<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 18, 1997
REGISTRATION NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933
GLOBALSTAR, L.P.
GLOBALSTAR CAPITAL CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 4812 13-3759824
DELAWARE 4812 13-3876323
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>
------------------------
3200 ZANKER ROAD, P.O. BOX 640670
SAN JOSE, CALIFORNIA 95164
(408) 473-5550
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANTS' 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 A COPY TO:
BRUCE R. KRAUS, ESQ.
WILLKIE FARR & GALLAGHER
ONE CITICORP CENTER
153 EAST 53RD STREET
NEW YORK, NEW YORK 10022
(212) 821-8000
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC:
As soon as practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be 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
PROPOSED MAXIMUM
MAXIMUM AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES AMOUNT TO BE OFFERING OFFERING REGISTRATION
TO BE REGISTERED REGISTERED PRICE(1) PRICE FEE
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
11 3/8% Senior Notes due 2004.... $500,000,000 100% $500,000,000 $151,516.00
=======================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGULATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON
SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY
DETERMINE.
================================================================================
<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED APRIL 18, 1997
PROSPECTUS
GLOBALSTAR, L.P.
GLOBALSTAR CAPITAL CORPORATION
OFFER TO EXCHANGE $1,000 IN PRINCIPAL AMOUNT OF 11 3/8% SENIOR NOTES DUE 2004
FOR EACH $1,000 IN PRINCIPAL AMOUNT OF OUTSTANDING 11 3/8% SENIOR NOTES DUE 2004
------------------------
Globalstar, L.P., a Delaware limited partnership ("Globalstar"), and
Globalstar Capital Corporation, a Delaware corporation ("Globalstar Capital"
and, together with Globalstar, the "Issuers"), as joint and several obligors,
hereby offer, upon the terms and subject to the conditions set forth in this
Prospectus and the accompanying Letter of Transmittal (which together constitute
the "Exchange Offer") to exchange an aggregate principal amount of up to
$500,000,000 of 11 3/8% Senior Notes due 2004 (the "Exchange Notes") of the
Issuers, which have been registered under the Securities Act of 1933, as amended
(the "Securities Act"), pursuant to a Registration Statement (as defined herein)
of which this Prospectus constitutes a part, for a like principal amount of
11 3/8% Senior Notes due 2004 (the "Original Notes" and, with the Exchange
Notes, the "Notes") of the Issuers with the holders (the "Holders") thereof.
Upon consummation of the Exchange Offer, the terms of the Exchange Notes
will be substantially identical in all respects (including principal amount,
interest rate, maturity and ranking) to the terms of the Original Notes for
which they may be exchanged pursuant to the Exchange Offer, except that (i) the
Exchange Notes will be freely transferable by holders thereof (except as
provided below) and (ii) the Exchange Notes will be issued without any covenant
of the Issuers regarding registration. The Exchange Notes will be issued under
the indenture governing the Original Notes. The Exchange Notes will be, and the
Original Notes are, senior obligations of the Issuers. The Exchange Notes will
rank pari passu with all other existing and future senior Debt (as defined) of
the Issuers and senior to all subordinated Debt of the Issuers. Upon a Change of
Control (as defined), each holder of the Notes will have the right to require
the Issuers to repurchase all or a portion of such holder's Notes then
outstanding at a purchase price equal to 101% of the principal amount thereof
plus accrued and unpaid interest, if any, to the date of repurchase. The
Issuers' ability to repurchase the Notes may be limited by, among other things,
the Issuers' financial resources at the time of repurchase. For a complete
description of the terms of the Exchange Notes, including provisions relating to
the ability of the Issuers to create indebtedness that is pari passu to the
Exchange Notes, see "Description of the Notes." There will be no cash proceeds
to the Issuers from the Exchange Offer.
The Exchange Notes will bear interest from and including their respective
dates of issuance. Holders whose Original Notes are accepted for exchange will
receive accrued interest thereon to, but not including, the date of issuance of
the Exchange Notes, such interest to be payable with the first interest payment
on the Exchange Notes, but will not receive any payment in respect of interest
on the Original Notes accrued after the issuance of the Exchange Notes.
The Original Notes were originally issued and sold on February 19, 1997, in
a transaction not registered under the Securities Act, in reliance upon the
exemptions provided in Section 4(2), Rule 144A and Regulation S of the
Securities Act. Accordingly, the Original Notes may not be reoffered, resold or
otherwise pledged, hypothecated or transferred in the United States unless so
registered or unless an applicable exemption from the registration requirements
of the Securities Act is available. Based upon interpretations by the Staff of
the Securities and Exchange Commission (the "Commission") issued to third
parties, the Issuers believe that the Exchange Notes issued pursuant to the
Exchange Offer in exchange for the Original Notes may be offered for resale,
resold and otherwise transferred by holders thereof (other than any holder which
is (i) an "affiliate" of the Issuers within the meaning of Rule 405 under the
Securities Act, (ii) a broker-dealer who acquired Original Notes directly from
the Issuers or (iii) a broker-dealer who acquired Original Notes as a result of
market making or other trading activities) without compliance with the
registration and prospectus delivery provisions of the Securities Act provided
that such Exchange Notes are acquired in the ordinary course of such holders'
business and such holders are not engaged in, and do not intend to engage in,
and have no arrangement or understanding with any person to participate in, a
distribution of such Exchange Notes. Each broker-dealer that receives Exchange
Notes for its own account pursuant to the Exchange Offer must acknowledge that
it will deliver a prospectus in connection with any resale of such Exchange
Notes. The Letter of Transmittal states that by so acknowledging and by
delivering a prospectus, a broker-dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act. This Prospectus, as
it may be amended or supplemented from time to time, may be used by a
broker-dealer in connection with resales of Exchange Notes received in exchange
for Original Notes where such Original Notes were acquired by such broker-dealer
as a result of market-making activities or other trading activities. The Issuers
have agreed that, for a period not to exceed 180 days after the Expiration Date
(as defined), they will make this Prospectus available to any broker-dealer for
use in connection with any such resale. See "Plan of Distribution." Any holder
that cannot rely upon such interpretations must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with a
secondary resale transaction.
The Original Notes and the Exchange Notes constitute new issues of
securities with no established trading market. Any Original Notes not tendered
and accepted in the Exchange Offer will remain outstanding. To the extent that
Original Notes are tendered and accepted in the Exchange Offer, a holder's
ability to sell untendered, and tendered but unaccepted, Original Notes could be
adversely affected. Following consummation of the Exchange Offer, the holders of
Original Notes will continue to be subject to the existing restrictions on
transfer thereof and the Issuers will have no further obligation to such holders
to provide for the registration under the Securities Act of the Original Notes
except under certain limited circumstances. (See "Description of
Notes -- Registration Rights.") No assurance can be given as to the liquidity of
the trading market for either the Original Notes or the Exchange Notes.
The Exchange Offer is not conditioned upon any minimum aggregate principal
amount of Original Notes being tendered for exchange. The Exchange Offer will
expire at 5:00 p.m., New York City time, on , 1997, unless extended
(the "Expiration Date"). The date of acceptance for exchange of the Original
Notes (the "Exchange Date") will be the first business day following the
Expiration Date, upon surrender of the Original Notes. Original Notes tendered
pursuant to the Exchange Offer may be withdrawn at any time prior to the
Expiration Date; otherwise such tenders are irrevocable.
SEE "RISK FACTORS" ON PAGE 6 FOR A DESCRIPTION OF CERTAIN FACTORS THAT
SHOULD BE CONSIDERED BY PARTICIPANTS IN THE EXCHANGE OFFER.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------
The date of this Prospectus is , 1997
<PAGE> 3
AVAILABLE INFORMATION
The Issuers have filed with the Commission a Registration Statement on Form
S-4 (the "Registration Statement," which term shall include all amendments,
exhibits, annexes and schedules thereto) pursuant to the Securities Act, and the
rules and regulations promulgated thereunder, covering the Exchange Notes being
offered hereby. This Prospectus does not contain all the information set forth
in the Registration Statement, certain parts of which are omitted in accordance
with the rules and regulations of the Commission. Statements made in this
Prospectus as to the contents of any contract, agreement or other document
referred to in the Registration Statement are not necessarily complete. With
respect to each such contract, agreement or other document filed as an exhibit
to the Registration Statement, reference is made to the exhibit for a more
complete description of the matter involved, and each such statement shall be
deemed qualified in its entirety by such reference.
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT PRESENTED
HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS ARE AVAILABLE UPON REQUEST FROM
GLOBALSTAR AT 3200 ZANKER ROAD, P.O. BOX 640670, SAN JOSE, CALIFORNIA
95164-0670, ATTENTION: STEPHEN C. WRIGHT, TELEPHONE: (408) 473-5550. IN ORDER TO
ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE BY
, 1997.
Upon consummation of the Exchange Offer, the Issuers will become subject to
the periodic reporting and other informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). Periodic reports, proxy
statements and other information filed by the Issuers with the Commission may be
inspected at the public reference facilities maintained by the Commission at
Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, or at its regional
offices located at Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661 and Seven World Trade Center, Suite 1300, New York, New
York 10048. Copies of such material also can be obtained from the Public
Reference Section of the Commission, Washington, D.C. 20549 at prescribed rates.
The Commission maintains a Web site at http://www.sec.gov. that contains
reports, proxy and information statements and other information regarding
registrants that file electronically with the Commission.
The Issuers are required by the terms of the Indenture dated as of February
15, 1997, among the Issuers and the trustee named therein, under which the Notes
are issued, to furnish holders of the Notes with annual reports containing
consolidated financial statements audited by its independent certified public
accountants and with quarterly reports containing unaudited condensed
consolidated financial statements for each of the first three quarters of each
fiscal year.
INCORPORATION BY REFERENCE
The following documents have been filed by Globalstar Telecommunications
Limited ("GTL"), one of the two general partners of Globalstar, with the
Commission pursuant to the Exchange Act and are hereby incorporated by reference
into this Prospectus:
(a) GTL's Annual Report on Form 10-K for the year ended December 31,
1996 (the "Form 10-K");
(b) GTL's Proxy Statement relating to the 1997 Annual Meeting of
Stockholders;
(c) GTL's Current Report on Form 8-K, filed on April 15, 1997; and
(d) the description of GTL's Common Stock contained in GTL's
Registration Statement on Form 8-A filed under the Exchange Act and any
amendments or reports filed for the purpose of updating such description.
All documents filed by GTL pursuant to Section 13(a), 13(c), 14 or 15(d) of
the Exchange Act after the date of this Prospectus and prior to the termination
of the offering of the Warrants and the Common Stock offered hereby shall be
deemed to be incorporated by reference in this Prospectus and to be a part
hereof from the date of filing such documents (provided, however, that the
information referred to in item 402(a)(8) of Regulation S-K of the Commission
shall not be deemed specifically incorporated by reference herein).
Any statement contained herein or in a document incorporated or deemed to
be incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a
i
<PAGE> 4
statement contained herein (or in the applicable Prospectus Supplement) or in
any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement as modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
Globalstar will provide without charge to each person, including any
beneficial owner, to whom a copy of this Prospectus has been delivered, upon the
written or oral request of any such person, a copy of any or all of the
documents incorporated by reference in this Prospectus (other than exhibits and
schedules thereto, unless such exhibits or schedules are specifically
incorporated by reference into the information that this Prospectus
incorporates). Written or oral requests for copies of these documents should be
directed to Globalstar, L.P. at 3200 Zanker Road, P.O. Box 64070, San Jose, CA
95164-0670. Attention: Secretary (Telephone (408) 473-5550).
FORWARD-LOOKING STATEMENTS
The statements contained or incorporated by reference in this Prospectus
that are not historical facts are "forward-looking statements" (as such term is
defined in the Private Securities Litigation Reform Act of 1995), which can be
identified by the use of forward-looking terminology such as "believes",
"expects", "may", "will", "should", or "anticipates" or the negative thereof or
other variations thereon or comparable terminology, or by discussions of
strategy that involve risks and uncertainties. From time to time, GTL, Loral
Space & Communications Ltd. ("Loral") a subsidiary of which is the managing
general partner of Globalstar, and Globalstar or their representatives have made
or may make forward-looking statements, orally or in writing. Furthermore, such
forward-looking statements may be included in, but are not limited to, various
filings made by GTL, Loral or Globalstar with the Commission, or press releases
or oral statements made by or with the approval of an authorized executive
officer of GTL, Loral or Globalstar.
Management wishes to caution the reader that these forward-looking
statements, such as the statements regarding Globalstar's planned timetable for
launching and operating the Globalstar System, the extent of the market
opportunity for Globalstar's services and products presented by the growing
demand for telecommunications services worldwide, its anticipation of enabling
local service providers to extend low-cost, high-quality telecommunications
services to millions of people, its anticipated future revenues and capital
expenditures and other statements contained or incorporated by reference in this
Prospectus regarding matters that are not historical facts involve predictions.
No assurance can be given that the future results will be achieved; actual
events or results may differ materially as a result of risks facing Globalstar.
Such risks include, but are not limited to, problems related to technical
development and launch of the Globalstar System, the competitive environment in
which the system will operate, doing business in developing markets, obtaining
the necessary financing while being substantially leveraged, obtaining any
required U.S. and foreign government authorizations, licenses and permits, all
in a timely manner, at reasonable costs and on satisfactory terms and
conditions, as well as regulatory, legislative and judicial developments that
could cause actual results to vary materially from the future results indicated,
expressed or implied, in such forward-looking statements. See "Risk Factors."
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE EXCHANGE OFFER COVERED BY THIS PROSPECTUS. IF GIVEN OR MADE
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR THE SUBSIDIARY GUARANTORS. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, THE EXCHANGE
NOTES IN ANY JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO
MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY
SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATIONS THAT
THERE HAS NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR IN
THE AFFAIRS OF THE ISSUERS SINCE THE DATE HEREOF.
ii
<PAGE> 5
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
AVAILABLE INFORMATION................................................................. i
INCORPORATION BY REFERENCE............................................................ i
FORWARD-LOOKING STATEMENTS............................................................ ii
PROSPECTUS SUMMARY.................................................................... 1
THE COMPANY........................................................................... 4
Recent Developments................................................................. 4
RISK FACTORS.......................................................................... 6
USE OF PROCEEDS....................................................................... 8
THE EXCHANGE OFFER.................................................................... 8
Purpose of the Exchange Offer....................................................... 8
Terms of the Exchange............................................................... 8
Expiration Date; Extensions; Termination; Amendments................................ 9
How to Tender....................................................................... 10
Terms and Conditions of the Letter of Transmittal................................... 12
Withdrawal Rights................................................................... 12
Acceptance of Original Notes for Exchange; Delivery of Exchange Notes............... 12
Conditions to the Exchange Offer.................................................... 13
Exchange Agent...................................................................... 14
Solicitation of Tenders; Expenses................................................... 14
Appraisal Rights.................................................................... 14
Federal Income Tax Consequences..................................................... 14
Other............................................................................... 14
SELECTED FINANCIAL DATA............................................................... 16
MANAGEMENT............................................................................ 17
Directors and Executive Officers.................................................... 17
Governance.......................................................................... 17
DESCRIPTION OF THE NOTES.............................................................. 17
General............................................................................. 17
Principal, Maturity and Interest.................................................... 18
Optional Redemption................................................................. 18
Change of Control................................................................... 18
Assets Dispositions................................................................. 20
Covenants........................................................................... 20
Limitation on Consolidated Debt..................................................... 21
Limitation on Liens................................................................. 22
Limitation on Restricted Payments................................................... 23
Dividend and Other Payment Restrictions Affecting Subsidiaries...................... 24
Limitation on Issuances and Sales of Capital Stock of Restricted Subsidiaries....... 25
Transactions with Affiliates........................................................ 25
Business Activities................................................................. 26
Maintenance of Insurance............................................................ 26
SEC Reports......................................................................... 27
Merger, Consolidation or Sale of Assets............................................. 27
Future Guarantors................................................................... 28
Business Activities of Globalstar Capital........................................... 28
Events of Defaults and Remedies..................................................... 29
No Personal Liability of Directors, Officers, Employees, Incorporators and
Stockholders..................................................................... 30
</TABLE>
iii
<PAGE> 6
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Legal Defeasance and Covenant Defeasance............................................ 30
Transfer and Exchange............................................................... 31
Amendment, Supplement and Waiver.................................................... 31
Concerning the Trustee.............................................................. 31
Definitions......................................................................... 32
Registration Rights................................................................. 41
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS............................................. 43
United States Federal Income Taxation of U.S. Holders............................... 43
Tax Treatment of the Notes.......................................................... 43
Liquidated Damages.................................................................. 44
Backup Withholding.................................................................. 44
Reporting Requirements.............................................................. 45
United States Federal Income Taxation of Non-U.S. Holders........................... 45
PLAN OF DISTRIBUTION.................................................................. 47
LEGAL OPINIONS........................................................................ 47
EXPERTS............................................................................... 47
</TABLE>
iv
<PAGE> 7
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the detailed
information and financial statements and the notes thereto incorporated by
reference in this Prospectus. On April 8, 1997, GTL's Board of Directors voted
to effect a 2-for-1 stock split of the Common Stock in the form of a stock
dividend (the "Stock Split"), such dividend to be paid on May 28, 1997 to
stockholders of record on May 12, 1997. Unless otherwise indicated, the
information contained herein regarding the number of outstanding partnership
interests of Globalstar or shares of Common Stock of GTL and the beneficial
ownership thereof does not give effect to the Stock Split. Unless otherwise
specified or the context otherwise requires, references in this Prospectus to
"dollars," "$" and "U.S.$" are to United States dollars.
THE EXCHANGE OFFER
The Exchange Offer......... The Issuers are offering to exchange (the "Exchange
Offer") up to $500,000,000 aggregate principal
amount of 11 3/8% Senior Notes due 2004 (the
"Exchange Notes"), which have been registered under
the Securities Act, for up to $500,000,000
aggregate principal amount of outstanding 11 3/8%
Senior Notes due 2004 (the "Original Notes"). Upon
consummation of the Exchange Offer, the terms of
the Exchange Notes will be substantially identical
in all respects (including principal amount,
interest rate, maturity and ranking) to the terms
of the Original Notes for which they may be
exchanged pursuant to the Exchange Offer, except
that (i) the Exchange Notes will be freely
transferable by holders thereof except as provided
herein (see "The Exchange Offer -- Terms of the
Exchange" and "-- Terms and Conditions of the
Letter of Transmittal") and (ii) the Exchange Notes
will be issued without any covenant regarding
registration under the Securities Act.
Exchange Notes issued pursuant to the Exchange
Offer in exchange for the Original Notes may be
offered for resale, resold and otherwise
transferred by holders thereof (other than any
holder which is (i) an "affiliate" of the Issuers
within the meaning of Rule 405 under the Securities
Act, (ii) a broker-dealer who acquired Original
Notes directly from the Issuer or (iii)
broker-dealers who acquired Original Notes as a
result of market making or other trading
activities) without compliance with the
registration and prospectus delivery provisions of
the Securities Act provided that such Exchange
Notes are acquired in the ordinary course of such
holders' business and such holders are not engaged
in, and do not intend to engage in, and have no
arrangement or understanding with any person to
participate in, a distribution of such Exchange
Notes.
Minimum Condition.......... The Exchange Offer is not conditioned upon any
minimum aggregate principal amount of Original
Notes being tendered for exchange.
Expiration Date............ The Exchange Offer will expire at 5:00 p.m., New
York City time, on , 1997 unless
extended (the "Expiration Date").
Exchange Date.............. The first date of acceptance for exchange for the
Original Notes will be the first business day
following the Expiration Date.
Conditions to the Exchange
Offer.................... The obligation of the Issuers to consummate the
Exchange Offer is subject to certain conditions.
See "The Exchange Offer -- Conditions to the
Exchange Offer." The Issuers reserve the right to
terminate or amend the Exchange Offer at any time
prior to the Expiration Date upon the occurrence of
any such condition.
<PAGE> 8
Withdrawal Rights.......... Tenders may be withdrawn at any time prior to the
Expiration Date. Any Original Notes not accepted
for any reason will be returned without expense to
the tendering holders thereof as promptly as
practicable after the expiration or termination of
the Exchange Offer.
Procedures for Tendering
Original Notes........... See "The Exchange Offer -- How to Tender."
Federal Income Tax
Consequences............. The exchange of Original Notes for Exchange Notes
by holders will not be a taxable exchange for
federal income tax purposes, and holders should not
recognize any taxable gain or loss or any interest
income as a result of such exchange.
Effect on Holders of
Original Notes........... As a result of the making of this Exchange Offer,
and upon acceptance for exchange of all validly
tendered Original Notes pursuant to the terms of
this Exchange Offer, the Issuers will have
fulfilled a covenant contained in the terms of the
Original Notes and the Registration Rights
Agreement (the "Registration Rights Agreement"),
dated as of February 19, 1997, between the Issuers
and Lehman Brothers Inc., Bear, Stearns & Co. Inc.,
Donaldson, Lufkin & Jenrette Securities Corporation
and Unterberg Harris, as initial purchasers, and,
accordingly, the holders of the Original Notes will
have no further registration or other rights under
the Registration Rights Agreement, except under
certain limited circumstances. See "Description of
Notes -- Registration Rights." Holders of the
Original Notes who do not tender their Original
Notes in the Exchange Offer will continue to hold
such Original Notes and will be entitled to all the
rights and limitations applicable thereto under the
Indenture, dated as of February 15, 1997, among the
Issuers and The Bank of New York, as Trustee (the
"Trustee"), relating to the Original Notes and the
Exchange Notes (the "Indenture"). All untendered,
and tendered but unaccepted, Original Notes will
continue to be subject to the restrictions on
transfer provided for in the Original Notes and
their Indenture. To the extent that Original Notes
are tendered and accepted in the Exchange Offer,
the trading market, if any, for the Original Notes
could be adversely affected. See "Risk Factors --
Consequences of Failure to Exchange."
2
<PAGE> 9
TERMS OF THE NOTES
The Exchange Offer applies to $500,000,000 aggregate principal amount of
the Original Notes. The form and terms of the Exchange Notes are the same as the
form and terms of the Original Notes for which they may be exchanged except that
the Exchange Notes have been registered under the Securities Act and, therefore,
will not bear legends restricting the transfer thereof. The Exchange Notes will
evidence the same debt as the Original Notes and will be entitled to the
benefits of the Indenture. See "Description of the Notes."
Issuers.................... Globalstar, L.P. and Globalstar Capital
Corporation. The principal executive offices of the
Issuers are located at 3200 Zanker Road, P.O. Box
640670, San Jose, California 95164-0670, and their
telephone number at that address is (408) 473-5550.
Maturity................... February 15, 2004.
Interest Payment Dates..... February 15 and August 15, commencing on August 15,
1997.
Ranking.................... The Notes will rank senior in right of payment to
any future subordinated indebtedness of the
Issuers, and pari passu in right of payment with
all senior indebtedness of the Issuers.
Security................... None.
Optional Redemption........ The Notes are not redeemable prior to February 15,
2002. Thereafter, the Notes will be redeemable, in
whole or in part, at the option of the Issuers, at
the redemption prices set forth herein plus accrued
and unpaid interest and Liquidated Damages (if any)
thereon to the applicable redemption date.
Change of Control.......... Upon the occurrence of a Change of Control, each
holder of Notes will have the right to require the
Issuers to repurchase all or any part of such
holder's Notes at an offer price in cash equal to
101% of the aggregate principal amount thereof,
plus accrued and unpaid interest and Liquidated
Damages (if any) thereon to the date of purchase.
See "Description of Notes -- Change of Control."
Covenants.................. The Indenture pursuant to which the Notes have been
issued contains certain covenants that, among other
things, limit the ability of the Issuers and their
Restricted Subsidiaries to incur additional Debt
and issue preferred stock, pay dividends or make
other distributions, repurchase Capital Stock or
subordinated Debt or make certain other Restricted
Payments, create certain liens, enter into certain
transactions with affiliates, sell assets, issue or
sell Capital Stock of the Issuers' Restricted
Subsidiaries or enter into certain mergers and
consolidations. See "Description of
Notes -- Covenants."
Amendment and Modification
of the Indenture........... Certain provisions of the Indenture, including
those related to a Change of Control, may be
amended with the consent of the holders of a
majority in principal amount of the
then-outstanding Notes.
FOR A DISCUSSION OF CERTAIN RISKS THAT SHOULD BE CONSIDERED IN CONNECTION
WITH THIS OFFERING, SEE "RISK FACTORS" BEGINNING ON PAGE 6.
3
<PAGE> 10
THE COMPANY
Globalstar is building and preparing to launch and operate a low-earth
orbit satellite-based telecommunications system (the "Globalstar System")
designed to enable local service providers to offer low-cost, high quality
wireless voice telephony and data services in virtually every populated area of
the world. Globalstar's designated service providers have agreed to offer
service and seek to obtain all necessary local regulatory approvals in more than
100 nations, accounting for about 88% of the world's population.
The Globalstar System's worldwide coverage is designed to enable its
service providers to extend modern telecommunications services to millions of
people who currently lack basic telephone service and to enhance wireless
telecommunications in areas underserved or not served by existing or future
cellular systems, providing a telecommunications solution in parts of the world
where the build-out of terrestrial systems cannot be economically justified. The
Globalstar System has been designed to provide services at prices comparable to
today's cellular service and substantially lower than the prices announced by
Globalstar's anticipated principal competitors. Globalstar service providers
will set their own retail pricing in their assigned service territories and will
pay Globalstar approximately $0.35 to $0.55 per minute on a wholesale basis.
Globalstar users will make and receive calls through a variety of
Globalstar phones ("Globalstar Phones"), including hand-held and vehicle-mounted
units similar to today's cellular telephones, fixed telephones similar either to
phone booths or ordinary wireline telephones, and data terminals and facsimile
machines. Dual-mode and tri-mode Globalstar Phones will provide access to both
the Globalstar System and the subscriber's land-based cellular service. Each
Globalstar Phone will communicate through one or more satellites to a local
Globalstar service provider's interconnection point (known as a gateway) which
will, in turn, connect into existing telecommunications networks.
RECENT DEVELOPMENTS
As of April 17, 1997, each of the elements of the Globalstar
System -- space and ground segments, digital communications technology, user
terminal supply, service provider arrangements and licensing -- is on schedule
to begin launching satellites in the second half of 1997, to commence commercial
operations in the second half of 1998 and to have a full constellation of 48
satellites operational in the first quarter of 1999.
Space Segment. The first Globalstar satellite has been
fully-assembled and is now in pre-flight testing, and another four
satellites are currently being assembled. Production is proceeding for the
remaining satellites to meet the scheduled operations date. Three different
launch providers have signed definitive agreements for the launch of the
Globalstar satellite constellation, providing a variety of launch options
and considerable launch flexibility. Mission operations preparations and
launch vehicle production and dispenser development are on schedule.
Ground Segment. The first four Globalstar gateways, which are
currently in advanced development and are to be located in Australia,
France, South Korea and the United States, are currently under
construction. These gateways will support Globalstar's data network,
monitor the initial launch and orbital placement of Globalstar's first
satellites, and serve as prototypes for production gateways that will
support Globalstar service. In addition, Globalstar's satellite operations
control center facility has been completed.
