Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the fiscal year ended December 31, 1993
Commission file number 1-4929
COMSAT Corporation
(Exact name of registrant as specified in its charter)
District of Columbia 52-0781863
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6560 Rock Spring Drive
Bethesda, MD 20817
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (301) 214-3000
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
Common Stock, without par value New York Stock Exchange
Chicago Stock Exchange
Pacific Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None.
Indicate by check mark whether the Registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Act of 1934 during the preceding 12 months (or for such
shorter period that the Registrant was required to file such
reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein, and
will not be contained, to the best of Registrant's knowledge, in
definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ X ]
Aggregate market value of voting stock held by non-affiliates
of the Registrant was $1.069 billion based on a closing market
price of $26.75 per share on March 1, 1994, as reported on the
composite tape for New York Stock Exchange listed issues.
40,266,776 shares of Common Stock, without par value, were
outstanding on February 28, 1994.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents are incorporated by reference:
Part of the Form 10-K into which
Title the document is incorporated
COMSAT - Annual Meeting of Shareholders -
Notice and Proxy Statement - 1994 Part III
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LEFT BLANK INTENTIONALLY
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PART I
Item 1. Business
GENERAL INFORMATION
Business Segments
COMSAT Corporation (COMSAT, the Corporation or Registrant) has
four business segments: International Communications, Mobile
Communications, Video Enterprises and Technology Services.
International Communications consists of COMSAT World Systems,
which provides satellite communications services using the
satellite system of the International Telecommunications Satellite
Organization (INTELSAT), and COMSAT International Ventures, which
invests in telecommunications opportunities internationally.
Mobile Communications consists of COMSAT Mobile Communications,
which provides satellite communications services using the
satellite system of the International Maritime Satellite
Organization (Inmarsat). Video Enterprises, which consists of
COMSAT Video Enterprises, Inc., and the Corporation's majority
ownership interest in On Command Video Corporation, provides
entertainment services to the hospitality industry throughout the
United States and domestic video distribution services to
television networks. Technology Services consists of COMSAT
Technology Services, which provides communications networks and
products, information services, and applied research and technology
throughout the world.
The Corporation also owns the Denver Nuggets, a franchise of
the National Basketball Association.
The revenues, operating income (loss) and assets of the
Corporation, by business segment, for each of the last three years
are shown in Note 13 to the 1993 Financial Statements.
The Corporation had 1,527 employees on December 31, 1993.
None of the employees is represented by a labor union.
Communications Satellite Act of 1962
COMSAT was incorporated in 1963 under District of Columbia
law, as authorized by the Communications Satellite Act of 1962 (the
Satellite Act). Effective June 1, 1993, COMSAT changed its
corporate name from "Communications Satellite Corporation" to
"COMSAT Corporation." COMSAT is not an agency or establishment of
the U.S. Government. The U.S. Government has not invested funds in
COMSAT, guaranteed funds invested in COMSAT or guaranteed the
payment of dividends by COMSAT.
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Although COMSAT is a private corporation, the Satellite Act
governs certain aspects of COMSAT's structure, ownership and
operations, most significantly the following: three of COMSAT's 15
directors are appointed by the President of the United States with
the advice and consent of the United States Senate; COMSAT's
issuances of capital stock and borrowings of money must be
authorized by the Federal Communications Commission (FCC); there
are limitations on the classes of persons that may hold shares of
COMSAT's Common Stock and on the number of shares a person or class
of persons may hold; and, on matters that may affect the national
interest and foreign policy of the United States, COMSAT's
representatives to INTELSAT and Inmarsat receive instructions from
the U.S. Government. Congress has reserved the right to amend the
Satellite Act, and amendments, if any, could materially affect the
Corporation.
Government Regulation
Under the Satellite Act and the Communications Act of 1934, as
amended (the Communications Act), COMSAT is subject to regulation
by the FCC with respect to its COMSAT World Systems and COMSAT
Mobile Communications communications services and the rates charged
for those services. FCC decisions and policies have had and will
continue to have a significant impact on the Corporation. For a
discussion of these matters, see Note 7 to the 1993 Financial
Statements.
INTERNATIONAL COMMUNICATIONS
The International Communications segment consists of the FCC-
rate-regulated business of COMSAT World Systems, and COMSAT
International Ventures.
COMSAT World Systems
Services. COMSAT World Systems provides telephone, data,
video and audio communications services between the United States
and the rest of the world using the global network of INTELSAT
satellites. COMSAT World Systems customers include U.S.
international communications common carriers, private network
providers, multinational corporations, U.S. and international
broadcasters, newsgathering organizations and digital audio
companies.
The largest portion of COMSAT World Systems revenues comes
from leasing full-time voice grade half-circuits (two-way
communications links between an earth station and an INTELSAT
satellite) to U.S. international communications common carriers.
The three largest carrier customers are American Telephone &
Telegraph Company (AT&T), MCI International Inc. (MCI) and Sprint
Communications Company (Sprint). COMSAT World Systems offers
significant discounts to customers entering into long-term
commitments for full-time voice-grade half-circuits. More than
95.5% of all eligible voice-grade half-circuits are now under such
commitments.
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COMSAT World Systems voice and data services are primarily
digital, which ensures high-quality transmissions. COMSAT World
Systems International Digital Route (IDR) service, for example,
makes it possible for communications carriers to provide digital
public-switched telephone network circuits. The carriers apply
techniques to such circuits that permit a single digital circuit to
handle multiple telephone calls simultaneously.
For private line customers, COMSAT World Systems offers an
all-digital International Business Service (IBS), as well as an
international VSAT (Very Small Aperture Terminal) service. IBS
offers customers high-speed, digital communications for voice,
data, facsimile and video-conferencing using on-premise earth
stations that eliminate the need for costly land-line connections.
At year-end 1993, approximately 58% of COMSAT World Systems IBS
traffic was covered by multi-year agreements.
In 1992, COMSAT World Systems established international VSAT
networks to both Latin America and Europe. Using on-premise
antennas as small as 1.8 meters in combination with the high-power
satellites in the INTELSAT network, international corporations can
deliver communications to multiple sites. Used primarily for data
transmissions, VSATs can also accommodate voice and video
communications.
To the growing international broadcasting community, COMSAT
World Systems provides both digital and analog transmission
services on a long-term, short-term or occasional as-needed basis.
With the launch in 1992 of the INTELSAT K satellite over the
Atlantic Ocean, COMSAT World Systems has expanded the availability
of high-power, flexible capacity for broadcasters and satellite
newsgatherers. In anticipation of the adoption of digital
compression in the broadcast industry, COMSAT World Systems
introduced a flexible digital television service and a digital
audio service in 1992, attracting new customers to satellite
broadcasting.
To maintain the quality of the INTELSAT network, COMSAT World
Systems provides tracking, telemetry, control and monitoring
services to INTELSAT and engages in a program of research and
development to ensure that the satellite system accommodates the
latest communications technologies, including both broadband and
integrated services digital networks (ISDN).
Tariffs and Revenues. Under the Satellite Act and the
Communications Act, COMSAT is subject to regulation by the FCC with
respect to COMSAT World Systems communications services, the rates
charged for those services and earnings levels. COMSAT World
Systems provides its services on a non-discriminatory basis to all
customers, either under tariffs filed with the FCC or on the basis
of inter-carrier contracts.
Effective January 1, 1992, COMSAT World Systems introduced a
regional growth plan through which customers can benefit from rate
reductions as certain threshold traffic levels are attained in each
of four geographic regions: Europe, Latin America, Pacific and
Mid-East/Other. In addition, COMSAT World Systems reduced its
rates by 10% on 10- and 15-year IDR and Time Division Multiple
Access (TDMA) digital "base" circuits activated prior to January 1,
1992.
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In May 1992, rates for all multi-year "base" circuits with
transmissions between large Standard A earth stations were also
reduced by 10%. During 1992, COMSAT World Systems also introduced
rates for Digital Television Service coupled with transitional
rates for customers who commenced service in an analog mode and
opted to convert to digital modulation techniques within the same
lease period.
In January 1992, COMSAT World Systems filed a petition for
rulemaking with the FCC seeking incentive-based regulation of its
multi-year, switched-voice services for carriers. The petition
requests a regulatory framework to replace traditional rate-base
regulation and enable COMSAT World Systems to respond more
effectively to competitive market forces. This framework would
have three parts: (1) COMSAT World Systems would agree to cap its
prices for existing multi-year, switched-voice services at the
reduced rates that went into effect on January 1, 1992; (2) COMSAT
World Systems could lower its rates for these services on 14 days
notice, and those rates would be presumed lawful as long as they
were above its average variable costs; and (3) multi-year,
switched-voice services would no longer be subject to annual rate-
of-return reviews, although they would still be subject to review
in the event of a customer complaint. The FCC has not yet taken
action on this petition.
In 1993, COMSAT World Systems entered into new inter-carrier
contracts with each of its three largest customers, AT&T, MCI and
Sprint. Pursuant to those contracts, COMSAT World Systems further
reduced its rates for 10- and 15-year IDR and TDMA digital "base"
circuits activated prior to January 1, 1992, and also reduced its
rates beginning in 1996 for 7-year and longer IDR and TDMA circuits
activated after January 1, 1992. In addition, the contracts
provided AT&T and Sprint with leases and with options to lease
capacity from COMSAT World Systems in 36 MHz increments under
specified rates, terms and conditions.
Approximately 39% of the Corporation's consolidated revenues
in 1993 were derived from COMSAT World Systems services (45% in
1992, 47% in 1991). Approximately 13% of the Corporation's
consolidated revenues in 1993 were derived from COMSAT World
Systems services to AT&T.
Competition. COMSAT World Systems competes with operators of
high capacity fiber-optic and other submarine cables in service
along major traffic routes worldwide. COMSAT World Systems' major
carrier customers (including its three largest customers, AT&T, MCI
and Sprint) are co-owners of submarine cables.
Under the Satellite Act and FCC orders, COMSAT is the only
U.S. entity that may provide international space segment services
to customers using INTELSAT satellites. In 1985 the FCC authorized
the establishment of separate international communications
satellite systems that would provide certain services in
competition with INTELSAT, subject to certain restrictions that are
being phased out. For a discussion of separate satellite systems
competition to COMSAT World Systems, see Management's Discussion
and Analysis of Financial Condition and Results of Operations and
Note 7 to the 1993 Financial Statements.
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INTELSAT. INTELSAT is a 131-nation organization headquartered
in Washington, D.C. It operates under two agreements: (1) an
intergovernmental agreement; and (2) an operating agreement signed
by each nation's government or designated telecommunications entity
(Signatory). COMSAT is the U.S. Signatory. It represents the
United States in INTELSAT, subject to instructions from the
Department of State (in concert with the Department of Commerce and
the FCC) on matters that may affect the national interest and
foreign policy of the United States.
Each Signatory has rights and obligations in INTELSAT
analogous to those of a partner. Each owns an investment share,
makes proportionate contributions to INTELSAT's capital costs, and
receives proportionate distributions of INTELSAT's net revenues
after deductions for operating expenses. The investment shares are
readjusted as of March 1 of each year to approximate the
Signatories' respective portions of the total use of the INTELSAT
space segment for the previous six months. COMSAT's investment
share, the largest in INTELSAT, was 20.2% as of March 1, 1994
(21.8% as of March 1, 1993; 21.9% as of March 1, 1992).
Signatories also pay INTELSAT for their use of the satellite
system. Charges for such use are computed to provide a pretax
cumulative rate of return of between 16% to 18% on a Signatory's
capital used by another Signatory or from non-owners who use the
satellite system. COMSAT World Systems realized revenue from its
INTELSAT ownership, net of use charges paid, of $26 million in
1993. This net revenue is reflected in COMSAT World Systems
revenue requirements for ratemaking purposes.
At December 31, 1993, total INTELSAT Owners' Equity was
approximately $1,687 million, and INTELSAT's outstanding
contractual commitments totaled approximately $1,725 million.
In each of 1989 through 1993, the Corporation entered into
agreements with INTELSAT to place COMSAT World Systems FM, digital
bearer, IBS and video traffic on the INTELSAT system under long-
term commitments.
During 1990, INTELSAT initiated certain reforms to its process
for coordinating with separate satellite systems. These reforms
were superseded in November 1992. Under the streamlined procedures
approved in 1992, carriage by separate systems of any amount of
traffic or services not interconnected to the public switched
network and of up to 1,250 circuits of public switched traffic per
satellite is presumed not to cause significant economic harm to the
INTELSAT system. In addition, the recommendations approved called
for further liberalization of coordination procedures with a view
toward eliminating the economic harm test in the 1996-98 timeframe.
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COMSAT International Ventures
COMSAT International Ventures (CIV) forms venture companies
with strategic and operating partners to provide a variety of
telecommunications services and equipment, and also operates
overseas companies that are wholly or majority owned. These
companies provide international and domestic (non-U.S.) private-
line voice and data services, including IBS, VSAT and single
channel per carrier services, as well as equipment leasing and
technical services. Customers for these services include U.S. and
foreign multinational corporations, and domestic (non-U.S.)
companies operating in their own countries.
CIV continued to develop new investment opportunities around
the world in 1993. CIV ventures are providing services in the
Latin American countries of Chile, Argentina, Bolivia, Colombia and
Guatemala. A CIV operating unit in Argentina is wholly owned.
During 1993, CIV formed a joint venture company in Brazil and its
new Venezuelan company continued to explore opportunities to
provide communications services in that country. CIV also expanded
its European and Middle Eastern presence by investing in a U.S.
company providing communications services in Russia and other newly
independent states. This venture joins CIV's existing operations
in Turkey. CIV continues to expand its investments to other
regions of the world besides Latin America, and several new
investments are expected to start operations during 1994.
The level of competition in each of the joint ventures in
which CIV invests varies considerably from country to country. In
some countries there is full competition, and in others competition
is limited. The competitive conditions faced by each joint venture
are the result of differing regulatory policies, as well as
economic and market conditions, in the particular country in which
that joint venture operates.
MOBILE COMMUNICATIONS
The Mobile Communications segment consists of the FCC-
regulated business of COMSAT Mobile Communications.
COMSAT Mobile Communications
COMSAT Mobile Communications provides satellite
telecommunications services for maritime, aeronautical and land
mobile applications, using the Inmarsat satellites and COMSAT's
land earth stations in Connecticut, California and Turkey, which
serve the Atlantic, Pacific and Indian Ocean Regions, respectively.
These stations enable COMSAT Mobile Communications to offer global
coverage for its services. There are currently more than 34,000
mobile terminals operating in the Inmarsat system. As described
below, COMSAT Mobile Communications provides a full range of voice,
facsimile, data and telex services, as well as certain value-added
services.
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Maritime Services. COMSAT Mobile Communications provides
satellite services for communications to and from ships and other
vessels. Customers for these services include transport ship
operators, cruise ships and their passengers, fishing vessel
operators, oil and mining interests, pleasure boat operators, U.S.
Navy ships and foreign telecommunications administrations.
Services include group call messaging to a fleet of ships, an
electronic mail service, a direct-dial telephone service for
passengers and crew on board ships, a news summary distribution
service, access to data bases through personal computers and other
office communications services for facsimile transmissions,
worldwide teleconferencing and current financial news reports.
In 1992, COMSAT Mobile Communications initiated its two new
digital services, Inmarsat-B and Inmarsat-M, in the Atlantic and
Pacific Ocean Regions. These services provide more efficient use
of the Inmarsat satellite capacity, help to significantly lower the
cost of using satellite communications, and expand the potential
customer base for maritime and land mobile services. COMSAT Mobile
Communications also introduced a multi-channel version of Inmarsat-
M service that will allow cruise ships and other high-volume users
to increase their channel capacity and offer lower rates to their
customers. In 1993, COMSAT Mobile Communications announced plans
for a new land earth station in Malaysia to provide these new
digital services to the Indian Ocean Region. The Malaysian earth
station is expected to be operational in 1994.
Aeronautical Services. COMSAT Mobile Communications provides
satellite telecommunications services for aeronautical
applications, including airline operational and administrative
communications, passenger telephone service and, prospectively, air
traffic control.
By an FCC Report and Order issued in 1989, COMSAT was
authorized (1) to be the sole U.S. provider of Inmarsat space
segment capacity for aeronautical services; (2) to provide ground
segment aeronautical services in connection with the Inmarsat space
segment on a nonexclusive basis; and (3) to provide such
aeronautical services only to aircraft engaged in international
flights, including international flights over U.S. airspace.
Another entity, the American Mobile Satellite Corporation (AMSC),
was designated as the sole provider of certain domestic
aeronautical satellite services. However, COMSAT Mobile
Communications has been authorized by the FCC to provide domestic
aeronautical satellite services on an interim basis until the
deployment of AMSC's satellite, which AMSC expects to occur in late
1994 or early 1995.
Customers of COMSAT Mobile Communications for aeronautical
services include airline service providers, commercial airlines,
government aircraft and owners and operators of corporate aircraft.
COMSAT Mobile Communications began providing aeronautical
services in 1990 with a data service for cockpit communications on
commercial flights under a 10-year agreement with Aeronautical
Radio, Inc., an airline-owned service organization. In 1991,
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COMSAT Mobile Communications began providing aeronautical voice
services in the Atlantic and Pacific Ocean Regions through its
earth stations at Southbury, Connecticut and Santa Paula,
California. There are currently more than 300 aircraft equipped to
use the Inmarsat aeronautical system, equally split between voice
and data services.
A service agreement with Kokusai Denshin Denwa Co., Ltd.
(KDD), the Japanese Signatory to Inmarsat, provides that COMSAT
Mobile Communications may use KDD's ground earth station serving
the Indian Ocean Region to serve COMSAT Mobile Communications'
aeronautical customers. COMSAT Mobile Communications may serve
KDD's customers flying in the Atlantic Ocean Region, and COMSAT
Mobile Communications and KDD will provide mutual back-up in the
Pacific Ocean Region for aeronautical customers of both companies.
Service agreements with GTE Airfone, Incorporated, Claircom
and In-Flight Phone, Inc., all of which are providers of air-to-
ground passenger telephone service using terrestrial facilities,
enable these providers to extend their current service to
transoceanic flights by acquiring satellite and ground earth
station services from COMSAT Mobile Communications.
In 1993, COMSAT signed a service agreement with United
Airlines to provide satellite communications services for
passengers, including telephone, fax and data transmission on
approximately 74 aircraft, once such aircraft are equipped with
satellite terminals.
Land Mobile Services. COMSAT Mobile Communications provides
telecommunications services for international land mobile
applications, using mobile and portable terminals located outside
of the United States. Customers for these services include
broadcasters, foreign telecommunications authorities and U.S. and
foreign corporations and government agencies.
COMSAT Mobile Communications land mobile services are
currently available using transportable versions of Inmarsat's
Standard-A mobile earth station (telephone, facsimile, data, and
telex), a briefcase-size Inmarsat-M terminal and a smaller data-
only Standard-C terminal through COMSAT Mobile Communications' C-
Link(sm) service. The briefcase-size Inmarsat-M terminals provide
a more portable and less expensive telephone service for
international travelers, the news media, government officials and
others who travel to remote parts of the world where reliable
communications services are often not available. C-Link service is
a low-cost text messaging service that permits smaller vessels and
land mobile units to use the global satellite network. COMSAT
Mobile Communications is continuing to modify its land earth
stations to interconnect this service with public and private data
networks.
COMSAT is not generally authorized to provide domestic land
mobile services directly to end users. However, it is providing
Inmarsat satellite capacity to AMSC, the authorized U.S. domestic
land mobile entity, for an interim service pending the launch of
AMSC's own satellite, and it is providing interim domestic service
to certain other end users under special temporary authority from
the FCC.
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Revenues. Approximately 30% of the Corporation's consolidated
revenues in 1993 were derived from COMSAT Mobile Communications
(28% in 1992, 24% in 1991). No single customer of COMSAT Mobile
Communications provided more than 10% of the Corporation's
consolidated revenues in 1993.
Competition. Under the Satellite Act and FCC orders, COMSAT
is the only U.S. entity that may provide space segment services to
customers using the Inmarsat satellites. COMSAT Mobile
Communications competes for maritime, land mobile and aeronautical
communications business with other Inmarsat Signatories operating
land earth stations and with IDB Aero-Nautical Communications, Inc.
(IDB), another U.S. carrier which provides maritime, land mobile
and aeronautical services through its own U.S. coast earth
stations, using Inmarsat satellite capacity obtained from COMSAT
Mobile Communications. COMSAT Mobile Communications also competes
for maritime communications business with operators of cellular
radio services, high frequency radio services and fixed C-band
satellites, domestic and international. These competitive forces
continue to exert downward pressure on COMSAT Mobile
Communication's pricing for services provided through the Inmarsat
system.
In November 1993, the FCC authorized AT&T to provide shore-to-
ship Inmarsat service under an agreement with COMSAT Mobile
Communications whereby COMSAT Mobile Communications is indicated in
AT&T's tariff as a "participating carrier" and pursuant to which
COMSAT Mobile Communications reduced its charge for space and
ground segment to AT&T by more than 20%. In December 1993, AT&T
filed a new application to provide "branded end-to-end" Standard A
mobile satellite service in the ship-to-shore direction. In
February 1994, COMSAT opposed this application, arguing that it is
contrary to the Satellite Act. The FCC has not acted on this
matter.
In March 1993, the FCC granted COMSAT's petition seeking
waivers of the structural separation requirements, subject to
COMSAT's establishing certain accounting and non-structural
safeguards. This relief allows COMSAT to provide equipment,
software and value-added services to customers directly through
COMSAT Mobile Communications, rather than through a separate
subsidiary that would require substantial duplication of personnel
and other costs. In satisfaction of conditions placed on COMSAT by
the FCC in granting the COMSAT application, in January 1994, COMSAT
filed with the FCC its new Cost Allocation Manual, and in February
1994, COMSAT filed its plan for implementing certain non-structural
safeguards desired by the FCC. Both filings are subject to FCC
approval before the FCC waivers take effect.
Inmarsat. Inmarsat is a 72-nation organization headquartered
in London, England. It operates under two agreements: (1) an
intergovernmental convention; and (2) an operating agreement signed
by each nation's government or designated telecommunications entity
(Signatory). COMSAT is the U.S. Signatory. It represents the
United States in Inmarsat, subject to instructions from the
Department of State (in concert with the Department of Commerce and
the FCC) on matters that may affect the national interest and
foreign policy of the United States.
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Each Signatory has rights and obligations in Inmarsat
analogous to those of a partner. Each owns an investment share,
makes proportionate contributions to Inmarsat's capital costs, and
receives proportionate distributions of Inmarsat's space segment
charges after deductions for operating expenses. The investment
shares are readjusted as of February 1 of each year to approximate
the Signatories' respective portions of the total use of the
Inmarsat space segment for the previous year. COMSAT's investment
share, the largest in Inmarsat, was 22.5% as of February 1, 1994
(23.1% as of February 1, 1993; 25.0% as of February 1, 1992).
At December 31, 1993, total Inmarsat Owners' Equity was
approximately $672 million, including undistributed compensation
for use of capital totaling approximately $136 million, and
Inmarsat's outstanding contractual commitments totaled
approximately $380 million.
VIDEO ENTERPRISES
The Video Enterprises segment consists of COMSAT Video
Enterprises, Inc. (CVE), a wholly owned subsidiary of the
Corporation, and On Command Video Corporation (OCV), a California-
based company that developed and markets a proprietary video
entertainment system to hotels. CVE is the majority owner of OCV.
This segment provides entertainment services to the hospitality
industry throughout the United States, as well as domestic video
distribution services to television networks.
CVE and OCV services to hotels consist of pay-per-view feature
films, free-to-guest programming (such as Showtime, HBO, ESPN, The
Disney Channel, CNN and TBS, among others), and pay-per-view sports
and entertainment special events. OCV's pay-per-view film service
is on-demand and its system also provides interactive in-room
services such as folio review and guest check out. At December 31,
1993, CVE and OCV had a customer base installed or under contract
of approximately 2,200 hotels and approximately 490,000 rooms,
including hotels in each major hospitality chain.
In 1993, CVE raised its ownership of OCV from 65.7% to 73.5%
through purchases of common stock from minority stockholders and of
additional common stock from OCV. Beginning with the third quarter
of 1992, OCV's financial results have been consolidated with CVE.
Previously, this investment was accounted for using the equity
method. For a further discussion of this investment, see Note 4 to
the 1993 Financial Statements.
CVE's hotel business was restructured in 1992. For a
discussion of the restructuring, see Note 12 to the 1993 Financial
Statements.
All of the Corporation's domestic video distribution services
and products have been consolidated within CVE. This includes the
distribution of network television programming of the National
Broadcasting Company (NBC) via satellite to NBC affiliate stations
nationwide pursuant to a service contract which runs to 1999.
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CVE operates in a highly competitive and rapidly changing
environment in which the principal methods of competition are
service, product features and price. Several competing companies,
principally Spectradyne, Inc., provide hotels with in-room video
entertainment.
TECHNOLOGY SERVICES
The Technology Services segment consists of COMSAT Technology
Services (CTS), which was created in 1992 by restructuring the
former COMSAT Systems Division and combining its activities with
those of COMSAT Laboratories, the Corporation's research and
development organization. For a discussion of the restructuring,
see Note 12 to the 1993 Financial Statements. CTS provides turnkey
voice, video and data communications networks and products,
information services and applied research and technology worldwide.
CTS's services include: information systems design,
development, engineering, installation, testing and operations and
maintenance; program management, applications engineering and
software; integrated voice, video and data networks; and systems
engineering and technical assistance services. CTS's customers
include the U.S. Government, foreign governments and a variety of
commercial customers.
Major new CTS contracts awarded or begun in 1993 include: a
contract with the Cote d'Ivoire (Ivory Coast) government to provide
a national television and radio distribution system for Radio
Television Ivorian; a contract with the Guatemalan telephone
company (Guatel) to provide a VSAT network for rural telephony
voice service; and contracts to provide various systems and
services for U.S. government classified customers.
On-going contracts being implemented in 1993 included: a
contract with the Defense Information System Agency for a
commercial satellite communications study; a contract to provide
earth station management services to the Saudi Arabian government;
a contract with a government agency in Korea to install earth
stations to connect with the Inmarsat Indian Ocean Region
satellites; contracts to provide consulting services for Koreasat
and Asiasat satellite construction and launches; a contract with
the Voice of America for earth station implementation; and
contracts to provide various systems and services for government
agencies in Italy, Korea, Japan and Turkey.
COMSAT Laboratories, part of CTS, conducts research and
development on a broad range of telecommunications devices,
subsystems, transmission systems, technologies and techniques in
support of CTS and other COMSAT businesses, as well as for outside
customers. Customers include U.S. and foreign government agencies,
commercial entities, INTELSAT and Inmarsat. COMSAT Laboratories
also licenses new technology it develops to other companies for
commercialization of such technology.
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During 1993, COMSAT Laboratories successfully delivered its
portion of NASA's Advanced Communications Technology Satellite
(ACTS) and is currently providing operations and maintenance
support. The ACTS satellite was launched in 1993 and NASA is
currently conducting its experiments program. COMSAT Laboratories
also continued work under a subcontract with Magnavox Electronic
Systems Company to develop satellite communications control
software and a computer interface to a new satellite ground
terminal system for the U.S. Army.
Support of COMSAT Laboratories from outside sources was 46% of
total funding in 1993. The Corporation's total expenditures for
research and development were $13 million in 1993, $15 million in
1992, and $18 million in 1991.
CTS also includes the activities of COMSAT General Corporation
(COMSAT General), a wholly owned subsidiary of the Corporation.
COMSAT General owns an 86.3% interest in and manages the MARISAT
Joint Venture, which owns and operates three satellites and leases
capacity in the satellites to Inmarsat and the U.S. Navy. In
addition, CTS manages the Corporation's minority investment in
Plexsys International Corporation, a manufacturer of cellular
telephone equipment.
Effective December 31, 1993, the Microwave Electronics
Division (MED) of CTS, which designs and manufactures certain
electronic components primarily for use in satellite communications
systems, was sold to AMP Incorporated.
No material portion of CTS's business is subject to
renegotiation of profits or termination of contracts or
subcontracts with the U.S. Government.
CTS competes with major companies around the world in the
broad areas of systems engineering and integration of
telecommunications and information systems and services. CTS
competes principally on the basis of service, product, price,
reputation and capabilities.
In January 1994, the Corporation entered into a definitive
agreement to acquire Radiation Systems, Inc. (RSi), a company which
designs, manufactures and integrates satellite earth stations,
advanced antennas and other turnkey systems for telecommunications,
radar, air traffic control and military uses, by merging RSi with
a wholly owned subsidiary of the Corporation. Following the
merger, the Corporation expects to combine CTS with RSi. For a
further discussion of the acquisition of RSi, see Note 15 to the
1993 Financial Statements.
INVESTMENTS
The Corporation owns a limited partnership which owns the
Denver Nuggets, a franchise of the National Basketball Association.
As a result of the Corporation's acquiring all of the remaining
interests in the partnership in 1992, the partnership's financial
results have been consolidated with the Corporation's financial
14
<PAGE>
statements beginning with the third quarter of 1992. Previously,
this investment was accounted for using the equity method.
For a further discussion of the Corporation's investments, see
Note 4 to the 1993 Financial Statements.
Item 2. Properties
COMSAT Properties
Effective in 1993, the headquarters of the Corporation and the
headquarters of the International Communications and Video
Enterprises segments are located in a building in Bethesda,
Maryland which the Corporation leases from a limited partnership in
which it holds a 50% interest, primarily as a limited partner. The
managing general partner also owns a 50% interest in the
partnership. An affiliate of the managing general partner owns the
building site and has leased this site to the partnership. The
Corporation has entered into a 15-year lease with the partnership
for the new building. For a further discussion of the
Corporation's ownership interest and lease of this property, see
Notes 4 and 6 to the 1993 Financial Statements.
The Corporation owns buildings and land at Clarksburg,
Maryland that serve as the headquarters of the businesses of the
Mobile Communications and Technology Services segments.
The Corporation owns two satellites that are used by the Video
Enterprises segment in its video distribution services and its
television distribution network for NBC. The Corporation, through
the 86.3%-owned MARISAT Joint Venture, also operates three
satellites, capacity of which is leased by the Technology Services
segment to Inmarsat and the U.S. Navy.
The Corporation leases an earth station in Turkey and owns
earth stations at Santa Paula, California and Southbury,
Connecticut that are used by COMSAT Mobile Communications to
provide mobile communications services. In addition, a land earth
station is planned in Malaysia. The California and Connecticut
earth stations are also used by the businesses of the Technology
Services segment to provide communications services and tracking,
telemetry and command (TT&C) services. The Corporation also owns
earth stations at Clarksburg, Maryland and Paumalu, Hawaii that are
used by COMSAT World Systems to provide TT&C services to INTELSAT.
The Corporation's properties are suitable and adequate for the
Corporation's business operations.
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<PAGE>
INTELSAT Satellites
COMSAT World Systems uses the satellites of INTELSAT, an
organization in which COMSAT owns a 20.9% interest. The INTELSAT
satellites currently used and under construction are described
below.
The INTELSAT V series consists of eight satellites having an
average capacity of at least 15,000 voice-grade bearer circuits or
51 television channels. The INTELSAT V-A series consists of five
satellites having an average capacity of at least 16,000 bearer
circuits or 57 television channels.
The INTELSAT VI series consists of five satellites,
constructed by Hughes Aircraft Company, a subsidiary of General
Motors Corporation, having an average capacity of at least 24,000
bearer circuits or 87 television channels.
The INTELSAT-K satellite, constructed by General Electric
Technical Services Company, Inc., a subsidiary of General Electric
Company, has an average capacity of 7,000 bearer circuits or 32
television channels.
The INTELSAT VII series consists of six satellites that are
being constructed by Space Systems/Loral (formerly Ford Aerospace
and Communications Company). These satellites will have an average
capacity of at least 17,050 bearer circuits or 62 television
channels. The first INTELSAT VII satellite was launched on October
22, 1993. The INTELSAT VII-A series, also being constructed by
Space Systems/Loral, consists of three satellites having an average
capacity of at least 19,250 bearer circuits or 70 television
channels. The first INTELSAT VII-A satellite is expected to be
launched in 1995. The INTELSAT VII satellite launches are expected
to be insured. No decision has been made regarding launch
insurance for the INTELSAT VII-A series, however.
The INTELSAT VIII series consists of four satellites that are
being constructed by Martin Marietta Astro Space, a division of the
Martin Marietta Corporation. These satellites will have an average
capacity of 21,000 bearer circuits or 76 television channels. The
first INTELSAT VIII satellite is expected to be launched in 1996.
No decision has been made regarding launch insurance for the
INTELSAT VIII series.
COMSAT has applied to the FCC for authorization to participate
in the procurement of one INTELSAT VIII-A spacecraft. This
satellite, which is being constructed by Martin Marietta Astro
Space, will have an average capacity of at least 11,600 bearer
circuits, or 38 television channels, and is expected to be launched
in 1997. No decision has been made regarding launch insurance for
the INTELSAT VIII-A spacecraft.
16
<PAGE>
Inmarsat Satellites
COMSAT Mobile Communications uses the satellites of Inmarsat,
an organization in which COMSAT owns a 22.5% interest. The
Inmarsat satellites currently used and under construction are
described below.
The first-generation Inmarsat satellite system consists of
satellite capacity leased from INTELSAT, the European Space Agency
and the MARISAT Joint Venture for periods expiring at various times
through January 1996.
The second-generation Inmarsat satellite system, known as the
Inmarsat II series, consists of four satellites constructed by an
international consortium led by British Aerospace Dynamics
Corporation. A financing arrangement with respect to the first
three Inmarsat II satellites is discussed in Note 5 to the 1993
Financial Statements.
The third-generation Inmarsat satellite system, known as the
Inmarsat III series, consists of four satellites which are being
constructed by General Electric Technical Services Company, Inc.
These satellites will use spot-beam technology, which allows reuse
of the scarce frequency resources allocated for mobile satellite
communications. Their capacity will be more than 20 times that of
the largest satellites in the first-generation Inmarsat system and
about eight times more powerful than the Inmarsat II series. In
March 1994, Inmarsat decided to procure a fifth Inmarsat III
spacecraft as a contingency against possible loss of a satellite.
No decision has been made regarding launch insurance for the
Inmarsat III series. A financing arrangement with respect to the
first three Inmarsat III satellites is discussed in Note 5 to the
1993 Financial Statements.
Item 3. Legal Proceedings
Neither COMSAT nor any of its subsidiaries is a party to, and
none of their property is the subject of, material pending legal
proceedings, and no such proceedings are known to be contemplated
by governmental authorities, except the matters described in Notes
6, 7 and 15 to the Corporation's 1993 Financial Statements.
Item 4. Submission of Matters to a Vote of Security Holders
None.
17
<PAGE>
Executive Officers of The Registrant
Age as of
Name Officer March 31, 1994
Bruce L. Crockett President and Chief Executive Officer 50
Betty C. Alewine President, COMSAT World Systems 45
John V. Evans President, COMSAT Laboratories 60
Charles Lyons President, COMSAT Video Enterprises, Inc. 39
Ronald J. Mario President, COMSAT Mobile Communications 50
Jerome W. Breslow Vice President and Secretary 60
C.Thomas Faulders, III Vice President and Chief Financial Officer 44
Steven F. Bell Vice President, Human Resources and
Organization Development 44
Arthur R. Sando Vice President, Corporate Affairs 46
Warren Y. Zeger Vice President and General Counsel 47
Allen E. Flower Controller 50
Wesley D. Minami Treasurer 37
Normally, the officers are elected annually by the Board of
Directors, at its first meeting following the Annual Meeting of
Shareholders, to serve until their successors are elected and
qualified.
There is no family relationship between an officer and any
other officer or director and no arrangement or understanding
between an officer and any other person pursuant to which he or
she was selected as an officer.
The following is a brief account of each executive officer's
experience for the past five years:
Mr. Crockett has been President and Chief Executive Officer
of the Corporation since February 1992. He was President and
Chief Operating Officer of the Corporation from April 1991 to
February 1992. He was President, World Systems Division from
February 1987 to April 1991.
Ms. Alewine has been President, COMSAT World Systems since
May 1991. She was Vice President and General Manager, INTELSAT
Satellite Services from January 1989 to May 1991. She was Vice
President, Sales and Marketing, World Sysite Services from January 1989 to
May 1991. She was Vice President, Sales and Marketing, World Systems
Division from March 1987 to January 1989.
Dr. Evans has been President, COMSAT Laboratories since
September 1991. He was Vice President and Director, COMSAT
Laboratories from October 1983 to September 1991, and Vice
President and Director of Research from April 1983 to October
1983.
Mr. Lyons has been President, COMSAT Video Enterprises, Inc.
(CVE) since February 1992. He was Vice President and General
Manager, CVE from October 1990 to January 1992. Prior to joining
the Corporation, he was with Marriott Corporation, serving as
National Director of Group Marketing from September 1989 to
October 1990, Regional Director of Operations and National
Director of Group Sales from September 1988 to September 1989,
and Director of Marketing from September 1986 to September 1988.
18
<PAGE>
Mr. Mario has been President, COMSAT Mobile Communications
(CMC) since May 1991. He was Vice President and General Manager,
CMC from April 1988 to May 1991. He was Vice President,
Corporate Services from September 1985 to April 1988.
Mr. Breslow has been Vice President and Secretary since June
1987.
Mr. Faulders has been Vice President and Chief Financial
Officer since February 1992. Prior to joining the Corporation,
he was with MCI Communications Corporation (MCI), serving as
Senior Vice President of Business Marketing from August 1991 to
February 1992, Senior Vice President of Government Systems and
Enterprise Group from August 1990 to August 1991, Vice President
of National Accounts for MCI Southeast from August 1988 to August
1990, and Vice President and Treasurer of MCI from December 1985
to August 1988.
Mr. Sando has been Vice President, Corporate Affairs since
September 1991. He was Vice President, Marketing and
Communications, COMSAT Video Enterprises, Inc. from May 1990 to
September 1991. Prior to joining the Corporation, he was with
Turner Broadcasting System, Inc., serving as Vice President,
Marketing and Communications from February 1989 to April 1990 and
Vice President, Corporate Communications from May 1984 to
February 1989.
Mr. Zeger has been Vice President and General Counsel since
March 1992. He was Acting General Counsel from September 1991 to
March 1992. He was Associate General Counsel of the Corporation
and Vice President, Law, World Systems Division (WSD) from
February 1988 to September 1991. He was Vice President and
General Counsel, WSD, from August 1987 to February 1988.
Mr. Flower has been Controller since June 1992. He was Vice
President, Finance and Administration, CVE from May 1990 to June
1992. He was Vice President, Finance and Administration, World
Systems Division from August 1987 to May 1990.
Mr. Bell has been Vice President of Human Resources and
Organization Development since October 1993. Prior to joining
the Corporation, he was with American Express Worldwide
Technologies, serving as Vice President of Human Resources from
September 1992 to September 1993; with US Sprint, serving as
Regional Director of Human Resources from October 1987 to August
1992; and with Martin Marietta Data Systems Division, serving as
Manager, Employment from July 1985 to October 1987.
Mr. Minami has been Treasurer since May 1993. Prior to
joining the Corporation, he was with Oxford Realty Services
Corp., a privately held $1.5 billion investment/property
management company, serving as Senior Vice President, Finance and
Administration and Chief Financial Officer from December 1989 to
April 1993 and Vice President and Treasurer from April 1988 to
November 1989.
19
<PAGE>
PART II
Item 5. Market for the Registrant's Common Stock and Related
Stockholder Matters.
As of December 31, 1993, there were 40,226,475 shares of
Common Stock, without par value, of the Corporation (COMSAT
Common Stock) outstanding: 40,205,587 were Series I shares, held
by 42,345 holders of record other than communications common
carriers; and 20,888 were Series II shares, held by 35 common
carriers.
The principal market for COMSAT Common Stock is the New York
Stock Exchange, where it is traded under the symbol "CQ."
COMSAT Common Stock is also traded on the Chicago Stock Exchange
and the Pacific Stock Exchange.
The Corporation's Transfer Agent, Registrar and Dividend
Disbursing Agent is The Bank of New York, 101 Barclay Street, New
York, New York.
The high and low sales prices of, and the dividends declared
on, each share of COMSAT Common Stock for the last two years are
as follows:
COMSAT
Common Stock*
High Low Dividend
Calendar Year 1992
First Quarter 21 1/2 17 1/8 .175
Second Quarter 21 1/4 18 3/4 .175
Third Quarter 21 5/8 19 5/8 .175
Fourth Quarter 24 1/2 19 7/8 .175
Calendar Year 1993
First Quarter 27 7/8 23 3/4 .185
Second Quarter 31 5/8 27 1/4 .185
Third Quarter 31 7/8 26 3/4 .185
Fourth Quarter 35 1/4 27 1/2 .185
* Prices reflect the two-for-one stock split which occurred in
June 1993.
20
<PAGE>
Item 6. Selected Financial Data for the Registrant for Each of
the Last Five Fiscal Years.
FIVE YEAR FINANCIAL SUMMARY
<TABLE>
<CAPTION>
(In thousands except per
share information) 1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS
Revenues $640,390 $563,615 $522,850 $456,806 $411,524
Operating Expenses 502,292 475,110 395,377 469,357 325,431
Operating Income (Loss) 138,098 88,505 127,473 (12,551) 86,093
Income (Loss) from Continuing
Operations Before Cumulative
Effect of Changes in
Accounting Principles 74,044 42,924 71,424 (16,349) 62,464
Cumulative Effect of Changes in
Accounting Principles 1,238 - (26,607) - -
Net Income (Loss) 75,282 42,924 44,817 (16,349) 62,464
Net Income (Loss) Per Share: (1)
Primary $ 1.85 $ 1.09 $ 1.18 $ (0.44) $ 1.67
Fully Diluted $ 1.85 $ 1.09 $ 1.17 $ (0.44) $ 1.50
Dividends Paid 29,577 27,127 25,313 24,677 24,481
Dividends Paid per Share (1) $ 0.74 $ 0.70 $ 0.67 $ 0.66 $ 0.66
YEAR-END POSITION
Total Assets $ 1,652,515 $ 1,542,843 $ 1,369,546 $ 1,209,565 $ 1,261,110
Long-Term Debt 402,402 486,383 382,764 375,181 367,617
Stockholders' Equity 679,352 621,132 584,986 558,064 595,138
</TABLE>
Notes:
1. Per share amounts have been restated for a 2-for-1 stock split in 1993.
21
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
ANALYSIS OF OPERATIONS
Consolidated Operations
Consolidated revenues totaled $640 million, an increase of $77
million above record 1992 revenues and $118 million above 1991.
Revenue increases resulted from improved operating performance,
particularly in COMSAT Mobile Communications, which had higher
traffic volumes, and in COMSAT Video Enterprises, where On Command
Video product installations grew rapidly. In addition, revenues
rose due to the consolidation of Denver Nuggets results for the
full year, versus the six months' revenues included in 1992.
Operating income was $138 million, an improvement of $50
million over 1992 ($11 million, excluding restructuring charges)
and $11 million better than 1991. Results from operations improved
over 1992 based on the strong performance from COMSAT Mobile
Communications and on cost benefits resulting from the
restructuring in 1992 that formed COMSAT Technology Services and
consolidated video entertainment and distribution services within
COMSAT Video Enterprises. Some of this improvement was offset by
the inclusion of a full year of consolidated losses from the Denver
Nuggets.
Other income improved in 1993 due to proceeds from company-
owned life insurance policies, inclusion of profits from equity
investments, and the inclusion of the Denver Nuggets losses in
other income in the first half of 1992.
Interest costs declined slightly from the levels of the prior
two years on lower borrowings and lower interest rates. Capitalized
interest increased over 1992, but remained below the 1991 level, as
plant under-construction balances have continued to increase
following the heavy satellite launch schedule in 1990 and 1991.
The corporation adopted Statement of Financial Accounting
Standards (SFAS) No. 109 in 1993. The new standard requires that
deferred tax assets and liabilities be adjusted to reflect current
tax rates. The cumulative effect of adopting this standard was to
increase income by $1 million in 1993. In addition, the corporation
recorded a charge to income tax expense of $3 million under the new
standard to reflect the impact on the prior year's deferred tax
accounts of the recent change in Federal income tax rate to 35%
from 34%.
The corporation adopted SFAS No. 106 in 1991, which required
recognition of $27 million in expenses after taxes for the expected
cost of postretirement benefits.
22
<PAGE>
Net income was a record $75 million, a 13% increase over 1992
excluding restructuring charges. Primary earnings per share were
$1.85, a 9% increase over 1992, excluding the effects of
restructuring.
Operating Results
International Communications
In millions 1993 1992 1991
- - - ------------------------------------------------------------
Revenues $ 250 $ 253 $ 245
Operating Income* $ 89 $ 96* $ 92*
*Excludes restructuring charges of $7 million in 1992 and SFAS
No. 106 costs of $24 million in 1991.
International Communications includes the FCC-regulated and
non-regulated businesses of COMSAT World Systems (CWS), as well as
COMSAT International Ventures (CIV). CWS provides international
voice, data, video and audio communications. Revenues declined
slightly, but the business continued its solid performance as
demand for services remained strong. CIV invests in
telecommunications opportunities internationally.
CWS revenues declined by 3% from 1992 levels and were flat
compared to 1991. Revenues for full-time voice circuits declined
11% due to the anticipated conversion from analog circuits to more
efficient digital service. Additionally, CWS entered into new long-
term carrier agreements with ATT, MCI and Sprint, its three major
international carrier customers, that provide significant rate
reductions in exchange for additional service commitments. CWS
share of revenues from the INTELSAT system declined as expected
with the 1% reduction in the corporation's ownership share in 1993.
Revenues from full-time leased television services increased
over 50% as customers benefitted from implementing highly efficient
networks with smaller, less expensive antennas that operate with
the high-power INTELSAT-K and INTELSAT VI satellites.
Operating income for CWS declined 5% from 1992 results, before
charges for restructuring, and were about the same as 1991 results.
The decrease from 1992 is due to the reduction in revenues.
Operating expenses for CWS were below 1992 levels (before
restructuring charges) due to cost controls and lower INTELSAT
system expenses resulting from the lower ownership share. This was
partially offset by higher depreciation expense.
CIV has business interests in eight countries in Central
America, South America, Eastern Europe and the Commonwealth of
Independent States. CIV continues to screen new opportunities
carefully as it manages its existing portfolio of operating
ventures and investments. Revenues from owned or controlled
ventures were consolidated for the first time in 1993, adding 2% to
segment revenues. As anticipated, CIV incurred operating losses of
$6 million in 1993. Results in 1992 were $2 million better, and
included a $2 million gain from the sale of a venture in Venezuela.
23
<PAGE>
Mobile Communications
In millions 1993 1992 1991
- - - -----------------------------------------------------------------
Revenues $ 190 $ 158 $ 128
Operating Income* $ 48 $ 37* $ 40
*Excludes restructuring charges of $3 million in 1992.
COMSAT Mobile Communications (CMC) provides maritime,
aeronautical and land mobile communications services. Revenues and
operating income grew in excess of 20% over 1992 levels.
The maritime business remains strong while undergoing a
transition to less expensive, more efficient digital service.
Digital Standard-M terminals currently represent only about 3% of
commissioned telephony terminals. However, the lower cost
associated with digital service versus comparable analog terminals
has produced significant increases in traffic volume on passenger
ships. Continued significant traffic growth is expected as the
digital Standard-M dominates new terminal commissionings over the
next few years.
Overall, CMC revenues grew by slightly better than 20% in
1993. Demand continued to be strong for telephone service,
particularly in the land mobile and government market segments,
while the fishing and offshore oil segments declined.
Telex revenue declined from 1992 levels, but this decline was
mostly offset by revenue growth from smaller, less expensive
Standard-C digital terminals.
Aeronautical communication services have continued to develop
slowly due to airline industry conditions. Revenues remained even
with 1992 levels. With several airlines already having committed to
install aircraft terminals, it is anticipated that this market will
begin to grow in the near future.
Operating income improved year to year by almost 30%,
excluding 1992 restructuring charges. Operating expenses increased
17% as higher satellite use charges associated with higher traffic
volumes were only partially offset by a reduced share of Inmarsat
system revenues and expenses. Depreciation on new earth station and
satellite equipment installed to meet traffic demand increased
expenses by $5 million.
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<PAGE>
Video Enterprises
In millions 1993 1992 1991
- - - -----------------------------------------------------------------
Revenues $ 96 $ 78 $ 82
Operating Income* $ 10 $ 6* $ 3
*Excludes restructuring charges of $14 million in 1992.
COMSAT Video Enterprises (CVE) provides video distribution and
on-demand video entertainment services to the hospitality industry
and video distribution services to television networks.
The corporation increased its ownership of On Command Video
Corporation (OCV) to 74% from 66% during 1993, and has consolidated
OCV results since July 1992. Through the investment in OCV, CVE has
grown to become the major supplier of on-demand video entertainment
to the hospitality industry.
Revenues from video programming provided to the hospitality
industry grew by almost 34% in 1993, as OCV and CVE continued to
equip existing and new hotel rooms with on-demand video systems
from OCV. A revenue decline of almost 11% in the mid-priced hotel
market was more than offset by a six-fold increase in revenues from
OCV 's upscale hotels and from CVE hotels converted to the OCV
system. OCV tripled the number of rooms equipped during 1993, and
increased the backlog of rooms to be installed by 290%. Demand
remains high for this state-of-the-art product.
Revenue from the video distribution services provided to the
National Broadcasting Corporation (NBC) remained flat, as did
operating income.
Operating income in 1993 improved by 76% over 1992, excluding
charges for restructuring. While the CVE hotel business continued
to incur modest losses, these were more than offset by operating
income from OCV. CVE improved performance over 1992 due to lower
costs achieved through the restructuring and to improved
performance from rooms converted to the OCV system.
25
<PAGE>
Technology Services
In millions 1993 1992 1991
- - - -----------------------------------------------------------------
Revenues $ 88 $ 81 $ 93
Operating Income (Loss)* $ 1 $ (3)* $ -
*Excludes restructuring charges of $10 million in 1992.
COMSAT Technology Services (CTS) provides turnkey voice, video
and data communications networks and products, technology
consulting services and applied research services.
Revenues in 1993 increased by 9% over 1992. Improvements came
from new infrastructure programs such as a major VSAT rural
telephony program in Guatemala and a television and radio
distribution network in Cote d'Ivoire (Ivory Coast), as well as
from new consulting programs.
Reductions in overhead and refocused marketing efforts which
followed the 1992 restructuring have helped make operating income
positive. This represents an improvement of $4 million over 1992
operating losses, before restructuring charges.
Corporate
In millions 1993 1992 1991
- - - -----------------------------------------------------------------
Revenues* $ 30 $ 11 $ 3
Operating Loss* $ (10) $ (9)* $ (8)
*Revenues exclude elimination of intra-company revenues. The 1992
operating loss excludes $4 million of restructuring charges.
Revenues increased in 1993 due to the Denver Nuggets' improved
attendance, ticket sales and sponsor revenues, and a full year of
consolidation versus six months in 1992.
Revenues in 1991 came primarily from office space sub-leased
by the corporation at its former headquarters building in
Washington. These rents have increased only slightly since 1991.
Operating losses for all years include costs for proprietary
research programs undertaken by COMSAT Laboratories. In 1992,
losses for the Denver Nuggets were included for half the year,
while in 1993 a full year is reflected. Increases in operating
losses of $1 million in 1993 compared to 1992, excluding
restructuring charges, were attributable to the full year of
consolidated Denver Nugget losses.
26
<PAGE>
Outlook
The corporation has advocated the privatization of both
INTELSAT and Inmarsat. Privatization would change these treaty-
based international organizations into commercial enterprises that
are responsive to marketplace forces and accountable to
shareholders. The corporation believes that the existing
organizational structures of INTELSAT and Inmarsat are ill-suited
to the competitive, fast-paced marketplace of today, and supports
the transfer of ownership holdings at market valuations.
Privatization would represent a fundamental change in how the
corporation operates in a regulated environment. The corporation
will continue to pursue its advocacy of privatization for each of
these organizations, but does not expect to see major changes
implemented in the near term.
COMSAT World Systems continues to adjust to an increasingly
competitive environment. In late 1993, the Federal Communications
Commission (FCC) substantially eliminated prior restrictions on
access of separate system satellite operators to the public
switched telephone network. This action, along with the FCC's
stated goal of eliminating all restrictions on separate satellite
systems by 1997, will increase competition for the provision of
satellite services and result in some loss of market share.
During 1994, two new satellites scheduled to be launched by
PanAmSat will offer additional competition for INTELSAT and CWS.
Increased satellite competition and continued competition from
fiber optic cables will put increased pressure on service revenues
and operating margins.
CWS is well-positioned with new long-term agreements with the
major international carriers to provide new cost-competitive
services for bulk usage beyond the year 2000. In addition, several
emerging markets are expected to continue growing, including
international television distribution, international VSAT and
digital audio services.
INTELSAT currently has 13 satellites on order. The first
satellite in the INTELSAT VII series, launched in the fourth
quarter of 1993, was placed in service early in 1994. There are
three more INTELSAT VII launches planned for 1994. The new INTELSAT
VII satellites, along with the INTELSAT VIII series satellites,
will offer new higher-power capabilities, enabling CWS to remain
competitive in an increasingly crowded international
telecommunications market.
COMSAT International Ventures anticipates strong traffic
growth and expansion of business from its existing ventures and
will continue efforts to expand to new markets internationally.
Existing ventures as a group are expected to reach profitability by
the end of 1994. However, CIV anticipates incurring small
additional losses for 1994 due to management and administrative
costs and losses from new start-up ventures.
COMSAT Mobile Communications will continue to expand its
service offerings to meet customer needs. An increasing number of
digital terminals with improved operating efficiency and reduced
service charges should keep traffic growth strong. Smaller digital
27
<PAGE>
terminals should facilitate growth in the land mobile, small
commercial and pleasure boat, and business traveler markets.
Additionally, CMC has signed agreements to provide multi-channel
terminals to major airline customers to help expand aeronautical
service.
CMC is facing competitive changes that will increase pressure
on service prices and operating margins. AT&T has petitioned the
FCC to allow competitive service offerings for ship-to-shore
traffic which, if approved, could lead to lower CMC rates for those
services. In early 1994, CMC reached agreement with AT&T to lower
the rates the corporation charges AT&T for shore-to-ship traffic
and the rates AT&T charges the corporation for ship-to-shore
traffic termination. It is anticipated that these new CMC rates
will be offered to all long distance carriers. These new agreements
could lead to slower revenue growth in the future. The impact on
future revenues and expenses will depend on the volume of calls
generated and the percentage of that traffic committed to the
corporation by the carriers. CMC entered into a carrier agreement
with Sprint International. The agreement provides for the exchange
of traffic and is expected to lead to additional traffic in the
future.
In 1993, the FCC initiated an audit of the corporation's role
as the United States signatory to Inmarsat and of CMC's earnings as
a provider of international mobile services. Although the
corporation cannot predict the ultimate disposition of this audit,
it believes the impact on service rates, if any, would be
prospective and should not be materially different from anticipated
rate actions required to respond to market pressure and
competition.
CMC is studying alternatives for providing new worldwide,
satellite-delivered, hand-held telephony services by the end of the
decade. These services would be provided by technically complex
global systems that would have to compete with existing cellular
services, as well as with planned satellite systems such as the
Iridium system to be built by Motorola. The corporation has not yet
determined the best technical or business approach to this new
expanded opportunity, but anticipates that decisions will be made
in 1994 and preliminary expenditures could begin before year end.
COMSAT Video Enterprises, Inc. will continue efforts to
convert existing qualified customers to the OCV product and to
retain hotel customers whose contracts expire in 1994. OCV will
continue to install new systems, working to address a rapidly
growing backlog that, at year end, exceeded its installed base.
Continued revenue and income growth is expected as a result of the
increasing market share.
CVE's video distribution business is expected to remain
stable with little change to the NBC services. As in prior years,
earnings in 1994 are expected to come primarily from the television
network distribution business, with an increasingly larger part
from the hospitality industry video distribution business.
COMSAT Technology Services emerged from the 1992 restructuring
as a more competitive business and entered 1994 with a substantial
improvement in its backlog compared to the beginning of 1993. In
January 1994, the corporation announced an agreement to acquire, by
28
<PAGE>
means of merger, Radiation Systems, Inc. (RSi). RSi designs,
manufactures and integrates satellite earth stations, advanced
antennas and other turnkey systems for telecommunications, radar,
air traffic control and military uses. If approved by RSi's
shareholders, the corporation will exchange newly issued common
stock for RSi's outstanding common stock, at an exchange value of
about $18.25 per RSi share. Each share of RSi common stock will be
exchanged for a portion of COMSAT common stock determined by
dividing $18.25 by the average closing price of COMSAT stock for
the 20 days ending five trading days prior to the effective date of
the merger. The exchange ratio shall not be less than 0.638 or
greater than 0.780. The transaction will have a total value of
approximately $150 million, and is expected to be completed in the
second quarter of 1994. Following the merger, which is expected to
be treated as a pooling of interests, CTS will be combined with RSi
to form a wholly owned subsidiary of the corporation. The new
subsidiary, COMSAT RSI, will pursue opportunities in the high-
growth wireless communications market by offering integrated
systems and products. COMSAT RSI will target international and
domestic markets that include cellular, personal communications
systems and VSAT antenna technologies. The corporation expects that
COMSAT RSI operations, while profitable, may have a small dilutive
effect on earnings in 1994, excluding the non-recurring transaction
costs. The newly combined entity plans to leverage the technical
expertise of COMSAT Laboratories and to maintain the competitive
cost structure that prevails in RSi.
The corporation anticipates continued improvement in the
financial performance of the Denver Nuggets, and expects that the
team will reach break-even in 1994.
The corporation will adopt SFAS No. 112, "Employer's
Accounting for Postemployment Benefits," in 1994. This statement
requires that the estimated cost of benefits provided to former or
inactive employees be accrued over their active service lives. The
effect of adopting the statement is not expected to have a material
effect on the corporation's 1994 financial results.
The corporation will also adopt SFAS No. 115, "Accounting for
Certain Investments in Debt and Equity Securities," in 1994. This
statement requires that certain investments in debt or equity
securities be carried on the balance sheet at fair value. The
effect of this statement is not expected to be material to the
corporation as of December 31, 1993.
29
<PAGE>
ANALYSIS OF BALANCE SHEETS
Assets
The corporation ended 1993 with $1,653 million of assets, an
increase of $110 million over 1992.
International Communications
In millions 1993 1992 1991
- - - -----------------------------------------------------------------
Assets $ 827 $ 803 $ 765
Property and Equipment Additions $ 117 $ 121 $ 174
Property and equipment additions are almost exclusively
related to COMSAT World Systems' share of INTELSAT's satellite
programs for the VII, VII A and VIII series of satellites. These
new satellites will offer higher power and deliver greater
performance characteristics to meet increasing demand from
customers worldwide.
CIV invested $7 million for new communications plant and
equipment in 1993. The majority of the investments are to meet
specific customer requirements for technologically advanced
applications in developing countries. The corporation anticipates
investing up to an additional $15 million in 1994 to meet demand in
existing ventures, and may invest additional amounts if warranted
by new opportunities.
Mobile Communications
In millions 1993 1992 1991
- - - -----------------------------------------------------------------
Assets $ 404 $ 397 $ 320
Property and Equipment Additions $ 51 $ 83 $ 90
Property and equipment were added to provide needed capacity
for CMC worldwide services.
Ground station plant and equipment were improved in 1993 to be
able to handle traffic volumes in all four service regions. A
second CMC ground station in the Indian Ocean region was begun in
Malaysia to provide digital Standard-M and -B service. The station
is expected to be operational in the second quarter of 1994.
Stations in California and Connecticut were also upgraded to handle
digital traffic under the new digital standards for Inmarsat M, B
and C terminals. Assets of $16 million were transferred to this
business from CTS in the first quarter of 1993 as part of the
restructuring effort begun in 1992; assets for prior years have
been restated. The transferred assets are facilities and equipment
at the earth stations in California and Connecticut.
30
<PAGE>
The first of the Inmarsat III series satellites, currently
under construction, is scheduled for launch in 1996. These
satellites will provide increased capacity to meet growing demand
for all services in all four service regions.
Video Enterprises
In millions 1993 1992 1991
- - - -----------------------------------------------------------------
Assets $ 187 $ 122 $ 120
Property and Equipment Additions $ 64 $ 18 $ 9
The additions to property and equipment are primarily
installations of video entertainment systems for new hotel
customers. OCV has a large backlog of hotels waiting to have
systems installed. The corporation is expected to make additional
investments in these systems during 1994 for new hotel
installations. The corporation will also continue to purchase video
entertainment systems from OCV for installation in a limited number
of hotels in CVE's existing hotel base. The business reduced some
asset balances as a result of the 1992 restructuring.
Technology Services
In millions 1993 1992 1991
- - - -----------------------------------------------------------------
Assets $ 46 $ 49 $ 62
Property and Equipment Additions $ 3 $ 10 $ 7
Property and equipment additions for 1992 and 1993 were
primarily purchases of test equipment for research and development
work by COMSAT Laboratories and equipment to support CTS' work in
communication systems design, demonstration and installation.
Requirements for new capital in 1994 are expected to be minimal.
Corporate
In millions 1993 1992 1991
- - - -----------------------------------------------------------------
Assets $ 189 $ 172 $ 102
Property and Equipment Additions $ 4 $ 1 $ 2
Assets increased in 1993 primarily due to the purchase of RSi
equity shares and increases in the cash value of company-owned life
insurance policies. The purchase of the remaining share and
subsequent consolidation of the Denver Nuggets in 1992 was the
primary cause of the increase in assets over 1991.
31
<PAGE>
Liabilities
During 1993, the corporation's share of long-term debt issued
by INTELSAT increased by $31 million as INTELSAT issued 6.75%
Eurobonds due in January 2000. Proceeds from this issue were used
to prepay $30 million of the corporation's 9.55% notes; $70 million
remains due in April 1994.
The corporation redeemed its 11.625% unsecured debentures in
March 1992. In April 1992 the corporation issued $160 million of
new debentures at 8.125% due in April 2004. The proceeds were used
to redeem its 7.75% convertible subordinated debentures and to
repay commercial paper.
ANALYSIS OF CASH FLOWS
Operating Activities
CWS generated the majority of the corporation's cash from
operations. The corporation made interest payments of $25 million
and tax payments of $22 million.
Investing Activities
The corporation made cash investments of $230 million for
property and equipment in 1993. Of this, $117 million was invested
by the International Communications businesses, $46 million by CMC
and $60 million by CVE and OCV.
The corporation received approximately $16 million when its
share of INTELSAT declined from 21.8% to 20.9% in 1993. The
corporation expects its share of INTELSAT to decrease slightly
during 1994. The corporation received approximately $5 million when
its share of Inmarsat declined from 24.6% to 23.0% in 1993. The
corporation's share of Inmarsat declined to 22.5% in February 1994.
A total of $14 million was used to purchase equity interests,
principally shares of RSi and the CIV ventures. An additional $13
million was used to purchase shares of OCV from minority
shareholders. The corporation increased its ownership share of OCV
to 73.5% at December 31, 1993.
The corporation's investment in property and equipment in 1994
will be somewhat higher than in 1993. Investments in INTELSAT
satellites, international ventures, aeronautical service equipment
and OCV systems will increase over 1993 levels.
32
<PAGE>
Financing Activities
Quarterly dividends were $.18-1/2 per share in 1993. The
corporation received in early 1993 $33 million in proceeds from
long-term debt issued by INTELSAT, all of which was used to redeem
or repay other debt obligations. INTELSAT intends to issue bonds
in the first quarter of 1994. The corporation will record its
share of the borrowings as long-term debt of approximately $42
million. INTELSAT will use the proceeds to redeem or repay their
short-term debt obligations.
Liquidity and Capital Resources
The corporation enjoys access to short- and long-term
financing at favorable rates. A $125 million commercial paper
program has $43 million of borrowings outstanding at an average
interest rate of 3.4%. A $200 million revolving credit agreement
with a group of banks is currently not being utilized and extends
to 1998. This facility is a back-up to the corporation's commercial
paper program.
The corporation enjoys access to capital markets at favorable
costs with an A rating from Standard and Poor's and an A-2 from
Moody's.
The corporation's funding activities, as regulated by the FCC,
allow long-term financing up to 45% of total capital, as well as
$200 million of short-term borrowings.
The corporation expects operations to fund almost all 1994
cash requirements. Any additional working capital requirements will
be funded using commercial paper.
Taxes
Taxes were paid on an Alternative Minimum Tax basis due to a
net operating loss carryforward from the 1987 discontinued
operations.
33
<PAGE>
Item 8. Financial Statements and Supplementary Data.
INDEPENDENT AUDITORS' REPORT
To the Shareholders of
COMSAT Corporation:
We have audited the accompanying consolidated balance sheets of
COMSAT Corporation and subsidiaries as of December 31, 1993, 1992
and 1991, and the related consolidated statements of income,
stockholders' equity, and cash flow for the years then ended. Our
audit also included the financial statement schedules listed in the
Index at Item 14(a)2. These financial statements and financial
statement schedules are the responsibility of the Corporation's
management. Our responsibility is to express an opinion on these
financial statements and financial statement schedules based on our
audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present
fairly, in all material respects, the financial position of COMSAT
Corporation and subsidiaries at December 31, 1993, 1992 and 1991,
and the results of their operations and their cash flows for the
years then ended in conformity with generally accepted accounting
principles. Also, in our opinion, such financial statement
schedules, when considered in relation to the basic consolidated
financial statements taken as a whole, present fairly in all
material respects the information set forth therein.
As discussed in Note 10 to the consolidated financial statements,
in 1991 the corporation changed its method of accounting for
postretirement health and life insurance benefits to conform with
Statement of Financial Accounting Standards No. 106. Also, as
discussed in Note 11 to the consolidated financial statements, in
1993 the corporation changed its methods of accounting for income
taxes to conform with Statement of Financial Accounting Standards
No. 109.
Deloitte & Touche
Washington, D.C.
February 16, 1994
34
<PAGE>
COMSAT CORPORATION AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
For the Years Ended December 31, 1993, 1992, and 1991
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Revenues $ 640,390 $ 563,615 $ 522,850
---------- ---------- ----------
Operating Expenses:
Cost of Services 328,727 272,351 245,187
Depreciation and Amortization 138,359 127,337 110,260
Research and Development 13,387 15,293 17,548
General and Administrative 21,819 21,168 22,382
Provision for Restructuring - 38,961 -
---------- ---------- ----------
Total Operating Expenses 502,292 475,110 395,377
---------- ---------- ----------
Operating Income 138,098 88,505 127,473
Other Income (Expense), Net 8,310 3,138 (6,407)
Interest Income 997 811 1,641
Interest Cost (45,117) (46,172) (46,941)
Interest Capitalized 22,197 20,481 27,307
---------- ---------- ----------
Income Before Taxes and Cumulative
Effect of Accounting Changes 124,485 66,763 103,073
Income Tax Expense (50,441) (23,839) (31,649)
---------- ---------- ----------
Income Before Cumulative
Effect of Accounting Changes 74,044 42,924 71,424
Cumulative Effect of Accounting Change for
Postretirement Benefits, net of $13,707
tax - - (26,607)
Cumulative Effect of Accounting Change for
Income Taxes 1,238 - -
---------- ---------- ----------
Net Income $ 75,282 $ 42,924 $ 44,817
========== ========== ==========
Earnings Per Share:
Primary:
Before Cumulative Effect of Accounting $ 1.82 $ 1.09 $ 1.88
Cumulative Effect of Accounting Changes 0.03 - (0.70)
---------- ---------- ----------
Net Income $ 1.85 $ 1.09 $ 1.18
========== ========== ==========
Fully Diluted:
Before Cumulative Effect of Accounting $ 1.82 $ 1.09 $ 1.80
Cumulative Effect of Accounting Changes 0.03 - (0.63)
---------- ---------- ----------
Net Income $ 1.85 $ 1.09 $ 1.17
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
35
<PAGE>
COMSAT CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1993, 1992, and 1991
(In thousands)
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash and Cash Equivalents $ 8,794 $ 3,857 $ 6,868
Receivables 143,347 135,558 109,359
Deferred Income Taxes 8,769 12,322 11,502
Other 17,572 13,477 8,419
----------- ----------- -----------
Total Current Assets 178,482 165,214 136,148
----------- ----------- -----------
Property and Equipment 1,308,167 1,244,947 1,171,594
Investments 19,493 14,838 31,256
Goodwill 30,778 22,733 -
Franchise Rights 41,084 43,049 -
Other Assets 74,511 52,062 30,548
----------- ----------- -----------
Total Assets $ 1,652,515 $ 1,542,843 $ 1,369,546
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current Maturities of Long-
Term Obligations $ 74,904 $ 1,506 $ 94,305
Commercial Paper 43,233 47,795 -
Accounts Payable and Accrued
Liabilities 97,329 77,803 52,818
Due to Related Parties 56,601 34,101 26,089
Accrued Interest 5,231 5,746 13,262
Income Taxes Payable 542 2,570 4,636
----------- ----------- -----------
Total Current Liabilities 277,840 169,521 191,110
----------- ----------- -----------
Long-Term Debt 402,402 486,383 382,764
Deferred Income Taxes 79,990 61,513 57,013
Deferred Investment Tax Credits 22,151 27,201 29,912
Accrued Postretirement Benefit Costs 50,014 47,053 40,346
Other Long-Term Liabilities 119,393 115,843 83,415
Commitments and Contingencies
(Notes 6,7 and 14) - - -
Minority Interest 21,373 14,197 -
Stockholders' Equity:
Common Stock, without par value,
100,000 shares authorized,
40,226 shares outstanding in 1993,
39,317 in 1992 and 38,092 in 1991 281,371 268,334 256,425
Preferred Stock 5,000 shares
authorized, no shares issued
or outstanding - - -
Retained Earnings 421,833 376,128 360,331
Treasury Stock, at cost,
1,348 shares in 1993,
2,103 in 1992 and 3,162
in 1991 (13,311) (20,433) (29,842)
Unearned Compensation,
Key Employee Stock Plan (8,240) (2,897) (1,928)
Minimum Pension Liability (2,301) - -
----------- ----------- -----------
Total Stockholders' Equity 679,352 621,132 584,986
----------- ----------- -----------
Total Liabilities and
Stockholders' Equity $ 1,652,515 $ 1,542,843 $ 1,369,546
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial
36
<PAGE>
COMSAT CORPORATION AND SUBSIDIARIES
STATEMENTS OF CHANGES IN CONSOLIDATED STOCKHOLDERS' EQUITY
For the Years Ended December 31, 1993, 1992, and 1991
(In thousands)
<TABLE>
<CAPTION> Unearned
Minimum Compensation,
Shares Shares Common Retained Treasury Pension Key Employee
Issued Outstanding Stock Earnings Stock Liability Stock Plan
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at
December 31, 1990 41,029 37,597 $ 251,459 $ 340,827 $ (32,386) $ 0 $ (1,836)
Net Income 44,817
Cash Dividends
($0.67 per share) (25,313)
Exercise of Stock Options
and Restricted Stock Units 136 477 1,279
Stock Options and Restricted
Stock Awarded 134 2,481 1,265 (3,746)
Amortization of Key
Employee Stock
Plan Expense 3,654
Shares Issued Under
Employee Stock
Purchase Plan 225 225 2,008
-------- -------- -------- -------- -------- ------- --------
Balance at
December 31, 1991 41,254 38,092 256,425 360,331 (29,842) 0 (1,928)
Net Income 42,924
Cash Dividends
($0.70 per share) (27,127)
Exercise of Stock Options
and Restricted Stock Units 991 5,067 8,789
Stock Options and Restricted
Stock Awarded 68 4,278 620 (4,898)
Amortization of Key
Employee Stock
Plan Expense 3,929
Shares Issued Under
Employee Stock
Purchase Plan 166 166 2,564
-------- -------- -------- -------- -------- ------- --------
Balance at
December 31, 1992 41,420 39,317 268,334 376,128 (20,433) 0 (2,897)
Net Income 75,282
Cash Dividends
($0.74 per share) (29,577)
Exercise of Stock Options
and Restricted Stock Units 407 1,018 3,810
Restricted Stock Awarded 348 5,322 3,312 (8,634)
Amortization of Key
Employee Stock
Plan Expense 3,291
Shares Issued Under
Employee Stock
Purchase Plan 154 154 3,153
Tax Benefit on Exercise
of Stock Options 3,544
Minimum Pension
Liability Adjustment (2,301)
Balance at -------- -------- -------- -------- ------- ------- --------
December 31, 1993 41,574 40,226 $281,371 $421,833 $(13,311) $(2,301) $ (8,240)
</TABLE>
The accompanying notes are an integral part of these financial statements.
37
<PAGE>
COMSAT CORPORATION AND SUBSIDIARIES
CONSOLIDATED CASH FLOW STATEMENTS
For the Years Ended December 31, 1993, 1992, and 1991
(In thousands)
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net Income $ 75,282 $ 42,924 $ 44,817
Adjustments for Noncash Expenses:
Depreciation and Amortization 138,359 127,337 110,260
Cumulative Effect of Accounting Changes, (1,238) - 26,607
Provision for Restructuring - 38,961 -
Changes in Operating Assets and Liabilities:
Receivables and Other Current Assets (10,918) (31,266) 9,887
Current Liabilities 37,552 (7,835) 13,805
Non-current Liabilities 26,196 44,508 34,545
Other (5,528) 2,485 15,862
---------- ---------- ----------
Net Cash Provided by Operating Activities 259,705 217,114 255,783
---------- ---------- ----------
Cash Flows from Investing Activities:
Purchase of Property and Equipment (230,241) (219,468) (257,976)
Decrease in INTELSAT Ownership 16,442 19,760 17,582
Decrease (Increase) in Inmarsat Ownership 4,771 886 (42)
Investments in Unconsolidated Businesses (13,737) (10,268) (21,335)
Purchase of Minority Shares of Subsidiaries (12,606) - -
Purchase of Subsidiaries, net of $11,655
cash acquired - (5,321) -
Other 508 (7,452) (4,489)
---------- ---------- ----------
Net Cash Used in Investing Activities (234,863) (221,863) (266,260)
---------- ---------- ----------
Cash Flows from Financing Activities:
Common Stock Issued 7,952 16,420 3,764
Proceeds from Issuance of Subsidiary's
Common Stock 11,582 - -
Cash Dividends Paid (29,577) (27,127) (25,313)
Proceeds from Issuance of Long-term Debt 32,745 201,454 75,000
Repayment of Long-term Debt (38,045) (232,439) (1,366)
Net Short-term Borrowings (Repayments) (4,562) 43,642 (36,247)
Other - (212) (850)
---------- ---------- ----------
Net Cash Provided by (Used for) Financing
Activities (19,905) 1,738 14,988
---------- ---------- ----------
Net Increase (Decrease) in Cash and
Cash Equivalents 4,937 (3,011) 4,511
Cash and Cash Equivalents, Beginning of Year 3,857 6,868 2,357
---------- ---------- ----------
Cash and Cash Equivalents, End of Year $ 8,794 $ 3,857 $ 6,868
========== ========== ==========
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest Paid, net of amount capitalized $ 25,332 $ 29,678 $ 19,145
Income Taxes Paid $ 22,074 $ 21,180 $ 14,206
Noncash Financing of Inmarsat Satellites $ 6,200 $ 12,480 $ 24,268
</TABLE>
The accompanying notes are an integral part of these financial statements.
38
<PAGE>
COMSAT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR EACH OF THE THREE YEARS IN THE PERIOD
ENDED DECEMBER 31, 1993
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies that have guided the
preparation of these financial statements are:
Principles of Consolidation
Accounts of COMSAT Corporation and its majority-owned
subsidiaries (the corporation) have been consolidated.
Significant intercompany transactions have been eliminated.
The corporation has consolidated its share of the accounts
of the International Telecommunications Satellite
Organization (INTELSAT), Inmarsat and the MARISAT Joint
Venture (MARISAT). The corporation's ownership interests in
INTELSAT and Inmarsat are based primarily on the
corporation's usage of these systems. As of December 31,
1993, the corporation owned 20.9% of INTELSAT, 23.0% of
Inmarsat and 86.3% of MARISAT.
The corporation's investments in the Denver Nuggets Limited
Partnership (the Nuggets) and On Command Video Corporation
(OCV) (see Note 4) were accounted for using the equity
method until the third quarter of 1992. Since July 1992,
the accounts of these investments have been consolidated in
the accompanying financial statements. The interest of
other shareholders in the net assets of OCV is shown as
Minority Interest in the accompanying balance sheet. The
minority interest share of the net income of OCV, which is
not significant, is included in Other Income (Expense).
Revenue Recognition
Revenue from satellite services is recognized over the
period during which the satellite services are provided.
Revenue from technical and other service contracts is
accounted for using the percentage-of-completion method.
Revenue from other services is recorded as services are
provided.
39
<PAGE>
Income Taxes and Investment Tax Credits
The corporation adopted Statement of Financial Accounting
Standards (SFAS) No. 109, "Accounting for Income Taxes,"
effective January 1, 1993. This accounting standard
requires the use of the asset and liability approach for
financial accounting and reporting for income taxes.
The provision for income taxes includes taxes currently
payable and those deferred because of differences between
the financial statement and tax bases of assets and
liabilities. The corporation has earned investment tax
credits on certain INTELSAT and Inmarsat satellite costs.
These tax credits have been deferred and are being
recognized as reductions to the tax provision over the
estimated service lives of the related assets.
Earnings Per Share
Primary earnings per share are computed using the average
number of shares outstanding during each period, adjusted
for outstanding stock options and restricted stock units.
Fully diluted earnings per share also assume the conversion
of the corporation's convertible debentures, which were
redeemed in March 1992 (see Note 5). The calculation of the
weighted average number of shares outstanding and all per
share amounts have been adjusted for a two-for-one stock
split on June 1, 1993 (see Note 8). The weighted average
number of shares for each year is:
<TABLE>
<CAPTION>
In thousands 1993 1992 1991
--------------------------------------------------
<S> <C> <C> <C>
Primary 40,708 39,347 38,069
Fully Diluted 40,770 40,763 42,767
</TABLE>
Goodwill
The balance sheet includes goodwill related primarily to the
acquisitions of OCV and the Nuggets. Nuggets goodwill is
amortized over 25 years and OCV goodwill is amortized over
15 years. Accumulated goodwill amortization was $2,343,000,
$875,000 and $105,000 at December 31, 1993, 1992 and 1991,
respectively. Net goodwill of $6,740,000 for the Nuggets
and OCV was included in the Investments line on the balance
sheet for 1991 because these investments were accounted for
using the equity method at that time.
Franchise Rights and Other Assets
Franchise rights were recorded in connection with the
consolidation of the Nuggets in 1992 and are being
amortized over 25 years. The amounts shown on the balance
sheets are net of accumulated amortization of $2,955,000 and
$990,000 at December 31, 1993 and 1992, respectively.
40
<PAGE>
The cash surrender values of life insurance policies (net of
loans) totalling $40,849,000, $33,350,000 and $23,419,000 at
December 31, 1993, 1992 and 1991, respectively, are included
in Other Assets. Other Income (Expense) on the income
statement includes the increases in the cash surrender
values of these policies. Additionally, the corporation
recorded income of $4,131,000 ($3,137,000 net of tax) from
the death benefit proceeds of certain policies in 1993.
Cash Flow Information
The corporation considers highly liquid investments with a
maturity of three months or less at the time of purchase to
be cash equivalents.
Statement Presentation
Certain prior period amounts have been reclassified to
conform with the current year's presentation.
New Accounting Pronouncements
SFAS No. 115, "Accounting for Certain Investments in Debt and
Equity Securities," was issued in May 1993 and must be
adopted by the corporation in 1994. This statement requires
that certain investments in debt or equity securities be
carried on the balance sheet at fair value. The effect of
this statement is not material to the corporation as of
December 31, 1993.
SFAS No. 112, "Employers' Accounting for Postemployment
Benefits," was issued in November 1992 and must be adopted
by the corporation in 1994. This statement requires that
the estimated cost of benefits provided to former or
inactive employees be accrued over the term of their active
service as employees. Although the corporation has not
completed its analysis, the effect of adopting this
statement is not expected to be material.
41
<PAGE>
2. RECEIVABLES
Receivables at each year-end are composed of:
<TABLE>
<CAPTION>
In thousands 1993 1992 1991
-----------------------------------------------------------------
<S> <C> <C> <C>
Billed Customer Receivables $125,027 $118,336 $85,535
Customer Receivables -
Related Parties 3,846 4,736 2,312
Unbilled Customer Receivables 23,204 20,063 28,644
Other 3,304 2,612 1,611
Total 155,381 145,747 118,102
Less Allowance for Doubtful
Accounts (12,034) (10,189) (8,743)
Total $143,347 $135,558 $109,359
======== ======== ========
</TABLE>
Unbilled receivables consist principally of revenues
recorded on long-term contracts, which are billable and
collectible within the next year.
Related party customer receivables are primarily amounts due
from INTELSAT and Inmarsat.
3. PROPERTY AND EQUIPMENT
Property and equipment include the corporation's shares of
INTELSAT, Inmarsat and MARISAT property and equipment.
<TABLE>
<CAPTION>
In thousands 1993 1992 1991
-----------------------------------------------------------------
<S> <C> <C> <C>
Property and Equipment
at Cost:
Satellites $1,182,924 $1,116,953 $1,004,344
Furniture, Fixtures
and Equipment 510,387 476,139 407,789
Buildings and Improvements 107,040 80,526 86,879
Land 5,055 4,033 4,108
---------- ---------- ----------
Total 1,805,406 1,677,651 1,503,120
Less Accumulated
Depreciation (836,474) (766,279) (647,013)
Net Property and Equipment
In Service 968,932 911,372 856,107
Property and Equipment Under
Construction:
INTELSAT Satellites 222,223 218,455 221,729
Inmarsat Satellites 66,962 47,284 49,869
Other 50,050 67,836 43,889
---------- ---------- ----------
Total $1,308,167 $1,244,947 $1,171,594
========== ========== ==========
</TABLE>
42
<PAGE>
Depreciation is calculated using the straight-line method
over the estimated service life of each asset. The service
life for satellites and furniture, fixtures and equipment
is 3 to 15 years. The service life for buildings and
improvements is 6 to 40 years.
Costs of satellites which are lost at launch or that fail in
orbit are carried, net of any insurance proceeds, in the
property accounts. The remaining net amounts are
depreciated over the estimated service life of a satellite
of the same series.
4. ACQUISITIONS AND INVESTMENTS
Denver Nuggets Limited Partnership
In November 1989, the corporation acquired a 62.5% interest
in a limited partnership which acquired the Denver Nuggets,
a franchise of the National Basketball Association. In
1991, the corporation acquired an additional interest,
bringing its ownership to 65.3% as of December 31, 1991. In
1992, the corporation acquired the remaining interests in
the partnership. The total cost of this investment was
$71,500,000 including liabilities assumed of $33,900,000.
The partnership's assets, liabilities, revenues and expenses
have been consolidated with the corporation's financial
statements since July 1, 1992. Prior to this date, the
corporation was the majority owner in the partnership, but
was not its managing general partner. Accordingly, the
financial results of the partnership in prior periods were
accounted for using the equity method.
The corporation's shares of the partnership's losses
accounted for under the equity method were $6,603,000 in
1991 and $2,857,000 for the first six months of 1992. Had
the financial results been consolidated throughout 1992 or
1991, the effect on the corporation's financial statements
would not have been material.
On Command Video
In 1991, the corporation acquired a 47% interest in On
Command Video Corporation (OCV), a California-based company
that developed and markets a proprietary video entertainment
system to hotels. The corporation purchased additional
shares of OCV stock throughout 1992 and 1993. OCV's
financial statements have been consolidated since the third
quarter of 1992, when the corporation's ownership increased
to 50.4%. The corporation's ownership share was 65.7% at
December 31, 1992 and 73.5% at December 31, 1993. Had the
financial results been consolidated throughout 1992 or 1991,
the effect on the corporation's financial statements would
not have been material. The total cost of the corporation's
investment in OCV was $77,282,000 as of December 31, 1993.
43
<PAGE>
Rock Spring II Limited Partnership
The corporation entered into a limited partnership to
build and lease a new headquarters facility. The
corporation holds a 50% interest in the partnership,
primarily as a limited partner. The managing general
partner, a regional real estate investment company, owns the
remaining 50% interest in the partnership. An affiliate of
the managing general partner owns the building site and has
leased this site to the partnership.
The corporation relocated its headquarters operations to the
new building during the second quarter of 1993. The
corporation has entered into a 15-year lease with the
partnership for the building starting April 1993 (see Note 6).
The partnership borrowed $27,000,000 in the form of a 26-year
mortgage at a fixed interest rate of 9.45% to cover
construction costs. As of December 31, 1993, the
corporation has guaranteed repayment of this loan. The
corporation's guarantee will be reduced to $2,700,000 after
satisfaction of certain contractual requirements which are
expected to be completed in 1994. Subsequently, the
corporation's guarantee will be reduced as the principal
balance is paid down and completely eliminated once the
outstanding loan balance is less than $24,300,000.
5. DEBT
The corporation, as regulated by the Federal Communications
Commission (FCC), is allowed to undertake long-term
borrowings of up to 45% of its total capital (long-term debt
plus equity) and $200,000,000 in short-term borrowings.
Commercial Paper
The corporation has a $125,000,000 commercial paper program.
Throughout 1993, 1992 and 1991, the corporation issued
short-term commercial paper with repayment terms of 90 days
or less. The corporation had $43,233,000 and $47,795,000 in
borrowings outstanding at December 31, 1993 and December 31,
1992, respectively. There were no short-term borrowings
outstanding at December 31, 1991.
Credit Facilities
The corporation has a $200,000,000 revolving credit
agreement which will expire in December 1998. There have
been no borrowings under this agreement.
44
<PAGE>
Long-Term Debt
Long-term debt at each year-end consists of:
<TABLE>
<CAPTION>
In thousands 1993 1992 1991
-----------------------------------------------------------------
<S> <C> <C> <C>
8.125% Notes Due 2004 $160,000 $160,000 $ -
8.95% Notes Due 2001 75,000 75,000 75,000
7.375% INTELSAT Eurobonds
Due 2002 41,793 43,685 -
6.75% INTELSAT Eurobonds
Due 2000 31,344 - -
9.55% Notes Due 1994 - 100,000 100,000
7.75% Debentures - - 110,000
Inmarsat Financing Obligations 94,959 102,346 91,193
Other, net of discounts on
notes payable (694) 5,352 6,571
-------- -------- --------
Total $402,402 $486,383 $382,764
======== ======== ========
</TABLE>
The corporation redeemed its 11.625% debentures
($92,935,000) in March 1992, using cash on hand and
commercial paper proceeds. In April 1992, the corporation
issued $160,000,000 of 8.125% debentures due April 1, 2004.
The corporation used $110,000,000 of the proceeds to redeem
its 7.75% convertible subordinated debentures in April 1992.
The balance of the proceeds was used to repay outstanding
commercial paper borrowings.
In August 1992, INTELSAT issued $200,000,000 of 7.375%
Eurobonds. Interest is payable annually in August, and the
bonds are due August 6, 2002. The corporation received its
share of the proceeds and recorded long-term debt totalling
$43,685,000.
In January 1993, INTELSAT issued $150,000,000 of 6.75%
Eurobonds. Interest is payable annually in January, and the
notes are due January 19, 2000. The corporation received
its share of the proceeds and recorded long-term debt. The
corporation's share of this debt at December 31, 1993 was
$31,344,000. The corporation prepaid $30,000,000 of its
9.55% notes with the proceeds. The remaining $70,000,000
balance of the 9.55% notes is due in April 1994 and has
been classified as a current liability on the December 31,
1993 balance sheet.
The principal amount of debt (excluding the Inmarsat lease
financing obligation) maturing over the next five years is
$71,204,000 in 1994, $817,000 in 1995, $208,000 in 1996 and
none in 1997 or 1998.
Inmarsat Lease Financing Obligations
Inmarsat borrowed 140,400,000 pounds sterling under a capital
lease agreement to finance the construction of second-
generation Inmarsat satellites. Inmarsat also entered into
another capital lease arrangement to finance the
construction costs of its third-generation satellites. As
of December 31, 1993, 65,500,000 pounds sterling of the
197,000,000 pounds sterling available for this purpose has been
borrowed. The corporation's share of these lease
obligations is included in long-term debt. Inmarsat has
hedged its obligations through various foreign exchange
45
<PAGE>
transactions to minimize the effect of fluctuating interest
and exchange rates (see Note 14).
The corporation's share of the payments under these lease
obligations for each of the next five years from 1994
through 1998 is $9,166,000, $11,486,000, $12,490,000,
$13,637,000 and $14,895,000 and $87,451,000 thereafter.
These payments include interest totalling $50,466,000 and
current maturities of $3,700,000.
6. COMMITMENTS AND CONTINGENCIES
Property and Equipment
As of December 31, 1993, the corporation had commitments to
acquire property and equipment totalling $379,649,000. Of
this total, $353,371,000 is payable over the next three
years. These commitments are related principally to the
purchase of INTELSAT and Inmarsat satellites.
Employment and Consulting Agreements
The Nuggets have employment and consulting agreements with
certain officers, coaches and players. Virtually all of
these agreements provide for guaranteed payments. Other
contracts provide for payments contingent upon the
fulfillment of certain terms and conditions. Amounts
required to be paid under such agreements total $17,682,000
in 1994, $17,906,000 in 1995, $18,243,000 in 1996,
$14,158,000 in 1997, $10,484,000 in 1998 and $4,536,000
thereafter.
Leases
As discussed in Note 4, the corporation has a 15-year lease
which started April 1993 on its new headquarters building in
Bethesda, Maryland, and the corporation has a ten-year lease
ending in 1996 on its former headquarters building in
Washington, D.C. The corporation also has leases of other
property and equipment. Annual rent expense was $6,600,000
in 1993, $3,000,000 in 1992 and $2,900,000 in 1991. These
amounts are net of the $3,921,000 annual amortization of the
deferred gain from the sale and leaseback of the Washington,
D.C. building in 1986. Annual rental income from
noncancelable subleases totals approximately $3,800,000.
The corporation's payments under all operating leases for
1994 through 1998 are $12,747,000, $12,418,000, $11,877,000,
$5,186,000, $5,259,000 and thereafter, $45,697,000.
46
<PAGE>
Environmental Issue
The corporation is engaged in a program to monitor a toxic
solvent spill of limited scope that occurred in 1986 at the
site of its former manufacturing subsidiary in California.
The corporation believes that it has complied with
remediation requirements. Management believes that the
corporation has sufficient accruals to cover the monitoring
costs.
7. REGULATORY ENVIRONMENT AND LITIGATION
Regulatory Environment
Under the Communications Act of 1934 and the Satellite Act,
the corporation is subject to regulation by the FCC with
respect to communications services provided through the
INTELSAT and Inmarsat systems and the rates charged for
those services.
In 1993, the FCC initiated an audit of the corporation's
role as the United States signatory to Inmarsat and as a
provider of international mobile satellite services. In the
opinion of management, the ultimate outcome of the audit will
not have a material effect on the accompanying financial
statements.
Until 1985, the corporation was, with minor exceptions, the
sole United States provider of international satellite
communications services using the INTELSAT system. Since
then, the FCC has authorized several international satellite
systems separate from INTELSAT. These U.S. separate systems
currently compete against the corporation for voice, video
and data traffic. In 1993, the FCC substantially eliminated
prior restrictions on the ability of separate systems to offer
public switched telephony services, thereby potentially
increasing competition to the corporation in the voice
market. The United States government has established a goal
to eliminate all restrictions on competitive systems by
1997.
Litigation
In 1989, Pan American Satellite (PanAmSat) filed an
antitrust suit against the corporation alleging interference
with PanAmSat's efforts to compete in the international
satellite communications market and seeking trebled damages
of approximately $1.5 billion. In 1991, a United States Court
of Appeals ruled that the corporation is immune from
antitrust suits in its role as a signatory to INTELSAT. In
February 1992, the United States Supreme Court denied
PanAmSat's request for a review of the lower court's
decision. An amended complaint was filed alleging that the
corporation violated antitrust laws in its business
activities purportedly outside of its role as a signatory to
INTELSAT. In March 1993, a Federal district court denied
the corporation's motion to dismiss the amended complaint
and allowed PanAmSat to proceed with discovery. A U.S.
magistrate has extended the discovery process from November
1993 to June 1994. In February 1994, PanAmSat submitted
47
<PAGE>
a report estimating its alleged damages (before trebling)
at a 1994 present value of $227,436,000. Also in February
1994, PanAmSat filed a motion with the district court for
acceptance of a third amended and supplemental complaint
that would add 15 new defendants to the suit, primarily as
alleged co-conspirators with the corporation. Generally,
the 15 proposed defendants are international
telecommunications companies or telecommunications entities
owned by foreign governments. The corporation has opposed
the motion which is pending before the court. In the
opinion of management, the complaint against the corporation
is without merit, and the ultimate disposition of this
matter will not have a material effect on the corporation's
financial statements.
The corporation is defending an intellectual property
infringement suit brought by Spectradyne, Inc. against its
COMSAT Video Enterprises, Inc. and On Command Video
Corporation subsidiaries. The initial patent claims were
dismissed. However, Spectradyne amended its complaint to
substitute new patent infringement claims along with claims
that the corporation's subsidiaries induced unnamed third
parties to infringe a copyrighted software interface.
Subsequently, Spectradyne further amended its complaint by
substituting direct copyright infringement claims for the
inducement to infringe claims. Spectradyne is seeking
damages in an unspecified amount and injunctive relief. The
corporation believes that these claims are without merit and
that the ultimate disposition of this matter will not have a
material effect on the corporation's financial statements.
8. STOCKHOLDERS' EQUITY
Effective June 1, 1993, the corporation's Articles of
Incorporation were amended to increase the number of
authorized shares of the corporation's common stock from
40,000,000 shares to 100,000,000 shares and to split each
share of common stock outstanding on June 1, 1993 into two
shares of common stock. Earnings per share and share
amounts for all prior periods have been restated to reflect
this stock split. The corporation's Articles of
Incorporation were also amended to increase the number of
authorized shares of the corporation's preferred stock from
1,000 shares to 5,000,000 shares and to permit preferred
stock to be convertible into any other class of stock. No
preferred stock is currently outstanding.
9. INCENTIVE STOCK PLANS
The corporation has stock plans for officers, directors and
employees. These plans provide for the issuance of
restricted stock awards, stock appreciation rights,
restricted stock units and stock options. Under the
current plans, grants for up to 5,550,000 shares may be
made. As of December 31, 1993, 5,589,000 shares of the
corporation's authorized common stock were reserved for
these plans. As of December 31, 1993, no stock appreciation
rights were outstanding.
48
<PAGE>
Restricted Stock Awards
Restricted stock awards are shares of stock that are subject
to restrictions on their sale or transfer. These
restrictions are lifted over six years. During 1993, 1992
and 1991, respectively, 348,000, 68,000 and 134,000
restricted stock awards were granted, net of awards
forfeited.
Restricted Stock Units
Restricted stock units entitle the holder to receive a
combination of stock and cash equal to the market price of
common stock for each unit, when vested. These units vest
over three years. During 1993, 1992 and 1991, respectively,
49,000, 42,000 and 56,000 restricted stock units were
granted. At December 31, 1993, 124,000 partially vested
restricted stock units were outstanding.
Stock Options
Under the current plans, the exercise price for stock
options may not be less than 50% of the fair market value of
the stock when granted. Options vest over three years and
expire after 15 years. Stock option activity was as
follows:
<TABLE>
<CAPTION>
In thousands, Number of Option Price
except per share amounts Shares Per Share Total
-----------------------------------------------------------------
<S> <C> <C> <C>
Balance at January 1, 1991 2,035 $ 8.89-19.22 $28,789
Options Granted 310 5.97- 8.70 1,872
Options Exercised (140) 8.89-16.97 (1,830)
Options Cancelled (187) 5.97-18.42 (2,630)
----- ------------ -------
Balance at December 31, 1991 2,018 5.97-19.22 26,201
Options Granted 388 9.72-10.66 3,819
Options Exercised (1,021) 5.97-19.22 (14,458)
Options Cancelled (22) $ 5.97-13.94 (178)
----- ------------ -------
Balance at December 31, 1992 1,363 5.97-18.42 15,384
Options Granted 1,180 25.41-30.31 31,110
Options Exercised (408) 5.97-18.42 (4,819)
Options Cancelled (18) 5.97-27.03 (230)
----- ------------ -------
Balance at December 31, 1993 2,117 5.97-30.31 $41,445
Options Exercisable at
December 31, 1993 629 $ 5.97-18.22 $7,757
</TABLE>
The corporation is recognizing an expense over three years
equal to the exercise price of the 1991 and 1992 options,
since they were granted at 50% of the market price. The
exercise price for options awarded in 1993 is equal to the
fair market value on the grant date.
49
<PAGE>
Employee Stock Purchase Plan
Employees may purchase stock at a discount through the
corporation's Employee Stock Purchase Plan. The purchase
price of the shares is the lower of 85% of the fair market
value of the stock on the offering date, or 85% of the fair
market value of the stock on the last business day of each
month throughout the following year. The offering date for
1994 purchases was November 19, 1993, when 85% of the fair
market value was $25.87.
A total of 2,426,000 shares of the corporation's unissued
common stock has been reserved for this plan.
10. PENSION AND OTHER BENEFIT PLANS
The corporation has a non-contributory, defined benefit
pension plan which covers substantially all of its
employees. Pension benefits are based on years of service
and compensation prior to retirement. The corporation's
funding policy is to make the contributions when required by
law.
The net pension expense for each year includes the following
components:
<TABLE>
<CAPTION>
In thousands 1993 1992 1991
--------------------------------------------------------------
<S> <C> <C> <C>
Service Cost for Benefits
Earned During the Year $ 3,087 $ 3,583 $ 3,249
Interest Cost on Projected
Benefit Obligation 7,044 6,556 5,723
Actual Return on Pension
Plan Assets (Gain) (13,010) (5,197) (16,534)
Net Amortization and
Deferral 5,427 (2,697) 9,210
------- ------- -------
Net Pension Expense $ 2,548 $ 2,245 $ 1,648
======= ======= =======
</TABLE>
In September 1992, the corporation offered an early
retirement program to certain employees in connection with
its restructuring of certain operations (see Note 12). This
program provided enhanced retirement benefits and an option
for a lump sum payment of all benefits. The additional
pension expense for this program was $6,582,000 and is
included in the provision for restructuring in the
accompanying income statement.
The following table shows the pension plan's
obligations and assets as well as the amount recognized
in the corporation's balance sheets at each year end.
50
<PAGE>
<TABLE>
<CAPTION>
In thousands 1993 1992 1991
-----------------------------------------------------------------
<S> <C> <C> <C>
Actuarial Present Value of
Benefit Obligations:
Accumulated Benefit Obligation,
including vested benefits of
$88,271 in 1993, $80,774 in
1992 and $60,961 in 1991 $ 90,981 $83,026 $63,937
======== ======= =======
Projected Benefit Obligation
for Service Rendered to Date $109,543 $99,198 $80,268
Pension Plan Assets at Fair
Value, primarily equity
securities, corporate and
U.S. Government bonds
and short-term investments 99,070 94,877 92,051
-------- ------- -------
Pension Plan Assets in Excess of
(Less than) Projected Benefit
Obligation (10,473) (4,321) 11,783
Unrecognized Net Loss (Gain) 12,116 3,248 (2,185)
Unrecognized Transition Asset at
January 1, 1986 being amortized
over 11 years (6,026) (7,884) (9,200)
--------- ------- -------
Net Pension Asset (Liability) $ (4,383) $ (8,957) $ 398
========= ======== ========
Assumed Discount Rate 7% 8% 8%
Assumed Rate of Compensation
Increase 5% 6% 6%
Expected Rate of Return on
Pension Plan Assets 9% 9% 9%
</TABLE>
The corporation made a $4,100,000 cash contribution to the
plan in 1993. No contributions were required in 1992
and 1991.
Supplemental Executive Retirement Plan
The corporation has an unfunded supplemental pension plan
for executives. The expense for this plan was $2,058,000,
$1,917,000 and $4,243,000 for 1993, 1992 and 1991,
respectively.
As of December 31, 1993, the corporation recorded an
additional minimum liability of $5,740,000 for this plan.
This amount is the excess of the accumulated benefit
obligation over the previously recorded plan liability. The
corporation also recorded an intangible asset of $2,128,000
which represents the unrecognized transition obligation and
a charge of stockholders equity of $2,301,000, net of tax.
The corporation's accrued liabilities for this plan were
$15,679,000, $10,661,000 and $9,814,000 at December 31,
1993, 1992 and 1991, respectively. As of December 31, 1993,
the accumulated benefit obligation was approximately
$15,679,000, and the projected benefit obligation was
approximately $16,449,000, assuming a discount rate of 7%
and future salary increases of 5%.
51
<PAGE>
401(k) Plan
The corporation has a 401(k) plan for qualifying employees.
A portion of employee contributions is matched by the
corporation. The corporation's matching contributions for
the years ended December 31, 1993, 1992 and 1991 were
$3,237,000, $2,860,000 and $2,585,000, respectively.
Postretirement Benefits
The corporation provides health and life insurance benefits
to employees and retirees. Effective January 1, 1991, the
corporation adopted the provisions of SFAS No. 106, which
requires that the expected cost of these benefits be
recognized during the years in which employees render
service. Prior to 1991, the cost of such benefits was
expensed as paid by the corporation. The corporation
recognized the full obligation attributable to the cost of
prior years' service in 1991. The cumulative effect to
January 1, 1991 was $40,314,000, less taxes of $13,707,000,
and is shown separately in the 1991 income statement.
The net postretirement benefit expense for each year
included the following components:
<TABLE>
<CAPTION>
In thousands 1993 1992 1991
----------------------------------------------------------------
<S> <C> <C> <C>
Service Cost for Benefits
Earned During the Year $1,898 $2,157 $1,433
Interest Cost on
Accumulated Postretirement
Benefit Obligation 3,518 3,762 2,947
Net Amortization and Deferral (321) 232 -
------ ------ ------
Net Postretirement Benefit
Expense $5,095 $6,151 $4,380
====== ====== ======
</TABLE>
The early retirement program discussed earlier in this note
resulted in an additional postretirement benefit expense of
$2,107,000 in 1992.
The following table shows the plan's obligations as well as
the liability recognized in the corporation's balance sheet
at each year end.
52
<PAGE>
<TABLE>
<CAPTION>
In thousands 1993 1992 1991
--------------------------------------------------------------
<S> <C> <C> <C>
Accumulated Postretirement
Benefit Obligation:
Retirees $25,258 $22,665 $21,245
Fully Eligible Active
Participants 3,826 13,106 3,829
Other Active Participants 14,846 18,368 15,558
------- ------- -------
43,930 54,139 40,632
Unrecognized Gain from Plan
Changes 12,873 - -
Unrecognized Net Loss (6,789) (7,086) (286)
Net Postretirement Benefit
Liability $50,014 $47,053 $40,346
Assumed Discount Rate 7% 8% 8%
Assumed Rate of Compensation
Increase 5% 6% 6%
</TABLE>
In 1993, the corporation made several modifications to its
postretirement benefits program including higher participant
premium payments, higher deductibles and out-of-pocket
maximums and reduced benefits for certain participants.
Additionally, the corporation implemented a managed health
care program to better control costs. These changes, which
are effective January 1, 1994, resulted in a reduction in
the accumulated postretirement benefit obligation and an
unrecognized gain of $12,873,000 as of December 31, 1993.
An 11% increase in health care costs was assumed for 1993
with the rate decreasing 0.5% each year to an ultimate rate
of 6%. Increasing the assumed trend rate by 1% each year
would have increased the accumulated postretirement benefit
obligation as of December 31, 1993 by $6,115,000 and the
benefit expense for 1993 by $900,000.
11. INCOME TAXES
The corporation adopted SFAS No. 109, "Accounting for Income
Taxes," effective January 1, 1993. This accounting
statement changed the method for the recognition and
measurement of deferred tax assets and liabilities. The
cumulative effect of adopting SFAS No. 109 on the
corporation's financial statements was to increase income by
$1,238,000 ($.03 per share) and was recorded in the first
quarter of 1993. Prior year financial statements have not
been restated.
The components of income tax expense for each year are:
53
<PAGE>
<TABLE>
<CAPTION>
In thousands 1993 1992 1991
-------------------------------------------------------------
<S> <C> <C> <C>
Federal:
Current $26,793 $21,028 $13,863
Deferred 21,221 3,680 6,154
Investment Tax Credits (3,627) (3,943) (3,968)
State and Local 6,054 3,074 1,893
------- ------- -------
Total $50,441 $23,839 $17,942
</TABLE>
The difference between tax expense computed at the statutory
Federal tax rate and the corporation's effective tax rate
is:
<TABLE>
<CAPTION>
In thousands 1993 1992 1991
-------------------------------------------------------------
<S> <C> <C> <C>
Federal Income Taxes
Computed at the Statutory
Rate $43,570 $22,699 $21,338
Reduction Under Gross
Change Tax Method - (2,694) (3,964)
Investment Tax Credits (3,627) (3,943) (3,968)
Dispositions of Assets - 2,913 1,925
State Income Taxes -
net of Federal income
tax benefit 3,935 2,126 1,348
Rate Increase on Prior
Year Deferred Taxes 2,977 - -
Goodwill 531 589 225
Other 3,055 2,149 1,038
------- ------- -------
Income Tax Expense $50,441 $23,839 $17,942
======= ======= =======
</TABLE>
SFAS No. 109 requires that deferred tax liabilities and
assets be adjusted for the effect of a change in tax laws or
rates. Accordingly, the corporation recorded a charge to
income tax expense of $2,977,000 in the third quarter of
1993 to adjust prior years' deferred tax assets and
liabilities for an increase in the Federal income tax rate
from 34% to 35%.
54
<PAGE>
The net current and net non-current components of deferred
tax accounts as shown on the balance sheet at December 31,
1993 are:
<TABLE>
<CAPTION>
In thousands 1993
-----------------------------------------------------
<S> <C>
Current Deferred Tax Asset $ 8,769
Non-current Deferred Tax Liability (79,990)
--------
Net Liability $(71,221)
========
</TABLE>
The deferred tax assets and liabilities at December 31, 1993
are:
<TABLE>
<CAPTION>
In thousands 1993
-----------------------------------------------------
<S> <C>
Assets
Postretirement Benefits $ 20,902
Accrued Expenses 31,937
ITC Carryforward 13,115
Alternative Minimum Tax Credit 32,368
Contract Revenue 7,135
Other 2,381
--------
Total Deferred Tax Assets 107,838
--------
Liabilities
Property and Equipment (177,928)
Other (1,131)
--------
Total Deferred Tax Liabilities (179,059)
--------
Net Liability $ (71,221)
</TABLE>
The corporation s investment tax credit carryforwards expire
in years 2002 through 2007.
The Internal Revenue Service (IRS) is currently examining
Federal income tax returns for 1990 and 1991 and has
completed examinations of the Federal income tax returns of
the corporation through 1989. The corporation has also
amended its returns and filed claims for refunds for 1979
through 1987. The IRS has denied these claims. The
corporation is contesting this denial by the IRS and other
adjustments proposed by the IRS on the 1980 through 1987
income tax returns. In the opinion of the corporation,
adequate provision has been made for income taxes for all
periods through 1993.
12. PROVISION FOR RESTRUCTURING
In September 1992, the corporation recorded a $38,961,000
charge for restructuring costs. At that time, the
corporation announced its plans to realign business
activities, downsize certain functions, and reposition
COMSAT Video Enterprises, Inc. to capitalize on the growing
market for on-demand entertainment. The restructuring costs
relate to headcount reductions throughout the corporation and
the elimination of the former COMSAT Systems Division and the
55
<PAGE>
consolidation of its operations with those of COMSAT
Laboratories into a new division, COMSAT Technology
Services, as well as the transfer of television distribution
services from COMSAT Systems Division to CVE. This charge
consists of $12,644,000 for early retirement and reduction
in force costs related to the reorganization, and
$26,317,000 for equipment, property and other items.
13. BUSINESS SEGMENT INFORMATION
The corporation reports operating results and financial data
in four business segments: International Communications,
Mobile Communications, Video Enterprises and Technology
Services. The International Communications segment
consists of activities undertaken by the corporation in its
COMSAT World Systems business, including INTELSAT services.
This segment also includes the activities of the
corporation's international ventures, which are accounted
for as consolidated subsidiaries. The Mobile Communications
segment consists of activities undertaken by the corporation
in its COMSAT Mobile Communications (CMC) business,
including Inmarsat services. The Video Enterprises segment
includes entertainment services provided to the hospitality
industry as well as video distribution services to
television networks. The Technology Services segment
includes voice and data communications networks and
products, systems integration services, and applied research
and technology services. The financial results of the
Denver Nuggets Limited Partnership are included in Other
Corporate activities.
The corporation has redefined its reporting segments. Prior
to 1993, CMC was included in the International
Communications segment. In the first quarter of 1993, the
operations of the corporation's earth stations in
Connecticut and California were transferred from the
Technology Services segment to the Mobile Communications
segment. As discussed in Note 12, business activities
within the Technology Services and Video Enterprises
segments were realigned in 1992. The financial results
presented below for prior periods have been restated
consistent with these changes.
56
<PAGE>
<TABLE>
<CAPTION>
In thousands 1993 1992 1991
-----------------------------------------------------------------
<S> <C> <C> <C>
Revenues:
International Communications $ 249,935 $ 253,308 $ 245,390
Mobile Communications 190,040 158,031 127,767
Video Enterprises 95,805 78,393 82,163
Technology Services (1) 88,266 81,021 93,062
Eliminations and Other Corp 16,344 (7,138) (25,532)
---------- ---------- ----------
Total $ 640,390 $ 563,615 $ 522,850
========== ========== ==========
Operating Income (Loss) (2):
International Communications $ 88,956 $ 89,164 $ 92,059
Mobile Communications 48,096 33,936 39,992
Video Enterprises 10,475 (8,191) 2,969
Technology Services 735 (13,301) 199
Other Corporate (10,164) (13,103) (7,746)
---------- ---------- ----------
Total $ 138,098 $ 88,505 $ 127,473
========== ========== ==========
Identifiable Assets as of
December 31:
International Communications $ 826,574 $ 803,113 $ 765,384
Mobile Communications 403,615 396,734 320,248
Video Enterprises (3) 186,731 121,504 120,338
Technology Services 45,915 49,074 61,758
Corporate and Other Assets 189,680 172,418 101,818
---------- ---------- ----------
Total $1,652,515 $1,542,843 $1,369,546
========== ========== ==========
Property and Equipment Additions:
International Communications $ 116,652 $ 120,833 $ 173,859
Mobile Communications 50,586 83,099 90,085
Video Enterprises 64,093 17,700 8,814
Technology Services 3,157 9,635 7,111
Corporate and Other Assets 4,067 1,404 2,332
---------- ---------- ----------
Total $ 238,555 $ 232,671 $ 282,201
========== ========== ==========
Depreciation and Amortization:
International Communications $ 73,636 $ 70,967 $ 64,203
Mobile Communications 32,772 27,304 17,405
Video Enterprises 21,905 17,578 16,684
Technology Services 4,164 7,108 9,225
Corporate and Other Assets 5,882 4,380 2,743
---------- ---------- ----------
Total $ 138,359 $ 127,337 $ 110,260
========== ========== ==========
</TABLE>
(1) Technology Services segment revenues include intersegment
sales totalling $10,132,000 in 1993, $19,500,000 in 1992
and $29,780,000 in 1991.
(2) Operating results for 1992 are net of the $38,961,000
provision for restructuring (see Note 12). The amounts
recorded in each segment were International Communications -
$6,955,000; Mobile Communications - $3,332,000; Video
Enterprises - $14,146,000; Technology Services -
$10,240,000; and Other Corporate - $4,288,000.
(3) The identifiable assets of the Video Enterprises segment
include the corporation's equity investment in On Command
Video Corporation totalling $13,655,000 at
December 31, 1991.
57
<PAGE>
Related Party Transactions and Significant Customers
The corporation provides support services to INTELSAT and
support services and satellite capacity to Inmarsat. The
revenues from these services were $23,190,000 in 1993,
$21,477,000 in 1992 and $24,000,000 in 1991. These revenues
were recorded primarily in the International Communications
and Technology Services segments.
A significant amount of the corporation's revenues were
received from AT&T. These revenues totalled $117,036,000 in
1993, $134,293,000 in 1992 and $148,525,000 in 1991.
Substantially all of these revenues were generated by the
International Communications and Mobile Communications
segments.
14. FINANCIAL INSTRUMENTS AND OFF BALANCE SHEET RISKS
SFAS No. 107, which became effective in 1992, requires
disclosures about the fair value of financial instruments.
In these disclosures, fair values are estimates and do not
necessarily represent the amounts that would be received or
paid in an actual sale or settlement of the financial
instruments.
At December 31, 1993, the corporation was contingently
liable to banks for $8,533,000 for outstanding letters of
credit securing performance of certain contracts. As
discussed in Note 4, the corporation has guaranteed
repayment of the construction loan related to its
headquarters building. The corporation has other financial
guarantees totalling approximately $3,000,000 as of December
31, 1993. The estimated fair value of these instruments is
not significant.
Inmarsat has entered into foreign currency contracts
designed to minimize exposure to exchange rate fluctuations
on foreign currency transactions. At December 31, 1993,
Inmarsat had several contracts maturing in 1994 to purchase
12,500,000 pounds sterling for a total of $18,392,000. The
corporation's share of the estimated fair value of these
contracts, as determined by a bank, is an unrealized gain of
approximately $13,000 at December 31, 1993.
Inmarsat has entered into interest rate and foreign currency
swap arrangements to minimize the exposure to interest rate
and foreign currency exchange fluctuations related to its
satellite financing obligations. Inmarsat borrowed and is
obligated to repay pounds sterling. The pounds sterling
borrowed were swapped for U.S. dollars with an agreement to
exchange the dollars for pounds sterling in order to meet
the future lease payments. Inmarsat pays interest on the
dollars at an average fixed rate of 9.0% and it receives
variable interest on the sterling amounts based on short-
term rates. The differential to be paid or received
is accrued as interest rates change and is recognized over
the life of the agreements. The currency swap arrangements
have been designated as hedges, and any gains or losses are
included in the measurement of the debt. The effect of
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<PAGE>
these swaps is to change the sterling lease obligation into
fixed interest rate dollar debt. As of December 31, 1993,
Inmarsat had $352,327,000 of swaps to be exchanged for
211,400,000 pounds sterling at various dates through 2005.
Inmarsat is exposed to loss if one or more of the
counterparties defaults. However, Inmarsat does not
anticipate non-performance by the counterparties as they are
major financial institutions. The corporation's share of
the estimated fair value of these swaps is an unrealized
loss of $18,500,000 at December 31, 1993. The fair value
was estimated by computing the present value of the dollar
obligations using current rates available for issuance of
debt with similar terms, and the current value of the
sterling at year-end exchange rates.
The fair value of long-term debt (excluding capitalized
leases) was estimated by computing present values of the
related cash flows using risk adjustments to Treasury rates
obtained from investment bankers.
<TABLE>
<CAPTION>
December 31, 1993
------------------------
In thousands Book Amount Fair Value
------------------------------------------------------
<S> <C> <C>
8.125% Notes $160,000 $178,061
8.95% Notes 75,000 86,534
7.375% INTELSAT Eurobonds 41,793 45,046
6.75% INTELSAT Eurobonds 31,344 32,906
</TABLE>
The fair values of the corporation's other financial
instruments are approximately equal to their carrying
values.
15. SUBSEQUENT EVENTS
Merger Agreement
In January 1994, the corporation entered
into a definitive merger agreement for the acquisition of
Radiation Systems, Inc. (RSi), based in Sterling, Virginia.
RSi designs, manufactures and integrates satellite earth
stations, advanced antennas and other turnkey systems for
telecommunications, radar, air traffic control and military
uses. Following the merger, the corporation expects to
combine its existing systems integration business, COMSAT
Technology Services, with RSi.
Under the merger agreement, RSi will be merged into a
wholly owned subsidiary of the corporation, and each share
of RSi's common stock will be exchanged for $18.25 in the
corporation's common stock, based on the average closing
price of the corporation's stock during the 20 trading days
ending five trading days before the closing of the
transaction. However, in no event will a share of RSi
common stock be exchanged for less than 0.638 or more than
0.780 shares of the corporation's common stock. RSi has
approximately eight million shares outstanding. During
1993, the corporation purchased 404,500 shares of RSi on the
open market for $5,098,000. The corporation's ownership
represented 4.9% of RSi stock with a market value of
$6,042,000 at December 31, 1993.
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<PAGE>
The merger is subject to the approval of RSi's shareholders,
receipt of all required government approvals and compliance
with other customary conditions. RSi shareholders are
expected to vote on the merger during the second quarter of
1994. It is a condition of the merger that it be treated as
a pooling of interests for accounting purposes. The merger
is expected to be completed in 1994.
