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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. )*
Globalstar Telecommunications Limited
- --------------------------------------------------------------------------------
(Name of Issuer)
Common Stock, par value $1.00
- --------------------------------------------------------------------------------
(Title of Class of Securities)
G3930H104
------------------------------
(CUSIP Number)
Eric J. Zahler, Vice President, Secretary and General Counsel,
Loral Space & Communications Ltd.,
600 Third Avenue, New York, New York 10016
(212) 697-1105
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
April 22, 1996
------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box .
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-l(a) for other parties to whom copies are to be
sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
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SCHEDULE 13D
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CUSIP No. G3930H104
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----------- -----------------------------------------------------------------
1 NAME OF REPORT PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Loral Space & Communications Ltd.
- ----------- ------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
00
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Bermuda
- ------------ --------- ------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY
OWNED BY EACH 2,984,067
REPORTING
PERSON WITH
--------- -------------------------------------------------------
8 SHARED VOTING POWER
0
--------- -------------------------------------------------------
9 SOLE DISPOSITIVE POWER
2,984,067
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10 SHARED DISPOSITIVE POWER
0
- ---------- -------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON
2,984,067
- --------- --------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [ ]
- ----------- ------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
20.2%
- ----------- ------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
- ----------- ------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
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This statement on Schedule 13D (this "Statement") relates to
shares of Common Stock, $1.00 par value per share (the "Shares"), of Globalstar
Telecommunications Limited (the "Company") and is being filed by Loral Space &
Communications Ltd. ("Loral").
Item 1. Security and Issuer
- ----------------------------
This Statement relates to Shares of the Company, a Bermuda
company. The principal executive offices of the Company are located at Cedar
House, 41 Cedar Avenue, Hamilton, HM12, Bermuda.
Item 2. Identity and Background
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This Statement is filed by and on behalf of Loral, a Bermuda
company. Loral is engaged in the space and telecommunications business and has
its principal office at 600 Third Avenue, New York, New York 10016.
The name, citizenship, business address, position and present
principal occupation of each of the executive officers and directors of Loral
are set forth in Schedule I of this Statement.
Other than the individuals identified in Schedule I as owning
Shares (the "Executive Officers and Directors"), none of the other persons named
in Schedule I, to the best knowledge of Loral, beneficially owns for purposes of
Section 13(d) of the Securities Exchange Act of 1934 ("Beneficially Owns")
Shares.
During the last five years, neither Loral, nor, to the best
knowledge of Loral, any of the persons named in Schedule I to this Statement,
has been (i) convicted in a criminal proceeding (excluding traffic violations or
similar misdemeanors) or (ii) a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, United States
federal or state securities laws or finding any violations with respect to such
laws.
Item 3. Source and Amount of Funds or Other Considerations
- -----------------------------------------------------------
The Shares Beneficially Owned by Loral were acquired by Loral on
April 22, 1996 in a distribution from Loral Corporation immediately prior to the
spin-off (the "Spin-off") of Loral from Loral Corporation (renamed Lockheed
Martin Tactical Systems, Inc.).
The aggregate cost of the Shares Beneficially Owned by each of
the Executive Officers and Directors is set forth in Schedule I. Such amounts
were furnished from the personal funds of the Executive Officers and Directors.
Executive Officers and Directors regularly effect purchases of securities
through margin accounts maintained for them with various securities firms which
extend margin credit to account holders when required to open or carry positions
in the margin account, subject to applicable federal margin regulations, stock
exchange rules and the firm's credit policies. The positions held in all of
these margin accounts are pledged as collateral security for the repayment of
debit balances in the accounts.
Item 4. Purpose of Transaction
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The sole business of the Company is acting as a general partner
in Globalstar, L.P. ("Globalstar"), which is building and preparing to launch
and operate a worldwide, low-earth orbit satellite-based digital
telecommunications system (the "Globalstar(TM) System"). Loral owns, directly
and indirectly, 33.8% of the outstanding equity of Globalstar and has overall
management responsibility for the design, construction, deployment and operation
of the Globalstar System. A portion of Loral's interest in Globalstar is held
through the Company, and a majority of the Company's directors are also members
of the Board of Directors or senior management of Loral. See Item 6 below for
further description of the relationship between Loral and the Company.
3
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Loral may make further purchases of Shares from time to time.
Loral may not sell the Shares unless they are registered under the Securities
Act of 1933, as amended (the "Securities Act") or sold pursuant to an exemption
from registration, including an exemption under Rule 144 of the Securities Act.
The purpose of the acquisition of the Shares by the Executive
Officers and Directors is for investment. The Executive Officers and Directors
may make further purchases of Shares from time to time and, subject to any
applicable restrictions under the Securities Act, may dispose of any or all of
the Shares held by them at any time.
Except as set forth above and in Item 6 below, neither Loral nor,
to the best knowledge of Loral SpaceCom, any of the persons listed in Schedule
I, has any plans or proposals that relate to or would result in any of the
consequences set forth in Sections (a) through (j) of Item 4 of Schedule 13D.
Each of Loral and each of the persons listed on Schedule I may, at any time,
review or reconsider its or his position with respect to the Company and
formulate plans or proposals with respect to any of such matters, but has no
present intention of doing so.
Item 5. Interest in Securities of the Company
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(a)-(b) Except as set forth in Item 6:
(i) Loral Beneficially Owns 2,984,067 Shares (1,576,923 of which
represent Shares issuable upon conversion of convertible preferred equivalent
obligations (the "CPEOs") *) by virtue of having sole voting and dispositive
power with respect to the Shares and the CPEOs convertible into Shares. Loral
acquired 3,251,323 Shares (including 1,576,923 Shares issuable upon conversion
of the CPEOs) on April 22, 1996 in a distribution from Loral Corporation in
connection with the Spin-Off. Loral SpaceCom Corporation, a wholly-owned
subsidiary of Loral, transferred 267,256 of such Shares (the "Lehman GTL
Shares") to certain partnerships affiliated with Lehman Brothers Holdings Inc.
(the "Lehman Partnerships") on August 9, 1996 in exchange for shares of Series S
Redeemable Preferred Stock of SS/L (Bermuda) Ltd. (the "Lehman Transaction").
The Shares (including the CPEOs convertible into Shares) Beneficially Owned by
Loral constitute 20.2% of the outstanding Shares of the Company. Of these
Shares, 340,000 represent Shares underlying options (none of which have yet been
exercised) granted to certain executives and directors of Loral and Loral
Corporation.
(ii) To the best knowledge of Loral, the Executive Officers and
Directors Beneficially Own the number of Shares set forth opposite their names
on Schedule I hereto. To the best knowledge of Loral and except as set forth on
Schedule I hereto, the Executive Officers and Directors have sole voting and
dispositive power with respect to their respective Shares. The respective
percentage interests of the Executive Officers and Directors are set forth
opposite their names in Schedule I hereto.
Loral's percentage is calculated based upon the 10,000,000 Shares
issued and outstanding, together with the 4,769,230 Shares issuable upon
conversion of the CPEOs (assuming no adjustment in the conversion price of $65
per share). The percentage interests of the Executive Officers and Directors are
calculated based upon the 10,000,000 Shares stated to be issued and outstanding.
(c) The trading date, number of Shares purchased and price per Share (excluding
commissions, if any) for all transactions by Loral and the Executive Officers
and Directors for the 60-day period preceding April 22, 1996 through the date
hereof are set forth in Schedule II hereto. With the exception of Loral, which
acquired its
- ---------------------
* The CPEOs had a conversion price of $65.00 per share, subject to adjustment
under certain circumstances. The CPEOs were acquired by Loral Corporation
on March 6, 1996 and April 3, 1996 in a direct purchase from the initial
purchasers of the Company's offering of CPEOs made pursuant to Rule 144A
under, and other applicable exemptions of, the Seucrites Act.
.
4
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Shares from Loral Corporation in connection with the Spin-Off, the Lehman
Transaction and Shares underlying options granted to the Executive Officers and
Directors, all other transactions in the Shares were effected on the Nasdaq
National Market.
(d) Other than Loral, with respect to the Shares owned by it, and the Executive
Officers and Directors, with respect to the Shares owned by each of them,
respectively, no other person is known to have the right to receive or the power
to direct the receipt of dividends from, or the proceeds of sale of, such
Shares.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with
Respect to Securities of the Company
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A majority of the members of the Company's Board of Directors are
also members of the Board of Directors or senior management of Loral. Company
directors who are not affiliated with Loral determine the vote of partnership
interests of Globalstar held by the Company in votes submitted to the partners
in Globalstar as to the approval of the financial terms and conditions of
material transactions between Globalstar and Loral or any of its affiliates (or
which are deemed to be transactions in which Loral is an interested party
pursuant to the Globalstar partnership agreement). In addition, Globalstar has
agreed with the Company that, for so long as the Company remains a general
partner of Globalstar, Globalstar will not issue more than 5,000,000 additional
partnership interests without either the consent of at least one of the
Company's independent directors or a majority in interest of the Globalstar
partners. Loral controls the vote of the Company's Board of Directors through
affiliated management in all other matters. Executive officers of Loral and
Globalstar serve as officers of the Company without salary.
Globalstar is managed by a General Partners' Committee, which is
majority controlled by representatives designated directly or indirectly by
Loral. The Company's sole business is acting as a general partner of Globalstar.
The Company's independent directors serve as the Company's representatives on
the General Partners' Committee and have the right to pass upon certain matters
prior to any decision to submit such matters to a vote of Globalstar's partners
and have certain authority over the hiring or dismissal of senior officers of
Globalstar. Upon the deferral by the Company of interest payments on the CPEOs
for an aggregate of six quarterly payments, holders of the CPEOs will have the
right to elect a representative to the General Partners' Committee. In the event
of (i) a change of control of the Company at a time when the Company owns less
than 50% of the Globalstar partnership interests outstanding, including certain
changes in the Company's Board of Directors, or (ii) a sale or other disposition
of partnership interests following which the equity interest of the Company in
Globalstar has been reduced to an interest of less than 5% (a "Reduction in
Interest"), which, in the event of either clause (i) or (ii) above, has not been
approved by Globalstar's managing general partner, which is an affiliate of
Loral, or by the partners of Globalstar, the Company will become a limited
partner in Globalstar and will no longer appoint representatives to serve on the
General Partners' Committee. Certain other governance rights granted to the
Company under the Globalstar partnership agreement will also be revoked, and it
will enjoy only the rights of a limited partner in Globalstar. In either event,
the Company may be deemed to be an investment company, subject to regulation
under the Investment Company Act of 1940, as amended.
