<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 17, 1999
REGISTRATION NO. 333-83239
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
<TABLE>
<S> <C>
GLOBALSTAR TELECOMMUNICATIONS GLOBALSTAR, L.P.
LIMITED GLOBALSTAR CAPITAL CORPORATION
(EXACT NAME OF ISSUER AS SPECIFIED IN ITS CHARTER) (EXACT NAME OF ISSUER AS SPECIFIED IN ITS CHARTER)
BERMUDA DELAWARE
(STATE OR OTHER JURISDICTION OF INCORPORATION) (STATE OR OTHER JURISDICTION OF INCORPORATION)
13-3759824
13-3795510 13-3876323
(I.R.S. EMPLOYER IDENTIFICATION NO.) (I.R.S. EMPLOYER IDENTIFICATION NO.)
CEDAR HOUSE, 41 CEDAR AVENUE 3200 ZANKER ROAD
HAMILTON, HM12, BERMUDA SAN JOSE, CALIFORNIA 95134
(441) 295-2244 (408) 933-4000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE
NUMBER, INCLUDING AREA CODE, OF REGISTRANT'S NUMBER, INCLUDING AREA CODE, OF REGISTRANT'S
PRINCIPAL EXECUTIVE OFFICES) PRINCIPAL EXECUTIVE OFFICES)
</TABLE>
ERIC J. ZAHLER, ESQ.
C/O LORAL SPACECOM CORPORATION
600 THIRD AVENUE
NEW YORK, NEW YORK 10016
(212) 697-1105
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
------------------------
WITH COPIES TO:
BRUCE R. KRAUS, ESQ.
WILLKIE FARR & GALLAGHER
787 SEVENTH AVENUE
NEW YORK, NEW YORK 10019-6099
(212) 728-8000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ] ________________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE SECURITIES AND EXCHANGE COMMISSION MAKES THE
REGISTRATION STATEMENT THAT INCLUDES THIS PROSPECTUS EFFECTIVE. THIS PROSPECTUS
IS NOT AN OFFER TO SELL THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS
NOT PERMITTED.
Subject to Completion
PRELIMINARY PROSPECTUS DATED AUGUST 17, 1999
$500,000,000
<TABLE>
<S> <C>
GLOBALSTAR GLOBALSTAR, L.P.
TELECOMMUNICATIONS GLOBALSTAR CAPITAL
LIMITED CORPORATION
COMMON STOCK DEBT SECURITIES
PREFERRED STOCK
WARRANTS
</TABLE>
-------------------------
GTL may from time to time offer the following equity or equity-related
securities separately or together in one or more series or classes and in
amounts, at prices and on terms to be determined at the time of the offering and
set forth in one or more supplements to this prospectus:
- shares of its common stock, par value $1.00 per share;
- shares of its preferred stock, par value $.01 per share; and
- warrants to purchase shares of common stock or preferred stock.
Globalstar and Globalstar Capital may from time to time offer jointly and
severally debt securities in one or more series or classes, which may be either
senior or subordinated, secured or unsecured, in amounts, at prices and on terms
to be determined at the time of the offering.
The specific terms of these securities will be provided in one or more
supplements to this prospectus. In the case of debt securities, these terms will
include, as applicable, the specific designation, aggregate principal amount,
maturity, rate or formula of interest, premium and terms for redemption. In case
of preferred stock, these terms will include, as applicable, the specific title
and stated value, any dividend, liquidation, redemption, conversion, voting and
other rights. In the case of common stock, these terms will include the
aggregate number of shares offered. In the case of warrants, these terms will
include the duration, offering price, exercise price and detachability.
We may sell any combination of these securities, in one or more offerings,
up to a total aggregate public offering price of $500,000,000.
GTL's common stock is listed on the Nasdaq National Market under the symbol
GSTRF. The closing price of GTL's common stock on the Nasdaq National Market was
$28.75 per share on August 16, 1999.
You should read this prospectus and any prospectus supplement carefully
before you invest.
THE SECURITIES WE MAY OFFER INVOLVE A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" ON PAGE 4 FOR A DISCUSSION OF MATTERS THAT YOU SHOULD CONSIDER BEFORE
INVESTING IN THESE SECURITIES.
-------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus is , 1999.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SUMMARY..................................................... 1
GLOBALSTAR, GTL AND GLOBALSTAR CAPITAL...................... 1
SECURITIES TO BE OFFERED.................................... 3
RISK FACTORS................................................ 4
RATIOS...................................................... 7
USE OF PROCEEDS............................................. 8
GENERAL DESCRIPTION OF THE SECURITIES....................... 9
DESCRIPTION OF COMMON STOCK................................. 9
DESCRIPTION OF PREFERRED STOCK.............................. 13
DESCRIPTION OF WARRANTS..................................... 19
DESCRIPTION OF DEBT SECURITIES.............................. 20
PLAN OF DISTRIBUTION........................................ 33
LEGAL MATTERS............................................... 35
EXPERTS..................................................... 35
WHERE YOU CAN FIND MORE INFORMATION......................... 36
INDEX TO FINANCIAL PAGES.................................... F-1
</TABLE>
i
<PAGE> 4
SUMMARY
This prospectus is part of a registration statement that we filed with the
SEC utilizing a shelf registration process. Under this shelf registration
process, we may, over the next two years, sell any combination of the securities
described in this prospectus, jointly or independently, in one or more offerings
up to a total dollar amount of $500,000,000. This prospectus provides you with a
general description of the securities we may offer. Each time we sell
securities, we will provide a prospectus supplement containing more specific
information about the terms of that offering. The prospectus supplements may
also add, update or change information contained in this prospectus. This
summary highlights selected information from this prospectus and does not
contain all the information that may be important to you.
We may sell the securities to or through national or international
underwriters, dealers or agents or directly to purchasers in and outside of the
United States. We and our agents reserve the sole right to accept and to reject
in whole or in part any proposed purchase of securities. The prospectus
supplement, which we will provide to you each time we offer securities, will set
forth the name of any underwriters, dealers or agents involved in the sale of
the securities, and any applicable fee, commission or discount arrangements with
them.
GLOBALSTAR, GTL AND GLOBALSTAR CAPITAL
Globalstar is now completing the launch of a satellite constellation that
will form the backbone of a wireless digital telephone system able to serve most
of the populated world. The Globalstar(TM) System will extend wireless digital
telephone service to millions of people who today lack even basic telephone
service. Globalstar plans to begin commercial service in September 1999.
Loral Space & Communications Ltd., one of the world's premier satellite
companies, is one of the founders of the Globalstar project, owns 43% of its
equity, including its holdings in GTL, and, through a subsidiary, serves as the
managing general partner of Globalstar. GTL is another general partner of
Globalstar and operates as a holding company to permit public equity ownership
in Globalstar. GTL's sole business is acting as a general partner of Globalstar.
At June 30, 1999, GTL held 35% of the outstanding ordinary partnership interests
and 100% of the outstanding 8% Redeemable Preferred Partnership Interests of
Globalstar. In the event of conversion of the 8% Redeemable Preferred
Partnership Interests, GTL's ownership of ordinary partnership interests would
increase to 39%.
Globalstar Capital is a wholly-owned subsidiary of Globalstar and was
formed for the primary purpose of serving as a co-issuer and co-obligor with
respect to certain debt obligations of Globalstar.
1
<PAGE> 5
GTL's address is: Cedar House, 41 Cedar Avenue, Hamilton HM12, Bermuda.
GTL's telephone number is: (441) 295-2244. Globalstar's and Globalstar Capital's
address is 3200 Zanker Road, San Jose, California 95134, and their telephone
number is: (408) 933-4000.
2
<PAGE> 6
SECURITIES TO BE OFFERED
COMMON STOCK
GTL may issue its common stock. GTL has authorized 600,000,000 shares of
common stock, par value $1.00 per share. Each holder of common stock is
generally entitled to one vote, irrespective of the number of shares held.
Holders of common stock are entitled to receive dividends declared by the board
of directors, subject to the rights of preferred stockholders.
PREFERRED STOCK
GTL may issue its preferred stock in whatever classes or series the board
of directors authorizes, subject to limitations prescribed by Bermuda law and
GTL's bye-laws and memorandum of association. We will describe the specific
terms of any class or series of preferred stock we will issue in the future in
the applicable prospectus supplement for that offering.
WARRANTS
GTL may issue warrants to purchase GTL's common stock and GTL's preferred
stock. Also, we may issue warrants tied to and dependent upon movements of
currency exchange rates, the prices of stocks underlying one or more indices, or
the prices of other underlying commodities. The applicable prospectus supplement
will describe the terms of the warrants.
DEBT SECURITIES
Globalstar and Globalstar Capital may offer secured and unsecured general
obligations, which may be senior debt securities or subordinated debt
securities. Senior debt securities will have the same rank as all their other
unsecured, unsubordinated debt. Under specified circumstances, such as default
on senior debt, the subordinated debt securities will not be entitled to payment
for a specified time, if at all, and will rank junior to senior debt in a
liquidation of Globalstar. Secured debt will have the right to receive proceeds
from the collateral that secures that debt, before such proceeds are available
to other security holders.
The debt securities will be issued under an indenture or indentures among
Globalstar, Globalstar Capital and the trustee or trustees we name in the
prospectus supplement. We have summarized the indentures, which will be exhibits
to the registration statement of which this prospectus is a part.
3
<PAGE> 7
RISK FACTORS
An investment in our securities entails some risks which are described in
our Annual Report on Form 10-K for the year ended December 31, 1998 and are
incorporated by reference in this prospectus. We will also describe the risks
relating specifically to the different types of securities we may offer under
this registration statement in the supplemental prospectus relating thereto. You
should consider these risks and the following, additional risks relating to an
investment in our securities:
THE RIGHTS OF SHAREHOLDERS UNDER BERMUDA LAW ARE DIFFERENT FROM RIGHTS OF
SHAREHOLDERS UNDER U.S. LAW.
Since GTL is a Bermuda company, the principles of law that govern
shareholder rights, the validity of corporate procedures and other matters are
different from those that would apply if it were a U.S. company. For example, it
is not certain whether a Bermuda court would enforce liabilities against GTL or
its officers and directors based upon United States securities laws either in an
original action in Bermuda or under a United States judgment. Bermuda law giving
shareholders rights to sue directors is less developed than in the United States
and may provide fewer rights.
SPACE SYSTEMS/LORAL, GLOBALSTAR'S PRIME CONTRACTOR, IS THE TARGET OF A GRAND
JURY INVESTIGATION; CONGRESS HAS HELD RELATED HEARINGS.
Space Systems/Loral, which is the prime contractor in the Globalstar
System, could be accused of criminal violations of the export control laws
arising out of the participation of its employees in a committee formed to
review the findings of the Chinese regarding the 1996 crash of a Long March
rocket in China. Whether or not Space Systems/Loral is indicted or convicted,
Space Systems/Loral will remain subject to the State Department's general
statutory authority to prohibit exports of satellites and related services if it
finds a violation of the Arms Export Control Act that puts the exporter's
reliability in question. Further, the State Department can suspend export
privileges whenever it determines that grounds for debarment exist and that such
suspension "is reasonably necessary to protect world peace or the security or
foreign policy of the United States." If Space Systems/Loral were to be indicted
and convicted of a criminal violation of the Arms Export Control Act, it
- would be subject to a fine of $1 million per violation;
- could be debarred from certain export privileges; and
- could be debarred from participation in government contracts.
