<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 2, 1999
REGISTRATION NO.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
LORAL SPACE & COMMUNICATIONS LTD.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
BERMUDA 4812 13-3867424
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) 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
THE REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
ERIC J. ZAHLER, ESQ.
600 THIRD AVENUE
NEW YORK, NY 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 825 EIGHTH AVENUE
(212) 728-8000 NEW YORK, NEW YORK 10019
(212) 474-1000
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED OFFER TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
PROPOSED MAXIMUM
TITLE OF EACH CLASS OF SECURITIES AMOUNT TO BE PROPOSED MAXIMUM AGGREGATE OFFERING AMOUNT OF
TO BE REGISTERED REGISTERED OFFERING PRICE PRICE REGISTRATION FEE(1)(2)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
9 1/2% Senior Notes due 2006... $350,000,000 95.875% $335,562,500 $93,287
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Pursuant to Rules 457(f)(1) and 457(c), and solely for the purpose of
calculating the registration fee, the registration fee was computed on the
basis of the average of the closing high bid and low ask prices for the
notes on March 30, 1999, which was 95.875%.
(2) $93,287 was wired to the SEC's account at Mellon Bank in payment of the
required registration fee due in connection with this Registration
Statement.
------------------------
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 WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SEC, ACTING PURSUANT TO SAID SECTION
8(a), MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
THIS INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT OFFER THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND WE ARE NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION APRIL 2, 1999.
LORAL SPACE & COMMUNICATIONS LTD.
EXCHANGE OFFER FOR
9 1/2% SENIOR NOTES DUE 2006
This is an offer to exchange the outstanding, unregistered 9 1/2% Senior
Notes you now hold for new, substantially identical 9 1/2% Senior Notes that
will be free of the transfer restrictions that apply to the old notes. This
offer will expire at 5:00 p.m., New York City time, on , 1999, unless
we extend it. You must tender your old, unregistered notes by the deadline to
obtain new, registered notes and the liquidity benefits they offer.
We agreed with the initial purchasers of the old notes to make this offer
and register the issuance of the new notes following the closing. This offer
applies to any and all old notes tendered by the deadline.
The new notes will not trade on any established exchange. The new notes
have the same financial terms and covenants as the old notes, and are subject to
the same business and financial risks.
A DESCRIPTION OF THOSE RISKS BEGINS ON PAGE 10.
NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR
DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
, 1999
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.......................................... 1
Risk Factors................................................ 10
Use of Proceeds............................................. 21
Capitalization.............................................. 22
Business.................................................... 23
The Exchange Offer.......................................... 26
Description of the Notes.................................... 40
Book-Entry; Delivery and Form............................... 89
Description of Other Indebtedness........................... 90
Material United States Federal Income Tax Consequences...... 95
Plan of Distribution........................................ 99
Incorporation of Material Documents by Reference............ 101
Where You Can Find More Information......................... 101
Legal Matters............................................... 102
Experts..................................................... 102
</TABLE>
<PAGE> 4
PROSPECTUS SUMMARY
This summary highlights selected information from this prospectus, but does
not contain all information that may be important to you. We encourage you to
read the entire prospectus.
ABOUT LORAL
We are one of the world's leading satellite communications companies, with
substantial activities in satellite manufacturing and satellite-based
communications services.
In 1998, we organized into four operating business segments:
- Satellite Manufacturing and Technology. We design and build satellite
systems and develop satellite technology for a broad variety of customers and
applications through our subsidiary, Space Systems/Loral.
- Fixed Satellite Services. We lease transmission capacity on satellites
and provide additional services to customers for a variety of applications,
including the distribution of broadcast, data, cable, direct-to-home and
Internet applications. We offer one-stop convenience for our customers through
the Loral Global Alliance, a network managed by our subsidiary Loral Skynet and
that includes Loral Skynet's Telstar fleet and Loral Orion's satellites along
with those of our 49% owned affiliate, Satelites Mexicanos, and in the future,
those of Europe*Star, a joint venture with Alcatel, in which we own a 47%
interest.
- Data Services. Our business in development, we provide managed
communications networks and Internet and intranet services through our
subsidiary, Loral Orion, and deliver high-speed broadband data communications
through our 82% owned subsidiary, CyberStar.
- Global Mobile Telephony. Our 43% owned affiliate, Globalstar, is
preparing to provide worldwide wireless mobile telephone service and narrow-
band data communication commencing in September 1999.
Loral was incorporated on January 12, 1996 as a Bermuda exempt company and
has its registered and principal executive offices at Cedar House, 41 Cedar
Avenue, Hamilton HM12, Bermuda. The executive office of Loral Spacecom
Corporation, our principal U.S. subsidiary, is located at 600 Third Avenue, New
York, New York 10016, and its telephone number is (212) 697-1105.
<PAGE> 5
THE EXCHANGE OFFER
The Exchange Offer.............. This is an offer to exchange our
unregistered 9 1/2% senior notes due 2006
that you now hold for new notes of equal
principal amount whose issuance has been
registered with the SEC. The old notes were
issued on January 21, 1999 in a private
offering.
In order to exchange your unregistered
notes, you must follow the instructions
contained in this prospectus and the
accompanying letter of transmittal.
The new notes have the same financial terms
and covenants as the old notes, and are
subject to the same business and financial
risks, but will not bear legends restricting
their transfer.
Expiration and Exchange Dates... This offer will expire at 5:00 p.m., New
York City time, on , 1999,
unless we extend it, and we will consummate
the exchange on the next business day.
Conditions of the Exchange
Offer........................ This offer is unconditional, as long as it
does not violate the securities laws. The
offer applies to any and all old notes
tendered by the deadline.
Withdrawal Rights............... You may withdraw your tender of old notes
at any time before the offer expires.
Federal Income Tax
Consequences................. The exchange will not be a taxable event for
U.S. federal income tax purposes or for
Bermuda tax purposes. You will not recognize
any taxable gain or loss or any interest
income as a result of this exchange.
Representations................. If you desire to participate in the exchange
offer, you will be required to make the
following representations:
- You are not one of our "affiliates";
- You are not engaged in, do not intend to
engage in, and have no arrangement or
2
<PAGE> 6
understanding with any person to
participate in, a distribution of the new
notes; and
- You are acquiring the new notes in the
ordinary course of your business.
Transfer Restrictions on New
Notes........................ If you can make the above representations,
you should be able to resell your new notes
freely without having to deliver a copy of
this prospectus to the purchaser. Otherwise,
prospectus delivery requirements under the
securities laws may apply, and we will not
be responsible if you violate those
requirements.
Broker-dealers who exchange old notes they
acquired for their own account through
market-making or other trading activities
must agree to deliver a copy of this
prospectus in connection with any resale of
the new notes.
Failure to Exchange Will Affect
You Adversely................ We agreed with the initial purchasers of the
old notes to make this exchange offer in
order to provide noteholders with the
opportunity to obtain registered securities.
Once the exchange offer is over, you will no
longer have any registration or exchange
rights, and, if you have failed to tender
any of your old notes, the untendered notes
will remain subject to significant
restrictions on transfer. If there is any
trading market for old notes after the
exchange offer, old notes are likely to
trade at a discount from the new notes, due
to these restrictions.
3
<PAGE> 7
THE NEW NOTES
Issuer.......................... Loral Space & Communications Ltd.
Maturity........................ January 15, 2006.
Interest........................ Interest accrues from January 21, 1999 at
the rate of 9 1/2% per year, payable semi-
annually in arrears on each January 15 and
July 15, beginning on July 15, 1999.
Ranking......................... The new notes will be unsecured and will
not be guaranteed by us or any of our
operating subsidiaries. As such, they will
be:
- equal in right of payment with any future
senior indebtedness we incur;
- senior in right of payment to any of our
future debt which is junior in right of
payment by its terms to senior Loral
indebtedness; and
- effectively junior in right of payment to
all indebtedness and liabilities
(including trade payables) of our
subsidiaries and future secured
indebtedness at the Loral level.
Optional Redemption............. From and after January 15, 2003, we will
have the right to redeem any or all of the
new notes at their principal amount plus
accrued interest and a premium, initially
equal to 4.75% and declining thereafter.
In addition, prior to January 15, 2002, we
have the right to use the net cash proceeds
of certain kinds of equity offerings to
redeem up to 35% of the new notes originally
outstanding at their principal amount plus
accrued interest and a premium of 9.5%.
Change of Control............... If an event treated as a change of control
under the indenture occurs, we must make an
offer to purchase any and all of the new
notes then outstanding at 101% of their
aggregate principal amount, plus accrued and
unpaid interest, if any, to the date of
purchase.
4
<PAGE> 8
Covenants....................... The indenture under which the old notes
have been and the new notes are being issued
contains covenants which, subject to
numerous and significant exceptions,
restrict our ability and the ability of our
subsidiaries to:
- borrow money;
- pay dividends on stock or purchase stock;
- make investments;
- use assets as security in other
transactions; and
- sell certain assets or merge with or into
other companies.
The indenture allows modification and
amendment of these and other covenants by a
vote of holders of a majority in aggregate
principal amount of the notes, subject to
certain exceptions described in the
indenture. Also, holders of a majority in
aggregate principal amount of the notes may
waive our compliance with certain other
restrictive covenants in the indenture.
No Withholding Tax Expected;
Special Tax Redemption....... We expect to make payments with respect
to the new notes without any tax
withholding. If withholding is required as a
result of a change to current law or policy,
we will generally pay enough additional
interest so that the net amount received by
the affected noteholders will not be
reduced. If that occurs, however, we will
have the right to redeem the affected notes
at 100% of their principal amount plus
accrued interest.
Mandatory Offer to Repurchase... If we sell certain assets or experience
certain kinds of changes in control, we must
offer to repurchase the new notes at the
prices listed in this prospectus under the
heading "Description of the
Notes -- Mandatory Redemption."
5
<PAGE> 9
For additional information regarding the notes, see "Description of the
Notes" and "Material United States Federal Income Tax Consequences."
RISK FACTORS
See "Risk Factors" immediately following this summary beginning on page 10
for a discussion of risks relating to the new notes, all of which apply to the
old notes as well.
6
<PAGE> 10
SELECTED FINANCIAL DATA
The following summary historical financial information of Loral has been
derived from, and should be read in conjunction with, the related financial
statements and other financial information incorporated by reference herein.
Financial information as of and for the years ended March 31, 1996 and 1995
represents the space and communications operations of Loral Corporation and has
been derived from financial statements not included or otherwise incorporated by
reference in this prospectus. On March 20, 1998, Loral acquired all of the
outstanding stock of Loral Orion in exchange for Loral common stock. The 1998
financial information includes Loral Orion from April 1, 1998. In 1997, Loral
increased its ownership in SS/L to 100% and, accordingly, the 1997 financial
information includes the results of SS/L. In prior years SS/L was accounted for
under the equity method of accounting. On March 14, 1997, Loral acquired Loral
Skynet from AT&T; Loral's financial information includes the results of Loral
Skynet from that date.
LORAL SPACE & COMMUNICATIONS LTD.
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS AND RATIOS)
<TABLE>
<CAPTION>
YEARS ENDED NINE MONTHS YEARS ENDED
DECEMBER 31, ENDED MARCH 31,(1)
------------------------- DECEMBER 31, -------------------
1998 1997 1996 1996 1995
---------- ------------ ------------ -------- --------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues................................................ $1,301,702 $1,312,591
Management fee from affiliate........................... $ 5,088 $ 5,608 $ 3,169
Operating income (loss)................................. (33,780) 13,552 (12,201) 2,587 (33)
Equity in net loss of affiliates(2)..................... (120,417) (49,037) (4,709) (8,628) (8,988)
Net income (loss)....................................... (138,798) 40,004 8,877 (13,785) (7,873)
Preferred dividends and accretion(3).................... (46,425) (26,315)
Net income (loss) applicable to common stockholders..... (185,223) 13,689 8,877 (13,785) (7,873)
Earnings (loss) per share -- basic and diluted.......... (.68) .06 .04 (.08) N/A
CASH FLOW DATA:
Provided by (used in) operating activities.............. $ 4,417 $ (230,248) $ (3,003) $ (1,319) $ (8,439)
Used in investing activities............................ 473,235 1,022,772 1,962 115,031 92,055
Provided by (used in) equity transactions............... 589,187 (18,097) 602,413 116,362 100,494
Provided by financing transactions...................... 199,856 316,912 583,292
Dividends paid per common share......................... N/A N/A
OTHER DATA:
EBITDA from operating segments before development and
start-up costs and affiliate and intercompany
eliminations(4)....................................... $ 233,027 $ 135,825 $ 66,103
EBITDA(4)............................................... 101,249 76,316 (11,150)
Depreciation and amortization........................... 135,029 62,764 1,051
Capital expenditures.................................... 489,448 255,340 (540)
Ratio of earnings to fixed charges...................... 1.9x 3.7x
Deficiency of earnings to cover fixed charges........... 140,438
</TABLE>
7
<PAGE> 11
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,(1)
-------------------------------------- --------------------
1998 1997 1996 1996 1995
---------- ---------- ---------- -------- --------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents...................... $ 546,772 $ 226,547 $1,180,752 $ 12
Total assets................................... 5,229,215 3,010,447 1,699,326 354,396 $251,819
Recourse debt(5)............................... 622,280 435,398
Non-recourse debt of Loral Orion............... 933,495
Total debt..................................... 1,555,775 435,398
Non-current liabilities........................ 236,160 221,211 26,834
Convertible preferreds(3)...................... 583,292
Shareholders' equity(6)/Invested equity........ 2,935,721 1,980,520 1,070,069 354,396 251,819
</TABLE>
- -------------------------
(1) Financial information as of and for the two years in the period ended March
31, 1996 represents the space and communications operations of Loral
Corporation and includes allocations and estimates of certain expenses of
Loral based upon estimates of actual services performed by Loral Corporation
on behalf of Loral. Interest expense was allocated to Loral based on Loral
Corporation's historical weighted average interest rate applied to the
average investment in affiliates.
(2) Loral's principal affiliates are Globalstar, Satelites Mexicanos ("SatMex")
since November 17, 1997 and Europe*Star since December 1998. Loral also has
an investment in SkyBridge Limited Partnership which is accounted for under
the equity method. Loral sold its interest in K&F Industries, Inc. in 1997.
(3) Convertible preferred equivalent obligations were exchanged for 6% Series C
Preferred Stock and were reclassified to shareholders' equity in 1997 upon
approval by Loral's shareholders.
(4) EBITDA, which is equivalent to operating income (loss) before depreciation
and amortization, is provided because it is a measure commonly used in the
communications industry to analyze companies on the basis of operating
performance, leverage and liquidity and is presented to enhance the
understanding of Loral's operating results. However, EBITDA should not be
construed as an alternative to net income as an indicator of a company's
operating performance, or cash flow from operations as a measure of a
company's liquidity. EBITDA may be calculated differently and, therefore,
may not be comparable to similarly titled measures reported by other
companies and may not be the same as "Consolidated Cash Flow" as defined in
the indenture. EBITDA for operating segments before development and start-up
costs and affiliate and intercompany eliminations includes EBITDA for
Loral's affiliates SatMex and Europe*Star, and excludes CyberStar's
development costs. See Note 15 of Loral's 1998 consolidated financial
statements incorporated by reference herein.
(5) Includes the debt of Loral SpaceCom Corporation and its subsidiaries.
(6) As of December 31, 1998, the book value per share of the Series A Preferred
Stock and the common stock (which Loral is required to disclose herein in
accordance with applicable Bermuda law) was $7.57 and $7.56, respectively.
Book value per share represents the quotient obtained by dividing
shareholders' equity, reduced by the Series C Preferred Stock redemption
value, by the number of outstanding shares of common stock, giving effect to
the conversion of the Series A Preferred Stock, plus, in the case of such
preferred stock, the $.01 liquidation preference thereof.
8
<PAGE> 12
UNAUDITED PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma statement of operations data reflects the
acquisition of Loral Orion on March 20, 1998, as if the acquisition had occurred
on January 1, 1998. Such unaudited pro forma statement of operations data may
not be indicative of the results that actually would have occurred if the
acquisition had taken place on January 1, 1998, or future results. This
unaudited pro forma information has been derived from and should be read in
conjunction with Loral's audited consolidated financial statements, which are
incorporated by reference herein.
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1998
------------------------
ACTUAL PRO FORMA
---------- ----------
(IN THOUSANDS EXCEPT PER
SHARE AMOUNTS)
<S> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues.................................................... $1,301,702 $1,320,492
Operating loss.............................................. (33,780) (48,929)
Equity in net loss of affiliates............................ (120,417) (120,417)
Net loss.................................................... (138,798) (162,644)
Preferred dividends and accretion........................... (46,425) (46,425)
Net loss applicable to common shareholders.................. (185,223) (209,069)
Loss per share -- basic and diluted......................... (.68) (.75)
</TABLE>
The following unaudited as adjusted balance sheet data presents the effects
of the offering of the old notes and Loral's purchase of $150 million face
amount of convertible preferred stock of Globalstar Telecommunications Limited,
which occurred in January 1999, as if such transactions had occurred as of
December 31, 1998.
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1998
-------------------------
ACTUAL AS ADJUSTED
---------- -----------
(IN THOUSANDS)
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents................................... $ 546,772 $ 743,772
Total assets................................................ 5,229,215 5,572,215
Investments in affiliates................................... 707,917 853,917
Recourse debt(1)............................................ 622,280 965,280
Non-recourse debt of Orion.................................. 933,495 933,495
Total debt.................................................. 1,555,775 1,898,775
Shareholders' equity........................................ 2,935,721 2,935,721
</TABLE>
- -------------------------
(1) Includes the debt of Loral SpaceCom Corporation and its subsidiaries.
9
<PAGE> 13
RISK FACTORS
The new notes, like the old notes, entail the following risks:
LAUNCH FAILURES HAVE DELAYED SOME OF OUR OPERATIONS IN THE PAST, AND MAY DO SO
AGAIN IN THE FUTURE.
Satellite launches are risky. About 15% of launch attempts end in failure.
We ordinarily insure against launch failures, but at considerable cost. The cost
and the availability of insurance vary depending on market conditions and the
launch vehicle used. Our insurance typically does not cover business
interruption, and so both launch failures and in-orbit satellite failures result
in uninsured losses. Replacement of a lost satellite typically requires up to 18
months from the time a contract is executed until the launch date of the
replacement satellite.
- LORAL ORION. Orion 3 is currently scheduled to be launched on the
second flight of a Delta 3 rocket in April 1999. A Delta 3 rocket failed
in August 1998 on its maiden flight. Although the manufacturer has
assured us that the cause of that failure has been identified and
corrected, we can't be certain that the second flight will succeed.
- LORAL SKYNET. Loral Skynet's Telestar 7 is currently scheduled to be
launched on the maiden flight of an Atlas IIIA. We cannot be certain that
the maiden flight will succeed.
- GLOBALSTAR. As of March 15, 1999, Globalstar needs to launch 16 more
satellites aboard four launch vehicles before commercial operations can
begin. Although Globalstar has contracted for the necessary launch
vehicles and developed contingency plans, launch failures could delay
Globalstar's start of commercial operations. In September 1998, a
malfunction of a Zenit 2 rocket resulted in the loss of 12 Globalstar
satellites shortly after lift-off from Kazakhstan and resulted in a delay
in Globalstar's program schedule.
GOVERNMENT POLICIES AND REGULATIONS MAY LIMIT OR DELAY LAUNCHES AND/OR INCREASE
LAUNCH-RELATED COSTS.
We depend on third parties, in the United States and abroad, to launch our
satellites. Foreign launches have been politically sensitive because of the
relationship between launch technology and missile technology. In the U.S.,
government policy has limited, and is likely in the future to limit, launches
from the former Soviet Union and China. For example, the most recent Globalstar
launch from Kazakhstan was delayed when the U.S. government stopped granting
case-by-case approval of launches from that location pending an
intergovernmental agreement covering technology security matters. Changes in
governmental policies, political leadership or legislation in the United States,
10
<PAGE> 14
Russia, Kazakhstan or China could adversely affect our ability to launch from
these countries or materially increase the costs of doing so.
AFTER LAUNCH, OUR SATELLITES REMAIN VULNERABLE TO IN-ORBIT FAILURE.
Random failure of satellite components may result in damage to or loss of a
satellite before the end of its expected life. Satellites are carefully built
and tested and have certain redundant systems in case of failure. However,
in-orbit failure may result from various causes including:
- component failure;
- loss of power or fuel;
- inability to control positioning of the satellite;
- solar and other astronomical events; and
- space debris.
Repair of satellites in space is not feasible. Many factors affect the useful
lives of our satellites. These factors include:
- the quality of construction;
- gradual degradation of solar panels; and
- the durability of components.
Although some failures may be covered in part by insurance, they may result in
uninsured losses as well. For example, when Skynet experienced the total loss of
two satellites in 1994 and 1997 while under AT&T's ownership, it suffered a
substantial drop in its profits.
Our geosynchronous satellites generally have an expected life of between 15
to 20 years. Some of the satellites we currently have in orbit have experienced
operational problems:
- In November 1995, a component on Orion 1 malfunctioned, resulting in a
two-hour service interruption. Full service was restored using a back-up
component. If the back-up component fails, Orion 1 would lose a
significant amount of usable capacity.
- SatMex's Solidaridad 1 satellite has experienced problems and mechanical
difficulties that could shorten its operational life.
GLOBALSTAR SATELLITES HAVE A SHORTER DESIGN LIFE AND GLOBALSTAR MAY NOT BE ABLE
TO REPLACE ITS SATELLITES AT THE END OF THEIR USEFUL LIVES.
Globalstar's satellites have a minimum life-span of seven and one-half
years. Globalstar plans to use funds from operations and possibly, proceeds from
additional financings, to deploy a second generation of satellites to replace
its first generation satellite constellation. However, enough money might not be
11
<PAGE> 15
available when needed, leaving Globalstar without a second-generation
constellation.
SPACESYSTEMS/LORAL MAY FORFEIT PAYMENTS FROM CUSTOMERS DUE TO SATELLITE FAILURES
OR LOSSES AFTER LAUNCH, AND THESE LOSSES MAY BE UNINSURED.
Some of Space Systems/Loral's satellite manufacturing contracts provide
that some of the total price is payable as "incentive" payments earned
throughout the life of the satellite. While insurance against loss of these
payments has been available in the past, the cost and availability of such
insurance are subject to wide fluctuations. In addition, Space Systems/Loral is
sometimes prohibited from insuring orbital incentive payments. Some of Space
Systems/Loral's contracts call for in-orbit delivery, transferring the launch
risk to Space Systems/Loral. Space Systems/Loral generally insures against this
exposure.
Space Systems/Loral records as revenue the present value of incentive
payments as the costs associated with these incentive payments are incurred.
Space Systems/Loral generally receives the present value of these incentive
payments if there is a launch failure or a failure is caused by customer error.
However, Space Systems/Loral forfeits these payments if the loss is caused by
satellite failure or as a result of its own error. For example, in 1998, a
satellite built by Space Systems/Loral experienced problems with two of its
antennae. Space Systems/Loral currently estimates that this degradation could
result in the loss of about 25% of the incentive payments under that contract.
Further warranty claims by the customer may also be possible.
WE ARE A HOLDING COMPANY WITH SUBSTANTIAL DEBT AND COMMITMENTS AT OUR OPERATING
LEVELS AND THIS FACT INCREASES THE RISK OF NONPAYMENT OF THE NOTES.
We and our subsidiaries and operating affiliates have a significant amount
of outstanding debt and commitments, including those described below. This fact
creates a risk that the holders of the notes will not be paid on time or at all
if we do not have sufficient funds to repay our debts. Since we are only a
holding company, we depend on the ability of our operating subsidiaries and
affiliates to provide us with the necessary funds to repay our debt obligations.
However, our operating subsidiaries and affiliates are obligated to repay their
own creditors before any of their funds can be dividended up to us for the
repayment of our obligations to you or to our other creditors. The notes,
therefore, are junior in right of repayment to all of the debt of our
subsidiaries and affiliates by virtue of our corporate structure.
- As of December 31, 1998, our outstanding consolidated debt, including the
current portion, was $1.6 billion, all of which represents obligations
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<PAGE> 16
of our subsidiaries to their creditors. In addition, we issued $350
million of the notes in January 1999.
- As of December 31, 1998, our unconsolidated affiliates, SatMex and
Globalstar, had outstanding debt, including the current portion, of $2.0
billion, and Globalstar had vendor financing of $371 million, both which
are also senior to the notes by virtue of our structure.
- We have a $115 million secured standby bank credit facility, which was
undrawn as of December 31, 1998, supporting a guarantee of a $115 million
term loan.
- Space Systems/Loral has guaranteed $11.7 million under Globalstar's $250
million credit facility. In addition, we have a contingent liability of
up to $56 million to Lockheed Martin Corporation under its guarantee of
the Globalstar credit facility.
- We have agreed to maintain certain assets in a trust to collateralize a
$129.9 million obligation of Servicios Corporativos Satelitales, S.A. de
C.V., in which we have a 65% economic interest. This obligation has a
seven-year term and bears interest at 6.03%.
We are allowed to incur substantial additional debt. This debt would be
repaid on a proportional basis with the notes and therefore your risk of non-
reimbursement would increase. Further, if we granted a security interest in any
of our assets against any newly-incurred debt, the new debt would have priority
of repayment over the notes, to the extent of the value of the assets granted as
collateral, in a liquidation scenario.
The ability of our subsidiaries and affiliates to pay dividends to us or
otherwise support our obligations is limited by the terms of our debt
instruments. We intend to use our available cash to help pay for the growth and
operation of our businesses. If any of our subsidiaries or affiliates finds
itself faced with an imminent payment default, we might be faced with a choice
between making additional equity investments in a troubled company or accepting
the loss of some or all of our equity investment.
IF OUR BUSINESS PLAN DOES NOT SUCCEED, OUR OPERATIONS MIGHT NOT GENERATE ENOUGH
CASH TO PAY OUR OBLIGATIONS, INCLUDING THE NOTES.
For the year ended December 31, 1998, we had a deficiency of earnings to
cover fixed charges of $140 million, before taking into account the $350 million
of notes we issued in January 1999. Our core businesses are capital intensive
and need substantial investment before returns on investment can be realized. We
are subject to substantial financial risks from possible delays or reductions in
revenue, unforeseen capital needs or unforeseen expenses. Our ability to meet
our obligations and execute our business plan could depend upon our ability and
that of our operating subsidiaries and affiliates to raise cash in the
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<PAGE> 17
capital markets. We can't be certain that this source of cash would be available
in the future on favorable terms, if at all.
Our ability to satisfy our obligations will depend upon our future
financial performance which is subject to:
- the successful execution of our business plan and those of our
affiliates;
- general economic conditions; and
- financial, business, regulatory and other factors, including
international conditions.
These factors are to some extent beyond our control, and as a result, we
cannot guarantee that we will be able to repay or refinance the notes or our
other indebtedness at their maturity.
WE CURRENTLY DEPEND HEAVILY ON SPACE SYSTEMS/LORAL FOR A LARGE PORTION OF OUR
REVENUE AND OPERATING INCOME.
Currently, Space Systems/Loral generates a significant part of our revenue
and operating income. Space Systems/Loral, in turn, has historically derived a
large part of its revenues from a few customers. As a result, its revenues and
operating results would be hurt if completed or canceled contracts are not
promptly replaced with new orders.
Space Systems/Loral's accounting for long-term contracts sometimes requires
adjustments to profit and loss based on revised estimates during the performance
of the contract. These adjustments may have a material effect on our results of
operations in the period they are made. The estimates giving rise to these
risks, which are inherent in long-term, fixed-price contracts, include the
forecasting of costs and schedules, contract revenues related to contract
performance, including revenues from orbital incentives, and the potential for
component obsolescence due to procurements long ahead of assembly.
GLOBALSTAR IS A DEVELOPMENT STAGE COMPANY THAT HAS NOT BEGUN COMMERCIAL
OPERATIONS.
Until the Globalstar System is fully deployed and tested, we cannot be
certain that it will perform as designed. Even if the system operates as it
should, we can't be certain that the market will develop as we anticipate. The
Globalstar System is still being deployed, and cannot begin commercial
operations until:
- at least 32 satellites are working in orbit;
- the necessary ground equipment and user terminals are in place; and
- the service provider is fully licensed in each country to be served.
The cost of building the Globalstar system has been revised upward from original
estimates, and further increases are possible.
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<PAGE> 18
Barring unexpected adverse developments, Globalstar will need approximately
$600 million more in capital before it can begin commercial service in September
1999 as planned. As of December 31, 1998, and including the effect of a
preliminary revision to Qualcomm's cost estimate, Globalstar's budgeted
expenditures were $3.17 billion for the design, construction and deployment of
the Globalstar system to commence commercial service and $340 million for
budgeted financing costs. More money will be needed if Globalstar experiences
delays in beginning commercial service, and in any event, after the commencement
of commercial service and before positive cash flow is achieved. Although
Globalstar believes it will be able to obtain the money it needs, we cannot be
certain that it will be available on favorable terms or on a timely basis, if at
all.
Globalstar depends on independent service providers to supply the ground
equipment and user terminals and market Globalstar service in each country where
they plan to operate. We don't know whether these service providers will be
successful. We expect that Globalstar service providers will operate in more
than 100 countries, many of which have developing economies. Globalstar's
strategy of focusing on areas which lack basic telephone service exposes it to
the risk that customers in these economies will not be able to afford the
service.
THERE ARE RISKS IN CONDUCTING BUSINESS INTERNATIONALLY.
Some of our business is conducted outside the United States, which imposes
more risks. We could be harmed financially and operationally by changes in
foreign regulations and telecommunications standards, tariffs or taxes and other
trade barriers. Customers in developing countries could have difficulties in
obtaining the U.S. dollars they owe us, including as a result of exchange
controls. Additionally, exchange rate fluctuations may adversely affect the
ability of our customers to pay us in U.S. dollars. Moreover, if we ever need to
pursue legal remedies against our foreign business partners or customers, we may
have to sue them abroad, where it could be hard for us to enforce our rights.
WE ARE SUBJECT TO EXPORT CONTROLS, WHICH MAY RESULT IN DELAYS, UNFORESEEN
ADDITIONAL COSTS AND UNCERTAINTIES TO SELL IN CERTAIN MARKETS.
Like other exporters of space-related products and services, Space
Systems/Loral needs licenses from the U.S. government whenever it sells a
satellite to a foreign customer or launches a satellite abroad. Satellite export
licensing has lately been politically controversial, resulting in delays of some
approvals, and creating uncertainties about the continuing ability of U.S.
satellite manufacturers to sell in certain markets.
On December 23, 1998, the Office of Defense Trade Controls of the U.S.
Department of State temporarily suspended the previously approved technical
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<PAGE> 19
assistance agreement under which Space Systems/Loral had been preparing for the
launch of the ChinaSat-8 satellite. According to the agency, the purpose of the
temporary suspension is to permit it to review the agreement for conformity with
newly-enacted legislation (Section 74 of the Arms Export Control Act) as to the
export of missile equipment or technology. This suspension has delayed Space
Systems/Loral's performance of its contractual obligations. If our customer
terminates the ChinaSat-8 contract because of this delay, Space Systems/Loral
will have to refund advances it has received from ChinaSat. These advances
totaled $124 million as of December 31, 1998. In addition, Space Systems/Loral
may incur penalties of up to $12 million upon such termination. Space
Systems/Loral believes that it would cost about $38 million to refurbish and
retrofit the satellite so that it could be sold to another customer. We cannot
guarantee that Space Systems/Loral would find a replacement customer.
The U.S. government recently announced that it will not grant an export
license to Hughes Space & Communications, Inc. for a telecommunications
satellite it is building for Asia Pacific Mobile Telecommunications. We do not
know what this denial may mean for future applications of export licenses to
Chinese customers or the resolution of the ChinaSat-8 suspension. If the U.S.
government continues to deny export licenses for satellites sold to the Chinese
or other markets, Space Systems/Loral's business could be hurt.
SPACE SYSTEMS/LORAL IS THE TARGET OF A GRAND JURY INVESTIGATION; CONGRESS HAS
HELD RELATED HEARINGS.
Space Systems/Loral could be accused of criminal violations of the export
control laws arising out of the participation of its employees in a committee
formed to review the findings of the Chinese regarding the 1996 crash of a Long
March rocket in China. Whether or not Space Systems/Loral is indicted or
convicted, Space Systems/Loral will remain subject to the State Department's
general statutory authority to prohibit exports of satellites and related
services if it finds that Space Systems/Loral has violated the Arms Export
Control Act. Further, the State Department can suspend export privileges
whenever it determines that grounds for debarment exist and that suspension "is
reasonably necessary to protect world peace or the security or foreign policy of
the United States." If Space Systems/Loral were to be indicted and convicted of
a criminal violation of the Arms Export Control Act, it:
- would be subject to a fine of up to $1 million per violation;
- could be debarred from certain export privileges; and
- could be debarred from participation in government contracts.
Since many of Space Systems/Loral's satellites are built for foreign customers
and/or launched on foreign rockets, a debarment would have a material adverse
effect on Space Systems/Loral's business, which in turn would affect us.
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A committee of the U.S. House of Representatives, chaired by Representative
Cox, is investigating U.S. satellite export policy toward China. The committee
recently issued a report which has been declassified in part. The other portions
of the report, which could be issued shortly, could contain negative comments
about Space System/Loral's compliance with the export control laws.
Further, we can't assure you that future licenses for satellites will be
granted in the same manner and time frame, if at all, as in the past after the
State Department takes over the licensing from the Commerce Department in March
1999.
WE SHARE CONTROL OF OUR AFFILIATES WITH THIRD PARTIES.
Third parties have significant ownership, voting and other rights in many
of our subsidiaries and affiliates. As a result, we do not always have full
control over management of these entities and the rights of these third parties
and fiduciary duties under applicable law could result in these entities taking
actions not in our best interests or in refraining to take actions that we deem
advisable. To the extent that these entities are or become customers of Space
Systems/ Loral, these conflicts could become acute. For example:
- Although we are the managing general partner and largest equity owner of
Globalstar, our control is limited by the supermajority rights of
Globalstar's limited partners.
- Primary operational control of SatMex is vested in Mexican nationals, as
required by Mexican law, subject to certain supermajority rights which we
retain.
- The Europe*Star joint venture, initiated by Alcatel, is under its
control, subject to our supermajority rights.
- Future joint ventures between Alcatel and us within the Loral Global
Alliance will be controlled by the initiating party, subject to
supermajority rights in favor of the non-initiating party.
- Alcatel is an investor in CyberStar, and has supermajority rights in it.
THERE ARE POTENTIAL CONFLICTING COMMERCIAL INTERESTS AMONG OUR SUBSIDIARIES AND
AFFILIATES.
Loral Skynet, SatMex, Loral Orion and Europe*Star have adopted a marketing
policy that provides for collaboration and cross-selling of capacity among the
Loral Global Alliance members. If, however, the members of the Loral Global
Alliance do not collaborate but rather compete in areas of overlapping capacity,
conflicting commercial interests among our subsidiaries and affiliates may
arise. Both Loral Skynet and Loral Orion own or are building satellites whose
coverage areas overlap with those of SatMex and Europe*Star. If Loral Skynet and
Loral Orion do not collaborate with SatMex and
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Europe*Star, or vice versa, under the Loral Global Alliance, Loral Skynet and
Loral Orion might compete directly with Europe*Star and SatMex for customers.
Partners and affiliates of Globalstar, including companies affiliated with
us, will be among Globalstar's service providers and may, therefore, have
conflicts with Globalstar and/or us over service provider agreements.
OUR BUSINESS IS REGULATED, CAUSING UNCERTAINTY AND ADDITIONAL COSTS.
Our business is regulated by authorities in more than 100 jurisdictions,
including the Federal Communications Commission, the International
Telecommunications Union and the European Union. As a result, some of the
activities which are important to our strategy are beyond our control. The
following are some strategically important activities which are regulated by
various government authorities:
- the expansion of Loral Skynet's operations beyond the domestic U.S.
market;
- the proposed launch and operation of Orion 2 and Orion 3;
- the international service offered by Loral Orion;
- the manufacture and export of satellites;
- the launch of Globalstar satellites; and
- the expansion of SatMex's Latin American presence.
Regulatory authorities in the various jurisdictions in which we operate can
modify, withdraw or impose charges or conditions upon the licenses which we
need, and so increase our cost of doing business. The regulatory process also
requires that we negotiate with third parties operating or intending to operate
satellites at or near orbital locations where we place our satellites so that
the frequencies of the satellites do not interfere. Because we cannot guarantee
the results of negotiations with third parties, "frequency coordination" is an
additional source of uncertainty. We cannot guarantee successful frequency
coordination for our satellites. In particular, we have learned that Eutelsat,
which may claim a priority filing with the International Telecommunications
Union, has recently placed a satellite that is beyond its useful life at 12.5
degrees W.L., near the 12 degrees W.L. orbital location intended for Orion 2. If
Eutelsat launches a replacement satellite into the 12.5 degrees W.L. orbital
location, it would interfere with the Orion 2 satellite at 12 degrees W.L. We
have entered into discussions with Eutelsat to resolve the issues relating to
this orbital location; however, we cannot guarantee a successful resolution.
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Failure to successfully coordinate our satellites' frequencies or to
resolve other required regulatory approvals could have a material adverse effect
on our financial condition and on our results of operations.
SPACE SYSTEMS/LORAL COMPETES WITH LARGE MANUFACTURERS WITH SIGNIFICANT
RESOURCES.
In the manufacture of our satellites, we compete with very large well-
capitalized companies, including several of the world's largest corporations,
such as Hughes Space & Communications, Inc., a subsidiary of General Motors
Corporation, and Lockheed Martin Corporation. These companies have considerable
financial resources which they may use to gain advantages in marketing and in
technological innovation. Space Systems/Loral's success will depend on its
ability to innovate on a cost-effective and timely basis.
WE COMPETE WITH A NUMBER OF SERVICE PROVIDERS FOR MARKET SHARE AND CUSTOMERS;
TECHNICAL DEVELOPMENTS FROM COMPETITORS OR OTHERS MAY REDUCE DEMAND FOR
SATELLITE-BASED SERVICES.
When Globalstar enters the satellite-based mobile phone business, it will
face intense competition for customers from various companies, and in particular
Iridium LLC, ICO Global and providers of land-based mobile phone services. We
cannot assure you that Globalstar will attract enough subscribers either to
compete effectively or to implement its current business plan.
We face competition in the provision of fixed-satellite services from
companies such as PamAmSat Corporation, GE Americom, SES Astra and
quasi-governmental organizations such as Intelsat. Because this market is
mature, competition may cause downward price pressures, which may adversely
affect our profits.
We, through Loral Orion and our affiliate CyberStar, also face competition
in the provision of high-speed data communications, such as Internet
applications, from providers of land-based data communications services, such as
cable operators and traditional telephone service providers. In addition, Loral
Orion and CyberStar may face competition in the future from Teledesic
Corporation's proposed system and Hughes's Spaceway system. We cannot assure you
that Loral Orion or CyberStar will attract enough customers either to compete
effectively or to implement their business plans.
As land-based telecommunications services expand, demand for some
satellite-based services may be reduced. New technology could render satellite-
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based services less competitive by satisfying consumer demand in other ways or
through the use of incompatible standards.
We also compete for local regulatory approval in places in which both we
and a competitor may want to operate. We also compete for scarce frequency
assignments and fixed orbital positions.
THE YEAR 2000 PROBLEM.
Many computer systems and software programs may not function properly in
the year 2000 and beyond because of a once common programming standard which
used two digits instead of four digits to signify a year. These computer systems
and software programs read the year 1999 as "99" and not "1999". Because of
this, the year 2000 may appear as the year 1900, which could result in system
failures or disruptions. This problem is often referred to as the "Year 2000"
issue.
If we are unable to fix a material Year 2000 problem, we could experience
an interruption or failure of our business operations. Likewise, if our
suppliers are unable to fix a material Year 2000 problem, a resulting
interruption or failure of their business could hurt us.
WE RELY ON KEY PERSONNEL.
We need highly qualified personnel. Except for Mr. Bernard L. Schwartz, our
Chairman and Chief Executive Officer, none of our officers has an employment
contract, and we do not maintain "key man" life insurance on any of our
personnel. The departure of any of our key executives could have an adverse
effect on our business.
THERE ARE RISKS REGARDING FORWARD-LOOKING STATEMENTS.
Some statements or information contained in this prospectus are not
historical facts but are "forward-looking statements" (as such term is defined
in the Private Securities Litigation Reform Act of 1995). They can be identified
by the use of forward-looking words such as "believes", "expects", "plans",
"may", "will", "should", or "anticipates" or their negatives or other variations
of these words or other comparable words, or by discussions of strategy that
involve risks and uncertainties. Some of the factors which may cause future
results and performance to differ from what we may imply here are:
- the space environment, where our satellites operate, is a harsh
environment;
- governments may change regulations or institute new rules, which could
have an impact on our operations;
- we need to be able to have access to scarce rockets to launch our
satellites;
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- Globalstar is a development-stage company that may continue to lose
money, have negative cash flow, require additional money and suffer
delays in meeting its targets;
- we depend on Space Systems/Loral for operating income;
- there is severe competition in our business; and
- our subsidiaries and affiliates owe significant amounts of money.
We warn you that forward-looking statements are only predictions. Actual
events or results may differ materially as a result of risks that we face,
including those presented above. These are representative of factors that could
affect the outcome of the forward-looking statements.
USE OF PROCEEDS
We will not receive any cash proceeds from the issuance of the new notes as
described in this prospectus. The proceeds from the old notes were used to
purchase $150 million face amount of convertible preferred stock of Globalstar
Telecommunications Limited and to pursue satellite service opportunities
worldwide. You will receive in exchange for the old notes new notes in like
principal amount. The old notes surrendered in exchange for new notes will be
retired and canceled and cannot be reissued. Accordingly, the issuance of the
new notes will not result in any change in the indebtedness of Loral.
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CAPITALIZATION
The following table presents, as of December 31, 1998, the actual cash and
cash equivalents and capitalization of Loral and as adjusted to give effect to
the net proceeds of the offering of the old notes and Loral's purchase of $150
million face amount of convertible preferred stock of Globalstar
Telecommunications Limited.
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1998
-------------------------
ACTUAL AS ADJUSTED
---------- -----------
(IN THOUSANDS)
<S> <C> <C>
Cash and cash equivalents............................. $ 546,772 $ 743,772
========== ==========
Debt
Recourse debt(1)
Term loan(2)(3).................................. $ 275,000 $ 275,000
Revolving credit facility(2)(3).................. 205,000 205,000
Note purchase facility(3)........................ 126,657 126,657
Other(3)(4)...................................... 15,623 15,623
9 1/2% senior notes due 2006 ($350 million
principal amount).............................. -- 343,000
---------- ----------
Total recourse debt............................ 622,280 965,280
---------- ----------
Non-recourse debt(5)
Loral Orion 11 1/4% senior notes due 2007 ($443
million principal amount)...................... 507,573 507,573
Loral Orion 12 1/2% senior discount notes due
2007 ($484 million principal amount)........... 408,812 408,812
Loral Orion -- other............................. 17,110 17,110
---------- ----------
Total non-recourse debt........................ 933,495 933,495
---------- ----------
Total debt, including current portion....... 1,555,775 1,898,775
Shareholders' equity.................................. 2,935,721 2,935,721
---------- ----------
Total capitalization.................................. $4,491,496 $4,834,496
========== ==========
</TABLE>
- -------------------------
(1) Includes debt of Loral SpaceCom Corporation and its subsidiaries.
