SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter Ended June 30, 1995
Commission File Number 1-4929
COMSAT CORPORATION
6560 Rock Spring Drive
Bethesda, MD 20817
(301) 214-3000
District of Columbia 52-0781863
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
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
Exchange Act of 1934 during the preceding twelve (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 ninety (90)
days. Yes X No
47,286,000 shares of the Registrant's common stock were
outstanding as of June 30, 1995.
Page 1 of 190 pages - Exhibit Index at page 17
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Interim Financial Statements for the Corporation (Unaudited)
COMSAT CORPORATION AND SUBSIDIARIES
Condensed Consolidated Income Statements
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Quarter Ended June 30, Six Months Ended June 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Revenues $ 210,809 $ 207,861 $ 418,692 $ 408,356
------- ------- ------- -------
Operating expenses:
Cost of services 105,220 112,608 226,433 227,343
Depreciation and amortization 48,853 40,029 96,231 80,308
Research and development 6,031 3,706 10,636 6,949
General and administrative 5,766 5,361 10,696 10,725
Merger and integration costs - 4,264 - 4,264
------- ------- ------- -------
Total operating expenses 165,870 165,968 343,996 329,589
------- ------- ------- -------
Operating income 44,939 41,893 74,696 78,767
Interest and other income, net 743 447 2,772 1,684
Interest expense, net of
amounts capitalized (10,374) (5,001) (19,249) (11,153)
------- ------ ------- -------
Income before taxes 35,308 37,339 58,219 69,298
Income tax expense (13,296) (15,722) (21,634) (27,500)
------- ------- ------- -------
Net income $ 22,012 $ 21,617 $ 36,585 $ 41,798
====== ====== ====== ======
Earnings per share $ 0.46 $ 0.46 $ 0.77 $ 0.89
====== ====== ====== ======
</TABLE>
The accompanying notes are an integral part of these financial statements.
Page 2
<PAGE>
COMSAT CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands)
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
---- ----
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 18,857 $ 18,658
Receivables 218,739 226,189
Inventories 25,769 21,933
Other 27,393 31,460
------ ------
Total current assets 290,758 298,240
------- -------
Property and equipment (net of accumulated depreciation of
$1,064,985 in 1995 and $990,596 in 1994) 1,481,478 1,431,066
Investments 81,858 69,541
Goodwill 50,500 46,535
Franchise rights 38,145 39,119
Other assets 93,081 91,491
--------- ---------
Total assets $ 2,035,820 $ 1,975,992
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term obligations $ 6,863 $ 7,115
Commercial paper 130,924 121,356
Accounts payable and accrued liabilities 116,768 145,893
Due to related parties 9,423 36,750
Other 15,263 5,966
--------- ---------
Total current liabilities 279,241 317,080
--------- ---------
Long-term debt 590,084 515,542
Deferred income taxes and investment tax credits 122,150 122,798
Accrued postretirement benefit costs 49,184 50,817
Other long-term liabilities 116,869 112,824
--------- ---------
Total liabilities 1,157,528 1,119,061
--------- ---------
Minority interest 28,428 30,015
--------- ---------
Stockholders' equity:
Common stock 317,703 312,143
Retained earnings 550,437 532,229
Treasury stock (11,254) (12,502)
Other (7,022) (4,954)
--------- ---------
Total stockholders' equity 849,864 826,916
--------- ---------
Total liabilities and stockholders' equity $ 2,035,820 $ 1,975,992
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
Page 3
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COMSAT CORPORATION AND SUBSIDIARIES
Condensed Consolidated Cash Flow Statements
(In thousands)
<TABLE>
<CAPTION>
Six Months Ended June 30,
1995 1994
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 36,585 $ 41,798
Adjustment for depreciation and amortization 96,231 80,308
Changes in operating assets and liabilities (32,437) (45,960)
Other 7,752 (2,067)
------- -------
Net cash provided by operating activities 108,131 74,079
------- -------
Cash flows from investing activities:
Purchase of property and equipment (158,402) (141,694)
Decrease in INTELSAT ownership 17,132 12,777
Decrease (increase) in Inmarsat ownership (9,018) 3,389
Investments in unconsolidated businesses (20,109) (31,604)
Other (1,466) (8,352)
-------- --------
Net cash used in investing activities (171,863) (165,484)
-------- --------
Cash flows from financing activities:
Common stock issued 4,594 4,126
Cash dividends paid (18,365) (15,336)
Proceeds from issuance of long-term debt 81,986 40,352
Repayment of long-term debt (8,870) (77,649)
Net short-term borrowings 9,568 123,122
Borrowings against company-owned life insurance policies - 10,079
Other (4,982) -
-------- --------
Net cash provided by financing activities 63,931 84,694
-------- --------
Net increase (decrease) in cash and cash equivalents 199 (6,711)
Cash and cash equivalents, beginning of period 18,658 16,230
-------- --------
Cash and cash equivalents, end of period $ 18,857 $ 9,519
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
Page 4
<PAGE>
COMSAT CORPORATION AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)
1. Financial Statement Presentation
These financial statements include the accounts of COMSAT
Corporation and its majority-owned subsidiaries (COMSAT or the
"corporation") and reflect all adjustments that are, in the opinion of
management, necessary to fairly present the results of the periods covered.
2. INTELSAT and Inmarsat Share Changes
The corporation's ownership share of INTELSAT has decreased from
20.1% at December 31, 1994 to 19.1% as of June 30, 1995. The corporation
received cash proceeds of $17.1 million and has a $0.5 million receivable
for the balance due.
The corporation paid $9.0 million to increase its share in
Inmarsat from 22.4% at December 31, 1994 to 24.0% as of June 30, 1995.
3. Inventories
Inventories, stated at the lower of cost (first-in, first-out) or
market, consist of the following (in thousands):
<TABLE>
<CAPTION>
June 30, 1995 December 31, 1994
------------- -----------------
<S> <C> <C>
Finished goods $ 5,893 $ 5,228
Work in progress 11,874 9,187
Raw materials 8,002 7,518
----- -----
Total $ 25,769 $ 21,933
====== ======
</TABLE>
4. Investments
In 1995 the corporation invested $12.8 million in a new company
that will own and operate a satellite system affiliated with Inmarsat (see
Note 8 to the 1994 financial statements). This includes the corporation's
$2.0 million cash investment plus $9.4 million paid to Inmarsat for the
corporation's share of Inmarsat's cash investment in the venture in
addition to the corporation's $1.4 million share of a non-cash contribution
made by Inmarsat.
5. Debt
In February 1995, INTELSAT issued $200.0 million of 8.125%
Eurobond notes due February 28, 2005. Interest is payable annually in
arrears. The corporation has recorded its share of this long-term debt.
Page 5
<PAGE>
The corporation has issued four notes during the first half of
1995 under its medium-term note program. A $5.0 million 8.5% note was
issued in February 1995, a $12.0 million 7.92% note was issued in March
1995 and a $9.0 million 7.77% note and a $16.0 million 7.7% note were
issued in May 1995. These notes are due in 2007. The corporation has $26.0
million remaining under its medium-term note program.
6. Nonrecurring Transactions
In May 1995, the National Basketball Association (NBA) approved
the admission of two expansion teams into the NBA. Revenues for the second
quarter of 1995 include the Denver Nuggets' $8.8 million share of the
expansion fees ($125 million per team). Approximately one half of this
amount was received in cash in June 1995 and the corporation has recorded a
note receivable for the remainder. The note is due upon the earlier of (1)
the completion of a collective bargaining agreement between the players and
the NBA or (2) May 1, 1996.
Cost of services for the second quarter of 1995 includes a $3.3
million credit for Inmarsat-related costs which were over-accrued during
1994 and the first quarter of 1995. Cost of services for the second quarter
of 1995 also includes a $2.7 million benefit plan curtailment gain related
to the reduction of pension benefits and the elimination of postretirement
health care benefits for a group of employees.
7. Litigation
As discussed in Note 9 to the corporation's 1994 financial
statements, the corporation is engaged in an antitrust suit filed by Pan
American Satellite (PanAmSat). Discovery in the suit ended in November
1994; however, PanAmSat has motions pending which, if granted, would result
in additional discovery. In December 1994, the corporation filed a motion
for summary judgment directed to dismissal of all claims in the complaint.
PanAmSat has opposed the motion. A hearing on the motion was held in a U.S.
District Court on August 3, 1995. In the opinion of management, the claims
are without merit, and the ultimate disposition of this matter will not
have a material effect on the corporation's financial statements.
The corporation has been defending a patent and copyright
infringement suit brought by Spectradyne, Inc. against its COMSAT Video
Enterprises, Inc. and On Command Video Corporation (OCV) subsidiaries as
discussed in Note 9 to the 1994 financial statements. In June 1995, all
claims related to this suit were dismissed.
8. Subsequent Events
On July 1, 1995, the corporation acquired a National Hockey League
(NHL) franchise and related player contracts, management contracts and
certain other assets from Le Club de Hockey Les Nordiques in Quebec, Canada
for approximately $75 million. The franchise, which was known as the Quebec
Nordiques, is being relocated to Denver, Colorado for the 1995-96 NHL
season and will be known as the Colorado Avalanche. The acquisition was
financed with the proceeds of a bank loan.
Page 6
<PAGE>
In July 1995, COMSAT Capital I, L.P. issued $200 million of
Monthly Income Preferred Securities (MIPS). COMSAT Capital I, L.P. is a
limited partnership formed for the sole purpose of issuing the MIPS and
loaning the proceeds to COMSAT, the managing General Partner. The MIPS were
issued at a par value of $25 per share and an annual dividend rate of
8.125%. The MIPS are callable by the issuer after July 2000 at par value.
The proceeds of the MIPS were loaned to COMSAT under the terms of
a 8.125%, 30-year subordinated debenture agreement. This agreement allows
COMSAT to extend the maturity of the debentures until 2044, provided that
COMSAT satisfies certain financial covenants. The proceeds have been used
to repay commercial paper borrowings and the $75 million bank loan incurred
in the acquisition of the NHL franchise and related assets.
COMSAT Capital I, L.P. will be consolidated in the financial
statements of COMSAT beginning with the third quarter of 1995. The loan
between the partnership and COMSAT will be eliminated in consolidation. The
$200 million of MIPS will be presented on the consolidated balance sheet as
a minority interest.
In July 1995, the corporation announced plans, subject to FCC
review, to integrate its mobile communications businesses with COMSAT's
other international communications services businesses. The corporation
also announced that it has retained investment counsel to evaluate ways to
unlock the value of the corporation's entertainment assets, to raise
capital specifically to fund entertainment growth opportunities and
potentially to monetize a portion of COMSAT's investment in these assets.
In August 1995, the corporation increased its ownership percentage
in OCV to approximately 85% through the contribution to OCV of
substantially all of the corporation's other hotel in-room entertainment
assets.
The corporation plans to record a restructuring charge in the
third quarter of 1995 related to the integration of its communications
businesses and restructuring of its hotel in-room entertainment businesses.
Page 7
<PAGE>
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS FOR THE QUARTER
ENDED JUNE 30, 1995
ANALYSIS OF OPERATIONS
Consolidated Operations
Consolidated revenues for the second quarter of 1995 were $210.8
million, an increase of $3.0 million over last year's second quarter. The
International Communications and Entertainment segments reported solid
growth in revenues whereas Technology Services segment revenues fell from
last year's second quarter. Mobile Communications segment revenues were
even with last year's second quarter. Revenues for the second quarter of
1995 include the corporation's $8.8 million share of National Basketball
Association expansion fees. Last year's second quarter revenues included
$4.8 million of business interruption insurance income as discussed in Note
15 to the 1994 financial statements.
Year-to-date revenues were $418.7 million, an increase of $10.4
million over the same period last year. The International Communications,
Mobile Communications and Entertainment segments all reported revenue
growth during this period, whereas Technology Services segment revenues
were lower than last year.
Operating income increased $3.0 million from the second quarter of
1994. The Mobile Communications and Entertainment segments reported growth
in operating income offset by lower operating results for the International
Communications and Technology Services segments. The NBA expansion revenues
contributed directly to operating income as there were no related operating
expenses. This year's second quarter also includes a $3.3 million credit
for Inmarsat-related costs which were over-accrued during 1994 and the
first quarter of 1995 and a $2.7 million benefit plan curtailment gain
resulting from the reduction of pension benefits and the elimination of
postretirement health care benefits for a group of employees. The second
quarter of 1994 included a $4.3 million charge ($4.1 million after tax, or
$0.08 per share) for merger and integration costs related to the merger
with Radiation Systems, Inc.
Operating income for the first half of 1995 decreased $4.1 million
as compared to the same period last year. The Mobile Communications segment
reported solid growth in operating income. The other segments reported
lower results this year.
Interest and other income increased $0.3 million in the second
quarter of 1995, and $1.1 million in the first half of 1995 as compared to
the same periods last year. This year's first quarter includes a $2.2
million gain from the sale of the corporation's interest in a
communications venture in Chile offset by a $0.9 million accrual for a
judgment in a lawsuit brought by a former employee of a subsidiary of the
corporation.
Page 8
<PAGE>
Net interest expense for the second quarter increased $5.4 million
over last year's second quarter and year-to-date net interest expense
increased $8.1 million over the first half of 1994. These increases are due
to increases in borrowings and interest rates and lower capitalized
interest. The corporation's borrowings have grown to meet capital
expenditure and investment requirements. Interest capitalized, primarily on
satellite construction projects, has declined due to the completion of
several INTELSAT satellites in the second half of 1994 and the first half
of 1995.
Segment Operating Results
As discussed in Note 15 to the 1994 financial statements, the
corporation reports operating results in four segments: International
Communications, Mobile Communications, Entertainment and Technology
Services. The method of allocating indirect corporate costs was changed in
1995. Segment operating results for 1994 have been restated for this
change.
<TABLE>
<CAPTION>
Results by Segment (in millions):
Quarter Ended June 30, Six Months Ended June 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
International Communications $ 71.2 $ 63.9 $ 141.8 $ 127.8
Mobile Communications 46.1 46.1 93.2 90.1
Entertainment 49.3 38.5 96.7 78.9
Technology Services 48.1 61.6 94.9 116.9
Eliminations and other (3.9) (2.3) (7.9) (5.4)
---- ---- ---- ----
Total revenues $ 210.8 $ 207.8 $ 418.7 $ 408.3
===== ===== ===== =====
OPERATING INCOME (LOSS)
International Communications $ 22.1 $ 26.2 $ 46.3 $ 50.4
Mobile Communications 17.6 11.0 30.2 22.5
Entertainment 6.3 5.4 3.1 8.0
Technology Services 6.5 9.8 9.1 14.6
--- --- --- ----
Total segment operating income 52.5 52.4 88.7 95.5
Merger and integration costs 0.0 (4.3) 0.0 (4.3)
Other corporate (7.6) (6.2) (14.0) (12.4)
---- ---- ----- -----
Total operating income $ 44.9 $ 41.9 $ 74.7 $ 78.8
==== ==== ==== ====
</TABLE>
International Communications
The International Communications segment includes the results of
COMSAT World Systems (CWS) and COMSAT International Ventures (CIV). CWS's
second quarter revenues increased $2.0 million over last year's second
quarter. Year-to-date revenues for CWS increased $3.0 million over the
first half of 1994. These improvements were primarily attributable to
growth in digital circuits and the corporation's share of INTELSAT revenues
which more than offset rate reductions under long-term agreements. CIV's
second quarter revenues grew $5.3 million and its year-to-date revenues
grew $11.0 million over the same periods last year. Approximately half of
this growth came from improved results for the corporation's subsidiaries
in Argentina and Brazil. The balance of the revenue improvement is
primarily attributable to a subsidiary which was not consolidated until the
fourth quarter of 1994.
Page 9
<PAGE>
Operating income for the segment declined $4.1 million in both the
second quarter and the first half of 1995 as compared to the same periods
last year. CWS's operating expenses for last year's second quarter included
its $2.7 million share of a credit to pension expense recorded by INTELSAT.
Absent this adjustment, CWS's operating income increased $1.5 million in
the second quarter and increased $3.5 million in the first half of the year
relative to the same periods in 1994. These changes are primarily due to
the increase in revenues and a decline in operating expenses offset
somewhat by higher depreciation. The decline in operating expenses was due
in part to a reduction in staff late last year and other cost containment
measures. The increase in depreciation was due to five new INTELSAT
satellites that were launched and placed in service in 1994 and the
first half of this year. CIV's operating income fell $2.9 million in the
second quarter and $4.9 million in the first half of 1995 primarily due to
the operating losses for the newly consolidated subsidiary.
Mobile Communications
Mobile Communications segment second quarter revenues were even
with last year's second quarter. Year-to-date revenues increased $3.1
million over the same period last year primarily due to a growth in
Inmarsat-C data services and the provision of additional space segment to
AMSC and IDB. These improvements were partially offset by a decline in
telephone revenues due to traffic shifts from higher-priced analog services
to lower-priced digital services. However, overall telephone traffic
increased approximately 7% this year versus the first half of 1994, with
more than 6,800 digital standard M and B terminals now commissioned.
Second quarter operating income increased $6.6 million and
year-to-date operating income increased $7.7 million over the same periods
in 1994. These increases are largely due to a $3.3 million credit recorded
in the second quarter of 1995 for Inmarsat-related costs which were
over-accrued during 1994 and the first quarter of 1995. Additionally, both
the quarter and the year-to-date periods benefited from an increased share
of Inmarsat operating results. The corporation increased its ownership
share of Inmarsat from 22.4% at December 31, 1994 to 24.0% as of June 30,
1995. Operating margins from the improvement in revenues for the first half
of the year also contributed to the year-to-date growth in operating
results. All of these improvements were partially offset by higher
depreciation expense related to upgrades to earth stations and a higher
share of Inmarsat's depreciation expense.
Entertainment
Second quarter revenues for the Entertainment segment increased
$10.8 million and year-to-date revenues increased $17.8 million as compared
to the same periods last year. Revenues for the second quarter of 1995
include the corporation's $8.8 million share of NBA expansion fees
discussed in Note 6 to the accompanying financial statements. The remainder
of the revenue improvement is primarily attributable to increased revenues
from the On Command Video (OCV) business which more than offset lower
revenues for the Satellite Cinema business. The number of rooms installed
with the OCV system increased by 121,000 rooms from June 30, 1994, to a
total of 323,000 at June 30, 1995. An additional 119,000 rooms are
Page 10
<PAGE>
scheduled for OCV system installation, including 23,000 Satellite Cinema
rooms scheduled for conversion. The revenue improvements for the hotel
in-room entertainment business were partially offset by lower reported
revenues from the NBC television distribution contract. Revenues recorded
for this contract have dropped by $2.9 million per quarter because the
contract has entered an option period.
Operating income for this segment increased $0.9 million in the second
quarter versus last year's second quarter, whereas operating income fell
$4.9 million in the first six months of the year compared to the first half
of 1994. The NBA expansion revenues contributed directly to operating
income as there were no related operating expenses. Absent the expansion
revenues, operating results decreased due to declining margins in the
Satellite Cinema business, the reduction in reported revenues from the NBC
contract and due to overhead costs for Beacon Communications Corp.
(Beacon). The corporation acquired Beacon in December 1994 as discussed in
Note 6 to the 1994 financial statements. Beacon overhead costs have totaled
approximately $2.0 million per quarter.
Technology Services
Revenues for the Technology Services segment declined $13.5
million in the second quarter of 1995 and $22.0 million in the first half
of 1995 as compared to the same periods last year. Revenues increased this
year from satellite services for classified government users, earth station
component sales and Intelesys, a VSAT manufacturer acquired in January
1995. These revenue improvements were more than offset by the lack of
recurring revenues from several large international and U.S. Government
projects which were completed in 1994 and delays in sales of microwave and
cellular antennas. Additionally, the second quarter of 1994 included a $4.8
million insurance settlement.
Operating income was down $3.3 million and $5.5 million for the
second quarter and first half of 1995, respectively, as compared to the
same periods last year. These declines were primarily due to lower revenues
and to new product development costs associated with the newly acquired
VSAT business. Additionally, operating income for this year's second
quarter includes a $2.7 million credit for a benefit plan curtailment gain
related to the reduction of pension benefits and the elimination of
postretirement health care benefits for a group of employees. Revenues and
operating income were lower than expected due to the cancellation late last
year of an $18 million contract for satellite earth stations in Kuwait.
Outlook
In July 1995, the corporation announced plans, subject to FCC
review, to integrate its mobile communications businesses with COMSAT's
other international communications services businesses. The corporation
also announced that it has retained investment counsel to evaluate ways to
unlock the value of the company's entertainment assets, to raise capital
specifically to fund entertainment growth opportunities and potentially to
monetize a portion of COMSAT's investment in these assets.
Page 11
<PAGE>
In August 1995, the corporation increased its ownership percentage
in OCV to approximately 85% through the contribution to OCV of
substantially all of the corporation's other hotel in-room entertainment
assets.
The corporation plans to record a restructuring charge in the
third quarter of 1995 related to the integration of its communications
businesses and restructuring of its hotel in-room entertainment businesses.
The corporation expects that the results for CWS will remain
strong for the remainder of 1995 although quarterly results will be
slightly less than this year's first two quarters. CIV will continue to
seek new investment opportunities in emerging countries and to utilize the
corporation's expertise to market a variety of products and services. CIV
will also concentrate on the growth of its existing ventures and
anticipates improvement in revenues and operating results from these
businesses.
The corporation expects to continue to face competition in its
Mobile Communications business, however, the continued commissioning of
digital terminals should sustain the growth in digital traffic. At the same
time, the corporation is making progress on developing new products and
services through its Mini-M and I-CO programs .
In the Entertainment segment, OCV will continue to install its systems
in hotel rooms which will boost revenues and increase depreciation expense
for the remainder of the year. Beacon is expected to release a new film in
the third quarter. The corporation plans to construct a new sports and
entertainment complex in Denver, Colorado. Arrangements for the complex are
not yet complete, therefore, groundbreaking will be delayed which will
delay the opening of the complex beyond the start of the 1997-98 season. On
July 1, 1995, the corporation acquired a National Hockey League (NHL)
franchise and related assets as discussed in Note 8 to the accompanying
financial statements. The NHL franchise is expected to make a significant
contribution to revenues of the Entertainment segment, but will probably
negatively impact operating results in the near term. The NBA has not
reached a ratified collective bargaining agreement with its players and the
players' union may be decertified as the bargaining agent for the players.
If no collective bargaining agreement is reached, the NBA may cancel some
or all of the 1995-96 season, which could adversely affect the financial
results of the Entertainment segment.
In the Technology Services segment, the corporation has been
successful in winning new contracts this year and expects to continue to
build its contract backlog throughout the rest of the year.
LIQUIDITY AND CAPITAL RESOURCES
The primary sources of cash in the second quarter of 1995 were
operations, borrowings and proceeds from the decrease in INTELSAT
ownership. Cash was expended primarily for property and equipment,
investments in businesses, acquisition of additional Inmarsat ownership,
repayment of long-term debt and quarterly dividends.
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<PAGE>
The corporation's working capital deficit of $18.8 million at
December 31, 1994 improved to positive working capital of $11.5 million at
June 30, 1995. This improvement is primarily due to decreases in accounts
payable, accrued liabilities and amounts due to related parties partially
offset by increases in commercial paper borrowings and other current
liabilities. Accounts payable and accrued liabilities decreased primarily
because of a reduction in deferred revenues related to the Denver Nuggets.
Receipts for season tickets and sponsorship agreements are recorded as
deferred revenues and recognized as games are played. Additionally, accrued
liabilities at December 31, 1994 included an accrual for a $9.1 million
payment in February 1995 to terminate the corporation's lease on its former
headquarters building in Washington, D.C. Amounts due related parties
decreased primarily due to a larger than normal payment to Inmarsat in the
first quarter for the corporation's share of satellite utilization costs.
The increase in other current liabilities is primarily due to income taxes
accrued for the first half of 1995.
In February 1995, INTELSAT issued $200.0 million of 8.125% notes.
The corporation has recorded its share of these notes as long-term debt.
The corporation received approximately $20.1 million of its share of the
proceeds and used this amount to repay commercial paper. The balance of the
proceeds was retained by INTELSAT for the corporation's share of satellite
construction costs.
The corporation has access to short- and long-term financing at
favorable rates. The corporation's borrowing activities are regulated by
the Federal Communications Commission. As of June 30, 1995, the corporation
had $130.9 million in commercial paper borrowings under a $200 million
commercial paper program.
As discussed in Note 7 to the 1994 financial statements and to
Note 5 to the accompanying financial statements, the corporation has a $100
million "medium-term note program." The corporation has issued $74.0
million of notes under this program. The proceeds of these notes have been
used to repay commercial paper.
In July 1995, COMSAT Capital I, L.P. issued $200 million of
Monthly Income Preferred Securities (MIPS). COMSAT Capital I, L.P. is a
limited partnership formed for the sole purpose of issuing the MIPS and
loaning the proceeds to COMSAT, the managing General Partner. The MIPS were
issued at a par value of $25 per share and an annual dividend rate of
8.125%. The MIPS are callable by the issuer after July 2000 at par value.
The proceeds of the MIPS were loaned to COMSAT under the terms of
a 8.125%, 30-year subordinated debenture agreement. This agreement allows
COMSAT to extend the maturity of the debentures until 2044, provided that
COMSAT satisfies certain covenants. The proceeds have been used to repay
commercial paper borrowings and the $75 million bank loan incurred in the
acquisition of the Nordiques.
Page 13
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Part II
OTHER INFORMATION
Item 1. Legal Proceedings
See Note 7 on page 6 of this Form 10-Q incorporated
herein by reference.
Item 2. Change in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
At the Corporation's Annual Meeting of Shareholders held
on May 19, 1995, all twelve of the Corporation's nominees
for directors were elected and the following matters were
approved:
o adoption of the 1995 Key Employee Stock Plan,
approved by a vote of 26,009,294 for, 6,947,759
against, and 556,267 abstentions, with 4,733,119
broker non-votes; and
o appointment of Deloitte & Touche LLP as
independent public accountants of the
Corporation for the fiscal year ending December
31, 1995, approved by a vote of 37,967,777 for,
128,899 withheld, and 149,763 abstentions.
A shareholder proposal requiring the reporting of
governmental service during the past five years of
certain of the Corporation's directors, officers and
consultants was defeated by a vote of 3,334,401 for,
28,305,219 against, and 1,510,027 abstentions, with
5,096,792 broker non-votes.
Item 5. Other Information
None
Item 6. (a) Exhibits
No. 4 - Instruments Defining the Rights of Security Holders,
including Indentures
(a) Limited Partnership Agreement of COMSAT
Capital I, L.P., dated as of July 18,
1995, relating to issuance of monthly
income preferred securities.
(b) Guarantee Agreement for Preferred
Securities of COMSAT Capital I, L.P.,
dated as of July 18, 1995.
(c) Indenture between Registrant and the First
National Bank of Chicago, as Trustee,
dated as of July 18, 1995.
Page 14
<PAGE>
Item 6. (a) Exhibits (continued)
No. 10 - Material Contracts
(a) Asset Purchase Agreement, dated as of May 24, 1995
between COMSAT Video Enterprises, Inc. and Le Club
de Hockey Les Nordiques, Societe en Commandite
(Limited Partnership).
No. 11 - Computation of Earnings Per Share
No. 27 - Financial Data Schedule
(b) Reports on Form 8-K
Press release dated May 25, 1995 describing an
agreement pursuant to which COMSAT Entertainment
Group, Inc., a wholly owned subsidiary of the
Corporation, would purchase a National Hockey
League franchise and related assets.
Page 15
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
COMSAT Corporation
By /s/ Allen E. Flower
-----------------------
Allen E. Flower
Controller
Date: August 11, 1995
Page 16
<PAGE>
EXHIBIT INDEX
Sequential
Exhibit No. Description Page Number
4(a) Limited Partnership Agreement of COMSAT 18
Capital I, L.P., dated as of July 18, 1995, relating
to issuance of monthly income preferred securities.
4(b) Guarantee Agreement for Preferred Securities of 69
COMSAT Capital I, L.P., dated as of July 18, 1995.
4(c) Indenture between Registrant and the First National 79
Bank of Chicago, as Trustee, dated as of July 18, 1995.
10(a) Asset Purchase Agreement, dated as of May 24, 1995 157
between COMSAT Video Enterprises, Inc. and Le Club
de Hockey Les Nordiques, Societe en Commandite
(Limited Partnership).
11 Computation of Earnings Per Share 187
27 Financial Data Schedule 189
Page 17
<PAGE>
EXHIBIT 4(a)
Page 18
<PAGE>
AMENDED AND RESTATED AGREEMENT
OF
LIMITED PARTNERSHIP
OF
COMSAT CAPITAL I, L.P.
Dated as of July 18, 1995
<PAGE>
TABLE OF CONTENTS
ARTICLE I
DEFINED TERMS
Section 1.1 Definitions................................................1
ARTICLE II
CONTINUATION OF THE PARTNERSHIP;
ADMISSION OF PREFERRED SECURITY HOLDERS
Section 2.1 Continuation of the Partnership............................8
Section 2.2 Name ......................................................8
Section 2.3 Business of the Partnership................................8
Section 2.4 Term ......................................................9
Section 2.5 Registered Agent and Office................................9
Section 2.6 Principal Place of Business................................9
Section 2.7 Name and Business Address of General
Partner...............................................9
Section 2.8 Qualification to Do Business...............................9
Section 2.9 Admission of Holders of Preferred
Securities as Limited Partners........................9
ARTICLE III
CAPITAL CONTRIBUTIONS; REPRESENTATION OF
PREFERRED SECURITY HOLDER'S INTEREST; CAPITAL ACCOUNTS
Section 3.1 Capital Contributions......................................10
Section 3.2 Preferred Security Holder's Interest
Represented by LP Certificate.........................10
Section 3.3 Capital Accounts...........................................11
Section 3.4 Interest on Capital Contributions..........................11
Section 3.5 Withdrawal and Return of Capital
Contributions.........................................11
ARTICLE IV
ALLOCATIONS
Section 4.1 Profits and Losses.........................................11
Section 4.2 Special Allocations........................................13
Section 4.3 Allocations for Income Tax Purposes........................14
Section 4.4 Withholding................................................14
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ARTICLE V
DIVIDENDS AND DISTRIBUTIONS
Section 5.1 Dividends..................................................15
Section 5.2 Limitations on Distributions...............................15
ARTICLE VI
ISSUANCE OF PREFERRED SECURITIES
Section 6.1 General Provisions Regarding Preferred
Securities............................................15
Section 6.2 Preferred Securities.......................................17
ARTICLE VII
BOOKS OF ACCOUNT, RECORDS AND REPORTS
Section 7.1 Books and Records..........................................24
Section 7.2 Accounting Method..........................................24
ARTICLE VIII
POWERS, RIGHTS AND DUTIES
OF THE LIMITED PARTNERS
Section 8.1 Limitations................................................25
Section 8.2 Liability..................................................25
Section 8.3 Priority...................................................25
ARTICLE IX
POWERS, RIGHTS AND DUTIES
OF THE GENERAL PARTNER
Section 9.1 Authority..................................................25
Section 9.2 Powers and Duties of General Partner.......................25
Section 9.3 Expenses Payable by General Partner........................27
Section 9.4 Liability..................................................27
Section 9.5 Exculpation................................................27
Section 9.6 Fiduciary Duty.............................................28
Section 9.7 [Intentionally Omitted.]...................................29
Section 9.8 Investment Company or Tax Actions..........................29
Section 9.9 Outside Businesses.........................................29
Section 9.10 Limits on General Partner's Powers.........................30
Section 9.11 Tax Matters Partner........................................31
Section 9.12 Merger, Consolidation or Amalgamation of
the Partnership.......................................32
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ARTICLE X
TRANSFERS OF INTERESTS BY PARTNERS
Section 10.1 Transfer of Interests.....................................33
Section 10.2 Transfer of LP Certificates...............................33
Section 10.3 Persons Deemed Preferred Security
Holders...............................................34
Section 10.4 Book-Entry Interests......................................34
Section 10.5 Notices to Clearing Agency................................35
Section 10.6 Appointment of Successor Clearing Agency..................35
Section 10.7 Definitive LP Certificates; Appointment
of Paying Agent.......................................35
ARTICLE XI
WITHDRAWAL; DISSOLUTION;
LIQUIDATION AND DISTRIBUTION OF ASSETS
Section 11.1 Withdrawal of Partners....................................36
Section 11.2 Dissolution of the Partnership............................36
Section 11.3 Liquidation...............................................38
Section 11.4 Distribution in Liquidation...............................39
Section 11.5 Rights of Limited Partners................................39
Section 11.6 Termination...............................................39
ARTICLE XII
AMENDMENTS AND MEETINGS
Section 12.1 Amendments................................................39
Section 12.2 Amendment of Certificate..................................40
Section 12.3 Meetings of Partners......................................40
ARTICLE XIII
MISCELLANEOUS
Section 13.1 Notices...................................................41
Section 13.2 Power of Attorney.........................................42
Section 13.3 Entire Agreement..........................................42
Section 13.4 GOVERNING LAW.............................................42
Section 13.5 Effect....................................................42
Section 13.6 Pronouns and Number.......................................42
Section 13.7 Captions..................................................43
Section 13.8 Partial Enforceability....................................43
Section 13.9 Counterparts..............................................43
Section 13.10 Waiver of Partition.......................................43
Section 13.11 Remedies..................................................43
ANNEX A - Form of LP Certificate Evidencing Preferred Securities
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<PAGE>
AMENDED AND RESTATED AGREEMENT
OF LIMITED PARTNERSHIP
OF
COMSAT CAPITAL I, L.P.
AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP of COMSAT
Capital I, L.P., a Delaware limited partnership (the "Partnership"), dated
as of July 18, 1995, among COMSAT Corporation, a District of Columbia
corporation ("COMSAT"), as the general partner, the Partnership and COMSAT
SPV, Inc., a Delaware corporation, as the initial limited partner (the
"Initial Limited Partner") and such other Persons (as defined herein) who
become Limited Partners (as defined herein) as provided herein.
WHEREAS, COMSAT and the Initial Limited Partner entered into a
Limited Partnership Agreement, dated as of May 22, 1995 (the "Original
Limited Partnership Agreement");
WHEREAS, the Certificate of Limited Partnership of the
Partnership was filed with the Office of the Secretary of State of the
State of Delaware on May 22, 1995; and
WHEREAS, the Partners desire to continue the Partnership under
the Act (as defined herein) and to amend and restate the Original Limited
Partnership Agreement in its entirety.
NOW, THEREFORE, in consideration of the agreements and
obligations set forth herein and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
hereto agree to amend and restate the Original Limited Partnership
Agreement as follows:
ARTICLE I
DEFINED TERMS
Section 1.1 Definitions. Unless the context otherwise requires,
the terms defined in this Article I shall, for the purposes of this
Agreement, have the meanings herein specified.
"1940 Act" means the Investment Company Act of 1940, as amended.
"Act" means the Delaware Revised Uniform Limited Partnership Act,
as amended from time to time.
<PAGE>
"Additional Dividends" means Dividends that shall accrue on any
Dividend arrearages in respect of the Preferred Securities (as defined
herein) at the rate of 81/8% per annum, compounded monthly.
"Additional Interest" means (i) interest that shall accrue on any
interest on the Subordinated Debentures (as defined herein) that is not
paid when due or not paid during an extension of an interest payment
period, which in either case shall accrue at the rate of 81/8% per annum
compounded monthly, and (ii) an amount equal to any amount that the
Partnership would be required to pay in taxes, duties, assessments or
governmental charges of whatever nature (other than withholding taxes)
imposed by the United States or any other taxing authority such that the
net amounts received and retained by the Partnership after paying any such
taxes, duties, assessments or governmental charges will not be less than
the amounts the Partnership would have received had no such taxes, duties,
assessments or governmental charges been imposed.
"Affiliate" means, with respect to a specified Person, (a) any
Person directly or indirectly owning, controlling or holding with power to
vote 10% or more of the outstanding voting securities or other ownership
interests of the specified Person, (b) any Person 10% or more of whose
outstanding voting securities or other ownership interests are directly or
indirectly owned, controlled or held with power to vote by the specified
Person, (c) any Person directly or indirectly controlling, controlled by,
or under common control with the specified Person, (d) a partnership in
which the specified Person is a general partner, (e) any officer or
director of the specified Person and (f) if the specified Person is an
officer, director, general partner or employee, any other entity for which
the specified Person acts in any such capacity.
"Agreement" means this Amended and Restated Agreement of Limited
Partnership, as amended, modified, supplemented or restated from time to
time in accordance with its terms.
"Book-Entry Interest" means a beneficial interest in the LP
Certificates (as defined herein), ownership of which shall be recorded and
transfers of which shall be made through the book-entry system of a
Clearing Agency (as defined herein) as described in Section 10.4.
"Business Day" means any day other than a day on which banking
institutions in The City of New York are authorized or required by law or
executive order to close.
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<PAGE>
"Capital Account" has the meaning set forth in Section 3.3.
"Certificate" means the Certificate of Limited Partnership of the
Partnership filed with the Secretary of State of the State of Delaware on
May 22, 1995, and any and all amendments thereto and restatements thereof.
"Change in 1940 Act Law" has the meaning set forth in the
definition of "Investment Company Event" below.
"Clearing Agency" means an organization registered as a "Clearing
Agency" pursuant to Section 17A of the Exchange Act (as defined herein)
that is acting as depositary for the Preferred Securities and in whose name
(or nominee's name) shall be registered one or more global LP Certificates
and which shall undertake to effect book-entry transfers and pledges of the
Preferred Securities.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book- entry transfers and pledges of interests in securities
deposited with the Clearing Agency.
"Closing Date" means the "Time of Delivery" under the
Underwriting Agreement (as defined herein).
"Code" means the Internal Revenue Code of 1986, as amended from
time to time, or any corresponding federal tax statute enacted after the
date of this Agreement. A reference to a specific section (ss.) of the Code
refers not only to such specific section, but also to any corresponding
provision of any federal tax statute enacted after the date of this
Agreement, as such specific section or corresponding provision is in effect
on the date of application of the provisions of this Agreement containing
such reference.
"COMSAT" has the meaning set forth in the introductory paragraph
of this Agreement.
"COMSAT Common Stock" means the common stock, without par value,
of COMSAT.
"Covered Person" means any officers, directors, shareholders,
partners, employees, representatives or agents of the General Partner or
its Affiliates, or any employee or agent of the Partnership or its
Affiliates.
"Definitive LP Certificates" has the meaning set forth in Section
10.4 of this Agreement.
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<PAGE>
"Dividends" means the cumulative cash distribu- tions from the
Partnership with respect to the Interests (as defined herein) represented
by the Preferred Securities, accruing from the Closing Date and payable
monthly in arrears on the last day of each calendar month of each year,
commencing July 31, 1995, pursuant to Section 6.2.
"Dividend Payment Date" has the meaning set forth in Section
6.2(b)(ii) of this Agreement.
"DTC" means The Depository Trust Company, the initial Clearing
Agency.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Fiscal Period" means each calendar month.
"Fiscal Year" means (i) the period commencing upon the formation
of the Partnership and ending on December 31, 1995, and (ii) any subsequent
twelve (12) month period commencing on January 1 and ending on December 31.
"General Partner" means COMSAT in its capacity as general partner
of the Partnership, its permitted suc- cessors, or any successor general
partner in the Partnership admitted as such pursuant to the applicable
provisions of this Agreement.
"Guarantee" means the Guarantee Agreement dated as of July 18,
1995 of COMSAT in favor of the Preferred Security Holders (as defined
herein) with respect to the Preferred Securities.
"Holder" or "Preferred Security Holder" means a Limited Partner
in whose name an LP Certificate representing Preferred Securities is
registered.
"Indenture" means the Indenture, dated as of July 18, 1995, as
amended or supplemented from time to time, between COMSAT and the Trustee
and any supplemental Indenture thereto entered into by COMSAT pursuant to
which Subordinated Debentures of COMSAT are to be issued.
"Initial Limited Partner" has the meaning set forth in the
introductory paragraph of this Agreement.
"Interest" means the entire ownership interest of a Partner in
the Partnership at any particular time, including, without limitation, its
interest in the capital, profits, losses and distributions of the
Partnership.
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<PAGE>
"Investment Company Event" means the occurrence of a change in
law or regulation or a written change in interpretation or application of
law or regulation by any legislative body, court, governmental agency or
regulatory authority (a "Change in 1940 Act Law") to the effect that the
Partnership is or will be considered an "investment company" which is
required to be registered under the Investment Company Act of 1940, as
amended (the "1940 Act"), which Change in 1940 Act Law becomes effective on
or after July 13, 1995; provided, however, that no Investment Company Event
shall be deemed to have occurred if the General Partner obtains a written
opinion of nationally recognized independent counsel to the Partnership
experienced in practice under the 1940 Act to the effect that,
notwithstanding such Change in 1940 Act Law, the Partnership is not
required to be registered as an "investment company" within the meaning of
the 1940 Act.
"Limited Partner" means any Person who is admitted to the
Partnership as a Limited Partner pursuant to the terms of this Agreement.
"Liquidation Distribution" has the meaning set forth in Section
4.1(c).
"Liquidator" has the meaning specified in Section 11.3 of this
Agreement.
"LP Certificate" means a certificate substantially in the form
attached hereto as Annex A, evidencing the Preferred Securities held by a
Limited Partner.
"Majority (or other stated Percentage) in Liquida- tion
Preference" means Holder(s) of Preferred Securities who are the record
owners of Preferred Securities whose aggregate liquidation preferences
represent not less than 50% (or not less than the relevant stated
percentage) of the aggregate liquidation preference of all Preferred
Securities then outstanding.
"Net Income" and "Net Loss", respectively, for any Fiscal Period
means the income and loss, respectively, of the Partnership for such Fiscal
Period as determined in accordance with the method of accounting followed
by the Partnership for federal income tax purposes, including, for all
purposes, any income exempt from tax and any expenditures of the
Partnership which are described in Code Section 705(a)(2)(B); provided,
however, that any item allocated under Section 4.2 shall be excluded from
the computation of Net Income and Net Loss.
"Notice of Redemption" has the meaning set forth in Section
6.2(d)(i) of this Agreement.
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<PAGE>
"NYSE" means the New York Stock Exchange, Inc.
"Original Limited Partnership Agreement" has the meaning set
forth in the recitals to this Agreement.