Loral has beneficial ownership (calculated on a proportionate
basis, in the case of ownership interests held through entities not wholly-owned
by Loral) of 17,507,867 Globalstar partnership interests, constituting 33.8% of
Globalstar's total outstanding partnership interests (including 4,769,231
partnership interests assuming the conversion of the CPEOs but excluding
partnership interests issued in connection with the GTL Warrants (as defined
below) and the Globalstar Warrants (as defined below)). Loral's beneficial
interest in Globalstar consists of (i) 13,514,000 partnership interests held
directly and indirectly by Loral, (ii) 1,009,800 partnership interests held
indirectly by Loral through its 51% owned affiliate, Space Systems/Loral, Inc.
and (iii) 2,984,067 partnership interests held indirectly by Loral through its
holdings of common stock and CPEOs of the Company.
5
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The Company has entered into an Exchange and Registration Rights
Agreement, dated as of December 31, 1994, with Globalstar and each of the other
partners therein (that is, with Loral/Qualcomm Satellite Services, L.P.,
AirTouch Satellite Services, Finmeccanica S.p.A., Hyundai/DACOM, Loral/DASA
Globalstar, L.P., Loral General Partner, Inc., TE.SA.M. and Vodastar Limited)
pursuant to which the Company has granted each other partner in Globalstar the
right, following the date on which Globalstar achieves full coverage via a
48-satellite constellation (the "Full Coverage Date") and after at least two
consecutive reported fiscal quarters of positive income, to exchange its
Globalstar partnership interests for an equal number of Shares (subject to
antidilution adjustments) subject to the following limitations: (i) in any
12-month period, the sum of the number of Globalstar partnership interests so
transferred plus all other transfers of Globalstar partnership interests will
not be permitted to exceed 5% of the total number of Globalstar partnership
interests outstanding (including those held by the Company), and (ii) the number
of Shares so issued in any 12-month period will not exceed 10% of the number of
Shares outstanding at the beginning of that year. The Company has agreed, with
certain limited exceptions, to file, and to use reasonable efforts to maintain
the effectiveness of, a registration statement covering the issuance of such
Shares. In the event of a bona fide offer or solicitation that would result in a
change of control involving a majority of the outstanding Shares or a majority
of the members of the Company's Board of Directors not approved by the partners
of Globalstar, the exchange rights will become fully exercisable, regardless of
such limitations, whether or not the Full Coverage Date has occurred. Loral will
have the right, through its direct and indirect interests in Globalstar,
pursuant to this agreement, to acquire, 13,514,000 Shares.
In connection with certain guarantees and indemnity of
Globalstar's obligations under its credit agreement, dated December 15, 1995,
the Company has issued to Loral, Lockheed Martin Tactical Systems, Inc.
("LMTS"), Qualcomm Limited Partner, Inc., Space Systems/Loral, Inc. and DASA
Globalstar Limited Partner, Inc. warrants (the "GTL Warrants") to purchase an
aggregate of 4,185,318 shares of the Company's common stock. 50% of the GTL
Warrants vested upon issuance and, subject to certain exceptions, 25% of the GTL
Warrants will vest on April 19, 1997 and the remaining 25% will vest on April
19, 1998. The GTL Warrants have an exercise price of $26.50, expire on April 19,
2003 and are not exercisable until six months after Globalstar commences initial
operations unless accelerated at the sole discretion of the managing general
partner of Globalstar. In connection with the issuance of the GTL Warrants, the
Company received (i) rights to acquire ordinary partnership interests in
Globalstar on terms and conditions generally similar to those of the GTL
Warrants and (ii) warrants to purchase an additional 1,131,168 partnership
interests in Globalstar (the "Globalstar Warrants").
Loral and LMTS have entered into a shareholders agreement (the
"Loral Shareholders Agreement") which provides among other things that, if
within one year following the date of such agreement, LMTS and its affiliates
vote against any transaction involving (i) a merger, consolidation, corporation
reorganization or similar transaction or (ii) a sale, lease, exchange, transfer
or other disposition of all or substantially all of the assets of Loral, in
either case between Loral, on the one hand, and the Company and certain other
affiliates of Loral, on the other hand, Loral will have the right to purchase
from LMTS and its affiliates all of the equity securities of Loral then held by
LMTS and its affiliates at a pre-determined purchase price.
Loral, LMTS and Lockheed Martin Corporation have entered into an
exchange agreement (the "Exchange Agreement") providing that, in the event Loral
is required to purchase additional shares of common stock of Space
Systems/Loral, Inc. from the other direct and indirect stockholders of Space
Systems/Loral, Inc. (the "Put Transaction"), and the Put Transaction requires a
filing with, or the approval of, antitrust authorities, the parties thereto will
cooperate to comply with informational requirements and jointly attempt to
resolve any objections raised without any change in LMTS' ownership interest in
Loral. If such a change is nonetheless required to obtain antitrust approval for
the Put Transaction, the Exchange Agreement provides that LMTS will transfer to
Loral some or all of the shares of Loral's securities beneficially owned by it
in exchange for shares of the Company's common stock or, if the use of the
Company's common stock as consideration is inconsistent with obtaining antitrust
approval for the Put Transaction, in exchange for cash.
6
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The Company has agreed to grant to Lockheed Martin Corporation
and LMTS registration rights with respect to the shares of common stock of the
Company, if any, acquired by LMTS pursuant to the Exchange Agreement. Such
registration rights are substantially identical to the registration rights
granted to LMTS with respect of the capital stock of Loral provided for in the
Loral Shareholders Agreement.
Pursuant to an Agreement dated as of August 9, 1996 among Loral,
Loral SpaceCom Corporation (a wholly-owned subsidiary of Loral) and the Lehman
Partnerships, Loral SpaceCom Corporation has agreed to cause the Lehman GTL
Shares to be included in a shelf registration statement of the Company or to
provide the Lehman Partnerships with registration rights with respect to the
Lehman GTL Shares. Loral SpaceCom Corporation has also agreed to cause the
Company to indemnify the Lehman Partnerships from and against losses arising out
of or based upon any untrue statement or alleged untrue statement of a material
fact contained in any registration statement, prospectus or preliminary
prospectus relating to the Lehman GTL Shares or any omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading.
Item 7. Material to be Filed as Exhibits
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The following exhibits are filed hereto:
Exhibit A: Exchange and Registration Rights Agreement, dated
as of December 31, 1994, among the Company,
Globalstar, Loral/Qualcomm Satellite Services,
L.P., AirTouch Satellite Services, Finmeccanica
S.p.A., Hyundai/DACOM, Loral/DASA Globalstar,
L.P., Loral General Partner, Inc., TE.SA.M.
and Vodastar Limited
Exhibit B: Shareholders Agreement, dated as of April 23,
1996, between Loral and LMTS
Exhibit C: Exchange Agreement, dated as of April 22, 1996,
among Loral, Lockheed Martin Corporation and LMTS
Exhibit D: Agreement, dated as of August 9, 1996, among
Loral, Loral SpaceCom Corporation and the
Lehman Partnerships
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: October 28, 1996
LORAL SPACE & COMMUNICATIONS LTD.
By: /s/ Eric J. Zahler
Name: Eric J. Zahler
Title: Vice President, Secretary
and General Counsel
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(a) Set forth below is the name, position, present principal occupation and
amount of beneficial interest in the Shares, if any, of the directors and
executive officers of Loral Space & Communications Ltd. Except as set forth
below, the business address of each of these persons is c/o Loral Space &
Communications Ltd., 600 Third Avenue, New York, New York 10016. Each such
person is a citizen of the United States.
Directors and Executive Officers of Loral Space &
Communications Ltd.
Number of
Shares
Name and Position Owned and
in addition to Present Aggregate
Present Principal Principal Purchase Percentage
Occupation Occupation Price Interest
- ------------------- ------------------------------- ---------- ---------
Bernard L. Schwartz Chairman of the Board of 137,600(1) 1.37%
Directors and Chief ($4,104,007)
Executive Officer
Michael B. Targoff President and Chief 24,000(2) *
Operating Office ($80,000)
Howard Gittis, Vice Chairman and Chief 20,000(3) *
Director Administrative Officer
of MacAndrews
& Forbes Holdings, Inc.
35 E. 62nd St.
New York, NY 10021
Robert B. Hodes, Counsel to 21,000(4) *
Director Willkie Farr & Gallagher ($17,000)
153 East 53rd St.
New York, NY 10022
Gershon Kekst, President of Kekst and Company, 20,000(5) *
Director Inc.
437 Madison Ave.
New York, NY 10022
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* Less than one percent.
1 Includes 20,000 options at an exercise price of $20.00 per Share.
2 Includes 20,000 option at an exercise price of $20.00 per Share.
3 Consists of 20,000 options at an exercise price of $33.375 per Share.
4 Includes 20,000 options at an exercise price of $33.375 per Share.
5 Consists of 20,000 options at an exercise price of $33.375 per Share.
I-1
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Number of
Shares
Name and Position Owned and
in addition to Present Aggregate
Present Principal Principal Purchase Percentage
Occupation Occupation Price Interest
- ------------------- ------------------------------- ---------- ---------
Charles Lazarus, Chairman and Director of Toys
Director "R" Us, Inc. 20,000(6) *
461 From Road
Paramus, NJ 07652
Malvin A. Ruderman, Professor of Physics, Columbia 20,500(7) *
Director University ($8,716)
29 Washington Sq. West
New York, NY 10011
E. Donald Shapiro, Dean and Professor of Law 25,000(8) *
Director New York Law School ($190,250)
57 Worth Street
New York, NY 10013
Arthur L. Simon, Independent consultant 20,000(9) *
Director 971 Haverstraw Road
Suffern, NY 10901
Thomas J. Stanton, Chairman Emeritus of National 20,000(10) *
Jr., Director Westminster Bancorp NJ
240 South Mountain Ave.
Montclair, NJ 07042
Daniel Yankelovich, Chairman of DYG, Inc. 22,000(11) *
Director 21 Holiday Point Rd. ($26,125)
Sherman, CT 06784
Michael P. DeBlasio Senior Vice President and Chief 24,000(12) *
Financial Officer ($80,000)
- ----------------------
6 Consists of 20,000 options at an exercise price of $33.375 per Share.
7 Includes 500 Shares held by his wife as to which he disclaims
beneficial ownership and 20,000 options at an exercise price of
$33.375 per Share.
