<PAGE>1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14D-9
Solicitation/Recommendation Statement
pursuant to Section 14(d)(4) of the
Securities Exchange Act of 1934
(Amendment No. 2)
Loral Corporation
(Name of Subject Company)
Loral Corporation
(Name of Person(s) Filing Statement)
Common Stock, par value $.25 per share
(Title of Class of Securities)
543859 10 2
(CUSIP Number of Class of Securities)
Michael B. Targoff
Senior Vice President and Secretary
Loral Corporation
600 Third Avenue
New York, New York 10016
(212) 697-1105
(Name and address and telephone number of person
authorized to receive notice and communications on
behalf of the person(s) filing statement)
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
<PAGE>2
This Amendment No. 2 amends and supplements the
Solicitation/Recommendation Statement on Schedule 14D-9 (as such may be amended
from time to time, the "Schedule 14D-9") filed on January 16, 1996 by Loral
Corporation, a New York corporation (the "Company" or "Loral"), with the
Securities and Exchange Commission (the "Commission"), relating to the tender
offer (the "Offer") by LAC Acquisition Corporation, a New York corporation (the
"Purchaser") and a wholly-owned subsidiary of Lockheed Martin Corporation, a
Maryland corporation ("Parent" or "Lockheed Martin"), disclosed in a Tender
Offer Statement on Schedule 14D-1 (the "Schedule 14D-1"), dated January 12,
1996, for all outstanding shares of common stock (the "Common Stock"), par
value $.25 per share, of the Company, and the associated preferred stock
purchase rights (the "Rights," and together with the Common Stock, the
"Shares"), for a per Share consideration of $38.00 net in cash to the seller,
upon the terms and subject to the conditions set forth in the Agreement and
Plan of Merger, dated as of January 7, 1996 (the "Merger Agreement"), among
Parent, the Purchaser and the Company.
All capitalized terms used herein but not otherwise defined
herein shall have the meanings ascribed thereto in the Schedule 14D-9. In
connection with the foregoing, the Company is hereby amending the Schedule
14D-9 as follows:
Item 3. Identity and Background.
Item 3 is amended and supplemented by replacing the section thereof
encaptioned "The Stockholders Agreement" with the following:
"The Stockholders Agreement
On or prior to the Distribution Date, Loral and Loral Space
will enter into a Shareholders Agreement (the "Shareholders
Agreement") which establishes, among other things, certain conditions
with respect to the relationship between Loral Space, on the one hand,
and Loral and its affiliates (the "Subject Shareholders"), on the
other hand. The Shareholders Agreement limits the ability of the
Subject Shareholders, during the term of the Shareholders Agreement to
acquire any voting securities or assets of, or solicit proxies or make
a public announcement of a proposal of any extraordinary transaction
with respect to, Loral Space. The Series A Preferred Stock issued to
Loral may be voted without restriction on all matters submitted to
shareholders for approval, except that it may not vote for the
election of directors. Subject Shareholders may vote their shares of
Loral Space Common Stock on all matters, including the election of
directors, except that in the event of an election contest, the
Subject Shareholders have agreed, pursuant to the Shareholders
Agreement, that they will vote any of Loral Space's equity securities
at the option of the
<PAGE>3
Subject Shareholders, either (i) as recommended by the Board
of Directors or management of Loral Space, or (ii) in the same
proportions as the other holders of Loral Space's equity securities
vote their securities. The Shareholders Agreement also limits the
ability of the Subject Shareholders to transfer the equity securities
of Loral Space held by the Subject Shareholders except pursuant to a
registered public offering, the volume limitations of Rule 144 under
the Exchange Act or pursuant to certain permitted transfers. The
Shareholders Agreement provides that if, within one year following the
date thereof, the Subject Shareholders vote against any transaction
involving (i) a merger, consolidation, corporate reorganization or
similar transaction or (ii) a sale, lease, exchange, transfer or other
disposition of all or substantially all of the assets of Loral Space
or any of its affiliates, in either case between Loral Space, on the
one hand, and SS/L, K&F, GTL, Globalstar and certain other
subsidiaries and affiliates of Loral Space, on the other hand, Loral
Space shall have the right to purchase from the Subject Shareholders
all of the equity securities of the Company held by the Subject
Shareholders for a price equal to $344 million plus all amounts
expended by the Subject Shareholders following the date of the
Shareholders Agreement in connection with the acquisition of equity
securities (other than acquisitions from another Subject Shareholder)
following the date of the Shareholders Agreement minus any net sales
proceeds received by the Subject Shareholders following the date of
the Shareholders Agreement in connection with the sale of equity
securities (other than sales to another Subject Shareholder) following
the date of the Shareholders Agreement. The agreement also provides
that if, within five years following the date thereof, any transaction
occurs involving (i) a merger, consolidation, corporate reorganization
or similar transaction, (ii) a sale, lease, exchange, transfer or
other disposition of all or substantially all of the assets of Loral
Space, Globalstar or any of their respective affiliates or (iii) the
liquidation or dissolution of Loral Space (each of the transactions
set forth in clauses (i) through (iii) referred to as a "Triggering
Transaction"), in each case, involving as parties, Loral Space or any
of its affiliates, on the one hand, and either GTL or Globalstar or
any of their respective subsidiaries on the other hand, Loral shall
have the right to purchase from Loral Space (including any successor
to the rights and obligations of Loral Space) a sufficient number of
shares of Loral Space (or such successor) to prevent dilution at a per
share price equal to (x) if the Triggering Transaction shall occur on
a date prior to the first anniversary thereof, $6.00, subject to
antidilution adjustments and (y) if the Triggering Transaction shall
occur after the first anniversary, but prior to the fifth anniversary
thereof, 80% of the per share price of the Company implicit in the
Triggering Transaction.
<PAGE>4
The Shareholders Agreement also provides that, in the event
of certain transactions, the Subject Shareholders shall have the right
to require Loral Space to purchase the Guaranty Warrants (as defined
in the Shareholders Agreement) issued to Loral at fair market value.
The Shareholders Agreement also provides that under certain
circumstances involving the repurchase by Loral Space of its equity
securities, the Subject Shareholders will sell to Loral Space such
number of Loral Space equity securities held by them sufficient to
reduce the Subject Shareholders' ownership of Loral Space equity
securities to 20% at a price equal to the repurchase price offered by
Loral Space, provided, however, that if the repurchase price is less
than the purchase price initially paid by the Subject Shareholders for
the Series A Preferred Stock, as adjusted by a 10% compounded annual
rate of increase, the Subject Shareholders may elect, in lieu of
selling such equity securities to Loral Space, to sell such equity
securities to third parties over certain time periods, which periods
in no event will be less than six months after the date the Subject
Shareholders deliver notice of their election to Loral Space. The
Shareholders Agreement further provides that under certain
circumstances and subject to certain conditions the Subject
Shareholders may require Loral Space to register under the Securities
Act any Loral Space securities held by the Subject Shareholders. The
Shareholders Agreement provides, subject to certain exceptions, that,
in the event of a tender offer, if Subject Shareholders wish to sell
or transfer any Loral Space securities pursuant to the tender offer,
the Subject Shareholders must first offer the shares for sale to the
Company. The term of the Shareholders Agreement will continue until
the earlier of (x) the date on which the voting power of the equity
securities owned by the Subject Shareholders represents, on a
fully-diluted basis, less than five percent (5%) of the total voting
power, (y) the tenth anniversary of the date of the agreement or (z) a
change of control of the Company.
After the seventh anniversary of the date of the Shareholders
Agreement, the Subject Shareholders shall have the right to propose
for election to the Board of Directors in opposition to management's
nominees the number of directors that is proportionate to the
percentage of voting securities of Loral Space then held by the
Subject Shareholders and to vote in favor of their election to the
Board.
The foregoing summary of the Shareholders Agreement does not
purport to be complete and is qualified in its entirety by reference
to the text of the Shareholders Agreement, a copy of which is filed as
Exhibit 12 hereto and is incorporated herein by reference.
<PAGE>5
The Exchange Agreement
Prior to the Distribution Date, Loral Space, Loral and
Lockheed Martin intend to enter into an Exchange Agreement providing
that, in the event that Loral Space is required to purchase additional
shares of SS/L common stock held by the Alliance Partners or the
Lehman Partnerships (a "Put Transaction"), and such Put Transaction
requires a filing with or the approval of, any antitrust authorities
having jurisdiction over the matter, the parties will cooperate to
comply with informational requirements and jointly attempt to resolve
any objections raised without any change in Lockheed Martin's
ownership interest in Loral Space. If such a change is nonetheless
required to obtain antitrust approval of the Put Transaction, Lockheed
Martin will be required to transfer to Loral Space some or all of the
shares of Loral Space securities beneficially owned by it in exchange
for shares of GTL Common Stock or, if the use of GTL Common Stock as
consideration is inconsistent with obtaining antitrust approval for
the Put Transaction, in exchange for cash. The shares of Loral Space
securities so transferred will be valued at the greater of fair market
value or the original purchase price thereof in connection with the
Distribution, increased at the rate of 10% per annum, compounded
annually, from the date of the consummation of the Offer.
The foregoing summary of the Exchange Agreement does not
purport to be complete and is qualified in its entirety by reference
to the text of the Exchange Agreement, a copy of which is filed as
Exhibit 17 hereto and is incorporated herein by reference."
Item 3 is further amended and supplemented by adding at the end of the
section encaptioned "The Merger Agreement" the following paragraph:
"Loral, Lockheed Martin and the Purchaser have agreed to an
amendment to the Merger Agreement that permits the Board of Directors
of Loral to provide that all Stock Options which are outstanding
immediately prior to Purchaser's acceptance for payment and payment
for Shares tendered pursuant to the Offer and which are held by
holders who are subject to the reporting requirements of Section 16(a)
of the Exchange Act will be cancelled and the holders thereof will be
entitled to receive from the Company, for each Share subject to such
Stock Option, (1) an amount in cash equal to the difference between
the Merger Price and the exercise price per share of such Stock
Option, which amount will be payable upon consummation of the Offer,
plus (2) one share of common stock, par value $0.01 per share of Loral
Space ("Loral Space Common Stock"), on the same basis as all other
holders of Stock Options.
<PAGE>6
The foregoing summary of the amendment to the Merger
Agreement does not purport to be complete and is qualified in its
entirety by reference to the text of such amendment, a copy of which
is filed as Exhibit 7.1 hereto and is incorporated herein by
reference."
Item 8. Additional Information to be Furnished.
Item 8 is amended and supplemented by the addition of the following
paragraphs thereto:
"On April 12, 1996, the Commission declared effective under
the Exchange Act a Registration Statement on Form 10 (such document,
which includes and incorporates by reference the Information
Statement, the "Form 10") with respect to the Loral Space Common
Stock. The Information Statement was mailed to the holders of record
of Loral Common Stock on April 12, 1996.
On April 12, 1996, Loral set the Spin-Off Record Date for
April 22, 1996.
On April 12, 1996, Loral Space amended its 1996 Stock Option
Plan so that the number of shares for which options may be granted
thereunder to any single optionee during any full or partial calendar
year that the stock option plan is in effect shall not exceed
2,000,000 (subject to adjustment for capital changes) and granted
options to purchase 1,200,000, 800,000, 800,000, 500,000 and 500,000
shares of Loral Space Common Stock to Bernard L. Schwartz, its
Chairman of the Board and Chief Executive Officer, Michael B. Targoff,
its President and Chief Operating Officer, Michael P. DeBlasio, its
Senior Vice President and Chief Financial Officer, Nicholas C. Moren,
its Vice President and Treasurer, and Eric J. Zahler, its Vice
President, General Counsel and Secretary, respectively. All executive
officers (including those named above) as a group hold options to
purchase 4,070,000 shares of Loral Space Common Stock. All options
were granted under the Loral Space 1996 Stock Option Plan at a price
of $10.50 per share, the fair market value of the Loral Space Common
Stock on the date of grant."
Item 9. Material To Be Filed As Exhibits.
Exhibit 7.1. Amendment dated as of April 15, 1996 to
Agreement and Plan of Merger dated as of January 7,
1996 among Lockheed Martin Corporation, LAC
Acquisition Corporation and Loral Corporation.
Exhibit 12. Form of Shareholders Agreement between Loral
Corporation and Loral Space & Communications Ltd.
<PAGE>7
Exhibit 17. Form of Exchange Agreement among Loral Space &
Communications Ltd., Loral Corporation and Lockheed
Martin Corporation.
<PAGE>8
SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
Dated: April 18, 1996
LORAL CORPORATION
By: /s/ Michael B. Targoff
Name: Michael B. Targoff
Title: Senior Vice President
and Secretary
<PAGE>9
EXHIBIT INDEX
Exhibit No. Exhibit
Exhibit 99.7.1. Amendment dated as of April 15, 1996 to
Agreement and Plan of Merger dated as of January 7,
1996 among Lockheed Martin Corporation, LAC
Acquisition Corporation and Loral Corporation.
Exhibit 99.12. Form of Shareholders Agreement between Loral
Corporation and Loral Space & Communications Ltd.
Exhibit 99.17. Form of Exchange Agreement among Loral Space &
Communications Ltd., Loral Corporation and Lockheed
Martin Corporation.
<PAGE>1
LORAL CORPORATION
600 Third Avenue
New York, New York 10016
April 15, 1996
Lockheed Martin Corporation
LAC Acquisition Corporation
6801 Rockledge Drive
Bethesda, Maryland 20817
Re: Merger Agreement dated as of January 7, 1996
Ladies and Gentlemen:
Reference is made to the Merger Agreement dated as of January 7, 1996
(the "Merger Agreement") among Lockheed Martin Corporation ("Parent"), LAC
Acquisition Corporation ("Purchaser") and Loral Corporation (the "Company").
Terms not specifically defined herein shall have the meanings set forth in the
Merger Agreement. The following sets forth our mutual agreement with respect to
certain matters relating to the Merger Agreement.
1. The parties agree that the parenthetical contained in the
second sentence of Section 2.10 of the Merger Agreement shall be amended to read
as follows:
"(including, if so authorized by the Company's Board of Directors,
holders who are subject to the reporting requirements of Section 16(a)
of the Exchange Act)."