(2) Loral SpaceCom Corporation has an $850 million credit facility. The facility
consists of a $500 million revolving credit facility, a $275 million term
loan facility and a $75 million letter of credit facility.
(3) See Note 7 of Loral's 1998 annual consolidated financial statements
incorporated by reference in this prospectus.
(4) In addition, Loral has a $115 million secured standby credit facility, which
was undrawn as of December 31, 1998, supporting a guarantee of a $115
million term loan.
(5) In connection with the Loral Orion acquisition, Loral did not assume Loral
Orion's senior notes and senior discount notes or Loral Orion's other debt.
Such debt remains outstanding and is non-recourse to Loral. The carrying
value of the Loral Orion senior notes and senior discount notes was
increased to reflect a fair value adjustment aggregating $153 million based
on quoted market prices at the date of acquisition.
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BUSINESS
Loral is one of the world's leading satellite communications companies
operating in four business segments:
SATELLITE MANUFACTURING AND TECHNOLOGY
Space Systems/Loral, our wholly-owned subsidiary is a worldwide leader in
the design, manufacture and integration of satellites and space systems. Space
Systems/Loral draws on a 40-year history, during which satellites manufactured
by Space Systems/Loral have achieved more than 650 years of cumulative on-orbit
experience. Space Systems/Loral manufactures satellites that provide
telecommunications, weather forecasting, and direct broadcast services. Space
Systems/Loral is the leading supplier of satellites to Intelsat, an
international consortium of 135 member nations which is currently the world's
largest operator of communications satellites.
Space Systems/Loral has a reputation for technical excellence, a long
record of reliable performance and offers its customers competitive pricing and
on-orbit delivery packages. We believe that Space Systems/Loral's advanced
manufacturing and testing facilities and long-term customer relationships have
enabled it to compete effectively in the commercial space systems marketplace.
FIXED SATELLITE SERVICES
We provide fixed satellite services through our wholly-owned subsidiaries,
Loral Skynet and Loral Orion, Inc., and our affiliate, Satelites Mexicanos, S.A.
de C.V., which together with the newly founded Europe*Star joint venture between
us and Alcatel, comprise the Loral Global Alliance. The Loral Global Alliance
provides for cross-selling arrangements among its members' respective sales
forces and for cooperative marketing and promotional activities to offer
customers "one stop shopping" for their local, regional and global needs.
Loral Global Alliance members currently have seven satellites in orbit. In
addition, Loral Skynet and Loral Orion expect to launch three additional
satellites in the next six months. Together, these satellites will have
footprints covering virtually all of the world's population.
Customers in the developed world use our geosynchronous satellites
(satellites whose high orbits enable them to remain fixed over a single point
over the earth's equator) primarily to distribute television programming and to
collect live video feeds from breaking news and sporting events. In the
developing world a large portion of geosynchronous satellite capacity is also
dedicated to long-distance telephone service. Geosynchronous satellites are
increasingly used for international Internet communications, high-speed data
services and for business and educational television.
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DATA SERVICES
Through our data services segment, which is a business in development, we
intend to capitalize on the increasing worldwide demand for information and
Internet access by providing satellite-based end-to-end customer solutions
through Loral Orion and CyberStar. Loral Orion is a leading provider of
satellite-based data transport services in Europe, providing multinational
corporations with managed communications networks capable of carrying high-
speed data, fax, video teleconferencing, voice and other specialized services.
Loral Orion also provides the fast growing Internet service provider market with
Internet access via its satellites. With the launch of Orion 3 and Orion 2,
which is expected to occur in the second and third quarters of 1999,
respectively, Loral Orion will expand its service offering into Asia and Latin
America.
Our subsidiary, CyberStar, provides a high-speed data communications
system. CyberStar will offer its customers a variety of services that enhance
corporate communications and provide for the efficient, secure and timely
exchange of information. We own approximately 82% of CyberStar and act as its
managing general partner.
GLOBAL MOBILE TELEPHONY
Globalstar has begun to launch and is preparing to operate an innovative
satellite constellation that will create a wireless digital telephone system
serving most of the populated areas of the world. The Globalstar(TM) System has
now launched 16 of the 52 satellites (including four in-orbit spares) that will
complete its full constellation, and is scheduled to commence service in
September 1999 with at least 32 satellites. We own approximately 43% of
Globalstar and act as its managing general partner.
Globalstar service will be marketed through service providers which
Globalstar expects will focus their efforts on extending service to the millions
of people who currently lack basic telephone service. Accordingly, Globalstar
plans to keep its wholesale price for capacity low and to provide service both
to mobile handsets and fixed terminals in remote locations.
Globalstar satellites orbit the earth at much lower altitudes than
geosynchronous satellites and move relative to the earth's surface.
Consequently, the low orbit satellites in Globalstar's constellation are
designed with the ability to hand calls off from one satellite to another to
provide continuous coverage.
BUSINESS STRATEGY
Our goal is to assemble the building blocks essential to the creation of a
seamless, global networking capability for the information age. Our strategy is
to capitalize on our innovative capabilities, market position and advanced
technologies to offer value-added satellite-based services as part of the
evolving worldwide communications networks. In addition, we plan to form
strategic
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alliances with major telecommunications service providers and equipment
manufacturers in order to enhance and expand our satellite communications
service opportunities.
We believe that demand for satellite-based communications services will
continue to grow due to:
- growing demand for Internet and intranet services, especially outside the
United States;
- increased size and scope of television programming distribution;
- worldwide deregulation of telecommunications markets;
- continuing technological advancement; and
- accelerating demand for high speed data services.
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THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
We sold the old notes on January 21, 1999 to the initial purchasers, who
placed the old notes with certain institutional investors. In connection with
this sale, we entered into a registration rights agreement with the initial
purchasers. Under this registration rights agreement we agreed, for the benefit
of the holders of the old notes, that we would, at our sole cost, within 90 days
following the original issuance of the old notes, file with the SEC an exchange
offer registration statement -- of which this prospectus is a part -- under the
Securities Act. This exchange offer registration statement is filed with respect
to an issue of a series of our new notes identical in all material respects to
the series of old notes. We agreed further that we would use our reasonable best
efforts to cause the exchange offer registration statement to become effective
under the Securities Act at the earliest possible time, but in no event later
than 210 days following the original issuance of the old notes. Upon the
effectiveness of the exchange offer registration statement, we will offer to the
holders of the old notes the opportunity to exchange their old notes for a like
principal amount of new notes. The new notes will be issued without a
restrictive legend and may, subject to certain exceptions described below, be
reoffered and resold by their holders without restrictions or limitations under
the Securities Act.
RESALE OF THE NEW NOTES
Each holder desiring to participate in the exchange offer will be required
to represent, among other things, that
(1) it is not an "affiliate" (as defined in Rule 405 of the Securities Act)
of ours;
(2) it is not engaged in, and does not intend to engage in, and has no
arrangement or understanding with any person to participate in, a
distribution of the new notes; and
(3) it is acquiring the new notes in the ordinary course of its business.
A holder unable to make the above representations is referred to as a
restricted holder. A restricted holder will not be able to participate in the
exchange offer, and may only sell its old notes under a registration statement
containing the selling securityholder information required by Item 507 of
Regulation S-K of the Securities Act, or under an exemption from the
registration requirement of the Securities Act.
Each participating broker-dealer is required to acknowledge in the letter
of transmittal that it acquired the old notes as a result of market-making
activities or other trading activities and that it will deliver a prospectus in
connection with the resale of the new notes. Based upon interpretations by the
staff of the SEC, we believe that new notes issued under the exchange offer to
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<PAGE> 30
participating broker-dealers may be offered for resale, resold, and otherwise
transferred by a participating broker-dealer upon compliance with the prospectus
delivery requirements, but without compliance with the registration requirements
of the Securities Act.
We have agreed that for a period of 180 days following completion of the
exchange offer we will make this prospectus available to participating broker-
dealers for use in connection with any such resale. During the period, delivery
of this prospectus, as it may be amended or supplemented, will satisfy the
prospectus delivery requirements of a participating broker-dealer engaged in
market-making or other trading activities.
Based upon interpretations by the staff of the SEC, we believe that new
notes issued pursuant to the exchange offer may be offered for resale, resold
and otherwise transferred by a holder of the new notes -- other than a
participating broker-dealer -- without compliance with the registration and
prospectus delivery requirements of the Securities Act.
If prior to the completion of the exchange offer, existing SEC
interpretations are changed in such a way that the new notes received by holders
other than restricted holders in the exchange offer are not or would not be,
upon receipt, transferable by each such holder without restriction under the
Securities Act, we could file with the SEC a shelf registration statement. We
are further required under the exchange offer registration rights agreement to
use our reasonable best efforts to cause the shelf registration statement to be
declared effective at the earliest possible time, but in no event later than 210
days after such obligation arises and to keep such shelf registration
continuously effective for a period ending on the earlier of the second
anniversary of the issuance of the old notes or when there are no longer any
registrable securities outstanding.
Registrable securities means the old notes, unless
- the old notes are sold pursuant to Rule 144 -- or any successor
provision -- under the Securities Act under circumstances in which any
legend borne by such notes relating to restrictions on their
transferability, under the Securities Act or otherwise, is removed by us,
- or in accordance with the indenture,
- or if the notes are eligible to be sold pursuant to paragraph (k) of Rule
144, or
- or when these notes shall cease to be outstanding.
SHELF REGISTRATION STATEMENT
If the shelf registration statement is filed, we will provide to each
holder of registrable securities covered by the shelf registration statement
copies of any shelf registration statement or any prospectus which is a part of
the shelf
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registration statement. We will further notify each holder when the shelf
registration statement has become effective and take other actions as are
required to permit unrestricted resales of registrable securities. A holder of
registrable securities that sells those registrable securities pursuant to the
shelf registration statement generally will be required to be named as a selling
security holder in the related prospectus and to deliver a prospectus to the
purchaser. This holder will also be subject to some of the civil liability
provisions under the Securities Act in connection with these sales and will be
bound by the provisions of the exhange offer registration rights agreement which
are applicable to it, including some indemnification obligations. In addition,
holders of registrable securities will be required to deliver information to be
used in connection with the shelf registration statement and to provide comments
on the shelf registration statement within the time periods set forth in the
exchange offer registration rights agreement in order to have their registrable
securities included in the shelf registration statement and benefit from the
provisions regarding liquidated damages, if any, set forth in the following
paragraph.
If
(1) we are required to file the shelf registration statement and
(2) the shelf registration has not become effective or been declared
effective by the SEC on or before the 210th day after the obligation to
file a shelf registration statement arises, or
(3) the shelf registration statement is filed and declared effective but
shall thereafter cease to be effective -- except as specifically
permitted in the exchange offer registration rights
agreement -- without being succeeded promptly by an additional
registration statement filed and declared effective, then interest
referred to as Liquidated Damages will accrue in addition to any stated
interest on the Securities.
We call each of the events referred to in clauses (1) through (3) a
"Registration Default." Liquidated Damages will accrue at the rate of $.05 per
week per $1,000 principal amount of the notes. It will accrue for the period
from the occurrence of the Registration Default until such time as no
Registration Default is in effect, after which time no Liquidated Damages will
accrue. After the first 90-day period during which Liquidated Damages accrue,
Liquidated Damages will increase by an additional $.05 per week per $1,000 of
principal amount of the notes, provided that Liquidated Damages will not exceed
a maximum of $.50 per week per $1,000 principal amount of the notes. The
Liquidated Damages will be payable in cash semi-annually in arrears on each
March 15 and September 15 in accordance with the exchange offer registration
rights agreement. Liquidated Damages will be paid at the increased rate until
the shelf registration has become or has been declared effective.
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Payment of Liquidated Damages is the sole remedy available to the holders
of registrable securities in the event that we do not comply with the deadlines
set forth in the exchange offer registration rights agreement with respect to
the registration of registrable securities for resale under the shelf
registration statement.
BERMUDA REGULATORY REQUIREMENTS
The exchange offer will be subject to the filing of a copy of this
prospectus with the Registrar of Companies in Bermuda, together with
confirmation from our Bermuda attorneys that the SEC, as a competent regulatory
authority under section 26(2)(b) of the Companies Act 1981, has received or
otherwise accepted this prospectus as a basis for offering the new notes to the
public.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this prospectus
and in the letter of transmittal, we will accept any and all old notes validly
tendered and not withdrawn prior to 5:00 p.m., New York City time, on the
expiration date. We will issue $1,000 principal amount at stated maturity of new
notes in exchange for each $1,000 principal amount at stated maturity of
outstanding old notes accepted in the exchange offer. Holders may tender some or
all of their old notes pursuant to the exchange offer. However, old notes may be
tendered only in integral multiples of $1,000 at stated maturity.
The form and terms of the new notes will be identical in all material
respects (including principal amount, interest rate, maturity and ranking) to
the terms of the old notes for which they may be exchanged pursuant to the
exchange offer, except that the new notes will have been registered under the
Securities Act. Therefore, they will not bear legends restricting their transfer
and will not contain terms providing for an increase in the interest rate on the
old notes under circumstances described in the exchange offer registration
rights agreement. The new notes will evidence the same debt as the old notes and
will be entitled to the benefits of the indenture under which the old notes
were, and the new notes will be, issued.
As of the date of this prospectus, $350 million aggregate principal amount
of the old notes is outstanding. We have fixed the close of business on
, 1999 as the record date for the exchange offer for purposes
of determining the persons to whom this prospectus, together with the letter of
transmittal, will initially be sent. As of the date of this prospectus, there
were registered holders of the old notes.
Holders of the old notes do not have any appraisal or dissenters' rights
under law or the indenture in connection with the exchange offer. We intend to
conduct the exchange offer in accordance with the applicable requirements of the
Exchange Act and the rules and regulations of the SEC.
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Holders who tender old notes in the exchange offer will not be required to
pay a brokerage commission or fees or, subject to the instructions in the letter
of transmittal, transfer taxes with respect to the exchange of old notes
pursuant to the exchange offer. We will pay all charges and expenses, other than
certain applicable taxes, in connection with the exchange offer. See "-- Fees
and Expenses."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "expiration date" shall mean 5:00 p.m., New York City time, on
, 1999, unless we will, in our reasonable discretion, extend the
exchange offer, in which case the term expiration date will mean the latest date
and time to which the exchange offer is extended.
In order to extend the exchange offer, we will notify the exchange agent of
any extension by oral or written notice and will make a public announcement of
this fact prior to 9:00 a.m., New York City time, on the next business day after
each previously scheduled expiration date, unless otherwise required by
applicable law or regulation.
We reserve the right, in our reasonable discretion,
(1) to delay accepting any old notes, to extend the exchange offer or, if
in our reasonable judgment, any of the conditions described below under
the caption "-- Conditions" are not satisfied, to terminate the
exchange offer, by giving oral or written notice of this delay,
extension or termination to the exchange agent, or
(2) to amend the terms of the exchange offer in any manner. Any such delay
in acceptance, extension, termination or amendment will be followed as
promptly as practicable by a public announcement thereof.
If the exchange offer is amended in a manner determined by us to constitute
a material change, we will promptly disclose such amendment by means of a
prospectus supplement that will be distributed to the registered holders. In
addition, we will extend the exchange offer for a period of five to ten business
days, depending upon the significance of the amendment and the manner of
disclosure to the registered holders, if the exchange offer would otherwise
expire during such five to ten business day period.
Without limiting the manner in which we may choose to make a public
announcement of any delay, extension, termination or amendment of the exchange
offer, we have no obligation to publish, advertise or otherwise communicate any
such public announcement, other than by making a timely release to the Dow Jones
News Service.
PROCEDURES FOR TENDERING
Only a holder of old notes may tender such old notes in the exchange offer.
A holder who wishes to tender old notes for exchange pursuant to the
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<PAGE> 34
exchange offer must transmit a properly completed and duly executed letter of
transmittal, or a facsimile thereof, together with any required signature
guarantees, or, in the case of a book-entry transfer, agent's message, and any
other required documents, to the exchange agent prior to midnight, New York City
time, on the expiration date. In addition, either
(1) certificates for such old notes must be received by the exchange agent
prior to the expiration date, along with the letter of transmittal,
(2) a timely confirmation of a book-entry transfer of these old notes into
the exchange agent's account at The Depository Trust Company ("DTC" or
the "Book-Entry Transfer Facility") pursuant to the procedure for
book-entry transfer described below, must be received by the exchange
agent prior to the expiration date or
(3) the holder must comply with the guaranteed delivery procedures
described below. To be tendered effectively, the old notes, or the
book-entry confirmation, as the case may be, the letter of transmittal
and other required documents must be received by the exchange agent at
the address set forth below under "-- Exchange Agent" prior to 5:00
p.m., New York City time, on the expiration date.
DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH ITS
PROCEDURE DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
DTC has authorized DTC participants that hold old notes on behalf of
beneficial owners of old notes through DTC to tender their old notes as if they
were holders. To effect a tender of old notes, DTC participants should either
(1) complete and sign the letter of transmittal (or a manually signed
facsimile thereof), have the signature thereon guaranteed if required
by the instructions to the letter of transmittal and mail or deliver
the letter of transmittal (or the manually signed facsimile) to the
exchange agent pursuant to the procedures set forth in "Procedures for
Tendering" or
(2) transmit their acceptance to DTC through the DTC Automated Tender Offer
Program for which the transaction will be eligible and follow the
procedures for book-entry transfer set forth in "-- Book-Entry
Transfer."
The tender by a holder will constitute an agreement between this holder and
us in accordance with the terms and subject to the conditions contained in this
prospectus and in the letter of transmittal.
The method of delivery of the old notes and the letter of transmittal and
all other required documents to the exchange agent is at the election and risk
of the holder. Instead of delivery by mail, it is recommended that holders use
an overnight or hand delivery service. In all cases, sufficient time should be
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allowed to assure delivery to the exchange agent before the expiration date. No
letter of transmittal or old notes, or book-entry confirmation, as the case may
be, should be sent to us.
Any beneficial owner whose old notes are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee, and who wishes
to tender, should contact the registered holder promptly and instruct the
registered holder to tender on the beneficial owner's behalf. If the beneficial
owner wishes to tender on his own behalf, the owner must, prior to completing
and executing the letter of transmittal and delivering the beneficial owner's
old notes, either make appropriate arrangements to register ownership of the old
notes in this owner's name or obtain a properly completed bond power from the
registered holder. The transfer of registered ownership may take considerable
time.
If the letter of transmittal is signed by a person other than the
registered holder of any old notes listed therein, these old notes must be
endorsed or accompanied by a properly completed bond power and signed by the
registered holder as the registered holder's name appears on the old notes.
If the letter of transmittal or any old notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, these
persons should so indicate when signing unless waived by us. Evidence
satisfactory to us of their authority so to act must be submitted with the
letter of transmittal.
Signatures on a letter of transmittal or a notice of withdrawal, as the
case may be, must be guaranteed by an eligible institution unless the old notes
tendered pursuant thereto are tendered
(1) by a registered holder who has not completed the box entitled "Special
Issuance Instructions" or "Special Delivery Instructions" on the letter
of transmittal, or
(2) for the account of an eligible institution. In the event that
signatures on a letter of transmittal or a notice of withdrawal, as the
case may be, are required to be guaranteed, such guarantee must be by a
member firm of a registered national securities exchange or of the
National Association of Securities Dealers, Inc., a commercial bank or
trust company having an office or correspondent in the United States or
an "eligible guarantor institution" within the meaning of Rule 17Ad-5
under the Exchange Act (an "Eligible Institution").
We will determine all questions as to the validity, form, eligibility,
including time of receipt, acceptance and withdrawal of tendered old notes in
our sole discretion, which determination shall be final and binding. We reserve
the absolute right to reject any and all old notes not properly tendered or any
old notes our acceptance of which would, in the opinion of our counsel, be
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unlawful. We also reserve the right to waive any defects, irregularities or
conditions of tender as to particular old notes. Our interpretation of the terms
and conditions of the exchange offer, including the instructions in the letter
of transmittal, shall be final and binding on all parties. Unless waived, any
defects or irregularities in connection with the tender of old notes must be
cured within the time as we shall determine. Neither we, the exchange agent nor
any other person shall incur any liability for failure to give notice of any
defect or irregularity with respect to any tender of old notes. Tenders of old
notes will not be deemed to have been made until such defects or irregularities
have been cured or waived. Any old notes received by the exchange agent that are
not properly tendered and as to which the defects or irregularities have not
been cured or waived will not be deemed to have been properly tendered. Any old
notes received by the exchange agent that are not properly tendered and as to
which the defects or irregularities have not been cured or waived will be
returned by the exchange agent to the tendering holders, unless otherwise
provided in the letter of transmittal, as soon as practicable following the
expiration date.
By tendering, each holder will represent to us, among other things, that it
is not a restricted holder. Each participating broker-dealer must acknowledge
that it will deliver a prospectus in connection with any resale of the new
notes. See "Plan of Distribution."
ACCEPTANCE OF OLD NOTES FOR EXCHANGE; DELIVERY OF NEW NOTES
For each old note accepted for exchange, the holder of this old note will
receive a new note having a principal amount equal to that of the surrendered
old note. For purposes of the exchange offer, we shall be deemed to have
accepted properly tendered old notes for exchange when, as and if we have given
oral or written notice thereof to the exchange agent.
In all cases, the issuance of new notes for old notes that are accepted for
exchange pursuant to the exchange offer will be made only after timely receipt
by the exchange agent of certificates for the old notes or a timely book-entry
confirmation of these old notes into the exchange agent's account at the book-
entry transfer facility, a properly completed and duly executed letter of
transmittal or agent's message and all other required documents. If any tendered
old notes are not accepted for any reason set forth in the terms and conditions
of the exchange offer, or if old notes are submitted for a greater principal
amount than the holder desires to exchange, these unaccepted or non-exchanged
old notes will be returned without expense to the tendering holder of these
notes (or, in the case of old notes tendered by book-entry transfer into the
exchange agent's account at the book-entry transfer facility, pursuant to the
book-entry transfer procedures described below. These non-exchanged old notes
will be credited to an account maintained with such book-entry transfer facility
as promptly as practicable after the expiration date.
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BOOK-ENTRY TRANSFER
The exchange agent will establish a new account or utilize an existing
account with respect to the old notes at DTC promptly after the date of this
prospectus. Any financial institution that is a participant in DTC and whose
name appears on a security position listing as the owner of old notes may make a
book-entry tender of old notes by causing DTC to transfer such old notes into
the exchange agent's account in accordance with DTC's procedures for such
transfer. However, although the tender of old notes may be effected through
book-entry transfer into the exchange agent's account at DTC, the letter of
transmittal, or a manually signed facsimile thereof, properly completed and
validly executed, with any required signature guarantees, or an agent's message
in lieu of the letter of transmittal, and any other required documents, must, in
any case, be received by the exchange agent at its address set forth below under
the caption "Exchange Agent" on or prior to the expiration date, or the
guaranteed delivery procedures described below must be complied with. The
confirmation of a book-entry transfer of old notes into the exchange agent's
account at DTC as described above is referred to herein as a "Book-Entry
Confirmation." Delivery of documents to DTC in accordance with DTC's procedures
does not constitute delivery to the exchange agent.
The term "agent's message" means a message transmitted by DTC to, and
received by, the exchange agent and forming a part of a book-entry confirmation,
which states that DTC has received an express acknowledgment from the
participant in DTC tendering the old notes stating
(1) the aggregate principal amount of old notes which have been tendered by
the participant,
(2) that this participant has received and agrees to be bound by the term
of the letter of transmittal and
(3) that we may enforce such agreement against the participant.
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their old notes and
(1) whose old notes are not immediately available,
(2) who cannot deliver their old notes, the letter of transmittal or any
other required documents to the exchange agent prior to the expiration
date or
(3) who cannot complete the procedure for book-entry transfer on a timely
basis,
may effect a tender if:
(a) the tender is made through an eligible institution;
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(b) prior to the expiration date, the exchange agent receives from such
eligible institution a properly completed and duly executed notice of
guaranteed delivery, by facsimile transmission, mail or hand
delivery, setting forth the name and address of the holder, the
certificate number(s) of the old notes and the principal amount of
old notes tendered, stating that the tender is being made thereby and
guaranteeing that, within three New York Stock Exchange trading days
after the expiration date, the letter of transmittal (or facsimile
thereof) or, in the case of a book-entry transfer, an agent's
message, together with the certificate(s) representing the old notes,
or a book-entry confirmation, as the case may be, and any other
documents required by the letter of transmittal will be deposited by
the eligible institution with the exchange agent; and
(c) such properly completed and executed letter of transmittal (or
facsimile thereof) or, in the case of a book-entry transfer, an
agent's message, as well as the certificate(s) representing all
tendered old notes in proper form for transfer, or a Book-Entry
Confirmation, as the case may be, and all other documents required by
the letter of transmittal are received by the exchange agent within
three New York Stock Exchange trading days after the expiration date.
WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of old notes may be withdrawn
at any time prior to 5:00 p.m., New York City time, on the expiration date.
To withdraw a tender of old notes in the exchange offer, a written or
facsimile transmission notice of withdrawal must be received by the exchange
agent at its address set forth herein prior to 5:00 p.m., New York City time, on
the expiration date. Any notice of withdrawal must
(1) specify the name of the person having deposited the old notes to be
withdrawn (the "Depositor"),
(2) identify the old notes to be withdrawn (including the certificate
number or numbers and principal amount of such old notes),
(3) be signed by the holder in the same manner as the original signature on
the letter of transmittal by which such old notes were tendered
(including any required signature guarantees) or be accompanied by
documents of transfer sufficient to have the trustee with respect to
the old notes register the transfer of these old notes into the name of
the person withdrawing the tender and
(4) specify the name in which any of the old notes are to be registered, if
different from that of the Depositor.
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If certificates for old notes have been delivered or otherwise identified
to the exchange agent, then, prior to the release of such certificates, the
withdrawing holder must also submit the serial numbers of the particular
certificates to be withdrawn and a signed notice of withdrawal with signatures
guaranteed by an eligible institution unless the holder is an eligible
institution. If old notes have been tendered pursuant to the procedure for
book-entry transfer described above, any notice of withdrawal must specify the
name and number of the account at the book-entry transfer facility to be
credited with the withdrawn old notes and otherwise comply with the procedures
of the book-entry transfer facility. We will determine in our sole discretion
all questions as to the validity, form and eligibility (including time of
receipt) of those notices, which determination shall be final and binding on all
parties. Any old notes so withdrawn will be deemed not to have been validly
tendered for purposes of the exchange offer and no new notes will be issued with
respect thereto unless the old notes so withdrawn are validly retendered.
Properly withdrawn old notes may be retendered by following one of the
procedures described above.
Any old notes which have been tendered but which are not accepted for
payment due to withdrawal, rejection of tender or termination of the exchange
offer will be returned as soon as practicable after withdrawal, rejection of
tender or termination of the exchange offer to the holder of the old notes,
without cost to the holder. In the case of old notes tendered by book-entry
transfer into the exchange agent's account at the book-entry transfer facility
pursuant to the book-entry transfer procedures described above, the old notes
will be credited to an account maintained with such book-entry transfer facility
for the old notes.
CONDITIONS
Notwithstanding any other term of the exchange offer, we are not required
to accept for exchange, or exchange new notes for, any old notes, and may
terminate the exchange offer as provided herein before the acceptance of such
old notes, if:
(a) any action or proceeding is instituted or threatened in any court or by
or before any governmental agency with respect to the exchange offer
which, in our reasonable judgment, might materially impair our ability
to proceed with the exchange offer or materially impair the
contemplated benefits of the exchange offer to us, or any material
adverse development has occurred in any existing action or proceeding
with respect to us or any of our subsidiaries;
(b) any change or any development involving a prospective change in our
business or our financial affairs or in that of any of our subsidiaries
has occurred which, in our reasonable judgment, might materially impair
our ability to proceed with the exchange offer or materially impair the
contemplated benefits of the exchange offer to us;
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(c) any law, statute, rule or regulation is proposed, adopted or enacted,
which, in our reasonable judgment, might materially impair our ability
to proceed with the exchange offer or materially impair the
contemplated benefits of the exchange offer to us; or
(d) any governmental approval has not been obtained, which approval we, in
our reasonable discretion, shall deem necessary for the consummation of
the exchange offer as contemplated hereby.
The foregoing conditions are for our sole benefit and may be asserted by us
regardless of the circumstances giving rise to any such condition or may be
waived by us in whole or in part at any time and from time to time in our
reasonable discretion. Our failure at any time to exercise any of the foregoing
rights shall not be deemed a waiver of the respective right and each of these
rights shall be deemed an ongoing right which may be asserted at any time and
from time to time.
If we determine in our reasonable discretion that any of the conditions are
not satisfied, we may
(1) refuse to accept any old notes and return all tendered old notes to the
tendering holders,
(2) extend the exchange offer and retain all old notes tendered prior to
the expiration of the exchange offer, subject, however, to the rights
of holders to withdraw their tendered old notes (see "-- Withdrawal of
Tenders" above) or
(3) waive the unsatisfied conditions with respect to the exchange offer and
accept all properly tendered old notes which have not been withdrawn.
If such waiver constitutes a material change to the exchange offer, we
will promptly disclose this waiver by means of a prospectus supplement
that will be distributed to the registered holders. We will also extend
the exchange offer for a period of five to ten business days, depending
upon the significance of the waiver and the manner of disclosure to the
registered holders, if the exchange offer would otherwise expire during
such five to ten business day period.
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EXCHANGE AGENT
The Bank of New York has been appointed as exchange agent for the exchange
offer. Requests for additional copies of this prospectus or of the letter of
transmittal should be directed to the exchange agent, addressed as follows:
To: The Bank of New York
By Hand/Overnight Courier:
The Bank of New York
101 Barclay Street
Corporate Trust Window
Ground Level
New York, NY 10286
Attn: Reorganization Section
Facsimile Transmission
(Eligible Institutions Only)
(212) 571-3080
Confirm by Telephone: (212) 815-6333
FEES AND EXPENSES
We will bear the expenses of soliciting tenders. We have not retained any
dealer-manager in connection with the exchange offer and will not make any
payments to brokers, dealers or others soliciting acceptances of the exchange
offer. We, however, will pay the exchange agent reasonable and customary fees
for its services and will reimburse it for its reasonable out-of-pocket expenses
in connection therewith.
We will also pay the cash expenses to be incurred in connection with the
exchange offer. These expenses include fees and expenses of the exchange agent
and trustee, accounting and legal fees and printing costs, among others.
We will pay all transfer taxes, if any, applicable to the exchange of old
notes pursuant to the exchange offer. If, however, certificates representing new
notes or old notes for principal amounts not tendered or accepted for exchange
are to be delivered to, or are to be issued in the name of, any person other
than the registered holder of the old notes tendered, the amount of any such
transfer taxes (whether imposed on the registered holder or any other persons)
will be payable by the tendering holder. The same applies if tendered old notes
are registered in the name of any person other than the person signing the
letter of transmittal, or if a transfer tax is imposed for any reason other than
the exchange of old notes pursuant to the exchange offer. If satisfactory
evidence of payment of these taxes or exemption from these taxes is not
submitted with the letter of transmittal, the amount of these transfer taxes
will be billed directly to the tendering holder.
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ACCOUNTING TREATMENT
The new notes will be recorded at the same carrying value as the old notes,
which is the principal amount as reflected in our accounting records on the date
of the exchange. Accordingly, no gain or loss for accounting purposes will be
recognized. The expenses of the exchange offer and the unamortized expenses
related to the issuance of the old notes will be amortized over the term of the
notes.
REGULATORY APPROVALS
We do not believe that the receipt of any material federal or state
regulatory approvals will be necessary in connection with the exchange offer,
other than the effectiveness of the exchange offer registration statement under
the Securities Act.
OTHER
Participation in the exchange offer is voluntary and holders of old notes
should carefully consider whether to accept the terms and conditions of the
exchange offer. Holders of the old notes are urged to consult their financial
and tax advisors in making their own decisions on what action to take with
respect to the exchange offer.
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DESCRIPTION OF THE NOTES
The new notes are issued pursuant to the indenture, dated as of January 15,
1999, between Loral and The Bank of New York, as trustee. The terms of the new
notes are identical in all material respects to the terms of the old notes,
except that the new notes have been registered under the Securities Act and,
therefore,
- will not bear legends restricting their transfer and
- will not contain certain terms providing for an increase in the interest
rate under the circumstances described in the registration rights
agreement.
The indenture and its associated documents contain the full legal text of
the matters described in this section. A copy of the indenture has been filed
with the SEC as part of our registration statement. See "Where You Can Find More
Information" on page ii on how to obtain a copy.
The following description is a summary of the material provisions of the
indenture. It does not restate that agreement in its entirety. In this section,
capitalized words signify defined terms that have been given special meaning in
the indenture. We describe the meaning only for the most important terms under
"Certain Definitions."
For purposes of this section, "Loral" refers to Loral Space &
Communications Ltd. and does not include its subsidiaries except for purposes of
financial data on a consolidated basis.
BRIEF DESCRIPTION OF THE NOTES
These notes:
- are general unsecured obligations of Loral;
- will mature on January 15, 2006;
- are structurally junior in right of payment to all existing and future
Indebtedness of Loral's subsidiaries, including Indebtedness incurred
under the Credit Agreement;
- are equal in right of payment with all existing and future senior
Indebtedness of Loral (except as to assets pledged to secure such
Indebtedness); and
- are senior in right of payment to any future Indebtedness which is by its
terms junior in right of payment to any senior Indebtedness of Loral.
As of the date of this prospectus, all of Loral's subsidiaries are
"Restricted Subsidiaries." However, under the circumstances described below
under the caption "-- Covenants -- Designation of Restricted and Unrestricted
Subsidiaries," Loral is permitted to designate certain of its subsidiaries as
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<PAGE> 44
"Unrestricted Subsidiaries." Unrestricted Subsidiaries will not be subject to
many of the restrictive covenants in the indenture.
The indenture under which the notes are issued permits Loral and its
Restricted Subsidiaries (based on Loral's December 31, 1998 financial condition)
to incur at least $3.5 billion of additional Indebtedness, and does not limit
the amount of debt Loral's Restricted Subsidiaries may incur which is without
legal recourse to Loral. Indebtedness incurred by Loral's subsidiaries will be
effectively senior to the notes as to the assets of the borrowing subsidiary.
Such Indebtedness may also be secured, in which case it will be effectively
senior to the notes as to these assets. The other restrictive covenants
contained in the indenture contain similarly broad exceptions and
qualifications. For example, the indenture permits Loral to make investments in
affiliates that it does not control.
PRINCIPAL, MATURITY AND INTEREST
The indenture permits Loral to issue notes in a maximum aggregate principal
amount of $500 million. $350 million were issued in the offering on January 21,
1999. Loral has and will issue notes in denominations of $1,000 and integral
multiples of $1,000. The issued notes will mature on January 15, 2006.
Interest on the notes will accrue at the rate of 9 1/2% per annum and will
be payable semi-annually in arrears on January 15 and July 15, commencing on
July 15, 1999. Loral will make each interest payment to the holders of record on
the immediately preceding January 1 and July 1.
Interest on the notes will accrue from the Issue Date or, if interest has
already been paid, from the date it was most recently paid. Interest will be
computed on the basis of a 360-day year comprised of twelve 30-day months.
METHODS OF RECEIVING PAYMENTS ON THE NOTES
If the holder has given wire transfer instructions to Loral, it will pay
all principal, interest and premium payments on the holder's notes in accordance
with those instructions. All other payments on notes will be made at the office
or agency of the paying agent and registrar within the City and State of New
York unless Loral elects to make interest payments by check mailed to each
holder at the holder's address set forth in the register of holders.
PAYING AGENT AND REGISTRAR FOR THE NOTES
The trustee will initially act as paying agent and registrar. Loral may
change the paying agent or registrar without prior notice to the holders, and
Loral or any of its subsidiaries may act as paying agent or registrar.
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<PAGE> 45
TRANSFER AND EXCHANGE
A holder may transfer or exchange notes in accordance with the indenture.
The registrar and the trustee may require the holders, among other things, to
furnish appropriate endorsements and transfer documents and Loral may require
the holders to pay any taxes and fees required by law or permitted by the
indenture. Loral is not required to transfer or exchange any note selected for
redemption. Also, Loral is not required to transfer or exchange any note for a
period of 15 days before a selection of notes to be redeemed.
The registered holder of a note will be treated as the owner of it for all
purposes.
OPTIONAL REDEMPTION
Before January 15, 2002, Loral may on any one or more occasions redeem up
to 35% of the aggregate principal amount of notes originally issued under the
indenture at a redemption price of 109.500% of the principal amount thereof,
plus accrued and unpaid interest, Additional Amounts and Liquidated Damages, if
any, to the redemption date, with the net cash proceeds of one or more equity
offerings; provided that:
(1) at least 65% of the aggregate principal amount of notes originally
issued remain outstanding immediately after each such redemption,
excluding notes held by Loral and its subsidiaries; and
(2) the redemption must occur within 60 days of the date of the closing of
such equity offering.
Except according to the preceding paragraph and as described in "-- Special
Tax Redemption," the notes will not be redeemable at our option before January
15, 2003.
On or after January 15, 2003, Loral may redeem all or part of the notes
upon not less than 30 nor more than 60 days' notice, at the redemption prices
described in the table below plus accrued and unpaid interest, Additional
Amounts and Liquidated Damages, if any, to the applicable redemption date, if
redeemed during the twelve-month period beginning on January 15 of the years
indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
- ---- ----------
<S> <C>
2003........................................................ 104.750%
2004........................................................ 102.375%
2005 and thereafter......................................... 100.000%
</TABLE>
Redemption prices are expressed as percentages of principal amount.
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SPECIAL TAX REDEMPTION
If Loral determines, based upon an opinion of counsel, that it has become
or would become obligated to pay, on the next date on which any amount would be
payable with respect to a note, any Additional Amounts as a result of a change
in or an amendment to the laws (including any regulations promulgated under
these laws) of any relevant jurisdiction, or any change in or amendment to any
official position regarding the application or interpretation of these laws or
regulations, which change or amendment becomes effective on or after the date of
this prospectus and which change shall not have been disclosed to the public
before the date of this prospectus, and that this obligation cannot be avoided
by us taking reasonable measures Loral may redeem, at its option, all the
affected notes -- but, except pursuant to clause (c) below, not less than all
the affected notes -- on not less than 30 nor more than 60 days' notice, at 100%
of the principal amount thereof, plus accrued and unpaid interest, if any, and
Liquidated Damages, if any, to the date of redemption, subject to the right of
holders of record on the relevant record date to receive interest due on the
relevant interest payment date, (such optional redemption, a "Special Tax
Redemption"); provided, however, that
(a) no such notice of redemption may be given earlier than 60 days prior to
the earliest date on which Loral would be obligated to pay such
Additional Amounts were a payment in respect of the notes then due,
(b) at the time any such Special Tax Redemption notice is given, the
obligation to pay such Additional Amounts must remain in effect; and
(c) Loral may redeem the affected notes in part if it redeems all affected
notes held by holders in respect of which, as a result of the
foregoing, Loral is or would be obligated to pay Additional Amounts
based on a withholding tax rate in excess of 10%.
Notwithstanding the foregoing, Loral may not redeem the affected notes if
it is obligated to pay any Additional Amounts as a result of a change in or an
amendment to the laws, including regulations promulgated thereunder, or any
change in or amendment to any official position regarding the application or
interpretation of those laws or regulations, of a relevant jurisdiction that
occurs or is disclosed on or before the six month anniversary of the date on
which the relevant jurisdiction became a relevant jurisdiction. However, if
Loral reincorporates in the United States and Additional Amounts are payable
with respect to taxes imposed by the United States or any political subdivision
or taxing authority thereof or therein, this restriction on the Loral's ability
to redeem the affected notes shall not apply.
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Unless the change of law occurs or is disclosed before the date of such
reincorporation and shall not apply if, absent such reincorporation,
(a) Loral would nonetheless have been required to pay Additional Amounts
with respect to such affected notes in respect of such United States
taxes and
(b) without regard to this proviso, Loral would have been entitled to
redeem such affected notes under a Special Tax Redemption as a result
of such payment of Additional Amounts.
MANDATORY REDEMPTION
Loral is not required to make mandatory redemption or sinking fund payments
with respect to these notes.
ADDITIONAL AMOUNTS
All payments of principal of, premium, if any, Liquidated Damages, if any,
and interest on each note will be made free and clear of, and without
withholding or deduction for, any present or future taxes, duties, assessments
or governmental charges of whatever nature (collectively, "Taxes") imposed,
levied, collected, withheld or assessed by or within any jurisdiction in which
Loral is then incorporated (or the jurisdiction of incorporation of any
successor of Loral) or any other jurisdiction in which Loral (or Loral's
successor) are resident for tax purposes or any political subdivision or taxing
authority thereof or therein, unless such withholding or deduction is required
by law or by regulation or governmental policy having the force of law. In the
event that any such withholding or deduction in respect of principal, premium,
if any, liquidated damages, if any, or interest is so required, Loral, or any
successor, will pay those Additional Amounts as will result in receipt by each
holder of the notes of the gross amount as would have been received by the
holder or the beneficial owner with respect to this note, as applicable, had no
such withholding or deduction (including any withholding or deduction applicable
to Additional Amounts payable) been required, except that no Additional Amounts
will be payable for or on account of:
(1) Taxes that would not have been imposed but for
(a) the existence of any present or former connection between a holder
or a beneficial owner (or between a fiduciary, settler,
beneficiary, member or shareholder of, or possessor of a power
over, a holder, if the holder is an estate, trust, partnership or
corporation) and the relevant jurisdiction, including if this
holder (or such fiduciary, settler, beneficiary, member,
shareholder or possessor) is or has been a national, domiciliary
or resident of or treated as a resident thereof or having been
present or engaged in a trade or business therein or having had a
permanent establishment therein; or
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<PAGE> 48
(b) Section 881(c)(3)(A) of the Internal Revenue Code of 1986, as
amended (or any successor provision);
(2) any estate, inheritance, gift, sale, transfer or similar tax,
assessment or other governmental charge;
(3) any tax that is imposed or withheld by reason of a holder's failure or
a beneficial owner's failure to timely comply with Loral's request,
addressed to the holders (a) to provide reasonably required or
requested information concerning a holder's nationality, residence or
identity or those of a beneficial owner or (b) to make any reasonably
required or requested declaration, filing or claim or satisfy any
reasonably required or requested information or reporting requirement,
which, in the case of (a) or (b), is required or imposed by statute,
treaty, regulation or administrative practice of the taxing
jurisdiction as a precondition to exemption from all or part of such
tax; provided, however, that (i) providing information required by IRS
Forms W-8, 1001 and 4224 and any successors thereto and (ii) the
execution and delivery of such forms is deemed to be reasonably
required or requested; or
(4) any combination of (1), (2) and (3);
nor shall Additional Amounts be paid with respect to payment of the principal of
or any premium or interest on any such note, to any holder (including any
fiduciary or partnership) to the extent that the beneficial owner would not have
been entitled to such Additional Amounts had it been the holder of the note.