8 Includes 20,000 options at an exercise price of $33.375 per Share.
9 Consists of 20,000 options at an exercise price of $33.375 per Share.
10 Consists of 20,000 options at an exercise price of $33.375 per Share.
11 Includes 20,000 options at an exercise price of $33.375 per Share.
12 Includes 20,000 options at an exercise price of $20.00 per Share.
I-2
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Number of
Shares
Name and Position Owned and
in addition to Present Aggregate
Present Principal Principal Purchase Percentage
Occupation Occupation Price Interest
- ------------------- ------------------------------- ---------- ---------
Nicholas C. Moren Vice President and Treasurer 21,000(13) *
($20,000)
Harvey B. Rein Vice President and Controller 200 *
($4,000)
Thomas B. Ross Vice President, Communications 3,000(14) *
($95,375)
Eric J. Zahler Vice President, General Counsel 21,800(15) *
and Secretary ($36,000)
- ----------------------
13 Includes 20,000 options at an exercise price of $20.00 per Share.
14 Consists of 3,000 shares held by his wife as to which he disclaims
beneficial ownership.
15 Includes 1,000 Shares held in a Keogh Account, 800 Shares held in trust
for his children and 20,000 options at an exercise price of $20.00 per
Share.
I-3
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SCHEDULE II
TRANSACTIONS IN SHARES DURING THE PERIOD COMMENCING FROM THE 60-DAY PERIOD
PRECEDING APRIL 22, 1996 THROUGH THE DATE HEREOF
Price
Name Date Shares per Share A/S*
- ---------------------- ---------- ----------- --------- -----------
Loral Space &
Communications Ltd. 4/22/96 3,251,323 N/A A**
Loral SpaceCom
Corporation (a
wholly-owned
subsidiary of
Loral Space &
Communications
Ltd.) 8/9/96 267,256 N/A S***
Bernard L. Schwartz 7/16/96 18,000 $33.2324 A
7/18/96 42,000 $37.26 A
7/18/96 5,000 $40.06 A
7/18/96 10,000 $39.06 A
7/18/96 10,000 $39.81 A
7/19/96 1,200 $40.06 A
7/19/96 4,000 $39.56 A
7/19/96 2,000 $39.56 A
7/19/96 4,000 $40.56 A
7/19/96 3,800 $40.06 A
E. Donald Shapiro 7/12/96 1,000 $38.05 A
7/15/96 4,000 $38.05 A
- ---------------------
* A indicates an acquisition of Shares and S indicates a sale of Shares.
** On April 22, 1994, Loral acquired the Shares from Loral Corporation
(subsequently renamed Lockheed Martin Tactical Systems, Inc.)
in a distribution immediately preceding the spinoff of Loral
from Loral Corporation.
*** On August 9, 1996, Loral SpaceCom Corporation transferred 267,256
Shares to certain partnerships affiliated with Lehman Brothers Holdings
Inc. in exchange for shares of Series S Redeemable Preferred Stock of
SS/L (Bermuda) Ltd.
<PAGE>1
EXECUTION COPY
EXCHANGE AND REGISTRATION RIGHTS AGREEMENT
Exchange and Registration Rights Agreement, dated as of December 31,
1994, among Globalstar Telecommunications Limited (the "Company"), a company
organized under the laws of the Islands of Bermuda, Globalstar, L.P.
("Globalstar"), a limited partnership organized under the laws of the State of
Delaware, Loral/QUALCOMM Satellite Services, L.P. ("LQSS"), a limited
partnership organized under the laws of the State of Delaware, AirTouch
Satellite Services ("ATSS"), a corporation organized under the laws of the
State of Delaware, Finmeccanica S.p.A. ("Finmeccanica"), a company organized
under the laws of Italy, Hyundai/DACOM, a consortium organized under the laws
of the Republic of Korea, Loral/DASA Globalstar, L.P. ("LDLP"), a limited
partnership organized under the laws of the State of Delaware, Loral
Globalstar, L.P. ("LGLP"), a limited partnership organized under the laws of
the State of Delaware, TE.SA.M. ("TESAM"), a company organized under the laws
of the Republic of France and Vodastar Limited ("Vodastar"), a company
organized under the laws of the United Kingdom. Each of LQSS, ATSS,
Finmeccanica, Hyundai/DACOM, LDLP, LGLP, TESAM and Vodastar is hereinafter
referred to as a Partner and collectively as the Partners.
WITNESSETH:
WHEREAS, the Company hereby desires to grant to the Partners, under
certain circumstances, the right to exchange (the "Exchange Right") the
partnership interests in Globalstar ("Globalstar Interests") held by the
Partners for shares of the Company's common stock, par value $1.00 per share
(the "Common Stock");
WHEREAS, the Company intends to maintain the effectiveness of a
registration statement covering shares of its Common Stock as hereinafter
provided;
WHEREAS, the Partners own 37,000,000 Globalstar Interests as of the
date hereof, and the Company has reserved 37,000,000 shares of Common Stock
for purposes of issuing shares under this Agreement in order to effect the
Exchange Right;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained, the parties hereto hereby agree as follows:
<PAGE>2
1. EXERCISE OF EXCHANGE RIGHTS.
(a) Exchange Right. The Partners will have the right, following the
Global Service Date and after at least two consecutive reported fiscal
quarters of net income (the "Exchange Date"), to exchange some or all of their
Globalstar Interests, on a 1-to-1 basis (the "Exchange Ratio"), for shares of
Common Stock. The Exchange Ratio shall be proportionately adjusted if the
Company effects a stock dividend on or a stock split or combination of the
outstanding shares of Common Stock.
(i) If the Company shall issue or otherwise distribute
rights, options or warrants to all holders of its Common
Stock entitling them to subscribe for or purchase shares
of Common Stock at a price per share less than the Current
Market Price (as defined below) on the date fixed for the
determination of holders entitled to receive such rights,
options or warrants, the Exchange Ratio shall be
appropriately increased to reflect such issuance or
distribution. Current Market Price shall mean the
average daily closing price of the Common Stock on the
principal securities market for the Common Stock over the
five trading day period immediately preceding the ex
date with respect to such issuance or distribution (i.e.,
the first date on which the Common Stock trades without
the right to receive such issuance or distribution).
(ii) If the Company shall merge or consolidate with or
into, or shall sell or transfer all or substantially all
of its assets to, another entity, and as a result the
holders of Common Stock immediately prior to such
transaction receive other securities and/or property,
including cash, in exchange for their shares of Common
Stock, the Globalstar Interests shall be exchangeable for
the kind and amount of shares of stock and other
securities and property receivable upon or in connection
with such transaction by a holder of the number of shares
of Common Stock for which such Globalstar Interests might
have been exchanged (disregarding for such purpose any
limitations on exchange
<PAGE>3
described below) immediately prior to such transaction.
If there is any other change in the Common Stock, including without
limitation, by way of a reclassification, reorganization or recapitalization,
or any other means, or if any other material, extraordinary transaction with
respect to the Common Stock which in the judgment of the Company's Board of
Directors acting reasonably and in the best interest of the Company would (in
the absence of an adjustment) change or affect the value of the conversion
right intended to be afforded hereby, appropriate adjustments shall be made in
the provisions hereof so that the rights and privileges granted hereby shall
continue with respect to the Common Stock as so changed or affected.
(b) Exchange Notice. Following the Exchange Date, a Partner electing to
exercise its Exchange Right (an "Exchanging Partner") shall submit a written
notice to the Company (the Exchange Notice ) setting forth the number of
Globalstar Interests then proposed to be exchanged by such Partner, upon
representations and warranties as to good title and valid transfer. Upon
receipt of an Exchange Notice from a Partner (the "Initial Exchanging
Partner"), the Company shall promptly send to the other Partners a copy of
such Exchange Notice (the "Company Notice").
(c) Limitations on Exchanges and Change of Control. Within 45 calendar
days after the giving of the Company Notice, the Company shall issue and
deliver to the Initial Exchanging Partner and such other Partners joining in
the exchange request as are specified in Exchange Notices received by the
Company within 30 calendar days after the Company Notice is given under
Section 1(b) above, shares of Common Stock upon representations and warranties
as to good title and valid transfer of the Globalstar Interests to the
Company; provided however, the Company shall not be obligated to effect, or
take any action to effect, any such exchanges to the extent that: (i) in any
12-month period, the sum of the number of Globalstar Interests exchanged
pursuant to this Agreement shall exceed 5% of the total number of Globalstar
Interests outstanding (including Globalstar Interests then held by the
Company) or (ii) the number of shares of Common Stock issued by the Company
pursuant to this Agreement in any twelve-month period would exceed 10% of the
number of shares of Common Stock outstanding at the beginning of such period.
Notwithstanding the foregoing, in the event of a bona fide offer or
solicitation that would result in a GTL Change of Control involving a majority
of the outstanding shares or majority of the Company's Board of Directors not
approved by the Consent of the Partners as set forth in Section 6.03 of the
Partnership Agreement, the Exchange Right will become fully exercisable,
<PAGE>4
regardless of the above-stated limitations and whether or not the Global
Service Date has occurred.
(d) Certain Allocations. If the number of Globalstar Interests requested
to be exchanged exceeds the number which can be exchanged pursuant to Section
1(c) above, the amount of Globalstar Interests available for exchange shall be
pro rated according to the relative Percentage Interests of all Exchanging
Partners submitting Exchange Notices on the same day. For purposes of this
Section 1(d), the Initial Exchanging Partner, together with all Partners
submitting their Exchange Notices within 30 calendar days after the giving of
the Company Notice pursuant to Section 1(c) above, shall be deemed to have
submitted their Exchange Notices on the same day.
(e) Closing. The closing of the transactions contemplated by this
Section 1 shall take place at such time and place as shall be mutually agreed
upon by the parties involved (the "Closing"). At the Closing, the Exchanging
Partners shall relinquish to the Company relevant Globalstar Interests and the
Company shall deliver to such Exchanging Partners shares of Common Stock,
registered in the name of such Exchanging Partners or their designees.