4
<PAGE> 8
If Space Systems/Loral loses its export privileges, Globalstar will be
unable to launch its satellites outside the United States, which would delay the
completion of its full satellite constellation and result in increased launch
costs.
HOLDERS OF COMMON STOCK MAY BE DILUTED BY FUTURE STOCK ISSUANCES.
At June 30, 1999, 82,026,576 shares of GTL's common stock were outstanding.
In addition, at that date:
- Globalstar partners had the right, exercisable over many years, to
exchange their partnership interests for about 151,750,000 shares of
common stock;
- holders of outstanding warrants had the right to exercise them for
4,069,325 shares of common stock;
- GTL has outstanding 6,999,900 shares of 8% Convertible Redeemable
Preferred Stock, due 2011, convertible into 15,049,470 whole shares of
common stock;
- Globalstar employees had unexercised options to buy 2,731,500 shares of
common stock; and
- under GTL's stock option plan, GTL may in the future grant employee
options to purchase as many as 2,230,300 shares of common stock.
In addition, on August 5, 1999, in consideration for the guarantee by two
Loral subsidiaries of a $500 million Globalstar credit facility, Loral and
certain Loral subsidiaries received warrants to purchase an aggregate of
3,450,000 Globalstar partnership interests (equivalent to approximately
13,800,000 shares of GTL common stock). The warrants vest in stages (provided
that the guarantee is then in effect): 50% on February 5, 2000, 25% on August 5,
2000 and the remaining 25% on August 5, 2001. The warrants are immediately
exercisable after vesting and have a seven-year term.
Sales of significant amounts of common stock to the public, including the
common stock covered by this registration statement, or the perception that
those sales could happen, could hurt the price of the common stock.
GTL IS DEPENDENT UPON PAYMENTS FROM GLOBALSTAR TO MEET ITS OBLIGATIONS.
Because GTL is a holding company whose only assets are its interests in
Globalstar, GTL is dependent upon payments from Globalstar to meet its
obligations, including those under its preferred stock. Further, GTL's rights
and the rights of holders of its securities, including the holders of preferred
stock, to participate in the distribution of assets of any subsidiary of GTL
upon Globalstar's liquidation or recapitalization will be subject to the prior
claims of
5
<PAGE> 9
Globalstar's creditors and preferred stockholders. GTL's rights and the rights
of its security holders will not be subordinated to the extent it is a creditor
with recognized claims against Globalstar or a holder of preferred partnership
interests of Globalstar.
THIS PROSPECTUS INCLUDES FORWARD-LOOKING STATEMENTS.
Some statements and information contained or incorporated by reference in
this prospectus are not historical facts, but are "forward-looking statements",
as such term is defined in the Private Securities Litigation Reform Act of 1995.
We wish to caution you that these forward-looking statements are only
predictions, and actual events or results may differ materially as a result of
risks that we face, including those set forth herein under "Risk Factors." These
forward-looking statements can be identified by the use of forward-looking
terminology such as "believes", "expects", "plans", "may", "will", "would,"
"could," "should", or "anticipates" or the negative of these words or other
variations of these words or other comparable words, or by discussions of
strategy that involve risks and uncertainties.
6
<PAGE> 10
RATIOS
GLOBALSTAR TELECOMMUNICATIONS LIMITED
RATIO OF EARNINGS TO COVER FIXED CHARGES AND
PREFERRED STOCK DIVIDENDS
The ratio of earnings to fixed charges presented below should be read
together with the financial statements and the notes accompanying them and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" found in our Annual Report on Form 10-K for the year ended December
31, 1998 and our Quarterly Report on Form 10-Q for the quarterly period ended
June 30, 1999 which are incorporated into this prospectus by reference. Our
earnings available to cover fixed charges consist solely of dividends from
Globalstar on the preferred partnership interests we hold.
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED SIX MONTHS SIX MONTHS
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, ENDED JUNE 30, ENDED JUNE 30,
1995 1996 1997 1998 1998 1999
- ------------ ------------ ------------ ------------ --------------- ---------------
<S> <C> <C> <C> <C> <C>
N/A 1X 1X 1X 1X 1X
</TABLE>
GLOBALSTAR, L.P. DEFICIENCY OF EARNINGS TO
COVER FIXED CHARGES AND PREFERRED PARTNERSHIP INTERESTS
(In thousands)
The deficiency of earnings to cover fixed charges and preferred partnership
interests presented below should be read together with the financial statements
and the notes accompanying them and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" found in our Annual Report on
Form 10-K for the year ended December 31, 1998 and our Quarterly Report on Form
10-Q for the quarterly period ended June 30, 1999 which are incorporated into
this prospectus by reference.
<TABLE>
<CAPTION>
MARCH 23, 1994
(COMMENCEMENT
OF OPERATIONS) YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED SIX MONTHS SIX MONTHS
TO DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, ENDED JUNE 30, ENDED JUNE 30,
1994 1995 1996 1997 1998 1998 1999
- --------------- ------------ ------------ ------------ ------------ -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
N/A N/A $81,869 $184,683 $330,475 $146,851 $185,729
</TABLE>
7
<PAGE> 11
USE OF PROCEEDS
Unless the applicable prospectus supplement states otherwise, Globalstar
will use the net proceeds from the sale of the offered securities for general
corporate purposes, which may include a possible refinancing of outstanding
securities. Until we use the net proceeds in this manner, we may temporarily use
them to make short-term investments. GTL intends to use the proceeds of any
offering of its securities to purchase Globalstar Securities having
substantially similar terms.
8
<PAGE> 12
GENERAL DESCRIPTION OF THE SECURITIES
We may offer shares of GTL common stock, preferred stock or warrants,
Globalstar's and Globalstar Capital's debt securities, or any combination of the
foregoing, either individually or as units consisting of one or more securities.
We may offer up to $500,000,000 of securities under this prospectus. If
securities are offered as units, we will describe the terms of the units in a
prospectus supplement.
This section describes the general terms and provisions of the securities.
The applicable prospectus supplement will describe the specific terms of the
securities offered through that prospectus supplement as well as any of the
general terms described below that will not be applicable to the securities
offered.
DESCRIPTION OF COMMON STOCK
We have summarized some of the terms and provisions of GTL's common stock
in this section. The following is a summary of certain provisions of Bermuda law
and GTL's organizational documents. You should note that this summary is not a
comprehensive description of such laws and documents and that it is qualified in
its entirety by appropriate reference to Bermuda law and to GTL's organizational
documents.
BERMUDA LAW
The following discussion is based upon the advice of Appleby, Spurling &
Kempe, GTL's Bermuda counsel.
GTL was incorporated as an exempted company under The Companies Act 1981 of
Bermuda (the "Act"). Accordingly, the rights of its shareholders are governed by
Bermuda law and GTL's memorandum of association and bye-laws.
DIVIDENDS. Under Bermuda law, a company may pay such dividends as are
declared from time to time by its board of directors unless there are reasonable
grounds for believing that the company is or would, after the payment, be unable
to pay its liabilities as they become due or that the realizable value of its
assets would thereby be less than the aggregate of its liabilities and issued
share capital and share premium accounts.
VOTING RIGHTS. Under Bermuda law, questions brought before a general
meeting of shareholders are decided by a majority vote of shareholders present
at the meeting (or by such majority as the Act or the bye-laws of GTL
prescribe). GTL's bye-laws provide that, subject to the provisions of the Act,
any questions proposed for the consideration of the shareholders will be decided
by a simple majority of the votes cast. Each shareholder present, or person
9
<PAGE> 13
holding proxies for any shareholder, is entitled to one vote. If a poll is
requested, each shareholder present in person or by proxy has one vote for each
share held.
A poll may only be requested under GTL's bye-laws by:
- the Chairman of the meeting;
- at least three shareholders present in person or by proxy;
- any shareholder or shareholders, present in person or by proxy, holding
between them not less than 10% of the total voting rights of all
shareholders having the right to vote at such meeting; or
- a shareholder or shareholders, present in person or by proxy, holding
voting shares in GTL on which an aggregate sum has been paid up equal to
not less than 10% of the total sum paid up on all such voting shares.
RIGHTS IN LIQUIDATION. Under Bermuda law, in the event of liquidation,
dissolution or winding-up of a company, the proceeds of such liquidation,
dissolution or winding-up are distributed pro rata among the holders of common
stock. However, such distribution may only be effected after satisfaction in
full of all claims of creditors and subject to the preferential rights accorded
to any series of preferred stock.
MEETINGS OF SHAREHOLDERS. Under Bermuda law, a company is required to
convene at least one general shareholders' meeting per calendar year. Bermuda
law provides that a special general meeting may be called by the board of
directors and must be called upon the request of shareholders holding not less
than 10% of such of the paid-up capital of the company carrying the right to
vote. Bermuda law also requires that shareholders be given at least five days'
advance notice of a general meeting, although the accidental omission of notice
to any person does not invalidate the proceedings at a meeting. Under the bye-
laws of GTL, at least five days' notice of the annual general meeting must be
given to each shareholder.
Under Bermuda law, the number of shareholders constituting a quorum at any
general meeting of shareholders is determined by the bye-laws of a company.
GTL's bye-laws provide that the presence in person or by proxy of at least two
shareholders entitled to vote constitute a quorum.
ACCESS TO BOOKS AND RECORDS AND DISSEMINATION OF INFORMATION. Members of
the general public have the right to inspect the public documents of a company
available at the office of the Registrar of Companies in Bermuda. These
documents include the company's certificate of incorporation, its memorandum of
association (including its objects and powers) and any alteration to the
company's memorandum of association.
10
<PAGE> 14
The shareholders have the additional right to inspect the bye-laws of the
company, minutes of general meetings and the company's audited financial
statements, which must be presented at the annual general meeting. The register
of shareholders of a company is also open to inspection by shareholders without
charge and to members of the general public on the payment of a fee. A company
is required to maintain its share register in Bermuda but may, subject to the
provisions of the Act, establish a branch register outside Bermuda.
A company is required to keep at its registered office a register of its
directors and officers which is open for inspection for not less than two hours
in each day by members of the public without charge. Bermuda law does not,
however, provide a general right for shareholders to inspect or obtain copies of
any other corporate records.
ELECTION OR REMOVAL OF DIRECTORS. Under Bermuda law and GTL's bye-laws,
directors are elected at the annual general meeting or to serve until their
successors are elected or appointed, unless they are earlier removed or resign.
Under Bermuda law and GTL's bye-laws, a director may be removed at a
special general meeting of shareholders specifically called for that purpose,
provided that the director was served with at least 14 days' notice. The
director has a right to be heard at the meeting. Any vacancy created by the
removal of a director at a special general meeting may be filled at such meeting
by the election of another director in his or her place or, in the absence of
any such election, by the board of directors.