Please indicate your acceptance of and agreement to the foregoing by
signing below.
Very truly yours,
LORAL CORPORATION
By:________________________
Name:
Title:
<PAGE>2
ACCEPTED AND AGREED
AS OF THE DATE FIRST
ABOVE WRITTEN:
LOCKHEED MARTIN CORPORATION
By:________________________
Name:
Title:
LAC ACQUISITION CORPORATION
By:________________________
Name:
Title:
cc: O'Melveny & Myers
C. Douglas Kranwinkle, Esq.
Jeffrey J. Rosen, Esq.
Skadden, Arps, Slate, Meagher & Flom
Peter Allan Atkins, Esq.
Lou R. Kling, Esq.
Willkie Farr & Gallagher
Robert B. Hodes, Esq.
Bruce R. Kraus
<PAGE>1
SHAREHOLDERS AGREEMENT
dated as of April 22, 1996
by and among
LORAL CORPORATION,
and
LORAL SPACE & COMMUNICATIONS LTD.
<PAGE>2
SHAREHOLDERS AGREEMENT
SHAREHOLDERS AGREEMENT, dated as of April 22, 1996 (the
"Agreement"), by and among Loral Corporation, a New York corporation ("Loral"),
and Loral Space & Communications Ltd., a Bermuda company (the "Company"). Loral
and those of its Affiliates who are transferees with respect to any of the
Equity Securities (as defined below), are sometimes collectively referred to
herein as the "Shareholders".
RECITALS:
WHEREAS, Lockheed Martin Corporation, a Maryland corporation
("LMC"), Loral and certain subsidiaries of Loral entered into a Restructuring,
Financing and Distribution Agreement, dated as of January 7, 1996 (the
"Restructuring Agreement"; all capitalized terms used in this Agreement but not
otherwise defined herein, shall have the respective meanings assigned to such
terms in the Restructuring Agreement), pursuant to which, after giving effect to
the Restructuring and the Distribution, Loral acquired _______ shares of Series
A Convertible Preferred Stock, par value $0.01 per share, of the Company (the
"Preferred Stock"); and
WHEREAS, the Company and Loral desire to establish in this
Agreement certain conditions with respect to the relationship between the
Shareholders and the Company;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein and in the Restructuring Agreement, the parties
hereto agree as follows:
<PAGE>3
I.
STANDSTILL AND VOTING PROVISIONS
1.1. Restrictions on Certain Actions by the Shareholders. (a)
During the Term (as defined in Article V below), each Stockholder will not, and
will cause each of its Affiliates (such term, as used in this Agreement, as
defined in Rule 12b-2 of the General Rules and Regulations under the Exchange
Act) not to, singly or as part of a partnership, limited partnership, syndicate
or other group (as those terms are used in Section 13(d)(3) of the Exchange
Act), directly or indirectly:
(i) acquire, offer to acquire, or agree to acquire,
by purchase, gift or otherwise, any Equity Securities (as defined below
in Section 1.1(c)), except pursuant to a stock split, stock dividend,
rights offering, recapitalization, reclassification, merger,
consolidation, corporate reorganization or similar transaction;
provided that at any time in which the Shareholders hold, in the
aggregate, less than twenty percent (20%) of the Total Voting Power,
then the Shareholders may acquire Equity Securities so that the
Shareholders hold, in the aggregate, up to twenty percent (20%) of the
Total Voting Power;
(ii) make, or in any way actively participate in, any
"solicitation" of "proxies" to vote (as such terms are defined in Rule
14a-1 under the Exchange Act), solicit any consent or communicate with
or seek to advise or influence any third party with respect to the
voting of any Equity Securities or become a "participant" in any
"election contest" (as such terms are defined or used in Rule 14a-11
under the Exchange Act), in each case with respect to the Company,
except as expressly provided in Section 1.7;
(iii) form, join or encourage the formation of, any
"person" or "group" within the meaning of Section 13(d) of the Exchange
Act with respect to any Equity Securities; provided that this Section
1.1(a)(iii) shall not prohibit any such arrangement solely among the
Shareholders and any of their respective Affiliates;
(iv) deposit any Equity Securities into a voting
trust or subject any such Equity Securities to any arrangement or
agreement with respect to the voting thereof; provided that this
Section 1.1(a)(iv) shall not prohibit any such arrangement solely among
the Shareholders and any of their respective Affiliates;
(v) initiate, propose or otherwise solicit
Shareholders for the approval of one or more stockholder proposals with
respect to the Company as described in Rule 14a-8 under the Exchange
Act, or induce or attempt to induce
<PAGE>4
any other third party to initiate any stockholder proposal, except as
expressly provided in Section 1.7;
(vi) except as otherwise contemplated or permitted by
this Agreement (including, without limitation, pursuant to Section 1.2
or 1.7 hereof), seek to place a representative on the Board of
Directors of the Company or seek the removal of any member of the Board
of Directors of the Company, except with the approval of the Board of
Directors or management of the Company;
(vii) except with the approval of the Board of
Directors or management of the Company, call or seek to have called
any meeting of the Shareholders of the Company;
(viii) except through its representatives on the
Board of Directors (or any committee thereof) of the Company (if any)
and except as otherwise contemplated by this Agreement or the
Restructuring Agreement (including the agreements and other documents
referred to therein, including, without limitation, the Tax Sharing
Agreement), otherwise act to seek to control the management or policies
of the Company, except with the approval of the Board of Directors or
management of the Company;
(ix) sell or otherwise transfer in any manner any
Equity Securities to any "person" (within the meaning of Section
13(d)(3) of the Exchange Act) who, immediately following such sale or
transfer, would, to the best of the Stockholder's knowledge, own more
than four percent (4%) of any class of Equity Securities or who,
without the approval of the Board of Directors of the Company, (A) has
publicly proposed a business combination or similar transaction with,
or a change of control of, the Company or who has publicly proposed a
tender offer for Equity Securities or (B) who has discussed with Loral
or any of its respective Affiliates the possibility of proposing a
business combination or similar transaction with, or a change in
control of, the Company;
(x) sell or otherwise transfer in any manner to any
person (as defined in clause (ix) above) in any single transaction or
series of related transactions more than 2% of the outstanding Equity
Securities;
(xi) solicit, seek to effect, negotiate with or
provide any information to any other party with respect to, or make any
statement or proposal, whether written or oral, to the Board of
Directors of the Company or any director or officer of the Company or
otherwise make any public announcement or proposal whatsoever with
respect to, any form of business combination transaction involving the
Company, including, without limitation, a merger, exchange offer or
liquidation of the Company's assets, or any
<PAGE>5
corporate reorganization or similar transaction with respect to the
Company, except in each case with the approval of the Board of
Directors or management of the Company; or
(xii) instigate or encourage any third party to
do any of the foregoing.
Notwithstanding clauses (ix) and (x) above, the Shareholders
may effect any transaction contemplated by Article III hereof.
(b) Notwithstanding the provisions of this Section 1.1,
nothing herein shall apply with respect to any Equity Securities acquired from
any person other than a Stockholder (x) held by any pension, retirement or other
benefit plan managed by any Stockholder or any of its subsidiaries or other
Affiliates or (y) held in any account managed for the benefit of another person,
by any subsidiary or other Affiliate of any of the Shareholders which is engaged
in the financial services business. In addition, notwithstanding the provisions
of this Section 1.1, nothing herein shall prohibit or restrict any transfer of
Equity Securities to or among any of the subsidiaries or other Affiliates of any
of the Shareholders (provided that such subsidiary or Affiliate agrees to be
bound to the provisions of this Agreement, upon which such subsidiary or
Affiliate shall be entitled to all rights and benefits, and shall be subject to
all obligations, of a Stockholder under this Agreement).
(c) For the purposes of this Agreement, (i) the term "Equity
Securities" shall mean the Preferred Stock and any securities entitled to vote
generally in the election of directors of the Company, or any direct or indirect
rights or options to acquire any such securities or any securities convertible
or exercisable into or exchangeable for such securities (provided that, in the
event that the Guaranty Warrants (as defined below) become warrants to acquire
Equity Securities, such Guaranty Warrants and any securities issued pursuant to
the exercise of such Guaranty Warrants, shall not (so long, in each case, as
they are held by the Stockholder) constitute Equity Securities for purposes of
determining the appropriate number of shares of Common Equity Securities which
Loral is entitled to acquire hereunder, including in connection with the
determination of the Target Percentage pursuant to Section 1.4(a) hereof), (ii)
the term "Voting Power" shall mean the voting power in the general election of
directors of the Company, (iii) the term "Total Voting Power" shall mean the
total combined Voting Power of all the Equity Securities then outstanding,
including, without limitation, the Preferred Stock, and, insofar as the
Preferred Stock is concerned, it is deemed to have Voting Power equal to that of
the Common Stock into which it is convertible, (iv) the term "Change of Control"
shall mean the occurrence of any of the following events: (A) any "person" or
<PAGE>6
"group" (as such terms are used in Sections 13(d) and 14(d) of the Exchange
Act) is or becomes the beneficial owner of Equity Securities which represent
at least forty percent (40%) of the Total Voting Power, or (B) during any
one-year period, individuals who at the beginning of such period constituted
the Board of Directors of the Company (together with any new directors
whose election by such Board of Directors or whose nomination for election
by the shareholders of the Company was approved by a vote of a majority
of the directors of the Company then still in office who were either
directors at the beginning of such period or whose election or nomination
for election was previously so approved) cease for any reason to
constitute a majority of the Board of Directors of the Company then in
office, (v) the term "beneficial owner", and terms having similar import,
shall mean any direct or indirect "beneficial owner", as such term is
defined in Rules 13d-3 and 13d-5 under the Exchange Act, and (vi) the term
"Guaranty Warrants" shall mean those warrants which accrue to the benefit of
the Company in connection with the Globalstar Bank Guarantee, as described
in the Globalstar Warrant Memorandum.
1.2. HSR Clearance.
(a) At any time after the date hereof (but subject to the
provisions of Section 1.2(b) below), following a written request by Loral to the
Company (such request, the "HSR Notice"), the Company and the Shareholders will
(i) take promptly all actions necessary to make the filings required of the
Shareholders, the Company or any of their respective Affiliates under the HSR
Act (as defined in the Merger Agreement) with respect to the right to convert
Preferred Stock and continue to own the securities so received, the ownership
and voting of Equity Securities by the Shareholders, any of the transactions
contemplated by this Agreement or any other similar matters (all such exercise,
ownership, voting, transaction and other similar matters, the "Filing Matters"),
(ii) comply at the earliest practicable date with any request for additional
information or documentary material received by the Company or the Shareholders
or any of their Affiliates from any of the Federal Trade Commission, the
Antitrust Division of the Department of Justice, state attorneys general, the
Commission, or other governmental or regulatory authorities (all such
authorities, the "Antitrust Authorities"), and (iii) cooperate with each other
in connection with any of the filings referred to in clause (i) above and in
connection with resolving any investigation or other inquiry commenced by any of
the Antitrust Authorities. To the extent reasonably requested by Loral, the
Company shall use all reasonable efforts to resolve such objections, if any, as
may be asserted with respect to the Filing Matters. If any administrative,
judicial or legislative action or proceeding is instituted (or threatened to be
instituted) challenging any aspect of the Filing Matters as violative of any
Antitrust Law, each of the Shareholders and the Company shall cooperate with
<PAGE>7
each other to contest and resist any such action or
proceeding, and to have vacated, lifted, reversed or overturned any decree,
judgment, injunction or other order (whether temporary, preliminary or
permanent) that is in effect and that restricts, prevents or prohibits the
exercise by the Shareholders of the right to convert Preferred Stock and
continue to own the securities so received, or the exercise by Loral of its
rights with respect to the ownership and voting of Equity Securities or any of
the transactions contemplated by this Agreement (any such decree, judgment,
injunction or other order is hereafter referred to as an "Order"), including,
without limitation, by pursuing all reasonable avenues of administrative and
judicial appeal, provided that nothing contained in this Section 1.2(a) shall be
construed to require any party hereto to hold separate or divest any of their
respective assets or businesses or agree to any substantive restriction thereon
or on the conduct thereof. Each of the Company and Loral shall promptly inform
the other party of any material communication received by such party from any
Antitrust Authority regarding any of the Filing Matters or any of the other
transactions contemplated hereby. For the purposes of this Agreement, the term
"HSR Clearance Date" shall mean the first date on which (x) any applicable
waiting period under the HSR Act with respect to the Filing Matters shall have
expired or been terminated, (y) there shall not be pending any Action commenced
by any Antitrust Authority relating to any of the Filing Matters or any of the
other transactions contemplated hereby, and (z) there shall not be in effect any
Order.
(b) Notwithstanding the provisions of Section 1.2(a) above, in
the event that Loral delivers the HSR Notice to the Company, the Company shall
be entitled to postpone for a reasonable period of time (but in no event later
than 45 days), any filing referred to in Section 1.2(a)(i) above if the Company
determines in its reasonable judgment and in good faith that such filing would
delay the obtaining of any approval from an Antitrust Authority with respect to
any announced or imminent material acquisition or disposition which would
require a filing by the Company under the HSR Act. In the event of such
postponement, Loral shall have the right to withdraw its HSR Notice and may
deliver any such HSR Notice at any time thereafter.
1.3. Voting.
(a) General Voting Provisions. Prior to the HSR Clearance
Date, no Stockholder shall have the right to convert Preferred Stock into common
stock or the right to vote any Equity Securities with respect to the election of
directors of the Company. Following the HSR Clearance Date, each Stockholder
shall have the right to vote its Equity Securities to the extent permitted by
the terms thereof on any matters submitted to a vote of the Shareholders of the
Company, provided that following the HSR Clearance Date any Stockholder shall
have the right to vote
<PAGE>8
any Equity Securities to the extent permitted by the terms
thereof with respect to the election of directors of the Company without
restriction, provided that, except as expressly provided in Section 1.7, in the
event of an "election contest" (as such term is used in Rule 14a-11 under the
Exchange Act) each Stockholder shall have the right to vote in the election
contest only (i) as recommended by the Board of Directors or management of the
Company or (ii) in the same proportions as the holders of Equity Securities
(other than Shareholders) vote their Securities. On each matter with respect to
which a Stockholder is entitled to vote pursuant to this Section 1.3, each such
Stockholder shall be present, in person or represented by proxy, at all such
stockholder meetings of the Company so that all Equity Securities beneficially
owned by it shall be counted for the purpose of determining the presence of a
quorum at such meetings.