Where required by applicable law, Loral or any paying agent, as the case
may be, will also
(a) make such withholding or deduction in respect of any taxes and
(b) remit the full amount withheld or deducted to the relevant authority in
accordance with applicable law.
Loral will furnish to each holder, within 30 days after the date the
payment of any taxes is due pursuant to applicable law, certified copies of tax
receipts satisfactory to the trustee evidencing such payment by Loral.
Whenever there is mentioned in any context the payment of principal of or
any premium or interest on, or in respect of, a note, or the net proceeds
received from Loral on the sale or exchange of any note, such mention shall be
deemed to include mention of the payment of Additional Amounts provided for in
the indenture to the extent that, in such context, Additional Amounts are, were,
or would be payable in respect thereof pursuant to the indenture.
Loral will pay any present or future stamp, court or documentary taxes or
any other excise or property taxes, charges, or similar levies that arise in any
jurisdiction from the execution, delivery, enforcement or registration of the
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<PAGE> 49
notes or any other document or instrument relating thereto, or the receipt of
any payments with respect to the notes, excluding such taxes, charges, or
similar levies imposed by any jurisdiction outside of any jurisdiction in which
Loral or the paying agent are located or incorporated (except those resulting
from or required to be paid in connection with, the enforcement of the notes or
any other such document or instrument following the occurrence of any event of
default with respect to the notes), and has agreed to indemnify each holder for
any such taxes paid by the holder.
The foregoing obligations shall survive any termination, defeasance or
discharge of the indenture.
REPURCHASE AT THE OPTION OF HOLDERS
CHANGE OF CONTROL
If a Change of Control occurs, each holder will have the right to require
Loral to repurchase all or any part (equal to $1,000 or an integral multiple
thereof) of the holder's notes pursuant to a Change of Control Offer. In the
Change of Control Offer, Loral will offer a Change of Control Payment in cash
equal to 101% of the aggregate principal amount of notes to be repurchased plus
accrued and unpaid interest thereon and Liquidated Damages (if any), to the date
of purchase. Within ten days following any Change of Control, Loral will mail a
notice to each holder describing the transaction or transactions that constitute
the Change of Control and offering to repurchase notes on the Change of Control
Payment Date specified in such notice, pursuant to the procedures required by
the indenture and described in such notice. Loral will comply with the
requirements of Rule 14e-1 under the Exchange Act and any other securities laws
and regulations thereunder to the extent such laws and regulations are
applicable in connection with the repurchase of the notes as a result of a
Change of Control. To the extent that the provisions of any securities laws or
regulations conflict with the Change of Control provisions of the indenture,
Loral shall comply with the applicable securities laws and regulations and shall
not be deemed to have breached its obligations under the Change of Control
provisions of the indenture by virtue of such conflict.
On the Change of Control Payment Date, Loral will, to the extent lawful:
(1) accept for payment all notes or portions thereof properly tendered
pursuant to the Change of Control Offer;
(2) deposit with the paying agent an amount equal to the Change of Control
Payment in respect of all notes or portions thereof so tendered; and
(3) deliver or cause to be delivered to the trustee the notes so accepted
together with an Officers' Certificate stating the aggregate principal
amount of notes or portions thereof being purchased by Loral.
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<PAGE> 50
The paying agent will promptly mail to each holder so tendered the Change
of Control Payment for these notes, and the trustee will promptly authenticate
and mail (or cause to be transferred by book entry) to each holder a new note
equal in principal amount to any unpurchased portion of the notes surrendered,
if any; provided that each new note will be in a principal amount of $1,000 or
an integral multiple thereof.
Loral will publicly announce the results of the Change of Control Offer on
or as soon as practicable after the Change of Control Payment Date.
The provisions described above that require Loral to make a Change of
Control Offer following a Change of Control will be applicable regardless of
whether or not any other provisions of the indenture are applicable. Except as
described above with respect to a Change of Control, the indenture does not
contain provisions that permit Loral to require that Loral repurchases or
redeems the notes in the event of a takeover, recapitalization or similar
transaction.
Loral's other indebtedness may contain prohibitions of certain events that
would constitute a Change of Control. In addition, the exercise of a holder's
right to require Loral to repurchase the notes upon a Change of Control could
cause a default under or be restricted by other indebtedness, including the
Credit Agreement, even if the Change of Control itself does not, due to the
financial effect of such repurchases on Loral. Finally, Loral's ability to pay
cash to holders of notes upon a repurchase may be limited by Loral's then
existing financial resources.
Loral will not be required to make a Change of Control Offer upon a Change
of Control if a third party makes the Change of Control Offer in the manner, at
the times and otherwise in compliance with the requirements set forth in the
indenture applicable to a Change of Control Offer made by Loral and purchases
all notes validly tendered and not withdrawn under such Change of Control Offer.
The definition of Change of Control includes a phrase relating to the
direct or indirect sale, lease, transfer, conveyance or other disposition of
"all or substantially all" of the properties or assets of Loral and its
Restricted Subsidiaries taken as a whole. Although there is a limited body of
case law interpreting the phrase "substantially all," there is no precise
established definition of the phrase under applicable law. Accordingly, the
ability of a holder of notes to require Loral to repurchase such notes as a
result of a sale, lease, transfer, conveyance or other disposition of less than
all of the assets of Loral and its Restricted Subsidiaries taken as a whole to
another Person or group may be uncertain.
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ASSET SALES
Loral will not, and will not permit any Restricted Subsidiary to,
consummate an Asset Sale unless:
(1) Loral (or the Restricted Subsidiary, as the case may be) receives
consideration at the time of such Asset Sale at least equal to the fair
market value of the assets or Equity Interests issued or sold or
otherwise disposed of;
(2) such fair market value is (a) determined by two Officers of Loral if
the fair market value is less than $25 million or (b) determined by
Loral's Board of Directors and evidenced by a resolution of the Board
of Directors if the fair market value is $25 million or greater, and,
in each case, such fair market value is set forth in an Officers'
Certificate delivered to the trustee; and
(3) at least 75% of the consideration therefor received by Loral or such
Restricted Subsidiary is in the form of cash or Cash Equivalents. Only
for purposes of this clause (3), each of the following shall be deemed
to be cash:
(a) any liabilities (as shown on Loral's or such Restricted
Subsidiary's most recent balance sheet), of Loral or any
Restricted Subsidiary (other than contingent liabilities and
liabilities that are by their terms junior in right of payment to
the notes) that are assumed by the transferee of any such assets
pursuant to a customary novation agreement that releases Loral or
such Restricted Subsidiary from further liability;
(b) any securities, notes or other obligations received by Loral or
any such Restricted Subsidiary from such transferee that are
contemporaneously (subject to ordinary settlement periods)
converted by Loral or such Restricted Subsidiary into cash (to the
extent of the cash received in that conversion);
(c) any assets described in clause (2) or (4) of the next succeeding
paragraph;
(d) Marketable Securities; and
(e) Designated Other Permitted Consideration; provided that the
aggregate fair market value (as determined above) of such
Designated Other Permitted Consideration, taken together with the
fair market value at the time of receipt of all other Designated
Other Permitted Consideration received pursuant to this clause
(e), less the amount of net cash proceeds previously realized in
cash from prior Designated Other Permitted Consideration is less
than 5% of Loral's Consolidated Tangible Assets at the time of the
receipt of such Designated Other Permitted
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Consideration (with the fair market value of each item of
Designated Other Permitted Consideration being measured at the
time received and without giving effect to subsequent changes in
value).
Within 360 days after the receipt of any Net Proceeds from an Asset Sale,
Loral may apply (or, in the case of clause (2), (3) or (4) below, enter into a
binding commitment to apply) such Net Proceeds:
(1) to repay Indebtedness of Loral or any Restricted Subsidiary which is
not junior in right of payment to the notes;
(2) to acquire all or substantially all of the assets of, or a majority of
the Voting Stock of, another Permitted Business or to purchase Equity
Interests of a Restricted Subsidiary from another Person;
(3) to make a capital expenditure in a Permitted Business or to make an
Investment in a Permitted Venture; or
(4) to acquire or to acquire the right to use other long-term assets that
are used or useful in a Permitted Business.
Pending the final application of any such Net Proceeds, Loral may
temporarily reduce revolving credit borrowings or otherwise invest such Net
Proceeds in any manner that is not prohibited by the indenture.
Any Net Proceeds from Asset Sales that are not applied or invested as
provided in the second preceding paragraph will constitute "Excess Proceeds."
When the aggregate amount of Excess Proceeds exceeds $15 million, Loral will
make an Asset Sale Offer to all holders of notes and all holders of other
Indebtedness that is equal in right of payment with the notes containing
provisions similar to those set forth in the indenture with respect to offers to
purchase or redeem with the proceeds of sales of assets to purchase the maximum
principal amount of notes and such other Indebtedness which is equal in right of
payment to the notes that may be purchased out of the Excess Proceeds. The offer
price in any Asset Sale Offer will be equal to 100% of principal amount plus
accrued and unpaid interest and Liquidated Damages (if any) to the date of
purchase, and will be payable in cash. If any Excess Proceeds remain after
consummation of an Asset Sale Offer, Loral may use such Excess Proceeds for any
purpose not otherwise prohibited by the indenture. If the aggregate principal
amount of notes and such other Indebtedness which is equal in right of payment
to the notes tendered into such Asset Sale Offer exceeds the amount of Excess
Proceeds, the trustee shall select the notes and such other Indebtedness which
is equal in right of payment to the notes to be purchased on a proportional
basis based on the principal amount of notes and such other Indebtedness which
is equal in right of payment to the notes tendered. Upon completion of each
Asset Sale Offer, the amount of Excess Proceeds shall be reset at zero.
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Loral will comply with the requirements of Rule 14e-1 under the Exchange
Act and any other securities laws and regulations thereunder to the extent such
laws and regulations are applicable in connection with each repurchase of notes
pursuant to an Asset Sale Offer. To the extent that the provisions of any
securities laws or regulations conflict with the Asset Sales provisions of the
indenture, Loral will comply with the applicable securities laws and regulations
and will not be deemed to have breached its obligations under the Asset Sale
provisions of the indenture by virtue of such conflict.
SELECTION AND NOTICE
If less than all of the notes are to be redeemed at any time (other than as
permitted by the provisions of the indenture described under "-- Special Tax
Redemption"), the trustee will select notes for redemption as follows:
(1) if the notes are listed, in compliance with the requirements of the
principal national securities exchange on which the notes are listed;
or
(2) if the notes are not so listed, on a proportional basis, by lot or by
such other method as the trustee shall deem fair and appropriate.
No notes of $1,000 or less shall be redeemed in part. Notices of redemption
shall be mailed by first class mail at least 30 but not more than 60 days before
the redemption date to each holder of notes to be redeemed at its registered
address. Notices of redemption may not be conditional.
If any note is to be redeemed in part only, the notice of redemption that
relates to that note shall state the portion of the principal amount thereof to
be redeemed. A new note in principal amount equal to the unredeemed portion of
the original note will be issued in the name of the holder of the note upon
cancellation of the original note. Notes called for redemption become due on the
date fixed for redemption. On and after the redemption date, interest ceases to
accrue on notes or portions of them called for redemption.
COVENANTS
In the indenture, Loral agreed to certain restrictions that limit its and
its Restricted Subsidiaries' ability to:
(1) pay dividends;
(2) acquire Equity Interests of Loral or any of its Restricted
Subsidiaries;
(3) redeem Indebtedness of Loral which is junior in right of payment to
the notes;
(4) make Restricted Investments;
(5) incur Indebtedness;
(6) issue Preferred Stock of our Restricted Subsidiaries;
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(7) create Liens;
(8) engage in sale and leaseback transactions;
(9) with respect to its Restricted Subsidiaries, pay dividends, make loans
or advances to Loral or any other Restricted Subsidiary or transfer
any of its property or assets to Loral or any other Restricted
Subsidiary;
(10) make Asset Sales;
(11) with respect to Loral, consolidate or merge with or into another
Person or sell all or substantially all of the properties or assets of
Loral and its Restricted Subsidiaries, taken as a whole, to another
Person;
(12) enter into transactions with Affiliates; and
(13) with respect to any of our Restricted Subsidiaries, guarantee or
pledge any assets to secure the payment of any other Indebtedness of
Loral.
In addition, if a change of Control occurs, each holder of notes will have
the right to require Loral to repurchase all or part of the holder's notes at a
price equal to 101% of their principal amount plus accrued and unpaid interest
to the date of purchase.
The above limitations are "restrictive covenants" that are promises that
Loral makes to you about how Loral will run its business, or business actions
that Loral promises not to take. A more detailed description of the restrictive
covenants and the exception to them follows below.
RESTRICTED PAYMENTS
Loral will not, and will not permit any Restricted Subsidiary to, directly
or indirectly:
(1) declare or pay any dividend or make any other payment or distribution
on account of Loral's or any of its Restricted Subsidiaries' Equity
Interests (including, without limitation, any distribution, dividend or
payment in connection with any merger or consolidation involving Loral
or any of its Restricted Subsidiaries) or to the direct or indirect
holders of Loral's or any of its Restricted Subsidiaries' Equity
Interests in their capacity as such (other than dividends or
distributions payable in Equity Interests (other than Disqualified
Stock) of Loral or to Loral or a Restricted Subsidiary of Loral);
(2) purchase, redeem or otherwise acquire or retire for value (including,
without limitation, in connection with any merger or consolidation
involving Loral) any Equity Interests of Loral, any Restricted
Subsidiary of Loral or any direct or indirect parent of Loral;
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(3) make any payment on or with respect to, or purchase, redeem, defease or
otherwise acquire or retire for value any Indebtedness that is junior
in right of payment to the notes, except the scheduled payment of
interest or principal at the Stated Maturity thereof; or
(4) make any Restricted Investment
(all such payments and other actions set forth in clauses (1) through (4)
above being collectively referred to as "Restricted Payments"),
unless, at the time of and after giving effect to such Restricted Payment:
(1) no Default or Event of Default shall have occurred and be continuing or
would occur as a consequence thereof; and
(2) Loral would, at the time of such Restricted Payment and after giving
pro forma effect thereto as if such Restricted Payment had been made at
the beginning of the applicable four-quarter period, have been
permitted to incur at least $1.00 of additional Indebtedness pursuant
to either test set forth in the first paragraph of the covenant
described below under the caption "-- Incurrence of Indebtedness and
Issuance of Preferred Stock;" and
(3) such Restricted Payment, together with the aggregate amount of all
other Restricted Payments made by Loral and its Restricted Subsidiaries
after the date of this prospectus (excluding Restricted Payments
permitted by clauses (2), (3), (4) and (6) of the next succeeding
paragraph) is less than the sum, without duplication, of:
(a) 50% of the Consolidated Net Income of Loral for the period (taken
as one accounting period) from the beginning of the first fiscal
quarter commencing after the Issue Date to the end of Loral's most
recently ended fiscal quarter for which internal financial
statements are available at the time of such Restricted Payment
(or, if such Consolidated Net Income for such period is a deficit,
less 100% of such deficit); plus
(b) 100% of the aggregate net cash proceeds received by Loral since
the Issue Date as a contribution to its common equity capital or
from the issue or sale of Equity Interests of Loral (other than
Disqualified Stock) or from the issue or sale of Disqualified
Stock or debt securities of Loral that have been converted into or
exchanged for such Equity Interests (other than Equity Interests
(or Disqualified Stock or convertible debt securities) sold to a
Subsidiary of Loral), except to the extent such net cash proceeds
are used to increase the amount of dividends on Preferred Stock of
Loral or the amount of Restricted Investments that may be made
pursuant to clause (7) of the next succeeding paragraph; plus
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(c) 100% of the fair market value (as determined by Loral's Board of
Directors and evidenced by a resolution of the Board of Directors
set forth in an Officers' Certificate delivered to the trustee) of
assets used or useful in a Permitted Business received by Loral
since the Issue Date as a contribution to its common equity
capital or from the issue or sale of Equity Interests of Loral
(other than Disqualified Stock); plus
(d) to the extent not already included in Consolidated Net Income of
Loral for such period, if any Restricted Investment that was made
by Loral or any Restricted Subsidiary after the Issue Date is sold
for cash or otherwise liquidated or repaid for cash, the lesser of
(A) the cash return of capital with respect to such Restricted
Investment (less the cost of disposition, if any) and
(B) the initial amount of such Restricted Investment or
designated amount of Unrestricted Subsidiary; plus
(e) to the extent that any Unrestricted Subsidiary is designated by
Loral as a Restricted Subsidiary after the Issue Date, an amount
equal to the lesser of
(A) the net book value of Loral's Investment in such
Unrestricted Subsidiary at the time of such designation and
(B) the fair market value of Loral's Investment in such
Unrestricted Subsidiary at the time of such designation.
The preceding provisions will not prohibit:
(1) the payment of any dividend within 60 days after the date of
declaration thereof, if at said date of declaration such payment would
have complied with the provisions of the indenture;
(2) the redemption, repurchase, retirement, defeasance or other
acquisition of any Indebtedness junior in right of payment of Loral or
of any Equity Interests of Loral or any Restricted Subsidiary in
exchange for, or out of the net cash proceeds of the substantially
concurrent sale (other than to a subsidiary of Loral) of, Equity
Interests of Loral (other than Disqualified Stock); provided that the
amount of any such net cash proceeds that are utilized for any such
redemption, repurchase, retirement, defeasance or other acquisition
shall be excluded from clause (3)(b) of the preceding paragraph;
(3) the defeasance, redemption, repurchase or other acquisition of
Indebtedness of Loral junior by its terms in right of payment to
senior Indebtedness of Loral with the net cash proceeds from an
incurrence of Permitted Refinancing Indebtedness;
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(4) the payment of any dividend or distribution by a Restricted Subsidiary
of Loral to the holders of its common Equity Interests so long as
Loral or such Restricted Subsidiary receives at least its proportional
share (and in like form) of such dividend or distribution in
accordance with its common Equity Interests;
(5) the repurchase, redemption or other acquisition or retirement for
value of any Equity Interests of Loral or any Restricted Subsidiary of
Loral held by any employee of Loral or a Restricted Subsidiary or
member of Loral's (or any of its Restricted Subsidiaries') management
pursuant to any equity subscription agreement or stock option
agreement; provided that the aggregate price paid for all such
repurchased, redeemed, acquired or retired Equity Interests shall not
exceed $10 million;
(6) the purchase by a Restricted Subsidiary of shares of Capital Stock of
Loral from Loral or the deemed repurchase of Capital Stock by Loral or
a Restricted Subsidiary on the exercise of stock options;
(7) payments of dividends by Loral on Preferred Stock of Loral or the
making of Restricted Investments by Loral or any Restricted Subsidiary
in an aggregate amount not to exceed 100% of the aggregate net cash
proceeds received by Loral since the Issue Date from the issue or sale
of Equity Interests of Loral (other than Disqualified Stock); provided
that the amount of any such net cash proceeds that are utilized for
any such dividend payment or Restricted Investment shall be excluded
from clause (3)(b) of the immediately preceding paragraph;
(8) the purchase by Loral or a Restricted Subsidiary of Equity Interests
in a Restricted Subsidiary from another Person;
(9) scheduled dividends payable on the Series C Preferred Stock;
(10) payment of dividends on Preferred Stock of a Restricted Subsidiary;
and
(11) other Restricted Payments in an aggregate principal amount not to
exceed $25 million;
provided that Loral will not and will not permit any of its Restricted
Subsidiaries to make any Restricted Payment contemplated by clauses (2) through
(10) above so long as a Default has occurred and is continuing.
The amount of all Restricted Payments (other than cash) shall be the fair
market value on the date of the Restricted Payment of the assets or securities
proposed to be transferred or issued to or by Loral or such Restricted
Subsidiary, as the case may be, pursuant to the Restricted Payment. The fair
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market value of any assets or securities that are required to be valued by this
covenant shall be either
(a) determined by the Board of Directors whose resolution with respect
thereto shall be delivered to the trustee or
(b) based upon an opinion or appraisal issued by an accounting, appraisal
or investment banking firm of international standing if the fair market
value exceeds $25 million. Not later than the date of making any
Restricted Payment, Loral shall deliver to the trustee an Officers'
Certificate stating that such Restricted Payment is permitted and
setting forth the basis upon which the calculations required by this
"Restricted Payments" covenant were computed, together with a copy of
any fairness opinion or appraisal required by the indenture.
INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK
Loral will not, and will not permit any of its Restricted Subsidiaries to,
directly or indirectly, create, incur, issue, assume, guarantee or otherwise
become directly or indirectly liable, contingently or otherwise, with respect to
(collectively, "incur") any Indebtedness (including Acquired Debt), and Loral
will not issue any Disqualified Stock and will not permit any of its Restricted
Subsidiaries to issue any shares of Preferred Stock; provided, however, that
Loral or any Restricted Subsidiary may incur Indebtedness (including Acquired
Debt), and Loral may issue Disqualified Stock, and any Restricted Subsidiary may
issue Preferred Stock, if, after giving effect to the incurrence of such
Indebtedness or the issuance of such Disqualified Stock or Preferred Stock and
the application of the proceeds thereof, no Default would occur as a consequence
of such incurrence or issuance or be continuing following such incurrence or
issuance and either
(1) the Consolidated Leverage Ratio of Loral would be less than 5.0 to 1.0,
or
(2) Loral's Consolidated Capital Ratio as of the most recent available
quarterly or annual balance sheet is less than 2.0 to 1.0.
As of December 31, 1998, on a pro forma basis after giving effect to this
offering of the notes and the use of proceeds therefrom, Loral's Consolidated
Capital Ratio would have been approximately 0.8 to 1.0.
The first paragraph of this covenant will not prohibit the incurrence of
any of the following items of Indebtedness (collectively, "Permitted Debt"):
(1) the incurrence by Loral and its Restricted Subsidiaries of additional
Indebtedness and letters of credit pursuant to Credit Facilities in an
aggregate principal amount at any one time outstanding under this
clause (1) not to exceed $850 million as of such date of incurrence
less the aggregate amount of all Net Proceeds of Asset Sales applied
to repay term Indebtedness outstanding under one or more Credit
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Facilities pursuant to clause (1) of the second paragraph of the
covenant described under the caption "-- Repurchase at the Option of
Holders -- Asset Sales";
(2) the incurrence by Loral and its Restricted Subsidiaries of Existing
Indebtedness;
(3) the incurrence by Loral of Indebtedness represented by the notes to be
issued on the Issue Date;
(4) the issuance by a Subsidiary of Preferred Stock or the incurrence by
Loral's Subsidiaries of Non-Recourse Debt (including Acquired Debt
that constitutes Non-Recourse Debt); provided, however, that if any
such Indebtedness ceases to be Non-Recourse Debt of a Subsidiary, such
event shall be deemed to constitute an incurrence of Indebtedness by a
Restricted Subsidiary of Loral that was not permitted by this clause
(4);
(5) the incurrence by Loral or any of its Restricted Subsidiaries of
Permitted Refinancing Indebtedness in exchange for, or the net
proceeds of which are used to refund, refinance or replace
Indebtedness (other than intercompany Indebtedness) that was permitted
by the indenture to be incurred under the first paragraph of this
covenant or clauses (2), (3) or (5) of this paragraph;
(6) the incurrence by Loral or any of its Restricted Subsidiaries of
intercompany Indebtedness between or among Loral and any of its
Restricted Subsidiaries; provided, however, that:
(a) if Loral is the obligor on such Indebtedness, such Indebtedness
must be expressly junior in right of payment to all Obligations
with respect to the notes and the indenture; and
(b)
(A) any subsequent issuance or transfer of Equity Interests that
results in any such Indebtedness being held by a Person other
than Loral or a Restricted Subsidiary thereof and
(B) any sale or other transfer of any such Indebtedness to a
Person that is not either Loral or a Restricted Subsidiary
thereof shall be deemed, in each case, to constitute an
incurrence of such Indebtedness by Loral or such Restricted
Subsidiary, as the case may be, that was not permitted by
this clause (6);
(7) the incurrence by Loral or any of its Restricted Subsidiaries of
Hedging Obligations that are incurred for the purpose of fixing or
hedging interest rate risk or currency exchange rate risk;
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(8) the accrual of interest, the accretion or amortization of original
issue discount, the payment of interest on any Indebtedness in the
form of additional Indebtedness with the same terms, and the payment
of dividends on Disqualified Stock or Preferred Stock in the form of
additional shares of the same class of Disqualified Stock or Preferred
Stock, as the case may be, will not be deemed to be an incurrence of
Indebtedness or an issuance of Disqualified Stock or Preferred Stock
for purposes of this covenant;
(9) the incurrence by Loral or any of its Restricted Subsidiaries of
additional Indebtedness in an aggregate principal amount (or accreted
value, as applicable) at any time outstanding, including all Permitted
Refinancing Indebtedness incurred to refund, refinance or replace any
Indebtedness incurred pursuant to this clause (9), not to exceed $50
million; or
(10) the incurrence by Restricted Subsidiaries of Guarantees of
Indebtedness of Loral or any Restricted Subsidiary that is not junior
in right of payment to the notes.
Loral will not incur any Indebtedness (including Permitted Debt) that is
contractually junior in right of payment to any other Indebtedness of Loral
unless such Indebtedness is also contractually junior in right of payment to the
notes on substantially identical terms; provided, however, that no Indebtedness
of Loral shall be deemed to be contractually junior in right of payment to any
other Indebtedness of Loral solely by virtue of being unsecured.
For purposes of determining compliance with this "Incurrence of
Indebtedness and Issuance of Preferred Stock" covenant, in the event that an
item of proposed Indebtedness meets the criteria of more than one of the
categories of Permitted Debt described in clauses (1) through (10) above, or is
entitled to be incurred pursuant to the first paragraph of this covenant, Loral
will be permitted to classify such item of Indebtedness on the date of its
incurrence in any manner that complies with this covenant.
LIENS
Loral will not, and will not permit any of its Restricted Subsidiaries to,
directly or indirectly, create, incur, assume or suffer to exist any Lien of any
kind on any asset now owned or hereafter acquired, except Permitted Liens.
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SALE AND LEASEBACK TRANSACTIONS
Loral will not, and will not permit any of its Restricted Subsidiaries to,
enter into any sale and leaseback transaction; provided that Loral or any
Restricted Subsidiary may enter into a sale and leaseback transaction if:
(1) Loral or such Restricted Subsidiary, as applicable, could have
(a) incurred Indebtedness in an amount equal to the Attributable Debt
relating to such sale and leaseback transaction under the covenant
described above under the caption "-- Incurrence of Indebtedness
and Issuance of Preferred Stock" and
(b) incurred a Lien to secure such Indebtedness pursuant to the
covenant described above under the caption "-- Liens";
(2) the gross cash proceeds of such sale and leaseback transaction are at
least equal to the fair market value, as determined in good faith by
the Board of Directors and set forth in an Officers' Certificate
delivered to the trustee, of the property that is the subject of such
sale and leaseback transaction; and
(3) the transaction complies with the covenant described above under the
caption "-- Repurchase at the Option of Holders -- Asset Sales."
DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING RESTRICTED SUBSIDIARIES
Loral will not, and will not permit any of its Restricted Subsidiaries to,
directly or indirectly, create or permit to exist or become effective any
consensual encumbrance or restriction on the ability of any Restricted
Subsidiary to:
(1) pay dividends or make any other distributions on its Capital Stock to
Loral or any of its Restricted Subsidiaries, or with respect to any
other interest or participation in, or measured by, its profits, or
pay any indebtedness owed to Loral or any of its Restricted
Subsidiaries;
(2) make loans or advances to Loral or any of its Restricted Subsidiaries;
or
(3) transfer any of its properties or assets to Loral or any of its
Restricted Subsidiaries.
However, the preceding restrictions will not apply to encumbrances or
restrictions existing under or by reason of:
(1) Existing Indebtedness as in effect on the Issue Date and any
amendments, modifications, restatements, renewals, increases,
supplements, refundings, replacements or refinancings thereof,
provided that such amendments, modifications, restatements,
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renewals, increases, supplements, refundings, replacement or
refinancings are no more restrictive, taken as a whole, with respect
to such dividend and other payment restrictions than those contained
in such Existing Indebtedness, as in effect on the Issue Date;
(2) any customary (as conclusively determined in good faith by the Chief
Financial Officer of Loral) encumbrance or restriction applicable to
Loral or a Restricted Subsidiary that is contained in an agreement or
instrument governing or relating to Indebtedness of Loral or
Indebtedness contained in any Credit Facilities or Indebtedness
incurred pursuant to clause (4) of the second paragraph of the
covenant entitled "-- Incurrence of Indebtedness and Issuance of
Preferred Stock", provided that, other than with respect to Preferred
Stock of a Subsidiary or Non-Recourse Debt of a Subsidiary (including
Non-Recourse Debt that is Acquired Debt), such encumbrances and
restrictions permit the distribution of funds to Loral in an amount
sufficient for Loral to make the timely payment of interest, premium
(if any), Liquidated Damages (if any) and principal (whether at stated
maturity, by way of a sinking fund applicable thereto, by way of any
mandatory redemption, defeasance, retirement or repurchase thereof,
including upon the occurrence of designated events or circumstances or
by virtue of acceleration upon an event of default, or by way of
redemption or retirement at the option of the holder of the
Indebtedness, including pursuant to offers to purchase) according to
the terms of the indenture and the notes and other Indebtedness that
is solely an obligation of Loral, but provided further that such
agreement may nevertheless contain customary (as so determined) net
worth, leverage, invested capital and other financial covenants,
customary (as so determined) covenants regarding the merger of or sale
of all or any substantial part of the assets of Loral or any
Restricted Subsidiary, customary (as so determined) restrictions on
transactions with affiliates and customary (as so determined)
subordination provisions governing Indebtedness owed to Loral or any
Restricted Subsidiary;
(3) the Credit Agreement as in effect on the Issue Date and any
amendments, modifications, restatements, renewals, increases,
supplements, refundings, replacements or refinancings thereof,
provided that such amendments, modifications, restatements, renewals,
increases, supplements, refundings, replacement or refinancings are no
more restrictive, taken as a whole, with respect to such dividend and
other payment restrictions than those contained in such Credit
Agreement, as in effect on the Issue Date;
(4) the indenture and the notes;
(5) applicable law;
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(6) any instrument governing Indebtedness or Capital Stock of a Person
acquired by Loral or any of its Restricted Subsidiaries as in effect
at the time of such acquisition (except to the extent such
Indebtedness was incurred in connection with or in contemplation of
such acquisition), which encumbrance or restriction is not applicable
to any Person, or the properties or assets of any Person, other than
the Person, or the property or assets of the Person, so acquired,
provided that, in the case of Indebtedness, such Indebtedness was
permitted by the terms of the indenture to be incurred;
(7) customary non-assignment provisions in leases entered into in the
ordinary course of business and consistent with past practices;
(8) purchase money obligations for property acquired in the ordinary
course of business that impose restrictions on the property so
acquired of the nature described in clause (3) of the preceding
paragraph;
(9) any agreement for the sale or other disposition of a Restricted
Subsidiary that restricts distributions by that Restricted Subsidiary
pending its sale or other disposition;
(10) Permitted Refinancing Indebtedness, provided that the restrictions
contained in the agreements governing such Permitted Refinancing
Indebtedness are no more restrictive, taken as a whole, than those
contained in the agreements governing the Indebtedness being
refinanced;
(11) Liens securing Indebtedness that limit the right of the debtor to
dispose of the assets subject to such Lien;
(12) provisions with respect to the disposition or distribution of assets
or property in joint venture agreements, assets sale agreements, stock
sale agreements and other similar agreements entered into in the
ordinary course of business; and
(13) restrictions on cash or other deposits or net worth imposed by
customers under contracts entered into in the ordinary course of
business.
MERGER, CONSOLIDATION OR SALE OF ASSETS
Loral will not, directly or indirectly:
(1) consolidate or merge with or into another Person (whether or not Loral
is the surviving corporation); or
(2) sell, assign, transfer, convey or otherwise dispose of all or
substantially all of the properties or assets of Loral and its
Restricted
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Subsidiaries, taken as a whole, in one or more related transactions,
to another Person, unless:
(1) either: (a) Loral is the surviving corporation; or (b) the Person
formed by or surviving any such consolidation or merger (if other than
Loral) or to which such sale, assignment, transfer, conveyance or
other disposition shall have been made is a corporation organized or
existing under the laws of Bermuda, the United States, any state
thereof or the District of Columbia;
(2) the Person formed by or surviving any such consolidation or merger (if
other than Loral) or the Person to which such sale, assignment,
transfer, conveyance or other disposition shall have been made assumes
all the obligations of Loral under the notes and the indenture
pursuant to agreements reasonably satisfactory to the trustee;
(3) immediately after such transaction no Default exists; and
(4) Loral or the Person formed by or surviving any such consolidation or
merger or to which such sale, assignment, transfer, conveyance or
other disposition shall have been made (if other than Loral):
(a) will have Consolidated Net Worth immediately after the transaction
equal to or greater than the Consolidated Net Worth of Loral
immediately preceding the transaction; and
(b) will, on the date of such transaction after giving pro forma
effect thereto and any related financing transactions as if the
same had occurred at the beginning of the applicable four-quarter
period or balance sheet date, as applicable, be permitted to incur
at least $1.00 of additional Indebtedness pursuant to at least one
of the tests set forth in the first paragraph of the covenant
described above under the caption "-- Incurrence of Indebtedness
and Issuance of Preferred Stock."
In addition, Loral may not, directly or indirectly, lease all or
substantially all of its properties or assets in one or more related
transactions, to any other Person.
When a successor corporation, trustee, paying agent or registrar assumes
all of the obligations of its predecessor under the notes and the indenture, the
predecessor will be released from those obligations.
This "Merger, Consolidation or Sale of Assets" covenant will not apply to a
sale, assignment, transfer, conveyance or other disposition of assets between or
among Loral and any of its Restricted Subsidiaries.
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DESIGNATION OF RESTRICTED AND UNRESTRICTED SUBSIDIARIES
The Board of Directors may designate any Restricted Subsidiary to be an
Unrestricted Subsidiary if that designation would not cause a Default. If a
Restricted Subsidiary is designated as an Unrestricted Subsidiary, the aggregate
fair market value of all outstanding Investments owned by Loral and its
Restricted Subsidiaries in the Subsidiary so designated will be deemed to be an
Investment made as of the time of such designation and will reduce the amount
available for Restricted Payments under the first paragraph of the covenant
described above under the caption "-- Restricted Payments" or reduce the amount
available for future Investments under one or more clauses of the definition of
Permitted Investments, as Loral shall determine. That designation will only be
permitted if such Investment would be permitted at that time and if such
Restricted Subsidiary otherwise meets the definition of an Unrestricted
Subsidiary. The Board of Directors may redesignate any Unrestricted Subsidiary
to be a Restricted Subsidiary if the redesignation would not cause a Default.
Loral SpaceCom Corporation, Space Systems/Loral, Loral Orion and CyberStar
will initially be "Restricted Subsidiaries" under the indenture; SatMex,
Europe*Star, Globalstar and Globalstar Telecommunications Limited will initially
be "Permitted Ventures" under the indenture.
TRANSACTIONS WITH AFFILIATES
Loral will not, and will not permit any of its Restricted Subsidiaries to,
make any payment to, or sell, lease, transfer or otherwise dispose of any of its
properties or assets to, or purchase any property or assets from, or enter into
or make or amend any transaction, contract, agreement, understanding, loan,
advance or guarantee with, or for the benefit of, any Affiliate (each, an
"Affiliate Transaction"), unless:
(1) such Affiliate Transaction is on terms that are no less favorable to
Loral or the relevant Restricted Subsidiary than those that would have
been obtained in a comparable transaction by Loral or such Restricted
Subsidiary with an unrelated Person; and
(2) Loral delivers to the trustee with respect to any Affiliate Transaction
or series of related Affiliate Transactions involving aggregate
consideration in excess of $15 million, either
(a) a resolution of the Board of Directors set forth in an Officers'
Certificate certifying that such Affiliate Transaction complies with
this covenant and that such Affiliate Transaction has been approved by
a majority of the disinterested members of the Board of Directors or
(b) an opinion as to the fairness to the Holders of such Affiliate
Transaction from a financial point of view issued by an accounting,
appraisal or investment banking firm of international standing.
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The following items shall not be deemed to be Affiliate Transactions and,
therefore, will not be subject, except as set forth below, to the provisions of
the prior paragraph:
(1) any employment agreement entered into by Loral or any of its Restricted
Subsidiaries in the ordinary course of business and consistent with the
past practice of Loral or such Restricted Subsidiary, as the case may
be;
(2) transactions between or among Loral and/or its Restricted Subsidiaries;
(3) any sale or other issuance of Equity Interests (other than Disqualified
Stock) of Loral;
(4) payment of reasonable directors fees to Persons who are not otherwise
Affiliates of Loral;
(5) Restricted Payments that are permitted by, and Permitted Investments
that are not prohibited by, the provisions of the indenture described
above under the caption "-- Restricted Payments;" and
(6) transactions between Loral and/or its Restricted Subsidiaries, on the
one hand, and a Permitted Venture, on the other hand, provided that the
condition set forth in clause (1) of the prior paragraph is satisfied.
LIMITATIONS ON ISSUANCES OF GUARANTEES OF INDEBTEDNESS
Loral will not permit any of its Restricted Subsidiaries, directly or
indirectly, to Guarantee or pledge any assets to secure the payment of any other
Indebtedness of Loral unless such Restricted Subsidiary simultaneously executes
and delivers a supplemental indenture providing for the Guarantee of the payment
of the notes by such Restricted Subsidiary (a "Guarantor"), which Guarantee
shall
(1) be senior to or equal to in right of payment with such Restricted
Subsidiary's Guarantee of or pledge to secure such other Indebtedness
and
(2) remain in effect for so long as the Guarantee or pledge to secure such
other Indebtedness remains in effect.
No Guarantor will incur any Indebtedness (including Permitted Debt) that is
contractually junior in right of payment to any other Indebtedness of such
Guarantor unless such Indebtedness is also contractually junior in right of
payment to such Guarantor's Guarantee of the notes on substantially identical
terms; provided, however, that no Indebtedness of a Guarantor shall be deemed to
be contractually junior in right of payment to any other Indebtedness of such
Guarantor solely by virtue of being unsecured.
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BUSINESS ACTIVITIES
Loral will not, and will not permit any Restricted Subsidiary to, engage in
any business other than Permitted Businesses, except to the extent as would not
be material to Loral and its Restricted Subsidiaries, taken as a whole.
PAYMENTS FOR CONSENT
Loral will not, and will not permit any of its Restricted Subsidiaries to,
directly or indirectly, pay or cause to be paid any consideration to or for the
benefit of any holder of notes for or as an inducement to any consent, waiver or
amendment of any of the terms or provisions of the indenture or the notes unless
such consideration is offered to be paid and is paid to all holders of the notes
that consent, waive or agree to amend in the time frame set forth in the
solicitation documents relating to such consent, waiver or agreement.
REPORTS
Whether or not required by the SEC, so long as any notes are outstanding,
Loral will furnish to the holders of notes, within the time periods specified in
the SEC's rules and regulations:
(1) all quarterly and annual financial information that would be required
to be contained in a filing with the SEC on Forms 10-Q and 10-K (or any
successor forms) if Loral were required to file such Forms, including a
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" that describes the financial condition and
results of operations of Loral and its subsidiaries and, with respect
to the annual information only, a report on the annual financial
statements by Loral's certified independent accountants; and
(2) all current reports that would be required to be filed with the SEC on
Form 8-K (or any successor form) if Loral were required to file such
reports.
If Loral has designated any of its Subsidiaries as Unrestricted
Subsidiaries, then the quarterly and annual financial information required by
this covenant shall include selected financial information, either on the face
of the financial statements or in the footnotes thereto, regarding the financial
condition and results of operations of Loral and its Restricted Subsidiaries
separate from the financial condition and results of operations of the
Unrestricted Subsidiaries of Loral.
In addition, whether or not required by the SEC, Loral will file a copy of
all information and reports referred to in clauses (1) and (2) above with the
SEC for public availability within the time periods specified in the SEC's rules
and regulations (unless the SEC will not accept such a filing) and make such
information available to securities analysts and prospective investors upon
request.
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EVENTS OF DEFAULT AND REMEDIES
Each of the following is an Event of Default:
(1) default for 30 days in the payment when due of interest or Liquidated
Damages on the notes;
(2) default in payment when due of the principal of, or premium, if any, on
the notes;
(3) failure by Loral to comply with the provisions described under the
caption "-- Covenants -- Merger, Consolidation or Sale of Assets;"
(4) failure by Loral for 30 days after notice to comply with the provisions
described under the captions "-- Repurchase at the Option of
Holders -- Change of Control," "-- Repurchase at the Option of
Holders -- Asset Sales," "-- Covenants -- Restricted Payments" or
"-- Covenants -- Incurrence of Indebtedness and Issuance of Preferred
Stock;"
(5) failure by Loral or any of its Restricted Subsidiaries for 60 days
after notice to comply with any of the other agreements in the
indenture;
(6) default under any mortgage, indenture or instrument under which there
may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by Loral or any of its Restricted
Subsidiaries (or the payment of which is guaranteed by Loral or any of
its Restricted Subsidiaries) whether such Indebtedness or guarantee now
exists, or is created after the Issue Date, if that default:
(a) is caused by a failure to pay principal at maturity of such
Indebtedness prior to the expiration of the grace period provided
in such Indebtedness on the date of such default (a "Payment
Default"); or
(b) results in the acceleration of such Indebtedness prior to its
express maturity, and, in each case, the principal amount of any
such Indebtedness, together with the principal amount of any other
such Indebtedness under which there has been a Payment Default or
the maturity of which has been so accelerated, aggregates $25
million or more;
(7) failure by Loral or any of its Subsidiaries to pay final judgments
aggregating in excess of $25 million, which judgments are not paid,
discharged or stayed for a period of 60 days; and
(8) certain events of bankruptcy or insolvency with respect to Loral or any
of its Significant Subsidiaries.
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In the case of an Event of Default arising from certain events of
bankruptcy or insolvency with respect to Loral, any Subsidiary that is a
Significant Subsidiary or any group of Subsidiaries that, taken together, would
constitute a Significant Subsidiary, all outstanding notes will become due and
payable immediately without further action or notice. If any other Event of
Default occurs and is continuing, the trustee or the holders of at least 25% in
principal amount of the then outstanding notes may declare all the notes to be
due and payable immediately.
