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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. 3)*
Globalstar Telecommunications Limited
- -------------------------------------------------------------------------------
(Name of Issuer)
Common Stock, par value $1.00
- -------------------------------------------------------------------------------
(Title of Class of Securities)
G3930H104
--------------------------------------
(CUSIP Number)
Eric J. Zahler, Senior Vice President, Secretary and General
Counsel, Loral Space & Communications Ltd.,
c/o Loral SpaceCom Corporation, 600 Third Avenue, New York, New York 10016
(212) 697-1105
- -------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
July 6, 1998
--------------------------------------
(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
CUSIP No. G3930H104 Page 2 of 8 Pages
-------- ----------
- ----------- ------------------------------------------------------------------
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) [ ]
- ----------- ------------------------------------------------------------------
3 SEC USE ONLY
- ----------- ------------------------------------------------------------------
4 SOURCE OF FUNDS*
00
- ----------- ------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
- ----------- ------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Bermuda
- ----------- ------------------------------------------------------------------
NUMBER OF SHARES 7 SOLE VOTING POWER
BENEFICIALLY OWNED
BY EACH REPORTING 8,991,382
PERSON WITH
--------- ----------------------------------------------
8 SHARED VOTING POWER
--------- ----------------------------------------------
9 SOLE DISPOSITIVE POWER
8,991,382
--------- ----------------------------------------------
10 SHARED DISPOSITIVE POWER
- ----------- ------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON
8,991,382
- ----------- ------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
- ----------- ------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
11%
- ----------- ------------------------------------------------------------------
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.
2 OF 8
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Loral Space & Communications Ltd., a Bermuda company ("Loral"), hereby
amends and supplements, in this Amendment No. 3 to Schedule 13D (this "Amendment
No. 3"), the Statement on Schedule 13D originally filed on October 29, 1996, as
amended on May 21, 1997 and June 11, 1998 (as so amended, the "Schedule 13D"),
with respect to shares of Common Stock, $1.00 par value per share (the
"Shares"), of Globalstar Telecommunications Limited, a Bermuda company (the
"Company), as follows: Capitalized terms used herein but not defined herein have
the meanings assigned to them in the Schedule 13D.
Item 2. Identity and Background
- -------------------------------
Item 2 of the Schedule 13D is hereby amended by replacing the first
paragraph thereof with the following:
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 executive offices at Cedar House, 41 Cedar Avenue, Hamilton HM12,
Bermuda. The executive office of Loral SpaceCom Corporation, the subsidiary of
Loral that supervises the activities of Loral's subsidiaries in North America,
is located at 600 Third Avenue, New York, New York 10016. Schedule I of the
Schedule 13D is hereby amended and restated by Schedule I attached to this
Amendment No. 3.
Item 4. Purpose of Transaction
- -------------------------------
Item 4 of the Schedule 13D is hereby amended and restated in its
entirety as follows:
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 System(TM)"). Loral owns, directly and indirectly,
approximately 42%, on a fully diluted basis, 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 for further description of the relationship
between Loral and the Company.
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.
On July 6, 1998, Loral purchased 4,200,000 direct and indirect
partnership interests of Globalstar for $420 million in cash from certain
partners of Globalstar. Concurrently with such purchase of partnership
interests, Loral sold to entities advised by or
3
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associated with Soros Fund Management L.L.C. ("Soros") 8,400,000 Shares (the
"Soros Shares") at a purchase price of $29 1/6 per share. The Company has agreed
to file a shelf registration statement covering the Soros Shares and have such
registration statement declared effective within one year from the date of
purchase.
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, 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
- ----------------------------------------------
Item 5(a)-(c) of the Schedule 13D is hereby amended and restated as
follows:
(a)-(b) Except as set forth in Item 6:
(i) Loral Beneficially Owns 8,991,382 Shares by virtue of having sole
voting and dispositive power with respect to the Shares.
Loral acquired 1,674,400 Shares 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"). On March 3, 1996, Loral acquired 2,050,000 CPEOs, which
were initially convertible, at a conversion price of $65.00, into 1,576,923
Shares. On April 29, 1997, Loral, by virtue of its ownership of 1,407,144
Shares, acquired 159,170 Shares (the "Rights Shares") pursuant to the exercise
of subscription rights to purchase Common Stock at $26.50 per share ("GTL
Rights") distributed by GTL to shareholders of record on March 24, 1997. On
April 30, 1997, Loral and Space Systems/Loral, Inc., a wholly owned subsidiary
of Loral ("SS/L"), exercised their GTL Warrants and purchased 942,428 and
195,094 Shares, respectively (collectively, the "Warrant Shares"). On May 5,
1997, Loral acquired 16,002 Shares (the "Standby Shares") pursuant to a Standby
Agreement between Loral and the Company under which Loral was obligated to
purchase any Shares not purchased by shareholders pursuant to the exercise of
Rights.
On May 28, 1997, the Company issued a 100% stock dividend (the "1997
Stock Split"). As a result of the 1997 Stock Split, Loral's ownership of Shares
increased from 2,719,838 Shares to 5,439,676 Shares.
4
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As a result of an antidilution adjustment in the conversion price of
the CPEOs effected by the Stock Split and the distribution of the Rights, Loral
became entitled to convert its CPEOs into an additional 1,749,917 Shares. On
March 31, 1998, the Company called for the provisional redemption of the CPEOs.
Under the terms of the indenture governing the CPEOs, the Company was required,
in connection with such provisional redemption, to pay to each holder of CPEOs
an interest make-whole payment of 0.0435 share of common stock for each CPEO
held. On April 14, 1998, Loral converted its CPEOs into 3,326,840 Shares (the
"CPEO Shares") and on April 30, 1998, Loral received 89,175 Shares as an
interest make-whole payment (the "Interest Make-Whole Shares"). As a result of
this conversion, Loral's ownership of Shares increased to 8,855,691.
On June 8, 1998, the Company issued a 100% stock dividend (the "1998
Stock Split"). As a result of the 1998 Stock Split, Loral's ownership of Shares
increased from 8,855,691 to 17,711,382 Shares. On July 6, 1998, Loral sold
8,400,000 Shares to Soros, reducing Loral's ownership of Shares to 9,311,382
Shares. Of these Shares, 1,988,000 represent Shares underlying options granted
to certain executives and directors of Loral and its predecessor entity. As of
July 1, 1998, 320,000 such options had been exercised and accordingly, Loral's
ownership of Shares was reduced to 8,991,382 Shares.
The Shares Beneficially Owned by Loral constitute 11% of the
outstanding Shares of the Company.
(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 40,988,702 Shares
issued and outstanding as reported on the Company's 10Q for the quarter ended
March 31, 1998, adjusted to 81,977,404 Shares for the 1998 Stock Split. The
percentage interests of the Executive Officers and Directors are calculated
based upon the 40,988,702 Shares stated to be issued and outstanding, adjusted
to 81,977,404 Shares for the 1998 Stock Split.
(c) The trading date, number of Shares purchased or disposed of 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 July 6,
1998 through the date hereof are set forth in Schedule II hereto. With the
exception of the sale by Loral of the Soros Shares, all other transactions in
the Shares were effected on the Nasdaq National Market.
