10-K
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the fiscal year ended December 31, 1994 Commission file number 1-4929
COMSAT Corporation
(Exact name of registrant as specified in its charter)
District of Columbia 52-0781863
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6560 Rock Spring Drive, Bethesda, MD 20817
(Address of principal executive offices)
Registrant's telephone number, including area code: (301) 214-3000
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
Common Stock, without par value New York Stock Exchange
Chicago Stock Exchange
Pacific Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None.
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Act of 1934
during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of Registrant's knowledge, in definitive proxy
or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [X]
Aggregate market value of voting stock held by non-affiliates of the
Registrant was $832 million based on a closing market price of $17-7/8
per share on March 1, 1995, as reported on the composite tape for New
York Stock Exchange listed issues.
47,055,846 shares of Common Stock, without par value, were outstanding
on February 28, 1995.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents are incorporated by reference:
Part of the Form 10-K into which
Title the document is incorporated
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COMSAT - Annual Meeting of Shareholders - Part III
Notice and Proxy Statement - 1995
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PART I
Item 1. Business
GENERAL INFORMATION
Business Segments
COMSAT Corporation (COMSAT, the Corporation or Registrant)
has four business segments: International Communications, Mobile
Communications, Entertainment and Technology Services.
International Communications consists of COMSAT World
Systems, which provides satellite communications services using
the satellite system of the International Telecommunications
Satellite Organization (INTELSAT), and COMSAT International
Ventures, which operates and invests in telecommunications
ventures internationally. Mobile Communications consists of
COMSAT Mobile Communications, which provides satellite
communications services using the satellite system of the
International Maritime Satellite Organization (Inmarsat).
Entertainment consists of COMSAT Video Enterprises, Inc. and the
Corporation's majority ownership interest in On Command Video
Corporation, which provide entertainment services to the
hospitality industry throughout the United States and domestic
video distribution services to television networks, the Denver
Nuggets, a franchise of the National Basketball Association, and
Beacon Communications Corp., a producer of theatrical films and
television programming. Technology Services consists of COMSAT
RSI, Inc., which designs, manufactures, and integrates satellite
earth stations, advanced antennas and other turnkey systems for
telecommunications, radar, air traffic control and military uses,
and provides turnkey voice, video and data communications
networks and products, and communications and information
services worldwide, and COMSAT Laboratories, the Corporation's
center for applied research and technology development.
The revenues, operating income (loss) and assets of the
Corporation, by business segment, for each of the last three
years are shown in Note 15 to the 1994 Financial Statements.
The Corporation had 2,894 employees on December 31, 1994.
None of the employees is represented by a labor union, except for
approximately 23 employees working for COMSAT RSI, Inc. on a 100-
meter radio telescope.
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Communications Satellite Act of 1962
COMSAT was incorporated in 1963 under District of Columbia
law, as authorized by the Communications Satellite Act of 1962
(the Satellite Act). Effective June 1, 1993, COMSAT changed its
corporate name from "Communications Satellite Corporation" to
"COMSAT Corporation." COMSAT is not an agency or establishment
of the U.S. Government. The U.S. Government has not invested
funds in COMSAT, guaranteed funds invested in COMSAT or
guaranteed the payment of dividends by COMSAT.
Although COMSAT is a private corporation, the Satellite Act
governs certain aspects of COMSAT's structure, ownership and
operations, most significantly the following: three of COMSAT's
15 directors are appointed by the President of the United States
with the advice and consent of the United States Senate; COMSAT's
issuances of capital stock and borrowings of money must be
authorized by the Federal Communications Commission (FCC); there
are limitations on the classes of persons that may hold shares of
COMSAT's Common Stock and on the number of shares a person or
class of persons may hold; and, on matters that may affect the
national interest and foreign policy of the United States,
COMSAT's representatives to INTELSAT and Inmarsat receive
instructions from the U.S. Government. Congress has reserved the
right to amend the Satellite Act, and amendments, if any, could
materially affect the Corporation.
Government Regulation
Under the Satellite Act, the International Maritime
Satellite Telecommunications Act of 1978 (the Inmarsat Act) and
the Communications Act of 1934, as amended (the Communications
Act), COMSAT is subject to regulation by the FCC with respect to
its COMSAT World Systems and COMSAT Mobile Communications
services and the rates charged for those services. FCC decisions
and policies have had and will continue to have a significant
impact on the Corporation. For a discussion of these matters,
see Notes 8 and 9 to the 1994 Financial Statements.
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INTERNATIONAL COMMUNICATIONS
The International Communications segment consists of the FCC
rate-regulated business of COMSAT World Systems, and COMSAT
International Ventures.
COMSAT World Systems
Services. COMSAT World Systems provides satellite capacity
for telephone, data, video and audio communications services
between the United States and the rest of the world using the
global network of INTELSAT satellites. COMSAT World Systems'
customers include U.S. international communications common
carriers, private network providers, multinational corporations,
U.S. and international broadcasters, newsgathering organizations,
digital audio companies and the U.S. government.
The largest portion of COMSAT World Systems revenues comes
from leasing full-time voice grade half-circuits (two-way
communications links between an earth station and an INTELSAT
satellite) to U.S. international communications common carriers.
The three largest carrier customers are AT&T Corporation (AT&T),
MCI International Inc. (MCI) and Sprint Communications Company
(Sprint). COMSAT World Systems offers significant discounts to
customers entering into long-term commitments for full-time
voice-grade half-circuits. More than 91.3% of all eligible
voice-grade half-circuits are now under such commitments.
COMSAT World Systems voice and data services are primarily
digital, which provides higher quality transmissions than analog
services. COMSAT World Systems International Digital Route (IDR)
service, for example, makes it possible for communications
carriers to provide digital public-switched telephone network
circuits. The carriers apply techniques to such circuits that
permit a single digital circuit to handle multiple telephone
calls simultaneously.
For private line customers, COMSAT World Systems offers an
all-digital International Business Service (IBS), as well as an
international VSAT (Very Small Aperture Terminal) service. IBS
offers customers high-speed, digital communications for voice,
data, facsimile and video-conferencing using on-premise earth
stations that eliminate the need for costly land-line
connections. At year-end 1994, approximately 54% of COMSAT World
Systems IBS traffic was covered by long-term commitments. COMSAT
World Systems has established international VSAT networks to both
Latin America and Europe. Using on-premise antennas as small as
1.8 meters in combination with the high-power satellites in the
INTELSAT network, international corporations can deliver
communications to multiple sites. Used primarily for data
transmissions, VSATs can also accommodate voice and video
communications.
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To the growing international broadcasting community, COMSAT
World Systems provides both digital and analog transmission
services on a long-term, short-term or occasional as-needed
basis. With the launch in 1992 of the INTELSAT K satellite over
the Atlantic Ocean and the launch of the INTELSAT VII satellites
discussed under "INTELSAT Satellites" in Item 2, Properties, on
page 20, COMSAT World Systems has expanded the availability of
high-power, flexible capacity for broadcasters and satellite
newsgatherers. In particular, COMSAT World Systems introduced a
flexible digital television service and a digital audio service
to attract new customers using digital compression in the
broadcast industry to satellite broadcasting.
To maintain the quality of the INTELSAT network, COMSAT
World Systems provides tracking, telemetry, control and
monitoring services to INTELSAT and engages in a program of
research and development to ensure that the satellite system
accommodates the latest communications technologies, including
both broadband and integrated services digital networks (ISDN).
Tariffs and Revenues. Under the Satellite Act and the
Communications Act, COMSAT is subject to regulation by the FCC
with respect to COMSAT World Systems communications services, the
rates charged for those services and earnings levels. COMSAT
World Systems provides its services on a non-discriminatory basis
to all customers, either under tariffs filed with the FCC or on
the basis of inter-carrier contracts.
Effective January 1, 1992, COMSAT World Systems introduced a
regional growth plan through which customers can benefit from
rate reductions as certain threshold traffic levels are attained
in each of four geographic regions: Europe, Latin America,
Pacific and Mid-East/Other. In addition, COMSAT World Systems
reduced its rates by 10% on 10- and 15-year IDR and Time Division
Multiple Access (TDMA) digital "base" circuits activated prior to
January 1, 1992. In May 1992, rates for all multi-year "base"
circuits with transmissions between large Standard A earth
stations were also reduced by 10%. During 1992, COMSAT World
Systems also introduced rates for Digital Television Service
coupled with transitional rates for customers who commenced
service in an analog mode and opted to convert to digital
modulation techniques within the same lease period.
In January 1992, COMSAT World Systems filed a petition for
rulemaking with the FCC seeking incentive-based regulation of its
multi-year, switched-voice services for carriers. The petition
requests a regulatory framework to replace traditional rate-base
regulation and enable COMSAT World Systems to respond more
effectively to competitive market forces. This framework would
have three parts: (1) COMSAT World Systems would agree to cap its
prices for existing multi-year, switched-voice services at the
reduced rates that went into effect on January 1, 1992; (2)
COMSAT World Systems could lower its rates for these services on
14 days notice, and those rates would be presumed lawful as long
as they were above its average variable costs (i.e., streamlined
tariff review); and (3) multi-year, switched-voice services would
no longer be subject to annual rate-of-return reviews,
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although they would still be subject to review in the event of a
customer complaint. The FCC has not yet taken action on this
petition. As a result, in July 1994, COMSAT World Systems filed
a Petition for Partial Relief. This petition requested expedited
FCC action to approve streamlined tariff review for all of COMSAT
World Systems' INTELSAT satellite services. The petition was
also accompanied by an extensive economic study which concluded
that COMSAT World Systems faces substantial effective competition
in all geographic and service market segments from existing and
planned fiber optic cables and separate satellite facilities, and
that its access to the INTELSAT system does not confer upon
COMSAT World Systems any market power in the provision of
transoceanic telecommunications facilities.
In 1993 and 1994, COMSAT World Systems entered into new
inter-carrier contracts with each of its three largest customers,
AT&T, MCI and Sprint. Pursuant to those contracts, COMSAT World
Systems further reduced its rates for 10- and 15-year IDR and
TDMA digital "base" circuits activated prior to January 1, 1992,
and also reduced its rates beginning in 1996 for 7-year and
longer IDR and TDMA circuits activated after January 1, 1992. In
addition, the contracts provided AT&T and Sprint with leases and
with options to lease capacity from COMSAT World Systems in 36
MHz increments under specified rates, terms and conditions.
Approximately 30% of the Corporation's consolidated revenues
in 1994 were derived from COMSAT World Systems services (32% in
1993, 37% in 1992). Approximately 9% of the Corporation's
consolidated revenues in 1994 were derived from COMSAT World
Systems services to AT&T. Also in 1994, COMSAT World Systems'
three largest customers, AT&T, MCI and Sprint were the source of
approximately 31%, 18% and 8%, respectively, of COMSAT World
Systems revenues.
Competition. COMSAT World Systems competes with operators
of high capacity fiber-optic and other submarine cables in
service along major traffic routes worldwide. COMSAT World
Systems' major carrier customers (including its three largest
customers, AT&T, MCI and Sprint) are co-owners of submarine
cables.
Under the Satellite Act and FCC orders, COMSAT is the only
U.S. entity that may provide international space segment services
to customers using INTELSAT satellites. In 1985 the FCC
authorized the establishment of separate international
communications satellite systems that would compete with
INTELSAT, subject to certain restrictions that are being phased
out. For a discussion of separate satellite systems competition
to COMSAT World Systems, see Management's Discussion and Analysis
of Financial Condition and Results of Operations and Note 9 to
the 1994 Financial Statements.
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INTELSAT. INTELSAT is a 135-nation organization
headquartered in Washington, D.C. It operates under two
agreements: (1) an intergovernmental agreement; and (2) an
operating agreement signed by each nation's government or
designated telecommunications entity (Signatory). COMSAT is the
U.S. Signatory. It represents the United States in INTELSAT,
subject to instructions from the Department of State (in concert
with the Department of Commerce and the FCC) on matters that may
affect the national interest and foreign policy of the United
States.
Each Signatory has rights and obligations in INTELSAT
analogous to those of a partner. Each owns an investment share,
makes proportionate contributions to INTELSAT's capital costs,
and receives proportionate distributions of INTELSAT's net
revenues after deductions for operating expenses. The investment
shares are readjusted as of March 1 of each year to approximate
the Signatories' respective portions of the total use of the
INTELSAT space segment for the previous six months. COMSAT's
investment share, the largest in INTELSAT, was 19.12% as of March
1, 1995 (20.2% as of March 1, 1994; 21.8% as of March 1, 1993).
Signatories also pay INTELSAT for their use of the satellite
system. While INTELSAT has targeted a pretax cumulative rate of
return of 20% on Signatory's capital used by another Signatory or
from non-owners who use the satellite system, COMSAT expects to
receive an actual pretax cumulative rate of return of between 16%
to 18% on its capital investment after appropriate accounting
adjustments. COMSAT World Systems realized revenue from its
INTELSAT ownership, net of use charges paid, of $25.4 million in
1994. This net revenue is reflected in COMSAT World Systems
revenue requirements for FCC ratemaking purposes.
At December 31, 1994, total INTELSAT Owners' Equity was
approximately $1,693 million, and INTELSAT's outstanding
contractual commitments totaled approximately $1,749 million.
In each of 1989 through 1994, the Corporation entered into
agreements with INTELSAT to place COMSAT World Systems FM,
digital bearer, IBS and video traffic on the INTELSAT system
under long-term commitments.
Under the INTELSAT agreements, the member nations that
authorize international satellite systems separate from INTELSAT
are required to ensure that such systems are technically
compatible with the INTELSAT system and will not cause
significant economic harm to the INTELSAT system. During 1990,
INTELSAT initiated certain reforms to its process for
coordinating with these separate satellite systems, which reforms
were superseded in November 1992 and again in October 1994.
Under the streamlined procedures approved in 1992, carriage by
separate systems of any amount of traffic or services not
interconnected to the public switched network and of up to 1,250
circuits of public switched traffic per satellite is presumed not
to cause significant economic harm to the INTELSAT system. The
1,250 circuits threshold was raised in 1994 to 8,000 circuits of
public switched traffic per satellite. In addition, in 1994
INTELSAT approved further liberalization of coordination
procedures with a view toward eliminating the economic harm test
in
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the 1996-98 timeframe. For a discussion of separate satellite
systems competition to COMSAT World Systems, see Management's
Discussion and Analysis of Financial Condition and Results of
Operations and Note 9 to the 1994 Financial Statements.
The Corporation is a strong advocate of the privatization of
INTELSAT, based upon management's belief that only if INTELSAT
is converted into a commercial entity responsible to shareholders
rather than member nations will it be competitive in the dynamic
telecommunications markets of tomorrow. In 1994, the United
States Government formally endorsed the privatization of
INTELSAT. Intergovernmental proceedings under the procedures of
INTELSAT are now underway to debate privatization and other
possible alternative structures favored by other member nations
of the organization.
COMSAT International Ventures
COMSAT International Ventures (CIV) manages investments in a
group of companies that provides a variety of telecommunications
services throughout the world, including private-line and public
switched services. CIV is also actively engaged in the
development of prospective international telecommunications
opportunities, and its existing and prospective ventures are
typically located in markets that the Corporation expects to be
the world's emerging, high growth telecommunications markets.
As of March 1, 1995, CIV manages investments in a total of
13 ventures in Latin America, Asia, Europe, Russia and other
countries of the Commonwealth of Independent States (the CIS).
CIV ventures take various forms, including minority equity
investments, joint ventures and wholly-owned subsidiaries.
Customers of these ventures include U.S. and foreign
multinational corporations, and domestic (non-U.S.) companies
operating in their own countries.
CIV continued to develop new investment opportunities around
the world in 1994. In particular, CIV initiated service in
Brazil, and its Venezuelan venture continued to explore
opportunities to provide communications services in that country.
CIV also increased its investment in BelCom, Inc., a company
providing telecommunications services in Russia and other CIS
countries, to majority ownership, making BelCom one of several
CIV ventures whose results were consolidated in 1994. Further,
CIV expanded its European and Middle Eastern presence by
concluding a revenue sharing agreement with the Government of
Turkey to provide VSAT services, and by purchasing a minority
stake in Viatel, Inc., a U.S.-based telecommunications company
whose primary activity is the international resale of voice
telephony and value-added services in Europe. CIV also extended
its operations to the Pacific region, through the acquisition of
a minority equity share of Philippine Global Communications, Inc.
(PhilCom), a full-service telecommunications company in the
Philippines. CIV expects to continue to expand its existing
businesses and to develop investment opportunities in other
markets of the world.
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CIV operates in numerous and diverse markets. Consequently,
the level of competition in the countries where CIV's ventures
conduct business varies considerably. In some countries there is
full competition, and in others competition is limited. The
competitive conditions faced by each venture are the result of
differing regulatory policies, as well as economic and market
conditions, in the particular country in which a venture
operates. Because CIV's ventures operate in some of the world's
most dynamic markets, the competitive environment faced by these
ventures is subject to constant change.
MOBILE COMMUNICATIONS
The Mobile Communications segment consists of the FCC-
regulated business of COMSAT Mobile Communications.
COMSAT Mobile Communications
COMSAT Mobile Communications provides satellite
telecommunications services for maritime, aeronautical and land
mobile applications, using the Inmarsat satellites and COMSAT's
land earth stations in Connecticut, California, Malaysia and
Turkey, which serve the Atlantic, Pacific and Indian Ocean
Regions, respectively. These stations enable COMSAT Mobile
Communications to offer global coverage for its services. There
are currently more than 40,000 mobile terminals operating in the
Inmarsat system. As described below, COMSAT Mobile
Communications provides a full range of voice, facsimile, data
and telex services, as well as certain value-added services.
Maritime Services. COMSAT Mobile Communications provides
satellite services for communications to and from ships and other
vessels. Customers for these services include transport ship
operators, cruise ships and their passengers, fishing vessel
operators, oil and mining interests, pleasure boat operators,
U.S. Navy ships and foreign telecommunications administrations.
Services include group call messaging to a fleet of ships,
an electronic mail service, a direct-dial telephone service for
passengers and crew on board ships, a news summary distribution
service, access to data bases through personal computers and
other office communications services for facsimile transmissions,
worldwide teleconferencing and current financial news reports.
In 1992, COMSAT Mobile Communications initiated its two new
digital services, Inmarsat-B and Inmarsat-M, in the Atlantic and
Pacific Ocean Regions. These services provide more efficient use
of the Inmarsat satellite capacity, help to significantly lower
the cost of using satellite communications, and expand the
potential customer base for maritime and land mobile services.
COMSAT Mobile Communications also introduced a multi-channel
version of Inmarsat-M service that allows cruise ships and other
high-volume users to increase their channel capacity and offer
lower rates to their customers. In 1994, COMSAT Mobile
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Communications opened a new land earth station in Malaysia to
provide these new digital services to the Indian Ocean Region.
Aeronautical Services. COMSAT Mobile Communications
provides satellite telecommunications services for aeronautical
applications, including airline operational and administrative
communications, passenger telephone service and, prospectively,
air traffic control.
By an FCC Report and Order issued in 1989, COMSAT was
authorized (1) to be the sole U.S. provider of Inmarsat space
segment capacity for aeronautical services; (2) to provide ground
segment aeronautical services in connection with the Inmarsat
space segment on a non-exclusive basis; and (3) to provide such
aeronautical services only to aircraft engaged in international
flights, including international flights over U.S. airspace.
Another entity, the American Mobile Satellite Corporation (AMSC),
was designated as the sole provider of certain domestic
aeronautical satellite services. However, COMSAT Mobile
Communications has been authorized by the FCC to provide domestic
aeronautical satellite services on an interim basis until the
commercial deployment of AMSC's satellite, which AMSC expects to
occur in early 1995.
Customers of COMSAT Mobile Communications for aeronautical
services include airline service providers, commercial airlines,
government aircraft and owners and operators of corporate
aircraft.
COMSAT Mobile Communications began providing aeronautical
services in 1990 with a data service for cockpit communications
on commercial flights under a 10-year agreement with Aeronautical
Radio, Inc., an airline-owned service organization. In 1991,
COMSAT Mobile Communications began providing aeronautical voice
services in the Atlantic and Pacific Ocean Regions through its
earth stations at Southbury, Connecticut and Santa Paula,
California. There are currently more than 500 aircraft equipped
to use the Inmarsat aeronautical system, equally split between
voice and data services.
A service agreement with Kokusai Denshin Denwa Co., Ltd.
(KDD), the Japanese Signatory to Inmarsat, provides that COMSAT
Mobile Communications may use KDD's ground earth station serving
the Indian Ocean Region to serve COMSAT Mobile Communications'
aeronautical customers. COMSAT Mobile Communications may serve
KDD's customers flying in the Atlantic Ocean Region, and COMSAT
Mobile Communications and KDD will provide mutual back-up in the
Pacific Ocean Region for aeronautical customers of both
companies.
Service agreements with GTE Airfone, Incorporated, Claircom
and In-Flight Phone, Inc., all of which are providers of air-to-
ground passenger telephone service using terrestrial facilities,
enable these providers to extend their current service to
transoceanic flights by acquiring satellite and ground earth
station services from COMSAT Mobile Communications.
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In 1993, COMSAT signed a service agreement with United
Airlines to provide satellite communications services for
passengers, including telephone, fax and data transmission on
approximately 74 aircraft, once such aircraft are equipped with
satellite terminals. In 1994, COMSAT was selected by Air Canada
to provide passenger voice service on 16 aircraft.
Land Mobile Services. COMSAT Mobile Communications provides
telecommunications services for international land mobile
applications, using mobile and portable terminals located outside
of the United States. Customers for these services include
broadcasters, foreign telecommunications authorities and U.S. and
foreign corporations and government agencies.
COMSAT Mobile Communications land mobile services are
currently available using transportable versions of Inmarsat's
Standard-A and Standard-B mobile earth station (telephone,
facsimile, data, and telex), a briefcase-size Standard-M terminal
and a smaller data-only Standard-C terminal through COMSAT Mobile
Communications' C-Link(sm) service. C-Link service is a low-cost
text messaging service that permits smaller vessels and land
mobile units to use the global satellite network. The briefcase-
size Standard-M terminals provide a more portable and less
expensive telephone service for international travelers, the news
media, government officials and others who travel to remote parts
of the world where reliable communications services are often not
available. COMSAT Mobile Communications is developing a six
pound, laptop computer sized "mini-M" terminal which is expected
to be available in 1996.
COMSAT is not regularly authorized to provide domestic land
mobile services. However, it is providing Inmarsat satellite
capacity to AMSC, the authorized U.S. domestic land mobile
entity, for an interim service pending the launch of AMSC's own
satellite, and it is providing interim domestic service to
certain other end users under special temporary authority from
the FCC.
Revenues. Approximately 23% of the Corporation's
consolidated revenues in 1994 were derived from COMSAT Mobile
Communications (25% in 1993, 23% in 1992). No single customer of
COMSAT Mobile Communications provided more than 10% of the
Corporation's consolidated revenues in 1994.
Competition. Under the Inmarsat Act, COMSAT is the sole
U.S. operating entity and investor in the Inmarsat system.
COMSAT Mobile Communications competes for maritime, land mobile
and aeronautical communications business with other Inmarsat
Signatories operating land earth stations and with IDB Mobile
Communications, Inc. (IDB), another carrier, co-owned by the
Canadian signatory to Inmarsat, which provides maritime, land
mobile and aeronautical services through its own U.S. land earth
stations, using Inmarsat satellite capacity obtained from COMSAT
Mobile Communications, as well as through foreign earth stations
on the ship-to-shore direction (and on the shore-to-ship
direction in the Indian Ocean region). COMSAT Mobile
Communications also competes for maritime communications business
with operators of cellular radio services, high frequency
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radio services and fixed C-band satellites, domestic and
international, and, when launched, the FCC-licensed low earth
orbit, or "Big Leo", satellite systems of Iridium, GlobalStar and
Odyssey. These competitive forces continue to exert downward
pressure on COMSAT Mobile Communication's pricing for services
provided through the Inmarsat system.
In November 1993, the FCC authorized AT&T to provide shore-
to-ship Inmarsat service under an agreement with COMSAT Mobile
Communications whereby COMSAT Mobile Communications is indicated
in AT&T's tariff as a "participating carrier" and pursuant to
which COMSAT Mobile Communications reduced its charge for space
and ground segment to AT&T by more than 20%. In December 1993,
AT&T filed a new application to provide "branded end-to-end"
Standard A mobile satellite service in the ship-to-shore
direction. In February 1994, COMSAT opposed this application,
arguing that it is contrary to the Inmarsat Act. The FCC has not
acted on this matter.
In December 1994, IDB filed two applications seeking
authority to provide two new digital services, Inmarsat-M and
Inmarsat-B, to maritime and land mobile users through foreign
earth stations in the shore-to-ship direction in the Atlantic and
Pacific Ocean regions. COMSAT filed a petition to deny both
applications. In that proceeding, IDB is contending that the
Inmarsat Act allows U.S. carriers to use Inmarsat earth stations
and space segment outside of the United States for U.S.-
originating traffic, a position COMSAT is opposing. The FCC has
not yet ruled on the IDB applications.
In March 1993, the FCC granted COMSAT's petition seeking
waivers of the structural separation requirements, subject to
COMSAT's establishing certain accounting and non-structural
safeguards. This relief allows COMSAT to provide equipment,
software and value-added services to customers directly through
COMSAT Mobile Communications, rather than through a separate
subsidiary that would require substantial duplication of
personnel and other costs. In satisfaction of conditions placed
on COMSAT by the FCC in granting the COMSAT application, in
January 1994, COMSAT filed with the FCC its new Cost Allocation
Manual, and in February 1994, COMSAT filed its plan for
implementing certain non-structural safeguards desired by the
FCC. Both filings are subject to FCC approval before the FCC
waivers take effect.
Inmarsat. Inmarsat is a 76-nation organization
headquartered in London, England. It operates under two
agreements: (1) an intergovernmental convention; and (2) an
operating agreement signed by each nation's government or
designated telecommunications entity (Signatory). COMSAT is the
U.S. Signatory. It represents the United States in Inmarsat,
subject to instructions from the Department of State (in concert
with the Department of Commerce and the FCC) on matters that may
affect the national interest and foreign policy of the United
States.
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Each Signatory has rights and obligations in Inmarsat
analogous to those of a partner. Each owns an investment share,
makes proportionate contributions to Inmarsat's capital costs,
and receives proportionate distributions of Inmarsat's space
segment charges after deductions for operating expenses. The
investment shares are readjusted as of February 1 of each year to
approximate the Signatories' respective portions of the total use
of the Inmarsat space segment for the previous year. COMSAT's
investment share, the largest in Inmarsat, was 24.1% as of
February 1, 1995 (22.5% as of February 1, 1994; 23.1% as of
February 1, 1993).
At December 31, 1994, total Inmarsat Owners' Equity was
approximately $660 million, including undistributed compensation
for use of capital totaling approximately $132 million, and
Inmarsat's outstanding contractual commitments totaled
approximately $493 million.
The Corporation is a strong advocate of the privatization of
Inmarsat, based upon management's belief that if Inmarsat is
converted from a treaty organization into a commercial enterprise
responsible to shareholders it will be more competitive in the
dynamic telecommunications markets of tomorrow.
Intergovernmental proceedings under the procedures of Inmarsat
are now underway to debate privatization and other possible
alternative structures favored by other member nations of the
organization.
Inmarsat-P. As part of the Corporation's international
telecommunications strategy, COMSAT Mobile Communications has
responsibility for the Corporation's investment of $147 million
in Inmarsat-P, a newly created company formed outside of the
Inmarsat organization to allow a more commercial focus than the
current Inmarsat system. Inmarsat signatories interested in
investing in hand-held satellite communications can invest in
Inmarsat-P in concert with other prospective strategic investors.
Inmarsat-P's intermediate circular orbit (ICO) satellite system
is to have 12 satellites and is expected to begin service in 1999
and be fully operational by the year 2000. Inmarsat-P users will
be able to communicate worldwide using hand-held units similar to
cellular phones. The units are expected to cost less than $1,000
and operate through both satellite and cellular links.
To ensure a leading position as a wholesaler of the
Inmarsat-P satellite service, the Corporation plans to invest $94
million directly, $20 million through COMSAT Argentina and
approximately $33 million through Inmarsat. The investment
through COMSAT Argentina supports the Corporation's strategy of
positioning itself in major emerging markets, where the demand
for hand-held communications is expected to be the greatest.
14
ENTERTAINMENT
The Entertainment segment consists of COMSAT Video
Enterprises, Inc. (CVE), a wholly owned subsidiary of the
Corporation; On Command Video Corporation (OCV), a majority-owned
subsidiary that developed and markets a proprietary on-demand
video entertainment and information system for the lodging
industry; the Denver Nuggets, a franchise of the National
Basketball Association (NBA); and Beacon Communications, Corp.,
(Beacon Communications), a wholly owned subsidiary which produces
theatrical films and television programming.
CVE and OCV provide in-room entertainment and information
services to the hospitality industry throughout the United
States, Canada and the Caribbean. The services to the hotels
consist of pay-per-view feature films, free-to-guest programming
(such as Showtime, HBO, ESPN, The Disney Channel, CNN and TBS,
among others), and pay-per-view sports and entertainment special
events. OCV's pay-per-view film service is on-demand and its
system also provides interactive in-room services such as folio
review and guest check out. CVE's pay-per-view service is
provided using OCV's on-demand system in certain hotel customers
and a scheduled, satellite-broadcast service to the remainder of
its hotel customers. At December 31, 1994, CVE and OCV had a
customer base installed or under contract of approximately 2,400
hotels and approximately 550,000 rooms, including hotels in each
major hospitality chain.
In 1994, CVE raised its ownership of OCV from 73.5% to 79.7%
through purchases of common stock from minority stockholders and
of additional common stock from OCV. Beginning with the third
quarter of 1992, OCV's financial results have been consolidated
with CVE. Previously, this investment was accounted for using
the equity method.
In COMSAT's 1992 restructuring, the Corporation's video
distribution business was transferred to CVE, which allowed CVE
to capitalize on certain operational synergies. CVE management's
focus was directed to rapidly install upscale hotel properties
using the OCV product. This refocus rendered significant
property and equipment obsolete which had been purchased for
CVE's mid-priced hotel business and this property and equipment
was written down in the 1992 restructuring charges. For a further
discussion of the restructuring, see Note 14 to the 1994
Financial Statements.
All of the Corporation's domestic video distribution
services and products have been consolidated within CVE. This
includes the distribution of network television programming of
the National Broadcasting Company (NBC) via satellite to NBC
affiliate stations nationwide pursuant to a service contract
which runs to 1999.
15
The Denver Nuggets are one of 27 franchises in the NBA. In
1995, the NBA is expected to add two expansion teams. During
1992, the Corporation acquired the partnership shares it did not
already own and has consolidated the partnership results with the
Corporation beginning with the third quarter of 1992.
Previously, this investment was accounted for using the equity
method. In the second quarter of 1994, the partnership results
were moved from Eliminations and Other to the Entertainment
segment. Results for prior periods were restated to reflect this
change. In connection with its Nuggets ownership, CVE owns one-
third of Mountain Mobile Television, LLC, a company which
produces television broadcasts of sports events, including the
Nuggets basketball games.
In January 1995, a proposed joint venture between CVE and
The Anschutz Corporation reached an agreement-in-principle with
the City and County of Denver, Colorado for the construction of a
new sports and entertainment complex in downtown Denver.
Construction of the new complex is conditioned on the negotiation
of final agreements with the City and the current owner of the
land. If the new arena is constructed, the Nuggets would begin
playing there in the 1997-1998 NBA season. For a further
discussion of this investment, see Note 17 to the 1994 Financial
Statements.
CVE acquired the assets of Beacon Communications in December
1994, including a multi-picture development, production and
domestic distribution agreement with SONY Pictures Entertainment,
Inc., certain recording and music publishing assets and certain
other contracts and intellectual property. The Corporation has
entered into five-year employment agreements with Beacon
Communications' two principal personnel. For a further
discussion of this investment, see Note 6 to the 1994 Financial
Statements.
The Corporation's entertainment properties compete with a
broad spectrum of other entertainment alternatives. In providing
entertainment services to the lodging industry, CVE and OCV
operate in a highly competitive and rapidly changing environment
in which the principal methods of competition are service,
product features and price. Several competing companies,
especially SpectraVision, Inc. and Lodgenet Entertainment
Corporation, provide hotels with in-room video entertainment.
The Denver Nuggets compete not only with other major league
sports, which are quite competitive among the leagues (i.e., the
NBA, the National Football League, the National Hockey League,
and Major League Baseball), but also with minor league sports,
college athletics and other sports entertainment for the sports
fans' entertainment dollars. Beacon Communications has numerous
competitors in the motion picture and television industry, many
of whom have significantly greater financial and other resources
than the Corporation for the development and production of motion
pictures and television programming.
16
TECHNOLOGY SERVICES
The Technology Services segment consists of COMSAT RSI, Inc.
(CRSI), a wholly-owned subsidiary of the Corporation which merged
in June 1994 with Radiation Systems, Inc. (RSi), and COMSAT
Laboratories, the Corporation's applied research and development
organization. CRSI combines RSi's capabilities in the design,
manufacture, and integration of satellite earth stations,
advanced antennas and other turnkey systems for
telecommunications, radar, air traffic control and military uses,
with the Corporation's former COMSAT Technology Services division
(CTS), which provided turnkey voice, video and data
communications networks and products, and communications and
information services worldwide. For a further discussion of the
merger, see Note 2 to the 1994 Financial Statements.
COMSAT RSI
CRSI is comprised of 11 operating divisions, 10 of which are
vertically integrated to serve global advanced telecommunications
markets and one of which serves global machine tool markets.
CRSI designs, manufactures and integrates a range of systems,
subsystems and components for advanced microwave communication,
satellite communication, radar and related applications, air
traffic control, and intelligence and scientific applications,
and supplies antenna systems for cellular, troposcatter,
personal, mobile and last-mile wireless markets. CRSI's
customers include the U.S. government, U.S. government prime
contractors, foreign governments, domestic and foreign
telecommunication service providers, and a wide variety of other
commercial customers.
CRSI's manufactured products include parabolic antennas from
.6 meters to 32 meters in diameter, line-of-site microwave
antennas, cellular and Personal Communication System (PCS)
antennas, low noise satellite frequency converters, microwave
components, modems, VSAT terminals, servo control systems,
antenna monitor and control systems, antenna positioning systems,
tactical military antennas, air traffic control antennas, radar
antennas, radio telescope antennas, optical measuring devices and
tactical masts. In addition to marketing its own proprietary
manufactured products, CRSI integrates its products, as well as
other equipment, to provide turnkey systems for satellite
gateway, cellular, rural telephony, VSAT and television
broadcast.
CRSI's services include systems installation, operations and
maintenance, satellite construction monitoring, engineering
development, system design and tracking, telemetry and command
(TT&C) services.
CRSI purchases parts and materials from a number of reliable
commercial suppliers and does not depend on any single source for
a significant portion of its supplies. It has encountered delays
and adjustments from time to time, but operations have not been
materially affected.
17
Major contracts ongoing during 1994 included: a contract
with the Cote d'Ivoire (Ivory Coast) government to provide a
national television and radio distribution network; a contract
with the Guatemalan telephone company (Guatel) to provide a VSAT
network for rural telephony service; a contract with the National
Science Foundation to install the world's largest steerable radio
telescope; a contract with the Federal Aviation Administration to
provide tactical air navigation antennas; contracts to provide
PCS antennas to both service providers in the United Kingdom; a
contract with Indiana Higher Educational System (IHETS) to expand
its digital education network; a contract with Cornell University
to upgrade the world's largest fixed position radio telescope in
Arecibo, Puerto Rico; a contract with Unisys to provide antenna
positioners for the next generation weather radar (NEXRAD)
program; contracts with the U.S. Navy for restoration and repair
of SPS-49 air search radar pedestals; contracts with Rockwell and
Raytheon to provide antennas and pedestals for the U.S.
government's MILSTSAR communication system; and a contract to
install cellular antenna systems in Argentina.
CRSI also includes the activities of COMSAT General
Corporation (COMSAT General), a wholly owned subsidiary of the
Corporation. COMSAT General owns an 86.3% interest in and
manages the MARISAT Joint Venture, which owns and operates three
satellites and leases capacity in the satellites to Inmarsat and
the U.S. Navy. In addition, CRSI manages the Corporation's
minority investment in Plexsys International Corporation, a
manufacturer of thin route cellular telephone equipment.
CRSI's business is such that its total customer base is
quite large; however, in any one 12-month period relatively few
customers can represent a large portion of sales. In particular,
CRSI sells to the U.S. Government as a prime contractor and as a
subcontractor. In 1994, sales to the U.S. Government accounted
for 44% of CRSI's sales. If the U.S. Department of Defense is
considered separately, it accounted for 24% of CRSI's 1994 sales.
At December 31, 1994, CRSI's backlog of orders believed to
be firm totaled approximately $152 million, as compared to
approximately $198 million at December 31, 1993 (which included a
Kuwait government order valued at $18 million which was canceled
in 1994). Of the December 31, 1994 backlog, approximately $110
million is expected to be recognized as sales in 1995 and
approximately $24 million is unfunded. Included in this order
backlog is approximately $85 million of U.S. Government
contracts. As is customary, these contracts include provisions
for cancellation at the convenience of the U.S. Government or the
prime contractor. If such a provision were exercised, CRSI would
have a claim for reimbursement of costs incurred and a reasonable
allowance for profit thereon.
18
CRSI competes with major companies around the world in
several of the telecommunications markets for its products and
services. Major competitors in the communications systems
markets include Scientific Atlanta, Inc., California Microwave,
Inc., Miteq, Inc., LNR Communications, Inc., NEC and Mitsubishi.
In the wireless networks market, competitors include GM Hughes
Electronics Corporation, Kathrein, Cellwave, Swedcom, Gabriel
Electronics, Inc., Alcatel NV, The Allen Group, Inc., Prodelin
and Channel Master. The advanced systems markets competition
includes Orbit Technologies, Inc., Datron Systems, Inc., Tecom
Industries, Incorporated, TIW Systems, Inc., Electrospace
Systems, Inc., GTE Corporation, and Vertex Communications
Corporation. Many of these companies are considerably larger and
have greater financial resources than the Corporation. In all
market areas, COMSAT RSI competes on the basis of price,
performance, on-time delivery, reliability and customer support.
COMSAT Laboratories
COMSAT Laboratories conducts research and development on a
broad range of telecommunications devices, subsystems,
transmission systems, technologies and techniques in support of
COMSAT RSI and other COMSAT businesses, as well as for outside
customers. Customers include U.S. and foreign government
agencies, commercial entities, INTELSAT and Inmarsat. COMSAT
Laboratories also licenses new technology it develops to other
companies for commercialization of such technology.
Major new COMSAT Laboratories contracts awarded or begun in
1994 include: contracts with INTELSAT and AT&T to design,
manufacture and deliver second generation TDMA traffic terminals;
a contract with INTELSAT to develop a software system for
generating TDMA burst time plans; a contract with Hughes
Communications, Inc. to build and deliver an in-orbit test (IOT)
system for Indonesia; and a contract with NASA to develop a
satellite-based low-rate ATM network product. All together,
COMSAT Laboratories won a total of 78 contracts in 1994, with a
total value of $15.8 million.
On-going contracts being implemented in 1994 include a
contract with INTELSAT to design and implement STRIP7, a software
system used to optimize communications traffic on INTELSAT
satellites, and a contract with NASA to provide operation and
maintenance support for ACTS (Advanced Communications Technology
Satellite). In 1994, COMSAT Laboratories also completed a
subcontract with Magnavox Electronics Systems Company to develop
satellite communications control software and a computer
interface for a new U.S. Army satellite ground terminal system.
In 1994, COMSAT Laboratories acquired a minor interest in
Superconducting Technologies, Inc. (SCT), a small start-up firm
that is developing practical applications for superconducting
materials in communications services.
19
Support of COMSAT Laboratories from outside sources was 46%
of total funding in 1994. The Corporation's total expenditures
for research and development were $16 million in 1994, $15
million in 1993, and $17 million in 1992. The majority of this
research and development was performed by COMSAT Laboratories.
INVESTMENTS
As discussed above, the Corporation owns the Denver Nuggets,
a franchise of the NBA. As a result of the Corporation's
acquiring all of the remaining interests in the partnership in
1992, the partnership's financial results have been consolidated
with the Corporation's financial statements beginning with the
third quarter of 1992. Previously, this investment was accounted
for using the equity method. Also as discussed above, in 1994
the Corporation acquired a minority equity share of Philippine
Global Communications, Inc., a full-service telecommunications
company in the Philippines. For a further discussion of the
Corporation's investments, see Note 6 to the 1994 Financial
Statements.
Item 2. Properties
COMSAT Properties
Effective in 1993, the headquarters of the Corporation and
the headquarters of the International Communications and
Entertainment segments are located in a building in Bethesda,
Maryland which the Corporation leases from a limited partnership
in which it holds a 50% interest, primarily as a limited partner.
The managing general partner also owns a 50% interest in the
partnership. An affiliate of the managing general partner owns
the building site and has leased this site to the partnership.
The Corporation has entered into a 15-year lease with the
partnership for the new building. For a further discussion of
the Corporation's ownership interest and lease of this property,
see Notes 6 and 8 to the 1994 Financial Statements.
The Corporation owns buildings and land in Clarksburg,
Maryland that serve as the headquarters of COMSAT Mobile
Communications and COMSAT Laboratories, as well as offices for
certain operations of CRSI. The Corporation also owns buildings
and land in Sterling, Virginia that serve as the headquarters of
CRSI, in addition to being used for manufacturing and as an
antenna test range. Further, the Corporation owns or leases 11
other properties in the United States and leases two properties
in England for the operations of CRSI's divisions.
The Corporation owns two satellites that are used by the
Entertainment segment in its video distribution services and its
television distribution network for NBC. The Corporation,
through the 86.3%-owned MARISAT Joint Venture, also operates
three satellites, the capacity of which is leased by CRSI to
Inmarsat and the U.S. Navy.
20
The Corporation leases earth stations in Turkey and
Malaysia, and owns earth stations at Santa Paula, California and
Southbury, Connecticut that are used by COMSAT Mobile
Communications to provide mobile communications services. The
California and Connecticut earth stations are also used by CRSI
to provide communications services and TT&C services. The
Corporation also owns earth stations at Clarksburg, Maryland and
Paumalu, Hawaii that are used by COMSAT World Systems to provide
TT&C services to INTELSAT.
The Corporation's properties are suitable and adequate for
the Corporation's business operations.
INTELSAT Satellites
COMSAT World Systems uses the satellites of INTELSAT, an
organization in which COMSAT owns a 19.12% interest. The
INTELSAT satellites currently used and under construction are
described below.
The INTELSAT V series consists of eight satellites having an
average capacity of at least 15,000 voice-grade bearer circuits
or 51 television channels. The INTELSAT V-A series consists of
five satellites having an average capacity of at least 16,000
bearer circuits or 57 television channels.
The INTELSAT VI series consists of five satellites,
constructed by Hughes Aircraft Company, a subsidiary of General
Motors Corporation, having an average capacity of at least 24,000
bearer circuits or 87 television channels.
The INTELSAT-K satellite, constructed by General Electric
Technical Services Company, Inc., a subsidiary of General
Electric Company, has an average capacity of 7,000 bearer
circuits or 32 television channels.
The INTELSAT VII series consists of six satellites
constructed or being constructed by Space Systems/Loral (formerly
Ford Aerospace and Communications Company). These satellites
have an average capacity of at least 17,050 bearer circuits or 62
television channels. To date, five INTELSAT VII satellites have
been launched, in October 1993, June 1994, October 1994, January
1995 and March 1995.
The INTELSAT VII-A series, also being constructed by Space
Systems/Loral, consists of three satellites having an average
capacity of at least 19,250 bearer circuits or 70 television
channels. The first INTELSAT VII-A satellite is expected to be
launched in 1995.
The INTELSAT VIII series consists of four satellites that
are being constructed by Martin Marietta Astro Space, a division
of the Martin Marietta Corporation. These satellites will have
an average capacity of 21,000 bearer circuits or 76 television
channels. The first INTELSAT VIII satellite is expected to be
launched in 1996.
21
COMSAT has applied to the FCC for authorization to
participate in the procurement of two INTELSAT VIII-A spacecraft.
These satellites, which are being constructed by Martin Marietta
Astro Space, will have an average capacity of at least 11,600
bearer circuits, or 38 television channels, and are expected to
be launched in 1997.
The Corporation has purchased insurance to cover fully the
launch phase of the INTELSAT VII, VII-A, VIII and VIII-A
satellites. Total loss in-orbit insurance for the first five
INTELSAT VII satellites has been purchased for 360 days with a
one satellite loss deductible. Total loss in-orbit insurance for
the remaining INTELSAT VII, VII-A, VIII and VIII-A satellites has
been purchased for 180 days with a one satellite loss deductible.
Inmarsat Satellites
COMSAT Mobile Communications uses the satellites of
Inmarsat, an organization in which COMSAT owns a 24.1% interest.
The Inmarsat satellites currently used and under construction are
described below.
The first-generation Inmarsat satellite system consists of
satellite capacity leased from INTELSAT, the European Space
Agency and the MARISAT Joint Venture for periods expiring at
various times through January 1996.
The second-generation Inmarsat satellite system, known as
the Inmarsat II series, consists of four satellites constructed
by an international consortium led by British Aerospace Dynamics
Corporation. A financing arrangement with respect to the first
three Inmarsat II satellites is discussed in Note 7 to the 1994
Financial Statements.
The third-generation Inmarsat satellite system, known as the
Inmarsat III series, consists of five satellites which are being
constructed by General Electric Technical Services Company, Inc.
These satellites will use spot-beam technology, which allows
reuse of the scarce frequency resources allocated for mobile
satellite communications. Their capacity will be more than 20
times that of the largest satellites in the first-generation
Inmarsat system and about eight times more powerful than the
Inmarsat II series. No decision has been made regarding launch
insurance for the Inmarsat III series. The first Inmarsat III
satellite is scheduled to be launched in late 1995. A financing
arrangement with respect to the first three Inmarsat III
satellites is discussed in Note 7 to the 1994 Financial
Statements.
22
Item 3. Legal Proceedings
Neither COMSAT nor any of its subsidiaries is a party to,
and none of their property is the subject of, material pending
legal proceedings, and no such proceedings are known to be
contemplated by governmental authorities, except the matters
described in Notes 8 and 9 to the Corporation's 1994 Financial
Statements. COMSAT and certain of its subsidiaries are parties
to other pending legal proceedings arising in the ordinary course
of business. While the outcome of such proceedings cannot be
predicted with certainty, the Corporation believes that the
resolution of such proceedings will not have a material effect on
the financial condition of the Corporation.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Executive Officers of The Registrant
Age as of
Name Officer March 31, 1995
Bruce L. Crockett President and Chief Executive Officer 51
Betty C. Alewine President, COMSAT International 46
Communications
John V. Evans. President, COMSAT Laboratories 61
Charles Lyons. President, COMSAT Video Enterprises, Inc. 40
Ronald J. Mario President, COMSAT Mobile Communications 51
Richard E. Thomas President, COMSAT RSI, Inc. 68
C. Thomas Faulders, III Vice President and Chief Financial Officer 45
Steven F. Bell Vice President, Human Resources and 45
Organization Development
Warren Y. Zeger Vice President, General Counsel and 48
Secretary
Allen E. Flower Controller 51
Wesley D. Minami Treasurer 38
Normally, the officers are elected annually by the Board of
Directors, at its first meeting following the Annual Meeting of
Shareholders, to serve until their successors are elected and
qualified.
There is no family relationship between an officer and any
other officer or director and no arrangement or understanding
between an officer and any other person pursuant to which he or
she was selected as an officer.
The following is a brief account of each executive officer's
experience for the past five years:
23
Mr. Crockett has been President and Chief Executive Officer
of the Corporation since February 1992. He was President and
Chief Operating Officer of the Corporation from April 1991 to
February 1992. He was President, World Systems Division from
February 1987 to April 1991. He has been an employee of COMSAT
since 1980 and has held various operational and financial
positions including Vice President and Chief Financial Officer.
Mr. Crockett also is a director of Augat, Inc. and a director or
trustee of funds of The AIM Management Group, Inc.
Ms. Alewine has been President, COMSAT International
Communications since January 1995, and President, COMSAT World
Systems, from May 1991 to May 1994. She was Vice President and
General Manager, INTELSAT Satellite Services from January 1989 to
May 1991.
Dr. Evans has been President, COMSAT Laboratories since
September 1991. He was Vice President and Director, COMSAT
Laboratories from October 1983 to September 1991.
Mr. Lyons has been President, COMSAT Video Enterprises, Inc.
(CVE) since February 1992. He was Vice President and General
Manager, CVE from October 1990 to January 1992. Prior to joining
the Corporation, he was with Marriott Corporation, serving as
National Director of Group Marketing from September 1989 to
October 1990 and Regional Director of Operations and National
Director of Group Sales from September 1988 to September 1989.
Mr. Mario has been President, COMSAT Mobile Communications
(CMC) since May 1991. He was Vice President and General Manager,
CMC from April 1988 to May 1991.
Mr. Thomas has been President, COMSAT RSI, Inc. since June
1994. Prior to the merger of Radiation Systems, Inc. (RSi), a
communications and radar systems manufacturing company, with
COMSAT, he was with RSi since 1965, serving as President,
Chairman of the Board, and Chief Executive Officer from June 1978
to June 1994.
Mr. Bell has been Vice President of Human Resources and
Organization Development since October 1993. Prior to joining
the Corporation, he was with American Express Worldwide
Technologies, serving as Vice President of Human Resources from
September 1992 to September 1993; and with US Sprint, serving as
Regional Director of Human Resources from October 1987 to August
1992.
Mr. Faulders has been Vice President and Chief Financial
Officer since February 1992. Prior to joining the Corporation, he
was with MCI Communications Corporation (MCI), serving as Senior
Vice President of Business Marketing from August 1991 to February
1992, Senior Vice President of Government Systems and Enterprise
Group from August 1990 to August 1991, and Vice President of
National Accounts for MCI Southeast from August 1988 to August
1990.
24
Mr. Zeger has been Vice President, General Counsel and
Secretary since August 1994. He was Vice President and General
Counsel from March 1992 to July 1994. He was Acting General
Counsel from September 1991 to March 1992 and Associate General
Counsel of the Corporation and Vice President, Law, World Systems
Division from February 1988 to September 1991.
Mr. Flower has been Controller since June 1992. He was Vice
President, Finance and Administration, CVE from May 1990 to June
1992. He was Vice President, Finance and Administration, World
Systems Division from August 1987 to May 1990.
Mr. Minami has been Treasurer since May 1993. Prior to
joining the Corporation, he was with Oxford Realty Services
Corp., a privately held investment/property management company,
serving as Senior Vice President, Finance and Administration and
Chief Financial Officer from December 1989 to April 1993.
25
PART II
Item 5. Market for the Registrant's Common Stock and Related
Stockholder Matters.
As of December 31, 1994, there were 46,811,242 shares of
Common Stock, without par value, of the Corporation (COMSAT
Common Stock) outstanding: 46,790,354 were Series I shares, held
by approximately 36,000 holders of record other than
communications common carriers; and 20,888 were Series II shares,
held by 35 common carriers.
The principal market for COMSAT Common Stock is the New York
Stock Exchange, where it is traded under the symbol "CQ."
COMSAT Common Stock is also traded on the Chicago Stock Exchange
and the Pacific Stock Exchange.
The Corporation's Transfer Agent, Registrar and Dividend
Disbursing Agent is The Bank of New York, 101 Barclay Street, New
York, New York.
The high and low sales prices of, and the dividends declared
on, each share of COMSAT Common Stock for the last two years are
as follows:
COMSAT
Common Stock*
------------------------
Calendar Year 1993 High Low Dividend
------------------------
First Quarter 27 7/8 23 3/4 .185
Second Quarter 31 5/8 27 1/4 .185
Third Quarter 31 7/8 26 3/4 .185
Fourth Quarter 35 1/4 27 1/2 .185
Calendar Year 1994
First Quarter 30 24 7/8 .185
Second Quarter 26 1/2 20 1/2 .185
Third Quarter 26 1/2 23 .195
Fourth Quarter 25 5/8 17 1/2 .195
* Prices reflect the two-for-one stock split which occurred in
June 1993.
26
Item 6. Selected Financial Data for the Registrant for Each of
the Last Five Fiscal Years.
FIVE YEAR FINANCIAL SUMMARY
In thousands,
except per share
information 1994 1993 1992 1991 1990
-----------------------------------------------------------------------------------
Summary of Operations
Revenues $826,899 $754,285 $688,093 $651,211 $563,462
Operating expenses 676,648 602,705 583,111 508,499 563,980
Operating income (loss) 150,251 151,580 104,982 142,712 (518)
Income (loss) from
continuing operations
before cumulative
effect of changes in
accounting principles 77,642 82,469 53,292 81,014 (9,045)
Cumulative effect of
changes in accounting
principles - 1,925 - (26,607) -
Net income (loss) 77,642 84,394 53,292 54,407 (9,045)
Dividends paid 33,547 30,410 27,837 25,867 25,219
Primary earnings (loss)
per share 1.64 1.79 1.16 1.22 (0.21)
Dividends paid per share 0.76 0.74 0.70 0.67 0.66
Balance Sheet Data
Total assets 1,975,992 1,773,513 1,654,985 1,469,516 1,300,683
Long-term debt 515,542 410,550 496,804 391,308 383,695
Stockholders' equity 826,916 763,440 702,292 657,783 619,150
Note:
As discussed in Note 2 to the financial statements, the
Corporation consummated its merger with Radiation Systems, Inc.
(RSi) in June 1994. The merger has been treated as a pooling of
interests for accounting purposes. Accordingly, information for
all periods prior to the merger has been restated to include RSi.
27
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
ANALYSIS OF OPERATIONS
Consolidated Operations
The corporation consummated its merger with Radiation
Systems, Inc. (RSi) on June 3, 1994. The merger has been
accounted for as a pooling of interests. Accordingly, the 1993
and 1992 financial statements have been restated to include RSi.
Consolidated revenues totaled $827 million in 1994, an
increase of $73 million above record 1993 revenues. Revenue
increases came from all business segments. The largest
improvement was in the Entertainment segment, where On Command
Video system installations grew substantially and revenues from
the Denver Nuggets improved. In addition, international venture
revenues as consolidated in the International Communications
segment increased more than threefold. Growth in 1993 revenues
of $66 million over 1992 was primarily attributable to improved
operating performance, particularly in COMSAT Mobile
Communications, which had higher traffic volumes, and the rapid
growth in On Command Video system installations. In addition,
the Denver Nuggets were consolidated for a full year in 1993
versus six months of 1992.
Operating income in 1994 was $150 million, a decline of $1
million from 1993. Results decreased as improved performances
from the Entertainment and Technology Services segments were more
than offset by merger and integration costs. As discussed in
Note 2 to the financial statements, the corporation recorded
nonrecurring charges to operations in 1994 of $7 million for
costs associated with the RSi merger.
Operating income for 1993 increased by $47 million over
1992. In 1992, the corporation announced a restructuring,
principally of its systems integration and video distribution
businesses. This resulted in a $39 million charge to operations
(see Note 14 to the financial statements). Operating income for
1993 increased by $8 million over 1992 excluding the provision
for restructuring. This improvement was based on strong
performance from the Mobile Communications segment and on cost
benefits from the restructuring.
Other income, net, declined in 1994 by $7 million from 1993
levels due to proceeds from corporate-owned life insurance
policies received in 1993 which did not recur in 1994, and to
lower equity profits associated with unconsolidated businesses.
Other income, net, improved in 1993 over 1992 due to the
insurance proceeds, improvement in profits from equity
investments, and the inclusion of the Denver Nuggets' losses in
other income in the first half of 1992.
28
Interest costs increased by $3 million in 1994 as interest
rates and borrowings increased. Interest costs in 1993 declined
slightly from the levels of 1992 based on lower borrowings and
lower interest rates. Capitalized interest continued to increase
over 1993 and 1992 levels as property under-construction balances
have continued to grow.
The corporation adopted Statement of Financial Accounting
Standards (SFAS) No. 109 in 1993. This standard requires that
deferred tax assets and liabilities be adjusted to reflect
current tax rates. The cumulative effect of adopting this
standard was to increase income by $2 million in 1993. In
addition, the corporation recorded a charge to income tax expense
of $3 million in 1993 under the new standard to reflect the
impact on the prior year's deferred tax accounts of the change in
Federal income tax rate to 35% from 34%.
Net income was $78 million in 1994, a reduction of $7
million from results in 1993. Earnings per share for 1994 were
$1.64, down from $1.79 in 1993. Merger and integration costs
reduced income in 1994 by $6 million, net of taxes, or $0.13 per
share. Excluding these costs, income was $84 million or $1.77
per share in 1994, versus $82 million or $1.75 per share in 1993
before the cumulative effect of the accounting change.
Income in 1993 before the cumulative effect of the
accounting change increased $29 million over the results for
1992. However, the provision for restructuring reduced the
corporation's income by $23 million, after tax, in 1992 or $0.51
per share. Absent this expense in 1992, and the accounting
change in 1993, income for 1993 increased $6 million or 7% over
1992.
Segment Operating Results
International Communications
In millions 1994 1993 1992
-------------------------------------------------------------------
Revenues $ 271 $ 250 $ 253
Operating income 89 90 97
International Communications includes COMSAT International
Ventures (CIV) and the FCC-regulated and non-regulated businesses
of COMSAT World Systems (CWS). CWS provides international voice,
data, video and audio communications as the statutory-designated
U.S. participant in the global INTELSAT satellite system. CIV
invests in and operates telecommunications businesses
internationally.
29
CWS's 1994 revenues increased 3% from 1993. Revenues from
full-time leased television services increased by 25%, while
short-term lease revenues, which were driven by world events
including the Winter Olympics and World Cup Soccer, rose 59%.
Revenues from new service offerings such as VSAT leases, digital
audio and wide-band mobile more than doubled in 1994. These
increases were partially offset by reduced revenues from voice
circuits, which declined 7% due to the anticipated conversion of
analog circuits to more efficient digital service, and to rate
reductions. The rate reductions, which went into effect in late
1993, were contained in long-term carrier agreements with AT&T,
MCI and Sprint, CWS's three largest international carrier
customers. CWS's share of revenues from the INTELSAT system also
declined, as expected, with the 1% reduction in the corporation's
ownership share in 1994.
The decline in CWS revenues in 1993 from 1992 levels
resulted primarily from anticipated full-time voice circuit
conversions from analog to more efficient digital circuits,
partially offset by increases in revenues from television
services.
CWS's 1994 operating income declined 3% from 1993. The
decrease was due to increased operating expenses, primarily
depreciation, which increased as a result of the launch of one
INTELSAT VII satellite in the fourth quarter of 1993 and two
INTELSAT VII satellites in 1994. Additionally, CWS's 1994
expenses increased due to two events designed to control future
staff costs: a voluntary early retirement offering at INTELSAT
($7 million), and a reduction in force within CWS ($1 million).
The 5% decline in operating results in 1993 versus 1992 was due
to the reduction in revenue discussed above.
CIV has business interests in telecommunication operations
in Latin America, Asia and Europe. Revenues from owned or
controlled ventures were consolidated for the first time in 1993,
adding 2% to segment revenues. In 1994, CIV's revenues grew more
than threefold and accounted for 7% of segment revenues. As
anticipated, CIV incurred operating losses of $5 million in 1994,
an improvement of $1 million over 1993. CIV's operating loss in
1993 was $2 million greater than in 1992. This was primarily
attributable to the operating losses of ventures which were
consolidated for the first time in 1993.
Mobile Communications
In millions 1994 1993 1992
------------------------------------------------------------------
Revenues $ 194 $ 190 $ 158
Operating income 48 49 37
This segment consists of COMSAT Mobile Communications (CMC),
which provides maritime, aeronautical and land mobile
communications services as the statutory-designated U.S.
participant in the Inmarsat satellite system.
30
CMC's overall telephone traffic minutes increased in 1994.
However, revenues were flat due to rate reductions and the
migration of traffic to less expensive, more efficient digital
services such as Standard-M. Continued traffic growth is
expected as the lower-cost digital Standard-M service dominates
new terminal commissionings in the next few years. The number of
Standard-M digital terminals in the marketplace at year end grew
to more than 4,000.
Telephone revenues declined about 8% from 1993 levels due in
part to rate reductions instituted in late 1993. Additionally,
the first nine months of 1993 included record traffic volumes due
to international events such as the conflict in Somalia. Telex
revenues declined 15% from 1993 levels. However, this decline
was partially offset by revenue growth of almost 60% generated
from smaller, less expensive Standard-C digital terminals.
Aeronautical system revenues grew 20% from 1993 levels. It is
anticipated that revenues from this market will continue to grow
as additional terminals, for which several airlines have already
committed, are installed on aircraft in the near future.
Revenues from service contracts with IDB Mobile
Communications, Inc. (IDB), American Mobile Satellite
Corporation (AMSC) and Inmarsat increased almost 48% over last
year due principally to additional capacity requirements.
Operating income for 1994 declined slightly from 1993.
Operating expenses increased about 3% year-to-year, attributable
mainly to depreciation on upgrades to earth station equipment
installed to meet traffic demand.
Revenue increases of 20% in 1993 over the 1992 levels were
across a broad range of services and were bolstered by
international events. Operating expenses increased by 17%,
largely attributable to higher depreciation and other traffic
related costs. Operating income improved by almost 30% in 1993
from 1992.
Entertainment
In millions 1994 1993 1992
-----------------------------------------------------------------
Revenues $ 157 $ 122 $ 86
Operating income 11 7 3
The Entertainment segment is comprised of COMSAT Video
Enterprises, Inc. (CVE) and On Command Video Corporation (OCV),
which provide video distribution and on-demand video
entertainment services to the hospitality industry, and video
distribution services to television networks. This segment also
includes the Denver Nuggets National Basketball Association (NBA)
franchise, and Beacon Communications Corp., a producer of
theatrical films and television programming.
The corporation increased its ownership of OCV to almost 80%
from 74% during 1994, and has consolidated OCV's results since
July 1992. In December 1994, CVE purchased substantially all of
the assets of Beacon Communications Corp.
31
Revenues from video programming provided to the hospitality
industry grew almost 35% in 1994 and 34% in 1993 as OCV and CVE
continued to install on-demand video systems manufactured by OCV
in newly contracted hotels and in hotels already served by CVE
that were converted to the OCV system. In 1994, the revenue
trend continued the pattern of 1993: the revenue decline from the
mid-priced hotel market was more than offset by the increase in
revenues from OCV's upscale hotels and from CVE hotels converted
to the OCV system. OCV doubled the number of rooms equipped
during 1994 while maintaining a substantial backlog of rooms to
be installed.
Revenues from video distribution services, for which the
primary customer is the National Broadcasting Company (NBC), rose
slightly in 1994. Revenue from these services remained flat in
1993 compared to 1992.
Revenues for the Denver Nuggets improved in 1994 due to
higher attendance and sponsor revenues and participation in the
first two rounds of the NBA playoffs. Revenues increased in 1993
due to improved attendance, ticket sales and sponsor revenues,
and a full year of consolidation versus six months in 1992.