(f) Restricted Securities. Any Common Stock issued by the Company to
Exchanging Partners prior to the effectiveness of a registration statement
filed with the Securities and Exchange Commission pursuant to Section 2 below
shall be restricted securities and any Partner receiving such restricted
securities shall at the time of issuance of such securities, represent and
warrant to the Company that it is acquiring such securities solely for its own
account for investment and not with a view to the resale or distribution
thereof. The certificates evidencing such restricted securities shall bear
a restrictive legend to the effect that the Common Stock represented thereby
have not been registered under the Securities Act of 1933, as amended (the
Securities Act ), and may not be sold except pursuant to an effective
registration statement under the Securities Act or pursuant to an applicable
exemption from the registration requirements thereof.
(g) Sale by Partner. Each Partner hereby agrees that it will not,
directly or indirectly, transfer, sell, assign, pledge, hypothecate, encumber
or otherwise dispose of, to any person, in one or a series of transactions,
any Common Stock received pursuant to this Agreement, except pursuant to an
effective registration statement or an applicable exemption from the
registration requirements of the Securities Act.
<PAGE>5
2. REGISTRATION RIGHTS.
(a) Registration Statement. As promptly as practicable after the
Exchange Date and from time to time thereafter as contemplated by this
Agreement and as required under applicable law, the Company shall use its best
efforts to effect a registration pursuant to Rule 415 under the Securities Act
(including, without limitation, the execution of an undertaking to file
post-effective amendments, appropriate qualification under applicable blue sky
or other state securities laws and appropriate compliance with applicable
regulations issued under the Securities Act) registering the maximum number of
shares of Common Stock subject to the Exchange Right during the following
twelve month period and, to the extent required by applicable law, the resale
of such shares by the Partners; provided that the Company shall not be
obligated to effect, or take any action to effect, any qualification under
blue sky laws pursuant to this Section 2 in any particular jurisdiction in
which the Company would be required to (i) qualify generally to do business as
a foreign corporation in any jurisdiction wherein it would not, but for the
requirements of this Section 2(a), be obligated to be so qualified or (ii)
execute a general consent to service of process in effecting such
registration, qualification or compliance, unless the Company is already
subject to service in such jurisdiction and except as may be required by the
Securities Act or applicable rules or regulations thereunder. The Company
hereby warrants and agrees that it is the intent of this Agreement to permit
resales by the Partners that will not be subject to the volume and holding
period limitations set forth in either Rule 144 or 145 under the Securities
Act.
(b) Distribution by Partner. If an Exchanging Partner intends to sell or
distribute the Common Stock received pursuant to its exercise of Exchange
Rights under Section 1, it shall so advise the Company in the Exchange Notice
submitted pursuant to Section 1.
(c) Registration of Additional Shares. The registration statement filed
pursuant to this Section, may, in addition to the shares of Common Stock
subject to Exchange Rights set forth in Section 2(a) above, include other
securities for sale for the Company's own account or for the account of any
other person.
(d) Assignability. The exchange and registration rights of a Partner set
forth in this Agreement shall be assignable, in whole or in part, to any
transferee of such Partner s Globalstar Interests or the holder of shares
received pursuant to the exercise of Exchange Right, as applicable, provided
such
<PAGE>6
transferee or holder agrees to be bound by all provisions of this Agreement.
(e) Lock-Up Period. Notwithstanding the foregoing, if the Company shall
furnish to the Partners a certificate (the Company Certificate ) signed by
the President or Chief Executive Officer of the Company stating that, in the
good faith judgment of the Board of Directors of the Company, acting
reasonably and in the best interest of the Company, it would be seriously
detrimental to the Company and its shareholders for such registration
statement to be filed or for the Partners to sell Common Stock acquired
pursuant to this Agreement under any such effective registration statement and
it is therefore essential to defer the filing of the registration statement or
suspend the ability of the Partners to sell Common Stock acquired pursuant to
this Agreement under an effective registration statement, then the Company
shall have the right to defer such filing or suspend the ability of the
Partners to sell Common Stock acquired pursuant to this Agreement under an
effective registration statement for a period of not more than 120 days from
the date of the Company Certificate; provided however, that the Company may
not utilize this right more than once in any twelve month period. Upon any
certification by the Company pursuant to this Section 2(e), each Partner or
its designee owning shares of Common Stock acquired pursuant to this Agreement
agrees that it shall not dispose of such Common Stock during the above-stated
120 day period other than pursuant to the limitations applicable to
"restricted securities" within the meaning of Rule 144 under the Securities
Act and that any sale by such Partner or its designee of such Common Stock
during this period shall be made only to a Person who has agreed to comply
with the provisions of this Section 2(e) for the balance of the 120 day
period.
(f) Expenses. All registration expenses incurred in connection with any
registration, qualification or compliance pursuant to this Section 2,
including without limitation, all registration and filing fees, printing
expenses, fees and disbursements of counsel for the Company, blue sky fees and
expenses and the expenses of any special audits incident to or required by any
such registration, shall be borne by Globalstar. All selling expenses shall
be borne by the Exchanging Partners pro rata on the basis of the number of
Globalstar Interests exchanged. Selling expenses shall mean all costs and
commissions applicable to the sale of the Common Stock and all fees and
disbursements of common counsel for all of the Exchanging Partners.
(g) Documents to be Furnished to Partners. The Company shall furnish to
each Partner such number of conformed copies of
<PAGE>7
such registration statement and of each such amendment and supplement thereof
(in each case including all exhibits), such number of copies of the prospectus
contained in such registration statement (including each preliminary
prospectus) and any other prospectus filed under Rule 424 under the Securities
Act, in conformity with the requirements of the Securities Act, and such other
documents, as such Partner may reasonably request.
(h) Listing. The Company shall use its best efforts to list all Common
Stock covered by such registration statement on any securities exchange or
automated quotation system on which any of the Common Stock is then listed.
(i) Information to be Furnished to Company. Each of the Partners shall
furnish to the Company such information regarding such Partner and the
distribution proposed by any such Partner as the Company may reasonably
request in writing and as shall be reasonably required in connection with any
registration, qualification or compliance referred to in this Section 2.
(j) Amendments. The Company shall prepare and file with the Securities
and Exchange Commission (the SEC ) such amendments and supplements to such
registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of
the Securities Act with respect to the disposition of all securities covered
by such registration statement.
(k) Rule 144 Information. With a view to making available to the
Partners the benefits of Rule 144 promulgated under the Securities Act and any
other rule or regulation of the SEC that may at any time permit a Partner to
sell restricted securities or securities subject to Rule 145 of the Company to
the public without registration, the Company agrees to: (i) make and keep
public information available, as those terms are understood and defined in
Rule 144; (ii) use its best efforts to file with the SEC in a timely manner
all reports and other documents required of the Company under the Securities
Act and the Securities Exchange Act of 1934 (the Exchange Act ); and (iii)
furnish to any Partner, so long as the Partner owns any Globalstar Interests,
forthwith upon request (A) a written statement by the Company that it has
complied with the reporting requirements of SEC Rule 144, the Securities Act
and the Exchange Act, (B) a copy of the most recent annual or quarterly report
of the Company and such other reports and documents so filed by the Company
and (C) such other information as may be reasonably requested in availing any
Partner of any rule or regulation of the SEC which permits the selling of any
such securities without registration.
<PAGE>8
3. EQUAL TREATMENT.
Nothing contained in this Agreement shall prohibit the Company from
offering following the Exchange Date to purchase Globalstar Interests held by
a Partner for cash or any other consideration, or to exchange additional
shares of its Common Stock for Globalstar Interests held by a Partner, all on
such terms and conditions as the Company and such Partner may agree, provided
that the Company shall offer to purchase or exchange upon such terms and
conditions equally pro rata to all the other Partners. Except as set forth in
Sections 1, 3 and 7 hereof, the Company shall not permit any other exchanges
or purchases with any Partner.
4. INDEMNIFICATION.
(a) Indemnification by the Company and Globalstar. The Company and
Globalstar will indemnify each of the Partners, as applicable, each of its
officers, directors and partners, and each person controlling each Partner,
with respect to the registration which has been effected pursuant to Section 2
hereof, against all claims, losses, damages and liabilities (or actions in
respect thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any prospectus, offering
circular or other document (including any related registration statement,
notification or the like) incident to any such registration, qualification or
compliance, or based on any 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 any violation by the Company of the
Securities Act or any rule or regulation thereunder applicable to the Company
and relating to action or inaction required of the Company in connection with
any such registration, qualification or compliance, and the Company and
Globalstar will reimburse each Partner, each of its officers, directors and
partners, and each person controlling each of the Partners, for any legal and
any other expenses reasonably incurred in connection with investigating and
defending any such claim, loss, damage, liability or action, provided that the
Company and Globalstar will not be liable in any such case to the extent that
any such claim, loss, damage, liability or expense arises out of or is based
on any untrue statement or omission based upon written information furnished
to the Company by any Partner with respect to such Partner and stated to be
specifically for use therein.
(b) Indemnification by Partners. Each Partner will indemnify the Company
and Globalstar, each of their respective directors or Committee members, as
the case may be, and officers,
<PAGE>9
each person who controls the Company or Globalstar within the meaning of the
Securities Act and the rules and regulations thereunder, each other Partner
and each of their officers, directors, and partners, and each person
controlling such other Partner, against all claims, losses, damages and
liabilities (or actions in respect thereof) arising out of or based on any
untrue statement of a material fact with respect to such Partner contained in
any such registration statement, prospectus, offering circular or other
document made by such Partner, or any omission (or alleged omission) to state
therein a material fact with respect to such Partner required to be stated
therein or necessary to make the statements by such Partner therein not
misleading, and will reimburse the Company, Globalstar and such other Partner
and each of their respective directors, officers and partners and each person
controlling each of the Company, Globalstar and such other Partner for any
legal or any other expenses reasonably incurred by such party in connection
with investigating or defending any such claim, loss, damage, liability or
action, in each case to the extent, but only to the extent, that such untrue
statement (or alleged untrue statement) or omission (or alleged omission) is
made in such registration statement, prospectus, offering circular or other
document in reliance upon and in conformity with written information furnished
to the Company by such Partner with respect to such Partner and stated to be
specifically for use therein; provided however, that the obligations of each
of the Partners hereunder shall be limited to an amount equal to the net
proceeds to such Partner of securities sold on such occasion as contemplated
herein.
