.01. Offering of Additional Partnership Interests....................53
11.02. Admission of Additional Limited Partners........................55
11.03. Admission of Successor General Partner..........................55
11.04. Withdrawal of General Partner...................................56
11.05. Withdrawal of Limited Partner...................................56
11.06. Removal of General Partner......................................56
-ii-
ARTICLE XII DISSOLUTION AND LIQUIDATION......................................58
12.01. Events Causing Dissolution......................................58
12.02. Right to Continue Business of Partnership.......................60
12.03. Liquidation.....................................................60
12.04. Termination of Partnership......................................60
ARTICLE XIII MISCELLANEOUS PROVISIONS........................................61
13.01. Additional Actions and Documents................................61
13.02. Notices.........................................................61
13.03. Severability....................................................62
13.04. Survival........................................................62
13.05. Waivers.........................................................62
13.06. Exercise of Rights..............................................63
13.07. Binding Effect..................................................63
13.08. Limitation on Benefits of this Agreement........................63
13.09. Amendment Procedure.............................................63
13.10. Waiver of Partition.............................................65
13.11. Consolidation...................................................65
13.12. Entire Agreement................................................65
13.13. Pronouns........................................................65
13.14. Headings........................................................65
13.15. Governing Law...................................................65
13.16. Execution in Counterparts.......................................66
13.17. Interest Rates..................................................66
ARTICLE XIV STET REDEMPTION..................................................66
14.01. Ratification of STET Redemption, Issuance of New Interest
to ONS..........................................................66
14.02. STET's Unrecovered Contingent Contributions.....................67
14.03. Termination and Modification of STET Agreements.................67
14.04. BA Waiver.......................................................68
ARTICLE XV PARTNERSHIP APPROVALS.............................................69
ARTICLE XVI EXECUTION.........................................................70
iii
THIRD AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
INTERNATIONAL PRIVATE SATELLITE PARTNERS, L.P.
THIS THIRD AMENDED AND RESTATED AGREEMENT OF LIMITED
PARTNERSHIP is entered into as of _______________, 1996 by and among Orion
Satellite Corporation, a Delaware corporation, as the General Partner, the
persons named as Limited Partners on Schedule A and any other persons or
entities who shall in the future execute and deliver this Agreement as
additional or substitute Partners pursuant to the provisions hereof. The
principal place of business of the General Partner and each Limited Partner are
set forth on Schedule A.
WHEREAS, the General Partner and the Orion Network Systems,
Inc., a Delaware corporation, as the organizational limited partner (the
"Organizational Limited Partner"), in accordance with the Delaware Revised
Uniform Limited Partnership Act, formed a limited partnership under the name
"International Private Satellite Partners, L.P." (the "Partnership") pursuant to
an initial agreement of limited partnership (the "Initial Agreement"), dated as
of August 15, 1989 and a Certificate of Limited Partnership dated as of August
15, 1989 and filed with the office of the Secretary of State of Delaware on
August 17, 1989; and
WHEREAS, counterparts of an Amended and Restated Agreement of
Limited Partnership and first, second and third amendments thereto
(collectively, the "First Amended and Restated Agreement") were executed and
deposited into escrow by the General Partner and certain proposed limited
partners of the Partnership; and
WHEREAS, pursuant to a Second Amended and Restated Agreement
of Limited Partnership entered into as of December 20, 1991 (the "Second Amended
and Restated Agreement") the parties thereto amended and restated the Initial
Agreement and the First Amended and Restated Agreement as provided therein, the
Organizational Limited Partner withdrew from the Partnership, and the General
Partner and the limited partners of the Partnership continued the Partnership
for the purposes set forth therein, subject to the terms and conditions thereof;
WHEREAS, the General Partner and the limited partners of the
Partnership entered into the First Amendment to the Second Amended and Restated
Agreement of Limited Partnership of International
Private Satellite Partners, L.P., effective as of December 20, 1991, the Second
Amendment to the Second Amended and Restated Agreement of Limited Partnership of
International Private Satellite Partners, L.P. dated April 2, 1992, the Third
Amendment to the Second Amended and Restated Agreement of Limited Partnership of
International Private Satellite Partners, L.P. dated April 2, 1992, the Fourth
Amendment to the Second Amended and Restated Agreement of Limited Partnership of
International Private Satellite Partners, L.P. dated March 22, 1994, the Fifth
Amendment to the Second Amended and Restated Agreement of Limited Partnership of
International Private Satellite Partners, L.P., dated May 2, 1994 and the Sixth
Amendment to the Second Amended and Restated Agreement of Limited Partnership of
International Private Satellite Partners, L.P., dated November ____, 1995; and
WHEREAS, the parties hereto desire to amend and restate the
Second Amended and Restated Agreement, as amended by the six amendments listed
in the prior paragraph, and the General Partner and the Limited Partners desire
to continue the Partnership for the purposes hereinafter set forth, subject to
the terms and conditions hereof.
NOW, THEREFORE, in consideration of the foregoing, and of the
covenants and agreements hereinafter set forth, the parties hereto hereby agree
as follows:
ARTICLE I
CERTAIN DEFINITIONS
Unless the context otherwise specifies or requires, the terms
defined in this Article I shall, for the purposes of this Agreement, have the
meanings herein specified. Unless otherwise specified, all references herein to
Articles, Sections, or Schedules are to Articles or Sections of, or Schedules
attached to, this Agreement.
Adjusted Basis: The basis for determining gain or loss for
federal income tax purposes from the sale or other disposition of property, as
defined in section 1011 of the Code.
Affiliate: With respect to a specified Person, (a) any other
Person directly or indirectly owning, controlling, or holding power to vote ten
percent (10%) or more of the voting securities, on a fully diluted basis of such
specified Person; (b) any other Person ten percent (10%) or more of the voting
securities, on a fully diluted basis of which are directly or indirectly owned,
controlled, or held with power to vote by such specified Person; (c) any other
Person directly or indirectly controlling, controlled by, or under common
control with such specified Person; (d) if such specified Person is a
corporation, any executive officer or director of such specified Person or of
any corporation directly or indirectly controlling such specified Person; and
(e) if such specified Person is a partnership, any general partner owning or
controlling ten percent (10%) or more, on a fully diluted basis of either the
capital or profits interest in such partnership. As used in this definition of
"Affiliate," the term "control" means the possession, directly or indirectly, of
the
-2-
power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract, or
otherwise. As used herein, this definition of "Affiliate" excludes an Affiliate
of an Affiliate, unless such Person would otherwise be an Affiliate under this
definition.
Agreement: This Third Amended and Restated Agreement of
Limited Partnership, as it may be further amended or supplemented from time to
time.
Book Tax Gain and Book Tax Loss: The amount of taxable gain or
loss for federal income tax purposes that would result from a sale or other
disposition of a Partnership Asset if, at the time of such sale or disposition,
the Adjusted Basis of the Partnership Asset sold or otherwise disposed of were
equal to the Carrying Value of such Partnership Asset at such time.
Business Day: Monday through Friday of each week, except that
a legal holiday recognized as such by the Government of the United States or the
State of Maryland shall not be regarded as a Business Day.
Capacity Option Agreement: Each of the Option Agreements,
including any amendments thereto, entered into effective as of December 20, 1991
between the Partnership and each Limited Partner or its Affiliate, any
substantially similar agreement entered into by the Partnership and a Limited
Partner or its Affiliate after December 20, 1991 and any substantially similar
agreement which may be entered into by the Partnership and a Limited Partner or
its Affiliate after the date of this Agreement.
Capital Account: The capital account established and
maintained for each Partner pursuant to Section 5.04.
Capital Contribution: Any property (including cash), whether
tangible or intangible, contributed to the Partnership by or on behalf of a
Partner.
Carrying Value: (a) With respect to any asset contributed to
the Partnership or revalued on the Partnership's books pursuant to Section
5.04(d), the fair market value of such asset (as determined by the Partners) at
the time of contribution or revaluation, reduced, but not below zero, by all
deductions for Depreciation (as defined in the definition of Net Income and Net
Loss) debited to the Capital Accounts of the Partners pursuant to Section
5.04(a) with respect to such asset from the later of the time of contribution or
the most recent revaluation to the time the Carrying Value is to be determined;
and (b) with respect to any other asset of the Partnership, the Adjusted Basis
of such asset as of the time the Carrying Value is to be determined.
Cash Flow: As defined in Section 6.01(a).
-3-
Certificate: The Certificate of Limited Partnership, and any
and all amendments thereto, filed on behalf of the Partnership with the
Recording Office as required under the Delaware RULPA.
Code: The Internal Revenue Code of 1986, as in effect and
hereafter amended, and, unless the context otherwise requires, applicable
regulations thereunder. Any reference herein to a specific section or sections
of the Code shall be deemed to include a reference to any corresponding
provision of future law.
Communications Satellite Capacity Agreement: Each of the
Communications Satellite Capacity Agreements, including any amendments thereto,
effective as of December 20, 1991 between the Partnership and each Limited
Partner or its Affiliate, any substantially similar agreement entered into by
the Partnership and a Limited Partner or its Affiliate after December 20, 1991
and any substantially similar agreement which may be entered into by the
Partnership and a Limited Partner or its Affiliate after the date of this
Agreement.
Contingent Communications Satellite Capacity Agreement: Each
of the Contingent Communications Satellite Capacity Agreements, including any
amendments thereto, effective as of December 20, 1991 between the Partnership
and each Limited Partner or its Affiliate, any substantially similar agreement
entered into by the Partnership and a Limited Partner or its Affiliate after
December 20, 1991 and any substantially similar agreement which may be entered
into by the Partnership and a Limited Partner or its Affiliate after the date of
this Agreement.
Delaware RULPA: The Delaware Revised Uniform Limited
Partnership Act (Del. Code Xxx. tit. 6 ss. 17-101 et seq.), as amended to date
and as it may be amended from time to time hereafter, and any successor to such
Act.
Excess Negative Balance: The negative balance, if any, in a
Partner's Capital Account as of the end of a Fiscal Year after crediting the
Partner's Capital Account for the amount of any deficit balance in such Capital
Account that the Partner is obligated to restore or is treated as being
obligated to restore pursuant to Regulations sections 1.704-1(b)(2)(ii) (b)(3)
and 1.704-1(b)(2)(ii)(c), including the amount of such Partner's share of the
Partnership's Minimum Gain, determined pursuant to Regulations sections
1.704-1T(b)(4)(iv)(f) and 1.704-1T(b)(4)(iv)(h)(5); and debiting the Partner's
Capital Account for any adjustment, allocation, or distribution described in
paragraph (4), (5), or (6) of Regulations section 1.704-1(b)(2)(ii)(d).
FCC: The United States Federal Communications Commission or
any successor thereto.
FCC License: The FCC license to construct, launch and operate
two in-orbit satellites at 37.5(degree) West Longitude and 47(degree) West
Longitude and all rights granted under that license.
-4-
Fiscal Year: The fiscal year of the Partnership for financial
accounting purposes, and for federal, state, and local income tax purposes,
which shall be the calendar year unless changed by the General Partner in
accordance with Section 9.08.
General Partner: Orion Satellite Corporation, or any other
Person admitted to the Partnership as a general partner in accordance with this
Agreement.
Independent Party: A panel of three individuals, as
constituted or reconstituted from time to time, each of which persons shall be a
fit and impartial person (where "impartial" means that such person, at the time
of such person's appointment to the panel, is not and has never been an officer,
director, partner, employee, or Affiliate of the General Partner or any Limited
Partner), of which one of such persons shall be chosen by the General Partner,
one of such persons shall be chosen by the Limited Partners pursuant to the
approval of an LP Majority, and one of such persons shall be chosen by the other
two so chosen.
Limited Partner: Any Person named as a Limited Partner on
Schedule A, as it may be amended from time to time, and any other persons or
entities who shall in the future execute and deliver this Agreement as
additional or substitute Partners pursuant to the provisions hereof.
LP Majority: Limited Partners holding a majority of the total
Percentage Interests then held by all Limited Partners.
Minimum Gain: The amount determined by computing, with respect
to each Nonrecourse Debt of the Partnership, the amount of Book Tax Gain (of
whatever character), if any, that the Partnership would realize if it disposed
of (in a taxable transaction) the Partnership Assets subject to such Nonrecourse
Debt in full satisfaction thereof and for no other consideration, and by then
aggregating the amounts so computed. For purposes of computing the amount of
Minimum Gain, (i) the Carrying Value of a Partnership Asset subject to two or
more Nonrecourse Debts of equal priority shall be allocated among such
Nonrecourse Debts in proportion to the outstanding principal balances of such
Nonrecourse Debts; (ii) the Carrying Value of a Partnership Asset subject to two
or more Nonrecourse Debts of unequal priority shall be allocated to the
Nonrecourse Debts of an inferior priority (in accordance with clause (i) above)
only to the extent of the excess, if any, of the Carrying Value of the
Partnership Asset over the aggregate outstanding balance of the Nonrecourse
Debts of superior priority; and (iii) only the portion of Carrying Value of a
Partnership Asset allocated to Nonrecourse Debts of the Partnership shall be
used in computing the Minimum Gain.
Net Income and Net Loss: For any taxable period, (i) the gross
income of the Partnership from all sources, as calculated for federal income tax
purposes by the Partnership (but excluding any item of income or gain taken into
account in computing Book Tax Gain or Book Tax Loss), plus (ii) any Book Tax
Gain
-5-
recognized by the Partnership during such period, plus (iii) any income of the
Partnership that is exempt from federal income tax and not otherwise taken into
account in computing gross income for federal income tax purposes, reduced by
(iv) Depreciation (as defined below), further reduced by (v) all other items of
expense or deduction (other than Depreciation (as defined below)) that are
allowable as deductions to the Partnership under the Code for such period (but
excluding any item of expense or deduction taken into account in computing Book
Tax Gain or Book Tax Loss), further reduced by (vi) any Book Tax Loss recognized
by the Partnership during such period, and further reduced by (vii) any
expenditures of the Partnership described in section 705(a)(2)(B) of the Code or
treated as expenditures described in section 705(a)(2)(B) of the Code pursuant
to Regulations section 1.704-1(b)(2)(iv)(i), and not otherwise taken into
account in computing taxable income (including for the purposes hereof, any
foreign income taxes paid or deemed paid by the Partnership for purposes of
section 901, et seq. of the Code). In computing Net Income and Net Loss, all
items of income, gain, loss, or deduction required to be specially allocated to
one or more Partners pursuant to Section 6.06 shall be excluded. "Depreciation"
means, for each taxable period, an amount equal to the depreciation,
amortization, or other cost recovery deductions allowable with respect to a
Partnership Asset for such period for federal income tax purposes computed
(using the same method used by the Partnership in computing depreciation,
amortization, or other cost recovery deductions in preparing its federal income
tax returns, or if the Adjusted Basis of the Partnership Asset is zero, such
method as is reasonably determined by the General Partner) as if the Adjusted
Basis of such Partnership Asset were equal to their Carrying Values. Except as
otherwise specifically provided herein or in the Regulations under section 704
of the Code, for purposes of computing the amount of any item of income, gain,
deduction, or loss in determining Net Income or Net Loss, the determination,
recognition, and classification of such item shall be the same as its
determination, recognition, and classification for federal income tax purposes.
All items of income, gain, loss, deduction, and credit recognized by the
Partnership for federal income tax purposes and allocated to the Partners in
accordance with the provisions of Article VI shall be determined without regard
to any election that may be made by the Partnership under section 754 of the
Code except as expressly contemplated under the Regulations section
1.704-1(b)(2)(iv)(m)(4); provided, however, that such allocations, once made,
shall be adjusted as necessary to take into account those adjustments authorized
under sections 734 and 743 of the Code.
Net Proceeds of a Terminating Capital Transaction: As defined
in Section 6.01(b).
Nonrecourse Debt: Any liability that is considered nonrecourse
for purposes of Regulations section 1.1001-2 (without regard to whether such
liability is a recourse liability under Regulations section 1.752-1T(d)(2)) and
any other liability for which the creditor's right to repayment is limited to
one or more of the assets of the Partnership (within the meaning of Regulations
section 1.752-1T(d)(3)(ii)(B)(4)(ii).
-6-
Nonrecourse Liability: Any Nonrecourse Debt (or portion
thereof) for which no Partner bears (or is deemed to bear) the economic risk of
loss within the meaning of Regulations section 1.704-1T(b)(4)(iv)(k)(3).
Organizational Limited Partner: Orion Network Systems, Inc.
Partner: A General Partner or a Limited Partner.
Partner Nonrecourse Debt: Any Nonrecourse Debt (or portion
thereof) for which a Partner bears (or is deemed to bear) the economic risk of
loss within the meaning of Regulations section 1.704-1T(b)(4)(iv)(k)(1).
Partnership: The limited partnership created pursuant to the
Certificate and continued by this Agreement.
Partnership Assets: All assets and property, whether tangible
or intangible and whether real, personal, or mixed, at any time owned by or held
for the benefit of the Partnership.
Partnership Interest: As to any Partner, all of the interest
of such Partner in the Partnership, including, without limitation, such
Partner's (i) right to a distributive share of the income, gain, losses and
deductions of the Partnership in accordance herewith, (ii) right to a
distributive share of Partnership Assets, (iii) rights, if a General Partner,
with respect to the management of the business and affairs of the Partnership
and (iv) consensual and voting rights, if a Limited Partner, with respect to
certain matters as provided herein.
Partnership Liabilities: All debts, liabilities, and other
obligations of the Partnership.
Percentage Interest: As defined in Section 6.01(c).
Person: Any individual, corporation, association, partnership,
joint venture, trust, estate, or other entity or organization.
Recording Office: The office of the Secretary of State of the
State of Delaware.
Regulations: The regulations issued by the United States
Department of the Treasury under the Code, as now in effect and as they may be
amended from time to time, and any successor regulations.
Review Committee: As defined in Section 7.11(a).
Satellite Authorizations: The FCC License, any other satellite
licenses and authorizations or rights thereunder granted by the FCC or other
governmental agencies which may be held by the General Partner or the
Partnership, and all other permits, approvals, consents, authorizations,
registrations, consultations,
-7-
notifications, coordinations, and licenses necessary or appropriate for the
construction, launch or operation of each satellite owned by the Partnership.
Satellite Construction Contract: The Second Amended and
Restated Purchase Contract, dated as of September 24, 1991, between the General
Partner and British Aerospace Public Limited Company, as amended, as such
agreement has been assigned by the General Partner to the Partnership pursuant
to an Assignment and Assumption of Satellite Construction Contract between the
General Partner and the Partnership effective as of December 20, 1991.
Section 754 Election: An election under section 754 of the
Code relating to the adjustment of the Adjusted Basis of Partnership Assets, as
provided in sections 734 and 743 of the Code.
Ten Year Projection: As defined in Section 7.11(b)(ii).
Terminating Capital Transaction: Any sale, condemnation,
exchange, abandonment, or other disposition, whether by foreclosure or
otherwise, of all or substantially all of the then remaining Partnership Assets
and/or any other transaction which will result in a dissolution of the
Partnership, or any sale or other disposition of the Partnership Assets or any
portion thereof or any other transactions in connection with the dissolution and
liquidation of the Partnership pursuant to Article XII.
Termination Date: December 31, 2039.
Unrealized Gain: As to any Partnership Asset, the Book Tax
Gain, if any, that would be realized if such Partnership Asset were sold for its
fair market value on the date of determination.
Unrealized Loss: As to any Partnership Asset, the Book Tax
Loss, if any, that would be realized if such Partnership Asset were sold for its
fair market value on the date of determination.
Unrecovered Contingent Contributions: With respect to each
Limited Partner, the aggregate amount, if any, of contingent payments made by
the Limited Partner or its Affiliate to the Partnership pursuant to Article II
of the Contingent Communications Satellite Capacity Agreement or to a payment
guarantee agreement in accordance with Article III of the Contingent
Communications Satellite Capacity Agreement and treated as contributions by such
Partner to the capital of the Partnership pursuant to Section 5.01 of the
Contingent Communications Satellite Capacity Agreement, reduced, as and when
made, by the amounts distributed to the Limited Partner in reduction of such
amounts pursuant to Section 6.04(a)(i).
Unrecovered Initial Contributions: In the case of the General
Partner, $10,000,000, and in the case of the Limited Partners, the amounts set
forth on
-8-
Schedule A. A Partner's Unrecovered Initial Contribution shall be
reduced, as and when made, by the amounts distributed to such Partner pursuant
to Section 6.04(a)(ii).
Working Capital Reserve: The reserve for working capital
established by the General Partner pursuant to Section 7.05.
ARTICLE II
PARTNERSHIP CONTINUATION, NAME, PLACE OF BUSINESS
2.01. CONTINUATION OF PARTNERSHIP; CERTIFICATE OF LIMITED
PARTNERSHIP; DETERMINATION OF PARTNERSHIP RIGHTS AND
DUTIES.
