AGREEMENT AND PLAN OF MERGER
DATED AS OF SEPTEMBER 18, 1998
AMONG
COMSAT CORPORATION,
LOCKHEED XXXXXX CORPORATION
AND
DENEB CORPORATION
ARTICLE I
THE OFFER
SECTION 1.1. THE OFFER............................................. 1
SECTION 1.2. COMSAT ACTIONS........................................ 3
SECTION 1.3. SHAREHOLDER LISTS..................................... 4
ARTICLE II
RELATED AGREEMENTS
SECTION 2.1. REGISTRATION RIGHTS AGREEMENT......................... 5
SECTION 2.2. SHAREHOLDERS AGREEMENT................................ 5
SECTION 2.3. CARRIER ACQUISITION AGREEMENT......................... 5
ARTICLE III
THE MERGER
SECTION 3.1. THE MERGER........................................... 5
SECTION 3.2. EFFECTIVE TIME....................................... 6
SECTION 3.3. EFFECTS OF THE MERGER................................ 6
SECTION 3.4. CERTIFICATE OF INCORPORATION AND BY-LAWS............. 6
SECTION 3.5. DIRECTORS............................................ 6
SECTION 3.6. OFFICERS............................................. 6
SECTION 3.7. EFFECT ON CAPITAL STOCK.............................. 7
SECTION 3.8. DISSENTING SHARES.................................... 7
SECTION 3.9. EXCHANGE OF STOCK.................................... 8
SECTION 3.10. NO FRACTIONAL SHARES OF LOCKHEED XXXXXX COMMON STOCK. 10
SECTION 3.11. TERMINATION OF EXCHANGE FUND......................... 10
SECTION 3.12. NO LIABILITY......................................... 11
SECTION 3.13. LOST CERTIFICATES.................................... 11
SECTION 3.14. CERTAIN ADJUSTMENTS.................................. 11
SECTION 3.15. CONDITIONS TO CLOSING OF MERGER...................... 11
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF COMSAT
SECTION 4.1. ORGANIZATION........................................ 14
SECTION 4.2. AUTHORITY........................................... 15
SECTION 4.3. CONSENTS AND APPROVALS; NO VIOLATIONS............... 15
SECTION 4.4. CAPITALIZATION...................................... 16
SECTION 4.5. ABSENCE OF CERTAIN CHANGES.......................... 18
i
SECTION 4.6. REPORTS............................................. 18
SECTION 4.7. NO DEFAULT.......................................... 19
SECTION 4.8. LITIGATION; COMPLIANCE WITH LAW..................... 19
SECTION 4.9. EMPLOYEE BENEFIT PLANS; ERISA....................... 20
SECTION 4.10. INTELLECTUAL PROPERTY; YEAR 2000.................... 21
SECTION 4.11. CERTAIN CONTRACTS AND ARRANGEMENTS.................. 22
SECTION 4.12. TAXES............................................... 23
SECTION 4.13. GOVERNMENTAL AUTHORIZATIONS......................... 24
SECTION 4.14. ENVIRONMENTAL MATTERS............................... 25
SECTION 4.15. BROKERAGE FEES AND COMMISSIONS...................... 25
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF LOCKHEED XXXXXX AND ACQUISITION SUB
SECTION 5.1. ORGANIZATION........................................ 25
SECTION 5.2. AUTHORITY........................................... 25
SECTION 5.3. CONSENTS AND APPROVALS; NO VIOLATIONS............... 26
SECTION 5.4. CAPITALIZATION...................................... 27
SECTION 5.5. ABSENCE OF CERTAIN CHANGES.......................... 27
SECTION 5.6. REPORTS............................................. 28
SECTION 5.7. OPINION OF FINANCIAL ADVISOR........................ 28
SECTION 5.8. BROKERS............................................. 28
ARTICLE VI
COVENANTS
SECTION 6.1. CONDUCT OF BUSINESS OF COMSAT....................... 28
SECTION 6.2. INTELSAT AND INMARSAT PRIVATIZATIONS................ 32
SECTION 6.3. CONDUCT OF BUSINESS OF LOCKHEED XXXXXX.............. 34
SECTION 6.4. NO SOLICITATION..................................... 35
SECTION 6.5. PREPARATION OF PROXY STATEMENT; COMSAT SHAREHOLDERS
MEETING........................................... 36
SECTION 6.6. ACCESS TO INFORMATION............................... 38
SECTION 6.7. REASONABLE EFFORTS.................................. 38
SECTION 6.8. LISTING APPLICATION................................. 38
SECTION 6.9. CONSENTS AND APPROVALS.............................. 39
SECTION 6.10. PUBLIC ANNOUNCEMENTS................................ 41
SECTION 6.11. NOTIFICATION........................................ 41
SECTION 6.12. CERTAIN LITIGATION.................................. 41
SECTION 6.13. EMPLOYEE AND BENEFIT MATTERS; STOCK OPTIONS
AND AWARDS......................................... 42
SECTION 6.14. NO RESTRICTIONS..................................... 44
SECTION 6.15. ADVICE OF CHANGES................................... 44
SECTION 6.16. INDEMNIFICATION..................................... 44
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SECTION 6.17. NO CONTROL.......................................... 45
SECTION 6.18. ACCOUNTANT'S LETTERS................................ 45
SECTION 6.19. NORTH AMERICAN NUMBERING PLAN....................... 45
SECTION 6.20. AFFILIATE LETTERS................................... 45
ARTICLE VII
TERMINATION; AMENDMENT; WAIVER
SECTION 7.1. TERMINATION.......................................... 45
SECTION 7.2. EFFECT OF TERMINATION................................ 47
SECTION 7.3. FEES AND EXPENSES.................................... 47
SECTION 7.4. AMENDMENT............................................ 48
SECTION 7.5. EXTENSION; WAIVER.................................... 49
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1. SURVIVAL............................................. 49
SECTION 8.2. ENTIRE AGREEMENT..................................... 49
SECTION 8.3. GOVERNING LAW........................................ 49
SECTION 8.4. NOTICES.............................................. 49
SECTION 8.5. SUCCESSORS AND ASSIGNS; NO THIRD PARTY BENEFICIARIES. 50
SECTION 8.6. COUNTERPARTS......................................... 51
SECTION 8.7. INTERPRETATION....................................... 51
SECTION 8.8. SCHEDULES............................................ 51
SECTION 8.9. LEGAL ENFORCEABILITY................................. 51
SECTION 8.10. NO WAIVERS; REMEDIES; SPECIFIC PERFORMANCE........... 51
SECTION 8.11. EXCLUSIVE JURISDICTION............................... 51
SECTION 8.12. WAIVER OF JURY TRIAL................................. 52
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EXHIBITS
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Exhibit A............................................. Conditions to Offer
Exhibit B........................... Form of Registration Rights Amendment
Exhibit C.................................. Form of Shareholders Agreement
Exhibit D........................... Form of Carrier Acquisition Agreement
Exhibit E.......... Form of Amended and Restated Articles of Incorporation
Exhibit F............................................ Form of Tax Opinions
SCHEDULES
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Schedule 1..................................... COMSAT Disclosure Schedule
iv
TABLE OF DEFINED TERMS
Term Section No.
---- ---------------
Acquisition Proposal.................................................... 6.4(a)
Acquisition Sub......................................... Introductory Paragraph
Agreement............................................... Introductory Paragraph
Amendment.................................................................. 4.2
Antitrust Laws.......................................................... 6.9(c)
Assets..................................................................... 4.3
Audit............................................................... 4.12(j)(i)
Authorized Carrier Conditions........................................ Exhibit A
Authorized Carriers..................................................... 1.1(a)
Average Price........................................................ 3.7(a)(i)
Carrier Acquisition........................................................ 2.3
Carrier Acquisition Agreement.............................................. 2.3
CCEC.................................................................... 6.9(c)
Certificates............................................................ 3.9(b)
Closing.................................................................... 3.2
Closing Date............................................................... 3.2
Code............................................................... 3.15(c)(ii)
Communications Act......................................................... 4.3
COMSAT.................................................. Introductory Paragraph
COMSAT Affiliate Letter................................................... 6.20
COMSAT Business Plans................................................... 6.1(i)
COMSAT Carrier Subsidiary.................................................. 2.3
COMSAT Common Stock..................................................... 1.1(a)
COMSAT Contracts....................................................... 4.11(a)
COMSAT Disclosure Schedule.......................................... Article IV
COMSAT Employees....................................................... 6.13(d)
COMSAT Form 10-K........................................................... 4.5
COMSAT Preferred Stock.................................................. 4.4(a)
COMSAT Representatives.................................................. 6.4(a)
COMSAT SEC Documents....................................................... 4.6
COMSAT Shareholders Meeting............................................. 6.5(b)
COMSAT Stock Options.................................................... 4.4(a)
COMSAT Stock Plans...................................................... 4.4(a)
Confidentiality Agreements................................................. 8.2
DCBCA................................................................... 1.1(a)
DCRA....................................................................... 3.2
DGCL....................................................................... 3.1
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Term Section No.
---- -----------
Determination Date.................................................... 3.7(a)(i)
Dissenting Shares.......................................................... 3.8
EC Merger Regulations................................................... 6.9(c)
Effective Time............................................................. 3.2
Environmental Claims...................................................... 4.14
Environmental Laws........................................................ 4.14
Equity Securities........................................................ 4.4(a)
ERISA.................................................................... 4.9(a)
ERISA Affiliate.......................................................... 4.9(a)
Exchange Act............................................................. 1.1(a)
Exchange Agent........................................................... 3.9(a)
Exchange Fund............................................................ 3.9(a)
FCC................................................................. 3.15(a)(ii)
Form S-4................................................................ 6.5(a)
Forward Merger............................................................. 3.1
GAAP....................................................................... 4.6
Governmental Authorizations................................................ 4.13
Governmental Authority.................................................... 3.11
HSR Act................................................................. 6.9(c)
ICO.................................................................. 6.2(e)(i)
Indemnified Parties.................................................... 6.16(a)
Inmarsat................................................................ 3.9(b)
Inmarsat Convention................................................. 6.2(e)(ii)
Inmarsat Existing Documents........................................ 6.2(e)(iii)
Inmarsat Interests.................................................. 6.2(e)(iv)
Inmarsat Investment Share............................................ 6.2(e)(v)
Inmarsat Privatization.............................................. 6.2(e)(vi)
Inmarsat Restructuring Documents................................... 6.2(e)(vii)
Intellectual Property.................................................. 4.10(a)
INTELSAT................................................................ 3.9(b)
INTELSAT Agreement................................................ 6.2(e)(viii)
INTELSAT Existing Documents....................................... 6.2(e)(viii)
INTELSAT Operating Agreement...................................... 6.2(e)(viii)
INTELSAT Interests................................................... 6.2(e)(ix)
INTELSAT Investment Share............................................. 6.2(e)(x)
IRS...................................................................... 4.9(a)
Laws....................................................................... 4.1
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Term Section No.
---- -----------
Liabilities................................................................ 4.6
Lien....................................................................... 4.3
Lockheed Xxxxxx......................................... Introductory Paragraph
Lockheed Xxxxxx Common Stock............................................ 3.7(a)
Lockheed Xxxxxx Form 10-K.................................................. 5.5
Lockheed Xxxxxx Preferred Stock......................................... 5.4(a)
Lockheed Xxxxxx SEC Documents.............................................. 5.6
Lockheed Xxxxxx Series Preferred Stock.................................. 5.4(a)
Lockheed Xxxxxx Stock Options........................................... 5.4(a)
Lockheed Xxxxxx Stock Plans............................................. 5.4(a)
Lock-Up Agreement....................................................... 6.2(c)
Material Adverse Effect.................................................... 4.1
Maximum Amount......................................................... 6.16(b)
Measurement Date..................................................... Exhibit A
Merger..................................................................... 3.1
Merger Consideration.................................................... 3.7(a)
Minimum Condition.................................................... Exhibit A
NYSE....................................................................... 3.2
Offer................................................................... 1.1(a)
Offer Closing Time...................................................... 1.1(a)
Offer Documents......................................................... 1.1(d)
Offer Price............................................................. 1.1(a)
Offer Subsidiary........................................................ 1.1(a)
Order................................................................... 6.9(d)
PBGC.................................................................... 4.9(a)
Person.................................................................. 3.9(b)
Plans................................................................... 4.9(a)
Proxy Statement/Prospectus.............................................. 6.5(a)
Recent SEC Documents.................................................... 4.8(b)
Registration Rights Agreement...............................................2.1
Reverse Merger..............................................................3.1
Satellite Act........................................................... 1.1(a)
Schedule 14D-9.......................................................... 1.2(b)
SEC..................................................................... 1.1(a)
Securities Act...................................................... 3.15(a)(v)
Shareholders Agreement......................................................2.2
Shares.................................................................. 1.1(a)
vii
Term Section No.
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Significant Adverse Effect............................................ 3.15(b)
Significant Subsidiary.................................................... 4.3
Stock Option Plans..................................................... 4.4(a)
Stock Value........................................................ 3.15(c)(i)
Subsidiary.................................................................4.2
Superior Proposal...................................................... 6.4(b)
Surviving Corporation......................................................3.1
Taxes............................................................. 4.12(j)(ii)
Tax Returns...................................................... 4.12(j)(iii)
Termination Fee.................................................... 7.3(a)(ii)
Transaction Agreements.....................................................2.3
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "AGREEMENT") dated as of September 18,
1998 among LOCKHEED XXXXXX CORPORATION, a Maryland corporation ("LOCKHEED
XXXXXX"), DENEB CORPORATION, a Delaware corporation and a wholly-owned
subsidiary of Lockheed Xxxxxx ("ACQUISITION SUB"), and COMSAT CORPORATION, a
District of Columbia corporation ("COMSAT").
In consideration of the representations, warranties, covenants and
agreements herein contained, and intending to be legally bound hereby, Lockheed
Xxxxxx, Acquisition Sub and COMSAT hereby agree as follows:
ARTICLE I
THE OFFER
SECTION 1.1. THE OFFER.
(a) Subject to this Agreement not having been terminated in accordance with
the provisions of Section 7.1 hereof, Lockheed Xxxxxx, acting through a wholly-
owned single member Delaware limited liability company (the "OFFER SUBSIDIARY"),
shall as promptly as practicable, but in no event later than five business days
from the date of the public announcement of the terms of this Agreement,
commence (within the meaning of Rule 14d-2 under the Securities Exchange Act of
1934, as amended, and all rules and regulations promulgated thereunder (the
"EXCHANGE ACT")) an offer to purchase for cash (as it may be amended in
accordance with the terms of this Agreement, the "OFFER") up to the number of
shares (collectively, the "SHARES") of COMSAT's common stock, without par value
(the "COMSAT COMMON STOCK"), that is equal to the remainder of (i) 49% of the
number of shares of COMSAT Common Stock outstanding at the close of business on
the date of purchase pursuant to the Offer minus (ii) the number of shares of
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COMSAT Common Stock then owned of record by "authorized carriers" (as defined in
the Communications Satellite Act of 1962, as amended, 47 U.S.C. (S)701 et. seq.,
and all rules and regulations promulgated thereunder (the "SATELLITE ACT"))
("AUTHORIZED CARRIERS"), as evidenced by issuance of shares of Series II COMSAT
Common Stock, minus (iii) the number of shares of COMSAT Common Stock with
-----
respect to which written demand shall have been made and not withdrawn under
Section 29-373 of the District of Columbia Business Corporation Act (the
"DCBCA"), at a price of not less than $45.50 per Share, net to the seller in
cash (the "OFFER PRICE"). Lockheed Xxxxxx shall extend the Offer, for periods
of no more than 60 days, until the earlier of (i) the one year anniversary of
the date hereof or (ii) 10 business days after the date on which the last of the
Authorized Carrier Conditions (as defined in Exhibit A hereto) shall have been
---------
obtained. The obligation of Lockheed Xxxxxx to accept for payment, and pay for,
any Shares tendered pursuant to the Offer shall be subject to the conditions set
forth in Exhibit A (any of which may be waived in whole or in part by Lockheed
---------
Xxxxxx in its sole discretion), and to the terms and conditions of this
Agreement. Lockheed Xxxxxx expressly reserves the right to modify the terms and
1
conditions of the Offer, except that, without the prior written consent of
COMSAT, Lockheed Xxxxxx shall not (i) reduce the number of Shares subject to the
Offer, (ii) waive the Minimum Condition (as defined in Exhibit A hereto), (iii)
---------
reduce the Offer Price, (iv) modify or add to the conditions set forth in
Exhibit A, (v) except as provided in this Section 1.1(a), extend the term of the
---------
Offer, (vi) change the form of the consideration payable in the Offer or (vii)
make any other modifications that are otherwise materially adverse to holders of
COMSAT Common Stock. Notwithstanding the foregoing, Lockheed Xxxxxx may,
without the consent of COMSAT, (A) extend the term of the Offer beyond any
scheduled expiration date of the Offer (but not beyond the two year anniversary
of the date hereof) if, at any such scheduled expiration date, any of the
conditions to Lockheed Xxxxxx'x obligation to accept for payment, and pay for,
Shares tendered pursuant to the Offer shall not have been satisfied or waived
and (B) extend the Offer (but not beyond the two year anniversary of the date
hereof) for any period required by any rule, regulation, interpretation or
position of the Securities and Exchange Commission (the "SEC") or the staff
thereof applicable to the Offer or any other applicable Law (as hereinafter
defined). Upon the terms and subject to the conditions of the Offer, Lockheed
Xxxxxx shall accept for payment and will pay for, as soon as permitted under the
terms of the Offer, Shares validly tendered and not withdrawn prior to the
expiration of the Offer. The date and time at which the Offer shall close is
referred to as the "OFFER CLOSING TIME".
(b) Lockheed Xxxxxx shall not, nor shall it permit any of its affiliates
to, tender into the Offer any shares of COMSAT Common Stock beneficially owned
by it; provided, that shares of COMSAT Common Stock held beneficially or of
--------
record by any plan, program or arrangement sponsored by Lockheed Xxxxxx or
maintained for the benefit of employees of Lockheed Xxxxxx or any of its
Subsidiaries (as hereinafter defined) shall be deemed not to be held by Lockheed
Xxxxxx or an affiliate thereof regardless of whether Lockheed Xxxxxx has,
directly or indirectly, the power to vote or control the disposition of such
shares of COMSAT Common Stock. COMSAT shall not, nor shall it permit any of its
Subsidiaries to, tender into the Offer any shares of COMSAT Common Stock
beneficially owned by it; provided, that shares of COMSAT Common Stock held
--------
beneficially or of record by any plan, program or arrangement sponsored by
COMSAT or maintained for the benefit of employees of COMSAT or any of its
Subsidiaries shall be deemed not to be held by COMSAT regardless of whether
COMSAT has, directly or indirectly, the power to vote or control the disposition
of such shares of COMSAT Common Stock.
(c) Notwithstanding anything to the contrary contained in this Agreement,
Lockheed Xxxxxx shall not be required to commence the Offer in any foreign
country where the commencement of the Offer, in Lockheed Xxxxxx'x reasonable
opinion, would violate the applicable Law of such jurisdiction.
(d) On the date of the commencement of the Offer, Lockheed Xxxxxx shall
file with the SEC a Tender Offer Statement on Schedule 14D-1 with respect to the
Offer, which will contain the offer to purchase and form of the related letter
of transmittal (together with any supplements or amendments thereto, the "OFFER
DOCUMENTS"). The Offer Documents shall comply as to form in all material
respects with the requirements of the Exchange Act and, on the date filed with
the SEC and when first published, sent or given to COMSAT's shareholders,
2
shall not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading, except that no representation is made by Lockheed Xxxxxx with
respect to information supplied by COMSAT in writing for inclusion in the Offer
Documents or incorporated therein by reference to any statement, report or other
document filed by or on behalf of COMSAT with the SEC. Upon obtaining
knowledge, Lockheed Xxxxxx or COMSAT shall correct promptly any information
provided by it for use in the Offer Documents if and to the extent that such
information shall have become false or misleading in any material respect, and
Lockheed Xxxxxx further shall take all steps necessary to amend or supplement
the Offer Documents and to cause the Offer Documents as so amended or
supplemented to be filed with the SEC and to be disseminated to COMSAT's
shareholders, in each case as and to the extent required by applicable federal
securities Laws. COMSAT and its counsel shall be given a reasonable opportunity
to review and comment on the Offer Documents prior to the filing of such Offer
Documents with the SEC. Lockheed Xxxxxx shall provide COMSAT and its counsel in
writing with any comments Lockheed Xxxxxx and its counsel may receive from the
SEC or its staff with respect to the Offer Documents promptly after the receipt
thereof. Lockheed Xxxxxx shall take all steps reasonably necessary to cause the
Offer Documents to be filed with the SEC and disseminated to the holders of
COMSAT Common Stock, in each case as, and to the extent, required by applicable
Law.
SECTION 1.2. COMSAT ACTIONS.