Holders of the notes may not enforce the indenture or the notes except as
provided in the indenture. Subject to certain limitations, holders of a majority
in principal amount of the then outstanding notes may direct the trustee in its
exercise of any trust or power. The trustee may withhold from holders of the
notes notice of any continuing Default or Event of Default (except a Default or
Event of Default relating to the payment of principal or interest) if it
determines that withholding notice is in their interest.
The holders of a majority in aggregate principal amount of the notes then
outstanding by notice to the trustee may on behalf of the holders of all of the
notes waive any existing Default and its consequences under the indenture except
a continuing Default in the payment of interest on, or the principal of, the
notes.
In the case of any Event of Default occurring by reason of any willful
action or inaction taken or not taken by or on behalf of Loral with the
intention of avoiding payment of the premium that Loral would have had to pay if
Loral then had elected to redeem the notes pursuant to the optional redemption
provisions of the indenture, an equivalent premium shall also become and be
immediately due and payable to the extent permitted by law upon the acceleration
of the notes.
Loral is required to deliver to the trustee annually a statement regarding
compliance with the indenture. Upon becoming aware of any Default, Loral is
required to deliver to the trustee a statement specifying such Default.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS
No director, officer, employee, incorporator or stockholder of Loral, as
such, shall have any liability for any obligations of Loral under the notes, the
indenture, or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each holder of notes by accepting a note waives
and releases all such liability. The waiver and release are part of the
consideration for issuance of the notes. The waiver may not be effective to
waive liabilities under the U.S. federal securities laws.
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LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Loral may, at its option and at any time, elect to have all of its
obligations discharged with respect to the outstanding notes ("Legal
Defeasance") except for:
(1) the rights of holders of outstanding notes to receive payments in
respect of the principal of, or interest, Liquidated Damages or
premium, if any, on such notes when such payments are due from the
trust referred to below;
(2) Loral's obligations with respect to the notes concerning issuing
temporary notes, registration of notes, mutilated, destroyed, lost or
stolen notes and the maintenance of an office or agency for payment and
money for security payments held in trust;
(3) the rights, powers, trusts, duties and immunities of the trustee, and
Loral's obligations in connection therewith; and
(4) the Legal Defeasance provisions of the indenture.
In addition, Loral may, at its option and at any time, elect to have the
obligations of Loral released with respect to certain covenants that are
described in the indenture ("Covenant Defeasance") and thereafter any omission
to comply with those covenants shall not constitute a Default with respect to
the notes. In the event Covenant Defeasance occurs, certain events (not
including non-payment, bankruptcy, receivership, rehabilitation and insolvency
events) described under "Events of Default" will no longer constitute an Event
of Default with respect to the notes.
In order to exercise either Legal Defeasance or Covenant Defeasance:
(1) Loral must irrevocably deposit with the trustee, in trust, for the
benefit of the holders of the notes, cash in U.S. dollars, non-callable
U.S. Government obligations, or a combination thereof, in such amounts
as will be sufficient, in the opinion of an internationally recognized
firm of independent public accountants, to pay the principal of, or
interest and premium, if any, on the outstanding notes on the stated
maturity;
(2) in the case of Legal Defeasance, Loral shall have delivered to the
trustee an Opinion of Counsel reasonably acceptable to the trustee
confirming that
(a) Loral has received from, or there has been published by, the
Internal Revenue Service a ruling or
(b) since the Issue Date, there has been a change in the applicable
federal income tax law, in either case to the effect that, and
based thereon such Opinion of Counsel shall confirm that, the
holders of the outstanding notes will not recognize income, gain
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or loss for United States federal income tax purposes as a result
of such Legal Defeasance and will be subject to United States
federal income tax on the same amounts, in the same manner and at
the same times as would have been the case if such Legal
Defeasance had not occurred;
(3) in the case of Covenant Defeasance, Loral shall have delivered to the
trustee an Opinion of Counsel reasonably acceptable to the trustee
confirming that the holders of the outstanding notes will not recognize
income, gain or loss for United States federal income tax purposes as a
result of such Covenant Defeasance and will be subject to United States
federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if such Covenant Defeasance had
not occurred;
(4) in the case of Legal Defeasance or Covenant Defeasance, Loral shall
have delivered to the trustee an Opinion of Counsel in Loral's
jurisdiction of incorporation reasonably acceptable to the trustee
confirming that the holders of the outstanding notes will not recognize
income, gain or loss for income tax purposes in such jurisdiction as a
result of such Legal Defeasance or Covenant Defeasance and will be
subject to income tax in such jurisdiction on the same amounts, in the
same manner and at the same times as would have been the case if such
Legal Defeasance or Covenant Defeasance had not occurred;
(5) no Default shall have occurred and be continuing either:
(a) on the date of such deposit (other than a Default resulting from
the borrowing of funds to be applied to such deposit); or
(b) insofar as Defaults from bankruptcy or insolvency events are
concerned, at any time in the period ending on the 91st day after
the date of deposit;
(6) such Legal Defeasance or Covenant Defeasance will not result in a
breach or violation of, or constitute a default under any material
agreement or instrument (other than the indenture) to which Loral or
any of its Subsidiaries is a party or by which Loral or any of its
Subsidiaries is bound;
(7) Loral must have delivered to the trustee an Opinion of Counsel to the
effect that, assuming no intervening bankruptcy of Loral between the
date of deposit and the 91st day following the deposit and, assuming
that no holder is an "insider" of Loral under applicable bankruptcy
law, after the 91st day following the deposit, the transfer of the
trust funds will not be characterizable as a preference under Section
547 of the United States Federal bankruptcy code;
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(8) Loral must deliver to the trustee an Officers' Certificate stating that
the deposit was not made by Loral with the intent of preferring the
holders of notes over the other creditors of Loral or with the intent
of defeating, hindering, delaying or defrauding creditors of Loral or
others; and
(9) Loral must deliver to the trustee an Officers' Certificate and an
Opinion of Counsel, each stating that all conditions precedent relating
to the Legal Defeasance or the Covenant Defeasance have been complied
with.
AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided in the succeeding paragraphs, the indenture or the notes
may be amended or supplemented with the consent of the Holders of at least a
majority in principal amount of the notes then outstanding (including, without
limitation, consents obtained in connection with a purchase of, or tender offer
or exchange offer for, notes), and any existing default or compliance with any
provision of the indenture or the notes may be waived with the consent of the
Holders of a majority in principal amount of the then outstanding notes
(including, without limitation, consents obtained in connection with a purchase
of, or tender offer or exchange offer for, notes).
Without the consent of each holder affected, an amendment or waiver may not
(with respect to any notes held by a non-consenting holder):
(1) reduce the principal amount of notes whose holders must consent to an
amendment, supplement or waiver;
(2) reduce the principal of or change the fixed maturity of any note or
alter the provisions with respect to the redemption of the notes (other
than provisions relating to the covenants described above under the
caption "-- Repurchase at the Option of Holders");
(3) reduce the rate of or change the time for payment of interest or
Liquidated Damages on any note;
(4) waive a Default in the payment of principal of, or interest, Liquidated
Damages or premium, if any, on the notes (except a rescission of
acceleration of the notes by the holders of at least a majority in
aggregate principal amount of the notes and a waiver of the payment
default that resulted from such acceleration);
(5) make any note payable in money other than that stated in the notes;
(6) make any change in the provisions of the indenture relating to waivers
of past Defaults or the rights of holders of notes to receive payments
of principal of, or interest, Liquidated Damages or premium, if any, on
the notes;
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(7) waive a redemption payment with respect to any note (other than a
payment required by one of the covenants described above under the
caption "-- Repurchase at the Option of Holders"); or
(8) make any change in the preceding amendment and waiver provisions.
Notwithstanding the preceding, without the consent of any holder of notes,
Loral and the trustee may amend or supplement the indenture or the notes:
(1) to cure any ambiguity, defect or inconsistency;
(2) to provide for uncertificated notes in addition to or in place of
certificated notes;
(3) to provide for the assumption of Loral's obligations to holders of
notes in the case of a merger or consolidation or sale of all or
substantially all of Loral's assets;
(4) to make any change that would provide any additional rights or benefits
to the holders of notes or that does not adversely affect the legal
rights under the indenture of any such holder;
(5) to provide for the issuance of additional notes in accordance with the
provisions set forth in the indenture; or
(6) to comply with requirements of the SEC in order to effect or maintain
the qualification of the indenture under the Trust indenture Act.
CONCERNING THE TRUSTEE
If the trustee becomes a creditor of Loral, the indenture limits its right
to obtain payment of claims in certain cases, or to realize on certain property
received in respect of any such claim as security or otherwise. The trustee is
permitted to engage in other transactions; however, if it acquires any
conflicting interest it must eliminate such conflict within 90 days, apply to
the SEC for permission to continue or resign.
The holders of a majority in principal amount of the then outstanding notes
have the right to direct the time, method and place of conducting any proceeding
for exercising any remedy available to the trustee, subject to certain
exceptions. The indenture provides that in case an Event of Default shall occur
and be continuing, the trustee will be required, in the exercise of its power,
to use the degree of care of a prudent man in the conduct of his own affairs.
Subject to such provisions, the trustee will be under no obligation to exercise
any of its rights or powers under the indenture at the request of any holder of
notes, unless such holder shall have offered to the trustee security and
indemnity satisfactory to it against any loss, liability or expense.
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GOVERNING LAW AND SUBMISSION TO JURISDICTION
The indenture provides that it and the notes governed by the indenture are
governed by, and construed in accordance with, the laws of the State of New York
without giving effect to applicable principles of conflicts of law to the extent
that the application of the law of another jurisdiction would be required
thereby.
Loral submits to the jurisdiction of the U.S. Federal and New York State
courts located in the Borough of Manhattan, City and State of New York for
purposes of all legal actions and proceedings instituted in connection with the
notes and the indenture. Loral has appointed an authorized agent upon which
process may be served in any such actions.
ADDITIONAL INFORMATION
Anyone who receives this prospectus may obtain a copy of the indenture and
the registration rights agreement without charge by writing to Loral Space &
Communications Ltd., Cedar House, 41 Cedar Avenue, Hamilton HM21, Bermuda,
Attention: Secretary.
CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the indenture. Reference
is made to the indenture for a full statement of all such terms, as well as any
other capitalized terms used herein for which no definition is provided.
"ACQUIRED DEBT" means, with respect to any specified Person:
(1) Indebtedness of any other Person existing at the time such other Person
is merged with or into or became a Restricted Subsidiary of such
specified Person, whether or not such Indebtedness is incurred in
connection with, or in contemplation of, such other Person merging with
or into, or becoming a Restricted Subsidiary of, such specified Person;
and
(2) Indebtedness secured by a Lien encumbering any asset acquired by such
specified Person.
"AFFILIATE" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control,"
as used with respect to any Person, shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of such Person, whether through the ownership of voting securities, by
agreement or otherwise; provided that beneficial ownership of 10% or more of the
Voting Stock of a Person shall be deemed to be control. For purposes of this
definition, the terms "controlling," "controlled by" and "under common control
with" shall have correlative meanings.
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"ASSET SALE" means:
(1) the sale, lease, transfer, conveyance or other disposition of any
assets or rights, other than sales of inventory in the ordinary course
of business consistent with past practices; provided that the sale,
lease, transfer, conveyance or other disposition of all or
substantially all of the assets of Loral and its Restricted
Subsidiaries taken as a whole will be governed by the provisions of the
indenture described above under the caption "-- Repurchase at the
Option of Holders -- Change of Control" and/or the provisions described
above under the caption "-- Covenants -- Merger, Consolidation or Sale
of Assets" and not by the provisions of the Asset Sale covenant; and
(2) the issuance of Equity Interests in any of Loral's Restricted
Subsidiaries or the sale of Equity Interests in any of its Restricted
Subsidiaries.
Notwithstanding the preceding, the following items shall not be deemed to
be Asset Sales:
(1) any single transaction or series of related transactions that: (a)
involves assets having a fair market value of less than $5 million; or
(b) results in net proceeds to Loral and its Restricted Subsidiaries of
less than $5 million;
(2) a transfer of assets between or among Loral and its Restricted
Subsidiaries;
(3) an issuance of Equity Interests by a Restricted Subsidiary to Loral or
to another Restricted Subsidiary;
(4) the sale or lease of satellites, transponders or other equipment,
inventory, accounts receivable or other assets in the ordinary course
of business;
(5) the sale or other disposition of cash or Cash Equivalents;
(6) a Restricted Payment or Permitted Investment that is permitted by the
covenant described above under the caption "-- Covenants -- Restricted
Payments"; and
(7) the issuance of partnership interests by CyberStar, L.P. pursuant to
participation bonuses in accordance with Section 4.3 of the CyberStar
partnership agreement.
"ATTRIBUTABLE DEBT" in respect of a sale and leaseback transaction means,
at the time of determination, the present value of the obligation of the lessee
for net rental payments during the remaining term of the lease included in such
sale and leaseback transaction including any period for which such lease has
been extended or may, at the option of the lessor, be extended. Such present
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value shall be calculated using a discount rate equal to the rate of interest
implicit in such transaction, determined in accordance with GAAP.
"BENEFICIAL OWNER" has the meaning assigned to such term in Rule 13d-3 and
Rule 13d-5 under the Exchange Act, except that in calculating the beneficial
ownership of any particular "person" (as that term is used in Section 13(d)(3)
of the Exchange Act), such "person" shall be deemed to have beneficial ownership
of all securities that such "person" has the right to acquire by conversion or
exercise of other securities, whether such right is currently exercisable or is
exercisable only upon the occurrence of a subsequent condition. The term
"beneficially owns" shall have a corresponding meaning.
"CAPITAL LEASE OBLIGATION" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that would
at that time be required to be capitalized on a balance sheet in accordance with
GAAP.
"CAPITAL STOCK" means:
(1) in the case of a corporation, corporate stock;
(2) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however
designated) of corporate stock;
(3) in the case of a partnership or limited liability company, partnership
or membership interests (whether general or limited); and
(4) any other interest or participation that confers on a Person the right
to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person.
"CASH EQUIVALENTS" means:
(1) United States dollars;
(2) securities issued or directly and fully guaranteed or insured by the
United States government or any agency or instrumentality thereof
(provided that the full faith and credit of the United States is
pledged in support thereof) having maturities of not more than one year
from the date of acquisition;
(3) certificates of deposit and eurodollar time deposits with maturities of
one year or less from the date of acquisition, bankers' acceptances
with maturities not exceeding one year and overnight bank deposits, in
each case, with any lender party to the Credit Agreement or with any
domestic commercial bank having capital and surplus in excess of $500
million and a Thompson Bank Watch Rating of "B" or better;
(4) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clauses (2) and
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(3) above entered into with any financial institution meeting the
qualifications specified in clause (3) above;
(5) commercial paper having one of the two highest ratings obtainable from
Moody's Investors Service, Inc. or Standard & Poor's Rating Services
and in each case maturing within six months after the date of
acquisition;
(6) money market funds at least 95% of the assets of which constitute Cash
Equivalents of the kinds described in clauses (1) through (5) of this
definition; and
(7) the Goldman Sachs US$ Liquid Reserves Fund and other funds with
substantially similar investment policies.
"CHANGE OF CONTROL" means the occurrence of any of the following:
(1) the direct or indirect sale, lease, transfer, conveyance or other
disposition (other than by way of merger or consolidation), in one or a
series of related transactions, of all or substantially all of the
properties or assets of Loral and its Restricted Subsidiaries taken as
a whole to any "person" (as that term is used in Section 13(d)(3) of
the Exchange Act);
(2) the adoption of a plan relating to the liquidation or dissolution of
Loral;
(3) the consummation of any transaction (including, without limitation, any
merger or consolidation) the result of which is that any "person" (as
defined above) becomes the Beneficial Owner, directly or indirectly, of
more than 35% of the Voting Stock of Loral, measured by voting power
rather than number of shares;
(4) the first day on which a majority of the members of the Board of
Directors of Loral are not Continuing Directors; or
(5) Loral consolidates with, or merges with or into, any Person, or any
Person consolidates with, or merges with or into, Loral, in any such
event pursuant to a transaction in which any of the outstanding Voting
Stock of Loral or such other Person is converted into or exchanged for
cash, securities or other property, other than any such transaction
where the Voting Stock of Loral outstanding immediately prior to such
transaction is converted into or exchanged for Voting Stock (other than
Disqualified Stock) of the surviving or transferee Person constituting
a majority of the outstanding shares of such Voting Stock of such
surviving or transferee Person (immediately after giving effect to such
issuance).
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"CONSOLIDATED CAPITAL RATIO" of any Person as of any date means the ratio
of
(1) the Total Indebtedness of such Person then outstanding to
(2) the stockholders' equity as of such date as shown on the consolidated
balance sheet of such Person in accordance with GAAP (which, in the
case of Loral, shall include the Series C Preferred Stock) after giving
pro forma effect to
(a) the incurrence of any Indebtedness proposed to be incurred or the
issuance of any Disqualified Stock proposed to be issued and the
receipt and application of the proceeds thereof,
(b) any other Indebtedness incurred, Disqualified Stock issued or
preferred stock of any Subsidiary issued or the repayment or
retirement of any of the foregoing since such balance sheet date
and the receipt and application of the proceeds thereof,
(c) any asset dispositions or asset acquisitions (including giving pro
forma effect to the application of proceeds of any asset
disposition) that has occurred since such balance sheet date, in
each case as if they had occurred and such proceeds had been
applied on the date of such balance sheet.
"CONSOLIDATED CASH FLOW" means, with respect to any specified Person for
any period, the Consolidated Net Income of such Person for such period plus:
(1) an amount equal to any extraordinary loss plus any net loss realized by
such Person or any of its Restricted Subsidiaries in connection with an
Asset Sale, to the extent such losses were deducted in computing such
Consolidated Net Income; plus
(2) provision for taxes based on income or profits of such Person and its
Restricted Subsidiaries for such period, to the extent that such
provision for taxes was deducted in computing such Consolidated Net
Income; plus
(3) consolidated interest expense of such Person and its Restricted
Subsidiaries for such period, whether paid or accrued and whether or
not capitalized (including, without limitation, amortization of debt
issuance costs and original issue discount, non-cash interest payments,
the interest component of any deferred payment obligations, the
interest component of all payments associated with Capital Lease
Obligations, imputed interest with respect to Attributable Debt,
commissions, discounts and other fees and charges incurred in respect
of letter of credit or bankers' acceptance financings, and net of the
effect of all payments made or received pursuant to Hedging
Obligations), to the extent that any such expense was deducted in
computing such Consolidated Net Income; plus
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(4) depreciation, amortization (including amortization of goodwill and
other intangibles but excluding amortization of prepaid cash expenses
that were paid in a prior period) and other non-cash expenses
(excluding any such non-cash expense to the extent that it represents
an accrual of or reserve for cash expenses in any future period or
amortization of a prepaid cash expense that was paid in a prior period)
of such Person and its Restricted Subsidiaries for such period to the
extent that such depreciation, amortization and other non-cash expenses
were deducted in computing such Consolidated Net Income; minus
(5) non-cash items increasing such Consolidated Net Income for such period,
other than the accrual of revenue in the ordinary course of business,
in each case, on a consolidated basis and determined in accordance with
GAAP.
Notwithstanding the preceding, amounts in respect of items (1), (2) and (4)
for a Restricted Subsidiary of Loral shall be added to Consolidated Net Income
to compute Consolidated Cash Flow of Loral only to the extent that a
corresponding percentage of the Consolidated Net Income of such Restricted
Subsidiary would be permitted at the date of determination to be dividended to
Loral by such Restricted Subsidiary without prior approval (that has not been
obtained) pursuant to the terms of its charter and all agreements, instruments,
judgments, decrees, orders, statutes, rules and governmental regulations
applicable to that Subsidiary or its stockholders.
"CONSOLIDATED LEVERAGE RATIO" means the ratio of
(1) the Total Indebtedness of Loral outstanding as of the most recent
available quarterly or annual balance sheet to
(2) the Consolidated Cash Flow of Loral for the four full fiscal quarters
next preceding the incurrence of such Indebtedness or the issuance of
such Disqualified Stock for which consolidated financial statements are
available; provided that pro forma effect shall be given to
(a) the incurrence of any Indebtedness proposed to be incurred or the
issuance of any Disqualified Stock proposed to be issued and the
receipt and application of the proceeds thereof,
(b) any other Indebtedness incurred, Disqualified Stock issued or
preferred stock of any Subsidiary issued or the repayment or
retirement of any of the foregoing since the beginning of such
four fiscal quarter period and the receipt and application of the
proceeds thereof and
(c) any asset dispositions or asset acquisitions (including giving pro
forma effect to the application of proceeds of any asset
disposition) that has occurred during such four fiscal quarter
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period, in each case as if they had occurred and such proceeds had
been applied on the first day of such four fiscal quarter period.
"CONSOLIDATED NET INCOME" means, with respect to any specified Person for
any period, the aggregate of the Net Income of such Person and its Restricted
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; provided that:
(1) the Net Income (but not loss) of any Person that is not a Restricted
Subsidiary or that is accounted for by the equity method of accounting
shall be included only to the extent of the amount of dividends or
distributions paid in cash to the specified Person or a Restricted
Subsidiary thereof;
(2) the Net Income of any Restricted Subsidiary shall be excluded to the
extent that the declaration or payment of dividends or similar
distributions by that Restricted Subsidiary of that Net Income is not
at the date of determination permitted without any prior governmental
approval (that has not been obtained) or, directly or indirectly, by
operation of the terms of its charter or any agreement, instrument,
judgment, decree, order, statute, rule or governmental regulation
applicable to that Restricted Subsidiary or its stockholders;
(3) the Net Income of any Person acquired in a pooling of interests
transaction for any period prior to the date of such acquisition shall
be excluded;
(4) the Net Income (but not loss) of any Unrestricted Subsidiary shall be
excluded, whether or not distributed to the specified person or one of
its Subsidiaries; and
(5) the cumulative effect of a change in accounting principles shall be
excluded.
"CONSOLIDATED NET WORTH" means, with respect to any Person as of any date,
the sum of:
(1) the consolidated equity of the common stockholders of such Person and
its consolidated Subsidiaries as of such date; plus
(2) the respective amounts reported on such Person's balance sheet as of
such date with respect to any series of Preferred Stock (other than
Disqualified Stock) that by its terms is not entitled to the payment of
dividends unless such dividends may be declared and paid only out of
net earnings in respect of the year of such declaration and payment,
but only to the extent of any cash received by such Person upon
issuance of such Preferred Stock.
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"CONSOLIDATED TANGIBLE ASSETS" of any Person means the total amount of
assets (less applicable reserves and any other properly deductible items) which
under GAAP would be included on a consolidated balance sheet of such Person and
its Subsidiaries after deducting therefrom all goodwill (but not any other
intangible assets) which under GAAP would be included on such consolidated
balance sheet.
"CONTINUING DIRECTORS" means, as of any date of determination, any member
of the Board of Directors of Loral who:
(1) was a member of such Board of Directors on the Issue Date; or
(2) was nominated for election or elected to such Board of Directors with
the approval of a majority of the Continuing Directors who were members
of such Board at the time of such nomination or election.
"CREDIT AGREEMENT" means that certain Amended and Restated Credit and
Participation Agreement among Loral SpaceCom Corporation, Space Systems/ Loral,
Inc., certain lending banks, Bank of America National Trust and Savings
Association, as Administrative Agent, and Istituto Bancario San Paolo Di Torino
S.P.A., individually and as Italian Export Financing Arranger and as Selling
Bank, dated as of November 14, 1997, providing for up to $850 million of credit
extensions, including any related notes, guarantees, collateral documents,
instruments and agreements executed in connection therewith, and in each case as
amended, modified, renewed, refunded, replaced or refinanced from time to time.
"CREDIT FACILITIES" means one or more debt facilities (including, without
limitation, the Credit Agreement) or commercial paper facilities, in each case
with banks or other institutional lenders providing for revolving credit loans,
term loans, receivables financing (including through the sale of receivables to
such lenders or to special purpose entities formed to borrow from such lenders
against such receivables) or letters of credit, in each case, as amended,
restated, modified, renewed, refunded, replaced or refinanced in whole or in
part from time to time.
"DEFAULT" means any event that is, or with the passage of time or the
giving of notice or both would be, an Event of Default.
"DESIGNATED OTHER PERMITTED CONSIDERATION" means the fair market value of
non-cash consideration received by Loral or one of its Restricted Subsidiaries
in connection with an Asset Sale that is so designated as Designated Other
Permitted Consideration pursuant to an Officers' Certificate, setting forth the
basis of such valuation, less the amount of cash or Cash Equivalents received in
connection with a sale of such Designated Other Permitted Consideration.
"DISQUALIFIED STOCK" means any Capital Stock that, by its terms (or by the
terms of any security into which it is convertible, or for which it is
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exchangeable, in each case at the option of the holder thereof), or upon the
happening of any event, matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or is redeemable at the option of the
holder thereof, in whole or in part, on or prior to the date that is 91 days
after the date on which the notes mature. Notwithstanding the preceding
sentence, any Capital Stock that would constitute Disqualified Stock solely
because the holders thereof have the right to require Loral to repurchase such
Capital Stock upon the occurrence of a Change of Control or an asset sale shall
not constitute Disqualified Stock if the terms of such Capital Stock provide
that Loral may not repurchase or redeem any such Capital Stock pursuant to such
provisions unless such repurchase or redemption complies with the covenant
described above under the caption "-- Covenants -- Restricted Payments."
"EQUITY INTERESTS" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"EXISTING INDEBTEDNESS" means Indebtedness of Loral and its Subsidiaries
(other than Indebtedness under the Credit Agreement) in existence on the Issue
Date, until such amounts are repaid.
"EQUITY OFFERING" means any public or private sale of Equity Interests
(other than Disqualified Stock) of Loral, other than private sales of Equity
Interests to an Affiliate of Loral.
"GAAP" means generally accepted accounting principles in the United States
set forth in the opinions and pronouncements of the Accounting Principles Board
of the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by any such other entity as have been approved by a significant
segment of the accounting profession, which are in effect from time to time.
"GUARANTEE" means a guarantee other than by endorsement of negotiable
instruments for collection in the ordinary course of business, direct or
indirect, in any manner including, without limitation, by way of a pledge of
assets or through letters of credit or reimbursement agreements in respect
thereof, of all or any part of any Indebtedness.
"HEDGING OBLIGATIONS" means, with respect to any specified Person, the
obligations of such Person under:
(1) interest rate swap agreements, interest rate cap agreements and
interest rate collar agreements; and
(2) other agreements or arrangements entered into in the ordinary course of
business and consistent with past practices designed to protect such
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Person against fluctuations in interest rates or currency exchange
rates.
"INDEBTEDNESS" means, with respect to any specified Person, any
indebtedness of such Person, whether or not contingent, in respect of:
(1) borrowed money;
(2) evidenced by bonds, notes, debentures or similar instruments or letters
of credit, excluding letters of credit supporting obligations under
customer contracts until such letters of credit are drawn;
(3) banker's acceptances;
(4) Capital Lease Obligations;
(5) the balance deferred and unpaid of the purchase price of any property,
except any such balance that constitutes an accrued expense or trade
payable; or
(6) Hedging Obligations,
if and to the extent any of the preceding items (other than letters of credit
and Hedging Obligations) would appear as a liability upon a balance sheet of the
specified Person prepared in accordance with GAAP. In addition, the term
"Indebtedness" includes all Indebtedness of others secured by a Lien on any
asset of the specified Person (whether or not such Indebtedness is assumed by
the specified Person) and, to the extent not otherwise included, the Guarantee
by the specified Person of any Indebtedness of any other Person.
The amount of any Indebtedness outstanding as of any date shall be:
(1) the accreted value thereof, in the case of any Indebtedness issued with
original issue discount;
(2) the principal amount thereof, together with any interest thereon that
is more than 30 days past due, in the case of any other Indebtedness;
and
(3) in the case of an obligation under a Hedging Obligation
(a) zero if such obligation has been incurred pursuant to clause (7)
of the second paragraph of the covenant described under
"-- Covenants -- Incurrence of Indebtedness and Issuance of
Preferred Stock" or
(b) the notional amount of such obligation if not incurred pursuant to
such clause.
"INVESTMENTS" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the form of direct or indirect
loans (including Guarantees or other obligations), advances or capital
contributions (excluding commission, travel and similar advances to officers and
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employees made in the ordinary course of business), purchases or other
acquisitions for consideration of Indebtedness, Equity Interests or other
securities, together with all items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP; provided,
however, that Investments shall not include any commercially reasonable (as
determined in good faith by either the Board of Directors of Loral or senior
management of Loral) extensions of credit to, or Investments made in, any Person
in connection with the purchase or sale of satellites or satellite services. If
Loral or any Restricted Subsidiary of Loral sells or otherwise disposes of any
Equity Interests of any direct or indirect Restricted Subsidiary of Loral such
that, after giving effect to any such sale or disposition, such Person is no
longer a Restricted Subsidiary of Loral and is not a Permitted Venture, Loral
shall be deemed to have made an Investment on the date of any such sale or
disposition equal to the fair market value of the Equity Interests of such
Restricted Subsidiary not sold or disposed of in an amount determined as
provided in the final paragraph of the covenant described above under the
caption "-- Covenants -- Restricted Payments."
"ISSUE DATE" means the date on which the old notes were originally issued.
"LIEN" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law,
including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction.
"MARKETABLE SECURITIES" means, with respect to any Asset Sale, any readily
marketable equity securities that are
(1) traded on the New York Stock Exchange, the American Stock Exchange or
the Nasdaq National Market and
(2) issued by a corporation having a total equity market capitalization of
not less than $250 million; provided that the excess of
(a) the aggregate amount of securities of any one such corporation
held by Loral and any Restricted Subsidiary over
(b) ten times the average daily trading volume of such securities
during the 20 immediately preceding trading days shall be deemed
not to be Marketable Securities, as determined on the date of the
contract relating to such Asset Sale.
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"NET INCOME" means, with respect to any specified Person, the net income
(loss) of such Person, determined in accordance with GAAP and before any
reduction in respect of Preferred Stock dividends, excluding, however:
(1) any gain (but not loss), together with any related provision for taxes
on such gain (but not loss), realized in connection with:
(a) any Asset Sale or
(b) the disposition of any securities by such Person or any of its
Restricted Subsidiaries or the extinguishment of any Indebtedness
of such Person or any of its Restricted Subsidiaries; and
(2) any extraordinary gain (but not loss), together with any related
provision for taxes on such extraordinary gain (but not loss).
"NET PROCEEDS" means the aggregate cash proceeds received by Loral or any
of its Restricted Subsidiaries in respect of any Asset Sale (including, without
limitation, any cash received upon the sale or other disposition of any non-cash
consideration received in any Asset Sale), net of the direct costs relating to
such Asset Sale, including, without limitation, legal, accounting and investment
banking fees, and sales commissions, and any relocation expenses incurred as a
result thereof, taxes paid or payable as a result thereof, in each case, after
taking into account any available tax credits or deductions and any tax sharing
arrangements, and amounts required to be applied to the repayment of
Indebtedness (other than Indebtedness under any one or more Credit Facilities)
secured by a lien on the asset or assets that were the subject of such Asset
Sale, and any reserve for adjustment in respect of the sale price of such asset
or assets established in accordance with GAAP.
"NON-RECOURSE DEBT" means Indebtedness as to which neither Loral nor any of
its Restricted Subsidiaries (other than the Restricted Subsidiary that is the
primary obligor and its Subsidiaries so long as no Capital Stock of such
Subsidiaries is owned by Loral or any other Restricted Subsidiary),
(1) provides credit support of any kind (including any undertaking,
agreement or instrument that would constitute Indebtedness),
(2) is directly or indirectly liable as a guarantor or otherwise, or
(3) constitutes the lender.
"OBLIGATIONS" means any principal, premium if any, interest, penalties,
fees, indemnifications, guarantees, reimbursements, damages and other
liabilities payable under the documentation governing any Indebtedness.
"PERMITTED BUSINESS" means any of the lines of business conducted by Loral
and its Restricted Subsidiaries or its existing Permitted Ventures on the Issue
Date and any other space or communication businesses and any business reasonably
related thereto.
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"PERMITTED INVESTMENTS" means:
(1) any Investment in Loral or in a Restricted Subsidiary of Loral;
(2) any Investment in Cash Equivalents;
(3) any Investment by Loral or any Restricted Subsidiary of Loral in a
Person engaged in a Permitted Business, if as a result of such
Investment:
(a) such Person becomes a Restricted Subsidiary of Loral; or
(b) such Person is merged, consolidated or amalgamated with or into,
or transfers or conveys substantially all of its assets to, or is
liquidated into, Loral or a Restricted Subsidiary of Loral;
(4) any Investment made as a result of the receipt of non-cash
consideration from an Asset Sale that was made pursuant to and in
compliance with the covenant described above under the caption
"-- Repurchase at the Option of Holders -- Asset Sales;"
(5) any acquisition of assets solely in exchange for the issuance of
Equity Interests (other than Disqualified Stock) of Loral;
(6) Hedging Obligations;
(7) Investments in Permitted Ventures;
(8) Investments existing on the Issue Date;
(9) Investments in Skybridge, L.P. that are either
(a) required pursuant to the partnership agreement in existence on the
Issue Date or
(b) required to avoid disproportionate dilution to Loral's equity
interest therein pursuant to such partnership agreement or to
avoid financial penalties; and
(10) other Investments in any Person principally engaged in Permitted
Businesses having an aggregate fair market value (measured on the date
each such Investment was made and without giving effect to subsequent
changes in value), when taken together with all other Investments made
pursuant to this clause (10) at any time outstanding not to exceed 5%
of Loral's Consolidated Tangible Assets.
"PERMITTED LIENS" means:
(1) Liens on assets of Loral or its Restricted Subsidiaries securing
Indebtedness and other Obligations under Credit Facilities that were
permitted by the terms of the indenture to be incurred;
(2) Liens in favor of Loral or any of its Restricted Subsidiaries;
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(3) Liens on property of a Person existing at the time such Person is
merged with or into or consolidated with Loral or any Restricted
Subsidiary of Loral; provided that such Liens were in existence prior
to the contemplation of such merger or consolidation and do not extend
to any assets other than those of the Person merged into or
consolidated with Loral or the Restricted Subsidiary;
(4) Liens on property existing at the time of acquisition thereof by Loral
or any Restricted Subsidiary of Loral; provided that such Liens were
in existence prior to the contemplation of such acquisition;
(5) Liens to secure the performance of statutory obligations, surety or
appeal bonds, performance bonds or other obligations of a like nature
incurred in the ordinary course of business;
(6) Liens to secure Indebtedness (including Capital Lease Obligations)
permitted by clause (4) of the second paragraph of the covenant
entitled "-- Covenants -- Incurrence of Indebtedness and Issuance of
Preferred Stock";
(7) Liens existing on the Issue Date and Liens Loral or any Restricted
Subsidiary are or may be obligated to create pursuant to agreements in
existence on the Issue Date;
(8) Liens for taxes, assessments or governmental charges or claims that
are not yet delinquent or that are being contested in good faith by
appropriate proceedings promptly instituted and diligently concluded,
provided that any reserve or other appropriate provision as shall be
required in conformity with GAAP shall have been made therefor;
(9) Liens incurred in the ordinary course of business of Loral or any
Restricted Subsidiary of Loral with respect to obligations that do not
exceed $50 million at any one time outstanding;
(10) other Liens incidental to the conduct of Loral's and its Restricted
Subsidiaries' businesses or the ownership of their respective property
not securing any Indebtedness, and which do not in the aggregate
materially detract from the value of Loral's and its Restricted
Subsidiaries' property when taken as a whole, or materially impair the
use thereof in the operation of their respective businesses; and
(11) Liens on assets of Unrestricted Subsidiaries that secure Non-Recourse
Debt of Unrestricted Subsidiaries.
"PERMITTED REFINANCING INDEBTEDNESS" means any Indebtedness of Loral or any
of its Restricted Subsidiaries issued in exchange for, or the net proceeds of
which are used to extend, refinance, renew, replace, defease or refund other
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Indebtedness of Loral or any of its Restricted Subsidiaries (other than
intercompany Indebtedness); provided that:
(1) the principal amount (or accreted value, if applicable) of such
Permitted Refinancing Indebtedness does not exceed the principal
amount (or accreted value, if applicable), of the Indebtedness so
extended, refinanced, renewed, replaced, defeased or refunded (plus
all accrued interest thereon and the amount of all customary expenses
incurred in connection therewith);
(2) such Permitted Refinancing Indebtedness has a final maturity date
later than the final maturity date of, and has a Weighted Average Life
to Maturity equal to or greater than the Weighted Average Life to
Maturity of, the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded;
(3) if the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded is junior in right of payment to the notes, such
Permitted Refinancing Indebtedness has a final maturity date later
than the final maturity date of, and is junior in right of payment to,
the notes on terms at least as favorable to the Holders of notes as
those contained in the documentation governing the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded; and
(4) such Indebtedness is incurred either by Loral or by the Restricted
Subsidiary who is the obligor on the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded.
"PERMITTED VENTURE" means:
(1) a corporation, partnership or other entity other than a Subsidiary
engaged in one or more Permitted Businesses in respect of which Loral
or a Restricted Subsidiary
(a) beneficially owns at least 20% of the Capital Stock of such
entity and
(b) either is a party to an agreement providing for one or more
parties to such agreement (which may or may not be Loral or a
Subsidiary), or is a member of a group that, pursuant to the
constituent documents of the applicable corporation, partnership
or other entity, has the power, to direct the policies,
management and affairs of such entity; or
(2) Globalstar Telecommunications Limited ("Globalstar Telecommunications
Limited"), so long as Globalstar, L.P. is a Permitted Venture and
Globalstar Telecommunications Limited's principal asset consists of
Equity Interests in Globalstar.
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"PERSON" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint stock company, trust,
unincorporated organization, government or agency or political subdivision
thereof or any other entity.
"PREFERRED STOCK" of any Person means Capital Stock of such Person of any
class or classes (however designated) that ranks prior, as to the payment of
dividends or as to the distribution of assets upon any voluntary or involuntary
liquidation, dissolution or winding up of such Person, to shares of Capital
Stock of any other class of such Person.
"RESTRICTED INVESTMENT" means an Investment other than a Permitted
Investment.
"RESTRICTED SUBSIDIARY" of a Person means any Subsidiary of such Person
that is not an Unrestricted Subsidiary.
"SERIES C PREFERRED STOCK" means Loral's 6% Series C Convertible Redeemable
Preferred Stock due 2007.
"SIGNIFICANT SUBSIDIARY" means any Subsidiary that would be a "significant
subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated by
the SEC, as such Regulation is in effect on the date hereof, using a percentage
of 5% for such calculations instead of the percentage set forth therein.
"STATED MATURITY" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
"SUBSIDIARY" means, with respect to any specified Person, any corporation,
partnership, association or other business entity that would be required under
GAAP to be consolidated in the financial statements of such Person or one or
more of the other Subsidiaries of that Person (or a combination thereof).
"TANGIBLE NET WORTH" of any Person as of any date means the Consolidated
Tangible Assets of such Person less the Total Indebtedness of such Person.
"TOTAL INDEBTEDNESS" means, at any time of determination, without
duplication, the sum of
(1) all Indebtedness of Loral and its Restricted Subsidiaries at such time,
(2) the aggregate redemption price of any Disqualified Stock and
(3) the aggregate liquidation preference of any Preferred Stock of Loral's
Restricted Subsidiaries, in each case as determined on a consolidated
basis in accordance with GAAP.
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"UNRESTRICTED SUBSIDIARY" means any Subsidiary of Loral that is designated
by the Board of Directors of Loral as an Unrestricted Subsidiary pursuant to a
Board Resolution, but only to the extent that such Subsidiary:
(1) has no Indebtedness other than Non-Recourse Debt;
(2) is not party to any agreement, contract, arrangement or understanding
with Loral or any Restricted Subsidiary of Loral unless the terms of
any such agreement, contract, arrangement or understanding are no less
favorable to Loral or such Restricted Subsidiary than those that might
be obtained at the time from Persons who are not Affiliates of Loral;
(3) is a Person with respect to which neither Loral nor any of its
Restricted Subsidiaries has any direct or indirect obligation
(a) to subscribe for additional Equity Interests or
(b) to maintain or preserve such Person's financial condition or to
cause such Person to achieve any specified levels of operating
results;
(4) has not guaranteed or otherwise directly or indirectly provided credit
support for any Indebtedness of Loral or any of its Restricted
Subsidiaries; and
(5) has at least one director on its board of directors that is not a
director or executive officer of Loral or any of its Restricted
Subsidiaries and has at least one executive officer that is not a
director or executive officer of Loral or any of its Restricted
Subsidiaries.
Any designation of a Subsidiary of Loral as an Unrestricted Subsidiary
shall be evidenced to the trustee by filing with the trustee a certified copy of
the Board Resolution giving effect to such designation and an Officers'
Certificate certifying that such designation complied with the preceding
conditions and was permitted by the covenant described above under the caption
"-- Covenants -- Restricted Payments." If, at any time, any Unrestricted
Subsidiary would fail to meet the preceding requirements as an Unrestricted
Subsidiary, it shall thereafter cease to be an Unrestricted Subsidiary for
purposes of the indenture and any Indebtedness of such Subsidiary shall be
deemed to be incurred by a Restricted Subsidiary of Loral as of such date and,
if such Indebtedness is not permitted to be incurred as of such date under the
covenant described under the caption "-- Covenants -- Incurrence of Indebtedness
and Issuance of Preferred Stock," Loral shall be in default of such covenant.
The Board of Directors of Loral may at any time designate any Unrestricted
Subsidiary to be a Restricted Subsidiary; provided that such designation shall
be deemed to be an incurrence of Indebtedness by a
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Restricted Subsidiary of Loral of any outstanding Indebtedness of such
Unrestricted Subsidiary and such designation shall only be permitted if
(1) such Indebtedness is permitted to be incurred under the covenant
described under the caption "-- Covenants -- Incurrence of Indebtedness
and Issuance of Preferred Stock," calculated on a pro forma basis as if
such designation had occurred at the beginning of the four-quarter
reference period or balance sheet date, as applicable, and
(2) no Default would be in existence following such designation.
"VOTING STOCK" of any Person as of any date means the Capital Stock of such
Person that is at the time entitled to vote in the election of the Board of
Directors of such Person.
"WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing:
(1) the sum of the products obtained by multiplying
(a) the amount of each then remaining installment, sinking fund,
serial maturity or other required payments of principal, including
payment at final maturity, in respect thereof, by
(b) the number of years (calculated to the nearest one-twelfth) that
will elapse between such date and the making of such payment; by
(2) the then outstanding principal amount of such Indebtedness.
"WHOLLY OWNED SUBSIDIARY" of any specified Person means a Subsidiary of
such Person all of the outstanding Capital Stock or other ownership interests of
which (other than directors' qualifying shares) shall at the time be owned by
such Person or by one or more Wholly Owned Subsidiaries of such Person and one
or more Wholly Owned Subsidiaries of such Person.
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BOOK-ENTRY; DELIVERY AND FORM
The new notes initially will be represented by one or more permanent global
certificates in definitive, fully registered form, called a "global note." The
global note will be deposited upon issuance with DTC and registered in the name
of DTC.