"Partners" means the General Partner and the Limited Partners,
collectively, where no distinction is required by the context in which the
term is used.
"Partnership" means the limited partnership formed under the Act
pursuant to the Original Limited Partnership Agreement upon filing of the
Certificate, and continued pursuant to this Agreement.
"Person" means any individual, corporation, association,
partnership, trust or other entity.
"Power of Attorney" means the Power of Attorney granted pursuant
to Section 13.2.
"Preferred Securities" means the Interests of Limited Partners
described in Article VI.
"Preferred Security Owner" means, with respect to a Book-Entry
Interest, a Person who is the beneficial owner of such Book-Entry Interest,
as reflected on the books of the Clearing Agency, or on the books of a
Person maintaining an account with such Clearing Agency (directly as a
Clearing Agency Participant or as an indirect participant, in each case in
accordance with the rules of such Clearing Agency or Clearing Agency
Participant).
"Purchase Price" for any Preferred Security means the amount paid
per Preferred Security pursuant to the Underwriting Agreement, payment of
which shall constitute the contribution to capital contemplated by Section
3.1(c).
"Redemption Price" has the meaning set forth in Section 6.2(c) of
this Agreement.
"Securities Act" means the Securities Act of 1933, as amended.
"Special Representative" means the Person appointed by the
Preferred Security Holders pursuant to Section 6.2(f) of this Agreement.
"Subordinated Debentures" means the 81/8% Junior Subordinated
Deferrable Interest Debentures of COMSAT issued pursuant to the Indenture
and sold by COMSAT to the Partnership in connection with the issuance and
sale by the Partnership of the Preferred Securities.
-6-
<PAGE>
"Successor Securities" has the meaning set forth in Section 9.12
of this Agreement.
"Tax Event" means that the General Partner shall have obtained an
opinion of nationally recognized independent tax counsel experienced in
such matters to the effect that, as a result of (a) any amendment to, or
change (including any announced prospective change) in, the laws (or any
regulations thereunder) of the United States or any political subdivision
or taxing authority thereof or therein, (b) any amendment to or change in
an interpretation or application of such laws or regulations by any
legislative body, court, governmental agency or regulatory authority
(including the enactment of any legislation and the publication of any
judicial decision or regulatory determination on or after July 13, 1995),
or (c) any interpretation or pronouncement that provides for a position
with respect to such laws or regulations that differs from the generally
accepted position on July 13, 1995, which amendment or change is effective
or such interpretation or pronouncement is announced on or after July 13,
1995, there is more than an insubstantial risk that (i) the Partnership is
subject to federal income tax with respect to interest received on the
Subordinated Debentures, (ii) interest payable to the Partnership on the
Subordinated Debentures will not be deductible for federal income tax
purposes or (iii) the Partnership is subject to more than a de minimis
amount of other taxes, duties or other governmental charges.
"Tax Matters Partner" means the General Partner designated as
such in Section 9.11 hereof.
"Transfer Agent" means The First National Bank of Chicago and its
successors and assigns.
"Treasury Regulations" means the income tax regulations,
including temporary regulations, promulgated under the Code, as such
regulations may be amended from time to time (including corresponding
provisions of succeeding regulations).
"Trustee" means The First National Bank of Chicago, the trustee
under the Indenture, and its successors and assigns.
"Underwriters" means the underwriters named in Schedule I to the
Underwriting Agreement.
"Underwriting Agreement" means the Underwriting Agreement dated
July 13, 1995, among COMSAT, the Partnership and the several Underwriters
named therein relating to the issuance of the Preferred Securities.
-7-
<PAGE>
ARTICLE II
CONTINUATION OF THE PARTNERSHIP;
ADMISSION OF PREFERRED SECURITY HOLDERS
Section 2.1 Continuation of the Partnership. The parties hereto
agree to continue the Partnership in accordance with the terms of this
Agreement. The General Partner, for itself and as agent for the Limited
Partners, shall accomplish all filing, recording, publishing and other acts
necessary or appropriate for effectiveness of this Agreement and for
compliance with all the requirements for the continuation of the
Partnership as a limited partnership under the Act and under all other laws
of the State of Delaware or such other jurisdictions in which the General
Partner determines that the Partnership may conduct busi- ness. The rights
and duties of the Partners shall be as provided herein and, subject to the
terms hereof, in the Act.
Section 2.2 Name. The name of the Partnership is "COMSAT Capital
I, L.P.", as such name may be modified from time to time by the General
Partner following written notice to the Limited Partners.
Section 2.3 Business of the Partnership. The purposes of the
Partnership are (a) to issue limited partnership interests in the
Partnership in the form of Preferred Securities, and to use the proceeds
therefrom and the capital contributed to the Partnership by the General
Partner to purchase Subordinated Debentures and (b) except as otherwise
limited herein, to enter into, make and perform all contracts and other
undertakings, and engage in all activities and transactions as the General
Partner may reasonably deem necessary or advisable for the carrying out of
the foregoing purposes of the Partnership. The Partnership may not conduct
any other business or operations except as contemplated by the preceding
sentence.
Section 2.4 Term. The term of the Partnership commenced upon the
filing of the Certificate in the Office of the Secretary of State of the
State of Delaware and shall continue until December 31, 2094, unless
dissolved before such date in accordance with the provisions of this
Agreement.
Section 2.5 Registered Agent and Office. The Partnership's
registered agent and office in Delaware shall be The Corporation Trust
Company, Corporation Trust Center, 1209 Orange Street, Wilmington, New
Castle County, Delaware 19801. At any time, the General Partner may
designate another registered agent and/or registered office.
-8-
<PAGE>
Section 2.6 Principal Place of Business. The principal place of
business of the Partnership shall be c/o COMSAT Corporation, 6560 Rock
Spring Drive, Bethesda, MD 20817-1146. Upon ten days' written notice to the
Partners, the General Partner may change the location of the Partnership's
principal place of business, provided that such change has no material
adverse effect upon any Partner.
Section 2.7 Name and Business Address of General Partner. The
name and address of the General Partner are as follows:
COMSAT Corporation
6560 Rock Spring Drive
Bethesda, Maryland 20817-1146
Attention: Chief Financial Officer
The General Partner may change its name or business address from
time to time, in which event the General Partner shall promptly notify the
Limited Partners of any such change.
Section 2.8 Qualification to Do Business. The General Partner
shall cause the Partnership to become qualified, formed or registered
under the applicable qualification, fictitious name or similar laws of
any jurisdiction in which the Partnership transacts business.
Section 2.9 Admission of Holders of Preferred Securities as
Limited Partners.
(a) Without execution of this Agreement, upon the acquisition of
an LP Certificate by a Person, whether by purchase, gift, devise or
otherwise, which acquisition shall be deemed to constitute a request by
such Person that the books and records of the Partnership reflect such
Person's admission as a Limited Partner, such Person shall be admitted to
the Partnership as a Limited Partner and shall become bound by this
Agreement.
(b) Following the first admission of a Preferred Security Holder
to the Partnership as a Limited Partner, the Initial Limited Partner shall
receive the return of its capital contribution without interest or
deduction and will cease to be a Limited Partner.
(c) The name and mailing address of each Partner and the amount
contributed by such Partner to the capital of the Partnership shall be
listed on the books and records of the Partnership. The General Partner
shall be required to update the books and records from time to time as
necessary to accurately reflect such information.
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<PAGE>
ARTICLE III
CAPITAL CONTRIBUTIONS; REPRESENTATION OF
PREFERRED SECURITY HOLDER'S INTEREST; CAPITAL ACCOUNTS
Section 3.1 Capital Contributions.
(a) The General Partner has, on or prior to the Closing Date,
contributed an aggregate of $100 to the capital of the Partnership. The
General Partner shall, on or prior to the Closing Date, make such
additional capital contribution as is necessary for the General Partner to
have contributed an aggregate of 3% of the capital contributed by all
Partners as of the Closing Date.
(b) The Initial Limited Partner has, prior to the date hereof,
contributed the amount of $100 to the capital of the Partnership, which
amount will be returned to the Initial Limited Partner as contemplated by
Section 2.9(b).
(c) On the Closing Date, each Person who acquires a Preferred
Security from the Partnership shall, as the consideration for the
acquisition of such Preferred Security, contribute to the capital of the
Partnership an amount in cash equal to the Purchase Price for such
Preferred Security.
(d) No Limited Partner shall at any time be required to make any
additional capital contributions to the Partnership, except as may be
required by law.
Section 3.2 Preferred Security Holder's Interest Represented by
LP Certificate. A Preferred Security Holder's Interest shall be represented
by the LP Certificate held by or on behalf of such Holder. Each Preferred
Security Holder's respective ownership of Preferred Securities shall be set
forth on the books and records of the Partnership. Each Holder hereby
agrees that its Interest represented by its LP Certificate shall for all
purposes be personal property. A Preferred Security Holder shall have no
interest in specific Partnership property.
Section 3.3 Capital Accounts. An individual capital account (a
"Capital Account") shall be established and maintained on the books of the
Partnership for each Partner in compliance with Treasury Regulation ss.ss.
1.704-1(b)(2)(iv) and 1.704-2, as amended. Subject to the preceding
sentence, each Capital Account will be increased by the amount of the
capital contributions (including the Purchase Price) made by, and the Net
Income allocated to, such Partner (or predecessor in interest) and reduced
by the amount of distributions made by the Partnership, and Net Losses
allocated, to the Partner (or
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<PAGE>
predecessor thereof). In addition, a Partner's Capital Account
shall be increased or decreased, as the case may be, for any items
specially allocated to such Partner under Section 4.2 of this Agreement,
and, to the extent permitted under such Treasury Regulation, the General
Partner's Capital Account will be increased to the extent the General
Partner pays any costs or expenses of the Partnership directly out of the
General Partner's own funds.
Section 3.4 Interest on Capital Contributions. Except as provided
herein, no Partner shall be entitled to interest on or with respect to any
capital contribution to the Partnership.
Section 3.5 Withdrawal and Return of Capital Contributions.
Subject to Sections 2.9(b) and 3.1(b), no Partner shall be entitled to
withdraw any part of such Partner's capital contribution to the Partnership
or be entitled to receive any distributions from the Partnership, except as
provided in this Agreement.
ARTICLE IV
ALLOCATIONS
Section 4.1 Profits and Losses. After giving effect to the
special allocations set forth in Section 4.2,
(a) the Partnership's Net Income for each Fiscal Period of the
Partnership shall be allocated as follows:
(i) First, to each Holder, as of the close of business on the
record date for such Fiscal Period, an amount of Net Income equal to the
excess of (x) the Dividends accrued on such Holder's Preferred Securities
from the Closing Date through and including the close of business on the
record date for such Fiscal Period, including any Additional Dividends
payable with respect thereto, over (y) the amount of Net Income allocated
to each such Holder (or predecessor thereof) pursuant to this Section
4.1(a)(i) in all prior Fiscal Periods, including any Additional Dividends
payable with respect thereto.
(ii) Second, to each Holder, as of the close of business on the
record date for such Fiscal Period, an amount of Net Income equal to the
excess of (x) all Net Losses allocated to each such Holder (or predecessor
thereof) from the date of issuance of each of such Holder's Preferred
Securities through and including the close of such Fiscal Period pursuant
to Section 4.1(b)(ii) over (y) the amount of Net Income allocated
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<PAGE>
to such Holder (or predecessor thereof) pursuant to this Section
4.1(a)(ii) in all prior Fiscal Periods.
(iii) Any remaining Net Income shall be allocated to the General
Partner.
(b) The Partnership's Net Loss for any Fiscal Period shall be
allocated as follows:
(i) First, to the General Partner until the balance of the
General Partner's Capital Account is reduced to zero.
(ii) Second, among the Holders in proportion to their respective
aggregate Capital Account balances, until the Capital Account balances of
such Holders are reduced to zero; provided, however, that the General
Partner shall make appropriate adjustments in these allocations, in
accordance with Section 4.1(c), with respect to any Preferred Securities as
to which Net Income has been allocated with respect to Dividends that
accrued but were not paid.
(iii) Any remaining Net Loss shall be allocated to the General
Partner.
(c) The General Partner shall make such changes to the
allocations in Sections 4.1(a) and 4.1(b) as it deems reasonably necessary
so that, in the year of the Partnership's dissolution, winding-up or
termination, amounts distributed to the Preferred Security Holders in
accordance with Section 11.4(a) shall equal the aggregate of the stated
liquidation preference of $25 per Preferred Security and accrued and unpaid
Dividends to the date of payment, including any Additional Dividends
accrued thereon (the "Liquidation Distribution"), unless, in connection
with such dissolution, winding-up or termination, Subordinated Debentures
in a principal amount equal to the aggregate liquidation preference of the
Preferred Securities have been distributed on a pro rata basis to the
Holders.
Section 4.2 Special Allocations.
(a) All expenditures described in Code Section 705(a)(2)(B) and
Section 9.3 hereof that are incurred by, or on behalf of, the Partnership
shall be allocated entirely to the General Partner.
(b) In the event any Holder unexpectedly receives any
adjustments, allocations or distributions described in Treasury Regulation
ss. 1.704-1(b)(2)(ii)(d)(4), (5) or (6), items of Partnership Net Income
shall be specially allocated to such Holder in an amount and manner
sufficient to elimi-
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nate, to the extent required by the Treasury Regulations, the
deficit, if any, in the balance of the Capital Account of such Holder as
quickly as possible. This Section 4.2(b) is intended to comply with the
qualified income offset provision in ss. 1.704-1(b)(2)(ii)(d) of the
Treasury Regulations.
(c) For purposes of determining the profits, losses or any other
items allocable to any period, profits, losses and any such other items
shall be determined on a daily, monthly or other basis, as determined by
the General Partner using any method that is permissible under ss. 706 of
the Code and the Treasury Regulations promulgated thereunder. Unless
otherwise specified, such profits, losses or other items shall be
determined for each Fiscal Period.
(d) The Partners and Holders, by becoming parties to this
Agreement, either by execution hereof or pursuant to Section 2.9, will be
deemed to be aware of the income tax consequences of the allocations made
by this Article IV and will be deemed to have agreed to be bound by the
provisions of this Article IV in reporting their shares of Partnership Net
Income and Net Loss for U.S. federal income tax purposes.
(e) Notwithstanding anything to the contrary that may be
expressed or implied in this Article IV, the interest of the General
Partner in each item of income, gain, loss, deduction and credit will be
equal to at least (i) at any time that aggregate capital contributions to
the Partnership are equal to or less than $50,000,000, 1% of each such item
and (ii) at any time that aggregate capital contributions to the
Partnership are greater than $50,000,000, 1% of each such item, multiplied
by a fraction (not exceeding one and not less than 0.2), the numerator of
which is $50,000,000 and the denominator of which is the lesser of the
aggregate Capital Account balances of the Capital Accounts of all Partners
at such time and the aggregate capital contributions to the Partnership of
all Partners at such time.
(f) The Partners intend that the allocations under Section 4.1
conform to Treasury Regulations ss.ss. 1.704-1(b) and 1.704-2 (including,
without limitation, the minimum gain chargeback, chargeback of partner
nonrecourse debt minimum gain, qualified income offset and partner
nonrecourse debt provisions of such Treasury Regulations), and the
General Partner shall make such changes in the allocations under Section
4.1 as it believes are reasonably necessary to meet the requirements of
such Treasury Regulations.
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(g) Solely for the purpose of adjusting the Capital Accounts of
the Partners, and not for tax purposes, if any property is distributed in
kind to any Partner, the difference between its fair market value and its
book value at the time of distribution shall be treated as gain or loss
recognized by the Partnership and allocated pursuant to the provisions of
Section 4.1.
(h) In the event of a Code Section 708(b)(1)(B) termination, or a
pro rata liquidating distribution of the Subordinated Debentures pursuant
to Section 11.4 hereof, the fair market value of the Subordinated
Debentures held by the Partnership shall be deemed to be the principal
amount thereof.
Section 4.3 Allocations for Income Tax Purposes. The income,
gains, losses, deductions and credits of the Partnership shall be allocated
in the same manner as the items entering into the computation of Net Income
and Net Loss are allocated under Sections 4.1 and 4.2; provided, however,
that solely for federal, state and local income and franchise tax purposes,
but not for book or Capital Account purposes, income, gain, loss and
deductions with respect to any property properly carried on the
Partnership's books at a value other than the tax basis of such property
shall be allocated in a manner determined in the General Partner's
discretion, so as to take into account (consistently with Code Section
704(c) principles) the difference between such property's book value and
its tax basis. Notwithstanding anything to the contrary set forth in this
Agreement, the General Partner is authorized to modify the allocations of
this Section 4.3, and Sections 4.1 and 4.2, if necessary or appropriate, in
the General Partner's sole discretion, for the allocations to fairly
reflect the economic gain, income or loss to each of the Partners, or as
otherwise required by the Code or the Treasury Regulations.
Section 4.4 Withholding. The Partnership shall comply with
withholding requirements under federal, state and local law and shall remit
amounts withheld to and file required forms with applicable jurisdictions.
To the extent that the Partnership is required to withhold and pay over any
amounts to any authority with respect to distributions or allocations to
any Partner, the amount withheld shall be deemed to be a distribution in
the amount of the withholding to the Partner. In the event of any claimed
over-withholding, Partners shall be limited to an action against the
applicable jurisdiction. If the amount withheld was not withheld from
actual distributions, the Partnership may reduce subsequent distributions
by the amount of such withholding. Each Partner agrees to furnish the
Partnership with any representations and forms as shall reasonably be
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requested by the Partnership to assist it in determining the
extent of, and in fulfilling, its withholding obligations.
ARTICLE V
DIVIDENDS AND DISTRIBUTIONS
Section 5.1 Dividends. Limited Partners shall receive periodic
Dividends, if any, Additional Dividends, if any, redemption payments and
liquidation distributions in accordance with the terms of the Preferred
Securities set forth in Article VI. Subject to the rights of the Preferred
Security Holders, all remaining cash shall be distributed to the General
Partner at such time as the General Partner shall determine.
Section 5.2 Limitations on Distributions. The Partnership shall
not make a distribution to any Partner on account of such Partner's
Interest if such distribution would violate Section 17-607 of the Act or
other applicable law.
ARTICLE VI
ISSUANCE OF PREFERRED SECURITIES
Section 6.1 General Provisions Regarding Preferred Securities.
(a) There is hereby authorized for issuance and sale Preferred
Securities having an aggregate liquidation preference not greater than
$200,000,000 and having the designation, annual Dividend rate, liquidation
preference, redemption terms and other powers, preferences and special
rights and limitations set forth in this Article VI.
(b) The payment of Dividends, Additional Dividends, if any, and
payments of distributions by the Partnership in liquidation or on
redemption in respect of Preferred Securities shall be guaranteed by COMSAT
pursuant to, and to the extent provided in, the Guarantee. The Guarantee
constitutes a guarantee of payment and not of collection. The Holders
hereby authorize the General Partner to hold the Guarantee on behalf of the
Holders. In the event of an appointment of a Special Representative
pursuant to Section 6.2(f) to, among other things, enforce the rights of
the Holders under the Guarantee, the Special Representative may take
possession of the Guarantee for such purpose. If no Special Representative
has been appointed to enforce the Guarantee, the General Partner has the
right to enforce the Guarantee on behalf of the Holders. The Holders
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of not less than 10% in aggregate liquidation preference of all
outstanding Preferred Securities have the right to direct the time, method
and place of conducting any proceeding for any remedy available in respect
of the Guarantee, including the giving of directions to the General Partner
or the Special Representative, as the case may be. If the General Partner
or the Special Representative fails to enforce the Guarantee as provided
above, a Holder may institute a legal proceeding directly against the
guarantor under the Guarantee to enforce its rights under the Guarantee,
without first instituting a legal proceeding against the Partnership or any
other Person. The Preferred Security Holders, by acceptance of such
Preferred Securities, acknowledge and agree to the subordination
provisions and other terms of the Guarantee.
(c) The proceeds received by the Partnership from the issuance of
Preferred Securities, together with the proceeds of the capital contributed
by the General Partner pursuant to Section 3.1(a) of this Agreement, shall
be invested by the Partnership in Subordinated Debentures with (i) an
aggregate principal amount equal to such aggregate invested proceeds and
(ii) an interest rate at least equal to the Dividend rate of the Preferred
Securities.
(d) The Partnership may not issue any other limited partnership
interests in or preferred securities of the Partnership, nor may it incur
any indebtedness. All Preferred Securities shall rank senior to all other
Interests in the Partnership in respect of the right to receive Dividends,
Additional Dividends or other distributions (including, without
limitation, any distribution out of the assets of the Partnership upon
voluntary or involuntary liquidation, dissolution, winding-up or
termination of the Partnership). All Preferred Securities redeemed,
purchased or otherwise acquired by the Partnership shall be canceled. The
Preferred Securities will be issued in registered form only. Dividends on
all Preferred Securities shall be cumulative.
(e) Notwithstanding that Holders of Preferred Securities are
entitled to vote or consent as provided in this Agreement, any of the
Preferred Securities that are owned by COMSAT or by any entity owned more
than 50% by COMSAT, or by any entity controlled by COMSAT, either directly
or indirectly, shall not be entitled to vote or consent and shall, for
purposes of such vote or consent, be treated as if they were not
outstanding.
(f) No Holder shall be entitled as a matter of right to subscribe
for or purchase, or have any preemptive right with respect to, any part of
any new or additional limited partnership interests, or of securities
convertible
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into any Preferred Securities or other limited partnership
interests, whether now or hereafter authorized and whether issued for cash
or other consideration or by way of a Dividend.
Section 6.2 Preferred Securities.
(a) Designation. The Preferred Securities, liquidation preference
$25 per Preferred Security, are hereby designated as "81/8% Cumulative
Monthly Income Preferred Securities".
(b) Dividends. (i) Preferred Security Holders shall be entitled
to receive, when, as and if available and determined to be so payable by
the General Partner, except as otherwise provided below, cumulative
Dividends at a rate per annum of 81/8% of the stated liquidation preference
of $25 per Preferred Security, calculated on the basis of a 360-day year
consisting of 12 months of 30 days each. For any period shorter than a full
monthly Dividend period, Divi- dends will be computed on the basis of the
actual number of days elapsed in such period. Dividends shall be payable in
United States dollars monthly in arrears on the last day of each calendar
month of each year, commencing July 31, 1995. Such Dividends will accrue
and be cumulative whether or not they have been declared and whether or not
there are funds of the Partnership legally available for the payment of
Dividends. Dividends on the Preferred Securities shall be cumulative and
shall accrue from the Closing Date. Additional Dividends upon any Dividend
arrearages shall be declared and paid in order to provide, in effect,
monthly compounding on such Dividend arrearages at a rate of 81/8% per
annum compounded monthly and such Additional Dividends shall accrue. In the
event that any date on which Dividends are payable on the Preferred
Securities is not a Business Day, then payment of the Dividend payable on
such date will be made on the next succeeding day which is a Business Day
(and without any interest or other payment in respect of any such delay)
except that, if such Business Day is in the next succeeding calendar year,
such payment shall be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on such date.
(ii) Dividends on the Preferred Securities must be declared
monthly and be paid on the last day of each calendar month (each a
"Dividend Payment Date") to the extent that the Partnership has, on such
date, (x) funds legally available for the payment of such Dividends and (y)
cash on hand sufficient to permit such payments, it being understood that
to the extent that funds are not available to pay in full all accrued and
unpaid Dividends, the Partnership may pay partial pro rata Dividends to the
extent of funds legally available therefor. Dividends will
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be payable to the Holders as they appear on the books and records
of the Partnership on the relevant record dates, which will be one Business
Day prior to the relevant Dividend Payment Date. In the event the Preferred
Securities shall not continue to remain in book-entry-only form as
described in Section 10.4 hereof, the General Partner shall have the right
to select relevant record dates, which shall be more than one Business Day
prior to the relevant Dividend Payment Date. In the event of any extended
interest payment period with respect to the Subordinated Debentures
resulting in the deferral of the payment of Dividends on the Preferred
Securities, the Partnership shall give written notice by first-class mail
to the Holders as to such extended interest payment period no later than
the last date on which it would be required to notify the NYSE of the
record or payment date of the related Dividend on the Preferred Securities.
(iii) The Partnership shall not:
(A) pay, declare or set aside for payment, any dividends or other
distributions on any other Interests in the Partnership; or
(B) redeem, purchase or otherwise acquire any other Interests in
the Partnership; until, in each case, such time as all accrued and unpaid
Dividends on all of the Preferred Securities, including any Additional
Dividends thereon, shall have been paid in full for all Dividend periods
terminating on or prior to the date of such payment or the date of such
redemption, purchase or acquisition, as the case may be.
(c) Redemption. (i) The Preferred Securities are redeemable at
the option of the Partnership, in whole or in part, from time to time, on
or after July 18, 2000, at $25 per Preferred Security plus accrued and
unpaid Dividends (whether or not earned or declared) to the date fixed for
redemption, including any Additional Dividends accrued thereon (the
"Redemption Price"). In the event that fewer than all the outstanding
Preferred Securities are to be so redeemed, the Preferred Securities to be
redeemed will be selected by lot. If a partial redemption would result in
the delisting of the Preferred Securities, the Partnership may only redeem
the Preferred Securities in whole.
(ii) If a Tax Event shall occur and be continuing, the General
Partner shall elect to (a) redeem the Preferred Securities in whole (and
not in part) at the Redemption Price within 90 days following the
occurrence of such Tax Event; provided that if at the time there is
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available to the General Partner the opportunity to eliminate,
within such 90-day period, the Tax Event by taking some ministerial action,
such as filing a form or making an election, or pursuing some other similar
reasonable measure, which has no adverse effect on the Partnership or
COMSAT, the General Partner will pursue such measure in lieu of redemption;
(b) dissolve the Partnership and cause the Subordinated Debentures to be
distributed to the Holders in liquidation of the Partnership; or (c) cause
the Preferred Securities to remain outstanding and pay Additional Interest
on the Subordinated Debentures.
(iii) If an Investment Company Event shall occur and be
continuing, the General Partner shall elect to either (a) redeem the
Preferred Securities in whole (and not in part) at the Redemption Price
within 90 days following the occurrence of such Investment Company Event;
provided that if at the time there is available to the General Partner the
opportunity to eliminate, within such 90-day period, the Investment Company
Event by taking some ministerial action, such as filing a form or making an
election, or pursuing some other similar reasonable measure, which has no
adverse effect on the Partnership or COMSAT, the General Partner will
pursue such measure in lieu of redemption; or (b) dissolve the Partnership
and cause the Subordinated Debentures to be distributed to the Holders in
liquidation of the Partnership, within 90 days following the occurrence of
such Investment Company Event.
(iv) Upon the repayment of the Subordinated Debentures at
maturity or upon any acceleration, earlier redemption or otherwise, the
proceeds from such repayment shall be applied to redeem the Preferred
Securities, in whole, at the Redemption Price. In the case of any
redemption pursuant to this clause (iv), the Preferred Securities shall
only be redeemed when repayment of the Subordinated Debentures has actually
been received by the Partnership.
(v) The Partnership may not redeem fewer than all the outstanding
Preferred Securities unless all accrued and unpaid dividends have been paid
on all Preferred Securities for all monthly dividend periods terminating on
or prior to the date of redemption.
(d) Redemption Procedures. (i) Notice of any redemption (a
"Notice of Redemption") of the Preferred Securities to be redeemed pursuant
to Section 6.2(c) will be given by the Partnership by first-class mail to
each record Holder not fewer than 30 nor more than 60 days prior to the
date fixed for redemption thereof. For purposes of the calculation of the
date of redemption and the dates on which notices are given pursuant to
this paragraph (d)(i), a
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Notice of Redemption shall be deemed to be given on the day such
notice is first mailed by first-class mail, postage prepaid, to each
Holder. Each Notice of Redemption shall be addressed to each Holder at the
address of the Holder appearing in the books and records of the
Partnership. If all of the Preferred Securities are represented by Book-
Entry Interests, Notices of Redemption shall be sent to the Clearing
Agency. No defect in the Notice of Redemption or in the mailing thereof
with respect to any Preferred Security shall affect the validity of the
redemption proceedings with respect to any other Preferred Security.
Subject to the last sentence of Section 6.2(c)(iv), any Notice of
Redemption shall be irrevocable.
(ii) If the Partnership gives a Notice of Redemption in respect
of the Preferred Securities and all of the Preferred Securities are
represented by Book-Entry Interests, then, by 12:00 noon, New York time, on
the redemption date, the Partnership will irrevocably deposit with the
Clearing Agency funds sufficient to pay the applicable Redemption Price and
will give the Clearing Agency irrevocable instructions and authority to pay
the Redemption Price to the Holders; if all of the Preferred Securities are
not represented by Book-Entry Interests, the Partnership may pay the
Redemption Price to a Holder by check upon presentation by a Holder of the
corresponding LP Certificate. If a Notice of Redemption shall have been
given and funds deposited as required, then upon the date of such deposit,
all rights of the Preferred Security Holders who hold such Preferred
Securities so called for redemption will cease, except the right of the
Holders of such Preferred Securities to receive the Redemption Price, but
without interest on such Redemption Price. In the event that any date fixed
for redemption of Preferred Securities is not a Business Day, then payment
of the Redemption Price payable on such date will be made on the next
succeeding day which is a Business Day (and without any interest or other
payment in respect of any such delay), except that, if such Business Day
falls in the next calendar year, such payment will be made on the
immediately preceding Business Day. In the event that payment of the
Redemption Price in respect of Preferred Securities is improperly withheld
or refused and not paid either by the Partnership or by COMSAT pursuant to
the Guarantee, Dividends on such Preferred Securities (including any
Additional Dividends thereon) will continue to accrue at the then
applicable rate, from the original redemption date to the date of payment,
in which case the actual payment date will be considered the date fixed for
redemption for purposes of calculating the Redemption Price.
(iii) Subject to the foregoing and applicable law (including,
without limitation, United States federal securities laws), COMSAT or its
subsidiaries may at any time
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and from time to time purchase outstanding Preferred Securities
by tender, in the open market or by private agreement.
(e) Liquidation Rights. In the event of any voluntary or
involuntary dissolution, winding-up or termination of the Partnership, the
Holders will have the rights provided in Section 11.4 hereof.
(f) Voting Rights -- Special Representative. (i) If (x) the
Partnership fails to pay Dividends in full on the Preferred Securities for
18 consecutive months, (y) an Event of Default (as defined in the
Indenture) occurs and is continuing on the Subordinated Debentures or (z)
COMSAT is in default on any of its payment or other obligations under the
Guarantee, then the Holders, upon the affirmative vote of at least a
Majority in Liquidation Preference of the Preferred Securities, will be
entitled to appoint and authorize a Special Representative to enforce the
Partnership's rights as a creditor under the Indenture and the Subordinated
Debentures, to enforce the rights of the Holders under the Guarantee and to
enforce the rights of the Holders to receive Dividends (including
Additional Dividends) on the Preferred Securities. The Special
Representative shall not be admitted as a general partner in the
Partnership or otherwise be deemed to be a general partner in the
Partnership and shall have no liability for the debts, obligations or
liabilities of the Partnership.
(ii) In furtherance of the foregoing, and without limiting the
powers of any Special Representative so appointed and for the avoidance of
any doubt concerning the powers of the Special Representative, any Special
Representative, in its own name and as Special Representative of the
Partnership, may institute a proceeding, including, without limitation, any
suit in equity, an action at law or other judicial or administrative
proceeding, to enforce the Partnership's rights directly against COMSAT, or
any other obligor in connection with such obligations on behalf of the
Partnership, and may prosecute such proceeding to judgment or final decree,
and enforce the same against COMSAT or any other obligor in connection with
such obligations and collect, out of the property, wherever situated, of
COMSAT or any such other obligor upon such obligations, the monies adjudged
or decreed to be payable in the manner provided by law.
(iii) For purposes of determining whether the Partnership has
failed to pay Dividends in full for 18 consecutive months, Dividends shall
be deemed to remain in arrears, notwithstanding any payments in respect
thereof, until full cumulative Dividends have been or contemporaneously
are paid with respect to all monthly Dividend periods
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terminating on or prior to the date of payment of such full
cumulative Dividends. Not later than 30 days after such right to appoint a
Special Representative arises and upon not less than 15 days' written
notice by first-class mail to the Holders, the General Partner will convene
a meeting for the purpose of appointing a Special Representative. If the
General Partner fails to convene such meeting within such 30-day period,
the Holders of not less than 10% in Liquidation Preference of the Preferred
Securities will be entitled to convene such meeting. Except as provided
herein, the provisions of Section 12.3 relating to the convening and
conduct of meetings of the Partners will apply with respect to any such
meeting. Any Special Representati- ve so appointed shall cease to be a
Special Representative of the Partnership and the Limited Partners if the
Partnership (or COMSAT pursuant to the Guarantee) shall have paid in full
all accrued and unpaid Dividends (including any Additional Dividends) on
the Preferred Securities or such default or breach, as the case may be,
shall have been cured and COMSAT, in its capacity as the General Partner,
shall continue the business of the Partnership without dissolution.
Notwithstanding the appointment of any such Special Representative, COMSAT
shall continue as General Partner and shall retain all rights under the
Indenture, including the right to extend the interest payment period from
time to time to a period not exceeding 60 consecutive months.
(g) Voting Rights -- Certain Amendments. (i) If any proposed
amendment to this Agreement provides for, or the General Partner otherwise
proposes to effect, (x) any action which would adversely affect the powers,
preferences or special rights of the Preferred Securities, whether by way
of amendment to this Agreement or otherwise (including, without limitation,
the authorization or issuance of any limited partnership interests in the
Partnership other than the Preferred Securities) or (y) the dissolution,
winding-up or termination of the Partnership (other than in connection with
the distribution of Subordinated Debentures upon the occurrence of a Tax
Event or Investment Company Event, or as described in Section 9.12, then
the Holders of outstanding Preferred Securities will be entitled to vote on
such amendment or proposal of the General Partner (but not on any other
amendment or proposal) and such amendment or proposal shall not be
effective except with the approval of Holders of not less than 66 2/3% in
Liquidation Preference of the Preferred Securities having a right to vote
on the matter; provided, however, that no such approval shall be required
if the dissolution, winding-up or termination of the Partnership is
proposed or initiated pursuant to Section 11.2 hereof.
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(ii) Any required approval of Holders may be given at a separate
meeting of such Holders convened for such purpose, at a meeting of all of
the Partners in the Partnership or pursuant to written consent. The
Partnership will cause written notice of any meeting at which Holders are
entitled to vote, or of any matter upon which action by written consent of
such Holders is to be taken, to be mailed by first-class mail to each
Holder of record of Preferred Securities at least 15 days prior to the date
of such meeting or the date by which such action is to be taken. Each such
notice will include a statement setting forth (x) the date of such meeting
or the date by which such action is to be taken, (y) a description of any
resolution proposed for adoption at such meeting on which such Holders are
entitled to vote or of such matter upon which written consent is sought
and (z) instructions for the delivery of proxies or consents. No vote or
consent of the Holders will be required for the Partnership to redeem and
cancel Preferred Securities in accordance with this Agreement.
(iii) Except as provided in this Section 6.2, Holders shall have
no voting rights, and the Holders may not remove or replace the General
Partner.
ARTICLE VII
BOOKS OF ACCOUNT, RECORDS AND REPORTS
Section 7.1 Books and Records.
(a) Proper and complete records and books of account of the
Partnership shall be kept by the General Partner in which shall be entered
fully and accurately all transactions and other matters relative to the
Partnership's business as are usually entered into records and books of
account maintained by Persons engaged in businesses of a like character,
including a Capital Account for each Partner. The books and records of
the Partnership, together with a copy of this Agreement and of the
Certificate, shall at all times be maintained at the principal office of
the General Partner and shall be open to the inspection and examination of
the Partners or their duly authorized representatives for a proper
purpose during reasonable business hours.
(b) The General Partner may, for such period of time that the
General Partner deems reasonable, keep confidential from the Partners any
information with respect to the Partnership the disclosure of which the
General Partner reasonably believes is not in the best interests of the
Partnership or is adverse to the interests of the Partner-
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ship or which the Partnership or the General Partner is required
by law or by an agreement with any Person to keep confidential.
(c) Within three months after the close of each Fiscal Year, the
General Partner shall transmit to each Partner a statement indicating such
Partner's share of each item of Partnership income, gain, loss, deduction
or credit for such Fiscal Year for federal income tax purposes.
Section 7.2 Accounting Method. For both financial and tax
reporting purposes and for purposes of determining profits and losses, the
books and records of the Partnership shall be kept on the accrual method of
accounting applied in a consistent manner and shall reflect all
Partnership transactions and be appropriate and adequate for the
Partnership's business. The Partnership's taxable year shall be the
calendar year.
ARTICLE VIII
POWERS, RIGHTS AND DUTIES
OF THE LIMITED PARTNERS
Section 8.1 Limitations. Other than as set forth in this
Agreement, the Limited Partners shall not participate in the management
or control of the Partnership's business, property or other assets nor
shall the Limited Partners transact any business for the Partnership, nor
shall the Limited Partners have the power to act for or bind the
Partnership, said powers being vested solely and exclusively in the
General Partner. The Limited Partners shall have no interest in the
properties or assets of the General Partner, or any equity therein, or in
any proceeds of any sales thereof (which sales shall not be restricted in
any respect, by virtue of acquiring or owning an Interest in the
Partnership).
Section 8.2 Liability. Subject to the provisions of the Act, no
Limited Partner shall be liable for the repayment, satisfaction or
discharge of any debts or other obligations of the Partnership in excess of
the Capital Account balance of such Limited Partner.
Section 8.3 Priority. No Limited Partner shall have priority over
any other Limited Partner as to Partnership allocations or distributions.
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ARTICLE IX
POWERS, RIGHTS AND DUTIES
OF THE GENERAL PARTNER
Section 9.1 Authority. Subject to the limitations provided in
this Agreement, the General Partner shall have exclusive and complete
authority and discretion to manage the operations and affairs of the
Partnership and to make all decisions regarding the business of the
Partnership. Any action taken by the General Partner shall constitute the
act of and serve to bind the Partnership. In dealing with the General
Partner acting on behalf of the Partnership, no Person shall be required to
inquire into the authority of the General Partner to bind the Partnership.
Persons dealing with the Partnership are entitled to rely conclusively on
the power and authority of the General Partner, as set forth in this
Agreement.
Section 9.2 Powers and Duties of General Partner. Except as
otherwise specifically provided herein, the General Partner shall have
all rights and powers of a general partner under the Act, and shall have
all authority, rights and powers in the management of the Partnership
business to do any and all other acts and things necessary, proper,
convenient or advisable to effectuate the purposes of this Agreement,
including by way of illustration but not by way of limitation, the
following:
(a) to secure the necessary goods and services required in
performing the General Partner's duties for the Partnership;
(b) to exercise all powers of the Partnership, on behalf of the
Partnership, in connection with enforcing the Partnership's rights under
the Subordinated Debentures and the Guarantee;
(c) to issue Preferred Securities and to admit Limited Partners
in connection therewith in accordance with this Agreement;
(d) to act as registrar and transfer agent for the Preferred
Securities or designate an entity to act as registrar and transfer agent;
(e) to establish a record date with respect to all actions to be
taken hereunder that require a record date be established, including with
respect to Dividends and voting rights and to make determinations as to
the payment of Dividends, and make or cause to be made all other required
payments to Holders and to the General Partner;
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(f) to open, maintain and close bank accounts and to draw checks
and other orders for the payment of money;
(g) to bring or defend, pay, collect, compromise, arbitrate,
resort to legal action, or otherwise adjust claims or demands of or against
the Partnership;
(h) to deposit, withdraw, invest, pay, retain and distribute the
Partnership's funds in a manner consistent with the provisions of this
Agreement;
(i) to take all action which may be necessary or appropriate for
the preservation and the continuation of the Partnership's valid existence,
rights, franchises and privileges as a limited partnership under the laws
of the State of Delaware and of each other jurisdiction in which such
existence is necessary to protect the limited liability of the Limited
Partners or to enable the Partnership to conduct the business in which it
is engaged;
(j) to cause the Partnership to enter into and perform, on behalf
of the Partnership, the Underwriting Agreement and to cause the Partnership
to purchase the Subordinated Debentures without any further act, vote or
approval of any Partner; and
(k) to execute and deliver any and all documents or instruments,
perform all duties and powers and do all things for and on behalf of the
Partnership in all matters necessary or desirable or incidental to the
foregoing.
Section 9.3 Expenses Payable by General Partner. The General
Partner hereby assumes and shall be liable for the debts, obligations and
liabilities of the Partnership and agrees to pay to each Person or entity
to whom the Partnership is now or hereafter becomes indebted or liable,
whether such indebtedness, obligations or liabilities arise in contract,
tort or otherwise, (including, without limitation, payment obligations
arising under Section 7.3 of this Agreement, but excluding payment
obligations of COMSAT to Holders of the Preferred Securities in such
Holders' capacities as Holders, such obligations being separately
guaranteed under the Guarantee) (the "Beneficiaries") the full payment of
such indebtedness and any and all liabilities, when and as due. This
agreement is intended to be for the benefit of and to be enforceable by all
such Beneficiaries whether or not such Beneficiaries have received notice
hereof.
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Section 9.4 Liability. Except as expressly set forth in this
Agreement, (a) the General Partner shall not be personally liable for the
return of any portion of the capital contributions (or any return thereon)
of the Limited Partners; (b) the return of such capital contributions (or
any return thereon) shall be made solely from assets of the Partnership;
and (c) the General Partner shall not be required to pay to the Partnership
or to any Limited Partner any deficit in any Limited Partner's Capital
Account upon dissolution or otherwise. Other than as provided under the
Act, no Limited Partner shall have the right to demand or receive property
other than cash for its respective Interest in the Partnership.
Section 9.5 Exculpation.
(a) No Covered Person shall be liable, responsible, or
accountable in damages or otherwise to the Partnership or any Limited
Partner (in its capacity as such) or any Affiliate of any Limited Partner
for any loss, damages or claim incurred by reason of any act or omission
performed or omitted by such Covered Person in good faith on behalf of the
Partnership and in a manner reasonably believed to be within the scope of
the authority conferred on such Covered Person by this Agreement or by law;
provided, however, that a Covered Person shall be liable for any such loss,
damage or claim incurred by reason of such Covered Persons's gross
negligence or willful misconduct with respect to such acts or omissions.