(a) COMSAT hereby consents to the Offer and represents that its Board of
Directors, at a meeting duly called and held, has by resolutions duly adopted,
and not rescinded or modified, by a unanimous vote (excluding any directors
absent and any directors who recused themselves pursuant to Section 8.06 of
COMSAT's Articles of Incorporation) (i) determined as of the date hereof that
the Offer and the Merger are fair to the shareholders of COMSAT, are advisable
and are in the best interests of the shareholders of COMSAT, (ii) subject to the
terms and conditions set forth herein, approved the Offer, the Merger and this
Agreement, which approval constitutes approval of the Merger and this Agreement
for purposes of Section 29-364 of DCBCA, (iii) directed that the Merger and this
Agreement be submitted to a vote of the shareholders of COMSAT, which direction
constitutes the direction required by Section 29-366 of the DCBCA with respect
to the Merger and this Agreement and (iv) recommended acceptance of the Offer
and approval of the Merger and this Agreement by the shareholders of COMSAT,
which approval, if obtained, will constitute approval of the Merger and this
Agreement for purposes of Section 29-367 of DCBCA. COMSAT further represents
that Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation has delivered to the
Board of Directors of COMSAT its opinion that as of the date hereof the
consideration to be received in the Offer and the Merger by holders of shares of
COMSAT Common Stock is fair to the holders of COMSAT Common Stock from a
financial point of view.
(b) COMSAT shall, subject to the provisions of this Agreement (i) file with
the SEC a Solicitation/Recommendation Statement on Schedule 14D-9 (the "SCHEDULE
14D-9") containing a recommendation of acceptance of the Offer and approval of
the Merger and this Agreement by the shareholders of COMSAT and (ii) mail such
Schedule 14D-9 to the
3
shareholders of COMSAT; provided, that subject to the provisions of Section
--------
6.4(b) hereof, such recommendation may be withdrawn, modified or amended. Such
Schedule 14D-9 shall be, if so requested by Lockheed Xxxxxx, filed on the same
date as Lockheed Xxxxxx'x Schedule 14D-1 is filed and mailed together with the
Offer Documents; provided, that in any event the Schedule 14D-9 shall be filed
--------
and mailed no later than 10 business days following the commencement of the
Offer. The Schedule 14D-9 shall comply as to form in all material respects with
the requirements of the Exchange Act and, on the date filed with the SEC and
when first published, sent or given to COMSAT's shareholders, shall not contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except that no representation is made by COMSAT with respect to
information supplied by Lockheed Xxxxxx in writing for inclusion in the Schedule
14D-9. Upon obtaining knowledge, each of COMSAT and Lockheed Xxxxxx shall
correct promptly any information provided by it for use in the Schedule 14D-9 if
and to the extent that such information shall have become false or misleading in
any material respect, and COMSAT further shall take all steps necessary to amend
or supplement the Schedule 14D-9 and to cause the Schedule 14D-9 as so amended
or supplemented to be filed with the SEC and disseminated to COMSAT's
shareholders, in each case as and to the extent required by applicable federal
securities Laws. Lockheed Xxxxxx and its counsel shall be given a reasonable
opportunity to review and comment on the Schedule 14D-9, and each such amendment
or supplement, prior to COMSAT's filing of the Schedule 14D-9 or such supplement
or amendment, as the case may be, with the SEC. COMSAT shall provide Lockheed
Xxxxxx and its counsel in writing with any comments COMSAT or its counsel may
receive from the SEC or its staff with respect to the Schedule 14D-9 or such
supplement or amendment, as the case may be, promptly after the receipt thereof.
SECTION 1.3. SHAREHOLDER LISTS. In connection with the Offer, at the
request of Lockheed Xxxxxx, from time to time after the date hereof, COMSAT
shall promptly furnish Lockheed Xxxxxx with mailing labels, security position
listings and any available listing or computer file containing the names and
addresses of the record holders of the Shares as of a recent date and shall
furnish Lockheed Xxxxxx with such information and assistance as Lockheed Xxxxxx
or its agents may reasonably request in communicating the Offer to the record
and beneficial holders of Shares. Subject to the requirements of applicable
Law, and except for such steps as are necessary to disseminate the Offer
Documents and any other documents necessary to consummate the Merger, Lockheed
Xxxxxx shall hold in confidence the information contained in any such labels,
listings and files, and the additional information referred to in the preceding
sentence, will use such information only in connection with the Offer and the
Merger and, if this Agreement shall be terminated, shall, upon request, deliver
to COMSAT all copies of such information then in its possession or control or in
the possession or control of its agents or representatives.
4
ARTICLE II
RELATED AGREEMENTS
SECTION 2.1. REGISTRATION RIGHTS AGREEMENT. Simultaneous with the
execution and delivery of this Agreement, Lockheed Xxxxxx and COMSAT shall
execute and deliver the Registration Rights Agreement, substantially in the form
attached hereto as Exhibit B (the "REGISTRATION RIGHTS AGREEMENT"), with respect
---------
to the Shares.
SECTION 2.2. SHAREHOLDERS AGREEMENT. Simultaneous with the
execution and delivery of this Agreement, Lockheed Xxxxxx and COMSAT shall
execute and deliver the Shareholders Agreement, substantially in the form
attached hereto as Exhibit C (the "SHAREHOLDERS AGREEMENT").
---------
SECTION 2.3. CARRIER ACQUISITION AGREEMENT. Simultaneous with the
execution and delivery of this Agreement, Lockheed Xxxxxx, Offer Subsidiary,
COMSAT and COMSAT Government Systems, Inc., a Delaware corporation ("COMSAT
CARRIER SUBSIDIARY"), shall enter into an agreement pursuant to which COMSAT
Carrier Subsidiary shall be merged with and into Offer Subsidiary, which
agreement shall be substantially in the form attached hereto as Exhibit D (the
---------
"CARRIER ACQUISITION AGREEMENT," and the transactions contemplated by the
Carrier Acquisition Agreement, the "CARRIER ACQUISITION"). (This Agreement, the
Registration Rights Agreement, the Shareholders Agreement and the Carrier
Acquisition Agreement are hereinafter collectively referred to as the
"TRANSACTION AGREEMENTS"). This Agreement contemplates the transactions set
forth in the Carrier Acquisition Agreement.
ARTICLE III
THE MERGER
SECTION 3.1. THE MERGER. Upon the terms and subject to the
conditions hereof, and in accordance with the DCBCA and the Delaware General
Corporation Law (the "DGCL"), at the Effective Time (as hereinafter defined)
COMSAT shall be merged with and into Acquisition Sub (the "FORWARD MERGER") as
soon as practicable following the satisfaction or waiver of the conditions set
forth in Section 3.15 hereof or on such other date as the parties hereto may
agree; provided, however, that if the conditions in subsections (a) and (b) of
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such Section 3.15 are satisfied, but any of the conditions in Section 3.15(c)
are not satisfied, then Acquisition Sub shall be merged with and into COMSAT at
the Effective Time (the "REVERSE MERGER"). At the Effective Time, if the
Forward Merger is effected, then the separate existence of COMSAT shall cease
and Acquisition Sub shall continue as the surviving corporation under the name
"COMSAT" or, if the Reverse Merger is effected, then the separate existence of
Acquisition Sub shall cease and COMSAT shall continue as the surviving
corporation. The surviving corporation of the Forward Merger or the Reverse
Merger, as the case may be, shall be herein referred to as the "SURVIVING
CORPORATION" and the Forward Merger and Reverse Merger shall alternatively be
referred to as the "MERGER."
5
SECTION 3.2. EFFECTIVE TIME; CLOSING. The Merger shall be
consummated by (i) filing with the Department of Consumer and Regulatory Affairs
of the District of Columbia (the "DCRA") articles of merger, executed and filed
in accordance with Section 29-368 of the DCBCA and such other documents as are
required by Section 29-371 of the DCBCA and (ii) filing with the Secretary of
State of the State of Delaware a certificate of merger, executed and filed in
accordance with Sections 103 and 252 of the DGCL (the time the Merger becomes
effective being referred to as the "EFFECTIVE TIME"). The parties will
cooperate to cause the Effective Time to occur outside of New York Stock
Exchange ("NYSE") trading hours. The Merger shall be effective upon the latest
to occur of (i) the issuance by the DCRA of a certificate of merger with respect
thereto pursuant to Section 29-369 of the DCBCA, (ii) the acceptance for filing
of the certificate of merger by the Secretary of State of the State of Delaware
pursuant to Section 252 of the DGCL and (iii) the time, if any, specified as the
effective time of the Merger in the articles of merger filed in accordance with
the DCBCA and the certificate of merger filed in accordance with the DGCL.
Prior to the filings referred to in this Section 3.2, a closing (the "CLOSING")
will be held at the offices of O'Melveny & Xxxxx LLP, 000 00xx Xxxxxx, X.X.,
Xxxxx 000 Xxxx, Xxxxxxxxxx, X.X. 00000-0000 (or such other place as the parties
may agree), for the purpose of confirming all of the foregoing no later than the
second business day after satisfaction or waiver of all the conditions set forth
in Section 3.15 (the date of the Closing herein referred to as the "CLOSING
DATE").
SECTION 3.3. EFFECTS OF THE MERGER. The Merger shall have the
effects set forth in Section 29-370 of the DCBCA and Section 259 of the DGCL.
As of the Effective Time, the Surviving Corporation shall be a wholly-owned
Subsidiary of Lockheed Xxxxxx.
SECTION 3.4. CERTIFICATE OF INCORPORATION AND BY-LAWS. If the
Forward Merger is consummated, the Certificate of Incorporation and By-Laws of
Acquisition Sub, each as in effect at the Effective Time, shall be the
Certificate of Incorporation and By-Laws of the Surviving Corporation, until
amended in accordance with applicable Law, except that Article FIRST of the
Certificate of Incorporation shall be amended so that it reads in its entirety
as follows: "The name of the corporation is COMSAT Corporation". If the Reverse
Merger is consummated, the Articles of Incorporation of COMSAT shall be amended
at the Effective Time to read in their entirety as set forth in Exhibit E hereto
---------
and shall be the Articles of Incorporation of the Surviving Corporation, and the
By-Laws of COMSAT as in effect at the Effective Time shall be the By-Laws of the
Surviving Corporation, each until amended in accordance with applicable Law.
SECTION 3.5. DIRECTORS. The directors of Acquisition Sub at the
Effective Time shall be the initial directors of the Surviving Corporation and
will hold office from the Effective Time until their respective successors are
duly elected or appointed and qualify in the manner provided in the Certificate
of Incorporation or Articles of Incorporation of the Surviving Corporation, as
the case may be, and the By-Laws of the Surviving Corporation, or as otherwise
provided by Law.
SECTION 3.6. OFFICERS. The officers of COMSAT at the Effective Time
shall be the initial officers of the Surviving Corporation and will hold office
from the Effective Time
6
until their respective successors are duly elected or appointed and qualify
in the manner provided in the Certificate of Incorporation or Articles of
Incorporation of the Surviving Corporation, as the case may be, and the By-Laws
of the Surviving Corporation, or as otherwise provided by Law.
SECTION 3.7. EFFECT ON CAPITAL STOCK. At the Effective Time:
(a) Each share of COMSAT Common Stock issued and outstanding
immediately prior to the Effective Time (other than shares of COMSAT Common
Stock held in the treasury of COMSAT, held by Offer Subsidiary, held by Lockheed
Xxxxxx, if any, and Dissenting Shares (as hereinafter defined), if any) shall,
by virtue of the Merger and without any action on the part of the holder
thereof, be converted into the right to receive 0.5 shares of Lockheed Xxxxxx
common stock, par value $1 per share (the "LOCKHEED XXXXXX COMMON STOCK") (as
subject to adjustment pursuant to Section 3.14 hereof, the "MERGER
CONSIDERATION"), issuable to the holder thereof upon the surrender of the
certificate formerly representing such share of COMSAT Common Stock (except as
provided in Section 6.13 hereof).
(b) Each share of COMSAT Common Stock held in the treasury of COMSAT,
each share of COMSAT Common Stock held by Offer Subsidiary, and each share of
COMSAT Common Stock held by Lockheed Xxxxxx, if any, immediately prior to the
Effective Time shall, by virtue of the Merger and without any action on the part
of the holder thereof, be cancelled and retired and cease to exist and no
consideration shall be received therefor; provided, that shares of COMSAT Common
--------
Stock held beneficially or of record by any plan, program or arrangement
sponsored or maintained for the benefit of employees of Lockheed Xxxxxx or
COMSAT or any of their respective Subsidiaries shall be deemed not to be held by
Lockheed Xxxxxx, Offer Subsidiary or COMSAT regardless of whether Lockheed
Xxxxxx, Offer Subsidiary or COMSAT has, directly or indirectly, the power to
vote or control the disposition of such shares of COMSAT Common Stock.
(c) In the case of the Forward Merger, each share of common stock, par
value $1.00 per share, of Acquisition Sub issued and outstanding immediately
prior to the Effective Time shall, by virtue of the Merger and without any
action on the part of the holder thereof remain outstanding as one share of the
Surviving Corporation, or in the case of the Reverse Merger, be converted into
and exchangeable for one share of common stock of the Surviving Corporation.
SECTION 3.8. DISSENTING SHARES. Notwithstanding anything in this
Agreement to the contrary, shares of COMSAT Common Stock which are issued and
outstanding immediately prior to the Effective Time and which are held by
shareholders who have not voted such shares of COMSAT Common Stock in favor of
the Merger and shall have delivered a written demand for appraisal of such
shares of COMSAT Common Stock in the manner provided in Section 29-373 of the
DCBCA (the "DISSENTING SHARES") shall not be converted into or be exchangeable
for the right to receive the Merger Consideration, unless and until such holder
shall have failed to perfect or shall have effectively withdrawn or lost such
holder's right to
7
appraisal and payment under the DCBCA. If such holder shall have so failed to
perfect or shall have effectively withdrawn or lost such right, such holder's
shares of COMSAT Common Stock shall thereupon be deemed to have been converted
into and to have become exchangeable for, at the Effective Time, the right to
receive the Merger Consideration.
SECTION 3.9. EXCHANGE OF STOCK.
(a) Prior to the Effective Time, Lockheed Xxxxxx shall designate a
bank or trust company reasonably acceptable to COMSAT to act as exchange agent
for the holders of the shares of COMSAT Common Stock in connection with the
Merger (the "EXCHANGE AGENT"). At the Effective Time, Lockheed Xxxxxx will
deposit with the Exchange Agent, in trust for the benefit of holders of shares
of COMSAT Common Stock, certificates representing the Lockheed Xxxxxx Common
Stock issuable pursuant to Section 3.7(a) hereof in exchange for outstanding
shares of COMSAT Common Stock. Lockheed Xxxxxx shall make available to the
Exchange Agent cash sufficient to pay cash in lieu of fractional shares pursuant
to Section 3.10 hereof and any dividends and other distributions pursuant to
Section 3.9(d) hereof. Any cash and certificates of Lockheed Xxxxxx Common
Stock deposited with the Exchange Agent shall hereinafter be referred to as the
"EXCHANGE FUND".
(b) Promptly after the Effective Time, the Exchange Agent shall mail
to each record holder, as of the Effective Time, of an outstanding certificate
or certificates which immediately prior to the Effective Time represented shares
of COMSAT Common Stock (the "CERTIFICATES") a form letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon proper delivery of the Certificates to the
Exchange Agent) and instructions for effecting the surrender of such
Certificates in exchange for the applicable Merger Consideration in such form as
Lockheed Xxxxxx shall reasonably specify. Upon surrender to the Exchange Agent
of a Certificate, together with such letter of transmittal duly executed, and
any other required documents, the holder of such Certificate shall be entitled
to promptly receive in exchange therefor (A) one or more shares of Lockheed
Xxxxxx Common Stock representing, in the aggregate, the whole number of shares
that such holder has the right to receive pursuant to Section 3.7(a) hereof
(after taking into account all shares of COMSAT Common Stock then held by such
holder) and (B) a check in the amount equal to the cash that such holder has the
right to receive pursuant to the provisions of this Article III, including cash
in lieu of any fractional shares of Lockheed Xxxxxx Common Stock pursuant to
Section 3.10 hereof. No interest will be paid or will accrue on any cash
payable pursuant to Section 3.9(d) hereof or Section 3.10 hereof upon the
surrender of the Certificates. All distributions to holders of Certificates
shall be subject to any applicable federal, state, local and foreign tax
withholding, and such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of Certificates in respect of which
such deduction and withholding was made. If the Merger Consideration is to be
distributed to a Person (as defined below) other than the Person in whose name
the Certificate surrendered is registered, it shall be a condition of such
distribution that the Certificate so surrendered shall be properly endorsed or
otherwise in proper form for transfer (including signature guarantees, if
required by the Surviving Corporation in its sole discretion) and that the
Person requesting such payment shall pay any transfer or other taxes required by
reason of the payment to a Person
8
other than the registered holder of the Certificate surrendered or establish to
the satisfaction of the Surviving Corporation that such tax has been paid or is
not applicable. Until surrendered in accordance with the provisions of this
Section 3.9, each Certificate (other than Certificates representing shares of
COMSAT Common Stock held by Lockheed Xxxxxx or any Subsidiary of Lockheed
Xxxxxx, shares of COMSAT Common Stock held in the treasury of COMSAT or held by
any Subsidiary of COMSAT and Dissenting Shares) shall represent for all purposes
only the right to receive the Merger Consideration. The Surviving Corporation
shall pay all charges and expenses, including those of the Exchange Agent, in
connection with the distribution of the Merger Consideration. For purposes of
this Agreement, the term "PERSON" means any individual, firm, trust,
partnership, joint venture, association, corporation, limited liability company,
unincorporated organization, Governmental Authority (as hereinafter defined), or
other entity including, without limitation, the International Telecommunications
Satellite Organization ("INTELSAT") or the International Maritime Satellite
Organization ("INMARSAT").
(c) After the Effective Time, there shall be no transfers on the stock
transfer books of the Surviving Corporation of the shares of COMSAT Common Stock
which were outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates are presented to the Surviving Corporation, they
shall be cancelled and exchanged for the Merger Consideration in accordance with
the procedures set forth in this Section 3.9.
(d) No dividends or other distributions declared or made with respect
to shares of Lockheed Xxxxxx Common Stock with a record date after the Effective
Time shall be paid to the holder of any unsurrendered Certificate with respect
to the shares of Lockheed Xxxxxx Common Stock that such holder would be entitled
to receive upon surrender of such Certificate and no cash payment in lieu of
fractional shares of Lockheed Xxxxxx Common Stock shall be paid to any such
holder pursuant to Section 3.10 hereof until such holder shall surrender such
Certificate in accordance with Section 3.9(b) hereof. Subject to the effect of
applicable Laws, including, without limitation, Laws of escheat, following
surrender of any such Certificate, there shall be paid to such holder of shares
of Lockheed Xxxxxx Common Stock issuable in exchange therefor, without interest,
(a) promptly after the time of such surrender, the amount of any cash payable in
lieu of fractional shares of Lockheed Xxxxxx Common Stock to which such holder
is entitled pursuant to Section 3.10 hereof and the amount of dividends or other
distributions with a record date after the Effective Time theretofore paid with
respect to such whole shares of Lockheed Xxxxxx Common Stock, and (b) at the
appropriate payment date, the amount of dividends or other distributions with a
record date after the Effective Time but prior to such surrender and a payment
date subsequent to such surrender payable with respect to such shares of
Lockheed Xxxxxx Common Stock.
(e) All shares of Lockheed Xxxxxx Common Stock issued and cash paid
upon conversion of shares of COMSAT Common Stock in accordance with the terms of
this Article III (including any cash paid pursuant to Section 3.9(d) or Section
3.10 hereof) shall be deemed to have been issued or paid in full satisfaction of
all rights pertaining to the shares of COMSAT Common Stock.
9
SECTION 3.10. NO FRACTIONAL SHARES OF LOCKHEED XXXXXX COMMON STOCK.
(a) No certificates or scrip representing fractional shares of
Lockheed Xxxxxx Common Stock shall be issued upon the surrender for exchange of
Certificates and such fractional share interests will not be considered
deliverable shares under Section 3.7(a) hereof, and will not entitle the owner
thereof to vote or to have any rights of a shareholder of Lockheed Xxxxxx or a
holder of shares of Lockheed Xxxxxx Common Stock.
(b) Notwithstanding any other provision of this Agreement, each holder
of shares of COMSAT Common Stock exchanged pursuant to the Merger who would
otherwise have been entitled to receive a fraction of a share of Lockheed Xxxxxx
Common Stock (after taking into account all Certificates delivered by such
holder) shall receive, in lieu thereof, cash (without interest) in an amount
equal to the product of (i) such fractional part of a share of Lockheed Xxxxxx
Common Stock multiplied by (ii) the closing price per share of Lockheed Xxxxxx
Common Stock reported on the NYSE Composite Tape on the last full trading day
prior to the Effective Time. As promptly as practicable after the determination
of the amount of cash, if any, to be paid to holders of COMSAT Common Stock with
respect to fractional interests, the Exchange Agent shall so notify Lockheed
Xxxxxx, and Lockheed Xxxxxx shall or shall cause the Surviving Corporation to
deposit such amount with the Exchange Agent and shall cause the Exchange Agent
to forward payments to such holders of fractional share interests subject to and
in accordance with the terms hereof.