Digital Communications Technology. QUALCOMM Incorporated's
("Qualcomm") Code Division Multiple Access ("CDMA") technology has now been
successfully deployed in South Korea, Hong Kong and cities in the United
States supporting terrestrial personal communications services and digital
cellular service, and its CDMA implementation for Globalstar has been
successfully demonstrated in a simulated satellite environment. This
demonstration validated Globalstar's encoding, modulation, control
software, time and frequency distribution and up/down links between
satellites and handsets.
User Terminal Supply. Qualcomm/Sony and two other manufacturers, L.M.
Ericsson and TELITAL S.r.L, are developing Globalstar's user terminals and
production orders are expected to be issued in the second half of 1997.
4
<PAGE> 11
Service Providers. Globalstar and its partners have been seeking
alliances with service providers throughout the world and have entered into
a number of agreements in specific territories. Globalstar believes that
these relationships with in-country service providers will facilitate the
granting of local regulatory approvals -- particularly where the service
provider and the licensing authority are one and the same -- as well as
provide local marketing and technical expertise.
Licensing. In January 1995, the Federal Communications Commission
("FCC") granted authority for the construction, launch and operation of the
Globalstar System and assigned spectrum for its user links. Later that
year, the 1995 World Radiocommunication Conference allocated feeder link
spectrum on an international basis for mobile satellite services ("MSS")
systems such as Globalstar, and in November of 1996 the FCC authorized
Globalstar's feeder links.
Globalstar's current budget for the cost for the design, construction and
deployment of the Globalstar System, including working capital, cash interest on
anticipated borrowings and operating expenses is approximately $2.5 billion.
Globalstar has recently added enhanced capabilities and additional test
requirements and has experienced cost growth in the development of the ground
system, the final cost impact of which is under assessment. Globalstar, however,
does not expect such cost growth to increase the budget for the project by more
than five percent. Globalstar has raised or received commitments for
approximately $2.0 billion in equity, debt and vendor financing.
Globalstar has also agreed to purchase from Space Systems/Loral, Inc.
("SS/L") eight additional spare satellites at a cost estimated at $175 million.
Globalstar also intends, together with its strategic partners, to jointly
finance the procurement of 37 gateways for resale to service providers, thereby
accelerating the deployment of gateways around the world prior to the date on
which Globalstar expects to commence initial operations via a 40-satellite
constellation. Globalstar has agreed to finance approximately $80 million of the
cost of these gateways and expects to recover its cost from the resale of these
gateways to service providers.
5
<PAGE> 12
RISK FACTORS
Prospective investors should carefully consider the following risk factors
and the risk factors set forth in GTL's Form 10-K under "Certain Factors that
May Affect Future Results," which report is incorporated herein by reference, in
addition to the other information contained elsewhere in this Prospectus, in
evaluating whether to tender their Original Notes for the Exchange Notes offered
hereby.
Controlling Person. Globalstar is currently managed by a General Partners'
Committee, a majority of the representatives on which are designated directly or
indirectly by Loral. The Independent Representatives on the General Partners'
Committee will, however, have the right to pass upon certain matters prior to
any decision to submit such matters to a vote of the partners and will have
certain authority over the hiring or dismissal of senior officers of Globalstar.
Change of Control of GTL and Reduction in Interest; Investment Company Act
Considerations. In the event of (i) a change of control of GTL at a time when
GTL owns less than 50% of the Globalstar partnership interests outstanding,
including certain changes in GTL's Board of Directors, or (ii) a sale or other
disposition of partnership interests following which the equity interest of GTL
in Globalstar has been reduced to an interest of less than 5% (a "Reduction in
Interest"), which, in the event of either clause (i) or (ii) above has not been
approved by LQSS or by the partners of Globalstar, GTL will become a limited
partner in Globalstar and will no longer appoint representatives to serve on
Globalstar's General Partners' Committee. Certain other governance rights
granted to GTL under Globalstar's partnership agreement will also be revoked,
and GTL will enjoy only the rights of a limited partner in Globalstar. If GTL
were to cease participation in the management of Globalstar, which would result
if GTL were to undergo a change of control or a Reduction in Interest shall have
occurred, its interest in Globalstar could be deemed an "investment security"
for purposes of the Investment Company Act. In general, a person is an
"investment company" if, subject to certain exceptions, it owns investment
securities having a value exceeding 40% of the value of its total assets
(exclusive of U.S. government securities and cash items). GTL's sole asset is
its partnership interests in Globalstar. A determination that such investment
was an investment security could result in GTL's being deemed to be an
investment company under the Investment Company Act and its becoming subject to
the registration and other requirements of the Investment Company Act. In order
to register, GTL might be required to reincorporate as a domestic U.S.
corporation and would thereafter be subject to U.S. tax on its worldwide income,
subject to any applicable foreign tax credits. Absent a change of control or a
Reduction in Interest, Globalstar intends to conduct its operations so as to
avoid being deemed an investment company under the Investment Company Act.
Absence of a Public Market. There is no existing market for the Exchange
Notes and there can be no assurance as to the liquidity of any markets that may
develop for the Exchange Notes, the ability of holders of the Exchange Notes to
sell such securities or the price at which holders would be able to sell such
securities. If such a market were to exist, the Exchange Notes could trade at
prices that may be higher or lower than their principal amount or purchase
price, depending on many factors, including prevailing interest rates, the
market for similar notes, and the financial performance of Globalstar and its
subsidiaries. The Issuers have been advised by Lehman Brothers Inc. that it
presently intends to make a market in the Exchange Notes. However, it is not
obligated to do so, and any market-making activity with respect to the Exchange
Notes may be discontinued at any time without notice. In addition, such
market-making activity will be subject to the limits imposed by the Exchange
Act. The Company does not intend to apply for listing of the Exchange Notes on
any securities exchange.
Consequences of Failure to Exchange. Holders of Original Notes who do not
exchange their Original Notes for Exchange Notes pursuant to the Exchange Offer
will continue to be subject to the restrictions on transfer of such original
Notes as set forth in the legend thereon as a consequence of the issuance of the
Original Notes pursuant to exemptions from, or in transactions not subject to,
the registration requirements of the Securities Act and applicable state
securities laws. In general, the Original Notes may not be offered or sold,
unless registered under the Securities Act and applicable state securities laws,
or pursuant to an exemption therefrom. Except under certain limited
circumstances, the Issuers do not intend to register the Original Notes under
the Securities Act. In addition, any holder of Original Notes who tenders in the
6
<PAGE> 13
Exchange Offer for the purpose of participating in a distribution of the
Exchange Notes may be deemed to have received restricted securities and, if so,
will be required to comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any resale transaction. To
the extent Original Notes are tendered and accepted in the Exchange Offer, the
trading market, if any, for the Original Notes not tendered could be adversely
affected. See "The Exchange Offer" and "Description of Notes -- Registration
Rights."
7
<PAGE> 14
USE OF PROCEEDS
There will be no proceeds to the Issuers from the exchange pursuant to the
Exchange Offer. The net proceeds to the Issuers from the issuance of the
Original Notes were approximately $484 million and have been and will continue
to be used toward the construction and deployment of the Globalstar System.
THE EXCHANGE OFFER
PURPOSE OF THE EXCHANGE OFFER
The Original Notes were originally issued and sold on February 19, 1997.
Such sales were not registered under the Securities Act in reliance upon the
exemptions provided by Section 4(2), Rule 144A and Regulation S of the
Securities Act. In connection with the sale of the Original Notes, the Issuers
agreed to use their reasonable efforts to file with the Commission a
registration statement relating to an exchange offer (the "Exchange Offer
Registration Statement") pursuant to which another series of Notes of the
Issuers, the Exchange Notes, covered by such registration statement and
containing substantially the same terms as the Original Notes, except as set
forth in this Prospectus, would be offered in exchange for Original Notes
tendered at the option of the holders thereof. If (i) the Issuers are not
permitted to effect the Exchange Offer because the Exchange Offer is not
permitted by applicable law or the Commission policy, (ii) the Exchange Offer is
not consummated within 180 days of February 19, 1997, (iii) any Initial
Purchaser (as defined in the Registration Rights Agreement) notifies the Issuers
within 90 days after the consummation of the Exchange Offer that its Transfer
Restricted Securities were not eligible to be exchanged for Exchange Notes in
the Exchange Offer or (iv) any Holder of Transfer Restricted Securities notifies
the Issuers that it is not eligible to participate in the Exchange Offer, or
that it participated in the Exchange Offer but did not receive freely tradeable
Exchange Notes on the date of exchange, the Issuers will file with the
Commission a shelf registration statement (the "Shelf Registration Statement")
to cover resales of the Original Notes by the holders thereof who satisfy
certain conditions relating to the provision of information in connection with
the Shelf Registration Statement. The Issuers will use reasonable efforts to
cause the applicable registration statement to be declared effective as promptly
as possible by the Commission. For purposes of the foregoing, Transfer
Restricted Securities means each Original Note until (i) the date on which such
Original Note has been exchanged by a person other than a broker-dealer for an
Exchange Note in the Exchange Offer, (ii) following the exchange by a
broker-dealer in the Exchange Offer of an Original Note for a Exchange Note, the
date on which such Exchange Note is sold to a purchaser who receives from such
broker-dealer on or prior to the date of such sale a copy of the prospectus
contained in the Exchange Offer Registration Statement, (iii) the date on which
such Original Note has been effectively registered under the Securities Act and
disposed of in accordance with the Shelf Registration Statement or (iv) the date
on which such Original Note is distributed to the public pursuant to Rule 144
under the Securities Act. In the event that (i) the Issuers have failed to file
the Exchange Offer Registration Statement or, if applicable, the Shelf
Registration Statement, (ii) the Exchange Offer Registration Statement, or, if
applicable, the Shelf Registration Statement, have not been declared effective
by the Commission, or (iii) the Exchange Offer has not been consummated or the
Exchange Offer Registration Statement or the Shelf Registration Statement ceases
to remain effective, in each case within specified time periods, the interest
rate borne by the Original Notes will be increased. See "Description of
Notes -- Registration Rights."
The sole purpose of the Exchange Offer is to fulfill the obligations of the
Issuers with respect to the Registration Rights Agreement.
TERMS OF THE EXCHANGE
The Issuers hereby offer to exchange, upon the terms and subject to the
conditions set forth herein and in the Letter of Transmittal accompanying this
Prospectus (the "Letter of Transmittal"), $1,000 in principal amount of Exchange
Notes for each $1,000 in principal amount of the Original Notes. The terms of
the Exchange Notes are identical in all respects to the terms of the Original
Notes for which they may be exchanged pursuant to this Exchange Offer, except
that the Exchange Notes will generally be freely transferable by holders
thereof, and the holders of the Exchange Notes (as well as remaining holders of
any
8
<PAGE> 15
Original Notes) will not be entitled to registration rights under the
Registration Rights Agreement. See "Description of Notes -- Registration
Rights." The Exchange Notes will evidence the same debt as the Original Notes
and will be entitled to the benefits of the Indenture. See "Description of
Notes."
The Exchange Offer is not conditioned upon any minimum aggregate principal
amount of Original Notes being tendered for exchange.
Based on interpretations by the Staff set forth in no-action letters issued
to third parties, the Issuers believe that Exchange Notes issued pursuant to the
Exchange Offer in exchange for the Original Notes may be offered for resale,
resold and otherwise transferred by holders thereof (other than any holder which
is (i) an "affiliate" of the Issuers within the meaning of Rule 405 under the
Securities Act, (ii) a broker-dealer who acquired Original Notes directly from
the Issuer or (iii) broker-dealers who acquired Original Notes as a result of
market making or other trading activities) without compliance with the
registration and prospectus delivery provisions of the Securities Act provided
that such Exchange Notes are acquired in the ordinary course of such holders'
business, and such holders are not engaged in, and do not intend to engage in,
and have no arrangement or understanding with any person to participate in, a
distribution of such Exchange Notes. Each broker-dealer that receives Exchange
Notes for its own account in exchange for Original Notes, where such Original
Notes were acquired by such broker-dealer as a result of market-making
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such Exchange Notes. See "Plan of Distribution." The Letter
of Transmittal states that by so acknowledging, and by delivering a prospectus,
a broker-dealer will not be deemed to admit that it is an "underwriter" within
the meaning of the Securities Act. This Prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of Exchange Notes received in exchange for Original Notes where
such Original Notes were acquired by such broker-dealer as a result of
market-making activities or other trading activities. The Issuers have agreed
that, for a period not to exceed 180 days after the Exchange Date, they will
make this Prospectus available to any broker-dealer for use in connection with
any such resale. Any holder that cannot rely upon such interpretations must
comply with the registration and prospectus delivery requirements of the
Securities Act in connection with a secondary resale transaction.
Tendering holders of Original Notes will not be required to pay brokerage
commissions or fees or, subject to the instructions in the Letter of
Transmittal, transfer taxes with respect to the exchange of the Original Notes
pursuant to the Exchange Offer.
The Exchange Notes will bear interest from and including their respective
dates of issuance. Holders whose Original Notes are accepted for exchange will
receive accrued interest thereon to, but not including, the date of issuance of
the Exchange Notes, such interest to be payable with the first interest payment
on the Exchange Notes, but will not receive any payment in respect of interest
on the Original Notes accrued after the issuance of the Exchange Notes.
EXPIRATION DATE; EXTENSIONS; TERMINATION; AMENDMENTS
The Exchange Offer expires on the Expiration Date. The term "Expiration
Date" means 5:00 p.m., New York City time, on , 1997, unless the Issuers
in their sole discretion extend the period during which the Exchange Offer is
open, in which event the term "Expiration Date" means the latest time and date
on which the Exchange Offer, as so extended by the Issuers, expires. The Issuers
reserve the right to extend the Exchange Offer at any time and from time to time
prior to the Expiration Date by giving written notice to The Bank of New York
(the "Exchange Agent") and by timely public announcement communicated, unless
otherwise required by applicable law or regulation, by making a release to the
Dow Jones News Service. During any extension of the Exchange Offer, all Original
Notes previously tendered pursuant to the Exchange Offer will remain subject to
the Exchange Offer.
The initial Exchange Date will be the first business day following the
Expiration Date. The Issuers expressly reserve the right to (i) terminate the
Exchange Offer and not accept for exchange any Original Notes for any reason,
including if any of the events set forth below under "-- Conditions to the
Exchange Offer" shall have occurred and shall not have been waived by the
Issuers and (ii) amend the terms of the Exchange Offer in any manner, whether
before or after any tender of the Original Notes. If any such
9
<PAGE> 16
termination or amendment occurs, the Issuers will notify the Exchange Agent in
writing and will either issue a press release or give written notice to the
holders of the Original Notes as promptly as practicable. Unless the Issuers
terminate the Exchange Offer prior to 5:00 p.m., New York City time, on the
Expiration Date, the Issuers will exchange the Exchange Notes for the Original
Notes on the Exchange Date.
If the Issuers waive any material condition to the Exchange Offer, or amend
the Exchange Offer in any other material respect, and if at the time that notice
of such waiver or amendment is first published, sent or given to holders of
Original Notes in the manner specified above, the Exchange Offer is scheduled to
expire at any time earlier than the expiration of a period ending on the fifth
business day from, and including, the date that such notice is first so
published, sent or given, then the Exchange Offer will be extended until the
expiration of such period of five business days.
This Prospectus and the related Letter of Transmittal and other relevant
materials will be mailed by the Issuers to record holders of Original Notes and
will be furnished to brokers, banks and similar persons whose names, or the
names of whose nominees, appear on the lists of holders for subsequent
transmittal to beneficial owners of Original Notes.
HOW TO TENDER
The tender to the Issuers of Original Notes by a holder thereof pursuant to
one of the procedures set forth below will constitute an agreement between such
holder and the Issuers in accordance with the terms and subject to the
conditions set forth herein and in the Letter of Transmittal.
General Procedures. A holder of an Original Note may tender the same by
(i) properly completing and signing the Letter of Transmittal or a facsimile
thereof (all references in this Prospectus to the Letter of Transmittal shall be
deemed to include a facsimile thereof) and delivering the same, together with
the certificate or certificates representing the Original Notes being tendered
and any required signature guarantees (or a timely confirmation of a book-entry
transfer (a "Book-Entry Confirmation") pursuant to the procedure described
below), to the Exchange Agent at its address set forth on the back cover of this
Prospectus on or prior to the Expiration Date or (ii) complying with the
guaranteed delivery procedures described below.
If tendered Original Notes are registered in the name of the signer of the
Letter of Transmittal and the Exchange Notes to be issued in exchange therefor
are to be issued (and any untendered Original Notes are to be reissued) in the
name of the registered holder, the signature of such signer need not be
guaranteed. In any other case, the tendered Original Notes must be endorsed or
accompanied by written instruments of transfer in form satisfactory to the
Issuers and duly executed by the registered holder and the signature on the
endorsement or instrument of transfer must be guaranteed by a firm (an "Eligible
Institution") that is a member of a recognized signature guarantee medallion
program (an "Eligible Program") within the meaning of Rule 17Ad-15 under the
Exchange Act. If the Exchange Notes and/or Original Notes not exchanged are to
be delivered to an address other than that of the registered holder appearing on
the note register for the Original Notes, the signature on the Letter of
Transmittal must be guaranteed by an Eligible Institution.
Any beneficial owner whose Original Notes are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender Original Notes should contact such holder promptly and instruct such
holder to tender Original Notes on such beneficial owner's behalf. If such
beneficial owner wishes to tender such Original Notes himself, such beneficial
owner must, prior to completing and executing the Letter of Transmittal and
delivering such Original Notes, either make appropriate arrangements to register
ownership of the Original Notes in such beneficial owner's name or follow the
procedures described in the immediately preceding paragraph. The transfer of
record ownership may take considerable time.
Book-Entry Transfer. The Exchange Agent will make a request to establish
an account with respect to the Original Notes at The Depository Trust Company
(the "Book-Entry Transfer Facility") for purposes of the Exchange Offer within
two business days after receipt of this Prospectus, and any financial
institution that is a participant in the Book-Entry Transfer Facility's systems
may make book-entry delivery of Original Notes by causing the Book-Entry
Transfer Facility to transfer such Original Notes into the Exchange Agent's
10
<PAGE> 17
account at the Book-Entry Transfer Facility in accordance with the Book-Entry
Transfer Facility's procedures for transfer. However, although delivery of
Original Notes may be effected through book-entry transfer at the Book-Entry
Transfer Facility, the Letter of Transmittal, with any required signature
guarantees and any other required documents, must, in any case, be transmitted
to and received by the Exchange Agent at the address specified on the back cover
page of this Prospectus on or prior to the Expiration Date or the guaranteed
delivery procedures described below must be complied with.
THE METHOD OF DELIVERY OF ORIGINAL NOTES AND ALL OTHER DOCUMENTS IS AT THE
ELECTION AND RISK OF THE HOLDER. IF SENT BY MAIL, IT IS RECOMMENDED THAT
REGISTERED MAIL, RETURN RECEIPT REQUESTED, BE USED, PROPER INSURANCE BE
OBTAINED, AND THE MAILING BE MADE SUFFICIENTLY IN ADVANCE OF THE EXPIRATION DATE
TO PERMIT DELIVERY TO THE EXCHANGE AGENT ON OR BEFORE THE EXPIRATION DATE.
Unless an exemption applies under the applicable law and regulations
concerning "backup withholding" of federal income tax, the Exchange Agent will
be required to withhold, and will withhold, 31% of the gross proceeds otherwise
payable to a holder pursuant to the Exchange Offer if the holder does not
provide his taxpayer identification number (social security number or employer
identification number) and certify that such number is correct. Each tendering
holder should complete and sign the main signature form and the Substitute Form
W-9 included as part of the Letter of Transmittal, so as to provide the
information and certification necessary to avoid backup withholding, unless an
applicable exemption exists and is proved in a manner satisfactory to the
Issuers and the Exchange Agent.
Guaranteed Delivery Procedures. If a holder desires to accept the Exchange
Offer and time will not permit a Letter of Transmittal or Original Notes to
reach the Exchange Agent before the Expiration Date, a tender may be effected if
the Exchange Agent has received at its office listed on the back cover hereof on
or prior to the Expiration Date a letter or facsimile transmission from an
Eligible Institution setting forth the name and address of the tendering holder,
the names in which the Original Notes are registered and, if possible, the
certificate numbers of the Original Notes to be tendered, and stating that the
tender is being made thereby and guaranteeing that within five New York Stock
Exchange trading days after the date of execution of such letter or facsimile
transmission by the Eligible Institution, the Original Notes, in proper form for
transfer, will be delivered by such Eligible Institution together with a
properly completed and duly executed Letter of Transmittal (and any other
required documents). Unless Original Notes being tendered by the above-described
method (or a timely Book-Entry Confirmation) are deposited with the Exchange
Agent within the time period set forth above (accompanied or preceded by a
properly completed Letter of Transmittal and any other required documents), the
Issuers may, at their option, reject the tender. Copies of a Notice of
Guaranteed Delivery which may be used by Eligible Institutions for the purposes
described in this paragraph are being delivered with this Prospectus and the
related Letter of Transmittal.
A tender will be deemed to have been received as of the date when the
tendering holder's properly completed and duly signed Letter of Transmittal
accompanied by the Original Notes (or a timely Book-Entry Confirmation) is
received by the Exchange Agent. Issuances of Exchange Notes in exchange for
Original Notes tendered pursuant to a Notice of Guaranteed Delivery or letter or
facsimile transmission to similar effect (as provided above) by an Eligible
Institution will be made only against deposit of the Letter of Transmittal (and
any other required documents) and the tendered Original Notes (or a timely
Book-Entry Confirmation).
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance for exchange of any tender of Original Notes will be
determined by the Issuers, whose determination will be final and binding. The
Issuers reserve the absolute right to reject any or all tenders not in proper
form or the acceptances for exchange of which may, in the opinion of counsel to
the Issuers, be unlawful. The Issuers also reserve the absolute right to waive
any of the conditions of the Exchange Offer or any defect or irregularities in
tenders of any particular holder whether or not similar defects or
irregularities are waived in the case of other holders. None of the Issuers, the
Exchange Agent or any other person will be under any duty to give notification
of any defects or irregularities in tenders or shall incur any liability for
failure to give any such notification. The Issuers' interpretation of the terms
and conditions of the Exchange Offer (including the Letter of Transmittal and
the instructions thereto) will be final and binding.
11
<PAGE> 18
TERMS AND CONDITIONS OF THE LETTER OF TRANSMITTAL
The Letter of Transmittal contains, among other things, the following terms
and conditions, which are part of the Exchange Offer.
The party tendering Original Notes for exchange (the "Transferor")
exchanges, assigns and transfers the Original Notes to the Issuers and
irrevocably constitutes and appoints the Exchange Agent as the Transferor's
agent and attorney-in-fact to cause the Original Notes to be assigned,
transferred and exchanged. The Transferor represents and warrants that it has
full power and authority to tender, exchange, assign and transfer the Original
Notes and to acquire Exchange Notes issuable upon the exchange of such tendered
Original Notes, and that, when the same are accepted for exchange, the Issuers
will acquire good and unencumbered title to the tendered Original Notes, free
and clear of all liens, restrictions, charges and encumbrances and not subject
to any adverse claim. The Transferor also warrants that it will, upon request,
execute and deliver any additional documents deemed by the Issuers to be
necessary or desirable to complete the exchange, assignment and transfer of
tendered Original Notes. The Transferor further agrees that acceptance of any
tendered Original Notes by the Issuers and the issuance of Exchange Notes in
exchange therefor shall constitute performance in full by the Issuers of its
obligations under the Registration Rights Agreement and that the Issuers shall
have no further obligations or liabilities thereunder (except in certain limited
circumstances). All authority conferred by the Transferor will survive the death
or incapacity of the Transferor and every obligation of the Transferor shall be
binding upon the heirs, legal representatives, successors, assigns, executors
and administrators of such Transferor.
By tendering Original Notes, the Transferor certifies (a) that it is not an
"affiliate" of the Issuers within the meaning of Rule 405 under the Securities
Act, that it is not a broker-dealer that owns Original Notes acquired directly
from the Issuers or an affiliate of the Issuers, that it is acquiring the
Exchange Notes offered hereby in the ordinary course of such Transferor's
business and that such Transferor has no arrangement with any person to
participate in the distribution of such Exchange Notes or (b) that it is an
"affiliate" (as so defined) of the Issuers or of the initial purchasers in the
original offering of the Original Notes, and that it will comply with the
registration and prospectus delivery requirements of the Securities Act to the
extent applicable to it.
WITHDRAWAL RIGHTS
Original Notes tendered pursuant to the Exchange Offer may be withdrawn at
any time prior to the Expiration Date.
For a withdrawal to be effective, a written or facsimile transmission
notice of withdrawal must be timely received by the Exchange Agent at its
address set forth on the back cover of this Prospectus. Any such notice of
withdrawal must specify the person named in the Letter of Transmittal as having
tendered Original Notes to be withdrawn, the certificate numbers of Original
Notes to be withdrawn, the principal amount of Original Notes to be withdrawn
(which must be an authorized denomination), a statement that such holder is
withdrawing his election to have such Original Notes exchanged, and the name of
the registered holder of such Original Notes, and must be signed by the holder
in the same manner as the original signature on the Letter of Transmittal
(including any required signature guarantees) or be accompanied by evidence
satisfactory to the Issuers that the person withdrawing the tender has succeeded
to the beneficial ownership of the Original Notes being withdrawn. The Exchange
Agent will return the properly withdrawn Original Notes promptly following
receipt of notice of withdrawal. All questions as to the validity of notices of
withdrawals, including time of receipt, will be determined by the Issuers, and
such determination will be final and binding on all parties.
ACCEPTANCE OF ORIGINAL NOTES FOR EXCHANGE; DELIVERY OF EXCHANGE NOTES
Upon the terms and subject to the conditions of the Exchange Offer, the
acceptance for exchange of Original Notes validly tendered and not withdrawn and
the issuance of the Exchange Notes will be made on the Exchange Date. For the
purposes of the Exchange Offer, the Issuers shall be deemed to have accepted for
12
<PAGE> 19
exchange validly tendered Original Notes when, as and if the Issuers have given
written notice thereof to the Exchange Agent.
The Exchange Agent will act as agent for the tendering holders of Original
Notes for the purposes of receiving Exchange Notes from the Issuers and causing
the Original Notes to be assigned, transferred and exchanged. Upon the terms and
subject to the conditions of the Exchange Offer, delivery of Exchange Notes to
be issued in exchange for accepted Original Notes will be made by the Exchange
Agent promptly after acceptance of the tendered Original Notes. Original Notes
not accepted for exchange by the Issuers will be returned without expense to the
tendering holders (or in the case of Original Notes tendered by book-entry
transfer into the Exchange Agent's account at the Book-Entry Transfer Facility
pursuant to the procedures described above, such non-exchanged Original Notes
will be credited to an account maintained with such Book-Entry Transfer
Facility) promptly following the Expiration Date or, if the Issuers terminate
the Exchange Offer prior to the Expiration Date, promptly after the Exchange
Offer is so terminated.
CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provision of the Exchange Offer, or any extension
of the Exchange Offer, the Issuers will not be required to issue Exchange Notes
in respect of any properly tendered Original Notes not previously accepted and
may terminate the Exchange Offer (by oral or written notice to the Exchange
Agent and by timely public announcement communicated, unless otherwise required
by applicable law or regulation, by making a release to the Dow Jones News
Service) or, at its option, modify or otherwise amend the Exchange Offer, if (a)
there shall be threatened, instituted or pending any action or proceeding
before, or any injunction, order or decree shall have been issued by, any court
or governmental agency or other governmental regulatory or administrative agency
or commission, (i) seeking to restrain or prohibit the making or consummation of
the Exchange Offer or any other transaction contemplated by the Exchange Offer,
(ii) assessing or seeking any damages as a result thereof, or (iii) resulting in
a material delay in the ability of the Issuers to accept for exchange or
exchange some or all of the Original Notes pursuant to the Exchange Offer; (b)
any statute, rule, regulation, order or injunction shall be sought, proposed,
introduced, enacted, promulgated or deemed applicable to the Exchange Offer or
any of the transactions contemplated by the Exchange Offer by any government or
governmental authority, domestic or foreign, or any action shall have been
taken, proposed or threatened, by any government, governmental authority, agency
or court, domestic or foreign, that in the sole judgment of the Issuers might
directly or indirectly result in any of the consequences referred to in clauses
(a)(i) or (ii) above or, in the sole judgment of the Issuers, might result in
the holders of Exchange Notes having obligations with respect to resales and
transfers of Exchange Notes which are greater than those described in the
interpretations of the Commission referred to on the cover page of this
Prospectus, or would otherwise make it inadvisable to proceed with the Exchange
Offer; or (c) a material adverse change shall have occurred in the business,
condition (financial or otherwise), operations, or prospects of the Issuers.
The foregoing conditions are for the sole benefit of the Issuers and may be
asserted by them with respect to all or any portion of the Exchange Offer
regardless of the circumstances (including any action or inaction by the
Issuers) giving rise to such condition or may be waived by the Issuers in whole
or in part at any time or from time to time in their sole discretion. The
failure by the Issuers at any time to exercise any of the foregoing rights will
not be deemed a waiver of any such right, and each right will be deemed an
ongoing right which may be asserted at any time or from time to time. In
addition, the Issuers have reserved the right, notwithstanding the satisfaction
of each of the foregoing conditions, to terminate or amend the Exchange Offer.
Any determination by the Issuers concerning the fulfillment or
non-fulfillment of any conditions will be final and binding upon all parties.
In addition, the Issuers will not accept for exchange any Original Notes
tendered and no Exchange Notes will be issued in exchange for any such Original
Notes, if at such time any stop order shall be threatened or in effect with
respect to the Registration Statement of which this Prospectus constitutes a
part or qualification of the Indenture under the Trust Indenture Act of 1939
(the "Trust Indenture Act").
13
<PAGE> 20
EXCHANGE AGENT
The Bank of New York has been appointed as the Exchange Agent for the
Exchange Offer. Letters of Transmittal must be addressed to the Exchange Agent
at its address set forth on the back cover page of this Prospectus.
Delivery to an address other than as set forth herein, or transmissions of
instructions via a facsimile number other than the ones set forth herein, will
not constitute a valid delivery.
SOLICITATION OF TENDERS; EXPENSES
The Issuers have not retained any dealer-manager or similar agent in
connection with the Exchange Offer and will not make any payments to brokers,
dealers or others for soliciting acceptances of the Exchange Offer. The Issuers
will, however, pay the Exchange Agent reasonable and customary fees for its
services and will reimburse it for reasonable out-of-pocket expenses in
connection therewith. The Issuers will also pay brokerage houses and other
custodians, nominees and fiduciaries the reasonable out-of-pocket expenses
incurred by them in forwarding tenders for their customers. The expenses to be
incurred in connection with the Exchange Offer, including the fees and expenses
of the Exchange Agent and printing, accounting and legal fees, will be paid by
Globalstar and are estimated at approximately $ .
No person has been authorized to give any information or to make any
representations in connection with the Exchange Offer other than those contained
in this Prospectus. If given or made, such information or representations should
not be relied upon as having been authorized by the Issuers. Neither the
delivery of this Prospectus nor any exchange made hereunder shall, under any
circumstances, create any implication that there has been no change in the
affairs of the Issuers since the respective dates as of which information is
given herein. The Exchange Offer is not being made to (nor will tenders be
accepted from or on behalf of) holders of Original Notes in any jurisdiction in
which the making of the Exchange Offer or the acceptance thereof would not be in
compliance with the laws of such jurisdiction. However, the Issuers may, at
their discretion, take such action as it may deem necessary to make the Exchange
Offer in any such jurisdiction and extend the Exchange Offer to holders of
Original Notes in such jurisdiction. In any jurisdiction the securities laws or
blue sky laws of which require the Exchange Offer to be made by a licensed
broker or dealer, the Exchange Offer is being made on behalf of the Issuers by
one or more registered brokers or dealers which are licensed under the laws of
such jurisdiction.
APPRAISAL RIGHTS
HOLDERS OF ORIGINAL NOTES WILL NOT HAVE DISSENTERS' RIGHTS OR APPRAISAL
RIGHTS IN CONNECTION WITH THE EXCHANGE OFFER.
FEDERAL INCOME TAX CONSEQUENCES
The exchange of Original Notes for Exchange Notes by holders will not be a
taxable exchange for Federal income tax purposes, and holders should not
recognize any taxable gain or loss or any interest income as a result of such
exchange.
OTHER
Participation in the Exchange Offer is voluntary and holders should
carefully consider whether to accept. Holders of the Original Notes are urged to
consult their financial and tax advisors in making their own decisions on what
action to take.
As a result of the making of, and upon acceptance for exchange of all
validly tendered Original Notes pursuant to the terms of this Exchange Offer,
the Issuers will have fulfilled a covenant contained in the terms of the
Original Notes and the Registration Rights Agreement. Holders of the Original
Notes who do not tender their certificates in the Exchange Offer will continue
to hold such certificates and will be entitled to all the rights, and
limitations applicable thereto, under the Indenture, except for any such rights
under the Registration Rights Agreement, which by their terms terminate or cease
to have further effect as a result of the making of this Exchange Offer. See
"Description of the Notes." All untendered Original Notes will
14
<PAGE> 21
continue to be subject to the restriction on transfer set forth in the
Indenture. To the extent that Original Notes are tendered and accepted in the
Exchange Offer, the trading market, if any, for the Original Notes could be
adversely affected. See "Risk Factors -- Consequences of Failure to Exchange."
The Issuers may in the future seek to acquire untendered Original Notes in
open market or privately negotiated transactions, through subsequent exchange
offers or otherwise. The Issuers have no present plan to acquire any Original
Notes which are not tendered in the Exchange Offer.
15
<PAGE> 22
SELECTED FINANCIAL DATA
The following selected financial data of Globalstar (including the
pre-capital subscription period from January 1, 1994 to March 22, 1994) has been
derived from the financial statements of Globalstar incorporated by reference
herein. The selected financial data set forth below should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the financial statements of Globalstar and notes
incorporated by reference herein. Globalstar Capital is a wholly owned
subsidiary of Globalstar and was formed solely for purposes of serving as an
issuer and obligor with respect to the Notes. The Indenture prohibits Globalstar
Capital from conducting any trade or business. See "Description of
Notes -- Covenants -- Business Activities of Globalstar Capital." Financial data
of Globalstar Capital has not been provided herein as Globalstar Capital has no
operations.
GLOBALSTAR, L.P.
(In thousands, except per partnership interest amounts)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1994 CUMULATIVE
---------------------------------
PRE-CAPITAL
SUBSCRIPTION PERIOD(1) MARCH 23 MARCH 23, 1994
--------------------------- (COMMENCEMENT YEARS ENDED DECEMBER (COMMENCEMENT
YEAR ENDED JANUARY 1 TO OF OPERATIONS) TO 31, OF OPERATIONS) TO
DECEMBER 31, MARCH 22, DECEMBER 31, --------------------- DECEMBER 31,
1993 1994 1994 1995 1996 1996
------------ ------------ ----------------- --------- --------- -----------------
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues........................ $ -- $ -- $ -- $ -- $ -- $ --
Operating expenses.............. 11,510 6,872 28,027 80,226 61,025 169,278
Interest income................. -- -- 1,783 11,989 6,379 20,151
Net loss applicable to ordinary
partnership interests......... 11,510 6,872 26,244 68,237 71,969 166,450
Net loss per weighted average
ordinary partnership
interest outstanding.......... 0.73 1.50 1.53
Cash distributions per ordinary
partnership interest.......... -- -- --
OTHER DATA:
Deficiency of earnings to cover
fixed charges(2).............. N/A N/A 71,969
CASH FLOW DATA:
Used in operating activities.... -- -- (23,052) (38,368) (46,622) (108,042)
Used in investing activities.... -- -- (50,549) (280,345) (384,264) (715,158)
Provided by partners' capital
transactions.................. -- -- 147,161 318,630 284,714 750,505
Provided by (used in) other
financing activities.......... -- -- -- (1,875) 95,750 93,875
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents........................................ $ 21,180 $ 71,602 $ 73,560
Working capital (deficiency)..................................... (53,481) 17,687 35,423
Globalstar System under construction............................. 891,033 400,257 71,996
Total assets..................................................... 942,913 505,391 151,271
Vendor financing liability....................................... 130,694 42,219 --
Borrowings under long-term revolving credit facility............. 96,077 -- --
Redeemable preferred partnership interests....................... 302,037 -- --
Ordinary partners' capital....................................... 315,186 386,838 112,944
</TABLE>
- ---------------
(1) Reflects certain costs incurred by Loral and Qualcomm prior to March 23,
1994, which were reimbursed by Globalstar through a capital subscription
credit or agreement for repayment in connection with the $275.0 million
capital subscription and commencement of Globalstar's operations on March
23, 1994.
(2) The ratio of earnings to fixed charges is not meaningful as Globalstar is in
the development stage and, accordingly, has incurred operating losses.
16
<PAGE> 23
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The executive officers and directors of Globalstar Capital are as follows:
Bernard L. Schwartz, Chairman and Chief Executive officer; Michael B. Targoff,
President, Chief Operating Officer and Director; Michael P. DeBlasio, Senior
Vice President, Chief Financial Officer and Director; Nicholas C. Moren, Vice
President and Treasurer; and Harvey B. Rein, Vice President and Controller.
Officers and directors of Globalstar Capital are not compensated for such
services.
GOVERNANCE
Globalstar is governed by the General Partners' Committee, consisting of
four members appointed by Loral/Qualcomm Satellite Services, L.P. ("LQSS"), the
managing general partner of Globalstar, two of whom are not affiliated with
Globalstar. Loral is the indirect general partner of LQSS. The current members
of the Committee are Mr. Schwartz, Mr. Targoff, Sir Ronald Grierson and A.
Robert Towbin. Members of the Committee are not compensated for such services.
DESCRIPTION OF NOTES
The following summary of certain provisions of the Indenture does not
purport to be complete and is qualified in its entirety by reference to the
Indenture, including the definitions therein of certain terms used below. A copy
of the proposed forms of Indenture and Registration Rights Agreement may be
obtained by contacting Globalstar at 3200 Zanker Road, P.O. Box 640670, San
Jose, California 95164-0670, Attention: Stephen C. Wright. The definitions of
certain terms used in the following summary are set forth below under
"-- Definitions."
GENERAL
The Notes were issued pursuant to the Indenture among Globalstar and
Globalstar Capital, as joint and several obligors, and The Bank of New York, as
trustee (the "Trustee"), in a private transaction that was not subject to the
registration requirements of the Securities Act. The terms of the Notes include
those stated in the Indenture and those made part of the Indenture by reference
to the Trust Indenture Act of 1939 (the "Trust Indenture Act"). The Notes are
subject to all such terms, and Holders of Notes are referred to the Indenture
and the Trust Indenture Act for a statement thereof.
The Notes are unsecured senior obligations of the Issuers and will rank
senior in right of payment to any existing and future subordinated Debt of the
Issuers, and pari passu in right of payment with all existing and future senior
Debt of the Issuers. As of December 31, 1996, on a pro forma basis after giving
effect to the issuance of the Notes, the Notes would have ranked senior to no
Debt (excluding the CPEOs) and would have ranked pari passu with approximately
$226.8 million of Debt of the Issuers.
As of the date of this Prospectus, Globalstar has no Subsidiaries other
than Globalstar Capital J.S.C. Global Tel, a Russian company, and a Transitory
Equipment Subsidiary in Australia. If Globalstar creates or acquires any
Subsidiary in the future, such Subsidiary will be required to guarantee the
Notes unless such Subsidiary is a Transitory Equipment Subsidiary or is
designated by Globalstar as an Unrestricted Subsidiary. Any such Unrestricted
Subsidiaries will not be subject to the restrictive covenants contained in the
Indenture.
PRINCIPAL, MATURITY AND INTEREST
The Notes are unsecured senior obligations of the Issuers, will be limited
to $500 million aggregate principal amount and will mature on February 15, 2004.
The Notes bear interest at the rate of 11 3/8% per annum, payable semi-annually
on February 15 and August 15 of each year, commencing August 15, 1997, to the
Person in whose name the Note (or any predecessor Note) is registered at the
close of business on the preceding February 1 or August 1, as the case may be.
Interest on the Notes will accrue from the most recent date to which interest
has been paid or, if no interest has been paid, from February 19, 1997. Interest
on the
17
<PAGE> 24
Notes will be computed on the basis of a 360-day year of twelve 30-day months.
The Notes were issued in denominations of $1,000 and integral multiples thereof.
OPTIONAL REDEMPTION
The Notes are not redeemable at the Issuers' option prior to February 15,
2002. Thereafter, the Notes are subject to redemption at the option of the
Issuers, in whole or in part, at any time or from time to time, upon not less
than 30 nor more than 60 days' prior notice, at the redemption prices (expressed
as percentages of principal amount) set forth below, plus accrued and unpaid
interest and Liquidated Damages (if any) thereon to the applicable redemption
date (subject to the right of Holders of record on the relevant record date to
receive interest and Liquidated Damages (if any) due on the relevant interest
payment date), if redeemed during the twelve-month period beginning on February
15 of the years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
------------------------------------------------------------------ ----------
<S> <C>
2002.............................................................. 105.688%
2003.............................................................. 102.844
</TABLE>
If less than all of the Notes are to be redeemed at any time, selection of
Notes for redemption will be made by the Trustee in compliance with the
requirements of the principal national securities exchange, if any, on which the
Notes are listed or, if the Notes are not so listed, on a pro rata basis, by lot
or by such method as the Trustee shall deem fair and appropriate; provided,
however, that no Note 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. If any Note is to be redeemed in part only, the notice of
redemption that relates to such Note shall state the portion of the principal
amount thereof to be redeemed. A new Note in principal amount equal to the
unredeemed portion thereof will be issued in the name of the Holder thereof upon
cancellation of the original Note. On and after the redemption date, interest
will cease to accrue on Notes or portions of them called for redemption.
CHANGE OF CONTROL
Upon the occurrence of a Change of Control, each Holder of Notes shall have
the right to require that the Issuers repurchase such Holder's Notes at a
purchase price in cash equal to 101% of the principal amount thereof plus
accrued and unpaid interest and Liquidated Damages (if any) to the date of
purchase (subject to the right of Holders of record on the relevant record date
to receive interest and Liquidated Damages (if any) due on the relevant interest
payment date).
"Change of Control" means:
(i) the sale, lease or transfer, in one transaction or a series of
related transactions, of all or substantially all the assets of Globalstar
and the Restricted Subsidiaries;
(ii) the adoption of a plan relating to the liquidation or dissolution
of Globalstar or Globalstar Capital;
(iii) one or more Dispositions which cause Loral's direct and indirect
equity interest in Globalstar to be reduced by more than 30% as compared to
its direct and indirect equity interest in Globalstar as of December 31,
1996; or
(iv) the first day on which:
(a) Globalstar fails to own, of record and beneficially, 100% of
the equity interests and voting stock of Globalstar Capital; or
(b) Loral fails to be, or, directly or indirectly, fails solely to
control, the sole managing general partner of Globalstar.
Notwithstanding clauses (i), (ii) and (iv)(b) above, neither the
acquisition by GTL, Loral or any wholly owned subsidiary of Loral of a majority
of the partnership interests in, or substantially all the assets of, Globalstar,
nor the merger of Globalstar with and into GTL, Loral or any wholly owned
subsidiary of Loral
18
<PAGE> 25
shall constitute a change in control; provided, however, that with respect to
clause (iv)(b), Loral continues to control, or is, the corporate successor to
Globalstar.
"Disposition" means (i) the sale, transfer or other conveyance by Loral or
any of its Subsidiaries (other than to a wholly owned subsidiary of Loral) of
(a) Globalstar partnership interests or (b) equity interests in any entity (an
"intermediate entity") which owns, directly or indirectly, Globalstar
partnership interests or (ii) the issue and sale by any such intermediate entity
of its equity securities to one or more third parties if and to the extent the
proceeds of such issue and sale are distributed by such intermediate entity to
Loral or any of its Subsidiaries.
Within 30 days following any Change of Control, the Issuers shall mail a
notice to each Holder with a copy to the Trustee stating: (i) that a Change of
Control has occurred and that such Holder has the right to require the Issuers
to purchase such Holder's Notes at a purchase price in cash equal to 101% of the
principal amount thereof plus accrued and unpaid interest and Liquidated Damages
(if any) to the date of purchase (subject to the right of Holders of record on
the relevant record date to receive interest and Liquidated Damages (if any) on
the relevant interest payment date); (ii) the circumstances and relevant facts
regarding such Change of Control (including information with respect to pro
forma historical income, cash flow and capitalization, each after giving effect
to such Change of Control); (iii) the repurchase date (which shall be no earlier
than 30 days nor later than 60 days from the date such notice is mailed); and
(iv) the instructions determined by the Issuers, consistent with the covenant
described hereunder, that a Holder must follow in order to have its Notes
purchased.
The Issuers shall comply, to the extent applicable, with the requirements
of Section 14(e) of the Exchange Act and any other securities laws or
regulations in connection with the repurchase of Notes pursuant to the covenant
described hereunder. To the extent that the provisions of any securities laws or
regulations conflict with the provisions of the covenant described hereunder,
the Issuers shall comply with the applicable securities laws and regulations and
shall not be deemed to have breached their obligations under the covenant
described hereunder by virtue thereof.
The Change of Control purchase feature is a result of negotiations between
the Issuers and the Initial Purchasers. Management has no present intention and
is not aware that Loral has any present intention to engage in a transaction
involving a Change of Control. Subject to the limitations discussed below, the
Issuers or Loral could, in the future, enter into certain transactions,
including, dispositions, acquisitions, refinancings or other recapitalizations,
that would not constitute a Change of Control under the Indenture, but that
could change the ownership, increase the amount of indebtedness outstanding or
otherwise affect Globalstar's capital structure or credit ratings. Restrictions
on the ability of the Issuers to Incur additional Debt are contained in the
covenants described under "-- Covenants -- Limitation on Consolidated Debt" and
"-- Covenants -- Limitation on Liens". Such restrictions can only be waived with
the consent of the Holders of a majority in principal amount of the Notes then
outstanding. Except for the limitations contained in such covenants, however,
the Indenture will not contain any covenants or provisions that may afford
Holders of the Notes protection in the event of a highly leveraged transaction.
Future indebtedness of the Issuers may contain prohibitions on the
occurrence of certain events that would constitute a Change of Control or
require such indebtedness to be repurchased upon a Change of Control. Moreover,
the exercise by the Holders of their right to require the Issuers to repurchase
the Notes could cause a default under such indebtedness, even if the Change of
Control itself does not, due to the financial effect of such repurchase on
Globalstar. Finally, the Issuers' ability to pay cash to the Holders of Notes
following the occurrence of a Change of Control may be limited by the Issuers'
then existing financial resources. There can be no assurance that sufficient
funds will be available when necessary to make any required repurchases. The
provisions under the Indenture relative to the Issuers' obligation to make an
offer to repurchase the Notes as a result of a Change of Control may be waived
or modified with the written consent of the Holders of a majority in principal
amount of the Notes.
19
<PAGE> 26
ASSET DISPOSITIONS
The Issuers may not, and may not permit any Restricted Subsidiary to,
directly or indirectly, make any Asset Disposition unless: (i) Globalstar,
Globalstar Capital or such Restricted Subsidiary, as the case may be, receives
consideration at the time of such Asset Disposition at least equal to the fair
market value (including as to the value of all non-cash consideration) of the
shares and assets subject to such Asset Disposition, as determined by the
General Partners' Committee of Globalstar in good faith and evidenced by a
resolution filed with the Trustee; (ii) at least 80% of the consideration
thereof received by Globalstar, Globalstar Capital or such Restricted
Subsidiary, as the case may be, consists of (a) cash or Marketable Securities or
(b) the assumption of Debt (other than Subordinated Obligations) of Globalstar,
Globalstar Capital or such Restricted Subsidiary and the release of the Issuers
and the Restricted Subsidiaries, as applicable, from all liability on the Debt
assumed; and (iii) all Net Available Proceeds, less any amounts invested within
180 days of such disposition in assets that comply with the covenant described
under "-- Covenants -- Business Activities", are applied within 180 days of such
disposition (1) first, to the permanent repayment or reduction of Debt then
outstanding under any Bank Credit Agreement or Vendor Financing Facility, to the
extent such agreement or facility would require such application or prohibit
payments pursuant to the following clause (2), (2) second, to the extent of
remaining Net Available Proceeds, to make an Offer to Purchase outstanding Notes
at 100% of their principal amount plus accrued and unpaid interest and
Liquidated Damages (if any) to the date of purchase thereon and, to the extent
required by the terms thereof, any other Debt of Globalstar, Globalstar Capital
or a Restricted Subsidiary that ranks pari passu with the Notes at a price no
greater than 100% of the principal amount thereof plus accrued and unpaid
interest to the date of purchase and (3) third, to the extent of any remaining
Net Available Proceeds following the completion of the Offer to Purchase, to the
repayment of other Debt of Globalstar or Debt of a Restricted Subsidiary, to the
extent permitted under the terms thereof. To the extent any Net Available
Proceeds remain after such uses, Globalstar and the Restricted Subsidiaries may
use such amounts for any purposes not prohibited by the Indenture.
Notwithstanding the foregoing, these provisions shall not apply to any Asset
Disposition which constitutes a transfer, conveyance, sale, lease or other
disposition of all or substantially all of Globalstar's properties or assets as
described under "-- Covenants -- Merger, Consolidation or Sale of Assets".
The Issuers shall comply, to the extent applicable, with the requirements
of Section 14(e) of the Exchange Act and any other securities laws or
regulations in connection with the repurchase of Notes pursuant to this
covenant. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this covenant, the Issuers shall comply
with the applicable securities laws and regulations and shall not be deemed to
have breached their obligations under this covenant by virtue thereof. The
provisions under the Indenture relative to the Issuers' obligation to make an
Offer to Purchase the Notes as described in this covenant may be waived or
modified with the written consent of the Holders of a majority in principal
amount of the Notes.
COVENANTS
The Indenture contains, among others, the following covenants:
LIMITATION ON CONSOLIDATED DEBT
The Issuers may not, and may not permit any Restricted Subsidiary to, Incur
any Debt; provided, however, that the Issuers or any Restricted Subsidiary may
Incur Debt so long as the ratio of (i) the aggregate consolidated principal
amount of Debt of the Issuers and the Restricted Subsidiaries outstanding as of
the most recent available quarterly or annual balance sheet, after giving pro
forma effect to the Incurrence of such Debt and any other Debt Incurred since
such balance sheet date and the receipt and application of the proceeds thereof
to (ii) Consolidated Cash Flow Available for Fixed Charges for the four full
fiscal quarters ending on the date of such balance sheet determined on a pro
forma basis as if any such Debt had been Incurred and the proceeds thereof had
been applied at the beginning of such four fiscal quarters, would be less than
4.0 to 1.0 (the "Debt Coverage Ratio").
20
<PAGE> 27
Notwithstanding the foregoing limitation, the Issuers and any Restricted
Subsidiary may Incur the following:
(i) Debt Incurred under any one or more Bank Credit Agreements, Vendor
Financing Facilities or other agreements or arrangements to finance the
Build-out; provided, however, that Debt Incurred pursuant to this clause
(i), other than Debt Incurred pursuant to a Bank Credit Agreement or a
Vendor Financing Facility, shall not have a Stated Maturity on or earlier
than the Stated Maturity of the Notes, and shall not be mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or be
redeemable at the option of the holder thereof, in whole or in part, on or
prior to the Stated Maturity of the Notes;
(ii) Debt under any one or more Bank Credit Agreements or other
agreements or arrangements to finance working capital requirements of
Globalstar and any Refinancing Debt in respect of such Debt; provided,
however, at the time of the Incurrence of such Debt and after giving effect
thereto, the aggregate principal amount of all Debt Incurred pursuant to
this clause (ii) and then outstanding shall not exceed $100 million;
(iii) Debt owed by the Issuers to any Wholly-Owned Restricted
Subsidiary or Debt owed by any Wholly-Owned Restricted Subsidiary to the
Issuers or to another Wholly-Owned Restricted Subsidiary; provided,
however, that upon either (x) the transfer or other disposition by such
Wholly-Owned Restricted Subsidiary or the Issuers of any Debt so permitted
to a Person other than the Issuers or another Wholly-Owned Restricted
Subsidiary or (y) the issuance (other than directors' qualifying shares),
sale, lease, transfer or other disposition of shares of Capital Stock
(including by consolidation or merger) of such Wholly-Owned Restricted
Subsidiary to a Person other than the Issuers or another such Wholly-Owned
Restricted Subsidiary, the provisions of this clause (iii) shall no longer
be applicable to such Debt and such Debt shall be deemed to have been
Incurred by the issuer thereof at the time of such issuance, sale, lease,
transfer or other disposition;
(iv) Refinancing Debt Incurred to Refinance Debt Incurred pursuant to
the first paragraph of this covenant or pursuant to clause (i), (vi) or
(vii) or this clause (iv) of this paragraph;
(v) Debt consisting of Permitted Interest Rate and Currency Protection
Agreements;
(vi) Debt represented by the Notes;
(vii) Debt outstanding on the Issue Date (other than Debt described in
clause (i), (ii), (iii), (vi) or (viii) of this paragraph);
(viii) Debt (including Capital Lease Obligations) of Globalstar or any
Restricted Subsidiary financing the purchase, lease or improvement of
property (real or personal) or equipment (whether through the direct
purchase of assets or the Capital Stock of any Person owning such assets),
in each case Incurred no more than 180 days after such purchase, lease or
improvement of such property and any Refinancing Debt in respect of such
Debt, provided, however, that (x) the amount of such Debt (net of original
issue discount) does not exceed, at the time initially Incurred, 90% of the
fair market value of such acquired property or equipment and (y) at the
time of the Incurrence of such Debt and after giving effect thereto, the
aggregate amount of all Debt Incurred pursuant to this clause (viii) and
then outstanding shall not exceed $100 million;
(ix) Debt consisting of performance and other similar bonds and
reimbursement obligations Incurred in the ordinary course of business
securing the performance of contractual, franchise or license obligations
of the Issuers or a Restricted Subsidiary, or in respect of a letter of
credit obtained to secure such performance; and
(x) Debt in an aggregate principal amount which, together with all
other Debt of the Issuers and the Restricted Subsidiaries outstanding on
the date of such Incurrence (other than Debt permitted by clauses (i)
through (ix) above or the first paragraph of this covenant) does not exceed
$50 million.