(b) No Covered Person shall be deemed to have acted with gross
negligence or willful misconduct if such Covered Person relied in good
faith upon the records of the Partnership and upon such information,
opinions, reports or statements presented to the Partnership by any Person
as to matters the Covered Person reasonably believes are within such other
Person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Partnership, including information,
opinions, reports or statements as to the value and amount of the assets,
liabilities, profits, losses, or any other facts pertinent to the existence
and amount of assets from which distributions to Partners might properly be
paid.
Section 9.6 Fiduciary Duty.
(a) To the extent that, at law or in equity, a Covered Person has
duties (including fiduciary duties) and liabilities relating thereto to the
Partnership or to any Limited Partner (in its capacity as such) or any
Affiliate of any Limited Partner, a Covered Person acting under this
Agreement shall not be liable to the Partnership or to any other Person for
its good faith reliance on the provisions
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of this Agreement. The provisions of this Agreement, to the
extent that they restrict the duties and liabilities of a Covered Person
otherwise existing at law or in equity, are agreed by the parties hereto to
replace such other duties and liabilities of such Covered Person.
(b) Unless otherwise expressly provided herein, (i) whenever a
conflict of interest exists or arises between Persons, or (ii) whenever
this Agreement or any other agreement contemplated herein or therein
provides that a Covered Person shall act in a manner that is, or provides
terms that are, fair and reasonable to the Partnership or any Partner, the
Covered Person shall resolve such conflict of interest, taking such action
or providing such terms, considering in each case the relative interest of
each party (including its own interest) to such conflict, agreement,
transaction or situation and the benefits and burdens relating to such
interests, any customary or accepted industry practices, and any applicable
generally accepted accounting practices or principles. In the absence of
bad faith by the Covered Person, the resolution, action or terms so made,
taken or provided by the Covered Person shall not constitute a breach of
this Agreement or any other agreement contemplated herein or of any duty or
obligation of the Covered Person at law or in equity or otherwise.
(c) Whenever in this Agreement a Covered Person is permitted or
required to make a decision (i) in its "discretion" or under a grant of
similar authority, the Covered Person shall be entitled to consider only
such interests and factors as it desires, including its own interests, and
shall have no duty or obligation to give any consideration to any interest
of or factors affecting the Partnership or any other Person, or (ii) in its
"good faith" or under another express standard, the Covered Person shall
act under such express standard and shall not be subject to any other or
different standard imposed by this Agreement or other applicable law.
Section 9.7 [Intentionally Omitted.]
Section 9.8 Investment Company or Tax Actions. The General
Partner is authorized and directed to conduct its affairs and to operate
the Partnership in such a way that the Partnership would not be deemed to
be an "invest- ment company" required to be registered under the 1940 Act
or taxed as a corporation for federal income tax purposes and so that the
Subordinated Debentures will be treated as indebtedness of COMSAT for
federal income tax purposes. In this connection, the General Partner is
authorized to take any action not inconsistent with applicable law, the
Certificate of Limited Partnership or this Agreement, and that does not
materially and adversely affect the interests
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of Holders, that the General Partner determines in its discretion
to be necessary or desirable for such purposes.
Section 9.9 Outside Businesses. Any Partner or Affiliate thereof
may engage in or possess an interest in other business ventures of any
nature or description, independently or with others, similar or dissimilar
to the business of the Partnership, and the Partnership and the Partners
shall have no rights by virtue of this Agreement in and to such independent
ventures or the income or profits derived therefrom and the pursuit of any
such venture, even if competitive with the business of the Partnership,
shall not be deemed wrongful or improper. No Partner or Affiliate thereof
shall be obligated to present any particular invest- ment opportunity to
the Partnership even if such opportunity is of a character that, if
presented to the Partnership, could be taken by the Partnership, and any
Partner or Affiliate thereof shall have the right to take for its own
account (individually or as a partner or fiduciary) or to recommend to
others any such particular investment opportunity.
Section 9.10 Limits on General Partner's Powers.
(a) Anything in this Agreement to the contrary notwithstanding,
the General Partner shall not cause or permit the Partnership to:
(i) acquire any assets other than as expressly provided herein;
(ii) do any act which would make it impractical or impossible to
carry on the ordinary business of the Partnership;
(iii) possess Partnership property for other than a Partnership
purpose;
(iv) admit a Person as a Partner, except as expressly provided in
this Agreement;
(v) make any loans to the General Partner or its Affiliates,
other than loans represented by the Subordinated Debentures;
(vi) perform any act that would subject any Limited Partner to
liability as a general partner in any jurisdiction;
(vii) engage in any activity that is not consistent with the
purposes of the Partnership, as set forth in Section 2.3;
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(viii) without the written consent of 66 2/3% in Liquidation
Preference of the Preferred Securities, have an order for relief entered
with respect to the Partnership or commence a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, or consent to the entry of an order for relief in an involuntary
case under any such law, or consent to the appointment of or taking
possession by a receiver, trustee or other custodian for all or a
substantial part of the Partnership's property, or make any assignment for
the benefit of creditors of the Partnership; or
(ix) borrow money or become liable for the borrowings of any
third party or engage in any financial or other trade or business.
(b) So long as the Subordinated Debentures are held by the
Partnership, the General Partner shall not:
(i) direct the time, method and place of conduct- ing any
proceeding for any remedy available to the Trustee, or exercising any trust
or power conferred on the Trustee with respect to the Subordinated
Debentures,
(ii) waive any past default which is waivable under the
Indenture,
(iii) exercise any right to rescind or annul a declaration that
the principal of the Subordinated Debentures shall be due and payable,
(iv) consent to any amendment, modification or termination of the
Indenture, where such consent shall be required, without, in each case,
obtaining the prior approval of the Holders of not less than 66 2/3% in
Liquidation Preference of the Preferred Securities; provided, however, that
where a consent under the Indenture would require the consent of each
holder of Subordinated Debentures affected thereby, no such consent shall
be given by the General Partner without the prior consent of each Holder of
Preferred Securities.
(c) The General Partner shall not revoke any action previously
authorized or approved by a vote of Holders without the approval of the
Holders of not less than 66 2/3% in Liquidation Preference of the Preferred
Securities. The General Partner shall notify all Holders of any notice of
default received from the Trustee with respect to the Subordinated
Debentures.
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Section 9.11 Tax Matters Partner.
(a) For purposes of Code ss. 6231(a)(7), the "Tax Matters
Partner" shall be the General Partner as long as it remains the general
partner of the Partnership. The Tax Matters Partner shall keep the Limited
Partners fully informed of any inquiry, examination or proceeding.
(b) The General Partner shall not make an elec- tion in
accordance with ss. 754 of the Code.
(c) The General Partner and the Preferred Security Holders
acknowledge that they intend, for U.S. federal income tax purposes, that
the Partnership shall be treated as a partnership and that the General
Partner and the Preferred Security Holders shall be treated as Partners of
such Partnership for such purposes.
Section 9.12 Merger, Consolidation or Amalgamation of the
Partnership. Except as permitted in this Section 9.12, the Partnership may
not, and the General Partner shall not permit the Partnership to,
consolidate, amalgamate, merge with or into, or be replaced by, or convey,
transfer or lease its properties and assets substantially as an entirety to
any corporation or other Person, except as described below. The Partnership
may, without the consent of the Holders, consolidate, amalgamate, merge
with or into, or be replaced by a limited partnership, a limited liability
company or a trust organized as such under the laws of any state of the
United States of America or of the District of Columbia; provided, that (i)
such successor entity either (x) expressly assumes all of the obligations
of the Partnership under the Preferred Secu- rities or (y) substitutes for
the Preferred Securities other securities having substantially the same
terms as the Preferred Securities (the "Successor Securities") so long as
the Successor Securities rank, with respect to participation in the
profits, dividends and assets of the successor entity, at least as high as
the Preferred Securities rank with respect to participation in the profits,
Dividends and assets of the Partnership, (ii) COMSAT expressly acknowledges
such successor entity as the holder of the Subordinated Debentures, (iii)
the Preferred Securities or any Successor Securities are listed, or any
Successor Securities will be listed upon notification of issuance, on any
national securities exchange or other organization on which the Preferred
Securities are then listed, (iv) such merger, consolidation, amalgamation
or replacement does not cause the Preferred Securities (including any
Successor Securities) to be downgraded by any nationally recognized
statistical rating organization, as that term is used in Rule
15c3-1(c)(2)(vi)(F) under the Exchange Act, (v) such merger, consolidation,
amalgamation or replacement does not
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adversely affect the powers, preferences and other special rights
of Holders of Preferred Securities (including holders of any Successor
Securities) in any material respect (other than with respect to any
dilution of the Holders' interest in the new entity), (vi) such successor
entity has a purpose substantially identical to that of the Partnership,
(vii) COMSAT has provided a guarantee to the holders of the Successor
Securities with respect to such successor entity having substantially the
same terms as the Guarantee, and (viii) prior to such merger,
consolidation, amalgamation or replacement, COMSAT has received an opinion
of nationally recognized independent counsel to the Partnership experienced
in such matters to the effect that (x) such successor entity will not be
treated as an association taxable as a corporation for federal income tax
purposes, (y) following such merger, consolidation, amalgamation or
replacement, neither COMSAT nor such successor entity will be required to
register as an investment company under the 1940 Act and (z) such merger,
consolidation, amalgamation or replacement will not adversely affect the
limited liability of the Holders.
ARTICLE X
TRANSFERS OF INTERESTS BY PARTNERS
Section 10.1 Transfer of Interests.
(a) Preferred Securities shall be freely trans- ferable by a
Holder.
(b) The General Partner may not assign its Interest in the
Partnership in whole or in part under any circumstances except to a
successor of COMSAT as permitted under the Indenture. The admission of such
successor as a general partner of the Partnership shall be effective upon
the filing of an amendment to the Certificate with the Secretary of State
of the State of Delaware which indicates that such successor has been
admitted as a general partner in the Partnership. If the General Partner
assigns its entire Interest to a successor of COMSAT as permitted under the
Indenture, the General Partner shall be deemed to have ceased to be a
general partner in the Partnership simultaneously with the admission of the
successor as a general partner in the Partnership and such successors
assumption hereof. Any such successor general partner in the Partnership is
hereby authorized to and shall continue the business of the Partnership
without dissolution.
(c) Except as provided above, no Interest shall be transferred,
in whole or in part, except in accordance with the terms and conditions set
forth in this Agreement.
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Any transfer or purported transfer of any Interest not made in
accordance with this Agreement shall be null and void.
Section 10.2 Transfer of LP Certificates. The General Partner
shall provide for the registration of LP Certificates and of transfers of
LP Certificates without charge, but upon payment (with the giving of such
indemnity as the Partnership or the General Partner may require) in respect
of any tax or other government charges that may be imposed in relation to
it. Upon surrender for registration of transfer of any LP Certificate, the
General Partner shall cause one or more new LP Certificates to be issued in
the name of the designated transferee or transferees. Every LP Certificate
surrendered for registration of transfer shall be accompanied by a written
instrument of transfer in form satisfactory to the General Partner duly
executed by the Preferred Security Holder or his or her attorney duly
authorized in writing. Each LP Certificate surrendered for registration of
transfer shall be canceled by the General Partner. A transferee of an LP
Certificate shall be admitted to the Partnership as a Limited Partner and
shall be entitled to the rights and subject to the obligations of a
Preferred Security Holder hereunder upon the receipt by a transferee of an
LP Certificate. The Partnership will not be required to register or cause
to be registered the transfer of Preferred Securities after such Preferred
Securities have been called for redemption pursuant to Section 6.2.
Section 10.3 Persons Deemed Preferred Security Holders. The
Partnership may treat the Person in whose name any LP Certificate shall be
registered on the books and records of the Partnership as the sole holder
of such LP Certificate and of the Preferred Securities represented by such
LP Certificate for purposes of receiving Dividends and for all other
purposes whatsoever and, accordingly, shall not be bound to recognize any
equitable or other claim to or interest in such LP Certificate or in the
Preferred Securi- ties represented by such LP Certificate on the part of
any other Person, whether or not the Partnership shall have actual or other
notice thereof.
Section 10.4 Book-Entry Interests. The LP Cer- tificates, on
original issuance, will be issued in the form of a global LP Certificate or
LP Certificates representing the Book-Entry Interests, to be delivered to
DTC, the ini- tial Clearing Agency, by, or on behalf of, the Partnership.
Such LP Certificate or LP Certificates shall initially be registered on the
books and records of the Partnership in the name of Cede & Co., the nominee
of DTC, and no Preferred Security Owner will receive a definitive LP
Certificate representing such Preferred Security Owner's interests in such
LP Certificate, except as provided in Section 10.7.
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Unless and until definitive, fully registered LP Certifi- cates
(the "Definitive LP Certificates") have been issued to the Preferred
Security Owners pursuant to Section 10.7:
(a) The provisions of this Section shall be in full force and
effect;
(b) The Partnership, the Special Representative and the General
Partner shall be entitled to deal with the Clearing Agency for all purposes
of this Agreement (including the payment of Dividends, Redemption Price and
liquidation proceeds on the LP Certificates and receiving approvals, votes
or consents hereunder) as the Preferred Security Holder and the sole holder
of the LP Certificates and shall have no obligation to the Preferred
Security Owner;
(c) None of the Partnership, the General Partner, any Special
Representative or any agent of the General Partner, the Partnership or any
Special Representative shall have any liability with respect to or
responsibility for the records of the Clearing Agency; and
(d) To the extent that the provisions of this Section conflict
with any other provisions of this Agreement, the provisions of this Section
shall control.
Section 10.5 Notices to Clearing Agency. Whenever a notice or
other communication to the Preferred Security Holders is required under
this Agreement, unless and until Definitive LP Certificates shall have been
issued to the Preferred Security Owners pursuant to Section 10.7, the
General Partner shall give all such notices and communications specified
herein to be given to the Preferred Security Holders to the Clearing
Agency, and shall have no obligations to the Preferred Security Owners.
Section 10.6 Appointment of Successor Clearing Agency. If any
Clearing Agency elects to discontinue its services as securities depository
with respect to the Preferred Securities, the General Partner may, in its
sole discretion, appoint a successor Clearing Agency with respect to the
Preferred Securities.
Section 10.7 Definitive LP Certificates; Appointment of Paying
Agent. If (a) the Clearing Agency elects to discontinue its services as
securities depository and no successor clearinghouse is obtained within 90
days after such discontinuance pursuant to Section 10.6 or (b) the
Partnership elects to terminate the book-entry system through the Clearing
Agency, then Definitive LP Certificates
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shall be prepared by the Partnership. In each of the above
circumstances, the General Partner will appoint a paying agent to pay
Dividends, redemption payments or liquidation payments on behalf of the
Partnership with respect to the Preferred Securities. Upon surrender of the
global LP Certificate or LP Certificates representing the Book-Entry
Interests by the Clearing Agency, accompanied by registration instructions,
the General Partner shall cause Definitive LP Certificates to be delivered
to Preferred Security Owners in accordance with the instructions of the
Clearing Agency. Neither the General Partner nor the Partnership shall be
liable for any delay in delivery of such instructions and may conclusively
rely on, and shall be protected in relying on, such instructions. Any
Person receiving a Definitive LP Certificate in accordance with this
Article X shall be admitted to the Partnership as a Limited Partner upon
receipt of such Definitive LP Certifi- cate and shall be registered on the
books and records of the Partnership as a Preferred Security Holder. The
Clearing Agency or the nominee of the Clearing Agency, as the case may be,
shall cease to be a Limited Partner under this Section 10.7 at the time
that at least one additional Person is admitted to the Partnership as a
Limited Partner in accordance with this Section 10.7. The Definitive LP
Certificates shall be printed, lithographed or engraved or may be produced
in any other manner as may be required by any national securities exchange
on which the Preferred Securities may be listed and is reasonably
acceptable to the General Partner, as evidenced by its execution thereof.
ARTICLE XI
WITHDRAWAL; DISSOLUTION;
LIQUIDATION AND DISTRIBUTION OF ASSETS
Section 11.1 Withdrawal of Partners. The General Partner shall
not at any time retire or withdraw from the Partnership except as otherwise
permitted hereunder. If the General Partner retires or withdraws in
contravention of this Section 11.1, it shall indemnify, defend and hold
harmless the Partnership and the other Partners from and against any
losses, expenses, judgments, fines, settlements or damages suffered or
incurred by the Partnership or such other Partners arising out of or
resulting from such retirement or withdrawal.
Section 11.2 Dissolution of the Partnership.
(a) The Partnership shall not be dissolved by the admission of
Partners in accordance with the terms of this Agreement. Except as provided
in Section 11.2(b), the death, retirement, resignation, expulsion,
bankruptcy or
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dissolution of a Partner, or the occurrence of any other event
which terminates the Interest of a Partner in the Partnership, shall not
cause the Partnership to be dissolved and its affairs wound up so long as
the Partnership at all times has at least two Partners. Upon the occurrence
of any such event, the business of the Partnership shall be continued
without dissolution.
(b) The Partnership shall be dissolved and termi- nated and its
affairs shall be wound up upon the earliest to occur of any of the
following events:
(i) the expiration of the term of the Partner- ship, as provided
in Section 2.4 of this Agreement;
(ii) upon the bankruptcy, insolvency or dissolution of the
General Partner;
(iii) upon the assignment by the General Partner of its entire
interest in the Partnership when the assignee is not admitted to the
Partnership as a general partner of the Partnership in accordance with this
Agreement, or the filing of a certificate of dissolution or its equivalent
with respect to the General Partner, or the revocation of the General
Partner's charter and the expiration of 90 days after the date of notice to
the General Partner of revocation without a reinstatement of its charter,
or any other event occurs which causes the General Partner to cease to be a
general partner of the Partnership under the Act, unless the business of
the Partnership is continued by a majority in interest of the remaining
Partners in accordance with the Act;
(iv) in accordance with the provisions of the Preferred
Securities;
(v) upon the entry of a decree of judicial dissolution under
Section 17-802 of the Act; or
(vi) upon the written consent of all Partners.
For purposes of subparagraph (iii) above, "majority in interest"
shall mean a majority of the profits interests and a majority of the
capital interests owned by all the remaining Partners within the meaning of
Rev. Proc. 94-46, 1994-28 I.R.B. 129.
(c) Upon dissolution of the Partnership, the Liquidator shall
promptly notify the Partners of such dissolution.
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(d) After the date fixed for any distribution of Subordinated
Debentures upon dissolution of the Partnership, (i) the Preferred
Securities will no longer be deemed to be outstanding, (ii) DTC or its
nominee, as the record holder of the Preferred Securities, will receive a
registered global certificate or certificates representing the Subordinated
Debentures to be delivered upon such distribution, and (iii) any
certificates representing Preferred Securities not held by DTC or its
nominee will be deemed to represent Subordinated Debentures having a
principal amount equal to the aggregate of the stated liquidation
preference of such Preferred Securities, with accrued and unpaid interest
equal to the amount of accrued and unpaid Dividends on such Preferred
Securities, until such certificates are presented to COMSAT or its agent
for transfer or reissuance.
Section 11.3 Liquidation.
(a) In the event of the dissolution of the Partnership for any
reason, the General Partner (or, if the Partnership is dissolved pursuant
to Section 11.2(b)(ii), then a liquidating agent appointed by Holders of
not less than 66 2/3% in Liquidation Preference of the Preferred Securities
(the General Partner or such person so appointed is hereinafter referred to
as the "Liquidator")) shall commence to wind up the affairs of the
Partnership and to liquidate the Partnership's assets; provided, however,
that a reasonable time shall be allowed for the orderly liquidation of the
assets of the Partnership and the satisfaction of liabilities to creditors
so as to enable the Partners to minimize the normal losses attendant upon
liquidation. The Partners shall continue to share all income, losses and
distributions during the period of liquidation in accordance with Articles
IV and V. Subject to the provisions of this Article XI, the Liquidator
shall have full right and unlimited discretion to determine the time,
manner and terms of any sale or sales of Partnership property pursuant to
such liquidation, giving due regard to the activity and condition of the
relevant market and general financial and economic conditions.
(b) The Liquidator shall have all of the rights and powers with
respect to the assets and liabilities of the Partnership in connection with
the liquidation and termina- tion of the Partnership that the General
Partner would have with respect to the assets and liabilities of the
Partner- ship during the term of the Partnership, and the Liquidator is
hereby expressly authorized and empowered to execute any and all documents
necessary or desirable to effectuate the liquidation and termination of the
Partnership and the transfer of any assets.
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(c) Notwithstanding the foregoing, a Liquidator that is not the
General Partner shall not be deemed a Partner in this Partnership and shall
not have any of the economic interests in the Partnership of a Partner; and
such Liquidator may be compensated for its services to the Partnership at
normal customary and competitive rates for its services to the Partnership
as reasonably proposed by the General Partner and agreed to by a Majority
in Liquidation Preference of the Preferred Securities.
Section 11.4 Distribution in Liquidation. Subject to Section 9.3,
the proceeds of liquidation shall be applied in the following order of
priority (and without regard to the provisions of Section 17-804 of the
Act):
(a) to creditors of the Partnership, including Preferred Security
Holders who are creditors, to the extent otherwise permitted by law, in
satisfaction of the liabilities of the Partnership (whether by payment or
the making of reasonable provision for payment thereof), other than
liabilities for distributions (including Dividends) to Partners; and
(b) following any allocations required under Section 4.1(c) of
the Agreement, to the Partners in proportion to the Partners' positive
Capital Account balances in accordance with Treasury Regulation ss.
1.704-1(b)(2)(ii)(b)(2).
The distribution pursuant to this Section 11.4 may be made by
distributing Subordinated Debentures on a pro rata basis to the Holders.
Section 11.5 Rights of Limited Partners. Each Limited Partner
shall look solely to the assets of the Partnership for all distributions
with respect to the Part- nership and such Partner's capital contribution
(including returns thereof), and such Partner's share of profits or losses
thereof, and shall have no recourse therefor (upon dissolution or
otherwise) against the General Partner, except under the Guarantee. No
Partner shall have any right to demand or receive property other than cash
upon dissolution and termination of the Partnership.
Section 11.6 Termination. The Partnership shall terminate when
all of the assets of the Partnership shall have been disposed of and the
assets shall have been distributed as provided in Section 11.4. The
Liquidator shall then execute and cause to be filed a certificate of
cancellation of the Partnership.
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ARTICLE XII
AMENDMENTS AND MEETINGS
Section 12.1 Amendments. Except as provided by Section 6.2(g),
this Agreement may be amended by a written instrument executed by the
General Partner without the consent of any Limited Partner; provided,
however, that no amendment shall be made, and any such purported amendment
shall be void and ineffective, to the extent the result thereof would be to
cause the Partnership to be treated as anything other than a partnership
for purposes of United States income taxation or require the Partnership to
register under the 1940 Act.
Section 12.2 Amendment of Certificate. In the event this
Agreement shall be amended pursuant to Sec- tion 12.1, the General Partner
shall amend the Certificate to reflect such change if it deems such
amendment of the Certificate to be necessary or appropriate.
Section 12.3 Meetings of Partners.
(a) Meetings of the Limited Partners who are Holders may be
called at any time by the General Partner to consider and act on any matter
on which Limited Partners are entitled Act. t under the terms of this
Agreement or the The General Partner shall call a meeting of Holders if
directed to do so by Holders of not less than 10% in Liqui- dation
Preference as permitted by this Agreement. Such direction shall be given by
delivering to the General Partner a request in writing stating that the
signing Limited Partners desire to call a meeting and indicating the
general or specific purpose for which the meeting is to be called.
(b) Unless otherwise specified herein, notice of any such meeting
shall be given to all Partners not less than seven (7) Business Days nor
more than 60 days prior to the date of such meeting. Each such notice shall
set forth the date, time and place of the meeting, a description of any
matter on which Holders are entitled to vote and instructions for the
delivery of proxies or written consents.
(c) Any action that may be taken at a meeting of the Limited
Partners may be taken without a meeting if a consent in writing setting
forth the action so taken is signed by Limited Partners owning not less
than the minimum Interests that would be necessary to authorize or take
such action at a meeting in which all Limited Partners having a right to
vote thereon were present and voting. Prompt notice of the taking of action
without a meeting shall be
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<PAGE>
given to the Limited Partners entitled to vote who have not
consented in writing. The General Partner may provide that any written
ballot submitted to the Limited Partners for the purpose of taking any
action without a meeting shall be returned to the Partnership within a
specified time.
(d) Each Partner may authorize any Person to act for it by proxy
on all matters as to which a Partner is entitled to participate, including
waiving notice of any meeting, or voting or participating at a meeting.
Every proxy must be signed by the Partner or its attorney-in-fact. No proxy
shall be valid after the expiration of 11 months from the date thereof
unless otherwise provided in the proxy. Every proxy shall be revocable at
the pleasure of the Partner executing it.
(e) Each meeting of Partners shall be conducted by the General
Partner or by such other Person that the General Partner may designate.
(f) The General Partner may establish all other reasonable
procedures relating to meetings of Partners or the giving of written
consents, in addition to those expressly provided, including notice of
time, place or purpose of any meeting at which any matter is to be voted on
by any Partners, waiver of any such notice, action by consent without a
meeting, the establishment of a record date, quorum requirements, voting in
person or by proxy or any other matter with respect to the exercise of any
such right to vote.
ARTICLE XIII
MISCELLANEOUS
Section 13.1 Notices. All notices provided for in this Agreement
shall be in writing, and shall be delivered or mailed by first class or
registered or certified mail or, with respect to the Partnership and
General Partner, telecopied, as follows:
(a) if given to the Partnership, in care of the General Partner
at the Partnership's mailing address set forth below:
COMSAT Capital I, L.P.
c/o COMSAT Corporation
6560 Rock Spring Drive
Bethesda, Maryland 20817-1146
Attention: Chief Financial Officer
Telecopy: (301) 214-7132
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<PAGE>
(b) if given to the General Partner, at its mailing address set
forth below:
COMSAT Corporation
6560 Rock Spring Drive
Bethesda, Maryland 20817-1146
Attention: Chief Financial Officer
Telecopy: (301) 214-7132
(c) if given to any other Partner, at the address set forth on
the books and records of the Partnership.
All such notices shall be deemed to have been given when
received.
Section 13.2 Power of Attorney. Each Holder does hereby
constitute and appoint the General Partner and, if applicable, any Special
Representative, as its true and lawful representative and attorney-in-fact,
in its name, place and stead to make, execute, sign, deliver and file (a)
any amendment of the Certificate required because of an amendment of this
Agreement or in order to effect any change in the Partnership, (b) this
Agreement, (c) any amendments to this Agreement and (d) all such other
instruments, documents and certificates which from time to time may
required by the laws of the United States of America, the State of Delaware
or any other jurisdiction, or any political subdivision or agency thereof,
to effectuate, implement and continue the valid and subsisting existence of
the Partnership or to dissolve the Partnership for any other purpose
consistent with this Agreement and the transactions contemplated hereby.
The power of attorney granted hereby is coupled with an interest
and shall (a) survive and not be affected by the subsequent death,
incapacity, disability, dissolu- tion, termination, or bankruptcy of the
Holder granting the same or the transfer of all or any portion of such
Holder's Interest and (b) extend to such Holder's successors, assigns and
legal representatives.
Section 13.3 Entire Agreement. This Agreement constitutes the
entire agreement among the parties. It supersedes any prior agreement or
understandings among them, and it may not be modified or amended in any
manner other than as set forth herein.
Section 13.4 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY AND INTERPRETED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF DELAWARE AND ALL RIGHTS AND REMEDIES SHALL BE
GOVERNED BY SUCH LAWS WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS.
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<PAGE>
Section 13.5 Effect. Except as herein otherwise specifically
provided, this Agreement shall be binding upon and inure to the benefit of
the parties and their legal representatives, successors and assigns.
Section 13.6 Pronouns and Number. Wherever from the context it
appears appropriate, each term stated in either the singular or the plural
shall include the singular and the plural, and pronouns stated in either
the masculine, feminine or neuter shall include the masculine, feminine and
neuter.
Section 13.7 Captions. Captions contained in this Agreement are
inserted only as a matter of convenience and in no way define, limit or
extend the scope or intent of this Agreement or any provisions hereof.
Section 13.8 Partial Enforceability. If any provision of this
Agreement, or the application of such pro- vision to any Person or
circumstance, shall be held invalid, the remainder of this Agreement, or
the application of such provision to persons or circumstances other than
those to which it is held invalid, shall not be affected thereby.
Section 13.9 Counterparts. This Agreement may contain more than
one counterpart of the signature page and this Agreement may be executed by
the affixing of the signature of each of the Partners to one of such
counterpart signature pages. All of such counterpart signatures pages shall
be read as though one, and they shall have the same force and effect as
though all of the signers had signed a single signature page.
Section 13.10 Waiver of Partition. Each Limited Partner hereby
irrevocably waives any and all rights (if any) that such Limited Partner
may have to maintain any action for partition of any of the Partnership's
property.
Section 13.11 Remedies. The failure of any party to seek redress
for violation of, or to insist upon the strict performance of, any
provision of this Agreement shall not prevent a subsequent act, which would
have originally constituted a violation, from having the effect of an
original violation. The rights and remedies provided by this Agreement are
cumulative and the use of any one right or remedy by any party shall not
preclude or waive its right to use any or all other remedies. Said rights
and remedies are given in addition to any other rights the parties may have
by law, statute, ordinance or otherwise.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amended
and Restated Agreement of Limited Partnership as of the date first above
stated.
General Partner:
COMSAT Corporation, a District of
Columbia corporation
By: /s/ Bruce L. Crockett
Bruce L. Crockett
President and Chief
Executive Officer
Initial Limited Partner:
COMSAT SPV, Inc.,
a Delaware corporation
By: /s/ Bruce L. Crockett
Bruce L. Crockett
President
Partnership:
COMSAT Capital I, L.P.,
a Delaware limited partnership
By: COMSAT Corporation, General
Partner
By: /s/ Bruce L. Crockett
Bruce L. Crockett
President
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<PAGE>
Annex A
[IF A GLOBAL LP CERTIFICATE ADD --
Unless this certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation
("DTC"), to COMSAT Capital I, L.P. or its agent for registration of
transfer, exchange, or payment, and any certificate issued is registered in
the name of Cede & Co. (or in such other name as is requested by an
authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as
the registered owner hereof, Cede & Co., has an interest herein.]
=============================================================================
Certificate Number Number of Preferred Securities
-----------------------------------------------------------------------------
R-_
=============================================================================
CUSIP NO. 205930209
Certificate Evidencing Preferred Securities
of
COMSAT Capital I, L.P.
81/8% Cumulative Monthly Income Preferred Securities
(liquidation preference $25 per Preferred Security)
COMSAT Capital I, L.P., a limited partnership formed under the
laws of the State of Delaware (the "Partnership"), hereby certifies that
_____ (the "Holder") is the registered owner of _______ preferred
securities of the Partnership representing limited partnership interests in
the Partnership, which are designated the 81/8% Cumulative Monthly Income
Preferred Securities (liquidation preference $25 per Preferred Security)
(the "Preferred Securities"). The Preferred Securities are fully paid and
are nonassess- able interests in the Partnership, as to which the Partners
in the Partnership who hold the Preferred Securities (the "Preferred
Security Holders"), in their capacities as
A-1
<PAGE>
Partners in the Partnership, will have no liability solely by
reason of being Preferred Security Holders (subject to the obligation of a
Preferred Security Holder to repay any funds wrongfully distributed to it),
and are freely transferable on the books and records of the Partnership, in
person or by a duly authorized attorney, upon surrender of this certificate
duly endorsed and in proper form for transfer accompanied by a written
instrument of transfer in form satisfactory to COMSAT Corporation, a
District of Columbia corporation ("COMSAT"), duly executed by the Preferred
Security Holder or a duly authorized attorney. The powers, preferences and
special rights and limitations of the Preferred Securities are set forth
in, and this certificate and the Preferred Securities represented hereby
are issued and shall in all respects be subject to the terms and provisions
of, the Amended and Restated Limited Partnership Agreement of the
Partnership dated as of July 18, 1995, as the same may be amended from time
to time in accordance with its terms (the "Limited Partnership Agreement"),
authorizing the issuance of the Preferred Securities and determining the
powers, preferences and other special rights and limitations, regarding
Dividends, voting, return of capital and otherwise, and other matters
relating to the Preferred Securities. Capitalized terms used herein but not
defined herein shall have the meaning given them in the Limited Partnership
Agreement. The Holder is entitled to the benefits of the Guarantee
Agreement of COMSAT, dated as of July 18, 1995 (the "Guarantee") to the
extent provided therein. The Partnership will furnish a copy of the Limited
Partnership Agreement and the Guarantee to the Holder without charge upon
written request to the Partnership at its principal place of business or
registered office.
The Holder, by accepting this certificate, is deemed to have
agreed (i) to be bound by the provisions of the Limited Partnership
Agreement and (ii) that the Subordinated Debentures acquired by the
Partnership with the proceeds from the issuance of the Preferred Securities
are subordinated and junior in right of payment to all Senior Indebtedness
of COMSAT as and to the extent provided in the Subordinated Debentures and
(iii) that the Guarantee ranks (x) subordinate and junior in right of
payment to all liabilities of COMSAT, (y) pari passu with the most senior
preferred or preference stock now or hereafter issued by COMSAT and with
any guarantee now or hereafter entered into by COMSAT in respect of any
preferred or preference stock or preference securities of any Affiliate of
COMSAT, and (z) senior to COMSAT Common Stock and any other class or series
of capital stock of COMSAT or any of its Affiliates which by its express
terms ranks junior in the payment of dividends and amounts on liquidation,
dissolution, and winding-up to the Preferred Securities, in each case, as
and to the extent
A-2
<PAGE>
provided in the Guarantee. Upon receipt of this certificate, the
Holder is admitted to the Partnership as a Limited Partner, is bound by the
Limited Partnership Agreement and is entitled to the benefits thereunder.
IN WITNESS WHEREOF, this certificate has been executed on behalf
of the Partnership by its duly authorized General Partner and countersigned
by a duly authorized officer of each of COMSAT Corporation, as Guarantor,
and The First National Bank of Chicago, as Registrar and Transfer Agent,
this _____ day of _________________, ____.
COMSAT CAPITAL I, L.P.
By: COMSAT CORPORATION,
its General Partner
By:
Name:
Title:
COMSAT CORPORATION,
as Guarantor
By:
Name:
Title:
Registered and Countersigned by
THE FIRST NATIONAL BANK OF CHICAGO
By:
Authorized Signature
A-3
<PAGE>
Exhibit 4(b)
Page 69
<PAGE>
GUARANTEE AGREEMENT
GUARANTEE AGREEMENT (this "Guarantee"), dated as of July 18, 1995 is
executed and delivered by COMSAT Corporation, a corporation organized under
the laws of the District of Columbia ("COMSAT"), for the benefit of the
Holders (as hereinafter defined) from time to time of the Preferred
Securities (as hereinafter defined) of COMSAT Capital I, L.P., a Delaware
limited partnership ("COMSAT Capital" or the "Partnership").
WHEREAS, COMSAT Capital is issuing up to 8,000,000 of its 81/8%
Cumulative Monthly Income Preferred Securities, with a liquidation
preference of $25 each (the "Preferred Securities"), and COMSAT desires to
issue this Guarantee for the benefit of the Holders, as provided herein;
WHEREAS, COMSAT Capital will purchase the Subordinated Debentures (as
hereinafter defined) issued pursuant to the Indenture (as hereinafter
defined) with the proceeds from the issuance and sale of the Preferred
Securities and its other partnership interests (the "Partnership
Interests"); and WHEREAS, COMSAT desires hereby unconditionally and
irrevocably to agree, to the extent set forth herein, to pay to the Holders
the Guarantee Payments (as hereinafter defined) and to perform the other
obligations set forth herein. NOW, THEREFORE, in consideration of the
purchase by each Holder of Preferred Securities, which purchase COMSAT
hereby agrees shall benefit COMSAT, COMSAT executes and delivers this
Guarantee for the benefit of the Holders.
1. Definitions. As used in this Guarantee, the terms set forth below shall,
unless the context otherwise requires, have the following meanings.
Capitalized terms used herein but not otherwise defined herein shall have
the meanings ascribed to such terms in the Amended and Restated Agreement
of Limited Partnership of COMSAT Capital I, L.P., dated as of July 18, 1995
(the "Limited Partnership Agreement").
1.1 "Additional Dividends" means Dividends (as defined herein) that
shall accumulate on any Dividend arrearages in respect of the Preferred
Securities at the rate of 81/8% per annum, compounded monthly.
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<PAGE>
1.2 "Dividends" means the cumulative cash distributions from the
Partnership with respect to the Preferred Securities, accumulating from
July 18, 1995 and payable monthly in arrears on the last day of each
calendar month of the year, commencing July 31, 1995.
1.3 "General Partner" means COMSAT in its capacity as general partner
in COMSAT Capital or any permitted successor general partner in COMSAT
Capital admitted as such pursuant to the applicable provisions of the
Limited Partnership Agreement.
1.4 "Guarantee Payments" shall mean the following payments, without
duplication, to the extent not paid by COMSAT Capital: (a) any accrued and
unpaid Dividends (including any Additional Dividends accrued thereon) to
the extent such Dividends have been declared by COMSAT Capital on the
Preferred Securities out of moneys held by COMSAT Capital and legally
available therefor; (b) the Redemption Price (as defined herein) (including
all accrued and unpaid Dividends) payable out of funds legally available
therefor with respect to any Preferred Securities called for redemption by
COMSAT Capital; and (c) upon a liquidation of COMSAT Capital, the lesser of
(i) the Liquidation Distribution (as defined herein) and (ii) the amount of
assets of COMSAT Capital remaining available for distribution to Holders in
liquidation of COMSAT Capital, except in the event that a Tax Event or an
Investment Company Event has occurred and the General Partner has elected
to dissolve COMSAT Capital and cause the Subordinated Debentures to be
distributed to the Holders in liquidation of COMSAT Capital as provided in
Clauses (ii) or (iii) of Section 6.2(c) of the Limited Partnership
Agreement.
1.5 "Holder" shall mean the registered holder from time to time of any
Preferred Securities of COMSAT Capital; provided, however, that in
determining whether the Holders of the requisite percentage of Preferred
Securities have given any request, notice, consent or waiver hereunder,
"Holder" shall not include, and outstanding liquidation preference shall
not include the liquidation preference of Preferred Securities held by,
COMSAT or any Subsidiary thereof, either directly or indirectly.
1.6 "Indenture" shall mean the Indenture, dated as of July 18, 1995,
between COMSAT and The First National Bank of Chicago, as trustee, relating
to the Subordinated Debentures.
1.7 "Liquidation Distribution" shall mean the aggregate of the stated
liquidation preference of $25 per Preferred Security, plus all accrued and
unpaid Dividends on the Preferred Securities to the date of payment,
including any Additional Dividends accrued thereon.
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<PAGE>
1.8 "Redemption Price" shall have the meaning ascribed to such term in
the Limited Partnership Agreement.
1.9 "Special Representative" shall mean a special representative
appointed by the Holders of the Preferred Securities pursuant to Section
6.2(f) of the Limited Partnership Agreement.
1.10 "Subordinated Debentures" shall mean the 81/8% Junior
Subordinated Deferrable Interest Debentures issued pursuant to the
Indenture.
1.11 "Subsidiary" of any Person means an entity more than 50% of the
outstanding voting stock of which is owned, directly or indirectly, by such
Person or by one or more other Subsidiaries, or by such Person and one or
more other Subsidiaries. For the purposes of this definition, "voting
stock" means stock which ordinarily has voting power for the election of
directors, whether at all times or only so long as no senior class of stock
has such voting power by reason of any contingency.
2. Guarantee.
2.1 General. COMSAT irrevocably and unconditionally agrees to pay in
full to the Holders the Guarantee Payments, as and when due (except,
subject to the proviso in Section 2.7 hereof, to the extent paid by COMSAT
Capital), regardless of any defense, right of set-off or counterclaim which
COMSAT Capital may have or assert. This Guarantee is continuing,
irrevocable, unconditional and absolute. COMSAT's obligation to make a
Guarantee Payment may be satisfied by direct payment of the required
amounts by COMSAT to the Holders or by causing COMSAT Capital to pay such
amounts to the Holders.
2.2 Waiver of Certain Rights. COMSAT hereby waives notice of
acceptance of this Guarantee and of any liability to which it applies or
may apply, presentment, demand for payment, protest, notice of nonpayment,
notice of dishonor, notice of redemption and all other notices and demands.
2.3 Obligations Not Affected. The obligations, covenants, agreements
and duties of COMSAT under this Guarantee shall in no way be affected or
impaired by reason of the happening from time to time of any of the
following:
(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by COMSAT Capital of any express or implied
agreement, covenant, term or condition relating to the Preferred
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<PAGE>
Securities to be performed or observed by COMSAT Capital;
(b) the extension of time for the payment by COMSAT Capital of all or
any portion of the Dividends (including any Additional Dividends),
Redemption Price, Liquidation Distribution or any other sums payable under
the terms of the Preferred Securities or the extension of time for the
performance of any other obligation under, arising out of, or in connection
with, the Preferred Securities;
(c) any failure, omission, delay or lack of diligence on the part of
the Holders or the Special Representative to enforce, assert or exercise
any right, privilege, power or remedy conferred on such Holders or such
Special Representative pursuant to the terms of the Preferred Securities or
the Limited Partnership Agreement, or any action on the part of the
Holders, the Special Representative or COMSAT Capital granting or
consenting to indulgence or extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution, winding-up,
sale of any collateral, receivership, insolvency, bankruptcy, assignment
for the benefit of creditors, reorganization, arrangement, composition or
readjustment of debt of, or other similar proceedings affecting, COMSAT
Capital or any of the assets of COMSAT Capital;
(e) any invalidity of, or defect or deficiency in, any of the
Preferred Securities; or
(f) the settlement or compromise of any obligation guaranteed hereby or
hereby incurred.
There shall be no obligation of the Holders to give notice to, or obtain
any consent of, COMSAT with respect to the happening of any of the
foregoing.
2.4 Guarantor, Special Representative or Holders May Proceed Directly
Against COMSAT. This Guarantee is a guarantee of payment and not of
collection. This Guarantee will be deposited with the General Partner to be
held for the benefit of the Holders. In the event of an appointment of a
Special Representative pursuant to the Limited Partnership Agreement to,
among other things, enforce the rights of the Holders under this Guarantee,
the Special Representative may take possession of this Guarantee for such
purpose. If no Special Representative has been appointed to enforce this
Guarantee, the General Partner has the right to enforce this Guarantee on
behalf of the Holders.