The Partnership was formed on August 17, 1989, pursuant to the
provisions of the Delaware RULPA. The Partners hereby execute this Agreement for
the purpose of continuing the existence of the Partnership, and setting forth
the rights, duties, and relationship of the Partners. If the laws of any
jurisdiction in which the Partnership transacts business so require, the General
Partner also shall file, with the appropriate office in that jurisdiction, a
copy of the Certificate as filed with the Recording Office or any other
documents necessary for the Partnership to qualify to transact business and to
establish and maintain the Limited Partners' limited liability under the
Delaware RULPA. The Partners further agree and obligate themselves to execute,
acknowledge, and cause to be filed for record, in the place or places and manner
prescribed by law, any amendments to the Certificate as may be required, either
by the Delaware RULPA, by the laws of a jurisdiction in which the Partnership
transacts business, or by this Agreement, to reflect changes in the information
contained therein or otherwise to comply with the requirements of law for the
continuation, preservation, and operation of the Partnership as a limited
partnership under the Delaware RULPA.
2.02. NAME OF PARTNERSHIP.
The name under which the Partnership shall conduct its
business is "International Private Satellite Partners, L.P." The business of the
Partnership may be conducted under any other name permitted by the Delaware
RULPA that is deemed necessary or desirable by the General Partner, in its sole
and absolute discretion. The General Partner promptly shall execute, file, and
record any assumed or fictitious name certificates required by the laws of the
State of Delaware or any state in which the Partnership conducts business and
shall take such other action as the General Partner determines are required by
the laws of the State of Delaware, or any other state in which the Partnership
conducts business, to use the name or names under which the Partnership conducts
business.
-9-
2.03. PLACE OF BUSINESS.
The principal place of business of the Partnership shall be
located at 0000 Xxxxxxxx Xxxx., Xxxxx 000, Xxxxxxxxx, Xxxxxxxx 00000-0000. The
General Partner may hereafter change the principal place of business of the
Partnership to such other place or places within the United States as the
General Partner may from time to time determine, in its sole and absolute
discretion, provided that the General Partner shall give written notice thereof
to the Limited Partners within thirty (30) days after the effective date of any
such change and, if necessary, shall amend the Certificate in accordance with
the applicable requirements of the Delaware RULPA. The General Partner may, in
its sole and absolute discretion, establish and maintain such other offices and
additional places of business of the Partnership, either within or without the
State of Delaware, as it deems appropriate.
2.04. REGISTERED OFFICE AND REGISTERED AGENT.
The street address of the registered office of the Partnership
shall be 0000 Xxxxxx Xxxx, Xxxxxxxxxx, Xxxxxxxx 00000, and the Partnership's
registered agent at such address shall be the Corporation Service Company.
ARTICLE III
PURPOSES AND POWERS OF PARTNERSHIP
3.01. PURPOSES.
The purposes of the Partnership shall be:
3.01(a)to develop international communications
satellite facilities and to engage in the business of providing communications
and communications-related services;
3.01(b) to acquire, hold, own, operate, lease, manage,
maintain, improve, repair, replace, reconstruct, sell, or otherwise dispose of
and otherwise use the Partnership Assets; and
3.01(c) to enter into any lawful transaction and engage
in any lawful activity incidental to or in furtherance of the foregoing
purposes.
3.02. POWERS.
The Partnership shall have the power to do any and all acts and things
necessary, appropriate, advisable, or convenient for the furtherance and
accomplishment of the purposes of the Partnership, including, without
limitation, the following:
-10-
3.02(a) to borrow (on a secured or unsecured basis)
money and issue evidences of indebtedness, and to secure the same by mortgages,
deeds of trust, security interests, pledges, or other liens on all or any part
of the Partnership Assets;
3.02(b) to secure and maintain insurance against
liability or other loss with respect to the activities and assets of the
Partnership (including, without limitation, insurance against liabilities under
Section 7.09(e));
3.02(c) to employ or retain such persons as may be
necessary or appropriate for the conduct of the Partnership's business,
including permanent, temporary, or part-time employees and independent
attorneys, accountants, consultants, and contractors;
3.02(d) to acquire, own, hold, maintain, use, lease,
sublease, manage, operate, sell, exchange, transfer, or otherwise deal in assets
and property as may be necessary or convenient for the purposes of the
Partnership;
3.02(e) to incur expenses and to enter into, guarantee,
perform, and carry out contracts, agreements, leases, subleases, and commitments
of any kind, to assume obligations, and to execute, deliver, acknowledge, and
file documents in furtherance of the purposes of the Partnership;
3.02(f) to pay, collect, compromise, arbitrate,
litigate, or otherwise adjust, contest, or settle any and all claims or demands
of or against the Partnership;
3.02(g) to establish and maintain one or more bank
accounts in the name of the Partnership at such banks as may be selected by the
General Partner, to deposit in such account(s) the funds received from time to
time by or on behalf of the Partnership, and to pay the debts, expenses, and
obligations of the Partnership by checks drawn on such accounts and signed by
the General Partner or by such other signatory as the General Partner shall
designate;
3.02(h) to invest in interest-bearing accounts and
short-term investments, including, without limitation, obligations of federal,
state, and local governments and their agencies, mutual funds (including money
market funds), commercial paper, time deposits, and certificates of deposit of
commercial banks, savings banks, or savings and loan associations; and
3.02(i) to engage in any kind of activity and to enter
into and perform obligations of any kind necessary to or in connection with, or
incidental to, the accomplishment of the purposes of the Partnership, so long as
said activities and obligations may be lawfully engaged in or performed by a
limited partnership under the Delaware RULPA.
-11-
3.03. Limitation on Powers of the Partnership.
Notwithstanding any provision in this Agreement, the FCC
License shall not be transferred, assigned or disposed of in any manner,
voluntarily or involuntarily, including by any transfer of control of any
corporation holding that license, to any person except upon a finding by the FCC
that the public convenience and necessity will be served thereby.
ARTICLE IV
TERM OF PARTNERSHIP
4.01. TERM.
The Partnership commenced when the Certificate was duly filed
with the Recording Office on August 17, 1989, and shall continue until the
Termination Date unless extended beyond the Termination Date in accordance with
the provisions of Section 12.02, or unless dissolved and liquidated before the
Termination Date in accordance with the provisions of Article XII.
ARTICLE V
CAPITAL
5.01. CAPITAL CONTRIBUTION OF GENERAL PARTNER.
5.01(a) Prior to the effectiveness of this Agreement,
the General Partner has contributed to the Partnership certain tangible and
intangible assets as set forth on Schedule A. It is acknowledged and agreed that
such Capital Contributions of the General Partner have Carrying Value of Thirty
Million Dollars ($30,000,000.00).
5.01(b) The General Partner shall not be required to
make any contributions to the capital of the Partnership other than as set forth
in this Section 5.01.
5.02. [INTENTIONALLY OMITTED.]
5.03. CAPITAL CONTRIBUTIONS OF LIMITED PARTNERS.
5.03(a) Concurrently with or immediately preceding the
effectiveness of this Agreement, and pursuant to the terms of a Subscription
Agreement executed by each Limited Partner, each Limited Partner listed on
Schedule A is making or has made a Capital Contribution in the amount set forth
-12-
opposite its name on Schedule A. The Capital Contribution of each Limited
Partner shall be made in cash, by wire transfer, by certified or cashier's check
payable to the order of the Partnership or its designated agent, or in such
other form as is approved by the General Partner, and shall be reflected on
Schedule A.
5.03(b) Contemporaneously with the execution of this
Agreement, each of certain Limited Partners or their Affiliates are entering
into a Contingent Communications Satellite Capacity Agreement pursuant to which
the Limited Partner or its Affiliate may be required from time to time to make
contingent payments to the Partnership. Any such contingent payments and any
contingent payments pursuant to a Payment Guarantee Agreement entered into in
accordance with the Contingent Communications Satellite Capacity Agreement made
by a Limited Partner or its Affiliate will be treated as capital contributions
to the Partnership by the Limited Partner to the extent provided in Section 5.01
of the Contingent Communications Satellite Capacity Agreement.
5.03(c) The Limited Partners shall not be required to
make any contributions to the capital of the Partnership other than as set forth
in this Section 5.03.
5.04. CAPITAL ACCOUNTS.
5.04(a) A separate Capital Account shall be established
and maintained for each Partner in all events in accordance with the rules of
Regulations section 1.704-1(b)(2)(iv), as amended from time to time. In general,
the Capital Account of each Partner shall be credited with:
(i) the amount of cash and the Carrying Value of any
property (net of liabilities assumed by the Partnership and
liabilities to which the contributed property is subject)
contributed to the Partnership by such Partner, plus
(ii) all Net Income and items of income and gain of
the Partnership specially allocated pursuant to Section 6.06
(computed in accordance with Section 5.04(b)) allocated to
such Partner pursuant to Sections 6.02(a) and 6.06 (including
for purposes of this Section 5.04(a) income and gain exempt
from tax);
and shall be debited with the sum of:
(iii) all Net Losses and items of loss or deduction
of the Partnership specially allocated pursuant to Section
6.06 (computed in accordance with Section 5.04(b)) allocated
to such Partner pursuant to Sections 6.02(b) and 6.06, and
-13-
(iv) all cash and the fair market value of any
property (net of liabilities assumed by such Partner and
liabilities to which such property is subject) distributed by
the Partnership to such Partner.
Any reference in this Agreement to the Capital Account of a Partner shall be
deemed to refer to such Capital Account as the same may be credited or debited
from time to time as set forth above.
5.04(b) Except as otherwise required pursuant to the
Regulations under section 704 of the Code, for purposes of computing the amount
of any item of income, gain, deduction, or loss to be reflected in Capital
Accounts, the determination, recognition, and classification of each such item
shall be the same as its determination, recognition, and classification of Net
Income and Net Loss, provided that:
(i) immediately prior to decreasing a Partner's
Capital Account to reflect any distribution of a Partnership
Asset to him (other than cash), all Partners' Capital Accounts
shall be adjusted to reflect the manner in which the
Unrealized Gain or Unrealized Loss inherent in such
Partnership Asset (that has not been reflected in the Capital
Accounts previously) would be allocated among the Partners if
there were a taxable disposition of such Partnership Asset for
its fair market value (but not less than the amount of any
Nonrecourse Debt secured by such Partnership Asset); and
(ii) adjustment to a Partner's Capital Account in
respect of Partnership income, gain, loss, deduction, and Code
section 705(a)(2)(B) expenditures (as described in Regulations
section 1.704-1(b)(2)(iv)(i)) (or items thereof) shall be made
with reference to the federal tax treatment of such items
(and, in the case of book tax items, with reference to the
federal tax treatment of the corresponding tax items) at the
Partnership level, without regard to any required or elective
tax treatment of such items at the Partner level.
5.04(c) A Partner shall be considered to have only one
Capital Account.
5.04(d) The General Partner, with the review and
concurrence of the Partnership's certified public accountants, shall have the
discretion to increase or decrease the Capital Account balances of the Partners
to reflect a revaluation of Partnership Assets on the Partnership's books to the
extent required or permitted by the Regulations. Any such adjustments must be
based on the fair market value of the Partnership Assets as reasonably
determined by the General Partner (provided that no Partnership Asset shall be
valued at an amount less than any Nonrecourse Debt to which such Partnership
Asset is subject on the date of adjustment) and must reflect the manner in which
the Unrealized Gain or Unrealized Loss inherent in such Partnership Assets (that
has not been reflected in
-14-
a Capital Account previously) would be allocated among the Partners if there
were a taxable disposition of such Partnership Assets for such fair market value
on that date.
5.04(e) Subject to Section 5.04(g), any permitted
transferee of a Partnership Interest hereunder shall succeed to the Capital
Account relating to the Partnership Interest transferred.
5.04(f) Any special basis adjustments resulting from an
election by the Partnership pursuant to section 754 of the Code shall not be
taken into account for any purpose in establishing and maintaining Capital
Accounts for the Partners, except as provided in Regulations section
1.704-1(b)(2)(iv)(m).
5.04(g) If any transfer of a Partner's Partnership
Interest causes a termination of the Partnership under section 708(b)(1)(B) of
the Code, the Capital Account that carries over to the transferee Partner shall
be adjusted in accordance with Regulations section 1.704-1(b)(2)(iv)(e) in
connection with the constructive liquidation of the Partnership under
Regulations section 1.708-1(b)(1)(iv). Moreover, the constructive reformation of
the Partnership will be treated as the formation of a new Partnership, and the
Capital Accounts of the Partners in such new Partnership will be determined and
maintained accordingly taking into account, for example, the difference between
the fair market value of the Partnership Asset and its Carrying Value on the
date of such constructive reformation.
5.04(h) The foregoing provisions of this Section 5.04
and any other provisions of the Agreement relating to the maintenance of Capital
Accounts are intended to comply with Regulations section 1.704-1(b)(2)(iv) as
they currently exist and as they subsequently may be amended, and they shall be
interpreted and applied in a manner consistent with such Regulations. In the
event the General Partner determines in its reasonable discretion, subject to
the review and concurrence of the Partnership's certified public accountants,
that it is prudent to modify the manner in which the Capital Accounts, or any
debits or credits thereto, are computed in order to comply with such
Regulations, the General Partner may make such modification, provided that it is
not likely to have a material effect on the amounts distributable to any Partner
upon dissolution of the Partnership.
5.05. NEGATIVE CAPITAL ACCOUNTS.
Except to the extent the Partners are required or elect to
make contributions to the capital of the Partnership under Sections 5.01 and
5.03, no Partner shall be required to pay to the Partnership or to any other
Partner any deficit or negative balance which may exist from time to time in
such Partner's Capital Account.
-15-
5.06. NO INTEREST ON AMOUNTS IN CAPITAL ACCOUNT.
No Partner shall be entitled to receive any interest on its
outstanding Capital Account balance.
5.07. ADVANCES TO PARTNERSHIP.
If any Partner shall advance funds to the Partnership in
excess of the amounts required hereunder to be contributed by it to the capital
of the Partnership and which do not constitute Unrecovered Contingent
Contributions, the making of such advances shall not result in any increase in
the amount of such Partner's Capital Account or entitle it to any increase in
its Percentage Interest. The amounts of such advances shall be a debt of the
Partnership to the Partner and shall be payable or collectible only out of the
Partnership Assets in accordance with the terms and conditions upon which such
advances are made. Any such advances shall be repayable upon demand and shall
bear interest at the rate equal to two (2) percentage points above the "Federal
Short-Term Rate" as defined in Code section 1274(d)(1)(C)(i) or the maximum rate
permitted under applicable law, whichever is less, calculated upon the
outstanding principal balance of such advances as of the first day of each
month.
5.08. LIABILITY OF LIMITED PARTNERS.
Except as provided in the Delaware RULPA, none of the Limited
Partners shall be personally liable for any debts, liabilities, contracts or
obligations of the Partnership. A Limited Partner shall be liable only to make
payments of such Limited Partner's Capital Contribution pursuant to Section
5.03. Except as provided in the Delaware RULPA, after such Limited Partner's
Capital Contribution has been fully paid, no Limited Partner shall be required
to make any further capital contributions or to lend any funds to the
Partnership.
5.09. RETURN OF CAPITAL.
Except upon the dissolution of the Partnership or as may be
specifically provided in this Agreement, no Partner shall have the right to
demand or to receive the return of all or any part of its Capital Account or its
contributions to the capital of the Partnership.
-16-
ARTICLE VI
ALLOCATION OF PROFITS AND LOSSES; DISTRIBUTIONS
OF CASH FLOW AND CERTAIN PROCEEDS
6.01. CERTAIN DEFINITIONS.
6.01(a) "Cash Flow" shall mean and refer to the sum of
the following:
(i) the Net Income (or Net Loss) of the Partnership
for the period for which such determination is being made,
excluding items of income, gain, loss, or deduction from any
Terminating Capital Transaction, increased to reflect any
items of income or gain and decreased to reflect any items of
loss or deduction required to be specially allocated to one or
more Partners pursuant to Sections 6.06(a) through 6.06(e)
(collectively, "Specially Allocated Items") increased by (A)
the amount of Depreciation and similar deductions in lieu
thereof deductible by the Partnership in computing such Net
Income or Net Loss or treated as Specially Allocated Items,
and any other deductions taken into account in determining Net
Income or Net Loss or treated as Specially Allocated Items for
such period that are not matched by cash payments during such
period, and (B) any receipts of the Partnership for such
period that are not either includible in determining Net
Income or Net Loss or treated as Specially Allocated Items for
such period and the proceeds of any loans to the Partnership
but excluding proceeds from any Terminating Capital
Transaction; and reduced by (AA) payments from the sum of the
foregoing during such period on the principal of any loan to
the Partnership or in satisfaction of other obligations to
holders of Partnership debt (other than distributions to
Partners pursuant to this Article VI) to the extent such
payments have not otherwise reduced the Net Income (or
increased the Net Loss or been treated as Specially Allocated
Items) of the Partnership for such period, (BB) all other
expenditures from the sum of the foregoing not financed
through any reserves previously set aside by the Partnership
for such purposes and not deducted in determining Net Income
or Net Loss or treated as Specially Allocated Items for such
period, (CC) any amounts included in determining Net Income or
Net Loss or treated as Specially Allocated Items for such
period that were not received by the Partnership during such
period, and (DD) transfers from the sum of the foregoing to
the Working Capital Reserve pursuant to Section 7.05; plus
(ii) any other funds (including amounts previously
set aside in the Working Capital Reserve by the General
Partner if and to the extent the General Partner no longer
regards such amounts as
-17-
reasonably needed in connection with the operation of
the business of the Partnership) deemed available for
distribution and designated as Cash Flow by the General
Partner.
6.01(b) "Net Proceeds of a Terminating Capital
Transaction" means the proceeds received by the Partnership in connection with a
Terminating Capital Transaction, after the payment of all costs and terminating
expenses of any kind or nature incurred by the Partnership in connection with
such Terminating Capital Transaction.
6.01(c) "Percentage Interests" of the General Partner
and the Limited Partners are as set forth on Schedule B, as it may be amended
from time to time.
6.02. Allocation of Net Income or Net Loss.
Net Income or Net Loss of the Partnership for each Fiscal Year
(or portion thereof) during the term of this Agreement shall be allocated to the
Partners (after allocating to the Partners any amounts required to be allocated
to them with respect to such Fiscal Year (or portion thereof) pursuant to
Section 6.06 and after reducing their respective Capital Accounts for all Cash
Flow distributed during or with respect to such Fiscal Year under Section 6.04,
but before taking into account any allocations of Net Income or Net Loss
pursuant to this Section 6.02 with respect to such Fiscal Year (or portion
thereof)), as follows:
6.02(a) Subject to Section 6.06 (including Section
6.06(f)), any Net Income of the Partnership with respect to a Fiscal Year shall
be allocated to the Partners as follows and in the following order of priority:
(i) First: If a Terminating Capital Transaction has
occurred, to the Partners, if any, with negative balances in
their Capital Accounts, pro rata, in proportion to the
negative balances in their respective Capital Accounts until
their respective Capital Account balances equal zero;
(ii) Second: To the Limited Partners, to the extent
of, and in proportion to, the amounts (if any) by which their
Unrecovered Contingent Contributions exceed their respective
Capital Account balances (after giving effect to the preceding
provisions of this Section 6.02(a));
(iii) Third: To the Partners, to the extent of, and
in proportion to, the amounts (if any) by which the sum of
their Unrecovered Contingent Contributions and their
Unrecovered Initial Contributions exceed their respective
Capital Account balances (after giving effect to the preceding
provisions of this Section 6.02(a));
-18-
(iv) Fourth: To the Partners, in the amounts
necessary to cause their Capital Account balances (after
giving effect to the preceding provisions of this Section
6.02(a)) in excess of the sum of their respective Unrecovered
Contingent Contributions (if any) and their respective
Unrecovered Initial Contributions (if any) to be in the same
proportion as their respective Percentage Interests; and
(v) Fifth: The balance of such Net Income, if any,
shall be allocated to the Partners, pro rata, in accordance
with their Percentage Interests.