21
<PAGE> 28
For purposes of determining compliance with this covenant, in the event
that an item of Debt meets the criteria of more than one of the types of Debt
the Issuers and the Restricted Subsidiaries are permitted to Incur, the Issuers
or such Restricted Subsidiary, as the case may be, shall have the right, in
their sole discretion, to classify such item of Debt at the time of its
Incurrence and shall only be required to include the amount and type of such
Debt under the clause permitting the Debt as so classified.
LIMITATION ON LIENS
The Issuers may not, and may not permit any Restricted Subsidiary, directly
or indirectly, to Incur or permit to exist any Lien on any asset now owned or
hereafter acquired, or any income or profits therefrom or assign or convey any
right to receive income therefrom, except for the following Liens (each, a
"Permitted Lien"):
(i) Liens to secure up to $500 million of Debt permitted to be
incurred under the Indenture so long as effective provision is made to
secure the Notes equally and ratably with (or prior to) the obligation so
secured;
(ii) Liens in favor of Holders of the Notes;
(iii) Liens in favor of the Issuers;
(iv) Liens on property or shares of Capital Stock of another Person at
the time such other Person becomes a Subsidiary of such Person; provided,
however, that such Liens are not created, incurred or assumed in connection
with, or in contemplation of, such other Person becoming such a Subsidiary;
provided further, however, that such Lien may not extend to any other
property owned by such Person or any of its Subsidiaries (other than
inventory and receivables generated in the ordinary course of business and
substitute property);
(v) Liens on property at the time such Person or any of its
Subsidiaries acquires such property, including any acquisition by means of
a merger or consolidation with or into such Person or a Subsidiary of such
Person; provided, however, that such Liens are not created, incurred or
assumed in connection with, or in contemplation of, such acquisition;
provided further, however, that the Liens may not extend to any other
property owned by such Person or any of its Subsidiaries;
(vi) Liens securing Debt Incurred pursuant to clause (viii) of the
second paragraph of the covenant described under "-- Limitation on
Consolidated Debt"; provided, however, that the Lien may not extend to any
assets owned by an Issuer or any Restricted Subsidiary other than (a) the
assets being financed or refinanced and income and proceeds therefrom and
(b) any other assets of such obligor securing other Debt of such obligor to
the same secured party;
(vii) 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;
(viii) Liens existing on the Issue Date;
(ix) 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, however, that any reserve or other appropriate provision as shall
be required in conformity with GAAP shall have been made therefor;
(x) Liens incurred in the ordinary course of business of the Issuers
and the Restricted Subsidiaries with respect to obligations that do not
exceed $10.0 million at any one time outstanding and that:
(a) are not incurred in connection with the borrowing of money or
the obtaining of advances or credit (other than trade credit in the
ordinary course of business); and
(b) do not in the aggregate materially detract from the value of
the property or materially impair the use thereof in the operation of
business by the Issuers and the Restricted Subsidiaries.
22
<PAGE> 29
LIMITATION ON RESTRICTED PAYMENTS
The Issuers may not, and may not permit any Restricted Subsidiary, directly
or indirectly, to make a Restricted Payment if at the time such Issuer or such
Restricted Subsidiary makes such Restricted Payment: (1) a Default shall have
occurred and be continuing (or would result therefrom); (2) the Issuers are not
able to Incur an additional $1.00 of Debt pursuant to the first paragraph of the
covenant described under "-- Limitation on Consolidated Debt"; or (3) the
aggregate amount of such Restricted Payment and all other Restricted Payments
since the Issue Date would exceed the sum of:
(a) 50% of the Consolidated Net Income of Globalstar accrued during
the period (treated as one accounting period) from the beginning of the
fiscal quarter immediately following the fiscal quarter during which the
Issue Date occurs to the end of the most recent fiscal quarter for which
internal financial statements are available at the time of such Restricted
Payment (or, in case such Consolidated Net Income shall be a deficit, minus
100% of such deficit);
(b) the aggregate Net Cash Proceeds received by Globalstar from the
issuance or sale of its Capital Stock (other than Disqualified Stock)
subsequent to the Issue Date (other than an issuance or sale to a
Subsidiary of Globalstar and other than an issuance or sale to an employee
stock ownership plan or to a trust established by Globalstar or any of its
Subsidiaries for the benefit of their employees);
(c) the amount by which Debt of Globalstar is reduced on the balance
sheet of Globalstar upon the conversion or exchange (other than by a
Subsidiary of Globalstar) subsequent to the Issue Date of any Debt of
Globalstar convertible or exchangeable for Capital Stock (other than
Disqualified Stock) of Globalstar (less the amount of any cash, or the fair
value of any other property, distributed by Globalstar upon such conversion
or exchange); and
(d) an amount equal to the sum of (i) the net reduction in Investments
in Unrestricted Subsidiaries resulting from dividends, repayments of loans
or advances or other transfers of assets, in each case to Globalstar or any
Restricted Subsidiary from Unrestricted Subsidiaries, and (ii) the portion
(proportionate to Globalstar's equity interest in such Subsidiary) of the
fair market value of the net assets of an Unrestricted Subsidiary at the
time such Unrestricted Subsidiary is designated a Restricted Subsidiary;
provided, however, that the foregoing sum shall not exceed, in the case of
any Unrestricted Subsidiary, the amount of Investments previously made (and
treated as a Restricted Payment) by Globalstar or any Restricted Subsidiary
in such Unrestricted Subsidiary.
Notwithstanding the foregoing, Globalstar may (i) subject to clause (vi)
below, pay any dividend on Capital Stock of any class within 60 days after the
declaration thereof if, on the date when the dividend was declared, Globalstar
could have paid such dividend in accordance with the foregoing provisions; (ii)
repurchase any shares of its Capital Stock or options to acquire its Capital
Stock from Persons who were formerly officers or employees of Globalstar;
provided however, that the aggregate amount of all such repurchases made
pursuant to this clause (ii) shall not exceed $2 million, plus the aggregate
cash proceeds received by Globalstar since the Issue Date of its Capital Stock
or options to acquire its Capital Stock to members, officers, managers and
employees of Globalstar or any of its Subsidiaries; (iii) Refinance, and permit
its Restricted Subsidiaries to Refinance, any Debt otherwise permitted to be
Refinanced by clause (iv) of the second paragraph under "-- Limitation on
Consolidated Debt" above; (iv) so long as Globalstar is treated as a partnership
for U.S. federal income tax purposes, make distributions in respect of members'
or partners' income tax liability with respect to Globalstar in an amount not to
exceed the Tax Amount; (v) make distributions to GTL to pay GTL's ordinary and
reasonable operating expenses related to Globalstar, as set forth in an
Officers' Certificate delivered to the Trustee; (vi) pay any scheduled dividend
on Special Preferred Obligations; provided, however, that at the time of payment
of any such dividend (other than a dividend paid only by distributions of
additional Special Preferred Obligations), no other Default shall have occurred
and be continuing (or result therefrom); (vii) make any Restricted Payment by
exchange for, or out of the proceeds of the substantially concurrent sale of, or
capital contribution in respect of, Capital Stock of Globalstar (other than
Disqualified Stock and other than Capital Stock issued or sold to a Subsidiary
of Globalstar or an employee stock ownership plan or to a trust established by
Globalstar or any of its
23
<PAGE> 30
Subsidiaries for the benefit of their employees); (viii) contribute its
Investment in Globaltel Russia to an Unrestricted Subsidiary; and (ix) make
other Restricted Payments in an aggregate amount not to exceed $10 million.
Any Restricted Payment made pursuant to clauses (ii), (iii), (iv), (vi),
(vii), (viii) and (ix) of the immediately preceding paragraph shall be excluded
from the calculation of the aggregate amount of Restricted Payments made since
the Issue Date; provided, however, that the Net Cash Proceeds from the issuance
of Capital Stock pursuant to clauses (ii) and (vii) of the immediately preceding
paragraph shall be excluded from the calculation of amounts under clause (b) of
the second preceding paragraph.
DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES
The Issuers may not, and may not permit any Restricted Subsidiary, directly
or indirectly, to create or otherwise cause or suffer to exist or become
effective any encumbrance or restriction on the ability of any Restricted
Subsidiary to:
(i) pay dividends or make any other distributions to the Issuers or
any of their Restricted Subsidiaries on its Capital Stock or with respect
to any other interest or participation in, or measured by, its profits;
(ii) pay any indebtedness owed to the Issuers or any Restricted
Subsidiary;
(iii) make loans or advances to the Issuers or any Restricted
Subsidiary; or
(iv) transfer any of its properties or assets to the Issuers or any
Restricted Subsidiary.
Notwithstanding the foregoing, the Issuers may, and may permit any
Restricted Subsidiary to, suffer to exist any such encumbrance or restriction
(a) pursuant to any agreement in effect on the Issue Date; (b) pursuant to an
agreement relating to any Acquired Debt, which encumbrance or restriction is not
applicable to any Person, or the properties or assets of any Person, other than
the Person so acquired and its Subsidiaries; (c) pursuant to an agreement
effecting a Refinancing of Debt Incurred pursuant to an agreement referred to in
clause (a) or (b) above or clause (d) below, provided, however, that the
provisions contained in such Refinancing agreement relating to such encumbrance
or restriction are no more restrictive taken as a whole (as determined in good
faith by the Chief Financial Officer of Globalstar) than the provisions
contained in the predecessor agreement the subject thereof; (d) in the case of
clause (iii) above, consisting of restrictions contained in any security
agreement (including a Capital Lease Obligation) securing Debt of the Issuers or
a Restricted Subsidiary otherwise permitted under the Indenture, but only to the
extent such encumbrances or restrictions restrict the transfer of the property
subject to such security agreement; (e) in the case of clause (iv) above,
consisting of customary nonassignment provisions entered into in the ordinary
course of business in leases governing leasehold interests, but only to the
extent such provisions restrict the transfer of the lease or the property
thereunder; (f) with respect to a Restricted Subsidiary, imposed pursuant to an
agreement which has been entered into for the sale or disposition of all or
substantially all of the Capital Stock or assets of such Restricted Subsidiary;
provided however, that after giving effect to such transaction no Default shall
have occurred or be continuing, that such restriction terminates if such
transaction is not consummated and that such consummation or abandonment of such
transaction occurs within one year of the date such agreement was entered into;
(g) imposed pursuant to applicable law or regulations; (h) imposed pursuant to
the Indenture and the Notes; or (i) consisting of any restriction on the sale or
other disposition of assets or property securing Debt as a result of a Permitted
Lien on such assets or property.
LIMITATION ON ISSUANCES AND SALES OF CAPITAL STOCK OF RESTRICTED
SUBSIDIARIES
The Issuers may not, and may not permit any Restricted Subsidiary to,
issue, transfer, convey, sell or otherwise dispose of any shares of Capital
Stock of a Restricted Subsidiary or securities convertible or exchangeable into,
or options, warrants, rights or any other interest with respect to, Capital
Stock of a Restricted Subsidiary to any person other than Globalstar, Globalstar
Capital or a Wholly-Owned Restricted Subsidiary except (i) in a transaction
consisting of a sale of all the Capital Stock of such Restricted Subsidiary and
that complies with the provisions described under "-- Asset Dispositions" above
to the extent such
24
<PAGE> 31
provisions apply; (ii) if required, the issuance, transfer, conveyance, sale or
other disposition of directors' qualifying shares; (iii) in a transaction in
which, or in connection with which, an Issuer or a Restricted Subsidiary
acquires at the same time sufficient Capital Stock of such Restricted Subsidiary
to at least maintain the same percentage ownership interest it had prior to such
transaction; and (iv) Disqualified Stock of a Restricted Subsidiary Incurred to
Refinance Disqualified Stock of such Restricted Subsidiary; provided, however,
that the amounts of the redemption obligations of such Disqualified Stock shall
not exceed the amounts of the redemption obligations of, and such Disqualified
Stock shall have redemption obligations no earlier than those required by, the
Disqualified Stock being Refinanced.
TRANSACTIONS WITH AFFILIATES
The Issuers may not, and may not permit any Restricted Subsidiary, directly
or indirectly, to enter into any transactions (or series of related
transactions) with an Affiliate or Related Person of the Issuers (other than the
Issuers or a Wholly-Owned Restricted Subsidiary) (an "Affiliate Transaction")
unless:
(i) such Affiliate Transaction is on terms that are no less favorable
to Globalstar, Globalstar Capital or the relevant Restricted Subsidiary
than those that would have been obtained in a comparable transaction by
Globalstar, Globalstar Capital or such Restricted Subsidiary, as the case
may be, with an unrelated Person; and
(ii) Globalstar delivers to the Trustee:
(a) with respect to any Affiliate Transaction involving aggregate
consideration in excess of $1 million (other than financing transactions
that are not vendor financing transactions pursuant to a Vendor
Financing Facility) and entered into in connection with the Build-out, a
certificate of the Chief Executive Officer of Globalstar to the effect
that a majority of the disinterested limited partners of Globalstar have
approved such Affiliate Transaction; provided, however, that there is at
least one disinterested limited partner at the time of such Affiliate
Transaction; provided further, however, that any limited partner
receiving any compensation in respect of its approval shall be deemed
not to be a disinterested limited partner; or
(b)(1) with respect to any Affiliate Transaction involving
aggregate consideration in excess of $1 million, a certificate of the
Chief Executive Officer of Globalstar to the effect that such Affiliate
Transaction complies with clause (i) above; and (2) with respect to any
Affiliate Transaction involving aggregate consideration in excess of $10
million, an opinion as to the fairness to Globalstar, Globalstar Capital
or such Restricted Subsidiary, as the case may be, of such Affiliate
Transaction from a financial point of view issued by an Independent
Financial Advisor or, with respect to telecommunications-related
matters, a recognized expert in the satellite telecommunications
industry;
provided, however, that the following shall be deemed not to be Affiliate
Transactions:
(1) employee compensation arrangements entered into in the ordinary
course of business and approved by the General Partners' Committee of
Globalstar;
(2) transactions solely between or among the Issuers and the
Restricted Subsidiaries;
(3) Restricted Payments permitted by the covenant described under
"-- Limitation on Restricted Payments";
(4) Investments by an Affiliate or Related Person of Globalstar or
Globalstar Capital in the Capital Stock (other than Disqualified Stock) of
Globalstar or any Restricted Subsidiary; and
(5) an Affiliate or Related Person of the Issuers acting as agent for
the placement or acquisition of launch services or insurance on behalf of
the Issuers or any Restricted Subsidary.
25
<PAGE> 32
BUSINESS ACTIVITIES
The Issuers may not, and may not permit any Restricted Subsidiary to,
engage in any business other than that which is related to the design,
development, procurement, installation, operation and ownership of
telecommunications systems and businesses.
MAINTENANCE OF INSURANCE
The Issuers shall:
(i) maintain, with respect to each satellite in the Globalstar System,
for the period beginning at least 45 days prior to, and at all times up to
and including, the launch of such satellite, launch insurance with respect
to such satellite in an amount sufficient to provide for the construction,
launch and insurance of a replacement satellite to be payable in the event
of a launch failure; and
(ii) in the event that more than 16 of Globalstar's satellites have
ceased Operating for 90 consecutive days and fewer than 44 satellites are
Operating as part of the Globalstar System (such an event, an "In-orbit
Insurance Event"), obtain (within 60 days of such In-orbit Insurance
Event), and thereafter maintain, in-orbit insurance in an amount sufficient
to provide for the construction, launch and insurance of replacement
satellites for at least 16 of Globalstar's satellites still operating or,
if such in-orbit insurance in such amount is not then commercially
available from traditional insurance providers, such lesser amount as is so
available.
The obligation of the Issuers to maintain insurance pursuant to this
covenant may be satisfied by any combination of:
(i) insurance commitments obtained from any recognized insurance
provider;
(ii) insurance commitments obtained from any other entity if the
General Partners' Committee of Globalstar determines in good faith that
such entity is creditworthy and otherwise capable of bearing the financial
risk of providing such insurance;
(iii) unrestricted cash segregated and maintained by Globalstar in a
segregated account (the "Insurance Account") solely for disbursement in
accordance with the last paragraph of this covenant ("Cash Insurance"); and
(iv) in respect of the insurance described in clause (i) of the
preceding paragraph, self-insurance for the launch of up to 12 satellites;
provided, however, that no earlier than 60 days prior to the scheduled
launch of any such satellites:
(a) the Issuers deliver an Officers' Certificate to the Trustee
certifying that they have sufficient committed capital to construct,
launch and insure at least 44 satellites, in addition to the satellites
with respect to which the Issuers are self-insuring; and
(b) the Issuers obtain an opinion from an investment banking firm
that is an Independent Financial Advisor to the effect that the Issuers
would be able to raise sufficient capital in the capital markets to
replace, relaunch and insure such satellites in the event of a failure
to successfully launch such satellites.
Within 30 days following any date on which the Issuers are required to
obtain insurance pursuant to the Indenture, the Issuers will deliver to the
Trustee an insurance certificate certifying the amount of insurance then carried
and an Officers' Certificate stating that such insurance, together with any
other insurance or Cash Insurance maintained by the Issuers, complies with the
Indenture. In addition, the Issuers will cause to be delivered to the Trustee no
less than once each year an insurance certificate setting forth the amount of
insurance then carried, which insurance certificate shall entitle the Trustee
to:
(i) notice of any claim under any such insurance policy; and
(ii) at least 30 days notice from the provider of such insurance prior
to the cancellation of any such insurance.
26
<PAGE> 33
In the event that the Issuers maintain any Cash Insurance in satisfaction of any
part of their obligation to maintain insurance pursuant to this covenant, the
Issuers shall deliver an Officers' Certificate to the Trustee in lieu of any
insurance certificate otherwise required by this covenant.
In the event that the Issuers receive any proceeds of any launch or
in-orbit insurance that they are required to maintain pursuant to this covenant,
such proceeds shall constitute "Insurance Proceeds." In addition, if the Issuers
maintain any Cash Insurance in satisfaction of any part of their obligations to
maintain in-orbit insurance pursuant to this covenant, then upon the occurrence
of the event (i.e., the in-orbit failure) that would have entitled the Issuers
to the payment of insurance had the Issuers purchased insurance from an
insurance provider, the cash maintained in the Insurance Account shall
constitute "Insurance Proceeds." Promptly following the receipt of any Insurance
Proceeds, the Issuers shall apply such Insurance Proceeds in accordance with the
covenant described under "-- Asset Dispositions"; provided, however, that
Insurance Proceeds shall only be required to be so applied to the extent that
the aggregate amount of all Insurance Proceeds received by the Issuers exceeds
$5 million in any 12-month period.
SEC REPORTS
Notwithstanding that the Issuers may not be, or may not be required to
remain, subject to the reporting requirements of Section 13 or 15(d) of the
Exchange Act, the Issuers shall file with the Commission (unless the Commission
will not accept such filing) and provide the Trustee and Holders of the Notes
with such annual reports and such information, documents and other reports as
are specified in Sections 13 and 15(d) of the Exchange Act and applicable to a
U.S. corporation subject to such Sections, such information, documents and other
reports to be so filed and provided at the times specified for the filing of
such information, documents and reports under such Sections.
In addition, for so long as any Notes remain outstanding, the Issuers shall
furnish to the Holders and to securities analysts and prospective investors,
upon their request, the information required to be delivered pursuant to Rule
144A(d)(4) under the Securities Act.
MERGER, CONSOLIDATION OR SALE OF ASSETS
Neither Globalstar nor Globalstar Capital may consolidate with or merge
with or into, or convey, transfer or lease, in one transaction or a series of
transactions, all or substantially all its assets to, any Person; provided,
however, that Globalstar may consolidate with or merge with or into, or convey,
transfer or lease, all or substantially all its assets to, any Person, if (i)
the resulting, surviving or transferee Person (the "Successor Company") shall be
a Person organized and existing under the laws of the United States of America,
any State thereof or the District of Columbia and the Successor Company (if not
Globalstar) shall expressly assume, by an indenture supplemental thereto,
executed and delivered to the Trustee, in form satisfactory to the Trustee, all
the obligations of Globalstar under the Notes and the Indenture; (ii)
immediately after giving effect to such transaction (and treating any Debt which
becomes an obligation of the Successor Company or any Subsidiary as a result of
such transaction as having been Incurred by such Successor Company or such
Subsidiary at the time of such transaction), no Default shall have occurred and
be continuing, (iii) immediately after giving effect to such transaction, the
Successor Company would be able to Incur an additional $1.00 of Debt pursuant to
the terms of the first paragraph of the covenant described under "-- Limitation
on Consolidated Debt"; (iv) immediately after giving effect to such transaction,
the Successor Company shall have Consolidated Net Worth in an amount that is not
less than the Consolidated Net Worth of Globalstar immediately prior to such
transaction; and (v) Globalstar shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such transaction and
such supplemental indenture (if any) comply with the Indenture.
Globalstar may not permit any Subsidiary Guarantor (as defined below) to
consolidate with or merge with or into, or convey, transfer or lease, in one
transaction or a series of transactions, all or substantially all of its assets
to any Person unless: (i) the resulting, surviving or transferee Person (if not
such Subsidiary) shall be a Person organized and existing under the laws of the
jurisdiction under which such Subsidiary was organized or under the laws of the
United States of America, or any State thereof or the District of Columbia,
27
<PAGE> 34
and such Person shall expressly assume, by a guaranty agreement, in a form
satisfactory to the Trustee, all the obligations of such Subsidiary, if any,
under its Subsidiary Guaranty; (ii) immediately after giving effect to such
transaction or transactions on a pro forma basis (and treating any Debt which
becomes an obligation of the resulting, surviving or transferee Person as a
result of such transaction as having been issued by such Person at the time of
such transaction), no Default shall have occurred and be continuing; and (iii)
Globalstar delivers to the Trustee a certificate of an officer and an opinion of
counsel, each stating that such consolidation, merger or transfer and such
guaranty agreement, if any, complies with the Indenture.
The Successor Company shall be the successor to Globalstar and shall
succeed to, and be substituted for, and may exercise every right and power of,
Globalstar under the Indenture, and the predecessor Company (other than in the
case of a lease) shall be released from the obligation to pay the principal of
and interest and Liquidated Damages (if any) on the Notes.
The meaning of the phrase "all or substantially all" as used above varies
according to the facts and circumstances of the subject transaction, has not
clearly established meaning under relevant law and is subject to judicial
interpretation. Accordingly, in certain circumstances, there may be a degree of
uncertainty in ascertaining whether a particular transaction would involve a
disposition of "all or substantially all" of the assets of Globalstar or
Globalstar Capital, and therefore it may be unclear whether the foregoing
provisions are applicable.
FUTURE GUARANTORS
In the event that, after the Issue Date, Globalstar shall acquire or create
a Subsidiary, Globalstar shall cause such Subsidiary (unless such Subsidiary is
a Transitory Equipment Subsidiary or is an Unrestricted Subsidiary) to Guarantee
the Notes on terms and conditions set forth in the Indenture (such Guarantee, a
"Subsidiary Guaranty").
The form of the Subsidiary Guaranty provided by Restricted Subsidiaries
(each, a "Subsidiary Guarantor") is provided for in the Indenture. Each
Subsidiary Guaranty will be limited in amount to an amount not to exceed the
maximum amount that can be guaranteed by the applicable Subsidiary Guarantor
without rendering the Subsidiary Guaranty, as it relates to such Subsidiary
Guarantor, voidable under applicable law relating to fraudulent conveyance or
fraudulent transfer or similar laws affecting the rights of creditors generally.
Upon the sale or other disposition of a Subsidiary Guarantor or the sale or
disposition of all or substantially all the assets of a Subsidiary Guarantor (in
each case other than to Globalstar or an Affiliate of Globalstar) permitted by
the Indenture, such Subsidiary Guarantor will be released and relieved from all
its obligations under its Subsidiary Guaranty.
BUSINESS ACTIVITIES OF GLOBALSTAR CAPITAL
Globalstar Capital shall not engage in any trade or business, and shall
conduct no business activity, other than the Incurrence of Debt permitted by the
covenant described under "-- Limitation on Consolidated Debt" and the issuance
of Capital Stock to Globalstar or any Wholly Owned Restricted Subsidiary and
activities incidental thereto.
EVENTS OF DEFAULT AND REMEDIES
An Event of Default is defined in the Indenture as (i) a default in the
payment of interest or Liquidated Damages (if any) on the Notes when due,
continued for 30 days, (ii) a default in the payment of principal of any Note
when due at its Stated Maturity, upon optional redemption, upon required
repurchase, upon declaration or otherwise, (iii) the failure by the Issuers to
comply with their obligations under "--Covenants--Merger, Consolidation or Sale
of Assets" above, (iv) the failure by the Issuers to comply for 30 days after
notice with any of their obligations in the covenants described above under
"-- Change of Control" (other than a failure to purchase Notes) or "-- Asset
Dispositions" (other than a failure to purchase Notes) or under "--Covenants"
under "--Limitation on Consolidated Debt", "--Limitation on Liens",
"-- Limitation on Restricted Payments", "--Dividend and Other Payment
Restrictions Affecting Subsidiaries", "--Limitation on Issuances and Sales of
Capital Stock of Restricted Subsidiaries", "--Transactions with
28
<PAGE> 35
Affiliates", "--Business Activities", "--Maintenance of Insurance", "--SEC
Reports", "--Future Guarantors" and "--Business Activities of Globalstar
Capital", (v) the failure by the Issuers to comply for 60 days after notice with
their other agreements contained in the Indenture, (vi) Debt of the Issuers or
any Significant Subsidiary is not paid within any applicable grace period after
final maturity or is accelerated by the holders thereof because of a default and
the total amount of such Debt unpaid or accelerated exceeds $10 million (the
"cross acceleration provision"), (vii) certain events of bankruptcy, insolvency
or reorganization of Globalstar, Globalstar Capital or a Significant Subsidiary
(the "bankruptcy provisions"), (viii) any judgment or decree for the payment of
money in excess of $10 million is entered against Globalstar, Globalstar Capital
or a Significant Subsidiary, remains outstanding for a period of 60 days
following such judgment and is not discharged, waived or stayed within 10 days
after notice (the "judgment default provision") or (ix) a Subsidiary Guaranty
ceases to be in full force and effect (other than in accordance with the terms
of such Subsidiary Guaranty) or any Subsidiary Guarantor denies or disaffirms
its obligations under its Subsidiary Guaranty. However, a default under clauses
(iv), (v) and (viii) will not constitute an Event of Default until the Trustee
or the Holders of 25% in principal amount of the outstanding Notes notify the
Issuers of the default and the Issuers do not cure such default within the time
specified after receipt of such notice.