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<PAGE>
The Holders of not less than 10% in liquidation preference of all
outstanding Preferred Securities have the right to direct the time, method
and place of conducting any proceeding for any remedy available in respect
of this Guarantee, including the giving of directions to the General
Partner or the Special Representative, as the case may be. If the General
Partner or the Special Representative fails to enforce this Guarantee as
provided above, any Holder may enforce this Guarantee directly against
COMSAT as guarantor, and COMSAT waives any right or remedy to require that
any action be brought against COMSAT Capital or any other person or entity
before proceeding against COMSAT. Subject to Section 2.5 hereof, all
waivers herein contained shall be without prejudice to the right of a
Holder or the Special Representative, at its option, to proceed against
COMSAT Capital, whether by separate action or by joinder. COMSAT agrees
that this Guarantee shall not be discharged except by payment of the
Guarantee Payments in full (to the extent not previously paid by COMSAT
Capital, but subject to the proviso in Section 2.7 hereof) and by complete
performance of all obligations under this Guarantee.
2.5 Subrogation. COMSAT shall be subrogated to all (if any) rights of
the Holders against COMSAT Capital in respect of any amounts paid to the
Holders by COMSAT under this Guarantee and shall have the right to waive
payment of any amount of Dividends in respect of which payment has been
made to the Holders by COMSAT pursuant to Section 2.1 hereof; provided,
however, that COMSAT shall not (except to the extent required by mandatory
provisions of law) exercise any rights which it may acquire by way of
subrogation or any indemnity, reimbursement or other agreement, in all
cases as a result of a payment under this Guarantee, if, at the time of any
such payment, any amounts are due and unpaid under this Guarantee. If any
amount shall be paid to COMSAT in violation of the preceding sentence,
COMSAT agrees to hold such amount in trust for the Holders and to pay over
such amount to the Holders.
2.6 Independent Obligations. COMSAT acknowledges that its obligations
hereunder are independent of the obligations of COMSAT Capital with respect
to the Preferred Securities and that COMSAT shall be liable as principal
and sole debtor under this Guarantee to make Guarantee Payments pursuant to
the terms of this Guarantee notwithstanding the occurrence of any event
referred to in subsections (a) through (f), inclusive, of Section 2.3
hereof.
2.7 Termination. This Guarantee shall terminate as to each Holder and
be of no further force and effect upon full payment of the Redemption Price
of all Preferred Securities held by such Holder and will terminate
completely upon full payment of the amounts payable upon liquidation of
COMSAT Capital; provided, however, that this Guarantee shall continue to be
effective or
Page 5
<PAGE>
shall be reinstated, as the case may be, if at any time any Holder must
restore payment of any sums paid under the Preferred Securities or under
this Guarantee for any reason whatsoever.
3. Certain Covenants of COMSAT.
3.1 Dividends and Other Payments. So long as any Preferred Securities
remain outstanding, COMSAT will not declare or pay any dividend on, or
redeem, purchase, acquire or make a liquidation payment with respect to,
any of its capital stock (other than as a result of a reclassification of
capital stock or the exchange or conversion of one class or series of
capital stock for another class or series of capital stock) or make any
guarantee payments with respect to the foregoing, if at such time (a)
COMSAT has exercised its option to defer interest payments on the
Subordinated Debentures and such deferral is continuing, (b) COMSAT shall
be in default with respect to its payment or other obligations hereunder,
or (c) there shall have occurred any event that, with the giving of notice
or the lapse of time or both, would constitute an Event of Default under
the Indenture.
3.2 Certain Other Covenants. COMSAT covenants that, so long as any
Preferred Securities remain outstanding, it shall: (a) maintain direct 100%
ownership of the Partnership Interests and any other interests in COMSAT
Capital other than the Preferred Securities (except as permitted in the
Limited Partnership Agreement); (b) cause at least 3% of the total value of
COMSAT Capital and at least 3% of all interest in the capital, income,
gain, loss, deduction and credit of COMSAT Capital to be held by COMSAT as
General Partner; (c) not voluntarily dissolve, wind up or liquidate itself
or COMSAT Capital; (d) remain the General Partner of COMSAT Capital and
timely perform all of its duties as General Partner (including the duty to
cause COMSAT Capital to declare and pay dividends on the Preferred
Securities), unless a permitted successor General Partner is appointed
pursuant to the Limited Partnership Agreement; and (e) subject to the terms
of the Preferred Securities, use reasonable efforts to cause COMSAT Capital
to remain a Delaware limited partnership and otherwise continue not to be
treated as an association taxable as a corporation for United States
federal income tax purposes, except, in all cases, in connection with
certain mergers, consolidations or amalgamations permitted by the Limited
Partnership Agreement.
4. Subordination.
4.1 Subordination. COMSAT covenants and agrees, and each Holder by his
or her acceptance of such Preferred Securities shall be deemed to
acknowledge and agree that for all purposes (including any bankruptcy,
insolvency, or reorganization of
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<PAGE>
COMSAT) this Guarantee constitutes an unsecured obligation of COMSAT
ranking (i) subordinate and junior in right of payment to all liabilities
of COMSAT, (ii) pari passu with the most senior preferred or preference
stock now or hereafter issued by COMSAT and with any guarantee now or
hereafter entered into by COMSAT in respect of any preferred or preference
stock or preferred securities of any affiliate of COMSAT and (iii) senior
to COMSAT Common Stock.
5. Miscellaneous.
5.1 Third Party Beneficiaries. Subject to the limitations of Section
2.4, all of COMSAT's obligations under this Guarantee shall be directly
enforceable by the Holders from time to time of the Preferred Securities.
Each Holder is an intended third-party beneficiary of this Guarantee.
5.2 Successors and Assigns. All guarantees and agreements contained in
this Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of COMSAT and shall inure to the benefit of the Holders
then outstanding. Except as permitted by Section 5.4 hereof, COMSAT shall
not assign its rights or delegate its obligations hereunder without the
prior approval of the Holders of not less than 66-2/3% of the aggregate
liquidation preference of the Preferred Securities then outstanding.
5.3 Amendments. Except with respect to any changes which do not
adversely affect the rights of Holders (in which case no vote will be
required), this Guarantee may only be amended with the prior approval of
the Holders of not less than 66-2/3% of the aggregate liquidation
preference of the Preferred Securities then outstanding, which approval
shall be obtained as described in the Limited Partnership Agreement.
5.4 Consolidation, Merger or Sale of Assets. COMSAT, without the
consent of any Holders, may merge or consolidate with or into another
entity or may permit another entity to merge or consolidate with or into
COMSAT, and may sell, transfer or lease all or substantially all of
COMSAT's assets to another entity, if (a) at such time no Event of Default
(as defined in the Indenture) shall have occurred and be continuing, or
would occur as a result of such merger, consolidation or sale, transfer or
lease and (b) the survivor of such merger or consolidation or entity to
which COMSAT assets are sold, transferred or leased is an entity organized
under the laws of the United States or any state thereof or the District of
Columbia, becomes the General Partner (if COMSAT is then the General
Partner), assumes all of COMSAT's obligations under this Guarantee and has
a net worth equal to at least 10% of the total capital contributions to
COMSAT Capital.
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<PAGE>
5.5 Notices. Any notice, request or other communication required or
permitted to be given hereunder to COMSAT shall be given in writing by
delivering the same against receipt therefor by registered mail, hand
delivery, facsimile transmission (confirmed by registered mail) or telex,
addressed to COMSAT, as follows (and if so given, shall be deemed given
when mailed; upon receipt of facsimile confirmation, if sent by facsimile
transmission; or upon receipt of an answer-back, if sent by telex):
COMSAT Corporation
6560 Rock Spring Drive
Bethesda, Maryland 20817
Attention: Chief Financial Officer
Telecopy: (301) 214-7132
Any notice, request or other communication required or permitted to be
given hereunder to the Holders shall be given by COMSAT in the same manner
as notices are sent by COMSAT Capital to the Holders.
5.6 Genders. The masculine and neuter genders used herein shall
include the masculine, feminine and neuter genders.
5.7 Guarantee Not Separately Transferable. This Guarantee is solely
for the benefit of the Holders and is not separately transferable from the
Preferred Securities.
5.8 Governing Law. THIS GUARANTEE SHALL BE GOVERNED BY AND CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
5.9 Severability. In case any provision of this Guarantee shall be
invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
5.10 Headings. The article and section headings herein are for
convenience only and shall not affect the construction hereof.
Page 8
<PAGE>
IN WITNESS WHEREOF, COMSAT has caused this Guarantee to be duly
executed as of the day and year first above written.
COMSAT Corporation
By: /s/ Bruce L. Crockett
Bruce L. Crockett
President and Chief Executive
Officer
ATTEST:
/s/ Nancy E. Weber
Assistant Secretary
Page 9
<PAGE>
Exhibit 4(c)
Page 79
<PAGE>
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COMSAT Corporation,
To
The First National Bank of Chicago,
Trustee
Indenture
Dated as of July 18, 1995
$206,200,000
8-1/8% Junior Subordinated Deferrable Interest Debentures
Due July 18, 2025
----------------------------------------------------------------------------
<PAGE>
Certain Sections of this Indenture relating to
Sections 310 through 318 of the
Trust Indenture Act of 1939:
Trust Indenture Indenture
Act Section Section
------------------ -----------
Section 310 (a)(1)..................................................... 609
(a)(2)..................................................... 609
(a)(3)..................................................... N/A
(a)(4)..................................................... N/A
(b) ..................................................... 608,610
Section 311 (a) ..................................................... 613
(b) ..................................................... 613
Section 312 (a) ..................................................... 701
702(a)
(b) ..................................................... 702(b)
(c) ..................................................... 702(c)
Section 313 (a) ..................................................... 703(a)
(b) ..................................................... 703(a)
(c) ..................................................... 703(a)
(d) ..................................................... 703(b)
Section 314 (a) ..................................................... 704
(b) ..................................................... N/A
(c)(1)..................................................... 102
(c)(2)..................................................... 102
(c)(3)..................................................... N/A
(d) ..................................................... N/A
(e) ..................................................... 102
Section 315 (a) ..................................................... 601
(b) ..................................................... 602
(c) ..................................................... 601
(d) ..................................................... 601
(e) ..................................................... 514
Section 316 (a)(1)(A).................................................. 502
512
(a)(1)(B).................................................. 513
(a)(2)..................................................... N/A
(b) ..................................................... 508
(c) ..................................................... 104(c)
Section 317 (a)(1)..................................................... 503
(a)(2)..................................................... 504
(b) ..................................................... 1003
Section 318 (a) ..................................................... 107
Note: This reconciliation and tie shall not, for any purpose, be
deemed to be a part of the Indenture.
<PAGE>
TABLE OF CONTENTS
PAGE
Parties................................................................ 1
Recitals of the Company and COMSAT Capital............................. 1
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
Section 101. Definitions............................................ 2
Act .............................................. 2
Additional Dividends................................... 2
Additional Interest.................................... 3
Affiliate.............................................. 3
Board of Directors..................................... 3
Board Resolution....................................... 3
Business Day........................................... 3
Capital Lease Obligation............................... 3
Commission............................................. 3
Common Stock........................................... 4
Company .............................................. 4
Company Request" or "Company
Order................................................ 4
COMSAT Capital......................................... 4
Corporate Trust Office................................. 4
Corporation............................................ 4
Defaulted Interest..................................... 4
Designated Senior Holder............................... 4
Event of Default....................................... 4
General Partner........................................ 4
General Partner Contribution........................... 4
Holder .............................................. 4
Indenture.............................................. 4
Interest Payment Date.................................. 5
Limited Partnership Agreement.......................... 5
Maturity .............................................. 5
NYSE .............................................. 5
Officers' Certificate.................................. 5
Opinion of Counsel..................................... 5
Outstanding............................................ 5
Parent Guarantee....................................... 6
Paying Agent........................................... 6
Person .............................................. 6
Predecessor Security................................... 7
Preferred Securities................................... 7
Note: This table of contents shall not, for any purpose, be
deemed to be a part of the Indenture.
i
<PAGE>
Redemption Date........................................ 7
Redemption Price....................................... 7
Regular Record Date.................................... 7
Responsible Officer.................................... 7
Scheduled Maturity Date................................ 7
Securities............................................. 7
Securities Payment..................................... 7
Security Register" and
Indebtedness........................................ 7
Senior Payment Default................................. 8
Special Record Date.................................... 8
Special Representative................................. 8
Stated Maturity........................................ 8
Subsidiary............................................. 8
Trustee .............................................. 9
Trust Indenture Act.................................... 9
--------------------------------------------------------------------------
<PAGE>
.... 9
Section 102. Compliance Certificates and
Opinions........................................... 9
Section 103. Form of Documents Delivered to
Trustee............................................. 10
Section 104. Acts of Holders; Record Dates........................... 10
Section 105. Notices, etc., to Trustee,
Company and COMSAT Capital.......................... 11
Section 106. Notice to Holders; Waiver............................... 12
Conflict with Trust Indenture
Act................................................. 13
Section 109. Effect of Headings and Table
of Contents......................................... 13
Section 110. Successors and Assigns.................................. 13
Section 111. Separability Clause..................................... 13
Section 112. Benefits of Indenture................................... 13
Section 113. Governing Law........................................... 14
Section 114. Legal Holidays.......................................... 14
ARTICLE TWO
SECURITY FORMS
Section 201. Forms Generally......................................... 14
Section 202. Form of Face of Security................................ 15
Section 203. Form of Reverse of Security............................. 18
Section 204. Form of Trustee's Certificate
of Authentication................................... 20
Note: This table of contents shall not, for any purpose, be
deemed to be a part of the Indenture.
ii
<PAGE>
ARTICLE THREE
THE SECURITIES
Section 301. Title and Terms......................................... 21
Section 302. Denominations........................................... 24
Section 303. Execution, Authentication,
Delivery and Dating................................... 24
Section 304. Temporary Securities.................................... 24
Section 305. Registration, Registration of
Transfer and Exchange................................. 25
Section 306. Mutilated, Destroyed, Lost and
Stolen Securities..................................... 26
Section 307. Payment of Interest; Interest
Rights Preserved...................................... 27
Section 308. Persons Deemed Owners................................... 28
Section 309. Cancellation............................................ 28
Section 310. Computation of Interest................................. 29
ARTICLE FOUR
SATISFACTION AND DISCHARGE
Section 401. Satisfaction and Discharge of
Indenture............................................. 29
Section 402. Application of Trust Money.............................. 30
Section 403. Defeasance and Discharge of
Indenture............................................. 31
Section 404. Reinstatement........................................... 33
ARTICLE FIVE
REMEDIES
Section 501. Events of Default....................................... 34
Section 502. Acceleration of Maturity;
Rescission and Annulment.............................. 35
Section 503. Collection of Indebtedness and
Suits for Enforcement by Trustee...................... 36
Section 504. Trustee May File Proofs of
Claim................................................. 37
Section 505. Trustee May Enforce Claims
Without Possession of Securities...................... 37
Section 506. Application of Money Collected.......................... 37
Section 507. Limitation on Suits..................................... 38
Section 508. Unconditional Right of Holders
to Receive Principal and
Interest.............................................. 39
Note: This table of contents shall not, for any purpose, be
deemed to be a part of the Indenture.
iii
<PAGE>
Section 509. Restoration of Rights and
Remedies.............................................. 39
Section 510. Rights and Remedies
Cumulative............................................ 39
Section 511. Delay or Omission Not Waiver............................ 39
Section 512. Control by Holders...................................... 40
Section 513. Waiver of Past Defaults................................. 40
Section 514. Undertaking for Costs................................... 41
Section 515. Waiver of Stay or Extension
Laws.................................................. 41
ARTICLE SIX
THE TRUSTEE
Section 601. Certain Duties and
Responsibilities...................................... 41
Section 602. Notice of Defaults...................................... 43
Section 603. Certain Rights of Trustee............................... 43
Section 604. Not Responsible for Recitals
or Issuance of Securities............................. 44
Section 605. May Hold Securities..................................... 44
Section 606. Money Held in Trust..................................... 44
Section 607. Compensation and
Reimbursement......................................... 44
Section 608. Disqualification; Conflicting
Interests............................................. 45
Section 609. Corporate Trustee Required;
Eligibility........................................... 45
Section 610. Resignation and Removal;
Appointment of Successor.............................. 45
Section 611. Acceptance of Appointment by
Successor............................................. 47
Section 612. Merger, Conversion,
Consolidation or Succession to
Business.............................................. 47
Section 613. Preferential Collection of
Claims Against Company................................ 48
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
Section 701. Company to Furnish Trustee
Names and Addresses of
Holders................................................. 48
Section 702. Preservation of Information;
Communications to Holders............................ 48
Section 703. Reports by Trustee...................................... 49
Section 704. Reports by Company...................................... 49
Note: This table of contents shall not, for any purpose, be
deemed to be a part of the Indenture.
iv
<PAGE>
ARTICLE EIGHT
CONSOLIDATION, MERGER, OR SALE OF ASSETS
Section 801. No Restrictions......................................... 49
Section 802. Successor Substituted................................... 50
ARTICLE NINE
SUPPLEMENTAL INDENTURES
Section 901. Supplemental Indentures
Without Consent of Holders........................... 51
Section 902. Supplemental Indentures with
Consent of Holders................................... 52
Section 903. Execution of Supplemental
Indentures........................................... 52
Section 904. Effect of Supplemental
Indentures........................................... 53
Section 905. Conformity with Trust
Indenture Act........................................ 53
Section 906. Reference in Securities to
Supplemental Indentures.............................. 53
ARTICLE TEN
COVENANTS; REPRESENTATIONS AND WARRANTIES
Section 1001. Payment of Principal and
Interest............................................. 54
Section 1002. Maintenance of Office or
Agency............................................... 54
Section 1003. Money for Securities Payments
to Be Held in Trust.................................. 54
Section 1004. Statement by Officers as to
Default.............................................. 55
Section 1005. Existence............................................... 56
Section 1006. Additional Covenants.................................... 56
ARTICLE ELEVEN
SUBORDINATION OF SECURITIES
Section 1101. Securities Subordinate to
Senior Indebtedness.................................. 57
Section 1102. Payment Over of Proceeds Upon
Dissolution, Etc..................................... 58
Section 1103. No Payment When Senior
Indebtedness in Default.............................. 59
Note: This table of contents shall not, for any purpose, be
deemed to be a part of the Indenture.
v
<PAGE>
Section 1104. Payment Permitted If No
Default.............................................. 59
Section 1105. Subrogation to Rights of
Holders of Senior Indebtedness....................... 60
Section 1106. Provisions Solely to Define
Relative Rights...................................... 60
Section 1107. Trustee to Effectuate
Subordination........................................ 61
Section 1108. No Waiver of Subordination
Provisions........................................... 61
Section 1109. Notice to Trustee....................................... 62
Section 1110. Reliance on Judicial Order or
Certificate of Liquidating Agent..................... 63
Section 1111. Trustee Not Fiduciary for
Holders of Senior
Indebtedness......................................... 63
Section 1112. Rights of Trustee as Holder of
Senior Indebtedness;
Preservation of Trustee's
Rights............................................... 63
Section 1113. Article Applicable to Paying
Agents............................................... 64
ARTICLE TWELVE
REDEMPTION OF SECURITIES
Section 1201. Mandatory Redemption; Optional
Redemption........................................... 64
Section 1202. Applicability of Article................................ 65
Section 1203. Election to Redeem; Notice to
Trustee.............................................. 65
Section 1204. Notice of Redemption.................................... 65
Section 1205. Deposit of Redemption Price............................. 66
Section 1206. Securities Payable on
Redemption Date...................................... 66
ANNEX A: Form of Amended and Restated Agreement of Limited
Partnership of COMSAT Capital I, L.P., dated as of July
18, 1995.
Note: This table of contents shall not, for any purpose, be
deemed to be a part of the Indenture.
vi
<PAGE>
INDENTURE, dated as of July 18, 1995, between COMSAT
Corporation, a corporation duly organized and existing under the laws of
the District of Columbia (herein called the "Company" or "COMSAT"),
currently having its principal office at 6560 Rock Spring Drive, Bethesda,
Maryland 20817, and the general partner of COMSAT Capital I, L.P., a
limited partnership organized under the laws of the State of Delaware
(herein called "COMSAT Capital"), currently having its principal office at
c/o COMSAT Corporation, 6560 Rock Spring Drive, Bethesda, Maryland 20817,
and The First National Bank of Chicago, a national banking association duly
organized and existing under the laws of the United States of America, as
Trustee (herein called the "Trustee"). Unless otherwise defined herein, all
capitalized terms used herein shall have the meanings ascribed to them in
the Amended and Restated Agreement of Limited Partnership of COMSAT Capital
I, L.P., dated as of July 18, 1995 (the "Limited Partnership Agreement"),
as in effect on the date hereof, the form of which is attached as Annex A
hereto.
RECITALS OF THE COMPANY
WHEREAS, COMSAT Capital may pursuant to the Underwriting
Agreement dated July 13, 1995 (the "Underwriting Agreement") among the
Company, COMSAT Capital and the Underwriters named therein issue up to
$200,000,000 aggregate liquidation preference of its 81/8% Cumulative
Monthly Income Preferred Securities (the "Preferred Securities") with a
liquidation preference of $25 per Preferred Security;
WHEREAS, the Company is guaranteeing the payment of
Dividends on the Preferred Securities (if and to the extent declared from
funds of COMSAT Capital legally available therefor), and payment of the
Redemption Price (as defined herein) and payments on liquidation with
respect to the Preferred Securities, to the extent provided in the
Guarantee Agreement dated July 18, 1995 between the Company and COMSAT
Capital (the "Parent Guarantee") for the benefit of the holders of the
Preferred Securities;
WHEREAS, the Company wishes to sell to COMSAT Capital
Securities in an aggregate principal amount equal to the sum of the capital
contributed by the Company to COMSAT Capital as the general partner thereof
(the "General Partner Contribution") and the aggregate stated liquidation
preference of the Preferred Securities issued and sold by COMSAT Capital
pursuant to the Underwriting Agreement;
WHEREAS, the Company has duly authorized the creation of
an issue of its 81/8% Junior Subordinated Deferrable Interest Debentures
Due July 18, 2025 (subject to extension) (the "Securities"), of
substantially the tenor and amount hereinafter set forth and to provide
therefor the Company has duly authorized the execution and delivery of this
Indenture; and
<PAGE>
WHEREAS, all things necessary to make the Securities,
when executed by the Company and authenticated and delivered hereunder and
duly issued by the Company, the valid obligations of the Company, and to
make this Indenture a valid agreement of the Company, in accordance with
their and its terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase
of the Securities by the Holders thereof, it is mutually agreed, for the
equal and proportionate benefit of all Holders of the Securities, as
follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
Section 101. Definitions.
For all purposes of this Indenture, except as otherwise
expressly provided or unless the context otherwise requires:
(1) the terms defined in this Article have the
meanings assigned to them in this Article and include the plural
as well as the singular;
(2) all other terms used herein which are defined in the
Trust Indenture Act (as defined herein), either directly or by reference
therein, have the meanings assigned to them therein;
(3) all accounting terms not otherwise defined herein
have the meanings assigned to them in accordance with generally accepted
accounting principles and, except as otherwise herein expressly provided,
the term "generally accepted accounting principles" with respect to any
computation required or permitted hereunder shall mean such accounting
principles as are generally accepted at the date of such computation; and
(4) the words "herein", "hereof" and "hereunder" and
other words of similar import refer to this Indenture as a whole and not to
any particular Article, Section or other subdivision.
"Act", when used with respect to any Holder, has the
meaning specified in Section 104.
"Additional Dividends" means dividends that shall accrue
on any dividend arrearages in respect of the Preferred Securities at the
rate of 81/8% per annum compounded monthly.
2
<PAGE>
"Additional Interest" means (i) interest that shall
accrue on any interest on the Securities that is not paid when due or not
paid during an extension of an interest payment period, which in either
case shall accrue at the rate of 81/8% per annum compounded monthly, and
(ii) an amount equal to any amount that COMSAT Capital would be required to
pay in taxes, duties, assessments or governmental charges of whatever
nature (other than withholding taxes) imposed by the United States or any
other taxing authority such that the net amounts received and retained by
COMSAT Capital after paying any such taxes, duties, assessments or
governmental charges will not be less than the amounts COMSAT Capital would
have received had no such taxes, duties, assessments or governmental
charges been imposed.
"Affiliate" of any specified Person (as defined herein)
means any other Person directly or indirectly controlling or controlled by
or under direct or indirect common control with such specified Person. For
the purposes of this definition, "Control" when used with respect to any
specified Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of
voting securities, by contract or otherwise; and the terms "Controlling"
and "Controlled" have meanings correlative to the foregoing.
"Board of Directors" means either the board of directors
of the Company or any duly authorized committee of that board.
"Board Resolution" means a copy of a resolution certified
by the Secretary or an Assistant Secretary of the Company to have been duly
adopted by the Board of Directors and to be in full force and effect on the
date of such certification, and delivered to the Trustee.
"Business Day" means any day other than a day on which
banking institutions in New York City are authorized or obligated by law or
executive order to close.
"Capital Lease Obligation" of any Person means the
obligation to pay rent or other payment amounts under a lease of (or other
indebtedness arrangements conveying the right to use) real or personal
property of such Person which is required to be classified and accounted
for as a capital lease or a liability on the face of a balance sheet of
such Person in accordance with generally accepted accounting principles.
"Commission" means the Securities and Exchange
Commission, as from time to time constituted, created under the Securities
Exchange Act of 1934, or, if at any time after the execution of this
instrument such Commission is not existing and performing the duties now
assigned to it under the Trust Indenture Act, then the body performing such
duties at such time.
3
<PAGE>
"Common Stock" includes any stock of any class of the
Company which has no preference in respect of dividends or of amounts
payable in the event of any voluntary or involuntary liquidation,
dissolution or winding-up of the Company and which is not subject to
redemption by the Company.
"Company" or "COMSAT" means the Person named as the
"Company" or "COMSAT" in the first paragraph of this instrument until a
successor Person shall have become such pursuant to the applicable
provisions of this Indenture, and thereafter "Company" or "COMSAT" shall
mean such successor Person.
"Company Request" or "Company Order" means a written
request or order signed in the name of the Company by its Chairman of the
Board, its Vice Chairman of the Board, its President or a Vice President,
and by its Treasurer, an Assistant Treasurer, its Secretary or an Assistant
Secretary, and delivered to the Trustee.
"COMSAT Capital" means the Person specified as such in
the first paragraph of this instrument or any successor thereto permitted
pursuant to the Limited Partnership Agreement.
"Corporate Trust Office" means the principal office of
the Trustee in Chicago, Illinois, at which at any particular time its
corporate trust business shall be administered.
"Corporation" means a corporation, association,
company, joint-stock company or business trust.
"Defaulted Interest" has the meaning specified in
Section 307.
"Designated Senior Holder" means, with respect to any
Senior Indebtedness, the Person designated as such in accordance with the
terms of the instrument evidencing such Senior Indebtedness or, if no
Person is so designated, any trustee, agent, fiduciary, representative,
group or Person authorized to act on behalf of the holders of such Senior
Indebtedness.
"Event of Default" has the meaning specified in Section
501.
"General Partner" has the meaning specified in the
Limited Partnership Agreement.
"General Partner Contribution" has the meaning
specified in the Recitals to this instrument.
"Holder" means a Person in whose name a Security is
registered in the Security Register (as defined herein).
"Indenture" means this instrument as originally
executed or as it may from time to time be supplemented or
4
<PAGE>
amended by one or more indentures supplemental hereto entered into pursuant
to the applicable provisions hereof, including, for all purposes of this
instrument and any such supplemental indenture, the provisions of the Trust
Indenture Act that are deemed to be a part of and govern this instrument
and any such supplemental indenture, respectively.
"Interest Deferral Event" means failure of Holders of
Preferred Securities (including any such failure following an election by
the Company to extend interest payments on the Securities in accordance
with their terms) to receive, for 18 consecutive months, the full amount of
Dividends (including Additional Dividends) accumulated on the Preferred
Securities.
"Interest Payment Date" means the Stated Maturity (as
defined herein) of each installment of interest on the Securities, which
shall be on the last day of each calendar month of each year commencing
July 31, 1995 until the principal of the Securities is paid or duly
provided for.
"Investment Grade" means with respect to any security a
security that has been rated in one of the four highest rating categories
by Standard & Poor's Corporation, Moody's Investors Service, Inc., Fitch
Investor Services, Duff & Phelps Credit Rating Company or any other
nationally recognized statistical
rating organization.
"Limited Partnership Agreement" has the meaning
specified in the first paragraph of this instrument.
"Maturity", when used with respect to any Security, means
the date on which the principal of such Security becomes due and payable as
therein or herein provided, whether at the Stated Maturity or by
declaration of acceleration, call for redemption or otherwise.
"NYSE" means the New York Stock Exchange.
"Officers' Certificate" means a certificate signed by the
Chairman of the Board, a Vice Chairman of the Board, the President or a
Vice President, and by the Treasurer, an Assistant Treasurer, the Secretary
or an Assistant Secretary, of the Company, and delivered to the Trustee.
One of the officers signing an Officers' Certificate given pursuant to
Section 1004 shall be the principal executive, financial or accounting
officer of the Company.
"Opinion of Counsel" means a written opinion of counsel,
who may be counsel for the Company, and who shall be acceptable to the
Trustee.
"Outstanding", when used with respect to Securities,
means, as of the date of determination, all Securities
5
<PAGE>
theretofore authenticated and delivered under this Indenture,
except:
(i) Securities theretofore cancelled by the Trustee
or delivered to the Trustee for cancellation;
(ii) Securities for whose payment or redemption money in
the necessary amount has been theretofore deposited with the Trustee or any
Paying Agent (other than the Company) in trust or set aside and segregated
in trust by the Company (if the Company shall act as its own Paying Agent
(as defined herein)) for the Holders of such Securities; provided, that, if
such Securities are to be redeemed, notice of such redemption has been duly
given pursuant to this Indenture or provision therefor satisfactory to the
Trustee has been made; and
(iii) Securities which have been paid pursuant to Section
306 or in exchange for or in lieu of which other Securities have been
authenticated and delivered pursuant to this Indenture, other than any such
Securities in respect of which there shall have been presented to the
Trustee proof satisfactory to it that such Securities are held by a bona
fide purchaser in whose hands such Securities are valid obligations of the
Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given any request,
demand, authorization, direction, notice, consent or waiver hereunder,
Securities owned by the Company or any other obligor upon the Securities or
any Affiliate of the Company or of such other obligor (other than COMSAT
Capital) shall be disregarded and deemed not to be Outstanding, except
that, in determining whether the Trustee shall be protected in relying upon
any such request, demand, authorization, direction, notice, consent or
waiver, only Securities which the Trustee knows to be so owned shall be so
disregarded. Securities so owned which have been pledged in good faith may
be regarded as Outstanding if the pledgee establishes to the satisfaction
of the Trustee the pledgee's right so to act with respect to such
Securities and that the pledgee is not the Company or any other obligor
upon the Securities or any Affiliate of the Company or of such other
obligor.
"Parent Guarantee" has the meaning specified in the
Recitals to this instrument.
"Paying Agent" means any Person authorized by the Company
to pay the principal of or interest on any Securities on behalf of the
Company.
"Person" means any individual, corporation, partnership,
joint venture, trust, unincorporated organization or government or any
agency or political subdivision thereof.
6
<PAGE>
"Predecessor Security" of any particular Security means
every previous Security evidencing all or a portion of the same debt as
that evidenced by such particular Security; and, for the purposes of this
definition, any Security authenticated and delivered under Section 306 in
exchange for or in lieu of a mutilated, destroyed, lost or stolen Security
shall be deemed to evidence the same debt as the mutilated, destroyed, lost
or stolen Security.
"Preferred Securities" has the meaning specified in the
Recitals to this instrument.
"Redemption Date", when used with respect to any Security
to be redeemed, means the date fixed for such redemption by or pursuant to
this Indenture.
"Redemption Price", when used with respect to any
Security to be redeemed, means the price at which it is to be redeemed
pursuant to this Indenture.
"Regular Record Date" for the interest payable on any
Interest Payment Date means the Business Day next preceding such Interest
Payment Date, subject to the proviso in Section 307.
"Responsible Officer", when used with respect to the
Trustee, means the chairman or any vice-chairman of the board of directors,
the chairman or any vice-chairman of the executive committee of the board
of directors, the chairman of the trust committee, the president, any vice
president, the secretary, any assistant secretary, the treasurer, any
assistant treasurer, the cashier, any assistant cashier, any trust officer
or assistant trust officer, the controller or any assistant controller or
any other officer of the Trustee customarily performing functions similar
to those performed by any of the above designated officers and also means,
with respect to a particular corporate trust matter, any other officer to
whom such matter is referred because of his knowledge of and familiarity
with the particular subject.
"Scheduled Maturity Date" means July 18, 2025.
"Securities" has the meaning specified in the Recitals
to this instrument.
"Securities Payment" has the meaning specified in
Section 1102.
"Security Register" and "Security Registrar" have the
respective meanings specified in Section 305.
"Senior Indebtedness" means the principal of, premium, if
any, interest on and any other payment due pursuant to any of the
following, whether outstanding at the date of execution hereof or hereafter
incurred:
7
<PAGE>
(i) all indebtedness of the Company evidenced by
notes, debentures, bonds or other securities sold by the Company
for money;
(ii) all Capital Lease Obligations of the Company;
(iii) all obligations of others of the kinds described
in the preceding clauses (i) and (ii) assumed by or guaranteed in
any manner by the Company or in effect guaranteed by the Company;
and
(iv) all renewals, extensions or refundings of
obligations of the kinds described in any of the preceding
clauses (i), (ii) and (iii);
provided, however, that the following shall not constitute Senior
Indebtedness: (A) that percentage of any indebtedness of the Company to any
Subsidiary (as defined herein) of the Company which is equal to the
Company's percentage interest in such Subsidiary, or (B) any indebtedness
which by the terms of the instrument creating or evidencing the same
expressly provides that such indebtedness is not superior in right of
payment to or is pari passu with the Securities. Senior Indebtedness shall
continue to be Senior Indebtedness and entitled to the benefits of the
subordination provisions irrespective of any amendment, modification or
waiver of any term of such Senior Indebtedness.
"Senior Payment Default" has the meaning specified in
Section 1103.
"Special Record Date" for the payment of any Defaulted
Interest means a date fixed by the Trustee pursuant to Section 307.
"Special Representative" means the Person appointed under
the Limited Partnership Agreement to exercise the right of COMSAT Capital
as a Holder of the Securities to accelerate the principal amount of the
Securities upon an Event of Default, to enforce COMSAT Capital's creditors
rights upon an Interest Deferral Event, and to enforce COMSAT Capital's
other creditor rights hereunder and under the Securities and the Guarantee.
"Stated Maturity", where used with respect to any
Security or any installment of interest thereon, means the date specified
in such Security as the fixed date on which the principal, together with
any accrued and unpaid interest (including Additional Interest), of such
Security or such installment of interest is due and payable.
"Subsidiary" means a corporation more than 50% of the
outstanding voting stock of which is owned, directly or indirectly, by the
Company or by one or more other Subsidiaries, or by the Company and one or
more other Subsidiaries. For the purposes of this definition, "voting
stock" means stock which
8
<PAGE>
ordinarily has voting power for the election of directors, whether at all
times or only so long as no senior class of stock has such voting power by
reason of any contingency.
"Trustee" means the Person named as the "Trustee" in the
first paragraph of this instrument until a successor Trustee shall have
become such pursuant to the applicable provisions of this Indenture, and
thereafter "Trustee" shall mean such successor Trustee.
"Trust Indenture Act" means the Trust Indenture Act of
1939 as in force at the date as of which this instrument was executed;
provided, however, that in the event the Trust Indenture Act of 1939 is
amended after such date, "Trust Indenture Act" means, to the extent
required by any such amendment, the Trust Indenture Act of 1939 as so
amended.
"U.S. Government Obligations" means direct obligations of
or obligations of a Person controlled or supervised by and acting as an
agency or instrumentality of (or certificates representing ownership
interests in such obligations held by a custodian on behalf of the owners
of such ownership interests provided that (except as required by law) such
custodian is not authorized to make any deduction from the amount payable
to the owner of such obligations from any amount received by the custodian
in respect of the U.S. Government Obligation or the specific payment of
principal of or interest on the U.S. Government Obligation evidenced by
such certificate) the United States of America, (i) the timely payment of
which is unconditionally guaranteed by the United States of America, (ii)
for the payment of which the full faith and credit of the United States of
America is pledged, and (iii) which are not callable or redeemable at the
issuer's option.
"Vice President", when used with respect to the Company
or the Trustee, means any vice president, whether or not designated by a
number or a word or words added before or after the title "vice president".
Section 102. Compliance Certificates and Opinions.
Upon any application or request by the Company to the
Trustee to take any action under any provision of this Indenture, the
Company shall furnish to the Trustee such certificates and opinions as may
be required under the Trust Indenture Act. Each such certificate or opinion
shall be given in the form of an Officers' Certificate, if to be given by
an officer of the Company, or an Opinion of Counsel, if to be given by
counsel, and shall comply with the requirements of the Trust Indenture Act
and any other requirement set forth in this Indenture.
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Section 103. Form of Documents Delivered to Trustee.
In any case where several matters are required to be
certified by, or covered by an opinion of, any specified Person, it is not
necessary that all such matters be certified by, or covered by the opinion
of, only one such Person, or that they be so certified or covered by only
one document, but one such Person may certify or give an opinion with
respect to some matters and one or more other such Persons as to other
matters, and any such Person may certify or give an opinion as to such
matters in one or several documents.
Any certificate or opinion of an officer of the Company
may be based, insofar as it relates to legal matters, upon a certificate or
opinion of, or representations by, counsel, unless such officer knows, or
in the exercise of reasonable care should know, that the certificate or
opinion or representations with respect to the matters upon which his
certificate or opinion is based are erroneous. Any such certificate or
opinion of counsel may be based, insofar as it relates to factual matters,
upon a certificate or opinion of, or representations by, an officer or
officers of the Company stating that the information with respect to such
factual matters is in the possession of the Company, unless such counsel
knows, or in the exercise of reasonable care should know, that the
certificate or opinion or representations with respect to such matters are
erroneous.
Where any Person is required to make, give or execute two
or more applications, requests, consents, certificates, statements,
opinions or other instruments under this Indenture, they may, but need not,
be consolidated and form one instrument.
Section 104. Acts of Holders; Record Dates.
(a) Any request, demand, authorization, direction,
notice, consent, waiver or other action provided by this Indenture to be
given or taken by Holders may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Holders in person
or by agent duly appointed in writing; and, except as herein otherwise
expressly provided, such action shall become effective when such instrument
or instruments are delivered to the Trustee and, where it is hereby
expressly required, to the Company. Such instrument or instruments (and the
action embodied therein and evidenced thereby) are herein sometimes
referred to as the "Act" of the Holders signing such instrument or
instruments. Proof of execution of any such instrument or of a writing
appointing any such agent shall be sufficient for any purpose of this
Indenture and (subject to Section 601) conclusive in favor of the Trustee
and the Company, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person
of any such instrument or writing may be proved by the affidavit
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of a witness of such execution or by a certificate of a notary public or
other officer authorized by law to take acknowledgments of deeds,
certifying that the individual signing such instrument or writing
acknowledged to him the execution thereof. Where such execution is by a
signer acting in a capacity other than his individual capacity, such
certificate or affidavit shall also constitute sufficient proof of his
authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be
proved in any other manner which the Trustee deems sufficient.
(c) The Company may, in the circumstances permitted by
the Trust Indenture Act, fix any day as the record date for the purpose of
determining the Holders entitled to give or take any request, demand,
authorization, direction, notice, consent, waiver or other action, or to
vote on any action, authorized or permitted to be given or taken by
Holders. If not set by the Company prior to the first solicitation of a
Holder made by any Person in respect of any such action, or, in the case of
any such vote, prior to such vote, the record date for any such action or
vote shall be the 30th day (or, if later, the date of the most recent list
of Holders required to be provided pursuant to Section 701) prior to such
first solicitation or vote, as the case may be. With regard to any record
date, only the Holders on such date (or their duly designated proxies)
shall be entitled to give or take, or vote on, the relevant action.
(d) The ownership of Securities shall be proved by
the Security Register.
(e) Any request, demand, authorization, direction,
notice, consent, waiver or other Act of the Holder of any Security shall
bind every future Holder of the same Security and the Holder of every
Security issued upon the registration of transfer thereof or in exchange
therefor or in lieu thereof in respect of anything done, omitted or
suffered to be done by the Trustee or the Company in reliance thereon,
whether or not notation of such action is made upon such Security.
Section 105. Notices, etc., to Trustee, Company and COMSAT
Capital.
Any request, demand, authorization, direction, notice,
consent, waiver or Act of Holders or other document provided or permitted
by this Indenture to be made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Company shall
be sufficient for every purpose hereunder if made, given,
furnished or filed in writing to or with the Trustee at its
Corporate Trust Office, Attention: Corporate Trust Services
Division, or
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(2) the Company by the Trustee or by any Holder shall be
sufficient for every purpose hereunder (unless otherwise herein expressly
provided) if in writing and mailed, first-class postage prepaid, to the
Company addressed to it at the address of its principal office specified in
the first paragraph of this instrument or at any other address previously
furnished in writing to the Trustee by the Company.
Section 106. Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders of
any event, such notice shall be sufficiently given (unless otherwise herein
expressly provided) if in writing and mailed, first-class postage prepaid,
to each Holder as to which such notice is required to be made, at his or
her address as it appears in the Security Register, not later than the
latest date (if any), and not earlier than the earliest date (if any),
prescribed for the giving of such notice. In any case where notice to
Holders is given by mail, neither the failure to mail such notice, nor any
defect in any notice so mailed, to any particular Holder shall affect the
sufficiency of such notice with respect to other Holders. Where this
Indenture provides for notice in any manner, such notice may be waived in
writing by the Person entitled to receive such notice, either before or
after the event, and such waiver shall be the equivalent of such notice.
Waivers of notice by Holders shall be filed with the Trustee, but such
filing shall not be a condition precedent to the validity of any action
taken in reliance upon such waiver.