6.02(b) Subject to Section 6.06 (including Section
6.06(f), any Net Loss of the Partnership with respect to a Fiscal Year shall be
allocated to the Partners as follows and in the following order of priority:
(i) First: To the Partners, until the Capital Account
balances of the Partners in excess of the sum of their
respective Unrecovered Contingent Contributions (if any) and
their respective Unrecovered Initial Contributions (if any)
are eliminated, with such Net Loss to be allocated first so as
to cause all Partners' Capital Accounts in excess of the sum
of their respective Unrecovered Contingent Contributions and
their respective Unrecovered Initial Contributions (if any) to
be in the same proportion as their Percentage Interests, and
thereafter in accordance with the Partners' Percentage
Interests;
(ii) Second: To the Partners, until the Capital
Account balances of the Partners in excess of their respective
Unrecovered Contingent Contributions (if any) are eliminated,
with such Net Loss to be allocated first so as to cause all
Partners' Capital Accounts in excess of their respective
Unrecovered Contingent Contributions to be in the same
proportion as their respective Unrecovered Initial
Contributions, and thereafter in the same proportion as the
Partners' respective Unrecovered Initial Contributions:
(iii) Third: To the Limited Partners, to the extent
of, and in proportion to, the amounts of their respective
Unrecovered Contingent Contributions; and
(iv) Fourth: The balance of such Net Loss, if any,
shall be allocated to the Partners in accordance with their
Percentage Interests.
-19-
6.03. ALLOCATION OF INCOME AND LOSS WITH RESPECT TO
PARTNERSHIP INTERESTS TRANSFERRED.
If any Partnership Interest is transferred during any Fiscal
Year, the Net Income or Net Loss attributable to such Partnership Interest for
such Fiscal Year shall be divided and allocated proportionately between the
transferor and the transferee based upon the number of days during such calendar
year for which each party was the owner of the interest transferred, provided
that such method of allocating Net Income and Net Loss with respect to a
transferred Partnership Interest is not prohibited under the Code or the
Regulations. Notwithstanding any provision herein to the contrary, any Book Tax
Gain or Book Tax Loss of the Partnership realized in connection with a
Terminating Capital Transaction shall be allocated only to Persons who are
holders of Partnership Interests as of the date such Terminating Capital
Transaction occurs.
6.04. DISTRIBUTION OF CASH FLOW.
6.04(a) Cash Flow of the Partnership shall be
determined for each Fiscal Year. Cash Flow as so determined shall be distributed
to the Partners as follows:
(i) First: To the Limited Partners, to the extent of,
and in proportion to, the amounts of their Unrecovered
Contingent Contributions (if any);
(ii) Second: To the Partners, to the extent of, and
in proportion to, the amounts of their Unrecovered Initial
Contributions; and
(iii) Third: To the Partners, pro rata, in accordance
with their Percentage Interests.
6.04(b) Cash Flow, if any, shall be distributed at
least annually within seventy-five (75) days after the end of each Fiscal Year,
commencing with the Fiscal Year ending December 31, 1990. Distributions of Cash
Flow made within the first seventy-five (75) days of a subsequent Fiscal Year
and designated by the General Partner as made with respect to the immediately
prior Fiscal Year shall be considered made with respect to such prior Fiscal
Year for purposes of Section 6.02 and shall be distributed based upon
Unrecovered Contingent Contributions, Unrecovered Initial Contributions, and
Percentage Interests as of the last day of such prior Fiscal Year. Cash Flow
also may be distributed, in the sole and absolute discretion of the General
Partner, at such other time or times during any Fiscal Year in anticipation of
the year-end determination thereof, and such distributions shall be subject to
year-end adjustment. The Partners agree that, within thirty (30) days after
determination by the Partnership that an overpayment was made to any Partner for
any Fiscal Year pursuant to this Section 6.04, such Partner shall repay, allow
as a credit against future distributions, or make such other adjustments as
-20-
the General Partner determines to be appropriate to remedy such overpayment.
Likewise, appropriate adjustment shall be made to remedy any underpayment.
6.05. DISTRIBUTION OF PROCEEDS FROM TERMINATING CAPITAL
TRANSACTIONS.
6.05(a) The Net Proceeds of a Terminating Capital
Transaction and any other remaining assets of the Partnership to be distributed
to the Partners in connection with dissolution and liquidation of the
Partnership pursuant to Article XII, after the payment of, or provision for, all
debts and liabilities of the Partnership to all creditors of the Partnership
(including, without limitation, all amounts owing to a Partner under this
Agreement (other than this Article VI) or under any other agreement between the
Partnership and a Partner), the payment of expenses of liquidation of the
Partnership, and the establishment of a reasonable reserve (including, without
limitation, an amount estimated by the General Partner to be sufficient to pay
any amount reasonably anticipated to be required pursuant to Section 7.09),
shall be distributed (i) if such dissolution occurs pursuant to Section
12.01(h), by distributing to the General Partner the property contributed by it
to the Partnership as listed on Schedule A of this Agreement, and distributing
all remaining Partnership Assets to the Limited Partners pro rata in proportion
to the amounts of their respective Capital Contributions as set forth on
Schedule A of this Agreement, and (ii) if such dissolution occurs under any
other circumstances, to the Partners as follows:
(A) First: To the Limited Partners, to the extent of,
and in proportion to, the amounts of their Unrecovered
Contingent Contributions (if any);
(B) Second: To the Partners, to the extent of, and in
proportion to, the amounts of their Unrecovered Initial
Contributions; and
(C) Third: To the Partners, pro rata, in accordance
with their Percentage Interests.
Distributions pursuant to this Section 6.05(a) shall be made by the end of the
Fiscal Year in which such Terminating Capital Transaction occurs or, if later,
within ninety (90) days of such Terminating Capital Transaction.
6.05(b) Notwithstanding any provision in this Section
6.05 to the contrary, in the event that the Net Proceeds of the Terminating
Capital Transaction are to be paid to the Partnership in more than one
installment, each such installment (including any interest thereon) shall be
allocated among the Partners in accordance with their respective "Installment
Percentages". The "Installment Percentage" of each Partner shall be (i) the
aggregate amount of cash that would have been distributed to that Partner under
this Section 6.05 had the Net Proceeds of the Terminating Capital Transaction
been paid in one lump sum
-21-
divided by (ii) the total Net Proceeds that would have been distributed to all
of the Partners under this Section under such circumstances.
6.06. SPECIAL ALLOCATION RULES.
The following allocation rules shall apply notwithstanding the
provisions of Section 6.02, and the provisions of Section 6.02 shall be applied
only after giving effect to the following rules. In the event there is a
conflict between any of the following rules, the earlier listed rule shall
govern.
6.06(a) If in any Fiscal Year there is a net increase
during such year in the amount of Minimum Gain attributable to Partner
Nonrecourse Debts, the Partner(s) that bear the economic risk of loss with
respect thereto (within the meaning of Regulations section
1.704-1T(b)(4)(iv)(k)(1)) shall be specially allocated items of Partnership loss
or deduction in an amount equal to the excess of (i) the amount of such net
increase, over (ii) the aggregate amount of any distributions during such Fiscal
Year to such Partner(s) of the proceeds of such debt that are allocable to such
increase in Minimum Gain. Items to be so allocated shall be determined in
accordance with Regulations section 1.704-1T(b)(4)(iv)(h).
6.06(b) If in any Fiscal Year there is a net decrease
in the Partnership's Minimum Gain attributable to Nonrecourse Liabilities during
such Fiscal Year, each Partner shall be specially allocated items of Partnership
income and gain for such Fiscal Year (and, if necessary, for subsequent Fiscal
Years) in proportion to, and to the extent of, an amount equal to the greater of
the following:
(i) the portion of such Partner's share of the net
decrease in such Minimum Gain during such Fiscal Year (as such
share is determined pursuant to Regulations section
1.704-1T(b)(4)(iv)(f)) that is allocable to the disposition of
Partnership property subject to one or more Nonrecourse
Liabilities (as such allocable portion is determined pursuant
to Regulations section 1.704-1T(b)(4)(iv)(e)(2)); or
(ii) such Partner's Excess Negative Balance at the end
of such Fiscal Year.
It is the intent of the Partners that items to be so allocated shall be
determined and the allocations made in accordance with Regulations section
1.704-1T(b)(4)(iv)(e).
6.06(c) If in any Fiscal Year there is a net decrease
in the Partnership's Minimum Gain attributable to Partner Nonrecourse Debts
during such Fiscal Year, the Partner(s) that bear the economic risk of loss with
respect to such Partner Nonrecourse Debts (within the meaning of Regulations
section 1.704-1T(b)(4)(iv)(k)(1)) shall be specially allocated items of
Partnership income and gain for such Fiscal Year (and, if necessary, for
subsequent Fiscal Years) in an amount equal to the greater of the following:
-22-
(i) the net decrease in such Minimum Gain during such
Fiscal Year that is allocable to the disposition of
Partnership property subject to one or more Partner
Nonrecourse Debts (as such allocable portion is determined
pursuant to Regulations section 1.704-1T(b)(4)(iv)(h)(6)); or
(ii) such Partner's (Partners') Excess Negative
Balance at the end of such Fiscal Year.
It is the intent of the Partners that items to be so allocated shall be
determined and the allocation made in accordance with Regulations section
1.704-1T(b)(4)(iv)(h)(6).
6.06(d) For purposes of allocating Partnership
Nonrecourse Liabilities among the Partners pursuant to Regulations section
1.752-1T(a)(2)(i), the respective interests of the Partners in Partnership
profits shall be equal to their respective Percentage Interests as of the date
with respect to which the determination is made.
6.06(e) No Net Loss or Partnership deductions for any
Fiscal Year shall be allocated to any Partner to the extent such allocation
would cause or increase an Excess Negative Balance in such Partner's Capital
Account. In the event a Partner receives with respect to a Fiscal Year an
adjustment, allocation, or distribution (whether or not expected) described in
subparagraphs (4), (5), or (6) of Regulations section 1.704-1(b)(2)(ii)(d) that
causes or increases an Excess Negative Balance in such Partner's Capital
Account, such Partner shall be specially allocated for such Fiscal Year (and if
necessary, in subsequent Fiscal Years) items of income and gain in an amount and
manner sufficient to eliminate such Excess Negative Balance as promptly as
possible as provided in Regulations section 1.704-1(b)(2)(ii)(d).
6.06(f) For purposes of determining the balances in the
Capital Accounts of the Partners in order to allocate Net Income or Net Loss
pursuant to Section 6.02, each Partner's Capital Account balance shall be deemed
to include any amount that such Partner is deemed to be obligated to restore
pursuant to the penultimate sentences of sections 1.704-1T(b)(iv)(f) and
1.704-1T(b)(4)(iv)(h)(5) of the Treasury Regulations (determined after taking
into account any changes during such year in Minimum Gain).
6.06(g) Notwithstanding the provisions of Section 6.02,
in the event that any fees, interest, or other amounts paid to a Partner, or an
Affiliate of a Partner, pursuant to this Agreement, or any agreement between the
Partnership and the Partner or Affiliate providing for the payment of such
amounts, and deducted by the Partnership for federal or other income tax
purposes, whether in reliance on sections 162, 163, 707(a), and/or 707(c) of the
Code or otherwise, are disallowed as deductions to the Partnership on its
applicable income tax return for the Fiscal Year in or with respect to which
such amounts are claimed, and are treated instead as Partnership distributions,
then there shall be allocated to the Partner who received (or whose Affiliate
received) such payments, prior to the
-23-
allocations pursuant to Sections 6.02(a) and 6.02(b), an amount of gross income
of the Partnership for the Fiscal Year in or with respect to which such claimed
deduction was disallowed equal to the amount of such deduction that was so
disallowed and treated as a Partnership distribution.
6.06(h) Notwithstanding the provisions of Section 6.02,
in the event that the Partnership is a party to an agreement with a Partner or
an Affiliate of a Partner and the Partnership is deemed to have taxable income
in respect of such agreement in excess of the amount payable to the Partnership
by such Partner or Affiliate thereunder, then:
(i) there shall be allocated to the Partner who is a
party (or whose Affiliate is a party) to such agreement, prior
to the allocations pursuant to Sections 6.02(a) and 6.02(b),
an amount of gross income of the Partnership for the Fiscal
Year in or with respect to which the Partnership is deemed to
have such additional income equal to the amount of such
additional income; and
(ii) the Partnership shall be deemed to have
distributed to such Partner, in addition to all other amounts
distributable hereunder, during such Fiscal Year an additional
amount of cash equal to the amount of such additional income.
6.06(i) Notwithstanding the provisions of Section 6.02,
in the event that the Partnership is a party to an agreement with a Partner or
an Affiliate of a Partner and the Partnership is deemed by any applicable taxing
authority to have a tax deduction in respect of either amounts deemed payable by
the Partnership under such agreement or amounts distributable to the Partner
under this Agreement, then:
(i) there shall be allocated to the Partner who is
the party (or whose Affiliate is a party) to such agreement or
who is to receive the amount distributable under this
Agreement, prior to the allocations pursuant to Sections
6.02(a) and 6.02(b), an amount of deductions of the
Partnership for the Fiscal Year in or with respect to which
the Partnership is deemed to have such additional deduction
equal to the amount of such additional deduction; and
(ii) the Partnership shall be deemed to have received
from such Partner, in addition to all other amounts
contributed hereunder, an additional contribution of cash
equal to the amount of such additional deduction.
6.06(j) Except as otherwise specifically provided in
this Agreement or applicable Treasury Regulations and as provided in the next
sentence below, the distributive share of a Partner of each specific deduction
and item of income, gain, loss, and credit of the Partnership for federal income
tax purposes for
-24-
any Fiscal Year and each other item taken into account in computing Net Income
or Net Loss for such Fiscal Year (including, without limitation, income exempt
from federal income tax and expenditures described in section 705(a)(2)(B) of
the Code or treated as such expenditures in the Regulations under section 704(b)
of the Code) shall be the same as such Partner's proportionate share (determined
as set forth in Section 6.02) of Net Income or Net Loss, as the case may be, for
such Fiscal Year, provided that if there is not Net Income or Net Loss for such
Fiscal Year, all such items shall be allocated among the Partners in accordance
with their respective Percentage Interests. Notwithstanding the foregoing, (i)
any income recognized pursuant to sections 1245 and 1250 of the Code with
respect to a Fiscal Year and allocated to the Partners pursuant to Section 6.02
shall be allocated, to the extent possible, to the Partners to whom (or to whose
predecessors in interest) the prior depreciation deductions giving rise to such
income or recapture were allocated, provided that the amount of income allocable
to a Partner pursuant to this clause with respect to a Fiscal Year shall not
exceed the total amount of income otherwise allocable to such Partner under
Sections 6.02 and 6.06 with respect to such Fiscal Year, and (ii) any foreign
tax credits for any Fiscal Year shall be allocated to the Partners in accordance
with their respective Percentage Interests at the time the foreign tax giving
rise to such credit was paid.
6.06(k) It is the intent of the Partners that each
Partner's distributive share of income, gain, loss, and credit (or items
thereof) shall be determined and allocated in each Fiscal Year in accordance
with this Article VI to effect the distributions (including distributions of
proceeds of Terminating Capital Transactions) in the order of priority
contemplated by Section 6.04(a) to the extent permitted by Code section 704(b)
and the applicable Regulations. In order to achieve the contemplated
distributions provided for in this Article VI, the General Partner is authorized
and directed to allocate income, gain, loss, and credit (or items thereof) with
respect to any Fiscal Year in a manner different from that otherwise provided
for in this Article VI if, and to the extent that, (i) an allocation of income,
gain, loss, or credit (or items thereof) in the manner provided for in this
Article VI would not achieve the intended economic result desired by the
Partners or (ii) based on the advice of the Partnership's counsel or
accountants, an allocation provided for in this Article VI is unlikely to be
respected under Code section 704(b) and the alternative allocation to be made by
the General Partner is reasonably likely to be respected (referred to as a "new
allocation"). The General Partner is authorized to make a new allocation under
this Section 6.06(k) only after having determined both (i) that the new
allocation either more accurately effects all distributions in the order of
priority contemplated by the Partners as set forth in Section 6.04(a) or is not
inconsistent with those distributions and (ii) that the new allocation will not
have a material adverse effect on the economic interests of the Partners
(including, without limitation, causing them to recognize income that they would
not otherwise be required to recognize or to lose the benefit of deductions that
they otherwise would have been permitted to recognize). New allocations by the
General Partner in accordance with this Section 6.06(k) shall not require the
consent of the other Partners.
-25-
6.07. CONTRIBUTED PROPERTY; REVALUATIONS PURSUANT TO SECTION
704(B) REGULATIONS.
6.07(a) In the event that any property contributed to
the Partnership or revalued pursuant to the provisions of Regulations section
1.704-1(b)(2)(iv)(f) has a Carrying Value that differs from the Adjusted Basis
of such property at the time of its contribution or revaluation, any income,
depreciation, gain, or loss with respect to such property shall, solely for tax
purposes, be allocated among the Partners in a manner that takes such difference
into account and is consistent with Code section 704(c), the Regulations
thereunder, and Regulations section 1.704-1(b)(2)(iv)(f)(4),
1.704-1(b)(2)(iv)(g), and 1.704-1(b)(4)(i). The allocations made pursuant to
this Section 6.07 shall be made solely for tax purposes and shall not affect or
in any way be taken into account in computing any Partner's Capital Account or
share of Net Income, Net Loss, Book Tax Gain, Book Tax Loss, or other
allocations or distributions under this Agreement.
6.07(b) The Partners acknowledge that the Carrying
Value of the assets contributed to the Partnership by the General Partner
pursuant to Section 5.01(a) (the "Contributed Assets") exceeds the Adjusted
Basis of such assets at the time of their contribution to the Partnership (such
excess being referred to as the "Built-in Gain"). The Adjusted Basis of such
assets shall be determined and agreed to between the General Partner and the
Review Committee (as defined in Section 7.11). Without limiting Section 6.07,
the General Partner acknowledges that it will be required to be specially
allocated income of the Partnership, not later than the time at which the
Contributed Assets are disposed of by the Partnership, an amount of taxable
income and gain equal to the lesser of (i) the Built-in Gain, reduced by any
depreciation and/or amortization deductions with respect to the Contributed
Assets specially allocated to Partners other than the General Partner pursuant
to Section 704(c) of the Code, the Regulations thereunder, or Regulations
sections 1.704-1(b)(2)(iv)(f), 1.704-1(b)(2)(iv)(g), or 1.704-1(b)(4)(i), which
special allocation of depreciation and/or amortization shall be made to the
extent required by the Code and the Regulations thereunder notwithstanding any
provision of this Agreement, or (ii) the taxable gain recognized by the
Partnership in connection with the disposition of the Contributed Assets.
6.08. TAXES.
6.08(a) The General Partner is authorized and directed
to cause the Partnership to withhold from or pay on behalf of any Partner the
amount of federal, state, local or foreign taxes that the General Partner, after
consultation with such Partner, reasonably believes the Partnership is required
to withhold or pay with respect to any amount distributable or allocable to such
Partner pursuant to this Agreement, including, without limitation, any taxes
required to be paid by the Partnership pursuant to sections 1441, 1442, 1445, or
1446 of the Code and any taxes imposed by any taxing jurisdiction on the
Partnership as an entity. Without limiting the foregoing, the General Partner
shall cause the Partnership to withhold
-26-
(and remit to the appropriate governmental authority) from amounts otherwise
distributable to a Partner any taxes that such Partner notifies the General
Partner in writing should be withheld, which notice shall specifically set
forth, inter alia, the rate at which tax should be withheld and the name and
address to which amounts withheld should be remitted. Any amount paid on behalf
of a Partner pursuant to this Section 6.08 (except to the extent withheld from
an amount that otherwise would have been distributed by the Partnership to such
Partner) shall constitute an advance by the Partnership to such Partner that
shall be secured by the Partner's Partnership Interest. An advance to a Partner
pursuant to this Section 6.08(a) shall be repaid to the Partnership, in whole or
in part, as determined by the General Partner in its sole discretion, either (i)
out of any distributions from the Partnership which the Partner may be or become
entitled to receive, or (ii) by the Partner in cash upon demand by the
Partnership. Any such advance shall bear interest at the rate equal to two (2)
percentage points above the "Federal Short-Term Rate" as defined in Code section
1274(d)(1)(C)(i) or the maximum rate permitted under applicable law, whichever
is less, calculated upon the outstanding principal balance of such advance as of
the first day of each month.
6.08(b) The Partners agree to cooperate fully with all
efforts of the Partnership to comply with its tax withholding and information
reporting obligations and to provide the Partnership with such information as
the General Partner may reasonably request from time to time in connection with
such obligations. Without limiting the foregoing, each Partner shall complete a
Certification of Non-foreign Status (to the extent applicable) in such form as
may be reasonably requested by the General Partner (or shall provide such other
information as the General Partner may require) at the time that it executes
this Agreement, and each permitted transferee of a Partnership Interest pursuant
to Article X, whether or not such transferee is admitted to the Partnership as a
Partner, shall complete such Certification at the time of its acquisition of an
interest in the Partnership. Any Partner or permitted transferee of a
Partnership Interest that does not provide such a Certification with this
Section 6.08(b) shall be liable to the Partnership for the amount of any taxes,
penalties, and interest for which the Partnership becomes liable as a result of
any such failure, provided that the foregoing shall not relieve the General
Partner of responsibility for withholding (and remitting to the appropriate
governmental authority) from amounts otherwise distributable to a Partner any
amount that such Partner specifically notified the General Partner pursuant to
Section 6.08(a) should be so withheld and remitted.
