<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 23, 1998
REGISTRATION NO. 333-51133
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 3 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
LORAL SPACE & COMMUNICATIONS LTD.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
------------------------
<TABLE>
<S> <C>
BERMUDA 13-3867424
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION) IDENTIFICATION NO.)
</TABLE>
C/O LORAL SPACECOM CORPORATION
600 THIRD AVENUE
NEW YORK, NEW YORK 10016
(212) 697-1105
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
ERIC J. ZAHLER, ESQ.
600 THIRD AVENUE
NEW YORK, NEW YORK 10016
(212) 697-1105
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
------------------------
WITH COPIES TO:
<TABLE>
<S> <C>
BRUCE R. KRAUS, ESQ. ROBERT ROSENMAN, ESQ.
WILLKIE FARR & GALLAGHER CRAVATH, SWAINE & MOORE
787 SEVENTH AVENUE WORLDWIDE PLAZA
NEW YORK, NEW YORK 10019-6099 825 EIGHTH AVENUE
(212) 728-8000 NEW YORK, NEW YORK 10079
(212) 474-1000
</TABLE>
------------------------
APPROXIMATE DATE OF THE COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As
soon as practicable after the effective date of this Registration Statement as
determined by market conditions.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box: [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box: [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering: [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: [ ]
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON
SUCH DATE AS THE COMMISSION ACTING PURSUANT TO SAID SECTION 8(a) MAY DETERMINE.
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<PAGE> 2
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the fees and expenses payable by the
Registrant in connection with this offering, other than underwriting discounts
and commissions. All the amounts shown are estimates, except the SEC
registration fee:
<TABLE>
<S> <C>
SEC registration fee........................................ $169,201
NASD fee.................................................... 30,500
NYSE listing fee............................................ 25,650
Printing fees............................................... 250,000
Legal fees and expenses..................................... 200,000
Accounting fees and expenses................................ 20,000
Miscellaneous fees and expenses............................. 4,649
--------
Total............................................. $700,000
========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Bermuda law permits a company to indemnify its directors and officers,
except for any act of fraud or dishonesty. The Registrant has provided in its
Bye-Laws that its directors and officers will be indemnified and held harmless
against any expenses, judgments, fines, settlements and other amounts incurred
by reason of any act or omission in the discharge of their duty, other than in
the case of fraud or dishonesty.
Bermuda law and the Bye-Laws of the Registrant also permit the Registrant
to purchase insurance for the benefit of its directors and officers against any
liability incurred by them for the failure to exercise the requisite care,
diligence and skill in the exercise of their powers and the discharge of their
duties, or indemnifying them in respect of any loss arising or liability
incurred by them by reason of negligence, default, breach of duty or breach of
trust.
The Registrant intends to enter into indemnification agreements with its
officers and directors. To the extent permitted by law, the indemnification
agreements may require the Registrant, among other things, to indemnify such
officers and directors against certain liabilities that may arise by reason of
their status or service as directors (other than liabilities arising from
willful misconduct of a culpable nature) and to advance their expenses incurred
as a result of any proceedings against them as to which they could be
indemnified.
The Registrant maintains a directors' and officers' liability insurance
policy.
ITEM 16. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
------- -----------------------
<C> <S>
1.1 -- Underwriting Agreement (for the U.S. offering)
1.2 -- Underwriting Agreement (for the International Offering)
4.1* -- Memorandum of Association
4.2* -- Second Amended and Restated Bye-Laws
5*** -- Opinion of Appleby, Spurling & Kempe
8.1*** -- Opinion of Appleby, Spurling & Kempe
8.2*** -- Opinion of Willkie Farr & Gallagher
10.1*** -- Purchase Agreement, dated as of May 20, 1998, between Loral
and certain limited partners of Globalstar
10.2*** -- Purchase Agreement, dated as of June 9, 1998, between Loral
and Dasa Globalstar Limited Partner, Inc.
23.1*** -- Consent of Deloitte & Touche LLP
</TABLE>
II-1
<PAGE> 3
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
------- -----------------------
<C> <S>
23.2*** -- Consent of Ernst & Young LLP
23.3*** -- Consent of Price Waterhouse
23.4*** -- Consent of Appleby, Spurling & Kempe (included in their
opinion filed as Exhibit 5 and 8.1)
23.5*** -- Consent of Willkie Farr & Gallagher (included in their
opinion filed as Exhibit 8.2)
24*** -- Powers of Attorney
</TABLE>
- ---------------
* Incorporated by reference to Loral's Annual Report on Form 10-K for the fiscal
year ended December 31, 1996 (File No. 1-14180).
*** Previously filed.
ITEM 17. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(b) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers, and controlling persons of
the registrant pursuant to the provisions described under item 15 above, or
otherwise, the registrant has been advised that in the opinion of the Securities
and Exchange Commission, such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer, or controlling
person of the registrant in the successful defense of any action, suit or
proceeding), is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
II-2
<PAGE> 4
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE
REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS AMENDMENT NO. 3 TO
REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO
DULY AUTHORIZED, IN THE CITY OF NEW YORK, STATE OF NEW YORK, ON JUNE 23, 1998.
LORAL SPACE & COMMUNICATIONS LTD.
BY: *
------------------------------------
BERNARD L. SCHWARTZ
CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
NO. 3 TO REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
NAME TITLE DATE
---- ----- ----
<C> <S> <C>
* Chairman of the Board and Chief
- ------------------------------------------------ Executive Officer (Principal
Bernard L. Schwartz Executive Officer) June 23, 1998
Director
- ------------------------------------------------
Howard Gittis
* Director
- ------------------------------------------------
Robert B. Hodes June 23, 1998
* Director
- ------------------------------------------------
Gershon Kekst June 23, 1998
* Director
- ------------------------------------------------
Charles Lazarus June 23, 1998
* Director
- ------------------------------------------------
Malvin A. Ruderman June 23, 1998
* Director
- ------------------------------------------------
E. Donald Shapiro June 23, 1998
* Director
- ------------------------------------------------
Arthur L. Simon June 23, 1998
* Director
- ------------------------------------------------
Daniel Yankelovich June 23, 1998
* First Senior Vice President and
- ------------------------------------------------ Chief Financial Officer
Michael P. DeBlasio (Principal Financial Officer) June 23, 1998
</TABLE>
II-3
<PAGE> 5
<TABLE>
<CAPTION>
NAME TITLE DATE
---- ----- ----
<C> <S> <C>
* Vice President and Controller
- ------------------------------------------------ (Principal Accounting Officer)
Harvey B. Rein June 23, 1998
* By: /s/ ERIC J. ZAHLER
------------------------------------------
Attorney-In-Fact
</TABLE>
II-4
<PAGE> 6
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
------- -----------------------
<C> <S> <C>
1.1 -- Underwriting Agreement (for the U.S. Offering)
1.2 -- Underwriting Agreement (for the International Offering)
4.1* -- Memorandum of Association
4.2* -- Second Amended and Restated Bye-Laws
5*** -- Opinion of Appleby, Spurling & Kempe
8.1*** -- Opinion of Appleby, Spurling & Kempe
8.2*** -- Opinion of Willkie Farr & Gallagher
10.1*** -- Purchase Agreement, dated as of May 20, 1998, between Loral
and certain limited partners of Globalstar
10.2*** -- Purchase Agreement, dated as of June 20, 1998, between Loral
and Dasa Globalstar Limited Partner, Inc.
23.1*** -- Consent of Deloitte & Touche LLP
23.2*** -- Consent of Ernst & Young LLP
23.3*** -- Consent of Price Waterhouse
23.4*** -- Consent of Appleby, Spurling & Kempe (included in their
opinion filed as Exhibit 5)
23.5*** -- Consent of Willkie Farr & Gallagher (included in their
opinion filed as Exhibit 8.2)
24*** -- Powers of Attorney
</TABLE>
- ---------------
* Incorporated by reference to Loral's Annual Report on Form 10-K for the
fiscal year ended December 31, 1996 (File No. 1-14180).
*** Previously filed.
<PAGE> 1
Exhibit 1.1
[Draft--6/21/98]
16,000,000(1)
LORAL SPACE & COMMUNICATIONS LTD.
Common Stock, $0.01 par value
U.S. UNDERWRITING AGREEMENT
June , 1998
Lehman Brothers Inc.,
Bear, Stearns & Co. Inc.
Donaldson, Lufkin & Jenrette Securities Corporation
BancAmerica Robertson Stephens
CIBC Oppenheimer Corp.
NationsBanc Montgomery Securities LLC
C.E. Unterberg, Towbin
c/o Lehman Brothers Inc.
As Representatives of the several
Underwriters named in Schedule 1,
Three World Financial Center
New York, New York 10285
Dear Sirs:
Loral Space & Communications Ltd., a Bermuda company (the
"Company"), proposes to sell 16,000,000 shares (the "Firm Stock") of the
Company's Common Stock, par value $0.01 per share (the "Common Stock") . In
addition, the Company proposes to grant to the Underwriters named in Schedule 1
hereto (the "U.S. Underwriters") an option to purchase up to an additional
2,400,000 shares of the Common Stock on the terms and for the purposes set forth
in Section 3 (the "Option Stock"). The Firm Stock and the Option Stock, if
purchased, are hereinafter collectively called the "Stock." This is to confirm
the agreement concerning the purchase of the Stock from the Company by the U.S.
Underwriters.
- --------
(1) Does not include an over-allotment option of up to 2,400,000 shares of
Common Stock, par value $0.01 per share.
<PAGE> 2
2
It is understood by all parties that the Company is concurrently
entering into an agreement dated the date hereof (the "International
Underwriting Agreement") providing for the sale by the Company of 4,600,000
shares of Common Stock (including the over-allotment option thereunder) (the
"International Stock") through arrangements with certain underwriters outside
the United States (the "International Managers"), for whom Lehman Brothers
International (Europe) is acting as lead manager. The U.S. Underwriters and the
International Managers simultaneously are entering into an agreement between the
U.S. and international underwriting syndicates (the "Agreement Between U.S.
Underwriters and International Managers") which provides for, among other
things, the transfer of shares of Common Stock between the two syndicates. Two
forms of prospectus are to be used in connection with the offering and sale of
shares of Common Stock contemplated by the foregoing, one relating to the Stock
and the other relating to the International Stock. The latter form of prospectus
will be identical to the former except for certain substitute pages as included
in the registration statement and amendments thereto referred to below. Except
as used in Sections 3, 4, 5, 10 and 11 herein, and except as the context may
otherwise require, references herein to the Stock shall include all the shares
of the Common Stock which may be sold pursuant to either this Agreement or the
International Underwriting Agreement, and references herein to any prospectus
whether in preliminary or final form, and whether as amended or supplemented,
shall include both the U.S. and the international versions thereof.
1. Definitions. The following terms as used in this Agreement shall
have the following meanings:
"Commission" shall mean the Securities and Exchange Commission.
"Globalstar" shall mean Globalstar, L.P., a Delaware limited
partnership.
"Globalstar Credit Agreement" shall mean the Revolving Credit
Agreement dated as of December 15, 1995, among Globalstar, the several financial
institutions named therein and the Chase Manhattan Bank as amended on July 31,
1997 and October 15, 1997.
"GTL" shall mean Globalstar Telecommunications Limited, a Bermuda
corporation.
"Loral Affiliates" shall mean each of GTL, Globalstar, SS/L, Orion
and SatMex, and any other subsidiary (as defined in Section 16) of the Company.
"LQP" means Loral/QUALCOMM Partnership, L.P., a Delaware limited
partnership and the general partner of LQSS.
<PAGE> 3
3
"LQSS" means Loral/QUALCOMM Satellite Services, L.P., a Delaware
limited partnership and the managing general partner of Globalstar.
"Orion" shall mean Loral Orion Network Systems, Inc., a Delaware
corporation.
"Partnership Agreement" shall mean the Amended and Restated
Agreement of Limited Partnership of Globalstar, L.P. dated as of March 6, 1996,
among LQSS, the Company and certain limited partners named therein, as amended
by an amendment dated April 8, 1998.
"SatMex" shall mean Satelites Mexicanos, S.A. de C.V., a company
organized under the laws of Mexico.
"SS/L" shall mean Space Systems/Loral, Inc., a Delaware corporation.
<PAGE> 4
4
2. Representations, Warranties and Agreements of the Company. The
Company represents, warrants and agrees that:
(1) A registration statement on Form S-3 with respect to the Stock
has (i) been prepared by the Company in conformity with the requirements of the
United States Securities Act of 1933 (the "Securities Act") and the rules and
regulations (the "Rules and Regulations") of the United States Securities and
Exchange Commission (the "Commission") thereunder, (ii) been filed with the
Commission under the Securities Act and (iii) become effective under the
Securities Act. Copies of such registration statement have been delivered by the
Company to you as the representatives (the "Representatives") of the U.S.
Underwriters. As used in this Agreement, "Effective Time" means the date and the
time as of which such registration statement, or the most recent post-effective
amendment thereto, if any, was declared effective by the Commission; "Effective
Date" means the date of the Effective Time; "Preliminary Prospectus" means each
prospectus included in such registration statement, or amendments thereof,
before it became effective under the Securities Act and any prospectus filed
with the Commission by the Company with the consent of the Representatives
pursuant to Rule 424(a) of the Rules and Regulations; "Registration Statement"
means such registration statement, as amended at the Effective Time, including
any documents incorporated by reference therein at such time and all information
contained in the final prospectus filed with the Commission pursuant to Rule
424(b) of the Rules and Regulations in accordance with Section 6 hereof and
deemed to be a part of the registration statement as of the Effective Time
pursuant to paragraph (b) of Rule 430A of the Rules and Regulations; and
"Prospectus" means such final prospectus, as first filed with the Commission
pursuant to paragraph (1) or (4) of Rule 424(b) of the Rules and Regulations.
Reference made herein to any Preliminary Prospectus or to the Prospectus shall
be deemed to refer to and include any documents incorporated by reference
therein pursuant to Item 12 of Form S-3 under the Securities Act, as of the date
of such Preliminary Prospectus or the Prospectus, as the case may be, and any
reference to any amendment or supplement to any Preliminary Prospectus or the
Prospectus shall be deemed to refer to and include any document filed under the
United States Securities Exchange Act of 1934 (the "Exchange Act") after the
date of such Preliminary Prospectus or the Prospectus, as the case may be, and
incorporated by reference in such Preliminary Prospectus or the Prospectus, as
the case may be; and any reference to any amendment to the Registration
Statement shall be deemed to include any annual report of the Company filed with
the Commission pursuant to Section 13(a) or 15(d) of the Exchange Act after the
Effective Time that is incorporated by reference in the Registration Statement.
The Commission has not issued any order preventing or suspending the use of any
Preliminary Prospectus.
(2) The Registration Statement conforms, and the Prospectus and any
further amendments or supplements to the Registration Statement or the
Prospectus will, when they become effective or are filed with the Commission, as
the case may be,
<PAGE> 5
5
conform in all respects to the requirements of the Securities Act and the Rules
and Regulations and do not and will not, as of the applicable effective date (as
to the Registration Statement and any amendment thereto) and as of the
applicable filing date (as to the Prospectus and any amendment or supplement
thereto) 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 not misleading; provided that no representation or warranty is made as
to information contained in or omitted from the Registration Statement or the
Prospectus in reliance upon and in conformity with written information furnished
to the Company through the Representatives by or on behalf of any U.S.
Underwriter specifically for inclusion therein.
(3) The documents incorporated by reference in the Prospectus, when
they were filed with the Commission, conformed in all material respects to the
requirements of the Securities Act or Exchange Act, as applicable, and the rules
and regulations of the Commission thereunder, and none of such documents
contained an untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading; and any further documents so filed and incorporated by reference
in the Prospectus, when such documents are filed with the Commission, will
conform in all material respects to the requirements of the Securities Act or
the Exchange Act, as applicable, and the rules and regulations of the Commission
thereunder and will not 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 not misleading.
(4) Each of the Company and GTL has been duly incorporated as an
exempted company and is validly existing as an exempted company in good standing
under the laws of Bermuda, with all requisite power and authority and, except as
disclosed in the Prospectus, has all necessary material government
authorizations, licenses, certificates, franchises, permits and approvals
required to own its properties and to conduct its business as described in the
Prospectus; Globalstar has been duly formed and is validly existing as a limited
partnership under the laws of the State of Delaware, and has been duly qualified
for the transaction of business and is in good standing under the laws of each
other jurisdiction in which it owns or leases property, or conducts any
business, so as to require such qualification (except where the failure to so
qualify would not have a material adverse effect on Globalstar); and Globalstar
has all requisite power and authority and, except as disclosed in the
Prospectus, has all necessary material government authorizations, licenses,
certificates, franchises, permits and approvals required to own its properties
and to conduct its business as described in the Prospectus; SS/L and Orion have
been duly incorporated and are validly existing in good standing under the laws
of the State of Delaware, with all requisite power and authority and, except as
disclosed in the Prospectus, have all necessary material government
authorizations, licenses, certificates, franchises, permits and approvals
required to own
<PAGE> 6
6
their properties and to conduct their businesses as described in the Prospectus;
SatMex has been duly formed and is validly existing as a company under the laws
of Mexico, with all requisite power and authority and, except as disclosed in
the Prospectus, has all necessary material government authorizations, licenses,
certificates, franchises, permits and approvals required to own its properties
and conduct its business as described in the Prospectus; each other Loral
Affiliate that is a corporation has been duly incorporated and is validly
existing in good standing under the laws of its jurisdiction of incorporation;
each Loral Affiliate that is a partnership has been duly formed and is validly
existing under the laws of its jurisdiction of formation.
(5) Neither the Company nor any Loral Affiliate is an "investment
company" within the meaning of such term under the United States Investment
Company Act of 1940 and the rules and regulations of the Commission thereunder.
Since the respective dates as of which information is given in the Prospectus,
there has not been, and prior to any Closing Date (as defined in Section 3
hereof) there will not be, any material change in the capital stock or
partnership interests of the Company or short-term debt or long-term
consolidated debt of the Company or any Loral Affiliate, or any material adverse
change, or any development involving a prospective material adverse change, in
or affecting the general affairs, management, financial position, stockholders'
equity or results of operations of the Company and the Loral Affiliates, taken
as a whole, otherwise than as set forth or contemplated, or under arrangements
referred to, in the Prospectus.
(6) The shares of the Stock to be issued and sold by the Company to
the U.S. Underwriters hereunder and under the International Underwriting
Agreement have been duly and validly authorized and, when issued and delivered
against payment therefor as provided herein and in the International
Underwriting Agreement, will be duly and validly issued, fully paid and
non-assessable; and the Stock will conform to the description thereof contained
in the Prospectus.
(7) This Agreement has been duly authorized, executed and delivered
by the Company.
(8) The execution, delivery and performance of this Agreement by the
Company and the consummation of the transactions contemplated hereby will not
conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which the Company or
any Loral Affiliate is a party or by which the Company or any Loral Affiliate is
bound or to which any of the property or assets of the Company or any Loral
Affiliate is subject, nor will such actions result in any violation of the
provisions of the Memorandum of Association or by-laws of the Company or the
charter or by-laws of any Loral Affiliate or any statute or any order, rule or
regulation of
<PAGE> 7
7
any court or governmental agency or body having jurisdiction over the Company or
any Loral Affiliate or any of their properties or assets; and except for the
registration of the Stock under the Securities Act and such consents, approvals,
authorizations, registrations or qualifications as may be required under the
Exchange Act and applicable state or foreign securities laws in connection with
the purchase and distribution of the Stock by the U.S. Underwriters, no consent,
approval, authorization or order of, or filing or registration with, any such
court or governmental agency or body is required for the execution, delivery and
performance of this Agreement by the Company and the consummation of the
transactions contemplated hereby.