In February 1994, two shareholder class-action
lawsuits were filed in Nevada state court challenging the
merger. Plaintiffs in the lawsuits allege, among other
things, that the proposed merger consideration is unfair and
inadequate. The lawsuits seek, among other things, to
enjoin the merger and, in the event the merger is
consummated, to recover damages. Management believes that
the lawsuits are without merit and that the ultimate
disposition of these matters will not have a material effect
on the merger or on the corporation's financial statements.
Debt
INTELSAT intends to issue $200 million of bonds in the
first quarter of 1994. INTELSAT will use the proceeds to
repay its short-term borrowings. The corporation will record
its share of the borrowings as long-term debt of approximately
$42 million when the bonds are issued.
Item 9. Disagreements on Accounting and Financial Disclosure. None.
60
<PAGE>
PART III
Except for the portion of Item 10 relating to Executive Officers which
is included in Part I of this Report, the information called for by
Items 10-13 is incorporated by reference from the COMSAT - 1994 Annual
Meeting of Shareholders - Notice and Proxy Statement - (to be filed
pursuant to Regulation 14A not later than 120 days after the close of
the fiscal year) which meeting involves the election of directors, in
accordance with General Instruction G to the Annual Report on Form 10-K.
Item 10. Directors and Officers of the Registrant.
Item 11. Executive Compensation.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
Item 13. Certain Relationships and Related Transactions.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
(a) Documents filed as part of this Report.
1. Consolidated Financial Statements and Supplementary Data of
Registrant.
Page
a. Independent Auditors' Report . . . . . . . . . . . . . . . . 34
b. Consolidated Financial Statements of COMSAT
Corporation and Subsidiaries
(i) Consolidated Income Statements for the Years
Ended December 31, 1993, 1992 and 1991 . . . . . . . . . 35
(ii)Consolidated Balance Sheets as of December 31
1993, 1992 and 1991. . . . . . . . . . . . . . . . . . . 36
(iv)Consolidated Cash Flow Statements for the Years
Ended December 31, 1993, 1992 and 1991 . . . . . . . . . 37
61
<PAGE>
(v) Statements of Changes in Consolidated Stockholders'
Equity for the Years Ended December 31, 1993, 1992
and 1991 . . . . . . . . . . . . . . . . . . . . . . . . 38
(vi)Notes to Consolidated Financial Statements for
Each of the Three Years in the Period Ended
December 31, 1993. . . . . . . . . . . . . . . . . . .39-60
2. Financial Statement Schedules Relating to the Consolidated
Financial Statements of COMSAT Corporation for Each of the
Three Years in the Period Ended December 31, 1993.
Page
a. Independent Auditors' Report . . . . . . . . . . . . . . . . 34
b. Schedule II -- Amounts Receivable from Related Parties and
Underwriters, Promoters, and Employees Other than Related
Parties. . . . . . . . . . . . . . . . . . . . . . . . . . . 73
c. Schedule V -- Property, Plant and Equipment. . . . . . . . . 74
d. Schedule VI -- Accumulated Depreciation of Property, Plant
and Equipment. . . . . . . . . . . . . . . . . . . . . . . . 76
e. Schedule VIII -- Valuation and Qualifying Accounts . . . . . 78
f. Schedule IX -- Short-Term Borrowings . . . . . . . . . . . . 79
g. Schedule X -- Supplementary Income Statement Information . . 79
All Schedules except those listed above have been omitted because
they are not applicable or not required or because the required
information is included elsewhere in the financial statements in
this filing. Separate financial statements and schedules
of COMSAT Corporation are omitted because the Corporation is
primarily an operating corporation and all subsidiaries included
in the consolidated financial statements, in the aggregate, do not
have minority equity interests and indebtedness to any person
other than the Corporation and its consolidated subsidiaries in
amounts which together exceed 5 percent of the total assets shown
by the consolidated statements in this filing.
(b) Reports on Form 8-K.
A report on Form 8-K dated January 31, 1994 was filed by the
Registrant to file the press release reporting the Registrant's
entering into a definitive merger agreement for the acquisition of
Radiation Systems, Inc.
A report on Form 8-K dated March 7, 1994 was filed by the
Registrant to file the press release reporting purported class
action shareholder lawsuits which were filed in Nevada to
challenge the Registrant's acquisition of Radiation Systems, Inc.
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<PAGE>
A report on Form 8-K dated March 11, 1994 was filed by the
Registrant to file the Registrant's 1993 Financial Statements.
(c) Exhibits (listed according to the number assigned in the table in
Item 601 of Regulation S-K).
Exhibit No. 2 - Plan of Acquisition, Reorganization, Arrangement,
Liquidation or Succession.
a. Agreement and Plan of Merger among Registrant, CTS America, Inc.
and Radiation Systems, Inc. dated as of January 30, 1994.
b. Stock Option Agreement between Registrant and Radiation Systems, Inc.
dated as of January 30, 1994.
Exhibit No. 3 - Articles of Incorporation and By-laws.
a. Articles of Incorporation of Registrant, composite copy, as amended
through June 1, 1993. (Incorporated by reference from Exhibit
No. 4(a) to Registrant's Registration Statement on Form S-3
(No. 33-51661) filed on December 22, 1993).
b. By-laws of Registrant, as amended through March 15, 1991.
(Incorporated by reference from Exhibit No. 3(b) to Registrant's
Report on Form 10-K for the fiscal year ended December 31, 1991.)
c. Regulations adopted by Registrant's Board of Directors pursuant to
Section 5.02(c) of Registrant's Articles of Incorporation.
(Incorporated by reference from Exhibit No. 3(c) to Registrant's
Report on Form 10-K for the fiscal year ended 1992.)
Exhibit No. 4 - Instruments defining the rights of security holders,
including indentures.
a. Specimen of a certificate representing Series I shares of Registrant's
Common Stock, without par value, registered under Section 12 of the
Securities Exchange Act of 1934, which are held by citizens of the
United States.
b. Specimen of a certificate representing Series I shares of Registrant's
Common Stock, without par value, registered under Section 12 of the
Securities Exchange Act of 1934, which are held by aliens.
(Incorporated by reference from Exhibit No. 4(b) to Registrant's
Report on Form 10-K for the fiscal year ended December 31, 1982.)
c. Specimen of a certificate representing Series II shares of
Registrant's Common Stock, without par value, registered under
Section 12 of the Securities Exchange Act of 1934. (Incorporated
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<PAGE>
by reference from Exhibit No. 4(c) to Registrant's Report on
Form 10-K for the fiscal year ended December 31, 1982.)
d. Indenture dated as of August 1, 1988 between Registrant and
The Chase Manhattan Bank, N.A. (Incorporated by reference from
Exhibit No. 4 to Registrant's Report on Form 10-Q for the
quarter ended June 30, 1988.)
e. Standard Multiple-Series Indenture Provisions, dated March 15, 1991.
(Incorporated by reference from Exhibit No. 4(a) to Registrant's
Registration Statement on Form S-3 (No. 33-39472) filed on
March 15, 1991.)
f. Indenture dated as of March 15, 1991 between Registrant and The
Chase Manhattan Bank, N.A. (Incorporated by reference from
Exhibit No. 4(b) to Registrant's Registration Statement on
Form S-3 (No. 33-39472) filed on March 15, 1991.)
g. Officers' Certificate pursuant to Section 3.01 of the Indenture,
dated as of March 15, 1991, from the Registrant to the Chase
Manhattan Bank (National Association), as Trustee, relating to the
authorization of $75,000,000 aggregate principal amount of
Registrant's 8.95% Notes Due 2001 (with form of Note attached).
(Incorporated by reference from Exhibit No. 4 to Registrant's
Current Report on Form 8-K filed on May 15, 1991.)
h. Officers' Certificate pursuant to Section 3.01 of the Indenture,
dated as of March 15, 1991, from the Registrant to the Chase Manhattan
Bank (National Association), as Trustee, relating to the authorization
of $160,000,000 aggregate principal amount of Registrant's 8.125%
Debentures Due 2004 (with form of Debenture attached). (Incorporated
by reference from Exhibit No. 4 to Registrant's Current Report on
Form 8-K filed on April 9, 1992.)
Exhibit No. 10 - Material Contracts
a. Agreement Relating to the International Telecommunications Satellite
Organization (INTELSAT) by Governments, which entered into force on
February 12, 1973. (Incorporated by reference from Exhibit No. 10(a)
to Registrant's Report on Form 10-K for the fiscal year ended
December 31, 1980.)
b. Operating Agreement Relating to the International Telecommunications
Satellite Organization (INTELSAT) by Governments which entered into
force on February 12, 1973. (Incorporated by reference from Exhibit
No. 10(b) to Registrant's Report on Form 10-K for the fiscal year
ended December 31, 1980.)
c. Agreement dated August 15, 1975, among COMSAT General Corporation,
RCA Global Communications, Inc., Western Union International, Inc.
and ITT World Communications, Inc. relating to the establishment
64
<PAGE>
of a joint venture for the purpose of participating in the
ownership and operation of a maritime communications satellite
system and Amendment Nos. 1-4 and Amendment No. 5 dated
March 24, 1980. (Incorporated by reference from Exhibit No. 10(p)
to Registrant's Report on Form 10-K for the fiscal year ended
December 31, 1980.)
(i) Amendment No. 6 dated September 1, 1981. (Incorporated by
reference from Exhibit No. 10(p)(ii) to Registrant's Report
on Form 10-K for the fiscal year ended December 31, 1981.)
d. Convention on the International Maritime Satellite Organization
(INMARSAT) dated September 3, 1976. (Incorporated by reference
from Exhibit No. 11 to Registrant's Report on Form 10-K for
the fiscal year ended December 31, 1978.)
e. Operating Agreement on the International Maritime Satellite
Organization (INMARSAT) dated September 3, 1976. (Incorporated by
reference from Exhibit No. 12 to Registrant's Report on Form 10-K
for the fiscal year ended December 31, 1978.)
f.* Registrant's 1982 Stock Option Plan. (Incorporated by reference
from Exhibit No. 10(x) to Registrant's Report on Form 10-K for the
fiscal year ended December 31, 1981.)
g. Agreement dated October 6, 1983, between COMSAT General Corporation
and National Broadcasting Company for the provision of satellite
distribution network programming. (Incorporated by reference from
Exhibit No. 10(r) to Registrant's Report on Form 10-K for the fiscal
year ended December 31, 1983.)
(i) Amendment dated September 1, 1992. (Incorporated by
reference from Exhibit No. 10(j)(i) to Registrant's Report on
Form 10-K for the fiscal year ended December 31, 1992.)
h.* Registrant's Insurance and Retirement Plan for Executives adopted
by Registrant's Board of Directors on June 21, 1985, as amended by
the Board of Directors on July 15, 1993.
i.* Registrant's 1986 Key Employee Stock Plan. (Incorporated by
reference from Exhibit No. 10(g) to Registrant's Registration
Statement on Form S-4 (File No. 33-9966) filed on November 4, 1986.)
j. Lease dated November 6, 1986, between Registrant and VMS 1985-299
Limited Partnership for the lease of Registrant's former headquarters
at 950 L'Enfant Plaza, S.W., Washington, D.C. (Incorporated by
reference from Exhibit No. 10(kk) to Registrant's Report on
Form 10-K for the fiscal year ended December 31, 1986.)
k.* Registrant's Non-Employee Directors Stock Option Plan adopted by
Registrant's Board of Directors on January 15, 1988 and approved by
Registrant's shareholders on May 20, 1988. (Incorporated by
65
<PAGE>
reference from Exhibit No. 10(h) to Registrant's Report
on Form 10-K for the fiscal year ended December 31, 1987.)
(i) Amendment No. 1 dated March 16, 1990. (Incorporated by
reference from Exhibit No. 10 (g)(i) to Registrant's Report
on Form 10-K for the fiscal year ended December 31, 1989.)
(ii) Amendment No. 2 dated January 15, 1993.
l.* Registrant's 1988 Annual Incentive Plan adopted by Registrant's
Board of Directors on June 17, 1988, as amended by the Board of
Directors on September 16, 1988. (Incorporated by Reference from
Exhibit No. 3(a) to Registrant's Report on Form 10-K for the
fiscal year ended December 31, 1988.)
m. Memorandum of Understanding between Registrant and National
Aeronautics and Space Administration (NASA), dated July 21, 1988
and amended through February 22, 1990. (Incorporated by reference
from Exhibit No. 10(aa) to Registrant's Report on Form 10-K for
the fiscal year ended December 31, 1989.)
n. Agreement to Acquire and Lease (and Supplemental Agreements thereto)
dated September 28 and October 10, 1988, respectively, among the
International Maritime Satellite Organization (Inmarsat), the North
Sea Marine Leasing Company, British Aerospace Public Limited Company,
the European Investment Bank, Kreditanstalt Fuer Wiederaufbau,
European Investment Bank (as Agent and as Trustee), Instituto
Mobiliare Italiano, Credit National, Hellenic Industrial Development
Bank, and Society Nationale de Credit a L'Industrie relating to the
financing of three Inmarsat spacecraft. (Incorporated by Reference
from Exhibit No. 3(a) to Registrant's Report on Form 10-k for the
fiscal year ended December 31, 1988.)
o. Service Agreement, dated September 14, 1989, between Registrant
and Aeronautical Radio, Inc. relating to satellite-based
communications services. (Incorporated by reference from Exhibit
No. 10(y) to Registrant's Report on Form 10-K for the fiscal
year ended December 31, 1989.)
p. Second Amended and Restated Agreement of Limited Partnership of
The Denver Nuggets Limited Partnership, dated November 29, 1989.
(Incorporated by reference from Exhibit No. 10(x) to Registrant's
Report on Form 10-K for the fiscal year ended December 31, 1989.)
(i) Asset Purchase Agreement, dated October 20, 1989, between
Denver Nuggets, Incorporated and Denver Nuggets Limited
Partnership, and First Amendment to Asset Purchase Agreement,
dated November 30, 1989. (Incorporated by reference from
Exhibit No. 10(x)(i) to Registrant's Report on Form 10-K for the
fiscal year ended December 31, 1989.)
q. Agreement, dated January 22, 1990, between Registrant and
Kokusai Denshin Denwa Co., Ltd. for provision of aeronautical
services. (Incorporated by reference from Exhibit No. 10(z) to
Registrant's Report on Form 10-K for the fiscal year ended
December 31, 1990.)
(i) Amendment No. 1 dated May 20, 1993.
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<PAGE>
r.* Registrant's 1990 Key Employee Stock Plan adopted by the Board
of Directors on March 16, 1990. (Incorporated by reference from
Exhibit No. 10 (p) to Registrant's Report on Form 10-K for the
fiscal year ended December 31, 1989.)
(i) Amendment No. 1 dated January 15, 1993.
s. Agreement, dated May 25, 1990, between Registrant and IDB
Communications Group, Inc. (Incorporated by reference from
Exhibit No. 10(bb) to Registrant's Report on Form 10-K for the
fiscal year ended December 31, 1990.)
t. Amended and Restated Agreement, dated November 14, 1990, of
Limited Partnership of Rock Spring II Limited Partnership.
(Incorporated by reference from Exhibit No. 10(a) to Registrant's
Current Report on Form 8-K filed on February 24, 1992.)
(i) Amended and Restated Lease Agreement, dated November 14, 1990,
by and between Rock Spring II Limited Partnership and Registrant.
(Incorporated by reference from Exhibit No. 10(b) to
Registrant's Current Report on Form 8-K filed on
February 24, 1992.)
(ii) Amended and Restated Ground Lease Indenture, dated
November 14, 1990, between Anne D. Camalier (Landlord) and
Rock Spring II Limited Partnership (Tenant). (Incorporated
by reference from Exhibit No. 10(c) to Registrant's
Current Report on Form 8-K filed on February 24, 1992.)
u. Finance Facility Contract (and Supplemental Agreements thereto),
dated December 20, 1991, among the International Maritime Satellite
Organization (Inmarsat), Abbey National plc, General Electric
Technical Services Company, Inc., European Investment Bank,
Kreditanstalt Fuer Wiederaufbau, Instituto Mobiliare Italiano S.p.A.,
Credit National, Societe Nationale de Credit a L'Industrie,
Finansieringsinstituttet for Industri OG Haandvaerk A/S, De
Nationale Investeringsbank NV, and Osterreichische Investitionkredit
Aktiengesellschaft relating to the financing of three Inmarsat
spacecraft. (Incorporated by reference from Exhibit No. 10 (dd)
to Registrant's Report on Form 10-K for the fiscal year ended
December 31, 1991.)
v.* Registrant's Directors and Executives Deferred Compensation Plan,
as amended by the Board of Directors on July 15, 1993.
w. Service Agreement, dated April 2, 1992, between Registrant and
GTE Airfone, Incorporated, for the provision of aeronautical
satellite services. (Incorporated by reference from Exhibit
No. 10(r) to Registrant's Report on Form 10-K for the fiscal
year ended December 31, 1990.)
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<PAGE>
x. Fiscal Agency Agreement, dated as of August 6, 1992, between
International Telecommunications Satellite Organization and Morgan
Guaranty Trust Company of New York. (Incorporated by reference
from Exhibit No. 10 (dd) to Registrant's Report on Form 10-K for
the fiscal year ended December 31, 1992.)
y. Agreement dated as of January 18, 1993 between the government of
Cote d'Ivoire and Registrant to provide a national television
and radio distribution system.
(i) Amendment No. 1 dated January 1994.
z. Fiscal Agency Agreement, dated as of January 19, 1993, between
International Telecommunications Satellite Organization and
Morgan Guaranty Trust Company of New York. (Incorporated by
reference from Exhibit No. 10 (ee) to Registrant's Report
on Form 10-K for the fiscal year ended December 31, 1992.)
aa. Lease Agreement, dated June 8, 1993, between GTE Airfone,
Incorporated, United Airlines, Inc. and Registrant for the
provision and financing of aeronautical satellite equipment.
bb. Agreement dated July 1, 1993, between Registrant and AT&T Easylink
Services relating to exchange of telex traffic.
cc. Agreement dated July 27, 1993, between the Registrant and American
Telephone & Telegraph Company relating to utilization of space
segment.
dd. Agreement dated September 1, 1993, between Registrant and MCI
International, Inc. relating to exchange of traffic.
ee. Agreement dated November 30, 1993, between the Registrant and Sprint
Communications Company L.P. relating to utilization of space segment.
ff. Agreement dated December 10, 1993, between Registrant and Sprint
International relating to the exchange of traffic.
gg. Credit Agreement dated as of December 17, 1993 among Registrant,
NationsBank of North Carolina, N.A., Bank of America National Trust
and Savings Association, The First National Bank of Chicago, The
Chase Manhattan Bank, N.A., The Sumitomo Bank, Limited, New York
Branch, Swiss Bank Corporation, New York Branch, as lenders, and
NationsBank of North Carolina, N.A., as agent.
hh. Schedule of Commitments between Registrant and INTELSAT, as of
December 31, 1993, relating to FM, digital bearer, International
Business Service and video traffic.
ii. Agreement dated January 24, 1994, between MCI International, Inc.
and Registrant relating to utilization of space segment.
68
<PAGE>
jj. Agreement dated February 18, 1994, between Registrant and AT&T
relating to exchange of traffic.
kk. Fiscal Agency Agreement between International Telecommunications
Satellite Organization, Issuer, and Bankers Trust Company, Fiscal
Agent and Principal Paying Agent, dated as of 22 March 1994.
*Compensatory plan or arrangement.
Exhibit No. 11 - Statement re computation of per share earnings.
Exhibit No. 22 - Subsidiaries of the Registrant as of March 31, 1994.
Exhibit No. 24 - Consents of experts and counsel.
Consent of Independent Auditors dated March 29, 1994.
Exhibit No. 27 - Financial Data Schedule.
69
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
COMSAT CORPORATION
(Registrant)
Date: March 31, 1994 By /s/ BRUCE L. CROCKETT
--------------------------------------
(Bruce L. Crockett, President and Chief
Executive Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by each of the following persons on
behalf of the Registrant and in the capacity and on the date indicated.
(1) Principal executive officer
Date: March 31, 1994 By /s/ BRUCE L. CROCKETT
--------------------------------------
(Bruce L. Crockett, President and Chief
Executive Officer)
(2) Principal financial officer
Date: March 31, 1994 By /s/ C. THOMAS FAULDERS, III
-------------------------------------
(C. Thomas Faulders, III, Vice President
and Chief Financial Officer)
(3) Principal accounting officer
Date: March 31, 1994 By /s/ ALLEN E. FLOWER
-------------------------------------
(Allen E. Flower, Controller)
70
<PAGE>
(4) Board of Directors
Date: March 31, 1994 By /s/ MELVIN R. LAIRD
(Melvin R. Laird, Chairman and Director)
By /s/ LUCY WILSON BENSON
(Lucy Wilson Benson, Director)
By /s/ RUDY E. BOSCHWITZ
(Rudy E. Boschwitz, Director)
By /s/ EDWIN I. COLODNY
(Edwin I. Colodny, Director)
By /s/ BRUCE L. CROCKETT
(Bruce L. Crockett, Director)
By /s/ FREDERICK B. DENT
(Frederick B. Dent, Director)
By
(James B. Edwards, Director)
By /s/ NEAL B. FREEMAN
(Neal B. Freeman, Director)
By /s/ BARRY M. GOLDWATER
(Barry M. Goldwater, Director)
By /s/ ARTHUR HAUSPURG
(Arthur Hauspurg, Director)
By /s/ PETER W. LIKINS
(Peter W. Likins, Director)
By /s/ HOWARD M. LOVE
(Howard M. Love, Director)
71
<PAGE>
By /s/ ROBERT G. SCHWARTZ
(Robert G. Schwartz, Director)
By /s/ C. J. SILAS
(C. J. Silas, Director)
By
(Dolores D. Wharton, Director)
72
<PAGE>
<TABLE>
<CAPTION>
COMSAT CORPORATION
CONSOLIDATED
SCHEDULE II - AMOUNTS RECEIVABLE FROM RELATED PARTIES
AND UNDERWRITERS, PROMOTERS, AND EMPLOYEES OTHER THAN RELATED PARTIES
FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 1993
(in thousands)
Balance at Balance at
Beginning Amounts End
Name of Debtor of Year Additions Collected of Year
- - - -------------- ---------- --------- --------- ----------
<S> <C> <C> <C> <C>
1991:
Robert J. Wussler (a) $ 209 $ - $ 209 $ -
===== ===== ===== =====
1992:
Richard C. Fenwick, Jr. (b) $ - $ 150 $ - $ 150
Mark Macon (c) - 150 150 -
----- ----- ----- -----
$ - $ 300 $ 150 $ 150
===== ===== ===== =====
1993:
Richard C. Fenwick, Jr. (b) $ 150 $ - $ 150 $ -
===== ===== ===== =====
</TABLE>
(a) An interest-free note receivable from Robert J. Wussler, a former
employee of the corporation, was repaid in 1991.
(b) An interest-free note receivable from Richard Fenwick, Jr., and
employee of On Command Video Corporation, was repaid in 1993.
(c) A note receivable at a 10% interest rate from Mark Macon, a
player of the Denver Nuggets, was repaid in 1992.
73
<PAGE>
<TABLE>
<CAPTION>
COMSAT CORPORATION
CONSOLIDATED
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 1993
(in thousands)
Balance at Other Balance at
Beginning Changes(a) End
of Year Additions Retirements Add(Deduct) of Year
---------- --------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C>
1991:
PROPERTY IN SERVICE
Land $ 4,182 $ - $ - $ (74) $ 4,108
Buildings & Improvements 85,346 3,733 278 (1,922) 86,879
Furniture, Fixtures
and Equipment 347,592 70,229 9,509 (523) 407,789
INTELSAT Satellites 602,262 151,874 - (21,364) 732,772
Inmarsat Satellites 80,246 78,822 - 92 159,160
Other Satellites and
Transponders 112,412 - - - 112,412
---------- --------- -------- -------- ----------
Total Property in
Service 1,232,040 304,658 9,787 (23,791) 1,503,120
CONSTRUCTION IN PROGRESS 355,733 (22,457)(b) 724 (17,065) 315,487
---------- --------- -------- -------- ----------
TOTAL PROPERTY $1,587,773 $ 282,201 $ 10,511 $(40,856) $1,818,607
========== ========= ======== ======== ==========
1992:
PROPERTY IN SERVICE
Land $ 4,108 $ - $ - $ (75) $ 4,033
Buildings & Improvements 86,879 1,167 515 (7,005) 80,526
Furniture, Fixtures
and Equipment 407,789 69,404 9,834 8,780 476,139
INTELSAT Satellites 732,772 99,459 1,245 (23,296) 807,690
Inmarsat Satellites 159,160 39,774 - (2,083) 196,851
Other Satellites and
Transponders 112,412 - - - 112,412
---------- --------- -------- -------- ----------
Total Property in
Service 1,503,120 209,804 11,594 (23,679) 1,677,651
CONSTRUCTION IN PROGRESS 315,487 22,867(b) 6 (4,773) 333,575
---------- --------- -------- -------- ----------
TOTAL PROPERTY $1,818,607 $ 232,671 $ 11,600 $(28,452)(c) $2,011,226
========== ========= ======== ======== ==========
1993:
PROPERTY IN SERVICE
Land $ 4,033 $ - $ - $ 1,022 $ 5,055
Buildings & Improvements 80,526 25,110 263 1,667 107,040
Furniture, Fixtures
and Equipment 476,139 94,536 60,545 257 510,387
INTELSAT Satellites 807,690 100,523 - (24,353) 883,860
Inmarsat Satellites 196,851 - - (10,199) 186,652
Other Satellites and
Transponders 112,412 - - - 112,412
---------- -------- -------- -------- -----------
Total Property in
Service 1,677,651 220,169 60,808 (31,606) 1,805,406
CONSTRUCTION IN PROGRESS 333,575 18,386(b) 21 (12,705) 339,235
---------- -------- -------- -------- ----------
TOTAL PROPERTY $2,011,226 $238,555 $ 60,829 $(44,311) $2,144,641
========== ======== ======== ======== ==========
</TABLE>
74
<PAGE>
SCHEDULE V (CONTINUED)
(a) Includes the effect of changes in COMSAT's investment share in INTELSAT
which was 23.9%, 22.9%, 21.8% and 20.9% as of December 31, 1990, 1991,
1992 and 1993, respectively. These changes resulted in increases to
plant retired and other of $30,096 in 1991, $35,515 in 1992 and $36,343
in 1993. Also includes the effect of changes in COMSAT's investment
share in Inmarsat which was 24.9%, 25.0%, 24.6% and 23.0% as of
December 31, 1990, 1991, 1992 and 1993, respectively. These changes
resulted in decreases to plant retired and other of $290 in 1991, and
increases to plant retired and other of $2,681 in 1992 and $15,510
in 1993.
(b) Net of transfers to property in-service.
(c) Includes property of $20,046 for the Denver Nuggets Limited Partnership
and On Command Video Corporation as of July 1, 1992, when the
corporation began consolidating the financial statements of these
businesses.
75
<PAGE>
<TABLE>
<CAPTION>
COMSAT CORPORATION
CONSOLIDATED
SCHEDULE VI - ACCUMULATED DEPRECIATION OF PROPERTY, PLANT AND EQUIPMENT
FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 1993
(in thousands)
Balance at Depre- Other Balance at
Beginning ciation Changes(a) End
of Year Provision Retirements Add(Deduct) of Year
--------- --------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C>
1991:
Buildings & Improvements $ 19,372 $ 2,613 $ 165 $ (227) $ 21,593
Furniture, Fixtures
and Equipment 187,332 34,984 8,537 (929) 212,850
INTELSAT Satellites 249,419 55,611 - (16,597) 288,433
Inmarsat Satellites 629 11,095 - 1 11,725
Other Satellites and
Transponders 106,455 5,957 - - 112,412
-------- -------- ------- -------- --------
TOTAL $563,207 $110,260 $ 8,702 $(17,752) $647,013
======== ======== ======= ======== ========
1992:
Buildings & Improvements $ 21,593 $ 2,398 $ 69 $ (3,284) $ 20,638
Furniture, Fixtures
and Equipment 212,850 41,817 9,212 18,665(d) 264,120
INTELSAT Satellites 288,433 62,747 1,067 (10,526) 339,587
Inmarsat Satellites 11,725 17,976 - (179) 29,522
Other Satellites and
Transponders 112,412 - - - 112,412
-------- -------- ------- -------- --------
TOTAL $647,013 $124,938(b) $10,348 $ 4,676(c) $766,279
1993:
Buildings & Improvements $ 20,638 $ 390 $ 260 $ 2,669 $ 23,437
Furniture, Fixtures
and Equipment 264,120 52,916 52,189 (1,583) 263,264
INTELSAT Satellites 339,587 63,316 - (11,424) 391,479
Inmarsat Satellites 29,522 17,483 - (1,123) 45,882
Other Satellites and
Transponders 112,412 - - - 112,412
-------- -------- ------- --------- --------
TOTAL $766,279 $134,105(b) $52,449 $ (11,461) $836,474
======== ======== ======= ========= ========
</TABLE>
(a) Includes the effect of changes in COMSAT's investment share in INTELSAT
which was 23.9%, 22.9%, 21.8% and 20.9% as of December 31, 1990, 1991,
1992, and 1993, respectively. These changes resulted in decreases of
$10,075 in 1991, $11,808 in 1992 and $12,801 in 1993. Also includes
the effect of changes in COMSAT's investment share in Inmarsat which
was 24.9%, 25.0%, 24.6% and 23.0% as of December 31, 1990, 1991, 1992
and 1993, respectively. These changes resulted in an increase of
$10 in 1991 and decreases of $290 in 1992, and $1,986 in 1993.
(b) Depreciation and amortization as reported in the consolidated income
statement for 1992 and 1993 includes amortization of intangibles of
$2,399 and $4,254, respectively.
76
<PAGE>
SCHEDULE VI (CONTINUED)
(c) Includes accumulated depreciation of $5,004 for the Denver Nuggets
Limited Partnership and On Command Video Corporation as of July 1, 1992,
when the corporation began consolidating the financial statements of
these businesses.
(d) Includes an addition to accumulated depreciation of $16,755 related to
the 1992 restructuring provision discussed in Note 12 to the
financial statements.
77
<PAGE>
<TABLE>
<CAPTION>
COMSAT CORPORATION
CONSOLIDATED
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 1993
(in thousands)
Balance at Balance at
Beginning Charged to End of
of Year Expenses Deductions(a) Year
---------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
1991:
Allowance for Loss on
Accounts Receivable $ 9,361 $ 2,539 $ 3,157 $ 8,743
======= ======= ======= =======
Allowance for Loss on
Investments $ 687 $ - $ 230 $ 457
======= ======= ======= =======
1992:
Allowance for Loss on
Accounts Receivable $ 8,743 $ 4,610 $ 3,164 $10,189
======= ======= ======= =======
Allowance for Loss on
Investments $ 457 $ 1,000 $ 457 $ 1,000
======= ======= ======= =======
1993:
Allowance for Loss on
Accounts Receivable $10,189 $ 3,403 $ 1,558 $12,034
======= ======= ======= =======
Allowance for Loss on
Investments $ 1,000 $ - $ - $ 1,000
======= ======= ======= =======
</TABLE>
(a) Uncollectible amounts written off, recoveries of amounts previously
reserved, and other adjustments.
78
<PAGE>
<TABLE>
<CAPTION>
COMSAT CORPORATION
CONSOLIDATED
SCHEDULE IX - SHORT-TERM BORROWINGS
FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 1993
(in thousands)
Weighted
Maximum Average Average
Weighted Amount Amount Interest
Balance at Average Outstanding Outstanding Rate
Category of Aggregate End of Interest During During the During the
Short-Term Borrowings Period Rate the Period Period (a) Period (a)
- - - --------------------- ---------- -------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Commercial Paper
1991 $ - - $46,732 $13,096 7.1%
------- --- ------- ------- ---
1992 $47,795 3.6% $78,138 $40,069 3.8%
------- --- ------- ------- ---
1993 $43,233 3.4% $71,661 $35,209 3.3%
------- --- ------- ------- ---
</TABLE>
(a) Calculated using the average daily balance method.
<TABLE>
<CAPTION>
SCHEDULE X - SUPPLEMENTARY INCOME STATEMENT INFORMATION
FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 1993
(in thousands)
1993 1992 1991
------- ------- -------
<S> <C> <C> <C>
Maintenance and repairs $ 9,157 $10,318 $ 8,281
------- ------- -------
</TABLE>
Items omitted are less than one percent of revenues.
79
<PAGE>
EXHIBIT INDEX
Exhibit
No. Description Page
2(a) Agreement and Plan of Merger among Registrant, CTS America, 88
Inc. and Radiation Systems, Inc. dated as of January 30,
1994.
2(b) Stock Option Agreement between Registrant and Radiation 135
Systems, Inc. dated as of January 30, 1994.
3(a) Articles of Incorporation of Registrant, composite copy, as -
amended through June 1, 1993. (Incorporated by reference
from Exhibit No. 4(a) to Registrant's Registration Statement
on Form S-3 (No. 33-51661) filed on December 22, 1993).
3(b) By-laws of Registrant, as amended through March 15, 1991. -
(Incorporated by reference from Exhibit No. 3(b) to
Registrant's Report on Form 10-K for the fiscal year ended
December 31, 1991.)
3(c) Regulations adopted by Registrant's Board of Directors -
pursuant to Section 5.02(c) of Registrant's Articles of
Incorporation. (Incorporated by reference from Exhibit No.
3(c) to Registrant's Report on Form 10-K for the fiscal year
ended 1992.)
4(a) Specimen of a certificate representing Series I shares of 144
Registrant's Common Stock, without par value, registered
under Section 12 of the Securities Exchange Act of 1934,
which are held by citizens of the United States.
4(b) Specimen of a certificate representing Series I shares of -
Registrant's Common Stock, without par value, registered
under Section 12 of the Securities Exchange Act of 1934,
which are held by aliens. (Incorporated by reference from
Exhibit No. 4(b) to Registrant's Report on Form 10-K for the
fiscal year ended December 31, 1982.)
4(c) Specimen of a certificate representing Series II shares of -
Registrant's Common Stock, without par value, registered
under Section 12 of the Securities Exchange Act of 1934.
(Incorporated by reference from Exhibit No. 4(c) to
Registrant's Report on Form 10-K for the fiscal year ended
December 31, 1982.)
80
<PAGE>
4(d) Indenture dated as of August 1, 1988 between the Registrant -
and The Chase Manhattan Bank, N.A. (Incorporated by
reference from Exhibit No. 4 to Registrant's Report on Form
10-Q for the quarter ended June 30, 1988.)
4(e) Standard Multiple-Series Indenture Provisions, dated March -
15, 1991. (Incorporated by reference from Exhibit No. 4(a)
to Registrant's Registration Statement on Form S-3 (No. 33-
39472) filed on March 15, 1991.)
4(f) Indenture dated as of March 15, 1991 between Registrant and -
The Chase Manhattan Bank, N.A. (Incorporated by reference
from Exhibit No. 4(b) to Registrant's Registration Statement
on Form S-3 (No. 33-39472) filed on March 15, 1991.
4(g) Officers' Certificate pursuant to Section 3.01 of the -
Indenture, dated as of March 15, 1991, from the Registrant
to the Chase Manhattan Bank (National Association), as
Trustee, relating to the authorization of $75,000,000
aggregate principal amount of Registrant's 8.95% Notes Due
2001 (with form of Note attached). (Incorporated by
reference from Exhibit No. 4 to Registrant's Current Report
on Form 8-K filed on May 15, 1991.)
4(h) Officers' Certificate pursuant to Section 3.01 of the -
Indenture, dated as of March 15, 1991, from the Registrant
to the Chase Manhattan Bank (National Association), as
Trustee, relating to the authorization of $160,000,000
aggregate principal amount of the Registrant's 8.125%
Debentures Due 2004 (with form of Debenture attached).
(Incorporated by reference from Exhibit No. 4 to
Registrant's Current Report on Form 8-K filed on April 9,
1992.)
10(a) Agreement Relating to the International -
Telecommunications Satellite Organization (INTELSAT) by
Governments, which entered into force on February 12,
1973. (Incorporated by reference from Exhibit No.
10(a) to Registrant's Report on Form 10-K for the
fiscal year ended December 31, 1980.)
10(b) Operating Agreement Relating to the International -
Telecommunications Satellite Organization (INTELSAT) by
Governments which entered into force on February 12,
1973. (Incorporated by reference from Exhibit No.
10(b) to Registrant's Report on Form 10-K for the
fiscal year ended December 31, 1980.)
81
<PAGE>
10(c) Agreement dated August 15, 1975, among COMSAT General -
Corporation, RCA Global Communications, Inc., Western
Union International, Inc. and ITT World Communications,
Inc. relating to the establishment of a joint venture
for the purpose of participating in the ownership and
operation of a maritime communications satellite system
and Amendment Nos. 1-4 and Amendment No. 5 dated March
24, 1980. (Incorporated by reference from Exhibit No.
10(p) to Registrant's Report on Form 10-K for the
fiscal year ended December 31, 1980.)
10(c)(i) Amendment No. 6 dated September 1, 1981. (Incorporated -
by reference from Exhibit No. 10(p)(ii) to Registrant's
Report on Form 10-K for the fiscal year ended December
31, 1981.)
10(d) Convention on the International Maritime Satellite -
Organization (INMARSAT) dated September 3, 1976.
(Incorporated by reference from Exhibit No. 11 to
Registrant's Report on Form 10-K for the fiscal year
ended December 31, 1978.)
10(e) Operating Agreement on the International Maritime -
Satellite Organization (INMARSAT) dated September 3,
1976. (Incorporated by reference from Exhibit No. 12
to Registrant's Report on Form 10-K for the fiscal year
ended December 31, 1978.)
10(f)* Registrant's 1982 Stock Option Plan. (Incorporated by -
reference from Exhibit No. 10(x) to Registrant's Report
on Form 10-K for the fiscal year ended December 31,
1981.)
10(g) Agreement dated October 6, 1983, between COMSAT General -
Corporation and National Broadcasting Company for the
provision of satellite distribution network
programming. (Incorporated by reference from Exhibit
No. 10(r) to Registrant's Report on Form 10-K for the
fiscal year ended December 31, 1983.)
10(g)(i) Amendment dated September 1, 1992. (Incorporated by -
reference from Exhibit No. 10(j)(i) to Registrant's
Report on Form 10-K for the fiscal year ended December
31, 1992.)
10(h)* Registrant's Insurance and Retirement Plan for 147
Executives adopted by Registrant's Board of Directors
on June 21, 1985, as amended by the Board of Directors
on July 15, 1993.
82
<PAGE>
10(i)* Registrant's 1986 Key Employee Stock Plan. -
(Incorporated by reference from Exhibit No. 10(g) to
Registrant's Registration Statement on Form S-4 (File
No. 33-9966) filed on November 4, 1986.)
10(j) Lease dated November 6, 1986, between Registrant and -
VMS 1985-299 Limited Partnership for the lease of
Registrant's former headquarters at 950 L'Enfant Plaza,
S.W., Washington, D.C. (Incorporated by reference from
Exhibit No. 10(kk) to Registrant's Report on Form 10-K
for the fiscal year ended December 31, 1986.)
10(k)* Registrant's Non-Employee Directors Stock Option Plan -
adopted by Registrant's Board of Directors on January
15, 1988 and approved by Registrant's shareholders on
May 20, 1988. (Incorporated by reference from Exhibit
No. 10(h) to Registrant's Report on Form 10-K for the
fiscal year ended December 31, 1987.)
10(k)(i)* Amendment No. 1 dated March 16, 1990. (Incorporated by -
reference from Exhibit No. 10 (g)(i) to Registrant's
Report on Form 10-K for the fiscal year ended December
31, 1989.)
10(k)(ii)*Amendment No. 2 dated January 15, 1993. 167
10(l)* Registrant's 1988 Annual Incentive Plan adopted by -
Registrant's Board of Directors on June 17, 1988, as
amended by the Board of Directors on September 16,
1988. (Incorporated by Reference from Exhibit No. 3(a)
to Registrant's Report on Form 10-K for the fiscal year
ended December 31, 1988.)
10(m) Memorandum of Understanding between Registrant and -
National Aeronautics and Space Administration (NASA),
dated July 21, 1988 and amended through February 22,
1990. (Incorporated by reference from Exhibit No.
10(aa) to Registrant's Report on Form 10-K for the
fiscal year ended December 31, 1989.)
83
<PAGE>
10(n) Agreement to Acquire and Lease (and Supplemental -
Agreements thereto) dated September 28 and October 10,
1988, respectively, among the International Maritime
Satellite Organization (Inmarsat), the North Sea Marine
Leasing Company, British Aerospace Public Limited
Company, the European Investment Bank, Kreditanstalt
Fuer Wiederaufbau, European Investment Bank (as Agent
and as Trustee), Instituto Mobiliare Italiano, Credit
National, Hellenic Industrial Development Bank, and
Society Nationale de Credit a L'Industrie relating to
the financing of three Inmarsat spacecraft.
(Incorporated by Reference from Exhibit No. 3(a) to
Registrant's Report on Form 10-k for the fiscal year
ended December 31, 1988.)
10(o) Service Agreement, dated September 14, 1989, between -
Registrant and Aeronautical Radio, Inc. relating to
satellite-based communications services. (Incorporated
by reference from Exhibit No. 10(y) to Registrant's
Report on Form 10-K for the fiscal year ended December
31, 1989.)
10(p) Second Amended and Restated Agreement of Limited -
Partnership of The Denver Nuggets Limited Partnership,
dated November 29, 1989. (Incorporated by reference
from Exhibit No. 10(x) to Registrant's Report on Form
10-K for the fiscal year ended December 31, 1989.)
10(p)(i) Asset Purchase Agreement, dated October 20, 1989,
between Denver Nuggets, Incorporated and Denver Nuggets -
Limited Partnership, and First Amendment to Asset
Purchase Agreement, dated November 30, 1989.
(Incorporated by reference from Exhibit No. 10(x)(i) to
Registrant's Report on Form 10-K for the fiscal year
ended December 31, 1989.)
10(q) Agreement, dated January 22, 1990, between Registrant -
and Kokusai Denshin Denwa Co., Ltd. for provision of
aeronautical services. (Incorporated by reference from
Exhibit No. 10(z) to Registrant's Report on Form 10-K
for the fiscal year ended December 31, 1990.)
10(q)(i) Amendment No. 1 dated May 20, 1993. 169
10(r)* Registrant's 1990 Key Employee Stock Plan adopted by
Registrant's Board of Directors on March 16, 1990.
(Incorporated by reference from Exhibit No. 10 (p) to
Registrant's Report on Form 10-K for the fiscal year
ended December 31, 1989.)
10(r)(i)* Amendment No. 1 dated January 15, 1993. 172
84
<PAGE>
10(s) Agreement, dated May 25, 1990, between Registrant and -
IDB Communications Group, Inc. (Incorporated by
reference from Exhibit No. 10(bb) to Registrant's
Report on Form 10-K for the fiscal year ended December
31, 1990.)
10(t) Amended and Restated Agreement, dated November 14, -
1990, of Limited Partnership of Rock Spring II Limited
Partnership. (Incorporated by reference from Exhibit
No. 10(a) to Registrant's Current Report on Form 8-K
filed on February 24, 1992.)
10(t)(i) Amended and Restated Lease Agreement, dated November -
14, 1990, by and between Rock Spring II Limited
Partnership and Registrant. (Incorporated by reference
from Exhibit No. 10(b) to Registrant's Current Report
on Form 8-K filed on February 24, 1992.)
10(t)(ii) Amended and Restated Ground Lease Indenture, dated -
November 14, 1990, between Anne D. Camalier (Landlord)
and Rock Spring II Limited Partnership (Tenant).
(Incorporated by reference from Exhibit No. 10(c) to
Registrant's Current Report on Form 8-K filed on
February 24, 1992.)
10(u) Finance Facility Contract (and Supplemental Agreements -
thereto), dated December 20, 1991, among the
International Maritime Satellite Organization
(Inmarsat), Abbey National plc, General Electric
Technical Services Company, Inc., European Investment
Bank, Kreditanstalt Fuer Wiederaufbau, Instituto
Mobiliare Italiano S.p.A., Credit National, Societe
Nationale de Credit a L'Industrie,
Finansieringsinstituttet for Industri OG Haandvaerk
A/S, De Nationale Investeringsbank NV, and
Osterreichische Investitionkredit Aktiengesellschaft
relating to the financing of three Inmarsat spacecraft.
(Incorporated by reference from Exhibit No. 10 (dd) to
Registrant's Report on Form 10-K for the fiscal year
ended December 31, 1991.)
10(v)* Registrant's Directors and Executives Deferred 174
Compensation Plan, as amended by the Board of Directors
on July 15, 1993.
10(w) Service Agreement, dated April 2, 1992, between -
Registrant and GTE Airfone, Incorporated, for the
provision of aeronautical satellite services.
(Incorporated by reference from Exhibit No. 10(r) to
Registrant's Report on Form 10-K for the fiscal year
ended December 31, 1990.)
85
<PAGE>
10(x) Fiscal Agency Agreement, dated as of August 6, 1992, -
between International Telecommunications Satellite
Organization and Morgan Guaranty Trust Company of New
York. (Incorporated by reference from Exhibit No. 10
(dd) to Registrant's Report on Form 10-K for the fiscal
year ended December 31, 1992.)
10(y) Agreement dated as of January 18, 1993 between the 191
government of Cote d'Ivoire and Registrant to provide a
national television and radio distribution system.
10(y)(i) Amendment No. 1 dated January 1994. 236
10(z) Fiscal Agency Agreement, dated as of January 19, 1993, -
between International Telecommunications Satellite
Organization and Morgan Guaranty Trust Company of New
York. (Incorporated by reference from Exhibit No. 10
(ee) to Registrant's Report on Form 10-K for the fiscal
year ended December 31, 1992.)
10(aa) Lease Agreement, dated June 8, 1993, between GTE 243
Airfone, Incorporated, United Airlines, Inc. and
Registrant for the provision and financing of
aeronautical satellite equipment.
10(bb) Agreement dated July 1, 1993, between Registrant and 254
AT&T Easylink Services relating to exchange of telex
traffic.
10(cc) Agreement dated July 27, 1993, between Registrant and 261
American Telephone & Telegraph Company relating to
utilization of space segment.
10(dd) Agreement dated September 1, 1993, between Registrant 299
and MCI International, Inc. relating to exchange of
traffic.
10(ee) Agreement dated November 30, 1993, between Registrant 316
and Sprint Communications Company L.P. relating to
utilization of space segment.
10(ff) Agreement dated December 10, 1993, between Registrant 347
and Sprint International relating to the exchange of
traffic.
10(gg) Credit Agreement dated as of December 17, 1993 among 364
Registrant, NationsBank of North Carolina, N.A., Bank
of America National Trust and Savings Association, The
First National Bank of Chicago, The Chase Manhattan
Bank, N.A., The Sumitomo Bank, Limited, New York
Branch, Swiss Bank Corporation, New York Branch, as
lenders, and NationsBank of North Carolina, N.A., as
agent.
86
<PAGE>
10(hh) Schedule of Commitments between Registrant and 434
INTELSAT, as of December 31, 1993, relating to FM,
digital bearer, International Business Service and
video traffic.
10(ii) Agreement dated January 24, 1994, between Registrant 436
and MCI International Inc. relating to utilization of
space segment.
10(jj) Agreement dated February 18, 1994, between Registrant 488
and AT&T relating to exchange of traffic.
10(kk) Fiscal Agency Agreement between International 490
Telecommunications Satellite Organization, Issuer, and
Bankers Trust Company, Fiscal Agent and Principal
Paying Agent, dated as of 22 March 1994.
*Compensatory plan or arrangement.
11 Statement re computation of per share earnings.
22 Subsidiaries of the Registrant as of March 31, 1994.
24 Consent of Independent Auditors dated March 29, 1994.
27 Financial Data Schedule
87
<PAGE>
EXHIBIT 2(a)
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER ("Agreement") made as of
January 30, 1994, by and among COMSAT Corporation, a District of
Columbia corporation ("COMSAT"), CTS America, Inc., a Delaware
corporation and a wholly owned subsidiary of COMSAT ("CTS"), and
Radiation Systems, Inc., a Nevada corporation ("RSI").
WHEREAS, COMSAT desires to acquire RSI by a merger of RSI
with and into CTS, and RSI desires the same, pursuant and subject
to the terms and conditions of this Agreement;
WHEREAS, the Boards of Directors of each of COMSAT and RSI
have determined that the proposed merger of RSI with and into CTS
is in the best interests of their respective corporations and
shareholders;
WHEREAS, COMSAT, CTS and RSI intend that the transactions
contemplated by this Agreement qualify as a reorganization within
the meaning of Section 368 of the Internal Revenue Code of 1986,
as amended (the "Code"), and that such transactions will be
accounted for by the pooling of interests method of accounting
for financial reporting purposes; and
WHEREAS, pursuant to such merger, CTS shall be the merging
or surviving corporation (sometimes hereinafter referred to as
the "Surviving Corporation") and RSI shall be the merged or
disappearing corporation (sometimes hereinafter referred to as
the "Merged Corporation");
NOW THEREFORE, in consideration of the premises, the mutual
benefits to be derived from this Agreement and the
representations, warranties, conditions and promises hereinafter
set forth, the parties hereby agree as follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger. Upon the Effective Date
(as defined in Section 1.2 herein) and subject to and upon the
terms of this Agreement, the General Corporation Law of the State
of Delaware ("Delaware Corporation Law") and the General
Corporation Law of the State of Nevada ("Nevada Corporation
Law"), RSI shall be merged with and into CTS, the separate
corporate existence of RSI shall cease, and CTS shall continue as
the Surviving Corporation (the "Merger"). CTS and RSI are
hereinafter sometimes referred to jointly as the "Constituent
Corporations."
<PAGE>
1.1.1 Nevada Articles of Merger. At the
Closing (as defined in Article II herein), CTS and RSI shall
execute and acknowledge Nevada Articles of Merger in the form of
Exhibit A hereto ("Nevada Articles of Merger"), providing for the
Merger pursuant to Section 78.458 of the Nevada Corporation Law.
1.1.2 Delaware Certificate of Merger. At the
Closing, CTS and RSI shall execute and acknowledge a Delaware
Certificate of Merger in the form of Exhibit B hereto ("Delaware
Certificate of Merger") providing for the Merger pursuant to
Section 252 of the Delaware Corporation Law.
1.1.3 Filings. Immediately upon completion
of the Closing, CTS and RSI shall cause the Merger to be
consummated by filing or causing to be filed the original
Delaware Certificate of Merger with the Secretary of the State of
Delaware, by recording or causing to be recorded a second
original of the Delaware Certificate of Merger in the Office of
the Recorder of the County of New Castle of the State of Delaware
(being the county in which the registered office of the Surviving
Corporation is located), and by filing or causing to be filed the
original Nevada Articles of Merger with the Secretary of the
State of Nevada, pursuant to Sections 103 and 252 of the Delaware
Corporation Law and Section 78.458 of the Nevada Corporation Law,
respectively.
Section 1.2 Effective Date. The Effective Date of
the Merger ("Effective Date") shall be the later of the day when
the Delaware Certificate of Merger is duly filed with the
Secretary of State of the State of Delaware or the day when the
Nevada Articles of Merger are duly filed with the Secretary of
the State of Nevada as provided in Subsection 1.1.3 herein, the
parties intending the Merger to be deemed as having been
consummated at the close of business upon the Effective Date,
which for purposes of this Agreement, shall be deemed to be 5:00
p.m. local time in Reno, Nevada on the Effective Date. It is the
intent of the parties that the Effective Date be the same day as
the Closing Date (as defined in Article II herein) or, if not
practicable, the earliest practicable day immediately thereafter.
Section 1.3 Effect of the Merger. At the close of
business on the Effective Date, the effect of the Merger shall be
as provided under all applicable provisions of the Delaware
Corporation Law and the Nevada Corporation Law. Without limiting
the generality of the foregoing, and subject thereto, at the
close of business on the Effective Date any and all assets,
rights, privileges, powers and franchises of the Constituent
Corporations, individually and collectively, shall vest in the
Surviving Corporation, and any and all debts, liabilities, duties
and obligations of the Constituent Corporations, individually and
collectively, shall vest in, be deemed to be assumed by and
become debts, liabilities, duties and obligations of the
Surviving Corporation.
<PAGE>
Section 1.4 The Surviving Corporation.
1.4.1 Certificate. The Certificate of
Incorporation of CTS as in effect upon the Effective Date shall
be the Certificate of Incorporation of the Surviving Corporation,
until thereafter amended as provided by law and such Certificate.
A copy of such Certificate is attached hereto as Exhibit C.
1.4.2 Bylaws. The Bylaws of CTS as in effect
upon the Effective Date shall be the Bylaws of the Surviving
Corporation until thereafter amended as provided by law, the
Certificate of Incorporation of the Surviving Corporation, and
such Bylaws. A copy of such Bylaws is attached hereto as
Exhibit D.
1.4.3 Directors and Officers. The directors
and officers of CTS upon the Effective Date will be the initial
directors and officers of the Surviving Corporation. In the
event a vacancy shall exist on the Board of Directors or in any
office of CTS upon the Effective Date, such vacancy may
thereafter be filled in the manner provided by law, the
Certificate of Incorporation and the Bylaws of the Surviving
Corporation.
1.4.4 Surrender. At the Closing, the Merged
Corporation shall surrender its stock registry, minute book and
corporate seal to the Surviving Corporation. At the Effective
Date the stock transfer books of RSI shall be closed, and there
shall be no registration of transfers of shares of capital stock
of RSI thereafter.
Section 1.5 Additional Actions. If, at any time
after the Closing, the Surviving Corporation shall consider or be
advised that any further assignments or assurances in law or any
other acts are necessary or desirable to (a) vest, perfect or
confirm, of record or otherwise, in the Surviving Corporation its
rights, title or interest in, to or under any of the rights,
properties or assets of the Merged Corporation acquired or to be
acquired by the Surviving Corporation as a result of, or in
connection with, the Merger, or (b) otherwise carry out the
purposes of this Agreement and the transactions contemplated
hereby, the Merged Corporation shall be deemed to have granted to
the Surviving Corporation an irrevocable power of attorney to
execute and deliver all such proper deeds, assignments, novations
and assurances in law and to do all acts necessary or proper to
vest, perfect or confirm title to and possession of such rights,
properties or assets in the Surviving Corporation and otherwise
to carry out the purposes of this Agreement and the transactions
contemplated hereby; and the proper officers and directors of the
Surviving Corporation are fully authorized in the name of the
Merged Corporation or otherwise to take any and all such actions.
<PAGE>
ARTICLE II
CLOSING; CONSIDERATION
Section 2.1 The Closing. The closing of the
transactions contemplated by this Agreement (the "Closing") shall
be held at the offices of Crowell & Moring, 1001 Pennsylvania
Avenue, N.W., Washington, D.C. 20004 at 11:00 a.m. immediately
following a special meeting of the RSI shareholders to approve
the Merger, or otherwise on the first business day after all of
the conditions to the Closing set out in Articles VI and VII
herein have been met or waived, or at such other place and date
and time as the parties may designate in writing (the date and
time agreed upon for Closing hereinafter the "Closing Date").
Section 2.2 Consideration and Conversion of Stock.
At the close of business on the Effective Date:
2.2.1 Conversion. Each share of RSI common
stock, par value $1.00 per share (the "RSI Stock"), other than
shares specified in Subsection 2.2.2, that is issued and
outstanding on the Effective Date shall be converted without any
action on the part of the holder thereof into that fraction of a
share, rounded to the nearest thousandth (the "Conversion
Fraction"), of common stock, without par value, of COMSAT (the
"COMSAT Stock") determined by dividing Eighteen Dollars and
twenty-five cents ($18.25) by the average closing price of a
whole share of COMSAT Stock on the New York Stock Exchange
Composite Tape for the twenty (20) Trading Days ending with the
Trading Day which precedes the Closing Date by five (5) Trading
Days (a "Trading Day" being any day on which the New York Stock
Exchange is open for business and on which shares of COMSAT Stock
are traded on that Exchange), provided that the Conversion
Fraction shall not be less than .638 and shall not be greater
than .780. The issuance and voting of the COMSAT Stock shall be
subject to any restrictions set forth in the Communications
Satellite Act of 1962, as amended, 47 U.S.C. sections 701 et seq., the
COMSAT Articles of Incorporation, and such actions that have been
taken by the Board of Directors of COMSAT pursuant to authority
granted by section 5.05 of the COMSAT Articles of Incorporation.
2.2.2 Cancellation of Certain Shares. All
shares of RSI Stock which are (i) held in the treasury of RSI or
owned by any subsidiary of RSI on the Effective Date, or (ii)
owned by COMSAT or any subsidiary of COMSAT, including CTS, on
the Effective Date shall be cancelled without payment of any
consideration therefor.
Section 2.3 Exchange of and Payment for RSI Stock.
2.3.1 Notice. Promptly after the Effective
Date COMSAT will cause the exchange agent selected by COMSAT (the
"Exchange Agent") to send to each holder of record of shares of
RSI Stock which shall have been converted into shares of COMSAT
Stock in the Merger an appropriate letter of transmittal for
<PAGE>
purposes of surrendering such holder's certificates for such
shares for exchange into certificates of shares of COMSAT Stock
as provided in this Section 2.3.
2.3.2 Certificates. As soon as practicable
after the Effective Date and after surrender to the Exchange
Agent of any certificate which prior to the Effective Date shall
have represented any shares of RSI Stock, subject to the
provisions of Subsection 2.3.4 herein, COMSAT shall cause to be
distributed to the person in whose name such certificate shall
have been registered certificates registered in the name of such
person representing the shares of COMSAT Stock into which any
shares previously represented by the surrendered certificate
shall have been converted as of the close of business on the
Effective Date and a check payable to such person representing
the payment of cash in lieu of fractional shares determined in
accordance with Subsection 2.3.5 herein. Until surrendered as
contemplated by the preceding sentence, each certificate which
immediately prior to the Effective Date shall have represented
any shares of RSI Stock shall be deemed at and after the
Effective Date to represent only the right to receive upon such
surrender a certificate representing the COMSAT Stock and the
payment as so contemplated.
2.3.3 Dividends. No dividends or other
distributions declared after the date of this Agreement with
respect to shares of COMSAT Stock and payable to the holders of
record thereof on or after the Effective Date shall be paid to
the holder of any unsurrendered certificates which prior to the
Effective Date shall have represented shares of RSI Stock with
respect to which the shares of COMSAT Stock shall have been
issued in the Merger until such certificates shall be surrendered
as provided herein, unless otherwise agreed in writing by COMSAT,
but (i) upon such surrender there shall be paid to the person in
whose name the certificates representing such shares of COMSAT
Stock shall be issued the amount of dividends or other
distributions theretofore paid or made with a record date on or
after the Effective Date but prior to surrender with respect to
such shares of COMSAT Stock and the amount of any cash payable to
such person in lieu of fractional shares pursuant to Subsection
2.3.5 herein, and (ii) at the appropriate payment date or as soon
as practicable thereafter, there shall be paid or made to such
person the amount of dividends or other distributions with a
record date on or after the Effective Date but prior to surrender
and a payment date subsequent to surrender payable with respect
to such shares of COMSAT Stock. No interest shall be payable
with respect to the payment of such dividends or other
distributions or cash in lieu of fractional shares on surrender
of outstanding certificates.
2.3.4 Prior Transfer. If any cash, dividend,
other distribution or certificate representing shares of COMSAT
Stock is to be paid or made to or issued in a name other than
that in which the certificate surrendered in exchange therefor is
registered, it shall be a condition of the payment or issuance
thereof that the certificate so surrendered shall be properly
endorsed and otherwise in proper form for transfer and that the
person requesting such exchange shall pay to the Exchange Agent
any transfer or other taxes required by reason of the issuance of
<PAGE>
a certificate representing shares of COMSAT Stock in any name
other than that of the registered holder of the certificate
surrendered, or otherwise required, or shall establish to the
satisfaction of the Exchange Agent that such tax has been paid or
is not payable.
2.3.5 Cash in Lieu of Fractional Shares.
Notwithstanding any other provision of this Agreement, no
certificates or scrip representing fractional shares of COMSAT
Stock shall be issued upon the surrender for exchange of
certificates which prior to the Merger shall have represented any
shares of RSI Stock, no dividend or other distribution of COMSAT
shall relate to any fractional share and such fractional share
interests will not entitle the owner thereof to vote or to any
rights of a shareholder of COMSAT. In lieu of any fractional
shares, there shall be paid to each holder of shares of RSI Stock
who otherwise would be entitled to receive a fractional share of
COMSAT Stock an amount of cash (without interest) determined by
multiplying such fraction by the closing price of a whole share
of COMSAT Stock on the New York Stock Exchange Composite Tape on
the last full trading day prior to the Effective Date.
2.3.6 Full Satisfaction. Subject to COMSAT's
obligation to pay or make previously declared dividends and other
distributions which remain unpaid or unmade, all rights to
receive cash, if any, other distributions and shares of COMSAT
Stock into which shares of RSI Stock shall have been converted in
the Merger shall be deemed when paid, made or issued hereunder to
have been paid, made or issued, as the case may be, in full
satisfaction of all rights pertaining to such shares of RSI
Stock.
2.3.7 Escheat Laws. Notwithstanding any
provision of this Section 2.3, neither the Exchange Agent nor any
party to this Agreement shall be liable to a holder of a
certificate for RSI Stock for any shares of COMSAT Stock,
dividends or other distributions thereon, or proceeds in lieu of
issuance of any fractional shares thereof, delivered to a public
official pursuant to applicable escheat or unclaimed property
laws.
Section 2.4 Adjustments. If, between the date of
this Agreement and the Effective Date (inclusive), the
outstanding shares of COMSAT Stock or RSI Stock shall have been
changed into a different number of shares or a different class by
reason of any reclassification, recapitalization, reorganization,
split-up, combination, exchange of shares or readjustment, or a
stock dividend or other extraordinary distribution (other than a
nonliquidating cash dividend) thereon shall be declared with a
record date within said period, the number of shares of COMSAT
Stock into which shares of RSI Stock are to be converted shall be
correspondingly adjusted after negotiations conducted in good
faith and promptly concluded between the parties, and the Nevada
Articles of Merger and the Delaware Certificate of Merger shall
be amended to reflect the same.
<PAGE>
Section 2.5 Other Deliveries. At the Closing, each
of COMSAT, CTS and RSI shall use its best efforts to deliver or
cause to be delivered the opinions, certificates and other
documents respectively required to be delivered pursuant to
Articles VI and VII hereunder.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF RSI
RSI hereby represents and warrants to COMSAT and CTS as of
the date hereof and as of the Closing Date as set forth in this
Article III. RSI is making all these representations and
warranties on behalf of itself and each RSI Subsidiary (as
defined in Subsection 3.1.2 herein), unless the context otherwise
plainly requires. In determining whether an event, condition or
matter would have an effect on or be material to RSI, RSI shall
be deemed to include RSI and the RSI Subsidiaries, taken as a
whole. The "Disclosure Letter" referred to in the representations
and warranties of RSI contained in this Article III refers to a
letter which has heretofore been delivered by RSI to COMSAT and
CTS, and which may be updated periodically and shall be updated
immediately prior to the Closing Date pursuant to Section 5.12.
The Disclosure Letter (and any update thereof) may include more
information than is required to be disclosed therein and such
inclusions are not an admission that any matter referred to
therein is material. Whenever a representation and warranty
contained in this Article III is made to the knowledge of RSI, it
shall mean all facts and conditions referred to in or omitted
from such representation and warranty, and which are known by, or
which should have been known by (in light of circumstantial
evidence made available to them on or prior to the date on which
such representation and warranty is made), the following
individuals: (i) as of the date of this Agreement, Richard E.
Thomas, Mark D. Funston, R. Doss McComas, Marvin D. Shoemake,
William A. Thomas, Harold A. Siegel, and the directors of RSI;
and (ii) as of the Closing Date each of the individuals referred
to in clause (i) of this sentence plus those officers and
employees of RSI and the RSI division presidents and general
managers so listed in the Disclosure Letter.
Section 3.1 Organization and Standing.
3.1.1 Organization. RSI is a corporation
duly incorporated, validly existing and in good standing under
the laws of the State of Nevada.
3.1.2 Subsidiaries. Except for those
entities identified in the Disclosure Letter (hereinafter termed
the "RSI Subsidiaries"), RSI has no subsidiaries or affiliated
companies, is not a partner or co-venturer with any other entity,
and does not otherwise directly or indirectly control any other
business entity. Except as identified in the Disclosure Letter,
each RSI Subsidiary is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction
in which it was formed, as indicated in the Disclosure Letter.
Except as identified in the Disclosure Letter, RSI is the sole
<PAGE>
record and beneficial owner of all of the outstanding capital
stock of each RSI Subsidiary, free and clear of any liens,
pledges, mortgages or encumbrances.
3.1.3 Qualification. RSI and each RSI
Subsidiary is duly qualified or licensed as a foreign corporation
to do business, and is in good standing, in each jurisdiction
where the nature of its activities makes such qualification or
license necessary, except where the failure to be so qualified or
licensed would not have a material adverse effect on the
business, assets or results of operations of RSI. The Disclosure
Letter identifies: (i) each state in which RSI and each RSI
Subsidiary is qualified or licensed to do business as a foreign
corporation; and (ii) the name and address of the registered
agent for RSI and each RSI Subsidiary in each such state.
3.1.4 Corporate Power. RSI and each RSI
Subsidiary has all requisite corporate power (i) to carry on its
business as it is now being conducted and to own and operate the
properties and assets it now owns and operates, and (ii) in the
case of RSI, to carry out the provisions of this Agreement and
the transactions contemplated hereby.
3.1.5 Corporate Documents. True, correct and
complete copies of the Restated Articles of Incorporation of RSI
and each RSI Subsidiary and all amendments thereto, and of the
By-laws of RSI and each RSI Subsidiary and all amendments
thereto, have been delivered to COMSAT.
Section 3.2 Capitalization.
3.2.1 Authorized and Outstanding RSI Stock.
The total authorized capital stock of RSI is 25,000,000 shares of
common stock, par value $1.00 per share, of which, as of the date
hereof, (i) 8,285,187 shares are issued and outstanding, (ii)
514,750 shares are subject to issuance upon the exercise of
outstanding options, and (iii) 471,432 shares are issued and held
in treasury. As of the Closing Date, the total number of issued
and outstanding shares of the capital stock of RSI shall not
exceed the sum of (i) and (ii). There exist no other shares of
capital stock of RSI, securities which are convertible into
shares of capital stock of RSI, or any options, warrants,
contracts, commitments or other arrangements which subject RSI to
the issuance of any shares of capital stock upon the exercise
thereof or after the passage of time.
3.2.2 Due Authorization and Issuance. All
issued and outstanding shares of the capital stock of RSI have
been duly authorized and validly issued and are fully paid and
nonassessable.
Section 3.3 Authorization.
3.3.1 RSI. RSI has all requisite corporate
power and authority to execute and deliver this Agreement and,
subject with respect to consummation of the Merger to approval of
this Agreement by a majority of all votes entitled to be cast by
<PAGE>
holders of shares of RSI Stock (the "RSI Vote"), to perform the
transactions contemplated hereby. The execution and delivery of
this Agreement, the performance by RSI of its obligations
hereunder and the consummation of the transactions contemplated
hereby have been duly authorized by RSI's Board of Directors and,
except for the RSI Vote, no other corporate proceedings are
necessary to authorize this Agreement and the transactions
contemplated hereby. RSI's Board of Directors has unanimously
(a) determined that the Merger is in the best interests of RSI
and its stockholders, (b) approved all of the transactions
contemplated by this Agreement, including without limitation, the
Merger, a Stock Option Agreement of even date herewith between
RSI and COMSAT (the "Stock Option Agreement"), and (c) voted to
recommend this Agreement to RSI stockholders. As of the date of
this Agreement, RSI has received the written opinion of Alex.
Brown & Sons Incorporated ("Alex. Brown"), its financial adviser,
that in the opinion of Alex. Brown the consideration to be
received by RSI stockholders in the Merger is fair, from a
financial point of view, to RSI stockholders. Assuming the valid
authorization, execution and delivery of this Agreement by COMSAT
and CTS, this Agreement is a valid and binding obligation of RSI
and is enforceable in accordance with its terms, except as
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other laws of general application referring to or
affecting enforcement of creditors' rights, or by general
equitable principles.
3.3.2 No Breach or Violation by RSI.
Execution, delivery and performance of this Agreement by RSI and
consummation of the transactions contemplated hereby will not
lead to or cause a violation, breach, or default or result in the
termination of, or accelerate the performance required by, or
result in the creation or imposition of any Encumbrance (as
defined in Section 3.7.1 hereof) on any property or assets of
RSI, whether by notice or lapse of time or both, or otherwise
conflict with any term or provision of the following:
(a) RSI's Restated Articles of
Incorporation and By-laws, as amended;
(b) Any note, bond, mortgage, contract,
indenture, pledge or agreement to lease, license or other
instrument or obligation to which RSI or any of the RSI
Subsidiaries is a party or is bound: (i) where such violation,
breach, default, termination, acceleration or Encumbrance would
have a material adverse effect on the business, operations or
financial condition of RSI; or (ii) as to which required
consents, amendments or waivers shall not have been obtained by
RSI prior to the Closing for any such violation, breach, default,
termination, acceleration or Encumbrance; or
(c) Any court or administrative order,
writ or injunction or process, or any permit, license, or consent
decree to which RSI or any RSI Subsidiary is a party or is bound:
(i) where such violation, breach, default, termination,
acceleration or Encumbrance would have a material adverse effect
on the business, operations or financial condition of RSI; or
(ii) as to which required consents, amendments or waivers shall
<PAGE>
not have been obtained by RSI prior to the Closing for any such
violation, breach, default, termination, acceleration or
Encumbrance.
Section 3.4 SEC Filings. RSI has furnished to
COMSAT and CTS a true and complete copy of (i) each final
prospectus and definitive proxy statement filed by RSI with the
Securities and Exchange Commission (the "SEC") since June 30,
1989 and (ii) each report on Form 10-K, 8-K or 10-Q (and any
amendments thereto) filed by RSI with the SEC since June 30, 1989
(collectively, the "RSI SEC Documents"). Each of the RSI SEC
Documents complied as to form in all material respects with the
published rules and regulations of the SEC with respect thereto
and none of the RSI SEC Documents as of the dates they were filed
with the SEC contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading in
each case as of the date when made.
Section 3.5 Financial Statements.
3.5.1 SEC Filings. Each of the consolidated
financial statements included in the RSI SEC Documents (including
any related notes thereto) complied as to form in all material
respects with the published rules and regulations of the SEC with
respect thereto and fairly presents the earnings, financial
position, cash flows and stockholders' equity, as the case may
be, of RSI and its subsidiaries on a consolidated basis as of its
date or for the respective periods set forth therein (subject, in
the case of unaudited statements, to normal recurring year-end
audit adjustments and when read in conjunction with the relevant
audited financial statements and the notes thereto), in each
case, in accordance with generally accepted accounting principles
("GAAP") consistently applied during the periods involved, except
as set forth therein or, in the case of the unaudited statements,
as permitted by Rule 10-01 of Regulation S-X as in effect at the
relevant time.
3.5.2 Absence of Changes. Since June 30,
1993, there has not been:
(a) Any material adverse change in the
assets, working capital, reserves, financial condition,
accounting methods or results of operations of RSI (provided that
expenses incurred in connection with the transactions
contemplated hereby shall be excluded in making such
determination);
(b) Any material change in the con-
tingent obligations or liabilities of RSI by way of guaranty,
documentary credit, standby credit, endorsement, indemnity,
warranty or otherwise;
<PAGE>
(c) Any waiver or cancellation by RSI
of valuable rights or of debts owed to any of them which, taken
as a whole, are material to the business or financial condition
of RSI;
(d) Any damage, destruction or loss,
whether or not covered by insurance, materially and adversely
affecting the properties or business of RSI;
(e) Any increase in the rate or terms
of compensation payable, or potentially payable, by RSI to any
director, officer or employee, except increases occurring in the
ordinary course of business in accordance with RSI's customary
practices (which shall include normal periodic performance
reviews and related compensation and benefit increases);
(f) Any increase in the rate or terms,
or establishment, of any bonus, insurance, severance, stock
option, pension or other employee benefit plan, payment or
arrangement made to, for or with any of the employees of RSI
except increases occurring in the ordinary course of business in
accordance with RSI's customary practices (which shall include
normal periodic performance reviews and related compensation and
benefit increases);
(g) Any loan to, or guarantee or
assumption of any loan or obligation on behalf of, any officer or
director of RSI except advances occurring in the ordinary course
of business in accordance with RSI's customary practices; or
(h) Any declaration, setting aside or
payment of any dividend (other than as permitted by Section 5.7
herein) by RSI (in cash, properties or securities) or other
distribution of assets by RSI in respect of the shares of its
capital stock, or issuance, sale, transfer by RSI, or commitment
to issue, sell or transfer any shares of its capital stock other
than pursuant to the Stock Option Agreement, employee stock
options, director stock options and other agreements or
commitments existing on June 30, 1993, or any redemption,
purchase or other acquisition of any of its securities;
provided that for purposes of paragraphs (a), (b), (c) and (d) of
this Subsection 3.5.2, a material adverse change or effect shall
be deemed to occur if as a result of the events described in such
paragraphs there is a decrease in the aggregate in the
stockholders' equity of RSI as reflected on RSI's consolidated
statement of financial position at June 30, 1993, of five percent
or greater, to the date of this Agreement or the Closing Date, as
applicable.
3.5.3 No Undisclosed Liabilities. RSI has no
liabilities or obligations, secured or unsecured (absolute,
accrued, or unaccrued, liquidated or unliquidated, executory,
contingent or otherwise and whether due or to become due), of a
nature required to be reflected in a balance sheet prepared in
accordance with GAAP applied on a basis consistent with prior
<PAGE>
years, which were not disclosed in the RSI SEC Documents, except
for those liabilities and obligations of RSI incurred since
June 30, 1993 in the ordinary course of business.
Section 3.6 Forecasts. Notwithstanding any
disclaimers to the contrary (whether oral or in writing) made by
or on behalf of RSI, all forward looking statements made in
writing (including but not limited to forecasts and projections
of revenues, income or losses, capital expenditures, or other
financial items, management plans and objectives for future
operations, statements of future economic performance and state-
ments of the assumptions underlying or relating to any of the
foregoing) by RSI in the "Bid and Proposal Schedule" delivered to
COMSAT prior to the date hereof or updated prior to the Closing
Date, or in any Form 10-K or Form 10-Q (and any amendments
thereto) filed with the SEC after June 30, 1992, were made based
upon reasonable grounds (in the case of the "Bid and Proposal
Schedule" delivered to COMSAT prior to the date hereof, taking
into account RSI's procedure for assembling the schedule as
described in the Disclosure Letter) and disclosed in good faith.
Section 3.7 Properties; Leases; Tangible Assets.
3.7.1 Title. The Disclosure Letter contains
a list of all real property which RSI purports to own. To RSI's
knowledge, RSI has good and valid title to or, in the case of
leased properties, a good and valid leasehold interest in, all of
the assets which it purports to own or lease, including all
assets (real, personal or mixed, tangible or intangible)
reflected in the June 30, 1993 consolidated financial statements
of RSI, or acquired by RSI thereafter, except those assets
disposed of in the ordinary course of business after June 30,
1993 and the title to each such property and asset of RSI is free
and clear of any title defects, objections, liens, mortgages,
security interests, pledges, charges and encumbrances, adverse
claims, equities or other adverse interests of any kind including
without limitation, leases, chattel mortgages, conditional sales
contracts, collateral security arrangements and other title or
interest retention arrangements (collectively the
"Encumbrances"), except as follows:
(a) Any lien for taxes or other
governmental charges not yet delinquent, or the validity of
which is being contested in good faith by appropriate proceedings
and as to which adequate reserves have been established by RSI;
(b) Any Encumbrances reflected on the
financial statements contained in the RSI SEC Documents, with
such changes in the amount thereof as may have occurred since
June 30, 1993 in the ordinary course of business and which
changes will not materially reduce the aggregate value of the
property and assets held by RSI;
<PAGE>
(c) Such other imperfections of title
or Encumbrances which, as of the Closing Date, will not mate-
rially reduce the aggregate value of the property and assets of
RSI;
(d) Any progress payment liens arising
from progress payments made by the United States Government or
any agency thereof on contracts affecting the assets of RSI; and
(e) Any Encumbrances or other matters
identified in the Disclosure Letter.
3.7.2 Use Restrictions. With respect to any
real property owned or leased by RSI, to RSI's knowledge there
exists no applicable zoning ordinance, building code, use or
occupancy restriction, or any material violation of any such
ordinance, code or restriction, or any condemnation action or
proceeding with respect thereto, that materially detracts from
the aggregate value of the real property as reflected in the June
30, 1993 consolidated statement of financial position of RSI.
3.7.3 Condition. To RSI's knowledge, all
tangible properties and assets of RSI that are necessary or
useful to the business of RSI are in good operating condition and
repair, ordinary wear and tear excepted, and are adequate for the
uses to which they are put.
3.7.4 Leases. The Disclosure Letter
identifies all leases with a remaining term of more than one year
and aggregate remaining lease payments due of $100,000 or more to
which RSI is a party or is otherwise bound for the lease of real
property or personal property or equipment pursuant to which RSI
leases real or personal property or equipment either as the
lessor or as the lessee. With respect to such leases, to RSI's
knowledge there exist no defaults by RSI, or defaults by a lessor
or any third party, or misrepresentations with respect to such
leases made by RSI, any lessor and/or any third party, that
materially and adversely affect in the aggregate the business,
operations or financial condition of RSI.
3.7.5 Government Furnished Equipment. RSI's
materials management systems relating to inventories of equipment
and other materials procured or held by RSI for the performance
of any contracts (prime or sub) with the U.S. Government are
adequate and appropriately maintained for the uses to which they
are put or required to be put under the terms of such contracts.
All items of inventory, equipment and other materials procured or
held by RSI for the performance of any contracts (prime or sub)
with the U.S. Government have been maintained in the condition
they were when loaned, or bailed to, or procured by RSI, ordinary
wear and tear excepted, or used or processed for the purposes for
which they were intended and if such items of inventory,
equipment and other materials were returned to the U.S.
Government or its designee at any time prior to the Closing Date,
there is no basis for a claim for loss, damage, negligence or
reckless disregard of use or care of such items of inventory,
equipment and other materials to be asserted by the U.S.
<PAGE>
Government that if successful would have a material adverse
effect on the business, results of operations or financial
condition of RSI.
Section 3.8 Backlog.
3.8.1 Amount. The Disclosure Letter sets
forth a schedule of the backlog by contract of RSI (excluding,
for purposes of the Disclosure Letter prior to execution of this
Agreement, the backlog by contract of the Mark Antennas, PG
Technologies, and CSA Antenna Systems Division), as of December
31, 1993, for products and services to be provided by RSI, for
those contracts having a value of at least $25,000, including (i)
the aggregate dollar amount of firm and funded backlog, (ii) the
aggregate dollar amount of unfunded backlog (including without
limitation unexercised options), and (iii) the aggregate dollar
amount of backlog for which RSI has received notice of program
selection but final contract terms have not been negotiated. At
the Closing Date, the Disclosure Letter shall set forth on a
consistent basis (except that contracts having a value of less
than $25,000 may be included) a schedule of the backlog of RSI by
contract or, in the case of the Mark Antenna and PG Technology
divisions, by division for contracts having a value of less than
$100,000, which schedule shall show an aggregate contract backlog
for categories (i), (ii), and (iii), above, of at least
$118,500,000. For purposes of this Subsection 3.8.1, where the
contract or applicable law or regulation would prohibit
identification of the customer, the Disclosure Letter will omit
such identification.
3.8.2 Ordinary Course. All of the contracts
constituting the backlog of RSI (i) have been entered into in the
ordinary course of business, and (ii) are capable of performance
by RSI in accordance with the terms and conditions of each such
contract, without materially and adversely affecting the
financial condition or results of operations of RSI. Since June
30, 1993, RSI has not changed in any material respects its
pricing policies, practices or objectives with respect to return
on sales in connection with its outstanding bids and proposals,
when considered in the aggregate.
Section 3.9 Accounts Receivable. RSI's accounts
receivable, unbilled costs and accrued profits (less customer
progress payments), notes receivable, contracts in progress,
accounts payable and notes payable (collectively, the
"Receivables and Unbilled Costs") as of the Closing Date shall be
or were recorded on its books and records in the ordinary course
of business in accordance with GAAP applied on a basis consistent
with prior years. Since June 30, 1993, RSI's consolidated
financial statements include reserves with respect to the
Receivables and Unbilled Costs reflected therein against doubtful
collection or billings which in the opinion of RSI, its officers
or directors, are adequate.
Section 3.10 Inventories. All inventories of RSI
(i) reflected in its June 30, 1993 consolidated statement of
financial position, or (ii) to be held as of the Closing Date,
have been or will have been acquired or manufactured, and are in
amounts RSI reasonably believes to be adequate to fill customer
<PAGE>
orders, in the ordinary course of business in accordance with
RSI's normal inventory practices. For purposes of preparing its
June 30, 1993 and any subsequent consolidated statement of
financial position, the inventories held by RSI were valued at
cost, and as to classes of items inventoried and methods of
accounting and pricing determined in a manner consistent with
prior years.
Section 3.11 Intellectual Property.
3.11.1 Patents and Know-How. The Disclosure
Letter sets forth a complete and accurate list of each patent,
patent application and docketed invention, by date and germane
case or docket number and country of origin, and each license or
licensing agreement, by date, term and the parties thereto, for
each of the patents, patent applications, inventions,
trade-secrets, rights to know-how, processes, computer programs
or use of technology, held or employed by RSI (each such patent,
patent application, license or licensing agreement listed thereon
hereinafter termed the "Patents and Licenses"). With respect to
the Patents and Licenses, and with respect to all other
technology including but not limited to research and development
results, computer programs, processes, trade secrets, know-how,
formulae, chip designs, mask works, inventions and manufacturing,
engineering, quality control, testing, operational, logistical,
maintenance and other technical information and technology held
or employed by RSI ("RSI's Technology") and except as set forth
in the Disclosure Letter:
(a) RSI owns, free and clear of all
liens, pledges or other encumbrances, all right, title and
interest in the Patents and Licenses and in RSI's Technology,
with all rights to make, use, and sell the property embodied in
or described in the Patents and Licenses and in RSI's Technology
and which are material to the business or operations of RSI. To
RSI's knowledge, its use of the Patents and Licenses and RSI's
Technology does not conflict with, infringe upon or violate any
patent, patent license, patent application, mask work, mask work
registration, or any pending application relating thereto, or any
trade secret, know-how, programs or processes of any third
person, firm or corporation;
(b) RSI either owns the entire right,
title and interest in, to and under, has an express license to
use, or has acquired in connection with the acquisition of
equipment or inventory an implied license to use, any and all
inventions, processes, computer programs, know-how, formulae,
trade secrets, patents, chip designs, mask works, trademarks,
trade names, brand names and copyrights which are material to
the business or operations of RSI.
(c) The U.S. government has no rights
with respect to any "technical data" or "computer software" that
are owned by RSI and are material to the business or operations
of RSI.
3.11.2 Trademarks and Copyrights. The
Disclosure Letter sets forth a complete and accurate list of each
trademark, trade name, and trademark and trade name registration
<PAGE>
or application, and copyright registration and application for
copyright registration, by date and germane case or docket number
and country of origin, and each license or licensing agreement,
by date and the parties thereto, for each trademark and copyright
license or licensing agreement, held or employed by RSI (each
such trademark, copyright, application, and license or licensing
agreement hereafter termed the "Trademarks and Licenses").
Except as set forth in the Disclosure Letter, RSI owns, free and
clear of all liens, pledges or other encumbrances, all right,
title and interest in the Trademarks and Licenses which are
material to the business or operations of RSI. To RSI's
knowledge, its use of the Trademarks and Licenses does not
conflict with, infringe upon or violate any trademark, trade
name, trademark or trade name registration or application, copy-
right, copyright registration or application, service mark,
brand mark or brand name or any pending application relating
thereto, of any third person, firm or corporation.
Section 3.12 Contracts and Obligations.
3.12.1 Identification. The Disclosure Letter
includes an accurate and complete list as of the date indicated
therein of:
(a) All agreements and contracts
between RSI and (i) its vendors or suppliers the termination of
which would have a material adverse effect on the business,
operations or financial condition of RSI, and (ii) its customers
(each U.S. government agency deemed to be a separate customer and
where the contract or applicable law or regulation would prohibit
identification of the customer, the Disclosure Letter will omit
such identification) where the backlog for such contract is
$25,000 or more;
(b) All loan agreements and other
evidences of indebtedness, and all letters of credit or other
documentary credits, having in each case a total liability of
$50,000 or more;
(c) All distributorship, non-employee
commission or marketing agent, representative or franchise
agreements providing for the marketing and/or sale of the
products or services of RSI;
(d) All partnership agreements for the
organization of limited or general partnerships in which RSI is a
partner, all limited liability company agreements, and all joint
ventures to which RSI is a party;
(e) All agreements or arrangements for
the sale of any of the assets of RSI except in the ordinary
course of business;
(f) All employment contracts or
consulting contracts reflecting an RSI commitment of $100,000 or
more, or agreements with respect to severance or similar
arrangements; and
<PAGE>
(g) To RSI's knowledge, all contracts
or agreements with any officer, director or employee of RSI or
any member of their immediate families, or with any entity under
the control of any officer, director or employee of RSI or any
member of their immediate families, whether individually or in
combination with any other such person or persons.
3.12.2 Full Force and Effect. Except as may
be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other laws of general application referring to or
affecting enforcement of creditors' rights, and by general
equitable principles, each agreement, contract and obligation
having a total value of $100,000 or more identified in the
Disclosure Letter pursuant to Subsection 3.12.1 is valid and
binding on each other party thereto in accordance with their
respective terms.
3.12.3 No Default. With respect to each con-
tract, agreement and obligation having a total value of $100,000
or more identified in the Disclosure Letter pursuant to
Subsection 3.12.1, neither RSI nor any other party thereto is in
material breach thereof or material default thereunder, and to
RSI's knowledge, no notice has been received from the other party
thereto of any such material breach or material default (whether
by lapse of time or notice or both).
3.12.4 No Commitments. RSI has no commitment
or undertaking to retain after Closing any attorneys,
accountants, actuaries, appraisers, investment bankers, or
management consultants.
Section 3.13 Employees; Compensation; Labor.
3.13.1 Employees and Compensation. Prior to
the Closing, RSI will provide to COMSAT and CTS a list dated
within 15 days prior to the Closing Date of all persons who are
employed by RSI, together with their base salary and bonus paid
or payable for the most recent fiscal year, and the date upon
which such compensation was last varied or increased, title,
original date of hire and vacation benefits, and any agreed to
current or future benefits or compensation of such employees.
The Disclosure Letter contains a true, correct and complete list
of all employment policies, procedures, manuals, and other
similar rules or regulations of RSI currently in effect regarding
the general conduct, compensation, labor relations and employment
and severance of RSI's employees, copies or descriptions of which
have heretofore been provided to COMSAT and CTS.
3.13.2 Certain Labor Matters. Except as set
forth in the Disclosure Letter:
<PAGE>
(a) To RSI's knowledge, none of its
division managers or executive officers has indicated to any
director, officer, or manager of RSI his or her intention to
cancel or otherwise terminate his relationship with RSI or his
relationship with CTS if CTS retains such person after Closing;
(b) There is no union representing the
interests of any of RSI employees and, to the knowledge of RSI,
there are no RSI employees seeking or attempting to organize
union representation;
(c) There are neither pending nor, to
the knowledge of RSI, threatened any strikes, work stoppages,
work disruptions or employment disruptions by any of the RSI
employees that would materially impair RSI's business, operations
or financial condition;
(d) To RSI's knowledge, there are
neither pending nor threatened any suits, actions, administrative
proceedings, hearings, arbitrations or other proceedings between
RSI and any of its employees involving a claim of $50,000 or
more;
(e) With respect to its employees, to
RSI's knowledge, during the past five (5) years RSI (i) has
complied in all material respects with all Federal, state and
local laws and regulations relating to the employment of labor,
including any provisions thereof relating to wages, hours,
collective bargaining and the payment of social security and
similar taxes, (ii) is not liable for any material arrears of
wages or any taxes or penalties for failure to comply with any of
the foregoing, (iii) has not committed any material unfair labor
practices, and (iv) has complied in all material respects with
all applicable provisions of the Occupational Safety and Health
Act of 1970, as amended, and regulations promulgated pursuant
thereto;
(f) To RSI's knowledge, RSI is not
required to make any capital or other expenditures of $100,000 or
more to comply with the Americans With Disabilities Act of 1990,
as amended, and the rules and regulations promulgated thereunder;
and
(g) To RSI's knowledge, since June 30,
1993, none of its employees has filed any complaint relating to
RSI's employment of its employees with any governmental or
regulatory authority or brought any action in law or in equity
with respect thereto.
3.13.3 Employee Benefit Plans; ERISA.
(a) Prior to Closing and with adequate
time for review, RSI will provide COMSAT an accurate and complete
list of each bonus, deferred compensation, incentive compensation,
severance or termination pay agreement, hospitalization or other
fringe, medical, dental, retiree medical, dental or other welfare
benefit plan, stock purchase, stock option, pension, life or
other insurance, profit-sharing or retirement plan or arrangement,
and each other employee benefit plan or arrangement maintained
or contributed to by RSI, whether formal or informal, whether
legally binding or not (the "Plans"), and which either required
or are expected to require expenditures or contributions by RSI
<PAGE>
in the fiscal year ended June 30, 1993 or the fiscal year ended
June 30, 1994, as applicable, of $100,000 or more. Such list
will set forth the annual amount of employer contributions accrued,
paid or payable for Employees of RSI (domestic or foreign) during
fiscal 1993 pursuant to each of the Plans. The amount of employer
contributions accrued, paid or payable for all Employees of RSI
(domestic or foreign) during fiscal 1993 pursuant to the Plans
did not exceed $7,000,000. RSI does not have any plan or
commitment, whether formal or informal and whether legally binding
or not, to create any additional Plan or modify or change any
existing Plan. RSI has heretofore delivered or will promptly
deliver to COMSAT true and complete copies of (i) the documents
governing all such Plans and their related trusts, (ii) the most
recent actuarial reports or accountants' reports prepared with
respect to each such Plan, (iii) the latest Form 5500 filed with
the Internal Revenue Service with respect to each such Plan, and
(iv) the most recent determination letter issued by the Internal
Revenue Service for each such Plan which has received a
determination letter.
(b) RSI does not have and has not in
the past five years had a Plan to which Title IV of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"),
applies or has applied.
(c) Prior to Closing and with
sufficient time for review the Disclosure Letter will list each
Plan in existence since June 30, 1989 that is an "employee
benefit plan," as such term is defined in Section 3(3) of ERISA
and the rules and regulations promulgated thereunder, which at
any time covered any employee of RSI (each such Plan is
hereinafter referred to as an "ERISA Plan"), and which required
contributions or expenditures by RSI in any given fiscal year
since June 30, 1989 of $100,000 or more, and copies of such Plans
will be made available to COMSAT.
(d) Except as set forth in the
Disclosure Letter: (i) No ERISA Plan is a "multiemployer plan"
as that term is defined in Section 3(37) of ERISA; (ii) to RSI's
knowledge neither RSI, any ERISA Plan, any trust created
thereunder, nor any trustee or administrator thereof, has engaged
in a transaction in connection with which RSI, any ERISA Plan,
any such trust, or any trustee or administrator thereof, or any
party dealing with any ERISA Plan or any such trust, could be
subject to either a material civil penalty assessed pursuant to
Section 502(i) of ERISA, or a material tax imposed by Section
4975 of the Code; (iii) full payment has been made of all amounts
which RSI is required to pay under the terms of each ERISA Plan
as a contribution to such ERISA Plan as of the last day of the
fiscal year of each such ERISA Plan ended prior to the date of
this Agreement, and no ERISA Plan nor any trust established
thereunder has incurred any "accumulated funding deficiency" (as
defined in Section 302 of ERISA and Section 412 of the Code),
whether or not waived, as of the last day of the most recent
fiscal year of each ERISA Plan ended prior to the date of this
Agreement; (iv) as to each ERISA Plan which is intended to be
qualified under Section 401(a) and 501(a) of the Code, to RSI's
knowledge there is no fact, condition or set of circumstances
that would adversely affect the qualified status of any such
ERISA Plan; (v) to RSI's knowledge each Plan has been operated
<PAGE>
and administered in all material respects in accordance with its
terms and all applicable laws, including but not limited to
ERISA; (vi) there are no pending or, to RSI's knowledge,
threatened or anticipated material claims against any Plan or any
fiduciary thereof, by any employee or beneficiary covered under
any Plan, or otherwise involving any Plan (other than routine
claims for benefits) and there are no pending or, to RSI's
knowledge, threatened or anticipated claims by or on behalf of
any Plan; and (vii) there is no liability or penalty under ERISA
or otherwise relating to the Plans which would have a material
adverse effect on RSI's financial condition.
Section 3.14 Litigation.
3.14.1 Litigation Pending or Threatened.
Except as set forth in the Disclosure Letter: (i) there are no
claims, actions, suits, hearings, arbitrations, disputes,
proceedings (public or private) or governmental investigations
pending or, to the knowledge of RSI, threatened, against RSI, at
law or in equity, before or by any Federal, state, municipal or
other governmental or nongovernmental department, commission,
board, bureau, agency, court or other instrumentality, or by any
private person or entity, which seek damages, contributions,
expenditures or other penalties of $25,000 or more; (ii) to RSI's
knowledge, there is no basis for any action, suit or proceeding
which, if successful, would, individually or in the aggregate,
have a material adverse effect on the assets, results of
operations or financial condition of RSI; and (iii) there are no
existing or, to the knowledge of RSI, threatened, orders,
judgments or decrees of any court or governmental agency to which
RSI is subject or which are materially affecting RSI.
3.14.2 This Transaction. Except as set forth
in the Disclosure Letter there are no legal, administrative,
arbitration or other proceedings or governmental investigations
pending, or, to the knowledge of RSI threatened, against RSI
which seek to enjoin or rescind the transactions contemplated by
this Agreement or otherwise prevent RSI from complying with the
terms and provisions of this Agreement.
Section 3.15 Insurance. The Disclosure Letter sets
forth (i) a true and correct list of all insurance policies of
any kind or nature whatsoever maintained by RSI, indicating the
type of coverage, name of insured, the insurer, the premium, the
expiration date of each policy and the amount of coverage, and
(ii) a general description of RSI's self-insurance practices.
The policies of insurance and practices of self-insurance as so
described evidence insurance against all risks of a character and
in such amounts as RSI has determined is prudent and to RSI's
knowledge are usually insured against by similarly situated
companies in the same or similar business as RSI, and all of such
insurance policies are in full force and effect and will remain
so until at least thirty (30) days after the Closing Date. RSI
will notify COMSAT in writing within 15 days of the date hereof
whether it has any reason to believe that the policies of
insurance currently in effect and held by RSI and all pending
claims, rights or causes of action made or held by RSI under any
<PAGE>
policies of insurance will not transfer by operation of law to
the Surviving Corporation in the Merger.
Section 3.16 Permits; Compliance; Reports;
Clearances.
3.16.1 Necessary Permits. RSI holds all
material approvals, authorizations, certificates, consents,
licenses, orders and permits of all governmental agencies,
whether Federal, state or local, necessary to the operation of
its business, or for its owned and leased real and personal
property in the manner currently operated by RSI, including,
without limitation, all necessary permits and approvals for the
discharge of by-products and waste material into a public waste
discharge system, and all such material approvals, authoriza-
tions, certificates, consents, licenses, orders and permits are
in full force and effect.
3.16.2 FCC Licenses. The Disclosure Letter
identifies all licenses granted by the Federal Communications
Commission to RSI. RSI holds all licenses required by the
Communications Act of 1934, as amended, and the rules and
regulations promulgated thereunder, necessary for the operation
of its business as presently conducted.
3.16.3 Compliance with Law. To RSI's
knowledge, the operations of RSI as presently conducted do not
violate in any material respect any Federal law (including,
without limitation, any that relate to health and safety,
individual disabilities, environmental protection and pollution
control, sale and distribution of products and services,
anti-competitive practices, collective bargaining, equal
opportunity and improper or corrupt payments) or any foreign,
state, local or other laws, statutes, ordinances, regulations, or
any order, writ, injunction or decree of any court, commission,
board, bureau, agency or instrumentality.
3.16.4 FCPA. RSI is in full compliance with
the Foreign Corrupt Practices Act, as amended, 15 U.S.C. sections 78m,
78dd-1, 78dd-2 and 78ff (the "FCPA"), and no pending contracts,
bids or proposals of RSI were obtained or made in violation of
the FCPA.
3.16.5 Reports. All material reports,
documents and notices (not relating to Taxes or Tax Returns as
defined in Subsection 3.20.2) required to be filed, maintained or
furnished with or to all governmental regulatory authorities,
including, without limitation, all Federal, state and local
governmental authorities have been so filed, maintained or
furnished. To RSI's knowledge all such reports, documents and
notices are true and correct in all material respects as of the
dates when legally required to be true and correct (and all
required amendments and updates have been made) and, to the
extent required to be kept in the public inspection files of RSI,
are kept in such files.
<PAGE>
3.16.6 Clearances. To the extent permitted by
law, the Disclosure Letter sets forth all security clearances
held by RSI and personal security clearances held by officers,
directors or employees of RSI with respect to the operation of
RSI's business.
Section 3.17 Government Contracts.
3.17.1 Government Contracts Compliance. RSI
is not, and consummation of this Agreement and the transactions
contemplated hereby will not result, in any material violation,
breach or default of any term or provision of (i) any contract,
subcontract or agreement between the United States Government and
RSI or (ii) any bid, proposal or quote submitted to the United
States Government by RSI. RSI is not, and consummation of this
Agreement and the transactions contemplated hereby will not
result, in any violation, breach or default in any material
respect of any provision of any Federal order, statute, rule or
regulation governing any contract, subcontract, bid, proposal,
quote, arrangement or transaction of any kind between the United
States Government and RSI. The representations in the two
foregoing sentences of this Subsection 3.17.1 are made after
consideration of, but are not limited to, the following laws,
regulations, standards, and agreements to the extent, if any,
they are applicable to or incorporated into contracts,
subcontracts, agreements, bids, proposals or quotes of RSI: (a)
The Truth in Negotiations Act of 1962, as amended; (b) The
Service Contract Act of 1965, as amended; (c) The Contract
Disputes Act of 1978, as amended; (d) The Federal Acquisition
Regulations and any applicable agency supplements thereto, as
well as applicable predecessor procurement regulations; (e) The
Cost Accounting Standards; (f) Agreements with the Defense
Contract Audit Agency; (g) Relevant rules and arrangements
governing the allowance of costs charged to overhead and general
and administrative cost pools allocable to government contracts;
(h) The Byrd Amendment, Pub. L. No. 101-121, section 319 (September
23, 1989); and (i) The Defense Industrial Security Manual (DOD
5220.22-M), the Defense Industrial Security Regulation (DOD
5220.22-R) and related security regulations. With respect to
bids or proposals by RSI for contracts covered by P.L. 87-653,
all required "cost or pricing data" provided to the United States
Government were current, accurate, and complete when price
negotiations were concluded and price agreement reached.
3.17.2 Investigations and Claims. The
Disclosure Letter sets forth descriptions of all audit reports,
final decisions, determinations of noncompliance, claims, consent
orders in effect, outstanding Forms 1, ongoing Government
investigations or prosecutions, or internal investigations con-
ducted by or initiated by RSI and identifies any corrective
action, restitution or disciplinary action initiated or taken by
RSI relating in any sense to the subjects listed below in
paragraphs (a) through (g) of this Subsection 3.17.2. Except as
set forth in the Disclosure Letter, RSI has not engaged in and
has not been charged with, received a claim related to, or been
under investigation or conducted or initiated any internal inves-
tigation, or had reason to conduct, initiate or report any inter-
nal investigation or made a voluntary disclosure, with regard to
any of the following, within the past five (5) years: (a)
<PAGE>
"defective pricing" within the meaning of P.L. 87-653, as
amended; (b) Failure to correct accounting, inventory, material
requirements planning, material management and accounting
systems, government property records, or purchasing system
deficiencies; (c) Mischarging of direct and/or indirect costs
in connection with U.S. Governmental contracts or subcontracts;
(d) Delivery to the U.S. Government or to a U.S. Government
prime or subcontractor of material, components, items or services
that do or did not meet specifications or standards therefor, or
delivery to the U.S. Government or to a U.S. Government prime or
subcontractor of foreign-made material, components or items where
domestic-made material, components or items were required; (e)
Improper payments or any payments or activities for obtaining
non-public source selection information; (f) Unallowable costs,
including unallowable direct or indirect costs; (g) Violations
of any of the following statutes, as amended, or the regulations
promulgated thereunder: (i) False Statements Act (18 U.S.C.
1001), (ii) False Claims Act (18 U.S.C. 287), (iii) False Claims
Act (31 U.S.C. 3729), (iv) Bribery, Gratuities and Conflicts of
Interest (18 U.S.C. 201), (v) Anti-Kickback Act (41 U.S.C. 51,
54), (vi) Anti-Kickback Enforcement Act of 1986 (P.L. 99-634),
(vii) Arms Export Control Act (22 U.S.C. 277 et seq.), (viii)
Foreign Corrupt Practices Act (15 U.S.C. 78 m, 78 dd-1, 78 ff),
(ix) Export Administration Act (P.L. 99-64), (x) War and National
Defense Act (18 U.S.C. 793), (xi) Racketeer Influenced and
Corrupt Organizations Act (18 U.S.C. 1901-68), (xii) Conspiracy
to Defraud the Government (18 U.S.C. 371), (xiii) Program Fraud
Civil Remedies Act (Pub. L. No. 99-509), (xiv) "Revolving Door"
Legislation (18 U.S.C. 207, 18 U.S.C. 218, 18 U.S.C. 281 (a)(11),
10 U.S.C. 2397, et seq.) 37 U.S.C. 801, 41 U.S.C. 423, (xv)
Defense Production Act (50 U.S.C. App. 2061), (xvi) The Byrd
Amendment, Pub. L. No. 101-121, section 319 (September 23, 1989), and
(xvii) U.S. antiboycott laws (the Ribicoff Amendment to the 1976
Tax Reform Act, and the 1979 Export Administration Act).
3.17.3 No Debarment or Suspension. RSI has
not been debarred or suspended or, to RSI's knowledge, informed
that it will be subject to any proceeding contemplating possible
debarment or suspension from contracting with the U.S.
Government.
3.17.4 Test and Inspection Results. All test
and inspection results RSI has provided to any government agency
pursuant to any government contract or subcontract or as a part
of the delivery to the U.S. Government of any article or system
designed, engineered or manufactured by RSI were true, complete
and correct except where any inaccuracy or omission does not or
will not have a material adverse effect on the results of
operations, business, assets or financial condition of RSI. RSI
has provided all material test and inspection results to
government agencies as required by law or pursuant to the terms
of the applicable government contracts or subcontracts, or as may
have been required by law or government contracts or subcontracts
as a part of the delivery to the government of any article or
system RSI designed, engineered or manufactured.
<PAGE>
Section 3.18 Product Warranties. RSI has provided
COMSAT and CTS true, correct and complete copies of the currently
used standard forms and statements of product warranties and
guaranties adopted by RSI with respect to any product or service
provided prior to Closing. RSI reasonably believes that its
reserves for product warranty and other post-sale services
reflected on its consolidated financial statements at and
subsequent to June 30, 1993 are adequate.
Section 3.19 Environmental Protection.
3.19.1 Environmental Permits. Except where
the failure to do so would not have a material adverse effect on
its business or operations, RSI has obtained all permits,
licenses and other authorizations which are required under
Federal, state, local and foreign laws relating to pollution or
protection of the environment, including laws relating to
emissions, discharges, releases or threatened releases of
pollutants, contaminants, chemicals, or industrial, toxic or
hazardous substances or wastes into the environment (including,
without limitation, ambient air, surface water, ground water,
land surface or subsurface strata) or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of pollutants, contaminants,
chemicals, or industrial, toxic or hazardous substances or wastes
or any regulation, code, plan, order, decree, judgment,
injunction, notice or demand letter issued, entered, promulgated
or approved thereunder including without limitation the following
statutes, as amended, (i) Resource Conservation and Recovery Act,
42 U.S.C. section 6901 ("RCRA"); (ii) Comprehensive Environmental
Response, Compensation and Liability Act of 1980, 26 U.S.C. section
4611; 42 U.S.C. section 9601; (iii) Superfund Amendments and
Reauthorization Act of 1984 ("Superfund"); (iv) Clean Air Act, 42
U.S.C. section 7401; (v) The Clean Water Act, 33 U.S.C. section 1251; (vi)
Safe Drinking Water Act, 42 U.S.C. section 300f; and (vii) Toxic
Substances Control Act, 15 U.S.C. section 2601 (collectively, the
"Environmental Laws"). The Disclosure Letter will set forth
prior to Closing (i) all such permits, licenses and other
authorizations issued under the Environmental Laws obtained by
RSI, and (ii) a description and good faith estimate by RSI of the
cost of capital expenditures (if any) that may be necessary to
maintain or qualify for each such permit, license or other
authorization.
3.19.2 No Violation. RSI is in compliance in
all material respects with all terms and conditions of the
required permits, licenses and authorizations, and RSI also is in
compliance in all material respects with all other limitations,
restrictions, conditions, standards, requirements, schedules and
timetables contained or referenced by or in the Environmental
Laws. Any single omission or act of non-compliance shall be
deemed to be "material" under this Subsection 3.19.2 if such
omission or act would result in any liabilities for RSI or the
Surviving Corporation equal to or greater than One Hundred
Thousand Dollars ($100,000), and all omissions or acts of non-
compliance shall be deemed to be "material" under this Subsection
3.19.2 if the aggregate of all such omissions or acts would
result in any liabilities for RSI or the Surviving Corporation
equal to or greater than Five Hundred Thousand Dollars
($500,000).
<PAGE>
3.19.3 Certain Matters. Except as set forth
in the Disclosure Letter, no properties or facilities owned or
leased by RSI contain any (i) underground tanks as defined by any
Environmental Law except for fully-inspectable vault tanks, (ii)
to RSI's knowledge, any polychlorinated biphenyls ("PCB") or PCB
contaminated electrical equipment except light ballasts, and
(iii) to RSI's knowledge, any friable structural asbestos or
asbestos-containing material.
3.19.4 No Litigation or Proceedings. With
respect to or affecting RSI, its business or operations, there is
no pending civil or criminal litigation, notice of violation or
administrative proceeding relating in any way to the
Environmental Laws including, but not limited to, notices, demand
letters, claims, litigations or proceedings based upon or
relating to any Environmental Law, where such litigation, notice
or claim could result in any liability to RSI or the Surviving
Corporation in excess of Fifty Thousand Dollars ($50,000).
3.19.5 No Notice. Except as set forth in the
Disclosure Letter, RSI has no knowledge of any threatened or
potential civil or criminal litigation, notice of violation or
administrative action relating in any way to the Environmental
Laws and involving RSI, its business or operations.
3.19.6 No Basis for Liability. To the
knowledge of RSI, except as set forth in the Disclosure Letter,
with respect to RSI, its business or operations, there are no
past or present events, conditions, circumstances, activities,
practices, incidents, actions or plans which may interfere with
or prevent continued compliance with the Environmental Laws, or
which may give rise to any common law or legal liability, or
otherwise form the basis of any claim, action, demand, suit,
proceeding, hearing, study, or investigation, based on or related
to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling, or the emission,
discharge, release or threatened release into the environment, of
any pollutant, contaminant, chemical, or industrial, toxic or
hazardous substance or waste, including, without limitation, any
liability arising, or any claim, action, demand, suit,
proceeding, hearing, study or investigation which may be brought
under any Environmental Laws.
3.19.7 No Expenditures. To the knowledge of
RSI, except as set forth in the Disclosure Letter, with respect
to RSI, its business or operations, there are no past or present
conditions, circumstances, activities, practices, incidents,
actions or plans which may interfere with or prevent continued
compliance with the Environmental Laws, which may require RSI to
make any capital or other expenditures to comply with any
Environmental Law existing as of Closing, nor is there any
reasonable basis on which any governmental or regulatory body or
agency could take any action that would require any such capital
or other expenditures.
<PAGE>
Section 3.20 Taxes.
3.20.1 Representation. Except as set forth in
the Disclosure Letter, to RSI's knowledge: (i) the reserves
reflected on RSI's June 30, 1993 consolidated statement of
financial position are sufficient for the payment of all unpaid
Taxes of RSI whether or not disputed for all periods through the
date thereof or based on any state of facts existing on or prior
to June 30, 1993; (ii) there has been no audit by the Internal
Revenue Service or any state, local or foreign tax authority of
any Tax Return of RSI resulting in a proposed, asserted or
assessed deficiency, there is no audit that is not closed, and
there are no outstanding agreements or waivers signed or agreed
to by RSI extending the statutory period of limitation applicable
to any Taxes or Tax Return; (iii) there are no outstanding
deficiencies or claims for Taxes asserted or threatened against
RSI; (iv) RSI has duly and timely filed all Tax Returns required
to be filed by it (all such returns being true, correct and
complete in all material respects) with the United States, the
United Kingdom, and the states of California, Virginia, Georgia,
Texas, Florida, New Jersey, Illinois and West Virginia; (v) with
respect to Tax Returns not referenced in (iv) above, RSI has duly
and timely filed all Tax Returns required to be filed by it (all
such returns being true, correct and complete in all material
respects); (vi) none of the Tax Returns referred to in clauses
(iv) and (v) above contain, and RSI has never filed with or
provided to the Internal Revenue Service, a disclosure statement
with respect to any member of the RSI Group under Section 6662 of
the Code (or any predecessor statute); (vii) RSI has duly paid or
set aside reserves or otherwise made provisions for the payment
of all Taxes attributable to the periods covered by the Tax
Returns referenced in (iv) and (v) above; (viii) there are no
liens with respect to Taxes (except statutory liens for Taxes not
yet due or delinquent) upon any of the assets of RSI; (ix) all
Taxes required to be collected or withheld by RSI have been duly
collected or withheld and timely paid to the appropriate tax
authorities; (x) no payments made or that may, as a result of the
Merger, be made by RSI (expressly excluding any payments made
pursuant to agreements entered into after the Merger or
arrangements offered by CTS, COMSAT or any of their affiliates)
will be treated as excess parachute payments within the meaning
of Section 280G of the Code; and (xi) no member of the RSI Group
has applied for a ruling relating to Taxes from any taxing
authority or entered into any closing agreement with any taxing
authority which could affect any member of the RSI Group;
provided, however, that with respect to the representations set
forth in (i), (v), (vii) and (ix), above, any failure or failures
on the part of RSI with respect to any such representation will
constitute a breach of such representation only if such failure
or failures would, in the aggregate, have a material adverse
effect on the business, results of operations or financial
condition of RSI.
3.20.2 Definitions. As used herein, "Taxes"
and all derivations thereof means any federal, state, local or
foreign income, gross receipts, license, payroll, employment,
excise, severance, stamp, occupation, premium, windfall profits,
<PAGE>
environmental, customs, duties, capital stock, franchise,
profits, withholding, social security (or similar), unemployment,
disability, real property, personal property, sales, use, ad
valorem, transfer, registration, value added, alternative or
add-on minimum, estimated, or other tax of any kind whatsoever,
including any interest, penalty, or addition thereto with respect
to which any member of the RSI Group could be held liable. The
term "Tax Returns" shall include all federal, state, local and
foreign returns, declarations, statements, reports, schedules,
and information returns required to be filed with any taxing
authority in connection with any Tax or Taxes. The term "RSI
Group" means RSI and every member of an affiliated group (as
defined in Section 1504 (without regard to Section 1504(b)) of
the Code, provided that for purposes of this Section 3.20,
references to provisions of the Code also include references to
comparable provisions of state, local, or foreign law) which
includes RSI or which has included any RSI subsidiary.
Section 3.21 No Brokers. RSI has not paid or become
obligated to pay any fee or commission to any broker, finder,
investment banker or other intermediary in connection with the
transactions contemplated by this Agreement, other than Alex.
Brown.
Section 3.22 Proxy Statement; Registration
Information. The proxy statement ("Proxy Statement") including
any amendments or supplements thereto with respect to the special
meeting of RSI shareholders contemplated by Section 5.1 herein
will comply as to form in all material respects with the
applicable provisions of the Securities Exchange Act of 1934, as
amended, 15 U.S.C. section 78, and the rules and regulations
promulgated thereunder (the "Exchange Act"), and the information
supplied by RSI for inclusion by COMSAT in the Registration
Statement (as defined in Section 4.4 herein) including any
amendments or supplements thereto with respect to the COMSAT
Stock to be issued pursuant to the Merger, will comply as to form
in all material respects with the applicable provisions of the
Securities Act of 1933, as amended, 15 U.S.C. section 77, and the rules
and regulations promulgated thereunder (the "Securities Act"),
and neither the Proxy Statement nor the information provided by
RSI for inclusion in the Registration Statement will, on the date
of filing thereof with the SEC, on the date of dissemination
thereof to holders of RSI Stock or at any time prior to the
special meeting of RSI shareholders contemplated by Section 5.1
herein, as the case may be, contain any untrue statement of a
material fact or omit to state a material fact required to be
stated therein or necessary to make the statements made therein,
in light of the circumstances under which they are made, not
misleading; provided, however, that the foregoing representation
and warranty shall not include or relate to any information
either furnished by COMSAT for the Proxy Statement or contained
in COMSAT's filings with the SEC (other than the information
provided by RSI for inclusion in the Registration Statement) and
which, in either such case, is included, incorporated by
reference or referred to in the Proxy Statement or the
Registration Statement. If at any time prior to the Effective
Date any event relating to RSI should occur which is required to
be described in an amendment of or supplement to the Registration
Statement or the Proxy Statement, RSI shall promptly so inform
COMSAT and will prepare, or cooperate in the preparation of, such
amendment or supplement.
<PAGE>
Section 3.23 Certain Stock Ownership. RSI does not
own any COMSAT Stock or any options or other arrangements to
acquire COMSAT Stock.
Section 3.24 Material Disclosures. No statement,
representation or warranty made by RSI in this Agreement, in any
Exhibit hereto, in the Disclosure Letter, or in any certificate,
written statement, list, schedule or other document delivered or
to be delivered to COMSAT or CTS hereunder, contains any untrue
statement of a material fact, or fails to state a material fact
necessary to make the statements contained herein or therein, in
light of the circumstances in which they are made, not
misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF COMSAT AND CTS
COMSAT and CTS hereby jointly and severally represent and
warrant to RSI, as of the date hereof, and as of the Closing
Date, as follows:
Section 4.1 Organization. COMSAT is a corporation duly
incorporated, validly existing and in good standing under the
laws of the District of Columbia. CTS is a corporation duly
incorporated, validly existing and in good standing under the
laws of the State of Delaware.
Section 4.2 Corporate Authorization.
4.2.1 Authority. Each of COMSAT and CTS have
all requisite corporate power and authority to enter into and
perform this Agreement and to consummate the transactions contem-
plated hereby. The execution and delivery of this Agreement, the
performance by COMSAT and CTS of their respective obligations
hereunder and the consummation of the transactions contemplated
hereby have been duly authorized by COMSAT's and CTS's Boards of
Directors and no other corporate proceedings are necessary to
authorize this Agreement and the transactions contemplated
hereby. Assuming the valid authorization, execution and delivery
of this Agreement by RSI, this Agreement is a valid and binding
obligation of COMSAT and CTS, enforceable in accordance with its
terms, except as limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application
referring to or affecting enforcement of creditor's rights, or by
general equitable principles.
4.2.2 No Breach or Violation. Execution,
delivery and performance of this Agreement by COMSAT and CTS and
consummation of the transactions contemplated hereby will not
cause a violation, breach or default or result in the termination
of, or accelerate the performance required by, or result in the
creation or imposition of any Encumbrance on any property or
assets of COMSAT or CTS, whether by notice or lapse of time or
both or otherwise conflict with any term or provision of the
following:
<PAGE>
(a) Their respective Articles or
Certificate of Incorporation and By-laws, as amended;
(b) Any note, bond, mortgage or
indenture to which COMSAT or CTS is a party or is bound (i)
where such violation, breach, default, termination, acceleration
or Encumbrance would have a material adverse effect on the
business, results of operations or financial condition of
COMSAT and its subsidiaries, considered as a whole, or (ii) as to
which required consents, amendments or waivers shall not have
been obtained by COMSAT or CTS prior to the Closing for any such
violation, breach, default termination, acceleration or
Encumbrance; or
(c) Any court or administrative order,
writ or injunction or process, or any consent decree to which
COMSAT or CTS is a party or is bound (i) where such violation,
breach, default, termination, acceleration or Encumbrance would
have a material adverse effect on the business, results of
operations or financial condition of COMSAT, or (ii) as to which
required consents, amendments or waivers shall not have been
obtained by COMSAT prior to the Closing for any such violation,
breach, default, termination, acceleration or Encumbrance.