THE GLOBAL NOTE. We expect that pursuant to procedures established by DTC
(a) upon issuance of the global note, DTC or its custodian will credit, on
its internal system, the principal amount of the individual beneficial
interests represented by the global note to the respective accounts of
persons who have accounts with such depositary and
(b) ownership of beneficial interests in the global note will be shown on,
and the transfer of ownership will be effected only through, records
maintained by DTC or its nominee (with respect to interests of
participants) and the records of participants (with respect to
interests of persons other than participants).
Ownership of beneficial interests in the global notes will be limited to persons
who have accounts with DTC ("participants") or persons who hold interests
through participants.
So long as DTC or its nominee is the registered owner or holder of the new
notes, DTC or the nominee will be considered the sole owner or holder of the new
notes represented by the global note for all purposes under the indenture. No
beneficial owner of an interest in the global note will be able to transfer that
interest except in accordance with DTC's procedures.
Payments of interest, principal and other amounts due on the global note
will be made to DTC or its nominee as the registered owner. Neither we, the
trustee or any paying agent will have any responsibility or liability for any
aspect of the records relating to or payments made on account of beneficial
ownership interests in the global note or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interest.
We expect that DTC or its nominee, upon receipt of any payment of interest,
principal or other amounts due on the global note, will credit participants'
accounts with payments in amounts proportionate to their respective beneficial
interests in the global note as shown on the records of DTC. We also expect that
payments by participants to owners of beneficial interests in the global note
held through such participants will be governed by standing instructions and
customary practice, as is the case with securities held for the accounts of
customers registered in the names of nominees for those customers. Such payments
will be the responsibility of the participants.
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Transfers between participants in DTC will be effected in the ordinary way
through DTC's settlement system in accordance with DTC rules and will be settled
in same day funds.
DTC has advised us that it will take any action permitted to be taken by a
holder of new notes only at the direction of a participant to whose account the
DTC interests in the global note are credited and only as to such portion of the
notes as to which the participant has given such direction. However, if there is
an event of default under the indenture, DTC will exchange the global note for
certificated notes, which it will distribute to its participants.
DTC has advised as follows: DTC is a limited purpose trust company
organized under the laws of the State of New York, a member of the Federal
Reserve System, a "clearing corporation" within the meaning of the Uniform
Commercial Code and a "Clearing Agency" registered pursuant to the provisions of
Section 17A of the Exchange Act. DTC was created to hold securities for its
participants and facilitate the clearance and settlement of securities
transactions between participants through electronic book-entry changes in
accounts of its participants, thereby eliminating the need for physical movement
of certificates. Participants include securities brokers and dealers, banks,
trust companies and clearing corporations and certain other organizations.
Indirect access to the DTC system is available to others such as banks, brokers
and trust companies that clear through or maintain a custodial relationship with
a participant, either directly or indirectly ("indirect participants").
Although DTC has agreed to the foregoing procedures to facilitate transfers
of interests in the global note among participants of DTC, it is under no
obligation to perform those procedures, and those procedures may be discontinued
at any time. Neither we nor the trustee will have any responsibility for the
performance by DTC or its participants or indirect participants of our
respective obligations under the rules and procedures governing their
operations.
CERTIFICATED SECURITIES. If DTC is at any time unwilling or unable to
continue as a depositary for the global note and a successor depositary is not
appointed by us within 90 days, certificated notes will be issued in exchange
for the global note.
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DESCRIPTION OF OTHER INDEBTEDNESS
LORAL SPACECOM CORPORATION AND SPACE SYSTEMS/LORAL CREDIT AGREEMENT
The Credit Agreement provides for borrowing availability of $500 million of
revolving loans, including letters of credit, $275 million of term loans and $75
million of additional letters of credit. Both the term loan facility and
revolving credit facility are for a period of five years from the date of the
Credit Agreement, November 14, 1997. The separate letter of credit facility runs
for a two-year period. The term loan facility requires repayment in twelve
consecutive quarterly installments beginning December 31, 1999. The first four
installments are $18.75 million each and the final eight installments are $25
million each. Obligations under the Credit Agreement are secured by the stock of
Loral SpaceCom Corporation and Space Systems/Loral and bear interest, at Loral
SpaceCom Corporation's option, at various rates based on margins over the lead
bank's base rate or the London Interbank Offer Rate for periods of one to six
months. Loral SpaceCom Corporation pays a commitment fee on the unused portion
of the facilities.
The Credit Agreement contains customary covenants including an interest
coverage ratio and debt to capitalization ratios. In addition, the Credit
Agreement contains limitations on indebtedness, liens, guarantee obligations,
asset sales, dividends, investments and transactions with affiliates. Under the
terms of the Credit Agreement, Loral SpaceCom may pay dividends to its parent if
the cumulative dividend payments do not exceed 50% of cumulative net income, as
defined, and the ratio of funded debt to EBITDA, as defined, is less than three
to one. Notwithstanding this dividend payment limitation, as of December 31,
1998 Loral SpaceCom could pay a dividend to its parent of up to $70 million.
Loral SpaceCom has an intercompany note payable outstanding with its parent in
the amount of $347 million at December 31, 1998. This note requires semi-annual
interest payments of $31.5 million to be made on the first day of April and
October. This note, however, can be prepaid down to $200 million under the terms
of the Credit Agreement. As of December 31, 1998 Loral SpaceCom could borrow an
additional $151 million under the Credit Agreement.
As of December 31, 1998, approximately $622 million, excluding letters of
credit, was outstanding under the Credit Agreement and other credit facilities.
LORAL SECURED STANDBY CREDIT FACILITY
Loral has a $115 million secured standby credit facility to support its
guarantee of a $115 million term loan obligation. This facility was undrawn as
of December 31, 1998.
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LORAL ORION NOTES
Loral Orion has outstanding $443 million in principal amount of 11 1/4%
senior notes due 2007 and $484 million in principal amount of 12 1/2% senior
discount notes due 2007. This indebtedness of Loral Orion is non-recourse to us.
SATMEX
In connection with the privatization by the Federal Government of Mexico
(the "Mexican Government") of its fixed satellite services business, Loral and
Principia, S.A. de C.V. ("Principia"), formerly known as Telefonica Autrey, S.A.
de C.V., formed a joint venture, Firmamento Mexicano, S.A. de R.L. de C.V.
("Holdings"). On November 17, 1997, Holdings acquired 75% of the outstanding
capital stock of SatMex for $646.8 million. The purchase price was financed by a
Loral equity contribution of $94.6 million, a Principia equity contribution of
$50.9 million and debt issued by a subsidiary of Holdings. As part of the
acquisition, Servicios Corporativos Satelitales, S.A. de C.V. ("Servicios"), a
wholly owned subsidiary of Holdings, agreed to issue a $129.9 million seven year
obligation bearing interest at 6.03% to the Mexican Government (the "Government
Obligation") in consideration for the assumption by SatMex of the debt incurred
by Servicios in connection with the acquisition. The debt of SatMex and
Servicios is non-recourse to Loral and Principia. However, Loral and Principia
have agreed to maintain assets in a collateral trust in an amount equal to the
value of the Government Obligation through December 30, 2000 and, thereafter, in
an amount equal to 1.2 times the value of the Government Obligation until
maturity. As of December 31, 1998, Loral and Principia have pledged their
respective shares in Holdings in such trust. Loral has a 65% economic interest
in Holdings and a 49% indirect economic interest in SatMex. Loral and Principia
have committed to make an equity investment in SatMex of up to $35 million prior
to March 31, 1999.
As of December 31, 1998, SatMex had total indebtedness of $644 million.
GLOBALSTAR
As of December 31, 1998, Globalstar had senior notes in an aggregate
principal amount of $1.45 billion outstanding. In addition, Globalstar had
vendor financing of $371 million outstanding as of December 31, 1998.
Globalstar's indebtedness is non-recourse to us; however, we are contingently
liable with respect to approximately $68 million of Globalstar's $250 million
revolving line of credit, which was undrawn as of December 31, 1998.
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FOREIGN ISSUER CONSIDERATIONS
The following discussion is based on the advice of Appleby, Spurling &
Kempe, Bermuda counsel to Loral.
We have been designated as a non-resident for exchange control purposes by
the Bermuda Monetary Authority.
Under Bermuda law, we are an exempted company (that is, we are exempted
from the provisions of Bermuda law which stipulate that at least 60% of our
equity must be beneficially owned by Bermudians). As an exempted company, we are
exempt from Bermuda laws which restrict the percentage of share capital that may
be held by non-Bermudians, but as an exempted company we may not participate in
certain business transactions, including:
(1) the acquisition or holding of land in Bermuda, except that required for
its business and held by way of lease or tenancy for terms of not more
than 21 years, without the express authorization of the Bermuda
legislature;
(2) the taking of mortgages on land in Bermuda to secure an amount in
excess of $50,000 without the consent of the Bermuda Minister of
Finance;
(3) the acquisition of securities created or issued by, or any interest in,
any local company or business, other than certain types of Bermuda
government securities or securities of another exempted company,
partnership or other corporation resident in Bermuda but incorporated
abroad; or
(4) the carrying on of business of any kind in Bermuda, except in
furtherance of our business carried on outside Bermuda or under a
license granted by the Bermuda Minister of Finance.
The Bermuda government actively encourages foreign investment in exempted
entities like Loral that are based in Bermuda but do not operate in competition
with local business. In addition to having no restrictions on the degree of
foreign ownership, we are subject neither to taxes on our income or dividends
nor to any foreign exchange controls in Bermuda. In addition, there is no
capital gains tax in Bermuda, and we can accumulate profits, as required,
without limitation.
BERMUDA TAX CONSIDERATIONS
At the date of this prospectus, there is no Bermuda income tax, corporation
or profits tax, withholding tax, capital gains tax, capital transfer tax, estate
or stamp duty or inheritance tax payable by us or the holders, other than
holders ordinarily resident in Bermuda, in respect of their investment in the
new notes. Accordingly, the exchange of the old notes for the new notes will not
be subject to taxes in Bermuda.
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We have obtained from the Minister of Finance under the Exempted
Undertakings Tax Protection Act 1966, as amended, a certificate confirming that,
in the event of there being enacted in Bermuda any legislation imposing tax
computed on profits or income, or computed on any capital asset, gain or
appreciation or any tax in the nature of estate duty or inheritance tax, such
tax shall not until March 28, 2016 be applicable to us or to any of our
operations, or other obligations of us except insofar as such tax applies to
persons ordinarily resident in Bermuda and holding such new notes or other
obligations, or to any land in Bermuda leased or rented to us.
We are liable to pay the Bermuda government an annual registration fee
calculated on a sliding scale based upon our assessable capital, which fee will
not exceed BD$26,500.
We have been classified as non-resident of the Bermuda exchange control
area by the Bermuda Monetary Authority, whose permission for the issue of the
new notes has been obtained. The transfer of new notes between persons regarded
as non-resident of Bermuda for exchange control purposes and the issue and
redemption of new notes to and by such persons may be effective without specific
consents under the Exchange Control Act 1972 of Bermuda and Regulations made
thereunder. Transfers involving any person regarded as resident in Bermuda for
exchange control purposes requires specific authorization under that Act. By
virtue of being a non-resident of Bermuda for exchange control purposes, we are
free to acquire, hold and sell any foreign currency, securities and other
investments without restrictions.
Purchasers of new notes may be required to pay stamp taxes and other
charges in accordance with the laws and practices of the country of purchase.
Prospective purchasers should consult their tax advisers as to the tax laws of
applicable jurisdictions and the specific tax consequences of acquiring, holding
and disposing of the new notes.
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MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following is a general discussion of certain United States federal
income tax consequences associated with the exchange of the old notes for the
new notes pursuant to the exchange offer and the ownership and disposition of
the new notes, but does not purport to be a complete analysis of all potential
tax effects. The discussion is based on review of the Internal Revenue Code of
1986, as amended, U.S. Treasury Regulations, Internal Revenue Service rulings
and pronouncements and judicial decisions, all in effect as of the date hereof
and all of which are subject to change at any time, and any such change may be
applied retroactively in a manner that could adversely affect a holder of the
notes. The discussion does not address all of the U.S. federal income tax
consequences that may be relevant to a holder in light of such holder's
particular circumstances or to holders subject to special rules, such as certain
financial institutions, insurance companies, dealers in securities, tax-exempt
organizations and persons holding the notes as part of a "straddle", "hedge" or
"conversion transaction." In addition, this discussion is limited to persons
purchasing the old notes at the issue price. Moreover, the effect of any
applicable state, local or foreign tax laws is not discussed. The discussion
deals only with notes held as "capital assets" within the meaning of Section
1221 of the IRS Code. We have not sought and will not seek any rulings from the
IRS with respect to the position of Loral discussed below. There can be no
assurance that the IRS will not take a different position concerning the tax
consequences of the exchange of old notes for new notes and the ownership or
disposition of the new notes.
PROSPECTIVE HOLDERS OF NEW NOTES SHOULD CONSULT THEIR OWN TAX ADVISORS WITH
REGARD TO THE APPLICATION OF THE TAX CONSIDERATIONS DISCUSSED BELOW TO THEIR
PARTICULAR SITUATIONS AS WELL AS THE APPLICATION OF ANY STATE, LOCAL, FOREIGN OR
OTHER TAX LAWS, INCLUDING GIFT AND ESTATE TAX LAWS.
THE EXCHANGE OFFER
The exchange of old notes for new notes pursuant to the exchange offer will
not be treated as an exchange or other taxable event for United States federal
income tax purposes because, under the IRS Code and applicable regulations, the
new notes do not differ materially in kind or extent from the old notes. Rather,
the exchange of old notes for new notes pursuant to the exchange offer should be
treated as a continuation of the corresponding old notes because the terms of
the new notes are not materially different from the terms of the old notes.
Accordingly,
(1) no gain or loss should be realized,
(2) the holding period of the new note should include the holding period of
the old note exchanged for the new note and
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(3) the adjusted tax basis of the new note should be the same as the
adjusted tax basis of the old note exchanged for the new note
immediately before the exchange.
U.S. HOLDERS
This section discusses the rules applicable to the following U.S. holders:
(1) a citizen or resident of the United States for United States federal
income tax purposes,
(2) a corporation, partnership or other entity created or organized in or
under the laws of the United States or any political subdivision
thereof,
(3) an estate the income of which is subject to United States federal
income taxation regardless of its source or a trust if a U.S. court can
exercise primary supervision over the administration of the trust and
one or more U.S. persons have the authority to control all substantial
decisions of the trust or
(4) any other person whose worldwide income or gain is otherwise subject to
United States federal income taxation on a net income basis.
STATED INTEREST
Stated interest on the notes will be taxable to a U.S. holder as ordinary
interest income in accordance with the U.S. holder's method of tax accounting at
the time that the stated interest is accrued or actually or constructively
received. We believe that under applicable regulations, all of the stated
interest on the notes should be treated as foreign source income for United
States federal income tax purposes. For United States foreign tax credit
purposes, interest generally will be foreign source "passive income" or
"financial services income." Therefore, only foreign tax credits from sources
that also generate "passive income" or "financial services income" can offset
United States federal income tax imposed on the stated interest on the notes.
SALE, EXCHANGE AND RETIREMENT OF NOTES
A U.S. Holder of a note will recognize gain or loss upon the sale,
retirement or other taxable disposition of his/her notes. This gain or loss will
generally be equal to the difference between
(1) the amount of cash and the fair market value of property received for
the notes, other than amounts representing accrued but unpaid stated
interest, and
(2) the holder's adjusted tax basis in the notes.
The adjusted tax basis of the notes in the hands of an original holder
generally will be equal to the notes' purchase price. Gain or loss generally
will
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be capital gain or loss and will be long-term capital gain or loss, generally
taxed at a preferential rate, if the holder has held his/her notes for more than
one year. There are limits on the deductibility of capital losses. Any amounts
paid with respect to accrued but unpaid stated interest generally will be
taxable as ordinary interest income. Gain or loss realized on the sale,
retirement or other taxable disposition of a note derived by a U.S. holder
generally will treated as U.S. source income or loss for foreign tax credit
purposes.
LIQUIDATED DAMAGES
We intend to take the position that the liquidated damages described in the
registration rights agreement will be taxable to a U.S. holder as ordinary
income in accordance with the holder's method of accounting for United States
federal income tax purposes. It is possible, however, that the IRS may take a
different position, in which case a U.S. holder might be required to include
such liquidated damages in income as the liquidated damages accrue or become
fixed. The source of such liquidated damages is unclear; we believe that the
liquidated damages should be treated as foreign source income for foreign tax
credit purposes.
NON-U.S. HOLDERS
For purposes of this discussion, a Non-U.S. holder is any holder of notes
who is
(1) a nonresident alien individual or
(2) a foreign corporation, partnership or estate or trust which is not
subject to United States federal income tax on a net income basis.
Under present United States federal income and estate tax law, and subject
to the discussion of backup withholding below:
(1) payments of principal, premium, if any, and interest by us or any of
our paying agents to a Non-U.S. holder will not be subject to United
States federal withholding tax if, in the case of interest,
(a) the beneficial owner of the notes does not actually or
constructively own 10% or more of the total combined voting power
of all classes of our stock,
(b) the beneficial owner of notes is not a controlled foreign
corporation that is related to us through stock ownership, and
(c) either
(A) the beneficial owner of the notes certifies to us or our
agent, under penalties of perjury, that it is not a U.S.
holder and provides its name and address or
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(B) a securities clearing organization, bank or other financial
institution that holds customers' securities in the ordinary
course of its trade or business and holds the notes certifies
to us or our agent, under penalties of perjury, that a
statement that the beneficial owner is not a U.S. holder has
been received from the beneficial owner by it or by a
financial institution between it and the beneficial owner and
furnishes the payor with a copy thereof;
(2) a non-U.S. holder of notes will not be subject to United States federal
withholding tax on any gain realized on the sale or exchange of notes;
and
(3) notes held by an individual who at death is not a citizen or resident
of the United States will not be includible in the individual's gross
estate for purposes of the United States federal estate tax as a result
of the individual's death if (a) the individual did not actually or
constructively own 10% or more of the total combined voting power of
all classes of our stock and (b) the income on the note would not have
been effectively connected with a United States trade or business of
the individual at the individual's death.
Recently finalized regulations (the "Final Withholding Regulations"), that
are generally effective with respect to payments after December 31, 1999,
provide alternative methods for satisfying the certification requirement
described in clause (1)(c) above. The Final Withholding Regulations also
require, in the case of notes held by a foreign partnership, that
(1) the certification described in clause (1)(c) above be provided by the
partners rather than by the foreign partnership and
(2) the partnership provide certain information, including a United States
taxpayer identification number. A look-through rule will apply in the
case of tiered partnerships.
BACKUP WITHHOLDING AND INFORMATION REPORTING
U.S. HOLDERS
In general, information reporting requirements will apply to certain
payments of principal, premium, if any, and interest and to the proceeds of sale
of notes made to holders other than certain exempt recipients, such as
corporations. Backup withholding and information reporting generally will not
apply to payments of principal, premium, if any, and interest on notes made
outside the United States, other than payments made to an address in the United
Sates or by transfer to an account maintained by the holder with a bank in the
United States, by us or any paying agent, acting in its capacity as such, to a
holder. A 31% backup withholding tax may apply to such payments if the U.S.
holder fails to provide a taxpayer identification number or certification of
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foreign or other exempt status or is notified by the IRS that it has failed to
report in full dividend and interest income.
NON-U.S. HOLDERS
Under current law, information reporting on Internal Revenue Service Form
1099 and backup withholding will not apply to payments of principal, premium, if
any, and interest made by us or a paying agent to a Non-U.S. holder on notes;
provided, the certification described in clause (1)(c) under "Non-United States
Holders" above is received, and provided further that the payor does not have
actual knowledge that the holder is a U.S. person. We or a paying agent,
however, may report (on Internal Revenue Service Form 1042S) payments of
interest on notes.
Payments of the proceeds from the sale by a Non-U.S. holder of a note made
to or through a foreign office of a broker will not be subject to information
reporting or backup withholding, except that if the broker is a U.S. person, a
controlled foreign corporation for United States tax purposes or a foreign
person 50% or more of whose gross income is effectively connected with a United
States trade or business for a specified three-year period, information
reporting may apply to such payments. Payments of the proceeds from the sale of
notes to or through the United States office of a broker is subject to
information reporting and backup withholding unless the holder or beneficial
owner certifies as to its non-United States status or otherwise establishes an
exemption from information reporting and backup withholding. See the discussion
above with respect to the rules under the Final Withholding Regulations.
PLAN OF DISTRIBUTION
Each holder desiring to participate in the exchange offer will be required
to represent, among other things, that
(1) it is not an "affiliate" (as defined in Rule 405 of the Securities Act)
of us,
(2) it is not engaged in, and does not intend to engage in, and has no
arrangement or understanding with any person to participate in a
distribution of the new notes, and
(3) it is acquiring the new notes in the ordinary course of its business.
A holder unable to make the foregoing representations is referred to herein
as a "restricted holder". A restricted holder will not be able to participate in
the exchange offer, and may only sell its old notes pursuant to a registration
statement containing the selling securityholder information required by Item 507
of Regulation S-K of the Securities Act, or pursuant to an exemption from the
registration requirement of the Securities Act.
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Each participating broker-dealer is required to acknowledge in the letter
of transmittal that it acquired the old notes as a result of market-making
activities or other trading activities and that it will deliver a prospectus in
connection with the resale of such new notes. Based upon interpretations by the
staff of the SEC, we believe that new notes issued pursuant to the exchange
offer to participating broker-dealers may be offered for resale, resold, and
otherwise transferred by a participating broker-dealer upon compliance with the
prospectus delivery requirements, but without compliance with the registration
requirements, of the Securities Act. We have agreed that for a period of 180
days following consummation of the exchange offer, we will make this prospectus
available to participating broker-dealers for use in connection with any such
resale. During such period of time, delivery of this prospectus, as it may be
amended or supplemented, will satisfy the prospectus delivery requirements of a
participating broker-dealer engaged in market making or other trading
activities.
Based upon interpretations by the staff of the SEC, we believe that new
notes issued pursuant to the exchange offer may be offered for resale, resold
and otherwise transferred by a holder thereof, other than a participating
broker-dealer, without compliance with the registration and prospectus delivery
requirements of the Securities Act.
We will not receive any proceeds from any sale of new notes by broker-
dealers. New notes received by participating broker-dealers for their own
account pursuant to the exchange offer may be sold from time to time in one or
more transactions in the over-the-counter market, in negotiated transactions,
through the writing of options on the new notes or a combination of such methods
of resale, at market prices prevailing at the time of resale, at prices related
to such prevailing market prices or at negotiated prices. Any such resale may be
made directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
participating broker-dealer and/or the purchasers of any such new notes. Any
participating broker-dealer that resells new notes that were received by it for
its own account pursuant to the exchange offer and any broker or dealer that
participates in a distribution of such new notes may be deemed to be an
"underwriter" within the meaning of the Securities Act and any profit on any
such resale of new notes and any commissions or concessions received by any such
persons may be deemed to be underwriting compensation under the Securities Act.
The letter of transmittal states that by acknowledging that it will deliver and
by delivering a prospectus, a participating broker-dealer will not be deemed to
admit that it is an "underwriter" within the meaning of the Securities Act.
We have agreed to pay all expenses incidental to the exchange offer other
than commissions and concessions of any brokers or dealers and will indemnify
holders of the notes, including any broker-dealers, against certain liabilities,
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including liabilities under the Securities Act, as set forth in the registration
rights agreement.
INCORPORATION OF MATERIAL DOCUMENTS BY REFERENCE
The SEC allows us to "incorporate by reference" the information we file
with them, which means we can disclose important information to you by referring
you to those documents. The information included in the following documents is
incorporated by reference and is considered to be a part of this prospectus. The
most recent information that we file with the SEC automatically updates and
supersedes more dated information.
We have previously filed (File No. 1-14180) the following documents with
the SEC and are incorporating them by reference into this prospectus.
(a) Our Annual Report on Form 10-K for the fiscal year ended December 31,
1998, and Globalstar's consolidated financial statements included in
Globalstar Telecommunications Limited and Globalstar's Annual Report on
Form 10-K for the fiscal year ended December 31, 1998, all filed
pursuant to the Exchange Act;
(b) Our Current Report on Form 8-K, filed on January 19, 1999 pursuant to
the Exchange Act; and
(c) Our Proxy Statement relating to the 1999 annual meeting of
stockholders.
We also incorporate by reference all documents subsequently filed by us
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act until all of
the old notes are exchanged for new notes.
We will provide, upon request, without charge to each person, including any
person having a control relationship with that person, to whom a prospectus is
delivered, a copy of any or all of the information that has been incorporated by
reference in this prospectus but not delivered with this prospectus. If you
would like to obtain this information from us, please direct your request,
either in writing or by telephone, to Eric J. Zahler, Esq., General Counsel, 600
Third Avenue, New York, New York 10016, Telephone: (212) 697-1105.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and other
information with the SEC and have filed a registration statement with the SEC on
Form S-4 to register this exchange offer. Since this prospectus does not contain
all of the important business and financial information included in the
registration statement, you may wish to refer to the registration statement and
its exhibits for further information about us, the exchange offer and the new
notes. This information is also available without charge upon written or oral
request. Call or write us at Loral SpaceCom Corporation, 600 Third Avenue,
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New York, New York, Attention: Secretary (Telephone (212) 697-1105) to request
your free copies. To obtain timely delivery, you should request the information
at least five days before you make your decision as to whether or not to
exchange your notes.
You can access our SEC filings electronically at www.sec.gov, and can read
and copy our filings at the SEC's Public Reference Room (800-SEC-0330) at 450
Fifth Street, N.W., Washington, D.C. 20549 and at regional public reference
facilities maintained by the SEC located at Seven World Trade Center, Suite
1300, New York, New York 10048 and Citicorp Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661. You can also obtain more information about
us by visiting our web site at http://www.loral.com.
We remind professional securities dealers of their obligation under the
securities laws to deliver a copy of this prospectus to anyone who buys new
notes from them until , 1999, which is the 90th day after the
date of this prospectus. Securities dealers who were initial purchasers of the
old notes and are acting as underwriters of unsold allotments have additional
prospectus delivery requirements.
LEGAL MATTERS
The validity of the new notes will be passed upon for us by Appleby,
Spurling & Kempe, Hamilton, Bermuda. Mr. Robert Hodes is of counsel to the law
firm of Willkie Farr & Gallagher, a Director of Loral and Globalstar
Telecommunications Limited and a member of the Executive and Audit Committees of
the Boards of Directors of both Loral and Globalstar Telecommunications Limited.
As of March 15, 1999, Mr. Hodes beneficially owned 25,000 shares of the common
stock of Loral, including 5,000 shares exercisable under Loral's stock option
plan. Mr. Bruce R. Kraus, partner of the law firm of Willkie Farr & Gallagher
and counsel to Loral, beneficially owned 6,700 shares of common stock of Loral.
EXPERTS
The annual consolidated financial statements of Loral, Space Systems/Loral
and the financial statement schedule of Loral incorporated in this prospectus by
reference from Loral's Annual Report on Form 10-K for the fiscal year ended
December 31, 1998 and the consolidated financial statements of Globalstar,
incorporated in this prospectus by reference from the Annual Report on Form 10-K
of Globalstar Telecommunications Limited and Globalstar for the fiscal year
ended December 31, 1998, have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their reports, which are incorporated herein by
reference, and have been so incorporated in reliance upon the reports of such
firm given upon their authority as experts in auditing and accounting.
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- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
$350,000,000
OFFER TO EXCHANGE
9 1/2% SENIOR NOTES DUE 2006
THAT HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 FOR OUTSTANDING
9 1/2% SENIOR NOTES DUE 2006
------------------------------
P R O S P E C T U S
DATED , 1999
------------------------------
LORAL SPACE &
COMMUNICATIONS LTD.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 107
PART II
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Bermuda law permits a company to indemnify its directors and officers,
except for any act of fraud or dishonesty. Loral 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 Loral also permit Loral to purchase
insurance for the benefit of its directors and officers against any liability
incurred by them for 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.
Loral has entered into indemnification agreements with its officers and
directors. To the extent permitted by law, the indemnification agreements may
require Loral, 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 fraud or dishonesty) 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 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits
<TABLE>
<C> <S>
1 Purchase Agreement, by and among Loral and the Initial
Purchasers, dated January 15, 1999.
3.1 Memorandum of Association of Loral.*
3.2 Bye-Laws of Loral.*
4 Indenture, dated January 15, 1999, by and between Loral and
The Bank of New York, as trustee.**
5 Opinion of Appleby, Spurling & Kempe regarding the legality
of the securities being registered.
8.1 Opinion of Appleby, Spurling & Kempe regarding certain
Bermuda tax considerations (included in Exhibit 5).
8.2. Opinion of Willkie Farr & Gallagher regarding certain
federal income tax considerations.
10.. Registration Rights Agreement, dated January 21, 1999,
between Loral and the Initial Purchasers.**
</TABLE>
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<TABLE>
<C> <S>
12 Statement re: computation of ratio of earnings to fixed charges.**
23.1 Consent of Appleby, Spurling & Kempe (included in Exhibit 5).
23.2 Consent of Willkie Farr & Gallagher (included in Exhibit 8.2).
23.3 Consent of Deloitte & Touche LLP.
24 Powers of Attorney.
25 Statement on Form T-1 of Eligibility of Trustee.
99.1 Form of Letter of Transmittal.
99.2 Form of Notice of Guaranteed Delivery.
99.3 Form of Letter to Clients.
99.4 Form of Letter to Nominees.
</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)
** Incorporated by reference to Loral's Annual Report on Form 10-K for the
fiscal year ended on December 31, 1998 (File No. 1-14180).
All other schedules have been omitted because they are not applicable or
are not required or the required information is included in the financial
statements or notes thereto.
ITEM 22. UNDERTAKINGS.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that, in the opinion of the SEC, such indemnification is
against public policy as expressed in the Securities 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 of whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed by the
final adjudication of such issue.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(a) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
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(b) To reflect in the prospectus any facts or events arising after the
effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set
forth in the Registration Statement; and
(c) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement; provided, however, that these undertakings
contained in paragraphs l(a) and 1(b) do not apply if the
information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed by the
Registrant pursuant to Section 13 or Section 15(d) of the Exchange
Act that are incorporated by reference in this Registration
Statement.
(2) For the purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1)
or (4) or 497(h) under the Securities Act shall be deemed to be part of
this Registration Statement as of the time it was declared effective.
(3) That, for the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus
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.
(4) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of offering.
The undersigned Registrant hereby undertakes:
(1) For the purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1)
or (4) or 497(h) under the Securities Act shall be deemed to be part of
this Registration Statement as of the time it was declared effective.
(2) That, for the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus
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.
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(3) That, for purposes of determining any liability under the Securities
Act, each filing of the Registrant's Annual Report pursuant to Section
13(a) or Section 15(d) of the Exchange Act (and where applicable, each
filing of an employee benefit plan's annual report pursuant to Section
15(d) of the Exchange Act) that is incorporated by reference in this
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.
(4) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus
pursuant to Item 4, 10(b), 11, or 13 of this form, within one business
day of receipt of such request, and to send the incorporated documents
by first class mail or other equally prompt means. This includes
information contained in documents filed subsequent to the effective
date of the registration statement through the date of responding to
the request.
(5) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and
the company being acquired involved therein, that was not the subject
of and included in the registration statement when it became effective.
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SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant
certifies that it has reasonable grounds to believe that it meets all the
requirements for filing on Form S-4 and has duly caused this 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 April 1, 1999.
LORAL SPACE & COMMUNICATIONS LTD.
By: *
------------------------------------
Name: Bernard L. Schwartz
Title: Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
* Chairman of the Board and Chief April 1, 1999
- --------------------------------------------------- Executive Officer (Principal
Bernard L. Schwartz Executive Officer)
* Director April 1, 1999
- ---------------------------------------------------
Howard Gittis
* Director April 1, 1999
- ---------------------------------------------------
Robert B. Hodes
* Director April 1, 1999
- ---------------------------------------------------
Gershon Kekst
* Director April 1, 1999
- ---------------------------------------------------
Charles Lazarus
* Director April 1, 1999
- ---------------------------------------------------
Malvin A. Ruderman
* Director April 1, 1999
- ---------------------------------------------------
E. Donald Shapiro
* Director April 1, 1999
- ---------------------------------------------------
Arthur L. Simon
* Director April 1, 1999
- ---------------------------------------------------
Daniel Yankelovich
* Senior Vice President and Chief April 1, 1999
- --------------------------------------------------- Financial Officer (Principal
Richard J. Townsend Financial Officer)
* Vice President and Controller April 1, 1999
- --------------------------------------------------- (Principal Accounting
Harvey B. Rein Officer)
</TABLE>
*By: /s/ ERIC J. ZAHLER
--------------------------------------------------
Eric J. Zahler
Attorney-in-Fact
II-5
<PAGE> 112
EXHIBIT INDEX
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
1 Purchase Agreement, by and among Loral and the Initial
Purchasers, dated January 15, 1999..........................
3.1 Memorandum of Association of Loral.*........................
3.2 Bye-Laws of Loral.*.........................................
4 Indenture, dated January 15, 1999, by and between Loral and
The Bank of New York, as trustee.**.........................
5 Opinion of Appleby, Spurling & Kempe regarding the legality
of the securities being registered..........................
8.1 Opinion of Appleby, Spurling & Kempe regarding certain
Bermuda tax considerations (included in Exhibit 5)..........
8.2. Opinion of Willkie Farr & Gallagher regarding certain
federal income tax considerations...........................
10.. Registration Rights Agreement, dated January 21, 1999,
between Loral and the Initial Purchasers.**.................
12 Statement re: computation of ratio of earnings to fixed
charges.**..................................................
23.1 Consent of Appleby, Spurling & Kempe (included in Exhibit
5)..........................................................
23.2 Consent of Willkie Farr & Gallagher (included in Exhibit
8.2)........................................................
23.3 Consent of Deloitte & Touche LLP............................
24 Powers of Attorney..........................................
25 Statement on Form T-1 of Eligibility of Trustee.............
99.1 Form of Letter of Transmittal...............................
99.2 Form of Notice of Guaranteed Delivery.......................
99.3 Form of Letter to Clients...................................
99.4 Form of Letter to Nominees..................................
</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)
** Incorporated by reference to Loral's Annual Report on Form 10-K for the
fiscal year ended on December 31, 1998 (File No. 1-14180).
All other schedules have been omitted because they are not applicable or
are not required or the required information is included in the financial
statements or notes thereto.
II-6
<PAGE> 1
EXECUTION COPY
LORAL SPACE & COMMUNICATIONS LTD.
$350,000,000
9-1/2% Senior Notes due 2006
PURCHASE AGREEMENT
New York, New York
January 15, 1999
LEHMAN BROTHERS INC.
and the other Initial Purchasers
named in Schedule I hereto
c/o LEHMAN BROTHERS INC.
3 World Financial Center
200 Vesey Street
New York, New York 10285
Ladies and Gentlemen:
Loral Space & Communications Ltd., a Bermuda company (the
"Company"), proposes to sell to the several initial purchasers named in Schedule
I hereto (the "Initial Purchasers") $350,000,000 aggregate principal amount of
9-1/2% Senior Notes due 2006 of the Company (the "Securities"). The Securities
will be issued under an Indenture (as defined herein).
Holders (including subsequent transferees) of the Securities will
have the registration rights set forth in the Registration Rights Agreement (the
"Registration Rights Agreement") between the Company and the Initial Purchasers.
Pursuant to the Registration Rights Agreement, the Company has agreed to file
with the Securities and Exchange Commission (the "Commission") (i) a
registration statement (the "Exchange Offer Registration Statement") under the
Securities Act of 1933 (the "Securities Act"), registering an issue of a series
of senior notes (the "Exchange
<PAGE> 2
2
Securities") identical in all material respects to the Securities (except that
the Exchange Securities will not contain terms with respect to transfer
restrictions) to be offered in exchange for the Securities (the "Exchange
Offer") and (ii) under certain circumstances, a shelf registration statement
pursuant to Rule 415 under the Securities Act (the "Shelf Registration
Statement").
The following terms as used in this Agreement shall have the
following meanings:
"Affiliates" shall have the meaning ascribed thereto in Rule 501(b)
of Regulation D under the Securities Act ("Regulation D").
"Business Day" shall mean any day on which the trading is conducted
on the NYSE.
"Closing Date" shall have the meaning set forth in Section 3(b).
"Common Stock" shall mean the common stock, par value $0.01 per
share, of the Company.
"Convertible Preferred Offering" shall mean the proposed offering of
up to 8,400,000 shares of convertible preferred stock (the "GTL Convertible
Preferred") of GTL and the concurrent sale to GTL of preferred partnership
interests (the "Globalstar Preferred Interests") contemplated in connection
therewith.
"DTC" shall mean The Depository Trust Company.
"Exchange Act" shall mean the Securities Exchange Act of 1934.
"Exchange Act Reports" shall have the meaning set forth in Section
1(a).
"Exchange Offer" shall have the meaning set forth in the second
paragraph of this Agreement.
<PAGE> 3
3
"Exchange Offer Registration Statement" shall have the meaning set
forth in the Registration Rights Agreement.
"Execution Time" shall mean the date and time that this Agreement is
executed and delivered by the parties hereto.
"FCC" shall mean the Federal Communications Commission.
"Final Memorandum" shall mean the final offering memorandum dated
January 15, 1999, including any information incorporated by reference therein.
"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, as amended by the First Amendment dated
March 25, 1996, the Second Amendment dated July 31, 1997 and the Third Amendment
dated October 15, 1997, among Globalstar, the several financial institutions
named therein and The Chase Manhattan Bank (as successor to Chemical Bank), as
administrative agent.
"GTL" shall mean Globalstar Telecommunications Limited, a Bermuda
company.
"Indenture" shall mean the Indenture dated as of January 15, 1999
between the Company and The Bank of New York, as trustee, pursuant to which the
Securities will be issued.
"Initial Purchasers" shall mean the parties named in Schedule I
hereto.
"Investment Company Act" shall mean the Investment Company Act of
1940 and the rules and regulations thereunder.
<PAGE> 4
4
"Loral Affiliates" shall mean each of GTL, Globalstar, SS/L, Orion
and SatMex, and any other subsidiary (as defined in Rule 405 under the
Securities Act) of the Company.
"LQP" shall mean Loral/QUALCOMM Partnership, L.P., a Delaware
limited partnership and the general partner of LQSS.
"LQSS" shall mean Loral/QUALCOMM Satellite Services, L.P., a
Delaware limited partnership and the managing general partner of Globalstar.
"NASD" shall mean the National Association of Securities Dealers,
Inc.
"Operative Documents" shall mean, collectively, this Agreement, the
Indenture and the Registration Rights Agreement.
"Orion" shall mean Loral Orion, 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,
as amended April 8, 1998, among LQSS, GTL, the Company and certain limited
partners named therein.
"PORTAL" shall mean the Private Offerings, Resale and Trading
through Automated Linkages market operated by the NASD.
"Preliminary Memorandum" shall mean the preliminary offering
memorandum, dated January 7, 1999, including any information incorporated by
reference therein.
"Registration Rights Agreement" shall mean the Registration Rights
Agreement dated as of the Closing Date between the Company and the Initial
Purchasers.
<PAGE> 5
5
"Rules and Regulations" shall mean the rules and regulations in
effect at any relevant time adopted by the Commission under the Securities Act
or the Exchange Act, as applicable.
"SatMex" shall mean Satelites Mexicanos, S.A. de C.V., a company
organized under the laws of Mexico.
"Securities Act" shall mean the Securities Act of 1933.
"Shelf Registration Statement" shall have the meaning set forth in
the second paragraph of this Agreement.
"Skynet" shall mean Loral Skynet, a Delaware corporation.
"SpaceCom Credit Agreement" shall mean that certain Amended and
Restated Credit and Participation Agreement among Loral SpaceCom Corporation,
Space Systems/Loral, Inc., certain lending banks, Bank of America National Trust
and Savings Association, as Administrative Agent, and Istituto Bancario San
Paolo Di Torino S.P.A., individually and as Italian Export Financing Arranger
and as Selling Bank, dated as of November 14, 1997, providing for up to $850
million of credit extensions, including any related notes, guarantees,
collateral documents, instruments and agreements executed in connection
therewith, and in each case as amended, modified, renewed, refunded, replaced or
refinanced from time to time, as amended on May 7, 1998.
"SS/L" shall mean Space Systems/Loral, Inc., a Delaware corporation.
"Trustee" shall mean The Bank of New York, as trustee under the
Indenture.
The sale of the Securities to you will be made without registration
of the Securities under the Securities Act, in reliance upon exemptions from the
registration requirements of the Securities Act. You have advised the Company
that the Initial Purchasers will offer and sell the
<PAGE> 6
6
Securities purchased by them hereunder in accordance with Section 3 hereof as
soon as you deem advisable.
In connection with the sale of the Securities, the Company has
prepared the Preliminary Memorandum and the Final Memorandum. Each of the
Preliminary Memorandum and the Final Memorandum sets forth certain information
concerning the Company, the Loral Affiliates and the Securities. The Company
hereby confirms that it has authorized the use of the Preliminary Memorandum and
the Final Memorandum in connection with the offer and sale of the Securities by
the Initial Purchasers.
Unless stated to the contrary, all references herein to the Final
Memorandum are to the Final Memorandum at the Execution Time and are not meant
to include any amendment or supplement thereto, or any information incorporated
by reference therein, subsequent to the Execution Time, and any references
herein to the terms "amend", "amendment" or "supplement" with respect to the
Final Memorandum shall be deemed to refer to and include any information filed
under the Exchange Act, subsequent to the Execution Time which is incorporated
by reference therein.
1. Representations and Warranties of the Company. The Company
represents and warrants to each Initial Purchaser as set forth below in this
Section 1 that:
(a) The Preliminary Memorandum, at the date thereof, did not contain
any untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading. The Final Memorandum, at the date
hereof, does not, and at the Closing Date will not (and any amendment or
supplement thereto, at the date thereof and at the Closing Date, will not),
contain any untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided, however, that the Company
makes no representation or warranty as to the information contained in or
omitted from the Preliminary Memorandum or the Final
<PAGE> 7
7
Memorandum, or any amendment or supplement thereto, in reliance upon and in
conformity with information furnished in writing to the Company by or on behalf
of the Initial Purchasers specifically for inclusion therein.
(b) It is not required by applicable law or regulation in connection
with the offer, sale and delivery of the Securities to the Initial Purchasers in
the manner contemplated by this Agreement to register the Securities under the
Securities Act, provided that neither the Initial Purchasers or any person
acting on their behalf (i) has or will directly, or through an agent, sell,
offer for sale, solicit offers to buy or otherwise negotiate in respect of any
security (as defined in the Securities Act) which is or will be integrated with
the sale of the Securities in a manner that would require the registration of
the Securities under the Securities Act and (ii) has or will engage in any form
of general solicitation or general advertising (within the meaning of Regulation
D) in connection with the offer and sale of any of the Securities, including,
but not limited to, articles, notices or other communications published in any
newspaper, magazine, or similar medium or broadcast over television or radio, or
any seminar or meeting whose attendees have been invited by any general
solicitation or general advertising.