-27-
ARTICLE VII
MANAGEMENT
7.01. MANAGEMENT AND CONTROL OF PARTNERSHIP BUSINESS.
7.01(a) Except as otherwise expressly provided or
limited by the provisions of this Agreement, the General Partner shall have
full, exclusive, and complete discretion in the management and control of the
business and affairs of the Partnership, to make all decisions affecting the
business and affairs of the Partnership, and to take all such actions as it
deems necessary or appropriate to accomplish the purposes of the Partnership as
set forth herein. The General Partner shall use its best efforts to continue the
Partnership's existence for the term specified in Section 4.01 (unless the
Partnership is previously dissolved or wound-up pursuant to this Agreement) and
to carry out the purposes of the Partnership and shall devote to the management
of the business and affairs of the Partnership such time as shall be required
for the operation thereof. Except as otherwise expressly set forth in this
Agreement, the Limited Partners shall not have any authority, right, or power to
bind the Partnership, or to manage or control, or to participate in the
management or control of, the business and affairs of the Partnership.
7.01(b) The General Partner shall be under a fiduciary
duty and obligation to conduct the affairs of the Partnership in the best
interests of the Partnership and of the Limited Partners, including the
safekeeping of all Partnership funds and assets (whether or not in the immediate
possession or control of the General Partner) and the use thereof for the
exclusive benefit of the Partnership.
7.01(c) The General Partner shall at all times conduct
its affairs and the affairs of the Partnership in such a manner that no Limited
Partner or Affiliate of any Limited Partner shall have any personal liability
with respect to any Partnership indebtedness (provided, however, that nothing
herein shall be construed as requiring that the General Partner attempt to
control or influence the conduct of any Limited Partner even if the General
Partner believes that actions of the Limited Partner would cause the Limited
Partner to have such personal liability). The General Partner shall use its best
efforts, in the conduct of the Partnership's business, to put all suppliers and
other Persons with whom the Partnership does business on notice that the Limited
Partners and their Affiliates are not liable for Partnership obligations, and
all agreements to which the Partnership is a party shall include a statement to
the effect that the Partnership is a limited partnership organized under the
laws of Delaware.
7.01(d) The General Partner shall use its best efforts
to assure that in correspondence, contracts, agreements and other documents
relating to the Partnership (1) it shall plainly appear, or be so stated, that
the Partnership is a
-28-
limited partnership organized under the laws of Delaware, (2) the full name of
the Partnership shall at all times be used and (3) wherever appropriate it shall
be expressly stated that, for purposes of determining the liability of the
Limited Partners, the laws of Delaware shall be controlling.
7.01(e) The General Partner shall cause the Partnership
to be protected by adequate public liability, property damage and other
insurance, including insurance necessary to continue and conduct the business of
the Partnership in a reasonable and prudent manner.
7.01(f) The General Partner warrants that it will
maintain in full force and effect the Satellite Authorizations. The General
Partner has assigned to the Partnership the FCC License, and shall use its best
efforts to cause the Partnership to maintain the Satellite Authorizations in
full force and effect.
7.01(g) The General Partner shall take all necessary
actions to (x) successfully assure the completion of the International
Telecommunications Union procedures with respect to other satellite systems for
all Partnership services prior to the launch of each of the Partnership's
satellites as well as, at an appropriate time, for any other Partnership service
that may be proposed within the lifetime of such satellites, and (y) obtain all
other Satellite Authorizations.
7.01(h) The General Partner shall take all necessary
actions to enforce the provisions of the Satellite Construction Contract for the
benefit of the Partnership and all of the Partners (subject to any requirements
set forth in the credit documents with respect to the financing of the
Partnership's proposed satellites).
7.01(i) The General Partner shall not, either on its
own behalf or on behalf of the Partnership, enter into contracts or agreements
with any Person or Persons which conflict with or prejudice in any material
respect the rights of the Limited Partners under the provisions of this
Agreement, the Communications Satellite Capacity Agreements, Contingent
Communications Satellite Capacity Agreements or Capacity Option Agreements, or
any other contract or agreement between the Partnership and a Partner, and
warrants that it has not done so as of the date hereof.
7.02. POWERS OF GENERAL PARTNER.
Subject to the limitations of Section 7.04 and any other
express limitation on the authority of the General Partner set forth herein, the
General Partner (acting on behalf of the Partnership) shall have the right,
power, and authority, in the management of the business and affairs of the
Partnership, to do or cause to be done any and all acts, at the expense of the
Partnership, deemed by the General Partner to be necessary or appropriate to
effectuate the purposes of the Partnership. Subject to the provisions of this
Agreement, all decisions made and
-29-
actions taken on behalf of the Partnership by the General Partner shall be
binding upon the Partnership (provided, however, that the powers of the General
Partner shall not be construed as permitting the General Partner to directly
bind any Limited Partner in such Limited Partner's capacity as an entity
separate from the Partnership). The power and authority of the General Partner
pursuant to this Agreement shall be liberally construed to encompass all acts
and activities in which a limited partnership may engage under the Delaware
RULPA. The power and authority of the General Partner shall include, without
limitation, the power and authority on behalf of the Partnership:
7.02(a) to do any acts or things that the Partnership
has power to do pursuant to Section 3.02;
7.02(b) to purchase and maintain, in its sole and
absolute discretion (subject to any obligation under Section 7.01(e) hereof) and
at the expense of the Partnership, liability, indemnity, and any other
insurance, sufficient to protect the Partnership, the General Partner, their
respective officers, directors, employees, agents, and Affiliates, or any other
Person, from those liabilities and hazards which may be insured against in the
conduct of the business and the management of the business and affairs of the
Partnership;
7.02(c) to make, execute, deliver, perform, assign,
acknowledge, and file on behalf of the Partnership any and all documents or
instruments of any kind which the General Partner may deem necessary or
appropriate in carrying out the purposes of the Partnership, including, without
limitation, powers of attorney, agreements of indemnification, sales contracts,
deeds, options, loan obligations, mortgages, deeds of trust, notes, documents,
or instruments of any kind or character, and amendments thereto (and no person,
firm or corporation dealing with the General Partner shall be required to
determine or inquire into the authority or power of the General Partner to bind
the Partnership or to execute, acknowledge, or deliver any and all documents in
connection therewith);
7.02(d) to possess and exercise any additional rights
and powers of a general partner under the partnership laws of Delaware
(including, without limitation, the Delaware RULPA) and any other applicable
laws, to the extent not inconsistent with this Agreement.
7.03. POWER OF ATTORNEY.
7.03(a) In furtherance of the foregoing, each of the
Limited Partners hereby irrevocably makes, constitutes and appoints and empowers
the General Partner, and the President, any Vice President and the Treasurer of
the General Partner, and any successor of the General Partner as general partner
of the Partnership acting singly or jointly, in each case with full power of
substitution, such Limited Partners true and lawful agent and attorney-in-fact
to negotiate,
-30-
execute, acknowledge, deliver and file, on behalf of each such Limited Partners,
any and all of the following:
(i) all counterparts of this Agreement, and any
amendment or restatement thereof, including all certificates
and instruments, which the General Partner deems appropriate
to form, qualify, or continue the Partnership as a limited
partnership (or a partnership in which the Limited Partners
will have limited liability comparable to that provided by the
Delaware RULPA) in the jurisdictions in which the Partnership
may conduct business or in which such formation,
qualification, or continuation is, in the opinion of the
General Partner, necessary or desirable to protect the limited
liability of the Limited Partners;
(ii) all amendments to this Agreement adopted in
accordance with Section 13.09 and all instruments which the
General Partner deems appropriate to reflect a change or
modification of the Agreement in accordance with the terms
hereof; or
(iii) all documents or instruments which the General
Partner deems appropriate to reflect the admission of a
Partner in accordance with this Agreement, the dissolution of
the Partnership (including a certificate of cancellation),
sales or transfers of Partnership property, sales or transfers
of Partnership Interests, or the initial amount or increase or
reduction in amount of any Partner's Capital Contribution or
reduction in any Partner's Capital Account in accordance with
the terms of this Agreement.
7.03(b) The appointment by all Limited Partners of the
General Partner (and any successor General Partner), and the President, any Vice
President and the Treasurer of the General Partner as attorney-in-fact shall be
deemed to be a power coupled with an interest, in recognition of the fact that
each of the Limited Partners under this Agreement will be relying upon the power
of the General Partner to act as contemplated by this Agreement in any filing
and other action by it on behalf of the Partnership, and shall survive, and not
be affected by the subsequent bankruptcy, death, incapacity, disability,
adjudication of incompetence or insanity, or dissolution of any Person hereby
giving such power and the transfer of all or any part of the Partnership
Interest of such Person; provided, however, that in the event of the transfer by
a Limited Partner of all of such Limited Partner's Partnership Interest, the
foregoing power of attorney of a transferor Partner shall survive such transfer
only until such time as the transferee shall have been admitted to the
Partnership as a Limited Partner and all required documents and instruments
shall have been duly executed, filed, and recorded to effect such substitution.
-31-
7.04. LIMITATION ON AUTHORITY OF GENERAL PARTNER.
Notwithstanding anything in this Agreement to the contrary,
but subject to the provisions of Section 7.11(b) herein, the General Partner
shall not, without the prior written consent of the Limited Partners holding a
majority of the total Percentage Interests then held by the Limited Partners,
cause or permit the Partnership to:
(a) dissolve and wind-up the affairs of the Partnership,
except as provided in Article XII;
(b) merge or consolidate with any other partnership or
other entity;
(c) sell, assign, lease or otherwise dispose of a
material portion of the Partnership Assets other than
in the ordinary course of the Partnership's business
(in any transaction or series of related
transactions);
(d) cause the Partnership to incur (in any transaction or
series of related transactions) any indebtedness in
excess of $25 million; provided, however, that this
provision shall not in any way restrict the General
Partner's authority to cause the Partnership to incur
indebtedness in connection with the initial financing
(or refinancing in accordance with Section 7.04(e))
of the Partnership's proposed satellite system;
(e) cause the Partnership to refinance (in any
transaction or series of related transactions) any
indebtedness of the Partnership in excess of $50
million other than on terms (taken as a whole) which
are no less favorable to the Partnership than the
terms (taken as a whole) of the indebtedness being
refinanced; in making the determination of whether
such terms are no less favorable to the Partnership,
the General Partner may, but shall not be required
to, obtain the opinion of an
internationallyrecognized investment banker engaged
by the Partnership, which opinion shall be conclusive
for purposes of this subsection;
(f) enter into a material agreement, or use any material
portion of the Partnership Assets in a manner, which
is not consistent with the purposes of the
Partnership as set forth in Section 3.01; or
(g) commingle the funds or accounts of the Partnership
with any funds or accounts of the General Partner or
any of its Affiliates.
-32-
7.05. WORKING CAPITAL RESERVE.
The General Partner shall have the right to set up a Working
Capital Reserve and to set aside therein such Partnership funds as the General
Partner determines to be reasonable in connection with the operation of the
business of the Partnership, including, without limitation, funds for the
acquisition, improvement, development, and replacement of property, for the
repayment of loans and other indebtedness, for security deposits and other
necessary escrows and deposits, and for meeting other reasonably anticipated
expenses. The amount of funds set aside in the Working Capital Reserve during
any Fiscal Year shall not exceed the amount provided in the Ten Year Projection
or most recent Approved Budget, as applicable, as operating expenses for the
immediately following Fiscal Year. Any funds set aside for such Working Capital
Reserve may be invested by the General Partner with a view to the appropriate
degree of safety of and return on such invested funds, and such funds shall not
be available for current distribution under Section 6.04; provided, however,
some or all of such funds may subsequently be made available for distribution
pursuant to Section 6.04 should the General Partner, in its sole and absolute
discretion, so elect.
7.06. OTHER ACTIVITIES OF PARTNERS.
Except as otherwise provided is this Section 7.06, any Limited
Partner or Affiliate thereof may have other business interests or may engage in
other business ventures of any nature or description whatsoever, whether
presently existing or hereafter created, and may compete, directly or
indirectly, with the business of the Partnership. The General Partner shall not
engage in any business other than management of the business and affairs of the
Partnership without the prior written unanimous consent of the Limited Partners.
Neither the General Partner nor Orion Network Systems, Inc. may have other
business interests or may engage in other business ventures which compete,
directly or indirectly, with the business of the Partnership; provided, however,
that (i) this provision shall not prohibit Orion Network Systems, Inc. from
having business interests or engaging in any business (x) in which the
Partnership is not then legally permitted to engage or in which the Partnership
is not then able technically to engage, or (y) which is permitted by Section
7.07(x) to be engaged in by an Affiliate of the General Partner; and (ii) in the
event that a business interest of Orion Network Systems, Inc. or a business
venture in which it is engaged competes, directly or indirectly, with the
business of the Partnership as a result of the Partnership entering into a new
business or taking other actions, Orion Network Systems, Inc. shall offer to
sell such business interest or its interest in such business venture within a
reasonable period of time to the Partnership, which, at the option of the
Partnership, pursuant to the approval of an LP Majority, may purchase such
business interest or interests in such business venture, at fair market value
(as determined by a mutually agreed appraiser). If the Partnership declines such
offer, Orion Network Systems shall exercise its best efforts to sell such
business interest or interests in such business venture to a third party, and,
if it is unable to do so, may continue to hold such
-33-
business interest or engage in such business venture. No Limited Partner or
Affiliate thereof shall incur any liability to the Partnership as a result of
such Limited Partner's or Affiliate's pursuit of such other business interest,
ventures and competitive activity, and nothing in this Agreement shall be
construed as granting the Partnership or the other Partners any right to
participate in such other business ventures or to receive or share in any income
or profits derived therefrom.
7.07. TRANSACTIONS WITH GENERAL PARTNER OR AFFILIATES.
The Partnership shall not be permitted in the normal course of
its business to enter into transactions with the General Partner or with any
Affiliate of the General Partner or with any Affiliate of an Affiliate of the
General Partner without the written consent of an LP Majority, except that the
Partnership shall be permitted to enter into (w) Communications Satellite
Capacity Agreements, Contingent Communications Satellite Capacity Agreements and
Capacity Option Agreements with any Affiliate of the General Partner, (x) other
contracts, agreements or transactions with any Affiliate of the General Partner
if each Limited Partner is or becomes, or has been or is offered the opportunity
to become, a party to such contract, agreement or transaction (or a contract,
agreement or transaction containing substantially similar terms, including any
contract, agreement or transaction where the amounts of services, property, cash
or other items to be provided to Limited Partners are pro rata based upon
Percentage Interests), (y) contracts, agreements or transactions with any
Affiliate of the General Partner relating to the provision of management or
similar support by such Affiliate to the General Partner within the limits of
the then-applicable budget of the Partnership, to the extent that the provision
of such services by the Affiliate does not conflict with the duty of the General
Partner to directly manage the affairs of the Partnership, and (z) contracts,
agreements or transactions with any Affiliate of the General Partner relating to
the provision of marketing or sales representation or operations services within
the United States.
7.08. LIABILITY OF GENERAL PARTNER AND AFFILIATES TO
PARTNERSHIP AND LIMITED PARTNERS.
Except as otherwise expressly agreed in writing by the
Partners, neither the General Partner nor any of its Affiliates, nor any of
their respective partners, officers, directors, employees, or agents, shall be
liable to the Partnership or to the Limited Partners for any losses sustained or
liabilities incurred as a result of any act or omission of any of such Persons,
so long as the conduct of such Person did not constitute bad faith, fraud, gross
negligence, willful misconduct or breach of fiduciary duty (either as
interpreted under Delaware law, this Agreement or any other contract between the
Partnership and Limited Partners generally).
-34-
7.09. INDEMNIFICATION OF GENERAL PARTNER AND LIMITED
PARTNERS.
7.09(a) The Partnership shall indemnify and hold
harmless the General Partner and its Affiliates and their respective partners,
officers, directors, employees and agents (individually, in each case, an
"Indemnitee") to the fullest extent permitted by law from and against any and
all losses, claims, demands, costs, damages, liabilities (joint or several),
expenses of any nature (including attorneys' fees and disbursements), judgments,
fines, settlements, and other amounts arising from any and all claims, demands,
actions, suits, or proceedings, whether civil, criminal, administrative or
investigative, in which the Indemnitee may be involved or threatened to be
involved as a party or otherwise, arising out of or incidental to the business
or activities of or relating to the Partnership, regardless of whether the
Indemnitee continues to be the General Partner or an Affiliate thereof or one of
their respective partners, officers, directors, employees and agents at the time
any such liability or expense is paid or incurred, if (x) a final,
non-appealable judgment favorable to the Indemnitee(s) is entered in a court of
competent jurisdiction, or (y) pursuant to a request by any Limited Partner or
the General Partner for such a determination by an Independent Party, the
Independent Party determines with regard to the Indemnitee's conduct which gave
rise to or resulted in any actual or threatened action, case, complaint or other
proceeding which was the subject of a final settlement, that had the
Indemnitee(s) not settled the dispute at issue, they would have received a
final, non-appealable judgment in their favor.
7.09(b) Expenses incurred by an Indemnitee in defending
any claim, demand, action, suit, or proceeding subject to this Section 7.09,
other than any such proceeding in which any claim is made by a Limited Partner
against the Indemnitee, shall, from time to time and upon request by the
Indemnitee, be advanced by the Partnership prior to the final disposition of
such claim, demand, action, suit, or proceeding, upon receipt by the Partnership
of an undertaking by or on behalf of the Indemnitee to repay such amount
promptly, with interest calculated at the rate equal to two (2) percentage
points above the "Federal Short-Term Rate" as defined in Code ss.
1274(d)(1)(C)(i) or the maximum rate permitted under applicable law, whichever
is less, calculated upon the outstanding principal balance of such amount, if it
shall be determined in a judicial proceeding or a binding arbitration or by the
Independent Party pursuant to Section 7.09(a) that such Indemnitee is not
entitled to be indemnified as authorized in this Section 7.09. In the event that
an Indemnitee does not receive from the Partnership advances on expenses
pursuant to this Section 7.09(b) because a Limited Partner asserted a claim
against the Indemnitee in the proceeding at issue, and the Indemnitee is
entitled to indemnification pursuant to Section 7.09(a), the Partnership shall
reimburse the Indemnitee for all expenses incurred in defending the proceeding,
plus interest at the rate equal to two (2) percentage points above the "Federal
Short-Term Rate" as defined in Code ss. 1274(d)(1)(C)(i), or the maximum rate
permitted under applicable law, whichever is less.
-35-
7.09(c) The indemnification provided by this Section
7.09 shall be in addition to any other rights to which an Indemnitee may be
entitled under any agreement, vote of the Partners, as a matter of law or
equity, or otherwise, both as to an action in the Indemnitee's capacity as the
General Partner or an Affiliate thereof, and as to an action in another
capacity, and shall continue as to an Indemnitee who has ceased to serve in such
capacity and shall inure to the benefit of the heirs, successors, assigns, and
administrators of the Indemnitee.
7.09(d) An Indemnitee pursuant to this Section 7.09
shall not be denied indemnification in whole or in part under this Section 7.09
or otherwise by reason of the fact that the Indemnitee had an interest in the
transaction with respect to which the indemnification applies if the transaction
was otherwise permitted or not expressly prohibited by the terms of this
Agreement.
7.09(e) The General Partner including its Affiliates
(other than any executive officer or director of the General Partner) shall
fully indemnify and hold harmless the Limited Partners and their Affiliates and
their respective partners, officers, directors, employees and agents to the
fullest extent permitted by law from and against any and all losses, claims,
demands, costs, damages, liabilities (joint or several), expenses of any nature
(including attorneys' fees and disbursements), judgments, fines, settlements,
and other amounts including, but not limited to, those arising directly or
indirectly from or relating to any civil, criminal, administrative or
investigative proceeding, arising out of or incidental to conduct by the General
Partner or one of its Affiliates with respect to the business or activities of
or relating to the Partnership which constituted fraud, bad faith, gross
negligence, willful misconduct or breach of fiduciary duty (either as
interpreted under Delaware law, this Agreement or any other contract between the
Partnership and Limited Partners generally).
7.09(f) The provisions of this Section 7.09 are for the
benefit of the indemnitees as set forth herein and shall not be deemed to create
any rights for the benefit of any other Persons.