If an Event of Default occurs and is continuing, the Trustee or the Holders
of at least 25% in principal amount of the outstanding Notes may declare the
principal of and accrued but unpaid interest and Liquidated Damages (if any) on
all the Notes to be due and payable. Upon such a declaration, such principal,
interest and Liquidated Damages shall be due and payable immediately. If an
Event of Default relating to certain events of bankruptcy, insolvency or
reorganization of either Issuer occurs and is continuing, the principal of and
interest and Liquidated Damages (if any) on all the Notes will ipso facto become
and be immediately due and payable without any declaration or other act on the
part of the Trustee or any Holders of the Notes. Under certain circumstances,
the Holders of a majority in principal amount of the outstanding Notes may
rescind any such acceleration with respect to the Notes and its consequences.
Subject to the provisions of the Indenture relating to the duties of the
Trustee, in case an Event of Default occurs and is continuing, the Trustee will
be under no obligation to exercise any of the rights or powers under the
Indenture at the request or direction of any of the Holders of the Notes unless
such Holders have offered to the Trustee reasonable indemnity or security
against any loss, liability or expense. Except to enforce the right to receive
payment of principal, premium (if any) or interest or Liquidated Damages (if
any) when due, no Holder of a Note may pursue any remedy with respect to the
Indenture or the Notes unless (i) such Holder has previously given the Trustee
notice that an Event of Default is continuing, (ii) Holders of at least 25% in
principal amount of the outstanding Notes have requested the Trustee to pursue
the remedy, (iii) such Holders have offered the Trustee reasonable security or
indemnity against any loss, liability or expense, (iv) the Trustee has not
complied with such request within 60 days after the receipt thereof and the
offer of security or indemnity and (v) the Holders of a majority in principal
amount of the outstanding Notes have not given the Trustee a direction
inconsistent with such request within such 60-day period. Subject to certain
restrictions, the Holders of a majority in principal amount of the outstanding
Notes are given the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or of exercising any trust or
power conferred on the Trustee. The Trustee, however, may refuse to follow any
direction that conflicts with law or the Indenture or that the Trustee
determines is unduly prejudicial to the rights of any other Holder of a Note or
that would involve the Trustee in personal liability.
The Indenture provides that if a Default occurs and is continuing and is
known to the Trustee, the Trustee must mail to each Holder of the Notes notice
of the Default within 90 days after it occurs. Except in the case of a Default
in the payment of principal of or interest or Liquidated Damages (if any) on any
Note, the Trustee may withhold notice if and so long as a committee of its trust
officers determines that withholding notice is in the interest of the Holders of
the Notes. In addition, Globalstar is required to deliver to the Trustee, within
120 days after the end of each fiscal year, a certificate indicating whether the
signers thereof know of any Default that occurred during the previous year.
Globalstar also is required to deliver to the Trustee, within 30 days after the
occurrence thereof, written notice of any event which would constitute certain
Defaults, their status and what action Globalstar is taking or proposes to take
in respect thereof.
29
<PAGE> 36
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES, INCORPORATORS AND
STOCKHOLDERS
No director, officer, partner (including general partners), employee,
incorporator or stockholder of the Issuers, as such, shall have any liability
for any obligations of the Issuers under the Notes or 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. Such waiver may not be effective to waive liabilities
under the federal securities laws and it is the view of the Commission that such
a waiver is against public policy.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
The Issuers at any time may terminate all their obligations under the Notes
and the Indenture ("legal defeasance"), except for certain obligations,
including those respecting the defeasance trust and obligations to register the
transfer or exchange of the Notes, to replace mutilated, destroyed, lost or
stolen Notes and to maintain a registrar and paying agent in respect of the
Notes. The Issuers at any time may terminate their obligations under "--Change
of Control" and "--Asset Dispositions" and under the covenants described under
"--Covenants" (other than the covenant described under "--Covenants --Merger,
Consolidation and Sale of Assets"), the operation of the cross acceleration
provision, the bankruptcy provisions with respect to Significant Subsidiaries
and the judgment default provision described under "--Events of Default and
Remedies" above and the limitations contained in clauses (iii) and (iv) under
"--Covenants--Merger, Consolidation and Sale of Assets" above ("covenant
defeasance").
The Issuers may exercise their legal defeasance option notwithstanding
their prior exercise of their covenant defeasance option. If the Issuers
exercise their legal defeasance option, payment of the Notes may not be
accelerated because of an Event of Default with respect thereto. If the Issuers
exercise their covenant defeasance option, payment of the Notes may not be
accelerated because of an Event of Default specified in clause (iv), (vi), (vii)
(with respect only to Significant Subsidiaries) or (viii) under "--Events of
Default and Remedies" above or because of the failure of the Issuers to comply
with clause (iii) or (iv) under "--Covenants--Merger, Consolidation and Sale of
Assets" above. If the Issuers exercise their legal defeasance option or their
covenant defeasance option, each Subsidiary Guarantor will be released from all
its obligations with respect to such Subsidiary Guaranty.
In order to exercise either defeasance option, the Issuers must irrevocably
deposit in trust (the "defeasance trust") with the Trustee money or U.S.
Government Obligations for the payment of principal and interest and Liquidated
Damages (if any) on the Notes to redemption or maturity, as the case may be, and
must comply with certain other conditions, including delivery to the Trustee of
an Opinion of Counsel to the effect that holders of the Notes will not recognize
income, gain or loss for Federal income tax purposes as a result of such deposit
and defeasance and will be subject to Federal income tax on the same amounts and
in the same manner and at the same times as would have been the case if such
deposit and defeasance had not occurred (and, in the case of legal defeasance
only, such Opinion of Counsel must be based on a ruling of the Internal Revenue
Service or other change after the Issue Date in applicable Federal income tax
law).
TRANSFER AND EXCHANGE
A Holder may transfer or exchange Notes in accordance with the Indenture.
The Registrar and Trustee may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents and the Issuers may require a
Holder to pay any taxes and fees required by law or permitted by the Indenture.
The Issuers are not required to transfer or exchange any Notes selected for
redemption. Also, the Issuers are not required to transfer or exchange any Notes
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.
AMENDMENT, SUPPLEMENT AND WAIVER
Subject to certain exceptions, the Indenture or the Notes may be amended
with the consent of the Holders of a majority in principal amount of the Notes
then outstanding (including consents obtained in
30
<PAGE> 37
connection with a tender offer or exchange for the Notes) and any past default
or compliance with any provisions may also be waived with the consent of the
Holders of a majority in principal amount of the Notes then outstanding.
However, without the consent of each Holder of an outstanding Note affected
thereby, no amendment may, among other things, (i) reduce the amount of Notes
whose Holders must consent to an amendment, (ii) reduce the rate of or extend
the time for payment of interest or Liquidated Damages (if any) on any Note,
(iii) reduce the principal of or extend the Stated Maturity of any Note, (iv)
reduce the premium payable upon the redemption of any Note or change the time at
which any Note may be redeemed as described under "--Optional Redemption", (v)
make any Note payable in money other than that stated in the Note, (vi) impair
the right of any Holder of the Notes to receive payment of principal of and
interest and Liquidated Damages (if any) on such Holder's Notes on or after the
due dates therefor or to institute suit for the enforcement of any payment on or
with respect to such Holder's Notes, (vii) make any change in the amendment
provisions which require each Holder's consent or in the waiver provisions or
(viii) make any change in any Subsidiary Guaranty that would adversely affect
the the rights of Noteholders.
Without the consent of any Holder of the Notes, the Issuers and Trustee may
amend the Indenture or the Notes to cure any ambiguity, omission, defect or
inconsistency, to provide for the assumption by a successor corporation of the
obligations of Globalstar under the Indenture, to provide for uncertificated
Notes in addition to or in place of certificated Notes (provided that the
uncertificated Notes are issued in registered form for purposes of Section
163(f) of the Code, or in a manner such that the uncertificated Notes are
described in Section 163(f)(2)(B) of the Code), to add guarantees with respect
to the Notes, to release such guarantees, to secure the Notes, to add to the
covenants of the Issuers for the benefit of the Holders of the Notes or to
surrender any right or power conferred upon the Issuers, to make any change that
does not adversely affect the rights of any Holder of the Notes or to comply
with any requirement of the SEC in connection with the qualification of the
Indenture under the Trust Indenture Act.
The consent of the Holders of the Notes is not necessary under the
Indenture to approve the particular form of any proposed amendment. It is
sufficient if such consent approves the substance of the proposed amendment.
After an amendment under the Indenture becomes effective, the Issuers are
required to mail to Holders of the Notes a notice briefly describing such
amendment. However, the failure to give such notice to all Holders of the Notes,
or any defect therein, will not impair or affect the validity of the amendment.
CONCERNING THE TRUSTEE
The Indenture contains certain limitations on the rights of the Trustee
should it become a creditor of the Issuers, 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 will be permitted to engage in other
transactions; however, if the Trustee 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
will 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 (which shall not be cured), 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, in its sole discretion,
against any loss, liability or expense.
DEFINITIONS
Set forth below is a summary of certain of the defined terms used in the
Indenture. Reference is made to the Indenture for the full definition of all
such terms, as well as any other terms used herein for which no definition is
provided.
31
<PAGE> 38
"Acquired Debt" means, with respect to any specified Person, (i) Debt of
any other Person existing at the time such Person merges with or into or
consolidates with or becomes a Restricted Subsidiary of such specified Person
and (ii) Debt secured by a Lien encumbering any asset acquired by such specified
Person, which Debt or Lien was not Incurred in anticipation of, and was
outstanding prior to, such merger, consolidation or acquisition.
"Affiliate" of any Person means any other Person, directly or indirectly
controlling or controlled by or under direct or indirect common control with
such specific Person. For the purposes of this definition, "control" when used
with respect to any Person means the power to direct the management and policies
of such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; provided, however, that beneficial
ownership of 10% or more of the voting securities of a Person shall be decreed
to be control. The terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Asset Disposition" means any transfer, conveyance, sale, lease or other
disposition (collectively, any "disposition") by the Issuers or any Restricted
Subsidiary (including any disposition by means of a consolidation, merger or
similar transaction) but excluding a disposition by a Restricted Subsidiary to
the Issuers or a Wholly-Owned Restricted Subsidiary or by the Issuers to a
Wholly-Owned Restricted Subsidiary of (i) shares of Capital Stock or other
ownership interests of a Restricted Subsidiary, (ii) all or substantially all of
the assets of the Issuers or any Restricted Subsidiary representing a division
or line of business or (iii) other assets or rights of such Person or any of its
Restricted Subsidiaries other than a disposition (a) in the ordinary course of
business, (b) that constitutes a Restricted Payment which is permitted under
"-- Covenants -- Limitation on Restricted Payments" above or (c) that is subject
to the provisions set forth in the first paragraph under
"-- Covenants -- Merger, Consolidation or Sale of Assets" above; provided,
however, that a transaction described in clauses (i), (ii) and (iii) shall
constitute an Asset Disposition only to the extent that the aggregate
consideration for all such transfers, conveyances, sales, leases or other
dispositions exceeds $5 million in any 12-month period.
"Attributable Debt" in respect of a Sale and Leaseback Transaction means,
as at the time of determination, the present value (discounted at the interest
rate borne by the Notes, compounded annually) of the total obligations of the
lessee for 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).
"Average Life" means, as of the date of determination, with respect to any
Debt or Preferred Stock, the quotient obtained by dividing (i) the sum of the
products of the numbers of years from the date of determination to the dates of
each successive scheduled principal payment of such Debt or redemption or
similar payment with respect to such Preferred Stock multiplied by the amount of
such payment by (ii) the sum of all such payments.
"Bank Credit Agreement" means any one or more credit agreements (which may
include or consist of revolving credits) between Globalstar, Globalstar Capital
or any Restricted Subsidiary and one or more banks or other financial
institutions providing financing for the business of Globalstar and its
Restricted Subsidiaries.
"Build-out" means the construction, acquisition, improvement, operation and
development (including all costs related thereto) of the Globalstar System,
until such time as Globalstar shall have (i) constructed at least 64 satellites
for use in the Globalstar System; (ii) launched or attempted to launch (through
"intentional ignition") at least 56 satellites for use in the Globalstar System;
and (iii) commenced commercial service of the Globalstar System with at least 44
satellites in orbit and Operating.
"Capital Lease Obligation" of any Person means an obligation that is
required to be classified and accounted for as a capital lease or a liability on
the face of a balance sheet of such Person in accordance with GAAP (a "Capital
Lease"). The Stated Maturity of such obligation shall be the date of the last
payment of rent or any other amount due under such lease prior to the first date
upon which such lease may be terminated by the lessee without payment of a
penalty. The amount of such Debt represented by such obligation shall be the
capitalized amount thereof that would appear on the face of a balance sheet of
such Person in accordance with GAAP.
32
<PAGE> 39
"Capital Stock" of any Person means any and all shares, interests,
participations or other equivalents (however designated) of corporate stock or
other equity participations, including partnership interests, whether general or
limited, of such Person and shall (i) include any Special Preferred Obligations
and other preferred equivalent obligations and (ii) exclude debt securities
convertible into Capital Stock.
"Commission" means the Securities and Exchange Commission and any successor
agency.
"Consolidated Cash Flow Available for Fixed Charges" for any period means
the Consolidated Net Income of Globalstar and its Restricted Subsidiaries for
such period plus Consolidated Interest Expense of Globalstar and its Restricted
Subsidiaries for such period, plus the following to the extent deducted in
calculating such Consolidated Net Income: (i) Consolidated Income Tax Expense of
Globalstar and its Restricted Subsidiaries for such period, (ii) the
consolidated depreciation and amortization expense included in the income
statement of Globalstar and its Restricted Subsidiaries for such period and
(iii) any non-cash expense related to the issuance to employees of Globalstar or
any Restricted Subsidiary of Globalstar of options to purchase Capital Stock of
Globalstar or such Restricted Subsidiary; provided, however, that there shall be
excluded therefrom the Consolidated Cash Flow Available for Fixed Charges (if
positive) of any Restricted Subsidiary (calculated separately for such
Restricted Subsidiary in the same manner as provided above for Globalstar) that
is subject to a restriction which prevents the payment of dividends or the
making of distributions to Globalstar or another Restricted Subsidiary to the
extent of such restriction; provided further, however, that if Consolidated Cash
Flow Available For Fixed Charges for any period shall be less than $1,
Consolidated Cash Flow For Fixed Charges for such period shall be deemed to be
$1.
"Consolidated Income Tax Expense" for any period means the consolidated
provision for income taxes of Globalstar and the Restricted Subsidiaries for
such period calculated on a consolidated basis in accordance with GAAP.
"Consolidated Interest Expense" means, for any period, the consolidated
interest expense included in a consolidated income statement (excluding interest
income) of Globalstar and the Restricted Subsidiaries for such period calculated
on a consolidated basis in accordance with GAAP, plus, to the extent not so
included, cash dividends paid during such period on Special Preferred
Obligations.
"Consolidated Net Income" means, for any period, the consolidated net
income (or loss) of Globalstar and the Restricted Subsidiaries for such period
determined on a consolidated basis in accordance with GAAP, less the amount of
any cash dividends paid during such period on Special Preferred Obligations;
provided, however, that there shall be excluded therefrom (i) the net income (or
loss) of any Person acquired by Globalstar or a Restricted Subsidiary in a
pooling-of-interests transaction for any period prior to the date of such
transaction, (ii) the net income (and loss) of any Person that is not a
Restricted Subsidiary except to the extent of the amount of dividends or other
distributions actually paid to Globalstar or a Restricted Subsidiary by such
Person during such period, (iii) gains (but not losses) on Asset Dispositions by
Globalstar or any Restricted Subsidiary, (iv) all extraordinary gains and
losses, (v) the cumulative effect of changes in accounting principles, (vi)
non-cash gains or losses resulting from fluctuations in currency exchange rates,
(vii) any noncash gain or loss realized on the termination of any employee
pension benefit plan and (viii) the tax effect of any of the items described in
clauses (i) through (vii) above; provided further, however, that for purposes of
any determination pursuant to the provisions described under
"-- Covenants -- Limitation on Restricted Payments," (a) there shall further be
excluded therefrom the net income (but not net loss) of any Restricted
Subsidiary that is subject to a restriction which prevents the payment of
dividends or the making of distributions to Globalstar or another Restricted
Subsidiary of Globalstar to the extent of such restriction and (b) there shall
further be deducted therefrom an amount equal to the Tax Amount paid by
Globalstar during such period.
"Consolidated Net Worth" of any Person means the consolidated stockholders'
equity of such Person, determined on a consolidated basis in accordance with
GAAP, less amounts attributable to Disqualified Stock of such Person; provided,
however, that, with respect to Globalstar, adjustments following the date of the
Indenture to the accounting books and records of Globalstar in accordance with
Accounting Principles Board Opinions Nos. 16 and 17 (or successor opinions
thereto) or otherwise resulting from the acquisition of control of Globalstar by
another Person shall not be given effect to.
33
<PAGE> 40
"Debt" means (without duplication), with respect to any Person, whether
recourse is to all or a portion of the assets of such Person and whether or not
contingent, (i) every obligation of such Person for money borrowed, (ii) every
obligation of such Person evidenced by bonds, debentures, notes or other similar
instruments, including any such obligations Incurred in connection with the
acquisition of property, assets or businesses, (iii) every reimbursement
obligation of such Person with respect to letters of credit, bankers'
acceptances or similar facilities issued for the account of such Person, (iv)
every obligation of such Person issued or assumed as the deferred purchase price
of property or services (including securities repurchase agreements but
excluding trade accounts payable or accrued liabilities arising in the ordinary
course of business which are not overdue or which are being contested in good
faith), (v) every Capital Lease Obligation of such Person, (vi) all Receivables
Sales of such Person, together with any obligation of such Person to pay any
discount, interest, fees, indemnities, penalties, recourse, expenses or other
amounts in connection therewith, (vii) all obligations to redeem Disqualified
Stock issued by such Person, (viii) all Attributable Debt, (ix) every obligation
under Interest Rate and Currency Protection Agreements of such Person, (x) every
obligation of the type referred to in clauses (i) through (ix) of another Person
secured by any Lien on any property or asset of such Person (whether or not such
obligation is assumed by such Person), the amount of such obligation being
deemed to be the lesser of the fair market value of such property or assets and
the amount of the obligation so secured and (xi) every obligation of the type
referred to in clauses (i) through (x) of another Person and all dividends of
another Person the payment of which, in either case, such Person has Guaranteed.
The "amount" or "principal amount" of Debt at any time of determination as used
herein represented by (a) any Debt issued at a price that is less than the
principal amount at maturity thereof, shall be the amount of the liability in
respect thereof determined in accordance with GAAP (b) any Receivables Sale
shall be the amount of the unrecovered capital or principal investment of the
purchaser (other than Globalstar or a Wholly-Owned Restricted Subsidiary)
thereof, excluding amounts representative of yield or interest earned on such
investment, (c) any Disqualified Stock, shall be the maximum fixed redemption or
repurchase price in respect thereof, (d) any Capital Lease Obligation, shall be
determined in accordance with the definition thereof and (e) any Permitted
Interest Rate or Currency Protection Agreement shall be zero. In no event shall
Debt include any liability for taxes. For purposes of determining any particular
amount of Debt, Guarantees or Liens with respect to letters of credit supporting
Debt otherwise included in the determination of a particular amount shall not be
included.
"Default" means an event that is, or after the passing of time or the
giving of notice or both would be, an Event of Default.
"Disqualified Stock" of any Person means any Capital Stock of such Person
which, by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable 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
first anniversary of the final Stated Maturity of the Notes; provided, however,
that any Preferred Stock which would not constitute Disqualified Stock but for
provisions thereof giving holders thereof the right to require Globalstar to
repurchase or redeem such Preferred Stock upon the occurrence of a change of
control occurring prior to the first anniversary of the final Stated Maturity of
the Notes shall not constitute Disqualified Stock if the change of control
provisions applicable to such Preferred Stock are no more favorable to the
holders of such Preferred Stock than the provisions applicable to the Notes
contained in the covenant described under "-- Change of Control" and such
Preferred Stock specifically provides that Globalstar will not repurchase or
redeem any such stock pursuant to such provisions prior to Globalstar's
repurchase of such Notes as are required to be repurchased pursuant to the
covenant described under "-- Change of Control"; provided further, however, that
all Special Preferred Obligations shall be deemed to be Disqualified Stock.
"Eligible Institution" means a commercial banking institution that has
combined capital and surplus of not less than $500 million or its equivalent in
foreign currency, whose debt is rated "A-3" or higher or "A-" or higher
according to Moody's Investors Service, Inc. or Standard & Poor's Ratings Group
(or such similar equivalent rating by at least one "nationally recognized
statistical rating organization" (as defined in Rule 436 under the Securities
Act)) respectively, at the time as of which any investment or rollover therein
is made.
"Event of Default" has the meaning set forth under "-- Events of Default
and Remedies" above.
34
<PAGE> 41
"Exchange Act" means the Securities Exchange Act of 1934, as amended (or
any successor act) and the rules and regulations thereunder.
"GAAP" means generally accepted accounting principles in the United States
of America as in effect as of the Issue Date, including those set forth in (i)
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants, (ii) statements and
pronouncements of the Financial Accounting Standards Board, (iii) such other
statements by such other entity as approved by a significant segment of the
accounting profession and (iv) the rules and regulations of the SEC governing
the inclusion of financial statements (including pro forma financial statements)
in periodic reports required to be filed pursuant to Section 13 of the Exchange
Act, including opinions and pronouncements in staff accounting bulletins and
similar written statements from the accounting staff of the SEC.
"General Partners' Committee" means the committee consisting of
representatives of the general partners of Globalstar that governs the
activities of Globalstar.
"Globalstar System" means Globalstar's worldwide, low-earth orbit,
satellite-based digital telecommunications system as described in Globalstar's
Prospectus dated February 13, 1997 with respect to the Notes.
"Globaltel Russia" means Globalstar-Space Telecommunications, a Russian
closed joint stock company.
"Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America for the payment of which obligations
or guarantee the full faith and credit of the United States is pledged and which
have a remaining weighted Average Life to maturity of not more than one year
from the date of Investment therein.
"Guarantee" by any Person means any obligation, contingent or otherwise, of
such Person guaranteeing, or having the economic effect of guaranteeing, any
Debt of any other Person, (the "primary obligor") in any manner, whether
directly or indirectly, and including, without limitation, any obligation of
such Person, (i) to purchase or pay (or advance or supply funds for the purchase
or payment of) such Debt or to purchase (or to advance or supply funds for the
purchase of) any security for the payment of such Debt, (ii) to purchase
property, securities or services for the purpose of assuring the holder of such
Debt of the payment of such Debt, or (iii) to maintain working capital, equity
capital or other financial statement condition or liquidity of the primary
obligor so as to enable the primary obligor to pay such Debt (and "Guaranteed",
"Guaranteeing" and "Guarantor" shall have meanings correlative to the
foregoing); provided, however, that the Guarantee by any Person shall not
include endorsements by such Person for collection or deposit, in either case,
in the ordinary course of business.
"Holders" means the registered holders from time to time of the Notes.
"Incur" means, with respect to any Debt or other obligation of any Person,
to create, issue, incur (by conversion, exchange or otherwise), assume,
Guarantee or otherwise become liable in respect of such Debt or other obligation
including by acquisition of Subsidiaries or the recording, as required pursuant
to GAAP or otherwise, of any such Debt or other obligation on the balance sheet
of such Person (and "Incurrence", "Incurred" and "Incurring" shall have meanings
correlative to the foregoing); provided, however, that a change in GAAP that
results in an obligation of such Person that exists at such time becoming Debt
shall not be deemed an Incurrence of such Debt and that neither the accrual of
interest nor the accretion of original issue discount shall be deemed an
Incurrence of Debt. Notwithstanding the foregoing, Globalstar may elect to treat
all or any portion of revolving credit debt of Globalstar or a Subsidiary as
being Incurred from and after any date beginning the date the revolving credit
commitment is extended to Globalstar or a Subsidiary, by furnishing notice
thereof to the Trustee, and any borrowings or reborrowings by Globalstar or a
Subsidiary under such commitment up to the amount of such commitment designated
by Globalstar as Incurred shall not be deemed to be new Incurrences of Debt by
Globalstar or such Subsidiary; provided, however, that the undrawn portion of
any such revolving credit debt shall be deemed to be outstanding Debt until such
time as the commitment thereunder is terminated. The accretion of principal of a
non-interest bearing or other discount security shall not be deemed the
Incurrence of Debt.
"Independent Financial Advisor" means an accounting, appraisal or
investment banking firm of nationally recognized standing that is, in the
judgement of the General Partners' Committee of Globalstar,
35
<PAGE> 42
qualified to perform the task for which it has been engaged and disinterested
and independent with respect to the Issuers and their Subsidiaries and
Affiliates.
"Interest Rate or Currency Protection Agreement" of any Person means any
forward contract, futures contract, swap, option or other financial agreement or
arrangement (including, without limitation, caps, floors, collars and similar
agreements) relating to, or the value of which is dependent upon, interest rates
or currency exchange rates or indices.
"Investment" by any Person means any direct or indirect loan, advance or
other extension of credit or capital contribution (by means of transfers of cash
or other property to others or payments for property or services for the account
or use of others, or otherwise) to, or purchase or acquisition of Capital Stock,
bonds, notes, debentures or other securities or evidence of Debt issued by, any
other Person, including any payment on a Guarantee of any obligation of such
other Person, but excluding any loan, advance or extension of credit to an
employee of Globalstar or any Restricted Subsidiary in the ordinary course of
business, accounts receivables and other commercially reasonable extensions of
trade credit.
"Issue Date" means the date on which the Units are first issued and
delivered.
"Lien" means, with respect to any property or assets, any mortgage or deed
of trust, pledge, hypothecation, assignment, Receivables Sale, deposit
arrangement, security interest, lien, charge, easement (other than any easement
not materially impairing usefulness or marketability), encumbrance, preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever on or with respect to such property or assets (including,
without limitation, any conditional sale or other title retention agreement
having substantially the same economic effect as any of the foregoing or any
Sale and Leaseback Transaction).
"Marketable Securities" means: (i) Government Securities; (ii) any time
deposit account, money market deposit and certificate of deposit maturing not
more than 270 days after the date of acquisition issued by, or time deposit of,
an Eligible Institution; (iii) commercial paper maturing not more than 270 days
after the date of acquisition issued by a corporation (other than an Affiliate
of Globalstar) with a rating, at the time as of which any investment therein is
made, of "P-1" or higher according to Moody's Investors Service, Inc. or "A-1"
or higher according to Standard & Poor's Ratings Group (or such similar
equivalent rating by at least one "nationally recognized statistical rating
organization" (as defined in Rule 436 under the Securities Act)); (iv) any
banker's acceptances or money market deposit accounts issued or offered by an
Eligible Institution; (v) repurchase obligations with a term of not more than 7
days for Government Securities entered into with an Eligible Institution; and
(vi) any fund investing exclusively in investments of the types described in
clauses (i) through (v) above.