(9) There are no contracts, agreements or understandings between the
Company and any person granting such person the right to require the Company to
file a registration statement under the Securities Act with respect to any
securities of the Company owned or to be owned by such person or to require the
Company to include such securities in the securities registered pursuant to the
Registration Statement or in any securities being registered pursuant to any
other registration statement filed by the Company under the Securities Act,
except such contracts or agreements under which such rights have been waived in
writing in a manner reasonably satisfactory to the Representatives.
(10) Except as described in the Registration Statement, the Company
has not sold or issued any shares of Common Stock during the six-month period
preceding the date of the Prospectus, including any sales pursuant to Rule 144A,
Regulation D or Regulation S under the Securities Act, other than shares issued
pursuant to employee benefit plans, qualified stock options plans or other
employee compensation plans or pursuant to outstanding options, rights or
warrants.
(11) Neither the Company nor any Loral Affiliate has sustained,
since the date of the latest audited financial statements included or
incorporated by reference in the Prospectus, any material loss or interference
with its business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental action,
order or decree, otherwise than as set forth or contemplated in the Prospectus;
and, since such date, there has not been any prospective change in the capital
stock, partnership interests or long-term debt of the Company or any Loral
Affiliate or any material adverse change, or any development involving a
prospective material adverse change, in or affecting the general affairs,
management, financial position, stockholders' equity or results of operations of
the Company and the Loral Affiliates, otherwise than as set forth or
contemplated in the Prospectus.
(12) The financial statements (including the related notes and
supporting schedules) filed as part of the Registration Statement or included or
incorporated by reference in the Prospectus present fairly the financial
condition and
<PAGE> 8
8
results of operations of the entities purported to be shown thereby, at the
dates and for the periods indicated, and have been prepared in conformity with
generally accepted accounting principles applied on a consistent basis
throughout the periods involved.
(13) Deloitte & Touche LLP, who have certified certain financial
statements of the Company and certain of the Loral Affiliates, whose report
appears in the Prospectus or is incorporated by reference therein and who have
delivered the initial letter referred to in Section 8(h) hereof, are independent
public accountants as required by the Securities Act and the Rules and
Regulations; Ernst & Young LLP, who have certified certain financial statements
of Orion and whose reports appear in the Prospectus or are incorporated by
reference therein, were independent accountants as required by the Securities
Act and the Rules and Regulations during the periods covered by the financial
statements on which they reported contained or incorporated in the Prospectus;
and Price Waterhouse LLP, who have certified certain financial statements of
SatMex, whose report appears in the Prospectus or is incorporated by reference
therein and who have delivered the initial letter referred to in Section 8(i)
hereof, are independent public accountants as required by the Securities Act and
the Rules and Regulations;.
(14) Except as described in the Prospectus, the Company and each of
the Loral Affiliates carry, or are covered by, insurance in such amounts and
covering such risks as is adequate for the conduct of their respective
businesses and the value of their respective properties and as is customary for
companies engaged in similar businesses in similar industries.
(15) Each of the Company and the Loral Affiliates and their
respective equipment suppliers owns or possesses adequate patent rights or
licenses or other rights to use patent rights, inventions, trademarks, service
marks, trade names and copyrights (except as otherwise described in the
Prospectus) necessary to conduct the general business proposed to be operated by
the Company and the Loral Affiliates as described in the Prospectus, and none of
the Company or the Loral Affiliates or, to the knowledge of the Company, any of
their respective equipment suppliers, has received any notice of infringement of
or conflict with asserted rights of others with respect to any patent, patent
rights, inventions, trademarks, service marks, trade names or copyrights which,
singly or in the aggregate, could materially adversely affect the business,
operations, financial condition, income or business prospects of the Company and
the Loral Affiliates, taken as a whole.
(16) Except as described in the Prospectus, there are no legal or
governmental proceedings pending to which the Company or any Loral Affiliate is
a party or of which any property or assets of the Company or any Loral Affiliate
is the subject which, if determined adversely to the Company or any Loral
Affiliate, might have a material adverse effect on the consolidated financial
position, stockholders' equity,
<PAGE> 9
9
results of operations, business or prospects of the Company and the Loral
Affiliates and to the best of the Company's knowledge, no such proceedings are
threatened or contemplated by governmental authorities or threatened by others.
(17) Other than as disclosed in the Prospectus, (i) no default
exists, and no event has occurred which with notice or lapse of time, or both,
would constitute a default in the due performance and observance of any term,
covenant or condition of the Partnership Agreement, the Globalstar Credit
Agreement, the agreement between the Company and AT&T Corp., dated as of
September 25, 1996, providing for the sale by AT&T Corp. to the Company of the
assets constituting its Skynet Satellite Services Business (the "Skynet
Agreement"), the Shareholders Agreement dated as of April 23, 1996 between
Lockheed Martin Tactical Systems, Inc. and the Company (the "Lockheed/Loral
Shareholders Agreement"), the Agreement and Plan of Merger Among Orion, the
Company and Loral Satellite Corporation dated as of October 7, 1997, as amended,
or any indenture, mortgage, deed of trust, loan or credit agreement, lease or
other agreement or instrument to which the Company or any Loral Affiliate is a
party or by which the Company or any Loral Affiliate is bound, except any such
default with respect to any such other agreement or instrument as does not
singly or in the aggregate have a material adverse effect on the Company and the
Loral Affiliates, taken as a whole and (ii) neither the Company nor any Loral
Affiliate is in violation in any material respect of any law.
(18) (i) The FCC has authorized LQP to construct a mobile satellite
system capable of operating in the 1610-1626.5/2483.5-2500 MHz frequency bands,
consistent with the technical specifications set forth in its application, the
FCC's rules and the conditions set forth in the FCC's Order and Authorization
(DA 95-128), released January 31, 1995; however, such authorization is presently
subject to modification, stay or revocation through judicial appeals.
(ii) Participation by Globalstar in the development and
operation of the Globalstar System as described in the Prospectus does not
violate the Communications Act of 1934, as amended (the "Communications
Act"), or the rules and regulations thereunder.
(iii) The construction, launch and operation by Globalstar of
the Globalstar satellite constellation authorized by the Order and
Authorization, FCC 95-128 (released Jan. 31, 1995), would not violate
provisions of the Communications Act or the FCC's rules and policies
thereunder relating to control of FCC authorizations, provided that L/Q
Licensee, Inc. remains in ultimate control of the authorized facilities as
defined by the rules and policies of the FCC and that there is no transfer
of control of L/Q Licensee, Inc. without prior approval of the FCC.
<PAGE> 10
10
(19) Neither the Company nor any Loral Affiliate, nor any director,
officer, agent, employee or other person associated with or acting on behalf of
the Company or any Loral Affiliate, has used any corporate funds for any
unlawful contribution, gift, entertainment or other unlawful expense relating to
political activity; made any direct or indirect unlawful payment to any foreign
or domestic government official or employee from corporate funds; violated or is
in violation of any provision of the Foreign Corrupt Practices Act of 1977; or
made any bribe, rebate, payoff, influence payment, kickback or other unlawful
payment.
(20) Except as disclosed in the Prospectus, there has been no
storage, disposal, generation, manufacture, refinement, transportation, handling
or treatment of toxic wastes, medical wastes, hazardous wastes or hazardous
substances by any of the Company or the Loral Affiliates (or, to the knowledge
of the Company, any predecessors in interest of any of them) at, upon or from
any of the property now or previously owned or leased by the Company or any
Loral Affiliate, as the case may be, in violation of any applicable law,
ordinance, rule, regulation, order, judgment, decree or permit or which would
require remedial action under any applicable law, ordinance, rule, regulation,
order, judgment, decree or permit, except for any violation or remedial action
which would not have, or could not be reasonably likely to have, singularly or
in the aggregate with all such violations and remedial actions, a material
adverse effect on the general affairs, management, financial position,
shareholders' equity or results of operations of the Company and the Loral
Affiliates, taken as a whole; there has been no material spill, discharge, leak,
emission, injection, escape, dumping or release of any kind onto such property
or into the environment surrounding such property of any toxic wastes, medical
wastes, solid wastes, hazardous wastes or hazardous substances due to or caused
by the Company, any Loral Affiliate or any of their respective predecessors or
with respect to which the Company has knowledge, except for any such spill,
discharge, leak, emission, injection, escape, dumping or release which would not
have or would not be reasonably likely to have, singularly or in the aggregate
with all such spills, discharges, leaks, emissions, injections, escapes,
dumpings and releases, a material adverse effect on the general affairs,
management, financial position, shareholders' equity or results of operations of
the Company and the Loral Affiliates, taken as a whole; and the terms "hazardous
wastes", "toxic wastes", "hazardous substances" and "medical wastes" shall have
the meanings specified in any applicable local, state, Federal and foreign laws
or regulations with respect to environmental protection.
(21) The partnership interests in Globalstar held by the Company and
GTL pursuant to the Partnership Agreement are duly and validly authorized,
executed, issued and delivered, in accordance with the terms of the Partnership
Agreement, fully paid and not subject to preemptive rights and constitute the
valid and binding obligations of Globalstar; all the issued and outstanding
capital stock of each other Loral Affiliate
<PAGE> 11
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has been duly authorized and validly issued and is fully paid and nonassessable;
and, except as disclosed in the Prospectus and except for the stock of GTL that
is owned by the Company and has been pledged to Lockheed Martin and Common Stock
of GTL owned by the Company that is subject to outstanding options, the capital
stock of such Loral Affiliate owned by the Company, directly or indirectly, is
owned free from liens, encumbrances, equities, claims and defects.
(22) For U.S. Federal income tax purposes, the Company is not, and
does not expect to become, a "passive foreign investment company" within the
meaning of Section 1297 of the Internal Revenue Code of 1986, as amended.
3. Purchase of the Stock by the U.S. Underwriters. On the basis of
the representations and warranties contained in, and subject to the terms and
conditions of, this Agreement, the Company agrees to sell 16,000,000 shares of
the Firm Stock to the several U.S. Underwriters and each of the U.S.
Underwriters, severally and not jointly, agrees to purchase the number of shares
of the Firm Stock set opposite that U.S. Underwriter's name in Schedule 1
hereto. The respective purchase obligations of the U.S. Underwriters with
respect to the Firm Stock shall be rounded among the U.S. Underwriters to avoid
fractional shares, as the Representatives may determine.
In addition, the Company grants to the U.S. Underwriters an option
to purchase up to 2,400,000 shares of Option Stock. Such option is granted
solely for the purpose of covering over-allotments in the sale of Firm Stock and
is exercisable as provided in Section 5 hereof. Shares of Option Stock shall be
purchased severally for the account of the U.S. Underwriters in proportion to
the number of shares of Firm Stock set opposite the name of such U.S.
Underwriters in Schedule 1 hereto. The respective purchase obligations of each
U.S. Underwriter with respect to the Option Stock shall be adjusted by the
Representatives so that no U.S. Underwriter shall be obligated to purchase
Option Stock other than in 100 share amounts. The price of both the Firm Stock
and any Option Stock shall be $_____ per share.
The Company shall not be obligated to deliver any of the Stock to be
delivered on the First Delivery Date or any Delivery Date (as hereinafter
defined), as the case may be, except upon payment for all the Stock to be
purchased on such Delivery Date as provided herein.
4. Offering of Stock by the U.S. Underwriters. Upon authorization by
the Representatives of the release of the Firm Stock, the several U.S.
Underwriters propose to offer the Firm Stock for sale upon the terms and
conditions set forth in the Prospectus.
<PAGE> 12
12
Each U.S. Underwriter agrees that, except to the extent permitted by
the Agreement Between U.S. Underwriters and International Managers, it will not
offer or sell any of the Stock outside of the United States.
5. Delivery of and Payment for the Stock. Delivery of and payment
for the Firm Stock shall be made at the office of Cravath, Swaine & Moore,
Worldwide Plaza, 825 Eighth Avenue, New York, NY 10019 at 10:00 a.m., New York
City time, on the fourth full business day following the date of this Agreement
or at such other date or place as shall be determined by agreement between the
Representatives and the Company. This date and time are sometimes referred to as
the "First Delivery Date." On the First Delivery Date, the Company shall deliver
or cause to be delivered certificates representing the Firm Stock to the
Representatives for the account of each U.S. Underwriter against payment to or
upon the order of the Company of the purchase price by wire transfer in
certified or official bank check or checks payable in New York Clearing House
(next-day) funds. Time shall be of the essence, and delivery at the time and
place specified pursuant to this Agreement is a further condition of the
obligation of each U.S. Underwriter hereunder. Upon delivery, the Firm Stock
shall be registered in such names and in such denominations as the
Representatives shall request in writing not less than two full business days
prior to the First Delivery Date. For the purpose of expediting the checking and
packaging of the certificates for the Firm Stock, the Company shall make the
certificates representing the Firm Stock available for inspection by the
Representatives in New York, New York, not later than 2:00 p.m., New York City
time, on the business day prior to the First Delivery Date.
At any time on or before the thirtieth day after the date of this
Agreement, the option granted in Section 3 may be exercised in whole or in part
from time to time by written notice being given to the Company by the
Representatives. Such notice shall set forth the aggregate number of shares of
Option Stock as to which the option is being exercised, the names in which the
shares of Option Stock are to be registered, the denominations in which the
shares of Option Stock are to be issued and the date and time, as determined by
the Representatives, when the shares of Option Stock are to be delivered;
provided, however, that this date and time shall not be earlier than the First
Delivery Date nor earlier than the second business day after the date on which
the option shall have been exercised nor later than the fifth business day after
the date on which the option shall have been exercised. The date and time the
shares of Option Stock are delivered are sometimes referred to as the "Second
Delivery Date" and the First Delivery Date and any Second Delivery Date are
sometimes each referred to as a "Delivery Date").
Delivery of and payment for the Option Stock shall be made at the
place specified in the first sentence of the first paragraph of this Section 5
(or at such other place as shall be determined by agreement between the
Representatives and the Company) at 10:00 a.m., New York City time, on the such
Second Delivery Date. On the
<PAGE> 13
13
such Second Delivery Date, the Company shall deliver or cause to be delivered
the certificates representing the Option Stock to the Representatives for the
account of each U.S. Underwriter against payment to or upon the order of the
Company of the purchase price by wire transfer in certified or official bank
check or checks payable in New York Clearing House (next-day) funds. Time shall
be of the essence, and delivery at the time and place specified pursuant to this
Agreement is a further condition of the obligation of each U.S. Underwriter
hereunder. Upon delivery, the Option Stock shall be registered in such names and
in such denominations as the Representatives shall request in the aforesaid
written notice. For the purpose of expediting the checking and packaging of the
certificates for the Option Stock, the Company shall make the certificates
representing the Option Stock available for inspection by the Representatives in
New York, New York, not later than 2:00 p.m., New York City time, on the
business day prior to the such Second Delivery Date.
6. Further Agreements of the Company. The Company agrees:
(1) To prepare the Prospectus in a form approved by the
Representatives and to file such Prospectus pursuant to Rule 424(b) under the
Securities Act not later than the Commission's close of business on the second
business day following the execution and delivery of this Agreement or, if
applicable, such earlier time as may be required by Rule 430A(a)(3) under the
Securities Act; to make no further amendment or any supplement to the
Registration Statement or to the Prospectus prior to the last Delivery Date
except as permitted herein; to advise the Representatives, promptly after it
receives notice thereof, of the time when any amendment to the Registration
Statement has been filed or becomes effective or any supplement to the
Prospectus or any amended Prospectus has been filed and to furnish the
Representatives with copies thereof to file promptly all reports and any
definitive proxy or information statements required to be filed by the Company
with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act subsequent to the date of the Prospectus and for so long as the
delivery of a prospectus is required in connection with the offering or sale of
the Stock; to advise the Representatives, promptly after it receives notice
thereof, of the issuance by the Commission of any stop order or of any order
preventing or suspending the use of any Preliminary Prospectus or the
Prospectus, of the suspension of the qualification of the Stock for offering or
sale in any jurisdiction, of the initiation or threatening of any proceeding for
any such purpose, or of any request by the Commission for the amending or
supplementing of the Registration Statement or the Prospectus or for additional
information; and, in the event of the issuance of any stop order or of any order
preventing or suspending the use of any Preliminary Prospectus or the Prospectus
or suspending any such qualification, to use promptly its best efforts to obtain
its withdrawal;
(2) To furnish promptly to the Representatives and to counsel for
the U.S. Underwriters a conformed copy of the Registration Statement as
originally filed
<PAGE> 14
14
with the Commission, and each amendment thereto filed with the Commission,
including all consents and exhibits filed therewith;
(3) To deliver promptly to the Representatives such number of the
following documents as the Representatives shall reasonably request: (i)
conformed copies of the Registration Statement as originally filed with the
Commission and each amendment thereto (in each case excluding exhibits other
than this Agreement), (ii) each Preliminary Prospectus, the Prospectus and any
amended or supplemented Prospectus and (iii) any document incorporated by
reference in the Prospectus (excluding exhibits thereto); and, if the delivery
of a prospectus is required at any time after the Effective Time in connection
with the offering or sale of the Stock or any other securities relating thereto
and if at such time any events shall have occurred as a result of which the
Prospectus as then amended or supplemented would include an untrue statement of
a material fact or omit to state any material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were
made when such Prospectus is delivered, not misleading, or, if for any other
reason it shall be necessary to amend or supplement the Prospectus or to file
under the Exchange Act any document incorporated by reference in the Prospectus
in order to comply with the Securities Act or the Exchange Act, to notify the
Representatives and, upon their request, to file such document and to prepare
and furnish without charge to each U.S. Underwriter and to any dealer in
securities as many copies as the Representatives may from time to time
reasonably request of an amended or supplemented Prospectus which will correct
such statement or omission or effect such compliance;
(4) To file promptly with the Commission any amendment to the
Registration Statement or the Prospectus or any supplement to the Prospectus
that may, in the judgment of the Company or the Representatives, be required by
the Securities Act or requested by the Commission;
(5) Prior to filing with the Commission any amendment to the
Registration Statement or supplement to the Prospectus, any document
incorporated by reference in the Prospectus or any Prospectus pursuant to Rule
424 of the Rules and Regulations, to furnish a copy thereof to the
Representatives and counsel for the U.S. Underwriters and obtain the consent of
the Representatives to the filing;
(6) As soon as practicable after the Effective Date to make
generally available to the Company's security holders and to deliver to the
Representatives an earnings statement of the Company and the Loral Affiliates
(which need not be audited) complying with Section 11(a) of the Securities Act
and the Rules and Regulations (including, at the option of the Company, Rule
158);
<PAGE> 15
15
(7) For a period of five years following the Effective Date, to
furnish to the Representatives copies of all materials furnished by the Company
to its shareholders and all public reports and all reports and financial
statements furnished by the Company to the principal national securities
exchange upon which the Common Stock may be listed pursuant to requirements of
or agreements with such exchange or to the Commission pursuant to the Exchange
Act or any rule or regulation of the Commission thereunder;
(8) Promptly from time to time to take such action as the
Representatives may reasonably request to qualify the Stock for offering and
sale under the securities laws of such jurisdictions as the Representatives may
request and to comply with such laws so as to permit the continuance of sales
and dealings therein in such jurisdictions for as long as may be necessary to
complete the distribution of the Stock; provided that in connection therewith
the Company shall not be required to qualify as a foreign corporation or to file
a general consent to service of process in any jurisdiction;
(9) For a period of 90 days from the date of the Prospectus, not to,
directly or indirectly, (1) offer for sale, sell, pledge or otherwise dispose of
(or enter into any transaction or device which is designed to, or could be
expected to, result in the disposition by any person during such period of) any
shares of Common Stock or securities convertible into or exchangeable for Common
Stock (other than the Stock and shares issued pursuant to employee benefit
plans, qualified stock option plans or other employee compensation plans
existing on the date hereof or pursuant to currently outstanding options,
warrants or rights), or sell or grant options, rights or warrants with respect
to any shares of Common Stock or securities convertible into or exchangeable for
Common Stock (other than the grant of options pursuant to option plans), or (2)
enter into any swap or other derivatives transaction that transfers to another,
in whole or in part, any of the economic benefits or risks of ownership of such
shares of Common Stock, whether any such transaction described in clause (1) or
(2) above is to be settled by delivery of Common Stock or other securities, in
cash or otherwise, in each case without the prior written consent of Lehman
Brothers Inc.;
(10) Prior to the Effective Date, to apply for the inclusion of the
Stock on the New York Stock Exchange, Inc. and to use its best efforts to
complete that listing, subject only to official notice of issuance, prior to the
First Delivery Date;
(11) To apply the net proceeds from the sale of the Stock being sold
by the Company as set forth in the Prospectus; and
(12) To take such steps as shall be necessary to ensure that neither
the Company nor any Loral Affiliate shall become an "investment company" within
the
<PAGE> 16
16
meaning of such term under the United States Investment Company Act of 1940 and
the rules and regulations of the Commission thereunder.