Section 4.3 SEC Filings. COMSAT has furnished to RSI a
true and complete copy of (i) each final prospectus and
definitive proxy statement filed by COMSAT with the SEC since
December 31, 1992, and each report on Form 10-K, 8-K or 10-Q (and
any amendments thereto) filed by COMSAT with the SEC since
December 31, 1992 (collectively, the "COMSAT SEC Documents").
All of the COMSAT SEC Documents complied as to form in all
material respects with the published rules and regulations of the
SEC with respect thereto and none of the COMSAT SEC Documents as
of the dates they were filed with the SEC contained any untrue
statements of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which
they were made, not misleading in each case as of the date when
made.
Section 4.4 Registration Statement; Proxy
Information. The Registration Statement ("Registration
Statement") including any amendments or supplements thereto with
respect to the issuance of the COMSAT Stock pursuant to the
Merger contemplated by Section 5.2 herein will comply as to form
in all material respects with the applicable provisions of the
Securities Act and the information supplied by COMSAT for
inclusion by RSI in the Proxy Statement including any amendments
or supplements thereto with respect to the special meeting of RSI
shareholders contemplated by Section 5.1 herein will comply as to
form in all material respects with the applicable provisions of
the Exchange Act, and neither the Registration Statement nor the
information provided by COMSAT for inclusion in the Proxy
Statement will, on the date of filing thereof with the SEC, on
the date of dissemination thereof to holders of RSI Stock or at
any time prior to the special meeting of RSI shareholders
contemplated by Section 5.1 herein, as the case may be, contain
<PAGE>
any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make
the statements made therein, in light of the circumstances under
which they are made, not misleading; provided, however, that the
foregoing representation and warranty shall not include or relate
to any information either furnished by RSI for the Registration
Statement or contained in RSI's filings with the SEC (other than
information provided by COMSAT for inclusion in the Proxy
Statement) and which, in either such case, is included,
incorporated by reference or referred to in the Registration
Statement or the Proxy Statement. If at any time prior to the
Effective Date any event relating to COMSAT should occur which is
required to be described in an amendment of or supplement to the
Proxy Statement or the Registration Statement, COMSAT shall
promptly so inform RSI and will prepare, or cooperate in the
preparation of, such amendment or supplement.
Section 4.5 Capitalization. The total authorized capital
stock of COMSAT is 100,000,000 shares of common stock, without
par value, and 5,000,000 shares of preferred stock, without par
value, of which, as of December 31, 1993, (a) 40,226,475 shares
of common stock were validly issued and outstanding and were
fully paid and nonassessable and free of preemptive rights, (b)
2,521,780 shares of common stock were subject to issuance upon
the exercise of outstanding options or warrants, and (c)
1,348,003 shares of common stock were issued and held in
treasury. Other than 1,019,350 options and 222,000 restricted
stock awards granted between December 31, 1993 to the date of
this Agreement, there are no other issued and outstanding or
issued and not outstanding shares of capital stock of COMSAT, or
any other securities which are convertible into or exercisable
for capital stock of COMSAT.
Section 4.6 COMSAT Stock. Upon issuance as
contemplated by this Agreement or pursuant to the exercise of
options into which the RSI Options were converted pursuant to
Section 5.10 herein, each share of COMSAT Stock shall be validly
issued, fully paid and nonassessable, and free and clear of any
liens, pledges, mortgages or encumbrances.
Section 4.7 No Brokers. Neither COMSAT nor CTS has paid or
become obligated to pay any fee or commission to any broker,
finder, investment banker or other intermediary in connection
with the transactions contemplated by this Agreement, other than
Goldman, Sachs & Co.
Section 4.8 Material Disclosures. No statement,
representation or warranty made by COMSAT or CTS in this
Agreement, in any Exhibit hereto, or in any certificate, written
statement, list, schedule or other document delivered or to be
delivered to RSI hereunder, contains any untrue statement of a
material fact, or fails to state a material fact necessary to
make the statements contained herein or therein, in light of the
circumstances in which they are made, not misleading.
<PAGE>
ARTICLE V
COVENANTS
Section 5.1 Shareholder Meeting. RSI will call a
special meeting of its shareholders to be held as promptly as
practicable (but no earlier than 30 business days after the date
hereof) for the purpose of obtaining shareholder approval of this
Agreement and the Merger. COMSAT will cooperate with RSI in the
preparation and filing with the SEC as promptly as practicable of
the Proxy Statement for such special meeting, and will cooperate
in the prompt filing of such amendments or supplements to the
Proxy Statement as may be reasonably requested by the SEC or its
staff in order to comply in all material respects with the
Exchange Act. The Proxy Statement shall include the
recommendation of the Board of Directors of RSI that the RSI
shareholders approve this Agreement and authorize the Merger,
unless such recommendation shall have been withdrawn in the
exercise of the fiduciary duties of the RSI Board of Directors to
the RSI shareholders under the Nevada Corporation Law. RSI shall
have no obligation to mail the Proxy Statement to its
shareholders until the Registration Statement is declared
effective by the SEC, as contemplated by Section 5.2 herein.
Section 5.2 Registration Statement. COMSAT will
prepare as promptly as practicable the Registration Statement on
Form S-4 for the issuance of the COMSAT Stock as contemplated
hereunder, and RSI will cooperate with COMSAT in its preparation.
Subject to Section 5.13 herein, COMSAT will file the Registration
Statement with the SEC and shall use all reasonable efforts,
including the filing of amendments with respect thereto, to have
the Registration Statement declared effective by the SEC, and to
maintain the effectiveness of the Registration Statement through
the Effective Date, including the filing of any post-effective
amendments thereto as may reasonably be requested by the SEC
staff or as otherwise required by the Securities Act. COMSAT
shall also take any action required to be taken under state "Blue
Sky" or securities laws in connection with the offering of the
COMSAT Stock to the RSI shareholders and the issuance of the
COMSAT Stock pursuant to the Merger.
Section 5.3 Affiliates' Letters. As soon as
practicable after the date hereof, RSI shall deliver to COMSAT a
list of names and addresses of those persons who are, to the
knowledge of RSI, reasonably anticipated to be at the time of
RSI's special meeting of stockholders convened pursuant to
Section 5.1 hereof, "affiliates" of RSI within the meaning of
Rule 145 (each such person, together with the persons identified
below, being hereinafter referred to as an "Affiliate")
promulgated under the Securities Act ("Rule 145"). RSI shall use
its best efforts to provide COMSAT such information and documents
as COMSAT shall reasonably request for purposes of reviewing such
list. There shall be added to such list the names and addresses
of any other person (within the meaning of Rule 145) which COMSAT
reasonably identifies (by written notice to RSI within three
business days after COMSAT's receipt of such list) as being a
person who may be deemed to be an Affiliate of RSI within the
meaning of Rule 145; provided, however, that no such person
<PAGE>
identified by COMSAT shall be added to the list of Affiliates of
RSI if COMSAT shall receive from RSI, on or before the Effective
Date, an opinion of counsel reasonably satisfactory to COMSAT to
the effect that such person is not an Affiliate. RSI shall use
its best efforts to deliver or cause to be delivered to COMSAT,
at least 30 days prior to the anticipated date of RSI's special
meeting, from each of the Affiliates of RSI identified in the
foregoing list (as the same may be supplemented as aforesaid), a
letter dated as of the Effective Date in the form of Exhibit E
attached hereto.
Section 5.4 Acquisition Proposals. RSI shall not
(nor will it permit any of its officers, directors, agents or
affiliates to) directly or indirectly (i) solicit, encourage,
initiate or participate in any negotiations or discussions with
respect to any offer or proposal to acquire all or substantially
all of its business and properties or capital stock, whether by
merger, purchase of assets, tender offer or otherwise, or (ii)
except as contemplated by this Agreement disclose any information
not customarily disclosed to any person concerning its business
and properties, afford to any person or entity access to its
properties, books or records or otherwise assist or encourage any
person or entity in connection with any of the activities
referred to in clause (i) above; unless in the case of either
clause (i) or (ii) above, RSI shall have received a firm written
offer relating to such transaction, not conditioned upon
financing, from a reputable buyer, which offer, in the written
opinion of Alex. Brown, RSI's financial advisers, appears to be
on terms financially superior to those offered by the
transactions contemplated by this Agreement and which, in the
written opinion of legal counsel to RSI reasonably acceptable to
COMSAT, RSI's Board of Directors is legally obligated to consider
by principles of fiduciary duty to shareholders under the Nevada
Corporation Law.
Section 5.5 HSR Act Filings. COMSAT and RSI shall
promptly make their respective filings, and shall thereafter
promptly make any required submissions or responses to second
requests for information, under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, 15 U.S.C. section 18a (the "HSR
Act"), with respect to the Merger and shall cooperate with each
other with respect to the foregoing.
Section 5.6 Consents. Each of COMSAT and RSI
agrees to use all reasonable efforts expeditiously to (i) obtain
all actions, non-actions, consents, authorizations, orders and
approvals from Federal, state, local and other governmental and
regulatory bodies, and from third parties, as may be required in
connection with, and waivers of any violations, breaches,
defaults, accelerations, terminations or Encumbrances that may be
caused by, the consummation of the Merger or the other
transactions contemplated by this Agreement and the Merger,
including the facilities clearance requirements of the Defense
Investigative Service of the United States Department of Defense
("DIS"), as set forth in the DIS Industrial Security Regulation
(DOD 5220.22-4) and the DIS Industrial Security Manual (DOD
5220.22-M), as may be amended from time to time, and (ii) resolve
favorably any action, suit, proceeding or investigation which
shall have been instituted or which a governmental agency shall
have indicated its intention to institute which could lead to an
order making the Merger unlawful.
<PAGE>
Section 5.7 Interim Operations of RSI. During the
period from the date of this Agreement through the Effective
Date, RSI shall operate its businesses only in the usual and
ordinary course and consistent with past practice and shall use
all reasonable efforts to (i) preserve intact its business
organization and goodwill in all material respects, (ii) keep
available the services of its key officers and employees and
(iii) maintain its relationships with significant customers,
suppliers, distributors and others having significant business
relationships with it, and, subject to the provisions of this
Agreement, except as mutually agreed to in writing by COMSAT, RSI
shall not (A) amend or otherwise change its Restated Articles of
Incorporation or Bylaws; (B) other than pursuant to outstanding
option or other agreements or commitments existing at June 30,
1993, issue, sell or authorize for issuance or sale, shares of
any class of its securities (including, without limitation, by
way of stock split or dividend) or any subscriptions, options,
warrants, rights, convertible securities or other agreements or
commitments of any character obligating it or any of its
subsidiaries to issue such securities, or directly or indirectly
redeem, purchase or otherwise acquire any of its securities; (C)
declare, set aside, make or pay any dividend or other
distribution (whether in cash, stock or property) with respect to
its capital stock other than its regular semi-annual cash
dividends, which in each case shall not be greater than the
highest semi-annual cash dividend paid to its shareholders during
its fiscal year ended June 30, 1993; (D) make any acquisitions or
any dispositions other than in the ordinary course of business;
(E) guarantee employment to or commit to retain any Employee
after the Closing Date; (F) take any action that would cause the
Merger not to qualify as a reorganization within the meaning of
Section 368 of the Code; or (G) take any action that could result
in the Merger not being accounted for by the pooling of interests
method for financial reporting purposes.
Section 5.8 Interim Operations of COMSAT.
Commencing from the date of this Agreement and through the
Effective Date and thereafter, COMSAT shall not (i) take any
action that would cause the Merger not to qualify as a
reorganization within the meaning of Section 368 of the Code, or
(ii) take any action that could result in the Merger not being
accounted for by the pooling of interests method for financial
reporting purposes.
Section 5.9 Access. Subject to reasonable notice
and as permitted by law, RSI shall afford to COMSAT and its
accountants, counsel and other agents and representatives full
access during normal business hours throughout the period prior
to the Effective Date to all of its properties, books, contracts,
commitments and records and, during such period, RSI shall
furnish promptly to COMSAT and its representatives (i) a copy of
each report, schedule and other document filed or received by it
pursuant to the requirements of Federal or state securities laws,
and (ii) access to all other information concerning its business,
properties and personnel as COMSAT may reasonably request,
provided that no investigation pursuant to this Section 5.9 shall
affect or be deemed to modify any representation or warranty
contained herein or the conditions to the obligations of the
parties to consummate the Merger. Without limiting the
generality of the foregoing, RSI shall permit COMSAT and its
representatives to conduct a "Phase I" and "Phase II"
environmental audit on properties owned or leased by RSI or any
<PAGE>
RSI Subsidiary, including the taking of soil samples and the
sinking of monitoring wells at COMSAT's expense, and will
cooperate with COMSAT and its representatives in any
environmental investigation it or they reasonably deem
appropriate in the circumstances. RSI shall promptly upon
request provide COMSAT and CTS access to a complete and correct
copy of each written agreement or other instrument, together with
all amendments or clarifications thereto, and a true and complete
summary of the terms and conditions of each oral agreement,
identified in the Disclosure Letter pursuant to Subsection 3.12.1
or relied upon by RSI in compiling and disclosing its backlog
pursuant to Subsection 3.8.1. If access is restricted due to a
term in the agreement or by applicable law or regulation, RSI
shall use all reasonable efforts to secure consent from the other
party(ies) to the Agreement to provide such access prior to
Closing with sufficient time for COMSAT and CTS review. COMSAT
will treat the documents and other material and information
referred to in this Section 5.9 which constitute "Confidential
Information" as defined in the Confidentiality Agreement between
COMSAT and RSI dated January 16, 1994 (the "Confidentiality
Agreement") as "Confidential Information" in accordance with the
terms of the Confidentiality Agreement. For purposes of this
Agreement, material and information supplied in connection with a
"Phase II" environmental audit shall be treated as "Confidential
Information."
Section 5.10 RSI Options.
5.10.1 No Acceleration. RSI shall not, from
the date hereof to the close of business on the Effective Date,
take any action to accelerate or agree or commit to accelerate
the vesting of any options or rights to acquire RSI Stock (the
"RSI Options"); provided however, that any unvested RSI Options
which shall automatically vest on or prior to the Closing Date in
accordance with the terms by which options were granted, and
without any further action on the part of RSI, shall so vest and
become exercisable in accordance with such terms.
5.10.2 Conversion to COMSAT Options. At the
close of business on the Effective Date, each outstanding RSI
Option shall be converted into an option to acquire that number
of shares of COMSAT Stock in an amount and at an exercise price
determined as provided below and otherwise having the same
duration and other terms as the original RSI Option:
(a) The number of shares of COMSAT
Stock to be subject to the new option shall be equal to the
product of the number of shares of RSI Stock subject to the
original RSI Option times the Conversion Fraction; provided that
any fractional shares resulting from such multiplication shall be
rounded down to the nearest share; and
(b) The exercise price per share for
COMSAT Stock under the new option shall be equal to the product
of the per share exercise price for RSI Stock under the original
RSI Option times the number, rounded to the nearest thousandth,
<PAGE>
obtained by dividing one (1) by the Conversion Fraction; provided
that such exercise price shall be rounded up to the nearest cent.
5.10.3 Plans and Registration. The Board of
Directors of COMSAT, or the appropriate committee thereof, shall,
under the terms of the COMSAT 1990 Key Employee Stock Plan,
cause the options converted pursuant to Subsection 5.10.2 herein,
other than any RSI Option held by directors of RSI, to be assumed
under such plan, and COMSAT shall, if such shares are not
otherwise registered, file a registration statement on Form S-8
(or any successor form thereto) with respect to the shares of
COMSAT Stock underlying such options. COMSAT shall, if
reasonably required to permit resale without restrictions other
than those contemplated by Section 5.3, file a registration
statement on Form S-8 (or any successor form thereto) with
respect to shares of COMSAT Stock underlying RSI Options held by
directors of RSI.
Section 5.11 NYSE Listing. COMSAT shall use its
best efforts to obtain, prior to the Effective Date, approval for
listing on the New York Stock Exchange, upon official notice of
issuance, of the COMSAT Stock to be issued pursuant to the
Merger.
Section 5.12 Disclosure Letter. RSI shall deliver
to COMSAT an update of the Disclosure Letter prior to Closing
with time sufficient for COMSAT's and CTS's review.
Section 5.13 Interim Review. COMSAT may, in its
sole discretion and at its expense, retain Deloitte & Touche to
conduct a review of the consolidated financial statements of RSI
at December 31, 1993. RSI shall cooperate in any such review and
shall use its best efforts to cause such review to be completed
prior to the filing by COMSAT of the Registration Statement with
the SEC. COMSAT shall be under no obligation to file the
Registration Statement with the SEC unless and until such review
has been completed.
Section 5.14 Confidentiality. RSI will treat all
documents and other material and information furnished to it by
COMSAT which constitute "Confidential Information" as defined in
the Confidentiality Agreement as "Confidential Information" in
accordance with the terms of the Confidentiality Agreement.
Section 5.15 Notice. COMSAT agrees to notify RSI
promptly upon COMSAT, CTS or its authorized representatives
having received actual knowledge, as part of COMSAT's due
diligence review of RSI, of a material breach of an RSI
representation or warranty made herein, to the extent RSI has not
already disclosed such material breach to COMSAT or the material
breach is otherwise open and notorious.
Section 5.16 ESOP; Certain Benefits. Simultaneously
with the execution and delivery of this Agreement, COMSAT is
<PAGE>
executing and delivering to the Board of Directors of RSI the
letter attached hereto as Exhibit F concerning the RSI Employee
Stock Ownership Plan and certain other benefits for the employees
and directors of RSI.
Section 5.17 Further Assurances. Each of the
parties hereto agrees to use all reasonable efforts to take, or
cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and
regulations expeditiously to consummate and make effective the
Merger and the other transactions contemplated by this Agreement.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF COMSAT AND CTS
Section 6.1 Conditions. The obligations of COMSAT and CTS
to consummate the Merger under this Agreement shall be subject to
the fulfillment, to their reasonable satisfaction, on or prior to
the Closing Date, of all of the following conditions precedent:
6.1.1 Disclosure Letter. As provided under
Section 5.12 herein, the Disclosure Letter shall have been
updated to the date closest as practicable to the Closing Date
and shall have been delivered with time sufficient for COMSAT's
and CTS's review.
6.1.2 Absence of Changes. The
representations and warranties contained in Subsections 3.5.2 and
3.16.4 herein shall be true and correct on the Closing Date. The
Disclosure Letter schedule referred to in the penultimate
sentence in Subsection 3.8.1 shall show at the Closing Date an
aggregate contract backlog for RSI in all categories of at least
$118,500,000 as required by Subsection 3.8.1.
6.1.3 No Adverse Facts Revealed. No audit,
investigation or due diligence review by COMSAT or its
representatives of RSI with respect to the representations and
warranties contained in Article III, shall have revealed in the
aggregate liabilities of RSI not previously disclosed as of the
date hereof (whether then existing or arising after the date
hereof) which exceed the product of five percent (5%) multiplied
by (i) $18.25 and (ii) the number of shares of RSI common stock
issued and outstanding on the date of this Agreement.
6.1.4 HSR Act Waiting Period. All waiting
periods under the HSR Act with respect to the Merger shall have
been terminated or expired.
6.1.5 Performance by RSI. RSI shall have
performed and complied in all material respects with all
agreements, covenants, obligations and conditions required by
this Agreement to be performed or complied with by RSI on or
before the Closing Date.
<PAGE>
6.1.6 Obtaining of DIS Consents and
Approvals. RSI shall have obtained and delivered to COMSAT all
necessary consents, approvals or waivers on or prior to the
Closing Date as required pursuant to the DIS Industrial Security
Regulation, DOD 5220.22-R, and the DIS Industrial Security Manual
DOD 5220.22-M (as either may be amended from time to time), for
the purpose of retaining any necessary facilities clearances
and/or personnel clearances as the case may be after the Closing
Date.
6.1.7 Obtaining of Consents and Approvals.
RSI shall have executed and delivered to COMSAT and CTS, or shall
have caused to be executed and delivered, any consents, waivers,
approvals, permits, licenses or authorizations which, if not
obtained on or prior to the Closing Date, would have a material
adverse effect on the Surviving Corporation's ability to conduct
business as conducted by RSI on the Closing Date.
6.1.8 Absence of Litigation. There shall not
be in effect any order enjoining or restraining the transactions
contemplated by this Agreement, and there shall not be instituted
or pending any action or proceeding before any Federal, state or
foreign court or governmental agency or other regulatory or
administrative agency or instrumentality challenging the Merger
or the issuance of the COMSAT Stock in connection therewith, or
otherwise seeking to restrain or prohibit consummation of the
transactions contemplated by this Agreement, or seeking to impose
any material limitations on any provision of this Agreement.
6.1.9 Authorization of Merger. The requisite
shareholders of RSI shall have duly voted their shares approving
this Agreement and authorizing the Merger.
6.1.10 Pooling. COMSAT shall have received an
opinion from Deloitte & Touche, dated the Closing Date, that the
Merger as contemplated by this Agreement will be accounted for as
a pooling of interests for financial reporting purposes.
6.1.11 Employment Agreement. RSI shall have
used its best efforts to cause, on or prior to the Closing Date,
Richard E. Thomas to execute and deliver an Employment Agreement
(the "Employment Agreement") in substantially the form of
Exhibit G attached hereto.
6.1.12 RSI Officers' Certificates. COMSAT and
CTS shall have received certificates, dated the Closing Date,
executed on behalf of RSI by appropriate officers, stating that
the representations and warranties set forth in Article III
hereof are true and correct on the Closing Date (unless specified
to be made as of another date, in which case on such specified
date) in all material respects and that the conditions set forth
in Sections 6.1.1 through 6.1.9.
<PAGE>
6.1.13 Comfort Letter. COMSAT and CTS shall
have received a letter, dated as of a date not more than two days
prior to the date that the Registration Statement is declared
effective, and shall have received a subsequent letter, dated as
of a date not more than two days prior to the Effective Date,
from Deloitte & Touche, independent auditors of RSI, addressed to
COMSAT and CTS, to the effect that (i) they are independent
accountants within the meaning of the Securities Act and the
Exchange Act; (ii) in their opinion, the financial statements of
RSI included in the Registration Statement comply as to form in
all material respects with the applicable accounting requirements
of the Securities Act and the Exchange Act, (iii) on the basis of
limited procedures specified in their letter, which need not
constitute an audit, nothing has come to their attention which
would give them reason to believe that (A) since December 31,
1993, to the date of such letter there has been any increase in
the outstanding capital stock or rights, securities, options or
obligations exercisable for or convertible into shares of capital
stock, or in the consolidated indebtedness, of RSI, (B) there has
been any change in specified balance sheet items of RSI since the
date of the most recent financial statements included in the
Registration Statement and the Proxy Statement or (C) since
December 31, 1993 to the date of such letter, there has been any
decrease in the net income of RSI as compared with the
corresponding period for the prior year, except with respect to
each of clauses (A), (B) and (C) for any such increase, change or
decrease referred to in or contemplated by the Registration
Statement and the Proxy Statement or specified in such letter.
6.1.14 Opinion of RSI's Counsel. RSI shall
have furnished COMSAT and CTS with an opinion of Shaw, Pittman,
Potts & Trowbridge, special counsel for RSI, dated the Closing
Date, substantially in the form of Exhibit H.
6.1.15 Other Documents. The execution and
delivery to COMSAT and CTS by RSI of such other certificates,
documents and instruments as COMSAT may reasonably request.
Section 6.2 Waiver. COMSAT and CTS may, at their sole
discretion, waive in writing fulfillment of any or all of the
conditions set forth in Section 6.1 of this Agreement, provided
that such waiver granted by COMSAT and CTS pursuant to this
Section 6.2 shall have no effect upon or as against any of the
other conditions not so waived. To the extent that at the
Closing RSI delivers to COMSAT a written notice specifying in
reasonable detail the failure of any of such conditions or the
breach by RSI of any of the representations or warranties of RSI
herein, and nevertheless COMSAT proceeds with the Closing, COMSAT
shall be deemed to have waived for all purposes any rights or
remedies it may have against RSI or, except in the case of fraud
or gross negligence, any of its directors, officers or employees
by reason of the failure of any such conditions or the breach of
any such representations or warranties to the extent described in
such notice. Following the Closing, no claims for breach of any
representations, warranties or agreements shall be brought
against any director or officer, or any employee listed in the
Disclosure Letter as providing "knowledge" with respect to RSI's
<PAGE>
representations and warranties as of the Closing Date as
referenced in clause (ii) of the last sentence in the
introductory paragraph in Article III, if and to the extent such
person did not have actual knowledge or had no reason to know (in
light of circumstantial evidence made available to them on or
prior to Closing) of the facts material to such breach of any
representation, warranty or agreement.
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF RSI
Section 7.1 Conditions. The obligations of RSI to
consummate the Merger under this Agreement herein shall be
subject to the fulfillment, to its reasonable satisfaction, on or
prior to the Closing Date, of all of the following conditions
precedent:
7.1.1 HSR Act Waiting Period. All waiting
periods under the HSR Act with respect to the Merger shall have
been terminated or expired.
7.1.2 Performance by COMSAT and CTS. Each of
COMSAT and CTS shall have performed and complied in all material
respects with all agreements, covenants, obligations and condi-
tions required by this Agreement to be performed or complied with
by COMSAT and CTS on or before the Closing Date.
7.1.3 Obtaining of DIS Consents and
Approvals. COMSAT shall have obtained and delivered to RSI all
necessary consents, approvals or waivers on or prior to the
Closing Date as required pursuant to the DIS Industrial Security
Regulation. DOD 5220.22-R, and the DIS Industrial Security
Manual DOD 5220.22-M (as either may be amended from time to
time), for the purpose of retaining any necessary facilities
clearances and/or personnel clearances as the case may be after
the Closing Date.
7.1.4 Obtaining of Consents and Approvals.
COMSAT and CTS shall have executed and delivered to RSI, or shall
have caused to be executed and delivered, any consents, waivers,
approvals, permits, licenses or authorizations which, if not
obtained on or prior to the Closing Date, would have a material
adverse effect on the Surviving Corporation's ability to conduct
business as conducted by RSI on the Closing Date.
7.1.5 Pooling. RSI shall have received an
opinion from Deloitte & Touche, dated the Closing Date, that the
Merger as contemplated by this Agreement will be accounted for as
a pooling of interests for financial reporting purposes.
7.1.6 Absence of Litigation. There shall not
be in effect any order enjoining or restraining the transactions
contemplated by this Agreement.
<PAGE>
7.1.7 Registration Statement; NYSE Listing.
The Registration Statement shall have become effective under the
Securities Act prior to the first mailing of the Proxy Statement
to shareholders of RSI and the Registration Statement shall, at
the date of the meeting of RSI shareholders called pursuant to
Section 5.1 of this Agreement and at all times thereafter to and
including the Effective Date, have been effective and no stop
order suspending the effectiveness thereof shall have been issued
during such period and not withdrawn and no stop order shall be
pending at the Effective Date. The COMSAT Stock to be issued
pursuant to the Merger shall have been approved for listing on
the New York Stock Exchange, upon official notice of issuance.
7.1.8 Authorization of Merger. The requisite
shareholders of RSI shall have duly voted their shares approving
this Agreement and authorizing the Merger.
7.1.9 Officers' Certificates. RSI shall have
received certificates, dated the Closing Date, executed on behalf
of COMSAT by appropriate officers stating that the
representations and warranties set forth in Article IV hereof are
true and correct on the Closing Date (unless specified to be made
as of another date, in which case on such specified date) in all
material respects and that the conditions set forth in Sections
7.1.1 through 7.1.8 hereof have been satisfied.
7.1.10 Other Documents. The execution and
delivery to RSI by COMSAT and CTS of such other certificates,
documents and instruments as RSI may reasonably request.
7.1.11 Opinion of COMSAT's Counsel. COMSAT
shall have furnished RSI with the opinion of Crowell & Moring,
special counsel for COMSAT, dated the Closing Date, substantially
in the form of Exhibit I.
Section 7.2 Waiver. RSI may, in its sole discretion, waive
in writing fulfillment of any or all of the conditions set forth
in Section 7.1 of this Agreement, provided that such waiver
granted pursuant to this Section 7.2 shall not constitute a
waiver by RSI of any other conditions not so waived.
ARTICLE VIII
TERMINATION
Section 8.1 Termination Events. Subject to the provisions
of Section 8.2, this Agreement may, by written notice given at or
prior to the Closing (in the manner provided by Section 9.9
herein) be terminated and abandoned only as follows:
8.1.1 Breach. By either COMSAT or RSI upon
written notice if a material default or breach shall be made by
the other, with respect to the due and timely performance of any
<PAGE>
of the other party's respective covenants and agreements
contained herein, or with respect to the due compliance with any
of the other party's respective representations and warranties
contained in Article III or IV herein, as applicable, and such
default cannot be cured prior to Closing and has not been waived;
8.1.2 Mutual Consent. By mutual written
consent of the parties hereto; or
8.1.3 Failure of Conditions to Close. By
either COMSAT or RSI, if by reason of failure of their respective
conditions to close contained in Article VI or VII herein, as
applicable, and such conditions have not been satisfied or waived
by December 31, 1994, or such later date as may be agreed upon by
the parties hereto, provided that the right to terminate this
Agreement under this Subsection 8.1.3 shall not be available to a
party whose failure to fulfill any obligation or perform any
covenant under this Agreement has been the cause of or resulted
in the failure of any of the conditions to close of the other
party hereto by such date.
Section 8.2 Effect of Termination. In the event this
Agreement is terminated pursuant to Section 8.1 herein, all
further rights and obligations of the parties hereunder shall
terminate, provided that if RSI at any time prior to December 31,
1994 is acquired by, merges, effectuates a business combination
with, or sells substantially all of its assets to any person or
entity not controlled by COMSAT, or agrees to do any of the
foregoing, RSI shall immediately upon such action or agreement
pay to COMSAT Five Million Dollars ($5,000,000), plus all of
COMSAT's costs, fees and expenses incurred in connection with
this Agreement and the Merger as contemplated hereby, including
fees and expenses of its accountants, investment advisers and
counsel, and provided further that the total payment RSI shall
pay to COMSAT immediately upon such action or agreement shall not
in any event exceed Seven Million, Five Hundred Thousand Dollars
($7,500,000).
Section 8.3 Fees and Expenses; Damages. Except as
otherwise provided in Section 8.2 herein, in the event this
Agreement is terminated for any reason and the Merger is not
consummated each party shall be responsible for its own costs,
fees and expenses, including fees and expenses of its
accountants, investment advisers and counsel, provided, however,
that if the termination is caused by the breach of COMSAT and CTS
on the one hand, or the breach of RSI on the other hand, the
breaching party(ies) shall pay to the non-breaching party(ies) as
liquidated damages (and as its sole and exclusive remedy) the
actual costs and expenses of the non-breaching party(ies),
including the fees and expenses of its accountants, investment
advisers and counsel, not to exceed Two Million Five Hundred
Thousand Dollars ($2,500,000).
<PAGE>
ARTICLE IX
MISCELLANEOUS
Section 9.1 Construction.
9.1.1 Words. All references in this
Agreement to the singular shall include the plural where appli-
cable, and all references to gender shall include both genders
and neuter.
9.1.2 Cross-References. References in this
Agreement to any Article shall include all Sections, Subsections
and Paragraphs in such Article; references in this Agreement to
any Section shall include all Subsections and Paragraphs in such
Section; and references in this Agreement to any Subsection shall
include all Paragraphs in such Subsection.
9.1.3 No Presumption. In interpreting any
provision of this Agreement no presumption shall be drawn against
the party drafting the provision.
9.1.4 Headings. Article, Section and
Subsection headings of this Agreement are for convenience only
and are not to be construed as part of this Agreement or as
defining or limiting in any way the scope or intent of the
provisions hereof.
9.1.5 Exhibits. Exhibits and the Disclosure
Letter referred to herein are hereby incorporated into and made a
part of this Agreement. Any material disclosed in any part of
the Disclosure Letter shall be deemed disclosed for purposes of
all of the representations and warranties of RSI contained in
Article III herein.
9.1.6 Time. Time shall be of the essence in
the performance of each party's respective obligations under this
Agreement.
Section 9.2 Severability. If any part of this Agreement
for any reason shall be declared invalid, such decision shall not
affect the validity of any remaining portion, which shall remain
in full force and effect.
Section 9.3 Further Assurances. Each party shall at its
own expense furnish, execute and deliver such documents, instru-
ments, certificates, notices or other further assurances as the
other party may reasonably require as necessary or appropriate to
effect the purposes of this Agreement or to confirm the rights
created or arising hereunder.
Section 9.4 Benefit. Unless otherwise specified herein, no
person who is not a party to this Agreement shall have any rights
<PAGE>
or derive any benefit hereunder. No provision of this Agreement
except Exhibit G shall constitute an agreement of employment.
Section 9.5 Scope and Modification. This Agreement, the
Stock Option Agreement, and Sections 1 through 4 and Section 7 of
the Confidentiality Agreement, constitute the entire agreement
between the parties and supersede all prior oral or written
agreements (including the Confidentiality Agreement except as
specifically referenced in this Section 9.5) or understandings of
the parties with regard to the subject matter hereof. No
interpretation, modification, termination or waiver of any
provision hereof shall be binding upon a party unless in writing
and executed by the other parties. No modification, waiver,
termination, rescission, discharge or cancellation of any right
or claim under this Agreement shall affect the right of any party
hereto to enforce any other claim or right hereunder.
Section 9.6 Delays or Omissions. Except as expressly pro-
vided in this Agreement, no delay or omission to exercise any
right, power or remedy accruing to a party hereunder, upon any
breach or default of any party under this Agreement, shall impair
any such right, power or remedy, nor shall it be construed to be
a waiver of any such breach or default, or an acquiescence
therein, or a waiver of or acquiescence in any similar breach or
default thereafter occurring; nor shall any waiver of any single
breach or default be deemed a waiver of any other breach or
default theretofore or thereafter occurring.
Section 9.7 Successors and Assigns. This Agreement may not
be assigned by any party without the written consent of the other
parties. Except as otherwise expressly provided herein, the
provisions of this Agreement shall inure to the benefit of, and
be binding upon, the successors and permitted assigns of the
parties hereto.
Section 9.8 Governing Law. The terms and provisions of
this Agreement shall be interpreted in accordance with and gov-
erned by the laws of the State of Maryland and the United States
of America, without giving effect to the doctrine of conflict of
laws.
Section 9.9 Notices. Any notice under this Agreement shall
be in writing and shall be delivered by personal service or by
United States certified or registered mail, with postage prepaid,
or by facsimile or overnight express courier, addressed to a
party at the address set forth beneath its name, below, or at
such other address as one party may give written notice of to the
other parties.
<PAGE>
(a) If to COMSAT or CTS:
C. Thomas Faulders, III
Vice President and Chief Financial
Officer
COMSAT Corporation
6560 Rock Spring Drive
Bethesda, MD 20817
Fax: (301) 214-7131
With a copy to:
Warren Y. Zeger, Esq.
Vice President and General Counsel
COMSAT Corporation
6560 Rock Spring Drive
Bethesda, MD 20817
Fax: (301) 214-7128
And to:
William P. O'Neill, Esq.
Crowell & Moring
1001 Pennsylvania Avenue, N.W.
Washington, D.C. 20004-2505.
Fax: (202) 628-5116
(b) If to RSI:
Richard E. Thomas
Chairman, Chief Executive Officer
and President
Radiation Systems Inc.
1501 Moran Road
Sterling, VA 20166
Fax: (703) 450-2701
With a copy to:
John L. Sullivan, III, Esq.
Shaw, Pittman, Potts & Trowbridge
1501 Farm Credit Drive
Suite 4400
McLean, VA 22102-5000
Fax: (703) 821-2397
<PAGE>
And to:
Lynn A. Soukup, Esq.
Shaw, Pittman, Potts & Trowbridge
2300 N Street, N.W.
Washington, D.C. 20037-1128
Fax: (202) 663-8007
The designation of the person(s) to be so notified, or the
address or facsimile of such person(s) for the purposes of such
notice, may be changed from time to time by means of a similar
notice. Copies to counsel shall not constitute notice.
Section 9.10 Duplicates. This Agreement may be
executed in one or more counterparts, each of which shall
constitute an original document.
Section 9.11 Cooperation. The parties shall
consult and cooperate with one another regarding, and shall use
their respective reasonable efforts to seek and obtain, the
approvals, consents and other documents contemplated by this
Agreement, and shall use their respective best efforts to cause
the statutory and other conditions to their respective
obligations hereunder to be satisfied.
Section 9.12 Public Announcements. RSI and COMSAT
agree that they will not issue any press release or otherwise
make any public statement or respond to any press inquiry with
respect to this Agreement or the transactions contemplated
hereby, without the prior approval of the other party, except as
may be required by law; if any such disclosure is required by law
the disclosing party shall use its best efforts to give notice
and an opportunity to consult to the other party prior to such
required disclosure.
<PAGE>
EXECUTION AND DELIVERY
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement with the express intent that it be
effective, legal and binding as of the date and year first-above
written.
COMSAT CORPORATION
By: /s/ Bruce L. Crockett
-----------------------
Name: Bruce L. Crockett
Title: President
CTS AMERICA, INC.
By: /s/ C. Thomas Faulders, III
-----------------------------
Name: C. Thomas Faulders, III
Title: President
RADIATION SYSTEMS, INC.
By: /s/ Richard E. Thomas
-------------------------
Name: Richard E. Thomas
Title: Chairman
<PAGE>
EXHIBIT 2(b)
<PAGE>
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT dated as of January 30, 1994, by and
between COMSAT CORPORATION, a District of Columbia corporation
("COMSAT"), and RADIATION SYSTEMS, INC., a Nevada corporation
(the "Company").
WHEREAS, the Company, COMSAT and CTS America, Inc., a Delaware
corporation and a wholly owned subsidiary of COMSAT ("CTS"), propose
to enter into an Agreement and Plan of Merger, dated as of the date
hereof (the "Merger Agreement"), which provides, among other things,
upon the terms and subject to the conditions thereof, that the Company
will be merged with and into CTS, with CTS to be the surviving corporation,
and that each outstanding share of common stock, par value $1.00 per share
of the Company (the "Company Common Stock") will be converted into the
right to receive that fraction of a share, rounded to the nearest thousandth
(the "Conversion Fraction"), of common stock, without par value, of COMSAT
(the "COMSAT Stock") determined by dividing Eighteen Dollars and twenty-
five cents ($18.25) by the average closing price of a whole share of
COMSAT Stock on the New York Stock Exchange Composite Tape for the
twenty (20) Trading Days ending with the Trading Day which precedes the
Closing Date by five (5) Trading Days (a "Trading Day" being any day on
which the New York Stock Exchange is open for business and on which shares
of COMSAT Stock are traded on that Exchange), provided that the Conversion
Fraction shall not be less than .638 and shall not be greater than .780;
and
WHEREAS, as a condition to its willingness to enter into the Merger
Agreement, COMSAT has required that the Company agree, and in order to
induce COMSAT to enter into the Merger Agreement the Company has agreed,
to grant the COMSAT Option (as hereinafter defined).
NOW THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth herein and in the Merger Agreement,
the parties hereto agree as follows:
1. Grant of Option. The Company hereby grants to COMSAT an
unconditional, irrevocable option (the "COMSAT Option") to purchase a
number of shares of Company Common Stock equal to Fifteen Percent (15%)
of the shares of Company Common Stock outstanding on the date hereof
(the "Option Shares") at an exercise price of Eighteen Dollars and
twenty-five cents ($18.25) per Option Share (the "COMSAT Option Exercise
Price").
2. Exercise of Option. Provided that COMSAT or CTS is not then
in material breach of its obligations under the Merger Agreement, COMSAT
may exercise the COMSAT Option, in whole or in part, at any time, in
the event that any corporation, partnership, person, other entity or
group (as defined in Section 13(d)(3) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")) (collectively, a "Person"), other
<PAGE>
than COMSAT or any of its subsidiaries, (i) acquires beneficial ownership
(as such term is defined in Rule 13d-3 under the Exchange Act) of at
least Fifteen Percent (15%) of the outstanding shares of Company Common
Stock, (ii) enters into an agreement with the Company or any of its
material subsidiaries to merge or consolidate with the Company or any of
its subsidiaries, or to purchase all or substantially all of the
consolidated assets of the Company (or effects any such merger,
consolidation or purchase) and the Merger Agreement is terminated,
or (iii) has commenced or commences (as such terms are defined in
Rule 14d-2 under the Exchange Act) a tender or exchange offer for at
least Fifteen Percent (15%) of the outstanding shares of Company Common
Stock that is not opposed by the Company and the Company is no longer
supporting the Merger Agreement and the transactions contemplated thereby.
In the event COMSAT wishes to exercise the COMSAT Option for some
or all of the Option Shares, COMSAT shall send a written notice to the
Company stating the number of Option Shares that it wishes to purchase
and setting forth a place and date not earlier than one nor, subject
to Section 8 herein, later than ten business days from the date such notice
is given for the closing of such purchase (a "COMSAT Option Closing").
3. Payment and Delivery of Certificates. (a) At a COMSAT Option
Closing, COMSAT will make payment to the Company of the aggregate price
for the Option Shares being purchased at the COMSAT Option Closing by
delivery of immediately available funds to the Company, and the Company
will deliver to COMSAT a certificate or certificates representing the
Option Shares being so purchased, registered in the name of COMSAT.
(b) Certificates for the Option Shares delivered at each COMSAT
Option Closing shall be endorsed with a restrictive legend which shall
read substantially as follows:
THE TRANSFER OF THE STOCK REPRESENTED BY THIS CERTIFICATE IS
SUBJECT TO RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, AND PURSUANT TO THE TERMS OF A STOCK OPTION
AGREEMENT DATED AS OF JANUARY __, 1994. A COPY OF SUCH
AGREEMENT WILL BE PROVIDED TO THE HOLDER HEREOF WITHOUT
CHARGE UPON RECEIPT BY THE ISSUER OF A WRITTEN REQUEST
THEREFORE.
It is understood and agreed that the above legend shall be removed by
delivery of substitute certificate(s) without such legend if COMSAT shall
have delivered to the Company a copy of a letter from the staff of the SEC,
or an opinion of counsel in form and substance reasonably satisfactory to
the Company and its counsel, to the effect that such legend is not required
for purposes of the Securities Act.
4. Option Value. In the event that the COMSAT Option becomes
exercisable pursuant to paragraph 2 hereof, and COMSAT so requests in
lieu of exercise of the COMSAT Option, then the Company shall promptly,
<PAGE>
and in no event later than five (5) business days after receipt of such
request, pay to COMSAT an amount in cash (the "COMSAT Option Value")
equal to the product of (x) the excess, if any, of (A) the highest price
per share paid or proposed to be paid in connection with any transaction
specified in Section 2 or Section 10(b)(ii), as applicable, herein for any
shares of Company Common Stock, or the greatest aggregate consideration
paid or proposed to be paid in connection with any transaction specified
in Section 2 or Section 10(b)(ii), as applicable, herein for the purchase
of assets of the Company divided by the number of shares of Company
Common Stock then outstanding, as the case may be (the value of any
such price or consideration other than cash to be determined, in the
case of consideration with a readily ascertainable market value, by
reference to such market value and, in the case of any other consideration,
by agreement in good faith between COMSAT and the Company), over (B) the
COMSAT Option Exercise Price, multiplied by (y) the total number of
shares still subject to the COMSAT Option. Such payment shall be made by
delivery of immediately available funds to COMSAT and shall extinguish
all other rights of COMSAT under this Agreement.
5. Representations and Warranties of the Company. The Company
hereby represents and warrants to COMSAT as follows:
(a) Authority Relative to this Agreement. The Company
has full corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby have been duly and
validly authorized by the Board of Directors of the Company and
no other corporate proceedings on the part of the Company are
necessary to authorize this Agreement or to consummate the
transactions so contemplated. This Agreement has been duly
and validly executed and delivered by the Company and, assuming
this Agreement and the Merger Agreement constitute valid and
binding obligations of COMSAT, this Agreement constitutes a
valid and binding agreement of the Company, enforceable against
the Company in accordance with its terms.
(b) Option Shares. The Company has taken all necessary
corporate action to authorize and reserve and to permit it to
issue, and at all times from the date hereof through the
Termination Date (as hereinafter defined) will have reserved
for issuance upon exercise of the COMSAT Option, a number of
shares of Company Common Stock equal to the number of Option
Shares to permit the exercise in full of the COMSAT Option,
all of which shares, upon issuance pursuant hereto, shall be
duly authorized, validly issued, fully paid and nonassessable,
and shall be delivered free and clear of all claims, liens,
encumbrances and security interests and not subject to any
preemptive rights.
<PAGE>
6. Representations and Warranties of COMSAT. COMSAT hereby
represents and warrants to the Company as follows:
(a) Authority Relative to this Agreement. COMSAT has
full corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby have been duly and
validly authorized by the Board of Directors of COMSAT and no
other corporate proceedings on the part of COMSAT are necessary
to authorize this Agreement or to consummate the transactions so
contemplated. This Agreement has been duly and validly
executed and delivered by COMSAT and, assuming this Agreement
and the Merger Agreement constitute valid and binding obligations
of the Company, this Agreement constitutes a valid and binding
agreement of COMSAT, enforceable against COMSAT in accordance
with its terms.
(b) Distribution. COMSAT will acquire the Option Shares
for its own account and not with a view to any resale or
distribution thereof, and will not sell the Option Shares
unless such shares are registered under the Securities Act of 1933
or unless an exemption from registration is available.
7. Adjustment Upon Changes in Capitalization. In the event of any
change in the shares of Company Common Stock by reason of stock dividends,
split-ups, mergers, recapitalizations, combinations, conversions, exchanges
of shares or the like, the number and kind of shares of Company Common Stock
subject to the COMSAT Option and the purchase price per share shall be
appropriately adjusted.
8. Consents. The Company will use its best efforts to obtain
any approvals and consents, and otherwise to satisfy any requirements, of
all governmental authorities and laws necessary to the consummation of
the transactions contemplated by this Agreement. The consummation of
such transactions shall be subject to, and, if delayed pursuant to this
Section 8, shall occur promptly after (whether before or after the
Termination Date) the receipt of such necessary approvals or consents
and satisfaction of such requirements.
9. Registration Rights; Listing. The Company shall, if reasonably
requested by COMSAT within three years of the first exercise of the
COMSAT Option (or any portion thereof), as expeditiously as possible
prepare and file a registration statement under the Securities Act
regarding the offer and sale or other disposition of any or all shares
of Company Common Stock or other securities that have been acquired by
or are issuable to COMSAT upon exercise of the COMSAT Option in
accordance with the intended method of sale or other disposition by
COMSAT, and the Company shall use its best efforts to qualify such
shares or other securities under any applicable state securities laws.
COMSAT agrees to use all reasonable efforts to cause, and to cause any
<PAGE>
underwriters of any sale or disposition to cause, any sale or other
disposition pursuant to such registration statement to be effected on a
widely distributed basis so that upon consummation thereof no purchaser
or transferee shall own beneficially more than 5% of the then outstanding
voting power of the Company. The Company shall use its best efforts to
cause such registration statement to become effective, to obtain all
consents or waivers of other parties that are required therefor and to
keep such registration statement effective for a period not in excess
of 180 days from the day such registration statement first becomes
effective as may be reasonably necessary to effect such sale or other
disposition. The obligations of the Company hereunder to file a
registration statement and to maintain its effectiveness may be
suspended for one or more periods of time not exceeding 45 days in the
aggregate if the Board of Directors of the Company shall determined that
the filing of such registration statement or the maintenance of its
effectiveness would require disclosure of nonpublic information that
would materially and adversely affect the Company. Any registration
statement prepared and filed under this Section 9, and any sale covered
thereby, shall be at the Company's expense except for underwriting
discounts or commissions, brokers' fees and the fees and disbursements
of COMSAT's counsel related thereto. COMSAT shall provide all information
reasonably requested by the Company for inclusion in any registration
statement to be filed hereunder. If during the time period referred to
in the first sentence of this Section 9 the Company effects a registration
under the Securities Act of Company Common Stock for its own account or
for any other stockholders of the Company (other than on Form S-4 or
Form S-8, or any successor form), it shall allow COMSAT the right to
participate in such registration; provided that, if the managing
underwriters of such offering advise the Company in writing that in
their opinion the number of shares of Company Common Stock requested
to be included in such registration exceeds the number which can be sold
in such offering, the Company shall include the shares requested to
be included therein by COMSAT pro rata with the shares intended to be
included therein by the Company (and by no others). In connection with
any registration pursuant to this Section 9, the Company and COMSAT shall
provide each other and any underwriter of the offering with the
customary representations, warranties, covenants, indemnification and
contribution in connection with such registration. The Company will
use its best efforts promptly to list on the NASDAQ National Market
System or a national securities exchange, whichever is the principal
trading market for the Company Common Stock on the date of exercise of
the COMSAT Option, upon official notice of issuance, the Option Shares
issued upon exercise of the COMSAT Option.
10. Termination; Certain Protection.
(a) Except as otherwise contemplated hereby, all the
provisions of this Agreement shall terminate upon the date
(the "Termination Date") which is thirty (30) days after
the termination of the Merger Agreement.
<PAGE>
(b) In the event that (i) prior to the Termination
Date any Person, other than COMSAT or any of its affiliates,
shall publicly announce or communicate to the Company a
proposal (A) to merge or consolidate with the Company or any of
its subsidiaries, or to purchase all or substantially all of
the assets of or otherwise to acquire the Company, or (B) to
make any tender or exchange offer for shares of Company Common
Stock and (ii) within one year after the Termination Date
such Person or a related Person (x) acquires at least Fifteen
Percent (15%) of the outstanding shares of Company Common Stock,
(y) enters into an agreement with the Company or any of its
subsidiaries to merge or consolidate with the Company or any of
its subsidiaries or to purchase all or substantially all of the
assets of the Company (or effects any such merger, consolidation
or purchase) or (z) commences a tender offer or exchange offer
for at least Fifteen Percent (15%) of the outstanding shares
of Company Common Stock that is supported by the Company, then
the Company shall promptly pay to COMSAT the COMSAT Option Value.
11. Assignment. COMSAT shall not sell, assign, convey or transfer
the COMSAT Option other than to any wholly owned subsidiary of COMSAT.
This Agreement shall be binding upon and inure to the benefit of each
party's successors and assigns.
12. Specific Performance. The parties hereto acknowledge that
damages would be an inadequate remedy for a breach of this Agreement
and that the obligations of the parties hereto shall be specifically
enforceable. Accordingly, it is agreed that COMSAT shall be entitled to
injunctive relief to prevent breaches of this Agreement by the Company
and specifically to enforce the terms and provisions hereof, in addition
to any other remedy to which it may be entitled, at law or in equity.
13. Entire Agreement. This Agreement and the Merger Agreement
constitute the entire agreement among the parties with respect to the
subject matter hereof and supersede all other prior agreements and
understandings, both written and oral, among the parties or any of them
with respect to the subject matter hereof.
14. Validity. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of
any other provisions of this Agreement, which shall remain in full force
and effect.
15. Notices. All notices, requests, claims, demands and other
communications hereunder shall be deemed to have been duly given when
delivered in person, by registered or certified mail (postage prepaid,
return receipt requested) or by facsimile to the respective parties
at their respective addresses set forth in the Merger Agreement, or at
such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth
<PAGE>
in the Merger Agreement (provided that notice of any change of address
shall be effective only upon receipt thereof).
16. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Maryland.
17. Descriptive Headings. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be
part of or to affect the meaning or interpretation of this Agreement.
18. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all
of which shall constitute one and the same agreement.
19. Expenses. All costs and expenses incurred in connection with
the transactions contemplated by this Agreement shall be paid by the
party incurring such expenses.
20. Benefit. No person who is not a party to this Agreement
shall have any rights or derive any benefit hereunder.
21. Transfer. If COMSAT has exercised the COMSAT Option,
COMSAT shall not sell, transfer, pledge, or hypothecate the Option
Shares except pursuant to a bona fide third party offer (the "Third
Party Offer"), and without first tendering the Option Shares to the
Company at the price or equivalent value as that provided for in the
Third Party Offer. Such tender shall be made in writing and be held
open for 15 days. Notwithstanding the above, COMSAT shall have no
obligation to tender the Option Shares if the Third Party Offer is
made by any member or members of a group (as defined in
Section 13(d)(3) of the Exchange Act) to which COMSAT is also member.
IN WITNESS WHEREOF, each of the parties has caused this Agreement
to be executed on its behalf by its officers thereunto duly authorized,
all as of the day and year first above written.
COMSAT CORPORATION
By: /s/ Bruce L. Crockett
-------------------------
Name: Bruce L. Crockett
Title: President
<PAGE>
RADIATION SYSTEMS, INC.
By: /s/ Richard E. Thomas
-------------------------
Name: Richard E. Thomas
Title: Chairman
<PAGE>
EXHIBIT 4(a)
<PAGE>
20604
__________ __________
NUMBER SHARES
CS
__________ __________
THE TRANSFERABILITY OF THESE THE TRANSFERABILITY OF THESE
SHARES IS SUBJECT TO THE SHARES IS SUBJECT TO THE
CONDITIONS SET FORTH ON THE CONDITIONS SET FORTH ON THE
REVERSE SIDE. REVERSE SIDE.
DOMESTIC SHARE
CERTIFICATE
SERIES [PICTURE] SERIES
I I
INCORPORATED UNDER THE SEE REVERSE FOR
DISTRICT OF COLUMBIA CERTAIN DEFINITIONS
BUSINESS CORPORATION ACT
CUSIP 20564D 10 7
COMSAT CORPORATION
___________________________________________________________________________
This is to Certify that
SPECIMEN
is the owner of
___________________________________________________________________________
FULLY PAID AND NON-ASSESSABLE SHARES, WITHOUT PAR VALUE, OF SERIES I COMMON
STOCK OF
COMSAT Corporation, transferable on the books of the Corporation by the
holder hereof in person or by duly authorized attorney on surrender of this
Certificate properly endorsed. This Certificate and the shares represented
hereby are issued and shall be subject to the provisions of the
Communications Satellite Act of 1962, the Articles of Incorporation and By-
laws of the Corporation, and all amendments thereto (copies of which are on
file with the Transfer Agent), to all of which the holder hereof by
acceptance of this Certificate assents. This Certificate is not valid
until countersigned by the Transfer Agent and registered by the Registrar.
In Witness Whereof, the Corporation has caused this Certificate to be
signed by its duly authorized officers and its corporate seal to be
hereunto affixed.
[CORPORATE SEAL]
Dated:
COUNTERSIGNED AND REGISTERED:
THE BANK OF NEW YORK \S\ Bruce L. Crockett
(NEW YORK) TRANSFER AGENT ______________________
AND REGISTRAR PRESIDENT AND CHIEF
EXECUTIVE OFFICER
BY
\S\ Jerome W. Breslow
______________________
AUTHORIZED SIGNATURE VICE PRESIDENT AND
SECRETARY
__________________________
American Bank Note Company
__________________________
<PAGE>
[Back of Certificate]
The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out in
full according to applicable laws or regulations:
TEN COM -- as tenants in common
TEN ENT -- as tenants by the entireties
JT TEN -- as joint tenants with right of survivorship and
not as tenants in common
UNIF GIFT MIN ACT -- .............. Custodian..............
(Cust) (Minor)
under Uniform Gifts to Minors Act
.................
(State)
Additional abbreviations may also be used though not in the above list.
For value received, __________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER TAXPAYER IDENTIFYING
NUMBER OF ASSIGNEE
_____________________________
_____________________________
___________________________________________________________________________
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE
___________________________________________________________________________
___________________________________________________Shares of the capital
stock represented by the within Certificate, and do hereby irrevocably
constitute and appoint__________________________________________Attorney,
to transfer the said stock on the books of the within-named Corporation
with full power of substitution in the premises.
Dated,_________________________
__________________________________________
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT
ALTERATION OR ENLARGEMENT, OR ANY CHANGE WHATEVER.
COMSAT CORPORATION
The Corporation will furnish without charge to each shareholder who so
requests a statement of the designations, preferences, restrictions,
limitations and relative rights of the shares of each class of stock or
series thereof which the Corporation is authorized to issue.
RESTRICTIONS ON OWNERSHIP AND TRANSFER OF SHARES OF COMMON STOCK
The ownership and transfer of shares of Common Stock of the
Corporation are subject to the provisions of the Communications Satellite
Act of 1962 (the Act) and the Articles of Incorporation of the Corporation
(the Articles). A summary of such provisions of the Act and the Articles
is set forth below and is qualified by reference thereto.
Persons Ineligible to Own Shares at Any Time. Shares of Common Stock
may not at any time be owned by any of the following persons (unless such
person is a communications common carrier authorized by the Federal
Communications Commission to own shares of stock of the Corporation (an
Authorized Carrier)): (1) a communications common carrier; (2) a subsidiary
or affiliated company of a communications common carrier; (3) an officer,
director or trustee of a communications common carrier or of a subsidiary
or affiliated company thereof (except as provided in Sections 5.02(a) and
(b) of the Articles); or (4) a person who will hold such shares as nominee
of, or subject to the direction and control of, any of the foregoing. In
general, the term "communications common carrier" includes (a) any person
(other than the Corporation) engaged as a common carrier for hire, in
interstate or foreign communication by wire or radio or in interstate or
foreign radio transmission of energy, and (b) any person that owns or
controls, or is under common control with, any such person. Persons
engaged in radio broadcasting are not, insofar as so engaged, deemed to be
communications common carriers.
Limitation on Ownership of Shares of Aliens and Certain Other Alien
Interests. Not more than an aggregate of 20% of the total number of shares
of stock owned or held by persons other than Authorized Carriers may be
owned or held by any of the following persons (collectively, Alien
Persons): (1) any alien or the representative of any alien; (2) any foreign
government or the representative thereof; (3) any corporation organized
under the laws of any foreign government; (4) any corporation of which any
officer or director is an alien or of which more than one-fifth of the
capital stock is owned of record or voted by aliens or their
representatives or by a foreign government or representative thereof or by
any corporation organized under the laws of a foreign country; or (5) any
corporation directly or indirectly controlled by any other corporation of
which any officer or more than one-fourth of the directors are aliens, or
of which more than one-fourth of the capital stock is owned of record or
voted by aliens, their representatives, or by a foreign government or
representative thereof, or by any corporation organized under the laws of a
foreign country.
Limitation on Ownership of Shares by Persons Other Than Authorized
Carriers. In accordance with procedures set forth in the Articles
(including the giving of notice to shareholders of record), the Board of
Directors of the Corporation is authorized to establish a percentage
limitation on the ownership, and the incidents of ownership such as voting,
of shares of stock by any shareholder (other than an Authorized Carrier) or
by any syndicate or affiliated group of shareholders, provided that such
percentage limitation may not exceed 10% of the shares of stock issued and
outstanding. Pursuant to this authority, the Board of Directors has fixed
(a) 10% as the maximum percentage of shares of stock issued and outstanding
that may be owned by any shareholder (other than an Authorized Carrier) or
by any syndicate or affiliated group of shareholders; and (b) 5% as the
maximum percentage of shares of stock issued and outstanding that may be
voted by any shareholder (other than an Authorized Carrier) or by any
syndicate or affiliated group of shareholders. For purposes of these
limitations, (a) a person shall be considered a shareholder if he is the
record holder of any shares of stock, or is the economic owner of any
shares, or has voting power over any shares, but not if he has only
investment discretion in respect of shares; and (b) there shall be
attributed to such a person shares of which he is the holder of record
(unless the attribution of such shares is excepted by Section 5.02(h) of
the Articles), shares of which he is the economic owner, and shares over
which he has voting power, provided that shares in respect of which he has
only investment discretion shall not be attributed to him.
Limitation on Ownership and Disposition of Shares by Authorized
Carriers. The number of shares of Common Stock owned by Authorized
Carriers may not at any time exceed 50% of the total number of shares of
Common Stock issued and outstanding. No Authorized Carrier (or affiliated
group of such carriers) may effect sales or other dispositions of shares of
Common Stock owned by them (except dispositions to Authorized Carriers)
totaling, in any consecutive 12-month period, more than 2% of the greatest
number of shares of Common Stock held by all Authorized Carriers at any
time during such period, except pursuant to a general public offering or
another method approved by the Board of Directors.
Procedures Relating to Ownership and Transfer of Shares. The Board of
Directors is authorized to establish procedures, consistent with applicable
law and the Articles, relating to the ownership and transfer of shares of
stock.
_________________________________________________________________
NO TRANSFER OF THE SHARES REPRESENTED BY THIS CERTIFICATE WILL BE
REGISTERED ON THE BOOKS OF THE CORPORATION UNLESS AN APPLICATION FOR
TRANSFER OF SHARES HAS BEEN EXECUTED BY THE ASSIGNEE. THE APPLICATION FOR
TRANSFER OF SHARES SET FORTH BELOW MAY BE EXECUTED BY THE ASSIGNEE IF HE
(OR SHE) IS A UNITED STATES CITIZEN AND THE STATEMENTS IN THE APPLICATION
ARE CORRECT AS TO SUCH ASSIGNEE. ANY OTHER ASSIGNEE MUST EXECUTE AN
APPLICATION IN ANOTHER APPROVED FORM, WHICH THE TRANSFER AGENT WILL FURNISH
ON REQUEST AND WITHOUT CHARGE.
________________________________________________________________
APPLICATION FOR TRANSFER OF SHARES OF COMMON STOCK
THE UNDERSIGNED ASSIGNEE HEREBY MAKES APPLICATION FOR THE TRANSFER TO
THE NAME OF THE UNDERSIGNED OF THE SHARES OF COMMON STOCK REPRESENTED BY
THE WITHIN CERTIFICATE (THE "SHARES") AND HEREBY CERTIFIES TO COMSAT
CORPORATION THAT:
(1) I AM A UNITED STATES CITIZEN AND AM NOT THE REPRESENTATIVE OF AN
ALIEN OR OF A FOREIGN GOVERNMENT.
(2) I AM NOT A "COMMUNICATIONS COMMON CARRIER" OR A SUBSIDIARY OR
AFFILIATED COMPANY OF A "COMMUNICATIONS COMMON CARRIER", OR A
TRUSTEE, OFFICER OR DIRECTOR OF ANY OF THE FOREGOING.
THE OWNERSHIP, ISSUANCE AND TRANSFER OF SHARES OF STOCK OF THE
CORPORATION ARE SUBJECT TO THE PROVISIONS OF THE COMMUNICATIONS SATELLITE
ACT OF 1962 AND THE ARTICLES OF INCORPORATION OF THE CORPORATION. A
SUMMARY OF SUCH PROVISIONS OF THE ACT AND THE ARTICLES IS SET FORTH ABOVE.
DATED
SIGNATURE OF ASSIGNEE
<PAGE>
EXHIBIT 10(h)
<PAGE>
COMSAT CORPORATION
INSURANCE AND RETIREMENT PLAN FOR EXECUTIVES
Restated effective January 1, 1994
(except as otherwise stated)
Section 1 - Name and Purpose
1.1 Name. The name of this plan is the COMSAT Corporation Insurance
and Retirement Plan for Executives.
1.2 Purpose. The purpose of this plan is to provide key executives of
the Corporation with supplemental retirement income and death benefits in
order to assist the Corporation in attracting and retaining executives of
outstanding ability.
Section 2 - Definitions and Construction
2.1 Definitions. For purposes of the Plan, unless a different meaning
is plainly required by the context, the following definitions are applicable:
(a) "Accrued Benefit" means an amount equal to the Normal
Retirement Benefit of a Participant, as of any date, as though that date were
the date of termination of his employment.
(b) "Administrator" means the person appointed by the Board in
accordance with Section 12.1.
(c) "Age" means the number of full years which have elapsed
since the Participant's date of birth.
<PAGE>
(d) "Beneficiary" means a person designated by a Participant, in
a written instrument filed with and in a form satisfactory to the
Administrator, to receive the lump sum death benefit payable under
Section 10.1 or 10.2 upon the death of a Participant.
(e) "Board" means the Board of Directors of COMSAT
Corporation or any successor to such Corporation.
(f) "Corporation" means COMSAT Corporation or any successor
thereto, and any subsidiary of such Corporation.
(g) "Disability" means total disability as defined in the
Corporation's Long-Term Disability Plan.
(h) "Disabled Participant" means a Participant who incurs a
Disability while he is an Employee and who continues to accrue Credited
Service under the Retirement Plan.
(i) "Early Retirement Date" means the date on which a
Participant retires pursuant to Section 5.1.
(j) "Early Retirement Supplement" means the amount of annual
income equal to the Primary Social Security Benefit of the Participant
used in determining his Normal Retirement Benefit under the Retirement Plan.
(k) "Earnings" means (i) the regular, basic salary received by a
Participant from the Corporation, before any salary reductions, (ii)
Incentive Compensation, (iii) dividend equivalents from Restricted Stock
Units, and (iv) cash proceeds from vested Restricted Stock Units. Incentive
<PAGE>
Compensation, dividend equivalents from Restricted Stock Units, and cash
proceeds from vested Restricted Stock Units shall be included in Earnings
at the earliest time they could have been paid to the Participant in cash,
whether or not he elects to receive such payment then or defer it to a
later date.
(l) "Employee" means any person who is employed by the
Corporation.
(m) "Highest Average Earnings Period" means the 48 consecutive
months in which a Participant's Earnings were the greatest. If a Participant
has completed less than 48 consecutive months of employment with the
Corporation as of any date, "Highest Average Earnings Period" shall mean
all of the consecutive months of employment with the Corporation as of
that date.
(n) "Highest Average Annual Earnings" means the amount
determined by dividing the total Earnings earned by a Participant during his
Highest Average Earnings Period by the number of years (including fractions
of years) included in the Highest Average Earnings Period.
(o) "Inactive Participant" means a Participant who is no longer
an Employee but who has an interest in the Plan which has not been fully
paid.
(p) "Incentive Compensation" means the additional
compensation awarded a Participant under the Corporation's Annual Incentive
Plan, as amended from time to time.
(q) "Late Retirement Date" means the date on which a Participant
retires pursuant to Section 6.1.
<PAGE>
(r) "Normal Retirement Benefit" means the amount of annual
income payable from and after a Participant's Normal Retirement Date, as
calculated as provided in Section 4.2.
(s) "Normal Retirement Date" means the first day of the month
coincident with or next following a Participant's 65th birthday. The
"normal retirement age" under the Plan shall be age 65.
(t) "Participant" means an Employee participating in the Plan in
accordance with Section 3, an Inactive Participant, and a Disabled
Participant.
(u) "Participation Commencement Date" means the date on which
an Employee becomes a Participant in the Plan in accordance with Section 3.
(v) "Plan" means the COMSAT Corporation Insurance and
Retirement Plan for Executives, as amended from time to time.
(w) "Restricted Stock Units" (RSUs) means stock units awarded
to a Participant under the Corporation's 1986 or 1990 Key Employee Stock
Plans or any successors thereto.
(x) "Retirement Plan" means the Corporation's qualified defined
benefit pension plan, currently known as the COMSAT Corporation Retirement
Plan, as amended from time to time, or any successor thereto.
(y) "Spouse" means the person who is married to a Participant
on the date of the Participant's death.
(z) "Years of Service" means the number of full years which a
Participant has been employed by the Corporation.
<PAGE>
(aa) Any term used in the Plan in capitalized form which is not
defined in one of the preceding paragraphs shall have the same meaning as
in the Retirement Plan.
2.2 Construction. Wherever applicable, the masculine pronoun shall
mean or include the feminine pronoun, and words used in the singular shall
include the plural, and vice versa.
Section 3 - Participation
3.1 Initial Participation. An Employee shall become a Participant in
the Plan upon being designated as such by the Board. There is no minimum
age or service requirement to become a Participant.
3.2 Continued Participation. An Employee who becomes a Participant
shall remain a Participant as long as he is an Employee. He shall thereafter
be an Inactive Participant as long as he has an interest in the Plan which
has not been fully paid.
3.3 Disabled Participant. A Disabled Participant shall remain a
Participant for all purposes of the Plan.
<PAGE>
Section 4 - Normal Retirement
4.1 Normal Retirement Age. A Participant who has not retired earlier
pursuant to Section 5.1 shall retire on his 65th birthday, except as provided
in Section 6.1.
4.2 Normal Retirement Benefit.
(a) Subject to the provisions of Section 8.1, a Participant
retiring at the Normal Retirement Age of 65 shall receive a Normal Retirement
Benefit, beginning on his Normal Retirement Date, in an amount equal to
60 percent (65 percent in the case of the President of COMSAT Corporation,
and 70 percent in the case of the Chairman and/or Chief Executive Officer
of COMSAT Corporation) of his Highest Average Annual Earnings, reduced
by the following:
(i) the Normal Retirement Income of the Participant under
the Retirement Plan, provided that in the case of a Participant who retires
under the Retirement Plan on or after March 1, 1993, the amount of the
reduction shall be the amount of annual retirement income which the
Participant is actually receiving under the Retirement Plan;
(ii) the Primary Social Security Benefit of the Participant
used in determining his Normal Retirement Income under the Retirement Plan;
(iii) vested age 65 retirement benefits of the Participant
from the qualified defined benefit pension plans of prior employers,
<PAGE>
including any lump sum retirement benefit previously received, expressed
in the form of a single life annuity, whether or not actually paid in
that form; and
(iv) retirement benefits of the Participant from government
and military pensions, expressed in the form of a single life annuity,
whether or not actually paid in that form.
(b) Except as provided in Section 11.2, the Normal Retirement
Benefit of a Participant who retires at the Normal Retirement Age of 65 shall
be nonforfeitable.
Section 5 - Early Retirement
5.1 Early Retirement Date. A Participant may elect to retire on the
first day of any month between his 55th and 65th birthdays, provided that a
Participant may retire before his 62nd birthday only with the Board's
consent, and provided further that a Participant eligible for early
retirement under the Retirement Plan may retire early under this Plan only
if he also elects early retirement under the Retirement Plan on the
same date.
5.2 Retirement Benefit.
(a) A Participant retiring on an Early Retirement Date shall,
unless he makes the election provided for in paragraph (b), receive an annual
retirement benefit, beginning on his Normal Retirement Date, in an amount
equal to his Accrued Benefit at his Early Retirement Date.
<PAGE>
(b) Such Participant may, by a written statement filed with the
Administrator at least 30 days before the date on which he wishes payment to
begin, elect that payment of his annual retirement benefit shall begin on the
first day of any month between his Early Retirement Date and his Normal
Retirement
Date. The amount of annual retirement benefit shall be equal to (i) his
Accrued Benefit at his Early Retirement Date plus (ii) the Early Retirement
Supplement, provided that if payment of such annual retirement benefit
commences before the Participant's 62nd birthday, the amount of the
Accrued Benefit shall be reduced by 1/4 of one percent for each complete
month between the date the retirement benefit payments commence and his
62nd birthday.
(c) Participants eligible for the Early Retirement Supplement are
those who either retire on or after January 1, 1988, or who are receiving
an Early Retirement Benefit as of that date.
Section 6 - Late Retirement
6.1 Late Retirement Date. A Participant shall retire not later than
the earlier of: (a) his 70th birthday; or (b) the earliest day upon which
he meets all of the following tests: (i) he has attained age 65; (ii) his
Normal Retirement Benefit under this Plan plus his Normal Retirement Income
under the Retirement Plan would be at least $44,000; provided, however,
<PAGE>
that no Participant shall be required to retire before the earliest date
upon which he may be required to retire under the applicable laws of the
state or other jurisdiction in which he is employed.
6.2 Retirement Benefit. A Participant retiring on a Late Retirement
Date pursuant to Section 6.1 shall receive an annual retirement benefit,
beginning on the first day of the month coincident with or next following
his Late Retirement Date, in an amount equal to his Accrued Benefit at
his Late Retirement Date.
Section 7 - Termination of Employment
7.1 Retirement Benefit. A Participant whose employment with the
Corporation terminates for any reason other than death or retirement under
this Plan shall be entitled to receive an annual retirement benefit,
payable as provided in Section 7.3, in an amount equal to his Accrued
Benefit at his date of termination multiplied by a fraction, the numerator
of which is the number of complete months of his employment before his
termination date, and the denominator of which is the number of complete
months of employment he would have had if he had retired at the normal
retirement age of 65.
7.2 Death Before Payment Commencement. If a Participant entitled to
an annual retirement benefit pursuant to Section 7.1 dies before payment of
such retirement benefit has begun pursuant to Section 7.3, no payment shall
be made under any provision of this Plan for the benefit of such
Participant.
<PAGE>
7.3 Payment Commencement Date. Payment of the annual retirement
benefit to which a Participant is entitled under Section 7.1 shall begin
on his Normal Retirement Date, if he shall be living on that date.
Section 8 - Vesting
8.1 Vesting - Participation Commencement Date Prior to June 21, 1985.
Notwithstanding any other provision of this Plan except Sections 11, 12.3,
and 13, a Participant whose Participation Commencement Date is any time
before June 21, 1985, shall be fully vested at all times in the annual
retirement benefit and the Early Retirement Supplement to which he is
entitled under the Plan.
8.2 Vesting - Participation Commencement Date After June 20, 1985, and
Prior to January 1, 1993. Notwithstanding any other provision of this Plan
except Sections 11, 12.3, and 13, in the case of a Participant whose
Participation Commencement Date is after June 20, 1985, and prior to
January 1, 1993, the annual retirement benefit and the Early Retirement
Supplement to which such a Participant is otherwise entitled under this
Plan shall be multiplied by a fraction (not to exceed 1.0), the numerator
of which is the number of complete months of employment with the
Corporation before his retirement or termination date, and the denominator
of which is 60.
8.3 Vesting - Participation Commencement Date After December 31, 1992.
Notwithstanding any other provision of this Plan except Sections 11, 12.3,
<PAGE>
and 13, a Participant whose Participation Commencement Date is after
December 31, 1992, shall be entitled to receive retirement income equal to
a percentage of the annual retirement benefit and the Early Retirement
Supplement to which the Participant is otherwise entitled under this Plan,
computed in accordance with the following schedule once the sum of the
Participant's Age and the Participant's Years of Service equals 60:
Years of Service Vested Percentage
0-4 0%
5 50
6 60
7 70
8 80
9 90
10 100
8.4 Death Benefits. Any benefits payable pursuant to Section 10 on
account of a Participant's death shall not be reduced because the Participant
had completed less than five years of employment with the Corporation at
the time of his death.
Section 9 - Form of Payment of Retirement Benefits
9.1 Normal Form of Payment. The normal form of payment of retirement
benefits shall be in equal monthly installments for the life of the
Participant.
<PAGE>
9.2 Optional Forms of Payment.
(a) At any time prior to the date on which payment of retirement
benefits is to begin, a Participant may by an instrument in writing delivered
to the Administrator elect to receive, in lieu of the normal form of payment
provided in Section 9.1, a retirement benefit which is the actuarial
equivalent of the benefit specified in Section 9.1, in one of the forms
provided for the payment of retirement benefits under the Retirement Plan.
(b) Notwithstanding paragraph (a), with respect to a Participant
who (i) retires on an Early Retirement Date, (ii) elects to begin payment of
his retirement benefits before his Normal Retirement Date, and (iii) elects
an optional form of payment pursuant to paragraph (a), the portion of his
retirement benefits specified in Section 5.2 (b) (ii) shall be paid in
equal monthly installments.
(c) Notwithstanding paragraph (a), the retirement benefit of a
Participant who retires on a Late Retirement Date and who elects an optional
form of payment pursuant to paragraph (a) shall not be actuarially
increased to take account of the commencement of such benefits after the
Participant's Normal Retirement Date.
9.3 1991 Lump Sum Payment Option
(a) For purposes of this Section 9.3:
(i) "Lump Sum Payment" means a single payment, payable on
January 1, 2000, equal to the actuarial equivalent of the retirement
benefits otherwise payable to a Participant under the Plan after
December 31, 2000, based on the Participant's Accrued Benefit as of
<PAGE>
March 31, 1991. In the case of a Participant who has not begun receiving
retirement benefits before January 1, 2000, such actuarial equivalence shall
be computed on the basis as if the Participant's retirement benefits were
to begin on the later of January 1, 2001, or the first day of the month
coincident with or next following his 62nd birthday.
(ii) "Electing Participant" means an Employee who: (1) was a
Participant on April 1, 1991 and (2) by an instrument in writing filed with
the Administrator no later than August 31, 1991, elects to receive a Lump
Sum Payment.
(b) On January 1, 2000, a Lump Sum Payment shall be made to each
Electing Participant who as of that date: (i) has begun receiving retirement
benefits pursuant to Section 4.2, 5.2 or 6.2; (ii) has retired on an Early
Retirement Date and has not begun to receive his annual retirement benefit
pursuant to Section 5.2; or (iii) is an Employee. The annual retirement
benefit payable after December 31, 2000, to the Electing Participant
pursuant to Section 4.2, 5.2 or 6.2, whichever may be applicable, shall
be reduced to reflect his receipt of the Lump Sum Payment.
9.4 1992 Lump Sum Payment Option.
(a) For purposes of this Section 9.4:
(i) "Lump Sum Payment" means a single payment, payable on
January 1, 2001, equal to the actuarial equivalent of the retirement benefits
otherwise payable to a Participant under the Plan after December 31, 2001,
based on the amount equal to (1) the Participant's Accrued Benefit as of
March 31, 1992, less (2) if the Participant made the election provided in
<PAGE>
Section 9.3, the Participant's Accrued Benefit as of March 31, 1991. In the
case of a Participant who has not begun receiving retirement benefits before
January 1, 2001, such actuarial equivalence shall be computed on the basis
as if the Participant's retirement benefits were to begin on the later of
January 1, 2002, or the first day of the month coincident with or next
following his 62nd birthday.
(ii) "Electing Participant" means an Employee who: (1) was a
Participant on January 1, 1992, and (2) by an instrument in writing filed
with the Administrator no later than May 31, 1992, elects to receive a Lump
Sum Payment.
(b) On January 1, 2001, a Lump Sum Payment shall be made to each
Electing Participant who as of that date: (i) has begun receiving retirement
benefits pursuant to Section 4.2, 5.2 or 6.2; (ii) has retired on an Early
Retirement Date and has not begun to receive his annual retirement benefit
pursuant to Section 5.2; or
(iii) is an Employee. The annual retirement benefit payable after
December 31, 2001, to the Electing Participant pursuant to Section 4.2, 5.2
or 6.2, whichever may be applicable, shall be reduced to reflect his
receipt of the Lump Sum Payment.
9.5 Actuarial Equivalent. Wherever in the Plan a benefit is required to
be the actuarial equivalent of another benefit, such actuarial equivalence
shall be computed on the basis of (a) Table V in section 1.72-9 of the
Treasury Department Regulations and (b) the Pension Benefit Guaranty
Corporation's interest rate for immediate annuities, both as in effect for
the month preceding the date of distribution of such benefit.
<PAGE>
Section 10 - Death Benefits
10.1 Death Benefits While Employed. If a Participant dies while an
active Employee:
(a) His Spouse shall receive an annual death benefit in an amount
equal to 50% of his Accrued Benefit at the date of his death. Such benefit
shall be payable in equal monthly installments beginning on the first day
of the month coincident with or next following the date of the Participant's
death, and continuing until the earlier of (i) the completion of 120 months
or (ii) the date of the Spouse's death.
(b) His Beneficiary shall receive a lump sum death benefit in the
amount of $200,000 as soon as practicable after the date of his death.
10.2 Death Benefits After Retirement. If a Participant dies after
retirement, his Beneficiary shall receive a lump sum death benefit in the
amount of $200,000 as soon as practicable after the date of his death.
10.3 Death Benefits Offset. If a Participant dies before
January 1, 2000, any payments made to the Participant's Spouse or
Beneficiary pursuant to life insurance policies on the life of the
Participant which are purchased in connection with this Plan shall be
offset against, and shall to that extent reduce the payments otherwise
required to be made to such Spouse or Beneficiary pursuant to Section
10.1 or 10.2.
<PAGE>
Section 11 - Forfeiture of Benefits
11.1 Termination for Cause. A Participant whose employment with the
Corporation is terminated for cause shall forfeit all right to any benefits
under the provisions of this Plan. For this purpose, a Participant's
employment with the Corporation shall be considered to be terminated for
cause only if: (a) the Participant is convicted of a felony, without regard
to his right to appeal, which involves the Corporation's real, tangible
or intellectual property, any of its personnel or any person with whom
the Corporation has a business relationship, and (b) at least two-thirds
of the members of the Board affirmatively vote, in their sole discretion,
to terminate the Participant's employment with the Corporation because
of such conviction.
11.2 Employment With a Competitor. A Participant who, without the
written consent of the Administrator, becomes employed with a competitor
of the Corporation, shall forfeit all rights to any further benefits under
the provisions of this Plan; provided, however, that the benefits of a
Participant whose Participation Commencement Date is prior to January 1,
1993, and who retires at the normal retirement age of 65, or who retires
at a later date upon meeting all of the tests of Section 6.1 (a)(ii),
shall be nonforfeitable. For this purpose, a Participant shall be considered
to be employed with a competitor of the Corporation only if, within the
period ending two years after the date of his termination of employment
with the Corporation:
<PAGE>
(a) there is a final judgement by a court of competent
jurisdiction, in an action brought by the Corporation, that the
Participant is liable for an act of unfair competition or the
misappropriation of trade secrets or confidential information; or
(b) (i) the Participant is employed in a management position with
another employer in a line of business that is classified under the same
four-digit industry code of the Standard Industrial Classification as is a
line of business operated by the Corporation, and (ii) such line of
business generated revenues for the Corporation during the previous
12-month period exceeding the greater of (1) $10,000,000 or (2) two
percent of the total revenues generated during such period by the
Corporation.
Section 12 - Administration
12.1 Appointment of Administrator. The Board shall appoint a person to
serve as Administrator of the Plan. The initial Administrator shall be the
Vice President for Human Resources and Organization Development.
12.2 Responsibility and Authority of Administrator. The Plan shall be
administered by the Administrator, who shall have the responsibility and
authority to, among other things, (a) interpret and construe the terms of
the Plan and (b) adopt such regulations, rules, procedures and forms
consistent with the Plan as he considered necessary or desirable for the
administration of the Plan. In all cases the determination of the
Administrator shall be final, conclusive and binding on all persons,
subject to Section 12.3.
<PAGE>
12.3 Exceptions Under Board Authority. Notwithstanding any other
provision of this Plan, the Board in its sole discretion shall have the
authority to make exceptions to the normal application and administration
of any and all provisions of the Plan in individual cases; provided,
however, that no such exception shall, without the written consent of
the person involved, deprive any Participant, Beneficiary or Spouse of
any part of his benefits under the Plan accrued as of the time such
exception is made.
Section 13 - Amendment or Termination of Plan
13.1 Right to Amend or Terminate. The Board reserves in its sole
discretion the right, at any time and from time to time, to amend or
terminate the Plan.
13.2 Effect on Benefits Accrued. No amendment or termination of the
Plan pursuant Section 13.1 shall, without the written consent of the person
involved, deprive any Participant, Beneficiary, or Spouse of any part of his
benefits under the Plan accrued as of the time of such amendment or
termination.
<PAGE>
Section 14 - Miscellaneous Provisions
14.1 No Implied Rights. Nothing in this Plan shall be deemed to:
(a) give to any Employee the right to be retained in the employ of the
Corporation or to interfere with the right of the Corporation to dismiss
any Employee at any time, or (b) give to any Participant, Beneficiary, or
Spouse (i) any right to any payments except as specifically provided for
in the Plan or (ii) any interest in any insurance policies acquired by
the Corporation in accordance with Section 14.2.
14.2 Insurance Policies. The Corporation in its discretion may, but
shall not be required to, provide for its obligations under the Plan through
the purchase of one or more life insurance policies on the life of a
Participant. Each Participant agrees, as a condition to receiving any
benefits under this Plan, to cooperate in securing life insurance on his
life by furnishing such information as the Corporation or any insurer may
require, by submitting to such physical examinations as may be necessary,
and by taking such other actions as may be requested by the Corporation
or any insurer to obtain and maintain such insurance coverage.
14.3 No Assignment or Alienation. To the extent permitted by law, no
benefit provided under the Plan shall be anticipated, assigned (either at
law or in equity), alienated or subject to attachment, garnishment, levy,
execution or other process. Any attempt to perform any such action shall
be void.
14.4 Expenses. The Corporation shall pay all expenses incident to the
operation and administration of the Plan.
14.5 Applicable Laws. Except as otherwise required by federal law, the
provisions of the Plan and the rules, regulations, and decisions of the Board
and the Administrator shall be construed and enforced according to the laws
of the District of Columbia.
<PAGE>
EXHIBIT 10(k)(ii)
<PAGE>
AMENDMENT
AMENDMENT to the COMSAT Corporation Non-Employee Directors
Stock Option Plan (the "Plan"), as approved by the shareholders
of COMSAT Corporation (the "Corporation") on May 20, 1988.
WHEREAS, on January 15, 1993, the Corporation's Board of
Directors approved this Amendment, subject to approval by the
shareholders of the Corporation; and
WHEREAS, on May 21, 1993, the shareholders of the
Corporation approved this Amendment.
NOW, THEREFORE, the Plan is hereby amended as follows:
1. Section 4(b) of the Plan is hereby amended to read as
follows:
"4(b) Automatic Grants. An Option to purchase 2,000 shares
of Common Stock, subject to adjustment under Section 6,
shall be granted annually at a meeting of the Board held in
March (or the next succeeding meeting date if no March
meeting is held), beginning in 1993, to each Non-Employee
Director who was a director as of the date of the Annual
Meeting of Shareholders for the prior year, provided the
Non-Employee Director continues in office after the Board
meeting date on which the Option is granted."
2. Subsection 4(d) of the Plan is hereby amended to read as
follows:
"4(d) Option Price. The purchase price for each share of
Common Stock subject to an Option shall be the fair market
value of the Common Stock on the date the Option is granted.
For this purpose, as well as other purposes under the Plan,
fair market value shall be deemed to be the average of the
highest and lowest selling prices of Common Stock as
reported under New York Stock Exchange-Composite
Transactions on the date on which the Option was granted or,
if there were no sales of Common Stock on that date, then on
the next preceding date on which there were sales."
All other terms and provisions of the Plan are hereby expressly
confirmed and restated, and all Options previously issued under
the Plan shall remain in full force and effect pursuant to their
terms and the terms of the Plan at the time of issuance.
- - - ----------------------
(1) Pursuant to the operation of Section 6 of the Plan, the number
of shares subject to such Options became 4,000 shares effective
upon the 2-for-1 stock split effected by the Corporation on
June 1, 1993.
<PAGE>
EXHIBIT 10(g)(i)
<PAGE>
This Amendment No. 1 to the Agreement for Inmarsat
Aeronautical Services is entered into this 20th day
of May 1993 by and between COMSAT Mobile
Communications, a Division of COMSAT Corporation, a corporation
organized and existing under the laws of the District of
Columbia in the United States of America and having its
principal office at 950 L'Enfant Plaza, S.W., Washington,
D.C. 20024 ("COMSAT") and KOKUSAI DENSHIN DENWA CO., LTD., a
company organized and existing under the laws of Japan and
having its principal office at No. 3-2, Nishi-Shinjuku 2-Chome,
Shinjuku-ku, Tokyo 163, Japan ("KDD").
WHEREAS, COMSAT and KDD have entered into an Agreement
dated 22 January 1990 under which COMSAT and KDD agreed to
jointly provide aeronautical mobile satellite services to
aviation users on a global basis; and
WHEREAS, COMSAT and KDD have agreed upon a rate schedule
for voice calls originated by COMSAT's Customer In-Flight Phone
("In-Flight") in the ocean regions served by KDD (IOR, POR).
NOW, THEREFORE, in accordance with Article 16 and in
consideration of the foregoing and the mutual covenants
contained herein, the Parties hereto agree to supplement and
amend the Agreement by adding Annex 1 "Rate Schedule for Voice
Calls Originated by In-Flight Phone".
Except as expressly provided herein, all other terms and
conditions of the Agreement shall remain unchanged and in full
force and effect.
IN WITNESS WHEREOF, the Parties hereto have executed this
Amendment.
COMSAT Corporation KOKUSAI DENSHIN DENWA CO., LTD.
By: /s/Elizabeth L. Young By: /s/Seiichi Inoue
Name: Elizabeth L. Young Name: Seiichi Inoue
Vice Pres. & General Manager
Title: COMSAT Aeronautical Services Title: Senior Managing Director
Date: 22 April 1993 Date: 10 May 1993
/s/Kari Schoonhoven
Kari Schoonhoven
Director, Contracts
5/20/93
<PAGE>
ANNEX 1
Rate Schedule for Voice Calls
Originated by In-Flight Phone
For all air-to-ground voice traffic generated by customers of
In-Flight through the KDD Ground Earth Stations ("GESs") in the
IOR and POR which terminates outside of Japan, KDD will charge
the rate of 3.95SDR per minute for space segment and use of
KDD's GES. For all air-to-ground voice traffic generated by
In-Flight customers through the KDD GESs in the IOR and POR
which terminates within Japan, KDD will charge the rate of
4.44SDR per minute for space segment and use of KDD's GES.
These rates will be exclusive of Land-line charges which shall
be charged in addition by KDD. KDD shall provide to COMSAT on
a weekly basis call record data for all calls originated from
each aircraft. Accounting and settlements shall be made on a
monthly basis.
<PAGE>
EXHIBIT 10(r)(i)
<PAGE>
AMENDMENT
AMENDMENT to the COMSAT Corporation 1990 Key Employee Stock
Plan (the "Plan"), as approved by the shareholders of COMSAT
Corporation (the "Corporation") on May 18, 1990.
WHEREAS, on January 15, 1993, the Corporation's Board of
Directors approved this Amendment, subject to approval by the
shareholders of the Corporation; and
WHEREAS, on May 21, 1993, the shareholders of the
Corporation approved this Amendment.
NOW, THEREFORE, Section 3 of the Plan is hereby amended to
read as follows:
"3. Shares Subject to the Plan. The aggregate number of
shares of Common Stock which may be covered by stock options
(Options), stock appreciation rights (SARs), restricted
stock units (Restricted Stock Units) and restricted stock
awards (Restricted Stock Awards) granted pursuant to the
Plan is 2,400,000 shares, subject to adjustment under
Section 9. Shares which may be delivered on exercise or
settlement of Options, SARs, Restricted Stock Units or
Restricted Stock Awards may be previously issued shares
reacquired by the Corporation or authorized but unissued
shares. Shares covered by Restricted Stock Units and
Restricted Stock Awards that are forfeited and shares
covered by Options that expire unexercised (without having
been surrendered upon the exercise of SARs, whether settled
in cash or Common Stock) shall again be available for grant
under the Plan."
All other terms and provisions of the Plan are hereby expressly
confirmed and restated, and all Options, SARs, Restricted Stock
Units and Restricted Stock Awards previously issued under the
Plan shall remain in full force and effect pursuant to their
terms and the terms of the Plan at the time of issuance.
<PAGE>
EXHIBIT 10(v)
<PAGE>
COMSAT CORPORATION
DIRECTORS AND EXECUTIVES DEFERRED COMPENSATION PLAN
Restated effective January 1, 1994
(except as otherwise stated)
Section 1 - Purpose and Effective Date
1.1 Purpose. The purpose of this Plan is to provide
Directors and key executives of the Corporation with supplemental
retirement income and death benefits in order to assist the
Corporation in attracting and retaining Directors and executives of
outstanding ability.
1.2 Effective Date. The Plan shall become effective upon
approval by the Board.
Section 2 - Definitions and Construction
2.1 Definitions. For purposes of the Plan, unless a
different meaning is plainly required by the context, the following
definitions are applicable:
(a) "Beneficiary" means the person designated by a
Participant, in accordance with Section 5.4(a), to receive benefits
payable under the Plan upon the death of the Participant.
(b) "Board" means the Board of Directors of COMSAT
Corporation or any successor to such Corporation.
(c) "Change of Control" means, with respect to COMSAT
Corporation:
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(i) A stock purchase by any "person" (as such term is
used in Sections 13(d) and 14(d) (2) of the Securities and Exchange
Act of 1934, as amended) who then owns or by virtue of such
purchase becomes the beneficial owner of, directly or indirectly,
voting securities of COMSAT Corporation representing 50 percent or
more of the combined voting power of such Corporation's then
outstanding voting securities, which purchase is not approved by
such Corporation pursuant to a resolution of the Board, or
(ii) Any change of two or more Directors in any one
year in the composition of the Board not recommended by the
management of COMSAT Corporation or the Board.
(d) "Committee" means the Committee on Compensation and
Management Development of the Board.
(e) "Compensation" means:
(i) In the case of an Employee, the following amounts
payable or awarded to the Employee by the Corporation with respect
to a Plan Year: (1) base salary, (2) Incentive Compensation, (3)
dividend equivalents from Restricted Stock Units, and (4) cash
proceeds from vested Restricted Stock Units, or
(ii) In the case of a Director, the fees and retainer
payable to the Director by the Corporation with respect to a Plan
Year, before reduction for any amounts deferred pursuant to this
Plan or any other plan of the Corporation, and not including any
expense reimbursements or any form of non-cash compensation and
benefits.
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(f) "Corporation" means COMSAT Corporation or any successor
thereto, and any subsidiary of such Corporation.
(g) "Deferral Election" means an election made by the
Participant, in accordance with Section 3.2 or 3.3, to defer an
amount of Compensation payable or awarded to the Participant with
respect to a Plan Year.
(h) "Deferred Compensation Account" means the account
maintained for a Participant by the Corporation, in accordance with
Section 4.1, with respect to the Compensation for which the
Participant has made a Deferral Election.
(i) "Determination Date" means the last Friday of each
biweekly payroll period of the Corporation.
(j) "Director" means any member of the Board who is not an
Employee.
(k) "Disability" means total disability as defined in the
Corporation's Long-Term Disability Plan.
(l) "Employee" means any person who is employed by the
Corporation.
(m) "Hardship" means the immediate and heavy financial need
of a Participant as determined by the Committee in accordance with
uniform standards established by the Committee.
(n) "Incentive Compensation" means the additional
compensation awarded a Participant with respect to a Plan Year
under the Corporation's Annual Incentive Plan and such other
incentive plans or arrangements of the Corporation
<PAGE>
as designated by the Committee from time to time as such plans or
arrangements may be amended from time to time.
(o) "Participant" means an Employee or Director
participating in the Plan in accordance with Section 3.
(p) "Plan" means the COMSAT Corporation Directors and
Executives Deferred Compensation Plan, as amended from time to
time.
(q) "Plan Year" means the period beginning as soon as
practicable after the effective date of the Plan and ending
December 31, 1986, and each calendar year thereafter.
(r) "Restricted Stock Units" means restricted stock units
awarded to a Participant under the Corporation's 1986 and 1990 Key
Employee Stock Plans.
(s) "Retirement Plan" means the Corporation's qualified
defined benefit pension plan, currently known as the COMSAT
Corporation Retirement Plan, as amended from time to time, or any
successor thereto.
(t) "Rollover Election" means an election made by the
Participant in accordance with Section 3.5.
2.2 Construction. Wherever applicable, the masculine
pronoun shall mean or include the feminine pronoun, and the words
used in the singular shall include the plural, and vice versa.
<PAGE>
Section 3 - Eligibility and Participation
3.1 Eligibility. Eligibility to participate in the Plan
is limited to (a) Directors and (b) Employees who are designated as
eligible by the Board.
3.2 Participation; Deferral Elections. An eligible
Employee or Director may elect to participate in the Plan with
respect to any Plan Year by filing a Deferral Election, in the form
and manner prescribed by the Committee, by December 15 of the
immediately preceding Plan Year, except that a Deferral Election
with respect to the first Plan Year shall be filed at such time
before the commencement of such Plan Year as the Committee shall
determine. The Participant may elect in the Deferral Election to
defer Compensation with respect to the Plan Year as follows:
(a) If the Participant is an Employee, he may elect to
defer, subject to a minimum deferral of $1,000, (i) base salary
payable during the Plan Year in increments of 5 percent up to a
maximum of 25 percent, (ii) Incentive Compensation awarded with
respect to the Plan Year in increments of 25 percent up to a
maximum of 100 percent, (iii) dividend equivalents from Restricted
Stock Units payable during the Plan Year in increments of 25
percent up to a maximum of 100 percent, and (iv) cash proceeds from
vested Restricted Stock Units payable during the Plan Year in
increments of 25 percent up to a maximum of 100 percent.
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(b) If the Participant is a Director, he may elect to defer
any amount or percentage of fees and retainer payable with respect
to the Plan Year, subject to a minimum deferral of $1,000.
3.3 Initial Eligibility During the Plan Year. If an
Employee or Director first becomes eligible to participate in the
Plan during a Plan Year, he may elect to participate with respect
to such Plan Year by filing a Deferral Election for such Plan Year
not later than 30 days after notification to him by the Committee
of his eligibility to participate in the Plan. the Plan. The
Participant may elect in such Deferral Election to defer
Compensation with respect to the Plan Year which is payable or
awarded following the filing of the Deferral Election, in
accordance with the limitations of Section 3.2(a) and (b) as if
such period were an entire Plan Year.
3.4 Modification of Deferral Election. A Deferral Election
made pursuant to Section 3.2 or 3.3 shall be irrevocable, except
that the Committee in its discretion may at any time reduce, or
waive the remainder of , the amount to be deferred under the
Deferral Election upon determining that the Participant has
suffered a Hardship.
3.5 Rollover Election. When an Employee or Director first
becomes eligible to participate in the Plan, but not thereafter, he
may elect to rollover to the Plan all, but not less than all, of
his then-current account balance of any amounts previously
deferred, plus interest credited, under the Corporation's Annual
Incentive Plan or its Insurance and Retirement Plan for Directors.
Such Rollover Election shall be made at the time, and in the form
<PAGE>
and manner prescribed by the Committee. If the eligible Employee
or Director makes a Rollover Election, he shall become a
Participant in the Plan, whether or not he also files a Deferral
Election pursuant to Section 3.2 or 3.3, and the amount rolled over
shall thereafter be subject in full to the provisions of this Plan.
Section 4 - Deferred Compensation Accounts
4.1 Maintenance of Accounts. The Corporation shall
maintain, for record-keeping purposes only, a Deferred Compensation
Account for each Participant who files a Deferral Election or Rollover
Election. The Compensation deferred pursuant to a Deferral Election
shall be credited to the Participant's Deferred Compensation Account
as it otherwise would become payable to the Participant. The amount
rolled over pursuant to a Rollover Election shall be credited to the
Participant's Deferred Compensation Account upon the filing of the
Rollover Election.
4.2 Interest. Each Participant's Deferred Compensation
Account shall be credited with interest as of each Determination
Date based upon the balance of the Participant's Deferred
Compensation Account as of the immediately preceding Determination
Date. The rate of interest to be credited during a Plan Year shall
be Moody's plus 6 percent. For this purpose, "Moody's" means the
effective annual yield on Moody's Seasoned Corporate Bond Yield
Index as determined during the first week of the Plan Year from
Moody's Bond Record published by Moody's Investors Service, Inc.,
or any successor thereto. If Moody's annual yield is no longer
published, the rate of interest for purposes of the Plan shall be
<PAGE>
based on a substantially similar annual yield selected by the
Committee. Notwithstanding the foregoing, amounts credited to a
Participant's Deferred Compensation Account after January 30, 1994
pursuant to a Deferral Election or Rollover Election shall be
credited with interest as of each Determination Date at a rate
equal to the Corporation's Cost of Capital. For this purpose,
"Cost of Capital" means the cost of funds employed in the
Corporation's business as determined by the Corporation's Chief
Financial Officer effective as of the first day of each Plan Year.
Section 5 - Payment of Benefits
5.1 Payment Upon Termination of Service.
(a) A Participant whose service with the Corporation
terminates for any of the following reasons shall be entitled to
receive an amount equal to the balance of his Deferred Compensation
Account, payable as provided in Section 5.4 and 5.5:
(i) retirement under the Corporation's Retirement Plan
or its Insurance and Retirement Plan for Executives, as those plans
may be amended from time to time;
(ii) Disability;
(iii) the convenience of the Corporation as determined
by the Committee;
(iv) a Change of Control, provided that the
Participant's service terminates within 24 months after the
occurrence of such Change of Control; or
<PAGE>
(v) if the Participant is a Director, termination of
service for any reason other than death.
(b) A Participant whose service with the Corporation
terminates for any reason other than death or the reasons specified
in paragraphs (a) or (c) shall be entitled to receive an amount,
payable as provided in Sections 5.4 and 5.5, equal to the balance
of his Deferred Compensation Account, calculated by recomputing all
interest credited to such Deferred Compensation Account at a rate
equal to Moody's plus 2 percent, provided that all interest
credited to the portion of such Deferred Compensation Account
attributable to amounts deferred after January 30, 1994 shall be
recomputed at a rate equal to the Cost of Capital minus 4 percent.
(c) A Participant, other than a Director, whose service
with the Corporation is terminated for cause shall be entitled to
receive an amount, payable as provided in Sections 5.4 and 5.5,
equal to the balance of his Deferred Compensation Account,
calculated by recomputing all interest credited to such Deferred
Compensation Account at a rate equal to Moody's, provided that all
interest credited to the portion of such Deferred Compensation
Account attributable to amounts deferred after January 30, 1994
shall be recomputed at a rate equal to the Cost of Capital minus 6
percent. For this purpose, a Participant's service with the
Corporation shall be considered to be terminated for cause only if:
(i) the Participant is convicted of a felony, without regard to his
right to appeal, which involves the Corporation's real, tangible or
intellectual property, any of its personnel or any person with whom
the Corporation has a business relationship, and (ii) at least two-
<PAGE>
thirds of the members of the Board affirmatively vote, in their
sole discretion, to terminate the Participant's employment with the
Corporation because of such conviction.
5.2 Payments Upon Death.
(a) Each Participant may designate a Beneficiary or
Beneficiaries to receive payment of the amounts provided in
paragraph (b) in the event of his death. Each Beneficiary
designation: (i) shall be made on a form filed in the manner
prescribed by the Committee, (ii) shall be effective when, and
only if made and filed in such manner during the Participant's
lifetime, and (iii) upon such filing, shall automatically revoke
all previous Beneficiary designations.
(b) Upon the death of a Participant, the Participant's
Beneficiary shall be entitled to receive an amount equal to the
balance of the Participant's Deferred Compensation Account payable
as provided in Section 5.4 and 5.5.
(c) If the payments to be made pursuant to paragraph (b)
are not subject to a valid Beneficiary designation at the time of
the Participant's death (because the designated Beneficiary
predeceased the Participant or for any other reason), the estate of
the Participant shall be the Beneficiary. If a Beneficiary
designated by the Participant to receive all or any part of the
Participant's Deferred Compensation Account dies after the
Participant but before complete distribution of that portion of
that Deferred Compensation Account, and at the time of the
Beneficiary's death there is no valid designation of a contingent
Beneficiary, the estate of such Beneficiary shall be the
Beneficiary of the portion in question.
<PAGE>
(d) Any payments made to a Participant's Beneficiary
pursuant to life insurance policies on the life of the Participant
which are purchased in connection with this Plan shall be offset
against, and shall to that extent reduce the payments otherwise
required to be made to such Beneficiary pursuant to Section 5.2(b).
5.3 Hardship Distributions. The Committee may, in its sole
discretion, make distributions to a Participant from his Deferred
Compensation Account prior to his termination of service with the
Corporation if the Committee determines that
the Participant has suffered a Hardship. The amount of any such
distribution shall be limited to the amount reasonable necessary to
meet the Participant's needs created by the Hardship.
5.4 Form of Payment.
(a) Except as provided in paragraph (c), the amount which
a Participant or Beneficiary becomes entitled to receive pursuant
to Sections 5.1 or 5.2 shall be paid either (i) as a lump sum or
(ii) in equal annual installments annuitized over a period of time
not to exceed 15 years, computed by using the rate of interest
applicable to the Participant's Deferred Compensation Account at
the time the first installment becomes payable.
(b) Except as provided below in this paragraph (b), the
Participant shall elect, at the time and in the manner prescribed
by the Committee, the form specified in paragraph (a) in which
payment shall be made. If the Participant fails to elect the form
of payment, payment shall be made in accordance with paragraph (a)
(ii) over a period of 15 years, provided that in the case of such
a Participant's death, the Participant's Beneficiary may elect the
<PAGE>
form of payment. In the case of a Participant who becomes entitled
to receive payment pursuant to Section 5.1(a)(iii), the Committee
shall determine the form specified in paragraph (a) in which
payment shall be made.
(c) Notwithstanding any other provision of this Plan, the
amount which a Participant becomes entitled to receive pursuant to
paragraph (b) or (c) of Section 5.1 shall be paid in a lump sum.
5.5 Commencement of Payments.
(a) Payment which a Participant or Beneficiary becomes
entitled to receive in the event of the Participant's death,
Disability or termination of service pursuant to paragraph (b) or
(c) of Section 5.1 shall commence or be made, as the case may be,
as soon as practicable after the occurrence of such event.
(b) Payment which a Participant becomes entitled to receive
upon termination of service pursuant to Section 5.1(a)(iii) shall
commence or be made, as determined by the Committee, on the first
day of any month between the date the Participant's service
terminates and his 66th birthday.
(c) Payment which a Participant becomes entitled to receive
upon termination of service for any other reason shall commence or
be made, as elected by the Participant at the time and in the
manner prescribed by the Committee, on the first day of any month
between the date his service terminates and (i) in the case of an
Employee, his 66th birthday, or (ii) in the case of a Director, his
73rd birthday.
<PAGE>
5.6 Payment as of January 1, 2000
(a) An Employee or Director who is an active Participant
on April 1, 1991 may, by an instrument in writing filed with the
Vice President of Human Resources and Organization Development no
later than August 31, 1991, elect that the amount described in
paragraph (b) shall be paid to him or, if applicable, to his
Beneficiary on January 1, 2000.
(b) Notwithstanding any other provision of this Plan:
(i) a Participant whose service with the Corporation
has not terminated before January 1, 2000, or
(ii) a Participant or Beneficiary who is receiving
installment payments pursuant to Section 5.4 as of January 1, 2000,
shall, if the Participant has made the election provided for in
paragraph (a), be entitled to receive an amount, payable on January
1, 2000 as a lump sum, equal to the portion of the Participant's
Deferred Compensation Account, to the extent such portion has not
previously been distributed to the Participant, or, if applicable,
his Beneficiary pursuant to Sections 5.3 and 5.4, which consists of
the balance of the Participant's Deferred Compensation Account as
of March 31, 1991 together with interest credited to such balance
pursuant to Section 4.2 from April 1, 1991 to December 31, 2000.
Solely for purposes of this Section 5.6, interest on such balance
from January 1, 2000 to December 31, 2000 shall be credited as of
January 1, 2000.
<PAGE>
(c) Any balance remaining in the Participant's Deferred
Compensation Account on January 1, 2000 after payment of the amount
described in paragraph (b), together with any amounts credited to
his Deferred Compensation Account after such date, shall continue
to be payable in accordance with the provisions of Sections 5.1
through 5.5.
Section 6 - Administration
6.1 Committee; Duties. The Plan shall be administered by
the Committee, which shall have the responsibility and authority
to, among other things, (a) interpret and construe the terms of the
Plan and (b) adopt such regulations, rules, procedures and forms
consistent with the Plan as it considers necessary or desirable for
the administration of the Plan. In all cases the determination of
the Committee shall be final, conclusive and binding on all
persons.
6.2 Appointment of Agents. The Committee shall appoint the
Vice President of Human Resources and Organization Development to
be the Committee's agent and shall delegate to him its duties with
respect to the day-to-day administration of the Plan. The
Committee may from time to time appoint other agents and delegate
to them such administrative duties as it sees fit. Notwithstanding
the above, the Committee may not delegate to any agent its duties
under the Plan provided in Sections 2.1(n), 3.4, 4.2, 5.1(a)(iii)
and 5.3.
<PAGE>
Section 7 - Amendment or Termination of Plan
7.1 Right to Amend or Terminate. The Board reserves in its
sole discretion the right, at any time and from time to time, to
amend or terminate the Plan.
7.2 Effect of Amendment or Termination. No amendment or
termination of the Plan pursuant to Section 7.1 shall deprive any
Participant or Beneficiary of any part of his benefits under the
Plan accrued as of the time of such amendment or termination. If
the Plan is terminated, each Participant shall be paid the full
amount of his Deferred Compensation Account in a lump sum within 90
days of the date of termination.
Section 8 - Miscellaneous Provisions
8.1 No Implied Rights. Nothing in his Plan shall be deemed
to: (a) give to any Employee the right to be retained in the
employ of the Corporation or to interfere with the right of the
Corporation to dismiss any Employee at any time, or (b) give to any
Participant or Beneficiary (i) any right to any payments except as
specifically provided for in the Plan or (ii) any interest in any
insurance policies acquired by the Corporation in accordance with
Section 8.2
8.2 Insurance Policies. The Corporation in its discretion
may, but shall not be required to, provide for its obligations
under this Plan through the purchase
<PAGE>
of one or more life insurance policies on the life a Participant.
Each Participant agrees, as a condition to receiving any benefits
under this Plan, to cooperate in securing life insurance on his
life by furnishing such information as the Corporation or any
insurer may require, by submitting to such physical examinations as
may be necessary, and by taking such other actions as may be
required by the Corporation or any insurer to obtain and maintain
such insurance coverage.
8.3 No Assignment or Alienation. To the extent permitted
by law, no benefit provided under the Plan shall be anticipated,
assigned (either at law or in equity), alienated or subject to
attachment, garnishment, levy, execution, or other process. Any
attempt to perform any such action shall be void.
8.4 Expenses. The Corporation shall pay all expenses
incident to the operation and administration of the Plan.
8.5 Applicable Laws. Except as otherwise required by
federal law, the provisions of the Plan and the rules, regulations
and decisions of the Board and the Committee shall be construed and
enforced according to the laws of the District of Columbia.
<PAGE>
<PAGE>
EXHIBIT 10(y)
<PAGE>
[TRANSLATED FROM THE ORIGINAL DOCUMENT IN FRENCH]
Agreement dated as of January 18, 1993
between
the State of Cote D'Ivoire
Represented by the Minister of Communications herein called:
"Employer"
and
"The Communications Satellite Corporation (COMSAT)"
Registered Offices: 22300 COMSAT Drive, Clarksburg, Maryland
20871, U.S.A.
Legal Status: Corporation existing under American Law hereby
represented by Mr. Kenneth Hoch, Vice President, Acting on behalf
of the Company under power of attorney annexed to this contract
and hereinafter called "CONTRACTOR".
It has been agreed and decided as follows:
Chapter I - General Conditions
Article 1.1 Object of the Contract and Scope of Works
1.1.1 Object of the Contract
The object of the contract for:
The renovation of the equipment and installations of
existing radio and television broadcast stations and
creation of new satellite transmission stations for one
television and channel and two radio channels.
Hereinafter called "Countrywide Sound and Television
Broadcast Coverage."
1.1.2 Scope of works
In accordance with the terms and conditions of the Technical
Specifications (TS) of this contract, works shall comprize:
1.1.2.1 Firm Phase
1.1.2.1.1 Lot A
1. Supply, delivery, installation and commissioning of the
entire set of telecommunications equipment needed for the
works.
2. Rehabilitation of existing equipment.
3. quipping of new transmission stations.
<PAGE>
4. Supply of a mobile earth station.
5. Supply of a stock of spare parts.
6. Supply of ten (10) maintenance vehicles.
7. Technical assistance and training of personnel necessary for
future operation of installations.
8. Obligation to maintain public service during the entire
duration of works described in this contract.
1.1.2.1.2 Lot B
All works, infrastructure and utilities:
for the construction of new transmission centers,
- for the renovation of existing centers.
1.1.2.2 Optional Phase
1.1.2.2.1 Lot A
1. Supply, delivery, installation and start of function of the
set of equipment needed for the works.
2. Equipping of new transmission stations.
3. Obligation to maintain public service during the entire
duration of works described in this contract.
1.1.2.2.2 Lot B
All works, infrastructure and utilities for the construction of a
new transmission station.
Article 1.2 - Knowledge of Sites and Working Conditions
For works
For LOT A works, the CONTRACTOR hereby testifies to his complete
knowledge of:
- the nature and geographic location of works,
- the meteorological and climatic conditions,
- general conditions for execution of works, especially
equipment needed for them,
- existence of possible nearby constructions that could
affect the mode of execution of the works,
- plans, technical specifications, and operation manuals
of existing installations,
- the exact plan location as well as the nature of all
utilities requiring either a diversion or special
precautions related to the works,
- local conditions, as a rule and more particularly
conditions of supply and stocking of equipment and
tools,
<PAGE>
- means of communication, transport, possibilities of
water, electricity and fuel supplies,
- availability of labour,
- all constraints and obligations resulting from social,
tax and customs laws in COTE D'IVOIRE,
- all the conditions and circumstances likely to have an
influence on the delivery of supplies, execution of
works or prices,
- techniques and modes of execution of works in force in
COTE D'IVOIRE.
The main contractor shall assist the CONTRACTOR in the
collection, verification and analysis of these information items.
The CONTRACTOR shall, however, be responsible for the adequacy of
these information items needed for the execution of services put
in his charge.
The CONTRACTOR shall be entirely liable for any lack, error or
omission by him of the knowledge of the sites and working
condition.
The parties agree that all the plans, characteristics,
operational schedules provided by the ADMINISTRATION concerning
the existing installations shall only be given as information and
shall not be binding on the ADMINISTRATION.
Article 1.3 - Interpretation of Terms Used
The following explanations are provided for terms used in this
contract:
1.3.1
The term "EMPLOYER" means "THE MINISTRY OF COMMUNICATIONS"
1.3.2
The term "MAIN CONTRACTOR" means "the DIRECTEUR GENERAL DE LA
DIRECTION ET CONTROLE DES GRANDS TRAVAUX (DCGTx)".
1.3.3
The term "ENGINEER" means the duly accredited representative of
the "MAIN CONTRACTOR" for the monitoring and supervision of the
works.
The ENGINEER shall carry out, on behalf of the ADMINISTRATION,
duties of technical and administrative monitoring of the works.
In this regard, he shall, inter alia, be responsible for:
- approval of specification plans and execution schedules
set up by the "CONTRACTOR",
- regular monitoring of the execution of actual works in
accordance with approved plans comprizing, if
<PAGE>
necessary, possible modifications to the basic project
made by the ADMINISTRATION,
- checks and other in-situ tests to ensure that the
quality of materials and their installation are in
conformity with the technical specifications stipulated
in the contract,
- verification and certification of invoices of the
CONTRACTOR,
- establishment of counter-measurements, architect's log,
provisional monthly breakdown and final detailed
account,
- writing and notifying directives and any other note
sent to the CONTRACTOR, necessary for the appropriate
execution of works and their supervision,
- factory acceptance,
- visits prior to provisional and final acceptance of
works.
1.3.4
The term "ADMINISTRATION" broadly means the various STATE agents.
1.3.5
The term "CONTRACTOR" means the holder of this contract or his
duly appointed representative.
1.3.6
The "PRICE OF THE CONTRACT" means the amount mentioned under
Article 2.1 of this PARTICULAR TERMS AND CONDITIONS (PTC) or
THIRTY SIX MILLION UNITED STATES DOLLARS excluding VAT -
excluding custom duty.
1.3.7
The term "WORKS BY FORCE ACCOUNT" means works executed by the
"MAIN CONTRACTOR" using the material and human resources of the
"CONTRACTOR".
1.3.8
The term "CONTROLLED EXPENSE WORKS" means works executed by the
CONTRACTOR and paid for on the basis of actual disbursements.
1.3.9
The term "MISCELLANEOUS REIMBURSEMENTS - CONTRACTOR AUTHORIZED"
means expenses directly related to execution of contract which
MAIN CONTRACTOR could request CONTRACTOR to pay his appointed
suppliers on behalf of the EMPLOYER.
Article 1.4 - Listing of Contract Documents
The contract comprizes, by order of priority the following
documents:
<PAGE>
- Document 1: DEED OF EMPLOYMENT
- Document 2: THE PARTICULAR TERMS AND CONDITIONS (PTC)
- Document 3: TECHNICAL SPECIFICATIONS (TS)
- Document 4: BREAKDOWN OF TOTAL CONTRACT PRICE OF LOT A
- Document 5: PROVISIONAL BILL OF QUANTITIES FOR LOT B.
In case of any discrepancy among the documents of the contract,
such documents shall be considered in the order in which they are
listed above.
In case of discrepancy between the provisions of the same
document, the most restrictive provisions for the CONTRACTOR
shall carry. Contractual documents shall be those which are
listed above which represent the entire agreement between the
parties and stipulate all their respective rights, obligations
and responsibilities.
Article 1.5 - Document Preparation and Submission-Assistance of
Employer
1.5.1 Documents to be Issued to the Contractor
Following the notification of approval of the contract, the
EMPLOYER shall issue, at no cost to the CONTRACTOR and against a
receipt, a certified true copy of contractual documents listed
under Article 1.4 of the aforementioned PTC.