Item 6. Contracts, Arrangements, Understandings or Relationships with
Respect to Securities of the Company
-------------------------------------------------------------
(i) The third, fourth and fifth paragraphs of Item 6 of the Schedule
13D are hereby amended and restated as follows:
5
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Loral has beneficial ownership (calculated on a proportionate basis, in
the case of ownership interests held through entities not wholly-owned by Loral)
of approximately 24,690,217 Globalstar partnership interests, constituting
approximately 42% of Globalstar's total outstanding partnership interests (after
giving effect to exercise of warrants held by GTL to acquire 1,032,250
Globalstar partnership interests). Loral's beneficial interest in Globalstar
consists of (i) 22,442,372 partnership interests held directly and indirectly by
Loral and SS/L and (ii) approximately 2,247,845 partnership interests held
indirectly by Loral through its holdings of Shares.
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 named therein, as amended on April 8, 1998 to add an additional partner
as a party thereto, pursuant to which the Company has granted to 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 limitation, 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 89,769,488 Shares.
On July 6, 1998, Loral purchased 4,200,000 direct and indirect
partnership interests of Globalstar for $420 million in cash from certain
partners of Globalstar. Concurrently with such purchase of partnership
interests, Loral sold to Soros 8,400,000 Shares at a purchase price of $29 1/6
per share. The Company has agreed to file a shelf registration statement
covering the Soros Shares and have such registration statement declared
effective within one year from the date of purchase.
6
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Item 7. Material to be Filed as Exhibits
- -----------------------------------------
The following exhibit is filed hereto:
Exhibit G: Form of Registration Rights Agreement dated as of July 6, 1998
relating to 8,400,000 shares of Common Stock by and among
Globalstar Telecommunications Limited, Loral Space &
Communications Ltd., Quantum Partners LDC, Quasar Strategic
Partners LDC and Quantum Industrial Partners LDC.
7
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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: July 31, 1998
LORAL SPACE & COMMUNICATIONS LTD.
By: /s/ Eric J. Zahler
--------------------------------------
Name: Eric J. Zahler
Title: Senior Vice President,
Secretary and General Counsel
8
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SCHEDULE I
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 SpaceCom
Corporation., 600 Third Avenue, New York, New York 10016. Each such person is a
citizen of the United States except that Mr. Gregory Clark holds dual U.S. and
Australian citizenship.
Directors and Executive Officers of Loral Space &
Communications Ltd.
-------------------------------------------------
<TABLE>
Number of
Name and Position in Shares Owned
addition to Present and Aggregate Percentage
Principal Occupation Present Principal Occupation Purchase Price Interest
- -------------------- ---------------------------- -------------- ----------
<S> <C> <C> <C>
Bernard L. Schwartz Chairman of the Board of Directors 1,207,604(1) 1.5%
and Chief Executive Officer
Gregory J. Clark President and Chief Operating Officer 20,000(2) *
Howard Gittis, Director Vice Chairman and Chief 80,000(3) *
Administrative Officer of MacAndrews
& Forbes Holdings, Inc.
35 E. 62nd St.
New York, NY 10021
Robert B. Hodes, Director Counsel to 104,452(4) *
Willkie Farr & Gallagher
153 East 53rd St.
New York, NY 10022
- ------------------
* Less than one percent.
1 Includes 80,000 options at an exercise price of $5.00 per Share and 480,000 options at an exercise
price of $6.25 per Share.
2 Consists of 20,000 options at an exercise price of $12.875 per Share.
3 Consists of 80,000 options at an exercise price of $8.34375 per Share.
I-1
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Number of
Name and Position in Shares Owned
addition to Present and Aggregate Percentage
Principal Occupation Present Principal Occupation Purchase Price Interest
- -------------------- ---------------------------- -------------- ----------
Gershon Kekst, Director President of Kekst and Company, Inc. 80,000(5) *
437 Madison Ave.
New York, NY 10022
Charles Lazarus, Director Chairman Emeritus and Director of 80,000(6) *
Toys "R" Us, Inc.
461 From Road
Paramus, NJ 07652
Malvin A. Ruderman, Director Professor of Physics, Columbia 82,224(7) *
University
29 Washington Sq. West
New York, NY 10011
E. Donald Shapiro, Director Joseph Solomon Distinguished 108,924(8) *
Professor of Law
New York Law School
57 Worth Street
New York, NY 10013
Arthur L. Simon, Director Independent consultant 80,000(9) *
971 Haverstraw Road
Suffern, NY 10901
- ------------------
4 Includes 80,000 options at an exercise price of $8.34375 per Share and 20,000 options at an exercise
price of $12.59375 per Share.
5 Consists of 80,000 options at an exercise price of $8.34375 per Share.
6 Consists of 80,000 options at an exercise price of $8.34375 per Share.
7 Includes 2,000 Shares held by his wife as to which he disclaims beneficial ownership and 80,000
options at an exercise price of $8.34375 per Share.
8 Includes 80,000 options at an exercise price of $8.34375 per Share.
9 Consists of 80,000 options at an exercise price of $8.34375 per Share.
I-2
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Number of
Name and Position in Shares Owned
addition to Present and Aggregate Percentage
Principal Occupation Present Principal Occupation Purchase Price Interest
- -------------------- ---------------------------- -------------- ----------
Daniel Yankelovich, Director Chairman of DYG, Inc. 95,808(10) *
21 Holiday Point Rd.
Sherman, CT 06784
Laurence D. Atlas Vice President, Government Relations 0 *
-- Telecommunications
W. Neil Bauer Vice President 0 *
Robert E. Berry Senior Vice President 444 *
Jeanette H. Clonan Vice President, Communications and 2,292 *
Investor Relations
Michael P. DeBlasio First Senior Vice President and Chief 128,000(11) *
Financial Officer
Terry J. Hart Vice President 0 *
Stephen L. Jackson Vice President, Administration 444 *
Avi Katz Vice President, Deputy General 1,000 *
Counsel and Assistant Secretary
Russell R. Mack Vice President, Business Ventures 3,500(12) *
Ronald C. Maehl Vice President 0 *
- ------------------
10 Includes 80,000 options at an exercise price of $8.34375 per Share.
11 Includes 80,000 options at an exercise price of $5.00 per Share and 40,000 options at an exercise
price of $6.25 per Share.
12 Consists of 3,500 options at an exercise price of $4.1563 per Share.
I-3
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Number of
Name and Position in Shares Owned
addition to Present and Aggregate Percentage
Principal Occupation Present Principal Occupation Purchase Price Interest
- -------------------- ---------------------------- -------------- ----------
Nicholas C. Moren Senior Vice President and Treasurer 104,452(13) *
Harvey B. Rein Vice President and Controller 12,388(14) *
Thomas B. Ross Vice President, Government Relations 18,356(15) *
Eric J. Zahler Senior Vice President, General 108,012(16) *
Counsel and Secretary
- ------------------
13 Includes 80,000 options at an exercise price of $5.00 per Share and 20,000 options at an exercise
price of $6.25 per Share.
14 Includes 8,000 options at an exercise price of $6.25 per Share and 3,500 options at an exercise
price of $4.1563 per Share.
15 Includes 5,000 Shares at an exercise price of $4.1563 per Share and 13,356 shares held by his
wife as to which he disclaims beneficial ownership.
16 Includes 4,452 Shares held in a Keogh Account, 3,3560 Shares held in trust for his children,
80,000 options at an exercise price of $5.00 per Share and 20,000 options at an exercise
price of $6.25 per Share.