(c) Proceedings. Each party entitled to indemnification under this
Section 4 (the Indemnified Party ) shall give notice to the party required to
provide indemnification (the Indemnifying Party ) promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may
be sought, and shall permit the Indemnifying Party to assume the defense of
any such claim or any litigation resulting therefrom provided that counsel for
the Indemnifying Party, who shall conduct the defense of such claim or any
litigation resulting therefrom, shall be approved by the Indemnified Party
(whose approval shall not unreasonably be withheld) and the Indemnified Party
may participate in such defense at such party's expense (unless the
Indemnified Party shall have reasonably concluded that there may be a conflict
of interest between the Indemnifying Party and the Indemnified Party in such
action, in which case the fees and expenses of counsel shall be at the expense
of the Indemnifying Party), and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this
<PAGE>10
Section 4 unless the Indemnifying Party is materially prejudiced thereby.
Each Indemnified Party shall furnish such information regarding itself or the
claim in question as an Indemnifying Party may reasonably request in writing
and as shall be reasonably required in connection with the defense of such
claim and litigation resulting therefrom. No Indemnifying Party shall settle
any claim or action unless it shall have first received an unconditional
release of all Indemnified Parties from such claim or action.
(d) Contribution. If the indemnification provided for in this Section 4
is held by a court of competent jurisdiction to be unavailable to an
Indemnified Party with respect to any loss, liability, claim, damage or
expense referred to herein, then the Indemnifying Party, in lieu of
indemnifying such Indemnified Party hereunder, shall contribute to the amount
paid or payable by such Indemnified Party as a result of such loss, liability,
claim, damage or expense in such proportion as is appropriate to reflect the
relative fault of the Indemnifying Party on the one hand and of the
Indemnified Party on the other in connection with the statements or omissions
which resulted in such loss, liability, claim, damage or expense, as well as
any other relevant equitable considerations. The relative fault of the
Indemnifying Party and of the Indemnified Party shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission to state a material fact relates
to information supplied by the Indemnifying Party or by the Indemnified Party
and the parties relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
(e) Indemnification Payments. Any indemnification payments required to
be made to an Indemnified Party under this Section 4 shall be made as the
related claims, losses, damages, liabilities or expenses are incurred.
5. REPRESENTATIONS AND WARRANTIES.
(a) Representations and Warranties of the Company. Each of the Company
and Globalstar represents and warrants to each of the Partners as follows:
(i) The execution, delivery and performance of this
Agreement by the Company or Globalstar, as the case may
be, have been duly authorized by all requisite corporate
or partnership action and will not violate any provisions
of law, any order of any court or other agency of
government, its
<PAGE>11
organizational documents or any provision of any
indenture, agreement or other instrument to which it or
any of its properties or assets is bound, conflict with,
result in a breach of or constitute (with due notice or
lapse of time or both) a default under any such
indenture, agreement or other instrument or result in the
creation or imposition of any lien, charge or encumbrance
of any nature whatsoever upon any of the properties or
assets of the Company or Globalstar, as the case may be.
(ii) This Agreement has been duly executed and delivered
by the Company or Globalstar, as the case may be, and
constitutes the legal, valid and binding obligation of the
Company or Globalstar, as the case may be, enforceable in
accordance with its terms.
(b) Representations and Warranties of the Partners. Each of the Partners
represents and warrants to each of the Company and Globalstar as follows:
(i) The execution, delivery and performance of this
Agreement by such Partner have been duly authorized by all
requisite corporate, partnership or consortium action and
will not violate any provisions of law (assuming
compliance by the Company and Globalstar with all
applicable federal or state securities laws), any order of
any court or other agency of government, the
organizational documents of the Partner or any provision
of any indenture, agreement or other instrument to which
it or any of its properties or assets is bound, conflict
with, result in a breach of or constitute (with due notice
or lapse of time or both) a default under any such
indenture, agreement or other instrument or result in the
creation or imposition of any lien, charge or encumbrance
of any nature whatsoever upon any of the properties or
assets of the Partner, other than possible conflicts,
breaches or defaults which in the aggregate would not have
a material adverse effect.
<PAGE>12
(ii) This Agreement has been duly executed and delivered
by the Partner and constitutes the legal, valid and
binding obligation of the Partner, enforceable in
accordance with its terms.
6. EFFECTIVENESS OF AGREEMENT.
This Agreement shall become effective only upon the consummation by the
Company of its offering of shares of its Common Stock pursuant to the
registration statement on Form S-1 (No. 33-86808) filed with the Securities
and Exchange Commission and the purchase by the Company of Globalstar
Interests in connection therewith.
7. ADDITIONAL PARTNERS.
The Company and Globalstar shall have the right but not the obligation to
amend this Agreement to include any partner of Globalstar admitted from time
to time on the terms and conditions set forth herein.
8. MISCELLANEOUS.
(a) Section Headings. The headings of the sections and subsections of
this Agreement are inserted for convenience only and shall not be deemed to
constitute a part thereof.
(b) Definitions. Defined terms used herein not otherwise defined shall
have the meanings set forth in the Amended and Restated Agreement of Limited
Partnership of Globalstar, L.P., dated of even date hereof (the Partnership
Agreement ).
(c) Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties;
provided however, that this Agreement may not be assigned by any party hereto
other than in compliance with the terms hereof.
(d) Notices. Notices shall be given pursuant to the provisions of
Section 15.01 of the Partnership Agreement.
(e) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which
together shall be considered one and the same agreement.
(f) Entire Agreement. This Agreement and the Partnership Agreement
constitute the entire understanding of the parties
<PAGE>13
hereof with respect to the subject matter hereof and supersede all prior
understanding among such parties.
(g) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
(h) Severability. If any provision of this Agreement shall be held to be
illegal, invalid or unenforceable, such illegality, invalidity or
unenforceability shall attach only to such provision and shall not in any
manner affect or render illegal, invalid or unenforceable any other provision
of this Agreement, and this Agreement shall be carried out as if any such
illegal, invalid or unenforceable provision were not contained herein.
<PAGE>14
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first above written.
GLOBALSTAR TELECOMMUNICATIONS LIMITED
By: /s/ Michael B. Targoff
Name:
Title:
GLOBALSTAR, L.P.
By: /s/ Michael B. Targoff
Name:
Title:
LORAL/QUALCOMM SATELLITE SERVICES, L.P.
by LORAL/QUALCOMM PARTNERSHIP, L.P.,
its general partner
by LORAL GENERAL PARTNER, INC.,
its general partner
By: /s/ Michael B. Targoff
Name:
Title:
AIRTOUCH SATELLITE SERVICES
By: /s/ Lloyd Rezler
Name: Lioyd Rezler
Title: Vice President
FINMECCANICA S.p.A.
By: /s/
Name:
Title:
HYUNDAI/DACOM
By: /s/ J. K. Shim
Name: J. K. Shim
Title: Executive Director
Satellite Business Division
<PAGE>15
LORAL/DASA GLOBALSTAR, L.P.,
by LORAL GLOBALSTAR, L.P.,
its general partner
by LORAL GENERAL PARTNER, INC., its
general partner
By: /s/ Michael B. Targoff
Name:
Title:
LORAL GLOBALSTAR, L.P.
by LORAL GENERAL PARTNER, INC.,
its general partner
By: /s/ Michael B. Targoff
Name:
Title:
TE.SA.M.
By: /s/ Enrique Fernandez
Name:
Title: Chairman
VODASTAR LIMITED
By: /s/ E. J. Peett
Name: E. J. Peett
Title: Executive Director
<PAGE>
EXECUTION COPY
SHAREHOLDERS AGREEMENT
dated as of April 23, 1996
by and among
LORAL CORPORATION,
and
LORAL SPACE & COMMUNICATIONS LTD.
1
<PAGE>
SHAREHOLDERS AGREEMENT
----------------------
SHAREHOLDERS AGREEMENT, dated as of April 23, 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 45,896,978 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:
2
<PAGE>
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
3
<PAGE>
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
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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
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"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
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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
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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. For purposes of this Section 1.3, all references to the
term "vote" shall include the execution and delivery of any written consent with
respect to the taking of any shareholder action in lieu of a meeting of
shareholders.
(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,
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(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 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
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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 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.
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(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 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
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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 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
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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 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
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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 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
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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 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
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criticism of the other nominees for director or of incumbent management, its
policies or the Company's performance.
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
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(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:
(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
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(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 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).
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III.
REGISTRATION RIGHTS
3.1. Registration Upon Request.
(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
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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 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
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<PAGE>
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 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
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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 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
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<PAGE>
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 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
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<PAGE>
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 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
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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, 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
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prospectus contained in such registration statement or any such amendment
thereof or supplement thereto.
(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
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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 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.
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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 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
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files any registration statement for the benefit of any other party during such
120-day period.
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 750,000,000 shares
of Spinco Common Stock, 150,000,000 shares of Preferred Stock and 750,000 shares
of Series B Preferred Stock, par value $.01 per share (the "Series B Preferred
Stock"), of which 183,587,910 shares of Spinco Common Stock and 45,896,978
shares of Preferred Stock shall be issued and outstanding and no shares of
Series B Preferred Stock shall be issued and outstanding, (ii) Loral will be the
record and beneficial owner of 45,896,978 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,
the
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shares of Preferred Stock and the Series B 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.
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
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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 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):
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(a) If to any of the Shareholders, to:
Loral Corporation
c/o Lockheed Martin Corporation
6801 Rockledge Drive
Bethesda, MD 20817
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
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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 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.
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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 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.
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<PAGE>
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 (to be
renamed Lockheed Martin
Tactical Systems, Inc.)
By: /s/ Stephen M. Piper
Name: Stephen M. Piper
Title: Vice President and
Assistant Treasurer
LORAL SPACE & COMMUNICATIONS
LTD.
By: /s/ Eric J. Zahler
Name: Eric J. Zahler
Title: Vice President, General
Counsel & Secretary
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<PAGE>
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, $.0l 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, S.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");
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
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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:
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
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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.
"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 $.0l per share, of SS/L Bermuda.
"SS/L Securities" means equity securities of either SS/L Bermuda or
SS/L.
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"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.
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 supragovemmental 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
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LMC's ownership interest in SpaceCom; provided, that SpaceCom shall not be
required to take any action or agree to any 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 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 agreed that for the purposes
of this Section 3.1(d) the aggregate
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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 (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.
6
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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) constitute 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
incurred 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).