(b) Company Call. If, within one year following the date
hereof, the Shareholders vote against any Call Event Triggering Transaction (as
defined below), the Company shall have the right, for 10 days following the date
on which such vote is held, to purchase, and the Shareholders shall be required
to sell to the Company, all, but not less than all, of the Equity Securities
held by the Shareholders at a per share cash price equal to the Call Event
Trigger Price (as defined below). The Company may exercise such right by
delivering to each Stockholder, within such 10-day period, a written notice
stating that the Company has irrevocably agreed to purchase in cash all (but not
less than all) of the Equity Securities held by the Shareholders at the Call
Event Trigger Price upon the terms and conditions set forth in this Section
1.3(b). The closing with respect to the purchase of Equity Securities by the
Company pursuant to this Section 1.3(b) shall be on a mutually determined
closing date which shall not be more than 15 days after the date on which the
Company's written notice referred to above is delivered to the Shareholders. The
closing shall be held at 10:00 A.M., local time, at the principal office of the
Company, or at such other time or place as the parties mutually agree. On such
closing date, each Stockholder shall deliver (i) certificates representing the
shares of Equity Securities being sold, free and clear of any lien, claim or
encumbrance, and (ii) such instruments of transfer and evidence of ownership and
authority as the Company may reasonably request. The purchase price shall be
paid by the Company to each Stockholder by wire transfer of immediately
available funds no later than 2:00 P.M. on the closing date to the account(s)
designated by the Shareholders prior to such closing date.
(c) Certain Definitions. For purposes of Section 1.3,
(i) the term "Call Event Triggering Transaction"
shall mean a transaction between the Company, on the one hand, and any
Spinco Company (or any other Subsidiary of
<PAGE>9
either the Company or a Spinco Company), on the other
hand, involving (x) any merger, consolidation, corporate reorganization
or similar transaction involving the Company; or (y) any sale, lease,
exchange, transfer or other disposition, directly or indirectly, in a
single transaction or series of related transactions, of all or
substantially all of the assets of the Company or any of its
Affiliates; provided that the term "Call Event Triggering Transaction"
shall not include any transaction involving any party which is not a
Spinco Company (or any other Subsidiary of either the Company or a
Spinco Company); and
(ii) the term "Call Event Trigger Price" shall mean
the sum of (x) $344,000,000.00, plus (y) all amounts expended by the
Shareholders following the date hereof in connection with the
acquisition of Equity Securities other than acquisitions from another
Stockholder following the date hereof, minus (z) any net sales proceeds
received by the Shareholders following the date hereof in connection
with the sale of Equity Securities (other than sales to another
Stockholder) following the date hereof.
1.4. Loral Option.
(a) General Provisions Relating to Loral Option. If, within
five years following the date hereof, any Option Event Triggering Transaction
(as defined below) occurs, Loral shall have the right, within 90 days after the
consummation of the Option Event Triggering Transaction, to purchase, and the
Company (for purposes of this Section 1.4, all references to the "Company" shall
be deemed to include the Surviving Corporation (as defined below), shall be
required to sell to Loral, a number of shares of Preferred Stock which would
cause Loral to own Equity Securities with Voting Power equal to the Target
Percentage (as defined below) of the Total Voting Power immediately after giving
effect to the consummation of the Option Event Triggering Transaction, at a per
share cash price equal to the Option Event Trigger Price (as defined below).
Loral may exercise such right by delivering to the Company, within such 90-day
period, a written notice stating that Loral (or any Subsidiary of Loral
designated by Loral; for purposes of this Section 1.4, all references to "Loral"
shall be deemed to include such designated Subsidiary) has irrevocably agreed to
purchase in cash the number of shares of Preferred Stock specified in the
preceding sentence, at the Option Event Trigger Price, upon the terms and
conditions set forth in this Section 1.4. The closing with respect to the
purchase of Preferred Stock by the Company pursuant to this Section 1.4 shall be
on a mutually determined closing date which shall not be more than 15 days after
the date on which Loral's written notice referred to above is delivered to the
Company. The closing shall be held at 10:00 A.M., local time, at the principal
office of the Company, or at such other time or place as the parties mutually
agree. On such closing
<PAGE>10
date, the Company shall issue to Loral certificates
representing the shares of Preferred Stock being sold, which shall be validly
issued, fully paid and non-assessable and free and clear of any lien, claim or
encumbrance. The purchase price shall be paid by Loral to the Company by wire
transfer of immediately available funds no later than 2:00 P.M. on the closing
date to the account designated in writing by the Company prior to such closing
date. For purposes of this Section 1.4,
(i) the term "Option Event Triggering Transaction"
shall mean a transaction involving as parties, among others, the
Company or any of its Affiliates (other than GTL and Globalstar), on
the one hand, and either GTL or Globalstar or any of their respective
Subsidiaries, on the other hand, involving either (x) a Call Event
Triggering Transaction (including, without limitation, a similar
transaction involving the merger, consolidation, reorganization, sale,
lease, exchange, transfer or other disposition of all or substantially
all of the assets, of Globalstar, GTL or their respective Subsidiaries)
or the liquidation or (y) dissolution of the Company;
(ii) the term "Option Event Trigger Price" shall mean
with respect to an Option Event Trigger Transaction occurring (x) on or
prior to the first anniversary hereof, a $6.00 per share cash purchase
price, subject to adjustment pursuant to the provisions of Section
1.4(b) hereof or (y) after the first anniversary hereof but on or prior
to the fifth anniversary hereof, a per share price equal to 80% of the
per share price of the Company implicit in the Option Event Triggering
Transaction;
(iii) the term "Surviving Corporation" shall mean any
successor to the rights and obligations of the Company as a result of
or in connection with any Option Event Triggering Transaction; and
(iv) the term "Target Percentage" shall mean a
percentage amount equal to the percentage of the Total Voting Power
represented by the Equity Securities held by the Shareholders
immediately prior to the closing of the Option Event Triggering
Transaction; provided, however, that if there has occurred within the
five days preceding such closing an event that diluted the Voting Power
of the Equity Securities held by the Shareholders, the Target
Percentage shall be determined as of the date five days prior to the
closing of such Option Event Triggering Transaction.
(b) Adjustment of Loral Option Event Trigger Price. The Option
Event Trigger Price shall be equitably adjusted from time to time after the date
hereof to take into account of any of the following events:
(i) if the Company shall pay a dividend or
<PAGE>11
make any other distribution with respect to any Equity
Securities which is payable in the form of Equity Securities or in the form of
any other Asset (other than normal, periodic cash dividends of the Company),
(ii) if the Company shall subdivide its outstanding common stock, (iii) if the
Company shall combine its outstanding common stock into a smaller number of
shares, (iv) if the Company shall issue any shares of its capital stock in a
reclassification of the Common Stock (including any such reclassification in
connection with a merger, consolidation or other business combination involving
the Company), or (v) in any other similar transaction affecting the Company or
the number or value of the outstanding Equity Securities. The parties
acknowledge and agree that each such equitable adjustment shall preserve for
Loral the economic benefits of the Loral option set forth in Section 1.4(a)
above.
1.5. Globalstar Warrant Put Option. In the event of any of
the following transactions (each such transaction, a "Warrant Trigger
Event"):
(i) any merger, consolidation, corporate reorganization
or similar transaction involving Globalstar or GTL;
(ii) any sale, lease, exchange, transfer or other
disposition, directly or indirectly, of all or substantially all of
the assets of Globalstar or GTL; or
(iii) any liquidation or dissolution of Globalstar or
GTL;
in which it is proposed that the Globalstar Warrants be converted into cash or
the right to receive cash, or any other interest (or the right to receive any
other interest) in Globalstar other than common stock thereof the Shareholders
shall have the right (the "Limited Warrant Put") to require the Company to
purchase the Globalstar Warrants for a price equal to their Option Privilege
Value (as defined below). The Shareholders may exercise the Limited Warrant Put
by delivering to the Company, at least 10 days prior to the scheduled closing of
the Warrant Trigger Event, a notice to such effect accompanied by appropriate
documentation or certificates evidencing the Globalstar Warrants. The Option
Privilege Price shall be payable by the Company 10 days after the determination
thereof. As used herein, the term "Option Privilege Price" means the greater of
(x) the consideration payable in respect of the Globalstar Warrants in the
Warrant Trigger Event and (y) the hypothetical fair market value that would be
assigned to the Globalstar Warrants at the date of the Warrant Trigger Event
assuming (1) that no Warrant Trigger Event were to occur then or at any time
prior to the expiration of the Globalstar Warrants, (2) that the Globalstar
Warrants would remain outstanding until such expiration in accordance with their
<PAGE>12
terms, exercisable for shares of or interests in the issuer thereof, and (3)
that such issuer would remain a public company during such period. The Option
Privilege Price shall be determined by an investment banking firm of national
standing selected by agreement of the Company and the Shareholders or, failing
such agreement, by agreement of Bear Stearns Co. Inc. and Lehman Brothers. Such
investment banking firm shall, in determining the Option Privilege Price, give
full effect to (i) the spread between the exercise price and the fair market
value of the securities into which the Globalstar Warrants are exercisable and
(ii) the value of the "option privilege" in the Globalstar Warrants (that is,
the value of the right, without risking any capital, to speculate on and benefit
from appreciation in the underlying securities).
1.6. Required Sales by Shareholders.
(a) Immediately following any repurchase by the Company of any
of its outstanding Equity Securities which repurchase has the effect of
increasing the Total Voting Power of all Shareholders to an amount in excess of
20% of Total Voting Power (a "Repurchase Event"), the Company shall give written
notice (the "Repurchase Event Notice") thereof to each Stockholder. The
Repurchase Event Notice shall set forth in reasonable detail the transactions
resulting in the Repurchase Event, specify the Repurchase Price (as defined in
Section 1.6(c) hereof) and set a date (the "Repurchase Date") for the repurchase
by the Company of the Adjustment Securities (as defined in Section 1.6(b)
hereof) as contemplated by Section 1.6(b) hereof. The Repurchase Date shall be
not sooner than 15 nor later than 25 business days after either (i) the date the
Repurchase Event Notice is sent to the Stockholder or (ii) if the provisions of
Section 1.6(d)(ii) hereof are applicable, the Section 16(d) Date (as defined in
Section 1.6(d)(ii) hereof).
(b) Subject to the provisions of Section 1.6(c) and (d)
hereof, on the Repurchase Date the Company shall purchase from each Stockholder
and each Stockholder shall sell to the Company, a number of shares of Equity
Securities (the "Adjustment Securities") held by the Stockholder equal to the
product of (i) the aggregate number of shares of Equity Securities of all
Shareholders less the aggregate number of shares of Equity Securities
constituting 20% of the Total Voting Power, multiplied by (ii) the number of
shares of Equity Securities held by the Stockholder divided by the number of
shares of Equity Securities held by all Shareholders. The closing with respect
to the purchase of Adjustment Securities shall be held on the Repurchase Date at
10:00 a.m. local time at the principal office of the Company, or at such other
place and time as the parties mutually agree. On the Repurchase Date each
Stockholder (other than an Electing Stockholder (as defined in Section 1.6(d)
hereof)) shall deliver (i) certificates representing the Adjustment Securities
free and clear of any lien, claim or encumbrance, and (ii) such
<PAGE>13
instruments of transfer and evidence of ownership and
authority as the Company may reasonably request. The Company shall pay the
purchase price to the Stockholder by wire transfer of immediately available
funds no later than 2:00 p.m. on the Repurchase Date to an account designated by
the Stockholder prior to the Repurchase Date.
(c) The per share repurchase price of the Adjustment
Securities (the "Repurchase Price") shall be equal to the per share price paid
by the Company in respect of the repurchase of Equity Securities resulting in
the Repurchase Event; provided, that if after the immediately preceding
Repurchase Event (or if none, the date of this Agreement) (the "Prior Repurchase
Event") the Company has repurchased Equity Securities at different prices, then
the Repurchase Price shall be equal to the highest per share price paid by the
Company to repurchase Equity Securities after the Prior Repurchase Event
(exclusive of repurchases after which the Stockholder's Total Voting Power was
less than or equal to 20%); provided, however, that if pursuant to the preceding
provisions of this Section 1.6(c) the Repurchase Price would be less than the
Initial Purchase Price (as defined below), then each Stockholder may elect to
sell the Adjustment Securities in accordance with the provisions of Section
1.6(d) hereof in lieu of selling the Adjustment Securities to the Company by
giving written notice to the Company (the "Market Sale Notice"), within 10
business days after receipt of the Repurchase Event Notice, that the Stockholder
has elected to sell the Adjustment Securities pursuant to the provisions of
Section 1.6(d) hereof. For purposes of this Agreement, the "Initial Purchase
Price" means the price paid by the Stockholder (or its Affiliate) for the
Adjustment Securities, increased at the rate of 10% per annum, compounded
annually, from the date of the acquisition thereof through the date of the
Repurchase Event Notice; it being understood that to the extent the Adjustment
Securities include Equity Securities acquired by the Stockholder (or its
Affiliate) on or before the Distribution Date (as defined in the Distribution
Agreement), then (i) the Initial Purchase Price therefor shall be equal to $344
million divided by the number of shares of Equity Securities beneficially owned
by the Shareholders immediately after the Distribution (subject to adjustment to
reflect (1) the 10% annual compound rate of increase, (2) any of the events
contemplated by Section 1.4(b) hereof, and (3) any stock splits, reverse stock
splits, stock dividends or other similar events), and (ii) the date of
acquisition thereof shall be the Distribution Date.