</TABLE>
I-4
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SCHEDULE II
TRANSACTIONS IN SHARES DURING THE PERIOD COMMENCING FROM THE
60-DAY PERIOD PRECEDING JULY 6, 1998 THROUGH THE DATE HEREOF
Price
Name Date Shares per Share A/S*
- --------------------------------- ------ --------- --------- ----
Loral Space & Communications Ltd. 7/6/98 8,400,000 $29 1/6 S
- ------------------
* A indicates an acquisition of Shares and S indicates a sale of Shares. The
above table does not show disposition of shares by Loral in connection with
the exercise by certain persons of options to acquire Shares previously
granted to them by Loral.
II-1
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=========================================================================
FORM OF
REGISTRATION RIGHTS AGREEMENT
Dated as of July 6, 1998
relating to
8,400,000 Shares of Common Stock
by and among
Globalstar Telecommunications Limited,
Loral Space & Communications Ltd.,
Quantum Partners LDC,
Quasar Strategic Partners LDC,
and
Quantum Industrial Partners LDC
=========================================================================
<PAGE>
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS....................................................1
SECTION 2. SECURITIES SUBJECT TO THIS AGREEMENT...........................2
SECTION 3. SHELF REGISTRATION.............................................3
SECTION 4. LIQUIDATED DAMAGES.............................................5
SECTION 5. REGISTRATION PROCEDURES........................................6
SECTION 6. REGISTRATION EXPENSES.........................................12
SECTION 7. INDEMNIFICATION...............................................13
SECTION 8. RULE 144A.....................................................16
SECTION 9. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS...................16
SECTION 10. REPRESENTATIONS OF THE COMPANY................................16
SECTION 11. MISCELLANEOUS.................................................17
<PAGE>
This Registration Rights Agreement (this "Agreement") is made and
entered into as of July 6, 1998 by and between Globalstar Telecommunications
Limited a Bermuda Company (the "Company"), Loral Space Communications Ltd., a
Bermuda company ("Loral"), and Quantum Partners LDC, Quasar Strategic Partners
LDC, and Quantum Industrial Partners LDC. (collectively, the "Purchasers"), who
purchased an aggregate of 8,400,000 shares of Common Stock (the "GTL Stock") of
the Company pursuant to a Stock Purchase Agreement dated June 30, 1998 (the
"Purchase Agreement") between Loral and the Purchasers. In order to induce the
Purchasers to enter into the Purchase Agreement, the Company has agreed to
provide the registration rights set forth in this Agreement. The execution and
delivery of this Agreement is a condition to the obligations of the Purchasers
set forth in the Purchase Agreement. All defined terms used but not defined
herein shall have the meanings ascribed to them in the Purchase Agreement.
The parties hereby agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall have
the following meanings:
Act: The Securities Act of 1933, as amended.
Closing Date: The date on which the GTL Stock is sold by Loral to the
Purchasers pursuant to the Purchase Agreement.
Commission: The Securities and Exchange Commission.
Damages Payment Date: Each June 1 and December 1.
Effectiveness Date: The date on which the Shelf Registration Statement
is declared effective by the Commission under the Act.
Effectiveness Target Date: As defined in Section 4.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Holders: As defined in Section 2(b) hereof.
NASD: The National Association of Securities Dealers, Inc.
Person: An individual, partnership, corporation, trust, association,
limited liability company, or unincorporated organization, a government or
agency or political subdivision thereof or any other entity.
Preliminary Prospectus: As defined in Section 3(f).
<PAGE>
Prospectus: The prospectus included in the Shelf Registration
Statement, as amended or supplemented by any Prospectus Supplement with respect
to the terms of the offering of any portion of the Transfer Restricted
Securities (as defined herein) covered by the Shelf Registration Statement and
by all other amendments and supplements to the prospectus, including
post-effective amendments, and all material which may be incorporated by
reference into such prospectus.
Prospectus Supplement: As defined in Section 5(b).
Record Holder: With respect to any Damages Payment Date relating to
the GTL Stock constituting Transfer Restricted Securities, each Person who is a
holder of record of such GTL Stock on the date that the relevant Registration
Default first occurred .
Registration Expenses: As defined in Section 6(a).
Shelf Registration Statement: As defined in Section 3(a) hereof.
Suspension Period: As defined in Section 3(a).
Transfer Restricted Securities: Each share of GTL Stock, until the
date on which each such share of GTL Stock (i) has been effectively registered
under the Securities Act and disposed of in accordance with the Shelf
Registration Statement covering it, (ii) is distributed to the public pursuant
to Rule 144 or (iii) may be sold or transferred pursuant to Rule 144(k) (or any
similar provisions then in force).
Underwriter: Any underwriter, placement agent, selling broker, dealer
manager, qualified independent underwriter or similar securities industry
professional.
Underwritten Registration or Underwritten Offering: An offering in
which securities of the Company are sold to an Underwriter or with the
assistance of such Underwriter for reoffering to the public on a firm commitment
or best efforts basis.
SECTION 2. SECURITIES SUBJECT TO THIS AGREEMENT
(a) Transfer Restricted Securities. The securities entitled to the
benefits of this Agreement are the Transfer Restricted Securities.
(b) Holders of Transfer Restricted Securities. A Person is deemed to
be a holder of Transfer Restricted Securities (each, a "Holder") whenever such
Person owns Transfer Restricted Securities.
SECTION 3. SHELF REGISTRATION
2
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(a) The Company agrees to file with the Commission a shelf
registration statement pursuant to Rule 415, or any successor rule, under the
Act (as may then be amended) (the "Shelf Registration Statement") on Form S-1 or
Form S-3, if the use of such form is then available and as determined by the
Company, to cover resales of Transfer Restricted Securities by the Holders
thereof who satisfy certain conditions relating to the provision of information
in connection with the Shelf Registration Statement. The Holders of such
Transfer Restricted Securities shall provide the information required pursuant
to Section 3(f) hereof.
The Company shall use its best efforts to cause such Shelf
Registration Statement to be declared effective by the Commission on or prior to
the first anniversary of the Closing Date. The Company shall use its best
efforts to keep such Shelf Registration Statement continuously effective for a
period ending on the earlier to occur of (i) three years from the Closing Date
or (ii) such shorter period that will terminate when each of the Transfer
Restricted Securities covered by the Shelf Registration Statement ceases to be a
Transfer Restricted Security and the Company or Loral shall have delivered to
the Purchasers an opinion of counsel to such effect. The Company further agrees
to use its best efforts to prevent the happening of any event that would cause
the Shelf Registration Statement to contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading or to be not effective and usable
for resale of the Transfer Restricted Securities during the period that such
Shelf Registration Statement is required to be effective and usable.
Upon the occurrence of any event that would cause the Shelf
Registration Statement (i) to contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein not misleading or (ii) to be not effective and usable for
resale of Transfer Restricted Securities during the period that such Shelf
Registration Statement is required to be effective and usable, the Company shall
as promptly as practicable take such action, including, if necessary, filing an
amendment to the Shelf Registration Statement, correcting any such misstatement
or omission, and using its best efforts to cause any such amendment to be
declared effective and/or such Shelf Registration Statement to become usable as
soon as practicable thereafter.