Section 4.4. 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):
(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
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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
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
reclassification of any SpaceCom Securities, or any merger, consolidation or
other transaction with
8
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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 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.
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 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
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
4.9 hereof.
-------------------------------------
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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: /s/ Eric J. Zahler
Name: Eric J. Zahler
Title: Vice President &
General Counsel
LOCKHEED MARTIN CORPORATION
By: /s/ Frank H. Menaker, Jr.
Name: Frank H. Menaker, Jr.
Title: Vice President and
General Counsel
LORAL CORPORATION
By: /s/ Eric J. Zahler
Name: Eric J. Zahler
Title: Vice President &
General Counsel
S-1
<PAGE>
<PAGE>
AGREEMENT
Among
LORAL SPACE & COMMUNICATIONS LTD.,
LORAL SPACECOM CORPORATION,
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.
--------------------------
Dated as of August 9, 1996
--------------------------
<PAGE>
TABLE OF CONTENTS
Page
PREAMBLE
1. THE TRANSACTION
1.1. Exchange............................................................1
1.2. Closing.............................................................2
2. PRICE PROTECTION; SUBSEQUENT EXCHANGE; REGISTRATION RIGHTS
2 1. Additional Consideration in Certain Events..........................2
2 2. Adjusted Price Per Share............................................3
2 3. Adjustment Closing..................................................3
2 4. Registration of GTL Shares..........................................3
3. REPRESENTATIONS AND WARRANTIES
3 1. Representations and Warranties of Loral and SpaceCom................5
3 1.1. Organization; Capitalization................................5
3 1.2. Authorization and Validity of Agreements....................6
3 1.3. No Conflict or Violation....................................6
3 1.4. Validity of Shares..........................................7
3 2. Representations and Warranties of the Lehman Partnerships...........7
3 2.1. Organization................................................7
3 2.2. Authorization and Validity of Agreements....................7
3 2.3. No Conflict or Violation....................................7
3 2.4. Title to shares of Tracking Stock...........................8
4. CONDITIONS TO CLOSINGS
4 1. Conditions to the Closing...........................................8
4 1.1. Conditions to Obligations of the Lehman Partnerships........8
4 1.2. Conditions to Obligations of Loral and SpaceCom.............9
-i-
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4 1.3. Conditions to Obligations of Loral and the Lehman
Partnerships................................................9
4 2. Adjustment Closing.................................................10
4 2.1. Conditions to Obligations of the Lehman Partnerships.......10
4 2.2. Conditions to Obligations of Loral and the Lehman
Partnerships...............................................10
5. MISCELLANEOUS
5 1. Reasonable Best Efforts............................................10
5 2. No Waivers; Amendments.............................................10
5 3. Survival of Provisions.............................................11
5 4. Entire Agreement...................................................11
5 5. Counterparts; Governing Law........................................11
5 6. Section Headings...................................................11
5 7. Press Releases and Public Announcements............................11
5.8 Termination of Stockholders Agreement..............................11
5.9 Expenses...........................................................12
5.10 PFIC Covenant......................................................12
SIGNATURES
SCHEDULE
Schedule A - Loral Shares, GTL Shares and Cash Consideration to be
transferred to the Lehman Partnerships
Schedule B - Tracking Shares to be transferred to Loral and SpaceCom
EXHIBIT
Exhibit A - Form of Registration Rights Agreement
-ii-
<PAGE>
AGREEMENT
AGREEMENT dated as of August 9, 1996 (this "Agreement") among LORAL
SPACE & COMMUNICATIONS LTD. ("Loral"), LORAL SPACECOM CORPORATION ("SpaceCom"),
LEHMAN BROTHERS CAPITAL PARTNERS II, L.P. ("Capital Partners"), LEHMAN BROTHERS
MERCHANT BANKING PORTFOLIO PARTNERSHIP L.P. ("Merchant Banking"), LEHMAN
BROTHERS OFFSHORE INVESTMENT PARTNERSHIP L.P. ("Offshore Investment") and LEHMAN
BROTHERS OFFSHORE INVESTMENT PARTNERSHIP-JAPAN L.P. ("Offshore Japan" and,
together with Capital Partners, Merchant Banking and Offshore Investment, the
"Lehman Partnerships").
W I T N E S S E T H :
WHEREAS, the Lehman Partnerships currently own, collectively, 731.85
Series S Redeemable Preferred Shares (the "Tracking Stock") of SS/L (Bermuda)
Ltd., a Bermuda company ("SS/L Bermuda"), constituting all of the issued and
outstanding shares of such class and which are the economic equivalent of 731.85
shares of Common Stock of Space Systems/Loral, Inc., a Delaware corporation
("SS/L"), representing an effective economic interest of 18.3% therein;
WHEREAS, SpaceCom owns shares of Globalstar Telecommunications Limited
("GTL"), a Bermuda company, and has authorized the exchange of 267,256 of such
shares (the "GTL Shares") for 61.00 shares of the Tracking Stock held by the
Lehman Partnerships;
WHEREAS, Loral has authorized the issuance and delivery of 7,500,000
shares of Loral Common Stock (together with associated rights ("Rights")
issuable pursuant to Loral's Rights Agreement, dated as of January 10, 1996)
(the "Loral Shares") plus $4,000,000 in cash (the "Cash Consideration") in
exchange for 670.85 shares of the Tracking Stock held by the Lehman
Partnerships;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, the parties hereto agree as follows:
1. THE TRANSACTION
---------------
1.1. Exchange. At the Closing described in Section 1.2 below, SpaceCom
will transfer the GTL Shares, and Loral will transfer the Loral Shares and pay
the Cash Consideration, to the Lehman Partnerships and, in exchange
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therefor, the Lehman Partnerships will transfer to SpaceCom 61.00 shares of the
Tracking Stock and will transfer to Loral 670.85 shares of the Tracking Stock
held by the Lehman Partnerships. The number of GTL Shares and Loral Shares to be
acquired by, and the portion of the Cash Consideration to be paid to, each of
the Lehman Partnerships is set forth on Schedule A hereto and the number of
shares of Tracking Stock held by each of the Lehman Partnerships (all of which
are to be exchanged and purchased at the Closing hereunder) to be acquired by
each of Loral and SpaceCom is set forth on Schedule B hereto.
1.2. Closing. The closing of the transactions contemplated by Section
1.1 (the "Exchange") shall occur on the third business day after the conditions
set forth in Section 4.1 shall have been satisfied or waived or on such other
date on which the parties may agree (the "Closing Date"). On the Closing Date,
Loral and the Lehman Partnerships will enter into a Registration Rights
Agreement in the form attached hereto as Exhibit A (the "Registration Rights
Agreement
2. PRICE PROTECTION; SUBSEQUENT EXCHANGE; REGISTRATION RIGHTS.
-----------------------------------------------------------
2.1 Additional Consideration in Certain Events. In the event that, at
any time hereafter and on or prior to February 4, 1997, Loral or any entity
under its control (including SS/L) purchases any shares of SS/L Common Stock, or
enters into a written agreement or any agreement in principle or letter of
intent to do so or an oral agreement as to all material terms, at an Adjusted
Price Per Share (as defined in Section 2.2 below) exceeding $143,472 (as such
amount shall be equitably adjusted from time to time to reflect stock splits,
stock dividends and the like), Loral will pay to each Lehman Partnership an
amount equal to the product of such excess and the number of shares of Tracking
Stock acquired from such Lehman Partnership in the Exchange, such payment to be
made in cash or, at Loral's election, in whole or in part, in additional shares
of Loral Common Stock (the "Additional Loral Shares") (valued at the average of
the daily high and low sales prices of the corresponding number of shares of
Loral Common Stock on the New York Stock Exchange on the ten trading days
preceding the date of the transaction in question), provided that Loral will
have the right to elect to make payment in the form of Additional Loral Shares
only if the conditions set forth in Section 4.2 have been satisfied or waived on
or prior to the Adjustment Closing Date (defined below). The additional
consideration contemplated by this Section 2.1 will not be payable in respect of
any acquisition by Loral
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of SS/L Common Stock held by SS/L Bermuda. In the event of successive purchases
or agreements during such 180 day period, the adjustment for all the Tracking
Stock shall be made based upon the highest price so paid.
2.2 Adjusted Price Per Share. The term "Adjusted Price Per Share"
refers to the value attributable to a share of SS/L Common Stock, excluding
therefrom any value attributable to the partnership interests in Globalstar,
L.P. held by SS/L. The Adjusted Price Per Share shall be calculated by dividing
(a) the difference obtained by subtracting (x) the value of the Globalstar
partnership interests at the time held by SS/L (valued at the average of the
daily high and low sales prices of the corresponding number of shares of GTL
Common Stock on the Nasdaq National Market on the ten trading days preceding the
date of the transaction in question) from (y) the valuation of 100% of the
equity of SS/L, taken as a whole as determined by the value of the consideration
paid in respect of the SS/L Common Stock in question (with consideration other
than cash to be valued at the fair market value thereof) by (b) the number of
shares of SS/L Common Stock outstanding immediately prior to such purchase.
2.3. Adjustment Closing. The closing of the transactions contemplated
by Section 2.1 (the "Adjustment") shall occur on the third business day after
the closing of the transaction requiring such adjustment (the "Adjustment
Closing Date"). Any cash amounts payable in connection with the adjustment will
be paid by wire transfer of immediately available funds to the account or
accounts specified by the Lehman Partnerships.
2.4 Registration of GTL Shares
(a) Registration. SpaceCom will cause the GTL Shares to be included in
GTL's shelf registration statement on Form S-3, File No. 333-6477 (the "GTL
Shelf Registration Statement"), will pay the additional registration fee
associated therewith, and will cause GTL to use all reasonable efforts to cause
such registration statement to be declared effective promptly. SpaceCom will
cause such registration statement to remain effective for a period of three
years or such longer period as it is required to do so with respect to the
Convertible Preferred Equivalent Obligations registered thereunder; provided
that the effectiveness of such registration statement may be terminated before
the end of such period if the Lehman Partnerships are provided registration
rights with respect to the GTL Shares substantially equivalent to their rights
with respect to the Loral Shares under the Registration Rights Agreement. The
Lehman Partnerships acknowledge and
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<PAGE>
agree that the GTL Shares may not be sold except pursuant to an effective
registration statement under the Securities Act of 1933, as amended (the
"Securities Act") or an applicable exemption from such registration.