(d) If a Stockholder delivers the Market Sale Notice to the
Company in the time required by Section 1.6(c) hereof (the "Electing
Stockholder"), then the Electing Stockholder may sell its Adjustment Securities
to any one or more third parties not Affiliates of the Shareholders; provided,
that such sale of Adjustment Securities shall be completed on or before the date
that is the later of (i) the six-month anniversary of the
<PAGE>14
Repurchase Event Notice (the "First Date"), (ii) the earliest
date after the First Date on which Adjustment Securities can be sold by the
Electing Stockholder without liability resulting therefrom under Section 16(b)
of the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder (the "Section 16(b) Date"), (iii) provided
the Electing Stockholder has requested in the Market Sale Notice the
registration of the Adjustment Securities pursuant to Article III hereof, the
six-month anniversary of the effective date of a registration statement filed
with respect to the Adjustment Securities under the Securities Act of 1933, as
amended, which registration statement has not after it becomes effective been
interfered with by any stop order, injunction or other order or requirement of
the SEC or other governmental agency or court for any reason other than a
misrepresentation or omission by the Electing Stockholder and, as a result
thereof, the Adjustment Securities cannot be distributed in accordance with the
plan of distribution, and (iv) provided clause (iii) of this Section 1.6(d) is
not applicable, the earliest date after the Repurchase Event Notice which is the
end of a period during which the Adjustment Securities could have been sold
pursuant to Rule 144 (or any similar provision then in force).
(e) The Electing Stockholder may demand that Adjustment
Securities be registered under the Securities Act pursuant to Article III
hereof; provided, that a registration of Adjustment Securities pursuant to
Article III hereof shall not be (i) subject to the limitation set forth in
Section 3.1(a) hereof on the minimum number of shares that can be registered
pursuant to Article III, and (ii) counted as one of the five requests for
registration permitted under Section 3.1(a) hereof.
(f) Except to the extent otherwise expressly provided in this
Section 1.6, the provisions of this Agreement shall not in any manner limit or
otherwise restrict the rights of an Electing Stockholder to transfer Adjustment
Securities
1.7. Special Nominating and Voting Rights.
(a) Notwithstanding anything to the contrary contained in this
Agreement, from and after the seventh anniversary of the date hereof, the
Shareholders shall have the right to nominate for election to the Board of
Directors a Proportionate Number (as defined below) of nominees ("Stockholder
Nominees") and to vote their Equity Securities in favor of their election.
(b) With respect to each meeting of shareholders of the
Company at which directors are to be elected which occurs on or after the
seventh anniversary of the date hereof, the Company will give the Shareholders
30 days' prior written notice of the filing with the SEC of proxy materials with
respect thereto. On or before the 10th day following receipt of such notice the
Shareholders shall notify the Company if they intend to propose
<PAGE>15
Stockholder Nominees and within 10 days thereafter shall
supply the Company with the Special Nominee Information (as defined below). The
Company will include the Special Nominee Information in its proxy materials with
respect to such meeting, and the Shareholders will not engage in any action
otherwise prohibited by Section 1.1(ii) or (v) with respect to the Stockholder
Nominees or otherwise.
(c) In the event that, following any election of Stockholder
Nominees to the Board of Directors and before the next meeting of shareholders
at which directors are elected, the size of the Board of Directors is increased
so as to increase the Proportionate Number of directors, the Company will use
its best efforts to create additional seats on the Board of Directors, offer the
Shareholders the right to propose additional Stockholder Nominees to fill such
vacancies and use its best efforts to cause such vacancies to be filled by any
such nominees so that the Stockholder Nominees would constitute a Proportionate
Number of the enlarged Board.
(d) The Company will not propose, and will use its best
efforts to prevent, the adoption of any amendment of any of the charter
documents of the Company that would adversely affect the rights of the
Shareholders under this Agreement.
(e) As used in this Section 1.7, the following terms are used
as defined below:
"Proportionate Number" means a number of directors or
nominees, as the case may be, rounded up to the nearest whole number, that would
represent a proportion of the entire Board of Directors (after giving effect to
the election of Directors or enlargement of the Board in question) equal to the
proportion of the Total Voting Power of the Company that is represented by the
Voting Power of the Equity Securities beneficially owned by the Shareholders,
provided, that if the Proportionate Number (as calculated above) would otherwise
be reduced if the total number of members of the Board of Directors were reduced
by a single member, the Proportionate Number will be calculated by rounding
down, rather than rounding up, to the nearest whole number.
"Special Nominee Information" means the information as to each
nominee for director required to be included in the Company's proxy materials
under the Exchange Act and the rules and regulations thereunder, and may include
a brief statement as to the qualifications of the Stockholder Nominees and the
Shareholders' reasons for seeking their election to the board, but shall not
include any invidious comparisons between the Stockholder Nominees and other
nominees for director or any criticism of the other nominees for director or of
incumbent management, its policies or the Company's performance.
<PAGE>16
II.
TRANSFER RESTRICTIONS
2.1. Certain Transactions. Notwithstanding anything
contained in this Agreement to the contrary, a Stockholder may without
restriction:
(i) assign, pledge, mortgage, hypothecate, or
otherwise encumber or transfer all or any of its Equity Securities in
connection with any bona fide financing arrangement entered into by
such person or otherwise in connection with any indebtedness owed by
such Stockholder; provided that in the event that the Stockholder in
question defaults, the creditor's rights and obligations with respect
to the voting and transfer of such Equity Securities and the
registration thereof shall be the same as the Stockholder in question
had under the provisions of this Agreement and the creditor in question
shall be deemed to be a Stockholder under this Agreement for such
purposes;
(ii) transfer any Equity Securities to another
Stockholder or any subsidiary or other Affiliate thereof (provided that
such subsidiary or Affiliate agrees to be bound to the provisions of
this Agreement, upon which such subsidiary or Affiliate shall be
entitled to all rights and benefits, and shall be subject to all
obligations, of a Stockholder under this Agreement);
(iii) transfer any Equity Securities pursuant to any
registered public offering in connection with the provisions of Article
III hereof or pursuant to the provisions of Rule 144 (or any similar
provision then in force) under the Securities Act provided that such
transfer under Rule 144 or any similar provision meets the volume
restrictions set forth in Rule 144 as in effect on the date hereof; or
(iv) transfer any Equity Securities pursuant to any
merger, consolidation, corporate reorganization, restructuring or any
other similar transaction affecting the Company or pursuant to any
involuntary transfer.
2.2. Rights Pursuant to a Tender Offer. Each
Stockholder (any such Stockholder shall, for purposes of this Section 2.2,
be referred to as a "Tendering Stockholder") shall have the right to sell or
exchange all its Equity Securities pursuant to a tender or exchange offer for
the Equity Securities (an "Offer"). However, during the Term, prior to
such sale or exchange, the Tendering Stockholder shall give the Company
the opportunity to purchase such Equity Securities in the following manner:
<PAGE>17
(i) The Tendering Stockholder shall give notice (the
"Tender Notice") to the Company in writing of its intention to sell or
exchange Equity Securities in response to an Offer no later than three
calendar days prior to the latest time (including any extensions) by
which Equity Securities must be tendered in order to be accepted
pursuant to such Offer, specifying the amount of Equity Securities
proposed to be tendered by the Tendering Stockholder (the "Tendered
Shares") and the purchase price per share specified in the Offer at the
time of the Tender Notice.
(ii) If the Tender Notice is given, the Company shall
have the right to purchase all, but not less than all, of the Tendered
Shares exercisable by giving written notice (an "Exercise Notice") to
the Tendering Stockholder at least two calendar days prior to the
latest time after delivery of the Tender Notice by which Equity
Securities must be tendered in order to be accepted pursuant to the
Offer (including any extensions thereof) and depositing in any escrow
or similar arrangement reasonably acceptable to the Tendering
Stockholder, a sum in cash sufficient to purchase all Tendered Shares
at the price then being offered in the Offer, without regard to any
provision thereof with respect to proration or conditions to the
offeror's obligation to purchase. The delivery by the Company of an
Exercise Notice and deposit of funds as provided above will, except as
provided below, constitute an irrevocable agreement by the Company to
purchase, and the Tendering Stockholder to sell, the Tendered Shares in
accordance with the terms of this Section 2.2, whether or not the Offer
or any other tender or exchange offer (a "Competing Tender Offer") for
Equity Securities that was outstanding during the Offer is consummated.
(iii) The purchase price to be paid by the Company
for any Equity Securities purchased by it pursuant to this Section 2.2
shall be the highest price offered or paid in the Offer or in any
Competing Tender Offer. For purposes hereof, the price offered or paid
in a tender or exchange offer for Voting Shares shall be deemed to be
the price offered or paid pursuant thereto, without regard to any
provisions thereof with respect to proration or conditions to the
offeror's obligation to purchase. If the purchase price per share
specified in the Offer includes any property other than cash (the
"Offer Noncash Property"), the purchase price per share at which the
Company shall be entitled to purchase all, but not less than all, of
the Equity Securities specified in the Tender Notice shall be (y) the
amount of cash per share, if any, specified in such Offer (the "Cash
Portion"), plus (z) an amount of cash per share equal to the value of
the Offer Noncash Property per share (the "Cash Value of Offer Noncash
Property"), as
<PAGE>18
determined in good faith by the mutual agreement of
the parties hereto, or if the parties cannot agree, by an independent,
nationally recognized investment banking firm selected by the Tendering
Shareholders and reasonably acceptable to the Company. If the Company
exercises its right of first refusal by giving an Exercise Notice, the
closing of the purchase of the Equity Securities with respect to such
right (the "Closing") shall take place at 3:00 p.m., local time (or, if
earlier, two hours before the latest time by which Equity Securities
must be tendered in order to be accepted pursuant to the Offer), on the
last day on which Equity Securities must be tendered in order to be
accepted pursuant to the Offer (including any extensions thereof) (the
"Last Tender Date"), and the Company shall pay the purchase price for
the Equity Securities specified above. The Tendering Stockholder shall
be entitled to rescind its Tender Notice at any time prior to the Last
Tender Date by notice in writing to the Company; provided that if on or
before the Last Tender Date, the Company publicly announces that the
Company has approved, proposed or entered into an agreement with
respect to (either individually or together with any other persons) a
recapitalization, reorganization or business combination with respect
to the Company or all or substantially all of its assets, or a
self-tender offer, the Tendering Stockholder shall be entitled to
rescind its Tender Notice by notice in writing to the Company at any
time prior to the Closing on the Last Tender Date. If the Tendering
Stockholder rescinds its Tender Notice pursuant to the immediately
preceding sentence, the Company's Exercise Notice with respect to such
Offer shall be deemed to be immediately rescinded and the Tendering
Stockholder's disposition of its Equity Securities in response to the
Offer with respect to which the Tender Notice is rescinded or any other
Offer shall again be subject to all of the provisions of this Section
2.2.
(iv) If the Company does not exercise its right of
first refusal set forth in this Section 2.2 within the time specified
for such exercise by giving an Exercise Notice, then the Tendering
Stockholder shall be free to accept, for all its Equity Securities, the
Offer with respect to which the Tender Notice was given or any
Competing Tender Offer (including any increases and extensions
thereof).
III.
REGISTRATION RIGHTS
3.1. Registration Upon Request.
<PAGE>19
(a) At any time commencing on the date hereof and continuing
thereafter, each Stockholder (any such Stockholder, whether registering
securities pursuant to this Section 3.1 or Section 3.2, shall be referred to as
a "Registering Stockholder") shall have the right to make written demand upon
the Company, on not more than five separate occasions (subject to the provisions
of this Section 3.1), to register under the Securities Act, any common stock or
other securities of the Company held by it (the securities subject to such
demand hereunder or subject to the provisions of Section 3.2 being referred to
in each case as the "Subject Securities"), and the Company shall use its best
efforts to cause such securities to be registered under the Securities Act as
soon as reasonably practicable so as to permit the sale thereof promptly;
provided that each such demand shall cover at least the lesser of (i) 10 million
shares of Common Stock or Preferred Stock convertible into 10 million shares of
Common Stock and (ii) shares having a market value of $150 million shares of
Common Stock (subject to adjustment for stock splits, reverse stock splits,
stock dividends and similar events after the date hereof). In connection
therewith, the Company shall prepare, and as soon as reasonably practicable but
in no event later than 90 days of the receipt of the request, file, on Form S-3
if permitted or otherwise on the appropriate form, a registration statement
under the Securities Act to effect such registration. Such registration shall be
effected in accordance with the intended method or methods of disposition
specified by the Registering Shareholders (including, but not limited to, an
offering on a delayed or continuous basis pursuant to Rule 415 (or any successor
rule to similar effect) promulgated under the Securities Act). Each Registering
Stockholder agrees to provide all such information and materials and to take all
such action as may be reasonably required in order to permit the Company to
comply with all applicable requirements of the Securities Act and the SEC and to
obtain any desired acceleration of the effective date of such registration
statement. If the offering to be registered is to be underwritten, the managing
underwriter shall be selected by the Registering Shareholders and shall be
reasonably satisfactory to the Company. Notwithstanding the foregoing, the
Company (i) shall not be obligated to prepare or file more than one registration
statement other than for purposes of a stock option or other employee benefit or
similar plan during any twelve-month period, (ii) shall be entitled to postpone
for a reasonable period of time (but in no event later than 60 days), the filing
of any registration statement otherwise required to be prepared and filed by the
Company if (A) the Company is, at such time, conducting or about to conduct an
underwritten public offering of securities and is advised by its managing
underwriter or underwriters in writing (with a copy to the Registering
Shareholders), that such offering would, in its or their opinion, be materially
adversely affected by the registration so requested, or (B) the Company
determines in its reasonable judgment and in good faith that the registration
and
<PAGE>20
distribution of the Subject Securities would interfere with
any announced or imminent material financing, acquisition, disposition,
corporate reorganization or other material transaction of a similar type
involving the Company. In the event of such postponement, the Registering
Shareholders shall have the right to withdraw the request for registration by
giving written notice to the Company within 20 days after receipt of the notice
of postponement (and, in the event of such withdrawal, such request shall not be
counted for purposes of determining the number of registrations to which the
Registering Shareholders are entitled pursuant to this Section 3.1).