Notwithstanding anything to the contrary in this Section 3, subject to
compliance with Section 4 and 5(b), if applicable, the Company may prohibit
offers and sales of Transfer Restricted Securities pursuant to the Shelf
Registration Statement at any time for valid business reasons (not including
avoidance of the Company's obligations hereunder), including the acquisition or
divestiture of assets, public filings with the Commission, pending corporate
developments and similar events
3
<PAGE>
(the period during which any such prohibition of offers and sales of
Transfer Restricted Securities pursuant to the Shelf Registration Statement is
in effect is referred to herein as a "Suspension Period"). A Suspension Period
shall commence on and include the date on which the Company provides written
notice to Holders of Transfer Restricted Securities covered by the Shelf
Registration Statement that offers and sales of Transfer Restricted Securities
cannot be made thereunder in accordance with this Section 3 and shall end on the
date on which each Holder of Transfer Restricted Securities covered by the Shelf
Registration Statement either receives copies of a Prospectus Supplement
contemplated by Section 5(b) or is advised in writing by the Company that offers
and sales of Transfer Restricted Securities pursuant to the Shelf Registration
Statement and use of the Prospectus may be resumed.
(b) If the Holders of a majority of the outstanding Transfer
Restricted Securities so elect, an offering of Transfer Restricted Securities
pursuant to the Shelf Registration Statement may be effected in the form of an
Underwritten Offering, provided, however, that notwithstanding anything
contained in this Agreement to the contrary, the Company shall not be required
to undertake more than one such Underwritten Offering during the term of this
Agreement. The Holders of the Transfer Restricted Securities to be registered
shall pay all underwriting discounts and commissions of such Underwriters and
the fees and expenses of any counsel for the Holders.
(c) If any of the Transfer Restricted Securities covered by the Shelf
Registration Statement are to be sold in an Underwritten Offering, the
Underwriter(s) that will administer the offering will be selected by the
Company; provided, however, that such Underwriter(s) shall be reasonably
satisfactory to Holders of a majority of the outstanding Transfer Restricted
Securities.
(d) The Company shall include in the Registration Statement as of the
Effective Date all Transfer Restricted Securities which any Holder shall have
elected (each, an "Electing Holder") to include in the Registration Statement as
specified in a completed questionnaire substantially in the form attached hereto
as Exhibit A (a "Selling Securityholder's Questionnaire"), received by the
Company on or prior to the date 10 calendar days to the anticipated filing date
of the Shelf Registration Statement (the "Initial Questionnaire Deadline"). The
Company will give each Holder of Transfer Restricted Securities 30 days prior
written notice of the anticipated initial filing date of the Shelf Registration
Statement. As used herein, the term "Specified Registrable Securities" shall
mean all Transfer Restricted Securities that the Electing Holders have elected
to include in the Registration Statement as provided in the preceding sentence
on or prior to the Initial Questionnaire Deadline. Each person acquiring
Specified Registrable Securities from an Electing Holder after the date on which
such Electing
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Holder provided the Company its Selling Securityholder's Questionnaire
shall also be entitled to have such Specified Registrable Securities included in
the Registration Statement so long as such person provides the Company with an
updated Selling Securityholder's Questionnaire. Any such transferee shall be
entitled to have its Specified Registrable Securities included in the
Registration Statement (i) at the Effective Date, if the updated Selling
Securityholder's Questionnaire is received by the Company on or prior to the
date 10 calendar days prior to the Effectiveness Date and (ii) in all other
cases, reasonably promptly after the Company receives the updated Selling
Securityholder's Questionnaire. In the case of any Transfer Restricted
Securities which are not included in the Registration Statement at the
Effectiveness Date and as to which an updated Selling Securityholder's
Questionnaire has been furnished to the Company, the Company shall include such
Transfer Restricted Securities in the Registration Statement reasonably promptly
and in connection therewith shall file such post-effective amendments to the
Registration Statement or supplements to the Prospectus as may be required by
the Act to permit the resale of such Specified Registrable Securities. The
Company may include information contained in any Selling Securityholder's
Questionnaire to the extent reasonably required in connection with any Shelf
Registration Statement or Prospectus or preliminary Prospectus (a "Preliminary
Prospectus") included therein and each Electing Holder shall provide the Company
promptly after written request with such additional or updated information as
the Company shall reasonably request in connection therewith.
SECTION 4. LIQUIDATED DAMAGES
(a) If (i) the Shelf Registration Statement has not been declared
effective by the Commission by the first anniversary of the Closing Date (the
"Effectiveness Target Date"), or (ii) the Shelf Registration Statement is filed
and declared effective but shall thereafter cease to be effective (without being
succeeded immediately by an additional registration statement filed and declared
effective) or useable for the offer and sale of Transfer Restricted Securities
for a period of time (including any Suspension Period) which shall exceed 60
days in the aggregate in any of the one-year periods ending on the second or
third anniversaries of the Closing Date, or which shall exceed 30 days in any
calendar quarter within either of such one-year periods (each such event
referred to in clauses (i) and (ii), a "Registration Default"), Loral will pay
liquidated damages to each Holder of Transfer Restricted Securities. The amount
of liquidated damages payable during any period during which a Registration
Default shall have occurred and be continuing is that amount which is equal to
$0.003 per week per share of GTL Stock (subject to adjustment in the event of
stock splits, stock recombinations, stock dividends and the like) constituting
Transfer Restricted Securities (excluding for purposes of such calculation any
such shares of GTL Stock constituting Transfer Restricted Securities that may be
sold
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during a 90-day period pursuant to Rule 144 or any successor rule),
increasing by $.001 per week per share of GTL Stock for each 60-day period or
part thereof until the applicable registration statement covering such Transfer
Restricted Securities is filed and the applicable registration statement is
declared effective, or the Shelf Registration Statement again becomes effective
or usable, as the case may be. The Company shall notify Loral and the Purchasers
within one Business Day after each and every date on which a Registration
Default occurs. All accrued liquidated damages shall be paid to Record Holders
by wire transfer of immediately available funds or by federal funds check by
Loral on each Damages Payment Date. Following the cure of a Registration
Default, liquidated damages will cease to accrue with respect to such
Registration Default.
All of the Company's and Loral's obligations set forth in the
preceding paragraph which are outstanding with respect to any Transfer
Restricted Security shall cease at the time such security ceases to be a
Transfer Restricted Security.
The parties hereto agree that the liquidated damages provided in this
Section 4 constitute a reasonable estimate of the damages that will be incurred
by Holders of Transfer Restricted Securities by reason of the failure of the
Shelf Registration Statement to be filed, declared effective or to remain
effective, as the case may be.