"Net Available Proceeds" from any Asset Disposition by any Person means
cash or Marketable Securities received (including by way of sale or discounting
of a note, installment receivable or other receivable, but excluding any other
consideration received in the form of assumption by the acquiror of Debt or
other obligations relating to such properties or assets) therefrom by such
Person, net of (i) all legal, title and recording tax expenses, commissions and
other fees and expenses Incurred and all federal, state, provincial, foreign and
local taxes (including taxes payable upon payment or other distribution of funds
from a foreign subsidiary to Globalstar or another Subsidiary of Globalstar)
required to be accrued as a liability as a consequence of such Asset
Disposition, (ii) all payments made by such Person or its Restricted
Subsidiaries on any Debt which is secured by such assets in accordance with the
terms of any Lien upon or with respect to such assets or which must by the terms
of such Lien, or in order to obtain a necessary consent to such Asset
Disposition or by applicable law, be repaid out of the proceeds from such Asset
Disposition, (iii) all distributions and other payments made to minority
interest holders in Restricted Subsidiaries of such Person or joint ventures as
a result of such Asset Disposition, (iv) appropriate amounts to be provided by
such Person or any Restricted Subsidiary thereof, as the case may be, as a
reserve in accordance with GAAP against any liabilities associated with such
assets and retained by such Person or any Restricted Subsidiary thereof, as the
case may be, after such Asset Disposition, including, without limitation,
liabilities under any indemnification obligations and severance and other
employee termination costs associated with such Asset Disposition, in each case
as determined by the General Partners' Committee of Globalstar, in its
reasonable good faith
36
<PAGE> 43
judgment evidenced by a board resolution filed with the Trustee; provided,
however, that any reduction in such reserve within twelve months following the
consummation of such Asset Disposition will be treated for all purposes of the
Indenture and the Notes as a new Asset Disposition at the time of such reduction
with Net Available Proceeds equal to the amount of such reduction, and (v) any
consideration for an Asset Disposition (which would otherwise constitute Net
Available Proceeds) that is required to be held in escrow pending determination
of whether a purchase price adjustment will be made, but amounts under this
clause (v) shall become Net Available Proceeds at such time and to the extent
such amounts are released to such Person.
"Net Cash Proceeds", with respect to any issuance or sale of Capital Stock,
means the cash proceeds of such issuance or sale net of attorneys' fees,
accountants' fees, underwriters' or placement agents' fees, discounts or
commissions and brokerage, consultant and other fees actually incurred in
connection with such issuance or sale and net of taxes paid or payable as a
result thereof.
"Non-Recourse Debt" means Debt:
(i) as to which neither the Issuers nor any Restricted Subsidiary:
(a) provides credit support of any kind (including any undertaking,
agreement or instrument that would constitute Debt);
(b) is directly or indirectly liable (as a guarantor or otherwise);
or
(c) constitutes the lender;
(ii) no default with respect to which (including any rights that the
holders thereof may have to take enforcement action against an Issuer or
any Unrestricted Subsidiary) would permit (upon notice, lapse of time or
both) any holder of any other Debt of the Issuers or any Restricted
Subsidiary to declare a default on such other Debt or cause the payment
thereof to be accelerated or payable prior to its stated maturity; and
(iii) as to which the lenders have been notified in writing that they
will not have any recourse to the stock or assets of the Issuers or any of
their Restricted Subsidiaries.
"Offer to Purchase" means a written offer (the "Offer") sent by Globalstar
by first class mail, postage prepaid, to each holder at his address appearing in
the Note Register on the date of the Offer offering to purchase up to the
principal amount of Notes specified in such Offer at the purchase price
specified in such Offer (as determined pursuant to the Indenture). Unless
otherwise required by applicable law, the Offer shall specify an expiration date
(the "Expiration Date") of the Offer to Purchase which shall be, subject to any
contrary requirements of applicable law, not less than 30 days or more than 60
days after the date of such Offer and a settlement date (the "Purchase Date")
for purchase of Notes within five Business Days after the Expiration Date. The
Issuers shall notify the Trustee at least 15 Business Days (or such shorter
period as is acceptable to the Trustee) prior to the mailing of the Offer of
Globalstar's obligation to make an Offer to Purchase, and the Offer shall be
mailed by Globalstar or, at Globalstar's request, by the Trustee in the name and
at the expense of Globalstar. The Offer shall contain information concerning the
business of Globalstar and its Subsidiaries which Globalstar in good faith
believes will enable such holders to make an informed decision with respect to
the Offer to Purchase (which at a minimum will include (i) the most recent
annual and quarterly financial statements and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" contained in the
documents required to be filed with the Trustee pursuant to the Indenture (which
requirements may be satisfied by delivery of such documents together with the
Offer), (ii) a description of material developments in Globalstar's business
subsequent to the date of the latest of such financial statements referred to in
clause (i) (including a description of the events requiring Globalstar to make
the Offer to Purchase), (iii) if applicable, appropriate pro forma financial
information concerning the Offer to Purchase and the events requiring Globalstar
to make the Offer to Purchase and (iv) any other information required by
applicable law to be included therein). The Offer shall contain all instructions
and materials necessary to enable such holders to tender Notes pursuant to the
Offer to Purchase.
"Operating" means, with respect to any satellite, that at least 50% of the
call circuits of such satellite are operating at design performance
specifications.
37
<PAGE> 44
"Permitted Interest Rate or Currency Protection Agreement" of any Person
means any Interest Rate or Currency Protection Agreement entered into with one
or more financial institutions in the ordinary course of business that is
designed to protect such Person against fluctuations in interest rates or
currency exchange rates with respect to Debt Incurred and which shall have a
notional amount no greater than the payments due with respect to the Debt being
hedged thereby and not for purposes of speculation.
"Permitted Investment" means an Investment by an Issuer or any Restricted
Subsidiary (i) in any Person as a result of which such Person becomes a
Restricted Subsidiary, (ii) in Marketable Securities, (iii) in Permitted
Interest Rate or Currency Protection Agreements, (iv) made as a result of the
receipt of noncash consideration from an Asset Disposition that was made
pursuant to and in compliance with the covenant described under "-- Asset
Dispositions" and (v) consisting of loans or advances to employees made in the
ordinary course of business not to exceed $3 million in the aggregate
outstanding at any one time.
"Person" means any individual, corporation, partnership, limited liability
company, 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.
"Receivables" means receivables, chattel paper, instruments, documents or
intangibles evidencing or relating to the right to payment of money in respect
of the sale of goods or services.
"Receivables Sale" of any Person means any sale of Receivables of such
Person (pursuant to a purchase facility or otherwise), other than in connection
with a disposition of the business operations of such Person relating thereto or
a disposition of defaulted Receivables for purpose of collection and not as a
financing arrangement.
"Refinance" means, in respect of any Debt, to refinance, extend, renew,
refund, repay, prepay, redeem, defease or retire, or to issue other Debt in
exchange or replacement for, such Debt. "Refinanced" and "Refinancing" shall
have correlative meanings.
"Refinancing Debt" means Debt that Refinances any Debt of the Issuers or
any Restricted Subsidiary existing on the Issue Date or Incurred in compliance
with the Indenture, including Debt that Refinances Refinancing Debt; provided,
however, that (i) such Refinancing Debt has a Stated Maturity no earlier than
the Stated Maturity of the Debt being Refinanced, (ii) such Refinancing Debt has
an Average Life at the time such Refinancing Debt is Incurred that is equal to
or greater than the Average Life of the Debt being Refinanced, (iii) such
Refinancing Debt has an aggregate principal amount (or if Incurred with original
issue discount, an aggregate issue price) that is equal to or less than the
aggregate principal amount (or if Incurred with original issue discount, the
aggregate accreted value) then outstanding or committed (plus fees and expenses,
including any premium and defeasance costs) under the Debt being Refinanced,
(iv) in the event the Debt being Refinanced constitutes a Subordinated
Obligation, the Refinancing Debt is subordinated to the Notes to at least the
same extent as the Debt being Refinanced and (v) Special Preferred Obligations
may only be Refinanced with Preferred Stock (other than Preferred Stock that is
Disqualified Stock), other Special Preferred Obligations or Subordinated
Obligations; provided further, however, that Refinancing Debt shall not include
(x) Debt of a Subsidiary that Refinances Debt of the Issuers or (y) Debt of the
Issuers or a Restricted Subsidiary that Refinances Debt of an Unrestricted
Subsidiary.
"Related Person" of any Person means any other Person directly or
indirectly owning (a) 10% or more of the outstanding common equity of such
Person (or, in the case of a Person that is not a corporation, 10% or more of
the equity interest in such Person) or (b) 10% or more of the combined voting
power of the Voting Stock of such Person.
"Restricted Payment" with respect to any Person means (i) the declaration
or payment of any dividends or any other distributions of any sort in respect of
its Capital Stock (including any payment in connection with
38
<PAGE> 45
any merger or consolidation involving such Person) or similar payment to the
direct or indirect holders of its Capital Stock (other than dividends or
distributions payable solely in its Capital Stock (other than Disqualified
Stock) and dividends or distributions payable solely to the Issuers or a
Restricted Subsidiary, and other than pro rata dividends or other distributions
made by a Subsidiary that is not a Wholly Owned Restricted Subsidiary to
minority stockholders (or owners of an equivalent interest in the case of a
Subsidiary that is an entity other than a corporation)), (ii) the purchase,
redemption or other acquisition or retirement for value of any Capital Stock of
the an Issuer held by any Person or of any Capital Stock of a Restricted
Subsidiary held by any Affiliate of the Issuers (other than a Restricted
Subsidiary), including the exercise of any option to exchange any Capital Stock
(other than into Capital Stock of the Issuers that is not Disqualified Stock),
(iii) the purchase, repurchase, redemption, defeasance or other acquisition or
retirement for value, prior to scheduled maturity, scheduled repayment or
scheduled sinking fund payment of any Subordinated Obligations (other than the
purchase, repurchase or other acquisition of Subordinated Obligations purchased
in anticipation of satisfying a sinking fund obligation, principal installment
or final maturity, in each case due within one year of the date of acquisition)
or (iv) the making of any Investment in any Person (other than a Permitted
Investment).
"Restricted Subsidiary" means any Subsidiary of Globalstar, whether
existing on or after the Issue Date, unless such Subsidiary is an Unrestricted
Subsidiary.
"Sale and Leaseback Transaction" means an arrangement relating to property
now owned or hereafter acquired whereby an Issuer or a Restricted Subsidiary
transfers such property to a Person and an Issuer or a Restricted Subsidiary
leases it from such Person.
"Significant Subsidiary" means a Restricted Subsidiary that is a
"significant subsidiary" as defined in Rule 1-02(w) of Regulation S-X under the
Securities Act and the Exchange Act.
"Special Preferred Obligations" means (i) preferred partnership interests
of Globalstar existing as of the Issue Date and (ii) any preferred partnership
interests, convertible preferred equivalent obligations or similar preferred
obligations of Globalstar issued after the Issue Date to finance the Build-out;
provided, however, that any such preferred partnership interests, convertible
preferred equivalent obligations or similar preferred obligations of Globalstar
issued after the Issue Date shall not constitute Special Preferred Obligations
if such interest or obligation, by its terms (or by the terms of any security
into which it is convertible or for which it is exchangeable at the option of
the Holders), 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
final Stated Maturity of the Notes; provided further, however, that any such
interest or obligation which would constitute Special Preferred Obligations but
for provisions thereof giving holders thereof the right to require Globalstar to
repurchase or redeem such interest or obligation upon the occurrence of a change
of control occurring prior to the final Stated Maturity of the Notes shall
constitute Special Preferred Obligations if the change of control provisions
applicable to such interest or obligation are no more favorable to the holders
of such interest or obligation than the provisions applicable to the Notes
contained in the covenant described under "-- Change of Control" and such
interest or obligation specifically provides that Globalstar will not repurchase
or redeem any such interest or obligation pursuant to such provisions prior to
Globalstar's repurchase of such Notes as are required to be repurchased pursuant
to the covenant described under "-- Change of Control". Notwithstanding the
foregoing, preferred partnership interests, convertible preferred equivalent
obligations or similar preferred obligations of Globalstar issued after the
Issue Date shall not be Special Preferred Obligations unless, at the time of
their issuance, Globalstar shall certify to the Trustee that such interests or
obligations shall be designated Special Preferred Obligations.
"Stated Maturity" means, with respect to any security, the date specified
in such security as the fixed date on which the final payment of principal of
such security is due and payable, including pursuant to any mandatory redemption
provision (but excluding any provision providing for the repurchase of such
security at the option of the holder thereof upon the happening of any
contingency unless such contingency has occurred).
39
<PAGE> 46
"Subordinated Obligation" means any Debt of the Issuers (whether
outstanding on the Issue Date or thereafter Incurred) which is subordinate or
junior in right of payment to the Notes pursuant to a written agreement to that
effect.
"Subsidiary" of any Person means (i) a corporation more than 50% of the
combined voting power of the outstanding Voting Stock of which is owned,
directly or indirectly, by such Person or by one or more other Subsidiaries of
such Person or by such Person and one or more Subsidiaries of such Person or
(ii) any other Person (other than a corporation) in which such Person, or one or
more other Subsidiaries of such Person or such Person and one or more other
Subsidiaries of such Person, directly or indirectly, has at least a majority
ownership and power to direct the policies, management and affairs thereof.
"Tax Amount" means, with respect to any year, an amount not to exceed the
sum of the ordinary income from trade or business activities and other items of
income, loss and deduction reported by Globalstar for that year for United
States federal income tax purposes multiplied by a percentage equal to the sum
of (a) the highest applicable federal corporation income tax rate for that year
(expressed as a percentage) plus (b) 8% multiplied by the excess of 100% over
the highest applicable federal corporate income tax for that year (expressed as
a percentage).
"Transitory Equipment Subsidiary" means a Subsidiary of Globalstar whose
only business activity is acquiring equipment from Globalstar for the sole
purpose of selling such equipment to a service provider of Globalstar; provided,
however, that Globalstar retains a security interest in such equipment so long
as it is owned by such Subsidiary; provided further, however, that such
Subsidiary has no Debt outstanding at any time other than Debt represented by
such security interest.
"Unrestricted Subsidiary" means (i) any Subsidiary of Globalstar designated
as such by the General Partner's Committee as set forth below where (a) neither
Globalstar nor any of its other Subsidiaries (other than another Unrestricted
Subsidiary) (1) provides credit support for, or Guarantee of, any Debt of such
Subsidiary or any Subsidiary of such Subsidiary (including any undertaking,
agreement or instrument evidencing such Debt), (2) is directly or indirectly
liable for any Debt of such Subsidiary or any Subsidiary of such Subsidiary, or
(3) has any obligation to make additional Investments in such Subsidiary or any
Subsidiary of such Subsidiary, (b) such Subsidiary has no Debt other than
Non-Recourse Debt; provided, however, that if any Unrestricted Subsidiary Incurs
any Debt other than Non-Recourse Debt or any Non-Recourse Debt Incurred by such
Unrestricted Subsidiary shall thereafter cease for any reason to be Non-Recourse
Debt, such event shall be deemed to constitute an Incurrence of such Debt by
Globalstar and such Unrestricted Subsidiary shall be deemed to be a Restricted
Subsidiary for purposes of the covenant described under "-- Covenants -- Future
Guarantors" and (c) such Subsidiary and each Subsidiary of such Subsidiary has
at least one director on its board of directors that is not a director or
executive officer of Globalstar or any Restricted Subsidiary and (ii) any
Subsidiary of an Unrestricted Subsidiary. The General Partner's Committee may
designate any Subsidiary to be an Unrestricted Subsidiary unless such Subsidiary
or any Subsidiary of such Subsidiary owns any Capital Stock or Debt of, or owns
or holds any Lien on any property of, Globalstar or any other Subsidiary of
Globalstar which is not a Subsidiary of the Subsidiary to be so designated or
otherwise an Unrestricted Subsidiary; provided, however, that either (A) the
Subsidiary to be so designated has total assets of $1,000 or less or (B)
immediately after giving effect to such designation, Globalstar could incur an
additional $1.00 of Debt pursuant to the first paragraph under "Covenants --
Limitation on Consolidated Debt" above and provided further, however, that
Globalstar could make a Restricted Payment in an amount equal to the greater of
the fair market value and the book value of such Subsidiary pursuant to the
covenant described under "-- Covenants -- Limitation on Restricted Payments" and
such amount is thereafter treated as a Restricted Payment for the purpose of
calculating the aggregate amount available for Restricted Payments thereunder.
The General Partners' Committee may designate any Unrestricted Subsidiary to be
a Restricted Subsidiary, provided that, immediately after giving effect to such
designation, Globalstar could incur an additional $1.00 of Debt pursuant to the
first paragraph under "-- Covenants -- Limitation on Consolidated Debt" above.
Notwithstanding the foregoing, neither Globalstar Capital nor any of its
Subsidiaries shall be Unrestricted Subsidiaries.
40
<PAGE> 47
"Vendor Financing Facility" means any agreements between Globalstar,
Globalstar Capital and/or any Restricted Subsidiary and one or more vendors or
lessors of equipment to Globalstar, Globalstar Capital and/or any Restricted
Subsidiary (or any affiliate of any such vendor or lessor) providing financing
for the acquisition by Globalstar or any such Restricted Subsidiary of equipment
from any such vendor or lessor.
"Voting Stock" of any Person means Capital Stock of such Person which
ordinarily has voting power for the election of directors (or persons performing
similar functions) of such Person, whether at all times or only so long as no
senior class of securities has such voting power by reason of any contingency.
"Wholly-Owned Restricted Subsidiary" means a Restricted Subsidiary 99% or
more of the outstanding Capital Stock or other ownership interests of which
(other than directors' qualifying shares) shall at the time be owned by
Globalstar or by one or more Wholly-Owned Restricted Subsidiaries of Globalstar
or by Globalstar and one or more Wholly-Owned Restricted Subsidiaries of
Globalstar.
REGISTRATION RIGHTS
The Issuers and the Initial Purchasers have entered into the registration
rights agreement, dated February 19, 1997 (the "Registration Rights Agreement")
pursuant to which the Issuers agreed to file with the Commission this
Registration Statement with respect to an offer to exchange the Original Notes
for the Exchange Notes. If the Issuers are not permitted to consummate the
Exchange Offer because the Exchange Offer is not permitted by applicable law or
Commission policy or under certain other circumstances, the Issuers will file
with the Commission a shelf registration statement (the "Shelf Registration
Statement") to cover resales of the Notes by the holders thereof who satisfy
certain conditions relating to the provision of information in connection with
the Shelf Registration Statement. The Issuers will use reasonable efforts to
cause the applicable registration statement to be declared effective as promptly
as possible by the Commission.
The Registration Rights Agreement also provides that (i) the Issuers will
use their reasonable efforts to have this Registration Statement declared
effective by the Commission on or prior to 150 days after February 19, 1997,
(ii) unless the Exchange Offer would not be permitted by applicable law or the
Commission's policy, the Issuers will commence the Exchange Offer and use their
reasonable efforts to issue, on or prior to 30 business days after the date on
which this Registration Statement was declared effective by the Commission,
Exchange Notes in exchange for all Notes tendered prior thereto in the Exchange
Offer and (iii) if obligated to file the Shelf Registration Statement, the
Issuers will use their reasonable efforts to file the Shelf Registration
Statement with the Commission on or prior to 60 days after such filing
obligation arises (and in any event within 150 days after February 19, 1997) and
to cause the Shelf Registration Statement to be declared effective by the
Commission on or prior to 30 days after such obligation arises. If (a) the
Issuers fail to file any of the registration statements required by the
Registration Rights Agreement on or before the date specified for such filing,
(b) any of such registration statements is not declared effective by the
Commission on or prior to the date specified for such effectiveness (the
"Effectiveness Target Date"), or (c) the Issuers fail to consummate the Exchange
Offer within 30 days of the Effectiveness Target Date with respect to the
Registration Statement, or (d) the Shelf Registration Statement or the Exchange
Offer Registration Statement is declared effective but thereafter ceases to be
effective or usable in connection with resales of Transfer Restricted Securities
during the periods specified in the Registration Rights Agreement (each such
event referred to in clauses (a) through (d) above a "Registration Default"),
then the Issuers will pay liquidated damages ("Liquidated Damages") to each
holder of Notes, with respect to the first 90-day period immediately following
the occurrence of such Registration Default in an amount equal to $.05 per week
per $1,000 principal amount of Notes held by such holder. The amount of the
Liquidated Damages will increase by an additional $.05 per week per $1,000
principal amount of Notes with respect to each subsequent 90-day period until
all Registration Defaults have been cured, up to a maximum amount of Liquidated
Damages of $.50 per week per $1,000 principal amount of Notes. Following the
cure of all Registration Defaults, the accrual of Liquidated Damages will cease.
41
<PAGE> 48
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following discussion is a summary of certain material federal income
tax considerations relevant to the acquisition, ownership and disposition of the
Notes by initial holders who or which acquired the Notes at original issue for
cash. This does not purport to be a complete analysis or listing of all
potential tax considerations that may be relevant to initial holders, and does
not purport to discuss tax considerations that may be relevant to subsequent
holders (which considerations may differ from those described herein) of the
Notes. The discussion does not include the special rules that may apply to
certain holders (including insurance companies, tax-exempt organizations,
financial institutions or broker-dealers, foreign corporations and persons who
are not citizens or residents of the United States), and does not address the
tax consequences of the laws of any state, locality or foreign jurisdiction. The
discussion is based upon currently existing provisions of the Internal Revenue
Code of 1986, as amended (the "Code"), existing and proposed Treasury
regulations promulgated thereunder and current administrative rulings and court
decisions, all of which are subject to change and any such change could affect
the continuing validity of this discussion. The Issuers have not sought and will
not seek any rulings from the IRS with respect to the positions of Globalstar
discussed below. There can be no assurance that the IRS will not take a
different position concerning the tax consequences of the acquisition, ownership
or disposition of the Notes or that any such IRS position would not be
sustained. This discussion applies only to a holder that will hold Notes as
"capital assets" within the meaning of Section 1221 of the Code. Globalstar will
receive an opinion of Willkie Farr & Gallagher that it is a partnership and not
an association or publicly traded partnership taxable as a corporation for
United States federal income tax purposes.
EACH PURCHASER IS URGED TO CONSULT HIS OWN TAX ADVISER AS TO THE PARTICULAR
TAX CONSEQUENCES OF ACQUIRING, OWNING AND DISPOSING OF THE UNITS, NOTES AND
WARRANTS, INCLUDING THE APPLICABILITY AND EFFECT OF ANY FEDERAL, STATE OR
FOREIGN INCOME AND OTHER TAX LAWS.
UNITED STATES FEDERAL INCOME TAXATION OF U.S. HOLDERS
This section discusses certain rules applicable to a holder of Notes that
is a United States Holder. For purposes of this discussion, a "United States
Holder" means a holder of Notes who or which is (i) an individual who is a
citizen or resident of the United States for U.S. Federal Income tax purposes,
(ii) a corporation or other entity taxable as a corporation created or organized
in the United States or under the laws of the United States or any political
subdivision thereof (including the States and the District of Columbia), (iii)
an estate or trust described in Section 7701(a)(30) of the Code, or (iv) a
person whose worldwide income or gain is otherwise subject to U.S. Federal
income taxation on a net income basis.
TAX TREATMENT OF THE NOTES
Original Issue Discount. The Notes were issued with original issue
discount for federal income tax purposes. The amount of original issue discount
("OID") on a Note is the excess of the stated redemption price at maturity over
such Note's issue price. The "stated redemption price at maturity" of each Note
is the sum of all payments (other than stated interest) with respect to each
such Note. The "issue price" of each Note is that portion of the issue price of
each unit allocated to the Note by the Issuers, unless a holder disclosed a
different allocation on a statement attached to such holder's timely filed
federal income tax return for such holder's taxable year that included the
acquisition date of a unit. Any such allocation is not binding on the IRS, which
may challenge any such allocation. Each holder (whether a cash or accrual method
taxpayer) will be required to include in income such OID as it accrues, in
advance of the receipt of some or all of the related cash payments.
The amount of OID includable in income by the initial holder of a Note is
the sum of the "daily portions"of OID with respect to the Note for each day
during the taxable year or portion of the taxable year on which such holder held
such Note ("accrued OID"). The daily portion is determined by allocating to each
day in any accrual period a pro rata portion of the OID allocable to that
accrual period. The amount of OID allocable to any accrual period other than the
initial short accrual period and the final accrual period is an
42
<PAGE> 49
amount equal to the excess of (i) the product of a Note's adjusted issue price
at the beginning of such accrual period and its yield to maturity (determined on
the basis of compounding at the close of each accrual period and properly
adjusted for the length of the accrual period) over (ii) the amount of any
stated interest payments allocable to such accrual period. The "yield to
maturity" is the discount rate that, when applied to all payments under a Note,
results in a present value equal to the issue price. The amount of OID allocable
to the final accrual period is the difference between the amount payable at
maturity (other than a payment of stated interest) and the adjusted issue price
of the Note at the beginning of the final accrual period. The amount of OID
allocable to the initial short accrual period may be computed under any
reasonable method. The adjusted issue price of the Note at the start of any
accrual period is equal to its issue price increased by the accrued OID for each
prior accrual period. The Issuers are required to report the amount of OID
accrued on Notes held of record by persons other than corporations and other
exempt holders.
Sale, Retirement or Other Taxable Disposition. A holder of a Note will
recognize gain or loss upon the sale, retirement or other taxable disposition of
such Note. Such gain or loss will generally be equal to the difference between
(i) the amount of cash and the fair market value of property received for such
Note (other than amounts representing accrued but unpaid stated interest) and
(ii) the holder's adjusted tax basis in the Note. The adjusted tax basis of a
Note in the hands of an original holder generally will be equal to the Note's
issue price, increased by the amount of OID, if any, on the Note that is
includable in the holder's income pursuant to these rules. Such gain or loss
generally will be capital gain or loss, and will be long-term capital gain or
loss if the holder has held such Notes for more than one year.
Applicable High Yield Debt Obligations. The Notes are applicable high
yield debt obligations ("AHYDOs") for U.S. Federal income tax purposes. As a
result, partners of Globalstar may not claim any deduction with respect to their
respective allocable shares of original issue discount on the Notes until
payments in respect of such original issue discount are actually made, and in
that case, only to the extent that any such original issue discount is
attributable to each such partner's allocable share of Globalstar's U.S. Income.
Exchange Offer. The exchange of Original Notes for Exchange Notes pursuant
to the Registered Exchange Offer should not be a taxable exchange. As a result,
a U.S. Holder should not recognize taxable income or loss as a result of
exchanging Original Notes for Exchange Notes pursuant to the Registered Exchange
Offer.