AMENDMENT OF MEMORANDUM OF ASSOCIATION AND BYE-LAWS. Bermuda law provides
that the memorandum of association of a company may be amended by a resolution
passed at a general meeting of shareholders of which due notice has been given.
An amendment to the memorandum of association also requires the approval of the
Bermuda Minister of Finance, who may grant or withhold approval at his
discretion. However, such approval of the Bermuda Minister of Finance is not
required for an amendment which alters or reduces a company's share capital as
provided in the Act. Except as set forth therein, the bye-laws may be amended by
a resolution passed by a majority of votes cast at a general meeting.
Under Bermuda law, the holders of an aggregate of no less than 20% in par
value of a company's issued share capital have the right to apply to the Bermuda
Court for an annulment of any amendment of the memorandum of association adopted
by shareholders at any general meeting. This does not apply to an amendment
which alters or reduces a company's share capital as provided in the Act. Where
such an application is made, the amendment becomes effective only to the extent
that it is confirmed by the Bermuda Court. An application for amendment of the
memorandum of association must be made within 21 days after the date on which
the resolution altering the company's
11
<PAGE> 15
memorandum is passed. Such application may be made on behalf of the persons
entitled to make the application by one or more of their number as they may
appoint in writing for the purpose. No such application may be made by persons
voting in favor of the amendment.
APPRAISAL RIGHTS AND SHAREHOLDER SUITS. Under Bermuda law, in the event
of an amalgamation of two Bermuda companies, a shareholder who is not satisfied
that fair value has been paid for his shares may apply to the Bermuda Court to
appraise the fair value of his shares. The amalgamation of a company with
another company requires the amalgamation agreement to be approved by:
- a meeting of the holders of shares of the amalgamating company of which
they are directors; and
- a meeting of the holders of each class of such shares; and
- the consent of the Bermuda Minister of Finance (who may grant or withhold
consent at his discretion).
Class actions and derivative actions are generally not available to
shareholders under Bermuda law. The Bermuda courts, however, would ordinarily be
expected to permit a shareholder to commence an action in the name of a company
to remedy a wrong done to the company where the act complained of:
- is alleged to be beyond the corporate power of the company; or
- is illegal; or
- would result in the violation of the company's memorandum of association
or bye-laws.
Furthermore, consideration would be given by the Court to acts that are
alleged to constitute a fraud against the minority shareholders or, for
instance, where an act requires the approval of a greater percentage of the
company's shareholders than those who actually approved it.
When the affairs of a company are being conducted in a manner oppressive or
prejudicial to the interests of some part of the shareholders, one or more
shareholders may apply to the Bermuda Court for an order regulating the
company's conduct of affairs in the future or ordering the purchase of the
shares by any shareholder, by other shareholders or by the company.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the common stock is The Bank of New
York.
12
<PAGE> 16
DESCRIPTION OF PREFERRED STOCK
This section describes the general terms and provisions of GTL's preferred
stock. The applicable prospectus supplement will describe the specific terms of
the preferred stock offered through that prospectus supplement, as well as any
general terms described in this section that will not apply to those shares of
preferred stock.
On January 31, 1999, GTL sold 7,000,000 shares of its 8% Convertible
Redeemable Preferred Stock due 2011 in a private placement for an aggregate
amount of $350 million. GTL used the proceeds to purchase the Globalstar 8%
Convertible Redeemable Preferred Partnership Interests from Globalstar, with
substantially identical terms. The 8% Convertible Redeemable Preferred Stock
ranks, with respect to dividend distributions and distributions upon GTL's
liquidation, winding-up and dissolution:
- senior to all classes of GTL common stock and to each other class of
capital stock or series of GTL preferred stock established after January
21, 1999 the terms of which do not expressly provide that it ranks senior
to or on a parity with the 8% Convertible Redeemable Preferred Stock;
- on a parity with any other class of capital stock or series of GTL
preferred stock established after January 21, 1999 the terms of which
expressly provide that such class or series will rank on a parity with
the 8% Convertible Redeemable Preferred Stock; and
- junior to each class of capital stock or series of GTL preferred stock
established after January 21, 1999 the terms of which expressly provide
that such class or series will rank senior to the 8% Convertible
Redeemable Preferred Stock.
In the event that GTL's assets upon liquidation, winding-up or dissolution
are less than or equal to the aggregate liquidation preference and accrued but
unpaid dividends on the 8% Convertible Redeemable Preferred Stock, holders of
common stock will not, and holders of other series of GTL preferred stock may
not, receive any amounts upon such liquidation, winding-up or dissolution.
We have summarized selected terms of the preferred stock which may be
offered by GTL below.
GENERAL
The preferred stock will have the rights described in this section unless
the applicable prospectus supplement provides otherwise. You should read the
13
<PAGE> 17
prospectus supplement relating to the particular series of the preferred stock
it offers for specific terms, including:
- the designation, stated value and liquidation preference of that series
of the preferred stock and the number of shares offered;
- the dividend rate or rates or method of calculation of dividends, the
dividend periods, the date or dates on which dividends will be payable
and whether such dividends will be cumulative or noncumulative and, if
cumulative, the dates from which dividends shall commence to cumulate;
- the redemption price or prices, if any, and the terms and conditions of
any redemption;
- the terms and conditions upon which the shares are convertible or
exchangeable, if they are convertible or exchangeable;
- the voting rights;
- the initial public offering price at which the shares will be issued; and
- any additional dividend, liquidation, redemption, sinking fund and other
rights, preferences, privileges, limitations and restrictions of that
series of preferred stock.
When GTL issues shares of preferred stock for cash, they will be fully paid
and nonassessable. This means that the full purchase price for those shares will
have been paid and the holders of those shares will not be assessed any
additional monies for those shares. Holders of preferred stock will generally
have no preemptive rights to subscribe for any additional securities that GTL
may issue.
In order to fund Globalstar as the actual operating entity, it is GTL's
intention to use any proceeds it will receive from the sale of its preferred
stock to purchase back-to-back preferred partnership interests in Globalstar.
These preferred partnership interests and GTL's preferred stock will have
substantially identical terms, subject, however, to the differences imposed by
their respective jurisdictions and forms of incorporation and tax
considerations.
RIGHTS UPON LIQUIDATION
Unless the applicable prospectus supplement states otherwise, if GTL
liquidates, dissolves or winds up its business, the holders of shares of each
series of the preferred stock will be entitled to receive:
- liquidating distributions in the amount stated in the applicable
prospectus supplement; and
- all accrued and unpaid dividends whether or not earned or declared.
14
<PAGE> 18
GTL will pay these amounts to the holders of shares of each series of the
preferred stock, and all amounts owing on any preferred stock ranking equally
with that series of preferred stock as to liquidating distributions, out of its
funds available for distribution to stockholders. These payments will be made
before any distribution is made to holders of any securities ranking junior to
the series of preferred stock upon liquidation.
If GTL liquidates, dissolves or winds up its business, and the assets
available for distribution to the holders of the preferred stock of any series
and any other shares of its stock ranking equal with that series are not
sufficient to pay all liquidating distributions and accrued and unpaid dividends
in full, then the holders of preferred stock and equal ranking shares will
receive pro rata distributions of liquidating distributions and accrued and
unpaid dividends. This means that the distributions GTL pays to these holders
will bear the same relationship to each other that the full distributable
amounts for which these holders are respectively entitled upon liquidation of
GTL's business bear to each other.
After GTL pays the full amount of the liquidating distribution to which the
holders of a series of the preferred stock are entitled, those holders will have
no right or claim to any of GTL's remaining assets.
DIVIDENDS
The holders of the preferred stock will be entitled to receive dividends,
when, as and if declared by GTL's board of directors, out of funds GTL can
legally use to pay dividends. The prospectus supplement relating to a particular
series of preferred stock will describe the dividend rates and dates on which
dividends will be payable. The rates may be fixed or variable or both. If the
dividend rate is variable, the applicable prospectus supplement will describe
the formula used for determining the dividend rate for each dividend period. GTL
will pay dividends to the holders of record as they appear on its stock books on
the record dates fixed by GTL's board of directors. The applicable prospectus
supplement will specify whether dividends will be paid in the form of cash,
preferred stock or common stock.
The applicable prospectus supplement will also state whether dividends on
any series of preferred stock are cumulative or noncumulative. If GTL's board of
directors does not declare a dividend payable on a dividend payment date on any
noncumulative series of preferred stock, then the holders of that series will
not be entitled to receive a dividend for that dividend period. In those
circumstances, GTL will not be obligated to pay the dividend accrued for that
period, whether or not dividends on such preferred stock are declared or paid on
any future dividend payment dates. Cumulative dividends, on the other hand, will
accrue whether or not GTL has any earnings or profits, whether or
15
<PAGE> 19
not there are funds legally available for the payment of dividends and whether
or not dividends are declared.
GTL's board of directors may not declare and pay a dividend on any of GTL's
stock ranking, as to dividends, equal with or junior to any series of preferred
stock unless full dividends on that series have been declared and paid, or
declared and sufficient money is set aside for payment. Until either full
dividends are paid, or are declared and payment is set aside, on preferred stock
ranking equal as to dividends, then:
- no dividend shall be declared or paid upon, or any sum set apart for the
payment of dividends upon, any shares of junior securities;
- no other distribution shall be declared or made upon, or any sum set
apart from the payment of any distribution upon shares of junior
securities, other than a distribution consisting only of junior
securities;
- no shares of junior securities shall be purchased, redeemed or otherwise
acquired (excluding an exchange for shares of other junior securities) by
GTL or any of its subsidiaries; and
- no monies shall be paid or set apart or made available for a sinking or
other like fund for the purchase, redemption or other acquisition of any
shares of junior securities by GTL or any of its subsidiaries.
GTL is dependent on Globalstar's ability to pay dividends as a source of
funds for its own dividend payments. Globalstar's credit agreements and the
indentures relating to its outstanding debt may contain restrictions on the
ability of GTL to pay cash dividends.
REDEMPTION
Preferred stock may be redeemable, in whole or in part, at GTL's option,
and may be subject to mandatory redemption through a sinking fund or otherwise,
as described in the applicable prospectus supplement. If a series of preferred
stock is subject to mandatory redemption, the applicable prospectus supplement
will specify the number of shares that GTL will redeem each year and the
redemption price.
Redeemed preferred stock will become authorized but unissued preferred
stock that GTL may issue in the future. If preferred stock is redeemed, GTL will
pay all accrued and unpaid dividends on those shares to, but excluding, the
redemption date. In the case of any noncumulative series of preferred stock,
accrued and unpaid dividends will not include any accumulation of dividends for
prior dividend periods. The applicable prospectus supplement will also specify
whether GTL will pay the redemption price in cash or other property.
16
<PAGE> 20
If GTL redeems fewer than all shares of any series of the preferred stock
held by any holder, GTL will also specify the number of shares to be redeemed
from the holder in the notice. Even though the terms of a series of preferred
stock may permit redemption of shares of preferred stock in whole or in part, if
any dividends, including accumulated dividends, on that series are past due:
- GTL will not redeem any preferred stock of that series unless it
simultaneously redeems all outstanding shares of preferred stock of that
series; and
- GTL will not purchase or otherwise acquire any preferred stock of that
series.