7.10. NO MANAGEMENT BY LIMITED PARTNERS.
7.10(a) No Limited Partner shall take part in the
day-to-day management, operation or control of the business and affairs of the
Partnership or have any right, power, or authority to act for or on behalf of or
to bind the Partnership or transact any business in the name of the Partnership.
In the event any laws, rules or regulations applicable to the Partnership, or to
its sale or issuance of interests in the Partnership, require a Limited Partner,
or any group or class thereof, to have certain rights, options, privileges or
consents not granted by the terms of this Agreement, then such Limited Partners
shall have and enjoy such rights, options, privileges and consents so long as
(but only so long as) the existence thereof does not result in a loss of the
limitation on liability enjoyed by the Limited
-36-
Partners under the Delaware RULPA or the applicable laws of any other
jurisdiction.
7.10(b) No Limited Partner (if not a natural person,
its directors, officers, partners, etc.) shall act as an employee of the
Partnership if such Limited Partner's functions, directly or indirectly, relate
to the Partnership's international communications satellite facilities.
7.10(c) No Limited Partner shall serve, in any material
capacity, as an independent contractor or agent with respect to the management
or operation of the Partnership's international communications satellite
facilities (except with regard to tracking, telemetry and command and related
services).
7.10(d) No Limited Partner shall communicate with the
General Partner on matters pertaining to the day-to-day operations of the
Partnership's international communications satellite facilities.
7.10(e) No Limited Partner shall perform any services
to the Partnership materially relating to the management or operation of the
Partnership's international communications satellite facilities, with the
exception of making loans to, or acting as a surety for, the Partnership.
7.10(f) No Limited Partner shall become actively
involved in the management or operation of the Partnership's international
communications satellite facilities.
7.10(g) The General Partner may contract with any
Limited Partner or any Affiliate of any Limited Partner for any purpose not
otherwise restricted by this Agreement, in particular for provision of customer
support, marketing and related services with respect to the sale of the
Partnership's international communications satellite facilities; provided,
however, that any such activity undertaken by a Limited Partner shall be
pursuant to independently-executed agreements which shall be non-exclusive in
nature and under which any sales to the Partnership's customers shall be
governed by contractual terms and conditions set by the General Partner.
7.11. PARTNERS PLANNING AND POLICY REVIEW COMMITTEE.
7.11(a) A committee of the Partnership known as the
Partners Planning and Policy Review Committee (the "Review Committee"),
consisting of one representative of each Partner, shall be established for the
purposes set forth in Section 7.11(b). Review Committee representatives shall be
entitled to bring to Review Committee meetings such staff and other personnel
which they reasonably deem necessary. The Review Committee shall meet at such
times, dates and places as the General Partner may deem appropriate. Meetings of
the Review Committee may be called by the General Partner from time to time and
shall be called by the
-37-
General Partner upon its receipt of a request in writing signed by at least two
Limited Partners holding in the aggregate at least [twenty percent (20%)] of the
total Percentage Interests then held by the Limited Partners, which request
shall specify the purpose of such a meeting. Notification of a meeting of the
Review Committee shall be sent by the General Partner, not less than fifteen
(15) days prior to the date of such meeting, to the representatives of the
Limited Partners at their record addresses (as may be changed by written notice
to the General Partner) and shall specify the time, date, place and purpose of
such meeting. Notification of a meeting called at the request of the requisite
number of Limited Partners shall be sent within ten (10) business days after the
General Partner's receipt of such a request and such meeting shall be held not
less than fifteen (15) nor more than thirty (30) days after receipt of such
request. The members of the Review Committee may designate one of such members
as chairman of the Review Committee and may establish such other procedures for
the functioning of the Review Committee as the members of the Review Committee
may approve, subject to the requirements and approval procedures of this Section
7.11. Voting of the representatives of the Limited Partners may be in person or
by proxy, duly signed by the representatives of the Limited Partners or their
respective attorneys-in-fact. All actions that could be taken at a meeting of
the Review Committee may also be taken by the written consent of the
representatives of Limited Partners holding such Percentage Interests as is
required to take such action pursuant to this Section 7.11.
7.11(b) The General Partner shall submit the following
actions to the Review Committee which, by vote of the representatives of an LP
Majority (except as set forth below in Section 13.09(e)), which shall have the
right to approve or disapprove of any such actions:
(i) Establishment of any standard pricing policies
with respect to the Partnership's sale of services which are
intended to result in (x) the sale of satellite transmission
capacity to customers generally at prices which are lower than
those charged to Limited Partners in agreements entered into
on or about the date of this Agreement or (y) the sale of
satellite transmission capacity to certain Partners at prices
or on terms materially different from the prices and terms
offered or available to Partners generally.
(ii) Establishment of any amended budget pursuant to
Section 9.09(c) or establishment of any budget relating to any
period of one year or longer (including any annual budget
proposed by the General Partner under Section 9.09) (a
"Proposed Budget") which calls for a percentage increase, from
the applicable amount specified, for the year to which the
Proposed Budget relates, in the Ten Year Projection dated July
12, 1991 (the "Ten Year Projection") (attached hereto as
Exhibit A) in (x) an aggregate annual amount of 10 percent or
more, or (y) any individual line item annual amount of 20
percent or more; provided,
-38-
however, that if under this Section 7.11(b)(ii) and Section
13.09(e), a budget is approved which covers the period to
which the Proposed Budget relates (an "Approved Budget"), the
percentage increase in aggregate annual operating expenses or
in individual line items shall be measured from the amount
specified in the most recent Approved Budget, rather than from
the applicable amount in the Ten Year Projection.
(iii) Causing the Partnership to make expenditures or
incur obligations in excess of those permitted by Section
9.09(c).
(iv) Settlement of any matters with federal, state,
local or foreign tax authorities that requires the payment by,
or the increase in tax liabilities of, either the Partnership
or the Partners in the aggregate in excess of $3 million, or
consent to an extension of the statute of limitations
applicable to the assessment and collection of taxes from the
Partners in connection with any federal or state income tax
audit of the Partnership involving a potential tax liability
for the Partners in the aggregate in excess of $3 million.
(v) Characterization (including determination of
source and whether such item should be separately stated by
the Partners in their respective returns) of major categories
of income, gain, deduction, and loss for purposes of the
Partnership's federal income tax returns, provided that any
characterization determined by the Review Committee pursuant
to this Section 7.11(b)(v) shall be used in filing the
Partnership's returns only if the Partnership's tax
accountants or tax counsel determine that there is a realistic
possibility (within the meaning of section 6694 of the Code)
of such characterization being sustained on its merits and
that either there is "substantial authority" (within the
meaning of section 6662 of the Code) for such characterization
or there is adequate disclosure of the relevant facts
affecting such characterization in the Partnership's return so
that the penalties applicable under section 6662(c) of the
Code would not apply to the Partnership or the Partners if
such characterization were not sustained. For the purposes
hereof, a "major category" shall mean an amount in excess of
$1,000,000 for the particular taxable year at issue.
(vi) Offering to sell any additional Partnership
Interest pursuant to the terms of Section 11.01.
(vii) Designation by the General Partner of a member
of its executive management to be the general manager to
direct the management of IPSP Services (as defined in Section
7.14(c)).
7.11(c) Any action required to be submitted by the
General Partner to the Review Committee pursuant to this Section 7.11 shall be
submitted
-39-
by written notice to the Limited Partners (the "Review Notice"), together with
the notice concerning the meeting and a description of the action(s) proposed to
be taken at the meeting.
7.11(d) At each meeting of the Review Committee, the
General Partner shall report to the members of the Review Committee on
significant developments of IPSP Services (as defined in Section 7.14(c)) during
the period since the preceding meeting of the Review Committee. Such report
shall be in such form as the General Partner may deem appropriate, but shall
include information concerning the execution of the business plan, including the
strategy for market entry, the development of service offerings, and the
appointment or removal of representative agents and distributors, the terms and
conditions of any such appointment, the relation of any such appointment to
existing agreements and the grounds for any such removal. In addition, when the
General Partner prepares and presents the annual budget (or any other Budget
Subject to Approval) to the members of the Review Committee, the General Partner
shall present to members of the Review Committee the work program for IPSP
Services as it is reflected in the budget.
7.12. MEETINGS OF LIMITED PARTNERS.
Meetings of the Limited Partners regarding any matters with
respect to which the Limited Partners have the right to vote or consent (other
than pursuant to Section 7.11) may be called by the General Partner from time to
time and shall be called by the General Partner upon its receipt of a request in
writing signed by at least two Limited Partners holding in the aggregate at
least twenty percent (20%) of the total Percentage Interests then held by the
Limited Partners, which request shall specify the purpose of such a meeting.
Notification of a meeting of the Limited Partners shall be sent by the General
Partner, not less than fifteen (15) days prior to the date of such meeting, to
the Limited Partners at their record addresses (as may be changed by written
notice to the General Partner) and shall specify the time, date, place and
purpose of such meeting. Notification of a meeting called at the request of the
requisite number of Limited Partners shall be sent within ten (10) business days
after the General Partner's receipt of such a request and shall be held not less
than fifteen (15) nor more than sixty (60) days after receipt of such request.
Any meeting of Limited Partners may be held at the principal office of the
Partnership or at such other location as the General Partner may deem
appropriate. Voting of the Limited Partners may be in person or by proxy, duly
signed by the Limited Partner or its attorney-in-fact. All actions that could be
taken at a meeting of the Limited Partners may also be taken by the written
consent of Limited Partners holding such Percentage Interests as is required to
take such action pursuant to this Agreement.
-40-
7.13. TRANSFER OF LIMITED PARTNERSHIP INTEREST TO THE GENERAL
PARTNER.
In the event that the Percentage Interest of the General
Partner is ever less than twenty five percent (25%) or in the event that Limited
Partners of the Partnership ever own, in the aggregate, more than twenty five
percent (25%) of the voting power with respect to the outstanding stock of Orion
Network Systems, Inc. ("ONS"), determined based upon the higher of the
percentage of votes that can be cast for the election of directors or the
percentage of directors that can be selected, ONS shall transfer to the General
Partner any interest as a Limited Partner that ONS then owns in the Partnership,
and the General Partner shall thereafter have, in addition to all of its rights
under this Agreement as a General Partner, all of the rights of a Limited
Partner under this Agreement attributable to such interest.
7.14. TECHNICAL COMMITTEE.
7.14(a) A committee of the Partnership known as the
Technical Committee (the "Technical Committee"), consisting of one
representative (and, if requested by a Limited Partner, an alternate
representative) of each Partner, shall be established for the purposes set forth
in Section 7.14(b). Technical Committee representatives shall be entitled to
bring to Technical Committee meetings such staff and other personnel which they
reasonably deem necessary. Meetings of the Technical Committee may be called by
the General Partner from time to time, and shall be called by the General
Partner upon its receipt of a request in writing signed by at least two Limited
Partners, which request shall specify the purpose of such a meeting.
Notification of a meeting of the Technical Committee shall be sent by the
General Partner, not less than fifteen (15) days prior to the date of such
meeting, to the representatives of the Limited Partners at their record
addresses (as may be changed by written notice to the General Partner) and shall
specify the time, date, place and purpose of such meeting. Notification of a
meeting called at the request of the requisite number of Limited Partners shall
be sent within ten (10) business days after the General Partner's receipt of
such a request and such meeting shall be held not less than fifteen (15) nor
more than thirty (30) days after receipt of such request. The General Partner
shall serve as chairman of the Technical Committee. The members of the Technical
Committee may establish such procedures for the functioning of the Technical
Committee as the members of the Technical Committee may approve, subject to the
requirements and approval procedures of this Section 7.14. If any matter is
submitted to the Technical Committee at a meeting of the Technical Committee for
that Committee's advice concerning such matter (whether by the General Partner
or upon receipt by the General Partner of a request in writing signed by at
least two Limited Partners), such matter shall be submitted by written notice to
the Limited Partners, together with the notice concerning the meeting and a
description of the matter on which advice is to be given at the meeting.
-41-
7.14(b) The Technical Committee will advise the General
Partner and the Review Committee on all matters relating to the technology and
operation of the Partnership's satellite system and transmission networks. The
Technical Committee also will review and recommend to the General Partner and
the Limited Partners the final and definitive main technical and performance
specifications for the Partnership's satellites, as well as of any material
amendment thereof during the construction period. With regard to IPSP Services,
the Technical Committee will recommend technical standards for equipment and
operations and will seek to ensure that any such standards are consistent with
the operating standards and procedures of the satellite system. The Technical
Committee will review the technical aspects of any general policies or
procedures proposed by the General Partner regarding IPSP Services; provided,
however, that the Technical Committee shall not have the power to disapprove any
action taken by the General Partner or the Review Committee. If the Technical
Committee does not reach a unanimous conclusion concerning particular advice to
be given to the General Partner or the Review Committee, only matters approved
by the representatives of an LP Majority shall be deemed to be the advice of the
Technical Committee; provided, however, that the report of the Technical
Committee which contains such advice also shall set forth any advice provided by
the representatives of any Limited Partner not included in such LP Majority.
Unless all representatives on the Technical Committee otherwise agree, advice by
the Technical Committee shall be in writing.
7.14(c) "IPSP Services" means: transmission-based
telecommunication services (other than the mere sale or lease of units of
transmission capacity on the Partnership's satellite system) which consist of
international private transmission links and networks, either as turnkey
facilities management or as a service, and in particular include (i) any and all
transmission services provided by the Partnership primarily over the
Partnership's satellite system that involve the transport of information, but
not its manipulation, and satellite connectivity services, and (ii) the
provision of, installation, maintenance, repair, operation, customer network
support and monitoring for, and associated services related to ground facilities
used to communicate to or from the satellite system, including (without
limitation), turnkey facilities management, VSAT and hub/control earth station
services and terrestrial links, and (iii) Value Added Services, which means
those services which involve not simply the transmission of information, but its
manipulation as well.
Any non-public switched telecommunications network or
international transmission service (other than the mere sale or lease of
transmission capacity on the Partnership's satellite system) is intended to be
included in IPSP Services.
-42-
ARTICLE VIII
COMPENSATION OF GENERAL PARTNER; PAYMENT OF PARTNERSHIP
EXPENSES
8.01. COMPENSATION OF GENERAL PARTNER.
Except as expressly provided in Section 8.03 or pursuant to
arrangements contemplated by Section 7.07, the General Partner shall not receive
any compensation from the Partnership for services rendered in its capacity as a
general partner of the Partnership.
8.02. PARTNERSHIP EXPENSES.
Subject to Section 7.11(b)(iii), notwithstanding any other
provision of this Agreement, the Partnership shall bear all costs and expenses,
including, without limitation, all costs and expenses (including overhead
expenses) reasonably incurred by the General Partner in connection with the
management and operation of the business and affairs of the Partnership, or in
carrying out the purposes of the Partnership. In the event that the General
Partner at any time or from time to time advances its own funds to pay any such
costs or expenses, it shall be entitled to reimbursement of such funds from the
Partnership promptly upon demand.
8.03. Acquisition, Organizational, and Offering Expenses.
The Partnership shall reimburse the General Partner for all
fees, costs, and expenses actually incurred by the General Partner and its
Affiliates in connection with the organization of the Partnership, the offering
and sale of Partnership Interests to the Limited Partners, and the arrangements
for the placement of Partnership debt, and including, without limitation, legal
(including tax advice), financial advisor, consulting and accounting fees,
filing and recordation fees, printing costs, telephone and travel expenses.
ARTICLE IX
BANK ACCOUNTS; BOOKS AND RECORDS; STATEMENTS; TAXES;
FISCAL YEAR; ANNUAL BUDGET
9.01. BANK ACCOUNTS AND INVESTMENTS.
All funds of the Partnership shall be deposited in its name in
such checking and savings accounts, time deposits or certificates of deposit, or
other accounts at such banks or in such other investments permitted by Section
3.02(h), as shall be designated by the General Partner from time to time, and
the General Partner shall arrange for the appropriate management of such account
or accounts.
-43-
9.02. BOOKS AND RECORDS.
The General Partner shall keep, or cause to be kept, books and
accounts showing assets, liabilities, income, operations, transactions and the
financial condition of the Partnership. Such books and accounts shall be
prepared on the accrual basis for accounting and U.S. federal income tax
purposes and in accordance with generally accepted accounting principles unless
the General Partner adopts an alternative basis in accordance with applicable
accounting and tax standards. The Limited Partners, or their respective
designees, shall have access to the books and records of the Partnership with
respect to all information which the Limited Partners are lawfully permitted to
require, including but not limited to budgets, financial projections and any
amendment thereto, quarterly and annual income statements, quarterly and annual
balance sheets, quarterly and annual funds flow statements and forecasts, the
credit documents with respect to the financing of the Partnership's proposed
satellites, and the Satellite Construction Contract (other than trade secrets
and other proprietary information, or any information of any kind received from
third parties pursuant to a confidentiality agreement or understanding) at any
reasonable time during regular business hours and shall have the right to copy
said records at their expense.
9.03. FINANCIAL STATEMENTS AND INFORMATION.
9.03(a) All financial statements prepared pursuant to
this Section 9.03 shall present fairly, in all material respects, the financial
position and operating results of the Partnership in accordance with generally
accepted accounting principles, and shall be prepared on the accrual, cash or
other basis, as provided in Section 9.02, for each Fiscal Year of the
Partnership during the term of this Agreement.
9.03(b) Within forty-five (45) days after the end of
each quarterly period (the "Fiscal Quarter") of each Fiscal Year, commencing
with the first full Fiscal Quarter after December 20, 1991, the General Partner
shall prepare and submit or cause to be prepared and submitted to the Limited
Partners an unaudited statement of profit and loss for the Partnership for such
Fiscal Quarter and an unaudited balance sheet of the Partnership dated as of the
end of such Fiscal Quarter, in each case prepared in accordance with generally
accepted accounting principles.
9.03(c) Within ninety (90) days after the end of each
Fiscal Year, the General Partner shall prepare and submit or cause to be
prepared and submitted to the Limited Partners (i) an audited balance sheet,
together with audited statements of profit and loss, Partners' equity and
changes in financial position for the Partnership during such Fiscal Year and
(ii) an audited statement showing any Cash Flow and any Net Proceeds of a
Capital Transaction distributed to the Partners in respect of such Fiscal Year.
-44-
9.03(d) At least ten (10) days prior to each meeting of
the Review Committee, the General Partner shall prepare and submit or cause to
be prepared and submitted to the members of the Review Committee a general
report on significant developments of or affecting the Partnership during the
period since the most recent prior meeting of the Review Committee. Such report
shall be in such form as the General Partner may deem appropriate.
9.03(e) The General Partner shall provide to the
Limited Partners such other reports and information concerning the business and
affairs of the Partnership as may be required by the Delaware RULPA or by any
other law or regulation of any regulatory body applicable to the Partnership.
Nothing in this Agreement shall restrict the right of any Limited Partner to
communicate with the General Partner on matters pertaining to general policy,
planning and direction to the extent permitted by Section 17-303 of Delaware
RULPA.
9.03(f) Within forty-five (45) days after the end of
each Fiscal Quarter, commencing with the first full Fiscal Quarter after
December 20, 1991, until commencement of commercial operations of each of the
Partnership's satellites, the General Partner shall prepare and submit or cause
to be prepared and submitted to the Limited Partners progress reports regarding
the construction and launch of the Partnership's proposed satellites under the
Satellite Construction Contract in such form as will reasonably inform the
Limited Partners about the matters set forth below. Such reports shall include
reports from the manufacturer under the Satellite Construction Contract
regarding the status of the construction, from the launch services company that
will perform launch services for such manufacturer regarding the launch status,
and from the Partnership regarding regulatory matters (including those of any
state, governmental commission (including the FCC) or other authority affecting
the construction, launch or operation of the satellites). Within forty-five (45)
days after the end of each Fiscal Quarter, commencing with the first full Fiscal
Quarter after the commencement of commercial operations of the first of the
Partnership's satellites, the General Partner shall prepare and submit or cause
to be prepared and submitted to the Limited Partners status reports regarding
the health of the Partnership's satellites and all transponders, the use of
transponder spares, updated predictions regarding satellite life, and full
information about any effected transfer or lease of capacity (including name of
user, bandwidth, price, duration and transponder occupancy). The General Partner
shall inform each Limited Partner in writing about any event which has or may
have a material adverse effect on the health or the performance of any of the
Partnership's satellite promptly after occurrence of such event.
9.03(g) The provision by the General Partner to one or
more Limited Partners of reports or information described in Section 9.03 or
otherwise pursuant to this Agreement, by itself, shall not imply in any manner
whatsoever the acceptance by or involvement of any Limited Partner with respect
to such reports or information, and such reports or information shall be
construed only as having been prepared and distributed by the General Partner.
-45-
9.04. ACCOUNTING DECISIONS.
All decisions as to accounting matters, except as specifically
provided to the contrary herein, shall be made by the General Partner.