7. Expenses. The Company agrees to pay (a) the costs incident to the
authorization, issuance, sale and delivery of the Stock and any taxes payable in
that connection; (b) the costs incident to the preparation, printing and filing
under the Securities Act of the Registration Statement and any amendments and
exhibits thereto; (c) the costs of distributing the Registration Statement as
originally filed and each amendment thereto and any post-effective amendments
thereof (including, in each case, exhibits), any Preliminary Prospectus, the
Prospectus and any amendment or supplement to the Prospectus or any document
incorporated by reference therein, all as provided in this Agreement; (d) the
costs of producing and distributing this Agreement, the Agreement Between U.S.
Underwriters and International Managers, any Supplemental Agreement Among U.S.
Underwriters and any other related documents in connection with the offering,
purchase, sale and delivery of the stock; (e) the filing fees incident to
securing any required review by the National Association of Securities Dealers,
Inc. of the terms of sale of the Stock; (f) any applicable listing or other
fees; (g) the fees and expenses of qualifying the Stock under the securities
laws of the several jurisdictions as provided in Section 6 (h) and of preparing,
printing and distributing a Blue Sky Memorandum; and (h) all other costs and
expenses incident to the performance of the obligations of the Company under
this Agreement; provided that except as provided in this Section 7 and in
Section 12 the U.S. Underwriters shall pay their own costs and expenses,
including the costs and expenses of their counsel, any transfer taxes on the
Stock which they may sell and the expenses of advertising any offering of the
Stock made by the U.S. Underwriters.
8. Conditions of U.S. Underwriters' Obligations. The respective
obligations of the U.S. Underwriters hereunder are subject to the accuracy, when
made and on each Delivery Date, of the representations and warranties of the
Company contained herein, to the performance by the Company of its obligations
hereunder, and to each of the following additional terms and conditions:
(1) The Prospectus shall have been timely filed with the Commission
in accordance with Section 6(a); no stop order suspending the effectiveness of
the Registration Statement or any part thereof shall have been issued and no
proceeding for that purpose shall have been initiated or threatened by the
Commission; and any request of the Commission for inclusion of additional
information in the Registration Statement or the Prospectus or otherwise shall
have been complied with.
(2) No U.S. Underwriter or International Manager shall have
discovered and disclosed to the Company on or prior to such Delivery Date that
the Registration Statement or the Prospectus or any amendment or supplement
thereto
<PAGE> 17
17
contains an untrue statement of a fact which, in the opinion of Cravath, Swaine
& Moore, counsel for the U.S. Underwriters, is material or omits to state a fact
which, in the opinion of such counsel, is material and is required to be stated
therein or is necessary to make the statements therein not misleading.
(3) All corporate proceedings and other legal matters incident to
the authorization, form and validity of this Agreement, the Stock, the
Registration Statement and the Prospectus, and all other legal matters relating
to this Agreement and the transactions contemplated hereby shall be reasonably
satisfactory in all material respects to counsel for the U.S. Underwriters, and
the Company shall have furnished to such counsel all documents and information
that they may reasonably request to enable them to pass upon such matters.
(4) Willkie Farr & Gallagher shall have furnished to the
Representatives their written opinion, as counsel to the Company, addressed to
the U.S. Underwriters and dated such Delivery Date, in form and substance
reasonably satisfactory to the Representatives, to the effect that:
(1) Globalstar has been duly formed and is validly existing as
a limited partnership in good standing under the laws of the State of
Delaware; SS/L and Orion have been duly incorporated and are validly
existing as corporations in good standing under the laws of the State of
Delaware; each of Globalstar and SS/L has been duly qualified for the
transaction of business and is in good standing under the laws of each
other jurisdiction in the United States in which it owns or leases
property, or conducts any business, so as to require such qualification
(except where the failure to so qualify would not have a material adverse
effect on the Company, Globalstar, SS/L and Orion, taken as a whole; and
each of Globalstar, SS/L and Orion has all requisite power and authority
and, except as disclosed in the Prospectus, all material governmental
authorizations, licenses, certificates, franchises, permits and approvals
required to own its properties and to conduct its business as described in
the Prospectus;
(2) To such counsel's knowledge, except as described in the
Prospectus, the Company has not granted any outstanding options, warrants
or commitments with respect to any shares of the capital stock of the
Company, whether issued or unissued;
(3) The Stock conforms in all material respects to the
description thereof contained in the Prospectus;
(4) The Company has an authorized capitalization as set forth
in the Prospectus, and all of the issued shares of capital stock of the
Company
<PAGE> 18
18
(including the shares of Stock being delivered on such Delivery Date) have
been duly and validly authorized and issued, are fully paid and
non-assessable and conform to the description thereof contained in the
Prospectus; all outstanding shares of stock of GTL, Orion and SS/L have
been duly and validly authorized and issued and are fully paid,
non-assessable and (except as set forth in the Prospectus and except for
the stock of GTL that is owned by the Company and has been pledged to
Lockheed Martin and Common Stock of GTL owned by the Company that is
subject to outstanding options) are owned directly or indirectly by the
Company, free and clear of all liens, encumbrances, equities or claims;
(5) To the best of such counsel's knowledge and other than as
set forth in the Prospectus, there are no legal or governmental
proceedings pending to which the Company or any Loral Affiliate is a party
or of which any property or assets of the Company or any Loral Affiliate
is the subject which, if determined adversely to the Company or any Loral
Affiliate, might have a material adverse effect on the consolidated
financial position, stockholders' equity, results of operations, business
or prospects of the Company and the Loral Affiliates, taken as a whole;
and, to the best of such counsel's knowledge, no such proceedings are
threatened or contemplated by governmental authorities or threatened by
others;
(6) The Registration Statement was declared effective under
the Securities Act as of the date and time specified in such opinion, the
Prospectus was filed with the Commission pursuant to the subparagraph of
Rule 424(b) of the Rules and Regulations specified in such opinion on the
date specified therein and no stop order suspending the effectiveness of
the Registration Statement has been issued and, to the knowledge of such
counsel, no proceeding for that purpose is pending or threatened by the
Commission;
(7) The Registration Statement and the Prospectus and any
further amendments or supplements thereto made by the Company prior to
such Delivery Date (other than the financial statements and related
schedules therein, as to which such counsel need express no opinion)
comply as to form in all material respects with the requirements of the
Securities Act and the Rules and Regulations; and the documents
incorporated by reference in the Prospectus and any further amendment or
supplement to any such incorporated document made by the Company prior to
such Delivery Date (other than the financial statements and related
schedules therein, as to which such counsel need express no opinion), when
they became effective or were filed with the Commission, as the case may
be, complied as to form in all material respects with the requirements of
the Securities Act or the Exchange Act, as applicable, and the rules and
regulations of the Commission thereunder;
<PAGE> 19
19
(8) To the best of such counsel's knowledge, there are no
contracts or other documents which are required to be described in the
Prospectus or filed as exhibits to the Registration Statement by the
Securities Act or by the Rules and Regulations which have not been
described or filed as exhibits to the Registration Statement or
incorporated therein by reference as permitted by the Rules and
Regulations;
(9) This Agreement and the International Underwriting
Agreement have both been duly authorized, executed and delivered by the
Company;
(10) The issue and sale of the shares of Stock being delivered
on such Delivery Date by the Company and the compliance by the Company
with all of the provisions of this Agreement and the International
Underwriting Agreement and the consummation of the transactions
contemplated hereby and thereby will not conflict with or result in a
breach or violation of any of the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, loan agreement or
other agreement or instrument known to such counsel to which the Company
or any Loral Affiliate is a party or by which the Company or any Loral
Affiliate is bound or to which any of the property or assets of the
Company or any Loral Affiliate is subject, nor will such actions result in
any violation of the provisions of the charter or by-laws of the Company
or any Loral Affiliate or any statute or any order, rule or regulation
known to such counsel of any court or governmental agency or body having
jurisdiction over the Company or any Loral Affiliate or any of their
properties or assets; and, except for the registration of the Stock under
the Securities Act and such consents, approvals, authorizations,
registrations or qualifications as may be required under the Exchange Act
and applicable state or foreign securities laws in connection with the
purchase and distribution of the Stock by the U.S. Underwriters and the
International Managers, no consent, approval, authorization or order of,
or filing or registration with, any such court or governmental agency or
body is required for the execution, delivery and performance of this
Agreement by the Company and the consummation of the transactions
contemplated hereby;
(11) To the best of such counsel's knowledge, there are no
contracts, agreements or understandings between the Company and any
person, other than those that have been waived [in writing], granting
such person the right to require the Company to file a registration
statement under the Securities Act
<PAGE> 20
20
with respect to any securities of the Company owned or to be owned by such
person or to require the Company to include such securities in the
securities registered pursuant to the Registration Statement or in any
securities being registered pursuant to any other registration statement
filed by the Company under the Securities Act;
(12) LQP (or its subsidiary) has agreed to use the license to
operate mobile satellite services in the 1610-1626.5 MHz L-band and the
2483.5-2500 MHz S-band granted by the FCC for the exclusive benefit of
Globalstar;
(13) The Partnership Agreement has been duly and validly
authorized, executed and delivered by LQSS, Globalstar and the Company
and, to the knowledge of such counsel, the other parties to such agreement
have authorized, executed and delivered such agreement and assuming such
authorization, execution and delivery by such other parties, such
agreement is valid and binding and enforceable against the parties
thereto, except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium and other similar laws relating to
or affecting creditors' rights generally or by general equitable
principles (regardless of whether such enforceability is considered in a
proceeding in equity or at law); and
(14) The statements set forth in the Prospectus under the
heading "Risk Factors--Regulation" insofar as such statements constitute a
summary of the FCC's rules, actions and proceedings referred to therein,
fairly present the information referred to therein with respect to such
rules, actions and proceedings, and to such counsel's knowledge, there are
no pending or threatened proceedings related to the FCC's licensing of the
Company or any Loral Affiliate required to be disclosed in the Prospectus
which have not been disclosed as required.
In rendering such opinion, such counsel may state that their opinion is limited
to matters governed by the Federal laws of the United States of America, the
laws of the State of New York, the General Corporation Law of the State of
Delaware or the Delaware Revised Uniform Limited Partnership Act. Such counsel
shall also have furnished to the Representatives a written statement, addressed
to the U.S. Underwriters and dated such Delivery Date, in form and substance
satisfactory to the Representatives, to the effect that (y) such counsel has
acted as counsel to the Company on a regular basis (although the Company is also
represented by its General Counsel and by other outside counsel), has acted as
counsel to the Company in connection with previous financing transactions and
has acted as counsel to the Company in connection with the preparation of the
Registration Statement; and (z) based on the foregoing, no facts have come to
the
<PAGE> 21
21
attention of such counsel which lead them to believe that (I) the Registration
Statement, as of the Effective Date, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein not misleading, or that the
Prospectus contains any untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading or (II) any document incorporated by reference in the Prospectus
or any further amendment or supplement to any such incorporated document made by
the Company prior to such Delivery Date, when they were filed with the
Commission contained, in the case of a registration statement which became
effective under the Securities Act, any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein not misleading, or, in the case of other
documents which were filed under the Exchange Act with the Commission, an untrue
statement of a material fact or omitted to state a material fact necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading; provided, however, that such counsel will
express no opinion or belief with respect to the financial statements and data
contained in the Prospectus or with respect to any matters addressed by the
opinion of Crowell & Moring set forth in Section 8(f) hereof.
(5) Appleby, Spurling & Kempe shall have furnished to the
Representatives its opinion, as counsel to the Company, addressed to the U.S.
Underwriters and dated such Delivery Date and in form and substance satisfactory
to the Representatives, to the effect that:
(1) each of the Company and GTL has been duly incorporated as
an exempted company and is validly existing as an exempted company in good
standing under the laws of Bermuda; and has full power and authority and
has obtained all Bermuda governmental authorizations, licenses,
certificates, franchises, permits and approvals required to own its
properties and to conduct its business as described in the Registration
Statement;
(2) to such counsel's knowledge, no litigation or governmental
proceeding is pending or threatened against the Company or GTL in Bermuda
which would adversely affect the Company's ability to perform its
obligations under this Agreement;
(3) the execution, delivery and performance by the Company of
this Agreement has been duly authorized by the Company and the
consummation by the Company of the sale of the Stock in accordance
therewith will not (A) conflict with the Company's Memorandum of
Association or By-
<PAGE> 22
22
Laws, in each case as amended, or (B) violate or conflict with any
provision of law or regulation of Bermuda applicable to the Company or
GTL;
(4) no consent, approval, authorization or order of any court,
regulatory body, administrative agency or other governmental body is
required to be obtained for the sale of Securities under any provision of
law or regulation of Bermuda applicable to the Company or GTL or for the
consummation of the transactions contemplated by this Agreement;
(5) there are no preemptive or other rights to subscribe for
or to purchase, nor any restriction upon the voting or transfer of, any
shares of the Stock pursuant to the Company's Memorandum of Association or
by-laws or any agreement or other instrument known to such counsel;
(6) there is no restriction upon the voting or transfer of
the shares of Stock pursuant to (A) the law of Bermuda or (B) the
Company's Memorandum of Association or by-laws, in each case as amended;
(7) the statements set forth in the Prospectus under the
headings "Description of Capital Stock" and "Taxation", insofar as such
statements describe the Stock and constitute a summary of the legal
matters referred to therein, fairly present the information referred to
therein with respect to such legal and other matters;
(8) a final and conclusive judgment of a New York court
under which a sum of money is payable (not being a sum payable in respect
of taxes or other charges of a like nature, in respect of a fine or other
penalty or in respect of multiple damages as defined in The Protection of
Trading Interests Act, 1981) may be the subject of enforcement proceedings
in the Supreme Court of Bermuda under the common law doctrine of
obligation by action for the debt evidenced by the New York court's
judgment; assuming that (1) the court that gave such judgment was
competent to hear the action in accordance with private international law
principles as applied to courts in Bermuda and (2) such judgment is not
contrary to public policy in Bermuda, has not been obtained by fraud or in
proceedings contrary to natural justice and is not based on an error in
Bermuda law, such counsel believes that, on general principles, such a
judgment would be enforceable in the Supreme Court of Bermuda; and
enforcement of such a judgment against assets in Bermuda may involve the
conversion of the judgment into Bermuda dollars, but the Bermuda Monetary
Authority's policy is to give the consents necessary to enable recovery in
the currency of the obligation;
<PAGE> 23
23
(9) the submission by the Company to the jurisdiction of the
State and Federal courts sitting in the City of New York contained in this
Agreement constitutes a legal, valid and binding obligation of the
Company, provided that such submission is valid under the laws of New
York; and
(10) the choice of the laws of the State of New York to govern
this Agreement is a valid choice of law under Bermuda law, assuming that
such choice is valid under the laws of the State of New York.
(6) Crowell & Moring shall have furnished to the Representatives its
written opinion, as special communications counsel to the Company, addressed to
the U.S. Underwriters and dated such Delivery Date, in form and substance
reasonably satisfactory to the Representatives, to the effect that:
(1) The statements set forth in the Prospectus under the
heading "Risk Factors--Regulation", insofar as such statements constitute
a summary of the FCC's rules, actions and proceedings relating to
Globalstar or the Company referred to therein, fairly present the
information referred to therein with respect to such rules, actions and
proceedings, and to such counsel's knowledge, except as set forth therein,
there are no pending or threatened proceedings (other than proceedings
having general applicability to companies in Globalstar's industry) which
could have a material adverse effect on the authorization for
construction, launch and operation of the Globalstar satellite
constellation;
(2) The FCC has authorized LQP to construct a mobile satellite
system capable of operating in the 1610-1626.5/2483.5-2500 MHz frequency
bands, consistent with the technical specifications set forth in its
application, the FCC's rules and the conditions set forth in the FCC's
Order and Authorization, DA 95-128 (released January 31, 1995), as
modified by the Erratum, DA 95-373 (released February 28, 1995), as
affirmed and modified by the Memorandum Opinion and Order, FCC 96-279
(released June 27, 1996); and pursuant to FCC approval, LQP has assigned
such authorization to L/Q Licensee, Inc.; however, such authorization is
presently subject to modification, stay or revocation as a result of
pending judicial appeals; and
(3) The construction, launch and operation by Globalstar,
L.P., of the Globalstar satellite constellation authorized by the Order
and Authorization, DA 95-128 (released Jan. 31, 1995), as modified by the
Erratum, DA 95-373 (released February 28, 1995), as affirmed and modified
by the Memorandum Opinion and Order, FCC 96-279 (released June 27, 1996);
would not violate provisions of the Communications Act or the FCC's rules
and policies thereunder
<PAGE> 24
24
relating to control of FCC authorizations, provided that L/Q Licensee,
Inc. remains in ultimate control of the authorized facilities as defined
by the rules and policies of the FCC and that there is no transfer of
control of L/Q Licensee, Inc. without prior approval of the FCC.
(7) The Representatives shall have received from Cravath, Swaine &
Moore, counsel for the U.S. Underwriters, such opinion or opinions, dated such
Delivery Date, with respect to the issuance and sale of the Stock, the
Registration Statement, the Prospectus and other related matters as the
Representatives may reasonably require, and the Company shall have furnished to
such counsel such documents as they reasonably request for the purpose of
enabling them to pass upon such matters.
(8) At the time of execution of this Agreement, the Representatives
shall have received from Deloitte & Touche LLP a letter, in form and substance
satisfactory to the Representatives, addressed to the U.S. Underwriters and
dated the date hereof (i) confirming that they are independent public
accountants within the meaning of the Securities Act and are in compliance with
the applicable requirements relating to the qualification of accountants under
Rule 2-01 of Regulation S-X of the Commission, (ii) stating, as of the date
hereof (or, with respect to matters involving changes or developments since the
respective dates as of which specified financial information is given in the
Prospectus, as of a date not more than five days prior to the date hereof), the
conclusions and findings of such firm with respect to the financial information
and other matters ordinarily covered by accountants' "comfort letters" to
underwriters in connection with registered public offerings.