SECTION 3.11. TERMINATION OF EXCHANGE FUND. Any portion of the
Exchange Fund which remains undistributed to the holders of Certificates for
twelve months after the Effective Time shall be delivered to the Surviving
Corporation or otherwise on the instruction of the Surviving Corporation, and
any holders of the Certificates who have not theretofore complied with this
Article III shall, subject to the effect of applicable Laws, including without
limitation, Laws of escheat, thereafter look only to the Surviving Corporation
and Lockheed Xxxxxx for the Merger Consideration with respect to the shares of
COMSAT Common Stock formerly represented thereby to which such holders are
entitled pursuant to Section 3.7 hereof and Section 3.9 hereof, any cash in lieu
of fractional shares of Lockheed Xxxxxx Common Stock to which such holders are
entitled pursuant to Section 3.10 hereof and any dividends or distributions with
respect to shares of Lockheed Xxxxxx Common Stock to which such holders are
entitled pursuant to Section 3.9(d) hereof. Any such portion of the Exchange
Fund remaining unclaimed by holders of shares of COMSAT Common Stock five years
after the Effective Time (or such earlier date immediately prior to such time as
such amounts would otherwise escheat to or become property of any Governmental
Authority (as defined below)) shall, to the extent permitted by Law, become the
property of the Surviving Corporation free and clear of any claims or interest
of any Person previously entitled thereto. For purposes of this Agreement, the
term "GOVERNMENTAL AUTHORITY" means any agency, bureau, commission, court,
department, officer, political subdivision, or other instrumentality of any
nation or government, any region, state, or other political subdivision thereof
whether federal, state, county or local, domestic or foreign (excluding INTELSAT
or Inmarsat), or any entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining
10
to government, and any Person owned or controlled through stock or capital
ownership or otherwise by any of the foregoing.
SECTION 3.12. NO LIABILITY. None of Lockheed Xxxxxx, Acquisition
Sub, COMSAT, the Surviving Corporation or the Exchange Agent shall be liable to
any Person in respect of any Merger Consideration from the Exchange Fund
delivered to a public official pursuant to any applicable abandoned property,
escheat or similar Law.
SECTION 3.13. LOST CERTIFICATES. If any Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
Person claiming such Certificate to be lost, stolen or destroyed and, if
required by the Surviving Corporation, the posting by such Person of a bond in
such reasonable amount as the Surviving Corporation may direct as indemnity
against any claim that may be made against it with respect to such Certificate,
the Exchange Agent will deliver in exchange for such lost, stolen or destroyed
Certificate the applicable Merger Consideration with respect to the shares of
COMSAT Common Stock formerly represented thereby, any cash in lieu of fractional
shares of Lockheed Xxxxxx Common Stock, and unpaid dividends and distributions
on shares of Lockheed Xxxxxx Common Stock deliverable in respect thereof,
pursuant to this Agreement.
SECTION 3.14. CERTAIN ADJUSTMENTS. Without limiting any other
provision of this Agreement, if, between the date of this Agreement and the
Effective Time, the outstanding shares of Lockheed Xxxxxx Common Stock shall be
changed into a different number or a different class or series of shares by
reason of any reclassification, recapitalization, stock split, reverse stock
split, combination or exchange of shares or any other similar transaction, or
any dividend payable in stock or other securities shall be declared thereon with
a record date within such period, the Merger Consideration established pursuant
to the provisions of Section 3.7 hereof shall be adjusted accordingly to provide
to the holders of COMSAT Common Stock the same economic effect as contemplated
by this Agreement prior to such reclassification, recapitalization, stock split,
reverse stock split, combination, exchange or dividend.
SECTION 3.15. CONDITIONS TO CLOSING OF MERGER.
(a) The obligation of each party to effect the Merger is subject to
the satisfaction at or prior to the Effective Time of the following conditions:
(i) Offer Subsidiary shall have purchased Shares pursuant to the
Offer;
(ii) the Satellite Act, and other applicable Laws, shall have
been amended or repealed, and all applicable proceedings before the
Federal Communications Commission ("FCC") or other Governmental
Authority necessary to implement such amendment or repeal shall have
been completed to the extent necessary to permit the consummation of
the Merger as contemplated by the terms of this Agreement;
11
(iii) any applicable waiting period related to the Merger under
the Antitrust Laws (as hereinafter defined) shall have terminated or
expired and all consents or approvals required under the Antitrust
Laws shall have been received;
(iv) the shares of Lockheed Xxxxxx Common Stock to be issued in
the Merger and such other shares to be reserved for issuance in
connection with the Merger shall have been approved upon official
notice of issuance for listing on the NYSE; and
(v) the Form S-4 (as hereinafter defined) shall have been
declared effective by the SEC under the Securities Act of 1933, as
amended, and all rules and regulations promulgated thereunder (the
"SECURITIES ACT"). No stop order suspending the effectiveness of the
Form S-4 shall have been issued by the SEC and no proceedings for that
purpose shall have been initiated or threatened by the SEC; and
(vi) the shareholders of COMSAT shall have approved the Merger
and this Agreement pursuant to Section 29-367 of the DCBCA.
(b) The obligations of Lockheed Xxxxxx and Acquisition Sub to effect
the Merger are further subject to the satisfaction at or prior to the Effective
Time of the following conditions:
(i) (A) after the date of this Agreement, there shall not have
been any change in existing Law or any new Law promulgated, enacted,
enforced or deemed applicable to COMSAT or to the transactions
contemplated by this Agreement nor (B) shall INTELSAT or Inmarsat have
adopted a plan for privatization, or have been privatized, in whole or
in part, in a manner or pursuant to terms and conditions (or, in the
case of an adopted plan, proposed terms and conditions), in the case
of either clause (A) or clause (B) that Lockheed Xxxxxx determines in
good faith (after consultation with COMSAT) would reasonably be
expected to have a Significant Adverse Effect(as defined below);
(ii) all consents and approvals from Governmental Authorities
(including the FCC) or any other Person required for the consummation
of the Merger as contemplated by the terms of this Agreement shall
have been granted, except where the failure to obtain such consent or
approval, individually or in the aggregate, would not reasonably be
expected to have a Significant Adverse Effect; and
(iii) since the date of this Agreement, there shall not have
occurred any event that has had or would reasonably be expected to
have a Significant Adverse Effect.
12
For purposes of this Agreement, the term "SIGNIFICANT ADVERSE EFFECT" means a
Material Adverse Effect on COMSAT (as hereinafter defined, but including, for
purposes of determining whether there has been a Significant Adverse Effect, any
effects or changes arising out of, resulting from or relating to general
economic, financial or industry conditions) of such seriousness and significance
that a reasonable businessperson in similar circumstances would not proceed with
the Merger on the terms and conditions set forth in this Agreement.
COMSAT will furnish Lockheed Xxxxxx with such certificates and other
documents to evidence the fulfillment of the conditions set forth in this
Section 3.15(b) as Lockheed Xxxxxx may reasonably request.
(c) The obligation of each party to effect the Forward Merger is
further subject to the satisfaction at or prior to the Effective Time of the
following conditions and if any of the following conditions are not satisfied,
but the conditions set forth in Sections 3.15(a) and 3.15(b) are satisfied, the
Reverse Merger shall be effected:
(i) the aggregate fair market value of the shares of Lockheed
Xxxxxx Common Stock, deliverable pursuant to Section 3.7(a) hereof
upon consummation of the Forward Merger, based upon the most recent
closing price of such stock on the NYSE Composite Tape on the last
full trading day prior to the Effective Time (the "STOCK VALUE"),
would be at least 40% of the sum of (A) the Stock Value, (B) the
aggregate amount paid by Lockheed Xxxxxx to purchase Shares pursuant
to the Offer, (C) cash payable in respect of Dissenting Shares
(assuming for these purposes that the per share amount payable in
respect of Dissenting Shares is $50 per share), and (D) cash payable
in respect of fractional shares (assuming for these purposes that each
holder of record of COMSAT Common Stock as of the close of the last
trading day prior to the Effective Time is entitled to receive $50 in
respect of fractional share interests);
(ii) COMSAT shall have received from Skadden, Arps, Slate,
Meagher, & Xxxx LLP, counsel to COMSAT, a written opinion dated as of
the Closing Date, substantially in the form attached hereto as Exhibit
-------
F, based upon representations of COMSAT and Lockheed Xxxxxx (including
-
representations relating to any material transactions currently under
consideration by COMSAT and Lockheed Xxxxxx, respectively) contained
in tax certificates. Such representations shall be those that
customarily would be required in similar circumstances. The written
opinion shall be substantially to the effect that the Forward Merger
will be treated for U.S. federal income tax purposes as a
reorganization qualifying under the provision of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "CODE");
(iii) Lockheed Xxxxxx shall have received from King & Spalding,
counsel to Lockheed Xxxxxx, a written opinion dated as of the Closing
Date, substantially in the form attached hereto as Exhibit F, based
---------
upon representations of COMSAT and Lockheed Xxxxxx (including
representations relating to any material
13
transactions currently under consideration by COMSAT and Lockheed
Xxxxxx, respectively) contained in tax certificates. Such
representations shall be those that customarily would be required in
similar circumstances. The written opinion shall be substantially to
the effect that the Forward Merger will be treated for U.S. federal
income tax purposes as a reorganization qualifying under the provision
of Section 368(a) of the Code; and
(iv) all required consents or approvals from Governmental
Authorities (including the FCC) or any other Person shall have been
obtained to permit the consummation of the Forward Merger, except
where the failure to obtain such consent or approval, individually or
in the aggregate, would not reasonably be expected to have a material
adverse effect on COMSAT's business.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF COMSAT
Except as set forth in the disclosure schedule delivered prior to the
execution hereof to Lockheed Xxxxxx (the "COMSAT DISCLOSURE SCHEDULE") (each
section of which qualifies only the corresponding numbered representation and
warranty or covenant as specified therein), COMSAT represents and warrants to
Lockheed Xxxxxx and Acquisition Sub as follows:
SECTION 4.1. ORGANIZATION. Each of COMSAT and its Subsidiaries is a
corporation, limited liability company or limited partnership duly organized,
validly existing and in good standing under the Laws of the jurisdiction of its
organization or formation and has all requisite power and authority, as a
corporation, limited liability company or limited partnership, as the case may
be, to own, lease and operate its properties and to carry on its business as now
being conducted, except, in the case of Subsidiaries, where the failure to be so
organized, existing and in good standing or to have such power and authority
would not, either individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect on COMSAT and except as set forth in Section 4.1
of the COMSAT Disclosure Schedule. For purposes of this Agreement, the term
"MATERIAL ADVERSE EFFECT" shall mean any change or effect that is materially
adverse to (i) the business, properties, operations, results of operations or
financial condition of the referenced Person and its Subsidiaries, taken as a
whole, other than any effects or changes arising out of, resulting from or
relating to general economic, financial or industry conditions or (ii) the
ability of any of the referenced Person and its Subsidiaries to perform its
obligations under this Agreement and the Carrier Acquisition Agreement. Each of
COMSAT and its Subsidiaries is duly qualified or licensed and in good standing
to do business in each jurisdiction in which the property owned, leased or
operated by it or the nature of the business conducted by it makes such
qualification or licensing necessary, except in such jurisdictions where the
failure to be so duly qualified or licensed and in good standing, either
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect on COMSAT and except as set forth in Section 4.1 of the
COMSAT Disclosure Schedule. COMSAT has heretofore delivered or made available
to Lockheed Xxxxxx accurate and complete
14
copies of the Articles of Incorporation and By-Laws (or other similar
organizational documents in the case of an entity other than a corporation), as
currently in effect, of COMSAT and each of its Subsidiaries. For purposes of
this Agreement, the term "LAWS" shall mean collectively, any law, rule,
regulation, statute, writ, ordinance, judgment, decision, decree, ruling, Order
(as hereinafter defined), award, injunction or other official action of any
Governmental Authority.
SECTION 4.2. AUTHORITY. COMSAT has full corporate power and
authority to execute and deliver each Transaction Agreement to which it is a
party and subject to the limitations of the Satellite Act, COMSAT's Articles of
Incorporation, and COMSAT's Bylaws to consummate the transactions contemplated
thereby. The execution and delivery of each such Transaction Agreement by
COMSAT and the consummation of the transactions contemplated thereby have been
duly and validly authorized by the Board of Directors of COMSAT and no other
corporate proceedings on the part of COMSAT are necessary to authorize any such
Transaction Agreement or to consummate the transactions contemplated thereby,
other than, with respect to the Merger, the approval of the Merger and this
Agreement by the shareholders of COMSAT and, with respect to the amendment to
COMSAT's Articles of Incorporation called for in the Shareholders Agreement (the
"AMENDMENT"), the approval thereof by the Board of Directors and shareholders of
COMSAT as contemplated by the Shareholders Agreement. This Agreement and each
other Transaction Agreement has been duly and validly executed and delivered by
COMSAT and constitutes the valid and binding agreement of COMSAT (and assuming
due and valid authorization, execution and delivery thereof by the other parties
thereto) enforceable against COMSAT in accordance with its terms, except to the
extent that enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or other similar Laws, now or
hereafter in effect, relating to the creditors' rights generally and general
principles of equity (regardless of whether enforceability is considered in a
proceeding at law or in equity). The approval of the Merger, this Agreement and
the Amendment by two-thirds of the votes entitled to be cast by all holders of
COMSAT Common Stock is the only vote of the holders of any class or series of
the capital stock of COMSAT required to approve any Transaction Agreement or the
transactions contemplated thereby. For purposes of this Agreement, the term
"SUBSIDIARY", when used with respect to any Person, means, (i) any corporation
or other entity of which securities or other ownership interests having ordinary
voting power to elect 50% or more of the board of directors or other persons
performing similar functions are at the time directly or indirectly owned by the
Person or (ii) a partnership, limited liability company, joint venture or
similar entity or arrangement however organized or constituted in which the
Person or a Subsidiary of the Person is, at the date of determination, a general
partner, limited partner or member, as the case may be, but only if the Person
or its Subsidiary is entitled at any time to receive 50% or more of the amounts
distributed or distributable by such partnership, limited liability company,
joint venture or other entity or pursuant to such arrangement to the partners or
members thereof or parties thereto, whether upon dissolution, termination or
otherwise.
SECTION 4.3. CONSENTS AND APPROVALS; NO VIOLATIONS. Except for any
applicable requirements of the Securities Act, the Exchange Act, Antitrust Laws,
the Communications Act of 1934, as amended, and all rules and regulations
promulgated thereunder (the "COMMUNICATIONS ACT") and the Satellite Act, the
filing and recordation of articles and/or a
15
certificate of merger with respect to the Merger, as required by the DCBCA and
the DGCL, respectively, the filing with and approval of the NYSE and the SEC
with respect to the delisting and deregistering of the shares of COMSAT Common
Stock, such filings and approvals as may be required under the "takeover" or
"blue sky" Laws of various states or as disclosed in Section 4.3 of the COMSAT
Disclosure Schedule, neither the execution and delivery of this Agreement by
COMSAT nor the consummation by COMSAT of any transaction contemplated hereby
will (i) conflict with or result in any breach of any provision of the Articles
of Incorporation or By-Laws of COMSAT or the articles of incorporation or by-
laws of any of its Subsidiaries (other than those Subsidiaries which, either
individually or in the aggregate, would not be a "significant subsidiary" within
the meaning of Regulation S-X promulgated under the Securities Act) (each such
Subsidiary, other than those described in the preceding parenthetical, herein
called a "SIGNIFICANT SUBSIDIARY"), (ii) require on the part of COMSAT, such
Subsidiary or a Significant Subsidiary any filing with, or the obtaining of any
permit, authorization, consent or approval of, any Governmental Authority or any
other Person, (iii) result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default (or give rise to any
right of termination, amendment, cancellation, acceleration or payment, or to
the creation of any mortgage, deed of trust, lien (statutory or otherwise),
pledge, hypothecation, charge, deposit arrangement, preference, priority,
security interest, restriction or transfer or encumbrance of any kind
(including, without limitation, any conditional sale contract, any capitalized
lease or any financing lease having substantially the same economic effect as
the foregoing and the filing of or agreement to give any financing statement
under the Uniform Commercial Code or comparable Law of any jurisdiction to
evidence any of the foregoing) (collectively, "LIENS") under any of the terms,
conditions or provisions of any note, mortgage, indenture, other evidence of
indebtedness, guarantee, license, agreement or other contract, instrument or
obligation to which COMSAT or any of its Subsidiaries is a party or by which any
of them or any of their Assets may be bound (including, without limitation, the
COMSAT Contracts (as hereinafter defined)) or (iv) violate any Law applicable to
COMSAT or any of its Subsidiaries or any of their Assets (as defined below),
except for such requirements, defaults, rights or violations under clauses (ii),
(iii) and (iv) above (x) which, either individually or in the aggregate, would
not reasonably be expected to have a Material Adverse Effect on COMSAT or (y)
which become applicable as a result of the business or activities in which
Lockheed Xxxxxx or Acquisition Sub is or proposes to be engaged (other than the
business or activities of COMSAT and its Subsidiaries, considered independently
of the ownership thereof by Lockheed Xxxxxx and Acquisition Sub) or as a result
of other facts or circumstances specific to Lockheed Xxxxxx or Acquisition Sub.
For purposes of this Agreement, the term "ASSETS" means all assets, of whatever
nature, tangible, intangible, real or personal.
SECTION 4.4. CAPITALIZATION.
(a) As of the close of business on September 11, 1998, the authorized
capital stock of COMSAT consisted of (i) 100,000,000 shares of COMSAT Common
Stock, of which 52,494,820 shares were issued and outstanding of which
52,475,862 shares were Series I Common Stock, inclusive of shares subject to
restrictions, and 18,958 shares were Series II Common Stock, and (ii) 5,000,000
shares of Preferred Stock, without par value ("COMSAT PREFERRED STOCK"), of
which no shares were issued and outstanding. Since the close of business
16
on September 11, 1998 through the date hereof, no shares of Series II Common
Stock in addition to those set forth in the preceding sentence have been issued.
As of the close of business on September 11, 1998, (i) 3,562,415 shares of
COMSAT Common Stock were issuable upon the exercise of outstanding vested and
non-vested options (the "COMSAT STOCK OPTIONS") granted under COMSAT's stock
option plans (the "STOCK OPTION PLANS") and (ii) not more than 9,000 shares of
COMSAT Common Stock were issuable upon the exercise of other rights to acquire
shares of COMSAT Common Stock granted under other programs of COMSAT or any of
its Subsidiaries that afford to employees or directors of COMSAT and its
Subsidiaries the opportunity to acquire shares of COMSAT Common Stock, each as
amended (such programs together with the Stock Option Plans, the "COMSAT STOCK
PLANS"), copies of which have previously been delivered to Lockheed Xxxxxx.
Since the close of business on September 11, 1998, COMSAT has not granted any
COMSAT Stock Options, issued any other right to acquire shares of its capital
stock or granted any restricted shares or restricted share units of COMSAT
Common Stock under the COMSAT Stock Plans, or otherwise issued any shares of its
capital stock except (i) as permitted by this Agreement, (ii) as set forth in
Section 4.4(a) of the COMSAT Disclosure Schedule, (iii) upon exercise of the
COMSAT Stock Options or (iv) pursuant to a nondiscretionary grant under the
COMSAT Savings and Profit Sharing Plan, the COMSAT Employee Stock Purchase Plan,
or the COMSAT Investors Plus Plan in accordance with the current terms of such
Plan. Except as set forth above and as otherwise permitted in this Agreement,
there are not now, and at the Effective Time there will not be, any Equity
Securities of COMSAT issued or outstanding. For purposes of this Agreement, the
term "EQUITY SECURITIES" of a Person means the capital stock of the Person and
all other securities (whether or not issued by such Person but excluding any
exchange traded or privately granted options) convertible into or exchangeable
or exercisable for any shares of its capital stock, all rights or warrants to
subscribe for or to purchase, all options for the purchase of, and all calls,
commitments, agreements, arrangements, undertakings or claims of any character
relating to, any shares of its capital stock and any securities convertible into
or exchangeable or exercisable for any of the foregoing.
(b) All outstanding shares of capital stock of COMSAT are duly
authorized, validly issued, fully paid and nonassessable and are not subject to
preemptive rights.
(c) Except with respect to the outstanding shares of COMSAT Common
Stock and the COMSAT Stock Options, there are no outstanding bonds, debentures,
notes or other indebtedness or other securities of COMSAT having the right to
vote (or convertible into, or exchangeable for, securities having the right to
vote) on any matters on which shareholders of COMSAT may vote.