The prohibition discussed in the prior sentence will not prohibit GTL from
purchasing or acquiring preferred stock of that series through a purchase or
exchange offer if GTL makes the offer on the same terms to all holders of that
series.
Unless the applicable prospectus supplement specifies otherwise, GTL will
give notice of a redemption by mailing a notice to each record holder of the
shares to be redeemed, between 30 to 60 days prior to the date fixed for
redemption. GTL will mail the notices to the holders' addresses as they appear
on its records. Each notice will state:
- the redemption date;
- the number of shares and the series of the preferred stock to be
redeemed;
- the redemption price;
- the place or places where holders can surrender the certificates for the
preferred stock for payment of the redemption price;
- that dividends on the shares to be redeemed will cease to accrue on the
redemption date; and
- the date when the holders' conversion rights, if any, will terminate.
If GTL has given notice of the redemption and has provided the funds for
the payment of the redemption price, then beginning on the redemption date:
- the dividends on the preferred stock called for redemption will no longer
accrue;
- such shares will no longer be considered outstanding; and
- the holder will no longer have any rights as stockholders except to
receive the redemption price.
17
<PAGE> 21
When the holders of these shares surrender the certificates representing
these shares, in accordance with the notice, the redemption price described
above will be paid out of the funds GTL provides. If fewer than all the shares
represented by any certificate are redeemed, a new certificate will be issued
representing the unredeemed shares without cost to the holder of those shares.
CONVERSION OR EXCHANGE RIGHTS
The prospectus supplement relating to a series of preferred stock that is
convertible or exchangeable will state the terms on which shares of that series
are convertible or exchangeable into common stock, another series of preferred
stock or debt securities.
VOTING RIGHTS
Except as indicated below or in the applicable prospectus supplement, or
except as expressly required by applicable law, the holders of preferred stock
will not be entitled to vote.
If GTL fails to pay stated dividends on any shares of preferred stock for
six consecutive quarterly periods, the holders of the majority of all
outstanding shares of preferred stock will be entitled to vote for the election
of at least 20% of the existing board of directors, but in no event more than
one or less than two additional directors. The number of directors on the board
will be increased automatically without the need of any special meeting.
Except as may be provided in the applicable prospectus supplement, so long
as any shares of preferred stock remain outstanding, unless GTL receives the
consent of the holders of at least 66 2/3% of all outstanding preferred stock
voting as one class, GTL will not:
- authorize or issue any new class or series of capital stock, or any
obligation or security that represents the right to purchase any shares
of any class or series of capital stock, ranking senior to the
outstanding series of preferred stock as to dividends or liquidating
distributions; or
- amend or modify the provisions of GTL's memorandum of association, so as
to materially and adversely affect any right, preference, privilege or
voting power of that series of preferred stock or the holders of that
series of preferred stock.
Except as provided in the applicable prospectus supplement, the consent of
holders of all the shares of preferred stock will be required to amend or modify
GTL's memorandum of association so as to:
- change a mandatory redemption date, or the due date of any dividend;
- reduce the liquidation preference, redemption price or dividend rate;
18
<PAGE> 22
- impair or adversely affect the right to institute suit for the
enforcement of any redemption payment, conversion rights or redemption
rights;
- modify the provisions with respect to the ranking of a particular series
of preferred stock; or
- alter the voting rights of the preferred stock, except to increase the
required percentage vote of the holders of preferred stock.
GTL will not be required to obtain the consent of the holders of preferred
stock to authorize, create (by way of reclassification or otherwise) or issue
any securities ranking junior to or on parity with the preferred stock, or any
obligation or security convertible or exchangeable into such a security.
DESCRIPTION OF WARRANTS
GTL may issue additional warrants for the purchase of common stock or
preferred stock. We may issue these warrants independently or together with any
other securities offered by any prospectus supplement, and they may be attached
to or separate from such offered securities. Each series of warrants will be
issued under a separate warrant agreement which we will enter into with a
warrant agent specified in the applicable prospectus supplement. The warrant
agent will act solely as our agent in connection with the warrants of such
series and will not assume any obligation or relationship of agency or trust for
or with any provisions of the warrants offered.
A prospectus supplement will describe specific terms of the warrants and
the applicable warrant agreements. These terms will contain some or all of the
following:
- the title of the warrants;
- the aggregate number of the warrants;
- the price or prices at which the warrants will be issued;
- the designation, terms and number of shares of common stock or preferred
stock purchasable upon exercise of the warrants;
- the designation and terms of the securities, if any, with which the
warrants are issued and the number of the warrants issued with each of
these securities;
- the date, if any, on and after which the warrants and the related common
stock or preferred stock will be separately transferable;
- the price at which each share of common stock or preferred stock
purchasable upon exercise of the warrants may be purchased;
19
<PAGE> 23
- the date on which the right to exercise the warrants shall commence and
the date on which such right shall expire;
- the minimum or maximum amount of the warrants which may be exercised at
any one time;
- information with respect to book-entry procedures, if any;
- a discussion of federal income tax consideration in connection with the
warrants; and
- any other terms of the warrants, including terms, procedures and
limitations relating to the exchange and exercise of the warrants.
DESCRIPTION OF DEBT SECURITIES
The debt securities will be Globalstar's and Globalstar Capital's direct
secured or unsecured general obligations as joint and several obligors and may
include debentures, notes, bonds and/or other evidences of indebtedness. The
debt securities will be either senior debt securities or subordinated debt
securities and may be secured or unsecured.
The debt securities will be issued under one or more separate indentures by
and among Globalstar, Globalstar Capital and The Bank of New York, as trustee.
Senior debt securities will be issued under a senior indenture, subordinated
debt securities will be issued under a subordinated indenture and secured debt
will be issued under a secured indenture. Together, the senior indentures, the
subordinated indentures and the secured indentures are called indentures. A copy
of the form of each type of indenture will be filed as an exhibit to the
registration statement of which this prospectus is a part. A prospectus
supplement will describe the particular terms of any debt securities Globalstar
and Globalstar Capital may offer.
The following summaries of the debt securities and the indentures are not
complete. We strongly urge you to read the indentures and the description of the
debt securities included in the prospectus supplement.
GENERAL TERMS OF DEBT SECURITIES
The debt securities issued under each indenture may be issued without limit
as to aggregate principal amount, in one or more series. Each indenture will
provide that there may be more than one trustee under the indenture, each with
respect to one or more series of debt securities. Any trustee under either
indenture may resign or be removed with respect to one or more series of debt
securities issued under that indenture, and a successor trustee may be appointed
to act with respect to that series.
20
<PAGE> 24
If two or more persons are acting as trustee with respect to different
series of debt securities issued under the same indenture, each of those
trustees will be a trustee of a trust under that indenture separate and apart
from the trust administered by any other trustee. In that case, except as
otherwise indicated in this prospectus, any action described in this prospectus
to be taken by the trustee may be taken by each of those trustees only with
respect to the one or more series of debt securities for which it is trustee.
A prospectus supplement relating to a series of debt securities being
offered will include specific terms relating to the offering and that series.
These terms will contain some or all of the following:
- the title of the debt securities;
- any limit on the aggregate principal amount of the debt securities;
- the purchase price of the debt securities, expressed as a percentage of
the principal amount;
- the date or dates on which the principal of and any premium on the debt
securities will be payable or the method for determining the date or
dates;
- if the debt securities will bear interest, the interest rate or rates or
the method by which the rate or rates will be determined;
- if the debt securities will bear interest, the date or dates from which
any interest will accrue, the interest payment dates on which any
interest will be payable, the record dates for those interest payment
dates and the basis upon which interest shall be calculated if other than
that of a 360-day year of twelve 30-day months;
- the place or places where payments on the debt securities will be made
and the debt securities may be surrendered for registration of transfer
or exchange;
- if Globalstar and Globalstar Capital will have the option to redeem all
or any portion of the debt securities, the terms and conditions upon
which the debt securities may be redeemed;
- the terms and conditions of any sinking fund or other similar provisions
obligating Globalstar and Globalstar Capital or permitting a holder to
require Globalstar and Globalstar to redeem or purchase all or any
portion of the debt securities prior to final maturity;
- whether the amount of any payments on the debt securities may be
determined with reference to an index, formula or other method and the
manner in which such amounts are to be determined;
21
<PAGE> 25
- if the debt securities are secured, a description of the underlying
collateral and any indenture provisions relating to the collateral;
- any additions or changes to the events of default in the respective
indentures;
- any additions or changes with respect to the other covenants in the
respective indentures;
- whether the debt securities will be issued in certificated or book-entry
form;
- whether the debt securities will be in registered or bearer form and, if
in registered form, the denominations of the debt securities if other
than $1,000 and multiples of $1,000;
- the applicability of the defeasance and covenant defeasance provisions of
the applicable indenture; and
- any other terms of the debt securities consistent with the provisions of
the applicable indenture.
Debt securities may be issued under the indentures as original issue
discount securities to be offered and sold at a substantial discount from their
stated principal amount. Special U.S. federal income tax, accounting and other
considerations applicable to original issue discount securities will be
described in the applicable prospectus supplement.
Unless otherwise provided with respect to a series of debt securities, the
debt securities will be issued only in registered form, without coupons, in
denominations of $1,000 and multiples of $1,000.
SENIOR DEBT SECURITIES AND SENIOR INDEBTEDNESS
Senior debt securities are to be issued under a senior indenture. Each
series of senior debt securities will constitute senior indebtedness and will
rank equally with each other series of senior debt securities and other senior
indebtedness. All subordinated debt, including, but not limited to, all
subordinated debt securities, will be subordinated to the senior debt securities
and other senior indebtedness.
Senior indebtedness includes the following indebtedness or obligations:
- the principal of and premium, if any, and unpaid interest on indebtedness
for money borrowed;
- purchase money and similar obligations;
- obligations under capital leases;
- financing provided by vendors to Globalstar;
22
<PAGE> 26
- guarantees, assumptions or purchase commitments relating to, or other
transactions as a result of which we are responsible for the payment of,
the indebtedness of others;
- renewals, extensions and refunding of that indebtedness;
- interest or obligations in respect of the indebtedness accruing after the
commencement of any insolvency or bankruptcy proceedings; and
- obligations associated with derivative products.
However, indebtedness or obligations are not senior indebtedness if the
instrument by which Globalstar and Globalstar Capital become obligated for that
indebtedness or those obligations expressly provides that that indebtedness or
those obligations are junior in right of payment to any other of Globalstar's
and Globalstar Capital's indebtedness or obligations.
SUBORDINATED DEBT SECURITIES
Subordinated debt securities are to be issued under a subordinated
indenture. Payments on the subordinated debt securities will be subordinated to
Globalstar's senior indebtedness, whether outstanding on the date of the
subordinated indenture or incurred after that date. No class of subordinated
debt securities will be subordinated to any other class of subordinated debt
securities. At June 30, 1999, Globalstar's aggregate senior indebtedness
consisted of approximately $1.45 billion principal amount of long term
indebtedness and $403 million of vendor financing, and, on August 5, 1999,
Globalstar entered into a $500 million credit facility with a group of banks.