Operating income in 1994 grew 62% over 1993. Gains in
operating results from the Denver Nuggets led to the improved
performance. Results from video programming and distribution
were unchanged from 1993. Operating income in 1993 improved 110%
over 1992 primarily due to improved performance from OCV and CVE
rooms converted to the OCV system.
Technology Services
In millions 1994 1993 1992
------------------------------------------------------------------
Revenues $ 219 $ 202 $ 205
Operating income 15 12 12
The Technology Services segment includes COMSAT Laboratories
and COMSAT RSI (CRSI), which designs, manufactures and integrates
a range of turnkey systems, subsystems and components for
advanced microwave communication, satellite communication, radar
and related applications. In addition, this segment provides
operations and maintenance, satellite construction monitoring and
applied research services.
Revenues in 1994 increased by $17 million, or 8%, over 1993.
Improvements came primarily from continued work on the VSAT rural
telephony program in Guatemala and the television and radio
distribution network in Cote d'Ivoire (Ivory Coast) as well as
from new projects to install cellular antennas in Argentina and
to provide digital upgrades to telephony equipment at a number of
earth stations internationally. In addition, 1994 revenues
reflected increased business interruption insurance proceeds
associated with tornado damage sustained in 1992 at the
corporation's facility in Florida, offset partially by lower U.S.
Government contract sales of military radar and air navigation
products. Revenues were also lower at
32
COMSAT Laboratories primarily due to the sale of a microwave
electronics group in 1993.
Operating profit in 1994 improved slightly as a result of
higher revenues noted above and the $2 million increase in
insurance income, offset in part by the costs associated with the
cancellation of a large infrastructure project in Kuwait. The
1994 sales mix was affected by less favorable U.S. Government
contracts and an increase in lower-margin commercial programs,
such as an Argentine cellular installation contract.
Revenues in 1993 declined from 1992 primarily as a result of
declining sales of military radar and other antenna products
under U.S. Government contracts, offset by improved sales from
new programs in Guatemala and the Ivory Coast and new sales
associated with the acquisition of Anghel Laboratories in January
1993 and an increase in business interruption insurance income.
Operating profit in 1993 was flat compared to 1992, due to
the combination of the lower sales noted above and a less
favorable sales mix of equipment contracts which contributed to a
decline in operating margins.
Outlook
The corporation continues to lead efforts to restructure
INTELSAT and Inmarsat as privatized commercial enterprises to
ensure that services offered on the INTELSAT and Inmarsat systems
remain competitive in tomorrow's marketplace. The rapid
evolution of telecommunications technology and increased
competition have made privatization necessary so that these
treaty-based organizations can become more flexible and
responsive to customer needs.
COMSAT World Systems and INTELSAT will be faced with
increased competition for the provision of satellite services
from new and existing satellites launched by separate systems
such as Pan American Satellite (PanAmSat) and Orion Network
Systems, Inc. In late 1993, the Federal Communications
Commission (FCC) substantially eliminated prior restrictions on
access of separate system satellite operators to the public
switched telephone network. This action, along with the FCC's
stated goal of eliminating all restrictions on separate satellite
systems by 1997, will increase competition.
Over the next few years, continuing increases in satellite
competition and the expected doubling of fiber optic cable
capacity available in the marketplace will put increased pressure
on service revenues and operating margins and could result in
some loss of market share. In addition, under CWS's long-term
service contracts, 1995 is the first year in which AT&T may
cancel certain circuits upon paying a termination charge and the
first year in which it is not obligated to activate additional
circuits.
33
CWS continues to be well positioned with long-term
agreements with major international carriers to provide cost-
competitive services for bulk usage beyond the year 2000. In
addition, CWS expects continued growth in several emerging
markets, particularly in international television distribution,
where new opportunities are being created in the marketplace.
Opportunities are also expanding for international VSAT services.
In addition to the ten satellites currently on order,
INTELSAT has signed a lease for capacity aboard the INSAT-2E
satellite in the Asia-Pacific region, planned for launch in 1997.
During 1994, INTELSAT launched two satellites and plans another
five launches in 1995. These new INTELSAT VII satellites, along
with the INTELSAT VIII series satellites, will offer higher-power
capabilities enabling CWS to remain competitive in this fast-
paced market.
COMSAT International Ventures plans to continue to manage
its current international businesses, as well as to pursue
investments in new telecommunications ventures. CIV expects to
invest up to $150 million in 1995 in strategic telecommunications
ventures, primarily in countries which are liberalizing their
telecommunications regulations.
In 1995, CIV's existing businesses are expected to be
profitable in the aggregate. However, new ventures and
acquisitions are expected to yield losses during the year. Thus,
the group anticipates only a small profit overall from its
operations before headquarters, management and administrative
costs.
COMSAT Mobile Communications will continue to expand its
service offerings and value-added products to meet customers'
growing needs. The increasing number of digital terminals with
improved operating efficiency and reduced service charges should
continue to provide traffic growth. The smaller digital
terminals should facilitate growth in the land mobile, small
commercial and pleasure boat, and business traveler markets.
Additionally, CMC has signed agreements to provide multi-channel
terminals to major airline customers to expand the aeronautical
service.
CMC will continue to face increasing competition from other
wireless communications services as well as from other members of
the Inmarsat system. In addition, the service contracts with
AMSC and IDB will expire at the end of 1995 and in September
1996, respectively. AMSC is scheduled to launch its own
satellite in 1995 and, if successful, the corporation does not
expect it to be a significant customer in 1996. The IDB contract
is a five-year contract and discussions have begun on renewing
the agreement.
34
CMC will build on its established position of leadership in
mobile satellite communications to evolve toward handheld
satellite service. The next generation of personal satellite
communications will be a six-pound, laptop computer-sized, "mini-
M" satellite terminal expected to be available for use in mid-
1996 via the Inmarsat satellite system. Mini-M will feature
greater convenience, global mobility management and unprecedented
affordability. This product will provide a bridge from the
briefcase-sized terminal of today to the small handheld terminals
expected by the year 2000.
As part of the corporation's international
telecommunications strategy, CMC has responsibility for the
corporation's investment of $147 million in Inmarsat-P (see Note
8 to the financial statements). This newly created company was
formed outside of the Inmarsat organization to allow a more
commercial focus than the current Inmarsat system. Inmarsat-P's
intermediate circular orbit (ICO) satellite system is to have 12
satellites and is expected to begin service in 1999 and be fully
operational by the year 2000. Inmarsat-P users would then be
able to communicate worldwide using handheld units similar to
cellular phones. The units are expected to cost less than $1,000
and operate through both satellite and cellular links.
The Entertainment segment will continue to derive a majority
of its revenues from the hospitality industry video distribution
business. Revenue and income growth are expected from the
continued installation of OCV systems in new properties as well
as in properties of qualified existing CVE customers. For those
properties receiving in-room video entertainment by satellite,
CVE has an agreement for free satellite capacity through 1995.
Beginning in 1996, additional operating costs may be required for
satellite distribution to these CVE properties.
Contracted revenues for video distribution services provided
to NBC will decrease by $12 million in 1995 and remain at that
level through the end of the contract in 1999, resulting in a
reduction of $12 million in annual operating income from this
service.
Continued improvement in the financial performance of the
Denver Nuggets is anticipated as additional season tickets and
sponsorships are sold. Further improvement in the Nuggets
operating performance will depend on the team's success in
reaching and remaining in the NBA playoffs. In addition, the
Nuggets will receive a share of franchise fees for two new NBA
expansion teams. The fees, which will total almost $10 million,
are expected to be received in the third quarter of 1995. The
collective bargaining agreement between the NBA and the NBA
Players Association expired before the beginning of the 1994-1995
NBA season. A "no strike, no lockout" agreement was reached for
the 1994-1995 season and it is anticipated that the league and
the Players Association will reach a new agreement without a
material impact on the corporation.
35
In January 1995, the corporation reached an agreement in
principle with the City and County of Denver to construct a
sports and entertainment complex in Denver, Colorado. The
19,000-seat, $132 million complex would be constructed by a
proposed joint venture between the corporation and The Anschutz
Corporation, and is subject to the negotiation of final
agreements with the city and the landowner. The arena will be
scheduled to open for the 1997-1998 NBA season. Each of the
venture partners would provide up to $30 million in equity during
the construction period, with the remainder to be financed with
debt, sponsorships and other sources.
Beacon Communications is expected to release two low-cost
feature films in the second half of 1995 and begin production on
two additional films for release in 1996. There is a significant
degree of variability in the performance of theatrical films.
Therefore, the effects of Beacon Communications operations on the
corporation's operating results are difficult to estimate.
The Technology Services segment, through CRSI, continues to
target the growing international markets for the building of
communication infrastructure equipment. CRSI products leverage
its own engineering and systems expertise, as well as the
technical capabilities of COMSAT Laboratories, primarily to
address the satellite and wireless communication systems
currently being implemented around the world, and the expected
new market for Personal Communication Systems. CRSI has
completed or is in the final stages of completion on several
large telecommunication infrastructure projects which provided
significant revenues in the first half of 1994. The company
expects that the research and development initiatives underway in
the first half of 1995, including new VSAT products from its
recently acquired Intelesys business unit, will contribute to
sales in the second half of 1995. Earnings in the first half of
1994 benefited from the receipt of the last business interruption
insurance proceeds associated with the 1992 tornado damage.
Absence of any such proceeds, together with the cancellation of a
significant infrastructure project in Kuwait during the fourth
quarter of 1994, are expected to hold down revenues and profits
in the first half of 1995.
ANALYSIS OF BALANCE SHEETS
Consolidated Balance Sheets
Assets. The corporation ended 1994 with $1,976 million of
assets, an increase of $202 million over 1993.
International Communications
In millions 1994 1993
---------------------------------------------------------------
Assets $ 885 $ 822
Property and equipment additions 137 117
36
International Communications segment property and equipment
additions are principally related to CWS's share of INTELSAT's
satellite programs for the VII, VII A and VIII series of
satellites. These new series of satellites, the first of which
was launched in 1993, will offer higher power and deliver better
performance characteristics to meet increasing demand from
customers worldwide.
CIV invested $18 million for new communications plant and
equipment in 1994. The majority of the investments were needed
to meet specific customer requirements for technologically
advanced applications in developing countries. The corporation
anticipates investing up to an additional $45 million in 1995 to
meet demand in existing ventures, and may invest additional
amounts if warranted by new opportunities.
Mobile Communications
In millions 1994 1993
------------------------------------------------------------------
Assets $ 421 $ 402
Property and equipment additions 55 51
Mobile Communications segment property and equipment
additions primarily relate to Inmarsat third-generation
satellites currently under construction. The first of the five
Inmarsat III series satellites is expected to be launched in
early 1996. These satellites will provide increased capacity to
meet growing demand for services in all four service regions.
A second CMC ground station in the Indian Ocean region began
service during 1994 to provide digital Standard-M and -B service.
Stations in California and Connecticut were also upgraded to
handle traffic under the new digital standards for Inmarsat M, B
and C terminals.
Entertainment
In millions 1994 1993
------------------------------------------------------------------
Assets $ 369 $ 258
Property and equipment additions 90 65
Entertainment segment additions to property and equipment
were primarily installations of on-demand video entertainment
systems for new hotel customers. With a large backlog of hotels
waiting for OCV system installations, the corporation expects to
make additional investments in these systems during 1995. The
corporation will also continue to purchase on-demand video
entertainment systems from OCV to convert a limited number of
hotels in CVE's existing satellite-serviced hotel base.
37
Technology Services
In millions 1994 1993
-----------------------------------------------------------------
Assets $ 147 $ 165
Property and equipment additions 4 7
Technology Services segment total assets declined in 1994
principally from collection of certain long-term government
contract receivables. Property and equipment additions for 1994
were primarily purchases of assets used to design, manufacture
and test antenna subassemblies and microwave components.
Requirements for new capital in 1995 are expected to be
comparable to 1994.
Corporate and Other
In millions 1994 1993
-----------------------------------------------------------------
Assets $ 155 $ 127
Property and equipment additions 1 3
Corporate and Other assets include investments in
unconsolidated businesses, corporate-owned life insurance
policies and certain land, property and equipment. Assets
increased in 1994 primarily due to the purchase of an equity
interest in Philippine Global Communications, Inc. (PhilCom),
offset by a reduction in the cash value of corporate-owned life
insurance policies.
Liabilities. During 1994, the corporation's share of long-
term debt issued by INTELSAT increased by $78 million as INTELSAT
issued $200 million of 6.625% Asian bonds due in March 2004 and
$200 million of 8.375% Eurobonds due in October 2004. The
corporation issued two medium-term notes under a $100 million
medium-term note program filed with the SEC in 1994. The two
notes totaling $32 million have rates of 8.05% to 8.66%. In
February 1995, the corporation issued a $5 million note at 8.5%
interest under the same program. The corporation repaid $70
million of 9.55% notes due in April 1994. The corporation's
short-term borrowings increased by $74 million from year-end 1993
to year-end 1994.
ANALYSIS OF CASH FLOWS, LIQUIDITY AND CAPITAL RESOURCES
Cash Flows
CWS, CMC and the Entertainment segment generated the
majority of the corporation's cash from operations. The
corporation made interest payments, net of amounts capitalized,
of $25 million and tax payments of $31 million.
The corporation made cash investments of $275 million for
property and equipment in 1994. Of this, $134 million was
invested by the International Communications businesses, $48
million by CMC and $89 million by CVE and OCV.
38
The corporation received approximately $14 million when its
share of INTELSAT declined from 20.9% to 20.1% in 1994; its share
of INTELSAT is again expected to decrease slightly during 1995.
The corporation also received approximately $4 million when its
share of Inmarsat declined from 23.0% to 22.4% in 1994. The
corporation's share of Inmarsat increased to 24.1% in February
1995 for an additional investment of $9 million.
A total of $53 million was used to purchase equity
interests, principally shares of PhilCom and other CIV ventures.
In addition, $36 million was invested in wholly owned
subsidiaries, primarily to purchase the assets of Beacon
Communications Corp., and $4 million was used to purchase shares
of OCV from minority shareholders. The corporation increased its
ownership share of OCV to 79.7% at December 31, 1994.
The corporation's investment in property and equipment in
1995 will be higher than in 1994. Investments in INTELSAT
satellites, international ventures, mobile terminal equipment,
OCV systems and entertainment property will increase over 1994
levels.
Quarterly dividends were $0.195 per share in the second half
of 1994, compared to $0.185 per share in 1993 and the first half
of 1994. During 1994 the corporation received $81 million in
proceeds from long-term debt issued by INTELSAT and $32 million
in proceeds from medium-term notes issued by the corporation.
Some of these proceeds were used to redeem or repay other long-
term debt obligations. In addition, the corporation issued
commercial paper totaling $74 million, net of repayments, in 1994
and borrowed $32 million against certain company-owned life
insurance policies. The corporation anticipates that it will
issue additional long-term debt during 1995.
Liquidity and Capital Resources
The corporation's working capital deficit improved by $11
million in 1994 as compared to 1993 principally due to the
increase in receivables and a reduction in amounts due to related
parties. This reduction is primarily attributable to advances
from INTELSAT funded by INTELSAT commercial paper in 1993. These
advances were reduced as a result of the 1994 INTELSAT bond issue
discussed above.
The corporation has access to short- and long-term financing
at favorable rates with an A rating from Standard and Poor's and
an A-2 from Moody's. A $200 million commercial paper program had
$121 million of borrowings outstanding as of December 31, 1994,
at an average interest rate of 6.1%. A $200 million credit
agreement, expiring in 1999, is a back-up to the corporation's
commercial paper program.
39
In addition, at year end, the corporation had two notes
totaling $32 million outstanding under a $100 million medium-term
note program. The medium-term note program is part of a $200
million debt securities shelf registration program initiated in
1994. Another $5 million note was issued in February 1995.
The corporation's debt-financing activities, as regulated by
the FCC, allow long-term financing up to 45% of total capital,
and up to $200 million of short-term borrowings.
The corporation expects operations to fund the majority of
the 1995 cash requirements and it is anticipated that additional
long-term debt will be required. In addition, the corporation is
reviewing other alternative sources of funding in an effort to
further strengthen its balance sheet. Working capital
requirements will continue to be met using commercial paper.
40
Item 8. Financial Statements and Supplementary Data.
INDEPENDENT AUDITORS' REPORT
To the Shareholders of
COMSAT Corporation:
We have audited the accompanying consolidated balance sheets of
COMSAT Corporation and its subsidiaries as of December 31, 1994
and 1993, and the related consolidated statements of income,
stockholders' equity and cash flow for each of the three years in
the period ended December 31, 1994. The consolidated financial
statements give retroactive effect to the merger of COMSAT
Corporation and subsidiaries and Radiation Systems, Inc. and
subsidiaries on June 3, 1994, which has been accounted for as a
pooling-of-interests as described in Note 2. Our audit also
included the financial statement schedule listed in the Index at
Item 14(a)2. These financial statements and the financial
statement schedule are the responsibility of the corporation's
management. Our responsibility is to express an opinion on these
financial statements and the financial statement schedule based
on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present
fairly, in all material respects, the financial position of
COMSAT Corporation and subsidiaries at December 31, 1994 and
1993, and the results of their operations and their cash flows
for each of the three years in the period ended December 31, 1994
after giving retroactive effect to the merger between COMSAT
Corporation and Radiation Systems, Inc. as described in Note 2,
in conformity with generally accepted accounting principles.
Also, in our opinion, such financial statement schedule, when
considered in relation to the basic consolidated financial
statements taken as a whole, presents fairly in all material
respects, the information set forth therein.
As discussed in Note 13 to the consolidated financial statements,
in 1993 the corporation changed its method of accounting for
income taxes to conform with Statement of Financial Accounting
Standards No. 109.
Deloitte & Touche LLP
Washington, D.C.
February 10, 1995
41
COMSAT CORPORATION AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
For the Years Ended December 31, 1994, 1993 and 1992
(In thousands, except per share amounts)
1994 1993 1992
-------- -------- --------
Revenues $826,899 $754,285 $688,093
-------- -------- --------
Operating expenses:
Cost of services 462,277 423,473 375,099
Depreciation and amortization 167,784 142,111 130,760
Research and development 16,369 15,302 17,123
General and administrative 22,851 21,819 21,168
Merger and integration costs 7,367 - -
Provision for restructuring - - 38,961
-------- -------- --------
Total operating expenses 676,648 602,705 583,111
-------- -------- --------
Operating income 150,251 151,580 104,982
Other income, net 2,348 9,765 4,592
Interest cost (48,940) (45,881) (46,792)
Interest capitalized 23,662 22,197 20,481
-------- -------- --------
Income before taxes and cumulative
effect of accounting change 127,321 137,661 83,263
Income tax expense (49,679) (55,192) (29,971)
-------- -------- --------
Income before cumulative
effect of accounting change 77,642 82,469 53,292
Cumulative effect of accounting
change for income taxes - 1,925 -
-------- -------- --------
Net income $ 77,642 $ 84,394 $ 53,292
======== ======== ========
Earnings per share:
Before cumulative effect of
accounting change $ 1.64 $ 1.75 $ 1.16
Cumulative effect of accounting
change - 0.04 -
-------- -------- --------
Net income $ 1.64 $ 1.79 $ 1.16
======== ======== ========
The accompanying notes are an integral part of these financial statements.
42
COMSAT CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1994 and 1993
(In thousands)
1994 1993
---------- ----------
ASSETS
Current assets:
Cash and cash equivalents $ 18,658 $ 16,230
Receivables 226,189 210,182
Inventories 21,933 19,328
Deferred income taxes 10,914 8,333
Other 20,546 19,873
---------- ----------
Total current assets 298,240 273,946
---------- ----------
Property and equipment 1,431,066 1,332,432
Investments 69,541 15,414
Goodwill 46,535 35,957
Franchise rights 39,119 41,084
Other assets 91,491 74,680
---------- ----------
Total assets $1,975,992 $1,773,513
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term obligations $ 7,115 $ 76,915
Commercial paper 121,356 47,233
Accounts payable and accrued liabilities 145,893 116,140
Due to related parties 36,750 56,601
Accrued interest 4,357 5,231
Income taxes payable 1,609 1,518
---------- ----------
Total current liabilities 317,080 303,638
---------- ----------
Long-term debt 515,542 410,550
Deferred income taxes 104,309 81,468
Deferred investment tax credits 18,489 22,151
Accrued postretirement benefit costs 50,817 50,014
Other long-term liabilities 112,824 120,879
Commitments and contingencies (notes 8, 9 & 16) - -
Minority interest 30,015 21,373
Stockholders' equity:
Common stock, without par value, 100,000 shares
authorized, 48,054 shares issued in 1994
and 48,404 in 1993 312,143 311,506
Preferred stock, 5,000 shares authorized,
no shares issued or outstanding - -
Retained earnings 532,229 488,090
Treasury stock, at cost, 1,243 shares in 1994
and 2,031 in 1993 (12,502) (21,473)
Unearned compensation (7,249) (10,891)
Other 2,295 (3,792)
---------- ----------
Total stockholders' equity 826,916 763,440
---------- ----------
Total liabilities and stockholders' equity $1,975,992 $1,773,513
========== ==========
The accompanying notes are an integral part of these financial statements.
43
COMSAT CORPORATION AND SUBSIDIARIES
CONSOLIDATED CASH FLOW STATEMENTS
For the Years Ended December 31, 1994, 1993 and 1992
(In thousands)
1994 1993 1992
-------- -------- --------
Cash flows from operating activities:
Net income $ 77,642 $ 84,394 $ 53,292
Adjustments for noncash expenses:
Depreciation and amortization 167,784 142,111 130,760
Cumulative effect of accounting change - (1,925) -
Provision for restructuring - - 38,961
Changes in operating assets and liabilities:
Receivables and other current assets (17,169) (21,047) (44,760)
Current liabilities (14,847) 32,199 (7,659)
Noncurrent liabilities 25,808 26,117 44,091
Other 3,509 (5,223) 1,873
-------- -------- --------
Net cash provided by operating activities 242,727 256,626 216,558
-------- -------- --------
Cash flows from investing activities:
Purchase of property and equipment (274,562) (234,552) (221,291)
Investments in unconsolidated businesses (53,397) (8,639) (10,268)
Purchase of subsidiaries, net of cash
acquired of $11,655 in 1992 (35,676) (3,140) (5,321)
Purchase of minority shares of subsidiaries (4,016) (12,606) -
Decrease in INTELSAT ownership 13,520 16,442 19,760
Decrease in Inmarsat ownership 3,573 4,771 886
Other (3,471) 4,529 (7,920)
-------- -------- --------
Net cash used in investing activities (354,029) (233,195) (224,154)
-------- -------- --------
Cash flows from financing activities:
Proceeds from issuance of long-term debt 112,296 32,745 207,013
Net short-term borrowings (repayments) 74,123 (562) 43,642
Borrowings against company-owned life
insurance policies 32,437 - -
Common stock issued 5,291 7,952 16,514
Proceeds from issuance of subsidiary's
common stock 1,486 11,582 -
Repayment of long-term debt (77,023) (40,481) (234,439)
Cash dividends paid (33,547) (30,410) (27,837)
Purchase of treasury stock - (5,968) -
Other (1,333) 6,164 (212)
-------- -------- --------
Net cash provided by (used for) financing
activities 113,730 (18,978) 4,681
-------- -------- --------
Net increase (decrease) in cash and
cash equivalents 2,428 4,453 (2,915)
Cash and cash equivalents, beginning of year 16,230 11,777 14,692
-------- -------- --------
Cash and cash equivalents, end of year $ 18,658 $ 16,230 $ 11,777
======== ======== ========
Supplemental cash flow information:
Interest paid, net of amount capitalized $ 24,880 $ 26,083 $ 30,376
Income taxes paid $ 30,639 $ 28,618 $ 26,409
Noncash financing of Inmarsat satellites $ 7,197 $ 6,200 $ 12,480
The accompanying notes are an integral part of these financial statements.
44
COMSAT CORPORATION AND SUBSIDIARIES
STATEMENTS OF CHANGES IN CONSOLIDATED STOCKHOLDERS' EQUITY
For the Years Ended December 31, 1994, 1993 and 1992
(In thousands)
Shares Shares Common Retained Treasury Unearned
Issued Outstanding Stock Earnings Stock Compensation Other
------------------------------------------------------------------------
Balance at
December 31, 1991 48,073 44,606 $286,118 $408,612 $(32,036) $(5,985) $ 1,074
Net income 53,292
Cash dividends (27,837)
Common Stock Issued:
Stock options and
restricted stock units 11 1,002 5,161 8,789
Employee stock purchase
plan 166 166 2,564
Stock options and restricted
stock awarded 68 4,278 620 (4,898)
Amortization of stock
incentive plan expense 3,929
Translation adjustment (2,458)
Other 348 721
------------------------------------------------------------------------
Balance at
December 31, 1992 48,250 45,842 298,469 434,067 (22,627) (6,233) (1,384)
Net income 84,394
Cash dividends (30,410)
Common stock issued:
stock options and
restricted stock units 407 1,018 3,810
Employee stock purchase
plan 154 154 3,153
Restricted stock awarded 348 5,322 3,312 (8,634)
Amortization of stock
incentive plan expense 3,291
Tax benefit on exercise of
stock options 3,544
Minimum pension liability
adjustment (2,301)
Purchase of treasury stock (378) (5,968)
Other 39 685 (107)
------------------------------------------------------------------------
Balance at
December 31, 1993 48,404 46,373 311,506 488,090 (21,473) (10,891) (3,792)
Net income 77,642
Cash dividends (33,547)
Common stock issued:
Stock options and
restricted stock units 105 233 808
Employee stock purchase
and 401k plans 257 257 5,455
Investors' plan 76 76 977
Amortization of stock
performance awards 1,420
Amortization of stock
incentive plan expense 2,868
Tax benefit on exercise of
stock options 715
Retirement of treasury stock (683) (8,163) 8,163
Translation adjustment 5,343
Other 44 774 744
------------------------------------------------------------------------
Balance at
December 31, 1994 48,054 46,811 $312,143 $532,229 $(12,502) $(7,249) $ 2,295
========================================================================
The accompanying notes are an integral part of these financial statements.
45
COMSAT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR EACH OF THE THREE YEARS IN THE PERIOD
ENDED DECEMBER 31, 1994
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies that have guided the
preparation of these financial statements are:
Principles of Consolidation. Accounts of COMSAT Corporation
and its majority-owned subsidiaries (the corporation) have
been consolidated. Significant intercompany transactions
have been eliminated. Minority interest on the balance
sheet is primarily comprised of the interest of other
shareholders of On Command Video Corporation (OCV). As of
December 31, 1994, the corporation owned 79.7% of OCV. The
minority interest share of the net income of consolidated
businesses is included in "Other income, net."
The corporation has consolidated its shares of the accounts
of the International Telecommunications Satellite
Organization (INTELSAT) and Inmarsat. The corporation's
ownership interests in INTELSAT and Inmarsat are based
primarily on the corporation's usage of these systems. As
of December 31, 1994, the corporation owned 20.1% of
INTELSAT and 22.4% of Inmarsat.
Revenue Recognition. Revenue from satellite services is
recognized over the period during which the satellite
services are provided. Revenue from long-term product,
system integration and related services contracts is
accounted for using the percentage-of-completion (cost-to-
cost) method. Revenue from other services is recorded as
services are provided.
Income Taxes and Investment Tax Credits. The corporation
adopted Statement of Financial Accounting Standards (SFAS)
No. 109, "Accounting for Income Taxes," effective January 1,
1993. This accounting standard requires the use of the
asset and liability approach for financial accounting and
reporting for income taxes.
The provision for income taxes includes taxes currently
payable and those deferred because of differences between
the financial statement and tax bases of assets and
liabilities. The corporation has earned investment tax
credits on certain INTELSAT and Inmarsat satellite costs.
These tax credits have been deferred and are being
recognized as reductions to the tax provision over the
estimated service lives of the related assets.
46
Earnings Per Share. Earnings per share are computed using
the average number of shares outstanding during each period,
adjusted for outstanding stock options, restricted stock
units and unissued restricted stock awards. The weighted
average number of shares for each year is 47,356,000 for
1994, 47,095,000 for 1993 and 45,875,000 for 1992. Earnings
per share and the weighted average number of shares
outstanding for 1992 have been adjusted for a two-for-one
stock split on June 1, 1993 (see Note 10).
Goodwill. The balance sheet includes goodwill related to
the acquisitions of OCV, the Denver Nuggets Limited
Partnership and other ventures. Goodwill is amortized over
15 to 25 years. Accumulated goodwill amortization was
$7,131,000 and $4,513,000 at December 31, 1994 and 1993,
respectively.
Franchise Rights and Other Assets. Franchise rights were
recorded in connection with the consolidation of the Nuggets
in 1992 and are being amortized over 25 years. The amounts
shown on the balance sheets are net of accumulated
amortization of $4,920,000 and $2,955,000 at December 31,
1994 and 1993, respectively.
The cash surrender values of life insurance policies (net of
loans) totaling $12,784,000 and $40,849,000 at December 31,
1994 and 1993, respectively, are included in "Other assets."
Other income on the income statement includes the increases
in the cash surrender values of these policies.
Additionally, other income for 1993 includes income of
$4,131,000 ($3,137,000 net of tax) from the death benefit
proceeds of corporate-owned policies.
Cash Flow Information. The corporation considers highly
liquid investments with a maturity of three months or less
at the time of purchase to be cash equivalents.
New Accounting Pronouncements. SFAS No. 115, "Accounting
for Certain Investments in Debt and Equity Securities," was
issued in May 1993 and was adopted by the corporation in
1994. This statement requires that certain investments in
debt or equity securities be carried on the balance sheet at
fair value. The effect of adopting this statement is not
material to the corporation as of December 31, 1994.
Statement Presentation. The financial statements for 1993
and 1992 have been restated for the merger accounted for as
a pooling of interests as discussed in Note 2. Certain
amounts have been reclassified to conform with the current
year's presentation.
47
2. MERGER WITH RADIATION SYSTEMS, INC.
On June 3, 1994, the corporation consummated its merger with
Radiation Systems, Inc. (RSi), based in Sterling, Virginia.
RSi designs, manufactures and integrates satellite earth
stations, advanced antennas and other turnkey systems for
telecommunications, radar, air traffic control and military
uses.
Each share of RSi's common stock was converted into 0.780 of
a share of the corporation's common stock. A total of
6,147,000 shares of the corporation's common stock were
issued for RSi's common stock. The January 1994 merger
agreement stipulated that each share of RSi's common stock
would be exchanged for $18.25 in the corporation's common
stock, based on the average closing price of the
corporation's stock during the 20 trading days ending five
trading days before the closing of the transaction. The
agreement also provided that in no event would a share of
RSi common stock be exchanged for less than 0.638 or more
than 0.780 of a share of the corporation's common stock.
The merger has been accounted for as a pooling of interests.
Accordingly, the 1993 and 1992 financial statements have
been restated to include RSi. Prior to the merger, RSi
reported on a June 30 fiscal year basis. The accompanying
financial statements include RSi's financial statements
restated on a calendar year basis. There were no
significant intercompany transactions between the two
companies prior to the merger. The corporation recorded
nonrecurring charges to operations in 1994 totaling
$7,367,000 ($6,269,000 net of taxes or $0.13 per share) for
merger and integration costs. These charges consisted of
$4,446,000 for investment banking, legal and other
professional fees, $2,226,000 for the costs associated with
closing a former RSi division and $695,000 for severance and
related costs.
48
Operating results of the separate companies for the periods
prior to the merger are as follows:
Six Months
Ended Year Ended
In thousands, except June 30, December 31,
per share amounts 1994 1993 1992
----------------------------------------------------------------------
Revenues:
COMSAT $ 337,436 $ 640,390 $ 563,615
RSi 70,920 113,895 124,478
---------- ---------- ----------
$ 408,356 $ 754,285 $ 688,093
========== ========== ==========
Income before cumulative
effect of accounting change:*
COMSAT $ 39,217 $ 74,044 $ 42,924
RSi 6,695 8,425 10,368
---------- ---------- ----------
$ 45,912 $ 82,469 $ 53,292
========== ========== ==========
Net income:*
COMSAT $ 39,217 $ 75,282 $ 42,924
RSi 6,695 9,112 10,368
---------- ---------- ----------
$ 45,912 $ 84,394 $ 53,292
========== ========== ==========
Earnings per share:
Income before cumulative effect of
accounting change:*
Before merger $ 0.96 $ 1.82 $ 1.09
After merger $ 0.97 $ 1.75 $ 1.16
Net income:*
Before merger $ 0.96 $ 1.85 $ 1.09
After merger $ 0.97 $ 1.79 $ 1.16
* Excludes $4,264,000 of merger and integration costs
($4,114,000 after tax, or $0.08 per share) recorded in the
second quarter of 1994.
3. RECEIVABLES
Receivables at each year end are composed of:
In thousands 1994 1993
---------------------------------------------------------------
Commercial receivables $ 155,552 $ 121,391
Receivables under long-term contracts:
U.S. Government:
Amounts billed 5,530 13,946
Unbilled costs and accrued profits 34,265 47,651
Commercial customers:
Amounts billed 8,029 7,639
Unbilled costs and accrued profits 21,713 24,765
Related party receivables 8,889 3,846
Other 1,586 3,782
---------- ----------
Total 235,564 223,020
Less allowance for doubtful accounts (9,375) (12,838)
---------- ----------
Net $ 226,189 $ 210,182
========== ==========
49
Unbilled amounts represent accumulated costs and accrued
profits which will be billed at future dates in accordance
with contract terms and delivery schedules. All but
approximately $5,100,000 of these amounts are expected to be
collected within one year.
Unbilled amounts are net of progress payments of $55,563,000
in 1994 and $42,616,000 in 1993.
4. INVENTORIES
Inventories, stated at the lower of cost (first-in, first-
out) or market, consist of the following at each year end.
In thousands 1994 1993
---------------------------------------------------------------
Finished goods $ 5,228 $ 4,705
Work in progress 9,187 8,346
Raw materials 7,518 6,277
------------- -------------
Total $ 21,933 $ 19,328
============= =============
5. PROPERTY AND EQUIPMENT
Property and equipment include the corporation's shares of
INTELSAT and Inmarsat property and equipment.
In thousands 1994 1993
---------------------------------------------------------------
Property and equipment at cost:
Satellites $ 1,255,019 $ 1,182,924
Furniture, fixtures and
equipment 674,407 538,774
Buildings and improvements 121,596 122,369
Land 7,044 7,059
------------- -------------
Total 2,058,066 1,851,126
Less accumulated depreciation (990,596) (858,008)
------------- -------------
Net property and equipment in
service 1,067,470 993,118
Property and equipment under
construction:
INTELSAT satellites 222,793 222,223
Inmarsat third-generation
satellites 93,328 66,962
Other 47,475 50,129
------------- -------------
Total $ 1,431,066 $ 1,332,432
============= =============
Depreciation is calculated using the straight-line method
over the estimated service life of each asset. The service
lives for property and equipment are: satellites, 10 to 13
years; furniture, fixtures and equipment, 3 to 15 years;
buildings and improvements, 3 to 40 years.
Costs of satellites which are lost at launch or that fail in
orbit are carried, net of any insurance proceeds, in the
property accounts. The remaining net amounts are
depreciated over the estimated service life of a satellite
of the same series.
50
6. ACQUISITIONS AND INVESTMENTS
Beacon Communications Corp. In December 1994, the
corporation acquired the assets of Beacon Communications
Corp., a film and television production company based in Los
Angeles. The cost of this acquisition was $29,133,000. The
purchase agreement calls for future cash consideration of up
to $16,900,000 which is contingent on the production and
performance of motion pictures over the next five years.
Investments. In June 1994, the corporation acquired an
approximately 17% interest in Philippine Global
Communications, Inc. (PhilCom), a provider of international
communications services in the Philippines, for $42,141,000.
The corporation's share of PhilCom's income or losses is
recorded using the "equity method" of accounting and is
included in the "Other income, net" on the income statement.
The corporation has investments in other businesses that are
accounted for using the equity and cost methods of
accounting. These investments (including PhilCom in 1994)
totaled $69,541,000 and $15,414,000 at December 31, 1994
and 1993, respectively.
Rock Spring II Limited Partnership. The corporation entered
into a limited partnership to build and lease a new
headquarters facility. The corporation holds a 50% interest
in the partnership, primarily as a limited partner. The
managing general partner, a regional real estate investment
company, owns the remaining 50% interest in the partnership.
An affiliate of the managing general partner owns the
building site and has leased this site to the partnership.
The corporation's investment in the partnership is included
in the Investments line on the balance sheet.
The corporation relocated its headquarters operations to the
new building during the second quarter of 1993. The
corporation entered into a 15-year lease with the
partnership for the building starting April 1993 (see Note
8).
The partnership borrowed $27,000,000 in the form of a 26-
year mortgage at a fixed interest rate of 9.45% to cover
construction costs. As of December 31, 1994, the
corporation has guaranteed repayment of this loan. The
corporation's guarantee will be reduced to $2,700,000 after
satisfaction of certain contractual requirements which are
expected to be completed in 1995. Subsequently, the
corporation's guarantee will be reduced as the principal
balance is paid down and completely eliminated once the
outstanding loan balance is less than $24,300,000. The loan
balance was $26,978,000 as of December 31, 1994.
51
7. DEBT
The corporation, as regulated by the Federal Communications
Commission (FCC), is allowed to undertake long-term
borrowings of up to 45% of its total capital (long-term debt
plus equity) and $200,000,000 in short-term borrowings.
Commercial Paper. The corporation issues short-term
commercial paper with repayment terms of 90 days or less
under a $200,000,000 program. The corporation had
$121,356,000 and $43,233,000 in borrowings outstanding at
December 31, 1994 and 1993, respectively. The weighted
average interest rate on these borrowings was 6.1% and 3.4%
at December 31, 1994 and 1993, respectively.
Credit Facilities. The corporation has a $200,000,000
revolving credit agreement which expires in December 1999 as
a backup to the commercial paper program. There have been
no borrowings under this agreement. The corporation had a
$4,000,000 current note payable at December 31, 1993 under a
separate credit agreement which was terminated in connection
with the merger discussed in Note 2.
Long-Term Debt. Long-term debt including the corporation's
share of INTELSAT and Inmarsat debt at each year end
consists of:
In thousands 1994 1993
----------------------------------------------------------------------
8.125% notes due 2004 $ 160,000 $ 160,000
8.95% notes due 2001 75,000 75,000
9.55% notes due 1994 - 70,000
6.75% INTELSAT Eurobonds due 2000 30,194 31,344
7.375% INTELSAT Eurobonds due 2002 40,258 41,793
8.375% INTELSAT Eurobonds due 2004 40,258 -
6.625% INTELSAT Asian bonds due 2004 40,258 -
Inmarsat lease financing obligations 100,434 98,659
Medium-term notes, due 2006 interest
rates of 8.05% to 8.66% 32,000 -
ESOP debt 1,877 2,651
Other, net of discounts on notes payable 2,378 8,018
---------- ----------
Total 522,657 487,465
Less current maturities (7,115) (76,915)
---------- -----------
Total long-term debt $ 515,542 $ 410,550
========== ===========
In March 1994, INTELSAT issued $200,000,000 of 6.625% notes
payable. Interest is payable annually in arrears and the
principal is due March 22, 2004. Additionally, in October
1994, INTELSAT issued $200,000,000 of 8.375% notes payable.
Interest is payable annually in arrears and the principal is
due October 14, 2004. The corporation received its share of
the proceeds of these notes and has recorded its share of
the long-term debt.
52
In 1993, the corporation prepaid $30,000,000 of its 9.55%
notes with the proceeds from INTELSAT's 6.75% Eurobonds.
The remaining $70,000,000 balance of the 9.55% notes was
repaid in April 1994 and, accordingly, was classified as a
current liability on the December 31, 1993 balance sheet.
In July 1994, the corporation filed a shelf registration
statement with the Securities and Exchange Commission (SEC)
to issue up to $200,000,000 of debt securities. The
corporation also filed a prospectus supplement with the SEC
to issue up to $100,000,000 of such securities under a
"medium-term note program." The corporation issued two
medium-term notes totaling $32,000,000 in 1994 with rates of
8.05% to 8.66% and a $5,000,000 note (8.5% interest) in
February, 1995. The remaining $63,000,000 may be issued
from time to time, at fixed or floating interest rates, as
determined at the time of issuance.
The principal amount of debt (excluding the Inmarsat lease
financing obligation) maturing over the next five years is
$2,110,000 in 1995, $1,719,000 in 1996, $505,000 in 1997,
$305,000 in 1998 and $305,000 in 1999.
Inmarsat Lease Financing Obligations. Inmarsat borrowed
140,400,000 pounds sterling under a capital lease agreement to
finance the construction of second-generation Inmarsat
satellites. Inmarsat also entered into another capital
lease arrangement to finance the construction costs of its
third-generation satellites. As of December 31, 1994,
80,000,000 pounds sterling of the 197,000,000 pounds sterling
available for this purpose has been borrowed. The corporation's
share of these lease obligations is included in long-term debt.
Inmarsat has hedged its obligations through various foreign
exchange transactions to minimize the effect of fluctuating
interest and exchange rates (see Note 16).
The corporation's share of the payments under these lease
obligations for each of the next five years from 1995
through 1999 is $9,481,000, $10,506,000, $14,230,000,
$15,407,000 and $16,717,000, and $72,482,000 thereafter.
These payments include interest totaling $38,389,000 and a
current maturity of $5,005,000.
ESOP Debt. As discussed in Note 11, the corporation has an
Employee Stock Ownership Plan (ESOP). The ESOP has bank
notes payable outstanding which are guaranteed by the
corporation. Accordingly, these notes are reported as long-
term debt of the corporation. The ESOP debt includes an
8.75% note with quarterly principal and interest payments
through 1996 and a 10.95% note with quarterly principal and
interest payments through 1997.
53
8. COMMITMENTS AND CONTINGENCIES
Property and Equipment. As of December 31, 1994, the
corporation had commitments to acquire property and
equipment totaling $140,138,000. Of this total,
$117,787,000 is payable over the next three years. These
commitments are related principally to the purchase of
INTELSAT and Inmarsat satellites.
Employment and Consulting Agreements. The corporation has
employment and consulting agreements with certain officers,
coaches and players. Virtually all of these agreements
provide for guaranteed payments. Other contracts provide
for payments contingent upon the fulfillment of certain
terms and conditions. Amounts required to be paid under
such agreements total approximately $23,900,000 in 1995,
$25,200,000 in 1996, $22,700,000 in 1997, $19,000,000 in
1998, $9,300,000 in 1999 and $3,500,000 thereafter.
Leases. As discussed in Note 6, the corporation has a 15-
year lease which started April 1993 on its headquarters
building in Bethesda, Maryland. The corporation also has
leases of other property and equipment. Rental expense
under operating leases was $8,381,000 in 1994, $7,993,000 in
1993 and $4,253,000 in 1992. The future rental payments
under operating leases are $7,155,000 in 1995, $6,462,000 in
1996, $6,597,000 in 1997, $6,599,000 in 1998 and $5,621,000
in 1999.
Government Contracts. The corporation is subject to audit
and investigation by various agencies which oversee contract
performance in connection with the corporation's contracts
with the U.S. Government. Management believes that
potential claims from such audits and investigations will
not have a material adverse effect on the consolidated
financial statements.
Environmental Issue. The corporation is engaged in a
program to monitor a toxic solvent spill of limited scope at
the site of its former manufacturing subsidiary in
California. The corporation believes that it has complied
with the directions of state authorities to date, including
removing approximately 458 cubic yards of soil from the site
soon after the leak was discovered in 1986 and conducting
ongoing groundwater monitoring at the site. The corporation
has accruals to cover monitoring costs over the near term,
but it is unclear at this time whether or to what extent
groundwater remediation may be required.
Investment in Inmarsat Affiliate. In 1994, the corporation
committed to invest $114 million directly in a new satellite
system affiliated with Inmarsat. The corporation has also
committed to invest $33 million indirectly as its pro rata
share of Inmarsat's $150 million investment in the venture.
This new affiliate plans to construct, deploy and operate
spacecraft in intermediate circular orbit, and
interconnecting terrestrial facilities, for the provision of
worldwide mobile communications via handheld devices. In
two orders
54
released November 1994 and December 1994, the FCC ruled in a
contested proceeding that the corporation would be legally
qualified to participate directly in the new venture
provided that the corporation does not extend its statutory
role in Inmarsat to obtain exclusive U.S. rights to access
the venture's satellites. The corporation has petitioned
the U.S. Court of Appeals for the District of Columbia
Circuit to review the FCC ruling generally with regard to
the standard applied to determine the corporation's scope of
authority under the Inmarsat Act and particularly with
regard to the proviso on participating in the new venture.
At the same time, the corporation is acting to structure its
relationship with the new venture to enable it to comply
with the FCC proviso.
In consideration for the above-referenced Inmarsat
investment, the new venture will provide Inmarsat with
satellite capacity for the provision of specialized maritime
and aeronautical communications services. The corporation's
legal qualifications to participate in Inmarsat's
investments will be contingent on showing that Inmarsat's
planned operations are consistent with the corporation's
scope of authority under the Inmarsat Act, which the FCC has
ruled is limited to maritime communications and non-maritime
services ancillary thereto.
The corporation has been directed by the FCC to file an
application for authorization to participate in the new
venture directly and indirectly through its investment in
Inmarsat by May 1, 1995.
9. REGULATORY ENVIRONMENT AND LITIGATION
Regulatory Environment. Under the Communications Act of
1934 and the Satellite Act, as amended, the corporation is
subject to regulation by the FCC with respect to
communications services provided through the INTELSAT and
Inmarsat systems and the rates charged for those services.
Until 1985, the corporation was, with minor exceptions, the
sole U.S. provider of international satellite communications
services using the INTELSAT system. Since then, the FCC has
authorized several international satellite systems separate
from INTELSAT. These separate systems currently compete
against the corporation for voice, video and data traffic.
In 1993, the FCC substantially eliminated prior restrictions
on the ability of separate systems to offer public switched
telephony services, thereby increasing competition to the
corporation in the voice market. The U.S. Government has
established a goal of eliminating all restrictions on
competitive systems by 1997.
55
In 1993, the FCC initiated an audit of the corporation's
role as the U.S. signatory to Inmarsat and as a provider of
international mobile satellite services. In 1994, the FCC
completed its audit and informed the corporation that
earnings from international mobile satellite services do not
appear excessive, and the FCC does not intend to take
enforcement action based on the audit.
The corporation has received FCC authorization to
participate in the construction of five third-generation
Inmarsat satellites, despite opposition which argued that
the satellites are outside the corporation's scope of
authority under the Inmarsat Act on the basis that these
satellites are principally designed to serve land-based
users. The FCC postponed consideration of the scope of
authority contention until it acts on the corporation's
application to provide commercial services via the
satellites, which is planned to be filed in 1995. The
corporation believes that all requisite operating
authorizations with respect to these satellites will be
obtained.
Litigation. In 1989, Pan American Satellite (PanAmSat)
filed an antitrust suit against the corporation alleging
interference with PanAmSat's efforts to compete in the
international satellite communications market and seeking
trebled damages of approximately $1.5 billion. In 1991, a
U.S. Court of Appeals ruled that the corporation is immune
from antitrust suits in its role as a signatory to INTELSAT.
In February 1992, the U.S. Supreme Court denied PanAmSat's
request for a review of the lower court's decision. An
amended complaint was filed alleging that the corporation
violated antitrust laws in its business activities
purportedly outside of its role as a signatory to INTELSAT.
In March 1993, a U.S. District Court denied the
corporation's motion to dismiss the amended complaint and
allowed PanAmSat to proceed with discovery. In February
1994, PanAmSat submitted a report estimating its alleged
damages (before trebling) at a 1994 present value of
$227,436,000. Also in February 1994, PanAmSat filed a
motion with the District Court for acceptance of a third
amended and supplemental complaint that would add several
new claims and 15 new defendants to the suit, primarily as
alleged co-conspirators with the corporation. In June 1994,
the court denied PanAmSat's motion and ruled that discovery
be completed. 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. In the opinion of
management, the complaint against the corporation is without
merit, and the ultimate disposition of this matter will not
have a material effect on the corporation's financial
statements.
The corporation is defending an intellectual property
infringement suit initiated by Spectradyne, Inc. against its
COMSAT Video Enterprises, Inc. and On Command Video
Corporation subsidiaries in 1992, seeking damages in an
unspecified amount and injunctive relief. The initial
patent claims were
56
dismissed. Spectradyne thereafter twice
amended its complaint, first to substitute new patent
infringement claims along with claims that the corporation's
subsidiaries induced unnamed third parties to infringe a
copyrighted software interface, and then to substitute
direct copyright infringement claims for the inducement to
infringe claims. In 1994, a U.S. District Court granted
summary judgment dismissing all of these claims except one
copyright issue. The corporation believes that the suit is
without merit and that the ultimate disposition of this
matter will not have a material effect on the corporation's
financial statements.
10. STOCKHOLDERS' EQUITY
Effective June 1, 1993, the corporation's Articles of
Incorporation were amended to increase the number of
authorized shares of the corporation's common stock from
40,000,000 shares to 100,000,000 shares and to split each
share of common stock outstanding on June 1, 1993 into two
shares of common stock. Earnings per share and share
amounts for all prior periods have been restated to reflect
this stock split. The corporation's Articles of
Incorporation were also amended to increase the number of
authorized shares of the corporation's preferred stock from
1,000 shares to 5,000,000 shares and to permit preferred
stock to be convertible into any other class of stock. No
preferred stock is currently outstanding.
Treasury Stock. The corporation acquired 404,500 shares of
RSi common stock in 1993 for $5,098,000. Additionally, RSi
acquired 80,000 shares of its own common stock for $870,000.
These shares, which were equivalent to 378,000 shares of
COMSAT common stock, were accounted for as treasury stock
transactions as of December 31, 1993. These shares, in
addition to RSi's other treasury shares, were retired upon
consummation of the merger discussed in Note 2.
Accordingly, 683,000 shares of the corporation's common
stock with a total cost of $8,163,000 were retired in 1994.
Investors' Plus Plan. The corporation has a plan which
allows investors to purchase shares of common stock directly
from the corporation. In 1994, 76,000 shares were issued
with total proceeds of $977,000.
11. STOCK INCENTIVE PLANS
The corporation has stock incentive plans which provide for
the issuance of stock options, restricted stock awards,
stock appreciation rights and restricted stock units. A
total of 5,550,000 shares of common stock may be granted
under the current plans. As of December 31, 1994, 1,234,000
shares of the corporation's treasury stock and 750,000
unissued common shares were reserved for these plans. As of
December 31, 1994, no stock appreciation rights were
outstanding.
57
Stock Options. Under the current plans, the exercise price
for stock options may not be less than 50% of the fair
market value of the stock when granted. Options vest over
three years and expire after 15 years. Stock option
activity was as follows:
In thousands, Number of Exercise
except per share amounts Shares Price Range
-------------------------------------------------------------------
Balance at January 1, 1992 2,256 $ 5.97-19.23
Options granted 464 9.72-23.08
Options exercised (1,032) 5.97-19.22
Options canceled (22) 5.97-13.94
------- --------------
Balance at December 31, 1992 1,666 5.97-23.08
Options granted 1,288 16.99-30.31
Options exercised (408) 5.97-18.42
Options canceled (27) 5.97-27.03
------- --------------
Balance at December 31, 1993 2,519 5.97-30.31
Options granted 1,398 23.08-27.63
Options exercised (126) 5.97-25.41
Options canceled (49) 5.97-27.63
------- --------------
Balance at December 31, 1994 3,742 $ 5.97-30.31
Options exercisable at ======= ==============
December 31, 1994 1,377 $ 5.97-30.31
======= ==============
The exercise price of certain options granted prior to 1993
is equal to 50% of the market price on the grant date. The
cost of these awards, which is the 50% discount to market
when granted, was recorded as unearned compensation and is
shown as a separate component of stockholders' equity. This
unearned compensation is being amortized to expense over the
three-year vesting period.
The exercise price for options awarded after 1992 is equal
to the fair market value on the grant date. Accordingly, no
expense is recorded for these options.
Restricted Stock Awards. Restricted stock awards are shares
of stock that are subject to restrictions on their sale or
transfer. During 1993 and 1992, respectively, 348,000 and
68,000 restricted stock awards were granted, net of awards
forfeited. The 1993 awards vest over six years and the 1992
awards vest over five years. The market value of the shares
awarded was recorded as unearned compensation and is being
amortized to expense over the vesting period for each grant.
In 1994, 265,000 "performance-based" restricted stock awards
were granted. Grantees do not have record ownership of the
underlying shares of stock until the end of a two-year
performance period. The actual shares awarded will be based
upon the achievement of the applicable financial performance
targets. The shares issued will then be subject to
restrictions on their sale or transfer for three additional
years. The expected cost of these grants is being amortized
over five years. The 1994 amortization was recorded as
compensation expense of $1,420,000 and a corresponding
increase to stockholders' equity described as "amortization
of stock performance awards."
58
Unearned compensation has not been recorded for these grants
since actual shares have not been issued and the number of
shares to be issued is not yet known.
Restricted Stock Units. Restricted stock units entitle the
holder to receive a combination of stock and cash equal to
the market price of common stock for each unit, when vested.
These units vest over three years. During 1994, 1993 and
1992, respectively, 115,000, 49,000 and 42,000 restricted
stock units were granted. At December 31, 1994, 189,000
partially vested restricted stock units were outstanding.
The cost of these awards, which is the market value of the
units when vested, is amortized to expense over the three-
year vesting period. The amounts amortized to expense in
1994, 1993 and 1992 were $335,000, $1,538,000 and
$1,048,000, respectively.
Employee Stock Purchase Plan. Employees may purchase stock
at a discount through the corporation's Employee Stock
Purchase Plan. The purchase price of the shares is the
lower of 85% of the fair market value of the stock on the
offering date, or 85% of the fair market value of the stock
on the last business day of each month throughout the one-
year offering period. The offering date for 1995 purchases
was November 18, 1994, when 85% of the fair market value was
$16.74.
A total of 2,248,000 shares of the corporation's unissued
common stock has been reserved for this plan.
Employee Stock Ownership Plan. The corporation has an
Employee Stock Ownership Plan (ESOP) which was established
in 1988 by RSi for the benefit of eligible employees. The
ESOP has acquired 714,000 shares of common stock with bank
loan proceeds. The corporation makes periodic contributions
to the ESOP at least sufficient to make principal and
interest payments as they are due. Contributions to the
ESOP charged to expense totaled $864,000 in 1994, $1,049,000
in 1993 and $1,026,000 in 1992.
The corporation has guaranteed the ESOP's bank notes payable
and has reported the unpaid balance of these loans as a
liability of the corporation (see Note 7). An unearned ESOP
compensation amount, which is equal to the unpaid bank
loans, has been reported as a reduction to stockholders'
equity.
12. PENSION AND OTHER BENEFIT PLANS
The corporation has a non-contributory, defined benefit
pension plan for qualifying employees. Pension benefits are
based on years of service and compensation prior to
retirement.
59
The components of net pension expense for each year are:
In thousands 1994 1993 1992
---------------------------------------------------------------------
Service cost for benefits earned
during the year $ 3,719 $ 3,087 $ 3,583
Interest cost on projected benefit
obligation 6,817 7,044 6,556
Credit for actual return on pension
plan assets (624) (13,010) (5,197)
Net amortization and deferral (7,572) 5,427 (2,697)
-------- -------- --------
Net pension expense $ 2,340 $ 2,548 $ 2,245
======== ======== ========
In September 1992, the corporation offered an early
retirement program to some employees in connection with its
restructuring of certain operations (see Note 14). This
program provided enhanced retirement benefits and an option
for a lump sum payment of all benefits. The additional
pension expense for this program was $6,582,000 and is
included in the provision for restructuring in the 1992
income statement.
The following table shows the pension plan's obligations and
assets as well as the amount recognized in the
corporation's balance sheets at each year end.
In thousands 1994 1993
----------------------------------------------------------------------
Actuarial present value of benefit
obligations:
Vested benefit obligation $ 72,620 $ 88,271
========= =========
Accumulated benefit obligation $ 74,403 $ 90,981
========= =========
Actuarial present value of projected benefit
obligation for service rendered to date $ 87,347 $ 109,543
Pension plan assets at fair value 95,003 99,070
--------- ---------
Plan assets greater than (less than)
projected benefit obligation 7,656 (10,473)
Unrecognized net loss (gain) (9,459) 12,116
Unrecognized transition asset at January 1,
1986 being amortized over 11 years (4,818) (6,026)
--------- ---------
Net pension liability $ (6,621) $ (4,383)
========= =========
Assumed discount rate 8.5% 7.0%
Assumed rate of compensation increase 5.5% 5.0%
Expected rate of return on pension plan assets 9.0% 9.0%
The plan's assets consist primarily of common stock,
corporate and government bonds and short-term investments.
The corporation's policy is to fund the minimum actuarially
computed contributions required by law. The corporation
made a $102,000 cash contribution to the plan in 1994, and
$4,100,000 in 1993.
Supplemental Executive Retirement Plan. The corporation has
an unfunded supplemental pension plan for executives. The
expense for this plan was $2,976,000, $2,058,000 and
$1,917,000 for 1994, 1993 and 1992, respectively.
60
In accordance with the provisions of Financial Accounting
Standard No. 87, the corporation recorded a minimum plan
liability for the excess of the accumulated benefit
obligation over the accrued plan liability. This was
reported as a reduction to stockholders' equity of
$1,557,000 as of December 31, 1994 and $2,301,000 as of
December 31, 1993. These amounts are net of deferred income
taxes and net of an intangible asset recorded for the
unrecognized transition obligation.
The corporation's accrued liabilities for this plan were
$16,041,000 and $15,679,000 at December 31, 1994 and 1993,
respectively. As of December 31, 1994, the accumulated
benefit obligation was approximately $16,041,000, and the
projected benefit obligation was approximately $16,558,000,
assuming a discount rate of 8.5% and future salary increases
of 5.5%.
401(k) Plan. The corporation has a 401(k) plan for
qualifying employees. A portion of employee contributions
is matched by the corporation. Prior to 1994, these
matching contributions were made in cash. The corporation's
matching contributions for the years ended December 31, 1993
and 1992 were $3,237,000 and $2,860,000, respectively.
Starting in 1994, the matching contributions have been made
in shares of the corporation's common stock. During 1994,
79,000 shares of common stock with a total market value of
$1,941,000 were contributed to the plan.
Postretirement Benefits. The corporation provides health
and life insurance benefits to qualifying retirees. The
expected cost of these benefits is recognized during the
years in which employees render service.
The components of the net postretirement benefit expense for
each year were:
In thousands 1994 1993 1992
----------------------------------------------------------------------
Service cost for benefits earned
during the year $ 1,756 $ 1,898 $ 2,157
Interest cost on accumulated
postretirement benefit
obligation 2,867 3,518 3,762
Net amortization and deferral (1,221) (321) 232
-------- -------- --------
Net postretirement benefit expense $ 3,402 $ 5,095 $ 6,151
======== ======== ========
The early retirement program discussed earlier in this note
resulted in an additional postretirement benefit expense of
$2,107,000 in 1992.
61
The following table shows the plan's obligations as well as
the liability recognized in the corporation's balance sheet
at each year end.
In thousands 1994 1993
----------------------------------------------------------------------
Accumulated postretirement benefit obligation:
Retirees $ 20,598 $ 25,258
Fully eligible active participants 3,845 3,826
Other active participants 12,363 14,846
--------- ---------
Total 36,806 43,930
Unrecognized gain from plan changes 11,614 12,873
Unrecognized net gain (loss) 2,397 (6,789)
--------- ---------
Net postretirement benefit liability $ 50,817 $ 50,014
========= =========
Assumed discount rate 8.5% 7.0%
Assumed rate of compensation increase 5.5% 5.0%
In 1993, the corporation made several modifications to its
postretirement benefits program including higher participant
premium payments, higher deductibles and out-of-pocket
maximums and reduced benefits for certain participants.
Additionally, the corporation implemented a managed health
care program to better control costs. These changes
resulted in a reduction in the accumulated postretirement
benefit obligation and an unrecognized gain of $12,873,000
as of December 31, 1993.
A 10.0% increase in health care costs was assumed for 1995
with the rate decreasing 0.5% each year to an ultimate rate
of 6.0%. Increasing the assumed trend rate by 1.0% each
year would have increased the accumulated postretirement
benefit obligation as of December 31, 1994 by $4,647,000 and
the benefit expense for 1994 by $763,000.
13. INCOME TAXES
The corporation adopted SFAS No. 109, "Accounting for Income
Taxes," effective January 1, 1993. This accounting
statement changed the method for the recognition and
measurement of deferred tax assets and liabilities. The
cumulative effect of adopting SFAS No. 109 on the
corporation's financial statements was to increase income by
$1,925,000 ($0.04 per share) and was recorded in the first
quarter of 1993. Prior year financial statements were not
restated.
The components of income tax expense for each year are:
In thousands 1994 1993 1992
----------------------------------------------------------------------
Federal:
Current $ 28,655 $ 32,646 $ 25,349
Deferred 18,064 19,419 3,682
Investment tax credits (3,550) (3,627) (3,943)
State and local 6,510 6,754 4,883
--------- --------- ---------
Total $ 49,679 $ 55,192 $ 29,971
========= ========= =========
62
The difference between tax expense computed at the statutory
Federal tax rate and the corporation's effective tax rate
is:
In thousands 1994 1993 1992
----------------------------------------------------------------------
Federal income taxes computed at
the statutory rate $ 44,562 $ 48,182 $ 28,309
Reduction under gross change tax
method - - (2,694)
Investment tax credits (3,550) (3,627) (3,943)
Dispositions of assets - - 2,913
State income taxes, net of
Federal income tax benefit 4,227 4,326 2,547
Rate increase on prior year
deferred taxes - 2,977 -
Goodwill 920 670 707
Merger costs 1,556 - -
Other 1,964 2,664 2,132
--------- --------- ---------
Income tax expense $ 49,679 $ 55,192 $ 29,971
========= ========= =========
SFAS No. 109 requires that deferred tax liabilities and
assets be adjusted for the effect of a change in tax laws or
rates. Accordingly, the corporation recorded a charge to
income tax expense of $2,977,000 in the third quarter of
1993 to adjust prior years' deferred tax assets and
liabilities for an increase in the Federal income tax rate
from 34% to 35%.
The net current and net non-current components of deferred
tax accounts as shown on the balance sheet at December 31,
1994 and 1993 are:
In thousands 1994 1993
----------------------------------------------------------------------
Current deferred tax asset $ 10,914 $ 8,333
Non-current deferred tax liability (104,309) (81,468)
--------- ---------
Net liability $ (93,395) $ (73,135)
========= =========
The deferred tax assets and liabilities at December 31, 1994
and 1993 are:
In thousands 1994 1993
----------------------------------------------------------------------
Assets:
Postretirement benefits $ 22,947 $ 20,902
Accrued expenses 41,247 32,291
ITC carryforwards - 13,115
Alternative minimum tax credit 35,688 32,368
Contract revenue 8,432 7,135
Other 377 2,486
--------- ---------
Total deferred tax assets 108,691 108,297
--------- ---------
Liabilities:
Property and equipment (202,086) (179,376)
Other - (2,056)
--------- ---------
Total deferred tax liabilities (202,086) (181,432)
--------- ---------
Net liability $ (93,395) $ (73,135)
========= =========
The corporation's investment tax credit carryforwards have
been fully utilized as of December 31, 1994.
63
The Internal Revenue Service (IRS) has completed
examinations of the Federal income tax returns of the
corporation through 1989 and is currently examining Federal
income tax returns for 1990 through 1992. The corporation
has also amended its returns and filed claims for refunds
for 1979 through 1987. The IRS has denied these claims.
The corporation is contesting this denial by the IRS. In
the opinion of the corporation, adequate provision has been
made for income taxes for all periods through 1994.
14. PROVISION FOR RESTRUCTURING
In September 1992, the corporation recorded a $38,961,000
charge for restructuring costs. At that time, the
corporation announced its plans to realign business
activities, downsize certain functions, and reposition
COMSAT Video Enterprises, Inc. (CVE) to capitalize on the
growing market for on-demand entertainment. The
restructuring costs relate to headcount reductions
throughout the corporation and the elimination of the former
COMSAT Systems Division and the consolidation of its
operations with those of COMSAT Laboratories into a new
division, COMSAT Technology Services, as well as the
transfer of television distribution services from COMSAT
Systems Division to CVE. This charge consists of
$12,644,000 for early retirement and reduction in force
costs related to the reorganization and $26,317,000 for
equipment, property and other items.
15. BUSINESS SEGMENT INFORMATION
The corporation reports operating results and financial data
in four business segments: International Communications,
Mobile Communications, Entertainment and Technology
Services. The International Communications segment
consists of activities undertaken by the corporation in its
COMSAT World Systems business, including INTELSAT services.
This segment also includes the activities of COMSAT
International Ventures. The Mobile Communications segment
consists of activities undertaken by the corporation in its
COMSAT Mobile Communications business, including Inmarsat
services. The Entertainment segment includes entertainment
services and video distribution services to television
networks. The results for CVE, On Command Video
Corporation, the Denver Nuggets and Beacon Communications
Corp. are reported in the Entertainment segment. The
Technology Services segment includes the design and
manufacture of voice and data communications networks and
products, systems integration services, and applied research
and technology services and includes the operations of
COMSAT RSI and COMSAT Laboratories.
64
In thousands(1) 1994 1993 1992
-----------------------------------------------------------------------------------
Revenues(2):
International Communications $ 271,136 $ 249,935 $ 253,308
Mobile Communications 193,530 190,040 158,031
Entertainment(3) 156,846 121,814 86,217
Technology Services(2) 219,119 202,161 205,499
Eliminations and other corporate(3) (13,732) (9,665) (14,962)
----------- ----------- -----------
Total $ 826,899 $ 754,285 $ 688,093
=========== =========== ===========
Operating income (loss):
International Communications $ 88,534 $ 89,795 $ 96,507
Mobile Communications 47,850 48,766 37,418
Entertainment(3) 10,530 6,516 3,097
Technology Services 15,467 12,109 12,492
Merger and integration costs (7,367) - -
Provision for restructuring(4) - - (38,961)
Other corporate(3) (4,763) (5,606) (5,571)
----------- ----------- -----------
Total $ 150,251 $ 151,580 $ 104,982
=========== =========== ===========
Identifiable assets as of December 31:
International Communications $ 884,637 $ 822,034 $ 792,123
Mobile Communications 420,570 401,649 394,659
Entertainment(3) 368,904 257,718 195,662
Technology Services 147,015 165,011 155,600
Corporate and other assets(3)(5) 154,866 127,101 116,941
----------- ----------- -----------
Total $ 1,975,992 $ 1,773,513 $ 1,654,985
=========== =========== ===========
Property and equipment additions:
International Communications $ 136,525 $ 116,652 $ 120,833
Mobile Communications 55,103 50,586 83,099
Entertainment(3) 90,053 65,325 18,071
Technology Services 4,067 7,468 11,458
Corporate and other assets(3) 835 2,835 1,033
----------- ----------- -----------
Total $ 286,583 $ 242,866 $ 234,494
=========== =========== ===========
Depreciation and amortization:
International Communications $ 84,925 $ 73,636 $ 70,967
Mobile Communications 35,299 32,772 27,304
Entertainment(3) 38,010 25,329 19,519
Technology Services 6,880 7,916 10,531
Corporate and other assets(3) 2,670 2,458 2,439
----------- ----------- -----------
Total $ 167,784 $ 142,111 $ 130,760
=========== =========== ===========
(1) Segment information for 1993 and 1992 has been restated for
the merger with RSi as discussed in Note 2.
(2) Technology Services segment revenues include intersegment
sales totaling $8,625,000 in 1994, $10,132,000 in 1993 and
$19,500,000 in 1992. Intersegment sales for other segments
are not significant. On October 3, 1992, the corporation
sustained tornado damage at its Largo, Florida facility.
Revenues reported for the Technology Services segment include
business interruption insurance proceeds of $4,835,000 in
1994, $3,021,000 in 1993 and $1,572,000 in 1992.
(3) The Denver Nuggets results were reported in Eliminations and
other corporate activities prior to 1994. Segment results for
1993 and 1992 have been restated to report these results in
the Entertainment segment.
(4) If the 1992 provision for restructuring (see Note 14) had
been charged to segment operating income, the amounts
allocated to each segment would have been: International
Communications - $6,955,000; Mobile Communications -
$3,332,000; Entertainment - $14,146,000; Technology Services -
$10,240,000; and Other Corporate - $4,288,000.
(5) The corporation's investments in unconsolidated businesses
are included in Corporate and other assets.
65
Related Party Transactions and Significant Customers. The
corporation provides support services to INTELSAT and
support services and satellite capacity to Inmarsat. The
revenues from these services were $26,162,000 in 1994,
$23,190,000 in 1993 and $21,477,000 in 1992. These revenues
were recorded primarily in the International Communications
and Technology Services segments.
Customers comprising 10% or greater of the corporation's
revenues are:
In thousands 1994 1993 1992
-----------------------------------------------------------------------
U.S. Government $ 121,715 $ 115,446 $ 117,245
AT&T 100,096 117,582 135,499
16. FINANCIAL INSTRUMENTS AND OFF-BALANCE-SHEET RISKS
SFAS No. 107, which became effective in 1992, and SFAS No.
119, which became effective in 1994, require disclosures
about the fair value of financial instruments. In these
disclosures, fair values are estimates and do not
necessarily represent the amounts that would be received or
paid in an actual sale or settlement of the financial
instruments.
At December 31, 1994, the corporation was contingently
liable to banks for $26,214,000 for outstanding letters of
credit securing performance of certain contracts. As
discussed in Note 6, the corporation has guaranteed
repayment of the construction loan related to its
headquarters building. The corporation has other financial
guarantees totaling approximately $9,600,000 as of December
31, 1994. The majority of these guarantees expire in 1995
through 1999. The estimated fair value of these instruments
is not significant.
Inmarsat has entered into foreign currency contracts
designed to minimize exposure to exchange rate fluctuations
on fixed operating expenses denominated in British pounds
sterling. At December 31, 1994, Inmarsat had several
contracts maturing in 1995 through 1997 to purchase
87,500,000 pounds sterling for a total of $139,347,000. The
corporation's share of the estimated fair value of these
contracts, as determined by a bank, is an unrealized gain of
approximately $700,000 at December 31, 1994.
Inmarsat has entered into interest rate and foreign currency
swap arrangements to minimize the exposure to interest rate
and foreign currency exchange fluctuations related to its
satellite financing obligations. Inmarsat borrowed and is
obligated to repay pounds sterling. The pounds sterling
borrowed were swapped for U.S. dollars with an agreement to
exchange the dollars for pounds sterling in order to meet
the future lease payments. Inmarsat pays interest on the
dollars at an average fixed rate of 8.4%, and it receives
variable interest on the sterling amounts based on short-
term LIBOR rates. The differential to be paid or received
is accrued as interest rates change and is recognized over
the life of the agreements. The currency swap arrangements
have been designated as hedges and any gains or losses are
66
included in the measurement of the debt. The effect of
these swaps is to change the sterling lease obligation into
fixed interest rate dollar debt. As of December 31, 1994,
Inmarsat had $416,936,000 of swaps to be exchanged for
255,282,000 pounds sterling at various dates through 2006.
Inmarsat is exposed to loss if one or more of the
counterparties defaults. However, Inmarsat does not
anticipate non-performance by the counterparties as all are
major financial institutions. The corporation's share of
the estimated fair value of these swaps is an unrealized
loss of $3,713,000 at December 31, 1994. The fair value was
estimated by computing the present value of the dollar
obligations using current rates available for issuance of
debt with similar terms, and the current value of the
sterling at year-end exchange rates.
The fair value of long-term debt (excluding capitalized
leases) was estimated by computing present values of the
related cash flows using risk adjustments to U.S. Treasury
rates obtained from investment bankers.
December 31, 1994
-------------------------------
In thousands Book Amount Fair Value
--------------------------------------------------------------
8.125% notes $ 160,000 $ 156,010
8.95% notes 75,000 76,671
6.75% INTELSAT Eurobonds 30,194 28,370
7.375% INTELSAT Eurobonds 40,258 38,282
6.625% INTELSAT Asian bonds 40,258 35,700
The fair values of the remaining long-term debt not itemized
above and the corporation's other financial instruments are
approximately equal to their carrying values.
17. SUBSEQUENT EVENTS
Denver Sports Arena. In January 1995, the corporation,
through a proposed joint venture between the corporation and
The Anschutz Corporation, reached an agreement in principle
with the City and County of Denver pursuant to which the
joint venture would construct a sports and entertainment
complex in Denver, Colorado. The 19,000-seat arena's
construction is contingent on the negotiation of final
agreements with the city and the landowner. The arena would
be scheduled to open for the 1997-98 NBA season. The new
facility would generate additional revenue and augment fan
amenities to strengthen the Denver Nuggets franchise. The
arena construction costs are expected to total approximately
$132 million. The corporation would contribute up to $30
million during the three-year construction period and the
other partner would contribute a like amount. The remaining
construction costs would be financed with debt, sponsor
advances and other sources.
Debt. INTELSAT intends to issue $200 million of bonds in
the first quarter of 1995. The corporation will record its
share of the borrowings as long-term debt of approximately
$40 million when the bonds are issued.
67
Item 9. Disagreements on Accounting and Financial Disclosure.
None.
PART III
Except for the portion of Item 10 relating to Executive Officers
which is included in Part I of this Report, the information
called for by Items 10-13 is incorporated by reference from the
COMSAT - 1995 Annual Meeting of Shareholders - Notice and Proxy
Statement - (to be filed pursuant to Regulation 14A not later
than 120 days after the close of the fiscal year) which meeting
involves the election of directors, in accordance with General
Instruction G to the Annual Report on Form 10-K.
Item 10. Directors and Officers of the Registrant.
Item 11. Executive Compensation.
Item 12. Security Ownership of Certain Beneficial Owners and
Management.
Item 13. Certain Relationships and Related Transactions.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K.
(a) Documents filed as part of this Report.
1. Consolidated Financial Statements and Supplementary Data
of Registrant.
Page
a. Independent Auditors' Report 41
b. Consolidated Financial Statements of COMSAT
Corporation and Subsidiaries
(i) Consolidated Income Statements for the Years
Ended December 31, 1994, 1993 and 1992 42
(ii) Consolidated Balance Sheets as of
December 31, 1994 and 1993 43
(iii) Consolidated Cash Flow Statements for
the Years Ended December 31, 1994, 1993
and 1992 44
(iv) Statements of Changes in Consolidated
Stockholders' Equity for the Years Ended
December 31, 1994, 1993 and 1992 45
(v) Notes to Consolidated Financial Statements for
Each of the Three Years in the Period Ended
December 31, 1994 46-67
68
2. Financial Statement Schedule Relating to the Consolidated
Financial Statements of COMSAT Corporation for Each of
the Three Years in the Period Ended December 31, 1994.
Page
a. Independent Auditors' Report 41
b. Schedule II - Valuation and Qualifying Accounts 80
All Schedules except that listed above have been omitted
because they are not applicable or not required or
because the required information is included elsewhere in
the financial statements in this filing. Separate
financial statements and schedules of COMSAT Corporation
are omitted because the Corporation is primarily an
operating corporation and all subsidiaries included in
the consolidated financial statements, in the aggregate,
do not have minority equity interests and indebtedness to
any person other than the Corporation and its
consolidated subsidiaries in amounts which together
exceed 5 percent of the total assets shown by the
consolidated statements in this filing.
(b) Reports on Form 8-K.
A report on Form 8-K dated October 27, 1994 was filed by the
Registrant to file the press release reporting certain
developments in the Registrant's Entertainment segment,
including a definitive agreement to purchase the assets of
Beacon Communications Corp., a film and television
production company, and a memorandum of understanding with
The Anschutz Corporation regarding construction of a new
sports and entertainment complex in Denver.
A report on Form 8-K dated November 3, 1994, as amended on
Form 8-K/A dated November 3, 1994, was filed by the
Registrant to file (a) a press release describing the
Registrant's financial results for the quarter ended
September 30, 1994 and (b) a press release describing
certain strategic initiatives of the Registrant.
(c) Exhibits (listed according to the number assigned in the
table in Item 601 of Regulation S-K).
Exhibit No. 3 - Articles of Incorporation and By-laws.
a. Articles of Incorporation of Registrant, composite copy,
as amended through June 1, 1993. (Incorporated by
reference from Exhibit No. 4(a) to Registrant's
Registration Statement on Form S-3 (No. 33-51661) filed
on December 22, 1993).
b. By-laws of Registrant, as amended through January 17,
1995.
69
c. Regulations adopted by Registrant's Board of Directors
pursuant to Section 5.02(c) of Registrant's Articles of
Incorporation. (Incorporated by reference from Exhibit
No. 3(c) to Registrant's Report on Form 10-K for the
fiscal year ended 1992.)
Exhibit No. 4 - Instruments defining the rights of security
holders, including indentures.
a. Specimen of a certificate representing Series I shares
of Registrant's Common Stock, without par value,
registered under Section 12 of the Securities Exchange
Act of 1934, which are held by citizens of the United
States. (Incorporated by reference from Exhibit No.
4(a) to Registrant's Report on Form 10-K for the fiscal
year ended December 31, 1993.)
b. Specimen of a certificate representing Series I shares
of Registrant's Common Stock, without par value,
registered under Section 12 of the Securities Exchange
Act of 1934, which are held by aliens. (Incorporated by
reference from Exhibit No. 4(b) to Registrant's Report
on Form 10-K for the fiscal year ended December 31,
1982.)
c. Specimen of a certificate representing Series II shares
of Registrant's Common Stock, without par value,
registered under Section 12 of the Securities Exchange
Act of 1934. (Incorporated by reference from Exhibit No.
4(c) to Registrant's Report on Form 10-K for the fiscal
year ended December 31, 1982.)
d. Standard Multiple-Series Indenture Provisions, dated
March 15, 1991. (Incorporated by reference from Exhibit
No. 4(a) to Registrant's Registration Statement on Form
S-3 (No. 33-39472) filed on March 15, 1991.)
e. Indenture dated as of March 15, 1991 between Registrant
and The Chase Manhattan Bank, N.A. (Incorporated by
reference from Exhibit No. 4(b) to Registrant's
Registration Statement on Form S-3 (No. 33-39472) filed
on March 15, 1991.)
f. Supplemental Indenture, dated as of June 29, 1994, from
the Registrant to The Chase Manhattan Bank, N. A.
(Incorporated by reference from Exhibit No. 4(c) to
Registrant's Registration Statement on Form S-3 (No. 33-
54369) filed on June 30, 1994.)
70
g. Officers' Certificate pursuant to Section 3.01 of the
Indenture, dated as of March 15, 1991, from the
Registrant to the Chase Manhattan Bank (National
Association), as Trustee, relating to the authorization
of $75,000,000 aggregate principal amount of
Registrant's 8.95% Notes Due 2001 (with form of Note
attached). (Incorporated by reference from Exhibit No.
4 to Registrant's Current Report on Form 8-K filed on
May 15, 1991.)
h. Officers' Certificate pursuant to Section 3.01 of the
Indenture, dated as of March 15, 1991, from the
Registrant to the Chase Manhattan Bank (National
Association), as Trustee, relating to the authorization
of $160,000,000 aggregate principal amount of
Registrant's 8.125% Debentures Due 2004 (with form of
Debenture attached). (Incorporated by reference from
Exhibit No. 4 to Registrant's Current Report on Form 8-K
filed on April 9, 1992.)
i. Officers' Certificate pursuant to Section 3.01 of the
Indenture, dated as of March 15, 1991, as supplemented
by the Supplemental Indenture, dated as of June 29,
1994, from the Registrant to the Chase Manhattan Bank
(National Association), as Trustee, relating to the
authorization of $100,000,000 aggregate principal amount
of Registrant's Medium Term Notes, Series A (with forms
of Notes attached).
Exhibit No. 10 - Material Contracts
a. Agreement Relating to the International
Telecommunications Satellite Organization (INTELSAT) by
Governments, which entered into force on February 12,
1973. (Incorporated by reference from Exhibit No. 10(a)
to Registrant's Report on Form 10-K for the fiscal year
ended December 31, 1980.)
b. Operating Agreement Relating to the International
Telecommunications Satellite Organization (INTELSAT) by
Governments which entered into force on February 12,
1973. (Incorporated by reference from Exhibit No. 10(b)
to Registrant's Report on Form 10-K for the fiscal year
ended December 31, 1980.)
c. Agreement dated August 15, 1975, among COMSAT General
Corporation, RCA Global Communications, Inc., Western
Union International, Inc. and ITT World Communications,
Inc. relating to the establishment of a joint venture
for the purpose of participating in the ownership and
operation of a maritime communications satellite system
and Amendment Nos. 1-4 and Amendment No. 5 dated March
24, 1980. (Incorporated by reference from Exhibit No.
10(p) to Registrant's Report on Form 10-K for the fiscal
year ended December 31, 1980.)
71
(i) Amendment No. 6 dated September 1, 1981.
(Incorporated by reference from Exhibit No.
10(p)(ii) to Registrant's Report on Form 10-K for
the fiscal year ended December 31, 1981.)
d. Convention on the International Maritime Satellite
Organization (INMARSAT) dated September 3, 1976.
(Incorporated by reference from Exhibit No. 11 to
Registrant's Report on Form 10-K for the fiscal year
ended December 31, 1978.)
e. Operating Agreement on the International Maritime
Satellite Organization (INMARSAT) dated September 3,
1976. (Incorporated by reference from Exhibit No. 12 to
Registrant's Report on Form 10-K for the fiscal year
ended December 31, 1978.)
f.* Registrant's 1982 Stock Option Plan. (Incorporated by
reference from Exhibit No. 10(x) to Registrant's Report
on Form 10-K for the fiscal year ended December 31,
1981.)
g. Agreement dated October 6, 1983, between COMSAT General
Corporation and National Broadcasting Company for the
provision of satellite distribution network programming.
(Incorporated by reference from Exhibit No. 10(r) to
Registrant's Report on Form 10-K for the fiscal year
ended December 31, 1983.)
(i) Amendment dated September 1, 1992. (Incorporated by
reference from Exhibit No. 10(j)(i) to Registrant's
Report on Form 10-K for the fiscal year ended
December 31, 1992.)
h.* Registrant's Insurance and Retirement Plan for
Executives adopted by Registrant's Board of Directors on
June 21, 1985, as amended by the Board of Directors on
July 15, 1993. (Incorporated by reference from Exhibit
No. 10(h) to Registrant's Report on Form 10-K for the
fiscal year ended December 31, 1993.)
i.* Registrant's 1986 Key Employee Stock Plan.
(Incorporated by reference from Exhibit No. 10(g) to
Registrant's Registration Statement on Form S-4 (File
No. 33-9966) filed on November 4, 1986.)
j.* Registrant's Non-Employee Directors Stock Option Plan
adopted by Registrant's Board of Directors on January
15, 1988 and approved by Registrant's shareholders on
May 20, 1988. (Incorporated by reference from Exhibit
No. 10(h) to Registrant's Report on Form 10-K for the
fiscal year ended December 31, 1987.)
(i) Amendment No. 1 dated March 16, 1990. (Incorporated
by reference from Exhibit No. 10 (g)(i) to
Registrant's Report on Form 10-K for the fiscal year
ended December 31, 1989.)
72
(ii) Amendment No. 2 dated January 15, 1993.
(Incorporated by reference from Exhibit No.
10(k)(ii) to Registrant's Report on Form 10-K for
the fiscal year ended December 31, 1993.)
k. Agreement to Acquire and Lease (and Supplemental
Agreements thereto) dated September 28 and October 10,
1988, respectively, among the International Maritime
Satellite Organization (Inmarsat), the North Sea Marine
Leasing Company, British Aerospace Public Limited
Company, the European Investment Bank, Kreditanstalt
Fuer Wiederaufbau, European Investment Bank (as Agent
and as Trustee), Instituto Mobiliare Italiano, Credit
National, Hellenic Industrial Development Bank, and
Society Nationale de Credit a L'Industrie relating to
the financing of three Inmarsat spacecraft.
(Incorporated by Reference from Exhibit No. 3(a) to
Registrant's Report on Form 10-k for the fiscal year
ended December 31, 1988.)
l. Service Agreement, dated September 14, 1989, between
Registrant and Aeronautical Radio, Inc. relating to
satellite-based communications services. (Incorporated
by reference from Exhibit No. 10(y) to Registrant's
Report on Form 10-K for the fiscal year ended December
31, 1989.)
m. Agreement, dated January 22, 1990, between Registrant
and Kokusai Denshin Denwa Co., Ltd. for provision of
aeronautical services. (Incorporated by reference from
Exhibit No. 10(z) to Registrant's Report on Form 10-K
for the fiscal year ended December 31, 1990.)
(i) Amendment No. 1 dated May 20, 1993. (Incorporated
by reference from Exhibit No. 10(q)(i) to
Registrant's Report on Form 10-K for the fiscal year
ended December 31, 1993.)
n.* Registrant's 1990 Key Employee Stock Plan adopted by the
Board of Directors on March 16, 1990. (Incorporated by
reference from Exhibit No. 10 (p) to Registrant's Report
on Form 10-K for the fiscal year ended December 31,
1989.)
(i) Amendment No. 1 dated January 15, 1993.
(Incorporated by reference from Exhibit No. 10(r)(i)
to Registrant's Report on Form 10-K for the fiscal
year ended December 31, 1993.)
(ii) Amendment No. 2 dated January 16, 1994.
o. Agreement, dated May 25, 1990, between Registrant and
IDB Communications Group, Inc. (Incorporated by
reference from Exhibit No. 10(bb) to Registrant's Report
on Form 10-K for the fiscal year ended December 31,
1990.)
73
p. Amended and Restated Agreement, dated November 14, 1990,
of Limited Partnership of Rock Spring II Limited
Partnership. (Incorporated by reference from Exhibit
No. 10(a) to Registrant's Current Report on Form 8-K
filed on February 24, 1992.)
(i) Amended and Restated Lease Agreement, dated November
14, 1990, by and between Rock Spring II Limited
Partnership and Registrant. (Incorporated by
reference from Exhibit No. 10(b) to Registrant's
Current Report on Form 8-K filed on February 24,
1992.)
(ii) Amended and Restated Ground Lease Indenture, dated
November 14, 1990, between Anne D. Camalier
(Landlord) and Rock Spring II Limited Partnership
(Tenant). (Incorporated by reference from Exhibit
No. 10(c) to Registrant's Current Report on Form 8-K
filed on February 24, 1992.)
q. Finance Facility Contract (and Supplemental Agreements
thereto), dated December 20, 1991, among the
International Maritime Satellite Organization
(Inmarsat), Abbey National plc, General Electric
Technical Services Company, Inc., European Investment
Bank, Kreditanstalt Fuer Wiederaufbau, Instituto
Mobiliare Italiano S.p.A., Credit National, Societe
Nationale de Credit a L'Industrie,
Finansieringsinstituttet for Industri OG Haandvaerk A/S,
De Nationale Investeringsbank NV, and Osterreichische
Investitionkredit Aktiengesellschaft relating to the
financing of three Inmarsat spacecraft. (Incorporated
by reference from Exhibit No. 10 (dd) to Registrant's
Report on Form 10-K for the fiscal year ended December
31, 1991.)
r.* Registrant's Directors and Executives Deferred
Compensation Plan, as amended by the Board of Directors
on July 15, 1993. (Incorporated by reference from
Exhibit No. 10(v) to Registrant's Report on Form 10-K
for the fiscal year ended December 31, 1993.)
s. Service Agreement, dated April 2, 1992, between
Registrant and GTE Airfone, Incorporated, for the
provision of aeronautical satellite services.
(Incorporated by reference from Exhibit No. 10(r) to
Registrant's Report on Form 10-K for the fiscal year
ended December 31, 1990.)
t. Fiscal Agency Agreement, dated as of August 6, 1992,
between International Telecommunications Satellite
Organization and Morgan Guaranty Trust Company of New
York. (Incorporated by reference from Exhibit No. 10
(dd) to Registrant's Report on Form 10-K for the fiscal
year ended December 31, 1992.)
74
u. Fiscal Agency Agreement, dated as of January 19, 1993,
between International Telecommunications Satellite
Organization and Morgan Guaranty Trust Company of New
York. (Incorporated by reference from Exhibit No. 10
(ee) to Registrant's Report on Form 10-K for the fiscal
year ended December 31, 1992.)
v. Lease Agreement, dated June 8, 1993, between GTE
Airfone, Incorporated, United Airlines, Inc. and
Registrant for the provision and financing of
aeronautical satellite equipment. (Incorporated by
reference from Exhibit No. 10(aa) to Registrant's Report
on Form 10-K for the fiscal year ended December 31,
1993.)
w. Agreement dated July 1, 1993, between Registrant and
AT&T Easylink Services relating to exchange of telex
traffic. (Incorporated by reference from Exhibit No.
10(bb) to Registrant's Report on Form 10-K for the
fiscal year ended December 31, 1993.)
x. Agreement dated July 27, 1993, between the Registrant
and American Telephone & Telegraph Company relating to
utilization of space segment. (Incorporated by
reference from Exhibit No. 10(cc) to Registrant's Report
on Form 10-K for the fiscal year ended December 31,
1993.)
y. Agreement dated September 1, 1993, between Registrant
and MCI International, Inc. relating to exchange of
traffic. (Incorporated by reference from Exhibit No.
10(dd) to Registrant's Report on Form 10-K for the
fiscal year ended December 31, 1993.)
z. Agreement dated November 30, 1993, between the
Registrant and Sprint Communications Company L.P.
relating to utilization of space segment. (Incorporated
by reference from Exhibit No. 10(ee) to Registrant's
Report on Form 10-K for the fiscal year ended December
31, 1993.)
aa. Agreement dated December 10, 1993, between Registrant
and Sprint International relating to the exchange of
traffic. (Incorporated by reference from Exhibit No.
10(ff) to Registrant's Report on Form 10-K for the
fiscal year ended December 31, 1993.)
bb. Credit Agreement dated as of December 17, 1993 among
Registrant, NationsBank of North Carolina, N.A., Bank of
America National Trust and Savings Association, The
First National Bank of Chicago, The Chase Manhattan
Bank, N.A., The Sumitomo Bank, Limited, New York Branch,
Swiss Bank Corporation, New York Branch, as lenders, and
NationsBank of North Carolina, N.A., as agent.
(Incorporated by reference from Exhibit No. 10(gg) to
Registrant's Report on Form 10-K for the fiscal year
ended December 31, 1993.)
(i) Amendment No. 1 dated as of December 17, 1994.
75
cc. Agreement dated January 24, 1994, between MCI
International, Inc. and Registrant relating to
utilization of space segment. (Incorporated by
reference from Exhibit No. 10(ii) to Registrant's Report
on Form 10-K for the fiscal year ended December 31,
1993.)
dd. Agreement dated February 18, 1994, between Registrant
and AT&T relating to exchange of traffic. (Incorporated
by reference from Exhibit No. 10(jj) to Registrant's
Report on Form 10-K for the fiscal year ended December
31, 1993.)
ee. Fiscal Agency Agreement between International
Telecommunications Satellite Organization, Issuer, and
Bankers Trust Company, Fiscal Agent and Principal Paying
Agent, dated as of 22 March 1994. (Incorporated by
reference from Exhibit No. 10(kk) to Registrant's Report
on Form 10-K for the fiscal year ended December 31,
1993.)
ff. Distribution Agreement dated July 11, 1994 between
Registrant and CS First Boston Corporation, Salomon
Brothers Inc. and Nationsbanc Capital Markets, Inc., as
Distributors, of Registrant's Medium-Term Notes, Series
A. (Incorporated by reference from Exhibit No. 1 to
Registrant's Registration Statement on Form S-3 (No. 33-
54369) filed on June 30, 1994).
gg. Fiscal Agency Agreement between International
Telecommunications Satellite Organization, Issuer, and
Morgan Guaranty Trust Company of New York, Fiscal Agent
and Principal Paying Agent, dated as of 14 October 1994.
hh.* Registrant's 1995 Annual Incentive Plan adopted by
Registrant's Board of Directors on January 17, 1995.
ii. Fiscal Agency Agreement between International
Telecommunications Satellite Organization, Issuer, and
Morgan Guaranty Trust Company of New York, Fiscal Agent
and Principal Paying Agent, dated as of 28 February
1995.
*Compensatory plan or arrangement.
Exhibit No. 11 - Statement regarding computation of per share
earnings.
Exhibit No. 21 - Subsidiaries of the Registrant as of March 31,
1995.
Exhibit No. 23 - Consents of experts and counsel.
Consent of Independent Auditors dated March 27, 1995.
Exhibit No. 27 - Financial Data Schedule
76
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
COMSAT CORPORATION
(Registrant)
Date: March 30, 1995 By /s/ Allen E. Flower
(Allen E. Flower, Controller)
Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed below by each of the
following persons on behalf of the Registrant and in the capacity
and on the date indicated.
(1) Principal executive officer
Date: March 30, 1995 By /s/ Bruce L. Crockett
(Bruce L. Crockett, President
and Chief Executive Officer)
(2) Principal financial officer
Date: March 30, 1995 By /s/ C. Thomas Faulders, III
(C. Thomas Faulders, III, Vice
President and Chief Financial
Officer)
(3) Principal accounting officer
Date: March 30, 1995 By /s/ Allen E. Flower
(Allen E. Flower, Controller)
77
(4) Board of Directors
Date: March 30, 1995 By /s/ Melvin R. Laird
(Melvin R. Laird, Chairman and
Director)
By /s/ Lucy Wilson Benson
(Lucy Wilson Benson, Director)
By /s/ Rudy E. Boschwitz
(Rudy E. Boschwitz, Director)
By /s/ Edwin I. Colodny
(Edwin I. Colodny, Director)
By /s/ Bruce L. Crockett
(Bruce L. Crockett, Director)
By /s/ Frederick B. Dent
(Frederick B. Dent, Director)
By /s/ Neal B. Freeman
(Neal B. Freeman, Director)
By /s/Barry M. Goldwater
(Barry M. Goldwater, Director)
By /s/ Arthur Hauspurg
(Arthur Hauspurg, Director)
By /s/ Peter S. Knight
(Peter S. Knight, Director)
By /s/ Peter W. Likins
(Peter W. Likins, Director)
78
By /s/ Howard M. Love
(Howard M. Love, Director)
By /s/ Robert G. Schwartz
(Robert G. Schwartz, Director)
By /s/ C.J. Silas
(C. J. Silas, Director)
By /s/ Dolores D. Wharton
(Dolores D. Wharton, Director)
79
COMSAT CORPORATION AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 1994
(in thousands)
Balance at Balance at
Beginning Charged to End of
Of Year Expenses Deductions(a) Year
---------------------------------------------------------------------------
1992:
Allowance for loss on
accounts receivable $ 9,245 $ 4,677 $ 2,942 $ 10,980
========= ========= ========= =========
Allowance for loss on
investments $ 457 $ 1,000 $ 457 $ 1,000
========= ========= ========= =========
1993:
Allowance for loss on
accounts receivable $ 10,980 $ 3,525 $ 1,667 $ 12,838
========= ========= ========= =========
Allowance for loss on
investments $ 1,000 $ - $ - $ 1,000
========= ========= ========= =========
1994:
Allowance for loss on
accounts receivable $ 12,838 $ 2,428 $ 5,891 $ 9,375
========= ========= ========= =========
Allowance for loss on
investments $ 1,000 $ - $ 250 $ 750
========= ========= ========= =========
(a) Uncollectible amounts written off, recoveries of amounts
previously reserved, and other adjustments.
80
EXHIBIT INDEX
Exhibit
No. Description Page
----------------------------------------------------------------------------
3(a) Articles of Incorporation of Registrant, composite
copy, as amended through June 1, 1993.
(Incorporated by reference from Exhibit No. 4(a) to
Registrant's Registration Statement on Form S-3
(No. 33-51661) filed on December 22, 1993).
3(b) By-laws of Registrant, as amended through January
17, 1995. 89
3(c) Regulations adopted by Registrant's Board of
Directors pursuant to Section 5.02(c) of
Registrant's Articles of Incorporation.
(Incorporated by reference from Exhibit No. 3(c) to
Registrant's Report on Form 10-K for the fiscal
year ended 1992.)
4(a) Specimen of a certificate representing Series I
shares of Registrant's Common Stock, without par
value, registered under Section 12 of the
Securities Exchange Act of 1934, which are held by
citizens of the United States. (Incorporated by
reference from Exhibit No. 4(a) to Registrant's
Report on Form 10-K for the fiscal year ended
December 31, 1993.)
4(b) Specimen of a certificate representing Series I
shares of Registrant's Common Stock, without par
value, registered under Section 12 of the
Securities Exchange Act of 1934, which are held by
aliens. (Incorporated by reference from Exhibit
No. 4(b) to Registrant's Report on Form 10-K for
the fiscal year ended December 31, 1982.)
4(c) Specimen of a certificate representing Series II
shares of Registrant's Common Stock, without par
value, registered under Section 12 of the
Securities Exchange Act of 1934. (Incorporated by
reference from Exhibit No. 4(c) to Registrant's
Report on Form 10-K for the fiscal year ended
December 31, 1982.)
4(d) Standard Multiple-Series Indenture Provisions,
dated March 15, 1991. (Incorporated by reference
from Exhibit No. 4(a) to Registrant's Registration
Statement on Form S-3 (No. 33-39472) filed on March
15, 1991.)
4(e) Indenture dated as of March 15, 1991 between
Registrant and The Chase Manhattan Bank, N.A.
(Incorporated by reference from Exhibit No. 4(b) to
Registrant's Registration Statement on Form S-3
(No. 33-39472) filed on March 15, 1991.)
81
Exhibit
No. Description Page
----------------------------------------------------------------------------
4(f) Supplemental Indenture, dated as of June 29, 1994,
from the Registrant to The Chase Manhattan Bank, N.
A. (Incorporated by reference from Exhibit No. 4(c)
to Registrant's Registration Statement on Form S-3
(No. 33-54369) filed on June 30, 1994.)
4(g) Officers' Certificate pursuant to Section 3.01 of
the Indenture, dated as of March 15, 1991, from the
Registrant to the Chase Manhattan Bank (National
Association), as Trustee, relating to the
authorization of $75,000,000 aggregate principal
amount of Registrant's 8.95% Notes Due 2001 (with
form of Note attached). (Incorporated by reference
from Exhibit No. 4 to Registrant's Current Report
on Form 8-K filed on May 15, 1991.)
4(h) Officers' Certificate pursuant to Section 3.01 of
the Indenture, dated as of March 15, 1991, from the
Registrant to the Chase Manhattan Bank (National
Association), as Trustee, relating to the
authorization of $160,000,000 aggregate principal
amount of Registrant's 8.125% Debentures Due 2004
(with form of Debenture attached). (Incorporated by
reference from Exhibit No. 4 to Registrant's
Current Report on Form 8-K filed on April 9, 1992.)
4(i) Officers' Certificate pursuant to Section 3.01 of 116
the Indenture, dated as of March 15, 1991, as
supplemented by the Supplemental Indenture, dated
as of June 29, 1994, from the Registrant to the
Chase Manhattan Bank (National Association), as
Trustee, relating to the authorization of
$100,000,000 aggregate principal amount of
Registrant's Medium Term Notes, Series A (with
forms of Notes attached).
10(a) Agreement Relating to the International
Telecommunications Satellite Organization
(INTELSAT) by Governments, which entered into force
on February 12, 1973. (Incorporated by reference
from Exhibit No. 10(a) to Registrant's Report on
Form 10-K for the fiscal year ended December 31,
1980.)
10(b) Operating Agreement Relating to the International
Telecommunications Satellite Organization
(INTELSAT) by Governments which entered into force
on February 12, 1973. (Incorporated by reference
from Exhibit No. 10(b) to Registrant's Report on
Form 10-K for the fiscal year ended December 31,
1980.)
82
Exhibit
No. Description Page
----------------------------------------------------------------------------
10(c) Agreement dated August 15, 1975, among COMSAT
General Corporation, RCA Global Communications,
Inc., Western Union International, Inc. and ITT
World Communications, Inc. relating to the
establishment of a joint venture for the purpose of
participating in the ownership and operation of a
maritime communications satellite system and
Amendment Nos. 1-4 and Amendment No. 5 dated March
24, 1980. (Incorporated by reference from Exhibit
No. 10(p) to Registrant's Report on Form 10-K for
the fiscal year ended December 31, 1980.)
10(c)(i)Amendment No. 6 dated September 1, 1981.
(Incorporated by reference from Exhibit No.
10(p)(ii) to Registrant's Report on Form 10-K for
the fiscal year ended December 31, 1981.)
10(d) Convention on the International Maritime Satellite
Organization (INMARSAT) dated September 3, 1976.
(Incorporated by reference from Exhibit No. 11 to
Registrant's Report on Form 10-K for the fiscal
year ended December 31, 1978.)
10(e) Operating Agreement on the International Maritime
Satellite Organization (INMARSAT) dated September
3, 1976. (Incorporated by reference from Exhibit
No. 12 to Registrant's Report on Form 10-K for the
fiscal year ended December 31, 1978.)
10(f)* Registrant's 1982 Stock Option Plan. (Incorporated
by reference from Exhibit No. 10(x) to Registrant's
Report on Form 10-K for the fiscal year ended
December 31, 1981.)
10(g) Agreement dated October 6, 1983, between COMSAT
General Corporation and National Broadcasting
Company for the provision of satellite distribution
network programming. (Incorporated by reference
from Exhibit No. 10(r) to Registrant's Report on
Form 10-K for the fiscal year ended December 31,
1983.)
10(g)(i)Amendment dated September 1, 1992. (Incorporated
by reference from Exhibit No. 10(j)(i) to
Registrant's Report on Form 10-K for the fiscal
year ended December 31, 1992.)
10(h)* Registrant's Insurance and Retirement Plan for
Executives adopted by Registrant's Board of
Directors on June 21, 1985, as amended by the Board
of Directors on July 15, 1993. (Incorporated by
reference from Exhibit No. 10(h) to Registrant's
Report on Form 10-K for the fiscal year ended
December 31, 1993.)
83
Exhibit
No. Description Page
----------------------------------------------------------------------------
10(i)* Registrant's 1986 Key Employee Stock Plan.
(Incorporated by reference from Exhibit No. 10(g)
to Registrant's Registration Statement on Form S-4
(File No. 33-9966) filed on November 4, 1986.)
10(j)* Registrant's Non-Employee Directors Stock Option
Plan adopted by Registrant's Board of Directors on
January 15, 1988 and approved by Registrant's
shareholders on May 20, 1988. (Incorporated by
reference from Exhibit No. 10(h) to Registrant's
Report on Form 10-K for the fiscal year ended
December 31, 1987.)
10(j)(i)*Amendment No. 1 dated March 16, 1990. (Incorporated
by reference from Exhibit No. 10 (g)(i) to
Registrant's Report on Form 10-K for the fiscal
year ended December 31, 1989.)
10(j)(ii)*Amendment No. 2 dated January 15, 1993.
(Incorporated by reference from Exhibit No.
10(k)(ii) to Registrant's Report on Form 10-K for
the fiscal year ended December 31, 1993.)
10(k) Agreement to Acquire and Lease (and Supplemental
Agreements thereto) dated September 28 and October
10, 1988, respectively, among the International
Maritime Satellite Organization (Inmarsat), the
North Sea Marine Leasing Company, British Aerospace
Public Limited Company, the European Investment
Bank, Kreditanstalt Fuer Wiederaufbau, European
Investment Bank (as Agent and as Trustee),
Instituto Mobiliare Italiano, Credit National,
Hellenic Industrial Development Bank, and Society
Nationale de Credit a L'Industrie relating to the
financing of three Inmarsat spacecraft.
(Incorporated by Reference from Exhibit No. 3(a) to
Registrant's Report on Form 10-k for the fiscal
year ended December 31, 1988.)
10(l) Service Agreement, dated September 14, 1989,
between Registrant and Aeronautical Radio, Inc.
relating to satellite-based communications
services. (Incorporated by reference from Exhibit
No. 10(y) to Registrant's Report on Form 10-K for
the fiscal year ended December 31, 1989.)
10(m) Agreement, dated January 22, 1990, between
Registrant and Kokusai Denshin Denwa Co., Ltd. for
provision of aeronautical services. (Incorporated
by reference from Exhibit No. 10(z) to Registrant's
Report on Form 10-K for the fiscal year ended
December 31, 1990.)
84
Exhibit
No. Description Page
----------------------------------------------------------------------------
10(m)(i)Amendment No. 1 dated May 20, 1993. (Incorporated
by reference from Exhibit No. 10(q)(i) to
Registrant's Report on Form 10-K for the fiscal
year ended December 31, 1993.)
10(n)* Registrant's 1990 Key Employee Stock Plan adopted
by the Board of Directors on March 16, 1990.
(Incorporated by reference from Exhibit No. 10 (p)
to Registrant's Report on Form 10-K for the fiscal
year ended December 31, 1989.)
10(n)(i)*Amendment No. 1 dated January 15, 1993.
(Incorporated by reference from Exhibit No.
10(r)(i) to Registrant's Report on Form 10-K for
the fiscal year ended December 31, 1993.)
10(n)(ii)*Amendment No. 2 dated January 16, 1994. 150
10(o) Agreement, dated May 25, 1990, between Registrant
and IDB Communications Group, Inc. (Incorporated
by reference from Exhibit No. 10(bb) to
Registrant's Report on Form 10-K for the fiscal
year ended December 31, 1990.)
10(p) Amended and Restated Agreement, dated November 14,
1990, of Limited Partnership of Rock Spring II
Limited Partnership. (Incorporated by reference
from Exhibit No. 10(a) to Registrant's Current
Report on Form 8-K filed on February 24, 1992.)
10(p)(i)Amended and Restated Lease Agreement, dated
November 14, 1990, by and between Rock Spring II
Limited Partnership and Registrant. (Incorporated
by reference from Exhibit No. 10(b) to Registrant's
Current Report on Form 8-K filed on February 24,
1992.)
10(p)(ii)Amended and Restated Ground Lease Indenture, dated
November 14, 1990, between Anne D. Camalier
(Landlord) and Rock Spring II Limited Partnership
(Tenant). (Incorporated by reference from Exhibit
No. 10(c) to Registrant's Current Report on Form 8-
K filed on February 24, 1992.)
85
Exhibit
No. Description Page
----------------------------------------------------------------------------
10(q) Finance Facility Contract (and Supplemental
Agreements thereto), dated December 20, 1991, among
the International Maritime Satellite Organization
(Inmarsat), Abbey National plc, General Electric
Technical Services Company, Inc., European
Investment Bank, Kreditanstalt Fuer Wiederaufbau,
Instituto Mobiliare Italiano S.p.A., Credit
National, Societe Nationale de Credit a
L'Industrie, Finansieringsinstituttet for Industri
OG Haandvaerk A/S, De Nationale Investeringsbank
NV, and Osterreichische Investitionkredit
Aktiengesellschaft relating to the financing of
three Inmarsat spacecraft. (Incorporated by
reference from Exhibit No. 10 (dd) to Registrant's
Report on Form 10-K for the fiscal year ended
December 31, 1991.)
10(r)* Registrant's Directors and Executives Deferred
Compensation Plan, as amended by the Board of
Directors on July 15, 1993. (Incorporated by
reference from Exhibit No. 10(v) to Registrant's
Report on Form 10-K for the fiscal year ended
December 31, 1993.)
10(s) Service Agreement, dated April 2, 1992, between
Registrant and GTE Airfone, Incorporated, for the
provision of aeronautical satellite services.
(Incorporated by reference from Exhibit No. 10(r)
to Registrant's Report on Form 10-K for the fiscal
year ended December 31, 1990.)
10(t) Fiscal Agency Agreement, dated as of August 6,
1992, between International Telecommunications
Satellite Organization and Morgan Guaranty Trust
Company of New York. (Incorporated by reference
from Exhibit No. 10 (dd) to Registrant's Report on
Form 10-K for the fiscal year ended December 31,
1992.)
10(u) Fiscal Agency Agreement, dated as of January 19,
1993, between International Telecommunications
Satellite Organization and Morgan Guaranty Trust
Company of New York. (Incorporated by reference
from Exhibit No. 10 (ee) to Registrant's Report on
Form 10-K for the fiscal year ended December 31,
1992.)
10(v) Lease Agreement, dated June 8, 1993, between GTE
Airfone, Incorporated, United Airlines, Inc. and
Registrant for the provision and financing of
aeronautical satellite equipment. (Incorporated by
reference from Exhibit No. 10(aa) to Registrant's
Report on Form 10-K for the fiscal year ended
December 31, 1993.)
86
Exhibit
No. Description Page
----------------------------------------------------------------------------
10(w) Agreement dated July 1, 1993, between Registrant
and AT&T Easylink Services relating to exchange of
telex traffic. (Incorporated by reference from
Exhibit No. 10(bb) to Registrant's Report on Form
10-K for the fiscal year ended December 31, 1993.)
10(x) Agreement dated July 27, 1993, between the
Registrant and American Telephone & Telegraph
Company relating to utilization of space segment.
(Incorporated by reference from Exhibit No. 10(cc)
to Registrant's Report on Form 10-K for the fiscal
year ended December 31, 1993.)
10(y) Agreement dated September 1, 1993, between
Registrant and MCI International, Inc. relating to
exchange of traffic. (Incorporated by reference
from Exhibit No. 10(dd) to Registrant's Report on
Form 10-K for the fiscal year ended December 31,
1993.)
10(z) Agreement dated November 30, 1993, between the
Registrant and Sprint Communications Company L.P.
relating to utilization of space segment.
(Incorporated by reference from Exhibit No. 10(ee)
to Registrant's Report on Form 10-K for the fiscal
year ended December 31, 1993.)
10(aa) Agreement dated December 10, 1993, between
Registrant and Sprint International relating to the
exchange of traffic. (Incorporated by reference
from Exhibit No. 10(ff) to Registrant's Report on
Form 10-K for the fiscal year ended December 31,
1993.)
10(bb) Credit Agreement dated as of December 17, 1993
among Registrant, NationsBank of North Carolina,
N.A., Bank of America National Trust and Savings
Association, The First National Bank of Chicago,
The Chase Manhattan Bank, N.A., The Sumitomo Bank,
Limited, New York Branch, Swiss Bank Corporation,
New York Branch, as lenders, and NationsBank of
North Carolina, N.A., as agent. (Incorporated by
reference from Exhibit No. 10(gg) to Registrant's
Report on Form 10-K for the fiscal year ended
December 31, 1993.)
10(bb)(i)Amendment No. 1 dated as of December 17, 1994. 154
10(cc) Agreement dated January 24, 1994, between MCI
International, Inc. and Registrant relating to
utilization of space segment. (Incorporated by
reference from Exhibit No. 10(ii) to Registrant's
Report on Form 10-K for the fiscal year ended
December 31, 1993.)
87
Exhibit
No. Description Page
----------------------------------------------------------------------------
10(dd) Agreement dated February 18, 1994, between
Registrant and AT&T relating to exchange of
traffic. (Incorporated by reference from Exhibit
No. 10(jj) to Registrant's Report on Form 10-K for
the fiscal year ended December 31, 1993.)
10(ee) Fiscal Agency Agreement between International
Telecommunications Satellite Organization, Issuer,
and Bankers Trust Company, Fiscal Agent and
Principal Paying Agent, dated as of 22 March 1994.
(Incorporated by reference from Exhibit No. 10(kk)
to Registrant's Report on Form 10-K for the fiscal
year ended December 31, 1993.)
10(ff) Distribution Agreement dated July 11, 1994 between
Registrant and CS First Boston Corporation, Salomon
Brothers Inc. and Nationsbanc Capital Markets,
Inc., as Distributors, of Registrant's Medium-Term
Notes, Series A. (Incorporated by reference from
Exhibit No. 1 to Registrant's Registration
Statement on Form S-3 (No. 33-54369) filed on June
30, 1994).
10(gg) Fiscal Agency Agreement between International 163
Telecommunications Satellite Organization, Issuer,
and Morgan Guaranty Trust Company of New York,
Fiscal Agent and Principal Paying Agent, dated as
of 14 October 1994.
10(hh)* Registrant's 1995 Annual Incentive Plan adopted by 206
Registrant's Board of Directors on January 17,
1995.
10(ii) Fiscal Agency Agreement between International 222
Telecommunications Satellite Organization, Issuer,
and Morgan Guaranty Trust Company of New York,
Fiscal Agent and Principal Paying Agent, dated as
of 28 February 1995.
*Compensatory plan or arrangement.
Exhibit 11 - Statement regarding computation of per share earnings 264
Exhibit 21 - Subsidiaries of the Registrant as of March 31, 1995 266
Exhibit 23 - Consent of Independent Auditors dated March 27, 1995 268
Exhibit 27 - Financial Data Schedule 270
88
EX-3
2
EXHIBIT 3(b)
Page 89
BY-LAWS
OF
COMSAT Corporation
(as amended through January 20, 1995)
Table of Contents*
Page
ARTICLE I Offices................................. 1
Section 1.01 Registered Office....................... 1
Section 1.02 Other Offices........................... 1
ARTICLE II Shareholders............................ 1
Section 2.01 Meetings................................ 1
Section 2.02 Annual Meetings......................... 1
Section 2.03 Special Meetings........................ 1
Section 2.04 Adjournments............................ 2
Section 2.05 Notice or Waiver of Notice.............. 2
Section 2.06 Quorum.................................. 2
Section 2.07 Organization............................ 3
Section 2.08 Order of Business....................... 3
Section 2.09 Voting--Voting List--Proxies............ 3
Section 2.10 Inspectors of Votes..................... 4
Section 2.11 Election of Directors................... 5
Section 2.12 Appointment of Independent Public
Accountants........................... 6
ARTICLE III Board of Directors...................... 6
Section 3.01 General Powers.......................... 6
Section 3.02 Number, Term of Office and
Qualifications........................ 6
Section 3.03 The Chairman of the Board............... 7
Section 3.04 Vice Chairman of the Board.............. 7
____________________
*This Table of Contents is not a part of the By-laws.
Section 3.05 Organization of Directors' Meetings..... 7
Section 3.06 Resignations............................ 7
Section 3.07 Regular Meetings........................ 8
Section 3.08 Special Meetings........................ 8
Section 3.09 Quorum, Manner of Acting and
Adjournment........................... 8
Section 3.10 Special Meetings for Filling
Vacancies in Board.................... 9
Section 3.11 Compensation............................ 9
Section 3.12 Outside Interests of Directors.......... 9
ARTICLE IV Committees.............................. 10
Section 4.01 Executive Committee..................... 10
Section 4.02 Committee on Audit, Corporate
Responsibility and Ethics............. 10
Section 4.03 Committee on Compensation and
Management Development................ 11
Section 4.04 Committees in General................... 12
Section 4.05 Committee Procedure..................... 12
ARTICLE V Officers................................ 12
Section 5.01 Officers................................ 12
Section 5.02 Election, Term of Office and
Qualifications........................ 12
Section 5.03 Removal................................. 13
Section 5.04 Resignation............................. 13
Section 5.05 Vacancies............................... 13
Section 5.06 The President........................... 13
Page ii
Section 5.07 The Vice Presidents..................... 13
Section 5.08 The Secretary........................... 13
Section 5.09 The Treasurer........................... 14
Section 5.10 Controller.............................. 14
Section 5.11 Duties of Officers May be Delegated..... 14
Section 5.12 Compensation............................ 14
Section 5.13 Outside Interests of Officers
and Employees......................... 14
ARTICLE VI Shares and Their Issuance and
Transfer.............................. 15
Section 6.01 Certificates for Shares................. 15
Section 6.02 Declarations Required................... 16
Section 6.03 Transfer of Stock....................... 16
Section 6.04 Lost, Destroyed and Mutilated
Certificates.......................... 16
Section 6.05 Regulations............................. 17
Section 6.06 Closing Transfer Books--Fixing
Record Date, etc...................... 17
Section 6.07 Corporate Records....................... 18
Section 6.08 Subsidiaries or Affiliated Companies
of Communications Common Carriers..... 18
ARTICLE VII Seal.................................... 18
ARTICLE VIII Indemnification......................... 18
ARTICLE IX Amendments.............................. 22
Page iii
By-Laws
of
COMSAT Corporation
(as amended through January 20, 1995)
ARTICLE I
Offices
Section 1.01. Registered Office. The registered office of
the Corporation shall be in the City of Washington, District of
Columbia.
Section 1.02. Other Offices. The Corporation may also have
offices at such other places, either within or without the
District of Columbia, as the Board of Directors may from time to
time authorize.
ARTICLE II
Shareholders
Section 2.01. Meetings. Annual and special meetings of the
shareholders entitled to vote shall be held at the Corporation's
principal place of business in the District of Columbia or at
such other place within or without the District of Columbia as
the Board of Directors may from time to time determine.
Section 2.02. Annual Meeting. The annual meeting of the
shareholders for the election of directors shall be held at such
time and on such date as shall be specified by resolution of the
Board of Directors. Failure to hold the annual meeting at the
designated time shall not work any forfeiture or dissolution of
the Corporation.
Section 2.03. Special Meetings. A special meeting of the
shareholders may be requested at any time by the Chairman of the
Board, the Vice Chairman of the Board, if there be one, the
President, the Secretary, the Board of Directors either by
resolution or by written direction signed by any three (3)
members of the Board, or by holders of not less than one-fifth
(1/5th) of all the shares of stock of the Corporation outstanding
and entitled to vote at such meeting. Upon any such
Page 1
request, it
shall be the duty of the Secretary promptly to call such special
meeting to be held on such date as the Secretary may fix, giving
notice thereof in accordance with Section 2.05 of these by-laws.
If the Secretary shall neglect or refuse to issue such call, the
Chairman of the Board, the Vice Chairman of the Board, the
President or the Board of Directors, or the person or persons
making the request, may do so.
Section 2.04. Adjournments. Any annual or special meeting
of shareholders may be adjourned from time to time by a majority
of the votes of the shareholders present in person or represented
by proxy at the meeting and entitled to vote thereat, provided
that any meeting at which directors are to be elected shall be
adjourned as provided in Section 2.11 of these by-laws.
Section 2.05. Notice or Waiver of Notice. Except as
hereinafter otherwise provided, notice of each meeting of the
shareholders, whether annual or special, shall be given to each
shareholder of record entitled to vote at such meeting by
delivering a written or printed notice thereof to him personally
or by mailing or telegraphing such notice to him, charges
prepaid, addressed to him at his address as it appears on the
books of the Corporation, not less than ten (10) days (or such
greater period as may be required by law in a particular case)
and not more than fifty (50) days before the day on which the
meeting is to be held. Every such notice shall state the place,
day and hour of the meeting and, in the case of special meetings,
state the business to be transacted at, and the purpose of, the
meeting. Attendance by any shareholder, in person or by proxy,
at any meeting of which he is entitled to notice shall constitute
a waiver by him of notice of such meeting except where such
attendance is for the express purpose of objecting to the
transaction of any business because the meeting was not lawfully
called or convened. A written waiver of notice of any meeting
signed by a person or persons entitled to such notice, whether
before or after the time stated therein, shall be deemed
equivalent to giving of such notice to such person or persons.
When a meeting is adjourned it shall not be necessary except when
required by law to give any notice of the adjourned meeting or of
the business to be transacted thereat otherwise than by
announcement at the meeting at which such adjournment is taken.
Section 2.06. Quorum. A shareholders' meeting shall not be
organized for the transaction of business unless a quorum is
present. The presence in person or by proxy of the holders of
one-third (1/3rd) (or such greater number as may be fixed by
statute in any case) of the outstanding shares of stock of the
Corporation entitled to vote shall be necessary to, and shall,
constitute a quorum, except that for the election of directors
the provisions of Section 2.11 of these by-laws shall govern;
provided that if a quorum is found to exist at any duly organized
Page 2
meeting, a quorum shall be deemed to continue to exist until
final adjournment of such meeting, whether on the same day or a
later day, notwithstanding the withdrawal of the holders of
enough shares to leave less than the number necessary to
constitute a quorum.
Section 2.07. Organization. At each meeting of the
shareholders the Chairman of the Board, the Vice Chairman of the
Board, if there be one, or the President, or in the absence of
the Chairman of the Board, the Vice Chairman of the Board and the
President, a chairman chosen by a majority of the votes of the
shareholders present in person or represented by proxy at the
meeting and entitled to vote thereat shall act as chairman of
such meeting and preside thereat. The Secretary of the
Corporation, or in his absence, an Assistant Secretary, shall act
as secretary at all meetings of the shareholders. In the absence
from any such meeting of the Secretary and all the Assistant
Secretaries, the chairman of the meeting may appoint any person
to act as secretary of the meeting.
Section 2.08. Order of Business. The order of business to
be followed at any meeting at which a quorum is present shall be
as established by the chairman of the meeting, unless objection
thereto shall be made by a shareholder, in which event the order
of business shall be established by a majority of the votes of
the shareholders present in person or represented by proxy at the
meeting and entitled to vote thereat.
Section 2.09. Voting--Voting List--Proxies. (a) Except as
in the Articles of Incorporation or these by-laws or by
applicable law otherwise provided, every shareholder of record
entitled to vote shall have the right at every shareholders'
meeting to one vote for each share entitled to be voted standing
in his name on the books of the Corporation at the time
determined in accordance with Section 6.06 of these by-laws. At
least five (5) days before each meeting of shareholders, the
Secretary shall make a complete list of the shareholders entitled
to vote at the meeting arranged in alphabetical order as to each
series of stock with the address of and the number of shares held
by each. Such list shall be kept on file at the principal place
of business of the Corporation or at the registered office of the
Corporation, and shall be subject to inspection, for any proper
purpose, at any time during usual business hours, by any
shareholder entitled to vote. The original share ledger or
transfer book, or a duplicate thereof, shall be prima facie
evidence as to who are the shareholders entitled to examine such
lists or to vote at any meeting of the shareholders.
(b) Any shareholder may vote either in person or by
proxy; provided that a proxy in respect of shares of Series I
Common Stock shall not be valid if granted to, or solicited by, a
Page 3
person to whom shares of such Series may not be issued. A proxy
may authorize the casting of votes in any manner authorized by
the Articles of Incorporation, as the holder of such proxy may
determine in his discretion, or may require that such votes be
cast in a particular manner. Every proxy shall be executed in
writing by the shareholder or by his duly authorized attorney-in-
fact and filed with the Secretary or, if the Secretary shall so
direct, with the Inspectors of Votes. No proxy shall be valid
after eleven (11) months from the date of its execution, unless a
longer period is expressly provided therein, but in no event
shall a proxy be valid after three (3) years from the date of its
execution. Every proxy shall be revocable at the pleasure of the
person executing it or his personal representatives or assigns;
provided that the parties to a valid pledge or to an executory
contract of sale may agree in writing as to which of them shall
vote the stock pledged or sold until the contract of pledge or
sale is fully executed.
(c) Upon the demand of any shareholder, the vote upon
any matter shall be by ballot. On a vote by ballot, each ballot
shall be signed by the shareholder voting or by the holder of his
proxy, and shall state the number of shares voted. At all
meetings of the shareholders, all matters (except the election of
directors and matters the manner of deciding which is especially
regulated by statute, the Articles of Incorporation or these by-
laws) shall be decided by a majority of the votes of the
shareholders of the Corporation present in person or represented
by proxy and entitled to vote at such meeting. Shares owned by
the Corporation shall not be voted and shall not be counted in
determining the existence of a quorum or in determining the total
number of outstanding shares for voting purposes.
Section 2.10. Inspectors of Votes. The Board of Directors,
in advance of any meeting of shareholders, shall appoint three
(3) Inspectors of Votes to act at the meeting or any reconvened
session thereof. In case any person appointed fails to appear or
act, the vacancy may be filled by appointment made by the Board
of Directors in advance of the meeting or at the meeting by the
chairman of the meeting. Each Inspector of Votes shall, promptly
upon his appointment, subscribe an oath or affirmation faithfully
to execute his duties with strict impartiality. The Inspectors
of Votes shall determine all questions touching the
qualifications of voters, the validity of proxies and the
acceptance or rejection of votes and, with respect to each vote
by ballot, shall collect and count the ballots and report in
writing to the secretary of the meeting the result of the vote.
The Inspectors of Votes need not be shareholders of the
Corporation. No person who is an officer or director of the
Corporation, or who is a candidate for election as director,
shall be eligible to be an Inspector of Votes.
Page 4
Section 2.11. Election of Directors. (a) At each annual
meeting following the completion of the initial offering of
Common Stock, the shareholders entitled to vote shall elect
twelve (12) directors in the manner provided in the Articles of
Incorporation, to serve until the next annual meeting or until
their successors are elected and qualified.
(b) At any meeting of shareholders for the election of
directors, the presence in person or by proxy of the holders of a
majority of the shares of Series I Common Stock entitled to vote
thereat shall be necessary to constitute a quorum for the
election of Series I directors and the presence in person or by
proxy of the holders of a majority of the shares of Series II
Common Stock entitled to vote thereat shall be necessary for the
election of Series II directors.
(c) If at any meeting of shareholders for the election
of directors there shall not exist the quorum of holders of
either series of Common Stock required for the election of
directors by such series, the meeting may proceed to transact
such other business as may be authorized, but with respect to the
election of directors by such series, the meeting shall be
adjourned from day to day, or for such longer periods not
exceeding fifteen (15) days each, as the holders of a majority of
the shares of such series present in person or represented by
proxy shall direct, until such quorum of such series shall have
been attained and such directors shall have been elected,
provided that, if such quorum shall not have been attained within
thirty (30) days from the date of such meeting as originally
called, the presence in person or by proxy of the holders of one-
third (1/3rd) of the outstanding shares of such series entitled
to vote thereat shall then be sufficient to constitute a quorum
for the sole purpose of election of directors by such series.
The absence of a quorum of the holders of one series shall not
affect the election by the holders of the other series of the
directors whom they are entitled to elect.
