<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or 240.14a-12
</TABLE>
Loral Space & Communications Ltd.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rule 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(4) Date Filed:
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<PAGE> 2
[LORAL logo]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MAY 18, 1999
------------------------
The Annual Meeting of Shareholders of Loral Space & Communications Ltd.
will be held in the Grand Salon, The Essex House, 160 Central Park South, New
York, New York 10019, at 9:30 A.M., on Tuesday, May 18, 1999 for the purpose of:
1. Electing to the Board three Class III Directors whose terms have
expired;
2. Acting upon a proposal to authorize and create an additional 20,000,000
preference shares, par value $.01 per share, of the Company (the
"Preferred Stock") and to amend the Bye-laws to authorize the Board of
Directors to establish the rights, preferences and designations of such
Preferred Stock;
3. Acting upon a proposal to ratify the appointment of Deloitte & Touche
LLP as independent auditors for the year ending December 31, 1999; and
4. Transacting any other business which may properly come before the
meeting.
The Board of Directors has fixed the close of business on March 31, 1999 as
the date for determining shareholders of record entitled to receive notice of,
and to vote at, the Annual Meeting.
All shareholders are cordially invited to attend. Those who do not expect
to be present are requested to date, sign and mail the enclosed proxy as
promptly as possible in the enclosed postage prepaid envelope.
By Order of the Board of Directors
/s/ BERNARD L. SCHWARTZ
BERNARD L. SCHWARTZ
Chairman of the Board of Directors
April , 1999
<PAGE> 3
PROXY STATEMENT
LORAL SPACE & COMMUNICATIONS LTD.
------------------------
ANNUAL MEETING OF SHAREHOLDERS
MAY 18, 1999
------------------------
PROXY SOLICITATION
The enclosed proxy is solicited by and on behalf of the Board of Directors
of Loral Space & Communications Ltd. (the "Company" or "Loral"). Any shareholder
may revoke a previously granted proxy at any time before it is voted by written
notice to the Secretary, by a duly executed proxy bearing a later date, or by
voting in person at the meeting. The cost of soliciting proxies will be borne by
the Company. The Company will enlist the assistance of and reimburse banks,
brokers and other nominees for their costs in transmitting proxies and proxy
authorizations to beneficial owners whose stock is registered in the name of
such nominees. The Company has also retained W. F. Doring & Co., Inc. to assist
it in the solicitation of proxies and will pay a fee, not to exceed $7,500, for
such services. Proxies, ballots and voting tabulations that identify
shareholders will be held confidential, except in a contested proxy solicitation
or where necessary to meet applicable legal requirements. The Inspector of
Election will not be an employee of the Company. This Proxy Statement and the
enclosed proxy will be first mailed to shareholders on or about April ,
1999. The registered and principal executive offices of the Company are located
at Cedar House, 41 Cedar Avenue, Hamilton HM 12, Bermuda. The executive offices
of the Company's principal U.S. subsidiary, Loral SpaceCom Corporation ("Loral
SpaceCom"), are located at 600 Third Avenue, New York, New York 10016.
OUTSTANDING VOTING STOCK
Only shareholders at the close of business on the March 31, 1999 record
date are entitled to notice of and to vote at the Annual Meeting. There were
shares of common stock, par value $.01 per share ("Common
Stock"), and 45,896,977 shares of Series A Convertible Preferred Stock, par
value $.01 per share ("Series A Preferred Stock"), of the Company outstanding on
that date. The holders of the Series A Preferred Stock vote together with the
holders of the Common Stock, and each share of Common Stock and Series A
Preferred Stock is entitled to one vote on each matter, except that the holders
of the Series A Preferred Stock will not vote for the election of directors.
Pursuant to Bermuda law and the Company's Bye-laws, the Company's Chairman will
request a poll at the Annual Meeting so that each shareholder present in person
or by proxy will have one vote for each share held. Proposals 1, 2, and 3
require for approval the vote of a majority of the votes cast at the Annual
Meeting in person or by proxy. Abstentions and broker "non-votes" will be
counted in determining the number of shares present but will not be voted for
election of directors or on other proposals. Because abstentions and broker
"non-votes" are not treated as shares voted, they would have no impact on
proposals 1 through 3.
ELECTION OF DIRECTORS
The Company has three classes of Directors serving staggered three-year
terms, each class consisting of three Directors. The terms of the Class I and
Class II Directors expire on the date of the Annual Meeting in 2000 and 2001,
respectively. Of the Directors named below, the terms of office of Messrs.
Schwartz, Ruderman and Shapiro expire at the 1999 Annual Meeting.
The three persons named above have been nominated by the Board of Directors
for election as Directors to serve for a period of three years and until their
respective successors are duly elected and shall qualify. Unless authority to
vote for management's nominees is withheld, the enclosed proxy will be voted for
the election of the persons named above, except that the persons designated as
proxies reserve full discretion to
<PAGE> 4
cast their votes for other persons in the unanticipated event that any of such
nominees is unable or declines to serve. The nominees have acted as Directors of
the Company since the Company was organized in January 1996.
The Company has a standing Audit Committee, Compensation and Stock Option
Committee (the "Compensation Committee") and Executive Committee. The Audit
Committee, which met twice during 1998, is comprised of four members: Messrs.
Hodes, Ruderman, Shapiro and Simon. The Audit Committee reviews and acts or
reports to the Board with respect to various auditing and accounting matters,
including the selection of the Company's independent auditors, the accounting
and financial practices and controls of the Company, audit procedures and
findings, and the nature of services performed for the Company by, and the fees
paid to, the independent auditors. The Compensation Committee, which met once
during 1998, is comprised of Messrs. Shapiro and Simon. The Compensation
Committee reviews and provides recommendations to the Board of Directors
regarding executive compensation matters. The Compensation Committee is also
responsible for the administration of the Company's 1996 Stock Option Plan (the
"Stock Option Plan") and the Common Stock Purchase Plan for Directors. The
Executive Committee, which met nine times during 1998, is comprised of Messrs.
Schwartz, Hodes and Kekst. The Executive Committee, between meetings of the
Board of Directors, exercises all powers and authority of the Board of Directors
in the management of the business and affairs of the Company that may be
lawfully delegated. The Board of Directors performs the function of a nominating
committee.
The Board of Directors held seven meetings during 1998. No Director
attended fewer than 75% of the meetings of the Board of Directors and of its
committees, except for Mr. Gittis who attended five meetings.
DIRECTOR COMPENSATION. Directors are paid a fixed fee of $25,000 per year.
Non-employee Directors are also paid $6,000 for personal attendance at each
meeting. Audit Committee members are paid $2,000 per year and $1,000 per
meeting. Compensation Committee members are paid $500 per year. The Company
provides certain life insurance and medical benefits to certain non-employee
Directors. For 1998, the value of the life insurance benefits was $13,565 for
Mr. Gittis, $14,553 for Mr. Kekst, $14,223 for Mr. Ruderman, $15,000 for Mr.