(9) At the time of execution of this Agreement, the Representatives
shall have received from Price Waterhouse a letter, in form and substance
satisfactory to the Representatives, addressed to the U.S. Underwriters and
dated the date hereof (i) confirming that they are independent public
accountants within the meaning of the Securities Act and are in compliance with
the applicable requirements relating to the qualification of accountants under
Rule 2-01 of Regulation S-X of the Commission, (ii) stating the conclusions and
findings of such firm with respect to the financial information incorporated by
reference in the Prospectus and other matters ordinarily covered by accountants'
"comfort letters" to underwriters in connection with registered public
offerings.
(10) With respect to the letter of Deloitte & Touche LLP referred to
in paragraph 8(h) above and delivered to the Representatives concurrently with
the execution of this Agreement (the "initial letter"), the Company shall have
furnished to the Representatives a letter (the "bring-down letter") of such
accountants, addressed to the U.S. Underwriters and dated such Delivery Date (i)
confirming that they are independent public accountants within the meaning of
the Securities Act and are in compliance with
<PAGE> 25
25
the applicable requirements relating to the qualification of accountants under
Rule 2-01 of Regulation S-X of the Commission, (ii) stating, as of the date of
the bring-down letter (or, with respect to matters involving changes or
developments since the respective dates as of which specified financial
information is given in the Prospectus, as of a date not more than five days
prior to the date of the bring-down letter), the conclusions and findings of
such firm with respect to the financial information and other matters covered by
the initial letter and (iii) confirming in all material respects the conclusions
and findings set forth in the initial letter.
(11) The Company shall have furnished to the Representatives a
certificate, dated such Delivery Date, of its Chairman of the Board, its
President or a Vice President and its chief financial officer stating that:
(1) The representations, warranties and agreements of the
Company in Section 2 are true and correct as of such Delivery Date; the
Company has complied with all its agreements contained herein; and the
conditions set forth in Sections 8(a) and 8(m) have been fulfilled; and
(2) They have carefully examined the Registration Statement
and the Prospectus and, in their opinion (A) as of the Effective Date, the
Registration Statement and Prospectus did not include any untrue statement
of a material fact and did not omit to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading, and (B) since the Effective Date no event has occurred which
should have been set forth in a supplement or amendment to the
Registration Statement or the Prospectus.
(12) (i) Neither the Company nor any Loral Affiliate shall have
sustained since the date of the latest audited financial statements included or
incorporated by reference in the Prospectus any loss or interference with its
business from fire, explosion, flood or other calamity, whether or not covered
by insurance, or from any labor dispute or court or governmental action, order
or decree, otherwise than as set forth or contemplated in the Prospectus or
(ii) since such date there shall not have been any change in the capital stock,
partnership interests or long-term debt of the Company or any Loral Affiliate or
any change, or any development involving a prospective change, in or affecting
the general affairs, management, financial position, stockholders' equity or
results of operations of the Company and the Loral Affiliates, otherwise than as
set forth or contemplated in the Prospectus, the effect of which, in any such
case described in clause (i) or (ii), is, in the judgment of the
Representatives, so material and adverse as to make it impracticable or
inadvisable to proceed with the public offering or the delivery of the Stock
being delivered on such Delivery Date on the terms and in the manner
contemplated in the Prospectus.
<PAGE> 26
26
(13) Subsequent to the execution and delivery of this Agreement (i)
no downgrading shall have occurred in the rating accorded the debt securities of
the Company by any "nationally recognized statistical rating organization", as
that term is defined by the Commission for purposes of Rule 436(g)(2) of the
Rules and Regulations and (ii) no such organization shall have publicly
announced that it has under surveillance or review, with possible negative
implications, its rating of any of the Company's debt securities.
(14) Subsequent to the execution and delivery of this Agreement
there shall not have occurred any of the following: (i) trading in securities
generally on the New York Stock Exchange or the American Stock Exchange or in
the over-the-counter market, or trading in any securities of the Company on any
exchange or in the over-the-counter market, shall have been suspended or minimum
prices shall have been established on any such exchange or such market by the
Commission, by such exchange or by any other regulatory body or governmental
authority having jurisdiction, (ii) a banking moratorium shall have been
declared by Federal or state authorities, (iii) the United States shall have
become engaged in hostilities, there shall have been an escalation in
hostilities involving the United States or there shall have been a declaration
of a national emergency or war by the United States or (iv) there shall have
occurred such a material adverse change in general economic, political or
financial conditions (or the effect of international conditions on the financial
markets in the United States shall be such) as to make it, in the judgment of a
majority in interest of the several U.S. Underwriters, impracticable or
inadvisable to proceed with the public offering or delivery of the Stock being
delivered on such Delivery Date on the terms and in the manner contemplated in
the Prospectus.
(15) The New York Stock Exchange, Inc. shall have approved the Stock
for inclusion, subject only to official notice of issuance.
(16) The closing under the International Underwriting Agreement
shall have occurred concurrently with the closing hereunder on the First
Delivery Date.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the U.S. Underwriters.
(9) Indemnification and Contribution.
<PAGE> 27
27
(1) The Company shall indemnify and hold harmless each U.S.
Underwriter, its officers and employees and each person, if any, who controls
any U.S. Underwriter within the meaning of the Securities Act, from and against
any loss, claim, damage or liability, joint or several, or any action in respect
thereof (including, but not limited to, any loss, claim, damage, liability or
action relating to purchases and sales of Stock), to which that U.S.
Underwriter, officer, employee or controlling person may become subject, under
the Securities Act or otherwise, insofar as such loss, claim, damage, liability
or action arises out of, or is based upon, (i) any untrue statement or alleged
untrue statement of a material fact contained (A) in any Preliminary Prospectus,
the Registration Statement or the Prospectus or in any amendment or supplement
thereto, or (B) in any blue sky application or other document prepared or
executed by the Company (or based upon any written information furnished by the
Company) specifically for the purpose of qualifying any or all of the Stock
under the securities laws of any state or other jurisdiction (any such
application, document or information being hereinafter called a "Blue Sky
Application") or (ii) the omission or alleged omission to state in any
Preliminary Prospectus, the Registration Statement or the Prospectus, or in any
amendment or supplement thereto, or in any Blue Sky Application any material
fact required to be stated therein or necessary to make the statements therein
not misleading, and shall reimburse each U.S. Underwriter and each such officer,
employee or controlling person promptly upon demand for any legal or other
expenses reasonably incurred by that U.S. Underwriter, officer, employee or
controlling person in connection with investigating or defending or preparing to
defend against any such loss, claim, damage, liability or action as such
expenses are incurred; provided, however, that the Company shall not be liable
in any such case to the extent that any such loss, claim, damage, liability or
action arises out of, or is based upon, any untrue statement or alleged untrue
statement or omission or alleged omission made in any Preliminary Prospectus,
the Registration Statement or the Prospectus, or in any such amendment or
supplement, or in any Blue Sky Application, in reliance upon and in conformity
with written information concerning such U.S. Underwriter furnished to the
Company through the Representatives by or on behalf of any U.S. Underwriter
specifically for inclusion therein which information consists solely of the
information specified in Section 10(f). The foregoing indemnity agreement is in
addition to any liability which the Company may otherwise have to any U.S.
Underwriter or to any officer, employee or controlling person of that U.S.
Underwriter.
(2) Each U.S. Underwriter, severally and not jointly, shall
indemnify and hold harmless the Company, its officers and employees, each of its
directors (including any person who, with his or her consent, is named in the
Registration Statement as about to become a director of the Company), and each
person, if any, who controls the Company within the meaning of the Securities
Act, from and against any loss, claim, damage or liability, joint or several, or
any action in respect thereof, to which the Company or any such director,
officer or controlling person may become subject,
<PAGE> 28
28
under the Securities Act or otherwise, insofar as such loss, claim, damage,
liability or action arises out of, or is based upon, (i) any untrue statement or
alleged untrue statement of a material fact contained (A) in any Preliminary
Prospectus, the Registration Statement or the Prospectus or in any amendment or
supplement thereto, or (B) in any Blue Sky Application or (ii) the omission or
alleged omission to state in any Preliminary Prospectus, the Registration
Statement or the Prospectus, or in any amendment or supplement thereto, or in
any Blue Sky Application any material fact required to be stated therein or
necessary to make the statements therein not misleading, but in each case only
to the extent that the untrue statement or alleged untrue statement or omission
or alleged omission was made in reliance upon and in conformity with written
information concerning such U.S. Underwriter furnished to the Company through
the Representatives by or on behalf of that U.S. Underwriter specifically for
inclusion therein, and shall reimburse the Company and any such director,
officer or controlling person for any legal or other expenses reasonably
incurred by the Company or any such director, officer or controlling person in
connection with investigating or defending or preparing to defend against any
such loss, claim, damage, liability or action as such expenses are incurred. The
foregoing indemnity agreement is in addition to any liability which any U.S.
Underwriter may otherwise have to the Company or any such director, officer,
employee or controlling person.
(3) Promptly after receipt by an indemnified party under this
Section 9 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under this Section 11, notify the indemnifying party in
writing of the claim or the commencement of that action; provided, however, that
the failure to notify the indemnifying party shall not relieve it from any
liability which it may have under this Section 9 except to the extent it has
been materially prejudiced by such failure, and provided further, that the
failure to notify the indemnifying party shall not relieve it from any liability
which it may have to an indemnified party otherwise than under this Section 9.
If any such claim or action shall be brought against an indemnified party, and
it shall notify the indemnifying party thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it wishes, jointly with
any other similarly notified indemnifying party, to assume the defense thereof
with counsel reasonably satisfactory to the indemnified party. After notice from
the indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 9 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that
the Representatives shall have the right to employ counsel to represent jointly
the Representatives and those other U.S. Underwriters and their respective
officers, employees and controlling persons who may be subject to liability
arising out of any claim in respect of which indemnity may be sought by the U.S.
Underwriters against the Company under this Section 9 if, in the
<PAGE> 29
29
reasonable judgment of the Representatives, it is advisable for the
Representatives and those U.S. Underwriters, officers, employees and controlling
persons to be jointly represented by separate counsel, and in that event the
fees and expenses of such separate counsel shall be paid by the Company. No
indemnifying party shall (i)without the prior written consent of the indemnified
parties (which consent shall not be unreasonably withheld), settle or compromise
or consent to the entry of any judgment with respect to any pending or
threatened claim, action, suit or proceeding in respect of which indemnification
or contribution may be sought hereunder (whether or not the indemnified parties
are actual or potential parties to such claim or action) unless such settlement,
compromise or consent includes an unconditional release of each indemnified
party from all liability arising out of such claim, action, suit or proceeding,
or (ii) be liable for any settlement of any such action effected without its
written consent (which consent shall not be unreasonably withheld), but if
settled with the consent of the indemnifying party or if there be a final
judgment of the plaintiff in any such action, the indemnifying party agrees to
indemnify and hold harmless any indemnified party from and against any loss or
liability by reason of such settlement or judgment.
(4) If the indemnification provided for in this Section 9 shall for
any reason be unavailable to or insufficient to hold harmless an indemnified
party under Section 9(a) or 9(b) in respect of any loss, claim, damage or
liability, or any action in respect thereof, referred to therein, then each
indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a result
of such loss, claim, damage or liability, or action in respect thereof, (i) in
such proportion as shall be appropriate to reflect the relative benefits
received by the Company on the one hand and the U.S. Underwriters on the other
from the offering of the Stock or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the Company on the one hand and the U.S. Underwriters
on the other with respect to the statements or omissions which resulted in such
loss, claim, damage or liability, or action in respect thereof, as well as any
other relevant equitable considerations. The relative benefits received by the
Company on the one hand and the U.S. Underwriters on the other with respect to
such offering shall be deemed to be in the same proportion as the total net
proceeds from the offering of the Stock purchased under this Agreement (before
deducting expenses) received by the Company, on the one hand, and the total
underwriting discounts and commissions received by the U.S. Underwriters with
respect to the shares of the Stock purchased under this Agreement, on the other
hand, bear to the total gross proceeds from the offering of the shares of the
Stock under this Agreement, in each case as set forth in the table on the cover
page of the Prospectus. The relative fault shall be determined by reference to
whether the untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact relates to information supplied by the
Company or the U.S. Underwriters, the intent of the parties and their
<PAGE> 30
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relative knowledge, access to information and opportunity to correct or prevent
such statement or omission. The Company and the U.S. Underwriters agree that it
would not be just and equitable if contributions pursuant to this Section were
to be determined by pro rata allocation (even if the U.S. Underwriters were
treated as one entity for such purpose) or by any other method of allocation
which does not take into account the equitable considerations referred to
herein. The amount paid or payable by an indemnified party as a result of the
loss, claim, damage or liability, or action in respect thereof, referred to
above in this Section shall be deemed to include, for purposes of this Section
9(d), any legal or other expenses reasonably incurred by such indemnified party
in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 9(d), no U.S. Underwriter shall
be required to contribute any amount in excess of the amount by which the total
price at which the Stock underwritten by it and distributed to the public was
offered to the public exceeds the amount of any damages which such U.S.
Underwriter has otherwise paid or become liable to pay by reason of any untrue
or alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 9(d) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The U.S. Underwriters' obligations
to contribute as provided in this Section 11(e) are several in proportion to
their respective underwriting obligations and not joint.
(5) The U.S. Underwriters severally confirm and the Company
acknowledges that the statements with respect to the public offering of the
Stock by the U.S. Underwriters set forth on the cover page of, the legend
concerning over-allotments on the inside front cover page of and the concession
and reallowance figures appearing under the caption "Underwriting" in, the
Prospectus are correct and constitute the only information concerning such U.S.
Underwriters furnished in writing to the Company by or on behalf of the U.S.
Underwriters specifically for inclusion in the Registration Statement and the
Prospectus.
10. Defaulting U.S. Underwriters.
<PAGE> 31
31
If, on any Delivery Date, any U.S. Underwriter defaults in the
performance of its obligations under this Agreement, the remaining
non-defaulting U.S. Underwriters shall be obligated to purchase the Stock which
the defaulting U.S. Underwriter agreed but failed to purchase on such Delivery
Date in the respective proportions which the number of shares of the Firm Stock
set opposite the name of each remaining non-defaulting U.S. Underwriter in
Schedule 1 hereto bears to the total number of shares of the Firm Stock set
opposite the names of all the remaining non-defaulting U.S. Underwriters in
Schedule 1 hereto; provided, however, that the remaining non-defaulting U.S.
Underwriters shall not be obligated to purchase any of the Stock on such
Delivery Date if the total number of shares of the Stock which the defaulting
U.S. Underwriter or U.S. Underwriters agreed but failed to purchase on such date
exceeds 9.09% of the total number of shares of the Stock to be purchased on such
Delivery Date, and any remaining non-defaulting U.S. Underwriter shall not be
obligated to purchase more than 110% of the number of shares of the Stock which
it agreed to purchase on such Delivery Date pursuant to the terms of Section 3.
If the foregoing maximums are exceeded, the remaining non-defaulting U.S.
Underwriters, or those other underwriters satisfactory to the Representatives
who so agree, shall have the right, but shall not be obligated, to purchase, in
such proportion as may be agreed upon among them, all the Stock to be purchased
on such Delivery Date. If the remaining U.S. Underwriters or other underwriters
satisfactory to the Representatives do not elect to purchase the shares which
the defaulting U.S. Underwriter or U.S. Underwriters agreed but failed to
purchase on such Delivery Date, this Agreement (or, with respect to the Second
Delivery Date, the obligation of the U.S. Underwriters to purchase, and of the
Company to sell, the Option Stock) shall terminate without liability on the part
of any non-defaulting U.S. Underwriter or the Company, except that the Company
will continue to be liable for the payment of expenses to the extent set forth
in Sections 7 and 12. As used in this Agreement, the term "U.S. Underwriter"
includes, for all purposes of this Agreement unless the context requires
otherwise, any party not listed in Schedule 1 hereto who, pursuant to this
Section 10, purchases Firm Stock which a defaulting U.S. Underwriter agreed but
failed to purchase.
Nothing contained herein shall relieve a defaulting U.S. Underwriter
of any liability it may have to the Company for damages caused by its default.
If other underwriters are obligated or agree to purchase the Stock of a
defaulting or withdrawing U.S. Underwriter, either the Representatives or the
Company may postpone the Delivery Date for up to seven full business days in
order to effect any changes that in the opinion of counsel for the Company or
counsel for the U.S. Underwriters may be necessary in the Registration
Statement, the Prospectus or in any other document or arrangement.
11. Termination. The obligations of the U.S. Underwriters hereunder
may be terminated by the Representatives by notice given to and received by the
Company prior to delivery of and payment for the Firm Stock if, prior to that
time, any of the events described in Sections 8(m), 8(n) or 8(o), shall have
occurred or if the U.S.
<PAGE> 32
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Underwriters shall decline to purchase the Stock for any reason permitted under
this Agreement.
12. Reimbursement of U.S. Underwriters' Expenses. If (a) the Company
shall fail to tender the Stock for delivery to the U.S. Underwriters by reason
of any failure, refusal or inability on the part of the Company to perform any
agreement on its part to be performed, or because any other condition of the
U.S. Underwriters' obligations hereunder required to be fulfilled by the Company
is not fulfilled, the Company will reimburse the U.S. Underwriters for all
reasonable out-of-pocket expenses (including fees and disbursements of counsel)
incurred by the U.S. Underwriters in connection with this Agreement and the
proposed purchase of the Stock, and upon demand the Company shall pay the full
amount thereof to the Representatives. If this Agreement is terminated pursuant
to Section 11 by reason of the default of one or more U.S. Underwriters, the
Company shall not be obligated to reimburse any defaulting U.S. Underwriter on
account of those expenses.
13. Notices, etc. All statements, requests, notices and agreements
hereunder shall be in writing, and:
(1) if to the U.S. Underwriters, shall be delivered or sent by mail,
telex or facsimile transmission to Lehman Brothers Inc., Three World Financial
Center, New York, New York 10285, Attention: Syndicate Department (Fax:
212-526-6588), with a copy, in the case of any notice pursuant to Section 9(d),
to the Director of Litigation, Office of the General Counsel, Lehman Brothers
Inc., 3 World Financial Center, 10th Floor, New York, NY 10285; and
(b) if to the Company, shall be delivered or sent by mail, telex or
facsimile transmission to Loral Space and Communications, c/o Loral SpaceCom
Corporation, 600 Third Avenue, New York, NY 10016, Attention: Eric J. Zahler,
Esq. (Fax: 212-338-5350).
14. Persons Entitled to Benefit of Agreement. This Agreement shall
inure to the benefit of and be binding upon the U.S. Underwriters and the
Company. This Agreement and the terms and provisions hereof are for the sole
benefit of only those persons, except that (A) the representations, warranties,
indemnities and agreements of the Company contained in this Agreement shall also
be deemed to be for the benefit of the person or persons, if any, who control
any U.S. Underwriter within the meaning of Section 15 of the Securities Act and
(B) the indemnity agreement of the U.S. Underwriters contained in Section 9(b)
of this Agreement shall be deemed to be for the benefit of directors of the
Company, officers of the Company who have signed the Registration Statement and
any person controlling the Company within the meaning of Section 15 of the
Securities Act. Nothing in this Agreement is intended or shall be
<PAGE> 33
33
construed to give any person, other than the persons referred to in this Section
14, any legal or equitable right, remedy or claim under or in respect of this
Agreement or any provision contained herein.