(b) The Company shall not grant to any other holder of its
securities, whether currently outstanding or issued in the future, any
incidental or piggyback registration rights with respect to any registration
statement filed pursuant to a demand registration under this Section 3.1 and
without the prior consent of the Registering Shareholders, the Company will not
itself, and will not permit any other holder of its securities to, participate
in any offering made pursuant to a demand registration under this Section 3.1.
The Company may grant to other holders of its securities incidental or piggyback
registration rights on a primary offering by the Company which are no more
favorable to such holders than the provisions set forth in Section 3.2 are to
the Shareholders. If the Registering Shareholders consents to the inclusion of
offers and sales of any other securities in a registration pursuant to this
Section 3.1 and the underwriter(s) retained in connection with such registration
subsequently advise the Registering Shareholders that such offering would be
adversely affected by the inclusion of such other securities, the Registering
Shareholders may in their sole discretion exclude all or some of such securities
from such registration.
(c) Any registration requested by any Registering Stockholder
pursuant to this Section 3.1 shall not be deemed to have been effected (and,
therefore, not requested for purposes of this Section 3.1), (i) unless it has
become effective, (ii) if after it has become effective such registration is
interfered with by any stop order, injunction or other order or requirement of
the SEC or other governmental agency or court for any reason other than a
misrepresentation or an omission by the Registering Shareholders and, as a
result thereof, the Subject Securities requested to be registered cannot be
completely distributed in accordance with the plan of distribution set forth in
the related registration statement or (iii) if the closing pursuant to the
purchase agreement or underwriting agreement entered into in connection with
such registration does not occur. Any registration effected pursuant to Section
3.2 shall not be deemed to have been requested by a Registering Stockholder for
purposes of this Section 3.1.
3.2. Incidental Registration Rights. If the Company
proposes to register any of its Equity Securities under the
<PAGE>21
Securities Act for its own account (other than (i) pursuant to
Section 3.1 hereof, (ii) securities to be issued pursuant to a stock option or
other employee benefit or similar plan, and (iii) securities proposed to be
issued in exchange for securities or assets of, or in connection with a merger
or consolidation with, another corporation), the Company shall, as promptly as
practicable, give written notice to the Registering Shareholders of the
Company's intention to effect such registration. If, within 15 days after
receipt of such notice, a Registering Stockholder submits a written request to
the Company specifying the amount of Equity Securities that it proposes to sell
or otherwise dispose of in accordance with this Section 3.2, the Company shall
use its best efforts to include the securities specified in the Registering
Stockholder's request in such registration. If the offering pursuant to such
registration statement is to be made by or through underwriters, the managing
underwriters shall be chosen by the Company and shall be reasonably satisfactory
to the Registering Shareholders and the Company, and the Registering
Shareholders and such underwriter shall execute an underwriting agreement in
customary form. If the managing underwriter reasonably determines in good faith
and advises the Registering Shareholders in writing that the inclusion in the
registration statement of all the Equity Securities proposed to be included
would interfere with the successful marketing of the securities proposed to be
registered, then the Company and the Registering Shareholders shall negotiate in
good faith to agree upon an equitable adjustment in the number or amount of
securities of each to be included in such underwriting (provided that in the
event that the Company and the Registering Shareholders are unable to agree upon
an equitable adjustment in the number or amount of securities of each to be
included in such underwriting, then the number of securities which the Company
and the Registering Shareholders propose to register shall be reduced pro rata
(based upon the respective market values of each party's respective share of the
total number of securities proposed to be registered). No registration effected
under this Section 3.2 shall relieve the Company of its obligation to effect any
registration upon request under Section 3.1. If the Registering Shareholders are
permitted to participate in a proposed offering pursuant to this Section 3.2,
the Company thereafter may determine either not to file a registration statement
relating thereto, or to withdraw such registration statement, or otherwise not
to consummate such offering, without any liability hereunder. Any underwriters
participating in a distribution of the Subject Securities pursuant to Sections
3.1 and 3.2 hereof shall use all reasonable efforts to effect as wide a
distribution as is reasonably practicable, and in no event shall any sale of
Subject Securities be made knowingly to any person (including its Affiliates and
any group in which that person or its Affiliates shall be a member, or the
Registering Shareholders or the underwriters know of the existence of such a
group or Affiliate) that, immediately prior to giving effect to any such sale,
beneficially owned Equity Securities representing five percent (5%) or more of
the Total
<PAGE>22
Voting Power. The Registering Shareholders and the Company
shall use all reasonable efforts to secure the agreement of the underwriters, in
connection with any underwritten offering of its Equity Securities, to comply
with the foregoing.
3.3. Registration Mechanics. (a) In connection with any
offering of Subject Securities registered pursuant to Section 3.1 or 3.2 herein,
the Company shall (i) furnish to the Registering Shareholders such number of
copies of any prospectus (including preliminary and summary prospectuses) and
conformed copies of the registration statement (including amendments or
supplements thereto and, in each case, all exhibits) and such other documents as
any Registering Stockholder may reasonably request; (ii)(A) use its best efforts
to register or qualify the Subject Securities covered by such registration
statement under such blue sky or other state securities laws for offer and sale
as the Registering Shareholders shall reasonably request and (B) keep such
registration or qualification in effect for so long as the registration
statement remains in effect; provided that the Company shall not be obligated to
qualify to do business as a foreign corporation under the laws of any
jurisdiction in which it shall not then be qualified or to file any general
consent to service of process in any jurisdiction in which such a consent has
not been previously filed or subject itself to taxation in any jurisdiction
wherein it would not otherwise be subject to tax but for the requirements of
this Section 3.3; (iii) use its best efforts to cause all Subject Securities
covered by such registration statement to be registered with or approved by such
other federal or state government agencies or authorities as may be necessary,
in the opinion of counsel to the Registering Shareholders, to enable the
Registering Shareholders to consummate the disposition of such Subject
Securities; (iv) notify the Registering Shareholders any time when a prospectus
relating thereto is required to be delivered under the Securities Act upon
discovery that, or upon the happening of any event as a result of which, the
prospectus included in such registration statement, as then in effect, includes
an untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading, in the light of the circumstances under which they were made, and
(subject to the good faith determination of the Company's Board of Directors as
to whether to permit sales under such registration statement), at the request of
any Registering Stockholder promptly prepare and furnish to it a reasonable
number of copies of a supplement to or an amendment of such prospectus as may be
necessary so that, as thereafter delivered to the purchasers of such securities,
such prospectus shall not include an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading, in light of the circumstances under which
they were made; (v) otherwise use its best efforts to comply with all applicable
rules and regulations of the SEC; (vi) use its best efforts to list the Subject
Securities covered by such registration statement on the New York
<PAGE>23
Stock Exchange or on any other Exchange on which the Subject
Securities are then listed, if required by the rules of any such Exchange; (vii)
use its best efforts to obtain a "cold comfort" letter from the independent
public accountants for the Company in customary form and covering matters of the
type customarily covered by such letters as may be reasonably requested by the
Registering Shareholders, in the event of a registration effected pursuant to
Section 3.1 hereof; (viii) execute and deliver all instruments and documents
(including in an underwritten offering an underwriting agreement in customary
form) and take such other actions and obtain such certificates and opinions as
the Registering Shareholders reasonably request in order to effect an
underwritten public offering; and (ix) before filing any registration statement
or any amendment or supplement thereto, and as far in advance as is reasonably
practicable, furnish to each Registering Stockholder and its counsel copies of
such documents. In connection with any offering of Subject Securities registered
pursuant to Section 3.1 or 3.2, the Company shall (x) furnish to the
underwriter, if any, unlegended certificates representing ownership of the
Subject Securities being sold in such denominations as requested and (y)
instruct any transfer agent and registrar of the Subject Securities to release
any stop transfer orders with respect to such Subject Securities. Upon any
registration becoming effective pursuant to Section 3.1, the Company shall use
its best efforts to keep such registration statement current for a period of 60
days (or 90 days, if the Company is eligible to use a Form S-3, or successor
form) or such shorter period as shall be necessary to effect the distribution of
the Subject Securities.
(a) Before filing with the SEC any registration statement
referred to herein or any amendments or supplements thereto, the Company shall
furnish to the Registering Shareholders or their respective counsel copies of
all such documents proposed to be filed, in order to give the Registering
Shareholders or their respective counsel sufficient time to review such
documents, and such documents may thereafter be filed subject to any timely and
reasonable comments of the Registering Shareholders or their respective counsel.
The Company shall (i) deliver promptly to the Registering Shareholders or their
respective counsel copies of all written communications between the Company and
the SEC relating to the registration statement, and (ii) advise the Registering
Shareholders or their respective counsel promptly of, and provide the
Registering Shareholders or their respective counsel with the opportunity to
participate in (to the extent reasonably practicable), all telephonic and other
non-written communications between the Company and the SEC relating to such
registration statement. The Company shall respond promptly to any comments from
the SEC with respect thereto, after consultation with the Registering
Shareholders or their respective counsel, and shall take such other actions as
shall be reasonably required in order to have each such
<PAGE>24
registration statement declared effective under the Securities
Act as soon as reasonably practicable following the date hereof.
(b) Each Registering Stockholder agrees that upon receipt of
any notice from the Company of the happening of any event of the kind described
in subdivision (iv) of this Section 3.3, it will forthwith discontinue its
disposition of Subject Securities pursuant to the registration statement
relating to such Subject Securities until its receipt of the copies of the
supplemented or amended prospectus contemplated by subdivision (iv) of this
Section 3.3 and, if so directed by the Company, will deliver to the Company all
copies (other than permanent file copies) then in its possession of the
prospectus relating to such Subject Securities current at the time of receipt of
such notice. If any Registering Stockholder's disposition of Subject Securities
is discontinued pursuant to the foregoing sentence unless the Company thereafter
extends the effectiveness of the registration statement to permit dispositions
of Subject Securities by the Registering Stockholder for an aggregate of 60 days
(or 90 days, if the Company is eligible to use a Form S-3, or successor form),
whether or not consecutive, the registration statement shall not be counted for
purposes of determining the number of registrations to which the Registering
Shareholders are entitled pursuant to Section 3.1.
3.4. Expenses. The Registering Shareholders shall pay all
agent fees and commissions and underwriting discounts and commissions related to
Subject Securities being sold by the Registering Shareholders and the fees and
disbursements of its counsel and accountants and the Company to the extent
permitted by applicable law shall pay all fees and disbursements of its counsel
and accountants in connection with any registration pursuant to this Article
III. All other fees and expenses in connection with any registration statement
(including, without limitation, all registration and filing fees, all printing
costs, all fees and expenses of complying with securities or blue sky laws)
shall to the extent permitted by applicable law (i) in the case of a
registration pursuant to Section 3.1, be borne equally by the Registering
Shareholders and the Company and (ii) in the case of a registration pursuant to
Section 3.2, be shared pro rata based upon the respective market values of the
securities to be sold by the Company, the Registering Shareholders and any other
holders participating in such offering; provided that the Registering
Shareholders shall not be obligated to pay any expenses relating to work that
would otherwise be incurred by the Company including, but to limited to, the
preparation and filing of periodic reports with the SEC.
3.5. Indemnification and Contribution. (a) In the case of any
offering registered pursuant to this Article III, the Company agrees to
indemnify and hold each Registering Stockholder, each underwriter, if any, of
the Subject Securities under such registration and each person who controls any
of the foregoing within the meaning of Section 15 of the Securities Act,
<PAGE>25
and any officer, employee or partner of the foregoing,
harmless against any and all losses, claims, damages, or liabilities (including
reasonable legal fees and other reasonable expenses incurred in the
investigation and defense thereof) to which they or any of them may become
subject under the Securities Act or otherwise (collectively "Losses"), insofar
as any such Losses shall arise out of or shall be based upon (i) any untrue
statement or alleged untrue statement of a material fact contained in the
registration statement relating to the sale of such Subject Securities (as
amended if the Company shall have filed with the SEC any amendment thereof), or
the omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading or
(ii) any untrue statement or alleged untrue statement of a material fact
contained in the prospectus relating to the sale of such Subject Securities (as
amended or supplemented if the Company shall have filed with the SEC any
amendment thereof or supplement thereto), or the omission or alleged omission to
state therein a material fact necessary in order to make the statements therein,
in light of the circumstances under which they were made, not misleading;
provided that the indemnification contained in this Section 3.5 shall not apply
to such Losses which shall arise primarily out of or shall be based primarily
upon any such untrue statement or alleged untrue statement, or any such omission
or alleged omission, which shall have been made in reliance upon and in
conformity with information furnished in writing to the Company by the
Registering Shareholders or any such underwriter, as the case may be,
specifically for use in connection with the preparation of the registration
statement or prospectus contained in the registration statement or any such
amendment thereof or supplement therein.
(a) In the case of each offering registered pursuant to this
Article III, the Registering Shareholders and each underwriter, if any,
participating therein shall agree, substantially in the same manner and to the
same extent as set forth in the preceding paragraph, severally to indemnify and
hold harmless the Company and each person, if any, who controls the Company
within the meaning of Section 15 of the Securities Act, and the directors and
executive officers of the Company, with respect to any statement in or omission
from such registration statement or prospectus contained in such registration
statement (as amended or as supplemented, if amended or supplemented as
aforesaid) if such statement or omission shall have been made in reliance upon
and in conformity with information furnished in writing to the Company by the
Registering Shareholders or such underwriter, as the case may be, specifically
for use in connection with the preparation of such registration statement or
prospectus contained in such registration statement or any such amendment
thereof or supplement thereto.
<PAGE>26
(b) Each party indemnified under this Section 3.5 shall,
promptly after receipt of notice of the commencement of any claim ("Claim")
against such indemnified party in respect of which indemnity may be sought
hereunder, notify the indemnifying party in writing of the commencement thereof.