(b) Indemnification and Contribution. SpaceCom shall cause GTL to
indemnify and hold harmless each Lehman Partnership, its officers, directors and
agents, and each Person (as defined in the Registration Rights Agreement), if
any, who controls such Lehman Partnership within the meaning of Section 15 of
the Securities Act or Section 20 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), (collectively, the "Lehman Entities") from and
against any loss, claim, damage or liability and any action in respect thereof
(collectively, "Losses") to which such Lehman Entities may become subject under
the Securities Act or otherwise, insofar as such Losses arise out of, or are
based upon, any untrue statement or alleged untrue statement of a material fact
contained in any registration statement (including without limitation the GTL
Shelf Registration Statement) or prospectus included therein relating to the GTL
Shares (as amended or supplemented if GTL shall have furnished any amendments or
supplements thereto) or any preliminary prospectus, or arise out of, or are
based upon, any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, on the same terms that Loral is obligated to indemnify such Lehman
Entities pursuant to Sections 4.1 and 4.3 of the Registration Rights Agreement
with respect to the Registrable Securities (as defined in the Registration
Rights Agreement). Each Lehman Partnership shall, severally and not jointly,
indemnify and hold harmless SpaceCom, its officers, directors and agents, and
each Person, if any, who controls SpaceCom within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act (collectively, the
"SpaceCom Entities") from and against any Losses to which such SpaceCom Entities
may become subject under the Securities Act or otherwise, with respect to such
matters and on the same terms that each Lehman Partnership is obligated to
indemnify Loral, its officers, directors and agents, and each Person, if any,
who controls Loral within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act pursuant to Sections 4.2 and 4.3 of the
Registration Rights Agreement with respect to the Registrable Securities. In
addition, SpaceCom shall cause GTL to contribute to the amount paid or payable
by each Lehman Partnership, and each Lehman Partnership shall contribute to the
amount paid or payable by SpaceCom, in respect of any Losses on the same terms
that Loral and the Lehman Partnerships are obligated to contribute to the
losses, claims, damages or liabilities
4
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referred to in Section 4.4 of the Registration Rights Agreement.
(c) Obligations of SpaceCom and GTL. The Lehman Partnerships shall be
entitled to offer and sell GTL Shares pursuant to the GTL Shelf Registration
Statement from time to time upon delivery of written notice to GTL at least 5
Business Days (as defined in the Registration Rights Agreement) prior to the
date of the intended offering, and SpaceCom shall cause GTL to use its best
efforts to effect the sale of the GTL Shares in accordance with the intended
method of disposition thereof as quickly as practicable, including taking
actions of the type set forth under Section 3.1 of the Registration Rights
Agreement. SpaceCom shall cause GTL to pay any expenses incurred in connection
with any sale of GTL Shares by the Lehman Partnerships pursuant to the GTL Shelf
Registration Statement, including all registration expenses of the type set
forth in Section 3.2 of the Registration Rights Agreement, provided that GTL
shall have no obligation to pay any underwriting fees, discounts or commissions
attributable to the sale of GTL Shares by any Lehman Partnership of any
out-of-pocket expenses of the Lehman Partnerships.
(d) Successors and Assigns. Each Lehman Partnership may transfer its
rights under this Section 2.4 to its successors or assigns who acquire the GTL
Shares, directly or indirectly, from the Lehman Partnerships.
3. REPRESENTATIONS AND WARRANTIES
------------------------------
3.1. Representations and Warranties of Loral and SpaceCom. Loral and
SpaceCom represent and warrant, severally and not jointly, to each of the Lehman
Partnerships as follows:
3.1.1. Organization; Capitalization. Loral and GTL are companies duly
organized, validly existing under the laws of the Islands of Bermuda and have
all requisite corporate power and authority to own their respective properties
and assets and to conduct their business as now conducted. SpaceCom is a company
duly organized, validly existing under the laws of the State of Delaware and has
all requisite corporate power and authority to own its properties and assets and
to conduct its business as now conducted. The authorized capital stock of Loral
consists of (a) 750,000,000 shares of Common Stock, par value $.01 per share, of
which 183,592,308 shares are issued and outstanding and, without giving effect
to the transactions contemplated hereby, 62,896,978 additional shares are
reserved for issuance upon the exercise or conversion of
5
<PAGE>
outstanding options, warrants or convertible securities; (b) 150,000,000 shares
of Series A Non-Voting Convertible Preferred Stock, par value $.01 per share, of
which 45,896,978 shares are outstanding and none of which have been reserved for
issuance and (c) 750,000 shares of Series B Preferred Stock, par value $.01 per
share, no shares of which are outstanding, and 250,000 shares of which have been
reserved for issuance upon the exercise of outstanding Rights. The authorized
capital stock of GTL consists of 60,000,000 shares of Common Stock, of which
10,000,000 shares are issued and outstanding, and 47,335,716 additional shares
are reserved for issuance upon the exercise or conversion of outstanding
options, warrants or convertible securities.
3.1.2. Authorization and Validity of Agreements. (a) Loral has the
corporate power to enter into this Agreement, the Registration Rights Agreement
and to carry out its obligations hereunder and thereunder. The execution and
delivery of this Agreement and the Registration Rights Agreement and the
performance of Loral's obligations hereunder and thereunder have been duly
authorized by the Board of Directors of Loral, and no other corporate
proceedings on the part of Loral are necessary to authorize such execution,
delivery and performance. This Agreement has been duly executed by Loral and is,
and the Registration Rights Agreement, when executed and delivered by Loral,
will be, the legal, valid and binding obligations of Loral.
(b) SpaceCom has the corporate power to enter into this Agreement and to
carry out its obligations hereunder. The execution and delivery of this
Agreement and the performance of SpaceCom's obligations hereunder have been duly
authorized by the Board of Directors of SpaceCom, and no other corporate
proceedings on the part of SpaceCom are necessary to authorize such execution,
delivery and performance. This Agreement has been duly executed by SpaceCom and
is the legal, valid and binding obligations of SpaceCom.
3.1.3. No Conflict or Violation. The execution, delivery and
performance by Loral of this Agreement and the Registration Rights Agreement and
by SpaceCom of this Agreement do not and will not violate or conflict with any
provision of the charter documents or by-laws of Loral or SpaceCom, and do not
and will not violate any provision of any agreement or instrument to which Loral
or SpaceCom is a party or by which it is bound, or any order, judgment or decree
of any court or other governmental or regulatory authority to which Loral or
SpaceCom is subject.
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3.1.4. Validity of Shares. The Loral Shares, the GTL Shares and the
Additional Loral Shares have been duly authorized and, when issued and delivered
in accordance with the terms of this Agreement, will be validly issued, fully
paid and nonassessable, and not subject to any contractual or other restrictions
on voting or transferability, except for compliance with the Securities Act, and
the Lehman Partnerships will acquire good and valid title thereto free and clear
of any lien or other right or claim. The issuance of the Loral Shares, the GTL
Shares and the Additional Loral Shares is not subject to any preemptive or
similar rights.
3.2. Representations and Warranties of the Lehman Partnerships. Each of
the Lehman Partnerships represents and warrants, severally and not jointly, to
Loral and SpaceCom as follows:
3.2.1. Organization. Each of the Lehman Partnerships is a partnership
duly organized, validly existing and in good standing under the laws of its
respective jurisdiction of organization and has all requisite partnership power
and authority to own its properties and assets and to conduct its business as
now conducted.
3.2.2. Authorization and Validity of Agreements. Each of the Lehman
Partnerships has the power to enter into this Agreement and the Registration
Rights Agreement and to carry out its obligations hereunder and thereunder. The
execution and delivery of this Agreement and the Registration Rights Agreement
and the performance of each of the Lehman Partnership's obligations hereunder
and thereunder have been duly authorized by the Board of Directors of the
general partner of such Lehman Partnership, and no other corporate or other
proceedings on the part of such Lehman Partnership are necessary to authorize
such execution, delivery and performance. This Agreement has been duly executed
by each of the Lehman Partnerships and is, and the Registration Rights
Agreement, when executed and delivered by such Lehman Partnership, will be, the
legal, valid and binding obligation of such Lehman Partnership.
3.2.3. No Conflict or Violation. The execution, delivery and
performance by each of the Lehman Partnerships of this Agreement and the
Registration Rights Agreement do not and will not violate or conflict with any
provision of the organizational documents or partnership agreements of such
Lehman Partnership, and do not and will not violate any provision of any
agreement or instrument to which such Lehman Partnership is a party or by which
it is bound, or any order, judgment or decree of any court or other
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governmental or regulatory authority to which such Lehman Partnership is
subject.
3.2.4. Title to Shares of Tracking Stock. Each of the Lehman
Partnerships holds good and valid title to the shares of Tracking Stock set
forth opposite such Lehman Partnership's name on Schedule B attached hereto,
which shares of Tracking Stock are owned by such Lehman Partnership free and
clear of any lien or other right or claim, except to the extent set forth in the
Stockholders Agreement dated as of April 22, 1996 among Loral, SS/L Bermuda and
the Lehman Partnerships, and when such shares of Tracking Stock are acquired by
Loral and SpaceCom in accordance with the terms of this Agreement, Loral and
SpaceCom, respectively, will acquire good and valid title to such shares of
Tracking Stock free of any lien or other right or claim.