(d) Except as set forth in Section 4.4(d) of the COMSAT Disclosure
Schedule or with respect to the COMSAT Stock Options, the Shareholders
Agreement, the restrictions set forth at Sections 303 and 304 of the Satellite
Act (47 U.S.C. (S)(S)733 and 734), resolutions by the Board of Directors of
COMSAT (which currently restrict the exercise of voting rights with respect to
the voting of shares of COMSAT Common Stock held by a shareholder that is not an
Authorized Carrier in excess of five per centum (5%) of the issued and
outstanding COMSAT Common Stock) and the restriction pursuant to Section 5.02(e)
of COMSAT's Articles of
17
Incorporation (which currently limits ownership of COMSAT stock by any
shareholder that is not an Authorized Carrier to ten per centum (10%) of the
issued and outstanding COMSAT Common Stock), there is no agreement or
arrangement restricting the voting or transfer of the Equity Securities of
COMSAT.
(e) Except as set forth in Section 4.4(e) of the COMSAT Disclosure
Schedule, there are no outstanding contractual obligations, commitments,
understandings or arrangements of COMSAT or any of its Subsidiaries to
repurchase, redeem or otherwise acquire, reacquire or make any payment in
respect of any Equity Securities of COMSAT or any of its Subsidiaries.
(f) Except as contemplated by the Registration Rights Agreement, there
are no agreements or arrangements to which COMSAT or any of its Subsidiaries is
a party pursuant to which COMSAT is required to register its Equity Securities
under the Securities Act.
SECTION 4.5. ABSENCE OF CERTAIN CHANGES. Except (i) as set forth in
Section 4.5 of the COMSAT Disclosure Schedule, (ii) as set forth in COMSAT's
Annual Report on Form 10-K for the year ended December 31, 1997 (the "COMSAT
FORM 10-K"), COMSAT's Quarterly Reports on Form 10-Q for the three month periods
ended March 31, 1998 and June 30, 1998, respectively, or any other document
filed prior to the date hereof pursuant to Section 13(a) or 15(d) of the
Exchange Act, or (iii) as contemplated by this Agreement, from June 30, 1998
until the date hereof, neither COMSAT nor any of its Subsidiaries has (x) taken
any of the prohibited actions set forth in Section 6.1 hereof, (y) suffered any
changes that, either individually or in the aggregate, would reasonably be
expected to have a Material Adverse Effect on COMSAT or (z) conducted its
business or operations in any material respect other than in the ordinary course
of business.
SECTION 4.6. REPORTS. For the purposes of this Agreement, the
"COMSAT SEC DOCUMENTS" means each registration statement, report, proxy
statement or information statement of COMSAT prepared by it since January 1,
1996, in the form (including exhibits and any amendments thereto) filed with the
SEC. As of the respective filing dates, the COMSAT SEC Documents (i) complied as
to form in all material respects with the applicable requirements of the
Securities Act and the Exchange Act and (ii) did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements made therein, in the light of
the circumstances under which they were made, not misleading. Each of the
consolidated balance sheets included in or incorporated by reference into the
COMSAT SEC Documents (including the related notes and schedules) fairly presents
the consolidated financial position of COMSAT and its Subsidiaries as of its
date, and each of the consolidated statements of income, retained earnings and
cash flows included in or incorporated by reference into the COMSAT SEC
Documents (including any related notes and schedules) fairly presents the
results of operations, retained earnings or cash flows, as the case may be, of
COMSAT and its Subsidiaries for the periods set forth therein (subject, in the
case of unaudited statements, to normal year-end audit adjustments which would
not be material in amount or effect), in each case in accordance with United
States generally accepted accounting principles ("GAAP") consistently applied
during the periods involved, except as may be noted therein. None of COMSAT and
its Subsidiaries has any Liabilities (as defined below) required
18
to be disclosed in a balance sheet of COMSAT or in the notes thereto prepared in
accordance with GAAP consistently applied except (a) Liabilities reflected on,
or reserved against in, a balance sheet of COMSAT or in the notes thereto, and
included in the COMSAT SEC Documents, (b) Liabilities incurred since June 30,
1998 in the ordinary course of business and (c) as set forth in Section 4.6 of
the COMSAT Disclosure Schedule. For purposes of this Agreement, the term
"LIABILITIES" means all debts, claims, actions, demands, rights, costs,
expenses, liabilities, losses, damages, commitments and obligations (in each
case whether fixed, contingent or absolute, accrued or not accrued, that would
be required by GAAP to be reflected in financial statements of COMSAT or
disclosed in the notes thereto).
SECTION 4.7. NO DEFAULT. Except as set forth in Section 4.7 of the
COMSAT Disclosure Schedule, neither COMSAT nor any of its Subsidiaries is in
default or violation (and no event has occurred which with notice or the lapse
of time or both would constitute a default or violation) of any term, condition
or provision of (i) its articles of incorporation or by-laws (or other similar
organizational documents in the case of an entity other than corporation), (ii)
any note, mortgage, indenture other evidence of indebtedness, guarantee,
license, agreement or other contract, instrument or contractual obligation to
which COMSAT or any of its Subsidiaries is now a party or by which they or any
of their Assets may be bound, or (iii) any Law applicable to COMSAT or any of
its Subsidiaries, except for defaults or violations under clause (i), clause
(ii) and clause (iii) above that, (A) in the aggregate would not reasonably be
expected to have a Material Adverse Effect on COMSAT or (B) become applicable as
a result of the business or activities in which Lockheed Xxxxxx or Acquisition
Sub is or proposes to be engaged (other than the business or activities of
COMSAT and its Subsidiaries, considered independently of the ownership thereof
by Lockheed Xxxxxx and Acquisition Sub) or as a result of any other facts or
circumstances specific to Lockheed Xxxxxx or Acquisition Sub.
SECTION 4.8. LITIGATION; COMPLIANCE WITH LAW.
(a) Except as set forth in Section 4.8(a) of the COMSAT Disclosure
Schedule, as of the date hereof, there are no actions, suits, claims,
proceedings or investigations pending or, to the knowledge of COMSAT,
threatened, involving COMSAT or any of its Subsidiaries or any of their
respective Assets (or any Person whose liability therefrom may have been
retained or assumed by COMSAT or any of its Subsidiaries either contractually or
by operation of law), by or before any court, Governmental Authority or by any
other Person that, either individually or in the aggregate, if determined
adversely to COMSAT or such Subsidiary, would reasonably be expected to have a
Material Adverse Effect on COMSAT.
(b) Except as disclosed by COMSAT in COMSAT SEC Documents filed since
January 1, 1998 (the "RECENT SEC DOCUMENTS") or as set forth in Section 4.8(b)
of the COMSAT Disclosure Schedule, COMSAT and its Subsidiaries are now being
and, to the knowledge of COMSAT, since January 1, 1994 have been operated in
substantial compliance with all Laws, except for violations that, either
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect on COMSAT.
19
SECTION 4.9. EMPLOYEE BENEFIT PLANS; ERISA.
(a) Except as set forth in Section 4.9(a) of the COMSAT Disclosure
Schedule, (i) each "employee benefit plan" (as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")), and all
other employee benefit, bonus, incentive, stock option (or other equity-based),
severance, change in control, welfare (including post-retirement medical and
life insurance) and fringe benefit plans (whether or not subject to ERISA)
maintained or sponsored by COMSAT or its Subsidiaries or any trade or business,
whether or not incorporated, that would be deemed a "single employer" within the
meaning of Section 4001 of ERISA (an "ERISA AFFILIATE"), for the benefit of any
employee or former employee of COMSAT or any of its ERISA Affiliates (the
"PLANS") is, and has been, operated in all material respects in accordance with
its terms and in substantial compliance (including the making of filings with
Governmental Authorities) with all applicable Laws, including, without
limitation, ERISA and the applicable provisions of the Code, (ii) each of the
Plans intended to be "qualified" within the meaning of Section 401(a) of the
Code has been determined by the Internal Revenue Service (the "IRS") to be so
qualified and is not under audit by the IRS or the Department of Labor or the
subject of IRS review under the IRS Employee Plans Compliance Resolution System
and COMSAT knows of no fact or set of circumstances that is reasonably likely to
adversely affect such qualification, (iii) no material withdrawal liability with
respect to any "multiemployer plan" (as defined in Section 4001(a)(3) of ERISA)
would be incurred by COMSAT and its ERISA Affiliates in the event of a
withdrawal from such plan, (iv) no "reportable event", as such term is defined
in Section 4043(c) of ERISA (for which the 30-day notice requirement to the
Pension Benefit Guaranty Corporation ("PBGC") has not been waived), has occurred
with respect to any Plan that is subject to Title IV of ERISA, and (v) there are
no material pending or, to the knowledge of COMSAT, threatened claims (other
than routine claims for benefits) by, on behalf of or against any of the Plans
or any trusts related thereto. Set forth in Section 4.9(a) of the COMSAT
Disclosure Schedule is a list of all Plans. A true and complete copy of each of
the Plans and, if applicable, the summary plan description, any summary of
material modifications, the most recent Form 5500, and the most recently issued
IRS determination letter and actuarial report with respect to each of the Plans
has previously been provided to Lockheed Xxxxxx and Acquisition Sub.
(b) (i) No Plan has incurred an "Accumulated Funding Deficiency" (as
defined in Section 302 of ERISA or Section 412 of the Code), whether or not
waived, (ii) neither COMSAT nor any ERISA Affiliate has incurred any Liability
under Title IV of ERISA except for required premium payments to the PBGC, which
payments have been made when due, and no events have occurred which are
reasonably likely to give rise to any Liability of COMSAT or an ERISA Affiliate
under Title IV of ERISA or which could reasonably be anticipated to result in
any claims being made against Lockheed Xxxxxx or its affiliates by the PBGC,
(iii) no amendment has been adopted which would require the posting of security
in accordance with Section 401(a)(29) of the Code, and (iv) COMSAT has not
incurred any material withdrawal liability (including any contingent or
secondary withdrawal liability) within the meaning of Section 4201 and 4204 of
ERISA to any multiemployer plan (within the meaning of Section 4001(a)(3) of
ERISA) which has not been satisfied in full.
20
(c) Except as set forth in Section 4.9(c) of the COMSAT Disclosure
Schedule, with respect to each Plan that is subject to Title IV of ERISA or that
provides post-retirement life or medical insurance or other post-employment
benefits (other than continuation coverage pursuant to Section 4980B(f) of the
Code or Sections 601 to 606 of ERISA) (i) COMSAT has provided to Acquisition Sub
a complete copy of the most recent actuarial valuation report prepared for such
Plan, (ii) the assets and liabilities in respect of the accrued benefits as set
forth in the most recent actuarial valuation report prepared by the Plan's
actuary fairly present the funded status of such Plan in all material respects,
and (iii) since the date of such valuation report there has been no material
adverse change in the funded status of any such Plan.
(d) Neither COMSAT nor any ERISA Affiliate has failed to make any
contribution or payment to any Plan or multiemployer plan which in either case
has resulted or could result in the imposition of a Lien or the posting of a
bond or other security under ERISA or the Code.
(e) Except as set forth in Section 4.9(e) of the COMSAT Disclosure
Schedule or as expressly provided for in this Agreement, the consummation of the
transactions contemplated by this Agreement will not (i) entitle any current or
former employee, officer or director of COMSAT or any Subsidiary to severance
pay, unemployment compensation or any other payment, (ii) accelerate the time of
payment or vesting, or increase the amount of compensation due any such
employee, officer or director or (iii) violate any provision of any Plan
document.
(f) Except as set forth in Section 4.9(f) of the COMSAT Disclosure
Schedule, COMSAT has reserved the right to amend or terminate the Plans
according to the terms of the Plans and with respect to any Plan that has been
amended or terminated within the five year period preceding the date of this
Agreement, such amendment or termination was permitted by the terms of the Plan.
SECTION 4.10. INTELLECTUAL PROPERTY; YEAR 2000.
(a) To the knowledge of COMSAT, COMSAT and its Subsidiaries do not now
and have not in the past used Intellectual Property in the conduct of their
respective businesses which conflicts with or infringes upon any proprietary
rights of others except where such conflict or infringement, individually or in
the aggregate, would not reasonably be expected to have a Material Adverse
Effect on COMSAT. For purposes of this Agreement, the term "INTELLECTUAL
PROPERTY" means trademarks, trade names, service marks, service names, xxxx
registrations, logos, assumed names, copyright registrations, patents and all
applications therefor and all other similar proprietary rights.
(b) As described in Section 4.10(b) of the COMSAT Disclosure Schedule,
COMSAT has implemented a program that is designed to ensure that prior to
December 31, 1999, all of the computer software programs, databases and
compilations, computer firmware, computer hardware (whether general or special
purpose), and other similar or related items of automated, computerized, and/or
software system(s) that are to be used or relied on by
21
COMSAT or any of its Subsidiaries in the conduct of their respective businesses
will not malfunction, will not cease to function, will not generate incorrect
data, and will not provide incorrect results when processing, providing, and/or
receiving date-related data into and between the twentieth and twenty-first
centuries. The program includes consideration of the status of the major
vendors and suppliers of COMSAT and its Subsidiaries and of the trustees of
employee benefit plans as defined in ERISA Section 3(3) maintained or sponsored
by COMSAT or its Subsidiaries with respect to this issue.
SECTION 4.11. CERTAIN CONTRACTS AND ARRANGEMENTS.
(a) COMSAT has delivered or otherwise made available (or will make
available) to Lockheed Xxxxxx true, correct and complete copies of all contracts
and agreements (and all amendments, modifications and supplements thereto and
all side letters to which COMSAT is a party affecting the obligations of any
party thereunder) to which COMSAT or any of its Subsidiaries is a party or by
which any of their Assets are bound that are material to the business or Assets
of COMSAT and its Subsidiaries taken as a whole, including, without limitation,
all: (i) employment, consulting, non-competition, severance, golden parachute or
indemnification contracts with past or present directors, officers or employees
(including, without limitation, any contract to which COMSAT is a party
involving employees of COMSAT); (ii) contracts granting a right of first refusal
or first negotiation; (iii) partnership or joint venture agreements; (iv)
agreements for the acquisition, sale or lease of material Assets of COMSAT (by
merger, purchase or sale of Assets or stock or otherwise); (v) contracts or
agreements with any Governmental Authority or INTELSAT or Inmarsat; (vi)
contracts or arrangements limiting or restraining COMSAT, any of COMSAT's
Subsidiaries or any successor thereto from engaging or competing in any
business; and (vii) all commitments and agreements to enter into any of the
foregoing (collectively, the "COMSAT CONTRACTS").
(b) Except as set forth in Section 4.11(b) of the COMSAT Disclosure
Schedule:
(i) to the knowledge of COMSAT, there is no default under any
COMSAT Contract either by COMSAT or any of its Subsidiaries or, by any
other party thereto, and no event has occurred that with the lapse of
time or the giving of notice or both would constitute a default
thereunder by COMSAT or any of its Subsidiaries or, to the knowledge
of COMSAT, any other party, except for defaults or events that, either
individually or in the aggregate, would not reasonably be expected to
have a Material Adverse Effect on COMSAT; and
(ii) no party to any such COMSAT Contract has given notice to
COMSAT of or made a claim against COMSAT with respect to any breach or
default thereunder, except for defaults or breaches that, either
individually or in the aggregate, would not reasonably be expected to
have a Material Adverse Effect on COMSAT.
22
(c) Section 4.11(c) of the COMSAT Disclosure Schedule sets forth a
list of each material contract to which COMSAT or any of its Subsidiaries is a
party or may be bound and under the terms of which any of the rights or
obligations of COMSAT or its Subsidiaries will be modified or altered
(including, without limitation, any acceleration of rights or obligations
thereunder pursuant to the terms of any such contract, agreement or arrangement)
as a result of the transactions contemplated by this Agreement.
SECTION 4.12. TAXES. Except as otherwise disclosed in Section 4.12
of the COMSAT Disclosure Schedule and except for those matters which, either
individually or in the aggregate, would not reasonably be expected to result in
a Material Adverse Effect on COMSAT:
(a) COMSAT and each of its Subsidiaries have filed (or have had filed
on their behalf) all Tax Returns required by applicable Law to be filed by any
of them;
(b) COMSAT and each of its Subsidiaries have paid (or have had paid on
their behalf) all Taxes due, and have established (or have had established on
their behalf and for their sole benefit and recourse) an adequate accrual (in
accordance with GAAP) for the payment of all other Taxes;
(c) there are no Liens for any Taxes upon the Assets of COMSAT or any
of its Subsidiaries, other than statutory Liens for Taxes not yet due and
payable and Liens for real estate Taxes being contested in good faith;
(d) no Audit is pending with respect to any Taxes due from COMSAT or
any Subsidiary. There are no outstanding waivers extending the statutory period
of limitation relating to the payment of Taxes due from COMSAT or any Subsidiary
for any taxable period ending prior to the expiration of the Offer which are
expected to be outstanding as of the expiration of the Offer;
(e) neither COMSAT nor any of its Subsidiaries is a party to, is bound
by, or has any obligation under, a Tax sharing contract or other agreement or
arrangement for the allocation, apportionment, sharing, indemnification, or
payment of Taxes;
(f) neither COMSAT nor any of its Subsidiaries has made an election
under Section 341(f) of the Code;
(g) the statute of limitations for all Tax Returns of COMSAT and each
of its Subsidiaries for all years through 1993 have expired for all federal,
California, Maryland and Connecticut Tax purposes, or such Tax Returns have been
subject to a final Audit;
(h) neither COMSAT nor any of its Subsidiaries has received any
written notice of deficiency, assessment or adjustment from the IRS or any other
Governmental Authority responsible for the administration of any Taxes that has
not been fully paid or finally settled, and any such deficiency, adjustment or
assessment shown on such schedule is being
23
contested in good faith through appropriate proceedings and adequate reserves
have been established on COMSAT's financial statements therefor. To the
knowledge of COMSAT, there are no indications of any other deficiencies,
assessments or adjustments with respect to COMSAT or any of its Subsidiaries;
and
(i) neither COMSAT nor any of its Subsidiaries is a party to any
agreement, contract or other arrangement that would result, separately or in the
aggregate, in the requirement to pay any "excess parachute payments" within the
meaning of Section 280G of the Code or any gross-up in connection with such an
agreement, contract or arrangement.
(j) For purposes of this Agreement, capitalized terms have the
following meaning:
(i) "AUDIT" means any audit, assessment or other examination of
Taxes or Tax Returns by the IRS or any other Governmental Authority
responsible for the administration of any Taxes, proceeding or appeal of
such proceeding relating to Taxes.
(ii) "TAXES" means all federal, state, local and foreign taxes,
and other assessments of a similar nature (whether imposed directly or
through withholding) including, but not limited to income, excise,
property, sales, use (or any similar taxes), gains, transfer, franchise,
payroll, value-added, withholding, Social Security, business license fees,
customs, duties and other taxes, assessments, charges, or other fees
imposed by a Governmental Authority, including any interest, additions to
tax, or penalties applicable thereto.
(iii) "TAX RETURNS" shall mean all federal, state, local and
foreign tax returns, declarations, statements, reports, schedules, forms
and information returns and any amended Tax Return relating to Taxes.
SECTION 4.13. GOVERNMENTAL AUTHORIZATIONS. Each of COMSAT and
its Subsidiaries is in possession of all licenses, permits, franchises,
certificates, consents, approvals and other authorizations from appropriate
Governmental Authorities (including the FCC) necessary for COMSAT or any of its
Subsidiaries to own, lease and operate its properties or to carry on their
respective businesses as they are now being conducted ("GOVERNMENTAL
AUTHORIZATIONS"), and all such Governmental Authorizations are valid and in full
force and effect, except where the failure to have any of the Governmental
Authorizations, either individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect on COMSAT. No suspension or
termination of any material Governmental Authorization is pending or, to the
knowledge of COMSAT, threatened, except for suspensions or terminations which,
either individually or in the aggregate, would not reasonably be expected to
have a Material Adverse Effect on COMSAT and except as set forth in Section 4.13
of the COMSAT Disclosure Schedule. Neither COMSAT nor any of its Subsidiaries
is in conflict with, or in default or violation of, any material Governmental
Authorization except for conflicts, defaults, or violations which, either
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect on COMSAT.