15. Survival. The respective indemnities, representations,
warranties and agreements of the Company and the U.S. Underwriters contained in
this Agreement or made by or on behalf on them, respectively, pursuant to this
Agreement, shall survive the delivery of and payment for the Stock and shall
remain in full force and effect, regardless of any investigation made by or on
behalf of any of them or any person controlling any of them.
16. Definition of the Terms "Business Day" and "Subsidiary". For
purposes of this Agreement, (a) "business day" means any day on which the New
York Stock Exchange, Inc. is open for trading each Monday, Tuesday, Wednesday,
Thursday or Friday that is not a day on which banking institutions in New York
are generally authorized or obligated by law or executive order to close and (b)
Asubsidiary@ has the meaning set forth in Rule 405 of the Rules and Regulations.
17. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of New York.
18. Consent to Jurisdiction. Each party irrevocably agrees that any
legal suit, action or proceeding arising out of or based upon this Agreement or
the transactions contemplated hereby ("Related Proceedings") may be instituted
in the Federal courts of the United States of America located in the City of New
York or the courts of the State of New York in each case located in the Borough
of Manhattan in the City of New York (collectively, the "Specified Courts"), and
irrevocably submits to the exclusive jurisdiction (except for proceedings
instituted in regard to the enforcement of a judgment of any such court (a
"Related Judgment"), as to which such jurisdiction is non-exclusive) of such
courts in any such suit, action or proceeding. The parties further agree that
service of any process, summons, notice or document by mail to such party's
address set forth above shall be effective service of process for any lawsuit,
action or other proceeding brought in any such court. The parties hereby
irrevocably and unconditionally waive any objection to the laying of venue of
any lawsuit, action or other proceeding in the Specified Courts, and hereby
further irrevocably and unconditionally waive and agree not to plead or claim in
any such court that any such lawsuit, action or other proceeding brought in any
such court has been brought in an inconvenient forum. The Company hereby
irrevocably appoints CT Corporation System, which currently maintains a New York
City office at 1633 Broadway, New York, New York 10019, United States of
America, as its agent to receive service of process or other legal summons for
purposes of any such action or proceeding that may be instituted in any state or
federal court in the City and State of New York.
<PAGE> 34
34
19. Waiver of Immunity. With respect to any Related Proceeding, each
party irrevocably waives, to the fullest extent permitted by applicable law, all
immunity (whether on the basis of sovereignty or otherwise) from jurisdiction,
service of process, attachment (both before and after judgment) and execution to
which it might otherwise be entitled in the Specified Courts, and with respect
to any Related Judgment, each party waives any such immunity in the Specified
Courts or any other court of competent jurisdiction, and will not raise or claim
or cause to be pleaded any such immunity at or in respect of any such Related
Proceeding or Related Judgment, including, without limitation, any immunity
pursuant to the United States Foreign Sovereign Immunities Act of 1976, as
amended.
20. Counterparts. This Agreement may be executed in one or more
counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original but all such counterparts
shall together constitute one and the same instrument.
21. Headings. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
<PAGE> 35
35
If the foregoing correctly sets forth the agreement between
the Company and the U.S. Underwriters, please indicate your acceptance
in the space provided for that purpose below.
Very truly yours,
Loral Space & Communications, Ltd.
By
-----------------------------------------
Name:
Title:
Lehman Brothers Inc.
BEAR, STEARNS & CO. INC.
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
BANCAMERICA ROBERTSON STEPHENS
CIBC OPPENHEIMER CORP.
NATIONSBANC MONTGOMERY SECURITIES LLC
C.E. UNTERBERG, TOWBIN
For themselves and as Representatives
of the several U.S. Underwriters named
in Schedule 1 hereto
By Lehman Brothers Inc.
By
------------------------------------
Authorized Representatives
<PAGE> 36
SCHEDULE 1
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------
Number of
U.S. Underwriters Shares
- ----------------- ------
- -----------------------------------------------------------------------
<S> <C>
Lehman Brothers Inc.....................................
- -----------------------------------------------------------------------
Bear, Stearns & Co. Inc.................................
- -----------------------------------------------------------------------
Donaldson, Lufkin & Jenrette Securities Corporation.....
- -----------------------------------------------------------------------
BancAmerica Robertson Stephens..........................
- -----------------------------------------------------------------------
CIBC Oppenheimer Corp...................................
- -----------------------------------------------------------------------
NationsBanc Montgomery Securities LLC...................
- -----------------------------------------------------------------------
C.E. Unterberg, Towbin..................................
- -----------------------------------------------------------------------
- -----------------------------------------------------------------------
_________
- -----------------------------------------------------------------------
Total
=========
- -----------------------------------------------------------------------
</TABLE>
<PAGE> 1
Exhibit 1.2
[Draft--6/21/98]
4,000,000(1)
LORAL SPACE & COMMUNICATIONS LTD.
Common Stock, $0.01 par value
INTERNATIONAL UNDERWRITING AGREEMENT
June , 1998
Lehman Brothers International (Europe)
Bear, Stearns International Limited
Donaldson, Lufkin & Jenrette International
BA Robertson Stephens International Limited
CIBC Wood Gundy Oppenheimer plc
NationsBanc Montgomery Securities LLC
C.E. Unterberg, Towbin
As Lead Managers of the several
Underwriters named in Schedule 1,
c/o Lehman Brothers International (Europe)
Three World Financial Center
New York, New York 10285
Dear Sirs:
Loral Space & Communications Ltd., a Bermuda company (the
"Company"), proposes to sell 4,000,000 shares (the "Firm Stock") of the
Company's Common Stock, par value $0.01 per share (the "Common Stock") to the
several International Managers named in Schedule I hereto (the "International
Managers"). In addition, the Company proposes to grant to the International
Managers an option to purchase up to an additional 600,000 shares of the Common
Stock on the terms and for the purposes set forth in Section 3 (the "Option
Stock"). The Firm Stock and the Option
- ----------
(1) Does not include an over-allotment option of up to 600,000 shares of Common
Stock, par value $0.01 per share.
<PAGE> 2
Stock, if purchased, are hereinafter collectively called the "Stock." This is to
confirm the agreement concerning the purchase of the Stock from the Company by
the International Managers.
It is understood by all parties that the Company is concurrently
entering into an agreement dated the date hereof (the "U.S. Underwriting
Agreement") providing for the sale by the Company of 18,400,000 shares of Common
Stock (including the over-allotment option thereunder) (the "U.S. Stock")
through arrangements with certain underwriters in the United States (the "U.S.
Underwriters"), for whom Lehman Brothers is acting as lead manager. The U.S.
Underwriters and the International Managers simultaneously are entering into an
agreement between the U.S. and international underwriting syndicates (the
"Agreement Between the U.S. Underwriters and International Managers") which
provides for, among other things, the transfer of shares of Common Stock between
the two syndicates. Two forms of prospectus are to be used in connection with
the offering and sale of shares of Common Stock contemplated by the foregoing,
one relating to the Stock and the other relating to the U.S. Stock. The latter
form of prospectus will be identical to the former except for certain substitute
pages as included in the registration statement and amendments thereto referred
to below. Except as used in Sections 3, 4, 5, 10 and 11 herein, and except as
the context may otherwise require, references herein to the Stock shall include
all the shares of the Common Stock which may be sold pursuant to either this
Agreement or the U.S. Underwriting Agreement, and references herein to any
prospectus whether in preliminary or final form, and whether as amended or
supplemented, shall include both the U.S. and the international versions
thereof.
1. Definitions. The following terms as used in this Agreement shall
have the following meanings:
"Commission" shall mean the Securities and Exchange Commission.
"Globalstar" shall mean Globalstar, L.P., a Delaware limited
partnership.
"Globalstar Credit Agreement" shall mean the Revolving Credit
Agreement dated as of December 15, 1995, among Globalstar, the several financial
institutions named therein and the Chase Manhattan Bank as amended on July 31,
1997 and October 15, 1997.
"GTL" shall mean Globalstar Telecommunications Limited, a Bermuda
corporation.
"Loral Affiliates" shall mean each of GTL, Globalstar, SS/L, Orion
and SatMex, and any other subsidiary (as defined in Section 16) of the Company.
"LQP" means Loral/QUALCOMM Partnership, L.P., a Delaware limited
partnership and the general partner of LQSS.
<PAGE> 3
3
"LQSS" means Loral/QUALCOMM Satellite Services, L.P., a Delaware
limited partnership and the managing general partner of Globalstar.
"Orion" shall mean Loral Orion Network Systems, Inc., a Delaware
corporation.
"Partnership Agreement" shall mean the Amended and Restated
Agreement of Limited Partnership of Globalstar, L.P. dated as of March 6, 1996,
among LQSS, the Company and certain limited partners named therein, as amended
by an amendment dated April 8, 1998.
"SatMex" shall mean Satelites Mexicanos, S.A. de C.V., a company
organized under the laws of Mexico.
"SS/L" shall mean Space Systems/Loral, Inc., a Delaware corporation.
<PAGE> 4
4
2. Representations, Warranties and Agreements of the Company. The
Company represents, warrants and agrees that:
(1) A registration statement on Form S-3 with respect to the Stock
has (i) been prepared by the Company in conformity with the requirements of the
United States Securities Act of 1933 (the "Securities Act") and the rules and
regulations (the "Rules and Regulations") of the United States Securities and
Exchange Commission (the "Commission") thereunder, (ii) been filed with the
Commission under the Securities Act and (iii) become effective under the
Securities Act. Copies of such registration statement have been delivered by the
Company to you as the Lead Managers (the "Lead Managers") of the International
Managers. As used in this Agreement, "Effective Time" means the date and the
time as of which such registration statement, or the most recent post-effective
amendment thereto, if any, was declared effective by the Commission; "Effective
Date" means the date of the Effective Time; "Preliminary Prospectus" means each
prospectus included in such registration statement, or amendments thereof,
before it became effective under the Securities Act and any prospectus filed
with the Commission by the Company with the consent of the Lead Managers
pursuant to Rule 424(a) of the Rules and Regulations; "Registration Statement"
means such registration statement, as amended at the Effective Time, including
any documents incorporated by reference therein at such time and all information
contained in the final prospectus filed with the Commission pursuant to Rule
424(b) of the Rules and Regulations in accordance with Section 6 hereof and
deemed to be a part of the registration statement as of the Effective Time
pursuant to paragraph (b) of Rule 430A of the Rules and Regulations; and
"Prospectus" means such final prospectus, as first filed with the Commission
pursuant to paragraph (1) or (4) of Rule 424(b) of the Rules and Regulations.
Reference made herein to any Preliminary Prospectus or to the Prospectus shall
be deemed to refer to and include any documents incorporated by reference
therein pursuant to Item 12 of Form S-3 under the Securities Act, as of the date
of such Preliminary Prospectus or the Prospectus, as the case may be, and any
reference to any amendment or supplement to any Preliminary Prospectus or the
Prospectus shall be deemed to refer to and include any document filed under the
United States Securities Exchange Act of 1934 (the "Exchange Act") after the
date of such Preliminary Prospectus or the Prospectus, as the case may be, and
incorporated by reference in such Preliminary Prospectus or the Prospectus, as
the case may be; and any reference to any amendment to the Registration
Statement shall be deemed to include any annual report of the Company filed with
the Commission pursuant to Section 13(a) or 15(d) of the Exchange Act after the
Effective Time that is incorporated by reference in the Registration Statement.
The Commission has not issued any order preventing or suspending the use of any
Preliminary Prospectus.
(2) The Registration Statement conforms, and the Prospectus and any
further amendments or supplements to the Registration Statement or the
Prospectus will, when they become effective or are filed with the Commission, as
the case may be,
<PAGE> 5
5
conform in all respects to the requirements of the Securities Act and the Rules
and Regulations and do not and will not, as of the applicable effective date (as
to the Registration Statement and any amendment thereto) and as of the
applicable filing date (as to the Prospectus and any amendment or supplement
thereto) 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 not misleading; provided that no representation or warranty is made as
to information contained in or omitted from the Registration Statement or the
Prospectus in reliance upon and in conformity with written information furnished
to the Company through the Lead Managers by or on behalf of any International
Manager specifically for inclusion therein.
(3) The documents incorporated by reference in the Prospectus, when
they were filed with the Commission, conformed in all material respects to the
requirements of the Securities Act or Exchange Act, as applicable, and the rules
and regulations of the Commission thereunder, and none of such documents
contained an untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading; and any further documents so filed and incorporated by reference
in the Prospectus, when such documents are filed with the Commission, will
conform in all material respects to the requirements of the Securities Act or
the Exchange Act, as applicable, and the rules and regulations of the Commission
thereunder and will not 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 not misleading.
(4) Each of the Company and GTL has been duly incorporated as an
exempted company and is validly existing as an exempted company in good standing
under the laws of Bermuda, with all requisite power and authority and, except as
disclosed in the Prospectus, has all necessary material government
authorizations, licenses, certificates, franchises, permits and approvals
required to own its properties and to conduct its business as described in the
Prospectus; Globalstar has been duly formed and is validly existing as a limited
partnership under the laws of the State of Delaware, and has been duly qualified
for the transaction of business and is in good standing under the laws of each
other jurisdiction in which it owns or leases property, or conducts any
business, so as to require such qualification (except where the failure to so
qualify would not have a material adverse effect on Globalstar); and Globalstar
has all requisite power and authority and, except as disclosed in the
Prospectus, has all necessary material government authorizations, licenses,
certificates, franchises, permits and approvals required to own its properties
and to conduct its business as described in the Prospectus; SS/L and Orion have
been duly incorporated and are validly existing in good standing under the laws
of the State of Delaware, with all requisite power and authority and, except as
disclosed in the Prospectus, have all necessary material government
authorizations, licenses, certificates, franchises, permits and approvals
required to own
<PAGE> 6
6
their properties and to conduct their businesses as described in the Prospectus;
SatMex has been duly formed and is validly existing as a company under the laws
of Mexico, with all requisite power and authority and, except as disclosed in
the Prospectus, has all necessary material government authorizations, licenses,
certificates, franchises, permits and approvals required to own its properties
and conduct its business as described in the Prospectus; each other Loral
Affiliate that is a corporation has been duly incorporated and is validly
existing in good standing under the laws of its jurisdiction of incorporation;
each Loral Affiliate that is a partnership has been duly formed and is validly
existing under the laws of its jurisdiction of formation.
(5) Neither the Company nor any Loral Affiliate is an "investment
company" within the meaning of such term under the United States Investment
Company Act of 1940 and the rules and regulations of the Commission thereunder.
Since the respective dates as of which information is given in the Prospectus,
there has not been, and prior to any Closing Date (as defined in Section 3
hereof) there will not be, any material change in the capital stock or
partnership interests of the Company or short-term debt or long-term
consolidated debt of the Company or any Loral Affiliate, or any material adverse
change, or any development involving a prospective material adverse change, in
or affecting the general affairs, management, financial position, stockholders'
equity or results of operations of the Company and the Loral Affiliates, taken
as a whole, otherwise than as set forth or contemplated, or under arrangements
referred to, in the Prospectus.
(6) The shares of the Stock to be issued and sold by the Company to
the International Managers hereunder and under the International Underwriting
Agreement have been duly and validly authorized and, when issued and delivered
against payment therefor as provided herein and in the International
Underwriting Agreement, will be duly and validly issued, fully paid and
non-assessable; and the Stock will conform to the description thereof contained
in the Prospectus.
(7) This Agreement has been duly authorized, executed and delivered
by the Company.
(8) The execution, delivery and performance of this Agreement by the
Company and the consummation of the transactions contemplated hereby will not
conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which the Company or
any Loral Affiliate is a party or by which the Company or any Loral Affiliate is
bound or to which any of the property or assets of the Company or any Loral
Affiliate is subject, nor will such actions result in any violation of the
provisions of the Memorandum of Association or by-laws of the Company or the
charter or by-laws of any Loral Affiliate or any statute or any order, rule or
regulation of
<PAGE> 7
7
any court or governmental agency or body having jurisdiction over the Company or
any Loral Affiliate or any of their properties or assets; and except for the
registration of the Stock under the Securities Act and such consents, approvals,
authorizations, registrations or qualifications as may be required under the
Exchange Act and applicable state or foreign securities laws in connection with
the purchase and distribution of the Stock by the International Managers, no
consent, approval, authorization or order of, or filing or registration with,
any such court or governmental agency or body is required for the execution,
delivery and performance of this Agreement by the Company and the consummation
of the transactions contemplated hereby.
(9) There are no contracts, agreements or understandings between the
Company and any person granting such person the right to require the Company to
file a registration statement under the Securities Act with respect to any
securities of the Company owned or to be owned by such person or to require the
Company to include such securities in the securities registered pursuant to the
Registration Statement or in any securities being registered pursuant to any
other registration statement filed by the Company under the Securities Act,
except such contracts or agreements under which such rights have been waived in
writing in a manner reasonably satisfactory to the Lead Managers.
(10) Except as described in the Registration Statement, the Company
has not sold or issued any shares of Common Stock during the six-month period
preceding the date of the Prospectus, including any sales pursuant to Rule 144A,
Regulation D or Regulation S under the Securities Act, other than shares issued
pursuant to employee benefit plans, qualified stock options plans or other
employee compensation plans or pursuant to outstanding options, rights or
warrants.
(11) Neither the Company nor any Loral Affiliate has sustained,
since the date of the latest audited financial statements included or
incorporated by reference in the Prospectus, any material loss or interference
with its business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental action,
order or decree, otherwise than as set forth or contemplated in the Prospectus;
and, since such date, there has not been any prospective change in the capital
stock, partnership interests or long-term debt of the Company or any Loral
Affiliate or any material adverse change, or any development involving a
prospective material adverse change, in or affecting the general affairs,
management, financial position, stockholders' equity or results of operations of
the Company and the Loral Affiliates, otherwise than as set forth or
contemplated in the Prospectus.
(12) The financial statements (including the related notes and
supporting schedules) filed as part of the Registration Statement or included or
incorporated by reference in the Prospectus present fairly the financial
condition and
<PAGE> 8
8
results of operations of the entities purported to be shown thereby, at the
dates and for the periods indicated, and have been prepared in conformity with
generally accepted accounting principles applied on a consistent basis
throughout the periods involved.
(13) Deloitte & Touche LLP, who have certified certain financial
statements of the Company and certain of the Loral Affiliates, whose report
appears in the Prospectus or is incorporated by reference therein and who have
delivered the initial letter referred to in Section 8(h) hereof, are independent
public accountants as required by the Securities Act and the Rules and
Regulations; Ernst & Young LLP, who have certified certain financial statements
of Orion and whose reports appear in the Prospectus or are incorporated by
reference therein, were independent accountants as required by the Securities
Act and the Rules and Regulations during the periods covered by the financial
statements on which they reported contained or incorporated in the Prospectus;
and Price Waterhouse LLP, who have certified certain financial statements of
SatMex, whose report appears in the Prospectus or is incorporated by reference
therein and who have delivered the initial letter referred to in Section 8(i)
hereof, are independent public accountants as required by the Securities Act and
the Rules and Regulations;
(14) Except as described in the Prospectus, the Company and each of
the Loral Affiliates carry, or are covered by, insurance in such amounts and
covering such risks as is adequate for the conduct of their respective
businesses and the value of their respective properties and as is customary for
companies engaged in similar businesses in similar industries.
(15) Each of the Company and the Loral Affiliates and their
respective equipment suppliers owns or possesses adequate patent rights or
licenses or other rights to use patent rights, inventions, trademarks, service
marks, trade names and copyrights (except as otherwise described in the
Prospectus) necessary to conduct the general business proposed to be operated by
the Company and the Loral Affiliates as described in the Prospectus, and none of
the Company or the Loral Affiliates or, to the knowledge of the Company, any of
their respective equipment suppliers, has received any notice of infringement of
or conflict with asserted rights of others with respect to any patent, patent
rights, inventions, trademarks, service marks, trade names or copyrights which,
singly or in the aggregate, could materially adversely affect the business,
operations, financial condition, income or business prospects of the Company and
the Loral Affiliates, taken as a whole.
(16) Except as described in the Prospectus, there are no legal or
governmental proceedings pending to which the Company or any Loral Affiliate is
a party or of which any property or assets of the Company or any Loral Affiliate
is the subject which, if determined adversely to the Company or any Loral
Affiliate, might have a material adverse effect on the consolidated financial
position, stockholders' equity,
<PAGE> 9
9
results of operations, business or prospects of the Company and the Loral
Affiliates and to the best of the Company's knowledge, no such proceedings are
threatened or contemplated by governmental authorities or threatened by others.
(17) Other than as disclosed in the Prospectus, (i) no default
exists, and no event has occurred which with notice or lapse of time, or both,
would constitute a default in the due performance and observance of any term,
covenant or condition of the Partnership Agreement, the Globalstar Credit
Agreement, the agreement between the Company and AT&T Corp., dated as of
September 25, 1996, providing for the sale by AT&T Corp. to the Company of the
assets constituting its Skynet Satellite Services Business (the "Skynet
Agreement"), the Shareholders Agreement dated as of April 23, 1996 between
Lockheed Martin Tactical Systems, Inc. and the Company (the "Lockheed/Loral
Shareholders Agreement"), the Agreement and Plan of Merger Among Orion, the
Company and Loral Satellite Corporation dated as of October 7, 1997, as amended,
or any indenture, mortgage, deed of trust, loan or credit agreement, lease or
other agreement or instrument to which the Company or any Loral Affiliate is a
party or by which the Company or any Loral Affiliate is bound, except any such
default with respect to any such other agreement or instrument as does not
singly or in the aggregate have a material adverse effect on the Company and the
Loral Affiliates, taken as a whole and (ii) neither the Company nor any Loral
Affiliate is in violation in any material respect of any law.
(18) (i) The FCC has authorized LQP to construct a mobile satellite
system capable of operating in the 1610-1626.5/2483.5-2500 MHz frequency bands,
consistent with the technical specifications set forth in its application, the
FCC's rules and the conditions set forth in the FCC's Order and Authorization
(DA 95-128), released January 31, 1995; however, such authorization is presently
subject to modification, stay or revocation through judicial appeals.
(ii) Participation by Globalstar in the development and
operation of the Globalstar System as described in the Prospectus does not
violate the Communications Act of 1934, as amended (the "Communications
Act"), or the rules and regulations thereunder.
(iii) The construction, launch and operation by Globalstar of
the Globalstar satellite constellation authorized by the Order and
Authorization, FCC 95-128 (released Jan. 31, 1995), would not violate
provisions of the Communications Act or the FCC's rules and policies
thereunder relating to control of FCC authorizations, provided that L/Q
Licensee, Inc. remains in ultimate control of the authorized facilities as
defined by the rules and policies of the FCC and that there is no transfer
of control of L/Q Licensee, Inc. without prior approval of the FCC.
<PAGE> 10
10
(19) Neither the Company nor any Loral Affiliate, nor any director,
officer, agent, employee or other person associated with or acting on behalf of
the Company or any Loral Affiliate, has used any corporate funds for any
unlawful contribution, gift, entertainment or other unlawful expense relating to
political activity; made any direct or indirect unlawful payment to any foreign
or domestic government official or employee from corporate funds; violated or is
in violation of any provision of the Foreign Corrupt Practices Act of 1977; or
made any bribe, rebate, payoff, influence payment, kickback or other unlawful
payment.
(20) Except as disclosed in the Prospectus, there has been no
storage, disposal, generation, manufacture, refinement, transportation, handling
or treatment of toxic wastes, medical wastes, hazardous wastes or hazardous
substances by any of the Company or the Loral Affiliates (or, to the knowledge
of the Company, any predecessors in interest of any of them) at, upon or from
any of the property now or previously owned or leased by the Company or any
Loral Affiliate, as the case may be, in violation of any applicable law,
ordinance, rule, regulation, order, judgment, decree or permit or which would
require remedial action under any applicable law, ordinance, rule, regulation,
order, judgment, decree or permit, except for any violation or remedial action
which would not have, or could not be reasonably likely to have, singularly or
in the aggregate with all such violations and remedial actions, a material
adverse effect on the general affairs, management, financial position,
shareholders' equity or results of operations of the Company and the Loral
Affiliates, taken as a whole; there has been no material spill, discharge, leak,
emission, injection, escape, dumping or release of any kind onto such property
or into the environment surrounding such property of any toxic wastes, medical
wastes, solid wastes, hazardous wastes or hazardous substances due to or caused
by the Company, any Loral Affiliate or any of their respective predecessors or
with respect to which the Company has knowledge, except for any such spill,
discharge, leak, emission, injection, escape, dumping or release which would not
have or would not be reasonably likely to have, singularly or in the aggregate
with all such spills, discharges, leaks, emissions, injections, escapes,
dumpings and releases, a material adverse effect on the general affairs,
management, financial position, shareholders' equity or results of operations of
the Company and the Loral Affiliates, taken as a whole; and the terms "hazardous
wastes", "toxic wastes", "hazardous substances" and "medical wastes" shall have
the meanings specified in any applicable local, state, Federal and foreign laws
or regulations with respect to environmental protection.
(21) The partnership interests in Globalstar held by the Company and
GTL pursuant to the Partnership Agreement are duly and validly authorized,
executed, issued and delivered, in accordance with the terms of the Partnership
Agreement, fully paid and not subject to preemptive rights and constitute the
valid and binding obligations of Globalstar; all the issued and outstanding
capital stock of each other Loral Affiliate has been duly authorized and validly
issued and is fully paid and nonassessable; and,
<PAGE> 11
11
except as disclosed in the Prospectus and except for the stock of GTL that is
owned by the Company and has been pledged to Lockheed Martin and Common Stock of
GTL owned by the Company that is subject to outstanding options, the capital
stock of such Loral Affiliate owned by the Company, directly or indirectly, is
owned free from liens, encumbrances, equities, claims and defects.
(22) For U.S. Federal income tax purposes, the Company is not, and
does not expect to become, a "passive foreign investment company" within the
meaning of Section 1297 of the Internal Revenue Code of 1986, as amended.
3. Purchase of the Stock by the International Managers. On the basis
of the representations and warranties contained in, and subject to the terms and
conditions of, this Agreement, the Company agrees to sell 4,000,000 shares of
the Firm Stock to the several International Managers and each of the
International Managers, severally and not jointly, agrees to purchase the number
of shares of the Firm Stock set opposite that U.S. Underwriter's name in
Schedule 1 hereto. The respective purchase obligations of the International
Managers with respect to the Firm Stock shall be rounded among the International
Managers to avoid fractional shares, as the Lead Managers may determine.
In addition, the Company grants to the International Managers an
option to purchase up to 600,000 shares of Option Stock. Such option is granted
solely for the purpose of covering over-allotments in the sale of Firm Stock and
is exercisable as provided in Section 5 hereof. Shares of Option Stock shall be
purchased severally for the account of the International Managers in proportion
to the number of shares of Firm Stock set opposite the name of such
International Managers in Schedule 1 hereto. The respective purchase obligations
of each U.S. Underwriter with respect to the Option Stock shall be adjusted by
the Lead Managers so that no U.S. Underwriter shall be obligated to purchase
Option Stock other than in 100 share amounts. The price of both the Firm Stock
and any Option Stock shall be $_____ per share.
The Company shall not be obligated to deliver any of the Stock to be
delivered on the First Delivery Date or any Delivery Date (as hereinafter
defined), as the case may be, except upon payment for all the Stock to be
purchased on such Delivery Date as provided herein.
4. Offering of Stock by the International Managers. Upon
authorization by the Lead Managers of the release of the Firm Stock, the several
International Managers propose to offer the Firm Stock for sale upon the terms
and conditions set forth in the Prospectus.
<PAGE> 12
12
Each U.S. Underwriter agrees that, except to the extent permitted by
the Agreement Between U.S. Underwriters and International Managers, it will not
offer or sell any of the Stock outside of the United States.
5. Delivery of and Payment for the Stock. Delivery of and payment
for the Firm Stock shall be made at the office of Cravath, Swaine & Moore,
Worldwide Plaza, 825 Eighth Avenue, New York, NY 10019 at 10:00 a.m., New York
City time, on the fourth full business day following the date of this Agreement
or at such other date or place as shall be determined by agreement between the
Lead Managers and the Company. This date and time are sometimes referred to as
the "First Delivery Date." On the First Delivery Date, the Company shall deliver
or cause to be delivered certificates representing the Firm Stock to the Lead
Managers for the account of each International Manager against payment to or
upon the order of the Company of the purchase price by wire transfer in
certified or official bank check or checks payable in New York Clearing House
(next-day) funds. Time shall be of the essence, and delivery at the time and
place specified pursuant to this Agreement is a further condition of the
obligation of each International Manager hereunder. Upon delivery, the Firm
Stock shall be registered in such names and in such denominations as the Lead
Managers shall request in writing not less than two full business days prior to
the First Delivery Date. For the purpose of expediting the checking and
packaging of the certificates for the Firm Stock, the Company shall make the
certificates representing the Firm Stock available for inspection by the Lead
Managers in New York, New York, not later than 2:00 p.m., New York City time, on
the business day prior to the First Delivery Date.
At any time on or before the thirtieth day after the date of this
Agreement, the option granted in Section 3 may be exercised in whole or in part
from time to time by written notice being given to the Company by the Lead
Managers. Such notice shall set forth the aggregate number of shares of Option
Stock as to which the option is being exercised, the names in which the shares
of Option Stock are to be registered, the denominations in which the shares of
Option Stock are to be issued and the date and time, as determined by the Lead
Managers, when the shares of Option Stock are to be delivered; provided,
however, that this date and time shall not be earlier than the First Delivery
Date nor earlier than the second business day after the date on which the option
shall have been exercised nor later than the fifth business day after the date
on which the option shall have been exercised. The date and time the shares of
Option Stock are delivered are sometimes referred to as the "Second Delivery
Date" and the First Delivery Date and any Second Delivery Date are sometimes
each referred to as a "Delivery Date").
Delivery of and payment for the Option Stock shall be made at the
place specified in the first sentence of the first paragraph of this Section 5
(or at such other place as shall be determined by agreement between the Lead
Managers and the Company) at 10:00 a.m., New York City time, on the such Second
Delivery Date. On such Second
<PAGE> 13
13
Delivery Date, the Company shall deliver or cause to be delivered the
certificates representing the Option Stock to the Lead Managers for the account
of each International Manager against payment to or upon the order of the
Company of the purchase price by wire transfer in certified or official bank
check or checks payable in New York Clearing House (next-day) funds. Time shall
be of the essence, and delivery at the time and place specified pursuant to this
Agreement is a further condition of the obligation of each International Manager
hereunder. Upon delivery, the Option Stock shall be registered in such names and
in such denominations as the Lead Managers shall request in the aforesaid
written notice. For the purpose of expediting the checking and packaging of the
certificates for the Option Stock, the Company shall make the certificates
representing the Option Stock available for inspection by the Lead Managers in
New York, New York, not later than 2:00 p.m., New York City time, on the
business day prior to the such Second Delivery Date.
6. Further Agreements of the Company. The Company agrees:
(1) To prepare the Prospectus in a form approved by the Lead
Managers and to file such Prospectus pursuant to Rule 424(b) under the
Securities Act not later than the Commission's close of business on the second
business day following the execution and delivery of this Agreement or, if
applicable, such earlier time as may be required by Rule 430A(a)(3) under the
Securities Act; to make no further amendment or any supplement to the
Registration Statement or to the Prospectus prior to the last Delivery Date
except as permitted herein; to advise the Lead Managers, promptly after it
receives notice thereof, of the time when any amendment to the Registration
Statement has been filed or becomes effective or any supplement to the
Prospectus or any amended Prospectus has been filed and to furnish the Lead
Managers with copies thereof to file promptly all reports and any definitive
proxy or information statements required to be filed by the Company with the
Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act
subsequent to the date of the Prospectus and for so long as the delivery of a
prospectus is required in connection with the offering or sale of the Stock; to
advise the Lead Managers, promptly after it receives notice thereof, of the
issuance by the Commission of any stop order or of any order preventing or
suspending the use of any Preliminary Prospectus or the Prospectus, of the
suspension of the qualification of the Stock for offering or sale in any
jurisdiction, of the initiation or threatening of any proceeding for any such
purpose, or of any request by the Commission for the amending or supplementing
of the Registration Statement or the Prospectus or for additional information;
and, in the event of the issuance of any stop order or of any order preventing
or suspending the use of any Preliminary Prospectus or the Prospectus or
suspending any such qualification, to use promptly its best efforts to obtain
its withdrawal;
(2) To furnish promptly to the Lead Managers and to counsel for the
International Managers a conformed copy of the Registration Statement as
originally filed
<PAGE> 14
14
with the Commission, and each amendment thereto filed with the Commission,
including all consents and exhibits filed therewith;
(3) To deliver promptly to the Lead Managers such number of the
following documents as the Lead Managers shall reasonably request: (i) conformed
copies of the Registration Statement as originally filed with the Commission and
each amendment thereto (in each case excluding exhibits other than this
Agreement), (ii) each Preliminary Prospectus, the Prospectus and any amended or
supplemented Prospectus and (iii) any document incorporated by reference in the
Prospectus (excluding exhibits thereto); and, if the delivery of a prospectus is
required at any time after the Effective Time in connection with the offering or
sale of the Stock or any other securities relating thereto and if at such time
any events shall have occurred as a result of which the Prospectus as then
amended or supplemented would include an untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made when such
Prospectus is delivered, not misleading, or, if for any other reason it shall be
necessary to amend or supplement the Prospectus or to file under the Exchange
Act any document incorporated by reference in the Prospectus in order to comply
with the Securities Act or the Exchange Act, to notify the Lead Managers and,
upon their request, to file such document and to prepare and furnish without
charge to each International Manager and to any dealer in securities as many
copies as the Lead Managers may from time to time reasonably request of an
amended or supplemented Prospectus which will correct such statement or omission
or effect such compliance;
(4) To file promptly with the Commission any amendment to the
Registration Statement or the Prospectus or any supplement to the Prospectus
that may, in the judgment of the Company or the Lead Managers, be required by
the Securities Act or requested by the Commission;
(5) Prior to filing with the Commission any amendment to the
Registration Statement or supplement to the Prospectus, any document
incorporated by reference in the Prospectus or any Prospectus pursuant to Rule
424 of the Rules and Regulations, to furnish a copy thereof to the Lead Managers
and counsel for the International Managers and obtain the consent of the Lead
Managers to the filing;
(6) As soon as practicable after the Effective Date to make
generally available to the Company's security holders and to deliver to the Lead
Managers an earnings statement of the Company and the Loral Affiliates (which
need not be audited) complying with Section 11(a) of the Securities Act and the
Rules and Regulations (including, at the option of the Company, Rule 158);
<PAGE> 15
15
(7) For a period of five years following the Effective Date, to
furnish to the Lead Managers copies of all materials furnished by the Company to
its shareholders and all public reports and all reports and financial statements
furnished by the Company to the principal national securities exchange upon
which the Common Stock may be listed pursuant to requirements of or agreements
with such exchange or to the Commission pursuant to the Exchange Act or any rule
or regulation of the Commission thereunder;
(8) Promptly from time to time to take such action as the Lead
Managers may reasonably request to qualify the Stock for offering and sale under
the securities laws of such jurisdictions as the Lead Managers may request and
to comply with such laws so as to permit the continuance of sales and dealings
therein in such jurisdictions for as long as may be necessary to complete the
distribution of the Stock; provided that in connection therewith the Company
shall not be required to qualify as a foreign corporation or to file a general
consent to service of process in any jurisdiction;
(9) For a period of 90 days from the date of the Prospectus, not to,
directly or indirectly, (1) offer for sale, sell, pledge or otherwise dispose of
(or enter into any transaction or device which is designed to, or could be
expected to, result in the disposition by any person during such period of) any
shares of Common Stock or securities convertible into or exchangeable for Common
Stock (other than the Stock and shares issued pursuant to employee benefit
plans, qualified stock option plans or other employee compensation plans
existing on the date hereof or pursuant to currently outstanding options,
warrants or rights), or sell or grant options, rights or warrants with respect
to any shares of Common Stock or securities convertible into or exchangeable for
Common Stock (other than the grant of options pursuant to option plans), or (2)
enter into any swap or other derivatives transaction that transfers to another,
in whole or in part, any of the economic benefits or risks of ownership of such
shares of Common Stock, whether any such transaction described in clause (1) or
(2) above is to be settled by delivery of Common Stock or other securities, in
cash or otherwise, in each case without the prior written consent of Lehman
Brothers Inc.;
(10) Prior to the Effective Date, to apply for the inclusion of the
Stock on the New York Stock Exchange, Inc. and to use its best efforts to
complete that listing, subject only to official notice of issuance, prior to the
First Delivery Date;
(11) To apply the net proceeds from the sale of the Stock being sold
by the Company as set forth in the Prospectus; and
(12) To take such steps as shall be necessary to ensure that neither
the Company nor any Loral Affiliate shall become an "investment company" within
the
<PAGE> 16
16
meaning of such term under the United States Investment Company Act of 1940 and
the rules and regulations of the Commission thereunder.
7. Expenses. The Company agrees to pay (a) the costs incident to the
authorization, issuance, sale and delivery of the Stock and any taxes payable in
that connection; (b) the costs incident to the preparation, printing and filing
under the Securities Act of the Registration Statement and any amendments and
exhibits thereto; (c) the costs of distributing the Registration Statement as
originally filed and each amendment thereto and any post-effective amendments
thereof (including, in each case, exhibits), any Preliminary Prospectus, the
Prospectus and any amendment or supplement to the Prospectus or any document
incorporated by reference therein, all as provided in this Agreement; (d) the
costs of producing and distributing this Agreement, the Agreement Between U.S.
Underwriters and International Managers, the Agreement Among International
Managers and any other related documents in connection with the offering,
purchase, sale and delivery of the stock; (e) the filing fees incident to
securing any required review by the National Association of Securities Dealers,
Inc. of the terms of sale of the Stock; (f) any applicable listing or other
fees; (g) the fees and expenses of qualifying the Stock under the securities
laws of the several jurisdictions as provided in Section 6 (h) and of preparing,
printing and distributing a Blue Sky Memorandum; and (h) all other costs and
expenses incident to the performance of the obligations of the Company under
this Agreement; provided that except as provided in this Section 7 and in
Section 12 the International Managers shall pay their own costs and expenses,
including the costs and expenses of their counsel, any transfer taxes on the
Stock which they may sell and the expenses of advertising any offering of the
Stock made by the International Managers.
8. Conditions of International Managers' Obligations. The respective
obligations of the International Managers hereunder are subject to the accuracy,
when made and on each Delivery Date, of the representations and warranties of
the Company contained herein, to the performance by the Company of its
obligations hereunder, and to each of the following additional terms and
conditions:
(1) The Prospectus shall have been timely filed with the Commission
in accordance with Section 6(a); no stop order suspending the effectiveness of
the Registration Statement or any part thereof shall have been issued and no
proceeding for that purpose shall have been initiated or threatened by the
Commission; and any request of the Commission for inclusion of additional
information in the Registration Statement or the Prospectus or otherwise shall
have been complied with.
(2) No U.S. Underwriter or International Manager shall have
discovered and disclosed to the Company on or prior to such Delivery Date that
the Registration Statement or the Prospectus or any amendment or supplement
thereto
<PAGE> 17
17
contains an untrue statement of a fact which, in the opinion of Cravath, Swaine
& Moore, counsel for the International Managers, is material or omits to state a
fact which, in the opinion of such counsel, is material and is required to be
stated therein or is necessary to make the statements therein not misleading.
(3) All corporate proceedings and other legal matters incident to
the authorization, form and validity of this Agreement, the Stock, the
Registration Statement and the Prospectus, and all other legal matters relating
to this Agreement and the transactions contemplated hereby shall be reasonably
satisfactory in all material respects to counsel for the International Managers,
and the Company shall have furnished to such counsel all documents and
information that they may reasonably request to enable them to pass upon such
matters.
(4) Willkie Farr & Gallagher shall have furnished to the Lead
Managers their written opinion, as counsel to the Company, addressed to the
International Managers and dated such Delivery Date, in form and substance
reasonably satisfactory to the Lead Managers, to the effect that:
(1) Globalstar has been duly formed and is validly existing as
a limited partnership in good standing under the laws of the State of
Delaware; SS/L and Orion have been duly incorporated and are validly
existing as corporations in good standing under the laws of the State of
Delaware; each of Globalstar and SS/L has been duly qualified for the
transaction of business and is in good standing under the laws of each
other jurisdiction in the United States in which it owns or leases
property, or conducts any business, so as to require such qualification
(except where the failure to so qualify would not have a material adverse
effect on the Company, Globalstar, SS/L and Orion, taken as a whole; and
each of Globalstar, SS/L and Orion has all requisite power and authority
and, except as disclosed in the Prospectus, all material governmental
authorizations, licenses, certificates, franchises, permits and approvals
required to own its properties and to conduct its business as described in
the Prospectus;
(2) To such counsel's knowledge, except as described in the
Prospectus, the Company has not granted any outstanding options, warrants
or commitments with respect to any shares of the capital stock of the
Company, whether issued or unissued;
(3) The Stock conforms in all material respects to the
description thereof contained in the Prospectus;
(4) The Company has an authorized capitalization as set forth
in the Prospectus, and all of the issued shares of capital stock of the
Company
<PAGE> 18
18
(including the shares of Stock being delivered on such Delivery Date) have
been duly and validly authorized and issued, are fully paid and
non-assessable and conform to the description thereof contained in the
Prospectus; all outstanding shares of stock of GTL, Orion and SS/L have
been duly and validly authorized and issued and are fully paid,
non-assessable and (except as set forth in the Prospectus and except for
the stock of GTL that is owned by the Company and has been pledged to
Lockheed Martin and Common Stock of GTL owned by the Company that is
subject to outstanding options) are owned directly or indirectly by the
Company, free and clear of all liens, encumbrances, equities or claims;
(5) To the best of such counsel's knowledge and other than as
set forth in the Prospectus, there are no legal or governmental
proceedings pending to which the Company or any Loral Affiliate is a party
or of which any property or assets of the Company or any Loral Affiliate
is the subject which, if determined adversely to the Company or any Loral
Affiliate, might have a material adverse effect on the consolidated
financial position, stockholders' equity, results of operations, business
or prospects of the Company and the Loral Affiliates, taken as a whole;
and, to the best of such counsel's knowledge, no such proceedings are
threatened or contemplated by governmental authorities or threatened by
others;
(6) The Registration Statement was declared effective under
the Securities Act as of the date and time specified in such opinion, the
Prospectus was filed with the Commission pursuant to the subparagraph of
Rule 424(b) of the Rules and Regulations specified in such opinion on the
date specified therein and no stop order suspending the effectiveness of
the Registration Statement has been issued and, to the knowledge of such
counsel, no proceeding for that purpose is pending or threatened by the
Commission;
(7) The Registration Statement and the Prospectus and any
further amendments or supplements thereto made by the Company prior to
such Delivery Date (other than the financial statements and related
schedules therein, as to which such counsel need express no opinion)
comply as to form in all material respects with the requirements of the
Securities Act and the Rules and Regulations; and the documents
incorporated by reference in the Prospectus and any further amendment or
supplement to any such incorporated document made by the Company prior to
such Delivery Date (other than the financial statements and related
schedules therein, as to which such counsel need express no opinion), when
they became effective or were filed with the Commission, as the case may
be, complied as to form in all material respects with the requirements of
the Securities Act or the Exchange Act, as applicable, and the rules and
regulations of the Commission thereunder;
<PAGE> 19
19
(8) To the best of such counsel's knowledge, there are no
contracts or other documents which are required to be described in the
Prospectus or filed as exhibits to the Registration Statement by the
Securities Act or by the Rules and Regulations which have not been
described or filed as exhibits to the Registration Statement or
incorporated therein by reference as permitted by the Rules and
Regulations;
(9) This Agreement and the U.S. Underwriting Agreement have
both been duly authorized, executed and delivered by the Company;
(10) The issue and sale of the shares of Stock being delivered
on such Delivery Date by the Company and the compliance by the Company
with all of the provisions of this Agreement and the U.S. Underwriting
Agreement and the consummation of the transactions contemplated hereby and
thereby will not conflict with or result in a breach or violation of any
of the terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument known to such counsel to which the Company or any Loral
Affiliate is a party or by which the Company or any Loral Affiliate is
bound or to which any of the property or assets of the Company or any
Loral Affiliate is subject, nor will such actions result in any violation
of the provisions of the charter or by-laws of the Company or any Loral
Affiliate or any statute or any order, rule or regulation known to such
counsel of any court or governmental agency or body having jurisdiction
over the Company or any Loral Affiliate or any of their properties or
assets; and, except for the registration of the Stock under the Securities
Act and such consents, approvals, authorizations, registrations or
qualifications as may be required under the Exchange Act and applicable
state or foreign securities laws in connection with the purchase and
distribution of the Stock by the U.S. Underwriters and the International
Managers, no consent, approval, authorization or order of, or filing or
registration with, any such court or governmental agency or body is
required for the execution, delivery and performance of this Agreement by
the Company and the consummation of the transactions contemplated hereby;
(11) To the best of such counsel's knowledge, there are no
contracts, agreements or understandings between the Company and any
person, other than those that have been waived [in writing], granting
such person the right to require the Company to file a registration
statement under the Securities Act with respect to any securities of the
Company owned or to be owned by such
<PAGE> 20
20
person or to require the Company to include such securities in the
securities registered pursuant to the Registration Statement or in any
securities being registered pursuant to any other registration statement
filed by the Company under the Securities Act;
(12) LQP (or its subsidiary) has agreed to use the license to
operate mobile satellite services in the 1610-1626.5 MHz L-band and the
2483.5-2500 MHz S-band granted by the FCC for the exclusive benefit of
Globalstar;
(13) The Partnership Agreement has been duly and validly
authorized, executed and delivered by LQSS, Globalstar and the Company
and, to the knowledge of such counsel, the other parties to such agreement
have authorized, executed and delivered such agreement and assuming such
authorization, execution and delivery by such other parties, such
agreement is valid and binding and enforceable against the parties
thereto, except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium and other similar laws relating to
or affecting creditors' rights generally or by general equitable
principles (regardless of whether such enforceability is considered in a
proceeding in equity or at law); and
(14) The statements set forth in the Prospectus under the
heading "Risk Factors--Regulation" insofar as such statements constitute a
summary of the FCC's rules, actions and proceedings referred to therein,
fairly present the information referred to therein with respect to such
rules, actions and proceedings, and to such counsel's knowledge, there are
no pending or threatened proceedings related to the FCC's licensing of the
Company or any Loral Affiliate required to be disclosed in the Prospectus
which have not been disclosed as required.
In rendering such opinion, such counsel may state that their opinion is limited
to matters governed by the Federal laws of the United States of America, the
laws of the State of New York, the General Corporation Law of the State of
Delaware or the Delaware Revised Uniform Limited Partnership Act. Such counsel
shall also have furnished to the Lead Managers a written statement, addressed to
the International Managers and dated such Delivery Date, in form and substance
satisfactory to the Lead Managers, to the effect that (y) such counsel has acted
as counsel to the Company on a regular basis (although the Company is also
represented by its General Counsel and by other outside counsel), has acted as
counsel to the Company in connection with previous financing transactions and
has acted as counsel to the Company in connection with the preparation of the
Registration Statement; and (z) based on the foregoing, no facts have come to
the attention of such counsel which lead them to believe that (I) the
Registration Statement,
<PAGE> 21
21
as of the Effective Date, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein not misleading, or that the Prospectus
contains any untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading or (II) any document incorporated by reference in the Prospectus or
any further amendment or supplement to any such incorporated document made by
the Company prior to such Delivery Date, when they were filed with the
Commission contained, in the case of a registration statement which became
effective under the Securities Act, any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein not misleading, or, in the case of other
documents which were filed under the Exchange Act with the Commission, an untrue
statement of a material fact or omitted to state a material fact necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading; provided, however, that such counsel will
express no opinion or belief with respect to the financial statements and data
contained in the Prospectus or with respect to any matters addressed by the
opinion of Crowell & Moring set forth in Section 8(f) hereof.
(5) Appleby, Spurling & Kempe shall have furnished to the Lead
Managers its opinion, as counsel to the Company, addressed to the International
Managers and dated such Delivery Date and in form and substance satisfactory to
the Lead Managers, to the effect that:
(1) each of the Company and GTL has been duly incorporated as
an exempted company and is validly existing as an exempted company in good
standing under the laws of Bermuda; and has full power and authority and
has obtained all Bermuda governmental authorizations, licenses,
certificates, franchises, permits and approvals required to own its
properties and to conduct its business as described in the Registration
Statement;
(2) to such counsel's knowledge, no litigation or governmental
proceeding is pending or threatened against the Company or GTL in Bermuda
which would adversely affect the Company's ability to perform its
obligations under this Agreement;
(3) the execution, delivery and performance by the Company of
this Agreement has been duly authorized by the Company and the
consummation by the Company of the sale of the Stock in accordance
therewith will not (A) conflict with the Company's Memorandum of
Association or By-Laws, in each case as amended, or (B) violate or
conflict with any provision of law or regulation of Bermuda applicable to
the Company or GTL;
<PAGE> 22
22
(4) no consent, approval, authorization or order of any court,
regulatory body, administrative agency or other governmental body is
required to be obtained for the sale of Securities under any provision of
law or regulation of Bermuda applicable to the Company or GTL or for the
consummation of the transactions contemplated by this Agreement;
(5) there are no preemptive or other rights to subscribe for
or to purchase, nor any restriction upon the voting or transfer of, any
shares of the Stock pursuant to the Company's Memorandum of Association or
by-laws or any agreement or other instrument known to such counsel;
(6) there is no restriction upon the voting or transfer of the
shares of Stock pursuant to (A) the law of Bermuda or (B) the Company's
Memorandum of Association or by-laws, in each case as amended;
(7) the statements set forth in the Prospectus under the
headings "Description of Capital Stock" and "Taxation", insofar as such
statements describe the Stock and constitute a summary of the legal
matters referred to therein, fairly present the information referred to
therein with respect to such legal and other matters;
(8) a final and conclusive judgment of a New York court under
which a sum of money is payable (not being a sum payable in respect of
taxes or other charges of a like nature, in respect of a fine or other
penalty or in respect of multiple damages as defined in The Protection of
Trading Interests Act, 1981) may be the subject of enforcement proceedings
in the Supreme Court of Bermuda under the common law doctrine of
obligation by action for the debt evidenced by the New York court's
judgment; assuming that (1) the court that gave such judgment was
competent to hear the action in accordance with private international law
principles as applied to courts in Bermuda and (2) such judgment is not
contrary to public policy in Bermuda, has not been obtained by fraud or in
proceedings contrary to natural justice and is not based on an error in
Bermuda law, such counsel believes that, on general principles, such a
judgment would be enforceable in the Supreme Court of Bermuda; and
enforcement of such a judgment against assets in Bermuda may involve the
conversion of the judgment into Bermuda dollars, but the Bermuda Monetary
Authority's policy is to give the consents necessary to enable recovery in
the currency of the obligation;
(9) the submission by the Company to the jurisdiction of the
State and Federal courts sitting in the City of New York contained in this
<PAGE> 23
23
Agreement constitutes a legal, valid and binding obligation of the
Company, provided that such submission is valid under the laws of New
York; and
(10) the choice of the laws of the State of New York to govern
this Agreement is a valid choice of law under Bermuda law, assuming that
such choice is valid under the laws of the State of New York.
(6) Crowell & Moring shall have furnished to the Lead Managers its
written opinion, as special communications counsel to the Company, addressed to
the International Managers and dated such Delivery Date, in form and substance
reasonably satisfactory to the Lead Managers, to the effect that:
(1) The statements set forth in the Prospectus under the
heading "Risk Factors--Regulation", insofar as such statements constitute
a summary of the FCC's rules, actions and proceedings relating to
Globalstar or the Company referred to therein, fairly present the
information referred to therein with respect to such rules, actions and
proceedings, and to such counsel's knowledge, except as set forth therein,
there are no pending or threatened proceedings (other than proceedings
having general applicability to companies in Globalstar's industry) which
could have a material adverse effect on the authorization for
construction, launch and operation of the Globalstar satellite
constellation;
(2) The FCC has authorized LQP to construct a mobile satellite
system capable of operating in the 1610-1626.5/2483.5-2500 MHz frequency
bands, consistent with the technical specifications set forth in its
application, the FCC's rules and the conditions set forth in the FCC's
Order and Authorization, DA 95-128 (released January 31, 1995), as
modified by the Erratum, DA 95-373 (released February 28, 1995), as
affirmed and modified by the Memorandum Opinion and Order, FCC 96-279
(released June 27, 1996); and pursuant to FCC approval, LQP has assigned
such authorization to L/Q Licensee, Inc.; however, such authorization is
presently subject to modification, stay or revocation as a result of
pending judicial appeals; and
(3) The construction, launch and operation by Globalstar,
L.P., of the Globalstar satellite constellation authorized by the Order
and Authorization, DA 95-128 (released Jan. 31, 1995), as modified by the
Erratum, DA 95-373 (released February 28, 1995), as affirmed and modified
by the Memorandum Opinion and Order, FCC 96-279 (released June 27, 1996);
would not violate provisions of the Communications Act or the FCC's rules
and policies thereunder relating to control of FCC authorizations,
provided that L/Q Licensee, Inc. remains in ultimate control of the
authorized facilities as defined by the rules and
<PAGE> 24
24
policies of the FCC and that there is no transfer of control of L/Q
Licensee, Inc. without prior approval of the FCC.
(7) The Lead Managers shall have received from Cravath, Swaine &
Moore, counsel for the International Managers, such opinion or opinions, dated
such Delivery Date, with respect to the issuance and sale of the Stock, the
Registration Statement, the Prospectus and other related matters as the Lead
Managers may reasonably require, and the Company shall have furnished to such
counsel such documents as they reasonably request for the purpose of enabling
them to pass upon such matters.
(8) At the time of execution of this Agreement, the Lead Managers
shall have received from Deloitte & Touche LLP a letter, in form and substance
satisfactory to the Lead Managers, addressed to the International Managers and
dated the date hereof (i) confirming that they are independent public
accountants within the meaning of the Securities Act and are in compliance with
the applicable requirements relating to the qualification of accountants under
Rule 2-01 of Regulation S-X of the Commission, (ii) stating, as of the date
hereof (or, with respect to matters involving changes or developments since the
respective dates as of which specified financial information is given in the
Prospectus, as of a date not more than five days prior to the date hereof), the
conclusions and findings of such firm with respect to the financial information
and other matters ordinarily covered by accountants' "comfort letters" to
underwriters in connection with registered public offerings.
(9) At the time of execution of this Agreement, the Lead Managers
shall have received from Price Waterhouse a letter, in form and substance
satisfactory to the Lead Managers, addressed to the International Managers and
dated the date hereof (i) confirming that they are independent public
accountants within the meaning of the Securities Act and are in compliance with
the applicable requirements relating to the qualification of accountants under
Rule 2-01 of Regulation S-X of the Commission, (ii) stating the conclusions and
findings of such firm with respect to the financial information incorporated by
reference in the Prospectus and other matters ordinarily covered by accountants'
"comfort letters" to underwriters in connection with registered public
offerings.
(10) With respect to the letter of Deloitte & Touche LLP referred to
in paragraph 8(h) above and delivered to the Lead Managers concurrently with the
execution of this Agreement (the "initial letter"), the Company shall have
furnished to the Lead Managers a letter (the "bring-down letter") of such
accountants, addressed to the International Managers and dated such Delivery
Date (i) confirming that they are independent public accountants within the
meaning of the Securities Act and are in compliance with the applicable
requirements relating to the qualification of accountants under Rule 2-01 of
Regulation S-X of the Commission, (ii) stating, as of the date of the
<PAGE> 25
25
bring-down letter (or, with respect to matters involving changes or developments
since the respective dates as of which specified financial information is given
in the Prospectus, as of a date not more than five days prior to the date of the
bring-down letter), the conclusions and findings of such firm with respect to
the financial information and other matters covered by the initial letter and
(iii) confirming in all material respects the conclusions and findings set forth
in the initial letter.
(11) The Company shall have furnished to the Lead Managers a
certificate, dated such Delivery Date, of its Chairman of the Board, its
President or a Vice President and its chief financial officer stating that:
(1) The representations, warranties and agreements of the
Company in Section 2 are true and correct as of such Delivery Date; the
Company has complied with all its agreements contained herein; and the
conditions set forth in Sections 8(a) and 8(m) have been fulfilled; and
(2) They have carefully examined the Registration Statement
and the Prospectus and, in their opinion (A) as of the Effective Date, the
Registration Statement and Prospectus did not include any untrue statement
of a material fact and did not omit to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading, and (B) since the Effective Date no event has occurred which
should have been set forth in a supplement or amendment to the
Registration Statement or the Prospectus.
(12) (i) Neither the Company nor any Loral Affiliate shall have
sustained since the date of the latest audited financial statements included or
incorporated by reference in the Prospectus any loss or interference with its
business from fire, explosion, flood or other calamity, whether or not covered
by insurance, or from any labor dispute or court or governmental action, order
or decree, otherwise than as set forth or contemplated in the Prospectus or (ii)
since such date there shall not have been any change in the capital stock,
partnership interests or long-term debt of the Company or any Loral Affiliate or
any change, or any development involving a prospective change, in or affecting
the general affairs, management, financial position, stockholders' equity or
results of operations of the Company and the Loral Affiliates, otherwise than as
set forth or contemplated in the Prospectus, the effect of which, in any such
case described in clause (i) or (ii), is, in the judgment of the Lead Managers,
so material and adverse as to make it impracticable or inadvisable to proceed
with the public offering or the delivery of the Stock being delivered on such
Delivery Date on the terms and in the manner contemplated in the Prospectus.
(13) Subsequent to the execution and delivery of this Agreement (i)
no downgrading shall have occurred in the rating accorded the debt securities of
the
<PAGE> 26
26
Company by any "nationally recognized statistical rating organization", as that
term is defined by the Commission for purposes of Rule 436(g)(2) of the Rules
and Regulations and (ii) no such organization shall have publicly announced that
it has under surveillance or review, with possible negative implications, its
rating of any of the Company's debt securities.
(14) Subsequent to the execution and delivery of this Agreement
there shall not have occurred any of the following: (i) trading in securities
generally on the New York Stock Exchange or the American Stock Exchange or in
the over-the-counter market, or trading in any securities of the Company on any
exchange or in the over-the-counter market, shall have been suspended or minimum
prices shall have been established on any such exchange or such market by the
Commission, by such exchange or by any other regulatory body or governmental
authority having jurisdiction, (ii) a banking moratorium shall have been
declared by Federal or state authorities, (iii) the United States shall have
become engaged in hostilities, there shall have been an escalation in
hostilities involving the United States or there shall have been a declaration
of a national emergency or war by the United States or (iv) there shall have
occurred such a material adverse change in general economic, political or
financial conditions (or the effect of international conditions on the financial
markets in the United States shall be such) as to make it, in the judgment of a
majority in interest of the several International Managers, impracticable or
inadvisable to proceed with the public offering or delivery of the Stock being
delivered on such Delivery Date on the terms and in the manner contemplated in
the Prospectus.
(15) The New York Stock Exchange, Inc. shall have approved the Stock
for inclusion, subject only to official notice of issuance.
(16) The closing under the U.S. Underwriting Agreement shall have
occurred concurrently with the closing hereunder on the First Delivery Date.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the International Managers.
9. Indemnification and Contribution.
<PAGE> 27
27
(1) The Company shall indemnify and hold harmless each International
Manager, its officers and employees and each person, if any, who controls any
International Manager within the meaning of the Securities Act, from and against
any loss, claim, damage or liability, joint or several, or any action in respect
thereof (including, but not limited to, any loss, claim, damage, liability or
action relating to purchases and sales of Stock), to which that International
Manager, officer, employee or controlling person may become subject, under the
Securities Act or otherwise, insofar as such loss, claim, damage, liability or
action arises out of, or is based upon, (i) any untrue statement or alleged
untrue statement of a material fact contained (A) in any Preliminary Prospectus,
the Registration Statement or the Prospectus or in any amendment or supplement
thereto, or (B) in any blue sky application or other document prepared or
executed by the Company (or based upon any written information furnished by the
Company) specifically for the purpose of qualifying any or all of the Stock
under the securities laws of any state or other jurisdiction (any such
application, document or information being hereinafter called a "Blue Sky
Application") or (ii) the omission or alleged omission to state in any
Preliminary Prospectus, the Registration Statement or the Prospectus, or in any
amendment or supplement thereto, or in any Blue Sky Application any material
fact required to be stated therein or necessary to make the statements therein
not misleading, and shall reimburse each International Manager and each such
officer, employee or controlling person promptly upon demand for any legal or
other expenses reasonably incurred by that International Manager, officer,
employee or controlling person in connection with investigating or defending or
preparing to defend against any such loss, claim, damage, liability or action as
such expenses are incurred; provided, however, that the Company shall not be
liable in any such case to the extent that any such loss, claim, damage,
liability or action arises out of, or is based upon, any untrue statement or
alleged untrue statement or omission or alleged omission made in any Preliminary
Prospectus, the Registration Statement or the Prospectus, or in any such
amendment or supplement, or in any Blue Sky Application, in reliance upon and in
conformity with written information concerning such International Manager
furnished to the Company through the Lead Managers by or on behalf of any
International Manager specifically for inclusion therein which information
consists solely of the information specified in Section 10(f). The foregoing
indemnity agreement is in addition to any liability which the Company may
otherwise have to any International Manager or to any officer, employee or
controlling person of that International Manager.
(2) Each International Manager, severally and not jointly, shall
indemnify and hold harmless the Company, its officers and employees, each of its
directors (including any person who, with his or her consent, is named in the
Registration Statement as about to become a director of the Company), and each
person, if any, who controls the Company within the meaning of the Securities
Act, from and against any loss, claim, damage or liability, joint or several, or
any action in respect thereof, to which the Company or any such director,
officer or controlling person may become subject,
<PAGE> 28
28
under the Securities Act or otherwise, insofar as such loss, claim, damage,
liability or action arises out of, or is based upon, (i) any untrue statement or
alleged untrue statement of a material fact contained (A) in any Preliminary
Prospectus, the Registration Statement or the Prospectus or in any amendment or
supplement thereto, or (B) in any Blue Sky Application or (ii) the omission or
alleged omission to state in any Preliminary Prospectus, the Registration
Statement or the Prospectus, or in any amendment or supplement thereto, or in
any Blue Sky Application any material fact required to be stated therein or
necessary to make the statements therein not misleading, but in each case only
to the extent that the untrue statement or alleged untrue statement or omission
or alleged omission was made in reliance upon and in conformity with written
information concerning such International Manager furnished to the Company
through the Lead Managers by or on behalf of that International Manager
specifically for inclusion therein, and shall reimburse the Company and any such
director, officer or controlling person for any legal or other expenses
reasonably incurred by the Company or any such director, officer or controlling
person in connection with investigating or defending or preparing to defend
against any such loss, claim, damage, liability or action as such expenses are
incurred. The foregoing indemnity agreement is in addition to any liability
which any International Manager may otherwise have to the Company or any such
director, officer, employee or controlling person.
(3) Promptly after receipt by an indemnified party under this
Section 9 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under this Section 11, notify the indemnifying party in
writing of the claim or the commencement of that action; provided, however, that
the failure to notify the indemnifying party shall not relieve it from any
liability which it may have under this Section 9 except to the extent it has
been materially prejudiced by such failure, and provided further, that the
failure to notify the indemnifying party shall not relieve it from any liability
which it may have to an indemnified party otherwise than under this Section 9.
If any such claim or action shall be brought against an indemnified party, and
it shall notify the indemnifying party thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it wishes, jointly with
any other similarly notified indemnifying party, to assume the defense thereof
with counsel reasonably satisfactory to the indemnified party. After notice from
the indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 9 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that
the Lead Managers shall have the right to employ counsel to represent jointly
the Lead Managers and those other International Managers and their respective
officers, employees and controlling persons who may be subject to liability
arising out of any claim in respect of which indemnity may be sought by the
International Managers against the Company under this Section 9
<PAGE> 29
29
if, in the reasonable judgment of the Lead Managers, it is advisable for the
Lead Managers and those International Managers, officers, employees and
controlling persons to be jointly represented by separate counsel, and in that
event the fees and expenses of such separate counsel shall be paid by the
Company. No indemnifying party shall (i)without the prior written consent of the
indemnified parties (which consent shall not be unreasonably withheld), settle
or compromise or consent to the entry of any judgment with respect to any
pending or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified parties are actual or potential parties to such claim or action)
unless such settlement, compromise or consent includes an unconditional release
of each indemnified party from all liability arising out of such claim, action,
suit or proceeding, or (ii) be liable for any settlement of any such action
effected without its written consent (which consent shall not be unreasonably
withheld), but if settled with the consent of the indemnifying party or if there
be a final judgment of the plaintiff in any such action, the indemnifying party
agrees to indemnify and hold harmless any indemnified party from and against any
loss or liability by reason of such settlement or judgment.
(4) If the indemnification provided for in this Section 9 shall for
any reason be unavailable to or insufficient to hold harmless an indemnified
party under Section 9(a) or 9(b) in respect of any loss, claim, damage or
liability, or any action in respect thereof, referred to therein, then each
indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a result
of such loss, claim, damage or liability, or action in respect thereof, (i) in
such proportion as shall be appropriate to reflect the relative benefits
received by the Company on the one hand and the International Managers on the
other from the offering of the Stock or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company on the one hand and the
International Managers on the other with respect to the statements or omissions
which resulted in such loss, claim, damage or liability, or action in respect
thereof, as well as any other relevant equitable considerations. The relative
benefits received by the Company on the one hand and the International Managers
on the other with respect to such offering shall be deemed to be in the same
proportion as the total net proceeds from the offering of the Stock purchased
under this Agreement (before deducting expenses) received by the Company, on the
one hand, and the total underwriting discounts and commissions received by the
International Managers with respect to the shares of the Stock purchased under
this Agreement, on the other hand, bear to the total gross proceeds from the
offering of the shares of the Stock under this Agreement, in each case as set
forth in the table on the cover page of the Prospectus. The relative fault shall
be determined by reference to whether the untrue or alleged untrue statement of
a material fact or omission or alleged omission to state a material fact relates
to information supplied by the Company or the International Managers, the intent
of the
<PAGE> 30
30
parties and their relative knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Company and the International
Managers agree that it would not be just and equitable if contributions pursuant
to this Section were to be determined by pro rata allocation (even if the
International Managers were treated as one entity for such purpose) or by any
other method of allocation which does not take into account the equitable
considerations referred to herein. The amount paid or payable by an indemnified
party as a result of the loss, claim, damage or liability, or action in respect
thereof, referred to above in this Section shall be deemed to include, for
purposes of this Section 9(d), any legal or other expenses reasonably incurred
by such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 9(d), no
International Manager shall be required to contribute any amount in excess of
the amount by which the total price at which the Stock underwritten by it and
distributed to the public was offered to the public exceeds the amount of any
damages which such International Manager has otherwise paid or become liable to
pay by reason of any untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 9(d) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The
International Managers' obligations to contribute as provided in this Section
11(e) are several in proportion to their respective underwriting obligations and
not joint.
(5) The International Managers severally confirm and the Company
acknowledges that the statements with respect to the public offering of the
Stock by the International Managers set forth on the cover page of, the legend
concerning over-allotments on the inside front cover page of and the concession
and reallowance figures appearing under the caption "Underwriting" in, the
Prospectus are correct and constitute the only information concerning such
International Managers furnished in writing to the Company by or on behalf of
the International Managers specifically for inclusion in the Registration
Statement and the Prospectus.
<PAGE> 31
31
10. Defaulting International Managers.
If, on any Delivery Date, any International Manager defaults in the
performance of its obligations under this Agreement, the remaining
non-defaulting International Managers shall be obligated to purchase the Stock
which the defaulting International Manager agreed but failed to purchase on such
Delivery Date in the respective proportions which the number of shares of the
Firm Stock set opposite the name of each remaining non-defaulting International
Manager in Schedule 1 hereto bears to the total number of shares of the Firm
Stock set opposite the names of all the remaining non-defaulting International
Managers in Schedule 1 hereto; provided, however, that the remaining
non-defaulting International Managers shall not be obligated to purchase any of
the Stock on such Delivery Date if the total number of shares of the Stock which
the defaulting International Manager or International Managers agreed but failed
to purchase on such date exceeds 9.09% of the total number of shares of the
Stock to be purchased on such Delivery Date, and any remaining non-defaulting
International Manager shall not be obligated to purchase more than 110% of the
number of shares of the Stock which it agreed to purchase on such Delivery Date
pursuant to the terms of Section 3. If the foregoing maximums are exceeded, the
remaining non-defaulting International Managers, or those other underwriters
satisfactory to the Lead Managers who so agree, shall have the right, but shall
not be obligated, to purchase, in such proportion as may be agreed upon among
them, all the Stock to be purchased on such Delivery Date. If the remaining
International Managers or other underwriters satisfactory to the Lead Managers
do not elect to purchase the shares which the defaulting International Manager
or International Managers agreed but failed to purchase on such Delivery Date,
this Agreement (or, with respect to the Second Delivery Date, the obligation of
the International Managers to purchase, and of the Company to sell, the Option
Stock) shall terminate without liability on the part of any non-defaulting
International Manager or the Company, except that the Company will continue to
be liable for the payment of expenses to the extent set forth in Sections 7 and
12. As used in this Agreement, the term "International Manager" includes, for
all purposes of this Agreement unless the context requires otherwise, any party
not listed in Schedule 1 hereto who, pursuant to this Section 10, purchases Firm
Stock which a defaulting International Manager agreed but failed to purchase.
Nothing contained herein shall relieve a defaulting International
Manager of any liability it may have to the Company for damages caused by its
default. If other underwriters are obligated or agree to purchase the Stock of a
defaulting or withdrawing International Manager, either the Lead Managers or the
Company may postpone the Delivery Date for up to seven full business days in
order to effect any changes that in the opinion of counsel for the Company or
counsel for the International Managers may be necessary in the Registration
Statement, the Prospectus or in any other document or arrangement.
<PAGE> 32
32
11. Termination. The obligations of the International Managers
hereunder may be terminated by the Lead Managers by notice given to and received
by the Company prior to delivery of and payment for the Firm Stock if, prior to
that time, any of the events described in Sections 8(m), 8(n) or 8(o), shall
have occurred or if the International Managers shall decline to purchase the
Stock for any reason permitted under this Agreement.
12. Reimbursement of International Managers' Expenses. If (a) the
Company shall fail to tender the Stock for delivery to the International
Managers by reason of any failure, refusal or inability on the part of the
Company to perform any agreement on its part to be performed, or because any
other condition of the International Managers' obligations hereunder required to
be fulfilled by the Company is not fulfilled, the Company will reimburse the
International Managers for all reasonable out-of-pocket expenses (including fees
and disbursements of counsel) incurred by the International Managers in
connection with this Agreement and the proposed purchase of the Stock, and upon
demand the Company shall pay the full amount thereof to the Lead Managers. If
this Agreement is terminated pursuant to Section 11 by reason of the default of
one or more International Managers, the Company shall not be obligated to
reimburse any defaulting International Manager on account of those expenses.
13. Notices, etc. All statements, requests, notices and agreements
hereunder shall be in writing, and:
(1) if to the International Managers, shall be delivered or sent by
mail, telex or facsimile transmission to Lehman Brothers Inc., Three World
Financial Center, New York, New York 10285, Attention: Syndicate Department
(Fax: 212-526-6588), with a copy, in the case of any notice pursuant to Section
9(d), to the Director of Litigation, Office of the General Counsel, Lehman
Brothers Inc., 3 World Financial Center, 10th Floor, New York, NY 10285; and
(b) if to the Company, shall be delivered or sent by mail, telex or
facsimile transmission to Loral Space and Communications Ltd., c/o Loral
SpaceCom Corporation, 600 Third Avenue, New York, NY 10016, Attention: Eric J.
Zahler, Esq. (Fax: 212-338-5350).
14. Persons Entitled to Benefit of Agreement. This Agreement shall
inure to the benefit of and be binding upon the International Managers and the
Company. This Agreement and the terms and provisions hereof are for the sole
benefit of only those persons, except that (A) the representations, warranties,
indemnities and agreements of the Company contained in this Agreement shall also
be deemed to be for the benefit of the person or persons, if any, who control
any International Manager within the meaning
<PAGE> 33
33
of Section 15 of the Securities Act and (B) the indemnity agreement of the
International Managers contained in Section 9(b) of this Agreement shall be
deemed to be for the benefit of directors of the Company, officers of the
Company who have signed the Registration Statement and any person controlling
the Company within the meaning of Section 15 of the Securities Act. Nothing in
this Agreement is intended or shall be construed to give any person, other than
the persons referred to in this Section 14, any legal or equitable right, remedy
or claim under or in respect of this Agreement or any provision contained
herein.
15. Survival. The respective indemnities, representations,
warranties and agreements of the Company and the International Managers
contained in this Agreement or made by or on behalf on them, respectively,
pursuant to this Agreement, shall survive the delivery of and payment for the
Stock and shall remain in full force and effect, regardless of any investigation
made by or on behalf of any of them or any person controlling any of them.
16. Definition of the Terms "Business Day" and "Subsidiary". For
purposes of this Agreement, (a) "business day" means any day on which the New
York Stock Exchange, Inc. is open for trading each Monday, Tuesday, Wednesday,
Thursday or Friday that is not a day on which banking institutions in New York
are generally authorized or obligated by law or executive order to close and (b)
"subsidiary" has the meaning set forth in Rule 405 of the Rules and Regulations.
17. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of New York.
18. Consent to Jurisdiction. Each party irrevocably agrees that any
legal suit, action or proceeding arising out of or based upon this Agreement or
the transactions contemplated hereby ("Related Proceedings") may be instituted
in the Federal courts of the United States of America located in the City of New
York or the courts of the State of New York in each case located in the Borough
of Manhattan in the City of New York (collectively, the "Specified Courts"), and
irrevocably submits to the exclusive jurisdiction (except for proceedings
instituted in regard to the enforcement of a judgment of any such court (a
"Related Judgment"), as to which such jurisdiction is non-exclusive) of such
courts in any such suit, action or proceeding. The parties further agree that
service of any process, summons, notice or document by mail to such party's
address set forth above shall be effective service of process for any lawsuit,
action or other proceeding brought in any such court. The parties hereby
irrevocably and unconditionally waive any objection to the laying of venue of
any lawsuit, action or other proceeding in the Specified Courts, and hereby
further irrevocably and unconditionally waive and agree not to plead or claim in
any such court that any such lawsuit, action or other proceeding brought in any
such court has been brought in an inconvenient forum.
<PAGE> 34
34
The Company hereby irrevocably appoints CT Corporation System, which currently
maintains a New York City office at 1633 Broadway, New York, New York 10019,
United States of America, as its agent to receive service of process or other
legal summons for purposes of any such action or proceeding that may be
instituted in any state or federal court in the City and State of New York.
19. Waiver of Immunity. With respect to any Related Proceeding, each
party irrevocably waives, to the fullest extent permitted by applicable law, all
immunity (whether on the basis of sovereignty or otherwise) from jurisdiction,
service of process, attachment (both before and after judgment) and execution to
which it might otherwise be entitled in the Specified Courts, and with respect
to any Related Judgment, each party waives any such immunity in the Specified
Courts or any other court of competent jurisdiction, and will not raise or claim
or cause to be pleaded any such immunity at or in respect of any such Related
Proceeding or Related Judgment, including, without limitation, any immunity
pursuant to the United States Foreign Sovereign Immunities Act of 1976, as
amended.
20. Counterparts. This Agreement may be executed in one or more
counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original but all such counterparts
shall together constitute one and the same instrument.
21. Headings. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
If the foregoing correctly sets forth the agreement between the
Company and the International Managers, please indicate your acceptance in the
space provided for that purpose below.
Very truly yours,
Loral Space & Communications, Ltd.
By
---------------------------------
Name:
Title:
<PAGE> 35
35
LEHMAN BROTHERS INTERNATIONAL (EUROPE)
BEAR, STEARNS INTERNATIONAL LIMITED
DONALDSON, LUFKIN & JENRETTE INTERNATIONAL
BA ROBERTSON STEPHENS INTERNATIONAL LIMITED
CIBC WOOD GUNDY OPPENHEIMER PLC
NATIONSBANC MONTGOMERY SECURITIES LLC
C.E. UNTERBERG, TOWBIN
For themselves and as Lead Managers
of the several International Managers named
in Schedule 1 hereto
By LEHMAN BROTHERS INTERNATIONAL (EUROPE)
By
--------------------------------------
Authorized Representative
<PAGE> 36
SCHEDULE 1
<TABLE>
<CAPTION>
Number of
International Managers Shares
- ---------------------- ------
<S> <C>
Lehman Brothers International (Europe)............................
Bear, Stearns International Limited...............................
Donaldson, Lufkin & Jenrette International........................
BA Robertson Stephens International Limited.......................
CIBC Wood Gundy Oppenheimer plc...................................
NationsBanc Montgomery Securities LLC.............................
---------
C.E. Unterberg, Towbin............................................
Total
=========
</TABLE>