In case by reason of the suspension of regular mail
service or by reason of any other cause it shall be impracticable to give
such notice by mail, then such notification as shall be made with the
approval of the Trustee shall constitute a sufficient notification for
every purpose hereunder.
Section 107. Immunity of Shareholders, Officers and Directors.
No recourse shall be had for the payment of the principal
of or the interest, if any, on, any Security, or for any claim based
thereon, or upon any obligation, covenant or agreement of this Indenture or
any supplemental indenture, against any shareholder, officer or director,
as such, past, present or future of the Company or of any successor
corporation, either directly or indirectly through the Company or any
successor corporation, whether by virtue of any constitution, statute or
rule of law or by the enforcement of any assessment or penalty or
otherwise; it being expressly agreed and understood that this Indenture and
any supplemental indenture and all the Securities are solely corporate
obligations, and that no personal liability whatever shall attach to, or is
incurred by, any shareholder, officer or director, past, present or future,
of the Company or of any successor corporation, either directly or
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indirectly through the Company or any successor corporation, because of the
incurring of the indebtedness hereby authorized or under or by reason of
any of the obligations, covenants or agreements contained in this Indenture
or in any of the Securities, or to be implied herefrom or therefrom; and
that any and all such personal liability is hereby expressly released and
waived as a condition of, and as part of the consideration for, the
execution of this Indenture, any supplemental indenture and the issue of
the Securities.
Section 108. Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts
with a provision of the Trust Indenture Act that is required under such
Trust Indenture Act to be a part of and govern this Indenture, the latter
provision shall control. If any provision of this Indenture modifies or
excludes any provision of the Trust Indenture Act that may be so modified
or excluded, the latter provision shall be deemed to apply to this
Indenture as so modified or to be excluded, as the case may be.
Section 109. 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 110. Successors and Assigns.
All covenants and agreements in this Indenture by the
Company shall bind their respective successors and assigns, whether so
expressed or not.
Section 111. Separability Clause.
In case any provision in this Indenture or in the
Securities shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any
way be affected or impaired thereby.
Section 112. Benefits of Indenture.
The Company's obligations under this Indenture and the
Securities will also be for the benefit of the holders from time to time of
the Preferred Securities. Nothing in this Indenture or in the Securities,
express or implied, shall give to any Person, other than the parties hereto
and their successors hereunder, the holders of Senior Indebtedness, the
holders of Preferred Securities, the Special Representative and the Holders
of Securities, any benefit or any legal or equitable right, remedy or claim
under this Indenture.
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Section 113. Governing Law.
This Indenture and the Securities shall be governed by
and construed in accordance with the laws of the State of New York.
Section 114. Legal Holidays.
In any case where any Interest Payment Date, Redemption
Date or Stated Maturity of any Security shall not be a Business Day, then
(notwithstanding any other provision of this Indenture or of the
Securities) payment of interest or principal need not be made on such date,
but may be made on the next succeeding Business Day (subject, in the case
of an Interest Payment Date, to Section 301) with the same force and effect
as if made on the Interest Payment Date or Redemption Date, or at the
Stated Maturity, provided that no interest shall accrue for the period from
and after such Interest Payment Date, Redemption Date or Stated Maturity,
as the case may be.
ARTICLE TWO
SECURITY FORMS
Section 201. Forms Generally.
The Securities and the Trustee's certificates of
authentication shall be in substantially the forms set forth in this
Article, with such appropriate insertions, omissions, substitutions and
other variations as are required or permitted by this Indenture, and may
have such letters, numbers or other marks of identification and such
legends or endorsements placed thereon as may be required to comply with
the rules of any securities exchange or as may, consistently herewith, be
determined by the officers executing such Securities, as evidenced by their
execution of the Securities.
The definitive Securities shall be printed, lithographed
or engraved or produced by any combination of these or other methods, all
as determined by the officers executing such Securities, as evidenced by
their execution of such Securities.
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Section 202. Form of Face of Security.
COMSAT Corporation
81/8% Junior Subordinated Deferrable Interest Debenture
Due July 18, 2025
No.R-$
COMSAT Corporation, a corporation duly organized and
existing under the laws of the District of Columbia (herein called
"COMSAT", which term includes any successor corporation under the Indenture
hereinafter referred to), for value received, hereby promises to pay to ,
or registered assigns, the principal sum of Dollars on the earliest of (i)
July 18, 2025 (the "Scheduled Maturity Date") (subject to extension, as
provided herein) or (ii), except in the event that (A) a Tax Event or an
Investment Company Event has occurred and the General Partner of COMSAT
Capital I, L.P. ("COMSAT Capital") has elected to dissolve COMSAT Capital
and cause the Securities to be distributed to the holders of the Preferred
Securities in liquidation of COMSAT Capital as provided in Clauses (ii) or
(iii) of Section 6.2(c) of the Limited Partnership Agreement or (B) COMSAT
Capital is consolidated, amalgamated, merged with or into, or replaced by,
or conveys, transfers or leases its properties and assets as an entirety
to, any corporation or other body pursuant to Section 9.12 of the Limited
Partnership Agreement, the date upon which COMSAT Capital is dissolved,
wound up, liquidated or terminated (other than any termination within the
meaning of section 708(b)(1)(B) of the Internal Revenue Code of 1986 or
equivalent provision of subsequent law, which termination does not
constitute a termination of COMSAT Capital for any other purpose), and to
pay interest thereon at the rate of 81/8% per annum from July 18, 1995,
payable monthly in arrears on the last day of each calendar month of each
year (each an "Interest Payment Date"), commencing July 31, 1995, until the
principal hereof is paid or made available for payment. Interest will
compound monthly and will accrue at the rate of 81/8% per annum on any
interest installment that is not paid at the end of any monthly interest
period or when otherwise due. The amount of interest payable for any period
will be computed on the basis of twelve 30-day months and a 360-day year
and, for any period shorter than a full monthly interest period, will be
computed on the basis of the actual number of days elapsed in such period.
In the event that any date on which interest is payable on this Security is
not a Business Day, then a payment of the interest payable on such date
will be made on the next succeeding day which is a Business Day (and
without any interest or other payment in respect of any such delay), except
that, if such Business Day is in the next succeeding calendar year, such
payment shall be made on the immediately preceding Business Day, in each
case with the same force and effect as if
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<PAGE>
made on such date. A "Business Day" shall mean any day other than a day on
which banking institutions in New York City are authorized or required by
law or executive order to close. The interest so payable, and punctually
paid or duly provided for, on any Interest Payment Date will, as provided
in the Indenture, be paid to the Person in whose name this Security (or one
or more Predecessor Securities) is registered at the close of business on
the Regular Record Date for such interest, which shall be the Business Day
next preceding such Interest Payment Date; provided, however, that if this
Security shall not continue to remain in book-entry-only form, the Company
shall have the right to select record dates which shall be more than one
Business Day prior to the Interest Payment Date. Any such interest not so
punctually paid or duly provided for will forthwith cease to be payable to
the Holder on such Regular Record Date and may either be paid to the Person
in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on a Special Record Date for the
payment of such Defaulted Interest to be fixed by the Trustee, notice
whereof shall be given to Holders of Securities not less than 10 days prior
to such Special Record Date, or be paid at any time in any other lawful
manner not inconsistent with the requirements of any securities exchange on
which the Securities may be listed, and upon such notice as may be required
by such exchange, all as more fully provided in said Indenture.
The Company may, by Company Order, prior to the Scheduled
Maturity Date, extend the maturity date of the Securities no more than one
time, for up to an additional 19 years from the Scheduled Maturity Date,
provided that at the time of such extension (i) no Event of Default or
event which after notice or lapse of time, or both, would become an Event
of Default specified in Section 501(5) or Section 501(6) shall have
occurred and be continuing; (ii) the Company has made timely payments of
interest (including Additional Interest) on the Securities during the
immediately preceding 18 months without deferrals; (iii) COMSAT Capital is
not in arrears on payments of distributions on the Preferred Securities;
(iv) the Securities shall continue to pay Interest at least at a rate equal
to the rate of distributions that accrue on the Preferred Securities; (v)
the Securities are rated Investment Grade; and (vi) the final maturity of
the Securities is not later than the 49th anniversary of the date of
issuance of the Preferred Securities.
COMSAT shall have the right at any time during the term
of this Security to extend the interest payment period from time to time to
a period not exceeding 60 consecutive months, during which periods interest
will compound monthly, and at the end of which periods COMSAT shall pay all
interest then accrued and unpaid (together with Additional Interest);
provided that during any such extended interest payment period COMSAT shall
not declare or pay any dividend on, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of its capital stock (other than
as a result of a reclassification of such
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capital stock or the exchange or conversion of one class or series of
capital stock for another class or series of capital stock), or make any
guarantee payments with respect to the foregoing (other than payments under
the Parent Guarantee). Prior to the termination of any such extended
interest payment period, COMSAT may further extend the interest payment
period, provided that such extended interest payment period together with
all such previous and further extensions thereof may not exceed 60
consecutive months, nor may such extended interest payment period extend
the Stated Maturity of this Security. After COMSAT has paid all accrued and
unpaid interest (including Additional Interest) following an extended
interest payment period, it may again extend interest payment periods for
up to 60 consecutive months, subject to the preceding sentence. If COMSAT
Capital shall be the sole Holder of the Securities, COMSAT shall give
COMSAT Capital notice of its selection of an extended interest payment
period one Business Day prior to the earlier of (i) the date the dividends
on the Preferred Securities are payable or (ii) the date COMSAT Capital is
required to give notice to the NYSE or other applicable self-regulatory
organization or to holders of the Preferred Securities of the record date
or the date such dividend is payable, but in any event not less than one
Business Day prior to such record date. COMSAT shall cause COMSAT Capital
to give notice of COMSAT's selection of such extended interest payment
period to the holders of the Preferred Securities. If COMSAT Capital is not
the sole Holder of the Securities, COMSAT shall give the Holders of the
Securities notice of its selection of such an extended interest payment
period ten Business Days prior to the earlier of (i) the Interest Payment
Date or (ii) the date COMSAT is required to give notice to the NYSE or
other applicable self-regulatory organization, or to the Holders of the
Securities, of the record or payment date of such related interest payment,
but in any event not less than two Business Days prior to such record date.
Payment of the principal of and interest on this Security
issued as a global security will be made to DTC, as the depository for the
Securities, in such coin or currency of the United States of America as at
the time of payment is legal tender for payment of public and private
debts. If the Securities are issued in certificated form, principal and
interest will be payable, the transfer of the Securities will be
registrable and the Securities will be exchangeable for Securities of other
denominations of a like aggregate principal amount at the corporate trust
office of the Trustee in New York City; provided, however, that, unless the
Securities are held by COMSAT Capital or any successor permissible under
the Limited Partnership Agreement (in which case payment shall be made by
wire transfer), payment of interest may, at the option of COMSAT, be made
by check mailed to the address of the Persons entitled thereto as such
address shall appear in the Security Register.
Reference is hereby made to the further provisions of
the Indenture summarized on the reverse hereof, which further
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provisions shall for all purposes have the same effect as if set
forth at this place.
Unless the certificate of authentication hereon has been
executed by the Trustee referred to on the reverse hereof by manual
signature, this Security shall not be entitled to any benefit under the
Indenture or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, COMSAT has caused this instrument to
be duly executed under its corporate seal.
Dated: , 1995
COMSAT Corporation
[SEAL]
By:
Name:
Title:
Attest:
Section 203. Form of Reverse of Security.
This Security is one of a duly authorized issue of
Securities of COMSAT, designated as its 81/8% Junior Subordinated
Deferrable Interest Debentures Due July 18, 2025 (subject to extension, as
provided herein) (herein called the "Securities"), limited in aggregate
principal amount to $206,200,000, issued and to be issued under an
Indenture, dated as of July 18, 1995 (herein called the "Indenture"),
between COMSAT and The First National Bank of Chicago, as Trustee (herein
called the "Trustee", which term includes any successor trustee under the
Indenture), to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights,
limitations of rights, duties and immunities thereunder of COMSAT, the
Trustee, the Holders of the Securities, the holders of Preferred Securities
and the holders of Senior Indebtedness and of the terms upon which the
Securities are, and are to be, authenticated and delivered. All terms used
in this Security which are defined in the Indenture or in the Limited
Partnership Agreement attached as Annex A thereto shall have the meanings
assigned to them in the Indenture or the Limited Partnership Agreement, as
the case may be.
The indebtedness evidenced by this Security is, to the extent provided
in the Indenture, subordinate and subject in right of payment to the prior
payment in full of all Senior Indebtedness, and this Security is issued
subject to the provisions of the Indenture with respect thereto. Each Holder
of
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this Security, by accepting the same, (a) agrees to and shall be bound by
such provisions, (b) authorizes and directs the Trustee on his behalf to
take such action as may be necessary or appropriate to effectuate the
subordination so provided and (c) appoints the Trustee his attorney-in-fact
for any and all such purposes.
The Trustee or the Holders of not less than 25% in
aggregate outstanding principal amount of the Securities may declare the
principal of and interest (including any Additional Interest) on the
Securities due and payable immediately on default with respect to such
Securities; provided, however, that after such acceleration, but before a
judgment or decree based on acceleration, the Holders of a majority in
aggregate principal amount of outstanding Securities may, under certain
circumstances, rescind and annul such acceleration if all Events of Default
with respect to such Securities, other than the non-payment of accelerated
principal, have been cured or waived as provided in the Indenture.
The Indenture permits, with certain exceptions as therein
provided, COMSAT and the Trustee, with the consent of the Holders of not
less than a majority in principal amount of the Securities, to modify the
Indenture or any supplemental indenture affecting the Securities or the
rights of the Holders of Securities. Any such consent by the Holder of this
Security shall be conclusive and binding upon such Holder and upon all
future Holders of this Security and of any Security issued upon the
registration of transfer hereof or in exchange herefor or in lieu hereof,
whether or not notation of such consent is made upon this Security.
The Securities shall be subject to redemption at the
option of COMSAT without premium or penalty, in whole or in part,
concurrent with the redemption by COMSAT Capital of the Preferred
Securities (if any Preferred Securities are then outstanding), at any time
or from time to time on or after July 18, 2000, as provided in the
Indenture, upon not less than 30 days' nor more than 60 days' notice, at a
Redemption Price equal to 100% of the principal amount to be redeemed, plus
any accrued and unpaid interest (including Additional Interest, if any), to
the Redemption Date, but interest installments whose Stated Maturity is on
or prior to such Redemption Date will be payable to the Holders of such
Securities of record at the close of business on the relevant Record Dates
referred to on the face hereof, all as provided in the Indenture. The
Company has covenanted to exercise such right to redeem if COMSAT Capital
redeems its Preferred Securities.
No reference herein to the Indenture and no provision of
this Security or of the Indenture shall alter or impair the obligation of
COMSAT, which is absolute and unconditional, to pay the principal of and
interest on this Security at the times, place and rate, and in the coin or
currency, herein prescribed.
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As provided in the Indenture and subject to certain
limitations therein set forth, the transfer of this Security is registrable
in the Security Register, upon surrender of this Security for registration
of transfer at the corporate trust office of the Trustee in New York City,
duly endorsed by, or accompanied by a written instrument of transfer in
form satisfactory to COMSAT and the Security Registrar duly executed by the
Holder hereof or his or her attorney duly authorized in writing, and
thereupon one or more new Securities, of authorized denominations and for
the same aggregate principal amount, will be issued to the designated
transferee or transferees.
The Securities, if distributed to holders of Preferred
Securities in a dissolution of COMSAT Capital, will initially be issued as
a global security. If the Securities are issued in certificated form, such
Securities will be issued in denominations of $25 and integral multiples
thereof. As provided in the Indenture and subject to certain limitations
therein set forth, Securities are exchangeable for a like aggregate
principal amount of Securities of a different authorized denomination, as
requested by the Holder surrendering the same.
No service charge shall be made for any such registration
of transfer or exchange, but COMSAT may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection
therewith.
Prior to due presentment of this Security for
registration of transfer, COMSAT, the Trustee and any agent of COMSAT or
the Trustee may treat the Person in whose name this Security is registered
as the owner hereof for all purposes, whether or not this Security be
overdue, and neither COMSAT, the Trustee nor any such agent shall be
affected by notice to the contrary.
The Indenture contains provisions for defeasance at any
time of the entire indebtedness of this Security upon compliance by COMSAT
with certain conditions set forth therein.
Section 204. Form of Trustee's Certificate of Authentication.
This is one of the Securities referred to in the
within-mentioned Indenture.
The First National Bank of Chicago,
as Trustee
By:
Authorized Officer
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ARTICLE THREE
THE SECURITIES
Section 301. Title and Terms.
The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is $206,200,000, except
for Securities authenticated and delivered upon registration of transfer
of, or in exchange for, or in lieu of, other Securities pursuant to Section
304, 305, 306 or 906.
The Securities shall be known and designated as the
"81/8% Junior Subordinated Deferrable Interest Debentures Due July 18,
2025" of the Company. Their Stated Maturity shall be the earliest of July
18, 2025 (subject to extension, as provided herein) or, except in the event
that (A) a Tax Event or an Investment Company Event has occurred and the
General Partner of COMSAT Capital has elected to dissolve COMSAT Capital
and cause the Securities to be distributed to the holders of the Preferred
Securities in liquidation of COMSAT Capital as provided in Clauses (ii) or
(iii) of Section 6.2(c) of the Limited Partnership Agreement or (B) COMSAT
Capital is consolidated, amalgamated, merged with or into, or replaced by,
or conveys, transfers or leases its properties and assets as an entirety
to, any corporation or other body pursuant to Section 9.12 of the Limited
Partnership Agreement, the date upon which COMSAT Capital is dissolved,
wound-up, liquidated or terminated (other than any termination within the
meaning of section 708(b)(1)(B) of the Internal Revenue Code of 1986 or
equivalent provision of subsequent law, which termination does not
constitute a termination of COMSAT Capital for any other purpose), and they
shall bear interest at the rate of 81/8% per annum, from July 18, 1995 or
from the most recent Interest Payment Date to which interest has been paid
or duly provided for, as the case may be, payable monthly, in arrears, on
the last day of each calendar month of each year, commencing July 31, 1995
until the principal thereof is paid or made available for payment. Interest
will compound monthly and will accrue at the annual rate of 81/8% on any
interest installment that is not paid when due or during an extension of an
interest payment period as set forth below in this Section 301. In the
event that any date on which interest is payable on the Securities is not a
Business Day, then payment of the interest payable on such date will be
made on the next succeeding day which is a Business Day (and without any
interest or other payment in respect of any such delay), except that, if
such Business Day is in the next succeeding calendar year, such payment
shall be made on the immediately preceding Business Day, in each case with
the same force and effect as if made on such date.
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If at any time COMSAT Capital shall be required to pay
any interest on dividends in respect of the Preferred Securities pursuant
to the terms thereof, then the Company will pay as interest to COMSAT
Capital as the holder of the Securities Additional Interest. In addition,
if COMSAT Capital would be required to pay any taxes, duties, assessments
or governmental charges of whatever nature (other than withholding taxes)
imposed by the United States, or any other taxing authority, then, in any
such case, the Company also will pay as Additional Interest such amounts as
shall be required so that the net amounts received and retained by COMSAT
Capital after paying any such taxes, duties, assessments or governmental
charges will be not less than the amounts COMSAT Capital would have
received had no such taxes, duties, assessments or governmental charges
been imposed. The obligations of the Company under this paragraph shall
survive any satisfaction and discharge or any defeasance pursuant to
Article Four hereof.
The Company may, by Company Order, prior to the Scheduled
Maturity Date, extend the maturity date of the Securities no more than one
time, for up to an additional 19 years from the Scheduled Maturity Date,
provided that at the time of such extension (i) no Event of Default or
event which after notice or lapse of time, or both, would become an Event
of Default specified in Section 501(5) or Section 501(6) shall have
occurred and be continuing; (ii) the Company has made timely payments of
interest (including Additional Interest) on the Securities during the
immediately preceding 18 months without deferrals; (iii) COMSAT Capital is
not in arrears on payments of distributions on the Preferred Securities;
(iv) the Securities shall continue to pay Interest at least at a rate equal
to the rate of distributions that accrue on the Preferred Securities; (v)
the Securities are rated Investment Grade; and (vi) the final maturity of
the Securities is not later than the 49th anniversary of the date of
issuance of the Preferred Securities.
The Company shall have the right, at any time during the
term of the Securities, to extend the interest payment period from time to
time to a period not exceeding 60 consecutive months, provided that during
the period of any such extension, interest will continue to accrue and
compound monthly. At the end of any such extended interest payment period,
the Company shall pay all interest then accrued and unpaid (together with
Additional Interest thereon); provided that during any such extended
interest payment period COMSAT shall not declare or pay any dividend on, or
redeem, purchase, acquire or make a liquidation payment with respect to,
any of its capital stock (other than as a result of a reclassification of
such capital stock or the exchange or conversion of one class or series of
capital stock for another class or series of capital stock), or make any
guarantee payments with respect to the foregoing (other than payments under
the Parent Guarantee). Prior to the termination of any such extended
interest payment period, the Company may further extend the interest
payment period, provided
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that such extended interest payment period together with all such previous
and further extensions thereof may not exceed 60 consecutive months and
provided, further, that in no event shall any extension of the interest
payment period extend beyond the Stated Maturity of the Securities. After
the Company has paid all accrued and unpaid interest (including Additional
Interest) following an extended interest payment period, it may again
extend interest payment periods for up to 60 consecutive months, subject to
the preceding sentence. If COMSAT Capital shall be the sole Holder of the
Securities, COMSAT shall give COMSAT Capital notice of its selection of an
extended interest payment period one Business Day prior to the earlier of
(i) the date the dividends on the Preferred Securities are payable or (ii)
the date COMSAT Capital is required to give notice to the NYSE or other
applicable self-regulatory organization or to holders of the Preferred
Securities of the record date or the date such dividend is payable, but in
any event not less than one Business Day prior to such record date. COMSAT
shall cause COMSAT Capital to give notice of COMSAT's selection of such
extended interest payment period to the holders of the Preferred
Securities. If COMSAT Capital is not the sole Holder of the Securities,
COMSAT shall give the Holders of the Securities notice of its selection of
such an extended interest payment period ten Business Days prior to the
earlier of (i) the Interest Payment Date or (ii) the date COMSAT is
required to give notice to the NYSE or other applicable self-regulatory
organization, or to the Holders of the Securities, of the record or payment
date of such related interest payment, but in any event not less than two
Business Days prior to such record date.
The principal of and interest on the Securities issued as
a global security will be made to DTC, as the depository for the
Securities. The Trustee or the Holders of not less than 25% in aggregate
outstanding principal amount of the Securities may declare the principal of
and interest (including any Additional Interest) on the Securities due and
payable immediately on any Event of Default; provided, however, that after
such acceleration, but before a judgment or decree based on acceleration,
the Holders of a majority in aggregate principal amount of outstanding
Securities may, under certain circumstances, rescind and annul such
acceleration if all Events of Default, other than the non-payment of
accelerated principal, have been cured or waived as provided in the
Indenture. Unless the Holder of the Preferred Securities is COMSAT Capital
(in which case payment of interest shall be made by wire transfer), payment
of interest may be made, at the option of the Company, by check mailed to
the address of the Persons entitled thereto as such address shall appear in
the Security Register.
The Securities shall be subordinated in right of payment
to Senior Indebtedness as provided in Article Eleven.
The Securities shall be redeemable as provided in Article
Twelve.
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Section 302. Denominations.
The Securities, if distributed to holders of Preferred
Securities in a dissolution of COMSAT Capital, will initially be issued as
a global security. If the Securities are issued in certificated form, such
Securities will be issued only in registered form without coupons and only
in denominations of $25 and integral multiples thereof.
Section 303. Execution, Authentication, Delivery and Dating.
The Securities shall be executed on behalf of the Company
by its Chairman of the Board, its Vice Chairman of the Board, its President
or one of its Vice Presidents, under its corporate seal reproduced thereon
attested by its Secretary or one of its Assistant Secretaries. The
signature of any of these officers on the Securities may be manual or
facsimile.
Securities bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company shall
bind the Company, notwithstanding that such individuals or any of them have
ceased to hold such offices prior to the authentication and delivery of
such Securities or did not hold such offices at the date of such
Securities.
At any time and from time to time after the execution and
delivery of this Indenture, the Company may deliver Securities executed by
the Company to the Trustee for authentication, together with a Company
Order for the authentication and delivery of such Securities; and the
Trustee in accordance with such Company Order shall authenticate and
deliver such Securities as in this Indenture provided and not otherwise.
Each Security shall be dated the date of its
authentication.
No Security shall be entitled to any benefit under this
Indenture or be valid or obligatory for any purpose unless there appears on
such Security a certificate of authentication substantially in the form
provided for herein executed by the Trustee by manual signature, and such
certificate upon any Security shall be conclusive evidence, and the only
evidence, that such Security has been duly authenticated and delivered
hereunder.
Section 304. Temporary Securities.
Pending the preparation of definitive Securities, the
Company may execute, and upon Company Order the Trustee shall authenticate
and deliver, temporary Securities which are printed,
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lithographed, typewritten, mimeographed or otherwise produced, in any
authorized denomination, substantially of the tenor of the definitive
Securities in lieu of which they are issued and with such appropriate
insertions, omissions, substitutions and other variations as the officers
executing such Securities may determine, as evidenced by their execution of
such Securities.
If temporary Securities are issued, the Company will
cause definitive Securities to be prepared without unreasonable delay.
After the preparation of definitive Securities, the temporary Securities
shall be exchangeable for definitive Securities upon surrender of the
temporary Securities at any office or agency of the Company designated
pursuant to Section 1002, without charge to the Holder. Upon surrender for
cancellation of any one or more temporary Securities, the Company shall
execute and the Trustee shall authenticate and deliver in exchange therefor
a like principal amount of definitive Securities of authorized
denominations. Until so exchanged the temporary Securities shall in all
respects be entitled to the same benefits under this Indenture as
definitive Securities.
Section 305. Registration, Registration of Transfer and
Exchange.
The Company shall cause to be kept at the Corporate Trust
Office of the Trustee a register (the register maintained in such office
and in any other office or agency designated pursuant to Section 1002 being
herein sometimes collectively referred to as the "Security Register") in
which, subject to such reasonable regulations as it may prescribe, the
Company shall provide for the registration of Securities and of transfers
of Securities. The Trustee is hereby appointed "Security Registrar" for the
purpose of registering Securities and transfers of Securities as herein
provided.
Upon surrender for registration of transfer of any
Security at an office or agency of the Company designated pursuant to
Section 1002 for such purpose, the Company shall execute, and the Trustee
shall authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Securities of any authorized denominations and
of a like aggregate principal amount.
At the option of the Holder, Securities may be exchanged
for other Securities of any authorized denominations and of a like
aggregate principal amount, upon surrender of the Securities to be
exchanged at such office or agency. Whenever any Securities are so
surrendered for exchange, the Company shall execute, and the Trustee shall
authenticate and deliver, the Securities which the Holder making the
exchange is entitled to receive.
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All Securities issued upon any registration of transfer
or exchange of Securities shall be the valid obligations of the Company,
evidencing the same debt, and entitled to the same benefits under this
Indenture, as the Securities surrendered upon such registration of transfer
or exchange.
Every Security presented or surrendered for registration
of transfer or for exchange shall (if so required by the Company or the
Trustee) be duly endorsed, or be accompanied by a written instrument of
transfer, in form satisfactory to the Company and the Security Registrar,
duly executed by the Holder thereof or his attorney duly authorized in
writing.
No service charge shall be made for any registration of
transfer or exchange of Securities, but the Company may require payment of
a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any registration of transfer or exchange of
Securities, other than (i) exchanges pursuant to Section 304 or 906 not
involving any transfer or (ii) transfers contemplated by Section 6.2(c) or
9.12 of the Limited Partnership Agreement.
Section 306. Mutilated, Destroyed, Lost and Stolen Securities.
If any mutilated Security is surrendered to the Trustee,
the Company shall execute and the Trustee shall authenticate and deliver in
exchange therefor a new Security of like tenor and principal amount and
bearing a number not contemporaneously Outstanding.
If there shall be delivered to the Company and the
Trustee (i) evidence to their satisfaction of the destruction, loss or
theft of any Security and (ii) such security or indemnity as may be
required by them to save each of them and any agent of either of them
harmless, then, in the absence of notice to the Company or the Trustee that
such Security has been acquired,by a bona fide purchaser, the Company shall
execute and the Trustee shall authenticate and deliver, in lieu of any such
destroyed, lost or stolen Security, a new Security of like tenor and
principal amount and bearing a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen
Security has become or is about to become due and payable, the Company in
its discretion may, instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section,
the Company may require the payment 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 expenses of the Trustee) connected
therewith.
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Every new Security issued pursuant to this Section in
lieu of any destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Company, whether or not the
destroyed, lost or stolen Security shall be at any time enforceable by
anyone, and shall be entitled to all the benefits of this Indenture equally
and proportionately with any and all other Securities duly issued
hereunder.
The provisions of this Section 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
Securities.
Section 307. Payment of Interest; Interest Rights Preserved.
Interest on any Security which is payable, and is
punctually paid, on any Interest Payment Date shall be paid to the Person
in whose name that Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such
interest, which shall be the Business Day next preceding such Interest
Payment Date; provided, however, that if the Securities shall not continue
to remain in book-entry-only form, the Company shall have the right to
select record dates which shall be more than one Business Day prior to the
Interest Payment Date.
Any interest on any Security which is payable, but is not
punctually paid or duly provided for, on any Interest Payment Date (herein
called "Defaulted Interest") shall forthwith cease to be payable to the
Holder on the relevant Regular Record Date by virtue of having been such
Holder, and such Defaulted Interest may be paid by the Company, at its
election in each case, as provided in Clause (1) or (2) below:
(1) The Company may elect to make payment of any
Defaulted Interest to the Persons in whose names the Securities (or their
respective Predecessor Securities) are registered at the close of business
on a Special Record Date for the payment of such Defaulted Interest, which
shall be fixed in the following manner. The Company shall notify the
Trustee in writing of the amount of Defaulted Interest proposed to be paid
on each Security and the date of the proposed payment, and at the same time
the Company shall deposit with the Trustee an amount of money equal to the
aggregate amount proposed to be paid in respect of such Defaulted Interest
or shall make arrangements satisfactory to the Trustee for such deposit
prior to the date of the proposed payment, such money when deposited to be
held in trust for the benefit of the Persons entitled to such Defaulted
Interest as provided in this Clause. Thereupon the Trustee shall fix a
Special Record Date for the payment of such Defaulted Interest which shall
be not more than 15 days and not less than 10 days prior to the date of the
proposed payment and not less than 10 days after the receipt by the Trustee
of the notice of the
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proposed payment. The Trustee shall promptly notify the Company of such
Special Record Date and, in the name and at the expense of the Company,
shall cause notice of the proposed payment of such Defaulted Interest and
the Special Record Date therefor to be mailed, first-class postage prepaid,
to each Holder at his address as it appears in the Security Register, not
less than 10 days prior to such Special Record Date. Notice of the proposed
payment of such Defaulted Interest and the Special Record Date therefor
having been so mailed, such Defaulted Interest shall be paid to the Persons
in whose names the Securities (or their respective Predecessor Securities)
are registered at the close of business on such Special Record Date and
shall no longer be payable pursuant to the following Clause (2).
(2) The Company may make payment of any Defaulted
Interest in any other lawful manner not inconsistent with the requirements
of any securities exchange on which the Securities may be listed, and, if
so listed, upon such notice as may be required by such exchange, if, after
notice given by the Company to the Trustee of the proposed payment pursuant
to this Clause, such manner of payment shall be deemed practicable by the
Trustee.
Subject to the foregoing provisions of this Section, each
Security delivered under this Indenture upon registration of transfer of or
in exchange for or in lieu of any other Security shall carry the rights to
interest accrued and unpaid, and to accrue (including in each such case
Additional Interest), which were carried by such other Security.
Section 308. Persons Deemed Owners.
Prior to due presentment of a Security for registration
of transfer, the Company, the Trustee and any agent of the Company or the
Trustee may treat the Person in whose name such Security is registered as
the owner of such Security for the purpose of receiving payment of
principal of and (subject to Section 307) interest (including Additional
Interest) on such Security and for all other purposes whatsoever, whether
or not such Security be overdue, and neither the Company, the Trustee nor
any agent of the Company or the Trustee shall be affected by notice to the
contrary.
Section 309. Cancellation.
All Securities surrendered for payment, redemption,
registration of transfer or exchange shall, if surrendered to any Person
other than the Trustee, be delivered to the Trustee and shall be promptly
cancelled by it. The Company may at any time deliver to the Trustee for
cancellation any Securities previously authenticated and delivered
hereunder which the Company may have acquired in any manner whatsoever, and
all Securities so
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delivered shall be promptly cancelled by the Trustee. No Securities shall
be authenticated in lieu of or in exchange for any Securities cancelled as
provided in this Section, except as expressly permitted by this Indenture.
All cancelled Securities held by the Trustee shall be disposed of as
directed by a Company Order.
Section 310. Computation of Interest.
Interest on the Securities shall be computed on the basis
of a 360-day year of twelve 30-day months and, for any period shorter than
a full monthly interest period, shall be computed on the basis of the
actual number of days elapsed in such period.
ARTICLE FOUR
SATISFACTION AND DISCHARGE
Section 401. Satisfaction and Discharge of Indenture.
This Indenture shall cease to be of further effect
(except as to any surviving rights of registration of transfer or exchange
of Securities herein expressly provided for, as to the obligations of the
Company pursuant to Sections 306, 402, 1002 and 1003, and as to the
obligation of the Company to pay Additional Interest when due), and the
Trustee, on demand of and at the expense of the Company, shall execute
proper instruments acknowledging satisfaction and discharge of this
Indenture, when
(1) either
(A) all Securities theretofore authenticated
and delivered (other than (i) Securities which have been
destroyed, lost or stolen and which have been replaced or
paid as provided in Section 306 and (ii) Securities for
whose payment money has theretofore been deposited in
trust or segregated and held in trust by the Company and
thereafter repaid to the Company or discharged from such
trust, as provided in Section 1003) have been delivered
to the Trustee for cancellation; or
(B) all such Securities not theretofore delivered
to the Trustee for cancellation
(i) have become due and payable, or
(ii) will become due and payable at
their Stated Maturity within one year, or
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(iii) are to be called for redemption
within one year under arrangements
satisfactory to the Trustee for the giving of
notice of redemption by the Trustee in the
name, and at the expense, of the Company and
the Company, in the case of (i), (ii) or (iii)
above, has deposited or caused to be deposited
with the Trustee as trust funds in trust for
the purpose an amount sufficient to pay and
discharge the entire indebtedness on such
Securities not theretofore delivered to the
Trustee for cancellation, for principal and
interest (including Additional Interest) to
the date of such deposit (in the case of
Securities which have become due and payable)
or to the Stated Maturity or Redemption Date,
as the case may be;
(2) the Company has paid or caused to be paid all
other sums payable hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and discharge of
this Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 607 and, if money
shall have been deposited with the Trustee pursuant to subclause (B) of
Clause (1) of this Section or if money and/or U.S. Government Obligations
shall have been deposited with the Trustee pursuant to Section 403, the
obligations of the Trustee under Section 402 and the last paragraph of
Section 1003 shall survive.
Section 402. Application of Trust Money.
Subject to the provisions of the last paragraph of
Section 1003, all money deposited with the Trustee pursuant to Section 401,
all money and/or U.S. Government Obligations deposited with the Trustee
pursuant to Section 403, and all money received by the Trustee in respect
of U.S. Government Obligations deposited with the Trustee pursuant to
Section 403 shall be held in trust and applied by it, in accordance with
the provisions of the Securities and this Indenture, to the payment, either
directly or through any Paying Agent (including the Company acting as its
own Paying Agent) as the Trustee may determine, to the Persons entitled
thereto, of the principal and interest, if any, for whose payment such
money has been deposited with the Trustee.
The Trustee shall deliver or pay to the Company from time
to time upon Company Request any money and/or U.S.
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Government Obligations held by it as provided in Section 402 or in Section
403 which, in the opinion of a nationally recognized firm of independent
public accountants expressed in a written certification thereof delivered
to the Trustee, are then in excess of the amount thereof which then would
have been required to be deposited for the purpose for which such money
and/or U.S. Government Obligations were deposited or received.
Section 403. Defeasance and Discharge of Indenture.
(1) Notwithstanding the provisions of Section 401 but
subject to Section 403(2), the Company shall have the option, to be
exercised by Board Resolution, to pay and discharge the entire indebtedness
on all the Outstanding Securities; provided that the following conditions
have been satisfied:
(A) the Company shall have irrevocably deposited
in trust with the Trustee as trust funds, for the purpose of making the
following payments, specifically pledged as security for, and dedicated
solely to, the benefit of Holders of Securities, money and/or U.S.
Government Obligations for the payment of principal and each installment of
interest on the Securities on their respective Stated Maturities, in
accordance with this Indenture and the Securities;
(B) the Company shall have delivered to the
Trustee a certificate (addressed to the Trustee) from a nationally
recognized firm of independent certified public accountants expressing
their opinion that the payment of principal and interest when due and
without reinvestment on the deposited U.S. Government Obligations plus any
deposited money without investment will provide cash at such times and in
such amounts (but, in the case of the option to defease the debt in its
entirety only, not more than such amounts) as will be sufficient to pay
principal and each installment of interest on all the Outstanding
Securities on their respective Stated Maturities, in accordance with this
Indenture and the Securities;
(C) 91 days pass after the deposit is made or,
if longer, the day following the expiration of the longest preference
period applicable to the Company in respect of such deposit occurs (it
being understood that the condition in this clause (C) is a condition
subsequent and shall not be deemed satisfied until the expiration of such
period), and during such period no Event of Default or event which after
notice or lapse of time, or both, would become an Event of Default
specified in Section 501(5) or Section 501(6) occurs which is continuing at
the end of the period;
(D) no Event of Default or event which after
notice or lapse of time, or both, would become an Event of Default has
occurred and is continuing on the date of such deposit and after giving
effect thereto;
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(E) the exercise of the defeasance options does
not constitute a default under, or a breach or violation of, this Indenture
or any other agreement or instrument to which the Company is a party or by
which it is bound;
(F) the Company delivers to the Trustee an
Opinion of Counsel to the effect that the trust resulting from the deposit
does not constitute, or is qualified as, a regulated investment company
under the Investment Company Act of 1940;
(G) the Company delivers to the Trustee an
Opinion of Counsel to the effect that the Company has received from, or
there has been published by, the United States Internal Revenue Service a
ruling, or since the date of this Indenture there has been a change in tax
law in either case to the effect that, and based thereon such opinion will
confirm that, holders of Securities will not recognize gain or loss for
federal income tax purposes as a result of such deposit, defeasance and
discharge and will be subject to federal income tax on the same amount, in
the same manner and at the same time as would have been the case if such
deposit, defeasance and discharge was not to occur;
(H) the Company shall have delivered to the
Trustee an Officers' Certificate to the effect that such defeasance shall
not cause any Securities then listed on any registered national securities
exchange under the Securities Exchange Act of 1934, as amended, to be
delisted;
(I) such defeasance shall not cause the Trustee
for the Securities to have a conflicting interest as specified in Section
608 or for the purposes of the Trust Indenture Act with respect to any
securities of the Company;
(J) the Company shall have delivered to the
Trustee an Officers' Certificate and an Opinion of Counsel, each stating
that all conditions precedent and subsequent to the defeasance and
discharge of the entire indebtedness on all Outstanding Securities as
contemplated by this Section 403 have been complied with;
(K) at the time of such deposit: (i) no
default in the payment of all or a portion of principal of (or premium, if
any) or interest on any Senior Indebtedness shall have occurred and be
continuing, and no event of default with respect to any Senior Indebtedness
shall have occurred and be continuing and shall have resulted in such
Senior Indebtedness becoming or being declared due and payable prior to the
date on which it would otherwise have become due and payable and (ii) no
other event of default with respect to any Senior Indebtedness shall have
occurred and be continuing permitting (after notice or the lapse of time,
or both) the holders of such Senior Indebtedness (or a trustee on behalf of
the holders thereof) to declare such Senior Indebtedness due and payable
prior to the
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date on which it would otherwise have become due and payable, or, in the
case of either Clause (i) or Clause (ii) above, each such default or event
of default shall have been cured or waived or shall have ceased to exist;
and
(L) Such defeasance shall not result in the
trust arising from such deposit constituting an investment company as
defined in the Investment Company Act of 1940, as amended, or such trust
shall be qualified under such act or exempt from regulation thereunder.
(2) Provided that all the conditions referred to in
Clauses (A) through (L) of Section 403(1) have been satisfied, all of the
provisions of this Indenture as they relate to the Outstanding Securities
(except the provisions relating to (i) the rights of Holders of Securities
to receive, from the trust funds described in Clause (A) of Section 403(1),
payment of the principal of and any installment of interest on such
Securities on the Stated Maturity or Redemption Date, as the case may be,
of such principal or installment of interest in accordance with the terms
of this Indenture and of the Securities, (ii) the Company's obligations
with respect to such Securities under Section 304, Section 305, Section
306, Section 1002 and Section 1003 of this Indenture, (iii) the rights,
powers, trusts, duties, and immunities of the Trustee under this Indenture,
(iv) the Company's obligations to pay Additional Interest as and when due
in accordance with the terms of this Indenture and the Securities, and (v)
this Article Four) shall no longer be in effect with respect to the
Securities, and the Trustee, at the expense of the Company, shall, upon
Company Request, execute proper instruments acknowledging the same.
Section 404. Reinstatement.
If the Trustee or any Paying Agent shall be unable to
apply any money or U.S. Government Obligations in accordance with Section
401 or Section 403 by reason of any legal proceeding or by reason of any
order or judgment of any court or governmental authority enjoining,
restraining or otherwise prohibiting such application, the Company's
obligations under the Securities and under this Indenture with respect
thereto shall be revived and reinstated as though no deposit had occurred
pursuant to Section 401 or Section 403, until such time as the Trustee or
such Paying Agent shall be permitted to apply all such money or obligations
in accordance with Section 401 or Section 403, provided, however, that if
the Company shall have made any payment of principal of or interest on any
Securities because of the reinstatement of its obligations, the Company
shall be subrogated to the rights of the Holders of such Securities to
receive such payment from the money or U.S. Government Obligations held by
the Trustee or such Paying Agent.