1.5.2 Documents to be Prepared and Submitted by Contractor
Within a period of ONE HUNDRED AND TWENTY (120) days starting
from the day of commencement of works, the CONTRACTOR shall
provide:
- the organizational chart of the local site management
and supervisors indicating their names, dates of
arrival and qualification of various supervisors,
- detailed implementation schedules(s) of all the works,
pert type, established on the basis of the contract. It
(they) shall be regularly up-dated. To facilitate its
(their) use, it (they) shall be in the form of
implementation charts.
This schedule shall notably comprize all the relevant information
on:
- general programme of supply delivery
- planning for end of deliveries as partially or
completely set out in general programme,
- methods and mode of execution proposed by the
CONTRACTOR for the execution of works
- execution rate,
<PAGE>
- works (or part of works) for which several work posts
shall be necessary and their relevant corresponding
periods,
- site manpower needs,
- provisional payment schedules,
- one month preceding each quarter, or at any moment, the
ENGINEER shall deem it necessary, especially if
schedules are not met, the CONTRACTOR shall submit to
the MAIN CONTRACTOR a detailed week to week quarterly
programme per work or nature of works comprizing the
following four items:
- future tasks,
- corresponding rates of implementation,
- manpower needed,
- supplies needed.
Any modification of installation, construction materials or
implementation schedules shall be subject to the prior approval
of the ENGINEER. The MAIN CONTRACTOR shall present his comments
on the programmes submitted to him.
Studies carried out by Sub-contractors must bear their stamp and
be presented to the ENGINEER by the CONTRACTOR. The latter shall
be solely liable for them.
The ENGINEER shall sign each plan or make relevant modifications
thereof known within THIRTY (30) days. Beyond this period, the
plan shall be deemed to have been approved. The approval stamp of
the ENGINEER shall not diminish in any way the liabilities of the
CONTRACTOR.
The CONTRACTOR shall therefore submit to the ENGINEER within
FOURTEEN (14) days, FIVE (5) copies of implementation documents
and TWO (2) counter-drawings on white tracing cloth. The
CONTRACTOR shall strictly adhere to the implementation drawings.
1.5.2.3 During Project Completion Phase
The CONTRACTOR shall constitute a complete file of drawings
during the execution of the project. All plans, including those
provided by the CONTRACTOR shall be as detailed as necessary to
provide complete details on the installation of partially or
completely finished infrastructures.
Within THREE (3) months of the provisional delivery the
CONTRACTOR shall submit to the ENGINEER:
- TWO (2) complete collections of reversed tracings of
all documents prepared by him, updated and in
conformity with the execution,
- FIVE (5) copies of each tracing,
<PAGE>
- TWO (2) 35 mm microfilms on cards with windows of all
the drawings.
1.5.3 Assistance by Employer
The EMPLOYER shall be under the obligation to provide all
reasonably possible assistance to the CONTRACTOR in the
accomplishment of various administrative procedures:
responsibility for their success shall rest entirely on the
CONTRACTOR. The EMPLOYER shall notably:
a) provide any assistance which may be required of him in
order to facilitate the clearing of equipment through
customs;
b) assist the CONTRACTOR to obtain at the appropriate
time, the authorizations required for the temporary
importation into the Republic of Cote d'Ivoire of
measuring instruments and other equipment which the
CONTRACTOR shall deem useful for the carrying out of
services stipulated in the contract;
c) assist the CONTRACTOR to obtain authorization to
re-export equipment temporarily imported into the
country as soon as their use in Cote d'Ivoire shall be
over;
d) undertake all the necessary steps to ensure that the
staff of the CONTRACTOR has access to the various
sites;
e) enable the CONTRACTOR's staff to have the free use of
available measuring instruments;
f) facilitate the immediate obtention of any medical
assistance and necessary medical evacuation facilities
in case of serious accident with the cost being borne
by the CONTRACTOR;
g) freely making available to the CONTRACTOR and on each
site throughout the period of the project an office
with a lock and key and equipped with a telephone. The
CONTRACTOR shall be responsible for the bills accruing
from the use of the latter;
h) provide adequate shelter and protection for equipment
delivered to various sites and not yet checked and
signed for;
i) obtain the approval from INTELSAT for access to the
system and participation of his staff in antenna
testing and putting into operation. The CONTRACTOR
shall assist the EMPLOYER to obtain space sector
capacity in the operation of the network;
j) avail the CONTRACTOR of sites and premises under lock
and key, air conditioning and primary power for the
installation and operation of equipment as well as the
necessary pylons, whenever responsibility for such
<PAGE>
facilities is not attributed to the CONTRACTOR in the
Technical Specifications (TS);
k) assist the CONTRACTOR, when the need arises to obtain
entry and exit visas, work permits and /or residence
permits and laisser-passers for his expatriate staff;
l) assist the CONTRACTOR to obtain accommodation for his
staff on the various sites;
m) obtain any other license and/or permit required in Cote
d'Ivoire.
Article 1.6 - French Language-Metric System Contract Currency
Any written documents from or to the CONTRACTOR for the purpose
of the execution of this contract shall be exclusively:
- in the French Language,
- in the metric system,
- with reference to the US Dollar.
The CONTRACTOR shall have on the site an adequate number of
qualified REPRESENTATIVES and INTERPRETERS speaking the French
Language in order to facilitate the work of the ENGINEER and his
REPRESENTATIVES; in particular, the approved REPRESENTATIVE of
the CONTRACTOR as well as his supervising staff should have a
fair knowledge of the French language.
Article 1.7 - Laws and Legislation Governing the Contract
1.7.1 Contract Governed by Ivorian Law
The CONTRACT is governed by the laws of the Republic of Cote
d'Ivoire.
The LEGISLATION in force in Cote d'Ivoire is the only one
applicable to this contract except for American Legislation on
the export of the technology mentioned in Article 1.7.2 below.
The CONTRACTOR must comply with any laws or regulations issued by
Ivorian Authorities and applicable to his activities.
He shall notably safeguard the EMPLOYER against any penalties or
liabilities resulting from the non compliance with these laws and
regulations.
The CONTRACTOR and his staff shall be subjected to the social and
tax laws of the Cote d'Ivoire.
1.7.2 American Legislation Concerning Technology Export
The contract shall be subjected to the regulations applicable in
the United States of America on the exportation of equipment and
related documentation using certain technologies.
<PAGE>
The EMPLOYER shall undertake to ensure that goods and documents
exported from the United States for the execution of this
contract shall only be used for the installation and operation of
this broadcast network and shall not directly or indirectly be
re-exported to another country without the prior written
authorization of the United States Government. The EMPLOYER shall
indemnify the CONTRACTOR for the consequences of any violation of
this commitment.
The provisions of this Article and other restrictions or
conditions imposed by the United States Government on this
contract shall be binding on the two parties after the
termination of the contract.
Article 1.8 - Labor
1.8.1
The CONTRACTOR shall be compelled to observe existing work
regulations and social legislation as well as those that shall be
published in the OFFICIAL GAZETTE OF THE REPUBLIC OF COTE
D'IVOIRE.
1.8.2
The CONTRACTOR shall comply with the legislation of the Republic
of Cote d'Ivoire in matters relating to foreign labour.
Article 1.9 - Legislation and Social Regulation - Application to
Company Staff and Payment of Salaries
1.9.1
The CONTRACTOR shall, at his own expense, apply Ivorian social
regulations on housing, health and safety to all his employees.
The CONTRACTOR shall observe any new legislation or regulation
that shall apply in this regard. Notwithstanding the obligations
stipulated by the laws and regulations on labour, the CONTRACTOR
shall convey to the ENGINEER, at his request, the updated list of
names of employees and their qualifications. He shall also convey
at the request of the ENGINEER all the payslips of the company
employees. The ENGINEER can at any time request the CONTRACTOR
for evidence of his application of social legislation to his
employees, notably in matters concerning salaries and wages,
health and safety.
The CONTRACTOR shall be responsible for hiring the staff needed
for the execution of the project.
The CONTRACTOR shall refrain from enticing workmen away from
other companies working for the EMPLOYER.
<PAGE>
The number of workers of each profession must be proportional to
the quantity of structures to be built, taking into consideration
time schedules required.
The CONTRACTOR can, if he deems it necessary and with the
agreement of the MAIN CONTRACTOR or ENGINEER, request derogations
of laws, regulations and collective agreements stipulated in
texts on the duration of work, weekly breaks, overtime, night
shift and public holidays.
The prior approval of the MAIN CONTRACTOR or ENGINEER can only be
given if the CONTRACTOR shall have presented his request at least
five (5) days before the day(s) for which the derogation is
sought.
No increase in price nor additional payment shall be given the
CONTRACTOR because of the above-mentioned derogations.
The MAIN CONTRACTOR or ENGINEER can demand the departure from the
site of any executive, supervisor or worker deemed to be
incompetent or guilty of repeated negligence, carelessness or
dishonesty and, generally, of any employee whose behaviour is
inimical to the proper execution of the project.
The CONTRACTOR shall be solely liable for damages arising from
any fraud or poor workmanship committed by his employees in the
execution of the project.
1.9.2
The CONTRACTOR shall be solely liable for the application of all
labour legislations and regulation, notably concerning health and
social regulations.
1.9.3
Notwithstanding liabilities stipulated by current labour
regulations and laws, the CONTRACTOR shall also provide the
ENGINEER with the list of members of his local staff. He shall
also be bound to furnish the ENGINEER and any other
Administrative Authority upon the request hereof, all payslips of
the CONTRACTOR's local staff. One or several agents of the
ENGINEER or ADMINISTRATIVE AUTHORITIES may observe the payment of
salaries and wages whenever they deem it necessary. The ENGINEER
may at any moment request from the CONTRACTOR evidence of the
latter's compliance with labour regulations and social
regulations, notably in matters relating to salaries and wages,
health and safety.
The CONTRACTOR may, if he deems it useful, request and utilize
derogations from stipulated laws and regulations on working hours
and weekly breaks (overtime, night shifts and holidays). No
additional payment will be made to the CONTRACTOR as a result of
the aforementioned derogations.
<PAGE>
The CONTRACTOR shall comply with Ivorian laws on foreign labor.
1.9.4
The CONTRACTOR shall hire the necessary labour for the project
under conditions stipulated in current regulations.
The number of workers of each profession shall always be
proportional to the quantity of structures to be constructed and
on the basis of deadlines set.
The CONTRACTOR shall refrain from enticing workmen away from
other companies working for the EMPLOYER.
The CONTRACTOR shall take great care in hiring his employees; the
EMPLOYER shall reserve the right to reject entry or residence
visa to any person whose presence, in his view, would be inimical
to public good. The EMPLOYER may demand the departure from the
site of any executive, agent or workers under the CONTRACTOR's
orders for repeated insubordination, incompetence, negligence,
carelessness or dishonesty. The application of this right shall
not in any way serve as an excuse for delays and poor workmanship
and claims of any kind by the CONTRACTOR.
The CONTRACTOR shall be liable for acts of fraud and poor
workmanship committed by his supervisors and workers in the
supply and use of materials and other services.
1.9.5
The CONTRACTOR shall comply with work safety regulations, in this
regard, he shall notably:
- appoint an officer in charge of safety at the start of
works and with the approval of the ENGINEER,
- undertake all the necessary steps to avoid occupational
accidents for which he shall solely be responsible,
- insure all his employees against occupational
accidents.
The attention of the CONTRACTOR is particularly drawing to
regulations in force on workers' accommodation and health.
The CONTRACTOR shall be responsible for the housing of all his
employees in Cote d'Ivoire.
Article 1.10 - Health Surveillance of Sites
The CONTRACTOR shall provide at no extra cost first-aid and rapid
evacuation facilities for any victim of accident either to the
nearest health center or home depending on the seriousness of the
victim's condition.
<PAGE>
He must have someone on the spot capable of providing first-aid
care and must ensure adequate pharmaceutical products.
The CONTRACTOR shall inform the EMPLOYER of any suspicious
disease on the sites in accordance with Ivorian health laws.
Article 1.11 - Presence of Contractor on Work Sites - Service
Orders
1.11.1 Presence of Contractor on Work Sites
The CONTRACTOR shall permanently ensure the on-site supervision
of the conduct and execution of works in accordance with the
implementation plan. He must appoint a Representative, approved
of by the MAIN CONTRACTOR, and who shall have the necessary power
to:
- take necessary immediate decisions on the progress of
the work,
- receive service orders.
The MAIN CONTRACTOR reserves the right to withdraw the approval
of the CONTRACTOR's Representative and demand his replacement.
The CONTRACTOR shall report to the offices of the MAIN CONTRACTOR
or ENGINEER and accompany them on their tour of the site whenever
this shall be required. If need be, he shall be accompanied by
his SUB-CONTRACTORS.
1.11.2 Service Orders
The service orders shall be written, dated and numbered by the
MAIN CONTRACTOR. They shall take immediate effect.
They shall be issued in TWO (2) copies to the CONTRACTOR who
shall sign, date and return one copy to the MAIN CONTRACTOR.
When the CONTRACTOR shall deem that the service order calls for
reservation on his part, he must under penalty of preclusion,
make this known in writing to MAIN CONTRACTOR within TEN (10)
days.
The CONTRACTOR shall strictly comply with service orders which
are notified him, regardless of any reservation on his part.
The service orders concerning sub-contracted jobs shall be
addressed only to the CONTRACTOR who shall be responsible for
receiving them.
<PAGE>
Article 1.12 - Authorization to Sub-Let
The CONTRACTOR, holder of the contract, may sub-let some works of
the contract. For local jobs, he must obtain the prior
authorization from the MAIN CONTRACTOR who, in case of refusal
must provide reasons.
To support his request, the CONTRACTOR shall specify:
- the nature of the services to be sub-let,
- the name, address, qualification, insurance
certificates and references of the proposed
SUB-CONTRACTOR.
The authorization application for a SUB-CONTRACTOR presented to
the MAIN CONTRACTOR, shall imply that the services, for which
sub-contract is requested shall be ascribed within the confines
of the terms of the contract as set out under Article 1.4 of the
PTC.
Authorization to sub-let shall not diminish in any way the
liabilities of the CONTRACTOR, who shall remain responsible of
the entire execution of the contract, to the EMPLOYER.
The appointment of a SUB-CONTRACTOR is subjected to conditions
stipulated under this Article.
The Contractor shall be responsible for the payment of
SUB-CONTRACTORS, and shall not in any way default in this. In
case of default, the EMPLOYER may substitute for him without any
appeal.
Article 1.13 - Subjection Arising from Closeness of Sites Unknown
to the Company
The CONTRACTOR shall not, under any circumstances, claim the
right to shirk his contractual obligations, nor lay claims as a
result of subjections arising from jobs that the ADMINISTRATION
or any other company may have him carry out on the site, except
if he shall have given prior notice to the ADMINISTRATION and
provided evidence of the inconvenience this may have subjected
him to.
Article 1.14 - Night Work and Public Holidays
Work carried out at night or on public holidays shall be
subjected to authorization by the ENGINEER.
This approval shall only be granted if the CONTRACTOR shall have
taken the relevant steps and if the request shall have been made
early enough to enable the ENGINEER to ensure the supervision and
monitoring of the works.
<PAGE>
No additional cost shall be granted for work done at night and
public holidays.
Chapter II - Financial and Administrative Clauses
Article 2.1 - Price of Contract
2.1.1 Firm Phase
2.1.1.1 Lot A
The value of LOT A amounts to a total and fixed price of: TWENTY
SEVEN MILLION US DOLLARS (US $27,000,000) (excluding VAT and
duty). The total value of LOT A of the contract, excluding fees,
registration charges, VAT, "TPS", at prices prevailing in October
1992 and under conditions stipulated in this contract and notably
tax and customs levies specified under Articles 2.19 and 2.20 of
the particular terms and conditions amounts to the following:
Total value excluding taxes and duties: US $27,000,000
Total customs duty: US $ 6,451,772
Registration charges: US $ 1,600
VAT at 25%: US $ 8,362,943
Total value including taxes: US $41,816,315
FORTY-ONE MILLION EIGHT HUNDRED AND SIXTEEN THOUSAND THREE
HUNDRED AND FIFTEEN DOLLARS.
2.1.1.2 Lot B
The estimated total amount of Lot B is a sum of: 9,000,000 USD
tax and duty free (Nine million US Dollars).
The total amount of the market Lot B without harbor, stamp, and
registration fees and without interior V.A.T. [value added tax]
and T.P.S., under the conditions defined in all the clauses of
the current transaction, particularly the fiscal and customs
clauses specified in Articles 2.19 and 2.20 of the Schedule of
Clauses and Special Conditions rises then to a sum of:
Total amount without duties and taxes: 9,000,000 US dollars
Total amount of harbor fees (customs duty): 1,350,000 US dollars
Total amount of V.A.T. at a rate of 25%: 2,587,000 US dollars
Total amount, all taxes included: 12,937,500 US dollars
Twelve million nine hundred thirty-seven thousand five
hundred US dollars (A.T.I.).
<PAGE>
2.1.2 Optional Section
2.1.2.1 Lot A
The total amount of Lot A is a total, inclusive, firm and fixed
sum of:
1,111,000 USD tax and duty free (One million one hundred and
eleven, thousand US Dollars).
The total amount of the market Lot A without harbor, stamp, and
registration fees, without interior V.A.T. [value added tax] and
T.P.S. under conditions defined by all the clauses of the current
transaction, particularly the fiscal and customs clauses
specified in Articles 2.19 and 2.20 of the Schedule of Clauses
and Special Conditions rises then to a sum of:
Total amount without duties and taxes: 1,111,000 US dollars
Total amount of customs duties: 265,086 US dollars
Total amount of V.A.T. at a rate of 25%: 344,022 US dollars
Total amount, all taxes included: 1,720,108 US dollars
One million seven hundred twenty thousand one hundred eight
US dollars (A.T.I.).
2.1.2.2 Lot B
The provisional value of LOT B amounts to SEVEN HUNDRED THOUSAND
DOLLARS (US $700,000).
The total value of LOT B of the contract, excluding customs and
registration charges, excluding VAT and professional taxes and
under conditions specified in the terms and conditions of this
contract, notably regarding taxes and customs levies specified
under Articles 2.19 and 2.20 of the PTC amounts to the following:
Total value excluding taxes and duties: US $ 700,000
Customs: US $ 105,000
VAT at 25%: US $ 201,250
Total value: US $1,006,250
ONE MILLION SIX THOUSAND TWO HUNDRED AND FIFTY DOLLARS.
Article 2.2 - Price Variations
Without object.
Article 2.3 - Breakdown of Total Fixed Price
The price of this contract for LOT A is total and lumpsum for LOT
A.
<PAGE>
The items which appear in the breakdown of the total and lump
price are given for information and do not in any way bind the
MAIN CONTRACTOR/EMPLOYER.
The unit value of the breakdown may only be used for provisional
detailed account and payment of possible modification works
ordered by MAIN CONTRACTOR.
The total and contractual price excluding taxes and duties of the
project comprizes all the expenses, of the CONTRACTOR in
implementing the entire project.
The overall and lump price exclusive of taxes and duties shall be
deemed to have been established with the understanding that no
part shall be carried out by the EMPLOYER except those specified
under Article 1.5.3.
The price shall comprize notably:
- design,
- technical execution surveys,
- technical coordination of the project and supervision
- of SUBCONTRACTORS,
- salaries and social benefits,
- staff accommodation expenses,
- amortization and operation of his equipment,
- supplies, materials and consumable items of all kinds,
- freight, transport and transit charges,
- insurance fees as stipulated under Article 2.5 of PTC,
- suretyship and guarantees,
- patents, fees, taxes, charges and levies of all sorts
owed as a result of the execution of this contract,
- taxes, and notably:
- taxes on incomes,
- national contribution (CN),
- apprentice's tax (T.A.),
- national solidarity tax (SN),
- land-tax,
- professional and merchant taxes,
- scheduled taxes on industrial and commercial profits,
- management and site changes,
- overheads,
- risks and profits.
This price shall include all the subjection and constraints
arising from the application of administrative, technical and
financial provisions stipulated in the contractual documents. It
shall take into account risks and subjections of all kinds
relating to the works specified in the contract which the
CONTRACTOR shall be deemed to have full knowledge. The nature and
difficulties.
<PAGE>
The price shall also include expenses related to special
conditions of the project notably:
natural phenomena (excluding Acts of God),
utilization of public property and functioning of
public services,
simultaneous construction of other structures.
Furthermore, it shall be specified that the price of the contract
shall also include all expenses outside Cote d'Ivoire which are
the necessary and direct consequence of the project (supplies,
works, services, etc.), and notably, all fees, taxes, insurance,
charges, overheads, false claims underwritten by the CONTRACTOR
and for which he shall in any case be liable.
In case of sub-contracting, the prices of the contract shall be
deemed to have adequately covered the general expenses of the
project, especially those relating to the coordination and
supervision by the CONTRACTOR and his SUB-CONTRACTOR as well as
the consequences of their possible default. The overall lumpsum
price stipulated above is labeled as follows:
excluding customs fee (special entry fee, fiscal entry
fee, custom levy and statistical fee) only for the
entry of materials, equipment and components
inextricably bound to the project,
excluding VAT and professional tax (TPS),
excluding registration fees and stamps levies.
Under the understanding that the purchase of fuel, lubricants and
hydrocarbonate binders shall be purchased locally and shall be
affected by the tax laws of Cote d'Ivoire without any restriction
or exception.
The value of stamp levy and registration fees to be paid by the
CONTRACTOR for the purpose of the contract shall be reimbursed
under conditions outlined under Article 2.19 of the PTC.
All other relevant fees and taxes to be paid by the CONTRACTOR
for the purpose of the contract or any other purpose and which
shall be in force at the date of the signing of the contract
shall be deemed to be included in the total and contractual price
of the project.
Furthermore, the total project shall be financed by a financing
agreement between the State of Cote d'Ivoire, an American Bank
and EXIMBANK as guarantor.
<PAGE>
Article 2.4 - Final Nature of Prices
The CONTRACTOR shall not revise the overall price of works
pertaining to LOT A of the contract signed by him, except in the
following cases:
If the rehabilitation of transmitters requires replacement
of parts other than those specified in overall contractual
breakdown, he shall do so at no extra cost provided the
required parts are available on the market and can be
obtained within the implementation schedules of the project.
If the transmitter cannot be repaired under these
conditions, any increase in price or deadline shall be
subject to a special negotiation.
Article 2.5 - Liabilities and Insurance
2.5.1 General Liability Clause
Notwithstanding the insurance liabilities imposed hereunder, the
CONTRACTOR shall be solely responsible for safeguarding the
EMPLOYER, MAIN CONTRACTOR and ENGINEER against any claims by
third parties for damages of all kinds or body injuries resulting
from the preparation and (or) execution of the contract by the
CONTRACTOR, his SUB-CONTRACTORS and their agents. This liability
also covers damages resulting from the transportation of his
materials.
Compensations that shall be due shall be paid by the CONTRACTOR
without prejudice to possible appeal against the culprits of the
accident. Under no circumstances shall the EMPLOYER, MAIN
CONTRACTOR and ENGINEER be held liable for damages mentioned in
the above paragraph.
The CONTRACTOR shall not be liable for any intangible or indirect
damages except in case of negligence or unintended error.
2.5.2 Insurance
2.5.2.1 Protection of Persons and Liabilities
The CONTRACTOR should apply for:
2.5.2.1.1 Civil liability Insurance
A third party CIVIL LIABILITY INSURANCE that covers all bodily
and material damages that might occur to their parties during
execution of all the transactions as well as during the guarantee
time limit.
This insurance will be applied for in the CONTRACTOR's name of
and on his behalf and will cover all the contributors, namely the
<PAGE>
CONTRACTOR, the OWNER, the PROJECT MANAGER, and the ENGINEER as
well as the SUBCONTRACTORS for their on site activities: they
will thus all be the coinsured.
The insurance policy should specify that the OWNER's, ENGINEER's,
or PROJECT MANAGER's personnel as well as those of other on site
BUSINESSES are considered as third parities with regard to the
insurers. The so-called "OVERLAPPING LIABILITY" clause is related
to both material damages and bodily injuries suffered by the
coinsured. This insurance excludes the work accidents suffered by
the Contractor's personnel mentioned in section 2.5.2.1.2 below.
This insurance must be unlimited for bodily injuries.
This insurance must cover especially the liability of the
CONTRACTOR acting as the company manger.
2.5.2.1.2 Work Accidents Insurance
In accordance with Cote d'Ivoire law, the Contractor will apply
for all insurance necessary to cover this. He will monitor to see
that the SUBCONTRACTORS do the same.
He protects the OWNER, the PROJECT MANAGER, and the ENGINEER
against all claims that its personnel or those of its
SUBCONTRACTORS might file against the latter both in the Cote
d'Ivoire and abroad.
For this permanent expatriated personnel, the CONTRACTOR will
also conform to the law and regulations of the original country.
2.5.2.1.3 Automobile Liability Insurance (C.L.)
The CONTRACTOR will apply for insurance that conforms to Cote
d'Ivoire law for all vehicles that have access to the public
highway and will monitor to see that his SUBCONTRACTORS do the
same.
2.5.2.1.4 Insurance Covering Risks at Work Site
The CONTRACTOR must effect and maintain an insurance against work
site risks, covering the EMPLOYER as well as the CONTRACTOR
extending continuously from the start of the project to the
provisional acceptance and covering all the goods of the project.
The insurance must carry widest possible guarantees and,
consequently, cover all physical damage affecting the goods
specified in the contract, including those caused by an error in
design, planning, construction or execution material, without
excluding the vitiating party.
<PAGE>
From the provisional acceptance, the guarantees of this insurance
shall run during a "maintenance" period and, at least, during the
guarantee period. The guarantees shall cover damages attributable
to the CONTRACTOR's interventions on the site while carrying out
his contractual duties, especially checking, maintenance,
adjustment, repairs or damages caused by factors which were
anterior to the provisional acceptance.
2.5.2.2 Subscription and Production of Policies
The CONTRACTOR must, before the start of the project, effect
insurances stipulated in paragraphs 2.5.2.1.1, 2.5.2.1.2,
2.5.2.1.3 and 2.5.2.1.4 of Article 2.5.2.1 above. The
corresponding policies must be presented within FOURTEEN (14)
days following the request by the MAIN CONTRACTOR or ENGINEER.
All the policies must bear a clause subjecting their annulment to
the prior approval of the insurance company, EMPLOYER and MAIN
CONTRACTOR. They must be effected with insurance companies
recognized in Cote d'Ivoire.
2.5.2.3 Sanctions
Apart from the copies of policies taken, the CONTRACTOR must
provide the MAIN CONTRACTOR's certificates showing that the said
insurance policies are indeed in force. Failure to produce these
documents shall prohibit any payment relating to the contract to
the CONTRACTOR.
Article 2.6.1 Execution Period
The CONTRACTOR shall take all the necessary steps to complete the
entire project within a maximum period of eighteen (18) months
beginning from the service note ordering the commencement of work
which can only be given after the entry into force of the
contract.
2.6.2 Delay Penalties
2.6.2.1
Delay in the completion of the project, except for reasons Act of
God or delays unattributable to the CONTRACTOR, shall result in
the full payment of penalties without prior formal notice.
The value of the penalty shall be fixed at ONE THOUSAND
(1/1000th) of the initial value (less taxes) of uncompleted jobs
expressed in US Dollars per calendar day of delay.
The term "uncompleted structures" mentioned above shall apply to
each of the 27 centers numbered from 1 to 27 in the BREAKDOWN OF
THE TOTAL AND LUMPSUM PRICE OF LOT A and BILL OF QUANTITIES AND
PROVISIONAL ESTIMATES OF LOT B undelivered at the expiry of the
contract.
<PAGE>
The value of penalties shall be deducted from amounts owed the
CONTRACTOR and shall be deducted from the project.
Any delay for reasons of Act of God or not attributable to the
CONTRACTOR shall be equally compensated for by extension of
completion time.
2.6.2.2
The parties agree that when penalties reach (5%) of the value of
the contract, the following consequences shall apply:
The CONTRACTOR shall, by notification, inform the EMPLOYER
of causes and reasons for this delay as soon as the
percentage stated above reaches 4.5%.
In case of default by the CONTRACTOR to inform the
above-mentioned, the penalties shall continue to apply.
2.6.2.3
The penalties shall be stopped as soon as the EMPLOYER receives
the notification indicated under 2.6.2.2 and for thirty (30) days
during which the CONTRACTOR and EMPLOYER shall attempt to
negotiate a solution which shall be subjected to a written
agreement. Agreement from these negotiations shall put forward
solutions for the delay and a new completion time for the project
which shall not be more than 90 days after the initial completion
date set in 2.6.1. Penalties outlined under Article 2.6.2.1 shall
apply to the new completion date and their value shall be linked
to the value of the contract.
2.6.2.4
If by the end of negotiation period stipulated under 2.6.2.3 an
agreement has not been reached, the penalties shall begin to
apply and linked to the value of the contract.
2.6.3 Specifications on Time Limit
Any time limit specified in the contract to the EMPLOYER, MAIN
CONTRACTOR or CONTRACTOR shall take effect from the date of
notification of commencement of work sent to the CONTRACTOR.
When the time limit is set in days, this shall mean calendar days
and it shall expire at the end of the last day of the completion
time specified.
When the time limit is in months, it shall be counted from day to
day. It there is no corresponding day in the month ending the
period, the latter shall expire at the end of the last day of the
month hereof.
<PAGE>
When the last day falls on a Sunday or public holiday, the time
limit shall be extended to the end of the following working day.
When, in executing the terms of the contract, a document must be
provided, within a set period, by the CONTRACTOR to the EMPLOYER
or vice versa, or when the dispatch of a document must run a
certain period, the document shall be delivered to the addressee
and a receipt issued. The date of the receipt shall be the
official date of delivery of the document.
Article 2.7 - Acceptance in Factory - Provisional and Final
Acceptance - Guarantee Period - Anticipated
Utilization of Some Installations or Parts of
Installations
2.7.1 ACCEPTANCE
2.7.1.1 BACKGROUND
For the execution of pre-delivery testing, the CONTRACTOR shall
provide the necessary personnel and instruments, but he may
freely use available measuring instruments belonging to the
EMPLOYER for tests carried out on the site.
2.7.1.2 Factory Acceptance
One month before the date scheduled for the start of necessary
tests, the CONTRACTOR shall provide the MAIN CONTRACTOR with the
test plans describing the intended tests and comprizing:
- a description of the principles to be applied and
conditions for the tests,
- installation and description of instruments to be used,
- expected result of each test.
The CONTRACTOR shall inform the MAIN CONTRACTOR by letter, telex
or cable the date scheduled for the test. This notification shall
reach the MAIN CONTRACTOR at least one month before the set date.
The latter shall decide whether or not to appoint his
representatives to witness the testing.
During the tests, the CONTRACTOR shall complete the necessary
measurement and test sheets. After the representatives of the
EMPLOYER shall have attended the testing sessions, the CONTRACTOR
shall provide them with sheets for their signature and
observations to be completed on the site. The CONTRACTOR shall
transmit them to the MAIN CONTRACTOR as soon as possible.
Otherwise, the CONTRACTOR shall send them to the MAIN CONTRACTOR
as soon as they are filled in.
If the results of the factory tests indicate that the equipment
can be dispatched, a certificate of factory acceptance shall be
issued to the CONTRACTOR within fourteen (14) days beginning from
the end of the said tests.
<PAGE>
These certificates issued on a site per site basis may include a
list of reservations concerning elements that do not conform with
the contractual specifications which the CONTRACTOR must rectify
before presentation for provisional acceptance.
The factory tests and measurement sheets shall not in any way
absolve the CONTRACTOR of his overall responsibilities for the
performance of the equipment.
2.7.1.3 PROVISIONAL ACCEPTANCE
Two months before the start of tests on the site, the CONTRACTOR
shall submit to the MAIN CONTRACTOR for approval an acceptance
log book describing all the measures to be carried out on each
site.
The MAIN CONTRACTOR shall approve an acceptance book within
thirty (30) days following the acceptance. Beyond this period the
MAIN CONTRACTOR shall be deemed to have approved of the delivery.
Acceptance tests shall be carried out in the presence of
representatives of the MAIN CONTRACTOR after installation on each
site and the measurement and test sheets shall be submitted to
the representatives for signature and comments.
In this regard, the CONTRACTOR shall, one month before hand,
inform the MAIN CONTRACTOR by registered letter, telex or cable
for the scheduled date for the start of the tests and the
relevant programme.
The tests shall be conducted to the satisfaction of the MAIN
CONTRACTOR before the provisional acceptance. If the tests should
be postponed or repeated through the exclusive fault of the
CONTRACTOR, the latter shall refund to the MAIN CONTRACTOR the
entire expenses incurred as a result, such as consultant and
expert fees and additional travel expenses. If the results of the
tests carried out on a given site indicate that the latter can be
commissioned, a provisional acceptance certificate shall be
issued to the CONTRACTOR within fourteen (14) days beginning from
the end of the said tests. These certificates issued on site by
site basis may contain a list of reservations on the components
that do not conform with the contractual specifications but shall
not prevent the operation of the network and in such a case shall
indicate the time limit agreed upon for the withdrawal of these
reservations.
If the results of the tests do not conform with the
specifications, hampering the operation of the site, the
provisional acceptance certificate shall not be issued, and if
the time set for the installation stipulated under Article 2.6.2
shall continue to apply. A list of materials not conforming to
<PAGE>
specifications shall be submitted to the CONTRACTOR within the
week following the trials.
The CONTRACTOR shall then undertake to replace or repair the
equipment concerned within the shortest possible time and present
them again for testing in accordance with the procedures outlined
above.
If provisional acceptance is granted. the MAIN CONTRACTOR shall
draft and sign the minutes of the provisional acceptance which
shall indicate the project completion date on which the various
guarantee periods shall then be based.
The transfer of full property of the systems, tools and measuring
equipment shall take place on the day of handing over of
provisional acceptance for each site.
2.7.1.4 GUARANTEE PERIOD
The guarantee period of one (1) year starting from the date of
the provisional acceptance of each station.
The CONTRACTOR shall be bound, during the guarantee period by a
liability called "PERFECT COMPLETION LIABILITY" by which he
shall, at his own expense:
- rectify all the defects indicated by the MAIN
CONTRACTOR or EMPLOYER such that the installation shall
conform with the state in which it was during the
provisional acceptance,
- undertake, if need be, adjustments or modifications
that may appear necessary,
- hand over to the MAIN CONTRACTOR plans of installations
conforming with the implementation.
The obligation of perfect completion covers jobs needed to remedy
effects of normal wear and tear with the exception of consumable
items, cleaning and regular maintenance which are incumbent upon
the EMPLOYER. Any default by the CONTRACTOR to meet his
obligations shall, after formal notice, result in the MAIN
CONTRACTOR undertaking the adjustments, modifications or repairs
at the expense and risks of the CONTRACTOR.
The guarantee period shall be extended until the total completion
of jobs and services whether the latter are carried out by the
CONTRACTOR or officially in conformity with the conditions stated
above.
<PAGE>
The CONTRACTOR shall undertake notably to have all necessary
repairs of substandard equipment done at his expense, on the site
or in a factory of his choice.
This guarantee does not cover consumable items, but it includes
the obligation to supply spare parts needed after normal wear and
tear during the guarantee period.
The CONTRACTOR shall guarantee the repair or replacement of
components under conditions stipulated above until the final
acceptance; however, when these components shall have been
installed six months before this date, the guarantee can be
extended six months after their installation and specialty
mentioned in the final acceptance certificate.
The guarantee does not however apply to damages resulting from
violation of rules and directives given by the CONTRACTOR for the
maintenance or misuse, negligence or any other omission
attributable to the EMPLOYER or a third party.
2.7.2 FINAL ACCEPTANCE
At the expiry of the guarantee, final acceptance operations shall
be undertaken in the same manner as the provisional acceptance.
Final acceptance shall take place under the same conditions as
the provisional acceptance mentioned above after the expiry of
the guarantee period of the last site.
If during the guarantee period, the MAIN CONTRACTOR detects a
defect of non-conformity with the technical specifications of the
contract, he shall request the CONTRACTOR to carry out at his own
expense, the necessary repairs.
The certificate of final acceptance shall only be issued after
the CONTRACTOR shall have completed the repair of the established
defects. Otherwise, the MAIN CONTRACTOR shall issue the
certificate of final acceptance within the thirty days following
the end of the guarantee.
2.7.3 ANTICIPATED USE OF SOME INSTALLATIONS OR PART OF
INSTALLATIONS
The EMPLOYER may, with the approval of the CONTRACTOR, dispose of
some structure or parts of structures as they are completed and
before the jobs stipulated in the contract are completed. In this
case, the transfer of ownership of the structures involved shall
be made.
2.7.4 REPLACEMENT PARTS
During a period of ten (10) years starting from the final
acceptance, the CONTRACTOR shall undertake to supply within
reasonable lengths of periods and at reasonable prices any
replacement part or material which shall be requested of him for
the maintenance of installations described in the contract.
<PAGE>
In case of stoppage of manufacture of spare parts, the CONTRACTOR
shall inform the EMPLOYER early enough to enable him to take the
necessary measures.
The CONTRACTOR undertakes, however, to refrain from interfering
in possible relationship between SUB-CONTRACTORS and the EMPLOYER
in the direct procurement of components manufactured by the
latter after the expiry of the contract.
Article 2.8 - Construction Defects
If the MAIN CONTRACTOR is of the opinion that there is a
construction defect in a given installation, he shall, during or
before the final acceptance direct, through a service order, the
measures to be taken to identify this defect. These measures
shall comprize, if need be, the demolition and partial or
complete reconstruction of the structure presumed defective.
The MAIN CONTRACTOR may carry out these measures himself or by a
third party, but the operation must be done in the presence of
the CONTRACTOR, or after duly summoning him.
If a construction defect is observed, the expenses needed for the
repairs or total rectification in accordance with the provisions
of the contract as well as expenses resulting from possible
defection operations, shall be borne by the CONTRACTOR with
prejudice to the compensation which the MAIN CONTRACTOR may lay
claim to.
If no defect is detected, the CONTRACTOR shall be reimbursed the
expenses outlined in the preceding paragraph, if he had borne
them.
Article 2.9 - Logging of Jobs Completed
2.9.1
For the evaluation of possible modifications ordered by the
CONTRACTOR, jobs carried out in this regard shall be logged by
the ENGINEER or his approved representative in the presence of
the CONTRACTOR, summoned for the purpose or his approved
representative. If the CONTRACTOR does not respond to the summons
and does not send his representative, the logging shall take
place in his absence.
2.9.2
The CONTRACTOR may not, under any pretext, for measurements
invoke habits and traditions in his favor.
2.9.3
The logs shall be presented for acceptance to the CONTRACTOR who
may have it copied in the ENGINEER's offices.
<PAGE>
2.9.4
Acceptance of logs by the CONTRACTOR shall concern quantities and
unit prices. The latter should be designated by the numbers of
the memorandum of unit prices. When the log is limited to
quantities, special mention must be made by the CONTRACTOR who
shall express his reservations in writing.
2.9.5
If the CONTRACTOR refuses to sign the log book or signs them with
reservation, minutes shall be written on the presentation and
accompanying circumstances; the minutes shall be annexed to the
unsigned documents. In this latter case, a time limit of ten (10)
days starting from the date of presentation of documents shall be
allowed him to put his comments into writing. Beyond this period,
the logs shall be deemed to have been accepted by him as if had
been signed without reservation.
2.9.6
The systematic conditional logging shall be considered as
constituting a non observance of contractual obligations with all
the administrative and legal consequences such an attitude may
have.
2.9.7
Conflicting observations may be agreed to in the course of the
project, either at the request of the CONTRACTOR or initiative of
the MAIN CONTRACTOR without the observations prejudicing, on
principle, neither admission, claim, nor right to payment.
Article 2.10 - Basis of Payment
2.10.1 Provisional Detailed Accounts
At the end of each month, the ENGINEER shall establish a
provisional detailed account, a copy of which shall be sent to
the CONTRACTOR at his request.
This provisional monthly detailed account shall take into account
sums owed the CONTRACTOR since the beginning of the project.
It shall notably comprize:
- contractual starting advance,
- the CIF value of goods stripped and for which partial
payment shall have been requested,
- value of supplies made on the site,
- the value of jobs based on bills of quantity of jobs
carried out under contract conditions and unit prices
included in the breakdown of the total cost,
- value of works by force account,
- value of jobs under controlled expenditure,
- value of various repayments,
<PAGE>
- value of refund of customs duty,
- value of refund of registration and stamp fees,
- value of penalties and deductions,
- value of VAT.
The monthly installments to be paid the CONTRACTOR shall be
determined by the difference between the value of the monthly
deduction and that of the deduction of the previous month.
2.10.2 Final Detailed Account
A final detailed account shall be established at the end of the
project.
The final account shall include all the items mentioned under
Article 2.10.1 above on provisional detailed account.
The value of project shall be the same as the total and lumpsum
price. However, if necessary, this amount shall be revised:
- downward to the value of jobs that the MAIN CONTRACTOR
shall have expressly called off by service order,
- upward to the value of additional jobs expressly
ordered during the construction work.
The final detailed account shall be binding on the EMPLOYER only
after receiving the approval of the MAIN CONTRACTOR.
Within three (3) months following the completion of the project
and its provisional acceptance, the CONTRACTOR shall be invited
by a duly notified service order, to come to the offices of the
ENGINEER to inspect the final detailed account and sign it for
approval. He may request to see the vouchers and have copies made
as well as copies of the account.
In case of refusal, minutes of the presentation shall be taken
and circumstances of the refusal noted. The acceptance of the
final detailed account by the CONTRACTOR shall be binding in
respect of unit prices and quantities.
If the CONTRACTOR does not reject the service order or refuses to
accept the final account, or signs the latter conditionally, he
shall explain in writing the reasons for his refusal and inform
the ENGINEER the value of his possible claims before the end of a
sixty (60) day period starting from the date of notification of
the said service order.
It shall be expressly stipulated that the CONTRACTOR shall have
no recourse to any claims relating to the final account after
inspecting it and at the end of the aforementioned sixty (60)
days. Beyond this time limit the final account shall be deemed to
have been accepted by him even if he shall have signed it with
<PAGE>
reservation the reasons for which shall have no been explained as
specified in the foregoing paragraph.
Payment of the balance, after the necessary deductions from the
guarantee deposit, shall be made within ninety (90) days from the
date of acceptance of the final account by the CONTRACTOR of the
aforementioned expiry date of sixty (60) days.
Article 2.11 - Unforseen Jobs and Their Price Elevation
The EMPLOYER can order jobs not included in the contractual price
under the financing condition of the project in accordance with
Article 2.3 above. If the nature of the jobs does not feature in
the total price breakdown, the CONTRACTOR shall immediately
conform with service orders he shall receive on the subject. New
prices shall be prepared without delay following market trends or
by assimilation to similar jobs in the contract.
Where assimilation cannot be possible, current prices on the
international market shall be used as reference. If mutual
consent cannot be attained, the CONTRACTOR may refer to the
provisions of Article 2.25 of the PTC.
While awaiting the final decision on the litigation, the
CONTRACTOR shall be provisionally paid on the basis of prices
proposed by the MAIN CONTRACTOR.
Article 2.12 - Variations of Volume of Project
For the purpose of application of this Article, "volume" of the
project means the value of actual jobs, evaluated from the
breakdown of the total and lumpsum price taking account possible
modifications formally ordered by the MAIN CONTRACTOR and new
prices fixed in application of Article 2.11 above.
The "initial volume" of the project shall be the value of jobs
resulting from estimates of the contract, i.e., initial contract
modified or supplemented with intervening additions.
The CONTRACTOR shall complete the construction of jobs indicated
in the contract, irrespective of the increase or decrease of the
volume of jobs resulting from technical subjections, evaluation
of quantities estimated or any cause of increase or decrease
thereof.
2.12.1 Increase in the Volume of Works
In the event of an increase in the volume of works, the
CONTRACTOR shall not raise any objection.
<PAGE>
2.12.2 Decrease in the Volume of Works
In the event of a decrease in the volume of works, the CONTRACTOR
shall raise no objection so long as the decrease does not exceed
Twenty Five Percent (25%) of the initial volume of works and so
long as he shall have not incurred any losses.
Article 2.13 - Domiciliation of Payments
Payments shall be effected in accordance with accounting
regulations in force in Cote d'Ivoire. Payments shall be made:
1. by the Register General of the CAISSE AUTONOME
D'AMORTISSEMENT of COTE D'IVOIRE for the sums excluding
entry duties (special entry duty, fiscal entry fee,
customs fees and statistical charges), registration and
stamp duties, VAT "TPS", by bank transfers in US
Dollars to Account No............. opened on behalf of
COMSAT CITIBANK NA NEW YORK,
2. by the AGENT COMPTABLE DU TRESOR PUBLIC for entry,
stamps and registration fees, VAT, TPS by special
checks payable to the Treasury in accordance with the
provisions of Decree No 305 of 2 September 1989.
Article 2.14 - Payments
Payment of installments must be effected within Ninety (90) days
following the end of the month of implementation of contract.
In case of delay in the payment of monthly installations beyond
the 90 day period, the CONTRACTOR shall have the right to claim
the payment of interest on the unpaid amounts.
Interest rates shall be based on the discount rate of the WEST
AFRICAN CENTRAL BANK augmented by one point.
Interest rates shall be calculated on amounts excluding VAT of
unpaid amounts with annual capitalization (365 days). Payment of
interest rate delays shall not be subjected to VAT nor TPS.
The period of application to be used in the calculation of delay
interest shall be the number of days between the two dates below
less the statutory payment period.
1. end of month of execution of works,
2. date of payment by BANK.
Article 2.15 - Definitive Suretyship
The CONTRACTOR shall produce definitive suretyship to guarantee
the proper execution of his contractual commitments and recovery
<PAGE>
of amounts for which he shall be deemed debtor in respect of the
contract.
The value of definitive suretyship shall be fixed at Three
Percent (3%) of the initial price less VAT and customs duties of
the contract plus, if necessary, the value of amendments.
The CONTRACTOR shall effect the definitive suretyship within
Twenty (20) days from the date of notification of approval of the
contract (or amendments in the case of an increase).
The suretyship can be replaced with an individual and joint
guarantee underwritten by a bank approved by the Minister in
charge of Economy, Finance and Planning under conditions
specified by regulations in force on public contracts.
The absence of suretyship, or, its increase, shall hamper payment
of amounts owed the CONTRACTOR, including the start-up advance.
In case of deduction made on the suretyship, for whatever reason,
the CONTRACTOR shall have to reconstitute it.
The suretyship shall remain assigned to the guarantee of
contractual obligations by the CONTRACTOR until the provisional
acceptance of the works.
The definitive suretyship shall be refunded, or the guarantee in
support of it released in so far as the holder shall have met his
obligations and following its release by the MAIN CONTRACTOR
within Thirty (30)days after the final acceptance of the project.
Article 2.16 - Retention Money
Retention money is a provision meant to guarantee the perfect
completion of the structure and rectify, if necessary, the
defaults of the CONTRACTOR during the guarantee period.
The value of the retention money is fixed at Seven Percent (7%)
of the initial value of the works. It shall be made up through
successive deductions on the monthly installments. The
replacement of this bond with a joint guarantee furnished by a
bank approved by the Minister responsible for Economy, Finance
and Planning may be effected either with the progress of the
works or at the provisional acceptance, in which case the joint
guarantee shall be furnished within Ten (10) days following the
date of stoppage of the said installment.
In so far as the CONTRACTOR shall have met his obligations in
this regard the retention money shall be refunded or the
guarantee replacing it released within Thirty (30) days following
the expiry of the guarantee.
<PAGE>
Article 2.17 - Contractual Advance
A contractual advance at the start of the project may be granted
the CONTRACTOR provided he formally requests it. It shall be
fully backed (100%) with a joint guarantee issued by a bank
approved by the Minister responsible for Economy, Finance and
Planning.
This advance shall be fixed at twenty percent (20%) of the
(pre-tax) basic value of the contract.
Payment of starting advance shall be subjected to the
aforementioned request and the furnishing of guarantees (start up
advance and final suretyship) must be effected within sixty (60)
days starting from the date of the notification ordering the
CONTRACTOR to begin works or the acceptance of the latter of the
two aforementioned guarantees if the acceptance follows the
notification.
Repayments shall be made by installments and regularly beginning
with the first installment on the basis of a 20% deduction of the
pre-tax value of the project and shall be completed at the end of
the implementation period or at the drafting of the final
account. The advance and relevant repayments shall not be
revised.
Article 2.18 - Embarkation Instalment
The CONTRACTOR may request that the provisional monthly breakdown
includes an embarkation deposit representing ninety percent (90%)
of the CIF value of the goods on board upon the presentation to
the ENGINEER of the following documents:
- bills of lading,
- invoices of goods embarked,
- packing list.
This deposit shall be fully backed (100%) with a joint guarantee
from a bank approved by the Minister responsible for Finance.
The release of the said guarantee shall be effected by the MAIN
CONTRACTOR at the inspection of the delivered goods at the site.
Article 2.19 - Tax and Customs System
The CONTRACTOR shall be deemed to have full knowledge of tax and
customs laws in force in Cote d'Ivoire.
The contract shall be eligible for special check procedures in
accordance with the provisions of Decree No 305 of 2 September
1989.
<PAGE>
The breakdown for pre-tax portion authorized by the MAIN
CONTRACTOR shall be conveyed to the Caisse Autonome
d'Amortissement which shall initiate the procedure required for
the settlement of the said portion.
The value of customs and entry duties based solely on materials
and equipment and components incorporated definitively into the
units and the VAT shall be paid by the Public Treasury by special
checks.
Such checks with special serial numbers that shall be
non-endorsable and non-compensable shall be issued in favor of
the Controller of Customs and Taxes, according to the procedures
described below, and given to the CONTRACTOR. The said
non-endorsable checks shall be used exclusively for the intended
payments and no other payment except those pertaining to customs
and taxes on turnover.
The breakdown established for fees and taxes above by the MAIN
CONTRACTOR on the basis of vouchers (customs liquidation vouchers
or special VAT declarations) shall be presented by the CONTRACTOR
to the Office of the Director General of Customs or Taxes for
inspection.
The inspection of these documents shall be carried out as an
emergency. The breakdowns thus signed by these offices shall then
be forwarded by the CONTRACTOR to the Directorate of Public
Investments for entry into the special account of the Treasury.
The Directorate of Public Investments shall transmit payment
orders to the Treasury with relevant supporting document for
issue by special checks.
The claims shall be supported with any details furnished by the
CONTRACTOR on the possible withdrawal of credit and the special
modalities for payment.
Article 2.20 - Registration
The CONTRACTOR shall undertake registration procedures to which
the contract is subjected.
Stamp levies and registration fees shall be paid as under Article
2.19 above by special checks issued by the Public Treasury in
favor of the Registrar and given to the CONTRACTOR for
presentation at the Registry.
Article 2.21 - Contract Security
In order to ensure the security of the contract under conditions
stipulated by regulations in force on the financing of State and
Public Contracts, it is stated that:
<PAGE>
- the Department responsible for ordering payment of sums
owed in the implementation of the contract shall be
Direction et Controle des Grands Travaux,
- the Accountant responsible for payments shall be
Caissier General of the Caisse Autonome d'Amortissement
de la Cote d'Ivoire for the pre-tax portion of entry
(customs, entry fee and special entry fee) exclusive of
stamps, registration, VAT and "TPS" and the Agent
Comptable du Tresor Public for the portion on entry,
stamp, registration, VAT and TPS,
- the Officer responsible for providing the contract
holder and beneficiaries of security or subrogation
information and certificates stipulated under Article 6
of Decree of 6 September 1938 shall be the Director
General of Direction et Controle des Grands Travaux,
- the MAIN CONTRACTOR shall issue at no cost to the
CONTRACTOR and at his request, an original copy of the
contract with the words "single copy issued for
security" on it.
Article 2.22 - Complete Termination or Suspension of Works
When the Employer orders the complete stoppage of works, the
contract shall be immediately terminated. When he orders their
suspension for more than six (6) months, either before or after
start of works, the CONTRACTOR shall have a right to the
termination of the contract, if he makes the request in writing,
without prejudicing the indemnity which in either case he shall
be entitled to if need be.
The same shall hold for successive suspension, the total duration
of which shall exceed a total of six (6) months and suspensions
of any duration which would require modifications in the
financing mechanisms and which shall not have been obtained
within sixty (60) days following the notification of the said
suspension.
If the works shall have started, the CONTRACTOR may request an
immediate provisional acceptance of completed structures, which
are liable to be accepted, and their final acceptance after the
expiry of the guarantee period. When the CONTRACTOR has no right
to a cancellation, he may, if he shall have incurred proven
prejudice, lay claims for compensation within the limitations of
the prejudice.
As soon as the notification of termination or suspension is
received, the CONTRACTOR shall:
- stop or suspend the work on the date indicated on the
notice,
- terminate or suspend any sub-contract, orders for
equipment and materials except those needed for the
<PAGE>
continuation of work up to the date of termination or
suspension,
- undertake all the necessary conservation measures
within the limitation and conditions outlined by the
MAIN CONTRACTOR.
Article 2.23 - Termination by Right
The contract shall be terminated by right by the Minister
responsible for Public Contracts without any recourse to legal
intervention and without compensation in the following cases:
2.23.1 BANKRUPTCY - LEGAL SETTLEMENT
1. In case of bankruptcy of the CONTRACTOR, it shall be
incumbent upon the Employer to accept, if need be,
offers to be made by a group of creditors for the
continuation of the project.
2. In case of the legal liquidation, if the CONTRACTOR is
not authorized by the Courts to continue operations.
2.23.2 Unauthorized Sub-Contracting
If a sub-contract is effected in breach of Article 1.12, the
Employer who approved the contract may request the termination of
the project or have sub-contractual jobs carried out at the
expense and risks of the CONTRACTOR by State control or through a
duly signed contract.
2.23.3 Long Delays in Works
In the event of long delays and irrespective of the application
of penalties indicated under Article 2.6, the Employer may
impose, at the expense of the CONTRACTOR, additional work teams.
If the above measures prove t be unsatisfactory, the Employer may
request the termination of the contract after the mandatory
thirty (30) day prior notice.
2.23.4 Default of Firm Suretyship
In the case of default by the CONTRACTOR in effecting the firm
suretyship within the time limit stipulated under Article 2.15 of
the PTC.
Article 2.24 Coercive Measures
The CONTRACTOR does not comply with either the provisions of the
contract or written service orders given him the MAIN CONTRACTOR
or his Representatives shall notify him to comply with the said
orders within a determined period of time.
<PAGE>
Beyond this period, if the CONTRACTOR has not implemented the
prescribed provisions the Employer may, at the risk of the
CONTRACTOR.
request the outright termination of the contract.
order control by the force account at the expense of
the CONTRACTOR. This control many be partial.
There shall therefore be, in his presence or to his knowledge an
immediate inspection of completed works, materials supplied as
the inventory of equipment belonging to the CONTRACTOR and the
handing over of the part of the equipment not used by the
Administration for the completion of the works.
In the case of force account, the CONTRACTOR shall be authorized
to monitor the operations with hampering the execution of the
orders of the Representatives of the Employer.
He may be released from force account if he demonstrates the
necessary ability to continue the works to their completion.
Supplementary expenses resulting from force account or fresh
contract shall be at the expense of the CONTRACTOR. They shall be
deducted from amounts owed him without prejudice to rights
exercised against him in case of inadequacies.
If the force account or fresh contract entails a decrease in
expenses, the CONTRACTOR shall not claim any part of the profit
which shall belong to the Administration.
When fraudulent acts, repeated shortcomings in the working
conditions or serious errors in duty shall be noticed and
attributed to the CONTRACTOR the relevant authority can, without
prejudice to legal proceedings and sanctions to which the
CONTRACTOR shall be answerable, ban him for a determined period
or definitively from contracts of his Administration.
Article 2.25 Avoidance and Settlement of Disputes
2.25.1 Out of Court Settlement
The CONTRACTOR and Employer shall agree to endeavor to settle all
the disputes that may arise from the application of this contract
out of court by exhausting a mandatory reconciliatory procedure.
2.25.2 Mandatory conciliatory procedure
2.25.2.1
As soon as one party shall feel that there is a dispute, he shall
notify this to the other party in accordance with Article 2.3.1
by requesting the application of the mandatory conciliatory
<PAGE>
procedure. The notification shall include a statement indicating
the causes of the dispute and, possibly, the value of claims.
2.25.2.2
The mandatory conciliatory procedure shall be conducted by three
(3) arbitrators appointed by the CONTRACTOR and Employer within
thirty (30) days after the notification of the dispute. Each part
shall appoint one arbitrator and both parties shall jointly
appoint the third arbitrator.
2.25.2.3
If within fourteen (14) days following the expiration of the said
thirty (30) day period. following the notification either or both
parties shall not have appointed the second and/or the third
arbitrator; the latter shall be appointed by the President of the
Abidjan Magistrate Court sitting upon petition of one of the
parties.
2.25.2.4
The mandatory conciliatory procedure shall take place in Abidjan.
2.25.2.5
The arbitrators shall proceed in the settlement of the dispute
solely as arbitrators. They shall not be bound by any rule of
procedure. They shall be entitled to undertake any off-site or
on-site investigation and summon any person to appear before
them.
2.25.2.6
The deliberations of the arbitrators shall lead to a decision
stating the grounds of the said decision. If the latter is not
unanimous, it shall reproduce the position of each of the
arbitrators.
2.25.2.7
If within sixty (60) days after the notification of the dispute,
no out of court settlement shall have been made, the dispute may
be referred for court arbitration in accordance with Clause
2.25.3 hereafter.
2.25.3 COURT ARBITRATION
In default of an out of court settlement, any dispute arising
from this contract shall be finally settled under the Rules of
Conciliation and Arbitration of the International Chamber of
Commerce by one or more arbitrators appointed under such rules.
2.25.3.1
The place of the said arbitration shall be Abidjan, Cote
d'Ivoire.
<PAGE>
2.25.3.2
The French Language shall be used.
2.25.3.3
Ivorian Law shall be applicable.
Article 2.26 - Act of God Special Risks
2.26.1 ACT OF GOD
An event shall only be deemed to be an Act of God if it is
unforseen, irresistible, beyond the control of the parties, it
can neither be anticipated nor prevented and if it makes it
absolutely impossible for the parties to fulfill their
commitments.
None of the parties shall default in his contractual obligations
in so far as the execution of the latter shall have been delayed
or prevented by an Act of God.
If an event of Act of God is deemed by the Employer to have
occurred, the CONTRACTOR shall be authorized to request a fair
compensation supported with all the corresponding supporting
documents.
Any dispute over the occurrence of an Act of God shall be settled
in accordance with the provisions of Article 2.25 of the PTC.
If the CONTRACTOR should invoke the Act of God Clause, he shall
notify the Employer in writing within ten (10) days after the
event which led to his notification; the Employer shall, at all
events, have a period of thirty (30) days to make his view known.
2.26.2 OTHER PROVISIONS
The CONTRACTOR shall not be entitled to any indemnification on
losses, damage or injury caused through negligence, improvidence.
lack of resources or fraud.
The CONTRACTOR must take all the necessary steps, and at his own
expense, to ensure that his supplies, equipment and field
installations are not carried away or damaged by storms, floods
and any atmospheric phenomena.
The CONTRACTOR shall not avail himself of the right, either to
forego his contractual obligations or lay any claims, any
subjections which may result from the simultaneous execution of
other works.
<PAGE>
2.26.3 Special Risks
Notwithstanding all the provisions of the PTC the CONTRACTOR
shall not be liable to nor pay compensation for injuries, death,
destruction or damages of structures, temporary structures or
properties of the Employer or a third party directly or
indirectly resulting from acts of war (declared or otherwise),
hostility, invasion, enemy operation, revolution, rebellion,
insurrection, military or civilian usurpation of power, civil
war, uprising or disorders (excluding the CONTRACTOR's
employees). These risks are generally defined hereinafter by the
term "Special Risks".
The Employer shall safeguard the CONTRACTOR against the special
risks indicated hereof. He shall indemnify the latter for any
real losses or damages caused to his property intended for the
execution of the works.
Article 2.27 - Works and Supplies by Force Account
2 27.1 BASIS FOR REMUNERATION OF WORKS BY FORCE ACCOUNT
The CONTRACTOR shall furnish the MAIN CONTRACTOR, if the need
should arise, workers and tools as well as necessary materials
and equipment for works by force account.
Expenses taken into account shall be the following:
a) Salaries and Wages
Salaries and wages shall be refunded to the CONTRACTOR
on the basis of actual hours done, including overtime
at rates applicable to professional categories
specified in the Interprofessional Collective Agreement
of Cote d'Ivoire of 20 July 1977, including social
benefits and legal entitlements.
b) Supplies
Supplies expenses shall be reimbursed upon the
production of vouchers established without VAT in so
far as the CONTRACTOR shall be able to get a refund for
the tax.
c) Equipment
The equipment shall only be taken into account for
hours of actual work. The cost of the equipment shall
be repaid in the form of a lease using rates
established by the Direction du Materiel des Travaux
Publics (DMTP) of Cote d'Ivoire. Bare equipment shall
be paid for in accordance with coefficients of posts
1-2-3-4-8 established for a normal 8-hour working day.
These coefficients apply to the purchase value of new
equipment prevailing at the main place of use, possibly
<PAGE>
including the tax and customs provisions in this
contract.
The leasing rates thus calculated shall be updated on
January 1 of each year to take into account variations
in the purchase price of the equipment.
Each effective overtime hour shall be paid as
one-eighth (1/8th) of the cost of a normal day of
lease.
Salaries and wages of the controlling staff shall be
refunded according to the provisions of paragraph a)
Salaries and Wages.
d) Fuel and Constituents
Expenses shall be reimbursed on the basis of purchase
value in so far as the CONTRACTOR can reclaim the VAT.
e) Lumpsum Increase
A lumpsum increase of six point twenty-five percent
(6.25%) shall be applied to expenses under paragraphs
a), b), c) and d) above to cover all overheads (notably
accident insurance on workers and third parties) and
entitlements.
f) VAT
All expenses for works by force account shall attract
VAT at rates in force on the date of the establishment
of the corresponding detailed account.
2.27.2 Limitation of Works by Force Account
The obligation of the CONTRACTOR to carry out works by force
account shall only apply within the constraints of total
expenditure not exceeding two percent (2%) of the basic price of
the contract.
Sums paid to the CONTRACTOR as a result of the application of
this Article shall not apply to articles of these particular
terms and conditions concerning variations in the volume and
nature of works.
In case of exceeding the limitation of two percent (2%) fixed
above, the contractual increase of six point twenty-five percent
(6.25%) shall be carried beyond this limit to ten percent (10%).
<PAGE>
Article 2.28 - Works Under Controlled Expenses
The expenses concerned shall be the following:
a) Salaries
Special expenses on senior expatriate staff with a
hundred percent (100%) which shall cover all related
expenses: travel, housing, miscellaneous allowances,
leave, insurance, gratification, social expenses, etc.
This increase shall be applied on the basic staff
salary. Salaries of the staff not considered under the
previous category shall be reimbursed to the CONTRACTOR
on the basis of actual hours of work done, including
possible overtimes at the rates applicable to
professional categories specified in the
Interprofessional Collective Agreement of Cote d'Ivoire
of 20 July 1977, including social benefits and legal
entitlements.
b) Supplies
Expenses for supplies shall be reimbursed upon
production of invoices established without VAT in so
far as the CONTRACTOR may reclaim the tax.
c) Equipment
Equipment shall only be considered in terms of actual
hours done.
The cost of equipment shall be repaid in the form of a
lease using rates established by the Direction du
Materiel des Travaux Publics (DMTP) of Cote d'Ivoire.
Bare equipment shall be paid for in accordance with
coefficients 1-2-3-4 established for a normal 8-hour
working day.
These coefficients apply to the purchase value of new
equipment at the place of use, possibly including the
tax and customs provisions in this contract.
The leasing rates thus calculated shall be updated on
January 1 of each year to take into account variations
in the purchase price of the equipment.
Each effective overtime hour shall be paid as
one-eighth (1/8th) of the cost of a normal day of
lease.
Salaries and wages of the controlling staff shall be
refunded according to the provisions of paragraph a)
Salaries and Wages.
<PAGE>
d) Fuel and Constituents
Expenses shall be reimbursed on the basis of basic
purchase value in so far as the CONTRACTOR can reclaim
the VAT.
e) Lumpsum Increase
A lumpsum increase of six point twenty-five percent
(6.25%) shall apply to expenses under paragraphs a), b)
and c) above to cover all overheads (notably accident
insurance on workers and third parties) and
entitlements.
f) VAT
All expenses for works by controlled expenses shall
attract a VAT at rates in force on the date of
establishment of corresponding detailed account.
Article 2.29 - Miscellaneous Reimbursements - Authority to
Contractor
The MAIN CONTRACTOR may request the CONTRACTOR to substitute for
the Employer in the payment of suppliers appointed by the MAIN
CONTRACTOR for a number of expenses which are directly related to
the contract and limited to the following.
- installation of inspection mission (construction of
offices by a company other than the holder of the
contract, procurement of office supplies and furniture,
procurement of laboratory equipment),
- purchase of vehicles,
- studies on current site,
- works pertaining to LOT B.
To this end, the MAIN CONTRACTOR shall give prior authority to
the CONTRACTOR to pay the bills concerned, or place orders and
follow up on them in his behalf. The bills shall be made in the
name of the MAIN CONTRACTOR.
The MAIN CONTRACTOR shall fully reimburse on the basis of
authority, under a separate heading called Miscellaneous
Reimbursements in the provisional breakdowns.
For his substitution duties, the CONTRACTOR shall receive a
remuneration of six point twenty-five percent (6.25%) of the
value of the invoice.
The total miscellaneous reimbursements shall be inclusive of VAT
at rates applicable at the time of establishment of the
corresponding detailed account.
<PAGE>
Article 2.31 - Domicile - Correspondence
For the execution of this contract, the CONTRACTOR and Employer
shall elect domicile at their respective head offices. Within
fourteen (14) days following the contract, the CONTRACTOR shall
convey the MAIN CONTRACTOR the address of a Representative in
Cote D'Ivoire who shall receive all correspondence relating to
the contract. He shall reserve the right to change this
Representative by notifying the MAIN CONTRACTOR but shall
undertake to keep the Representative in Cote D'Ivoire until the
final acceptance.
All correspondence between parties concerned with this contract
should be made either by a letter signed by a person duly
authorized by the initiating party or by telegram, fax or telex
immediately confirmed by letter. Such correspondence must be
written in French or accompanied by a translation in French.
Correspondence shall be sent to the following addresses or any
other that the parties shall notify each other and, notably, for
the CONTRACTOR, to the address of the representative in Cote
d'Ivoire.
For EMPLOYER
Ministere de la Communication
01 BP V 138, Abidjan 01
Republic of Cote d'Ivoire
Telex: 23501
Fax (225) 22-22-97 ATTN: Honorable Minister of Communications
For the CONTRACTOR
Communications Satellite Corporation
COMSAT Systems Division
22300 Comsat Drive
Clarksburg, Maryland 20871
United States of America
Telex 44-06-96
Fax: (1) (301) 428-7747
ATTN: Vice President Contracts
To establish that a prior notice, notice, notification or other
correspondence shall have been duly made, it shall be necessary
to prove its reception by the other party which may be presumed
on the basis of an acknowledgment of receipt, or delivery
certificate for registered mail or a delivery receipt signed and
dated by a person who shall be authorized by the addressee,
regardless of the form.
Article 2.32 - Entry into Force and Validity of Contract
This contract for the rehabilitation and extension of the radio
and television broadcast network shall only enter into force when
<PAGE>
all the precedent conditions outlined below shall have been
fulfilled:
a) signing of a financing agreement between the State of Cote
d'Ivoire, an American Bank acting as lender and EXIMBANK as
guarantor;
b) signing of an agreement between the CONTRACTOR and Employer
on the modalities of execution of and payment for works of
LOT B which shall take account of the provisions of the
aforementioned financing agreement;
c) fulfillment of the set of conditions prior to the use of
financing, notably handing over to the lending bank the
certificate indicating the EXIMBANK approval of the mode of
disbursement chosen.
Parties to the contract shall undertake to ensure severally and
collectively to work towards the timely implementation of the
conditions listed above. In the event of non-fulfillment of all
the conditions by January 31, 1993 and, unless the parties agree
to an extension time or forgo the unexecuted conditions, this
contract shall be deemed to be null and void.
It shall be valid only after notification by the MAIN CONTRACTOR
of its approval by the rightful authority.
Done in Abidjan January 20, 1993
Read and Approved
(in writing)
The CONTRACTOR The MINISTER OF COMMUNICATION
By: /s/P. Serrey-Eiffel
P. Serrey-Eiffel
/s/Kenneth Hoch Le Directeur General de la DCGTx
for The Minister of Communication
Stamped by Approved under No 93.0001
The DIRECTOR GENERAL OF MINISTER RESPONSIBLE FOR
IVORIAN RADIO AND TELEVISION ECONOMY, FINANCE TRADE
BROADCAST AND PLANNING
<PAGE>
EXHIBIT 10(y)(i)
<PAGE>
[TRANSLATED FROM THE ORIGINAL DOCUMENT IN FRENCH]
REPUBLIC OF THE IVORY COAST
Union - Discipline - Labor
- - - - - -
MINISTRY OF COMMUNICATION
NATIONWIDE RADIO AND TELEVISION BROADCASTING COVERAGE
AMENDMENT NO. 1
IVORY COAST RADIO AND TELEVISION BROADCASTING
MANAGEMENT AND SUPERVISION OF LARGE-SCALE WORKS
JANUARY 1994
<PAGE>
REPUBLIC OF THE IVORY COAST
Union - Discipline - Labor
MINISTRY OF COMMUNICATION
Contract No. : 93.0001
Contracting Company : COMSAT
Signed on :
Approved on : 01/18/93
Notification given on :
Starting date of work : 10/06/93
Turn-around time : 18 mos.
Term of guarantee : 1 yr.
Amount of initial contract
exclusive of tax & customs : $36,000,000
Amount of Amendment No. 1
exclusive of tax & customs : $ 1,768,562
Total amount exclusive of tax & customs : $37,768,562
Amount of customs duties : $ 8,165,492
Amount of VAT (25% rate) : $11,483,514
Amount of stamp duties and
registration fees : $ 1,600
Amount of contract all taxes included : $57,419,168
Escrow : 7%
Definitive security : 3%
NATIONWIDE RADIO AND TELEVISION BROADCASTING COVERAGE
AMENDMENT NO. 1 TO CONTRACT NO. 93.0001
OF JANUARY 18, 1993
DOCUMENT NO. 1
IVORY COAST RADIO AND TELEVISION BROADCASTING
MANAGEMENT AND SUPERVISION OF LARGE-SCALE WORKS
<PAGE>
BETWEEN
THE IVORY COAST GOVERNMENT
Represented by the MINISTER OF COMMUNICATION hereinafter referred
to as:
"SPONSOR",
ON THE ONE HAND,
AND
The Company "Communications Satellite Corporation (COMSAT)".
Main office: 22300 COMSAT DRIVE, CLARKSBURG, MARYLAND 20871 USA
Legal form: Incorporated Company under United States Law
Represented for the purposes of these presents by Mr. Kenneth
HOCH, Vice-President,
Acting in the name of and on behalf of this COMPANY by virtue of
a power of attorney dated .......1992 attached to the present
contract, hereinafter referred to as: "THE CONTRACTOR",
ON THE OTHER HAND
THE FOLLOWING HAS BEEN AGREED AND DECIDED:
ARTICLE 1 - OBJECT OF THE AMENDMENT
The object of the present Amendment No. 1 to the Nationwide
Radio and Television Broadcasting Coverage Contract is:
1) The decision to execute the optional section already
provided for in Article 1.1.2.2 of the CCCP (Particular
Clauses and Conditions, Doc. No. 2) of the initial
contract.
Execution of the optional section comprises installing
the Transmitting Station at ZOUKOUGBEU to replace that
of ISSIA.
2) The amount of Lot B, the methods of payment of which
were governed in the initial contract by Article 2.29,
has been changed to a fixed, non-revisable, total
lump-sum of 9,657,562 (nine million six-hundred fifty
seven thousand, five hundred sixty two) US Dollars and
will be paid in pursuance of Article 2.10 of the
initial contract.
<PAGE>
ARTICLE 2 - CONTRACT DOCUMENTS
Documents No. 4 and 5 of the initial contract are cancelled
and replaced with Document No. 5 and 6 of the present Amendment.
The list below enumerates in order of importance the
contract documents constituting the amendment:
Document No. 1: The present amendment.
Document No. 2: Documents No. 1 and 2 listed under Article
1.4 of the CCCP (Particular Clauses and
Conditions) of the initial contract.
Document No. 3: The CPTP (Technical Specifications) of the
initial contract to the extent that they do
not depart from the data sheets approved by
the Architect.
Document No. 4: Specifications for all elements of the new
transmitting stations and overhauling of
existing stations.
Document No. 5: Breakdown of the new total lump-sum price of
Lot A.
Document No. 6: Breakdown of the new total lump-sum price of
Lot B.
Document No. 7: All plans of project buildings and sites.
ARTICLE 3 - AMOUNT OF AMENDMENT TO CONTRACT
The amount of Amendment No. 1 is 1,768,562 (one million, seven
hundred sixty-eight thousand, five hundred sixty two) US Dollars,
broken down as follows:
- optional section of Lot A : $1,111,000
- optional section of Lot B : $ 657,562
----------
TOTAL : $1,768,562
ARTICLE 4 - AMOUNT OF INITIAL CONTRACT AND ITS AMENDMENT NO. 1
The amount of the contract and its Amendment No. 1 comes out
to 37,768,562 (thirty-seven million, seven hundred sixty-eight
thousand, five hundred sixty two) US Dollars, broken down as
follows:
1) Lot A : $28,111,000
2) Lot B : $ 9,657,562
-----------
TOTAL $37,768,562
1) The breakdown of the total lump-sum price of Lot A is
contained in Document No. 5 attached to the present
amendment.
<PAGE>
2) The breakdown of the total lump-sum price of Lot B is
contained in Document No. 6 attached to the present
amendment,
- New buildings : $5,212,891
- Renovations : $1,162,118
- COCODY electricity : $ 154,755
- Foundations : $1,074,325
- Studies and Management : $2,053,473
----------
TOTAL : $9,657,562
ARTICLE 5 - TURN-AROUND TIME
The turn-around time and penalties for lateness laid down in
Article 2.6 of the contract remain unchanged.
ARTICLE 6 - DEFINITIVE SECURITY
Article 2.15 of the CCCP (Particular Clauses and Conditions)
setting the amount of the definitive security at 3% of the amount
of the contract increased by the amount of the amendments remains
unchanged.
The Contractor is requested to make up the security within
twenty (20) days after the date of notification of the present
amendment.
ARTICLE 7 - ESCROW
Article 2.16 of the CCCP (Particular Clauses and Conditions)
setting the amount of escrow at 7% of the amount of the work
remains unchanged.
ARTICLE 8 - STAMP DUTIES AND REGISTRATION FEES
The present Amendment is subject to stamp and registration
formalities.
The CONTRACTOR will be responsible for paying the stamp
duties and registration fees to which the contract is subject.
ARTICLE 9 - OTHER CLAUSES
The clauses of the initial contract remain applicable in all
points that do not depart from the prescriptions of the present
Amendment.
<PAGE>
ARTICLE 10 - (LAST): APPROVAL OF AMENDMENT NO. 1
The present Amendment will be definitive only after
notification is given of the competent AUTHORITY's approval
thereof.
Drawn up at Abidjan on January 1994
Read and approved
(handwritten endorsement)
THE CONTRACTOR THE MINISTER OF COMMUNICATION
/s/Kenneth Hoch
Approved under No.
Initialed by the GENERAL THE DEPUTY MINISTER UNDER THE
MANAGER OF IVORY COAST MINISTER OF ECONOMY, FINANCES,
RADIO AND TELEVISION TRADE AND PLANNING
BROADCASTING
<PAGE>
<PAGE>
EXHIBIT 10(aa)
<PAGE>
UAL Contract
No. 115990
LEASE AGREEMENT
THIS LEASE made and entered into this 8th day of June, 1993,
by and between COMSAT CORPORATION, through its COMSAT Mobile
Communications business unit, a District of Columbia corporation,
having its principal place of business at 22300 Comsat Drive,
Clarksburg, MD 20871, (hereinafter referred to as "LESSOR"), GTE
AIRFONE INCORPORATED, a Delaware corporation, having its
principal place of business at 2809 Butterfield Road, Oak Brook,
IL 60522 (hereinafter referred to as "Lessee's Contract
Administrator") and UNITED AIR LINES INC., a Delaware
corporation, having its principal place of business at 1200 East
Algonquin Road, Elk Grove Township, IL 60007, (hereinafter
referred to as "LESSEE").
WITNESSETH:
WHEREAS, Lessor shall have available for lease 74 shipsets
of satellite communications equipment (hereinafter referred to as
"Equipment"); and
WHEREAS, Lessor desires to lease the Equipment to Lessee
under the terms and provisions set forth below; and
WHEREAS, Lessee desires to lease the Equipment from Lessor
under the terms and provisions set forth below; and
WHEREAS, Lessee has appointed GTE Airfone to be Lessee's
Contract Administrator of this Agreement; and
WHEREAS, Lessee's Contract Administrator has been selected
by Lessee to provide air-ground telecommunications service to
Lessee's passengers aboard certain of Lessee's aircraft; and
WHEREAS, Lessee's Contract Administrator has agreed to
provide certain equipment for telephony services over its system
and to assist in the procurement of the Equipment (as defined
herein) for telephony services over the INMARSAT System.
NOW THEREFORE, in consideration of the foregoing and the
mutual promises and covenants contained herein, Lessor and Lessee
hereby agree as follows:
SECTION 1. EQUIPMENT PROCUREMENT.
1.01 The Lessor hereby leases to the Lessee and the Lessee
hereby leases from the Lessor, the Equipment, together
with all accessories attached thereto or used in
connection therewith. (Equipment list is attached
hereto as Exhibit A.)
1.02 The initial term ("Initial Term") of this Lease shall
commence on the date the Equipment is first installed
under the regular installation schedule on Lessee's
aircraft (the "Effective Date") and shall continue for
a period of nine (9) years thereafter, provided that in
the event there is a deviation from the installation
schedule such that more than 10% of the aircraft
hereunder will remain unequipped beyond the first two
years of the Initial Term (the "Later Installed
Aircraft") then the parties shall agree on a mutually
acceptable extension of the Initial Term with respect
to the Later Installed Aircraft.
1.03 Lessor shall purchase the equipment listed on Exhibit
B, at Lessee's cost set forth therein, from Lessee for
inclusion in the shipsets of Equipment provided
hereunder.
<PAGE>
SECTION 2. RENTAL.
2.01 Lessor shall provide up to seventy four (74) complete
shipsets (as identified in Exhibit A) of Equipment at a
maximum cost to Lessor of two hundred seventy thousand
dollars ($270,000.00) per shipset. Procurement beyond 74
shipsets is an option if desired by Lessee. On an aircraft
by aircraft basis upon installation of the Equipment, and
upon receipt from Lessee of notice of Lessee's installation
of the Equipment and identifying the Equipment to be
installed on each aircraft, Lessor shall forward payment to
the equipment supplier for that shipset of Equipment.
SECTION 3. PAYMENT OF RENTAL.
3.01 Upon installation of the Equipment on each aircraft,
Lessee's Contract Administrator shall program Lessor as
highest priority choice in all ocean regions served by
Lessor on the "Owner's Preference Table" for the
Equipment on that equipped aircraft.
3.02 Upon installation of the Equipment on each aircraft,
Lessee's Contract Administrator shall pay to Lessor, as
rental for the Equipment, on behalf of Lessee, an
amount equal to the previously agreed rental amount.
Such rental shall be the sole liability of Lessee's
Contract Administrator and shall at no time become a
liability of Lessee.
3.03 All rental payments shall be due and payable on a
quarterly basis in accordance with the terms of the
carrier to carrier agreement between Lessee's Contract
Administrator and Lessor.
3.04 It is agreed between the parties that the Lessor shall
sell such Equipment to Lessee (at Lessee's option) at
any time during the lease period, for a sum equal to
the net book value (as defined in Exhibit C attached
hereto) of such Equipment at the time of the exercise
of this option. In the event Lessee exercises this
option prior to the end of the lease term, Lessee shall
be responsible for any early pay-back penalty required
by Lessor's financing arrangement. It is further
stipulated that Lessee must, to exercise this option,
inform Lessor, in writing, of its intent to purchase
the Equipment ninety (90) days prior to the date Lessee
wishes to exercise the option.
3.05 If Lessee's Contract Administrator does not make the
quarterly rental payments when due, Lessor may charge
Lessee's Contract Administrator an additional sum of
EIGHTEEN (18%) PERCENT per annum or the maximum amount
allowed by law, whichever is less, for each and every
late rental payment. Such interest shall be the
liability of Lessee's Contract Administrator and shall
at no time become a liability of Lessee.
SECTION 4. INSTALLATION, MAINTENANCE & REPAIR.
4.01 Lessee shall be responsible for performing all
installations of the Equipment on Lessee's aircraft and
for all expenses associated therewith.
4.02 As between Lessor and Lessee, Lessee accepts the
Equipment in its delivered condition and, during the
term of this Lease and until return and delivery of the
Equipment to Lessor or until purchase of Equipment by
Lessee pursuant to Section 3.04 above, Lessee shall
maintain and keep the Equipment on each aircraft in
good repair and operating order and shall repair, at
its own expense, any damage to the Equipment. Lessee
shall maintain a sufficient number of spare parts to
properly maintain the Equipment.
<PAGE>
SECTION 5. EXPENSES.
5.01 Lessee shall bear all operating and maintenance costs
including, but not limited to: Equipment maintenance,
replacement and repair, and insurance premiums for all
insurance coverage required by this Lease. Lessee further
agrees to keep the Equipment in (a) fully operational, duly
certified and airworthy condition at all times; and (b)
mechanical condition adequate to comply with all regulations
of the FCC, FAA, INMARSAT, and any other Federal, state or
local governing body, domestic or foreign, having
jurisdiction over the maintenance, use or operation of the
Equipment. All replacement parts supplied by Lessee shall
be of the same quality as the replaced part and type
approved by the manufacturer. Lessee shall also cause the
Equipment to be regularly inspected by qualified experts of
its choice and to immediately correct, repair of replace any
dangerous condition, malfunction or worn part which may be
discovered at any time. Lessor shall bear the costs of
modifications or upgrades mandated by airworthiness
directives and mandatory operational modifications.
SECTION 6. LAWFUL USE.
6.01 Lessee shall during the term of this Lease and until
return and delivery of the Equipment to Lessor, abide by and
conform to, and cause others to abide by and conform to all
laws, governmental orders, and rules and regulations,
including future amendments thereto pertaining to or
affecting operations or use of said Equipment. Further, the
Equipment will not be maintained, used or operated in
violation of any law or any rule, regulation or order of any
government or governmental authority having jurisdiction
(domestic or foreign), or in violation of any airworthiness
certificate, license or registration relating to the
Equipment or its use, or in violation or breach of any
representation or warranty made with respect to obtaining
insurance on the Equipment or any term or condition of such
insurance policy.
SECTION 7. MISCELLANEOUS PROVISIONS.
7.01 Alterations. Excepting modifications required under
manufacturer's service bulletins, Lessee shall not in
any way alter, modify, remove or make additions or
improvements to the Equipment without the prior written
consent of Lessor. All alterations, modifications,
additions and improvements which are made shall become
the sole and exclusive property of Lessor and shall be
subject to all terms of this Lease.
7.02 Liens. The Lessee shall not directly or indirectly
create, incur, assume or suffer to exist any liens on
or with respect to (a) the Equipment or any part
thereof, (b) the Lessor's title thereto or, (c) any
interest of the Lessor therein. The Lessee shall
promptly, at its own expense, take such action as may
be necessary to duly discharge any such lien, except
(a) the respective rights of the Lessor and the Lessee
as herein provided, and (b) liens created by the
Lessor.
7.03 Inspection. Lessor or its designee shall have the
right, but not the duty, to inspect the Equipment at
any reasonable time and upon reasonable notice,
wherever the aircraft on which the Equipment is
installed may then be located. Upon Lessor's request,
Lessee shall advise Lessor of the aircraft's location
and, within a reasonable time, shall furnish Lessor
with all information, documents and Lessee's records
regarding or in respect to the Equipment and its use,
maintenance or condition.
SECTION 8. TITLE TO EQUIPMENT.
8.01 (a) Lessor shall at all times retain the sole and
exclusive right, title and possessory interest in and
to any and all Equipment installed on any of the
aircraft or otherwise in Lessee's possession.
Notwithstanding the foregoing, Lessor shall transfer to
<PAGE>
Lessee, upon payment therefore in accordance with
Section 3.04 above, the sole and exclusive right, title
and possessory interest in and to the Equipment and all
items that are permanently affixed to any aircraft as a
result of any alteration, modification, addition or
improvement, as provided for in Section 7.01 above.
(b) Upon any termination of this Lease or disposition
of an aircraft on which any Equipment is installed
prior to expiration of the term hereof, Lessee shall
provide written notice to Lessor of any disposition of
an equipped aircraft, as soon as reasonably possible.
Lessor shall, within thirty (30) days thereof, notify
Lessee and Lessee's Contract Administrator in writing
of its desire to remove such Equipment from the
aircraft to which such termination of disposition
relates and Lessor and Lessee shall cooperate in good
faith in the removal of such Equipment.
(c) Upon receipt by Lessee or Lessee's Contract
Administrator of the notice provided for in Subsection
8.01 (b), Lessee shall, during a period commencing upon
the date of receipt of the notice and ending one
hundred and twenty (120) days thereafter, provide
Lessor with a reasonably sufficient amount of
continuous, uninterrupted access to the relevant
aircraft on which such Equipment is installed, to
permit Lessor to remove any or all of the Equipment
aboard such aircraft. Such access will be at such
times and locations as Lessor and Lessee shall mutually
agree upon in writing. If Lessor and Lessee agree upon
a schedule for removal of the Equipment and Lessor
fails to remove the Equipment from such aircraft and
such failure is not caused, directly or indirectly, by
Lessor and Lessor and Lessee cannot in good faith agree
upon a new schedule within the one hundred and twenty
(120) day period referred to above, Lessor shall
forfeit its right to remove any Equipment from the
relevant aircraft. Notwithstanding the foregoing,
nothing herein shall be construed or interpreted as a
waiver or forfeiture by Lessor of any rights to, or
interest in, any trade secrets, patents, intellectual
property, Confidential Information, or other intangible
right or interest represented by or embodied in any
Equipment. Lessor and Lessee shall each bear their
respective costs and expenses of removal of any
Equipment, unless such removal is due to an Event of
Default, as specified in Section 13, in which case the
Lessee shall be solely responsible for the reasonable
costs and expenses of both parties related to such
removal.
8.02 Lessee shall have the obligation to ensure that any
leasing agreements between Lessee and any third party,
which are applicable to any of the aircraft upon which
the shipsets of Equipment will be installed, are
modified to reflect that the sole and exclusive right,
title and possessory interests in and to such Equipment
on any aircraft by aircraft basis remains with Lessor
until such time as termination of this Lease or
purchase of the Equipment by the Lessee. Lessor shall
have the further right to review pertinent parts of
amendments to all such leasing agreements between
Lessee and any third party prior to installation of
Equipment on such aircraft.
8.03 Neither Lessee nor others shall have the right to incur
any mechanic's or other lien in connection with the
repair or maintenance of said Equipment and Lessee
agrees that neither it nor others will attempt to
convey or mortgage or create any lien of any kind or
character against the Equipment or do anything to take
any action that might mature into such a lien.
SECTION 9. RISK OF LOSS AND INSURANCE.
9.01 Lessee shall provide and maintain insurance on the
Equipment in such company or companies as Lessor shall
approve, with Lessor being named as an additional
insured, (a) against loss or damage from any cause or
causes to the Equipment in the amount of the
replacement cost of the Equipment, and (b) against
liability for personal injuries, death or property
damages, or any of them, under Lessee's presently
existing standard policy.
<PAGE>
9.02 In the event a claim is made with regard to an insured
event, Lessee agrees to pay Lessor any deductible
amounts as provided in such policies. Such insurance
shall not be subject to any offset by any other
insurance carried by the Lessor or the Lessee.
9.03 In the event of loss or of damage to the Equipment,
Lessee shall immediately report such loss or damage to
Lessor, to the insurance companies underwriting such
risk and to all applicable governmental agencies,
Federal and state, and Lessee shall furnish such
information and execute such documents as may be
required to collect the proceeds from the insurance
policies. The rights, liabilities and obligations of
the parties regarding such proceeds shall be as set
forth in Subsection 9.04 below.
9.04 In the event that, in the opinion of the Lessor, the
Equipment is lost, stolen, damaged beyond repair,
confiscated, seized or its use appropriated by any
government or instrumentality thereof, the proceeds of
the insurance policy or policies shall be payable to
Lessor. In the event Lessor does not receive insurance
proceeds in an amount equal to the replacement cost
within one hundred twenty (120) days from the date of
the event of loss or damage, Lessee shall promptly pay
Lessor the full amount of the replacement cost, and
provided that (a) no Event of Default shall have
occurred hereunder, and (b) Lessee shall not have
breached any of its representations, warranties or
agreements under such insurance policy or policies,
Lessee shall be subrogated to the rights of Lessor to
the extent, but only to the extent, of such payment.
For purposes of this Subsection 9.04 only, Lessee's
Contract Administrator will not be required to make
rental payments for the period the Equipment is not
available. Lessor will allow Lessee to cancel the
Agreement in this eventuality as to the affected
Equipment or, at the option of the Lessor, Lessee will
be provided with another shipset of Equipment within a
reasonable time thereafter.
9.05 In the event the Equipment is partially damaged, in the
opinion of the Lessor, then this Lease shall remain in
full force and effect and Lessor shall use the
insurance proceeds to repair the Equipment. Lessor
shall direct and must approve all repairs made to the
Equipment.
9.06 Lessee hereby appoints Lessor as Lessee's
attorney-in-fact to make proof of loss and claim for
and to receive payment of and to execute or endorse all
documents, checks or drafts in connection with all
policies of insurance in respect of the Equipment.
SECTION 10. LESSOR'S WARRANTIES.
10.01 Lessor warrants that it has the right to lease the
Equipment to Lessee, and that Lessor will do nothing to
disturb Lessee's full right of possession and enjoyment
thereof and the exercise of all the Lessee's rights with
respect thereto as provided by this Agreement. HOWEVER,
LESSOR MAKES NO WARRANTIES OR REPRESENTATIONS, EXPRESS OR
IMPLIED, AS TO ANY MATTER WHATSOEVER, INCLUDING, WITHOUT
LIMITATION, THE CONDITION OF THE EQUIPMENT, ITS
MERCHANTABILITY OR ITS FITNESS FOR ANY PARTICULAR PURPOSE.
LESSOR SHALL PASS THROUGH TO LESSEE ANY AND ALL WARRANTIES
LESSOR RECEIVES FROM THE EQUIPMENT MANUFACTURER.
SECTION 11. ASSIGNMENT AND SUBLEASE.
11.01 The Lessee may not sublet the Equipment nor shall
Lessee assign this Agreement without the prior written
consent of Lessor. Once installed in an aircraft, the
Equipment may only be transferred to other aircraft
providing the same service within Lessee's fleet unless
<PAGE>
otherwise agreed to in writing by Lessor. Such limitation
shall not prevent Lessee from replacing equipment for
maintenance.
SECTION 12. INDEMNITY.
12.01 Lessee shall be responsible and liable for, indemnify
Lessor against, hold Lessor free and harmless from any claim
or claims of any kind whatsoever for or from, and promptly
pay any judgment for, any and all liability for personal
injuries, death or property damages, or any of them, which
arise or in any manner are occasioned by the intentional
acts or negligence of the Lessee or others in the custody,
operation or use of said Equipment during the term of this
Lease.
SECTION 13. LESSEE'S DEFAULT.
13.01 The following events shall constitute "Events of
Default" on the part of the Lessee hereunder:
(a) Any breach or failure of the Lessee to observe or
perform any of the obligations specifically required of
Lessee hereunder and the failure to correct such
default within thirty (30) days after written notice
hereof by Lessor to Lessee, or Lessee's Contract
Administrator; or
(b) If any writ or order of attachment or execution or
other legal process is levied on or charged against
said Equipment and is not vacated or satisfied within
thirty (30) days; or
(c) The making of an assignment by Lessee for the
benefit of its creditors or the admission of Lessee, in
writing, of its inability to pay its debts as they
become due; or
(d) The insolvency of Lessee or the filing by or
against Lessee of a petition in bankruptcy; or
(e) The adjudication of lessee as bankrupt; or
(f) The filing by Lessee of any petition seeking for
itself a reorganization, arrangement, composition,
readjustment of its debts, liquidation, dissolution or
similar relief under any law relating to the relief of
debtors or insolvents.
SECTION 14. LESSOR'S REMEDIES.
14.01 Upon the happening of any Event of Default hereunder,
Lessor may, at its sole election, declare a default under
the Lease and take possession of said Equipment wherever
located, with court order or other process of Law, Lessee
hereby consenting to entry upon its premises for such
purpose and waiving all damages related to the AES equipment
caused by such taking of possession and agreeing that such
taking does not constitute termination of this Lease as to
any other Equipment unless Lessor expressly notifies Lessee
thereof in writing. The above waiver of damages shall not
include a waiver of Lessee's rights in the event Lessor
damages the aircraft on which the Equipment is located while
taking possession of the Equipment.
SECTION 15. WAIVER.
15.01 No covenant or condition of this Lease can be waived
except by the written consent of Lessor. Forbearance or
indulgence by Lessor in any regard whatsoever shall not
<PAGE>
constitute a waiver of the covenant or condition to be
performed by Lessee to which the same may apply, and, until
complete performance by Lessee of such covenant or
condition, Lessor shall be entitled to invoke any remedy
available to Lessor under this Lease despite such
forbearance or indulgence. Upon Lessee's failure to perform
any of its duties hereunder, Lessor may, but shall not be
obligated to, perform any or all such duties, and Lessee
shall pay an amount equal to the expense thereof to Lessor
forthwith upon demand by Lessor.
SECTION 16. ADDITIONAL DOCUMENTS.
16.01 If Lessor shall so request, Lessee shall execute and
deliver to Lessor such documents as Lessor shall deem
necessary or desirable for purposes of recording or filing
to protect the interest of Lessor in the said Equipment.
SECTION 17. AMENDMENTS.
17.01 This Lease shall not be amended, altered or changed
except by a written agreement signed by both Lessor and
Lessee.
SECTION 18. TIME OF THE ESSENCE.
18.01 Time is of the essence in this Lease.
SECTION 19. ENTIRE AGREEMENT.
19.01 The terms and conditions of this Lease constitute the
entire agreement between the parties and supersedes all
prior written and oral negotiations, representations and
agreements, if any, between the parties and upon execution
hereof, this Lease shall be binding upon them, their
successors, assigns and legal representatives.
SECTION 20. NOTICES.
20.01 Any notices required to be given under this
Agreement shall be sufficient if in writing and
given personally or mailed, by registered or
certified mail, return receipt requested, directed
to the attention of the party involved at its
respective address set forth below, or at such
address as such party may provide in writing from
time to time:
LESSOR:
COMSAT Corporation
COMSAT Mobile Communications
22300 COMSAT Drive
Clarksburg, MD 20871
ATTN: Vice President - Human Resources,
Contracts and Administration
LESSEE'S AGENT:
GTE Airfone Incorporated
3809 Butterfield Road
Oak Brook, IL 60522
ATTN: Vice President - Marketing
<PAGE>
LESSEE:
United Air Lines Inc.
Maintenance Operations Center
San Francisco International Airport
San Francisco, CA 94128
Attn:
Designated Contract Representative: Director of Maintenance
Purchasing
Designated Marketing Representative: Manager-System Aircraft
Maintenance & Control
OR:
United Air Lines Inc.
P.O. Box 66100
Chicago, IL 60666
Attn:
Designated Marketing Representative: Staff Executive
- Aircraft
Interiors
SECTION 21. APPLICABLE LAW.
21.01 This Lease is made, executed and delivered in the
State of Illinois and shall be governed and construed for
all purposes under and in accordance with the laws of the
State of Illinois, without giving effect to conflict of laws
principles which might refer such interpretation to the laws
of a different State of jurisdiction.
SECTION 22. SEVERABILITY.
22.01 In the event that any one or more of the provisions
of this Lease shall for any reason be held invalid, illegal
or unenforceable, the remaining provisions of this Lease
shall be unimpared.
SECTION 23. RETURN OF EQUIPMENT.
23.01 At the termination of this Lease, whether by
expiration of time or for any other cause, in the
event that the option contained in Section 3.04 is
not exercised by the Lessee, the Equipment shall
be delivered by Lessee to Lessor at Lessor's
address in Section 20.01, or to such other address
as Lessee is authorized to deliver the Equipment
by an officer of Lessor.
23.02 Lessee will return the Equipment to Lessor in the
same condition as received, normal wear and tear
excepted, and upon return any Lessee corporate
identification or logo in or on the Equipment
shall be removed by Lessee. In the event Lessee
does not return the Equipment in such condition,
Lessor may make any repairs necessary to restore
the Equipment to such condition, and Lessee
agrees, upon demand, to reimburse Lessor for any
expense related to such restoration.
SECTION 24. SUCCESSION.
24.01 This Lease shall be binding upon Lessee, its
successors, assigns and/or any other entity which may
succeed to the assets, operations or consolidation by merger
of such parties, sale or the transfer of substantially all
the assets of Lessee for any reason whatsoever.
<PAGE>
IN WITNESS WHEREOF, the duty authorized representatives of
the parties hereto have executed this Agreement effective as of
the date first above written.
GTE AIRFONE INCORPORATED COMSAT CORPORATION
BY: COMSAT Mobile Communications
/s/Horace A. Lindsay /s/Arthur E. Gelven
BY:______________________ BY:______________________
President Vice President, Human
Resources, Contracts and
Administration
TITLE:___________________ TITLE:____________________
Horace A. Lindsay Arthur E. Gelven
PRINTED NAME:____________ PRINTED NAME:_____________
/s/Brenda A. McNabb June 3, 1993
BY:______________________ DATE:_____________________
Assistant Secretary
TITLE:___________________
Brenda A. McNabb
PRINTED NAME:____________
6/8/93
DATE:____________________
UNITED AIR LINES, INC.
/s/C. E. Doyle
BY:______________________
Director, Maintenance Purchasing
TITLE:___________________
C. E. Doyle
PRINTED NAME:____________
6/4/93
DATE:____________________
<PAGE>
EXHIBIT C
For the purposes of Section 3.04 of this Lease Agreement, "Net
Book Value" is defined as: cost less accumulated depreciation,
depreciated over an eight (8) year period.
<PAGE>
EXHIBIT 10(bb)
<PAGE>
TELEX SERVICES AGREEMENT
This Agreement No. CMC-SA-93/167 is hereby entered into this
first day of July, 1993, by and between COMSAT Mobile
Communications of COMSAT Corporation, a corporation organized and
existing under the laws of the District of Columbia and having
its principal office located at 22300 COMSAT Drive, Clarksburg,
MD 20871 ("COMSAT"), and American Telephone and Telegraph
company, a corporation of the State of New York, doing business
as AT&T Easylink Services, with a place of business at 400
Interpace Parkway, Parsippany, New Jersey 07054 ("AT&T").
WITNESSETH
WHEREAS, COMSAT offers mobile satellite communications
services to and from mobile stations via the Inmarsat satellite
system and COMSAT's land earth stations and switching facilities;
and
WHEREAS, AT&T provides, among other thinks, telex
communication services worldwide; and
WHEREAS, COMSAT and AT&T desire jointly to interconnect
their facilities to as to permit the exchange of telex traffic
between mobile earth stations and land points within the United
States and international points served by AT&T;
NOW, THEREFORE, in consideration of the foregoing and the
covenants hereinafter set forth, COMSAT and AT&T agree as
follows:
1. Interconnection of Facilities
A. COMSAT and AT&T agree to interconnect their telex
facilities to permit users of AT&T telex searches to send
and receive messages via the Inmarsat system provided by
COMSAT, including any traffic from AT&T which originates
from any domestic connecting carrier's subscribers in the
United States and is routed via AT&T's facilities for
delivery to a mobile earth station.
B. In connection with traffic originating from an
international point that transits the U.S. and is destined
for a mobile earth station, AT&T and COMSAT shall jointly
make appropriate interconnection arrangements with foreign
administrations to implement and facilitate the use of
COMSAT's services as provided for herein.
C. For traffic originating at mobile earth stations,
COMSAT shall honor routing designated by the originating
caller, except that COMSAT shall transmit to any
interconnecting carrier all traffic from mobile earth
stations destined to subscribers of that carrier's network.
<PAGE>
For international calls whose routing has not been
designated by the originating caller ("undesignated
traffic"), AT&T shall receive from COMSAT a minimum of
twenty (20) percent of such undesignated traffic per month,
such percentage reflecting the fact that, as of the date of
execution of this Agreement by both Parties, AT&T is one of
five carriers interconnecting with COMSAT for such traffic.
Should the number of interconnected carriers change, AT&T
shall receive from COMSAT a minimum of such undesignated
traffic equivalent to AT&T's representative share of the
total number of carriers interconnected with COMSAT. Should
the Federal Communications Commission ("FCC") subsequently
approve the implementation of a proportionate return
mechanism for the allocation of undesignated traffic, COMSAT
shall deliver such traffic to AT&T in accordance with a
mutually agreed upon proportionate return formula.
D. AT&T shall maintain COMSAT as its preferred choice for
all fixed-to-mobile traffic.
E. AT&T shall deliver domestic originating telex traffic
destined for termination through the Inmarsat system to
United States land earth stations, as required by FCC
regulatory policy.
F. Each Party shall be responsible for providing and
maintaining, at its own expense, the equipment and circuits
located on its side of the point of interconnection. The
Parties shall cooperate in the detection and correction of
problems which may not be capable of being immediately
isolated to a specified segment of a circuit.
G. AT&T shall provide prompt assistance, as needed, to
customers using or attempting to use the COMSAT mobile
satellite communications services on a priority not less
than that which they accord their other service activities
and their customers for those services.
H. Each Party shall be responsible for (a) the
transmission to the other Party of signals in accordance
with CCITT Recommendations, and (b) for the transmission of
signals received from the other Party over its facilities
and to any interconnecting carrier, foreign administration
or subscriber, as appropriate.
<PAGE>
2. Charges
A. For the services provided by AT&T hereunder, COMSAT
agrees to pay those charges set forth in Article 3 B.(i)
below.
B. For those services provided by COMSAT hereunder, AT&T
agrees to pay those charges set forth in Article 3 B.(ii)
below.
C. Telex rates to customers of COMSAT or AT&T are the sole
responsibility of the billing carrier. Any tariff changes
affecting services provided in conjunction with this
Agreement shall be provided by the Party making the changes
to the other Party prior to the filing of such changes with
the FCC.
3. Accounting and Settlement
A. The Parties shall exchange accounting statements on a
monthly basis within thirty (30) days after the end of the
traffic month. Settlement of net balances shall be made on
a quarterly basis within thirty (30) days following the end
of the traffic quarter. No allowance shall be made in the
accounts for uncollectible amounts. Settlement of net
balances for overseas originated traffic will be on a
quarterly basis within thirty (30) day following the end of
the traffic quarter.
B. The procedures for settlement between AT&T and COMSAT
for traffic terminating or originating at mobile earth
stations shall be as follows:
i. For mobile-to-fixed telex traffic billable by
COMSAT to mobile subscribers, COMSAT shall credit to
AT&T the amounts due at AT&T's normal terminating
interconnect rates less twenty percent (20%).
ii. For fixed-to-mobile telex traffic chargeable at
U.S. land points, AT&T shall credit to COMSAT the
amounts due at COMSAT's terminating interconnect rate
of $3.50 per minute.
iii. For telex traffic chargeable at overseas land
points, AT&T will arrange for connecting overseas
correspondents to collect the applicable charges for
the combined services and to credit AT&T with AT&T's
share of the applicable international charges plus an
amount equal to COMSAT's share of the interconnect
rate, which latter amount AT&T shall credit to COMSAT.
<PAGE>
AT&T shall use reasonable efforts to identify such
mobile satellite communications traffic by ocean region
and traffic month in the accounting statements
exchanged.
5. Term
This Agreement shall become effective as of the date set
forth above and shall continue in full force and effect until
terminated by either Party by not less than six months notice in
writing to the other Party, or is replaced by a superseding
Agreement between the Parties.
6. Publicity
During the term of this Agreement, COMSAT and AT&T will
entertain proposals by each to the other for joint advertising of
the services provided under this Agreement under terms and
conditions mutually acceptable to both Parties.
7. Liability
Neither Party nor its parent corporation, subsidiaries,
affiliates, or suppliers, or any of its parent corporation's
subsidiaries or affiliates shall be liable to the other for
incidental, special, indirect or consequential damages or loss of
revenues or profits resulting from failure to provide
telecommunications services or facilities as called for
hereunder, or for any loss of damage sustained by reason of any
failure in or breakdown of the communications facilities or
interruption of the same associated with functioning of the
services covered by this Agreement no matter what the cause.
8. Assignment
Neither Party may assign this Agreement without the prior
written consent of the other Party, except to its parent, an
affiliate or subsidiary in connection with the transfer of
responsibility for the service provided under this Agreement.
9. Trademarks
Nothing in this Agreement shall create in either Party any
rights in the trademarks, tradenames, insignia, symbols,
identification and logotypes used by the other Party. Before
either Party uses any such marks of the other Party, it shall
obtain the prior, written consent of the other Party.
<PAGE>
10. Confidentiality
Except as required by governmental agency, neither Party
shall disclose customer and billing information or its
participation in this undertaking or any terms and condition of
this Agreement or any other agreement between the Parties without
the prior written consent of the other Party.
11. Notices
Any notices required or permitted to be given pursuant to
this Agreement shall be considered properly given when sent via
registered courier, telex, or fax to the following addresses,
respectively, or to such other addresses as the Party concerned
may hereafter designate in writing.
To COMSAT: COMSAT Mobile Communications
22300 COMSAT Drive
Clarksburg, MD 20024
Attention: Director, Contracts
To AT&T: AT&T EasyLink Services
400 Interpace Parkway
Parsippany, New Jersey 07054
Attention: Robert Jones
Vice President & General manager
AT&T Easylink Telex SBU
12. Governing Law
This Agreement shall be governed by and construed according
to the law of Maryland, United States of America.
<PAGE>
13. Severability
If any term or provision of this Agreement shall be found to
be illegal or unenforceable, then such term or provision shall be
deemed stricken, and the remainder of this Agreement shall
continue in full force and effect.
14. Waiver
No term or provision hereof shall be deemed waived by either
Party unless such waiver shall be in writing and signed by that
Party.
15. Amendment
Any amendment to this Agreement shall be in writing and
shall be executed by authorized representatives of the Parties
hereto.
16. Entire Agreement
This Agreement and the Attachments hereto constitute the
complete and entire understanding of the Parties with respect to
the subject matter hereof, superseding all prior oral and written
negotiations, representations and agreement.
IN WITNESS WHEREOF, the Parties hereto have caused this
Agreement to be executed as of the day and year first shown
above.
AT&T Easylink Services Communications Satellite Corporation
COMSAT Mobile Communications
/s/Robert F. Jones /s/Arthur E. Gelven
By:____________________ By:____________________
Robert F. Jones Arthur E. Gelven
Name:__________________ Name:__________________
V.P. & Gen. Mgr. Vice President, Human
Resources, Contracts and
Administration
Title:_________________ Title:_________________
7-28-93 August 3, 1993
Date:__________________ Date:__________________
<PAGE>
EXHIBIT 10(cc)
<PAGE>
A G R E E M E N T
This Agreement is made by and between American Telephone and
Telegraph Company ("AT&T"), a United States International Service
Carrier ("USISC"), and COMSAT Corporation ("COMSAT"), the U.S.
Signatory to the International Telecommunications Satellite
Organization ("INTELSAT") (hereinafter jointly referred to as the
"Parties").
WHEREAS, AT&T is engaged in the provision of international
telecommunications services via satellite; and
WHEREAS, COMSAT offers INTELSAT space segment capacity to
USISCs for international telecommunications services; and
WHEREAS, COMSAT and AT&T entered into an inter-carrier
contract on October 8, 1987, specifying the rates, terms and
conditions relating to AT&T's long-term commitment for
utilization of COMSAT's INTELSAT space segment capacity for IMTS
circuits ("1987 Agreement"); and
WHEREAS, the 1987 Agreement was filed with the Federal
Communications Commission ("FCC") pursuant to Section 211 of the
Communications Act and as part of CC Docket 87-67; and
WHEREAS, the 1987 Agreement was accepted by the FCC in all
material respects as consistent with the public interest, and was
relied upon by the FCC as a basis for withdrawing all loading
guidelines applicable to AT&T's IMTS circuits; and
<PAGE>
WHEREAS, the 1987 Agreement was amended on May 16, 1988, and
that amendment was also filed with and accepted by the FCC; and
WHEREAS, the Parties continue to believe, as stated in the
1987 Agreement, that marketplace forces rather than regulatory
determinations can and should govern the relationship between
them; and
WHEREAS, the Parties have decided to replace the 1987
Agreement, as amended, with a new inter-carrier contract based
upon AT&T's current and future utilization of COMSAT's INTELSAT
space segment capacity for telecommunications services, and have
decided to maintain certain prior commitments arising from the
1987 Agreement, as amended, as specified herein;
NOW, THEREFORE, in consideration of and in reliance upon the
mutual promises set forth below, AT&T and COMSAT hereby agree as
follows:
<PAGE>
ARTICLE I
PURPOSE AND INTENT
The purpose of this Agreement is to implement the Parties'
mutual understanding with respect to AT&T's current and future
utilization of COMSAT's INTELSAT space segment capacity for
telecommunications services. It is the intent of COMSAT and AT&T
that this Agreement comply with all laws and international
obligations of the United States. Consistent with that intent,
nothing herein shall preclude COMSAT from reaching similar
agreements for circuits with other USISCs, and nothing herein
shall preclude AT&T from placing traffic not covered by this
Agreement on whatever telecommunications facilities it should
select.
<PAGE>
ARTICLE II
DEFINITIONS
The terms used in this Agreement are defined as follows:
1. Additional Circuits. Digital Bearer Circuits
activated by AT&T on the INTELSAT system via
COMSAT on or after January 1, 1992 for 10-year
lease terms, including, but not limited to,
circuits other than Base Circuits that AT&T
committed to take pursuant to the 1987 Agreement,
as amended.
2. Base Circuits. The 5,716 Digital Bearer Circuits
activated by AT&T on the INTELSAT system via
COMSAT prior to January 1, 1992, each of which
circuits AT&T committed to take for 10-year lease
terms pursuant to the 1987 Agreement, as amended.
3. Bulk Offering. The offering by COMSAT to AT&T of
three 36 MHz allotments pursuant to the rates,
terms and conditions specified in this Agreement.
4. Date of Activation. The month, day and year on
which a particular FM Circuit or Digital Bearer
Circuit is placed in service.
<PAGE>
5. Derived Circuits. Circuits created from Digital
Bearer Circuits by means of Digital Circuit
Multiplication Equipment (DCME).
6. Digital Bearer Circuits. 64 Kbps equivalent
circuits used to carry public-switched traffic
(including IDR and TDMA circuits, but excluding
private line circuits); these circuits may or may
not be aggregated into larger digital carriers,
e.g., 2.048 Mbps.
7. Efficiency Factor. The maximum number of Derived
Circuits that may be provided through a Digital
Bearer Circuit.
8. FM Circuits. 4 Khz analog circuits associated
with analog carriers using Frequency Division
Multiple Access and Frequency Modulation.
9. Growth Traffic. Voice-Grade Circuits above and
beyond those existing at a given point in time.
10. IDR Circuits. 64 Kbps equivalent international
digital route circuits associated with digital
carriers using Quadrature Phase Shift Keying
(QPSK) modulation.
<PAGE>
11. IMTS (International Message Telecommunications
Service). International switched-voice service,
as defined by the FCC to include AT&T's 800
service-overseas, but excluding dedicated private
line service.
12. Large Standard A Earth Station. An earth station
having a gain-to-noise temperature ratio ("G/T")
at least equal to 40.7 dB/K (in the U.S.) and at
least equal to 39 dB/K (at the foreign end).
13. Revised Standard A Earth Station. An earth
station having a gain-to-noise temperature ratio
("G/T") at least equal to 35 dB/K.
14. Satellite Circuits. Voice-Grade Circuits provided
by COMSAT to AT&T and carried on the INTELSAT
system.
15. TDMA/DNI Circuits. 64 Kbps equivalent digital
circuits providing Time Division Multiple Access
service using digital non-interpolation equipment
providing a clear 64 Kbps channel.
16. TDMA/DSI Circuits. 64 Kbps equivalent digital
circuits providing Time Division Multiple Access
service using digital speech interpolation
equipment with encoding at both ends.
<PAGE>
17. Voice-Grade Circuits. IMTS circuits on any long-
haul transmission medium consisting of FM
Circuits, Digital Bearer Circuits not using DCME,
and Derived Circuits.
<PAGE>
ARTICLE III
PREVIOUSLY-COMMITTED CIRCUITS
A. The Parties agree that certain obligations under the
1987 Agreement, as amended, shall be incorporated into this
Agreement and shall continue to apply. The Parties agree that
the provisions of Articles VI-A and VI-B of the 1987 Agreement,
as amended (which Articles placed limits on the percentage of
digital circuits relative to total IMTS traffic that could be
activated by AT&T) shall not be among those that continue to
apply, and COMSAT hereby waives any claim it might have based on
such limits having been previously exceeded. The obligations
under the 1987 Agreement, as amended, that shall continue to
apply are set forth in Paragraphs B through J of this Article.
B. In addition to the Growth Traffic that AT&T has already
placed on the INTELSAT system via COMSAT pursuant to the 1987
Agreement, as amended, AT&T shall place on the INTELSAT system
via COMSAT at least 30% of its Voice-Grade Circuits from Growth
Traffic during each of the following time periods: July 1, 1993
through June 30, 1994, and July 1, 1994 through June 30, 1995.
AT&T shall activate Satellite Circuits during each of these time
periods in such a way as to achieve an even growth of such
circuits throughout the time period, or its mathematical
equivalent in terms of satellite circuit months.
<PAGE>
C. Except as provided in Paragraph D of this Article, at no
time during the period from the effective date of this Agreement
through June 30, 1995 shall AT&T reduce the total number of
Voice-Grade Circuits obtained from COMSAT below the levels
required by Paragraph B of this Article. However, subject to
Paragraph H of this Article, AT&T shall have the flexibility to
redistribute its circuits geographically among the regions of the
world in order to meet its operational needs without cancellation
penalty.
D. In the event of a net decrease in AT&T's total
requirements for Voice-Grade Circuits during either the period
from July 1, 1993 through June 30, 1994 or the period from July
1, 1994 through June 30, 1995, and only to the extent of that net
decrease, AT&T may remove cable and Satellite Circuits from
service in direct proportion to the percentage which cable and
Satellite Circuits represent of the total number of AT&T circuits
in service at the time, subject to the following conditions: (i)
AT&T shall first promptly notify COMSAT of its intent to remove
circuits from service and provide COMSAT with appropriate
verification of the net decreases in AT&T's total requirements
for Voice-Grade Circuits; (ii) AT&T shall remove cable and
Satellite Circuits from service in an even manner throughout the
year so as to assure that deactivations are equitably distributed
between the two media; (iii) AT&T shall only remove Satellite
Circuits from service in sequence, beginning with the earliest
<PAGE>
activated AT&T Satellite Circuits and proceeding on a "first in,
first out basis"; (iv) Satellite Circuits removed from service
shall be subject to the cancellation penalties set forth in
Article IV-C of this Agreement; and (v) once AT&T again begins to
have Growth Traffic for any July through June period, such growth
shall be activated by means of cable and Satellite Circuits in
the same manner in which the circuits were removed from service
until such time as the number of Satellite Circuits is equal to
the levels achieved before AT&T experienced the net decrease
referred to above. At such time, the provisions of Paragraph B
of this Article shall reapply.
E. The Efficiency Factors used by AT&T to determine the
maximum number of Derived Circuits that can be provided through
Digital Bearer Circuits shall not exceed the following: (i) from
July 1, 1993 through June 30, 1994, 4.28:1; and (ii) from July 1,
1994 through June 30, 1995, 4.29:1. Examples of the applications
of Paragraphs B and E of this Article are provided in Paragraph I
below.