24
SECTION 4.14. ENVIRONMENTAL MATTERS. Except as set forth in
Section 4.14 of the COMSAT Disclosure Schedule, COMSAT and each of its
Subsidiaries are in material compliance with all applicable federal, state and
local Laws relating to pollution or protection of human health or the
environment (including, without limitation, ambient air, surface water, ground
water, land surface or subsurface strata) (collectively, "ENVIRONMENTAL LAWS"),
except for instances of noncompliance that, either individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect on
COMSAT. Such compliance includes, but is not limited to, the possession by
COMSAT and its Subsidiaries of all material permits and other Governmental
Authorizations required under applicable Environmental Laws, and compliance with
the terms and conditions thereof. Except as set forth in Section 4.14 of the
COMSAT Disclosure Schedule, neither COMSAT nor any of its Subsidiaries has
received written notice of, or to the knowledge of COMSAT, is the subject of,
any actions, causes of action, claims, investigations, demands or notices by any
Person alleging liability under or noncompliance with any Environmental Law
("ENVIRONMENTAL CLAIMS") that, either individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect on COMSAT. To the
knowledge of COMSAT, there are no circumstances that are reasonably likely to
prevent or interfere with such material compliance in the future.
SECTION 4.15. BROKERAGE FEES AND COMMISSIONS. Except for
Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation, no Person is entitled to
receive from COMSAT or any of its Subsidiaries any investment banking, brokerage
or finder's fee or fees for financial consulting or advisory services in
connection with this Agreement or any of the transactions contemplated hereby.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF LOCKHEED XXXXXX AND ACQUISITION SUB
Lockheed Xxxxxx and Acquisition Sub represent and warrant to COMSAT as
follows:
SECTION 5.1. ORGANIZATION. Each of Lockheed Xxxxxx, Acquisition
Sub and Offer Subsidiary is a corporation or limited liability company, as the
case may be, duly organized, validly existing and in good standing under the
Laws of the jurisdiction of its incorporation or formation, as the case may be,
and has all requisite corporate or limited liability company power and
authority, as the case may be, to own, lease and operate its properties and to
carry on its business as now being conducted, except where the failure to be so
organized, existing and in good standing or to have such power and authority
would not, in the aggregate, reasonably be expected to have a Material Adverse
Effect on Lockheed Xxxxxx.
SECTION 5.2. AUTHORITY. Each of Lockheed Xxxxxx, Acquisition Sub
and Offer Subsidiary has full corporate or limited liability company power and
authority, as the case may
25
be, to execute and deliver each Transaction Agreement to which it is a party and
to consummate the transactions contemplated thereby. The execution and delivery
of each such Transaction Agreement and the consummation of the transactions
contemplated thereby have been duly and validly authorized by the Boards of
Directors of Lockheed Xxxxxx or Acquisition Sub, as the case may be, and by
Lockheed Xxxxxx as the sole member of Offer Subsidiary and the sole stockholder
of Acquisition Sub; and no other corporate or limited liability company
proceedings on the part of Lockheed Xxxxxx, Acquisition Sub or Offer Subsidiary,
as the case may be, are necessary to authorize any such Transaction Agreement or
to consummate the transactions contemplated thereby. This Agreement and each
such other Transaction Agreement has been duly and validly executed and
delivered by Lockheed Xxxxxx, Acquisition Sub or Offer Subsidiary, as the case
may be, and constitutes the valid and binding agreement of Lockheed Xxxxxx,
Acquisition Sub or Offer Subsidiary, as the case may be, (and assuming due and
valid authorization, execution and delivery thereof by the other parties
thereto) enforceable against Lockheed Xxxxxx, Acquisition Sub or Offer
Subsidiary, as the case may be, in accordance with its terms, except to the
extent that enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or other similar Laws, now or
hereafter in effect, relating to creditors' rights generally and general
principles of equity (regardless of whether enforceability is considered in a
proceeding at law or in equity).
SECTION 5.3. CONSENTS AND APPROVALS; NO VIOLATIONS. Except for
any applicable requirements of the Securities Act, the Exchange Act, Antitrust
Laws, the Communications Act, the Satellite Act, the NYSE, the filing and
recordation of articles and/or a certificate of merger with respect to the
Merger as required by the DCBCA and the DGCL, respectively, any filings required
by the Investment Canada Act, such filings and approvals as may be required
under the "takeover" or "blue sky" Laws of various states, or as contemplated by
Section 6.19 hereof or otherwise by this Agreement, neither the execution and
delivery of this Agreement or the Carrier Acquisition Agreement by Lockheed
Xxxxxx, Acquisition Sub or Offer Subsidiary, as the case may be, nor the
consummation by Lockheed Xxxxxx, Acquisition Sub or Offer Subsidiary, as the
case may be, of any transaction contemplated hereby and thereby will (i)
conflict with or result in any breach of any provision of the charter or by-laws
of Lockheed Xxxxxx or Acquisition Sub, or the limited liability company
agreement or certificate of formation of Offer Subsidiary, as the case may be,
(ii) require on the part of Lockheed Xxxxxx, Acquisition Sub or Offer Subsidiary
any filing with, or the obtaining of any permit, authorization, consent or
approval of, any Governmental Authority or any other Person, (iii) result in a
violation or breach of, or constitute (with or without due notice or lapse of
time or both) a default (or give rise to any right of termination, amendment,
cancellation, acceleration or payment, or to the creation of a Lien) under any
of the terms, conditions or provisions of any note, mortgage, indenture, other
evidence of indebtedness, guarantee, license, agreement or other contract,
instrument or obligation to which Lockheed Xxxxxx or any of its Subsidiaries is
a party or by which any of them or any of their Assets may be bound, or (iv)
violate any Law applicable to Lockheed Xxxxxx or any of its Subsidiaries or any
of their Assets, except for such requirements, defaults, rights or violations
under clauses (ii), (iii) and (iv) above that would not reasonably be expected
to have a Material Adverse Effect on Lockheed Xxxxxx.
26
SECTION 5.4. CAPITALIZATION.
(a) As of the close of business on September 11, 1998, the authorized
capital stock of Lockheed Xxxxxx consisted of (i) 1,500,000,000 shares of
Lockheed Xxxxxx Common Stock, of which 195,848,551 shares were issued and
outstanding, (ii) 50,000,000 shares of Series Preferred Stock, par value $1.00
per share of which no shares were issued and outstanding ("LOCKHEED XXXXXX
SERIES PREFERRED STOCK") and (iii) 20,000,000 shares of Series A preferred
stock, par value $1.00 per share ("LOCKHEED XXXXXX PREFERRED STOCK"), of which
no shares of any class or series were issued and outstanding. As of the close
of business on September 11, 1998, 12,023,408 shares of Lockheed Xxxxxx Common
Stock were issuable upon the exercise of outstanding vested and non-vested
options and other rights to acquire shares of Lockheed Xxxxxx Common Stock
("LOCKHEED XXXXXX STOCK OPTIONS") granted under any stock option plan, program,
employee stock purchase plan, employment agreement or similar arrangement of
Lockheed Xxxxxx or any Subsidiaries, each as amended (the "LOCKHEED XXXXXX STOCK
PLANS").
(b) All outstanding shares of capital stock of Lockheed Xxxxxx are,
and all shares of Lockheed Xxxxxx Common Stock issuable pursuant to this
Agreement when issued, will be, duly authorized, validly issued, fully paid and
nonassessable and are not subject to preemptive rights.
(c) Except with respect to the outstanding shares of Lockheed Xxxxxx
Common Stock and the Lockheed Xxxxxx Stock Options, there are no outstanding
bonds, debentures, notes or other indebtedness or other securities of Lockheed
Xxxxxx having the right to vote (or convertible into, or exchangeable for,
securities having the right to vote) on any matters on which shareholders of
Lockheed Xxxxxx may vote.
(d) Except with respect to the Lockheed Xxxxxx Stock Options, there
are no outstanding securities, options, warrants, calls, rights, commitments,
agreements, arrangements or undertakings of any kind to which Lockheed Xxxxxx or
any of its Subsidiaries is a party or by which any them is bound obligating
Lockheed Xxxxxx or any of its Subsidiaries to issue, deliver or sell, or cause
to be issued, delivered or sold, additional shares of capital stock or other
Equity Securities of Lockheed Xxxxxx or any of its Subsidiaries or obligating
Lockheed Xxxxxx or any of its Subsidiaries to issue, grant, extend or enter into
any such security, option, warrant, call, right, commitment, agreement,
arrangement or undertaking.
SECTION 5.5. ABSENCE OF CERTAIN CHANGES. Except (i) as set forth
in Lockheed Xxxxxx'x Annual Report on Form 10-K for the year ended December 31,
1997 (the "LOCKHEED XXXXXX FORM 10-K"), Lockheed Xxxxxx'x Quarterly Reports on
Form 10-Q for the three month periods ended March 31, 1998 and June 30, 1998,
respectively, or any other document filed prior to the date hereof pursuant to
Section 13(a) or 15(d) of the Exchange Act, or (ii) as contemplated by this
Agreement, from June 30, 1998 until the date hereof, neither Lockheed Xxxxxx nor
any of its Subsidiaries has suffered any changes that, either individually or in
the aggregate, would reasonably be expected to have a Material Adverse Effect on
Lockheed Xxxxxx.
27
SECTION 5.6. REPORTS. For the purposes of this Agreement, the
"LOCKHEED XXXXXX SEC DOCUMENTS" means each registration statement, report, proxy
statement or information statement of Lockheed Xxxxxx prepared by it since
January 1, 1996, in the form (including exhibits and any amendments thereto)
filed with the SEC. As of the respective filing dates, the Lockheed Xxxxxx SEC
Documents (i) complied as to form in all material respects with the applicable
requirements of the Securities Act and the Exchange Act and (ii) did not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements made therein,
in the light of the circumstances under which they were made, not misleading.
Each of the consolidated balance sheets included in or incorporated by reference
into the Lockheed Xxxxxx SEC Documents (including the related notes and
schedules) fairly presents the consolidated financial position of Lockheed
Xxxxxx and its Subsidiaries as of its date, and each of the consolidated
statements of income, retained earnings and cash flows included in or
incorporated by reference into the Lockheed Xxxxxx SEC Documents (including any
related notes and schedules) fairly presents the results of operations, retained
earnings or cash flows, as the case may be, of Lockheed Xxxxxx and its
Subsidiaries for the periods set forth therein (subject, in the case of
unaudited statements, to normal year-end audit adjustments which would not be
material in amount or effect), in each case in accordance with GAAP consistently
applied during the periods involved, except as may be noted therein. None of
Lockheed Xxxxxx and its Subsidiaries has any Liabilities required to be
disclosed in a balance sheet of Lockheed Xxxxxx or in the notes thereto prepared
in accordance with GAAP consistently applied except (a) Liabilities reflected
on, or reserved against in, a balance sheet of Lockheed Xxxxxx or in the notes
thereto, and included in the Lockheed Xxxxxx SEC Documents and (b) Liabilities
incurred since June 30, 1998 in the ordinary course of business.
SECTION 5.7. OPINION OF FINANCIAL ADVISOR. Bear, Xxxxxxx & Co.
Inc. has delivered to the Board of Directors of Lockheed Xxxxxx its opinion
that, as of the date hereof, the terms of this Agreement are fair to the holders
of Lockheed Xxxxxx Common Stock from a financial point of view.
SECTION 5.8. BROKERS. Except for Bear, Xxxxxxx & Co. Inc., no
Person is entitled to receive from Lockheed Xxxxxx or any of its Subsidiaries
any investment banking, brokerage or finder's fee or fees for financial
consulting or advisory services in connection with this Agreement or the
transactions contemplated hereby.
ARTICLE VI
COVENANTS
SECTION 6.1. CONDUCT OF BUSINESS OF COMSAT. Except (i) as
contemplated by this Agreement, (ii) as set forth in Section 6.1A of the COMSAT
Disclosure Schedule, or (iii) as otherwise permitted by Sections 6.1(a)-(q) of
this Agreement, during the period from the date of this Agreement to the
Effective Time, unless Lockheed Xxxxxx has consented thereto in writing (which
consent shall not be unreasonably withheld or delayed), COMSAT shall, and shall
cause each of its Subsidiaries to, (x) conduct its operations in the ordinary
course, (y) use
28
commercially reasonable efforts to preserve intact its business organization and
goodwill and maintain satisfactory relationships with those Persons having
business relationships with them, and (z) use commercially reasonable efforts to
keep available the services of its officers and employees. Without limiting the
generality of and in addition to the foregoing, and except as otherwise
contemplated by this Agreement or as set forth in Section 6.1A of the COMSAT
Disclosure Schedule, prior to the time specified in the preceding sentence,
unless Lockheed Xxxxxx has consented thereto in writing (which consent shall not
be unreasonably withheld or delayed), COMSAT and its Subsidiaries:
(a) except as required to give effect to changes in Law, shall not
amend their respective articles of incorporation or by-laws or other comparable
governing instruments in a manner that would adversely affect the consummation
of the transactions contemplated by, or otherwise adversely affect the rights of
Lockheed Xxxxxx or its Subsidiaries under, any Transaction Agreement;
(b) except as set forth in Section 6.1(b) of the COMSAT Disclosure
Schedule, shall not, and shall not permit any of its Subsidiaries to, issue any
shares of their capital stock or Equity Securities (except by COMSAT as
permitted by this Agreement, in connection with the COMSAT Stock Options that
are outstanding on the date of this Agreement or which may hereafter be granted
as permitted by this Agreement under COMSAT Stock Plans or shares of COMSAT
Common Stock pursuant to nondiscretionary grants under the current terms of any
existing Plan), or grant, confer or award any options, appreciation rights,
warrants, conversion rights, restricted stock, stock units, performance shares
or other rights, not existing on the date hereof, with respect to any shares of
its capital stock or other Equity Securities of COMSAT or its Subsidiaries
except that, during the twelve-month period beginning upon the date hereof and
ending on the first anniversary hereof and during each subsequent twelve-month
period ending upon subsequent anniversaries hereof, COMSAT may grant COMSAT
Stock Options to acquire up to the number of shares of COMSAT Common Stock as is
equal to 1.5% of the number of issued and outstanding shares of COMSAT Common
Stock as of the end of the preceding fiscal year pursuant to the continued
operation of the COMSAT Stock Plans, and up to 200,000 shares of COMSAT Common
Stock during each calendar year beginning after the date of this Agreement
pursuant to the continued operation of the COMSAT Employee Stock Purchase Plan,
all in the ordinary course of business and consistent with past practice, or
effect any stock split or otherwise change its capitalization;
(c) except as set forth in Section 6.1(c) of the COMSAT Disclosure
Schedule, shall not, and shall not permit any of its Subsidiaries to, (i)
declare, set aside or pay any dividend or make any other distribution or payment
with respect to any shares of its capital stock or other ownership interests
(other than regular quarterly cash dividends not to exceed $0.05 per share of
COMSAT Common Stock and dividends and distributions from Subsidiaries of COMSAT
to COMSAT or another of its Subsidiaries) or (ii) directly or indirectly redeem,
purchase or otherwise acquire any shares of its capital stock or capital stock
of any of its Subsidiaries, or make any commitment for any such action;
29
(d) shall not pledge or otherwise encumber shares of capital stock of
COMSAT or any of its Subsidiaries;
(e) except (i) as disclosed in Section 6.1(e) of the COMSAT Disclosure
Schedule, (ii) as required by Law (including any amendment required to maintain
the qualification of any Plan intended to be "qualified" under Section 401(a) of
the Code) or (iii) as contemplated by this Agreement, shall not (A) except in
the ordinary course of business and consistent with past practice, enter into or
amend any employment or similar agreements or arrangements with any of its
directors or executive officers, (B) amend or otherwise change the terms of the
Plans in any manner which would constitute a material change in Plan design or
materially increase the cost of a Plan, including, without limitation, amend any
employment, severance or similar agreements or arrangements in existence on the
date hereof, (C) adopt any new Plans, programs or arrangements or any severance
or similar agreements or arrangements, or (D) except in the ordinary course of
business and consistent with past practice, increase any compensation, bonus or
other benefits payable to any current or former director or executive officer;
(f) except as set forth in Section 6.1(f) of the COMSAT Disclosure
Schedule, shall not transfer, sell, lease, license or dispose of any material
lines of business, Subsidiaries, divisions, operating units or facilities (other
than facilities currently closed or currently proposed to be closed) outside the
ordinary course of business or enter into any material commitment or transaction
outside the ordinary course of business;
(g) except as set forth in Section 6.1(g) of the COMSAT Disclosure
Schedule, shall not, and shall not permit any of its Subsidiaries to, authorize,
propose or announce an intention to authorize or propose to another Person, or
enter into an agreement with respect to, any merger, consolidation or business
combination, any acquisition of Assets or Equity Securities (other than the
purchase of Assets in the ordinary course of business), any disposition of
Assets or Equity Securities (other than the disposition of Assets or Equity
Securities in the ordinary course of business) or any release or relinquishment
of any contract rights in which, in any such case, the aggregate consideration
is in excess of $5 million for any individual transaction or $20 million for all
of such transactions in any one year period or which would materially adversely
affect the ability of COMSAT or any of its Subsidiaries to consummate any of the
transactions contemplated by this Agreement. For purposes of this Section
6.1(g), Section 6.1(i), Section 6.1(j)(ii) and Section 6.1(l) only, any actions
taken by COMSAT to preserve substantially (or to increase or decrease such
interest by no more than 2.0% in any fiscal year) its existing ownership
interest in INTELSAT or Inmarsat in connection with (A) annual share
redeterminations and adjustments or (B) pursuant to capital calls approved by
the governing bodies of INTELSAT or Inmarsat in accordance with their charter
documents, shall be deemed to be in the ordinary course of COMSAT's business;
(h) except as set forth in Section 6.1(h) of the COMSAT Disclosure
Schedule, shall not make any material Tax election other than in the ordinary
course of business and consistent with past practice, or settle or compromise
any Tax Liability in excess of $3 million arising from or in connection with any
single issue;
30
(i) shall not make or agree to make any capital expenditures other
than (i) expenditures in the ordinary course of business, (ii) capital
expenditures that are consistent with COMSAT's strategic business plans (the
"COMSAT BUSINESS PLANS") and (iii) additional capital expenditures not in excess
of $5 million;
(j) except as set forth in Section 6.1(j) of the COMSAT Disclosure
Schedule, except in the ordinary course of business and except as consistent
with the COMSAT Business Plans, shall not, and shall not permit any of its
Subsidiaries to, (i) incur, create, assume or otherwise become liable for
borrowed money or assume, guarantee, endorse or otherwise become responsible or
liable for the obligations of any other Person (other than COMSAT and its
Subsidiaries) in excess of $5 million per occurrence and $20 million in the
aggregate or (ii) make any loans or advances to any other Person (other than
COMSAT and its Subsidiaries) in excess of $5 million per occurrence and $20
million in the aggregate;
(k) except as set forth in Section 6.1(k) of the COMSAT Disclosure
Schedule, or as required by Law or GAAP, shall not effect any material change in
any of its methods of accounting in effect as of December 31, 1997;
(l) except as provided in the Shareholders Agreement, shall not
impose limitations not already in existence on the date hereof, not imposed on
other shareholders of COMSAT, on the enjoyment by any of Lockheed Xxxxxx and its
Subsidiaries of the legal rights generally enjoyed by shareholders of COMSAT;
(m) except as set forth in Section 6.1(m) of the COMSAT Disclosure
Schedule, shall not pay, discharge or satisfy any material Liabilities, other
than the payment, discharge or satisfaction of any such Liability (i) reflected
or reserved against in, or contemplated by, the financial statements (or the
notes thereto) of COMSAT and its Subsidiaries, (ii) incurred in the ordinary
course of business or (iii) which is legally required to be paid, discharged or
satisfied;
(n) shall not adopt a plan of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or other
material reorganization of COMSAT or any plan of merger or consolidation of any
of its Subsidiaries in which such Subsidiary is not the surviving entity;
(o) shall not, and shall not permit any of its Subsidiaries to take
any action which would make any representation or warranty of COMSAT contained
herein untrue or incorrect in any material respect as of the Effective Time;
(p) shall not fail to take reasonable efforts to cause the Merger to
constitute a reorganization within the meaning of Section 368(a) of the Code;
and
(q) shall not enter into a legally binding commitment with respect to,
or any agreement to take, any of the foregoing actions.