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ARTICLE FIVE
REMEDIES
Section 501. Events of Default.
"Event of Default", wherever used herein, means any one
of the following events (whatever the reason for such Event of Default and
whether it shall be occasioned by the provisions of Article Eleven or be
voluntary or involuntary or be effected by operation of law or pursuant to
any judgment, decree or order of any court or any order, rule or regulation
of any administrative or governmental body):
(1) failure for 10 days to pay any interest on the
Securities, including any Additional Interest in respect thereof, when due;
provided that a valid extension of the interest payment period by the
Company pursuant to this Indenture shall not constitute a default in the
payment of interest for this purpose; or
(2) failure to pay any principal or premium, if any,
on the Securities when due, whether at maturity, upon redemption
by declaration or otherwise; or
(3) failure by the Company to observe or perform any
other covenant contained herein for a period of 90 days after written
notice to the Company from any Holder of the Securities or any holder of
Preferred Securities; or
(4) the dissolution, winding up, or termination (other
than any termination within the meaning of section 708(b)(1)(B) of the
Internal Revenue Code of 1986 or equivalent provision of subsequent law,
which termination does not constitute a termination of COMSAT Capital for
any other purpose) of COMSAT Capital, except in connection with the
distribution of Securities to the holders of Preferred Securities in
liquidation of COMSAT Capital pursuant to Section 6.2(c) or 9.12 of the
Limited Partnership Agreement and in connection with certain mergers,
consolidations or amalgamations permitted by Section 9.12 of the Limited
Partnership Agreement; or
(5) entry by a court having jurisdiction in the premises
of (A) a decree or order for relief in respect of the Company in an
involuntary case or proceeding under any applicable Federal or State
bankruptcy, insolvency, reorganization or other similar law or (B) a decree
or order adjudging the Company a bankrupt or insolvent, or approving as
properly filed a petition seeking reorganization, arrangement, adjustment
or composition of or in respect of the Company under any applicable Federal
or State law, or appointing a custodian, receiver, liquidator, assignee,
trustee, sequestrator or other similar official of the Company or of any
substantial part of the property of either, or
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ordering the winding up or liquidation of its affairs, and the continuance
of any such decree or order for relief or any such other decree or order
unstayed and in effect for a period of 60 consecutive days; or
(6) the commencement by the Company of a voluntary case
or proceeding under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or of any other case or proceeding to
be adjudicated a bankrupt or insolvent, or the consent by the Company to
the entry of a decree or order for relief in respect of itself in an
involuntary case or proceeding under any applicable Federal or State
bankruptcy, insolvency, reorganization or other similar law or to the
commencement of any bankruptcy or insolvency case or proceeding against the
Company, or the filing by the Company of a petition or answer or consent
seeking reorganization or relief under any applicable Federal or State law,
or the consent by the Company to the filing of such petition or to the
appointment of or taking possession by a custodian, receiver, liquidator,
assignee, trustee, sequestrator or other similar official of the Company or
of any substantial part of the property of the Company, or the making by
the Company of an assignment for the benefit of creditors, or the admission
by the Company in writing of its inability to pay its debts generally as
they become due, or the taking of corporate action by the Company the
Company in furtherance of any such action.
Section 502. Acceleration of Maturity; Rescission and
Annulment.
If an Event of Default occurs and is continuing, then and
in every such case, the Trustee or the Holders of not less than 25% in
principal amount of the Outstanding Securities may declare the principal
of, premium, if any, and interest (including any Additional Interest) on
the Securities due and payable immediately, by a notice in writing to the
Company (and to the Trustee if given by Holders), and upon any such
declaration, such principal, premium, if any, and all accrued interest
shall become immediately due and payable; provided, however, that after
such acceleration, but before a judgment or decree based on acceleration,
the Holders of a majority in aggregate principal amount of Outstanding
Securities, by written notice to the Company and the Trustee, may rescind
and annul such acceleration if
(1) the Company has paid or deposited with the
Trustee a sum sufficient to pay
(A) all overdue interest (including any
Additional Interest) on all Securities,
(B) the principal of any Securities which have
become due otherwise than by such declaration of
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acceleration and interest thereon at the rate borne by
the Securities,
(C) to the extent that payment of such
interest is lawful, interest upon overdue interest at the
rate borne by the Securities, and
(D) all sums paid or advanced by the Trustee
hereunder and the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and
counsel;
and
(2) all Events of Default, other than the non-payment of
the principal of Securities which have become due solely by such
declaration of acceleration, have been cured or waived as provided in
Section 513.
No such rescission shall affect any subsequent default or
impair any right consequent thereon.
Section 503. Collection of Indebtedness and Suits for
Enforcement by Trustee.
The Company covenants that if
(1) default is made in the payment of any interest
(including any Additional Interest) on any Security when such interest
becomes due and payable and such default continues for a period of 30 days,
or
(2) default is made in the payment of the principal
of any Security at the Maturity thereof,
the Company will, upon demand of the Trustee, pay to it, for the benefit of
the Holders of such Securities, the whole amount then due and payable on
such Securities for principal and interest (including any Additional
Interest), and, to the extent that payment thereof shall be legally
enforceable, interest on any overdue principal and on any overdue interest
(including any Additional Interest), at the rate borne by the Securities,
and, in addition thereto, such further amount as shall be sufficient to
cover the costs and expenses of collection, including the reasonable
compensation, expenses, disbursements and advances of the Trustee, its
agents and counsel.
If an Event of Default occurs and is continuing, the
Trustee may in its discretion proceed to protect and enforce its rights and
the rights of the Holders by such appropriate judicial proceedings as the
Trustee shall deem most effectual to protect and enforce any such rights,
whether for the specific enforcement of any covenant or agreement in this
Indenture or in aid of the
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exercise of any power granted herein, or to enforce any other
proper remedy.
Section 504. Trustee May File Proofs of Claim.
In case of any judicial proceeding relative to the
Company (or any other obligor upon the Securities), its property or its
creditors, the Trustee shall be entitled and empowered, by intervention in
such proceeding or otherwise, to take any and all actions authorized under
the Trust Indenture Act in order to have claims of the Holders and the
Trustee allowed in any such proceeding. In particular, the Trustee shall be
authorized to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same; and any
custodian, receiver, assignee, trustee, liquidator, sequestrator or other
similar official in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the
Holders, to pay to the Trustee any amount due it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its
agents and counsel, and any other amounts due the Trustee under Section
607.
No provision of this Indenture shall be deemed to
authorize the Trustee to authorize or consent to or accept or adopt on
behalf of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Securities or the rights of any Holder thereof or
to authorize the Trustee to vote in respect of the claim of any Holder in
any such proceeding.
Section 505. Trustee May Enforce Claims Without Possession of
Securities.
All rights of action and claims under this Indenture or
the Securities may be prosecuted and enforced by the Trustee without the
possession of any of the Securities or the production thereof in any
proceeding relating thereto, and any such proceeding instituted by the
Trustee shall be brought in its own name as trustee of an express trust,
and any recovery of judgment shall, after provision for the payment of the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, be for the ratable benefit of the Holders
of the Securities in respect of which such judgment has been recovered.
Section 506. Application of Money Collected.
Subject to Article Eleven, any money collected by the
Trustee pursuant to this Article shall be applied in the
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following order, at the date or dates fixed by the Trustee and, in case of
the distribution of such money on account of principal, premium, if any, or
interest (including any Additional Interest), upon presentation of the
Securities and the notation thereon of the payment if only partially paid
and upon surrender thereof if fully paid:
First: To the payment of all amounts due the Trustee
under Section 607; and
Second: To the payment of the amounts then due and unpaid
for principal of and interest (including any Additional Interest) on the
Securities in respect of which or for the benefit of which such money has
been collected, ratably, without preference or priority of any kind,
according to the amounts due and payable on such Securities for principal
and interest (including any Additional Interest), respectively.
Section 507. Limitation on Suits.
No Holder of any Security will have any right to
institute any proceeding with respect to this Indenture, or for any remedy
hereunder, unless
(1) such Holder shall have previously given written
notice to the Trustee of a continuing Event of Default;
(2) if COMSAT Capital is not the sole Holder of
Securities, the Holders of at least 25% in aggregate principal amount of
the Outstanding Securities shall have made written request to the Trustee
to institute such proceedings in respect of such Event of Default in its
own name as Trustee hereunder;
(3) such Holder or Holders shall have offered to the
Trustee reasonable indemnity against the costs, expenses and liabilities to
be incurred in compliance with such request;
(4) the Trustee shall not have received from the Holders
of a majority in aggregate principal amount of the Outstanding Securities a
direction inconsistent with such written request; and
(5) the Trustee, for 60 days after its receipt of
such notice, request and offer of indemnity, has failed to
institute any such proceeding;
it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other
Holders, or to obtain or to seek to obtain priority or preference over any
other Holders or to enforce any right under this Indenture, except in the
manner herein provided and for the equal and ratable benefit of all the
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Holders. However, the limitations contained in the previous sentence do not
apply to a suit instituted by a Holder of a Security for enforcement of
payment of principal of or interest on such Security on or after the
respective due dates expressed in such Security.
Section 508. Unconditional Right of Holders to Receive
Principal and Interest.
Notwithstanding any other provision in this Indenture,
the Holder of any Security shall have the right, which is absolute and
unconditional, to receive payment of the principal of and (subject to
Section 307) interest (including any Additional Interest) on such Security
on the respective Stated Maturities expressed in such Security (or, in the
case of redemption, on the Redemption Date) and to institute suit for the
enforcement of any such payment, and such rights shall not be impaired
without the consent of such Holder.
Section 509. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any
proceeding to enforce any right or remedy under this Indenture and such
proceeding has been discontinued or abandoned for any reason, or has been
determined adversely to the Trustee or to such Holder, then and in every
such case, subject to any determination in such proceeding, the Company,
the Trustee and the Holders shall be restored severally and respectively to
their former positions hereunder and thereafter all rights and remedies of
the Trustee and the Holders shall continue as though no such proceeding had
been instituted.
Section 510. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Securities
in the last paragraph of Section 306, no right or remedy herein conferred
upon or reserved to the Trustee or to the Holders is intended to be
exclusive of any other right or remedy, and every right and remedy shall,
to the extent permitted by law, be cumulative and in addition to every
other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. The assertion or employment of any right or
remedy hereunder, or otherwise, shall not prevent the concurrent assertion
or employment of any other appropriate right or remedy.
Section 511. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of
any Security to exercise any right or remedy accruing upon any
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Event of Default shall impair any such right or remedy or constitute a
waiver of any such Event of Default or an acquiescence therein. Every right
and remedy given by this Article or by law to the Trustee or to the Holders
may be exercised from time to time, and as often as may be deemed
expedient, by the Trustee or by the Holders, as the case may be.
Section 512. Control by Holders.
The Holders of a majority in aggregate principal amount
of the Outstanding Securities shall have the right to direct the time,
method and place of conducting any proceeding for any remedy available to
the Trustee or exercising any trust or power conferred on the Trustee,
provided that
(1) such direction shall not be in conflict with any
rule of law or with this Indenture;
(2) subject to the provisions of Section 601, the Trustee
shall have the right to decline to follow any such direction if the Trustee
determines that the action so directed may not be lawfully taken, or if a
Responsible Officer or Officers determines that the action so directed
would be unjustly prejudicial to the Holders of Securities not taking part
in such direction or would involve the Trustee in personal liability; and
(3) the Trustee may take any other action deemed proper
by the Trustee which is not inconsistent with such direction.
Section 513. Waiver of Past Defaults.
Subject to Section 1006 hereof, the holders of not less
than a majority in aggregate outstanding principal amount of the Securities
may, on behalf of the holders of all the Securities, waive any past default
hereunder and its consequences, except a default
(1) in the payment of the principal or interest
(including any Additional Interest) on any Security; or
(2) in respect of a covenant or provision hereof which
under Article Nine cannot be modified or amended without the consent of the
Holder of each Outstanding Security affected.
Upon any such waiver, such default shall cease to exist,
and any Event of Default arising therefrom shall be deemed to have been
cured, for every purpose of this Indenture; but no such waiver shall extend
to any subsequent or other default or impair any right consequent thereon.
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Section 514. Undertaking for Costs.
In any suit for the enforcement of any right or remedy
under this Indenture, or in any suit against the Trustee for any action
taken, suffered or omitted by it as Trustee, a court may require any party
litigant in such suit to file an undertaking to pay the costs of such suit,
and may assess costs against any such party litigant, in the manner and to
the extent provided in the Trust Indenture Act; provided, that neither this
Section nor the Trust Indenture Act shall be deemed to authorize any court
to require such an undertaking or to make such an assessment in any suit
instituted by the Company or in any suit for the enforcement of the right
to receive the principal of and interest (including any Additional
Interest) on any Security.
Section 515. Waiver of Stay or Extension Laws.
The Company covenants (to the extent that it may lawfully
do so) that it will not at any time insist upon, or plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay or extension
law wherever enacted, now or at any time hereafter in force, which may
affect the covenants or the performance of this Indenture; and the Company
(to the extent that it may lawfully do so) hereby expressly waives all
benefit or advantage of any such law and covenants that it will not hinder,
delay or impede the execution of any power herein granted to the Trustee,
but will suffer and permit the execution of every such power as though no
such law had been enacted.
ARTICLE SIX
THE TRUSTEE
Section 601. Certain Duties and Responsibilities.
The Trustee, prior to the occurrence of an Event of
Default with respect to Securities and after the curing of all Events of
Default with respect to Securities which may have occurred, shall undertake
to perform with respect to Securities only such duties as are specifically
set forth in this Indenture and no implied covenants shall be read into
this Indenture against the Trustee. In case an Event of Default with
respect to Securities has occurred (which has not been cured or waived),
the Trustee shall exercise with respect to Securities such of the rights
and powers vested in it by this Indenture, and use the same degree of care
and skill in their exercise, as a prudent individual would exercise or use
under the circumstances in the conduct of his or her own affairs.
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No provision of this Indenture shall be construed to
relieve the Trustee from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct, except that:
(a) prior to the occurrence of an Event of Default
with respect to Securities and after the curing or waiving of all
such Events of Default which may have occurred:
(1) the duties and obligations of the Trustee shall with
respect to the Securities be determined solely by the express provisions of
this Indenture, and the Trustee shall not be liable with respect to such
Securities except for the performance of such duties and obligations as are
specifically set forth in this Indenture, and no implied covenants or
obligations shall be read into this Indenture against the Trustee; and
(2) in the absence of bad faith on the part of the
Trustee, the Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Trustee and conforming to the
requirements of this Indenture; but in the case of any such certificates or
opinions which by any provision hereof are specifically required to be
furnished to the Trustee, the Trustee shall be under a duty to examine the
same to determine whether or not they conform to the requirements of this
Indenture;
(b) the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer or Responsible
Officers of the Trustee, unless it shall be proved that the Trustee was
negligent in ascertaining the pertinent facts;
(c) the Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance with
the direction of the Holders of not less than a majority in principal
amount of the Securities at the time Outstanding relating to the time,
method and place of conducting any proceeding for any remedy available to
the Trustee, or exercising any trust or power conferred upon the Trustee
under this Indenture with respect to the Securities; and
(d) none of the provisions contained in this Indenture
shall require the Trustee to expend or risk its own funds or otherwise
incur personal financial liability in the performance of any of its duties
or in the exercise of any of its rights or powers, if it shall have
reasonable grounds for believing that the repayment of such funds or
liability is not reasonably assured to it under the terms of this Indenture
or adequate indemnity against such risk is not reasonably assured to it.
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Section 602. Notice of Defaults.
The Trustee shall give the Holders notice of any default
hereunder as and to the extent provided by the Trust Indenture Act;
provided, however, that in the case of any default of the character
specified in Section 501(3), no such notice to Holders shall be given until
at least 60 days after the occurrence thereof. For the purpose of this
Section, the term "default" means any event which is, or after notice or
lapse of time or both would become, an Event of Default.
Section 603. Certain Rights of Trustee.
Subject to the provisions of Section 601:
(1) the Trustee may rely and shall be protected in acting
or refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document believed by it to be genuine and to have been signed or presented
by the proper party or parties;
(2) any request or direction of the Company mentioned
herein shall be sufficiently evidenced by a Company Request or Company
Order and any resolution of the Board of Directors may be sufficiently
evidenced by a Board Resolution;
(3) whenever in the administration of this Indenture the
Trustee shall deem it desirable that a matter be proved or established
prior to taking, suffering or omitting any action hereunder, the Trustee
(unless other evidence be herein specifically prescribed) may, in the
absence of bad faith on its part, rely upon an Officers' Certificate;
(4) the Trustee may consult with counsel and the written
advice of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance thereon;
(5) the Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Indenture at the request
or direction of any of the Holders pursuant to this Indenture, unless such
Holders shall have offered to the Trustee reasonable indemnity against the
costs, expenses and liabilities which might be incurred by it in compliance
with such request or direction;
(6) the Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other
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evidence of indebtedness or other paper or document, but the Trustee, in
its discretion, may make such further inquiry or investigation into such
facts or matters as it may see fit, and, if the Trustee shall determine to
make such further inquiry or investigation, it shall be entitled to examine
the books, records and premises of the Company, personally or by agent or
attorney; and
(7) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys and the Trustee shall not be responsible for any
misconduct or negligence on the part of any agent or attorney appointed
with due care by it hereunder.
Section 604. Not Responsible for Recitals or Issuance of
Securities.
The recitals contained herein and in the Securities,
except the Trustee's certificates of authentication, shall be taken as the
statements of the Company, and the Trustee assumes no responsibility for
their correctness. The Trustee makes no representations as to the validity
or sufficiency of this Indenture or of the Securities. The Trustee shall
not be accountable for the use or application by the Company of Securities
or the proceeds thereof.
Section 605. May Hold Securities.
The Trustee, any Paying Agent, any Security Registrar or
any other agent of the Company, in its individual or any other capacity,
may become the owner or pledgee of Securities and, subject to Sections 608
and 613, may otherwise deal with the Company with the same rights it would
have if it were not Trustee, Paying Agent, Security Registrar or such other
agent.
Section 606. Money Held in Trust.
Money held by the Trustee in trust hereunder need not be
segregated from other funds except to the extent required by law. The
Trustee shall be under no liability for interest on any money received by
it hereunder except as otherwise provided herein or agreed with the
Company.
Section 607. Compensation and Reimbursement.
The Company agrees
(1) to pay to the Trustee from time to time
reasonable compensation for all services rendered by it hereunder
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(which compensation shall not be limited by any provision of law
in regard to the compensation of a trustee of an express trust);
(2) except as otherwise expressly provided herein, to
reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in accordance
with any provision of this Indenture (including the reasonable compensation
and the expenses and disbursements of its agents and counsel), except any
such expense disbursement or advance as may be attributable to its
negligence or bad faith; and
(3) to indemnify the Trustee for, and to hold it harmless
against, any loss, liability or expense incurred without negligence or bad
faith on its part, arising out of or in connection with the acceptance or
administration of this trust, including the costs and expenses of defending
itself against any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder.
Section 608. Disqualification; Conflicting Interests.
If the Trustee has or shall acquire a conflicting
interest within the meaning of the Trust Indenture Act, the Trustee shall
either eliminate such interest or resign, to the extent and in the manner
provided by, and subject to the provisions of, the Trust Indenture Act and
this Indenture.
Section 609. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which
shall be a Person that is eligible pursuant to the Trust Indenture Act to
act as such and has a combined capital and surplus of at least $50,000,000.
If such Person publishes reports of condition at least annually, pursuant
to law or to the requirements of said supervising or examining authority,
then for the purposes of this Section, the combined capital and surplus of
such Person shall be deemed to be its combined capital and surplus as set
forth in its most recent report of condition so published. If at any time
the Trustee shall cease to be eligible in accordance with the provisions of
this Section, it shall resign immediately in the manner and with the effect
hereinafter specified in this Article.
Section 610. Resignation and Removal; Appointment of
Successor.
(a) No resignation or removal of the Trustee and no
appointment of a successor Trustee pursuant to this Article shall become
effective until the acceptance of appointment by the successor Trustee
under Section 611.
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(b) The Trustee may resign at any time by giving written
notice thereof to the Company. If an instrument of acceptance by a
successor Trustee shall not have been delivered to the Trustee within 30
days after the giving of such notice of resignation, the resigning Trustee
may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
(c) The Trustee may be removed at any time by Act of the
Holders of a majority in principal amount of the Outstanding Securities,
delivered to the Trustee and to the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with
Section 608 after written request therefor by the Company
or by any Holder who has been a bona fide Holder of a
Security for at least six months, or
(2) the Trustee shall cease to be eligible
under Section 609 and shall fail to resign after written
request therefor by the Company or by any such Holder, or
(3) the Trustee shall become incapable of
acting or shall be adjudged a bankrupt or insolvent or a
receiver of the Trustee or of its property shall be
appointed or any public officer shall take charge or
control of the Trustee or of its property or affairs for
the purpose of rehabilitation, conservation or
liquidation,
then, in any such case, (i) the Company by a Board Resolution may remove
the Trustee, or (ii) subject to Section 514, any Holder who has been a bona
fide Holder of a Security for at least six months may, on behalf of himself
and all others similarly situated, petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a
successor Trustee.
(e) If the Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of Trustee
for any cause, the Company, by a Board Resolution, shall promptly appoint a
successor Trustee if, within one year after such resignation, removal or
incapability, or the occurrence of such vacancy, a successor Trustee shall
be appointed by Act of the Holders of a majority in principal amount of the
Outstanding Securities delivered to the Company and the retiring Trustee,
the successor Trustee so appointed shall, forthwith upon its acceptance of
such appointment, become the successor Trustee and supersede the successor
Trustee appointed by the Company. If no successor Trustee shall have been
so appointed by the Company or the Holders and accepted appointment in the
manner hereinafter provided, any Holder who has been a bona fide Holder of
a
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Security for at least six months may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for the
appointment of a successor Trustee.
(f) The Company shall give notice of each resignation and
each removal of the Trustee and each appointment of a successor Trustee to
all Holders in the manner provided in Section 106. Each notice shall
include the name of the successor Trustee and the address of its Corporate
Trust Office.
Section 611. Acceptance of Appointment by Successor.
Every successor Trustee appointed hereunder shall
execute, acknowledge and deliver to the Company and to the retiring Trustee
an instrument accepting such appointment, and thereupon the resignation or
removal of the retiring Trustee shall become effective and such successor
Trustee, without any further act, deed or conveyance, shall become vested
with all the rights, powers, trusts and duties of the retiring Trustee;
provided that, on request of the Company or the successor Trustee, such
retiring Trustee shall, upon payment of its charges, execute and deliver an
instrument transferring to such successor Trustee all the rights, powers
and trusts of the retiring Trustee and shall duly assign, transfer and
deliver to such successor trustee all property and money held by such
retiring Trustee hereunder. Upon request of any such successor Trustee, the
Company shall execute any and all Instruments for more fully and certainly
vesting in and confirming to such successor Trustee all such rights, powers
and trusts.
No successor Trustee shall accept its appointment unless
at the time of such acceptance such successor Trustee shall be qualified
and eligible under this Article.
Section 612. Merger, Conversion, Consolidation or Succession
to Business.
Any corporation into which the Trustee may be merged or
converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which the Trustee
shall be a party, or any corporation succeeding to all or substantially all
the corporate trust business of the Trustee, shall be the successor of the
Trustee hereunder, provided that such corporation shall be otherwise
qualified and eligible under this Article, without the execution or filing
of any paper or any further act on the part of any of the parties hereto.
In case any Securities shall have been authenticated, but not delivered, by
the Trustee then in office, any successor by merger, conversion or
consolidation to such authenticating Trustee may adopt such authentication
and deliver the Securities so authenticated with the same effect as
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if such successor Trustee had itself authenticated such
Securities.
Section 613. Preferential Collection of Claims Against
Company.
If and when the Trustee shall be or become a creditor of
the Company (or any other obligor upon the Securities), the Trustee shall
be subject to the provisions of the Trust Indenture Act regarding the
collection of claims against the Company (or any such other obligor).
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
Section 701. Company to Furnish Trustee Names and Addresses of
Holders.
The Company will furnish or cause to be furnished to
the Trustee
(a) semiannually, not later than January 15 and July 15
in each year, a list, in such form as the Trustee may reasonably require,
of the names and addresses of the Holders as of a date not more than 15
days prior to the delivery thereof, and
(b) at such other times as the Trustee may request in
writing, within 30 days after the receipt by the Company of any such
request, a list of similar form and content as of a date not more than 15
days prior to the time such list is furnished;
excluding from any such list names and addresses received by the Trustee in
its capacity as Security Registrar.
Section 702. Preservation of Information; Communications to
Holders.
(a) The Trustee shall preserve, in as current a form as
is reasonably practicable, the names and addresses of Holders contained in
the most recent list furnished to the Trustee as provided in Section 701
and the names and addresses of Holders received by the Trustee in its
capacity as Security Registrar. The Trustee may destroy any list furnished
to it as provided in Section 701 upon receipt of a new list so furnished.
(b) The rights of Holders to communicate with other
Holders with respect to their rights under this Indenture or
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under the Securities, and the corresponding rights and duties of the
Trustee, shall be as provided by the Trust Indenture Act.
(c) Every Holder of Securities, by receiving and holding
the same, agrees with the Company and the Trustee that neither the Company
nor the Trustee nor any agent of either of them shall be held accountable
by reason of any disclosure of information as to names and addresses of
Holders made pursuant to the Trust Indenture Act.
Section 703. Reports by Trustee.
(a) The Trustee shall transmit to Holders such reports
concerning the Trustee and its actions under this Indenture as may be
required pursuant to the Trust Indenture Act at the times and in the manner
provided pursuant thereto.
(b) A copy of each such report shall, at the time of such
transmission to Holders, be filed by the Trustee with each stock exchange
upon which the Securities are listed, with the Commission and with the
Company. The Company will notify the Trustee when the Securities are listed
on any stock exchange.
Section 704. Reports by Company.
The Company shall file with the Trustee and the
Commission, and transmit to Holders, such information, documents and other
reports, and such summaries thereof, as may be required pursuant to the
Trust Indenture Act at the times and in the manner provided pursuant to the
Trust Indenture Act; provided that any such information, documents or
reports required to be filed with the Commission pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934 shall be filed with the
Trustee within 15 days after the same is so required to be filed with the
Commission.
ARTICLE EIGHT
CONSOLIDATION, MERGER, OR SALE OF ASSETS
Section 801. No Restrictions.
Nothing contained in this Indenture or in any of the
Securities shall prevent any consolidation or merger of the Company with or
into any other corporation or corporations (whether or not affiliated with
the Company), or successive consolidations or mergers in which the Company
or its successor or successors shall be a party or parties, or shall
prevent any sale, conveyance, transfer or other disposition of the property
of the Company or its successor or successors as an entirety, or
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substantially as an entirety, to any other corporation (whether or not
affiliated with the Company or its successor or successors) authorized to
acquire and operate the same; provided, however, the Company hereby
covenants and agrees that, upon any such consolidation, merger, sale,
conveyance, transfer or other disposition, the due and punctual payment of
the principal of and interest on the Securities, according to their tenor,
and the due and punctual performance and observance of all the covenants
and conditions of this Indenture with respect to the Securities to be kept
or performed by the Company, shall be expressly assumed, by supplemental
indenture (which shall conform to the provisions of the Trust Indenture
Act, as then in effect) satisfactory in form to the Trustee executed and
delivered to the Trustee by the entity formed by such consolidation, or
into which the Company shall have been merged, or by the entity which shall
have acquired such property.
Section 802. Successor Substituted.
(1) Upon any such consolidation, merger, sale,
conveyance, transfer or other disposition, in accordance with Section 801
and upon the assumption by the successor corporation, by supplemental
indenture, executed and delivered to the Trustee and satisfactory in form
to the Trustee, of the due and punctual payment of the principal of and
interest on all of the Outstanding Securities and the due and punctual
performance of all of the covenants and conditions of this Indenture with
respect to the Securities to be kept or performed by the Company, the
successor Person formed by such consolidation, merger, sale, conveyance,
transfer or other disposition, shall succeed to, and be substituted for,
and may exercise every right and power of, the Company under this Indenture
with the same effect as if such successor Person had been named as the
Company herein, and thereafter the predecessor Person shall be relieved of
all obligations and covenants under this Indenture and the Securities.
(2) In case of any such consolidation, merger, sale,
conveyance, transfer or other disposition such changes in phraseology and
form (but not in substance) may be made in the Securities thereafter to be
issued as may be appropriate.
(3) Nothing contained in this Indenture or in any of the
Securities shall prevent the Company from merging into itself or acquiring
by purchase or otherwise all or any part of the property of any other
corporation (whether or not affiliated with the Company).
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ARTICLE NINE
SUPPLEMENTAL INDENTURES
Section 901. Supplemental Indentures Without Consent of
Holders.
Without the consent of any Holders, the Company, when
authorized by a Board Resolution, and the Trustee, at any time and from
time to time, may enter into one or more indentures supplemental hereto, in
form satisfactory to the Trustee, for any of the following purposes:
(1) to evidence the succession of another Person to
the Company and the assumption by any such successor of the
covenants of the Company contained herein and in the Securities;
or
(2) to add to the covenants of the Company for the
benefit of the Holders, or to surrender any right or power herein
conferred upon the Company; or
(3) to secure the Securities; or
(4) to cure any ambiguity, to correct or supplement any
provision herein which may be defective or inconsistent with any other
provision contained herein, or to make any other provisions with respect to
matters or questions arising under this Indenture which shall not be
inconsistent with the provisions of this Indenture, provided that such
action pursuant to this Clause (4) shall not adversely affect the interests
of the Holders of the Securities.
The Trustee is hereby authorized to join with the Company
in the execution of any such supplemental indenture, and to make any
further appropriate agreements and stipulations which may be therein
contained, but the Trustee shall not be obligated to enter into any such
supplemental indenture which affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.
Any supplemental indenture authorized by the provisions
of this Section may be executed by the Company and the Trustee without the
consent of the holders of any of the Securities at the time Outstanding,
notwithstanding any of the provisions of Section 902. No consent of the
holders of any Preferred Securities shall be required in connection with
any supplemental indenture entered into pursuant to this Section 901.
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Section 902. Supplemental Indentures with Consent of Holders.
With the consent of the holders of not less than a
majority in principal amount of the Outstanding Securities, by Act of said
Holders delivered to the Company and the Trustee, the Company, when
authorized by a Board Resolution, and the Trustee may from time to time and
at any time enter into an indenture or indentures supplemental hereto
(which shall conform to the provisions of the Trust Indenture Act as then
in effect) for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of this Indenture or of any
supplemental indenture or of modifying in any manner the rights of the
Holders under this Indenture; provided, however, that no such modification
shall, without the consent of the Holder of each Outstanding Security
affected thereby,
(1) extend the Stated Maturity of the principal of (other
than in accordance with the provisions of Section 301) or any installment
of interest (including any Additional Interest) on any Security or reduce
the principal amount thereof, or reduce the rate or extend the time of
payment of interest thereon; or
(2) reduce the percentage in principal amount of the
Outstanding Securities, the consent of whose Holders is required
for any such supplemental indenture; or
(3) modify any of the provisions of this Section, Section
513 or Section 1006, except to increase any such percentage or to provide
that certain other provisions of this Indenture cannot be modified or
waived without the consent of the Holder of each Outstanding Security
affected thereby.
It shall not be necessary for any Act of Holders under
this Section to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such Act shall approve the
substance thereof.
Promptly after the execution by the Company and the
Trustee of any supplemental indenture pursuant to the provisions of this
Section, the Trustee shall transmit by mail, first-class postage prepaid, a
notice, setting forth in general terms the substance of such supplemental
indenture, to the Holders of all Outstanding the Securities as their names
and addresses appear upon the Securities Register. Any failure of the
Trustee to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such supplemental indenture.
Section 903. Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created
by, any supplemental indenture permitted by this Article or the
modifications thereby of the trusts created by this
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Indenture, the Trustee shall be entitled to receive, and (subject to
Section 601) shall be fully protected in relying upon, an Opinion of
Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. Upon the request of the Company,
accompanied by a Board Resolution authorizing the execution of any such
supplemental indenture, and upon the filing with the Trustee of evidence of
the consent of Holders of the Securities required to consent thereto as
aforesaid, the Trustee shall join with the Company in the execution of such
supplemental indenture unless such supplemental indenture affects the
Trustee's own rights, duties or immunities under this Indenture or
otherwise, in which case the Trustee may in its discretion but shall not be
obligated to enter into such supplemental indenture.
Section 904. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under
this Article, this Indenture shall be modified in accordance therewith, and
such supplemental indenture shall form a part of this Indenture for all
purposes; and the respective rights, limitations of rights, obligations,
duties and immunities under this Indenture of the Trustee, the Company and
the Holders of Securities shall thereafter be determined, exercised and
enforced hereunder subject in all respects to such modifications and
amendments.
Section 905. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this
Article shall conform to the requirements of the Trust Indenture Act.
Section 906. Reference in Securities to Supplemental
Indentures.
Securities authenticated and delivered after the
execution of any supplemental indenture pursuant to this Article may bear a
notation in form approved by the Company, provided such form meets the
requirements of any exchange upon which the Securities may be listed, as to
any matter provided for in such supplemental indenture. If the Company
shall so determine, new Securities so modified as to conform, in the
opinion of the Board of Directors, to any such supplemental indenture may
be prepared and executed by the Company and authenticated and delivered by
the Trustee in exchange for Outstanding Securities.
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ARTICLE TEN
COVENANTS; REPRESENTATIONS AND WARRANTIES
Section 1001. Payment of Principal and Interest.
The Company will duly and punctually pay or cause to be
paid the principal of and interest on the Securities in accordance with the
terms of the Securities and this Indenture.
Section 1002. Maintenance of Office or Agency.
The Company will maintain in The City of New York an
office or agency (i) where Securities may be presented or surrendered for
payment, (ii) where Securities may be surrendered for registration of
transfer or exchange, and (iii) where notices and demands to or upon the
Company in respect of the Securities and this Indenture may be served. The
Company will give prompt written notice to the Trustee of the location, and
any change in the location, of such office or agency. If at any time the
Company shall fail to maintain any such required office or agency or shall
fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate
Trust Office of the Trustee, and the Company hereby appoints the Trustee as
its agent to receive all such presentations, surrenders, notices and
demands.
The Company may also from time to time designate one or
more other offices or agencies (in or outside The City of New York) where
the Securities may be presented or surrendered for any or all such purposes
and may from time to time rescind such designations; provided, however,
that no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency in The City of
New York for such purposes. The Company will give prompt written notice to
the Trustee of any such designation or rescission and of any change in the
location of any such other office or agency.
Section 1003. Money for Securities Payments to Be Held in
Trust.
If the Company shall at any time act as its own Paying
Agent, it will, on or before each due date of the principal of or interest
on any of the Securities, segregate and hold in trust for the benefit of
the Persons entitled thereto a sum sufficient to pay the principal or
interest so becoming due until such sums shall be paid to such Persons or
otherwise disposed of as herein provided and will promptly notify the
Trustee of its action or failure so to act.
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Whenever the Company shall have one or more Paying
Agents, it will, prior to each due date of the principal of or interest on
any Securities, deposit with a Paying Agent a sum sufficient to pay such
amount, such sum to be held as provided by the Trust Indenture Act, and
(unless such Paying Agent is the Trustee) the Company will promptly notify
the Trustee of its action or failure so to act.
The Company will cause each Paying Agent other than the
Trustee to execute and deliver to the Trustee an instrument in which such
Paying Agent shall agree with the Trustee, subject to the provisions of
this Section, that such Paying Agent will (i) comply with the provisions of
the Trust Indenture Act applicable to it as a Paying Agent and (ii) during
the continuance of any default by the Company (or any other obligor upon
the Securities) in the making of any payment in respect of the Securities,
upon the written request of the Trustee, forthwith pay to the Trustee all
sums held in trust by such Paying Agent as such.
The Company may at any time, for the purpose of obtaining
the satisfaction and discharge of this Indenture or for any other purpose,
pay, or by Company Order direct any Paying Agent to pay, to the Trustee all
sums held in trust by the Company or such Paying Agent, such sums to be
held by the Trustee upon the same trusts as those upon which such sums were
held by the Company or such Paying Agent; and, upon such payment by any
Paying Agent to the Trustee, such Paying Agent shall be released from all
further liability with respect to such money.
Any money deposited with the Trustee or any Paying Agent,
or then held by the Company, in trust for the payment of the principal of
(or premium, if any) or interest on any Security and remaining unclaimed
for two years after such principal or interest has become due and payable
shall be paid to the Company on Company Request, or (if then held by the
Company) shall be discharged from such trust; and the Holder of such
Security shall thereafter, as an unsecured general creditor, look only to
the Company for payment thereof, and all liability of the Trustee or such
Paying Agent with respect to such trust money, and all liability of the
Company as trustee thereof, shall thereupon cease.
Section 1004. Statement by Officers as to Default.
The Company will deliver to the Trustee, on or before May
15 in each calendar year in which any of the Securities are Outstanding, or
on or before such other day in each calendar year as the Company and the
Trustee may from time to time agree upon, an Officers' Certificate, stating
whether or not to the best knowledge of the signers thereof the Company is
in default in the performance and observance of any of the terms,
provisions and conditions of this Indenture (without regard to any period
of grace or requirement of notice provided hereunder) and, if the
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Company shall be in default, specifying all such defaults and the nature
and status thereof of which they may have knowledge.
Section 1005. Existence.
Subject to Article Eight, the Company will do or cause to
be done all things necessary to preserve and keep in full force and effect
its existence, rights (charter and statutory) and franchises; provided,
however, that the Company shall not be required to preserve any such right
or franchise if the Board of Directors shall determine that the
preservation thereof is no longer desirable in the conduct of the business
of the Company and that the loss thereof is not disadvantageous in any
material respect to the Holders.
Section 1006. Additional Covenants.
The Company agrees it will not, directly or indirectly,
declare or pay any dividend on, or redeem, purchase, acquire or make a
distribution or liquidation payment with respect to, any of its Common
Stock or preferred stock (other than as a result of a reclassification of
such Common Stock or preferred stock or the exchange or conversion of one
class or series of Common Stock or preferred stock for another class or
series of Common Stock or preferred stock), or make any guarantee payments
with respect to the foregoing, if at such time (a) there shall have
occurred any event that, with the giving of notice or the lapse of time or
both, would constitute an Event of Default hereunder, (b) the Company shall
be in default with respect to its payment of any obligations under the
Parent Guarantee or (c) the Company shall have given notice of its
selection of an extended interest payment period as provided herein and
such period, or any extension thereof, shall be continuing. The Company
also covenants (i) to remain the sole General Partner of COMSAT Capital and
maintain 100% ownership of the general partnership interests thereof;
provided that any permitted successor of the Company under Article Eight
may succeed to the Company's duties as General Partner, (ii) to contribute
capital in an amount equal to at least 3% of the total capital
contributions to COMSAT Capital, (iii) not to voluntarily dissolve, wind-up
or terminate COMSAT Capital, except in connection with the distribution of
Securities to the holders of Preferred Securities in liquidation of COMSAT
Capital pursuant to Section 6.2(c) or 9.12 of the Limited Partnership
Agreement and in connection with certain mergers, consolidations or
amalgamations permitted by the Limited Partnership Agreement, (iv) to
perform timely all of its duties as General Partner (including the duty to
declare and pay Dividends on the Preferred Securities), and (v) to use its
reasonable efforts to cause COMSAT Capital to remain a limited partnership
except in connection with certain mergers, consolidations or amalgamations
permitted by the Limited Partnership Agreement and otherwise to continue
not to be treated
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as an association taxable as a corporation for United States
federal income tax purposes.
The Company also covenants that so long as any Securities
are held by COMSAT Capital, the General Partner shall not (i) direct the
time, method and place of conducting any proceeding for any remedy
available to the Trustee, or executing any trust or power conferred on the
Trustee with respect to the Securities, (ii) waive any past default which
is waivable under this Indenture, (iii) exercise any right to rescind or
annul a declaration that the principal of all the Securities shall be due
and payable, or (iv) consent to any amendment, modification or termination
of this Indenture, where such consent shall be required, without, in each
case, obtaining the prior approval of the holders of at least 66 2/3% or
more in liquidation preference of the Preferred Securities then
outstanding, provided, however, that where a consent under this Indenture
would require the consent of each Holder affected thereby, no such consent
shall be given by the General Partner without the prior consent of each
holder of the Preferred Securities. The General Partner shall not revoke
any action previously authorized or approved by a vote of the Preferred
Securities, without the approval of the holders of Preferred Securities
representing 66 2/3% or more of the aggregate liquidation preference of the
Outstanding Preferred Securities. The General Partner shall notify all
holders of the Preferred Securities of any notice of default received from
the Trustee with respect to the Securities.
The Company also covenants that if the Securities are
distributed to the holders of the Preferred Securities upon the dissolution
of COMSAT Capital, the Company will use its best efforts to list the
Securities on the NYSE or on such other exchange as the Preferred
Securities are then listed and traded on the same part of any such
exchange.
ARTICLE ELEVEN
SUBORDINATION OF SECURITIES
Section 1101. Securities Subordinate to Senior Indebtedness.
The Company covenants and agrees, and each Holder of a
Security, by his acceptance thereof, likewise covenants and agrees, that,
to the extent and in the manner hereinafter set forth in this Article
(subject to Article Four), the payment of the principal of, premium, if
any, and interest (including any Additional Interest) on each and all of
the Securities is hereby expressly made subordinate and junior in right of
payment to the prior payment in full of all Senior Indebtedness of the
Company, whether outstanding at the date of this Indenture or hereafter
incurred.
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Section 1102. Payment Over of Proceeds Upon Dissolution, Etc.