F. Should AT&T elect to activate more Voice-Grade Circuits
on the INTELSAT system than are required under Paragraph B of
this Article for the time period from July 1, 1993 through June
30, 1994 (by, for example, placing 35% of Growth Traffic on
COMSAT's INTELSAT space segment during that time period rather
than the 30% required by Paragraph B), such circuits may be in
<PAGE>
any combination of FM and Digital Bearer Circuits necessary to
meet AT&T's operational needs and will not be subject to
Paragraph E of this Article for that time period. AT&T will
identify such circuits in the semi-annual report referred to in
Paragraph G of this Article. If such circuits are short-term
(e.g., monthly), they may be canceled at any time without
penalty, but may not be credited against the number of Voice-
Grade Circuits that would be required under Paragraph B of this
Article to be placed on the INTELSAT system via COMSAT during the
succeeding time period from July 1, 1994 through June 30, 1995.
If such circuits are multi-year circuits, they may either (1) be
canceled at any time subject to the cancellation penalties set
forth in Article IV-C of this Agreement, or (2) be credited
against the number of Voice-Grade Circuits that would be required
under Paragraph B of this Article to be placed on the INTELSAT
system via COMSAT during the succeeding time period from July 1,
1994 through June 30, 1995, provided that such circuits when
activated shall be subject to Paragraph E of this Article, and
shall otherwise be treated in the same manner as regular
Satellite Circuits under Paragraphs B and H of this Article.
G. AT&T shall provide COMSAT through June 30, 1995 with
semi-annual reports, certified by an appropriate representative
of AT&T, showing (on a regional basis, and in the same form as it
has since implementation of the 1987 Agreement, as amended) the
total number of Voice-Grade Circuits on cable, satellite and any
<PAGE>
other media, and their further apportionment into FM, Digital
Bearer Circuits not using DCME and Derived Circuits.
H. All IDR and TDMA/DNI Bearer Circuits activated by AT&T
in fulfillment of the requirements of Paragraph B of this Article
shall be subject to a 10-year lease commitment. The 10-year
lease term for IDR and TDMA/DNI Bearer Circuits shall run from
the Date of Activation of such circuit, and that term shall apply
in full both to new IDR and TDMA/DNI Bearer Circuits and to IDR
and TDMA/DNI Bearer Circuits converted from FM Circuits.
However, the geographical substitution of one circuit for another
in order to accommodate AT&T's operational needs shall not
trigger the start of a new lease term or cancellation penalty.
I. Consistent with and subject to the foregoing Paragraphs,
following is an explanation summarizing the methodology to be
used in determining the number of Satellite Circuits to be
maintained by AT&T during each of the time periods July 1, 1993
through June 30, 1994 and July 1, 1994 through June 30, 1995:
1. The starting point for the calculations will be the
total AT&T Voice-Grade Circuits on all facilities as of
June 30, 1993 (assuming that, as of that date, AT&T has
met its commitment under the 1987 Agreement, as
amended, to place at least 30% of its Voice Grade
Circuits from Growth Traffic on the INTELSAT system via
COMSAT during the period from July 1, 1992 through June
30, 1993; if it has not, AT&T will add enough Satellite
Circuits to meet that commitment and such added
circuits will be included in the calculation of the
<PAGE>
starting point, but this will not delay this Agreement
from going into effect and will not affect the
expiration date specified in Paragraph J below).
2. The total Growth Traffic in AT&T's IMTS circuits during
the period from July 1, 1993 through June 30, 1994 will
be multiplied by 30% to determine the portion of such
growth that will be placed on the INTELSAT system via
COMSAT.
3. The satellite Growth Traffic obtained in 2 above (i.e.,
30% of total Growth Traffic) is then added to the
number of Satellite Circuits as of June 30, 1993 to
determine the minimum number of Satellite Circuits as
of June 30, 1994.
4. The number of FM Satellite Circuits as of June 30, 1994
is subtracted from the total number of Satellite
Circuits as of that date.
5. The number of Satellite Circuits not including FM
Circuits as of June 30, 1994 is then divided by the
Efficiency Factor of 4.28:1 to determine the minimum
number of Digital Bearer Circuits (to be billed) that
must be activated by June 30, 1994.
6. The above methodology also will be applied for the
period from July 1, 1994 through June 30, 1995, using a
30% growth percentage and an Efficiency Factor of
4.29:1.
J. The provisions set forth in Paragraphs B through I of
this Article shall expire on June 30, 1995, provided, however,
that: (1) consistent with Article IX of this Agreement, all
applicable rates, terms and conditions for each circuit leased
pursuant to the provisions of this Article shall survive until
the expiration of that circuit's lease term; and (2) if AT&T
removes any Satellite Circuits from the INTELSAT system prior to
June 30, 1995 pursuant to Paragraph D of this Article, AT&T's
obligation to restore those circuits once it again begins to have
growth traffic shall not expire until December 31, 2003.
<PAGE>
ARTICLE IV
BASE AND ADDITIONAL CIRCUITS
A. COMSAT's rates for AT&T's Base Circuits shall be reduced
as of July 1, 1993 to the levels specified in Attachment A, which
is appended hereto and made part of this Agreement. The rates in
Attachment A are for Base Circuits provided via INTELSAT Revised
Standard A Earth Stations. Base Circuits transmitted through
standard earth stations with lower G/T values shall be subject to
the rate adjustment factors specified in Attachment B, which is
also appended hereto and made part of this Agreement. In
addition, the Parties agree that, from July 1, 1993 through
December 31, 1997, a discount of 10% below the rates specified in
Attachment A shall be applied to Base Circuits transmitted
through Large Standard A Earth Stations at both ends.
B. COMSAT's rates for AT&T's Additional Circuits shall be
reduced to the levels specified in Attachment C, which is
appended hereto and made part of this Agreement. The rates in
Attachment C are for Additional Circuits provided via all
INTELSAT Standard A earth stations. Additional Circuits
transmitted through standard earth stations with lower G/T values
shall be subject to the rate adjustment factors specified in
Attachment B.
<PAGE>
C. As of July 1, 1993, COMSAT's charge for early
termination of Base Circuits and Additional Circuits shall be a
flat fee of $6,880 per 64 Kbps equivalent circuit, plus 45% of
the balance due at the time of early termination.
D. Notwithstanding Paragraph C of this Article, AT&T
reaffirms that it will not cancel any Digital Bearer Circuits
committed pursuant to Article III of this Agreement or already in
place under the 1987 Agreement, as amended, until July 1, 1995 at
the earliest, except as provided under Article III-D above.
E. The Parties agree that the rates and early termination
charges set forth in this Article and in Attachments A through C
supersede any conflicting provisions in COMSAT World Systems
Tariff F.C.C. No. 1. All other terms and conditions for AT&T's
Base Circuits and Additional Circuits shall be the same as those
specified in COMSAT World Systems Tariff F.C.C. No. 1 as of the
effective date of this Agreement, and those tariff provisions are
hereby incorporated into this Agreement.
<PAGE>
ARTICLE V
BULK OFFERING
A. COMSAT hereby agrees to provide, and AT&T commits and
agrees to lease from COMSAT for a 10-year term commencing as of
July 1, 1993, the following 36 MHz bandwidth allotments to be
used for U.S. traffic:
[blank space intended]
B. COMSAT's rates for each of the three 36 MHz allotments
provided pursuant to the Bulk Offering described in this Article
shall be $189,000 per month from January 1, 1994 through December
31, 1996, and $165,000 per month for the remainder of the lease
term. As of the effective date of this Agreement, however, there
is substantial non-AT&T traffic located in these allotments that
will constrain AT&T's ability to utilize them fully. The parties
recognize that it will take some time to relocate this non-AT&T
<PAGE>
traffic consistent with INTELSAT's standard relocation
procedures. Therefore, until this relocation is complete, COMSAT
will prorate its lease price such that, if there are X non-AT&T
circuits being leased from COMSAT in a given allotment, the lease
price for that allotment will be ((540-X)/540) x $189,000 (or
$165,000, as applicable) per month.
C. For the purpose of converting part of the traffic
requirements under Article III above to the leasing of the three
36 MHz allotments described in this Article, and for the
additional purpose of establishing termination charges for those
allotments, each 36 MHz allotment lease will be considered the
equivalent of 540 64 Kbps circuits. Consistent therewith, COMSAT
and AT&T hereby agree that, by the end of 1993, the three 36 MHz
allotment leases may absorb up to 827 of AT&T's existing 10-year
Additional Circuits. The conversion of up to 827 Additional
Circuits under this Paragraph shall not be considered early
termination, and early termination charges shall not apply
thereto. Existing circuits outside the allotments that have not
been leased for multi-year terms may be moved into the allotments
at any time, and new circuits (including Additional Circuits not
yet activated as of the effective date of this Agreement) may be
activated inside the allotments at any time. Once inside the
allotments, circuits may not be counted in determining the
appropriate block rates for AT&T under Article IV-B and
Attachment C of this Agreement.
<PAGE>
D. The Parties agree that, in consideration of AT&T's total
commitment under this Agreement, COMSAT shall provide the three
36 MHz allotments described in this Article free of charge for
the period from July 1, 1993 through December 31, 1993.
Beginning January 1, 1994, the charges specified in Paragraph B
of this Article will apply.
E. COMSAT's charge for early termination for each of the 36
MHz allotments described in this Article shall be a flat fee of
540 x $6,880 per 64 Kbps equivalent circuit, plus 45% of the
balance due at the time of early termination.
F. Notwithstanding Paragraph E of this Article, AT&T agrees
that it will not cancel any of the 36 MHz allotments committed
pursuant to this Article until July 1, 1998 at the earliest.
G. INTELSAT's technical lease definitions, as set forth in
the IESS documents that COMSAT routinely provides to AT&T, will
apply to the lease of the three 36 MHz allotments described in
this Article, and COMSAT and INTELSAT must approve transmission
plans for each circuit located in the allotments in advance of
service activation.
H. The Parties recognize that, during the lease term of the
three 36 MHz allotments described in this Article, the particular
<PAGE>
satellites listed in paragraph A of this Article may be replaced
by other INTELSAT satellites. In such cases, a transponder of
different connectivity may be substituted for the replaced
transponder upon mutual agreement of the Parties.
I. The Parties agree that the rates, early termination
charges, and other terms and conditions specified in this Article
supersede any conflicting provisions in COMSAT World Systems
Tariff F.C.C. No. 1. All other terms and conditions for the
circuits provided pursuant to the Bulk Offering described in this
Article shall be the same as those specified in COMSAT World
Systems Tariff F.C.C. No. 1 as of the effective date of this
Agreement, and those tariff provisions are hereby incorporated
into this Agreement.
J. Any request by AT&T during the term of this Agreement
for additional allotments beyond the three 36 MHz allotments
specified in this Article shall be the subject of a separate
agreement with respect to price and terms when and if such a
request is made.
<PAGE>
ARTICLE VI
MOST FAVORED CARRIER
A. To the extent permitted by law, COMSAT agrees that,
during the term of this Agreement, it will offer AT&T rates,
terms and conditions for Base Circuits that are no less favorable
than the rates, terms and conditions it makes available, after
the effective date of this Agreement, to any other USISC for
Digital Bearer Circuits activated prior to January 1, 1992. In
the event that, during the term of this Agreement, COMSAT makes
available to another USISC rates, terms and conditions for
Digital Bearer Circuits activated prior to January 1, 1992 that
are more favorable than those applicable under this Agreement,
then such more favorable rates, terms and conditions shall be
offered by COMSAT to AT&T in writing and, if accepted by AT&T in
writing, shall be automatically incorporated into this Agreement
as an amendment thereto, and shall be effective as of the date
made available to such other USISC.
B. To the extent permitted by law, COMSAT agrees that,
during the term of this Agreement, it will offer AT&T rates,
terms and conditions for Additional Circuits that are no less
favorable than the rates, terms and conditions it makes
available, after the effective date of this Agreement, to any
other USISC for Digital Bearer Circuits activated or on after
January 1, 1992. In the event that, during the term of this
<PAGE>
Agreement, COMSAT makes available to another USISC rates, terms
and conditions for Digital Bearer Circuits activated on or after
January 1, 1992 that are more favorable than those applicable
under this Agreement, then such more favorable rates, terms and
conditions shall be offered by COMSAT to AT&T in writing and, if
accepted by AT&T in writing, shall be automatically incorporated
into this Agreement as an amendment thereto, and shall be
effective as of the date made available to such other USISC.
<PAGE>
ARTICLE VII
CUSTOMER/SUPPLIER RELATIONSHIP
In recognition of COMSAT's unique expertise and experience
in international satellite telecommunications, the high quality
of its services, its performance as U.S. Signatory to INTELSAT,
and the Parties' good working relationship over the past three
decades, AT&T agrees that it shall treat COMSAT as a preferred
supplier and shall give it an opportunity to supply additional
satellite capacity not covered by this agreement, provided
however that, consistent with Article I above, nothing shall
preclude AT&T from placing such traffic on other facilities.
<PAGE>
ARTICLE VIII
REMEDIES
A. In the event that COMSAT materially breaches Article IV-
A or IV-B of this Agreement, AT&T shall be entitled to damages in
an amount equal to the difference between the rates AT&T paid and
the rates specified in Attachments A and C for the number of Base
Circuits or Additional Circuits involved.
B. In the event that COMSAT materially breaches Article V-B
or V-D of this Agreement, AT&T shall be entitled to damages in an
amount equal to the difference between the rates AT&T paid and
the rates specified in Article V-B and V-D for the number of 36
MHz allotments involved.
C. In the event that COMSAT materially breaches Article VI
of this Agreement, AT&T shall be entitled to damages in an amount
equal to the difference between the rates AT&T paid for the
circuits covered by this Agreement and the rates AT&T would have
paid for those circuits if COMSAT had not breached Article VI.
D. In the event that AT&T materially breaches Article III
or IV-D of this Agreement, COMSAT shall be entitled to damages in
an amount equal to the revenues that COMSAT would have realized
if AT&T had activated Base and Additional Circuits in accordance
<PAGE>
with its prior commitments to COMSAT and then canceled those
circuits on July 1, 1995.
E. In the event that AT&T materially breaches Article V-A
or V-F of this Agreement, COMSAT shall be entitled to damages in
an amount equal to the revenues that COMSAT would have realized
if AT&T had activated the three 36 MHz allotments in accordance
with the provisions of this Agreement and then canceled those
allotments on July 1, 1998.
F. In the event that AT&T materially breaches Article VII
of this Agreement, COMSAT shall be entitled prospectively to
charge AT&T for Base Circuits and Additional Circuits at the
highest rate specified for such circuits in COMSAT World Systems
Tariff F.C.C. No. 1 as of the effective date of this Agreement.
G. In no event shall either Party be entitled to damages or
other remedies under this Article unless it provides the other
Party with notice and a reasonable opportunity to cure within
sixty (60) days of the date when the Party claiming breach either
knew or should have known of the event giving rise to the alleged
breach.
<PAGE>
ARTICLE IX
TERM OF AGREEMENT
The term of this Agreement shall commence upon execution of
the Agreement by both Parties and shall run through December 31,
2003, provided, however, that all applicable rates, terms and
conditions for each circuit leased pursuant to the provisions of
this Agreement (or its predecessor, the 1987 Agreement, as
amended) shall survive until the expiration of that circuit's
lease term. Thus, for example, the rates, terms and conditions
for an Additional Circuit activated on January 1, 1995 would
remain in effect until December 31, 2004.
<PAGE>
ARTICLE X
FCC REVIEW
The Parties shall jointly submit this Agreement to the FCC
within thirty (30) days of execution pursuant to Section 211(a)
of the Communications Act, and shall request confidential
treatment for any competitively sensitive information contained
herein. If any FCC proceeding is initiated with respect to the
entry into force of this Agreement, the Parties agree to
cooperate fully in seeking a prompt and favorable resolution of
such proceeding. Although this Agreement is effective as of its
signing date in order to implement rate reductions beneficial to
the public as soon as practicable, the Parties recognize that the
FCC has reserved the right within ninety (90) days to take
actions affecting the provisions herein, and accordingly, the
Parties agree that any FCC-mandated changes shall be retroactive
to the effective date of this Agreement. However, in the event
that such changes materially alter the substance of this
Agreement, the Parties shall promptly seek to renegotiate the
affected provisions thereof.
<PAGE>
ARTICLE XI
DISPUTE RESOLUTION
If any dispute arises with respect to the interpretation,
implementation or termination of this Agreement, the Parties will
use their best efforts to resolve the matter amicably, including
recourse to the highest levels of management in their respective
organizations. If such efforts fail to resolve the dispute
within a reasonable time, the Parties agree to present that
dispute to the American Arbitration Association in Washington,
D.C. for binding resolution in accordance with that Association's
Commercial Rules of Arbitration, or in lieu of arbitration, to
utilize another mutually agreeable means of alternative dispute
resolution (ADR). Each Party shall bear all of its own costs
incurred in utilizing arbitration or other ADR mechanism.
<PAGE>
ARTICLE XII
ENTIRE AGREEMENT
This Agreement (including its attachments and those portions
of COMSAT's tariffs which are incorporated by reference) replaces
the 1987 Agreement, as amended, and constitutes the entire
agreement between the Parties as to AT&T's utilization of
COMSAT's INTELSAT space segment capacity for telecommunications
services; it is intended as the complete and exclusive statement
of the terms of the agreement between the Parties, and supersedes
all previous understandings, commitments or representations by or
between the Parties with respect to its subject matter.
<PAGE>
ARTICLE XIII
REPRESENTATIONS OF AUTHORITY
Each Party to this Agreement hereby represents and warrants
to the other that it is a corporation duly organized, validly
existing, and in good standing under the laws of its jurisdiction
of incorporation; that it has appropriate approvals and direction
from its Board of Directors to empower it to enter into and
perform its obligations under this Agreement; and that it has
taken all requisite corporate action to approve the execution,
delivery, and performance of this Agreement.
<PAGE>
ARTICLE XIV
BINDING OBLIGATION
A. This Agreement, when executed and delivered, shall be a
legal, valid and binding obligation of COMSAT and AT&T, and shall
bind all successors, permitted assigns and U.S. subsidiaries of
the Parties.
B. The provisions of this Agreement are for the benefit
only of the Parties hereto and their subsidiaries, successors and
permitted assigns, and no other party may seek to enforce, or
benefit from, any provision of this Agreement.
C. Neither Party shall assign or transfer its rights and
obligations under this Agreement without the other Party's
express written consent, which consent shall not be unreasonably
withheld.
D. The Parties agree that neither of them shall take any
action, either directly or indirectly, that would interfere or be
inconsistent with the terms of this Agreement.
<PAGE>
ARTICLE XV
NOTICES
All written notices required under this Agreement shall be
considered properly given only when sent by registered or
certified mail, return receipt requested, to the following
addresses, respectively, or to such other addresses as the
receiving party may hereafter designate in writing:
To AT&T: Arthur N. Sparks
Director, IFM
AT&T
412 Mt. Kemble Ave.
Morristown, NJ 07960
To COMSAT: Patricia S. Benton
Vice President and General Manager
COMSAT World Systems
6560 Rock Spring Drive
Bethesda, MD 20817
Any period of time referred to herein which is to commence
upon notice shall be counted from the date such notice is
received as aforesaid.
<PAGE>
ARTICLE XVI
WAIVERS
The waiver by either Party of a breach of, or default under,
any of the provisions of this Agreement, or the failure of either
Party, on one or more occasions, to enforce any of the provisions
of this Agreement or to exercise any right or privilege
hereunder, shall not thereafter be construed as a waiver of any
subsequent breach or default of a similar nature, or as a waiver
of any provision, right or privilege hereunder.
<PAGE>
ARTICLE XVII
MISCELLANEOUS
A. The article headings and table of contents in this
Agreement are inserted for convenience only and do not constitute
a part of this Agreement.
B. This Agreement may be amended only in writing by an
instrument signed by authorized representatives of both Parties.
C. This Agreement shall be construed according to the laws
of the State of New Jersey.
D. This Agreement may be executed in counterparts, each of
which shall be deemed an original, and all such counterparts
together shall constitute one and the same instrument.
E. This Agreement shall become effective immediately upon
execution by both Parties.
<PAGE>
IN WITNESS WHEREOF, each of the Parties hereto has executed
this Agreement.
AMERICAN TELEPHONE AND COMSAT CORPORATION
TELEGRAPH COMPANY
/s/ Frank P. Fahey /s/ Patricia Benton
By:___________________________ By:___________________________
V.P. and G.M. COMSAT
Deputy Director World Systems
Title: _______________________ Title:________________________
July 27, 1993 July 23, 1993
Date:_________________________ Date:_________________________
<PAGE>
ATTACHMENT A
BASE CIRCUIT RATES
Per month per activated carrier(1)
10-Year Term
Carrier Size 1993-94(2) 1995(3) 1996(4) 1997(5)
- - - ------------ ------- ------- ------- -------
64 Kbps $ 600 $ 540 $ 465 $ 365
512 Kbps 4,800 4,320 3,720 2,920
1.544 Mbps 13,920 12,480 10,800 8,400
2.048 Mbps 17,400 15,600 13,500 10,500
6.312 Mbps 49,215 44,125 38,185 29,700
8.448 Mbps 65,625 58,835 50,915 39,600
Per 64 Kbps
equivalent in a
fully-activated
2.048 Mbps carrier $ 580 $ 520 $ 450 $ 350
- - - ------------------------
(1) The rates specified in this Attachment are for services to
INTELSAT Revised Standard A Earth Stations.
(2) The rates in this column shall take effect on July 1, 1993.
(3) The rates in this column shall take effect on January 1, 1995.
(4) The rates in this column shall take effect on January 1, 1996.
(5) The rates in this column shall take effect on January 1, 1997,
and shall remain in effect for the duration of each circuit's
lease term unless further reduced.
<PAGE>
ATTACHMENT B
RATE ADJUSTMENT FACTORS
for Base and Additional Circuits
Earth Station Frequency Minimum Rate Adjustment
Standard Band G/T Factor(1)
- - - ------------- --------- ------- ---------------
Std. B C 31.7 dB/K 1.36
Std. F-3 C 29.0 dB/K 2.05
Std. F-2 C 27.0 dB/K 2.92
Std. E-3 Ku 34.0 dB/K 1.68
Std. E-2 Ku 29.0 dB/K 4.94
- - - ------------------
(1) In the event that COMSAT tariffs rate adjustment factors that
are more favorable than those listed in this Attachment, the
factors tariffed shall be incorporated automatically into
this Agreement.
<PAGE>
ATTACHMENT C
ADDITIONAL CIRCUIT RATES
Per month per 64 Kbps equivalent
in a fully-activated 2.048 Mbps carrier(1)
10-Year term
Block 1993-94(2) 1995(3) 1996(4) 1997(5)
- - - ------ ------- ---- ---- ----
Block 1(6) $495 $495 $450 $350
Block 2(7) 445 445 445 350
Block 3(8) 395 395 395 350
Block 4(9) 350 350 350 350
- - - ---------------
(1) The rates specified in this Attachment are for service to all
INTELSAT Standard A earth stations. Rates for fully activated
2.048 Mbps carriers shall be 30 times the numbers shown above.
Rates for carrier sizes other than 2.048 Mbps shall bear the
same relationships to the 2.048 Mbps rate as those shown in
Attachment A.
(2) The rates in this column are currently in effect.
(3) The rates in this column are currently in effect.
(4) The rates in this column shall take effect on January 1, 1996.
(5) The rates in this column shall take effect on January 1, 1997,
and shall remain in effect for the duration of each circuit's
lease term unless further reduced.
(6) The rates in Block 1 apply to Additional Circuits included among
the first 270 Digital Bearer Circuits (excluding Base Circuits)
leased in a given region for terms of at least five years. The
regions are those specified in COMSAT World Systems Tariff F.C.C.
No.1 as of the effective date of this Agreement, i.e.: (1) (Western)
Europe; (2) Pacific; (3) Latin America; and (4) Near and Middle
East, Africa and other Europe.
(7) The rates in Block 2 apply to Additional Circuits included
among the next 360 Digital Bearer Circuits (excluding Base
Circuits) leased in a given region for terms of at least
five years.
(8) The rates in Block 3 apply to Additional Circuits included
among the next 450 Digital Bearer Circuits (excluding Base
Circuits) leased in a given region for terms of at least
five years.
(9) The rates in Block 4 apply to Additional Circuits included
among the Digital Bearer Circuits above 1080 (excluding Base
Circuits) leased in a given region for terms of at least
five years.
<PAGE>
<PAGE>
EXHIBIT 10(dd)
<PAGE>
This Agreement is hereby entered into this 1 day of
September 1993 by and between COMSAT Mobile Communications of
COMSAT Corporation with offices located at 22300 COMSAT Drive,
Clarksburg, MD 20871 (hereinafter referred to as "COMSAT"), AND
MCI International, Inc. With offices at 2 International Drive,
Rye Brook, New York 10573 on behalf of itself and its affiliated
entities, (hereinafter referred to as "MCI").
WITNESSETH:
WHEREAS, COMSAT and MCI are communications common carriers
and are each subject to the jurisdiction of the Federal
Communications Commission ("FCC"); and
WHEREAS, COMSAT and MCI agree to exchange services between
the various regions covered by the International Maritime
Satellite Organization ("Inmarsat") served by COMSAT and points
in the United States and international points served by MCI;
NOW, THEREFORE, in consideration of the foregoing and the
covenants hereinafter set forth, COMSAT and MCI agree as follows:
1. Interconnection of Facilities
(a) COMSAT and MCI agree to interconnect their facilities
to permit the exchange of traffic for the services covered
under this Agreement. Such services to be covered are
described in Annex I and II hereto, which is hereby
incorporated into and made part of this Agreement. The
Annex to this Agreement may be modified from time to time
subject to mutual agreement of the Parties, and additional
Annexes may be added if the Parties so choose.
(b) MCI shall provide prompt assistance, as needed, to
customers using or attempting to use the COMSAT mobile
satellite communications services on a basis not less than
that which they accord their other service activities and
their customers for those services.
(c) Each Party shall be responsible for:
o the transmission to the other Party of signals in
accordance with CCITT Recommendations, and
o the transmission of signals received from the
other Party over its facilities and to any
interconnecting carrier, foreign administration or
subscriber, as appropriate.
<PAGE>
2. Charges
(a) Rates for services provided hereunder are set forth in
Annex I and II, hereto.
(b) Rates to customers of COMSAT or MCI are the sole
responsibility of the billing carrier. Any tariff changes
affecting services provided in conjunction with this
Agreement shall be provided by the Party making the changes
to the other Party not later than the day of filing of such
changes with the FCC.
3. Payment, Accounting and Settlement
Payment, accounting and settlement shall be accomplished in
accordance with the procedures set forth in Annexes I and II.
4. Existing Agreements
This Agreement shall supersede and replace the existing
negotiated Agreement between COMSAT and MCI International for
maritime satellite telephone services dated February 8, 1988, the
Agreement between COMSAT and Western Union International dated
January 19, 1982, the Agreement between COMSAT and RCA Global
Communications, Inc. dated October 26, 1981, and all other
existing agreements between COMSAT and MCI International
pertaining to the services covered by this Agreement.
5. Term
The term of this Agreement shall as set forth in Annexes I
and II.
6. Joint Marketing and Promotion
During the term of this Agreement COMSAT and MCI will
entertain proposals by each to the other for joint marketing and
promotion of the services provided under this Agreement under
terms and conditions mutually acceptable to both Parties.
7. Liability
Neither Party nor its parent corporation, subsidiaries,
affiliates, or suppliers, or any of its parent corporation's
subsidiaries or affiliates shall be liable to the other for
incidental, special, indirect or consequential damages or loss of
revenues or profits resulting from failure to provide services or
facilities as called for hereunder, or for any loss or damage
sustained by reason of any failure in or breakdown of the
communications facilities or interruption to same associated with
functioning of the services covered by this Agreement no matter
what the cause, or from any other causes arising out of this
Agreement.
<PAGE>
8. Assignment
Neither Party may assign this Agreement without the prior
written consent of the other Party, except to its parent, an
affiliate or subsidiary in connection with the transfer of
responsibility for the services provided under this Agreement.
9. Trademarks
Nothing in this Agreement shall create in either Party any
rights in the trademarks, tradenames, insignia, symbols,
identification and logotypes used by the other Party. Before
either Party uses any such marks of the other Party, it shall
obtain the prior, written consent of the other Party.
10. Confidentiality
Except as required by law, or where such information becomes
Public without the fault of the disclosing party, neither Party
shall disclose customer and billing information or its
participation in this undertaking or any of the terms and
conditions of this Agreement or any other agreement between the
Parties without the prior written consent of the other Party. If
disclosure is required by law, the Disclosing Party shall provide
advance written notice of such disclosure to the other Party.
In connection with the provision of services pursuant to
this Agreement, COMSAT and MCI may each disclose to the other,
certain business, technical, and other information which has been
identified to be propriety to the disclosing party of its
affiliated companies (hereinafter referred to as "INFORMATION").
For purposes of this Agreement, such INFORMATION shall include,
but not be limited to, engineering information, hardware,
software, drawings, models, samples, tools, technical
specifications, or documentation, in whatever form recorded or
orally provided. The Receiving Party shall hold the INFORMATION
in confidence during the term of this Agreement or until such
time as the INFORMATION has been made publicly available without
a breach of this Agreement, or any other agreement by either the
Disclosing Party or the Receiving Party or the Disclosing Party
requested return thereof. The Receiving Party shall use such
INFORMATION only for the purpose of performing this Agreement,
shall reproduce such INFORMATION only to the extent necessary for
such purpose, shall restrict disclosure of such INFORMATION to
its employees or contractor itself, or affiliate companies, with
a need to know and inform such employees of the obligations
assumed herein, and shall not disclose such INFORMATION to any
third party without prior written approval of the other party.
The Receiving Party shall apply a standard of care to preserve
the confidentiality of the INFORMATION which is no less rigorous
than that which it applies to protect the confidential nature of
its own confidential material. All customer information
exchanged by the Parties shall be used only for the purposes
agreed upon by the Parties.
<PAGE>
11. Government Approvals and Compliance with Regulations
All undertakings and obligations assumed herein by either
Party are subject to all necessary governmental licenses and
approvals. Moreover, each Party hereby assures the other that it
does not intend to, and will not knowingly, violate the laws and
regulations applicable to the services provided under this
Agreement, including, but not limited to, those pertaining to the
provision of telecommunications services and to export control.
12. Additional Services
Should COMSAT elect to subscribe to new MCI Services that
are not covered by this Agreement, MCI and COMSAT agree to
incorporate into this Agreement such new MCI Services at mutually
agreeable discount structures based on aggregate usage of MCI
Services.
13. Technical Descriptions and Performance Definitions
For each and any particular service contemplated and/or
implemented hereunder, MCI and COMSAT agree that prior to
installation or commencement of said service, technical
discussions will be held by appropriate representatives of MCI
and COMSAT. These discussions will entail, at a minimum,
definition of specifications of the interconnections,
transmission performance and standards, signalling standards,
billing arrangements, traffic routing, and any other operational
characteristics and technical items requiring clarification.
Technical performance standards criteria which must be met will
be cited for each service. Results of these discussions shall be
confirmed in writing and summarized as technical attachments
hereto in a Technical Annex for each service described herein, or
any future services which may be added to this Agreement. Should
COMSAT and MCI fail to reach timely agreement on the technical
issues as described above pertaining to any service contemplated
under this Agreement, COMSAT may decline to take part in such
service, and COMSAT may seek such services form other suppliers
without penalty or claim of violation of any provision of this
Agreement. Agreement to the contents of each Technical Annex for
each service described must be reached in accordance with the
above in order for COMSAT to be eligible for the discounts for
that respective service.
(a) Order for Services Furthermore, notwithstanding
anything to the contrary contained in the Agreement, nothing
in this Agreement is to be construed as an order for any
particular service, nor shall be so construed, without
formal notification to MCI by COMSAT of an order for each
specific service described herein and Agreement reached in
accordance with this Paragraph 16.
<PAGE>
14. Notices
Any notices required or permitted to be given pursuant to
this Agreement shall be considered properly given when sent via
registered courier, telex, or fax to the following addresses,
respectively, or to such other addresses as the Party concerned
may hereafter designate in writing.
TO COMSAT: COMSAT Mobile Communications
22300 COMSAT Drive
Clarksburg, MD 20871
Attention: Director, Contracts
TO MCI: MCI International, Inc.
2 International Drive
Rye Brook, New York 10573
Attention: Vice President, Finance
15. Publicity
Neither Party may issue any press release or other public
statement concerning this Agreement or the relationship of the
Parties in connection herewith without obtaining the prior
written consent of the other Party.
16. Governing Law
This Agreement shall be governed by and construed according
to the laws of New York, United States of America.
17. Equal Treatment
COMSAT agrees to exchange services covered by this Agreement
with MCI on terms and conditions substantially similar to those
given other carriers providing substantially equivalent service.
MCI agrees to exchange services covered by this Agreement with
COMSAT on terms and conditions substantially similar to those
given other carriers providing substantially similar mobile
services.
18. Severability
If any term or provision of this Agreement shall be found to
be illegal or unenforceable, then such term or provision shall be
deemed stricken and replaced by a mutually agreeable substitute
provision which is legal and enforceable and the remainder of
this Agreement shall continue in full force and effect.
<PAGE>
19. Waiver
No term or provision hereof shall be deemed waived by either
Party unless such waiver shall be in writing and signed by that
Party.
20. Amendment
Any amendment to this Agreement shall be in writing and
shall be executed by authorized representatives of the Parties
hereto.
21. Entire Agreement
This Agreement and the attachments hereto constitute the
complete and entire understanding of the Parties with respect to
the subject matter hereof, superseding all prior oral and written
negotiations, representations and agreement.
In WITNESS WHEREOF, the Parties hereto have caused this
Agreement to execute as of the day and year first shown above.
COMSAT Corporation
MCI International, Inc COMSAT Mobile Communication
By: /s/William A. Paquin By: /s/Arthur E. Gelven
-------------------- -------------------
Name: William A. Paquin Name: Arthur E. Gelven
Vice President, Human Resources,
Vice President Contracts and Administration
Title: ___________________ Title:____________________
Date: 9 September 1993 Date: September 10, 1993
<PAGE>
ANNEX I
MOBILE SATELLITE TELEPHONE SERVICE
1. PROVISION OF SERVICE
COMSAT and MCI agree to interconnect COMSAT's facilities and
MCI's network, and agree to provide telecommunications
services between the various Inmarsat-system regions and
points throughout the world served by MCI. COMSAT and MCI
shall cooperate to make arrangements with foreign
telecommunications administrations to originate and
terminate such services at international points. Mobile
satellite telephony service shall be accorded equal priority
with MCI's other telephony services for purposes of
maintenance and access to MCI's network.
2. Term
The term of this Annex shall be for a period of one year,
commencing October 1, 1993, and shall be automatically
renewable for additional periods of one (1) year. Either
Party may terminate this Annex upon furnishing six (6)
months written notice at any time after the initial one (1)
year term.
3. Value Added Services to be Provided
It is understood that from time to time COMSAT and/or MCI
may wish to introduce new or enhanced value-added services
(including, for example, directory assistance and credit
card/calling card service) to supplement the mobile
satellite telephony service covered by this Agreement. Such
introduction of new services shall be accommodated by each
party by mutual agreement. Other services may also include
such services as the provision of private leased lines to
and/or from COMSAT's land earth stations, such lines
provided by MCI to MCI customers, or to COMSAT subject to
mutual agreement between the parties.
4. Service Structure
(a) MCI will tariff fixed-to-mobile service for Inmarsat
traffic originating in its network, and COMSAT will
concur in MCI's tariff.
(b) COMSAT will continue to tariff its mobile-to-fixed
service for Inmarsat traffic originating in its
network, and MCI will concur in COMSAT Corporation -
COMSAT Mobile Communications Tariff F.C.C. No. 1 and
future COMSAT tariffs for mobile-to-fixed service for
Inmarsat traffic originating in COMSAT's network.
<PAGE>
(c) MCI and COMSAT shall cooperate diligently and in good
faith to develop and implement procedures and
mechanisms to ensure, to the greatest extent feasible,
that all end users have an opportunity to express a
preference for a specific ground station service
provider and that all customers who express a
preference for COMSAT's services are given access to
those services.
(d) The interconnecting circuits to be used in providing
the services covered by this Annex shall be direct
circuits between COMSAT's Mobile Satellite Switching
Centers (MSSC) and MCI's International Switching
Centers (ISC). Each party shall provide and maintain,
at its own expense, the circuits located on its side of
the point of interconnection at COMSAT's MSSC. Each
party shall inform the other party, as soon as possible
of any facility failure in its network that is expected
to cause protracted interruption of service and the
party experiencing the failure shall take reasonable
actions to implement restoration procedures.
5. Exchange of Traffic
(a) COMSAT and MCI agree to route designated traffic in
accordance with the customer's instructions, including
the following:
(i) fixed-to-mobile routed to COMSAT: all foreign
originating (transit) traffic for which a Foreign
Administration has requested to have its traffic
routed to COMSAT, and all other traffic for which
a customer has indicated a preference for COMSAT.
(ii) mobile-to-fixed routed to MCI: all traffic for
which the customer has designated MCI as the
carrier through COMSAT's carrier selection
program, whether by presubscription or
direct-dialed selection, MCI specific services
(MCI calling card, country direct, or calls
requested to be routed through MCI), or other
means.
(b) COMSAT and MCI agree to route undesignated traffic as
follows:
(i) fixed-to-mobile routed to COMSAT: MCI agrees to
meet with COMSAT each year to establish a mutually
agreed upon traffic forecast for the following
calendar year. MCI shall use its reasonable best
efforts to deliver to COMSAT fixed-to-mobile
traffic consistent with the mutually agreed upon
traffic forecasts.
<PAGE>
(ii) mobile-to-fixed routed to MCI: COMSAT shall
transmit to MCI traffic originating at mobile
earth stations and designated for delivery by MCI.
o Mobile originated traffic destined for
domestic or international points, for which
no routing has been designated by the
originating caller, shall be allocated to MCI
on a proportionate return basis.
o COMSAT shall compute the proportion based
upon traffic recorded through COMSAT's
switch.
(iii) Proportionate Return Procedures
o To implement the proportionate return
agreement, the parties agree that a "data
capture period" shall be established, for the
calculation of proportionate return
percentages to be applied to total ship-shore
minutes. The proportionate return
percentages will be calculated based on the
total shore-ship minutes as recorded through
COMSAT's switch and as reported in the
monthly statements of account for that
period. The first "data capture period"
hereunder will be the first quarter
subsequent to the signing of this agreement.
Each subsequent quarter will represent a new
"data capture period".
o The proportionate return percentages
developed during the "data capture period"
shall be used to return traffic for the
"designated return period". The first
"designated return period" hereunder will
commence three months after the data capture
period.
o The "designated return period" will be
separated from the "data capture period" by
three calendar months to allow for
"collection and confirmation" of the traffic
data and the calculation of market shares and
return traffic requirements using the
proportionate return principle as defined in
this agreement. The time periods are:
Data Capture Period Collection Designated Return
(Settlement Months) & Confirmation Period
___________________ ________________ _________________
Three (3) Months Three (3) Months Three (3) Months
<PAGE>
o Prior to each "designated return period",
COMSAT will inform the U.S. Carriers of the
proportionate return percentage it has
calculated for each new "data capture period"
to be sent during the "designated return
period".
o At the end of each "designated return period"
COMSAT shall inform the carriers of any
deviations in the actual minutes returned as
compared to the proportionate return owed and
the reasons therefore.
(c) QUARTERLY reviews will be conducted to discuss the
items in (b) (iii) above as well as the following items
to compare actual traffic data against the forecast:
o Adjustments will be made in the proportion to be
returned for the following year if necessary.
o Traffic levels quarterly for the previous period
for all traffic will be reviewed to determine if
revised volume discounts are applicable.
o Updated forecasts for the new year will exchanged
at the October 1 review.
6. Rates
Rates for services provided hereunder are set forth in
Attachments 1,2. Such rates shall be effective on September
1, 1993.
7. Payment Accounting and Settlement
(a) Monthly Accounts
(i) For sent paid calls, each party shall be
responsible for the billing and collection of
charges to its respective subscribers.
(ii) Each party shall render to the other a monthly
statement of the minutes carried, at rates in U.S.
currency, for services rendered during the month
to which the account relates showing the portion
of revenues due to the other party. Such accounts
shall be forwarded to the other party promptly
after the calendar month to which the account
relates but in no event later than the end of the
second calendar month following the month to which
the account relates. The monthly statements shall
include accounting information received through
international accounts.
<PAGE>
(iii) No allowances shall be made in the accounts for
uncollectible amounts. However, each party will
have the right to make adjustments as may be
proper with respect to periods when transmission
is defective. A party may deduct such credits
from the monthly accounts submitted to the other
party, provided that such deductions are made
before the monthly account involved is forwarded
to the other party.
(iv) An account shall be deemed to have been accepted
by the party to whom it is rendered if that party
does not object in writing thereto before the end
of the calendar month following the month in which
the account is transmitted by the party rendering
it. Objections shall be transmitted in writing to
the party which rendered the account promptly
after receipt of the account. Agreed adjustment
shall be included in the next monthly account.
(b) Establishment of Balance - Payment of Account
The sum due each month from one party to the other as
covered by the rendered accounts shall be reduced to a
net balance by each party. Net balances due from one
party to the other shall be paid monthly by the debtor
party to the creditor party in United States currency.
Payment will be made promptly, but in no event later
than six (6) weeks after each monthly account is
received from the creditor party. The payment of a
balance due on an account shall not be delayed pending
agreement to the adjustment of disputed items of that
account.
(c) Transit Traffic
If the call is chargeable at the international point
where COMSAT has an agreed transit rate with the
originating Administration, then MCI shall be entitled
to its transit fee, and COMSAT shall be entitled to an
amount determined in accordance with its agreed transit
rate to the originating Administration. If COMSAT does
not have an agreed transit rate with the originating
Administration, then MCI shall pay to COMSAT an amount
equal to the shore-to-ship per minute rate established
in Annex I, Attachment 1 of this Agreement.
<PAGE>
Attachment 1 to Annex I
7.21.93
COMSAT Mobile Communications
PRICE SCHEDULE FOR
FIXED-MOBILE
INMARSAT SERVICES
Prices Effective January 1, 1994(3)
STANDARD-A TELEPHONE
TRAFFIC VOLUME STANDARD-A
PRESENTED TO TRAFFIC
COMSAT ANNUALLY PRICE PER
(A,M,B, AERO) MINUTE
(minutes)
- - - ------------------------------------
0 to 500,000 $8.00
500,000 to 3,500,000 $7.25
Over 3,500,000 $7.20
GROWTH INCENTIVE SCHEDULE
CUMULATIVE INCREMENTAL STANDARD-A
TRAFFIC GROWTH OVER TRAFFIC
INITIAL BASE FORECAST(1) PRICE PER
(percent) MINUTE(2)
- - - ------------------------------------
20% to 30% $7.15
30% to 50% $7.10
50% to 70% $6.95
Greater than 70% $6.95
DIGITAL SERVICES
SERVICE PRICE PER
MINUTE
- - - -----------------------------------
STANDARD-M $4.95
STANDARD-B $6.45
AERONAUTICAL $7.40
(1) INITIAL BASE FORECASE = First Two Year's Traffic Forecast.
(2) Price applies to incremental minutes over BASE FORCAST.
(3) Interim Price for Standard-A fixed-mobile Telephone service
until January 1, 1994 will be at the rate of $7.25 per
minute.
<PAGE>
ANNEX II
INMARSAT TELEX SERVICES
1. Service To Be Provided
(a) COMSAT and MCI agree to interconnect their telex
facilities to permit user of MCI telex services to send
and receive messages via the Inmarsat system provided
by COMSAT, including any traffic from MCI which
originates from any domestic connecting carrier's
subscribers in the United States and is routed via
MCI's facilities for delivery to a mobile earth
station.
(b) For traffic originating from an international point
that transits the U.S. and is destined for a mobile
earth station, MCI and COMSAT shall jointly make
appropriate interconnection arrangements with foreign
administrations to implement and facilitate the use of
COMSAT's services as provided for herein.
(c) For traffic originating at mobile earth stations,
COMSAT shall honor routing designated by the
originating caller, except that COMSAT shall transmit
to any interconnecting carrier all traffic from mobile
earth stations destined to subscribers of that
carrier's network. For international calls whose
routing has not been designated by the originating
caller ("undesignated traffic"), MCI shall receive from
COMSAT a minimum of twenty (20) percent of such
undesignated traffic per month, such percentage
reflecting the fact that, as of the date of execution
of this Agreement by both Parties, MCI is one of five
carriers interconnecting with COMSAT for such traffic.
Should the number of interconnected carriers change,
MCI shall receive from COMSAT a minimum of such
undesignated traffic equivalent to MCI's representative
share of the total number of carriers interconnected
with COMSAT. Should the Federal Communications
Commission ("FCC") subsequently approve the
implementation of a proportionate return mechanism for
the allocation of undesignated traffic, COMSAT shall
deliver such traffic to MCI in accordance with a
mutually agreed upon proportionate return formula.
(d) MCI shall deliver domestic originating telex traffic
destined for termination through the Inmarsat system to
United States land earth stations, as required by FCC
regulatory policy.
2. Term
The term of the Annex shall be for one (1) year, commencing
September 1, 1993, and shall automatically renewable for
additional periods of one (1) year. Either Party may
terminate this Annex upon furnishing six (6) months written
notice at any time after the initial one year term.
<PAGE>
3. Charges
(a) For the services provided by COMSAT hereunder, MCI
agrees to pay those charges set forth in Attachment 1
hereto.
(b) For those services provided by MCI hereunder, COMSAT
agrees to pay those charges set forth in Attachment 2
hereto.
(c) Telex rates to customers of COMSAT or MCI are the sole
responsibility of the billing carrier.
4. Accounting and Settlement
(a) The Parties shall exchange accounting statements on a
monthly basis within thirty (30) days after the end of
the traffic month. Settlement of net balances shall be
made on a quarterly basis within thirty (30) days
following the end of the traffic quarter. No allowance
shall be made in the accounts for uncollectible
amounts. Settlement of net balances for overseas
originated traffic will be on a quarterly basis within
thirty (30) days following the end of the traffic
quarter.
(b) The procedures for settlement between MCI and COMSAT
for traffic terminating or originating at mobile earth
stations shall be as follows:
(i) For traffic billable by COMSAT to mobile
subscribers, COMSAT shall credit to MCI the
amounts due at MCI's terminating interconnect
rates specified in Attachment 2 to this Annex.
(ii) For traffic chargeable at U.S. land points, MCI
shall credit to COMSAT the amounts due at COMSAT's
terminating interconnect rate specified in
Attachment 1 to this Annex.
(iii) For traffic chargeable at overseas land points,
MCI will arrange for connecting overseas
correspondents to collect the applicable charges
for the combined services and to credit MCI with
MCI's share of the applicable international
charges plus an amount equal to COMSAT's share of
the interconnect rate, which latter amount MCI
shall credit to COMSAT. MCI shall use reasonable
efforts to identify such mobile satellite
communications traffic by ocean region and traffic
month in the accounting statements exchanged.
5. Promotion of Traffic
COMSAT will implement a carrier selection code for MCI and
promote the availabilty of MCI telex carrier selection.
<PAGE>
Attachment 1
to Annex II
COMSAT Mobile Communications
Price Schedule
for INMARSAT Telex Services
Standard A Telex(1)
Annual Commitment Price per Minute
(000's of Minutes)
0 - 200 $3.80
201 - 500 $3.75
501 - 750 $3.70
751 - 1,000 $3.60
Over 1,000 Annually $3.50
Standard B Telex(2)
Notes
1. Minutes are bi-directionally accumulative; i.e. total
of minutes in Fixed-to-Mobile, Mobile-to-Fixed,
domestic and foreign originating, apply.
2. Minutes of Digital Services Telex (Standard B) traffic
apply toward Standard A Telex traffic commitment
levels, but are volume insensitive until such time that
traffic levels warrant volume-commitment discounts.
<PAGE>
MCII PRICING SCHEDULE
TELEX TRAFFIC (UNDESIGNATED)
DOMESTIC DOMESTIC RATE PER WUI TARIFF #22
INTL INTL COMPONENT RATE PER WUI TARIFF #5
TELEX CARRIER SELECT TRAFFIC (DESIGNATED)
GROSS MONTHLY
INTERNATIONAL REVENUE*
$0 - $10,000 5.0%
$10,001 - $30,000 10.0%
>$30,000 15.0%
*DOMESTIC DESIGNATED SETTLED AT SAME RATE AS UNDESIGNATED
========================================================
MCII TERMINATION CHARGES **
INMARSAT VOICE SERVICES
U.S. TERMINATION $0.35/MINUTE
INTERNATIONAL TERMINATION
75,000 MINUTES/MONTH PRISM 1 RATES
>75,000 MINUTES/MONTH 10% OFF PRISM 1 RATES
**UNDESIGNATED TRAFFIC
<PAGE>
<PAGE>
EXHIBIT 10(ee)
<PAGE>
A G R E E M E N T
This Agreement is made by and between Sprint Communications
Company L.P., a Delaware limited partnership ("SPRINT"), a United
States International Service Carrier ("USISC"), and COMSAT
Corporation ("COMSAT"), the U.S. Signatory to the International
Telecommunications Satellite Organization ("INTELSAT")
(hereinafter jointly referred to as the "Parties").
WHEREAS, SPRINT is engaged in the provision of
telecommunications services via satellite; and
WHEREAS, COMSAT offers INTELSAT space segment capacity to
USISCs for telecommunications services; and
WHEREAS, the Parties have decided to enter into an inter-
carrier contract based on SPRINT's utilization of COMSAT's
INTELSAT space segment capacity for telecommunications services;
NOW, THEREFORE, in consideration of and in reliance upon
the mutual promises set forth below, SPRINT and COMSAT hereby
agree as follows:
<PAGE>
ARTICLE I
PURPOSE AND INTENT
The purpose of this Agreement is to implement the Parties'
mutual understanding with respect to SPRINT's utilization of
COMSAT's INTELSAT space segment capacity for telecommunications
services. It is the intent of COMSAT and SPRINT that this
Agreement comply with all laws and international obligations of
the United States. Consistent with that intent, nothing herein
shall preclude COMSAT from reaching similar agreements for
circuits with other USISCs, and nothing herein shall preclude
SPRINT from placing traffic not covered by this Agreement on
whatever telecommunications facilities it should select.
<PAGE>
ARTICLE II
DEFINITIONS
The terms used in this Agreement are defined as follows:
1. Additional Circuits. Digital Bearer Circuits
activated by SPRINT on the INTELSAT system via
COMSAT on or after January 1, 1992 for lease terms
of at least seven (7) years.
2. Base Circuits. Digital Bearer Circuits activated
by SPRINT on the INTELSAT system via COMSAT prior
to January 1, 1992 for lease terms of at least ten
(10) years, or otherwise treated as Base Circuits
pursuant to this Agreement.
3. Bulk Offering. The offering by COMSAT to SPRINT
of one 36 MHz bandwidth allotment pursuant to the
rates, terms and conditions specified in this
Agreement.
4. Digital Bearer Circuits. 64 Kbps equivalent
circuits used to carry public-switched traffic
(including IDR and TDMA circuits, but excluding
private line circuits); these circuits may or may
not be aggregated into larger digital carriers.
<PAGE>
5. Revised Standard A Earth Station. An earth
station having a gain-to-temperature ratio ("G/T")
at least equal to 35 dB/K.
<PAGE>
ARTICLE III
BASE AND ADDITIONAL CIRCUITS
A. As of the date of this Agreement, SPRINT had activated
_____ Base Circuits on the INTELSAT system via COMSAT for 10-year
lease terms. SPRINT hereby agrees by this inter-carrier
agreement to replace each individual lease term for these _____
Base Circuits with a new 10-year lease term that will begin on
December 1, 1993 and end on November 30, 2003.
B. As of the date of this Agreement, SPRINT had also
activated _____ Base Circuits on the INTELSAT system via COMSAT
for 15-year lease terms. COMSAT hereby agrees that these __
circuits may be converted to 10-year Base Circuits, each with a
new lease term that will begin on December 1, 1993 and end on
November 30, 2003. In consideration for this adjustment, SPRINT
agrees to convert [an equivalent number] of its existing 7-year
Additional Circuits to 10-year Base Circuits, also with a new
lease term that will begin on December 1, 1993 and end on
November 30, 2003. Thus, for purposes of this Agreement,
SPRINT's total number of Base Circuits is _____.
C. As of December 1, 1993, COMSAT's rates for SPRINT's
_____ Base Circuits shall be as specified in Attachment A, which
is appended hereto and made part of this Agreement. The rates in
<PAGE>
Attachment A are for Base Circuits provided via INTELSAT Revised
Standard A Earth Stations. Base Circuits transmitted through
standard earth stations with lower G/T values shall be subject to
the rate adjustments specified in Attachment B, which is also
appended hereto and made part of this Agreement.
D. As of December 1, 1993, COMSAT's rates for SPRINT's
Additional Circuits shall be as specified in Attachment C, which
is appended hereto and made part of this Agreement. The rates in
Attachment C are for Additional Circuits provided via INTELSAT
Revised Standard A earth stations. Additional Circuits
transmitted through standard earth stations with lower G/T values
shall be subject to the rate adjustment factors specified in
Attachment B.
E. As of December 1, 1993, COMSAT's charge for early
termination of SPRINT's Base Circuits and Additional Circuits
shall be a flat fee of $6,880 per 64 Kbps equivalent circuit,
plus 45% of the balance due at the time of early termination.
F. The Parties agree that the rates and early termination
charges set forth in this Article and in Attachments A through C
supersede any conflicting provisions in COMSAT World Systems
Tariff F.C.C. No. 1. All other terms and conditions for SPRINT's
Base Circuits and Additional Circuits shall be the same as those
specified in COMSAT World Systems Tariff F.C.C. No. 1 as of the
<PAGE>
effective date of this Agreement, and those tariff provisions are
hereby incorporated into this Agreement.
G. Notwithstanding Paragraph F above, COMSAT agrees that,
during the term of this Agreement, it will offer SPRINT rates,
terms and conditions for Base Circuits that are no less favorable
than the rates, terms and conditions it makes available pursuant
to tariff for Digital Bearer Circuits activated prior to January
1, 1992. Upon written acceptance by SPRINT, such rates, terms
and conditions shall be automatically incorporated into this
Agreement.
H. Notwithstanding Paragraph F above, COMSAT agrees that,
during the term of this Agreement, it will offer SPRINT rates,
terms and conditions for Additional Circuits that are no less
favorable than the rates, terms and conditions it makes available
pursuant to tariff for Digital Bearer Circuits activated or on
after January 1, 1992. Upon written acceptance by SPRINT, such
rates, terms and conditions shall be automatically incorporated
into this Agreement.
<PAGE>
ARTICLE IV
BULK OFFERING
A. COMSAT hereby agrees to provide, and SPRINT commits and
agrees to lease from COMSAT for a 10-year term commencing on
December 1, 1993 and ending on November 30, 2003, one (1) 36 MHz
bandwidth allotment providing __________________________________
connectivity in the __________ Ocean Region. As of the date of
this Agreement, this allotment will be in ______________________
________________________________________________________________
__________________________________________.
B. COMSAT's rate for the 36 MHz allotment provided
pursuant to the Bulk Offering described in this Article shall be
$189,000 per month from January 1, 1994 through the remainder of
the lease term. The Parties anticipate, however, that for some
period of time after January 1, 1994 there will be substantial
non-SPRINT traffic located in this allotment that will constrain
SPRINT's ability to utilize it fully. The Parties recognize that
it will take some time to relocate this non-SPRINT traffic
consistent with INTELSAT's standard relocation procedures.
Therefore, until this relocation is complete, COMSAT will prorate
its lease price such that, if there are X non-SPRINT circuits
being leased from COMSAT in this allotment, the lease price for
the allotment will be ((540-X)/540) x $189,000 per month.
<PAGE>
C. The 36 MHz allotment provided pursuant to the Bulk
Offering described in this Article shall be considered the
equivalent of 540 64 Kbps circuits. Consistent therewith, COMSAT
and SPRINT hereby agree that, during the six-month period
commencing with the effective date of this Agreement, the 36 MHz
allotment may absorb up to 270 of SPRINT's existing 7-year or 10-
year Additional Circuits. (Base Circuits already located within
the allotment may be substituted for Additional Circuits, but
only if equivalent numbers of Additional Circuits outside the
allotment are redesignated as Base Circuits, so that SPRINT's
total number of Base Circuits remains constant at _____.) The
conversion of up to 270 Additional Circuits under this Paragraph
shall not be considered early termination, and early termination
charges shall not apply thereto. Existing circuits outside the
allotment that have not been leased for multi-year terms may be
moved into the allotments at any time, and new circuits may be
activated inside the allotment at any time. Once an existing
circuit is designated as part of the allotment, all other charges
for that circuit shall cease, and that circuit may not be counted
in determining the appropriate block rates for SPRINT under
Article IV-B and Attachment C of this Agreement.
D. SPRINT hereby agrees that it will not cancel the 36 MHz
allotment committed pursuant to this Article until November 30,
1998 at the earliest.
<PAGE>
E. After November 30, 1998, COMSAT's charge for early
termination for the 36 MHz allotment described in this Article
shall be a flat fee of $6,880 x 540 64 Kbps equivalent circuits,
plus 45% of the balance due at the time of early termination.
F. The 36 MHz allotment provided pursuant to this
Article shall be non-preemptible. In case of space segment
failure, this allotment shall be restored in accordance with the
procedures set forth in INTELSAT SSOG 103, Section 6, as may be
amended from time to time. This allotment may be used for any
type of U.S. traffic, including both public-switched and private
line traffic and both analog and digital traffic, provided,
however, that: (1) INTELSAT's technical lease definitions, as set
forth in the IESS documents that COMSAT routinely provides to
SPRINT, shall apply to the use of this allotment, and (2) COMSAT
and INTELSAT must approve transmission plans for each circuit in
the allotment in advance of service activation.
G. The Parties recognize that, during the lease term of
the 36 MHz allotment described in this Article, the particular
satellite listed in paragraph A of this Article may be replaced
by another INTELSAT satellite. In such cases, a transponder of
different connectivity may be substituted for the replaced
transponder under the same terms and conditions upon mutual
agreement of the Parties.
<PAGE>
H. The Parties agree that the rates, early termination
charges, and other terms and conditions specified in this Article
supersede any conflicting provisions in COMSAT World Systems
Tariff F.C.C. No. 1. All other terms and conditions for the
circuits contained in the 36 MHz allotment provided pursuant to
this Article shall be the same as those specified in COMSAT World
Systems Tariff F.C.C. No. 1 as of the effective date of this
Agreement, and those tariff provisions are hereby incorporated
into this Agreement.
I. During the twelve months immediately following the
effective date of this Agreement, SPRINT shall have the option of
leasing up to two (2) additional 36 MHz bandwidth allotments from
COMSAT, subject to the availability of mutually agreeable
capacity. The rates, terms and conditions for the lease of such
additional 36 MHz allotments shall be the same as those set forth
in Paragraphs A through H of this Article, except that if SPRINT
leases a total of three (3) 36 MHz allotments by the end of this
twelve-month period, the rate for each such allotment shall be
$165,000 per month beginning on January 1, 1997. After twelve
months from the date of this Agreement, any request by SPRINT
during the term of this Agreement for additional allotments
beyond the one 36 MHz allotment specified in this Article shall
be the subject of a separate agreement with respect to price and
terms when and if such a request is made.
<PAGE>
K. COMSAT shall be responsible for coordinating the
movement of circuits in and out of the 36 MHz allotment described
in this Article. It is the intent of both Parties that at least
nine (9) of SPRINT's 2.048 Mbps carriers be located in this
allotment within ninety (90) days after the effective date of
this Agreement, and COMSAT agrees to use its best efforts to
ensure that this schedule is met.
L. The Parties agree that, in consideration of SPRINT's
total commitment under this Agreement, COMSAT shall provide the
36 MHz allotment described in this Article free of charge for the
period from December 1, 1993 through December 31, 1993.
Beginning January 1, 1994, the charges specified in Paragraph B
of this Article will apply to the 36 MHz allotment described in
this Article.
<PAGE>
ARTICLE V
REMEDIES
A. In the event that COMSAT materially breaches Article
III-C or III-D of this Agreement, SPRINT shall be entitled to
damages in an amount equal to the difference between the rates
SPRINT actually paid and the rates specified in Attachments A and
C for the number of Base Circuits or Additional Circuits
involved.
B. In the event that COMSAT materially breaches Article
IV-B or IV-E of this Agreement, SPRINT shall be entitled to
damages in an amount equal to the difference between the rates
SPRINT actually paid and the rates specified in Articles IV-B and
IV-D for the 36 MHz allotment involved.
C. In the event that SPRINT materially breaches Article
III-A or III-B of this Agreement, COMSAT shall be entitled to
damages in an amount equal to the difference between the charges
SPRINT actually paid and the revenues that COMSAT would have
realized if SPRINT had begun a new lease term for each of its
1,434 Base Circuits as of December 1, 1993.
D. In the event that SPRINT materially breaches Article
IV-A or IV-D of this Agreement, COMSAT shall be entitled to
<PAGE>
damages in an amount equal to the difference between the charges
SPRINT actually paid and the revenues that COMSAT would have
realized if SPRINT had activated the 36 MHz allotment in
accordance with the provisions of this Agreement and then
prematurely canceled that allotment on November 30, 1998.
E. In no event shall either Party be entitled to damages
or other remedies under this Article unless it provides the other
Party with notice and a reasonable opportunity to cure within
sixty (60) days of the date when the Party claiming breach either
knew or should have known of the event giving rise to the alleged
breach.
<PAGE>
ARTICLE VI
CUSTOMER/SUPPLIER RELATIONSHIP
In recognition of COMSAT's unique expertise and experience
in international satellite telecommunications, the high quality
of its services, its performance as U.S. Signatory to INTELSAT,
and the Parties' good working relationship over many years,
SPRINT agrees that it shall give COMSAT an opportunity to supply
additional satellite capacity not covered by this agreement,
provided however that, consistent with Article I above, nothing
shall preclude SPRINT from placing such traffic on other
facilities.
<PAGE>
ARTICLE VII
TERM OF AGREEMENT
The term of this Agreement shall commence on December 1,
1993 and shall run through November 30, 2003, provided, however,
that all applicable rates, terms and conditions for each circuit
leased pursuant to the provisions of this Agreement shall survive
until the expiration of that circuit's lease term. Thus, for
example, the rates, terms and conditions for a 10-year Additional
Circuit activated on January 1, 1995 would remain in effect until
December 31, 2004.
<PAGE>
ARTICLE VIII
FCC REVIEW
The Parties shall jointly submit this Agreement to the FCC
within thirty (30) days of execution pursuant to Section 211(a)
of the Communications Act, and shall request confidential
treatment for any competitively sensitive information contained
herein. If any FCC proceeding is initiated with respect to the
entry into force of this Agreement, the Parties agree to
cooperate fully in seeking a prompt and favorable resolution of
such proceeding.
<PAGE>
ARTICLE IX
DISPUTE RESOLUTION
If any dispute arises with respect to the interpretation,
implementation or termination of this Agreement, the Parties will
use their best efforts to resolve the matter amicably, including
recourse to the highest levels of management in their respective
organizations. If such efforts fail to resolve the dispute
within a reasonable time, the Parties agree to present that
dispute to the American Arbitration Association in Washington,
D.C. for binding resolution in accordance with that Association's
Commercial Rules of Arbitration, or in lieu of arbitration, to
utilize another mutually agreeable means of alternative dispute
resolution (ADR). Each Party shall bear all of its own costs
incurred in utilizing arbitration or other ADR mechanism.
<PAGE>
ARTICLE X
ENTIRE AGREEMENT
This Agreement (including its attachments and those
portions of COMSAT's tariffs which are incorporated by reference)
constitutes the entire agreement between the Parties as to
SPRINT's utilization of COMSAT's INTELSAT space segment capacity
for the telecommunications services specified herein; it is
intended as the complete and exclusive statement of the terms of
this agreement between the Parties, and supersedes all previous
understandings, commitments or representations by or between the
Parties with respect to its subject matter.
<PAGE>
ARTICLE XI
REPRESENTATIONS OF AUTHORITY
A. COMSAT hereby represents and warrants to SPRINT that it
is a corporation duly organized, validly existing, and in good
standing under the laws of its jurisdiction of incorporation;
that it has appropriate approvals and direction from its Board of
Directors to empower it to enter into and perform its obligations
under this Agreement; and that it has taken all requisite
corporate action to approve the execution, delivery, and
performance of this Agreement.
B. SPRINT hereby represents and warrants to COMSAT that it
is duly organized, validly existing, and in good standing under
the laws of the State of Kansas; that it has appropriate
approvals and direction to empower it to enter into and perform
its obligations under this Agreement; and that it has taken all
requisite action to approve the execution, delivery and
performance of this Agreement.
<PAGE>
ARTICLE XII
BINDING OBLIGATION
A. This Agreement, when executed and delivered, shall be a
legal, valid and binding obligation of COMSAT and SPRINT, and
shall bind all successors and assigns of the Parties.
B. The provisions of this Agreement are for the benefit
only of the Parties hereto and their successors and assigns, and
no other party may seek to enforce, or benefit from, any
provision of this Agreement.
C. Neither Party may assign this Agreement without the
other Party's express written consent, except that each Party may
assign its rights and obligations hereunder to a legal entity
which is successor, assign, subsidiary or affiliate of that Party
or its parent without notice or consent.
<PAGE>
ARTICLE XIII
NOTICES
All written notices required under this Agreement shall be
considered properly given only when sent by registered or
certified mail, return receipt requested, or by an overnight
courier such as Federal Express, to the following addresses,
respectively, or to such other addresses as the receiving party
may hereafter designate in writing:
To SPRINT: Ericka Officer
Contract Negotiator
Sprint Communications Company L.P.
9350 Metcalf
KSOPKC0802
Overland Park, KS 66212
To COMSAT: M. Brent Bohne
Director, Contracts and Procurement
COMSAT World Systems
6560 Rock Spring Drive
Bethesda, MD 20817
Any period of time referred to herein which is to commence
upon notice shall be counted from the date such notice is
received as aforesaid.
<PAGE>
ARTICLE XIV
WAIVERS
The waiver by either Party of a breach of, or default
under, any of the provisions of this Agreement, or the failure of
either Party, on one or more occasions, to enforce any of the
provisions of this Agreement or to exercise any right or
privilege hereunder, shall not thereafter be construed as a
waiver of any subsequent breach or default of a similar nature,
or as a waiver of any provision, right or privilege hereunder.
<PAGE>
ARTICLE XV
MISCELLANEOUS
A. The article headings and table of contents in this
Agreement are inserted for convenience only and do not constitute
a part of this Agreement.
B. This Agreement may be amended only in writing by an
instrument signed by authorized representatives of both Parties.
C. This Agreement shall be construed according to the laws
of the State of Maryland.
D. This Agreement may be executed in counterparts, each of
which shall be deemed an original, and all such counterparts
together shall constitute one and the same instrument.
E. This Agreement shall become effective on December 1,
1993 following execution by both Parties.
<PAGE>
IN WITNESS WHEREOF, each of the Parties hereto has executed
this Agreement.
SPRINT COMMUNICATIONS COMSAT CORPORATION
COMPANY L.P.
/s/Michael Robinson /s/Patricia Benton
By:___________________________ By:___________________________
V.P. and G.M. COMSAT
AVP Network World Systems
Title: _______________________ Title:________________________
11/30/93 November 16, 1993
Date:_________________________ Date:_________________________
<PAGE>
ATTACHMENT A
BASE CIRCUIT RATES
Per month per activated carrier(1)
10-Year Term
Carrier Size 1993(2) 1994(3) 1995(4) 1996(5) 1997(6)
- - - ------------ ------- ------ ------ ------ ------
1.544 Mbps $ 8,496 13,920 12,480 10,800 8,400
2.048 Mbps $10,620 17,400 15,600 13,500 10,500
Per 64 Kbps
equivalent in a
fully-activated
2.048 Mbps carrier $354 580 520 450 350
- - - -------------------
(1) The rates specified in this Attachment are for service to
INTELSAT Revised Standard A Earth Stations.
(2) The rates in this column shall take effect on December 1, 1993
and are provided in consideration for SPRINT's agreement to start
a new 10-year lease term for each of its _____ Base Circuits.
(3) The rates in this column shall take effect on January 1, 1994.
(4) The rates in this column shall take effect on January 1, 1995.
(5) The rates in this column shall take effect on January 1, 1996.
(6) The rates in this column shall take effect on January 1, 1997,
and shall remain in effect for the duration of each circuit's
lease term unless further reduced.
<PAGE>
ATTACHMENT B
RATE ADJUSTMENT FACTORS
for Base and Additional Circuits
Earth Station Frequency Minimum Rate Adjustment
Standard Band G/T Factor(1)
- - - ------------- --------- ------- -------------
Std. B C 31.7 dB/K 1.36
Std. F-3 C 29.0 dB/K 2.05
Std. F-2 C 27.0 dB/K 2.92
Std. E-3 Ku 34.0 dB/K 1.68
Std. E-2 Ku 29.0 dB/K 4.94
- - - ---------------
(1) In the event that COMSAT tariffs rate adjustment factors that
are more favorable than those listed in this Attachment,
the factors tariffed shall be incorporated automatically
into this Agreement.
<PAGE>
ATTACHMENT C
ADDITIONAL CIRCUIT RATES
Per month per 64 Kbps equivalent
in a fully-activated 2.048 Mbps carrier(1)
10-Year term
Block 1993-94(2) 1995(3) 1996(4) 1997(5)
- - - ----- ------- ---- ---- ----
Block 1(6) $495 $495 $450 $350
Block 2(7) 445 445 445 350
Block 3(8) 395 395 395 350
Block 4(9) 350 350 350 350
- - - --------------
(1) The rates specified in this Attachment are for service to
INTELSAT Revised Standard A earth stations. Rates for fully
activiated 2.048 Mbps carriers shall be 30 times the numbers shown
INTELSAT Standard A earth stations. Rates for fully activated
2.048 Mbps carriers shall be 30 times the numbers shown above.
Rates for carrier sizes other than 2.048 Mbps shall bear the
same relationships to the 2.048 Mbps rate as those shown in
Attachment A.
(2) The rates in this column are currently in effect.
(3) The rates in this column are currently in effect.
(4) The rates in this column shall take effect on January 1, 1996.
(5) The rates in this column shall take effect on January 1, 1997,
and shall remain in effect for the duration of each circuit's
lease term unless further reduced.
(6) The rates in Block 1 apply to Additional Circuits included among
the first 270 Digital Bearer Circuits (excluding Base Circuits)
leased in a given region for terms of at least five years. The
regions are those specified in COMSAT World Systems Tariff F.C.C.
No.1 as of the effective date of this Agreement, i.e.: (1) (Western)
Europe; (2) Pacific; (3) Latin America; and (4) Near and Middle
East, Africa and other Europe.
(7) The rates in Block 2 apply to Additional Circuits included
among the next 360 Digital Bearer Circuits (excluding Base
Circuits) leased in a given region for terms of at least
five years.
(8) The rates in Block 3 apply to Additional Circuits included
among the next 450 Digital Bearer Circuits (excluding Base
Circuits) leased in a given region for terms of at least
five years.
(9) The rates in Block 4 apply to Additional Circuits included
among the Digital Bearer Circuits above 1080 (excluding Base
Circuits) leased in a given region for terms of at least
five years.
<PAGE>
ADDITIONAL CIRCUIT RATES
Per month per 64 Kbps equivalent
in a fully-activated 2.048 Mbps carrier(1)
7-Year term
Block 1993-94(2) 1995(3) 1996(4) 1997(5)
- - - ------ ------- ---- ---- ----
Block 1 $615 $615 $559 $455
Block 2 555 555 555 455
Block 3 505 505 505 455
Block 4 455 455 455 455
__________________
(1) The rates specified in this Attachment are for service to
INTELSAT Revised Standard A earth stations. Rates for fully
activiated 2.048 Mbps carriers shall be 30 times the numbers shown
INTELSAT Standard A earth stations. Rates for fully activated
2.048 Mbps carriers shall be 30 times the numbers shown above.
Rates for carrier sizes other than 2.048 Mbps shall bear the
same relationships to the 2.048 Mbps rate as those shown in
Attachment A.
(2) The rates in this column are currently in effect.
(3) The rates in this column are currently in effect.
(4) The rates in this column shall take effect on January 1, 1996.
(5) The rates in this column shall take effect on January 1, 1997,
and shall remain in effect for the duration of each circuit's
lease term unless further reduced.
(6) The rates in Block 1 apply to Additional Circuits included among
the first 270 Digital Bearer Circuits (excluding Base Circuits)
leased in a given region for terms of at least five years. The
regions are those specified in COMSAT World Systems Tariff F.C.C.
No.1 as of the effective date of this Agreement, i.e.: (1) (Western)
Europe; (2) Pacific; (3) Latin America; and (4) Near and Middle
East, Africa and other Europe.
(7) The rates in Block 2 apply to Additional Circuits included
among the next 360 Digital Bearer Circuits (excluding Base
Circuits) leased in a given region for terms of at least
five years.
(8) The rates in Block 3 apply to Additional Circuits included
among the next 450 Digital Bearer Circuits (excluding Base
Circuits) leased in a given region for terms of at least
five years.
(9) The rates in Block 4 apply to Additional Circuits included
among the Digital Bearer Circuits above 1080 (excluding Base
Circuits) leased in a given region for terms of at least
five years.
<PAGE>
<PAGE>
EXHIBIT 10(ff)
<PAGE>
This agreement is hereby entered into this 10th day of
December 1993 by and between COMSAT Mobile Communications of COMSAT
Corporation with offices located at 22300 COMSAT Drive, Clarksburg,
MD 20871 (hereinafter referred to as "COMSAT"), and Sprint
International with offices at 12490 Sunrise Valley Drive, Reston,
Virginia 22096 on behalf of itself, Sprint Communications Company,
L.P. and its, affiliated entities, (hereinafter referred to as
"SPRINT").
WITNESSETH:
WHEREAS, COMSAT and SPRINT are communications common carriers
and are each subject to the jurisdiction of the Federal
Communications Commission ("FCC"); and
WHEREAS, COMSAT and SPRINT agree to exchange services between
the various regions covered by the International Maritime Satellite
Organization ("Inmarsat") served by COMSAT and points in the United
States and international points served by SPRINT:
NOW, THEREFORE, in consideration of the foregoing and the
covenants hereinafter set forth, COMSAT and SPRINT agree as
follows:
1. Interconnection of Facilities
(a) COMSAT and SPRINT agree to interconnect their facilities
to permit the exchange of traffic for the services covered
under this Agreement. Such services to be covered are
described in Annex I hereto entitled "Mobile Satellite
Telephone Service", which is hereby incorporated into and made
a part of this Agreement. The Annexes to this Agreement may
be modified from time to time subject to mutual written
agreement of the Parties, and additional Annexes may be added
if the Parties so choose.
(b) SPRINT shall provide prompt assistance, as needed, to
customers using or attempting to use the COMSAT mobile
satellite communications services on a priority basis not less
than that which they accord their other service activities and
their customers for those services.
(c) Each Party shall be responsible for:
o the transmission to the other Party of signals in
accordance with TSS Recommendations, and
o the transmission of signals received from the other
Party over its facilities and to any
interconnecting carrier, foreign administration or
subscriber, as appropriate.
(d) Consistent with the terms and conditions of this
Agreement, each Party shall have the right to interconnect
with the other telecommunications service providers to
exchange services, including, but not limited to, those
covered by this Agreement.
<PAGE>
2. Charges
(a) Settlement Rates for services provided hereunder are set
forth in Annex I hereto.
(b) Rates to customers of COMSAT or SPRINT are the sole
responsibility of the billing carrier. Any tariff changes
affecting services provided in conjunction with this Agreement
shall be provided by the Party making the changes to the other
Party three (3) days prior to the filing of such changes with
the FCC.
3. Payment, Accounting and Settlement
Payment, accounting and settlement shall be accomplished in
accordance with the procedures set forth in Annex I.
4. Term
The term of this Agreement shall be for a period of five (5)
years commending on Dec. 10, 1993, with subsequent renewal periods
of one year. This Agreement may be terminated by either Party
after five (5) years with not less than six (6) months notice in
writing to the other Party.
5. Joint Marketing and Promotion
During the term of this Agreement COMSAT and SPRINT will
entertain proposals by each to the other for joint marketing and
promotion of the services provided under this Agreement under terms
and conditions mutually acceptable to both Parties.
6. Liability
Neither Party nor its parent corporation, subsidiaries,
affiliates, or suppliers, or any of its parent corporation's
subsidiaries or affiliates shall be liable to the other for
incidental, special, indirect or consequential damages or loss of
revenues or profits resulting from failure to provide services or
facilities as called for hereunder, or for any loss or damage
sustained by reason of any failure in or breakdown of the
communications facilities or interruption to same associated with
functioning of the services covered by this Agreement no matter
what the cause.
7. Assignment
Neither Party may assign this Agreement without the prior
written consent of the other Party, except to its parent, an
affiliate or subsidiary in connection with the transfer of
responsibility for the services provided under this Agreement.
<PAGE>
8. Trademarks
Nothing in this Agreement shall create in either Party any
rights in the trademarks, tradenames, insignia, identification and
logotypes used by the other Party. Before either Party uses any
such marks of the other Party, it shall obtain the prior, written
consent of the other Party.
9. Confidentiality
Except as required by law, neither Party shall disclose
customer and billing information or its participation in this
undertaking or any of the terms and conditions of this Agreement or
any other agreement between the Parties without the prior written
consent of the other Party. If disclosure is required by law, the
Disclosing Party shall provide advance written notice of such
disclosure to the other Party.
In connection with the provision of services pursuant to this
Agreement COMSAT and SPRINT may each disclose to the other, certain
business, technical, and other information which has been
identified in writing to be proprietary to the disclosing party or
its affiliated companies (hereinafter referred to as
"INFORMATION"). For purposes of this Agreement, such INFORMATION
shall include, but not be limited to, engineering information,
hardware, software, drawings, models, samples, tools, technical
specifications, or documentation, in whatever form recorded or
orally provided. The Receiving Party shall hold the INFORMATION in
confidence during the term of this Agreement or until such time as
the INFORMATION has been made publicly available without a breach
of this Agreement, or any other agreement or the Disclosing Party
requests return thereof. The Receiving Party shall use such
INFORMATION only for the purpose of performing this Agreement, and
in support of the services provided hereunder, shall reproduce such
INFORMATION only to the extent necessary for such purpose, shall
restrict disclosure of such INFORMATION to its employees with a
need to know (and inform such employees of the obligations assumed
herein), and shall not disclose such INFORMATION to any third party
without prior written approval of the other party. The Receiving
Party shall apply a standard of care to preserve the
confidentiality of the INFORMATION which is no less rigorous than
that which it applies to protect the confidential nature of its own
confidential material.
10. Export Control
Each party hereby assures the other that it does not intend to
and will not knowingly, without the prior written consent, if
required, of the Office of Export Administration of the U.S.
Department of Commerce, Washington, DC 20230, transmit directly or
indirectly: (a) any INFORMATION received hereunder; or (b) any
immediate product (including processes and services) produced
directly by the use of such INFORMATION; or (c) any commodity
produced by such immediate product if the immediate product of such
INFORMATION is a plant capable of producing a commodity or is a
major component of such plant; to Afghanistan, the People's
Republic of China or any Group Q, S, W, Y or Z country specified in
Supplement No. 1 to Section 770 of the Export Administration
<PAGE>
Regulations issued by the U.S. Department of Commerce. Each Party
agrees that all of its obligations undertaken in Articles 10 and 11
herein as a Party receiving INFORMATION shall survive and continue
after termination of this Agreement.
11. Government Approvals
All undertakings and obligations assumed herein by either
party are subject to all necessary governmental licenses and
approvals.
12. Letter of Agency
When circumstances so require, COMSAT agrees to appoint SPRINT
as its agent with provisions typically authorized as shown in the
example letter of Agency attached hereto and incorporated herein as
Exhibit A.
13. Special Access Surcharge
Where applicable, COMSAT will certify that any special access
lines terminate in a device not capable of interconnecting SPRINT's
service with the local exchange network and thus are surcharge
exempt from the special access surcharge. The form shown in
Exhibit B is an example of the means to be used for such
certification.
14. Additional Services
Should COMSAT elect to subscribe to other SPRINT Services that
are not covered by this Agreement, SPRINT and COMSAT agree to
incorporate into this Agreement such other SPRINT Services at
similar discount structures based on aggregate usage of SPRINT
Services.
15. Technical Descriptions and Performance Definitions
For each and any particular service contemplated and/or
implemented hereunder, SPRINT and COMSAT agree that prior to
installation or commencement of said service, technical discussions
will be held by appropriate representatives of SPRINT and COMSAT.
These discussions will entail, at a minimum, definition of
specifications of the interconnections, transmission performance
and standards, signaling standards, billing arrangements, traffic
routing, and any other operational characteristics and technical
items requiring clarification. Technical performance standards
criteria which must be met will be cited for each service. Results
of these discussions shall be confirmed in writing and summarized
as technical attachments hereto in a Technical Annex for each
service described herein, or any future services which may be added
to this Agreement. Should COMSAT and SPRINT fail to reach timely
agreement on the technical issues as described above pertaining to
any service contemplated under this Agreement, COMSAT may decline
<PAGE>
to take up such service, and COMSAT may seek such service form
other suppliers without penalty or claim of violation of any
provision of this Agreement. Agreement to the contents of each
Technical Annex for each service described must be reached in
accordance with the above in order for COMSAT to be eligible for
the discounts for that respective service.
16. Notices
Any notices required or permitted to be given pursuant to this
Agreement shall be considered properly given when sent via
registered courier, telex, or fax to the following addresses,
respectively, or to such other addresses as the Party concerned may
hereafter designate in writing.
To COMSAT: COMSAT Mobile Communications
22300 Comsat Drive
Clarksburg, Maryland 20871
Attention: Director, Contracts
To SPRINT: SPRINT
12490 Sunrise Valley Drive
Reston, Virginia 22096
Attention: General Counsel
17. Governing Law
This Agreement shall be governed by and construed according to
the laws of Maryland, United States of America.
18. Equal Treatment
COMSAT agrees to exchange services with SPRINT on terms and
conditions substantially similar to those given other carriers
providing substantially equivalent service. SPRINT agrees to
exchange services with COMSAT on terms and conditions substantially
similar to those given other carriers providing substantially
similar mobile services.
19. Severability
If any term or provision of this Agreement shall be found to
be illegal or unenforceable, then such term or provision shall be
deemed stricken, and the remainder of this Agreement shall continue
in full force and effect.
<PAGE>
20. Waiver
No term or provision hereof shall be deemed waived by either
Party unless such waiver shall be in writing and signed by that
Party.
21. Amendment
Any amendments, attachments, or orders to or stemming from
this Agreement shall be in writing and shall be executed by
authorized representatives of the Parties hereto.
22. Entire Agreement
This Agreement and the attachments hereto constitute the
complete and entire understanding of the Parties with respect to
the subject matter hereof, superseding all prior oral and written
negotiations, representations and agreement.
IN WITNESS WHEREOF, the Parties hereto have caused this
Agreement to be executed as of the day and year first shown above.
COMSAT Corporation
SPRINT International COMSAT Mobile Communication
/s/J. Allen /s/Chris J. Leber
By:_____________________________ By:__________________________
J. Allen Chris J. Leber
Name:___________________________ Name:________________________
Assistant Vice President V.P. & G.M. Operations
Title:__________________________ Title:_______________________
Dec. 10, 1993 12-10-93
Date:___________________________ Date:________________________
<PAGE>
Exhibit A
COMSAT Mobile Communications
22300 COMSAT Drive
Clarksburg, MD 20871
Telephone 301 428 4000
Fax 301 428 7747
Telex 197800
LETTER OF AGENCY
Dear Sir:
COMSAT Mobile Communications of Communications Satellite
Corporation (COMSAT), hereby appoints Sprint International on
behalf of Sprint Communications Company, L.P. or any of its
affiliated companies; as agent (Agent) to order changes in, or
maintenance on, specific telecommunications service you provide to
the undersigned, including, without limitation, removing, adding
to, or rearranging such telecommunications service.
This specific service is to provide interconnection between Agent's
facilities and COMSAT facilities.
You are hereby released from any and all liability for making
pertinent information available to the Agent and for following the
Agent's instructions with reference to any additions changes to, or
maintenance on, the undersign's telecommunications service.
You may deal directly with the Agent on all matters pertaining to
said telecommunications service and should follow its instructions
with reference thereto. This authorization will remain in effect
until otherwise notified.
Sincerely,
<PAGE>
EXHIBIT B
SURCHAGE EXEMPTION FORM
I certify that my special access lines, circuit numbers
______________________________________
______________________________________
provided by SPRINT,
a) terminate in a device not capable of interconnecting*
SPRINT service with the local exchange network, or
b) are associated with Switched Access Service that is
subject to Carrier Common Line Charges (applies to
Foreign Exchange (FX) open ends), or
c) the private line facility is used for Telex service or
radio or television program transmissions.
* "Not capable of interconnecting" or "leaking" has been
interpreted by the FCC to mean "prevented from
interconnecting special access lines with the local
exchange lines due to either hardware or software
restrictions."
Sincerely,
______________________________________
COMPANY NAME
______________________________________
CUSTOMER ACCOUNT ID
______________________________________
SIGNATURE
______________________________________
TITLE
______________________________________
DATE
<PAGE>
ANNEX I
MOBILE SATELLITE TELEPHONE SERVICE
1. Provision of Service
COMSAT and SPRINT agree to interconnect OMSAT's facilities and
SPRINT's terrestrial network, and agree to provide
telecommunications services between the various
Inmarsat-system regions and points throughout the world served
by SPRINT. COMSAT an SPRINT shall cooperate to make
arrangements with foreign telecommunications administrations
to originate such services at international points. Mobile
satellite telephony service shall be accorded equal priority
with SPRINT's other telephony services for purposes of
maintenance and access to SPRINT's network.
2. Services to be Provided
DIRECTORY ASSISTANCE. All mobile directory assistance such as
mobile station listing, locations, etc., will be provided by
COMSAT's mobile operators. SPRINT will direct its customers
requiring mobile station listings to call the COMSAT Directory
Assistance number: 1 (800) 826-8680.
CONFERENCE CALLS. Conference calls will be permitted in both
the shore-to-ship and ship-to-shore directions.
PERSON/STATION. Person and station calls will be permitted in
both directions for maritime and international and mobile
satellite service. Only station calls will be permitted for
aeronautical satellite telephone service.
CREDIT CARD AND CALLING CARD. SPRINT calling cards will be
accepted on calls from the United States to mobile earth
stations. Recognized SPRINT and foreign telecommunications
authorities' credit cards will be accepted by COMSAT for
mobile originated calls to U.S. or overseas termination
points, providing that systems needed to perform such
acceptance are in place. If, in the ship-to-shore usage,
there is evidence of fraud, alleged misuse, or substantial
uncollectibles, COMSAT and SPRINT shall cooperate to
investigate the nature and extent of the incident, and if no
reconciliation of the problem can be found, COMSAT and SPRINT
will share in an equitable and fair manner the losses
incurred. In the event fraud levels prevent either party from
providing a profitable calling card or credit card service,
either Party may, pursuant to Article 16 of this Agreement
"Notices", discontinue said service. Any call carried by
COMSAT which is billed to a SPRINT Foncard shall be routed to
SPRINT's network.
<PAGE>
THIRD NUMBER. Third number calls will be permitted in the
shore-to-ship direction only, at SPRINT's discretion with the
understanding that SPRINT will accept liability for the
charge. Third number calls will not be permitted in the
ship-to-shore direction.
PUBLIC AND SEMI-PUBLIC COIN TELEPHONES. Collect calls and
credit card calls will be permitted from a coin telephone.
Collect calls will not be permitted to a coin telephone. If
a collect call is inadvertently placed to a coin telephone,
resulting in an uncollectible charge for the call, COMSAT and
SPRINT shall cooperate to investigate the nature an extent of
the incident, and if no reconciliation of the problem can be
found, COMSAT and SPRINT will agree to negotiate proportional
share in an equitable and fair restitution process for losses
which might be incurred.
COLLECT CALLS. Collect calls will be permitted in both
directions between mobile stations and the 50 states and U.S.
possessions and territories, where applicable, except to coin
telephones. Collect calls will also be permitted to U.S.
offshore and overseas points, providing an agreement has been
reached with the respective overseas administration.
OTHER SERVICES. It is understood that from time to time
COMSAT and/or SPRINT may wish to introduce new or enhanced
services. Such introduction of new services shall be
accommodated by each party by mutual agreement. Other
services can include such services as the provision of private
leased lines to and/or from COMSAT's land earth stations, such
lines provided by SPRINT to SPRINT customers, or to COMSAT
subject to mutual agreement between the parties.
3. Service Structure
(a) SPRINT will tariff fixed-to-mobile service for Inmarsat
traffic originating in its network, and COMSAT will
concur in SPRINT's tariff.
(b) COMSAT will continue to tariff its mobile-to-fixed
service for Inmarsat traffic originating in its network,
and SPRINT will concur in COMSAT's tariff.
(c) SPRINT shall deliver originated traffic destined for
termination through the Inmarsat system to United States
land earth stations, as required by FCC regulatory
policy.
(d) SPRINT will recognize and accept COMSAT's requirement to
maintain its identity with customers which express a
preference for COMSAT's high quality ground station
services.
(e) The interconnecting circuits to be used in providing the
services covered by this Annex shall be direct circuits
between COMSAT's Mobile Satellite Switching Centers
(MSSC) and SPRINT's International Switching Centers
(ISC). Each party shall provide and maintain, at its own
expense, the circuits located on its side of the point of
interconnection at COMSAT's MSSC. Each party shall
inform the other party, as soon as possible of any
facility failure in its network that is expected to cause
protracted interruption of service and the party
experiencing the failures shall take reasonable actions
to implement restoration procedures.
<PAGE>
4. Exchange of Traffic
(a) COMSAT and SPRINT agree to route designated traffic in
accordance with the customer's instructions, including
the following:
(i) fixed-to-mobile routed to COMSAT: all foreign
originating (transit) traffic for which a Foreign
Administration has requested to have its traffic
routed to COMSAT, and all other traffic for which a
customer has indicated a preference for COMSAT.
(ii) mobile-to-fixed routed to SPRINT: all traffic for
which the customer has designated SPRINT as the
terminating carrier through COMSAT's carrier
selection program, whether by presubscription or
direct-dialed selection, SPRINT specific services
(SPRINT calling card, country direct, or calls
requested to be routed through SPRINT), or other
means.
(b) COMSAT and SPRINT agree to route undesignated traffic as
follows:
(i) fixed-to-mobile routed to COMSAT: SPRINT agrees to
meet with COMSAT each year to establish a mutually
agreed upon traffic forecast for the following
calendar year. SPRINT shall use its reasonable
best efforts to deliver to COMSAT fixed-to-mobile
traffic consistent with the mutually agreed upon
traffic forecasts.
(ii) mobile-to-fixed routed to SPRINT: COMSAT shall
transmit to SPRINT traffic originating at mobile
earth stations and designated for delivery by
SPRINT.
o Mobile originated traffic destined for
domestic or international points, for which no
routing has been dsignated by the originating
caller, shall be allocated to SPRINT on a
proportionate return basis.
o COMSAT shall compute the proportion based upon
traffic recorded through COMSAT's switch.
o For the initial twelve (12) month period of
service, SPRINT's proportion of undesignated
traffic will be ten (10) percent. COMSAT will
recompute SPRINT's proportion of undesignated
traffic transmitted beginning day one of month
thirteen (13) based upon traffic data captured
during the initial period. Such recomputation
shall not adjust for any shortfall between the
percentage of traffic delivered by SPRINT
during the initial twelve (12) month period
and the percentage to which the ten percent
minimum guaranteed return would ordinarily
correspond if the return traffic was based
upon proportionate return during the initial
twelve (12) month period. Thereafter, COMSAT
will calculate SPRINT's proportion in
accordance with Paragraph 4(b)(iii).
<PAGE>
(iii) Proportionate Return Procedures
o To implement the proportionate return
agreement, the parties agree that a "data
capture period" shall be established, for the
calculation of proportionate return
percentages to be applied to total ship-shore
minutes. The proportionate return percentages
will be calculated based on the total
shore-ship minutes as recorded through
COMSAT's switch and as reported in the monthly
statements of account for that period. The
first "data capture period" hereunder will be
the first quarter subsequent to the signing of
this agreement. Each subsequent quarter will
represent a new "data capture period".
o The proportionate return percentages developed
during the "data capture period" shall be used
to return traffic for the "designated return
period". The first "designated return period"
hereunder will commence three (3) months after
the data capture period.
o The "designated return period" will be
separate from the "data capture period" by
three (3) calendar months to allow for
"collection and confirmation" of the traffic
data and the calculation of market shares and
return traffic requirements using the
proportionate return principle as defined in
this agreement. The time periods are
Data Capture Period Collection Designated
(Settlement Months) & Confirmation Return Period
___________________ ______________ _____________
Three (3) months Three (3) Months Three (3) Months
o Prior to each "designated return period",
COMSAT will inform the U.S. Carriers of the
return percentage it has calculated for each
new "data capture period" to be sent during
the designated return period".
o At the end of each "designated return period"
COMSAT shall inform the carriers of any
deviations in the actual minutes returned as
compared to the proportionate return owed and
the reasons therefore.
(c) QUARTERLY reviews will be conducted to discuss the items
in (b)(iii) above as well as the following items to
compare actual traffic data against the forecast:
o Adjustments will be made in the proportion to be
returned for the following quarter if necessary,
except during the initial twelve (12) month service
period as specified in Paragraph 4(b)(ii) above.
o Traffic levels quarterly for the previous period
for all traffic will be reviewed to determine if
revised volume discounts are applicable.
<PAGE>
o Updated forecasts for the new year will be
exchanged during the last month of each year to
compare actual traffic data against the forecast,
except after year one owing to the two year nature
of the initial base forecast
5. Rates
Rates for services provided hereunder are set forth in
Attachments 1 and 2 hereto.
6. Payment Accounting and Settlement
(a) Monthly Accounts
(i) For sent paid calls, each party shall be
responsible for the billing and collection of
charges to its respective subscribers.
(ii) Each party shall render to the other a monthly
statement of the minutes carried, at accounting
rates in U.S. currency, for services rendered
during the month to which the account relates
showing the portion of revenues due to the other
party. Such accounts shall be forwarded to the
other party promptly after the calendar month to
which the account relates but in no event later
than the end of the second calendar month following
the month to which the account relates. The
monthly statements shall include accounting
information received through international
accounts.
(iii) No allowances shall be made in the accounts for
uncollectible amounts. However, each party will
have the right to make adjustments as may be proper
with respect to periods when transmission is
defective or when fraud has been established in
accordance with Paragraph 2 above. A party may
deduct such credits from the monthly accounts
submitted to the other party, provided that such
deductions are made before the monthly account
involved is forwarded to the other party.
(iv) An account shall be deemed to have been accepted by
the party to whom it is rendered if that party does
not object in writing thereto before the end of the
calendar month in which the account is transmitted
by the party rendering it. Objections shall be
transmitted in writing to the party which rendered
the account promptly after receipt of the account.
Agreed adjustments shall be included in the next
monthly account.
<PAGE>
(b) Establishment of Balance - Payment of Account
The sum due each month form one party to the other as
covered by the rendered accounts shall be reduced to a
net balance by each party. Net balances due from one
party to the other shall be paid monthly by the debtor
party to the creditor party in United States currency.
Payment will be made promptly, but in no event later than
six (6) weeks after each monthly account is received from
the creditor party. The payment of a balance due on an
account shall not be delayed pending agreement to the
adjustment of disputed items of that account.
(c) Transit Traffic
If the call is chargeable at the international point,
SPRINT shall be entitled to its rate agree with the
originating Administration for service via the U.S. to
CVOMSAT's facilities, plus its terrestrial
interconnection fees, and COMSAT shall be entitled to an
amount determined in accordance with the agreed rate to
the originating Administration.
<PAGE>
Attachment 1 to Annex 1
COMSAT Mobile Communications
PRICE SCHEDULE FOR FIXED-MOBILE INMARSAT SERVICES
STANDARD-A TELEPHONE
TRAFFIC VOLUME STANDARD-A
PRESENTED TO TRAFFIC
COMSAT ANNUALLY PRICE PER MINUTE
(A,M,B, AERO)
(minutes)
0 to 500,000 $8.00
500,000 to 3,500,000 $7.25
Over 3,500,000 $7.20
GROWTH INCENTIVE SCHEDULE
CUMULATIVE INCREMENTAL
TRAFFIC GROWTH OVER
INITIAL BASE FORECAST STANDARD-A TRAFFIC
(percent) PRICE PER MINUTE
20% to 30% $7.15
30% to 50% $7.10
50% to 70% $7.05
Greater than 70% $6.95
DIGITAL SERVICES
SERVICE PRICE PER MINUTE
STANDARD-M $4.95
STANDARD-B $6.45
AERONAUTICAL $7.40
TERMS AND CONDITIONS FOR GROWTH INCENTIVE SCHEDULE
1. Eligibility for discounts under the Growth Incentive Schedule
will be based upon Sprint's performance in a particular
quarter as compared to the annualized base forecast. COMSAT
will utilize Sprint's initial base forecast over a two year
period in its evaluations.
2. Incentive discounts will be available in accordance with the
schedule for readjusting proportional return percentages as
explained in Paragraph 4(b)(iii) of Annex 1. COMSAT will
endeavor to adjust any applicable discount level in a more
expeditious manner should such action prove feasible.
<PAGE>
Attachment 2 to Annex 1
Sprint International's
PRICE SCHEDULE FOR
MOBILE-FIXED
TERMINATION RATES
for
COMSAT Mobile Communications'
INMARSAT SERVICES
STANDARD-A TELEPHONE
REGION Price Per Minute(1)
North America
North American Dialing Plan $0.35
(Plus 809 Countries)
Region 1
Western Europe, Japan $1.13
Central and South America
Region 2
Pacific Rim and Asia $1.67
(Excluding Japan)
Region 3
Remainder of Countries $1.62
World-wide
1 Volume discounts are applicable to per-minute rates per TABLE
below.
VOLUME DISCOUNT TABLE
Monthly Volume North American International
of Service ($) Region Regions (1,2, & 3)
0 to 9,999 0 0
10,000 to 17,999 8% 2%
18,000 to 24,999 9% 3%
25,000 to 39,999 10% 4%
40,000 to 49,999 11% 5%
50,000 to 74,999 12% 6%
Over 75,000 13% 7%
<PAGE>
EXHIBIT 10(gg)
<PAGE>
CREDIT AGREEMENT
Dated as of December 17, 1993
Among
COMSAT CORPORATION
as Borrower
and
THE BANKS NAMED HEREIN
as Banks
and
NATIONSBANK OF NORTH CAROLINA, N.A.
as Agent
<PAGE>
CREDIT AGREEMENT
Dated as of December 17, 1993
COMSAT Corporation, a District of Columbia corporation
(the "Borrower"), the banks (the "Banks") listed on the signature
pages hereof, and NationsBank of North Carolina, N.A.
("NationsBank"), as agent (the "Agent") for the Lenders (as
hereinafter defined) hereunder, agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. Certain Defined Terms. As used in this
Agreement, the following terms shall have the following meanings
(such meanings to be equally applicable to both the singular and
plural forms of the terms defined):
"A Advance" means an advance by a Lender to the
Borrower as part of an A Borrowing and refers to a Base Rate
Advance or a Eurodollar Rate Advance, each of which shall be
a "Type" of A Advance.
"A Borrowing" means a borrowing consisting of
simultaneous A Advances of the same Type made by each of the
Lenders pursuant to Section 2.01.
"A Note" means a promissory note of the Borrower
payable to the order of any Lender, in substantially the
form of Exhibit A-1 hereto, evidencing the aggregate
indebtedness of the Borrower to such Lender resulting from
the A Advances made by such Lender.
"Advance" means an A Advance, a B Advance or a
Swingline Advance.
"Affiliate" means, as to any Person, any other Person
that, directly or indirectly, controls, is controlled by or
is under common control with such Person or is a director or
executive officer of such Person.
"Applicable Fee Percentage" shall mean on any date,
with respect to the Facility Fees, the applicable percentage
set forth below based upon the ratings applicable on such
date to any senior unsecured debt of the Borrower then
outstanding:
<PAGE>
Facility Fee
Percentage
------------
Category 1
----------
AA- or higher by S&P .125%
and Aa3 or higher
by Moody's
Category 2
----------
A+ by S&P and .125%
A1 by Moody's
Category 3
----------
A by S&P and A2 .125%
by Moody's
Category 4
----------
A- by S&P and .125%
A3 by Moody's
Category 5
----------
BBB+ by S&P and .15%
Baa1 by Moody's
Category 6
----------
BBB by S&P and .1875%
Baa2 by Moody's
Category 7
----------
BBB- by S&P and .25%
Baa3 by Moody's
Category 8
----------
BB+ or lower by .375%
S&P and Ba1 or lower
by Moody's
For purposes of the foregoing, (i) if no rating for any
senior unsecured debt of the Borrower shall be available
from either Moody's or S&P, such rating agency shall be
deemed to have established a rating for the senior unsecured
debt of the Borrower in Category 8, (ii) if the ratings
established or deemed to have been established by Moody's
and S&P shall fall within different Categories, the
Applicable Fee Percentage shall be based upon the inferior
(or numerically highest) Category and (iii) if any rating
<PAGE>
established or deemed to have been established by Moody's or
S&P shall be changed (other than as a result of a change in
the rating system of either Moody's or S&P), such change
shall be effective as of the date on which such change is
first announced by the rating agency making such change.
Each such change shall apply to all Facility Fees thataccrue
at any time during the period commencing on the effective
date of such change and ending on the date immediately
preceding the effective date of the next such change. If
the rating system of either Moody's or S&P shall change
prior to the Termination Date, the Borrower and the Lenders
shall negotiate in good faith to amend the references to
specific ratings in this definition to reflect such changed
rating system.
"Applicable Lending Office" means, with respect to each
Lender, such Lender's Domestic Lending Office in the case of
a Base Rate Advance and such Lender's Eurodollar Lending
Office in the case of a Eurodollar Rate Advance and, in the
case of a B Advance, the office of such Lender notified by
such Lender to the Agent as its Applicable Lending Office
with respect to such B Advance.
"Applicable Margin" shall mean on any date, with
respect to A Advances which are Eurodollar Rate Advances,
the applicable spread set forth below based upon the ratings
applicable on such date to any senior unsecured debt of the
Borrower then outstanding:
Eurodollar Rate
Advance Spread
---------------
Category 1
----------
AA- or higher by S&P .25%
and Aa3 or higher
by Moody's
Category 2
----------
A+ by S&P and .275%
A1 by Moody's
Category 3
----------
A by S&P and A2 .275%
by Moody's
Category 4
----------
A- by S&P and .275%
A3 by Moody's
<PAGE>
Category 5
----------
BBB+ by S&P and .30%
Baa1 by Moody's
Category 6
----------
BBB by S&P and .3125%
Baa2 by Moody's
Category 7
----------
BBB- by S&P and .375%
Baa3 by Moody's
Category 8
----------
BB+ or lower by .50%
S&P and Ba1 or lower
by Moody's
For purposes of the foregoing, (i) if no rating for any
senior unsecured debt of the Borrower shall be available
from either Moody's or S&P, such rating agency shall be
deemed to have established a rating for the senior unsecured
debt of the Borrower in Category 8, (ii) if the ratings
established or deemed to have been established by Moody's
and S&P shall fall within different Categories, the
Applicable Margin applicable to any A Advance which is a
Eurodollar Rate Advance shall be based upon the inferior (or
numerically highest) Category and (iii) if any rating
established or deemed to have been established by Moody's or
S&P shall be changed (other than as a result of a change in
the rating system of either Moody's or S&P), such change
shall be effective as of the date on which such change is
first announced by the rating agency making such change.
Each such change shall apply to all A Advances which are
Eurodollar Rate Advances that are outstanding at any time
during the period commencing on the effective date of such
change and ending on the date immediately preceding the
effective date of the next such change. If the rating
system of either Moody's or S&P shall change prior to the
Termination Date, the Borrower and the Lenders shall
negotiate in good faith to amend the references to specific
ratings in this definition to reflect such changed rating
system.
"Assignment and Acceptance" means an assignment and
acceptance agreement entered into by a Lender and an
Eligible Assignee, and accepted by the Agent, in
substantially the form of Exhibit C hereto.
<PAGE>
"B Advance" means an advance by a Lender to the
Borrower as part of a B Borrowing resulting from the auction
bidding procedure described in Section 2.03.
"B Borrowing" means a borrowing consisting of
simultaneous B Advances from each of the Lenders whose offer
to make one or more B Advances as part of such borrowing has
been accepted by the Borrower under the auction bidding
procedure described in Section 2.03.
"B Note" means a promissory note of the Borrower
payable to the order of any Lender, in substantially the
form of Exhibit A-2 hereto, evidencing the indebtedness of
the Borrower to such Lender resulting from a B Advance made
by such Lender.
"B Reduction" has the meaning specified in Section
2.01.
"Base Rate" means a fluctuating interest rate per annum
equal at all times to the higher of:
(a) the rate of interest announced publicly by
NationsBank of North Carolina, N.A. in Charlotte, North
Carolina, from time to time, as NationsBank of North
Carolina, N.A.'s prime rate; or
(b) for any day 1/2 of one percent per annum
above the weighted average of the rates on overnight
Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as
published for such day (or, if such day is not a
Business Day, for the next preceding Business Day) by
the Federal Reserve Bank of New York, or, if such rate
is not so published for any day which is a Business
Day, the average of the quotations for such day on such
transactions received by NationsBank of North Carolina,
N.A. from three Federal funds brokers of recognized
standing selected by it.
"Base Rate Advance" means an A Advance which bears
interest as provided in Section 2.07(a).
"Borrowing" means an A Borrowing or a B Borrowing.
"Business Day" means a day of the year on which banks
are not required or authorized to close in New York City
and, if the applicable Business Day relates to any
Eurodollar Rate Advances, on which dealings are carried on
in the London interbank market.
"Closing Date" means the date on which the conditions
set forth in Section 3.01 applicable to the making of the
initial Advances under this Agreement have been fulfilled.
<PAGE>
"Commitment" has the meaning specified in Section 2.01.
"Commitment Percentage" means, with respect to each
Lender, the percentage that such Lender's Commitment
constitutes of the aggregate amount of the Commitments.
"Convert", "Conversion" and "Converted" each refers to
a conversion of Advances of one Type into Advances of
another Type pursuant to Section 2.09 or 2.10.
"Debt" means (i) indebtedness for borrowed money,
however evidenced, including obligations under letters of
credit, (ii) obligations to pay the deferred purchase price
of property or services (other than trade indebtedness
incurred in the ordinary course of business), (iii)
obligations as lessee under leases recorded as capital
leases in accordance with generally accepted accounting
principles, and (iv) obligations under direct or indirect
guaranties in respect of, and obligations (contingent or
otherwise) to assure a creditor against loss in respect of,
indebtedness or obligations of others of the kinds referred
to in clauses (i) through (iii) above.
"Domestic Lending Office" means, with respect to any
Lender, the office of such Lender specified as its "Domestic
Lending Office" opposite its name on Schedule I hereto or in
the Assignment and Acceptance pursuant to which it became a
Lender, or such other office of such Lender as such Lender
may from time to time specify to the Borrower and the Agent.
"Eligible Assignee" means (i) a commercial bank
organized or licensed to operate under the laws of the
United States, or any State thereof, and having a combined
capital and surplus of at least $50,000,000, or (ii) a
commercial bank organized under the laws of any other
country which is a member of the Organization for Economic
Cooperation and Development or has concluded special lending
arrangements with the International Monetary Fund associated
with its General Arrangements to Borrow and having a
combined capital and surplus of at least $50,000,000,
provided that such bank is acting through a branch or agency
located in the United States.
"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended from time to time, and the
regulations promulgated and rulings issued thereunder.
"ERISA Affiliate" of any Person means any other Person
that for purposes of Title IV of ERISA is a member of such
Person's controlled group, or under common control with such
Person, within the meaning of Section 414 of the Internal
Revenue Code of 1986, as amended, and the regulations
promulgated and rulings issued thereunder.
<PAGE>
"ERISA Event" means (a) a reportable event, within the
meaning of Section 4043 of ERISA, unless the 30-day notice
requirement with respect thereto has been waived by the
Pension Benefit Guaranty Corporation; (b) the provision by
the administrator of any Plan of a notice of intent to
terminate such Plan, pursuant to Section 4041(a)(2) of ERISA
(including any such notice with respect to a plan amendment
referred to in Section 4041(e) of ERISA; (c) the cessation
of operations at a facility in the circumstances described
in Section 4068(f) of ERISA; (d) the withdrawal by the
Borrower or any of its ERISA Affiliates from a Multiple
Employer Plan during a plan year for which is was a
substantial employer, as defined in Section 4001(a)(2) of
ERISA; (e) the failure by the Borrower or any of its ERISA
Affiliates to make a payment to a plan required under
Section 302(f)(1) of ERISA; (f) the adoption of an amendment
to a Plan requiring the provision of security to such Plan,
pursuant to Section 307 of ERISA; or (g) the institution by
the PBGC of proceedings to terminate a Plan, pursuant to
Section 4042 of ERISA, or the occurrence of any event or
condition that might constitute grounds under Section 4042
of ERISA for the termination of, or the appointment of a
trustee to administer, a Plan.
"Eurocurrency Liabilities" has the meaning assigned to
that term in Regulation D of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
"Eurodollar Lending Office" means, with respect to any
Lender, the office of such Lender specified as its
"Eurodollar Lending Office" opposite its name on Schedule I
hereto or in the Assignment and Acceptance pursuant to which
it became a Lender (or, if no such office is specified, its
Domestic Lending Office), or such other office of such
Lender as such Lender may from time to time specify to the
Borrower and the Agent.
"Eurodollar Rate" means, for the Interest Period for
each Eurodollar Rate Advance comprising part of the same A
Borrowing, an interest rate per annum equal to the average
(rounded upward to the nearest whole multiple of 1/16 of 1%
per annum, if such average is not such a multiple) of the
rate per annum at which deposits in U.S. dollars are offered
by the principal office of each of the Reference Banks in
London, England to prime banks in the London interbank
market at 11:00 A.M. (London time) two Business Days before
the first day of such Interest Period in an amount
substantially equal to such Reference Bank's Eurodollar Rate
Advance comprising part of such A Borrowing and for a period
equal to such Interest Period. The Eurodollar Rate for the
Interest Period for each Eurodollar Rate Advance comprising
part of the same A Borrowing shall be determined by the
Agent on the basis of applicable rates furnished to and
received by the Agent from the Reference Banks two Business
<PAGE>
Days before the first day of such Interest Period, subject,
however, to the provisions of Section 2.09.
"Eurodollar Rate Advance" means an A Advance which
bears interest as provided in Section 2.07(b).
"Eurodollar Rate Reserve Percentage" of any Lender for
the Interest Period for any Eurodollar Rate Advance means
the reserve percentage applicable during such Interest
Period (or if more than one such percentage shall be so
applicable, the daily average of such percentages for those
days in such Interest Period during which any such
percentage shall be so applicable) under regulations issued
from time to time by the Board of Governors of the Federal
Reserve System (or any successor) for determining the
maximum reserve requirement (including, without limitation,
any emergency, supplemental or other marginal reserve
requirement) for such Lender with respect to liabilities or
assets consisting of or including Eurocurrency Liabilities
having a term equal to such Interest Period.
"Events of Default" has the meaning specified in
Section 6.01.
"Extension Date" has the meaning specified in Section
2.17.
"Facility Fee" shall have the meaning assigned to such
term in Section 2.04(a).
"Federal Funds Rate" means, for any period, a
fluctuating interest rate per annum equal for each day
during such period to the weighted average of the rates on
overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers, as
published for such day (or, if such day is not a Business
Day, for the next preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not so
published for any day which is a Business Day, the average
of the quotations for such day on such transactions received
by the Agent from three Federal funds brokers of recognized
standing selected by it.
"Insufficiency" means, with respect to any Plan, the
amount, if any, of its unfunded benefit liabilities within
the meaning of Section 4001(a)(18) of ERISA.
"Interest Period" means, for each A Advance comprising
part of the same A Borrowing, the period commencing on the
date of such A Advance or the date of the Conversion of any
A Advance into such an A Advance and ending on the last day
of the period selected by the Borrower pursuant to the
provisions below and, thereafter, each subsequent period
commencing on the last day of the immediately preceding
Interest Period and ending on the last day of the period
<PAGE>
selected by the Borrower pursuant to the provisions below.
The duration of each such Interest Period shall be 1, 3 or 6
months in the case of a Eurodollar Rate Advance, in each
case as the Borrower may, upon notice received by the Agent
not later than 11:00 A.M. (New York City time) on the third
Business Day prior to the first day of such Interest Period,
select; provided, however, that:
(i) the duration of any Interest Period
which commences before the Termination Date and
otherwise ends after such date shall end on such date;
(ii) the duration of any Interest Period
which commences before an assignment pursuant to
Section 8.07 and otherwise ends after the date of such
assignment shall end on such date and all accrued and
unpaid interest shall be due and payable on such date;
(iii) Interest Periods commencing on the same
date for A Advances comprising part of the same A
Borrowing shall be of the same duration; and
(iv) whenever the last day of any Interest
Period would otherwise occur on a day other than a
Business Day, the last day of such Interest Period
shall be extended to occur on the next succeeding
Business Day, provided, in the case of any Interest
Period for a Eurodollar Rate Advance, that if such
extension would cause the last day of such Interest
Period to occur in the next following calendar month,
the last day of such Interest Period shall occur on the
next preceding Business Day.
"Lenders" means the Banks listed on the signature pages
hereof and each Eligible Assignee that shall become a party
hereto pursuant to Section 8.07.
"Majority Lenders" means at any time Lenders holding at
least 51% of the then aggregate unpaid principal amount of
the A Notes held by Lenders, or, if no such principal amount
is then outstanding, Lenders having at least 51% of the
Commitments (provided that, for purposes hereof, neither the
Borrower, nor any of its Affiliates, if a Lender, shall be
included in (i) the Lenders holding such amount of the A
Advances or having such amount of the Commitments or (ii)
determining the aggregate unpaid principal amount of the A
Advances or the total Commitments).
"Margin Regulations" means the margin stock regulations
issued by the Board of Governors of the Federal Reserve
System applicable to the Lenders and/or to the Borrower.
"Moody's" shall mean Moody's Investors Service, Inc.
<PAGE>
"Moody's Rating" means the rating assigned to the
Borrower's senior unsecured debt by Moody's Investors
Service, Inc.
"Multiemployer Plan" means a multiemployer plan, as
defined in Section 4001(a)(3) of ERISA, to which the
Borrower or any of its ERISA Affiliates is making or
accruing an obligation to make contributions, or has within
any of the preceding five plan years made or accrued an
obligation to make contributions, such plan being maintained
pursuant to one or more collective bargaining agreements.
"Multiple Employer Plan" means a single employer plan,
as defined in Section 4001(a)(15) of ERISA, that (a) is
maintained for employees of the Borrower or any of its ERISA
Affiliates and at least one Person other than the Borrower
and its ERISA Affiliates or (b) was so maintained and in
respect of which the Borrower or any of its ERISA Affiliates
could have liability under Section 4064 or 4069 of ERISA in
the event such plan has been or were to be terminated.
"Note" means an A Note, a B Note or the promissory note
executed by the Borrower in favor of the Swingline Lender to
evidence the Swingline Advances.
"Notice of an A Borrowing" has the meaning specified in
Section 2.02(a).
"Notice of a B Borrowing" has the meaning specified in
Section 2.03(a).
"Person" means an individual, partnership, corporation
(including a business trust), joint stock company, trust,
unincorporated association, joint venture or other entity,
or a government or any political subdivision or agency
thereof.
"Plan" means a Single Employer Plan or a Multiple
Employer Plan.
"Rating Event" means any of the following: (i) the
Borrower's senior unsecured debt is rated by both S&P and
Moody's and the Standard & Poor's Rating is lower than or
equal to BBB+ or the Moody's Rating is lower than or equal
to Baa1 or (ii) the Borrower's senior unsecured debt is
rated by only one of S&P or Moody's and the Standard &
Poor's Rating is lower than or equal to BBB+ or the Moody's
Rating is lower than or equal to Baa1, as the case may be,
or (iii) the Borrower's senior unsecured debt is not rated
by either S&P or Moody's.
<PAGE>
"Reference Banks" means NationsBank of North Carolina,
N.A., Bank of America National Trust and Savings
Association, The First National Bank of Chicago and The
Chase Manhattan Bank, N.A.
"Register" has the meaning specified in Section
8.07(c).
"S&P" shall mean Standard and Poor's Corporation.
"Single Employer Plan" means a single employer plan, as
defined in Section 4001(a)(15) of ERISA, that (a) is
maintained for employees of the Borrower or any of its ERISA
Affiliates and no Person other than the Borrower and its
ERISA Affiliates or (b) was so maintained and in respect of
which the Borrower or any of its ERISA Affiliates could have
liability under Section 4069 of ERISA in the event such plan
has been or were to be terminated.