The applicable prospectus supplement for each issuance of subordinated debt
securities will specify the aggregate amount of our outstanding indebtedness as
of the most recent practicable date that would rank senior to and equally with
the offered subordinated debt securities.
If any of certain specified events occur, the holders of senior
indebtedness must receive payment of the full amount due on the senior
indebtedness, or that payment must be duly provided for, before Globalstar and
Globalstar Capital may make payments on the subordinated debt securities. These
events are:
- any distribution of Globalstar's assets upon Globalstar's liquidation,
reorganization or other similar transaction except for a distribution in
connection with a merger or other transaction complying with the covenant
described above under "Merger";
- the occurrence and continuation of a payment default on any senior
indebtedness; or
- a declaration of the acceleration of the principal of any series of the
subordinated debt securities, or, in the case of original issue discount
23
<PAGE> 27
securities, the portion of the principal amount specified under their
terms, as due and payable, that has not been rescinded and annulled.
However, if the event is the acceleration of any series of subordinated
debt securities, only the holders of senior indebtedness outstanding at the time
of the acceleration of those subordinated debt securities, or, in the case of
original issue discount securities, that portion of the principal amount
specified under their terms, must receive payment of the full amount due on that
senior indebtedness, or such payment must be duly provided for, before
Globalstar or Globalstar Capital makes payments on the subordinated debt
securities.
As a result of the subordination provisions, some of Globalstar's or
Globalstar Capital's general creditors, including holders of senior
indebtedness, are likely to recover more, ratably, than the holders of the
subordinated debt securities in the event of insolvency.
SECURED DEBT SECURITIES
Secured debt securities are to be issued under a secured debt indenture
containing terms and conditions similar in all material respects to the terms
and conditions applicable to the senior debt securities, except for provisions
relating to the collateral securing the debt securities.
CERTIFICATED SECURITIES
Except as otherwise stated in the applicable prospectus supplement, debt
securities will not be issued in certificated form. If, however, debt securities
are to be issued in certificated form, no service charge will be made for any
transfer or exchange of any of those debt securities. Globalstar and Globalstar
Capital may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection with the transfer or exchange of those
debt securities.
BOOK-ENTRY DEBT SECURITIES
The debt securities of a series may be issued in whole or in part in the
form of one or more global securities that will be deposited with the depositary
identified in the applicable prospectus supplement. Unless it is exchanged in
whole or in part for debt securities in definitive form, a global security may
not be transferred. However, transfers of the whole security between the
depositary for that global security and its nominee or their respective
successors are permitted.
Unless otherwise stated, The Depository Trust Company, New York, New York
will act as depositary for each series of global securities. Beneficial
interests in global securities will be shown on, and transfers of global
securities will be effected only through, records maintained by DTC and its
participants.
24
<PAGE> 28
DTC has provided the following information to us. DTC is a:
- limited-purpose trust company organized under the New York Banking Law;
- a banking organization within the meaning of the New York Banking Law;
- a member of the U.S. Federal Reserve System;
- a clearing corporation within the meaning of the New York Uniform
Commercial Code; and
- a clearing agency registered under the provisions of Section 17A of the
Securities Exchange Act.
DTC holds securities that its direct participants deposit with DTC. DTC
also facilitates the settlement among direct participants of securities
transactions, in deposited securities through electronic computerized book-entry
changes in the direct participant's accounts. This eliminates the need for
physical movement of securities certificates. Direct participants include
securities brokers and dealers, banks, trust companies, clearing corporations
and certain other organizations. DTC is owned by a number of its direct
participants and by the New York Stock Exchange, Inc., the American Stock
Exchange, Inc. and the National Association of Securities Dealers, Inc. Access
to DTC's book-entry system is also available to indirect participants such as
securities brokers and dealers, banks and trust companies that clear through or
maintain a custodial relationship with a direct participant. The rules
applicable to DTC and its direct and indirect participants are on file with the
SEC.
Principal and interest payments on global securities registered in the name
of DTC's nominee will be made in immediately available funds to DTC's nominee as
the registered owner of the global securities. Globalstar, Globalstar Capital
and the trustee will treat DTC's nominee as the owner of the global securities
for all other purposes as they may determine. Accordingly, Globalstar and
Globalstar Capital, the trustee and any paying agent will have no direct
responsibility or liability to pay amounts due on the global securities to
owners of beneficial interests in the global securities. It is DTC's current
practice, upon receipt of any payment of principal or interest, to credit direct
participants' accounts on the payment date according to their respective
holdings of beneficial interests in the global securities. These payments will
be the responsibility of the direct and indirect participants and not of DTC,
the trustee, Globalstar or Globalstar Capital.
25
<PAGE> 29
Debt securities represented by a global security will be exchangeable for
debt securities in definitive form of like amount and terms in authorized
denominations only if:
- DTC notifies Globalstar and Globalstar Capital that it is unwilling or
unable to continue as depositary;
- DTC ceases to be a registered clearing agency and a successor depositary
is not appointed by Globalstar and Globalstar Capital within 90 days; or
- Globalstar and Globalstar Capital determine not to require all of the
debt securities of a series to be represented by a global security and
notify the trustee of their decisions.
MERGER
Under the terms of the indentures, Globalstar generally may consolidate
with, or sell, lease or convey all or substantially all of its assets to, or
merge with or into, any other legal entity, if Globalstar is either the
continuing entity or, if Globalstar is not the continuing entity:
- the successor entity is organized under the laws of Bermuda or the United
States of America and expressly assumes all payments on all the debt
securities and the performance and observance of all the covenants and
conditions of the applicable indenture;
- neither Globalstar nor the successor entity is in default immediately
after the transaction under the indenture;
- immediately after giving effect to such transaction, the successor entity
would be able to incur an additional $1.00 of debt pursuant to the terms
of the indenture;
- immediately after giving effect to the transaction, the successor entity
has a consolidated net worth that is not less than the consolidated net
worth of Globalstar immediately prior to the transaction; and
- Globalstar has delivered to the trustee an officer's certificate and an
opinion of counsel, each stating that the transaction complies with the
indenture.
The indentures will not permit Globalstar Capital to consolidate with, or
sell, lease or convey substantially all of its assets to, or merger with or
into, any other legal entity.
26
<PAGE> 30
EVENTS OF DEFAULT, NOTICE AND WAIVER
SENIOR INDENTURE. The senior indenture will provide that the following
are events of default with respect to any series of senior debt securities:
- default for 30 days in the payment of any interest on any debt security
of that series;
- default in the payment of the principal of or premium, if any, on any
debt security of that series at its maturity;
- default in making a sinking fund payment required for any debt security
of that series;
- default in the performance of any of Globalstar's other covenants in the
senior indenture that continues for 60 days after written notice, other
than default in a covenant included in the senior indenture solely for
the benefit of another series of senior debt securities;
- the acceleration of the maturity of more than $10,000,000 in the
aggregate of any of Globalstar's other indebtedness, where that
indebtedness is not discharged or that acceleration is not rescinded or
annulled;
- certain events of bankruptcy, insolvency or reorganization of Globalstar
or its property; and
- any other event of default provided with respect to a particular series
of debt securities.
The senior trustee generally may withhold notice to the holders of any
series of debt securities of any default with respect to that series if it
considers the withholding to be in the interest of those holders. However, the
senior trustee may not withhold notice of any default in the payment of the
principal of, or premium, if any, or interest on any debt security of that
series or in the payment of any sinking fund installment in respect of any debt
security of that series.
If an event of default with respect to any series of senior debt securities
occurs and is continuing, the senior trustee or the holders of not less than 25%
in principal amount of the outstanding debt securities of that series may
declare the principal amount of all of the debt securities of that series
immediately due and payable. Subject to certain conditions, the holders of a
majority in principal amount of outstanding debt securities of that series may
rescind and annul that acceleration. However, they may only do so if all events
of default, other than the non-payment of accelerated principal or specified
portion of accelerated principal, with respect to debt securities of that series
have been cured or waived.
27
<PAGE> 31
Holders of a majority in principal amount of any series of outstanding
senior debt securities may, subject to some limitations, waive any past default
with respect to that series and the consequences of the default. The prospectus
supplement relating to any series of senior debt securities which are original
issue discount securities will describe the particular provisions relating to
acceleration of a portion of the principal amount of those original issue
discount securities upon the occurrence and continuation of an event of default.
Within 120 days after the close of each fiscal year, Globalstar and Globalstar
Capital must file with the senior trustee a statement, signed by specified of
their officers, stating whether those officers have knowledge of any default
under the senior indenture.
Except with respect to its duties in case of default, the senior trustee is
not obligated to exercise any of its rights or powers at the request or
direction of any holders of any series of outstanding senior debt securities,
unless those holders have offered the senior trustee reasonable security or
indemnity. Subject to those indemnification provisions and limitations contained
in the senior indenture, the holders of a majority in principal amount of any
series of the outstanding debt securities issued thereunder may direct any
proceeding for any remedy available to the senior trustee, or the exercising of
any of the senior trustee's trusts or powers.
SUBORDINATED INDENTURE. The subordinated indenture will provide that the
following are events of default with respect to any series of subordinated debt
securities:
- default for 30 days in the payment of any interest on any debt security
of that series;
- default in the payment of the principal of or premium, if any, on any
debt security of that series at its maturity;
- default in making a sinking fund payment required for any debt security
of that series;
- any default in the performance of any of our other covenants in the
subordinated indenture that continues for 60 days after written notice,
other than default in a covenant included in the subordinated indenture
solely for the benefit of another series of subordinated debt securities;
- the acceleration of more than $10,000,000, where that indebtedness is not
discharged or that acceleration is not rescinded or annulled;
- certain events relating to the bankruptcy, insolvency or reorganization
of us or our property; and
- any other event of default provided with respect to a particular series
of debt securities.
28
<PAGE> 32
The subordinated trustee generally may withhold notice to the holders of
any series of subordinated debt securities of any default with respect to that
series if it considers the withholding to be in the interest of the holders.
However, the subordinated trustee may not withhold notice of any default in the
payment of the principal of or premium, if any or interest on any debt security
of that series or in the payment of any sinking fund installment in respect of
any debt security of that series.
If an event of default with respect to any series of subordinated debt
securities occurs and is continuing, the subordinated trustee or the holders of
not less than 25% in principal amount of the outstanding debt securities of that
series may declare the principal amount of all of the debt securities of that
series immediately due and payable. Subject to certain conditions, the holders
of a majority in principal amount of outstanding debt securities of that series
may rescind and annul that acceleration. However, they may only do so if all
events of default with respect to debt securities of that series have been cured
or waived. Holders of a majority in principal amount of any series of the
outstanding subordinated debt securities may, subject to some limitations, waive
any past default with respect to that series and the consequences of the
default. The prospectus supplement relating to any series of subordinated debt
securities which are original issue discount securities will describe the
particular provisions relating to acceleration of a portion of the principal
amount of those original issue discount securities upon the occurrence and
continuation of an event of default. Within 120 days after the close of each
fiscal year, Globalstar and Globalstar Capital must file with the subordinated
trustee a statement, signed by their specified officers, stating whether these
officers have knowledge of any default under the subordinated indenture.