LIQUIDATED DAMAGES
Globalstar intends to take the position that the Liquidated Damages
described above under "Description of Notes -- Registration Rights; Liquidated
Damages" will be taxable to the holders as ordinary income in accordance with
the holder's method of accounting for federal income tax purposes. It is
possible, however, that the IRS may take a different position, in which case
holders might be required to include such Liquidated Damages in income as it
accrues or becomes fixed (regardless of their usual method of tax accounting).
BACKUP WITHHOLDING
Under certain circumstances, the failure of a holder of a Note to provide
sufficient information to establish that such holder is exempt from the backup
withholding provisions of the Code will subject such holder to backup
withholding at a rate of 31 percent. In general, backup withholding applies if a
holder fails to furnish a correct taxpayer identification number, fails to
report dividend and interest income in full, or fails to certify that such
holder has provided a correct taxpayer identification number and that such
holder is not subject to withholding. An individual's taxpayer identification
number is such person's Social Security number.
Any amount withheld from a payment to a holder under the backup withholding
rules is allowable as a credit against such holder's U.S. Federal income tax
liability, provided that the required information is furnished to the IRS.
Certain holders (including, among others, corporations and foreign individuals
who comply with certain certification requirements) are not subject to backup
withholding. Holders should consult
43
<PAGE> 50
their tax advisors as to their qualification for exemption from backup
withholding and the procedure for obtaining such an exemption.
REPORTING REQUIREMENTS
Each Note will bear a legend setting forth the issue date, the issue price,
the total amount of original issue discount and the yield to maturity.
Globalstar will provide annual information statements to holders other than
corporations and other exempt holders of the Notes and to the IRS, setting forth
the amount of original issue discount determined to be attributable to the Notes
for that year.
UNITED STATES FEDERAL INCOME TAXATION OF NON-U.S. HOLDERS
This section discusses certain rules applicable to a holder of Notes that
is not a U.S. Holder (a "Non-U.S. Holder").
Interest and Original Issue Discount. Although the matter is not free from
doubt, under present U.S. Federal income tax law and subject to the discussion
of backup withholding below, interest (including original issue discount) paid
by the Issuers to a Non-U.S. Holder generally should not be subject to
withholding of U.S. Federal income tax, provided that (i) Globalstar is not
engaged in a trade or business within the United States, or (ii) if Globalstar
is engaged in a trade or business within the United States, (a) such Non-U.S.
Holder does not own directly or indirectly a 10% or more capital or profits
interest in Globalstar, (b) such interest (including original issue discount) is
not effectively connected with the conduct by such Non-U.S. Holder of a trade or
business within the United States and (c) the Issuers or their paying agent
receives (1) from such Non-U.S. Holder a properly completed Form W-8 (or
substitute Form W-8) under penalties of perjury which provides such Non-U.S.
Holder's name and address and certifies that such Non-U.S. Holder is a Non-U.S.
Holder or (2) from a security clearing organization, bank or other financial
institution that holds the Notes in the ordinary course of its trade or business
(a "financial institution") on behalf of such Non-U.S. Holder, certification
under penalties of perjury that such a Form W-8 (or substitute Form W-8) has
been received by it, or by another such financial institution, from the Non-U.S.
Holder, and a copy of the Form W-8 (or substitute Form W-8) is furnished to the
payor.
If Globalstar is engaged in a trade or business within the United States,
and interest (including original issue discount) paid by the Issuers to a
Non-U.S. Holder is effectively connected to the conduct by such Non-U.S. Holder
of a trade or business within the United States, such interest (including
original issue discount) will be subject to U.S. Federal income tax on a net
basis at the rates applicable to U.S. persons generally (and, with respect to
corporate holders under certain circumstances, may also be subject to a 30%
branch profits tax). If payments are subject to U.S. Federal income tax on a net
basis in accordance with the rules described in the preceding sentence, such
payments will not be subject to U.S. withholding tax so long as the Non-U.S.
Holder provides the Issuers or their paying agent with a properly executed Form
4224. Non-U.S. Holders should consult any applicable income tax treaties, which
may provide for a lower rate of withholding tax, or other rules different from
those described above.
Information Reporting and Backup Withholding
If Globalstar is not engaged in a trade or business within the United
States, neither 31% backup withholding nor information reporting will apply to
the payment of interest (including original issue discount) to a Non-U.S.
Holder. If Globalstar is engaged in a trade or business within the United
States, temporary Treasury Regulations provide that 31% backup withholding and
other reporting will not apply to such payments of interest (including original
issue discount) with respect to which either the requisite certification, as
described above, has been received or an exemption has otherwise been
established (provided that neither the Issuers nor their paying agent has actual
knowledge that the holder is a U.S. person or the conditions of any other
exemption are not in fact satisfied). Under temporary Treasury Regulations,
those information reporting and backup withholding requirements will apply,
however, to the gross proceeds paid to a foreign person upon the disposition of
the Notes by or through a United States office of a United States or foreign
broker, unless the holder certifies to the broker under penalties of perjury as
to its name, address and status as
44
<PAGE> 51
a foreign person or the holder otherwise establishes an exemption. Information
reporting requirements (but not backup withholding) will also apply to a payment
of the proceeds of a disposition of the Notes by or through a foreign office of
(i) a United States broker, (ii) a foreign broker 50% or more of whose gross
income for certain periods is effectively connected with the conduct of a trade
or business within the United States or (iii) a foreign broker that is a
"controlled foreign corporation" unless the broker has documentary evidence in
its records that the holder is a Non-U.S. Holder and certain other conditions
are met, or the holder otherwise establishes an exemption. Neither information
reporting nor back withholding will generally apply to a payment of the proceeds
of a disposition of the Notes by or through a foreign office of a foreign broker
not subject to the preceding sentence.
45
<PAGE> 52
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Notes for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Notes. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of Exchange Notes received in
exchange for existing Notes where such existing Notes were acquired as a result
of market-making activities or other trading activities. The Issuers have agreed
that, for a period of 180 days after the Expiration Date, it will make this
prospectus, as amended or supplemented, available to any broker-dealer for use
in connection with any such resale. In addition, until , 1997 (90
days after the date of this Prospectus), all dealers effecting transactions in
the Exchange Notes may be required to deliver a prospectus.
The Issuers will not receive any proceeds from any sale of Exchange Notes
by broker-dealers. Exchange Notes received by 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 Exchange 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 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
broker-dealer for the purchasers of any such Exchange Notes. Any broker-dealer
that resells Exchange 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 Exchange Notes may be deemed to be an "underwriter" within
the meaning of the Securities Act and any profit on any such resale of Exchange
Notes and any commission 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 broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
For a period of 180 days after the Expiration Date the Issuers will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such documents
in the Letter of Transmittal. The Issuers have agreed to pay all expenses
incident to the Exchange Offer (including the reasonable expenses of one counsel
for the Holders of the Notes) other than commissions or concessions of any
brokers or dealers and will indemnify the Holders of the Notes (including any
broker-dealers) against certain liabilities, including liabilities under the
Securities Act.
LEGAL OPINIONS
The validity of the Notes and certain United States tax matters described
under "Certain Federal Income Tax Considerations" will be passed upon for
Globalstar by Willkie Farr & Gallagher, New York, New York, general counsel to
Globalstar. As of April 15, 1997, partners in Willkie Farr & Gallagher
beneficially owns approximately 25,000 shares of the Common Stock. Mr. Robert B.
Hodes is of counsel to the law firm of Willkie Farr & Gallagher, and a Director
of Loral and GTL and a member of the Audit and Executive Committees of the
Boards of Directors of both Loral and GTL.
EXPERTS
The consolidated financial statements of Globalstar incorporated in this
Prospectus by reference from GTL's Annual Report on Form 10-K for the fiscal
year ended December 31, 1996 have been audited by Deloitte & Touche LLP as
stated in their report, which is incorporated herein by reference, and have been
so incorporated in reliance on the report of said firm given upon their
authority as experts in auditing and accounting.
46
<PAGE> 53
GLOBALSTAR, L.P.
GLOBALSTAR CAPITAL CORPORATION
The Exchange Agent for the Exchange Offer is:
THE BANK OF NEW YORK
By Registered or Certified Mail
The Bank of New York
101 Barclay Street, 7E
New York, New York 10286
Attn: Reorganization Section
Facsimile Transmissions:
(Eligible Institutions Only)
(212) 571-3080
Confirm by Telephone:
(212) 815-6333
For Information Call:
(212) 815-6333
By Hand or Overnight Delivery
The Bank of New York
101 Barclay Street
Corporate Trust Services Window
Ground Level
New York, New York 10286
Attn: Reorganization Section
Until 1997 (90 days after the date of this Prospectus), all
dealers effecting transactions in the registered securities, whether or not
participating in this distribution, maybe required to deliver a prospectus. This
is in addition to the obligation of dealers to deliver a prospectus when acting
as underwriters and with respect to their unsold allotments or subscriptions.
<PAGE> 54
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Globalstar Capital, which is a Delaware corporation, is empowered by the
Delaware General Corporation Law, subject to the procedures and limitations
stated therein, to indemnify any person against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with any threatened, pending or completed action,
suit or proceeding in which such person is made a party by reason of his being
or having been a director, officer, employee or agent of Globalstar Capital. The
statute provides that indemnification pursuant to its provisions is not
exclusive of other rights of indemnification to which a person may be entitled
under any by-law, agreement, vote of stockholders or disinterested directors, or
otherwise. The Certificate of Incorporation and by-laws of Globalstar Capital
provide for indemnification of the directors and officers of such entities to
the full extent permitted by the Delaware General Corporation Law.
Section 17-108 of the Delaware Revised Uniform Limited Partnership Act
empowers Globalstar to indemnify and hold harmless any partner or other person
from and against any and all claims and demands whatsoever.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------ ------------------------------------------------------------------------------------
<S> <C>
3.1 Amended and Restated Agreement of Limited Partnership of Globalstar, dated as of
March 6, 1996, among Loral/Qualcomm Satellite Services, L.P., Globalstar
Telecommunications Limited, AirTouch Satellite Services, San Giorgio S.p.A.,
Hyundai/Dacom, Loral/DASA Globalstar, L.P., Loral Globalstar, L.P., TE.S.A.M. and
Vodastar Limited***
3.2 Certificate of Incorporation of Globalstar Capital+
3.3 By-laws of Globalstar Capital+
4.1 Indenture dated as of February 15, 1997 relating to Globalstar's and Globalstar
Capital's 11 3/8% Senior Notes due 2004***
5.1 Opinion of Willkie Farr & Gallagher****
8.1 Opinion of Willkie Farr & Gallagher (included with Exhibit 5.1)****
10.1 Subscription Agreements by and between Globalstar, and each of AirTouch
Communications, Alcatel Spacecom, Loral General Partner, Inc., Hyundai/Dacom and
Vodastar Limited*
10.2 Subscription Agreement by and between Globalstar and Loral/Qualcomm Satellite
Services, L.P.*
10.3 Satellite Procurement Letter Agreement by and among Globalstar, Hyundai Electronics
Industries Co., Ltd. and Space Systems/Loral, Inc.*
10.4 Contract for OmniTRACS Like Services Agreement between Globalstar and Qualcomm
Incorporated*
10.5 Support Agreement by and among Qualcomm Incorporated, Globalstar and Loral/Qualcomm
Satellite Services, Inc.*
10.6 Qualcomm Licensee Letter Agreement by and among Globalstar, Hyundai Electronics
Industries Co., Ltd. and Qualcomm Incorporated.*
10.7 Contract between Globalstar and Space Systems/Loral, Inc.*
10.8 Contract for the Development of Certain Portions of the Ground Operations Control
Center between Globalstar and Loral Western Development Laboratories.*
10.9 Contract for the Development of Satellite Orbital Operations Centers between
Globalstar and Loral Aerosys, a division of Loral Aerospace Corporation.*
</TABLE>
II-1
<PAGE> 55
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------ ------------------------------------------------------------------------------------
<S> <C>
10.10 Revolving Credit Agreement dated as of December 15, 1995, as amended on March 25,
1996, among Globalstar, certain banks parties thereto and Chemical Bank, as
Administrative Agent***
10.11 Warrant Agreement dated as of February 19, 1997 relating to Warrants to purchase
1,032,250 shares of Common Stock***
10.12 Registration Rights Agreement dated February 19, 1997 relating to Globalstar's and
Globalstar Capital's 11 3/8% Senior Notes due 2004***
12 Statement Regarding Computation of Ratios***
21 Subsidiaries of the Registrants.+
23.1 Consent of Deloitte & Touche LLP.+
23.2 Consent of Willkie Farr & Gallagher (included in their opinion filed as Exhibit
5.1).****
24 Powers of Attorney (included in the Signature Pages).+
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 GTL's Registration Statement on Form S-1 (No.
33-86808).
** Incorporated by reference to GTL's Registration Statement on Form S-3 (No.
333-6477).
*** Incorporated by reference to the Form 10-K of GTL for fiscal 1996.
**** To be filed by amendment.
+ Filed herewith.
++ Management compensation plan.
(b) Financial Statement Schedules:
All schedules have been omitted because they are not applicable or 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 Registrants
pursuant to the provisions, described under Item 20 above, or otherwise, the
Registrants have been advised that in the opinion of the Securities and Exchange
Commission, 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
Registrants of expenses incurred or paid by a director, officer or controlling
person of the Registrants 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 registrants will, unless in
the opinion of their counsel the matter has been settled by controlling
precedent, submit to court of appropriate jurisdiction the question 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 Registrants hereby undertake to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 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.
The undersigned Registrants hereby undertake 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 this Registration Statement when it became effective.
II-2
<PAGE> 56
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
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 THE DAY OF APRIL 18, 1997.
GLOBALSTAR, L.P.
By: Loral/QUALCOMM Satellite Services,
L.P., its General Partner
By: Loral/QUALCOMM Partnership, L.P.,
its General Partner
By: Loral General Partner, Inc.,
its General Partner
By: /s/ MICHAEL B. TARGOFF
------------------------------------
Michael B. Targoff
President
POWER OF ATTORNEY
EACH OF THE UNDERSIGNED OFFICERS AND DIRECTORS OF LORAL GENERAL PARTNER,
INC. HEREBY SEVERALLY CONSTITUTES AND APPOINTS BERNARD L. SCHWARTZ, MICHAEL B.
TARGOFF, MICHAEL P. DEBLASIO, ERIC J. ZAHLER AND HARVEY B. REIN, AND EACH OF
THEM AS ATTORNEYS-IN-FACT FOR THE UNDERSIGNED, IN ANY AND ALL CAPACITIES, WITH
FULL POWER OF SUBSTITUTION, TO SIGN 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.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
NAME TITLE DATE
- ------------------------------------------ ---------------------------------------------------
<C> <S> <C>
/s/ BERNARD L. SCHWARTZ Chairman of the Board April 18, 1997
- ------------------------------------------ (Principal Executive Officer)
BERNARD L. SCHWARTZ
/s/ MICHAEL B. TARGOFF President and Director April 18, 1997
- ------------------------------------------
MICHAEL B. TARGOFF
/s/ ERIC J. ZAHLER Vice President and Director April 18, 1997
- ------------------------------------------
ERIC J. ZAHLER
/s/ MICHAEL P. DEBLASIO Vice President and Chief April 18, 1997
- ------------------------------------------ Financial Officer
MICHAEL P. DEBLASIO (Principal Financial Officer)
/s/ HARVEY B. REIN Vice President and Controller April 18, 1997
- ------------------------------------------ (Principal Accounting Officer)
HARVEY B. REIN
</TABLE>
II-3
<PAGE> 57
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
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 THE DAY OF APRIL 18, 1997.
GLOBALSTAR CAPITAL CORPORATION
By: /s/ MICHAEL B. TARGOFF
------------------------------------
Michael B. Targoff
President and Chief Operating
Officer
POWER OF ATTORNEY
EACH OF THE UNDERSIGNED OFFICERS AND DIRECTORS OF GLOBALSTAR CAPTIAL
CORPORATION HEREBY SEVERALLY CONSTITUTES AND APPOINTS BERNARD L. SCHWARTZ,
MICHAEL B. TARGOFF, MICHAEL P. DEBLASIO, ERIC J. ZAHLER AND HARVEY B. REIN, AND
EACH OF THEM AS ATTORNEYS-IN-FACT FOR THE UNDERSIGNED, IN ANY AND ALL
CAPACITIES, WITH FULL POWER OF SUBSTITUTION, TO SIGN 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.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
NAME TITLE DATE
- ------------------------------------------ ---------------------------------------------------
<C> <S> <C>
/s/ BERNARD L. SCHWARTZ Chairman of the Board and Chief April 18, 1997
- ------------------------------------------ Executive Officer (Principal
BERNARD L. SCHWARTZ Executive Officer)
/s/ MICHAEL B. TARGOFF President, Chief Operating April 18, 1997
- ------------------------------------------ Officer
MICHAEL B. TARGOFF and Director
/s/ MICHAEL P. DEBLASIO Senior Vice President, Chief April 18, 1997
- ------------------------------------------ Financial Officer and Director
MICHAEL P. DEBLASIO (Principal Financial Officer)
/s/ HARVEY B. REIN Vice President and Controller April 18, 1997
- ------------------------------------------ (Principal Accounting Officer)
HARVEY B. REIN
</TABLE>
II-4
<PAGE> 58
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION OF EXHIBIT PAGE
- ------- ----------------------------------------------------------------------- ------------
<S> <C> <C>
3.1 Amended and Restated Agreement of Limited Partnership of Globalstar,
dated as of March 6, 1996, among Loral/Qualcomm Satellite Services,
L.P., Globalstar Telecommunications Limited, AirTouch Satellite
Services, San Giorgio S.p.A., Hyundai/Dacom, Loral/DASA Globalstar,
L.P., Loral Globalstar, L.P., TE.S.A.M. and Vodastar Limited***........
3.2 Certificate of Incorporation of Globalstar Capital+....................
3.3 By-laws of Globalstar Capital+.........................................
4.1 Indenture dated as of February 15, 1997 relating to Globalstar's and
Globalstar Capital's 11 3/8% Senior Notes due 2004***..................
5.1 Opinion of Willkie Farr & Gallagher****................................
8.1 Opinion of Willkie Farr & Gallagher (included with Exhibit 5.1)****....
10.1 Subscription Agreements by and between Globalstar, and each of AirTouch
Communications, Alcatel Spacecom, Loral General Partner, Inc.,
Hyundai/Dacom and Vodastar Limited*....................................
10.2 Subscription Agreement by and between Globalstar and Loral/Qualcomm
Satellite Services, L.P.*..............................................
10.3 Satellite Procurement Letter Agreement by and among Globalstar, Hyundai
Electronics Industries Co., Ltd. and Space Systems/Loral, Inc.*........
10.4 Contract for OmniTRACS Like Services Agreement between Globalstar and
Qualcomm Incorporated*.................................................
10.5 Support Agreement by and among Qualcomm Incorporated, Globalstar and
Loral/Qualcomm Satellite Services, Inc.*...............................
10.6 Qualcomm Licensee Letter Agreement by and among Globalstar, Hyundai
Electronics Industries Co., Ltd. and Qualcomm Incorporated.*...........
10.7 Contract between Globalstar and Space Systems/Loral, Inc.*.............
10.8 Contract for the Development of Certain Portions of the Ground
Operations Control Center between Globalstar and Loral Western
Development Laboratories.*.............................................
10.9 Contract for the Development of Satellite Orbital Operations Centers
between Globalstar and Loral Aerosys, a division of Loral Aerospace
Corporation.*..........................................................
10.10 Revolving Credit Agreement dated as of December 15, 1995, as amended on
March 25, 1996, among Globalstar, certain banks parties thereto and
Chemical Bank, as Administrative Agent***..............................
10.11 Warrant Agreement dated as of February 19, 1997 relating to Warrants to
purchase 1,032,250 shares of Common Stock***...........................
10.12 Registration Rights Agreement dated February 19, 1997 relating to
Globalstar's and Globalstar Capital's 11 3/8% Senior Notes due
2004***................................................................
12 Statement Regarding Computation of Ratios***...........................
21 Subsidiaries of the Registrants.+......................................
23.1 Consent of Deloitte & Touche LLP.+.....................................
23.2 Consents of Willkie Farr & Gallagher (included in their opinion filed
as Exhibit 5.1).****...................................................
</TABLE>
<PAGE> 59
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION OF EXHIBIT PAGE
- ------- ----------------------------------------------------------------------- ------------
<S> <C> <C>
24 Powers of Attorney (included in the Signature Pages).+.................
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 GTL's Registration Statement on Form S-1 (No.
33-86808).
** Incorporated by reference to GTL's Registration Statement on Form S-3 (No.
333-6477).
*** Incorporated by reference to the Form 10-K of GTL for fiscal 1996.
**** To be filed by amendment.
+ Filed herewith.
++ Management compensation plan.
<PAGE> 1
EXHIBIT 3.2
CERTIFICATE OF INCORPORATION
OF
GLOBALSTAR CAPITAL CORPORATION
* * * * * * * *
1. The name of the corporation (the "Corporation") is:
GLOBALSTAR CAPITAL CORPORATION
2. The address of its registered office in the State of Delaware is 1209
Orange Street in the City of Wilmington, County of New Castle. The name of its
registered agent at such address is The Corporation Trust Company.
3. The nature of the business or purposes to be conducted or promoted by
the Corporation is to engage in any lawful act or activity for which
corporations may be organized under the General Corporation Law of the State of
Delaware.
4. The total number of shares of stock which the Corporation shall have
authority to issue is 1,000 shares, consisting of 1,000 shares of Common Stock,
each of which shall have a par value of $.10 per share.
5. The name and mailing address of the incorporator is as follows:
Marianne A. Grin
Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, New York 10022
6. In furtherance and not in limitation of the powers conferred by
statute, the by-laws of the Corporation may be made, altered, amended or
repealed by the stockholders or by a majority of the entire board of directors.
7. Directors of the Corporation shall be elected by a majority of the
votes of the shares present in person or represented by proxy at a meeting
called for the election of directors and entitled to vote on the election of
directors.
8. Elections of directors need not be by written ballot.
9. (a) The Corporation shall indemnify to the fullest extent permitted
under and in accordance with the laws of the State of Delaware any person who
was or is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal, administrative
or investigative by reason of the fact that he is or was a director, officer,
employee or agent of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, trustee, employee or agent of or in any
other capacity with another corporation, partnership, joint venture, trust or
other enterprise, against expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding if he acted in good faith and in
a manner he reasonably believed to be in or not opposed to the best interests of
the Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful.
(b) Expenses incurred in defending a civil or criminal action, suit or
proceeding shall (in the case of any action, suit or proceeding against a
director of the Corporation) or may (in the case of any action, suit or
proceeding against an officer, trustee, employee or agent) be paid by the
Corporation in advance of the final disposition of such action, suit or
proceeding as authorized by the Board upon receipt of an undertaking by or on
behalf of the indemnified person to repay such amount if it shall ultimately be
determined that he is not entitled to be indemnified by the Corporation as
authorized in this Paragraph.
<PAGE> 2
(c) The indemnification and other rights set forth in this Paragraph shall
not be exclusive of any provisions with respect thereto in the by-laws or any
other contract or agreement between the Corporation and any officer, director,
employee or agent of the Corporation.
(d) Neither the amendment nor repeal of this paragraph 9, subparagraph (a),
(b) or (c), nor the adoption of any provision of this Certificate of
Incorporation inconsistent with paragraph 9, subparagraph (a), (b) or (c), shall
eliminate or reduce the effect of this paragraph 9, subparagraphs (a), (b) and
(c), in respect of any matter occurring before such amendment, repeal or
adoption of an inconsistent provision or in respect of any cause of action, suit
or claim relating to any such matter which would have given rise to a right of
indemnification or right to receive expenses pursuant to this paragraph 9,
subparagraph (a), (b) or (c), if such provision had not been so amended or
repealed or if a provision inconsistent therewith had not been so adopted.
(e) No director shall be personally liable to the Corporation or any
stockholder for monetary damages for breach of fiduciary duty as a director,
except for any matter in respect of which such director (A) shall be liable
under Section 174 of the General Corporation Law of the State of Delaware or any
amendment thereto or successor provision thereto, or (B) shall be liable by
reason that, in addition to any and all other requirements for liability, he:
(i) shall have breached his duty of loyalty to the Corporation or its
stockholders;
(ii) shall not have acted in good faith or, in failing to act, shall
not have acted in good faith;
(iii) shall have acted in a manner involving intentional misconduct or
a knowing violation of law or, in failing to act, shall have acted in a
manner involving intentional misconduct or a knowing violation of law; or
(iv) shall have derived an improper personal benefit.
If the General Corporation Law of the State of Delaware is amended to
authorize corporate action further eliminating or limiting the personal
liability of directors, then the liability of a director of the Corporation
shall be eliminated or limited to the fullest extent permitted by the General
Corporation Law of the State of Delaware, as so amended.
10. Pursuant to Section 203(b)(1) of the General Corporation Law of the
State of Delaware, the Corporation elects not to be governed by the provisions
of Section 203.
THE UNDERSIGNED, being the incorporator hereinbefore named, for the purpose
of forming a Corporation pursuant to the General Corporation Law of the State of
Delaware makes this Certificate, hereby declaring and certifying that this is
his act and deed and the facts herein stated are true and, accordingly, has
hereunto set his hand this 24th day of July, 1995.
/s/ MARIANNE A. GRIN
--------------------------------------
Marianne A. Grin
2
<PAGE> 1
EXHIBIT 3.3
GLOBALSTAR CAPITAL CORPORATION
INCORPORATED UNDER THE LAWS OF
THE STATE OF DELAWARE
BY-LAWS
ARTICLE I
OFFICES
The registered office of the Corporation in Delaware shall be at 1209
Orange Street in the City of Wilmington, County of New Castle, in the State of
Delaware, and The Corporation Trust Company shall be the resident agent of this
Corporation in charge thereof. The Corporation may also have such other offices
at such other places, within or without the State of Delaware, as the Board of
Directors may from time to time designate or the business of the Corporation may
require.
ARTICLE II
STOCKHOLDERS
Section 1. Annual Meeting: The annual meeting of stockholders for the
election of directors and the transaction of any other business shall be held on
the 15th day of July each year, or as soon after such date as may be
practicable, in such city and state and at such time and place as may be
designated by the Board of Directors, and set forth in the notice of such
meeting. If said day be a legal holiday, said meeting shall be held on the next
succeeding business day. At the annual meeting any business may be transacted
and any corporate action may be taken, whether stated in the notice of meeting
or not, except as otherwise expressly provided by statute or the Certificate of
Incorporation.
Section 2. Special Meetings: Special meetings of the stockholders for any
purpose may be called at any time by the Board of Directors, or by the
President, and shall be called by the President at the request of the holders of
a majority of the outstanding shares of capital stock entitled to vote. Special
meetings shall be held at such place or places within or without the State of
Delaware as shall from time to time be designated by the Board of Directors and
stated in the notice of such meeting. At a special meeting no business shall be
transacted and no corporate action shall be taken other than that stated in the
notice of the meeting.