"Standard & Poor's Rating" means the rating assigned to
the Borrower's senior unsecured debt by Standard & Poor's
Corporation.
"Swingline Advances" shall have the meaning given to
such term in Section 2.18 hereof.
"Swingline Lender" shall mean NationsBank.
"Swingline Reduction" has the meaning specified in
Section 2.01.
"Termination Date" means (i) December 17, 1998 or such
later date determined in accordance with the provisions of
Section 2.17, provided, however, that the Termination Date
shall not be in any event later than December 17, 2000 or
(ii) the earlier date of termination in whole of the
Commitments pursuant to Section 2.05 or 6.01.
"Type" means, with respect to any Advance, a Base Rate
Advance or a Eurodollar Rate Advance.
"Withdrawal Liability" has the meaning assigned to such
term under Part 1 of Subtitle E or Part IV of ERISA.
SECTION 1.02. Computation of Time Periods. In this
Agreement in the computation of periods of time from a specified
date to a later specified date, the word "from" means "from and
including" and the words "to" and "until" each means "to but
excluding".
SECTION 1.03. Accounting Terms. All accounting terms
not specifically defined herein shall be construed in accordance
with generally accepted accounting principles consistent with
<PAGE>
those applied in the preparation of the financial statements
referred to in Section 4.01(e).
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
SECTION 2.01. The A Advances. Each Lender severally
agrees, on the terms and conditions hereinafter set forth, to
make A Advances to the Borrower from time to time on any Business
Day during the period from the date hereof until the Termination
Date in an aggregate amount not to exceed at any time outstanding
the amount set forth opposite such Lender's name on the signature
pages hereof or, if such Lender has entered into any Assignment
and Acceptance, set forth for such Lender in the Register
maintained by the Agent pursuant to Section 8.07(c), as such
amount may be reduced or increased pursuant to Section 2.05 (such
Lender's "Commitment"), provided that the aggregate amount of the
Commitments of the Lenders shall be deemed used from time to time
to the extent of the aggregate amount of the B Advances then
outstanding and such deemed use of the aggregate amount of the
Commitments shall be applied to the Lenders ratably according to
their respective Commitments (such deemed use of the aggregate
amount of the Commitments being a "B Reduction"), provided
further, that the aggregate amount of the Commitments of the
Lenders shall be deemed used from time to time to the extent of
the aggregate amount of the Swingline Advances then outstanding
and such deemed use of the aggregate amount of the Commitments
shall be applied to the Lenders ratably according to their
respective Commitments (such deemed use of the aggregate amount
of the Commitments being a "Swingline Reduction"). Each A
Borrowing shall be in an aggregate amount not less than
$10,000,000 or an integral multiple of $1,000,000 in excess
thereof and shall consist of A Advances of the same Type made on
the same day by the Lenders ratably according to their respective
Commitments. Within the limits of each Lender's Commitment, the
Borrower may from time to time borrow, prepay pursuant to Section
2.11(b) and reborrow from time to time under this Section 2.01.
SECTION 2.02. Making the A Advances. (a) Each A
Borrowing shall be made on notice, given not later than 11:00
A.M. (New York City time) on the third Business Day prior to the
date of the proposed A Borrowing, by the Borrower to the Agent,
which shall give to each Lender prompt notice thereof by
telecopier, telex or cable; provided, however, that in the event
such notice is with respect to a proposed Base Rate Advance, such
notice shall be given not later than 10:00 A.M. (New York City
time) on the Business Day of the proposed Base Rate Advance.
Each such notice of an A Borrowing (a "Notice of A Borrowing")
shall be by telecopier, telex or cable, confirmed immediately in
writing, in substantially the form of Exhibit B-1 hereto,
specifying therein the requested (i) date of such A Borrowing,
(ii) Type of A Advances comprising such A Borrowing, (iii)
aggregate amount of such A Borrowing, and (iv) in the case of an
<PAGE>
A Borrowing comprised of Eurodollar Rate Advances, initial
Interest Period for each such A Advance. Each Lender shall,
before 11:00 A.M. (New York City time) on the date of such A
Borrowing, make available for the account of its Applicable
Lending Office to the Agent at its address referred to in Section
8.02, in same day funds, such Lender's ratable portion of such A
Borrowing, provided, however, that upon any assignment pursuant
to Section 8.07, the assignee shall therewith make available to
the Agent, and the Borrower shall immediately reborrow upon the
same terms and conditions, the Advances of the assignor repaid in
connection with such assignment. After the Agent's receipt of
such funds and upon fulfillment of the applicable conditions set
forth in Article III, the Agent will make such same day funds
available to the Borrower at the Borrower's account maintained
with the Agent.
(b) Each Notice of A Borrowing shall be irrevocable
and binding on the Borrower. In the case of any A Borrowing
which the related Notice of A Borrowing specifies is to be
comprised of Eurodollar Rate Advances, the Borrower shall
indemnify each Lender against any loss, cost or reasonable
expense incurred by such Lender as a result of any failure to
fulfill on or before the date specified in such Notice of A
Borrowing for such A Borrowing the applicable conditions set
forth in Article III, including, without limitation, any loss
(other than the loss of anticipated profits), cost or reasonable
expense incurred by reason of the liquidation or reemployment of
deposits or other funds acquired by such Lender to fund the A
Advance to be made by such Lender as part of such A Borrowing
when such A Advance, as a result of such failure, is not made on
such date. The amount of such loss, cost or expense shall be
determined by such Lender and notified to the Borrower through
the Agent in the form of a certificate of such Lender stating
that the calculations set forth therein are in accordance with
the terms of this Agreement and setting forth in reasonable
detail the basis of such calculations, such certificate being
conclusive and binding for all purposes absent manifest error and
unless contested by the Borrower within 10 Business Days of its
receipt of such certificate, and the amount set forth therein
being payable in any event by the Borrower to such Lender on or
before the 10th Business Day following delivery of such
certificate to the Borrower.
(c) Unless the Agent shall have received notice from a
Lender prior to the date of any A Borrowing that such Lender will
not make available to the Agent such Lender's ratable portion of
such A Borrowing, the Agent may assume that such Lender has made
such portion available to the Agent on the date of such A
Borrowing in accordance with subsection (a) of this Section 2.02
and the Agent may, in reliance upon such assumption, make
available to the Borrower on such date a corresponding amount.
If and to the extent that such Lender shall not have so made such
ratable portion available to the Agent, such Lender and the
Borrower severally agree to repay to the Agent forthwith on
demand such corresponding amount together with interest thereon,
<PAGE>
for each day from the date such amount is made available to the
Borrower until the date such amount is repaid to the Agent, at
(i) in the case of the Borrower, the interest rate applicable at
the time to A Advances comprising such A Borrowing and (ii) in
the case of such Lender, the Federal Funds Rate. If such Lender
shall repay to the Agent such corresponding amount, such amount
so repaid shall constitute such Lender's A Advance as part of
such A Borrowing for purposes of this Agreement.
(d) The failure of any Lender to make the A Advance to
be made by it as part of any A Borrowing shall not relieve any
other Lender of its obligation, if any, hereunder to make its A
Advance on the date of such A Borrowing, but no Lender shall be
responsible for the failure of any other Lender to make the A
Advance to be made by such other Lender on the date of any A
Borrowing.
SECTION 2.03. The B Advances. (a) Each Lender
severally agrees that the Borrower may make B Borrowings under
this Section 2.03 from time to time on any Business Day during
the period from the date hereof until the date occurring 30 days
prior to the Termination Date in the manner set forth below;
provided that, following the making of each B Borrowing, the
aggregate amount of the Advances then outstanding shall not
exceed the aggregate amount of the Commitments of the Lenders
(computed without regard to any B Reduction).
(i) The Borrower may request a B Borrowing under
this Section 2.03 by delivering to the Agent, by telecopier,
telex or cable, confirmed immediately in writing, a notice
of a B Borrowing (a "Notice of B Borrowing"), in
substantially the form of Exhibit B-2 hereto, specifying the
date and aggregate amount of the proposed B Borrowing, the
maturity date for repayment of each B Advance to be made as
part of such B Borrowing (which maturity date may not be
earlier than the date occurring 10 days after the date of
such B Borrowing or later than the Termination Date), the
interest payment date or dates relating thereto, and any
other terms to be applicable to such B Borrowing, not later
than 10:00 A.M. (New York City time) (A) at least one
Business Day prior to the date of the proposed B Borrowing,
if the Borrower shall specify in the Notice of B Borrowing
that the rates of interest to be offered by the Lenders
shall be fixed rates per annum and (B) at least four
Business Days prior to the date of the proposed B Borrowing,
if the Borrower shall instead specify in the Notice of B
Borrowing the basis to be used by the Lenders in determining
the rates of interest to be offered by them. The Agent
shall in turn promptly notify each Lender of each request
for a B Borrowing received by it from the Borrower by
sending such Lender a copy of the related Notice of B
Borrowing.
(ii) Each Lender may, if, in its sole discretion,
it elects to do so, irrevocably offer to make one or more B
<PAGE>
Advances to the Borrower as part of such proposed B
Borrowing at a rate or rates of interest specified by such
Lender in its sole discretion, by notifying the Agent (which
shall give prompt notice thereof to the Borrower), before
10:00 A.M. (New York City time) (A) on the date of such
proposed B Borrowing, in the case of a Notice of B Borrowing
delivered pursuant to clause (A) of paragraph (i) above and
(B) three Business Days before the date of such proposed B
Borrowing, in the case of a Notice of B Borrowing delivered
pursuant to clause (B) of paragraph (i) above, of the
minimum amount and maximum amount of each B Advance which
such Lender would be willing to make as part of such
proposed B Borrowing (which amounts may, subject to the
proviso to the first sentence of this Section 2.03(a),
exceed such Lender's Commitment), the rate or rates of
interest therefor and such Lender's Applicable Lending
Office with respect to such B Advance; provided that if the
Agent in its capacity as a Lender shall, in its sole
discretion, elect to make any such offer, it shall notify
the Borrower of such offer before 9:00 A.M. (New York City
time) on the date on which notice of such election is to be
given to the Agent by the other Lenders. If any Lender
shall elect not to make such an offer, such Lender shall so
notify the Agent, before 10:00 A.M. (New York City time) on
the date on which notice of such election is to be given to
the Agent by the other Lenders, and such Lender shall not be
obligated to, and shall not, make any B Advance as part of
such B Borrowing; provided that the failure by any Lender to
give such notice shall not cause such Lender to be obligated
to make any B Advance as part of such proposed B Borrowing.
(iii) The Borrower shall, in turn, (A) before 11:00
A.M. (New York City time) on the date of such proposed B
Borrowing, in the case of a Notice of B Borrowing delivered
pursuant to clause (A) of paragraph (i) above and (B) before
1:00 P.M. (New York City time) three Business Days before
the date of such proposed B Borrowing, in the case of a
Notice of B Borrowing delivered pursuant to clause (B) of
paragraph (i) above, either
(x) cancel such B Borrowing by giving the Agent
notice to that effect, or
(y) accept one or more of the offers made by any
Lender or Lenders pursuant to paragraph (ii) above, in its
sole discretion, by giving notice to the Agent of the amount
of each B Advance (which amount shall be equal to or greater
than the minimum amount, and equal to or less than the
maximum amount, notified to the Borrower by the Agent on
behalf of such Lender for such B Advance pursuant to
paragraph (ii) above) to be made by each Lender as part of
such B Borrowing, and reject any remaining offers made by
Lenders pursuant to paragraph (ii) above by giving the Agent
notice to that effect.
<PAGE>
(iv) If the Borrower notifies the Agent that such
B Borrowing is cancelled pursuant to paragraph (iii)(x)
above, the Agent shall give prompt notice thereof to the
Lenders and such B Borrowing shall not be made.
(v) If the Borrower accepts one or more of the
offers made by any Lender or Lenders pursuant to paragraph
(iii)(y) above, the Agent shall in turn promptly notify (A)
each Lender that has made an offer as described in paragraph
(ii) above, of the date and aggregate amount of such B
Borrowing and whether or not any offer or offers made by
such Lender pursuant to paragraph (ii) above have been
accepted by the Borrower, (B) each Lender that is to make a
B Advance as part of such B Borrowing, of the amount of each
B Advance to be made by such Lender as part of such B
Borrowing, and (C) each Lender that is to make a B Advance
as part of such B Borrowing, upon receipt, that the Agent
has received forms of documents appearing to fulfill the
applicable conditions set forth in Article III. Each Lender
that is to make a B Advance as part of such B Borrowing
shall, before 12:00 noon (New York City time) on the date of
such B Borrowing specified in the notice received from the
Agent pursuant to clause (A) of the preceding sentence or
any later time when such Lender shall have received notice
from the Agent pursuant to clause (C) of the preceding
sentence, make available for the account of its Applicable
Lending Office to the Agent at its address referred to in
Section 8.02 such Lender's portion of such B Borrowing, in
same day funds. Upon fulfillment of the applicable
conditions set forth in Article III and after receipt by the
Agent of such funds, the Agent will make such funds
available to the Borrower at the Agent's aforesaid address.
Promptly after each B Borrowing the Agent will notify each
Lender of the amount of the B Borrowing, the consequent B
Reduction and the dates upon which such B Reduction
commenced and will terminate.
(b) Each B Borrowing shall be in an aggregate amount
not less than $10,000,000 or an integral multiple of $1,000,000
in excess thereof and, following the making of each B Borrowing,
the Borrower shall be in compliance with the limitation set forth
in the proviso to the first sentence of subsection (a) above.
(c) Within the limits and on the conditions set forth
in this Section 2.03, the Borrower may from time to time borrow
under this Section 2.03, repay or prepay pursuant to subsection
(d) below, and reborrow under this Section 2.03, provided that a
B Borrowing shall not be made within five Business Days of the
date of any other B Borrowing.
(d) The Borrower shall repay to the Agent for the
account of each Lender which has made a B Advance, or each
other holder of a B Note, on the maturity date of each B Advance
(such maturity date being that specified by the Borrower for
repayment of such B Advance in the related Notice of B Borrowing
<PAGE>
delivered pursuant to subsection (a)(i) above and provided in the
B Note evidencing such B Advance), the then unpaid principal
amount of such B Advance. The Borrower shall have no right to
prepay any principal amount of any B Advance unless, and then
only on the terms, specified by the Borrower for such B Advance
in the related Notice of B Borrowing delivered pursuant to
subsection (a)(i) above and set forth in the B Note evidencing
such B Advance.
(e) The Borrower shall pay interest on the unpaid
principal amount of each B Advance from the date of such B
Advance to the date the principal amount of such B Advance is
repaid in full, at the rate of interest for such B Advance
specified by the Lender making such B Advance in its notice with
respect thereto delivered pursuant to subsection (a)(ii) above,
payable on the interest payment date or dates specified by the
Borrower for such B Advance in the related Notice of B Borrowing
delivered pursuant to subsection (a)(i) above, as provided in the
B Note evidencing such B Advance.
(f) The indebtedness of the Borrower resulting from
each B Advance made to the Borrower as part of a B Borrowing
shall be evidenced by a separate B Note of the Borrower payable
to the order of the Lender making such B Advance.
SECTION 2.04. Fees. (a) Facility Fee. The
Borrower agrees to pay to the Agent, for the account of each
Lender, a facility fee (the "Facility Fee") from the date hereof
in the case of each Bank and from the effective date specified in
the Assignment and Acceptance pursuant to which it became a
Lender in the case of each other Lender until the Termination
Date, payable on the first day of each March, June, September and
December during the term of such Lender's Commitment, commencing
March 1, 1994, and on the Termination Date, in an amount equal to
the Applicable Fee Percentage multiplied by the daily average
Commitment (whether used or unused) of such Lender.
(b) Agent's Fees. The Borrower shall pay to the Agent
for its own account such fees as may from time to time be agreed
between the Borrower and the Agent.
SECTION 2.05. Reduction of the Commitments. (a)
Reduction. The Borrower shall have the right, upon at least 10
Business Days' notice to the Agent, to terminate in whole or
reduce ratably in part the unused portions of the respective
Commitments of the Lenders, provided that the aggregate amount of
the Commitments of the Lenders shall not be reduced to an amount
which is less than the aggregate principal amount of the B
Advances and Swingline Advances then outstanding, provided,
further, that each partial reduction shall be in the aggregate
amount of $10,000,000 or an integral multiple of $5,000,000 in
excess thereof and provided, further, that the aggregate amount
of the Commitments of the Lenders, after giving effect to the B
Reductions and the Swingline Reductions, shall not be reduced
below $100,000,000.
<PAGE>
(b) [intentionally left blank].
SECTION 2.06. Repayment of A Advances. The Borrower
shall repay the principal amount of each A Advance made by each
Lender in accordance with the A Note to the order of such Lender.
SECTION 2.07. Interest on A Advances. The Borrower
shall pay interest on the unpaid principal amount of each A
Advance made by each Lender from the date of such A Advance until
such principal amount shall be paid in full, at the following
rates per annum:
(a) Base Rate Advances. If such A Advance is a Base
Rate Advance, a rate per annum equal at all times to the Base
Rate in effect from time to time, payable monthly in arrears on
the first Business Day of each month during such periods and on
the date such Base Rate Advance shall be Converted or paid in
full; provided that any amount of principal which is not paid
when due (whether at stated maturity, by acceleration or
otherwise) shall bear interest, from the date on which such
amount is due until such amount is paid in full, payable on
demand, at a rate per annum equal at all times to 2% per annum
above the Base Rate in effect from time to time.
(b) Eurodollar Rate Advances. If such A Advance is a
Eurodollar Rate Advance, a rate per annum equal at all times
during the Interest Period for such A Advance to the Eurodollar
Rate for such Interest Period plus the Applicable Margin, payable
on the last day of such Interest Period and, if such Interest
Period has a duration of more than three months, on each day
which occurs during such Interest Period every three months from
the first day of such Interest Period; provided that any amount
of principal which is not paid when due (whether at stated
maturity, by acceleration or otherwise) shall bear interest, from
the date on which such amount is due until such amount is paid in
full, payable on demand, at a rate per annum equal at all times
to the greater of (x) 2% per annum above the Base Rate in effect
from time to time and (y) 2% per annum above the rate per annum
required to be paid on such A Advance immediately prior to the
date on which such amount became due.
SECTION 2.08. Additional Interest on Eurodollar Rate
Advances. The Borrower shall pay to each Lender, so long as such
Lender shall be required under regulations of the Board of
Governors of the Federal Reserve System to maintain reserves with
respect to liabilities or assets consisting of or including
Eurocurrency Liabilities, additional interest on the unpaid
principal amount of each Eurodollar Rate Advance of such Lender,
from the date of such A Advance until such principal amount is
paid in full, at an interest rate per annum equal at all times to
the remainder obtained by subtracting (i) the Eurodollar Rate for
the Interest Period for such A Advance from (ii) the rate
obtained by dividing such Eurodollar Rate by a percentage equal
to 100% minus the Eurodollar Rate Reserve Percentage of such
Lender for such Interest Period, payable on each date on which
<PAGE>
interest is payable on such A Advance. Such additional interest
shall be determined by such Lender and notified to the Borrower
through the Agent in the form of a certificate of such Lender
stating that the calculations set forth therein are in accordance
with the terms of this Agreement and setting forth in reasonable
detail the basis of such calculation, such certificate being
conclusive and binding for all purposes absent manifest error and
unless contested by the Borrower within 10 Business Days of its
receipt of such certificate, and such amounts being payable by
the Borrower in any event on or before the 10th Business Day
following delivery of such certificates to the Borrower.
SECTION 2.09. Interest Rate Determination. (a) Each
Reference Bank agrees to furnish to the Agent timely information
for the purpose of determining each Eurodollar Rate. If any one
or more of the Reference Banks shall not furnish such timely
information to the Agent for the purpose of determining any such
interest rate, the Agent shall determine such interest rate on
the basis of timely information furnished by the remaining
Reference Banks.
(b) The Agent shall give prompt notice to the Borrower
and the Lenders of the applicable interest rate determined by the
Agent for purposes of Section 2.07(a) or (b), and the applicable
rate, if any, furnished by each Reference Bank for the purpose of
determining the applicable interest rate under Section 2.07(b).
(c) If fewer than two Reference Banks furnish timely
information to the Agent for determining the Eurodollar Rate for
any Eurodollar Rate Advance, the Eurodollar Rate for such
Eurodollar Rate Advance shall be a rate of interest determined on
the basis of at least two offered rates for deposits in United
States dollars for a period equal to the Interest Period
applicable to such Eurodollar Rate Advance commencing on the
first day of such Interest Period appearing on the Reuters Screen
LIBO Page as of 11:00 a.m. (London time) on the day that is two
Business Days prior to the first day of such Interest Period. If
at least two such offered rates appear on the Reuters Screen LIBO
Page, the rate with respect to each Interest Period will be the
arithmetic average (rounded upwards to the next 1/16th of 1%) of
such offered rates. If fewer than two offered rates appear:
(i) the Agent shall forthwith notify the Borrower
and the Lenders that the interest rate cannot be determined
for such Eurodollar Rate Advances, as the case may be,
(ii) each such Advance will automatically, on the
last day of the then existing Interest Period therefor,
Convert into a Base Rate Advance, and
(iii) the obligation of the Lenders to make, or to
Convert Base Rate Advances into, Eurodollar Rate Advances
shall be suspended until the Agent shall notify the Borrower
and the Lenders that the circumstances causing such
suspension no longer exist.
<PAGE>
Each Reference Bank shall use its best efforts to
provide timely information to the Agent for the purpose of
determining the Eurodollar Rate.
(d) If, with respect to any Eurodollar Rate Advances,
the Majority Lenders notify the Agent that the Eurodollar Rate
for any Interest Period for such Advances will not adequately
reflect the cost to such Majority Lenders of making, funding or
maintaining their respective Eurodollar Rate Advances for such
Interest Period, the Agent shall forthwith so notify the Borrower
and the Lenders, whereupon
(i) each Eurodollar Rate Advance will
automatically, on the last day of the then existing Interest
Period therefor, Convert into a Base Rate Advance, and
(ii) the obligation of the Lenders to make, or to
Convert A Advances into, Eurodollar Rate Advances shall be
suspended until the Agent shall notify the Borrower and the
Lenders that the circumstances causing such suspension no
longer exist.
(e) If the Borrower shall fail to select the duration
of any Interest Period for any Eurodollar Rate Advances in
accordance with the provisions contained in the definition of
"Interest Period" in Section 1.01, the Agent will forthwith so
notify the Borrower and the Lenders and such advances will
automatically, on the last day of the then existing Interest
Period therefor, Convert into Base Rate Advances.
(f) On the date on which the aggregate unpaid
principal amount of A Advances comprising any A Borrowing shall
be reduced, by payment or prepayment or otherwise, to less than
$10,000,000, such A Advances shall, if they are Advances of a
Type other than Base Rate Advances, automatically Convert into
Base Rate Advances, and on and after such date the right of the
Borrower to Convert such A Advances into Advances of a Type other
than Base Rate Advances shall terminate; provided, however, that
if and so long as each such A Advance shall be of the same Type
and have the same Interest Period as A Advances comprising
another A Borrowing or other A Borrowings, and the aggregate
unpaid principal amount of all such A Advances shall equal or
exceed $10,000,000, the Borrower shall have the right to continue
all such A Advances as, or to Convert all such A Advances into,
Advances of such Type having such Interest Period.
SECTION 2.10. Voluntary Conversion of A Advances. The
Borrower may on any Business Day, upon notice given to the Agent
not later than 11:00 A.M. (New York City time) on the third
Business Day prior to the date of the proposed Conversion and
subject to the provisions of Sections 2.09 and 2.13, Convert all
A Advances of one Type comprising the same A Borrowing into
Advances of another Type; provided, however, that any Conversion
of any Eurodollar Rate Advances into Base Rate Advances shall be
made on, and only on, the last day of an Interest Period for such
<PAGE>
Eurodollar Rate Advances. Each such notice of a Conversion
shall, within the restrictions specified above, specify (i) the
date of such Conversion, (ii) the A Advances to be Converted, and
(iii) if such Conversion is into Eurodollar Rate Advances, the
duration of the Interest Period for each such A Advance.
SECTION 2.11. Prepayment of A Advances. (a) The
Borrower shall have no right to prepay any principal amount of
any A Advances other than as provided in subsection (b) below.
(b) The Borrower may, upon at least 1 Business Day's
notice to the Agent stating the proposed date and aggregate
principal amount of the prepayment, and if such notice is given
the Borrower shall, prepay the outstanding principal amounts of
the Advances comprising part of the same A Borrowing in whole or
ratably in part, together with accrued interest to the date of
such prepayment on the principal amount prepaid; provided,
however, that (x) each partial prepayment shall be in an
aggregate principal amount not less than $1,000,000 and (y) in
the case of any such prepayment of a Eurodollar Rate Advance, the
Borrower shall be obligated to reimburse the Lenders in respect
thereof pursuant to Section 8.04(b).
SECTION 2.12. Increased Costs. (a) If, due to either
(i) the introduction after the date of this Agreement of or any
change (other than any change by way of imposition or increase of
reserve requirements, in the case of Eurodollar Rate Advances,
included in the Eurodollar Rate Reserve Percentage) in or in the
interpretation of any law or regulation or (ii) the compliance
with any guideline or request from any central bank or other
governmental authority after the date of this Agreement (whether
or not having the force of law), there shall be any increase in
the cost to any Lender of agreeing to make or making, funding or
maintaining Eurodollar Rate Advances under this Agreement, then
the Borrower shall from time to time pay to the Agent for the
account of such Lender, to the extent that such Lender reasonably
determines such increase to be allocable to the existence of such
Lender's commitment to lend hereunder, additional amounts
sufficient to compensate such Lender for such increased cost.
The amount of such increased cost shall be determined by such
Lender and notified to the Borrower through the Agent in the form
of a certificate of such Lender stating that the calculations set
forth therein are in accordance with the terms of this Agreement
and setting forth in reasonable detail the basis of such
calculations, such certificate being conclusive and binding for
all purposes absent manifest error and unless contested by the
Borrower within 10 Business Days of its receipt of such
certificate, and the amount set forth therein being payable in
any event by the Borrower to such Lender on or before the 10th
Business Day following delivery of such certificate to the
Borrower.
(b) If any Lender determines that compliance with any
law or regulation or any guideline or request from any central
bank or other governmental authority (whether or not having the
<PAGE>
force of law) affects or would affect the amount of capital
required or expected to be maintained by such Lender or any
corporation controlling such Lender and that the amount of such
capital is increased by or based upon the existence of such
Lender's commitment to lend hereunder and other commitments of
this type or such Lender's Advances, then, on or before 10
Business Days after a demand by such Lender (with a copy of such
demand to the Agent), the Borrower shall immediately pay to the
Agent for the account of such Lender, from time to time as
specified by such Lender, additional amounts sufficient to
compensate such Lender or such corporation in the light of such
circumstances, to the extent that such Lender reasonably
determines such increase in capital to be allocable to the
existence of such Lender's commitment to lend hereunder or such
Lender's Advances. Such additional amounts shall be determined
by such Lender and notified to the Borrower through the Agent in
the form of a certificate of such Lender stating that the
calculations set forth therein are in accordance with the terms
of this Agreement and setting forth in reasonable detail the
basis of such calculations, such certificate being conclusive and
binding for all purposes absent manifest error and unless
contested by the Borrower within 10 Business Days of its receipt
of such certificate, and the amount set forth therein being
payable in any event by the Borrower to such Lender on or before
the 10th Business Day following delivery of such certificate to
the Borrower.
(c) Notwithstanding the foregoing, any Lender making
written demand on Borrower for indemnification or compensation
pursuant to paragraphs (a) or (b) of this Section 2.12 shall make
such demand as soon as practicable after the Lender receives
actual notice or obtains actual knowledge of the promulgation of
a law, rule, order or interpretation or occurrence of another
event giving rise to a claim pursuant to such paragraphs. In the
event that such Lender fails to give Borrower the notice within
the time limitation set forth in the preceding sentence, the
Borrower shall have no obligation to pay such claim for
indemnification or compensation accruing prior to the ninetieth
day preceding such written demand.
(d) Each Lender agrees that it will use reasonable
efforts to designate an alternate lending office with respect to
any of its Advances affected by the matters or circumstances
described in paragraphs (a) or (b) of this Section 2.12, Section
2.13 or Section 2.14 to reduce the liability of Borrower or avoid
the results provided thereunder, so long as such designation is
not disadvantageous to such Lender as reasonably determined by
such Lender.
(e) If a Lender has notified the Borrower of any
material increased costs pursuant to paragraph (a) or (b) of this
Section 2.12, Borrower may, within 10 Business Days after such
notice and upon at least 5 Business Days notice to such Lender,
terminate the Commitment of such Lender; provided, that (i) any
such termination shall be accompanied by prepayment in full of
<PAGE>
the aggregate principal amount of the Advances made by such
Lender then outstanding, together with accrued interest thereon
to the date of such prepayment, any other amounts owing to the
Lender pursuant to this Agreement and reasonable costs and
expenses incurred by such Lender in effecting such Commitment
termination and (ii) no Event of Default, or an event which would
constitute an Event of Default but for the requirement that
notice be given or time elapse or both, shall exist as of the
date of any such termination; provided, further, that the
Borrower may terminate the Commitment of a Lender pursuant to
this paragraph even if an Event of Default, or an event which
would constitute an Event of Default but for the requirement that
notice be given or time elapse or both, exists at the time of
such termination, if the Lender's Commitment is assigned in
accordance with Section 8.07.
SECTION 2.13. Illegality. Notwithstanding any other
provision of this Agreement, if any Lender or Lenders shall
notify the Agent that after the date of this Agreement the
introduction of or any change in or in the interpretation of any
law or regulation makes it unlawful, or any central bank or other
governmental authority asserts that it is unlawful, for any
Lender or its Eurodollar Lending office to perform its
obligations hereunder to make Eurodollar Rate Advances or to fund
or maintain Eurodollar Rate Advances hereunder, (i) the
obligation of the Lenders to make, or to Convert A Advances into,
Eurodollar Rate Advances shall be suspended until the Agent shall
notify the Borrower and the Lenders that the circumstances
causing such suspension no longer exist and (ii) the Borrower
shall either (A) forthwith prepay in full all Eurodollar Rate
Advances of all Lenders then outstanding, together with interest
accrued thereon, unless the Borrower, within five Business Days
of notice from the Agent, Converts all Eurodollar Rate Advances
of all Lenders then outstanding into Advances of another Type in
accordance with Section 2.10 or (B) forthwith prepay in full all
Eurodollar Rate Advances of such Lender or Lenders so notifying
the Agent and reduce the Commitments of such Lenders by such
amount.
SECTION 2.14. Payments and Computations. (a) The
Borrower shall make each payment hereunder and under the Notes
not later than 11:00 A.M. (New York City time) on the day when
due in U.S. dollars to the Agent at its address referred to in
Section 8.02 in same day funds. The Agent will promptly
thereafter cause to be distributed like funds relating to the
payment of principal or interest or commitment fees ratably
(other than amounts payable pursuant to Section 2.03, 2.08, 2.12,
2.13(ii)(B) or 2.15) to the Lenders for the account of their
respective Applicable Lending Offices, and like funds relating to
the payment of any other amount payable to any Lender to such
Lender for the account of its Applicable Lending Office, in each
case to be applied in accordance with the terms of this
Agreement. Upon its acceptance of an Assignment and Acceptance
and recording of the information contained therein in the
Register pursuant to Section 8.07(d), from and after the
<PAGE>
effective date specified in such Assignment and Acceptance, the
Agent shall make all payments hereunder and under the Notes in
respect of the interest assigned thereby to the Lender assignee
thereunder, and the parties to such Assignment and Acceptance
shall make all appropriate adjustments in such payments for
periods prior to such effective date directly between themselves.
(b) All computations of interest based on the Base
Rate and of fees set forth in Sections 2.04(a) shall be made by
the Agent on the basis of a year of 365 or 366 days, as the case
may be, and all computations of interest based on the Eurodollar
Rate or the Federal Funds Rate shall be made by the Agent, and
all computations of interest pursuant to Section 2.08 shall be
made by a Lender, on the basis of a year of 360 days, in each
case for the actual number of days including the first day but
excluding the last day) occurring in the period for which such
interest or commitment fees are payable. Each determination by
the Agent (or, in the case of Section 2.08, by a Lender) of an
interest rate hereunder shall be conclusive and binding for all
purposes, absent manifest error.
(c) Whenever any payment hereunder or under the Notes
shall be stated to be due on a day other than a Business Day,
such payment shall be made on the next succeeding Business Day,
and such extension of time shall in such case be included in the
computation of payment of interest or commitment fee, as the case
may be; provided, however, if such extension would cause payment
of interest on or principal of Eurodollar Rate Advances to be
made in the next following calendar month, such payment shall be
made on the next preceding Business Day.
(d) Unless the Agent shall have received notice from
the Borrower prior to the date on which any payment is due to the
Lenders hereunder that the Borrower will not make such payment in
full, the Agent may assume that the Borrower has made such
payment in full to the Agent on such date and the Agent may, in
reliance upon such assumption, cause to be distributed to each
Lender on such due date an amount equal to the amount then due
such Lender. If and to the extent that the Borrower shall not
have so made such payment in full to the Agent, each Lender shall
repay to the Agent forthwith on demand such amount distributed to
such Lender together with interest thereon, for each day from the
date such amount is distributed to such Lender until the date
such Lender repays such amount to the Agent, at the Federal Funds
Rate.
SECTION 2.15. Taxes. (a) Any and all payments by the
Borrower hereunder or under the A Notes shall be made, in
accordance with Section 2.14, free and clear of and without
deduction for any and all present or future taxes, levies,
imposts, deductions, charges or withholdings, and all liabilities
with respect thereto, excluding, in the case of each Lender and
the Agent, taxes imposed on its income, and franchise taxes
imposed on it, by the jurisdiction under the laws of which such
Lender or the Agent (as the case may be) is organized or any
<PAGE>
political subdivision thereof and, in the case of each Lender,
taxes imposed on its income, and franchise taxes imposed on it,
by the jurisdiction of such Lender's Applicable Lending Office or
any political subdivision thereof (all such non-excluded taxes,
levies, imposts, deductions charges, withholdings and liabilities
being hereinafter referred to as "Taxes"). If the Borrower shall
be required by law to deduct any Taxes from or in respect of any
sum payable hereunder or under any A Note to any Lender or the
Agent, (i) the sum payable shall be increased as may be necessary
so that after making all required deductions (including
deductions applicable to additional sums payable under this
Section 2.15) such Lender or the Agent (as the case may be)
receives an amount equal to the sum it would have received had
not such deductions been made, (ii) the Borrower shall make such
deductions and (iii) the Borrower shall pay the full amount
deducted to the relevant taxation authority or other authority in
accordance with applicable law.
(b) In addition, the Borrower agrees to pay any
present or future stamp or documentary taxes or any other excise
or property taxes, charges or similar levies which arise from any
payment made hereunder or under the A Notes or from the
execution, delivery or registration of, or otherwise with respect
to, this Agreement or the A Notes (hereinafter referred to as
"Other Taxes").
(c) The Borrower will indemnify each Lender and the
Agent for the full amount of Taxes or Other Taxes (including,
without limitation, any Taxes or Other Taxes imposed by any
jurisdiction on amounts payable under this Section 2.15) paid by
such Lender or the Agent (as the case may be) and any liability
(including penalties, interest and expenses) arising therefrom or
with respect thereto, whether or not such Taxes or Other Taxes
were correctly or legally asserted. Such indemnification shall
be made within 30 days from the date the Lender or the Agent (as
the case may be) makes written demand therefor. The Borrower may
contest whether such Taxes or Other Taxes were correctly or
legally asserted within 30 days from the date of such demand. In
the event that subsequent to the Borrower's indemnification of a
Lender or the Agent it is determined that such Taxes or Other
Taxes were incorrectly asserted and such Lender or the Agent
receives a refund of such Taxes or Other Taxes, such Lender or
the Agent shall, within 10 days of receiving such refund, pay to
the Borrower the amount of such refund allocable to this
Agreement together with any interest received by such Lender or
the Agent on account thereof.
(d) Prior to the date of the initial Borrowing in the
case of each Bank, and on the date of the Assignment and
Acceptance pursuant to which it became a Lender in the case of
each other Lender, and from time to time thereafter if requested
by the Borrower or the Agent, each Lender organized under the
laws of a jurisdiction outside the United States shall provide
the Agent and the Borrower with the forms prescribed by the
Internal Revenue Service of the United States certifying as to
<PAGE>
such Lender's status for purposes of determining exemption from
United States withholding taxes with respect to all payments to
be made to such Lender hereunder and under the Notes or other
documents satisfactory to the Borrower and the Agent indicating
that all payments to be made to such Lender hereunder and under
the Notes are subject to such taxes at a rate reduced by an
applicable tax treaty. Unless the Borrower and the Agent have
received forms or other documents satisfactory to them indicating
that payments hereunder or under any Note are not subject to
United States withholding tax or are subject to such tax at a
rate reduced by an applicable tax treaty, the Borrower or the
Agent shall withhold taxes from such payments at the applicable
statutory rate in the case of payments to or for any Lender
organized under the laws of a jurisdiction outside the United
States.
(e) Any Lender claiming any additional amounts payable
pursuant to this Section 2.15 shall use its best efforts
(consistent with its internal policy and legal and regulatory
restrictions) to change the jurisdiction of its Applicable
Lending Office if the making of such a change would avoid the
need for, or reduce the amount of, any such additional amounts
which may thereafter accrue and would not, in the reasonable
judgment of such Lender, be otherwise disadvantageous to such
Lender.
(f) Without prejudice to the survival of any other
agreement hereunder, the agreements and obligations contained in
this Section 2.15 shall survive the payment in full of principal
and interest hereunder and under the A Notes.
SECTION 2.16. Sharing of Payments, Etc. If any Lender
shall obtain any payment (whether voluntary, involuntary, through
the exercise of any right of set-off, or otherwise) on account of
the A Advances made by it (other than pursuant to Section 2.08,
2.12, 2.13(ii)(B), 2.15 or 8.07) in excess of its ratable share
of payments on account of the A Advances obtained by all the
Lenders, such Lender shall forthwith purchase from the other
Lenders such participations in the A Advances made by them as
shall be necessary to cause such purchasing Lender to share the
excess payment ratably with each of them, provided, however, that
if all or any portion of such excess payment is thereafter
recovered from such purchasing Lender, such purchase from each
Lender shall be rescinded and such Lender shall repay to the
purchasing Lender the purchase price to the extent of such
recovery together with an amount equal to such Lender's ratable
share (according to the proportion of (i) the amount of such
Lender's required repayment to (ii) the total amount so recovered
from the purchasing Lender) of any interest or other amount paid
or payable by the purchasing Lender in respect of the total
amount so recovered. The Borrower agrees that any Lender so
purchasing a participation from another Lender pursuant to this
Section 2.16 may, to the fullest extent permitted by law,
exercise all its rights of payment (including the right of set-
off) with respect to such participation as fully as if such
<PAGE>
Lender were the direct creditor of the Borrower in the amount of
such participation.
SECTION 2.17. Extension of Maturity. So long as no
Event of Default shall have occurred and be continuing or if any
Event of Default shall have occurred and shall have been waived,
the Borrower may, prior to each of December 17, 1998 and December
17, 1999 (each, an "Extension Date"), request an extension of the
Termination Date for a one-year period by giving notice of such
request not less than 90 days nor more than 120 days prior to
such Extension Date to the Agent and executing and delivering to
each Lender a completed Extension Letter in the form of Exhibit
"F" hereto, requesting the extension of the Termination Date.
Each Lender may, in its sole discretion, execute such letter and
return copies thereof to the Agent and the Borrower. Any Lender
which fails to execute and return its copies of the Extension
Letter on or before the date 60 days prior to the applicable
Extension Date shall be deemed to have denied the Borrower's
request. If, on the date 60 days before the applicable Extension
Date, the Agent has received Extension Letters from Lenders
holding at least 60% but less than 100% in aggregate principal
amount of the Commitments, the Borrower may (i) require each
Lender who has denied the Borrower's request to transfer all such
Lender's rights and obligations under this Agreement to another
financial institution or institutions, which shall be in each
case (A) an Eligible Assignee selected by the Borrower willing to
assume such rights and obligations and to consent to the
extension of the Termination Date, in accordance with the
provisions of Section 8.07 and (B) assuming a Commitment in an
amount not less than $10,000,000 or an integral multiple of
$1,000,000 in excess thereof or (ii) repay in whole or in part
accrued and unpaid principal, interest and fees with respect to
the Commitments and Advances of each Lender who has denied the
Borrower's request and terminate in whole or in part the
Commitments of such Lenders, provided (i) that the termination of
such Commitments would not result in the aggregate remaining
Commitments being reduced below the limit set forth in Section
2.05 and (ii) that the Borrower shall have obtained the consent
of such Lender with respect to the remaining portion of such
Lender's Commitment. If on the date 30 days prior to the
applicable Extension Date the Agent has received Extension
Letters from each Lender (after giving effect to the assignments
pursuant to Section 8.07, if any) the Termination Date shall be
extended by one year.
SECTION 2.18 Swingline Advances.
(a) Subject to the terms and conditions hereof, and in
reliance on the representations and warranties set forth herein,
the Swingline Lender agrees to make swingline loans (the
"Swingline Advances") to the Borrower from time to time during
the period from the Closing Date to but not including the
Termination Date, in an amount not to exceed Twenty Million
Dollars ($20,000,000) at any time outstanding; provided, the
obligation of the Lenders to make A Advances under Section 2.01
<PAGE>
shall be reduced from time to time by the outstanding principal
balance of the Swingline Advances. Notwithstanding the
foregoing, the Swingline Lender shall not make any Swingline
Advances after the date on which the Agent or the Majority
Lenders notify the Swingline Lender and the Borrower that an
Event of Default, or an event which would constitute an Event of
Default but for the requirement that notice be given or time
elapse or both, has occurred. The Swingline Lender may resume
the making of Swingline Advances after the Swingline Lender shall
have received, and acknowledged in writing, notice from the
Majority Lenders or the Agent that an Event of Default, or an
event which would constitute an Event of Default but for the
requirement that notice be given or time elapse or both, is no
longer continuing or has been waived in accordance with the terms
of this Agreement.
(b) (i) Each Swingline Advance shall have a maturity
of no greater than 7 days and shall bear interest at the rate
offered by the Swingline Lender and accepted by the Borrower for
the applicable period prior to maturity. Interest on all
Swingline Advances shall be due and payable in arrears on March
31, June 30, September 30 and December 31 of each year and on the
Termination Date.
(ii) All Swingline Advances shall be denominated in
Dollars. Swingline Advances and all payments thereof shall
be in the aggregate minimum amount of $1,000,000 and
integral multiples of $500,000 in excess of that amount.
(c) Whenever the Borrower desires to borrow or repay
under this Section 2.18, it shall deliver to the Agent a notice
of such borrowing or repayment not later than 11:00 a.m.
(Charlotte, North Carolina time) on the date of each Swingline
Advance.
(d) (i) Promptly after receipt of such notice under
Section 2.18(c), the Agent shall notify the Swingline Lender by
facsimile or other similar form of transmission, of the date,
type, amount and interest period of the proposed borrowing. The
Swingline Lender shall make the amount of its Swingline Advances
available to the Agent in immediately available, freely
transferable funds, to such account of the Agent as the Agent may
designate, by the date and time specified in the notice of
borrowing delivered pursuant to Section 2.18(c) provided that the
Swingline Lender and the Borrower have agreed as to the interest
rate for such Swingline Advance. After the Agent's receipt of
the proceeds of such Swingline Advances and upon satisfaction of
the applicable conditions set forth in Section 3.02, the Agent
shall make the proceeds of such Swingline Advance on such date by
transferring immediately available, freely transferable funds
equal to the proceeds of all such Swingline Advances received by
the Agent to an account of the Borrower with the Agent.
(ii) All Swingline Advances shall be subject to all
the terms and conditions applicable to Advances generally,
<PAGE>
provided that all interest thereon shall be payable to the
Agent solely for the account of the Swingline Lender except
as provided herein and in subsection (e) below.
(iii) Notwithstanding the foregoing, not more than (A)
two (2) Business Days after demand is made by the Swingline
Lender (if such demand is made by 10:00 a.m. (Charlotte,
North Carolina time) on any Business Day) or (B) three (3)
Business Days after demand is made by the Swingline Lender
(if such demand is made after 10:00 a.m. (Charlotte, North
Carolina time) on any Business Day) (in each case whether
before or after the occurrence of an Event of Default or an
event which would constitute an Event of Default but for the
requirement that notice be given or time elapse or both),
each Lender shall irrevocably and unconditionally purchase
and receive from the Swingline Lender, without recourse or
warranty, an undivided interest and participation in each
Swingline Advance to the extent of such Lender's Commitment
Percentage thereof by paying to the Agent for the account of
the Swingline Lender, in same day funds, an amount equal to
the product of such Swingline Advance multiplied by such
Lender's Commitment Percentage. If such amount is not in
fact made available by any Lender, the Agent shall be
entitled to recover such amount on demand from such Lender
together with interest thereon, for each day from the date
of such demand, if made prior to 10:00 a.m. (Charlotte,
North Carolina time) on any Business Day, or, if made at any
other time, from the next Business Day following the date of
such demand, until the date such amount is paid to the Agent
by such Lender, at the Federal Funds Rate.
(e) From and after the date, if any, on which any
Lender purchases an undivided interest and participation in any
Swingline Advance pursuant to Section 2.18(d)(iii) above, the
Agent shall promptly distribute to such Lender at its address set
forth on the signature pages hereof, or at such other address as
such Lender may request in writing, such Lender's pro rata share
of all payments of principal and interest received by the Agent
in respect of such Swingline Advance.
ARTICLE III
CONDITIONS OF LENDING
SECTION 3.01. Condition Precedent to Initial Advances.
The obligation of each Lender to make its initial Advance is
subject to the condition precedent that the Agent shall have
received on or before the day of the initial Borrowing the
following, each dated such day, in form and substance
satisfactory to the Agent and (except for the Notes) in
sufficient copies for each Lender:
(a) The A Notes payable to the order of the Lenders,
respectively.
<PAGE>
(b) Certified copies of the resolutions of the Board
of Directors of the Borrower approving this Agreement and the
Notes, and of all documents evidencing other necessary corporate
action and governmental approvals, if any, with respect to this
Agreement and the Notes.
(c) A certificate of the Secretary or an Assistant
Secretary of the Borrower certifying the names and true
signatures of the officers of the Borrower authorized to sign
this Agreement and the Notes and the other documents to be
delivered hereunder.
(d) A favorable opinion of Warren Y. Zeger, Esq., Vice
President and General Counsel for the Borrower, substantially in
the form of Exhibit D hereto and as to such other matters as any
Lender through the Agent may reasonably request.
(e) The Borrower shall have paid all accrued fees and
expenses of the Agent (including the accrued fees and
disbursements of counsel to the Agent).
SECTION 3.02. Conditions Precedent to Each A
Borrowing. The obligation of each Lender to make an A Advance on
the occasion of each A Borrowing (including the initial Borrowing
if an A Borrowing) shall be subject to the further conditions
precedent that on the date of such A Borrowing the following
statements shall be true (and each of the giving of the
applicable Notice of A Borrowing and the acceptance by the
Borrower of the proceeds of such A Borrowing shall constitute a
representation and warranty by the Borrower that on the date of
such A Borrowing such statements are true):
(i) The representations and warranties contained
in paragraphs (a) and (d) of Section 4.01 are correct on and
as of the date of such A Borrowing, before and after giving
effect to such A Borrowing and to the application of the
proceeds therefrom, as though made on and as of such date,
and
(ii) No event has occurred and is continuing, or
would result from such A Borrowing or from the application
of the proceeds therefrom, which constitutes an Event of
Default or would constitute an Event of Default but for the
requirement that notice be given or time elapse or both.
SECTION 3.03. Conditions Precedent to Each B
Borrowing. The obligation of each Lender which is to make a B
Advance on the occasion of a B Borrowing (including the initial
Borrowing if a B Borrowing) to make such B Advance as part of
such B Borrowing is subject to the conditions precedent that (i)
the Agent shall have received the written confirmatory Notice of
B Borrowing with respect thereto, (ii) on or before the date of
such B Borrowing, but prior to such B Borrowing, the Agent shall
have received a B Note payable to the order of such Lender for
each of the one or more B Advances to be made by such Lender as
<PAGE>
part of such B Borrowing, in a principal amount equal to the
principal amount of the B Advance to be evidenced thereby and
otherwise on such terms as were agreed to for such B Advance in
accordance with Section 2.03, and (iii) on the date of such B
Borrowing the following statements shall be true (and each of the
giving of the applicable Notice of B Borrowing and the acceptance
by the Borrower of the proceeds of such B Borrowing shall
constitute a representation and warranty by the Borrower that on
the date of such B Borrowing such statements are true):
(a) The representations and warranties contained in
paragraphs (a) and (d) of Section 4.01 are correct on and as of
the date of such B Borrowing, before and after giving effect to
such B Borrowing and the application of the proceeds therefrom,
as though made on and as of such date, and
(b) No event has occurred and is continuing, or would
result from such B Borrowing or from the application of the
proceeds therefrom, which constitutes an Event of Default or
which would constitute an Event of Default but for the
requirement that notice be given or time elapse or both.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the
Borrower. The Borrower represents and warrants as follows ((i)
as of the date hereof and as of the date of the making of each
Advance in the case of the representations and warranties
contained in Sections 4.01(a) and (d) and (ii) as of the date
hereof in the case of each other representation and warranty
contained in this Section 4.01):
(a) The Borrower is a corporation duly organized,
validly existing and in good standing under the laws of the
jurisdiction indicated at the beginning of this Agreement.
(b) The execution, delivery and performance by the
Borrower of this Agreement and the Notes are within the
Borrower's corporate powers, have been duly authorized by all
necessary corporate action, and do not contravene (i) the
Borrower's charter or by-laws or (ii) law or any contractual
restriction binding on or affecting the Borrower except, in the
case of (ii), for any contravention which would not have a
materially adverse effect on Borrower's business, assets or
financial condition.
(c) Section 4.01(c) of the Disclosure Schedule lists
each material authorization or approval or other action by, and
notice to or filing with, any governmental authority or
regulatory body (including, without limitation, the Federal
Communications Commission) required for the due execution,
delivery and performance by the Borrower of this Agreement or the
<PAGE>
Notes, and Borrower has obtained each such authorization or
approval and has given each such notice and made each such
filing.
(d) This Agreement is, and the Notes when delivered
hereunder will be, legal, valid and binding obligations of the
Borrower enforceable against the Borrower in accordance with
their respective terms, subject to the effect of any applicable
bankruptcy, insolvency, reorganization, moratorium or similar law
affecting creditors' rights generally and subject to general
rules of equity.
(e) The balance sheets of the Borrower and its
consolidated subsidiaries as at December 31, 1992, and the
related statements of income and retained earnings of the
Borrower and its consolidated subsidiaries for the fiscal year
then ended, copies of which have been furnished to each Bank,
fairly present the financial condition of the Borrower and its
consolidated subsidiaries as at such date and the results of the
operations of the Borrower and its consolidated subsidiaries for
the period ended on such date, all in accordance with generally
accepted accounting principles consistently applied, and since
December 31, 1992, there has been no material adverse change in
the business, financial condition or performance, operations, or
properties of the Borrower and any of its consolidated
subsidiaries, taken as a whole.
(f) Section 4.01(f) of the Disclosure Schedule
contains a brief description of each material action, suit,
investigation, litigation or proceeding pending or, to the
knowledge of Borrower, threatened in any court or before any
arbitrator or governmental instrumentality to which the Borrower
is a party, none of which (i) would have a material adverse
effect on the business, financial condition, operations or
properties of the Borrower and any of its consolidated
subsidiaries, taken as a whole or (ii) would be likely to have a
material adverse effect on the ability of Borrower to fulfill its
obligations under this Agreement or any Note.
(g) All transactions contemplated hereby are
permissible in accordance with Regulation U and the Margin
Regulations issued by the Board of Governors of the Federal
Reserve System, after giving effect to each of the Advances made
hereunder.
(h) To the knowledge of the Borrower, no
representation or warranty by the Borrower in this Agreement or
in any certificate or other document that has been delivered
pursuant to the terms of this Agreement contained any untrue
statement of a material fact or omitted to state a material fact
or any fact necessary to make the statements contained herein or
therein not misleading at such time and in light of the
circumstances under which such information was furnished.
<PAGE>
(i) Neither the Borrower nor any of its consolidated
subsidiaries is an "investment company," or an "affiliated
person" of, or "promoter" or "principal underwriter" for, an
"investment company," as such terms are defined in the Investment
Company Act of 1940, as amended. Neither the making of any
Advances, nor the application of the proceeds or repayment
thereof by the Borrower, nor the consummation of the other
transactions contemplated hereby will violate any provision of
such Act or rule, regulation or order of the Securities Exchange
Commission thereunder.
ARTICLE V
COVENANTS OF THE BORROWER
SECTION 5.01. Affirmative Covenants. So long as any
Note shall remain unpaid or any Lender shall have any Commitment
hereunder, the Borrower will, unless the Majority Lenders shall
otherwise consent in writing:
(a) Compliance with Laws, Etc. Comply, and cause each
of its consolidated subsidiaries to comply, with (i) the
requirements of all applicable laws, rules, regulations and
orders of any governmental authority (including, without
limitation, the regulations of the Federal Communications
Commission), non-compliance with which would materially adversely
affect the business or credit of the Borrower and its
consolidated subsidiaries, taken as a whole, and (ii) the Margin
Regulations (which compliance shall include the furnishing to any
Lender of a Federal Reserve Form U-1 provided for in Regulation U
issued by the Board of Governors of the Federal Reserve System
upon the reasonable request of any Lender).
(b) Reporting Requirements. Furnish to the Lenders:
(i) as soon as available and in any event within
60 days after the end of each fiscal quarter, quarterly
consolidated balance sheets, income statements and
statements of changes in financial position of the Borrower
and its consolidated subsidiaries, certified by the
Borrower's Chief Financial Officer or Treasurer (which
certification shall indicate that the reported results
present fairly the combined financial positions of the
Borrower and its consolidated subsidiaries at the end of
such quarter in conformity with generally accepted
accounting principles applied on a consistent basis and
which may be subject to year-end audit adjustments) and
stating that, to such officer's knowledge, the Borrower is
in compliance with the covenants contained in Sections 5.01,
and 5.02 and, if applicable, 5.03 of this Agreement;
(ii) as soon as available and in any event within
90 days after the end of each fiscal year, furnish audited
annual consolidated financial statements of the Borrower and
<PAGE>
its consolidated subsidiaries prepared in accordance with
generally accepted accounting principles consistently
applied and certified in a manner acceptable to the Majority
Lenders by Deloitte & Touche or other independent certified
public accountants reasonably acceptable to the Majority
Lenders;
(iii) as soon as possible and in any event within
five Business Days after the Borrower becomes aware of the
occurrence of each Event of Default and each event which,
with the giving of notice or lapse of time, or both, would
constitute an Event of Default, continuing on the date of
such statement, a statement of the Chief Financial Officer
of the Borrower setting forth details of such Event of
Default or event and the action which the Borrower has taken
and proposes to take with respect thereto;
(iv) promptly after the sending or filing thereof,
copies of all reports which the Borrower sends to any of its
security holders, and copies of all reports and registration
statements, other than Form S-8 and other similar reports,
which the Borrower or any subsidiary files with the
Securities and Exchange Commission or any national
securities exchange; and
(v) such other information respecting the
financial condition or operations of the Borrower or any of
its consolidated subsidiaries as any Lender through the
Agent may from time to time reasonably request.
(c) Insurance. Maintain, and cause each of its
consolidated subsidiaries to maintain, insurance with responsible
and reputable insurance companies or associations in such amounts
and covering such risks as is usually carried by companies
engaged in similar businesses and owning similar properties in
the same general areas in which the Borrower or such subsidiary
operates.
(d) Preservation of Corporate Existence, Etc.
Preserve and maintain, and cause each of its consolidated
subsidiaries to preserve and maintain, its corporate existence,
rights (charter and statutory), and franchises; provided,
however, that the Borrower or any of its consolidated
subsidiaries shall not be required to preserve any right or
franchise and any such consolidated subsidiary shall not be
required to preserve its corporate existence, if the Board of
Directors or an appropriate executive officer of the Borrower or
the Board of Directors or an appropriate executive officer of
such consolidated subsidiary shall determine that the
preservation thereof is no longer desirable in the conduct of the
business of the Borrower or such consolidated subsidiary, as the
case may be, and that the loss thereof is not disadvantageous in
any material respect to the Lenders.
<PAGE>
(e) Visitation Rights. At any reasonable time and
from time to time, permit the Agent or any of the Lenders or any
agents or representatives thereof, upon written notice given to
the Borrower, to examine and make copies of and abstracts from
the records and books of account of, and visit the properties of,
the Borrower and any of its consolidated subsidiaries, and to
discuss the affairs, finances and accounts of the Borrower and
any of its consolidated subsidiaries with any of their respective
officers or directors.
(f) Keeping of Books. Keep, and cause each of its
consolidated subsidiaries to keep, proper books of record and
account, in which full and correct entries shall be made of all
financial transactions and the assets and business of the
Borrower and each of its consolidated subsidiaries in accordance
with generally accepted accounting principles consistently
applied.
(g) Maintenance of Properties, Etc. Maintain and
preserve, and cause each of its consolidated subsidiaries to
maintain and preserve, in the ordinary course of business
consistent with past practice, all of its properties which are
used in the conduct of its business in good working order and
condition, ordinary wear and tear excepted.
SECTION 5.02. Negative Covenants. So long as any Note
shall remain unpaid or any Lender shall have any Commitment
hereunder, the Borrower will not, without the written consent of
the Majority Lenders:
(a) Liens, Etc. Create or suffer to exist, or permit
any of its consolidated subsidiaries to create or suffer to
exist, any lien, security interest or other charge or
encumbrance, or any other type of preferential arrangement, upon
or with respect to any of its properties, whether now owned or
hereafter acquired, or assign, or permit any of its consolidated
subsidiaries to assign, any right to receive income, in each case
to secure or provide for the payment of any Debt of any Person,
other than (i) purchase money liens or purchase money security
interests upon or in any property acquired or held by the
Borrower or any consolidated subsidiary in the ordinary course of
business to secure the purchase price of such property or to
secure indebtedness incurred solely for the purpose of financing
the acquisition of such property, (ii) liens or security
interests existing on such property at the time of its
acquisition (other than any such lien or security interest
created in contemplation of such acquisition), (iii) liens or
security interests existing on the date of this Credit Agreement,
(iv) liens for taxes not yet due, or liens for taxes being
contested in good faith and by appropriate proceedings for which
adequate reserves have been established in accordance with
generally accepted accounting principles, (v) liens in respect of
property or assets of the Borrower or any consolidated subsidiary
imposed by law, which were incurred in the ordinary course of
business, such as carriers', warehousemen's and mechanics' liens
<PAGE>
and other similar liens arising in the ordinary course of
business and (x) which do not in the aggregate materially detract
from the value of such property or assets or materially impair
the use thereof in the operation of the business of the Borrower
or any consolidated subsidiary or (y) which are being contested
in good faith by appropriate proceedings for which adequate
reserves have been established in accordance with generally
accepted accounting principles and which proceedings have the
effect of preventing the forfeiture or sale of the property or
assets subject to any such lien, (vi) any lien arising by reason
of deposits with, or the giving of any form of security to, any
governmental agency or any body created or approved by law or
governmental regulation, which is required by law or governmental
regulation as a condition to the transaction of any business, or
the exercise of any privilege or license, or to enable the
Borrower or a consolidated subsidiary to maintain self-insurance
or to participate in any arrangements established by law to cover
any insurance risks or in connection with workmen's compensation,
unemployment insurance, old age pensions, social security or
similar matters, (vii) judgment liens, so long as the finality of
such judgment is being contested in good faith and execution
thereon is stayed and adequate reserves have been established in
accordance with generally accepted accounting principles, (viii)
easements or similar encumbrances, the existence of which does
not impair the use or value of the property subject thereto for
the purposes for which it is held or was acquired or (ix) leases
and landlords' liens on fixtures and movable property located on
premises leased in the ordinary course of business, so long as
the rent secured by said fixtures and movable property is not in
default; provided that the aggregate principal amount of the
indebtedness secured by the liens or security interests referred
to in clauses (i) and (ii) above shall not exceed the lesser of
(A) $400 million or (B) 40% of the Borrower's consolidated
tangible net worth as of the date of the Borrower's last
financial statement submitted to the Agent pursuant to Section
5.01(b). In the event that such indebtedness secured by liens or
security interests would be permitted but for the limitation in
clause (B) above, the Borrower may nevertheless incur such
indebtedness and grant such liens or security interests, provided
that the amount of such indebtedness shall not exceed 40% of the
Borrower's consolidated tangible net worth as reflected in a pro
forma balance sheet giving effect to such transaction delivered
to the Agent and certified by the Treasurer or Assistant
Treasurer of the Borrower as to the basis of such determinations
and, upon the reasonable request of the Majority Lenders, upon
the Borrower's delivery to the Agent of a letter from a firm
reasonably satisfactory to the Majority Lenders as to the
fairness of the consideration paid and the indebtedness and liens
incurred by the Borrower in connection with such acquisition.
(b) Mergers, Etc. Merge or consolidate with any
Person or acquire all or substantially all of the assets of any
Person provided that the Borrower may engage in any such proposed
transaction so long as the Borrower is the surviving corporation
and immediately after giving effect to such proposed transaction,
<PAGE>
no Event of Default or event which, with the giving of notice or
lapse of time, or both, would constitute an Event of Default
would exist.
(c) Sales, Etc. of Assets. Sell, lease, transfer or
otherwise dispose of, or permit any consolidated subsidiary to
sell, lease, transfer or otherwise dispose of, fixed assets of
the Borrower or its consolidated subsidiaries in an aggregate
amount in excess of 15% of the Borrower's consolidated tangible
net worth as of the date of the Borrower's last financial
statement submitted to the Agent pursuant to Section 5.01(b)
during any calendar year, other than (i) in the ordinary course
of business or (ii) pursuant to an order of the Federal
Communications Commission.
(d) Change in Nature of Business. Make, or permit any
consolidated subsidiary to make, any material change in the
nature of its business, taken as a whole, as carried on at the
date hereof; provided, however, that the Borrower may make, or
permit any consolidated subsidiary to make, any such change so
long as it does not constitute a material change of the nature of
the Borrower's operations conducted with not less than 40% of its
total consolidated assets.
(e) Accounting Changes. Make, or permit any
consolidated subsidiary to make, any material change in
accounting policies or reporting practices, except as required by
generally accepted accounting principles or by any law, rule or
regulation applicable to the Borrower or any of its consolidated
subsidiaries.
SECTION 5.03. Special Financial Covenant. So long as
any Note shall remain unpaid or any Lender shall have any
Commitment hereunder and in the event that a Rating Event shall
have occurred and be continuing, the Borrower will, unless the
Majority Lenders shall otherwise consent in writing,maintain at
all times a ratio of (A) the sum of the Borrower's total
consolidated Debt to (B) the sum of the Borrower's total
consolidated Debt plus the Borrower's total stockholders' equity
not in excess of .60 to 1.0.
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.01. Events of Default. If any of the
following events ("Events of Default") shall occur and be
continuing:
(a) The Borrower shall fail to pay (i) any principal
of any Note when the same becomes due and payable or (ii)
interest on any Note when the same becomes due and payable and
such failure to pay interest continues for five (5) Business
Days; or
<PAGE>
(b) Any representation or warranty made or deemed made
by the Borrower herein or by the Borrower (or any of its
officers) to the Agent or any Lender in connection with the
negotiation of this Agreement or any representation or warranty
deemed to have been made pursuant to Section 3.02(i) or 3.03(a)
in connection with any Borrowing shall prove to have been
incorrect in any material respect when made; or
(c) The Borrower shall fail to perform or observe (i)
any term, covenant or agreement contained in Section
5.01(b)(iii), (ii) any term, covenant or agreement contained in
Section 5.02 if the failure to perform or observe any such term,
covenant or agreement shall remain unremedied for 5 Business Days
after written notice thereof shall have been given to the
Borrower by the Agent or any Lender; or (iii) any other term,
covenant or agreement contained in this Agreement on its part to
be performed or observed if the failure to perform or observe
such other term, covenant or agreement shall remain unremedied
for 30 days after written notice thereof shall have been given to
the Borrower by the Agent or any Lender; or
(d) The Borrower or any of its consolidated
subsidiaries shall fail to pay any principal of or premium or
interest on any Debt which is outstanding in a principal amount
of at least $25,000,000 in the aggregate (but excluding Debt
evidenced by the Notes) of the Borrower or such subsidiary (as
the case may be), when the same becomes due and payable (whether
by scheduled maturity, required prepayment, acceleration, demand
or otherwise), and such failure shall continue after the
applicable grace period, if any, specified in the agreement or
instrument relating to such Debt; or any other event shall occur
or condition shall exist under any agreement or instrument
relating to any such Debt and shall continue after the applicable
grace period, if any, specified in such agreement or instrument,
if the effect of such event or condition is to accelerate, or to
permit the acceleration of, the maturity of such Debt; or any
such Debt shall be declared to be due and payable, or required to
be prepaid (other than by a regularly scheduled required
prepayment), prior to the stated maturity thereof; or
(e) The Borrower or any of its consolidated
subsidiaries shall generally not pay its debts as such debts
become due, or shall admit in writing its inability to pay its
debts generally, or shall make a general assignment for the
benefit of creditors; or any proceeding shall be instituted by or
against the Borrower or any of its consolidated subsidiaries
seeking to adjudicate it a bankrupt or insolvent, or seeking
liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief, or composition of it or its debts under any
law relating to bankruptcy, insolvency or reorganization or
relief of debtors, or seeking the entry of an order for relief or
the appointment of a receiver, trustee, custodian or other
similar official for it or for any substantial part of its
property and, in the case of any such proceeding instituted
against it (but not instituted by it), either such proceeding
<PAGE>
shall remain undismissed or unstayed for a period of 60 days, or
any of the actions sought in such proceeding (including, without
limitation, the entry of an order for relief against, or the
appointment of a receiver, trustee, custodian or other similar
official for, it or for any substantial part of its property)
shall occur; or the Borrower or any of its consolidated
subsidiaries shall take any corporate action to authorize any of
the actions set forth above in this subsection (e); or
(f) Any judgment or order for the payment of money in
excess of $10,000,000 in the aggregate or individually (except
for any judgment or order which is not final and is appealable by
the Borrower and the enforcement of which is stayed by reason of
pending appeal or otherwise and for which the Borrower has
provided adequate reserves) shall be rendered against the
Borrower or any of its consolidated subsidiaries and there shall
be any period of 30 consecutive days during which a stay of
enforcement of such judgment or order, by reason of a pending
appeal or otherwise, shall not be in effect; or
(g) (i) any Person or two or more Persons acting in
concert shall have acquired beneficial ownership (within the
meaning of Rule 13d-3 of the Securities and Exchange Commission
under the Securities Exchange Act of 1934), directly or
indirectly, of securities of the Borrower (or other securities
convertible into such securities) representing 20% or more of the
combined voting power of all securities of the Borrower entitled
to vote in the election of directors, other than securities
having such power only by reason of the happening of a
contingency; or (ii) any Person or two or more Persons acting in
concert shall have acquired by contract or otherwise, or shall
have entered into a contract or arrangement that, upon
consummation, will result in its or their acquisition of, the
power to exercise, directly or indirectly, control over
securities of the Borrower (or other securities convertible into
such securities) representing 20% or more of the combined voting
power of all securities of the Borrower entitled to vote in the
election of directors, other than securities having such power
only by reason of the happening of a contingency; or
(h) Any ERISA Event shall have occurred with respect
to a Plan and, 30 days after notice thereof shall have been given
to the Borrower by the Agent, (i) such ERISA Event shall still
exist and (ii) the sum (determined as of the date of occurrence
of such ERISA Event) of the Insufficiency of such Plan and the
Insufficiency of any and all other Plans with respect to which a
ERISA Event shall have occurred and then exist (or in the case of
a Plan with respect to which a Termination Event described in
clause (iii) through (vi) of the definition of ERISA Event shall
have occurred and then exist, the liability related thereto) is
equal to or greater than $25,000,000; or
(i) The Borrower or any of its ERISA Affiliates shall
have been notified by the sponsor of a Multiemployer Plan that it
has incurred Withdrawal Liability to such Multiemployer Plan in
<PAGE>
an amount that, when aggregated with all other amounts required
to be paid to Multiemployer Plans by the Borrower and its ERISA
Affiliates in connection with Withdrawal Liabilities (determined
as of the date of such notification), exceeds $25,000,000; or
(j) The Borrower or any of its ERISA Affiliates shall
have been notified by the sponsor of a Multiemployer Plan that
such Multiemployer Plan is in reorganization or is being
terminated, within the meaning of Title IV of ERISA, if as a
result of such reorganization or termination the aggregate annual
contributions of the Borrower and its ERISA Affiliates to all
Multiemployer Plans that are then in reorganization or being
terminated have been or will be increased over the amounts
contributed to such Multiemployer Plans for the plan year of each
such Multiemployer Plan immediately preceding the plan year in
which such reorganization or termination occurs by an amount
exceeding $25,000,000; or
(k) The Borrower or any of its ERISA Affiliates shall
have committed a failure described in Section 302(f)(1) of ERISA
and the amount determined under Section 302(f)(3) of ERISA is
equal to or greater than $25,000,000;
then, and in any such event, the Agent (i) shall at the request,
or may with the consent, of the Majority Lenders, by notice to
the Borrower, declare the obligation of each Lender to make
Advances to be terminated, whereupon the same shall forthwith
terminate, and (ii) shall at the request, or may with the
consent, of the Majority Lenders, by notice to the Borrower,
declare the Notes, all interest thereon and all other amounts
payable under this Agreement to be forthwith due and payable,
whereupon the Notes, all such interest and all such amounts shall
become and be forthwith due and payable, without presentment,
demand, protest or further notice of any kind, all of which are
hereby expressly waived by the Borrower; provided, however, that
in the event of an actual or deemed entry of an order for relief
with respect to the Borrower or any of its consolidated
subsidiaries under the Federal Bankruptcy Code, (A) the
obligation of each Lender to make Advances shall automatically be
terminated and (B) the Notes, all such interest and all such
amounts shall automatically become and be due and payable,
without presentment, demand, protest or any notice of any kind,
all of which are hereby expressly waived by the Borrower.
ARTICLE VII
THE AGENT
SECTION 7.01. Authorization and Action. Each Lender
hereby appoints and authorizes the Agent to take such action as
agent on its behalf and to exercise such powers under this
Agreement as are delegated to the Agent by the terms hereof,
together with such powers as are reasonably incidental thereto.
As to any matters not expressly provided for by this Agreement
<PAGE>
(including, without limitation, enforcement or collection of the
Notes), the Agent shall not be required to exercise any
discretion or take any action, but shall be required to act or to
refrain from acting (and shall be fully protected in so action or
refraining from acting) upon the instructions of the Majority
Lenders, and such instructions shall be binding upon all Lenders
and all holders of Notes; provided, however, that the Agent shall
not be required to take any action which exposes the Agent to
personal liability or which is contrary to this Agreement or
applicable law. The Agent agrees to give to each Lender prompt
notice of each notice given to it by the Borrower pursuant to the
terms of this Agreement.
SECTION 7.02. Agent's Reliance, Etc. Neither the
Agent nor any of its directors, officers, agents or employees
shall be liable for any action taken or omitted to be taken by it
or them under or in connection with this Agreement, except for
its or their own gross negligence or willful misconduct. Without
limitation of the generality of the foregoing, the Agent: (i)
may treat the payee of any Note as the holder thereof until the
Agent receives and accepts an Assignment and Acceptance entered
into by the Lender which is the payee of such Note, as assignor,
and an Eligible Assignee, as assignee, as provided in Section
8.07; (ii) may consult with legal counsel (including counsel for
the Borrower), independent public accountants and other experts
selected by it and shall not be liable for any action taken or
omitted to be taken in good faith by it in accordance with the
advice of such counsel, accountants or experts; (iii) makes no
warranty or representation to any Lender and shall not be
responsible to any Lender for any statements, warranties or
representations (whether written or oral) made in or in
connection with this Agreement; (iv) shall not have any duty to
ascertain or to inquire as to the performance or observance of
any of the terms, covenants or conditions of this Agreement on
the part of the Borrower or to inspect the property (including
the books and records) of the Borrower; (v) shall not be
responsible to any Lender for the due execution, legality,
validity, enforceability, genuineness, sufficiency or value of
this Agreement or any other instrument or document furnished
pursuant hereto; and (vi) shall incur no liability under or in
respect of this Agreement by acting upon any notice, consent,
certificate or other instrument or writing (which may be by
telecopier, telegram, cable or telex) believed by it to be
genuine and signed or sent by the proper party or parties.
SECTION 7.03. NationsBank and Affiliates. With
respect to its Commitment, the Advances made by it and the Notes
issued to it, NationsBank shall have the same rights and powers
under this Agreement as any other Lender and may exercise the
same as though it were not the Agent; and the term "Lender" or
"Lenders" shall, unless otherwise expressly indicated, include
NationsBank in its individual capacity. NationsBank and its
affiliates may accept deposits from, lend money to, act as
trustee under indentures of, and generally engage in any kind of
business with, the Borrower, any of its subsidiaries and any
<PAGE>
Person who may do business with or own securities of the Borrower
or any such subsidiary, all as if NationsBank were not the Agent
and without any duty to account therefor to the Lenders.
SECTION 7.04. Lender Credit Decision. Each Lender
acknowledges that it has, independently and without reliance upon
the Agent or any other Lender and based on the financial
statements referred to in Section 4.01 and such other documents
and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Lender
also acknowledges that it will, independently and without
reliance upon the Agent or any other Lender and based on such
documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not
taking action under this Agreement.
SECTION 7.05. Indemnification. The Lenders agree to
indemnify the Agent (to the extent not reimbursed by the
Borrower), ratably according to the respective principal amounts
of the A Notes then held by each of them (or if no A Notes are at
the time outstanding or if any A Notes are held by Persons which
are not Lenders, ratably according to the respective amounts of
their Commitments), from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature
whatsoever which may be imposed on, incurred by, or asserted
against the Agent in any way relating to or arising out of this
Agreement or any action taken or omitted by the Agent under this
Agreement, provided that no Lender shall be liable for any
portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from the Agent's gross negligence or
willful misconduct. Without limitation of the foregoing, each
Lender agrees to reimburse the Agent promptly upon demand for its
ratable share of any out-of-pocket expenses (including counsel
fees) incurred by the Agent and reimbursable by the Borrower in
accordance with Section 8.04 to the extent that the Agent is not
reimbursed for such expenses by the Borrower.
SECTION 7.06. Successor Agent. The Agent may resign
at any time by giving 30 days' written notice thereof to the
Lenders and the Borrower and may be removed at any time with or
without cause by the Majority Lenders. Upon any such resignation
or removal, the Majority Lenders shall have the right to appoint
a successor Agent with the consent of the Borrower, such consent
not to be unreasonably withheld, provided, however, that the
consent of the Borrower shall not be required for the appointment
of any Lender as Agent. If no successor Agent shall have been so
appointed by the Majority Lenders, and shall have accepted such
appointment, within 30 days after the retiring Agent's giving of
notice of resignation or the Majority Lenders' removal of the
retiring Agent, then the retiring Agent may, on behalf of the
Lenders, appoint a successor Agent, which shall be a commercial
bank organized under the laws of the United States of America or
of any State thereof and having a combined capital and surplus of
<PAGE>
at least $50,000,000. Upon the acceptance of any appointment as
Agent hereunder by a successor Agent, such successor Agent shall
thereupon succeed to and become vested with all the rights,
powers, privileges and duties of the retiring Agent, and the
retiring Agent shall be discharged from its duties and
obligations under this Agreement. After any retiring Agent's
resignation or removal hereunder as Agent, the provisions of this
Article VII shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was Agent under this
Agreement.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Amendments, Etc. No amendment or waiver
of any provision of this Agreement or the A Notes, nor consent to
any departure by the Borrower therefrom, shall in any event be
effective unless the same shall be in writing and signed by the
Majority Lenders, and then such waiver or consent shall be
effective only in the specific instance and for the specific
purpose for which given; provided, however, that no amendment,
waiver or consent shall, unless in writing and signed by all the
Lenders, do any of the following: (a) waive any of the
conditions specified in Section 3.01, 3.02 or 3.03, (b) except
pursuant to Section 2.05, increase the Commitments of the Lenders
or subject the Lenders to any additional obligations, (c) reduce
the principal of, or interest on, the A Notes or any fees or
other amounts payable hereunder, (d) postpone any date fixed for
any payment of principal of, or interest on, the A Notes or any
fees or other amounts payable hereunder, (e) change the
percentage of the Commitments or of the aggregate unpaid
principal amount of the A Notes, or the number of Lenders, which
shall be required for the Lenders or any of them to take any
action hereunder, (f) change the percentage of the Commitments
which shall be required to extend the Termination Date pursuant
to Section 2.17 or (g) amend this Section 8.01; and provided,
further, that no amendment, waiver or consent shall, unless in
writing and signed by the Agent in addition to the Lenders
required above to take such action, affect the rights or duties
of the Agent under this Agreement or any Note.
SECTION 8.02. Notices, Etc. All notices and other
communications provided for hereunder shall be in writing
(including telecopier, telegraphic, telex or cable communication)
and mailed, telecopied, telegraphed, telexed, cabled or
delivered, if to the Borrower, at its address at 6560 Rock Spring
Drive, Bethesda, Maryland, 20817, Attention: Treasurer; if to
any Bank, at its Domestic Lending Office specified opposite its
name on Schedule I hereto; if to any other Lender, at its
Domestic Lending Office specified in the Assignment and
Acceptance pursuant to which it became a Lender; and if to the
Agent, at its address at NationsBank Plaza, NC1002-06-19,
Charlotte, North Carolina 28255 Attention: Kevin Stephens; or,
<PAGE>
as to the Borrower or the Agent, at such other address as shall
be designated by such party in a written notice to the other
parties and, as to each other party, at such other address as
shall be designated by such party in a written notice to the
Borrower and the Agent. All such notices and communications
shall, when mailed, telecopied, telegraphed, telexed or cabled,
be effective when deposited in the mails, telecopied, delivered
to the telegraph company, confirmed by telex answerback or
delivered to the cable company, respectively, except that notices
and communications to the Agent pursuant to Article II or VII
shall not be effective until received by the Agent.
SECTION 8.03. No Waiver; Remedies. No failure on the
part of any Lender or the Agent to exercise, and no delay in
exercising, any right hereunder or under any Note shall operate
as a waiver thereof; nor shall any single or partial exercise of
any such right preclude any other or further exercise thereof or
the exercise of any other right. The remedies herein provided
are cumulative and not exclusive of any remedies provided by law.
SECTION 8.04. Costs, Expenses and Taxes. (a) The
Borrower agrees to pay on demand all reasonable out-of-pocket
costs and expenses of the Agent in connection with the
preparation, execution, delivery, waiver, modification and
amendment of this Agreement, the Notes and the other documents to
be delivered hereunder, including, without limitation, the
reasonable out-of-pocket fees and expenses of counsel for the
Agent with respect thereto; provided, however, such costs and
expenses of the Agent in connection with the preparation,
execution and delivery of this Agreement, the Notes and the other
documents to be delivered hereunder shall not exceed $10,000.00.
The Borrower further agrees to pay on demand all reasonable out-
of-pocket costs and expenses, if any (including without
limitation, reasonable counsel fees and expenses), in connection
with the enforcement (whether through negotiations, legal
proceedings or otherwise) of this Agreement, the Notes and the
other documents to be delivered hereunder, including, without
limitation, reasonable out-of-pocket counsel fees and expenses in
connection with the enforcement of rights under this Section
8.04(a).
(b) If any payment of principal of, or Conversion of,
any Eurodollar Rate Advance is made other than on the last day of
the Interest Period for such A Advance, as a result of a payment
or Conversion pursuant to Section 2.13 or 2.09(f) or acceleration
of the maturity of the Notes pursuant to Section 6.01 or for any
other reason, the Borrower shall, upon demand by any Lender (with
a copy of such demand to the Agent), pay to the Agent for the
account of such Lender any amounts required to compensate such
Lender for any additional losses, costs or expenses which it may
reasonably incur as a result of such payment or Conversion,
including, without limitation, any loss (other than loss of
anticipated profits), cost or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired
by any Lender to fund or maintain such A Advance. The amount of
<PAGE>
such loss, cost or expense shall be determined by such Lender and
notified to the Borrower through the Agent in the form a
certificate of such Lender stating that the calculations set
forth therein are in accordance with the terms of this Agreement
and setting forth in reasonable detail the basis of such
calculations, such certificate being conclusive and binding for
all purposes absent manifest error and unless contested by the
Borrower within 10 Business Days of its receipt of such
certificate, and the amount set forth therein being payable in
any event by the Borrower to such Lender on or before the 10th
Business Day following delivery of such certificate to the
Borrower.
SECTION 8.05. Right of Set-off. Upon (i) the
occurrence and during the continuance of any Event of Default and
(ii) the making of the request or the granting of the consent
specified by Section 6.01 to authorize the Agent to declare the
Notes due and payable pursuant to the provisions of Section 6.01,
each Lender is hereby authorized at any time and from time to
time, to the fullest extent permitted by law, to set off and
apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other indebtedness at
any time owing by such Lender to or for the credit or the account
of the Borrower against any and all of the obligations of the
Borrower now or hereafter existing under this Agreement and any
Note held by such Lender, whether or not such Lender shall have
made any demand under this Agreement or such Note and although
such obligations may be unmatured. Each Lender agrees promptly
to notify the Borrower after any such set-off and application
made by such Lender, provided that the failure to give such
notice shall not affect the validity of such set-off and
application. The rights of each Lender under this Section are in
addition to other rights and remedies (including, without
limitation, other rights of set-off) which such Lender may have.
SECTION 8.06. Binding Effect. This Agreement shall
become effective when it shall have been executed by the Borrower
and the Agent and when the Agent shall have been notified by each
Bank that such Bank has executed it and thereafter shall be
binding upon and inure to the benefit of the Borrower, the Agent
and each Lender and their respective successors and assigns,
except that the Borrower shall not have the right to assign its
rights hereunder or any interest herein without the prior written
consent of the Lenders.
SECTION 8.07. Assignments and Participations. (a) No
Lender may assign any portion of its rights and obligations under
this Agreement (including, without limitation, all or a portion
of its Commitment, the A Advances owing to it and the A Note or
Notes held by it, the B Advances owing to it and the B Note or
Notes held by it), except with the approval of the Borrower and
the Agent, which approval may not be unreasonably withheld, or
otherwise pursuant to the terms of this Section 8.07; provided,
however, any Lender may pledge or assign any of its rights
(including, without limitation, rights to payment of principal
<PAGE>
and/or interest under the Notes) under this Credit Agreement to
any Federal Reserve Bank in accordance with applicable law
without the consent of or prior notice to the Borrower or the
Agent. If, pursuant to the terms of Section 2.17, the Borrower
shall have given notice of its request to extend the Termination
Date and on the date 60 days prior to the applicable anniversary
date Lenders holding at least 60% but less than 100% in aggregate
principal amount of the Commitments have consented to such
extension, each Lender who has denied the Borrower's request for
an extension of the Termination Date shall, upon the written
demand of the Borrower, execute an Assignment and Acceptance for
all or a portion of such Lender's rights and obligations under
this Agreement (including, without limitation, all or a portion
of its Commitment, the A Advances owing to it and the A Note held
by it, the B Advances owing to it and the B Note or Notes held by
it); provided, however, that the Borrower shall have delivered to
such Lender not less than 5 Business Days prior to such demand,
an Assignment and Acceptance executed by an Eligible Assignee for
the portion of such Lender's Commitment not terminated by the
Borrower or retained and consented to by such Lender. All
accrued and unpaid principal, interest and fees with respect to
any assigning Lender's Commitment and Advances that have not been
terminated by the Borrower or retained by such Lender shall be
due and payable by the Borrower to such Lender upon the
assignment. Notwithstanding such assignment, the obligations of
the Borrower under Sections 2.02, 2.12, 8.04 and 8.08 shall
survive such assignment and be enforceable by such Lender. The
parties to each Assignment and Acceptance shall deliver to the
Agent, for its acceptance and recording in the Register, the
Assignment and Acceptance, together with any A Note and/or B Note
or Notes subject to such assignment and a processing and
recordation fee of $2,500, payable by the assigning Lender. Upon
such execution, delivery, acceptance and recording, from and
after the effective date specified in each Assignment and
Acceptance, (x) the assignee thereunder shall be a party hereto
and, to the extent that rights and obligations hereunder have
been assigned to it pursuant to such Assignment and Acceptance,
have the rights and obligations of a Lender hereunder and (y) the
Lender assignor thereunder shall, to the extent that rights and
obligations hereunder have been assigned by it pursuant to such
Assignment and Acceptance, relinquish its rights and be released
from its obligations under this Agreement (and, in the case of an
Assignment and Acceptance covering all or the remaining portion
of an assigning Lender's rights and obligations under this
Agreement, such Lender shall cease to be a party hereto).
(b) By executing and delivering an Assignment and
Acceptance, the Lender assignor thereunder and the assignee
thereunder confirm to and agree with each other and the other
parties hereto as follows: (i) other than as provided in such
Assignment and Acceptance, such assigning Lender makes no
representation or warranty and assumes no responsibility with
respect to any statements, warranties or representations made in
or in connection with this Agreement or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of
<PAGE>
this Agreement or any other instrument or document furnished
pursuant hereto; (ii) such assigning Lender makes no
representation or warranty and assumes no responsibility with
respect to the financial condition of the Borrower or the
performance or observance by the Borrower of any of its
obligations under this Agreement or any other instrument or
document furnished pursuant hereto; (iii) such assignee confirms
that it has received a copy of this Agreement, together with
copies of the financial statements referred to in Section 4.01
and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter
into such Assignment and Acceptance; (iv) such assignee will,
independently and without reliance upon the Agent, such assigning
Lender or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action
under this Agreement; (v) such assignee confirms that it is an
Eligible Assignee; (vi) such assignee appoints and authorizes the
Agent to take such action as agent on its behalf and to exercise
such powers under this Agreement as are delegated to the Agent by
the terms hereof, together with such powers as are reasonably
incidental thereto; and (vii) such assignee agrees that it will
perform in accordance with their terms all of the obligations
which by the terms of this Agreement are required to be performed
by it as a Lender.
(c) The Agent shall maintain at its address referred
to in Section 8.02 a copy of each Assignment and Acceptance
delivered to and accepted by it and a register for the
recordation of the names and addresses of the Lenders and the
Commitment of, and principal amount of the A Advances owing to,
each Lender from time to time (the "Register"). The entries in
the Register shall be conclusive and binding for all purposes,
absent manifest error, and the Borrower, the Agent and the
Lenders may treat each Person whose name is recorded in the
Register as a Lender hereunder for all purposes of this
Agreement. The Register shall be available for inspection by the
Borrower or any Lender at any reasonable time and from time to
time upon reasonable prior notice.
(d) Upon its receipt of an Assignment and Acceptance
executed by an assigning Lender and an assignee representing that
it is an Eligible Assignee, together with any A Note and/or B
Notes subject to such assignment, the Agent shall, if such
Assignment and Acceptance has been completed and is in
substantially the form of Exhibit C hereto, (i) accept such
Assignment and Acceptance, (ii) record the information contained
therein in the Register and (iii) give prompt notice thereof to
the Borrower. Within five Business Days after its receipt of
such notice, the Borrower, at its own expense, shall execute and
deliver to the Agent in exchange for the surrendered A Note
and/or B Note or Notes, a new A Note and/or B Note or Notes to
the order of such Eligible Assignee in an amount equal to the
Commitment assumed by it pursuant to such Assignment and
Acceptance and, if the assigning Lender has retained a Commitment
<PAGE>
hereunder, a new A Note to the order of the assigning Lender in
an amount equal to the Commitment retained by it hereunder. Such
new A Note and/or B Note or Notes shall be in an aggregate
principal amount equal to the aggregate principal amount of such
surrendered A Note and/or B Note or Notes, shall be dated the
effective date of such Assignment and Acceptance and shall
otherwise be in substantially the form of Exhibit A-1 hereto.
(e) Each Lender may sell participations to one or more
banks or other entities in or to all or a portion of its rights
and obligations under this Agreement (including, without
limitation, all or a portion of its Commitment, the Advances
owing to it and the Note or Notes held by it); provided, however,
that (i) such Lender's obligations under this Agreement
(including, without limitation, its Commitment to the Borrower
hereunder) shall remain unchanged, (ii) such Lender shall remain
solely responsible to the other parties hereto for the
performance of such obligations, (iii) such Lender shall remain
the holder of any such Note for all purposes of this Agreement,
and (iv) the Borrower, the Agent and the other Lenders shall
continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this
Agreement.
(f) Any Lender may, in connection with any assignment
or participation or proposed assignment or participation pursuant
to this Section 8.07, disclose to the assignee or participant or
proposed assignee or participant, any information relating to the
Borrower furnished to such Lender by or on behalf of the
Borrower; provided that, prior to any such disclosure, the
assignee or participant or proposed assignee or participant shall
agree to preserve the confidentiality of any confidential
information relating to the Borrower received by it from such
Lender.
SECTION 8.08. Indemnification by Borrower. The
Borrower shall indemnify and hold harmless the Agent, each Lender
and their respective affiliates, officers, directors, employees,
agents and advisors (each, an "Indemnified Party") from and
against any and all claims, damages, losses, liabilities and
expenses (including, without limitation, reasonable out-of-pocket
fees and disbursements of counsel) which may be incurred by or
asserted or awarded against any Indemnified Party, in each case
arising out of or in connection with or by reason of, or in
connection with the preparation for a defense of, any
investigation, litigation or proceeding arising out of, related
to or in connection with this Agreement or the Notes, whether or
not an Indemnified Party is a party thereto and whether or not
any Advance has been made under this Agreement, except to the
extent such claim, damage, loss, liability or expensehas been
caused by such Indemnified Party's gross negligence or willful
misconduct.
<PAGE>
SECTION 8.09. Governing Law. This Agreement and the
Notes shall be governed by, and construed in accordance with, the
laws of the State of New York.
SECTION 8.10. Confidentiality of Financial
Information. The Agent and the Lenders agree that they will not
disclose Financial Information (as defined below) without the
prior consent of the Borrower (other than to their directors,
employees, auditors or counsel); provided that the Agent and any
Lender is authorized to make such disclosure of Financial
Information without any consent of the Borrower (a) as may be
required by law (such as pursuant to any subpoena or civil
investigative demand) and as may be requested or required by any
state or federal authority, examiner, or regulatory body or
agency having jurisdiction over the Agent or any Lender, (b)
during the course of any action, suit, investigation, litigation
or proceeding in any court or before any arbitrator or
governmental instrumentality to which the Borrower and any Lender
is a party, provided such Financial Information is submitted
under seal and (c) as permitted by Section 8.07(f). The term
"Financial Information" means any information delivered by the
Borrower under Section 5.01(b)(v), that is marked "Confidential"
that relates to the business, operations or financial condition
of the Borrower or its consolidated subsidiaries other than
information (a) that is, or generally becomes, available to the
public, (b) was available to the Agent or any Lender on a
nonconfidential basis prior to its disclosure to the Agent or
such Lender (as the case may be) by the Borrower or any Affiliate
or (c) becomes available to the Agent or any Lender from a Person
or other sources that is not, to the best knowledge of the Agent
or such Lender (as the case may be) otherwise bound by a
confidentiality agreement with the Borrower.
SECTION 8.11. WAIVER OF JURY TRIAL. THE BORROWER AND
EACH LENDER EACH HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY
JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OR
RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS.
SECTION 8.12. Effect of Headings and Table of
Contents. The Article and Section headings herein and the Table
of Contents are for convenience only and shall not affect the
construction hereof.
SECTION 8.13. Execution in Counterparts. This
Agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto
duly authorized, as of the date first above written.
COMSAT CORPORATION
By: /s/Wesley D. Minami
------------------------
Title: Treasurer
NATIONSBANK OF NORTH
CAROLINA, N.A., as Agent
By: /s/Michael R. Williams
---------------------------
Title: Senior Vice President
<PAGE>
Banks
-----
Commitment
- - - ----------
$45,000,000 NATIONSBANK OF NORTH CAROLINA, N.A.
By: /s/Michael R. Williams
--------------------------
Title: Senior Vice President
$35,000,000 BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By: /s/Doug Bontemps
------------------------
Title: Vice President
$25,000,000 THE FIRST NATIONAL BANK
CHICAGO
By: /s/Ted Wozniak
------------------------
Title: Vice President
$35,000,000 THE CHASE MANHATTAN BANK, N.A.
By: /s/Robert T. Smith
------------------------
Title: Vice President
$35,000,000 THE SUMITOMO BANK, LIMITED, NEW
YORK BRANCH
By: /s/Yoshinori Kawamura
-------------------------
Title: Joint General Manager
$25,000,000 SWISS BANK CORPORATION, NEW YORK
BRANCH
By: /s/Jane A. Majeski
----------------------
Title: Director Merchant Banking
By: /s/Alois Mueller
----------------------
Title: Associate Director
Merchant Banking
_____________
$200,000,000 Total of the Commitments
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE I
COMSAT CORPORATION
CREDIT AGREEMENT DATED AS OF
DECEMBER 17, 1993
BANK NAME DOMESTIC LENDING OFFICE EURODOLLAR LENDING OFFICE
<S> <C> <C>
NationsBank of North Carolina,N.A. NationsBank of North Carolina, N.A. NationsBank of North Carolina, N.A.
Operations Contact: c/o Domestic Operations Contact:
Robert W. Gillison, IV Robert W. Gillison, IV
Vice President Vice President
6610 Rockledge Drive, 1st Floor 6610 Rockledge Drive, 1st Floor
Bethesda, Maryland 20817-1876 Bethesda, Maryland 20817-1876
tel.: (301) 571-0712 tel.: (301) 571-0712
fax: (301) 571-0719 fax: (301) 571-0719
Bank of America National Trust and Bank of America National Trust and Bank of America National Trust and
Savings Association Savings Association Savings Association
Operations Contact: c/o Domestic Operations contact:
Heather Martinez Heather Martinez
Account Administrator Account Administrator
1850 Gateway Blvd., 4th floor 1850 Gateway Blvd., 4th Floor
Concord, California 94520 Concord, California 94520
tel.: (510) 675-7775 tel.: (510) 675-7775
fax: (510) 675-7531 fax: (510) 675-7531
The First National Bank of Chicago The First National Bank of Chicago The First National Bank of Chicago
Operations Contact: c/o Domestic Operations Contact:
Ted Wozniak Ted Wozniak
Vice President Vice President
1 First National Plaza 1 First National Plaza
Mail Suite 0374 Mail Suite 0374
Chicago, IL 60670 Chicago, IL 60670
tel.: (312) 732-1032 tel.: (312) 732-1032
fax: (312) 732-3885 fax: (312) 732-3885
The Chase Manhattan Bank, N.A. The Chase Manhattan Bank, N.A. The Chase Manhattan Bank, N.A.
Operations Contact: c/o Domestic Operations Contact:
Robert T. Smith Robert T. Smith
Vice President Vice President
Media & Telecommunications Group Media & Telecommunications Group
1 Chase Manhattan Plaza, 4th flr 1 Chase Manhattan Plaza, 4th flr
New York, New York 10081 New York, New York 10081
tel.: (212) 552-3534 tel.: (212) 552-3534
fax: (212) 552-4905 fax: (212) 552-4905
<PAGE>
The Sumitomo Bank, Limited, The Sumitomo Bank, Limited, The Sumitomo Bank, Limited,
New York Branch New York Branch New York Branch
Operations Contact: Operations Contact:
Robert J. Wehner Robert J. Wehner
Vice President Vice President
U.S. Corporate Department 2 U.S. Corporate Department 2
1 World Trade Center, Suite 9651 1 World Trade Center, Suite 9651
New York, New York 10048 New York, New York 10048
tel.: (212) 323-0441 tel.: (212) 323-0441
fax: (212) 553-0118 fax: (212) 553-0118
Swiss Bank Corporation, Swiss Bank Corporation, Swiss Bank Corporation,
New York Branch New York Branch Cayman Island Branch
Operations Contact: c/o Domestic Operations Contact:
Jane A. Majeski Jane A. Majeski
Director Director
Box 395, Church Street Station Box 395, Church Street Station
New York, NY 10008 New York, NY 10008
10 E. 50th Street 10022
tel.: (212) 574-4408 tel.: (212) 574-4408
fax: (212) 574-3852 fax: (212) 574-3852
</TABLE>
<PAGE>
EXHIBIT A-1
FORM OF A NOTE
U.S. $______________ Dated: December 17, 1993
FOR VALUE RECEIVED, the undersigned, Comsat Corporation, a
District of Columbia corporation (the "Borrower"), HEREBY
PROMISES TO PAY to the order of ____________________________ (the
"Lender") for the account of its Applicable Lending Office (as
defined in the Credit Agreement referred to below) the principal
sum of U.S. $[amount of the Lender's Commitment in figures] or,
if less, the aggregate principal amount of the A Advances (as
defined below) made by the Lender to the Borrower pursuant to the
Credit Agreement outstanding on the Termination Date (as defined
in the Credit Agreement) or upon earlier maturity, as provided in
the Credit Agreement.
The Borrower promises to pay interest on the unpaid
principal amount of each A Advance from the date of such A
Advance until such principal amount is paid in full, at such
interest rates, and payable at such times, as are specified in
the Credit Agreement.
Both principal and interest are payable in lawful money
of the United States of America to NationsBank of North Carolina,
N.A., as Agent, at _________________________________, in same day
funds. Each A Advance made by the Lender to the Borrower
pursuant to the Credit Agreement, and all payments made on
account of principal thereof, shall be recorded by the Lender
and, prior to any transfer hereof, endorsed on the grid attached
hereto which is part of this Promissory Note.
This Promissory Note is one of the A Notes referred to
in, and is entitled to the benefits of, the Credit Agreement
dated as of December 17, 1993 (the "Credit Agreement") among the
Borrower, the Lender and certain other banks parties thereto, and
NationsBank of North Carolina, N.A., as Agent for the Lender and
such other banks. The Credit Agreement, among other things, (i)
provides for the making of advances (the "A Advances") by the
Lender to the Borrower from time to time in an aggregate amount
not to exceed at any time outstanding the U.S. dollar amount
first above mentioned, the indebtedness of the Borrower resulting
from each such A Advance being evidenced by this Promissory Note,
and (ii) contains provisions for acceleration of the maturity
hereof upon the happening of certain stated events and also for
prepayments on account of principal hereof prior to the maturity
hereof upon the terms and conditions therein specified.
COMSAT CORPORATION
By______________________
Title:
<PAGE>
<TABLE>
<CAPTION>
ADVANCES AND PAYMENTS OF PRINCIPAL
AMOUNT OF UNPAID
AMOUNT OF PRINCIPAL PAID PRINCIPAL NOTATION
DATE ADVANCE OR PREPAID BALANCE MADE BY
- - - ---- ------- -------------- --------- --------
<S> <C> <C> <C> <C>
_________________________________________________________________________________
_________________________________________________________________________________
_________________________________________________________________________________
_________________________________________________________________________________
_________________________________________________________________________________
_________________________________________________________________________________
_________________________________________________________________________________
_________________________________________________________________________________
_________________________________________________________________________________
_________________________________________________________________________________
_________________________________________________________________________________
_________________________________________________________________________________
_________________________________________________________________________________
_________________________________________________________________________________
_________________________________________________________________________________
_________________________________________________________________________________
_________________________________________________________________________________
_________________________________________________________________________________
_________________________________________________________________________________
_________________________________________________________________________________
_________________________________________________________________________________
_________________________________________________________________________________
_________________________________________________________________________________
_________________________________________________________________________________
</TABLE>
<PAGE>
EXHIBIT A-2
FORM OF B NOTE
U.S. $______________ Dated: ________, 19__
FOR VALUE RECEIVED, the undersigned, Comsat Corporation, a
District of Columbia corporation (the "Borrower"), HEREBY
PROMISES TO PAY to the order of _______________________ (the
"Lender") for the account of its Applicable Lending Office (as
defined in the Credit Agreement referred to below), on
__________, 19__, the principal amount of _____________ Dollars
($___________).
The Borrower promises to pay interest on the unpaid
principal amount hereof from the date hereof until such principal
amount is paid in full, at the interest rate and payable on the
interest payment date or dates provided below:
Interest Rate: ___% per annum (calculated on the basis
of a year of ____ days for the actual number of day
s elapsed).
Interest Payment Date or Dates: ____________________
Both principal and interest are payable in lawful money
of the United States of America to __________________ or the
account of the Lender at the office of _____________________, at
____________________________________, in same day funds, free and
clear of and without any deduction, with respect to the payee
named above, for any and all present and future taxes,
deductions, charges or withholdings, and all liabilities with
respect thereto.
This Promissory Note is one of the B Notes referred to
in, and is entitled to the benefits of, the Credit Agreement
dated as of December 17, 1993 (the "Credit Agreement") among the
Borrower, the Lender and certain other banks parties thereto, and
NationsBank of North Carolina, N.A., as Agent for the Lender and
such other banks. The Credit Agreement, among other things,
contains provisions for acceleration of the maturity hereof upon
the happening of certain stated events.
COMSAT CORPORATION
By__________________________
Title:
<PAGE>
EXHIBIT B-1
NOTICE OF A BORROWING
NationsBank of North Carolina, N.A., as Agent
for the Lenders parties
to the Credit Agreement
referred to below
_______________________
_______________________ [Date]
Attention: __________________
Gentlemen:
The undersigned, Comsat Corporation, refers to the
Credit Agreement, dated as of December 17, 1993 (the "Credit
Agreement", the terms defined therein being used herein as
therein defined), among the undersigned, certain Lenders parties
thereto and NationsBank of North Carolina, N.A., as Agent for
said Lenders, and hereby gives you notice, irrevocably, pursuant
to Section 2.02 of the Credit Agreement that the undersigned
hereby requests an A Borrowing under the Credit Agreement, and in
that connection sets forth below the information relating to such
A Borrowing (the "Proposed A Borrowing") as required by Section
2.02(a) of the Credit Agreement:
(i) The Business Day of the Proposed A Borrowing
is _____________, 19___.
(ii) The Type of A Advances comprising the
Proposed A Borrowing is [Base Rate Advances] [Eurodollar
Rate Advances].
(iii) The aggregate amount of the Proposed A
Borrowing is $____________ [an amount not less than
$10,000,000].
(iv) The Interest Period for each A Advance made
as part of the Proposed A Borrowing is [____ days] [____
month[s]].
The undersigned hereby certifies that the following
statements are true on the date hereof, and will be true on the
date of the Proposed A Borrowing:
(A) the representations and warranties contained in
paragraphs (a) and (d) of Section 4.01 are correct, before
and after giving effect to the Proposed A Borrowing and to
the application of the proceeds therefrom, as though made on
and as of such date; and
<PAGE>
(B) no event has occurred and is continuing, or would
result from such Proposed A Borrowing or from the
application of the proceeds therefrom, which constitutes an
Event of Default or would constitute an Event of Default but
for the requirement that notice be given or time elapse or
both.
Very truly yours,
COMSAT CORPORATION
By_________________________
Title:
<PAGE>
EXHIBIT B-2
NOTICE OF B BORROWING
NationsBank of North Carolina, N.A., as Agent
for the Lenders parties
to the Credit Agreement
referred to below
_________________________
_________________________ [Date]
Attention: ___________________
Gentlemen:
The undersigned, Comsat Corporation, refers to the
Credit Agreement, dated as of December 17, 1993 (the "Credit
Agreement", the terms defined therein being used herein as
therein defined), among the undersigned, certain Lenders parties
thereto and NationsBank of North Carolina, N.A., as Agent for
said Lenders, and hereby gives you notice pursuant to Section
2.03 of the Credit Agreement that the undersigned hereby requests
a B Borrowing under the Credit Agreement, and in that connection
sets forth the terms on which such B Borrowing (the "Proposed B
Borrowing") is requested to be made:
(A) Date of B Borrowing _________________________
(B) Amount of B Borrowing _________________________
(C) Maturity Date _________________________
(D) Interest Rate Basis _________________________
(E) Interest Payment Date(s) _________________________
(F) _____________________ _________________________
(G) _____________________ _________________________
(H) _____________________ _________________________
The undersigned hereby certifies that the following
statements are true on the date hereof, and will be true on the
date of the Proposed B Borrowing:
(a) the representations and warranties contained in
paragraphs (a) and (d) of Section 4.01 are correct, before
and after giving effect to the Proposed B Borrowing and to
the application of the proceeds therefrom, as though made on
and as of such date; and
(b) no event has occurred and is continuing, or would
result from the Proposed B Borrowing or from the application
of the proceeds therefrom, which constitutes an Event of
Default or would constitute an Event of Default but for the
requirement that notice be given or time elapse or both.
<PAGE>
The undersigned hereby confirms that the Proposed B
Borrowing is to be made available to it in accordance with
Section 2.03(a)(v) of the Credit Agreement.
Very truly yours,
COMSAT CORPORATION
By_________________________
Title:
<PAGE>
EXHIBIT C
ASSIGNMENT AND ACCEPTANCE
Dated______, 19___
Reference is made to the Credit Agreement dated as of
December 17, 1993 (the "Credit Agreement") among Comsat
Corporation, a District of Columbia corporation (the "Borrower"),
the Lenders (as defined in the Credit Agreement) and NationsBank
of North Carolina, N.A., as Agent for the Lenders (the "Agent").
Terms defined in the Credit Agreement are used herein with the
same meaning.
_______________ (the "Assignor") and _______________
(the "Assignee") agree as follows:
1. The Assignor hereby sells and assigns to the
Assignee, and the Assignee hereby purchases and assumes from the
Assignor, that interest in and to all of the Assignor's rights
and obligations under the Credit Agreement as of the date hereof
which represents the percentage interest specified on Schedule 1
of all outstanding rights and obligations under the Credit
Agreement, including, without limitation, such interest in the
Assignor's Commitment. After giving effect to such sale and
assignment, the Assignee's Commitment will be set forth in
Section 2 of Schedule 1.
2. The Assignor (i) represents and warrants that it
is the legal and beneficial owner of the interest being assigned
by it hereunder and that such interest is free and clear of any
adverse claim; (ii) makes no representation or warranty and
assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with the
Credit Agreement or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of the Credit
Agreement or any other instrument or document furnished pursuant
thereto; and (iii) makes no representation or warranty and
assumes no responsibility with respect to the financial condition
of the Borrower or the performance or observance by the Borrower
of any of its obligations under the Credit Agreement or any other
instrument or document furnished pursuant thereto.
3. The Assignee (i) confirms that it has received a
copy of the Credit Agreement, together with copies of the
financial statements referred to in Section 4.01 thereof and such
other documents and information as it has deemed appropriate to
make its own credit analysis and decision to enter into this
Assignment and Acceptance; (ii) agrees that it will,
independently and without reliance upon the Agent, the Assignor
or any other Lender and based on such documents and information
as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under the
<PAGE>
Credit Agreement; (iii) confirms that it is an Eligible Assignee;
(iv) appoints and authorizes the Agent to take such action as
Agent on its behalf and to exercise such powers under the Credit
Agreement as are delegated to the Agent by the terms thereof,
together with such powers as are reasonably incidental thereto;
(v) agrees that it will perform in accordance with their terms
all of the obligations which by the terms of the Credit Agreement
are required to be performed by it as a Lender; (vi) specifies as
its Domestic Lending Office (and address for notices) and
Eurodollar Lending Office the offices set forth beneath its name
on the signature pages hereof; and [(vii) attaches its executed
Extension Letter consenting to the extension of the Termination
Date] [and (viii) attaches the forms prescribed by the Internal
Revenue Service of the United States certifying as to the
Assignee's status for purposes of determining exemption from
United States withholding taxes with respect to all payments to
be made to the Assignee under the Credit Agreement and the Notes
or such other documents as are necessary to indicate that all
such payments are subject to such rates at a rate reduced by an
applicable tax treaty](1).
4. Following the execution of this Assignment and
Acceptance by the Assignor and the Assignee, it will be delivered
to the Agent for acceptance and recording by the Agent. The
effective date of this Assignment and Acceptance shall be the
date of acceptance thereof by the Agent[, which shall be an
anniversary date of the Credit Agreement] (the "Effective Date").
5. Upon such acceptance and recording by the Agent,
as of the Effective Date, (i) the Assignee shall be a party to
the Credit Agreement and, to the extent provided in this
Assignment and Acceptance, have the rights and obligations of a
Lender thereunder and (ii) the Assignor shall, to the extent
provided in this Assignment and Acceptance, relinquish its rights
and be released from its obligations under the Credit Agreement.
6. Upon such acceptance and recording by the Agent,
from and after the Effective Date the Agent shall make all
payments under the Credit Agreement assigned hereby (including,
without limitation, all payments of principal, interest and
commitment fees with respect thereto) to the Assignee. The
Assignor and Assignee shall make all appropriate adjustments in
payments under the Credit Agreement for periods prior to the
Effective Date directly between themselves.
7. This Assignment and Acceptance shall be governed
by, and construed in accordance with, the laws of the State of
New York.
- - - -----------
(1) If the Assignee is organized under the laws of a
jurisdiction outside the Unites States.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Assignment and Acceptance to be executed by their respective
officers thereunto duly authorized, as of the date first above
written, such execution being made on Schedule 1 hereto.
Schedule 1
to
Assignment and Acceptance
Dated _______, 19___
Section 1.
Percentage Interest: ____%
Section 2.
Assignee's Commitment:
Aggregate Outstanding Principal $________
Amount of A Advances owing to the Assignee: $________
An A Note payable to the order of the Assignee
Dated: _______, 19__
Principal amount: _______
Section 3.
Effective Date*: __________, 19__
[NAME OF ASSIGNOR]
By:_________________________
Title:
[NAME OF ASSIGNEE]
By:_________________________
Title:
Domestic Lending Office (and
address for notices):
[Address]
Eurodollar Lending Office:
[Address]
___________________
* This date should be no earlier than the date of acceptance
by the Agent, and in the case of an assignment pursuant to
Section 2.07, shall be an anniversary date of the Credit
Agreement.
<PAGE>
Accepted this ____ day
of ____________, 19___
NATIONSBANK OF NORTH CAROLINA, N.A.
By:__________________________
Title:
<PAGE>
EXHIBIT D
FORM OF OPINION OF COUNSEL
FOR THE BORROWER
[Date of initial Borrowing]
To each of the Banks parties
to the Revolving Credit and
Term Loan Agreement dated
as of December 17, 1993
among Comsat
Corporation, said Banks and
NationsBank of North Carolina, N.A., as Agent for
said Banks, and to NationsBank of North Carolina,
N.A., as Agent
COMSAT CORPORATION
$200,000,000 Credit Agreement
Gentlemen:
This opinion is furnished to you pursuant to Section
3.01(d) of the Credit Agreement, dated as of December 17, 1993
(the "Credit Agreement"), among Comsat Corporation (the
"Borrower"), the Banks parties thereto and NationsBank of North
Carolina, N.A., as Agent for said Banks. Terms defined in the
Credit Agreement are used herein as therein defined.
We have acted as counsel for the Borrower in connection
with the preparation, execution and delivery of, and the initial
Borrowing made under, the Credit Agreement.
In that connection, we have examined:
(1) The Credit Agreement.
(2) The documents furnished by the Borrower pursuant
to Article II of the Credit Agreement.
(3) The Certificate of Incorporation of the Borrower
and all amendments thereto (the "Charter").
(4) The by-laws of the Borrower and all amendments
thereto (the "By-laws").
(5) A certificate of the Department of Consumer and
Regulatory Affairs of the District of Columbia, dated
__________, 19___, attesting to the continued corporate
existence and good standing of the Borrower in the District
of Columbia.
<PAGE>
We have also examined the originals, or copies certified to our
satisfaction, of the documents listed in a certificate of the
chief financial officer of the Borrower, dated the date hereof
(the "Certificate"), certifying that the documents listed in such
certificate are all of the indentures, loan or credit agreements,
leases, guarantees, mortgages, security agreements, bonds, notes
and other agreements or instruments, and all of the orders,
writs, judgments, awards, injunctions and decrees, which affect
or purport to affect the Borrower's right to borrow money or the
Borrower's obligations under the Credit Agreement or the Notes.
In addition, we have examined the originals, or copies certified
to our satisfaction, of such other corporate records of the
Borrower, certificates of public officials and of officers of the
Borrower, and agreements, instruments and other documents, as we
have deemed necessary as a basis for the opinions expressed
below. As to questions of fact material to such opinions, we
have, when relevant facts were not independently established by
us, relied upon certificates of the Borrower or its officers or
of public officials. We have assumed the due execution and
delivery, pursuant to due authorization, of the Credit Agreement
by the Banks and the Agent.
We are qualified to practice law in the District of
Columbia and we do not purport to be experts on any laws other
than the laws of the District of Columbia and the Federal laws of
the United States.
Based upon the foregoing and upon such investigation as
we have deemed necessary, we are of the following opinion:
1. The Borrower is a corporation duly organized,
validly existing and in good standing under the laws of the
District of Columbia.
2. The execution, delivery and performance by the
Borrower of the Credit Agreement and the Notes are within
the Borrower's corporate powers, have been duly authorized
by all necessary corporate action, and do not contravene (i)
the Charter or the By-laws or (ii) any law, rule or
regulation applicable to the Borrower (including, without
limitation, the margin stock regulations issued by the Board
of Governors of the Federal Reserve System applicable to the
Borrower and the regulations of the Federal Communications
Commission) or (iii) any contractual or legal restriction
contained in any document listed in the Certificate or, to
the best of our knowledge, contained in any other similar
document. The Credit Agreement and the Notes have been duly
executed and delivered on behalf of the Borrower.
3. No authorization, approval or other action by, and
no notice to or filing with, any governmental authority or
regulatory body is required for the due execution, delivery
and performance by the Borrower of the Credit Agreement and
the Notes.
<PAGE>
4. To the best of our knowledge, there are no pending
or overtly threatened actions or proceedings against the
Borrower or any of its subsidiaries before any court,
governmental agency or arbitrator which purport to affect
the legality, validity, binding effect or enforceability of
the Credit Agreement or any of the Notes or which are likely
to have a materially adverse effect upon the financial
condition or operations of the Borrower and its consolidated
subsidiaries, taken as a whole.
5. In any action or proceeding arising out of or
relating to the Credit Agreement or the Notes in any court
of the District of Columbia or in any federal court sitting
in the District of Columbia, such court would recognize and
give effect to the provisions of Section 8.09 of the Credit
Agreement wherein the parties thereto agree that the Credit
Agreement and the Notes shall be governed by, and construed
in accordance with, the laws of the State of New York.
Without limiting the generality of the foregoing, a court of
the District of Columbia or a federal court sitting in the
District of Columbia would apply the usury law of the State
of New York, and would not apply the usury law of the
District of Columbia, to the Credit Agreement and the Notes.
However, if a court were to hold that the Credit Agreement
and the Notes are governed by, and to be construed in
accordance with, the laws of the District of Columbia, the
Credit Agreement and the Notes would be, under the laws of
the District of Columbia, legal, valid and binding
obligations of the Borrower enforceable against the Borrower
in accordance with the respective terms.
The opinions set forth above are subject to the following
qualifications:
(a) Our opinion in paragraph 5 above is subject to the
effect of any applicable bankruptcy, insolvency,
reorganization, moratorium or similar law affecting
creditors' rights generally.
(b) Our opinion in paragraph 5 above is subject to the
effect of general principles of equity, including (without
limitation) concepts of materiality, reasonableness, good
faith and fair dealing (regardless of whether considered in
a proceeding in equity or at law).
Very truly yours,
<PAGE>
EXHIBIT E
Form of Extension Letter
_______________, 199_
[Name and address of Lender]
Re: Proposed Extension of the Termination Date
Ladies and Gentlemen:
We make reference to the Credit Agreement dated as of
December 17, 1993 among the undersigned, the Lenders parties
thereto and NationsBank of North Carolina, N.A., as Agent for
said Lenders (the "Credit Agreement," the terms defined therein
being used herein as therein defined).
The current Termination Date is ______________, 199_.
The Borrower desires to extend the Termination Date by one
year and accordingly requests hereby that the Bank agree to
extend the Termination Date to ______________, 199_.