Except with respect to its duties in case of default, the subordinated
trustee is not obligated to exercise any of its rights or powers at the request
or direction of any holders of any series of outstanding subordinated debt
securities, unless those holders have offered the subordinated trustee
reasonable security or indemnity. Subject to those indemnification provisions
and limitations contained in the subordinated indenture, the holders of a
majority in principal amount of any series of the outstanding subordinated debt
securities may direct any proceeding for any remedy available to the
subordinated trustee, or the exercising of any of the subordinated trustee's
trusts or powers.
AMENDMENT, SUPPLEMENT AND WAIVER
SENIOR INDENTURE. Modifications and amendments of the senior indenture
may be made only, subject to some exceptions, with the consent of the holders of
a majority in aggregate principal amount of all outstanding debt securities
under the senior indenture which are affected by the modification or amendment.
29
<PAGE> 33
However, to the extent discussed in the prospectus supplement, the holder
of each affected senior debt security must consent to any modification or
amendment of the senior indenture that:
- changes the stated maturity of the principal of, or the premium, if any,
or any installment of interest on, that debt security;
- reduces the principal amount of, or the rate or amount of interest on, or
any premium payable on redemption of, that debt security;
- reduces the amount of principal of an original issue discount security
that would be due and payable upon declaration of acceleration of its
maturity or would be provable in bankruptcy;
- adversely affects any right of repayment of the holder of that debt
security;
- changes the place of payment where, or the currency in which, any payment
on that debt security is payable;
- impairs the right to institute suit to enforce any payment on or with
respect to that debt security;
- reduces the percentage of outstanding debt securities of any series
necessary to modify or amend the senior indenture or to waive compliance
with some of its provisions or defaults and their consequences; or
- make any change in any subsidiary guarantee that would adversely affect
the rights of holders of that security.
Globalstar, Globalstar Capital and the senior trustee may amend the senior
indenture without the consent of the holders of any senior debt securities in
certain limited circumstances, such as:
- to evidence the succession of another entity to Globalstar and the
assumption by the successor of Globalstar's covenants contained in the
senior indenture;
- to secure the securities; and
- to cure any ambiguity, to correct or supplement any provision in the
senior indenture which may be inconsistent with any other provision of
the senior indenture.
SUBORDINATED INDENTURE. Modifications and amendments to the subordinated
indenture may be made only, subject to some exceptions, with the consent of the
holders of a majority in aggregate principal amount of all outstanding debt
securities under the subordinated indenture which are affected by the
modification or amendment. However, to the extent discussed in the
30
<PAGE> 34
prospectus supplement, the holder of each affected subordinated debt security
must consent to any modification or amendment of the subordinated indenture
that:
- changes the stated maturity of the principal of, or the premium, if any,
or any installment of interest on, that debt security;
- reduces the principal amount of, or the rate or amount of interest on, or
any premium payable on redemption of, that debt security;
- reduces the amount of principal of an original issue discount security
that would be due and payable upon declaration of acceleration of its
maturity or would be provable in bankruptcy;
- adversely affects any right of the repayment of the holder of that debt
security;
- changes the place of payment where, or the currency in which, any payment
on that debt security is payable;
- impairs the right to institute suit to enforce any payment on or with
respect to that debt security;
- reduces the percentage of outstanding debt securities of any series
necessary to modify or amend the subordinated indenture or to waive
compliance with some of its provisions or defaults and their
consequences; or
- subordinates the indebtedness evidenced by that debt security to any of
our indebtedness other than senior indebtedness.
Globalstar, Globalstar Capital and the subordinated trustee also may amend
the subordinated indenture without the consent of the holders of any
subordinated debt securities in certain limited circumstances, such as:
- to evidence the succession of another entity to Globalstar and the
assumption by the successor of Globalstar's covenants contained in the
subordinated indenture;
- to secure the securities; and
- to cure any ambiguity, to correct or supplement any provision in the
subordinated indenture which may be inconsistent with any other provision
of the subordinated indenture.
DEFEASANCE AND COVENANT DEFEASANCE
To the extent stated in the prospectus supplement, Globalstar and
Globalstar Capital may elect to apply the provisions relating to defeasance and
31
<PAGE> 35
discharge of indebtedness, or to defeasance of certain restrictive covenants in
the indentures, to the debt securities of any series.
When Globalstar and Globalstar Capital establish a series of debt
securities, Globalstar and Globalstar Capital may provide that that series is
subject to the defeasance and discharge provisions of the applicable indenture.
If those provisions are made applicable, Globalstar and Globalstar Capital may
elect either:
- to defease and be discharged from, subject to some limitations, all of
its obligations with respect to those debt securities; or
- to be released from its obligations to comply with specified covenants
relating to those debt securities as described in the applicable
prospectus supplement.
To effect that defeasance or covenant defeasance, Globalstar and Globalstar
Capital must irrevocably deposit in trust with the relevant trustee an amount in
any combination of funds or government obligations, which, through the payment
of principal and interest in accordance with their terms, will provide money
sufficient to make payments on those debt securities and any mandatory sinking
fund or analogous payments on those debt securities.
On such a defeasance, Globalstar and Globalstar Capital will not be
released from obligations:
- to pay additional amounts, if any, upon the occurrence of some events;
- to register the transfer or exchange of those debt securities;
- to replace some of those debt securities;
- to maintain an office relating to those debt securities; and
- to hold moneys for payment in trust.
To establish such a trust Globalstar and Globalstar Capital must, among
other things, deliver to the relevant trustee an opinion of counsel to the
effect that the holders of those debt securities:
- will not recognize income, gain or loss for U.S. federal income tax
purposes as a result of the defeasance or covenant defeasance; and
- will be subject to U.S. federal income tax on the same amounts, in the
same manner and at the same times as would have been the case if the
defeasance or covenant defeasance had not occurred. In the case of
defeasance, the opinion of counsel must be based upon a ruling of the IRS
or a change in applicable U.S. federal income tax law occurring after the
date of the applicable indenture.
32
<PAGE> 36
Government obligations mean generally securities which are:
- direct obligations of the U.S. or of the government which issued the
foreign currency in which the debt securities of a particular series are
payable, in each case, where the issuer has pledged its full faith and
credit to pay the obligations; or
- obligations of an agency or instrumentality of the U.S. or of the
government which issued the foreign currency in which the debt securities
of that series are payable, the payment of which is unconditionally
guaranteed as a full faith and credit obligation by the U.S. or that
other government.
In any case, the issuer of government obligations cannot have the option to
call or redeem the obligations. In addition, government obligations include,
subject to certain qualifications, a depository receipt issued by a bank or
trust company as custodian with respect to any government obligation or a
specific payment of interest on or principal of any such government obligation
held by the custodian for the account of a depository receipt holder.
If Globalstar and Globalstar Capital effect covenant defeasance with
respect to any debt securities, the amount on deposit with the relevant trustee
will be sufficient to pay amounts due on the debt securities at the time of
their stated maturity. However, those debt securities may become due and payable
prior to their stated maturity if there is an event of default with respect to a
covenant from which Globalstar and Globalstar Capital have not been released. In
that event, the amount on deposit may not be sufficient to pay all amounts due
on the debt securities at the time of the acceleration.
The applicable prospectus supplement may further describe the provisions,
if any, permitting defeasance or covenant defeasance, including any
modifications to the provisions described above.
PLAN OF DISTRIBUTION
We may sell the offered securities (1) through agents, (2) through
underwriters, (3) to dealers, or (4) directly to one or more purchasers. The
applicable prospectus supplement will describe the terms of the offering of the
securities, including:
- the name or names of any underwriters, if any;
- whether these underwriters operate in or outside of the United States;
- the purchase price of the securities and the proceeds we will receive
from the sale;
33
<PAGE> 37
- any underwriting discounts and other items constituting underwriters'
compensation;
- any initial public offering price;
- any discounts or concessions allowed or reallowed or paid to dealers; and
- any securities exchange or market on which the securities may be listed.
Offered securities may be sold through agents designated by us. Unless
otherwise indicated in a prospectus supplement, the agents will use their best
efforts to solicit purchases for the period of their appointment.
If underwriters are used in the sale, the offered securities will be
acquired by the underwriters for their own account. The underwriters may resell
the securities in one or more transactions, including negotiated transactions,
at a fixed public offering price or at varying prices determined at the time of
sale. The obligations of the underwriters to purchase the securities will be
subject to certain conditions. The underwriters will be obligated to purchase
all the securities of the series offered if any of the securities are purchased.
Any initial public offering price and any discounts or concessions allowed or
re-allowed or paid to dealers may be changed from time to time. We may also
decide to sell the offered securities or parts of any offering outside of the
United States, using international underwriters. In such an event, we will file
a separate information prospectus with the SEC.
If a dealer is used in the sale, we will sell the offered securities to the
dealer, as principal. The dealer may then resell those securities to the public
at varying prices to be determined by the dealer at the time of resale.
We may also sell offered securities directly to institutional investors or
others. In this case, no underwriters or agents would be involved.
We may authorize underwriters, dealers and agents to solicit offers by
certain institutional investors to purchase offered securities under contracts
providing for payment and delivery on a future date specified in the prospectus
supplement. The prospectus supplement will also describe the public offering
price for the securities and the commission payable for solicitation of these
delayed delivery contracts. Delayed delivery contracts will contain definite
fixed price and quantity terms. The obligations of a purchaser under these
delayed delivery contracts will be subject to only two conditions:
- that the institution's purchase of the securities at the time of delivery
of the securities is not prohibited under the law of any jurisdiction to
which the institution is subject; and
- that we shall have sold to the underwriters the total principal amount of
the offered securities, less the principal amount covered by the delayed
delivery contracts.
34
<PAGE> 38
Underwriters, dealers, agents and direct purchasers that participate in the
distribution of the offered securities may be underwriters as defined in the
Securities Act and any discounts or commissions they receive from us and any
profit on the resale of the offered securities by them may be treated as
underwriting discounts and commissions under the Securities Act. Any
underwriters, dealers or agents will be identified and their compensation
described in a prospectus supplement.
We may have agreements with the underwriters, dealers and agents to
indemnify them against certain civil liabilities, including liabilities under
the Securities Act, or to contribute with respect to payments which the
underwriters, dealers or agents may be required to make.
Underwriters, dealers and agents may engage in transactions with, or
perform services for, us or our subsidiaries in the ordinary course of their
businesses.
The place and time of delivery of the offered securities will be described
in the prospectus supplement.
LEGAL MATTERS
Appleby, Spurling & Kempe will issue an opinion as to the validity of the
offered securities under Bermuda law and Willkie Farr & Gallagher will issue an
opinion as to the validity of the offered securities under U.S. federal law,
Delaware law and New York law. Any underwriters will be advised about other
issues relating to any offering by their own legal counsel. As of June 30, 1999,
partners and counsel in Willkie Farr & Gallagher beneficially owned 110,000
shares of GTL common stock. Mr. Robert B. Hodes is counsel to the law firm of
Willkie Farr & Gallagher and a Director of Loral and GTL and a member of the
Executive and Audit Committees of the Boards of Directors of both Loral and GTL.
EXPERTS
The annual financial statements of GTL and Globalstar incorporated in this
prospectus by reference from GTL's and Globalstar's Annual Report on Form 10-K
for the year ended December 31, 1998 and the balance sheets of Globalstar
Capital and Loral/Qualcomm Satellite Services, L.P., as of December 31, 1998 and
1997 included in this prospectus have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their reports, which are included or
incorporated by reference in this prospectus, and have been so included or
incorporated in reliance upon the reports of such firm given upon their
authority as experts in auditing and accounting.
35
<PAGE> 39
WHERE YOU CAN FIND MORE INFORMATION
We file reports, proxy statements and other information with the SEC which
you can read at the SEC's Web site at http://www.sec.gov. You can also read
these documents at the SEC's public reference rooms in Washington, D.C.,
Chicago, Illinois and New York, NY. Please call the SEC toll free at
1-800-SEC-0330 for information about its public reference rooms.
We have filed a registration statement with the SEC on Form S-3 under the
Securities Act of 1933. This prospectus does not contain all of the information
in the registration statement. We have omitted certain parts of the registration
statement, as permitted by the rules and regulations of the SEC. You may inspect
and copy the registration statement, including exhibits, at the SEC's web site
and public reference facilities. Our statements in this prospectus about the
contents of any contract or other document are not necessarily complete. You
should refer to the copy of each contract or other document we have filed as an
exhibit to the registration statement for complete information.
The SEC allows us to "incorporate by reference" the information we file
with it, which means we can satisfy our legal obligations to disclose important
information contained in those documents by referring you to them. The
information included in the following documents is incorporated by reference and
is considered to be a part of this prospectus. More recent information that we
file with the SEC automatically updates and supersedes any inconsistent
information contained in prior filings.
The documents listed below have been filed under the Securities and
Exchange Act of 1934 with the SEC and are incorporated herein by reference:
- GTL's and Globalstar's Annual Report on Form 10-K for the year ended
December 31, 1998;
- GTL's and Globalstar's Quarterly Report on Form 10-Q for the quarterly
period ended March 31, 1999;
- GTL's and Globalstar's Quarterly Report on Form 10-Q for the quarterly
period ended June 30, 1999;
- GTL's Proxy Statement relating to the 1999 Annual Meeting of
Shareholders;
- GTL's and Globalstar's Current Report on Form 8-K, filed January 8, 1999;
- GTL's and Globalstar's Current Report on Form 8-K, filed January 22,
1999;
36
<PAGE> 40
- GTL's and Globalstar's Current Report on Form 8-K, filed August 6, 1999;
and
- the description of GTL's common stock contained in GTL's registration
statement on Form 8-A filed under the Exchange Act and any amendments or
reports filed for the purpose of updating such description.
We also incorporate by reference all documents subsequently filed by us
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act, until the
offering of the securities under this prospectus is completed.
We will provide without charge to each person, including any person having
a control relationship with that person, to whom a prospectus is delivered, a
copy of any or all of the information that has been incorporated by reference in
this prospectus but not delivered with this prospectus. If you would like to
obtain this information from us, please direct your request, either in writing
or by telephone to Globalstar Telecommunications Limited, Cedar House, 41 Cedar
Avenue, Hamilton HM12, Bermuda, Attn: Secretary, (441) 295-2244. For information
about Globalstar and Globalstar Capital, please direct your request in writing
or by telephone to Globalstar, L.P. at 3200 Zanker Road, P.O. Box 640670, San
Jose, California 95134-0670, Attention Stephen C. Wright, (408) 933-4000.
You should rely only on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. We have not authorized
anyone else to provide you with different information. We are not making an
offer of these securities in any state where the offer is not permitted. You
should not assume that the information in this prospectus or any prospectus
supplement is accurate as of any date other than the date on the front of those
documents.
37
<PAGE> 41
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
GLOBALSTAR CAPITAL CORPORATION
Independent Auditors' Report................................ F-2
Balance Sheets.............................................. F-3
Notes to Balance Sheets..................................... F-4
LORAL/QUALCOMM SATELLITE SERVICES, L.P.
Independent Auditors' Report................................ F-7
Balance Sheets.............................................. F-8
Notes to Balance Sheets..................................... F-9
</TABLE>
F-1
<PAGE> 42
INDEPENDENT AUDITORS' REPORT
To the Stockholder of Globalstar Capital Corporation:
We have audited the accompanying balance sheets of Globalstar Capital
Corporation (a wholly-owned subsidiary of Globalstar, L.P.) as of December 31,
1998 and 1997. These balance sheets are the responsibility of the Company's
management. Our responsibility is to express an opinion on these balance sheets
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the balance sheets are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the balance sheets. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall balance sheet presentation. We
believe that our audits of the balance sheets provide a reasonable basis for our
opinion.
In our opinion, such balance sheets present fairly, in all material
respects, the financial position of Globalstar Capital Corporation as of
December 31, 1998 and 1997 in conformity with generally accepted accounting
principles.
DELOITTE & TOUCHE LLP
San Jose, California
February 16, 1999
F-2
<PAGE> 43
GLOBALSTAR CAPITAL CORPORATION
(A WHOLLY-OWNED SUBSIDIARY OF GLOBALSTAR, L.P.)
BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
----------------
1998 1997
------ ------
<S> <C> <C>
ASSETS
Receivable from Parent..................................... $1,000 $1,000
====== ======
LIABILITIES AND STOCKHOLDER'S EQUITY
Commitments and contingencies (Note 3).....................
Stockholder's equity.......................................
Common stock, par value $.10; 1,000 shares authorized,
issued and outstanding................................ $ 10 $ 10
Paid-in capital............................................ 990 990
------ ------
$1,000 $1,000
====== ======
</TABLE>
See notes to balance sheets.
F-3
<PAGE> 44
GLOBALSTAR CAPITAL CORPORATION
(A WHOLLY-OWNED SUBSIDIARY OF GLOBALSTAR, L.P.)
NOTES TO BALANCE SHEETS
1. ORGANIZATION
Globalstar Capital Corporation ("Globalstar Capital"), a wholly-owned
subsidiary of Globalstar, L.P. ("Globalstar") was formed on July 24, 1995 for
the primary purpose of serving as a co-issuer and co-obligor with respect to
certain debt obligations of Globalstar.
2. COMMITMENTS AND CONTINGENCIES
Globalstar Capital is a co-obligor on the following Globalstar borrowings:
11 3/8% $500 MILLION SENIOR NOTES DUE 2004
In February, 1997, Globalstar sold $500 million principal amount of 11 3/8%
Senior Notes due 2004 in a private offering. The notes are senior in right of
payment to Globalstar's 8% Convertible Redeemable Preferred Partnership
Interests ("8% RPPIs"), may not be redeemed prior to February 2002 and are
subject to a prepayment premium prior to 2004. Interest is paid semi-annually.
11 1/4% $325 MILLION SENIOR NOTES DUE 2004
In June, 1997, Globalstar sold $325 million principal amount of 11 1/4%
Senior Notes due 2004 in a private offering. The notes are senior in right of
payment to Globalstar's 8% RPPIs, may not be redeemed prior to June 2002 and are
subject to a prepayment premium prior to 2004. Interest is paid semi-annually.
10 3/4% $325 MILLION SENIOR NOTES DUE 2004
In October, 1997, Globalstar sold $325 million principal amount of 10 3/4%
Senior Notes due 2004 in a private offering. The notes are senior in right of
payment to Globalstar's 8% RPPI's, may not be redeemed prior to November 2002
and are subject to a prepayment premium prior to 2004. Interest is paid
semi-annually.
11 1/2% $300 MILLION SENIOR NOTES DUE 2005
In May, 1998, Globalstar sold $300 million principal amount of 11 1/2%
Senior Notes due 2005 in a private offering. The notes are senior in right of
payment to Globalstar's 8% RPPI's, may not be redeemed prior to June 2003 and
are subject to a prepayment premium prior to 2005. Interest is paid semi-
annually.
F-4
<PAGE> 45
GLOBALSTAR CAPITAL CORPORATION
(A WHOLLY-OWNED SUBSIDIARY OF GLOBALSTAR, L.P.)
NOTES TO BALANCE SHEETS -- (CONTINUED)
The indentures for the 11 3/8% Senior Notes, the 11 1/4% Senior Notes, the
10 3/4% Senior Notes, and the 11 1/2% Senior Notes contain certain covenants
that, among other things, limit the ability of Globalstar to incur additional
debt, issue preferred stock, or pay dividends and certain distributions. In
certain limited circumstances involving a change of control of Globalstar, as
defined, each note is redeemable at the option of the holder for 101% of the
principal amount plus accrued interest.
Globalstar Capital is a guarantor of a $250 million credit agreement
between Globalstar and a group of banks. At December 31, 1998, and December 31,
1997, there were no borrowings outstanding under this agreement.
3. SUBSEQUENT EVENTS
On January 21, 1999, Globalstar sold to GTL 7 million units (face amount of
$50 per unit) of 8% RPPIs in Globalstar, in connection with GTL's offering of 7
million shares (face amount of $50 per share) of 8% Convertible Redeemable
Preferred Stock due 2011 (the "Preferred Stock"). Dividends on the 8% RPPIs and
the Preferred Stock accrue at 8% per annum and are payable quarterly. Globalstar
is using the funds for the construction and deployment of the Globalstar System.
The Preferred Stock is convertible into shares of GTL common stock at a
conversion price of $23.2563 per share, subject to adjustment for certain
antidilution events. As of January 21, 1999, the Preferred Stock was convertible
into 15,049,685 shares of GTL common stock. Loral purchased 3 million shares
($150 million face amount) of the Preferred Stock issued, in order to maintain
its prior percentage ownership interest in Globalstar.
The Preferred Stock has limited voting rights. With respect to dividend
rights and rights upon liquidation, winding up and dissolution, the Preferred
Stock ranks senior to common stock and to all other future series of preferred
stock or other class of capital stock of GTL, the terms of which do not
expressly provide that such series or class ranks senior to or on parity with
the Preferred Stock. Prior to its mandatory redemption date, the Preferred Stock
is redeemable (at a premium which declines over time) by GTL beginning in
February 2002 (or beginning in February 2000 if GTL's stock price exceeds
certain defined price ranges). Payments due on the Preferred Stock may be made
in cash, GTL common stock or a combination of both at the option of GTL. In the
event accrued and unpaid dividends accumulate to an amount equal to six
quarterly dividends, holders of the majority of the outstanding
F-5
<PAGE> 46
GLOBALSTAR CAPITAL CORPORATION
(A WHOLLY-OWNED SUBSIDIARY OF GLOBALSTAR, L.P.)
NOTES TO BALANCE SHEETS -- (CONTINUED)
shares of Preferred Stock will be entitled to elect additional members to GTL's
Board of Directors.
The 8% RPPIs rank senior to ordinary partnership interests and have terms
substantially similar to the Preferred Stock. However, they are subordinate to
all existing and future liabilities of Globalstar, and cash distributions
thereon are limited to the amount of the partnership capital accounts that are
maintained for such interests. The 8% RPPIs will convert to ordinary partnership
interests upon any conversion of the Preferred Stock into GTL common stock.