SECTION 5. REGISTRATION PROCEDURES
In connection with the Shelf Registration Statement, the Company will
use its best efforts to effect such registration to permit the sale of the
Transfer Restricted Securities being sold in accordance with the intended method
or methods of distribution or disposition thereof, and pursuant thereto the
Company will:
(a) at such time as the Company deems appropriate, prepare and file
with the Commission a Shelf Registration Statement relating to the registration
on Form S-1 or Form S-3, if the use of such form is then available and as
determined by the Company, for the sale of the Transfer Restricted Securities in
accordance with the intended method or methods of distribution thereof and shall
include all financial statements required to be included or incorporated by
reference therein; cooperate and assist in any filings required to be made with
the NASD and use its best efforts to cause such Shelf Registration Statement to
become effective and approved by such governmental agencies or authorities as
may be necessary to enable the selling Holders to consummate the disposition of
such Transfer Restricted Securities; provided, however, that before filing a
Shelf Registration Statement or any Prospectus, or any amendments or supplements
thereto, the Company will furnish to Loral, the Holders and the Underwriter(s),
if any, copies of all such documents proposed to be filed (except that the
Company shall not
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be required to furnish any exhibits to such documents, including those
incorporated by reference, unless so requested by a Holder or Underwriter in
writing), and the Company will not file any Shelf Registration Statement or
amendment thereto or any Prospectus or any supplement thereto to which (i) Loral
shall reasonably object, (ii) the Underwriter(s), if any, shall reasonably
object or (iii) if there are no Underwriters, the Holders of a majority of the
outstanding Transfer Restricted Securities shall reasonably object. A Holder or
Underwriter, if any, shall be deemed to have reasonably objected to such filing
if the Shelf Registration Statement, amendment, Prospectus or supplement, as
applicable, as proposed to be filed contains any untrue statement of a material
fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading which misstatement or
omission is specifically identified to the Company in writing no later than five
business days prior to the filing date;
(b) prepare and file with the Commission such amendments and
post-effective amendments to the Shelf Registration Statement as may be
necessary to keep the Shelf Registration Statement effective for the applicable
period set forth in Section 3(a) hereof; cause the Prospectus to be supplemented
by any required supplement thereto (a "Prospectus Supplement"), and as so
supplemented to be filed pursuant to Rule 424 under the Act, and to comply fully
with the applicable provisions of Rules 424 and 430A under the Act in a timely
manner; and comply with the provisions of the Act with respect to the
disposition of all securities covered by such Shelf Registration Statement
during the applicable period in accordance with the intended method or methods
of distribution by the sellers thereof set forth in such Shelf Registration
Statement, Prospectus or Prospectus Supplement;
(c) if requested by the Holders of Transfer Restricted Securities, or,
if the Transfer Restricted Securities are being sold in an Underwritten
Offering, the Underwriter(s) of such Underwritten Offering, promptly incorporate
in the Prospectus, any Prospectus Supplement or post-effective amendment to the
Shelf Registration Statement such information as the Underwriters and/or the
Holders of Transfer Restricted Securities being sold agree should be included
therein relating solely to the plan of distribution of the Transfer Restricted
Securities, including, without limitation, information with respect to the
number of shares of GTL Stock being sold to such Underwriter(s), the purchase
price being paid therefor and any other customary terms with respect to the
offering of the Transfer Restricted Securities to be sold in such offering; and
make all required filings of such Prospectus, Prospectus Supplement or
post-effective amendment as soon as practicable after the Company is notified of
the matters to be incorporated in such Prospectus, Prospectus Supplement or
post-effective amendment;
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(d) advise Loral and the Underwriter(s), if any, and selling Holders
promptly and, if requested by such Persons, to confirm such advice in writing,
(i) when the Prospectus or any Prospectus Supplement or post-effective amendment
to the Shelf Registration Statement has been filed, and, with respect to the
Shelf Registration Statement or any post-effective amendment thereto, when the
same has become effective, (ii) of any request by the Commission for amendments
to the Shelf Registration Statement or amendments or supplements to the
Prospectus or for additional information relating thereto, (iii) of the issuance
by the Commission of any stop order suspending the effectiveness of the Shelf
Registration Statement under the Act or of the suspension by any state
securities commission of the qualification of the Transfer Restricted Securities
for offering or sale in any jurisdiction, or the initiation of any proceeding
for any of the preceding purposes, (iv) if at any time the representations and
warranties of the Company contemplated by paragraph (l)(i) below cease to be
true and correct, and (v) of the existence of any fact or the happening of any
event that makes any statement of a material fact made in the Shelf Registration
Statement, the Prospectus, any amendment or supplement thereto, or any document
incorporated by reference therein untrue, or that requires the making of any
additions to or changes in the Shelf Registration Statement or the Prospectus in
order to make the statements therein not misleading. If at any time the
Commission shall issue any stop order suspending the effectiveness of the Shelf
Registration Statement, or any state securities commission or other regulatory
authority shall issue an order suspending the qualification or exemption from
qualification of the Transfer Restricted Securities under state securities or
Blue Sky laws, the Company shall use its best efforts to obtain the withdrawal
or lifting of such order at the earliest possible time;
(e) furnish to Loral, each Holder and each of the Underwriter(s), if
any, without charge, at least one copy of the Shelf Registration Statement, as
first filed with the Commission, and of each amendment thereto, including all
correspondence with the Commission with respect thereto, documents incorporated
by reference therein and all exhibits to the Shelf Registration Statement
(excluding exhibits to documents incorporated by reference therein unless
requested by such Holder or Underwriter);
(f) deliver to each selling Holder and each of the Underwriter(s), if
any, without charge, as many copies of any Preliminary Prospectus and the
Prospectus and any amendments or supplements thereto as such Persons may
reasonably request; the Company consents to the use of any Preliminary
Prospectus and the Prospectus and any amendments or supplements thereto by each
of the selling Holders and each of the Underwriter(s), if any, in connection
with the public offering and the sale of the Transfer Restricted Securities
covered by any Preliminary Prospectus and the Prospectus or any amendments or
supplements thereto;
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<PAGE>
(g) prior to any public offering of Transfer Restricted Securities,
cooperate with the selling Holders, the Underwriter(s), if any, and their
respective counsel in connection with the registration and qualification of the
Transfer Restricted Securities under the securities or Blue Sky laws of such
jurisdictions as the selling Holders or Underwriter(s) may reasonably request
and do any and all other acts or things necessary or advisable to enable the
disposition in such jurisdiction of the Transfer Restricted Securities covered
by the Shelf Registration Statement; provided, however, that the Company shall
not be required (i) to register or qualify as a foreign corporation where it is
not now so qualified or (ii) to take any action that would subject it to the
service of process in suits, other than as to matters and transactions relating
to the Shelf Registration Statement, or taxation in any jurisdiction where it is
not now so subject;
(h) cooperate with the selling Holders and the Underwriter(s), if any,
to facilitate the timely preparation and delivery of certificates representing
Transfer Restricted Securities to be sold pursuant to the Shelf Registration
Statement and not bearing any restrictive legends; and enable such Transfer
Restricted Securities to be in such denominations and registered in such names
as the Holders or the Underwriter(s), if any, may request at least two Business
Days prior to any sale of Transfer Restricted Securities;
(i) use its best efforts to cause the Transfer Restricted Securities
covered by the Shelf Registration Statement to be registered with or approved by
such other governmental agencies or authorities as may be reasonably necessary
to enable the seller or sellers thereof or the Underwriter(s), if any, to
consummate the disposition of such Transfer Restricted Securities, subject to
the provisos contained in clause (g) above;
(j) if any fact or event contemplated by clause (d)(v) above shall
exist or have occurred, prepare a post-effective amendment or supplement to the
Shelf Registration Statement or related Prospectus or any document incorporated
therein by reference or file any other required document so that, as thereafter
delivered to the purchasers of Transfer Restricted Securities, the Prospectus
will not contain an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein not misleading;
(k) enter into such agreements (including an underwriting agreement
reasonably acceptable to the Company) and take all such other actions in
connection therewith as may reasonably be required in order to expedite or
facilitate the disposition of the Transfer Restricted Securities pursuant to the
Shelf Registration Agreement, in connection with an Underwritten Registration,
and (i) make such representations and warranties to the Underwriter(s), in form,
substance and scope as they may
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<PAGE>
reasonably request and as are customarily made by issuers to Underwriters in
primary Underwritten Offerings; (ii) obtain opinions of counsel for the Company
and updates thereof in customary form and covering matters reasonably requested
by the Underwriter(s) of the type customarily covered in legal opinions to
Underwriters in connection with primary Underwritten Offerings addressed to the
Underwriter requesting the same and covering the matters as may be reasonably
requested by such Underwriters; (iii) obtain "cold comfort" letters and updates
thereof from the Company's independent certified public accountants, and the
independent certified public accountants of any other corporation or person
("Other Companies") with respect to which audited financial statements are
required to be included or incorporated by reference in the Shelf Registration
Statement, addressed to the Underwriters requesting the same, such letters to
be in customary form and covering matters of the type customarily covered in
"cold comfort" letters to Underwriters in connection with primary Underwritten
Offerings; (iv) set forth in full or incorporate by reference in the
underwriting agreement the indemnification provisions and procedures of Section
7 hereof with respect to all parties to be indemnified pursuant to said Section
(including the Underwriters); and (v) deliver such documents and certificates
as may be reasonably requested by the Holders of the Transfer Restricted
Securities being sold or the Underwriter(s) of such Underwritten Offering to
evidence compliance with clause (h) above and with any customary conditions
contained in the underwriting agreement entered into by the Company pursuant to
this clause (k). The above shall be done at or prior to each closing under
such underwriting agreement, as and to the extent required thereunder;
(l) make available at reasonable times and in a reasonable manner for
inspection by any Underwriter participating in any disposition pursuant to such
Shelf Registration Statement and any attorney or accountant retained by the
selling Holders or any of the Underwriters, all relevant financial and other
records, pertinent corporate documents and properties of the Company and cause
the Company's officers, directors and employees to supply all information
reasonably requested by such Underwriter, attorney or accountant in connection
with such Shelf Registration Statement prior to its effectiveness; provided,
however, that such Underwriters, attorneys or accountants shall agree to keep
confidential (which agreement shall be confirmed in writing in advance to the
Company if the Company shall so request) all information, records or documents
made available to such persons which are not otherwise available to the general
public unless disclosure of such records, information or documents is required
by court or administrative order (of which the Company shall have been given
prior notice and an opportunity to defend) after the exhaustion of all appeals
therefrom, and to use such information obtained pursuant to this provision only
in connection with the transaction for which such information was obtained, and
not for any other purpose;
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(m) otherwise use its reasonable best efforts to comply with all
applicable rules and regulations of the Commission, including keeping all
filings current and timely making all reports, and make generally available to
its security holders, as soon as practicable, a consolidated earnings statement,
which consolidated earnings statement shall satisfy the provisions of Section
11(a) of the Act, for the twelve-month period (i) commencing at the end of any
fiscal quarter in which Transfer Restricted Securities are sold to Underwriters
in a firm commitment or best efforts Underwritten Offering or (ii) if not sold
to Underwriters in such an offering, beginning with the first month of the
Company's first fiscal quarter commencing after the effective date of the Shelf
Registration Statement;
(n) use its best efforts to obtain the withdrawal of any order
suspending the effectiveness of the Shelf Registration Statement at the earliest
possible moment;
(o) cause all Transfer Restricted Securities covered by the Shelf
Registration Statement to be listed on each securities exchange or quotation
system on which similar securities issued by the Company are then listed; and
(p) cooperate and assist in any filings required to be made with the
NASD and in the performance of any due diligence investigation by any
Underwriter (including any "qualified independent Underwriter" that is required
to be retained in accordance with the rules and regulations of the NASD).
Each Holder as to which any Shelf Registration Statement is being
effected agrees to furnish promptly to the Company all information required to
be disclosed in order to make the information previously furnished to the
Company by such Holder not materially misleading or necessary to cause such
Shelf Registration Statement not to omit a material fact with respect to such
Holder necessary in order to make the statements therein not misleading.
Each Holder agrees by acquisition of such Transfer Restricted
Securities that, upon receipt of any notice from the Company of the existence of
any fact of the kind described in Section 5(d)(v) hereof, such Holder will
forthwith discontinue disposition of Transfer Restricted Securities until such
Holder's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 5(j) hereof, or until it is advised in writing (the
"Advice") by the Company that the use of the Prospectus may be resumed, and has
received copies of any additional or supplemental filings with respect to the
Prospectus. If so directed by the Company, each Holder will deliver to the
Company (at the Company's expense) all copies, other than permanent file copies
then in such Holder's possession, of the Prospectus covering such Transfer
Restricted Securities current at the time of receipt of such notice. In the
event the Company shall give any such notice, the time period
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regarding the effectiveness of the Shelf Registration Statement set forth
in Section 3(a) hereof shall be extended by the number of days during the period
from and including the date of the giving of such notice pursuant to Section
5(d)(v) hereof to and including the date when each selling Holder covered by
such Shelf Registration Statement shall have received the copies of the
supplemented or amended Prospectus contemplated by Section 5(j) hereof or shall
have received the Advice.
SECTION 6. REGISTRATION EXPENSES
(a) Except as set forth in Section 6(b) hereof, all expenses incident
to the Company's performance of or compliance with this Agreement (the
"Registration Expenses") will be borne by the Company, regardless of whether a
Shelf Registration Statement becomes effective, including without limitation:
(i) all registration and filing fees and expenses (including
filings made with the NASD);
(ii) reasonable fees and expenses of compliance with federal
securities or state blue sky laws;
(iii) expenses of printing (including, without limitation,
expenses of printing or engraving certificates for the Transfer Restricted
Securities in a form eligible for deposit with Depository Trust Company and of
printing the Prospectus and any Preliminary Prospectus), messenger and delivery
services and telephone;
(iv) fees and disbursements of counsel for the Company;
(v) fees and disbursements of all independent certified public
accountants of the Company (including the expenses of any "cold comfort" letters
required by or incidental to the preparation and filing of a Shelf Registration
Statement and Prospectus and the disposition of Transfer Restricted Securities);
(vi) fees and expenses associated with any NASD filings and
approval required to be made in connection with the Shelf Registration
Statement; and
(vii) fees and expenses of listing the Transfer Restricted
Securities on any securities exchange or quotation system in accordance with
Section 5(p) hereof.
The Company will, in any event, bear its internal expenses (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expense of any annual audit and the
fees and expenses of any Person, including special experts, retained by the
Company.
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(b) The Holders of Transfer Restricted Securities shall bear the
expense of (i) any broker's commission or Underwriter's discount or commission
and the fees and expenses of any counsel for the Holders, (ii) their own costs
and expenses, including stock transfer taxes due upon resale by them of any of
the Transfer Restricted Securities covered by the Shelf Registration Statement
and any advertising expenses incurred in connection with any offers and sales
they make, and (iii) all Registration Expenses to the extent required by
applicable law.
SECTION 7. INDEMNIFICATION
(a) The Company agrees to indemnify and hold harmless (i) each of the
Purchasers, (ii) each Holder, (iii) each person, if any, who controls (within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act) either
of the Purchasers or any Holder (any of the persons referred to in this clause
(iii) being hereinafter referred to as a "controlling person") and (iv) the
respective officers, directors, partners, employees, representatives and agents
of the Purchasers, any Holder or any controlling person (any person referred to
in clause (i), (ii), (iii) or (iv) may hereinafter be referred to as a
"Non-Company Indemnitee"), to the fullest extent lawful, from and against any
and all losses, claims, damages, liabilities and judgments caused by any untrue
statement or alleged untrue statement of a material fact contained in the Shelf
Registration Statement, Prospectus or Preliminary Prospectus (or any amendments
or supplements thereto), including any document incorporated by reference
therein, or caused by 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, except, with respect to any Non-Company Indemnitee,
insofar as such losses, claims, damages, liabilities or judgments are caused by
(i) any such untrue statement or omission or alleged untrue statement or
omission based upon information furnished in writing to the Company by such
Non-Company Indemnitee expressly for use therein, (ii) losses, claims, damages,
liabilities or judgments incurred by such Non-Company Indemnitee resulting from
an untrue statement or alleged untrue statement of a material fact or omission
or alleged omission that had been corrected in the Shelf Registration Statement
or Prospectus (or an amendment or supplement thereto), if the person alleging
such loss, claim, damage or liability was not sent or given, at or prior to the
written confirmation of the sale of the Transfer Restricted Securities pursuant
to the Shelf Registration Statement to such person, a copy of the corrected
Shelf Registration Statement or Prospectus (or amendment or supplement thereto)
if the Company had previously furnished copies thereof to such Non-Company
Indemnitee, or (iii) any sale of securities pursuant to the Shelf Registration
Statement during (x) any period when a stop order has been issued in respect
thereof or any proceedings for that purpose have been initiated or (y) any
Suspension Period, provided in each case that the Non-Company Indemnitee
received
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prior notice of such stop order, initiation of proceedings or Suspension Period.
(b) In case any action shall be brought against any Non-Company
Indemnitee, based upon the Shelf Registration Statement, Prospectus, or
Preliminary Prospectus (or any amendments or supplements thereto), and with
respect to which indemnity may be sought against the Company pursuant to this
Section 7, such Non-Company Indemnitee shall promptly notify the Company in
writing and the Company shall assume the defense thereof, including the
employment of such counsel and payment of all fees and expenses; provided,
however, that the omission so to notify the Company shall not relieve the
Company from any liability that it may have to any Non-Company Indemnitee
(except to the extent that the Company is materially prejudiced or otherwise
forfeits substantive rights or defenses by reason of such failure). Such
Non-Company Indemnitee shall have the right to employ separate counsel in any
such action and participate in the defense thereof, but the fees and expenses of
counsel shall be paid by such Non-Company Indemnitee, unless (i) the employment
of such counsel shall have been specifically authorized in writing by the
Company, (ii) the Company shall have failed to assume the defense and employ
counsel or (iii) the named parties to any such action (including any impleaded
parties) include both such Non-Company Indemnitee and the Company and it would
be inappropriate for the same counsel to represent such Non-Company Indemnitee
and the Company (in which case the Company shall not have the right to assume
the defense of such action on behalf of such Non-Company Indemnitee and shall
bear the reasonable fees and expenses for the Non-Company Indemnitee, it being
understood, however, that the Company shall not, in connection with any one such
action or separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the fees and expenses of more than one separate firm of attorneys (in
addition to any local counsel) for the Non-Company Indemnitees, which firm shall
be designated in writing by the Non-Company Indemnitees and whose fees and
expenses reasonably incurred shall be reimbursed as they are incurred). The
Company shall not be liable for any settlement of any such action effected
without the written consent of the Company, but if settled with the written
consent of the Company, the Company agrees to indemnify and hold harmless any
Non-Company Indemnitee from and against any amounts payable pursuant to such
written consent in connection with such settlement. The Company shall not,
without the prior written consent of such Non-Company Indemnitee, effect any
settlement of any pending or threatened proceeding in respect of which such
Non-Company Indemnitee is or could have been a party and indemnity could have
been sought hereunder by such Non-Company Indemnitee, unless such settlement
includes an unconditional release of such Non-Company Indemnitee from all
liability on claims that are the subject matter of such proceeding.
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(c) Each Holder of Transfer Restricted Securities agrees to indemnify
and hold harmless (i) the Company and Loral, (ii) each of the Purchasers, (iii)
each other Holder, (iv) any person controlling (within the meaning of Section 15
of the Act or Section 20 of the Exchange Act) the Company, Loral, the Purchasers
and each other Holder and (v) the respective officers, directors, partners,
employees, representatives and agents of each of the parties referred to in
clauses (i), (ii), (iii) and (iv), to the same extent as the foregoing indemnity
from the Company to each of the Non-Company Indemnitees, but only with respect
to information relating to such Holder that was furnished in writing by such
Holder to the Company expressly for use in the Shelf Registration Statement (or
any amendment or supplement thereto).
(d) If the indemnification provided for in this Section 7 is
unavailable to an indemnified party in respect of any losses, claims, damages,
liabilities or judgments referred to herein, then each indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to the amount paid
or payable by such indemnified party as a result of such losses, claims,
damages, liabilities and judgments in such proportion as is appropriate to
reflect the relative fault of the indemnifying party, on the one hand, and the
indemnified party, on the other hand, in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities or
judgments, as well as any other relevant equitable considerations. The relative
fault of the indemnifying party, on the one hand, and the indemnified party, on
the other hand, shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
indemnifying party, on the one hand, or the indemnified party, on the other
hand, and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
The Company, Loral, each of the Purchasers and each Holder of Transfer
Restricted Securities agree that it would not be just and equitable if
contribution pursuant to this Section 7(d) were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
The losses, claims, damages, liabilities or judgments of an indemnified party
referred to in the immediately preceding paragraph shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim (but only to the extent such investigation
or defense was reasonably necessary) prior to the indemnifying party's
assumption of the defense thereof or subsequent thereto to the extent permitted
by the second sentence of Section 7(b) hereof. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
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Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. The Holders' obligations to contribute
pursuant to this Section 7(d) are several in proportion to the respective
Purchase Price for the GTL Stock held by each of the Holders hereunder and not
joint.
SECTION 8. RULE 144A
The Company hereby agrees with each Holder, for so long as any of the
shares of GTL Stock that are Transfer Restricted Securities remain outstanding
(and are "restricted securities" within the meaning of Rule 144 under the
Act)and during any such period in which the Company is not subject to Section 13
or 15(d) of the Exchange Act, to make available to any Purchaser or any Holder
of Transfer Restricted Securities in connection with any sale thereof and any
prospective purchaser of such GTL Stock from such Initial Purchaser or Holder of
Transfer Restricted Securities, the information required by Rule 144A(d)(4)
under the Act in order to permit resales of such Transfer Restricted Securities
pursuant to Rule 144A.
SECTION 9. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS
No Holder may participate in any Underwritten Offering hereunder
unless such Holder (a) agrees to sell such Holder's Transfer Restricted
Securities on the basis provided in any underwriting arrangements approved by
the Persons entitled hereunder to approve such arrangements, (b) completes and
executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents required under the terms of such underwriting
arrangements and (c) furnishes the Company in writing information in accordance
with Section 3(f) and agrees to indemnify and hold harmless the Company, its
directors, its officers who sign the Registration Statement and any person
controlling the Company within the meaning of Section 15 of the Act or Section
20 of the Exchange Act to the extent contemplated by Section 7(c).
SECTION 10. REPRESENTATIONS OF THE COMPANY.
The Company represents and warrants to the Purchasers as follows:
(a) The Company is duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization.
(b) The Company has all requisite power and authority to execute and
deliver this Agreement and to perform its obligations hereunder. The execution
and delivery by the Company of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by all
necessary action (corporate or otherwise) on the part of the Company. This
Agreement has been duly executed and delivered by
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the Company and constitutes the legal, valid and binding obligation of the
Company enforceable against the Company in accordance with its terms, except as
such enforcement may be limited by applicable bankruptcy, reorganization,
insolvency, moratorium, or similar laws from time to time in effect which
affect creditors' rights generally and by legal and equitable limitations on
the enforceability of specific remedies.
SECTION 11. MISCELLANEOUS
(a) Remedies. Each Holder of Transfer Restricted Securities, in
addition to being entitled to exercise all rights provided herein, and as
provided in the Purchase Agreement and granted by law, including recovery of
damages, will be entitled to specific performance of such Holder's rights under
this Agreement. The Company agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of the provisions
of this Agreement and hereby agrees to waive the defense in any action for
specific performance that a remedy at law would be adequate.
(b) No Inconsistent Agreements. The Company will not on or after the
date of this Agreement enter into any agreement with respect to its securities
that is inconsistent with the rights granted to the Holders of Transfer
Restricted Securities in this Agreement or otherwise conflicts with the
provisions hereof. The rights granted to the Holders of Transfer Restricted
Securities hereunder do not in any way conflict with and are not inconsistent
with the rights granted to the holders of the Company's securities under any
other agreements.
(c) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given unless the Company has obtained the written consent of Loral
and Holders of a majority of the outstanding Transfer Restricted Securities
affected by such amendment, modification, supplement, waiver or departure.
Notwithstanding the foregoing, a waiver or consent to departure from the
provisions hereof that relates exclusively to the rights of Holders of Transfer
Restricted Securities whose securities are being sold pursuant to such Shelf
Registration Statement and that does not directly or indirectly affect the
rights of other Holders of Transfer Restricted Securities shall be valid only
with the written consent of Loral and Holders of at least 66 2/3% of the
Transfer Restricted Securities being sold, in each case calculated in accordance
with the provisions of Section 3(c).
(d) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telex, telecopier, or air
courier guaranteeing overnight delivery:
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(i) if to a Holder of Transfer Restricted Securities, at the
address set forth on the records of the Company;
(ii) if to the Company, to it c/o Loral SpaceCom Corporation, 600
Third Avenue, New York, New York 10016, Fax: 212-338-5350, Attention: Eric J.
Zahler; and
(iii) if to Loral or a Purchaser, initially at its address set
forth in the Purchase Agreement and thereafter at such other address, notice of
which is given in accordance with the provisions of this Section.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt acknowledged, if telecopied; and on the
next business day, if timely delivered to an air courier guaranteeing overnight
delivery.
(e) Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors and assigns of each of the parties,
including without limitation and without the need for an express assignment,
subsequent Holders of Transfer Restricted Securities; provided, however, that
this Agreement shall not inure to the benefit of or be binding upon a successor
or assign of a Holder of Transfer Restricted Securities unless and to the extent
such successor or assign acquired Transfer Restricted Securities from such
Holder; and provided, further, that nothing herein shall be deemed to permit any
assignment, transfer or any disposition of Transfer Restricted Securities in
violation of the terms of the Purchase Agreement or applicable law. If any
transferee of any Holder shall acquire Transfer Restricted Securities, in any
manner, whether by operation of law or otherwise, such Transfer Restricted
Securities shall be held subject to all of the terms of this Agreement and by
taking and holding such Transfer Restricted Securities such person shall be
conclusively deemed to have agreed to be bound by and to perform all of the
terms and provisions of this Agreement and such Person shall be entitled to
receive the benefits hereof.
(f) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(g) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
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(h) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
CONFLICTS OF LAW RULES THEREOF.
(i) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
(j) Entire Agreement. This Agreement, together with the Purchase
Agreement, is intended by the parties as a final expression of their agreement
and intended to be a complete and exclusive statement of the agreement and
understanding of the parties hereto in respect of the subject matter contained
herein. There are no restrictions, promises, warranties or undertakings, other
than those set forth or referred to herein with respect to the registration
rights granted by the Company with respect to the securities sold pursuant to
the Purchase Agreement. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
GLOBALSTAR TELECOMMUNICATIONS LIMITED
By:
Name:
Title:
LORAL SPACE & COMMUNICATIONS LTD.
By:
Name:
Title:
PURCHASERS:
QUANTUM PARTNERS LDC
By:
Name:
Title:
QUASAR STRATEGIC PARTNERS LDC
By:
Name:
Title:
QUANTUM INDUSTRIAL PARTNERS LDC
By:
Name:
Title:
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<PAGE>
Exhibit A
NAME:
GLOBALSTAR TELECOMMUNICATIONS LIMITED
Selling Securityholder's Questionnaire
IN CONNECTION WITH THE PROPOSED REGISTRATION
OF SECURITIES OF. GLOBALSTAR TELECOMMUNICATIONS LIMITED
Reference is made to the Registration Rights Agreement (the
"Registration Rights Agreement") dated as of _______, 1998 between Globalstar
Telecommunications Limited (the "Company") and the Purchasers named therein.
Pursuant to the Registration Rights Agreement, the Company agreed to file a
Registration Statement under the Securities Act of 1933, as amended (the
"Securities Act"), for the registration and sale under the Securities Act of
8,400,000 shares of common stock of the Company (the "GTL Stock"). The
undersigned beneficial owner (the "Selling Securityholder") of Transfer
Restricted Securities (as defined in the Registration Rights Agreement) hereby
elects pursuant to the Registration Rights Agreement to include in the
Registration Statement the Transfer Restricted Securities beneficially owned by
it and listed in Item 4 below (unless otherwise specified under Item 4). The
inclusion in the Registration Statement of the Transfer Restricted Securities
owned by the Selling Securityholder shall be made in accordance with and shall
be subject to the provisions of the Registration Rights Agreement. The Selling
Securityholder is providing this Questionnaire to provide the Company with
information necessary for the inclusion in the Registration Statement of the
Transfer Restricted Securities beneficially owned by the Selling Securityholder.
All capitalized terms not otherwise defined herein shall have the meanings given
to them in the Registration Rights Agreement.
i. Complete Name of Selling Securityholder:
ii. Address for Notices:
iii. Contact Person:
Name:
Address:
Tel.:
Fax.:
iv. Transfer Restricted Securities Beneficially Owned by the Selling
Securityholder:
EXCEPT AS SET FORTH BELOW, THE UNDERSIGNED SELLING SECURITYHOLDER DOES
NOT OWN ANY SHARES OF GTL STOCK.
A-1
<PAGE>
Shares of GTL Stock:
v. Other Shares of GTL Stock or Other Securities of the Company Owned
by the Selling Securityholder:
EXCEPT AS SET FORTH BELOW, AND UNDER ITEM 4, THE UNDERSIGNED SELLING
SECURITYHOLDER DOES NOT OWN ANY SHARES OF GTL STOCK OR ANY OTHER SECURITIES OF
THE COMPANY.
vi. Except as set forth below, the Selling Securityholder has held no
position or office or has had any other material relationship with the Company
(or predecessor or affiliate of the Company) during the past three years.
vii. The Selling Securityholder acknowledges that it understands its
obligation to comply with the provisions of the Securities Exchange Act of 1934,
and the rules thereunder, relating to stock manipulation, in connection with the
offering of its Transfer Restricted Securities covered by the Registration
Statement. The Selling Securityholder agrees that neither it nor any person
acting on its behalf, will bid for, or purchase any securities of the Company in
violation of such provisions, so long as the Transfer Restricted Securities
beneficially owned by it are being offered pursuant to the Registration
Statement.
By its signature below, the Selling Securityholder consents to the disclosure of
the information contained herein to the extent required by the federal and state
securities laws and the rules of the Commission. The Selling Securityholder
understands that the information that is being furnished to the Company in this
Questionnaire will be relied upon by the Company in connection with the
preparation of the Registration Statement. The Selling Securityholder agrees to
promptly notify the Company of any changes in such information which may occur
subsequent to the date hereof.
Dated: , 199
----------------------
Selling Securityholder
By:
---------------------
Name:
Title:
A-2