If the foregoing proposed extension of the Termination Date
meets with your approval, please so indicate by executing and
returning to the Agent and the Borrower the accompanying copies
of this letter. Upon the approval of at least 60% of the Lenders
in accordance with Section 2.17 of the Credit Agreement, the
Termination Date under the Credit Agreement shall hereafter be
_______________, 199_.
Very truly yours,
COMSAT CORPORATION
By:
Title:
ACCEPTED AND AGREED TO:
[NAME OF BANK]
By:____________________________
Title:_________________________
Date:__________________________
<PAGE>
<PAGE>
EXHIBIT 10hh
<PAGE>
<TABLE>
<CAPTION>
COMMITMENT SUMMARY 1989-1993
Net Additions
--------------------------------------------------------------
Cumulative
Service 1989 1990 1991 1992 1993 Total
- - - ---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
FDM 10,362 (862) (1,224) (3,062) (1,970) 3,224
CFDM 742 0 84 228 (446) 608
SCPC 3 0 0 (3) 0 0
IDR 438 677 2,017 3,422 680 7,234
TDMA 1,458 227 (121) 1 (68) 1,497
IBS 0 1,193 1,837 (1,057) (16) 1,957
TUU's 0 10.5 1 0 0 11.5
</TABLE>
<PAGE>
<PAGE>
EXHIBIT 10(ii)
<PAGE>
A G R E E M E N T
This Agreement is made by and between MCI International,
Inc. ("MCI"), a United States International Service Carrier
("USISC"), and COMSAT Corporation ("COMSAT"), the U.S. Signatory
to the International Telecommunications Satellite Organization
("INTELSAT") (hereinafter jointly referred to as the "Parties").
WHEREAS, MCI is engaged in the provision of
telecommunications services via satellite; and
WHEREAS, COMSAT offers INTELSAT space segment capacity to
USISCs for telecommunications services; and
WHEREAS, COMSAT and MCI entered into an inter-carrier
contract on October 27, 1988, specifying the rates, terms and
conditions relating to MCI's long-term commitment for utilization
of COMSAT's INTELSAT space segment capacity for international
voice-grade switched circuits ("1988 Agreement"); and
WHEREAS, the 1988 Agreement was filed with the Federal
Communications Commission ("FCC") pursuant to Section 211 of the
Communications Act, and was allowed to become effective by the
FCC; and
WHEREAS, COMSAT and MCI entered into a new inter-carrier
contract on April 8, 1993, specifying rates, terms and conditions
relating to MCI's utilization of COMSAT's INTELSAT space segment
<PAGE>
capacity for international switched telecommunications services
("1993 Agreement"); and
WHEREAS, the 1993 Agreement was also filed with the FCC
pursuant to Section 211 of the Communications Act, and was also
allowed to become effective by the FCC; and
WHEREAS, the Parties have decided to replace the 1993
Agreement with a new inter-carrier contract based upon MCI's
current and future utilization of COMSAT's INTELSAT space segment
capacity for telecommunications services, and have decided to
maintain certain prior commitments arising from the 1988
Agreement and the 1993 Agreement, as specified herein;
NOW, THEREFORE, in consideration of and in reliance upon the
mutual promises set forth below, MCI and COMSAT hereby agree as
follows:
<PAGE>
ARTICLE I
PURPOSE AND INTENT
The purpose of this Agreement is to implement the Parties'
mutual understanding with respect to MCI's current and future
utilization of COMSAT's INTELSAT space segment capacity for
telecommunications services. It is the intent of COMSAT and MCI
that this Agreement comply with all laws and international
obligations of the United States. Consistent with that intent,
nothing herein shall preclude COMSAT from reaching similar
agreements for circuits with other USISCs, and nothing herein
shall preclude MCI from placing traffic not covered by this
Agreement on whatever telecommunications facilities it should
select.
<PAGE>
ARTICLE II
DEFINITIONS
The terms used in this Agreement are defined as follows:
1. Additional Circuits. Digital Bearer Circuits
activated by MCI on the INTELSAT system via COMSAT
on or after January 1, 1992 for 7-year, 10-year or
15-year lease terms, including but not limited to
the 7-year circuits that MCI committed to
take pursuant to the 1993 Agreement and the
10-year circuits that MCI has committed to take
pursuant to this Agreement.
2. Analog-to-Digital Conversions. Digital Bearer
Circuits converted from FM Circuits.
3. Base Circuits. The Digital Bearer Circuits
activated by MCI on the INTELSAT system via COMSAT
prior to January 1, 1992, each of which circuits
MCI committed to take for 15-year lease terms
pursuant to the 1988 Agreement.
4. Circuit Month. The utilization by MCI of one 64
Kbps equivalent Digital Bearer Circuit for thirty
(30) consecutive days as part of the First Bulk
Offering provided under this Agreement.
<PAGE>
5. Date of Activation. The month, day and year on
which a particular FM Circuit or Digital Bearer
Circuit is placed in service.
6. Derived Circuits. Circuits created from Digital
Bearer Circuits by means of Digital Circuit
Multiplication Equipment (DCME).
7. Digital Bearer Circuits. 64 Kbps equivalent
circuits used to carry public-switched traffic
(including IDR and TDMA circuits, but excluding
private line circuits such as IBS); these circuits
may or may not be aggregated into larger digital
carriers, e.g., 2.048 Mbps.
8. Efficiency Factor. The maximum number of Derived
Circuits that may be provided through a Digital
Bearer Circuit.
9. First Bulk Offering. The offering by COMSAT to
MCI of a total of Circuit Months of service
on a take-or-pay basis pursuant to the rates,
terms and conditions initially specified in the
<PAGE>
1993 Agreement and subsequently revised in this
Agreement.
10. FM Circuits. 4 Khz analog circuits associated
with analog carriers using Frequency Division
Multiple Access and Frequency Modulation.
11. Global Traffic Meeting. INTELSAT's annual Global
Traffic Meeting, at which USISCs and their foreign
correspondents forecast their requirements for
INTELSAT satellite circuits.
12. Growth Circuits. Digital Bearer Circuits
(excluding Analog-to-Digital Conversions)
activated after the effective date of this
Agreement.
13. IDR Circuits. 64 Kbps equivalent international
digital route circuits associated with digital
carriers using Quadrature Phase Shift Keying
(QPSK) modulation.
14. Large Standard A Earth Station. An earth station
having a gain-to-noise temperature ratio ("G/T")
at least equal to 40.7 dB/K in the U.S. and at
least equal to 39 dB/K at the foreign end.
<PAGE>
15. Revised Standard A Earth Station. An earth
station having a gain-to-noise temperature ratio
("G/T") at least equal to 35 dB/K.
16. Second Bulk Offering. The offering by COMSAT to
MCI of options to lease up to three (3) 36 MHz
allotments pursuant to the rates, terms and
conditions specified in this Agreement.
17. Tariff No. 1. COMSAT World Systems Tariff F.C.C.
No. 1.
18. TDMA Circuits. 64 Kbps equivalent digital
circuits providing Time Division Multiple Access
service.
19. Voice-Grade Circuits. Circuits on any long-haul
transmission medium consisting of FM Circuits,
Digital Bearer Circuits not using DCME, and
Derived Circuits.
<PAGE>
ARTICLE III
BASE AND ADDITIONAL CIRCUITS
A. MCI hereby reaffirms the prior commitment it made to
COMSAT under the 1988 Agreement (and affirmed in the 1993
Agreement) to place at least Voice-Grade Circuits on the
INTELSAT system via COMSAT by December 31, 1998. In fulfillment
of that commitment, as of the date of this Agreement MCI had
taken Digital Bearer Circuits from COMSAT for 15-year lease
terms. Those circuits were all activated before January 1,
1992, and are referred to herein as Base Circuits. MCI also
reaffirms its prior commitment to COMSAT under the 1988 Agreement
and 1993 Agreement not to cancel any of its existing 15-
year Digital Bearer Circuits until January 1, 1999, at the
earliest.
B. MCI also committed under the 1993 Agreement to place on
the INTELSAT system via COMSAT at least 7-year Digital
Bearer Circuits between January 1, 1992 and December 31, 1993.
In exchange for this commitment, which has also been fulfilled,
COMSAT affirms that it will allow MCI to deactivate any or all of
its FM Circuits in existence as of the effective date of the 1993
Agreement (up to a maximum of FM Circuits) at any time
during the term of the present Agreement without incurring early
termination charges.
<PAGE>
C. COMSAT hereby agrees to provide, and MCI commits and
agrees to lease from COMSAT, an additional 64 Kbps equivalent
IDR Growth Circuits. At least of these circuits must be
leased within one (1) year after the effective date of this
Agreement and the remainder within two (2) years after the
effective date of this Agreement. The lease term for each of
these circuits shall be ten (10) years.
D. In addition to the 15-year Digital Bearer Circuits
described in Paragraph A of this Article, the 7-year
Digital Bearer Circuits described in Paragraph B of this Article,
and the 10-year IDR Growth Circuits described in Paragraph C
of this Article, MCI may order other long-term Digital Bearer
Circuits from COMSAT. For purposes of this Agreement, all 7-
year, 10-year and 15-Year Digital Bearer Circuits activated by
MCI after January 1, 1992 (including the 7-year circuits
described in Paragraph B and the 10-year circuits described
in Paragraph C) are referred to as Additional Circuits.
E. MCI affirms its prior commitment to maintain for the
duration of their respective lease terms at least Voice-
Grade Circuits in the combined Europe/Latin America Region and at
least Voice-Grade Circuits in the Pacific Region pursuant
to its written notification availing itself of COMSAT's 1989
promotional regional tariff. Above those specified circuit
<PAGE>
levels, MCI shall have the flexibility to redistribute its Base
and Additional Circuits geographically consistent with the
procedures specified in Tariff No. 1 (which provisions are hereby
incorporated into this Agreement), without incurring early
termination charges for such redistribution or triggering the
start of a new lease term.
F. COMSAT will permit MCI to redesignate Base Circuits as
Additional Circuits and vice versa, and will also permit MCI to
redesignate the Circuit Months provided under the First Bulk
Offering described in Article V below as Base or Additional
Circuits and vice versa. Such redesignation is subject to the
following conditions, however: (1) a circuit may not be
redesignated more than once every thirty (30) days; (2) MCI's
total number of 15-year Base Circuits may not be reduced below
before January 1, 1999 at the earliest and thereafter may be
reduced only upon payment of early termination charges; (3) MCI's
commitment of Circuit Months pursuant to Article V below
may not be reduced; and (4) except as provided in Article VI
below, MCI's total number of Additional Circuits may not be
reduced without payment of early termination charges.
<PAGE>
ARTICLE IV
RATES FOR BASE AND ADDITIONAL CIRCUITS
A. COMSAT's rates for MCI's Base Circuits shall be
reduced as of December 1, 1993 to the levels specified in
Attachment A, which is appended hereto and made part of this
Agreement. The rates in Attachment A are for Base Circuits
provided via INTELSAT Revised Standard A Earth Stations at the
U.S. end. Base Circuits transmitted through standard earth
stations with lower G/T values at the U.S. end shall be subject
to the rate adjustment factors specified in Attachment B, which
is also appended hereto and made part of this Agreement. In
addition, the Parties agree that, from December 1, 1993 through
December 31, 1997, a discount of 10% below the rates specified in
Attachment A shall be applied to Base Circuits transmitted
through Large Standard A Earth Stations at both ends.
B. COMSAT's rates for MCI's Additional Circuits are
specified in Attachments C and D, which are appended hereto and
made part of this Agreement. The rates in Attachments C and D
are for Additional Circuits provided via INTELSAT Large Standard
A and Revised Standard A earth stations at the U.S. end.
Additional Circuits transmitted through standard earth stations
with lower G/T values at the U.S. end shall be subject to the
rate adjustment factors specified in Attachment B.
<PAGE.
C. As of December 1, 1993, COMSAT's charge for early
termination of MCI's Base Circuits and Additional Circuits shall
be a flat fee of $6,880 per 64 Kbps equivalent circuit, plus 45%
of the balance due at the time of early termination.
D. Notwithstanding Paragraph C of this Article, MCI
reaffirms that it will not cancel any of the Base Circuits
committed pursuant to Article III-A of this Agreement until
January 1, 1999 at the earliest.
E. The Parties agree that the rates and early termination
provisions set forth in this Article and in Attachments A through
D supersede any conflicting provisions in Tariff No. 1. All
other terms and conditions for MCI's Base Circuits and Additional
Circuits (including Efficiency Factor ratios) shall be the same
as those specified in Tariff No. 1 as of the effective date of
this Agreement, and those tariff provisions are hereby
incorporated into this Agreement. If those other tariff terms
and conditions are amended during the term of this Agreement,
such amended terms and conditions shall also be incorporated into
this Agreement and shall be effective as of the effective date of
the tariff amendment, unless MCI notifies COMSAT in writing
within thirty (30) days of such effective date that it does not
accept the amended terms and conditions, in which case the prior
terms and conditions will continue to apply to MCI; provided,
<PAGE>
however, that MCI must accept or reject the amended terms and
conditions in their entirety.
<PAGE>
ARTICLE V
FIRST BULK OFFERING
A. The Parties hereby affirm that COMSAT shall provide, and
that MCI shall place on the INTELSAT system via COMSAT, Digital
Bearer Growth Circuits equivalent to Circuit Months during
the period from April 8, 1993 through December 31, 1999. The
Parties also affirm that COMSAT shall provide these
Circuit Months to MCI on a take-or-pay basis as a Bulk Offering
at special rates within the framework of this Agreement.
B. The Bulk Offering described in this Article (hereafter
"First Bulk Offering") is designed to accommodate MCI's varying
growth traffic requirements during the period from April 8, 1993
through December 31, 1999, in a flexible manner consistent with
reasonable operational constraints. Accordingly, MCI previously
agreed to pay for at least the following numbers of 64 Kbps
equivalent Digital Bearer Circuit Months within the following
calendar years:
Calendar Year Circuit Month Commitment
1993
1994
1995
1996
1997
1998
1999
<PAGE>
C. MCI recognizes that COMSAT and INTELSAT may be unable to
accommodate spikes in MCI's traffic. For this reason, COMSAT's
commitment under Articles III-C, III-D, V-A and V-B of this
Agreement is limited to meeting circuit orders: (1) that have
been included in MCI's then-current Global Traffic Meeting
forecast for the relevant calendar year; (2) that have been
matched by a foreign correspondent; (3) in amounts up to 270 64
Kbps equivalent Digital Bearer Circuits in a given calendar month
and up to 1,710 64 Kbps equivalent Digital Bearer Circuits in a
given calendar year. However, COMSAT will attempt to fill any
MCI order, and circuits in excess of the limits specified herein
will be provided if available. If MCI orders circuits within the
limits specified herein under Articles V-A and V-B of this
Agreement, and such circuits cannot be accommodated by the
sixtieth (60th) day from the date a matched order is placed with
COMSAT, such circuits will be subtracted from MCI's commitment
under Articles V-A and V-B for the calendar year after the
sixtieth (60th) day during which they were unavailable. Circuits
ordered in excess of the limits specified herein that cannot be
accommodated will not be subtracted from MCI's commitments under
Articles V-A and V-B for the applicable calendar year. If MCI
orders circuits within the limits specified herein under Article
III-C of this Agreement, and such circuits cannot be accommodated
by the sixtieth (60th) day from the date a matched order is
placed with COMSAT, such circuits will not be subtracted from
<PAGE>
MCI's total commitment of circuits under Article III-C, but their
activation may be postponed until the following calendar year.
D. Except as provided in Paragraph J below, COMSAT's rates
for Circuit Months provided pursuant to the First Bulk Offering
described in this Article shall be set at $10 per month per 64
Kbps equivalent Digital Bearer Circuit above the Block 1 step
rate specified in Attachment D (or the Block 1 step rate
specified in Tariff No. 1, if that rate is lower) that would have
been applicable if the same circuit had been taken for a seven
(7) year lease term.
E. Billing for each circuit activated pursuant to this
First Bulk Offering shall commence as of the Date of Activation,
and shall continue until the circuit is deactivated. Charges
will be billed on a calendar month basis. There shall be no
early termination charges associated with this First Bulk
Offering. However, each circuit provided pursuant to this First
Bulk Offering must be activated for at least thirty (30)
consecutive days and may be deactivated only on ten (10) days'
prior written notice. During both the first and last calendar
months of service for each circuit, MCI shall be charged for one-
half month of service if the circuit is utilized for fifteen (15)
days or less, and for a full month of service if the circuit is
utilized for more than fifteen (15) days.
<PAGE>
F. Except as provided in Paragraph J below, if, at the end
of a given calendar year, the Circuit Month volume committed to
by MCI exceeds its actual use, MCI shall pay for the difference
within sixty (60) days at the rate of $10 per month per 64 Kbps
equivalent Digital Bearer Circuit above the Block 1 step rate
specified in Attachment D (or the Block 1 step rate specified in
Tariff No. 1, if that rate is lower) that would have been
applicable if the same circuit had been taken for a seven (7)
year lease term. If MCI's actual use of Circuit Months exceeds
its commitment during a given calendar year, the overage may be
applied against MCI's commitment for the subsequent calendar year
or, alternatively, MCI may receive a credit for the overage up to
the amount of any shortfall it has paid for that occurred during
the previous calendar year.
G. Except as otherwise specified in this Agreement, all
Digital Bearer Circuits provided pursuant to the First Bulk
Offering described in this Article shall be subject to the same
terms and conditions as those specified in Tariff No. 1 as of the
effective date of this Agreement, and those tariff provisions are
hereby incorporated into this Agreement. If such tariff terms
and conditions are amended during the term of this Agreement, the
amended terms and conditions shall also be automatically
incorporated into this Agreement and shall be effective as of the
effective date of the tariff amendment, unless MCI notifies
COMSAT in writing within thirty (30) days of such effective date
<PAGE>
that it does not accept the amended terms and conditions, in
which case the prior terms and conditions will continue to apply
to MCI; provided, however, that MCI must accept or reject the
amended terms and conditions in their entirety.
H. Any request by MCI during the period through December
31, 1999, for additional Circuit Months beyond the Circuit
Months specified in this Article shall be the subject of a
separate agreement with respect to price and terms when and if
such requests are made.
I. To the extent MCI orders Digital Bearer Circuits from
COMSAT over and above the 7-year circuits described in
Article III-B and the 10-year circuits described in Article
III-C for terms of seven (7) years or more, the Circuit Months
(out to December 31, 1999) represented by such circuits, up to a
maximum of Circuit Months, may be counted prospectively
toward the fulfillment of MCI's commitment under Articles V-A and
V-B of this Agreement.
J. As of the effective date of this Agreement, it appears
that MCI placed Digital Bearer Growth Circuits equivalent to only
Circuit Months with COMSAT during 1993. In consideration
of MCI's other traffic commitments reflected in this Agreement,
the Parties agree that Paragraph F of this Article shall not be
invoked, and that MCI shall make up the 1993 shortfall of
<PAGE>
Circuit Months completely in 1994. The price for these
Circuit Months, and only these Circuit Months, shall be $465 per
month per 64 Kbps equivalent circuit. The price for the
Circuit Months originally committed to for 1994 under Paragraph B
of this Article shall be $625 per month per 64 Kbps equivalent
circuit. If MCI fails by year-end 1994 to place with COMSAT the
total of Circuit Months ( ) committed to for
1994, then the provisions of Paragraph F of this Article will
apply. MCI hereby reaffirms its commitment either to place the
remainder of its Circuit Months with COMSAT according to
the schedule set forth in Paragraph B of this Article or to
follow the procedures set forth in Paragraph F of this Article.
MCI also reaffirms its agreement that the price for all Circuit
Months other than the Circuit Months referenced in this
Paragraph shall be as specified in Paragraph D of this Article.
<PAGE>
ARTICLE VI
SECOND BULK OFFERING
A. The Parties agree that MCI shall have options to lease
up to three (3) 36 MHz bandwidth allotments from COMSAT for U.S.
traffic. Two (2) of these options shall expire one (1) year
after the effective date of this Agreement, and the third option
shall expire two (2) years after the effective date of this
Agreement. The designation of the specific capacity to be leased
shall be subject to mutual agreement. All three (3) 36 MHz
allotments offered pursuant to the Second Bulk Offering described
in this Article shall be subject to the availability of capacity
for the entire lease term as of the start date requested by MCI,
and shall be leased pursuant to the rates, terms and conditions
described in Paragraphs B-L below.
B. MCI must lease each 36 MHz bandwidth allotment for a 10-
year term, which term must commence before the expiration of the
option date specified in Paragraph A above.
C. COMSAT's rates for each 36 MHz allotment provided
pursuant to the Second Bulk Offering described in this Article
shall initially be $189,000 per month. If MCI leases three (3)
36 Mhz allotments within one (1) year after the effective date of
this Agreement, the rate for each of the three allotments shall
be $165,000 per month from January 1, 1997 through the remainder
<PAGE>
of the lease term for each allotment. If MCI leases two (2) 36
MHZ allotments within one (1) year after the effective date of
this Agreement and a third 36 MHz allotment within two (2) years
after the effective date of this Agreement, the rate for each of
the three allotments shall be $165,000 per month from January 1,
1998 through the remainder of the lease term for each allotment.
D. The Parties recognize that, even after COMSAT and MCI
agree on specific capacity to be leased as part of the Second
Bulk Offering described in this Article, there is still likely to
be substantial non-MCI traffic located in these allotments that
will constrain MCI's ability to utilize them fully. The parties
also recognize that it will take some time to relocate this non-
MCI traffic consistent with INTELSAT's standard relocation
procedures. Therefore, until this relocation is complete, COMSAT
will prorate its lease price such that, if there are X non-MCI
circuits being leased from COMSAT in a given allotment, the lease
price for that allotment will be ((540-X)/540) x $189,000 (or
$165,000, as applicable) per month.
E. Each of the 36 MHz allotments described in this Article
may accommodate up to 540 64 Kbps equivalent circuits.
Consistent therewith, COMSAT and MCI hereby agree that, during
the two-year period following the effective date of this
Agreement, MCI's 36 MHz allotment(s) may absorb any or all of the
10-year Additional Circuits committed by MCI pursuant to
<PAGE>
Article III-C of this Agreement. In addition, the Parties agree
that, during the six-month period following the commencement of
each lease for a 36 MHz allotment, that allotment may absorb up
to 270 of MCI's other existing Additional Circuits (except
circuits ordered under Article V-I of this Agreement), provided,
however, that the total number of 64 Kbps equivalent circuits in
any one 36 MHz allotment shall not exceed 540. (Base Circuits
within the allotment may be substituted for Additional Circuits,
but only if equivalent numbers of Additional Circuits outside the
allotment are redesignated as Base Circuits, so that MCI's total
number of Base Circuits remains constant at .) The movement
of the 10-year Additional Circuits into the 36 MHz
allotments, and of up to 270 other Additional Circuits (excluding
Article V-I circuits) into a given 36 MHz allotment, subject to
the limits set forth in this Paragraph, shall not be considered
early termination, and early termination charges shall not apply
thereto. However, if MCI moves more than the permitted number of
existing Additional Circuits into 36 MHz allotments, MCI must
replace those circuits with Growth Circuits of equal lease term;
otherwise, early termination charges will be applied.
F. Existing circuits outside the allotment(s) that have not
been leased for multi-year terms (including circuits leased
pursuant to the First Bulk Offering described in Article V of
this Agreement) may be moved into the allotments at any time, and
new circuits (including Additional Circuits not yet activated as
<PAGE>
of the effective date of this Agreement) may be activated inside
the allotments at any time. Once a circuit is designated as part
of an allotment, all other charges for that circuit shall cease,
and that circuit may not be counted either in determining the
appropriate block rates for MCI under Article IV-B and
Attachments C and D of this Agreement, or in determining the
number of Circuit Months placed with COMSAT under Article V of
this Agreement.
G. MCI agrees that it will not cancel any 36 MHz allotment
taken pursuant to this Article until at least five (5) years
after the commencement of the lease term for such allotment.
H. Beginning five (5) years after the commencement of the
lease term for any 36 MHz allotment taken pursuant to this
Article, COMSAT's charge for early termination for that allotment
shall be a flat fee of $6,880 x 540 64 Kbps equivalent circuits,
plus 45% of the balance due at the time of early termination.
I. Any 36 MHz allotment provided pursuant to this Article
shall be non-preemptible. In case of space segment failure, such
allotment(s) shall be restored in accordance with the procedures
set forth in INTELSAT SSOG 103, Section 6, as may be amended from
time to time. The allotment(s) may be used for any type of U.S.
traffic, provided, however, that: (1) INTELSAT's technical lease
definitions, as set forth in the IESS documents that COMSAT
<PAGE>
routinely provides to MCI, shall apply to the use of the
allotment(s), and that (2) COMSAT and INTELSAT must approve
transmission plans for each circuit located in the allotment(s)
in advance of service activation.
J. The Parties recognize that, during the lease term of the
36 MHz allotment(s) described in this Article, the particular
satellites on which the allotments are initially located may be
replaced by other INTELSAT satellites. In such cases, a
transponder of different connectivity may be substituted for the
replaced transponder upon mutual agreement of the Parties.
K. The Parties agree that the rates, early termination
charges, and other terms and conditions specified in this Article
supersede any conflicting provisions in Tariff No. 1. In
addition, the circuits provided pursuant to the Second Bulk
Offering described in this Article shall be subject to the terms
and conditions specified in Sections 2.1, 2.2, 2.3, 2.4.3, 2.5.1,
2.6, 2.7, 2.10, 2.11 and 9 of Tariff No. 1 as of the date of this
Agreement, and those tariff provisions are hereby incorporated
into this Agreement. If such tariff terms and conditions are
amended during the term of this Agreement, the amended terms and
conditions shall also be automatically incorporated into this
Agreement and shall be effective as of the effective date of the
tariff amendment, unless MCI notifies COMSAT in writing within
thirty (30) days of such effective date that it does not accept
<PAGE>
the amended terms and conditions, in which case the prior terms
and conditions will continue to apply to MCI; provided, however,
that MCI must accept or reject the amended terms and conditions
in their entirety.
L. Any request by MCI during the term of this Agreement for
additional allotments (or options for allotments) beyond the
number of exercisable options specified in this Article shall be
the subject of a separate agreement with respect to price and
terms when and if such a request is made.
<PAGE>
ARTICLE VII
SEMI-ANNUAL REPORTS
A. To ensure compliance with the terms of this Agreement,
MCI agrees to provide COMSAT with semi-annual reports, certified
by a responsible officer of MCI or that officer's authorized
designate. These reports will be provided at mid-year and year-
end and will be subject to appropriate non-disclosure agreements.
B. With respect to the First Bulk Offering described in
Article V above, MCI shall specify in its semi-annual reports:
(1) the number of 64 Kbps Digital Bearer Circuits activated and
deactivated during the preceding six-month period; (2) the total
number of Circuit Months utilized during the preceding six-month
period; and (3) the total number of Circuit Months utilized up to
the date of the report.
C. With respect to the 10-year Digital Bearer Circuits
described in Article III-C above, MCI shall specify the number of
64 Kbps equivalent Digital Bearer Circuits activated during the
preceding six-month period on a regional basis. If MCI activates
Additional Circuits over and above the 10-year circuits
described in Article III-C above (and the 7-year circuits
described in Article III-B above), it shall specify the number of
64 Kbps equivalent Digital Bearer Circuits activated during the
preceding six-month period on a regional basis, and shall also
<PAGE>
indicate (in the case of circuits leased for seven (7) years or
longer) whether it wishes those circuits to be counted
prospectively toward the fulfillment of MCI's commitment under
Articles V-A and V-B of this Agreement.
D. To the extent that MCI exercises any of its options
under the Second Bulk Offering described in Article VI above, MCI
shall specify in its semi-annual reports: (1) the number of 64
Kbps Digital Bearer Circuits moved into and out of the
allotment(s) within the previous six-month period, and (2)
whether those circuits are (or were) existing long-term circuits,
existing short-term circuits, or new circuits.
E. The Parties will meet as needed to review and verify the
semi-annual reports provided pursuant to this Article. In
addition, and if undertaken at COMSAT's own expense, MCI agrees
that COMSAT shall have the annual right to retain an independent
firm to audit MCI's compliance with the circuit commitments made
under this Agreement, and MCI agrees to cooperate fully with the
independent auditors.
F. The semi-annual reports provided for in this Article are
not a substitute for COMSAT's standard ordering and billing
procedures. Thus, nothing in this Article shall relieve MCI of
its obligation to inform COMSAT of what service it wishes to take
prior to activation, movement or designation of any circuit.
<PAGE>
ARTICLE VIII
MOST FAVORED CARRIER
A. To the extent permitted by law, COMSAT agrees that,
during the term of this Agreement, it will offer MCI rates, terms
and conditions for Base Circuits that are no less favorable than
the rates, terms and conditions it makes available, after the
effective date of this Agreement, to any other USISC for Digital
Bearer Circuits activated prior to January 1, 1992. In the event
that, during the term of this Agreement, COMSAT makes available
to another USISC rates, terms and conditions for Digital Bearer
Circuits activated prior to January 1, 1992 that are more
favorable than those applicable under this Agreement, then such
more favorable rates, terms and conditions shall be offered by
COMSAT to MCI in writing and, if accepted by MCI in writing,
shall be automatically incorporated into this Agreement as an
amendment thereto, and shall be effective as of the date made
available to such other USISC.
B. To the extent permitted by law, COMSAT agrees that,
during the term of this Agreement, it will offer MCI rates, terms
and conditions for Additional Circuits that are no less favorable
than the rates, terms and conditions it makes available, after
the effective date of this Agreement, to any other USISC
(including potentially any carrier subsidiary or affiliate of
COMSAT) for Digital Bearer Circuits activated on or after January
<PAGE>
1, 1992. In the event that, during the term of this Agreement,
COMSAT makes available to another USISC rates, terms and
conditions for Digital Bearer Circuits activated on or after
January 1, 1992 that are more favorable than those applicable
under this Agreement, then such more favorable rates, terms and
conditions shall be offered by COMSAT to MCI in writing and, if
accepted by MCI in writing, shall be automatically incorporated
into this Agreement as an amendment thereto, and shall be
effective as of the date made available to such other USISC.
C. To the extent permitted by law, COMSAT agrees that,
during the term of this Agreement, it will offer MCI rates, terms
and conditions for Circuit Month bulk offerings that are no less
favorable than the rates, terms and conditions it makes available
to any other USISC for any such offerings leased after the
effective date of this Agreement. In the event that, during the
term of this Agreement, COMSAT makes available to another USISC
rates, terms and conditions for Circuit Month bulk offerings
leased after the effective date of this Agreement that are more
favorable than those applicable under this Agreement, then such
more favorable rates, terms and conditions shall be offered by
COMSAT to MCI in writing and, if accepted by MCI in writing,
shall be automatically incorporated into this Agreement as an
amendment thereto, and shall be effective as of the date made
available to such other USISC.
<PAGE>
D. To the extent permitted by law, COMSAT agrees that,
during the term of this Agreement, it will offer MCI rates, terms
and conditions for 36 MHz frequency allotments that are no less
favorable than the rates, terms and conditions it makes available
to any other USISC for any such allotments leased after the
effective date of this Agreement. In the event that, during the
term of this Agreement, COMSAT makes available to another USISC
rates, terms and conditions for 36 MHz frequency allotments
leased after the effective date of this Agreement that are more
favorable than those applicable under this Agreement, then such
more favorable rates, terms and conditions shall be offered by
COMSAT to MCI in writing and, if accepted by MCI in writing,
shall be automatically incorporated into this Agreement as an
amendment thereto, and shall be effective as of the date made
available to such other USISC.
<PAGE>
ARTICLE IX
CUSTOMER/SUPPLIER RELATIONSHIP
In recognition of COMSAT's unique expertise and experience
in international satellite telecommunications, the high quality
of its services, its performance as U.S. Signatory to INTELSAT,
and the Parties' good working relationship over the past decade,
MCI agrees that it shall give COMSAT an opportunity to supply
additional satellite capacity not covered by this agreement,
provided however that, consistent with Article I above, nothing
shall preclude MCI from placing such traffic on other facilities.
<PAGE>
ARTICLE X
NEW ENTRANTS
A. It is the intent of the Parties under this Article that
MCI shall not be placed at a market disadvantage by virtue of
paying Base Circuit rates in comparison to other USISCs that did
not take Digital Bearer Circuits from COMSAT in substantial
numbers prior to January 1, 1992. Accordingly, if any USISC
increases the number of 64 Kbps equivalent Digital Bearer
Circuits it takes from COMSAT from fewer than in a particular
region as of January 1, 1992, to more than in that region
during the term of this Agreement (other than by merger with, or
acquisition of, another USISC), and thereby achieves a lower
average cost per circuit to that region than MCI, COMSAT shall,
at its discretion, either: (1) adjust its rates for MCI's Base
Circuits so that MCI's average cost per circuit, as billed by
COMSAT, for Digital Bearer Circuits to the same region for the
same term is no greater than the average cost per circuit
available to such other USISC; or (2) adjust its rates for MCI's
Base Circuits to the region in question so that those rates are
no higher than the highest applicable step rate specified in
Tariff No. 1 for 15-year circuits activated after January 1,
1992; or (3) subject to Article III-E above, permit MCI to cancel
without penalty enough Base Circuits to the region in question to
ensure that its average cost per circuit to that region for the
<PAGE>
same term is no greater than the average cost per circuit
available to such other USISC.
B. For purposes of this Article, the regions referred to
are those specified in Tariff No. 1, as may be amended from time
to time. As of the date of this Agreement, those regions are:
(1) (Western) Europe; (2) Pacific; (3) Latin America; and (4)
Near and Middle East, Africa and other Europe.
C. For purposes of calculating average cost per circuit in
connection with this Article, any 36 MHz frequency allotment
leased by MCI pursuant to Article VI of this Agreement (or by
another USISC pursuant to a similar bulk offering) shall be
deemed the equivalent of 540 Digital Bearer Circuits.
D. As part of the review process described in Article VII
of this Agreement, a responsible officer of COMSAT, or that
officer's designee, shall certify to MCI whether any USISC has
met the criteria set forth in Paragraph A of this Article. Such
certification shall not require COMSAT to disclose to MCI the
identity of such USISC, or any other confidential or
competitively sensitive information with respect to such USISC.
<PAGE>
ARTICLE XI
INCENTIVE REGULATION
Notwithstanding any other provision of this Agreement,
Article X of this Agreement (entitled "New Entrants") shall not
take effect unless and until the Federal Communications
Commission issues a final Memorandum Opinion and Order, which is
no longer subject to Commission or court review, granting
COMSAT's specific request, as described in its Petition for
Rulemaking, RM-7913, filed January 30, 1992, for incentive-based
regulation of its multi-year fixed-price carrier-to-carrier
contract-based switched-voice INTELSAT services.
<PAGE>
ARTICLE XII
REMEDIES
A. In the event that COMSAT materially breaches Article IV-
A, IV-B, or V-D of this Agreement, MCI shall be entitled to
damages in an amount equal to the difference between the rates
MCI actually paid and the rates specified in Attachments A, C and
D and in Article V-D for the number of Base Circuits, Additional
Circuits or Circuit Months involved.
B. In the event that MCI exercises its option to lease one
or more 36 MHz transponders pursuant to Article VI of this
Agreement, and COMSAT then materially breaches Article VI-C of
this Agreement, MCI shall be entitled to damages in an amount
equal to the difference between the rates MCI paid and the rates
specified in Article VI-C for the number of 36 MHz allotments
involved.
C. In the event that COMSAT materially breaches Article
VIII of this Agreement, MCI shall be entitled to damages in an
amount equal to the difference between the rates MCI paid for the
circuits covered by this Agreement and the rates MCI would have
paid for those circuits if COMSAT had not breached Article VIII.
D. In the event that MCI materially breaches Article III-A
of this Agreement, COMSAT shall be entitled to damages in an
<PAGE>
amount equal to the revenues that COMSAT would have realized if
MCI had left Base Circuits in place in accordance with its
commitments to COMSAT and then canceled those circuits on January
1, 1999.
E. In the event that MCI materially breaches Article III-C
of this Agreement, COMSAT shall be entitled to damages in an
amount equal to the termination charges that COMSAT would have
realized if MCI had activated circuits on the last possible day
consistent with its commitments and then canceled those circuits
immediately. Alternatively, MCI may notify COMSAT that it wishes
to commence payment for those circuits and activate them up to
six (6) months later. If those circuits then are not activated
within six (6) months, termination charges will apply to the
remaining balance.
F. In the event that MCI exercises its option to lease one
or more 36 MHz frequency allotments pursuant to Article VI of
this Agreement, and MCI then materially breaches Article VI-G of
this Agreement with respect to such allotment(s), COMSAT shall be
entitled to damages in an amount equal to the difference between
the rates MCI paid and the revenues that COMSAT would have
realized if MCI had not canceled such allotment(s) until five (5)
years after commencement of the lease term for each allotment and
had then canceled those leases.
<PAGE>
G. In no event shall either Party be entitled to damages or
other remedies under this Article unless it provides the other
Party with notice and a reasonable opportunity to cure within
sixty (60) days of the date when the Party claiming breach either
knew or should have known of the event giving rise to the alleged
breach.
<PAGE>
ARTICLE XIII
TERM OF AGREEMENT
The term of this Agreement shall commence upon execution of
the Agreement by both Parties and shall run through December 31,
2003, provided, however, that all applicable rates, terms and
conditions for each circuit leased pursuant to the provisions of
this Agreement (or its predecessors, the 1988 Agreement and the
1993 Agreement) shall survive until the expiration of that
circuit's lease term. Thus, for example, the rates, terms and
conditions for a 10-year Additional Circuit activated on January
1, 1995 would remain in effect until December 31, 2004.
<PAGE>
ARTICLE XIV
FCC REVIEW
The Parties shall jointly submit this Agreement to the FCC
within thirty (30) days of execution pursuant to Section 211(a)
of the Communications Act, and shall request confidential
treatment for any competitively sensitive information contained
herein. If any FCC proceeding is initiated with respect to the
entry into force of this Agreement, the Parties agree to
cooperate fully in seeking a prompt and favorable resolution of
such proceeding.
<PAGE>
ARTICLE XV
DISPUTE RESOLUTION
If any dispute arises with respect to the interpretation,
implementation or termination of this Agreement, the Parties will
use their best efforts to resolve the matter amicably, including
recourse to the highest levels of management in their respective
organizations. If such efforts fail to resolve the dispute
within a reasonable time, the Parties agree to present that
dispute to the American Arbitration Association in Washington,
D.C. for binding resolution in accordance with that Association's
Commercial Rules of Arbitration, or in lieu of arbitration, to
utilize another mutually agreeable means of alternative dispute
resolution (ADR). Each Party shall bear all of its own costs
incurred in utilizing arbitration or other ADR mechanism.
<PAGE>
ARTICLE XVI
ENTIRE AGREEMENT
This Agreement (including its attachments and those portions
of COMSAT's tariffs which are incorporated by reference) replaces
the 1993 Agreement between the Parties, and constitutes the
entire agreement between the Parties as to MCI's utilization of
COMSAT's INTELSAT space segment capacity for the
telecommunications services specified herein; it is intended as
the complete and exclusive statement of the terms of the
agreement between the Parties, and supersedes all previous
understandings, commitments or representations by or between the
Parties with respect to its subject matter.
<PAGE>
ARTICLE XVII
REPRESENTATIONS OF AUTHORITY
Each Party to this Agreement hereby represents and warrants
to the other that it is a corporation duly organized, validly
existing, and in good standing under the laws of its jurisdiction
of incorporation; that it has appropriate approvals and direction
from its Board of Directors to empower it to enter into and
perform its obligations under this Agreement; and that it has
taken all requisite corporate action to approve the execution,
delivery, and performance of this Agreement.
<PAGE>
ARTICLE XVIII
BINDING OBLIGATION
A. This Agreement, when executed and delivered, shall be a
legal, valid and binding obligation of COMSAT and MCI, and shall
bind all successors, permitted assigns and U.S. subsidiaries of
the Parties.
B. The provisions of this Agreement are for the benefit
only of the Parties hereto and their subsidiaries, successors and
permitted assigns, and no other party may seek to enforce, or
benefit from, any provision of this Agreement.
C. Neither Party shall assign or transfer its rights and
obligations under this Agreement without the other Party's
express written consent, which consent shall not be unreasonably
withheld.
<PAGE>
ARTICLE XIX
NOTICES
All written notices required under this Agreement shall be
considered properly given only when sent by registered or
certified mail, return receipt requested, to the following
addresses, respectively, or to such other addresses as the
receiving party may hereafter designate in writing:
To MCI: William A. Paquin
Vice President - Finance/Information Services
MCI International, Inc.
2 International Drive
Rye Brook, New York 10573
To COMSAT: Patricia S. Benton
Vice President and General Manager
COMSAT World Systems
6560 Rock Spring Drive
Bethesda, MD 20817
Any period of time referred to herein which is to commence
upon notice shall be counted from the date such notice is
received as aforesaid.
<PAGE>
ARTICLE XX
WAIVERS
The waiver by either Party of a breach of, or default under,
any of the provisions of this Agreement, or the failure of either
Party, on one or more occasions, to enforce any of the provisions
of this Agreement or to exercise any right or privilege
hereunder, shall not thereafter be construed as a waiver of any
subsequent breach or default of a similar nature, or as a waiver
of any provision, right or privilege hereunder.
<PAGE>
ARTICLE XXI
MISCELLANEOUS
A. The article headings and table of contents in this
Agreement are inserted for convenience only and do not constitute
a part of this Agreement.
B. This Agreement may be amended only in writing by an
instrument signed by authorized representatives of both Parties.
C. This Agreement shall be construed according to the laws
of the State of Maryland.
D. This Agreement may be executed in counterparts, each of
which shall be deemed an original, and all such counterparts
together shall constitute one and the same instrument.
E. This Agreement shall become effective as of the last
date written below.
<PAGE>
IN WITNESS WHEREOF, each of the Parties hereto has executed
this Agreement.
MCI INTERNATIONAL, INC. COMSAT CORPORATION
/s/William A. Paquin /s/Patricia Benton
By:___________________________ By:___________________________
Vice President and General Manager
Vice President COMSAT World Systems
Title: _______________________ Title:________________________
24 January 1994 January 21, 1994
Date:_________________________ Date:_________________________
<PAGE>
ATTACHMENT A
BASE CIRCUIT RATES
Per month per activated carrier(1)
15-Year Term
Carrier Size 1993(2) 1994(3) 1995(4) 1996(5) 1997(6)
64 Kbps $470 $595 $535 $465 $360
512 Kbps 3,760 4,760 4,280 3,720 2,880
1.024 Mbps 7,520 9,520 8,560 7,440 5,760
1.544 Mbps 10,370 13,130 11,760 10,175 7,920
2.048 Mbps 12,960 16,410 14,700 12,720 9,900
6.312 Mbps 36,530 46,250 41,430 35,850 27,900
8.448 Mbps 48,710 61,670 55,240 47,800 37,200
Per 64 Kbps
equivalent in a
fully-activated
2.048 Mbps carrier $432 $547 $490 $424 $330
- - - ---------------------
(1) The rates specified in this Attachment are for services to
INTELSAT Revised Standard A Earth Stations at the U.S. end.
(2) The rates in this column shall be in effect only for the
month of December 1993.
(3) The rates in this column shall take effect on January 1, 1994.
(4) The rates in this column shall take effect on January 1, 1995.
(5) The rates in this column shall take effect on January 1, 1996.
(6) The rates in this column shall take effect on January 1, 1997,
and shall remain in effect for the duration of each circuit's
lease term unless further reduced.
<PAGE>
ATTACHMENT B
RATE ADJUSTMENT FACTORS
for Base and Additional Circuits
Earth Station Frequency Minimum Rate Adjustment
Standard Band G/T Factor(1)
Std. B C 31.7 dB/K 1.36
Std. F-3 C 29.0 dB/K 2.05
Std. F-2 C 27.0 dB/K 2.92
Std. E-3 Ku 34.0 dB/K 1.68
Std. E-2 Ku 29.0 dB/K 4.94
- - - -----------------------
(1) In the event that COMSAT tariffs rate adjustment factors that
are more favorable than those listed in this Attachment, the
factors tariffed shall be incorporated automatically into
this Agreement.
<PAGE>
ATTACHMENT C
ADDITIONAL CIRCUIT RATES
Per month per 64 Kbps equivalent
in a fully-activated 2.048 Mbps carrier(1)
10-Year term
Block 1993-94(2) 1995(3) 1996(4) 1997(5)
Block 1(6) $495 $495 $450 $350
Block 2(7) 445 445 445 350
Block 3(8) 395 395 395 350
Block 4(9) 350 350 350 350
- - - -----------------
(1) The rates specified in this Attachment are for service to all
INTELSAT Standard A earth stations. Rates for fully activated
2.048 Mbps carriers shall be 30 times the numbers shown above.
Rates for carrier sizes other than 2.048 Mbps shall bear the
same relationships to the 2.048 Mbps rate as those shown in
Attachment A.
(2) The rates in this column are currently in effect.
(3) The rates in this column are currently in effect.
(4) The rates in this column shall take effect on January 1, 1996.
(5) The rates in this column shall take effect on January 1, 1997,
and shall remain in effect for the duration of each circuit's
lease term unless further reduced.
(6) The rates in Block 1 apply to Additional Circuits included among
the first 270 Digital Bearer Circuits (excluding Base Circuits)
leased in a given region for terms of at least five years. The
regions are those specified in COMSAT World Systems Tariff F.C.C.
No.1 as of the effective date of this Agreement, i.e.: (1) (Western)
Europe; (2) Pacific; (3) Latin America; and (4) Near and Middle
East, Africa and other Europe.
(7) The rates in Block 2 apply to Additional Circuits included
among the next 360 Digital Bearer Circuits (excluding Base
Circuits) leased in a given region for terms of at least
five years.
(8) The rates in Block 3 apply to Additional Circuits included
among the next 450 Digital Bearer Circuits (excluding Base
Circuits) leased in a given region for terms of at least
five years.
(9) The rates in Block 4 apply to Additional Circuits included
among the Digital Bearer Circuits above 1080 (excluding Base
Circuits) leased in a given region for terms of at least
five years.
<PAGE>
ATTACHMENT D
ADDITIONAL CIRCUIT RATES
Per month per 64 Kbps equivalent
in a fully-activated 2.048 Mbps carrier(1)
7-Year term
Block 1993-94(2) 1995(3) 1996(4) 1997(5)
Block 1(6) $615 $615 $559 $455
Block 2(7) 555 555 555 455
Block 3(8) 505 505 505 455
Block 4(9) 455 455 455 455
- - - ------------------------
(1) The rates specified in this Attachment are for service to all
INTELSAT Standard A earth stations. Rates for fully activated
2.048 Mbps carriers shall be 30 times the numbers shown above.
Rates for carrier sizes other than 2.048 Mbps shall bear the
same relationships to the 2.048 Mbps rate as those shown in
Attachment A.
(2) The rates in this column are currently in effect.
(3) The rates in this column are currently in effect.
(4) The rates in this column shall take effect on January 1, 1996.
(5) The rates in this column shall take effect on January 1, 1997,
and shall remain in effect for the duration of each circuit's
lease term unless further reduced.
(6) The rates in Block 1 apply to Additional Circuits included among
the first 270 Digital Bearer Circuits (excluding Base Circuits)
leased in a given region for terms of at least five years. The
regions are those specified in COMSAT World Systems Tariff F.C.C.
No.1 as of the effective date of this Agreement, i.e.: (1) (Western)
Europe; (2) Pacific; (3) Latin America; and (4) Near and Middle
East, Africa and other Europe.
(7) The rates in Block 2 apply to Additional Circuits included
among the next 360 Digital Bearer Circuits (excluding Base
Circuits) leased in a given region for terms of at least
five years.
(8) The rates in Block 3 apply to Additional Circuits included
among the next 450 Digital Bearer Circuits (excluding Base
Circuits) leased in a given region for terms of at least
five years.
(9) The rates in Block 4 apply to Additional Circuits included
among the Digital Bearer Circuits above 1080 (excluding Base
Circuits) leased in a given region for terms of at least
five years.
<PAGE>
<PAGE>
EXHIBIT 10(jj)
<PAGE>
AT&T
Maritime Services
650 Liberty Avenue
Union, NJ 07083
FAX 908 851-4002
February 18, 1994
Christopher J. Leber
Vice President & General Manager
CMC Operations
COMSAT Mobile Communications
22300 COMSAT Drive
Clarksburg, Maryland 20871
Chris,
The following outlines the agreement in principle we have reached
regarding pricing and volumes for AT&T's branded shore-to-ship
mobile satellite service and COMSAT's branded ship-to-shore
service to be effective February 1, 1994.
AT&T plans to route 1.8 million minutes annually of domestic U.S.
originating shore-to-ship Standard A traffic to COMSAT, prorated
during the period beginning February 1, 1994 and ending December
31, 1994. AT&T will settle with COMSAT at the rate of $6.70 per
minute. Furthermore, for all Standard M and Standard B traffic
that AT&T routes to COMSAT during the above period, COMSAT will
settle with AT&T at the rate of $4.95 per minute for Standard M
traffic and $6.45 per minute for Standard B traffic.
COMSAT plans to route 3.6 million minutes annually of ship-to-
shore traffic to AT&T, prorated during the period beginning
February 1, 1994 and ending December 31, 1994. COMSAT will also
return to AT&T all calls designated by the customer for
termination over the AT&T network. COMSAT will settle with AT&T
at the rate of $.25 per minute for calls terminating in the
United States and, for call terminating to all other points, at
an amount equal to a 10 percent discount off of AT&T's prevailing
published ILD rates.
Neither AT&T nor COMSAT commits to traffic volumes, but will make
a good faith effort to send the above-described traffic to the
other. Each party will review volumes quarterly to verify that
these proposed volumes are being satisfied. There will be no
shortfall obligation, charge, or penalty for the failure to
deliver the planned volumes.
The parties agree also to exchange written proposals on or before
November 30, 1994 with respect to prices for calendar year 1995.
Subject to any appropriate regulatory approvals, this informal
letter of understanding will form the basis for a formal contract
based upon these principles. The parties will use reasonable
best efforts to incorporate the above understanding into a formal
contract by the earliest possible date.
Please indicate your acceptance in the appropriate space below.
Sincerely,
/s/Paula Goldstein
- - - ------------------
Paula Goldstein
Product Manager
Maritime Services
/s/Cheryl Lynn Schneider
Agreed to and accepted by: ________________________________
<PAGE>
<PAGE>
EXHIBIT 10(kk)
<PAGE>
______________________________________________________________________________
FISCAL AGENCY AGREEMENT
Between
INTERNATIONAL TELECOMMUNICATIONS SATELLITE ORGANIZATION,
Issuer
and
BANKERS TRUST COMPANY
Fiscal Agent and Principal Paying Agent
_________________________
Dated as of 22 March 1994
_________________________
U.S. $200,000,000
6 5/8% Notes Due 2004
______________________________________________________________________________
<PAGE>
FISCAL AGENCY AGREEMENT, dated as of 22 March 1994 (the
"Agreement"), between International Telecommunications Satellite
Organization ("INTELSAT"), an international organization
established by the Agreement Relating to the International
Telecommunications Satellite Organization and the Operating
Agreement relating thereto, entered into force on 12 February 1973,
and Bankers Trust Company, a bank organized under the laws of New
York, United States, as Fiscal Agent and Principal Paying Agent.
1. INTELSAT has, by a Subscription Agreement, dated 7
March 1994, between INTELSAT and Goldman Sachs (Asia) Limited
("GSAL"), and the other Managers named therein (the "Managers"),
agreed to issue U.S. $200,000,000 aggregate principal amount of its
6 5/8% Notes Due 2004 (the "Notes"). The Notes shall be issued
initially in the form of a temporary global note in bearer form,
without interest coupons, substantially in the form of Exhibit A
hereto (the "Global Note"). The Global Note will be exchangeable,
as provided below, for definitive Notes issuable in bearer form, in
denominations of U.S. $10,000 and U.S. $100,000 (the "Bearer
Notes") with interest coupons attached (the "coupons"), substan-
tially in the forms set forth in Exhibit B hereto. The term
"Notes" as used herein includes the Global Note. The term "Holder",
when used with respect to a Bearer Note or any coupon, means the
bearer thereof.
2. INTELSAT hereby appoints Bankers Trust Company acting
through its office at London, United Kingdom, as its fiscal agent
and principal paying agent in respect of the Notes upon the terms
and subject to the conditions herein set forth (Bankers Trust
Company and its successor or successors as such fiscal agent or
principal paying agent qualified or appointed in accordance with
Section 8 hereof are herein collectively called the "Fiscal
Agent"), and Bankers Trust Company hereby accepts such appointment.
The Fiscal Agent shall have the powers and authority granted to and
conferred upon it herein and in the Notes and such further powers
and authority to act on behalf of INTELSAT as may be mutually
agreed upon by INTELSAT and the Fiscal Agent. As used herein,
"paying agents" shall mean paying agents (including the Fiscal
Agent) maintained by INTELSAT as provided in Section 8(b) hereof.
3. (a) The Notes shall be executed on behalf of
INTELSAT by the Director General and Chief Executive Officer or by
any other officer of INTELSAT specifically identified in a
certificate of incumbency and specimen signatures as having the
requisite authority to execute the Notes (the "Executive
Officers"), any of whose signatures may be manual or facsimile,
under a facsimile of its seal reproduced thereon and attested by
its General Counsel or an Assistant General Counsel, any of whose
signatures may be manual or facsimile. Notes bearing the manual or
facsimile signatures of persons who were at any time the proper
officers of INTELSAT shall bind INTELSAT, notwithstanding that such
persons or any of them ceased to hold such office or offices prior
to the authentication and delivery of such Notes or did not hold
such office or offices at the date of issue of such Notes.
<PAGE>
(b) The Fiscal Agent is hereby authorized, in accordance
with the provisions of Paragraph 9 of the definitive Notes and this
Section, from time to time to authenticate (or to
arrange for the authentication on its behalf) and deliver a new
Note in exchange for or in lieu of any Note which has become, or
the coupons appertaining thereto which have become, mutilated,
lost, stolen or destroyed. Each Note authenticated and delivered
in exchange for or in lieu of any such Note shall carry all the
rights to interest accrued and unpaid and to accrue which were
carried by such Note.
4. (a) INTELSAT initially shall execute and deliver, on
22 March 1994 (the "Closing Date"), a Global Note for an aggregate
principal amount of U.S. $200,000,000 to the Fiscal Agent, and the
Fiscal Agent by a duly authorized officer or an attorney-in-fact
duly appointed pursuant to a valid power of attorney shall, upon
the order of INTELSAT signed by an Executive Officer of INTELSAT,
authenticate the Global Note and deliver the Global Note to The
Chase Manhattan Bank, N.A., as common depositary (the "Common
Depositary") for the benefit of the operator of the Euroclear
System ("Euroclear") and Cedel S.A. ("Cedel"), for credit to the
respective account of the purchasers (or to such other accounts as
it may direct).
(b) For the purposes of this Agreement, "Exchange Date"
shall mean a date which is not earlier than the day immediately
following the expiration of the 40-day period beginning on the
later of the commencement of the offering and the Closing Date.
Without unnecessary delay, but in any event not less than 14 days
prior to the Exchange Date, in such denominations as are specified
by the Fiscal Agent, except in the event of earlier redemption or
acceleration, INTELSAT shall execute and deliver to the Fiscal
Agent U.S. $200,000,000 principal amount of definitive Bearer
Notes.
(c) Not earlier than the Exchange Date, the interest of
a beneficial owner of the Notes in the Global Note shall only be
exchanged for Bearer Notes after the account holder instructs
Euroclear or Cedel, as the case may be, to request such exchange on
his behalf and presents to Euroclear or Cedel, as the case may be,
a certificate substantially in the form set forth in Exhibit C
hereto, copies of which certificate shall be available from the
offices of Euroclear and Cedel, the Fiscal Agent and each other
paying agent of INTELSAT. Any exchange pursuant to this paragraph
shall be made free of charge to beneficial owners of the Global
Note, except that a person receiving definitive Notes must bear the
cost of insurance, postage, transportation and the like in the
event that such person does not take delivery of such definitive
Notes in person at the offices of Euroclear or Cedel. In no event
shall any such exchange occur prior to the Exchange Date.
(d) Upon request for issuance of Bearer Notes, on or
after the Exchange Date, the Global Note shall be surrendered by
the Common Depositary to the Fiscal Agent, as INTELSAT's agent, for
purposes of the exchange of Notes described below. Following such
surrender and upon presentation by Euroclear or Cedel, acting on
behalf of the beneficial owners of Bearer Notes, to the Fiscal
Agent at its principal office in London, United Kingdom (the
"Principal Office") of a certificate or certificates substantially
in the form set forth in Exhibit D
<PAGE>
hereto, the Fiscal Agent shall authenticate (or arrange for the
authentication on its behalf) and deliver to Euroclear or Cedel, as
the case may be, for the account of such owners, the Bearer Notes
in exchange for an aggregate principal amount equal to the
principal amount of the Global Note beneficially owned by such
owners. The presentation to the Fiscal Agent by Euroclear or Cedel
of such a certificate may be relied upon by INTELSAT and the Fiscal
Agent as conclusive evidence that a related certificate or
certificates has or have been presented to Euroclear or Cedel, as
the case may be, as contemplated by the terms of Section 4(c)
hereof.
Upon any exchange of a portion of the Global Note for
Bearer Notes, the Global Note shall be endorsed by the Fiscal Agent
to reflect the reduction of the principal amount evidenced thereby,
whereupon its remaining principal amount shall be reduced for all
purposes by the amount so exchanged; provided, that when the Global
Note is exchanged in full, the Fiscal Agent shall cancel it. Until
so exchanged in full, the Global Note shall in all respects be
entitled to the same benefits under this Agreement as the
definitive Notes authenticated and delivered hereunder, except that
none of Euroclear, Cedel or the beneficial owners of the Global
Note shall be entitled to receive payment of interest thereon.
Notwithstanding the foregoing, in the event of redemption
or acceleration of the Global Note prior to the issue of the Bearer
Notes, Bearer Notes will be issuable in respect of such Global Note
on or after the later of (i) the date fixed for such redemption or
on which such acceleration occurs and (ii) the Exchange Date, and
all of the foregoing in this subsection (d) shall be applicable to
the issuance of such Bearer Notes.
(e) No Note or coupon shall be entitled to any benefit
under this Agreement or be valid or obligatory for any purpose
unless there appears on such Note or coupon a certificate of
authentication substantially in the forms provided for herein and
executed by the Fiscal Agent by manual signature, and such
certificate upon any Note or coupon shall be conclusive evidence,
and the only evidence, that such Note or coupon has been duly
authenticated and delivered hereunder.
5. (a) INTELSAT will pay or cause to be paid to the
Fiscal Agent the amounts required to be paid by it herein and in
the Notes, at the times and for the purposes set forth herein and
in the Notes and in the manner set forth below, and INTELSAT hereby
authorizes and directs the Fiscal Agent to make payment of the
principal of and interest and additional amounts pursuant to
Paragraph 5 of the definitive Notes ("Additional Amounts"), if any,
on the Notes in accordance with the terms of the Notes.
(i) INTELSAT shall initiate a wire transfer for payment
to the Fiscal Agent at its Principal Office in London, United
Kingdom, by no later than 10:00 a.m. (New York time) on the
applicable Interest Payment Date, any redemption date and the
maturity date of the Notes, in such coin or currency of the
United States of America as at the time of payment is legal
tender for the payment of public and private debts, of amounts
sufficient (with any amounts then held by the Fiscal Agent and
available for the purpose) to pay
<PAGE>
the interest on, the redemption price of an accrued interest
(if the redemption date is not an Interest Payment Date) on,
and the principal of, the Notes due and payable on such an
Interest Payment Date, redemption date or maturity date, as
the case may be.
(ii) INTELSAT will supply to the Fiscal Agent by
10:00 a.m. (New York time) on the second business day
prior to the due date for any such payment a confirmation
(by tested telex or authenticated SWIFT message or by
facsimile transmission with an original to follow by
mail) that such payment will be made, which confirmation
shall identify the bank from which the wire transfer
constituting payment will be made.
(iii) The Fiscal Agent will forthwith notify by
telex each of the other paying agents and INTELSAT if it
has not (A) by the time specified for its receipt,
received the confirmation referred to above or (B) by the
due date for any payment due, received the full amount so
payable on such date.
(iv) In the absence of the notification from the
Fiscal Agent referred to in sub-clause (iii) of this
Clause, each such paying agent shall be entitled to
assume that the Fiscal Agent has received the full amount
due in respect of the Notes or the Coupons on that date
and shall be entitled:
(A) to pay maturing Notes and Coupons in
accordance with their terms; and
(B) to claim any amounts so paid by it from the
Fiscal Agent (notwithstanding anything herein
to the contrary).
(v) Without prejudice to the obligations of
INTELSAT to make payments in accordance with the
provisions of this Clause, if payment of the appropriate
amount shall be made by or on behalf of INTELSAT later
than the time specified, but otherwise in accordance with
the provisions hereof, the Fiscal Agent shall forthwith
notify the paying agents and give notice to holders of
the Notes, that the Fiscal Agent has received such amount
and the paying agents will act as such for the Notes and
Coupons and make or cause to be made payments as provided
herein.
(vi) The Fiscal Agent shall apply the amounts so
paid to it to the payment of such interest, redemption
price and principal in accordance with the terms of the
Notes. Any monies paid by INTELSAT to the Fiscal Agent
for the payment of the principal of and interest on any
Notes and remaining unclaimed at the end of two years
after such principal or interest shall have become due
and payable (whether at maturity, upon call for
redemption or otherwise) shall then be repaid to INTELSAT
upon its written request, and upon such repayment all
<PAGE>
liability of the Fiscal Agent with respect thereto shall
thereupon cease, without, however, limiting in any way any
obligation INTELSAT may have to pay the principal of and
interest on this Note as the same shall become due.
(b) Notwithstanding any other provision hereof (other
than the last sentence of this Section 5(b)) or of the Notes, no
payment with respect to principal of or interest or Additional
Amounts, if any, on any Bearer Note may be made at any office of
the Fiscal Agent or any other paying agent maintained by INTELSAT
in the United States of America (including the States and the
District of Columbia), its territories or possessions and other
areas subject to its jurisdiction (the "United States"). No
payment with respect to a Bearer Note shall be made by transfer to
an account in, or by mail to an address in, the United States.
Notwithstanding the foregoing, payment of principal of and interest
and Additional Amounts, if any, on Bearer Notes shall be made at
the paying agent in the Borough of Manhattan, The City of New York,
if (but only if) payments in United States dollars of the full
amount of such principal, interest or Additional Amounts at all
offices or agencies outside the United States through which payment
is to be made in accordance with the terms of the Notes is illegal
or effectively precluded by exchange controls or other similar
restrictions.
(c) If INTELSAT becomes liable to pay additional amounts
pursuant to Section 5 of the Notes, then, at least ten business
days prior to the date of any such payment of principal or interest
to which such payment of additional amounts relates, INTELSAT shall
furnish the Fiscal Agent, the Paying Agent and each other paying
agent of INTELSAT with a certificate which specifies, by country,
the rates of withholding, if any, applicable to such payment to
Holders of the Notes, and shall pay to the Paying Agent such
amounts as shall be required to be paid to Holders of the Notes.
INTELSAT hereby agrees to indemnify the Fiscal Agent, the Paying
Agent and each other paying agent of INTELSAT for, and to hold them
harmless against, any loss, liability or expense incurred without
negligence or bad faith on their part arising out of or in
connection with actions taken or omitted by any of them in reliance
on any certificate furnished pursuant to this Section 5(c).
(d) In the case of any redemption of Notes, INTELSAT
shall give notice, not less than 45 or more than 75 days prior to
any date set for redemption (as provided for in Paragraph 6 of the
definitive Notes), to the Fiscal Agent of its election to redeem
the Notes on such redemption date specified in such notice. The
Fiscal Agent shall cause notice of redemption to be given in the
name and at the expense of INTELSAT in the manner provided in
Paragraph 6(e) of the definitive Notes.
6. All Notes and coupons surrendered for payment,
redemption or exchange shall, if surrendered to anyone other than
the Fiscal Agent, be cancelled and delivered to the Fiscal Agent.
All cancelled Notes and coupons held by the Fiscal Agent shall be
destroyed, and the Fiscal Agent shall furnish to INTELSAT a
certificate with respect to such destruction, except that the
cancelled Global Note and the certificates as to beneficial
ownership required by Section 4 hereof shall not be destroyed but
shall be delivered to INTELSAT.
<PAGE>
7. The Fiscal Agent accepts its obligations set forth
herein and in the Notes upon the terms and conditions hereof and
thereof, including the following, to all of which INTELSAT agrees
and to all of which the rights hereunder of the Holders from time
to time of the Notes and coupons shall be subject:
(a) The Fiscal Agent and each other paying agent of
INTELSAT shall be entitled to the compensation to be agreed upon
with INTELSAT for all services rendered by it, and INTELSAT agrees
promptly to pay such compensation and to reimburse the Fiscal Agent
and each other paying agent of INTELSAT for its reasonable out-of-
pocket expenses (including reasonable advertising expenses and
counsel fees) incurred by it in connection with the services
rendered by it hereunder. INTELSAT also agrees to indemnify each
of the Fiscal Agent and each other paying agent of INTELSAT
hereunder for, and to hold it harmless against, any loss, liability
or expense incurred without negligence or bad faith on the part of
the Fiscal Agent or such other paying agent, arising out of or in
connection with its acting as such Fiscal Agent or other paying
agent of INTELSAT hereunder, including the costs and expenses of
defending against any claim of liability. For purposes of this
Section, the obligations of INTELSAT shall survive the payment of
the Notes and the resignation or removal of the Fiscal Agent or any
other paying agent of INTELSAT hereunder.
(b) In acting under this Agreement and in connection
with the Notes, the Fiscal Agent and each other paying agent of
INTELSAT are acting solely as agents of INTELSAT and do not assume
any obligation or relationship of agency or trust for or with any
of the Holders of the Notes or coupons, except that all funds held
by the Fiscal Agent or any other paying agent of INTELSAT for
payment of principal of or interest or Additional Amounts, if any,
on the Notes shall be held in trust, but need not be segregated
from other funds except as required by law, and shall be applied as
set forth herein and in the Notes; provided, however, that monies
paid by INTELSAT to the Fiscal Agent or any other paying agent of
INTELSAT for the payment of principal of or interest or Additional
Amounts, if any, on Notes remaining unclaimed at the end of two
years after such principal or interest or Additional Amounts, if
any, shall have become due and payable shall be repaid to INTELSAT,
promptly upon its request, as provided and in the manner set forth
in the Notes, whereupon the aforesaid trust shall terminate and all
liability of the Fiscal Agent or such other paying agent of
INTELSAT with respect thereto shall cease and the Holder of such
Note or unpaid coupon must thereafter look solely to INTELSAT for
payment thereof.
(c) The Fiscal Agent and each other paying agent of
INTELSAT hereunder may consult with counsel (who may also be
counsel to INTELSAT) satisfactory to such Fiscal Agent or paying
agent in its reasonable judgment, and the written opinion of such
counsel shall be full and complete authorization and protection in
respect of any action taken, omitted or suffered by it hereunder in
good faith and in reliance thereon.
(d) The Fiscal Agent and each other paying agent of
INTELSAT hereunder shall be protected and shall incur no liability
to any person for or in respect of any action in good
<PAGE>
faith taken, omitted or suffered by it in reliance upon any Note,
coupon, notice, direction, consent, certificate, affidavit,
statement or other paper or document reasonably believed by the
Fiscal Agent or such other paying agent in good faith to be genuine
and to have been signed by the proper parties.
(e) The Fiscal Agent and each other paying agent of
INTELSAT hereunder and its directors, officers and employees may
become the owner of, or acquire an interest in, any Notes or
coupons, with the same rights that it or they would have if it were
not the Fiscal Agent or such other paying agent of INTELSAT
hereunder, may engage or be interested in any financial or other
transaction with INTELSAT and may act on, or as depositary, trustee
or agent for, any committee or body of Holders of Notes or coupons
or holders of other obligations of INTELSAT as freely as if it were
not the Fiscal Agent or a paying agent of INTELSAT hereunder.
(f) Neither the Fiscal Agent nor any other paying agent
of INTELSAT hereunder shall be under any liability to any person
for interest on any monies at any time received by it pursuant to
any of the provisions of this Agreement or of the Notes except as
may be otherwise agreed with INTELSAT.
(g) The recitals contained herein and in the Notes
(except the Fiscal Agent's certificates of authentication) and in
the coupons shall be taken as the statements of INTELSAT, and the
Fiscal Agent assumes no responsibility for their correctness. The
Fiscal Agent makes no representation as to the validity or
sufficiency of this Agreement or the Notes or coupons, except for
the Fiscal Agent's due authorization to execute and deliver this
Agreement; provided, however, that the Fiscal Agent shall not be
relieved of its duty to authenticate Notes (or to arrange for
authentication on its behalf) as authorized by this Agreement. The
Fiscal Agent shall not be accountable for the use or application by
INTELSAT of the proceeds of Notes.
(h) The Fiscal Agent and each other paying agent of
INTELSAT hereunder shall be obligated to perform such duties and
only such duties as are herein and in the Notes specifically set
forth and no implied duties or obligations shall be read into this
Agreement or the Notes against the Fiscal Agent or any other paying
agent of INTELSAT. The Fiscal Agent shall not be under any
obligation to take any action hereunder which may tend to involve
it in any undue expense or liability, the payment of which within
a reasonable time is not, in its reasonable opinion, assured to it.
(i) Unless herein or in the Notes otherwise specifically
provided, any order, certificate, notice, request, direction or
other communication from INTELSAT under any provision of this
Agreement shall be sufficient if signed by an Executive Officer of
INTELSAT.
(j) No provision of this Agreement shall be construed to
relieve the Fiscal Agent from liability for its own negligent
action, its own negligent failure to act, or its own willful
misconduct or that of its directors, officers or employees.
<PAGE>
8. (a) INTELSAT agrees that, until all Notes or coupons
(other than coupons the surrender of which has been waived under
Paragraphs 3 and 6 of the definitive Notes and coupons which have
been replaced or paid as provided in Paragraph 9 of the definitive
Notes) authenticated and delivered hereunder (i) shall have been
delivered to the Fiscal Agent for cancellation or (ii) become due
and payable, whether at maturity or upon redemption, and monies
sufficient to pay the principal thereof and interest, and
Additional Amounts, if any, thereon shall have been made available
to the Fiscal Agent and either paid to the persons entitled thereto
or returned to INTELSAT as provided herein and in the Notes, there
shall at all times be a Fiscal Agent hereunder which shall be
appointed by INTELSAT, shall be authorized under the laws of its
place of organization to exercise corporate trust powers and shall
have a combined capital and surplus of at least U.S. $50,000,000.
(b) INTELSAT hereby appoints the Principal Office of the
Fiscal Agent as its agent where, subject to any applicable laws or
regulations, Notes and coupons may be presented or surrendered for
payment, where the Global and Bearer Notes may be surrendered for
exchange and where notices and demands to or upon INTELSAT in
respect of the Notes and coupons and this Agreement may be served.
In addition, INTELSAT hereby appoints the main office of Bankers
Trust Luxembourg S.A. in Luxembourg, Bankers Trust Company in Hong
Kong, Credit Suisse in Zurich, Switzerland and DBS Bank in
Singapore as additional paying agencies for the payment of
principal of, and interest and Additional Amounts, if any, on, the
Notes.
INTELSAT may at any time and from time to time vary or
terminate the appointment, upon thirty days prior written notice,
of any such agent or appoint any additional agents for any or all
of such purposes; provided, however, that, (i) so long as INTELSAT
is required to maintain a Fiscal Agent hereunder, INTELSAT will
maintain in London, United Kingdom an office or agency where Notes
and coupons may be presented or surrendered for payment, where the
Global and Bearer Notes may be presented for exchange and where
notices and demands to or upon INTELSAT in respect of the Notes and
coupons and this Agreement may be served and (ii) in the event the
circumstances described in Section 5(b) hereof require, it will
designate a paying agent in the Borough of Manhattan, The City of
New York, the State of New York, U.S.A., where Bearer Notes and
coupons may be presented or surrendered for payment in such
circumstances (and not otherwise); and provided, further, that so
long as the Notes are listed on the respective stock exchanges,
INTELSAT will maintain a paying agent in Hong Kong and Singapore.
INTELSAT will give prompt written notice to the Fiscal Agent, of
the appointment or termination of any such agency and of the
location and any change in the location of any such office or
agency and shall give notice thereof to Holders in the manner
described in the first sentence of Paragraph 6(d) of the definitive
Notes.
(c) The Fiscal Agent may at any time resign as such
Fiscal Agent by giving written notice to INTELSAT of such intention
on its part, specifying the date on which its desired resignation
shall become effective; provided, however, that such date shall
never be less than three months after the receipt of such notice by
INTELSAT unless INTELSAT agrees to
<PAGE>
accept less notice. The Fiscal Agent may be removed at any time by
the filing with it of an instrument in writing signed on behalf of
INTELSAT and specifying such removal and the date when it is
intended to become effective. Any resignation or removal of the
Fiscal Agent or other paying agent of INTELSAT, if such other
paying agent is the only paying agent of INTELSAT then maintained
outside the United States, shall take effect upon the date of the
appointment by INTELSAT as hereinafter provided of a successor and
the acceptance of such appointment by such successor. Upon its
resignation or removal, such agent shall be entitled to the payment
by INTELSAT of its compensation for the services rendered hereunder
and to the reimbursement of all reasonable out-of-pocket expenses
incurred in connection with the services rendered hereunder by such
agent.
(d) In case at any time the Fiscal Agent or other paying
agent of INTELSAT, if such other paying agent is the only paying
agent of INTELSAT then maintained outside the United States, shall
resign, or shall be removed, or shall become incapable of acting or
shall be adjudged a bankrupt or insolvent, or if a receiver of it
or of its property shall be appointed, or if any public officer
shall take charge or control of it or of its property or affairs
for the purpose of rehabilitation, conservation or liquidation, a
successor agent, eligible as aforesaid, shall be appointed by
INTELSAT by an instrument in writing. Upon the appointment as
aforesaid of a successor agent and the acceptance by it of such
appointment, the agent so superseded shall cease to be such agent
hereunder. If no successor Fiscal Agent or other paying agent of
INTELSAT shall have been so appointed by INTELSAT and shall have
accepted appointment as hereinafter provided, and if such other
paying agent is the only paying agent of INTELSAT then maintained
outside the United States, and if INTELSAT shall have otherwise
failed to make arrangements for the performance of the duties of
the Fiscal Agent or other paying agent, then any Holder of a Note
who has been a bona fide Holder of a Note for at least six months,
on behalf of himself and all others similarly situated, or the
Fiscal Agent, may petition any New York State or United States
Federal court sitting in the Borough of Manhattan, The City of New
York, the State of New York, U.S.A., for the appointment of a
successor agent.
(e) Any successor Fiscal Agent appointed hereunder shall
execute, acknowledge and deliver to its predecessor and to INTELSAT
an instrument accepting such appointment hereunder, and thereupon
such successor Fiscal Agent, without any further act, deed or
conveyance, shall become vested with all the authority, rights,
powers, trusts, immunities, duties and obligations of such
predecessor with like effect as if originally named as such Fiscal
Agent hereunder, and such predecessor, upon payment of its charges
and disbursements then unpaid, shall simultaneously therewith
become obligated to transfer, deliver and pay over, and such
successor Fiscal Agent shall be entitled to receive, all monies,
securities or other property on deposit with or held by such
predecessor, as such Fiscal Agent hereunder. INTELSAT will give
prompt written notice to each other paying agent of INTELSAT of the
appointment of a successor Fiscal Agent and shall give notice
thereof to Holders at least once, in the manner described in
Paragraph 6(e) of the definitive Notes.
<PAGE>
(f) Any corporation, bank or trust company into which
the Fiscal Agent may be merged or converted, or with which it may
be consolidated, or any corporation, bank or trust company
resulting from any merger, conversion or consolidation to which the
Fiscal Agent shall be a party, or any corporation, bank or trust
company succeeding to all or substantially all the assets and
business of the Fiscal Agent, shall be the successor to the Fiscal
Agent under this Agreement; provided, however, that such
corporation shall be otherwise eligible under this Section, without
the execution or filing of any document or any further act on the
part of any of the parties hereto.
9. INTELSAT will pay all stamp taxes and other duties,
if any, which may be imposed by the United States, the United
Kingdom or any political subdivision or taxing authority of or in
the foregoing with respect to (i) the execution or delivery of this
Agreement, (ii) the issuance of the Global Note, or (iii) the
exchange from time to time of the Global Note for Bearer Notes
(other than any such tax or duty which would not have been imposed
on such exchange had such exchange occurred on or before the first
anniversary of the initial issuance of the Notes which shall be
payable by the Holders).
10. (a) A meeting of Holders of Notes may be called at
any time and from time to time to make, give or take any request,
demand, authorization, direction, notice, consent, waiver or other
action provided by this Agreement or the Notes to be made, given or
taken by Holders of Notes. The Fiscal Agent may, upon request
from, and at the expense of, INTELSAT, direct to convene a single
meeting of the Holders of Notes and the holders of debt securities
of other series.
(b) INTELSAT may at any time call a meeting of Holders
of Notes for any purpose specified in Section 10(a) hereof to be
held at such time and at such place in London, United Kingdom or in
the Borough of Manhattan, The City of New York, the State of New
York, U.S.A., as INTELSAT shall determine. Notice of every meeting
of Holders of Notes, setting forth the time and the place of such
meeting and in general terms the action proposed to be taken at
such meeting, shall be given, in the same manner as provided in
Paragraph 6(e) of the definitive Notes, not more than 180 days nor
less than 21 days prior to the date fixed for the meeting. In case
at any time the Holders of at least 10% in principal amount of the
Outstanding (as defined in Paragraph 3 of the definitive Notes)
Notes shall have requested INTELSAT to call a meeting of the
Holders of Notes for any purpose specified in Section 10(a) hereof,
by written request setting forth in reasonable detail the action
proposed to be taken at the meeting, and INTELSAT shall not have
caused to be published the notice of such meeting within 21 days
after receipt of such request or shall not thereafter proceed to
cause the meeting to be held as provided herein, then the Holders
of Notes in the amount above-specified, as the case may be, may
determine the time and the place in London, United Kingdom or in
the Borough of Manhattan, The City of New York, the State of New
York, U.S.A., for such meeting and may call such meeting for such
purposes by giving notice thereof as provided in this subsection
(b).
<PAGE>
(c) To be entitled to vote at any meeting of Holders of
Notes, a person shall be a Holder of an Outstanding Note or a
person appointed by an instrument in writing as proxy for such a
Holder.
(d) The persons entitled to vote a majority in aggregate
principal amount of the Outstanding Notes shall constitute a
quorum. In the absence of a quorum within 30 minutes of the time
appointed for any such meeting, the meeting shall, if convened at
the request of the Holders of Notes, be dissolved. In any other
case the meeting may be adjourned for a period of not less than 10
days as determined by the chairman of the meeting prior to the
adjournment of such meeting. In the absence of a quorum at any
such adjourned meeting, such adjourned meeting may be further
adjourned for a period of not less than 10 days as determined by
the chairman of the meeting prior to the adjournment of such
adjourned meeting. Notice of the reconvening of any adjourned
meeting shall be given as provided in Section 10(b) hereof, except
that such notice need be given only once not less than five days
prior to the date on which the meeting is scheduled to be
reconvened. Notice of the reconvening of an adjourned meeting
shall state expressly the percentage of the principal amount of the
Outstanding Notes which shall constitute a quorum.
Subject to the foregoing, at the reconvening of any
meeting adjourned for a lack of a quorum, the persons entitled to
vote 25% in principal amount of the Outstanding Notes shall
constitute a quorum for the taking of any action set forth in the
notice of the original meeting. Any meeting of Holders of Notes at
which a quorum is present may be adjourned from time to time by
vote of a majority in principal amount of the Outstanding Notes
represented at the meeting, and the meeting may be held as so
adjourned without further notice. At a meeting or an adjourned
meeting duly reconvened and at which a quorum is present as
aforesaid, any resolution and all matters shall be effectively
passed or decided if passed or decided by the persons entitled to
vote a majority in principal amount of the Outstanding Notes
represented and voting.
(e) INTELSAT may make such reasonable regulations as it
may deem advisable for any meeting of Holders of Notes in regard to
proof of the holding of Notes and of the appointment of proxies and
in regard to the appointment and duties of inspectors of votes, the
submission and examination of proxies, certificates and other
evidence of the right to vote, and such other matters concerning
the conduct of the meeting as it shall deem appropriate. INTELSAT
or the Holders calling the meeting, as the case may be, shall, by
an instrument in writing, appoint a temporary chairman. A
permanent chairman and a permanent secretary of the meeting shall
be elected by vote of the persons entitled to vote a majority in
principal amount of the Outstanding Notes represented and voting at
the meeting. The chairman of the meeting shall have no right to
vote, except as a Holder of Notes or a proxy. A record, at least
in duplicate, of the proceedings of each meeting of Holders of
Notes shall be prepared, and one such copy shall be delivered to
INTELSAT and another to the Fiscal Agent to be preserved by the
Fiscal Agent.
<PAGE>
11. All notices hereunder shall be deemed to have been
given when deposited in the mails as first-class mail, registered
or certified mail, return receipt requested, postage prepaid, or,
if electronically communicated, then when delivered, or when hand
delivered, addressed to either party hereto as follows:
INTELSAT . . . . . . . . . . . International Telecommunications
Satellite Organization
3400 International Drive, N.W.
Washington, D.C. 20008-3098, U.S.A.
Attention: Vice President & Chief
Financial Officer
Facsimile No.: (202) 944-7860
Fiscal Agent . . . . . . . . . . Bankers Trust Company
1 Appold Street, Broadgate
London EC2A 2HE, England
Attention: Corporate Trust
and Agency Group
Facsimile No.: 011-4471-982-2271
or at any other address of which either of the foregoing shall have
notified the other in writing. All notices to Holders of Notes
shall be given in the manner provided in Paragraph 6(e) of the
definitive Notes.
12. This Agreement and the terms and conditions of the
Notes and coupons may be modified or amended by INTELSAT and the
Fiscal Agent, without the consent of the Holder of any Note or
coupon, for the purpose of (a) adding to the covenants of INTELSAT
for the benefit of the Holders of Notes or coupons, or (b)
surrendering any right or power conferred upon INTELSAT, or (c)
securing the Notes pursuant to the requirements of the Notes or
otherwise, or (d) permitting the payment of principal, interest and
Additional Amounts, if any, in respect of Notes in the United
States, or (e) curing any ambiguity or correcting or supplementing
any defective provision contained herein or in the Notes or
coupons, or (f) evidencing the succession of another organization
or entity to INTELSAT and the assumption by any such successor of
the covenants and obligations of INTELSAT herein and in the Notes
and coupons as permitted by the Notes, or (g) providing for
issuances of further debt securities as contemplated by Section 13,
or (h) in any manner which the parties may mutually deem necessary
or desirable and which in any such case shall not adversely affect
the interests of the Holders of the Notes or the coupons.
13. INTELSAT may from time to time without the consent
of the Holder of any Note or coupon issue further debt securities
having the same terms and conditions as the Notes in all respects
(or in all respects except for the first payment of interest
thereon) or having such terms as INTELSAT may determine at the time
of their issuance, in either case so that any such further debt
securities shall be consolidated and form a single series with the
outstanding securities of any series (including the Notes). Unless
the context requires otherwise, references herein and in the Notes
and coupons to the Notes or coupons shall include any other debt
<PAGE>
securities issued in accordance with this Section that are intended
by INTELSAT to form a single series with the Notes. Any further
debt securities forming a single series with the outstanding
securities of any series (including the Notes) shall be issued
pursuant to this Agreement as amended pursuant to Section 12 for
the purpose of providing for the issuance of such debt securities.
14. This Agreement and each of the Notes and coupons
shall be governed by and construed in accordance with the laws of
the State of New York, U.S.A.
15. INTELSAT hereby appoints CT Corporation System, 1633
Broadway, New York, New York 10019, as its authorized agent (the
"Authorized Agent") upon which process may be served in any action
arising out of or based on this Agreement, the Notes or any coupons
which action may be instituted in any New York State or United
States Federal court sitting in the Borough of Manhattan, The City
of New York, the State of New York, U.S.A., by the Fiscal Agent or
the Holder of any Note or coupon and INTELSAT and each such Holder
by acceptance of a Note or coupon expressly accepts the exclusive
jurisdiction of any such court in respect of any such action. Such
appointment shall be irrevocable until two years after the Notes
shall have matured and been paid or moneys for the payment thereof
shall have been made available unless and until a successor
Authorized Agent shall have been appointed and shall have accepted
such appointment. INTELSAT hereby irrevocably waives any immunity
to service of process in respect of any such action to which it
might otherwise be entitled in any action arising out of or based
on this Agreement or the Notes or coupons which may be instituted
by the Fiscal Agent or any Holder of a Note or coupon in any State
or Federal court in the Borough of Manhattan, The City of New York,
the State of New York, U.S.A. Service of process upon the
Authorized Agent at the address indicated above, as such address
may be changed within the Borough of Manhattan, The City of New
York, the State of New York, U.S.A., by notice given by the
Authorized Agent to each party hereto, shall be deemed, in every
respect, effective service of process upon INTELSAT. INTELSAT
irrevocably waives, to the fullest extent permitted by applicable
law, any sovereign or other immunity from jurisdiction or from
execution (except that INTELSAT does not waive immunity from
execution prior to judgment and any similar defense) to which it
might otherwise be entitled in any such action which may be
instituted by the Fiscal Agent or any Holder of a Note or coupon in
any New York State or United States Federal court sitting in the
Borough of Manhattan, The City of New York, the State of New York,
U.S.A.
16. This Agreement, the Notes and the coupons
appertaining thereto will constitute obligations of INTELSAT and
not of any Signatory or Party (each as defined in the Agreement
Relating to the International Telecommunications Satellite
Organization, entered into force on 12 February 1973). No
Signatory or Party will waive any immunity to which it may be
entitled in any suit on this Agreement or the Notes or coupons, and
neither the Fiscal Agent nor Holders of Notes or coupons will have
any recourse against any Signatory or Party with respect to any
obligations of INTELSAT under this Agreement or the Notes and the
coupons appertaining thereto.<PAGE>
<PAGE>
17. This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be
an original but all such counterparts shall together constitute but
one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
INTERNATIONAL TELECOMMUNICATIONS
SATELLITE ORGANIZATION
/s/Margarita K. Dilley
By _____________________________
Name: Margarita K. Dilley
Title: Treasurer
BANKERS TRUST COMPANY
as Fiscal Agent and Principal Paying
Agent
/s/Shiela Ajimal
By _____________________________
Name: Shiela Ajimal
Title: Authorized Signatory
<PAGE>
INTERNATIONAL TELECOMMUNICATIONS SATELLITE ORGANIZATION
U.S. $200,000,000
6 5/8% Notes Due 2004
TEMPORARY GLOBAL NOTE
INTERNATIONAL TELECOMMUNICATIONS SATELLITE ORGANIZATION,
an international organization established by the Agreement Relating
to the International Telecommunications Satellite Organization and
the Operating Agreement relating thereto, entered into force on
12 February 1973, for value received, hereby promises to pay to
bearer upon presentation and surrender of this Temporary Global
Note the principal sum of Two Hundred Million United States Dollars
(U.S. $200,000,000) on 22 March 2004 and to pay interest thereon,
from the date hereof, annually in arrears on 22 March in each year,
commencing 22 March 1995, at the rate of 6 5/8% per annum, until
the principal hereof is paid or made available for payment;
provided, however, that interest on this Temporary Global Note
shall be payable only after the issuance of Bearer Notes for which
this Temporary Global Note is exchangeable, and only upon
presentation and surrender of the interest coupons thereto attached
as they severally mature.
This Temporary Global Note is one of a duly authorized
issue of Notes of INTELSAT designated as specified in the title
hereof, entitled to the benefits of the Fiscal Agency Agreement,
dated as of 22 March 1994, between INTELSAT and Bankers Trust
Company as Fiscal Agent. This Note is a temporary note and is
exchangeable in whole or from time to time in part without charge
upon request of the Holder hereof for Bearer Notes with coupons
attached in denominations of U.S. $10,000 and $100,000 as promptly
as practicable following presentation of certification, in the form
required by the Fiscal Agency Agreement for such purpose, that the
beneficial owner or owners of this Temporary Global Note (or, if
such exchange is only for a part of this Temporary Global Note, of
such part) are not citizens or residents of the United States, a
corporation, partnership or other entity created or organized in or
under the laws of the United States or any political subdivision
thereof, or an estate or trust the income of which is subject to
United States Federal income taxation regardless of its source
("United States Person"). The Bearer Notes are expected to be
available 40 days after the Closing Date. Bearer Notes to be
delivered in exchange for any part of this Temporary Global Note
shall be delivered only outside the United States. Upon any
exchange of a part of this Temporary Global Note for Bearer Notes,
the portion of the principal amount hereof so exchanged shall be
endorsed by the Fiscal Agent on the Schedule hereto, and the
principal amount hereof shall be reduced for all purposes by the
amount so exchanged.
<PAGE>
Until exchanged in full for Bearer Notes, this Temporary
Global Note shall in all respects be entitled to the same benefits
and subject to the same terms and conditions as those of the
definitive Notes and those contained in the Fiscal Agency Agreement
(including the forms of Notes attached thereto), except that
neither the Holder hereof nor the beneficial owners of this
Temporary Global Note shall be entitled to receive payment of
interest hereon.
This Temporary Global Note shall be governed by and
construed in accordance with the laws of the State of New York,
U.S.A.
All terms used in this Temporary Global Note which are
defined in the Fiscal Agency Agreement or the definitive Notes
shall have the meanings assigned to them therein.
Unless the certificate of authentication hereon has been
executed by the Fiscal Agent by the manual signature of one of its
duly authorized officers, this Temporary Global Note shall not be
valid or obligatory for any purpose.
This Temporary Global Note constitutes an obligation of
INTELSAT and not of any Signatory or Party (each as defined in the
INTELSAT Agreement). No Signatory or Party will waive any immunity
to which it may be entitled in any suit on this Temporary Global
Note, and Holders of this Temporary Global Note will have no
recourse against any Signatory or Party with respect to any
obligations of INTELSAT under this Temporary Global Note.
IN WITNESS WHEREOF, INTELSAT has caused this Temporary
Global Note to be duly executed and its seal to be hereunto affixed
and attested.
Dated as of 22 March 1994
INTERNATIONAL TELECOMMUNICATIONS
SATELLITE ORGANIZATION
By______________________________
Attest:
_____________________
<PAGE>
This is the Temporary Global Note referred to in the
within-mentioned Fiscal Agency Agreement.
BANKERS TRUST COMPANY
as Fiscal Agent
By_________________________
Authorized Signatory
<PAGE>
SCHEDULE OF EXCHANGES
Remaining
principal
Principal amount amount Notation
Date exchanged for following made on behalf
Made definitive Bearer Notes such exchange of the Fiscal Agent
____ _______________________ _____________ ___________________
____ _______________________ _____________ ___________________
____ _______________________ _____________ ___________________
____ _______________________ _____________ ___________________
____ _______________________ _____________ ___________________
____ _______________________ _____________ ___________________
____ _______________________ _____________ ___________________
____ _______________________ _____________ ___________________
____ _______________________ _____________ ___________________
____ _______________________ _____________ ___________________
____ _______________________ _____________ ___________________
____ _______________________ _____________ ___________________
____ _______________________ _____________ ___________________
____ _______________________ _____________ ___________________
____ _______________________ _____________ ___________________
____ _______________________ _____________ ___________________
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____ _______________________ _____________ ___________________
____ _______________________ _____________ ___________________
____ _______________________ _____________ ___________________
____ _______________________ _____________ ___________________
<PAGE>
EXHIBIT B
[FORM OF BEARER NOTES]
[Form of Face]
ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE
SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX
LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j)
AND 1287(a) OF THE INTERNAL REVENUE CODE.
INTERNATIONAL TELECOMMUNICATIONS SATELLITE ORGANIZATION
6 5/8% Notes Due 2004
No. B-_________ U.S.$[10,000]
[100,000]
INTERNATIONAL TELECOMMUNICATIONS SATELLITE ORGANIZATION
("INTELSAT"), an international organization established by the
Agreement Relating to the International Telecommunications
Satellite Organization and the Operating Agreement relating
thereto, entered into force on 12 February 1973, for value
received, hereby promises to pay to bearer upon presentation and
surrender of this Note the principal sum of [10,000][100,000]
United States dollars on 22 March 2004 and to pay interest thereon,
from the date hereof, annually in arrears on 22 March in each year
("Interest Payment Date"), commencing 22 March 1995 at the rate of
6 5/8% per annum (calculated on the basis of a year of twelve 30-
day months), until the principal hereof is paid or made available
for payment. Such payments shall be made subject to any laws or
regulations applicable thereto and to the right of INTELSAT
(limited as provided below) to terminate the appointment of any
such paying agency, at the principal office of Bankers Trust
Company in London, United Kingdom or at such other offices or
agencies outside the United States (as defined in Paragraph 5 on
the reverse hereof) as INTELSAT may designate and notify the Holder
(as defined in Paragraph 2 on the reverse hereof) as provided in
Paragraph 6(e) hereof, at the option of the Holder, by United
States dollar check, or (ii) by wire transfer to a United States
dollar account maintained by the Holder with a bank located outside
the United States. Payments with respect to this Note shall be
payable only at an office or agency located outside the United
States and only upon presentation and surrender at such office of
this Note in the case of principal or the coupons attached hereto
(the
<PAGE>
"coupons") as they severally mature in the case of interest (but
not in the case of Additional Amounts payable as defined and
provided for in Paragraph 5 on the reverse hereof). No payment
with respect to this Note shall be made by transfer to an account
in, or by mail to an address in, the United States.
Notwithstanding the foregoing, payment of principal of and interest
on Bearer Notes and Additional Amounts, if any, may, at INTELSAT's
option, be made at an office designated by INTELSAT in the Borough
of Manhattan, The City of New York, the State of New York, U.S.A.
if (but only if) the full amount of such payments at all offices
and agencies located outside the United States through which
payment is to be made in accordance with the terms of the Notes is
illegal or effectively precluded by exchange controls or other
similar restrictions as determined by INTELSAT. INTELSAT covenants
that until this Note has been delivered to the Fiscal Agent for
cancellation or monies sufficient to pay the principal of and
interest on this Note have been made available for payment and
either paid or returned to INTELSAT as provided herein, it will at
all times maintain offices or paying agents in London, United
Kingdom and, so long as the Notes are listed on the respective
stock exchanges, in Hong Kong and Singapore for the payment of the
principal of and interest on the Notes as herein provided.
Reference is hereby made to the further provisions of
this Note set forth on the reverse hereof, including but not
limited to the provisions for redemption of the Notes, which
further provisions shall for all purposes have the same effect as
though fully set forth at this place.
Unless the certificate of authentication hereon has been
executed by the Fiscal Agent by the manual signature of one of its
authorized officers, neither this Note nor any coupon appertaining
hereto shall be valid or obligatory for any purpose.
IN WITNESS WHEREOF, INTELSAT has caused this Note to be
duly executed and its seal to be hereunto affixed and attested and
duly executed coupons to be annexed hereto.
Dated as of 22 March 1994
INTERNATIONAL TELECOMMUNICATIONS
SATELLITE ORGANIZATION
By______________________________
[Seal]
Attest:
<PAGE>
[FORM OF FISCAL AGENT'S CERTIFICATE OF AUTHENTICATION]
This is one of the Notes referred to in the within-
mentioned Fiscal Agency Agreement.
For and on behalf of BANKERS TRUST COMPANY
as Fiscal Agent
By _____________________________________________
Authorized Signatory
<PAGE>
[Form of Reverse]
1. This Note is one of a duly authorized issue of
Notes of INTELSAT in the aggregate principal amount of Two
Hundred Million United States Dollars (U.S.$200,000,000),
designated as its 6 5/8% Notes Due 2004 (the "Notes"). INTELSAT,
for the benefit of the Holders from time to time of the Notes,
has entered into a Fiscal Agency Agreement, dated as of 22 March
1994 (the "Fiscal Agency Agreement"), between INTELSAT and
Bankers Trust Company, as Fiscal Agent, copies of which Fiscal
Agency Agreement are on file and available for inspection at the
Principal Office of the Fiscal Agent in London, United Kingdom
and the main offices of the paying agencies named on the face of
this Note. (Bankers Trust Company and its respective successors
as Fiscal Agent are herein collectively called the "Fiscal
Agent".)
As long as any of the Notes shall be outstanding and
unpaid, but only up to the time all amounts of principal and
interest have been placed at the disposal of the Fiscal Agent,
INTELSAT will not cause or permit to be created on any of its
property or assets any mortgage, pledge or other lien or charge
as security for any bonds, notes or other evidences of
indebtedness heretofore or hereafter issued, assumed or
guaranteed by INTELSAT for money borrowed (other than purchase
money mortgages, sale and leaseback transactions in connection
with spacecraft, or other pledges or liens on property purchased
by INTELSAT as security for all or part of the purchase price
thereof; liens incidental to an investment transaction, but not a
borrowing, of INTELSAT; or mechanics', landlords', tax or other
statutory liens), unless the Notes shall be secured by such
mortgage, pledge or other lien or charge equally and ratably with
such other bonds, notes or evidences of indebtedness.
2. The Notes are issuable in bearer form, with
interest coupons attached (the "coupons"), in denominations of
U.S. $10,000 and $100,000. As used herein, the term "Holder"
when used with respect to any Bearer Note or coupon, means the
bearer thereof.
3. INTELSAT has appointed the main offices of Bankers
Trust Luxembourg S.A. in Luxembourg, Bankers Trust Company in
Hong Kong, Credit Suisse in Zurich, Switzerland and DBS Bank in
Singapore as additional agencies where Notes may be surrendered
for exchange. INTELSAT reserves the right to vary or terminate
the appointment of any agent or to appoint additional or other
transfer agents or to approve any change in the office through
which any transfer agent acts, provided that there will at all
times be a transfer agent in London, United Kingdom.
All Notes issued upon any exchange of Notes shall be
the valid obligations of INTELSAT evidencing the same debt, and
entitled to the same benefits, as the Notes surrendered upon such
exchange. No service charge shall be made for any exchange, but
INTELSAT may require payment of a sum sufficient to cover any tax
or other governmental charge payable in connection therewith.
<PAGE>
Title to Bearer Notes and coupons shall pass by
delivery. INTELSAT, the Fiscal Agent, and any paying agent of
INTELSAT may deem and treat the bearer of any Bearer Note or
coupon as the owner thereof for all purposes, whether or not such
Note or coupon shall be overdue.
For purposes of the provisions of this Note and the
Fiscal Agency Agreement, any Note authenticated and delivered
pursuant to the Fiscal Agency Agreement shall, as of any date of
determination, be deemed to be "Outstanding", except:
(i) Notes theretofore cancelled by the Fiscal Agent
or delivered to the Fiscal Agent for cancellation and not
reissued by the Fiscal Agent;
(ii) Notes which have been surrendered for
redemption in accordance with Paragraph 6 hereof or which
have become due and payable at maturity or otherwise and
with respect to which monies sufficient to pay the principal
thereof and interest thereon shall have been made available
to the Fiscal Agent; or
(iii) Notes in lieu of or in substitution for which
other Notes shall have been authenticated and delivered
pursuant to the Fiscal Agency Agreement;
provided, however, that in determining whether the Holders of the
requisite principal amount of Outstanding Notes are present at a
meeting of Holders of Notes for quorum purposes or have given any
request, demand, authorization, direction, notice, consent or
waiver hereunder, Notes owned by INTELSAT shall be disregarded
and deemed not to be Outstanding.
4. (a) INTELSAT shall pay to the Fiscal Agent at its
Principal Office in London, United Kingdom, in accordance with
the terms of the Fiscal Agency Agreement on each Interest Payment
Date, any redemption date and the maturity date of the Notes, in
such coin or currency of the United States of America as at the
time of payment is legal tender for the payment of public and
private debts, amounts sufficient (with any amounts then held by
the Fiscal Agent and available for the purpose) to pay the
interest on, the redemption price of and accrued interest (if the
redemption date is not an Interest Payment Date) on, and the
principal of, the Notes due and payable on such an Interest
Payment Date, redemption date or maturity date, as the case may
be.
The Fiscal Agent shall apply the amounts so paid to it
to the payment of such interest, redemption price and principal
in accordance with the terms of the Notes. Any monies paid by
INTELSAT to the Fiscal Agent for the payment of the principal of
and interest on any Notes and remaining unclaimed at the end of
two years after such principal or interest shall have become due
and payable (whether at maturity, upon call for redemption or
otherwise) shall then be repaid to INTELSAT upon its written
request, and upon such repayment all liability of the Fiscal
Agent with respect thereto shall thereupon cease, without,
<PAGE>
however, limiting in any way any obligation INTELSAT may have to
pay the principal of and interest on this Note as the same shall
become due.
(b) In any case where the date for the payment of the
principal of or interest on any Note or the date fixed for
redemption of any Note shall be at any place of payment a day on
which banking institutions are authorized or obligated by law or
executive order to close, or are not carrying out transactions in
United States dollars in The City of New York, the State of New
York, U.S.A., or the city of the paying agent to which the Note
or coupon is surrendered for payment, then payment of principal
or interest need not be made on such date at such place but may
be made on the next succeeding day at such place of payment which
is not a day on which banking institutions are authorized or
obligated by law or executive order to close, or which is a day
on which banking institutions are carrying out transactions in
United States dollars in The City of New York, the State of New
York, U.S.A., or the city of the paying agent to which the Note
or coupon is surrendered for payment, with the same force and
effect as if made on the date for the payment of the principal or
interest or the date fixed for redemption, and no interest shall
accrue for the period after such date.
5. (a) INTELSAT will pay to the Holder of this Note
or any coupon appertaining hereto who is a United States Alien
(as defined below) such Additional Amounts as may be necessary in
order that every net payment of the principal of, and interest
on, this Note, after withholding for or on account of any present
or future tax, assessment or governmental charge imposed upon, or
as a result of, such payment by the United States (or any
political subdivision or taxing authority thereof or therein),
will not be less than the amount provided for in this Note or in
such coupon to be then due and payable; provided, however, that
the foregoing obligation to pay Additional Amounts shall not
apply to any one or more of the following:
(i) any tax, assessment or other governmental
charge which would not have been so imposed but for (A) the
existence of any present or former connection between such
Holder (or between a fiduciary, settlor, or beneficiary of,
or a possessor of a power over, such Holder, if such Holder
is an estate or trust, or a member or shareholder of such
holder, if such Holder is a partnership or corporation) and
the United States, including, without limitation, such
Holder (or such fiduciary, settlor, beneficiary, possessor,
member or shareholder) being or having been a citizen,
resident or treated as a resident thereof or being or having
been engaged in a trade or business or present therein or
having or having had a permanent establishment therein or
(B) such Holder's present or former status as a personal
holding company, controlled foreign corporation, foreign
personal holding company or passive foreign investment
company with respect to the United States or as a
corporation which accumulates earnings to avoid United
States federal income tax, all under existing United States
Federal income tax law or successor provisions;
<PAGE>
(ii) any tax, assessment or other governmental
charge which would not have been so imposed but for the
presentation by the Holder of this Note or any coupon
appertaining hereto for payment on a date more than 10
calendar days after the date on which such payment became
due and payable or the date on which payment thereof is duly
provided for and notice thereof is given to Holders,
whichever occurs later;
(iii) any estate, inheritance, gift, sales, transfer,
personal property tax or any similar tax, assessment or
other governmental charge;
(iv) any tax, assessment or other governmental
charge which is payable otherwise than by withholding from
payments on or in respect of this Note or any coupon
appertaining hereto;
(v) any tax, assessment or other governmental
charge imposed by reason of such Holder's past or present
status as the actual or constructive owner of 10 per cent.
or more of the capital or profits interest of INTELSAT
within the meaning of Section 871(h)(3) of the United States
Internal Revenue Code of 1986, as amended, and any
regulations thereunder;
(vi) any tax, assessment or other governmental
charge imposed because a Holder of a Note is a bank that
receives interest on such Note pursuant to a loan agreement
entered into in the ordinary course of its trade or
business;
(vii) any tax, assessment or other governmental
charge imposed as a result of the failure to comply with
applicable certification, information, documentation or
other reporting requirements concerning the nationality,
residence, identity or connection with the United States of
the Holder or beneficial owner of this Note, or any coupon
appertaining hereto if such compliance is required by
statute or by regulation of the United States as a
precondition to relief or exemption from such tax,
assessment or other government charge;
(viii) any tax, assessment or other governmental
charge required to be withheld by any paying agent from any
payment on this Note or any coupon appertaining hereto if
such payment can be made without such withholding by at
least one other paying agent; or
(ix) any combination of items (i) through (viii)
above;
nor will Additional Amounts be paid with respect to any payment
of principal or interest on this Note or any coupon appertaining
hereto to a Holder who is a fiduciary or partnership or other
than the sole beneficial owner of this Note or any coupon
appertaining hereto to the extent a beneficiary or settlor with
respect to the fiduciary or a member of the partnership or
<PAGE>
the beneficial owner would not have been entitled to payment of
the Additional Amounts had such beneficiary, settlor, member or
beneficial owner been the Holder of this Note or any coupon
appertaining hereto.
The term "United States Alien" means any person who,
for United States federal income tax purposes, is a foreign
corporation, a nonresident alien individual, a nonresident
fiduciary of a foreign estate or trust, or a foreign partnership,
one or more of the members of which is, for United States federal
income tax purposes, a foreign corporation, a nonresident alien
individual or a nonresident fiduciary of a foreign estate or
trust. The term "United States" means the United States of
America (including the States and the District of Columbia), its
territories, its possessions and other areas subject to its
jurisdiction.
(b) Except as specifically provided in this Note and
in the Fiscal Agency Agreement, INTELSAT shall not be required to
make any payment with respect to any tax, assessment or other
governmental charge imposed by any government or any political
subdivision or taxing authority thereof or therein. Whenever in
this Note there is a reference, in any context, to the payment of
the principal of or interest on, or in respect of, any Note or
any coupon, such mention shall be deemed to include mention of
the payment of Additional Amounts provided for in this Paragraph
to the extent that, in such context, Additional Amounts are, were
or would be payable in respect thereof pursuant to the provisions
of this Paragraph and express mention of the payment of
Additional Amounts (if applicable) in any provisions hereof shall
not be construed as excluding Additional Amounts in those
provisions hereof where such express mention is not made.
6. (a) The Notes are subject to redemption at the
option of INTELSAT, as a whole but not in part, at any time at a
redemption price equal to the principal amount thereof, together
with accrued and unpaid interest to the date fixed for redemption
(except if the redemption date is an Interest Payment Date) under
the circumstances described in the next three Paragraphs.
(b) The Notes may be redeemed, as a whole but not in
part, at the option of INTELSAT, upon not more than 60 days' nor
less than 30 days' prior notice in the manner provided in clause
(e) of this Paragraph 6 at a redemption price equal to the
principal amount thereof together with accrued and unpaid
interest to the date fixed for redemption, if (x) INTELSAT
determines that, without regard to any immunities that may be
available to it, (1) as a result of any change in or amendment to
the laws (or any regulations or rulings promulgated thereunder)
of the United States or of any political subdivision or taxing
authority thereof or therein affecting taxation, or any change in
official position regarding application or interpretation of such
laws, regulations or rulings (including a holding by a court of
competent jurisdiction in the United States), which change or
amendment is announced or becomes effective on or after 22 March
1994, INTELSAT has or will become obligated to pay Additional
Amounts (as provided in Paragraph 5(a) hereof) or (2) on or after
22 March 1994, any action has been taken by any taxing authority
of, or any decision has
<PAGE>
been rendered by a court of competent jurisdiction in, the United
States or any political subdivision or taxing authority thereof
or therein, including any of those actions specified in (1)
above, whether or not such action was taken or decision was
rendered with respect to INTELSAT, or any change, amendment,
application or interpretation shall be officially proposed,
which, in any such case, in the written opinion to INTELSAT of
independent legal counsel of recognized standing, will result in
a material probability that INTELSAT will become obligated to pay
Additional Amounts with respect to the Notes, and (y) in any such
case INTELSAT, in its business judgment, determines that such
obligation cannot be avoided by the use of reasonable measures
available to INTELSAT (provided that INTELSAT shall not be
required to assert any immunities that may be available to it);
provided, however, that (i) no such notice of redemption shall be
given earlier than 90 days prior to the earliest date on which
INTELSAT would but for such redemption be obligated to pay
Additional Amounts and (ii) at the time such notice of redemption
is given, such obligation to pay Additional Amounts remains in
effect. Prior to the publication of notice of redemption
pursuant to this Paragraph 6(b), INTELSAT shall deliver to the
Fiscal Agent a certificate of INTELSAT stating the date of
redemption and that INTELSAT is entitled to effect such
redemption and setting forth in reasonable detail a statement of
facts showing that the conditions precedent to the right of
INTELSAT to so redeem the Notes have occurred.
(c) In addition, if INTELSAT shall determine that any
payment made outside the United States by INTELSAT or any paying
agent of principal or interest due in respect of any Bearer Note
or coupon would, under any present or future laws or regulations
of the United States and without regard to any immunities that
may be available to INTELSAT, be subject to any certification,
information or other reporting requirement of any kind, the
effect of which requirement is the disclosure to INTELSAT, any
paying agent or any governmental authority of the nationality,
residence or identity (as distinguished from, for example, status
as a United States Alien) of a beneficial owner of such Note or
coupon who is a United States Alien (other than such a
requirement (i) which would not be applicable to a payment made
by INTELSAT or any paying agent (A) directly to the beneficial
owner, or (B) to a custodian, nominee or other agent of the
beneficial owner, or (ii) which can be satisfied by such
custodian, nominee or other agent certifying to the effect that
such beneficial owner is a United States Alien, provided that in
each case referred to in clauses (i)(B) and (ii), payment by such
custodian, nominee or agent to such beneficial owner is not
otherwise subject to any such requirement or (iii) would not be
applicable to a payment made by at least one other paying agent
of INTELSAT), INTELSAT, at its election, shall either (x) redeem
the Bearer Notes, as a whole but not in part, at a redemption
price equal to the principal amount thereof, together with
accrued and unpaid interest to the date fixed for redemption or
(y) if the conditions set forth in Paragraph 6(d) hereof are
satisfied, pay the additional amounts specified in such
Paragraph. INTELSAT shall make such determination and election as
soon as practicable and give prompt notice thereof (the
"Determination Notice") in the manner provided in clause (e) of
this Paragraph 6, stating the effective date of such
certification, information or other reporting requirement,
whether INTELSAT has elected to redeem the Bearer Notes or to pay
the additional amounts specified in Paragraph
<PAGE>
6(d) hereof, and (if applicable) the last date by which the
redemption of the Bearer Notes must take place, as provided in
the next succeeding sentence. If INTELSAT elects to redeem the
Bearer Notes, such redemption shall take place on such date, not
later than one year after the publication of the Determination
Notice, as INTELSAT shall elect by notice to the Fiscal Agent
given not less than 45 nor more than 75 days before the date
fixed for redemption. Notice of such redemption of the Bearer
Notes will be given to the Holders of the Bearer Notes not less
than 30 nor more than 60 days prior to the date fixed for
redemption. Notwithstanding the foregoing, INTELSAT shall not so
redeem the Bearer Notes if INTELSAT shall subsequently determine,
not less than 30 days prior to the date fixed for redemption,
that subsequent payments would not be subject to any such
requirement, in which case INTELSAT shall give prompt notice of
such determination in the manner provided in clause (e) of this
Paragraph 6 and any earlier redemption notice shall be revoked
and of no further effect.
(d) If and so long as the certification, information
or other reporting requirements referred to in Paragraph 6(c)
would be fully satisfied by payment of a withholding tax, backup
withholding tax or similar charge, INTELSAT may elect to pay,
without regard to any immunities that may be available to it,
such additional amounts (regardless of clause (vii) in Paragraph
5(a)) as may be necessary so that every net payment made outside
the United States following the effective date of such
requirements by INTELSAT or any paying agent of principal or
interest due in respect of any Bearer Note or any coupon the
beneficial owner of which is a United States Alien (but without
any requirement that the nationality, residence or identity of
such beneficial owner be disclosed to INTELSAT, any paying agent
or any governmental authority), after deduction or withholding
for or on account of such withholding tax, backup withholding tax
or similar charge (other than a withholding tax, backup
withholding tax or similar charge that (i) is the result of a
certification, information or other reporting requirement
described in the second parenthetical clause of the first
sentence of Paragraph 6(c), (ii) is imposed as a result of the
fact that INTELSAT or any of its paying agents have actual
knowledge that the beneficial owner of such Bearer Note or coupon
is within the category of persons described in Clauses (i) or (v)
of Paragraph 5(a), or (iii) is imposed as a result of
presentation of such Bearer Note or coupon for payment more than
10 calendar days after the date on which such payment becomes due
and payable or on which payment thereof is duly provided for and
notice thereof is given to Holders, whichever occurs later), will
not be less than the amount provided for in such Bearer Note or
coupon to be then due and payable. In the event INTELSAT elects
to pay such additional amounts, INTELSAT will have the right, at
its sole option, at any time, to redeem the Bearer Notes as a
whole, but not in part, at a redemption price equal to the
principal amount thereof, together with accrued and unpaid
interest to the date fixed for redemption. If INTELSAT has made
the determination described in Paragraph 6(c) with respect to
certification, information or other reporting requirements
applicable only to interest and subsequently makes a
determination in the manner and of the nature referred to in such
Paragraph 6(c) with respect to such requirements applicable to
principal, INTELSAT will redeem the Bearer Notes in the manner
and on the terms described in Paragraph 6(c) unless INTELSAT
elects to have the provisions of this Paragraph apply rather than
the provisions of
<PAGE>
Paragraph 6(c). If in such circumstances the Bearer Notes are to
be redeemed, INTELSAT shall have no obligation to pay additional
amounts pursuant to this Paragraph with respect to principal or
interest accrued and unpaid after the date of the notice of such
determination indicating such redemption, but will be obligated
to pay such additional amounts with respect to interest accrued
and unpaid to the date of such determination. If INTELSAT elects
to pay additional amounts pursuant to this Paragraph and the
condition specified in the first sentence of this Paragraph
should no longer be satisfied, then INTELSAT shall promptly
redeem such Bearer Notes.
(e) The Fiscal Agent shall cause, on behalf of
INTELSAT, notices to be given to redeem Bearer Notes to Holders
by publication at least once in a leading daily newspaper in the
English language of general circulation in South East Asia and,
so long as the Notes are listed on the respective stock exchanges
and such exchanges shall so require, in a daily newspaper of
general circulation in Hong Kong and Singapore or, if publication
in either Hong Kong or Singapore is not reasonably practicable,
elsewhere in South East Asia. The term "daily newspaper" as used
herein shall be deemed to mean a newspaper customarily published
on each business day, whether or not it shall be published in
Saturday, Sunday or holiday editions. If by reason of the
suspension of publication of any newspaper, or by reason of any
other cause, it shall be impracticable to give notice to the
Holders of Notes in the manner prescribed herein, then such
notification in lieu thereof as shall be made by INTELSAT or by
the Fiscal Agent on behalf of and at the instruction and expense
of INTELSAT shall constitute sufficient provision of such notice,
if such notification shall, so far as may be practicable,
approximate the terms and conditions of the publication in lieu
of which it is given. Neither the failure to give notice nor any
defect in any notice given to any particular Holder of a Note
shall affect the sufficiency of any notice with respect to other
Notes. Such notices will be deemed to have been given on the
date of such publication or mailing or, if published in such
newspapers on different dates, on the date of the first such
publication in South East Asia. Notices to redeem Notes shall be
given at least once not more than 60 days nor less than 30 days
prior to the date fixed for redemption and shall specify the date
fixed for redemption, the redemption price, the place or places
of payment, that payment will be made upon presentation and
surrender of the Notes to be redeemed, together with all
appurtenant coupons, if any, maturing subsequent to the date
fixed for redemption, that interest accrued and unpaid to the
date fixed for redemption (unless the redemption date is an
Interest Payment Date) will be paid as specified in said notice,
and that on and after said date interest thereon will cease to
accrue. If the redemption is pursuant to Paragraph 6(b) or 6(c)
hereof, such notice shall also state that the conditions
precedent to such redemption have occurred and state that
INTELSAT has elected to redeem all the Notes.
(f) If notice of redemption has been given in the
manner set forth in Paragraph 6(e) hereof, the Notes so to be
redeemed shall become due and payable on such redemption date
specified in such notice and upon presentation and surrender of
the Notes at
<PAGE>
the place or places specified in such notice, together with all
appurtenant coupons, if any, maturing subsequent to the
redemption date, the Notes shall be paid and redeemed by INTELSAT
at the places and in the manner and currency herein specified and
at the redemption price together with accrued and unpaid interest
(unless the redemption date is an Interest Payment Date) to the
redemption date; provided, however, that interest due on or prior
to the redemption date on Bearer Notes shall be payable only upon
the presentation and surrender of coupons for such interest (at
an office or agency outside the United States except as otherwise
provided on the face of the Bearer Note). If any Bearer Note
surrendered for redemption shall not be accompanied by all
appurtenant coupons maturing after the redemption date, such Note
may be paid after deducting from the amount otherwise payable an
amount equal to the face amount of all such missing coupons, or
the surrender of such missing coupon or coupons may be waived by
INTELSAT and the Fiscal Agent if they are furnished with such
security or indemnity as they may require to save each of them
and each other paying agency of INTELSAT harmless. From and
after the redemption date, if monies for the redemption of Notes
surrendered for redemption shall have been made available at the
Principal Office of the Fiscal Agent for redemption on the
redemption date, the Notes surrendered for redemption shall cease
to bear interest, the coupons for interest appertaining to Bearer
Notes maturing subsequent to the redemption date shall be void
(unless the amount of such coupons shall have been deducted from
the redemption price at the time of surrender of the Bearer Note
to which such coupons appertained, as aforesaid), and the only
right of the Holders of such Notes shall be to receive payment of
the redemption price together with accrued and unpaid interest
(unless the redemption date is an Interest Payment Date) to the
redemption date as aforesaid. If monies for the redemption of
the Notes are not made available for payment until after the
redemption date, the Notes surrendered for redemption shall not
cease to bear interest until such monies have been so made
available.