(d) No vote may be counted for the election of any
person as a Series I or Series II director unless such person
shall have been proposed for nomination to be a candidate for
election by a written notice signed by a shareholder of the
appropriate series and mailed by registered or certified mail to
the Secretary not less than ten (10) nor more than fifty (50)
days before the date of the meeting, provided that in the event
of the death or incapacity of any person so proposed the proposer
shall be entitled to make a substitute nomination at the meeting.
The Secretary shall, upon the written request of any shareholder
entitled to vote at any meeting, give to such shareholder a list
of the names of those proposed for nomination and their
proposers.
Page 5
(e) No vote may be counted for the election of any
person as a director unless he shall have filed with the
Secretary a statement of his interests in any communications
common carrier as defined in Section 103(7) of the Communications
Satellite Act of 1962 for purposes of Sections 303 and 304 of
said Act, in such reasonable detail as the Board of Directors may
require. Such statements shall be produced and kept open at the
time and place of the meeting, and during the whole time of the
meeting shall be subject to inspection by any shareholder
entitled to vote.
(f) In the event that any holder of Series II shares
or a trustee for any such shareholder casts votes, either
directly or indirectly, through subsidiaries or affiliated
companies, nominees, or persons subject to his direction or
control, for more than three (3) candidates for election as
Series II directors, only the votes so cast for those three (3)
of such candidates who receive the highest number of the votes so
cast shall be counted, and the votes so cast for any other such
candidate shall not be counted.
Section 2.12. Appointment of Independent Public
Accountants. At each annual meeting, the shareholders, after
receiving a recommendation of the Board of Directors, shall
appoint Independent Public Accountants for the purpose of
auditing and certifying the annual financial statements of the
Corporation for its current fiscal year, as sent to shareholders
or otherwise published by the Corporation. In case the
shareholders shall fail to appoint such Independent Public
Accountants or if the Independent Public Accountants so appointed
by the shareholders shall decline to act, or shall resign, or for
some other reason shall be unable to perform their duties, the
Board of Directors shall appoint other Independent Public
Accountants to perform the duties herein provided.
ARTICLE III
Board of Directors
Section 3.01. General Powers. The property, affairs and
business of the Corporation shall be managed by the Board of
Directors.
Section 3.02. Number, Term of Office and Qualifications.
The Board of Directors shall consist of fifteen (15) members
whose method of appointment or election and whose terms of office
shall be as set forth in the Communications Satellite Act of 1962
and the Articles of Incorporation. Directors shall be citizens
of the United States but need not be shareholders or residents of
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the District of Columbia. Directors may be salaried officers of
the Corporation.
Section 3.03. The Chairman of the Board. At the meeting of
the Board of Directors specified in Section 5.02 of these by-
laws, the Board, by a vote of a majority of all the members
thereof, shall elect from among its members a Chairman of the
Board of Directors, to serve in such capacity at the pleasure of
the Board. He shall, if present, preside at all meetings of the
Board. He shall perform such other duties as from time to time
may be assigned to him by the Board. In his capacity as Chairman
of the Board, he shall not be an officer of the Corporation, but
he shall be eligible to serve, in addition, as an officer of the
Corporation pursuant to Article V of these by-laws. In the
absence of the Chairman of the Board, the Vice Chairman of the
Board, if there be one, or, in the absence of the Chairman of the
Board and the Vice Chairman of the Board, the President of the
Corporation, shall in all respects act in the stead of the
Chairman of the Board during such absence.
Section 3.04. Vice Chairman of the Board. The Board of
Directors, by a vote of a majority of all of the members thereof,
may elect from among its members a Vice Chairman of the Board of
Directors, to serve in such capacity at the pleasure of the Board
until the meeting of the Board specified in Section 5.02 of these
by-laws. He shall perform such duties as are assigned to him by
these by-laws and as from time to time may be assigned to him by
the Board. In his capacity as Vice Chairman of the Board, he
shall not be an officer of the Corporation, but he shall be
eligible to serve, in addition, as an officer of the Corporation
pursuant to Article V of these by-laws.
Section 3.05. Organization of Directors' Meetings. At all
meetings of the Board of Directors the Chairman of the Board, or,
in his absence, the Vice Chairman of the Board, if there be one,
or, in the absence of the Chairman of the Board and the Vice
Chairman of the Board, the President, or in the absence of the
Chairman of the Board, the Vice Chairman of the Board and the
President, a chairman chosen by a majority of the directors
present shall act as chairman of such meeting and preside
thereat. The Secretary, or in his absence, an Assistant
Secretary, shall act as secretary at all meetings of the Board.
In the absence from any such meeting of the Secretary and all the
Assistant Secretaries, the chairman may appoint any person to act
as secretary of the meeting.
Section 3.06. Resignations. Any director of the
Corporation may resign at any time by giving written notice of
his resignation to the Corporation. Such resignation shall take
effect at the time received unless another time is specified
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therein. The acceptance of such resignation shall not be
necessary to make it effective.
Section 3.07. Regular Meetings. Regular meetings of the
Board of Directors shall be held within the District of Columbia
or elsewhere at such regular intervals as may be fixed by
resolution adopted by a majority of the whole Board and upon such
notice, or without notice, as shall be specified in said
resolution.
Section 3.08. Special Meetings. Special meetings of the
Board of Directors shall be held whenever called by the Chairman
of the Board, the Vice Chairman of the Board, if there be one,
the President or any three (3) of the directors. Notice of each
such meeting shall be mailed to each director at his address
appearing on the books of the Corporation or supplied by him to
the Corporation for the purpose of notice, at least five (5) days
before the day on which the meeting is to be held, or shall be
sent to him at such place by telegraph, charges prepaid, or
delivered to him personally not later than the third (3rd) day
before the day on which the meeting is to be held. Every such
notice shall specify the place, day and hour of the meeting and
the general nature of the business to be transacted. A waiver of
notice of any meeting in writing signed by the director entitled
to such notice, whether before or after the time stated therein,
shall be deemed equivalent to the giving of such notice.
Attendance of a director at any meeting shall constitute a waiver
by him of notice of such meeting except where a director attends
for the express purpose of objecting to the transaction of any
business because the meeting was not lawfully called or convened.
Whenever a meeting of the Board of Directors shall be adjourned
it shall not be necessary to give any notice of the adjourned
meeting or of the business to be transacted thereat otherwise
than by announcement at the meeting at which such adjournment is
taken.
Section 3.09. Quorum, Manner of Acting and Adjournment. At
each meeting of the Board of Directors the presence of eight (8)
directors shall be necessary to constitute a quorum for the
transaction of business; provided that, if a quorum is found to
exist at any time during the course of any such meeting, a quorum
shall be deemed to continue to exist until final adjournment of
such meeting. Except as otherwise specifically provided by
statute, the Articles of Incorporation or these by-laws, the acts
of a majority of the directors present at a meeting at which a
quorum has been found to exist for the purpose of transacting
business shall be the acts of the Board of Directors. A majority
of the directors present at any meeting may adjourn the meeting
from time to time. Except as otherwise provided in the Articles
of Incorporation, each director
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shall be entitled to one vote.
Voting rights of directors may not be exercised by proxy.
Notwithstanding the foregoing, during an emergency period
following a national catastrophe, a majority of the surviving
members of the Board of Directors who have not been rendered
incapable of acting or attending shall constitute a quorum.
Section 3.10. Special Meetings for Filling Vacancies in
Board. Any vacancy among the Series I directors or the Series II
directors, to be filled in accordance with Section 8.02 of the
Articles of Incorporation, shall be filled at a meeting of the
remaining Series I or Series II directors, as the case may be.
Such a meeting shall be held whenever called by the Chairman of
the Board, the Vice Chairman of the Board, if there be one, the
President, or two (2) of the directors of the Series in which
such vacancy has occurred. Notice of any such meeting shall be
given to, or may be waived by, each director of the Series
affected, in accordance with the provisions of Section 3.08 of
these by-laws. A majority of the directors of such Series
remaining in office shall be necessary to constitute a quorum at
any such meeting, and the affirmative vote of a majority of the
directors of such Series remaining in office shall be necessary
to fill the vacancy. A majority of the directors of such Series
present at any such meeting, whether or not they shall constitute
a quorum, may adjourn the meeting from time to time, and it shall
not be necessary to give any notice of the next session of the
meeting being adjourned otherwise than by announcement at the
meeting at which such adjournment is taken.
Section 3.11. Compensation. Directors shall receive such
reasonable compensation for their services as members of the
Board or of any committee thereof, and such reimbursement for
expenses incurred in connection with such services (including
attendance at meetings) as the Board of Directors may by
resolution from time to time prescribe; provided, however, that
nothing herein contained shall preclude any director from serving
the Corporation in any other capacity or from receiving
compensation for any such services.
Section 3.12. Outside Interests of Directors. Pursuant to
procedures to be established by the Board of Directors from time
to time, each director, upon assuming office and at least
annually thereafter, shall file with the Secretary a statement
identifying any entity (individual proprietorship, partnership,
association, corporation or other business entity) with which the
Corporation to his knowledge does or contemplates doing a
substantial volume of business, and of which he is a director,
officer, trustee or employee, or in which he has a substantial
financial interest. For purposes of this Section and Section
8.06 of the Articles of Incorporation, the term "substantial
financial interest" shall mean any financial interest with a fair
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value in excess of $60,000, or any ownership interest in excess
of ten per centum (10%) without regard to value, including any
such interest, known to the director, officer or employee, as the
case may be, of his spouse or minor child.
ARTICLE IV
Committees
Section 4.01. Executive Committee. The Board of Directors,
by resolution adopted by a majority of the whole Board, may
designate not less than three (3) of the directors then in office
to constitute an Executive Committee. To the extent specifically
provided by resolution adopted by a majority of the whole Board,
the Executive Committee shall have and may exercise the authority
of the Board of Directors in the management of the property,
affairs and business of the Corporation, and may authorize the
seal of the Corporation to be affixed to all papers which may
require it. The Board may designate one member of the Committee
to act as its chairman.
Section 4.02. Committee on Audit, Corporate Responsibility
and Ethics. (a) The Board of Directors, by resolution adopted
by a majority of the whole Board, shall designate not less than
three (3) of the directors then in office to constitute a
Committee on Audit, Corporate Responsibility and Ethics. The
Board may designate one member of the Committee to act as its
chairman. A director who is also an officer or employee of the
Corporation shall not be eligible to serve as a member of the
Committee.
(b) The Committee shall (i) consider and make
recommendations to the Board with respect to the employment of a
firm of Independent Public Accountants, which recommendation, if
accepted by the Board, shall be subject to the provisions of
Section 2.12 of these by-laws, (ii) confer with the Corporation's
Independent Public Accountants to determine the scope of the
audit that such accountants will perform, (iii) receive reports
from the Independent Public Accountants and transmit such reports
to the Board, and after the close of the fiscal year, transmit to
the Board the financial statements certified by such accountants,
(iv) inquire into, examine and make comments on the accounting
procedures of the Corporation and the reports of the Independent
Public Accountants, and (v) consider and make recommendations to
the Board upon matters presented to it by the officers of the
Corporation pertaining to the audit practices and procedures
adhered to by the Corporation.
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(c) The Committee shall (i) review and make
recommendations to the Board relating to corporate policy in
respect of community and governmental relations, codes of
conduct, ethics and other broad social, political and public
issues, (ii) consult with the directors and officers of the
Corporation concerning the administration of policies and
programs in respect of conflicts of interest (including the
procedures established pursuant to Section 3.12 of these by-
laws), and (iii) consider and make recommendations to the Board
upon matters relating to such policies and programs and the
administration thereof. The Committee also shall exercise such
authority as may from time to time be granted to it by resolution
adopted by the Board upon matters pertaining to the policies
referred to in this subsection.
Section 4.03. Committee on Compensation and Management
Development. The Board of Directors, by resolution adopted by a
majority of the whole Board, may designate not less than three
(3) of the directors then in office to constitute a Committee on
Compensation and Management Development. The Committee, if
established, shall (i) consider and make recommendations to the
Board with respect to programs relating to the development of
human resources, organizational plans for the Corporation and
management succession, (ii) consider and make recommendations to
the Board with respect to the rates and manner of payment of the
compensation to be paid to officers and other employees of the
Corporation, (iii) exercise such authority as may from time to
time be granted to it by resolution adopted by a majority of the
whole Board to set the salaries of specified officers within
rates of compensation fixed by resolution of the Board, (iv)
consider and make recommendations to the Board as to the salaries
to be paid to all other officers of the Corporation, (v) as
directed by resolution adopted by a majority of the whole Board
set salaries or make recommendations as to salaries to be paid to
employees of the Corporation other than officers, (vi) upon
request, consult with the principal officers of the Corporation
upon matters of policy relating to the compensation of employees
of the Corporation, (vii) consider and make recommendations to
the Board with respect to the adoption, modification or
termination of any pension plan, profit-sharing plan, stock bonus
plan, stock option plan or other incentive or benefit plan or
arrangement applicable to any or all of the officers and
employees of the Corporation, (viii) exercise the authority which
may be granted to the Committee by any such plan, and (ix)
exercise such other authority as may from time to time be granted
to it by resolution adopted by a majority of the whole Board upon
matters pertaining to compensation and management development.
The Board may designate one member of the Committee to act as its
chairman. A director who is also an officer of the Corporation
shall not be eligible to serve as a member of the Committee.
Page 11
Section 4.04. Committees in General. The Board of
Directors may appoint such other committees, and chairmen
thereof, as it may deem appropriate to perform such functions as
it may designate, provided that no committee shall be appointed
or disbanded unless notice of such proposed action shall have
been given to, or waived by, each director in accordance with the
provisions of Section 3.08 of these by-laws, and that any such
Committee shall consist of not less than three (3) of the
directors then in office.
Section 4.05. Committee Procedure. Each member of any
committee shall continue to be a member of that committee only
during the pleasure of the Board of Directors, provided that no
existing member of a committee shall be removed from such
membership and no new member shall be appointed unless notice of
such proposed action shall have been given to, or waived by, each
director in accordance with the provisions of Section 3.08 of
these by-laws. Except as otherwise provided by the Board of
Directors, a majority of a committee shall constitute a quorum
thereof, and the act of a majority of those present at a meeting
at which a quorum is present shall be the act of the committee,
provided that any committee may, by unanimous approval of its
members, take action without a meeting of the committee.
Meetings of each committee shall be called by the Secretary at
the request of the chairman of the committee or any two members
of the committee. Each committee shall keep minutes of its
meetings and shall render to the Board of Directors, at its next
ensuing regular meeting, a report of all action taken by the
committee since the last meeting of the Board at which a report
was made, or if no such previous report was made, since the
appointment of the committee. Each committee shall also render
such other reports, at such other times, as the Board may
request.
ARTICLE V
Officers
Section 5.01. Officers. The officers of the Corporation
shall be a President, such Vice Presidents as may from time to
time be elected by the Board of Directors, a Secretary, a
Treasurer and a Controller. The Board of Directors may elect
such other officers, including assistant officers, as it may deem
necessary, each of whom shall have such authority and perform
such duties as the Board of Directors may from time to time
determine.
Section 5.02. Election, Term of Office and Qualifications.
The officers of the Corporation shall be elected at least
annually by vote of a majority of the whole Board of Directors.
Such annual election shall be held at the first meeting of the
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Board of Directors following the annual election of directors.
Each officer shall hold his office until his successor shall have
been duly elected and qualified in his stead or until he shall
resign or shall have been removed in the manner hereinafter
provided. No individual other than a citizen of the United
States shall be an officer of the Corporation. Except as may be
provided otherwise by law, any two (2) or more offices may be
held by the same person.
Section 5.03. Removal. Any officer elected by the Board of
Directors may be removed by vote of a majority of the whole Board
of Directors whenever in its judgment the best interest of the
Corporation will be served thereby, but such removal shall be
without prejudice to the contract rights, if any, of the person
so removed.
Section 5.04. Resignation. Any officer of the Corporation
may resign at any time by giving written notice of his
resignation to the Corporation. Such resignation shall take
effect at the time received unless another time is specified
therein. The acceptance of such resignation shall not be
necessary to make it effective.
Section 5.05. Vacancies. Any vacancy in any office because
of death, resignation, removal, disqualification or any other
cause may be filled by the Board of Directors at any regular or
special meeting thereof.
Section 5.06. The President. The President shall have all
the authority and perform all the duties normally incident to the
office of President and such other duties as from time to time
may be assigned to him by the Board of Directors.
Section 5.07. The Vice Presidents. Each Vice President
shall have such powers and perform such duties as from time to
time may be assigned to him by the Board of Directors.
Section 5.08. The Secretary. The Secretary shall (a) see
that all notices are duly given in accordance with law and these
by-laws; (b) be custodian of the seal of the Corporation and
affix such seal to all certificates of stock of the Corporation
prior to their issue and to all documents the execution of which,
on behalf of the Corporation under its seal, is authorized by the
Board of Directors or the Executive Committee, if any, or by any
officer or agent of the Corporation to whom power to authorize
the affixing of such seal shall have been delegated; (c) keep, or
cause to be kept, in books provided for the purpose, minutes of
the meetings of the shareholders, of the Board of Directors, and
of each committee of the Board; (d) keep registers of the
shareholders of all series of stock in accordance with Section
6.01 of these by-laws; (e) see that the books, reports,
statements, certificates, voting lists and all other documents
Page 13
and records required by law are properly kept and filed; (f) sign
such instruments as require the signature of the Secretary; and
(g) in general perform all the duties incident to the office of
Secretary and such other duties as from time to time may be
assigned to him by the Board of Directors.
Section 5.09. The Treasurer. The Treasurer shall (a) have
charge and custody of, and be responsible for, all funds and
securities of the Corporation and deposit all such funds in such
banks, trust companies or other depositories as shall be selected
in accordance with the provisions of these by-laws; (b) receive,
and give receipts for, moneys due and payable to the Corporation
from any source whatsoever; (c) sign such documents as shall
require the signature of the Treasurer; and (d) perform such
other duties as from time to time may be assigned to him by the
Board of Directors. The Treasurer shall give a bond for the
faithful discharge of his duties in such sum and with such
sureties as the Board of Directors shall determine.
Section 5.10. Controller. The Controller shall keep, or
cause to be kept at such office of the Corporation as the Board
of Directors shall from time to time by resolution designate, and
shall be responsible for the keeping of, correct records of the
business and transactions of the Corporation and at all
reasonable times shall exhibit such records to any of the
directors of the Corporation upon application at the office of
the Corporation where such records are kept. The Controller
shall perform such other duties as from time to time may be
assigned to him by the Board of Directors.
Section 5.11. Duties of Officers May Be Delegated. Subject
to the approval of the Board of Directors, which approval may be
of a general or specific nature, any officer of the Corporation
may delegate to any employee of the Corporation, for the period
set forth in such delegation, but not to exceed the term of
office of the person making such delegation, any authority or
duty of his office; provided, however, that any such delegation
shall not be effective until such delegation and the approval
relating thereto are evidenced in writing and filed in the Office
of the Secretary of the Corporation.
Section 5.12. Compensation. The rates of compensation of
the officers shall be fixed from time to time by the Board of
Directors. No officer of the Corporation shall receive any
salary from any source other than the Corporation during his
period of employment by the Corporation.
Section 5.13. Outside Interests of Officers and Employees.
The Board of Directors from time to time may adopt rules and
regulations governing the conduct of officers or key employees
with respect to matters in which they have a financial interest
adverse to the interests of the Corporation. Such rules and
Page 14
regulations may forbid officers or key employees from
participating personally and substantially in corporate action
with respect to any contract, transaction or other matter in
which, to the knowledge of any such officer or employee, he or
any member of his immediate family has a financial interest,
unless (a) such officer or employee makes full disclosure of the
circumstances to the Board or its delegate and the Board or its
delegate determines that the interest is not so substantial as to
affect the integrity of the services of such officer or employee,
or (b) on the basis of standards to be established in such rules
or regulations, the financial interest is too remote or too
inconsequential to affect the integrity of such services. Such
rules and regulations may also prohibit, or establish appropriate
limits upon, the ownership by such officer or employee, or member
of his immediate family, of securities of any communications
common carrier or any other firm or corporation doing a
substantial volume of business with the Corporation.
ARTICLE VI
Shares and Their Issuance and Transfer
Section 6.01. Certificates for Shares. (a) Shares of stock
of the Corporation shall be represented by certificates for
shares in such form as the Board of Directors may from time to
time prescribe. No certificate representing any share shall be
issued until such share is fully paid. Each certificate
representing shares of Common Stock shall state that the transfer
of the shares represented thereby is subject to the provisions of
the Communications Satellite Act of 1962 and the Articles of
Incorporation of the Corporation and, except for certificates
representing shares of Common Stock issued to Incorporators
pursuant to Section 5.01 of the Articles of Incorporation of the
Corporation, shall include a description or summary of the
provisions of Section 5.02 of said Articles. Shares of Common
Stock held by or for the account of, or in trust for, a person of
the classes described in paragraphs (1), (2), (3), (4) and (5) of
Section 3.10(a) of the Communications Act of 1934, as amended,
shall be represented by Foreign Share Certificates. All other
shares of Common Stock shall be represented by Domestic Share
Certificates. Certificates for shares of stock of the
Corporation shall be numbered as to each Series of shareholders
and registered in the order in which they shall be issued.
(b) A record shall be kept of the name of the person,
firm or corporation in which each certificate for shares of stock
of the Corporation shall be issued, the number of shares
represented thereby, the date thereof, and, in case of
cancellation, the date of the cancellation thereof. A record
shall also be kept of the declarations made as provided in
Page 15
Section 6.02 of these by-laws by each person, firm or corporation
in whose name a certificate for shares of Common Stock is issued.
(c) No certificate for shares of stock of the
Corporation shall be valid unless it shall have been signed by
the President or a Vice President and by the Secretary or an
Assistant Secretary and shall have been impressed with the
corporate seal; provided, however, that to the extent permitted
by law, the signatures of such officers or any of them and such
corporate seal may be facsimile.
Section 6.02. Declarations Required. No issue or transfer
of shares of Common Stock shall be registered on the books of the
Corporation, and no certificate for shares shall be issued,
except after the execution and delivery to the Corporation, by or
on behalf of the person, firm or corporation in whose name such
shares are to be registered and in whose name the certificate for
such shares is to be issued, of an application containing such
declarations, in the form as may be prescribed by rules or
regulations of the Board of Directors, with reference to
limitations on ownership of shares set forth in Section 5.02 of
the Articles of Incorporation and to the descriptions of persons
to whom shares may be issued set forth in Section 5.03 of the
Articles, as the Board of Directors may determine.
Section 6.03. Transfer of Stock. Except as otherwise
provided by law, transfer of shares of stock of the Corporation
shall be made on the books of the Corporation only by the holder
thereof, or by his attorney thereunto authorized by a power of
attorney duly executed and filed with the Secretary, and on
surrender of the certificate or certificates for such shares
properly endorsed and the payment of all taxes on the transfer
thereof. The Corporation shall have the right to treat the
person whose name is registered upon its books as the holder of
any shares of its stock as the absolute owner of such shares,
and, except as otherwise provided in these by-laws, such person
shall have the exclusive right to vote and to receive dividends
thereon.
Section 6.04. Lost, Destroyed and Mutilated Certificates.
The holder of any shares of stock of the Corporation shall
immediately notify the Corporation of any loss, destruction or
mutilation of the certificate therefor, and the Board of
Directors may, in its discretion, cause a new certificate or
certificates to be issued to him, upon the surrender of the
mutilated certificate, or in the case of loss or destruction of
the certificate, upon satisfactory proof of such loss or
destruction, and the deposit of a bond, in such form and amount
and with such sureties as the Board of Directors may require.
Page 16
Section 6.05. Regulations. The Board of Directors may make
such rules and regulations as it may deem expedient concerning
the issue, transfer and registration of certificates for shares
of stock of the Corporation. It may appoint one or more transfer
agents and one or more registrars of transfers, and may require
all certificates of stock to bear the signature of either a
transfer agent or a registrar or both.
Section 6.06. Closing Transfer Books--Fixing Record Date,
etc. Insofar as permitted by law, the Board of Directors shall
have power to close the stock transfer books of the Corporation
for a period not exceeding fifty (50) days preceding the date of
any meeting of the shareholders, or the date fixed for the
payment of any dividend or distribution, or the date for the
allotment of rights, or the date when any change or conversion or
exchange of shares will be made or go into effect. If the stock
transfer books are so closed for the purpose of determining
shareholders entitled to notice of or vote at a meeting of
shareholders, such books shall be closed for at least ten (10)
days immediately preceding the date of such meeting. If the
stock transfer books are so closed for any purpose, written or
printed notice of the closing shall be mailed at least ten (10)
days before the closing to each shareholder of record of the
Corporation at his address appearing on the records of the
Corporation, or supplied by him to the Corporation for the
purpose of notice. While the stock transfer books of the
Corporation are closed, no transfer of shares shall be made
thereon. In lieu of closing the stock transfer books as
aforesaid, the Board of Directors may, in its discretion, fix a
time, not more than fifty (50) days prior to the date of any
meeting of shareholders or the date fixed for the payment of any
dividend or distribution, or the date for the allotment of
rights, or the date when any change or conversion or exchange of
shares will be made or go into effect, and, in the case of a
meeting of shareholders, not less than ten (10) days before the
date of the meeting, as a record date for the determination of
shareholders entitled to notice of, or to vote at any such
meeting, or entitled to receive payment of any such dividend or
distribution, or to receive any such allotment of rights, or to
exercise the rights in respect of any such change, conversion or
exchange of shares. If a record date shall be fixed as
aforesaid, such persons as shall be shareholders of record on the
date so fixed, and only such persons, shall be entitled to notice
of, or to vote at, such meeting, or to receive payment of such
dividend, or to receive such allotment of rights, or to exercise
such rights, as the case may be, notwithstanding any transfer of
any shares on the books of the Corporation after any record date
so fixed as aforesaid. If the stock transfer books of the
Corporation shall not be closed as herein provided and if a
record date for the determination of shareholders entitled to
receive notice of, or to vote at, any shareholders' meeting shall
not be fixed as herein provided, the date on which notice of the
Page 17
meeting is given shall be in accordance with Section 2.05 of
these by-laws and shall be the record date for such
determination.
Section 6.07. Corporate Records. The Corporation shall
keep at its principal place of business (a) the original or a
duplicate record of the proceedings of the shareholders and
directors, (b) the original or a copy of its by-laws, including
all amendments or alterations thereto to date, certified by the
Secretary, and (c) appropriate, correct and complete books and
records of account. The Corporation shall keep at its principal
place of business or at the registered office of the Corporation
in the District of Columbia the original or a duplicate share
register for each Series of shares.
Section 6.08. Subsidiaries or Affiliated Companies of
Communications Common Carriers. For all purposes under Article V
of the Articles of Incorporation:
(a) an association, joint-stock company, trust,
corporation or other entity shall be deemed to be a subsidiary of
a communications common carrier if more than fifty percent (50%)
of the shares of such association, joint-stock company, trust,
corporation or other entity having the right under normal
circumstances to elect a majority of its board of directors or
trustees are owned or controlled directly or indirectly by such
communications common carrier; and
(b) an association, joint-stock company, trust,
corporation or other entity shall be deemed to be an affiliated
company of a communications common carrier if such association,
joint-stock company, trust, corporation or other entity is
otherwise directly or indirectly subject to the control of, or is
under direct or indirect common control with, such communications
common carrier.
ARTICLE VII
Seal
The Corporation shall have a corporate seal, which shall be
in the form of a circle and shall bear the full name of the
Corporation and the words and figures "Incorporated 1963,
District of Columbia" or words and figures of similar import.
ARTICLE VIII
Indemnification
Section 8.01 (a) To the full extent permitted by law, the
Corporation shall indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or
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completed action, suit or proceeding (including civil, criminal,
administrative or investigative actions, suits or proceedings)
brought by or in the right of the Corporation or any wholly owned
subsidiary of the Corporation (a "Subsidiary"), or otherwise, by
reason of the fact that such person (hereinafter a "Person
Entitled to Indemnification") is or was or has agreed to become a
director, advisory director, or officer of the Corporation, or is
or was a director or officer of a Subsidiary, or is or was
serving or has agreed to serve at the request of the Corporation
or a Subsidiary as a director, officer, trustee or other
fiduciary of another corporation, partnership, joint venture,
trust or other enterprise, including employee benefit plans, or
by reason of any action alleged to have been taken or omitted in
such capacity, against costs, charges and expenses (including
attorneys' fees) reasonably incurred by him or on his behalf in
connection with the defense or settlement of any threatened,
pending or completed action, suit or proceeding, and any appeal
therefrom, or in defense or settlement of any claim, issue or
matter, except that no indemnification pursuant to this paragraph
shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged liable for negligence
or misconduct in the performance of duty by a court of competent
jurisdiction. The termination of any claim, action, suit or
proceeding by settlement, conviction or upon a plea of nolo
contendere or its equivalent, shall not, in itself, create a
presumption that any such person was adjudged liable for
negligence or misconduct in the performance of duty.
(b) To the full extent permitted by law, the Corporation
shall, upon request, pay costs, charges and expenses (including
attorneys' fees) incurred by Persons Entitled to Indemnification
in advance of the final disposition of any such action, suit or
proceeding; provided, however, that the payment of such costs,
charges and expenses incurred by a Person Entitled to
Indemnification in the capacity in which he became entitled to
indemnification (and not in any other capacity in which service
was or is rendered by such person) in advance of the final
disposition of such action, suit or proceeding shall be made only
upon receipt of an undertaking by or on behalf of such person to
repay all amounts so advanced in the event that it shall
ultimately be determined that he is not entitled to be
indemnified by the Corporation pursuant to this Section 8.01, or
otherwise.
(c) To the full extent permitted by law, the Corporation,
in the sole discretion of the Board of Directors of the
Corporation, may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or
completed action, suit or proceeding (including civil, criminal,
administrative or investigative actions, suits or proceedings)
brought by or in the right of the Corporation or a Subsidiary, or
otherwise, by reason of the fact that such
Page 19
person is or was or
has agreed to become an employee or agent of the Corporation or a
Subsidiary, or is or was serving or has agreed to serve at the
request of the Corporation or a Subsidiary as an employee, agent,
trustee or other fiduciary of another corporation, partnership,
joint venture, trust or other enterprise, including employee
benefit plans, or by reason of any action alleged to have been
taken or omitted in such capacity, against all costs, charges and
expenses (including attorneys' fees) reasonably incurred by him
or on his behalf in connection with the defense or settlement of
any threatened, pending or completed action, suit or proceeding,
and any appeal therefrom or in defense or settlement of any
claim, issue or matter, except that no indemnification pursuant
to this paragraph shall be made in respect of any claim, issue or
matter as to which such person shall have been adjudged liable
for negligence or misconduct in the performance of duty by a
court of competent jurisdiction. The termination of any claim,
action, suit or proceeding by settlement, conviction or upon a
plea of nolo contendere or its equivalent, shall not in itself
create a presumption that any such person was adjudged liable for
negligence or misconduct in the performance of duty.
(d) To the full extent permitted by law, the Corporation
may, upon request, pay costs, charges and expenses (including
attorneys' fees) incurred by Persons Entitled to Indemnification
pursuant to paragraph (c) of this Section 8.01 in advance of the
final disposition of such action, suit or proceeding; provided,
however, that the payment of such costs, charges and expenses
incurred by any such person in the capacity in which he became
entitled to indemnification (and not in any other capacity in
which service was or is rendered by such person) in advance of
the final disposition of such action, suit or proceeding shall be
made only upon receipt of an undertaking by or on behalf of such
person to repay all amounts so advanced in the event that it
shall ultimately be determined that he is not entitled to be
indemnified by the Corporation pursuant to this Section 8.01, or
otherwise.
(e) Any indemnification or advance of costs, charges and
expenses provided for in paragraphs (a) and (b) of this Section
8.01 shall be made promptly, and in any event within sixty (60)
days, upon the written request of the Person Entitled to
Indemnification; the right to indemnification or advances as
granted by paragraphs (a) and (b) of this Section 8.01 shall be
enforceable by the Person Entitled to Indemnification in any
court of competent jurisdiction, if the Corporation denies such
request, in whole or in part, or if no disposition thereof is
made within sixty (60) days, such Person Entitled to
Indemnification's costs, charges and expenses incurred in
connection with successfully establishing his right to
indemnification, in whole or in part, in any such action shall
also be indemnified by the Corporation; it shall be a defense to
any such action (other than an action brought to enforce a claim
Page 20
for the advance of costs, charges and expenses under paragraph
(b) of this Section 8.01 where the required undertaking, if any,
has been received by the Corporation) that the Person Entitled to
Indemnification has not met the standard set forth in paragraph
(a) of this Section 8.01, but the burden of proving such defense
shall be on the Corporation. Neither the failure of the
Corporation (including its Board of Directors, its independent
legal counsel, and its shareholders) to have made a determination
prior to the commencement of such action that indemnification of
the claimant is proper in the circumstances because he has met
the applicable standard of conduct set forth in paragraph (a) of
this Section 8.01, nor the fact that there has been an actual
determination by the Corporation (including its Board of
Directors, its independent legal counsel, and its shareholders)
that the claimant has not met such applicable standard of
conduct, shall be a defense to the action or create a presumption
that the claimant has not met the applicable standard of conduct.
(f) The provisions of paragraphs (a) and (b) of this
Section 8.01 shall be applicable to claims, actions, suits or
proceedings made or commenced after the adoption hereof, whether
arising from acts or omissions occurring before or after the
adoption hereof.
(g) The indemnification and advancement of expenses
provided by this Section 8.01 shall not be deemed exclusive of
any other rights to which a person seeking indemnification or
advancement of expenses may be entitled under any law (present or
future, common or statutory), by-law, agreement, vote of
shareholders or otherwise and shall continue as to a person who
has ceased to serve in the capacity making him eligible for
indemnification, and shall inure to the benefit of the estate,
heirs, executors and administrators of such person. To the full
extent permitted by law, the Corporation may enter into and
perform agreements with persons, including without limitation,
present and former officers, directors and employees of the
Corporation and its Subsidiaries and of companies acquired by or
merged with the Corporation or any of its subsidiaries,
obligating the Corporation, among other things, to provide
indemnification and advancement of costs, charges and expenses to
such persons in addition to any indemnification or advancement
which may be available to such person under this Section 8.01.
(h) All rights to indemnification under this Section 8.01
shall be deemed to be a contract between the Corporation and each
Person Entitled to Indemnification who serves or served in such
capacity at any time while this Section 8.01 is in effect.
Any repeal or modification of this Section 8.01 or any repeal or
modification of the relevant provisions of the Business
Corporation Act of the District of Columbia or of any other
applicable law shall not in any way diminish any rights to
Page 21
indemnification of any person or the obligation of the
Corporation arising prior to such repeal or modification.
(i) If this Section 8.01 or any portion hereof shall be
invalidated on any ground in any court of competent jurisdiction,
then the Corporation shall nevertheless indemnify each Person
Entitled to Indemnification, and may nevertheless indemnify each
person whom the Corporation has determined to indemnify pursuant
to paragraphs (c) and (g) of this Section 8.01, to the full
extent permitted by any applicable portion of this Section 8.01
that shall not have been invalidated (whether under paragraphs
(c) or (g) or the other applicable provisions of this Section
8.01), and to the full extent permitted by applicable law.
ARTICLE IX
Amendments
Any of these by-laws may be altered, amended or repealed,
and new by-laws may be adopted, by the affirmative vote of a
majority of the whole Board; provided that (a) such action may be
taken only at a meeting of the Board called for such purpose; (b)
the notice of such meeting shall state the substance of the by-
law to be made or repealed, or of the alteration or amendment;
and (c) the notice of such meeting shall be mailed, telegraphed
or delivered personally to each director, and a copy thereof
shall be mailed, telegraphed or delivered to the Attorney General
of the United States, the Chairman of the Federal Communications
Commission and such other persons as the President of the United
States may designate from time to time, at least five (5) days
before the date on which the meeting is to be held.
Page 22
EX-4
3
EXHIBIT 4(i)
Page 116
COMSAT CORPORATION
Officers' Certificate
C. Thomas Faulders, III, Vice President and Chief
Financial Officer, and Wesley D. Minami, Treasurer, of COMSAT
Corporation, a District of Columbia corporation (the "Company"),
pursuant to Section 3.01 of the Indenture, dated as of March 15,
1991, as supplemented by the Supplemental Indenture, dated as of
June 29, 1994 (the "Indenture"), between the Company and The
Chase Manhattan Bank (National Association), as Trustee (the
"Trustee"), each hereby certifies as follows (capitalized terms
used herein but not otherwise defined shall have the meaning
ascribed thereto in the Indenture or in the forms of Securities
attached hereto as Annex A and B, as applicable):
1. There is hereby established pursuant to the terms of
Section 3.01 of the Indenture a series of Securities which shall
have the following terms:
(a) The title of the Securities of such series is
"Medium-Term Notes, Series A" (the "Notes").
(b) The aggregate principal amount of the Notes which
may be authenticated and delivered under the Indenture shall
be up to $100,000,000 or, if any Notes are issued at
original issue discount, such greater amount as may result
in an aggregate offering price equivalent to no more than
$100,000,000 (except for Notes authenticated and delivered
upon registration of transfer, or in exchange for, or in
lieu of, other Notes of the same tenor pursuant to Section
3.05, 3.06, 4.07 or 11.06 of the Indenture).
(c) The Depository Trust Company shall be the
Depositary with respect to all Notes issued in permanent
global form.
(d) The terms of a particular Note shall be as set
forth in such Note when such Note is duly executed, issued
and authenticated as set forth herein and in the Indenture.
The terms of the Note will specify the date that such Note
will mature, which shall be nine months or more from its
Issue Date, whether such Note will be an Original Issue
Discount Note or an Amortizing Note, and any other terms or
conditions not inconsistent with this Officers' Certificate
(or any amendment or supplement hereto pursuant to
subparagraph 1(k) hereof) or the Indenture. Such Note shall
be delivered to the Trustee together with a Company Order.
Page 1
(e) Each interest-bearing Note will bear interest from
and including its Issue Date or from and including the most
recent Interest Payment Date with respect to which interest
on such Note (or any predecessor Note) has been paid or duly
provided for to, but excluding, the relevant Interest
Payment Date at the fixed rate per annum, or at the rate per
annum determined pursuant to the interest rate formula,
stated therein until the principal thereof is paid or made
available for payment.
(f) Principal of (and premium, if any) and interest on
each Note shall be payable at the corporate trust office of
the Paying Agent, in the City of New York; provided,
however, that, at the option of the Company, payment of
interest may be made by check mailed to the address of the
holder of a Note as such address shall appear in the
Security Register, or by wire transfer to an account
maintained by the holder of a Note with a bank located in
the United States, provided that the holder shall have
provided in writing to the Trustee, on or prior to the
relevant record date, appropriate payment instructions; and
provided, further, that, notwithstanding the foregoing, the
holder of $10,000,000 or more in aggregate principal amount
of Notes having the same Interest Payment Date shall be
entitled to receive such payment by wire transfer of
immediately payable funds to an account maintained by such
holder with a bank located in the United States, provided
that the holder shall have provided in writing to the
Trustee, on or prior to the relevant record date,
appropriate payment instructions. Upon the terms,
conditions and circumstances provided in the Indenture and
in the forms of Notes attached hereto as Annex A or Annex B,
as the case may be, the transfer of the Notes will be
registrable and Notes will be exchangeable for Notes of any
authorized denomination and of a like tenor at the office of
a security registrar selected by the Company, initially The
Chase Manhattan Bank (National Association) (the "Security
Registrar"), in the City of New York.
(g) The terms of the Notes will specify either that
the Note cannot be redeemed, or if it can be redeemed, the
manner and the dates or ranges of dates on which it can be
redeemed.
(h) The Notes are not subject to redemption or
purchase pursuant to any sinking fund or analogous
provisions.
Page 2
(i) The minimum denomination of the Notes shall be
$1,000 and integral multiples of $1,000 in excess thereof.
(j) Payments of principal and interest on the Notes
shall be made only in United States dollars.
(k) Any increase in the aggregate principal amount of
Notes outstanding which may be authenticated and delivered
upon original issuance under the Indenture, any additional
forms of Notes, any amendments and supplements to the forms
of Notes and any additional or supplemental terms of Notes
not described in or contemplated by the forms of the Notes
attached hereto as Annexes A and B shall be effective upon
delivery to the Trustee of any amendment or supplement to
this Officers' Certificate or of an additional Officers'
Certificate in accordance with an appropriate Board
Resolution.
2. Except as provided in subparagraph 1(k) hereof, the Form
of the fixed rate Notes attached hereto as Annex A and the Form
of the floating rate Notes attached hereto as Annex B is hereby
established and approved pursuant to authority granted by the
Board of Directors of the Company with such changes therein as
any individual authorized to sign a Company Order may have
approved.
3. Each of the President and Chief Executive Officer and
the Vice President and Chief Financial Officer have been duly
appointed as an authorized officer of the Company with such
powers as given them in the resolutions of the Board of Directors
of the Company.
4. The issuance from time to time of up to $100,000,000
aggregate principal amount of Notes pursuant to the Indenture was
duly approved and authorized pursuant to the authority granted in
resolutions adopted by the Board of Directors of the Company on
May 20, 1994.
Page 3
IN WITNESS WHEREOF, we have hereunto signed our names
this 11th day of July, 1994.
\s\ C. Thomas Faulders, III
---------------------------
C. Thomas Faulders, III
Vice President and Chief
Financial Officer
\s\ Wesley D. Minami
--------------------------
Wesley D. Minami
Treasurer
Page 4
[Form of Face of Security] Annex A
REGISTERED REGISTERED
COMSAT CORPORATION
No. FXRA-___ MEDIUM-TERM NOTE, SERIES A CUSIP ________
(Fixed Rate)
[Insert if the Security is to be a Global Security -- This Security
is a Global Security within the meaning of the Indenture
hereinafter referred to and is registered in the name of a
Depositary or a nominee thereof. This Security may not be exchanged
in whole or in part for a Security registered, and no transfer of
this Security in whole or in part may be registered, in the name of
any Person other than such Depositary or a nominee thereof, except
in the limited circumstances described in the Indenture.
Unless this Certificate is presented by an authorized
representative of The Depository Trust Company (55 Water Street,
New York, New York) to the issuer or its agent for registration of
transfer, exchange or payment, and any certificate issued is
registered in the name of Cede & Co. or such other name as
requested by an authorized representative of The Depository Trust
Company and any payment hereon is made to Cede & Co., ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL since the registered owner hereof, Cede & Co.,
has an interest herein.]
PRINCIPAL AMOUNT: DENOMINATIONS:
ISSUE DATE: STATED MATURITY OF SECURITY:
INTEREST RATE: COMPUTATION PERIOD:
INTEREST PAYMENT DATE(S): REGULAR RECORD DATE(S):
REDEMPTION DATE(S): REDEMPTION PERCENTAGE(S):
REDEMPTION DATE(S) REDEMPTION PERCENTAGE(S):
(OPTION OF HOLDER): (OPTION OF HOLDER)(if other
than 100% of Principal Amount)
[ORIGINAL ISSUE DISCOUNT SECURITY]*:
OTHER PROVISIONS:
[Add Sinking Fund provisions if applicable]
* Include U.S. federal income tax original discount legend if
and when regulations require.
NOTE: This form of Security does not cover zero-coupon
securities.
1
COMSAT CORPORATION, a corporation duly organized and existing
under the laws of the District of Columbia (herein called the
"Company", which term includes any successor Person under the
Indenture hereinafter referred to), for value received, hereby
promises to pay to [INSERT IF THE SECURITY IS TO BE A GLOBAL
SECURITY -- CEDE & Co., as nominee for The Depository Trust
Company] [_________________________________________], or registered
assigns, the principal amount specified above on the Stated
Maturity specified above and to pay interest thereon (computed,
unless a different Computation Period is specified above, on the
basis of a 360-day year of twelve 30-day months) from and including
the Issue Date specified above (the "Issue Date") or from and
including the most recent Interest Payment Date to which interest
on this Security (or any Predecessor Security) has been paid or
duly provided for to, but excluding, the Interest Payment Date, on
the Interest Payment Date(s) specified above in each year (each an
"Interest Payment Date") and at Maturity, at the rate per annum
equal to the Interest Rate specified above, until the principal
hereof is paid or duly made available for payment. The interest so
payable, and punctually paid or duly provided for, on any Interest
Payment Date will, as provided in such 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 fifteenth
day next preceding such Interest Payment Date, unless a different
Regular Record Date is specified above (the "Regular Record Date");
provided, however, that interest payable at Maturity will be
payable to the person to whom principal shall be payable; and
provided, further, that if the Issue Date is after a Regular Record
Date and before the next succeeding Interest Payment Date the first
payment of interest shall be payable on the second Interest Payment
Date following the Issue Date 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 immediately
preceding such 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 of this series 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 this Security may be listed, and upon such notice
as may be required by such exchange, all as more fully provided in
said Indenture.
As provided in this Security and in lieu of any contrary
provision in the Indenture, if any Interest Payment Date specified
on the face hereof would otherwise be a day which is not a Market
Day (as defined on the reverse hereof), with respect to this
Security, the Interest Payment Date shall be postponed to the next
succeeding Market Day with the same force and effect as if made on
the due date, and no interest shall accrue on the period from and
after such date.
Payment of the principal of (and premium, if any) and interest
on this Security will be made at the corporate trust office of the
Trustee in The City of New York, or such other office or agency of
the Company maintained by it for that purpose in The City of
New York, 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; provided, however, that payment of the principal of
(and premium, if any) and interest on this Security due will be
made in immediately available funds at such corporate trust office
or such other office or agency if this Security is presented to the
Paying Agent in time for the Paying Agent to make such payments in
such funds in accordance with its normal procedures; and provided,
further, that, at the option of the Company, payment of interest
may be made by check mailed to the address of the Holder as such
address shall appear in the Security Register; or by wire transfer
to an account maintained by the Holder with a bank located in the
United States, provided that the Holder shall have provided in
2
writing to the Trustee, on or prior to the relevant Regular Record
Date, appropriate payment instructions. Notwithstanding the
foregoing, the Holder of $10,000,000 or more in aggregate principal
amount of Securities having the same Interest Payment Date shall be
entitled to receive such payment by wire transfer of immediately
payable funds to an account maintained by such Holder with a bank
located in the United States, provided that the Holder shall have
provided in writing to the Trustee, on or prior to the relevant
Regular Record Date, appropriate payment instructions.
Reference is hereby made to the further provisions of this
Security set forth on the reverse hereof, which further 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, the Company has caused this instrument to
be duly executed by manual or facsimile signature under its
corporate seal.
COMSAT CORPORATION
[CORPORATE SEAL]
By____________________________
Name:
Title:
Attest:
_________________________________
Dated:_____________________, 199_
TRUSTEE'S
CERTIFICATE OF
AUTHENTICATION
This is one of the Securities
of the series designated
therein referred to in the
within-mentioned Indenture
THE CHASE MANHATTAN BANK
(National Association),
as Trustee
By__________________________________
Authorized Officer
3
[Form of Reverse of Security]
This Security is one of a duly authorized issue of securities
of the Company (the "Securities") issued and to be issued in one or
more series under an Indenture, dated as of March 15, 1991, as
supplemented by a Supplemental Indenture dated as of June 29, 1994
(the "Indenture", which term shall have the meaning assigned to it
in such instrument), between the Company and The Chase Manhattan
Bank (National Association), as Trustee (herein called the
"Trustee", which term includes any successor trustee under the
Indenture) and reference is hereby made to the Indenture for a
statement of the respective rights, limitations of rights, duties
and immunities thereunder of the Company, the Trustee and the
Holders of the Securities and of the terms upon which the
Securities are, and are to be, authenticated and delivered. This
Security is one of the series designated on the face hereof,
limited in aggregate principal amount not to exceed $100,000,000
(or if Securities of this series are to be Original Issue Discount
Securities or with the amount payable in respect of any premium or
interest to be determined by reference to the value, rate or price
of one or more specified indices ("Indexed Securities"), such
principal amount as shall result in an aggregate initial offering
price of Securities equivalent to not more than $100,000,000),
which amount may be increased at the option of the Company if in
the future it determines that it may wish to sell additional
Securities, which may be offered or sold either in the United
States or outside the United States or both simultaneously. Except
as may be otherwise stated on the face hereof, the Securities of
this series are issuable only as registered Securities, without
coupons, in denominations of $1,000 and integral multiples of
$1,000 in excess thereof. The Securities of this series may be
issued from time to time in various principal amounts, may mature
at different times, may bear interest at different rates, may be
subject to different redemption provisions, if any, and may
otherwise vary. As provided in the Indenture and subject to
certain limitations therein set forth, Securities of this series
are exchangeable for a like aggregate principal amount of
Securities of this series and of like tenor of a different
authorized denomination, as requested by the Holder surrendering
the same.
The Securities are general, direct, unconditional and
unsecured obligations of the Company.
If this Security is designated on the face hereof as an
Original Issue Discount Security, then, notwithstanding anything to
the contrary contained in this Security, upon the redemption or
acceleration of Maturity of this Security there shall be payable,
in lieu of the principal amount due at the Stated Maturity hereof,
as specified on the face hereof, an amount equal to the Amortized
Face Amount of this Security. The "Amortized Face Amount" shall be
the amount equal to (a) the issue price of this Security, plus
(b) that portion of the difference between the issue price and the
principal amount of this Security that has been amortized at the
Stated Yield (as defined below) of this Security (computed in
accordance with generally accepted United States bond yield
computation principles) at the date as of which the Amortized Face
Amount is calculated, but in no event shall the Amortized Face
Amount exceed the principal amount of this Security due at the
Stated Maturity hereof. As used in the previous sentence the
"Stated Yield" means the Yield to Maturity specified on the face
hereof (or if not so specified, the yield to maturity compounded
semi-annually and computed in accordance with generally accepted
United States bond yield computation principles) for the period
from the Issue Date to the Stated Maturity on the basis of the
issue price and such principal amount.
If one or more "Redemption Dates" (or ranges of Redemption
Dates) is specified on the face hereof, this Security is subject to
redemption upon not less than 30 days' notice by mail, on any such
date (or during any such range), as a whole, or from time to time
in part, at the election of the Company, at a Redemption Price
determined as provided in the next succeeding sentence, together
4
with accrued interest to the Redemption Date, but interest
installments whose Stated Maturity is on or prior to the Redemption
Date will be payable to the Holder hereof (or one or more
Predecessor Securities) of record at the close of business on the
relevant Regular Record Dates referred to on the face hereof, all
as provided in the Indenture. If applicable, the Redemption Price
for any such redemption shall be the amount determined by
multiplying the "Redemption Percentage" specified on the face
hereof with respect to the relevant Redemption Date (or range of
such dates), by the portion of the principal amount hereof (or, if
this Security is an Original Issue Discount Security, the portion
of the Amortized Face Amount hereof) to be redeemed; provided,
however, that in no event shall the Redemption Price be less than
100% of the portion of the principal amount hereof (or, if this
Security is an Original Issue Discount Security, the portion of the
Amortized Face Amount hereof) to be redeemed.
Notice of redemption having been given as aforesaid, this
Security (or the portion of the principal amount hereof so to be
redeemed) shall, on the Redemption Date, become due and payable at
the Redemption Price herein specified, and from and after such date
(unless the Company shall default in the payment of the Redemption
Price and accrued interest) shall cease to bear interest.
In the case of any partial redemption at the election of the
Company of Securities of this series, the Securities of a
particular tenor to be redeemed shall be selected by the Trustee
not more than 60 days prior to the Redemption Date by such method
as the Trustee shall deem fair and appropriate and which may
provide for the selection for redemption of portions of the
principal amount of Securities. In the event of any redemption of
this Security in part only, a new Security or Securities of this
series of like tenor for the unredeemed portion hereof will be
issued in the name of the Holder hereof upon the cancellation
hereof, provided that such unredeemed portion shall be an
authorized denomination for Securities of this series.
If one or more "Redemption Dates (Option of Holder)" (or
ranges of such dates) is specified on the face hereof, this
Security is subject to redemption on any such date (or during any
such range) or, if such date is not a Market Day, on the first
Market Day following such date, as a whole or from time to time in
part, at the election of the Holder hereof, at a Redemption Price
determined as provided in the fifth succeeding sentence together
with accrued interest to the Redemption Date, but interest
installments whose Stated Maturity is on or prior to the Redemption
Date will be payable to the Holder hereof of record at the close of
business on the Regular Record Date referred to on the face hereof,
all as provided in the Indenture. Such election shall be effected
by the Holder hereof delivering to the Company at the principal
corporate trust office of the Trustee in The City of New York, not
less than 30 nor more than 60 days prior to the date on which this
Security is to be redeemed, or during such other Notice Period
specified on the face hereof, a notice requesting such redemption
as prescribed below and specifying the date upon which this
Security is to be redeemed. Any notice given by a Holder pursuant
to this paragraph shall consist of either (i) this Security with
the form entitled "Option to Elect Redemption" set forth at the end
of this Security duly completed or (ii) a telegram, facsimile
transmission or a letter from a member of a national securities
exchange or of the National Association of Securities Dealers, Inc.
or a commercial bank or trust company in the United States setting
forth the name of the Holder hereof, the principal amount of this
Security, the principal amount of this Security to be redeemed, the
certificate number or a description of the terms of this Security,
a statement that the option to elect redemption is being exercised
thereby and a guarantee that this Security, together with the duly
completed form entitled "Option to Elect Redemption" set forth at
the end of this Security, will be received by the Trustee not later
than the fifth Business Day after the date of such telegram,
facsimile transmission or letter; provided, however, that such
5
telegram, facsimile transmission or letter shall only be effective
if this Security and such form duly completed are received by the
Trustee by such fifth Business Day. Exercise of the redemption
option by the Holder hereof will be irrevocable. Such option may
be exercised with respect to less than the entire principal amount
of this Security, provided that the portion Outstanding after such
redemption shall be an authorized denomination for Securities of
this series. If applicable, the Redemption Price for any such
redemption shall be determined by multiplying the "Redemption
Percentage (Option of Holder)" specified on the face hereof with
respect to the relevant Redemption Date (Option of Holder) (or
range of such dates) by the portion of the principal amount hereof
(or, if this Security is an Original Issue Discount Security, the
portion of the Amortized Face Amount hereof) to be redeemed,
together with interest accrued thereon to the Redemption Date;
provided, however, that in no event shall the Redemption Price be
less than 100% of the portion of the principal amount hereof (or,
if this Security is an Original Issue Discount Security, the
portion of the Amortized Face Amount hereof) to be redeemed.
If so indicated on the face hereof, and in accordance with the
terms specified thereon, this Security will be subject to
redemption through operation of a sinking fund.
[The Indenture contains provisions for defeasance at any time
of [the entire indebtedness on this Security] [or] [certain
restrictive covenants and Events of Default with respect to this
Security] [, in each case] upon compliance by the Company with
certain conditions set forth therein.]
If an Event of Default with respect to the Securities of this
series shall occur and be continuing, the principal of the
Securities of this series (or, in the case of Original Issue
Discount Securities the Amortized Face Amount thereof) may be
declared due and payable in the manner and with the effect provided
in the Indenture. Upon payment (i) of the amount of principal so
declared due and payable and (ii) of interest on any overdue
principal, premium and interest (in each case to the extent that
the payment of such interest shall be legally enforceable), all of
the Company's obligations in respect of the payment of the
principal of and premium and interest, if any, on the Securities of
this series shall terminate.
The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights
and obligations of the Company and the rights of the Holders of the
Securities of each series to be affected under the Indenture at any
time by the Company and the Trustee with the consent of the Holders
of 66 2/3% in principal amount of the Securities at the time
Outstanding of each series to be affected. The Indenture also
contains provisions permitting the Holders of specified percentages
in principal amount of the Securities of each series at the time
Outstanding, on behalf of the Holders of all Securities of such
series, to waive compliance by the Company with certain provisions
of the Indenture and certain past defaults under the Indenture and
their consequences. Any such consent or waiver 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 therefor or
in lieu hereof, whether or not notation of such consent or waiver
is made upon this Security.
As provided in and subject to the provisions of the Indenture,
the Holder of this Security shall not have the right to institute
any proceeding with respect to the Indenture or for the appointment
of a receiver or trustee or for any other remedy thereunder, unless
such Holder shall have previously given the Trustee written notice
of a continuing Event of Default with respect to the Securities of
this series, the Holders of not less than 50% in principal amount
of the Securities of this series at the time Outstanding shall have
made written request to the Trustee to institute proceedings in
respect of such Event of Default as Trustee and offered the Trustee
6
reasonable indemnity, and the Trustee shall not have received from
the Holders of a majority in principal amount of Securities of this
series at the time Outstanding a direction inconsistent with such
request, and shall have failed to institute any such proceeding,
for 60 days after receipt of such notice, request and offer of
indemnity. The foregoing shall not apply to any suit instituted by
the Holder of this Security for the enforcement of any payment of
principal hereof or any premium or interest hereon on or after the
respective due dates expressed herein.
No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation
of the Company, which is absolute and unconditional, to pay the
principal of and any premium and interest on this Security at the
times, place and rate, and in the coin or currency, herein
prescribed.
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 office or agency of
the Company in any place where the principal of and any premium and
interest on this Security are payable, duly endorsed by, or
accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security Registrar duly
executed by, the Holder hereof or his attorney duly authorized in
writing, and thereupon one or more new Securities of this series
and of like tenor, of authorized denominations and for the same
aggregate principal amount, will be issued to the designated
transferee or transferees.
As provided in the Indenture and subject to certain
limitations therein set forth, the Securities of this series are
exchangeable for a like aggregate principal amount of Securities of
this series and of like tenor of a different authorized
denomination, as requested by the Holder surrendering the same.
In the event of any redemption at the election of the Company,
the Trustee shall not be required to (i) issue, register the
transfer of or exchange Securities of this series of like tenor
during a period beginning at the opening of business 15 days before
any selection of Securities of this series to be redeemed and
ending at the close of business on the day of mailing of the
relevant notice of redemption, or (ii) register the transfer of or
exchange any Security, or portion thereof, called for redemption,
except the unredeemed portion of any Security being redeemed in
part. Following the exercise of a redemption option by the Holder
hereof, the Trustee shall not be required to issue, register the
transfer of or exchange that portion of this Security with respect
to which such option has been exercised.
No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in
connection therewith.
The Securities of this series may be issued in the form of one
or more Global Securities to The Depository Trust Company as
depositary for the Global Securities of this series (the
"Depositary") or its nominee and registered in the name of the
Depositary or such nominee. If the face of this Security contains
a legend indicating that this Security is a Global Security so
registered, the transfer and exchange hereof is subject to the
additional limitations set forth in such legend.
Prior to due presentment of this 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 this Security is
7
registered as the owner hereof for all purposes, whether or not
this Security is overdue, and neither the Company, the Trustee nor
any such agent shall be affected by notice to the contrary.
All terms used in this Security which are defined in the
Indenture shall have the meanings assigned to them in the
Indenture.
8
_________________________
ABBREVIATIONS
The following abbreviations, when used in the inscription on
the face of this instrument, shall be construed as though they were
written out in full according to applicable laws or regulations.
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship
and not as tenants in common
UNIF GIFT MIN ACT - ______________ Custodian ________________
(Custodian) (Minor)
Under Uniform Gifts to Minors Act (___________)
(State)
Additional abbreviations may also be used though not in the above
list.
_________________________
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
_________________________________________________________________
(PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE)
_________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE
OF ASSIGNEE)
_________________________________________________________________
_________________________________________________________________
the within Note and all rights thereunder, hereby irrevocably
constituting
and appointing
______________________________________________________________
attorney to transfer said Note on the books of the Company, with
full power of substitution in the premises.
Dated:__________________ X___________________________________
Signature Guarantee: NOTICE: The signature to
this assignment must
correspond with the name
as written upon the face
of the within instrument
in every particular,
without alteration or
enlargement or any change
whatever.
9
OPTION TO ELECT REDEMPTION
The undersigned hereby irrevocably requests and instructs
[INSERT NAME OF COMPANY] to redeem the within Security (or portion
thereof specified below) pursuant to its terms at the Redemption
Price, to the undersigned at
----------------------------------------------------------------
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL
ZIP CODE OF THE UNDERSIGNED)
----------------------------------------------------------------
----------------------------------------------------------------
----------------------------------------------------------------
If less than the entire principal amount of the within
Security is to be redeemed, specify the portion thereof which the
Holder elects to have redeemed:
_____________________________________________________________; and
specify the denomination or denominations (which shall not be less
than the minimum authorized denomination) of the Securities to be
issued to the Holder for the portion of the within Security not
being redeemed (in the absence of any such specification, one such
Security will be issued for the portion not being redeemed):
________________________________________________________________.
Dated:_____________ __________________________________________
Signature Guarantee: NOTICE: This signature on this Option to
Elect Redemption must correspond
with the name as written upon
the face of the within instrument in
every particular without alteration
or enlargement.
10
[Form of Face of Security] Annex B
REGISTERED REGISTERED
COMSAT CORPORATION
No. FLRA-____ MEDIUM-TERM NOTE, SERIES A CUSIP ________
(Floating Rate)
[INSERT IF THE SECURITY IS TO BE A GLOBAL SECURITY -- This Security
is a Global Security within the meaning of the Indenture
hereinafter referred to and is registered in the name of a
Depositary or a nominee thereof. This Security may not be
exchanged in whole or in part for a Security registered, and no
transfer of this Security in whole or in part may be registered in
the name of any Person other than such Depositary or a nominee
thereof except in the limited circumstances described in the
Indenture.
Unless this Certificate is presented by an authorized
representative of The Depository Trust Company (55 Water Street,
New York, New York) to the issuer or its agent for registration of
transfer, exchange or payment, and any certificate issued is
registered in the name of Cede & Co. or such other name as
requested by an authorized representative of The Depository Trust
Company and any payment hereon is made to Cede & Co., ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL since the registered owner hereof, Cede & Co.,
has an interest herein.]
PRINCIPAL AMOUNT: DENOMINATIONS:
ISSUE DATE: STATED MATURITY OF SECURITY:
INTEREST RATE BASIS: COMPUTATION PERIOD:
INTEREST PAYMENT DATE(S): REGULAR RECORD DATE(S):
INITIAL INTEREST RATE: SPREAD MULTIPLIER:
MAXIMUM INTEREST RATE: MINIMUM INTEREST RATE:
INTEREST PAYMENT PERIOD INTEREST PAYMENT MONTH(S):
(monthly, quarterly, semi-
annually or annually):
INTEREST RESET PERIOD INTEREST RESET MONTH(S):
(monthly, quarterly, semi-
annually or annually):
INTEREST DETERMINATION DATE(S):
CALCULATION DATE: CALCULATION AGENT:
INTEREST RESET DATE(S):
1
REDEMPTION DATE(S): REDEMPTION PERCENTAGE(S):
REDEMPTION DATE(S) REDEMPTION PERCENTAGE(S)
(OPTION OF HOLDER): (OPTION OF HOLDER)
(if other than 100% of Principal
Amount):
[ORIGINAL ISSUE DISCOUNT SECURITY:]*
OTHER PROVISIONS: [Add Sinking Fund provisions if applicable]**
---------------------
* Include U.S. Federal income tax original issue discount legent if and
when regulations require.
** NOTE: This form of security does not cover zero-coupon Securities.
2
COMSAT CORPORATION, a corporation duly organized and existing
under the laws of the District of Columbia (herein called the
"Company", which term includes any successor Person under the
Indenture hereinafter referred to), for value received, hereby
promises to pay to [INSERT IF THE SECURITY IS TO BE A GLOBAL
SECURITY -- CEDE & Co., as nominee for The Depository Trust
Company]
[___________________________________________________________], or
registered assigns, the principal amount specified above on the
Stated Maturity specified above and to pay interest thereon, from
and including the Issue Date specified above (the "Issue Date") or
from and including the most recent Interest Payment Date to which
interest on this Security (or any Predecessor Security) has been
paid or duly provided for to, but excluding, the Interest Payment
Date (as hereinafter defined) (or, if the Interest Reset Period
specified above (the "Interest Reset Period") is [daily or] weekly,
from and including the Issue Date or from and including the day
following the most recent Regular Record Date with respect to which
interest has been paid or duly provided for, as the case may be, to
but excluding the day following the Regular Record Date immediately
preceding such Interest Payment Date), at a rate per annum equal to
the Initial Interest Rate specified above (the "Initial Interest
Rate") until the first Interest Reset Date (as defined on the
reverse hereof) following the Issue Date and thereafter at a rate
determined in accordance with the provisions on the reverse hereof
under the heading "Determination of Commercial Paper Rate",
"Determination of Prime Rate", "Determination of CD Rate",
"Determination of Federal Funds Rate", "Determination of LIBOR",
"Determination of Treasury Rate", "Determination of the J.J. Kenny
Rate", "Determination of the 11th District Cost of Funds Rate" or
"Determination of the CMT Rate" depending upon whether the Interest
Rate Basis specified above is Commercial Paper Rate, Prime Rate, CD
Rate, Federal Funds Rate, LIBOR, Treasury Rate, J.J. Kenny Rate,
11th District Cost of Funds Rate or CMT Rate until the principal
hereof is paid or duly made available for payment; provided,
however, that the Company will make all such payments in respect of
this Security in U.S. dollars in amounts determined as set forth on
the reverse hereof. Such interest shall be payable by the Company
monthly, quarterly, semi-annually or annually as specified above
under "Interest Payment Period" and, unless otherwise specified
above under "Interest Payment Date(s)", such interest shall be
payable by the Company on the third Wednesday of the month or
months specified above under "Interest Payment Month(s)" in each
year (each date so specified above or, if none is so specified,
determined as herein provided, an "Interest Payment Date") and at
Maturity. The interest so payable, and punctually paid or duly
provided for, on any such Interest Payment Date will 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 fifteenth
day (whether or not a Market Day) next preceding such Interest
Payment Date, unless a different Regular Record Date is specified
above (the "Regular Record Date"); provided, however, that interest
payable at Maturity will be payable to the Person to whom principal
shall be payable; and provided, further, that if the Issue Date is
after a Regular Record Date and before the next succeeding Interest
Payment Date the first payment of interest shall be payable on the
second Interest Payment Date following the Issue Date 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
immediately preceding such 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 of this series 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 this Security may be listed, and upon
such notice as may be required by such exchange, all as more fully
provided in said Indenture.
3
As provided in this Security and in lieu of any contrary
provision in the Indenture, if any Interest Payment Date shown on
the face hereof would otherwise be a day that is not a Market Day
(as defined in the reverse hereof) the Interest Payment Date shall
be postponed to the next day that is a Market Day, except that if
the rate of interest on this Security shall be determined in
accordance with the provisions of the heading "Determination of
LIBOR", and such Market Day is in the next succeeding calendar
month, such Interest Payment Date shall be the immediately
preceding Market Day. If the Maturity of this Security would
otherwise be a day that is not a Market Day, the payment of
principal (and premium, if any) and interest may be made on the
next succeeding Market Day, and no interest on such payment will
accrue from and after the Maturity.
Payment of the principal of (and premium, if any) or interest
on this Security will be made at the corporate trust office of the
Trustee in The City of New York, or such other office or agency of
the Company maintained by it for that purpose in the The City of
New York, 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; provided, however, that payment of the principal of
(and premium, if any) and interest on this Security due will be
made in immediately available funds at such corporate trust office
or such other office or agency if this Security is presented to the
Paying Agent in time for the Paying Agent to make such payments in
accordance with its normal procedures; and provided, further, that
at the option of the Company payment of interest may be made by
check mailed to the address of the Holder as such address shall
appear in the Security Register or by wire transfer to an account
maintained by the Holder with a bank located in the United States,
provided that the Holder shall have provided in writing the
Trustee, on or prior to the relevant Regular Record Date,
appropriate payment instructions. Notwithstanding the foregoing,
the Holder of $10,000,000 or more in aggregate principal amount of
Securities having the same Interest Payment Date shall be entitled
to receive such payment by wire transfer of immediately payable
funds to an account maintained by such Holder with a bank located
in the United States, provided that the Holder shall have provided
in writing to the Trustee, on or prior to the relevant Regular
Record Date, appropriate payment instructions.
Reference is hereby made to the further provisions of this
Security set forth on the reverse hereof, which further 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, the Company has caused this instrument to
be duly executed by manual or facsimile signature under its
corporate seal.
COMSAT CORPORATION
[CORPORATE SEAL] By______________________________
Name:
Title:
Attest:
_________________________________
4
Dated: ____________________, 199_
TRUSTEE'S
CERTIFICATE OF
AUTHENTICATION
This is one of the Securities
of the series designated
therein referred to in the
within-mentioned Indenture.
THE CHASE MANHATTAN BANK
(National Association),
as Trustee
By____________________________________
Authorized Officer
5
[Form of Reverse of Security]
This Security is one of a duly authorized issue of securities
of the Company (the "Securities") issued and to be issued in one or
more series under the Indenture, dated as of March 15, 1991, as
supplemented by a Supplemental Indenture, dated as of June 29, 1994
(the "Indenture" which term shall have the meaning assigned to it
in such instrument), between the Company and The Chase Manhattan
Bank (National Association), 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
the Company, the Trustee, the Holders of the Securities and of the
terms upon which the Securities are, and are to be, authenticated
and delivered. This Security is one of the series designated on
the face hereof, limited to an aggregate principal amount not to
exceed $100,000,000 (or, if Securities of this series are to be
Original Issue Discount Securities or with the amount payable in
respect of principal of or any premium or interest to be determined
by reference to the value, rate or price of one or more specified
indices ("Indexed Securities"), such principal amount as shall
result in an aggregate initial offering price of Securities
equivalent to no more than $100,000,000), which amount may be
increased at the option of the Company if in the future it
determines that it may wish to sell additional Securities, which
may be offered or sold either in the United States or outside the
United States or both simultaneously. Except as otherwise may be
stated on the face hereof, the Securities of this series are
issuable only as registered Securities, without coupons, in
denominations of $1,000 and integral multiples of $1,000 in excess
thereof. The Securities of this series may be issued from time to
time in various principal amounts, may mature at different times,
may bear interest at different rates, may be subject to different
redemption provisions, if any, and may otherwise vary. As provided
in the Indenture and subject to certain limitations therein set
forth, Securities of this series are exchangeable for a like
aggregate principal amount of Securities of this series and of like
tenor of a different authorized denomination, as requested by the
Holder surrendering the same.
The Securities are general, direct, unconditional and
unsecured obligations of the Company.
Accrued interest hereon shall be calculated by multiplying the
principal amount specified on the face hereof by an accrued
interest factor. Such accrued interest factor shall be computed by
adding the interest factor calculated for each day in the period
for which accrued interest is being calculated. The interest
factor (expressed as a decimal rounded, if necessary, as described
below) for each such day shall be computed by dividing the interest
rate (expressed as a decimal rounded, if necessary, as described
below) applicable to such day by 360, if the Interest Rate Basis
specified on the face hereof is the Commercial Paper Rate, Prime
Rate, CD Rate, Federal Funds Rate, LIBOR, J.J. Kenny Rate, 11th
District Cost of Funds Rate or CMT Rate by the actual number of
days in the year (365 or 366, as the case may be) if the Interest
Rate Basis specified on the face hereof is the Treasury Rate, or by
the number of days in the Computation Period specified on the face
hereof. Except as otherwise provided herein, all percentages
resulting from any calculation with respect to this Security will
be rounded, if necessary, to the nearest one-hundred thousandth of
a percentage point, with five one-millionths of a percentage point
rounded upwards (e.g., 9.876545% (or .09876545) being rounded to
9.87655% (or .0987655) and 9.876544% (or .09876544) being rounded
to 9.87654% (or .0987654)), and all dollar amounts used in or
resulting from such calculations will be rounded to the nearest
cent.
The rate of interest on this Security will be reset daily,
weekly, monthly, quarterly, semi-annually or annually, as specified
on the face hereof under Interest Reset Period (each date upon
which interest is so reset as provided below being hereinafter
referred to as an "Interest Reset Date"), and the interest rate in
6
effect on any day shall be (a) if such day is an Interest Reset
Date, the interest rate for such Interest Reset Date or (b) if such
day is not an Interest Reset Date the interest rate for the
immediately preceding Interest Reset Date; provided, however, that
(i) the interest rate in effect from the Issue Date of this
Security (or one or more Predecessor Securities) to but excluding
the first Interest Reset Date will be the Initial Interest Rate and
(ii) the interest rate in effect for the ten calendar days
immediately prior to Maturity of this Security will be that in
effect on the tenth calendar day preceding such Maturity.
Notwithstanding the foregoing, the interest rate hereon shall not
be greater than the Maximum Interest Rate, if any, or less than the
Minimum Interest Rate, if any, specified on the face hereof and in
no event shall be higher than the maximum rate permitted by New
York law, as the same may be modified by United States law of
general application. Unless otherwise specified on the face hereof
and except as provided in the next succeeding sentence, the
Interest Reset Date with respect to this Security will be, if the
Interest Reset Period specified on the face hereof is daily, each
Market Day (as defined below); if the Interest Reset Period
specified on the face hereof is weekly (unless the Interest Rate
Basis specified on the face hereof is the Treasury Rate), the
Wednesday of each week; if the Interest Reset Period specified on
the face hereof is weekly and the Interest Rate Basis specified on
the face hereof is the Treasury Rate, except as otherwise provided
below, the Tuesday of each week; if the Interest Reset Period
specified on the face hereof is monthly, the third Wednesday of
each month; if the Interest Reset Period specified on the face
hereof is quarterly, the third Wednesday of each March, June,
September and December; if the Interest Reset Period specified on
the face hereof is semi-annually, the third Wednesday of two months
in each year specified under "Interest Reset Month(s)" on the face
hereof; and if the Interest Reset Period specified on the face
hereof is annually, the third Wednesday of the month in each year
specified under "Interest Reset Month(s)" on the face hereof. If,
pursuant to the preceding sentence, any Interest Reset Date would
otherwise be a day that is not a Market Day with respect to this
Security, the Interest Reset Date shall be the next succeeding day
that is a Market Day with respect to this Security, except that if
the Interest Rate Basis specified on the face hereof is LIBOR and
the next succeeding Market Day falls in the next succeeding
calendar month, such Interest Reset Date shall be the immediately
preceding Market Day. Subject to applicable provisions of law and
except as specified herein, on each Interest Reset Date the rate of
interest on this Security shall be the rate determined in
accordance with the provisions of the applicable heading below.
"Market Day" means (i) with respect to any Security of this
series the rate of interest on which is determined other than in
accordance with the provisions of the heading "Determination of
LIBOR" above, any day that is a Business Day in The City of New
York and (ii) with respect to any Security of this series the rate
of interest on which is determined in accordance with the
provisions of the heading "Determination of LIBOR" above, any
Business Day in The City of New York on which dealings in deposits
in U.S. dollars are transacted in the London interbank market.
Determination of Commercial Paper Rate. If the Interest Rate
Basis specified on the face hereof is the Commercial Paper Rate,
the interest rate with respect to this Security for any Interest
Reset Date shall equal (a) the Money Market Yield (calculated as
described below) of the rate on the second Market Day with respect
to this Security immediately preceding such Interest Reset Date
(the "Commercial Paper Interest Determination Date") for commercial
paper having the Index Maturity specified on the face hereof,
(i) as published in "Statistical Release H.15(519), Selected
Interest Rates", or any successor publication published by the
Board of Governors of the Federal Reserve System ("H.15(519)"),
under the heading "Commercial Paper", or (ii) if such rate is not
so published prior to 3:00 P.M., New York City time, on the
Calculation Date pertaining to such Commercial Paper Interest
Determination Date, then as published in "Composite 3:30 P.M.
7
Quotations for U.S. Government Securities", or any successor
publication published by the Federal Reserve Bank of New York
("Composite Quotations"), under the heading "Commercial Paper", or
(b) if such rate is not published in either H.15(519) or Composite
Quotations by 3:30 P.M., New York City time, on such Calculation
Date, the Money Market Yield of the arithmetic mean, as calculated
by the Calculation Agent on such Calculation Date, of the offered
rates, as of 11:00 A.M., New York City time, on such Commercial
Paper Interest Determination Date, of three leading dealers of
commercial paper in The City of New York selected by the Calcula-
tion Agent for commercial paper having the Index Maturity specified
on the face hereof placed for an industrial issuer whose bond
rating is "AA", or the equivalent, from a nationally recognized
rating agency, in each of the above cases adjusted by the addition
or subtraction of the Spread, if any, specified on the face hereof,
and/or by multiplication by the Spread Multiplier, if any,
specified on the face hereof; provided, however, that if fewer than
three such dealers selected as aforesaid by the Calculation Agent
are quoting as mentioned in this sentence, the Commercial Paper
Rate shall be the Commercial Paper Rate in effect on such
Commercial Paper Interest Determination Date.
"Money Market Yield" shall be a yield (expressed as a
percentage rounded, if necessary, to the next higher one-hundred
thousandth of a percentage point), calculated in accordance with
the following formula:
D x 360
Money Market Yield = ------------- x 100,
360 - (D x M)
where "D" refers to the per annum rate for commercial paper quoted
on a bank discount basis and expressed as a decimal; and "M" refers
to the actual number of days in the interest period for which
interest is being calculated.
Determination of Prime Rate. If the Interest Rate Basis
specified on the face hereof is the Prime Rate, the Interest Rate
with respect to this Security for any Interest Reset Date shall
equal the rate set forth on such date in H.15(519) under the
heading "Bank Prime Loan." In the event that such rate is not
published prior to 3:00 P.M., New York City time, on such Prime
Rate Interest Determination Date, then the Prime Rate will be
determined by the Calculation Agent and will be the arithmetic mean
of the rates of interest publicly announced by each bank that
appears on the Reuters Screen NYMF Page as such bank's prime rate
or base lending rate as in effect for that Prime Rate Interest
Determination Date. If fewer than four such rates appear on the
Reuters Screen NYMF Page for the Prime Rate Interest Determination
Date, the Prime Rate will be the arithmetic mean of the announced
prime rates quoted on the basis of the actual number of days in the
year divided by 360 as of the close of business on such Prime Rate
Interest Determination Date by at least two of three major money
center banks in The City of New York selected by the Calculation
Agent. If fewer than two such quotations are provided, the Prime
Rate shall be determined on the basis of the rates furnished in The
City of New York by the appropriate number of substitute banks or
trust companies organized and doing business under the laws of the
United States, or any state thereof, having total equity capital of
at least $500 million and being subject to supervision or
examination by federal or state authority, selected by the
Calculation Agent to provide such rate or rates; provided, however,
that if the banks selected as aforesaid are not quoting as
mentioned in this sentence, the Prime Rate will be the Prime Rate
then in effect on such Prime Rate Interest Determination Date.
Determination of CD Rate. If the Interest Rate Basis
specified on the face hereof is the CD Rate, the Interest Rate with
respect to any Interest Reset Date shall equal (a) the rate on the
second Market Day with respect to this Security immediately
preceding such Interest Reset Date (the "CD Rate Interest
Determination Date") for negotiable certificates of deposit having
8
the Index Maturity specified on the face hereof, (i) as published
in H.15(519) under the heading "CDs (Secondary Market)", or
(ii) such rate is not published prior to 3:00 P.M., New York City
time, on the Calculation Date pertaining to such CD Rate Interest
Determination Date, then as published in Composite Quotations under
the heading "Certificates of Deposit", or (b) if such rate is not
yet published in either H.15(519) or Composite Quotations by 3:00
P.M., New York City time, on such Calculation Date the arithmetic
mean, as calculated by the Calculation Agent, of the secondary
market offered rates, as of 10:00 A.M., New York City time, on such
CD Rate Interest Determination Date, of three leading nonbank
dealers of negotiable U.S. dollar certificates of deposit in The
City of New York selected by the Calculation Agent for negotiable
certificates of deposit of major United States money market banks
with a remaining maturity closest to the Index Maturity specified
on the face hereof in a denomination of $5,000,000 in each of the
above cases adjusted by the addition or subtraction of the Spread,
if any, specified on the face hereof, and/or by multiplication by
the Spread Multiplier, if any, specified on the face hereof;
provided, however, that if fewer than three dealers selected as
aforesaid by the Calculation Agent are quoting as mentioned in this
sentence, the CD Rate will be the CD Rate in effect on such CD Rate
Interest Determination Date.
Determination of Federal Funds Rate. If the Interest Rate
Basis specified on the face hereof is the Federal Funds Rate, the
interest rate with respect to this Security for any Interest Reset
Date shall equal (a) the rate on the second Market Day with respect
to this Security immediately preceding such Interest Reset Date
(the "Federal Funds Interest Determination Date") for Federal Funds
having the Index Maturity specified on the face hereof (i) as
published in H.15(519) under the heading "Federal Funds
(Effective)" or (ii) if such rate is not so published prior to 3:00
P.M., New York City time, on the Calculation Date pertaining to
such Federal Funds Interest Determination Date, then as published
in Composite Quotations under the heading "Federal Funds/ Effective
Rate" or (b) if by 3:00 P.M., New York City time, on such
Calculation Date such rate is not yet published in either H.15(519)
or Composite Quotations, the arithmetic mean, as calculated by the
Calculation Agent on such Calculation Date, of the rates, prior to
9:00 A.M., New York City time, on such Federal Funds Interest
Determination Date, for the last transaction in overnight Federal
Funds arranged by three leading brokers of Federal Funds
transactions in The City of New York selected by the Calculation
Agent, in each of the above cases adjusted by the addition or sub-
traction of the Spread, if any, specified on the face hereof,
and/or by multiplication by the Spread Multiplier, if any,
specified on the face hereof; provided, however, that if fewer than
three brokers selected as aforesaid by the Calculation Agent are
quoting as mentioned in this sentence, the Federal Funds Rate will
be the Federal Funds Rate in effect on such Federal Funds Interest
Determination Date.
Determination of LIBOR. If the Interest Rate Basis specified
on the face hereof is LIBOR, the interest rate with respect to this
Security for any Interest Reset Date shall be determined by the
Calculation Agent and shall equal the offered rate for deposits in
U.S. Dollars having the Index Maturity specified on the face hereof
commencing on the second London Market Day immediately following
the Interest Determination Date which appears on the Telerate Page
3750 (as defined herein) as of 11:00 A.M. London time, on such
Interest Determination Date, adjusted by the addition or
subtraction of the Spread, if any, specified on the face hereof,
and/or by multiplication by the Spread Multiplier, if any,
specified on the face hereof; provided, however, if such rate does
not so appear on the Telerate Page 3750, the rate in respect of
such Interest Determination Date will be determined on the basis of
the rates at which deposits in U.S. dollars are offered by four
major banks in the London interbank market (selected by the
Calculation Agent) at approximately 11:00 A.M., London time, on the
Interest Determination Date next preceding the relevant Interest
Reset Date to prime banks in the London interbank market for a
period of the Index Maturity commencing on that Interest Reset Date
9
and in a principal amount equal to an amount not less than
$1,000,000 that is representative for a single transaction in such
market at such time. In such case, the Calculation Agent will
request the principal London office of each of the aforesaid major
banks to provide a quotation of such rate. If at least two such
quotations are provided in respect of such Interest Determination
Date, the rate for that Interest Reset Date will be the arithmetic
mean of the quotations, and, if fewer than two quotations are
provided as requested in respect of such Interest Determination
Date, the rate for that Interest Reset Date will be the arithmetic
mean of the rates quoted by three major banks in New York City,
selected by the Calculation Agent, at approximately 11:00 A.M. New
York City time on that Interest Determination Date for loans in
U.S. dollars to leading European banks for a period of the Index
Maturity commencing on that Interest Reset Date and in a principal
amount equal to an amount not less than $1,000,000 that is
representative for a single transaction in such market at such
time, each of the aforementioned cases following the proviso above
adjusted by the addition or subtraction of the Spread, if any,
specified on the face hereof, and/or by multiplication by the
Spread Multiplier, if any, specified on the face hereof; provided,
however, if the aforesaid rate cannot be so determined by the
Calculation Agent, LIBOR in respect of such LIBOR Interest
Determination Date will be LIBOR then in effect on such Interest
Determination Date. "Telerate Page 3750" means the display page so
designated on the Dow Jones Telerate Service (or such other page as
may replace that page on that service, or such other service as may
be nominated as the information vendor, for the purpose of
displaying rates or prices relating to LIBOR). "London Market Day"
means any day on which deposits in U.S. dollars are transacted in
the London interbank market.
Determination of Treasury Rate. If the Interest Rate Basis
specified on the face hereof is the Treasury Rate, the interest
rate with respect to this Security for any Interest Reset Date
shall equal (a) the rate for the most recent auction of direct
obligations of the United States ("Treasury bills") having the
Index Maturity specified on the face hereof as published in
H.15(519) under the heading "U.S. Government Securities -- Treasury
bills - Auction Average (Investment)" on the Treasury Interest
Determination Date (as defined below) or (b) if such rate is not so
published by 3:00 P.M., New York City time, on the Calculation Date
pertaining to such Treasury Interest Determination Date, the
auction average rate (expressed as bond equivalent on the basis of
a year of 365 or 366 days, as applicable, and applied on a daily
basis) for such auction as otherwise announced by the United States
Department of the Treasury or (c) in the event that the results of
the auction of Treasury bills having the Index Maturity specified
on the face hereof are not published or reported as provided in (a)
or (b) above by 3:00 P.M., New York City time, on such Calculation
Date or if no such auction is held in a particular week, then the
Treasury Rate shall be the rate as published in H.15(519) under the
heading "U.S. Government Securities/Treasury Bills/Secondary
Market." In the event that such rate is not so published by 3:00
P.M., New York City time, on its Calculation Date, then the
Treasury Rate shall be calculated by the Calculation Agent and
shall be (d) the yield to maturity (expressed as a bond equivalent
on the basis of a year of 365 or 366 days, as applicable, and
applied on a daily basis) of the arithmetic mean, as calculated by
the Calculation Agent on such Calculation Date, of the secondary
market bid rates as of approximately 3:30 P.M., New York City time,
on such Treasury Interest Determination Date, of three leading
primary United States government securities dealers selected by the
Calculation Agent for the issue of Treasury bills with a remaining
maturity closest to the Index Maturity specified on the face
hereof, in each of the above cases adjusted by the addition or
subtraction of the Spread, if any, specified on the face hereof,
and/or by multiplication by the Spread Multiplier, if any,
specified on the face hereof; provided, however, that if such deal-
ers selected as aforesaid by the Calculation Agent are not quoting
as mentioned in this sentence, the Treasury Rate shall be the
Treasury Rate on such Treasury Interest Determination Date.
10
The "Treasury Interest Determination Date" pertaining to an
Interest Reset Date will be the day on which Treasury bills are
auctioned for the week in which such Interest Reset Date falls, or
if no auction is held for such week, the Monday of such week (or if
Monday is a legal holiday, the next succeeding Market Day) and the
Interest Reset Date will be the Market Day immediately following
such Treasury Interest Determination Date and the Interest Reset
Date will be the Market Day following such Treasury Interest
Determination Date. Treasury bills are usually sold at auction on
Monday of each week, unless that day is a legal holiday, in which
case the auction is usually held on the following Tuesday, except
that such auction may be held on the preceding Friday. If an
auction is held for such week on Monday or the preceding Friday,
such Monday or preceding Friday shall be the Treasury Interest
Determination Date for such week, and the Interest Reset Date for
such week shall be the Tuesday of such week (or, if such Tuesday is
not a Market Day, the next succeeding Market Day). If the auction
for such week is held on any day of such week other than Monday,
then such date shall be the Treasury Interest Determination Date
and the Interest Reset Date for such week shall be the next
succeeding Market Day.
Determination of J.J. Kenny Rate. If the Interest Rate Basis
specified on the face hereof is the J.J. Kenny Rate, the interest
rate with respect to this Security for any Interest Reset Date
shall equal the rate in the high-grade weekly index (the "Weekly
Index") on such date made available by Kenny Information Systems
("Kenny") to the Calculation Agent. The Weekly Index is, and shall
be, based upon 30-day yield evaluations at par of bonds, the
interest of which is exempt from Federal income taxation under the
Internal Revenue Code of 1986, as amended, of not less than five
high- grade component issuers selected by Kenny; which shall
include, without limitation, issuers of general obligation bonds.
The specific issuers included among the component issuers may be
changed from time to time by Kenny in its discretion. The bonds on
which the Weekly Index is based shall not include any bonds on
which the interest is subject to a minimum tax or similar tax under
the Internal Revenue Code of 1986, as amended, unless all tax-
exempt bonds are subject to such tax. In the event Kenny ceases to
make available such Weekly Index, a successor indexing agent will
be selected by the Calculation Agent, such index to reflect the
prevailing rate for bonds rated in the highest short-term rating
category by Moody's Investors Service, Inc. and Standard & Poor's
Corporation in respect of issuers most closely resembling the high-
grade component issuers selected by Kenny for its Weekly Index, the
interest on which is (A) variable on a weekly basis, (B) exempt
from Federal income taxation under the Internal Revenue Code of
1986, as amended, and (C) not subject to a minimum tax or similar
tax under the Internal Revenue Code of 1986, as amended, unless all
tax-exempt bonds are subject to such tax. If such successor
indexing agent is not available, the rate for any J.J. Kenny
Interest Determination Date shall be 67% of the rate determined if
the Treasury Rate option had been originally selected. The
Calculation Agent shall calculate the J.J. Kenny Rate in accordance
with the foregoing. The J.J. Kenny Rate shall be adjusted by the
addition or subtracting of the Spread, if any, specified on the
face hereof, and/or by multiplication by the Spread Multiplier, if
any, specified on the face hereof.
Determination of the 11th District Cost of Funds Rate. If the
Interest Rate Basis specified on the face hereof is the 11th
District Cost of Funds Rate, the interest rate shall be equal to
the monthly 11th District Cost of Funds Index (the "11th District
Cost of Funds Index") normally made available and subsequently
published by the Federal Home Loan Bank of San Francisco (the "FHLB
of San Francisco") during the month immediately preceding the
Interest Reset Date to which such 11th District Cost of Funds
Interest Determination Date applies. If the FHLB of San Francisco
shall fail in any month to make available the 11th District Cost of
Funds Index (each such failure being referred to herein as an
"Alternate Rate Event"), then the 11th District Cost of Funds Rate
11
for the 11th District Cost of Funds Interest Determination Date
after the Alternate Rate Event shall be calculated on the basis of
the 11th District Cost of Funds Index most recently made available
prior to such 11th District Cost of Funds Interest Determination
Date. If an Alternate Rate Event occurs in the month immediately
following a month in which a prior Alternate Rate Event occurred,
then the 11th District Cost of Funds Rate for the 11th District
Cost of Funds Interest Determination Date immediately following the
second Alternate Rate Event shall be calculated on the basis of the
11th District Cost of Funds Index most recently made available
prior to the 11th District Cost of Funds Interest Determination
Date and, thereafter, the 11th District Cost of Funds Rate for each
succeeding 11th District Cost of Funds Interest Determination Date
shall be LIBOR, determined as though the interest rate basis were
LIBOR, and the Spread shall be plus or minus the number of basis
points specified in the applicable 11th District Cost of Funds Rate
Note as the "Alternate Rate Event Spread," if any.
In determining that the FHLB of San Francisco has failed in
any month to make available the 11th District Cost of Funds Index,
the Calculation Agent may rely conclusively on any written advice
from the FHLB of San Francisco to such effect.
The 11th District Cost of Funds Rate shall be adjusted by the
addition or subtraction of the Spread, if any, specified on the
face hereof, and/or by multiplication by the Spread Multiplier, if
any, specified on the face hereof.
Determination of the CMT Rate. If the Interest Rate Basis
specified on the face hereof is the CMT Rate, the interest rate
with respect to this Security for any Interest Reset Date shall be
determined by the Calculation Agent and shall equal the rate
displayed on the Designated CMT Telerate Page (as defined below)
under the caption "...Treasury Constant Maturities...Federal
Reserve Board Release H.15...Mondays Approximately 3:45 P.M.,"
under the Column for the Designated CMT Maturity Index (as defined
below) for (i) if the Designated CMT Telerate Page is 7055, the
rate on such CMT Interest Determination Date and (ii) if the
Designated CMT Telerate Page is 7052, the week, or the month, as
applicable, ended immediately preceding the week in which the
related CMT Interest Determination Date occurs. If such rate is no
longer displayed on the relevant page, or if not displayed by 3:00
P.M., New York City time, on the related Calculation Date, then the
CMT Rate for such CMT Interest Determination Date will be such
treasury constant maturity rate for the Designated CMT Maturity
Index as published in the relevant H.15(519). If such rate is no
longer published, or if not published by 3:00 P.M., New York City
time, on the related Calculation Date, then the CMT Rate for such
CMT Interest Determination Date will be such treasury constant
maturity rate for the Designated CMT Maturity Index (or other
United States Treasury rate for the Designated CMT Maturity Index)
for the CMT Interest Determination Date with respect to such
Interest Reset Date as may then be published by either the Board of
Governors of the Federal Reserve System or the United States
Department of the Treasury that the Calculation Agent determines to
be comparable to the rate formerly displayed on the Designated CMT
Telerate Page and published in the relevant H.15(519). If such
information is not provided by 3:00 P.M., New York City time, on
the related Calculation Date, then the CMT Rate for the CMT
Interest Determination Date will be calculated by the Calculation
Agent and will be a yield to maturity, based on the arithmetic mean
of the secondary market closing offer side prices as of
approximately 3:30 P.M. (New York City time) on the CMT Interest
Determination Date reported, according to their written records, by
three leading primary United States government securities dealers
(each, a "Reference Dealer") in The City of New York selected by
the Calculation Agent (from five such Reference Dealers selected by
the Calculation Agent and eliminating the highest quotation (or, in
the event of equality, one of the highest) and the lowest quotation
(or, in the event of equality, one of the lowest)), for the most
recently issued direct noncallable fixed rate obligations of the
United States ("Treasury Notes") with an original maturity of
approximately the Designated CMT Maturity Index and a remaining
term to maturity of not less than such Designated CMT Maturity
Index minus one year. If the Calculation Agent cannot obtain three
12
such Treasury Note quotations, the CMT Rate for such CMT Interest
Determination Date will be calculated by the Calculation Agent and
will be a yield to maturity based on the arithmetic mean of the
secondary market offer side prices as of approximately 3:30 P.M.
(New York City time) on the CMT Interest Determination Date of
three Reference Dealers in The City of New York (from five such
Reference Dealers selected by the Calculation Agent and eliminating
the highest quotations (or, in the event of equality, one of the
highest) and the lowest quotation (or, in the event of equality,
one of the lowest)), for Treasury Notes with an original maturity
of the number of years that is the next highest to the Designated
CMT Maturity Index and a remaining term to maturity closest to the
Designated CMT Maturity Index and in an amount of at least $100
million. If three of four (and not five) of such Reference Dealers
are quoting as described above, then the CMT Rate will be based on
the arithmetic mean of the offer prices obtained and neither the
highest nor the lowest of such quotes will be eliminated; provided,
however, that if fewer than three Reference Dealers selected by the
Calculation Agent are quoting as described herein, the CMT Rate
will be the CMT Rate in effect on such CMT Interest Determination
Date. If two Treasury Notes with an original maturity as described
in the third preceding sentence, have remaining terms to maturity
equally close to the Designated CMT Maturity Index, the quotes for
the CMT Rate Notes with the shorter remaining term to maturity will
be used. The CMT Rate shall be adjusted by the addition or
subtraction of the Spread, if any, specified on the face hereof,
and/or by multiplication of Spread Multiplier, if any, specified on
the face hereof.
"Designated CMT Telerate Page" means the display on the Dow
Jones Telerate Service on the page designated in the applicable
Pricing Supplement (or any other page as may replace such page on
that service for the purpose of displaying Treasury Constant
Maturities as reported in H.15(519)), for the purpose of displaying
Treasury Constant Maturities as reported in H.15(519). If no such
page is specified in the applicable Pricing Supplement, the
Designated CMT Telerate Page shall be 7052, for the most recent
week.
"Designated CMT Maturity Index" means the original period to
maturity of the U.S. Treasury securities (either 1, 2, 3, 5, 7, 10,
20, or 30 years) specified in the applicable Pricing Supplement
with respect to which the CMT Rate will be calculated. If no such
maturity is specified in the applicable Pricing Supplement, the
Designated CMT Maturity Index shall be 2 years.
Unless otherwise specified on the face hereof, the Calculation
Date pertaining (i) to any Commercial Paper Rate Interest
Determination Date, CD Rate Interest Determination Date, Treasury
Interest Determination Date, J.J. Kenny Rate Determination Date,
11th District Cost of Funds Rate Determination date or CMT Rate
Determination Date, Federal Funds Rate Interest Determination Date,
as the case may be, shall be the tenth day after such interest
determination date or, if any such day is not a Market Day with
respect to this Security, the next succeeding Market Day and
(ii) to any Prime Rate Interest Determination Date or LIBOR
Interest Determination Date shall be such Prime Rate Interest
Determination Date or such LIBOR Interest Determination Date, as
the case may be. The Calculation Agent shall calculate the
interest rate hereon in accordance with the foregoing on or before
each Calculation Date. At the request of the Holder hereof, the
Calculation Agent will provide to the Holder hereof the interest
rate hereon then in effect and, if determined, the interest rate
which will become effective as of the next Interest Reset Date.
Unless otherwise specified on the face hereof, the Calculation
Agent shall be the Trustee.
If this Security is designated on the face hereof as an
Original Issue Discount Security, then, notwithstanding anything to
the contrary contained in this Security, upon the redemption or
acceleration of Maturity of this Security there shall be payable,
in lieu of the principal amount due at the Stated Maturity hereof,
as specified on the face hereof, an amount equal to the Amortized
13
Face Amount of this Security. The "Amortized Face Amount" shall be
the amount equal to (a) the issue price of this Security, plus
(b) that portion of the difference between the issue price and the
principal amount of this Security that has been amortized at the
Stated Yield (as defined below) of this Security (computed in
accordance with generally accepted United States bond yield
computation principles) at the date as of which the Amortized Face
Amount is calculated, but in no event shall the Amortized Face
Amount exceed the principal amount of this Security due at the
Stated Maturity hereof. As used in the previous sentence the
"Stated Yield" means the Yield to Maturity specified on the face
hereof (or if not so specified, the yield to maturity compounded
semi-annually and computed in accordance with generally accepted
United States bond yield computation principles) for the period
from the Issue Date to the Stated Maturity on the basis of the
issue price and such principal amount.
If one or more "Redemption Dates" (or ranges of Redemption
Dates) is specified on the face hereof, this Security is subject
to redemption upon not less than 30 days' notice by mail, on any
such date (or during any such range) as a whole, or from time to
time in part, at the election of the Company, at a Redemption Price
determined as provided in the next succeeding sentence, together
with accrued interest to the Redemption Date; but interest
installments whose Stated Maturity is on or prior to the Redemption
Date will be payable to the Holder hereof (or one or more
Predecessor Securities) of record at the close of business on the
relevant Regular Record Dates referred to on the face hereof, all
as provided in the Indenture. If applicable, the Redemption Price
for any such redemption shall be the amount determined by
multiplying the "Redemption Percentage" specified on the face
hereof with respect to the relevant Redemption Date (or range of
such dates) by the portion of the principal amount hereof (or, if
this Security is an Original Issue Discount Security, the portion
of the Amortized Face Amount hereof) to be redeemed; provided,
however, that in no event shall the Redemption Price be less than
100% of the portion of the principal amount hereof (or, if this
Security is an Original Issue Discount Security, the portion of the
Amortized Face Amount hereof) to be redeemed.
Notice of redemption having been given as aforesaid, this
Security (or the portion of the principal amount hereof so to be
redeemed) shall, on the Redemption Date, become due and payable at
the Redemption Price herein specified, and from and after such date
(unless the Company shall default in the payment of the Redemption
Price and accrued interest) shall cease to bear interest.
In the case of any partial redemption at the election of the
Company of Securities of this series, the Securities of a
particular tenor to be redeemed shall be selected by the Trustee
not more than 60 days prior to the Redemption Date by such method
as the Trustee shall deem fair and appropriate and which may
provide for the selection for redemption of portions of the
principal amount of Securities. In the event of any redemption of
this Security in part only, a new Security or Securities of this
series of like tenor for the unredeemed portion hereof will be
issued in the name of the Holder hereof upon the cancellation
hereof, provided that such unredeemed portion shall be an
authorized denomination for Securities of this series.
If one or more "Redemption Dates (Option of Holder)" (or
ranges of such dates) is specified on the face hereof, this
Security is subject to redemption on any such date (or during any
such range) or, if such date is not a Market Day, on the first
Market Day following such date, as a whole or from time to time in
part, at the election of the Holder hereof at a Redemption Price
determined as provided in the fifth succeeding sentence together
with accrued interest thereon to the Redemption Date, but interest
installments whose Stated Maturity is on or prior to the Redemption
Date will be payable to the Holder hereof of record at the close of
14
business on the Regular Record Date referred to on the face hereof,
all as provided in the Indenture. Such election shall be effected
by the Holder hereof delivering to the Company at the principal
corporate trust office of the Trustee in The City of New York not
less than 30 nor more than 60 days prior to the date on which this
Security is to be redeemed, or during such other Notice Period
specified on the face hereof, a notice requesting such redemption
in the form as prescribed below and specifying the date upon which
this Security is to be redeemed. Any notice given by a Holder
pursuant to this paragraph shall consist of either (i) this
Security with the form entitled "Option to Elect Redemption" set
forth of the end of this Security duly completed or (ii) a
telegram, facsimile transmission or a letter from a member of a
national securities exchange, the National Association of
Securities Dealers, Inc. or a commercial bank or trust company in
the United States setting forth the name of the Holder hereof, the
principal amount of this Security, the principal amount of this
Security to be redeemed, the certificate number or a description of
the terms of this Security, a statement that the option to elect
redemption is being exercised thereby and a guarantee that this
Security, together with the duly completed form entitled "Option to
Elect Redemption" set forth at the end of this Security, will be
received by the Trustee not later than the fifth Business Day after
the date of such telegram, facsimile transmission or letter;
provided, however, that such telegram, facsimile transmission or
letter shall only be effective if this Security and form duly
completed are received by the Trustee by such fifth Business Day.
Exercise of the redemption option by the Holder hereof will be
irrevocable. Such Option may be exercised with respect to less
than the entire principal amount of this Security, provided that
the portion remaining Outstanding after such redemption shall be an
authorized amount for Securities of this Series. If applicable,
the Redemption Price for any such redemption shall be the amount
determined by multiplying the "Redemption Percentage (Option of
Holder)," specified on the face hereof with respect to the relevant
Redemption Date (Option of Holder) (or range of such dates) by the
portion of the principal amount hereof (or, if this Security is an
Original Issue Discount Security, the portion of the Amortized Face
Amount hereof) to be redeemed, together with the interest accrued
thereon to the Redemption Date; provided, however, that in no event
shall the Redemption Price be less than 100% of the portion of the
principal amount hereof (or, if this Security is an Original Issue
Discount Security, the portion of the Amortized Face Amount hereof)
to be redeemed.
If so indicated on the face hereof, and in accordance with the
terms specified thereon, this Security will be subject to
redemption through operation of a sinking fund.
[The Indenture contains provisions for defeasance at any time
of [the entire indebtedness on this Security] [or] [certain
restrictive covenants and Events of Default with respect to this
Security] [, in each case] upon compliance by the Company with
certain conditions set forth therein. If under the terms of any
Securities it is not possible, due to the nature of the manner in
which interest payable on such Securities is determined, for the
Company to determine the amount of money necessary to pay the
principal of, premium, if any, and each installment of interest on
such Securities on the Stated Maturity or Interest Payment Dates
related to such payments in accordance with the terms of the
Indenture and such Securities, then the Company shall waive its
right to exercise such defeasance.]
If an Event of Default with respect to the Securities of this
series shall occur and be continuing, the principal of the
Securities of this series (or, in the case of Original Issue
Discount Securities, the Amortized Face Amount thereof) may be
declared due and payable in the manner and with the effect provided
in the Indenture. Upon payment (i) of the amount of principal so
declared due and payable and (ii) of interest on any overdue
principal, premium and interest (in each case to the extent that
the payment of such interest shall be legally enforceable), all of
the Company's obligations in respect of the payment of the
principal of and premium and the interest, if any, on the
Securities of this series shall terminate.
15
The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights
and obligations of the Company and the rights of the Holders of the
Securities of each series to be affected under the Indenture at any
time by the Company and the Trustee with the consent of the Holders
of 66 2/3% in principal amount of the Securities at the time
Outstanding of each series to be affected. The Indenture also
contains provisions permitting the Holders of specified percentages
in principal amount of the Securities of each series at the time
Outstanding, on behalf of the Holders of all Securities of such
series, to waive compliance by the Company with certain provisions
of the Indenture and certain past defaults under the Indenture and
their consequences. Any such consent or waiver 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 hereof or
in lieu hereof, whether or not notation of such consent or waiver
is made upon this Security.
As provided in and subject to the provisions of the Indenture,
the Holder of this Security shall not have the right to institute
any proceeding with respect to the Indenture or for the appointment
of a receiver or trustee or for any other remedy thereunder, unless
such Holder shall have previously given the Trustee written notice
of a continuing Event of Default with respect to the Securities of
this series, the Holder of not less than 50% in principal amount of
the Securities of this series at the time Outstanding shall have
made written request to the Trustee to institute proceedings in
respect of such Event of Default as Trustee and offered the Trustee
reasonable indemnity, and the Trustee shall not have received from
the Holders of a majority in principal amount of Securities of this
series at the time Outstanding a direction inconsistent with such
request, and shall have failed to institute any such proceeding,
for 60 days after receipt of such notice, request and offer of
indemnity. The foregoing shall not apply to any suit instituted by
the Holder of this Security for the enforcement of any payment of
principal hereof or any premium or interest hereon on or after the
respective due dates expressed herein.
No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation
of the Company, which is absolute and unconditional, to pay the
principal of (and premium, if any) and interest on this Security at
the times, place and rate, and in the coin or currency, herein
prescribed.
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 office or agency of
the Company in any place where the principal of and any premium and
interest on this Security are payable, duly endorsed by, or
accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security Registrar duly
executed by, the Holder hereof or his attorney duly authorized in
writing, and thereupon one or more new Securities of this series
and of like tenor, of authorized denominations and for the same
aggregate principal amount, will be issued to the designated
transferee or transferees.
As provided in the Indenture and subject to certain
limitations therein set forth, the Securities of this series are
exchangeable for a like aggregate principal amount of Securities of
this series and of like tenor of a different authorized
denomination, as requested by the Holder surrendering the same.
In the event of any redemption at the election of the Company,
the Trustee shall not be required to (i) issue, register the
transfer of or exchange Securities of this series of like tenor
during a period beginning at the opening of business 15 days before
any selection of Securities of this series to be redeemed and
ending at the close of business on the day of mailing of the
16
relevant notice of redemption, or (ii) register the transfer of or
exchange any Security, or portion thereof, called for redemption,
except the unredeemed portion of any Security being redeemed in
part. Following the exercise of any redemption option by the
Holder hereof, the Trustee shall not be required to issue, register
the transfer of or exchange that portion of this Security with
respect to which such option has been exercised.
No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in
connection therewith.
The Securities of this series may be issued in the form of one
or more Global Securities to The Depository Trust Company as
depositary for the Global Securities of this series (the
"Depositary") or its nominee and registered in the name of the
Depositary or such nominee. If the face of this Security contains
a legend indicating that this Security is a Global Security so
registered, the transfer and exchange hereof is subject to the
additional limitations set forth in such legend.
Prior to due presentment of this 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 this Security is
registered as the owner hereof for all purposes, whether or not
this Security is overdue, and neither the Company, the Trustee nor
any such agent shall be affected by notice to the contrary.
All terms used in this Security which are defined in the
Indenture shall have the meanings assigned to them in the
Indenture.
__________________
ABBREVIATIONS
The following abbreviations, when used in the inscription on
the face of this instrument, shall be construed as though they were
written out in full according to applicable laws or regulations.
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship
and not as tenants in common
UNIF GIFT MIN ACT - ______________ Custodian ________________
(Custodian) (Minor)
Under Uniform Gifts to Minors Act (___________)
(State)
Additional abbreviations may also be used though not in the above
list.
__________________
17
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
--------------------------------------------------------------------------
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE:
--------------------------------------------------------------------------
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF
ASSIGNEE)
--------------------------------------------------------------------------
--------------------------------------------------------------------------
the within Note and all rights thereunder, hereby irrevocably
constituting
and appointing___________________________________________________________
attorney to transfer said Note on the books of the Company, with
full power of substitution in the premises.
Dated:____________________
X________________________________________________________________
Signature guarantee: NOTICE: The signature to
this assignment must
correspond with the name
as written upon the face
of the within instrument
in every particular,
without alteration or
enlargement or any change
whatever.
18
OPTION TO ELECT REDEMPTION
The undersigned hereby irrevocably requests and instructs
[INSERT NAME OF COMPANY] to redeem the within Security (or portion
thereof specified below) pursuant to its terms at the Redemption
Price, to the undersigned at
--------------------------------------------------------------------------
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE
OF THE UNDERSIGNED)
--------------------------------------------------------------------------
--------------------------------------------------------------------------
--------------------------------------------------------------------------
If less than the entire principal amount of the within
Security is to be redeemed, specify the portion thereof which the
Holder elects to have redeemed:
_________________________________________________________________
_______________________; and specify the denomination or
denominations (which shall not be less than the minimum authorized
denomination) of the Securities to be issued to the Holder for the
portion of the within Security not being redeemed (in the absence
of any such specification, one such Security will be issued for the
portion not being redeemed):
_________________________________________________________________
___________________________.
Dated:___________________
________________________________________________________________
Signature guarantee: NOTICE: This signature
on this Option to Elect
Redemption must
correspond with the name
as written upon the face
of the within instrument
in every particular
without alteration or
enlargement.
19
EX-10
4
EXHIBIT 10(n)(ii)
Page 150
AMENDMENT
AMENDMENT to the COMSAT Corporation 1990 Key Employee Stock
Plan (the "Plan"), as approved by the shareholders of COMSAT
Corporation (the "Corporation") on May 18, 1990, and as
previously amended on January 15, 1993.
WHEREAS, on February 18, 1994, the Corporation's Board of
Directors approved this Amendment, subject to approval by the
shareholders of the Corporation; and
WHEREAS, on May 20, 1994, the shareholders of the
Corporation approved this Amendment.
NOW, THEREFORE, Section 8 of the Plan is hereby amended with
respect to all grants made on or after January 1, 1994 to read as
follows:
"8. Restricted Stock Awards.
(a) The Committee may from time to time, and subject
to the provisions of the Plan and such other terms and
conditions as the Committee may determine, grant Restricted
Stock Awards under the Plan. Each Restricted Stock Award
shall be evidenced by a written instrument which shall state
the number of shares of Common Stock covered by the award
and the terms and conditions which the Committee shall have
determined with respect to such award. No more than 50,000
shares of Common Stock may be granted to any individual with
respect to any Restricted Stock Awards in any given year.
(b) The Committee shall determine a period of time
("Performance Period"), the applicable performance measures
and the specific targets applicable to those measures which
shall apply to a Restricted Stock Award made to a
Participant. The performance measures may include one or
more of the following: improvements in revenues, earnings
per share, profit before taxes, net income or operating
income; return on shareholder equity; return on net assets;
and stock price performance. During the Performance Period,
the Participant is not the record holder of the shares of
Common Stock underlying the Restricted Stock Award and will
not have the rights and privileges of a shareholder of the
Corporation with respect to such shares, including the right
to vote the shares or receive dividends paid on the shares.
(c) The Committee may provide that, during the
Performance Period, a Participant whose Restricted Stock
Award has not previously terminated shall be entitled to
have an amount accrued for his or her account equal to each
cash dividend the Corporation would have paid to such
Participant during the Performance Period if the Participant
had been the owner of record of the shares of Common Stock
underlying the Restricted Stock Award on the record date for
the payment of such dividend.
(d) At the end of the Performance Period with respect
to any Restricted Stock Award, the Committee must certify
that the performance measures have been achieved. Once this
certification is made with respect to a Restricted Stock
Award, the dividends accrued pursuant to paragraph (c) shall
be paid and a certificate representing the shares of Common
Stock covered by the award shall be registered in the name
of the Participant and shall be delivered to the Participant
without payment on his part. The Participant shall then
generally have the rights and privileges of a shareholder of
the Corporation with respect to such shares, including the
right to vote and to receive dividends, subject to the
restrictions specified in paragraphs (e) and (f).
(e) The Committee shall determine a period of time
("Limitation Period") which shall apply to the shares of
Common Stock transferred to a Participant with respect to
achievement of the performance measures contained in each
Restricted Stock Award, provided that in no event shall the
Limitation Period be less than two years. Except as
otherwise determined by the Committee, during the Limitation
Period applicable with respect to each Restricted Stock
Award, the Participant may not sell, transfer, assign,
pledge or otherwise encumber or dispose of the shares of
Common Stock covered by such Restricted Stock Award. The
Committee in its discretion may prescribe conditions for the
incremental lapse of the preceding restrictions during the
Limitation Period, and for the lapse or termination of such
restrictions upon the occurrence of certain events before
the expiration of the Limitation Period. The Committee in
its discretion also may shorten or terminate the Limitation
Period or waive any conditions for the lapse or termination
of the restrictions with respect to all or any portion of
the shares of Common Stock covered by the Restricted Stock
Award. The certificate representing the shares of Common
Stock distributed with respect to each Restricted Stock
Award made under the Plan shall be affixed with a legend
setting forth the restrictions applicable to the transfer of
such shares. The restrictions applicable to a Restricted
Stock Award shall lapse and a certificate for the number of
shares of Common Stock with respect to which the
restrictions have lapsed shall be delivered to the
Participant free of all such restrictions upon the earliest
of the following: (1) the expiration of the Limitation
Period applicable to the Restricted Stock Award, (2) the
occurrence of an event prescribed by the Committee which
results in the lapse of the restrictions, or (3) such other
time as the Committee may determine.
(f) The Shares of Common Stock covered by a Restricted
Stock Award shall be forfeited by the Participant upon
termination of the Participant's employment with the
Corporation or any of its subsidiaries before the occurrence
of any of the events described in the last sentence of
paragraph (e). The Participant shall thereupon immediately
transfer the shares back to the Corporation without payment
by the Corporation."
All other terms and provisions of the Plan are hereby expressly
confirmed and restated, and all Options, SARs, Restricted Stock
Units and Restricted Stock Awards previously issued under the
Plan shall remain in full force and effect pursuant to their
terms and the terms of the Plan at the time of issuance.
EXHIBIT 10(bb)(i)
Page 154
AMENDMENT NO. 1 TO CREDIT AGREEMENT
THIS AMENDMENT AGREEMENT (this "Amendment"), dated as of
December 17, 1994, among COMSAT CORPORATION, a District of
Columbia corporation (the "Borrower"), the various banks and
lending institutions parties hereto (each a "Bank" and
collectively, the "Banks"), and NATIONSBANK OF NORTH CAROLINA,
N.A., a national banking association, as agent for the Banks (in
such capacity, the "Agent");
W I T N E S S E T H:
WHEREAS, pursuant to that certain Credit Agreement, dated as
of December 17, 1993 (the "Existing Credit Agreement"), among the
parties hereto, the Banks have agreed to make loans to the
Borrower; and
WHEREAS, the Borrower, the Banks and the Agent desire to
make certain amendments to the Existing Credit Agreement;
NOW, THEREFORE, in consideration of the agreements herein
contained, the parties hereby agree as follows:
PART I
DEFINITIONS
SUBPART 1.1. Certain Definitions. Unless otherwise defined
herein or the context otherwise requires, terms used in this
Amendment, including its preamble and recitals, have the
following meanings:
"Amended Credit Agreement" means the Existing Credit
Agreement as amended hereby.
"Amendment No. 1 Effective Date" is defined in Subpart 3.1.
SUBPART 1.2. Other Definitions. Unless otherwise defined
herein or the context otherwise requires, terms used in this
Amendment, including its preamble and recitals, have the meanings
provided in the Amended Credit Agreement.
PART II
AMENDMENTS TO EXISTING CREDIT AGREEMENT
Effective on (and subject to the occurrence of) the
Amendment No. 1 Effective Date, the Existing Credit Agreement is
hereby amended in accordance with this Part II. Except as so
amended, the Existing Credit Agreement, the Notes and the other
Financing Documents shall continue in full force and effect.
SUBPART 2.1 Amendments to Article I. Article I of the
Existing Credit Agreement is hereby amended by inserting, in the
alphabetically appropriate place, the following definition:
Page 1
"Amendment No. 1" means Amendment No. 1 to Credit
Agreement, dated as of December 17, 1994, among the
Borrower, the Agent and the Banks, amending this Credit
Agreement as then in effect.
Article I of the Existing Credit Agreement is further amended by
amending in their entirety the following definitions so that such
definitions now read as follows:
"Applicable Fee Percentage" shall mean on any date,
with respect to the Facility Fees, the applicable percentage
set forth below based upon the ratings applicable on such
date to any senior unsecured debt of the Borrower then
outstanding:
Facility Fee
Percentage
------------
Category 1
----------
AA- or higher by S&P .10%
and Aa3 or higher
by Moody's
Category 2
----------
A+ by S&P and .10%
A1 by Moody's
Category 3
----------
A by S&P and A2 .10%
by Moody's
Category 4
----------
A- by S&P and .10%
A3 by Moody's
Category 5
----------
BBB+ by S&P and .125%
Baa1 by Moody's
Category 6
----------
BBB by S&P and .15%
Baa2 by Moody's
Category 7
----------
BBB- by S&P and .1875%
Baa3 by Moody's
Page 2
Category 8
----------
BB+ or lower by .375%
S&P and Ba1 or lower
by Moody's
For purposes of the foregoing, (i) if no rating for any
senior unsecured debt of the Borrower shall be available
from either Moody's or S&P, such rating agency shall be
deemed to have established a rating for the senior unsecured
debt of the Borrower in Category 8, (ii) if the ratings
established or deemed to have been established by Moody's
and S&P shall fall within different Categories, the
Applicable Fee Percentage shall be based upon the inferior
(or numerically highest) Category and (iii) if any rating
established or deemed to have been established by Moody's or
S&P shall be changed (other than as a result of a change in
the rating system of either Moody's or S&P), such change
shall be effective as of the date on which such change is
first announced by the rating agency making such change.
Each such change shall apply to all Facility Fees that
accrue at any time during the period commencing on the
effective date of such change and ending on the date
immediately preceding the effective date of the next such
change. If the rating system of either Moody's or S&P shall
change prior to the Termination Date, the Borrower and the
Lenders shall negotiate in good faith to amend the
references to specific ratings in this definition to reflect
such changed rating system.
"Applicable Margin" shall mean on any date, with
respect to A Advances which are Eurodollar Rate Advances,
the applicable spread set forth below based upon the ratings
applicable on such date to any senior unsecured debt of the
Borrower then outstanding:
Eurodollar Rate
Advance Spread
---------------
Category 1
----------
AA- or higher by S&P .25%
and Aa3 or higher
by Moody's
Category 2
----------
A+ by S&P and .25%
A1 by Moody's
Category 3
----------
A by S&P and A2 .25%
by Moody's
Page 3
Category 4
----------
A- by S&P and .25%
A3 by Moody's
Category 5
----------
BBB+ by S&P and .275%
Baa1 by Moody's
Category 6
----------
BBB by S&P and .30%
Baa2 by Moody's
Category 7
----------
BBB- by S&P and .375%
Baa3 by Moody's
Category 8
----------
BB+ or lower by .50%
S&P and Ba1 or lower
by Moody's
For purposes of the foregoing, (i) if no rating for any
senior unsecured debt of the Borrower shall be available
from either Moody's or S&P, such rating agency shall be
deemed to have established a rating for the senior unsecured
debt of the Borrower in Category 8, (ii) if the ratings
established or deemed to have been established by Moody's
and S&P shall fall within different Categories, the
Applicable Margin applicable to any A Advance which is a
Eurodollar Rate Advance shall be based upon the inferior (or
numerically highest) Category and (iii) if any rating
established or deemed to have been established by Moody's or
S&P shall be changed (other than as a result of a change in
the rating system of either Moody's or S&P), such change
shall be effective as of the date on which such change is
first announced by the rating agency making such change.
Each such change shall apply to all A Advances which are
Eurodollar Rate Advances that are outstanding at any time
during the period commencing on the effective date of such
change and ending on the date immediately preceding the
effective date of the next such change. If the rating
system of either Moody's or S&P shall change prior to the
Termination Date, the Borrower and the Lenders shall
negotiate in good faith to amend the references to specific
ratings in this definition to reflect such changed rating
system.
"Termination Date" means (i) December 17, 1999 or such
later date determined in accordance with the provisions of
Section 2.17, or (ii) the earlier date of termination in
Page 4
whole of the Commitments pursuant to Section 2.05 or 6.01;
provided, however, the Termination Date shall not in any
event be later than December 17, 2000.
SUBPART 2.2 Amendments to Section 2.17. Section 2.17 is
amended in its entirety so that such Section now reads as
follows:
SECTION 2.17. Extension of Maturity. So long as no
Event of Default shall have occurred and be continuing or if
any Event of Default shall have occurred and shall have been
waived, the Borrower may, prior to December 17 of each
calendar year commencing December 17, 1995 and ending
December 17, 1999 (each, an "Extension Date"), request an
extension of the Termination Date for a one-year period by
giving notice of such request not less than 90 days nor more
than 120 days prior to such Extension Date to the Agent and
executing and delivering to each Lender a completed
Extension Letter in the form of Exhibit "F" hereto,
requesting the extension of the Termination Date. Each
Lender may, in its sole discretion, execute such letter and
return copies thereof to the Agent and the Borrower. Any
Lender which fails to execute and return its copies of the
Extension Letter on or before the date 60 days prior to the
applicable Extension Date shall be deemed to have denied the
Borrower's request. If, on the date 60 days before the
applicable Extension Date, the Agent has received Extension
Letters from Lenders holding at least 60% but less than 100%
in aggregate principal amount of the Commitments, the
Borrower may (i) require each Lender who has denied the
Borrower's request to transfer all such Lender's rights and
obligations under this Agreement to another financial
institution or institutions, which shall be in each case (A)
an Eligible Assignee selected by the Borrower willing to
assume such rights and obligations and to consent to the
extension of the Termination Date, in accordance with the
provisions of Section 8.07 and (B) assuming a Commitment in
an amount not less than $10,000,000 or an integral multiple
of $1,000,000 in excess thereof or (ii) repay in whole or in
part accrued and unpaid principal, interest and fees with
respect to the Commitments and Advances of each Lender who
has denied the Borrower's request and terminate in whole or
in part the Commitments of such Lenders, provided (i) that
the termination of such Commitments would not result in the
aggregate remaining Commitments being reduced below the
limit set forth in Section 2.05 and (ii) that the Borrower
shall have obtained the consent of such Lender with respect
to the remaining portion of such Lender's Commitment. If on
the date 30 days prior to the applicable Extension Date the
Agent has received Extension Letters from each Lender (after
giving effect to the assignments pursuant to Section 8.07,
if any) the Termination Date shall be extended by one year.
Page 5
PART III
CONDITIONS TO EFFECTIVENESS
SUBPART 3.1. Amendment No. 1 Effective Date. This
Amendment shall be and become effective on such date (the
"Amendment No. 1 Effective Date") on or prior to December 17,
1994, when all of the conditions set forth in this Subpart 3.1
shall have been satisfied, and thereafter, this Amendment shall
be known, and may be referred to, as "Amendment No. 1."
SUBPART 3.1.1. Execution of Counterparts. The Agent shall
have received counterparts of this Amendment, each of which shall
have been duly executed on behalf of the Borrower, the Agent and
each Bank.
SUBPART 3.1.2. Legal Details, Etc. All documents executed
or submitted pursuant hereto shall be satisfactory in form and
substance to the Agent and its counsel. The Agent and its
counsel shall have received all information, and such counterpart
originals or such certified or other copies of such originals, as
the Agent may reasonably request, and all legal matters incident
to the transactions contemplated by this Amendment shall be
satisfactory to the Agent. In addition, the Agent shall have
received such other agreements, documents or instruments as it
may from time to time reasonably request.
PART IV
MISCELLANEOUS
SUBPART 4.1 Cross-References. References in this Amendment
to any Part or Subpart are, unless otherwise specified, to such
Part or Subpart of this Amendment.
SUBPART 4.2 Instrument Pursuant to Existing Credit
Agreement. This Amendment is a document executed pursuant to the
Existing Credit Agreement and shall (unless otherwise expressly
indicated therein) be construed, administered and applied in
accordance with the terms and provisions of the Existing Credit
Agreement.
SUBPART 4.3 Notes. The Borrower hereby confirms and agrees
that the Notes are, and shall continue to be, in full force and
effect, and hereby ratifies and confirms in all respects its
obligations thereunder, except that, upon the effectiveness of,
and on and after the date of, this Amendment, all references in
each Note to the "Credit Agreement", "thereunder", "thereof" or
words of like import referring to the Existing Credit Agreement
shall mean the Amended Credit Agreement.
SUBPART 4.4 Counterparts, Effectiveness, Etc. This
Amendment may be executed by the parties hereto in several
counterparts, each of which shall be deemed to be an original and
all of which shall constitute together but one and the same
agreement.
Page 6
SUBPART 4.5 Governing Law. THIS AMENDMENT SHALL BE DEEMED
TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF
THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE CONFLICT OF
LAW PRINCIPLES THEREOF.
SUBPART 4.6 Successors and Assigns. This Amendment shall
be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed by their respective duly authorized
officers as of the day and year first above written.
COMSAT CORPORATION
By/s/W.D. Minami
---------------------------
Title: Treasurer
NATIONSBANK OF NORTH CAROLINA,
N.A., as Agent and as a Bank
By/s/Robert Gillison
---------------------------
Title: Vice President
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By/s/Doug Bontemps
---------------------------
Title: Vice President
THE FIRST NATIONAL BANK OF CHICAGO
By/s/Ted Wozniak
---------------------------
Title: Vice President
THE CHASE MANHATTAN BANK, N.A.
By/s/Robert T. Smith
---------------------------
Title: Vice President
Page 7
THE SUMITOMO BANK, LIMITED,
NEW YORK BRANCH
By/s/Yoshinori Kawamura
---------------------------
Title: Joint General Manager
SWISS BANK CORPORATION, NEW YORK
BRANCH
By/s/Jane A. Majeski
---------------------------
Title: Director, Merchant Banking
By/s/Colin T. Taylor
---------------------------
Title: Director, Merchant Banking
Page 8
EXHIBIT 10(gg)
Page 163
_________________________________________________________________
FISCAL AGENCY AGREEMENT
Between
INTERNATIONAL TELECOMMUNICATIONS SATELLITE ORGANIZATION,
Issuer
and
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
Fiscal Agent and Principal Paying Agent
_________________________
Dated as of 14 October 1994
_________________________
U.S. $200,000,000
8-3/8% Notes Due 2004
_________________________________________________________________
Page ii
FISCAL AGENCY AGREEMENT, dated as of 14 October 1994 (the
"Agreement"), between International Telecommunications Satellite
Organization ("INTELSAT"), an international organization
established by the Agreement Relating to the International
Telecommunications Satellite Organization and the Operating
Agreement relating thereto, entered into force on 12 February 1973,
and Morgan Guaranty Trust Company of New York, a bank organized
under the laws of New York, United States, as Fiscal Agent and
Principal Paying Agent.
1. INTELSAT has, by a Subscription Agreement, dated as
of 13 October 1994, between INTELSAT and CS First Boston Limited
("CSFB"), and the other Managers named therein (the "Managers"),
agreed to issue U.S. $200,000,000 aggregate principal amount of its
8 3/8% Notes Due 2004 (the "Notes"). The Notes shall be issued
initially in the form of a temporary global note in bearer form,
without interest coupons, substantially in the form of Exhibit A
hereto (the "Global Note"). The Global Note will be exchangeable,
as provided below, for definitive Notes issuable in bearer form, in
denominations of U.S. $1,000, U.S. $10,000 and U.S. $100,000 (the
"Bearer Notes") with interest coupons attached (the "coupons"),
substantially in the forms set forth in Exhibit B hereto. The term
"Notes" as used herein includes the Global Note. The term "Holder",
when used with respect to a Bearer Note or any coupon, means the
bearer thereof.
2. INTELSAT hereby appoints Morgan Guaranty Trust
Company of New York, acting through its office at London, United
Kingdom, as its fiscal agent and principal paying agent in respect
of the Notes upon the terms and subject to the conditions herein
set forth (Morgan Guaranty Trust Company of New York and its
successor or successors as such fiscal agent or principal paying
agent qualified or appointed in accordance with Section 8 hereof
are herein collectively called the "Fiscal Agent"), and Morgan
Guaranty Trust Company of New York hereby accepts such appointment.
The Fiscal Agent shall have the powers and authority granted to and
conferred upon it herein and in the Notes and such further powers
and authority to act on behalf of INTELSAT as may be mutually
agreed upon by INTELSAT and the Fiscal Agent. As used herein,
"paying agents" shall mean paying agents (including the Fiscal
Agent) maintained by INTELSAT as provided in Section 8(b) hereof.
3. (a) The Notes shall be executed on behalf of
INTELSAT by the Director General and Chief Executive Officer or by
any other officer of INTELSAT specifically identified in a
certificate of incumbency and specimen signatures as having the
requisite authority to execute the Notes (the "Executive
Officers"), any of whose signatures may be manual or facsimile,
under a facsimile of its seal reproduced thereon and attested by
its General Counsel or an Assistant General Counsel, any of whose
signatures may be manual or facsimile. Notes bearing the manual or
facsimile signatures of persons who were at any time the proper
officers of INTELSAT shall bind INTELSAT, notwithstanding that such
persons or any of them ceased to hold such office or offices prior
to the authentication and delivery of such Notes or did not hold
such office or offices at the date of issue of such Notes.
Page 1
(b) The Fiscal Agent is hereby authorized, in accordance
with the provisions of Paragraph 9 of the definitive Notes and this
Section, from time to time to authenticate (or to arrange for the
authentication on its behalf) and deliver a new Note in exchange
for or in lieu of any Note which has become, or the coupons
appertaining thereto which have become, mutilated, lost, stolen or
destroyed. Each Note authenticated and delivered in exchange for
or in lieu of any such Note shall carry all the rights to interest
accrued and unpaid and to accrue which were carried by such Note.
4. (a) INTELSAT initially shall execute and deliver, on
14 October 1994 (the "Closing Date"), a Global Note for an
aggregate principal amount of U.S. $200,000,000 to the Fiscal
Agent, and the Fiscal Agent by a duly authorized officer or an
attorney-in-fact duly appointed pursuant to a valid power of
attorney shall, upon the order of INTELSAT signed by an Executive
Officer of INTELSAT, authenticate the Global Note and deliver the
Global Note to The Chase Manhattan Bank N.A. (London Branch), a
common depositary for the Morgan Guaranty Trust Company, Brussels'
Office, as operator of the Euroclear System ("Euroclear") and Cedel
societe anonyme ("Cedel"), for credit to the respective account of
the purchasers (or to such other accounts as it may direct).
(b) For the purposes of this Agreement, "Exchange Date"
shall mean the day immediately following the expiration of the 40-
day period beginning on the later of the date on which Notes are
first offered to persons other than distributors (as determined by
CSFB) and the Closing Date. Without unnecessary delay, but in any
event not less than 14 days prior to the Exchange Date, except in
the event of earlier redemption or acceleration, INTELSAT shall
execute and deliver to the Fiscal Agent U.S. $200,000,000 principal
amount of Bearer Notes.
(c) Not earlier than the Exchange Date, the interest of
a beneficial owner of the Notes in the Global Note shall only be
exchanged for Bearer Notes after the account holder instructs
Euroclear or Cedel, as the case may be, to request such exchange on
his behalf and presents to Euroclear or Cedel, as the case may be,
a certificate substantially in the form set forth in Exhibit C
hereto, copies of which certificate shall be available from the
offices of Euroclear and Cedel. Any exchange pursuant to this
paragraph shall be made free of charge to beneficial owners of the
Global Note, except that a person receiving definitive Notes must
bear the cost of insurance, postage, transportation and the like in
the event that such person does not take delivery of such Notes in
person at the offices of Euroclear or Cedel. In no event shall any
such exchange occur prior to the Exchange Date.
(d) Upon request for issuance of Bearer Notes, on or
after the Exchange Date, the Global Note shall be surrendered by
the Common Depositary to the Fiscal Agent, as INTELSAT's agent, for
purposes of the exchange of Notes described below. Following such
surrender and upon presentation by Euroclear or Cedel, acting on
behalf of the beneficial owners of Bearer Notes, to the Fiscal
Agent at its principal office in London, United Kingdom (the
"Principal Office") of a certificate or certificates substantially
in the form set forth in Exhibit D hereto, the Fiscal Agent shall
authenticate (or arrange for the authentication on its behalf) and
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deliver to Euroclear or Cedel, as the case may be, for the account
of such owners, the Bearer Notes in exchange for an aggregate
principal amount equal to the principal amount of the Global Note
beneficially owned by such owners. The presentation to the Fiscal
Agent by Euroclear or Cedel of such a certificate may be relied
upon by INTELSAT and the Fiscal Agent as conclusive evidence that
a related certificate or certificates has or have been presented to
Euroclear or Cedel, as the case may be, as contemplated by the
terms of Section 4(c) hereof.
Upon any exchange of a portion of the Global Note for
Bearer Notes, the Global Note shall be endorsed by the Fiscal Agent
to reflect the reduction of the principal amount evidenced thereby,
whereupon its remaining principal amount shall be reduced for all
purposes by the amount so exchanged; provided, that when the Global
Note is exchanged in full, the Fiscal Agent shall cancel it. Until
so exchanged in full, the Global Note shall in all respects be
entitled to the same benefits under this Agreement as the
definitive Notes authenticated and delivered hereunder, except that
none of Euroclear, Cedel or the beneficial owners of the Global
Note shall be entitled to receive payment of interest thereon.
Notwithstanding the foregoing, in the event of redemption
or acceleration of the Global Note prior to the issue of the Bearer
Notes, Bearer Notes will be issuable in respect of such Global Note
on or after the later of (i) the date fixed for such redemption or
on which such acceleration occurs and (ii) the Exchange Date, and
all of the foregoing in this subsection (d) shall be applicable to
the issuance of such Bearer Notes.
(e) No Note or coupon shall be entitled to any benefit
under this Agreement or be valid or obligatory for any purpose
unless there appears on such Note or coupon a certificate of
authentication substantially in the forms provided for herein and
executed by the Fiscal Agent by manual signature, and such
certificate upon any Note or coupon shall be conclusive evidence,
and the only evidence, that such Note or coupon has been duly
authenticated and delivered hereunder.
5. (a) INTELSAT will pay or cause to be paid to the
Fiscal Agent the amounts required to be paid by it herein and in
the Notes, at the times and for the purposes set forth herein and
in the Notes, and INTELSAT hereby authorizes and directs the Fiscal
Agent to make payment of the principal of and interest and
additional amounts pursuant to Paragraph 5 of the definitive Notes
("Additional Amounts"), if any, on the Notes in accordance with the
terms of the Notes.
(b) Notwithstanding any other provision hereof (other
than the last sentence of this Section 5(b)) or of the Notes, no
payment with respect to principal of or interest or Additional
Amounts, if any, on any Note may be made at any office of the
Fiscal Agent or any other paying agent maintained by INTELSAT in
the United States of America (including the States and the District
of Columbia), its territories or possessions and other areas
subject to its jurisdiction (the "United States"). No payment with
respect to a Note shall be made by transfer to an account in, or by
mail to an address in, the United States. Notwithstanding the
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foregoing, payment of principal of and interest and Additional
Amounts, if any, on the Notes shall be made at a paying agent in
the Borough of Manhattan, The City of New York, if (but only if)
payments in United States dollars of the full amount of such
principal, interest or Additional Amounts at all offices or
agencies outside the United States through which payment is to be
made in accordance with the terms of the Notes is illegal or
effectively precluded by exchange controls or other similar
restrictions.
(c) If INTELSAT becomes liable to pay additional amounts
pursuant to Section 5 of the Notes, then, at least ten business
days prior to the date of any such payment of principal or interest
to which such payment of additional amounts relates, INTELSAT shall
furnish the Fiscal Agent, the Paying Agent and each other paying
agent of INTELSAT with a certificate which specifies, by country,
the rates of withholding, if any, applicable to such payment to
Holders of the Notes, and shall pay to the Paying Agent such
amounts as shall be required to be paid to Holders of the Notes.
INTELSAT hereby agrees to indemnify the Fiscal Agent, the Paying
Agent and each other paying agent of INTELSAT for, and to hold them
harmless against, any loss, liability or expense incurred without
negligence or bad faith on their part arising out of or in
connection with actions taken or omitted by any of them in reliance
on any certificate furnished pursuant to this Section 5(c).
(d) In the case of any redemption of Notes, INTELSAT
shall give notice, not less than 45 or more than 75 days prior to
any date set for redemption (as provided for in Paragraph 6 of the
definitive Notes), to the Fiscal Agent of its election to redeem
the Notes on such redemption date specified in such notice. The
Fiscal Agent shall cause notice of redemption to be given in the
name and at the expense of INTELSAT in the manner provided in
Paragraph 6(e) of the definitive Notes.
6. All Notes and coupons surrendered for payment,
redemption or exchange shall, if surrendered to anyone other than
the Fiscal Agent, be cancelled and delivered to the Fiscal Agent.
All cancelled Notes and coupons held by the Fiscal Agent shall be
destroyed, and the Fiscal Agent shall furnish to INTELSAT a
certificate with respect to such destruction, except that the
cancelled Global Note shall not be destroyed but shall be delivered
to INTELSAT.
7. The Fiscal Agent accepts its obligations set forth
herein and in the Notes upon the terms and conditions hereof and
thereof, including the following, to all of which INTELSAT agrees
and to all of which the rights hereunder of the Holders from time
to time of the Notes and coupons shall be subject:
(a) The Fiscal Agent and each other paying agent of
INTELSAT shall be entitled to the compensation to be agreed upon
with INTELSAT for all services rendered by it, and INTELSAT agrees
promptly to pay such compensation and to reimburse the Fiscal Agent
and each other paying agent of INTELSAT for its reasonable out-of-
pocket expenses (including reasonable counsel fees) incurred by it
in connection with the services rendered by it hereunder. INTELSAT
also agrees to indemnify each of the Fiscal Agent and each other
Page 4
paying agent of INTELSAT hereunder for, and to hold it harmless
against, any loss, liability or expense incurred without negligence
or bad faith on the part of the Fiscal Agent or such other paying
agent, arising out of or in connection with its acting as such
Fiscal Agent or other paying agent of INTELSAT hereunder, including
the costs and expenses of defending against any claim of liability.
For the purposes of this Section, the obligations of INTELSAT shall
survive the payment of the Notes and the resignation or removal of
the Fiscal Agent or any other paying agent of INTELSAT hereunder.
(b) In acting under this Agreement and in connection
with the Notes, the Fiscal Agent and each other paying agent of
INTELSAT are acting solely as agents of INTELSAT and do not assume
any obligation or relationship of agency or trust for or with any
of the Holders of the Notes or coupons, except that all funds held
by the Fiscal Agent or any other paying agent of INTELSAT for
payment of principal of or interest or Additional Amounts, if any,
on the Notes shall be held in trust, but need not be segregated
from other funds except as required by law, and shall be applied as
set forth herein and in the Notes; provided, however, that monies
paid by INTELSAT to the Fiscal Agent or any other paying agent of
INTELSAT for the payment of principal of or interest or Additional
Amounts, if any, on Notes remaining unclaimed at the end of two
years after such principal or interest or Additional Amounts, if
any, shall have become due and payable shall be repaid to INTELSAT,
as provided and in the manner set forth in the Notes, whereupon the
aforesaid trust shall terminate and all liability of the Fiscal
Agent or such other paying agent of INTELSAT with respect thereto
shall cease and the Holder of such Note or unpaid coupon must
thereafter look solely to INTELSAT for payment thereof.
(c) The Fiscal Agent and each other paying agent of
INTELSAT hereunder may consult with counsel (who may also be
counsel to INTELSAT) satisfactory to such Fiscal Agent or paying
agent in its reasonable judgment, and the written opinion of such
counsel shall be full and complete authorization and protection in
respect of any action taken, omitted or suffered by it hereunder in
good faith and in reliance thereon.
(d) The Fiscal Agent and each other paying agent of
INTELSAT hereunder shall be protected and shall incur no liability
to any person for or in respect of any action in good faith taken,
omitted or suffered by it in reliance upon any Note, coupon,
notice, direction, consent, certificate, affidavit, statement or
other paper or document reasonably believed by the Fiscal Agent or
such other paying agent in good faith to be genuine and to have
been signed by the proper parties.
(e) The Fiscal Agent and each other paying agent of
INTELSAT hereunder and its directors, officers and employees may
become the owner of, or acquire an interest in, any Notes or
coupons, with the same rights that it or they would have if it were
not the Fiscal Agent or such other paying agent of INTELSAT
hereunder, may engage or be interested in any financial or other
transaction with INTELSAT and may act on, or as depositary, trustee
or agent for, any committee or body of Holders of Notes or coupons
or holders of other obligations of INTELSAT as freely as if it were
not the Fiscal Agent or a paying agent of INTELSAT hereunder.
Page 5
(f) Neither the Fiscal Agent nor any other paying agent
of INTELSAT hereunder shall be under any liability to any person
for interest on any monies at any time received by it pursuant to
any of the provisions of this Agreement or of the Notes except as
may be otherwise agreed with INTELSAT.
(g) The recitals contained herein and in the Notes
(except the Fiscal Agent's certificates of authentication) and in
the coupons shall be taken as the statements of INTELSAT, and the
Fiscal Agent assumes no responsibility for their correctness. The
Fiscal Agent makes no representation as to the validity or
sufficiency of this Agreement or the Notes or coupons, except for
the Fiscal Agent's due authorization to execute and deliver this
Agreement; provided, however, that the Fiscal Agent shall not be
relieved of its duty to authenticate Notes (or to arrange for
authentication on its behalf) as authorized by this Agreement. The
Fiscal Agent shall not be accountable for the use or application by
INTELSAT of the proceeds of Notes.
(h) The Fiscal Agent and each other paying agent of
INTELSAT hereunder shall be obligated to perform such duties and
only such duties as are herein and in the Notes specifically set
forth and no implied duties or obligations shall be read into this
Agreement or the Notes against the Fiscal Agent or any other paying
agent of INTELSAT. The Fiscal Agent shall not be under any
obligation to take any action hereunder which may tend to involve
it in any undue expense or liability, the payment of which within
a reasonable time is not, in its reasonable opinion, assured to it.
(i) Unless herein or in the Notes otherwise specifically
provided, any order, certificate, notice, request, direction or
other communication from INTELSAT under any provision of this
Agreement shall be sufficient if signed by an Executive Officer of
INTELSAT.
(j) No provision of this Agreement shall be construed to
relieve the Fiscal Agent from liability for its own negligent
action, its own negligent failure to act, or its own willful
misconduct or that of its directors, officers or employees.
8. (a) INTELSAT agrees that, until all Notes or coupons
(other than coupons the surrender of which has been waived under
Paragraphs 3 and 6 of the definitive Notes and coupons which have
been replaced or paid as provided in Paragraph 9 of the definitive
Notes) authenticated and delivered hereunder (i) shall have been
delivered to the Fiscal Agent for cancellation or (ii) become due
and payable, whether at maturity or upon redemption, and monies
sufficient to pay the principal thereof and interest, and
Additional Amounts, if any, thereon shall have been made available
to the Fiscal Agent and either paid to the persons entitled thereto
or returned to INTELSAT as provided herein and in the Notes, there
shall at all times be a Fiscal Agent hereunder which shall be
appointed by INTELSAT, shall be authorized under the laws of its
place of organization to exercise corporate trust powers and shall
have a combined capital and surplus of at least U.S. $50,000,000.
Page 6
(b) INTELSAT hereby appoints the Principal Office of the
Fiscal Agent as its agent where, subject to any applicable laws or
regulations, Notes and coupons may be presented or surrendered for
payment, where the Notes may be surrendered for exchange and where
notices and demands to or upon INTELSAT in respect of the Notes and
coupons and this Agreement may be served. In addition, INTELSAT
hereby appoints the main office of Morgan Guaranty Trust Company of
New York, Brussels Office, Banque Generale du Luxembourg S.A. in
Luxembourg and Credit Suisse in Zurich, Switzerland as additional
paying agencies for the payment of principal of, and interest and
Additional Amounts, if any, on, the Notes.
INTELSAT may at any time and from time to time vary or
terminate the appointment of any such agent or appoint any
additional agents for any or all of such purposes; provided,
however, that, (i) so long as INTELSAT is required to maintain a
Fiscal Agent hereunder, INTELSAT will maintain in London, United
Kingdom an office or agency where Notes and coupons may be
presented or surrendered for payment, where the Note may be
presented for exchange and where notices and demands to or upon
INTELSAT in respect of the Notes and coupons and this Agreement may
be served and (ii) in the event the circumstances described in
Section 5(b) hereof require, it will designate a paying agent in
the Borough of Manhattan, The City of New York, the State of New
York, U.S.A., where Bearer Notes and coupons may be presented or
surrendered for payment in such circumstances (and not otherwise);
and provided, further, that so long as the Notes are listed on the
Luxembourg Stock Exchange and such exchange shall so require,
INTELSAT will maintain a paying agent in Luxembourg. INTELSAT will
give prompt written notice to the Fiscal Agent of the appointment
or termination of any such agency and of the location and any
change in the location of any such office or agency and shall give
notice thereof to Holders in the manner described in the first
sentence of Paragraph 6(d) of the definitive Notes.
If at any time INTELSAT shall fail to maintain any such
required office or agency in the Borough of Manhattan, The City of
New York, the State of New York, U.S.A. or in Luxembourg or shall
fail to furnish the Fiscal Agent with the address thereof,
presentations and surrenders may be made at the Principal Office of
the Fiscal Agent, and Notes and coupons may be presented and
surrendered for payment to the Principal Office of the Fiscal
Agent, and INTELSAT hereby appoints the same as its agent to
receive such presentations and surrenders of Notes and coupons, and
the Fiscal Agent hereby accepts such appointment.
(c) The Fiscal Agent may at any time resign as such
Fiscal Agent by giving written notice to INTELSAT of such intention
on its part, specifying the date on which its desired resignation
shall become effective; provided, however, that such date shall
never be less than three months after the receipt of such notice by
INTELSAT unless INTELSAT agrees to accept less notice. The Fiscal
Agent may be removed at any time by the filing with it of an
instrument in writing signed on behalf of INTELSAT and specifying
such removal and the date when it is intended to become effective.
Any resignation or removal of the Fiscal Agent or other paying
agent of INTELSAT, if such other paying agent is the only paying
agent of INTELSAT then maintained outside the United States, shall
take effect upon the date of the appointment by INTELSAT as
Page 7
hereinafter provided of a successor and the acceptance of such
appointment by such successor. Upon its resignation or removal,
such agent shall be entitled to the payment by INTELSAT of its
compensation for the services rendered hereunder and to the
reimbursement of all reasonable out-of-pocket expenses incurred in
connection with the services rendered hereunder by such agent.
(d) In case at any time the Fiscal Agent or other paying
agent of INTELSAT, if such other paying agent is the only paying
agent of INTELSAT then maintained outside the United States, shall
resign, or shall be removed, or shall become incapable of acting or
shall be adjudged a bankrupt or insolvent, or if a receiver of it
or of its property shall be appointed, or if any public officer
shall take charge or control of it or of its property or affairs
for the purpose of rehabilitation, conservation or liquidation, a
successor agent, eligible as aforesaid, shall be appointed by
INTELSAT by an instrument in writing. Upon the appointment as
aforesaid of a successor agent and the acceptance by it of such
appointment, the agent so superseded shall cease to be such agent
hereunder. If no successor Fiscal Agent or other paying agent of
INTELSAT shall have been so appointed by INTELSAT and shall have
accepted appointment as hereinafter provided, and if such other
paying agent is the only paying agent of INTELSAT then maintained
outside the United States, and if INTELSAT shall have otherwise
failed to make arrangements for the performance of the duties of
the Fiscal Agent or other paying agent, then any Holder of a Note
who has been a bona fide Holder of a Note for at least six months,
on behalf of himself and all others similarly situated, or the
Fiscal Agent, may petition any New York State or United States
Federal court sitting in the Borough of Manhattan, The City of New
York, the State of New York, U.S.A., for the appointment of a
successor agent.
(e) Any successor Fiscal Agent appointed hereunder shall
execute, acknowledge and deliver to its predecessor and to INTELSAT
an instrument accepting such appointment hereunder, and thereupon
such successor Fiscal Agent, without any further act, deed or
conveyance, shall become vested with all the authority, rights,
powers, trusts, immunities, duties and obligations of such
predecessor with like effect as if originally named as such Fiscal
Agent hereunder, and such predecessor, upon payment of its charges
and disbursements then unpaid, shall simultaneously therewith
become obligated to transfer, deliver and pay over, and such
successor Fiscal Agent shall be entitled to receive, all monies,
securities or other property on deposit with or held by such
predecessor, as such Fiscal Agent hereunder. INTELSAT will give
prompt written notice to each other paying agent of INTELSAT of the
appointment of a successor Fiscal Agent and shall give notice
thereof to Holders at least once, in the manner described in
Paragraph 6(e) of the definitive Notes.
(f) Any corporation, bank or trust company into which
the Fiscal Agent may be merged or converted, or with which it may
be consolidated, or any corporation, bank or trust company
resulting from any merger, conversion or consolidation to which the
Fiscal Agent shall be a party, or any corporation, bank or trust
company succeeding to all or substantially all the assets and
business of the Fiscal Agent, shall be the successor to the Fiscal
Agent under this Agreement; provided, however, that such
corporation shall be otherwise eligible under this Section, without
Page 8
the execution or filing of any document or any further act on the
part of any of the parties hereto.
9. INTELSAT will pay all stamp taxes and other duties,
if any, which may be imposed by the United States, the United
Kingdom or any political subdivision or taxing authority of or in
the foregoing with respect to (i) the execution or delivery of this
Agreement, (ii) the issuance of the Global Note or (iii) the
exchange from time to time of the Global Note for Bearer Notes
(other than any such tax or duty which would not have been imposed
on such exchange had such exchange occurred on or before the first
anniversary of the initial issuance of the Notes which shall be
payable by the Holders).
10. (a) A meeting of Holders of Notes may be called at
any time and from time to time to make, give or take any request,
demand, authorization, direction, notice, consent, waiver or other
action provided by this Agreement or the Notes to be made, given or
taken by Holders of Notes. The Fiscal Agent may, upon request
from, and at the expense of, INTELSAT, direct to convene a single
meeting of the Holders of Notes and the holders of debt securities
of other series.
(b) INTELSAT may at any time call a meeting of Holders
of Notes for any purpose specified in Section 10(a) hereof to be
held at such time and at such place in London, United Kingdom or in
the Borough of Manhattan, The City of New York, the State of New
York, U.S.A., as INTELSAT shall determine. Notice of every meeting
of Holders of Notes, setting forth the time and the place of such
meeting and in general terms the action proposed to be taken at
such meeting, shall be given, in the same manner as provided in
Paragraph 6(e) of the definitive Notes, not more than 180 days nor
less than 21 days prior to the date fixed for the meeting. In case
at any time the Holders of at least 10% in principal amount of the
Outstanding (as defined in Paragraph 3 of the definitive Notes)
Notes shall have requested INTELSAT to call a meeting of the
Holders of Notes for any purpose specified in Section 10(a) hereof,
by written request setting forth in reasonable detail the action
proposed to be taken at the meeting, and INTELSAT shall not have
caused to be published the notice of such meeting within 21 days
after receipt of such request or shall not thereafter proceed to
cause the meeting to be held as provided herein, then the Holders
of Notes in the amount above-specified, as the case may be, may
determine the time and the place in London, United Kingdom or in
the Borough of Manhattan, The City of New York, the State of New
York, U.S.A., for such meeting and may call such meeting for such
purposes by giving notice thereof as provided in this subsection
(b).
(c) To be entitled to vote at any meeting of Holders of
Notes, a person shall be a Holder of an Outstanding Note or a
person appointed by an instrument in writing as proxy for such a
Holder.
(d) The persons entitled to vote a majority in aggregate
principal amount of the Outstanding Notes shall constitute a
quorum. In the absence of a quorum within 30 minutes of the time
appointed for any such meeting, the meeting shall, if convened at
Page 9
the request of the Holders of Notes, be dissolved. In any other
case the meeting may be adjourned for a period of not less than 10
days as determined by the chairman of the meeting prior to the
adjournment of such meeting. In the absence of a quorum at any
such adjourned meeting, such adjourned meeting may be further
adjourned for a period of not less than 10 days as determined by
the chairman of the meeting prior to the adjournment of such
adjourned meeting. Notice of the reconvening of any adjourned
meeting shall be given as provided in Section 10(b) hereof, except
that such notice need be given only once not less than five days
prior to the date on which the meeting is scheduled to be
reconvened. Notice of the reconvening of an adjourned meeting
shall state expressly the percentage of the principal amount of the
Outstanding Notes which shall constitute a quorum.
Subject to the foregoing, at the reconvening of any
meeting adjourned for a lack of a quorum, the persons entitled to
vote 25% in principal amount of the Outstanding Notes shall
constitute a quorum for the taking of any action set forth in the
notice of the original meeting. Any meeting of Holders of Notes at
which a quorum is present may be adjourned from time to time by
vote of a majority in principal amount of the Outstanding Notes
represented at the meeting, and the meeting may be held as so
adjourned without further notice. At a meeting or an adjourned
meeting duly reconvened and at which a quorum is present as
aforesaid, any resolution and all matters shall be effectively
passed or decided if passed or decided by the persons entitled to
vote a majority in principal amount of the Outstanding Notes
represented and voting.
(e) INTELSAT may make such reasonable regulations as it
may deem advisable for any meeting of Holders of Notes in regard to
proof of the holding of Notes and of the appointment of proxies and
in regard to the appointment and duties of inspectors of votes, the
submission and examination of proxies, certificates and other
evidence of the right to vote, and such other matters concerning
the conduct of the meeting as it shall deem appropriate. INTELSAT
or the Holders calling the meeting, as the case may be, shall, by
an instrument in writing, appoint a temporary chairman. A
permanent chairman and a permanent secretary of the meeting shall
be elected by vote of the persons entitled to vote a majority in
principal amount of the Outstanding Notes represented and voting at
the meeting. The chairman of the meeting shall have no right to
vote, except as a Holder of Notes or a proxy. A record, at least
in duplicate, of the proceedings of each meeting of Holders of
Notes shall be prepared, and one such copy shall be delivered to
INTELSAT and another to the Fiscal Agent to be preserved by the
Fiscal Agent.
11. All notices hereunder shall be deemed to have been
given when deposited in the mails as first-class mail, registered
or certified mail, return receipt requested, postage prepaid, or,
if electronically communicated, then when delivered, or when hand
delivered, addressed to either party hereto as follows:
Page 10
INTELSAT . . . . . . . International Telecommunications Satellite
Organization
3400 International Drive, N.W.
Washington, D.C. 20008-3098, U.S.A.
Attention: Vice President & Chief
Financial Officer
Facsimile No.: (202) 944-7860
Fiscal Agent . . . . . Morgan Guaranty Trust Company of New York
60 Victoria Embankment
London EC4Y 0JP, England
Attention: Global Trust and Agency Services
Facsimile No.: 011-4471-325-8285
or at any other address of which either of the foregoing shall have
notified the other in writing. All notices to Holders of Notes
shall be given in the manner provided in Paragraph 6(e) of the
definitive Notes.
12. This Agreement and the terms and conditions of the
Notes and coupons may be modified or amended by INTELSAT and the
Fiscal Agent, without the consent of the Holder of any Note or
coupon, for the purpose of (a) adding to the covenants of INTELSAT
for the benefit of the Holders of Notes or coupons, or (b)
surrendering any right or power conferred upon INTELSAT, or (c)
securing the Notes pursuant to the requirements of the Notes or
otherwise, or (d) permitting the payment of principal, interest and
Additional Amounts, if any, in respect of Notes in the United
States, or (e) curing any ambiguity or correcting or supplementing
any defective provision contained herein or in the Notes or
coupons, or (f) evidencing the succession of another organization
or entity to INTELSAT and the assumption by any such successor of
the covenants and obligations of INTELSAT herein and in the Notes
and coupons as permitted by the Notes, or (g) providing for
issuances of further debt securities as contemplated by Section 13,
or (h) in any manner which the parties may mutually deem necessary
or desirable and which in any such case shall not adversely affect
the interests of the Holders of the Notes or the coupons.
13. INTELSAT may from time to time without the consent
of the Holder of any Note or coupon issue further debt securities
having the same terms and conditions as the Notes in all respects
(or in all respects except for the first payment of interest
thereon) or having such terms as INTELSAT may determine at the time
of their issuance, in either case so that any such further debt
securities shall be consolidated and form a single series with the
outstanding securities of any series (including the Notes). Unless
the context requires otherwise, references herein and in the Notes
and coupons to the Notes or coupons shall include any other debt
securities issued in accordance with this Section that are intended
by INTELSAT to form a single series with the Notes. Any further
debt securities forming a single series with the outstanding
securities of any series (including the Notes) shall be issued
pursuant to this Agreement as amended pursuant to Section 12 for
the purpose of providing for the issuance of such debt securities.
Page 11
14. This Agreement and each of the Notes and coupons
shall be governed by and construed in accordance with the laws of
the State of New York, U.S.A.
15. INTELSAT hereby appoints CT Corporation System, 1633
Broadway, New York, New York 10019, as its authorized agent (the
"Authorized Agent") upon which process may be served in any action
arising out of or based on this Agreement, the Notes or any coupons
which action may be instituted in any New York State or United
States Federal court sitting in the Borough of Manhattan, The City
of New York, the State of New York, U.S.A., by the Fiscal Agent or
the Holder of any Note or coupon and INTELSAT and each such Holder
by acceptance of a Note or coupon expressly accepts the exclusive
jurisdiction of any such court in respect of any such action. Such
appointment shall be irrevocable until two years after the Notes
shall have matured and been paid or moneys for the payment thereof
shall have been made available unless and until a successor
Authorized Agent shall have been appointed and shall have accepted
such appointment. INTELSAT hereby irrevocably waives any immunity
to service of process in respect of any such action to which it
might otherwise be entitled in any action arising out of or based
on this Agreement or the Notes or coupons which may be instituted
by the Fiscal Agent or any Holder of a Note or coupon in any State
or Federal court in the Borough of Manhattan, The City of New York,
the State of New York, U.S.A. Service of process upon the
Authorized Agent at the address indicated above, as such address
may be changed within the Borough of Manhattan, The City of New
York, the State of New York, U.S.A., by notice given by the
Authorized Agent to each party hereto, shall be deemed, in every
respect, effective service of process upon INTELSAT. INTELSAT
irrevocably waives, to the fullest extent permitted by applicable
law, any sovereign or other immunity from jurisdiction or from
execution (except that INTELSAT does not waive immunity from
execution prior to judgment and any similar defense) to which it
might otherwise be entitled in any such action which may be
instituted by the Fiscal Agent or any Holder of a Note or coupon in
any New York State or United States Federal court sitting in the
Borough of Manhattan, The City of New York, the State of New York,
U.S.A.
16. This Agreement, the Notes and the coupons
appertaining thereto will constitute obligations of INTELSAT and
not of any Signatory or Party (each as defined in the Agreement
Relating to the International Telecommunications Satellite
Organization, entered into force on 12 February 1973). No
Signatory or Party will waive any immunity to which it may be
entitled in any suit on this Agreement or the Notes or coupons, and
neither the Fiscal Agent nor Holders of Notes or coupons will have
any recourse against any Signatory or Party with respect to any
obligations of INTELSAT under this Agreement or the Notes and the
coupons appertaining thereto.
Page 12
17. This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be
an original but all such counterparts shall together constitute but
one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
INTERNATIONAL TELECOMMUNICATIONS
SATELLITE ORGANIZATION
/s/David Tudge
By _____________________________
Name: David Tudge
Title: Vice President & CFO
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
as Fiscal Agent and Principal Paying
Agent
/s/Viola Japaul
By _____________________________
Name: Viola Japaul
Title: Associate
Page 13
INTERNATIONAL TELECOMMUNICATIONS SATELLITE ORGANIZATION
U.S. $200,000,000
8 3/8% Notes Due 2004
TEMPORARY GLOBAL NOTE
INTERNATIONAL TELECOMMUNICATIONS SATELLITE ORGANIZATION, an
international organization established by the Agreement Relating to the
International Telecommunications Satellite Organization and the Operating
Agreement relating thereto, entered into force on 12 February 1973, for
value received, hereby promises to pay to bearer upon presentation and
surrender of this Temporary Global Note the principal sum of Two Hundred
Million United States Dollars (U.S. $200,000,000) on 14 October 2004 and
to pay interest thereon, from the date hereof, annually in arrears on the
14th of October in each year, commencing 14 October 1995, at the rate of
8 3/8% per annum, until the principal hereof is paid or made available
for payment; provided, however, that interest on this Temporary Global
Note shall be payable only after the issuance of Bearer Notes for which
this Temporary Global Note is exchangeable, and only upon presentation
and surrender of the interest coupons thereto attached as they severally
mature.
This Temporary Global Note is one of a duly authorized issue
of Notes of INTELSAT designated as specified in the title hereof,
entitled to the benefits of the Fiscal Agency Agreement, dated as of 14
October 1994, between INTELSAT and Morgan Guaranty Trust Company of New
York, as Fiscal Agent. This Note is a temporary note and is exchangeable
in whole or from time to time in part without charge upon request of the
Holder hereof for Bearer Notes with coupons attached in denominations of
U.S. $1,000, $10,000 and $100,000 as promptly as practicable following
presentation of certification, in the form required by the Fiscal Agency
Agreement for such purpose, that the beneficial owner or owners of this
Temporary Global Note (or, if such exchange is only for a part of this
Temporary Global Note, of such part) are not citizens or residents of the
United States, a corporation, partnership or other entity created or
organized in or under the laws of the United States or any political
subdivision thereof, or an estate or trust the income of which is subject
to United States Federal income taxation regardless of its source
("United States Person"). The Bearer Notes are expected to be available
40 days after the Closing Date. Bearer Notes to be delivered in exchange
for any part of this Temporary Global Note shall be delivered only
outside the United States. Upon any exchange of a part of this Temporary
Global Note for Bearer Notes, the portion of the principal amount hereof
so exchanged shall be endorsed by the Fiscal Agent on the Schedule
hereto, and the principal amount hereof shall be reduced for all purposes
by the amount so exchanged.
Until exchanged in full for Bearer Notes, this Temporary
Global Note shall in all respects be entitled to the same benefits and
subject to the same terms and conditions as those of the definitive Notes
and those contained in the Fiscal Agency Agreement (including the forms
of Notes attached thereto), except that neither the Holder hereof nor the
beneficial owners of this Temporary Global Note shall be entitled to
receive payment of interest hereon.
1
This Temporary Global Note shall be governed by and construed
in accordance with the laws of the State of New York, U.S.A.
All terms used in this Temporary Global Note which are defined
in the Fiscal Agency Agreement or the definitive Notes shall have the
meanings assigned to them therein.
Unless the certificate of authentication hereon has been
executed by the Fiscal Agent by the manual signature of one of its duly
authorized officers, this Temporary Global Note shall not be valid or
obligatory for any purpose.
This Temporary Global Note constitutes an obligation of
INTELSAT and not of any Signatory or Party (each as defined in the
INTELSAT Agreement). No Signatory or Party will waive any immunity to
which it may be entitled in any suit on this Temporary Global Note, and
Holders of this Temporary Global Note will have no recourse against any
Signatory or Party with respect to any obligations of INTELSAT under this
Temporary Global Note.
IN WITNESS WHEREOF, INTELSAT has caused this Temporary Global
Note to be duly executed and its seal to be hereunto affixed and
attested.
Dated as of 14 October 1994
INTERNATIONAL TELECOMMUNICATIONS
SATELLITE ORGANIZATION
By______________________________
Attest:
_____________________
2
This is the Temporary Global Note referred to in the within-
mentioned Fiscal Agency Agreement.
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
as Fiscal Agent
By _____________________________
Authorized Signatory
3
SCHEDULE OF EXCHANGES
Remaining
principal
Principal amount amount Notation
exchanged for following made on behalf
Date Made Definitive Bearer Notes such exchange of the Fiscal Agent
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4
EXHIBIT B
[FORM OF BEARER NOTES]
[Form of Face]
ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT
TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING
THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE
INTERNAL REVENUE CODE.
INTERNATIONAL TELECOMMUNICATIONS SATELLITE ORGANIZATION
8 3/8% Notes Due 2004
No. B-_________ U.S.$ [1,000] [10,000]
[100,000]
INTERNATIONAL TELECOMMUNICATIONS SATELLITE ORGANIZATION
("INTELSAT"), an international organization established by the Agreement
Relating to the International Telecommunications Satellite Organization
and the Operating Agreement relating thereto, entered into force on 12
February 1973, for value received, hereby promises to pay to bearer upon
presentation and surrender of this Note the principal sum of [One
Thousand] [Ten Thousand] [One Hundred Thousand] United States dollars on
14 October 2004 and to pay interest thereon, from the date hereof,
annually in arrears on the 14th of October in each year ("Interest
Payment Date"), commencing 14 October 1995 at the rate of 8 3/8% per
annum (calculated on the basis of a year of twelve 30-day months), until
the principal hereof is paid or made available for payment. Such
payments shall be made subject to any laws or regulations applicable
thereto and to the right of INTELSAT (limited as provided below) to
terminate the appointment of any such paying agency, at the principal
office of Morgan Guaranty Trust Company of New York in London, United
Kingdom or at such other offices or agencies outside the United States
(as defined in Paragraph 5 on the reverse hereof) as INTELSAT may
designate and notify the Holder (as defined in Paragraph 2 on the reverse
hereof) as provided in Paragraph 6(e) hereof, at the option of the
Holder, by United States dollar check, or (ii) by wire transfer to a
United States dollar account maintained by the Holder with a bank located
outside the United States. Payments with respect to this Note shall be
payable only at an office or agency located outside the United States and
only upon presentation and surrender at such office of this Note in the
B-1
case of principal or the coupons attached hereto (the "coupons") as they
severally mature in the case of interest (but not in the case of
Additional Amounts payable as defined and provided for in Paragraph 5 on
the reverse hereof). No payment with respect to this Note shall be made
by transfer to an account in, or by mail to an address in, the United
States. Notwithstanding the foregoing, payment of principal of and
interest on Bearer Notes and Additional Amounts, if any, may, at
INTELSAT's option, be made at an office designated by INTELSAT in the
Borough of Manhattan, The City of New York, the State of New York, U.S.A.
if (but only if) the full amount of such payments at all offices and
agencies located outside the United States through which payment is to
be made in accordance with the terms of the Notes is illegal or
effectively precluded by exchange controls or other similar restrictions
as determined by INTELSAT. INTELSAT covenants that until this Note has
been delivered to the Fiscal Agent for cancellation or monies sufficient
to pay the principal of and interest on this Note have been made
available for payment and either paid or returned to INTELSAT as provided
herein, it will at all times maintain offices or paying agents (i) in
London, United Kingdom, (ii) upon the happening of the events set forth
in the immediately prior sentence, in the Borough of Manhattan, The City
of New York, the State of New York, U.S.A. and (iii), so long as the
Notes are listed on the Luxembourg Stock Exchange and such exchange shall
so require, in Luxembourg for the payment of the principal of and
interest on the Notes as herein provided.
Reference is hereby made to the further provisions of this
Note set forth on the reverse hereof, including but not limited to the
provisions for redemption of the Notes, which further provisions shall
for all purposes have the same effect as though fully set forth at this
place.
Unless the certificate of authentication hereon has been
executed by the Fiscal Agent by the manual signature of one of its
authorized officers, neither this Note nor any coupon appertaining hereto
shall be valid or obligatory for any purpose.
IN WITNESS WHEREOF, INTELSAT has caused this Note to be duly
executed and its seal to be hereunto affixed and attested and duly
executed coupons to be annexed hereto.
Dated as of 14 October 1994
INTERNATIONAL TELECOMMUNICATIONS
SATELLITE ORGANIZATION
By______________________________
[Seal]
Attest:
B-2
THIS PAGE INTENTIONALLY LEFT BLANK
B-3
[FORM OF FISCAL AGENT'S CERTIFICATE OF AUTHENTICATION]
This is one of the Notes referred to in the within-mentioned
Fiscal Agency Agreement.
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
as Fiscal Agent
By _____________________________________________
Authorized Signatory
B-4
[Form of Reverse]
1. This Note is one of a duly authorized issue of Notes of
INTELSAT in the aggregate principal amount of Two Hundred Million
United States Dollars (U.S.$200,000,000), designated as its 8 3/8%
Notes Due 2004 (the "Notes"). INTELSAT, for the benefit of the
Holders from time to time of the Notes, has entered into a Fiscal
Agency Agreement, dated as of 14 October 1994 (the "Fiscal Agency
Agreement"), between INTELSAT and Morgan Guaranty Trust Company of New
York, as Fiscal Agent, copies of which Fiscal Agency Agreement are on
file and available for inspection at the Principal Office of the
Fiscal Agent in London, United Kingdom and the main offices of the
paying agencies named on the face of this Note. (Morgan Guaranty
Trust Company of New York and its respective successors as Fiscal
Agent are herein collectively called the "Fiscal Agent".)
As long as any of the Notes shall be outstanding and unpaid,
but only up to the time all amounts of principal and interest have
been placed at the disposal of the Fiscal Agent, INTELSAT will not
cause or permit to be created on any of its property or assets any
mortgage, pledge or other lien or charge as security for any bonds,
notes or other evidences of indebtedness heretofore or hereafter
issued, assumed or guaranteed by INTELSAT for money borrowed (other
than purchase money mortgages, sale and leaseback transactions in
connection with spacecraft or spacecraft capacity, or other pledges or
liens on property purchased by INTELSAT as security for all or part of
the purchase price thereof; liens incidental to an investment
transaction, but not a borrowing, of INTELSAT; or mechanics',
landlords', tax or other statutory liens), unless the Notes shall be
secured by such mortgage, pledge or other lien or charge equally and
ratably with such other bonds, notes or evidences of indebtedness.
2. The Notes are issuable in bearer form, with interest
coupons attached (the "coupons"), in denominations of U.S. $1,000,
U.S. $10,000 and U.S. $100,000. As used herein, the term "Holder"
when used with respect to any Bearer Note or coupon, means the bearer
thereof.
3. INTELSAT has appointed the main offices of Morgan
Guaranty Trust Company of New York in London, United Kingdom, Morgan
Guaranty Trust Company of New York, Brussels Office, Banque Generale
du Luxembourg S.A. in Luxembourg and Credit Suisse in Zurich,
Switzerland as agencies where Notes may be surrendered for exchange.
INTELSAT reserves the right to vary or terminate the appointment of
any agent or to appoint additional or other agents or to approve any
change in the office through which any agent acts, provided that there
will be at all times an agent in London, United Kingdom.
All Notes issued upon any exchange of Notes shall be the
valid obligations of INTELSAT evidencing the same debt, and entitled
to the same benefits, as the Notes surrendered upon such exchange. No
B-5
service charge shall be made for any exchange, but INTELSAT may
require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith.
Title to Bearer Notes and coupons shall pass by delivery.
INTELSAT, the Fiscal Agent, and any paying agent of INTELSAT may deem
and treat the bearer of any Bearer Note or coupon as the owner thereof
for all purposes, whether or not such Note or coupon shall be overdue.
For purposes of the provisions of this Note and the Fiscal
Agency Agreement, any Note authenticated and delivered pursuant to the
Fiscal Agency Agreement shall, as of any date of determination, be
deemed to be "Outstanding", except:
(i) Notes theretofore cancelled by the Fiscal Agent or
delivered to the Fiscal Agent for cancellation and not reissued
by the Fiscal Agent;
(ii) Notes which have been surrendered for redemption in
accordance with Paragraph 6 hereof or which have become due and
payable at maturity or otherwise and with respect to which monies
sufficient to pay the principal thereof and interest thereon
shall have been made available to the Fiscal Agent; or
(iii) Notes in lieu of or in substitution for which other
Notes shall have been authenticated and delivered pursuant to the
Fiscal Agency Agreement;
provided, however, that in determining whether the Holders of the
requisite principal amount of Outstanding Notes are present at a
meeting of Holders of Notes for quorum purposes or have given any
request, demand, authorization, direction, notice, consent or waiver
hereunder, Notes owned by INTELSAT shall be disregarded and deemed not
to be Outstanding.
4. (a) INTELSAT shall pay to the Fiscal Agent at its
Principal Office in London, United Kingdom, on or prior to each
Interest Payment Date, any redemption date and the maturity date of
the Notes, in such coin or currency of the United States of America as
at the time of payment is legal tender for the payment of public and
private debts, amounts sufficient (with any amounts then held by the
Fiscal Agent and available for the purpose) to pay the interest on,
the redemption price of and accrued interest (if the redemption date
is not an Interest Payment Date) on, and the principal of, the Notes
due and payable on such an Interest Payment Date, redemption date or
maturity date, as the case may be.
The Fiscal Agent shall apply the amounts so paid to it to
the payment of such interest, redemption price and principal in
accordance with the terms of the Notes. Any monies paid by INTELSAT
to the Fiscal Agent for the payment of the principal of and interest
B-6
on any Notes and remaining unclaimed at the end of two years after
such principal or interest shall have become due and payable (whether
at maturity, upon call for redemption or otherwise) shall then be
repaid to INTELSAT upon its written request, and upon such repayment
all liability of the Fiscal Agent with respect thereto shall thereupon
cease, without, however, limiting in any way any obligation INTELSAT
may have to pay the principal of and interest on this Note as the same
shall become due.
(b) In any case where the date for the payment of the
principal of or interest on any Note or the date fixed for redemption
of any Note shall be at any place of payment a day on which banking
institutions are authorized or obligated by law or executive order to
close, or are not carrying out transactions in United States dollars
in The City of New York, the State of New York, U.S.A., or the city of
the paying agent to which the Note or coupon is surrendered for
payment, then payment of principal or interest need not be made on
such date at such place but may be made on the next succeeding day at
such place of payment which is not a day on which banking institutions
are authorized or obligated by law or executive order to close, or
which is a day on which banking institutions are carrying out
transactions in United States dollars in The City of New York, the
State of New York, U.S.A., or the city of the paying agent to which
the Note or coupon is surrendered for payment, with the same force and
effect as if made on the date for the payment of the principal or
interest or the date fixed for redemption, and no interest shall
accrue for the period after such date.
5. (a) INTELSAT will pay to the Holder of this Note or any
coupon appertaining hereto who is a United States Alien (as defined
below) such Additional Amounts as may be necessary in order that every
net payment of the principal of, and interest on, this Note, after
withholding for or on account of any present or future tax, assessment
or governmental charge imposed upon, or as a result of, such payment
by the United States (or any political subdivision or taxing authority
thereof or therein), will not be less than the amount provided for in
this Note or in such coupon to be then due and payable; provided,
however, that the foregoing obligation to pay Additional Amounts shall
not apply to any one or more of the following:
(i) any tax, assessment or other governmental charge
which would not have been so imposed but for (A) the existence of
any present or former connection between such Holder (or between
a fiduciary, settlor, or beneficiary of, or a possessor of a
power over, such Holder, if such Holder is an estate or trust, or
a member or shareholder of such Holder, if such Holder is a
partnership or corporation) and the United States, including,
without limitation, such Holder (or such fiduciary, settlor,
beneficiary, possessor, member or shareholder) being or having
been a citizen, resident or treated as a resident thereof or
being or having been engaged in a trade or business or present
therein or having or having had a permanent establishment therein
or (B) such Holder's present or former status as a personal
holding company, controlled foreign corporation, foreign personal
holding company or passive foreign investment company with
B-7
respect to the United States or as a corporation which
accumulates earnings to avoid United States federal income tax,
all under existing United States Federal income tax law or
successor provisions;
(ii) any tax, assessment or other governmental charge
which would not have been so imposed but for the presentation by
the Holder of this Note or any coupon appertaining hereto for
payment on a date more than 10 calendar days after the date on
which such payment became due and payable or the date on which
payment thereof is duly provided for and notice thereof is given
to Holders, whichever occurs later;
(iii) any estate, inheritance, gift, sales, transfer,
personal property tax or any similar tax, assessment or other
governmental charge;
(iv) any tax, assessment or other governmental charge
which is payable otherwise than by withholding from payments on
or in respect of this Note or any coupon appertaining hereto;
(v) any tax, assessment or other governmental charge
imposed by reason of such Holder's past or present status as the
actual or constructive owner of 10 per cent. or more of the
capital or profits interest of INTELSAT within the meaning of
Section 871(h)(3) of the United States Internal Revenue Code of
1986, as amended, and any regulations thereunder;
(vi) any tax, assessment or other governmental charge
imposed as a result of the failure to comply with applicable
certification, information, documentation or other reporting
requirements concerning the nationality, residence, identity or
connection with the United States of the Holder or beneficial
owner of this Note, or any coupon appertaining hereto if such
compliance is required by statute or by regulation of the United
States as a precondition to relief or exemption from such tax,
assessment or other government charge;
(vii) any tax, assessment or other governmental charge
required to be withheld by any paying agent from any payment on
this Note or any coupon appertaining hereto if such payment can
be made without such withholding by at least one other paying
agent; or
(viii) any combination of items (i) through (vii) above;
nor will Additional Amounts be paid with respect to any payment of
principal or interest on this Note or any coupon appertaining hereto
to a Holder who is a fiduciary or partnership or other than the sole
beneficial owner of this Note or any coupon appertaining hereto to the
extent that such payment would be required by the laws of the United
States (or any political subdivision thereof) to be included in the
B-8
income for Federal income tax purposes of a beneficiary or settlor
with respect to such fiduciary or a member of such partnership or a
beneficial owner who would not have been entitled to payment of the
Additional Amounts had such beneficiary, settlor, member or beneficial
owner been the Holder of this Note or any coupon appertaining hereto.
The term "United States Alien" means any person who, for
United States federal income tax purposes, is a foreign corporation, a
nonresident alien individual, a nonresident fiduciary of a foreign
estate or trust, or a foreign partnership, one or more of the members
of which is, for United States federal income tax purposes, a foreign
corporation, a nonresident alien individual or a nonresident fiduciary
of a foreign estate or trust. The term "United States" means the
United States of America (including the States and the District of
Columbia), its territories, its possessions and other areas subject to
its jurisdiction.
(b) Except as specifically provided in this Note and in
the Fiscal Agency Agreement, INTELSAT shall not be required to make
any payment with respect to any tax, assessment or other governmental
charge imposed by any government or any political subdivision or
taxing authority thereof or therein. Whenever in this Note there is a
reference, in any context, to the payment of the principal of or
interest on, or in respect of, any Note or any coupon, such mention
shall be deemed to include mention of the payment of Additional
Amounts provided for in this Paragraph to the extent that, in such
context, Additional Amounts are, were or would be payable in respect
thereof pursuant to the provisions of this Paragraph and express
mention of the payment of Additional Amounts (if applicable) in any
provisions hereof shall not be construed as excluding Additional
Amounts in those provisions hereof where such express mention is not
made.
6. (a) The Notes are subject to redemption at the option
of INTELSAT, as a whole but not in part, at any time at a redemption
price equal to the principal amount thereof, together with accrued and
unpaid interest to the date fixed for redemption (except if the
redemption date is an Interest Payment Date) under the circumstances
described in the next three Paragraphs.
(b) The Notes may be redeemed, as a whole but not in part,
at the option of INTELSAT, upon not more than 60 days' nor less than
30 days' prior notice in the manner provided in clause (e) of this
Paragraph 6 at a redemption price equal to the principal amount
thereof together with accrued and unpaid interest to the date fixed
for redemption, if (x) INTELSAT determines that, without regard to any
immunities that may be available to it, (1) as a result of any change
in or amendment to the laws (or any regulations or rulings promulgated
thereunder) of the United States or of any political subdivision or
taxing authority thereof or therein affecting taxation, or any change
in official position regarding application or interpretation of such
laws, regulations or rulings (including a holding by a court of
competent jurisdiction in the United States), which change or
amendment is announced or becomes effective on or after 14 October
1994, INTELSAT has or will become obligated to pay Additional Amounts
B-9
(as provided in Paragraph 5(a) hereof) or (2) on or after 14 October
1994, any action has been taken by any taxing authority of, or any
decision has been rendered by a court of competent jurisdiction in,
the United States or any political subdivision or taxing authority
thereof or therein, including any of those actions specified in (1)
above, whether or not such action was taken or decision was rendered
with respect to INTELSAT, or any change, amendment, application or
interpretation shall be officially proposed, which, in any such case,
in the written opinion to INTELSAT of independent legal counsel of
recognized standing, will result in a material probability that
INTELSAT will become obligated to pay Additional Amounts with respect
to the Notes, and (y) in any such case INTELSAT, in its business
judgment, determines that such obligation cannot be avoided by the use
of reasonable measures available to INTELSAT (provided that INTELSAT
shall not be required to assert any immunities that may be available
to it); provided, however, that (i) no such notice of redemption shall
be given earlier than 90 days prior to the earliest date on which
INTELSAT would but for such redemption be obligated to pay Additional
Amounts and (ii) at the time such notice of redemption is given, such
obligation to pay Additional Amounts remains in effect. Prior to the
publication of notice of redemption pursuant to this Paragraph 6(b),
INTELSAT shall deliver to the Fiscal Agent a certificate of INTELSAT
stating the date of redemption and that INTELSAT is entitled to effect
such redemption and setting forth in reasonable detail a statement of
facts showing that the conditions precedent to the right of INTELSAT
to so redeem the Notes have occurred.
(c) In addition, if INTELSAT shall determine that any
payment made outside the United States by INTELSAT or any paying agent
of principal or interest due in respect of any Note or coupon would,
under any present or future laws or regulations of the United States
and without regard to any immunities that may be available to
INTELSAT, be subject to any certification, information or other
reporting requirement of any kind, the effect of which requirement is
the disclosure to INTELSAT, any paying agent or any governmental
authority of the nationality, residence or identity (as distinguished
from, for example, status as a United States Alien) of a beneficial
owner of such Note or coupon who is a United States Alien (other than
such a requirement (i) which would not be applicable to a payment made
by INTELSAT or any paying agent (A) directly to the beneficial owner,
or (B) to a custodian, nominee or other agent of the beneficial owner,
or (ii) which can be satisfied by such custodian, nominee or other
agent certifying to the effect that such beneficial owner is a United
States Alien, provided that in each case referred to in clauses (i)(B)
and (ii), payment by such custodian, nominee or agent to such
beneficial owner is not otherwise subject to any such requirement or
(iii) would not be applicable to a payment made by at least one other
paying agent of INTELSAT), INTELSAT, at its election, shall either (x)
redeem the Notes, as a whole but not in part, at a redemption price
equal to the principal amount thereof, together with accrued and
unpaid interest to the date fixed for redemption or (y) if the
conditions set forth in Paragraph 6(d) hereof are satisfied, pay the
additional amounts specified in such Paragraph. INTELSAT shall make
such determination and election as soon as practicable and give prompt
notice thereof (the "Determination Notice") in the manner provided in
clause (e) of this Paragraph 6, stating the effective date of such
B-10
certification, information or other reporting requirement, whether
INTELSAT has elected to redeem the Notes or to pay the additional
amounts specified in Paragraph 6(d) hereof, and (if applicable) the
last date by which the redemption of the Notes must take place, as
provided in the next succeeding sentence. If INTELSAT elects to
redeem the Notes, such redemption shall take place on such date, not
later than one year after the publication of the Determination Notice,
as INTELSAT shall elect by notice to the Fiscal Agent given not less
than 45 nor more than 75 days before the date fixed for redemption.
Notice of such redemption of the Notes will be given to the Holders of
the Notes not less than 30 nor more than 60 days prior to the date
fixed for redemption. Notwithstanding the foregoing, INTELSAT shall
not so redeem the Notes if INTELSAT shall subsequently determine, not
less than 30 days prior to the date fixed for redemption, that
subsequent payments would not be subject to any such requirement, in
which case INTELSAT shall give prompt notice of such determination in
the manner provided in clause (e) of this Paragraph 6 and any earlier
redemption notice shall be revoked and of no further effect.
(d) If and so long as the certification, information or
other reporting requirements referred to in Paragraph 6(c) would be
fully satisfied by payment of a withholding tax, backup withholding
tax or similar charge, INTELSAT may elect to pay, without regard to
any immunities that may be available to it, such additional amounts
(regardless of clause (vi) in Paragraph 5(a)) as may be necessary so
that every net payment made outside the United States following the
effective date of such requirements by INTELSAT or any paying agent of
principal or interest due in respect of any Note or any coupon the
beneficial owner of which is a United States Alien (but without any
requirement that the nationality, residence or identity of such
beneficial owner be disclosed to INTELSAT, any paying agent or any
governmental authority), after deduction or withholding for or on
account of such withholding tax, backup withholding tax or similar
charge (other than a withholding tax, backup withholding tax or
similar charge that (i) is the result of a certification, information
or other reporting requirement described in the second parenthetical
clause of the first sentence of Paragraph 6(c), (ii) is imposed as a
result of the fact that INTELSAT or any of its paying agents have
actual knowledge that the beneficial owner of such Note or coupon is
within the category of persons described in Clauses (i) or (v) of
Paragraph 5(a), or (iii) is imposed as a result of presentation of
such Note or coupon for payment more than 10 calendar days after the
date on which such payment becomes due and payable or on which payment
thereof is duly provided for and notice thereof is given to Holders,
whichever occurs later), will not be less than the amount provided for
in such Note or coupon to be then due and payable. In the event
INTELSAT elects to pay such additional amounts, INTELSAT will have the
right, at its sole option, at any time, to redeem the Notes as a
whole, but not in part, at a redemption price equal to the principal
amount thereof, together with accrued and unpaid interest to the date
fixed for redemption. If INTELSAT has made the determination
described in Paragraph 6(c) with respect to certification, information
or other reporting requirements applicable only to interest and
subsequently makes a determination in the manner and of the nature
referred to in such Paragraph 6(c) with respect to such requirements
applicable to principal, INTELSAT will redeem the Notes in the manner
B-11
and on the terms described in Paragraph 6(c) unless INTELSAT elects to
have the provisions of this Paragraph apply rather than the provisions
of Paragraph 6(c). If in such circumstances the Notes are to be
redeemed, INTELSAT shall have no obligation to pay additional amounts
pursuant to this Paragraph with respect to principal or interest
accrued and unpaid after the date of the notice of such determination
indicating such redemption, but will be obligated to pay such
additional amounts with respect to interest accrued and unpaid to the
date of such determination. If INTELSAT elects to pay additional
amounts pursuant to this Paragraph and the condition specified in the
first sentence of this Paragraph should no longer be satisfied, then
INTELSAT shall promptly redeem such Notes.
(e) The Fiscal Agent shall cause, on behalf of INTELSAT,
notices to be given to redeem the Notes to Holders by publication at
least once in a leading daily newspaper in the English language of
general circulation in London, United Kingdom and, so long as the
Notes are listed on the Luxembourg Stock Exchange and such exchange
shall so require, in a daily newspaper of general circulation in
Luxembourg or, if publication in either London or Luxembourg is not
reasonably practicable, elsewhere in Western Europe. The term "daily
newspaper" as used herein shall be deemed to mean a newspaper
customarily published on each business day, whether or not it shall be
published in Saturday, Sunday or holiday editions. If by reason of
the suspension of publication of any newspaper, or by reason of any
other cause, it shall be impracticable to give notice to the Holders
of Notes in the manner prescribed herein, then such notification in
lieu thereof as shall be made by INTELSAT or by the Fiscal Agent on
behalf of and at the instruction and expense of INTELSAT shall
constitute sufficient provision of such notice, if such notification
shall, so far as may be practicable, approximate the terms and
conditions of the publication in lieu of which it is given. Neither
the failure to give notice nor any defect in any notice given to any
particular Holder of a Note shall affect the sufficiency of any notice
with respect to other Notes. Such notices will be deemed to have been
given on the date of such publication or mailing or, if published in
such newspapers on different dates, on the date of the first such
publication in Western Europe. Notices to redeem Notes shall be given
at least once not more than 60 days nor less than 30 days prior to the
date fixed for redemption and shall specify the date fixed for
redemption, the redemption price, the place or places of payment, that
payment will be made upon presentation and surrender of the Notes to
be redeemed, together with all appurtenant coupons, if any, maturing
subsequent to the date fixed for redemption, that interest accrued and
unpaid to the date fixed for redemption (unless the redemption date is
an Interest Payment Date) will be paid as specified in said notice,
and that on and after said date interest thereon will cease to accrue.
If the redemption is pursuant to Paragraph 6(b) or 6(c) hereof, such
notice shall also state that the conditions precedent to such
redemption have occurred and state that INTELSAT has elected to redeem
all the Notes.
(f) If notice of redemption has been given in the manner
set forth in Paragraph 6(e) hereof, the Notes so to be redeemed shall
become due and payable on such redemption date specified in such
notice and upon presentation and surrender of the Notes at the place
B-12
or places specified in such notice, together with all appurtenant
coupons, if any, maturing subsequent to the redemption date, the Notes
shall be paid and redeemed by INTELSAT at the places and in the manner
and currency herein specified and at the redemption price together
with accrued and unpaid interest (unless the redemption date is an
Interest Payment Date) to the redemption date; provided, however, that
interest due on or prior to the redemption date on the Bearer Notes
shall be payable only upon the presentation and surrender of coupons
for such interest (at an office or agency outside the United States
except as otherwise provided on the face of the Bearer Note). If any
Bearer Note surrendered for redemption shall not be accompanied by all
appurtenant coupons maturing after the redemption date, such Note may
be paid after deducting from the amount otherwise payable an amount
equal to the face amount of all such missing coupons, or the surrender
of such missing coupon or coupons may be waived by INTELSAT and the
Fiscal Agent if they are furnished with such security or indemnity as
they may require to save each of them and each other paying agency of
INTELSAT harmless. From and after the redemption date, if monies for
the redemption of Notes surrendered for redemption shall have been
made available at the Principal Office of the Fiscal Agent for
redemption on the redemption date, the Notes surrendered for
redemption shall cease to bear interest, the coupons for interest
appertaining to Bearer Notes maturing subsequent to the redemption
date shall be void (unless the amount of such coupons shall have been
deducted from the redemption price at the time of surrender of the
Bearer Note to which such coupons appertained, as aforesaid), and the
only right of the Holders of such Notes shall be to receive payment of
the redemption price together with accrued and unpaid interest (unless
the redemption date is an Interest Payment Date) to the redemption
date as aforesaid. If monies for the redemption of the Notes are not
made available for payment until after the redemption date, the Notes
surrendered for redemption shall not cease to bear interest until such
monies have been so made available.
(g) Notes redeemed or otherwise acquired by INTELSAT will
forthwith be delivered to the Fiscal Agent for cancellation and may
not be reissued or resold, except that Bearer Notes delivered to the
Fiscal Agent may, at the written request of INTELSAT, be reissued by
the Fiscal Agent in replacement of mutilated, lost, stolen or
destroyed Notes pursuant to Paragraph 9 hereof.
7. In the event of:
(a) default in the payment of any installment of interest
upon any Note for a period of 30 days after the date when due; or
(b) default in the payment of the principal of any Note
when due (whether at maturity or redemption or otherwise); or
(c) default in the performance or breach of any covenant
or warranty contained in the Notes or the Fiscal Agency Agreement
(other than as specified in clauses (a) and (b) of this Paragraph
B-13
7) for a period of 90 days after the date on which written notice
of such failure, requiring INTELSAT to remedy the same and
stating that such notice is a "Notice of Default", shall first
have been given to INTELSAT and the Fiscal Agent by any Holder of
a Note; or
(d) involuntary acceleration of the maturity of other
indebtedness of INTELSAT for money borrowed with a maturity of
one year or more in excess of U.S. $50,000,000 which acceleration
shall not be rescinded or annulled, or which indebtedness shall
not be discharged, within 45 days after notice; or
(e) INTELSAT is dissolved or the INTELSAT Agreement or the
Operating Agreement ceases to be in full force and effect;
provided, however, that no default shall occur if INTELSAT's
obligations under the Fiscal Agency Agreement and the Notes are
assumed by a successor which includes a business which is
substantially similar to that of INTELSAT;
the Holder of this Note may, at such Holder's option, unless such
Event of Default has been waived as described in Paragraph 10(b)
hereof, declare the principal of this Note and accrued and unpaid
interest hereon to be due and payable immediately by written notice to
INTELSAT, with a copy to the Fiscal Agent at its Principal Office, and
unless all such defaults shall have been cured by INTELSAT prior to
receipt of such written notice, the principal of this Note and accrued
and unpaid interest hereon shall become and be immediately due and
payable.
8. (a) INTELSAT will conduct and operate its business
diligently and in the ordinary manner in compliance with the INTELSAT
Agreement and the Operating Agreement, and will use all reasonable
efforts to maintain in full force and effect its existing
international registration of orbital locations and frequency spectrum
for the operation of its global commercial telecommunications
satellite system; provided, however, that INTELSAT shall not be
prevented from making any change with respect to its manner of
conducting or operating its business or with respect to such
registration if such change, in the judgment of INTELSAT, is desirable
and does not materially impair INTELSAT's ability to perform its
obligations under the Notes.
(b) INTELSAT will cause all properties used or useful in the
conduct of its business to be maintained and kept in good condition,
repair and working order and supplied with all necessary equipment and
will cause to be made all necessary repairs, renewals, replacements,
betterments and improvements thereof, all as in the judgment of
INTELSAT may be necessary so that the business carried on in
connection therewith may be properly and advantageously conducted at
all times (except for ordinary wear and tear and deterioration);
provided, however, that INTELSAT shall not be prevented from
B-14
discontinuing the operation or maintenance of any of such properties
if such discontinuance, in the judgment of INTELSAT, is desirable in
the conduct of its business and does not materially impair INTELSAT's
ability to perform its obligations under the Notes.
9. If any mutilated Note or a Note with a mutilated
coupon appertaining to it is surrendered to the Fiscal Agent, INTELSAT
shall execute, and the Fiscal Agent shall authenticate (or arrange for
authentication on its behalf) and deliver in exchange therefor, a new
Note of like tenor and principal amount, bearing a number not
contemporaneously outstanding, with coupons corresponding to the
coupons, if any, appertaining to the surrendered Note.
If there be delivered to INTELSAT and the Fiscal Agent (i)
evidence to their satisfaction of the destruction, loss or theft of
any Note or coupon, and (ii) such security or indemnity as may be
required by them to save each of them and any agent of each of them
harmless, then, in the absence of notice to INTELSAT or the Fiscal
Agent that such Note or coupon has been acquired by a bona fide
purchaser, INTELSAT shall execute, and upon its request the Fiscal
Agent shall authenticate (or arrange for authentication on its behalf)
and deliver in lieu of any such destroyed, lost or stolen Note or in
exchange for the Note to which such coupon appertains (with all
appurtenant coupons not destroyed, lost or stolen), a new Note of like
tenor and principal amount and bearing a number not contemporaneously
outstanding, with coupons corresponding to the coupons, if any,
appertaining to such destroyed, lost or stolen Note or to the Note to
which such destroyed, lost or stolen coupon appertains.
Upon the issuance of any new Note under this Paragraph,
INTELSAT may require the payment by the Holder of a sum sufficient to
cover any tax or other governmental charge that may be imposed in
relation thereto and any other expenses (including the fees and the
expenses of the Fiscal Agent and INTELSAT) connected therewith.
Every new Note with its coupons, if any, issued pursuant to
this Paragraph in lieu of any destroyed, lost or stolen Note, or in
exchange for a Note to which a destroyed, lost or stolen coupon
appertains, shall constitute an original additional contractual
obligation of INTELSAT, whether or not the destroyed, lost or stolen
Note and its coupons, if any, or the destroyed, lost or stolen coupon
shall be at any time enforceable by anyone.
Any new Note delivered pursuant to this Paragraph shall be
so dated, or have attached thereto such coupons, that neither gain nor
loss in interest shall result from such exchange.
The provisions of this Paragraph 9 are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with
respect to the replacement or payment of mutilated, destroyed, lost or
stolen Notes or coupons.
B-15
10. (a) The Fiscal Agency Agreement and the terms and
conditions of the Notes may be modified or amended by INTELSAT and the
Fiscal Agent, without the consent of the Holder of any Note or coupon,
in any manner which does not adversely affect the interests of the
Holders, to provide for issuances of further debt securities as
contemplated by Paragraph 11 hereof and by the Fiscal Agency
Agreement, and to cure any ambiguity or to cure, correct or supplement
any defective provision contained herein or in any coupon appertaining
hereto or in the Fiscal Agency Agreement, or in certain other
circumstances as described in the Fiscal Agency Agreement, to all of
which each Holder of any Note or coupon shall, by acceptance thereof,
consent.
(b) The Fiscal Agency Agreement and the terms and
conditions of the Notes may also be modified or amended by INTELSAT
and the Fiscal Agent, and future compliance therewith or past default
by INTELSAT may be waived, either with the consent of the Holders of
not less than a majority in aggregate principal amount of the Notes at
the time Outstanding or by the adoption of a resolution at a meeting
of Holders duly convened and held in accordance with the provisions of
the Fiscal Agency Agreement at which a quorum (as defined below) is
present by at least a majority in aggregate principle amount of Notes
represented at such meeting; provided, however, that no such
modification, amendment or waiver may, without the written consent or
affirmative vote of the Holder of each Note affected thereby:
(i) change the stated maturity of the principal of or
any installment of interest on any such Note, or
(ii) reduce the principal amount thereof or the rate of
interest on any such Note, or
(iii) change the obligation of INTELSAT to pay Additional
Amounts, or
(iv) change the coin or currency in which any such Note
or the interest thereon is payable, or
(v) modify the obligation of INTELSAT to maintain
offices or agencies outside the United States, or
(vi) reduce the percentage in principal amount of the
Outstanding Notes necessary to modify or amend the Fiscal Agency
Agreement or the terms and conditions of the Notes or the
coupons, or to waive any future compliance or past default, or
(vii) reduce the requirements for voting for the adoption
of a resolution or the quorum required at any meeting of Holders
of Notes at which a resolution is adopted.
B-16
The quorum at any meeting called to adopt a resolution will
be a majority in aggregate principal amount of Notes Outstanding,
except that at any meeting which is reconvened for lack of a quorum,
the Holders entitled to vote 25 per cent. in aggregate principle
amount of Notes Outstanding shall constitute a quorum for the taking
of any action set forth in the notice of the original meeting.
It shall not be necessary for the Holders of Notes to
approve the particular form of any proposed amendment, but it shall be
sufficient if they approve the substance thereof.
(c) Any modifications, amendments or waivers to the Fiscal
Agency Agreement or to the terms and conditions of the Notes in
accordance with the foregoing provisions will be conclusive and
binding on all Holders of Notes, whether or not they have given such
consent, and on all Holders of coupons, whether or not notation of
such modifications, amendments or waivers is made upon the Notes or
coupons, and on all future Holders of Notes and coupons.
(d) Promptly after the execution of any amendment to the
Fiscal Agency Agreement or the effectiveness of any modification or
amendment of the terms and conditions of the Notes, notice of such
modification or amendment shall be given by INTELSAT or by the Fiscal
Agent on behalf of and at the expense of INTELSAT, to Holders of the
Notes in the manner provided in Paragraph 6(e) hereof. The failure to
give such notice on a timely basis shall not invalidate such
modification or amendment, but INTELSAT shall cause the Fiscal Agent
to give such notice as soon as practicable upon discovering such
failure or upon any impediment to the giving of such notice being
overcome.
11. INTELSAT may from time to time, without the consent of
the Holder of any Note or coupon, issue further debt securities having
the same terms and conditions as the Notes in all respects (or in all
respects except for the first payment of interest thereon) or having
such terms as INTELSAT may determine at the time of their issuance, in
either case so that any such further debt securities shall be
consolidated and form a single series with outstanding securities of
any series (including the Notes). Unless the context requires
otherwise, references in the Notes and coupons and in the Fiscal
Agency Agreement to the Notes or coupons shall include any other debt
securities issued in accordance with the Fiscal Agency Agreement that
are intended by INTELSAT to form a single series with the Notes. Any
further debt securities forming a single series with the outstanding
securities of any series (including the Notes) shall be issued
pursuant to the Fiscal Agency Agreement as amended for the purpose of
providing for the issuance of such debt securities.
12. Subject to the authentication of this Note by the
Fiscal Agent, INTELSAT hereby certifies and declares that all acts,
conditions and things required to be done and performed and to have
happened precedent to the creation and issuance of the Notes and any
B-17
coupons, and to constitute the same the valid obligations of INTELSAT,
have been done and performed and have happened in due compliance with
all applicable laws.
13. INTELSAT hereby appoints CT Corporation System, 1633
Broadway, New York, New York 10019, as its authorized agent
("Authorized Agent") upon which process may be served in any action
arising out of or based on the Notes or any coupons which action may
be instituted in any New York State or United States Federal court
sitting in the Borough of Manhattan, The City of New York, the State
of New York, U.S.A., by the Holder of any Note or coupon, and INTELSAT
and each Holder by acceptance hereof expressly accepts the exclusive
jurisdiction of any such court in respect of any such action. Such
appointment shall be irrevocable until two years after the Notes shall
have matured and been paid or moneys for the payment thereof shall
have been made available unless and until a successor Authorized Agent
shall have been appointed and shall have accepted such appointment.
INTELSAT hereby irrevocably waives any immunity to service of process
in respect of any such action to which it might otherwise be entitled
in any action arising out of or based upon the Notes or coupons which
may be instituted by any Holder of a Note or coupon in any State or
Federal court in the Borough of Manhattan, The City of New York, the
State of New York, U.S.A. Service of process upon the Authorized
Agent at the address indicated above, as such address may be changed
within the Borough of Manhattan, The City of New York, the State of
New York, U.S.A., by notice given by the Authorized Agent to each
party hereto, shall be deemed, in every respect, effective service of
process upon INTELSAT. INTELSAT irrevocably waives, to the fullest
extent permitted by applicable law, any sovereign or other immunity
from jurisdiction or from execution (except that INTELSAT does not
waive immunity from execution prior to judgment and any similar
defense) to which it might otherwise be entitled in any such action
which may be instituted by any Holder of a Note or coupon in any New
York State or United States Federal court sitting in the Borough of
Manhattan, The City of New York, the State of New York, U.S.A.
14. The Notes and coupons will constitute an obligation of
INTELSAT and not of any Signatory or Party (each as defined in the
INTELSAT Agreement). No Signatory or Party will waive any immunity to
which it may be entitled in any suit on the Notes or coupons, and
Holders of Notes or coupons will have no recourse against any
Signatory or Party with respect to any obligations of INTELSAT under
the Notes or coupons.
B-18
[Form of coupon]
[Face of coupon]
ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE
SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX
LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j)
AND 1287(a) OF THE INTERNAL REVENUE CODE.
[B-][1] ... [10]
U.S.$[83.75] [837.50][8375.00]
Due 14 October [1995]....[2004]
INTERNATIONAL TELECOMMUNICATIONS SATELLITE ORGANIZATION
8 3/8% Notes Due 2004
On the date set forth hereon, INTERNATIONAL
TELECOMMUNICATIONS SATELLITE ORGANIZATION ("INTELSAT") will pay to
bearer upon surrender hereof, the amount shown hereon (together with
any additional amounts in respect thereof which INTELSAT may be
required to pay according to the terms of said Note) at the paying
agencies set out on the reverse hereof or at such other places outside
the United States of America (including the States and the District of
Columbia), its territories and possessions and other areas subject to
its jurisdiction as INTELSAT may determine from time to time, at the
option of the Holder, by United States dollar check drawn on a bank in
The City of New York, the State of New York, U.S.A. or by transfer to
a United States dollar account maintained by the payee with a bank
located in a city in Western Europe, being the interest then payable
on said Note.
INTERNATIONAL TELECOMMUNICATIONS
SATELLITE ORGANIZATION
By_______________________________________
B-19
[Reverse of coupon]
Morgan Guaranty Trust Company of New York
60 Victoria Embankment
London EC4Y 0JP
United Kingdom
Banque Generale du Luxembourg S.A.
27 Avenue Monterey
L-2951 Luxembourg
Credit Suisse
Paradeplatz 8
8001 Zurich
Switzerland
Morgan Gauranty Trust of New York, Brussels Office
Avenue des Arts 35
B-1040 Brussels
Belgium
B-20
EXHIBIT C
[FORM OF CERTIFICATION TO BE GIVEN TO
EUROCLEAR OR CEDEL S.A. BY ACCOUNT HOLDER]
CERTIFICATE
INTERNATIONAL TELECOMMUNICATIONS SATELLITE ORGANIZATION
8 3/8% Notes Due 2004
(the "Notes")
This is to certify that as of the date hereof, and except as
set forth below, interests in the temporary Global Note representing the
above-captioned Notes held by you for our account (i) are owned by
person(s) that are not citizens or residents of the United States,
domestic partnerships, domestic corporations or any estate or trust the
income of which is subject to United States Federal income taxation
regardless of its source ("United States person(s)"), (ii) are owned by
United States person(s) that (a) are foreign branches of United States
financial institutions (as defined in U.S. Treasury Regulations Section
1.165-12(c)(1)(v) ("financial institutions")) purchasing for their own
account or for resale or (b) acquired the Notes through foreign branches
of United States financial institutions and who hold the Notes through
such United States financial institutions on the date hereof (and in
either case (a) or (b), each such United States financial institution
hereby agrees, on its own behalf or through its agent, that you may
advise INTELSAT or INTELSAT's agent that it will comply with the
requirements of Section 165(j)(3)(A), (B) or (C) of the U.S. Internal
Revenue Code of 1986, as amended, and the regulations thereunder), or
(iii) are owned by a United States or foreign financial institution for
purposes of resale during the restricted period (as defined in U.S.
Treasury Regulations Section 1.163-5(c)(2)(i)(D)(7)), and in addition if
the owner of the Notes is a United States or foreign financial
institution described in clause (iii) above (whether or not also
described in clause (i) or (ii)) this is to further certify that such
financial institution has not acquired the Notes for purposes of resale
directly or indirectly to a United States person or to a person within
the United States or its possessions.
As used herein, "United States" means the United States of
America (including the States thereof and the District of Columbia); and
its "possessions" include Puerto Rico, the U.S. Virgin Islands, Guam,
American Samoa, Wake Island and the Northern Mariana Islands.
We undertake to advise you promptly by tested telex on or
prior to the date on which you intend to submit your certification
relating to the Notes held by you for our account in accordance with your
Operating Procedures if any applicable statement herein is not correct
C-1
on such date, and in the absence of any such notification it may be
assumed that this certification applies as of such date.
This certification excepts and does not relate to U.S. $______
of such interest in the above Notes in respect of which we are not able
to certify and as to which we understand exchange and delivery of
definitive Notes (or, if relevant, exercise of any rights or collection
of any interest) cannot be made until we do so certify.
We understand that this certification is required in
connection with certain tax laws or, if applicable, certain securities
laws of the United States. In connection therewith, if administrative
or legal proceedings are commenced or threatened in connection with which
this certification is or would be relevant, we irrevocably authorize you
to produce this certification to any interested party in such
proceedings.
Dated: _____________, 199_
By:_______________________________________
As, or as agent for, the beneficial owner(s)
of the Notes to which this certificate relates.
C-2
EXHIBIT D
[FORM OF CERTIFICATION TO BE GIVEN
BY THE EUROCLEAR OPERATOR OR
CEDEL S.A.]
CERTIFICATION
INTERNATIONAL TELECOMMUNICATIONS SATELLITE ORGANIZATION
8 3/8% Notes Due 2004
(the "Notes")
This is to certify that, based solely on certifications we
have received in writing, by tested telex or by electronic transmission
from member organizations appearing in our records as persons being
entitled to a portion of the principal amount set forth below (our
"Member Organizations") substantially to the effect set forth in the
Fiscal Agency Agreement, as of the date hereof, U.S. $_______ principal
amount of the above-captioned Notes (i) is owned by persons that are not
citizens or residents of the United States, domestic partnerships,
domestic corporations or any estate or trust the income of which is
subject to United States Federal income taxation regardless of its source
("United States persons"), (ii) is owned by United States persons that
are (a) foreign branches of United States financial institutions (as
defined in U.S. Treasury Regulations Section 1.165-12(c)(1)(v)
("financial institutions")) purchasing for their own account or for
resale or (b) United States persons who acquired the Notes through
foreign branches of United States financial institutions and who hold the
Notes through such United States financial institutions on the date
hereof (and in either case (a) or (b), each such United States financial
institution has agreed, on its own behalf or through its agent, that we
may advise INTELSAT or INTELSAT's agent that it will comply with the
requirements of Section 165(j)(3)(A), (B) or (C) of the U.S. Internal
Revenue Code of 1986, as amended, and the regulations thereunder), or
(iii) is owned by a United States or foreign financial institution for
purposes of resale during the restricted period (as defined in U.S.
Treasury Regulations Section 1.163-5(c)(2)(i)(D)(7)), and to the further
effect that United States or foreign financial institutions described in
clause (iii) above (whether or not also described in clause (i) or (ii))
have certified that they have not acquired the Notes for purposes of
resale directly or indirectly to a United States person or to a person
within the United States or its possessions.
We further certify (i) that we are not making available
herewith for exchange (or, if relevant, exercise of any rights or
collection of any interest) any portion of the Temporary Global Note
excepted in such certifications and (ii) that as of the date hereof we
have not received any notification from any of our Member Organizations
to the effect that the statements made by such Member Organizations with
D-1
respect to any portion of the part submitted herewith for exchange (or,
if relevant, exercise of any rights or collection of any interest) are
no longer true and cannot be relied upon as of the date hereof.
We understand that this certification is required in
connection with certain tax laws and, if applicable, certain securities
laws of the United States. In connection therewith, if administrative
or legal proceedings are commenced or threatened in connection with which
this certification is or would be relevant, we irrevocably authorize you
to produce this certification to any interested party in such
proceedings.
Dated: __________, 1994
Yours faithfully,
[Morgan Guaranty Trust Company of
New York, Brussels Office as
operator of the Euroclear System]
or
[Cedel S.A.]
By_______________________
D-2
EXHIBIT 10(hh)
Page 206
COMSAT CORPORATION
ANNUAL INCENTIVE PLAN
Approved by the Committee on Compensation
and Management Development on January 19, 1995,
and the Board of Directors on January 20, 1995
/s/Steven F. Bell 1/20/95
---------------------------------------
Steven F. Bell (date)
Vice President, Human Resources
and Organization Development
TABLE OF CONTENTS
Page
SECTION 1 - Purpose and Effective Date
1.1 Purpose 1
1.2 Effective Date 1
SECTION 2 - Definitions and Construction
2.1 Definitions 1
2.2 Construction 3
SECTION 3 - Eligibility and Participation
3.1 Eligibility 4
3.2 Participation 4
3.3 Restriction on Participation 4
SECTION 4 - Annual Incentive Award Determination
4.1 Assignment of Objectives 4
4.2 Annual Incentive Award Determination 4
SECTION 5 - Deferrals of Annual Incentive Awards
5.1 Deferral Elections 6
5.2 Irrevocability of Deferral Elections 7
5.3 Participants in the Communications
Satellite Corporation Directors and
Executives Deferred Compensation Plan 7
Page i
Page
SECTION 6 - Deferred Compensation Accounts
6.1 Maintenance of Accounts 8
6.2 Interest 8
SECTION 7 - Payment of Benefits
7.1 Amounts Not Subject to Deferral
Election 8
7.2 Amounts Subject to Deferral Election 9
7.3 Payments Upon Death 9
7.4 Hardship Distributions 10
SECTION 8 - Administration
8.1 Administration 10
SECTION 9 - Miscellaneous Provisions
9.1 No Implied Rights 10
9.2 No Assignment or Alienation 11
9.3 Applicable Laws 11
SECTION 10 - Amendment or Termination
10.1 Amendment 11
10.2 Termination 11
Page ii
Section 1 - Purpose and Effective Date
1.1 Purpose. The purpose of the COMSAT Corporation Annual
Incentive Plan is to provide meaningful incentives to certain key
employees of COMSAT Corporation and its subsidiaries who are
largely responsible for the development and success of the
business.
1.2 Effective Date. The Plan will become effective upon
approval by the Board of Directors.
Section 2 - Definitions and Construction
2.1 Definitions. For purposes of the Plan, unless a
different meaning is plainly required by the context, the
following definitions are applicable:
(a) "Annual Incentive Award" means an award of
incentive compensation made to a Participant with respect to a
Plan Year pursuant to Section 4.
(b) "Beneficiary" means the person designated by the
Participant to receive the cash award or the account balance(s)
maintained for him in the event of his death prior to receiving
payment.
Page 1
(c) "Board" means the Board of Directors of COMSAT
Corporation or any successor to such Corporation.
(d) "Committee" means the Committee on Compensation
and Management Development of the Board of Directors of COMSAT
Corporation or any successor to such Corporation.
(e) "Corporation" means COMSAT Corporation or any
successor thereto, and any subsidiary of such Corporation.
(f) "Deferral Date" means the date on which payout
of the balance in a Participant's Deferred Compensation Account
shall commence or be made, as the case may be pursuant to Section
5.1.
(g) "Deferral Election" means an election made by a
Participant, in accordance with Section 5.1, to defer an Annual
Incentive Award made to the Participant with respect to a Plan
Year.
(h) "Deferred Compensation Account" means each
account maintained for a Participant by the Corporation in
accordance with Section 6.1, with respect to an Annual Incentive
Award for which the Participant has made a Deferral Election.
(i) "Deferred Compensation Plan" means the COMSAT
Corporation Directors and Executives Deferred Compensation Plan,
as amended from time to time.
(j) "Division" means a line of business of the
Corporation which maintains separate financial records to
determine profit and loss.
(k) "Employee" means any person who is employed by
the Corporation on a full-time basis.
Page 2
(l) "Fair Market Value" means the average of the
highest and lowest selling prices of COMSAT stock as reported
under the New York Stock Exchange - Composite Transactions as of
a specific date.
(m) "Hardship" means the immediate and heavy
financial need of a Participant as determined by the Committee in
accordance with uniform standards established by the Committee.
(n) "Participant" means an Employee participating in
the Plan in accordance with Section 3.
(o) "Performance Components" means that each award
made under the Plan will be based on at least two pre-established
performance standards, such as, Corporate Performance, Division
Performance, and Individual Performance.
(p) "Phantom Stock Units" means units calculated by
dividing a specific dollar amount from an Annual Incentive Award
by the Fair Market Value of COMSAT stock as of a specific date.
(q) "Plan" means the COMSAT Corporation Annual
Incentive Plan.
(r) "Plan Year" means the calendar year.
2.2 Construction. Wherever applicable, the masculine
pronoun shall mean or include the feminine pronoun, and words
used in the singular shall include the plural and vice versa.
Page 3
Section 3 - Eligibility and Participation
3.1 Eligibility. Except as provided in Section 3.3, all
Employees that hold key positions as determined by one or more of
the following criteria are eligible to participate in the Plan
for that Plan Year: job title, reporting level, salary, and/or
salary grade/points.
3.2 Participation. The Committee shall select the
Participants for each Plan Year from among the Employees eligible
to participate with respect to that Plan Year.
3.3 Restriction on Participation. Employees participating
in any other cash incentive, commission, or bonus plan of the
Corporation in any Plan Year will not be eligible to participate
in this Plan with respect to that Plan Year.
Section 4 - Annual Incentive Award Determination
4.1 Assignment of Objectives. For each Plan Year,
objectives shall be established for the Performance Components
against which each eligible Employee will be measured.
4.2 Annual Incentive Award Determination. For each Plan
Year, the Committee will establish target Annual Incentive Awards
for eligible Employees based on one or more of the following
criteria: job title, reporting level, salary and/or salary
grade/points. These targets will be expressed as a percentage of
base annual salary as of the last day of the applicable
Plan Year. The Annual Incentive Award to be made to each
Participant will be determined by (1) comparing performance to
Page 4
the written objectives established for the Plan Year (before
unusual adjustments) for the Corporation and, if applicable, the
Division, and (2) taking into account the Participant's
Individual Performance during the Plan Year. The Committee shall
approve Annual Incentive Awards for all Participants except for
those to be made to the Chief Executive Officer and his or her
direct reports. For these Participants, the Committee shall
recommend to the Board, and the Board shall approve the Annual
Incentive Awards with respect to each Plan Year.
At the discretion of the Committee and/or the Board, a
decision may be made to award part of the Annual Incentive Award
in cash and part in Phantom Stock Units (PSUs). The number of
PSUs to be awarded to a Participant shall be calculated by
dividing that part of the Annual Incentive Award not to be paid
in cash by the Fair Market Value of COMSAT stock as of the date
of the Award. The Committee shall determine for each Plan Year
the number of full years from the date of the Award which shall
be the vesting period. In order to vest in the PSUs, the
Participant must remain in the employment of the Corporation or
one of its subsidiaries until the expiration of the vesting
period except in the event of death, retirement, or disability,
in which case the Committee will determine in its sole discretion
whether any, a part, or all of the Phantom Stock Units will be
vested.
Notwithstanding any other provision of this Plan, the
Board or the Committee may, in their sole discretion, adjust or
modify the Annual Incentive Award in a given Plan Year for any
Participant where the Board or Committee deems such an adjustment
or modification appropriate.
Page 5
Section 5 - Deferral of Annual Incentive Awards
5.1 Deferral Elections. An eligible Employee may elect to
defer payment of part or all of any Annual Incentive Award made
to such Employee with respect to any Plan Year by filing a
Deferral Election by December 31 of the immediately preceding
Plan Year. A Participant who has been awarded Phantom Stock
Units (PSUs) as part of an Annual Incentive Award may elect to
defer receipt of all of the PSUs when they become vested by
filing a PSU Deferral Election within 60 days after the
notification of such award. The minimum amount which may be
deferred is $2,500 or 100 PSUs. Each Deferral Election:
(a) shall be made on a form filed in the manner
prescribed by the Committee;
(b) shall be effective only if made and filed in
such manner by the Employee;
(c) shall specify the percentage of the Annual
Incentive Award to be deferred;
(d) shall specify the date on which payment of the
deferred portion of the Annual Incentive Award or the Phantom
Stock Units shall commence or be made, as the case may be, which
date may be the first day of any month before the Employee's 66th
birthday but not earlier than (1) the first day of the second
Plan Year after the Plan Year with respect to which the Annual
Incentive Award is made or (2) the first day of the Plan Year
after the Plan Year in which the Phantom Stock Units become
vested; and
(e) shall specify the form in which payment of the
Page 6
deferred portion of the Annual Incentive Award or Phantom Stock Units
shall be made, which shall be either:
(i) a lump sum, or
(ii) equal annual installments over a period of time
not to exceed 15 years commencing on the Deferral Date, provided
that if the Employee fails to elect the form of payment or the
account balance to be distributed is less than $10,000, payment
shall be made accordance with clause (i).
5.2 Irrevocability of Deferral Elections. A Deferral
Election made pursuant to Section 5.1 shall be irrevocable,
except as provided in Section 7.4.
5.3 Participants in the COMSAT Corporation Directors and
Executives Deferred Compensation Plan. Notwithstanding any other
provision of this Plan, if a Participant is eligible to
participate in the COMSAT Corporation Directors and Executives
Deferred Compensation Plan, the following shall apply:
(a) an election by the Participant to defer payment
of any Annual Incentive Award or Phantom Stock Units shall be
made in accordance with, and shall thereafter be governed in all
respects by, the terms and conditions of such Deferred
Compensation Plan; and
(b) if the Participant elects to rollover to such
Deferred Compensation Plan the amounts credited to each of his
Deferred Compensation Accounts, such amounts shall thereafter be
subject in full to the provisions of such Deferred Compensation
Plan.
Section 6 - Deferred Compensation Accounts
Page 7
6.1 Maintenance of Accounts. The Corporation shall
maintain, for recordkeeping purposes only, a separate Deferred
Compensation Account with respect to each Deferral Election made
by a Participant. The portion of the Annual Incentive Award or
the value of the Phantom Stock Units deferred pursuant to a
Deferral Election shall be credited to the Deferred Compensation
Account as it otherwise would become payable to the Participant.
6.2 Interest. Each Deferred Compensation Account
maintained for a Participant shall be credited annually with
interest at a rate equal to the average of the Composite Bond
rates, as published by Standard and Poor's during the week that
Annual Incentive Awards for the Plan Year are paid in accordance
with Section 7.1 with respect to:
i. COMSAT'S Standard and Poor's Senior Debt Rating,
and
ii. COMSAT'S Moody's Senior Debt Rating.
Section 7 - Payment of Benefits
7.1 Amounts Not Subject to Deferral Election. Except as
provided in Section 7.2, the Annual Incentive Award made to a
Participant for a Plan Year shall be paid to the Participant in
cash as soon as practicable after such Annual Incentive Award is
approved. The cash value of the Phantom Stock Units, upon
vesting, shall be paid to the Participant as soon as practicable
after the PSUs become 100% vested. The cash value shall be
calculated by multiplying the number of PSUs by the Fair Market
Value of COMSAT stock as of the day before the date on which the
PSUs become vested.
7.2 Amounts Subject to Deferral Election. If a Participant
Page 8
has filed a valid Deferral Election pursuant to Section 5.1 with
respect to an Annual Incentive Award and/or Phantom Stock Units
made to the Participant for a Plan Year, payment to the
Participant of an amount equal to the balance of the Deferred
Compensation Account maintained with respect to such Deferral
Election shall commence or be made, as the case may be, on the
Deferral Date specified in such Deferral Election.
7.3 Payments Upon Death.
(a) Each Participant may designate a Beneficiary or
Beneficiaries to receive payment of the balance of each Deferred
Compensation Account of the Participant or Phantom Stock Units
not yet vested in the event of his death. Each Beneficiary
designation:
(i) shall be made on a form filed in the manner
prescribed by the Committee,
(ii)shall be effective when, and only if made and
filed in such manner during the Participant's lifetime, and
(iii) upon such filing, shall automatically
revoke all previous Beneficiary designations.
(b) If the payments to be made pursuant to paragraph
(a) are not subject to a valid Beneficiary designation at the
time of the Participant's death (because the designated
Beneficiary predeceased the Participant or for any other reason),
the estate of the Participant shall be the Beneficiary. If a
Beneficiary designated by the Participant to receive all or any
part of the amount to be paid in accordance with Section 7.1 or
the Participant's Deferred Compensation Account dies after the
Page 9
Participant but before complete distribution of the portion in
question, and at the time of the Beneficiary's death there is no
valid designation of a contingent Beneficiary, the estate of such
Beneficiary shall be the Beneficiary of the portion in question.
7.4 Hardship Distributions. The Committee may, in its sole
discretion, make distributions to a Participant from any of his
Deferred Compensation Accounts prior to the Deferral Date for
payment of any such Deferred Compensation Account if the
Committee determines that the Participant has suffered a
Hardship. The amount of any such distribution shall be limited
to the amount reasonably necessary to meet the Participant's
needs created by the Hardship.
Section 8 - Administration
8.1 Administration. This Plan will be administered by the
Committee which shall be responsible for the establishment of
procedures for the operation of the Plan. The Corporate Vice
President of Human Resources and Organization Development shall
be delegated the day-to-day responsibility for Plan
Administration.
Section 9 - Miscellaneous Provisions
9.1 No Implied Rights. Nothing in this Plan shall be
deemed to:
(a) give to any Employee the right to be retained in
the employ of the Corporation or to interfere with the right of
the Corporation to dismiss any Employee at any time, or
Page 10
(b) give to any Participant or Beneficiary any right
to any payments except as specifically provided for by the Plan.
9.2 No Assignment or Alienation. To the extent permitted
by law, no benefit provided under the Plan shall be anticipated,
assigned (either at law or in equity), alienated or subject to
attachment, garnishment, levy, execution, or other process. Any
attempt to perform any such action shall be void.
9.3 Applicable Laws. Except as otherwise required by
federal law, the provisions of the Plan and the rules,
regulations and decisions of the Board and the Committee shall be
construed and enforced according to the laws of the District of
Columbia.
Section 10 - Amendment or Termination
10.1 Amendment. The Committee may at any time amend the
Plan for the purpose of (a) satisfying the requirements of any
changes in applicable laws or regulations or (b) streamlining
administration of the Plan. Any material changes, amendments,
modifications, or enhancements to the Plan other than those
provided above require the approval of the Board.
10.2 Termination. The Board may terminate the Plan at any
time, provided, however, that no termination of the Plan shall,
without the consent of a Participant, adversely affect the
Participant's rights under the Plan as of the time of such
termination. Unless the Plan has been previously terminated, it
shall terminate with the payments of the Annual Incentive Awards
Page 11
for the 2004 Plan Year.
Page 12
EXHIBIT 10(ii)
Page 218
______________________________________________________________________
FISCAL AGENCY AGREEMENT
Between
INTERNATIONAL TELECOMMUNICATIONS SATELLITE ORGANIZATION,
Issuer
and
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
Fiscal Agent and Principal Paying Agent
_________________________
Dated as of 28 February 1995
_________________________
U.S. $200,000,000
8 1/8% Notes due 2005
______________________________________________________________________
FISCAL AGENCY AGREEMENT, dated as of 28 February 1995
(the "Agreement"), between INTERNATIONAL TELECOMMUNICATIONS
SATELLITE ORGANIZATION ("INTELSAT"), an international organization
established by the Agreement Relating to the International
Telecommunications Satellite Organization and the Operating
Agreement relating thereto, entered into force on 12 February 1973,
and MORGAN GUARANTY TRUST COMPANY OF NEW YORK, a bank organized
under the laws of New York, United States, as Fiscal Agent and
Principal Paying Agent.
1. INTELSAT has, by a Subscription Agreement, dated as
of 24 February 1995, between INTELSAT and Goldman Sachs
International (the "Lead Manager"), and the other managers named
therein (together with the Lead Manager the "Managers"), agreed to
issue U.S. $200,000,000 aggregate principal amount of its 8 1/8%
Notes due 2005 (the "Notes"). The Notes shall be issued initially
in the form of a temporary global note in bearer form, without
interest coupons, substantially in the form of Exhibit A hereto
(the "Global Note"). The Global Note will be exchangeable, as
provided below, for definitive Notes issuable in bearer form, in
denominations of U.S. $1,000, U.S. $10,000 and U.S. $100,000 (the
"Bearer Notes") with interest coupons attached (the "coupons"),
substantially in the forms set forth in Exhibit B hereto. The term
"Notes" as used herein includes the Global Note. The term "Holder",
when used with respect to a Bearer Note or any coupon, means the
bearer thereof.
2. INTELSAT hereby appoints Morgan Guaranty Trust
Company of New York, acting through its office in London, United
Kingdom, as its fiscal agent and principal paying agent in respect
of the Notes upon the terms and subject to the conditions herein
set forth (Morgan Guaranty Trust Company of New York and its
successor or successors as such fiscal agent or principal paying
agent qualified or appointed in accordance with Section 8 hereof
are herein collectively called the "Fiscal Agent"), and Morgan
Guaranty Trust Company of New York hereby accepts such appointment.
The Fiscal Agent shall have the powers and authority granted to and
conferred upon it herein and in the Notes and such further powers
and authority to act on behalf of INTELSAT as may be mutually
agreed upon by INTELSAT and the Fiscal Agent. As used herein,
"paying agents" shall mean paying agents (including the Fiscal
Agent) maintained by INTELSAT as provided in Section 8(b) hereof.
3. (a) The Notes shall be executed on behalf of
INTELSAT by the Director General and Chief Executive Officer or by
any other officer of INTELSAT specifically identified in a
certificate of incumbency and specimen signatures as having the
requisite authority to execute the Notes (the "Executive
Officers"), any of whose signatures may be manual or facsimile,
under a facsimile of its seal reproduced thereon and attested by
its General Counsel or an Assistant General Counsel, any of whose
signatures may be manual or facsimile. Notes bearing the manual or
facsimile signatures of persons who were at any time the proper
officers of INTELSAT shall bind INTELSAT, notwithstanding that such
persons or any of them ceased to hold such office or offices prior
to the authentication and delivery of such Notes or did not hold
such office or offices at the date of issue of such Notes.
(b) The Fiscal Agent is hereby authorized, in accordance
with the provisions of Paragraph 9 of the definitive Notes and this
Section, from time to time to authenticate (or to arrange for the
authentication on its behalf) and deliver a new Note in exchange
for or in lieu of any Note which has become, or the coupons
appertaining thereto which have become, mutilated, lost, stolen or
destroyed. Each Note authenticated and delivered in exchange for
or in lieu of any such Note shall carry all the rights to interest
accrued and unpaid and to accrue which were carried by such Note.
4. (a) INTELSAT initially shall execute and deliver, on
28 February 1995 (the "Closing Date"), a Global Note for an
aggregate principal amount of U.S. $200,000,000 to the Fiscal
Agent, and the Fiscal Agent by a duly authorized officer or an
attorney-in-fact duly appointed pursuant to a valid power of
attorney shall, upon the order of INTELSAT signed by an Executive
Officer of INTELSAT, authenticate the Global Note and deliver the
Global Note to Morgan Guaranty Trust Company of New York (London
Branch), a common depositary for the Morgan Guaranty Trust Company,
Brussels Office, as operator of the Euroclear System ("Euroclear"),
and Cedel societe anonyme ("Cedel"), for credit to the respective
account of the purchasers (or to such other accounts as it may
direct).
(b) For the purposes of this Agreement, "Exchange Date"
shall mean the day immediately following the expiration of the 40-
day period beginning on the later of the date on which Notes are
first offered to persons other than distributors (as determined by
the Lead Manager) and the Closing Date. Without unnecessary delay,
but in any event not less than 14 days prior to the Exchange Date,
except in the event of earlier redemption or acceleration, INTELSAT
shall execute and deliver to the Fiscal Agent, as INTELSAT's agent,
U.S. $200,000,000 principal amount of Bearer Notes.
(c) Not earlier than the Exchange Date, the interest of
a beneficial owner of the Notes in the Global Note shall only be
exchanged for Bearer Notes after the account holder instructs
Euroclear or Cedel, as the case may be, to request such exchange on
his behalf and presents to Euroclear or Cedel, as the case may be,
a certificate substantially in the form set forth in Exhibit C
hereto, copies of which certificate shall be available from the
offices of either Euroclear or Cedel, as the case may be. Any
exchange pursuant to this paragraph shall be made free of charge to
beneficial owners of the Global Note, except that a person
receiving definitive Notes must bear the cost of insurance,
postage, transportation and the like in the event that such person
does not take delivery of such Notes in person at the offices of
Euroclear or Cedel. In no event shall any such exchange occur
prior to the Exchange Date.
(d) Upon request for issuance of Bearer Notes, on or
after the Exchange Date, the Global Note shall be surrendered by
the Common Depositary to the Fiscal Agent, as INTELSAT's agent, for
purposes of the exchange of Notes described below. Following such
surrender and upon presentation by Euroclear or Cedel, acting on
behalf of the beneficial owners of Bearer Notes, to the Fiscal
Agent at its principal office in London, United Kingdom (the
"Principal Office") of a certificate or certificates substantially
in the form set forth in Exhibit D hereto, the Fiscal Agent shall
authenticate (or arrange for the authentication on its behalf) and
deliver to Euroclear or Cedel, as the case may be, for the account
of such owners, the Bearer Notes in exchange for an aggregate
Page 2
principal amount equal to the principal amount of the Global Note
beneficially owned by such owners. The presentation to the Fiscal
Agent by Euroclear or Cedel of such a certificate may be relied
upon by INTELSAT and the Fiscal Agent as conclusive evidence that
a related certificate or certificates has or have been presented to
Euroclear or Cedel, as the case may be, as contemplated by the
terms of Section 4(c) hereof.
Upon any exchange of a portion of the Global Note for
Bearer Notes, the Global Note shall be endorsed by the Fiscal Agent
to reflect the reduction of the principal amount evidenced thereby,
whereupon its remaining principal amount shall be reduced for all
purposes by the amount so exchanged; provided, that when the Global
Note is exchanged in full, the Fiscal Agent shall cancel it. Until
so exchanged in full, the Global Note shall in all respects be
entitled to the same benefits under this Agreement as the
definitive Notes authenticated and delivered hereunder, except that
none of Euroclear, Cedel or the beneficial owners of the Global
Note shall be entitled to receive payment of interest thereon.
Notwithstanding the foregoing, in the event of redemption
or acceleration of the Global Note prior to the issue of the Bearer
Notes, Bearer Notes will be issuable in respect of such Global Note
on or after the later of (i) the date fixed for such redemption or
on which such acceleration occurs and (ii) the Exchange Date, and
all of the foregoing in this subsection (d) shall be applicable to
the issuance of such Bearer Notes.
(e) No Note or coupon shall be entitled to any benefit
under this Agreement or be valid or obligatory for any purpose
unless there appears on such Note or coupon a certificate of
authentication substantially in the forms provided for herein and
executed by the Fiscal Agent by manual signature, and such
certificate upon any Note or coupon shall be conclusive evidence,
and the only evidence, that such Note or coupon has been duly
authenticated and delivered hereunder.
5. (a) INTELSAT will pay or cause to be paid to the
Fiscal Agent the amounts required to be paid by it herein and in
the Notes, at the times and for the purposes set forth herein and
in the Notes, and INTELSAT hereby authorizes and directs the Fiscal
Agent to make payment of the principal of and interest and
additional amounts pursuant to Paragraph 5 of the definitive Notes
("Additional Amounts"), if any, on the Notes in accordance with the
terms of the Notes.
(b) Notwithstanding any other provision hereof (other
than the last sentence of this Section 5(b)) or of the Notes, no
payment with respect to principal of or interest or Additional
Amounts, if any, on any Note may be made at any office of the
Fiscal Agent or any other paying agent maintained by INTELSAT in
the United States of America (including the States and the District
of Columbia), its territories or possessions and other areas
subject to its jurisdiction (the "United States"). No payment with
respect to a Note shall be made by transfer to an account in, or by
mail to an address in, the United States. Notwithstanding the
foregoing, payment of principal of and interest and Additional
Amounts, if any, on the Notes shall be made at a paying agent in
Page 3
the Borough of Manhattan, The City of New York, if (but only if)
payments in United States dollars of the full amount of such
principal, interest or Additional Amounts at all offices or
agencies outside the United States through which payment is to be
made in accordance with the terms of the Notes is illegal or
effectively precluded by exchange controls or other similar
restrictions.
(c) If INTELSAT becomes liable to pay additional amounts
pursuant to Section 5 of the Notes, then, at least ten business
days prior to the date of any such payment of principal or interest
to which such payment of additional amounts relates, INTELSAT shall
furnish the Fiscal Agent and each other paying agent of INTELSAT
with a certificate which specifies, by country, the rates of
withholding, if any, applicable to such payment to Holders of the
Notes, and shall pay to the paying agent such amounts as shall be
required to be paid to Holders of the Notes. INTELSAT hereby
agrees to indemnify the Fiscal Agent and each other paying agent of
INTELSAT for, and to hold them harmless against, any loss,
liability or expense incurred without negligence or bad faith on
their part arising out of or in connection with actions taken or
omitted by any of them in reliance on any certificate furnished
pursuant to this Section 5(c).
(d) In the case of any redemption of Notes, INTELSAT
shall give notice, not less than 45 or more than 75 days prior to
any date set for redemption (as provided for in Paragraph 6 of the
definitive Notes), to the Fiscal Agent of its election to redeem
the Notes on such redemption date specified in such notice. The
Fiscal Agent shall cause notice of redemption to be given in the
name and at the expense of INTELSAT in the manner provided in
Paragraph 6(e) of the definitive Notes.
6. All Notes and coupons surrendered for payment,
redemption or exchange shall, if surrendered to anyone other than
the Fiscal Agent, be cancelled and delivered to the Fiscal Agent.
All cancelled Notes and coupons held by the Fiscal Agent shall be
destroyed, and the Fiscal Agent shall furnish to INTELSAT a
certificate with respect to such destruction, except that the
cancelled Global Note shall not be destroyed but shall be delivered
to INTELSAT.
7. The Fiscal Agent accepts its obligations set forth
herein and in the Notes upon the terms and conditions hereof and
thereof, including the following, to all of which INTELSAT agrees
and to all of which the rights hereunder of the Holders from time
to time of the Notes and coupons shall be subject:
(a) The Fiscal Agent and each other paying agent of
INTELSAT shall be entitled to the compensation to be agreed upon
with INTELSAT for all services rendered by it, and INTELSAT agrees
promptly to pay such compensation and to reimburse the Fiscal Agent
and each other paying agent of INTELSAT for its reasonable out-of-
pocket expenses (including reasonable counsel fees) incurred by it
in connection with the services rendered by it hereunder. INTELSAT
also agrees to indemnify each of the Fiscal Agent and each other
paying agent of INTELSAT hereunder for, and to hold it harmless
against, any loss, liability or expense incurred without negligence
or bad faith on the part of the Fiscal Agent or such other paying
Page 4
agent, arising out of or in connection with its acting as such
Fiscal Agent or other paying agent of INTELSAT hereunder, including
the costs and expenses of defending against any claim of liability.
For the purposes of this Section, the obligations of INTELSAT shall
survive the payment of the Notes and the resignation or removal of
the Fiscal Agent or any other paying agent of INTELSAT hereunder.
(b) In acting under this Agreement and in connection
with the Notes, the Fiscal Agent and each other paying agent of
INTELSAT are acting solely as agents of INTELSAT and do not assume
any obligation or relationship of agency or trust for or with any
of the Holders of the Notes or coupons, except that all funds held
by the Fiscal Agent or any other paying agent of INTELSAT for
payment of principal of or interest or Additional Amounts, if any,
on the Notes shall be held in trust, but need not be segregated
from other funds except as required by law, and shall be applied as
set forth herein and in the Notes; provided, however, that monies
paid by INTELSAT to the Fiscal Agent or any other paying agent of
INTELSAT for the payment of principal of or interest or Additional
Amounts, if any, on Notes remaining unclaimed at the end of two
years after such principal or interest or Additional Amounts, if
any, shall have become due and payable shall be repaid to INTELSAT,
as provided and in the manner set forth in the Notes, whereupon the
aforesaid trust shall terminate and all liability of the Fiscal
Agent or such other paying agent of INTELSAT with respect thereto
shall cease and the Holder of such Note or unpaid coupon must
thereafter look solely to INTELSAT for payment thereof.
(c) The Fiscal Agent and each other paying agent of
INTELSAT hereunder may consult with counsel (who may also be
counsel to INTELSAT) satisfactory to such Fiscal Agent or paying
agent in its reasonable judgment, and the written opinion of such
counsel shall be full and complete authorization and protection in
respect of any action taken, omitted or suffered by it hereunder in
good faith and in reliance thereon.
(d) The Fiscal Agent and each other paying agent of
INTELSAT hereunder shall be protected and shall incur no liability
to any person for or in respect of any action in good faith taken,
omitted or suffered by it in reliance upon any Note, coupon,
notice, direction, consent, certificate, affidavit, statement or
other paper or document reasonably believed by the Fiscal Agent or
such other paying agent in good faith to be genuine and to have
been signed by the proper parties.
(e) The Fiscal Agent and each other paying agent of
INTELSAT hereunder and its directors, officers and employees may
become the owner of, or acquire an interest in, any Notes or
coupons, with the same rights that it or they would have if it were
not the Fiscal Agent or such other paying agent of INTELSAT
hereunder, may engage or be interested in any financial or other
transaction with INTELSAT and may act on, or as depositary, trustee
or agent for, any committee or body of Holders of Notes or coupons
or holders of other obligations of INTELSAT as freely as if it were
not the Fiscal Agent or a paying agent of INTELSAT hereunder.
Page 5
(f) Neither the Fiscal Agent nor any other paying agent
of INTELSAT hereunder shall be under any liability to any person
for interest on any monies at any time received by it pursuant to
any of the provisions of this Agreement or of the Notes except as
may be otherwise agreed with INTELSAT.
(g) The recitals contained herein and in the Notes
(except the Fiscal Agent's certificates of authentication) and in
the coupons shall be taken as the statements of INTELSAT, and the
Fiscal Agent assumes no responsibility for their correctness. The
Fiscal Agent makes no representation as to the validity or
sufficiency of this Agreement or the Notes or coupons, except for
the Fiscal Agent's due authorization to execute and deliver this
Agreement; provided, however, that the Fiscal Agent shall not be
relieved of its duty to authenticate Notes (or to arrange for
authentication on its behalf) as authorized by this Agreement. The
Fiscal Agent shall not be accountable for the use or application by
INTELSAT of the proceeds of Notes.
(h) The Fiscal Agent and each other paying agent of
INTELSAT hereunder shall be obligated to perform such duties and
only such duties as are herein and in the Notes specifically set
forth and no implied duties or obligations shall be read into this
Agreement or the Notes against the Fiscal Agent or any other paying
agent of INTELSAT. The Fiscal Agent shall not be under any
obligation to take any action hereunder which may tend to involve
it in any undue expense or liability, the payment of which within
a reasonable time is not, in its reasonable opinion, assured to it.
(i) Unless herein or in the Notes otherwise specifically
provided, any order, certificate, notice, request, direction or
other communication from INTELSAT under any provision of this
Agreement shall be sufficient if signed by an Executive Officer of
INTELSAT.
(j) No provision of this Agreement shall be construed to
relieve the Fiscal Agent from liability for its own negligent
action, its own negligent failure to act, or its own willful
misconduct or that of its directors, officers or employees.
8. (a) INTELSAT agrees that, until all Notes or coupons
(other than coupons the surrender of which has been waived under
Paragraphs 3 and 6 of the definitive Notes and coupons which have
been replaced or paid as provided in Paragraph 9 of the definitive
Notes) authenticated and delivered hereunder (i) shall have been
delivered to the Fiscal Agent for cancellation or (ii) become due
and payable, whether at maturity or upon redemption, and monies
sufficient to pay the principal thereof and interest, and
Additional Amounts, if any, thereon shall have been made available
to the Fiscal Agent and either paid to the persons entitled thereto
or returned to INTELSAT as provided herein and in the Notes, there
shall at all times be a Fiscal Agent hereunder which shall be
appointed by INTELSAT, shall be authorized under the laws of its
place of organization to exercise corporate trust powers and shall
have a combined capital and surplus of at least U.S. $50,000,000.
Page 6
(b) INTELSAT hereby appoints the Principal Office of the
Fiscal Agent as its agent where, subject to any applicable laws or
regulations, Notes and coupons may be presented or surrendered for
payment, where the Notes may be surrendered for exchange and where
notices and demands to or upon INTELSAT in respect of the Notes and
coupons and this Agreement may be served. In addition, INTELSAT
hereby appoints the main office of Morgan Guaranty Trust Company of
New York, Brussels Office, Banque Generale du Luxembourg S.A. in
Luxembourg and Credit Suisse in Zurich, Switzerland as additional
paying agencies for the payment of principal of, and interest and
Additional Amounts, if any, on, the Notes.
INTELSAT may at any time and from time to time vary or
terminate the appointment of any such agent or appoint any
additional agents for any or all of such purposes; provided,
however, that, (i) so long as INTELSAT is required to maintain a
Fiscal Agent hereunder, INTELSAT will maintain in London, United
Kingdom an office or agency where Notes and coupons may be
presented or surrendered for payment, where the Note may be
presented for exchange and where notices and demands to or upon
INTELSAT in respect of the Notes and coupons and this Agreement may
be served and (ii) in the event the circumstances described in
Section 5(b) hereof require, it will designate a paying agent in
the Borough of Manhattan, The City of New York, the State of New
York, U.S.A., where Bearer Notes and coupons may be presented or
surrendered for payment in such circumstances (and not otherwise);
and provided, further, that so long as the Notes are listed on the
Luxembourg Stock Exchange and such exchange shall so require,
INTELSAT will maintain a paying agent in Luxembourg. INTELSAT will
give prompt written notice to the Fiscal Agent of the appointment
or termination of any such agency and of the location and any
change in the location of any such office or agency and shall give
notice thereof to Holders in the manner described in the first
sentence of Paragraph 6(d) of the definitive Notes.
If at any time INTELSAT shall fail to maintain any such
required office or agency in the Borough of Manhattan, The City of
New York, the State of New York, U.S.A. or in Luxembourg or shall
fail to furnish the Fiscal Agent with the address thereof,
presentations and surrenders may be made at the Principal Office of
the Fiscal Agent, and Notes and coupons may be presented and
surrendered for payment to the Principal Office of the Fiscal
Agent, and INTELSAT hereby appoints the same as its agent to
receive such presentations and surrenders of Notes and coupons, and
the Fiscal Agent hereby accepts such appointment.
(c) The Fiscal Agent may at any time resign as such
Fiscal Agent by giving written notice to INTELSAT of such intention
on its part, specifying the date on which its desired resignation
shall become effective; provided, however, that such date shall
never be less than three months after the receipt of such notice by
INTELSAT unless INTELSAT agrees to accept less notice. The Fiscal
Agent may be removed at any time by the filing with it of an
instrument in writing signed on behalf of INTELSAT and specifying
such removal and the date when it is intended to become effective.
Any resignation or removal of the Fiscal Agent or other paying
agent of INTELSAT, if such other paying agent is the only paying
agent of INTELSAT then maintained outside the United States, shall
take effect upon the date of the appointment by INTELSAT as
Page 7
hereinafter provided of a successor and the acceptance of such
appointment by such successor. Upon its resignation or removal,
such agent shall be entitled to the payment by INTELSAT of its
compensation for the services rendered hereunder and to the
reimbursement of all reasonable out-of-pocket expenses incurred in
connection with the services rendered hereunder by such agent.
(d) In case at any time the Fiscal Agent or other paying
agent of INTELSAT, if such other paying agent is the only paying
agent of INTELSAT then maintained outside the United States, shall
resign, or shall be removed, or shall become incapable of acting or
shall be adjudged a bankrupt or insolvent, or if a receiver of it
or of its property shall be appointed, or if any public officer
shall take charge or control of it or of its property or affairs
for the purpose of rehabilitation, conservation or liquidation, a
successor agent, eligible as aforesaid, shall be appointed by
INTELSAT by an instrument in writing. Upon the appointment as
aforesaid of a successor agent and the acceptance by it of such
appointment, the agent so superseded shall cease to be such agent
hereunder. If no successor Fiscal Agent or other paying agent of
INTELSAT shall have been so appointed by INTELSAT and shall have
accepted appointment as hereinafter provided, and if such other
paying agent is the only paying agent of INTELSAT then maintained
outside the United States, and if INTELSAT shall have otherwise
failed to make arrangements for the performance of the duties of
the Fiscal Agent or other paying agent, then any Holder of a Note
who has been a bona fide Holder of a Note for at least six months,
on behalf of himself and all others similarly situated, or the
Fiscal Agent, may petition any New York State or United States
Federal court sitting in the Borough of Manhattan, The City of New
York, the State of New York, U.S.A., for the appointment of a
successor agent.
(e) Any successor Fiscal Agent appointed hereunder shall
execute, acknowledge and deliver to its predecessor and to INTELSAT
an instrument accepting such appointment hereunder, and thereupon
such successor Fiscal Agent, without any further act, deed or
conveyance, shall become vested with all the authority, rights,
powers, trusts, immunities, duties and obligations of such
predecessor with like effect as if originally named as such Fiscal
Agent hereunder, and such predecessor, upon payment of its charges
and disbursements then unpaid, shall simultaneously therewith
become obligated to transfer, deliver and pay over, and such
successor Fiscal Agent shall be entitled to receive, all monies,
securities or other property on deposit with or held by such
predecessor, as such Fiscal Agent hereunder. INTELSAT will give
prompt written notice to each other paying agent of INTELSAT of the
appointment of a successor Fiscal Agent and shall give notice
thereof to Holders at least once, in the manner described in
Paragraph 6(e) of the definitive Notes.
(f) Any corporation, bank or trust company into which
the Fiscal Agent may be merged or converted, or with which it may
be consolidated, or any corporation, bank or trust company
resulting from any merger, conversion or consolidation to which the
Fiscal Agent shall be a party, or any corporation, bank or trust
company succeeding to all or substantially all the assets and
business of the Fiscal Agent, shall be the successor to the Fiscal
Agent under this Agreement; provided, however, that such
corporation shall be otherwise eligible under this Section, without
Page 8
the execution or filing of any document or any further act on the
part of any of the parties hereto.
9. INTELSAT will pay all stamp taxes and other duties,
if any, which may be imposed by the United States, the United
Kingdom or any political subdivision or taxing authority of or in
the foregoing with respect to (i) the execution or delivery of this
Agreement, (ii) the issuance of the Global Note or (iii) the
exchange from time to time of the Global Note for Bearer Notes
(other than any such tax or duty which would not have been imposed
on such exchange had such exchange occurred on or before the first
anniversary of the initial issuance of the Notes, which shall be
payable by the Holders).
10. (a) A meeting of Holders of Notes may be called at
any time and from time to time to make, give or take any request,
demand, authorization, direction, notice, consent, waiver or other
action provided by this Agreement or the Notes to be made, given or
taken by Holders of Notes. The Fiscal Agent may, upon request
from, and at the expense of, INTELSAT, direct to convene a single
meeting of the Holders of Notes and the holders of debt securities
of other series.
(b) INTELSAT may at any time call a meeting of Holders
of Notes for any purpose specified in Section 10(a) hereof to be
held at such time and at such place in London, United Kingdom or in
the Borough of Manhattan, The City of New York, the State of New
York, U.S.A., as INTELSAT shall determine. Notice of every meeting
of Holders of Notes, setting forth the time and the place of such
meeting and in general terms the action proposed to be taken at
such meeting, shall be given, in the same manner as provided in
Paragraph 6(e) of the definitive Notes, not more than 180 days nor
less than 21 days prior to the date fixed for the meeting. In case
at any time the Holders of at least 10% in principal amount of the
Outstanding (as defined in Paragraph 3 of the definitive Notes)
Notes shall have requested INTELSAT to call a meeting of the
Holders of Notes for any purpose specified in Section 10(a) hereof,
by written request setting forth in reasonable detail the action
proposed to be taken at the meeting, and INTELSAT shall not have
caused to be published the notice of such meeting within 21 days
after receipt of such request or shall not thereafter proceed to
cause the meeting to be held as provided herein, then the Holders
of Notes in the amount above-specified, as the case may be, may
determine the time and the place in London, United Kingdom or in
the Borough of Manhattan, The City of New York, the State of New
York, U.S.A., for such meeting and may call such meeting for such
purposes by giving notice thereof as provided in this subsection
(b).
(c) To be entitled to vote at any meeting of Holders of
Notes, a person shall be a Holder of an Outstanding Note or a
person appointed by an instrument in writing as proxy for such a
Holder.
(d) The persons entitled to vote a majority in aggregate
principal amount of the Outstanding Notes shall constitute a
quorum. In the absence of a quorum within 30 minutes of the time
appointed for any such meeting, the meeting shall, if convened at
Page 9
the request of the Holders of Notes, be dissolved. In any other
case the meeting may be adjourned for a period of not less than 10
days as determined by the chairman of the meeting prior to the
adjournment of such meeting. In the absence of a quorum at any
such adjourned meeting, such adjourned meeting may be further
adjourned for a period of not less than 10 days as determined by
the chairman of the meeting prior to the adjournment of such
adjourned meeting. Notice of the reconvening of any adjourned
meeting shall be given as provided in Section 10(b) hereof, except
that such notice need be given only once not less than five days
prior to the date on which the meeting is scheduled to be
reconvened. Notice of the reconvening of an adjourned meeting
shall state expressly the percentage of the principal amount of the
Outstanding Notes which shall constitute a quorum.