Upon any payment by, or distribution of assets of, the
Company to creditors upon any dissolution, winding-up, liquidation or
reorganization of the Company, whether voluntary or involuntary or in
bankruptcy, insolvency, receivership or other proceedings, all amounts due
or to become due upon all Senior Indebtedness shall first be paid in full,
or payment thereof provided for in money in accordance with its terms,
before the Holders of the Securities are entitled to receive any payment or
distribution of any kind or character whether in cash, property or
securities, on account of the principal of or interest on the Securities or
on account of any purchase, redemption or other acquisition of Securities
by the Company, any Subsidiary of the Company, the Trustee or any Paying
Agent (all such payments, distributions, purchases, redemptions and
acquisitions herein referred to, individually and collectively, as a
"Securities Payment"); any payment by, or distribution of assets of, the
Company of any kind or character, whether in cash, property or securities,
by set-off or otherwise, to which the Holders of the Securities or the
Trustee would be entitled but for the provisions of this Article shall be
paid by the Company or by any liquidating trustee or agent or other Person
making such payment or distribution, or by the Holders of the Securities or
by the Trustee under this Indenture if received by them or it, directly to
the holders of Senior Indebtedness or their representative or
representatives or to the trustee or trustees under any indenture under
which any instruments evidencing any of such Senior Indebtedness may have
been issued, ratably according to the aggregate amounts remaining unpaid on
account of the Senior Indebtedness held or represented by each, to the
extent necessary to pay all Senior Indebtedness in full, after giving
effect to any concurrent payment to the holders of such Senior
Indebtedness.
In the event that, notwithstanding the foregoing
provisions of this Section, the Trustee or the Holder of any Security shall
have received any payment or distribution of assets of the Company of any
kind or character, whether in cash, property or securities, prohibited by
the foregoing before all Senior Indebtedness is paid in full or payment
thereof provided for in cash, then and in such event such payment or
distribution shall be paid over or delivered forthwith to the trustee in
bankruptcy, receiver, liquidating trustee, custodian, assignee, agent or
other Person making payment or distribution of assets of the Company for
application to the payment of all Senior Indebtedness remaining unpaid, to
the extent necessary to pay all Senior Indebtedness in full after giving
effect to any concurrent payment to or for the holders of Senior
Indebtedness.
For purposes of this Article only, the words "any payment
or distribution of any kind or character, whether in cash, property or
securities" shall not be deemed to include a
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payment or distribution of stock or securities of the Company provided for
by a plan of reorganization or readjustment authorized by an order or
decree of a court of competent jurisdiction in a reorganization proceeding
under any applicable bankruptcy law or of any other corporation provided
for by such plan of reorganization or readjustment which stock or
securities are subordinated in right of payment to all then outstanding
Senior Indebtedness to substantially the same extent, or to a greater
extent than, the Securities are so subordinated as provided in this
Article. The consolidation of the Company with, or the merger of the
Company into, another Person or the liquidation or dissolution of the
Company following the conveyance or transfer of all or substantially all of
its properties and assets as an entirety to another Person upon the terms
and conditions set forth in Article Eight hereof shall not be deemed a
dissolution, winding-up, liquidation or reorganization for the purposes of
this Section 1102 if the Person formed by such consolidation or into which
the Company is merged or the Person which acquires by conveyance or
transfer such Properties and assets, as the case may be, shall, as a part
of such consolidation, merger, conveyance or transfer, comply with the
conditions set forth in Article Eight.
Section 1103. No Payment When Senior Indebtedness in Default.
In the event that any Senior Payment Default (as defined
below) shall have occurred, then no Securities Payment shall be made, nor
shall any property of the Company or any Subsidiary of the Company be
applied to the purchase, acquisition, retirement or redemption of the
Securities, unless and until such Senior Payment Default shall have been
cured or waived in writing or shall have ceased to exist or all amounts
then due and payable in respect of such Senior Indebtedness (including
amounts that have become and remain due by acceleration) shall have been
paid in full in cash. "Senior Payment Default" means (a) any default in the
payment of principal, premium, interest or any other payment due on any
Senior Indebtedness continuing beyond the period of grace, if any,
specified in the instrument evidencing such Senior Indebtedness, unless and
until such default shall have been cured or waived or shall have ceased to
exist, and (b) the acceleration of the maturity of any Senior Indebtedness
because of a default.
The provisions of this Section shall not apply to any
payment on account of the principal or interest on the Securities with
respect to which Section 1102 hereof would be applicable.
Section 1104. Payment Permitted If No Default.
Nothing contained in this Article or elsewhere in this
Indenture or in any of the Securities shall prevent the Company, at any
time except during the pendency of any dissolution,
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winding-up, liquidation or reorganization of the Company referred to in
Section 1102 hereof or under the conditions described in Section 1103
hereof, from making any payments on account of the principal or interest on
the Securities.
Section 1105. Subrogation to Rights of Holders of Senior
Indebtedness.
Subject to the payment in full of all Senior
Indebtedness, the rights of the Holders of the Securities shall be
subrogated to the rights of the holders of such Senior Indebtedness to
receive payments and distributions of cash, property and securities
applicable to the Senior Indebtedness until the principal of and interest
on the Securities shall be paid in full. For purposes of such subrogation,
no payments or distributions to the holders of the Senior Indebtedness of
any cash, property or securities to which the Holders of the Securities or
the Trustee would be entitled except for the provisions of this Article,
and no payments over pursuant to the provisions of this Article to or for
the benefit of the holders of Senior Indebtedness by Holders of the
Securities or the Trustee, shall, as among the Company, its creditors other
than holders of Senior Indebtedness and the Holders of the Securities, be
deemed to be a payment or distribution by the Company to or on account of
the Senior Indebtedness.
Section 1106. Provisions Solely to Define Relative Rights.
The provisions of this Article are and are intended
solely for the purpose of defining the relative rights of the Holders on
the one hand and the holders of Senior Indebtedness on the other hand.
Nothing contained in this Article or elsewhere in this Indenture or in the
Securities is intended to or shall (a) impair, as among the Company, its
creditors other than holders of Senior Indebtedness and the Holders of the
Securities, the obligation of the Company, which is absolute and
unconditional, (and which, subject to the rights under this Article of the
holders of Senior Indebtedness, is intended to rank equally with all other
general obligations of the Company) to pay to the Holders of the Securities
the principal of and interest (including any Additional Interest) on the
Securities as and when the same shall become due and payable in accordance
with their terms; or (b) affect the relative rights against the Company of
the Holders of the Securities and creditors of the Company other than the
holders of Senior Indebtedness; or (c) prevent the Trustee or the Holder of
any Security from exercising all remedies otherwise permitted by applicable
law upon default under this Indenture, subject to the rights, if any, under
this Article of the holders of Senior Indebtedness to receive cash,
property and securities otherwise payable or deliverable to the Trustee or
such Holder.
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Section 1107. Trustee to Effectuate Subordination.
Each Holder of a Security by his or her acceptance
thereof authorizes and directs the Trustee on his or her behalf to take
such action as may be necessary or appropriate to effectuate the
subordination provided in this Article and appoints the Trustee his
attorney-in-fact for any and all such purposes, including, in the event of
any dissolution, winding-up, liquidation or reorganization of the Company,
whether in bankruptcy, insolvency, receivership proceedings, or otherwise,
the timely filing of a claim for the unpaid balance of the Indebtedness of
the Company owing to such Holder in the form required in such proceedings
and the causing of such claim to be approved. If the Trustee does not file
a proper claim at least 30 days before the expiration of the time to file
such claim, then the holders of the Senior Indebtedness and their agents,
trustees or other representatives are authorized to do so (but,shall in no
event be liable for any failure to do so) for and on behalf of the Holders
of the Securities.
Section 1108. No Waiver of Subordination Provisions.
No right of any present or future holder of any Senior
Indebtedness to enforce subordination as herein provided shall at any time
in any way be prejudiced or impaired by any act or failure to act on the
part of the Company or by any act or failure to act, in good faith, by any
such holder, or by any noncompliance by the Company with the terms,
provisions and covenants of this Indenture, regardless of any knowledge
thereof any such holder may have or be otherwise charged with.
Without in any way limiting the generality of the
foregoing paragraph, the holders of Senior Indebtedness may, at any time
and from time to time, without the consent of or notice to the Trustee or
the Holders of the Securities, without incurring responsibility to the
Holders of the Securities and without impairing or releasing the
subordination provided in this Article or the obligations hereunder of the
Holders of the Securities to the holders of Senior Indebtedness, do any one
or more of the following: (i) change the manner, place or terms of payment
or extend the time of payment of, or renew or alter, Senior Indebtedness,
or otherwise amend or supplement in any manner Senior Indebtedness or any
instrument evidencing the same or any agreement under which Senior
Indebtedness is outstanding; (ii) permit the Company to borrow, repay and
then reborrow any or all of the Senior Indebtedness; (iii) sell, exchange,
release or otherwise deal with any property pledged, mortgaged or otherwise
securing Senior Indebtedness; (iv) release any Person liable in any manner
for the collection of Senior Indebtedness; (v) exercise or refrain from
exercising any rights against the Company and any other Person; and (vi)
apply any sums received by them to Senior Indebtedness.
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Section 1109. Notice to Trustee.
The Company shall give prompt written notice to the
Trustee of any fact known to the Company which would prohibit the making of
any payment to or by the Trustee in respect of the Securities.
Notwithstanding the provisions of this Article or any other provision of
this Indenture, the Trustee shall not be charged with knowledge of the
existence of any facts which would prohibit the making of any payment to or
by the Trustee in respect of the Securities, unless and until a Responsible
Officer of the Trustee shall have received written notice thereof from the
Company, any holder of Senior Indebtedness, any Designated Senior Holder or
any trustee, fiduciary or agent therefor; and, prior to the receipt of any
such written notice, the Trustee, subject to the provisions of Section 601
hereof, shall be entitled in all respects to assume that no such facts
exist; provided, however, that if the Trustee shall not have received the
notice provided for in this Section at least three Business Days prior to
the date upon which by the terms hereof any money may become payable for
any purpose (including, without limitation, the payment of the principal of
or interest on any Security), then, anything herein contained to the
contrary notwithstanding, but without limiting the rights and remedies of
the holders of Senior Indebtedness or any trustee, fiduciary or agent
therefor, the Trustee shall have full power and authority to receive such
money and to apply the same to the purpose for which such money was
received and shall not be affected by any notice to the contrary which may
be received by it within two Business Days prior to such date. Any notice
required or permitted to be given to the Trustee by a holder of Senior
Indebtedness or by any Designated Senior Holder shall be in writing and
shall be sufficient for every purpose hereunder if in writing and either
(i) sent via facsimile to the Trustee, the receipt of which shall be
confirmed via telephone, or (ii) mailed, first class postage prepaid, or
sent by overnight carrier, to the Trustee addressed to it at the address of
its principal office specified in the first paragraph of this instrument or
at any other address furnished in writing to such holder of Senior
Indebtedness by the Trustee.
Subject to the provisions of Section 601 hereof, the
Trustee shall be entitled to rely on the delivery to it of a written notice
by a Person representing himself to be a holder of Senior Indebtedness or
Designated Senior Holder to establish that such notice has been given by a
holder of Senior Indebtedness or Designated Senior Holder. In the event
that the Trustee determines in good faith that further evidence is required
with respect to the right of any Person as a holder of Senior Indebtedness
or Designated Senior Holder to participate in any payment or distribution
pursuant to this Article, the Trustee may request such Person to furnish
evidence to the reasonable satisfaction of the Trustee as to the amount of
Senior Indebtedness held by such Person, the extent to which such Person is
entitled to participate in such payment or distribution and
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any other facts pertinent to the rights of such Person under this Article,
and if such evidence is not furnished, the Trustee may defer any payment to
such Person pending judicial determination as to the right of such Person
to receive such payment.
Notwithstanding anything else contained herein, no
notice, request or other communication to or with the Trustee shall be
deemed given unless received by a Responsible officer at the Trustee's
principal corporate trust office.
Section 1110. Reliance on Judicial Order or Certificate of
Liquidating Agent.
Upon any payment or distribution of assets of the Company
referred to in this Article, the Trustee, subject to the provisions of
Section 601 hereof, and the Holders of the Securities shall be entitled to
rely upon any order or decree entered by any court of competent
jurisdiction in which such dissolution, winding-up, liquidation or
reorganization proceedings are pending, or a certificate of the trustee in
bankruptcy, receiver, liquidating trustee, custodian, assignee for the
benefit of creditors, agent or other Person making such payment or
distribution, delivered to the Trustee or to the Holders of Securities, for
the purpose of ascertaining the Persons entitled to participate in such
payment or distribution, the holders of the Senior Indebtedness and other
indebtedness of the Company, the amount thereof or payable thereon, the
amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article.
Section 1111. Trustee Not Fiduciary for Holders of Senior
Indebtedness.
The Trustee shall not be deemed to owe any fiduciary duty
to the holders of Senior Indebtedness and shall not be liable to any such
holders if it shall in good faith pay over or distribute to Holders of
Securities or to the Company or to any other Person cash, property or
securities to which any holders of Senior Indebtedness shall be entitled by
virtue of this Article or otherwise.
Section 1112. Rights of Trustee as Holder of Senior
Indebtedness; Preservation of Trustee's Rights.
The Trustee in its individual capacity shall be entitled
to all the rights set forth in this Article with respect to any Senior
Indebtedness which may at any time be held by it, to the same extent as any
other holder of Senior Indebtedness, and nothing in this Indenture shall
deprive the Trustee of any of its rights as such holder.
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Nothing in this Article shall apply to claims of, or
payments to, the Trustee under or pursuant to Section 607 hereof.
Section 1113. Article Applicable to Paying Agents.
In case at any time any Paying Agent other than the
Trustee shall have been appointed by the Company and be then acting
hereunder, the term "Trustee" as used in this Article shall in such case
(unless the context otherwise requires) be construed as extending to and
including such Paying Agent within its meaning as fully for all intents and
purposes as if such Paying Agent were named in this Article in addition to
or in place of the Trustee; provided, however, that Section 1111 hereof
shall not apply to the Company or any Affiliate of the Company if it or
such Affiliate acts as Paying Agent.
Section 1114. Trust Moneys Not Subordinated.
Notwithstanding anything contained herein to the
contrary, payments from money or the proceeds of U.S. Government
Obligations held in trust by the Trustee under Article Four for the payment
of the principal of and interest (including Additional Interest) on the
Securities shall not be subordinated to the prior payment of any Senior
Indebtedness or subject to the restrictions set forth in this Article, and
no Holder of Securities nor the Trustee shall be obligated to pay over any
such amount to the Company, any holder of Senior Indebtedness, any
Designated Senior Holder or any other creditor of the Company.
ARTICLE TWELVE
REDEMPTION OF SECURITIES
Section 1201. Mandatory Redemption; Optional Redemption.
(a) If COMSAT Capital redeems the Preferred Securities in
accordance with the terms thereof, the Securities will become due and
payable in a principal amount equal to the aggregate stated liquidation
preference of the Preferred Securities so redeemed, together with any
accrued and unpaid interest thereon, including Additional Interest, if any.
Upon any such event, the Company shall redeem the Securities not later than
the date of redemption of the Preferred Securities, and shall pay the
Redemption Price therefor prior to 12:00 noon, New York City time, on the
date of such redemption or at such other time on such earlier date as the
Company and COMSAT Capital agree.
(b) The Company shall have the right to redeem the
Securities without premium or penalty, in whole or in part,
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concurrent with the redemption by COMSAT Capital of the Preferred
Securities (if any Preferred Securities are then outstanding), at any time
or from time to time, on or after July 18, 2000, at a redemption price
equal to 100% of the principal amount to be redeemed, plus any accrued and
unpaid interest, including Additional Interest, if any, to the Redemption
Date.
In the event of any redemption in part, the Company shall
not be required to (i) issue, register the transfer of or exchange any
Security during a period beginning at the opening of business 15 days
before any selection for redemption of Securities and ending at the close
of business on the earliest date in which the relevant notice of redemption
is deemed to have been given to all holders of Securities and (ii) register
the transfer of or exchange any Securities so selected for redemption, in
whole or in part, except the unredeemed portion of any Securities being
redeemed in part.
Section 1202. Applicability of Article.
Redemption of Securities at the election of the Company,
as permitted by Section 1201(b), shall be made in accordance with such
provision and this Article.
Section 1203. Election to Redeem; Notice to Trustee.
The election of the Company to redeem Securities pursuant
to Section 1201 shall be evidenced by a Board Resolution. In case of any
redemption at the election of the Company, the Company shall, at least 30
days and no more than 60 days prior to the Redemption Date fixed by the
Company, notify the Trustee of such Redemption Date and of the principal
amount of Securities to be redeemed and provide a copy of the notice of
redemption given to Holders of Securities to be redeemed pursuant to
Section 1204.
Section 1204. Notice of Redemption.
Notice of redemption shall be given by first-class mail,
postage prepaid, mailed not less than 30 nor more than 60 days prior to the
Redemption Date, to each Holder of Securities to be redeemed, at his
address appearing in the Security Register.
All notices of redemption shall be irrevocable and shall
state:
(1) the Redemption Date,
(2) the Redemption Price,
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(3) that on the Redemption Date the Redemption Price will
become due and payable upon each such Security to be redeemed and that
interest thereon will cease to accrue on and after said date, and
(4) the place or places where such Securities are to
be surrendered for payment of the Redemption Price.
Notice of redemption of Securities to be redeemed at the
election of the Company shall be given by the Company or, at the Company's
request, by the Trustee in the name and at the expense of the Company.
Section 1205. Deposit of Redemption Price.
Prior to any Redemption Date, the Company shall deposit
with the Trustee or with a Paying Agent (or, if the Company is acting as
its own Paying Agent, segregate and hold in trust as provided in Section
1003) an amount of money sufficient to pay the Redemption Price of, and
(except if the Redemption Date shall be an Interest Payment Date) accrued
interest on, all the Securities which are to be redeemed on that date.
Section 1206. Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the
Securities so to be redeemed shall, on the Redemption Date, become due and
payable at the Redemption Price therein specified, and from and after such
date, unless the Company shall default in the payment of the Redemption
Price and accrued interest, such Securities shall cease to bear interest.
Upon surrender of any such Security for redemption in accordance with said
notice, such Security shall be paid by the Company at the Redemption Price,
together with accrued interest to the Redemption Date; provided, however,
that installments of interest whose Stated Maturity is on or prior to the
Redemption Date shall be payable to the Holders of such Securities, or one
or more Predecessor Securities, registered as such at the close of business
on the relevant record dates according to their terms and the provisions of
Section 307.
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If any Security called for redemption shall not be so
paid upon surrender thereof for redemption, the principal shall, until
paid, bear interest from the Redemption Date at the rate borne by the
Security.
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This instrument may be executed in any number of
counterparts, each of which 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 caused this
Indenture to be duly executed, and their respective corporate seals to be
hereunto affixed and attested, all as of the day and year first written
above.
COMSAT Corporation
By: /s/ Bruce L. Crockett
Bruce L. Crockett
[SEAL] President and Chief Executive
Officer
Attest: /s/ Nancy E. Weber
Assistant Secretary
The First National Bank of Chicago
By: /s/ John R. Prendiville
[SEAL] Name: John R. Prendiville
Its: Vice President
Attest: /s/ Barbara G. Grosse
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STATE OF MARYLAND ) ss.:
COUNTY OF MONTGOMERY )
On the 14th day of July, 1995 before me personally came
Bruce L. Crockett, to me known, who, being by me duly sworn, did depose and
say that he is the President and Chief Executive Officer of COMSAT
Corporation, a corporation described in and which executed the foregoing
instrument; that he knows the seal of said corporation; that the seal
affixed to said instrument is such corporate seal; that it was so affixed
by order of the Board of Directors of said corporation; and that he signed
his name thereto by authority of the Board of Directors of such
corporation.
/s/ Lesa D. Kopsidas [Seal]
Notary Public ------------------
Lesa D. Kopsidas
Notary Public State of Maryland
My Commission Expires January 14, 1998
STATE OF ILLINOIS ) ss.:
COUNTY OF COOK )
On the 13th day of July, 1995, before me personally came
John Prendiville, to me known, who, being by me duly sworn, did depose and
say that he is a Vice President of The First National Bank of Chicago, one
of the corporations described in and which executed the foregoing
instrument; that he knows the seal of said corporation; that the seal
affixed to said instrument is such corporate seal; that it was so affixed
by authority of the Board of Directors of said corporation, and that he
signed his name thereto by like authority.
/s/ Nilda Sierra [Seal]
Notary Public
Official Seal
Nilda Sierra
Notary Public, State of Illinois
My Commission Expires 11/12/97
69
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Exhibit 10(a)
Page 157
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement ("Agreement") is made and entered
into as of May 24, 1995, by and between COMSAT Video Enterprises, Inc., a
Delaware corporation ("Buyer"), and Le Club de Hockey Les Nordiques,
Societe en Commandite (Limited Partnership) ("Seller").
WHEREAS, Seller is engaged in the business (the "Business") of
operating two professional hockey teams playing under franchises with the
National Hockey League (the "NHL") and the American Hockey League (the
"AHL"); and
WHEREAS, Seller wishes to sell to Buyer, and Buyer wishes to
purchase from Seller, certain of Seller's assets and properties, subject to
the assumption by Buyer of certain of the liabilities and obligations of
Seller, all pursuant to the terms and conditions hereinafter set forth; and
WHEREAS, Buyer would then relocate the professional hockey team
playing under the NHL franchise to Denver, Colorado.
NOW, THEREFORE, in consideration of the mutual covenants,
agreements, representations and warranties contained herein, and other good
and valuable consideration given and received by each party, the receipt of
which is hereby acknowledged, the parties hereto agree as follows:
ARTICLE 1
ACQUISITION ASSETS
1.1 Assets to be Conveyed. On the terms and subject to the
conditions set forth in this Agreement, on the Closing Date (as hereinafter
defined) Seller shall convey, transfer, assign, sell and deliver to Buyer,
and Buyer shall acquire, accept and purchase from Seller, the following
assets (collectively, the "Acquisition Assets"):
(i) From the Closing Date, the right to membership and franchise
in the NHL, to the full extent provided by the NHL Constitution, By-laws
and rules (the "NHL Rules") (collectively, the "NHL Franchise"), including,
without limitation: (a) Seller's right, title and interest in and to the
National Hockey League Reserve Fund; (b) Seller's shares in National Hockey
League Enterprises, Inc. ("NEI"); (c) Seller's shares in Intra-Continental
Ensurer, Ltd. ("ICE"); and (d) Seller's right, title and interest in and to
all claims, causes of action, choses in action, rights of recovery and
rights of set-off of any kind, against any person or entity, which are
owned or controlled by the NHL or its members as a collectivity of the NHL
including, without
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limitation, any such liens, security interests, pledges or other
rights to payment or to enforce payment; provided, however, that Seller
shall remain owner of all such right, title and interest in any and all
amounts due, receivable or payable prior to the Closing Date even if paid
after the Closing Date;
(ii) From the Closing Date, the right to membership and franchise
in the AHL, to the full extent provided by the AHL Constitution, By-laws
and rules (the "AHL Rules") (collectively, the "AHL Franchise"), including,
without limitation: (a) Seller's right, title and interest in and to the
membership equity of the AHL; and (b) Seller's right, title and interest in
and to all claims, causes of action, choses in action, rights of recovery
and rights of set-off of any kind, against any person or entity, which are
owned or controlled by the AHL or its members as a collectivity of the AHL
including, without limitation, any such liens, security interests, pledges
or other rights to payment or to enforce payment; provided, however, that
Seller shall remain owner of all such rights, title and interest in any and
all amounts due, receivable or payable prior to the Closing Date even if
paid after the Closing Date;
(iii) All of the agreements, contracts and leases listed on
Schedule 1.1(iii) (collectively, the "Assumed Contracts"): (a) those
employment agreements and contracts with hockey players, coaches, assistant
coaches, trainers, scouts, and team staff listed on Schedule 1.1(iii) and
in effect on the Closing Date; and (b) those agreements related to the
operation of the AHL franchise in Cornwall, Quebec listed on Schedule
1.1(iii) and in effect on the Closing Date;
(iv) Those books, records, ledgers, files, documents,
correspondence, whether in printed or written form or stored in an
electronic medium, relating to the operations of the AHL Franchise in
Cornwall and related to the NHL franchise and reasonably necessary to the
operation of the NHL Franchise in Denver, (collectively, "Books and
Records"), including, without limitation: (a) all records and lists, if
any, pertaining to the customers, suppliers or personnel of Seller in
connection with the AHL Franchise; and (b) all books, ledgers, files,
documents, correspondence and operating records of every kind maintained by
Seller in connection with the AHL Franchise in Cornwall.
(v) To the extent assignable, the insurance policy described on
Schedule 1.1(v) as required by the NHL (the "Insurance Policy"); and
(vi) To the extent assignable, all rights under or pursuant to
all warranties, representations and guarantees made by suppliers in
connection with the Acquisition Assets.
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1.2 Excluded Assets. For greater certainty, Seller is not
selling, and Buyer is not purchasing, pursuant to this Agreement any assets
of Seller not identified in Section 1.1, including, without limitation, the
following, all of which shall be retained by Seller (collectively, the
"Excluded Assets"):
(i) Any rights, title and interest in any and all amounts, of any
kind, due, receivable or payable to Seller prior to the Closing Date, even
if paid after the Closing Date, by the NHL, AHL, NEI or ICE with respect to
the operations of the Business, and specifically including any rights to
the future payment of expansion fees to the AHL as set forth on Schedule
1.2(i);
(ii) All accounts and notes receivable (whether current or
noncurrent) arising in connection with the operations of the Business prior
to the Closing Date; and
(iii) any and all amounts receivable pursuant to those disputes
listed on Schedule 1.2(iii) which are resolved by the NHL's arbitration
process or before any court as pursued by the Buyer on behalf of the Seller
at the sole cost of Seller.
1.3 Assumed Obligations. Upon the terms and subject to the
conditions contained herein, at the Closing, Buyer shall assume and shall
thereafter pay, perform and discharge when due the following, and only the
following, liabilities and obligations of Seller (collectively, the
"Assumed Obligations"):
(i) All obligations and liabilities accruing, arising out of, or
relating to events or occurrences happening on or after the Closing Date or
resulting from the transaction contemplated herein under the Assumed
Contracts, including (a) any unpaid amounts in U.S. dollars on the basis
required by the NHL and the AHL without liability to Seller under the
Assumed Contracts listed on Schedule 1.3(i) or which have not become due
until on or after the Closing Date, (b) payment of players' remuneration
and benefits from the Closing Date, in U.S. dollars on the basis required
by the NHL and the AHL without liability to Seller, (c) all obligations and
liabilities which are the responsibilities of a transferee club under the
NHL Rules, the AHL Rules, the Collective Bargaining Agreement between the
NHL and the National Hockey League Players' Associations ("NHLPA") (the
"NHL CBA") and the Collective Bargaining Agreement between AHL and the
Professional Hockey Players Association (the "AHL CBA"), and (d) any
liabilities arising out or players' injuries or physical condition whether
resulting from events or occurrences before or after the Closing Date; but
specifically excluding for purposes of this Section 1.3(i) any other
deferred compensation or other obligations or liabilities which arise out
of or result from any action or inaction in breach or default of the
Assumed Contracts,
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the NHL Rules, AHL Rules, NHL CBA or AHL CBA which occurred prior
to the Closing Date;
(ii) All obligations and liabilities which relate to or arise out
of the operations of the AHL Franchise in Cornwall, or the transfer of the
NHL Franchise to Denver, Colorado, or the operations of the NHL Franchise
under the NHL Rules, AHL Rules, NHL CBA or AHL CBA in each case commencing
on and after the Closing Date; provided, however, that Buyer shall assume
the following liabilities related to the transfer fee to be payable to the
NHL for the transfer of the NHL Franchise and Buyer's contingent obligation
to share with the NHL revenues in an amount equal to U.S.$8,000,000,
payable on the following basis: (A) on or about the Closing, Seller shall
pay the NHL U.S.$4,000,000 toward the transfer, and the NHL shall repay
such amount to Seller out of proceeds from fees paid to the NHL by
expansion teams and otherwise due to Buyer as its share of such fees, and
from amounts repaid to the NHL by Buyer from proceeds received during the
two years following the Closing, in the amount of U.S.$1,000,000 per
expansion team, (B) the NHL shall retain out of proceeds from fees paid to
the NHL by expansion teams entering the NHL and otherwise due to Buyer as
its share of such fees, the amount of U.S.$2,000,000 per expansion team, up
to a maximum of U.S.$8,000,000, out of which the NHL shall reimburse Seller
$1,000,000 per expansion team, except that during the first two years
following the Closing, Buyer shall receive its entire share of such
proceeds, and owe U.S.$2,000,000 per expansion team to the NHL on the
second anniversary of the Closing for distribution as described herein, and
(C) Buyer agrees that the NHL's right to retain any such amounts, and the
NHL's obligation to reimburse any such amounts to Seller, shall be
irrevocable and survive any sale of the NHL Franchise and be binding upon
the transferee, provided that Buyer shall incur no liability if the NHL
refuses to agree to do so; and provided, further, that Buyer shall assume
responsibility with respect to the NHL, but shall not assume any financial
obligations or liabilities which shall remain the responsibilities of
Seller, for those claims set forth on Schedule 1.2(iii) such that such
actions may be pursued on behalf of Seller before the NHL's arbitrator or
any court.
(iii) All liabilities and obligations arising out of any and all
claims, causes of action, choses in action, rights of recovery and rights
of set-off of any kind, against the NHL or its members (including the
Seller) as a collectivity before, on or after the Closing Date, including,
without limitation, any such liabilities and obligations listed in Schedule
1.3(iii) provided, however, that Seller shall be responsible for any
liabilities arising out of any such claims or other rights which have been
finally resolved prior to the Closing Date but not yet assessed by the NHL.
For the absence of doubt, the litigation between the NHL and the NHLPA
regarding pension benefits and referred to as the Bathgate litigation is
deemed to be
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finally resolved, notwithstanding any ongoing appeals or actions
against the NHL's counsel or advisors on that matter.
1.4 No Other Debt, Obligations or Liabilities Assumed.
Notwithstanding any other provision of this Agreement, but except as
expressly set forth in Section 1.3, Buyer shall not assume, or otherwise be
liable or responsible for, any of the debts, obligations or liabilities of
Seller of any kind or nature whatsoever, whether actual or contingent,
matured or unmatured, liquidated or unliquidated, or known or unknown,
whether arising out of occurrences prior to, at or after the date hereof
specifically including, without limitation, any liability of Seller
resulting from entering into, performing its obligations pursuant to, or
consummating the transactions contemplated by, this Agreement
(collectively, the "Excluded Liabilities").
ARTICLE 2
PURCHASE PRICE
2.1 Purchase Price. Upon the terms and subject to the conditions
set forth herein, Buyer shall pay and deliver to Seller for the sale,
transfer, conveyance and delivery of the Acquisition Assets, at the
Closing, by wire transfer of immediately available funds to an account
designated in writing by Seller at least five (5) business days prior to
the Closing Date, cash in the amount of U.S.$75,234,190 (the "Purchase
Price").
2.2 Allocation of Purchase Price. Buyer and Seller shall agree
upon the allocation of the Purchase Price among the Acquisition Assets and
other assets acquired from Seller, if any, as required by Section 1060 of
the Internal Revenue Code of 1986, as amended (the "Code"). Buyer and
Seller shall timely report the amount of the Purchase Price and the manner
of its allocation in accordance with applicable law. Buyer agrees to
allocate not more than 45% of the Purchase Price to the players' contracts.
2.3 Closing Costs; Transfer Taxes and Fees. Seller shall be
responsible for any documentary and transfer taxes and any sales, use or
other taxes imposed by any Canadian federal, provincial or local
authorities by reason of the transfers of the Acquisition Assets provided
hereunder and any deficiency, interest or penalty asserted with respect
thereto. Buyer shall be responsible for any documentary and transfer taxes
and any sales, use or other taxes imposed by any United States federal,
state, or local authorities by reason of the transfers of the Acquisition
Assets provided hereunder and any deficiency, interest or penalty asserted
with respect thereto. Buyer represents to Seller that it is a non-resident
of Canada, that it is not registered for purposes of any Canadian federal
or provincial sales tax and that it is not operating a business in Canada.
If necessary, Seller will provide to Buyer all forms necessary for the
payment of GST with respect to
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the AHL assets, and Buyer will pay any tax due and seek a refund.
If Buyer does not receive a refund of all amounts paid, then Seller shall
indemnify Buyer accordingly.
ARTICLE 3
CLOSING
3.1 Closing Place and Date; Effective Date. The closing of the
transactions contemplated hereby ("Closing") shall be held at 10:00 a.m.
local time, on July 1, 1995, at the offices of Buyer in Bethesda, Maryland,
or at such other time and place as Buyer and Seller may agree to in
writing; provided, however, that either party may, in its sole discretion,
require the other party to agree to a closing on any day between July 1,
1995 and July 15, 1995. If the Closing is postponed under this Section,
then notwithstanding the date to which it is postponed, the effective date
of the Closing shall be July 1, 1995, and July 1, 1995 shall be the Closing
Date for purposes of this Agreement.
3.2 Closing. Subject to the satisfaction or waiver of the
conditions set forth in Articles 8, 9 and 10, as the case may be, to effect
the sale and transfer referred to in Section 1.1 hereof, at the Closing,
Seller and Buyer shall perform the following:
(i) Seller shall execute and deliver the following conveyancing
documents: (a) the assignment in the form set forth in Exhibit 3.2(i)(a) of
the Acquisition Assets; (b) such termination statements, releases or other
documents, if any, duly executed by Seller, as will enable Seller to convey
the Acquisition Assets to Buyer free and clear, as of the Closing Date, of
any claim, lien, pledge, option, charge, security interest, deed of trust,
mortgage, encumbrance or other right of third parties (collectively,
"Encumbrances") entered into by Seller or otherwise existing and not being
assumed by Buyer; and (c) such other deeds, bills of sale, certificates,
endorsements, assignments and other instruments of transfer and conveyance
as shall be reasonably necessary in the opinions of Buyer's and Seller's
counsel, to transfer all of Seller's right, title and interest in the
Acquisition Assets to Buyer, subject only to the Assumed Obligations;
(ii) Buyer shall execute and deliver the assumption in the form
set forth in Exhibit 3.2(ii) providing for the assumption by Buyer of the
Assumed Obligations;
(iii) Seller shall deliver to Buyer originals, or copies if the
originals have been filed with the NHL Central Registry, of all of the
Assumed Contracts, Books and Records and the Insurance Policy included in
the Acquisition Assets;
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(iv) Seller shall deliver to Buyer certified copies of the
authorizations referred to in Section 9.3;
(v) Seller shall deliver to Buyer the opinion of counsel of
Seller referred to in Section 9.6;
(vi) Seller shall deliver to Buyer the certificates of good
standing referred to in Section 9.5;
(vii) Seller shall deliver to Buyer the closing certificate
referred to in Section 9.7 in the form set forth in Exhibit 3.2(vii);
(viii) Buyer and Seller shall execute and deliver the guarantee
indemnification agreement described in Section 12.3 in the form set forth
in Exhibit 12.3 (the "Guarantee Indemnification Agreement");
(ix) Buyer shall deliver to Seller the payment specified in
Section 2.1;
(x) Buyer shall deliver to Seller certified copies of the
authorizations referred to in Section 10.3;
(xi) Buyer shall deliver to Seller the opinion of counsel of
Buyer referred to in Section 10.5;
(xii) Buyer shall deliver to Seller the certificates of good
standing referred to in Section 10.4;
(xiii) Buyer shall deliver to Seller the closing certificate
referred to in Section 10.6 in the form set forth in Exhibit 3.2(xiii).
3.3 No Equitable Conversion. Prior to the Closing, and unless the
Closing occurs, neither the execution of this Agreement nor the performance
of any provision contained herein shall cause Buyer to become liable for
(i) the operations of the Business or any other business of Seller; (ii)
the condition of the Acquisition Assets; or (iii) compliance with any laws,
requirements or regulations of, or taxes, or assessments or other charges
now or hereafter due to, any governmental authority with respect to the
Business or the Acquisition Assets.
3.4 Risk of Loss. Except for the AHL Franchise (and other assets
referred to in Section 1.1(ii)) and for the lease with the City of Cornwall
which are covered by the provisions of Section 6.4(iii), in the event that
Buyer receives notice that either all of the other Acquisition Assets, or a
portion of the Acquisition Assets the absence of which would materially
adversely impair the ability of the NHL Franchise to operate in Denver, it
being understood that the failure of one or more parties to honor their
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obligations under Assumed Contracts shall not be deemed to have
such a material adverse effect, are not available to be transferred at the
Closing, whether or not as a result of Seller's breach of this Agreement,
Buyer shall be entitled to elect within five (5) days of written notice
thereof to either (i) terminate this Agreement, in which case each party
hereto shall pay its own expenses, or (ii) pursue the transactions
contemplated herein without reduction in the Purchase Price.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
OF SELLER
As a material inducement to Buyer to enter into this Agreement
and consummate the transactions contemplated hereby, Seller hereby
represents and warrants to Buyer as set forth in this Article 4, except as
otherwise set forth on the schedule attached hereto as Schedule 4 (the
"Disclosure Schedule"), which representations and warranties are, as of the
date hereof, and will be, as of the Closing Date, true and correct. As used
in this Article 4, the term "best knowledge" shall mean to the actual
knowledge of the party without obligation to make any search or enquiry and
shall include the actual knowledge of the partners, officers and directors
of Seller listed on Section 4.1(a) of the Disclosure Schedule; provided,
however, that no person shall incur any personal liability to Buyer by
reason of his name being included on Section 4.1(a) of the Disclosure
Schedule.
4.1 Organization and Qualification. Seller is a limited
partnership duly organized, validly existing, and in good standing under
the laws of the Province of Quebec, with full power and authority to own
its properties and to conduct its business in the manner and in the places
where such properties are now owned and such business is now conducted.
Seller has previously provided copies of the Seller's declaration of
limited partnership which is accurate and complete.
4.2 Authorization. Subject to Section 4.3 hereof, Seller has full
right, power and authority to own, lease and operate the Acquisition
Assets, to execute, deliver and enter into this Agreement and each of the
agreements, documents and instruments contemplated by this Agreement
(collectively, the "Ancillary Agreements"), to consummate the transactions
contemplated hereby and thereby and to perform its obligations hereunder
and thereunder. This Agreement and the Ancillary Agreements have been duly
and validly authorized by all necessary partnership or similar corporate
action, including, without limitation, authorizations of Seller's partners,
which authorizations remain in full force and effect. This Agreement
constitutes, and each of the Ancillary Agreements when executed and
<PAGE>
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delivered will constitute, a valid and binding obligation of
Seller enforceable against Seller in accordance with their respective
terms.
4.3 Approvals and Consents. Except as set forth in Section 4.3 of
the Disclosure Schedule, no authorization, consent or approval of or
notification to any Canadian federal, provincial or local public body or
authority or from any third party is necessary for the consummation by
Seller of the transactions contemplated by this Agreement or the Ancillary
Agreements, and, to the best knowledge of Seller, no authorization, consent
or approval of or notification to any United States federal, state or local
public body or authority is necessary for the consummation by Seller of the
transactions contemplated by this Agreement or the Ancillary Agreements.
4.4 No Conflict or Violation. Except for any breaches,
violations, defaults or Encumbrances which will not prevent the Buyer from
consummating the transactions contemplated by this Agreement or which may
not result in any action, suit, claim, proceeding, demand, assessment or
enforcement action against the Buyer ("Adverse Claim") as a result of Buyer
entering into this Agreement or consummating such transactions, neither the
execution and delivery of this Agreement and the Ancillary Agreements, nor
consummation by Seller of the transactions contemplated hereby and thereby,
nor compliance with any of the provisions hereof or thereof will (a)
conflict with or result in a breach or violation of, or default under, any
of the terms, conditions or provisions of (i) except for the lease referred
to in Section 4.4 of the Disclosure Schedule, any agreement or other
instrument or any obligation to which Seller is a party or by which it is
bound; (ii) Seller's organizational documents; or (iii) any judgment,
order, injunction, decree, statute, rule or regulation applicable to Seller
or any of its assets or properties; (b) violate or result in a failure to
comply with any laws, common laws, statutes, rules, regulations,
ordinances, codes or other requirements of any United States or Canadian
federal, state, provincial or local governments and all agencies or
instrumentalities thereof applicable to Seller; or (c) impose any
Encumbrance on any of the Acquisition Assets.
4.5 Compliance With Laws and Franchises. Seller holds all
licenses, franchises, permits and authorizations necessary for the lawful
conduct and operation of the Acquisition Assets. Except for any violations
which will not prevent the Buyer from consummating the transactions
contemplated by this Agreement or which may not result in any Adverse Claim
as a result of Buyer entering into this Agreement or consummating such
transactions Seller has not violated, and is not in violation of, any
applicable statutes, laws, ordinances, rules and regulations applicable to
the Business (including, without limitation, any of the foregoing related
to employment discrimination, occupational safety, environmental
protection, conservation, antitrust or unfair
<PAGE>
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competition, labor practices or corrupt practices) of all
federal, provincial, state and local governmental bodies, agencies and
subdivisions thereof having jurisdiction over the Business and Seller is in
full compliance with the duties and obligations imposed by the NHL Rules
and the AHL Rules. Seller has not received any notice within three (3)
years of the date hereof of any violation or noncompliance described in
this Section 4.5.
4.6 Financial Information. Section 4.6 of the Disclosure Schedule
contains certain unaudited financial information related to the operations
of the AHL Franchise. The foregoing financial information (i) was prepared
in accordance with the books and records of Seller; and (ii) fairly and
accurately present those costs of operations for the fiscal year 1993-94.
4.7 Absence of Certain Changes or Events. Except for any changes,
events or matters which will not prevent the Buyer from consummating the
transactions contemplated by this Agreement or which may not result in any
Adverse Claim as a result of Buyer entering into this Agreement or
consummating such transactions, since June 30, 1994, there has not been (i)
any material adverse change in the Acquisition Assets; (ii) any damage,
destruction or loss, whether covered by insurance or not, materially and
adversely affecting the Acquisition Assets; (iii) except in the ordinary
course of business and in a manner consistent with past practices, any
increase in the compensation payable or to become payable by Seller to any
employee or player employed under an Assumed Contract, or any increase in
any bonus, insurance, pension or other employee benefit plan, payment or
arrangement made to, for or with any employee or player employed under an
Assumed Contract; (iv) any labor dispute, other than routine matters, none
of which is material with respect to the players or employees employed
under an Assumed Contract, other than those referred to in Section 4.7 of
the Disclosure Schedule; (v) except in the ordinary course of business and
in a manner consistent with past practices, any termination, amendment,
assignment or other transfer of any Assumed Contract; (vi) any other
transaction not in the ordinary course of business and affecting the
Acquisition Assets; (vii) any material change in the manner of keeping the
books, accounts or records with respect to the Acquisition Assets; or
(viii) any agreement to do any of the things described in this Section 4.7.
4.8 Title to Acquisition Assets. Subject to any provisions of the
NHL Rules, the AHL Rules, the NHL CBA and the AHL CBA, Seller has, and will
have at the time of Closing, good and marketable title to each of the
Acquisition Assets, and the Acquisition Assets are, except for any
Encumbrances or claims which will not prevent the Buyer from consummating
the transactions contemplated by this Agreement or which may not result in
any Adverse Claim as a result of Buyer entering into this Agreement or
consummating such transactions , free and clear of all Encumbrances and
claims of any kind or nature whatsoever and, upon delivery to
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Buyer of the instruments of transfer of ownership contemplated by
this Agreement, Buyer will acquire good title to the Acquisition Assets,
free and clear of all Encumbrances.
4.9 Contracts. (i) Section 4.9 of the Disclosure Schedule
contains true and complete copies of the Assumed Contracts. Except as set
forth in Section 4.9 of the Disclosure Schedule, each Assumed Contract is
valid and in full force and effect and is a valid and binding agreement of
the Seller and, to Seller's best knowledge, of each other party thereto.
Seller has duly performed its obligations required pursuant to each Assumed
Contract to have been performed by Seller on its part prior to the date
hereof, and Seller has no reason to believe that it will not be able to
fulfill, when due, all of Seller's material obligations under the Assumed
Contracts which remain to be performed after the date hereof prior to
Closing. No violation, default or breach of any Assumed Contracts by Seller
or, to the best knowledge of Seller, any other party has occurred and
neither Seller nor any other party has repudiated any provisions thereof.
(ii) Seller is not a party to, nor are any of the Acquisition
Assets bound by, any agreement or arrangement which is or would be
materially adverse to the operations, assets, prospects or financial
condition of the Acquisition Assets.
4.10 Litigation. Except as set forth in Section 4.10 of the
Disclosure Schedule and except for any claims, actions, suits, proceedings
or arbitration which will not prevent the Buyer from consummating the
transactions contemplated by this Agreement or which may not result in any
Adverse Claim as a result of Buyer entering into this Agreement or
consummating such transactions, there are no claims, actions, suits or
proceedings pending or, to Seller's best knowledge, threatened against
Seller, its partners or any of its employees, players or coaches, or
relating to this Agreement or the transactions contemplated hereby or to
the Business or the Acquisition Assets, at law or in equity or before or by
any federal, state, local or foreign court or other governmental
department, commission, board, agency, instrumentality or authority, nor
any arbitration proceedings, nor, to Seller's best knowledge, is there any
basis for any claim. Except for any judgments, orders, writs or decrees
which will not prevent the Buyer from consummating the transactions
contemplated by this Agreement or which may not result in any Adverse Claim
as a result of Buyer entering into this Agreement or consummating such
transactions, Seller is not subject to any judgment, order, writ,
injunction or decree of any court or governmental body.
4.11 Taxes. Except for any nonfiling or nonpayment which will not
prevent the Buyer from consummating the transactions contemplated by this
Agreement or which may not result in any Adverse Claim as a result of Buyer
entering into this Agreement or consummating such transactions, Seller has
filed all tax returns
<PAGE>
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and reports (including with respect to payroll) required to be
filed with respect to the Acquisition Assets or the Business and paid all
taxes, including penalties, interest and assessments, required to be paid
with respect to any of the Acquisition Assets or the Business, or adequate
provision for the payment thereof has been made.
4.12 NHL and AHL Franchises. Each of the Seller's NHL Franchise
and AHL Franchise is valid and in full force and effect. Seller has duly
performed its obligations required pursuant to each of the franchises to
have been performed by Seller on its part prior to the date hereof, and
Seller has no reason to believe that it will not be able to fulfill, when
due, all of Seller's material obligations under the franchises which remain
to be performed by Seller after the date hereof prior to Closing. No
violation, default or breach of either the NHL Franchise or the AHL
Franchise by Seller or, to the best knowledge of Seller, any other party
has occurred and neither Seller nor, to the best knowledge of Seller, any
other party has repudiated any provisions thereof.
4.13 Brokers. No person or entity is entitled to any brokerage
commission, finder's fee or like payment from Seller or Buyer in connection
with the transactions contemplated by this Agreement other than as may be
due to agreements or commitments made by Buyer.
4.14 Employees; Labor Matters. On or before June 1, 1995, Seller
will provide to Buyer a list of all employees (other than players) who are
employed by Seller under the Assumed Contracts, 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. Except as set forth in
this Agreement and in the Disclosure Schedule (including Section 4.10 of
the Disclosure Schedule) and except as will not prevent the Buyer from
consummating the transactions contemplated by this Agreement or may not
result in any Adverse Claim as a result of Buyer entering into this
Agreement or consummating such transactions: (i) there is no union other
than the NHLPA and the Professional Hockey Players Association representing
the interests of any of Seller's employees and, to the best knowledge of
Seller, there are no employees of Seller seeking or attempting to organize
union representation; (ii) there are neither pending nor, to the knowledge
of Seller, threatened any strikes, work stoppages, work disruptions or
employment disruptions by any of the employees of Seller that would
materially impair the operations, prospects or financial condition of the
Acquisition Assets; (iii) to the best knowledge of Seller, there are
neither pending nor threatened any suits, actions, administrative
proceedings, hearings, arbitrations or other proceedings between Seller and
any of its employees involving a claim of $50,000 or more; (iv) with
respect to its
<PAGE>
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employees, to the best knowledge of Seller, during the past five
(5) years Seller (A) has complied with all Canadian federal, provincial,
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, (B) is not
liable for any arrears of wages or any taxes or penalties for failure to
comply with any of the foregoing, and (C) has not committed any unfair
labor practices; and (v) to the best knowledge of Seller, none of its
employees has filed any complaint relating to Seller's employment of its
employees with any governmental or regulatory authority or brought any
action in law or in equity with respect thereto.
4.15 Employee Benefit Plans. Except as will not prevent the Buyer
from consummating the transactions contemplated by this Agreement or may
not result in any Adverse Claim as a result of Buyer entering into this
Agreement or consummating such transactions, or except as expressly set
forth in the Assumed Contracts: (i) Seller does not maintain or contribute
to, have any obligation to contribute to, and has not incurred any material
liability that was not satisfied to any employee benefit plan, program,
scheme or arrangement (including, without limitation, any "employee benefit
plans" as defined in Section 3(3) of Employee Retirement Income Security
Act of 1974, as amended, or any similar or corresponding Canadian federal,
provincial or local statute or regulation ("ERISA")) (collectively, the
"Employee Benefit Plans"); (ii) No Employee Benefit Plan has been
terminated so as to, and, to the best knowledge of Seller, no proceeding is
pending or threatened which would, directly or indirectly, subject any of
the Acquisition Assets to the imposition of any lien under Title IV of
ERISA; (iii) Seller has not incurred any "withdrawal liability" (within the
meaning of Section 4201(a) of ERISA) which has not been discharged in full
prior to the date hereof; (iv) With respect to any Employee Benefit Plan
which is subject to the funding requirements of either Section 412 of the
Code or 302 of ERISA, Seller has not failed to timely make any contribution
thereto that would result in the imposition of a lien on the Acquisition
Assets if not timely made; (v) Seller has not made any guarantees or
endorsements of the debts or obligations of any employees or former
employees by the Seller; and (vi) Seller does not have any obligation to
indemnify any person by reason of the fact that such person was a partner,
trustee, officer, employee or agent of Seller or was serving at the request
of Seller as a partner, trustee, director, officer, employee or agent of
another entity.
4.16 Insurance. The Insurance Policy is in full force and effect
and will remain so until the Closing Date.
4.17 Material Disclosure. Except as will not prevent the Buyer
from consummating the transactions contemplated by this Agreement or as may
not result in any Adverse Claim as a result of Buyer entering into this
Agreement or consummating such
<PAGE>
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transactions, no statement, representation or warranty made by
Seller in this Agreement, in any Exhibit hereto, in the Disclosure
Schedule, or in any certificate, written statement, list, schedule or other
document delivered or to be delivered to Buyer 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.
4.18 Players' Physical Condition. Except for Claude Lapointe,
Seller is not aware of any claims by, or obligations to, any players party
to the Assumed Contracts arising out of injuries or illness incurred prior
to the Closing Date. Other than the foregoing, and notwithstanding any
other representations in this Agreement, Seller has made no other
representations with respect to the physical conditions of any parties to
the Assumed Contracts.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
OF BUYER
Buyer hereby represents and warrants to Seller as set forth in
this Article 5. As used in this Article 5., the term "best knowledge" shall
mean to the actual knowledge of the party without obligation to make any
search or enquiry, and shall include the actual knowledge of the officers
and directors of Buyer listed on Exhibit 5; provided, however, that no
person shall incur any personal liability to Buyer by reason of his name
being included on Exhibit 5.
5.1 Organization and Qualification. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of Delaware
with full corporate power to own its properties and to carry on its
business as now owned and operated by it. Section 5.1 of the Disclosure
Schedule contains copies of the Buyer's Articles of Incorporation and
Bylaws.
5.2 Authorization. Except for approval of this Agreement and the
transactions contemplated hereby by the Board of Directors of Buyer's
ultimate sole shareholder, COMSAT Corporation (the "Shareholder Approval"),
Buyer has full right, power and authority to execute, deliver and enter
into this Agreement and each of the Ancillary Agreements, to consummate the
transactions contemplated hereby and thereby and to perform its obligations
hereunder and thereunder, and except for the Shareholder Approval, no
approvals, authorizations or consents of any public body or of any other
third party are necessary in connection therewith. This Agreement and the
Ancillary Agreements have been duly and validly authorized by all necessary
corporate action other than the
<PAGE>
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Shareholder Approval, which authorizations remain in full force
and effect. If the Shareholder Approval is obtained, this Agreement will
constitute, and each of the Ancillary Agreements when executed and
delivered will constitute, a valid and binding obligation of Seller
enforceable against Buyer in accordance with their respective terms.
5.3 Regulatory Approvals. No authorization, consent or approval
of or notification to any United States federal, state or local public body
or authority is necessary for the consummation by Buyer of the transactions
contemplated by this Agreement or the Ancillary Agreements, and, to the
best knowledge of Buyer, no authorization, consent or approval of or
notification to any Canadian federal, provincial or local public body or
authority is necessary for the consummation by Buyer of the transactions
contemplated by this Agreement or the Ancillary Agreements.
5.4 No Conflict or Violation. If the Shareholder Approval is
obtained, neither the execution and delivery of this Agreement and the
Ancillary Agreements, nor consummation by Buyer of the transactions
contemplated hereby and thereby, nor compliance with any of the provisions
hereof or thereof will conflict with or result in a violation of: (i)
Buyer's Certificate of Incorporation or By-laws; or (ii) any judgments,
orders, injunctions, decrees, laws, statutes, rules, regulations,
ordinances, codes or other requirements of any United States, Canadian or
foreign federal, state, provincial or local governments and all agencies or
instrumentalities thereof.
5.5 Brokers. No person or entity is entitled to any brokerage
commission, finder's fee, or like payment from Seller or Buyer in
connection with the transactions contemplated by this Agreement other than
as may be due to agreements or commitments made by Seller.
ARTICLE 6
OBLIGATIONS AND COVENANTS OF BUYER AND
SELLER PRIOR TO THE CLOSING
Seller hereby covenants to and agrees with Buyer, and Buyer
hereby covenants to and agrees with Seller, that between the date hereof
and the Closing:
6.1 Access to Properties and Records. Seller shall give to Buyer
and its authorized representatives, reasonable access, during normal
business hours and upon reasonable notice throughout the period prior to
the Closing Date, to any and all of Seller's premises, properties,
contracts, books and records relating to the Acquisition Assets and will
cause its officers to furnish to Buyer
<PAGE>
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any and all data and information primarily pertaining to the
Acquisition Assets that Buyer shall from time to time reasonably request in
order to confirm the continuing accuracy of the representations and
warranties set forth in Article 4. In connection with such access, Seller
shall permit Buyer to discuss the affairs of the Acquisition Assets with
designated employees, officers and directors of Seller; provided, however,
that no investigation pursuant to this Section 6.1 or otherwise in
connection with this Agreement or the transactions contemplated hereby
shall diminish or modify the scope of, or in any manner whatsoever alter
the effect of, any representation, certification, warranty, obligation, or
agreement of the Seller set forth in this Agreement.
6.2 Conduct of Business. Except for actions contemplated or
required to be taken pursuant to this Agreement, Seller shall conduct its
hockey operations from the date hereof through the Closing Date in
accordance with prior practice and in the ordinary course of business, and
without limiting the generality of the foregoing, Seller shall not, with
respect to the Acquisition Assets, except with the prior written consent of
Buyer: (i) enter into any transaction not in the ordinary course of
business; (ii) purchase, sell or dispose of any of the Acquisition Assets
(including, without limitation, any of the Assumed Contracts); (iii)
mortgage, pledge or encumber any of the Acquisition Assets, unless
discharged before Closing; (iv) amend, modify, renew or terminate any
Assumed Contract, other than in the ordinary course of business and
consistent with past practice, or relinquish, forfeit or waive any right or
increase any obligation under any Assumed Contract, other than in the
ordinary course of business; (v) make any increase in, or any commitment to
increase, the compensation payable to any of Seller's players or employees;
(vi) materially alter the manner of keeping its books, accounts or records;
or (vii) propose, authorize or commit, arrange or agree in writing or
otherwise to take, any of the foregoing actions.
6.3 Preservation of Organization and Relationships. Seller will
use its reasonable efforts to preserve intact the business of the AHL
Franchise and to continue operation of the AHL Franchise substantially in
accordance with prior practice and will use its best efforts to preserve
for Buyer its existing relationships with suppliers, customers and others
having business relations with the AHL Franchise. Seller will not do, and
will use its best efforts not to permit to be done, any act which would
cause the representations and warranties of Seller contained herein to
become untrue or inaccurate.
6.4 Consents; Assumed Contracts. (i) Buyer and Seller will use
their respective best efforts to obtain prior to the Closing Date any and
all consents and releases required of third parties for the consummation of
the transactions contemplated hereby including, without limitation: (a) any
necessary consents
<PAGE>
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to the assignment of the Assumed Contracts; and (b) the consents
of the NHL and the AHL to the transfers of the franchises. Buyer and Seller
shall commence the process of obtaining the consents of the NHL and AHL
within five business days of signing this Agreement, and Buyer agrees to
cooperate to the fullest extent necessary to obtain such consents,
including, without limitation to comply with all reasonable requirements
contained in such consents and to provide any and all operating and
financial information reasonably required in connection with such consents.
(ii) Buyer and Seller will give any notices to, make any filings
with, and use their respective best efforts to obtain any authorizations,
consents and approvals of United States or Canadian federal, provincial,
state and local governmental agencies and authorities necessary for the
consummation of the transactions contemplated hereby.
(iii) Notwithstanding any other provisions of this Agreement, the
parties agree that the consent of the AHL to the transfer of the AHL
Franchise and the consent of the City of Cornwall for the transfer of the
lease with the City of Cornwall to Buyer are not essential conditions to
this Agreement and the Parties agree to consummate the transactions
contemplated by this Agreement (other than those related to such consents)
without diminution in the Purchase Price and without indemnification of the
Buyer by the Seller if those consents are not obtained. In the event that
Seller is unable to obtain the consent to transfer of the AHL Franchise or
of the City of Cornwall within one year following the Closing Date, Seller
may then elect to sell the AHL Franchise to any other party with respect to
whom the necessary consents may be obtained; provided, however, that the
proceeds of such sale, if any, shall be remitted to Buyer immediately upon
receipt by Seller.
6.5 Notice of Breaches. Promptly after becoming aware of any
event and promptly after receiving any notice which would cause or
constitute a material breach of any of the covenants set forth in this
Article 6 or any of the representations and warranties set forth in Article
4, Seller will inform Buyer of such event and will send to Buyer a copy of
such notice, and will use its best efforts promptly to remedy or to prevent
the occurrence of such breach. If Buyer does not terminate this Agreement
pursuant to Section 13.1 within 10 business days after receipt of such
written notice, such written notice will be deemed to have amended the
relevant disclosure statements set forth in the Disclosure Schedule, to
have qualified the representations and warranties contained in Article 4,
and to have cured any misrepresentation or breach of warranty that
otherwise might have existed hereunder by reason of the subject matter of
such notice.
6.6 Limitation on Solicitation. Until the Closing Date, neither
Seller, nor any of its officers, directors, employees,
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representatives, agents or affiliates, shall, directly or
indirectly, recommend, propose, solicit, initiate or promote (or authorize
any person or entity to recommend, propose, solicit, initiate or promote)
any inquiry, proposal or offer from, or provide any information to, any
corporation, partnership, person or other entity or group (other than the
Buyer and its affiliates, representatives and agents) concerning any
purchase or sale of material assets, merger, reorganization, consolidation,
business combination or similar transaction involving the Acquisition
Assets (collectively "Solicitation").
6.7 Further Assurances. Buyer and Seller shall use their
respective best 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 transactions contemplated by this Agreement.
ARTICLE 7
OBLIGATIONS AND COVENANTS OF BUYER
PRIOR TO CLOSING
Buyer hereby covenants to and agree with Seller that between the
date hereof and the Closing Date:
7.1 Confidentiality. Subject to Section 11.3, Buyer shall, and
shall cause its employees, attorneys, accountants, advisors and other
representatives to, keep confidential and not disclose to any person or
entity (other than, with appropriate undertakings of confidentiality, their
respective employees, attorneys, accountants and other advisers with
reasonable need to know such information) all Confidential Information (as
defined in Section 11.3) relating to the Seller and the Business obtained
by it from Seller in preparation for, or in connection with, this Agreement
and the transactions contemplated hereby, and use such information only in
connection with such Agreement and transactions; provided that the
provisions of this Section 7.1 relating solely to the Business shall cease
to apply from and after the Closing. Buyer's obligations under this Section
7.1 shall expire two years from the date hereof.
ARTICLE 8
CONDITIONS TO EACH PARTY'S
OBLIGATIONS TO CLOSE
The respective obligation of each party to consummate the
transactions contemplated herein shall be subject to the
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fulfillment at or prior to the Closing Date of the following
conditions:
8.1 No Injunction. There shall be no effective injunction, writ,
preliminary restraining order or other order of any nature issued by a
court of competent jurisdiction directing that the transactions provided
for at the Closing not be consummated as contemplated herein.
8.2 Consents Obtained. Seller shall have received, and furnished
copies thereof to Buyer, of the NHL's consent to the assignment and
transfer to Buyer of the NHL Franchise, in form and substance substantially
similar to the form of consent provided to Buyer, with other reasonable and
usual conditions usually requested by the NHL.
ARTICLE 9
CONDITIONS PRECEDENT TO BUYER'S
OBLIGATION TO CLOSE
The obligation of Buyer hereunder to consummate the transactions
contemplated by this Agreement are expressly subject to the satisfaction,
on or prior to the Closing Date, of each of the conditions set forth below.
Buyer may waive any or all of these conditions in whole or in part without
prior notice; provided, however, that no such waiver of a condition shall
constitute a waiver by Buyer of any other condition or of any of its rights
or remedies, at law or in equity.
9.1 Representations and Warranties. The representations and
warranties of Seller contained in this Agreement and the exhibits,
schedules, certificates and other documents delivered by Seller to Buyer
pursuant to the provisions of this Agreement shall be true and correct in
all material respects on and as of the Closing Date as if made on and as of
such date.
9.2 Performance of Covenants and Agreements. Seller shall have
performed in all material respects its agreements and covenants contained
in this Agreement required to be performed prior to the Closing Date.
9.3 Authority. All partnership or similar corporate actions
required to be taken by, or on the part of, Seller to authorize the
execution, delivery and performance of this Agreement and the consummation
of the transactions contemplated hereby shall have been duly and validly
taken by Seller. Buyer shall have received copies of all such
authorizations, certified as of the date of the Closing Date as being in
full force and effect by the General Partner of Seller.
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9.4 No Adverse Changes. Subject to the provisions of Sections 3.4
and 6.5, between the date of this Agreement and the Closing Date there
shall not have occurred any damage, destruction, or loss of all or any
material portion of the Acquisition Assets, whether or not covered by
insurance, which has had a material and adverse effect on the Acquisition
Assets.
9.5 Certificates of Good Standing. Seller shall have delivered to
Buyer a certificate of the applicable governmental authority to the effect
that Seller is a validly existing limited partnership in good standing
under the laws of such jurisdiction.
9.6 Counsel Opinion. Buyer shall have received an opinion of
Seller's counsel in substantially the form set forth in Exhibit 9.6.
9.7 Closing Certificate. Buyer shall have received a certificate
in the form set forth in Section 3.2(vii) executed by Seller's General
Partner and dated as of the Closing Date confirming the matters set forth
in Sections 9.1, 9.2 and 9.3.
9.8 Absence of Litigation. There shall not be instituted or
pending any action or proceeding before any United States or Canadian
federal, provincial, state or foreign court or governmental agency or other
regulatory or administrative agency or instrumentality challenging the
transactions contemplated by this Agreement, 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.
9.9 Shareholder Approval. This Agreement and the transactions
contemplated hereby shall have been approved by the Board of Directors of
COMSAT Corporation, the ultimate sole shareholder of Buyer; provided,
however, that such approval shall be obtained prior to May 26, 1995, or
Seller shall have the right to terminate this Agreement.
ARTICLE 10
CONDITIONS PRECEDENT TO SELLER'S
OBLIGATIONS TO CLOSE
The obligations of Seller hereunder to consummate the
transactions contemplated by this Agreement are expressly subject to the
satisfaction, on or prior to the Closing Date, of each of the conditions
set forth below. Seller may waive any or all of these conditions in whole
or in part without prior notice; provided, however, that no such waiver of
a condition shall constitute a waiver by Seller of any other condition or
of any of its rights or remedies, at law or in equity.
<PAGE>
- 21 -
10.1 Representations and Warranties. The representations and
warranties of Buyer contained in this Agreement and the exhibits,
schedules, certificates and other documents delivered by Buyer to Seller
pursuant to the provisions of this Agreement shall be true in all material
respects on and as of the Closing Date as if made on and as of the Closing
Date.
10.2 Performance of Covenants and Agreements. Buyer shall have
performed in all material respects its agreements and covenants contained
in this Agreement required to be performed prior to the Closing Date.
10.3 Authority. All actions required to be taken by, or on the
part of, Buyer and Buyer's Board of Directors, and Buyer's sole shareholder
to authorize the execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby shall have been
duly and validly taken by Buyer.
10.4 Certificates of Good Standing. Buyer shall have delivered to
Seller a certificate of the Secretary of State of the State of Delaware to
the effect that Buyer is a validly existing corporation in good standing
under the laws of the State of Delaware.
10.5 Counsel Opinion. Seller shall have received an opinion of
Buyer's counsel in substantially the form set forth in Exhibit 10.5.
10.6 Closing Certificate. Seller shall have received a
certificate in form reasonably satisfactory to Seller executed by Buyer's
President and dated as of the Closing confirming the matters set forth in
Sections 10.1, 10.2 and 10.3.
ARTICLE 11
OBLIGATIONS AND COVENANTS
OF PARTIES AFTER CLOSING
11.1 Equitable Relief. Buyer's obligations contained in Section
7.1, and Seller's and Buyer's obligations in Section 11.3 are of a special
and unique character which gives them a peculiar value to the respective
parties, and each party cannot be reasonably or adequately compensated in
damages in an action at law in the event of a breach of such obligations.
The parties therefore expressly agree that, in addition to any other rights
or remedies which they may possess, they shall respectively be entitled to
injunctive and other equitable relief in the form of preliminary and
permanent injunctions without bond or other security in the event of any
actual or threatened breach of said obligations by the breaching party.
<PAGE>
- 22 -
11.2 Further Assurances. Buyer and Seller agree to do such
further acts and things and to execute and deliver such additional
agreements and instruments as Buyer or Seller reasonably may request to
consummate, evidence or confirm the agreements contained in this Agreement
in the manner contemplated hereby and the transfer of the Acquisition
Assets to Buyer.
11.3 Confidentiality. (i) Subject to Section 11.3(ii), Seller
shall, and shall cause its employees, attorneys, accountants, advisors and
other representatives to, keep confidential and not disclose to any person
or entity (other than, with appropriate undertakings of confidentiality,
its employees and other representatives with a reasonable need to know such
information) all Confidential Information relating to Buyer obtained by it
from Buyer in preparation for, or in connection with, this Agreement or the
transactions contemplated hereby, and use such information only in
connection with this Agreement and such transactions. The obligations of
Seller contained in this subsection 11.3(i) shall continue for a period of
two years after the later of the date of this Agreement or the Closing.
(ii) The obligations imposed by Sections 7.1 and 11.3(i) hereof
shall not apply, or shall cease to apply, to any Confidential Information
when, and to the extent that, such Confidential Information:
(a) was known to the recipient prior to the receipt of the
Confidential Information from the discloser thereof; or
(b) was, or becomes through no breach of the recipient's
obligations hereunder, known to the public; or
(c) becomes known to the recipient from sources other than the
discloser under circumstances not involving any breach of any
confidentiality obligation known to the recipient between such source and
the discloser; or
(d) is required to be disclosed by law or applicable legal
process; or
(e) the discloser expressly consents thereto in writing.
(iii) If the transactions contemplated by this Agreement are not
consummated, then upon the request of either party, the other party shall,
promptly return or destroy (at the election of the responding party) any
written materials that it has received from the requesting party in
connection with this Agreement or the transactions contemplated hereby,
together with any copies of such materials made by it, and promptly destroy
any analyses, studies or other documents prepared by such other party
<PAGE>
- 23 -
with respect to, or based upon, such materials or other
Confidential Information received from the requesting party, and shall
promptly furnish the requesting party an officer's certificate confirming
that such actions have been taken.
(iv) For purposes of this Agreement, "Confidential Information"
shall mean any and all information (excluding information in the public
domain, except as a result of a breach by a party of this confidentiality
obligation) relating to the parties which is confidential, proprietary or
otherwise not generally available to the public but shall specifically
exclude the negotiation process resulting in this Agreement, this Agreement
and any and all information related to the operation of Seller in Quebec.
11.4 Bulk Sales Laws. Seller and Buyer hereby waive compliance
with the bulk transfer law or statute of the Province of Quebec which
requires notice to or provides for the rights of creditors of Seller in
connection with the sale of the assets of Seller to Buyer. Such waiver
shall not be deemed to waive Buyer's rights to indemnification against
liabilities of Seller that are not Assumed Obligations pursuant to Section
12.2(i).
ARTICLE 12
SURVIVAL OF REPRESENTATIONS, WARRANTIES,
COVENANTS AND AGREEMENTS; INDEMNIFICATION
12.1 Survival of Representations, Warranties, Covenants and
Agreements. The representations, warranties, covenants and agreements
contained herein or in any exhibit, schedule, document, certificate or
other instrument delivered pursuant to this Agreement shall survive the
Closing and expire at 11:59 p.m. on the second anniversary of the Closing
Date (the "Expiration Date"). From and after the Expiration Date, none of
Seller or Buyer or any affiliate of Seller or Buyer shall be under any
liability whatsoever with respect to any representation or warranty, except
for claims, the existence of which any party shall have notified the other
party in writing prior to the Expiration Date in the manner provided in
Section 12.2.
12.2 Indemnification. (i) By Seller. From and after the Closing
Date, Seller shall indemnify, save and hold harmless Buyer, and its
employees, representatives, officers, directors and agents, from and
against any and all actions, suits, claims, proceedings, demands,
assessments and judgments, costs, losses, liabilities, damages, and
expenses (including, without limitation, settlement costs and reasonable
out-of-pocket legal or other expenses for investigating or defending any
actions or threatened actions) in connection with, relating to or resulting
from:
<PAGE>
- 24 -
(a) any breach of any representation or warranty or the
inaccuracy of any representation made by Seller in this Agreement or any
certificates delivered pursuant to this Agreement; (b) any breach of any
covenant or agreement of or made by Seller in or pursuant to this
Agreement; (c) any Excluded Liability; or (d) if applicable, any failure to
comply with the "bulk sales" requirements of the Province of Quebec.
Notwithstanding the foregoing, Seller shall not be obligated to indemnify
Buyer under this Agreement (A) for those Adverse Claims that are otherwise
indemnifiable and which are: (1) disclosed to Buyer in this Agreement or
the Disclosure Schedule or any Exhibit hereto, (2) accepted by Buyer
according to Section 6.5, or (3) Assumed Obligations and (B) unless Buyer
seeks such indemnification in good faith and on a reasonable basis.
(ii) By Buyer. From and after the Closing, Buyer shall indemnify
and save and hold harmless Seller, and its respective employees,
representatives, officers, directors and agents, from and against any and
all actions, suits, claims, proceedings, demands, assessments and
judgments, costs, losses, liabilities, damages and expenses (including,
without limitation, settlement costs and reasonable out-of-pocket legal or
other expenses for investigating or defending any actions or threatened
actions) in connection with, relating to or resulting from: (a) any breach
of any representation or warranty or the inaccuracy of any representation
made by Buyer in this Agreement or any certificates delivered pursuant to
this Agreement; (b) any breach of any covenant or agreement of or made by
Buyer in or pursuant to this Agreement; or (c) any Assumed Obligations.
Notwithstanding the foregoing Buyer shall not be obligated to indemnify
Seller under this Agreement (A) for any actions, suits, claims,
proceedings, demands, assessments or enforcement actions against Seller
that are otherwise indemnifiable and which are Excluded Liabilities and (B)
unless Seller seeks such indemnification in good faith and on a reasonable
basis.
(iii) Defense of Claims. If any action, suit, claim, proceeding,
demand, assessment or enforcement action (collectively, "Claims") is filed
against any party entitled to the benefit of indemnity hereunder, the
indemnified party shall give written notice thereof to the indemnifying
party as promptly as practicable (and in any event within fifteen (15) days
after the service of the citation or summons); provided, however, that the
failure of any indemnified party to give timely notice shall not affect the
rights to indemnification hereunder except and to the extent that the
indemnifying party demonstrates actual damage caused by such failure. After
such notice, if the indemnifying party acknowledges in writing to the
indemnified party that it is obligated under the terms of its indemnity in
this Agreement, the indemnifying party, shall be entitled, if it so elects,
(a) to take control of the defense and investigation of such Claim, (b) to
employ and engage attorneys of its own choice, subject to approval by the
indemnified party, which approval shall not be unreasonably withheld to
defend
<PAGE>
- 25 -
the same, at the indemnifying party's cost, risk and expense, and
(c) to compromise or settle such claim, which compromise or settlement
shall be made only with the written consent of the indemnified party, such
consent not to be unreasonably withheld. The indemnified party shall
cooperate in all reasonable respects with the indemnifying party and its
attorneys in the investigation, trial and defense of such Claim, and any
appeal arising therefrom; provided, however, that the indemnified party
may, at its own cost, participate in such investigation, trial and defense
of such Claim, and any appeal arising therefrom; and provided further, that
the indemnifying party shall have an obligation to keep the indemnified
party reasonably apprised of the status of the Claim, to furnish the
indemnified party with all documents and information that the indemnified
party shall reasonably request in connection therewith, and to consult with
the indemnified party prior to acting on major matters involved in such
Claim, including settlement discussions.
(iv) Limitations. Neither Buyer nor Seller shall be liable to the
other under this section 12.2 until the aggregate amount otherwise due the
party being indemnified exceeds U.S. $500,000; then the indemnifying party
shall be obligated to pay such indemnification but only for what exceeds
U.S. $500,000; provided, however, that this limitation shall not apply with
respect to (a) indemnification arising out of a breach of a representation
or warranty contained in Sections 4.11 or 4.15, (b) any Claims by any
contracting party other than under an Assumed Contract for the provisions
of goods or services to the Seller in the Province of Quebec, (c) any claim
by a creditor based upon failure to comply with the "bulk sales"
requirements of the Province of Quebec and (d) any Claim challenging the
consummation of the transaction contemplated by this Agreement by or on
behalf of Gilles Leger or any federal, provincial or local government or
governmental agency.
12.3 Letter of Guarantee. Buyer and Seller shall enter into a
Guarantee Indemnification Agreement substantially in the form of Exhibit
12.3 attached hereto under which Buyer will provide Seller with an
irrevocable letter of guarantee for an amount of US$2,000,000. The parties
agree and acknowledge that the irrevocable letter of guarantee shall not be
Buyer's exclusive method of receiving indemnification from Seller pursuant
to this Article 12 or otherwise.
ARTICLE 13
TERMINATION OF AGREEMENT
13.1 Termination Events. Subject to the provisions of Section
13.2, this Agreement may, by written notice given at or
<PAGE>
- 26 -
prior to the Closing in the manner hereinafter provided, be
terminated and abandoned prior to the Closing:
(i) By Buyer or Seller if the other party materially defaults or
breaches with respect to the due and timely performance of any of its
covenants, agreements and obligations contained herein, and such default
cannot within a reasonable time period be cured (or after notice thereof
and an opportunity of 15 calendar days thereafter to cure, has not been
cured) and has not been waived;
(ii) by mutual written consent of Buyer and Seller;
(iii) by either Buyer or Seller if the Closing shall not have
occurred on or before July 15, 1995, or such later date as may be agreed
upon by the parties; or
(iv) by Buyer in the event that the transfer fee imposed by the
NHL in connection with granting its consent to the transfer to Buyer of the
NHL Franchise and moving the NHL Franchise to Denver is greater than
U.S.$8,000,000, payable on the terms set forth in Section 1.3(ii).
13.2 Effect of Termination. In the event this Agreement is
terminated pursuant to Section 13.1, such termination shall be without any
liability or obligation by the terminating party and all further
obligations of the parties hereunder shall terminate, except that the
obligations set forth in Sections 7.1, 11.3 and 14.13 hereof shall survive
such termination and Buyer agrees not to bring any action or make any claim
against Seller if Seller terminates pursuant to Section 13.1(iii) as a
result of a failure of any conditions contained in Section 8 or Section 10
hereof. Notwithstanding the foregoing, if this Agreement is terminated by
Buyer as a result of Seller's failure to consummate the transactions
contemplated hereby as a result of Seller's voluntary decision to retain
the NHL Franchise in Quebec or sell the NHL Franchise to any other party
then Seller shall pay to Buyer U.S.$4,000,000 within 20 business days after
such termination which will liquidate all damages.
ARTICLE 14 GENERAL PROVISIONS
14.1 Construction. (i) Words. All references in this Agreement to
the singular shall include the plural where applicable, and all references
to gender shall include both genders and neuter.
(ii) Cross-References. References in this Agreement to any
Article shall include all Sections, Subsections
<PAGE>
- 27 -
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.
(iii) No Presumption. In interpreting any provision of this
Agreement no presumption shall be drawn against the party drafting the
provision.
(iv) 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.
(v) Exhibits. Exhibits and the Disclosure Schedule referred to
herein are hereby incorporated into and made a part of this Agreement.
14.2 Notices. All communications provided for hereunder shall be
sufficiently given if personally served, transmitted by facsimile
(telephonically confirmed) or delivered by prepaid, nationally-recognized
overnight courier or by United States mail, registered or certified, return
receipt requested and with postage prepaid, to the respective parties as
set forth below. Notice shall be deemed given on the date of receipt.
To Buyer: COMSAT Video Enterprises, Inc.
6560 Rock Spring Drive
Bethesda, MD 20817
Attention: President
Fax: (301) 214-7120
With a copy to:
COMSAT Corporation
6560 Rock Spring Drive
Bethesda, MD 20817
Attention: Vice President and
General Counsel
Fax: (301) 214-7128
To Seller: Le Club de Hockey Les Nordiques
2205, avenue du Colisee
Quebebc (Quebec)
G1L 4W7
Attention: Marcel Aubut, president
<PAGE>
- 28 -
With a copy to:
Aubut Chabot
2, Place Quebec
Bureau 600, C.P. 910
Quebec (Quebec)
G1R 4T4
Attention: Counsel of Le Club de Hockey
Les Nordiques, Societe en commandite
14.3 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
taken together shall constitute but one and the same instrument.
14.4 Governing Law; Jurisdiction; Service of Process. This
Agreement shall be governed by, interpreted under, and construed and
enforced in accordance with the laws of the State of New York applicable to
agreements made and to be performed wholly within the State of New York
(without regard to the conflicts of laws principles thereof). Seller
consents to personal jurisdiction in any action brought in any court,
federal or state, within the State of New York having subject matter
jurisdiction arising under this Agreement, and agrees not to contest the
jurisdiction or venue of any such court on any basis. Seller consents to
service of process in any action arising out of its obligations under this
Agreement by registered mail to its address set forth in Section 14.2.
14.5 Entire Agreement. The terms of this Agreement are intended
by the parties as a final expression of their agreement with respect to
such terms as are included in this Agreement and may not be contradicted by
evidence of any prior or contemporaneous agreement.
14.6 Modifications and Amendments. This Agreement may not be
modified, changed or supplemented, nor may any obligations hereunder be
waived or extensions of time for performance granted, except by written
instrument signed by the party to be charged or by its agent duly
authorized in writing or as otherwise expressly permitted herein.
14.7 Waivers and Extensions. No waiver of any breach of any
agreement or provision herein contained shall be deemed a waiver of any
preceding or succeeding breach thereof or of any other agreement or
provision herein contained. No extension of time for performance of any
obligations or acts shall be deemed an extension of the time for
performance of any other obligations or acts.
14.8 Attorney's Fees. Should any party institute any action or
proceeding to enforce this Agreement or any provision
<PAGE>
- 29 -
hereof, or for damages by reason of any alleged breach of this
Agreement or of any provision hereof, or for a declaration of rights
hereunder, neither party in any such action or proceeding shall be entitled
to receive from the other party any costs and expenses, including
attorney's fees, incurred in connection with such action or proceeding.
14.9 Time. Time shall be of the essence in the performance of
each party's respective obligations under this Agreement.
14.10 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.
14.11 Assignment. This Agreement and the rights, duties and
obligations hereunder may not be assigned or delegated by any party without
the prior written consent of the other party or parties; provided, however,
that Buyer shall be entitled without the consent of Seller to assign its
rights, but not its obligations, to another entity wholly owned by Buyer or
COMSAT Corporation for purposes of consummating the transactions
contemplated by this Agreement. Subject to the foregoing sentence, any
assignment of rights or delegation of duties or obligations hereunder made
without the written consent of the other party hereto shall be void and be
of no effect.
14.12 Successors and Assigns. This Agreement and the provisions
hereof shall be binding upon each of the parties, their successors and
permitted assigns.
14.13 Expenses. Except as otherwise set forth in Section 13.2,
each party hereto shall pay its own expenses incident to the negotiation
and preparation of this Agreement and all other documents necessary or
appropriate to consummate the transactions contemplated hereby, and shall
bear its own costs and expenses incurred in closing and carrying out the
transactions contemplated by this Agreement; provided, however, that to the
extent that this Agreement or any other agreements contemplated by this
Agreement
<PAGE>
- 30 -
are required by Seller to be translated into the French language,
any expense related to such translation shall be borne by Seller.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written at 6:30 p.m. Eastern
Daylight Savings Time.
LE CLUB DE HOCKEY
LES NORDIQUES
SOCIETE EN COMMANDITE
BY: 2627-9455 QUEBEC INC.,
ITS GENERAL PARTNER
By: /s/ Marcel Aubut
Name: Marcel Aubut
Title: President
COMSAT VIDEO ENTERPRISES, INC.
By: /s/ Charlie Lyons
Name: Charlie Lyons
Title: President
<PAGE>
Exhibit 11
Computation of Earnings Per Share
Page 187
<PAGE>
Exhibit 11
COMSAT CORPORATION AND SUBSIDIARIES
Computation of Earnings Per Share
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Quarter Ended June 30, Six Months Ended June 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
PRIMARY
Earnings $ 22,012 $ 21,617 $ 36,585 $ 41,798
====== ====== ====== ======
Shares:
Weighted average number of
common shares outstanding 47,179 46,555 47,084 46,481
Add shares issuable from
assumed exercise of options 676 747 672 747
------ ------ ------ ------
Weighted average shares 47,855 47,302 47,756 47,228
====== ====== ====== ======
Primary earnings per share $ 0.46 $ 0.46 $ 0.77 $ 0.89
====== ====== ====== ======
ASSUMING FULL DILUTION
Earnings 22,012 $ 21,617 $ 36,585 $ 41,798
====== ====== ====== ======
Shares:
Weighted average number of
common shares outstanding 47,179 46,555 47,084 46,481
Add shares issuable from
assumed exercise of options 678 749 421 837
------ ------ ------ ------
Weighted average shares 47,857 47,304 47,505 47,318
====== ====== ====== ======
Fully diluted earnings per share $ 0.46 $ 0.46 $ 0.77 $ 0.88
====== ====== ====== ======
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
financial statements for the quarter ended June 30, 1995 and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000022698
<NAME> COMSAT CORPORATION
<MULTIPLIER> 1000
<S> <C> <C>
<PERIOD-TYPE> 6-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1995
<PERIOD-START> JAN-1-1995 APR-1-1995
<PERIOD-END> JUN-30-1995 JUN-30-1995
<CASH> 18,857 18,857
<SECURITIES> 0 0
<RECEIVABLES> 218,739 218,739
<ALLOWANCES> 0 0
<INVENTORY> 25,769 25,769
<CURRENT-ASSETS> 290,758 290,758
<PP&E> 2,546,463 2,546,463
<DEPRECIATION> 1,064,985 1,064,985
<TOTAL-ASSETS> 2,035,820 2,035,820
<CURRENT-LIABILITIES> 279,241 279,241
<BONDS> 590,084 590,084
<COMMON> 317,703 317,703
0 0
0 0
<OTHER-SE> 532,161 532,161
<TOTAL-LIABILITY-AND-EQUITY> 2,035,820 2,035,820
<SALES> 0 0
<TOTAL-REVENUES> 418,692 210,809
<CGS> 0 0
<TOTAL-COSTS> 226,433 105,220
<OTHER-EXPENSES> 117,563 60,650
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 19,249 10,374
<INCOME-PRETAX> 58,219 35,308
<INCOME-TAX> 21,634 13,296
<INCOME-CONTINUING> 36,585 22,012
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 36,585 22,012
<EPS-PRIMARY> 0.77 0.46
<EPS-DILUTED> 0.77 0.46
</TABLE>