(g) Notes redeemed or otherwise acquired by INTELSAT
will forthwith be delivered to the Fiscal Agent for cancellation
and may not be reissued or resold, except that Bearer Notes
delivered to the Fiscal Agent may, at the written request of
INTELSAT, be reissued by the Fiscal Agent in replacement of
mutilated, lost, stolen or destroyed Notes pursuant to Paragraph
9 hereof.
7. In the event of:
(a) default in the payment of any installment of
interest upon any Note for a period of 30 days after the
date when due; or
(b) default in the payment of the principal of any
Note when due (whether at maturity or redemption or
otherwise); or
(c) default in the performance or breach of any
covenant or warranty contained in the Notes or the Fiscal
Agency Agreement (other than as specified in
<PAGE>
clauses (a) and (b) of this Paragraph 7) for a period of 90
days after the date on which written notice of such failure,
requiring INTELSAT to remedy the same and stating that such
notice is a "Notice of Default", shall first have been given
to INTELSAT and the Fiscal Agent by any Holder of a Note; or
(d) involuntary acceleration of the maturity of other
indebtedness of INTELSAT for money borrowed with a maturity
of one year or more in excess of U.S. $50,000,000 which
acceleration shall not be rescinded or annulled, or which
indebtedness shall not be discharged, within 45 days after
notice; or
(e) INTELSAT is dissolved or the INTELSAT Agreement or
the Operating Agreement ceases to be in full force and
effect; provided, however, that no default shall occur if
INTELSAT's obligations under the Fiscal Agency Agreement and
the Notes are assumed by a successor who maintains a
business which is substantially similar to that of INTELSAT;
the Holder of this Note may, at such Holder's option, unless such
Event of Default has been waived as described in Paragraph 10(b)
hereof, declare the principal of this Note and accrued and unpaid
interest hereon to be due and payable immediately by written
notice to INTELSAT, with a copy to the Fiscal Agent at its
Principal Office, and unless all such defaults shall have been
cured by INTELSAT prior to receipt of such written notice, the
principal of this Note and accrued and unpaid interest hereon
shall become and be immediately due and payable.
8. (a) INTELSAT will conduct and operate its
business diligently and in the ordinary manner in compliance with
the INTELSAT Agreement and the Operating Agreement, and will use
all reasonable efforts to maintain in full force and effect its
existing international registration of orbital locations and
frequency spectrum for the operation of its global commercial
telecommunications satellite system; provided, however, that
INTELSAT shall not be prevented from making any change with
respect to its manner of conducting or operating its business or
with respect to such registration if such change, in the judgment
of INTELSAT, is desirable and does not materially impair
INTELSAT's ability to perform its obligations under the Notes.
(b) INTELSAT will cause all properties used or useful
in the conduct of its business to be maintained and kept in good
condition, repair and working order and supplied with all
necessary equipment and will cause to be made all necessary
repairs, renewals, replacements, betterments and improvements
thereof, all as in the judgment of INTELSAT may be necessary so
that the business carried on in connection therewith may be
properly and advantageously conducted at all times (except for
ordinary wear and tear and deterioration); provided, however,
that INTELSAT shall not be prevented from discontinuing the
operation or maintenance of any of such properties if such
discontinuance, in the judgment of INTELSAT, is desirable in the
conduct of its business and does not materially impair INTELSAT's
ability to perform its obligations under the Notes.
<PAGE>
9. If any mutilated Note or a Note with a mutilated
coupon appertaining to it is surrendered to the Fiscal Agent,
INTELSAT shall execute, and the Fiscal Agent shall authenticate
(or arrange for authentication on its behalf) and deliver in
exchange therefor, a new Note of like tenor and principal amount,
bearing a number not contemporaneously outstanding, with coupons
corresponding to the coupons, if any, appertaining to the
surrendered Note.
If there be delivered to INTELSAT and the Fiscal Agent
(i) evidence to their satisfaction of the destruction, loss or
theft of any Note or coupon, and (ii) such security or indemnity
as may be required by them to save each of them and any agent of
each of them harmless, then, in the absence of notice to INTELSAT
or the Fiscal Agent that such Note or coupon has been acquired by
a bona fide purchaser, INTELSAT shall execute, and upon its
request the Fiscal Agent shall authenticate (or arrange for
authentication on its behalf) and deliver in lieu of any such
destroyed, lost or stolen Note or in exchange for the Note to
which such coupon appertains (with all appurtenant coupons not
destroyed, lost or stolen), a new Note of like tenor and
principal amount and bearing a number not contemporaneously
outstanding, with coupons corresponding to the coupons, if any,
appertaining to such destroyed, lost or stolen Note or to the
Note to which such destroyed, lost or stolen coupon appertains.
Upon the issuance of any new Note under this Paragraph,
INTELSAT may require the payment by the Holder of a sum
sufficient to cover any tax or other governmental charge that may
be imposed in relation thereto and any other expenses (including
the fees and the expenses of the Fiscal Agent and INTELSAT)
connected therewith.
Every new Note with its coupons, if any, issued
pursuant to this Paragraph in lieu of any destroyed, lost or
stolen Note, or in exchange for a Note to which a destroyed, lost
or stolen coupon appertains, shall constitute an original
additional contractual obligation of INTELSAT, whether or not the
destroyed, lost or stolen Note and its coupons, if any, or the
destroyed, lost or stolen coupon shall be at any time enforceable
by anyone.
Any new Note delivered pursuant to this Paragraph shall
be so dated, or have attached thereto such coupons, that neither
gain nor loss in interest shall result from such exchange.
The provisions of this Paragraph 9 are exclusive and
shall preclude (to the extent lawful) all other rights and
remedies with respect to the replacement or payment of mutilated,
destroyed, lost or stolen Notes or coupons.
<PAGE>
10. (a) The Fiscal Agency Agreement and the terms and
conditions of the Notes may be modified or amended by INTELSAT
and the Fiscal Agent, without the consent of the Holder of any
Note or coupon, in any manner which does not adversely affect the
interests of the Holders, to provide for issuances of further
debt securities as contemplated by Paragraph 11 hereof and by the
Fiscal Agency Agreement, and to cure any ambiguity or to cure,
correct or supplement any defective provision contained herein or
in any coupon appertaining hereto or in the Fiscal Agency
Agreement, or in certain other circumstances as described in the
Fiscal Agency Agreement, to all of which each Holder of any Note
or coupon shall, by acceptance thereof, consent.
(b) The Fiscal Agency Agreement and the terms and
conditions of the Notes may also be modified or amended by
INTELSAT and the Fiscal Agent, and future compliance therewith or
past default by INTELSAT may be waived, either with the consent
of the Holders of not less than a majority in aggregate principal
amount of the Notes at the time Outstanding or by the adoption of
a resolution at a meeting of Holders duly convened and held in
accordance with the provisions of the Fiscal Agency Agreement at
which a quorum (as defined below) is present by at least a
majority in aggregate principle amount of Notes represented at
such meeting; provided, however, that no such modification,
amendment or waiver may, without the written consent or
affirmative vote of the Holder of each Note affected thereby:
(i) change the stated maturity of the principal of
or any installment of interest on any such Note, or
(ii) reduce the principal amount thereof or the rate
of interest on any such Note, or
(iii) change the obligation of INTELSAT to pay
Additional Amounts, or
(iv) change the coin or currency in which any such
Note or the interest thereon is payable, or
(v) modify the obligation of INTELSAT to maintain
offices or agencies outside the United States, or
(vi) reduce the percentage in principal amount of the
Outstanding Notes necessary to modify or amend the Fiscal
Agency Agreement or the terms and conditions of the Notes or
the coupons, or to waive any future compliance or past
default, or
(vii) reduce the requirements for voting for the
adoption of a resolution or the quorum required at any
meeting of Holders of Notes at which a resolution is
adopted.
<PAGE>
The quorum at any meeting called to adopt a resolution
will be a majority in aggregate principal amount of Notes
Outstanding, except that at any meeting which is reconvened for
lack of a quorum, the Holders entitled to vote 25 per cent. in
aggregate principle amount of Notes Outstanding shall constitute
a quorum for the taking of any action set forth in the notice of
the original meeting.
It shall not be necessary for the Holders of Notes to
approve the particular form of any proposed amendment, but it
shall be sufficient if they approve the substance thereof.
(c) Any modifications, amendments or waivers to the
Fiscal Agency Agreement or to the terms and conditions of the
Notes in accordance with the foregoing provisions will be
conclusive and binding on all Holders of Notes, whether or not
they have given such consent, and on all Holders of coupons,
whether or not notation of such modifications, amendments or
waivers is made upon the Notes or coupons, and on all future
Holders of Notes and coupons.
(d) Promptly after the execution of any amendment to
the Fiscal Agency Agreement or the effectiveness of any
modification or amendment of the terms and conditions of the
Notes, notice of such modification or amendment shall be given by
INTELSAT or by the Fiscal Agent on behalf of and at the expense
of INTELSAT, to Holders of the Notes in the manner provided in
Paragraph 6(e) hereof. The failure to give such notice on a
timely basis shall not invalidate such modification or amendment,
but INTELSAT shall cause the Fiscal Agent to give such notice as
soon as practicable upon discovering such failure or upon any
impediment to the giving of such notice being overcome.
11. INTELSAT may from time to time, without the
consent of the Holder of any Note or coupon, issue further debt
securities having the same terms and conditions as the Notes in
all respects (or in all respects except for the first payment of
interest thereon) or having such terms as INTELSAT may determine
at the time of their issuance, in either case so that any such
further debt securities shall be consolidated and form a single
series with outstanding securities of any series (including the
Notes). Unless the context requires otherwise, references in the
Notes and coupons and in the Fiscal Agency Agreement to the Notes
or coupons shall include any other debt securities issued in
accordance with the Fiscal Agency Agreement that are intended by
INTELSAT to form a single series with the Notes. Any further
debt securities forming a single series with the outstanding
securities of any series (including the Notes) shall be issued
pursuant to the Fiscal Agency Agreement as amended for the
purpose of providing for the issuance of such debt securities.
12. Subject to the authentication of this Note by the
Fiscal Agent, INTELSAT hereby certifies and declares that all
acts, conditions and things required to be done and performed and
to have happened precedent to the creation and issuance of the
Notes and any coupons, and to constitute the same the valid
obligations of INTELSAT, have been done and performed and have
happened in due compliance with all applicable laws.
<PAGE>
13. INTELSAT hereby appoints CT Corporation System,
1633 Broadway, New York, New York 10019, as its authorized agent
("Authorized Agent") upon which process may be served in any
action arising out of or based on the Notes or any coupons which
action may be instituted in any New York State or United States
Federal court sitting in the Borough of Manhattan, The City of
New York, the State of New York, U.S.A., by the Holder of any
Note or coupon, and INTELSAT and each Holder by acceptance hereof
expressly accepts the exclusive jurisdiction of any such court in
respect of any such action. Such appointment shall be
irrevocable until two years after the Notes shall have matured
and been paid or moneys for the payment thereof shall have been
made available unless and until a successor Authorized Agent
shall have been appointed and shall have accepted such
appointment. INTELSAT hereby irrevocably waives any immunity to
service of process in respect of any such action to which it
might otherwise be entitled in any action arising out of or based
upon the Notes or coupons which may be instituted by any Holder
of a Note or coupon in any State or Federal court in the Borough
of Manhattan, The City of New York, the State of New York, U.S.A.
Service of process upon the Authorized Agent at the address
indicated above, as such address may be changed within the
Borough of Manhattan, The City of New York, the State of New
York, U.S.A., by notice given by the Authorized Agent to each
party hereto, shall be deemed, in every respect, effective
service of process upon INTELSAT. INTELSAT irrevocably waives,
to the fullest extent permitted by applicable law, any sovereign
or other immunity from jurisdiction or from execution (except
that INTELSAT does not waive immunity from execution prior to
judgment and any similar defense) to which it might otherwise be
entitled in any such action which may be instituted by any Holder
of a Note or coupon in any New York State or United States
Federal court sitting in the Borough of Manhattan, The City of
New York, the State of New York, U.S.A.
14. The Notes and coupons will constitute an
obligation of INTELSAT and not of any Signatory or Party (each as
defined in the INTELSAT Agreement). No Signatory or Party will
waive any immunity to which it may be entitled in any suit on the
Notes or coupons, and Holders of Notes or coupons will have no
recourse against any Signatory or Party with respect to any
obligations of INTELSAT under the Notes or coupons.
<PAGE>
[Form of coupon]
[Face of coupon]
ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION
WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED
STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS
PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE
INTERNAL REVENUE CODE.
[B-][1] ... [10]
U.S.$[662.50] [6625.00]
Due March 22 [1995]....[2004]
INTERNATIONAL TELECOMMUNICATIONS SATELLITE ORGANIZATION
6 5/8 Notes Due 2004
On the date set forth hereon, INTERNATIONAL
TELECOMMUNICATIONS SATELLITE ORGANIZATION ("INTELSAT") will pay
to bearer upon surrender hereof, the amount shown hereon
(together with any additional amounts in respect thereof which
INTELSAT may be required to pay according to the terms of said
Note) at the paying agencies set out on the reverse hereof or at
such other places outside the United States of America (including
the States and the District of Columbia), its territories and
possessions and other areas subject to its jurisdiction as
INTELSAT may determine from time to time, at the option of the
Holder, by United States dollar check drawn on a bank in The City
of New York, the State of New York, U.S.A. or by transfer to a
United States dollar account maintained by the payee with a bank
located in a city in Western Europe, being the interest then
payable on said Note.
INTERNATIONAL TELECOMMUNICATIONS
SATELLITE ORGANIZATION
By_______________________________________
<PAGE>
[Reverse of coupon]
Bankers Trust Company
1 Appold Street
Broadgate
London EC2A 2HE
England
Bankers Trust Luxembourg S.A.
14 Boulevard F.D. Roosevelt
L-2450 Luxembourg
Bankers Trust Company
38/F Two Pacific Place
88 Queensway
Hong Kong
Credit Suisse
Paradeplatz 8
8001 Zurich
Switzerland
DBS Bank
24 Raffles Place #81-00
Clifford Centre
Singapore 0104
<PAGE>
EXHIBIT C
[FORM OF CERTIFICATION TO BE GIVEN TO
EUROCLEAR OR CEDEL S.A. BY ACCOUNT HOLDER]
CERTIFICATE
INTERNATIONAL TELECOMMUNICATIONS SATELLITE ORGANIZATION
6 5/8% Notes Due 2004
(the "Notes")
This is to certify that as of the date hereof, and except
as set forth below, interests in the temporary Global Note
representing the above-captioned Notes held by you for our account
(i) are owned by person(s) that are not citizens or residents of
the United States, domestic partnerships, domestic corporations or
any estate or trust the income of which is subject to United States
Federal income taxation regardless of its source ("United States
person(s)"), (ii) are owned by United States person(s) that (a) are
foreign branches of United States financial institutions (as
defined in U.S. Treasury Regulations Section 1.165-12(c)(1)(v)
("financial institutions")) purchasing for their own account or for
resale or (b) acquired the Notes through foreign branches of United
States financial institutions and who hold the Notes through such
United States financial institutions on the date hereof (and in
either case (a) or (b), each such United States financial
institution hereby agrees, on its own behalf or through its agent,
that you may advise INTELSAT or INTELSAT's agent that it will
comply with the requirements of Section 165(j)(3)(A), (B) or (C) of
the U.S. Internal Revenue Code of 1986, as amended, and the
regulations thereunder), or (iii) are owned by a United States or
foreign financial institution for purposes of resale during the
restricted period (as defined in U.S. Treasury Regulations Section
1.163-5(c)(2)(i)(D)(7)), and in addition if the owner of the Notes
is a United States or foreign financial institution described in
clause (iii) above (whether or not also described in clause (i) or
(ii)) this is to further certify that such financial institution
has not acquired the Notes for purposes of resale directly or
indirectly to a United States person or to a person within the
United States or its possessions.
As used herein, "United States" means the United States
of America (including the States thereof and the District of
Columbia); and its "possessions" include Puerto Rico, the U.S.
Virgin Islands, Guam, American Samoa, Wake Island and the Northern
Mariana Islands.
We undertake to advise you promptly by tested telex on or
prior to the date on which you intend to submit your certification
relating to the Notes held by you for our account in accordance
with your Operating Procedures if any applicable statement herein
is not correct
<PAGE>
on such date, and in the absence of any such notification it may be
assumed that this certification applies as of such date.
This certification excepts and does not relate to U.S.
$______ of such interest in the above Notes in respect of which we
are not able to certify and as to which we understand exchange and
delivery of definitive Notes (or, if relevant, exercise of any
rights or collection of any interest) cannot be made until we do so
certify.
We understand that this certification is required in
connection with certain tax laws or, if applicable, certain
securities laws of the United States. In connection therewith, if
administrative or legal proceedings are commenced or threatened in
connection with which this certification is or would be relevant,
we irrevocably authorize you to produce this certification to any
interested party in such proceedings.
Dated: _____________, 199_
By:_______________________________________
As, or as agent for, the beneficial owner(s)
of the Notes to which this certificate relates.
<PAGE>
EXHIBIT D
[FORM OF CERTIFICATION TO BE GIVEN
BY THE EUROCLEAR OPERATOR OR
CEDEL S.A.]
CERTIFICATION
INTERNATIONAL TELECOMMUNICATIONS SATELLITE ORGANIZATION
6 5/8% Notes Due 2004
(the "Notes")
This is to certify that, based solely on certifications
we have received in writing, by tested telex or by electronic
transmission from member organizations appearing in our records as
persons being entitled to a portion of the principal amount set
forth below (our "Member Organizations") substantially to the
effect set forth in the Fiscal Agency Agreement, as of the date
hereof, U.S. $_______ principal amount of the above-captioned Notes
(i) is owned by persons that are not citizens or residents of the
United States, domestic partnerships, domestic corporations or any
estate or trust the income of which is subject to United States
Federal income taxation regardless of its source ("United States
persons"), (ii) is owned by United States persons that are (a)
foreign branches of United States financial institutions (as
defined in U.S. Treasury Regulations Section 1.165-12(c)(1)(v)
("financial institutions")) purchasing for their own account or for
resale or (b) United States persons who acquired the Notes through
foreign branches of United States financial institutions and who
hold the Notes through such United States financial institutions on
the date hereof (and in either case (a) or (b), each such United
States financial institution has agreed, on its own behalf or
through its agent, that we may advise INTELSAT or INTELSAT's agent
that it will comply with the requirements of Section 165(j)(3)(A),
(B) or (C) of the U.S. Internal Revenue Code of 1986, as amended,
and the regulations thereunder), or (iii) is owned by a United
States or foreign financial institution for purposes of resale
during the restricted period (as defined in U.S. Treasury
Regulations Section 1.163-5(c)(2)(i)(D)(7)), and to the further
effect that United States or foreign financial institutions
described in clause (iii) above (whether or not also described in
clause (i) or (ii)) have certified that they have not acquired the
Notes for purposes of resale directly or indirectly to a United
States person or to a person within the United States or its
possessions.
We further certify (i) that we are not making available
herewith for exchange (or, if relevant, exercise of any rights or
collection of any interest) any portion of the Temporary Global
Note excepted in such certifications and (ii) that as of the date
hereof we have not received any notification from any of our Member
Organizations to the effect that the statements made by such Member
Organizations with respect to any portion of the part submitted herewith
<PAGE>
for exchange (or, if relevant, exercise of any rights or collection
of any interest) are no longer true and cannot be relied upon as of
the date hereof.
We understand that this certification is required in
connection with certain tax laws and, if applicable, certain
securities laws of the United States. In connection therewith, if
administrative or legal proceedings are commenced or threatened in
connection with which this certification is or would be relevant,
we irrevocably authorize you to produce this certification to any
interested party in such proceedings.
Dated: __________, 1994
Yours faithfully,
[Morgan Guaranty Trust Company
of New York, Brussels Office as
operator of the Euroclear
System]
or
[Cedel S.A.]
By_______________________
<PAGE>
<PAGE>
EXHIBIT 10(jj)
<PAGE>
AT&T
Maritime Services
650 Liberty Avenue
Union, NJ 07083
FAX 908 851-4002
February 18, 1994
Christopher J. Leber
Vice President & General Manager
CMC Operations
COMSAT Mobile Communications
22300 COMSAT Drive
Clarksburg, Maryland 20871
Chris,
The following outlines the agreement in principle we have reached
regarding pricing and volumes for AT&T's branded shore-to-ship
mobile satellite service and COMSAT's branded ship-to-shore
service to be effective February 1, 1994.
AT&T plans to route 1.8 million minutes annually of domestic U.S.
originating shore-to-ship Standard A traffic to COMSAT, prorated
during the period beginning February 1, 1994 and ending December
31, 1994. AT&T will settle with COMSAT at the rate of $6.70 per
minute. Furthermore, for all Standard M and Standard B traffic
that AT&T routes to COMSAT during the above period, COMSAT will
settle with AT&T at the rate of $4.95 per minute for Standard M
traffic and $6.45 per minute for Standard B traffic.
COMSAT plans to route 3.6 million minutes annually of ship-to-
shore traffic to AT&T, prorated during the period beginning
February 1, 1994 and ending December 31, 1994. COMSAT will also
return to AT&T all calls designated by the customer for
termination over the AT&T network. COMSAT will settle with AT&T
at the rate of $.25 per minute for calls terminating in the
United States and, for call terminating to all other points, at
an amount equal to a 10 percent discount off of AT&T's prevailing
published ILD rates.
Neither AT&T nor COMSAT commits to traffic volumes, but will make
a good faith effort to send the above-described traffic to the
other. Each party will review volumes quarterly to verify that
these proposed volumes are being satisfied. There will be no
shortfall obligation, charge, or penalty for the failure to
deliver the planned volumes.
The parties agree also to exchange written proposals on or before
November 30, 1994 with respect to prices for calendar year 1995.
Subject to any appropriate regulatory approvals, this informal
letter of understanding will form the basis for a formal contract
based upon these principles. The parties will use reasonable
best efforts to incorporate the above understanding into a formal
contract by the earliest possible date.
Please indicate your acceptance in the appropriate space below.
Sincerely,
/s/Paula Goldstein
- - - ------------------
Paula Goldstein
Product Manager
Maritime Services
/s/Cheryl Lynn Schneider
Agreed to and accepted by: ________________________________
<PAGE>
<PAGE>
EXHIBIT 10(kk)
<PAGE>
______________________________________________________________________________
FISCAL AGENCY AGREEMENT
Between
INTERNATIONAL TELECOMMUNICATIONS SATELLITE ORGANIZATION,
Issuer
and
BANKERS TRUST COMPANY
Fiscal Agent and Principal Paying Agent
_________________________
Dated as of 22 March 1994
_________________________
U.S. $200,000,000
6 5/8% Notes Due 2004
______________________________________________________________________________
<PAGE>
FISCAL AGENCY AGREEMENT, dated as of 22 March 1994 (the
"Agreement"), between International Telecommunications Satellite
Organization ("INTELSAT"), an international organization
established by the Agreement Relating to the International
Telecommunications Satellite Organization and the Operating
Agreement relating thereto, entered into force on 12 February 1973,
and Bankers Trust Company, a bank organized under the laws of New
York, United States, as Fiscal Agent and Principal Paying Agent.
1. INTELSAT has, by a Subscription Agreement, dated 7
March 1994, between INTELSAT and Goldman Sachs (Asia) Limited
("GSAL"), and the other Managers named therein (the "Managers"),
agreed to issue U.S. $200,000,000 aggregate principal amount of its
6 5/8% Notes Due 2004 (the "Notes"). The Notes shall be issued
initially in the form of a temporary global note in bearer form,
without interest coupons, substantially in the form of Exhibit A
hereto (the "Global Note"). The Global Note will be exchangeable,
as provided below, for definitive Notes issuable in bearer form, in
denominations of U.S. $10,000 and U.S. $100,000 (the "Bearer
Notes") with interest coupons attached (the "coupons"), substan-
tially in the forms set forth in Exhibit B hereto. The term
"Notes" as used herein includes the Global Note. The term "Holder",
when used with respect to a Bearer Note or any coupon, means the
bearer thereof.
2. INTELSAT hereby appoints Bankers Trust Company acting
through its office at London, United Kingdom, as its fiscal agent
and principal paying agent in respect of the Notes upon the terms
and subject to the conditions herein set forth (Bankers Trust
Company and its successor or successors as such fiscal agent or
principal paying agent qualified or appointed in accordance with
Section 8 hereof are herein collectively called the "Fiscal
Agent"), and Bankers Trust Company hereby accepts such appointment.
The Fiscal Agent shall have the powers and authority granted to and
conferred upon it herein and in the Notes and such further powers
and authority to act on behalf of INTELSAT as may be mutually
agreed upon by INTELSAT and the Fiscal Agent. As used herein,
"paying agents" shall mean paying agents (including the Fiscal
Agent) maintained by INTELSAT as provided in Section 8(b) hereof.
3. (a) The Notes shall be executed on behalf of
INTELSAT by the Director General and Chief Executive Officer or by
any other officer of INTELSAT specifically identified in a
certificate of incumbency and specimen signatures as having the
requisite authority to execute the Notes (the "Executive
Officers"), any of whose signatures may be manual or facsimile,
under a facsimile of its seal reproduced thereon and attested by
its General Counsel or an Assistant General Counsel, any of whose
signatures may be manual or facsimile. Notes bearing the manual or
facsimile signatures of persons who were at any time the proper
officers of INTELSAT shall bind INTELSAT, notwithstanding that such
persons or any of them ceased to hold such office or offices prior
to the authentication and delivery of such Notes or did not hold
such office or offices at the date of issue of such Notes.
<PAGE>
(b) The Fiscal Agent is hereby authorized, in accordance
with the provisions of Paragraph 9 of the definitive Notes and this
Section, from time to time to authenticate (or to
arrange for the authentication on its behalf) and deliver a new
Note in exchange for or in lieu of any Note which has become, or
the coupons appertaining thereto which have become, mutilated,
lost, stolen or destroyed. Each Note authenticated and delivered
in exchange for or in lieu of any such Note shall carry all the
rights to interest accrued and unpaid and to accrue which were
carried by such Note.
4. (a) INTELSAT initially shall execute and deliver, on
22 March 1994 (the "Closing Date"), a Global Note for an aggregate
principal amount of U.S. $200,000,000 to the Fiscal Agent, and the
Fiscal Agent by a duly authorized officer or an attorney-in-fact
duly appointed pursuant to a valid power of attorney shall, upon
the order of INTELSAT signed by an Executive Officer of INTELSAT,
authenticate the Global Note and deliver the Global Note to The
Chase Manhattan Bank, N.A., as common depositary (the "Common
Depositary") for the benefit of the operator of the Euroclear
System ("Euroclear") and Cedel S.A. ("Cedel"), for credit to the
respective account of the purchasers (or to such other accounts as
it may direct).
(b) For the purposes of this Agreement, "Exchange Date"
shall mean a date which is not earlier than the day immediately
following the expiration of the 40-day period beginning on the
later of the commencement of the offering and the Closing Date.
Without unnecessary delay, but in any event not less than 14 days
prior to the Exchange Date, in such denominations as are specified
by the Fiscal Agent, except in the event of earlier redemption or
acceleration, INTELSAT shall execute and deliver to the Fiscal
Agent U.S. $200,000,000 principal amount of definitive Bearer
Notes.
(c) Not earlier than the Exchange Date, the interest of
a beneficial owner of the Notes in the Global Note shall only be
exchanged for Bearer Notes after the account holder instructs
Euroclear or Cedel, as the case may be, to request such exchange on
his behalf and presents to Euroclear or Cedel, as the case may be,
a certificate substantially in the form set forth in Exhibit C
hereto, copies of which certificate shall be available from the
offices of Euroclear and Cedel, the Fiscal Agent and each other
paying agent of INTELSAT. Any exchange pursuant to this paragraph
shall be made free of charge to beneficial owners of the Global
Note, except that a person receiving definitive Notes must bear the
cost of insurance, postage, transportation and the like in the
event that such person does not take delivery of such definitive
Notes in person at the offices of Euroclear or Cedel. In no event
shall any such exchange occur prior to the Exchange Date.
(d) Upon request for issuance of Bearer Notes, on or
after the Exchange Date, the Global Note shall be surrendered by
the Common Depositary to the Fiscal Agent, as INTELSAT's agent, for
purposes of the exchange of Notes described below. Following such
surrender and upon presentation by Euroclear or Cedel, acting on
behalf of the beneficial owners of Bearer Notes, to the Fiscal
Agent at its principal office in London, United Kingdom (the
"Principal Office") of a certificate or certificates substantially
in the form set forth in Exhibit D
<PAGE>
hereto, the Fiscal Agent shall authenticate (or arrange for the
authentication on its behalf) and deliver to Euroclear or Cedel, as
the case may be, for the account of such owners, the Bearer Notes
in exchange for an aggregate principal amount equal to the
principal amount of the Global Note beneficially owned by such
owners. The presentation to the Fiscal Agent by Euroclear or Cedel
of such a certificate may be relied upon by INTELSAT and the Fiscal
Agent as conclusive evidence that a related certificate or
certificates has or have been presented to Euroclear or Cedel, as
the case may be, as contemplated by the terms of Section 4(c)
hereof.
Upon any exchange of a portion of the Global Note for
Bearer Notes, the Global Note shall be endorsed by the Fiscal Agent
to reflect the reduction of the principal amount evidenced thereby,
whereupon its remaining principal amount shall be reduced for all
purposes by the amount so exchanged; provided, that when the Global
Note is exchanged in full, the Fiscal Agent shall cancel it. Until
so exchanged in full, the Global Note shall in all respects be
entitled to the same benefits under this Agreement as the
definitive Notes authenticated and delivered hereunder, except that
none of Euroclear, Cedel or the beneficial owners of the Global
Note shall be entitled to receive payment of interest thereon.
Notwithstanding the foregoing, in the event of redemption
or acceleration of the Global Note prior to the issue of the Bearer
Notes, Bearer Notes will be issuable in respect of such Global Note
on or after the later of (i) the date fixed for such redemption or
on which such acceleration occurs and (ii) the Exchange Date, and
all of the foregoing in this subsection (d) shall be applicable to
the issuance of such Bearer Notes.
(e) No Note or coupon shall be entitled to any benefit
under this Agreement or be valid or obligatory for any purpose
unless there appears on such Note or coupon a certificate of
authentication substantially in the forms provided for herein and
executed by the Fiscal Agent by manual signature, and such
certificate upon any Note or coupon shall be conclusive evidence,
and the only evidence, that such Note or coupon has been duly
authenticated and delivered hereunder.
5. (a) INTELSAT will pay or cause to be paid to the
Fiscal Agent the amounts required to be paid by it herein and in
the Notes, at the times and for the purposes set forth herein and
in the Notes and in the manner set forth below, and INTELSAT hereby
authorizes and directs the Fiscal Agent to make payment of the
principal of and interest and additional amounts pursuant to
Paragraph 5 of the definitive Notes ("Additional Amounts"), if any,
on the Notes in accordance with the terms of the Notes.
(i) INTELSAT shall initiate a wire transfer for payment
to the Fiscal Agent at its Principal Office in London, United
Kingdom, by no later than 10:00 a.m. (New York time) on the
applicable Interest Payment Date, any redemption date and the
maturity date of the Notes, in such coin or currency of the
United States of America as at the time of payment is legal
tender for the payment of public and private debts, of amounts
sufficient (with any amounts then held by the Fiscal Agent and
available for the purpose) to pay
<PAGE>
the interest on, the redemption price of an accrued interest
(if the redemption date is not an Interest Payment Date) on,
and the principal of, the Notes due and payable on such an
Interest Payment Date, redemption date or maturity date, as
the case may be.
(ii) INTELSAT will supply to the Fiscal Agent by
10:00 a.m. (New York time) on the second business day
prior to the due date for any such payment a confirmation
(by tested telex or authenticated SWIFT message or by
facsimile transmission with an original to follow by
mail) that such payment will be made, which confirmation
shall identify the bank from which the wire transfer
constituting payment will be made.
(iii) The Fiscal Agent will forthwith notify by
telex each of the other paying agents and INTELSAT if it
has not (A) by the time specified for its receipt,
received the confirmation referred to above or (B) by the
due date for any payment due, received the full amount so
payable on such date.
(iv) In the absence of the notification from the
Fiscal Agent referred to in sub-clause (iii) of this
Clause, each such paying agent shall be entitled to
assume that the Fiscal Agent has received the full amount
due in respect of the Notes or the Coupons on that date
and shall be entitled:
(A) to pay maturing Notes and Coupons in
accordance with their terms; and
(B) to claim any amounts so paid by it from the
Fiscal Agent (notwithstanding anything herein
to the contrary).
(v) Without prejudice to the obligations of
INTELSAT to make payments in accordance with the
provisions of this Clause, if payment of the appropriate
amount shall be made by or on behalf of INTELSAT later
than the time specified, but otherwise in accordance with
the provisions hereof, the Fiscal Agent shall forthwith
notify the paying agents and give notice to holders of
the Notes, that the Fiscal Agent has received such amount
and the paying agents will act as such for the Notes and
Coupons and make or cause to be made payments as provided
herein.
(vi) The Fiscal Agent shall apply the amounts so
paid to it to the payment of such interest, redemption
price and principal in accordance with the terms of the
Notes. Any monies paid by INTELSAT to the Fiscal Agent
for the payment of the principal of and interest on any
Notes and remaining unclaimed at the end of two years
after such principal or interest shall have become due
and payable (whether at maturity, upon call for
redemption or otherwise) shall then be repaid to INTELSAT
upon its written request, and upon such repayment all
<PAGE>
liability of the Fiscal Agent with respect thereto shall
thereupon cease, without, however, limiting in any way any
obligation INTELSAT may have to pay the principal of and
interest on this Note as the same shall become due.
(b) Notwithstanding any other provision hereof (other
than the last sentence of this Section 5(b)) or of the Notes, no
payment with respect to principal of or interest or Additional
Amounts, if any, on any Bearer Note may be made at any office of
the Fiscal Agent or any other paying agent maintained by INTELSAT
in the United States of America (including the States and the
District of Columbia), its territories or possessions and other
areas subject to its jurisdiction (the "United States"). No
payment with respect to a Bearer Note shall be made by transfer to
an account in, or by mail to an address in, the United States.
Notwithstanding the foregoing, payment of principal of and interest
and Additional Amounts, if any, on Bearer Notes shall be made at
the paying agent in the Borough of Manhattan, The City of New York,
if (but only if) payments in United States dollars of the full
amount of such principal, interest or Additional Amounts at all
offices or agencies outside the United States through which payment
is to be made in accordance with the terms of the Notes is illegal
or effectively precluded by exchange controls or other similar
restrictions.
(c) If INTELSAT becomes liable to pay additional amounts
pursuant to Section 5 of the Notes, then, at least ten business
days prior to the date of any such payment of principal or interest
to which such payment of additional amounts relates, INTELSAT shall
furnish the Fiscal Agent, the Paying Agent and each other paying
agent of INTELSAT with a certificate which specifies, by country,
the rates of withholding, if any, applicable to such payment to
Holders of the Notes, and shall pay to the Paying Agent such
amounts as shall be required to be paid to Holders of the Notes.
INTELSAT hereby agrees to indemnify the Fiscal Agent, the Paying
Agent and each other paying agent of INTELSAT for, and to hold them
harmless against, any loss, liability or expense incurred without
negligence or bad faith on their part arising out of or in
connection with actions taken or omitted by any of them in reliance
on any certificate furnished pursuant to this Section 5(c).
(d) In the case of any redemption of Notes, INTELSAT
shall give notice, not less than 45 or more than 75 days prior to
any date set for redemption (as provided for in Paragraph 6 of the
definitive Notes), to the Fiscal Agent of its election to redeem
the Notes on such redemption date specified in such notice. The
Fiscal Agent shall cause notice of redemption to be given in the
name and at the expense of INTELSAT in the manner provided in
Paragraph 6(e) of the definitive Notes.
6. All Notes and coupons surrendered for payment,
redemption or exchange shall, if surrendered to anyone other than
the Fiscal Agent, be cancelled and delivered to the Fiscal Agent.
All cancelled Notes and coupons held by the Fiscal Agent shall be
destroyed, and the Fiscal Agent shall furnish to INTELSAT a
certificate with respect to such destruction, except that the
cancelled Global Note and the certificates as to beneficial
ownership required by Section 4 hereof shall not be destroyed but
shall be delivered to INTELSAT.
<PAGE>
7. The Fiscal Agent accepts its obligations set forth
herein and in the Notes upon the terms and conditions hereof and
thereof, including the following, to all of which INTELSAT agrees
and to all of which the rights hereunder of the Holders from time
to time of the Notes and coupons shall be subject:
(a) The Fiscal Agent and each other paying agent of
INTELSAT shall be entitled to the compensation to be agreed upon
with INTELSAT for all services rendered by it, and INTELSAT agrees
promptly to pay such compensation and to reimburse the Fiscal Agent
and each other paying agent of INTELSAT for its reasonable out-of-
pocket expenses (including reasonable advertising expenses and
counsel fees) incurred by it in connection with the services
rendered by it hereunder. INTELSAT also agrees to indemnify each
of the Fiscal Agent and each other paying agent of INTELSAT
hereunder for, and to hold it harmless against, any loss, liability
or expense incurred without negligence or bad faith on the part of
the Fiscal Agent or such other paying agent, arising out of or in
connection with its acting as such Fiscal Agent or other paying
agent of INTELSAT hereunder, including the costs and expenses of
defending against any claim of liability. For purposes of this
Section, the obligations of INTELSAT shall survive the payment of
the Notes and the resignation or removal of the Fiscal Agent or any
other paying agent of INTELSAT hereunder.
(b) In acting under this Agreement and in connection
with the Notes, the Fiscal Agent and each other paying agent of
INTELSAT are acting solely as agents of INTELSAT and do not assume
any obligation or relationship of agency or trust for or with any
of the Holders of the Notes or coupons, except that all funds held
by the Fiscal Agent or any other paying agent of INTELSAT for
payment of principal of or interest or Additional Amounts, if any,
on the Notes shall be held in trust, but need not be segregated
from other funds except as required by law, and shall be applied as
set forth herein and in the Notes; provided, however, that monies
paid by INTELSAT to the Fiscal Agent or any other paying agent of
INTELSAT for the payment of principal of or interest or Additional
Amounts, if any, on Notes remaining unclaimed at the end of two
years after such principal or interest or Additional Amounts, if
any, shall have become due and payable shall be repaid to INTELSAT,
promptly upon its request, as provided and in the manner set forth
in the Notes, whereupon the aforesaid trust shall terminate and all
liability of the Fiscal Agent or such other paying agent of
INTELSAT with respect thereto shall cease and the Holder of such
Note or unpaid coupon must thereafter look solely to INTELSAT for
payment thereof.
(c) The Fiscal Agent and each other paying agent of
INTELSAT hereunder may consult with counsel (who may also be
counsel to INTELSAT) satisfactory to such Fiscal Agent or paying
agent in its reasonable judgment, and the written opinion of such
counsel shall be full and complete authorization and protection in
respect of any action taken, omitted or suffered by it hereunder in
good faith and in reliance thereon.
(d) The Fiscal Agent and each other paying agent of
INTELSAT hereunder shall be protected and shall incur no liability
to any person for or in respect of any action in good
<PAGE>
faith taken, omitted or suffered by it in reliance upon any Note,
coupon, notice, direction, consent, certificate, affidavit,
statement or other paper or document reasonably believed by the
Fiscal Agent or such other paying agent in good faith to be genuine
and to have been signed by the proper parties.
(e) The Fiscal Agent and each other paying agent of
INTELSAT hereunder and its directors, officers and employees may
become the owner of, or acquire an interest in, any Notes or
coupons, with the same rights that it or they would have if it were
not the Fiscal Agent or such other paying agent of INTELSAT
hereunder, may engage or be interested in any financial or other
transaction with INTELSAT and may act on, or as depositary, trustee
or agent for, any committee or body of Holders of Notes or coupons
or holders of other obligations of INTELSAT as freely as if it were
not the Fiscal Agent or a paying agent of INTELSAT hereunder.
(f) Neither the Fiscal Agent nor any other paying agent
of INTELSAT hereunder shall be under any liability to any person
for interest on any monies at any time received by it pursuant to
any of the provisions of this Agreement or of the Notes except as
may be otherwise agreed with INTELSAT.
(g) The recitals contained herein and in the Notes
(except the Fiscal Agent's certificates of authentication) and in
the coupons shall be taken as the statements of INTELSAT, and the
Fiscal Agent assumes no responsibility for their correctness. The
Fiscal Agent makes no representation as to the validity or
sufficiency of this Agreement or the Notes or coupons, except for
the Fiscal Agent's due authorization to execute and deliver this
Agreement; provided, however, that the Fiscal Agent shall not be
relieved of its duty to authenticate Notes (or to arrange for
authentication on its behalf) as authorized by this Agreement. The
Fiscal Agent shall not be accountable for the use or application by
INTELSAT of the proceeds of Notes.
(h) The Fiscal Agent and each other paying agent of
INTELSAT hereunder shall be obligated to perform such duties and
only such duties as are herein and in the Notes specifically set
forth and no implied duties or obligations shall be read into this
Agreement or the Notes against the Fiscal Agent or any other paying
agent of INTELSAT. The Fiscal Agent shall not be under any
obligation to take any action hereunder which may tend to involve
it in any undue expense or liability, the payment of which within
a reasonable time is not, in its reasonable opinion, assured to it.
(i) Unless herein or in the Notes otherwise specifically
provided, any order, certificate, notice, request, direction or
other communication from INTELSAT under any provision of this
Agreement shall be sufficient if signed by an Executive Officer of
INTELSAT.
(j) No provision of this Agreement shall be construed to
relieve the Fiscal Agent from liability for its own negligent
action, its own negligent failure to act, or its own willful
misconduct or that of its directors, officers or employees.
<PAGE>
8. (a) INTELSAT agrees that, until all Notes or coupons
(other than coupons the surrender of which has been waived under
Paragraphs 3 and 6 of the definitive Notes and coupons which have
been replaced or paid as provided in Paragraph 9 of the definitive
Notes) authenticated and delivered hereunder (i) shall have been
delivered to the Fiscal Agent for cancellation or (ii) become due
and payable, whether at maturity or upon redemption, and monies
sufficient to pay the principal thereof and interest, and
Additional Amounts, if any, thereon shall have been made available
to the Fiscal Agent and either paid to the persons entitled thereto
or returned to INTELSAT as provided herein and in the Notes, there
shall at all times be a Fiscal Agent hereunder which shall be
appointed by INTELSAT, shall be authorized under the laws of its
place of organization to exercise corporate trust powers and shall
have a combined capital and surplus of at least U.S. $50,000,000.
(b) INTELSAT hereby appoints the Principal Office of the
Fiscal Agent as its agent where, subject to any applicable laws or
regulations, Notes and coupons may be presented or surrendered for
payment, where the Global and Bearer Notes may be surrendered for
exchange and where notices and demands to or upon INTELSAT in
respect of the Notes and coupons and this Agreement may be served.
In addition, INTELSAT hereby appoints the main office of Bankers
Trust Luxembourg S.A. in Luxembourg, Bankers Trust Company in Hong
Kong, Credit Suisse in Zurich, Switzerland and DBS Bank in
Singapore as additional paying agencies for the payment of
principal of, and interest and Additional Amounts, if any, on, the
Notes.
INTELSAT may at any time and from time to time vary or
terminate the appointment, upon thirty days prior written notice,
of any such agent or appoint any additional agents for any or all
of such purposes; provided, however, that, (i) so long as INTELSAT
is required to maintain a Fiscal Agent hereunder, INTELSAT will
maintain in London, United Kingdom an office or agency where Notes
and coupons may be presented or surrendered for payment, where the
Global and Bearer Notes may be presented for exchange and where
notices and demands to or upon INTELSAT in respect of the Notes and
coupons and this Agreement may be served and (ii) in the event the
circumstances described in Section 5(b) hereof require, it will
designate a paying agent in the Borough of Manhattan, The City of
New York, the State of New York, U.S.A., where Bearer Notes and
coupons may be presented or surrendered for payment in such
circumstances (and not otherwise); and provided, further, that so
long as the Notes are listed on the respective stock exchanges,
INTELSAT will maintain a paying agent in Hong Kong and Singapore.
INTELSAT will give prompt written notice to the Fiscal Agent, of
the appointment or termination of any such agency and of the
location and any change in the location of any such office or
agency and shall give notice thereof to Holders in the manner
described in the first sentence of Paragraph 6(d) of the definitive
Notes.
(c) The Fiscal Agent may at any time resign as such
Fiscal Agent by giving written notice to INTELSAT of such intention
on its part, specifying the date on which its desired resignation
shall become effective; provided, however, that such date shall
never be less than three months after the receipt of such notice by
INTELSAT unless INTELSAT agrees to
<PAGE>
accept less notice. The Fiscal Agent may be removed at any time by
the filing with it of an instrument in writing signed on behalf of
INTELSAT and specifying such removal and the date when it is
intended to become effective. Any resignation or removal of the
Fiscal Agent or other paying agent of INTELSAT, if such other
paying agent is the only paying agent of INTELSAT then maintained
outside the United States, shall take effect upon the date of the
appointment by INTELSAT as hereinafter provided of a successor and
the acceptance of such appointment by such successor. Upon its
resignation or removal, such agent shall be entitled to the payment
by INTELSAT of its compensation for the services rendered hereunder
and to the reimbursement of all reasonable out-of-pocket expenses
incurred in connection with the services rendered hereunder by such
agent.
(d) In case at any time the Fiscal Agent or other paying
agent of INTELSAT, if such other paying agent is the only paying
agent of INTELSAT then maintained outside the United States, shall
resign, or shall be removed, or shall become incapable of acting or
shall be adjudged a bankrupt or insolvent, or if a receiver of it
or of its property shall be appointed, or if any public officer
shall take charge or control of it or of its property or affairs
for the purpose of rehabilitation, conservation or liquidation, a
successor agent, eligible as aforesaid, shall be appointed by
INTELSAT by an instrument in writing. Upon the appointment as
aforesaid of a successor agent and the acceptance by it of such
appointment, the agent so superseded shall cease to be such agent
hereunder. If no successor Fiscal Agent or other paying agent of
INTELSAT shall have been so appointed by INTELSAT and shall have
accepted appointment as hereinafter provided, and if such other
paying agent is the only paying agent of INTELSAT then maintained
outside the United States, and if INTELSAT shall have otherwise
failed to make arrangements for the performance of the duties of
the Fiscal Agent or other paying agent, then any Holder of a Note
who has been a bona fide Holder of a Note for at least six months,
on behalf of himself and all others similarly situated, or the
Fiscal Agent, may petition any New York State or United States
Federal court sitting in the Borough of Manhattan, The City of New
York, the State of New York, U.S.A., for the appointment of a
successor agent.
(e) Any successor Fiscal Agent appointed hereunder shall
execute, acknowledge and deliver to its predecessor and to INTELSAT
an instrument accepting such appointment hereunder, and thereupon
such successor Fiscal Agent, without any further act, deed or
conveyance, shall become vested with all the authority, rights,
powers, trusts, immunities, duties and obligations of such
predecessor with like effect as if originally named as such Fiscal
Agent hereunder, and such predecessor, upon payment of its charges
and disbursements then unpaid, shall simultaneously therewith
become obligated to transfer, deliver and pay over, and such
successor Fiscal Agent shall be entitled to receive, all monies,
securities or other property on deposit with or held by such
predecessor, as such Fiscal Agent hereunder. INTELSAT will give
prompt written notice to each other paying agent of INTELSAT of the
appointment of a successor Fiscal Agent and shall give notice
thereof to Holders at least once, in the manner described in
Paragraph 6(e) of the definitive Notes.
<PAGE>
(f) Any corporation, bank or trust company into which
the Fiscal Agent may be merged or converted, or with which it may
be consolidated, or any corporation, bank or trust company
resulting from any merger, conversion or consolidation to which the
Fiscal Agent shall be a party, or any corporation, bank or trust
company succeeding to all or substantially all the assets and
business of the Fiscal Agent, shall be the successor to the Fiscal
Agent under this Agreement; provided, however, that such
corporation shall be otherwise eligible under this Section, without
the execution or filing of any document or any further act on the
part of any of the parties hereto.
9. INTELSAT will pay all stamp taxes and other duties,
if any, which may be imposed by the United States, the United
Kingdom or any political subdivision or taxing authority of or in
the foregoing with respect to (i) the execution or delivery of this
Agreement, (ii) the issuance of the Global Note, or (iii) the
exchange from time to time of the Global Note for Bearer Notes
(other than any such tax or duty which would not have been imposed
on such exchange had such exchange occurred on or before the first
anniversary of the initial issuance of the Notes which shall be
payable by the Holders).
10. (a) A meeting of Holders of Notes may be called at
any time and from time to time to make, give or take any request,
demand, authorization, direction, notice, consent, waiver or other
action provided by this Agreement or the Notes to be made, given or
taken by Holders of Notes. The Fiscal Agent may, upon request
from, and at the expense of, INTELSAT, direct to convene a single
meeting of the Holders of Notes and the holders of debt securities
of other series.
(b) INTELSAT may at any time call a meeting of Holders
of Notes for any purpose specified in Section 10(a) hereof to be
held at such time and at such place in London, United Kingdom or in
the Borough of Manhattan, The City of New York, the State of New
York, U.S.A., as INTELSAT shall determine. Notice of every meeting
of Holders of Notes, setting forth the time and the place of such
meeting and in general terms the action proposed to be taken at
such meeting, shall be given, in the same manner as provided in
Paragraph 6(e) of the definitive Notes, not more than 180 days nor
less than 21 days prior to the date fixed for the meeting. In case
at any time the Holders of at least 10% in principal amount of the
Outstanding (as defined in Paragraph 3 of the definitive Notes)
Notes shall have requested INTELSAT to call a meeting of the
Holders of Notes for any purpose specified in Section 10(a) hereof,
by written request setting forth in reasonable detail the action
proposed to be taken at the meeting, and INTELSAT shall not have
caused to be published the notice of such meeting within 21 days
after receipt of such request or shall not thereafter proceed to
cause the meeting to be held as provided herein, then the Holders
of Notes in the amount above-specified, as the case may be, may
determine the time and the place in London, United Kingdom or in
the Borough of Manhattan, The City of New York, the State of New
York, U.S.A., for such meeting and may call such meeting for such
purposes by giving notice thereof as provided in this subsection
(b).
<PAGE>
(c) To be entitled to vote at any meeting of Holders of
Notes, a person shall be a Holder of an Outstanding Note or a
person appointed by an instrument in writing as proxy for such a
Holder.
(d) The persons entitled to vote a majority in aggregate
principal amount of the Outstanding Notes shall constitute a
quorum. In the absence of a quorum within 30 minutes of the time
appointed for any such meeting, the meeting shall, if convened at
the request of the Holders of Notes, be dissolved. In any other
case the meeting may be adjourned for a period of not less than 10
days as determined by the chairman of the meeting prior to the
adjournment of such meeting. In the absence of a quorum at any
such adjourned meeting, such adjourned meeting may be further
adjourned for a period of not less than 10 days as determined by
the chairman of the meeting prior to the adjournment of such
adjourned meeting. Notice of the reconvening of any adjourned
meeting shall be given as provided in Section 10(b) hereof, except
that such notice need be given only once not less than five days
prior to the date on which the meeting is scheduled to be
reconvened. Notice of the reconvening of an adjourned meeting
shall state expressly the percentage of the principal amount of the
Outstanding Notes which shall constitute a quorum.
Subject to the foregoing, at the reconvening of any
meeting adjourned for a lack of a quorum, the persons entitled to
vote 25% in principal amount of the Outstanding Notes shall
constitute a quorum for the taking of any action set forth in the
notice of the original meeting. Any meeting of Holders of Notes at
which a quorum is present may be adjourned from time to time by
vote of a majority in principal amount of the Outstanding Notes
represented at the meeting, and the meeting may be held as so
adjourned without further notice. At a meeting or an adjourned
meeting duly reconvened and at which a quorum is present as
aforesaid, any resolution and all matters shall be effectively
passed or decided if passed or decided by the persons entitled to
vote a majority in principal amount of the Outstanding Notes
represented and voting.
(e) INTELSAT may make such reasonable regulations as it
may deem advisable for any meeting of Holders of Notes in regard to
proof of the holding of Notes and of the appointment of proxies and
in regard to the appointment and duties of inspectors of votes, the
submission and examination of proxies, certificates and other
evidence of the right to vote, and such other matters concerning
the conduct of the meeting as it shall deem appropriate. INTELSAT
or the Holders calling the meeting, as the case may be, shall, by
an instrument in writing, appoint a temporary chairman. A
permanent chairman and a permanent secretary of the meeting shall
be elected by vote of the persons entitled to vote a majority in
principal amount of the Outstanding Notes represented and voting at
the meeting. The chairman of the meeting shall have no right to
vote, except as a Holder of Notes or a proxy. A record, at least
in duplicate, of the proceedings of each meeting of Holders of
Notes shall be prepared, and one such copy shall be delivered to
INTELSAT and another to the Fiscal Agent to be preserved by the
Fiscal Agent.
<PAGE>
11. All notices hereunder shall be deemed to have been
given when deposited in the mails as first-class mail, registered
or certified mail, return receipt requested, postage prepaid, or,
if electronically communicated, then when delivered, or when hand
delivered, addressed to either party hereto as follows:
INTELSAT . . . . . . . . . . . International Telecommunications
Satellite Organization
3400 International Drive, N.W.
Washington, D.C. 20008-3098, U.S.A.
Attention: Vice President & Chief
Financial Officer
Facsimile No.: (202) 944-7860
Fiscal Agent . . . . . . . . . . Bankers Trust Company
1 Appold Street, Broadgate
London EC2A 2HE, England
Attention: Corporate Trust
and Agency Group
Facsimile No.: 011-4471-982-2271
or at any other address of which either of the foregoing shall have
notified the other in writing. All notices to Holders of Notes
shall be given in the manner provided in Paragraph 6(e) of the
definitive Notes.
12. This Agreement and the terms and conditions of the
Notes and coupons may be modified or amended by INTELSAT and the
Fiscal Agent, without the consent of the Holder of any Note or
coupon, for the purpose of (a) adding to the covenants of INTELSAT
for the benefit of the Holders of Notes or coupons, or (b)
surrendering any right or power conferred upon INTELSAT, or (c)
securing the Notes pursuant to the requirements of the Notes or
otherwise, or (d) permitting the payment of principal, interest and
Additional Amounts, if any, in respect of Notes in the United
States, or (e) curing any ambiguity or correcting or supplementing
any defective provision contained herein or in the Notes or
coupons, or (f) evidencing the succession of another organization
or entity to INTELSAT and the assumption by any such successor of
the covenants and obligations of INTELSAT herein and in the Notes
and coupons as permitted by the Notes, or (g) providing for
issuances of further debt securities as contemplated by Section 13,
or (h) in any manner which the parties may mutually deem necessary
or desirable and which in any such case shall not adversely affect
the interests of the Holders of the Notes or the coupons.
13. INTELSAT may from time to time without the consent
of the Holder of any Note or coupon issue further debt securities
having the same terms and conditions as the Notes in all respects
(or in all respects except for the first payment of interest
thereon) or having such terms as INTELSAT may determine at the time
of their issuance, in either case so that any such further debt
securities shall be consolidated and form a single series with the
outstanding securities of any series (including the Notes). Unless
the context requires otherwise, references herein and in the Notes
and coupons to the Notes or coupons shall include any other debt
<PAGE>
securities issued in accordance with this Section that are intended
by INTELSAT to form a single series with the Notes. Any further
debt securities forming a single series with the outstanding
securities of any series (including the Notes) shall be issued
pursuant to this Agreement as amended pursuant to Section 12 for
the purpose of providing for the issuance of such debt securities.
14. This Agreement and each of the Notes and coupons
shall be governed by and construed in accordance with the laws of
the State of New York, U.S.A.
15. INTELSAT hereby appoints CT Corporation System, 1633
Broadway, New York, New York 10019, as its authorized agent (the
"Authorized Agent") upon which process may be served in any action
arising out of or based on this Agreement, the Notes or any coupons
which action may be instituted in any New York State or United
States Federal court sitting in the Borough of Manhattan, The City
of New York, the State of New York, U.S.A., by the Fiscal Agent or
the Holder of any Note or coupon and INTELSAT and each such Holder
by acceptance of a Note or coupon expressly accepts the exclusive
jurisdiction of any such court in respect of any such action. Such
appointment shall be irrevocable until two years after the Notes
shall have matured and been paid or moneys for the payment thereof
shall have been made available unless and until a successor
Authorized Agent shall have been appointed and shall have accepted
such appointment. INTELSAT hereby irrevocably waives any immunity
to service of process in respect of any such action to which it
might otherwise be entitled in any action arising out of or based
on this Agreement or the Notes or coupons which may be instituted
by the Fiscal Agent or any Holder of a Note or coupon in any State
or Federal court in the Borough of Manhattan, The City of New York,
the State of New York, U.S.A. Service of process upon the
Authorized Agent at the address indicated above, as such address
may be changed within the Borough of Manhattan, The City of New
York, the State of New York, U.S.A., by notice given by the
Authorized Agent to each party hereto, shall be deemed, in every
respect, effective service of process upon INTELSAT. INTELSAT
irrevocably waives, to the fullest extent permitted by applicable
law, any sovereign or other immunity from jurisdiction or from
execution (except that INTELSAT does not waive immunity from
execution prior to judgment and any similar defense) to which it
might otherwise be entitled in any such action which may be
instituted by the Fiscal Agent or any Holder of a Note or coupon in
any New York State or United States Federal court sitting in the
Borough of Manhattan, The City of New York, the State of New York,
U.S.A.
16. This Agreement, the Notes and the coupons
appertaining thereto will constitute obligations of INTELSAT and
not of any Signatory or Party (each as defined in the Agreement
Relating to the International Telecommunications Satellite
Organization, entered into force on 12 February 1973). No
Signatory or Party will waive any immunity to which it may be
entitled in any suit on this Agreement or the Notes or coupons, and
neither the Fiscal Agent nor Holders of Notes or coupons will have
any recourse against any Signatory or Party with respect to any
obligations of INTELSAT under this Agreement or the Notes and the
coupons appertaining thereto.<PAGE>
<PAGE>
17. This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be
an original but all such counterparts shall together constitute but
one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
INTERNATIONAL TELECOMMUNICATIONS
SATELLITE ORGANIZATION
/s/Margarita K. Dilley
By _____________________________
Name: Margarita K. Dilley
Title: Treasurer
BANKERS TRUST COMPANY
as Fiscal Agent and Principal Paying
Agent
/s/Shiela Ajimal
By _____________________________
Name: Shiela Ajimal
Title: Authorized Signatory
<PAGE>
INTERNATIONAL TELECOMMUNICATIONS SATELLITE ORGANIZATION
U.S. $200,000,000
6 5/8% Notes Due 2004
TEMPORARY GLOBAL NOTE
INTERNATIONAL TELECOMMUNICATIONS SATELLITE ORGANIZATION,
an international organization established by the Agreement Relating
to the International Telecommunications Satellite Organization and
the Operating Agreement relating thereto, entered into force on
12 February 1973, for value received, hereby promises to pay to
bearer upon presentation and surrender of this Temporary Global
Note the principal sum of Two Hundred Million United States Dollars
(U.S. $200,000,000) on 22 March 2004 and to pay interest thereon,
from the date hereof, annually in arrears on 22 March in each year,
commencing 22 March 1995, at the rate of 6 5/8% per annum, until
the principal hereof is paid or made available for payment;
provided, however, that interest on this Temporary Global Note
shall be payable only after the issuance of Bearer Notes for which
this Temporary Global Note is exchangeable, and only upon
presentation and surrender of the interest coupons thereto attached
as they severally mature.
This Temporary Global Note is one of a duly authorized
issue of Notes of INTELSAT designated as specified in the title
hereof, entitled to the benefits of the Fiscal Agency Agreement,
dated as of 22 March 1994, between INTELSAT and Bankers Trust
Company as Fiscal Agent. This Note is a temporary note and is
exchangeable in whole or from time to time in part without charge
upon request of the Holder hereof for Bearer Notes with coupons
attached in denominations of U.S. $10,000 and $100,000 as promptly
as practicable following presentation of certification, in the form
required by the Fiscal Agency Agreement for such purpose, that the
beneficial owner or owners of this Temporary Global Note (or, if
such exchange is only for a part of this Temporary Global Note, of
such part) are not citizens or residents of the United States, a
corporation, partnership or other entity created or organized in or
under the laws of the United States or any political subdivision
thereof, or an estate or trust the income of which is subject to
United States Federal income taxation regardless of its source
("United States Person"). The Bearer Notes are expected to be
available 40 days after the Closing Date. Bearer Notes to be
delivered in exchange for any part of this Temporary Global Note
shall be delivered only outside the United States. Upon any
exchange of a part of this Temporary Global Note for Bearer Notes,
the portion of the principal amount hereof so exchanged shall be
endorsed by the Fiscal Agent on the Schedule hereto, and the
principal amount hereof shall be reduced for all purposes by the
amount so exchanged.
<PAGE>
Until exchanged in full for Bearer Notes, this Temporary
Global Note shall in all respects be entitled to the same benefits
and subject to the same terms and conditions as those of the
definitive Notes and those contained in the Fiscal Agency Agreement
(including the forms of Notes attached thereto), except that
neither the Holder hereof nor the beneficial owners of this
Temporary Global Note shall be entitled to receive payment of
interest hereon.
This Temporary Global Note shall be governed by and
construed in accordance with the laws of the State of New York,
U.S.A.
All terms used in this Temporary Global Note which are
defined in the Fiscal Agency Agreement or the definitive Notes
shall have the meanings assigned to them therein.
Unless the certificate of authentication hereon has been
executed by the Fiscal Agent by the manual signature of one of its
duly authorized officers, this Temporary Global Note shall not be
valid or obligatory for any purpose.
This Temporary Global Note constitutes an obligation of
INTELSAT and not of any Signatory or Party (each as defined in the
INTELSAT Agreement). No Signatory or Party will waive any immunity
to which it may be entitled in any suit on this Temporary Global
Note, and Holders of this Temporary Global Note will have no
recourse against any Signatory or Party with respect to any
obligations of INTELSAT under this Temporary Global Note.
IN WITNESS WHEREOF, INTELSAT has caused this Temporary
Global Note to be duly executed and its seal to be hereunto affixed
and attested.
Dated as of 22 March 1994
INTERNATIONAL TELECOMMUNICATIONS
SATELLITE ORGANIZATION
By______________________________
Attest:
_____________________
<PAGE>
This is the Temporary Global Note referred to in the
within-mentioned Fiscal Agency Agreement.
BANKERS TRUST COMPANY
as Fiscal Agent
By_________________________
Authorized Signatory
<PAGE>
SCHEDULE OF EXCHANGES
Remaining
principal
Principal amount amount Notation
Date exchanged for following made on behalf
Made definitive Bearer Notes such exchange of the Fiscal Agent
____ _______________________ _____________ ___________________
____ _______________________ _____________ ___________________
____ _______________________ _____________ ___________________
____ _______________________ _____________ ___________________
____ _______________________ _____________ ___________________
____ _______________________ _____________ ___________________
____ _______________________ _____________ ___________________
____ _______________________ _____________ ___________________
____ _______________________ _____________ ___________________
____ _______________________ _____________ ___________________
____ _______________________ _____________ ___________________
____ _______________________ _____________ ___________________
____ _______________________ _____________ ___________________
____ _______________________ _____________ ___________________
____ _______________________ _____________ ___________________
____ _______________________ _____________ ___________________
____ _______________________ _____________ ___________________
____ _______________________ _____________ ___________________
____ _______________________ _____________ ___________________
____ _______________________ _____________ ___________________
____ _______________________ _____________ ___________________
<PAGE>
EXHIBIT B
[FORM OF BEARER NOTES]
[Form of Face]
ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE
SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX
LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j)
AND 1287(a) OF THE INTERNAL REVENUE CODE.
INTERNATIONAL TELECOMMUNICATIONS SATELLITE ORGANIZATION
6 5/8% Notes Due 2004
No. B-_________ U.S.$[10,000]
[100,000]
INTERNATIONAL TELECOMMUNICATIONS SATELLITE ORGANIZATION
("INTELSAT"), an international organization established by the
Agreement Relating to the International Telecommunications
Satellite Organization and the Operating Agreement relating
thereto, entered into force on 12 February 1973, for value
received, hereby promises to pay to bearer upon presentation and
surrender of this Note the principal sum of [10,000][100,000]
United States dollars on 22 March 2004 and to pay interest thereon,
from the date hereof, annually in arrears on 22 March in each year
("Interest Payment Date"), commencing 22 March 1995 at the rate of
6 5/8% per annum (calculated on the basis of a year of twelve 30-
day months), until the principal hereof is paid or made available
for payment. Such payments shall be made subject to any laws or
regulations applicable thereto and to the right of INTELSAT
(limited as provided below) to terminate the appointment of any
such paying agency, at the principal office of Bankers Trust
Company in London, United Kingdom or at such other offices or
agencies outside the United States (as defined in Paragraph 5 on
the reverse hereof) as INTELSAT may designate and notify the Holder
(as defined in Paragraph 2 on the reverse hereof) as provided in
Paragraph 6(e) hereof, at the option of the Holder, by United
States dollar check, or (ii) by wire transfer to a United States
dollar account maintained by the Holder with a bank located outside
the United States. Payments with respect to this Note shall be
payable only at an office or agency located outside the United
States and only upon presentation and surrender at such office of
this Note in the case of principal or the coupons attached hereto
(the
<PAGE>
"coupons") as they severally mature in the case of interest (but
not in the case of Additional Amounts payable as defined and
provided for in Paragraph 5 on the reverse hereof). No payment
with respect to this Note shall be made by transfer to an account
in, or by mail to an address in, the United States.
Notwithstanding the foregoing, payment of principal of and interest
on Bearer Notes and Additional Amounts, if any, may, at INTELSAT's
option, be made at an office designated by INTELSAT in the Borough
of Manhattan, The City of New York, the State of New York, U.S.A.
if (but only if) the full amount of such payments at all offices
and agencies located outside the United States through which
payment is to be made in accordance with the terms of the Notes is
illegal or effectively precluded by exchange controls or other
similar restrictions as determined by INTELSAT. INTELSAT covenants
that until this Note has been delivered to the Fiscal Agent for
cancellation or monies sufficient to pay the principal of and
interest on this Note have been made available for payment and
either paid or returned to INTELSAT as provided herein, it will at
all times maintain offices or paying agents in London, United
Kingdom and, so long as the Notes are listed on the respective
stock exchanges, in Hong Kong and Singapore for the payment of the
principal of and interest on the Notes as herein provided.
Reference is hereby made to the further provisions of
this Note set forth on the reverse hereof, including but not
limited to the provisions for redemption of the Notes, which
further provisions shall for all purposes have the same effect as
though fully set forth at this place.
Unless the certificate of authentication hereon has been
executed by the Fiscal Agent by the manual signature of one of its
authorized officers, neither this Note nor any coupon appertaining
hereto shall be valid or obligatory for any purpose.
IN WITNESS WHEREOF, INTELSAT has caused this Note to be
duly executed and its seal to be hereunto affixed and attested and
duly executed coupons to be annexed hereto.
Dated as of 22 March 1994
INTERNATIONAL TELECOMMUNICATIONS
SATELLITE ORGANIZATION
By______________________________
[Seal]
Attest:
<PAGE>
[FORM OF FISCAL AGENT'S CERTIFICATE OF AUTHENTICATION]
This is one of the Notes referred to in the within-
mentioned Fiscal Agency Agreement.
For and on behalf of BANKERS TRUST COMPANY
as Fiscal Agent
By _____________________________________________
Authorized Signatory
<PAGE>
[Form of Reverse]
1. This Note is one of a duly authorized issue of
Notes of INTELSAT in the aggregate principal amount of Two
Hundred Million United States Dollars (U.S.$200,000,000),
designated as its 6 5/8% Notes Due 2004 (the "Notes"). INTELSAT,
for the benefit of the Holders from time to time of the Notes,
has entered into a Fiscal Agency Agreement, dated as of 22 March
1994 (the "Fiscal Agency Agreement"), between INTELSAT and
Bankers Trust Company, as Fiscal Agent, copies of which Fiscal
Agency Agreement are on file and available for inspection at the
Principal Office of the Fiscal Agent in London, United Kingdom
and the main offices of the paying agencies named on the face of
this Note. (Bankers Trust Company and its respective successors
as Fiscal Agent are herein collectively called the "Fiscal
Agent".)
As long as any of the Notes shall be outstanding and
unpaid, but only up to the time all amounts of principal and
interest have been placed at the disposal of the Fiscal Agent,
INTELSAT will not cause or permit to be created on any of its
property or assets any mortgage, pledge or other lien or charge
as security for any bonds, notes or other evidences of
indebtedness heretofore or hereafter issued, assumed or
guaranteed by INTELSAT for money borrowed (other than purchase
money mortgages, sale and leaseback transactions in connection
with spacecraft, or other pledges or liens on property purchased
by INTELSAT as security for all or part of the purchase price
thereof; liens incidental to an investment transaction, but not a
borrowing, of INTELSAT; or mechanics', landlords', tax or other
statutory liens), unless the Notes shall be secured by such
mortgage, pledge or other lien or charge equally and ratably with
such other bonds, notes or evidences of indebtedness.
2. The Notes are issuable in bearer form, with
interest coupons attached (the "coupons"), in denominations of
U.S. $10,000 and $100,000. As used herein, the term "Holder"
when used with respect to any Bearer Note or coupon, means the
bearer thereof.
3. INTELSAT has appointed the main offices of Bankers
Trust Luxembourg S.A. in Luxembourg, Bankers Trust Company in
Hong Kong, Credit Suisse in Zurich, Switzerland and DBS Bank in
Singapore as additional agencies where Notes may be surrendered
for exchange. INTELSAT reserves the right to vary or terminate
the appointment of any agent or to appoint additional or other
transfer agents or to approve any change in the office through
which any transfer agent acts, provided that there will at all
times be a transfer agent in London, United Kingdom.
All Notes issued upon any exchange of Notes shall be
the valid obligations of INTELSAT evidencing the same debt, and
entitled to the same benefits, as the Notes surrendered upon such
exchange. No service charge shall be made for any exchange, but
INTELSAT may require payment of a sum sufficient to cover any tax
or other governmental charge payable in connection therewith.
<PAGE>
Title to Bearer Notes and coupons shall pass by
delivery. INTELSAT, the Fiscal Agent, and any paying agent of
INTELSAT may deem and treat the bearer of any Bearer Note or
coupon as the owner thereof for all purposes, whether or not such
Note or coupon shall be overdue.
For purposes of the provisions of this Note and the
Fiscal Agency Agreement, any Note authenticated and delivered
pursuant to the Fiscal Agency Agreement shall, as of any date of
determination, be deemed to be "Outstanding", except:
(i) Notes theretofore cancelled by the Fiscal Agent
or delivered to the Fiscal Agent for cancellation and not
reissued by the Fiscal Agent;
(ii) Notes which have been surrendered for
redemption in accordance with Paragraph 6 hereof or which
have become due and payable at maturity or otherwise and
with respect to which monies sufficient to pay the principal
thereof and interest thereon shall have been made available
to the Fiscal Agent; or
(iii) Notes in lieu of or in substitution for which
other Notes shall have been authenticated and delivered
pursuant to the Fiscal Agency Agreement;
provided, however, that in determining whether the Holders of the
requisite principal amount of Outstanding Notes are present at a
meeting of Holders of Notes for quorum purposes or have given any
request, demand, authorization, direction, notice, consent or
waiver hereunder, Notes owned by INTELSAT shall be disregarded
and deemed not to be Outstanding.
4. (a) INTELSAT shall pay to the Fiscal Agent at its
Principal Office in London, United Kingdom, in accordance with
the terms of the Fiscal Agency Agreement on each Interest Payment
Date, any redemption date and the maturity date of the Notes, in
such coin or currency of the United States of America as at the
time of payment is legal tender for the payment of public and
private debts, amounts sufficient (with any amounts then held by
the Fiscal Agent and available for the purpose) to pay the
interest on, the redemption price of and accrued interest (if the
redemption date is not an Interest Payment Date) on, and the
principal of, the Notes due and payable on such an Interest
Payment Date, redemption date or maturity date, as the case may
be.
The Fiscal Agent shall apply the amounts so paid to it
to the payment of such interest, redemption price and principal
in accordance with the terms of the Notes. Any monies paid by
INTELSAT to the Fiscal Agent for the payment of the principal of
and interest on any Notes and remaining unclaimed at the end of
two years after such principal or interest shall have become due
and payable (whether at maturity, upon call for redemption or
otherwise) shall then be repaid to INTELSAT upon its written
request, and upon such repayment all liability of the Fiscal
Agent with respect thereto shall thereupon cease, without,
<PAGE>
however, limiting in any way any obligation INTELSAT may have to
pay the principal of and interest on this Note as the same shall
become due.
(b) In any case where the date for the payment of the
principal of or interest on any Note or the date fixed for
redemption of any Note shall be at any place of payment a day on
which banking institutions are authorized or obligated by law or
executive order to close, or are not carrying out transactions in
United States dollars in The City of New York, the State of New
York, U.S.A., or the city of the paying agent to which the Note
or coupon is surrendered for payment, then payment of principal
or interest need not be made on such date at such place but may
be made on the next succeeding day at such place of payment which
is not a day on which banking institutions are authorized or
obligated by law or executive order to close, or which is a day
on which banking institutions are carrying out transactions in
United States dollars in The City of New York, the State of New
York, U.S.A., or the city of the paying agent to which the Note
or coupon is surrendered for payment, with the same force and
effect as if made on the date for the payment of the principal or
interest or the date fixed for redemption, and no interest shall
accrue for the period after such date.
5. (a) INTELSAT will pay to the Holder of this Note
or any coupon appertaining hereto who is a United States Alien
(as defined below) such Additional Amounts as may be necessary in
order that every net payment of the principal of, and interest
on, this Note, after withholding for or on account of any present
or future tax, assessment or governmental charge imposed upon, or
as a result of, such payment by the United States (or any
political subdivision or taxing authority thereof or therein),
will not be less than the amount provided for in this Note or in
such coupon to be then due and payable; provided, however, that
the foregoing obligation to pay Additional Amounts shall not
apply to any one or more of the following:
(i) any tax, assessment or other governmental
charge which would not have been so imposed but for (A) the
existence of any present or former connection between such
Holder (or between a fiduciary, settlor, or beneficiary of,
or a possessor of a power over, such Holder, if such Holder
is an estate or trust, or a member or shareholder of such
holder, if such Holder is a partnership or corporation) and
the United States, including, without limitation, such
Holder (or such fiduciary, settlor, beneficiary, possessor,
member or shareholder) being or having been a citizen,
resident or treated as a resident thereof or being or having
been engaged in a trade or business or present therein or
having or having had a permanent establishment therein or
(B) such Holder's present or former status as a personal
holding company, controlled foreign corporation, foreign
personal holding company or passive foreign investment
company with respect to the United States or as a
corporation which accumulates earnings to avoid United
States federal income tax, all under existing United States
Federal income tax law or successor provisions;
<PAGE>
(ii) any tax, assessment or other governmental
charge which would not have been so imposed but for the
presentation by the Holder of this Note or any coupon
appertaining hereto for payment on a date more than 10
calendar days after the date on which such payment became
due and payable or the date on which payment thereof is duly
provided for and notice thereof is given to Holders,
whichever occurs later;
(iii) any estate, inheritance, gift, sales, transfer,
personal property tax or any similar tax, assessment or
other governmental charge;
(iv) any tax, assessment or other governmental
charge which is payable otherwise than by withholding from
payments on or in respect of this Note or any coupon
appertaining hereto;
(v) any tax, assessment or other governmental
charge imposed by reason of such Holder's past or present
status as the actual or constructive owner of 10 per cent.
or more of the capital or profits interest of INTELSAT
within the meaning of Section 871(h)(3) of the United States
Internal Revenue Code of 1986, as amended, and any
regulations thereunder;
(vi) any tax, assessment or other governmental
charge imposed because a Holder of a Note is a bank that
receives interest on such Note pursuant to a loan agreement
entered into in the ordinary course of its trade or
business;
(vii) any tax, assessment or other governmental
charge imposed as a result of the failure to comply with
applicable certification, information, documentation or
other reporting requirements concerning the nationality,
residence, identity or connection with the United States of
the Holder or beneficial owner of this Note, or any coupon
appertaining hereto if such compliance is required by
statute or by regulation of the United States as a
precondition to relief or exemption from such tax,
assessment or other government charge;
(viii) any tax, assessment or other governmental
charge required to be withheld by any paying agent from any
payment on this Note or any coupon appertaining hereto if
such payment can be made without such withholding by at
least one other paying agent; or
(ix) any combination of items (i) through (viii)
above;
nor will Additional Amounts be paid with respect to any payment
of principal or interest on this Note or any coupon appertaining
hereto to a Holder who is a fiduciary or partnership or other
than the sole beneficial owner of this Note or any coupon
appertaining hereto to the extent a beneficiary or settlor with
respect to the fiduciary or a member of the partnership or
<PAGE>
the beneficial owner would not have been entitled to payment of
the Additional Amounts had such beneficiary, settlor, member or
beneficial owner been the Holder of this Note or any coupon
appertaining hereto.
The term "United States Alien" means any person who,
for United States federal income tax purposes, is a foreign
corporation, a nonresident alien individual, a nonresident
fiduciary of a foreign estate or trust, or a foreign partnership,
one or more of the members of which is, for United States federal
income tax purposes, a foreign corporation, a nonresident alien
individual or a nonresident fiduciary of a foreign estate or
trust. The term "United States" means the United States of
America (including the States and the District of Columbia), its
territories, its possessions and other areas subject to its
jurisdiction.
(b) Except as specifically provided in this Note and
in the Fiscal Agency Agreement, INTELSAT shall not be required to
make any payment with respect to any tax, assessment or other
governmental charge imposed by any government or any political
subdivision or taxing authority thereof or therein. Whenever in
this Note there is a reference, in any context, to the payment of
the principal of or interest on, or in respect of, any Note or
any coupon, such mention shall be deemed to include mention of
the payment of Additional Amounts provided for in this Paragraph
to the extent that, in such context, Additional Amounts are, were
or would be payable in respect thereof pursuant to the provisions
of this Paragraph and express mention of the payment of
Additional Amounts (if applicable) in any provisions hereof shall
not be construed as excluding Additional Amounts in those
provisions hereof where such express mention is not made.
6. (a) The Notes are subject to redemption at the
option of INTELSAT, as a whole but not in part, at any time at a
redemption price equal to the principal amount thereof, together
with accrued and unpaid interest to the date fixed for redemption
(except if the redemption date is an Interest Payment Date) under
the circumstances described in the next three Paragraphs.
(b) The Notes may be redeemed, as a whole but not in
part, at the option of INTELSAT, upon not more than 60 days' nor
less than 30 days' prior notice in the manner provided in clause
(e) of this Paragraph 6 at a redemption price equal to the
principal amount thereof together with accrued and unpaid
interest to the date fixed for redemption, if (x) INTELSAT
determines that, without regard to any immunities that may be
available to it, (1) as a result of any change in or amendment to
the laws (or any regulations or rulings promulgated thereunder)
of the United States or of any political subdivision or taxing
authority thereof or therein affecting taxation, or any change in
official position regarding application or interpretation of such
laws, regulations or rulings (including a holding by a court of
competent jurisdiction in the United States), which change or
amendment is announced or becomes effective on or after 22 March
1994, INTELSAT has or will become obligated to pay Additional
Amounts (as provided in Paragraph 5(a) hereof) or (2) on or after
22 March 1994, any action has been taken by any taxing authority
of, or any decision has
<PAGE>
been rendered by a court of competent jurisdiction in, the United
States or any political subdivision or taxing authority thereof
or therein, including any of those actions specified in (1)
above, whether or not such action was taken or decision was
rendered with respect to INTELSAT, or any change, amendment,
application or interpretation shall be officially proposed,
which, in any such case, in the written opinion to INTELSAT of
independent legal counsel of recognized standing, will result in
a material probability that INTELSAT will become obligated to pay
Additional Amounts with respect to the Notes, and (y) in any such
case INTELSAT, in its business judgment, determines that such
obligation cannot be avoided by the use of reasonable measures
available to INTELSAT (provided that INTELSAT shall not be
required to assert any immunities that may be available to it);
provided, however, that (i) no such notice of redemption shall be
given earlier than 90 days prior to the earliest date on which
INTELSAT would but for such redemption be obligated to pay
Additional Amounts and (ii) at the time such notice of redemption
is given, such obligation to pay Additional Amounts remains in
effect. Prior to the publication of notice of redemption
pursuant to this Paragraph 6(b), INTELSAT shall deliver to the
Fiscal Agent a certificate of INTELSAT stating the date of
redemption and that INTELSAT is entitled to effect such
redemption and setting forth in reasonable detail a statement of
facts showing that the conditions precedent to the right of
INTELSAT to so redeem the Notes have occurred.
(c) In addition, if INTELSAT shall determine that any
payment made outside the United States by INTELSAT or any paying
agent of principal or interest due in respect of any Bearer Note
or coupon would, under any present or future laws or regulations
of the United States and without regard to any immunities that
may be available to INTELSAT, be subject to any certification,
information or other reporting requirement of any kind, the
effect of which requirement is the disclosure to INTELSAT, any
paying agent or any governmental authority of the nationality,
residence or identity (as distinguished from, for example, status
as a United States Alien) of a beneficial owner of such Note or
coupon who is a United States Alien (other than such a
requirement (i) which would not be applicable to a payment made
by INTELSAT or any paying agent (A) directly to the beneficial
owner, or (B) to a custodian, nominee or other agent of the
beneficial owner, or (ii) which can be satisfied by such
custodian, nominee or other agent certifying to the effect that
such beneficial owner is a United States Alien, provided that in
each case referred to in clauses (i)(B) and (ii), payment by such
custodian, nominee or agent to such beneficial owner is not
otherwise subject to any such requirement or (iii) would not be
applicable to a payment made by at least one other paying agent
of INTELSAT), INTELSAT, at its election, shall either (x) redeem
the Bearer Notes, as a whole but not in part, at a redemption
price equal to the principal amount thereof, together with
accrued and unpaid interest to the date fixed for redemption or
(y) if the conditions set forth in Paragraph 6(d) hereof are
satisfied, pay the additional amounts specified in such
Paragraph. INTELSAT shall make such determination and election as
soon as practicable and give prompt notice thereof (the
"Determination Notice") in the manner provided in clause (e) of
this Paragraph 6, stating the effective date of such
certification, information or other reporting requirement,
whether INTELSAT has elected to redeem the Bearer Notes or to pay
the additional amounts specified in Paragraph
<PAGE>
6(d) hereof, and (if applicable) the last date by which the
redemption of the Bearer Notes must take place, as provided in
the next succeeding sentence. If INTELSAT elects to redeem the
Bearer Notes, such redemption shall take place on such date, not
later than one year after the publication of the Determination
Notice, as INTELSAT shall elect by notice to the Fiscal Agent
given not less than 45 nor more than 75 days before the date
fixed for redemption. Notice of such redemption of the Bearer
Notes will be given to the Holders of the Bearer Notes not less
than 30 nor more than 60 days prior to the date fixed for
redemption. Notwithstanding the foregoing, INTELSAT shall not so
redeem the Bearer Notes if INTELSAT shall subsequently determine,
not less than 30 days prior to the date fixed for redemption,
that subsequent payments would not be subject to any such
requirement, in which case INTELSAT shall give prompt notice of
such determination in the manner provided in clause (e) of this
Paragraph 6 and any earlier redemption notice shall be revoked
and of no further effect.
(d) If and so long as the certification, information
or other reporting requirements referred to in Paragraph 6(c)
would be fully satisfied by payment of a withholding tax, backup
withholding tax or similar charge, INTELSAT may elect to pay,
without regard to any immunities that may be available to it,
such additional amounts (regardless of clause (vii) in Paragraph
5(a)) as may be necessary so that every net payment made outside
the United States following the effective date of such
requirements by INTELSAT or any paying agent of principal or
interest due in respect of any Bearer Note or any coupon the
beneficial owner of which is a United States Alien (but without
any requirement that the nationality, residence or identity of
such beneficial owner be disclosed to INTELSAT, any paying agent
or any governmental authority), after deduction or withholding
for or on account of such withholding tax, backup withholding tax
or similar charge (other than a withholding tax, backup
withholding tax or similar charge that (i) is the result of a
certification, information or other reporting requirement
described in the second parenthetical clause of the first
sentence of Paragraph 6(c), (ii) is imposed as a result of the
fact that INTELSAT or any of its paying agents have actual
knowledge that the beneficial owner of such Bearer Note or coupon
is within the category of persons described in Clauses (i) or (v)
of Paragraph 5(a), or (iii) is imposed as a result of
presentation of such Bearer Note or coupon for payment more than
10 calendar days after the date on which such payment becomes due
and payable or on which payment thereof is duly provided for and
notice thereof is given to Holders, whichever occurs later), will
not be less than the amount provided for in such Bearer Note or
coupon to be then due and payable. In the event INTELSAT elects
to pay such additional amounts, INTELSAT will have the right, at
its sole option, at any time, to redeem the Bearer Notes as a
whole, but not in part, at a redemption price equal to the
principal amount thereof, together with accrued and unpaid
interest to the date fixed for redemption. If INTELSAT has made
the determination described in Paragraph 6(c) with respect to
certification, information or other reporting requirements
applicable only to interest and subsequently makes a
determination in the manner and of the nature referred to in such
Paragraph 6(c) with respect to such requirements applicable to
principal, INTELSAT will redeem the Bearer Notes in the manner
and on the terms described in Paragraph 6(c) unless INTELSAT
elects to have the provisions of this Paragraph apply rather than
the provisions of
<PAGE>
Paragraph 6(c). If in such circumstances the Bearer Notes are to
be redeemed, INTELSAT shall have no obligation to pay additional
amounts pursuant to this Paragraph with respect to principal or
interest accrued and unpaid after the date of the notice of such
determination indicating such redemption, but will be obligated
to pay such additional amounts with respect to interest accrued
and unpaid to the date of such determination. If INTELSAT elects
to pay additional amounts pursuant to this Paragraph and the
condition specified in the first sentence of this Paragraph
should no longer be satisfied, then INTELSAT shall promptly
redeem such Bearer Notes.
(e) The Fiscal Agent shall cause, on behalf of
INTELSAT, notices to be given to redeem Bearer Notes to Holders
by publication at least once in a leading daily newspaper in the
English language of general circulation in South East Asia and,
so long as the Notes are listed on the respective stock exchanges
and such exchanges shall so require, in a daily newspaper of
general circulation in Hong Kong and Singapore or, if publication
in either Hong Kong or Singapore is not reasonably practicable,
elsewhere in South East Asia. The term "daily newspaper" as used
herein shall be deemed to mean a newspaper customarily published
on each business day, whether or not it shall be published in
Saturday, Sunday or holiday editions. If by reason of the
suspension of publication of any newspaper, or by reason of any
other cause, it shall be impracticable to give notice to the
Holders of Notes in the manner prescribed herein, then such
notification in lieu thereof as shall be made by INTELSAT or by
the Fiscal Agent on behalf of and at the instruction and expense
of INTELSAT shall constitute sufficient provision of such notice,
if such notification shall, so far as may be practicable,
approximate the terms and conditions of the publication in lieu
of which it is given. Neither the failure to give notice nor any
defect in any notice given to any particular Holder of a Note
shall affect the sufficiency of any notice with respect to other
Notes. Such notices will be deemed to have been given on the
date of such publication or mailing or, if published in such
newspapers on different dates, on the date of the first such
publication in South East Asia. Notices to redeem Notes shall be
given at least once not more than 60 days nor less than 30 days
prior to the date fixed for redemption and shall specify the date
fixed for redemption, the redemption price, the place or places
of payment, that payment will be made upon presentation and
surrender of the Notes to be redeemed, together with all
appurtenant coupons, if any, maturing subsequent to the date
fixed for redemption, that interest accrued and unpaid to the
date fixed for redemption (unless the redemption date is an
Interest Payment Date) will be paid as specified in said notice,
and that on and after said date interest thereon will cease to
accrue. If the redemption is pursuant to Paragraph 6(b) or 6(c)
hereof, such notice shall also state that the conditions
precedent to such redemption have occurred and state that
INTELSAT has elected to redeem all the Notes.
(f) If notice of redemption has been given in the
manner set forth in Paragraph 6(e) hereof, the Notes so to be
redeemed shall become due and payable on such redemption date
specified in such notice and upon presentation and surrender of
the Notes at
<PAGE>
the place or places specified in such notice, together with all
appurtenant coupons, if any, maturing subsequent to the
redemption date, the Notes shall be paid and redeemed by INTELSAT
at the places and in the manner and currency herein specified and
at the redemption price together with accrued and unpaid interest
(unless the redemption date is an Interest Payment Date) to the
redemption date; provided, however, that interest due on or prior
to the redemption date on Bearer Notes shall be payable only upon
the presentation and surrender of coupons for such interest (at
an office or agency outside the United States except as otherwise
provided on the face of the Bearer Note). If any Bearer Note
surrendered for redemption shall not be accompanied by all
appurtenant coupons maturing after the redemption date, such Note
may be paid after deducting from the amount otherwise payable an
amount equal to the face amount of all such missing coupons, or
the surrender of such missing coupon or coupons may be waived by
INTELSAT and the Fiscal Agent if they are furnished with such
security or indemnity as they may require to save each of them
and each other paying agency of INTELSAT harmless. From and
after the redemption date, if monies for the redemption of Notes
surrendered for redemption shall have been made available at the
Principal Office of the Fiscal Agent for redemption on the
redemption date, the Notes surrendered for redemption shall cease
to bear interest, the coupons for interest appertaining to Bearer
Notes maturing subsequent to the redemption date shall be void
(unless the amount of such coupons shall have been deducted from
the redemption price at the time of surrender of the Bearer Note
to which such coupons appertained, as aforesaid), and the only
right of the Holders of such Notes shall be to receive payment of
the redemption price together with accrued and unpaid interest
(unless the redemption date is an Interest Payment Date) to the
redemption date as aforesaid. If monies for the redemption of
the Notes are not made available for payment until after the
redemption date, the Notes surrendered for redemption shall not
cease to bear interest until such monies have been so made
available.
(g) Notes redeemed or otherwise acquired by INTELSAT
will forthwith be delivered to the Fiscal Agent for cancellation
and may not be reissued or resold, except that Bearer Notes
delivered to the Fiscal Agent may, at the written request of
INTELSAT, be reissued by the Fiscal Agent in replacement of
mutilated, lost, stolen or destroyed Notes pursuant to Paragraph
9 hereof.
7. In the event of:
(a) default in the payment of any installment of
interest upon any Note for a period of 30 days after the
date when due; or
(b) default in the payment of the principal of any
Note when due (whether at maturity or redemption or
otherwise); or
(c) default in the performance or breach of any
covenant or warranty contained in the Notes or the Fiscal
Agency Agreement (other than as specified in
<PAGE>
clauses (a) and (b) of this Paragraph 7) for a period of 90
days after the date on which written notice of such failure,
requiring INTELSAT to remedy the same and stating that such
notice is a "Notice of Default", shall first have been given
to INTELSAT and the Fiscal Agent by any Holder of a Note; or
(d) involuntary acceleration of the maturity of other
indebtedness of INTELSAT for money borrowed with a maturity
of one year or more in excess of U.S. $50,000,000 which
acceleration shall not be rescinded or annulled, or which
indebtedness shall not be discharged, within 45 days after
notice; or
(e) INTELSAT is dissolved or the INTELSAT Agreement or
the Operating Agreement ceases to be in full force and
effect; provided, however, that no default shall occur if
INTELSAT's obligations under the Fiscal Agency Agreement and
the Notes are assumed by a successor who maintains a
business which is substantially similar to that of INTELSAT;
the Holder of this Note may, at such Holder's option, unless such
Event of Default has been waived as described in Paragraph 10(b)
hereof, declare the principal of this Note and accrued and unpaid
interest hereon to be due and payable immediately by written
notice to INTELSAT, with a copy to the Fiscal Agent at its
Principal Office, and unless all such defaults shall have been
cured by INTELSAT prior to receipt of such written notice, the
principal of this Note and accrued and unpaid interest hereon
shall become and be immediately due and payable.
8. (a) INTELSAT will conduct and operate its
business diligently and in the ordinary manner in compliance with
the INTELSAT Agreement and the Operating Agreement, and will use
all reasonable efforts to maintain in full force and effect its
existing international registration of orbital locations and
frequency spectrum for the operation of its global commercial
telecommunications satellite system; provided, however, that
INTELSAT shall not be prevented from making any change with
respect to its manner of conducting or operating its business or
with respect to such registration if such change, in the judgment
of INTELSAT, is desirable and does not materially impair
INTELSAT's ability to perform its obligations under the Notes.
(b) INTELSAT will cause all properties used or useful
in the conduct of its business to be maintained and kept in good
condition, repair and working order and supplied with all
necessary equipment and will cause to be made all necessary
repairs, renewals, replacements, betterments and improvements
thereof, all as in the judgment of INTELSAT may be necessary so
that the business carried on in connection therewith may be
properly and advantageously conducted at all times (except for
ordinary wear and tear and deterioration); provided, however,
that INTELSAT shall not be prevented from discontinuing the
operation or maintenance of any of such properties if such
discontinuance, in the judgment of INTELSAT, is desirable in the
conduct of its business and does not materially impair INTELSAT's
ability to perform its obligations under the Notes.
<PAGE>
9. If any mutilated Note or a Note with a mutilated
coupon appertaining to it is surrendered to the Fiscal Agent,
INTELSAT shall execute, and the Fiscal Agent shall authenticate
(or arrange for authentication on its behalf) and deliver in
exchange therefor, a new Note of like tenor and principal amount,
bearing a number not contemporaneously outstanding, with coupons
corresponding to the coupons, if any, appertaining to the
surrendered Note.
If there be delivered to INTELSAT and the Fiscal Agent
(i) evidence to their satisfaction of the destruction, loss or
theft of any Note or coupon, and (ii) such security or indemnity
as may be required by them to save each of them and any agent of
each of them harmless, then, in the absence of notice to INTELSAT
or the Fiscal Agent that such Note or coupon has been acquired by
a bona fide purchaser, INTELSAT shall execute, and upon its
request the Fiscal Agent shall authenticate (or arrange for
authentication on its behalf) and deliver in lieu of any such
destroyed, lost or stolen Note or in exchange for the Note to
which such coupon appertains (with all appurtenant coupons not
destroyed, lost or stolen), a new Note of like tenor and
principal amount and bearing a number not contemporaneously
outstanding, with coupons corresponding to the coupons, if any,
appertaining to such destroyed, lost or stolen Note or to the
Note to which such destroyed, lost or stolen coupon appertains.
Upon the issuance of any new Note under this Paragraph,
INTELSAT may require the payment by the Holder of a sum
sufficient to cover any tax or other governmental charge that may
be imposed in relation thereto and any other expenses (including
the fees and the expenses of the Fiscal Agent and INTELSAT)
connected therewith.
Every new Note with its coupons, if any, issued
pursuant to this Paragraph in lieu of any destroyed, lost or
stolen Note, or in exchange for a Note to which a destroyed, lost
or stolen coupon appertains, shall constitute an original
additional contractual obligation of INTELSAT, whether or not the
destroyed, lost or stolen Note and its coupons, if any, or the
destroyed, lost or stolen coupon shall be at any time enforceable
by anyone.
Any new Note delivered pursuant to this Paragraph shall
be so dated, or have attached thereto such coupons, that neither
gain nor loss in interest shall result from such exchange.
The provisions of this Paragraph 9 are exclusive and
shall preclude (to the extent lawful) all other rights and
remedies with respect to the replacement or payment of mutilated,
destroyed, lost or stolen Notes or coupons.
<PAGE>
10. (a) The Fiscal Agency Agreement and the terms and
conditions of the Notes may be modified or amended by INTELSAT
and the Fiscal Agent, without the consent of the Holder of any
Note or coupon, in any manner which does not adversely affect the
interests of the Holders, to provide for issuances of further
debt securities as contemplated by Paragraph 11 hereof and by the
Fiscal Agency Agreement, and to cure any ambiguity or to cure,
correct or supplement any defective provision contained herein or
in any coupon appertaining hereto or in the Fiscal Agency
Agreement, or in certain other circumstances as described in the
Fiscal Agency Agreement, to all of which each Holder of any Note
or coupon shall, by acceptance thereof, consent.
(b) The Fiscal Agency Agreement and the terms and
conditions of the Notes may also be modified or amended by
INTELSAT and the Fiscal Agent, and future compliance therewith or
past default by INTELSAT may be waived, either with the consent
of the Holders of not less than a majority in aggregate principal
amount of the Notes at the time Outstanding or by the adoption of
a resolution at a meeting of Holders duly convened and held in
accordance with the provisions of the Fiscal Agency Agreement at
which a quorum (as defined below) is present by at least a
majority in aggregate principle amount of Notes represented at
such meeting; provided, however, that no such modification,
amendment or waiver may, without the written consent or
affirmative vote of the Holder of each Note affected thereby:
(i) change the stated maturity of the principal of
or any installment of interest on any such Note, or
(ii) reduce the principal amount thereof or the rate
of interest on any such Note, or
(iii) change the obligation of INTELSAT to pay
Additional Amounts, or
(iv) change the coin or currency in which any such
Note or the interest thereon is payable, or
(v) modify the obligation of INTELSAT to maintain
offices or agencies outside the United States, or
(vi) reduce the percentage in principal amount of the
Outstanding Notes necessary to modify or amend the Fiscal
Agency Agreement or the terms and conditions of the Notes or
the coupons, or to waive any future compliance or past
default, or
(vii) reduce the requirements for voting for the
adoption of a resolution or the quorum required at any
meeting of Holders of Notes at which a resolution is
adopted.
<PAGE>
The quorum at any meeting called to adopt a resolution
will be a majority in aggregate principal amount of Notes
Outstanding, except that at any meeting which is reconvened for
lack of a quorum, the Holders entitled to vote 25 per cent. in
aggregate principle amount of Notes Outstanding shall constitute
a quorum for the taking of any action set forth in the notice of
the original meeting.
It shall not be necessary for the Holders of Notes to
approve the particular form of any proposed amendment, but it
shall be sufficient if they approve the substance thereof.
(c) Any modifications, amendments or waivers to the
Fiscal Agency Agreement or to the terms and conditions of the
Notes in accordance with the foregoing provisions will be
conclusive and binding on all Holders of Notes, whether or not
they have given such consent, and on all Holders of coupons,
whether or not notation of such modifications, amendments or
waivers is made upon the Notes or coupons, and on all future
Holders of Notes and coupons.
(d) Promptly after the execution of any amendment to
the Fiscal Agency Agreement or the effectiveness of any
modification or amendment of the terms and conditions of the
Notes, notice of such modification or amendment shall be given by
INTELSAT or by the Fiscal Agent on behalf of and at the expense
of INTELSAT, to Holders of the Notes in the manner provided in
Paragraph 6(e) hereof. The failure to give such notice on a
timely basis shall not invalidate such modification or amendment,
but INTELSAT shall cause the Fiscal Agent to give such notice as
soon as practicable upon discovering such failure or upon any
impediment to the giving of such notice being overcome.
11. INTELSAT may from time to time, without the
consent of the Holder of any Note or coupon, issue further debt
securities having the same terms and conditions as the Notes in
all respects (or in all respects except for the first payment of
interest thereon) or having such terms as INTELSAT may determine
at the time of their issuance, in either case so that any such
further debt securities shall be consolidated and form a single
series with outstanding securities of any series (including the
Notes). Unless the context requires otherwise, references in the
Notes and coupons and in the Fiscal Agency Agreement to the Notes
or coupons shall include any other debt securities issued in
accordance with the Fiscal Agency Agreement that are intended by
INTELSAT to form a single series with the Notes. Any further
debt securities forming a single series with the outstanding
securities of any series (including the Notes) shall be issued
pursuant to the Fiscal Agency Agreement as amended for the
purpose of providing for the issuance of such debt securities.
12. Subject to the authentication of this Note by the
Fiscal Agent, INTELSAT hereby certifies and declares that all
acts, conditions and things required to be done and performed and
to have happened precedent to the creation and issuance of the
Notes and any coupons, and to constitute the same the valid
obligations of INTELSAT, have been done and performed and have
happened in due compliance with all applicable laws.
<PAGE>
13. INTELSAT hereby appoints CT Corporation System,
1633 Broadway, New York, New York 10019, as its authorized agent
("Authorized Agent") upon which process may be served in any
action arising out of or based on the Notes or any coupons which
action may be instituted in any New York State or United States
Federal court sitting in the Borough of Manhattan, The City of
New York, the State of New York, U.S.A., by the Holder of any
Note or coupon, and INTELSAT and each Holder by acceptance hereof
expressly accepts the exclusive jurisdiction of any such court in
respect of any such action. Such appointment shall be
irrevocable until two years after the Notes shall have matured
and been paid or moneys for the payment thereof shall have been
made available unless and until a successor Authorized Agent
shall have been appointed and shall have accepted such
appointment. INTELSAT hereby irrevocably waives any immunity to
service of process in respect of any such action to which it
might otherwise be entitled in any action arising out of or based
upon the Notes or coupons which may be instituted by any Holder
of a Note or coupon in any State or Federal court in the Borough
of Manhattan, The City of New York, the State of New York, U.S.A.
Service of process upon the Authorized Agent at the address
indicated above, as such address may be changed within the
Borough of Manhattan, The City of New York, the State of New
York, U.S.A., by notice given by the Authorized Agent to each
party hereto, shall be deemed, in every respect, effective
service of process upon INTELSAT. INTELSAT irrevocably waives,
to the fullest extent permitted by applicable law, any sovereign
or other immunity from jurisdiction or from execution (except
that INTELSAT does not waive immunity from execution prior to
judgment and any similar defense) to which it might otherwise be
entitled in any such action which may be instituted by any Holder
of a Note or coupon in any New York State or United States
Federal court sitting in the Borough of Manhattan, The City of
New York, the State of New York, U.S.A.
14. The Notes and coupons will constitute an
obligation of INTELSAT and not of any Signatory or Party (each as
defined in the INTELSAT Agreement). No Signatory or Party will
waive any immunity to which it may be entitled in any suit on the
Notes or coupons, and Holders of Notes or coupons will have no
recourse against any Signatory or Party with respect to any
obligations of INTELSAT under the Notes or coupons.
<PAGE>
[Form of coupon]
[Face of coupon]
ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION
WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED
STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS
PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE
INTERNAL REVENUE CODE.
[B-][1] ... [10]
U.S.$[662.50] [6625.00]
Due March 22 [1995]....[2004]
INTERNATIONAL TELECOMMUNICATIONS SATELLITE ORGANIZATION
6 5/8 Notes Due 2004
On the date set forth hereon, INTERNATIONAL
TELECOMMUNICATIONS SATELLITE ORGANIZATION ("INTELSAT") will pay
to bearer upon surrender hereof, the amount shown hereon
(together with any additional amounts in respect thereof which
INTELSAT may be required to pay according to the terms of said
Note) at the paying agencies set out on the reverse hereof or at
such other places outside the United States of America (including
the States and the District of Columbia), its territories and
possessions and other areas subject to its jurisdiction as
INTELSAT may determine from time to time, at the option of the
Holder, by United States dollar check drawn on a bank in The City
of New York, the State of New York, U.S.A. or by transfer to a
United States dollar account maintained by the payee with a bank
located in a city in Western Europe, being the interest then
payable on said Note.
INTERNATIONAL TELECOMMUNICATIONS
SATELLITE ORGANIZATION
By_______________________________________
<PAGE>
[Reverse of coupon]
Bankers Trust Company
1 Appold Street
Broadgate
London EC2A 2HE
England
Bankers Trust Luxembourg S.A.
14 Boulevard F.D. Roosevelt
L-2450 Luxembourg
Bankers Trust Company
38/F Two Pacific Place
88 Queensway
Hong Kong
Credit Suisse
Paradeplatz 8
8001 Zurich
Switzerland
DBS Bank
24 Raffles Place #81-00
Clifford Centre
Singapore 0104
<PAGE>
EXHIBIT C
[FORM OF CERTIFICATION TO BE GIVEN TO
EUROCLEAR OR CEDEL S.A. BY ACCOUNT HOLDER]
CERTIFICATE
INTERNATIONAL TELECOMMUNICATIONS SATELLITE ORGANIZATION
6 5/8% Notes Due 2004
(the "Notes")
This is to certify that as of the date hereof, and except
as set forth below, interests in the temporary Global Note
representing the above-captioned Notes held by you for our account
(i) are owned by person(s) that are not citizens or residents of
the United States, domestic partnerships, domestic corporations or
any estate or trust the income of which is subject to United States
Federal income taxation regardless of its source ("United States
person(s)"), (ii) are owned by United States person(s) that (a) are
foreign branches of United States financial institutions (as
defined in U.S. Treasury Regulations Section 1.165-12(c)(1)(v)
("financial institutions")) purchasing for their own account or for
resale or (b) acquired the Notes through foreign branches of United
States financial institutions and who hold the Notes through such
United States financial institutions on the date hereof (and in
either case (a) or (b), each such United States financial
institution hereby agrees, on its own behalf or through its agent,
that you may advise INTELSAT or INTELSAT's agent that it will
comply with the requirements of Section 165(j)(3)(A), (B) or (C) of
the U.S. Internal Revenue Code of 1986, as amended, and the
regulations thereunder), or (iii) are owned by a United States or
foreign financial institution for purposes of resale during the
restricted period (as defined in U.S. Treasury Regulations Section
1.163-5(c)(2)(i)(D)(7)), and in addition if the owner of the Notes
is a United States or foreign financial institution described in
clause (iii) above (whether or not also described in clause (i) or
(ii)) this is to further certify that such financial institution
has not acquired the Notes for purposes of resale directly or
indirectly to a United States person or to a person within the
United States or its possessions.
As used herein, "United States" means the United States
of America (including the States thereof and the District of
Columbia); and its "possessions" include Puerto Rico, the U.S.
Virgin Islands, Guam, American Samoa, Wake Island and the Northern
Mariana Islands.
We undertake to advise you promptly by tested telex on or
prior to the date on which you intend to submit your certification
relating to the Notes held by you for our account in accordance
with your Operating Procedures if any applicable statement herein
is not correct
<PAGE>
on such date, and in the absence of any such notification it may be
assumed that this certification applies as of such date.
This certification excepts and does not relate to U.S.
$______ of such interest in the above Notes in respect of which we
are not able to certify and as to which we understand exchange and
delivery of definitive Notes (or, if relevant, exercise of any
rights or collection of any interest) cannot be made until we do so
certify.
We understand that this certification is required in
connection with certain tax laws or, if applicable, certain
securities laws of the United States. In connection therewith, if
administrative or legal proceedings are commenced or threatened in
connection with which this certification is or would be relevant,
we irrevocably authorize you to produce this certification to any
interested party in such proceedings.
Dated: _____________, 199_
By:_______________________________________
As, or as agent for, the beneficial owner(s)
of the Notes to which this certificate relates.
<PAGE>
EXHIBIT D
[FORM OF CERTIFICATION TO BE GIVEN
BY THE EUROCLEAR OPERATOR OR
CEDEL S.A.]
CERTIFICATION
INTERNATIONAL TELECOMMUNICATIONS SATELLITE ORGANIZATION
6 5/8% Notes Due 2004
(the "Notes")
This is to certify that, based solely on certifications
we have received in writing, by tested telex or by electronic
transmission from member organizations appearing in our records as
persons being entitled to a portion of the principal amount set
forth below (our "Member Organizations") substantially to the
effect set forth in the Fiscal Agency Agreement, as of the date
hereof, U.S. $_______ principal amount of the above-captioned Notes
(i) is owned by persons that are not citizens or residents of the
United States, domestic partnerships, domestic corporations or any
estate or trust the income of which is subject to United States
Federal income taxation regardless of its source ("United States
persons"), (ii) is owned by United States persons that are (a)
foreign branches of United States financial institutions (as
defined in U.S. Treasury Regulations Section 1.165-12(c)(1)(v)
("financial institutions")) purchasing for their own account or for
resale or (b) United States persons who acquired the Notes through
foreign branches of United States financial institutions and who
hold the Notes through such United States financial institutions on
the date hereof (and in either case (a) or (b), each such United
States financial institution has agreed, on its own behalf or
through its agent, that we may advise INTELSAT or INTELSAT's agent
that it will comply with the requirements of Section 165(j)(3)(A),
(B) or (C) of the U.S. Internal Revenue Code of 1986, as amended,
and the regulations thereunder), or (iii) is owned by a United
States or foreign financial institution for purposes of resale
during the restricted period (as defined in U.S. Treasury
Regulations Section 1.163-5(c)(2)(i)(D)(7)), and to the further
effect that United States or foreign financial institutions
described in clause (iii) above (whether or not also described in
clause (i) or (ii)) have certified that they have not acquired the
Notes for purposes of resale directly or indirectly to a United
States person or to a person within the United States or its
possessions.
We further certify (i) that we are not making available
herewith for exchange (or, if relevant, exercise of any rights or
collection of any interest) any portion of the Temporary Global
Note excepted in such certifications and (ii) that as of the date
hereof we have not received any notification from any of our Member
Organizations to the effect that the statements made by such Member
Organizations with respect to any portion of the part submitted herewith
<PAGE>
for exchange (or, if relevant, exercise of any rights or collection
of any interest) are no longer true and cannot be relied upon as of
the date hereof.
We understand that this certification is required in
connection with certain tax laws and, if applicable, certain
securities laws of the United States. In connection therewith, if
administrative or legal proceedings are commenced or threatened in
connection with which this certification is or would be relevant,
we irrevocably authorize you to produce this certification to any
interested party in such proceedings.
Dated: __________, 1994
Yours faithfully,
[Morgan Guaranty Trust Company
of New York, Brussels Office as
operator of the Euroclear
System]
or
[Cedel S.A.]
By_______________________
<PAGE>
<PAGE>
EXHIBIT 11
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT 11
COMSAT CORPORATION CONSOLIDATED
COMPUTATION OF EARNINGS PER SHARE
FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 1993
(in thousands, except per share amounts)
1993 1992 1991
------- ------- -------
<S> <C> <C> <C>
PRIMARY
EARNINGS:
INCOME BEFORE CUMULATIVE EFFECT OF
ACCOUNTING CHANGES $74,044 $42,924 $71,424
CUMULATIVE EFFECT OF ACCOUNTING CHANGES 1,238 - (26,607)
NET INCOME $75,282 $42,924 $44,817
SHARES:
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING 39,953 38,759 37,772
ADD-SHARES ISSUABLE FROM ASSUMED
EXERCISE OF OPTIONS 755 588 297
WEIGHTED AVERAGE SHARES 40,708 39,347 38,069
PRIMARY EARNINGS PER SHARE:
BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGES $1.82 $1.09 $1.88
CUMULATIVE EFFECT OF ACCOUNTING CHANGES 0.03 - (0.70)
NET INCOME $1.85 $1.09 $1.18
ASSUMING FULL DILUTION
EARNINGS:
INCOME BEFORE CUMULATIVE EFFECT OF
ACCOUNTING CHANGES $74,044 $42,924 $71,424
ADD-INTEREST EXPENSE (NET OF TAX) APPLICABLE
TO 7-3/4% CONVERTIBLE DEBENTURES - PORTION
NOT CAPITALIZED - 1,488 5,413
74,044 44,412 76,837
CUMULATIVE EFFECT OF ACCOUNTING CHANGES 1,238 - (26,607)
NET INCOME $75,282 $44,412 $50,230
SHARES:
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING 39,953 38,759 37,772
ASSUMED CONVERSION OF 7-3/4% CONVERTIBLE
DEBENTURES - 1,237 4,501
ADD-SHARES ISSUABLE FROM ASSUMED EXERCISE
OF OPTIONS 817 767 494
WEIGHTED AVERAGE SHARES 40,770 40,763 42,767
FULLY DILUTED EARNINGS PER SHARE:
BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGES $1.82 $1.09 $1.80
CUMULATIVE EFFECT OF ACCOUNTING CHANGES 0.03 - (0.63)
NET INCOME $1.85 $1.09 $1.17
</TABLE>
<PAGE>
EXHIBIT 22
<PAGE>
SUBSIDIARIES OF THE REGISTRANT
AS OF MARCH 31, 1994
Subsidiary State of Incorporation
- - - --------------------------------------------------------------
Bethesda Real Property, Inc. Delaware
COMSAT Earth Stations, Inc. Delaware
COMSAT General Corporation Delaware
COMSAT Technology, Inc. Delaware
COMSAT General Telematics, Inc. Delaware
COMSAT International N.V. Delaware
COMSAT Investments, Inc. Delaware
COMSAT Mobile Investments, Inc. Delaware
COMSAT Overseas, Inc. Delaware
COMSAT Video Enterprises, Inc. Delaware
COMSAT Denver, Inc. Delaware
On Command Video Corporation Delaware
CTS America, Inc. Delaware
CTS Transnational, Inc. Delaware
<PAGE>
EXHIBIT 24
<PAGE>
EXHIBIT 24
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in COMSAT Corporation's
Registration Statement No. 2-83319 on Form S-8, Registration Statement
No. 2-87942 on Form S-8, Registration Statement No. 33-5259 on Form S-8,
Registration Statement No. 33-25124 on Form S-8, Registration Statement
No. 33-35364 on Form S-8, Registration Statement No. 33-53610 on Form
S-8, and Registration Statement No. 33-51661 on Form S-3 of our report
dated February 16, 1994, appearing in this Annual Report on Form 10-K
of COMSAT Corporation for the year ended December 31, 1993.
Deloitte & Touche
Washington D.C.
March 29, 1994
<PAGE>
EXHIBIT 27
<PAGE>
EXHIBIT 27
COMSAT CORPORATION CONSOLIDATED
FINANCIAL DATA SCHEDULE
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
As of or for the Year
Ended December 31,
1993 1992 1991
<S> <C> <C> <C>
Assets debit (credit) --------- --------- ---------
Cash and cash equivalents $8,794 $3,857 $6,868
Receivables 155,381 145,747 118,102
Allowance for doubtful accounts (12,034) (10,189) (8,743)
Total current assets 178,482 165,214 136,148
Property, plant and equipment 2,144,641 2,011,226 1,818,607
Accumulated depreciation (836,474) (766,279) (647,013)
Total assets 1,652,515 1,542,843 1,369,546
Liabilities and Equity
Total current liabilities $277,840 $169,521 $191,110
Long-term debt 402,402 486,383 382,764
Common stock 281,371 268,334 256,425
Other stockholders' equity 397,981 352,798 328,561
Total liabilities and stockholders 1,652,515 1,542,843 1,369,546
Income Statement revenues (expenses)
Revenues $640,390 $563,615 $522,850
Cost of services (328,727) (272,351) (245,187)
Other operating expenses (173,565) (202,759) (150,190)
Total operating expenses (502,292) (475,110) (395,377)
Interest cost (45,117) (46,172) (46,941)
Interest capitalized 22,197 20,481 27,307
Other income (expense), net 9,307 3,949 (4,766)
Income before taxes and cumulative
effect of accounting changes 124,485 66,763 103,073
Income tax expense (50,441) (23,839) (31,649)
Income before cumulative effect
of accounting changes 74,044 42,924 71,424
Cumulative effect of accounting
changes 1,238 - (26,607)
Net income 75,282 42,924 44,817
Primary earnings per share:
Before cumulative effect of
accounting changes $1.82 $1.09 $1.88
Cumulative effect of accounting 0.03 - (0.70)
changes
Net income 1.85 1.09 1.18
Fully diluted earnings per share:
Before cumulative effect of
accounting changes $1.82 $1.09 $1.80
Cumulative effect of accounting 0.03 - (0.63)
changes
Net income 1.85 1.09 1.17
</TABLE>
Items omitted are not material.
This schedule contains summary financial information extracted from the
statements and notes for the years ended December 31, 1993, 1992 and 19
in its entirety by reference to such financial statements.
<PAGE>