9.05. WHERE MAINTAINED.
The books, accounts and records of the Partnership at all
times shall be maintained at the Partnership's principal office as set forth in
Section 2.03 above, or, at the option of the General Partner, at the principal
place of business of the General Partner.
9.06. TAX RETURNS AND TAX MATTERS.
9.06(a) The General Partner shall, at the expense of
the Partnership, cause to be prepared and delivered to the Partners, in a timely
fashion after the end of each Fiscal Year, copies of all Federal, state, local,
and foreign income tax returns for the Partnership for such Fiscal Year, one
copy of which shall be filed by the General Partner. Such returns shall be
prepared on the accrual basis (or as otherwise determined pursuant to Section
9.02) and shall accurately reflect the results of operations of the Partnership
for such Fiscal Year. The General Partner is designated as the "tax matters
partner" (as defined in the Code) of the Partnership and is authorized and
required to represent the Partnership (at the expense of the Partnership),
subject to Section 7.11(b)(iv), in connection with all examinations of the
affairs of the Partnership by any Federal, state, or local tax authorities,
including any resulting administrative and judicial proceedings, and to expend
funds of the Partnership for professional services and costs associated
therewith. Each Partner agrees to cooperate with the General Partner and to do
or refrain from doing any or all things reasonably required by the General
Partner in connection with the conduct of such proceedings; provided, however,
that in no event shall any Limited Partner be required to do or refrain from
doing anything which would cause such Limited Partner to be deemed a general
partner of the Partnership.
9.06(b) Upon receipt by the General Partner of any
notice, request, inquiry, or statement of a material nature from the IRS in
connection with an examination of the Partnership involving a potential federal
income tax liability for the Partners, in the aggregate, in excess of $3
million, the General Partner shall within 20 days send all other Partners a copy
of the documents so received. In the event that General Partner intends to
respond in writing to any documents from the IRS required to be provided to the
other Partners under the preceding sentence, (i) if the potential federal income
tax liability for the Partners, in the aggregate, exceeds $10 million, the
General Partner shall provide a copy of its proposed response to all other
Partners not less than 10 days before such response is to be submitted to the
IRS and shall consider in good faith any comments received from other Partners
with respect to such proposed response, and (ii) if the potential
-46-
federal income tax liability for the Partners, in the aggregate is greater than
$3 million, the General Partner shall provide a copy of its actual response to
all other Partners promptly after submission to the IRS.
9.06(c) The General Partner, at the expense of the
Partnership shall provide Limited Partners with such other information as they
may reasonably request for use in the preparation of their respective income tax
returns.
9.07. FEDERAL INCOME TAX ELECTIONS.
If there is a distribution of any Partnership Assets or other
property as described in Section 734 of the Code, or if there is a transfer of
an interest in the Partnership as described in Section 743 of the Code, then,
upon the request of any Partner, the General Partner shall cause the Partnership
to file a Section 754 Election, provided the Partner requesting such election
shall have agreed in writing to reimburse the Partnership for all incremental
accounting and other administrative costs incurred as a result of such election.
9.08. FISCAL YEAR.
The Fiscal Year of the Partnership for financial and Federal,
state and local income tax purposes shall initially be the calendar year. The
General Partner shall have authority to change the beginning and ending dates of
the Fiscal Year if the General Partner, in its sole and absolute discretion,
deems such change to be necessary or appropriate to the business of the
Partnership, provided such change is permitted by the Code, and shall give
written notice of any such change to the Limited Partners within thirty (30)
days after the occurrence thereof.
9.09. ANNUAL BUDGET.
9.09(a) Distribution of Annual Budgets. Prior to the
commencement of each new Fiscal Year, the General Partner shall prepare and
distribute to the members of the Review Committee a budget setting forth the
anticipated expenditures, aggregate annual operating expenses and revenues of
the Partnership with respect to such Fiscal Year, including the proposed
overhead expenses of the General Partner which budget shall contain at least the
same line items as the Ten Year Projection or most recent Approved Budget, as
applicable. This budget may, in the discretion of the General Partner, also
relate to years other than such Fiscal Year.
9.09(b) Approval of Budgets Subject to Approval. All
budgets required to be submitted to the Review Committee as provided in Section
7.11 and Section 13.09(e) (a "Budget Subject to Approval") shall be so
submitted, subject to such provisions. When a proposed Budget Subject to
Approval is approved (or deemed approved) by the Review Committee, then such
Budget Subject to Approval shall become the operative budget for the Fiscal Year
to which it relates. In the
-47-
event that any proposed Budget Subject to Approval (or revised proposed Budget
Subject to Approval) is disapproved by the Review Committee, then the General
Partner shall submit a revised proposed budget to the Review Committee within
thirty (30) days after such disapproval. If the revised proposed budget is a
Budget Subject to Approval, the Review Committee and the General Partner shall
attempt in good faith to reach agreement on such revised budget. During any
Fiscal Quarter (or portion thereof) of any Fiscal Year in which no budget is in
effect because a Budget Subject to Approval has been disapproved by the Review
Committee, or has not yet been approved (or deemed approved) by the Review
Committee, then the operative budget for such Fiscal Quarter shall be deemed to
include (a) all liabilities or obligations of the Partnership that were
previously incurred or committed to by or on behalf of the Partnership in good
faith and that became due and payable during such Fiscal Quarter, (b) all
liabilities or obligations that the General Partner, in good faith, believes
should be incurred or committed to by or on behalf of the Partnership for the
operation of its business or the carrying out of the purposes of the Partnership
during such Fiscal Quarter (including, without limitation, the payment or
settlement of any claims or potential claims against the Partnership) and (c)
all other operating expenses in an amount equal to one hundred ten percent
(110%) of the operating expenses for such Fiscal Quarter as set forth in the
most recent Approved Budget which relates to the Fiscal Year in which such
Fiscal Quarter occurs or, if there is no such Approved Budget, as set forth in
the Ten Year Projection, provided that, for purposes of this clause (c), if such
Approved Budget or the Ten Year Projection, as applicable, sets forth operating
expenses on a fiscal year basis rather than on a fiscal quarter basis, the
operating expenses for such Fiscal Quarter shall equal one-fourth of the
operating expenses for the Fiscal Year in which such Fiscal Quarter occurs, as
set forth in such Approved Budget or the Ten Year Projection, as applicable. Any
operative budget for a Fiscal Quarter (or portion thereof) of any Fiscal Year in
which no budget is in effect because a Budget Subject to Approval has been
disapproved by the Review Committee, or has not yet been approved (or deemed
approved) by the Review Committee, shall be superseded by the budget, if any,
ultimately approved (or deemed approved) by the Review Committee or any revised
budget prepared and distributed by the General Partner to the members of the
Review Committee which is not a Budget Subject to Approval. 9.09(c) In the event
that the General Partner shall determine that the total expenditures of the
Partnership for a Fiscal Year will exceed by ten percent (10%) or more all
expenditures of the Partnership, or that expenditures by the Partnership for a
Fiscal Year with respect to any individual line item will exceed by twenty
percent (20%) or more the corresponding amount, reflected in the Approved Budget
for such Fiscal Year or Ten Year Projection, as applicable, the General Partner
shall promptly prepare and submit to the Review Committee for approval pursuant
to Section 7.10(b)(iii) an amended budget for such Fiscal Year pursuant to
Section 9.09(b). Notwithstanding the foregoing, the General Partner shall be
permitted to cause the Partnership to make expenditures that (a) do not exceed
by ten percent (10%) or more in the aggregate the aggregate annual
-48-
expenditures and by twenty percent (20%) or more the annual expenditures with
respect to any individual line item, reflected in the Approved Budget for such
Fiscal Year or Ten Year Projection, as applicable, or (b) that are beyond the
control of the General Partner, or (c) that the General Partner determines must
reasonably be paid prior to the approval of an amended budget pursuant to this
Section 9.09(c) in order to protect the Partnership, the Partnership Assets, the
business of the Partnership or its customers.
9.09(d) No budget, amended budget, Approved Budget or
increase in any of the foregoing shall require an increase in the amount of the
Capital Contribution of any Partner (unless such increase in the Capital
Contribution is contained in an amendment to this Agreement which has received
the written consent of all of the Partners under Section 13.09).
ARTICLE X
TRANSFER OF INTERESTS
10.01. TRANSFER.
10.01(a) The term "transfer", when used in this Article
X with respect to a Partnership Interest, shall include any sale, assignment,
gift, pledge, hypothecation, mortgage or other encumbrance, exchange, or other
disposition, whether voluntary or involuntary, by operation of law or otherwise,
and whether effected directly or indirectly (including without limitation any
change of control of any Partner or of any Person who controls such Partner,
other than a change of control of the ultimate parent company or other entity
controlling such Partner or Person or in the event such Partner or Person has no
ultimate controlling parent company or other controlling entity, a change of
control of the Partner or Person itself), except that "transfer" shall not
include any pledge, mortgage, or hypothecation of or granting of a security
interest in a Partnership Interest in connection with any financing obtained on
behalf of the Partnership (so long as such financing, to the extent required to
be submitted to the Limited Partners under Section 7.04(d) or 7.04(e), has been
so submitted and has been approved). As used in this Article X, the term
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract, or otherwise.
10.01(b) No Partnership Interest shall be transferred,
in whole or in part, except in accordance with the terms and conditions set
forth in this Article X. Any transfer or purported transfer of any Partnership
Interest not made in accordance with this Article X shall be null and void.
-49-
10.02. TRANSFER OF INTEREST OF GENERAL PARTNER.
The General Partner may not transfer, or otherwise permit any
Person to hold, its Partnership Interest as a General Partner unless:
10.02(a) such transfer in the written opinion of legal
counsel acceptable to the Review Committee, in its reasonable discretion, (i)
would not violate the then applicable federal and state securities and other
laws and rules and regulations of the Securities and Exchange Commission, state
securities commissions and any other governmental authorities with jurisdiction
over such disposition, (ii) would not result in the Partnership being classified
for Federal income tax purposes as an "association taxable as a corporation"
rather than as a partnership, (iii) would not prejudice or affect the continuity
of the Partnership for the purposes of Section 708 of the Code, and (iv) would
not affect the Partnership's existence as a limited partnership under the
Delaware RULPA;
10.02(b) a successor General Partner is admitted to the
Partnership in accordance with Section 11.03; and
10.02(c) with respect to the transfer of its
Partnership Interest, other than a transfer of the right to a distributive share
of the income, gain, losses, deductions, and assets of the Partnership in
accordance with the terms of this Agreement which does not reduce the General
Partner's distributive share of such items below five percent (5%), such
transfer and the admission of the transferee to the Partnership as a General
Partner is approved by written consent of an LP Majority.
10.03. TRANSFER OF INTEREST OF LIMITED PARTNER.
A Limited Partner may transfer all or any portion of its
Partnership Interest except as prohibited under this Section 10.03.
Notwithstanding the foregoing, no transferee of a Limited Partner's Partnership
Interest shall become a Limited Partner or have any of the rights of a Limited
Partner, other than the right to a distributive share of the income, gain,
losses, deductions, distributions, and assets of the Partnership in accordance
with the terms of this Agreement, unless such transferee is admitted to the
Partnership as a Limited Partner in accordance with Section 11.02. A Limited
Partner may not transfer, or otherwise permit any Person to hold, all or any
portion of its Partnership Interest as a Limited Partner unless:
10.03(a) if the transferee is not a Person that
controls, is controlled by, or is under common control with, the transferring
Limited Partner, the transferring Limited Partner first offers the other
Partners the right to purchase such Partnership Interest on a pro rata basis in
accordance with their respective Percentage Interests pursuant to Section 10.04;
and
-50-
10.03(b) if the transferee is a Person who controls, is
controlled by, or is under common control with, the transferring Limited
Partner, the ability of the transferee to perform its obligations to the
Partnership (including without limitation obligations under this Agreement and
any agreement or contract between such transferee and the Partnership) is
reasonably satisfactory to the General Partner and the creditworthiness of the
transferee is satisfactory to the Partnership's lenders.
10.04. PARTNERS' RIGHTS OF FIRST REFUSAL.
10.04(a) If a Limited Partner has received a bona fide
written offer from a prospective third party purchaser (including another
Partner) (a "Third Party Offer") then, before accepting such Third Party Offer,
such Limited Partner (the "Offeror") shall first offer, to the other Partners
(the "Offerees"), on a pro rata basis in accordance with their respective
Percentage Interests, the Partnership Interest that the Offeror proposes to be
transferred to such third party. Such Partnership Interest shall be offered to
the Offerees at an offering price which shall be the same as, and on the same
terms and conditions as, those contained in the Third Party Offer, or if the
Third Party Offer provides for consideration or other terms and conditions not
practically attainable by the Offerees, then for consideration and upon terms
and conditions substantially equivalent to those contained in the Third Party
Offer. The offer shall be made by a written notice to the Offerees which offer
notice shall be accompanied by a copy of the Third Party Offer. The Offerees
shall have thirty (30) days after the date of such offer notice (the "Offerees
Election Period") within which to elect to purchase all (but not less than all)
of the Partnership Interest proposed to be transferred. Such election shall be
made by a written notice of election given to the Offeror and the other
Partners. The right of the Offerees or any of them to elect to make such
purchase is conditioned upon the purchase by the participating Offerees
collectively of all of the Partnership Interest which is subject to the Third
Party Offer; provided, however, that any portion of a Partnership Interest not
purchased by any particular Offeree may be purchased by the other Offerees on a
pro rata basis in accordance with their respective Percentage Interests, or on
such other basis as they may agree, by written notice to the Offeror within ten
(10) days after the end of the Offerees Election Period. The closing date of any
purchase by the Offerees shall be twenty (20) days after expiration of the
Offerees Election Period (or if not a business day, then on the next business
day thereafter).
10.04(b) If the Offerees shall fail to elect, pursuant
to the terms of Section 10.04(a), to purchase all of the Partnership Interest
that is the subject of the Third Party Offer or at any time shall notify the
Offeror of their elections not to purchase all of such Partnership Interest, or
shall elect to purchase but fail to close the purchase on the closing date, then
the Offeror shall be free for a period of ninety (90) days thereafter to sell
such Partnership Interest to the Person that made the Third Party Offer and
under terms and conditions no less favorable to the Offeror than those contained
in the Third Party Offer, subject to the limitations set forth in
-51-
Section 11.02 regarding admission of additional Limited Partners. If such
Partnership Interest is not so sold by the Offeror within such 90-day period,
the Offeror's right to transfer such Partnership Interest shall again be subject
to the foregoing restrictions.
10.04(c) If a Limited Partner (the "Offeror Limited
Partner") wishes to transfer a Partnership Interest (other than to a transferee
who is a Person that controls, is controlled by, or is under common control
with, such Offeror Limited Partner), and if such Offeror Limited Partner has not
yet received a bona fide offer that such Offeror Limited Partner wishes to
accept, then such Offeror Limited Partner may elect to offer such Partnership
Interest to the other Partners (the "Offeree Partners") on a pro rata basis in
accordance with their respective Percentage Interests, at a price and on terms
proposed by such Offeror Limited Partner. Such offer shall be made by a written
notice (the "Proposed Sale Notice") to the Offeree Partners setting forth the
price and the terms and conditions proposed by such Offeror Limited Partner. The
Offeree Partners shall have thirty (30) days after the date of such Proposed
Sale Notice (the "Offeree Partners Election Period") within which to elect to
purchase all (but not less than all) of the Partnership Interest proposed to be
transferred. Such election shall be made by a written notice of election given
to the Offeror Limited Partner and the other Partners. The right of the Offeree
Partners or any of them to elect to make such purchase is conditioned upon the
purchase by the participating Offeree Partners collectively of all of the
Partnership Interest proposed to be transferred; provided, however, that any
portion of such Partnership Interest not purchased by any particular Offeree may
be purchased by the other Offeree Partners on a pro rata basis in accordance
with their respective Percentage Interests, or on such other basis as they may
agree, by written notice to the Offeror Limited Partner within ten (10) days
after the end of the Offeree Partners Election Period. The closing date of any
purchase by the Offeree Partners shall be twenty (20) days after expiration of
the Offeree Partners Election Period (or if not a business day, then on the next
business day thereafter).
10.04(d) If the Offeree Partners shall fail to elect,
pursuant to the terms of Section 10.04(c), to purchase all of such Partnership
Interest or at any time shall notify the Offeror Limited Partner of their
elections not to purchase all of the Partnership Interest proposed to be
transferred, or shall elect to purchase but fail to close the purchase on the
closing date, then the Offeror Limited Partner shall be free for a period of one
hundred twenty (120) days thereafter to sell such Partnership Interest at a
price and on terms and conditions no less favorable to the Offeror Limited
Partner than those contained in the Proposed Sale Notice, subject to the
limitations in Section 11.02(a) regarding admission of additional Limited
Partners. If such Partnership Interest is not so sold by the Offeror Limited
Partner within such 120-day period, the Offeror Limited Partner's right to
transfer such Partnership Interest shall again be subject to the provisions of
Section 10.04(c).
-52-
10.05. RESTRICTION ON CERTAIN TRANSFERS.
Notwithstanding any provision in this Agreement, the FCC
License shall not be transferred, assigned or disposed of in any manner,
voluntarily or involuntarily, including by any transfer of control of any
corporation holding that license, to any person except upon application to the
FCC and upon a finding by the FCC that the public convenience and necessity will
be served thereby.
ARTICLE XI
OFFERING OF ADDITIONAL PARTNERSHIP
INTERESTS; ADMISSION OF ADDITIONAL PARTNERS;
WITHDRAWAL OF PARTNERS; REMOVAL OF GENERAL PARTNER
11.01. OFFERING OF ADDITIONAL PARTNERSHIP INTERESTS.
11.01(a) If, following the admission of the Limited
Partners to the Partnership on the date hereof, the General Partner wishes to
cause the Partnership to offer and sell to third parties (including other
Partners) additional limited partner Partnership Interests (a "Third Party
Offering"), the General Partner shall give notice to each Limited Partner of the
identity and background of the proposed purchaser (if not already a Limited
Partner) and the terms and conditions of the offer and shall submit such
proposed sale to a vote of the Limited Partners pursuant to Section 7.11(b). In
exercising their right to vote pursuant to Section 7.11(b) concerning the
proposed offer and sale of additional limited partner Partnership Interests and
admission of third party purchasers, the Limited Partners shall not unreasonably
withhold their approval. One basis, but not the exclusive basis, for the Limited
Partners to reasonably withhold their approval shall be the Limited Partners'
belief that the admission of such third party purchasers as Limited Partners
will present a risk to the business, operations, goals, finances or regulatory
approvals of the Partnership. In addition, it shall be reasonable for the
Limited Partners to condition their approval on the Partnership first offering
all the then-existing Partners the right to purchase such additional Partnership
Interests on the same terms as are proposed to be offered to such third parties
and on a pro rata basis in accordance with their respective Percentage Interests
pursuant to Sections 11.01(b) and (c). The Limited Partners may, in their
discretion, by a vote of Limited Partners holding a majority of the total
Percentage Interests then held by the Limited Partners, require that as a
condition to any such sale and admission that the Partnership obtain a written
opinion of legal counsel acceptable to the General Partner, in its reasonable
discretion, that such sale and admission would not result in the Partnership
being classified for Federal income tax purposes as an "association taxable as a
corporation" rather than as a partnership. In addition, unless such offer and
sale of additional limited partner Partnership Interests and admission of such
third party purchasers are approved, pursuant to the vote of Limited Partners
under Section 7.11(b), by an LP Majority,
-53-
the Partnership must first offer all the then-existing Partners the right to
purchase such additional Partnership Interests on the same terms as are proposed
to be offered to such third parties and on a pro rata basis in accordance with
their respective Percentage Interests pursuant to Sections 11.01(b) and (c). It
is acknowledged and agreed that the sale of additional Partnership Interests
will reduce, or otherwise alter, proportionally the Percentage Interests of the
Partners existing immediately prior to such sale except to the extent that such
existing Partners purchase any of such additional Partnership Interests. Any
such reductions or other alterations in the Partners' Percentage Interests shall
be reflected on Schedule B.