The failure of any indemnified party to so notify an indemnifying party shall
not relieve the indemnifying party from any liability in respect of such Claim
which it may have to such indemnified party on account of the indemnity
contained in this Section 3.5, unless (and only in the event) the indemnifying
party was materially prejudiced by such failure, and in no event shall such
failure relieve the indemnifying party from any other liability which it may
have to such indemnified party. In case any Claim in respect of which
indemnification may be sought hereunder shall be brought against any indemnified
party and it shall notify an indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate therein and, to the extent
that it may desire, jointly with any other indemnifying party similarly
notified, to assume the defense thereof through counsel reasonably satisfactory
to the indemnified party by notifying the indemnified party in writing of such
election within 10 days after receipt of the indemnified party's initial notice
of the Claim, and after such notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party under this
Section 3.5 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof, other than reasonable
costs of investigation (unless such indemnified party reasonably objects to such
assumption on the grounds that there may be defenses available to it which are
different from or in addition to those available to such indemnifying party in
which event the indemnified party shall be reimbursed by the indemnifying party
for the reasonable expenses incurred in connection with retaining separate legal
counsel). If the indemnifying party undertakes to defend against such Claim
within such 10-day period, the indemnifying party shall control the
investigation, defense and settlement thereof; provided that (i) the
indemnifying party shall use its reasonable efforts to defend and protect the
interests of the indemnified party with respect to such Claim, (ii) the
indemnified party, prior to or during the period in which the indemnifying party
assumes control of such matter, may take such reasonable actions as the
indemnified party deems necessary to preserve any and all rights with respect to
such matter, without such actions being construed as a waiver of the indemnified
party's rights to defense and indemnification pursuant to this Agreement, and
(iii) the indemnifying party shall not, without the prior written consent of the
indemnified party, consent to any settlement which (A) imposes any Liabilities
on the indemnified party (other than those Liabilities which the indemnifying
party agrees to promptly pay or discharge), and (B) with respect to any
non-monetary provision of such settlement, would be likely, in the indemnified
party's
<PAGE>27
reasonable judgment, to have an adverse effect on the business
operations, assets, properties or prospects of any Stockholder (in the event
that a Registering Stockholder or any of its Affiliates is the indemnified
party), or the Company (in the event that the Company is an indemnified party),
or such indemnified party. If the indemnifying party does not undertake within
such 10-day period to defend against such Claim, then the indemnifying party
shall have the right to participate in any such defense at its sole cost and
expense, but the indemnified party shall control the investigation, defense and
settlement thereof (provided that the indemnified party may not settle any such
Claim without obtaining the prior written consent of the indemnifying party
(which consent shall not be unreasonably withheld by the indemnifying party;
provided that in the event that the indemnifying party is in material breach at
such time of the provisions of this Section 3.5, then the indemnified party
shall not be obligated to obtain such prior written consent of the indemnifying
party) at the reasonable cost and expense of the indemnifying party (which shall
be paid by the indemnifying party promptly upon presentation by the indemnified
party of invoices or other documentation evidencing the amounts to be
indemnified). In addition to the foregoing, no indemnifying party shall, without
the prior written consent of the indemnified party, effect any settlement of any
pending or threatened proceeding in respect of which the indemnified party could
have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability arising out of such claim or
proceeding.
(c) If the indemnification provided for in this Section 3.5 is
unavailable to an indemnified party or is insufficient to hold such indemnified
party harmless from any Losses in respect of which this Section 3.5 would
otherwise apply by its terms (other than by reason of exceptions provided
herein), then each applicable indemnifying party, in lieu of indemnifying such
indemnified party, shall have a joint and several obligation to contribute to
the amount paid or payable by such indemnified party as a result of such Losses,
in such proportion as is appropriate to reflect the relative benefits received
by and fault of the indemnifying party, on the one hand, and such indemnified
party, on the other hand, in connection with the offering to which such
contribution relates as well as any other relevant equitable considerations. The
relative benefit shall be determined by reference to, among other things, the
amount of proceeds received by each party from the offering to which such
contribution relates. The relative fault shall be determined by reference to,
among other things, each party's relative knowledge and access to information
concerning the matter with respect to which the claim was asserted, and the
opportunity to correct and prevent any statement or omission. The amount paid or
payable by a party as a result of any Losses shall be deemed to include any
legal or other fees or expenses incurred by such party in connection with any
investigation or
<PAGE>28
proceeding, to the extent such party would have been
indemnified for such expenses if the indemnification provided for in this
Section 3.5 was available to such party.
(d) The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 3.5 were determined by pro
rata allocation or by any other method of allocation that does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.
3.6. Rule 144. The Company covenants that it will file the
reports required to be filed by it under the Securities Act and the Exchange Act
and the rules and regulations adopted by the Commission thereunder (or, if the
Company is not required to file such reports, it will, upon the request of any
Stockholder, make publicly available other information), and it will take such
further action as any Stockholder may reasonably request, all to the extent
required from time to time to enable such Stockholder to sell Subject Securities
without registration under the Securities Act within the limitation of the
exemptions provided by (i) Rule 144 under the Securities Act, as such Rule may
be amended from time to time, or (ii) any similar rule or regulation hereafter
adopted by the Commission. Upon the request of any Stockholder, the Company will
deliver to such Stockholder a written statement as to whether it has complied
with such requirements.
3.7. Holdback Agreement. The Company agrees that it and its
Affiliates will not effect any sale, offer for sale, or grant any option to
purchase any shares of common stock (or securities convertible into or
exchangeable or exercisable for common stock) (collectively, "Sales") during the
10-day period prior to, and the 90-day period (or such longer period, not to
exceed 120 days, as the managing underwriter(s) therefor determines) beginning
on the effective date of a registration statement filed pursuant to Section 3.1
without the consent of such managing underwriter(s). The Shareholders agree not
to effect any Sales during the 10-day period prior to, and the 90-day period (or
such longer period, not to exceed 120 days, as the managing underwriter(s)
therefor determines) beginning on the effective date of a registration statement
relating to a primary offering (other than one described in clauses (i), (ii) or
(iii) of the first sentence of Section 3.2 hereof) without the consent of such
managing underwriter(s); provided that this sentence shall be of no force and
effect if the Company effects a Sale or files any registration statement for the
benefit of any other party during such 120-day period.
<PAGE>29
IV.
REPRESENTATIONS AND WARRANTIES
4.1. Representations and Warranties of the Company. The
Company hereby represents and warrants to each of the Shareholders as follows:
(a) The execution, delivery and performance by the Company of
this Agreement and the consummation by the Company of the transactions
contemplated by this Agreement are within its corporate powers and have been
duly authorized by all necessary corporate action on its part. This Agreement
constitutes a legal, valid and binding agreement of the Company, enforceable
against the Company in accordance with its terms, (i) except as limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to or affecting creditors' rights
generally, including the effect of statutory and other laws regarding fraudulent
conveyances and preferential transfers, and (ii) subject to the limitations
imposed by general equitable principles (regardless of whether such
enforceability is considered in a proceeding at law or in equity).
(b) The execution, delivery and performance of this Agreement
by the Company does not and will not contravene or conflict with or constitute a
default under the Company's Memorandum of Association or Bye-laws or any of its
material Contracts.
(c) Immediately after giving effect to both the Restructuring
and the Distribution (including, without limitation, after giving effect to the
distribution of shares of Spinco Common Stock to the holders of common stock of
Loral and the holders of options with respect to common stock of Loral, who or
which may be entitled to receive shares of Spinco Common Stock pursuant to or in
connection with the Distribution Agreement, the Merger Agreement or otherwise),
(i) the Company's authorized capital stock shall consist of ________ shares of
Spinco Common Stock and ________ shares of Preferred Stock, of which ________
shares of Spinco Common Stock and ________ shares of Preferred Stock shall be
issued and outstanding, (ii) Loral will be the record and beneficial owner of
_______ shares of Preferred Stock, all of which will be validly issued and fully
paid and nonassessable and all of which will be free of all Liens, (iii) except
for the shares of Spinco Common Stock and the shares of Preferred Stock
specified in clause (i) above, there will be no other Equity Securities, and
(iv) the Wing Shareholders will hold, in the aggregate, at least twenty percent
(20%) of the Total Voting Power.
<PAGE>30
V.
TERM
5.1. Term. The term (the "Term") of this Agreement shall
commence on the date hereof and shall continue until the earlier of (x) the date
on which the Voting Power of the Equity Securities, on a fully diluted basis,
beneficially owned by Loral and its Affiliates shall represent less than five
percent (5%) of the Total Voting Power, (y) the tenth anniversary of the date
hereof, or (z) a Change of Control (as defined in Section 1.1(c) above). Upon
expiration of the Term, the provisions of this Agreement shall terminate, and be
of no further force or effect, automatically without any further action on the
part of any parties hereto; provided that the provisions of Articles III and VI
shall continue without regard to the term limitation set forth in this sentence;
provided further that no such termination shall relieve any party of any
liability to the other parties hereto, to the extent such liability is incurred
prior to the expiration of the Term.
VI.
MISCELLANEOUS
6.1. Certain Restrictions. The Company shall not take or
recommend to its Shareholders any action, including any amendment of its
Memorandum of Association, Bye-laws or stockholder rights plan, if any, which
would impose restrictions applicable to Loral and not to other securityholders
generally based upon the size of Loral' security holdings, the business in which
it is engaged or other considerations applicable to it and not to
securityholders generally. In addition, the Company shall not take or recommend
to its Shareholders any action, including any amendment of its Certificate of
Incorporation, By-laws or stockholder rights plan, if any, which would likely
adversely affect in any material respect, either directly or indirectly, any of
the rights or obligations of the Shareholders under the provisions of this
Agreement.
The Shareholders agree that the Company may adopt a
Shareholders rights plan similar to the Shareholders rights plan adopted by
Loral except that Loral (and its Affiliates and associates) shall not be deemed
to be an "Acquiring Person" unless Loral and its Affiliates become the
beneficial owner of 25% or more of the outstanding shares of common stock of the
Company.
6.2. Entire Agreement. This Agreement and the Restructuring
Agreement (including the schedules and exhibits and the agreements and other
documents referred to therein, including, without limitation, the Tax Sharing
Agreement and the
<PAGE>31
Transition Services Agreements) constitutes the entire
agreement among the parties with respect to the subject matter hereof and
supersedes all other prior negotiations, commitments, agreements and
understandings, both written and oral, between the parties or any of them with
respect to the subject matter hereof.
6.3. Fees and Expenses. Except as otherwise provided in this
Agreement, all costs and expenses incurred by the Shareholders and the Company
in connection with consummating such party's obligations hereunder or otherwise
shall be paid by the party incurring such cost or expense.
6.4. Access to Information. During the Term, the Company shall
provide to each Stockholder reasonable access to the books and records of the
Company and its subsidiaries during the regular business hours of the Company
and such subsidiaries, following the Company's receipt of a written notice from
such Stockholder requesting such access; provided that the Company shall not be
required to provide any confidential information if the Company reasonably
determines that the providing of such information would result in (x) a
violation of applicable antitrust laws or (y) create a substantial likelihood of
a significant adverse effect on the Company; provided, further, that the
Stockholder shall keep confidential any confidential information disclosed to it
except as required by law, service of process, interrogatories, or similar legal
process, and except for any such information which becomes publicly available
through no fault of the Stockholder.
6.5. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
INTERPRETED AND ENFORCED IN ACCORDANCE WITH THE SUBSTANTIVE LAWS OF THE STATE OF
NEW YORK WITHOUT GIVING EFFECT TO THE CHOICE OF LAW PRINCIPLES THEREOF (EXCEPT
IN THOSE CIRCUMSTANCES WHERE THE CORPORATE LAW OF THE COMPANY'S JURISDICTION OF
ORGANIZATION REQUIRES THE APPLICATION OF THE LAW OF THE COMPANY'S JURISDICTION
OF ORGANIZATION WITH RESPECT TO A PARTICULAR MATTER).
6.6. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given upon (a) transmitter's
confirmation of a receipt of a facsimile transmission, (b) confirmed delivery by
a standard overnight carrier or when delivered by hand or (c) the expiration of
five Business Days after the day when mailed by certified or registered mail,
postage prepaid, addressed at the following addresses (or at such other address
for a party as shall be specified by like notice):
(a) If to any of the Shareholders, to:
Loral Corporation
c/o Lockheed Martin Corporation
6801 Rockledge Drive
Bethesda, MD 20817
<PAGE>32
Telephone: (301) 897-6125
Telecopy No.: (301) 897-6333
Attention: General Counsel
and to:
Skadden, Arps, Slate, Meagher
& Flom
919 Third Avenue
New York, New York 10022
Telephone: (212) 735-3000
Telecopy No.: (212) 735-2000
Attention: Peter Allan Atkins, Esq.
Lou R. Kling, Esq.
and to:
O'Melveny & Myers
153 E. 53rd Street
New York, New York 10022
Telephone: (212) 326-2000
Telecopy No.: (212) 326-2160
Attention: C. Douglas Kranwinkle, Esq.
Jeffrey J. Rosen, Esq.
If to the Company, to:
Loral Space & Communications Corporation
600 Third Avenue
New York, New York
Telephone: (212) 697-1105
Telecopy No.: (212) 602-9805
Attention: General Counsel
with a copy to:
Willkie Farr & Gallagher
153 E. 53rd Street
New York, New York 10022
Telephone: (212) 821-8000
Telecopy No.: (212) 821-8111
Attention: Robert B. Hodes, Esq.
Bruce R. Kraus, Esq.
In addition to providing any notice required to be given by
the Company pursuant to its Certificate of Incorporation in the manner specified
therein, the Company shall send to each Stockholder by telecopy in accordance
with this Section 6.6 a copy of each such notice.