Subject to the foregoing, at the reconvening of any
meeting adjourned for a lack of a quorum, the persons entitled to
vote 25% in principal amount of the Outstanding Notes shall
constitute a quorum for the taking of any action set forth in the
notice of the original meeting. Any meeting of Holders of Notes at
which a quorum is present may be adjourned from time to time by
vote of a majority in principal amount of the Outstanding Notes
represented at the meeting, and the meeting may be held as so
adjourned without further notice. At a meeting or an adjourned
meeting duly reconvened and at which a quorum is present as
aforesaid, any resolution and all matters shall be effectively
passed or decided if passed or decided by the persons entitled to
vote a majority in principal amount of the Outstanding Notes
represented and voting.
(e) INTELSAT may make such reasonable regulations as it
may deem advisable for any meeting of Holders of Notes in regard to
proof of the holding of Notes and of the appointment of proxies and
in regard to the appointment and duties of inspectors of votes, the
submission and examination of proxies, certificates and other
evidence of the right to vote, and such other matters concerning
the conduct of the meeting as it shall deem appropriate. INTELSAT
or the Holders calling the meeting, as the case may be, shall, by
an instrument in writing, appoint a temporary chairman. A
permanent chairman and a permanent secretary of the meeting shall
be elected by vote of the persons entitled to vote a majority in
principal amount of the Outstanding Notes represented and voting at
the meeting. The chairman of the meeting shall have no right to
vote, except as a Holder of Notes or a proxy. A record, at least
in duplicate, of the proceedings of each meeting of Holders of
Notes shall be prepared, and one such copy shall be delivered to
INTELSAT and another to the Fiscal Agent to be preserved by the
Fiscal Agent.
11. All notices hereunder shall be deemed to have been
given when deposited in the mails as first-class mail, registered
or certified mail, return receipt requested, postage prepaid, or,
if electronically communicated, then when delivered, or when hand
delivered, addressed to either party hereto as follows:
Page 10
INTELSAT . . . . . . . . International Telecommunications Satellite
Organization
3400 International Drive, N.W.
Washington, D.C. 20008-3098, U.S.A.
Attention: Vice President & Chief
Financial Officer
Facsimile No.: (202) 944-7860
Fiscal Agent . . . . . . Morgan Guaranty Trust Company of New York
60 Victoria Embankment
London EC4Y 0JP, England
Attention: Global Trust and Agency Services
Facsimile No.: 011-4471-325-8285
or at any other address of which either of the foregoing shall have
notified the other in writing. All notices to Holders of Notes
shall be given in the manner provided in Paragraph 6(e) of the
definitive Notes.
12. This Agreement and the terms and conditions of the
Notes and coupons may be modified or amended by INTELSAT and the
Fiscal Agent, without the consent of the Holder of any Note or
coupon, for the purpose of (a) adding to the covenants of INTELSAT
for the benefit of the Holders of Notes or coupons, or (b)
surrendering any right or power conferred upon INTELSAT, or (c)
securing the Notes pursuant to the requirements of the Notes or
otherwise, or (d) permitting the payment of principal, interest and
Additional Amounts, if any, in respect of Notes in the United
States, or (e) curing any ambiguity or correcting or supplementing
any defective provision contained herein or in the Notes or
coupons, or (f) evidencing the succession of another organization
or entity to INTELSAT and the assumption by any such successor of
the covenants and obligations of INTELSAT herein and in the Notes
and coupons as permitted by the Notes, or (g) providing for
issuances of further debt securities as contemplated by Section 13,
or (h) in any manner which the parties may mutually deem necessary
or desirable and which in any such case shall not adversely affect
the interests of the Holders of the Notes or the coupons.
13. INTELSAT may from time to time without the consent
of the Holder of any Note or coupon issue further debt securities
having the same terms and conditions as the Notes in all respects
(or in all respects except for the first payment of interest
thereon) or having such terms as INTELSAT may determine at the time
of their issuance, in either case so that any such further debt
securities shall be consolidated and form a single series with the
outstanding securities of any series (including the Notes). Unless
the context requires otherwise, references herein and in the Notes
and coupons to the Notes or coupons shall include any other debt
securities issued in accordance with this Section that are intended
by INTELSAT to form a single series with the Notes. Any further
debt securities forming a single series with the outstanding
securities of any series (including the Notes) shall be issued
pursuant to this Agreement as amended pursuant to Section 12 for
the purpose of providing for the issuance of such debt securities.
Page 11
14. This Agreement and each of the Notes and coupons
shall be governed by and construed in accordance with the laws of
the State of New York, U.S.A.
15. INTELSAT hereby appoints CT Corporation System, 1633
Broadway, New York, New York 10019, as its authorized agent (the
"Authorized Agent") upon which process may be served in any action
arising out of or based on this Agreement, the Notes or any coupons
which action may be instituted in any New York State or United
States Federal court sitting in the Borough of Manhattan, The City
of New York, the State of New York, U.S.A., by the Fiscal Agent or
the Holder of any Note or coupon and INTELSAT and each such Holder
by acceptance of a Note or coupon expressly accepts the exclusive
jurisdiction of any such court in respect of any such action. Such
appointment shall be irrevocable until two years after the Notes
shall have matured and been paid or moneys for the payment thereof
shall have been made available unless and until a successor
Authorized Agent shall have been appointed and shall have accepted
such appointment. INTELSAT hereby irrevocably waives any immunity
to service of process in respect of any such action to which it
might otherwise be entitled in any action arising out of or based
on this Agreement or the Notes or coupons which may be instituted
by the Fiscal Agent or any Holder of a Note or coupon in any State
or Federal court in the Borough of Manhattan, The City of New York,
the State of New York, U.S.A. Service of process upon the
Authorized Agent at the address indicated above, as such address
may be changed within the Borough of Manhattan, The City of New
York, the State of New York, U.S.A., by notice given by the
Authorized Agent to each party hereto, shall be deemed, in every
respect, effective service of process upon INTELSAT. INTELSAT
irrevocably waives, to the fullest extent permitted by applicable
law, any sovereign or other immunity from jurisdiction or from
execution (except that INTELSAT does not waive immunity from
execution prior to judgment and any similar defense) to which it
might otherwise be entitled in any such action which may be
instituted by the Fiscal Agent or any Holder of a Note or coupon in
any New York State or United States Federal court sitting in the
Borough of Manhattan, The City of New York, the State of New York,
U.S.A.
16. This Agreement, the Notes and the coupons
appertaining thereto will constitute obligations of INTELSAT and
not of any Signatory or Party (each as defined in the Agreement
Relating to the International Telecommunications Satellite
Organization, entered into force on 12 February 1973). No
Signatory or Party will waive any immunity to which it may be
entitled in any suit on this Agreement or the Notes or coupons, and
neither the Fiscal Agent nor Holders of Notes or coupons will have
any recourse against any Signatory or Party with respect to any
obligations of INTELSAT under this Agreement or the Notes and the
coupons appertaining thereto.
Page 12
17. This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be
an original but all such counterparts shall together constitute but
one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
INTERNATIONAL TELECOMMUNICATIONS
SATELLITE ORGANIZATION
/s/G.R. Bonney
By _____________________________
Name: G.R. Bonney
Title: Assistant Treasurer
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
as Fiscal Agent and Principal Paying
Agent
/s/Viola Japaul
By _____________________________
Name: Viola Japaul
Title: Associate
Page 13
INTERNATIONAL TELECOMMUNICATIONS SATELLITE ORGANIZATION
U.S. $200,000,000
8 1/8% Notes due 2005
TEMPORARY GLOBAL NOTE
INTERNATIONAL TELECOMMUNICATIONS SATELLITE ORGANIZATION,
an international organization established by the Agreement Relating
to the International Telecommunications Satellite Organization and
the Operating Agreement relating thereto, entered into force on
12 February 1973, for value received, hereby promises to pay to
bearer upon presentation and surrender of this Temporary Global
Note the principal sum of Two Hundred Million United States Dollars
(U.S. $200,000,000) on 28 February 2005 and to pay interest
thereon, from the date hereof, annually in arrear on the 28 of
February in each year, commencing 28 February 1996, at the rate of
8 1/8% per annum, until the principal hereof is paid or made
available for payment; provided, however, that interest on this
Temporary Global Note shall be payable only after the issuance of
Bearer Notes for which this Temporary Global Note is exchangeable,
and only upon presentation and surrender of the interest coupons
thereto attached as they severally mature.
This Temporary Global Note is one of a duly authorized
issue of Notes of INTELSAT designated as specified in the title
hereof, entitled to the benefits of the Fiscal Agency Agreement,
dated as of 28 February 1995, between INTELSAT and Morgan Guaranty
Trust Company of New York, as Fiscal Agent. This Note is a
temporary note and is exchangeable in whole or from time to time in
part without charge upon request of the Holder hereof for Bearer
Notes with coupons attached in denominations of U.S. $1,000,
$10,000 and $100,000 as promptly as practicable following
presentation of certification, in the form required by the Fiscal
Agency Agreement for such purpose, that the beneficial owner or
owners of this Temporary Global Note (or, if such exchange is only
for a part of this Temporary Global Note, of such part) are not
citizens or residents of the United States, a corporation,
partnership or other entity created or organized in or under the
laws of the United States or any political subdivision thereof, or
an estate or trust the income of which is subject to United States
Federal income taxation regardless of its source ("United States
Person"). The Bearer Notes are expected to be available 40 days
after the Closing Date. Bearer Notes to be delivered in exchange
for any part of this Temporary Global Note shall be delivered only
outside the United States. Upon any exchange of a part of this
Temporary Global Note for Bearer Notes, the portion of the
principal amount hereof so exchanged shall be endorsed by the
Fiscal Agent on the Schedule hereto, and the principal amount
hereof shall be reduced for all purposes by the amount so
exchanged.
Until exchanged in full for Bearer Notes, this Temporary
Global Note shall in all respects be entitled to the same benefits
and subject to the same terms and conditions as those of the
definitive Notes and those contained in the Fiscal Agency Agreement
(including the forms of Notes attached thereto), except that
neither the Holder hereof nor the beneficial owners of this
Temporary Global Note shall be entitled to receive payment of
interest hereon.
This Temporary Global Note shall be governed by and
construed in accordance with the laws of the State of New York,
U.S.A.
All terms used in this Temporary Global Note which are
defined in the Fiscal Agency Agreement or the definitive Notes
shall have the meanings assigned to them therein.
Unless the certificate of authentication hereon has been
executed by the Fiscal Agent by the manual signature of one of its
duly authorized officers, this Temporary Global Note shall not be
valid or obligatory for any purpose.
This Temporary Global Note constitutes an obligation of
INTELSAT and not of any Signatory or Party (each as defined in the
INTELSAT Agreement). No Signatory or Party will waive any immunity
to which it may be entitled in any suit on this Temporary Global
Note, and Holders of this Temporary Global Note will have no
recourse against any Signatory or Party with respect to any
obligations of INTELSAT under this Temporary Global Note.
IN WITNESS WHEREOF, INTELSAT has caused this Temporary
Global Note to be duly executed and its seal to be hereunto affixed
and attested.
Dated as of 28 February 1995
INTERNATIONAL TELECOMMUNICATIONS
SATELLITE ORGANIZATION
By______________________________
Attest:
_____________________
This is the Temporary Global Note referred to in the
within-mentioned Fiscal Agency Agreement.
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
as Fiscal Agent
By _____________________________
Authorized Signatory
SCHEDULE OF EXCHANGES
Remaining
principal
Principal amount amount Notation
exchanged for following made on behalf
Date Made definitive Bearer Notes such exchange of the Fiscal Agent
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EXHIBIT B
[FORM OF BEARER NOTES]
[Form of Face]
ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE
SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX
LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j)
AND 1287(a) OF THE INTERNAL REVENUE CODE.
INTERNATIONAL TELECOMMUNICATIONS SATELLITE ORGANIZATION
8 1/8% Notes due 2005
No. B-_________ U.S.$ [1,000] [10,000]
[100,000]
INTERNATIONAL TELECOMMUNICATIONS SATELLITE ORGANIZATION
("INTELSAT"), an international organization established by the
Agreement Relating to the International Telecommunications
Satellite Organization and the Operating Agreement relating
thereto, entered into force on 12 February 1973, for value
received, hereby promises to pay to bearer upon presentation and
surrender of this Note the principal sum of [One Thousand] [Ten
Thousand] [One Hundred Thousand] United States dollars on 28
February 2005 and to pay interest thereon, from the date hereof,
annually in arrear on the 28 of February in each year ("Interest
Payment Date"), commencing 28 February 1996 at the rate of 8 1/8%
per annum (calculated on the basis of a year of twelve 30-day
months), until the principal hereof is paid or made available for
payment. Such payments shall be made subject to any laws or
regulations applicable thereto and to the right of INTELSAT
(limited as provided below) to terminate the appointment of any
such paying agency, at the principal office of Morgan Guaranty
Trust Company of New York in London, United Kingdom or at such
other offices or agencies outside the United States (as defined in
Paragraph 5 on the reverse hereof) as INTELSAT may designate and
notify the Holder (as defined in Paragraph 2 on the reverse hereof)
as provided in Paragraph 6(e) hereof, at the option of the Holder,
by United States dollar check, or (ii) by wire transfer to a United
States dollar account maintained by the Holder with a bank located
outside the United States. Payments with respect to this Note
B-1
shall be payable only at an office or agency located outside the
United States and only upon presentation and surrender at such
office of this Note in the case of principal or the coupons
attached hereto (the "coupons") as they severally mature in the
case of interest (but not in the case of Additional Amounts payable
as defined and provided for in Paragraph 5 on the reverse hereof).
No payment with respect to this Note shall be made by transfer to
an account in, or by mail to an address in, the United States.
Notwithstanding the foregoing, payment of principal of and interest
on Bearer Notes and Additional Amounts, if any, may, at INTELSAT's
option, be made at an office designated by INTELSAT in the Borough
of Manhattan, The City of New York, the State of New York, U.S.A.
if (but only if) payments in United States dollars of the full
amount of such principal, interest or Additional Amounts at all
offices and agencies located outside the United States through
which payment is to be made in accordance with the terms of the
Notes is illegal or effectively precluded by exchange controls or
other similar restrictions as determined by INTELSAT. INTELSAT
covenants that until this Note has been delivered to the Fiscal
Agent for cancellation or monies sufficient to pay the principal of
and interest on this Note have been made available for payment and
either paid or returned to INTELSAT as provided herein, it will at
all times maintain offices or paying agents (i) in London, United
Kingdom, (ii) upon the happening of the events set forth in the
immediately prior sentence, in the Borough of Manhattan, The City
of New York, the State of New York, U.S.A. and (iii), so long as
the Notes are listed on the Luxembourg Stock Exchange and such
exchange shall so require, in Luxembourg for the payment of the
principal of and interest on the Notes as herein provided.
Reference is hereby made to the further provisions of
this Note set forth on the reverse hereof, including but not
limited to the provisions for redemption of the Notes, which
further provisions shall for all purposes have the same effect as
though fully set forth at this place.
Unless the certificate of authentication hereon has been
executed by the Fiscal Agent by the manual signature of one of its
authorized officers, neither this Note nor any coupon appertaining
hereto shall be valid or obligatory for any purpose.
IN WITNESS WHEREOF, INTELSAT has caused this Note to be
duly executed and its seal to be hereunto affixed and attested and
duly executed coupons to be annexed hereto.
Dated as of 28 February 1995
INTERNATIONAL TELECOMMUNICATIONS
SATELLITE ORGANIZATION
By______________________________
[Seal]
Attest:
B-2
[FORM OF FISCAL AGENT'S CERTIFICATE OF AUTHENTICATION]
This is one of the Notes referred to in the within-
mentioned Fiscal Agency Agreement.
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
as Fiscal Agent
By_____________________________________________
Authorized Signatory
B-3
[Form of Reverse]
1. This Note is one of a duly authorized issue of
Notes of INTELSAT in the aggregate principal amount of Two
Hundred Million United States Dollars (U.S.$200,000,000),
designated as its 8 1/8% Notes due 2005 (the "Notes"). INTELSAT,
for the benefit of the Holders from time to time of the Notes,
has entered into a Fiscal Agency Agreement, dated as of 28
February 1995 (the "Fiscal Agency Agreement"), between INTELSAT
and Morgan Guaranty Trust Company of New York, as Fiscal Agent,
copies of which Fiscal Agency Agreement are on file and available
for inspection at the Principal Office of the Fiscal Agent in
London, United Kingdom and the main offices of the paying
agencies named on the face of this Note. (Morgan Guaranty Trust
Company of New York and its respective successors as Fiscal Agent
are herein collectively called the "Fiscal Agent".)
As long as any of the Notes shall be outstanding and
unpaid, but only up to the time all amounts of principal and
interest have been placed at the disposal of the Fiscal Agent,
INTELSAT will not cause or permit to be created on any of its
property or assets any mortgage, pledge or other lien or charge
as security for any bonds, notes or other evidences of
indebtedness heretofore or hereafter issued, assumed or
guaranteed by INTELSAT for money borrowed (other than purchase
money mortgages, sale and leaseback transactions in connection
with spacecraft or spacecraft capacity, or other pledges or liens
on property purchased by INTELSAT as security for all or part of
the purchase price thereof; liens incidental to an investment
transaction, but not a borrowing, of INTELSAT; or mechanics',
landlords', tax or other statutory liens), unless the Notes shall
be secured by such mortgage, pledge or other lien or charge
equally and ratably with such other bonds, notes or evidences of
indebtedness.
2. The Notes are issuable in bearer form, with
interest coupons attached (the "coupons"), in denominations of
U.S. $1,000, U.S. $10,000 and U.S. $100,000. As used herein, the
term "Holder" when used with respect to any Bearer Note or
coupon, means the bearer thereof.
3. INTELSAT has appointed the main offices of Morgan
Guaranty Trust Company of New York in London, United Kingdom,
Morgan Guaranty Trust Company of New York, Brussels Office,
Banque Generale du Luxembourg S.A. in Luxembourg and Credit
Suisse in Zurich, Switzerland as agencies where Notes may be
surrendered for exchange. INTELSAT reserves the right to vary or
terminate the appointment of any agent or to appoint additional
or other agents or to approve any change in the office through
which any agent acts, provided that, subject to the conditions on
the face of this Note, there will be at all times an agent in
London, United Kingdom.
All Notes issued upon any exchange of Notes shall be
the valid obligations of INTELSAT evidencing the same debt, and
entitled to the same benefits, as the Notes surrendered upon such
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exchange. No service charge shall be made for any exchange, but
INTELSAT may require payment of a sum sufficient to cover any tax
or other governmental charge payable in connection therewith.
Title to Bearer Notes and coupons shall pass by
delivery. INTELSAT, the Fiscal Agent, and any paying agent of
INTELSAT may deem and treat the bearer of any Bearer Note or
coupon as the owner thereof for all purposes, whether or not such
Note or coupon shall be overdue.
For purposes of the provisions of this Note and the
Fiscal Agency Agreement, any Note authenticated and delivered
pursuant to the Fiscal Agency Agreement shall, as of any date of
determination, be deemed to be "Outstanding", except:
(i) Notes theretofore cancelled by the Fiscal Agent
or delivered to the Fiscal Agent for cancellation and not
reissued by the Fiscal Agent;
(ii) Notes which have been surrendered for
redemption in accordance with Paragraph 6 hereof or which
have become due and payable at maturity or otherwise and
with respect to which monies sufficient to pay the principal
thereof and interest thereon shall have been made available
to the Fiscal Agent; or
(iii) Notes in lieu of or in substitution for which
other Notes shall have been authenticated and delivered
pursuant to the Fiscal Agency Agreement;
provided, however, that in determining whether the Holders of the
requisite principal amount of Outstanding Notes are present at a
meeting of Holders of Notes for quorum purposes or have given any
request, demand, authorization, direction, notice, consent or
waiver hereunder, Notes owned by INTELSAT shall be disregarded
and deemed not to be Outstanding.
4. (a) INTELSAT shall pay to the Fiscal Agent at its
Principal Office in London, United Kingdom, on or prior to each
Interest Payment Date, any redemption date and the maturity date
of the Notes, in such coin or currency of the United States of
America as at the time of payment is legal tender for the payment
of public and private debts, amounts sufficient (with any amounts
then held by the Fiscal Agent and available for the purpose) to
pay the interest on, the redemption price of and accrued interest
(if the redemption date is not an Interest Payment Date) on, and
the principal of, the Notes due and payable on such an Interest
Payment Date, redemption date or maturity date, as the case may
be.
The Fiscal Agent shall apply the amounts so paid to it
to the payment of such interest, redemption price and principal
in accordance with the terms of the Notes. Any monies paid by
INTELSAT to the Fiscal Agent for the payment of the principal of
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and interest on any Notes and remaining unclaimed at the end of
two years after such principal or interest shall have become due
and payable (whether at maturity, upon call for redemption or
otherwise) shall then be repaid to INTELSAT upon its written
request, and upon such repayment all liability of the Fiscal
Agent with respect thereto shall thereupon cease, without,
however, limiting in any way any obligation INTELSAT may have to
pay the principal of and interest on this Note as the same shall
become due.
(b) In any case where the date for the payment of the
principal of or interest on any Note or the date fixed for
redemption of any Note shall be at any place of payment a day on
which banking institutions are authorized or obligated by law or
executive order to close, or are not carrying out transactions in
United States dollars in The City of New York, the State of New
York, U.S.A., or the city of the paying agent to which the Note
or coupon is surrendered for payment, then payment of principal
or interest need not be made on such date at such place but may
be made on the next succeeding day at such place of payment which
is not a day on which banking institutions are authorized or
obligated by law or executive order to close, or which is a day
on which banking institutions are carrying out transactions in
United States dollars in The City of New York, the State of New
York, U.S.A., or the city of the paying agent to which the Note
or coupon is surrendered for payment, with the same force and
effect as if made on the date for the payment of the principal or
interest or the date fixed for redemption, and no interest shall
accrue for the period after such date.
5. (a) INTELSAT will pay to the Holder of this Note
or any coupon appertaining hereto who is a United States Alien
(as defined below) such Additional Amounts as may be necessary in
order that every net payment of the principal of, and interest
on, this Note, after withholding for or on account of any present
or future tax, assessment or governmental charge imposed upon, or
as a result of, such payment by the United States (or any
political subdivision or taxing authority thereof or therein),
will not be less than the amount provided for in this Note or in
such coupon to be then due and payable; provided, however, that
the foregoing obligation to pay Additional Amounts shall not
apply to any one or more of the following:
(i) any tax, assessment or other governmental
charge which would not have been so imposed but for (A) the
existence of any present or former connection between such
Holder (or between a fiduciary, settlor, or beneficiary of,
or a possessor of a power over, such Holder, if such Holder
is an estate or trust, or a member or shareholder of such
Holder, if such Holder is a partnership or corporation) and
the United States, including, without limitation, such
Holder (or such fiduciary, settlor, beneficiary, possessor,
member or shareholder) being or having been a citizen,
resident or treated as a resident thereof or being or having
been engaged in a trade or business or present therein or
having or having had a permanent establishment therein or
(B) such Holder's present or former status as a personal
holding company, controlled foreign corporation, foreign
personal holding company or passive foreign investment
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company with respect to the United States or as a
corporation which accumulates earnings to avoid United
States federal income tax, all under existing United States
Federal income tax law or successor provisions;
(ii) any tax, assessment or other governmental
charge which would not have been so imposed but for the
presentation by the Holder of this Note or any coupon
appertaining hereto for payment on a date more than 10
calendar days after the date on which such payment became
due and payable or the date on which payment thereof is duly
provided for and notice thereof is given to Holders,
whichever occurs later;
(iii) any estate, inheritance, gift, sales, transfer,
personal property tax or any similar tax, assessment or
other governmental charge;
(iv) any tax, assessment or other governmental
charge which is payable otherwise than by withholding from
payments on or in respect of this Note or any coupon
appertaining hereto;
(v) any tax, assessment or other governmental
charge imposed by reason of such Holder's past or present
status as the actual or constructive owner of 10 per cent.
or more of the capital or profits interest of INTELSAT
within the meaning of Section 871(h)(3) of the United States
Internal Revenue Code of 1986, as amended, and any
regulations thereunder;
(vi) any tax, assessment or other governmental
charge imposed as a result of the failure to comply with
applicable certification, information, documentation or
other reporting requirements concerning the nationality,
residence, identity or connection with the United States of
the Holder or beneficial owner of this Note, or any coupon
appertaining hereto if such compliance is required by
statute or by regulation of the United States as a
precondition to relief or exemption from such tax,
assessment or other government charge;
(vii) any tax, assessment or other governmental
charge required to be withheld by any paying agent from any
payment on this Note or any coupon appertaining hereto if
such payment can be made without such withholding by at
least one other paying agent; or
(viii) any combination of items (i) through (vii)
above;
nor will Additional Amounts be paid with respect to any payment
of principal or interest on this Note or any coupon appertaining
hereto to a Holder who is a fiduciary or partnership or other
than the sole beneficial owner of this Note or any coupon
appertaining hereto to the extent that such payment would be
required by the laws of the United States (or any political
B-7
subdivision thereof) to be included in the income for Federal
income tax purposes of a beneficiary or settlor with respect to
such fiduciary or a member of such partnership or a beneficial
owner who would not have been entitled to payment of the
Additional Amounts had such beneficiary, settlor, member or
beneficial owner been the Holder of this Note or any coupon
appertaining hereto.
The term "United States Alien" means any person who,
for United States federal income tax purposes, is a foreign
corporation, a nonresident alien individual, a nonresident
fiduciary of a foreign estate or trust, or a foreign partnership,
one or more of the members of which is, for United States federal
income tax purposes, a foreign corporation, a nonresident alien
individual or a nonresident fiduciary of a foreign estate or
trust. The term "United States" means the United States of
America (including the States and the District of Columbia), its
territories, its possessions and other areas subject to its
jurisdiction.
(b) Except as specifically provided in this Note and
in the Fiscal Agency Agreement, INTELSAT shall not be required to
make any payment with respect to any tax, assessment or other
governmental charge imposed by any government or any political
subdivision or taxing authority thereof or therein. Whenever in
this Note there is a reference, in any context, to the payment of
the principal of or interest on, or in respect of, any Note or
any coupon, such mention shall be deemed to include mention of
the payment of Additional Amounts provided for in this Paragraph
to the extent that, in such context, Additional Amounts are, were
or would be payable in respect thereof pursuant to the provisions
of this Paragraph and express mention of the payment of
Additional Amounts (if applicable) in any provisions hereof shall
not be construed as excluding Additional Amounts in those
provisions hereof where such express mention is not made.
6. (a) The Notes are subject to redemption at the
option of INTELSAT, as a whole but not in part, at any time at a
redemption price equal to the principal amount thereof, together
with accrued and unpaid interest to the date fixed for redemption
(except if the redemption date is an Interest Payment Date) under
the circumstances described in the next three Paragraphs.
(b) The Notes may be redeemed, as a whole but not in
part, at the option of INTELSAT, upon not more than 60 days' nor
less than 30 days' prior notice in the manner provided in clause
(e) of this Paragraph 6 at a redemption price equal to the
principal amount thereof together with accrued and unpaid
interest to the date fixed for redemption, if (x) INTELSAT
determines that, without regard to any immunities that may be
available to it, (1) as a result of any change in or amendment to
the laws (or any regulations or rulings promulgated thereunder)
of the United States or of any political subdivision or taxing
authority thereof or therein affecting taxation, or any change in
official position regarding application or interpretation of such
laws, regulations or rulings (including a holding by a court of
competent jurisdiction in the United States), which change or
amendment is announced or becomes effective on or after 28
February 1995, INTELSAT has or will become obligated to pay
B-8
Additional Amounts (as provided in Paragraph 5(a) hereof) or (2)
on or after 28 February 1995, any action has been taken by any
taxing authority of, or any decision has been rendered by a court
of competent jurisdiction in, the United States or any political
subdivision or taxing authority thereof or therein, including any
of those actions specified in (1) above, whether or not such
action was taken or decision was rendered with respect to
INTELSAT, or any change, amendment, application or interpretation
shall be officially proposed, which, in any such case, in the
written opinion to INTELSAT of independent legal counsel of
recognized standing, will result in a material probability that
INTELSAT will become obligated to pay Additional Amounts with
respect to the Notes, and (y) in any such case INTELSAT, in its
business judgment, determines that such obligation cannot be
avoided by the use of reasonable measures available to INTELSAT
(provided that INTELSAT shall not be required to assert any
immunities that may be available to it); provided, however, that
(i) no such notice of redemption shall be given earlier than 90
days prior to the earliest date on which INTELSAT would but for
such redemption be obligated to pay Additional Amounts and (ii)
at the time such notice of redemption is given, such obligation
to pay Additional Amounts remains in effect. Prior to the
publication of notice of redemption pursuant to this Paragraph
6(b), INTELSAT shall deliver to the Fiscal Agent a certificate of
INTELSAT stating the date of redemption and that INTELSAT is
entitled to effect such redemption and setting forth in
reasonable detail a statement of facts showing that the
conditions precedent to the right of INTELSAT to so redeem the
Notes have occurred.
(c) In addition, if INTELSAT shall determine that any
payment made outside the United States by INTELSAT or any paying
agent of principal or interest due in respect of any Note or
coupon would, under any present or future laws or regulations of
the United States and without regard to any immunities that may
be available to INTELSAT, be subject to any certification,
information or other reporting requirement of any kind, the
effect of which requirement is the disclosure to INTELSAT, any
paying agent or any governmental authority of the nationality,
residence or identity (as distinguished from, for example, status
as a United States Alien) of a beneficial owner of such Note or
coupon who is a United States Alien (other than such a
requirement (i) which would not be applicable to a payment made
by INTELSAT or any paying agent (A) directly to the beneficial
owner, or (B) to a custodian, nominee or other agent of the
beneficial owner, or (ii) which can be satisfied by such
custodian, nominee or other agent certifying to the effect that
such beneficial owner is a United States Alien, provided that in
each case referred to in clauses (i)(B) and (ii), payment by such
custodian, nominee or agent to such beneficial owner is not
otherwise subject to any such requirement or (iii) would not be
applicable to a payment made by at least one other paying agent
of INTELSAT), INTELSAT, at its election, shall either (x) redeem
the Notes, as a whole but not in part, at a redemption price
equal to the principal amount thereof, together with accrued and
unpaid interest to the date fixed for redemption or (y) if the
conditions set forth in Paragraph 6(d) hereof are satisfied, pay
the additional amounts specified in such Paragraph. INTELSAT
shall make such determination and election as soon as practicable
and give prompt notice thereof (the "Determination Notice") in
the manner provided in clause (e) of this Paragraph 6, stating
the effective date of such certification, information or other
B-9
reporting requirement, whether INTELSAT has elected to redeem the
Notes or to pay the additional amounts specified in Paragraph
6(d) hereof, and (if applicable) the last date by which the
redemption of the Notes must take place, as provided in the next
succeeding sentence. If INTELSAT elects to redeem the Notes,
such redemption shall take place on such date, not later than one
year after the publication of the Determination Notice, as
INTELSAT shall elect by notice to the Fiscal Agent given not less
than 45 nor more than 75 days before the date fixed for
redemption. Notice of such redemption of the Notes will be given
to the Holders of the Notes not less than 30 nor more than 60
days prior to the date fixed for redemption. Notwithstanding the
foregoing, INTELSAT shall not so redeem the Notes if INTELSAT
shall subsequently determine, not less than 30 days prior to the
date fixed for redemption, that subsequent payments would not be
subject to any such requirement, in which case INTELSAT shall
give prompt notice of such determination in the manner provided
in clause (e) of this Paragraph 6 and any earlier redemption
notice shall be revoked and of no further effect.
(d) If and so long as the certification, information
or other reporting requirements referred to in Paragraph 6(c)
would be fully satisfied by payment of a withholding tax, backup
withholding tax or similar charge, INTELSAT may elect to pay,
without regard to any immunities that may be available to it,
such additional amounts (regardless of clause (vi) in Paragraph
5(a)) as may be necessary so that every net payment made outside
the United States following the effective date of such
requirements by INTELSAT or any paying agent of principal or
interest due in respect of any Note or any coupon the beneficial
owner of which is a United States Alien (but without any
requirement that the nationality, residence or identity of such
beneficial owner be disclosed to INTELSAT, any paying agent or
any governmental authority), after deduction or withholding for
or on account of such withholding tax, backup withholding tax or
similar charge (other than a withholding tax, backup withholding
tax or similar charge that (i) is the result of a certification,
information or other reporting requirement described in the
second parenthetical clause of the first sentence of Paragraph
6(c), (ii) is imposed as a result of the fact that INTELSAT or
any of its paying agents have actual knowledge that the
beneficial owner of such Note or coupon is within the category of
persons described in Clauses (i) or (v) of Paragraph 5(a), or
(iii) is imposed as a result of presentation of such Note or
coupon for payment more than 10 calendar days after the date on
which such payment becomes due and payable or on which payment
thereof is duly provided for and notice thereof is given to
Holders, whichever occurs later), will not be less than the
amount provided for in such Note or coupon to be then due and
payable. In the event INTELSAT elects to pay such additional
amounts, INTELSAT will have the right, at its sole option, at any
time, to redeem the Notes as a whole, but not in part, at a
redemption price equal to the principal amount thereof, together
with accrued and unpaid interest to the date fixed for
redemption. If INTELSAT has made the determination described in
Paragraph 6(c) with respect to certification, information or
other reporting requirements applicable only to interest and
subsequently makes a determination in the manner and of the
nature referred to in such Paragraph 6(c) with respect to such
requirements applicable to principal, INTELSAT will redeem the
B-10
Notes in the manner and on the terms described in Paragraph 6(c)
unless INTELSAT elects to have the provisions of this Paragraph
apply rather than the provisions of Paragraph 6(c). If in such
circumstances the Notes are to be redeemed, INTELSAT shall have
no obligation to pay additional amounts pursuant to this
Paragraph with respect to principal or interest accrued and
unpaid after the date of the notice of such determination
indicating such redemption, but will be obligated to pay such
additional amounts with respect to interest accrued and unpaid to
the date of such determination. If INTELSAT elects to pay
additional amounts pursuant to this Paragraph and the condition
specified in the first sentence of this Paragraph should no
longer be satisfied, then INTELSAT shall promptly redeem such
Notes.
(e) The Fiscal Agent shall cause, on behalf of
INTELSAT, notices to be given to redeem the Notes to Holders by
publication at least once in a leading daily newspaper in the
English language of general circulation in London, United Kingdom
and, so long as the Notes are listed on the Luxembourg Stock
Exchange and such exchange shall so require, in a daily newspaper
of general circulation in Luxembourg or, if publication in either
London or Luxembourg is not reasonably practicable, elsewhere in
Western Europe. The term "daily newspaper" as used herein shall
be deemed to mean a newspaper customarily published on each
business day, whether or not it shall be published in Saturday,
Sunday or holiday editions. If by reason of the suspension of
publication of any newspaper, or by reason of any other cause, it
shall be impracticable to give notice to the Holders of Notes in
the manner prescribed herein, then such notification in lieu
thereof as shall be made by INTELSAT or by the Fiscal Agent on
behalf of and at the instruction and expense of INTELSAT shall
constitute sufficient provision of such notice, if such
notification shall, so far as may be practicable, approximate the
terms and conditions of the publication in lieu of which it is
given. Neither the failure to give notice nor any defect in any
notice given to any particular Holder of a Note shall affect the
sufficiency of any notice with respect to other Notes. Such
notices will be deemed to have been given on the date of such
publication or mailing or, if published in such newspapers on
different dates, on the date of the first such publication in
Western Europe. Notices to redeem Notes shall be given at least
once not more than 60 days nor less than 30 days prior to the
date fixed for redemption and shall specify the date fixed for
redemption, the redemption price, the place or places of payment,
that payment will be made upon presentation and surrender of the
Notes to be redeemed, together with all appurtenant coupons, if
any, maturing subsequent to the date fixed for redemption, that
interest accrued and unpaid to the date fixed for redemption
(unless the redemption date is an Interest Payment Date) will be
paid as specified in said notice, and that on and after said date
interest thereon will cease to accrue. If the redemption is
pursuant to Paragraph 6(b) or 6(c) hereof, such notice shall also
state that the conditions precedent to such redemption have
occurred and state that INTELSAT has elected to redeem all the
Notes.
(f) If notice of redemption has been given in the
manner set forth in Paragraph 6(e) hereof, the Notes so to be
redeemed shall become due and payable on such redemption date
specified in such notice and upon presentation and surrender of
B-11
the Notes at the place or places specified in such notice,
together with all appurtenant coupons, if any, maturing
subsequent to the redemption date, the Notes shall be paid and
redeemed by INTELSAT at the places and in the manner and currency
herein specified and at the redemption price together with
accrued and unpaid interest (unless the redemption date is an
Interest Payment Date) to the redemption date; provided, however,
that interest due on or prior to the redemption date on the
Bearer Notes shall be payable only upon the presentation and
surrender of coupons for such interest (at an office or agency
outside the United States except as otherwise provided on the
face of the Bearer Note). If any Bearer Note surrendered for
redemption shall not be accompanied by all appurtenant coupons
maturing after the redemption date, such Note may be paid after
deducting from the amount otherwise payable an amount equal to
the face amount of all such missing coupons, or the surrender of
such missing coupon or coupons may be waived by INTELSAT and the
Fiscal Agent if they are furnished with such security or
indemnity as they may require to save each of them and each other
paying agency of INTELSAT harmless. From and after the
redemption date, if monies for the redemption of Notes
surrendered for redemption shall have been made available at the
Principal Office of the Fiscal Agent for redemption on the
redemption date, the Notes surrendered for redemption shall cease
to bear interest, the coupons for interest appertaining to Bearer
Notes maturing subsequent to the redemption date shall be void
(unless the amount of such coupons shall have been deducted from
the redemption price at the time of surrender of the Bearer Note
to which such coupons appertained, as aforesaid), and the only
right of the Holders of such Notes shall be to receive payment of
the redemption price together with accrued and unpaid interest
(unless the redemption date is an Interest Payment Date) to the
redemption date as aforesaid. If monies for the redemption of
the Notes are not made available for payment until after the
redemption date, the Notes surrendered for redemption shall not
cease to bear interest until such monies have been so made
available.
(g) Notes redeemed or otherwise acquired by INTELSAT
will forthwith be delivered to the Fiscal Agent for cancellation
and may not be reissued or resold, except that Bearer Notes
delivered to the Fiscal Agent may, at the written request of
INTELSAT, be reissued by the Fiscal Agent in replacement of
mutilated, lost, stolen or destroyed Notes pursuant to Paragraph
9 hereof.
7. In the event of:
(a) default in the payment of any installment of
interest upon any Note for a period of 30 days after the
date when due; or
(b) default in the payment of the principal of any
Note when due (whether at maturity or redemption or
otherwise); or
(c) default in the performance or breach of any
covenant or warranty contained in the Notes or the Fiscal
Agency Agreement (other than as specified in clauses (a) and
B-12
(b) of this Paragraph 7) for a period of 90 days after the
date on which written notice of such failure, requiring
INTELSAT to remedy the same and stating that such notice is
a "Notice of Default", shall first have been given to
INTELSAT and the Fiscal Agent by any Holder of a Note; or
(d) involuntary acceleration of the maturity of other
indebtedness of INTELSAT for money borrowed with a maturity
of one year or more in excess of U.S. $50,000,000 which
acceleration shall not be rescinded or annulled, or which
indebtedness shall not be discharged, within 45 days after
notice; or
(e) INTELSAT is dissolved or the INTELSAT Agreement or
the Operating Agreement ceases to be in full force and
effect; provided, however, that no default shall occur if
INTELSAT's obligations under the Fiscal Agency Agreement and
the Notes are assumed by a successor which includes a
business which is substantially similar to that of INTELSAT;
the Holder of this Note may, at such Holder's option, unless such
Event of Default has been waived as described in Paragraph 10(b)
hereof, declare the principal of this Note and accrued and unpaid
interest hereon to be due and payable immediately by written
notice to INTELSAT, with a copy to the Fiscal Agent at its
Principal Office, and unless all such defaults shall have been
cured by INTELSAT prior to receipt of such written notice, the
principal of this Note and accrued and unpaid interest hereon
shall become and be immediately due and payable.
8. (a) INTELSAT will conduct and operate its
business diligently and in the ordinary manner in compliance with
the INTELSAT Agreement and the Operating Agreement, and will use
all reasonable efforts to maintain in full force and effect its
existing international registration of orbital locations and
frequency spectrum for the operation of its global commercial
telecommunications satellite system; provided, however, that
INTELSAT shall not be prevented from making any change with
respect to its manner of conducting or operating its business or
with respect to such registration if such change, in the judgment
of INTELSAT, is desirable and does not materially impair
INTELSAT's ability to perform its obligations under the Notes.
(b) INTELSAT will cause all properties used or useful
in the conduct of its business to be maintained and kept in good
condition, repair and working order and supplied with all
necessary equipment and will cause to be made all necessary
repairs, renewals, replacements, betterments and improvements
thereof, all as in the judgment of INTELSAT may be necessary so
that the business carried on in connection therewith may be
properly and advantageously conducted at all times (except for
ordinary wear and tear and deterioration); provided, however,
that INTELSAT shall not be prevented from discontinuing the
operation or maintenance of any of such properties if such
B-13
discontinuance, in the judgment of INTELSAT, is desirable in the
conduct of its business and does not materially impair INTELSAT's
ability to perform its obligations under the Notes.
9. If any mutilated Note or a Note with a mutilated
coupon appertaining to it is surrendered to the Fiscal Agent,
INTELSAT shall execute, and the Fiscal Agent shall authenticate
(or arrange for authentication on its behalf) and deliver in
exchange therefor, a new Note of like tenor and principal amount,
bearing a number not contemporaneously outstanding, with coupons
corresponding to the coupons, if any, appertaining to the
surrendered Note.
If there be delivered to INTELSAT and the Fiscal Agent
(i) evidence to their satisfaction of the destruction, loss or
theft of any Note or coupon, and (ii) such security or indemnity
as may be required by them to save each of them and any agent of
each of them harmless, then, in the absence of notice to INTELSAT
or the Fiscal Agent that such Note or coupon has been acquired by
a bona fide purchaser, INTELSAT shall execute, and upon its
request the Fiscal Agent shall authenticate (or arrange for
authentication on its behalf) and deliver in lieu of any such
destroyed, lost or stolen Note or in exchange for the Note to
which such coupon appertains (with all appurtenant coupons not
destroyed, lost or stolen), a new Note of like tenor and
principal amount and bearing a number not contemporaneously
outstanding, with coupons corresponding to the coupons, if any,
appertaining to such destroyed, lost or stolen Note or to the
Note to which such destroyed, lost or stolen coupon appertains.
Upon the issuance of any new Note under this Paragraph,
INTELSAT may require the payment by the Holder of a sum
sufficient to cover any tax or other governmental charge that may
be imposed in relation thereto and any other expenses (including
the fees and the expenses of the Fiscal Agent and INTELSAT)
connected therewith.
Every new Note with its coupons, if any, issued
pursuant to this Paragraph in lieu of any destroyed, lost or
stolen Note, or in exchange for a Note to which a destroyed, lost
or stolen coupon appertains, shall constitute an original
additional contractual obligation of INTELSAT, whether or not the
destroyed, lost or stolen Note and its coupons, if any, or the
destroyed, lost or stolen coupon shall be at any time enforceable
by anyone.
Any new Note delivered pursuant to this Paragraph shall
be so dated, or have attached thereto such coupons, that neither
gain nor loss in interest shall result from such exchange.
The provisions of this Paragraph 9 are exclusive and
shall preclude (to the extent lawful) all other rights and
remedies with respect to the replacement or payment of mutilated,
destroyed, lost or stolen Notes or coupons.
B-14
10. (a) The Fiscal Agency Agreement and the terms and
conditions of the Notes may be modified or amended by INTELSAT
and the Fiscal Agent, without the consent of the Holder of any
Note or coupon, in any manner which does not adversely affect the
interests of the Holders, to provide for issuances of further
debt securities as contemplated by Paragraph 11 hereof and by the
Fiscal Agency Agreement, and to cure any ambiguity or to cure,
correct or supplement any defective provision contained herein or
in any coupon appertaining hereto or in the Fiscal Agency
Agreement, or in certain other circumstances as described in the
Fiscal Agency Agreement, to all of which each Holder of any Note
or coupon shall, by acceptance thereof, consent.
(b) The Fiscal Agency Agreement and the terms and
conditions of the Notes may also be modified or amended by
INTELSAT and the Fiscal Agent, and future compliance therewith or
past default by INTELSAT may be waived, either with the consent
of the Holders of not less than a majority in aggregate principal
amount of the Notes at the time Outstanding or by the adoption of
a resolution at a meeting of Holders duly convened and held in
accordance with the provisions of the Fiscal Agency Agreement at
which a quorum (as defined below) is present by at least a
majority in aggregate principle amount of Notes represented at
such meeting; provided, however, that no such modification,
amendment or waiver may, without the written consent or
affirmative vote of the Holder of each Note affected thereby:
(i) change the stated maturity of the principal of
or any installment of interest on any such Note, or
(ii) reduce the principal amount thereof or the rate
of interest on any such Note, or
(iii) change the obligation of INTELSAT to pay
Additional Amounts, or
(iv) change the coin or currency in which any such
Note or the interest thereon is payable, or
(v) modify the obligation of INTELSAT to maintain
offices or agencies outside the United States, or
(vi) reduce the percentage in principal amount of the
Outstanding Notes necessary to modify or amend the Fiscal
Agency Agreement or the terms and conditions of the Notes or
the coupons, or to waive any future compliance or past
default, or
(vii) reduce the requirements for voting for the
adoption of a resolution or the quorum required at any
meeting of Holders of Notes at which a resolution is
adopted.
B-15
The quorum at any meeting called to adopt a resolution
will be a majority in aggregate principal amount of Notes
Outstanding, except that at any meeting which is reconvened for
lack of a quorum, the Holders entitled to vote 25 per cent. in
aggregate principle amount of Notes Outstanding shall constitute
a quorum for the taking of any action set forth in the notice of
the original meeting.
It shall not be necessary for the Holders of Notes to
approve the particular form of any proposed amendment, but it
shall be sufficient if they approve the substance thereof.
(c) Any modifications, amendments or waivers to the
Fiscal Agency Agreement or to the terms and conditions of the
Notes in accordance with the foregoing provisions will be
conclusive and binding on all Holders of Notes, whether or not
they have given such consent, and on all Holders of coupons,
whether or not notation of such modifications, amendments or
waivers is made upon the Notes or coupons, and on all future
Holders of Notes and coupons.
(d) Promptly after the execution of any amendment to
the Fiscal Agency Agreement or the effectiveness of any
modification or amendment of the terms and conditions of the
Notes, notice of such modification or amendment shall be given by
INTELSAT or by the Fiscal Agent on behalf of and at the expense
of INTELSAT, to Holders of the Notes in the manner provided in
Paragraph 6(e) hereof. The failure to give such notice on a
timely basis shall not invalidate such modification or amendment,
but INTELSAT shall cause the Fiscal Agent to give such notice as
soon as practicable upon discovering such failure or upon any
impediment to the giving of such notice being overcome.
11. INTELSAT may from time to time, without the
consent of the Holder of any Note or coupon, issue further debt
securities having the same terms and conditions as the Notes in
all respects (or in all respects except for the first payment of
interest thereon) or having such terms as INTELSAT may determine
at the time of their issuance, in either case so that any such
further debt securities shall be consolidated and form a single
series with outstanding securities of any series (including the
Notes). Unless the context requires otherwise, references in the
Notes and coupons and in the Fiscal Agency Agreement to the Notes
or coupons shall include any other debt securities issued in
accordance with the Fiscal Agency Agreement that are intended by
INTELSAT to form a single series with the Notes. Any further
debt securities forming a single series with the outstanding
securities of any series (including the Notes) shall be issued
pursuant to the Fiscal Agency Agreement as amended for the
purpose of providing for the issuance of such debt securities.
12. Subject to the authentication of this Note by the
Fiscal Agent, INTELSAT hereby certifies and declares that all
acts, conditions and things required to be done and performed and
to have happened precedent to the creation and issuance of the
B-16
Notes and any coupons, and to constitute the same the valid
obligations of INTELSAT, have been done and performed and have
happened in due compliance with all applicable laws.
13. INTELSAT hereby appoints CT Corporation System,
1633 Broadway, New York, New York 10019, as its authorized agent
("Authorized Agent") upon which process may be served in any
action arising out of or based on the Notes or any coupons which
action may be instituted in any New York State or United States
Federal court sitting in the Borough of Manhattan, The City of
New York, the State of New York, U.S.A., by the Holder of any
Note or coupon, and INTELSAT and each Holder by acceptance hereof
expressly accepts the exclusive jurisdiction of any such court in
respect of any such action. Such appointment shall be
irrevocable until two years after the Notes shall have matured
and been paid or moneys for the payment thereof shall have been
made available unless and until a successor Authorized Agent
shall have been appointed and shall have accepted such
appointment. INTELSAT hereby irrevocably waives any immunity to
service of process in respect of any such action to which it
might otherwise be entitled in any action arising out of or based
upon the Notes or coupons which may be instituted by any Holder
of a Note or coupon in any State or Federal court in the Borough
of Manhattan, The City of New York, the State of New York, U.S.A.
Service of process upon the Authorized Agent at the address
indicated above, as such address may be changed within the
Borough of Manhattan, The City of New York, the State of New
York, U.S.A., by notice given by the Authorized Agent to each
party hereto, shall be deemed, in every respect, effective
service of process upon INTELSAT. INTELSAT irrevocably waives,
to the fullest extent permitted by applicable law, any sovereign
or other immunity from jurisdiction or from execution (except
that INTELSAT does not waive immunity from execution prior to
judgment and any similar defense) to which it might otherwise be
entitled in any such action which may be instituted by any Holder
of a Note or coupon in any New York State or United States
Federal court sitting in the Borough of Manhattan, The City of
New York, the State of New York, U.S.A.
14. The Notes and coupons will constitute an
obligation of INTELSAT and not of any Signatory or Party (each as
defined in the INTELSAT Agreement). No Signatory or Party will
waive any immunity to which it may be entitled in any suit on the
Notes or coupons, and Holders of Notes or coupons will have no
recourse against any Signatory or Party with respect to any
obligations of INTELSAT under the Notes or coupons.
B-17
[Form of coupon]
[Face of coupon]
ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL
BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES
INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN
SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE
CODE.
[B-][1] ... [10]
U.S.$[81.25] [812.50] [8125.00]
Due 28 February [1996]....[2005]
INTERNATIONAL TELECOMMUNICATIONS SATELLITE ORGANIZATION
8 1/8% Notes due 2005
On the date set forth hereon, INTERNATIONAL
TELECOMMUNICATIONS SATELLITE ORGANIZATION ("INTELSAT") will pay
to bearer upon surrender hereof, the amount shown hereon
(together with any additional amounts in respect thereof which
INTELSAT may be required to pay according to the terms of said
Note) at the paying agencies set out on the reverse hereof or at
such other places outside the United States of America (including
the States and the District of Columbia), its territories and
possessions and other areas subject to its jurisdiction as
INTELSAT may determine from time to time, at the option of the
Holder, by United States dollar check drawn on a bank in The City
of New York, the State of New York, U.S.A. or by transfer to a
United States dollar account maintained by the payee with a bank
located in a city in Western Europe, being the interest then
payable on said Note.
INTERNATIONAL TELECOMMUNICATIONS
SATELLITE ORGANIZATION
By_______________________________________
B-18
[Reverse of coupon]
Morgan Guaranty Trust Company of New York
60 Victoria Embankment
London EC4Y 0JP
United Kingdom
Banque Generale du Luxembourg S.A.27 Avenue Monterey
L-2951 Luxembourg
Credit Suisse
Paradeplatz 8
8001 Zurich
Switzerland
Morgan Guaranty Trust of New York, Brussels Office
Avenue des Arts 35
B-1040 Brussels
Belgium
B-19
EXHIBIT C
[FORM OF CERTIFICATION TO BE GIVEN TO
EUROCLEAR OR CEDEL BY ACCOUNT HOLDER]
CERTIFICATE
INTERNATIONAL TELECOMMUNICATIONS SATELLITE ORGANIZATION
8 1/8% Notes due 2005
(the "Notes")
This is to certify that as of the date hereof, and except
as set forth below, interests in the temporary Global Note
representing the above-captioned Notes held by you for our account
(i) are owned by person(s) that are not citizens or residents of
the United States, domestic partnerships, domestic corporations or
any estate or trust the income of which is subject to United States
Federal income taxation regardless of its source ("United States
person(s)"), (ii) are owned by United States person(s) that (a) are
foreign branches of United States financial institutions (as
defined in U.S. Treasury Regulations Section 1.165-12(c)(1)(v)
("financial institutions")) purchasing for their own account or for
resale or (b) acquired the Notes through foreign branches of United
States financial institutions and who hold the Notes through such
United States financial institutions on the date hereof (and in
either case (a) or (b), each such United States financial
institution hereby agrees, on its own behalf or through its agent,
that you may advise INTELSAT or INTELSAT's agent that it will
comply with the requirements of Section 165(j)(3)(A), (B) or (C) of
the U.S. Internal Revenue Code of 1986, as amended, and the
regulations thereunder), or (iii) are owned by a United States or
foreign financial institution for purposes of resale during the
restricted period (as defined in U.S. Treasury Regulations Section
1.163-5(c)(2)(i)(D)(7)), and in addition, if the owner of the Notes
is a United States or foreign financial institution described in
clause (iii) above (whether or not also described in clause (i) or
(ii)), this is to further certify that such financial institution
has not acquired the Notes for purposes of resale directly or
indirectly to a United States person or to a person within the
United States or its possessions.
As used herein, "United States" means the United States
of America (including the States thereof and the District of
Columbia); and its "possessions" include Puerto Rico, the U.S.
Virgin Islands, Guam, American Samoa, Wake Island and the Northern
Mariana Islands.
We undertake to advise you promptly by tested telex on or
prior to the date on which you intend to submit your certification
relating to the Notes held by you for our account in accordance
with your Operating Procedures if any applicable statement herein
is not correct on such date, and in the absence of any such
C-1
notification it may be assumed that this certification applies as
of such date.
This certification excepts and does not relate to U.S.
$______ of such interest in the above Notes in respect of which we
are not able to certify and as to which we understand exchange and
delivery of definitive Notes (or, if relevant, exercise of any
rights or collection of any interest) cannot be made until we do so
certify.
We understand that this certification is required in
connection with certain tax laws and, if applicable, certain
securities laws of the United States. In connection therewith, if
administrative or legal proceedings are commenced or threatened in
connection with which this certification is or would be relevant,
we irrevocably authorize you to produce this certification to any
interested party in such proceedings.
Dated: _____________, 199_
By:_______________________________________
As, or as agent for, the beneficial owner(s)
of the Notes to which this certificate relates.
C-2
EXHIBIT D
[FORM OF CERTIFICATION TO BE GIVEN
BY THE EUROCLEAR OPERATOR OR
CEDEL]
CERTIFICATION
INTERNATIONAL TELECOMMUNICATIONS SATELLITE ORGANIZATION
8 1/8% Notes due 2005
(the "Notes")
This is to certify that, based solely on certifications
we have received in writing, by tested telex or by electronic
transmission from member organizations appearing in our records as
persons being entitled to a portion of the principal amount set
forth below (our "Member Organizations") substantially to the
effect set forth in the Fiscal Agency Agreement, as of the date
hereof, U.S. $_______ principal amount of the above-captioned Notes
(i) is owned by persons that are not citizens or residents of the
United States, domestic partnerships, domestic corporations or any
estate or trust the income of which is subject to United States
Federal income taxation regardless of its source ("United States
persons"), (ii) is owned by United States persons that are (a)
foreign branches of United States financial institutions (as
defined in U.S. Treasury Regulations Section 1.165-12(c)(1)(v)
("financial institutions")) purchasing for their own account or for
resale or (b) United States persons who acquired the Notes through
foreign branches of United States financial institutions and who
hold the Notes through such United States financial institutions on
the date hereof (and in either case (a) or (b), each such United
States financial institution has agreed, on its own behalf or
through its agent, that we may advise INTELSAT or INTELSAT's agent
that it will comply with the requirements of Section 165(j)(3)(A),
(B) or (C) of the U.S. Internal Revenue Code of 1986, as amended,
and the regulations thereunder), or (iii) is owned by a United
States or foreign financial institution for purposes of resale
during the restricted period (as defined in U.S. Treasury
Regulations Section 1.163-5(c)(2)(i)(D)(7)), and to the further
effect that United States or foreign financial institutions
described in clause (iii) above (whether or not also described in
clause (i) or (ii)) have certified that they have not acquired the
Notes for purposes of resale directly or indirectly to a United
States person or to a person within the United States or its
possessions.
We further certify (i) that we are not making available
herewith for exchange (or, if relevant, exercise of any rights or
collection of any interest) any portion of the Temporary Global
Note excepted in such certifications and (ii) that as of the date
hereof we have not received any notification from any of our Member
Organizations to the effect that the statements made by such Member
Organizations with respect to any portion of the part submitted
D-1
herewith for exchange (or, if relevant, exercise of any rights or
collection of any interest) are no longer true and cannot be relied
upon as of the date hereof.
We understand that this certification is required in
connection with certain tax laws and, if applicable, certain
securities laws of the United States. In connection therewith, if
administrative or legal proceedings are commenced or threatened in
connection with which this certification is or would be relevant,
we irrevocably authorize you to produce this certification to any
interested party in such proceedings.
Dated: __________, 199_
Yours faithfully,
[Morgan Guaranty Trust Company
of New York, Brussels Office as
operator of the Euroclear
System]
or
[Cedel societe anonyme]
By_______________________
D-2
EX-11
5
EXHIBIT 11
Page 264
EXHIBIT 11
Comsat Corporation and Subsidiaries
Computation Of Earnings Per Share
For Each Of The Three Years In The Period Ended December 31, 1994
(In thousands, except per-share amounts)
1994 1993 1992
---------- ---------- ------------
Primary
--------
Earnings:
Income before cumulative effect
of accounting change $ 77,642 $ 82,469 $ 53,292
Cumulative effect of accounting
change - 1,925 -
---------- ---------- ----------
Net income $ 77,642 $ 84,394 $ 53,292
========== ========== ==========
Shares:
Weighted average number of
common shares outstanding 46,590 46,336 45,277
Add-shares issuable from assumed
exercise of options 766 759 598
---------- ---------- ----------
Weighted average shares 47,356 47,095 45,875
========== ========== ==========
Primary earnings per share:
Before cumulative effect of
accounting change $ 1.64 $ 1.75 $ 1.16
Cumulative effect of accounting
change - 0.04 -
---------- ---------- -----------
Net income $ 1.64 $ 1.79 $ 1.16
========== ========== ===========
Assuming Full Dilution
----------------------
Earnings:
Income before cumulative effect of
accounting change $ 77,642 $ 82,469 $ 53,292
Add-interest expense (net of tax)
applicable to 7-3/4% convertible
debentures-portion not capitalized - - 1,488
---------- ---------- ----------
77,642 82,469 54,780
Cumulative effect of accounting
change - 1,925 -
---------- ---------- ----------
Net income $ 77,642 $ 84,394 $ 54,780
========== ========== ==========
Shares:
Weighted average number of common
shares outstanding 46,590 46,336 45,277
Assumed conversion of 7-3/4%
convertible debentures - - 1,237
Add-shares issuable from assumed
exercise of options 874 821 777
---------- ---------- ----------
Weighted average shares 47,464 47,157 47,291
========== ========== ==========
Fully diluted earnings per share:
Before cumulative effect of
accounting change $ 1.64 $ 1.75 $ 1.16
Cumulative effect of accounting
change - 0.04 -
---------- ---------- ----------
Net income $ 1.64 $ 1.79 $ 1.16
========== ========== ==========
Page 265
EX-21
6
EXHIBIT 21
Page 266
SUBSIDIARIES OF THE REGISTRANT
AS OF MARCH 31, 1995
Subsidiary Locality of Incorporation
---------- -------------------------
Anghel Laboratories, Inc. Delaware
Beacon Communications Corp. Delaware
BelCom, Inc. Delaware
Bethesda Real Property, Inc. Delaware
C&S Antennas, Inc. Delaware
C&S Antennas Limited United Kingdom
COMSAT Argentina, S.A. Argentina
COMSAT Brasil, Ltda. Brazil
COMSAT de Bolivia, S.R.L. Bolivia
COMSAT de Colombia, S.A. Colombia
COMSAT de Guatemala, S.A. Guatemala
COMSAT Denver, Inc. Delaware
COMSAT Venezuela, COMSATVEN, C.A. Venezuela
COMSAT Dijital Hizmetleri Ticaret
Anonim Sirketi Turkey
COMSAT do Brasil Equipamentos de
Telecomunicacoes Ltda. Brazil
COMSAT General Corporation Delaware
COMSAT General Telematics, Inc. Delaware
COMSAT Iletisim Hizmetleri Ticaret
Anonim Sirketi Turkey
COMSAT Investments, Inc. Delaware
COMSAT Mobile India, Inc. Delaware
COMSAT Mobile Investments, Inc. Delaware
COMSAT Overseas, Inc. Delaware
COMSAT Peru S.A. Peru
COMSAT RSI, Inc. Delaware
COMSAT RSI Foreign Sales Corporation US VI
COMSAT RSI Maryland, Inc. Delaware
COMSAT Technology, Inc. Delaware
COMSAT Video Enterprises, Inc. Delaware
CSA Limited United Kingdom
CTS Transnational, Inc. Delaware
Mark Antenna Products, Inc. Nevada
Mexia Fabricators, Inc. Texas
On Command Video Corporation Delaware
PG Technology Limited United Kingdom
Radiation Systems Electromechanical
Systems, Incorporated Florida
Radiation Systems International Limited United Kingdom
Radiation Systems Precision Controls, Inc. Nevada
SatCom Technologies, Inc. Nevada
Page 267
EX-23
7
EXHIBIT 23
Page 268
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in COMSAT Corporation's
Registration Statement No. 2-83319 on Form S-8, Registration Statement
No. 2-87942 on Form S-8, Registration Statement No. 33-5259 on Form S-8,
Registration Statement No. 33-25124 on Form S-8, Registration Statement
No. 33-35364 on Form S-8, Registration Statement No. 33-53610 on Form S-8,
Registration Statement No. 33-51661 on Form S-3, Registration Statement
No. 33-54369 on Form S-3, Registration Statement No. 33-54685 on Form S-8,
Registration Statement No. 33-54687 on Form S-8, Registration Statement
No. 33-56331 on Form S-8, and Registration Statement No. 33-56333 on Form
S-8 of our report dated February 10, 1995, appearing in this Annual Report
on Form 10-K of COMSAT Corporation for the year ended December 31, 1994.
Deloitte and Touche LLP
Washington, D.C.
March 27, 1995
Page 269
EX-27
8
5
0000022698
COMSAT CORPORATION
1000
YEAR
DEC-31-1994
DEC-31-1994
18,658
0
226,189
0
21,933
298,240
2,421,662
990,596
1,975,992
317,080
515,542
312,143
0
0
514,773
1,975,992
0
826,899
0
462,277
214,371
0
25,278
127,321
49,679
77,642
0
0
0
77,642
1.64
1.64