31
SECTION 6.2. INTELSAT AND INMARSAT PRIVATIZATIONS. Any actions taken
pursuant to U.S. Government instruction and any actions taken in good faith by
COMSAT or its Subsidiaries in connection with the planned privatizations of
INTELSAT or Inmarsat shall not be considered a breach of the first sentence of
Section 6.1 hereof or, to the extent applicable, of subsections 6.1(f), (g),
(h), (i), (j), (k) or (m) discharge of liabilities. Notwithstanding the
foregoing, other than as provided in Section 6.1A of the COMSAT Disclosure
Schedule or pursuant to the Existing INTELSAT Documents, the Existing Inmarsat
Documents, the Inmarsat Restructuring Documents or the New Skies Documents,
COMSAT shall not:
(a) sell, transfer, assign or dispose of or agree to sell, transfer,
assign or dispose of the INTELSAT Interests or the Inmarsat Interests
(including, without limitation, by entering into any options with respect
thereto);
(b) enter into any voting rights, proxy or other agreement with
respect to the voting of any of the INTELSAT Interests or the Inmarsat
Interests that would be binding on Lockheed Xxxxxx, COMSAT or their
respective Subsidiaries following the Merger;
(c) enter into any lock-up, standstill or other similar agreement (a
"LOCK-UP AGREEMENT") with respect to the INTELSAT Interests or the Inmarsat
Interests that would be binding on Lockheed Xxxxxx, COMSAT or their
respective Subsidiaries following the Merger; provided that COMSAT or its
Subsidiaries may enter into a Lock-Up Agreement in connection with an
initial public offering by INTELSAT, Inmarsat or New Skies Satellites,
N.V., on terms that are usual and customary to those entered into by
directors, affiliates or significant shareholders in similar transactions;
or
(d) take any other action or omit to take any action (including by
way of votes in the INTELSAT Board of Governors or Meeting of Signatories,
or the Inmarsat Council, in either case except to the extent instructed to
the contrary by the United States Government, pursuant to the Satellite
Act) which would reasonably be expected to materially impair the economic
value of or any of the rights associated with the INTELSAT Interests or the
Inmarsat Interests; provided, that COMSAT shall not be required to force a
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vote to be held on a matter in any of the foregoing bodies where consistent
with past practice such decision would be decided by consensus rather than
a vote.
(e) For purposes of this Agreement, capitalized terms have the
following meaning:
(i) "ICO" shall mean ICO Global Communications (Holdings)
Limited.
(ii) "INMARSAT CONVENTION" shall mean the Convention on the
International Maritime Satellite Organization (Inmarsat) which entered
into force on July 16, 1979, last amended by amendments thereto which
entered into force on June 26, 1997.
32
(iii) "INMARSAT EXISTING DOCUMENTS" shall mean the Inmarsat
Convention, the Operating Agreement on Inmarsat which entered into
force on July 16, 1979, as last amended by amendments thereto which
entered into force on June 26, 1997, the Headquarters Agreement
Between Inmarsat and the government of the United Kingdom, Great
Britain and Northern Ireland which entered into force on February 25,
1980, and all existing policies and procedures approved by the
Inmarsat Council pursuant to the foregoing.
(iv) "INMARSAT INTERESTS" shall mean the Inmarsat Investment
Share owned by COMSAT (or all of the shares of Inmarsat PLC received
by COMSAT in lieu thereof pursuant to the Inmarsat Privatization) and
all rights and obligations associated therewith, including, prior to
the Inmarsat Privatization, COMSAT's rights as an Inmarsat Signatory
(as defined in the Inmarsat Convention).
(v) "INMARSAT INVESTMENT SHARE" shall mean an investment share
described in the Inmarsat Operating Agreement.
(vi) "INMARSAT PRIVATIZATION" shall mean the restructuring of
Inmarsat contemplated by the Inmarsat Restructuring Documents.
(vii) "INMARSAT RESTRUCTURING DOCUMENTS" shall mean, in each
case substantially in the form of the draft made available by the
General Counsel to the Inmarsat parties as of August 26, 1998, the
Master Transition Agreement, to be entered into between Inmarsat and
Inmarsat PLC, together with (a) the following documents that are
defined in such Master Transition Agreement: the Business Transfer
Agreement, the LESO Agreement, the License Agreement, the New
Memorandum and Articles of Association, the Public Services Agreement,
the Shareholders' Agreement and the Trust Deeds and (b) the Memoranda
and Articles of Association of Inmarsat One Limited, Inmarsat Two
Company, Inmarsat Three Limited and Inmarsat Limited and each as
subsequently amended in accordance with the decisions of the Inmarsat
Council.
(viii) "INTELSAT EXISTING DOCUMENTS" shall mean the Agreement
Relating to the International Telecommunications Satellite
Organization (INTELSAT) (the "INTELSAT AGREEMENT") which entered into
force on February 12, 1973, the Operating Agreement Relating to the
International Telecommunications Satellite Organization (INTELSAT)
(the "INTELSAT OPERATING AGREEMENT") which entered into force on
February 12, 1973, and the Headquarters Agreement between the
Government of the United States of America and INTELSAT which entered
into force on November 24, 1976, and all existing policies and
procedures approved by the INTELSAT Board of Governors pursuant to the
foregoing.
33
(ix) "INTELSAT INTERESTS" shall mean the INTELSAT Investment
Share owned by COMSAT, any ownership or other interests received by
COMSAT relating to any entity created pursuant to any partial or full
privatization of INTELSAT (including New Skies Satellites, N.V.), any
ownership or other interests received by COMSAT relating to any other
entity created pursuant to the full or partial privatization of
INTELSAT, and in each case all rights and obligations associated
therewith, including, prior to the full privatization of INTELSAT,
COMSAT's rights as an INTELSAT Signatory (as defined in the INTELSAT
Agreement).
(x) "INTELSAT INVESTMENT SHARE" shall mean an investment share
described in the INTELSAT Operating Agreement.
(xi) "NEW SKIES DOCUMENTS" shall mean, in each case, in
substantially the same form of the draft contained in the Report of
the New INTELSAT 2000 Working Part to the Twenty-Second Assembly of
Parties, AP-22-7E S/3/98, 24 February 1998; the Draft Trust Agreement,
the Ensured Capacity Rights (ECR) Contract, the Draft Satellite
Operational Services Contract, the Draft Transition Services
Agreement, the Draft INC Subscription Agreement, the INC Articles of
Association, the Leaseback Equalization Arrangements/Transponder
Leasing Agreement, along with the Record of Decisions of the Twenty-
Second (Extraordinary) Meeting of the INTELSAT Assembly of Parties,
AP-22-3E FINAL S/3/98, 30-31 March 1998 and each as subsequently
amended in accordance with the decisions of the INTELSAT Assembly of
Parties.
SECTION 6.3. CONDUCT OF BUSINESS OF LOCKHEED XXXXXX. Except as
otherwise contemplated by this Agreement, during the period from the date of
this Agreement to the Effective Time, unless COMSAT has consented thereto in
writing (which consent shall not be unreasonably withheld or delayed), Lockheed
Xxxxxx shall not and shall cause each of its Subsidiaries not to:
(a) adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other material
reorganization of Lockheed Xxxxxx;
(b) take any action which would make any representation or warranty of
Lockheed Xxxxxx contained herein untrue or incorrect as of the Effective Time;
(c) fail to take reasonable efforts to cause the Merger to constitute
a reorganization within the meaning of Section 368(a) of the Code; and
(d) enter into a legally binding commitment with respect to, or any
agreement to take, any of the foregoing actions.
34
SECTION 6.4. NO SOLICITATION.
(a) COMSAT shall, and shall cause its Subsidiaries and their
respective officers, directors, employees, consultants, investment bankers,
accountants, attorneys and other advisors, representatives and agents
(collectively, "COMSAT REPRESENTATIVES") to immediately cease any discussions or
negotiations with any Person that may be ongoing with respect to any Acquisition
Proposal (as defined below). COMSAT shall not, nor shall it permit any of its
Subsidiaries to, nor shall it authorize or permit any COMSAT Representative to,
directly or indirectly, (i) solicit or initiate, or knowingly encourage the
submission of, any Acquisition Proposal or (ii) participate in any discussions
or negotiations regarding, or furnish to any Person (other than Lockheed Xxxxxx
or its representatives or affiliates) any information, that may reasonably be
expected to lead to, an Acquisition Proposal; provided, however, that if, prior
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to the COMSAT Shareholders Meeting, the Board of Directors of COMSAT determines
in good faith, based upon advice of independent counsel, that it is necessary to
do so in order to comply with its fiduciary duties to COMSAT's shareholders
under applicable Law, the Board of Directors of COMSAT may permit COMSAT in
response to an Acquisition Proposal that was not solicited by COMSAT or its
officers, directors or employees (x) to furnish information (including any non-
public information) with respect to COMSAT (including its Subsidiaries) and
afford access to its properties, books and records pursuant to a confidentiality
agreement designed to reasonably protect the confidentiality of such
information, and (y) to participate in discussions or negotiations regarding
such Acquisition Proposal. For purposes of this Agreement, the term
"ACQUISITION PROPOSAL" means any proposal or offer from any Person (other than
Lockheed Xxxxxx or its representatives or affiliates) to acquire, directly or
indirectly, in one or more transactions, Assets (including, without limitation,
the capital stock of Subsidiaries) of COMSAT or any of its Subsidiaries having
an aggregate value equal to more than 10% of the market capitalization of
COMSAT, any tender offer or exchange offer that if consummated would result in
any Person beneficially owning more than 10% of any class of Equity Securities
of COMSAT, any merger, consolidation, business combination, sale of all or
substantially all the Assets, recapitalization, liquidation, dissolution or
similar transaction involving COMSAT, other than the transactions contemplated
by this Agreement; provided that no transaction specified in Section 6.1A of the
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COMSAT Disclosure Schedule shall be deemed to be an Acquisition Proposal.
(b) Except as set forth in this Section 6.4, neither the Board of
Directors of COMSAT nor any committee thereof shall (i) withdraw, modify or
materially qualify (or publicly propose to withdraw, modify or materially
qualify) its approval or recommendation of the Offer, the Merger or this
Agreement, (ii) approve or recommend, or publicly propose to approve or
recommend, any Acquisition Proposal or (iii) enter, or publicly propose to
enter, into any agreement with respect to any Acquisition Proposal.
Notwithstanding the foregoing, in the event that, prior to the COMSAT
Shareholders Meeting, the Board of Directors of COMSAT determines in good faith,
based upon advice of independent counsel, that it is necessary to do so in order
to comply with its fiduciary duties to COMSAT's shareholders under applicable
Law, the Board of Directors of COMSAT may terminate this Agreement pursuant to
Section 7.1(d)(ii) hereof solely in order to concurrently enter into a
definitive agreement to effect a Superior Proposal. For purposes of this
Agreement, the term "SUPERIOR PROPOSAL" means any bona fide
35
proposal or offer from one or more Persons (other than Lockheed Xxxxxx and its
affiliates) to acquire, directly or indirectly, in one or more transactions for
consideration consisting of cash and/or securities, more than 50% of the shares
of COMSAT Common Stock then outstanding or all or substantially all the Assets
of COMSAT and its Subsidiaries taken as a whole, and otherwise on terms which
the Board of Directors of COMSAT determines in its good faith judgment (based on
the advice of a financial advisor of nationally recognized reputation) to be
more favorable to the holders of COMSAT Common Stock than are the Offer and the
Merger and for which financing, to the extent required, is then committed or
which, in the good faith judgment of the Board of Directors of COMSAT (based on
the advice of a financial advisor of nationally recognized reputation), is
reasonably capable of being financed by such Person.
(c) In addition to the obligations of COMSAT set forth in paragraphs
(a) and (b) of this Section 6.4, COMSAT shall promptly advise Lockheed Xxxxxx
orally and in writing of COMSAT's receipt of any Acquisition Proposal, any
request for information or an inquiry that could lead to or is otherwise related
to any Acquisition Proposal, the identity of the Person making such request or
Acquisition Proposal and the material terms of any such Acquisition Proposal.
COMSAT shall keep Lockheed Xxxxxx fully informed of the status and terms
(including amendments) of any such request or Acquisition Proposal, unless the
Board of Directors determines in good faith, based upon advice of independent
counsel, that it is necessary not to do so in order to comply with its fiduciary
duties to COMSAT's shareholders under applicable Law.
(d) Nothing contained in this Section 6.4 shall prohibit COMSAT from
taking and disclosing to its shareholders a position contemplated by Rule 14e-
2(a) promulgated under the Exchange Act or issuing a communication meeting the
requirements of Rule 14d-9(e) promulgated under the Exchange Act; provided,
--------
however, neither COMSAT nor its Board of Directors nor any committee thereof
-------
shall, except as permitted by Section 6.4(b) hereof, withdraw, modify or
materially qualify, or publicly propose to withdraw, modify or materially
qualify, its position with respect to the Offer, the Merger or this Agreement or
to approve or recommend, or publicly propose to approve or recommend, an
Acquisition Proposal.
SECTION 6.5. PREPARATION OF PROXY STATEMENT; COMSAT SHAREHOLDERS
MEETING.
(a) As promptly as practicable following the date hereof, Lockheed
Xxxxxx shall, in cooperation with COMSAT, prepare and file with the SEC
preliminary proxy materials which shall constitute the Proxy
Statement/Prospectus in connection with the Merger (such proxy
statement/prospectus, and any amendments or supplements thereto, the "PROXY
STATEMENT/PROSPECTUS") and a registration statement on Form S-4 with respect to
the issuance of Lockheed Xxxxxx Common Stock in the Merger (the "FORM S-4"),
together with any other materials required to be filed with the SEC in
connection with the Merger. The Proxy Statement/Prospectus will be included in
the Form S-4 as Lockheed Xxxxxx'x prospectus. The Form S-4 and the Proxy
Statement/Prospectus shall comply as to form in all material respects with the
applicable provisions of the Securities Act and the Exchange Act. Each of
Lockheed Xxxxxx and COMSAT shall use all reasonable efforts to have the Form S-4
cleared by the SEC as promptly as practicable after filing with the SEC and to
keep the Form S-4 effective as long
36
as is necessary to consummate the Merger. Lockheed Xxxxxx shall, as promptly as
practicable after receipt thereof, provide copies of any written comments
received from the SEC with respect to the Proxy Statement/Prospectus to COMSAT
and advise COMSAT of any oral comments with respect to the Proxy
Statement/Prospectus received from the SEC. None of the information supplied or
to be supplied by Lockheed Xxxxxx in writing specifically for inclusion or
incorporation by reference in the Proxy Statement/Prospectus and each amendment
or supplement thereto, at the time of mailing thereof and at the time of the
COMSAT Shareholders Meeting, will contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. None of the information supplied or to be supplied by
COMSAT in writing specifically for inclusion or incorporation by reference in
the Proxy Statement/Prospectus and each amendment or supplement thereto, at the
time of mailing thereof and at the time of the COMSAT Shareholders Meeting, will
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. Lockheed
Xxxxxx shall advise COMSAT in writing, promptly after it receives notice
thereof, of the time when the Form S-4 has become effective or any supplement or
amendment thereto has been filed, the issuance of any stop order, the suspension
of the qualification of the Lockheed Xxxxxx Common Stock issuable in connection
with the Merger for offering or sale in any jurisdiction, or any request by the
SEC for amendment of the Proxy Statement/Prospectus or the Form S-4 or comments
thereon and responses thereto or requests by the SEC for additional information.
Lockheed Xxxxxx shall provide COMSAT with a reasonable opportunity to review and
comment on any amendment or supplement to the Proxy Statement/Prospectus prior
to filing such with the SEC, and shall provide COMSAT with a copy of all such
filings made with the SEC. No amendment or supplement to the information
supplied by COMSAT for inclusion in the Proxy Statement/Prospectus shall be made
without the approval of COMSAT, which approval shall not be unreasonably
withheld or delayed.
(b) Subject to Sections 6.4 and 7.1(d)(ii) hereof, COMSAT shall, at
such time as determined by Lockheed Xxxxxx after consultation with COMSAT, duly
call, give notice of, convene, hold, postpone, adjourn and reconvene a meeting
or meetings of its shareholders (the "COMSAT SHAREHOLDERS MEETING") for the
purpose of considering and taking action with respect to the Merger and this
Agreement, shall take reasonable efforts to solicit the adoption of this
Agreement by its shareholders (including, but not limited to, employing the
services of a proxy solicitation firm), and the Board of Directors of COMSAT
shall recommend adoption of the Merger and this Agreement by the shareholders of
COMSAT. Without limiting the generality of the foregoing but subject to its
rights pursuant to Sections 6.4 and 7.1(d)(ii) hereof, the obligations of COMSAT
to duly call, give notice of, convene, hold, postpone, adjourn and reconvene the
COMSAT Shareholders Meeting pursuant to the first sentence of this Section
6.5(b) shall not be affected by the commencement, public proposal, public
disclosure or communication to COMSAT of any Acquisition Proposal.
37
SECTION 6.6. ACCESS TO INFORMATION.
(a) Between the date of this Agreement and the Effective Time, upon
reasonable notice and at reasonable times, and subject to any access,
disclosure, copying or other limitations imposed by applicable Law or any of the
contracts of COMSAT and its Subsidiaries, COMSAT shall give Lockheed Xxxxxx,
Acquisition Sub and their authorized representatives reasonable access to all
offices and other facilities and to all books and records of it and its
Subsidiaries and to employees of COMSAT and its Subsidiaries, and will permit
Lockheed Xxxxxx, Acquisition Sub or their authorized representatives, as the
case may be, to make such inspections as it or they may reasonably require, and
shall cause its officers and those of its Subsidiaries to furnish Lockheed
Xxxxxx, Acquisition Sub and their authorized representatives with such financial
and operating data and other information with respect to any of COMSAT and its
Subsidiaries as Lockheed Xxxxxx, Acquisition Sub or their authorized
representatives, as the case may be, may from time to time reasonably request;
provided that to the extent that access, disclosure or copying of any of the
--------
foregoing is limited by applicable Law or contract, COMSAT shall take reasonable
efforts to provide a summary of such information to Lockheed Xxxxxx within the
limits of applicable Law or contract. Lockheed Xxxxxx, Acquisition Sub and
their authorized representatives shall conduct all such inspections in a manner
which shall minimize any disruptions of the business and operations of COMSAT
and its Subsidiaries.
(b) Lockheed Xxxxxx, Acquisition Sub and COMSAT agree that each of the
Confidentiality Agreements (as hereinafter defined), other than Sections 3 and 7
thereof, shall remain binding and in full force and effect.
SECTION 6.7. REASONABLE EFFORTS. Subject to the terms and
conditions of this Agreement, each of the parties hereto agrees to use all
reasonable efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, all things reasonably necessary, proper or advisable under
applicable Law to consummate and make effective the transactions contemplated by
this Agreement (including, without limitation, (i) cooperating in the
preparation and filing of the Offer Documents, the Schedule 14D-9, the Proxy
Statement/Prospectus, the Form S-4 and any amendments to any thereof, (ii)
taking of all action reasonably necessary, proper or advisable to secure any
necessary consents or waivers under existing debt obligations of COMSAT and its
Subsidiaries or amend the notes, indentures or agreements relating thereto to
the extent required by such notes, indentures or agreements or redeem or
repurchase such debt obligations, (iii) contesting any pending legal proceeding
relating to any transaction contemplated by this Agreement and (iv) executing
any additional instruments necessary to consummate the transactions contemplated
hereby). In case at any time after the Effective Time any further action is
necessary to carry out the purposes of this Agreement or the Carrier Acquisition
Agreement, the proper officers and directors of each party hereto shall use all
reasonable efforts to take all such necessary action.
SECTION 6.8. LISTING APPLICATION. Lockheed Xxxxxx shall prepare
and submit to the NYSE a listing application covering the shares of Lockheed
Xxxxxx Common Stock issuable in the Merger and shall use commercially reasonable
efforts to obtain, prior to the Effective
38
Time, approval for the listing of such Lockheed Xxxxxx Common Stock, subject to
official notice of issuance.
SECTION 6.9. CONSENTS AND APPROVALS.
(a) In furtherance of and not in limitation of the agreements of the
parties contained in Section 6.7 hereof, the parties shall each cooperate and
use its respective reasonable efforts to promptly seek the amendment or repeal
of the Satellite Act and other applicable Laws, including any regulations of the
FCC or other Governmental Authority, or the applicable provisions thereof, that
would prohibit or limit the ability of Lockheed Xxxxxx to (x) acquire and own
all of the Equity Securities of COMSAT, (y) appoint all of the officers and
directors of COMSAT following the Merger, or (z) consummate the transactions
contemplated by this Agreement.
(b) In furtherance of and not in limitation of the agreements of the
parties contained in Section 6.7 hereof, the parties shall each cooperate and
use its respective reasonable efforts to promptly make all filings and obtain
all consents and approvals of Governmental Authorities (including, without
limitation, the FCC) and other Persons necessary to consummate the transactions
contemplated by this Agreement including, without limitation, to permit Lockheed
Xxxxxx and Offer Subsidiary to consummate the Carrier Acquisition, to cause
Offer Subsidiary to become an Authorized Carrier and to consummate the Offer and
the Merger. Each of the parties hereto will furnish to the other parties such
necessary information and reasonable assistance as such other Persons may
reasonably request in connection with the foregoing.
(c) In furtherance of and not in limitation of the agreements of the
parties contained in Section 6.7 hereof, the parties shall each (i) take
promptly all actions necessary to make the filings required of such party or any
of their affiliates under the applicable Antitrust Laws, (ii) comply at the
earliest practicable date with any request for additional information or
documentary material received by such party or any of their affiliates from the
Federal Trade Commission or the Antitrust Division of the Department of Justice
pursuant to the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended
(the "HSR ACT") or other Governmental Authority pursuant to Antitrust Laws, and
(iii) cooperate with the other parties hereto in connection with any filings
under applicable Antitrust Laws and in connection with resolving any
investigation or other inquiry concerning any transaction contemplated by this
Agreement commenced by any of the Federal Trade Commission, the Antitrust
Division of the Department of Justice, state attorneys general, or other
Governmental Authorities. For purposes of this Agreement, the term "ANTITRUST
LAWS" means the Xxxxxxx Act, as amended, the Xxxxxxx Act, as amended, the HSR
Act, the Federal Trade Commission Act, as amended, EC Merger Regulations and all
other federal, state and foreign Laws that are designed or intended to prohibit,
restrict or regulate actions having the purpose or effect of monopolization or
restraint of trade. For purposes of this Agreement, "EC MERGER REGULATIONS"
mean Council Regulation (EEC) No. 4064/89 of December 21, 1989 on the Control of
Concentrations Between Undertakings, OJ (1989) L 395/1 and the regulations and
decisions of the Council or Commission of the European Community (the "CCEC") or
other organs of the European Union or European Community implementing such
regulations.
39
(d) In furtherance of and not in limitation of the agreements of the
parties contained in Section 6.7 hereof the parties shall each use all
reasonable efforts to resolve such objections, if any, as may be asserted under
any Antitrust Law or any other applicable Law, with respect to any transaction
contemplated by this Agreement. If any administrative, judicial or legislative
action or proceeding is initiated (or threatened to be initiated) or any other
action is taken by any Person challenging any transaction contemplated by this
Agreement as violative of any Antitrust Law or any other applicable Law, the
parties shall each cooperate to contest and resist any such action or
proceeding, and to have vacated, lifted, reversed or overturned any decree,
judgment, injunction, ruling, decision, finding or other order (whether
temporary, preliminary or permanent) (any such decree, judgment, injunction,
ruling, decision, finding or other order is hereafter referred to as an "ORDER")
or other official action or decision of any Governmental Authority that is in
effect and that restricts, prevents or prohibits consummation of any transaction
contemplated by this Agreement, including, without limitation, by pursuing all
reasonable avenues of administrative and judicial appeal.
(e) Notwithstanding anything in this Agreement to the contrary:
(i) In no event shall any of Lockheed Xxxxxx and its Subsidiaries
be required to agree to hold separate or to divest any of their respective
businesses or Assets, or agree to any other restriction or condition with
respect to the acquisition or ownership of any of their respective
businesses or Assets or the conduct or operation of any of their respective
businesses or Assets, or following the consummation of the Offer or the
Effective Time, of COMSAT or any of its Subsidiaries, as may be required
(i) by any applicable Governmental Authority (including, without
limitation, the Federal Trade Commission, the Antitrust Division of the
Department of Justice or any state attorney general) in order to resolve
such objections as such Governmental Authority may have to such
transactions under any Antitrust Law, or (ii) by any domestic or foreign
court or other tribunal, in any action or proceeding brought by any Person
challenging such transactions as violative of any Antitrust Law, in order
to avoid the entry of, or to effect the dissolution, vacating, lifting,
altering or reversal of, any Order that has the effect of restricting,
preventing or prohibiting the consummation of any transaction contemplated
by this Agreement, if the Board of Directors of Lockheed Xxxxxx determines
in good faith that any such agreement to hold separate or to divest or
agreement to other restriction or condition is not in the best interests of
Lockheed Xxxxxx.
(ii) Except for seeking review by the full FCC of any FCC staff
decision denying any application to permit Lockheed Xxxxxx or Offer
Subsidiary to consummate the Carrier Acquisition, to cause Offer Subsidiary
to become an Authorized Carrier or to consummate the Offer, Lockheed Xxxxxx
shall not be required to undertake or continue any contest or resistance of
an action or proceeding or take any other action, in each case of the type
referred to in Section 6.7 hereof (including, but not limited to, Section
6.7(iii) hereof) or Section 6.9 hereof (including, but not limited to,
Section 6.9(d) hereof) if, after taking into account advice of independent
counsel with respect to relevant matters, including, without limitation,
the likely outcome of the action or proceeding, the timing thereof and the
likely costs related thereto, the Board of Directors of Lockheed
40
Xxxxxx determines in good faith that undertaking or continuing any such
contest or resistance or taking any such other action is not in the best
interests of Lockheed Xxxxxx.
(f) Each of COMSAT, Lockheed Xxxxxx and Acquisition Sub shall promptly
inform the other parties of any material communication received by such party
from the Federal Trade Commission, the Antitrust Division of the Department of
Justice, the FCC or any other Governmental Authority or INTELSAT or Inmarsat
regarding any transaction contemplated by this Agreement, along with copies of
any written communications received with respect thereto and written summaries
of any oral communications with respect thereto.
SECTION 6.10. PUBLIC ANNOUNCEMENTS. The initial press release
relating to this Agreement shall be a joint press release and thereafter COMSAT,
Lockheed Xxxxxx and Acquisition Sub shall consult with each other before issuing
any press release or otherwise making any public statements with respect to any
transaction contemplated by this Agreement and shall not issue any such press
release or make any such public statement prior to such consultation, except as
may be required by Law or by obligations pursuant to any listing agreement with
any securities exchange; provided that the statements included in any such press
release or the public statement made in compliance with this Section 6.10 may be
published, reiterated or restated, in whole or in part, without the necessity of
further complying with this Section 6.10.
SECTION 6.11. NOTIFICATION. COMSAT shall give prompt notice to
Lockheed Xxxxxx and Lockheed Xxxxxx shall give prompt notice to COMSAT, in each
case, after it has actually become aware, of (i) any representation or warranty
made by it contained in this Agreement that is qualified as to materiality
becoming untrue or inaccurate in any respect or any such representation or
warranty that is not so qualified becoming untrue or inaccurate in any material
respect or (ii) the failure by it to comply with or satisfy in any material
respect any covenant, condition or agreement to be complied with or satisfied by
it under this Agreement; provided, however, that no such notification shall
-------- -------
affect the representations, warranties, covenants or agreements of the parties
or the conditions to the obligations of the parties under this Agreement.
SECTION 6.12. CERTAIN LITIGATION. The parties shall cooperate in
the defense of any litigation commenced after the date hereof against either
party or any of their respective directors by any shareholder of COMSAT or
Lockheed Xxxxxx relating to any transaction contemplated by this Agreement and
shall not settle any such litigation without the prior written consent of the
other party. In addition, subject to its rights under Section 6.4 hereof,
COMSAT shall not voluntarily cooperate with any other Person that may hereafter
seek to restrain or prohibit or otherwise oppose any transaction contemplated by
this Agreement and shall cooperate with Lockheed Xxxxxx and Acquisition Sub to
resist any such effort to restrain or prohibit or otherwise oppose such
transaction.
41
SECTION 6.13. EMPLOYEE AND BENEFIT MATTERS; STOCK OPTIONS AND AWARDS.
(a) Stock Options and Awards. Except as provided in Section 6.13(b)
------------------------
hereof, as of the Effective Time, Lockheed Xxxxxx shall assume all COMSAT Stock
Plans and the COMSAT Stock Options. Each COMSAT Stock Option outstanding at the
Effective Time shall be deemed to constitute an option to acquire, on the same
terms and conditions, mutatis mutandis, as were applicable under such COMSAT
------- --------
Stock Option prior to the Effective Time, (i) the number of shares of Lockheed
Xxxxxx Common Stock as the holder of such COMSAT Stock Option would have been
entitled to receive pursuant to the Merger had such holder exercised such COMSAT
Stock Option in full immediately prior to the Effective Time (not taking into
account whether or not such option was in fact then exercisable), (ii) at a
price per share equal to (x) the aggregate exercise price for COMSAT Common
Stock otherwise purchasable pursuant to such COMSAT Stock Option divided by (y)
the number of shares of Lockheed Xxxxxx Common Stock deemed purchasable pursuant
to such assumed COMSAT Stock Option, provided that the number of shares of
--------
Lockheed Xxxxxx Common Stock that may be purchased upon exercise of any such
Lockheed Xxxxxx Stock Option shall not include any fractional share and, upon
exercise of any such Lockheed Xxxxxx Stock Option, a cash payment shall be made
for any fractional share based on the last sale price per share of Lockheed
Xxxxxx Common Stock on the trading day immediately preceding the date of
exercise. COMSAT shall use its reasonable efforts to provide, on or prior to
the Effective Time, a written acknowledgement of each holder of a COMSAT Stock
Option that such COMSAT Stock Option from and after the Effective Time will be
exercisable for shares of Lockheed Xxxxxx Common Stock as provided herein,
provided that COMSAT need not do so if Lockheed Xxxxxx determines to its
--------
reasonable satisfaction that the terms of such COMSAT Stock Option or COMSAT
Stock Plan provides that, after giving effect to any permitted action by the
COMSAT board of directors or committee thereof, from and after the Effective
Time, such COMSAT Stock Option shall be exercisable only for shares of Lockheed
Xxxxxx Common Stock and not for shares of common stock of the Surviving
Corporation or any other Person. COMSAT shall amend each other Plan, agreement
or arrangement that provides benefits or payments by reference to the price of
COMSAT Common Stock, other than the COMSAT Stock Option Plans, to provide that
as of and after the Effective Time, the payments or benefits shall be measured
by reference to the price of Lockheed Xxxxxx Common Stock, determined in like
manner to the adjustments prescribed above with respect to the exercise price of
COMSAT Stock Options and the number of shares of COMSAT Common Stock into which
COMSAT Stock Options are exercisable. In respect of each COMSAT Stock Option to
be converted into options or rights to acquire Lockheed Xxxxxx Common Stock,
Lockheed Xxxxxx shall file as soon as practicable after the Effective Time with
the SEC, and keep current the effectiveness of, a registration statement on Form
S-8 or other appropriate form for as long as such options or rights remain
outstanding (and maintain the current status of the prospectus with respect
thereto). Lockheed Xxxxxx agrees to reserve for issuance a number of shares of
Lockheed Xxxxxx Common Stock equal to the number of shares of Lockheed Xxxxxx
Common Stock issuable under the COMSAT Stock Options.
(b) Employee Stock Purchase Plan. COMSAT shall terminate each
----------------------------
employee stock purchase plan COMSAT maintains for its or any of its
Subsidiaries' employees no later than the Effective Time.
42
(c) Change in Control. COMSAT shall cause to be amended each of the
-----------------
Plans listed in Section 6.13(c) of the COMSAT Disclosure Schedule and/or the
Board of Directors of COMSAT shall adopt a resolution to provide that (i) for
purposes of the Plans listed in Section 6.13(c)(1) of the COMSAT Disclosure
Schedule, neither the execution of this Agreement, the consummation of the
transactions contemplated by this Agreement nor approval of this Agreement or
the transactions contemplated hereby by the Board of Directors or shareholders
of COMSAT shall be a "Change in Control" of COMSAT (or any similar triggering
event resulting in the acceleration or other change in the terms of benefits
payable under the Plans); and (ii) for the purposes of the Plans listed in
Section 6.13(c)(2) of the COMSAT Disclosure Schedule, a "Change in Control" of
COMSAT (or any similar triggering event resulting in the acceleration or other
change in the terms of benefits payable under the Plans) shall occur at the
Effective Time.
(d) Service Credit. Following the Effective Time, Lockheed Xxxxxx
--------------
shall, or shall cause the Surviving Corporation, to recognize the service of
current or former employees of COMSAT and any of its Subsidiaries (the "COMSAT
EMPLOYEES") for purposes of participation, eligibility and vesting under any
benefit Plan (including eligibility for benefit levels under any severance,
retiree medical or vacation pay plans to the extent based on length of service)
in which such employees may then be eligible to participate, except to the
extent that such service was not taken into account under the comparable Plan
immediately prior to the Effective Time. A COMSAT Employee who has accrued but
unused vacation time under a Plan at the Effective Time shall retain such
accrued but unused vacation after the Effective Time.
(e) Pre-Existing Condition Limitations; Deductibles. With respect to
-----------------------------------------------
any Plans of Lockheed Xxxxxx in which the COMSAT Employees participate effective
as of the Effective Time, Lockheed Xxxxxx shall, or shall cause the Surviving
Corporation to: (i) not impose any requirements under the Plans more onerous
than those currently in effect with respect to pre-existing condition
limitations or exclusions and waiting periods with respect to eligibility and
participation applicable to COMSAT Employees, and (ii) recognize credit toward
satisfying any applicable co-payment, deductible expense requirement, out-of-
pocket expense limit and maximum lifetime benefit limits of each COMSAT Employee
or their eligible dependents as and to the extent any payment would have been
previously recognized under the applicable COMSAT welfare benefit Plans prior to
the Effective Time.
(f) Assumption of Plans. As of the Effective Time, Lockheed Xxxxxx
-------------------
shall assume and shall cause the Surviving Corporation to assume in accordance
with their terms all Plans and agreements listed in Section 6.13(f) of the
COMSAT Disclosure Schedule.
(g) Benefit Continuation. For a period of at least one year following
--------------------
the Effective Time, Lockheed Xxxxxx shall, or shall cause the Surviving
Corporation to, provide each COMSAT Employee with qualified plan and employee
welfare plan benefits (other than plans provided exclusively to management)
which are comparable in the aggregate to the qualified plan and welfare plan
benefits (other than plans provided exclusively to management) provided to such
COMSAT Employee immediately prior to the Effective Time.
43
SECTION 6.14. NO RESTRICTIONS. COMSAT shall not intentionally take
any action, or omit to take any action, if the result of such action or omission
could reasonably be expected to result in any restriction or limitation on the
ability of Lockheed Xxxxxx or its Subsidiaries to vote any of the Shares
purchased by any of Lockheed Xxxxxx and its Subsidiaries in the Offer.
SECTION 6.15. ADVICE OF CHANGES. COMSAT shall cause its senior
officers to use reasonable efforts to promptly advise Lockheed Xxxxxx of any
change or occurrence that would reasonably be expected to have a Material
Adverse Effect on COMSAT and, to the extent permitted by Law, to meet from time
to time with Lockheed Xxxxxx'x senior officers to discuss COMSAT's business.
SECTION 6.16. INDEMNIFICATION.
(a) From and after the Effective Time, Lockheed Xxxxxx shall cause the
Surviving Corporation to indemnify, defend and hold harmless the present and
former officers, directors, employees and agents of COMSAT and its Subsidiaries
(the "INDEMNIFIED PARTIES") against all losses, claims, damages, expenses or
liabilities arising out of or related to actions or omissions or alleged actions
or omissions occurring at or prior to the Effective Time to the same extent and
on the same terms and conditions (including with respect to advancement of
expenses) provided for in COMSAT's Articles of Incorporation and By-Laws and
agreements in effect on the date hereof (to the extent consistent with
applicable Law as of the Effective Time), which provisions will survive the
Merger and continue in full force and effect after the Effective Time, in each
case consistent with Applicable Law. Without limiting the foregoing, (i)
Lockheed Xxxxxx shall, and shall cause the Surviving Corporation to,
periodically advance expenses (including attorneys' fees) as incurred by an
Indemnified Party with respect to the foregoing to the extent required under
COMSAT's Articles of Incorporation and Bylaws in effect on the date hereof (to
the extent consistent with applicable Law) and (ii) any determination required
to be made with respect to whether an Indemnified Party shall be entitled to
indemnification shall, if requested by such Indemnified Party, be made by
independent legal counsel selected by the Surviving Corporation and reasonably
satisfactory to such Indemnified Party. Lockheed Xxxxxx hereby guarantees the
obligation of the Surviving Corporation provided for under this Section 6.16(a).
(b) For a period of six years after the Effective Time, Lockheed
Xxxxxx shall use reasonable efforts to cause to be maintained in effect the
current policies of directors and officers liability insurance maintained by
COMSAT (provided that Lockheed Xxxxxx may substitute therefor policies with
reputable and financially sound carriers of at least the same coverage and
amounts containing terms and conditions which are no less advantageous in the
aggregate) with respect to claims arising from or related to facts or events
which occurred at or before the Effective Time; provided, that Lockheed Xxxxxx
--------
shall not be obligated to make annual premium payments for such insurance to the
extent such premiums exceed 150% of the annual premiums paid as of the date
hereof by COMSAT for such insurance (the "MAXIMUM AMOUNT"). If the amount of
the annual premiums necessary to maintain or procure such insurance coverage
exceeds the Maximum Amount, Lockheed Xxxxxx and the Surviving
44
Corporation shall maintain the most advantageous policies of directors, and
officers' insurance obtainable for an annual premium equal to the Maximum
Amount.
(c) The provisions of this Section 6.16 are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party, his or her
heirs and his or her representatives.
SECTION 6.17. NO CONTROL. Prior to the Effective Time, Lockheed
Xxxxxx shall not and shall not permit any of its Subsidiaries to, directly or
indirectly, control, supervise or direct, or attempt to control, supervise or
direct, the operations of COMSAT or of any common carrier activities or licensed
facilities authorized by the FCC, in contravention of applicable Law; those
operations, including complete control and supervision of common carrier
activities, FCC-licensed facilities, employees and policies shall be the sole
responsibility of COMSAT and its Subsidiaries.
SECTION 6.18. ACCOUNTANT'S LETTERS. Each of COMSAT and Lockheed
Xxxxxx shall use all reasonable efforts to cause to be delivered to the other
party two letters from its independent public accountants, one dated the date on
which the Form S-4 shall become effective and one dated the Closing Date, each
addressed to COMSAT and Lockheed Xxxxxx, in form and substance reasonably
satisfactory to the other party and customary in scope and substance for comfort
letters delivered by independent public accountants in connection with
registration statements similar to the Form S-4.
SECTION 6.19. NORTH AMERICAN NUMBERING PLAN. COMSAT acknowledges
that an affiliate of Lockheed Xxxxxx is party to a contract pursuant to which it
acts as administrator of the North American Numbering Plan. Lockheed Xxxxxx
shall take such actions as are necessary so that the existence of the
aforementioned contract does not prevent or delay consummation of the Offer or
the Merger.
SECTION 6.20. AFFILIATE LETTERS. On or prior to the date of the
COMSAT Shareholders Meeting, COMSAT will deliver to Lockheed Xxxxxx a letter
identifying all Persons who may be deemed to be "affiliates" of COMSAT for
purposes of Rule 145 under the Securities Act as of the date of the COMSAT
Shareholders Meeting (the "COMSAT AFFILIATE LETTER"). On or prior to the
Closing Date, COMSAT will use all reasonable efforts to cause each Person
identified as an "affiliate" in the COMSAT Affiliate Letter to deliver a written
agreement acknowledging the restrictions on affiliates under Rule 145 under the
Securities Act.
ARTICLE VII
TERMINATION; AMENDMENT; WAIVER
SECTION 7.1. TERMINATION. This Agreement may be terminated and
the Offer and the Merger may be abandoned at any time (notwithstanding approval
of the Merger by the shareholders of COMSAT) prior to the Effective Time:
45
(a) by mutual written consent of COMSAT and Lockheed Xxxxxx;
(b) by COMSAT or Lockheed Xxxxxx if any court of competent
jurisdiction in the United States of America or other United States Governmental
Authority shall have issued a final Order or taken any other final action
restraining, enjoining or otherwise prohibiting the consummation of the Offer or
the Merger and such Order or other action is or shall have become nonappealable;
(c) by Lockheed Xxxxxx if, due to an occurrence or circumstance which
would result in a failure to satisfy any of the conditions set forth in Exhibit
-------
A hereto, Lockheed Xxxxxx shall have (i) failed to commence the Offer within the
-
time required by Regulation 14D under the Exchange Act, (ii) terminated the
Offer without the purchase of any Shares thereunder or (iii) failed to accept
for payment and pay for Shares pursuant to the Offer prior to the one year
anniversary of the date hereof; provided that Lockheed Xxxxxx may not terminate
--------
pursuant to this Section 7.1(c) if Lockheed Xxxxxx is in material breach of this
Agreement;
(d) by COMSAT if (i) there shall not have occurred a material breach
of any representation, warranty, covenant or agreement of COMSAT or any of its
Subsidiaries contained in this Agreement and Lockheed Xxxxxx shall have (A)
failed to commence the Offer within the time required by Regulation 14D under
the Exchange Act, (B) terminated the Offer without the purchase of any Shares
thereunder or (C) failed to accept for payment and pay for Shares pursuant to
the Offer on or prior to the one year anniversary of the date hereof or (ii)
prior to the purchase of Shares pursuant to the Offer, the Board of Directors of
COMSAT or any committee thereof shall have (A) determined that an Acquisition
Proposal is a Superior Proposal, and approved a definitive agreement to effect
such Superior Proposal and directed the authorized officers of COMSAT to execute
and deliver such definitive agreement concurrently with the effectiveness of the
termination of this Agreement pursuant to this Section 7.1(d)(ii) or (B) adopted
any resolution to effect any of the foregoing; provided, that such termination
--------
under this clause (ii) shall not be effective until payment of the fee required
by Section 7.3(a) hereof;
(e) by Lockheed Xxxxxx prior to the purchase of Shares pursuant to the
Offer, if (i) there shall have occurred a breach of any representation or
warranty of COMSAT or its Subsidiaries contained in this Agreement that would
reasonably be expected to have a Material Adverse Effect on COMSAT or would
reasonably be expected to materially adversely affect (or materially delay) the
consummation of the Offer, (ii) there shall have occurred a breach of any
covenant or agreement of COMSAT or its Subsidiaries contained in this Agreement
that has or would reasonably be expected to have a Material Adverse Effect on
COMSAT or that would reasonably be expected to materially adversely affect (or
materially delay) the consummation of the Offer, which shall not have been cured
prior to the earlier of (A) 10 days following notice of such breach and (B) two
business days prior to the date on which the Offer expires, (iii) the Board of
Directors of COMSAT or any committee thereof shall have (A) determined that an
Acquisition Proposal is a Superior Proposal, (B) withdrawn, modified or
materially qualified (including by amendment of the Schedule 14D-9) in a manner
adverse to Lockheed Xxxxxx or Acquisition Sub its approval or recommendation of
the Offer, the Merger or this Agreement, (C) recommended to COMSAT's
shareholders another Acquisition Proposal, (D) adopted any
46
resolution to effect any of the foregoing, or (iv) the Minimum Condition shall
not have been satisfied upon the expiration of the Offer and at or prior to such
time a Person or group (other than Lockheed Xxxxxx or Acquisition Sub) shall
have commenced, publicly proposed or publicly disclosed an Acquisition Proposal;
(f) by COMSAT prior to the purchase of Shares pursuant to the Offer,
if (i) there shall have occurred a breach of any representation or warranty of
Lockheed Xxxxxx or Acquisition Sub contained in this Agreement that would
reasonably be expected to materially adversely affect (or materially delay) the
consummation of the Offer or (ii) there shall have occurred a material breach of
any covenant or agreement of Lockheed Xxxxxx or Acquisition Sub contained in
this Agreement that would reasonably be expected to materially adversely affect
(or materially delay) the consummation of the Offer which shall not have been
cured prior to the earlier of (A) 10 days following notice of such breach and
(B) two business days prior to the date on which the Offer expires;
(g) by Lockheed Xxxxxx or COMSAT if the shareholders of COMSAT shall
not have approved the Merger and this Agreement at the COMSAT Shareholders
Meeting, including any postponement or adjournment thereof, on or before the one
year anniversary of the date hereof;
(h) by COMSAT or Lockheed Xxxxxx if (i) there shall not have occurred
a material breach of any representation, warranty, covenant or agreement of such
party contained in this Agreement and (ii) the Effective Time shall not have
occurred on or before the two year anniversary of the date hereof;
SECTION 7.2. EFFECT OF TERMINATION. In the event of the termination
and abandonment of this Agreement pursuant to Section 7.1 hereof, this Agreement
shall forthwith become void and have no effect, without any Liability on the
part of any party hereto or its affiliates, directors, officers or shareholders,
other than the provisions of this Section 7.2 and Sections 6.6(b), 7.3, 8.2,
8.11 and 8.12 hereof. Nothing contained in this Section 7.2 shall relieve any
party from Liability for any willful breach of this Agreement.
SECTION 7.3. FEES AND EXPENSES.
(a) If any of the following shall occur:
(i) COMSAT or Lockheed Xxxxxx terminates this Agreement pursuant
to Section 7.1(e)(iv) or Section 7.1(g) and, within 12 months thereafter,
COMSAT or any of its Subsidiaries enters into an agreement with respect to
an Acquisition Proposal, or an Acquisition Proposal is consummated,
involving any Person or affiliate, or any group in which such Person (or
any affiliate thereof, or any group in which such Person or affiliate is a
member) (A) with whom COMSAT or any COMSAT Representative had discussions
with respect to an Acquisition Proposal, (B) to whom COMSAT or any COMSAT
Representative furnished information with respect to an Acquisition
Proposal or (C) who had commenced, publicly proposed or publicly disclosed
an Acquisition
47
Proposal or expressed to COMSAT an interest in an Acquisition Proposal, in
the case of each of clauses (A), (B) and (C) after the date hereof and
prior to such termination; or
(ii) COMSAT terminates this Agreement pursuant to Section
7.1(d)(ii) hereof;
then, in each case, COMSAT shall pay to Lockheed Xxxxxx, within one business day
following the execution and delivery of such agreement or such occurrence, as
the case may be, or simultaneously with such determination pursuant to Section
7.1(d)(ii) hereof, a fee, in cash, of $75 million (the "TERMINATION FEE");
provided, that COMSAT in no event shall be obligated to pay more than one such
--------
Termination Fee with respect to all such agreements and occurrences and such
termination.
(b) Except as specifically provided in this Section 7.3(b) or the
Registration Rights Agreement, each party shall bear its own expenses incurred
in connection with the transactions contemplated by the Transaction Agreements,
including, without limitation, out-of-pocket costs, and fees and expenses of
investment bankers, finders, brokers, agents, representatives, counsel and
accountants as well as fees and expenses incident to the negotiation,
preparation and execution of the Transaction Agreements and related
documentation, preparation of filings and consents with Governmental Authorities
and other Persons, and any litigation resulting from the execution of the
Transaction Agreements; provided, that in the event the Termination Fee becomes
--------
payable, COMSAT shall, upon the receipt of documentation in form reasonably
satisfactory to COMSAT, promptly reimburse Lockheed Xxxxxx and its Subsidiaries
in cash in immediately available funds, for any of the foregoing expenses of
Lockheed Xxxxxx or its Subsidiaries, up to $5.0 million in the aggregate.
(c) Notwithstanding anything to the contrary contained in this
Agreement, upon payment by COMSAT in full of the amounts referred to in Sections
7.3(a) and 7.3(b) hereof, COMSAT shall be released from all Liability hereunder,
including any Liability for any claims by Lockheed Xxxxxx, Acquisition Sub or
any of their affiliates based upon or arising out of any breach of this
Agreement.
(d) The agreements contained in this Section 7.3 are an integral part
of the transactions contemplated by this Agreement and constitute liquidated
damages and not a penalty. In the event of any dispute as to whether any fee or
other amount due under this Section 7.3 is due and payable, the prevailing party
shall be entitled to receive from the other party the reasonable costs and
expenses (including reasonable legal fees and expenses) in connection with any
action, including the filing of any lawsuit or other legal action, relating to
such dispute. Interest shall be paid on the amount any unpaid fee at the
publicly announced prime rate of Citibank, N.A. from the date such fee was
required to be paid.
SECTION 7.4. AMENDMENT. This Agreement may be amended by action
taken by COMSAT, Lockheed Xxxxxx and Acquisition Sub at any time before or after
approval of the Merger and this Agreement by the shareholders of COMSAT, if any;
provided that after the date
--------
48
of approval of the Merger and this Agreement by the shareholders of COMSAT, no
amendment shall be made which decreases the amount or changes the form of the
Merger Consideration or which adversely affects the rights of COMSAT's
shareholders hereunder without the approval of such shareholders. This
Agreement may not be amended except by an instrument in writing signed on behalf
of the parties.
SECTION 7.5. EXTENSION; WAIVER. At any time prior to the
Effective Time, the parties may (i) extend the time for the performance of any
of the obligations or other acts of the other parties hereto, (ii) waive any
inaccuracies in the representations and warranties of the other parties
contained herein or in any document, certificate or writing delivered pursuant
hereto or (iii) waive compliance with any of the agreements or conditions of the
other parties hereto contained herein; provided that after the date of approval
--------
of the Merger and this Agreement by the shareholders of COMSAT, no extensions or
waivers shall be made which adversely affect the rights of COMSAT's shareholders
hereunder without the approval of such shareholders. Any agreement on the part
of any party to any such extension or waiver shall be valid only if set forth in
an instrument in writing signed on behalf of such party.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1. SURVIVAL. The representations, warranties,
covenants and agreements made herein shall not survive beyond the Effective
Time; provided, that the covenants and agreements contained in Section 6.16
--------
hereof shall survive beyond the Effective Time without limitation.
SECTION 8.2. ENTIRE AGREEMENT. Except for the Confidentiality
Agreements dated as of August 5, 1997 between Lockheed Xxxxxx and COMSAT (the
"CONFIDENTIALITY AGREEMENTS"), which shall continue in full force and effect
other than Sections 3 and 7 thereof (which are superseded hereby), the
Transaction Agreements (including the schedules and exhibits and the agreements
and other documents referred to therein) embody the entire agreement and
understanding of the parties, and supersede all prior agreements or
understandings, with respect to the subject matters thereof.
SECTION 8.3. GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the internal laws of the State of Delaware
except for internal corporate matters, which shall be governed by the Laws of
the respective parties' jurisdictions of incorporation.
SECTION 8.4. NOTICES. In any case where any notice or other
communication is required or permitted to be given hereunder (including, without
limitation, any change in the information set forth in this Section 8.4), such
notice or communication shall be in writing and (i) personally delivered, (ii)
sent by postage prepaid certified or registered mail, return receipt requested,
(iii) sent by recognized overnight courier, or (iv) transmitted by telecopier,
with a
49
copy sent by postage prepaid certified or registered mail, return receipt
requested, or by recognized overnight courier, as follows:
(a) If to the Lockheed Xxxxxx or Acquisition Sub, to:
Lockheed Xxxxxx Corporation
0000 Xxxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: General Counsel
with a copy to:
O'Melveny & Xxxxx LLP
000 00xx Xxxxxx, X.X., Xxxxx 000X
Xxxxxxxxxx, X.X. 00000-0000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: Xxxxx X. Xxxx, Esq.
(b) If to COMSAT, to:
COMSAT Corporation
0000 Xxxx Xxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: General Counsel
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx, Esq.
SECTION 8.5. SUCCESSORS AND ASSIGNS; NO THIRD PARTY
BENEFICIARIES. This Agreement and all of the provisions hereof shall be binding
upon and inure to the benefit of the parties and their respective successors and
permitted assigns, but neither this Agreement nor any of the rights, interests
or obligations hereunder shall be assigned by any party (whether by operation of
Law or otherwise) without the prior written consent of the other party;
provided that Lockheed Xxxxxx may assign its rights and obligations hereunder
--------
or those of Acquisition Sub
50
to Lockheed Xxxxxx or any Subsidiary of Lockheed Xxxxxx, but in each case no
such assignment shall relieve Lockheed Xxxxxx or Acquisition Sub, of its
obligations hereunder. This Agreement shall be binding upon and inure solely to
the benefit of each party hereto, and except for Section 6.16 hereof nothing in
this Agreement, express or implied, is intended to or shall confer upon any
other Person any rights, benefits or remedies of any nature whatsoever under or
by reason of this Agreement.
SECTION 8.6. COUNTERPARTS. This Agreement may be signed in any
number of counterparts, each of which shall be an original, with the same effect
as if all signatures were on the same instrument.
SECTION 8.7. INTERPRETATION. Article and section headings in
this Agreement are included for the convenience of reference only and do not
constitute a part of this Agreement for any other purpose. References to
parties and articles and sections in this Agreement are references to the
parties to or the articles and sections of this Agreement, as the case may be,
unless the context shall require otherwise.
SECTION 8.8. SCHEDULES. The COMSAT Disclosure Schedule shall be
construed with and as an integral part of this Agreement to the same extent as
if the same had been set forth verbatim herein.
SECTION 8.9. LEGAL ENFORCEABILITY. Any provision of this
Agreement that is prohibited or unenforceable in any jurisdiction shall, as to
that jurisdiction, be ineffective to the extent of the prohibition or
unenforceability without invalidating the remaining provisions of this Agreement
or affecting the validity or enforceability of the provision in any other
jurisdiction.
SECTION 8.10. NO WAIVERS; REMEDIES; SPECIFIC PERFORMANCE.
(a) No failure or delay by any party in exercising any right, power or
privilege under this Agreement shall operate as a waiver of such right, power or
privilege. A single or partial exercise of any right, power or privilege shall
not preclude any other or further exercise of such right, power or privilege or
the exercise of any other right, power or privilege. The rights and remedies
provided in this Agreement shall be cumulative and not exclusive of any rights
or remedies available at law or in equity.
(b) In view of the uniqueness of the agreements contained in this
Agreement and the transactions contemplated hereby and the fact that each party
would not have an adequate remedy at law for money damages in the event that any
obligation under this Agreement is not performed in accordance with its terms,
each party therefore agrees that the other parties to this Agreement shall be
entitled to specific enforcement of the terms of this Agreement in addition to
any other remedy to which any of them may be entitled, at law or in equity.
SECTION 8.11. EXCLUSIVE JURISDICTION. Each party (i) agrees that
any action with respect to this Agreement or transactions contemplated by this
Agreement shall be brought
51
exclusively in the courts of the State of Delaware or of the United States of
America for the State of Delaware, (ii) accepts for itself and in respect of its
property, generally and unconditionally, the jurisdiction of those courts, (iii)
irrevocably waives any objection, including, without limitation, any objection
to the laying of venue or based on the grounds of forum non conveniens, which it
----- --- ----------
may now or hereafter have to the bringing of any action in those jurisdictions;
provided, however, that each party may assert in an action in any other
-------- -------
jurisdiction or venue each mandatory defense, third-party claim or similar claim
that, if not so asserted in such action, may not be asserted in an original
action in the courts referred to in clause (i) above. Lockheed Xxxxxx and
COMSAT each hereby appoints Corporation Trust Company as its agent for service
of process in the State of Delaware in connection with any such action.
SECTION 8.12. WAIVER OF JURY TRIAL. Each party waives any right
to a trial by jury in any action to enforce or defend any right under this
Agreement or any amendment, instrument, document or agreement delivered, or
which in the future may be delivered, in connection with this Agreement and
agrees that any action shall be tried before a court and not before a jury.
______________________
[The remainder of this page has been left blank intentionally.]
52
IN WITNESS WHEREOF, each of the parties has caused this Agreement and
Plan of Merger to be executed on its behalf by its officers thereunto duly
authorized, all as of the day and year first above written.
COMSAT CORPORATION
By: /s/ Xxxxx X. Xxxxxxx
------------------------------
Name: Xxxxx X. Xxxxxxx
Title: President and
Chief Executive Officer
LOCKHEED XXXXXX CORPORATION
By: /s/ Xxxxx X. Xxxxxxx
------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Chairman and
Chief Executive Officer
DENEB CORPORATION
By: /s/ Xxxx X. Xxxxxxx
------------------------------
Name: Xxxx X. Xxxxxxx
Title: Chief Executive Officer
53
EXHIBIT A
CONDITIONS OF THE OFFER
Notwithstanding any other provision of the Offer, Lockheed Xxxxxx
shall not be required to accept for payment or pay for, and may delay the
acceptance for payment of (whether or not any Shares have theretofore been
accepted for payment), or the payment for, any Shares tendered, and may
terminate or extend the Offer and not accept for payment any Shares, if:
(i) immediately prior to the expiration of the Offer (as extended in
accordance with the terms of the Offer and the Merger Agreement), (A) any
applicable waiting period under the Antitrust Laws shall not have terminated or
expired and all consents or approvals required under the Antitrust Laws shall
not have been received, (B) fewer than one third (1/3) of the outstanding shares
of COMSAT Common Stock shall have been validly tendered and not withdrawn (the
"MINIMUM CONDITION"), (C) the shareholders of COMSAT shall not have approved the
Merger and this Agreement pursuant to Section 29-367 of the DCBCA, (D) Lockheed
Xxxxxx and Offer Subsidiary shall not have received all approvals of the FCC
necessary for them to consummate the Carrier Acquisition, (E) the Carrier
Acquisition shall not have been consummated, (F) Offer Subsidiary shall not have
been approved by the FCC to be an Authorized Carrier, (G) Offer Subsidiary shall
not have been authorized by the FCC to acquire the maximum number of shares of
COMSAT Common Stock to be purchased pursuant to the Offer (the affirmative
obligations of subsections (D)-(G) shall be referred to as the "AUTHORIZED
CARRIER CONDITIONS"), or (H) Lockheed Xxxxxx or its Subsidiaries shall not have
the right to vote any of the shares without restriction or limitation except as
expressly set forth in Section 303 of the Satellite Act (47 U.S.C. (S) 733); or
(ii) on or after the date of the Merger Agreement and prior to the
acceptance for payment of Shares, any of the following conditions exist:
(a) any of the representations or warranties of COMSAT contained
in the Merger Agreement shall not have been true and correct at the date
when made or (except for those representations and warranties made as of a
particular date which need only be true and correct as of such date) shall
cease to be true and correct (without giving effect to any limitation as to
"materiality" or "Material Adverse Effect" set forth therein) at any time
prior to consummation of the Offer, except for changes permitted by the
Merger Agreement and except where the failure to be so true and correct
would not, either individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect on COMSAT; provided, that if any such
--------
failure to be so true and correct (without giving effect to any limitation
as to "materiality" or "Material Adverse Effect" set forth therein) is
curable by COMSAT through the exercise of its reasonable efforts, then
Lockheed Xxxxxx may not terminate the Offer under this subsection (a) until
10 business days after written notice thereof has been given to COMSAT by
Lockheed Xxxxxx and unless at such time the matter has not been cured; or
A-1
(b) COMSAT shall have breached any of its covenants or agreements
contained in the Merger Agreement, except for any such breaches that,
individually or in the aggregate, would not reasonably be expected to have
a Material Adverse Effect on COMSAT; provided that, if any such breach is
--------
curable by COMSAT through the exercise of its reasonable efforts, then
Lockheed Xxxxxx may not terminate the Offer under this subsection (b) until
10 business days after written notice thereof has been given to COMSAT by
Lockheed Xxxxxx and unless at such time the breach has not been cured; or
(c) (A) after the date of the Merger Agreement, there shall have
been any change in existing Law or any new Law promulgated, enacted,
enforced or deemed applicable to COMSAT or to the transactions contemplated
by the Merger Agreement or (B) INTELSAT or Inmarsat shall have adopted a
plan for privatization, or have been privatized, in whole or in part, in a
manner or pursuant to terms and conditions (or, in the case of an adopted
plan, proposed terms and conditions), in the case of either clause (A) or
clause (B) that Lockheed Xxxxxx determines in good faith (after
consultation with COMSAT) would reasonably be expected to have a Material
Adverse Effect on COMSAT; or
(d) any fact or circumstance exists or shall have occurred that
has or would reasonably be expected to have a Material Adverse Effect on
COMSAT; or
(e) there shall have occurred (i) any general suspension of
trading in securities on the NYSE (other than intra-day trading halts),
(ii) the declaration of a banking moratorium or any suspension of payments
in respect of banks in the United States of America (whether or not
mandatory), (iii) the commencement of a war, armed hostilities or other
international or national calamity directly or indirectly involving the
United States of America and that would reasonably be expected to have a
Material Adverse Effect on COMSAT or would reasonably be expected to
materially adversely affect (or materially delay) the consummation of the
Offer, (iv) any limitation or proposed limitation (whether or not
mandatory) by any Governmental Authority or other instrumentality of the
United States of America that materially adversely affects generally the
extension of credit by banks or other financial institutions, or (v) in the
case of any of the situations described in clauses (i) through (iv)
inclusive, existing at the date of the commencement of the Offer, a
material acceleration, escalation or worsening thereof; or
(f) (i) there shall have been a decline in the Standard & Poor's
500 Index of at least 27% from the date hereof through any given day (a
"MEASUREMENT DATE") prior to the termination or expiration of the Offer,
and (ii) the Standard & Poor's 500 Index shall also be at least 27% lower
than on the date hereof on the earlier of (A) the close of trading on the
next trading date at least 30 calendar days from such Measurement Date, and
(B) the close of trading on the trading date immediately prior to the date
on which the Offer Closing Time would otherwise occur, but for the failure
of this condition; or
A-2
(g) prior to the purchase of Shares pursuant to the Offer, the
Board of Directors of COMSAT shall have (1) recommended an Acquisition
Proposal that is a Superior Proposal, (2) withdrawn, modified or materially
qualified (including by amendment of the Schedule 14D-9) in a manner
adverse to Lockheed Xxxxxx its approval or recommendation of the Offer, the
Merger or the Merger Agreement, (3) recommended to COMSAT's shareholders
another offer, or (4) adopted any resolution to effect any of the foregoing
which, in the sole judgment of Lockheed Xxxxxx in any such case, and
regardless of the circumstances (including any action or omission by
Lockheed Xxxxxx) giving rise to any such condition, makes it inadvisable to
proceed with such acceptance for payment; or
(h) the Merger Agreement shall have been terminated in accordance
with its terms.
The foregoing conditions are for the sole benefit of Lockheed Xxxxxx
and may be asserted by Lockheed Xxxxxx regardless of the circumstances giving
rise to such conditions, or may be waived by Lockheed Xxxxxx in whole or in part
at any time and from time to time in its sole discretion.
A-3