(c) Prior to the effectiveness of the Exchange Offer Registration
Statement or the Shelf Registration Statement, it is not necessary to qualify
the Indenture in respect of the Securities under the Trust Indenture Act of
1939, as amended (the "Trust Indenture Act").
(d) The Securities satisfy the eligibility requirements of Rule
144A(d)(3) under the Securities Act and the Company has been advised by the NASD
that the Securities have or will be designated PORTAL eligible securities in
accordance with the rules and regulations of the NASD.
(e) 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
<PAGE> 8
8
as disclosed in the Final Memorandum, 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
Final Memorandum; 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 the Company); and Globalstar
has all requisite power and authority and, except as disclosed in the Final
Memorandum, 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 Final Memorandum; 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 Final Memorandum, have all necessary material
government authorizations, licenses, certificates, franchises, permits and
approvals required to own their properties and to conduct their businesses as
described in the Final Memorandum; 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 Final Memorandum, 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 Final Memorandum; 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. Since the respective dates as of which
information is given in the Final Memorandum, and except as otherwise disclosed
in the Final Memorandum, there has not been, and (other than as contemplated in
the Convertible Preferred Offering) prior to the Closing Date there will not be,
any material change in
<PAGE> 9
9
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 Final Memorandum (as amended or
supplemented).
(f) 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.
(g) The Company has authorized capital stock as set forth in its
Memorandum of Association, and all the issued shares of Common Stock have been
duly and validly authorized and issued, are fully paid and not subject to any
preemptive or similar rights.
(h) The Indenture has been duly authorized by the Company and, when
executed by the proper officers of the Company (assuming due execution and
delivery by the Trustee) and delivered by the Company, will constitute a valid
and legally binding obligation of the Company, enforceable against the Company
in accordance with its terms except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium and other similar laws
relating to or affecting creditor's rights generally or by general equitable
principles (regardless of whether such enforceability is considered in a
proceeding in equity or at law) and except as enforcement of rights to indemnity
or contribution may be limited by Federal or state securities laws or principles
of public policy; and the Securities will conform in all material respects to
the description of the Securities in the Final Memorandum and the Indenture.
(i) The Securities to be issued and sold by the Company to the
Initial Purchasers hereunder have been duly and validly authorized and, when
duly executed,
<PAGE> 10
10
authenticated, issued and delivered as contemplated by the Indenture against
payment therefor as provided herein, will be duly and validly issued, fully paid
and not subject to further calls, and will constitute the valid and binding
obligations of the Company, entitled to the benefits of the Indenture and
enforceable in accordance with their terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium and other similar
laws relating to or affecting creditor's rights generally or by general
equitable principles (regardless of whether such enforceability is considered in
a proceeding in equity or at law) and except as enforcement of rights to
indemnity or contribution may be limited by Federal or state securities laws or
principles of public policy; and the Securities will conform in all material
respects to the description of the Securities in the Final Memorandum and the
Indenture.
(j) The Registration Rights Agreement has been duly authorized by
the Company and, when executed by the proper officers of the Company (assuming
due execution and delivery by the Initial Purchasers) and delivered by the
Company, will constitute the valid and legally binding obligation of the
Company, enforceable against the Company in accordance with its terms except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws relating to or affecting creditor's rights
generally or by general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law) and except as
enforcement of rights to indemnity or contribution may be limited by Federal or
state securities laws or principles of public policy; and the Registration
Rights Agreement conforms in all material respects to the description thereof
contained in the Final Memorandum.
(k) This Agreement has been duly authorized, executed and delivered
by the Company.
(l) The execution, delivery and performance of the Operative
Documents 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
<PAGE> 11
11
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 charter or by-laws (or other constitutive documents) of the
Company or any Loral Affiliate, or any statute or any order, rule or regulation
of any court or governmental agency or body having jurisdiction over the Company
or any Loral Affiliate or any of their properties or assets; no consent,
approval, authorization or order of, or filing or registration with, any such
court or governmental agency or body is required for the issue and sale of
Securities by the Company and the consummation of the transactions contemplated
by the Operative Documents, except as may be required under the various state
securities or Blue Sky Laws or as may be required by the laws of any country
other than the United States in connection with the resale of the Securities by
the Initial Purchasers or as may be required under the Securities Act pursuant
to the terms of the Registration Rights Agreement.
(m) Except as may otherwise be disclosed in or contemplated by the
Final Memorandum or as part of the Convertible Preferred Offering, since
September 30, 1998, none of the Company or the Loral Affiliates have issued or
granted any securities or partnership interests, 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.
(n) Except as disclosed in the Final Memorandum, neither the Company
nor any Loral Affiliate has sustained, since the date of the latest audited
financial statements included in the Final Memorandum, 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,
<PAGE> 12
12
order or decree; 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 (other than as part of the Convertible Preferred Offering)
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
Final Memorandum.
(o) Deloitte & Touche LLP, whose report appears in the Final
Memorandum, are independent public accountants with respect to each of the
Company and certain of the Loral Affiliate. The financial statements (including
the related notes) included or incorporated by reference in the Final Memorandum
or Preliminary Memorandum present fairly the financial condition, results of
operations and changes in financial condition of the entities purported to be
shown thereby at the dates and for the periods indicated and have been prepared
in accordance with generally accepted accounting principles applied on a
consistent basis (except as may be noted therein) throughout the periods
indicated.
(p) Except as described in the Final Memorandum, 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.
(q) 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 Final
Memorandum) necessary to conduct the general business proposed to be operated by
the Company and the Loral Affiliates as described in the Final Memorandum, and
none of the Company or the Loral Affiliates or, to the knowledge of the Company,
any of their respective equipment suppliers,
<PAGE> 13
13
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.
(r) Except as described or contemplated in the Final Memorandum,
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, would 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 the Company's knowledge, except as described in the Final
Memorandum, no such proceedings are threatened or contemplated by governmental
authorities or threatened by others.
(s) Other than as disclosed in the Final Memorandum, (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 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 or event as would 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 applicable law.
(t) (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
<PAGE> 14
14
and Authorization (DA 95-128), released January 31, 1995, as affirmed and
modified by the Memorandum Opinion and Order, FCC 96 279 (released June 27,
1996), as modified by the FCC's Order and Authorization, DA 96 1924 (released
November 19, 1996); 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 Final Memorandum 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 (DA 95-128), released January 31, 1995 as modified by the
Erratum, DA 95 373 (released February 29, 1995), as affirmed and modified
by the Memorandum Opinion and Order, FCC 96 279 (released June 27, 1996),
as modified by the FCC's Order and Authorization, DA 96 1924 (released
November 19, 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 policies
of the FCC and that there is no transfer of control of L/Q Licensee, Inc.
without prior approval of the FCC.
(u) 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,
<PAGE> 15
15
payoff, influence payment, kickback or other unlawful payment.
(v) Except as disclosed in the Final Memorandum, 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 would 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
<PAGE> 16
16
foreign laws or regulations with respect to environmental protection.
(w) 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, are fully paid 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, except as disclosed in the Final Memorandum and except for
the stock of GTL that is owned by the Company and has been pledged to Lockheed
Martin, common stock of GTL owned by the Company that is subject to outstanding
options, shares of Loral SpaceCom Corporation and SS/L pledged as security for
borrowings under the SpaceCom Credit Agreement, partnership interests in
Globalstar owned by the Company, some of which are subject to a pledge in the
event of a drawing by the Company under a credit agreement, dated as of June 30,
1998, among the Company, the lenders party thereto from time to time and Bank of
America National Trust and Savings Association, as administrative agent,
interests in Firmanento Mexicano, S. de R.L. de C.V. that have been pledged to
the Mexican government and shares of SatMex pledged in favor of certain banks in
connection with the SatMex Credit Agreement dated as of February 23, 1998 and
the Indenture dated March 4, 1998 relating to the Senior Secured Floating Rate
Notes, the capital stock of such Loral Affiliate owned by the Company, directly
or indirectly, is owned free from liens, encumbrances, equities, claims and
defects.
(x) 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.
(y) The proceeds from the offering of Securities will be used as
contemplated in the Final Memorandum.
<PAGE> 17
17
2. Purchase and Sale of the Securities.
On the basis of the representations, warranties and agreements
herein contained, but subject to the terms and conditions herein set forth, the
Company agrees to sell to each Initial Purchaser, and each Initial Purchaser
agrees, severally and not jointly, to purchase from the Company, at a purchase
price of 98.25% of the principal amount thereof plus accrued interest, if any,
from January 21, 1999 to the Closing Date, the principal amount of Firm
Securities set forth opposite such Initial Purchaser's name in Schedule I
hereto.
3. Delivery and Payment for Securities.
(a) Delivery of and payment for the Securities shall be made at the
offices of Cravath, Swaine & Moore, 825 Eighth Avenue, New York, New York 10019
(or such other place as mutually may be agreed upon), at 10:00 a.m., New York
City time, on January 21, 1999 or such later date as the Initial Purchasers and
the Company shall agree (such date and time of delivery and payment for the
Securities being herein called the "Closing Date").
(b) The Securities to be purchased by the Initial Purchasers
hereunder shall be delivered by or on behalf of the Company to you against
payment of the purchase price therefor by wire transfer in immediately available
funds. On the Closing Date, payment will be made against delivery of a single
global Securities certificate to be deposited with, or on behalf of, DTC, and
registered in the name of Cede & Co., as DTC's nominee. Time shall be of the
essence, and delivery of certificates for the Securities at the time and place
specified in this Agreement is a further condition to the obligations of each
Initial Purchaser.
4. Representations by Initial Purchasers; Sale and Resale of the
Securities by Initial Purchasers. Each
<PAGE> 18
18
Initial Purchaser represents and warrants to and agrees with the Company that:
(a) it has offered and will offer to sell the Securities only to,
and has solicited and will solicit offers to buy the Securities only from,
persons that in purchasing such Securities will be deemed to have represented
and agreed as provided under "Investor Representations and Restrictions on
Resale" in Exhibit A hereto;
(b) none of it or any of its affiliates has entered into or will
enter into any contractual arrangement with respect to the distribution of the
Securities except for any such arrangements with any other Initial Purchaser or
affiliates of any other Initial Purchaser or with the prior written consent of
the Company;
(c) with respect to resales made in reliance on Rule 144A of any of
the Securities, it will deliver either with the confirmation of such resale or
otherwise prior to settlement of such resale a notice to the effect that the
resale of such Securities has been made in reliance upon the exemption from the
registration requirements of the Securities Act provided by Rule 144A;
(d) with respect to offers and sales outside the United States in
reliance on Regulation S: (i) the Securities have not been and will not be
registered under the Securities Act and may not be offered or sold within the
United States or to, or for the account or benefit of, U.S. persons (as defined
in Regulation S) except in accordance with Regulation S or pursuant to an
exemption from the registration requirements of the Securities Act; and (ii)
such Initial Purchaser has not offered the Securities and will not offer, sell
or deliver the Securities in the United States or to, or for the account or
benefit of, U.S. persons, (A) as part of its distribution at any time or (B)
otherwise until 40 days after the later of the commencement of the offering and
the Closing Date, only in accordance with Rule 903 of Regulation S. Accordingly,
neither such Initial Purchaser, its affiliates nor any
<PAGE> 19
19
persons acting on its behalf have engaged or will engage in any directed selling
efforts (within the meaning of Regulation S) with respect to the Securities, and
such Initial Purchaser, its affiliates and any such persons have complied and
will comply with the offering restrictions requirement of Regulation S; and
(e) it has not offered or sold, and will not offer or sell, in the
United Kingdom, by means of any document, any Securities other than to persons
whose ordinary business it is to buy or sell shares or debentures, whether as a
principal or agent, or in circumstances which do not constitute an offer to the
public within the meaning of the Public Offers of Securities Regulations 1995;
it has complied and will comply with all applicable provisions of the Financial
Services Act 1986 with respect to anything done by it in relation to the
Securities in, from or otherwise involving the United Kingdom; and it has only
issued or passed on and will only issue or pass on in the United Kingdom any
document received by it in connection with the issue of the Securities to a
person who is of a kind described in Article 11(3) of the Financial Services Act
1986 (Investment Advertisements) (Exemptions) Order 1995 or is a person to whom
the document may otherwise lawfully be issued or passed on.
5. Covenants of the Company. The Company agrees with each Initial
Purchaser that:
(a) The Company will furnish to each Initial Purchaser and to
counsel for the Initial Purchasers, without charge, during the period referred
to in paragraph (c) of this Section 5, as many copies of the Final Memorandum,
including any documents incorporated by reference therein and any amendments and
supplements thereto, as it may reasonably request. The Company will pay the
expenses of printing or other production of all documents relating to the
offering.
(b) The Company will not amend or supplement the Final Memorandum
without the prior written consent of the
<PAGE> 20
20
Initial Purchasers, which consent shall not be unreasonably withheld or delayed.
(c) If at any time prior to the completion of the sale of the
Securities by the Initial Purchasers (as determined by the Initial Purchasers),
any event occurs as a result of which the Final Memorandum, as then amended or
supplemented, would include any untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading, or if it should
be necessary to amend or supplement the Final Memorandum to comply with
applicable law, the Company will promptly notify the Initial Purchasers of the
same and, subject to the requirements of paragraph (b) of this Section 5, will
promptly prepare and provide to the Initial Purchasers pursuant to paragraph (a)
of this Section 5 an amendment or supplement which will correct such statement
or omission or effect such compliance.
(d) The Company will arrange for the qualification of the Securities
for sale by the Initial Purchasers under the laws of such jurisdictions as the
Initial Purchasers may reasonably designate and will maintain such
qualifications in effect so long as required for the sale of the Securities;
provided that in connection therewith the Company shall not be required to
qualify as a foreign corporation, to file a general consent to service of
process, or become subject to taxation in any jurisdiction. The Company will
promptly advise the Initial Purchasers of the receipt by the Company of any
notification with respect to the suspension of the qualification of the
Securities for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose.
(e) Neither the Company, nor any of the Loral Affiliates, nor any
person acting on either of their behalf will, directly or indirectly, make
offers or sales of any security, or solicit offers to buy any security, under
circumstances that would require the registration of the Securities under the
Securities Act. Neither the Company, nor any of the Loral Affiliates, nor any
person acting on
<PAGE> 21
21
either of or their behalf will engage in any form of general solicitation or
general advertising (within the meaning of Regulation D), in any "directed
selling efforts" (as defined in Regulation S) within the United States or in any
manner involving a public offering within the meaning of Section 4(2) of the
Securities Act in the United States.
(f) So long as any of the Securities are "restricted securities"
within the meaning of Rule 144(a)(3) under the Securities Act, the Company will,
during any period in which it is not subject to and in compliance with Section
13 or 15(d) of the Exchange Act (or has not otherwise provided such information
to the Commission), provide to each holder of such restricted securities and to
each prospective purchaser (as designated by such holder) of such restricted
securities, upon the request of such holder or prospective purchaser, any
information required to be provided by Rule 144A(d)(4) under the Securities Act.
This covenant is intended to be for the benefit of the holders, and the
prospective purchasers designated by such holders, from time to time of such
restricted securities.
(g) During the period of two years after the First Closing Date, the
Company will not, without the prior written consent of the Initial Purchasers,
resell any of the Securities that have been reacquired by them, and the Company
will not permit any of its directors nor will the Company permit any of the
Loral Affiliates to resell any of the Securities that have been reacquired by
any of them, except for Securities purchased by the Company or the Loral
Affiliates and resold in a transaction registered under the Securities Act.
(h) The Company agrees to pay (i) all expenses (including transfer
taxes) incurred in connection with the delivery to the Initial Purchasers of the
Securities, (ii) all reasonable fees and expenses (including, without
limitation, fees and expenses of the Company's accountants and counsel, but
excluding fees and expenses of counsel for the Initial Purchasers) in connection
with the preparation, printing, delivery and shipping of the Final Memorandum
(including the Exchange Act Reports and all amendments and
<PAGE> 22
22
exhibits thereto), the Preliminary Memorandum, and any amendments or supplements
of the foregoing, and the reproduction, delivery and shipping of this Agreement,
(iii) all filing fees and reasonable fees and disbursements of counsel to the
Initial Purchasers incurred in connection with the qualification of the
Securities under state securities laws as provided in Section 5(d) hereof, (iv)
any applicable listing, rating agency or similar fees, (v) the cost of printing
certificates representing the Securities, (vi) the cost and charges of the
Trustee, any transfer agent or registrar (including, without limitation, fees
and expenses of counsel thereto) and (vii) all other reasonable costs and
expenses incident to the performance of its obligations hereunder for which
provision is not otherwise made in this Section 5. It is understood, however,
that, except as provided in this Section 5 and Section 7 hereof, the Initial
Purchasers shall pay all their own costs and expenses, including the fees of
their counsel, transfer taxes due upon resale of any of the Securities by them
and any advertising expenses incurred in connection with any offers they may
make (such costs and expenses to be borne in equal proportions by the Initial
Purchasers). If the sale of the Securities provided for herein is not
consummated by reason of acts of the Company or any of the Loral Affiliates
pursuant to Section 8 hereof which prevent this Agreement from becoming
effective, or by reason of any failure, refusal or inability on the part of the
Company or the Loral Affiliates to perform in all material respects any
agreement on their part to be performed or because any condition of the Initial
Purchasers' obligations hereunder to be performed by the Company or any of the
Loral Affiliates is not fulfilled or if the Initial Purchasers shall decline to
purchase the Securities for any reason permitted under this Agreement (except
termination of this Agreement pursuant to paragraphs (c)-(f) of Section 8), the
Company shall reimburse the Initial Purchasers for all reasonable out-of-pocket
disbursements (including reasonable fees and disbursements of counsel) incurred
by the Initial Purchasers in connection with any investigation or preparation
made by it in respect of the marketing of the Securities or in contemplation of
the performance by them of their obligations hereunder. If this Agreement is
terminated
<PAGE> 23
23
pursuant to Section 8 hereof by reason of the default of one or more Initial
Purchasers, the Company shall not be obligated to reimburse any defaulting
Initial Purchasers on account of these expenses.
(i) In connection with the offering, until Lehman Brothers Inc.
shall have notified the Company of the completion of the initial resale of the
Securities, neither the Company, nor any Loral Affiliate nor anyone acting on
their behalf has or will, either alone or with one or more other persons, bid
for or purchase for any account in which it or any of its directors or partners,
as the case may be, has a beneficial interest, any Securities or attempt to
induce any person to purchase any Securities for the purpose of creating actual,
or apparent, active trading in, or of raising the price of, the Securities.
(j) The Company will not at any time offer, sell, contract to sell,
pledge or otherwise dispose of, directly or indirectly, any securities under
circumstances where such offer, sale, pledge, contract or disposition would
cause the exemption afforded by Section 4(2) of the Securities Act or the safe
harbor of Regulation S thereunder to cease to be applicable to the offer and
sale of the Securities.
(k) The Company will use its reasonable efforts to permit the
Securities to be designated PORTAL securities in accordance with the rules and
regulations adopted by the NASD relating to trading in the PORTAL market and to
cause the Securities to be eligible for clearance and settlement through DTC.
(l) The Company will not, until 90 days following the Closing Date,
without the prior written consent of Lehman Brothers Inc., agree to offer to
sell, sell or otherwise dispose of, directly or indirectly, any United States
dollar denominated debt securities issued or guaranteed by the Company and
having a maturity of more than one year from the date of issue, other than (i)
Securities issued in connection with the Exchange Offer or the Shelf
Registration Statement, (ii) strategically driven private placements of debt
securities with strategic investors and
<PAGE> 24
24
(iii) debt securities which are offered, sold or disposed of pursuant to
obligations in existence on the date of this Agreement.
(m) In connection with any disposition of Securities pursuant to a
transaction made in compliance with applicable state securities laws and (i)
satisfying the requirements of Rule 144(k) under the Securities Act, (ii)
satisfying the requirements of Rule 904 of Regulation S, (iii) made pursuant to
an effective registration statement under the Securities Act or (iv) disposed of
in any other transaction that does not require registration under the Securities
Act (and the Company has received an opinion of counsel or other documentation
satisfactory to them to such effect), the Company will reissue certificates
evidencing such Securities without the legend set forth under the heading
"Notice to Investors" in the Final Memorandum (provided, in the case of a
transaction specified in clause (iv) above, that the legal opinion referred to
therein so permits).
6. Conditions of Initial Purchasers' Obligations. The respective
obligations of the Initial Purchasers hereunder to purchase the Securities are
subject to there not being any material breach, as of the date hereof and the
Closing Date (as if made at the Closing Date), of the representations and
warranties of the Company contained herein, to the performance in all material
respects by the Company of its obligations hereunder and to the following
additional conditions:
(a) No Initial Purchaser shall have been advised by the Company or
discovered and disclosed to the Company that the Final Memorandum, as of the
date thereof, or as of the Closing Date, contained or contains an untrue
statement of fact which, in your opinion or in the opinion of counsel to the
Initial Purchasers, is material, or omitted or omits to state a fact which, in
your opinion or in the opinion of counsel to the Initial Purchasers, is material
and is required to be stated therein or is necessary to make the statements
therein not misleading.
<PAGE> 25
25
(b) On or prior to the Closing Date, you shall have received from
Cravath, Swaine & Moore, counsel for the Initial Purchasers, such opinions or
letters with respect to such matters as you may reasonably request, and such
counsel shall have received such documents and information as they reasonably
request to enable them to pass upon such matters.
(c) On the Closing Date there shall have been furnished to you the
opinion (addressed to the Initial Purchasers) of Willkie Farr & Gallagher,
counsel to the Company, dated such Closing Date and in form and substance
satisfactory to counsel for the Initial Purchasers, to the effect that:
(i) 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, Skynet 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, SS/L, Skynet and Orion 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, Skynet and
Orion, taken as a whole; and each of Globalstar, SS/L, Skynet and Orion
has all requisite power and authority and, except as disclosed in the
Final Memorandum, all material governmental authorizations, licenses,
certificates, franchises, permits and approvals required to own its
properties and to conduct its business as described in the Final
Memorandum;
(ii) The Securities conform in all material respects to the
description thereof contained in the Final Memorandum;
(iii) To such counsel's knowledge, other than as set forth in the
Final Memorandum, no litigation or
<PAGE> 26
26
governmental proceedings are pending or threatened against the Company or
the Loral Affiliates which would adversely affect the Company's ability to
perform its obligations under this Agreement or is required to be
disclosed in the Final Memorandum and which is not disclosed and correctly
summarized therein;
(iv) The Indenture has been duly authorized, executed and delivered
by the Company and, assuming due execution and delivery by the Trustee,
the Indenture constitutes a valid and legally binding obligation of the
Company; and is enforceable in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium
and similar laws of general applicability relating to or affecting
creditors' rights and to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at
law)(except that no opinion need be expressed with respect to the
indemnification or construction provisions contained therein);
(v) The Registration Rights Agreement has been duly authorized,
executed and delivered by the Company and conforms in all material
respects to the description thereof contained in the Final Memorandum,
and, assuming due execution and delivery thereof by the Initial
Purchasers, constitutes a valid and legally binding obligation of the
Company enforceable in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar
laws of general applicability relating to or affecting creditors' rights
and to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law) (except
that no opinion need be expressed with respect to the indemnification or
construction provisions contained therein);
(vi) The Purchase Agreement has been duly authorized, executed and
delivered by the Company;
<PAGE> 27
27
(vii) The Securities have been duly executed, and assuming the
Securities have been duly authorized, when authenticated in accordance
with the provisions of the Indenture and delivered to and paid for by the
Initial Purchasers pursuant to this Agreement, will be duly and validly
issued and outstanding and will constitute valid and legally binding
obligations of the Company entitled to the benefits of the Indenture and
enforceable against the Company in accordance with their terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium
and similar laws of general applicability relating to or affecting
creditors' rights and to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at
law)(except that no opinion need be expressed with respect to the
indemnification or construction provisions contained therein); and the
offer and sale of the Securities has been duly authorized by the Company;
(viii) The execution, delivery and performance by the Company of the
Operative Documents, and the consummation of the transactions therein
contemplated, 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 material
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 (except such breaches or events of default with
respect thereto as are disclosed in the Final Memorandum), nor will such
actions result in any violation of the provisions of the charter or
by-laws (or other constitutive documents) 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;
<PAGE> 28
28
(ix) No consent, approval, authorization or order of any court,
regulatory body, administrative agency or other governmental body is
required to be obtained for the execution and delivery of any of the
Operative Documents, the consummation of the transactions contemplated
hereby and thereby and the sale of the Securities as contemplated in the
Final Memorandum, under any provision of law or regulation applicable to
the Company of the State of New York or the United States of America,
except as may be required under the various state securities or Blue Sky
laws or as may be required by the laws of any country other than the
United States in connection with the resale of the Securities by the
Initial Purchasers or as may be required under the Securities Act pursuant
to the terms of the Registration Rights Agreement;
(x) Such counsel has read (i) all contracts referred to in the Final
Memorandum and all other loan agreements to which the Company is a party
of which such counsel has knowledge and (ii) the SpaceCom Credit
Agreement, the Globalstar Credit Agreement and the indenture for each
series of notes issued by Globalstar and Globalstar Capital Corporation,
and to the extent material such contracts are fairly summarized as
disclosed therein, conform in all material respects to the descriptions
thereof contained therein, and such counsel does not know of any contracts
or other documents required to be so summarized or disclosed, which have
not been so summarized or disclosed;
(xi) The statements set forth in the Final Memorandum under "Certain
Federal Income Tax Considerations", insofar as such statements constitute
a summary of the legal matters, documents or proceedings referred to
therein fairly present the information referred to therein with respect to
such legal matters, documents and proceedings; the statements set forth
under the heading "Description of Notes" in the Final Memorandum, insofar
as such statements purport to summarize provisions of the
<PAGE> 29
29
Securities and the Indenture, provide a fair summary of such provisions;
(xii) 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 (I) 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 (II) Federal or state securities laws
or principles of public policy with regard to rights to indemnity;
provided, however, that no opinion is given with respect to the
enforceability of any provisions contained in the Partnership Agreement or
the Service Provider Agreements which state that the parties thereto have
agreed to further negotiate with respect to certain matters as specified
therein;
(xiii) 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;
(xiv) After giving effect to the sale of the Securities by the
Initial Purchasers as contemplated in the Final Memorandum, the Company
will not be an "investment company" under the Investment Company Act; and
(xvii) Assuming the accuracy of the representations and warranties
and compliance with the agreements contained herein, no registration of
the Securities under the Securities Act is required for the offer and
<PAGE> 30
30
sale by the Initial Purchasers of the Securities in the manner
contemplated by this Agreement prior to the effectiveness of the Exchange
Offer Registration Statement or the Shelf Registration Statement, and no
qualification of the Indenture under the Trust Indenture Act of 1939 prior
to the effectiveness of the Exchange Offer Registration Statement or the
Shelf Registration with respect to the Securities is required for the
offer and sale by the Initial Purchasers of the Securities in the manner
contemplated by this Agreement.
In rendering such opinion, such counsel may limit its opinion to the
laws of the State of New York, the laws of the United States and the Delaware
Revised Uniform Limited Partnership Act and as to matters of fact, such counsel
may rely to the extent deemed proper, on certificates of responsible officers of
the Company and public officials.
Such counsel shall also state that in connection with the
preparation of the Preliminary Memorandum and Final Memorandum, no facts have
come to its attention which lead it to believe that the Final Memorandum, as of
the Execution Time and the Closing Date, contained any untrue statement of
material fact or omitted 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; provided, however,
that such counsel will express no opinion or belief with respect to the
financial data contained in the Final Memorandum or with respect to any matters
addressed by the opinion of Crowell & Moring set forth in Section 6(d) hereof or
the opinion of Appleby, Spurling & Kempe set forth in Section 6(e) hereof with
respect to Bermuda law matters.
(d) On the Closing Date there shall have been furnished to you the
opinion (addressed to the Initial Purchasers) of Crowell & Moring, special
communications counsel to the Company, dated the Closing Date and in form
<PAGE> 31
31
and substance satisfactory to counsel for the Initial Purchasers to the effect
that:
(i) The statements set forth in the Final Memorandum under the
heading "Risk Factors--Regulations," insofar as such statements constitute
a summary of the FCC's regulatory framework relating to Globalstar
referred to therein, fairly present the information referred to therein
with respect to such regulatory framework. The statements set forth in the
Final Memorandum under the heading "Risks Relating to
Globalstar--Globalstar FCC License," insofar as such statements constitute
a summary of the proceedings related to the validity of the authorization
for construction, launch and operation of the Globalstar satellite
constellation, fairly present the information referred to therein with
respect to such proceedings, and to our knowledge, there are no other
pending or threatened proceedings which could have a material adverse
effect on the validity of such authorization.
(ii) 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 29, 1995), as affirmed and
modified by the Memorandum Opinion and Order, FCC 96 279 (released June
27, 1996), as modified by the FCC's Order and Authorization, DA 96 1924
(released November 19, 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.
(iii) The construction, launch and operation by Globalstar, of the
Globalstar satellite constellation authorized by the Order and
Authorization, DA 95-128
<PAGE> 32
32
(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) , as modified by the FCC's
Order and Authorization, DA 96 1924 (released November 19, 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 policies of the FCC and that there
is no transfer of control of L/Q Licensee, Inc. without prior approval of
the FCC.
(e) On the Closing Date there shall have been furnished to you the
opinion (addressed to the Initial Purchasers) of Appleby, Spurling & Kempe,
counsel to the Company, dated the Closing Date and in form and substance
satisfactory to counsel for the Initial Purchasers to the effect that:
(i) 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 Final
Memorandum;
(ii) the Company has authorized share capital as set forth in the
Final Memorandum, and all the issued shares of Common Stock of the Company
and common stock of GTL have been duly and validly authorized and issued
and are fully paid and not subject to further calls;
(iii) the Indenture has been duly authorized, executed and delivered
by the Company and constitutes a valid and legally binding obligation of
the Company enforceable against the Company in accordance with its terms
except as enforceability may be limited by
<PAGE> 33
33
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); the Securities to be
issued and sold by the Company to the Initial Purchasers hereunder have
been duly and validly authorized and, when duly executed, authenticated
issued and delivered as contemplated by the Indenture against payment
therefor as provided herein, will be duly and validly issued, and will
constitute the valid and binding obligations of the Company entitled to
the benefits of the Indenture and enforceable in accordance with its
terms, 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); the issuance of the Securities is not subject to any preemptive
or similar rights under the Company's Memorandum of Association or
Bye-Laws, in each case as amended; the Securities and the Indenture
conform to the descriptions thereof in the Final Memorandum;
(iv) 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;
(v) the execution, delivery and performance by the Company of each
of the Operative Documents have been duly authorized by the Company and
the consummation by the Company of the sale of the Securities in
accordance therewith will not (A) conflict with the Company's Memorandum
of Association or Bye-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> 34
34
(vi) 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, the
Indenture and Registration Rights Agreement, except for the consent of the
Bermuda Monetary Authority which has been obtained;
(vii) there is no restriction upon the transfer of any Securities
pursuant to (A) the law of Bermuda or (B) the Company's Memorandum of
Association or By-laws, in each case as amended;
(viii) the statements set forth in the Final Memorandum under the
headings "Certain Foreign Issuer Considerations", insofar as such
statements 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;
(ix) 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
<PAGE> 35
35
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;
(x) the submission by the Company to the jurisdiction of the State
and federal courts sitting in the City of New York contained in the
Operative Agreements constitutes a legal, valid and binding obligation of
the Company, provided that such submission is valid under the laws of New
York; and
(xi) the choice of the laws of the State of New York to govern the
Notes and the Operative Agreements is a valid choice of law under Bermuda
law assuming that such choice is valid under the laws of the state of New
York.
(f) There shall have been furnished to you certificates, dated the
Closing Date and addressed to you, signed by the Chief Executive Officer or
President and by the Chief Financial Officer or Treasurer of the Company, in
each case, to the effect that: (i) the representations and warranties of the
Company contained in this Agreement are true and correct in all material
respects, as if made at and as of the Closing Date, and the Company has in all
material respects complied with all the agreements and satisfied all the
conditions on its part to be complied with or satisfied at or prior to the
Closing Date; and (ii) the signers of said certificates have carefully examined
the Final Memorandum and the Exchange Act Reports and each of the Final
Memorandum and the Exchange Act Reports (A) as of the date of the Final
Memorandum, does not include any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading, and (B) since the date of the Final
Memorandum there has occurred no event required to be set forth in an amendment
or supplement to the Final Memorandum which has not been so set forth.
(g) Since the date of the Final Memorandum, none of the Company and
the Loral Affiliates shall have sustained
<PAGE> 36
36
any loss or interference with its business by fire, explosion, flood, accident
or other calamity, whether or not covered by insurance, or shall have been
subject to any labor dispute, or shall have become a party to or the subject of
any action, suit or proceeding before any court or governmental agency,
authority or body or arbitrator, that is likely to have a material adverse
effect on, nor shall there have been a material adverse change in, the general
affairs, management, financial position, stockholders' equity or results of
operations of the Company and the Loral Affiliates, taken as a whole, whether or
not arising in the ordinary course of business, which loss, action, suit,
proceeding or change is in the Initial Purchasers' judgment so material and
adverse as to render it impracticable or inadvisable to proceed with the payment
for and delivery of the Securities.
(h) On the Closing Date, you shall have received a letter of
Deloitte & Touche LLP dated the Closing Date and addressed to you, confirming
that they are independent certified public accountants within the meaning of the
Securities Act and the applicable published Rules and Regulations with respect
to the Company and stating, as of the date of such letter (or, with respect to
matters involving changes or developments since the respective dates as of
which specified financial information is given in the Final Memorandum, as of a
date not more than five Business Days prior to the date of such letter), the
conclusions and findings of such firm with respect to the financial information
included in the Final Memorandum in form and substance satisfactory to you.
(i) You shall have been furnished such additional documents and
certificates as you or counsel for the Initial Purchasers may reasonably
request.
All references in paragraphs (b)-(h) of this Section 6 to the Final
Memorandum shall be deemed to include any amendment or supplement thereto at the
Closing Date.
All such opinions, certificates, letters and documents shall be in
compliance with the provisions hereof
<PAGE> 37
37
only if they are reasonably satisfactory in form and sub stance to you and to
counsel for the Initial Purchasers. The Company shall furnish to you conformed
copies of such opinions, certificates, letters and other documents in such
number as you shall reasonably request. If any of the conditions specified in
this Section 6 shall not have been fulfilled when and as required by this
Agreement, this Agreement and all obligations of the Initial Purchasers
hereunder may be canceled at, or at any time prior to, the Closing Date, by you.
Any such cancelation shall be without liability of the Initial Purchasers to the
Company. Notice of such cancelation shall be given to the Company in writing, or
by telecopy or telephone and confirmed in writing.
7. Indemnification and Contribution. (a) The Company shall indemnify
and hold harmless each Initial Purchaser from and against any loss, claim,
damage or liability (or any action in respect thereof), joint or several, to
which such Initial Purchaser may become subject, under the Securities Act or
otherwise, insofar as such loss, claim, damage or liability (or action in
respect thereof) arises out of or is based upon (i) any untrue statement or
alleged untrue statement of a material fact contained in the Final Memorandum
(as amended or supplemented) or any Preliminary Memorandum (as amended or
supplemented) or (ii) the omission or alleged omission to state in the Final
Memorandum (as amended or supplemented) or any Preliminary Memorandum (as
amended or supplemented) a material fact required to be stated therein or
necessary to make the statements therein not misleading; and shall reimburse
each Initial Purchaser promptly upon demand for any legal or other expenses
reasonably incurred by such Initial Purchaser in connection with investigating,
preparing to defend or defending against any such loss, claim, damage, liability
or action, as such expenses are incurred; provided, however, that the Company
shall not be liable under this Section 7(a) in any such case to the extent, but
only to the extent, that any such loss, claim, damage, liability or action
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission made in any Preliminary Memorandum (as amended
or supplemented) or the
<PAGE> 38
38
Final Memorandum (as amended or supplemented) in reliance upon and in conformity
with written information furnished to the Company by any Initial Purchaser
specifically for inclusion therein; and provided further that as to any
Preliminary Memorandum this indemnity agreement shall not inure to the benefit
of any Initial Purchaser on account of any loss, claim, damage, liability or
action arising from the sale of Securities to any person by that Initial
Purchaser if such loss, claim, damage, liability or action is a result of the
fact that both (i) to the extent required by applicable law, a copy of the Final
Memorandum, as the same may be amended or supplemented, was not sent or given to
such person at or prior to the written confirmation of the sale of such
Securities and (ii) the untrue statement or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact in such
Preliminary Memorandum was corrected in the Final Memorandum, unless such
failure resulted from non-compliance by the Company with Section 5(a) herein.
(b) Each Initial Purchaser severally, but not jointly, shall
indemnify and hold harmless the Company from and against any loss, claim, damage
or liability (or any action in respect thereof) to which the Company may become
subject, under the Securities Act or otherwise, insofar as such loss, claim,
damage or liability (or action in respect thereof) arises out of or is based
upon (i) any untrue statement or alleged untrue statement of a material fact
contained in the Final Memorandum or any Preliminary Memorandum, each as amended
or supplemented, or (ii) the omission or alleged omission to state in the Final
Memorandum or any Preliminary Memorandum, each as amended or supplemented, a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and shall reimburse the Company promptly for any legal
or other expenses reasonably incurred by the Company in connection with
investigating, preparing to defend or defending against any such loss, claim,
damage, liability or action, as such expenses are incurred; provided, however,
that such indemnification or reimbursement shall be available in each such case
to the extent, but only to the extent, that such untrue statement or alleged
untrue
<PAGE> 39
39
statement or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Company through the Initial
Purchasers by or on behalf of such Initial Purchaser specifically for inclusion
therein.
(c) Promptly after receipt by any indemnified party under subsection
(a) or (b) above 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 such subsection, notify the indemnifying party in
writing of the claim or the commencement of that action; provided, however,
that the failure so to notify the indemnifying party shall not relieve it from
any liability which it may have under this Section 7 unless the indemnifying
party is materially prejudiced thereby. If any such claim or action shall be
brought against any 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 such subsection 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 any indemnified party
shall have the right to employ separate counsel in any such action and to
participate in the defense thereof but the fees and expenses of such counsel
shall be at the expense of such indemnified party unless (i) the employment
thereof has been specifically authorized by the indemnifying party in writing,
(ii) such indemnified party shall have been advised by such counsel that there
may be one or more legal defenses available to it which are different from or
additional to those available to the indemnifying party and in the reasonable
judgment of such counsel it is advisable for such indemnified party to employ
separate counsel or (iii) the indemnifying party has
<PAGE> 40
40
failed to assume the defense of such action and employ counsel reasonably
satisfactory to the indemnified party, in which case, if such indemnified party
notifies the indemnifying party in writing that it elects to employ separate
counsel at the expense of the indemnifying party, the indemnifying party shall
not have the right to assume the defense of such action on behalf of such
indemnified party, it being understood, however, that the indemnifying party
shall not, in connection with any one such action or separate but substantially
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the reasonable fees and
expenses of more than one separate firm of attorneys at any time for all such
indemnified parties, which firm shall be designated in writing by the Initial
Purchasers, if the indemnified party under this Section 7 consist of any Initial
Purchaser, or the Company, if the indemnified parties under this Section 7
consists of the Company. No indemnifying party shall be liable for any
settlement of any such action effected without its written consent, but if
settled with such consent or if there be a final judgment for the plaintiff in
any such action, the indemnifying party agrees to indemnify the indemnified
party from and against any loss or liability by reason of such settlement or
judgment.
(d) If the indemnification provided for in this Section 7 is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above, 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 the losses, claims, damages or liabilities
referred to in subsection (a) or (b) above (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company and the
Initial Purchasers from the offering of the Securities 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 and the
Initial Purchasers in connection with the statements or omissions that resulted
in such losses,
<PAGE> 41
41
claims, damages or liabilities, or actions in respect thereof, as well as any
other relevant equitable considerations. The relative benefits received by the
Company and the Initial Purchasers shall be deemed to be in the same proportion
as the total net proceeds from the offering of the Securities (before deducting
expenses) received by the Company, on the one hand, and the total discounts and
commissions received by the Initial Purchasers, on the other hand, bear to the
total gross proceeds from the offering of Securities, in each case as set forth
on the cover page of the Final Memorandum. Relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or the Initial Purchasers and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such untrue statement or omission. The Company and the
Initial Purchasers agree that it would not be just and equitable if
contributions pursuant to this subsection (d) were to be determined by pro rata
allocation 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 losses, claims, damages or liabilities
(or actions in respect thereof) referred to in this subsection (d) shall be
deemed to include, for purposes of this subsection (d), any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating, preparing to defend or defending against any action or claim
which is the subject of this subsection (d). Notwithstanding the provisions of
this subsection (d), no Initial Purchaser shall be required to contribute any
amount in excess of the amount by which the total price at which the Securities
sold by it exceeds the amount of any damages which such Initial Purchaser has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Initial Purchasers'
<PAGE> 42
42
obligations in this subsection (d) to contribute are several in proportion to
their respective purchasing obligations and not joint. Each party entitled to
contribution agrees that upon the service of a summons or other initial legal
process upon it in any action instituted against it in respect of which
contribution may be sought, it shall promptly give written notice of such
service to the party or parties from whom contribution may be sought, but the
omission so to notify such party or parties of any such service shall not
relieve the party from whom contribution may be sought for any obligation it may
have hereunder or otherwise.
(e) The obligations of the Company under this Section 7 shall be in
addition to any liability which the Indemnitor may otherwise have, and shall
extend, upon the same terms and conditions, to each person, if any, who controls
any Initial Purchaser within the meaning of the Securities Act or the Exchange
Act; and the obligations of the Initial Purchasers under this Section 7 shall be
in addition to any liability that the respective Initial Purchasers may
otherwise have, and shall extend, upon the same terms and conditions, to each
director of the Company, and to each person, if any, who controls the Company
within the meaning of the Securities Act or Exchange Act.
8. Effective Date and Termination. Until the Closing Date, this
Agreement may be terminated by you by giving notice as hereinafter provided to
the Company if (a) the Company shall have failed, refused or been unable, at or
prior to the Closing Date, to perform in all material respects any agreement on
its part to be performed hereunder, (b) any other condition to the Initial
Purchasers' obligations hereunder is not fulfilled, (c) trading in securities
generally on the New York Stock Exchange, the American Stock Exchange, Nasdaq
National Market or the over-the-counter market shall have been suspended or
limited (which shall not include any limitation on program trading pursuant to
the rules of the New York Stock Exchange) or minimum prices shall have been
established on either of such exchanges or such markets by the Commission or
such exchange or other regulatory body or governmental authority having
jurisdiction, (d) a banking
<PAGE> 43
43
moratorium is declared by either Federal or state authorities, (e) the United
States becomes engaged in hostilities or there is an escalation of hostilities
involving the United States or there is a declaration of a national emergency or
war by the United States or (f) there shall have been 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, in the judgment of the Initial Purchasers, make it inadvisable or
impracticable to proceed with the delivery of the Securities. Any termination of
this Agreement pursuant to this Section 8 shall be without liability on the part
of the Company or any Initial Purchaser, except as otherwise provided in
Sections 5(h) and 7 hereof.