6.7. Successors and Assigns; Reclassifications; No Third
Party Beneficiaries. This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the parties and their respective
successors and permitted
<PAGE>33
assigns, but neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any party hereto
(whether by operation of law or otherwise) without the prior written consent of
the other parties hereto (which consent may not be unreasonably withheld),
except that any party shall have the right, without the consent of any other
party hereto, to assign all or a portion of its rights, interests and
obligations hereunder to one or more direct or indirect subsidiaries, but no
such assignment of obligation shall relieve the assigning party from its
responsibility therefor. In the event of any recapitalization or
reclassification of any Equity Securities, or any merger, consolidation or other
transaction with like effect, the securities issued in replacement or exchange
for such Equity Securities shall be deemed Equity Securities hereunder. This
Agreement shall be binding upon and inure solely to the benefit of each party
hereto, and nothing in this Agreement, express or implied, is intended to or
shall confer upon any other person any rights, benefits or remedies of any
nature whatsoever under or by reason of this Agreement; provided that the
indemnified parties referred to in Section 3.5 hereof are intended to be third
party beneficiaries of the provisions of Section 3.5 hereof, and shall have the
right to enforce such provisions as if they were parties hereto.
6.8. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
6.9. Further Assurances. Each party hereto or person subject
hereto shall do and perform or cause to be done and performed all such further
acts and things and shall execute and deliver all such other agreements,
certificates, instruments and documents as any other party hereto or person
subject hereto may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
6.10. Interpretation. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of
or to affect the meaning or interpretation of this Agreement. Unless otherwise
specified in this Agreement, all references in this Agreement to "days" shall
be deemed to be references to calendar days.
6.11. Legal Enforceability. Any provision of this Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without affecting the validity or enforceability of the
remaining provisions hereof. Any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. If any provision of
<PAGE>34
this Agreement is so broad as to be unenforceable, the
provision shall be interpreted to be only so broad as is enforceable.
6.12. Consent to Jurisdiction. Each of the parties hereto
irrevocably and unconditionally (a) agrees that all suits, actions or other
legal proceedings arising out of this Agreement or any of the transactions
contemplated hereby (a "Suit") shall be brought and adjudicated solely in the
United States District Court for the District of Delaware, or, if such court
will not accept jurisdiction, in the Delaware Chancery Court or any court of
competent civil jurisdiction sitting in New Castle County, Delaware, (b) submits
to the non-exclusive jurisdiction of any such court for the purpose of any such
Suit and (c) waives and agrees not to assert by way of motion, as a defense or
otherwise in any such Suit, any claims that it is not subject to the
jurisdiction of the above courts, that such Suit is brought in an inconvenient
forum or that the venue of such Suit is improper. Each of the parties hereto
also irrevocably and unconditionally consents to the service of any process,
summons, pleadings, notices or other papers in a manner permitted by the notice
provisions of Section 6.6 hereof and agrees that any such form of service shall
be effective in connection with any such Suit; provided that nothing contained
in this Section 6.12 shall affect the right of any party to serve process,
pleadings, notices or other papers in any other manner permitted by applicable
Law.
6.13. Specific Performance. Each of the parties hereto
acknowledges and agrees that in the event of any breach of this Agreement, each
non-breaching party would be irreparably and immediately harmed and could not be
made whole by monetary damages. It is accordingly agreed that the parties hereto
(a) will waive, in any action for specific performance, the defense of adequacy
of a remedy at law and (b) shall be entitled, in addition to any other remedy to
which they may be entitled at law or in equity, to compel specific performance
of this Agreement in any action instituted in any court referred to in Section
6.12 hereof.
<PAGE>35
IN WITNESS WHEREOF, each of the parties has caused this
Shareholders Agreement to be executed on its behalf by its officers thereunto
duly authorized, all as of the day and year first above written.
LORAL CORPORATION
By:
Name:
Title:
LORAL SPACE & COMMUNICATIONS LTD.
By:
Name:
Title:
<PAGE>1
EXCHANGE AGREEMENT
EXCHANGE AGREEMENT, dated as of April 22, 1996 (the "Agreement"), by
and among Loral Space & Communications Ltd., a Bermuda company which is the
successor-in-interest to Loral Space & Communications, Inc., a Delaware
corporation ("SpaceCom"), Lockheed Martin Corporation, a Maryland corporation
("LMC"), and Loral Corporation, a New York corporation ("Loral").
R E C I T A L S:
WHEREAS, each of Loral, LMC, and LAC Acquisition Corporation, a New
York corporation ("LAC"), are parties to that certain Agreement and Plan of
Merger, dated as of January 7, 1996, as amended (the "Merger Agreement");
WHEREAS, Loral, LMC, SpaceCom and certain affiliates of SpaceCom are
parties to the Restructuring, Financing and Distribution Agreement dated as of
January 6, 1996, as amended (the "Distribution Agreement");
WHEREAS, concurrently with the consummation of the Distribution (as
defined in the Distribution Agreement), Loral and SpaceCom will enter into the
Stockholders Agreement (as defined in the Distribution Agreement; for purposes
of this Agreement, the "SpaceCom Stockholders Agreement");
WHEREAS, immediately following the Distribution, Loral will own all
of the issued and outstanding shares of Series A Non-Voting Convertible
Preferred Stock of SpaceCom (the "SpaceCom Preferred Shares"), which, subject
to certain conditions set forth in the Certificate of Designation of the
SpaceCom Preferred Shares and the SpaceCom Stockholders Agreement, are
convertible into shares of SpaceCom common stock, $.01 par value per share
(the "SpaceCom Common Stock"; collectively, the SpaceCom Preferred Shares and
the SpaceCom Common Stock are the "SpaceCom Securities");
WHEREAS, immediately following the Distribution, SpaceCom will own
all of the issued and outstanding common stock, $.01 par value per share (the
"SS/L Bermuda Common Stock"), of SS/L (Bermuda) Ltd., a Bermuda company ("SS/L
Bermuda");
WHEREAS, immediately following the Distribution all of the issued
and outstanding shares of Series S Preferred Stock (as defined below) of SS/L
Bermuda will be owned by Lehman Brothers Capital Partners, II, L.P., Lehman
Brothers Merchant Banking Portfolio Partnership, L.P., Lehman Brothers
Offshore Investment Partnership, L.P. and Lehman Brothers Offshore Investment
Partnership-Japan L.P. (collectively, the "Lehman Partnerships");
<PAGE>2
WHEREAS, immediately following the Distribution, SpaceCom, SS/L
Bermuda and the Lehman Partnerships will be parties to the Second Amended and
Restated Agreement dated as of November 13, 1992, as amended as of April 22,
1996 (the "SS/L Bermuda Stockholders Agreement").
WHEREAS, pursuant to Sections 2.9, 2.10 and 5.4 of the SS/L Bermuda
Stockholders Agreement, the Lehman Partnerships have, under certain
circumstances and subject to certain conditions, the right to require SS/L to
purchase from the Lehman Partnerships all of the Series S Preferred Stock;
WHEREAS, immediately following the Distribution, each of SS/L
Bermuda, Aerospatiale Societe Nationale Industrielle, Alcatel Espace, Daimler-
Benz Aerospace A.G. and Finmeccanica S.p.A. (collectively, the "Strategic
Partners") will own shares of common stock, $.10 par value per share ("SS/L
Common Stock"), of Space Systems/Loral, Inc., a Delaware corporation ("SS/L");
WHEREAS, SpaceCom, SS/L Bermuda and SS/L intend to enter into an
agreement with the Strategic Partners to amend that certain Stockholders
Agreement, dated as of April 22, 1991, as amended November 2, 1992 (as amended
by such contemplated amendment, the "SS/L Stockholders Agreement");
WHEREAS, pursuant to Section 4.4 of the SS/L Stockholders Agreement
each of the Strategic Partners has, under certain circumstances and subject to
certain conditions, the right to require SS/L to purchase from the Strategic
Partner shares of SS/L Common Stock beneficially owned by the Strategic
Partner (the "Strategic Partner Put Rights");
WHEREAS, if SpaceCom acquires any of the ownership interests of the
Lehman Partnerships or the Strategic Partners in SS/L Bermuda or SS/L,
respectively, SpaceCom's direct or indirect ownership interest in SS/L will
increase;
WHEREAS, while each of the parties hereto believe that an increase
in the ownership by SpaceCom of SS/L would be entirely consistent with all
applicable law and policies of the Antitrust Authorities (as defined in
Section 2.1(a)), the parties have agreed to enter into this Agreement to
provide for any contingencies that may hereinafter arise;
NOW THEREFORE, in consideration of the foregoing premises and for
other good and valuable consideration, the sufficiency of which is hereby
acknowledged, LMC, Loral and SpaceCom agree as follows:
<PAGE>3
ARTICLE I
DEFINITIONS
Section 1.1 General. For convenience and brevity, certain terms
used in various parts of this Agreement are listed in alphabetical order and
defined or referred to below (such terms to be equally applicable to both
singular and plural forms of the terms defined or referred to):
"Change of Control" has, with respect to the Lehman Put Rights, the
meaning assigned to the term in the SS/L Bermuda Stockholders Agreement and
has, with respect to the Strategic Partner Put Rights, the meaning assigned to
that term in the SS/L Stockholders Agreement.
"Closing Market Price" for each day for any publicly traded security
means the last reported sales price regular way or, in case no such sale takes
place on such day, the average of the closing bid and asked prices regular
way, in either case on the principal national securities exchange on which the
shares of the publicly traded security are listed or admitted to trading, or,
if not listed or admitted to trading on any national securities exchange, on
the Nasdaq National Market or, if the shares of the publicly traded security
are not listed or admitted to trading on any national securities exchange or
quoted on the Nasdaq National Market, the average of the closing bid and asked
prices as furnished by any New York Stock Exchange member firm selected from
time to time by LMC for such purpose.
"Distribution Date" has the meaning assigned to that term in the
Distribution Agreement.
"Exercise" means (i) the valid exercise by the Lehman Partnerships
of the Lehman Put Rights or by a Strategic Partner of the Strategic Partner
Put Rights for reasons unrelated to a Change of Control other than the Change
of Control resulting from the consummation of the Offer (as defined in the
Merger Agreement) and/or (ii) the repurchase of SS/L Securities from the
Lehman Partnerships by SpaceCom, SS/L Bermuda or SS/L otherwise than pursuant
to an exercise of the Lehman Put Rights.
"Fair Market Value" means (i) with respect to any publicly traded
security, the average of the Closing Market Prices of such security for the 10
consecutive trading days ended immediately before the date of the Requirement
Notice, and (ii) with respect to a security not publicly traded, the fair
market value, as of the date of the Requirement Notice, determined as if the
Company whose security is being valued were to be sold in its entirety with a
reasonable amount of time available to negotiate and consummate such sale;
provided, that for purposes of clauses (i) and (ii) of this definition, the
Fair Market Value of SpaceCom Preferred Shares shall be deemed to be equal to
the Fair Market Value of SpaceCom Common Stock into which they are
convertible.
<PAGE>4
"GTL" means Globalstar Telecommunications Limited, a company
organized under the laws of Bermuda.
"GTL Common Stock" means the common stock, $1.00 par value per
share, of GTL.
"Lehman Put Rights" means the rights of the Lehman Partnerships to
require SpaceCom, SS/L, SS/L Bermuda or any affiliate of SpaceCom to purchase
SS/L Securities beneficially owned by the Lehman Partnerships pursuant to
Sections 2.9, 2.10 or 5.4 of the SS/L Bermuda Stockholders Agreement as in
effect on the date hereof or as such agreement may be amended from time to
time hereafter with respect to (i) the conditions precedent to the Lehman
Partnerships' right to require the repurchase of the SS/L Securities, (ii) the
times at which such repurchase must occur and (iii) the number of shares of
SS/L Securities required to be sold in connection with the exercise of any
such rights.
"Ownership Increase" means any increase in the beneficial ownership
of equity securities of SS/L, or, as the context shall require, any binding
agreement (an "Ownership Increase Agreement") to enter into a transaction or
series of transactions that would result in such an increase.
"Requirement Notice" has the meaning set forth in Section 3.2
hereof.
"Series S Preferred Stock" means the shares of Series S Redeemable
Preferred Stock, par value $.01 per share, of SS/L Bermuda.
"SS/L Securities" means equity securities of either SS/L Bermuda or
SS/L.
"Strategic Partner Put Rights" means the rights of a Strategic
Partner to require SpaceCom, SS/L, SS/L Bermuda or any affiliate of SpaceCom
to purchase SS/L Securities beneficially owned by the Strategic Partner
pursuant to Section 4.4 of the SS/L Stockholders Agreement as in effect on the
date hereof or as such agreement may be amended from time to time hereafter
with respect to (i) the conditions precedent to the Strategic Partner's right
to require the repurchase of the SS/L Securities, (ii) the times at which such
repurchase must occur and (iii) the number of shares of SS/L Securities
required to be sold in connection with the exercise of any such rights.
"Transferred Shares" has the meaning set forth in Section 3.1(a)
hereof.
<PAGE>5
ARTICLE II
ANTITRUST APPROVAL AND REVIEW
Section 2.1 Antitrust Approval.
(a) The parties acknowledge and agree that an Ownership Increase
could result in a requirement on the part of SS/L, SpaceCom and other parties
to abide by a waiting period imposed under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), and to make certain
filings required thereunder, and could otherwise be subject to approval by the
relevant governmental or supragovernmental antitrust authorities of the United
States or the European Community (the "Antitrust Authorities"). Any such
approval with respect to an Ownership Increase resulting from an Exercise and
the lapse or early termination of the HSR Act waiting period with respect
thereto is hereinafter referred to as an "Approval".
(b) SpaceCom agrees that it shall not seek Approval unless it shall
have received the prior written opinion of Willkie Farr & Gallagher (and/or
such other counsel reasonably acceptable to LMC) that absent such Approval,
the Ownership Increase would constitute a violation of law (the "Opinion").
Section 2.2 Antitrust Review.
(a) SpaceCom will give LMC prompt written notice of any Ownership
Increase resulting from an Exercise and a copy of any Opinion received in
connection therewith.
(b) Following delivery of the Opinion to LMC, LMC and SpaceCom will
(i) take promptly all actions necessary to make the filings required of LMC,
SpaceCom or any of their affiliates necessary to obtain the Approval, (ii)
comply at the earliest practicable date with any request from the Antitrust
Authorities for additional information or documentary material related to the
Ownership Increase, and (iii) cooperate in connection with any filing required
by the Antitrust Authorities in connection with the Approval and in connection
with resolving any investigation or other inquiry commenced by the Antitrust
Authorities concerning the Ownership Increase.