11.01(b) If the General Partner is required to offer
all the then-existing Limited Partners the right to purchase additional
Partnership Interests pursuant to Section 11.01(a), the Partnership shall offer
to all the Partners, on a pro rata basis in accordance with their respective
Percentage Interests, the additional Partnership Interests that the Partnership
proposes to offer to such third party purchasers. Such additional Partnership
Interests shall be offered to the partners at an offering price which shall be
the same as, and on the same terms and conditions as, those proposed for the
Third Party Offering. The offer shall be made by a written notice to Partners
which shall also identify the designated third party purchasers, if then known
by the Partnership. The Partners shall have thirty (30) days after the date of
such offer notice (the "Partner Subscription Period") within which to elect to
purchase any or all of such additional Partnership Interests proposed to be
offered to third party purchasers. Such election shall be made by a written
notice of subscription given to the Partnership and all the other Partners. In
the event that any of the Partners do not purchase the maximum amount of such
additional Partnership Interests to which they are entitled pursuant to this
Section 11.01(b), any of such additional Partnership Interests not so purchased
may be purchased by the other Partners on a pro rata basis in accordance with
their respective Percentage Interests, or on such other basis as they may agree,
by written notice to the Partnership within ten (10) days after the end of the
Partner Subscription Period. The closing date of any purchase by the Partners of
such additional Partnership Interests shall be on such date as the General
Partner shall reasonably determine. Notwithstanding any provision of this
Section 11.01 to the contrary, the Partnership shall not be required to make an
offer to sell additional Partnership Interests to the Partners if, in the
reasonable opinion of the General Partner, after consultation with its legal
counsel, no exemption would be available for such offer from the registration
requirements of the Securities Act of 1933 or applicable state securities laws.
11.01(c) If the Partners shall fail to elect to
purchase or shall be foreclosed from purchasing, pursuant to the terms of
Section 11.01(b), all of the additional Partnership Interests proposed to be
offered to third parties, or shall elect to purchase but fail to close the
purchase on the closing date, then the Partnership shall be free for a period of
two hundred seventy (270) days thereafter to sell any such additional
Partnership Interests not purchased by the Partners
-54-
pursuant to the terms of Section 11.01(b) to the offeror whose identity was
disclosed to the Limited Partners pursuant to Section 11.01(a), upon terms and
conditions no less favorable to the Partnership than those proposed for the
Third Party Offering. If such additional Partnership Interests are not sold by
the Partnership within such 270-day period, the Partnership's right to make any
offering of additional Partnership Interests to third parties (including other
Partners) shall again be subject to the foregoing restrictions.
11.02. ADMISSION OF ADDITIONAL LIMITED PARTNERS.
11.02(a) Following the admission of the Limited
Partners to the Partnership on the date hereof, additional Limited Partners
(including substituted Limited Partners) may be admitted to the Partnership at
such times as the conditions set forth in Section 11.02(b) have been satisfied
and the admission of such Limited Partners is reflected on the books and records
of the Partnership.
11.02(b) No Person shall have the right to become a
Limited Partner unless:
(i) the General Partner consents in writing to the
admission of such Person as a Limited Partner, which consent
shall be in the sole and absolute discretion of the General
Partner;
(ii) such Person accepts and agrees in writing to be
bound by all of the terms and provisions of the Agreement; and
(iii) such Person (and, in the case of the transfer of
any Partnership Interest of a Limited Partner pursuant to
Sections 10.03 and 16.05, the transferor Limited Partner)
executes and delivers such other instruments as are necessary
to effect, and as a condition to, such action, including,
without limitation, amendments to this Agreement and to the
Certificate or any other instrument filed with the State of
Delaware or any other state.
11.03. ADMISSION OF SUCCESSOR GENERAL PARTNER.
A transferee of all of the Partnership Interest of the General
Partner pursuant to Section 10.02, or a Person elected to be a successor General
Partner upon the removal of the former General Partner pursuant to Section
11.06, shall be admitted to the Partnership as a General Partner (in the place
of the transferor or former General Partner, as the case may be), effective as
of the date that an amendment of the Certificate, adding the name of such
successor General Partner and other required information, is recorded pursuant
to Section 2.01 (which date, in the event the successor General Partner is in
the place in whole of the transferor or former General Partner, shall be
immediately prior to the withdrawal of such
-55-
transferor or former General Partner), and upon prior receipt by the Partnership
of all of the following:
11.03(a) the successor General Partner's acceptance of,
and agreement to be bound by, all of the terms and provisions of this Agreement,
in form and substance satisfactory to the Partnership and all other agreements
then in effect between the General Partner and any Limited Partner (and any
other parties);
11.03(b) evidence of the authority of such successor
General Partner to become a General Partner and to be bound by all of the terms
and conditions of the Agreement including without limitation the provisions of
Sections 3.03, 7.01(f) and 10.05 with regard to the assignment of the FCC
License;
11.03(c) the written agreement of the successor General
Partner to continue the business of the Partnership in accordance with the terms
and provisions of the Agreement; and
11.03(d) such other documents or instruments as may be
required in order to effect the admission of the successor General Partner as a
General Partner under this Agreement.
11.04. WITHDRAWAL OF GENERAL PARTNER.
The General Partner may voluntarily withdraw from the
Partnership only upon a transfer of all of such General Partner's Partnership
Interest as a General Partner in accordance with Article X. The voluntary
withdrawal of the General Partner shall not affect the benefits to IPSP under
such license. The General Partner shall have no liability to the Partnership or
the Partners on account of any withdrawal in accordance with the terms of this
Section 11.04, but such withdrawal shall not relieve the General Partner of its
outstanding obligations and liabilities towards the Partnership, the Limited
Partners and third parties.
11.05. Withdrawal of Limited Partner.
Any Limited Partner may voluntarily withdraw from the
Partnership at any time upon a transfer of all of such Limited Partner's
Partnership Interest as a Limited Partner in accordance with Article X or
transfer of such Limited Partner's Partnership Interest to the Partnership.
11.06. REMOVAL OF GENERAL PARTNER.
11.06(a) Subject to the provisions of Sections 3.03 and
11.03 with regard to the transfer or control of the FCC License, the General
Partner shall be removed as a general partner if (i) it is found by a court of
competent jurisdiction, by a final non-appealable judgment, that any of the
General Partner's actions as
-56-
general partner constituted actual fraud, gross negligence, willful misconduct
or breach of fiduciary duty (under Delaware law, this Agreement or any other
contract between the Partnership and Limited Partners generally) and (ii) the
Limited Partners, by the affirmative vote of Limited Partners holding two-thirds
of the Percentage Interests then held by Limited Partners, vote to remove the
General Partner. The General Partner may be removed as a general partner of the
Partnership for "cause" (as hereinafter defined) upon the affirmative vote of
Limited Partners holding two-thirds of the Percentage Interests then held by
Limited Partners. Any such action by the Limited Partners must also provide for
the prompt election of a successor General Partner by Limited Partners holding
two-thirds of the Percentage Interests then held by Limited Partners, and shall
become effective only upon the admission of the successor General Partner
pursuant to Section 11.03. As used herein, "cause" shall mean (i) actual fraud,
gross negligence, or willful misconduct or breach of fiduciary duty (under
Delaware law, this Agreement or any other contract between the Partnership and
Limited Partners generally) of the General Partner, (ii) the Bankruptcy (as
defined in Section 12.01) of the General Partner, or (iii) the declaration of an
event of default under the credit documents with respect to the financing of the
Partnership's proposed satellites by the banks (or their agent, as applicable)
under the terms of such credit documents and an indication by such banks (or
such agent, as applicable) in writing that the banks intended to foreclose upon
any Partnership Assets or other collateral (as defined in such credit
documents), unless such event of default is due principally to circumstances
that are reasonably beyond the control of the General Partner, in each case as
determined by the Independent Party. The removal of the General Partner pursuant
to this Section 11.06(a) shall not be deemed to be an election of remedies by
the Partnership or the Limited Partners, and such removal shall not relieve the
General Partner of its outstanding obligations and liabilities towards the
Partnership, the Limited Partners and third parties.
11.06(b) Written notice of removal of the General
Partner pursuant to this Section 11.06 shall be provided to the General Partner
in the manner provided in Section 13.02.
11.06(c) In the event the General Partner is removed
pursuant to this Section 11.06, the removed General Partner's Partnership
Interest as a General Partner automatically shall be converted into the
Partnership Interest of a Limited Partner and the removed General Partner shall
retain all its Percentage Interest and thereupon be admitted as and be deemed a
Limited Partner for all purposes.
11.06(d) Any successor General Partner elected pursuant
to Section 11.06(a) shall, at the effective date of its admission to the
Partnership as the General Partner, make a Capital Contribution to the
Partnership in an amount such that, immediately following such Capital
Contribution, the balance of the successor General Partner's Capital Account
shall be no less than one percent (1%) of the aggregate balances of all
Partners' Capital Accounts.
-57-
11.06(e) Prior to any removal of the General Partner
under this Agreement, notice shall be given to the FCC of such proposed removal,
and any successor General Partner shall, prior to the effective date of its
admission to the Partnership as the General Partner, comply with the provisions
of Section 3.03. The General Partner agrees that, if the FCC License is then
held by the General Partner and not the Partnership, it will take any action and
execute any instruments necessary to obtain from the FCC such approval as may be
necessary for the assignment to a Person designated by the Partnership as the
successor General Partner of such license, the rights under which shall have
been contributed by the General Partner to the Partnership pursuant to this
Agreement. The General Partner hereby appoints each Limited Partner as its
attorney-in-fact, with full power of substitution, for the purpose of taking any
action and executing any instruments, in the event of the General Partner's
removal under this Agreement, necessary for obtaining such approval of the FCC.
The General Partner hereby agrees that the subject matter of this Section
11.06(e) is unique, and that in addition to any other remedies which the Limited
Partners may have at law or in equity, the General Partner hereby agrees that
the Limited Partners shall have the right to have all obligations, undertakings,
agreements, covenants and other provisions of this Section 11.06(e) specifically
performed by the General Partner, that the General Partner waives any equitable
defenses it may have to such specific performance, and that the Limited Partners
shall have the right to obtain an order or decree of such specific performance
in any of the courts of the United States or of any state or other political
subdivision thereof.
ARTICLE XII
DISSOLUTION AND LIQUIDATION
12.01. EVENTS CAUSING DISSOLUTION.
The Partnership shall be dissolved and its affairs wound up
upon the occurrence of any of the following events:
12.01(a) expiration of the term of the Partnership on
the Termination Date;
12.01(b) the election in writing of the General Partner
and the Limited Partners holding two-thirds of the total Percentage Interests of
the Limited Partners to dissolve and wind up the affairs of the Partnership;
12.01(c) the sale or other disposition by the
Partnership (other than in the ordinary course of business) of all or
substantially all of the Partnership Assets and the collection of all amounts
derived from any such sale or disposition, including all amounts payable to the
Partnership under any promissory notes or other evidences of indebtedness taken
by the Partnership in connection with such
-58-
sale or other disposition (unless the General Partner shall elect to distribute
such indebtedness to the Partners in liquidation);
12.01(d) the Bankruptcy (as hereinafter defined) of the
General Partner;
12.01(e) the Bankruptcy (as hereinafter defined) of the
Partnership and the determination of the General Partner not to continue the
business of the Partnership; or
12.01(f) except as provided in Section 12.01(d) above,
the occurrence of any event that would cause the General Partner to cease to be
a general partner of the Partnership under Section 17-402 of the Delaware RULPA;
or
12.01(g) the entry of a decree of judicial dissolution
under Section 17-802 of the Delaware RULPA.
For the purposes of this Agreement, the term "Bankruptcy" of
the General Partner or the Partnership, as applicable, shall mean, and the
General Partner or the Partnership, as applicable, shall be deemed "Bankrupt,"
if it:
a. makes an assignment for the benefit of creditors;
b. files a voluntary petition in bankruptcy;
c. is adjudged a bankrupt or insolvent, or has entered
against it an order of relief in any bankruptcy or
insolvency proceeding and such adjudication or order is
final and not subject to appeal;
d. files a petition or answer seeking for itself any
reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under any
statute, law or regulation;
e. files an answer or other pleading admitting or failing
to contest the material allegations of a petition filed
against it in any proceeding of this nature; or
f. seeks, consents to or acquiesces in the appointment of
a trustee, receiver or liquidator of the Partnership or
of all or any substantial part of its properties.
The term "Bankruptcy," as defined above and as used in this
Agreement, is intended and shall be deemed to supersede and replace the event of
withdrawal described in Sections 17-402(a)(4) and (5) of the Delaware RULPA.
-59-
12.02. RIGHT TO CONTINUE BUSINESS OF PARTNERSHIP.
Upon an event described in Sections 12.01(d) or 12.01(f), the
Partnership shall not be dissolved or be required to be wound up if (A) at the
time of such event there is at least one remaining General Partner who carries
on the business of the Partnership (and each such remaining General Partner is
hereby authorized to carry on the business of the Partnership without
dissolution), or (B) within ninety (90) days after such event, all remaining
Partners agree in writing (a) to continue the business of the Partnership and
(b) to the appointment, effective as of the date of such event, of one or more
additional General Partners if necessary or desired.
12.03. LIQUIDATION.
12.03(a) Upon the dissolution of the Partnership, the
General Partner (or other person responsible for winding up the affairs of the
Partnership) shall promptly notify the Partners of such dissolution and shall
proceed without any unnecessary delay to sell or otherwise liquidate the
Partnership Assets and pay or make due provision for the payment of all debts,
liabilities and obligations of the Partnership.
12.03(b) After adequate provision has been made for the
payment of all debts, liabilities and obligations of the Partnership (other than
liabilities for distributions to Partners), the General Partner (or other person
responsible for winding up the affairs of the Partnership) shall distribute the
net liquidation proceeds and any other liquid assets of the Partnership to the
Partners in accordance with Section 6.05. No distribution in kind of Partnership
Assets, other than cash and other liquid assets, shall be made without the
approval of the Review Committee.
12.03(c) A reasonable time shall be allowed for the
orderly winding up of the business and affairs of the Partnership and the
liquidation of its assets pursuant to this Section 12.03 in order to minimize
any losses otherwise attendant upon such a winding up.
12.04. TERMINATION OF PARTNERSHIP.
Except as otherwise provided in this Agreement, the
Partnership shall terminate when all of the assets of the Partnership shall have
been converted into cash, the net proceeds therefrom, as well as any other
liquid assets of the Partnership, after payment of or due provision for the
payment of all debts, liabilities and obligations of the Partnership, shall have
been distributed to the Partners as provided for in Section 6.05 and Section
12.03, and the Certificate shall have been cancelled in the manner required by
the Delaware RULPA.
-60-
ARTICLE XIII
MISCELLANEOUS PROVISIONS
13.01. ADDITIONAL ACTIONS AND DOCUMENTS.
Each of the Partners hereby agrees to take or cause to be
taken such further actions, to execute, acknowledge, deliver and file or cause
to be executed, acknowledged, delivered and filed such further documents and
instruments, and to use best efforts to obtain such consents, as may be
necessary or as may be reasonably requested in order to fully effectuate the
purposes, terms and conditions of this Agreement, whether before, at or after
the closing of the transactions contemplated by this Agreement.
13.02. NOTICES.
All notices, demands, requests or other communications which
may be or are required to be given, served, or sent by a Partner or the
Partnership pursuant to this Agreement shall be in writing and shall be hand
delivered (including delivery by courier), mailed by first-class, registered or
certified mail, return receipt requested, postage prepaid or by "overnight" or
express mail or courier service, or transmitted by telegram, telex or facsimile
transmission (if an additional copy is sent by "overnight" or express mail or
courier service in addition to the facsimile transmission), addressed as
follows:
(i) If to the General Partner:
Orion Satellite Corporation
0000 Xxxxxxxx Xxxx.
Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000-0000
Attention:
Telex/Fax Nos.:
(ii) If to a Limited Partner:
At the address specified for such Limited Partner in
Schedule A
(iii) If to the Partnership:
International Private Satellite Partners, L.P.
0000 Xxxxxxxx Xxxxx
Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000-0000
Attention:
Telex/Fax Nos.:
-61-
Each Partner and the Partnership may designate by notice in writing a new
address to which any notice, demand, request or communication may thereafter be
so given, served or sent. Each notice, demand, request or communication which
shall be delivered, mailed or transmitted in the manner described above, shall
be deemed sufficiently given, served, sent or received for all purposes at such
time as it is delivered to the addressee (with an affidavit of personal delivery
(and in the case of communications by facsimile transmission, the affidavit of
the "overnight" or express mail or courier service delivering the additional
copy), the return receipt, the delivery receipt, or (with respect to a telex)
the answer back being deemed conclusive, but not exclusive, evidence of such
delivery) or at such time as delivery is refused by the addressee upon
presentation.
13.03. SEVERABILITY.
Except as otherwise expressly provided in this Agreement, the
invalidity of any one or more provisions hereof or of any other agreement or
instrument given pursuant to or in connection with this Agreement shall not
affect the remaining portions of this Agreement or any such other agreement or
instrument or any part thereof, all of which are inserted conditionally on their
being held valid in law; and in the event that one or more of the provisions
contained herein or therein should be invalid, or should operate to render this
Agreement or any such other agreement or instrument invalid, this Agreement and
such other agreements and instruments shall be construed as if such invalid
provisions had not been inserted; provided, however, that such severability of
the remaining portions shall be conditional upon the good faith and diligent
efforts of IPSP and the Limited Partner(s) whose rights and/or duties were
declared invalid to negotiate and agree upon new provision(s) which will closely
replicate the void provision(s) and which will be valid and enforceable.
13.04. SURVIVAL.
It is the express intention and agreement of the Partners that
all covenants, agreements, statements, representations, warranties and
indemnities made in this Agreement shall survive the execution and delivery of
this Agreement.
13.05. WAIVERS.
Neither the waiver by a Partner of a breach of or a default
under any of the provisions of this Agreement, nor the failure of a Partner, on
one or more occasions, to enforce any of the provisions of this Agreement or to
exercise any right, remedy or privilege hereunder shall thereafter be construed
as a waiver of any subsequent breach or default of a similar nature, or as a
waiver of any such provisions, rights, remedies or privileges hereunder.
-62-
13.06. EXERCISE OF RIGHTS.
No failure or delay on the part of a Partner or the
Partnership in exercising any right, power or privilege hereunder and no course
of dealing between the Partners or between a Partner and the Partnership shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, power or privilege hereunder preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein expressly provided are cumulative and not exclusive of any other
rights or remedies which a Partner or the Partnership would otherwise have at
law or in equity or otherwise.
13.07. BINDING EFFECT.
Subject to any provisions hereof restricting assignment, this
Agreement shall be binding upon and shall inure to the benefit of the Partners
and their respective heirs, devises, executors, administrators, legal
representatives, successors and assigns.
13.08. LIMITATION ON BENEFITS OF THIS AGREEMENT.
It is the explicit intention of the Partners that, except as
otherwise expressly agreed in writing by the Partners, no person or entity other
than the Partners and the Partnership is or shall be entitled to bring any
action to enforce any provision of this Agreement against any Partner or the
Partnership, and that the covenants, undertakings and agreements set forth in
this Agreement shall be solely for the benefit of, and shall be enforceable only
by, the Partners (or their respective successors and assigns as permitted
hereunder) and the Partnership.
13.09. AMENDMENT PROCEDURE.
This Agreement may not be modified or amended except as
expressly set forth below.
13.09(a) This Agreement may be modified or amended by
the General Partner, without the consent or approval of the Limited Partners,
except as set forth in Section 13.09(c), (i) to cure any ambiguity, to correct
or supplement any provision herein which would be inconsistent with any other
provision herein, or to make any other provision with respect to matters or
questions arising under this Agreement which will not be inconsistent with the
provisions of this Agreement; (ii) to delete or add any provision of this
Agreement required to be so deleted or added by any federal agency or by a state
"Blue Sky" commissioner or similar official, which addition or deletion is
deemed by such agency or official to be for the benefit or protection of the
Limited Partners; (iii) to amend Schedules A and B to reflect the admission of
additional or substitute Limited Partners pursuant to Section 11.02; or (iv) to
permit the allocations provided for in Article VI to be respected for federal
income tax purposes or to avoid the Partnership being treated as an
"association"
-63-
for federal income tax purposes; provided however, that no amendment shall be
adopted pursuant to this Section 13.09(a) unless the adoption thereof (A) is not
adverse to the interest of the Limited Partners; (B) does not affect the method
of distribution of cash or allocation of net profits or net losses provided in
Article VI among the Limited Partners or between the Limited Partners and the
General Partner; and (C) does not adversely affect the limited liability of the
Limited Partners contemplated by this Agreement or the status of the Partnership
as a partnership for federal income tax purposes. The power of attorney granted
pursuant to Section 7.03 may be used by the General Partner to execute on behalf
of a Limited Partner any document evidencing or effecting an amendment adopted
in accordance with this Section 13.09.
13.09(b) This Agreement also may be modified or amended
with the written consent of the General Partner and of an LP Majority; provided
however, that any modification or amendment which would (i) increase the amount
of Capital Contributions payable by the Limited Partners, (ii) affect the rights
of the Partners under Article VI, or (iii) except as provided in Section
13.09(a), amend Article V, Article VI, Article XII, or this Section 13.09, shall
require the written consent of all the Partners.