Any notice referred to above may be given at the address specified
in Section 10 hereof in writing or by telecopy or telephone, and if by telecopy
or telephone, shall be immediately confirmed in writing.
9. Survival of Certain Representations and Provisions. The
agreements contained in Section 7 hereof and the representations, warranties and
agreements of the Company and the Initial Purchasers contained in this Agreement
shall survive the delivery of the Securities to the Initial Purchasers hereunder
and shall remain in full force and effect, regardless of any termination or
cancelation of this Agreement or any investigation made by or on behalf of any
indemnified party.
10. Notices. Except as otherwise provided in the Agreement, whenever
notice is required by the provisions of this Agreement to be given to the
following parties, such notice shall be in writing to the following addresses:
(a) to the Company:
600 Third Avenue
New York, New York 10016
Attention: Eric J. Zahler
<PAGE> 44
44
(b) to the several Initial Purchasers:
c/o Lehman Brothers Inc.
3 World Financial Center
200 Vesey Street
New York, New York 10285
Attention: Syndicate Department
11. Information Furnished by Initial Purchasers. The Company and the
Initial Purchasers severally confirm that the statements set forth in "Plan of
Distribution" in the Final Memorandum or any Preliminary Memorandum constitute
the written information furnished by or on behalf of any Initial Purchaser
referred to in paragraphs (a) and (b) of Section 7 hereof. The Initial
Purchasers severally agree that such information is correct.
12. Parties. This Agreement shall inure to the benefit of and be
binding upon the several Initial Purchasers, the Company and their respective
successors. 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 Initial Purchaser within the meaning of Section 15 of the Securities Act and
(b) the indemnity agreement of the Initial Purchasers contained in Section 7
hereof shall be deemed to be for the benefit of officers and directors of the
Company and any person controlling the Company within the meaning of Section 15
of the Securities Act. Nothing in this Agreement is intended to confer or shall
be construed to give any person, other than the persons referred to in this
paragraph, any legal or equitable right, remedy or claim under or in respect of
this Agreement or any provision contained herein.
13. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE
CONFLICTS OF LAWS PRINCIPLES THEREOF.
<PAGE> 45
45
14. Jurisdiction; Consent to Service of Process. THE COMPANY HEREBY
IRREVOCABLY AND UNCONDITIONALLY CONSENTS TO SUBMIT TO THE EXCLUSIVE JURISDICTION
OF THE COURTS OF THE STATE OF NEW YORK AND OF THE UNITED STATES DISTRICT COURTS
LOCATED IN THE CITY OF NEW YORK FOR ANY LAWSUITS, CLAIMS OR OTHER PROCEEDINGS
ARISING OUT OF OR RELATING TO THIS AGREEMENT AND AGREES NOT TO COMMENCE ANY SUCH
LAWSUIT, CLAIM OR OTHER PROCEEDING EXCEPT IN SUCH COURTS. THE COMPANY HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY OBJECTION TO THE LAYING OF VENUE OF
ANY LAWSUIT, CLAIM, OR OTHER PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT IN THE COURTS OF THE STATE OF NEW YORK OR THE UNITED STATES DISTRICT
COURTS LOCATED IN THE CITY OF NEW YORK, AND HEREBY FURTHER IRREVOCABLY AND
UNCONDITIONALLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT
ANY SUCH LAWSUIT, CLAIM OR OTHER PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM. THE COMPANY HAS APPOINTED ERIC J. ZAHLER AT
600 THIRD AVENUE, NEW YORK, NEW YORK 10016, U.S.A. (HEREINAFTER REFERRED TO IN
SUCH CAPACITY AS THE "PROCESS AGENT"), AS ITS AUTHORIZED AGENT UPON WHOM PROCESS
MAY BE SERVED IN ANY SUCH SUIT OR PROCEEDING. THE COMPANY REPRESENTS TO YOU THAT
IT HAS NOTIFIED THE PROCESS AGENT OF SUCH DESIGNATION AND APPOINTMENT AND THAT
THE PROCESS AGENT HAS ACCEPTED THE SAME IN WRITING. THE COMPANY HAS AUTHORIZED
AND DIRECTED THE PROCESS AGENT TO ACCEPT SUCH SERVICE. IF THE PROCESS AGENT
SHALL CEASE TO ACT AS THE COMPANY'S AGENT FOR SERVICE OF PROCESS, THE COMPANY
SHALL APPOINT WITHOUT DELAY ANOTHER SUCH AGENT AND NOTIFY YOU OF SUCH
APPOINTMENT. THE COMPANY FURTHER AGREES THAT SERVICE OF PROCESS UPON THE PROCESS
AGENT AND WRITTEN NOTICE OF SAID SERVICE TO THE COMPANY MAILED BY FIRST CLASS
MAIL OR DELIVERED TO THE PROCESS AGENT SHALL BE DEEMED IN EVERY RESPECT
EFFECTIVE SERVICE OF PROCESS UPON IT IN ANY SUCH SUIT OR PROCEEDING. NOTHING
HEREIN SHALL AFFECT YOUR RIGHT OR THE RIGHT OF ANY PERSON CONTROLLING ANY OF YOU
TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW. THE COMPANY AGREES THAT A
FINAL ACTION IN ANY SUCH SUIT OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE
ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER LAWFUL
MANNER.
<PAGE> 46
46
15. Counterparts. This Agreement may be signed in one or more
counterparts, each of which shall constitute an original and all of which
together shall constitute one and the same agreement.
<PAGE> 47
47
Please confirm, by signing and returning to us counterparts of this
Agreement, that the foregoing correctly sets forth the agreement among the
Company and the several Initial Purchasers.
Very truly yours,
LORAL SPACE & COMMUNICATIONS
LTD.,
By:
-----------------------------------
Name:
Title:
Confirmed and accepted as of the date first above mentioned:
LEHMAN BROTHERS INC.
BEAR, STEARNS & CO. INC.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
CIBC OPPENHEIMER CORP.
ING BARING FURMAN SELZ LLC
C.E. UNTERBERG, TOWBIN
By: LEHMAN BROTHERS INC.
By:
-----------------------------------
Name:
Title:
<PAGE> 48
SCHEDULE I
<TABLE>
<CAPTION>
Principal Amount
Initial Purchasers of Securities
to be Purchased
<S> <C>
Lehman Brothers Inc........................................... $157,500,000
Bear, Stearns & Co., Inc...................................... 70,000,000
Donaldson, Lufkin & Jenrette
Securities Corporation...................................... 70,000,000
CIBC Oppenheimer Corp......................................... 17,500,000
Ing Baring Furman Selz LLC.................................... 17,500,000
C.E. Unterberg, Towbin........................................ 17,500,000
------------
Total................................................... $350,000,000
============
</TABLE>
<PAGE> 49
EXHIBIT A
Offers and Sales by the Initial Purchasers
The Securities have not been registered under the Securities Act and
may not be offered or sold except in accordance with an applicable exemption
from the registration requirements thereof. Accordingly, the Securities are
being offered and sold only (1) in the United states to qualified institutional
buyers (each, a "Qualified Institutional Buyer" or "QIB") under Rule 144A under
the Securities Act in a private sale exempt from the registration requirements
of the Securities Act, and (2) outside the United States to non-U.S. persons
("foreign purchasers") in reliance upon Regulation S under the Securities Act.
Investor Representations and Restrictions on Resale
Each purchaser of the Securities, by its acceptance thereof, will be
deemed to have acknowledged, represented to and agreed with the Initial
Purchasers and the Company as follows (terms used in this paragraph that are
defined in Rule 144A or Regulation S are used herein as defined therein):
(1) It understands and acknowledges that the Securities have not
been registered under the Securities Act or any other applicable
securities law, and are being offered for resale in transactions not
requiring registration under the Securities Act or any other applicable
securities law, including sales pursuant to Rule 144A and Regulation S
under the Securities Act, that the Securities (the Securities are referred
to herein as the "Restricted Securities") have not been registered under
the Securities Act or any other applicable securities law and, unless so
registered, may not be offered, sold or otherwise transferred except in
compliance with the registration requirements of the Securities Act or any
other applicable securities law, pursuant to an exemption therefrom or in
a transaction not subject thereto, and in each case, in compliance with
the conditions for transfer set forth in paragraph (4) below.
<PAGE> 50
2
(2) It is either (A) a "qualified institutional buyer" (QIB") within
the meaning of Rule 144A under the Securities Act, is aware that any sale
of the Notes to it will be made in reliance on Rule 144A and such
acquisition will be for its own account or for the account of another QIB
or (B) a non-U.S. person (a "foreign purchaser", which term shall include
dealers or other professional fiduciaries in the U.S. acting on a
discretionary basis for foreign beneficial owners (other than an estate or
trust)).
(3) It acknowledges that none of the Company nor the Initial
Purchasers, or any person representing the Company or the Initial
Purchasers, has made any representation to it with respect to the Company
or the offering of the Securities, other than in this Offering Memorandum,
which has been delivered to it and upon which it is relying in making its
investment decision with respect to the Securities. Accordingly, it
acknowledges that no representation or warranty is made by the Initial
Purchasers as to the accuracy or completeness of such materials. It has
had access to such financial and other information concerning the Company
and the Securities as it deemed necessary in connection with its decision
to purchase any of the Securities, including an opportunity to ask
questions and request information from the Company and the Initial
Purchasers.
(4) It is purchasing the Securities for its own account, or for one
or more investor accounts for which it is acting as a fiduciary or agent,
in each case for investment, and not with a view to, or for offer or sale
in connection with, any distribution thereof in violation of the
Securities Act, subject to any requirement of law that the disposition of
its property or the property of such investor account or accounts be at
all times within its or their control and subject to its or their ability
to resell such Securities pursuant to Rule 144A, Regulation S or any
exemption from registration available under the Securities Act. It agrees
on its own behalf and on behalf of any investor account for which it is
<PAGE> 51
3
purchasing the Restricted Securities, and each subsequent holder of the
Restricted Securities by its acceptance thereof will agree, to offer, sell
or otherwise transfer such Restricted Securities prior to the date which
is two years after the later of the date of original issue and the last
date on which the Company or any affiliate of the Company was the owner of
such Restricted Securities (or any predecessor thereto) (the "Resale
Restriction Termination Date") only (a) to the Company, (b) pursuant to a
registration statement which has been declared effective under the
Securities Act, (c) for so long as the Securities are eligible for resale
pursuant to Rule 144A, to a person it reasonably believes is a QIB that
purchases for its own account or for the account of a QIB to which notice
is given that the transfer is being made in reliance on Rule 144A, (d) in
an offshore transaction meeting the requirements of Rule 903 or Rule 904
of Regulation S, or (e) pursuant to another available exemption from the
registration requirements of the Securities Act, and in each case, in
accordance with the applicable securities laws of any state of the United
States or any other applicable jurisdiction and, subject to any
requirement of law that the disposition of its property or the property of
such investor account or accounts be at all times within its or their
control. The foregoing restrictions on resale will not apply subject to
the Resale Restriction Termination Date. Each purchaser acknowledges that
the Company and the Trustee or the transfer agent reserve the right prior
to any offer, sale or other transfer prior to the Resale Restriction
Termination Date of the Restricted Securities pursuant to clauses (d) or
(e) above to require the delivery of an opinion, certifications or other
information acceptable to the Company and the Trustee or the transfer
agent in form and substance. Each purchaser acknowledges that each
Restricted Security will contain a legend substantially to the following
effect:
"THIS SECURITY (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY
STATE SECURITIES LAWS AND NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION
<PAGE> 52
4
HEREIN MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF
SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF
THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE
EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED
BY RULE 144A THEREUNDER. THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE
HEREOF, REPRESENTS, ACKNOWLEDGES AND AGREES FOR THE BENEFIT OF THE COMPANY
THAT: (I) IT HAS ACQUIRED A "RESTRICTED" SECURITY WHICH HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT; (II) IT WILL NOT OFFER, SELL OR
OTHERWISE TRANSFER THIS SECURITY, PRIOR TO THE DATE WHEN THIS SECURITY NO
LONGER CONSTITUTES A "RESTRICTED" SECURITY UNDER RULE 144(K) OF THE
SECURITIES ACT EXCEPT (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION
STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C)
FOR SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A,
TO A PERSON WHO THE SELL REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, (D) OUTSIDE THE UNITED STATES IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT,
OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND, IN EACH CASE, IN ACCORDANCE WITH
THE APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY
APPLICABLE JURISDICTION; AND (III) IT WILL, AND EACH SUBSEQUENT HOLDER IS
REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THIS SECURITY OF THE RESALE
RESTRICTIONS SET FORTH IN (II) ABOVE. ANY OFFER, SALE OR OTHER DISPOSITION
PURSUANT TO THE FOREGOING CLAUSES (II)(D) AND (E) IS SUBJECT TO THE RIGHT
OF THE ISSUER OF THIS SECURITY AND THE TRUSTEE OR TRANSFER AGENT FOR SUCH
SECURITIES TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATIONS OR OTHER INFORMATION ACCEPTABLE TO THEM IN FORM AND
SUBSTANCE."
(5) It acknowledges that the Company, the Initial Purchaser and
others will rely upon the truth and accuracy of the foregoing
acknowledgments, representations and agreements and agrees that, if any of
<PAGE> 53
5
the acknowledgments, representations and agreements deemed to have been
made by purchase of the Securities are no longer accurate, it shall
promptly notify the Initial Purchasers. If it is acquiring any Securities
as a fiduciary or agent for one or more investor accounts, it represents
that it has sole investment discretion with respect to each such account
and it has full power to make the foregoing acknowledgments,
representations and agreements on behalf of each such account.
<PAGE> 1
EXHIBIT 5,8.1
[LETTERHEAD OF APPLEBY SPURLING & KEMPE]
30 March 1999
Loral Space & Communications Limited
600 Third Avenue
New York
NY 10016
Ladies and Gentlemen
We have acted as Bermuda counsel for Loral Space & Communications Limited,
a Bermuda company, (the "Company"), in connection with the filing by the Company
with the Securities and Exchange Commission (the "Commission") of a registration
statement (the "Registration Statement") on Form S-4 under the Securities Act of
1933, as amended (the "Securities Act") relating to the proposed issuance, in
exchange for $350,000,000 aggregate principal amount of the Company's 9 1/2%
Senior Notes due 2006 (the "Old Notes"), of $350,000,000 aggregate principal
amount of the Company's 9 1/2% Notes due 2006 (the "New Notes", and collectively
with the Old Notes, the "Notes"). The New Notes are to be issued pursuant to an
indenture dated as of 15 January 1999 (the "Indenture"), between the Company and
The Bank of New York, as trustee (the "Trustee"). Capitalized terms used herein
and not otherwise defined herein have the meanings ascribed thereto in the
Indenture.
In so acting, we have examined originals or copies, certified or otherwise
identified to our satisfaction, of the Registration Statement and such corporate
records, agreements, documents and other instruments, as we have deemed
necessary for the purpose of this opinion, and we have relied on statements and
certificates of officers and representatives of the Company and public
officials.
We have assumed:
(i) the truth, accuracy and completeness as the date hereof of all
representations as to factual matters made in the documents which we
have examined;
(ii) the genuineness of all signatures on the documents which we have
examined; and
(iii) The conformity to original documents of all documents produced to us
as copies and the authenticity of all original documents which, or
copies of which, have been submitted to us.
Based upon and subject to the foregoing and subject to the reservations
mentioned below and to any matters not disclosed to us, we are of the opinion
that:
(i) the Company is an exempted company duly incorporated and validly
existing under Bermuda law and is in good standing under the laws of
Bermuda;
(ii) the Company has full power and authority, and has obtained all
Bermuda governmental authorisations, licenses, permits, certificates
and approvals as are necessary to own its properties and to conduct
its business as described in the Registration Statement;
(iii) all the Shares have been duly and validly authorised, issued, fully
paid and non-assessable; and
(iv) the legal conclusions set forth in the discussion of Bermuda tax law
under the headings "Foreign Issuer Considerations -- Bermuda Tax
Considerations" and "The Exchange Offer"
<PAGE> 2
are our opinions, and it is our opinion that this discussion
addresses the material Bermuda tax consequences of an investment in
the Notes.
Our reservations are as follows:
(A) We express no opinion as to any law other than Bermuda law and none of the
opinions expressed herein relates to compliance with or matters governed
by the laws of any jurisdiction other than Bermuda. Where an obligation is
to be performed in a jurisdiction other than Bermuda, a Bermuda court may
decline to enforce it to the extent that such performance would be illegal
or contrary to public policy under the laws of such other jurisdiction.
(B) We express no opinion as to the availability of equitable remedies, such
as specific performance or injunctive relief, or as to any matters which
are within the discretion of the Bermuda courts, such as the award of
costs or questions related to jurisdiction. Further, we express no opinion
as to the validity or binding effect in Bermuda of any waiver of or
obligation to waive any provision of law (whether substantive or
procedural) or any right or remedy arising through circumstances not known
at the time of the filing of the Registration Statement.
(C) Section 9 of the Interest and Credit Charges (Regulation) Act, 1975
provides that the Bermuda courts have discretion as to the amount of
interest if any payable on the amount of a judgment after date of
judgment. If the court does not exercise that discretion, then interest
will accrue at the statutory rate which is currently seven per cent per
annum.
(D) Where a party is vested with a discretion or may determine a matter in its
opinion, such discretion may have to be exercised reasonably or such an
opinion may have to be based on reasonable grounds.
(E) For the purposes of this opinion:
(a) the term "fully paid" means, in relation to the issued shares of a
company limited by shares (that is to say, a company having the
liability of its members limited by its Memorandum of Association
to the amount, if any, unpaid on the shares held by them), that
members holding such shares have no liability to make any
contribution or other payment to the company in respect of those
shares; and
(b) the term "non-assessable" means, in relation to fully-paid shares
of a company, that such member shall not be bound by an alteration
to the Memorandum of Association or to the Bye-laws of that company
after the date upon which he became a member, if and so far as the
alteration requires him to take, or subscribe for additional
shares, or in any way increases his liability to contribute to the
share capital of, or otherwise to, pay money to the company.
This opinion is issued on the basis that it will be construed in accordance
with the provisions of Bermuda law.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to us in the Prospectus included as
part of the Registration Statement. In giving such consent, we do not admit
hereby that we come within the category of persons whose consent is required
under Section 7 of the Securities Act, or the Rules and Regulations of the
Securities and Exchange Commission thereunder.
Yours faithfully
/s/ APPLEBY SPURLING & KEMPE
2
<PAGE> 1
EXHIBIT 8.2
[LETTERHEAD OF WILLKIE FARR & GALLAGHER]
March 31, 1999
Loral Space & Communications Ltd.
600 Third Avenue
New York, NY 10016
Ladies and Gentlemen:
We have acted as counsel for Loral Space & Communications Ltd., a Bermuda
company (the "Company"), in connection with the filing by the Company with the
Securities and Exchange Commission (the "Commission") of a registration
statement (the "Registration Statement") on Form S-4 under the Securities Act of
1933, as amended (the "Securities Act"), relating to the proposed issuance, in
exchange for $350,000,000 aggregate principal amount of the Company's 9 1/2%
Senior Notes due 2006 (the "Old Notes"), of $350,000,000 aggregate principal
amount of the Company's 9 1/2% Senior Notes due 2006 (the "New Notes") and
collectively with the Old Notes, the "Notes"). The New Notes are to be issued
pursuant to an indenture dated as of January 15, 1999 (the "Indenture"), between
the Company and The Bank of New York, as trustee. Capitalized terms used herein
and not otherwise defined have the meanings ascribed thereto in the Indenture.
In so acting, we have examined originals or copies, certified or otherwise
identified to our satisfaction, of the Registration Statement and such corporate
records, agreements, documents and other instruments as we have deemed necessary
for the purpose of this opinion. We have also examined such other documents,
papers, statutes and authorities as we have deemed necessary to form a basis for
the opinion hereinafter expressed.
In our examination, we have assumed the genuineness of all signatures and
the conformity to original documents of all copies submitted to us. As to
various questions of fact material to our opinion, we have relied on statements
and certificates of officers and representatives of the Company and public
officials.
Based upon the foregoing and having regard for such legal questions as we
have deemed relevant, the legal conclusions set forth in the discussion of U.S.
Federal tax law in the Registration Statement under the heading "Material United
States Federal Income Tax Consequences" accurately describe the material U.S.
Federal income tax consequences to holders of the New Notes issued pursuant to
the Indenture.
We call to your attention that we are members of the Bar of the State of
New York and do not purport to be experts in, or to render any opinions with
respect to, the laws of jurisdictions other than the State of New York, except
for the federal laws of the United States of America.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to us in the Prospectus included as
part of the Registration Statement.
Very truly yours,
/s/ WILLKIE FARR & GALLAGHER
<PAGE> 1
EXHIBIT 23.3
CONSENT OF DELOITTE & TOUCHE LLP
We consent to the incorporation by reference in this Registration Statement
of Loral Space & Communications Ltd. (a Bermuda company) on Form S-4 of our
reports with respect to (i) the consolidated financial statements of Loral Space
& Communications Ltd., Space Systems/Loral, Inc., and the financial statement
schedule of Loral Space & Communications Ltd., appearing in the Annual Report on
Form 10-K of Loral Space & Communications Ltd., for the year ended December 31,
1998 and (ii) the consolidated financial statements of Globalstar, L.P.
appearing in the Annual Report on Form 10-K of Globalstar Telecommunications
Limited and Globalstar, L.P. for the year ended December 31, 1998 and to the
reference to us under the heading "Experts" in the Prospectus, which is part of
this Registration Statement.
Deloitte & Touche LLP
New York, New York
April 1, 1999
<PAGE> 1
EXHIBIT 24
POWER OF ATTORNEY
Each of the undersigned officers and directors of Loral Space &
Communications Ltd. hereby severally constitutes and appoints Bernard L.
Schwartz, Gregory J. Clark, Richard Townsend, Eric J. Zahler, Nicholas C. Moren
and Harvey B. Rein, and each of them as the attorneys-in-fact for the
undersigned, in any and all capacities, with full power of substitution, to sign
this Registration Statement on Form S-4 covering the Senior Notes due 2006 of
Loral Space & Communications Ltd. and any and all pre- or post-effective
amendments to this Registration Statement, any subsequent Registration Statement
for the same offering which may be filed pursuant to Rule 462(b) under the
Securities Act of 1933 and any and all pre- or post effective amendments
thereto, and to file the same with exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact, and each of them, full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully to all intents and purposes as he might or could do
in person, hereby ratifying and confirming all that each said attorney-in-fact,
or either of them, may lawfully do or cause to be done by virtue hereof.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ BERNARD L. SCHWARTZ Chairman of the Board, Chief March 30, 1999
- ------------------------------------------------ Executive Officer and Director
Bernard L. Schwartz (Principal Executive Officer)
/s/ HOWARD GITTIS Director March 30, 1999
- ------------------------------------------------
Howard Gittis
/s/ ROBERT B. HODES Director March 30, 1999
- ------------------------------------------------
Robert B. Hodes
/s/ GERSHON KEKST Director March 30, 1999
- ------------------------------------------------
Gershon Kekst
/s/ CHARLES LAZARUS Director March 30, 1999
- ------------------------------------------------
Charles Lazarus
/s/ MALVIN A. RUDERMAN Director March 30, 1999
- ------------------------------------------------
Malvin A. Ruderman
/s/ E. DONALD SHAPIRO Director March 30, 1999
- ------------------------------------------------
E. Donald Shapiro
/s/ ARTHUR L. SIMON Director March 30, 1999
- ------------------------------------------------
Arthur L. Simon
/s/ DANIEL YANKELOVICH Director March 30, 1999
- ------------------------------------------------
Daniel Yankelovich
/s/ RICHARD J. TOWNSEND Senior Vice President and Chief March 30, 1999
- ------------------------------------------------ Financial Officer (Principal
Richard J. Townsend Financial Officer)
/s/ HARVEY B. REIN Vice President and Controller March 30, 1999
- ------------------------------------------------ (Principal Accounting Officer)
Harvey B. Rein
</TABLE>
<PAGE> 1
EXHIBIT 25
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) [ ]
------------------------
THE BANK OF NEW YORK
(EXACT NAME OF TRUSTEE AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
NEW YORK 13-5160382
(STATE OF INCORPORATION (I.R.S. EMPLOYER
IF NOT A U.S. NATIONAL BANK) IDENTIFICATION NO.)
ONE WALL STREET, NEW YORK, N.Y. 10286
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
</TABLE>
LORAL SPACE & COMMUNICATIONS LTD.
(EXACT NAME OF OBLIGOR AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
BERMUDA 13-3867424
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
C/O LORAL SPACECOM CORPORATION 10016
600 THIRD AVENUE (ZIP CODE)
NEW YORK, NEW YORK
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
</TABLE>
------------------------
9 1/2% SENIOR NOTES DUE 2006
(TITLE OF THE INDENTURE SECURITIES)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE
TRUSTEE:
(A) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH
IT IS SUBJECT.
<TABLE>
<CAPTION>
NAME ADDRESS
---- -------
<S> <C>
Superintendent of Banks of the State 2 Rector Street, New York, N.Y. 10006,
of New York and Albany, N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York, N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
</TABLE>
(B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Yes.
2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
None.
16. LIST OF EXHIBITS.
EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION,
ARE INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO
RULE 7a-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND 17
C.F.R. 229.10(d).
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which contains the
authority to commence business and a grant of powers to exercise
corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1
filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to
Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1
to Form T-1 filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No.
33-44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or examining
authority.
<PAGE> 3
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New York,
a corporation organized and existing under the laws of the State of New York,
has duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in The City of New York, and State
of New York, on the 26th day of March, 1999.
THE BANK OF NEW YORK
By: /s/ MICHELE L. RUSSO
---------------------------------------
Name: MICHELE L. RUSSO
Title: ASSISTANT TREASURER
<PAGE> 1
EXHIBIT 99.1
LETTER OF TRANSMITTAL
FOR
OFFER FOR ALL OUTSTANDING 9 1/2% SENIOR NOTES DUE 2006
IN EXCHANGE FOR UP TO $350,000,000 PRINCIPAL AMOUNT OF
9 1/2% SENIOR NOTES DUE 2006
OF
LORAL SPACE & COMMUNICATIONS, INC.
PURSUANT TO THE PROSPECTUS
DATED MARCH , 1999
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
, 1999, UNLESS EXTENDED OR TERMINATED (THE "EXPIRATION DATE").
The Exchange Agent for the Exchange Offer is:
THE BANK OF NEW YORK
<TABLE>
<S> <C> <C>
By Hand or Overnight Delivery: Facsimile Transmissions By Registered Or Certified Mail:
(Eligible Institutions Only)
The Bank of New York The Bank of New York
101 Barclay Street (212) 815-3080 101 Barclay Street, 7E
New York, New York 10286 New York, New York 10286
Corporate Trust Services To Confirm by Telephone Attn: Reorganization Section
Window or for Information Call:
Ground Level
Attn: Reorganization Section (212) 852-6333
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL (THE "LETTER OF TRANSMITTAL") TO AN
ADDRESS, OR TRANSMISSION VIA FACSIMILE TO A NUMBER, OTHER THAN AS SET FORTH
ABOVE, WILL NOT CONSTITUTE A VALID TENDER OF 9 1/2% SENIOR NOTES DUE 2006 (THE
"OLD NOTES").
The Instructions contained herein should be read carefully before this
Letter of Transmittal is completed and signed.
This Letter of Transmittal is to be used by registered holders of Old Notes
("Holders") if: (i) certificates representing Old Notes are to be physically
delivered to the Exchange Agent by such Holders; (ii) tender of Old Notes is to
be made by book-entry transfer to the Exchange Agent's account at The Depositary
Trust Company ("DTC" or the "Book-Entry Transfer Facility") pursuant to the
procedures set forth in the Prospectus, dated , 1999 (as the same
may be amended from time to time, the "Prospectus") under the caption "The
Exchange Offer -- Book-Entry Transfer" by any financial institution that is a
participant in DTC and whose name appears on a security position listing as the
owner of Old Notes or (iii) delivery of Old Notes is to be made according to the
guaranteed delivery procedures set forth in the Prospectus under the caption
"The Exchange Offer -- Guaranteed Delivery Procedures," and, in each case,
instructions are not being transmitted through the DTC Automated Tender Program
("ATOP"). DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY IN
ACCORDANCE WITH SUCH BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT
CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
In order to properly complete this Letter of Transmittal, a Holder must (i)
complete the box entitled "Method of Delivery" by checking one of the three
boxes therein and supplying the appropriate information, (ii) complete the box
entitled "Description of Old Notes," (iii) if such Holder is a Participating
Broker Dealer (as defined below) and wishes to receive additional copies of the
Prospectus for delivery in connection with resales of New Notes, check the
applicable box, (iv) sign this Letter of Transmittal by completing the box
entitled "Please Sign Here", (v) if appropriate, check and complete the boxes
relating to the "Special Issuance Instructions" and "Special Delivery
Instructions," and (vi) complete the Substitute Form W-9. Each Holder should
carefully read the detailed
<PAGE> 2
Instructions below prior to completing this Letter of Transmittal. See "The
Exchange Offer -- Procedures For Tendering" in the Prospectus.
Holders of Old Notes that are tendering by book-entry transfer to the
Exchange Agent's account at DTC can execute the tender through ATOP for which
the transaction will be eligible. DTC participants that are accepting the
Exchange Offer should transmit their acceptance to DTC, which will edit and
verify the acceptance and execute a book-entry delivery to the Exchange Agent's
account at DTC. DTC will then send an Agent's Message to the Exchange Agent for
its acceptance. Delivery of the Agent's Message by DTC will satisfy the terms of
the Exchange Offer as to execution and delivery of a Letter of Transmittal by
the participant identified in the Agent's Message. DTC participants may also
accept the Exchange Offer by submitting a Notice of Guaranteed Delivery through
ATOP.
If Holders desire to tender Old Notes pursuant to the Exchange Offer and
(i) certificates representing such Old Notes are not lost but are not
immediately available, (ii) time will not permit this Letter of Transmittal,
certificates representing such Holder's Old Notes and all other required
documents to reach the Exchange Agent prior to the Expiration Date or (iii) the
procedures for book-entry transfer cannot be completed prior to the Expiration
Date, such Holders may effect a tender of such Old Notes in accordance with the
guaranteed delivery procedures set forth in the Prospectus under the caption
"The Exchange Offer -- Guaranteed Delivery Procedures." See Instruction 2 below.
A Holder having Old Notes registered in the name of a broker, dealer,
commercial bank, trust company or other nominee must contact such broker,
dealer, commercial bank, trust company or other nominee if they desire to accept
the Exchange Offer with respect to the Old Notes so registered.
THE EXCHANGE OFFER IS NOT BEING MADE TO (NOR WILL TENDERS OF OLD NOTES BE
ACCEPTED FROM OR ON BEHALF OF) HOLDERS IN ANY JURISDICTION IN WHICH THE MAKING
OR ACCEPTANCE OF THE EXCHANGE OFFER WOULD NOT BE IN COMPLIANCE WITH THE LAWS OF
SUCH JURISDICTION.
All capitalized terms used herein and not defined herein shall have the
meaning ascribed to them in the Prospectus.
Your bank or broker can assist you in completing this form. The
instructions included with this Letter of Transmittal must be followed.
Questions and requests for assistance or for additional copies of the
Prospectus, this Letter of Transmittal and the Notice of Guaranteed Delivery may
be directed to the Exchange Agent, whose address and telephone number appear on
the front cover of this Letter of Transmittal. See Instruction 11 below.
2
<PAGE> 3
METHOD OF DELIVERY
[ ] CHECK HERE IF CERTIFICATES FOR TENDERED OLD NOTES ARE BEING DELIVERED
HEREWITH.
[ ] CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH A
BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution:
Account Number: Transaction Code Number:
- --------------------------------------------------------------------------------
[ ] CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE
OF GUARANTEED DELIVERY PREVIOUSLY DELIVERED TO THE EXCHANGE AGENT
PURSUANT TO INSTRUCTION 2 BELOW AND COMPLETE THE FOLLOWING:
Name of Registered Holder(s):
Window Ticket No. (if any):
Date of Execution of Notice of Guaranteed Delivery:
Name of Eligible Institution that Guaranteed Delivery:
If Delivered by Book-Entry Transfer (yes or no):
Account Number: Transaction Code Number:
List below the Old Notes to which this Letter of Transmittal relates. If
the space provided below is inadequate, list the certificate numbers and
principal amounts on a separately signed schedule and affix the schedule to this
Letter of Transmittal.
- --------------------------------------------------------------------------------
DESCRIPTION OF OLD NOTES
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
AGGREGATE
NAME(S) AND ADDRESS(ES) OF HOLDER(S) CERTIFICATE PRINCIPAL AMOUNT PRINCIPAL AMOUNT
(PLEASE FILL IN, IF BLANK) NUMBER(S)* REPRESENTED** TENDERED
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
TOTAL PRINCIPAL
AMOUNT OF OLD
NOTES
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Need not be completed by Holders tendering by book-entry transfer (see
below).
** Unless otherwise indicated in the column labeled "Principal Amount
Tendered" and subject to the terms and conditions of the Prospectus, a
Holder will be deemed to have tendered the entire aggregate principal
amount represented by the Old Notes indicated in the column labeled
"Aggregate Principal Amount Represented." See Instruction 3.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
3
<PAGE> 4
FOR PARTICIPATING BROKER-DEALERS ONLY:
[ ] CHECK HERE AND PROVIDE THE INFORMATION REQUESTED BELOW IF YOU ARE A
PARTICIPATING BROKER-DEALER (AS DEFINED BELOW) AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND, DURING THE 30-DAY PERIOD FOLLOWING THE
CONSUMMATION OF THE EXCHANGE OFFER, 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO, AS WELL AS ANY NOTICES FROM THE COMPANY TO SUSPEND AND RESUME USE OF
THE PROSPECTUS. BY TENDERING ITS OLD NOTES AND EXECUTING THIS LETTER OF
TRANSMITTAL, EACH PARTICIPATING BROKER-DEALER AGREES TO USE ITS REASONABLE BEST
EFFORTS TO NOTIFY THE COMPANY OR THE EXCHANGE AGENT WHEN IT HAS SOLD ALL OF ITS
NEW NOTES. (IF NO PARTICIPATING BROKER-DEALERS CHECK THIS BOX, OR IF ALL
PARTICIPATING BROKER-DEALERS WHO HAVE CHECKED THIS BOX SUBSEQUENTLY NOTIFY THE
COMPANY OR THE EXCHANGE AGENT THAT ALL THEIR NEW NOTES HAVE BEEN SOLD, THE
COMPANY WILL NOT BE REQUIRED TO MAINTAIN THE EFFECTIVENESS OF THE EXCHANGE OFFER
REGISTRATION STATEMENT OR TO UPDATE THE PROSPECTUS AND WILL NOT PROVIDE ANY
NOTICES TO ANY HOLDERS TO SUSPEND OR RESUME USE OF THE PROSPECTUS.)
Provide the name of the individual who should receive, on behalf of the Holder,
additional copies of the Prospectus, and amendments and supplements thereto, and
any notices to suspend and resume use of the Prospectus:
Name:
- --------------------------------------------------------------------------------
Address:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Telephone No.:
- ---------------------------------------------
Facsimile No.:
- ----------------------------------------------
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
4
<PAGE> 5
Ladies and Gentlemen:
By execution hereof, the undersigned acknowledges receipt of the
Prospectus, dated , 1999 (as the same may be amended from time to
time, the "Prospectus" and, together with the Letter of Transmittal, the
"Exchange Offer"), of Loral Space & Communications Ltd. a Bermuda company (the
"Company"), and this Letter of Transmittal and instructions hereto, which
together constitute the Company's offer to exchange $1,000 principal amount of
9 1/2% Senior Notes due 2006 (the "New Notes") of the Company, upon the terms
and subject to the conditions set forth in the Exchange Offer, for each $1,000
principal amount of outstanding 9 1/2% Senior Notes due 2006 (the "Old Notes")
of the Company.
Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to the Company the principal amount of Old Notes
indicated above. Subject to, and effective upon, the acceptance for exchange of
the Old Notes tendered herewith, the undersigned hereby exchanges, assigns and
transfers to, or upon the order of, the Company all right, title and interest in
and to such Old Notes. The undersigned hereby irrevocably constitutes and
appoints the Exchange Agent as the true and lawful agent and attorney-in-fact of
the undersigned (with full knowledge that the Exchange Agent also acts as the
agent of the Company) with respect to such Old Notes with full power of
substitution (such power-of-attorney being deemed to be an irrevocable power
coupled with an interest) to (i) present such Old Notes and all evidences of
transfer and authenticity to, or transfer ownership of, such Old Notes on the
account books maintained by the Book-Entry Transfer Facility to, or upon the
order of, the Company, (ii) present such Old Notes for transfer of ownership on
the books of the Company or the trustee under the Indenture (the "Trustee"), and
(iii) receive all benefits and otherwise exercise all rights of beneficial
ownership of such Old Notes, all in accordance with the terms of and conditions
of the Exchange Offer as described in the Prospectus.
The undersigned represents and warrants that it has full power and
authority to tender, exchange, assign and transfer the Old Notes tendered hereby
and to acquire New Notes issuable upon the exchange of such tendered Old Notes,
and that, when the same are accepted for exchange, the Company will acquire good
and unencumbered title to the tendered Old Notes, free and clear of all liens,
restrictions, charges and encumbrances and not subject to any adverse claim or
right. The undersigned also warrants that it will, upon request, execute and
deliver any additional documents deemed by the Exchange Agent or the Company to
be necessary or desirable to complete the exchange, assignment and transfer of
the Old Notes tendered hereby or transfer ownership of such Old Notes on the
account books maintained by the book-entry transfer facility.
The Exchange Offer is subject to certain conditions as set forth in the
Prospectus under the caption "The Exchange Offer -- Conditions." The undersigned
recognizes that as a result of these conditions (which may be waived by the
Company, in whole or in part, in the reasonable discretion of the Company), as
more particularly set forth in the Prospectus, the Company may not be required
to exchange any of the Old Notes tendered hereby and, in such event, the Old
Notes not exchanged will be returned to the undersigned at the address shown
above.
THE EXCHANGE OFFER IS NOT BEING MADE TO ANY BROKER-DEALER WHO PURCHASED OLD
NOTES DIRECTLY FROM THE COMPANY FOR RESALE PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT OR TO ANY PERSON THAT IS AN "AFFILIATE" OF THE COMPANY WITHIN THE
MEANING OF RULE 405 UNDER THE SECURITIES ACT. THE UNDERSIGNED UNDERSTANDS AND
AGREES THAT THE COMPANY RESERVE THE RIGHT NOT TO ACCEPT TENDERED OLD NOTES FROM
ANY TENDERING HOLDER IF THE COMPANY DETERMINE, IN THEIR REASONABLE DISCRETION,
THAT SUCH ACCEPTANCE COULD RESULT IN A VIOLATION OF APPLICABLE SECURITIES LAWS.
The undersigned, if the undersigned is a beneficial holder, represents, or,
if the undersigned is a broker, dealer, commercial bank, trust company or other
nominee, represents that it has received representations from the beneficial
owners of the Old Notes (the "Beneficial Owner") stating that (i) the New Notes
to be acquired in connection with the Exchange Offer by the Holder and each
Beneficial Owner of the Old Notes are being acquired by the Holder and each such
Beneficial Owner in the ordinary course of business of the Holder and each such
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<PAGE> 6
Beneficial Owner, (ii) the Holder and each such Beneficial Owner are not engaged
in, do not intend to engage in, and have no arrangement or understanding with
any person to participate in, a distribution of the New Notes, (iii) the Holder
and each Beneficial Owner acknowledge and agree that any person participating in
the Exchange Offer for the purpose of distributing the New Notes must comply
with the registration and prospectus delivery requirements of the Securities Act
in connection with a secondary resale transaction of the New Notes acquired by
such person and cannot rely on the position of the staff of the Commission set
forth in the no-action letters that are discussed in the Prospectus under the
caption "The Exchange Offer -- Purpose and Effect of the Exchange Offer" and may
only sell the New Notes acquired by such person pursuant to a registration
statement containing the selling security holder information required by Item
507 of Regulation S-K under the Securities Act, (iv) if the Holder is a
broker-dealer that acquired Old Notes as a result of market-making or other
trading activities, it will deliver a prospectus in connection with any resale
of New Notes acquired in the Exchange Offer (but by so acknowledging and by
delivering a prospectus, the undersigned will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act) and (v) neither the
Holder nor any such Beneficial Owner is an "affiliate," as defined under Rule
405 of the Securities Act, of the Company or is a broker-dealer who purchased
Old Notes directly from the Company for resale pursuant to Rule 144A under the
Securities Act.
In addition, if the undersigned is not a broker-dealer, the undersigned
represents that it is not engaged in, and does not intend to engage in, a
distribution of New Notes. If the undersigned is a broker-dealer that will
receive New Notes for its own account in exchange for Old Notes that were
acquired as a result of market-making activities or other trading activities, it
acknowledges that it will deliver a prospectus in connection with any resale of
such New Notes; however, by so acknowledging and by delivering a prospectus, the
undersigned will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
EACH BROKER-DEALER WHO ACQUIRED OLD NOTES FOR ITS OWN ACCOUNT AS A RESULT
OF MARKET-MAKING ACTIVITIES OR OTHER TRADING ACTIVITIES (A "PARTICIPATING
BROKER-DEALER"), BY TENDERING SUCH OLD NOTES AND EXECUTING THIS LETTER OF
TRANSMITTAL, AGREES THAT, UPON RECEIPT OF NOTICE FROM THE COMPANY OF THE
OCCURRENCE OF ANY EVENT OR THE DISCOVERY OF ANY FACT WHICH MAKES ANY STATEMENT
CONTAINED OR INCORPORATED BY REFERENCE IN THE PROSPECTUS UNTRUE IN ANY MATERIAL
RESPECT OR WHICH CAUSES THE PROSPECTUS TO OMIT TO A STATE A MATERIAL FACT
NECESSARY IN ORDER TO MAKE THE STATEMENTS CONTAINED OR INCORPORATED BY REFERENCE
THEREIN, IN LIGHT OF THE CIRCUMSTANCES UNDER WHICH THEY WERE MADE, NOT
MISLEADING OR OF THE OCCURRENCE OR CERTAIN OTHER EVENTS SPECIFIED IN THE
REGISTRATION RIGHTS AGREEMENT, SUCH PARTICIPATING BROKER-DEALER WILL SUSPEND THE
SALE OF NEW NOTES PURSUANT TO THE PROSPECTUS UNTIL THE COMPANY HAS AMENDED OR
SUPPLEMENTED THE PROSPECTUS TO CORRECT SUCH MISSTATEMENT OR OMISSION AND HAS
FURNISHED COPIES OF THE AMENDED OR SUPPLEMENTED PROSPECTUS TO THE PARTICIPATING
BROKER-DEALER OR THE COMPANY HAS GIVEN NOTICE THAT THE SALE OF THE NEW NOTES MAY
BE RESUMED, AS THE CASE MAY BE.
EACH PARTICIPATING BROKER-DEALER SHOULD CHECK THE BOX HEREIN UNDER THE
CAPTION "FOR PARTICIPATING BROKER-DEALERS ONLY" IN ORDER TO RECEIVE ADDITIONAL
COPIES OF THE PROSPECTUS, AND ANY AMENDMENTS AND SUPPLEMENTS THERETO, FOR USE IN
CONNECTION WITH RESALES OF THE NEW NOTES, AS WELL AS ANY NOTICES FROM THE
COMPANY TO SUSPEND AND RESUME USE OF THE PROSPECTUS. BY TENDERING ITS OLD NOTES
AND EXECUTING THIS LETTER OF TRANSMITTAL, EACH PARTICIPATING BROKER-DEALER
AGREES TO USE ITS REASONABLE BEST EFFORTS TO NOTIFY THE COMPANY OR THE EXCHANGE
AGENT WHEN IT HAS SOLD ALL OF ITS NEW NOTES. IF NO PARTICIPATING BROKER-DEALERS
CHECK SUCH BOX, OR IF ALL PARTICIPATING BROKER-DEALERS WHO HAVE CHECKED SUCH BOX
SUBSEQUENTLY NOTIFY THE COMPANY OR THE EXCHANGE AGENT THAT ALL THEIR NEW NOTES
HAVE BEEN SOLD, THE
6
<PAGE> 7
COMPANY WILL NOT BE REQUIRED TO MAINTAIN THE EFFECTIVENESS OF THE EXCHANGE OFFER
REGISTRATION STATEMENT OR TO UPDATE THE PROSPECTUS AND WILL NOT PROVIDE ANY
HOLDERS WITH ANY NOTICES TO SUSPEND OR RESUME USE OF THE PROSPECTUS.
The undersigned understands that tenders of the Old Notes pursuant to any
one of the procedures described under "The Exchange Offer -- Procedures for
Tendering" in the Prospectus and in the instructions hereto will constitute a
binding agreement between the undersigned and the Company in accordance with the
terms and subject to the conditions of the Exchange Offer. All authority herein
conferred or agreed to be conferred by this Letter of Transmittal and every
obligation of the undersigned hereunder shall be binding upon the heirs, legal
representatives, successors and assigns, executors, administrators and trustees
in bankruptcy of the undersigned and shall survive the death or incapacity of
the undersigned. Tendered Old Notes may be withdrawn at any time prior to the
Expiration Date in accordance with the terms of the Exchange Offer.
The undersigned also understands and acknowledges that the Company reserves
the right in its sole discretion to purchase or make offers for any Old Notes
that remain outstanding subsequent to the Expiration Date in the open market, in
privately negotiated transactions, through subsequent exchange offers or
otherwise. The terms of any such purchases or offers could differ from the terms
of the Exchange Offer.
The undersigned understands that the delivery and surrender of the Old
Notes is not effective, and the risk of loss of the Old Notes does not pass to
the Exchange Agent, until receipt by the Exchange Agent of this Letter of
Transmittal, or a manually signed facsimile hereof, properly completed and duly
executed, with any required signature guarantees, together with all accompanying
evidences of authority and any other required documents in form satisfactory to
the Company. All questions as to form of all documents and the validity
(including time of receipt) and acceptance of tenders and withdrawals of Old
Notes will be determined by the Company, in their sole discretion, which
determination shall be final and binding.
Unless otherwise indicated herein in the box entitled "Special Issuance
Instructions," the undersigned hereby requests that any Old Notes representing
principal amounts not tendered or not accepted for exchange be issued in the
name(s) of the undersigned and that New Notes be issued in the name(s) of the
undersigned (or, in the case of Old Notes delivered by book-entry transfer, by
credit to the account at the Book-Entry Transfer Facility). Similarly, unless
otherwise indicated herein in the box entitled "Special Delivery Instructions,"
the undersigned hereby requests that any Old Notes representing principal
amounts not tendered or not accepted for exchange and certificates for New Notes
be delivered to the undersigned at the address(es) shown above. In the event
that the "Special Issuance Instructions" box or the "Special Delivery
Instructions" box is, or both are, completed, the undersigned hereby requests
that any Old Notes representing principal amounts not tendered or not accepted
for exchange be issued in the name(s) of, certificates for such Old Notes be
delivered to, and certificates for New Notes be issued in the name(s) of, and be
delivered to, the person(s) at the address(es) so indicated, as applicable. The
undersigned recognizes that the Company has no obligation pursuant to the
"Special Issuance Instructions" box or "Special Delivery Instructions" box to
transfer any Old Notes from the name of the registered Holder(s) thereof if the
Company does not accept for exchange any of the principal amount of such Old
Notes so tendered.
7
<PAGE> 8
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL HOLDERS OF OLD NOTES
REGARDLESS OF WHETHER OLD NOTES ARE BEING PHYSICALLY DELIVERED HEREWITH)
This Letter of Transmittal must be signed by the Holder(s) of Old Notes
exactly as their name(s) appear(s) on certificate(s) for Old Notes or, if
delivered by a participant in the Book-Entry Transfer Facility, exactly as such
participant's name appears on a security position listing as the owner of Old
Notes, or by person(s) authorized to become Holder(s) by endorsements and
documents transmitted with this Letter of Transmittal. If signature is by a
trustee, executor, administrator, guardian, attorney-in-fact, officer or other
person acting in a fiduciary or representative capacity, such person must set
forth his or her full title below under "Capacity" and submit evidence
satisfactory to the Company of such person's authority to so act. See
Instruction 4 below.
If the signature appearing below is not of the record holder(s) of the Old
Notes, then the record holder(s) must sign a valid bond power.
X
- --------------------------------------------------------------------------------
X
- --------------------------------------------------------------------------------
SIGNATURE(S) OF REGISTERED HOLDER(S) OR AUTHORIZED SIGNATORY
Date:
- ------------------------, 1999
Name(s):
- --------------------------------------------------------------------------------
(PLEASE PRINT)
Capacity:
- --------------------------------------------------------------------------------
Address:
- --------------------------------------------------------------------------------
(INCLUDING ZIP CODE)
- --------------------------------------------------------------------------------
Area Code and Telephone No.:
- --------------------------------------------------------------------------------
PLEASE COMPLETE SUBSTITUTE FORM W-9 HEREIN
[ ] CHECK HERE IF YOU ARE A BROKER DEALER WHO ACQUIRED THE OLD NOTES FOR ITS
OWN ACCOUNT AS A RESULT OF MARKET MAKING OR OTHER TRADING ACTIVITIES AND
WISH TO RECEIVE ADDITIONAL COPIES OF THE PROSPECTUS AND COPIES OF ANY
AMENDMENTS OR SUPPLEMENTS THERETO.
Name:
----------------------------------------------------------------------------
Address:
----------------------------------------------------------------------------
MEDALLION SIGNATURE GUARANTEE (SEE INSTRUCTION 4 BELOW)
CERTAIN SIGNATURES MUST BE GUARANTEED BY AN ELIGIBLE INSTITUTION
- --------------------------------------------------------------------------------
(NAME OF ELIGIBLE INSTITUTION GUARANTEEING SIGNATURES)
- --------------------------------------------------------------------------------
(ADDRESS (INCLUDING ZIP CODE) AND TELEPHONE NUMBER (INCLUDING AREA CODE) OF
FIRM)
- --------------------------------------------------------------------------------
(AUTHORIZED SIGNATURE)
- --------------------------------------------------------------------------------
(PRINTED NAME)
- --------------------------------------------------------------------------------
(TITLE)
Dated:
- ------------------------, 1999
8
<PAGE> 9
------------------------------------------------------------
SPECIAL ISSUANCE INSTRUCTIONS
(SEE INSTRUCTIONS 3, 4, 5 AND 7)
To be completed ONLY if certificates for Old Notes in a principal
amount not tendered or not accepted for exchange are to be issued in the
name of, or certificates for New Notes are to be issued to the order of,
someone other than the person or persons whose signature(s) appear(s)
within this Letter of Transmittal.
Issue: [ ] Old Notes
[ ] New Notes
(check as applicable)
Name:
----------------------------------------------------
(PLEASE PRINT)
Address:
--------------------------------------------------
------------------------------------------------------------
(ZIP CODE)
------------------------------------------------------------
(TAX IDENTIFICATION OR SOCIAL SECURITY NUMBER)
(SEE SUBSTITUTE FORM W-9 HEREIN)
Credit Old Notes not exchanged and delivered by book entry transfer to
the Book Entry Transfer Facility account set below:
------------------------------------------------------------
(BOOK ENTRY TRANSFER FACILITY ACCOUNT NUMBER)
Credit New Notes to the Book Entry Transfer Facility account set below:
------------------------------------------------------------
(BOOK ENTRY TRANSFER FACILITY ACCOUNT NUMBER)
------------------------------------------------------------
------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 4 AND 5)
To be completed ONLY if certificates for Old Notes in a principal
amount not accepted for exchange or certificates for New Notes are to be
sent to someone other than the person or persons whose signature(s)
appear(s) within this Letter of Transmittal or to an address different
from that shown in the box entitled "Description of Old Notes" within the
Letter of Transmittal.
Deliver: [ ] Old Notes
[ ] New Notes
(check as applicable)
Name:
----------------------------------------------------
(PLEASE PRINT)
Address:
--------------------------------------------------
------------------------------------------------------------
(ZIP CODE)
------------------------------------------------------------
9
<PAGE> 10
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER
1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND CERTIFICATES FOR OLD NOTES OR
BOOK-ENTRY CONFIRMATIONS; WITHDRAWAL OF TENDERS.
To tender Old Notes in the Exchange Offer, physical delivery of
certificates for Old Notes or confirmation of a book-entry transfer into the
Exchange Agent's account with a Book-Entry Transfer Facility of Old Notes
tendered electronically, as well as a properly completed and duly executed copy
or manually signed facsimile of this Letter of Transmittal, or in the case of a
book-entry transfer, an Agent's Message, and any other documents required by
this Letter of Transmittal, must be received by the Exchange Agent at its
address set forth herein prior to the Expiration Date. Tenders of Old Notes in
the Exchange Offer may be made prior to the Expiration Date in the manner
described in the preceding sentence and otherwise in compliance with this Letter
of Transmittal. THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL,
CERTIFICATES FOR OLD NOTES AND ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE
AGENT, INCLUDING DELIVERY THROUGH DTC AND ANY ACCEPTANCE OF AN AGENT'S MESSAGE
TRANSMITTED THROUGH ATOP, IS AT THE ELECTION AND RISK OF THE HOLDER TENDERING
OLD NOTES. IF SUCH DELIVERY IS MADE BY MAIL, IT IS SUGGESTED THAT THE HOLDER USE
PROPERLY INSURED, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED AND THAT
SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE TIMELY DELIVERY. NO ALTERNATIVE,
CONDITIONAL OR CONTINGENT TENDERS OF OLD NOTES WILL BE ACCEPTED. Except as
otherwise provided below, the delivery will be made when actually received by
the Exchange Agent. THIS LETTER OF TRANSMITTAL, CERTIFICATES FOR THE OLD NOTES
AND ANY OTHER REQUIRED DOCUMENTS SHOULD BE SENT ONLY TO THE EXCHANGE AGENT, NOT
TO THE COMPANY, THE TRUSTEE OR DTC.
Old Notes tendered pursuant to the Exchange Offer may be withdrawn at any
time prior to the Expiration Date. In order to be valid, notice of withdrawal of
tendered Old Notes must comply with the requirements set forth in the Prospectus
under the caption "The Exchange Offer -- Withdrawal of Tenders."
2. GUARANTEED DELIVERY PROCEDURES.
If Holders desire to tender Old Notes pursuant to the Exchange Offer and
(i) certificates representing such Old Notes are not lost but are not
immediately available, (ii) time will not permit this Letter of Transmittal,
certificates representing such Holder's Old Notes and all other required
documents to reach the Exchange Agent prior to the Expiration Date or (iii) the
procedures for book-entry transfer cannot be completed prior to the Expiration
Date, such Holders may effect a tender of Old Notes in accordance with the
guaranteed delivery procedures set forth in the Prospectus under the caption
"The Exchange Offer -- Guaranteed Delivery Procedures."
Pursuant to the guaranteed delivery procedures:
(i) such tender must be made by or through an Eligible Institution;
(ii) prior to the Expiration Date, the Exchange Agent must have
received from such Eligible Institution, at one of the addresses set forth
on the cover of this Letter of Transmittal, a properly completed and
validly executed Notice of Guaranteed Delivery (by manually signed
facsimile transmission, mail or hand delivery) in substantially the form
provided with the Prospectus, setting forth the name(s) and address(es) of
the registered Holder(s) and the principal amount of Old Notes being
tendered and stating that the tender is being made thereby and guaranteeing
that, within three Nasdaq National Market ("NNM") trading days from the
date of the Notice of Guaranteed Delivery, the Letter of Transmittal (or a
manually signed facsimile thereof), properly completed and duly executed,
or, in the case of a book-entry transfer, an Agent's Message, together with
certificates representing the Old Notes (or confirmation of book-entry
transfer of such Old Notes into the Exchange Agent's account at a
Book-Entry Transfer Facility), and any other documents required by this
Letter of Transmittal and the instructions thereto, will be deposited by
such Eligible Institution with the Exchange Agent; and
10
<PAGE> 11
(iii) the Exchange Agent must have received this Letter of Transmittal
(or a manually signed facsimile thereof), properly completed and validly
executed with any required signature guarantees, or, in the case of a
book-entry transfer, an Agent's Message, together with certificates for all
Old Notes in proper form for transfer (or a Book-Entry Confirmation with
respect to all tendered Old Notes), and any other required documents within
three NNM trading days after the date of such Notice of Guaranteed
Delivery.
3. PARTIAL TENDERS.
If less than the entire principal amount of any Old Notes evidenced by a
submitted certificate is tendered, the tendering Holder must fill in the
principal amount tendered in the last column of the box entitled "Description of
Old Notes" herein. The entire principal amount represented by the certificates
for all Old Notes delivered to the Exchange Agent will be deemed to have been
tendered, unless otherwise indicated. The entire principal amount of all Old
Notes not tendered or not accepted for exchange will be sent (or, if tendered by
book-entry transfer, returned by credit to the account at the Book-Entry
Transfer Facility designated herein) to the Holder unless otherwise provided in
the "Special Issuance Instructions" or "Special Delivery Instructions" boxes of
this Letter of Transmittal.
4. SIGNATURES ON THIS LETTER OF TRANSMITTAL, BOND POWERS AND ENDORSEMENTS;
GUARANTEE OF SIGNATURES.
If this Letter of Transmittal is signed by the Holder(s) of the Old Notes
tendered hereby, the signature(s) must correspond with the name(s) as written on
the face of the certificate(s) without alteration, enlargement or any change
whatsoever. If this Letter of Transmittal is signed by a participant in one of
the Book-Entry Transfer Facilities whose name is shown as the owner of the Old
Notes tendered hereby, the signature must correspond with the name shown on the
security position listing as the owner of the Old Notes.
If any of the Old Notes tendered hereby are registered in the name of two
or more Holders, all such Holders must sign this Letter of Transmittal. If any
tendered Old Notes are registered in different names on several certificates, it
will be necessary to complete, sign and submit as many separate copies of this
Letter of Transmittal and any necessary accompanying documents as there are
different names in which certificates are held.
If this Letter of Transmittal or any certificates for Old Notes or bond
powers are signed by trustees, executors, administrators, guardians,
attorneys-in-fact, officers of corporations or others acting in a fiduciary or
representative capacity, such persons should so indicate when signing, and
proper evidence satisfactory to the Company of their authority so to act must be
submitted with this Letter of Transmittal.
IF THIS LETTER OF TRANSMITTAL IS EXECUTED BY A PERSON OR ENTITY WHO IS NOT
THE REGISTERED HOLDER, THEN THE REGISTERED HOLDER MUST SIGN A VALID BOND POWER,
WITH THE SIGNATURE OF SUCH REGISTERED HOLDER GUARANTEED BY A PARTICIPANT IN A
RECOGNIZED MEDALLION SIGNATURE PROGRAM (A "MEDALLION SIGNATURE GUARANTOR").
No signature guarantee is required if (i) this Letter of Transmittal is
signed by the registered Holder(s) of the Old Notes tendered herewith (or by a
participant in one of the Book-Entry Transfer Facilities whose name appears on a
security position listing as the owner of Old Notes) and certificates for New
Notes or for any Old Notes for principal amounts not tendered or not accepted
for exchange are to be issued, directly to such Holder(s) or, if tendered by a
participant in one of the Book-Entry Transfer Facilities, any Old Notes for
principal amounts not tendered or not accepted for exchange are to be credited
to such participant's account at such Book-Entry Transfer Facility and neither
the "Special Issuance Instructions" box nor the "Special Delivery Instructions"
box of this Letter of Transmittal has been completed or (ii) such Old Notes are
tendered for the account of an Eligible Institution. IN ALL OTHER CASES, ALL
SIGNATURES ON LETTERS OF TRANSMITTAL ACCOMPANYING OLD NOTES MUST BE GUARANTEED
BY A MEDALLION SIGNATURE GUARANTOR. In all such other cases (including if this
Letter of Transmittal is not signed by the Holder), the Holder must either
properly endorse the certificates for Old Notes tendered or transmit a separate
properly completed bond power with this Letter of Transmittal (in either case,
executed exactly as the name(s) of the registered Holder(s) appear(s) on
11
<PAGE> 12
such Old Notes, and, with respect to a participant in a Book-Entry Transfer
Facility whose name appears on a security position listing as the owner of Old
Notes, exactly as the name(s) of the participant(s) appear(s) on such security
position listing), with the signature on the endorsement or bond power
guaranteed by a Medallion Signature Guarantor, unless such certificates or bond
powers are executed by an Eligible Institution.
Endorsements on certificates for Old Notes and signatures on bond powers
provided in accordance with this Instruction 4 by registered Holders not
executing this Letter of Transmittal must be guaranteed by a Medallion Signature
Guarantor.
5. SPECIAL ISSUANCE AND SPECIAL DELIVERY INSTRUCTIONS.
Tendering Holders should indicate in the applicable box or boxes the name
and address to which Old Notes for principal amounts not tendered or not
accepted for exchange or certificates for New Notes, if applicable, are to be
sent or issued, if different from the name and address of the Holder signing
this Letter of Transmittal. In the case of payment to a different name, the
taxpayer identification or social security number of the person named must also
be indicated. If no instructions are given, Old Notes not tendered or not
accepted for exchange will be returned, and certificates for New Notes will be
sent, to the Holder of the Old Notes tendered.
6. TAXPAYER IDENTIFICATION NUMBER.
Each tendering Holder is required to provide the Exchange Agent with the
Holder's social security or Federal employer identification number, on
Substitute Form W-9, which is provided under "Important Tax Information" below,
or alternatively, to establish another basis for exemption from backup
withholding. A Holder must cross out item (2) in the Certification box in Part
III on Substitute Form W-9 if such Holder is subject to backup withholding.
Failure to provide the information on the form may subject such Holder to 31%
Federal backup withholding tax on any payment made to the Holder with respect to
the Exchange Offer. The box in Part I of the form should be checked if the
tendering or consenting Holder has not been issued a Taxpayer Identification
Number ("TIN") and has either applied for a TIN or intends to apply for a TIN in
the near future. If the box in Part I is checked the Holder should also sign the
attached Certification of Awaiting Taxpayer Identification Number. If the
Exchange Agent is not provided with a TIN within 60 days thereafter, the
Exchange Agent will withhold 31% on all such payments of the New Notes until a
TIN is provided to the Exchange Agent.
7. TRANSFER TAXES.
The Company will pay all transfer taxes applicable to the exchange and
transfer of Old Notes pursuant to the Exchange Offer, except if (i) deliveries
of certificates for Old Notes for principal amounts not tendered or not accepted
for exchange are registered or issued in the name of any person other than the
Holder of Old Notes tendered thereby, (ii) tendered certificates are registered
in the name of any person other than the person signing this Letter of
Transmittal or (iii) a transfer tax is imposed for any reason other than the
exchange of Old Notes pursuant to the Exchange Offer. If satisfactory evidence
of payment of such taxes or exemption therefrom is not submitted herewith, the
amount of such transfer taxes will be billed directly to such tendering Holder.
8. IRREGULARITIES.
All questions as to the form of all documents and the validity (including
time of receipt) and acceptance of all tenders and withdrawals of Old Notes will
be determined by the Company, in its sole discretion, which determination shall
be final and binding. ALTERNATIVE, CONDITIONAL OR CONTINGENT TENDERS OF OLD
NOTES WILL NOT BE CONSIDERED VALID. The Company reserves the absolute right to
reject any and all tenders of Old Notes that are not in proper form or the
acceptance of which, in the Company's opinion, would be unlawful. The Company
also reserves the right to waive any defects, irregularities or conditions of
tender as to particular Old Notes. The Company's interpretations of the terms
and conditions of the Exchange Offer (including the instructions in this Letter
of Transmittal) will be final and binding. Any defect or irregularity in
connection with tenders of Old Notes must be cured within such time as the
Company determines, unless waived by the Company. Tenders of Old Notes shall not
be deemed to have been made until all defects or irregularities have been waived
by the Company or cured. A defective tender (which defect is not waived by the
Company or cured by the Holder) will not constitute a valid
12
<PAGE> 13
tender of Old Notes and will not entitle the Holder to New Notes. None of the
Company, the Trustee, the Exchange Agent or any other person will be under any
duty to give notice of any defect or irregularity in any tender or withdrawal of
any Old Notes, or incur any liability to Holders for failure to give any such
notice.
9. WAIVER OF CONDITIONS.
The Company reserves the right, in its reasonable discretion, to amend or
waive any of the conditions to the Exchange Offer.
10. MUTILATED, LOST, STOLEN OR DESTROYED CERTIFICATES FOR OLD NOTES.
Any Holder whose certificates for Old Notes have been mutilated, lost,
stolen or destroyed should write to or telephone the Trustee at the address or
telephone number set forth on the cover of this Letter of Transmittal for the
Exchange Agent.
11. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES.
Questions relating to the procedure for tendering Old Notes and requests
for assistance or additional copies of the Prospectus, this Letter of
Transmittal, the Notice of Guaranteed Delivery or other documents may be
directed to the Exchange Agent, whose address and telephone number appear above.
13
<PAGE> 14
IMPORTANT TAX INFORMATION
Under federal income tax laws, a Holder who tenders Old Notes prior to
receipt of the New Notes is required to provide the Exchange Agent with such
Holder's correct TIN on the Substitute Form W-9 below or otherwise establish a
basis for exemption from backup withholding. If such Holder is an individual,
the TIN is his or her social security number. If the Exchange Agent is not
provided with the correct TIN, a $50 penalty may be imposed by the Internal
Revenue Service ("IRS") and payments, including any New Notes, made to such
Holder with respect to Old Notes exchanged pursuant to the Exchange Offer may be
subject to backup withholding.
Certain Holders (including, among others, all corporations and certain
foreign persons) are not subject to these backup withholding and reporting
requirements. Exempt Holders should indicate their exempt status on the
Substitute Form W-9. A foreign person may qualify as an exempt recipient by
submitting to the Exchange Agent a properly completed IRS Form W-8, signed under
penalties of perjury, attesting to that Holder's exempt status. A Form W-8 can
be obtained from the Exchange Agent. See the enclosed "Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9" for
additional instructions. Holders are urged to consult their own tax advisors to
determine whether they are exempt.
If backup withholding applies, the Exchange Agent is required to withhold
31% of any payments made to the Holder or other payee. Backup withholding is not
an additional Federal income tax. Rather, the Federal income tax liability of
persons subject to backup withholding will be reduced by the amount of tax
withheld. If withholding results in an overpayment of taxes, a refund may be
obtained from the IRS.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments, including any New Notes, made
with respect to Old Notes exchanged pursuant to the Exchange Offer, the Holder
is required to provide the Exchange Agent with (i) the Holder's correct TIN by
completing the form below, certifying that the TIN provided on the Substitute
Form W-9 is correct (or that such Holder is awaiting a TIN) and that (A) such
Holder is exempt from backup withholding, (B) the Holder has not been notified
by the IRS that the Holder is subject to backup withholding as a result of
failure to report all interest or dividends or (C) the IRS has notified the
Holder that the Holder is no longer subject to backup withholding and (ii) if
applicable, an adequate basis for exemption.
WHAT NUMBER TO GIVE THE EXCHANGE AGENT
The Holder is required to give the Exchange Agent the TIN (e.g., social
security number or employer identification number) of the registered Holder. If
the Old Notes are held in more than one name or are held not in the name of the
actual owner, consult the enclosed "Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9" for additional guidance on which
number to report.
14
<PAGE> 15
SUBSTITUTE FORM W-9
REQUEST FOR TAXPAYER IDENTIFICATION NUMBER AND CERTIFICATION
PAYOR'S NAME: LORAL SPACE & COMMUNICATIONS LTD.
- --------------------------------------------------------------------------------
PAYEE INFORMATION
(Please print or type)
Individual or business name (if joint account, list first and circle the name
of person or entity whose number you furnish in Part 1 below):
- --------------------------------------------------------------------------------
Check appropriate box: [ ] Individual/Sole proprietor [ ] Corporation
[ ] Partnership [ ] Other --------
- --------------------------------------------------------------------------------
Address (number, street, and apt. or suite no.):
- --------------------------------------------------------------------------------
City, state, and ZIP code:
<TABLE>
<CAPTION>
<S> <C>
- ----------------------------------------------------------------------------------------------
PART I TAXPAYER IDENTIFICATION NUMBER ("TIN") PART II PAYEES EXEMPT FROM
Enter your TIN below. For individuals, this is your social BACKUP WITHHOLDING
security number. For other entities, it is your employer Check box (See page 2 of the
identification number. Refer to the chart on page 1 of the Guidelines for further
Guidelines for Certification of Taxpayer Identification clarification. Even if you are
Number on Substitute Form W-9 (the "Guidelines") for further exempt from backup withholding,
clarification. If you do not have a TIN, see instructions on you should still complete and
how to obtain a TIN on page 2 of the Guidelines, check the sign the certification below):
appropriate box below indicating that you have applied for a
TIN and, in addition to the Part III Certification, sign the [ ] EXEMPT
attached Certification of Awaiting Taxpayer Identification
Number.
Social security number:
[ ] [ ] [ ] - [ ] [ ] - [ ] [ ] [ ] [ ]
[ ] Applied For
Employer identification number
[ ] [ ] [ ] - [ ] [ ] - [ ] [ ] [ ] [ ]
- ----------------------------------------------------------------------------------------------
</TABLE>
PART III CERTIFICATION
Certification Instructions: You must cross out item 2 below if you have been
notified by the Internal Revenue Service (the "IRS") that you are currently
subject to backup withholding because of underreporting interest or dividends
on your tax return (See page 2 of the Guidelines for further clarification).
Under penalties of perjury, I certify that:
1. The number shown on this form is my correct taxpayer identification number
(or I am waiting for a number to be issued to me), and
2. I am not subject to backup withholding because: (a) I am exempt from backup
withholding, (b) I have not been notified by the IRS that I am subject to
backup withholding as a result of a failure to report all interest or
dividends, or (c) the IRS has notified me that I am no longer subject to
backup withholding.
Signature ------------------------------------------- Date -----------------
------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS SUBSTITUTE FORM W-9 MAY RESULT IN
BACKUP WITHHOLDING OF 31% OF ANY PAYMENT MADE TO YOU PURSUANT TO THE EXCHANGE
OFFER. PLEASE REVIEW THE ENCLOSED "GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9" FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATION IF YOU CHECKED THE BOX "APPLIED
FOR" IN PART I OF SUBSTITUTE FORM W-9
CERTIFICATION OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify, under penalties of perjury, that a TIN has not been issued to
me, and either (a) I have mailed or delivered an application to receive a TIN to
the appropriate IRS Service Center or Social Security Administration Office, or
(b) I intend to mail or deliver an application in the near future. I understand
that I must provide a TIN to the payor within 60 days of submitting this
Substitute Form W-9 and that if I do not provide a TIN to the payor within 60
days, the payor is required to withhold 31% of all reportable payments
thereafter to me until I furnish the payor with a TIN.
<TABLE>
<S> <C>
- ------------------------------------------------------ ------------------------------------------------------
Signature Date
</TABLE>
<PAGE> 1
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF ALL OUTSTANDING
9 1/2% SENIOR NOTES DUE 2006
IN EXCHANGE FOR NEW
9 1/2% SENIOR NOTES DUE 2006
OF
LORAL SPACE & COMMUNICATIONS LTD.
As set forth in the Prospectus dated , 1999 (as the same may
be amended from time to time, the "Prospectus") of Loral Space & Communications
Ltd. (the "Company") under the caption "The Exchange Offer -- Guaranteed
Delivery Procedures," and in the accompanying Letter of Transmittal (the "Letter
of Transmittal") and Instruction 2 thereto, this form or one substantially
equivalent, must be used to tender any of the Company's outstanding 9 1/2%
Senior Notes due 2006 (the "Old Notes") pursuant to the Exchange Offer, if (i)
certificates representing the Old Notes to be tendered for exchange are not lost
but are not immediately available, (ii) time will not permit a Holder's Letter
of Transmittal, certificates representing the Old Notes to be tendered and all
other required documents to reach The Bank of New York (the "Exchange Agent")
prior to the Expiration Date with respect to the Exchange Offer, or (iii) the
procedures for book-entry transfer cannot be completed prior to the Expiration
Date. This form may be delivered by an Eligible Institution by mail or hand
delivery or transmitted, via manually signed facsimile, to the Exchange Agent as
set forth below.
Terms not otherwise defined herein shall have their respective meanings as
set forth in the Prospectus.
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
, 1999, UNLESS EXTENDED OR TERMINATED (THE "EXPIRATION DATE").
The Exchange Agent for the Exchange Offer is:
THE BANK OF NEW YORK
<TABLE>
<S> <C> <C>
By Hand Or Overnight Delivery: Facsimile Transmissions: By Registered Or Certified Mail:
(Eligible Institutions Only) The Bank of New York
The Bank of New York (212) 571-3080 101 Barclay Street, 7E
101 Barclay Street Confirm by Telephone: New York, New York 10286
New York, New York 10286 (212) 815-6333 Attn: Reorganization Section
Corporate Trust Services Window For Information Call:
Ground Level (212) 815-6333
Attn: Reorganization Section
</TABLE>
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION TO A
NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
<PAGE> 2
LADIES AND GENTLEMEN:
The undersigned hereby tender(s) to the Company, upon the terms and subject
to the conditions set forth in the Prospectus and the Letter of Transmittal,
receipt of which is hereby acknowledged, the principal amount of Old Notes set
forth below pursuant to the guaranteed delivery procedures set forth in the
Prospectus under the caption "The Exchange Offer -- Guaranteed Delivery
Procedures."
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender the Old Notes. The undersigned will, upon
request, execute and deliver any additional documents deemed by the Exchange
Agent or the Company to be necessary or desirable for the perfection of the
undersigned's tender.
Tenders may be withdrawn in accordance with the procedures set forth in the
Prospectus. The undersigned authorizes the Exchange Agent to deliver this Notice
of Guaranteed Delivery to the Company and the Trustee as evidence of the
undersigned's tender of Old Notes.
All authority herein conferred or agreed to be conferred by this Notice of
Guaranteed Delivery shall survive the death or incapacity of the undersigned and
every obligation of the undersigned under this Notice of Guaranteed Delivery
shall be binding upon the heirs, personal representatives, executors,
administrators, successors, assigns, trustees in bankruptcy and other legal
representatives of the undersigned.
2
<PAGE> 3
<TABLE>
<CAPTION>
- --------------------------------------------------------
PLEASE SIGN AND COMPLETE
- ------------------------------------------------------------------------------------------------------------------
<S> <C>
Signatures of Registered Holder(s) Date: --------------------------------------------------
or Authorized Signatory:
- -------------------------------------------------------- Address: -----------------------------------------------
- --------------------------------------------------------
--------------------------------------------------------
--------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
Name(s) of Registered Holder(s): Area Code and Telephone No.:
- -------------------------------------------------------- --------------------------------------------------------
- -------------------------------------------------------- --------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
Principal Amount of Notes Tendered: If Notes will be delivered by book-entry transfer,
- -------------------------------------------------------- complete the following:
Depository Account No. ------------------------------
Certificate No.(s) of Notes (if available):
- --------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
This Notice of Guaranteed Delivery must be signed by the Holder(s) exactly as
their names appear on certificates for Old Notes or on a security position
listing as the owner of Old Notes, or by person(s) authorized to become
Holder(s) by endorsements and documents transmitted with this Notice of
Guaranteed Delivery. If signature is by a trustee, executor, administrator,
guardian, attorney-in-fact, officer or other person acting in a fiduciary or
representative capacity, such person must set forth his or her full title below
under "Capacity" and submit evidence satisfactory to the Company of such
person's authority to so act.
PLEASE PRINT NAME(S) AND ADDRESS(ES)
<TABLE>
<S> <C>
Name(s): ------------------------------------------------------------
------------------------------------------------------------
Capacity: ------------------------------------------------------------
Address(es): ------------------------------------------------------------
------------------------------------------------------------
------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
DO NOT SET OLD NOTES WITH THIS FORM. OLD NOTES SHOULD BE SENT TO THE EXCHANGE
AGENT, TOGETHER WITH A PROPERLY COMPLETED AND VALIDLY EXECUTED LETTER OF
TRANSMITTAL AND ANY OTHER RELATED DOCUMENTS.
3
<PAGE> 4
<TABLE>
<S> <C>
- -----------------------------------------------------------------------------------------------------------------------------
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a member firm of a registered national securities exchange or of the National Association of
Securities Dealers, Inc. or a commercial bank or trust company having an office or correspondent in the United States,
hereby guarantees that, within three Nasdaq National Market trading days from the date of this Notice of Guaranteed
Delivery, a properly completed and duly executed Letter of Transmittal (or a manually signed facsimile thereof), together
with certificates representing the Old Notes tendered hereby in proper form for transfer (or confirmation of the book-entry
transfer of such Old Notes into the Exchange Agent's account at a Book-Entry Transfer Facility, pursuant to the procedure
for book-entry transfer set forth in the Prospectus under the caption "The Exchange Offer -- Book-Entry Transfer"), and any
other required documents will be deposited by the undersigned with the Exchange Agent at its address set forth above.
- -----------------------------------------------------------------------------------------------------------------------------
Name of Firm: ----------------------------------------- ---------------------------------------------------------
(AUTHORIZED SIGNATURE)
Address: ------------------------------------------------
Name:------------------------------------------------
- -----------------------------------------------------------
Title:--------------------------------------------------
Area Code and
Telephone No.: ----------------------------------------- Date:--------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
4
<PAGE> 1
EXHIBIT 99.3
LORAL SPACE & COMMUNICATIONS LTD.
OFFER FOR ALL OUTSTANDING 9 1/2% SENIOR NOTES DUE 2006
IN EXCHANGE FOR UP TO $350,000,000 PRINCIPAL AMOUNT OF
9 1/2% SENIOR NOTES DUE 2006
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
, 1999, UNLESS EXTENDED OR TERMINATED (THE "EXPIRATION DATE").
To Our Clients:
Enclosed for your consideration is a Prospectus dated , 1999
(as the same may be amended or supplemented from time to time, the "Prospectus")
and a form of Letter of Transmittal (the "Letter of Transmittal") relating to
the offer (the "Exchange Offer") by Loral Space & Communications Ltd. (the
"Company") to exchange up to $350,000,000 in aggregate principal amount of its
Senior Notes due 2006 (the "Old Notes") for $350,000,000 in aggregate principal
amount of its Senior Notes due 2006 (the "New Notes") upon the terms and
conditions set forth in the Prospectus and the Letter of Transmittal.
The material is being forwarded to you as the beneficial owner of Old Notes
held by us for your account or benefit but not registered in your name. A tender
of the Old Notes pursuant to the Exchange Offer may be made only by us as the
registered holder of the Old Notes, and pursuant to your instructions.
Therefore, the Company urges beneficial owners of Old Notes registered in the
name of a broker, dealer, commercial bank, trust company or other nominee to
contact such holder promptly if they wish to tender Old Notes in the Exchange
Offer.
Accordingly, we request instructions as to whether you wish us to tender
any or all Old Notes held by us for your account or benefit, pursuant to the
terms and conditions set forth in the Prospectus and Letter of Transmittal. We
urge you to read carefully the Prospectus and Letter of Transmittal before
instructing us to tender your Old Notes pursuant to the Exchange Offer.
Your instructions to us should be forwarded as promptly as practicable in
order to permit us to tender Old Notes on your behalf in accordance with the
provisions of the Exchange Offer. The Exchange Offer will expire at 5:00 p.m.,
New York City Time, on , 1999, unless extended (the "Expiration
Date"). Old Notes tendered pursuant to the Exchange Offer may be withdrawn,
subject to the procedures described in the Prospectus, at any time prior to the
Expiration Date.
If you wish to have us tender any or all of your Old Notes held by us for
your account or benefit, please so instruct us by completing, executing and
returning to us the instruction form that appears below. The accompanying Letter
of Transmittal is furnished to you for informational purposes only and may not
be used by you to tender Old Notes held by us and registered in our name for
your account or benefit.
<PAGE> 2
INSTRUCTIONS WITH RESPECT TO THE EXCHANGE OFFER
The undersigned acknowledge(s) receipt of your letter and the enclosed
material referred to therein relating to the Exchange Offer made by Loral Space
& Communications Ltd. with respect to their Old Notes.
This will instruct you to tender the Old Notes held by you for the account
of the undersigned, upon and subject to the terms and conditions set forth in
the Prospectus and the related Letter of Transmittal.
Please tender the Old Notes held by you for my account as indicated below:
<TABLE>
<CAPTION>
AGGREGATE PRINCIPAL AMOUNT OF OLD NOTES
---------------------------------------
<S> <C>
[ ] Please do not tender any Old Notes held by
you for my account.
Dated: -------------------------------, 1999 --------------------------------------------------
--------------------------------------------------
SIGNATURE(S)
--------------------------------------------------
--------------------------------------------------
PLEASE PRINT NAME(S) HERE
--------------------------------------------------
--------------------------------------------------
ADDRESS(ES)
--------------------------------------------------
AREA CODE(S) AND TELEPHONE NUMBER(S)
--------------------------------------------------
TAX IDENTIFICATION OR SOCIAL SECURITY NO(S).
</TABLE>
None of the Old Notes held by us for your account will be tendered unless
we receive written instructions from you to do so. Unless a specific instruction
is given in the space provided, your signature(s) hereon shall constitute an
instruction to us to tender all the Old Notes held by us for your account.
<PAGE> 1
EXHIBIT 99.4
LORAL SPACE & COMMUNICATIONS LTD.
OFFER FOR ALL OUTSTANDING 9 1/2% SENIOR NOTES DUE 2006
IN EXCHANGE FOR UP TO $350,000,000 PRINCIPAL AMOUNT OF
9 1/2% SENIOR NOTES DUE 2006
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON 1999, UNLESS EXTENDED OR TERMINATED (THE "EXPIRATION DATE").
To Brokers, Dealers, Commercial Banks
Trust Companies and Other Nominees:
Enclosed for your consideration is a Prospectus dated , 1999
(as the same may be amended or supplemented from time to time, the "Prospectus")
and a form of Letter of Transmittal (the "Letter of Transmittal") relating to
the offer (the "Exchange Offer") by Loral Space & Communications Ltd. (the
"Company") to exchange up to $350,000,000 in aggregate principal amount of its
Senior Notes due 2006 (the "New Notes") for $350,000,000 in aggregate principal
amount of its Senior Notes due 2006 (the "Old Notes").
We are asking you to contact your clients for whom you hold Old Notes
registered in your name or in the name of your nominee. In addition, we ask you
to contact your clients who, to your knowledge, hold Old Notes registered in
their own name. The Company will not pay any fees or commissions to any broker,
dealer or other person in connection with the solicitation of tenders pursuant
to the Exchange Offer. You will, however, be reimbursed by the Company for
customary mailing and handling expenses incurred by you in forwarding any of the
enclosed materials to your clients. The Company will pay all transfer taxes, if
any, applicable to the tender of Old Notes to it or its order, except as
otherwise provided in the Prospectus and the Letter of Transmittal.
Enclosed are copies of the following documents:
1. The Prospectus;
2. A Letter of Transmittal for your use in connection with the tender of
Old Notes and for the information of your clients;
3. A form of letter that may be sent to your clients for whose accounts
you hold Old Notes registered in your name or the name of your nominee;
with space provided for obtaining the clients' instructions with regard
to the Exchange Offer;
4. A form of Notice of Guaranteed Delivery; and
5. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
Your prompt action is requested. The Exchange Offer will expire at 5:00
p.m., New York City Time, on , 1999, unless extended (the
"Expiration Date"). Old Notes tendered pursuant to the Exchange Offer may be
withdrawn, subject to the procedures described in the Prospectus, at any time
prior to the Expiration Date.
In all cases, exchanges of Old Notes for New Notes accepted for exchange
pursuant to the Exchange Offer will be made only after timely receipt by the
Exchange Agent of (a) certificates representing such Old Notes or a confirmation
of a book-entry transfer of such Old Notes, as the case may be, (b) the Letter
of Transmittal (or a facsimile thereof) promptly completed and duly executed
with any required signature guarantees, and (c) any other documents required by
the Letter of Transmittal.
<PAGE> 2
Holders who wish to tender their Old Notes and (a) whose Old Notes are not
immediately available, (b) who cannot deliver their Old Notes, the Letter of
Transmittal or any other required documents to the Exchange Agent prior to the
Expiration Date or (c) who cannot complete the procedure for book-entry transfer
on a timely basis, may tender their Old Notes by following the guaranteed
delivery procedures described in the Prospectus under "The Exchange
Offer -- Guaranteed Delivery Procedures."
To tender Old Notes, certificates for Old Notes, a duly executed and
properly completed Letter of Transmittal or a facsimile thereof, together with
any other required documents, must be received by the Exchange Agent as provided
the Prospectus and the Letter of Transmittal.
Additional copies of the enclosed material may be obtained form the
Exchange Agent, The Bank of New York, by calling (212) 815-????.
NOTHING HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY
PERSON AS AN AGENT OF THE COMPANY OR THE EXCHANGE AGENT, OR AUTHORIZE YOU OR ANY
OTHER PERSON TO MAKE ANY STATEMENTS ON BEHALF OF EITHER OF THEM WITH RESPECT TO
THE EXCHANGE OFFER, EXCEPT FOR STATEMENTS EXPRESSLY MADE IN THE PROSPECTUS AND
THE LETTER OF TRANSMITTAL.