4. CONDITIONS TO CLOSINGS
----------------------
4.1. Conditions to the Closing.
4.1.1. Conditions to Obligations of the Lehman Partnerships. The
obligations of the Lehman Partnerships to consummate the Exchange are subject to
the satisfaction or waiver, at or prior to the Closing Date, of the following
conditions:
(a) the representations and warranties of Loral and SpaceCom contained
herein shall be true and correct in all material respects on and as of the
Closing Date as if made on and as of such date;
(b) Loral and SpaceCom shall have performed and complied in all
material respects with all agreements required by this Agreement to be
performed or complied with by it on or prior to the Closing Date;
(c) the Lehman Partnerships shall have received a certificate signed by
an executive officer of each of Loral and SpaceCom to the effect that the
conditions set forth in paragraphs (a) and (b) above have been satisfied;
(d) the Lehman Partnerships shall have received an opinion, dated the
Closing Date, from Avi Katz, Associate General Counsel of Loral, as to the
legality and validity of this Agreement, the Registration Rights Agreement
and such other matters relating to the Exchange as the Lehman Partnerships
may reasonably request;
8
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(e) The Lehman Partnerships shall have received an opinion, dated the
Closing Date, from Willkie Farr & Gallagher to the effect that (A) for
United States federal income tax purposes, it is more likely than not that
the transfer by the Lehman Partnerships of the 731.85 shares of Tracking
Stock pursuant to this Agreement will constitute a sale or exchange of
731.85 shares of Common Stock of SS/L under Section 1001 of the Internal
Revenue Code of 1986, as amended (the "Code"), and (B) that the Lehman
Entities will not be subject to penalties in respect of any Taxes for
taking the position set forth in clause (A) above. For purposes of this
Agreement, "Taxes" shall mean any net income, alternative, add-on minimum,
gross income, gross receipts, sales, use, ad valorem, value added,
transfer, franchise, corporation, metropolitan and other municipal
surcharge, profits, license, withholding on amounts paid to or by any
Person, payroll, employment, excise, severance, stamp, occupation, premium,
property, environmental or windfall profit tax, custom, duty or other tax,
governmental fee or other like assessment or like charge of any kind
whatsoever, together with any interest or any penalty, addition to tax or
additional amount imposed by any governmental authority responsible for the
imposition of any such tax (domestic or foreign). For the avoidance of
doubt, Taxes shall include any Tax resulting from the treatment of SS/L
Bermuda as a controlled foreign corporation or passive foreign investment
company within the meaning of Section 957 and 1296 of the Code,
respectively, for United States federal income tax purposes; and
(f) the Lehman Partnerships shall have received an opinion, dated the
Closing Date, from Appleby, Spurling & Kempe as to the legality of the
Loral Shares and the GTL Shares and such other matters relating to the
Exchange as the Lehman Partnerships may reasonably request.
4.1.2. Conditions to Obligations of Loral and SpaceCom. The obligations
of Loral and SpaceCom to consummate the Exchange are subject to the satisfaction
or waiver, at or prior to the Closing Date, of the following conditions:
(a) the representations and warranties of the Lehman Partnerships
contained herein shall be true and correct in all material respects on and
as of the Closing Date as if made on and as of such date;
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<PAGE>
(b) the Lehman Partnerships shall have performed and complied in all
material respects with all agreements required by this Agreement to be
performed or complied with by them on or prior to the Closing Date; and
(c) Loral and SpaceCom shall have received a certificate signed by the
general partner of each of the Lehman Partnerships to the effect that the
conditions set forth in paragraphs (a) and (b) above have been satisfied.
4.1.3. Conditions to Obligations of Loral and the Lehman
Partnerships. The obligations of Loral, SpaceCom and the Lehman
Partnerships to consummate the Exchange are subject to the
satisfaction or waiver, at or prior to the Closing Date, of the
following conditions:
(a) Loral and the Lehman Partnerships shall have entered
into the Registration Rights Agreement;
(b) all consents, waivers, authorizations and approvals of any
governmental or regulatory authority required in connection with the
execution, delivery and performance of this Agreement and the Registration
Rights Agreement shall have been duly obtained and in full force and
effect; and
(c) the Exchange shall not be prohibited by any applicable
law, court order or governmental regulation.
4.2. Adjustment Closing.
4.2.1. Conditions to Use of Loral Shares. The right of Loral to pay all
or part of the Adjustment in shares of Loral Common Stock is subject to the
satisfaction or waiver, at or prior to the Adjustment Closing Date, of the
following conditions:
(a) the representations and warranties of (i) Loral contained in
Sections 3.1.1 through 3.1.4 shall be true and correct in all material
respects on and as of the Adjustment Closing Date as if made on and as of
such date;
(b) the Lehman Partnerships shall have received a certificate signed by
an executive officer of Loral to the effect that the conditions set forth
in paragraph (a) above has been satisfied; and
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<PAGE>
(c) the Lehman Partnerships shall have received an opinion, dated the
Adjustment Closing Date, from Avi Katz, Associate General Counsel of Loral,
as to such other matters relating to the Adjustment as the Lehman
Partnerships may reasonably request.
4.2.2. Conditions to Obligations of Loral and the Lehman Partnerships.
The obligations of Loral and the Lehman Partnerships to consummate the
Adjustment are subject to the satisfaction or waiver, at or prior to the
Adjustment Closing Date, of the condition that the Adjustment shall not be
prohibited by any applicable law, court order or governmental regulation.
5. MISCELLANEOUS
-------------
5.1. Reasonable Best Efforts. The parties hereto will
bear their respective reasonable best efforts to cause the
conditions to their respective obligations to be satisfied.
5.2. No Waivers; Amendments.
5.2.1. No failure or delay on the part of any party in exercising any
right, power or privilege hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
5.2.2. Any provision of this Agreement may be amended or waived if, but
only if, such amendment or waiver is in writing and is signed by each party
hereto.
5.3. Survival of Provisions. The representations and warranties,
covenants and agreements contained in this Agreement shall survive and remain in
full force and effect, regardless of any investigation made by or on behalf of
the Lehman Partnerships, or by or on behalf of Loral or SpaceCom, and shall
survive delivery of the GTL Shares, Loral Shares, the shares of Tracking Stock
and the Additional Loral Shares.
5.4. Entire Agreement. This Agreement and the Registration Rights
Agreement constitute the entire agreement and understanding among the parties
hereto and supersedes any and all prior agreements and understandings, written
or oral, relating to the subject matter hereof.
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5.5. Counterparts; Governing Law. This Agreement may be signed in
counterparts, each of which shall constitute an original and all of which
together shall constitute one and the same instrument. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York.
5.6. Section Headings. The section headings contained in this Agreement
are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.
5.7. Press Releases and Public Announcements. Press releases and public
announcements or disclosures relating to the transactions contemplated hereby
shall be made only if mutually agreed upon by the parties hereto, except (i) to
the extent required by law or by stock exchange regulation, provided that any
such required disclosure will, to the extent practicable, be subject to
consultation among the parties, or (ii) between any Lehman Partnership and its
partners therein.
5.8. Termination of Stockholders Agreement. The Stockholders Agreement
dated as of April 22, 1996 (the "Stockholders Agreement") by and among Loral,
SS/L Bermuda and the Lehman Partnerships shall hereby terminate and be of no
further force and effect and no party to the Stockholders Agreement shall have
any further rights or obligations under the Stockholders Agreement as of the
date hereof; provided, however, that Loral's obligation to indemnify and hold
harmless the Lehman Partnerships as set forth in Section 5.7 of the Stockholders
Agreement shall not be terminated and shall survive without limitation. For the
avoidance of doubt, it is understood that such indemnity will be calculated
taking into account any Taxes (as defined in the Stockholders Agreement) payable
by reason of the exchange of Tracking Stock pursuant to this Agreement in
determining the amount of Tax which would not have been payable had the Lehman
Partnerships been treated as owners of SS/L Common Stock for Tax purposes
commencing with the November 1992 Exchange (as defined in the Stockholders
Agreement).
5.9 Expenses. Loral agrees to pay the reasonable out-of-pocket expenses
of the Lehman Partnerships in connection with the transactions contemplated by
this Agreement upon presentation of a reasonably detailed itemized statement
thereof.
5.10 PFIC Covenant. Loral agrees that it will review, in consultation
with its professional advisors, and will cause GTL to review, in consultation
with its
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professional advisors, the possible status of each as a passive foreign
investment company within the meaning of Section 1296 of the Code for each
taxable year based upon the relevant financial data and applicable law. Loral
further agrees that if it or GTL should determine in good faith after such
review that it is more likely than not that either or both is a passive foreign
investment company for the preceding taxable year, that it will and will cause
GTL to promptly notify the Lehman Partnerships and furnish the information
necessary to permit an effective election for such year for one or both as the
case may be under Section 1295(b) of the Code, including the pro rata share of
"ordinary earnings" and "net capital gain" includible under Section 1295(a)(2)
of the Code by such Lehman Partnerships or any partner thereof.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date set forth above.
LORAL SPACE & COMMUNICATIONS LTD.
By: /s/ Eric J. Zahler
Name: Eric J. Zahler
Title: Vice President
LORAL SPACECOM CORPORATION
By: /s/ Eric J. Zahler
Name: Eric J. Zahler
Title: Vice President
SS/L (BERMUDA) LTD.
(For purposes of Section 5.8 only)
By: /s/ Eric J. Zahler
Name: Eric J. Zahler
Title: Vice President
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LEHMAN BROTHERS CAPITAL
PARTNERS II, L.P.
By: Lehman Brothers
Holdings Inc.
By: /s/ Alan H. Washkowitz
Name: Alan H. Washkowitz
Title: Managing Director
LEHMAN BROTHERS MERCHANT BANKING
PORTFOLIO PARTNERSHIP L.P.
By: LBI Group Inc.
By: /s/ Alan H. Washkowitz
Name: Alan H. Washkowitz
Title: Managing Director
LEHMAN BROTHERS OFFSHORE INVESTMENT
PARTNERSHIP L.P.
By: Lehman Brothers Offshore
Partners Ltd.
By: /s/ Alan H. Washkowitz
Name: Alan H. Washkowitz
Title: Managing Director
LEHMAN BROTHERS OFFSHORE INVESTMENT
PARTNERSHIP-JAPAN L.P.
By: Lehman Brothers Offshore
Partners Ltd.
By: /s/ Alan H. Washkowitz
Name: Alan H. Washkowitz
Title: Managing Director
15
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Schedule A
----------
Loral
GTL Shares Shares
Name Acquired Acquired Cash Received
---- -------- -------- -------------
Capital Partners 88,224 2,475,815 $1,320,435
Merchant Banking 129,799 3,642,550 $1,942,693
Offshore 35,667 1,000,922 $ 533,825
Offshore Japan 13,566 380,713 $ 203,047
------- --------- ----------
TOTAL 267,256 7,500,000 $4,000,000
A-1
<PAGE>
Schedule B
----------
Shares of Tracking Tracking
Tracking Stock Stock
Stock Acquired by Acquired by
Name Exchanged SpaceCom Loral
---- --------- ----------- -----------
Capital Partners 241.59 20.14 221.45
Merchant Banking 355.44 29.63 325.81
Offshore 97.67 8.14 89.53
Offshore Japan 37.15 3.09 34.06
TOTAL 731.85 61.00 670.85
B-1