Section 3. Notice of Meetings: Written notice of the time and place of
any stockholder's meeting, whether annual or special, shall be given to each
stockholder entitled to vote thereat, by personal delivery or by mailing the
same to him at his address as the same appears upon the records of the
Corporation at least ten (10) days but not more than sixty (60) days before the
day of the meeting. Notice of any adjourned meeting need not be given except by
announcement at the meeting so adjourned, unless otherwise ordered in connection
with such adjournment. Such further notice, if any, shall be given as may be
required by law.
Section 4. Quorum: Any number of stockholders, together holding at least
a majority of the capital stock of the Corporation issued and outstanding and
entitled to vote, who shall be present in person or represented by proxy at any
meeting duly called, shall constitute a quorum for the transaction of all
business, except as otherwise provided by law, by the Certificate of
Incorporation or by these By-laws.
Section 5. Adjournment of Meetings: If less than a quorum shall attend at
the time for which a meeting shall have been called, the meeting may adjourn
from time to time by a majority vote of the stockholders present or represented
by proxy and entitled to vote without notice other than by announcement at the
meeting until a quorum shall attend. Any meeting at which a quorum is present
may also be adjourned in like manner and for such time or upon such call as may
be determined by a majority vote of the stockholders present or represented by
proxy and entitled to vote. At any adjourned meeting at which a quorum shall be
present, any business may be transacted and any corporate action may be taken
which might have been transacted at the meeting as originally called.
<PAGE> 2
Section 6. Voting List: The Secretary shall prepare and make, at least
ten days before every election of directors, a complete list of the stockholders
entitled to vote, arranged in alphabetical order and showing the address of each
stockholder and the number of shares of each stockholder. Such list shall be
open at the place where the election is to be held for said ten days, to the
examination of any stockholder, and shall be produced and kept at the time and
place of election during the whole time thereof, and subject to the inspection
of any stockholder who may be present.
Section 7. Voting: Each stockholder entitled to vote at any meeting may
vote either in person or by proxy, but no proxy shall be voted on or after three
years from its date, unless said proxy provides for a longer period. Each
stockholder entitled to vote shall at every meeting of the stockholders be
entitled to one vote for each share of stock registered in his name on the
record of stockholders. At all meetings of stockholders all matters, except as
otherwise provided by statute, shall be determined by the affirmative vote of
the majority of shares present in person or by proxy and entitled to vote on the
subject matter. Voting at meetings of stockholders need not be by written
ballot.
Section 8. Record Date of Stockholders: The Board of Directors is
authorized to fix in advance a date not exceeding sixty days nor less than ten
days preceding the date of any meeting of stockholders, or the date for the
payment of any dividend, or the date for the allotment of rights, or the date
when any change or conversion or exchange of capital stock shall go into effect,
or a date in connection with obtaining the consent of stockholders for any
purposes, as a record date for the determination of the stockholders entitled to
notice of, and to vote at, any such meeting, and any adjournment thereof, or
entitled to receive payment of any such dividend, or to any such allotment of
rights, or to exercise the rights in respect of any such change, conversion or
exchange of capital stock, or to give such consent, and, in such case, such
stockholders and only such stockholders as shall be stockholders of record on
the date so fixed shall be entitled to such notice of, and to vote at, such
meeting, and any adjournment thereof, or to receive payment of such dividend, or
to receive such allotment of rights, or to exercise such rights, or to give such
consent, as the case may be, notwithstanding any transfer of any stock on the
books of the Corporation, after such record date fixed as aforesaid.
Section 9. Action Without Meeting: Any action required or permitted to be
taken at any annual or special meeting of stockholders may be taken without a
meeting, without prior notice and without a vote, if a consent or consents in
writing, setting forth the action so taken, shall be signed by the holders of
outstanding stock having not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted and shall be delivered to the
Corporation by delivery to its registered office in the State of Delaware, its
principal place of business, or an officer or agent of the Corporation having
custody of the book in which proceedings of meetings of stockholders are
recorded. Delivery made to the Corporation's registered office shall be by hand
or by certified or registered mail, return receipt requested. Prompt notice of
the taking of the corporate action without a meeting by less than unanimous
written consent shall be given to those stockholders who have not consented in
writing.
Section 10. Conduct of Meetings: The Chairman of the Board of Directors
or, in his absence, the President or any Vice President designated by the
Chairman of the Board, shall preside at all regular or special meetings of
stockholders. To the maximum extent permitted by law, such presiding person
shall have the power to set procedural rules, including but not limited to rules
respecting the time allotted to stockholders to speak, governing all aspects of
the conduct of such meetings.
ARTICLE III
DIRECTORS
Section 1. Number and Qualifications: The Board of Directors shall
consist initially of three directors, and thereafter shall consist of such
number as may be fixed from time to time by resolution of the Board. The
directors need not be stockholders.
Section 2. Election of Directors: The directors shall be elected by the
stockholders at the annual meeting of stockholders.
2
<PAGE> 3
Section 3. Duration of Office: The directors chosen at any annual meeting
shall, except as hereinafter provided, hold office until the next annual
election and until their successors are elected and qualify.
Section 4. Removal and Resignation of Directors: Any director may be
removed from the Board of Directors, with or without cause, by the holders of a
majority of the shares of capital stock entitled to vote, either by written
consent or consents or at any special meeting of the stockholders called for
that purpose, and the office of such director shall forthwith become vacant.
Any director may resign at any time. Such resignation shall take effect at
the time specified therein, and if no time be specified, at the time of its
receipt by the President or Secretary. The acceptance of a resignation shall not
be necessary to make it effective, unless so specified therein.
Section 5. Filling of Vacancies: Any vacancy among the directors,
occurring from any cause whatsoever, may be filled by a majority of the
remaining directors, though less than a quorum, provided however, that the
stockholders removing any director may at the same meeting fill the vacancy
caused by such removal, and provided further, that if the directors fail to fill
any such vacancy, the stockholders may at any special meeting called for that
purpose fill such vacancy. In case of any increase in the number of directors,
the additional directors may be elected by the directors in office before such
increase.
Any person elected to fill a vacancy shall hold office, subject to the
right of removal as hereinbefore provided, until the next annual election and
until his successor is elected and qualifies.
Section 6. Regular Meetings: The Board of Directors shall hold an annual
meeting for the purpose of organization and the transaction of any business
immediately after the annual meeting of the stockholders, provided a quorum of
directors is present. Other regular meetings may be held at such times as may be
determined from time to time by resolution of the Board of Directors.
Section 7. Special Meetings: Special meetings of the Board of Directors
may be called by the Chairman of the Board of Directors or by the President.
Section 8. Notice and Place of Meetings: Meetings of the Board of
Directors may be held at the principal office of the Corporation, or at such
other place as shall be stated in the notice of such meeting. Notice of any
special meeting, and, except as the Board of Directors may otherwise determine
by resolution, notice of any regular meeting also, shall be mailed to each
director addressed to him at his residence or usual place of business at least
two days before the day on which the meeting is to be held, or if sent to him at
such place by telegraph or cable, or delivered personally or by telephone, not
later than the day before the day on which the meeting is to be held. No notice
of the annual meeting of the Board of Directors shall be required if it is held
immediately after the annual meeting of the stockholders and if a quorum is
present.
Section 9. Business Transacted at Meetings, etc.: Any business may be
transacted and any corporate action may be taken at any regular or special
meeting of the Board of Directors at which a quorum shall be present, whether
such business or proposed action be stated in the notice of such meeting or not,
unless special notice of such business or proposed action shall be required by
statute.
Section 10. Quorum: A majority of the Board of Directors at any time in
office shall constitute a quorum. At any meeting at which a quorum is present,
the vote of a majority of the members present shall be the act of the Board of
Directors unless the act of a greater number is specifically required by law or
by the Certificate of Incorporation or these By-laws. The members of the Board
shall act only as the Board and the individual members thereof shall not have
any powers as such.
Section 11. Compensation: The directors shall not receive any stated
salary for their services as directors, but by resolution of the Board of
Directors a fixed fee and expenses of attendance may be allowed for attendance
at each meeting. Nothing herein contained shall preclude any director from
serving the Corporation in any other capacity, as an officer, agent or
otherwise, and receiving compensation therefor.
Section 12. Action Without a Meeting: Any action required or permitted to
be taken at any meeting of the Board of Directors, or of any committee thereof,
may be taken without a meeting if all members of the
3
<PAGE> 4
Board or committee, as the case may be, consent thereto in writing, and the
writing or writings are filed with the minutes of the proceedings of the Board
or committee.
Section 13. Meetings Through Use of Communications Equipment: Members of
the Board of Directors, or any committee designated by the Board of Directors,
shall, except as otherwise provided by law, the Certificate of Incorporation or
these By-laws, have the power to participate in a meeting of the Board of
Directors, or any committee, by means of a conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and such participation shall constitute presence in
person at the meeting.
ARTICLE IV
COMMITTEES
Section 1. Executive Committee: The Board of Directors may, by resolution
passed by a majority of the whole Board, designate one or more of their number
to constitute an Executive Committee to hold office at the pleasure of the
Board, which Committee shall, during the intervals between meetings of the Board
of Directors, have and exercise all of the powers of the Board of Directors in
the management of the business and affairs of the Corporation, subject only to
such restrictions or limitations as the Board of Directors may from time to time
specify, or as limited by the Delaware General Corporation Law, and shall have
power to authorize the seal of the Corporation to be affixed to all papers which
may require it.
Any member of the Executive Committee may be removed at any time, with or
without cause, by a resolution of a majority of the whole Board of Directors.
Any person ceasing to be a director shall ipso facto cease to be a member
of the Executive Committee.
Any vacancy in the Executive Committee occurring from any cause whatsoever
may be filled from among the directors by a resolution of a majority of the
whole Board of Directors.
Section 2. Other Committees: Other committees, whose members need not be
directors, may be appointed by the Board of Directors or the Executive
Committee, which committees shall hold office for such time and have such powers
and perform such duties as may from time to time be assigned to them by the
Board of Directors or the Executive Committee.
Any member of such a committee may be removed at any time, with or without
cause, by the Board of Directors or the Executive Committee. Any vacancy in a
committee occurring from any cause whatsoever may be filled by the Board of
Directors or the Executive Committee.
Section 3. Resignation: Any member of a committee may resign at any time.
Such resignation shall be made in writing and shall take effect at the time
specified therein, or, if no time be specified, at the time of its receipt by
the President or Secretary. The acceptance of a resignation shall not be
necessary to make it effective unless so specified therein.
Section 4. Quorum: A majority of the members of a committee shall
constitute a quorum. The act of a majority of the members of a committee present
at any meeting at which a quorum is present shall be the act of such committee.
The members of a committee shall act only as a committee, and the individual
members thereof shall not have any powers as such.
Section 5. Record of Proceedings, etc.: Each committee shall keep a
record of its acts and proceedings, and shall report the same to the Board of
Directors when and as required by the Board of Directors.
Section 6. Organization, Meetings, Notices, etc.: A committee may hold
its meetings at the principal office of the Corporation, or at any other place
which a majority of the committee may at any time agree upon. Each committee may
make such rules as it may deem expedient for the regulation and carrying on of
its meetings and proceedings. Unless otherwise ordered by the Executive
Committee, any notice of a meeting of such committee may be given by the
Secretary of the Corporation or by the chairman of the committee and shall be
sufficiently given if mailed to each member at his residence or usual place of
business at least two days
4
<PAGE> 5
before the day on which the meeting is to be held, or if sent to him at such
place by telegraph or cable, or delivered personally or by telephone not later
than 24 hours before the time at which the meeting is to be held.
Section 7. Compensation: The members of any committee shall be entitled
to such compensation as may be allowed them by resolution of the Board of
Directors.
ARTICLE V
OFFICERS
Section 1. Number: The officers of the Corporation shall be a President,
one or more Vice-Presidents, a Secretary, one or more Assistant Secretaries, a
Treasurer, and one or more Assistant Treasurers, and such other officers as may
be appointed in accordance with the provisions of Section 3 of this Article V.
The Board of Directors in its discretion may also elect a Chairman of the Board
of Directors.
Section 2. Election, Term of Office and Qualifications: The officers,
except as provided in Section 3 of this Article V, shall be chosen annually by
the Board of Directors. Each such officer shall, except as herein otherwise
provided, hold office until his successor shall have been chosen and shall
qualify. The Chairman of the Board of Directors, if any, shall be a director of
the Corporation, and should he cease to be a director, he shall ipso facto cease
to be such officer. Except as otherwise provided by law, any number of offices
may be held by the same person.
Section 3. Other Officers: Other officers may from time to time be
appointed by the Board of Directors or by a vote of the stockholders holding at
least a majority of the capital stock of the Corporation issued and outstanding
and entitled to vote. These additional officers shall have such powers and
perform such duties as may be assigned to them by the Board of Directors, the
stockholders or the officer or committee appointing them.
Section 4. Removal of Officers: Any officer of the Corporation may be
removed from office, with or without cause, by a vote of a majority of the Board
of Directors or by a vote of stockholders holding at least a majority of the
capital stock of the Corporation issued and outstanding and entitled to vote.
Section 5. Resignation: Any officer of the Corporation may resign at any
time. Such resignation shall be in writing and shall take effect at the time
specified therein, and if no time be specified, at the time of its receipt by
the President or Secretary. The acceptance of a resignation shall not be
necessary in order to make it effective, unless so specified therein.
Section 6. Filling of Vacancies: A vacancy in any office shall be filled
by any of the following: the Board of Directors, stockholders holding at least a
majority of the capital stock of the Corporation entitled to vote, or by the
authority appointing the predecessor in such office.
Section 7. Compensation: The compensation of the officers shall be fixed
by the Board of Directors, or by any committee upon whom power in that regard
may be conferred by the Board of Directors.
Section 8. Chairman of the Board of Directors: The Chairman of the Board
of Directors shall be a director and shall preside at all meetings of the Board
of Directors at which he shall be present, and shall have such power and perform
such duties as may from time to time be assigned to him by the Board of
Directors.
Section 9. President: The President shall, when present, preside at all
meetings of the stockholders, and, in the absence of the Chairman of the Board
of Directors, at meetings of the Board of Directors. He shall have power to call
special meetings of the stockholders or of the Board of Directors or of the
Executive Committee at any time. He shall be the chief executive officer of the
Corporation, and shall have the general direction of the business, affairs and
property of the Corporation, and of its several officers, and shall have and
exercise all such powers and discharge such duties as usually pertain to the
office of President.
Section 10. Vice-Presidents: The Vice-Presidents, or any of them, shall,
subject to the direction of the Board of Directors, at the request of the
President or in his absence, or in case of his inability to perform his duties
from any cause, perform the duties of the President, and, when so acting, shall
have all the powers of,
5
<PAGE> 6
and be subject to all restrictions upon, the President. The Vice-Presidents
shall also perform such other duties as may be assigned to them by the Board of
Directors, and the Board of Directors may determine the order of priority among
them.
Section 11. Secretary: The Secretary shall perform such duties as are
incident to the office of Secretary, or as may from time to time be assigned to
him by the Board of Directors, or as are prescribed by these By-laws.
Section 12. Treasurer: The Treasurer shall perform such duties and have
powers as are usually incident to the office of Treasurer or which may be
assigned to him by the Board of Directors.
Section 13. Assistant Secretary: An Assistant Secretary shall perform
such duties of the Secretary as the Secretary or the Board of Directors may
assign, and, in the absence of the Secretary, may perform all the duties of the
Secretary.
Section 14. Assistant Treasurer: An Assistant Treasurer shall perform
such duties of the Treasurer as the Treasurer or the Board of Directors may
assign, and, in the absence of the Treasurer, may perform all the duties of the
Treasurer.
ARTICLE VI
CAPITAL STOCK
Section 1. Issue of Certificates of Stock: Certificates of capital stock
shall be in such form as shall be approved by the Board of Directors. They shall
be numbered in the order of their issue and shall be signed by the Chairman of
the Board of Directors, the President or one of the Vice-Presidents, and the
Secretary or an Assistant Secretary or the Treasurer or an Assistant Treasurer,
and the seal of the Corporation or a facsimile thereof shall be impressed or
affixed or reproduced thereon, provided, however, that where such certificates
are signed by a transfer agent or an assistant transfer agent or by a transfer
clerk acting on behalf of the Corporation and a registrar, the signature of any
such Chairman of the Board of Directors, President, Vice-President, Secretary,
Assistant Secretary, Treasurer or Assistant Treasurer may be facsimile. In case
any officer or officers who shall have signed, or whose facsimile signature or
signatures shall have been used on any such certificate or certificates shall
cease to be such officer or officers of the Corporation, whether because of
death, resignation or otherwise, before such certificate or certificates shall
have been delivered by the Corporation, such certificate or certificates may
nevertheless be adopted by the Corporation and be issued and delivered as though
the person or persons who signed such certificate or certificates, or whose
facsimile signature or signatures shall have been used thereon have not ceased
to be such officer or officers of the Corporation.
Section 2. Registration and Transfer of Shares: The name of each person
owning a share of the capital stock of the Corporation shall be entered on the
books of the Corporation together with the number of shares held by him, the
numbers of the certificates covering such shares and the dates of issue of such
certificates. The shares of stock of the Corporation shall be transferable on
the books of the Corporation by the holders thereof in person, or by their duly
authorized attorneys or legal representatives, on surrender and cancellation of
certificates for a like number of shares, accompanied by an assignment or power
of transfer endorsed thereon or attached thereto, duly executed, and with such
proof of the authenticity of the signature as the Corporation or its agents may
reasonably require. A record shall be made of each transfer.
The Board of Directors may make other and further rules and regulations
concerning the transfer and registration of certificates for stock and may
appoint a transfer agent or registrar or both and may require all certificates
of stock to bear the signature of either or both.
Section 3. Lost, Destroyed and Mutilated Certificates: The holder of any
stock of the Corporation shall immediately notify the Corporation of any loss,
theft, destruction or mutilation of the certificates therefor. The Corporation
may issue a new certificate of stock in the place of any certificate theretofore
issued by it alleged to have been lost, stolen or destroyed, and the Board of
Directors may, in its discretion, require the owner of the lost, stolen or
destroyed certificate, or his legal representatives, to give the Corporation a
bond, in such sum
6
<PAGE> 7
not exceeding double the value of the stock and with such surety or sureties as
they may require, to indemnify it against any claim that may be made against it
by reason of the issue of such new certificate and against all other liability
in the premises, or may remit such owner to such remedy or remedies as he may
have under the laws of the State of Delaware.
ARTICLE VII
DIVIDENDS, SURPLUS, ETC.
Section 1. General Discretion of Directors: The Board of Directors shall
have power to fix and vary the amount to be set aside or reserved as working
capital of the Corporation, or as reserves, or for other proper purposes of the
Corporation, and, subject to the requirements of the Certificate of
Incorporation, to determine whether any, if any, part of the surplus or net
profits of the Corporation shall be declared as dividends and paid to the
stockholders, and to fix the date or dates for the payment of dividends.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
Section 1. Fiscal Year: The fiscal year of the Corporation shall commence
on the first day of April and end on the last day of March.
Section 2. Corporate Seal: The corporate seal shall be in such form as
approved by the Board of Directors and may be altered at their pleasure. The
corporate seal may be used by causing it or a facsimile thereof to be impressed
or affixed or reproduced or otherwise.
Section 3. Notices: Except as otherwise expressly provided, any notice
required by these By-laws to be given shall be sufficient if given by depositing
the same in a post office or letter box in a sealed postpaid wrapper addressed
to the person entitled thereto at his address, as the same appears upon the
books of the Corporation, or by telegraphing or cabling the same to such person
at such addresses; and such notice shall be deemed to be given at the time it is
mailed, telegraphed or cabled.
Section 4. Waiver of Notice: Any stockholder or director may at any time,
by writing or by telegraph or by cable, waive any notice required to be given
under these By-laws, and if any stockholder or director shall be present at any
meeting his presence shall constitute a waiver of such notice.
Section 5. Checks, Drafts, etc.: All checks, drafts or other orders for
the payment of money, notes or other evidences of indebtedness issued in the
name of the Corporation, shall be signed by such officer or officers, agent or
agents of the Corporation, and in such manner, as shall from time to time be
designated by resolution of the Board of Directors.
Section 6. Deposits: All funds of the Corporation shall be deposited from
time to time to the credit of the Corporation in such bank or banks, trust
companies or other depositories as the Board of Directors may select, and, for
the purpose of such deposit, checks, drafts, warrants and other orders for the
payment of money which are payable to the order of the Corporation, may be
endorsed for deposit, assigned and delivered by any officer of the Corporation,
or by such agents of the Corporation as the Board of Directors or the President
may authorize for that purpose.
Section 7. Voting Stock of Other Corporations: Except as otherwise
ordered by the Board of Directors or the Executive Committee, the President or
the Treasurer shall have full power and authority on behalf of the Corporation
to attend and to act and to vote at any meeting of the stockholders of any
corporation of which the Corporation is a stockholder and to execute a proxy to
any other person to represent the Corporation at any such meeting, and at any
such meeting the President or the Treasurer or the holder of any such proxy, as
the case may be, shall possess and may exercise any and all rights and powers
incident to ownership of such stock and which, as owner thereof, the Corporation
might have possessed and exercised if present. The Board of Directors or the
Executive Committee may from time to time confer like powers upon any other
person or persons.
7
<PAGE> 8
Section 8. Indemnification of Officers and Directors: The Corporation
shall indemnify any and all of its directors or officers, including former
directors or officers, and any employee, who shall serve as an officer or
director of any corporation at the request of this Corporation, to the fullest
extent permitted under and in accordance with the laws of the State of Delaware.
ARTICLE IX
AMENDMENTS
The Board of Directors shall have the power to make, rescind, alter, amend
and repeal these By-laws, provided, however, that the stockholders shall have
power to rescind, alter, amend or repeal any by-laws made by the Board of
Directors, and to enact by-laws which if so expressed shall not be rescinded,
altered, amended or repealed by the Board of Directors. No change of the time or
place for the annual meeting of the stockholders for the election of directors
shall be made except in accordance with the laws of the State of Delaware.
Dated: July 24, 1995
8
<PAGE> 1
EXHIBIT 21
SUBSIDIARIES OF GLOBALSTAR, L.P.:
Globalstar Capital Corporation
GlobalTrak Pty. Ltd.
J.S.C. GlobalTel
SUBSIDIARIES OF GLOBALSTAR CAPITAL CORPORATION:
None
<PAGE> 1
EXHIBIT 23.1
CONSENT OF DELOITTE & TOUCHE LLP
Globalstar, L.P. and Globalstar Capital Corporation
We consent to the incorporation by reference in this Registration Statement
of Globalstar, L.P. and Globalstar Capital Corporation on Form S-4 of our report
dated February 24, 1997 on the consolidated financial statements of Globalstar,
L.P. appearing in the Annual Report on Form 10-K of Globalstar
Telecommunications Limited for the year ended December 31, 1996 and to the
reference to us under the heading "Experts" in the Prospectus, which is part of
this Registration Statement.
Deloitte & Touche LLP
San Jose, California
April 17, 1997
<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)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
----------------------
GLOBALSTAR, L.P.
(Exact name of obligor as specified in its charter)
Delaware 13-3759824
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
3200 Zanker Road
P.O. Box 640670
San Jose, California 95164
(Address of principal executive offices) (Zip code)
----------------------
GLOBALSTAR CAPITAL CORPORATION
(Exact name of obligor as specified in its charter)
Delaware 13-3876323
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
3200 Zanker Road
P.O. Box 640670
San Jose, California 95164
(Address of principal executive offices) (Zip code)
----------------------
11 3/8% Senior Notes Due 2004
(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.
- --------------------------------------------------------------------------------
Name Address
- --------------------------------------------------------------------------------
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, 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
(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 RULE
24 OF THE COMMISSION'S RULES OF PRACTICE.
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.)
-2-
<PAGE> 3
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.
-3-
<PAGE> 4
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 17th day of April, 1997.
THE BANK OF NEW YORK
By: /s/ PAUL J. SCHMALZEL
------------------------------
Name: PAUL J. SCHMALZEL
Title: ASSISTANT TREASURER
-4-
<PAGE> 5
EXHIBIT 7
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286 And Foreign and Domestic Subsidiaries, a
member of the Federal Reserve System, at the close of business September 30,
1996, published in accordance with a call made by the Federal Reserve Bank of
this District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
in Thousands
<S> <C>
ASSETS
Cash and balances due from depos-
itory institutions:
Noninterest-bearing balances and
currency and coin ..................................... $ 4,404,522
Interest-bearing balances ............................... 732,833
Securities:
Held-to-maturity securities ............................. 789,964
Available-for-sale securities ........................... 2,005,509
Federal funds sold in domestic offices
of the bank:
Federal funds sold ...................................... 3,364,838
Loans and lease financing
receivables:
Loans and leases, net of unearned
income ..................................... 28,728,602
LESS: Allowance for loan and
lease losses .................................. 584,525
LESS: Allocated transfer risk
reserve ........................................... 429
Loans and leases, net of unearned
income, allowance, and reserve ........................ 28,143,648
Assets held in trading accounts ........................... 1,004,242
Premises and fixed assets (including
capitalized leases) ..................................... 605,668
Other real estate owned ................................... 41,238
Investments in unconsolidated
subsidiaries and associated
companies ............................................... 205,031
Customers' liability to this bank on
acceptances outstanding ................................. 949,154
Intangible assets ......................................... 490,524
Other assets .............................................. 1,305,839
------------
Total assets .............................................. $ 44,043,010
============
LIABILITIES
Deposits:
In domestic offices ..................................... $ 20,441,318
Noninterest-bearing ........................... 8,158,472
Interest-bearing ............................. 12,282,846
In foreign offices, Edge and
Agreement subsidiaries, and IBFs ........................ 11,710,903
Noninterest-bearing .............................. 46,182
Interest-bearing ............................. 11,664,721
Federal funds purchased in
domestic offices of the bank:
Federal funds purchased ................................. 1,565,288
Demand notes issued to the U.S. ...........................
Treasury ................................................ 293,186
Trading liabilities ....................................... 826,856
Other borrowed money:
With original maturity of one year
or less ............................................... 2,103,443
With original maturity of more than
one year .............................................. 20,766
Bank's liability on acceptances exe-
cuted and outstanding ................................... 951,116
Subordinated notes and debentures ......................... 1,020,400
Other liabilities ......................................... 1,522,884
------------
Total liabilities ......................................... 40,456,160
------------
EQUITY CAPITAL
Common stock .............................................. 942,284
Surplus ................................................... 525,666
Undivided profits and capital
reserves ................................................ 2,129,376
Net unrealized holding gains
(losses) on available-for-sale
securities .............................................. (2,073)
Cumulative foreign currency transla-
tion adjustments ........................................ (8,403)
------------
Total equity capital ...................................... 3,586,850
------------
Total liabilities and equity
capital ................................................. $ 44,043,010
============
</TABLE>
I, Robert E. Keilman, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of Governors
of the Federal Reserve System and is true to the best of my knowledge and
belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
J. Carter Bacot }
Thomas A. Renyi } Directors
Alan R. Griffith }