(c) In furtherance and not in limitation of the covenants of LMC
and SpaceCom contained in Section 2.2(b) hereof, LMC and SpaceCom shall each
use reasonable efforts to resolve such objections, if any, as may be asserted
with respect to the Ownership Increase. SpaceCom shall use its reasonable
efforts to obtain the Approval without the Approval being conditioned upon a
change in LMC's ownership interest in SpaceCom, including, without limitation,
SpaceCom's agreeing to reasonable alternative conditions or proposals of the
Antitrust Authorities not involving any change in LMC's ownership interest in
SpaceCom; provided, that SpaceCom shall not be required to take any action or
agree to any
<PAGE>6
alternative conditions or proposals that would have a material adverse effect
on SpaceCom. LMC will, and will cause its subsidiaries, to use reasonable
efforts to assist SpaceCom in obtaining the Approval without the Approval
being conditioned upon any change in LMC's ownership interest in SpaceCom
including, without limitation, agreeing to reasonable alternative conditions
or proposals of the Antitrust Authorities not involving any reduction in LMC's
ownership of SpaceCom Securities; provided that LMC shall not be required to
take any action, or agree to any alternative conditions or proposals, that
could, in the reasonable judgment of LMC, have a material adverse effect on
LMC's investment in SpaceCom.
ARTICLE III
EXCHANGE
Section 3.1 Exchange.
(a) If, following an Ownership Increase resulting from an Exercise
and receipt of the Opinion, an Antitrust Authority requires as a condition to
the Approval that the indirect ownership interest of LMC in SS/L be reduced
below the indirect ownership interest that would otherwise result from the
Ownership Increase (the "Antitrust Requirement"), then LMC shall be required
to transfer to SpaceCom shares of SpaceCom Securities beneficially owned by
LMC as specified in Section 3.1(c) hereof in exchange for shares of GTL Common
Stock; provided, however, that no such transfer shall be required if the
transactions contemplated by an Ownership Increase Agreement are not
completed.
(b) SpaceCom shall provide prompt written notice of the Antitrust
Requirement to LMC and shall include therein reasonable evidence of the
Antitrust Requirement (the "Requirement Notice").
(c) The number of shares of SpaceCom Securities to be transferred
by or on behalf of LMC (the "Transferred Shares") shall be the minimum number
of shares necessary to reduce LMC's indirect ownership interest in SS/L to the
maximum ownership interest therein permitted by the Antitrust Authorities as a
condition necessary to the Approval; it being understood that nothing in this
Agreement will require LMC to reduce its fully-diluted ownership interest in
SpaceCom below 20% unless, prior to such reduction, appropriate modification
of Section 1.4 of the SpaceCom Stockholders Agreement shall have been made
that preserves the economic benefits to Loral of the option contained in such
Section 1.4. The number of shares of GTL Common Stock to be delivered to LMC
in exchange for the Transferred Shares shall be a number of shares of GTL
Common Stock having a Fair Market Value equal to the Fair Market Value of the
Transferred Shares.
(d) Notwithstanding the provisions of Section 3.1(a) hereof,
SpaceCom shall not be required to deliver shares of GTL Common Stock to LMC as
required thereunder if an Antitrust Authority from which Approval is
requested, as a condition to the Approval, prohibits
<PAGE>7
the exchange of GTL Common Stock for the Transferred Shares. In such event,
in lieu of transferring GTL Common Stock to LMC in exchange for the
Transferred Shares, SpaceCom shall pay LMC, upon surrender and transfer of the
Transferred Shares to SpaceCom, cash in an amount equal to the greater of (i)
the Fair Market Value of the Transferred Shares and (ii) the original purchase
price of the Transferred Shares, increased at the rate of 10% per annum,
compounded annually, from the date of the consummation of the Offer (as
defined in the Merger Agreement) through the date of the transfer of the
Transferred Shares to SpaceCom. The parties agree that for the purposes of
this Section 3.1(d) the aggregate original purchase price of the SpaceCom
Securities owned beneficially by LMC on the Distribution Date is $344 million.
Section 3.2 Determination of Consideration. Following receipt of
the Requirement Notice by LMC, each of LMC and SpaceCom will use their
reasonable efforts to reach an agreement on the number of shares of GTL Common
Stock to be transferred, or the amount of cash to be paid, as the case may be,
pursuant to Section 3.1(c) hereof, to LMC in exchange for the Transferred
Shares. If, within 10 business days after the date of delivery of the
Requirement Notice, LMC and SpaceCom cannot agree on the number of shares of
GTL Common Stock or amount of cash, as the case may be, to be received by LMC
in consideration of the Transferred Shares pursuant to Section 3.1 hereof (the
"Consideration"), then the Consideration shall be determined by such
nationally recognized investment bank as LMC and SpaceCom shall jointly select
(the "Designated Investment Bank"). LMC and SpaceCom shall use their best
efforts to cause the determination of the Consideration by the Designated
Investment Bank to be completed in five business days if SpaceCom Securities
and GTL Common Stock are both publicly traded securities and otherwise in 60
days, in each case, after the date of engagement of the Designated Investment
Bank. The determination of the Designated Investment Bank shall be final and
binding on the parties hereto. One-half of the fees and expenses of the
Designated Investment Bank shall be paid by each of LMC and SpaceCom.
Section 3.3 New Registration Rights. If the Consideration is
shares of GTL Common Stock, then on or before the date the Consideration is
received by LMC, SpaceCom shall cause GTL to enter into an agreement with LMC
and Loral providing for LMC and Loral to have registration rights with respect
to all of the shares of GTL Common Stock received in exchange for the
Transferred Shares, the terms of which shall be substantially identical to the
registration rights of Loral with respect to the SpaceCom Securities set forth
in Article III of the SpaceCom Stockholders Agreement; provided, that the
minimum number of shares and minimum value of shares of GTL Common Stock
required to be included in any registration shall be adjusted in direct
proportion to the difference, if any, in the market capitalization of GTL as
compared to the market capitalization of SpaceCom, on the date of the
Requirement Notice.
Section 3.4 Closing of Exchange. The closing with respect to the
exchange of the Transferred Shares for the Consideration pursuant to
Article III hereof shall be on a mutually determined closing date which shall
be the later of a date not more than 15 days after
<PAGE>8
(i) the date on which LMC and SpaceCom agree on the Consideration or, if
applicable, the Designated Investment Bank determines the Consideration and
(ii) the consummation of the transactions resulting in the Ownership Increase.
The closing shall be held at 10:00 a.m., local time, at the principal office
of SpaceCom, or at such other time or place as LMC and SpaceCom mutually
agree. On such closing date, LMC and, if applicable, SpaceCom shall deliver
(i) certificates representing the shares of SpaceCom Securities and, if
applicable, GTL Common Stock, respectively, which shares shall be free and
clear of any lien, claim or encumbrance, and in the case of the GTL Common
Stock, shall be validly issued, fully paid and non-assessable, and (ii) such
instruments of transfer and evidence of ownership and authority as the other
party may reasonably request. In the event the Consideration is cash, then
SpaceCom shall pay the Consideration to LMC by wire transfer of immediately
available funds no later than 2:00 p.m. on the closing date to the account
designated by LMC prior to such closing date.
ARTICLE IV
MISCELLANEOUS
Section 4.1 Entire Agreement. This Agreement, the Distribution
Agreement and the SpaceCom Stockholders Agreement (including the schedules and
exhibits and the agreements and other documents referred to therein) consti-
tute the entire agreement among the parties with respect to the subject matter
hereof and supersedes all other prior negotiations, commitments, agreements
and understandings, both written and oral, between the parties or any of them
with respect to the subject matter hereof.
Section 4.2 Fees and Expenses. Except as otherwise provided in
the last sentence of Section 3.2 hereof, all reasonable costs and expenses in-
curred by the parties hereto in connection with consummating such party's
obligations hereunder or otherwise shall be paid by SpaceCom; provided,
however, that upon the request of SpaceCom, LMC shall advise SpaceCom from
time to time of the extent of the activities of LMC's outside advisors in
connection with LMC satisfying its obligations under Section 2.2(b) hereof;
and provided further, that LMC shall consider in good faith the reasonable
requests of SpaceCom with respect to reducing the costs and expenses being
incurred by LMC in connection therewith.
Section 4.3 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY
AND INTERPRETED AND ENFORCED IN ACCORDANCE WITH THE SUBSTANTIVE LAWS OF THE
STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE CHOICE OF LAW PRINCIPLES
THEREOF (EXCEPT IN THOSE CIRCUMSTANCES WHERE THE CORPORATE LAW OF THE
COMPANY'S JURISDICTION OF ORGANIZATION REQUIRES THE APPLICATION OF THE LAW OF
THE COMPANY'S JURISDICTION OF ORGANIZATION WITH RESPECT TO A PARTICULAR
MATTER).
<PAGE>9
Section 4.4 Notices. All notices and other communications here-
under shall be in writing and shall be deemed given upon (a) transmitter's
confirmation of a receipt of a facsimile transmission, (b) confirmed delivery
by a standard overnight carrier or when delivered by hand or (c) the expi-
ration of five Business Days after the day when mailed by certified or regis-
tered mail, postage prepaid, addressed at the following addresses (or at such
other address for a party as shall be specified by like notice):
(i) If to LMC or Loral, to:
Lockheed Martin Corporation
6801 Rockledge Drive
Bethesda, MD 20817
Telephone: (301) 897-6125
Telecopy No.: (301) 897-6333
Attention: Frank H. Menaker, Jr., General Counsel
and to:
Skadden, Arps, Slate, Meagher
& Flom
919 Third Avenue
New York, New York 10022
Telephone: (212) 735-3000
Telecopy No.: (212) 735-2000
Attention: Peter Allan Atkins, Esq.
and to:
O'Melveny & Myers
One Citicorp Center
153 E. 53rd Street
New York, New York 10022
Telephone: (212) 326-2000
Telecopy No.: (212) 326-2160
Attention: Jeffrey J. Rosen, Esq.
(ii) If to SpaceCom, to:
Loral Space & Communications Ltd.
600 Third Avenue
New York, New York
Telephone: (212) 697-1105
Telecopy No.: (212) 602-9805
<PAGE>10
Attention: Eric J. Zahler, General Counsel
with a copy to:
Willkie Farr & Gallagher
One Citicorp Center
153 E. 53rd Street
New York, New York 10022
Telephone: (212) 821-8000
Telecopy No.: (212) 821-8111
Attention: Robert B. Hodes, Esq.
Bruce R. Kraus, Esq.
Section 4.5 Successors and Assigns; Reclassifications; No Third
Party Beneficiaries. This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the parties and their respective
successors and permitted assigns, but neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any party
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties hereto (which consent may not be unreasonably
withheld), except that any party shall have the right, without the consent of
any other party hereto, to assign all or a portion of its rights, interests
and obligations hereunder to one or more direct or indirect subsidiaries, but
no such assignment of obligation shall relieve the assigning party from its
responsibility therefor. In the event of any recapitalization or re-
classification of any SpaceCom Securities, or any merger, consolidation or
other transaction with like effect, the securities issued in replacement or
exchange for such SpaceCom Securities shall be deemed SpaceCom Securities
hereunder. This Agreement shall be binding upon and inure solely to the bene-
fit of each party hereto, and nothing in this Agreement, express or implied,
is intended to or shall confer upon any other person any rights, benefits or
remedies of any nature whatsoever under or by reason of this Agreement.
Section 4.6 Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
Section 4.7 Further Assurances. Each party hereto or person
subject hereto shall do and perform or cause to be done and performed all such
further acts and things and shall execute and deliver all such other
agreements, certificates, instruments and documents as any other party hereto
or person subject hereto may reasonably request in order to carry out the
intent and accomplish the purposes of this Agreement and the consummation of
the transactions contemplated hereby.
Section 4.8 Interpretation. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of
or to affect the meaning or
<PAGE>11
interpretation of this Agreement. Unless otherwise specified in this
Agreement, all references in this Agreement to "days" shall be deemed to be
references to calendar days.
Section 4.9 Summary Proceeding. No dispute arising with respect
to this Agreement where the amount in controversy as to at least one party,
exclusive of interest and costs, exceeds One Million Dollars ($1,000,000) (a
"Summary Proceeding"), shall be litigated except in the Superior Court of the
State of Delaware (the "Delaware Superior Court") as a summary proceeding
pursuant to Rules 124-131 of the Delaware Superior Court, or any successor
rules (the "Summary Proceeding Rules"). Each of the parties hereto hereby
irrevocably and unconditionally (i) submits to the jurisdiction of the
Delaware Superior Court for any Summary Proceeding, (ii) agrees not to
commence any Summary Proceeding except in the Delaware Superior Court; (iii)
waives, and agrees not to plead or to make, any objection to the venue of any
Summary Proceeding in the Delaware Superior Court, (iv) waives, and agrees not
to plead or to make, any claim that the Delaware Superior Court lacks personal
jurisdiction over it, and (iv) waives its right to remove any Summary
Proceeding to the federal courts except where such courts are vested with sole
and exclusive jurisdiction by statute.
Section 4.10 Specific Performance. Each of the parties hereto ac-
knowledges and agrees that in the event of any breach of this Agreement, each
non-breaching party would be irreparably and immediately harmed and could not
be made whole by monetary damages. It is accordingly agreed that the parties
hereto (a) will waive, in any action for specific performance, the defense of
adequacy of a remedy at law and (b) shall be entitled, in addition to any
other remedy to which they may be entitled at law or in equity, to compel
specific performance of this Agreement in any action instituted in any court
referred to in Section 4.9 hereof.
____________________________
<PAGE>12
IN WITNESS WHEREOF, each of the parties has caused this Exchange
Agreement to be executed on its behalf by its officers thereunto duly
authorized, all as of the day and year first above written.
LORAL SPACE & COMMUNICATIONS
LTD.
By:
Name:
Title:
LOCKHEED MARTIN CORPORATION
By:
Name:
Title:
LORAL CORPORATION
By:
Name:
Title:
