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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
December 8, 1999
GLOBALSTAR TELECOMMUNICATIONS LIMITED
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
Islands of Bermuda 0-25456 13-3795510
(State or other (Commission (IRS Employer
jurisdiction of incorporation) File Number) Identification Number)
</TABLE>
Cedar House, 41 Cedar Avenue, Hamilton, Bermuda HM 12
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(441) 295-2244
GLOBALSTAR, L.P.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
Delaware 333-25461 13-3759824
(State or other (Commission (IRS Employer
jurisdiction of incorporation) File Number) Identification Number)
</TABLE>
3200 Zanker Road, San Jose, California 95134
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(408)933-4000
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Item 5. Other Events.
On December 8, 1999, Globalstar Telecommunications Limited
("GTL"), a general partner of Globalstar, L.P. ("Globalstar"), sold $150 million
of 9% Series B Convertible Redeemable Preferred Stock due 2011 in an offering
exempt from registration.
GTL applied the net proceeds of the offering to purchase
Series B Convertible Redeemable Preferred Partnership Interests in Globalstar.
Globalstar, in turn, will apply the proceeds from the sale of the Convertible
Redeemable Preferred Partnership Interests for the cost of the continued
deployment of its worldwide, low-earth orbit satellite-based digital
telecommunications system and for general corporate purposes.
The press release of GTL dated December 3, 1999, a copy of
which is attached hereto as Exhibit 99.1, is hereby incorporated by reference.
Item 7. Financial Statements, Pro Forma Financial Information
and Exhibits.
(c) Exhibits.
Exhibit 3(ii) Schedule IV to the Amended and Restated Bye-Laws of
Globalstar Telecommunications Limited
Exhibit 10.1 Registration Rights Agreement dated December 8, 1999
relating to Globalstar Telecommunications Limited's
9% Series B Convertible Preferred Stock due 2011
Exhibit 10.2 Amendment dated as of December 8, 1999 to the Amended
and Restated Agreement of Limited Partnership of
Globalstar, L.P.
Exhibit 99.1 Press Release of Globalstar Telecommunications
Limited dated December 3, 1999
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
GLOBALSTAR TELECOMMUNICATIONS
LIMITED
(Registrant)
Date: December 20, 1999 By: /s/ Avi Katz
Avi Katz
Vice President and Secretary
Globalstar, L.P.
(Registrant)
By: Loral/QUALCOMM Satellite Services,
L.P., its general partner
By: Loral/QUALCOMM Partnership, L.P.,
its general partner
By: Loral General Partner, Inc.,
its general partner
Date: December 20, 1999 By: /s/ Avi Katz
Avi Katz
Vice President and Secretary
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EXHIBIT INDEX
Exhibit Description
- ------- -----------
Exhibit 3(ii) Schedule IV to the Amended and Restated Bye-Laws of
Globalstar Telecommunications Limited
Exhibit 10.1 Registration Rights Agreement dated December 8, 1999
relating to Globalstar Telecommunications Limited's
9% Series B Convertible Preferred Stock due 2011
Exhibit 10.2 Amendment dated as of December 8, 1999 to the Amended
and Restated Agreement of Limited Partnership of
Globalstar, L.P.
Exhibit 99.1 Press Release of Globalstar Telecommunications
Limited dated December 3, 1999
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EXECUTION COPY
SCHEDULE IV
9% Series B Convertible Redeemable
Preferred Shares due 2011
Globalstar Telecommunications Limited, an exempted company
organized under the laws of Bermuda (the "Company"), certifies that pursuant to
the authority contained in its Memorandum of Association (the "Memorandum of
Association") and its Bye-Laws (the "Bye-Laws"), and in accordance with Bermuda
law, the Board of Directors (or a duly authorized committee thereof) of the
Company at meetings duly called and held on November 29, 1999, and December 2,
1999, duly approved and adopted the following resolution, which resolution
remains in full force and effect on the date hereof:
RESOLVED, that pursuant to the authority vested in the Board
of Directors by the Memorandum of Association and Bye-Laws, the Board of
Directors does hereby designate, create, authorize and provide for the issue of
a series of preference stock having the following designation, voting powers,
preferences and relative, participating, optional and other special rights:
Capitalized terms used herein are defined in Section 15.
1. Number and Designation. The Company shall have a class of
preference shares, which shall be designated as its 9% Series B Convertible
Redeemable Preferred Shares due 2011 (the "Series B Preferred Shares"), par
value U.S.$0.01 per share, with 3,750,000 shares initially authorized and,
subject to the limitations set forth herein, such number of additional shares as
are authorized from time to time by resolution of the Board of Directors of the
Company and as set forth in the Bye-Laws of the Company. Unless otherwise
specified, references herein to any "Section" refer to the Section number
specified in this Schedule IV.
2. Issuance. The Company may issue Series B Preferred Shares
from time to time as may be determined by the Board of Directors (or any
committee thereof) of the Company.
3. Registered Form; Liquidation Preference; Registrar.
Certificates for Series B Preferred Shares shall be issuable only in registered
form and only with a liquidation preference of U.S.$50 per share. The Company
hereby appoints The Bank of New York as its initial Registrar and Transfer Agent
(the "Registrar") for the Series B Preferred Shares.
4. Registration; Transfer. (a) The Series B Preferred Shares
have not been registered under the United States Securities Act of 1933 (the
"Securities Act") and may not be resold, pledged or otherwise transferred prior
to the date when they no longer constitute "restricted securities" for purposes
of Rule 144(k) under the Securities Act other than (i) to the Company, (ii) to
"qualified institutional buyers" ("QIBs") pursuant to and in compliance with
Rule 144A ("Rule 144A") under the Securities Act, (iii) pursuant to and in
compliance with Rule 904 of Regulation S under the Securities Act, (iv) to
"accredited investors" as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act, (v) pursuant to an exemption from registration under the
Securities Act, or (vi) pursuant to an effective registration statement under
the Securities Act, in each case in accordance with any applicable securities
laws of Bermuda or any state of the United States. Until such time as determined
by the Company and the Registrar, certificates evidencing the Series B Preferred
Shares shall contain a legend (the "Restricted Shares Legend") evidencing the
foregoing restrictions in substantially the form set forth on the form of Series
B Preferred Share attached hereto as Exhibit A.
(b) Series B Preferred Shares issued to QIBs in reliance on
Rule 144A, as provided in the Purchase Agreement, shall be issued in the form of
one or more permanent global Series B Preferred
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Shares in definitive, fully registered form with the global legend (the "Global
Shares Legend") and the Restricted Shares Legend set forth on the form of Series
B Preferred Share attached hereto as Exhibit A (each, a "Global Series B
Preferred Share"), which shall be deposited on behalf of the holders of the
Series B Preferred Shares represented thereby with the Registrar, at its New
York office, as custodian for The Depository Trust Company, New York, New York
("DTC") or its nominee and their respective successors (the "Depositary"), and
registered in the name of the Depositary or a nominee of the Depositary, duly
executed by the Company and countersigned and registered by the Registrar as
hereinafter provided. The aggregate liquidation preference of the Global Series
B Preferred Share may from time to time be increased or decreased by adjustments
made on the records of the Registrar and the Depositary or its nominee as
hereinafter provided.
(c) This paragraph shall apply only to a Global Series B
Preferred Share deposited with or on behalf of the Depositary. The Company shall
execute and the Registrar shall, in accordance with this Section, countersign
and deliver initially one or more Global Series B Preferred Shares that (i)
shall be registered in the name of Cede & Co. or other nominee of the Depositary
and (ii) shall be delivered by the Registrar to Cede & Co. or pursuant to
instructions received from Cede & Co. or held by the Registrar as custodian for
the Depositary pursuant to an agreement between the Depositary and the
Registrar. Members of, or participants in, the Depositary ("Agent Members")
shall have no rights under this Schedule with respect to any Global Series B
Preferred Share held on their behalf by the Depositary or by the Registrar as
the custodian of the Depositary or under such Global Series B Preferred Share,
and the Depositary may be treated by the Company, the Registrar and any agent of
the Company or the Registrar as the absolute owner of such Global Series B
Preferred Share for all purposes whatsoever. Notwithstanding the foregoing,
nothing herein shall prevent the Company, the Registrar or any agent of the
Company or the Registrar from giving effect to any written certification, proxy
or other authorization furnished by the Depositary or impair, as between the
Depositary and its Agent Members, the operation of customary practices of the
Depositary governing the exercise of the rights of a holder of a beneficial
interest in any Global Series B Preferred Share. Except as provided in Section
5(b), owners of beneficial interests in Global Series B Preferred Shares will
not be entitled to receive physical delivery of certificated Series B Preferred
Shares.
(d) Purchasers of Series B Preferred Shares who are not QIBs
will receive certificated Series B Preferred Shares bearing the Restricted
Shares Legend ("Restricted Series B Preferred Shares"). Restricted Series B
Preferred Shares will bear a Restricted Shares Legend unless removed in
accordance with Section 5 and may not be exchanged for a Global Series B
Preferred Share, or interest therein, at any time, except as set forth in clause
(iv) of paragraph (b) of Section 5.
(e) No certificate evidencing Series B Preferred Shares shall
be valid unless it bears the countersignature of the Registrar.
5. Paying Agent and Conversion Agent. (a) The Company shall
maintain in the Borough of Manhattan, City of New York, State of New York (i) an
office or agency where Series B Preferred Shares may be presented for payment
(the "Paying Agent") and (ii) an office or agency where Series B Preferred
Shares may be presented for conversion (the "Conversion Agent"). The Company may
appoint the Registrar, the Paying Agent and the Conversion Agent and may appoint
one or more additional paying agents and one or more additional conversion
agents in such other locations as it shall determine. The term "Paying Agent"
includes any additional paying agent and, with respect to payments hereunder by
delivery of Common Shares, may include the Common Share Transfer Agent, and the
term "Conversion Agent" includes any additional conversion agent. The Company
may change any Paying Agent or Conversion Agent without prior notice to any
holder. The Company shall notify the Registrar of the name and address of any
Paying Agent or Conversion Agent appointed by the Company. If the Company fails
to appoint or maintain another entity as Paying Agent or Conversion Agent, the
Registrar shall act as such. The Company or any of its Affiliates may act as
Paying Agent, Registrar, coregistrar or Conversion Agent.
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Neither the Company nor the Registrar shall be required (A) to
issue, countersign or register the transfer of or exchange any Series B
Preferred Share during a period beginning at the opening of business 15 days
before the day of the mailing of a notice of redemption of Series B Preferred
Shares selected for redemption under Section 10 and ending at the close of
business on the day of such mailing or (B) to register the transfer of or
exchange any Series B Preferred Share so selected for redemption in whole or in
part, except the unredeemed portion of any Series B Preferred Share being
redeemed in part.
(b) Notwithstanding any provision to the contrary herein, so
long as a Global Series B Preferred Share remains outstanding and is held by or
on behalf of the Depositary, transfers of a Global Series B Preferred Share, in
whole or in part, or of any beneficial interest therein, shall only be made in
accordance with Section 4 and this Section 5; provided, however, that beneficial
interests in a Global Series B Preferred Share may be transferred to persons who
take delivery thereof in the form of a beneficial interest in the same Global
Series B Preferred Share in accordance with the transfer restrictions set forth
in the Restricted Shares Legend:
(i) Except for transfers or exchanges made in accordance with
any of clauses (b)(ii) through (v) of this Section 5, transfers of a
Global Series B Preferred Share shall be limited to transfers of such
Global Series B Preferred Share in whole, but not in part, to nominees
of the Depositary or to a successor of the Depositary or such
successor's nominee.
(ii) If an owner of a beneficial interest in a Global Series B
Preferred Share deposited with the Depositary or with the Registrar as
custodian for the Depositary wishes at any time to transfer its
interest in such Global Series B Preferred Share to a person who is
required to take delivery thereof in the form of Restricted Series B
Preferred Shares, such owner may, subject to the rules and procedures
of the Depositary, cause the exchange of such interest for one or more
certificates evidencing such Restricted Series B Preferred Shares. Upon
receipt by the Registrar, at its office in The City of New York of (A)
instructions from the Depositary directing the Registrar to countersign
and deliver one or more Restricted Series B Preferred Shares equal in
number of shares to the beneficial interest in the Global Series B
Preferred Share to be exchanged, such instructions to contain the name
or names of the designated transferee or transferees, the number of
Restricted Series B Preferred Shares to be so issued and appropriate
delivery instructions, (B) a certificate in the form of Exhibit B
attached hereto given by the transferor, to the effect set forth
therein, (C) if such transfer is made pursuant to Section 4(a)(iv), a
certificate in the form of Exhibit C attached hereto given by the
person acquiring the Restricted Series B Preferred Shares for which
such interest is being exchanged, to the effect set forth therein, and
(D) such other certifications, legal opinions or other information as
the Company, the Depositary or the Registrar may reasonably require to
confirm that such transfer is being made pursuant to an exemption from,
or in a transaction not subject to, the registration requirements of
the Securities Act, then the Registrar will instruct the Depositary to
reduce or cause to be reduced such Global Series B Preferred Share by
the number of shares of the beneficial interest therein to be exchanged
and to debit or cause to be debited from the account of the person
making such transfer the beneficial interest in the Global Series B
Preferred Share that is being transferred, and concurrently with such
reduction and debit, the Company shall execute, and the Registrar shall
countersign and deliver, one or more Restricted Series B Preferred
Shares representing the same number of shares in accordance with the
instructions referred to above.
(iii) If a holder of Restricted Series B Preferred Shares
wishes at any time to transfer all or part of such Restricted Series B
Preferred Shares to a person who is required to take delivery thereof
in the form of Restricted Series B Preferred Shares, such holder may,
subject to the restrictions on transfer set forth herein and in the
certificate representing such Restricted Series B Preferred Shares,
cause the exchange of such Restricted Series B Preferred Shares for one
or more certificates evidencing such Restricted Series B Preferred
Shares. Upon receipt by the Registrar,
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at its office in The City of New York of (A) such Restricted Series B
Preferred Shares, duly endorsed as provided herein, (B) instructions
from such holder directing the Registrar to authenticate and deliver
one or more certificates evidencing Restricted Series B Preferred
Shares, such instructions to contain the name of the transferee and the
number of the Restricted Series B Preferred Shares to be so issued and
appropriate delivery instructions, (C) a certificate from the holder of
the Restricted Series B Preferred Shares to be exchanged in the form of
Exhibit B attached hereto given by the transferor, to the effect set
forth therein, (D) if such transfer is made pursuant to clause
4(a)(iv), a certificate in the form of Exhibit C attached hereto given
by the person acquiring the Restricted Series B Preferred Shares for
which such shares are being exchanged, to the effect set forth therein,
and (E) such other certifications, legal opinions or other information
as the Company or the Registrar may reasonably require to confirm that
such transfer is being made pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the
Securities Act, then the Registrar shall cancel or cause to be canceled
such Restricted Series B Preferred Share and concurrently therewith,
the Company shall execute, and the Registrar shall countersign and
deliver, one or more Restricted Series B Preferred Shares representing
the number of shares transferred in accordance with the instructions
referred to above.
(iv) If a holder of Restricted Series B Preferred Shares
wishes at any time to transfer all or part of such Restricted Series B
Preferred Shares to a person who is eligible to take delivery thereof
in the form of a beneficial interest in a Global Series B Preferred
Share, such holder may, subject to the restrictions on transfer set
forth herein and in the certificate representing such Restricted Series
B Preferred Shares, cause the exchange of such Restricted Series B
Preferred Shares for beneficial interests in a Global Series B
Preferred Share. Upon receipt by the Registrar, at its office in The
City of New York of (A) such Restricted Series B Preferred Shares, duly
endorsed as provided herein, (B) instructions from such holder
directing the Registrar to increase the Global Series B Preferred
Share, such instructions to contain the name of the transferee and
appropriate account information, (C) a certificate from the holder of
the Restricted Series B Preferred Shares to be exchanged in the form of
Exhibit B attached hereto given by the transferor, to the effect set
forth therein, and (D) such other certifications, legal opinions or
other information as the Company, the Depositary or the Registrar may
reasonably require to confirm that such transfer is being made pursuant
to an exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act, then the Registrar
shall cancel or cause to be canceled such Restricted Series B Preferred
Shares and concurrently therewith, the Registrar will instruct the
Depositary to increase or cause to be increased the Global Series B
Preferred Share by the aggregate number of shares of the Restricted
Series B Preferred Shares to be exchanged and to credit or cause to be
credited to the account of the transferee the beneficial interest in
the Global Series B Preferred Share that is being transferred.
(v) In the event that a Global Series B Preferred Share is
exchanged for Series B Preferred Shares in definitive registered form
pursuant to this Section, prior to the effectiveness of a Shelf
Registration Statement with respect to such Series B Preferred Shares,
such Series B Preferred Shares may be exchanged only in accordance with
such procedures as are substantially consistent with the provisions of
clauses (ii), (iii) and (iv) above (including the certification
requirements intended to ensure that such transfers comply with Rule
144A or are otherwise exempt under the Securities Act, as the case may
be) and such other procedures as may from time to time be adopted by
the Company, the Depositary or the Registrar.
(c) Except in connection with a Shelf Registration Statement
contemplated by and in accordance with the terms of the Registration Rights
Agreement relating to the Series B Preferred Shares, Common Shares issuable (A)
as dividends thereon, (B) on conversion thereof or (C) in redemption thereof,
and any securities into which such Series B Preferred Shares or Common Shares
shall be converted or into
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which they shall be changed by operation of law or otherwise (collectively,
the "Registrable Securities"), if Series B Preferred Shares are issued upon the
transfer, exchange or replacement of Series B Preferred Shares bearing the
Restricted Shares Legend, or if a request is made to remove such Restricted
Shares Legend on Series B Preferred Shares, the Series B Preferred Shares so
issued shall bear the Restricted Shares Legend, or the Restricted Shares Legend
shall not be removed, as the case may be, unless there is delivered to the
Company and the Registrar such satisfactory evidence, which may include an
opinion of counsel licensed to practice law in the State of New York, as may be
reasonably required by the Company or the Registrar, that neither the legend nor
the restrictions on transfer set forth therein are required to ensure that
transfers thereof comply with the provisions of Rule 144A or Rule 144 or, with
respect to Restricted Series B Preferred Shares, that such Series B Preferred
Shares are not "restricted securities" within the meaning of Rule 144 under the
Securities Act. Upon provision of such satisfactory evidence, the Registrar, at
the direction of the Company, shall countersign and deliver Series B Preferred
Shares that do not bear the Restricted Shares Legend.
(d) The Registrar shall have no responsibility for any actions
taken or not taken by the Depositary.
(e) Each holder of a Series B Preferred Share agrees to
indemnify the Company and the Registrar against any liability that may result
from the transfer, exchange or assignment of such holder's Series B Preferred
Share in violation of any provision of this Schedule and/or applicable U.S.
Federal or State securities law; provided, however, that such indemnity shall
not apply to acts of wilful misconduct or gross negligence on the part of the
Company or the Registrar, as the case may be.
(f) Payments (whether in cash or, as permitted by Section 11,
in Common Shares) due on the Series B Preferred Shares shall be payable at the
office or agency of the Company maintained for such purpose in The City of New
York and at any other office or agency maintained by the Company for such
purpose. If any such payment is in cash, it shall be payable by United States
dollar check drawn on, or wire transfer (provided that appropriate wire
instructions have been received by the Registrar at least 15 days prior to the
applicable date of payment) to a United States dollar account maintained by the
holder with, a bank located in New York City; provided that at the option of the
Company payment of dividends in cash may be made by check mailed to the address
of the person entitled thereto as such address shall appear in the Series B
Preferred Share register.
6. Dividend Rights. (a) The Company shall pay, and the holders
of the Series B Preferred Shares shall be entitled to receive, cumulative
dividends from the date of initial issuance of such Series B Preferred Shares at
a rate of 9% per annum on the amount of the liquidation preference of the Series
B Preferred Shares. Dividends will be computed on the basis of a 360-day year of
twelve 30-day months and will be payable quarterly, subject to Section 11, (i)
in cash, (ii) by delivery of Common Shares or (iii) through any combination of
the foregoing in arrears on March 1, June 1, September 1 and December 1 of each
year (each a "Dividend Payment Date"), commencing March 1, 2000 until the
liquidation preference thereof is paid or made available for payment provided,
however, that if such date is not a Business Day, then the Dividend Payment Date
shall be the next Business Day. The Company may elect not to declare dividend
payments on any Dividend Payment Date; provided, however, that dividends on the
Series B Preferred Shares will accrue whether or not the Company has earnings or
profits, whether or not there are funds legally available for the payment of
such dividends and whether or not dividends are declared. Dividends will
accumulate to the extent they are not paid on the Dividend Payment Date for the
period to which they relate. The Company will take all actions required or
permitted under The Companies Act 1981 of Bermuda (the "Companies Act") to
permit the payment of dividends on the Series B Preferred Shares. Arrearages of
unpaid dividends ("Accumulated Dividends") will not themselves bear interest or
be added to the liquidation preference of the Series B Preferred Shares.
(b) Pursuant to the terms of the Registration Rights
Agreement, a "Registration Default" will occur
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(i) from 90 days following the Closing Date, if (A) neither
(x) a new shelf registration statement with respect to resales of the
Registrable Securities nor (y) a prospectus supplement to the Company's
existing Registration Statement No. 333-83239 with respect to resales
of the Registrable Securities, which, when filed, becomes effective in
accordance with Rule 424 under the Securities Act (such shelf
registration statement referred to in (x) above or such Registration
Statement No. 333-83239 as supplemented by such prospectus supplement
referred to in (y) above, as applicable, being referred to herein as
the "Shelf Registration Statement"), is effective on or prior to the
date that is 210 days following the Closing Date (the "Effectiveness
Target Date") and (B) the shelf registration statement referred to in
clause (x) above is filed with the SEC after 90 days following the
Closing Date;
(ii) from the Effectiveness Target Date if the Shelf
Registration Statement is not effective on or prior to the
Effectiveness Target Date; and
(iii) if the Shelf Registration Statement has been declared
effective by the SEC and such Shelf Registration Statement ceases to be
effective or to be usable as contemplated by Section 2(b) of the
Registration Rights Agreement at any time during the Shelf Registration
Period (as defined in the Registration Rights Agreement) (without being
succeeded by a post-effective amendment to such Shelf Registration
Statement that cures such failure and that is itself declared
effective) for any period of 10 consecutive Trading Days or for any 20
Trading Days in any 180-day period in connection with resales of
Transfer Restricted Securities (provided, that the Company will have
the option of suspending the effectiveness of the Shelf Registration
Statement, or of notifying holders of Transfer Restricted Securities
that the Shelf Registration Statement shall be deemed not to be
effective, without becoming obligated to pay Preferred Stock Liquidated
Damages for periods of up to a total of 60 days in any calendar year if
the Board of Directors of the Company determines that compliance with
the disclosure obligations necessary to maintain the effectiveness of
the Shelf Registration Statement at such time could reasonably be
expected to have an adverse effect on the Company or a pending
corporate transaction)
(each of the foregoing clauses (i) through (iii), a "Registration Default") and
additional dividends ("Preferred Stock Liquidated Damages") will accrue on the
Series B Preferred Shares, from and including the date of such Registration
Default to but excluding the day on which such Registration Default has been
cured. In the event of each such Registration Default, the Company shall pay
Preferred Stock Liquidated Damages to each holder of Series B Preferred Shares
that are Transfer Restricted Securities at a rate of 0.50% per annum of the
liquidation preference of such Series B Preferred Shares, which shall accrue
from the date of the Registration Default to and including the 30th day
following such Registration Default and increase by 0.50% for each subsequent 30
day period; provided, however, that such Preferred Stock Liquidated Damages may
not accrue at any time at a rate greater than 2.00% per annum of the liquidation
preference of the Series B Preferred Shares. Following the cure of all
Registration Defaults, the accrual of Preferred Stock Liquidated Damages with
respect to such Series B Preferred Shares shall cease (without in any way
limiting the effect of any subsequent Registration Default).
7. Payment of Dividend; Mechanics of Payment; Dividend Rights
Preserved. (a) Dividends on any Series B Preferred Share which are payable, and
are punctually paid or duly provided for, on any Dividend Payment Date shall be
paid in arrears to the person in whose name such Series B Preferred Share (or
one or more predecessor Series B Preferred Shares) is registered at the close of
business on the next preceding February 15, May 15, August 15 and November 15
(each, together with any record date established for the payment of Accumulated
Dividends, a "Dividend Record Date").
(b) No dividend whatsoever shall be declared or paid upon, or
any sum set apart for the
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payment of dividends upon, any outstanding share of the Series B Preferred
Shares with respect to any dividend period unless all dividends for all
preceding dividend periods have been declared and paid, or declared and a
sufficient sum set apart for the payment of such dividends, upon all outstanding
Series B Preferred Shares. Unless full cumulative dividends on all outstanding
Series B Preferred Shares for all past dividend periods shall have been declared
and paid, or declared and a sufficient sum for the payment thereof set apart,
then:
(i) no dividend (other than (A) with respect to Junior Shares
or Parity Shares, a dividend payable solely in any Junior Shares or
Parity Shares, respectively, or (B) with respect to Parity Shares, a
partial dividend paid pro rata on such Parity Shares and the Series B
Preferred Shares) shall be declared or paid upon, or any sum set apart
for the payment of dividends upon, any Junior Shares or Parity Shares,
respectively;
(ii) no other distribution shall be declared or made upon, or
any sum set apart for the payment of any distribution upon, any Junior
Shares or Parity Shares, other than a distribution consisting solely of
Junior Shares or Parity Shares, respectively;
(iii) no Junior Shares or Parity Shares or any warrants,
rights, calls or options exercisable for or convertible into any Parity
Share or Junior Share shall be purchased, redeemed or otherwise
acquired (other than in exchange for other Junior Shares or Parity
Shares, respectively) by the Company or any of its subsidiaries; and
(iv) no monies shall be paid into or set apart or made
available for a sinking or other like fund for the purchase, redemption
or other acquisition of any Junior Shares or Parity Shares or any
warrants, rights, calls or options exercisable for or convertible into
any Parity Share or Junior Share by the Company or any of its
subsidiaries.
Holders of the Series B Preferred Shares will not be entitled
to any dividends, whether payable in cash, property or stock, in excess of the
full cumulative dividends as herein described. In the event that the Company
fails to pay the dividends due for an aggregate of six quarterly payments
(whether or not consecutive), the holders will have the rights and remedies set
forth in Section 8.
(c) Dividends (including Accumulated Dividends) may be paid,
subject to Section 11, (i) in cash, (ii) by delivery of Common Shares or (iii)
through any combination of the foregoing. The Company will notify the Registrar
and make a public announcement no later than the close of business on the tenth
Business Day prior to the Record Date for each dividend as to whether it will
pay such dividend and, if so, the form of consideration it will use to make such
payment.
(d) Any Accumulated Dividends on any Series B Preferred Share
may be paid, subject to Section 11, by the Company in any lawful manner (which
shall include the establishment of a record date not more then 45 days prior to
the payment thereof) not inconsistent with the requirements of any securities
exchange on which the Series B Preferred Shares may be listed, and upon such
notice (which shall precede the record date by at least ten Business Days) as
may be required by such exchange, if, after notice given by the Company to the
Registrar of the proposed payment pursuant to this clause (d), such manner of
payment shall be deemed practicable by the Registrar.
(e) Subject to the foregoing provisions of this Section 7,
each Series B Preferred Share delivered under this Schedule upon registration of
transfer of or in exchange for or in lieu of any other Series B Preferred Share
shall carry the rights to dividends accumulated and unpaid, and to accrue, which
were carried by such other Series B Preferred Share.
(f) The holder of record of a Series B Preferred Share at the
close of business on a
<PAGE> 8
8
Dividend Record Date with respect to the payment of dividends on the Series B
Preferred Shares will be entitled to receive such dividends with respect to such
Series B Preferred Share on the corresponding Dividend Payment Date,
notwithstanding the conversion of such share after such Dividend Record Date and
prior to such Dividend Payment Date. A Series B Preferred Share surrendered for
conversion during the period from the close of business on any Dividend Record
Date to the opening of business of the corresponding Dividend Payment Date must
be accompanied by a payment in cash, Common Shares or a combination thereof,
depending on the method of payment that the Company has chosen to pay such
dividend, in an amount equal to such dividend payable on such Dividend Payment
Date, unless such Series B Preferred Share has been called for redemption on a
redemption date occurring during the period from the close of business on any
Dividend Record Date to the close of business on the Business Day immediately
following the corresponding Dividend Payment Date. The dividend payment with
respect to a Series B Preferred Share called for redemption on a date during the
period from the close of business on any Dividend Record Date to the close of
business on the Business Day immediately following the corresponding Dividend
Payment Date will be payable on such Dividend Payment Date to the record holder
of such share on such Dividend Record Date if such share has been converted
after such Dividend Record Date and prior to such Dividend Payment Date.
Notwithstanding the immediately preceding three sentences of this Section 7(f),
no payment shall be owed or payable to or by any converting holder if the Board
of Directors of the Company shall have elected to defer the dividend payment to
be made on such Dividend Payment Date pursuant to Section 6(a). Fractional
Common Shares will not be issued upon conversion, but in lieu thereof the
Company will pay a cash adjustment in the manner set forth in Section 11(c).
(g) Except as provided with respect to a Provisional
Redemption, no payment or adjustment will be made upon conversion of Series B
Preferred Shares for accumulated and unpaid dividends or for dividends with
respect to the Common Shares issued upon such conversion.
8. Voting Rights. (a) Holders of Series B Preferred Shares
will not be entitled to any voting rights unless (i) required by law or (ii) the
Company has not paid scheduled dividend payments for an aggregate of six
quarterly payments, whether or not consecutive (a "Voting Rights Triggering
Event"). If a Voting Rights Triggering Event occurs while any Series B Preferred
Shares are outstanding, the number of directors constituting the Board of
Directors of the Company will be adjusted to permit the holders of the then
Outstanding Series B Preferred Shares, voting separately and as a class, to
elect such number of members to the Board of Directors of the Company as will
constitute at least 20% of the then existing Board of Directors before such
election (rounded to the nearest whole number), provided, however, that such
number shall be no less than one nor greater than two (the "Series B Preferred
Share Directors"), and the number of members of the Company's Board of Directors
will be immediately and automatically increased by one or two, as the case may
be. The voting rights set forth in the preceding sentence will continue until
such time as all dividends in arrears on the Series B Preferred Shares are paid
in full, at which time the term of any Series B Preferred Share Director shall
terminate. At any time after voting power to elect Directors shall have become
vested and be continuing in the holders of the Series B Preferred Shares
pursuant to the second preceding sentence, or if a vacancy shall exist in the
offices of Series B Preferred Share Directors, the Board of Directors may, and
upon written request of the holders of record of at least 25% of the Outstanding
Series B Preferred Shares addressed to the Chairman of the Board of the Company,
shall, call a special meeting of the holders of the Series B Preferred Shares
for the purpose of electing the Series B Preferred Share Directors that such
holders are entitled to elect. At any meeting held for the purpose of electing
Series B Preferred Share Directors, the presence in person or by proxy of the
holders of at least a majority of the Outstanding Series B Preferred Shares
shall be required to constitute a quorum of such Series B Preferred Shares. Any
vacancy occurring in the office of a Series B Preferred Share Director may be
filled by the remaining Series B Preferred Share Director unless and until such
vacancy shall be filled by the holders of the Series B Preferred Shares. The
Series B Preferred Share Directors shall agree, prior to their election to
office, to resign upon any termination of the right of the holders of Series B
Preferred Shares to vote as a class for Directors as herein provided, and upon
such
<PAGE> 9
9
termination the Series B Preferred Share Directors then in office shall
forthwith resign.
(b) In addition to the voting rights set forth above, the
approval of the holders of at least two-thirds of the then Outstanding Series B
Preferred Shares voting or consenting, as the case may be, as one class, will be
required for the Company to (i) amend the Memorandum of Association, this
Schedule or the Bye-Laws or (ii) so long as the Company owns preferred
partnership interests of Globalstar purchased with the proceeds of the issuance
of Series B Preferred Shares (the "Series B Preferred Partnership Interests"),
to waive any rights under, or agree to the modification of the terms of such
Series B Preferred Partnership Interests, in either case (i) or (ii), so as to
affect adversely the rights, preferences, privileges or voting rights of holders
of the Series B Preferred Shares or authorize the issuance of any additional
Series B Preferred Shares (other than Series B Preferred Shares to be sold
pursuant to the Purchase Agreement); provided, however, that no such
modification or amendment may, without the consent of the holders of each
Outstanding Series B Preferred Share affected thereby, (i) change the Mandatory
Redemption Date, or the due date of any dividend on, any Series B Preferred
Shares, or reduce the liquidation preference or redemption price thereof or the
rate of dividends thereon, or change the place of payment where, or the coin or
currency in which, any Series B Preferred Share or any payment thereon is
payable, or impair the right to institute suit for the enforcement of any such
payment on or after the Mandatory Redemption Date (or on or after other
redemption dates), or adversely affect the rights to convert any Series B
Preferred Share as provided in Section 12, or adversely affect the right to
require the Company to redeem the Series B Preferred Shares as provided in
Section 10, or modify the provisions of this Schedule with respect to the
ranking of the Series B Preferred Shares in a manner adverse to the holders,
(ii) alter the voting rights with respect to the Series B Preferred Stock or
reduce the percentage of the Outstanding Series B Preferred Shares the consent
of whose holders is required for any such modification, or the consent of whose
holders is required for any waiver of compliance with provisions of this
Schedule or (iii) modify any of the provisions of this Section 8 except to
increase any such percentage or to provide that certain other provisions of this
Schedule cannot be modified or waived without the consent of the holder of each
Outstanding Series B Preferred Share affected thereby.
(c) The Company will not authorize or issue any new class of
Senior Shares or any obligation or security convertible or exchangeable into or
evidencing a right to purchase shares of any class or series of Senior Shares,
without the approval of the holders of at least two-thirds of the then
Outstanding Series B Preferred Shares, voting or consenting, as the case may be,
as one class.
(d) Except as set forth in Section 8(c) with respect to Senior
Shares, neither (i) the creation, authorization or issuance of any Junior
Shares, Parity Shares or Senior Shares or (ii) the increase or decrease in the
amount of authorized capital stock of any class, including any preference
shares, shall require the consent of the holders of the Series B Preferred
Shares or shall be deemed to affect adversely the rights, preferences,
privileges, special rights or voting rights of holders of Series B Preferred
Shares. Furthermore, the consent of the holders of Series B Preferred Shares
will not be required for the Company to authorize, create (by way of
reclassification or otherwise) or issue any Parity Shares or any obligation or
security convertible or exchangeable into, or evidencing a right to purchase,
shares of any class or series of Parity Shares.
9. Ranking. (a) The Series B Preferred Shares will, with
respect to dividend rights and rights on liquidation, winding-up and
dissolution, rank (i) senior to all Common Shares (whether issued in one or more
classes) and to each other class of capital stock or series of preference shares
created after December 2, 1999 by the Company, the terms of which do not
expressly provide that it ranks senior to or on a parity with the Series B
Preferred Shares as to dividend rights and rights on liquidation, winding-up and
dissolution of the Company (collectively referred to, together with all Common
Shares (whether issued in one or more classes) of the Company, as "Junior
Shares"); (ii) on a parity with shares of 8% Series A Convertible Redeemable
Preferred Shares due 2011, additional Series B Preferred Shares issued by the
Company and each other class of capital stock or series of preference shares
created after December 2,
<PAGE> 10
10
1999 by the Company, the terms of which expressly provide that such class or
series will rank on a parity with the Series B Preferred Shares as to dividend
rights and rights on liquidation, winding-up and dissolution of the Company
(collectively referred to as "Parity Shares"); and (iii) junior to each class of
capital stock or series of preference shares created after December 2, 1999 in
compliance with Section 8(c) by the Company, the terms of which expressly
provide that such class or series will rank senior to the Series B Preferred
Shares as to dividend rights and rights upon liquidation, winding-up and
dissolution of the Company (collectively referred to as "Senior Shares").
(b) No dividend whatsoever shall be declared or paid upon, or
any sum set apart for the payment of dividends upon, any outstanding share of
the Series B Preferred Shares with respect to any dividend period unless all
dividends for all preceding dividend periods have been declared and paid, or
declared and a sufficient sum set apart for the payment of such dividends, upon
all outstanding Senior Shares.
(c) In the event of any liquidation, dissolution or winding-up
of the Company, whether voluntary or involuntary, the holders of the Series B
Preferred Shares then Outstanding shall be entitled to receive, prior and in
preference to any distribution of any of the assets of the Company to the
holders of Common Shares or Junior Shares by reason of their ownership thereof,
an amount equal to $50 per share for each outstanding Series B Preferred Share,
plus, without duplication, an amount in cash equal to all accumulated and unpaid
dividends (including Preferred Stock Liquidated Damages) thereon to the date
fixed for liquidation, dissolution or winding-up (including an amount equal to a
pro rata dividend for the period from the last Dividend Payment Date to the date
fixed for liquidation, dissolution or winding-up). If upon the occurrence of
such event the assets thus distributed among the holders of Series B Preferred
Shares shall be insufficient to permit the payment to such holders of the full
preferential amount, the entire assets of the Company legally available for
distribution shall be distributed ratably based upon their respective
liquidation preference, among the holders of the Series B Preferred Shares pari
passu with the holders of all Parity Shares. After payment of the full
preferential amount (and, if applicable, an amount equal to a pro rata dividend
to the holders of Outstanding Series B Preferred Shares), such holders shall not
be entitled to any further participation in any distribution of assets of the
Company.
10. Redemption. (a) The Company may redeem, in whole or in
part (the "Provisional Redemption"), at any time prior to December 3, 2002, at
the redemption price of 105.1% of the aggregate liquidation preference of the
Series B Preferred Shares to be redeemed (the "Provisional Redemption Date"), in
the event that the Current Market Value of the Common Stock equals or exceeds
the following Trigger Percentages of the prevailing Conversion Price then in
effect for at least 20 Trading Days in any consecutive 30-day Trading Day period
ending on the Trading Day prior to the date of mailing of the notice of
Provisional Redemption (the "Notice Date"), if redeemed in the 12-month period
ending on the dates set forth below:
<TABLE>
<CAPTION>
Trigger
Year Percentage
---- ----------
<S> <C>
December 1, 2000 170%
December 1, 2001 160%
December 2, 2002 150%
</TABLE>
Upon any Provisional Redemption, the Company will make an additional
payment (the "Dividend Make-Whole Payment") with respect to the Series B
Preferred Shares called for redemption, whether or not such Series B Preferred
Shares are converted into Common Shares between the Notice Date and the
Provisional Redemption Date, in an amount equal to the sum of (i) the present
value of the aggregate
<PAGE> 11
11
amount of dividends that would otherwise have accrued from the Provisional
Redemption Date through December 1, 2002 (the "Dividend Make-Whole Period") and
(ii) the amount of any accumulated and unpaid dividends (including a prorated
dividend for any partial dividend period) and Preferred Stock Liquidated
Damages, if any, to the Provisional Redemption Date. Such present value shall be
calculated using the bond equivalent yield on U.S. Treasury notes or bills
having a remaining term nearest in length to that of the Dividend Make-Whole
Period as of the Notice Date.
(b) The Series B Preferred Shares may be redeemed at any time
commencing on or after December 3, 2002, in whole or from time to time in part,
at the election of the Company (the "Optional Redemption"), at a redemption
price equal to the percentage of the liquidation preference set forth below plus
accumulated and unpaid dividends (including an amount equal to a prorated
dividend for any partial dividend period) and Preferred Stock Liquidated
Damages, if any, to the date of redemption (the "Optional Redemption Date"), if
redeemed in the 12-month period commencing on the dates set forth below:
<TABLE>
<CAPTION>
Date Percentage
- ---- ----------
<S> <C>
December 3, 2002 105.1%
December 1, 2003 103.9%
December 1, 2004 102.6%
December 1, 2005 101.3%
December 1, 2006 and thereafter 100.0%
</TABLE>
(c) The Series B Preferred Shares (if not earlier redeemed or
converted) shall be mandatorily redeemed by the Company on December 1, 2011 (the
"Mandatory Redemption Date" provided, however, that if such date is not a
Business Day, then the Mandatory Redemption Date shall be the next Business
Day), at a redemption price of 100% of the liquidation preference per share plus
accumulated and unpaid dividends and Preferred Stock Liquidated Damages, if any,
to the Mandatory Redemption Date.
(d) The Company may, as provided in Section 11, make any payments in
respect of the liquidation preference due on the Series B Preferred Shares on
the Provisional Redemption Date, the Optional Redemption Date or the Mandatory
Redemption Date, (i) in cash, (ii) by delivery of Common Shares or (iii) through
any combination of the foregoing.
(e) No Provisional Redemption or Optional Redemption may be authorized
or made unless, prior to giving the applicable redemption notice, all
accumulated and unpaid dividends for periods ended prior to the date of such
redemption notice shall have been paid in cash or, subject to Section 11, in
Common Shares.
(f) In the event of a redemption of fewer than all the Series B
Preferred Shares, the Series B Preferred Shares will be chosen for redemption by
the Registrar from the Outstanding Series B Preferred Shares not previously
called for redemption, pro rata or by lot or by such other method as the
Registrar shall deem fair and appropriate, provided that the Company may redeem
(an "Odd-lot Redemption") all shares held by holders of fewer than 100 Series B
Preferred Shares (or by holders that would hold fewer than 100 Series B
Preferred Shares following such redemption) prior to its redemption of other
Series B Preferred Shares. If fewer than all the Series B Preferred Shares
represented by any share certificate are so to be redeemed, (i) the Company
shall issue a new certificate for the shares not redeemed and (ii) if any shares
represented thereby are converted before termination of the conversion right
with respect to such shares, such converted shares shall be deemed (so far as
may be) to be the shares represented by such share certificate that was selected
for redemption. Series B Preferred Shares which have been converted during a
<PAGE> 12
12
selection of Series B Preferred Shares to be redeemed shall be treated by the
Registrar as outstanding for the purpose of such selection but not for the
purpose of the payment of the Redemption Price.
(g) In the event the Company elects to effect a Provisional Redemption
or an Optional Redemption, the Company shall (i) make a public announcement of
the redemption (including a statement of the form of consideration it will use
to effect the same) and (ii) give a redemption notice (the "Redemption Notice")
to the holders not fewer than 30 days nor more than 60 days before the
redemption date (the "Redemption Date"). Whenever a Redemption Notice is
required to be delivered to the holders, such Notice shall provide the
information set forth below and be given by first class mail, postage prepaid to
each holder of Series B Preferred Shares to be redeemed, at such holder's
address appearing in the Series B Preferred Share register. All Redemption
Notices shall identify the Series B Preferred Shares to be redeemed (including
CUSIP number) and shall state:
(i) the Redemption Date;
(ii) the redemption price (the "Redemption Price") and the form of
consideration the Company will use to satisfy the Redemption Price;
(iii) if fewer than all the outstanding Series B Preferred Shares are
to be redeemed, the identification (and, in the case of partial redemption,
the certificate number, the total number of shares represented thereby and the
number of such shares being redeemed on the Redemption Date) of the particular
Series B Preferred Shares to be redeemed;
(iv) that on the Redemption Date the Redemption Price, together with
(subject to Section 10(k)) dividends accumulated and unpaid to the Redemption
Date (including an amount equal to a prorated dividend for any partial
dividend period), will become due and payable upon each such Series B
Preferred Share to be redeemed and that dividends thereon will cease to accrue
on and after said date;
(v) the conversion price (and, if applicable, the amount of cash
payable on conversion pursuant to Section 12(d)(xii)), the date on which the
right to convert Series B Preferred Shares to be redeemed will terminate and
the place or places where such Series B Preferred Shares may be surrendered
for conversion; and
(vi) the place or places where such Series B Preferred Shares are to be
surrendered for payment of the Redemption Price.
The Redemption Notice shall be given by the Company or, at the
Company's request, by the Registrar in the name and at the expense of the
Company; provided that if the Company so requests, it shall provide the
Registrar adequate time, as reasonably determined by the Registrar, to deliver
such notices in a timely fashion.
(h) Prior to any Redemption Date, the Company shall deposit with the
Registrar or with a Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust) an amount of consideration sufficient to pay
the Redemption Price of and (except to the extent payable to a holder of Series
B Preferred Shares on a Dividend Record Date prior to the Redemption Date)
accrued but unpaid dividends (including an amount equal to a prorated dividend
for any partial dividend period) on all the Series B Preferred Shares which are
to be redeemed on that date other than any Series B Preferred Shares called for
redemption on that date which have been converted in Common Shares prior to the
date of such deposit. If any Series B Preferred Share called for redemption is
converted, any consideration deposited with the Registrar or with any Paying
Agent or so segregated and held in trust for the redemption of such Series B
Preferred Share shall (subject to any right of the holder of such Series B
Preferred Share or any predecessor Series B Preferred Share to receive accrued
but unpaid dividends thereon as provided in
<PAGE> 13
13
Section 7(f) or a Dividend Make-Whole Payment as provided in Section 10(a)) be
paid or delivered to the Company upon Company Order or, if then held by the
Company, shall be discharged from such trust.
(i) Notice of redemption having been given as aforesaid, the Series B
Preferred Shares so to be redeemed shall, on the Redemption Date, become due and
payable at the Redemption Price therein specified, and from and after such date
(unless the Company shall default in the payment of the Redemption Price and
accrued but unpaid dividends) dividends on such Series B Preferred Shares shall
cease to accrue and such shares shall cease to be convertible into Common
Shares. Upon surrender of any such Series B Preferred Shares for redemption in
accordance with said notice, such Series B Preferred Shares shall be redeemed,
subject to Section 7(f), by the Company at the Redemption Price, together with
(except to the extent payable to a holder of Series B Preferred Shares on a
Dividend Record Date prior to the Redemption Date) accrued but unpaid dividends
and Preferred Stock Liquidated Damages, if any, to the Redemption Date. If any
Series B Preferred Share called for redemption shall not be so paid upon
surrender thereof for redemption, the Redemption Price thereof, exclusive of
accrued but unpaid dividends, shall, until paid, bear interest from the
Redemption Date at the dividend rate payable on the Series B Preferred Shares.
(j) Any certificate that represents more than one Series B Preferred
Share and is to be redeemed only in part shall be surrendered at any office or
agency of the Company designated for that purpose (with, if the Company or the
Registrar so requires, due endorsement by, or a written instrument of transfer
in form satisfactory to the Company and the Registrar duly executed by, the
holder thereof or his attorney duly authorized in writing), and the Company
shall execute, and the Registrar shall countersign and deliver to the holder of
such Series B Preferred Share without service charge, a new Series B Preferred
Share certificate or certificates, representing any number of Series B Preferred
Shares as requested by such holder, in aggregate amount equal to and in exchange
for the number of shares not redeemed and represented by the Series B Preferred
Share certificate so surrendered.
(k) If a Series B Preferred Share is redeemed subsequent to a Dividend
Record Date with respect to any Dividend Payment Date specified above and on or
prior to such Dividend Payment Date, then any accumulated but unpaid dividends
will be paid to the person in whose name such Series B Preferred Share is
registered at the close of business on such Dividend Record Date.
11. Method of Payments.
The Company may make any payments due on the Series B Preferred Shares,
including dividend payments and redemption payments described in Section 11(b),
(i) in cash, (ii) by delivery of Common Shares or (iii) through any combination
of the foregoing, provided, however, that if Globalstar shall have paid the
scheduled distribution or redemption payment on the Series B Preferred
Partnership Interests corresponding to such payment in cash, the Company shall
make such payment in cash. The Company, at its option, may make dividend
payments notwithstanding the fact that it shall not have received a distribution
on the Series B Preferred Partnership Interests for the corresponding Dividend
Payment Date.
(b) The Company will make each dividend payment, Provisional Redemption
payment (including the associated Dividend Make-Whole Payment), Optional
Redemption payment and Mandatory Redemption payment on the Series B Preferred
Shares in cash, except to the extent it has elected to make all or any portion
of such payment in Common Shares. The Company may not make any such payment, or
any portion thereof (other than a Mandatory Redemption payment, or portion
thereof), in Common Shares unless, on the date of such payment, the Shelf
Registration Statement covers the resale of such shares and is effective or is
no longer required to be effective. If the Company elects to make any such
payment, or any portion thereof, in Common Shares, such shares shall be valued
for such purpose (i) in the case of any dividend payment, Provisional Redemption
payment, Dividend Make-Whole Payment, Optional Redemption payment, or portion
thereof, at 95% of the Average Market Value and (ii) in the case of any
<PAGE> 14
14
Mandatory Redemption payment, or portion thereof (A) if on the date of such
payment the Shelf Registration Statement covers the resale of such shares and is
effective or, pursuant to the Registration Rights Agreement, is no longer
required to be effective, at 100% of the Average Market Value and (B) otherwise,
at 90% of the Average Market Value. If, as a matter of Bermuda law, the Company
is not able to issue Common Shares in payment of the Mandatory Redemption price,
then the Company may, at its option, cause the Series B Preferred Shares to be
converted on the Mandatory Redemption Date into the same number of Common Shares
as the Company could otherwise have issued in satisfaction of the Mandatory
Redemption price, provided that the Company has given the holders of Series B
Preferred Shares notice of the exercise of such option at least 30 days prior to
the Mandatory Redemption Date.
(c) No fractional Common Shares will be delivered to the holders of the
Series B Preferred Shares, but the Company will instead pay a cash adjustment to
each holder that would otherwise be entitled to a fraction of a Common Share.
The amount of such cash adjustment will be determined based on the proceeds
received by the Registrar from the sale of that number of Common Shares, which
the Company will deliver to the Registrar for such purpose, equal to the
aggregate of all such fractions (round up to the nearest whole share). The
Registrar is authorized and directed to sell such shares at the best available
prices and distribute the proceeds to the holders in proportion to their
respective interests therein. The Company will pay the expenses of the Registrar
with respect to such sale, including brokerage commissions.
(d) Any portion of any payment on or in respect of the Series B
Preferred Shares that is declared and not paid through the delivery of Common
Shares will be paid in cash.
(e) Prior to the issuance of any Common Shares pursuant to this Section
11, the Company shall have provided for the listing or quotation of such Common
Shares on the Nasdaq National Market or any other securities exchange in the
United States upon which the Common Shares are then listed or quoted.
12. Conversion. (a) Subject to and upon compliance with the provisions
of this Schedule, at the option of the holder thereof, any Series B Preferred
Share may be converted at any time on or after February 1, 2000 at the
liquidation preference thereof into fully paid and nonassessable Common Shares
(calculated as to each conversion to the nearest 1/100 of a share), at the
Conversion Price, determined as hereinafter provided, in effect at the time of
conversion. Such conversion right shall expire at the close of business on the
Business Day next preceding the Mandatory Redemption Date. In case a Series B
Preferred Share is called for redemption, such conversion right in respect of
the Series B Preferred Share so called shall expire at the close of business on
the Business Day next preceding the Redemption Date, unless the Company defaults
in making the payment due upon redemption.
The price at which Common Shares shall be delivered upon conversion
(herein called the "Conversion Price") shall be initially $25.9569 per Common
Share. The Conversion Price shall be adjusted in certain instances as provided
in Section 12(d) and Section 12(e).
(b) In order to exercise the conversion privilege, the holder of any
Series B Preferred Share to be converted shall surrender the certificate for
such share, duly endorsed or assigned to the Company or in blank, at any office
or agency of the Company maintained for that purpose, accompanied by written
notice to the Company at such office or agency that the holder elects to convert
such share or, if fewer than all the Series B Preferred Shares represented by a
single share certificate are to be converted, the number of shares represented
thereby to be converted. Except as provided in Section 10(a) or 7(f), no payment
or adjustment shall be made upon any conversion on account of any dividends
accrued on the Series B Preferred Shares surrendered for conversion or on
account of any dividends on the Common Shares issued upon conversion. In no
event shall the Company be obligated to pay any converting holder any unpaid
Accumulated Dividends upon conversion.
<PAGE> 15
15
Series B Preferred Shares shall be deemed to have been converted
immediately prior to the close of business on the day of surrender of such
shares for conversion in accordance with the foregoing provisions, and at such
time the rights of the holders of such shares as holders shall cease, and the
person or persons entitled to receive the Common Shares issuable upon conversion
shall be treated for all purposes as the record holder or holders of such Common
Shares at such time. As promptly as practicable on or after the conversion date,
the Company shall issue and shall deliver at such office or agency a certificate
or certificates for the number of full Common Shares issuable upon conversion,
together with payment in lieu of any fraction of a share, as provided in Section
12(c).
In the case of any conversion of fewer than all the Series B Preferred
Shares evidenced by a certificate, upon such conversion the Company shall
execute and the Registrar shall countersign and deliver to the holder thereof,
at the expense of the Company, a new certificate or certificates representing
the number of unconverted Series B Preferred Shares.
(c) No fractional Common Shares shall be issued upon the conversion of
a Series B Preferred Share. If more than one Series B Preferred Share shall be
surrendered for conversion at one time by the same holder, the number of full
Common Shares which shall be issuable upon conversion thereof shall be computed
on the basis of the aggregate number of Series B Preferred Shares so
surrendered. Instead of any fractional Common Share which would otherwise be
issuable upon conversion of any Series B Preferred Share, the Company shall pay
a cash adjustment in respect of such fraction in an amount equal to the same
fraction of the closing price (as defined in Section 12(d)(vii)) per Common
Share at the close of business on the Business Day prior to the day of
conversion.
(d) The conversion price shall be adjusted from time to time by the
Company as follows:
(i) if the Company shall hereafter pay a dividend or make a
distribution to holders of the outstanding Common Shares in Common Shares, the
Conversion Price in effect at the opening of business on the date following
the date fixed for the determination of shareholders entitled to receive such
dividend or other distribution shall be reduced by multiplying such Conversion
Price by a fraction of which the numerator shall be the number of Common
Shares outstanding at the close of business on the Common Share Record Date
(as defined in Section 12(d)(vii)) fixed for such determination and the
denominator shall be the sum of such number of shares and the total number of
shares constituting such dividend or other distribution, such reduction to
become effective immediately after the opening of business on the day
following the Common Share Record Date. If any dividend or distribution of the
type described in this Section 12(d)(i) is declared but not so paid or made,
the Conversion Price shall again be adjusted to the Conversion Price which
would then be in effect if such dividend or distribution had not been
declared;
(ii) if the Company shall offer or issue rights or warrants to holders
of its outstanding Common Shares entitling them to subscribe for or purchase
Common Shares at a price per share less than the Current Market Price (as
defined in Section 12(d)(vii)) on the Common Share Record Date fixed for the
determination of shareholders entitled to receive such rights or warrants, the
Conversion Price shall be adjusted so that the same shall equal the price
determined by multiplying the Conversion Price in effect at the opening of
business on the date after such Common Share Record Date by a fraction of
which the numerator shall be the number of Common Shares outstanding at the
close of business on the Common Share Record Date plus the number of Common
Shares which the aggregate offering price of the total number of Common Shares
subject to such rights or warrants would purchase at such Current Market Price
and of which the denominator shall be the number of Common Shares outstanding
at the close of business on the Common Share Record Date plus the total number
of additional Common Shares subject to such rights or warrants for
subscription or purchase. Such adjustment shall become effective immediately
after the opening of business on the day following the Common Share Record
Date fixed for determination of shareholders entitled to purchase or receive
such rights or warrants. To the extent that
<PAGE> 16
16
Common Shares are not delivered pursuant to such rights or warrants, upon the
expiration or termination of such rights or warrants the Conversion Price
shall again be adjusted to be the Conversion Price which would then be in
effect had the adjustments made upon the issuance of such rights or warrants
been made on the basis of delivery of only the number of Common Shares
actually delivered. If such rights or warrants are not so issued, the
Conversion Price shall again be adjusted to be the Conversion Price which
would then be in effect if such date fixed for the determination of
shareholders entitled to receive such rights or warrants had not been fixed.
In determining whether any rights or warrants entitle the holders to subscribe
for or purchase Common Shares at less than such Current Market Price, and in
determining the aggregate offering price of such Common Shares, there shall be
taken into account any consideration received for such rights or warrants,
with the value of such consideration, if other than cash, to be determined by
the Board of Directors;
(iii) if the outstanding Common Shares shall be subdivided into a
greater number of Common Shares, the Conversion Price in effect at the opening
of business on the day following the day upon which such subdivision becomes
effective shall be proportionately reduced, and, conversely, if the
outstanding Common Shares shall be combined into a smaller number of Common
Shares, the Conversion Price in effect at the opening of business on the day
following the day upon which such combination becomes effective shall be
proportionately increased, such reduction or increase, as the case may be, to
become effective immediately after the opening of business on the day
following the day upon which such subdivision or combination becomes
effective;
(iv) if the Company shall, by dividend or otherwise, distribute to
holders of its Common Shares any class of capital stock of the Company (other
than any dividends or distributions to which Section 12(d)(i) applies) or
evidences of its indebtedness, cash or other assets (including securities, but
excluding any rights or warrants of a type referred to in Section 12(d)(ii)
and dividends and distributions paid exclusively in cash and excluding any
capital stock, evidences of indebtedness, cash or assets distributed upon a
merger or consolidation to which Section 12(e) applies) (the foregoing
hereinafter in this Section 12(d)(iv) called the "Distributed Securities"),
then, in each such case, the Conversion Price shall be reduced so that the
same shall be equal to the price determined by multiplying the Conversion
Price in effect immediately prior to the close of business on the Common Share
Record Date (as defined in Section 12(d)(vii)) with respect to such
distribution by a fraction of which the numerator shall be the Current Market
Price (determined as provided in Section 12(d)(vii)) on such date less the
fair market value (as determined by the Board of Directors, whose
determination shall be conclusive and described in a resolution of the Board
of Directors) on such date of the portion of the Distributed Securities so
distributed applicable to one Common Share and the denominator shall be such
Current Market Price, such reduction to become effective immediately prior to
the opening of business on the day following the Common Share Record Date;
provided, however, that, in the event the then fair market value (as so
determined) of the portion of the Distributed Securities so distributed
applicable to one Common Share is equal to or greater than the Current Market
Price on the Common Share Record Date, in lieu of the foregoing adjustment,
adequate provision shall be made so that each holder of Series B Preferred
Shares shall have the right to receive upon conversion of a Series B Preferred
Share (or any portion thereof) the amount of Distributed Securities such
holder would have received had such holder converted such Series B Preferred
Share (or portion thereof) immediately prior to such Common Share Record Date.
If such dividend or distribution is not so paid or made, the Conversion Price
shall again be adjusted to be the Conversion Price which would then be in
effect if such dividend or distribution had not been declared. If the Board of
Directors determines the fair market value of any distribution for purposes of
this Section 12(d)(iv) by reference to the actual or when issued trading
market for any securities constituting all or part of such distribution, it
must in doing so consider the prices in such market over the same period used
in computing the Current Market Price pursuant to Section 12(d)(vii) to the
extent possible.
Rights or warrants distributed by the Company to holders of Common
Shares entitling the holders thereof to subscribe for or purchase shares of
the Company's capital stock (either initially or under certain
<PAGE> 17
17
circumstances), which rights or warrants, until the occurrence of a specified
event or events ("Dilution Trigger Event"): (A) are deemed to be transferred
with such Common Shares; (B) are not exercisable; and (C) are also issued in
respect of future issuances of Common Shares, shall be deemed not to have been
distributed for purposes of this Section 12(d)(iv) (and no adjustment to the
Conversion Price under this Section 12(d)(iv) shall be required) until the
occurrence of the earliest Dilution Trigger Event, whereupon such rights and
warrants shall be deemed to have been distributed and an appropriate
adjustment to the Conversion Price under this Section 12(d)(iv) shall be made.
If any such rights or warrants, including any such existing rights or warrants
distributed prior to the first issuance of Series B Preferred Shares, are
subject to subsequent events, upon the occurrence of each of which such rights
or warrants shall become exercisable to purchase different securities,
evidences of indebtedness or other assets, then the occurrence of each such
event shall be deemed to be such date of issuance and record date with respect
to new rights or warrants (and a termination or expiration of the existing
rights or warrants, without exercise by the holder thereof). In addition, in
the event of any distribution (or deemed distribution) of rights or warrants,
or any Dilution Trigger Event with respect thereto, that was counted for
purposes of calculating a distribution amount for which an adjustment to the
Conversion Price under this Section 12(d) was made, (1) in the case of any
such rights or warrants which shall all have been redeemed or repurchased
without exercise by any holders thereof, the Conversion Price shall be
readjusted upon such final redemption or repurchase to give effect to such
distribution or Dilution Trigger Event, as the case may be, as though it were
a cash distribution, equal to the per share redemption or repurchase price
received by a holder or holders of Common Shares with respect to such rights
or warrants (assuming such holder had retained such rights or warrants), made
to all holders of Common Shares as of the date of such redemption or
repurchase, and (2) in the case of such rights or warrants which shall have
expired or been terminated without exercise by any holders thereof, the
Conversion Price shall be readjusted as if such rights and warrants had not
been issued.
Notwithstanding any other provision of this Section 12(d)(iv) to the
contrary, rights, warrants, evidences of indebtedness, other securities, cash
or other assets (including, without limitation, any rights distributed
pursuant to any shareholder rights plan) shall be deemed not to have been
distributed for purposes of this Section 12(d)(iv) if the Company makes proper
provision so that each holder of Series B Preferred Shares who converts a
Series B Preferred Share (or any portion thereof) after the date fixed for
determination of shareholders entitled to receive such distribution shall be
entitled to receive upon such conversion, in addition to the Common Shares
issuable upon such conversion, the amount and kind of such distributions that
such holder would have been entitled to receive if such holder had,
immediately prior to such determination date, converted such Series B
Preferred Share into a Common Share.
For purposes of this Section 12(d)(iv) and Sections 12(d)(i) and (ii),
any dividend or distribution to which this Section 12(d)(iv) is applicable
that also includes Common Shares, or rights or warrants to subscribe for or
purchase Common Shares to which Section 12(d)(ii) applies (or both), shall be
deemed instead to be (A) a dividend or distribution of the evidences of
indebtedness, assets, shares of capital stock, rights or warrants other than
such Common Shares or rights or warrants to which Section 12(d)(ii) applies
(and any Conversion Price reduction required by this Section 12(d)(iv) with
respect to such dividend or distribution shall then be made) immediately
followed by (B) a dividend or distribution of such Common Shares or such
rights or warrants (and any further Conversion Price reduction required by
Sections 12(d)(i) or 12(d)(ii) with respect to such dividend or distribution
shall then be made), except that (1) the Common Share Record Date of such
dividend or distribution shall be substituted as "the date fixed for the
determination of stockholders entitled to receive such dividend or other
distribution", "the Common Share Record Date fixed for such determination" and
"the Common Share Record Date" within the meaning of Section 12(d)(i) and as
"the date fixed for the determination of shareholders entitled to receive such
rights or warrants", "the Common Share Record Date fixed for the determination
of the shareholders entitled to receive such rights or warrants" and "such
Common Share Record Date" for purposes of Section 12(d)(ii), and (2) any
Common Shares included in such dividend or distribution shall not be deemed
"outstanding at the close of business on the date fixed for such
determination" for the purposes of Section 12(d)(i).
<PAGE> 18
18
(v) If the Company shall, by dividend or otherwise, distribute to
holders of its Common Shares cash (excluding any cash that is distributed upon
a merger or consolidation to which Section 12(e) applies or as part of a
distribution referred to in Section 12(d)(iv)) in an aggregate amount that,
combined together with (A) the aggregate amount of any other such
distributions to holders of its Common Shares made exclusively in cash within
the 12 months preceding the date of payment of such distribution, and in
respect of which no adjustment pursuant to this Section 12(d)(v) has been
made, and (B) the aggregate of any cash plus the fair market value (as
determined by the Board of Directors, whose determination shall be conclusive
and described in a resolution of the Board of Directors) of consideration
payable in respect of any tender offer by the Company for all or any portion
of the Common Shares concluded within the 12 months preceding the date of
payment of such distribution, and in respect of which no adjustment pursuant
to Section 12(d)(vi) has been made, exceeds 20% of the product of the Current
Market Price (determined as provided in Section 12(d)(vii)) on the Common
Share Record Date with respect to such distribution times the number of Common
Shares outstanding on such date, then, and in each such case, immediately
after the close of business on such date, the Conversion Price shall be
reduced so that the same shall equal the price determined by multiplying the
Conversion Price in effect immediately prior to the close of business on such
Common Share Record Date by a fraction (1) the numerator of which shall be
equal to the Current Market Price on the Common Share Record Date less an
amount equal to the quotient of (x) the excess of such combined amount over
such 20% and (y) the number of Common Shares outstanding on the Common Share
Record Date and (2) the denominator of which shall be equal to the Current
Market Price on such Common Share Record Date; provided, however, that, if the
portion of the cash so distributed applicable to one Common Share is equal to
or greater than the Current Market Price of the Common Shares on the Common
Share Record Date, in lieu of the foregoing adjustment, adequate provision
shall be made so that each holder of Series B Preferred Shares shall have the
right to receive upon conversion of a Series B Preferred Share (or any portion
thereof) the amount of cash such holder would have received had such holder
converted such Series B Preferred Share (or portion thereof) immediately prior
to such Common Share Record Date. If such dividend or distribution is not so
paid or made, the Conversion Price shall again be adjusted to be the
Conversion Price which would then be in effect if such dividend or
distribution had not been declared. Any cash distribution to holders of Common
Shares as to which the Company makes the election permitted by Section
12(d)(xii) and as to which the Company has complied with the requirements of
such Section 12(d)(xii) shall be treated as not having been made for all
purposes of this Section 12(d)(v).
(vi) if a tender offer made by the Company or any of its subsidiaries
for all or any portion of the Common Shares expires and such tender offer (as
amended upon the expiration thereof) requires the payment to shareholders
(based on the acceptance (up to any maximum specified in the terms of the
tender offer) of Purchased Shares) of an aggregate consideration having a fair
market value (as determined by the Board of Directors, whose determination
shall be conclusive and described in a resolution of the Board of Directors)
that, combined together with (A) the aggregate of the cash plus the fair
market value (as determined by the Board of Directors, whose determination
shall be conclusive and described in a resolution of the Board of Directors),
as of the expiration of such tender offer, of consideration payable in respect
of any other tender offers, by the Company or any of its subsidiaries for all
or any portion of the Common Shares expiring within the 12 months preceding
the expiration of such tender offer and in respect of which no adjustment
pursuant to this Section 12(d)(vi) has been made and (B) the aggregate amount
of any distributions to all holders of the Common Shares made exclusively in
cash within 12 months preceding the expiration of such tender offer and in
respect of which no adjustment pursuant to Section 12(d)(v) has been made,
exceeds 20% of the product of the Current Market Price (determined as provided
in Section 12(d)(vii)) as of the last time (the "Expiration Time") tenders
could have been made pursuant to such tender offer (as it may be amended)
times the number of Common Shares outstanding (including any tendered shares)
at the Expiration Time, then, and in each such case, immediately prior to the
opening of business on the day after the date of the Expiration Time,
<PAGE> 19
19
the Conversion Price shall be adjusted so that the same shall equal the price
determined by multiplying the Conversion Price in effect immediately prior to
the close of business on the date of the Expiration Time by a fraction of
which the numerator shall be the number of Common Shares outstanding
(including any tendered shares) at the Expiration Time multiplied by the
Current Market Price of the Common Shares on the Trading Day next succeeding
the Expiration Time and the denominator shall be the sum of (x) the fair
market value (determined as aforesaid) of the aggregate consideration payable
to shareholders based on the acceptance (up to any maximum specified in the
terms of the tender offer) of all shares validly tendered and not withdrawn as
of the Expiration Time (the shares deemed so accepted, up to any such maximum,
being referred to as the "Purchased Shares") and (y) the product of the number
of Common Shares outstanding (less any Purchased Shares) at the Expiration
Time and the Current Market Price of the Common Shares on the Trading Day next
succeeding the Expiration Time, such reduction (if any) to become effective
immediately prior to the opening of business on the day following the
Expiration Time. If the Company is obligated to purchase shares pursuant to
any such tender offer, but the Company is permanently prevented by applicable
law from effecting any such purchases or all such purchases are rescinded, the
Conversion Price shall again be adjusted to be the Conversion Price which
would then be in effect if such tender offer had not been made. If the
application of this Section 12(d)(vi) to any tender offer would result in an
increase in the Conversion Price, no adjustment shall be made for such tender
offer under this Section 12(d)(vi).
(vii) For purposes of this Section 12(d), the following terms shall
have the meaning indicated:
"closing price" with respect to any securities on any day
means the closing price on such day or, if no such sale takes place on
such day, the average of the reported high and low prices on such day,
in each case on the Nasdaq National Market or the New York Stock
Exchange, as applicable, or, if such security is not listed or admitted
to trading on such national market or exchange, on the principal
national securities exchange or quotation system in the United States
on which such security is quoted or listed or admitted to trading, or,
if not quoted or listed or admitted to trading on any national
securities exchange or quotation system in the United States, the
average of the high and low prices of such security on the
over-the-counter market on the day in question as reported by the
National Quotation Bureau Incorporated or a similar generally accepted
reporting service in the United States, or, if not so available, in
such manner as furnished by any New York Stock Exchange member firm
selected from time to time by the Board of Directors for that purpose,
or a price determined in good faith by the Board of Directors, whose
determination shall be conclusive and described in a resolution of the
Board of Directors.
"Common Share Record Date" shall mean, with respect to any
dividend, distribution or other transaction or event in which the
holders of Common Shares have the right to receive any cash, securities
or other property or in which the Common Shares (or other applicable
security) is exchanged for or converted into any combination of cash,
securities or other property, the date fixed for determination of
shareholders entitled to receive such cash, securities or other
property (whether such date is fixed by the Board of Directors or by
statute, contract or otherwise).
"Current Market Price" means the average of the daily closing
prices per Common Share for the 10 consecutive Trading Days immediately
prior to the date in question; provided, however, that (A) if the "ex"
date (as hereinafter defined) for any event (other than the issuance or
distribution requiring such computation) that requires an adjustment to
the Conversion Price pursuant to Section 12(d)(i), (ii), (iii), (iv),
(v) or (vi) occurs during such 10 consecutive Trading Days, the closing
price for each Trading Day prior to the "ex" date for such other event
shall be adjusted by multiplying such closing price by the same
fraction by which the Conversion Price is so required to be adjusted as
a result of such other event, (B) if the "ex" date for any event (other
than the issuance or distribution requiring such computation) that
requires an adjustment to the Conversion Price pursuant to Section
12(d)(i), (ii), (iii), (iv), (v) or (vi) occurs on or after the "ex"
<PAGE> 20
20
date for the issuance or distribution requiring such computation and
prior to the day in question, the closing price for each Trading Day on
and after the "ex" date for such other event shall be adjusted by
multiplying such closing price by the reciprocal of the fraction by
which the Conversion Price is so required to be adjusted as a result of
such other event and (C) if the "ex" date for the issuance or
distribution requiring such computation is prior to the day in
question, after taking into account any adjustment required pursuant to
clause (A) or (B) of this proviso, the closing price for each Trading
Day on or after such "ex" date shall be adjusted by adding thereto the
amount of any cash and the fair market value (as determined by the
Board of Directors in a manner consistent with any determination of
such value for purposes of Section 12(d)(iv) or (v), whose
determination shall be conclusive and described in a resolution of the
Board of Directors) of the evidences of indebtedness, shares of capital
stock or assets being distributed applicable to one Common Share as of
the close of business on the day before such "ex" date. For purposes of
any computation under Section 12(d)(vi), the Current Market Price on
any date shall be deemed to be the average of the daily closing prices
per Common Share for such day and the next two succeeding Trading Days;
provided, however, that, if the "ex" date for any event (other than the
tender offer requiring such computation) that requires an adjustment to
the Conversion Price pursuant to Section 12(d)(i), (ii), (iii), (iv),
(v) or (vi) occurs on or after the Expiration Time for the tender or
exchange offer requiring such computation and prior to the day in
question, the closing price for each Trading Day on and after the "ex"
date for such other event shall be adjusted by multiplying such closing
price by the reciprocal of the fraction by which the Conversion Price
is so required to be adjusted as a result of such other event. For
purposes of this paragraph, the term "ex" date (1) when used with
respect to any issuance or distribution, means the first date on which
the Common Shares trade regular way on the relevant exchange or in the
relevant market from which the closing price was obtained without the
right to receive such issuance or distribution, (2) when used with
respect to any subdivision or combination of Common Shares, means the
first date on which the Common Shares trade regular way on such
exchange or in such market after the time at which such subdivision or
combination becomes effective and (3) when used with respect to any
tender or exchange offer means the first date on which the Common
Shares trade regular way on such exchange or in such market after the
Expiration Time of such offer. Notwithstanding the foregoing, whenever
successive adjustments to the Conversion Price are called for pursuant
to this Section 12(d), such adjustments shall be made to the Current
Market Price as may be necessary or appropriate to effectuate the
intent of this Section 12(d) and to avoid unjust or inequitable
results, as determined in good faith by the Board of Directors.
"fair market value" shall mean the amount which a willing
buyer would pay a willing seller in an arm's-length transaction.
(viii) No adjustment in the Conversion Price shall be required unless
such adjustment would require an increase or decrease of at least 1% in such
price; provided, however, that any adjustments which by reason of this Section
12(d)(viii) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment. All calculations under this Section
12 shall be made by the Company and shall be made to the nearest cent. No
adjustment need be made for a change in the par value or no par value of the
Common Shares.
(ix) Whenever the Conversion Price is adjusted as herein provided, the
Company shall promptly file with the Registrar an Officers' Certificate
setting forth the Conversion Price after such adjustment and setting forth a
brief statement of the facts requiring such adjustment. Promptly after
delivery of such certificate, the Company shall prepare a notice of such
adjustment of the Conversion Price setting forth the adjusted Conversion Price
and the date on which each adjustment becomes effective and shall mail such
notice of such adjustment of the Conversion Price to each holder of Series B
Preferred Shares at such holder's last address appearing on the register of
holders maintained for that purpose within 20 days
<PAGE> 21
21
of the effective date of such adjustment. Failure to deliver such notice shall
not affect the legality or validity of any such adjustment.
(x) In any case in which this Section 12(d) provides that an adjustment
shall become effective immediately after a Common Share Record Date for an
event, the Company may defer until the occurrence of such event issuing to the
holder of any Series B Preferred Share converted after such Common Share
Record Date and before the occurrence of such event the additional Common
Shares issuable upon such conversion by reason of the adjustment required by
such event over and above the Common Shares issuable upon such conversion
before giving effect to such adjustment.
(xi) For purposes of this Section 12(d), the number of Common Shares at
any time outstanding shall not include shares held in the treasury of the
Company. The Company shall not pay any dividend or make any distribution on
Common Shares held in the treasury of the Company.
(xii) In lieu of making any adjustment to the Conversion Price pursuant
to Section 12(d)(v), the Company may elect to reserve an amount of cash for
distribution to the holders of Series B Preferred Shares upon the conversion
of the Series B Preferred Shares so that any such holder converting Series B
Preferred Shares will receive upon such conversion, in addition to the Common
Shares and other items to which such holder is entitled, the full amount of
cash which such holder would have received if such holder had, immediately
prior to the Common Share Record Date for such distribution of cash, converted
its Series B Preferred Shares into Common Shares, together with any interest
accrued with respect to such amount, in accordance with this Section
12(d)(xii). The Company may make such election by providing an Officers'
Certificate to the Registrar to such effect on or prior to the payment date
for any such distribution and depositing with the Registrar on or prior to
such date an amount of cash equal to the aggregate amount that the holders of
Series B Preferred Shares would have received if such holders had, immediately
prior to the Common Share Record Date for such distribution, converted all the
Series B Preferred Shares into Common Shares. Any such funds so deposited by
the Company with the Registrar shall be invested by the Registrar in
unconditional U.S. Government obligations with a maturity not more than three
months from the date of issuance. Upon conversion of Series B Preferred Shares
by a holder thereof, such holder shall be entitled to receive, in addition to
the Common Shares issuable upon conversion, an amount of cash equal to the
amount such holder would have received if such holder had, immediately prior
to the Common Share Record Date for such distribution, converted its Series B
Preferred Shares into Common Shares, along with such holder's pro rata share
of any accrued interest earned as a consequence of the investment of such
funds. Promptly after making an election pursuant to this Section 12(d)(xii),
the Company shall give or shall cause to be given notice to all holders of
Series B Preferred Shares of such election, which notice shall state the
amount of cash per Series B Preferred Share such holders shall be entitled to
receive (excluding interest) upon conversion of the Series B Preferred Shares
as a consequence of the Company having made such election.
(e) Subject to Section 13, in case of any consolidation of the Company
with, or merger of the Company into, any other corporation, or in case of any
merger of another corporation into the Company (other than a merger which does
not result in any reclassification, conversion, exchange or cancelation of
outstanding shares of Common Shares of the Company), or in case of any sale,
conveyance or transfer of all or substantially all the assets of the Company,
the holder of each Series B Preferred Share then outstanding shall have the
right thereafter, during the period such Series B Preferred Share shall be
convertible as specified in Section 12(a), to convert such Series B Preferred
Share only into the kind and amount of securities, cash and other property
receivable upon such consolidation, merger, conveyance or transfer by a holder
of the number of shares of Common Shares of the Company into which such Series B
Preferred Share might have been converted immediately prior to such
consolidation, merger, conveyance or transfer, assuming such holder of Common
Shares of the Company failed to exercise his rights of election, if any, as to
the kind or amount of securities, cash and other property receivable upon such
consolidation, merger, conveyance or transfer (provided that, if the kind or
amount of securities, cash and
<PAGE> 22
22
other property receivable upon such consolidation, merger, conveyance or
transfer is not the same for each Common Share of the Company in respect of
which such rights of election shall not have been exercised ("nonelecting
share"), then for the purpose of this Section 12 the kind and amount of
securities, cash and other property receivable upon such consolidation, merger,
conveyance or transfer by each nonelecting share shall be deemed to be the kind
and amount so receivable per share by a plurality of the nonelecting shares).
Such securities shall provide for adjustments which, for events subsequent to
the effective date of the triggering event, shall be as nearly equivalent as may
be practicable to the adjustments provided for in this Section 12. The above
provisions of this Section 12 shall similarly apply to successive
consolidations, mergers, conveyances or transfers.
(f) In case:
(i) the Company shall declare a dividend (or any other distribution) on
its Common Shares payable otherwise than in cash out of its earned surplus; or
(ii) the Company shall authorize the granting to all holders of its
Common Shares of rights or warrants to subscribe for or purchase any shares of
capital stock of any class or of any other rights; or
(iii) of any reclassification of the Common Shares of the Company
(other than a subdivision or combination of its outstanding Common Shares), or
of any consolidation or merger to which the Company is a party and for which
approval of any shareholders of the Company is required, or the sale,
conveyance or transfer of all or substantially all the assets of the Company;
or
(iv) of the voluntary or involuntary dissolution, liquidation or
winding-up of the Company;
then the Company shall cause to be filed with the Registrar and at each office
or agency maintained for the purpose of conversion of Series B Preferred Shares,
and shall cause to be mailed to all holders at their last addresses as they
shall appear in the Series B Preferred Shares register, at least 20 Business
Days (or 10 Business Days in any case specified in clause (i) or (ii) above)
prior to the applicable date hereinafter specified, a notice stating (x) the
date on which a record is to be taken for the purpose of such dividend,
distribution, rights or warrants, or, if a record is not to be taken, the date
as of which the holders of Common Shares of record to be entitled to such
dividend, distribution, rights or warrants are to be determined or (y) the date
on which such reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding-up is expected to become effective, and the
date as of which it is expected that holders of Common Shares of record shall be
entitled to exchange their Common Shares for securities, cash or other property
deliverable upon such reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding-up. Failure to give the notice required by
this Section 12(f) or any defect therein shall not affect the legality or
validity of any dividend, distribution, right, warrant, reclassification,
consolidation, merger, sale, transfer, dissolution, liquidation or winding-up,
or the vote upon any such action.
(g) The Company shall at all times reserve and keep available, free
from preemptive rights, out of its authorized but unissued Common Shares, for
the purpose of effecting the conversion of Series B Preferred Shares, the full
number of Common Shares then issuable upon the conversion of all outstanding
Series B Preferred Shares.
(h) The Company will pay any and all taxes that may be payable in
respect of the issue or delivery of Common Shares on conversion of Series B
Preferred Shares pursuant hereto. The Company shall not, however, be required to
pay any tax which may be payable in respect of any transfer involved in the
issue and delivery of Common Shares in a name other than that of the holder of
the Series B Preferred Share or Series B Preferred Shares to be converted, and
no such issue or delivery shall be made unless and until the Person requesting
such issue has paid to the Company the amount of any such tax, or has
<PAGE> 23
23
established to the satisfaction of the Company that such tax has been paid or is
not payable.
13. Consolidation, Merger, Conveyance or Transfer. Without the vote or
consent of the holders of a majority of the then Outstanding Series B Preferred
Shares, the Company may not consolidate or merge with or into, or sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of its
assets to, any person unless (a) the entity formed by such consolidation or
merger (if other than the Company) or to which such sale, assignment, transfer,
lease, conveyance or other disposition shall have been made (in any such case,
the "resulting entity") is a corporation organized and existing under the laws
of Bermuda, the United States or any State thereof or the District of Columbia;
(b) if the Company is not the resulting entity, the Series B Preferred Shares
are converted into or exchanged for and become shares of such resulting entity,
having in respect of such resulting entity the same (or more favorable) powers,
preferences and relative, participating, optional or other special rights that
the Series B Preferred Shares had immediately prior to such transaction; (c)
immediately after giving effect to such transaction, no Voting Rights Triggering
Event has occurred and is continuing and (d) the Company shall have delivered to
the Registrar an Officers' Certificate and an opinion of counsel, each stating
that such consolidation, merger, conveyance or transfer complies with this
Section 13 and that all conditions precedent herein provided for relating to
such transaction have been complied with.
14. SEC Reports; Reports by Company. So long as any Series B Preferred
Shares are outstanding, the Company shall file with the SEC and, within 15 days
after it files them with the SEC, with the Registrar and, if requested, furnish
to the holders of Series B Preferred Shares all annual, quarterly and current
reports and the information, documents, and other reports that the Company is
required to file with the SEC pursuant to Section 13(a) or 15(d) of the Exchange
Act ("SEC Reports"). In the event the Company is not required or shall cease to
be required to file SEC Reports pursuant to the Exchange Act, the Company will
nevertheless file such reports with the SEC (unless the SEC will not accept such
a filing). Whether or not required by the Exchange Act to file SEC Reports with
the SEC, so long as any Series B Preferred Shares are Outstanding, the Company
will furnish or cause to be furnished copies of the SEC Reports to the holders
of Series B Preferred Shares at the time the Company is required to make such
information available to the Registrar and to prospective investors who request
it in writing. In addition, the Company has agreed that, for so long as any
Series B Preferred Shares remain outstanding, it will furnish to the holders and
to securities analysts and prospective investors, upon their request, the
information required to be delivered pursuant to Rule 144A(d)(4) under
Securities Act.
15. Definitions. For purposes of this Schedule, the following terms
shall have the meaning set forth below:
"Accumulated Dividends" has the meaning set forth in Section 6(a).
"Agent Members" has the meaning set forth in Section 4(c).
"Average Market Value" of the Common Shares means the arithmetic
average of the Current Market Value of the Common Shares for the ten Trading
Days ending on the fifth Business Day prior to (i) in the case of the payment of
any dividend, the Record Date for such dividend and (ii) in the case of any
other payment, the date of such payment.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in The City of New York
are authorized or obligated by law or executive order to be closed.
"Bye-Laws" has the meaning set forth in the Recitals.
"Closing Date" means any Closing Date under the Purchase Agreement.
<PAGE> 24
24
"closing price" has the meaning set forth in Section 12(d)(vii).
"Common Share Record Date" has the meaning set forth in Section
12(d)(vii).
"Common Shares" means common shares of the Company, par value $1.00 per
share.
"Companies Act" has the meaning set forth in Section 6(a).
"Company" has the meaning set forth in the Recitals.
"Company Order" means a written request or order signed in the name of
the Company by its Chairman of the Board, its President or a Vice President and
by its Treasurer, an Assistant Treasurer, its Secretary or an Assistant
Secretary.
"Conversion Agent" has the meaning set forth in Section 5(a).
"Conversion Price" has the meaning set forth in Section 12(a).
"Current Market Price" has the meaning set forth in Section 12(d)(vii).
"Current Market Value" of the Common Shares means the average of the
high and low sale prices of the Common Shares as reported on the Nasdaq National
Market or such other SEC-recognized national securities exchange or trading
system which the Company may from time to time designate, upon which the
greatest number of the Common Shares are then listed or traded, for the Trading
Day in question.
"Depositary" has the meaning set forth in Section 4(b).
"Dilution Trigger Event" has the meaning set forth in Section
12(d)(iv).
"Distributed Securities" has the meaning set forth in Section
12(d)(iv).
"Dividend Make-Whole Payment" has the meaning set forth in Section
10(a).
"Dividend Make-Whole Period" has the meaning set forth in Section
10(a).
"Dividend Payment Date" means each March 1, June 1, September 1 and
December 1; provided, however, that if such date shall not be a Business Day,
then such date shall be the next Business Day.
"Dividend Record Date" has the meaning set forth in Section 7(a).
"DTC" has the meaning set forth in Section 4(b).
"Effectiveness Target Date" has the meaning set forth in Section
6(b)(i).
"Exchange Act" means the Securities Exchange Act of 1934.
"Expiration Time" has the meaning set forth in Section 12(d)(vi).
"fair market value" has the meaning set forth in Section 12(d)(vii).
"Global Series B Preferred Share" has the meaning set forth in Section
4(b).
<PAGE> 25
25
"Global Shares Legend" has the meaning set forth in Section 4(b).
"Globalstar" means Globalstar, L.P., a Delaware limited partnership.
"Initial Purchasers" means Bear, Stearns & Co. Inc., Banc of America
Securities LLC, C.E. Unterberg, Towbin and Lehman Brothers Inc.
"Junior Shares" has the meaning set forth in Section 9(a).
"Mandatory Redemption Date" has the meaning set forth in Section 10(c).
"Memorandum of Association" has the meaning set forth in the Recitals.
"nonelecting share" has the meaning set forth in Section 12(e).
"Notice Date" has the meaning set forth in Section 10(a).
"Odd-lot Redemption" has the meaning set forth in Section 10(f).
"Officers' Certificate" means a certificate of the Company signed in
the name of the Company by its Chairman of the Board, its President or a Vice
President and by its Treasurer, an Assistant Treasurer, its Secretary or an
Assistant Secretary.
"Optional Redemption" has the meaning set forth in Section 10(b).
"Optional Redemption Date" has the meaning set forth in Section 10(b).
"Outstanding" means when used with respect to Series B Preferred Shares
means, as of the date of determination, all Series B Preferred Shares
theretofore authenticated and delivered under this Schedule, except (a) Series B
Preferred Shares theretofore converted into Common Shares in accordance with
Section 12 and Series B Preferred Shares theretofore canceled by the Registrar
or delivered to the Registrar for cancelation; (b) Series B Preferred Shares for
whose payment or redemption money in the necessary amount has been theretofore
deposited with the Registrar or any Paying Agent (other than the Company) in
trust or set aside and segregated in trust by the Company (if the Company shall
act as its own Paying Agent) for the holders of such Series B Preferred Shares;
provided that, if such Series B Preferred Shares are to be redeemed, notice of
such redemption has been duly given pursuant to this Schedule or provision
therefor satisfactory to the Registrar has been made; and (c) Series B Preferred
Shares (x) that are mutilated, destroyed, lost or stolen which the Company has
decided to pay or (y) in exchange for or in lieu of which other Series B
Preferred Shares have been authenticated and delivered pursuant to this
Schedule; provided, however, that, in determining whether the holders of the
Series B Preferred Shares have given any request, demand, authorization,
direction, notice, consent or waiver or taken any other action hereunder, Series
B Preferred Shares owned by the Company or any other obligor upon the Series B
Preferred Shares or any affiliate (other than in the case of Sections 8(b) and
8(c), Loral Space & Communications Ltd. and its subsidiaries) of the Company or
of such other obligor shall be disregarded and deemed not to be Outstanding,
except that, in determining whether the Registrar shall be protected in relying
upon any such request, demand, authorization, direction, notice, consent, waiver
or other action, only Series B Preferred Shares which the Registrar has actual
knowledge of being so owned shall be so disregarded. Series B Preferred Shares
so owned which have been pledged in good faith may be regarded as Outstanding if
the pledgee establishes to the satisfaction of the Registrar the pledgee's right
so to act with respect to such Series B Preferred Shares and that the pledgee is
not the Company or any other obligor upon the Series B Preferred Shares or any
affiliate of the Company or of such other obligor.
<PAGE> 26
26
"Parity Shares" has the meaning set forth in Section 9(a).
"Paying Agent" has the meaning set forth in Section 5(a).
"Preferred Stock Liquidated Damages" has the meaning set forth in
Section 6(b).
"Provisional Redemption" has the meaning set forth in Section 10(a).
"Provisional Redemption Date" has the meaning set forth in Section
10(a).
"Purchase Agreement" means the Purchase Agreement dated December 2,
1999, among the Company, Globalstar and the Initial Purchasers.
"Purchased Shares" has the meaning set forth in Section 12(d)(vi).
"QIBs" has the meaning set forth in Section 4(a).
"Redemption Date" has the meaning set forth in Section 10(g).
"Redemption Notice" has the meaning set forth in Section 10(g).
"Redemption Price" has the meaning set forth in Section 10(g).
"Registrar" has the meaning set forth in Section 3.
"Registrable Securities" has the meaning set forth in Section 5(c).
"Registration Default" has the meaning set forth in Section 6(b).
"Registration Rights Agreement" means the Registration Rights Agreement
dated as of December 8, 1999, among the Company, Globalstar and the Initial
Purchasers.
"Restricted Series B Preferred Shares" has the meaning set forth in
Section 4(d).
"Restricted Shares Legend" has the meaning set forth in Section 4(a).
"resulting entity" has the meaning set forth in Section 13.
"Rule 144A" has the meaning set forth in Section 4(a).
"SEC" means the Securities and Exchange Commission, as from time to
time constituted, created under the Exchange Act, or, if at any time after the
adoption of this Schedule such commission is not existing and performing the
duties now assigned to it, then the body performing such duties at such time.
"SEC Reports" has the meaning set forth in Section 14.
"Securities Act" has the meaning set forth in Section 4(a).
"Senior Shares" has the meaning set forth in Section 9(a).
"Series B Preferred Partnership Interests" means the 9% Series B
Convertible Redeemable
<PAGE> 27
27
Preferred Partnership Interests of Globalstar purchased by the Company with the
proceeds of the issuance of the Series B Preferred Shares.
"Series B Preferred Share Directors" has the meaning set forth in
Section 8(a).
"Series B Preferred Shares" has the meaning set forth in Section 1.
"Shelf Registration Statement" has the meaning set forth in Section
6(b)(i).
"Trading Day" means any Business Day on which the Common Shares are
traded on a national, SEC-recognized exchange or trading system.
"Transfer Restricted Securities" means each Registrable Security until
the earlier of (A) the second anniversary of the last Closing Date pursuant to
the Purchase Agreement and (B) such time as (1) such Registrable Security shall
no longer constitute a restricted security for purposes of Rule 144(k) of the
Securities Act or (2) such Registrable Security has been sold pursuant to the
Shelf Registration Statement.
"Voting Rights Triggering Event" has the meaning set forth in Section
8(a).
IN WITNESS WHEREOF, the Company has caused this Schedule to be duly
executed by Eric J. Zahler, Vice President of the Company, and attested by Avi
Katz, Vice President and Secretary of the Company, this 8th day of December,
1999.
GLOBALSTAR TELECOMMUNICATIONS
LIMITED
by: /s/ Eric J. Zahler
-------------------------------
Name: Eric J. Zahler
Title: Vice President
ATTEST:
by: /s/ Avi Katz
---------------------------------
Name: Avi Katz
Title: Vice President and
Secretary
<PAGE> 28
EXECUTION COPY
EXHIBIT A
FACE OF SECURITY
[Restricted Shares Legend (include if Security is not registered under the U.S.
Securities Act of 1933): THE SECURITY EVIDENCED HEREBY (OR ITS PREDECESSOR) (AND
(1) THE COMMON STOCK INTO WHICH THIS SECURITY IS CONVERTIBLE AND (2) THE COMMON
STOCK ISSUABLE IN PAYMENT OF DIVIDENDS OR REDEMPTION OBLIGATIONS ON THIS
SECURITY) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER
SECTION 5 OF THE UNITED STATES SECURITIES ACT OF 1933 (THE "SECURITIES ACT") AND
MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF
SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THE
SECURITY EVIDENCED HEREBY (AND (1) THE COMMON STOCK INTO WHICH THIS SECURITY IS
CONVERTIBLE AND (2) THE COMMON STOCK ISSUABLE IN PAYMENT OF DIVIDENDS OR
REDEMPTION OBLIGATIONS ON THIS SECURITY) IS HEREBY NOTIFIED THAT THE SELLER MAY
BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES
ACT PROVIDED BY RULE 144A THEREUNDER (OTHER THAN WITH RESPECT TO THE COMMON
STOCK). THE HOLDER OF THE SECURITY EVIDENCED HEREBY (AND (1) THE COMMON STOCK
INTO WHICH THIS SECURITY IS CONVERTIBLE AND (2) THE COMMON STOCK ISSUABLE IN
PAYMENT OF DIVIDENDS OR REDEMPTION OBLIGATIONS ON THIS SECURITY) AGREES FOR THE
BENEFIT OF THE COMPANY THAT (A) SUCH SECURITY (AND (1) THE COMMON STOCK INTO
WHICH THIS SECURITY IS CONVERTIBLE AND (2) THE COMMON STOCK ISSUABLE IN PAYMENT
OF DIVIDENDS OR REDEMPTION OBLIGATIONS ON THIS SECURITY) MAY BE RESOLD, PLEDGED
OR OTHERWISE TRANSFERRED, ONLY (1) (a) OTHER THAN WITH RESPECT TO THE COMMON
STOCK, TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT
PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL
BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (b) TO AN
INSTITUTIONAL "ACCREDITED INVESTOR" AS DEFINED IN RULE 501(a)(1), (2), (3) OR
(7) UNDER THE SECURITIES ACT THAT IS ACQUIRING SUCH SECURITY FOR INVESTMENT
PURPOSES AND NOT FOR DISTRIBUTION IN A MINIMUM LIQUIDATION PREFERENCE OF NOT
LESS THAN $250,000, (c) OUTSIDE THE UNITED STATES TO A NON-U.S. PERSON IN A
TRANSACTION COMPLYING WITH RULE 904 OF REGULATION S UNDER THE SECURITIES ACT,
(d) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED
BY RULE 144 THEREUNDER (IF AVAILABLE) OR (e) IN ACCORDANCE WITH ANOTHER
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND, IN EACH
CASE, BASED UPON AN OPINION OF COUNSEL IF THE COMPANY SO REQUESTS) (2) TO THE
COMPANY OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT AND, IN EACH CASE, IN ACCORDANCE WITH ALL APPLICABLE SECURITIES
LAWS OF THE STATES OF THE UNITED STATES AND (B) THE HOLDER WILL, AND EACH
SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE SECURITY
EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN CLAUSE (A) ABOVE.
IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND
TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH REGISTRAR AND
TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH
THE FOREGOING RESTRICTIONS.]
[Global Shares Legend (include if Security is issued as a global certificate):
UNLESS THIS
<PAGE> 29
29
CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW YORK, TO THE COMPANY OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OF PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC) ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO. HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE
PREFERRED STOCK SCHEDULE REFERRED TO BELOW.
IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE
REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH
REGISTRAR AND TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER
COMPLIES WITH THE FOREGOING RESTRICTIONS.]
<PAGE> 30
EXECUTION COPY
Number of Shares
Number: ____ ____ Shares
144A CUSIP NO.: 379364 87 0
IAI CUSIP NO.: 379364 86 2
9% SERIES B CONVERTIBLE REDEEMABLE PREFERRED STOCK DUE 2011
OF
GLOBALSTAR TELECOMMUNICATIONS LIMITED
GLOBALSTAR TELECOMMUNICATIONS LIMITED, an exempted company organized
under the laws of Bermuda (the "Company"), hereby certifies that [HOLDER] (the
"Holder") is the registered owner of fully paid and non-assessable preference
securities of the Company designated the 9% Series B Convertible Redeemable
Preferred Stock due 2011, par value U.S.$0.01 and liquidation preference
U.S.$50.00 per share (the "Preferred Stock"). The shares of Preferred Stock are
transferable on the books and records of the Registrar, in person or by a duly
authorized attorney, upon surrender of this certificate duly endorsed and in
proper form for transfer. The designation, rights, privileges, restrictions,
preferences and other terms and provisions of the Preferred Stock represented
hereby are issued and shall in all respects be subject to the provisions of the
schedule to the Bye-Laws of the Company dated December 8, 1999, as the same may
be amended from time to time in accordance with its terms (the "Preferred Stock
Schedule"). Capitalized terms used herein but not defined shall have the meaning
given them in the Preferred Stock Schedule. The Company will provide a copy of
the Preferred Stock Schedule to a Holder without charge upon written request to
the Company at its principal place of business.
Reference is hereby made to select provisions of the Preferred Stock
set forth on the reverse hereof, and to the Preferred Stock Schedule, which
select provisions and the Preferred Stock Schedule shall for all purposes have
the same effect as if set forth at this place.
Upon receipt of this certificate, the Holder is bound by the Preferred
Stock Schedule and is entitled to the benefits thereunder.
Unless the Transfer Agent's valid countersignature appears hereon, the
shares of Preferred Stock evidenced hereby shall not be entitled to any benefit
under the Preferred Stock Schedule or be valid or obligatory for any purpose.
<PAGE> 31
EXECUTION COPY
IN WITNESS WHEREOF, the Company has executed this certificate as of the
date set forth below.
GLOBALSTAR TELECOMMUNICATIONS LIMITED,
By:
-----------------------------------------
Name:
Title:
[Seal]
By:
-----------------------------------------
Name:
Title:
Dated:
COUNTERSIGNED AND REGISTERED
THE BANK OF NEW YORK
as Transfer Agent,
By:
----------------------------
Authorized Signatory
Dated:
<PAGE> 32
EXECUTION COPY
REVERSE OF SECURITY
GLOBALSTAR TELECOMMUNICATIONS LIMITED
9% Series B Convertible Redeemable Preferred Stock due 2011
Dividends on each share of Preferred Stock shall be payable at a rate
per annum set forth in the face hereof or as provided in the Preferred Stock
Schedule (including Preferred Stock Liquidated Damages). Dividends may be paid,
at the option of the Company, in cash, or, subject to certain limitations, in
shares of Common Stock of the Company or a combination of cash and shares of
Common Stock of the Company.
The shares of Preferred Stock shall be redeemable as provided in the
Preferred Stock Schedule. The shares of Convertible Preferred Stock shall be
convertible into the Company's Common Stock in the manner and according to the
terms set forth in the Preferred Stock Schedule.
The Company shall furnish to any Holder upon request and without
charge, a full summary statement of the designations, voting rights preferences,
limitations and special rights of the shares of each class or series authorized
to be issued by the Company so far as they have been fixed and determined and
the authority of the Board of Directors to fix and determine the designations,
voting rights, preferences, limitations and special rights of the class and
series of shares of the Company.
<PAGE> 33
EXECUTION COPY
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers the shares of
Preferred Stock evidenced hereby to:
- ----------------------------------
- ----------------------------------
(Insert assignee's social security or tax identification number)
- --------------------------------------------------------------------------------
(Insert address and zip code of assignee)
and irrevocably appoints:
- ----------------------------------
agent to transfer the shares of Preferred Stock evidenced hereby on the books of
the Transfer Agent and Registrar. The agent may substitute another to act for
him or her.
Date:
-----------------------------
Signature:
------------------------
(Sign exactly as your name appears on the other side of this Convertible
Preferred Stock Certificate)
Signature Guarantee:
---------------------------*
*Signature must be guaranteed by an "eligible guarantor institution"
(i.e., a bank, stockbroker, savings and loan association or credit union)
meeting the requirements of the Registrar, which requirements include membership
or participation in the Securities Transfer Agents Medallion Program ("STAMP")
or such other "signature guarantee program" as may be determined by the
Registrar in addition to, or in substitution for, STAMP, all in accordance with
the Securities Exchange Act of 1934.
<PAGE> 34
EXECUTION COPY
NOTICE OF CONVERSION
(To be Executed by the Registered Holder
in order to Convert the Preferred Stock)
The undersigned hereby irrevocably elects to convert (the "Conversion")
_________ shares of 9% Series B Convertible Redeemable Preferred Stock due 2011
(the "Preferred Stock"), represented by stock certificate No(s). ________ (the
"Preferred Stock Certificates") into shares of common stock, par value U.S.$1.00
per share ("Common Stock"), of Globalstar Telecommunications Limited (the
"Company") according to the conditions of the schedule to the Company's Bye-Laws
establishing the terms of the Preferred Stock (the "Preferred Stock Schedule"),
as of the date written below. If shares are to be issued in the name of a person
other than the undersigned, the undersigned will pay all transfer taxes payable
with respect thereto and is delivering herewith such certificates. No fee will
be charged to the holder for any conversion, except for transfer taxes, if any.
A copy of each Preferred Stock Certificate is attached hereto (or evidence of
loss, theft or destruction thereof).*
The undersigned represents and warrants that all offers and sales by the
undersigned of the shares of Common Stock issuable to the undersigned upon
conversion of the Preferred Stock shall be made pursuant to registration of the
Common Stock under the Securities Act of 1933 (the "Act"), or pursuant to any
exemption from registration under the Act.
Any holder, upon the exercise of its conversion rights in accordance with the
terms of the Preferred Stock Schedule and the Preferred Stock, agrees to be
bound by the terms of the Registration Rights Agreement.
Capitalized terms used but not defined herein shall have the meanings ascribed
thereto in or pursuant to the Preferred Stock Schedule.
Date of Conversion:
---------------------------------
Applicable Conversion Price:
------------------------
Number of shares of
Preferred Stock to be Converted:
--------------------
Number of shares of
Common Stock to be Issued:
--------------------------
Signature:
------------------------------------------
Name:
-----------------------------------------------
Address:**
-----------------------------------------
Fax No.:
--------------------------------------------
*The Company is not required to issue shares of Common Stock until the original
Preferred Stock Certificate(s) (or evidence of loss, theft or destruction
thereof) to be converted are received by the Company or its Transfer Agent. The
Company shall issue and deliver shares of Common Stock to an overnight courier
not later than three business days following receipt of the original Preferred
Stock
<PAGE> 35
35
Certificate(s) to be converted.
**Address where shares of Common Stock and any other payments or certificates
shall be sent by the Company.
[Global Share Schedule: (include if Security is issued as a global certificate)]
<PAGE> 36
EXECUTION COPY
SCHEDULE A
SCHEDULE OF EXCHANGES FOR GLOBAL SECURITY
The initial number of Series B Preferred Shares represented by this
Global Series B Preferred Share shall be _______. The following exchanges of a
part of this Global Series B Preferred Share have been made:
<TABLE>
<CAPTION>
Amount of decrease Amount of increase Number of shares
in number of in number of represented by
shares represented shares represented this Global Series
by this Global by this Global B Preferred Share Signature of
Series B Preferred Series B Preferred following such authorized officer
Date of Exchange Share Share decrease or increase of Registrar
---------------- ----- ----- -------------------- ------------
<S> <C> <C> <C> <C>
</TABLE>
<PAGE> 37
EXECUTION COPY
EXHIBIT B
FORM OF TRANSFER CERTIFICATE
(Transfers pursuant to Section 5(b)(ii),
Section 5(b)(iii) or Section 5(b)(iv) of the Schedule)
The Bank of New York, as Transfer Agent
101 Barclay Street, Floor 21 West
New York, New York 10286
Att: Stock Transfer
Administration
Re: Globalstar Telecommunications Limited
9% Series B Convertible Redeemable Preferred Shares due 2011 (the "Series
B Preferred Shares")
Reference is hereby made to Schedule IV (the "Schedule") to the
Bye-laws of Globalstar Telecommunications Limited. Capitalized terms used but
not defined herein shall have the meanings given them in the Schedule.
This letter relates to __________ Series B Preferred Shares (the
"Securities") which are held [in the form of the [Restricted] [Global] Security
(CUSIP No. __) with the Depositary]** in the name of [name of transferor] (the
"Transferor") to effect the transfer of the Securities.
In connection with such request, and in respect of Securities, the
Transferor does hereby certify the Securities are being transferred (i) in
accordance with applicable securities laws of any state of the United States or
any other jurisdiction and (ii) in accordance with their terms:
CHECK ONE BOX BELOW:
(1) G to a transferee that the Transferor reasonably believes is a
qualified institutional buyer within the meaning of Rule 144A under the
Securities Act purchasing for its own account or for the account of a
qualified institutional buyer in a transaction meeting the requirements
of Rule 144A;
(2) G to a transferee that the Transferor reasonably believes is an
institutional "accredited investor" as defined in Rule 501(a)(1), (2),
(3) or (7) under the Securities Act that is acquiring such Securities
for investment purposes and not for distribution and is acquiring at
least $250,000 aggregate liquidation preference of Series B Preferred
Shares for its own account or for one or more accounts (each of which
is acquiring at least $250,000 aggregate liquidation preference) as to
which the transferee exercises sole investment discretion;
(3) G outside the United States to a Non-U.S. Person in a transaction
complying with Rule 904 of Regulation S under the Securities Act;
** Insert, if appropriate.
<PAGE> 38
(4) G pursuant to an exemption from registration under the Securities Act
provided by Rule 144 thereunder (if available); or
(5) G in accordance with another exemption from the registration
requirements of the Securities Act (based upon an opinion of counsel if the
Company so requests).
[Name of Transferor]
by:
--------------------------------
Name:
Title:
Dated:
cc: Globalstar Telecommunications Limited
Cedar House
41 Cedar Avenue
Hamilton HM12 Bermuda
Att.: Corporate Secretary
<PAGE> 39
EXECUTION COPY
EXHIBIT C
FORM OF ACCREDITED INVESTOR TRANSFEREE CERTIFICATE
(Transfers pursuant to Section 5(b)(ii) or
Section 5(b)(iii) of the Schedule)
The Bank of New York, as Transfer Agent
101 Barclay Street, Floor 21 West
New York, New York 10286
Att: Stock Transfer
Administration
Re: Globalstar Telecommunications Limited
9% Series B Convertible Redeemable Preferred Shares due 2011 (the "Series
B Preferred Shares")
Reference is hereby made to Schedule IV (the "Schedule") to the
Bye-laws of Globalstar Telecommunications Limited. Capitalized terms used but
not defined herein shall have the meanings given them in the Schedule.
This letter relates to ________ Series B Preferred Shares (the
"Securities") which are held [in the form of the [Restricted] [Global] Series B
Preferred Share (CUSIP No. ___) with the Depositary] in the name of [name of
transferor] (the "Transferor") to effect the transfer of the Securities to the
undersigned.
In connection with such request, and in respect of the Securities, we
confirm that:
1. We understand that the Securities have not been registered under the
U.S. Securities Act of 1933 (the "Securities Act"), and are being sold to us in
a transaction that is exempt from the registration requirements of the
Securities Act.
2. We are a corporation, partnership or other entity having such
knowledge and experience in financial and business matters as to be capable of
evaluating the merits and risks of an investment in the Securities, and we are
(or any account for which we are purchasing under paragraph 4 below is) an
accredited investor as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act, able to bear the economic risk of the proposed investment in the
Securities.
3. We are acquiring the Securities for our own account (or for accounts
as to which we exercise sole investment discretion and have authority to make,
and do make, the statements contained in this letter) and not with a view to any
distribution of the Securities, subject, nevertheless, to the understanding that
the disposition of our property shall at all times be and remain within our
control.
4. We are, and each account (if any) for which we are purchasing
Securities is, purchasing Securities having an aggregate liquidation preference
of not less than $250,000.
5. We understand that (a) the Securities will be delivered to us in
registered form only and that the certificate delivered with respect to the
Securities will bear a legend substantially to the following effect:
THE SECURITY EVIDENCED HEREBY (OR ITS PREDECESSOR) (AND (1) THE COMMON STOCK
INTO WHICH THIS SECURITY IS CONVERTIBLE AND (2) THE COMMON STOCK ISSUABLE IN
PAYMENT OF DIVIDENDS OR REDEMPTION OBLIGATIONS ON THIS SECURITY) WAS
ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF
THE UNITED STATES SECURITIES ACT OF 1933 (THE "SECURITIES ACT") AND MAY NOT BE
OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THE
SECURITY EVIDENCED HEREBY (AND (1) THE COMMON STOCK INTO WHICH THIS SECURITY
IS CONVERTIBLE AND (2) THE COMMON STOCK ISSUABLE IN PAYMENT OF DIVIDENDS OR
REDEMPTION OBLIGATIONS ON THIS SECURITY) IS HEREBY NOTIFIED THAT THE SELLER
MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE
SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER (OTHER THAN WITH RESPECT TO
THE COMMON STOCK). THE HOLDER OF THE SECURITY EVIDENCED HEREBY (AND (1) THE
COMMON STOCK INTO WHICH THIS SECURITY IS CONVERTIBLE AND (2) THE COMMON STOCK
ISSUABLE IN PAYMENT OF DIVIDENDS OR REDEMPTION OBLIGATIONS ON THIS SECURITY)
AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH SECURITY (AND (1) THE
COMMON STOCK INTO WHICH THIS SECURITY IS CONVERTIBLE AND (2) THE COMMON STOCK
ISSUABLE IN PAYMENT OF DIVIDENDS OR REDEMPTION OBLIGATIONS ON THIS SECURITY)
MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1) (a) OTHER THAN WITH
RESPECT TO THE COMMON STOCK, TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS
A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE
SECURITIES ACT PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A
QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144A, (b) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" AS
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DEFINED IN RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS
ACQUIRING SUCH SECURITY FOR INVESTMENT PURPOSES AND NOT FOR DISTRIBUTION IN A
MINIMUM LIQUIDATION PREFERENCE OF NOT LESS THAN $250,000, (c) OUTSIDE THE
UNITED STATES TO A NON-U.S. PERSON IN A TRANSACTION COMPLYING WITH RULE 904 OF
REGULATION S UNDER THE SECURITIES ACT, (d) PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF
AVAILABLE) OR (e) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT (AND, IN EACH CASE, BASED UPON AN OPINION
OF COUNSEL IF THE COMPANY SO REQUESTS) (2) TO THE COMPANY OR (3) PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND, IN EACH
CASE, IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE
UNITED STATES AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED
TO, NOTIFY ANY PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE
RESALE RESTRICTIONS SET FORTH IN CLAUSE (A) ABOVE.
IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND
TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH REGISTRAR AND
TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES
WITH THE FOREGOING RESTRICTIONS.
and (b) such certificates will be reissued without the foregoing legend
only in accordance with the terms of the Schedule.
6. We agree that in the event that at some future time we wish to
dispose of any of the Securities, we will not do so unless:
(a) the Securities are sold to the Company;
(b) the Securities are sold to a qualified institutional buyer in
compliance with Rule 144A under the Securities Act;
(c) the Securities are sold to an accredited investor, as defined in
Rule 501(a)(1), (2), (3) or (7) under the Securities Act, acquiring at least
$250,000 liquidation preference of the Securities that, prior to such
transfer, furnishes to the Transfer Agent a signed letter containing certain
representations and agreements relating to the restrictions on transfer of the
Securities (the form of which letter can be obtained from such Transfer
Agent);
(d) the Securities are sold outside the United States in compliance
with Rule 904 under the Securities Act;
(e) the Securities are sold by us pursuant to Rule 144 under the
Securities Act; or
(f) the Securities are sold pursuant to an effective registration
statement under the Securities Act.
Very truly yours,
[PURCHASER]
by:
--------------------------------
Name:
Title:
Dated:
cc: Globalstar Telecommunications Limited
Cedar House
41 Cedar Avenue
Hamilton HM12 Bermuda
<PAGE> 1
EXECUTION COPY
GLOBALSTAR TELECOMMUNICATIONS LIMITED
Up to 3,750,000 Shares of
9% Series B Convertible Redeemable Preferred Stock
due 2011 (Liquidation Preference of $50 Per Share)
REGISTRATION RIGHTS AGREEMENT
New York, New York
December 8, 1999
Bear, Stearns & Co. Inc.
Banc of America Securities LLC
Lehman Brothers Inc.
C.E. Unterberg, Towbin
c/o Bear, Stearns & Co. Inc.
245 Park Avenue
New York, New York 10167
Dear Sirs:
Globalstar Telecommunications Limited, a Bermuda company (the
"Company"), proposes to issue and sell to you (the "Purchasers"), upon the terms
set forth in the Purchase Agreement dated December 2, 1999 (the "Purchase
Agreement"), among the Company, Globalstar, L.P., a Delaware limited partnership
("Globalstar") and the Purchasers, up to 3,750,000 shares (including up to
750,000 shares that the Company has granted the Purchasers an option to purchase
pursuant to the Purchase Agreement) of its 9% Series B Convertible Redeemable
Preferred Stock due 2011, par value $0.01 per share, liquidation preference of
$50 per share (the "Preferred Stock") (such issuance and sale, the "Initial
Placement"). The Preferred Stock will be convertible into shares of Common
Stock, par value $1.00 per share, of the Company (the "Common Stock") at the
conversion price set forth in the Final Memorandum (as defined below). For
purposes of this Agreement, the term "Securities" shall refer to the Preferred
Stock, all shares of Common Stock issued (i) as dividends thereon, (ii) on
conversion thereof or (iii) in redemption thereof, and any securities into which
such shares of Preferred Stock or Common Stock shall be converted or into which
they shall be changed by operation of law or otherwise. The Company will use the
proceeds of such sale to purchase preferred partnership interests in Globalstar.
In satisfaction of a condition to
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your obligations under the Purchase Agreement, the Company agrees with you (i)
for your benefit and (ii) for the benefit of the holders of the Securities
(including you) from time to time until the earlier of (i) the second
anniversary of the last Closing Date (as defined below) and (ii) such time as
(A) such Securities shall no longer constitute restricted securities for
purposes of Rule 144(k) of the Act (as defined below) or (B) all such Securities
have been sold pursuant to the Shelf Registration Statement (as defined below)
(each of the foregoing a "Holder" and together the "Holders"), as follows:
1. Definitions. Capitalized terms used herein without
definition shall have their respective meanings set forth in the Purchase
Agreement. As used in this Agreement, the following capitalized defined terms
shall have the following meanings:
"Act" means the Securities Act of 1933 and the rules and
regulations of the Commission promulgated thereunder.
"Affiliate" of any specified person means any other person
that, directly or indirectly, is in control of, is controlled by, or is under
common control with, such specified person. For purposes of this definition,
control of a person means the power, direct or indirect, to direct or cause the
direction of the management and policies of such person whether by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Closing Date" has the meaning set forth in the Purchase
Agreement.
"Commission" means the Securities and Exchange Commission.
"Damages Payment Date" means each of the quarterly dividend
payment dates set forth in the schedule to the Bye-Laws of the Company setting
forth the terms of the Preferred Stock.
"Exchange Act" means the Securities Exchange Act of 1934 and
the rules and regulations of the Commission promulgated thereunder.
"Final Memorandum" has the meaning set forth in the Purchase
Agreement.
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3
"First Closing Date" has the meaning set forth in the Purchase
Agreement.
"Holder" has the meaning set forth in the preamble hereto.
"Incorporated Documents" means filings made by the Company
with the Commission pursuant to Section 13, 14 or 15 of the Exchange Act and
incorporated by reference in the Shelf Registration Statement.
"Initial Placement" has the meaning set forth in the preamble
hereto.
"Majority Holders" means the Holders of a majority of the
shares of the Preferred Stock registered (or if no shares are registered,
entitled to be registered) under a Shelf Registration Statement; provided,
however, that Holders of Common Stock issued in respect of the Preferred Stock
shall be deemed to be Holders of the number of shares of Preferred Stock which,
when converted, would have resulted in such number of shares of Common Stock.
"Managing Underwriters" means the investment banker or
investment bankers and manager or managers that shall administer an underwritten
offering of the securities covered by the Shelf Registration Statement.
"Preferred Stock" has the meaning set forth in the preamble
hereto.
"Prospectus" means the prospectus included in any Shelf
Registration Statement, as amended or supplemented by any prospectus supplement,
with respect to the terms of the offering of any portion of the Securities or
Common Stock issuable upon conversion thereof covered by such Shelf Registration
Statement, and all amendments and supplements to the Prospectus, including
post-effective amendments.
"Securities" has the meaning set forth in the preamble hereto.
"Shelf Registration" has the meaning set forth in Section 2
hereof.
"Shelf Registration Period" has the meaning set forth in
Section 2(b) hereof.
"Shelf Registration Statement" means a "shelf" registration
statement of the Company pursuant to the
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provisions of Section 2 hereof which covers some or all of the Securities, on an
appropriate form under Rule 415 under the Act or any similar rule that may be
adopted by the Commission, and all amendments and supplements to such
registration statement, including post-effective amendments, in each case
including the Prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein.
"Transfer Agent" means The Bank of New York.
"Transfer Restricted Securities" means each Security until the
earlier of (i) the second anniversary of the last Closing Date and (ii) such
time as (A) such Security shall no longer constitute a restricted security for
purposes of Rule 144(k) of the Act or (B) such Security has been sold pursuant
to the Shelf Registration Statement.
"underwriter" means any underwriter of Securities in
connection with an offering thereof under a Shelf Registration Statement.
2. Shelf Registration; Suspension of Use of Prospectus.
(a) The Company shall prepare and either (i) not later than 90
days following the First Closing Date, file with the Commission and thereafter
use its reasonable efforts to cause to be declared effective under the Act, as
promptly as practicable but no later than 210 days following the First Closing
Date (the "Effectiveness Target Date"), a new registration statement or (ii)
file with the Commission a prospectus supplement to the Company's existing
Registration Statement No. 333-83239 not later than the Effectiveness Target
Date, which, when filed, becomes effective in accordance with Rule 424 under the
Act (such shelf registration statement referred to in clause (i) above or such
Registration Statement No. 333-83239 as supplemented by such prospectus
supplement referred to in clause (ii) above, as applicable, being hereinafter
referred to as the "Shelf Registration Statement"), relating to the offer and
sale of the Transfer Restricted Securities by the Holders from time to time in
accordance with the methods of distribution elected by such Holders and set
forth in such Shelf Registration Statement. The sole and exclusive remedy
available to the Holders in the event that a Shelf Registration Statement is not
filed or, if relevant, declared effective within the time periods specified in
this Section 2(a) is the collection of additional dividends in accordance with
Section 6 and the terms of the Preferred
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Stock.
(b) The Company shall use its reasonable efforts to keep the
Shelf Registration Statement continuously effective in order to permit the
Prospectus forming part thereof to be usable by Holders until the earlier of (i)
the second anniversary of the last Closing Date and (ii) such time as (A) the
Securities shall no longer constitute restricted securities for purposes of Rule
144(k) of the Act or (B) all Securities have been sold pursuant to the Shelf
Registration Statement (in any such case, such period being called the "Shelf
Registration Period"). The Company shall be deemed not to have used its
reasonable efforts to keep the Shelf Registration Statement effective during the
requisite period if it voluntarily takes any action that would result in Holders
of securities covered thereby not to be able to offer and sell such securities
during that period, unless such action is (i) required by applicable law or (ii)
taken pursuant to Section 2(c) hereof, and, in either case, so long as the
Company promptly thereafter complies with the requirements of Section 3(i)
hereof, if applicable.
(c) The Company may suspend the use of the Prospectus for a
period not to exceed 60 days (or such longer period as is reasonably necessary
under the circumstances) in any calendar year 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. Registration Procedures. In connection with any Shelf
Registration Statement, the following provisions shall apply:
(a) The Company shall furnish to you, prior to the filing
thereof with the Commission, a copy of any Shelf Registration
Statement, and each amendment thereof and each amendment or supplement,
if any, to the Prospectus included therein and shall use its best
efforts to reflect in each such document, when so filed with the
Commission, such comments as you reasonably may propose; provided,
however, that the Company shall be required only to furnish an
Incorporated Document to you as promptly as practicable following its
filing with the Commission.
(b) The Company shall ensure that (i) any Shelf Registration
Statement and any amendment thereto and
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any Prospectus forming part thereof and any amendment or supplement
thereto complies in all material respects with the Act, (ii) any Shelf
Registration Statement and any amendment thereto does not, when it
becomes effective, contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading and (iii) any
Prospectus forming part of any Shelf Registration Statement, and any
amendment or supplement to such Prospectus, does not include an untrue
statement of a material fact or omit to state a material fact necessary
in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(c) (1) The Company shall advise you and the Holders and, if
requested by you or any such Holder, confirm such advice in writing:
(i) when a Shelf Registration Statement and any
amendment thereto has been filed with the Commission and when
the Shelf Registration Statement or any post-effective
amendment thereto has become effective; and
(ii) of any request by the Commission for amendments
or supplements to the Shelf Registration Statement or the
Prospectus included therein or for additional information.
(2) The Company shall advise you and the Holders and, if
requested by you or any such Holder, confirm such advice in writing:
(i) of the issuance by the Commission of any stop
order suspending the effectiveness of the Shelf Registration
Statement or the initiation of any proceedings for that
purpose;
(ii) of the receipt by the Company of any
notification with respect to the suspension of the
qualification of the securities included in any Shelf
Registration Statement for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose;
and
(iii) of the suspension of the use of the Prospectus
pursuant to Section 2(c) hereof or of the happening of any
event that requires the making of any changes in the Shelf
Registration
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Statement or the Prospectus so that, as of such date, the
statements therein are not misleading and do not omit to state
a material fact required to be stated therein or necessary to
make the statements therein (in the case of the Prospectus, in
light of the circumstances under which they were made) not
misleading (which advice shall be accompanied by an
instruction to suspend the use of the Prospectus until the
requisite changes have been made); provided that such notice
shall not be required to specify the nature of the event
giving rise to the notice requirement hereunder.
(d) The Company shall use its reasonable best efforts to
obtain the withdrawal of any order suspending the effectiveness of any
Shelf Registration Statement at the earliest possible time.
(e) The Company shall furnish to each Holder of Securities
included within the coverage of any Shelf Registration Statement,
without charge, at least one copy of such Shelf Registration Statement
and any post-effective amendment thereto, including documents
incorporated by reference therein, financial statements and schedules,
and, if the Holder so requests in writing, all exhibits (including
those incorporated by reference).
(f) The Company shall, during the Shelf Registration Period,
deliver to each Holder of Securities included within the coverage of
any Shelf Registration Statement, without charge, as many copies of the
Prospectus (including each preliminary Prospectus) included in such
Shelf Registration Statement and any amendment or supplement thereto as
such Holder may reasonably request; and the Company consents to the use
of the Prospectus or any amendment or supplement thereto by each of the
selling Holders of Securities in connection with the offering and sale
of the Securities covered by the Prospectus or any amendment or
supplement thereto.
(g) Prior to any offering of securities pursuant to any Shelf
Registration Statement, the Company shall register or qualify or
cooperate with the Holders of Securities included therein and their
respective counsel in connection with the registration or qualification
of such Securities for offer and sale under the securities or blue sky
laws of such jurisdictions as any such Holders reasonably request in
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writing and do any and all other acts or things reasonably necessary or
advisable to enable the offer and sale in such jurisdictions of the
Securities covered by such Shelf Registration Statement; provided,
however, that the Company will not be required to qualify generally to
do business in any jurisdiction where it is not then so qualified or to
take any action which would subject it to general service of process or
to taxation in any such jurisdiction where it is not then so subject.
(h) The Company shall cooperate with the Holders of Securities
to facilitate the timely preparation and delivery of certificates
representing Securities to be sold pursuant to any Shelf Registration
Statement free of any restrictive legends and in such denominations and
registered in such names as Holders may request prior to sales of
Securities pursuant to such Shelf Registration Statement.
(i) Upon the occurrence of any event contemplated by paragraph
(c)(2)(iii) above, the Company shall, if required pursuant to the Act
or paragraph (c)(2)(iii) above, as promptly as practicable prepare a
post-effective amendment to any Shelf Registration Statement or an
amendment or supplement to the related Prospectus or file any other
required document so that, as thereafter delivered to purchasers of the
Securities included therein, the Prospectus will not include an untrue
statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(j) Not later than the effective date of any Shelf
Registration Statement hereunder, the Company shall provide a CUSIP
number for each class of Securities registered under such Shelf
Registration Statement, and provide the Transfer Agent with printed
certificates for such Securities, in a form eligible for deposit with
The Depository Trust Company.
(k) The Company shall use its best efforts to comply with all
applicable rules and regulations of the Commission and shall make
generally available to its security holders as soon as practicable
after the effective date of the applicable Shelf Registration Statement
an earnings statement satisfying the provisions of Section 11(a) of the
Act.
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(l) The Company may require each Holder of Securities to be
sold pursuant to any Shelf Registration Statement to furnish to the
Company such information regarding the Holder and the distribution of
such Securities as the Company may from time to time reasonably require
for inclusion in such Shelf Registration Statement. Any Holder who
fails to provide such information shall not be entitled to use the
Prospectus.
(m) The Company shall, if requested, promptly incorporate in a
prospectus supplement or post-effective amendment to a Shelf
Registration Statement, such information as the Managing Underwriters
and Majority Holders reasonably agree should be included therein and
shall make all required filings of such prospectus supplement or
post-effective amendment as soon as notified of the matters to be
incorporated in such prospectus supplement or post-effective amendment.
(n) The Company and Globalstar shall enter into such
agreements (including underwriting agreements) and take all other
appropriate actions in order to expedite or facilitate the registration
or the disposition of any Securities, and in connection therewith, if
an underwriting agreement is entered into, cause the same to contain
indemnification provisions and procedures no less favorable than those
set forth in Section 5 (or such other provisions and procedures
acceptable to the Majority Holders and the Managing Underwriters, if
any), with respect to all parties to be indemnified pursuant to Section
5, it being understood that all underwriting discounts and commissions,
and all other underwriting fees, associated with such agreement in
connection with such offering of the Securities shall, except as
otherwise expressly agreed herein (including those expenses covered by
Section 4), be for the account of the Holders or the underwriters.
(o) The Company and Globalstar shall (i) make reasonably
available for inspection by Holders of Securities to be registered
thereunder and any Managing Underwriter participating in any
disposition pursuant to such Shelf Registration Statement, and any
attorney, accountant or other agent retained by the Majority Holders of
Securities to be registered thereunder or by any such Managing
Underwriter all relevant financial and other records, pertinent
corporate documents and properties of the Company or Globalstar, as the
case may be; (ii) cause the officers, directors and
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employees of the Company or Globalstar, as the case may be, to supply
all relevant information reasonably requested by any such Holders or
Managing Underwriter, attorney, accountant or agent in connection with
such Shelf Registration Statement as is customary for similar due
diligence examinations; provided, however, that any information that is
designated in writing by the Company or Globalstar, as the case may be,
in good faith, as confidential at the time of delivery of such
information shall be kept confidential by any such Holders and Managing
Underwriter, attorney, accountant or agent, unless disclosure thereof
is made in connection with a court proceeding or required by law, or
such information has become available (not in violation of this
Agreement) to the public generally or through a third party without an
accompanying obligation of confidentiality; (iii) make such
representations and warranties to the Holders of securities registered
thereunder and the underwriters, if any, in form, substance and scope
as are customarily made by issuers to underwriters in primary
underwritten offerings and covering matters including those set forth
in the Purchase Agreement; (iv) obtain opinions of counsel to the
Company and Globalstar and updates thereof (which counsel and opinions
(in form, scope and substance) shall be reasonably satisfactory to the
Holders and Managing Underwriter, if any) addressed to each selling
Holder and the underwriters, if any, covering such matters as are
customarily covered in opinions requested in underwritten offerings and
such other matters as may be reasonably requested by the Majority
Holders of the securities covered by such Shelf Registration Statement
and by such Managing Underwriter; (v) obtain "cold comfort" letters and
updates thereof from the independent certified public accountants of
the Company and Globalstar, as the case may be (and, if necessary, use
its reasonable best efforts to retain any other independent certified
public accountants of any subsidiary of the Company or Globalstar or of
any business acquired by the Company or Globalstar for which financial
statements and financial data are, or are required to be, included in
the Shelf Registration Statement), addressed to each selling Holder of
Securities registered thereunder and the underwriters, if any, in
customary form and covering matters of the type customarily covered in
"cold comfort" letters in connection with primary underwritten
offerings; and (vi) deliver such documents and certificates as may be
reasonably requested by the Majority Holders and the Managing
Underwriters, if any,
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including those to evidence compliance with Section 3(i) and with any
customary conditions contained in the underwriting agreement or other
agreement entered into by the Company or Globalstar. The foregoing
actions set forth in clauses (iii), (iv), (v) and (vi) of this Section
3(o) shall be performed at (A) the effectiveness of such Shelf
Registration Statement and each post-effective amendment thereto and
(B) each closing under any underwriting or similar agreement as and to
the extent required thereunder.
4. Registration Expenses. Globalstar shall bear all expenses
incurred in connection with the performance of the Company's obligations under
Sections 2 and 3 hereof and shall reimburse the Holders for the reasonable and
duly documented fees and disbursements of (i) counsel designated by the Majority
Holders to act as counsel for the Holders in connection therewith or (ii) in the
absence of such selection of counsel by the Majority Holders, one firm
designated by the underwriters to act as counsel for the Holders in connection
therewith. It is understood, however, that as except provided in this Section 4,
the Holders shall pay all their own costs and expenses, including stock transfer
taxes due upon resale by them of any of the securities covered by a Shelf
Registration Statement and any advertising expenses incurred in connection with
any offers and sales they make.
5. Indemnification and Contribution. (a) In connection with
any Shelf Registration Statement, the Company and Globalstar (the
"Indemnitors"), jointly and severally, agree to indemnify and hold harmless each
Holder of securities covered thereby (including the Purchasers), the directors,
officers, employees and agents of each such Holder and each person who controls
any such Holder within the meaning of either the Act or the Exchange Act against
any and all losses, claims, damages or liabilities, joint or several, to which
they or any of them may become subject under the Act, the Exchange Act or other
Federal or state statutory law or regulation, at common law or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the Shelf Registration Statement as
originally filed or in any amendment thereof, or in any preliminary Prospectus
or Prospectus, or in any amendment thereof or supplement thereto, or arise out
of or are based upon 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, and agrees to
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reimburse each such indemnified party, as incurred, for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that (i) the Indemnitors will not be liable in any case to the extent that any
such loss, claim, damage or liability arises out of or is based upon any such
untrue statement or alleged untrue statement or omission or alleged omission
made therein in reliance upon and in conformity with written information
furnished to the Indemnitors by or on behalf of any such Holder specifically for
inclusion therein, (ii) the Indemnitors shall not be liable to any indemnified
party under this indemnity agreement with respect to any Shelf Registration
Statement or Prospectus to the extent that any such loss, claim, damage or
liability of such indemnified party results solely from an untrue statement of a
material fact contained in, or the omission of a material fact from, the Shelf
Registration Statement or Prospectus which untrue statement or omission was
corrected in an amended or supplemented Shelf Registration Statement or
Prospectus, if the person alleging such loss, claim, damage or liability was not
sent or given, at or prior to the written confirmation of such sale, a copy of
the amended or supplemented Shelf Registration Statement or Prospectus if the
Indemnitors had previously furnished copies thereof to such indemnified party
and if such delivery of a prospectus is finally judicially determined to be
required by the Act and was not so made and (iii) the Indemnitors will not be
liable to any indemnified party under this indemnity agreement with respect to
any Shelf Registration Statement or Prospectus to the extent that any such loss,
claim, damage or liability of such indemnified party results (a) from the use of
a Shelf Registration Statement during a period when a stop order has been issued
in respect thereof or any proceedings for that purpose have been initiated or
(b) from the use of the Prospectus during a period when the use of the
Prospectus has been suspended in accordance with Section 3(c)(2)(iii) hereof,
provided, in each case, that Holders received prior notice of such stop order,
initiation of proceedings or suspension. This indemnity agreement will be in
addition to any liability which the Indemnitors may otherwise have.
The Indemnitors also agree to indemnify or contribute to
Losses, as provided in Section 5(d), of any underwriters of Securities
registered under a Shelf Registration Statement, their officers and directors
and each person who controls such underwriters on substantially the same basis
as that of the indemnification of the Holders provided in this Section 5(a) and
shall, if requested by any
<PAGE> 13
13
Holder, enter into an underwriting agreement reflecting such agreement, as
provided in Section 3(n) hereof.
(b) Each Holder of securities covered by a Shelf Registration
Statement (including the Purchasers) severally agrees to indemnify and hold
harmless (i) the Indemnitors, (ii) each of their respective directors, (iii)
each of their respective officers who signs such Shelf Registration Statement
and (iv) each person who controls either of the Indemnitors within the meaning
of either the Act or the Exchange Act to the same extent as the foregoing
indemnity from the Indemnitors to each such Holder, but only with reference to
written information relating to such Holder furnished to the Indemnitors by or
on behalf of such Holder specifically for inclusion in the documents referred to
in the foregoing indemnity. This indemnity agreement will be in addition to any
liability which any such Holder may otherwise have.
(c) Promptly after receipt by an indemnified party under this
Section 5 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 5, notify the indemnifying party in writing of the
commencement thereof; but the failure so to notify the indemnifying party (i)
will not relieve it from liability under paragraph (a) or (b) above unless and
to the extent it did not otherwise learn of such action and such failure results
in the forfeiture by the indemnifying party of substantial rights and defenses
and (ii) will not, in any event, relieve the indemnifying party from any
obligations to any indemnified party other than the indemnification obligation
provided in paragraph (a) or (b) above. The indemnifying party shall be entitled
to appoint counsel of the indemnifying party's choice at the indemnifying
party's expense to represent the indemnified party in any action for which
indemnification is sought (in which case the indemnifying party shall not
thereafter be responsible for the fees and expenses of any separate counsel
retained by the indemnified party or parties except as set forth below);
provided, however, that such counsel shall be reasonably satisfactory to the
indemnified party. Notwithstanding the indemnifying party's election to appoint
counsel to represent the indemnified party in an action, the indemnified party
shall have the right to employ separate counsel (including local counsel), and
the indemnifying party shall bear the reasonable fees, costs and expenses of
such separate counsel (and local counsel) if (i) the use of counsel chosen by
the indemnifying party to represent the indemnified party would present such
counsel with a conflict
<PAGE> 14
14
of interest, (ii) the actual or potential defendants in, or targets of, any such
action include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be legal
defenses available to it and/or other indemnified parties which are different
from or additional to those available to the indemnifying party, (iii) the
indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of the institution of such action or (iv) the indemnifying party
shall authorize the indemnified party to employ separate counsel at the expense
of the indemnifying party. An indemnifying party will not, without the prior
written consent of the indemnified parties, settle or compromise or consent to
the entry of any judgment with respect to any pending or threatened claim,
action, suit or proceeding in respect of which indemnification or contribution
may be sought hereunder (whether or not the indemnified parties are actual or
potential parties to such claim or action) unless such settlement, compromise or
consent includes an unconditional release of each indemnified party from all
liability arising out of such claim, action, suit or proceeding.
(d) In the event that the indemnity provided in paragraph (a)
or (b) of this Section 5 is unavailable to or insufficient to hold harmless an
indemnified party for any reason, then each applicable indemnifying party, in
lieu of indemnifying such indemnified party, shall have a joint and several
obligation to contribute to the aggregate losses, claims, damages and
liabilities (including legal or other expenses reasonably incurred in connection
with investigating or defending same) (collectively, "Losses") to which such
indemnified party may be subject in such proportion as is appropriate to reflect
the relative benefits received by such indemnifying party, on the one hand, and
such indemnified party, on the other hand, from the Initial Placement and the
Shelf Registration Statement which resulted in such Losses; provided, however,
that in no case shall the Purchasers be responsible, in the aggregate, for any
amount in excess of the purchase discount or commission applicable to such
Security, nor shall any underwriter be responsible for any amount in excess of
the underwriting discount or commission applicable to the securities purchased
by such underwriter under the Shelf Registration Statement which resulted in
such Losses. If the allocation provided by the immediately preceding sentence is
unavailable for any reason, the indemnifying party and the indemnified party
shall contribute in such proportion as is appropriate to reflect not only such
<PAGE> 15
15
relative benefits but also the relative fault of such indemnifying party, on the
one hand, and such indemnified party, on the other hand, in connection with the
statements or omissions which resulted in such Losses as well as any other
relevant equitable considerations. Benefits received by the Indemnitors shall be
deemed to be equal to the total net proceeds from the Initial Placement (before
deducting expenses). Benefits received by the Purchasers shall be deemed to be
equal to the total purchase discounts and commissions, and benefits received by
any other Holders shall be deemed to be equal to the value such Holders realize
by receiving Securities registered under the Act. Benefits received by any
underwriter shall be deemed to be equal to the total underwriting discounts and
commissions, as set forth on the cover page of the Prospectus forming a part of
the Shelf Registration Statement which resulted in such Losses. Relative fault
shall be determined by reference to whether any alleged untrue statement or
omission relates to information provided by the indemnifying party, on the one
hand, or by the indemnified party, on the other hand. The parties agree that it
would not be just and equitable if contribution were determined by pro rata
allocation or any other method of allocation which does not take account of the
equitable considerations referred to above. Notwithstanding the provisions of
this paragraph (d), no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. For purposes of
this Section 5, each person who controls a Holder within the meaning of either
the Act or the Exchange Act and each director, officer, employee and agent of
such Holder shall have the same rights to contribution as such Holder, and each
person who controls either of the Indemnitors within the meaning of either the
Act or the Exchange Act, each officer of the Company or Globalstar who shall
have signed the Shelf Registration Statement and each director of the Company or
Globalstar shall have the same rights to contribution as the Company or
Globalstar, as the case may be, subject in each case to the applicable terms and
conditions of this paragraph (d).
(e) The provisions of this Section 5 will remain in full force
and effect, regardless of any investigation made by or on behalf of any Holder
or the Indemnitors or any of the officers, directors or controlling persons
referred to in Section 5 hereof, and will survive the sale by a Holder of
securities covered by a Shelf Registration Statement.
<PAGE> 16
16
6. Liquidated Damages.
(a) The Company and the Purchasers agree that the Holders of
Transfer Restricted Securities shall suffer damages if the Company fails to
fulfill its obligations pursuant to Section 2 hereof and that it would not be
possible to ascertain the extent of such damages. Accordingly, the Company
hereby agrees to pay liquidated damages ("Preferred Stock Liquidated Damages")
to each Holder of Transfer Restricted Securities under the circumstances and to
the extent set forth below:
(i) from 90 days following the First Closing Date, if the
Shelf Registration Statement is not effective on or prior to the
Effectiveness Target Date and the shelf registration statement
described in Section 2(a)(i) is filed with the Commission after 90 days
following the First Closing Date; and
(ii) from the Effectiveness Target Date if the Shelf
Registration Statement is not effective on or prior to the
Effectiveness Target Date; and
(iii) if the Shelf Registration Statement has been declared
effective by the Commission and such Shelf Registration Statement
ceases to be effective or to be usable as contemplated by Section 2(b)
at any time during the Shelf Registration Period (without being
succeeded by a post-effective amendment to such Shelf Registration
Statement that cures such failure and that is itself immediately
declared effective) for any period of ten consecutive trading days that
are also business days or for any 20 trading days that are also
business days in any 180-day period in connection with resales of
Transfer Restricted Securities (provided, that the Company will have
the option of suspending the effectiveness of the Shelf Registration
Statement, without becoming obligated to pay Preferred Stock Liquidated
Damages, for periods of up to a total of 60 days in any calendar year
if the Board of Directors of the Company determines that compliance
with the disclosure obligations necessary to maintain the effectiveness
of the Shelf Registration Statement at such time could reasonably be
expected to have an adverse effect on the Company or a pending
corporate transaction)
(each of the foregoing clauses (i) through (iii), a "Registration Default").
<PAGE> 17
17
(b) In the event of each such Registration Default, the
Company shall pay Preferred Stock Liquidated Damages to each Holder of shares of
Preferred Stock that are Transfer Restricted Securities at a rate of 0.50% of
the liquidation preference of the shares of Preferred Stock constituting
Transfer Restricted Securities, which shall accrue from the date of the
Registration Default to and including the 30th day following such Registration
Default and increase by 0.50% for each subsequent 30 day period; provided,
however, that the rate of such Preferred Stock Liquidated Damages may not exceed
2.00% of the Liquidation Preference of the Preferred Stock at any time.
Following the cure of all Registration Defaults relating to any shares of
Preferred Stock that are Transfer Restricted Securities, the accrual of
Preferred Stock Liquidated Damages with respect to such shares of Preferred
Stock that are Transfer Restricted Securities shall cease (without in any way
limiting the effect of any subsequent Registration Default). A Registration
Default under clause 6(a)(i) above shall be cured on the date that the Shelf
Registration Statement is filed with the Commission. A Registration Default
under clause 6(a)(ii) above shall be cured on the date that the Shelf
Registration Statement is declared effective by the Commission. A Registration
Default under clause 6(a)(iii) above shall be cured on the date the Shelf
Registration Statement is declared effective or becomes usable.
(c) The Company shall notify the Transfer Agent within one
business day after (i) each and every date on which a Registration Default
occurs and (ii) in the event of a Registration Default under Section 6(a)(i),
the Effectiveness Target Date. Preferred Stock Liquidated Damages shall be paid
by the Company to the record Holders of shares of Preferred Stock that are
Transfer Restricted Securities on each Damages Payment Date by mailing checks to
their registered addresses as they appear in the Preferred Stock register if no
such accounts have been specified on or before the Damages Payment Date;
provided that any Preferred Stock Liquidated Damages accrued with respect to any
Preferred Stock or portion thereof called for redemption on a redemption date or
converted into Common Stock on a conversion date prior to the Damages Payment
Date, shall, in any such event, be paid instead to the Holder that submitted
such Preferred Stock for redemption or conversion on the applicable redemption
date or conversion date, as the case may be, on such date (promptly following
the conversion date, in the case of conversion of Preferred Stock). Each
obligation to pay Preferred Stock Liquidated Damages shall be deemed to commence
accruing on the date of the applicable Registration Default and to cease
accruing when all
<PAGE> 18
18
Registration Defaults have been cured.
(d) All Preferred Stock Liquidated Damages with respect to any
shares of Preferred Stock that are Transfer Restricted Securities, that remain
unpaid when such Securities cease to be Transfer Restricted Securities or cease
to be outstanding, shall remain unpaid obligations of the Company until they
have been paid in full.
7. Rules 144 and 144A. The Company shall use its reasonable
efforts to file the reports required to be filed under the Act and the Exchange
Act in a timely manner and, if at any time the Company is not required to file
such reports, will, upon the request of any Holder of Transfer Restricted
Securities, make publicly available other information so long as necessary to
permit sales of its securities pursuant to Rules 144 and 144A. The Company
covenants that it will take such further action as any Holder of Transfer
Restricted Securities may reasonably request, all to the extent required from
time to time to enable such Holder to sell Transfer Restricted Securities
without registration under the Act within the limitation of the exemptions
provided by Rules 144 and 144A (including the requirements of Rule 144A(d)(4)).
The Company will provide a copy of this Agreement to prospective purchasers of
Securities identified to the Company by the Purchasers upon request. Upon the
request of any Holder of Transfer Restricted Securities, the Company shall
deliver to such Holder a written statement as to whether it has complied with
such requirements. Notwithstanding the foregoing, nothing in this Section 7
shall be deemed to require the Company to register any of its securities
pursuant to the Exchange Act.
8. Miscellaneous.
(a) No Inconsistent Agreements. The Company has not, as of the
date hereof, entered into, nor shall it, on or after the date hereof,
enter into, any agreement with respect to its securities that is
inconsistent with the rights granted to the Holders herein or otherwise
conflicts with the provisions hereof.
(b) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended,
qualified, 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 the Majority Holders;
provided that, with respect to any
<PAGE> 19
19
matter that directly or indirectly affects the rights of the Purchasers
hereunder, the Company shall obtain the written consent of the
Purchasers against which such amendment, qualification, supplement,
waiver or consent is to be effective. Notwithstanding the foregoing
(except the foregoing proviso), a waiver or consent to departure from
the provisions hereof with respect to a matter that relates exclusively
to the rights of Holders whose Securities are being sold pursuant to a
Shelf Registration Statement and that does not directly or indirectly
affect the rights of other Holders may be given by the Majority
Holders, determined on the basis of securities being sold rather than
registered under such Shelf Registration Statement.
(c) Notices. All notices and other communications provided for
or permitted hereunder shall be made in writing by hand-delivery,
first-class mail, telecopier, or air courier guaranteeing overnight
delivery:
(1) if to a Holder, at the most current address given
by such holder to the Company in accordance with the
provisions of this Section 8(c), which address initially is,
with respect to each Holder, the address of such Holder
maintained by the Registrar of the Securities, with a copy in
like manner to Bear, Stearns & Co. Inc.;
(2) if to you, initially at the address set forth in
the Purchase Agreement; and
(3) if to the Company or Globalstar, initially at its
address set forth in the Purchase Agreement.
All such notices and communications shall be deemed to have
been duly given when received.
The Purchasers or the Company by notice to the other may
designate additional or different addresses for subsequent notices or
communications.
(d) 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 the need for an express assignment or
any consent by the Company or Globalstar thereto,
<PAGE> 20
20
subsequent Holders of Securities. The Company and Globalstar hereby
agree to extend the benefits of this Agreement to any Holder of
Securities and any such Holder may specifically enforce the provisions
of this Agreement as if an original party hereto.
(e) 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.
(f) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect
the meaning hereof.
(g) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO THE CONFLICT OF LAW RULES THEREOF.
(h) Jurisdiction. EACH OF THE COMPANY AND GLOBALSTAR HEREBY
IRREVOCABLY AND UNCONDITIONALLY CONSENTS TO SUBMIT TO THE EXCLUSIVE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND OF THE UNITED
STATES DISTRICT COURTS LOCATED IN THE CITY OF NEW YORK FOR ANY
LAWSUITS, CLAIMS OR OTHER PROCEEDINGS ARISING OUT OF OR RELATING TO
THIS AGREEMENT AND AGREES NOT TO COMMENCE ANY SUCH LAWSUIT, CLAIM OR
OTHER PROCEEDING EXCEPT IN SUCH COURTS. EACH OF THE COMPANY AND
GLOBALSTAR HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY OBJECTION
TO THE LAYING OF VENUE OF ANY LAWSUIT, CLAIM, OR OTHER PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT IN THE COURTS OF THE STATE
OF NEW YORK OR THE UNITED STATES DISTRICT COURTS LOCATED IN THE CITY OF
NEW YORK, AND HEREBY FURTHER IRREVOCABLY AND UNCONDITIONALLY WAIVES AND
AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH LAWSUIT,
CLAIM OR OTHER PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN
AN INCONVENIENT FORUM. EACH OF THE COMPANY AND GLOBALSTAR HAS APPOINTED
ERIC J. ZAHLER AT 600 THIRD AVENUE, NEW YORK, NEW YORK 10016, U.S.A.
(HEREINAFTER REFERRED TO IN EACH SUCH CAPACITY AS THE "PROCESS AGENT"),
AS ITS AUTHORIZED AGENT UPON WHOM PROCESS MAY BE SERVED IN ANY SUCH
SUIT OR PROCEEDING. EACH OF THE COMPANY AND GLOBALSTAR REPRESENTS TO
YOU THAT IT HAS NOTIFIED THE PROCESS AGENT OF SUCH DESIGNATION AND
APPOINTMENT AND THAT THE PROCESS AGENT HAS ACCEPTED THE SAME IN
WRITING. EACH
<PAGE> 21
21
OF THE COMPANY AND GLOBALSTAR HAS AUTHORIZED AND DIRECTED THE PROCESS
AGENT TO ACCEPT SUCH SERVICE. IF THE PROCESS AGENT SHALL CEASE TO ACT
AS THE COMPANY'S OR GLOBALSTAR'S AGENT FOR SERVICE OF PROCESS, THE
COMPANY OR GLOBALSTAR, AS APPLICABLE, SHALL APPOINT WITHOUT DELAY
ANOTHER SUCH AGENT AND NOTIFY YOU OF SUCH APPOINTMENT. EACH OF THE
COMPANY AND GLOBALSTAR FURTHER AGREES THAT SERVICE OF PROCESS UPON THE
PROCESS AGENT AND WRITTEN NOTICE OF SAID SERVICE TO THE COMPANY OR
GLOBALSTAR, AS APPLICABLE, MAILED BY FIRST CLASS MAIL OR DELIVERED TO
THE PROCESS AGENT SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF
PROCESS UPON IT IN ANY SUCH SUIT OR PROCEEDING. NOTHING HEREIN SHALL
AFFECT YOUR RIGHT OR THE RIGHT OF ANY PERSON CONTROLLING ANY OF YOU TO
SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW. EACH OF THE COMPANY
AND GLOBALSTAR AGREES THAT A FINAL ACTION IN ANY SUCH SUIT OR
PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER
JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER LAWFUL MANNER.
(i) Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any
circumstances, is held invalid, illegal or unenforceable in any respect
for any reason, the validity, legality and enforceability of any such
provision in every other respect and of the remaining provisions hereof
shall not be in any way impaired or affected thereby, it being intended
that all of the rights and privileges of the parties shall be
enforceable to the fullest extent permitted by law.
(j) Securities Held by the Company or Globalstar, etc.
Whenever the consent or approval of Holders of a specified percentage
of principal amount or liquidation preference, as the case may be, of
Securities is required hereunder, Securities held by the Company,
Globalstar or their respective Affiliates (other than subsequent
Holders of Securities if such subsequent Holders are deemed to be
Affiliates solely by reason of their holdings of such Securities) shall
not be counted in determining whether such consent or approval was
given by the Holders of such required percentage.
<PAGE> 22
EXECUTION COPY
22
Please confirm that the foregoing correctly sets forth the
agreement between the Company and you.
Very truly yours,
GLOBALSTAR TELECOMMUNICATIONS LIMITED,
by:
/s/ Avi Katz
-------------------------------------
Name: Avi Katz
Title: Vice President and Secretary
GLOBALSTAR, L.P., by
LORAL/QUALCOMM SATELLITE SERVICES, L.P.,
its general partner, by
LORAL/QUALCOMM PARTNERSHIP, L.P., its
general partner, by
LORAL GENERAL PARTNER, INC., its general
partner,
by
/s/ Avi Katz
-------------------------------------
Name: Avi Katz
Title: Vice President and Secretary
Accepted in New York, New York
December 8, 1999
BEAR, STEARNS & CO. INC.
BANC OF AMERICA SECURITIES LLC
LEHMAN BROTHERS INC.
C.E. UNTERBERG, TOWBIN
by BEAR, STEARNS & CO. INC.
by
/s/ Stephen Parish
---------------------------------
Name: Stephen Parish
Title: Senior Managing Director
<PAGE> 1
AMENDMENT
to the
AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
of
GLOBALSTAR, L.P.
AMENDMENT (this "Amendment"), dated as of December 8, 1999 to
the AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP of GLOBALSTAR, L.P., a
Delaware limited partnership ("Globalstar" or the "Partnership"), dated as of
January 26, 1999, (the "Partnership Agreement") by and among LORAL/QUALCOMM
SATELLITE SERVICES, L.P., a Delaware limited partnership ("LQSS"), GLOBALSTAR
TELECOMMUNICATIONS LIMITED, a Bermuda company ("GTL"), the limited partners
signatories thereto as set forth on the signature pages hereto (collectively,
the "Limited Partners" and together with LQSS and GTL, the "Partners").
WHEREAS, in January 1999 GTL made an offering (the "Series A
Preferred Stock Offering") of 8% Series A Convertible Redeemable Preferred Stock
due 2011 (the "Series A Preferred Stock");
WHEREAS, the Partnership acquired additional capital by
contribution of the proceeds of the Series A Preferred Stock Offering by GTL and
issued to GTL preferred partnership interests (the "Series A Preferred
Partnership Interests" or "Series A PPIs");
WHEREAS, the Partnership requires additional capital to
accomplish its purposes;
WHEREAS, GTL has made an offering (the "Series B Preferred
Stock Offering") of 9% Series B Convertible Redeemable Preferred Stock due 2011
(the "Series B Preferred Stock");
WHEREAS, it is in the best interest of the Partnership to
acquire such additional capital by contribution from GTL and to issue to GTL
additional preferred partnership interests (the "Series B Preferred Partnership
Interests" or "Series B PPIs"); and
WHEREAS, the Partners have previously approved certain
amendments to the Partnership Agreement which are set forth herein;
NOW, THEREFORE, the Partners, in consideration of the premises
and their mutual agreements as hereinafter set forth, do hereby agree to amend
the Partnership Agreement as follows:
1. AMENDMENT TO SECTION 2.1. Section 2.1 of the Partnership Agreement
is hereby amended as follows:
<PAGE> 2
(a) The definitions of the following terms shall be deleted from Section 2.1:
"Authorized Partnership Interests;" "Distribution Make-Whole
Period;" "GTL Conversion Price;" "GTL Registration Default;" "Mandatory
Redemption Date;" "Offering Memorandum;" "Preferred Stock;" "Preferred
Stock Effective Date;" "Preferred Stock Schedule;" and "Scheduled
Distribution Payment Date."
(b) The following definitions shall be added to Section 2.1:
"Authorized Partnership Interests" means the sum of (i)
55,448,837 Partnership Interests, (ii) 4,769,231 Partnership Interests,
(iii) the number of Ordinary Partnership Interests issuable upon
exercise of the warrants issuable to certain Partners or Affiliates
thereof and to GTL in connection with the guarantee of the
Partnership's obligations under the Globalstar Credit Agreement, (iv)
the number of Series A Preferred Partnership Interests issued to GTL in
connection with GTL's offering of the Series A Preferred Stock,
including as a result of the exercise by the purchasers thereof of the
option to purchase additional shares thereof under the purchase
agreement relating thereto, (v) the number of Series B Preferred
Partnership Interests issuable to GTL in connection with GTL's offering
of the Series B Preferred Stock Offering, including as a result of the
exercise by the purchasers thereof of the option to purchase additional
shares thereof under the purchase agreement relating thereto, (vi) the
number of Ordinary Partnership Interests issuable upon conversion or
exchange of the Series A Preferred Partnership Interests or Series B
Preferred Partnership Interests or in satisfaction of any distribution,
make-whole or redemption payment thereon, (vii) the number of Ordinary
Partnership Interests issuable upon exercise of the warrants issuable
to certain Partners of Globalstar, L.P., Loral/Qualcomm Satellite
Services, L.P. or Loral/Qualcomm Partnership, L.P. or Affiliates
thereof in connection with the guarantee of the Partnership's
obligations under the $500 million credit agreement with Bank of
America and the other lenders parties thereto, (viii) the number of
Ordinary Partnership Interests issuable upon exercise of the Warrants
issuable to Qualcomm Incorporated and its Affiliates in connection with
up to $500 million of vendor financing provided by Qualcomm
Incorporated to the Partnership, and (ix) the number of Ordinary
Partnership Interests or PPIs that may be issued in connection with an
offering of common stock, preferred stock OPIs, PPIs, or any other
equity interests of GTL or the Partnership, in an aggregate offering
amount equal to the difference between 300 million and the gross
proceeds of the Series B Preferred Stock Offering including Ordinary
Partnership Interests issuable upon conversion or exchange of any PPIs
issued in connection with such offering, or in satisfaction of any
distribution, distribution make-whole payment, or redemption payment
thereon; provided, however, that any greater number of Authorized
Partnership Interests may be authorized from time to time with the
Consent of the Partners.
"Distribution Make-Whole Period" means the period of time from
the
-2-
<PAGE> 3
Provisional Redemption Date of a PPI through (i) February 15, 2002 in
the case of the Series A PPIs and (ii) December 1, 2002 in the case of
the Series B PPIs.
"GTL Conversion Price" shall mean with regard to a particular
series of Preferred Stock, the conversion price of such Preferred
Stock, adjusted upon the occurrence of certain dilutive events as set
forth in the respective Preferred Stock Schedule of such series of
Preferred Stock.
"GTL Registration Default" means (i) with regard to the Series
A Preferred Stock, the occurrence of any of the following: (a) GTL
fails to file the shelf registration statement on or prior to the 90th
day after the consummation of the Series A Preferred Stock Offering,
(b) the shelf registration statement is not declared effective by the
Securities and Exchange Commission on or prior to the 210th day after
the consummation of the Series A Preferred Stock Offering or (c) the
shelf registration statement is declared effective but thereafter
ceases to be effective or usable during the period in which GTL is
required to maintain the effectiveness of the shelf registration
statement, for any period of ten consecutive days or for any 20 days in
any 180-day period in connection with resales of Transfer Restricted
Securities (provided, that GTL will have the option of suspending the
effectiveness of the shelf registration statement, without becoming
obligated to pay Preferred Stock Liquidated Damages for periods of up
to a total of 60 days in any calendar year if the Board of Directors of
GTL determines that compliance with the disclosure obligations
necessary to maintain the effectiveness of the shelf registration
statement at such time could reasonably be expected to have an adverse
effect on GTL or a pending corporate transaction) and (ii) with regard
to the Series B Preferred Stock, the occurrence of any of the following
with regard to such series of Preferred Stock: (a) from 90 days
following the closing of the Series B Preferred Stock Offering, if a
new shelf registration statement, or a supplement to an existing shelf
registration statement, is not effective on or prior to the 210th day
after the closing of the Series B Preferred Stock Offering and GTL
files a new shelf registration statement after 90 days following the
closing of the Series B Preferred Stock Offering, (b) from 210 days
following the closing of the Series B Preferred Stock Offering, if the
shelf registration statement is not effective on or prior to the 210th
day after the closing of the Series B Preferred Stock Offering or (c)
if the shelf registration statement has been declared effective but
thereafter ceases to be effective or usable during the period in which
GTL is required to maintain the effectiveness of the shelf registration
statement, for any period of ten consecutive GTL Trading Days or for
any 20 GTL Trading Days in any 180-day period in connection with
resales of Transfer Restricted Securities (provided, that GTL will have
the option of suspending the effectiveness of the shelf registration
statement, without becoming obligated to pay Preferred Stock Liquidated
Damages for periods of up to a total of 60 days in any calendar year if
the Board of Directors of GTL determines that compliance with the
disclosure obligations necessary to maintain the effectiveness of the
shelf registration
-3-
<PAGE> 4
statement at such time could reasonably be expected to have an adverse
effect on GTL or a pending corporate transaction).
"GTL Trading Day" means any NY Business Day on which the GTL
Common Stock is traded on a national, Securities and Exchange
Commission - recognized exchange or trading system.
"Mandatory Redemption Date" means (i) February 15, 2011 in the
case of the Series A Preferred Partnership Interests and (ii) December
1, 2011 in the case of the Series B Preferred Partnership Interests;
provided, however, that if such date shall not be a Business Day, then
the Mandatory Redemption Date shall be the next Business Day.
"NY Business Day" means each Monday, Tuesday, Wednesday,
Thursday and Friday which is not a day on which banking institutions in
the City of New York are authorized or obligated by law or executive
order to be closed.
"PPIs" means the Series A Preferred Partnership Interests
and/or the Series B Preferred Partnership Interests, as the case may
be.
"Offering Memorandum" means (i) in the case of the Series A
Preferred Stock, the final offering memorandum dated January 21, 1999,
relating to the Series A Preferred Stock and (ii) in the case of the
Series B Preferred Stock, the final offering memorandum dated December
2, 1999, relating to the Series B Preferred Stock.
"Preferred Stock" means the Series A Preferred Stock and/or
Series B Preferred Stock, as the case may be.
"Preferred Stock Effective Date" means, with regard to a
particular series of Preferred Stock, the date on which such series of
Preferred Stock is issued and GTL contributes to the Partnership the
net proceeds from the sale of such series of Preferred Stock.
"Preferred Stock Offering" means the Series A Preferred Stock
Offering and/or the Series B Preferred Stock Offering, as the case may
be.
"Preferred Stock Schedule" means, with regard to a particular
series of Preferred Stock, the schedule to the Bye-Laws of GTL setting
forth the terms of such series of Preferred Stock.
"Scheduled Distribution Payment Date" means (i) in the case of
the Series A PPIs, February 15, May 15, August 15, and November 15,
commencing on May 15, 1999 and (ii) in the case of the Series B PPIs,
March 1, June 1, September 1, and December 1, commencing on March 1,
2000; provided, however, that if such date shall not be a Business Day,
then the applicable
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<PAGE> 5
payment date shall be the next Business Day.
"Series A Preferred Partnership Interests" or "Series A PPIs"
means the PPIs issued to GTL in connection with the contribution of the
net proceeds of the Series A Preferred Stock Offering.
"Series A Preferred Stock" has the meaning set forth in the
recitals.
"Series B Preferred Partnership Interests" or "Series B PPIs"
means the PPIs issued to GTL in connection with the contribution of the
net proceeds of the Series B Preferred Stock Offering.
"Series B Preferred Stock" has the meaning set forth in the
recitals.
2. AMENDMENT TO SECTION 4.1(d) Section 4.1(d) of the Partnership
Agreement is hereby amended to read as follows:
(d) Contributions in connection with Preferred Stock:
(i) On the Series A Preferred Stock Effective Date, GTL will
contribute the net proceeds of the Series A Preferred Stock Offering to
the Partnership as described in the Series A Offering Memorandum in
return for Series A PPIs with an aggregate Stated Value equal to the
aggregate Liquidation Preference of the Series A Preferred Stock issued
by GTL in the Series A Preferred Stock Offering. The Stated Value of
each Series A PPI shall be $50. The aggregate contribution and Stated
Value of the Series A PPIs shall be set forth in Schedule A. If, on or
after the Series A Preferred Stock Effective Date, the option granted
to the purchasers thereof to purchase additional shares of Preferred
Stock is exercised (as described in the Series A Offering Memorandum),
in full or in part, then GTL shall contribute the additional net
proceeds from the exercise of such option to the Partnership in return
for additional Series A PPIs which shall be reflected in a similar
manner in Schedule A.
(ii) On the Series B Preferred Stock Effective Date, GTL will
contribute the net proceeds of the Series B Preferred Stock Offering to
the Partnership as described in the Series B Offering Memorandum in
return for Series B PPIs with an aggregate Stated Value equal to the
aggregate Liquidation Preference of the Series B Preferred Stock issued
by GTL in the Series B Preferred Stock Offering. The Stated Value of
each Series B PPI shall be $50. The aggregate contribution and Stated
Value of the Series B PPIs shall be set forth in Schedule A. If, on or
after the Series B Preferred Stock Effective Date, the option granted
to the purchasers thereof to purchase additional shares of Preferred
Stock is exercised (as described in the Series B Offering Memorandum),
in full or in part, then GTL shall contribute the additional net
proceeds from the exercise of such option to the Partnership in return
for additional Series B PPIs which shall be reflected in a similar
manner in Schedule A.
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<PAGE> 6
3. AMENDMENT TO SECTION 4.5(a) Section 4.5(a) is hereby amended to read
as follows:
(a) The Partnership shall maintain a separate account for each
class of Partnership Interests held by a Partner as part of its books
and records. A Partner's "Capital Account" for a class of Partnership
Interests shall be credited with (i) the amount of cash contributed to
the Partnership by the Partner; provided, however, that LQSS's capital
account shall include the Book Value of any property contributed and
the amount referred to in Section 4.1(b)(iii); provided, further, that
TeleSat's capital account shall include (x) the amount of the bonus in
the Capital Account balance that it received for ChinaSat entering into
the ChinaSat Service Provider Agreement and (y) the excess, if any, of
the amount credited to the capital accounts for Ordinary Partnership
Interests acquired by TeleSat upon its exercise of the ChinaSat Option
over the exercise price; and, provided, further, that the amounts
described in clauses (x) and (y) for purposes of Schedule A and this
Agreement shall be considered part of TeleSat's Capital Contribution;
(ii) allocations of Adjusted Income, Operating Income, Capital
Transaction Gain and COD Income to the Partner; and (iii) the amount of
any Partnership liabilities assumed (or taken subject to) by such
Partner and shall be debited with (iv) allocations of Operating Loss
and Capital Transaction Loss to the Partner; (v) the amount of cash
distributions and the fair market value of any property distributed to
the Partner; and (vi) the amount of any Partner liabilities assumed (or
taken subject to) by the Partnership. The foregoing provisions and the
other provisions of this Agreement relating to the maintenance of
Capital Accounts are intended to comply with Treasury Regulations under
Section 704(b) of the Code and, to the extent not inconsistent with the
provisions of this Agreement, shall be interpreted and applied in a
manner consistent with such Regulations.
4. AMENDMENT TO SECTION 5.1(a) Sections 5.1(a)(ii) and (iii) of the
Partnership Agreement are hereby amended to read as follows:
(ii) then in the amount necessary to bring the Capital Account
in respect of each outstanding PPI to $50;
(iii) then in an amount equal to the sum of (x) an amount in
respect of the Series A PPIs equal to a cumulative 8% per annum return
on the Stated Value of each outstanding Series A PPI and (y) an amount
in respect of the Series B PPIs equal to a cumulative 9% per annum
return on the Stated Value of each outstanding Series B PPI; provided,
however, that such returns shall be calculated on the basis of a
360-day year with twelve 30-day months; and
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<PAGE> 7
provided, further, that the Series A PPIs and Series B PPIs shall rank
pari passu for purposes of allocations under this Subsection(a)(iii);
5. AMENDMENT TO SECTION 5.5(a) Section 5.5(a)(ii) of the Partnership
Agreement is hereby amended to read as follows:
(ii) Then, in respect of each series of PPI, on each
Scheduled Distribution Payment Date of such series of PPI (or, if not a
Business Day, the next succeeding Business Day), Distributable Cash
Flow and Distributable Capital Proceeds shall be distributed to the
holder of each outstanding PPI of such series, until cumulative
distributions under this Subsection (a)(ii) give each such holder a
cumulative return in an amount equal to (x) in the case of holders of
Series A PPIs, a cumulative 8% per annum return on the Stated Value of
each outstanding Series A PPI and (y) in the case of holders of Series
B PPIs, a cumulative 9% per annum return on the Stated Value of each
outstanding Series B PPI; provided, however, that these returns shall
be computed on the basis of a 360-day year with twelve 30-day months;
and provided, further, that if more than one series of PPI shall have
the same Scheduled Distribution Payment Date, then all such series
shall rank pari passu for purposes of distributions under this
Subsection(a)(ii).
6. AMENDMENT TO SCHEDULE A. Schedule A to the Partnership Agreement is
hereby amended, as of the Series B Preferred Stock Effective Date, as revised by
the Managing General Partner to reflect the issue of the Series B PPIs on that
date.
7. AMENDMENT TO SCHEDULE C. Schedule C to the Partnership Agreement is
hereby deleted in its entirety and replaced by Schedule C attached hereto.
8. DEFINED TERMS. Capitalized terms used herein not otherwise defined
shall have the meanings set forth in the Partnership Agreement, as amended.
9. EFFECTIVENESS. This Amendment shall become effective as of the date
set forth above and when GTL shall have contributed the proceeds of the Series B
Preferred Stock Offering and the Partnership shall have issued the Series B PPIs
to GTL.
10. COUNTERPARTS. This Amendment may be executed in counterparts, all
of which together shall constitute one agreement binding on all the parties
hereto.
11. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY THE LAWS OF THE
STATE OF DELAWARE WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAW.
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<PAGE> 8
IN WITNESS WHEREOF, the undersigned have caused this Amendment
to be duly executed and delivered by this respective duly authorized officer as
of the day and year first above written.
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/ Eric J. Zahler
Name: Eric J. Zahler
Title: Executive Vice-President
GLOBALSTAR TELECOMMUNICATIONS LIMITED
By: /s/ Eric J. Zahler
Name: Eric J. Zahler
Title: Vice-President
Limited Partners:
AIRTOUCH SATELLITE SERVICES, INC.
DACOM CORPORATION
DACOM INTERNATIONAL, INC.
HYUNDAI CORPORATION
HYUNDAI ELECTRONICS INDUSTRIES CO., LTD.
LORAL/DASA GLOBALSTAR, L.P.
LORAL SPACE & COMMUNICATIONS LTD.
SAN GIORGIO S.p.A.
TELESAT LIMITED
TE.SA.M.
VODASTAR CELLULAR LIMITED
VODAFONE SATELLITE SERVICES LIMITED
BY: 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/ Eric J. Zahler
Name: Eric J. Zahler as Attorney-in-Fact
-8-
<PAGE> 9
SCHEDULE C
ARTICLE I
COVENANTS
SECTION 1.1. Distributions on PPIs. Cumulative accrued distributions
shall be payable on the PPIs as set forth in Section 5.5(a)(ii) and subject to
Section 5.5(e) of this Agreement on each Scheduled Distribution Payment Date
(or, if such date is not a Business Day, on the next succeeding Business Day)
commencing (i) on May 15, 1999 in the case of the Series A PPIs and (ii) on
March 1, 2000 in the case of the Series B PPIs. Subject to Section 5.5 of this
Agreement, distributions on the PPIs shall occur, as and if designated by the
Committee in its sole discretion. Distributions on the PPIs will accrue on a
daily basis (360 day year and twelve 30-day months) (without interest or
compounding) whether or not the Partnership has earnings or profits, whether or
not there are funds legally available for the payment of such distributions and
whether or not such distributions are declared. Distribution Arrearages shall
not accrue interest.
SECTION 1.2. Deferral of Distributions. The Partnership may defer
paying Scheduled Distributions on any Scheduled Distribution Payment Date if the
Committee so determines in its sole discretion, but so long as any Distribution
Arrearage remains outstanding, except as set forth in Section 5.5(a)(iv) of the
Partnership Agreement and Section 4.1 of this Schedule C, the Partnership will
be prohibited from paying distributions on (i) its OPIs or (ii) preferred
partnership interests that may be issued in the future other than pro rata based
on the redemption amount of such preferred partnership interests, except for
distributions (A) on OPIs consisting solely of OPIs, (B) on securities that rank
pari passu or junior to such PPIs, in securities that rank pari passu or junior
to such PPIs, respectively, or (C) on securities that rank senior to such PPIs.
SECTION 1.3. Payment of Redemption Price and Distributions. (a) The
Partnership will duly and punctually pay or cause to be paid by no later than
one Business Day prior to the date such payment is due the redemption price of
the PPIs, and any applicable additional amounts in accordance with the terms of
Sections 2.6, 2.7 and 2.8 of this Schedule C.
(b) The Partnership may elect, at its option, to pay the Redemption
Price (including any Distribution Make Whole Payment) of, and Scheduled
Distributions, on, the PPIs, (i) in cash, (ii) by delivery of OPIs (in the
manner described in paragraph (c) of this Section 1.3) or (iii) through any
combination of the foregoing as selected by the Committee in its sole
discretion. The Partnership may make the foregoing elections (i) separately with
regard to each payment to which this Section 1.3(b) is applicable and (ii)
separately with regard to each series of PPI.
(c) If the Partnership elects to deliver any OPIs in lieu of a cash
payment on the applicable date of payment, the Partnership shall deliver, in the
aggregate, the number of OPIs equal to (i) the amount of payment that is not
being paid in cash, (ii) divided by:
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<PAGE> 10
(A) in the case of any Scheduled Distributions, Provisional Redemption payment,
Distribution Make-Whole Payment, Optional Redemption payment, or portion
thereof, 95% of the Average Market Value of the GTL Common Stock; (B) in the
case of any Mandatory Redemption payment, or portion thereof, (1) if on the date
of such payment the shelf registration statement covers the resale of such
shares and is effective or no longer required to be effective, 100% of the
Average Market Value of the GTL Common Stock and (2) otherwise, 90% of the
Average Market Value of the GTL Common Stock; provided, however, if GTL shall
have made a GTL Dividend Payment Notice or a GTL Response Redemption Notice
which indicates that GTL shall have elected to make its corresponding payment
from the proceeds from the sale of any issuance of GTL Common Stock, then the
valuation of the OPIs to be issued by the Partnership pursuant to Section 1.3(c)
of this Schedule C shall be based upon the actual price at which such GTL Common
Stock is sold.
(d) The Partnership shall deliver a Globalstar Distribution Payment
Notice to GTL 15 Business Days prior to the applicable record date corresponding
to the Scheduled Distribution Payment Date.
SECTION 1.4. Certain Accompanying Payments. PPIs surrendered for
conversion during the period from the close of business on any Regular Record
Date next preceding any Scheduled Distribution Payment Date to the opening of
business on such Scheduled Distribution Payment Date (except PPIs called for
redemption on a Redemption Date from the close of business on any Regular Record
Date to the close of business on the Business Day immediately following the
corresponding Scheduled Distribution Payment Date) must be accompanied by
payment in cash, OPIs or a combination thereof in an amount equal to the
distribution thereon which GTL is entitled to receive; provided, that no payment
shall be owed or payable to GTL if the Committee shall have elected to defer the
distribution to be made on such Scheduled Distribution Payment Date. No other
adjustment for distributions, including any Distribution Arrearages, is to be
made upon conversion.
ARTICLE II
REDEMPTION OF PPIS
SECTION 2.1. Right of Redemption; Mechanics of Redemption. (a) The PPIs
may be redeemed pursuant to (i) a Provisional Redemption (as described in
Section 2.6 of this Schedule C, any such Provisional Redemption shall include
the Distribution Make-Whole Payment, as well as accrued and unpaid Scheduled
Distributions (including an amount equal to a prorated Scheduled Distribution
for any period following the immediately preceding Scheduled Distribution
Payment Date) and Preferred Stock Liquidated Damages, if any, to the date of
such Provisional Redemption)) or (ii) an Optional Redemption (as described in
Section 2.7 of this Schedule C, any such Optional Redemption shall include
accrued and unpaid Scheduled Distributions (including an amount equal to a
prorated Scheduled Distribution for any period following the immediately
preceding Scheduled Distribution Payment Date) and Preferred Stock
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<PAGE> 11
Liquidated Damages, if any, to the date of such Optional Redemption), at the
election of the Partnership, in whole or from time to time in part; the PPIs
shall be redeemed at the Mandatory Redemption Date, at the Redemption Price
specified in Section 2.8, together with accrued and unpaid Scheduled
Distributions and Preferred Stock Liquidated Damages, if any, to the Mandatory
Redemption Date.
(b) The Partnership shall deliver a Globalstar Redemption Notice to GTL
not fewer than 40 days nor more than 60 days before any such Redemption Date.
SECTION 2.2. Selection by the Managing General Partner of PPIs to be
Redeemed. If any PPI selected for partial redemption is converted in part before
termination of the conversion right with respect to the portion of the PPI so
selected, the converted portion of such PPI shall be deemed (so far as may be)
to be the portion selected for redemption. PPIs which have been converted during
a selection of PPIs to be redeemed shall be treated by the Managing General
Partner as Outstanding for the purpose of such selection, but not for the
purpose of paying the Redemption Price thereof.
For all purposes of this Schedule C, unless the context otherwise
requires, all provisions relating to the redemption of PPIs shall relate, in the
case of any PPIs redeemed or to be redeemed only in part, to the portion of the
redemption amount of such PPI which has been or is to be redeemed.
SECTION 2.3. Notice of Redemption. Whenever a Globalstar Redemption
Notice is required to be delivered to GTL, such Notice shall state:
(1) the Redemption Date;
(2) the Redemption Price and the form of consideration the
Partnership will use to satisfy the Redemption Price;
(3) if less than all the Outstanding PPIs are to be redeemed,
the identification (and, in the case of partial redemption, the
redemption amounts) of the particular PPIs to be redeemed;
(4) that on the Redemption Date the Redemption Price, together
with (i) in the case of a Provisional Redemption, the Distribution
Make-Whole Payment and accrued and unpaid Scheduled Distributions
(including an amount equal to a prorated Scheduled Distribution for any
period following the immediately preceding Scheduled Distribution
Payment Date) and Preferred Stock Liquidated Damages, if any, to the
Provisional Redemption Date, (ii) in the case of an Optional
Redemption, accrued and unpaid Scheduled Distributions (including an
amount equal to a prorated Scheduled Distribution for any period
following the immediately preceding Scheduled Distribution Payment
Date) and Preferred Stock Liquidated Damages, if any, to the Optional
Redemption Date, and (iii) in the case of a Mandatory Redemption,
accrued and unpaid Scheduled
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<PAGE> 12
Distributions and Preferred Stock Liquidated Damages, if any, to the
Mandatory Redemption Date, will become due and payable upon each such
PPI to be redeemed and that distributions thereon will cease to accrue
on and after said date;
(5) the Conversion Ratio, the date on which the right to
convert the PPIs to be redeemed will terminate and the place or places
where such PPIs may be surrendered for conversion; and
(6) the place or places where such PPIs are to be surrendered
for payment of the Redemption Price.
SECTION 2.4. Deposit of Redemption Price. Prior to any Redemption Date,
the Partnership shall deposit with the Partnership's paying agent (or, with the
Partnership if the Partnership is acting as its own paying agent with respect to
the PPIs) an amount of consideration sufficient to pay, in the case of a cash
payment, or deliver, in the case of delivery of OPIs, the Redemption Price,
together with (i) in the case of a Provisional Redemption, the Distribution
Make-Whole Payment and accrued and unpaid Scheduled Distributions (including an
amount equal to a prorated Scheduled Distribution for any period following the
immediately preceding Scheduled Distribution Payment Date) and Preferred Stock
Liquidated Damages, if any, to the Provisional Redemption Date (ii) in the case
of an Optional Redemption, accrued and unpaid Scheduled Distributions (including
an amount equal to a prorated Scheduled Distribution for any period following
the immediately preceding Scheduled Distribution Payment Date) and Preferred
Stock Liquidated Damages, if any, to the Optional Redemption Date, and (iii) in
the case of a Mandatory Redemption, accrued and unpaid Scheduled Distributions
and Preferred Stock Liquidated Damages, if any, to the Mandatory Redemption
Date, on all the PPIs which are to be redeemed on that date (other than any PPIs
called for redemption on that date which have been converted prior to the date
of such deposit, except with respect to any applicable Distribution Make-Whole
Payment and Preferred Stock Liquidated Damages, which shall be payable
regardless of such conversion).
If any PPI called for redemption is converted, any cash or OPIs
deposited with the Partnership's paying agent or with the Partnership shall
(subject to any right of GTL to receive accrued and unpaid distributions as
provided in Section 1.3 of this Schedule C) be paid or delivered to the
Partnership upon its request. Any Distribution Make-Whole Payment will be paid
to GTL on the date of conversion or the Provisional Redemption Date, as the case
may be.
SECTION 2.5. PPIs Payable on Redemption Date. Notice of redemption
having been given as aforesaid, the PPIs so to be redeemed shall, on the
Redemption Date, become due and payable at the Redemption Price therein
specified plus such other amounts as may be due and payable pursuant to the
terms hereof, and from and after such date (unless the Partnership shall default
in the payment of the Redemption Price
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<PAGE> 13
and accrued Scheduled Distributions (including an amount equal to a prorated
Scheduled Distribution for any period following the immediately preceding
Scheduled Distribution Payment Date) and Preferred Stock Liquidation Damages, if
any, to the Redemption Date or, if applicable, any Distribution Make-Whole
Payment) no further distributions shall be payable or accrue with respect to
such PPIs and such PPIs shall cease to be convertible into OPIs. Upon surrender
of any such PPI for redemption in accordance with said notice, such PPI shall be
paid, subject to Section 1.3, by the Partnership at the Redemption Price,
together with accrued Scheduled Distributions to the Redemption Date.
If any PPI called for redemption shall not be so paid upon surrender
thereof for redemption, the Redemption Price (but not any accrued and unpaid
Scheduled Distributions) shall, until paid, bear interest from the Redemption
Date (i) in the case of the Series A PPIs at 8% per annum and (ii) in the case
of the Series B PPIs at 9% per annum.
SECTION 2.6. Provisional Redemption. The PPIs may be redeemed in whole
or from time to time in part (a "Provisional Redemption" and the date of such
redemption a "Provisional Redemption Date") as follows:
(a) The Series A PPIs may be redeemed at any time on or prior to
February 15, 2002, at the Redemption Price of 104.6% of the aggregate Stated
Value of the PPIs to be redeemed, in the event that the Current Market Value of
the GTL Common Stock equals or exceeds the following Trigger Percentages of the
prevailing GTL Conversion Price then in effect for at least 20 Trading Days in
any consecutive 30 Trading Day period ending on the Trading Day prior to the
date of mailing of the Globalstar Redemption Notice if called for Provisional
Redemption in the 12-month period ending February 15 of the following years:
<TABLE>
<CAPTION>
Year Trigger Percentage
- ---- ------------------
<S> <C>
2000 170%
2001 160%
2002 150%
</TABLE>
(b) The Series B PPIs may be redeemed at any time on or prior to
December 3, 2002, at the Redemption Price of 105.1% of the aggregate Stated
Value of the PPIs to be redeemed, in the event that the Current Market Value of
the GTL Common Stock equals or exceeds the following Trigger Percentages of the
prevailing GTL Conversion Price then in effect for at least 20 GTL Trading Days
in any consecutive 30 GTL Trading Day period ending on the Trading Day prior to
the date of mailing of the Globalstar Redemption Notice if called for
Provisional Redemption in the 12-month
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<PAGE> 14
period ending on the dates set forth below:
<TABLE>
<CAPTION>
Year Trigger Percentage
- ---- ------------------
<S> <C>
December 1, 2000 170%
December 1, 2001 160%
December 2, 2002 150%
</TABLE>
(c) Upon any Provisional Redemption, the Partnership shall make the
Distribution Make-Whole Payment with respect to the PPIs called for redemption.
The Partnership shall make the Distribution Make-Whole Payment on all PPIs
called for Redemption, regardless of whether such PPIs are converted prior to
the Provisional Redemption Date.
SECTION 2.7. Subsequent Optional Redemption. The PPIs may be redeemed,
in whole or from time to time in part, at the option of the Partnership (the
"Optional Redemption") as follows:
(a) The Series A PPIs may be redeemed on or after February 20, 2002 at
a redemption price equal to the percentage of the Stated Value set forth below,
in each case, together with accrued and unpaid Scheduled Distributions
(including an amount equal to a prorated Scheduled Distribution for any period
following the immediately preceding Scheduled Distribution Payment Date) and
Preferred Stock Liquidated Damages, if any, to the date of redemption, upon not
less than 30 nor more than 60 days' prior written notice, if redeemed during the
12-month period commencing on the dates set forth below:
<TABLE>
<CAPTION>
Year Redemption Price
- ---- ----------------
<S> <C>
February 20, 2002 104.6%
February 19, 2003 103.4%
February 19, 2004 102.3%
February 19, 2005 101.1%
February 19, 2006 and thereafter 100.0%
</TABLE>
(b) The Series B PPIs may be redeemed on or after December 3, 2002 at a
redemption price equal to the percentage of the Stated Value set forth below, in
each case, together with accrued and unpaid Scheduled Distributions (including
an amount
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<PAGE> 15
equal to a prorated Scheduled Distribution for any period following the
immediately preceding Scheduled Distribution Payment Date) and Preferred Stock
Liquidated Damages, if any, to the date of redemption, upon not less than 30 nor
more than 60 days' prior written notice, if redeemed during the 12-month period
commencing on the dates set forth below:
<TABLE>
<CAPTION>
Year Redemption Price
- ---- ----------------
<S> <C>
December 3, 2002 105.1%
December 1, 2003 103.9%
December 1, 2004 102.6%
December 1, 2005 101.3%
December 1, 2006 and thereafter 100.0%
</TABLE>
SECTION 2.8. Mandatory Redemption. Each PPI (if not earlier redeemed or
converted) will be mandatorily redeemed by the Partnership on the Mandatory
Redemption Date at a Redemption Price of 100% of the Stated Value thereof,
together with accrued and unpaid Scheduled Distributions and Preferred Stock
Liquidated Damages, if any, to the Mandatory Redemption Date.
SECTION 2.9. Other Redemption Procedures. Provisional Redemptions and
Optional Redemptions may be authorized and made separately for each series of
PPIs. No Provisional Redemption or Optional Redemption may be authorized or made
unless, prior to giving the applicable redemption notice, all accumulated and
unpaid distributions for periods ended prior to the date of such redemption
notice shall have been paid in cash or OPIs. In the event of partial redemptions
of any series of PPIs, the PPIs to be redeemed will be determined pro rata or by
lot, as determined by the Partnership, provided that the Partnership may redeem
all PPIs of a series held by holders of fewer than 100 PPIs (or by holders that
would hold fewer than 100 PPIs following such redemption) prior to its
redemption of other PPIs.
ARTICLE III
CONVERSION OF PPIS
SECTION 3.1. Conversion Privilege and Conversion Price.
(a) Subject to and upon compliance with the provisions of this Article,
one Series A PPI initially shall be convertible into the number of OPIs (the
"Series A Conversion Ratio") determined by dividing $50 by the product of the
initial conversion price
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<PAGE> 16
applicable to the Series A Preferred Stock, which is $23.2563, and 4.05. One
Series A PPI shall initially be convertible into .53085 OPIs (i.e., $50 Stated
Value/($23.2563 initial conversion price times 4.05)).
(b) Subject to and upon compliance with the provisions of this Article,
one Series B PPI initially shall be convertible into the number of OPIs (the
"Series B Conversion Ratio" and together with the Series A Conversion Ratio, the
"Conversion Ratios") determined by dividing $50 by the product of the initial
conversion price applicable to the Series B Preferred Stock, which is $25.9569,
and 4.05. One Series B PPI shall initially be convertible into .47562 OPIs
(i.e., $50 Stated Value/($25.9569 initial conversion price times 4.05)).
(c) Conversion Ratios shall be adjusted in certain circumstances as
provided in Section 3.4. Upon any conversion of Preferred Stock by a holder
thereof, GTL shall convert a proportionate amount of the related series of PPIs
into OPIs. Such conversion right shall expire at the close of business on the
Business Day next preceding the Mandatory Redemption Date. In case a PPI or
portion thereof is called for redemption, such conversion right in respect of
the PPI so called shall expire at the close of business on the Business Day next
preceding the Redemption Date, unless the Partnership defaults in making the
payment due upon redemption.
SECTION 3.2. Exercise of Conversion Privilege. PPIs surrendered for
conversion during the period from the close of business on any Regular Record
Date next preceding any Scheduled Distribution Payment Date to the opening of
business on such Scheduled Distribution Payment Date shall (except PPIs called
for redemption on a Redemption Date from the close of business on any Regular
Record Date to the close of business on the Business Day immediately following
the corresponding Scheduled Distribution Payment Date) be accompanied by payment
in cash, OPIs or a combination thereof in an amount equal to the distribution
thereon which GTL is entitled to receive; provided, that no payment shall be
owed or payable to GTL if the Committee shall have elected to defer the
distribution to be made on such Scheduled Distribution Payment Date. No other
adjustment for distributions, including any Distribution Arrearages, is to be
made upon conversion.
PPIs shall be deemed to have been converted immediately prior to the
close of business on the day of surrender of such PPIs for conversion in
accordance with the foregoing provisions, and at such time the rights of GTL
with respect to such PPIs shall cease, and OPIs issuable upon conversion shall
be treated for all purposes as having been issued at such time.
SECTION 3.3. Fractions of Interests. In the event that GTL shall be
required to pay a cash adjustment in lieu of any issuance of fractional
interests in GTL Common Stock as provided in its Bye-Laws and GTL shall not have
cash available to make such payment, then the Partnership shall make a cash
distribution to GTL, in lieu of a payment of such amount in OPIs under this
Agreement and to the extent that funds
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shall be legally available thereof, to allow GTL to make such cash adjustments.
SECTION 3.4. Adjustment of Conversion Ratio. Upon a subdivision,
combination or reclassification of OPIs, the Conversion Ratios shall be adjusted
to take into account such subdivision, combination or reclassification.
SECTION 3.5. Provisions in Case of Consolidation, Merger or Conveyance
or Transfer of Properties and Assets. In case of any consolidation of the
Partnership with, or merger of the Partnership into, any other partnership or
other business entity, or in case of any merger of another partnership or other
business entity into the Partnership (other than a merger which does not result
in any reclassification, conversion, exchange or cancellation of outstanding
Partnership Interests or a transaction governed by Section 6.13 of this
Agreement), or in case of any conveyance or transfer of the properties and
assets of the Partnership substantially as an entirety, the partnership,
corporation, or other business entity formed by such consolidation or resulting
from such merger or which acquires by conveyance or transfer such properties and
assets, as the case may be, shall execute and deliver to GTL an agreement
providing that GTL shall have the right thereafter, during the period any series
of PPIs shall be convertible as specified in this Article III, to convert such
PPIs only into the kind and amount of securities, cash and other property
receivable upon such consolidation, merger, conveyance or transfer by a Partner
holding OPIs immediately prior to such consolidation, merger, conveyance or
transfer, assuming such Partner failed to exercise its rights of election, if
any, as to the kind or amount of partnership interests, securities, cash and
other property receivable upon such consolidation, merger, conveyance or
transfer (provided that, if the kind or amount of securities, cash and other
property receivable upon such consolidation, merger, conveyance or transfer is
not the same for each unit of Ordinary Partnership Interests in respect of which
such rights of election shall not have been exercised ("nonelecting share"),
then for the purpose of this Section the kind and amount of partnership
interests, cash and other property receivable upon such consolidation, merger,
conveyance or transfer by each nonelecting OPI shall be deemed to be the kind
and amount so receivable per share by a plurality of the nonelecting OPIs). Such
agreement shall provide for adjustments which, for events subsequent to the
effective date of such agreement, shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Article. The above
provisions of this Section shall similarly apply to successive consolidations,
mergers, conveyances or transfers. The Partnership will not become a party to
any consolidation or merger unless the terms of such consolidation or merger are
consistent with this Section.
SECTION 3.6. Taxes on Conversions. The Partnership will pay any and all
taxes that may be payable in respect of the issue or delivery of OPIs on
conversion of PPIs pursuant hereto.
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ARTICLE IV
SUBORDINATION OF PPIS
SECTION 4.1. PPIs Subordinate to All Liabilities. The PPIs shall be
subordinated and subject, to the extent and in the manner herein set forth, in
right of payment to the prior payment in full of all existing and future
liabilities of the Partnership, including without limitation: (i) certain
distributions made to partners in respect of taxes levied upon the operations of
Globalstar; (ii) distributions of the Management Fee; and (iii) guarantee fees
to be made to partners and other persons in connection with their guarantee of
the Partnership's obligations under the Globalstar Credit Agreement.
SECTION 4.2. No Payments When Liabilities in Default; Payment Over of
Proceeds upon Dissolution, etc. In the event the Partnership shall default in
the payment of any liabilities of the Partnership when the same becomes due and
payable, whether at maturity or at a date fixed for prepayment or by declaration
or otherwise, then, unless and until such default shall have been cured or
waived or shall have ceased to exist, no direct or indirect payment (in cash or
property, by setoff or otherwise) need be made or agreed to be made on account
of the PPIs (excepting cash payment for fractional interests as set forth in
Section 3.3 above).
Upon the happening of an event of default with respect to any
liability, as defined therein or in the instrument under which the same is
outstanding, permitting the holders thereof to accelerate the maturity thereof
(under circumstances when the terms of the preceding paragraph are not
applicable), unless and until such event of default shall have been cured or
waived or shall have ceased to exist, no direct or indirect payment (in cash or
property, by setoff or otherwise) need be made or may agreed to be made on
account of the PPIs (excepting cash payment for fractional interests as set
forth in Section 3.3 above).
In the event of:
(a) any insolvency, bankruptcy, receivership, liquidation,
reorganization, readjustment, composition or other similar proceeding
relating to the Partnership or its property;
(b) any proceeding for the liquidation, dissolution or other winding up
of the Partnership or its property;
(c) any assignment by the Partnership for the benefit of creditors; or
(d) any other marshaling of the assets of the Partnership;
all liabilities (including any interest thereon accruing after the commencement
of any such proceedings) shall first be paid in full before any payment or
distribution (direct or indirect), whether in cash or property, by setoff or
otherwise, need be made on account of any PPIs.
SECTION 4.3. Voting Rights. Excepting as required by law, the PPIs will
not
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have any voting rights. Upon a Voting Rights Deferral Triggering Event, (i) the
number of members of the Committee will be increased by one and (ii) the holders
of the Preferred Stock, voting separately as a class with the holders of any
other securities upon which similar voting rights have been conferred and are
exercisable, will be entitled to elect one representative to the Committee (the
"Preferred Stock Representative"). The Preferred Stock Representative will
promptly resign upon receipt of notice from GTL that all Distribution Arrearages
with respect to the PPIs have been paid.
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[Globalstar Logo]
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600 Third Avenue
New York, NY 10016
Tel: (212) 697-1105
Fax: (212) 338-5662
NEWS
For Immediate Release
Contact: Jeanette Clonan
212-338-5658
GLOBALSTAR TO SELL $150 MILLION OF
CONVERTIBLE PREFERRED STOCK
IN A RULE 144A OFFERING
NEW YORK, December 3, 1999 -- Globalstar Telecommunications Limited
(NASDAQ:GSTRF) announced today that it has entered into an agreement to sell
$150 million of 9% Convertible Preferred Stock due 2011 in an offering exempt
from registration. The Preferred Stock will be convertible into shares of common
stock at a conversion price of $25.9569 per share.
Globalstar Telecommunications Limited (GTL) will apply the proceeds to purchase
Convertible Preferred Partnership Interests in Globalstar, L.P. Globalstar L.P.,
in turn, will use the proceeds from the sale of the Convertible Preferred
Partnership Interests for continued deployment of the Globalstar mobile
satellite-based telephone system and for general corporate purposes.
The Preferred Stock will be offered only to qualified institutional buyers
pursuant to Rule 144A and to certain accredited institutional investors under
the Securities Act of 1933. The Preferred Stock has not been registered under
the Securities Act of 1933 and may not be offered or sold in the United States
absent registration or an applicable exemption from registration requirements.
This press release does not constitute an offer to sell or the solicitation of
an offer to buy the securities.
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