Shapiro and $14,170 for Mr. Yankelovich, and the value of life insurance and
medical benefits was $31,463 for Mr. Hodes.
The Company has purchased insurance from the Reliance Insurance Company
("Reliance") insuring the Company against obligations it might incur as a result
of its indemnification of its officers and Directors for certain liabilities
they might incur and insuring such officers and Directors for additional
liabilities against which they might not be indemnified by the Company. The
insurance commenced in April 1998 and expires in April 2001 and costs
approximately $551,250 for 36 months of coverage. Pursuant to Bermuda law, the
Company has entered into Indemnity Agreements with its Directors and executive
officers. The Indemnity Agreements are intended to provide the full indemnity
protection authorized by Bermuda law.
The following provides certain relevant information concerning the
Directors and nominees and their principal occupations:
BERNARD L. SCHWARTZ
Bernard L. Schwartz, 73, is a nominee to serve as a Class III director of
the Company. He has been a director since 1996. Mr. Schwartz is Chairman of the
Board of Directors and Chief Executive Officer of the Company. In addition, he
is Chairman of the Board of Directors and Chief Executive Officer of Globalstar
Telecommunications Limited, Chairman of the Board of Directors and Chief
Executive Officer of K&F Industries, Inc. and Chief Executive Officer and
Chairman of the General Partners' Committee of Globalstar, L.P. Mr. Schwartz is
a director of First Data Corp., Reliance Group Holdings, Inc. and certain of its
subsidiaries and Satelites Mexicanos, S.A. de C.V. He is a trustee of Mount
Sinai -- NYU Medical Center and Health System, as well as a trustee of
Thirteen/WNET Educational Broadcasting Corporation.
2
<PAGE> 5
HOWARD GITTIS
Howard Gittis, 65, has served as a Class I director of the Company since
1996. Mr. Gittis is Director, Vice Chairman and Chief Administrative Officer of
MacAndrews & Forbes Holdings Inc. and various affiliates. He is a director of
Golden State Bancorp Inc., Golden State Holdings Inc., Jones Apparel Group,
Inc., M&F Worldwide Corp., Panavision Inc., Revlon Consumer Products
Corporation, Revlon, Inc., REV Holdings Inc., Rutherford-Moran Oil Corporation
and Sunbeam Corporation.
ROBERT B. HODES
Robert B. Hodes, 73, has served as a Class II director of the Company since
1996. Mr. Hodes is counsel to Willkie Farr & Gallagher, a law firm in New York,
N.Y. and, until 1996, was a partner and co-chairman of that firm. He is a
director of Beaver Dam Sanctuary, Inc., Crystal Oil Company, Cross River
Reservoir Association, Globalstar Telecommunications Limited, LCH Investments,
N.V., Mueller Industries, Inc., Restructured Capital Holdings, Ltd., R.V.I.
Guaranty Ltd. and W.R. Berkley Corporation.
GERSHON KEKST
Gershon Kekst, 64, has served as a Class I director of the Company since
1996. Mr. Kekst is President of Kekst and Company Incorporated, corporate and
financial communications consultants, New York, N.Y.
CHARLES LAZARUS
Charles Lazarus, 75, has served as a Class II director of the Company since
1996. Mr. Lazarus is Chairman Emeritus of Toys "R" Us, Inc.
MALVIN A. RUDERMAN
Malvin A. Ruderman, 72, is a nominee to serve as a Class III director of
the Company. He has been a director since 1996. Dr. Ruderman is a Professor of
Physics at Columbia University in New York, N.Y.
E. DONALD SHAPIRO
E. Donald Shapiro, 67, is a nominee to serve as a Class III director of the
Company. He has been a director since 1996. Professor Shapiro has been The
Joseph Solomon Distinguished Professor of Law at New York Law School since 1983
and was previously Dean/Professor of Law (1973-1983). He is a director of
Eyecare Products PLC, Frequency Electronics, Inc., Kranzco Realty Trust, United
Industrial Corporation, Vasomedical, Inc. and Vion, Inc.
ARTHUR L. SIMON
Arthur L. Simon, 67, has served as a Class I director of the Company since
1996. Mr. Simon is an independent consultant. Previously, he was a partner at
Coopers & Lybrand L.L.P, Certified Public Accountants, from 1968 to 1994.
DANIEL YANKELOVICH
Daniel Yankelovich, 74, has served as a Class II director of the Company
since 1996. Mr. Yankelovich is Chairman of DYG, Inc., a market, consumer and
opinion research firm in New York, N.Y. He is Director Emeritus of Arkla, Inc.,
Meredith Corporation and U S West, Inc.
ELECTION OF THE NOMINEES WILL REQUIRE THE AFFIRMATIVE VOTE IN PERSON OR BY
PROXY OF A MAJORITY OF THE VOTES CAST AT THE ANNUAL MEETING.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS OF LORAL VOTE FOR
THE NOMINEES FOR DIRECTORS.
3
<PAGE> 6
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table shows, based upon filings made with the Company,
certain information concerning persons who may be deemed beneficial owners of 5%
or more of the outstanding shares of Common Stock of the Company because they
possessed or shared voting or investing power with respect to the shares of
Common Stock of the Company:
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT
NAME AND ADDRESS BENEFICIAL OWNERSHIP OF CLASS(1)
---------------- -------------------- -----------
<S> <C> <C>
FMR Corp.............................................. 15,532,241(2) 6.3%
82 Devonshire Street
Boston, MA 02109
Capital Guardian Trust Company........................ 13,127,460(3) 5.4%
11100 Santa Monica Boulevard
Los Angeles, CA 90025
</TABLE>
- ---------------
(1) Percent of class refers to percentage of class beneficially owned as the
term beneficial ownership is defined in Rule 13d-3 under the Security
Exchange Act of 1934.
(2) A Schedule 13G under the Securities Exchange Act of 1934 filed by FMR Corp.
and affiliates ("FMR") with the SEC as of February 12, 1999 reported that,
as of December 31, 1998, FMR beneficially owned 15,532,241 shares of Common
Stock, representing 6.3% of the outstanding Common Stock as of December 31,
1998. Of such shares, FMR reported sole voting power with respect to
1,082,901 shares and sole dispositive power with respect to 14,798,836
shares. According to its Schedule 13G, FMR is the beneficial owner of Common
Stock as a result of its acting as investment adviser to various investment
companies or serving as investment manager of certain institutional
accounts.
(3) A Schedule 13G under the Securities Exchange Act of 1934 filed by Capital
Guardian Trust Company and affiliates (the "Capital Companies") with the SEC
as of February 8, 1999 reported that, as of December 31, 1998, the Capital
Companies beneficially owned 13,127,460 shares of Common Stock, representing
5.4% of the outstanding Common Stock as of December 31, 1998. Of such
shares, the Capital Companies reported sole voting power with respect to
11,238,400 shares and sole dispositive power with respect to 13,127,460
shares. According to their Schedule 13G, the Capital Companies are deemed to
be the beneficial owner of shares of Common Stock as a result of their
serving as the investment manager of, or investment adviser to, various
investment companies or institutional accounts.
4
<PAGE> 7
The following table presents the number of shares of Common Stock
beneficially owned by the Directors and nominees, the named executive officers
in the Summary Compensation Table ("NEOs") and all Directors, nominees and
executive officers as a group as of March 5, 1999 (except as otherwise
indicated). Individuals have sole voting and investment power over the stock
unless otherwise indicated in the footnotes.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT
NAME OF INDIVIDUAL BENEFICIAL OWNERSHIP(1)(2) OF CLASS
------------------ -------------------------- --------
<S> <C> <C>
Bernard L. Schwartz........................................ 4,351,003(3) 1.8%
Gregory J. Clark........................................... 120,275(4) *
Michael P. DeBlasio........................................ 433,058(5) *
Howard Gittis.............................................. 11,000(6) *
Robert B. Hodes............................................ 25,000(6) *
Gershon Kekst.............................................. 28,300(7) *
Charles Lazarus............................................ 25,000(6) *
Nicholas C. Moren.......................................... 402,475(8) *
Malvin A. Ruderman......................................... 37,000(6) *
E. Donald Shapiro.......................................... 35,000(9) *
Arthur L. Simon............................................ 15,000(10) *
Daniel Yankelovich......................................... 40,000(6) *
Eric J. Zahler............................................. 411,828(11) *
All Directors, Nominees and Executive Officers as a Group
(25 persons)............................................. 6,612,233(12) 2.7%
</TABLE>
- ---------------
* Represents holdings of less than one percent.
(1) Includes shares which, as of March 5, 1999, may be acquired within sixty
days pursuant to the exercise of options (which shares are treated as
outstanding for the purposes of determining beneficial ownership and
computing the percentage set forth) and shares held for the benefit of
executive officers as of December 31, 1998 in the Loral Savings Plan (the
"Savings Plan").
(2) Except as noted, all shares are owned directly with sole investment and
voting power.
(3) Includes 160,000 shares held by Mr. Schwartz' wife, 1,512,500 shares
exercisable under the Stock Option Plan and 245 shares in the Savings Plan.
(4) Includes 120,000 shares exercisable under the Stock Option Plan and 275
shares in the Savings Plan.
(5) Includes 345,000 shares exercisable under the Stock Option Plan and 8,058
shares in the Savings Plan.
(6) Includes 5,000 shares exercisable under the Stock Option Plan.
(7) Includes 2,000 shares owned jointly with Mr. Kekst's wife, 1,300 shares
from an IRA Rollover and 5,000 shares exercisable under the Stock Option
Plan.
(8) Includes 320,000 shares exercisable under the Stock Option Plan and 2,075
shares in the Savings Plan.
(9) Includes 3,000 shares owned by Mr. Shapiro's wife and 5,000 shares
exercisable under the Stock Option Plan.
(10) Includes 5,750 shares held in Mr. Simon's IRA account, 250 shares in his
wife's IRA account and 5,000 shares exercisable under the Stock Option
Plan.
(11) Includes 320,000 shares exercisable under the Stock Option Plan and 10,628
shares in the Savings Plan.
(12) Includes 3,166,856 shares exercisable under the Stock Option Plan, 44,564
shares in the Savings Plan and 16,500 shares under a restricted stock
grant.
5
<PAGE> 8
REPORT OF THE COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
The goals of the compensation program established by the Compensation
Committee are to align compensation with business objectives and corporate
performance and to enable the Company and its subsidiaries (collectively, the
"Loral Group") to attract, retain and reward executive officers who contribute
to the long-term success of the Loral Group and thereby create value for
shareholders. In order to attain these goals, the Committee's compensation
policies link compensation to corporate performance.
The principal components of the Committee's compensation program are annual
cash compensation consisting of base salary and an annual incentive bonus, as
well as long-term incentive compensation using stock options. In determining the
amount and form of executive compensation, the Committee has considered the
competitive market for senior executives, the executive's role in achieving the
business objectives of the Loral Group and the overall performance of the Loral
Group.
The Committee believes that its compensation policies, which have been
instrumental in attracting and retaining highly qualified and dedicated
personnel, will be an important factor in the Company's growth and success.
SECTION 162(m) OF THE CODE. The Company's Stock Option Plan, which was
adopted by the Company's Board of Directors and approved by the Company's then
sole shareholder on March 13, 1996, has been designed to comply with the
requirements for "performance-based compensation" under Internal Revenue Code
Section 162(m). The Committee, however, does not have a policy precluding the
payment of nondeductible compensation.
CEO COMPENSATION. The Company's Chairman and Chief Executive Officer
("CEO"), Bernard L. Schwartz, is paid pursuant to a long-term employment
contract. This contract provides for a minimum annual base salary, to be
increased each year by the percentage change in the Consumer Price Index, plus
such other annual increases as the Board of Directors or the Compensation
Committee may grant from time to time. Effective March 1, 1998, the Committee
has set Mr. Schwartz's annual base salary at $1.6 million in recognition of Mr.
Schwartz's outstanding leadership in guiding the Loral Group and to bring his
compensation in line with that of CEOs of other comparable companies. The
Compensation Committee sets annual incentive compensation for Mr. Schwartz by
assessing a number of factors, including his individual effort, performance and
contribution toward achieving the business plan and growth objectives of the
Loral Group.
COMPENSATION FOR OTHER EXECUTIVE OFFICERS. Base salaries for NEOs other
than Mr. Schwartz and other executive officers have been set at competitive
levels by the CEO in consultation with the Committee, giving due regard to
individual performance and time in position. Incentive compensation for NEOs
other than Mr. Schwartz and other executive officers is set by the CEO, in
consultation with the Committee, based on factors similar to those used for
establishing incentive compensation for the CEO. Incentive compensation for
corporate officers with line responsibility for division operations is generally
tied to performance targets for the businesses under their authority. These
performance targets are set as part of the annual budgeting process for the
Company and its subsidiaries. Bonus compensation for 1998 has been awarded in
accordance with these factors.
LONG-TERM INCENTIVE COMPENSATION. It has been the Committee's belief that
shareholders' interests are best served by encouraging key employees of the
Loral Group to develop ownership interests in the Company. To that end, the
Committee primarily relies upon fair market value employee stock options granted
in accordance with the provisions of the Stock Option Plan. During 1998,
4,337,400 options were granted to employees under the Stock Option Plan, of
which 1,318,800 were granted to NEOs.
6
<PAGE> 9
This report of the Compensation Committee and the Performance Graph
immediately following shall not be deemed incorporated by reference by any
general statements incorporating by reference this proxy statement into any
filing under the Securities Act of 1933 or under the Securities Exchange Act of
1934, except to the extent it shall be specifically incorporated; and shall not
otherwise be deemed filed under such Acts.
MEMBERS OF THE COMPENSATION COMMITTEE
E. Donald Shapiro
Arthur L. Simon
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of the members of the Compensation Committee are present or former
officers or employees of the Company or its subsidiaries.
STOCK PERFORMANCE GRAPH
The graph below compares the monthly change in cumulative total return of
the Company's Common Stock with the cumulative total return of the Standard &
Poor's 500 Composite Stock Index and SATIN, the Barclays Satellite & Space Index
from January 8, 1996, through , 1999, assuming an investment of
$100 in the Company's Common Stock and each index. On January 7, 1996, Loral
Corporation entered into a Merger Agreement with Lockheed Martin Corporation
("Lockheed Martin") pursuant to which Loral Corporation agreed to merge (the
"Merger") with a subsidiary of Lockheed Martin and Loral Corporation
stockholders would receive in the merger $38 in cash and one share of Common
Stock of the Company (the "Distribution"). "When issued" trading in the
Company's Common Stock commenced on April 15, 1996, and the Distribution and
Merger were completed on April 23, 1996. The share price for the Company's
Common Stock in the graph below for the period from January 8, 1996, the day
after the announcement of the Merger, through April 15, 1996, the day on which
"when issued" trading commenced, represents the value of a share of Common Stock
of the Company inherent in the value of the common stock of Loral Corporation as
represented by the share price of Loral Corporation common stock for such period
less $38, the fixed portion of the merger consideration.
COMPARISON OF CUMULATIVE TOTAL RETURN
[TO BE UPDATED]
<TABLE>
<CAPTION>
LORAL SPACE & SATIN, THE BARCLAYS
COMMUNICATIONS SATELLITE & SPACE INDEX S&P 500 COMPOSITE INDEX
-------------- ----------------------- -----------------------
<S> <C> <C> <C>
08-Jan-96 100 100 100
30-Jun-96 212 123 109
31-Dec-96 283 119 121
30-Jun-97 231 114 145
31-Dec-97 330 125 159
10-Mar-98 430 139 174
</TABLE>
7
<PAGE> 10
The Company has entered into a management agreement with Loral SpaceCom
pursuant to which Loral SpaceCom provides certain services to the Company. In
accordance with this agreement, compensation for the NEOs and other executive
officers and employees of the Company is paid by Loral SpaceCom.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION -----------------
------------------------------------ SECURITIES
NAME AND PRINCIPAL OTHER ANNUAL UNDERLYING ALL OTHER
POSITION YEAR SALARY(A) BONUS COMPENSATION STOCK OPTIONS(B) COMPENSATION(C)
------------------ ---- --------- ----- ------------ ---------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Bernard L. Schwartz 1998 $1,498,017 $ -- 312,500 $463,919
Chairman of the 1997 $ 978,225 $500,000 -- -- $630,479
Board of Directors 1996 $ 956,300 -- -- 1,200,000 $543,210
and Chief Executive
Officer
Gregory J. Clark 1998 $1,100,000 $900,184(d) 600,000 $143,063
President and
Chief Operating
Officer
Michael P. DeBlasio 1998 $ 750,000 $ -- 156,300 $ 19,898
First Senior Vice 1997 $ 500,000 $500,000 -- -- $ 21,701
President 1996 $ 500,000 $300,000 -- 800,000 $ 5,921
Eric J. Zahler 1998 $ 500,000 $ -- 125,000 $ 11,076
Senior Vice
President, 1997 $ 275,000 $350,000 -- -- $ 11,016
General Counsel and 1996 $ 275,000 $200,000 -- 500,000 $ 6,241
Secretary
Nicholas C. Moren 1998 $ 450,000 $ -- 125,000 $ 12,636
Senior Vice President 1997 $ 250,000 $350,000 -- -- $ 12,576
and Treasurer 1996 $ 250,000 $200,000 -- 500,000 $ 7,832
</TABLE>
- ---------------
(a) For 1998, amount reflects the annual base salary for Dr. Clark, not the
actual base salary earned during the period January 19, 1998 to December
31, 1998, which was $1,053,462. For 1996, amounts reflect the annual base
salary for each individual, not the actual base salary earned during the
period April 1, 1996 to December 31, 1996, which was $654,698, $344,885,
$189,712 and $172,385 for Messrs. Schwartz, DeBlasio, Zahler and Moren,
respectively.
(b) Does not reflect grants during 1996 (1998 for Dr. Clark) of stock options
to acquire 480,000, 20,000, 40,000, 20,000 and 20,000 shares of common
stock owned by Loral of Globalstar Telecommunications Limited, granted by
Loral to Messrs. Schwartz, Clark, DeBlasio, Zahler and Moren, respectively.
These options are exercisable at $6.25($12.875 for Dr. Clark) per share,
vest in one-third increments over three years and have a 10-year term.
(c) For 1998, includes annual Board of Directors fee in the amount of $25,000
to Mr. Schwartz and Company matching contributions to the Savings Plan for
all of the NEOs (other than Dr. Clark) in the amount of $5,760 and the
value of supplemental life insurance premiums in the amount of $433,159,
$138,780, $14,138, $5,316 and $6,876 for Messrs. Schwartz, Clark, DeBlasio,
Zahler and Moren, respectively. Dr. Clark's matching contributions to the
Savings Plan in 1998 were $4,283.
(d) Upon joining the Company in January 1998, Dr. Clark received a $700,000
hiring bonus, relocation expenses of $99,977 and a tax equalization payment
on relocation of $100,207.
8
<PAGE> 11
OPTION GRANTS TABLE
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
NUMBER OF % OF TOTAL MARKET
SECURITIES OPTIONS EXERCISE PRICE ON GRANT
UNDERLYING GRANTED TO OR BASE DATE OF DATE
OPTIONS EMPLOYEES PRICE GRANT EXPIRATION PRESENT
NAME GRANTED(A) IN FISCAL YEAR (PER SHARE) (PER SHARE) DATE VALUE(B)
- ---- ---------- -------------- ----------- ----------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Bernard L. Schwartz......... 250,000 5.76% $24.4375 $24.4375 2/10/2008 $3,251,750
Bernard L. Schwartz......... 62,500 1.44% $13.5000 $13.5000 10/13/2008 $ 449,125
Gregory J. Clark............ 600,000 13.83% $11.7188 $21.7188 1/20/2008 $9,397,779
Michael P. DeBlasio......... 125,000 2.88% $24.4375 $24.4375 2/10/2008 $1,625,875
Michael P. DeBlasio......... 31,300 0.72% $13.5000 $13.5000 10/13/2008 $ 224,922
Eric J. Zahler.............. 100,000 2.31% $24.4375 $24.4375 2/10/2008 $1,300,700
Eric J. Zahler.............. 25,000 0.58% $13.5000 $13.5000 10/13/2008 $ 179,650
Nicholas C. Moren........... 100,000 2.31% $24.4375 $24.4375 2/10/2008 $1,300,700
Nicholas C. Moren........... 25,000 0.58% $13.5000 $13.5000 10/13/2008 $ 179,650
</TABLE>
- ---------------
(a) Except with respect to Mr. Schwartz, whose options are exercisable six
months following grant, exercisability vests in twenty percent increments
over a five-year period on the first through fifth anniversary of the date
of grant. Options for each of the NEOs other than Dr. Clark were granted at
$24.4375 on February 10, 1998 and at $13.50 on October 13, 1998 and for Dr.
Clark at $11.7188 on January 20, 1998.
(b) The Black-Scholes model of option valuation was used to determine grant
date present value. The Company does not advocate or necessarily agree that
the Black-Scholes model can properly determine the value of an option. The
present value calculation is based on a ten-year option term, a risk-free
interest rate assumption of 6.25%, stock price volatility of 25% over a
ten-year period and a dividend rate of $0 per share. However, there were no
adjustments made for non-transferability or risk of forfeiture. The actual
value realized, if any, will depend on the amount by which the stock price
at the time of the exercise exceeds the exercise price. There is no
assurance that the amount estimated by the Black-Scholes model will be
realized.
OPTION EXERCISES AND YEAR-END VALUE TABLE
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED
SHARES UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
ACQUIRED AT YEAR-END at Year-End(a)
ON REALIZED --------------------------------- --------------------
NAME EXERCISE VALUE EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- --------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Bernard L.
Schwartz........... -- -- 1,450,000 62,500 $8,775,000 $ 269,531
Gregory J. Clark..... -- -- -- 600,000 -- $3,656,250
Michael P.
DeBlasio........... 160,000 $3,125,000 160,000 636,300 $1,170,000 $3,644,981
Eric J. Zahler....... -- -- 200,000 425,000 $1,462,500 $2,301,563
Nicholas C. Moren.... -- -- 200,000 425,000 $1,462,500 $2,301,563
</TABLE>
- ---------------
(a) Market value of underlying securities at year-end, minus the exercise price.
EMPLOYMENT AGREEMENTS AND OTHER ARRANGEMENTS
Mr. Schwartz is compensated pursuant to an employment agreement with Loral
SpaceCom, which expires on April 5, 2001. This agreement provides for a minimum
annual base salary, to be increased each year by the percentage change in a
specified consumer price index, plus such other annual increases as the Board of
Directors or the Compensation Committee may grant from time to time. Effective
March 1, 1998, the
9
<PAGE> 12
Compensation Committee has set Mr. Schwartz's annual base salary at $1.6 million
in recognition of Mr. Schwartz's outstanding leadership in guiding the Company
and to bring his compensation in line with that of CEOs of other comparable
companies.
Pursuant to the agreement, if Mr. Schwartz is removed as Chairman of the
Board of Directors or as Chief Executive Officer other than for cause, or if his
duties, authorities or responsibilities are diminished, or if there is a change
of control (as defined to encompass the Company becoming a subsidiary of another
company, the acquisition of 35% or more of the voting securities of the Company
by a particular stockholder or group, or a change in 35% of the Company's
directors at the insistence of the shareholder group), Mr. Schwartz may elect to
terminate the agreement. In any such event, or upon his death or disability, Mr.
Schwartz will be entitled to receive a lump sum payment discounted at 9% per
annum, in an amount equal to his base salary as adjusted for defined consumer
price index changes for the remainder of the term, an amount of incentive bonus
equal to the highest received by Mr. Schwartz in any of the prior three years,
times the number of years (including partial fiscal years) remaining during the
term, and an amount calculated to approximate the annual compensation element
reflected in the difference between fair market value and exercise price of
stock options granted to Mr. Schwartz. All such sums are further increased to
offset any tax due by Mr. Schwartz under the excise tax and related provisions
of Section 4999 of the Internal Revenue Code.
Loral SpaceCom has established Supplemental Life Insurance Programs for
certain key employees including the executives listed in the Summary
Compensation Table. For Messrs. Schwartz, Clark, DeBlasio, Zahler and Moren, the
Plans are funded with "split-dollar" or "universal" life insurance policies in
the face amounts of $20,500,000, $7,000,000, $1,060,000, $500,000 and $500,000,
respectively. In the event of death, Loral SpaceCom will be entitled to receive
an amount not less than Loral SpaceCom's cumulative contributions. If any of
such officers terminates his employment prior to the time that Loral SpaceCom's
contributions equal the cash value of the insurance policy, he will be
responsible for repayment of the remainder of Loral SpaceCom's contribution to
the extent cash becomes available in the policy. Such officers contribute to the
payment for this program.
GTL OPTIONS
On September 12, 1995, Loral Corporation, in its capacity as managing
general partner of Globalstar, L.P. ("Globalstar"), granted to each of Mr.
Schwartz and six other executives of Loral Corporation an option to purchase
80,000 shares of common stock of Globalstar Telecommunications Limited ("GTL"),
a general partner of Globalstar, which shares were owned by Loral (the "1995 GTL
Options"). The 1995 GTL Options were granted at an exercise price of $5 per
share. The closing price of GTL common stock on the Nasdaq National Market on
September 12, 1995 was $4.75 per share. The 1995 GTL Options were immediately
exercisable as of the date of grant and have a maximum term of 12 years from the
date of grant. In the event of the option holder's death, the 1995 GTL Options
are exercisable by the option holder's estate or beneficiary for a period of one
year from the date of death. The obligations of Loral Corporation under the 1995
GTL Options were assumed by the Company in connection with the Distribution.
On December 12, 1995, Loral Corporation granted to each outside director of
Loral Corporation an option to purchase 80,000 shares of GTL common stock owned
by Loral Corporation at an exercise price of $8.34375 per share and otherwise on
terms substantially identical to those of the 1995 GTL Options described above.
The closing price of GTL common stock on the Nasdaq National Market on December
12, 1995 was $8.375 per share. The obligations of Loral Corporation under these
options were assumed by the Company in connection with the Distribution.
On October 9, 1996, Loral SpaceCom granted Mr. Schwartz and five other
executives of Loral options to purchase an aggregate of 608,000 shares of GTL
common stock owned by Loral (the "1996 GTL Options"). The 1996 GTL Options were
granted at an exercise price of $6.25 per share. The closing price of the GTL
common stock on the Nasdaq National Market on October 9, 1996 was $12.59375 per
share. The 1996 GTL Options vest in one-third increments over three years and
have a maximum term of 10 years from the date of grant. In the event of the
option holder's death, the 1996 GTL Options are exercisable by the option
holder's estate or beneficiary for a period of one year from the date of death.
10
<PAGE> 13
On January 20, 1998, Loral SpaceCom granted Dr. Clark options to purchase
20,000 shares of GTL common stock owned by Loral at an exercise price of $12.875
per share and otherwise on terms substantially identical to those of the 1996
GTL Options. The closing price of the GTL Common Stock on January 20, 1998 was
$26.375.
PENSION PLAN
Loral SpaceCom has adopted a defined benefit pension plan and trust (the
"Pension Plan") that is qualified under Section 401(a) of the Code. The Pension
Plan provides retirement benefits for eligible employees of Loral SpaceCom and
Loral SpaceCom's operating affiliates, including executive officers. The benefit
formula for executive officers for the period ending December 31, 1996 will
generally provide an annual benefit equal to the greater of (A) or (B), where
(A) equals (i) 1.2% of compensation up to the Social Security Wage Base and
1.45% of compensation in excess of the Social Security Wage Base for each year
prior to the calendar year in which a participant completes 15 years of
employment, plus (ii) 1.5% of compensation up to the Social Security Wage Base
and 1.75% of compensation in excess of the Social Security Wage Base for the
calendar year in which the participant has completed 15 years of employment and
for each year thereafter; and (B) equals (i) 1.2% of average annual compensation
paid during 1992-1996 up to the 1996 Social Security Wage Base and 1.45% of
average annual compensation paid during 1992-1996 in excess of the 1996 Social
Security Wage Base for each year prior to the calendar year in which a
participant completes 15 years of employment, plus (ii) 1.5% of average annual
compensation paid during 1992-1996 up to the 1996 Social Security Wage Base and
1.75% of average annual compensation paid during 1992-1996 in excess of the 1996
Social Security Wage Base for the calendar year in which the participant has
completed 15 years of employment and for each year thereafter. The benefit for
periods subsequent to December 31, 1996 will be based on (A) above. Executive
officers also participate in a supplemental executive retirement plan (the
"SERP") which provides supplemental retirement benefits due to certain
reductions in retirement benefits under the Pension Plan that are caused by
various limitations imposed by the Internal Revenue Code. Compensation used in
determining benefits under the Pension Plan and SERP includes salary and bonus.
Effective April 1, 1997, under the minimum distribution rules prescribed by
the Code, Mr. Schwartz began receiving an annual benefit under the Pension Plan
and SERP of $2,165,700, determined on a joint and 50% survivor basis. The
estimated annual benefit under the Pension Plan and SERP is $208,000 for Dr.
Clark, $516,000 for Mr. DeBlasio, $279,000 for Mr. Zahler and $216,000 for Mr.
Moren. This projected benefit has been computed assuming that (i) employment
with Loral SpaceCom will be continued until normal retirement, (ii) current
levels of creditable compensation and the Social Security Wage Base will
continue without increases or adjustments throughout the remainder of the
computation period and (iii) payments will be made on a life annuity basis.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
As a result of the Merger and the Distribution, Lockheed Martin holds all
of Loral's outstanding Series A Preferred Stock, which represents an approximate
14% diluted equity interest in Loral as of March 31, 1999. Loral and Lockheed
Martin are parties to a shareholders agreement which, among other matters,
regulates the voting rights of Lockheed Martin and its affiliates and limits
their ability to acquire additional voting securities or assets of, or solicit
proxies or make a public announcement of a proposal of any extraordinary
transaction with respect to, Loral. The shareholders agreement also provides
that under certain circumstances and subject to certain conditions, Lockheed
Martin and its affiliates may require Loral to register under the Securities Act
of 1933 any Loral securities held by them.
In connection with contract performance, Loral subsidiaries provided
services to and acquired services from Lockheed Martin for the year ended
December 31, 1998. For 1998, revenues for services sold were $1,301,000, the
cost of services purchased was $70,569,000, and such subsidiaries' net payable
to Lockheed Martin at December 31, 1998 was $2,158,000.
Globalstar has entered into an agreement with a subsidiary of Lockheed
Martin for the development and delivery of two satellite operations control
centers and 33 telemetry and command units for the Globalstar System. This
contract is a cost-plus-fee contract with a maximum price of $25.1 million which
includes a fee
11
<PAGE> 14
of 12% under the contract, 6% of which would be payable at the time the costs
are incurred with the remainder payable upon achievement of certain milestones.
Globalstar will own any intellectual property produced under the contract.
Globalstar entered into an agreement with a subsidiary of Lockheed Martin
for an S-Band Beam Forming Network Engineering Model. The contract is a firm
fixed-price contract for approximately $463,000.
Globalstar currently leases 104,000 square feet of office space from
Lockheed Martin at a cost of approximately $300,000 per month. This space is
leased pursuant to an agreement that expires in August 2000 (with an option to
extend for two additional five year periods).
On December 15, 1995, Globalstar entered into a credit agreement providing
for a $250 million credit facility. Following the consummation of the Merger,
Lockheed Martin guaranteed $206.3 million of Globalstar's obligation under the
credit agreement, and Space Systems/Loral, Inc., a Loral subsidiary, and certain
other Globalstar strategic partners guaranteed $11.7 million and $32 million,
respectively, of Globalstar's obligation. In addition, Loral has agreed to
indemnify Lockheed Martin for liability in excess of $150 million under Lockheed
Martin's guarantee. In connection with such guarantees and indemnity of the
credit agreement, Globalstar has also agreed to pay to Loral and the other
guaranteeing partners a fee equal to 1.5% per annum of the average quarterly
amount outstanding under the credit agreement (the "Guarantee Fee"). Payment of
the Guarantee Fee will be deferred and subordinated, with interest at LIBOR plus
3%, until after the termination date of the credit agreement. The managing
general partner of Globalstar may also defer payment of such fee if it
determines that such deferral is necessary to comply with the terms of any
applicable credit agreement or indenture.
Mr. Bernard L. Schwartz, Chairman and CEO of the Company, is a 50% owner of
K&F Industries, Inc. ("K&F"). Prior to a recapitalization of K&F in 1997, the
Company was a 22.5% owner of K&F and, pursuant to its management agreement with
the Company, Loral SpaceCom had from time to time granted options to purchase
shares of the Company's Common Stock to employees of K&F. K&F reimburses Loral
SpaceCom for the interest cost on the funds it would have had to pay to Loral
SpaceCom had it purchased the Loral shares underlying the options granted at the
applicable exercise prices.
Mr. Robert B. Hodes, a Director and a member of the Executive and Audit
Committees, is counsel to the law firm of Willkie Farr & Gallagher, which is
general counsel to the Company.
For the year ended December 31, 1998, the Company paid fees and
disbursements in the amount of approximately $250,000 for corporate
communications consultations to Kekst and Company Incorporated, of which company
Mr. Gershon Kekst, a Director and member of the Executive Committee, is
President and the principal stockholder. Kekst and Company Incorporated
continues to render such services to the Company.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Company believes that during 1998 all reports for the Company's
executive officers and directors and beneficial owners of more than 10% of the
Company's Common Stock that were required to be filed under Section 16 of the
Securities Exchange Act of 1934 were timely filed, except that one report was
not timely filed by Gershon Kekst to report acquisitions of Common Stock.
12
<PAGE> 15
PROPOSAL 2. ACTING UPON A PROPOSAL TO AUTHORIZE AND CREATE ADDITIONAL PREFERRED
STOCK OF THE COMPANY AND TO AMEND THE BYE-LAWS TO AUTHORIZE THE
BOARD OF DIRECTORS TO ESTABLISH THE RIGHTS, PREFERENCES AND
DESIGNATIONS OF SUCH PREFERRED STOCK.
The Company's Bye-laws currently provide for three series of preferred
stock: Series A convertible preferred stock, of which 150,000,000 shares are
authorized and 45,896,977 shares are issued and outstanding; Series B preferred
stock, of which 20,000,000 shares are authorized and no shares are issued and
outstanding; and Series C convertible redeemable preferred stock, of which
20,000,000 shares are authorized and 14,909,437 shares are issued and
outstanding. Under the Bye-laws, additional series of preferred stock may not be
authorized or issued without shareholder approval. The Board of Directors
believes that the availability of additional preferred stock would provide
financing flexibility for the Company. The Board of Directors, therefore, has
declared advisable and recommended a proposal to authorize the creation of an
additional 20,000,000 preference shares, par value $.01 per share (the
"Preferred Stock"), without further shareholder approval, the preferences,
rights and designations of which will be determined by the Board.
The text of the resolution of the Board of Directors is set forth below.
RESOLVED, that the Board of Directors deems it in the best
interests of the Company and declares it advisable that, subject to
shareholder approval at the Annual Meeting of Shareholders of the
Company on May 18, 1999, the authorized capital of the Company be
increased to provide for an additional 20,000,000 preference shares,
par value $.01 per share, which shares shall have such rights,
preferences and designations as may be determined by the Board of
Directors from time to time and a Memorandum of Increase of Share
Capital be deposited with the Registrar of Companies of Bermuda
reflecting an increase of $200,000 of authorized capital of the
Company.
Under the proposal, Bye-law 4 would be amended to permit the Board of
Directors to authorize the issuance of Preferred Stock from time to time, in one
more series or classes, with such designations, preferences and rights as may be
designated by the Board of Directors from time to time prior to the issuance of
such class or series. The designations, preferences and rights that may be
designated by the Board, include without limitation the following: (i) the class
or series of Preferred Stock, (ii) the dividend rate of such class or series and
the conditions and dates on which the dividend is payable, (iii) the redemption
provisions and terms of such redemption, (iv) the terms and amount of any
sinking funds established therefor, (v) the terms and conditions on which any
series or class of Preferred Stock may be converted into Common Stock or other
securities of the Company, (vi) the voting rights, if any, of the Preferred
Stock, (vii) the restrictions on the issue or reissue of any additional
Preferred Stock and (viii) the rights of the holders of such series or class
upon liquidation or dissolution of the Company.
The Board believes that Preferred Stock is often a useful financing tool
and that it is advisable that the Board be given flexibility in setting the
terms of the Preferred Stock. If opportunities arise that would make desirable
the issuance of the Company's Preferred Stock through either public offerings or
private placements, the proposed amendment would avoid the possible delay and
expense of a shareholders' meeting. The Company's shareholders will have no
preemptive rights with respect to the issuance of any such shares.
Issuance of the Preferred Stock could result in one or more classes of
securities outstanding that will have certain preferences with respect to
dividends and in liquidation over the Common Stock, and could result in the
dilution of voting rights, net income per share and net book value of the Common
Stock.
The specific terms of any series of Preferred Stock will depend primarily
on market conditions and other factors existing at the time of issuance. The
Board has no present plans, understandings or agreements for issuing any
Preferred Stock and the Board does not intend to issue any such shares except on
terms that it deems to be in the best interests of the Company and its
shareholders.
In the event of a hostile attempt to take over the Company which the Board
determines is not in the best interest of the Company and its shareholders, it
may be possible for the Board to issue Preferred Stock with rights and
preferences which could impede the completion of a takeover. Such possibilities
may make the Company less attractive as a takeover candidate and may deter
takeover attempts not approved by the Board.
13
<PAGE> 16
The foregoing summary of the amendment to the Bye-laws is qualified in its
entirety by reference to the complete text of proposed Bye-law 4, which is set
forth as Exhibit A to this Proxy Statement. The proposed amendment would replace
existing Bye-law 4 in its entirety.
APPROVAL OF PROPOSAL 2 WILL REQUIRE THE AFFIRMATIVE VOTE IN PERSON OR BY
PROXY OF A MAJORITY OF THE VOTES CAST AT THE ANNUAL MEETING.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS OF LORAL VOTE IN
FAVOR OF THIS PROPOSAL.
PROPOSAL 3. RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS.
The Board of Directors has appointed Deloitte & Touche LLP, certified
public accountants, as the independent auditors of the Company for the fiscal
year ending December 31, 1999. Deloitte & Touche LLP has advised the Company
that it has no direct or indirect financial interest in the Company or any of
its subsidiaries, and that it has had, during the last three years, no
connection with the Company or any of its affiliates other than as independent
auditors and related activities.
The financial statements of the Company for the fiscal year ended December
31, 1998, and report of the auditors thereon will be presented at the Annual
Meeting. Deloitte & Touche LLP will have a representative present at the meeting
who will have an opportunity to make a statement if he or she so desires and to
respond to appropriate questions.
During 1998, Deloitte & Touche LLP provided services consisting of the
audit of the annual consolidated financial statements of the Company,
consultations with respect to the Company's quarterly financial statements,
reports and registration statements filed with the Securities and Exchange
Commission and other pertinent matters.
IF THE SHAREHOLDERS, BY THE AFFIRMATIVE VOTE OF THE HOLDERS OF A MAJORITY
OF THE SHARES OF COMMON STOCK REPRESENTED IN PERSON OR BY PROXY AND VOTING AT
THE MEETING DO NOT RATIFY THE APPOINTMENT OF DELOITTE & TOUCHE LLP, THE
APPOINTMENT OF INDEPENDENT AUDITORS WILL BE RECONSIDERED BY THE BOARD.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS OF LORAL VOTE IN FAVOR
OF THIS PROPOSAL.
LORAL SHAREHOLDERS' PROPOSALS
Proposals of the Company's shareholders intended to be included in the
Company's 2000 Proxy Statement, must be received by the Company no later than
December , 1999. In addition, under the Company's Bye-laws, proposals of the
Company's shareholders intended to be presented at the 2000 Annual Meeting of
the Company, must be received by the Company not before March 9, 2000 nor after
April 6, 2000. Proposals for inclusion in the Company's Proxy Statement or for
presentation at the Annual Meeting must be submitted to the Company in writing
at c/o Loral SpaceCom Corporation, 600 Third Avenue, New York, New York 10016,
Attention: Secretary. There are additional requirements regarding proposals of
shareholders, and a shareholder contemplating submission of a proposal is
referred to Rule 14a-8 promulgated under the Securities Exchange Act of 1934.
14
<PAGE> 17
OTHER ACTION AT MEETING AND VOTING OF PROXIES
Management does not know of any matters to come before the Annual Meeting
other than those set forth herein. However, the enclosed proxy confers
discretionary authority upon the proxy holders named therein to vote and act in
accordance with their best judgment with regard to any other matters which
should come before the meeting or any adjournment thereof. Upon receipt of such
proxy (in the form enclosed and properly signed) in time for voting, the shares
represented thereby will be voted as indicated thereon or, if no direction is
indicated, will be voted FOR the election of Directors and FOR any other
Proposal.
By Order of the Board of Directors
/s/ ERIC J. ZAHLER
Eric J. Zahler
Secretary
April , 1999
15
<PAGE> 18
EXHIBIT A
BYE-LAW 4
(AS PROPOSED TO BE AMENDED)
4. (a) The respective rights and restrictions attached to the Series A
Preferred Shares, the Series B Preferred Shares and the Series C Preferred
Shares are set forth in Schedules I, II and III (or the same may be amended from
time to time) to these Bye-laws, which Schedules shall be deemed to be
incorporated in and from part of this Bye-law 4.
(b) In addition to the Series A Preferred Shares, Series B Preferred
Shares and Series C Preferred Shares, the Board shall be authorized to issue
other preference shares and such shares may be issued from time to time, in one
or more series with such designations, preferences and relative, participating,
optional or other special rights, and qualifications, limitations or
restrictions thereof, as may be designated by the Board prior to the issuance of
such series, and the Board is hereby expressly authorized to fix by resolution
or resolutions prior to such issuance such designations, preferences and
relative, participating, optional or other special rights, or qualifications,
limitations or restrictions, including without limiting the generality of the
foregoing, the following:
(i) the designation of such series or class;
(ii) the dividend rate of such series or class, the conditions and
dates upon which such dividends will be payable, the relation which such
dividends will bear to the dividends payable on any other class or classes
of shares or any other series of any class of shares of the Company, and
whether such dividends will be cumulative or non-voting;
(iii) the redemption provisions and times, prices and other terms and
conditions of such redemption, if any, for such series or class, which may
include provisions that they are to be redeemed on the happening of a
specified event or on a given date, that they are liable to be redeemed at
the option of the Company or that if authorized by the Memorandum of
Association of the Company, that they are liable to be redeemed at the
option of the holder;
(iv) the terms and amount of any sinking fund provided for the
purchase or redemption of the shares of such series or class;
(v) the terms and conditions, if any, on which shares of such series
or class shall be convertible into, or exchangeable for, shares of the
Company or any other securities, including the price or prices, or the
rates of exchange thereof;
(vi) the voting rights, if any;
(vii) the restrictions, if any, on the issue or reissue of any
additional preference shares; and
(viii) the rights of the holders of such series or class upon the
liquidation, dissolution or distribution of assets of the Company.
The designations, preferences and relative, participating, optional or
other special rights or qualifications, limitations or restrictions thereof, of
each additional series, if any, may differ from those of any or all other series
already outstanding.
<PAGE> 19
LORAL SPACE & COMMUNICATIONS LTD.
PROXY -- ANNUAL MEETING OF SHAREHOLDERS, MAY 18, 1999
BERNARD L. SCHWARTZ, GREGORY J. CLARK and ROBERT B. HODES, and each of them, are
hereby appointed the proxies of the undersigned, with full power of substitution
on behalf of the undersigned to vote, as designated below, all the shares of the
undersigned at the Annual Meeting of Shareholders of LORAL SPACE &
COMMUNICATIONS LTD., to be held in the Grand Salon, The Essex House, 160 Central
Park South, New York, New York 10019, at 9:30 A.M., on Tuesday, May 18, 1999 and
at all adjournments thereof. The Board of Directors recommends a vote FOR the
following proposals:
1. ELECTION OF THREE CLASS III DIRECTORS -- Nominees: Class III: B. Schwartz, M.
Ruderman and D. Shapiro
[ ] VOTE FOR all nominees except those written below [ ] WITHHOLD AUTHORITY
to vote for all nominees
Instruction: To withhold authority to vote for any individual nominee write
that nominee's name on the line below:
------------------------------------------------------------------------------
2. Acting upon a proposal to authorize and create an additional 20,000,000
preference
shares, par value $.01 per share, of the Company (the "Preferred Stock") and
to
amend the Bye-laws to authorize the Board of Directors to establish
the rights, preferences and designations of such Preferred Stock. FOR [
] AGAINST [ ] ABSTAIN [ ]
3. Acting upon a proposal to ratify the appointment of Deloitte & Touche LLP as
independent auditors for the year ending December 31, 1999. FOR [
] AGAINST [ ] ABSTAIN [ ]
4. In their discretion, upon such other matters as may properly come before
the meeting. FOR [ ] AGAINST [ ] ABSTAIN [ ]
(Continued on reverse side)
<PAGE> 20
(Continued from other side)
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS
INDICATED, THIS PROXY WILL BE VOTED FOR THE ELECTION OF ALL NOMINEES
LISTED HEREON AND FOR PROPOSALS 2 AND 3.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby acknowledges receipt
of the Notice of Annual Meeting and
accompanying Proxy Statement.
Dated: , 1999
--------------------------------------------
--------------------------------------------
(Signature of Shareholder)
(Please sign exactly as name or names appear
hereon. When signing as attorney, executor,
administrator, trustee or guardian, please
give your full title as such; if by a
corporation, by an authorized officer; if by
a partnership, in partnership name by an
authorized person. For joint owners, all
co-owners must sign.)
PLEASE MARK, SIGN, DATE AND RETURN THIS
PROXY IN THE ENVELOPE PROVIDED.
P