13.09(c) [Intentionally Omitted.]
13.09(d) Notwithstanding anything to the contrary in
this Agreement, this Agreement may not be modified or amended in any manner
which, in the view of the FCC or in the reasonable judgment of the General
Partner or its counsel, would (i) result in any violation (either through the
possession of such power or through the taking of any specific action) of any
law, rule or regulation applicable to the Partnership and its proposed business,
including without limitation the United States' Communications Act of 1934, as
amended, or the rules and regulations of the FCC as now or hereafter in effect,
or (ii) result in a transfer of control (as defined in the rules and regulations
of the FCC as now or hereafter in effect) of the General Partner, the business
or operations of the General Partner or the licenses issued by the FCC relating
to the construction, launch and operation of the satellite(s) owned by IPSP.
13.09(e) The Ten Year Projection constitutes an
integral and substantial part of this Agreement and cannot be amended without
the unanimous approval of the Limited Partners. In addition, if any Proposed
Budget relating to a period of longer than one Fiscal Year or that requires
multi-year expenditures calls for a percentage increase for any Fiscal Year,
other than the first Fiscal Year of the Proposed Budget, of 2 percent or more
over the budget for such Fiscal Year as reflected in the Ten Year Projection or
Approved Budget, whichever is applicable, then the entire Proposed Budget shall
require the unanimous approval of the Limited Partners.
-64-
13.10. WAIVER OF PARTITION.
Each Partner hereby irrevocably waives any and all rights that
it may have to maintain an action for partition of any of the Partnership
Assets.
13.11. CONSOLIDATION.
In interpreting this Agreement, it is understood that the
operations of any corporation or other entity in which the Partnership has an
ownership interest and which is controlled by the Partnership or the General
Partner will be consolidated to the extent appropriate with those of the
Partnership.
13.12. ENTIRE AGREEMENT.
Except as set forth in this Section 13.12, this Agreement
(including the Schedules and annexes hereto) contains the entire agreement among
the Partners with respect to the transactions contemplated herein, and
supersedes all prior (but not contemporaneous) written and all oral agreements,
commitments or understandings with respect to the matters provided for herein
and therein. Notwithstanding this Section 13.12, each of the Partners have
entered into other agreements prior to the date hereof or contemporaneously with
the execution of this Agreement, all of which relate to the transactions
contemplated herein, and the terms of which are no less binding upon the
signatories thereto than are the terms of this Agreement binding upon the
signatories hereto.
13.13. PRONOUNS.
All pronouns and any variations thereof shall be deemed to
refer to the masculine, feminine, neuter, singular or plural, as the identity of
the person or entity may require.
13.14. HEADINGS.
Article, Section and subsection headings contained in this
Agreement are inserted for convenience of reference only, shall not be deemed to
be a part of this Agreement for any purpose, and shall not in any way define or
affect the meaning, construction or scope of any of the provisions hereof.
13.15. GOVERNING LAW.
This Agreement, the rights and obligations of the parties
hereto, and any claims or disputes relating thereto, shall be governed by and
construed in accordance with the laws of the State of Delaware (but not
including the choice of law rules thereof).
-65-
13.16. EXECUTION IN COUNTERPARTS.
To facilitate execution, this Agreement may be executed in as
many counterparts as may be required; and it shall not be necessary that the
signatures of, or on behalf of, each party, or that the signatures of all
persons required to bind any party, appear on each counterpart; but it shall be
sufficient that the signature of, or on behalf of, each party, or that the
signatures of the persons required to bind any party, appear on one or more of
the counterparts. All counterparts shall collectively constitute a single
agreement. It shall not be necessary in making proof of this Agreement to
produce or account for more than a number of counterparts containing the
respective signatures of, or on behalf of, all of the parties hereto.
13.17. INTEREST RATES.
Any provision of this Agreement containing, or requiring the
use of, a stated interest rate shall be deemed to refer to the lower of such
stated rate and the highest rate permitted by applicable law.
ARTICLE XIV
STET REDEMPTION
14.01. RATIFICATION OF STET REDEMPTION, ISSUANCE OF NEW INTEREST TO
ONS.
Notwithstanding anything in this Agreement to the contrary,
the following actions are hereby authorized, approved, ratified and confirmed in
all respects and do not violate or constitute a breach of or a default under any
provision of this Agreement: (i) the redemption by the Partnership in 1995 of
the 8.33% limited partnership interest of Societa Finanziaria Telefonica-per
Azioni ("STET"), and the withdrawal of STET as a limited partner from the
Partnership pursuant to Section 11.05 of the Agreement; (ii) the issuance of a
new 8.33% limited partnership interest to existing limited partner Orion Network
Systems, Inc. ("ONS"); (iii) recognition of the assumption by ONS of the
obligations of an Affiliate of STET, Telecom Italia S.p.A. ("Telecom Italia"),
to make contingent payments pursuant to the Contingent Communications Satellite
Capacity Agreement to which Telecom Italia and the Partnership are parties (the
"STET/Telecom Italia Contingent Payment Obligations"); (iv) the modification or
termination of certain bilateral and multilateral agreements between the
Partnership and STET (or Telecom Italia, as the case may be) or among the
Partnership, STET (or Telecom Italia, as the case may be) and some or all of the
Limited Partners; (v) the amendment of certain provisions of the Second Amended
and Restated Agreement, including the deletion of provisions of Article XVI
thereof relating to certain specific rights of STET and its affiliates,
amendment of Schedules A and B to the Second Amended and Restated Agreement to
reflect the redemption of STET's 8.33% limited partnership interest,
-66-
the withdrawal of STET from the Partnership, the sale to ONS of an additional
limited partnership interest, and the adjustment by the General Partner, in
consultation with the accounting firm that prepares the Federal income tax
returns of the Partnership, of the Partners' Capital Accounts in accordance with
Regulations sections 1.704-1(b)(2)(iv)(f) and 1.704-1(b)(2)(iv)(g)(1) to reflect
the redemption of STET's limited partnership interest and the acquisition by ONS
of an additional limited partner interest; and (vi) the execution, delivery and
performance by the Partnership of a Redemption Agreement, dated as of November
___, 1995, between the Partnership and STET (the "STET Redemption Agreement"), a
Subscription Agreement, dated as of November ___, 1995, between the Partnership
and ONS (the "Subscription Agreement"), an Indemnity Agreement dated as of
November ___, 1995, among the Partnership, Telecom Italia and ONS (the
"Indemnity Agreement"), and an IPSP-Telecom Italia Agreement, dated as of
November ___, 1995, between the Partnership and Telecom Italia S.p.A. (the
"IPSP-Telecom Italia Agreement"), and the agreements, documents and instruments
referred to therein.
14.02. STET's UNRECOVERED CONTINGENT CONTRIBUTIONS.
Notwithstanding anything in this Agreement to the contrary,
(i) all Unrecovered Contingent Contributions of STET prior to November ___, 1995
shall constitute Unrecovered Contingent Contributions of ONS from and after
November __, 1995, and (ii) all STET/Telecom Italia Contingent Payment
Obligations paid by ONS (or on its behalf) from and after November __, 1995
(including without limitation pursuant to the Indemnity Agreement) shall
constitute (including for purposes of determining Unrecovered Contingent
Contributions) contingent payments made by ONS or its Affiliate to the
Partnership pursuant to Article II of the Contingent Communications Satellite
Capacity Agreement (or to a payment guarantee agreement in accordance with
Article III of the Contingent Communications Satellite Capacity Agreement) and
treated as contributions by ONS to the capital of the Partnership pursuant to
Section 5.01 of the Contingent Communications Satellite Capacity Agreement.
14.03. TERMINATION AND MODIFICATION OF STET AGREEMENTS.
The parties hereby consent to and ratify the termination, as
of the effective date of the STET Redemption Agreement and IPSP-Telecom Italia
Agreement, of each of the bilateral and multilateral agreements, as amended
through such effective date, set forth on Annex 1 hereto between the Partnership
and STET (or Telecom Italia, as the case may be) or among the Partnership, STET
(or Telecom Italia, as the case may be) and some or all of the Limited Partners,
and agree that (and such agreements are hereby amended to the extent necessary
so that) such agreements are terminated in their entirety as of the effective
date of the STET Redemption Agreement and IPSP-Telecom Italia Agreement.
-67-
The parties hereby consent to and ratify the modification, as
of the effective date of the STET Redemption Agreement and IPSP-Telecom Italia
Agreement, of each of the multilateral agreements, as amended through such
effective date, set forth on Annex 2 hereto among the Partnership, STET (or
Telecom Italia, as the case may be) and some or all of the Limited Partners, to
remove STET (or Telecom Italia, as the case may be) as a party to such
agreements and to provide that such agreements, as so modified, continue in full
force and effect, such modification to be effective as of the effective date of
the STET Redemption Agreement and IPSP-Telecom Italia Agreement.
The parties hereby consent to and ratify the modification, as
of the effective date of the STET Redemption Agreement and IPSP-Telecom Italia
Agreement, of each of the agreements set forth on Annex 3 hereto, as amended
through such effective date, between the Partnership and STET (or Telecom
Italia, as the case may be), which modifications are described on Annex 3 or the
attachments thereto and to provide that such agreements, as so modified (and
with such additional modifications not material to the Partnership or any
Limited Partner and agreed to by the General Partner on behalf of the
Partnership and set forth on the applicable modification documents), continue in
full force and effect, such modification to be effective as of the effective
date of the STET Redemption Agreement and IPSP-Telecom Italia Agreement.
In the event that the parties to the agreements set forth on
Annexes 1, 2 or 3 hereto include affiliates of Limited Partners rather than the
Limited Partners themselves, the consents given under this Section 14.03 are
given both on behalf of such affiliates and their affiliated Limited Partners,
and the affiliated Limited Partners agree to cause such affiliates to supply
additional consents to the effect of the applicable provisions of this Section
14.03 upon the reasonable written request of any party hereto.
14.04. BA WAIVER.
British Aerospace Communications, Inc. ("BA"), as of the
effective date of the STET Redemption Agreement and IPSP-Telecom Italia
Agreement, waived its rights pursuant to the Consent and Agreement dated
December 20, 1991 among the Partnership and the Limited Partners with respect to
the additional limited partnership interest that was purchased by ONS (the "New
Interest"), including BA's rights to (i) have the Partnership refrain from
offering the New Interest until certain of BA's limited partnership interests
have been repurchased, or require the purchaser of the New Interest to acquire
certain of BA's limited partnership interests or (ii) have certain of BA's
limited partnership interests purchased by the Partnership with the proceeds of
the sale of the New Interest.
-68-
ARTICLE XV
PARTNERSHIP APPROVALS
Notwithstanding anything in this Agreement to the contrary,
except as set forth below in this Article XV, the execution, delivery and
performance by the Partnership of the following agreements, documents and
instruments (of which there may be one or more versions), among the Partnership
and Partners or prospective partners of the Partnership or their Affiliates and
other Persons which are dated on or prior to the date of this Agreement, or any
amendments or amendment and restatements of such agreements, documents and
instruments, are hereby authorized, approved, ratified and confirmed in all
respects and do not violate or constitute a breach of or a default under any
provision of this Agreement: subscription agreements, escrow agreements,
communications satellite capacity agreements, option agreements, contingent
communications satellite capacity agreements, Agreements of Principles regarding
service offerings by the Partnership, agreements relating to marketing and
related services with respect to the sale of the Partnership's international
communications satellite facilities, agreements relating to distribution and
sales representation with respect to the Partnership's services (which such
agreements, consistent with the terms of Section 7.10, may be exclusive in
nature and pursuant to which sales are not governed by contractual terms and
conditions set solely by the General Partner), consent and agreement concerning
the rights of one limited partner to transfer certain partnership interests,
assignment and assumption between the General Partner and the Partnership,
agreement regarding certain possible conveyances, agreement regarding preferred
bidding, and such other agreements, documents and instruments to which the
Partnership is a party dated on or prior to the date of this Agreement that have
been entered into or executed by the Partnership. Nothing contained herein,
however, shall constitute or reflect any approval or waiver of rights by any
Limited Partner with respect to the execution, delivery or performance by the
Partnership or the General Partner of any agreement which was not provided by
the Partnership or the General Partner to such Limited Partner prior to the date
hereof.
[Signatures commence on next page]
-69-
ARTICLE XVI
EXECUTION
IN WITNESS WHEREOF, the undersigned have duly executed this
Agreement, or have caused this Agreement to be duly executed on their behalf, as
of the day and year first hereinabove set forth.
General Partner:
ORION SATELLITE CORPORATION
By:
------------------------------
Title:
------------------------------
LIMITED PARTNERS:
-----------------------------------
By:
------------------------------
Title:
------------------------------
-----------------------------------
By:
------------------------------
Title:
------------------------------
-----------------------------------
By:
------------------------------
Title:
------------------------------
-70-
-----------------------------------
By:
------------------------------
Title:
------------------------------
-----------------------------------
By:
------------------------------
Title:
------------------------------
-----------------------------------
By:
------------------------------
Title:
------------------------------
-----------------------------------
By:
------------------------------
Title:
------------------------------
-71-
SCHEDULE A
----------
NAMES AND ADDRESSES AND
CAPITAL CONTRIBUTIONS OF PARTNERS
---------------------------------
GENERAL PARTNER
---------------
Orion Satellite Corporation $30,000,000 (consisting of the
0000 Xxxxxxxx Xxxx, Xxxxx 000 assignment of the rights of the General
Xxxxxxxxx, XX 00000-0000 Partner to use, sell, lease or otherwise
convey the communications transmission
capacity on the satellite system which
is the subject of the FCC license to
construct and operate two in-orbit
satellites at 37.5(degree) West
Longitude and 47(degree) West Longitude
held by the General Partner, but
excluding the assignment of any FCC
construction permit or license with
respect to said satellite system, under
the authorizations by other governments,
and under its IFRB registration and
under the INTELSAT consultation; certain
contract rights; and certain other
tangible and intangible assets).
LIMITED PARTNERS
----------------
Xxxxxx Xxxxxxxx Commercial $10,000,000
Launch Services, Inc.
0000 Xxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxx, XX 00000
British Aerospace $30,000,000
Communications, Inc.
Xxxxx 000
00000 Xxxx Xxxxxx Xxxx
Xxxxxxx, Xxxxxxxx 00000
A-1
SCHEDULE A (Cont'd)
-------------------
NAMES AND ADDRESSES AND
CAPITAL CONTRIBUTIONS OF PARTNERS
---------------------------------
LIMITED PARTNERS
----------------
MCN Sat U.S., Inc. $10,000,000
c/o Matra Aerospace
0000 Xxxxxxxxx Xxxxx Xxxxxxx
Xxxxx 000
Xxxxxxxxx, XX 00000
Trans-Atlantic Satellite, Inc. $10,000,000
0000 Xxxxxx xx xxx Xxxxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Kingston Communications $ 5,000,000
International Limited
Xxxxxxxxx Xxxxx
Xxxx Xxxx
Xxxxxxxx-xxxx-Xxxx
XX0 0XX
Xxxxxxx
COM DEV Satellite
Communications Limited $ 5,000,000
000 Xxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxx
Xxxxxx X0X 0X0
Orion Network Systems, Inc. $18,000,000
0000 Xxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxx, XX 00000-0000
A-2
SCHEDULE B
----------
PERCENTAGE INTERESTS OF PARTNERS
--------------------------------
GENERAL PARTNER
---------------
Orion Satellite Corporation 25.00%
LIMITED PARTNERS
----------------
Xxxxxx Xxxxxxxx Commercial 8.33%
Launch Services, Inc.
British Aerospace25.00%
Com
MCN Sat U.S., Inc. 8.33%
Trans-Atlantic Satellite, Inc. 8.33%
Kingston Communications 4.17%
International Limited
COM DEV Satellite 4.17%
Communications Limited
Orion Network Systems, Inc. 16.66%
------
Total 100.00%
B-1
EXHIBIT A
---------
TEN YEAR PROJECTION
-------------------
Annex 1
-------
Agreements Being Terminated
---------------------------
1. Service Provision and Representative Agent Agreement for
Eastern Europe, dated as of August 7, 1991, as amended,
between the Partnership and STET, and assigned by STET to
Telecom Italia (or a predecessor thereof) as of December 21,
1993.
2. First Refusal Agreement for Italy, dated as of August 7, 1991,
by and between the Partnership and STET, and assigned by STET
to Telecom Italia (or a predecessor thereof) as of December
21, 1993.
3. Service Provision and Distribution Agreement for Italy, dated
as of August 7, 1991, by and between the Partnership and STET,
as amended, and assigned by STET to Telecom Italia (or a
predecessor thereof) as of December 21, 1993.
4. Representative Agent Agreement for the Sale of Satellite
Capacity in Eastern Europe, dated August 7, 1991, by and
between the Partnership and STET, as amended, and assigned by
STET to Telecom Italia (or a predecessor thereof) as of
December 21, 1993.
5. Side Agreement for Eastern Europe, dated as of December 20,
1991, by and among the Partnership, STET and the Limited
Partners, and assigned by STET to Telecom Italia (or a
predecessor thereof) as of December 21, 1993.
6. Side Agreement for Italy, dated December 20, 1991, by and
among the Partnership, STET and the Limited Partners, and
assigned by STET to Telecom Italia (or a predecessor thereof)
as of December 21, 1993.
7. Option Agreement, dated as of December 22, 1991, by and
between the Partnership and STET and assigned by STET to
Telecom Italia (or a predecessor thereof), as of December 21,
1993.
8. Subscription Agreement, dated as of August 7, 1991, by and
between OrionSat and STET.
9. Consulting Agreement, dated as of August 2, 1991, by and
between the Partnership and Telespazio S.p.A., and assigned by
STET to Telecom Italia (or a predecessor thereof) as of
December 21, 1993.
10. Agreement on Letter of Credit, dated as of December 20, 1991,
by and among the Partnership, OrionSat, Orion and STET.
Annex 2
-------
Agreements Being Modified
to Remove STET (or Telecom Italia) as a Party
---------------------------------------------
1. Amended and Restated Preferred Bidders Agreement, dated as of
December 20, 1991, by and among the Partnership, OrionSat,
STET and the Limited Partners and assigned by STET to Telecom
Italia (or a predecessor thereof) as of December 21, 1993.
2. Agreement of Principles, dated as of April 2, 1992, by and
among the Partnership, OrionSat, STET and the Limited
Partners, and assigned by STET to Telecom Italia (or a
predecessor thereof) as of December 21, 1993, which superseded
the earlier "Amended and Restated Agreement in Principle."
3. Consent and Agreement, dated as of December 20, 1991, relating
to certain sales of partnership interests, by and among the
Partnership, STET and the Limited Partners.
Annex 3
-------
Agreements Being Modified
As Specified Herein
-------------------
1. Communications Satellite Capacity Agreement, dated as of
October 22, 1991, by and between the Partnership and STET and
assigned by STET to Telecom Italia (or a predecessor thereof)
as of December 21, 1993: modifications regarding a change in
Telecom Italia's selected capacity and change in the
termination date to December 31, 1997 (subject to the
completion of a bond financing, bank loan refinancing, bank
approval or occurrence of other conditions permitting
termination under existing agreements between the Partnership
and its senior lenders), with certain options for Telecom
Italia to extend the term, with respect to part or all of the
capacity covered thereby, through December 31, 1999.
2. Contingent Communications Satellite Capacity Agreement, dated
as of October 22, 1991, by and between the Partnership and
STET and assigned by STET to Telecom Italia (or a predecessor
thereof) as of December 21, 1993: modifications to cause
termination to occur upon the completion of a bond financing,
bank loan refinancing, bank approval or occurrence of other
conditions permitting termination under existing agreements
between the Partnership and its senior lenders.
3. Italian Facility and Services Agreement, dated as of August 2,
1991, by and between OrionSat and Telespazio S.p.A., as
amended by the amendment thereto, dated March 19, 1994 and
assigned to Telecom Italia (or a predecessor thereof) as of
December 21, 1993: modifications regarding revisions to the
statement of work, reduction of the payment obligations of the
Partnership by approximately $1.5 million and changes to the
ratio for payments by the Partnership between cash and
capacity credits.
4. Telespazio Communications Capacity Agreement dated as of
August 2, 1991 by and between the Partnership and Telespazio
S.p.A.: modification regarding use of capacity credits earned
pursuant to the Italian Facility and Services Agreement
referred to in item 3 of this Annex 3.
5. STET-IPSP Agreement, dated as of December 25, 1991, by and
among the Partnership, OrionSat, STET and the Limited
Partners: modifications to provide that Section 2 thereof
(limitations on financial exposure), will survive, Sections 3
through 7 will not survive and the remaining provisions will
survive only to the extent they relate to surviving provisions
or agreements.