Payments due on the 8% RPPIs may be made in cash. Globalstar ordinary
partnership interests or a combination of both at the option of Globalstar.
F-6
<PAGE> 47
INDEPENDENT AUDITORS' REPORT
To the Partners of Loral/Qualcomm Satellite Services, L.P.
We have audited the accompanying balance sheets of Loral/Qualcomm Satellite
Services, L.P. (a General Partner of Globalstar, L.P.) as of December 31, 1998
and 1997. These balance sheets are the responsibility of the Partnerships'
management. Our responsibility is to express an opinion on these balance sheets
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the balance sheets are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the balance sheets. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall balance sheet presentation. We
believe that our audits of the balance sheets provide a reasonable basis for our
opinion.
In our opinion, such balance sheets present fairly, in all material
respects, the financial position of Loral/Qualcomm Satellite Services, L.P. as
of December 31, 1998 and 1997 in conformity with generally accepted accounting
principles.
DELOITTE & TOUCHE LLP
San Jose, California
February 16, 1999
F-7
<PAGE> 48
LORAL/QUALCOMM SATELLITE SERVICES, L.P.
(A GENERAL PARTNER OF GLOBALSTAR, L.P.)
BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1998 1997
------------ ------------
<S> <C> <C>
ASSETS:
Investment in Globalstar, L.P. ................... $-- $--
Total assets......................................
== ==
PARTNERS' CAPITAL:
Partnership interests (18,000 interests
outstanding).................................... $-- $--
Total partners' capital...........................
== ==
</TABLE>
See notes to balance sheets.
F-8
<PAGE> 49
LORAL/QUALCOMM SATELLITE SERVICES, L.P.
(A GENERAL PARTNER OF GLOBALSTAR, L.P.)
NOTES TO BALANCE SHEETS
1. ORGANIZATION AND BACKGROUND
Loral/Qualcomm Satellite Services, L.P. ("LQSS"), was formed in November
1993 as a Delaware limited partnership with a December 31 fiscal year end. The
general partner of LQSS is Loral/Qualcomm Partnership, L.P. ("LQP"), a limited
partnership whose general partner is Loral General Partner, Inc. ("LGP"), a
subsidiary of Loral Space & Communications Ltd., a Bermuda company ("Loral") and
whose limited partners include a subsidiary of QUALCOMM Incorporated
("Qualcomm").
Effective April 23, 1996, a merger between Loral Corporation ("Old Loral")
and Lockheed Martin Corporation ("Lockheed Martin") was completed. In
conjunction with the merger, Old Loral's space and communications businesses,
including its direct and indirect interests in LGP, LQP, LQSS, Globalstar, L.P.
("Globalstar"), Globalstar Telecommunications Limited ("GTL"), Space
Systems/Loral, Inc. ("SS/L"), and other affiliated businesses, as well as
certain other assets, were transferred to Loral.
LQSS's only activity is acting as the managing general partner of
Globalstar, a development stage limited partnership, which was founded to
design, construct and operate a worldwide, low-earth orbit satellite-based
wireless digital telecommunications system (the "Globalstar System"). The
Globalstar System's world-wide coverage is designed to enable its service
providers to extend modern telecommunications services to millions of people who
currently lack basic telephone service and to enhance wireless communications in
areas underserved or not served by existing or future cellular systems,
providing a telecommunications solution in parts of the world where the build-
out of terrestrial systems cannot be economically justified.
At December 31, 1998, LQSS held a 30.9% interest in Globalstar's
outstanding partnership interests. As LQSS's investment in Globalstar is LQSS's
only asset, LQSS is dependent upon Globalstar's success and achievement of
profitable operations for the recovery of its investment. Globalstar is a
development stage limited partnership which may encounter problems, delays and
expenses, many of which may be beyond Globalstar's control. These may include,
but are not limited to, problems related to technical development of the system,
testing, regulatory compliance, manufacturing and assembly, potential launch
failures which could delay the program schedule, the competitive and regulatory
environment in which Globalstar will operate, marketing problems and costs and
expenses that may exceed current estimates. There can be no assurance that
substantial delays in any of the foregoing matters would not delay Globalstar's
achievement of profitable
F-9
<PAGE> 50
LORAL/QUALCOMM SATELLITE SERVICES, L.P.
(A GENERAL PARTNER OF GLOBALSTAR, L.P.)
NOTES TO BALANCE SHEETS -- (CONTINUED)
operations and effect the recoverability of LQSS's investment. All expenses
necessary to maintain LQSS's operations are borne by Globalstar.
While it is not anticipated that LQSS will incur any direct obligations for
borrowed money or any other liabilities, it will, as a general partner of
Globalstar, be jointly and severally liable for all liabilities of Globalstar
other than those that are by contract made expressly non-recourse to
Globalstar's general partners or otherwise guaranteed. Limited partners in LQSS
do not, in general, have such joint and several liability.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
INVESTMENT IN GLOBALSTAR, L.P.
LQSS accounts for its investment in Globalstar using the equity method of
accounting. Under this method, LQSS recognizes its allocated share of
Globalstar's net loss, for each period since its initial investment in March
1994. The difference between LQSS's initial investment in Globalstar and its
interest in Globalstar's ordinary partnership capital, at that time, is
attributable to certain intangible assets contributed to Globalstar for
development of the Globalstar System; this difference will be accreted by LQSS
on a ratable basis upon Globalstar's commencement of commercial services. During
1995, LQSS's investment in Globalstar was reduced to zero. Accordingly, LQSS has
discontinued providing for its allocated share of Globalstar's net losses, and
will recognize a liability as a result of its general partner status in
Globalstar only in the event that Globalstar's losses result in an aggregate
ordinary partners' capital deficiency. At December 31, 1998, suspended losses
representing LQSS's unrecognized equity in Globalstar's net losses aggregated
approximately $107,944,000.
NET (LOSS) INCOME ALLOCATION
The partnership agreements of LQSS and Globalstar provide that net losses
of each partnership are allocated among the partners with positive adjusted
capital account balances in accordance with their relative percentage interests
until the adjusted capital account balances of all partners are zero. Any
further net loss is allocated to the general partner.
Net income of each partnership is allocated among the partners in
proportion to, and to the extent of, distributions made to the partners out of
receipts for the period, as defined, then in proportion to and to the extent of
negative adjusted capital account balances and then in accordance with
percentage interests.
F-10
<PAGE> 51
LORAL/QUALCOMM SATELLITE SERVICES, L.P.
(A GENERAL PARTNER OF GLOBALSTAR, L.P.)
NOTES TO BALANCE SHEETS -- (CONTINUED)
Under the terms of the partnership agreements, adjusted partners' capital
accounts are calculated in accordance with the principles of U.S. Treasury
Regulations governing the allocation of taxable income and loss including
adjustments to reflect the fair market value (including intangibles) of
partnership assets upon certain capital transactions including a sale of
partnership interests. Such adjustments are not permitted under generally
accepted accounting principles and, accordingly, are not reflected in the
accompanying financial statements.
INCOME TAXES
LQSS was organized as a Delaware limited partnership. As such, no income
tax provision (benefit) is included in the accompanying financial statements
since U.S. income taxes are the responsibility of its partners. Generally,
taxable income (loss), deductions and credits of LQSS will be passed
proportionately through to its partners.
3. INVESTMENT IN GLOBALSTAR
On March 23, 1994, LQSS entered into a subscription agreement to acquire
18,000,000 general ordinary partnership interests in Globalstar for $50,000,000.
LQSS paid $38,691,000 in cash during 1994 and 1995 and received a credit of
$11,309,000 against its capital subscription, as compensation for certain costs
incurred by the partners of its general partner, LQP. As of December 31, 1998,
Globalstar had 38,242,593 general and 19,937,500 limited ordinary partnership
interests outstanding.
On February 14, 1995, GTL completed an initial public offering of
40,000,000 shares of common stock, resulting in net proceeds of $185,750,000,
which were used to purchase 10,000,000 ordinary general partnership interests in
Globalstar. LQSS and the other partners in Globalstar have the right to exchange
their ordinary partnership interests into shares of GTL common stock on an
approximate one-for-four basis following the Full Coverage Date, as defined, of
the Globalstar System and after two consecutive quarters of positive net income,
subject to certain annual limitations. GTL has reserved approximately 152
million shares for this purpose.
In May 1997 and June 1998, GTL issued two-for-one stock splits in the form
of 100% stock dividends. Prior to the stock splits, GTL's equity securities and
convertible securities were represented by equivalent Globalstar partnership
interests on an approximate one-for-one basis. Globalstar's partnership
interests were not affected by the GTL stock splits and, accordingly, GTL's
equity
F-11
<PAGE> 52
LORAL/QUALCOMM SATELLITE SERVICES, L.P.
(A GENERAL PARTNER OF GLOBALSTAR, L.P.)
NOTES TO BALANCE SHEETS -- (CONTINUED)
securities are now represented by equivalent Globalstar partnership interests on
an approximate four-for-one basis. All GTL shares and per share amounts have
been restated to reflect the two-for-one stock splits.
On December 15, 1995, Globalstar entered into a $250 million credit
agreement (the "Global Credit Agreement") with a group of banks. Lockheed
Martin, Qualcomm, SS/L and another Globalstar partner have guaranteed $206.3
million, $21.9 million, $11.7 million and $10.1 million of the Globalstar Credit
Agreement, respectively. In addition, Loral agreed to indemnify Lockheed Martin
for any liability in excess of $150 million.
Pursuant to other equity arrangements entered into by Globalstar,
additional Globalstar ordinary partnership interests have been reserved for
issuance. As LQSS is not a participant in such arrangements, such issuances
would result in the dilution of LQSS's interest in Globalstar's ordinary
partnership interests. At December 31, 1998 and 1997, LQSS held directly
18,000,000 ordinary general partnership interests, or 30.9% and 34.4%, of the
outstanding 58,180,093 and 52,319,076 ordinary partnership interests of
Globalstar, respectively.
At December 31, 1998, Globalstar had reserved additional ordinary
partnership interests for issuance for: exercise of warrants to purchase GTL
common stock issued in connection with Globalstar's 11 3/8% Senior Notes due
2004 (1,017,331 interests), exercise of a warrant issued to China Telecom to
purchase Globalstar ordinary partnership interests (937,500 interests), and
interests reserved for issuance under GTL's 1994 stock option plan (617,873
interests). Assuming all such reserved interests had been issued at December 31,
1998, LQSS's direct interest in Globalstar's ordinary partnership interests
would have decreased to 29.6%.
On January 21, 1999, Globalstar sold GTL $350 million face amount of 8%
redeemable preferred partnership interests ("8% RPPI's") in connection with
GTL's offering of $350 million of 8% Convertible Preferred Stock due 2011.
Conversion of the 8% RPPI's would result in the issuance of 3,762,421 interests,
subject to adjustment for certain antidilution events. Assuming all such
reserved interests had been issued at December 31, 1998, LQSS's direct interest
in Globalstar's ordinary partnership interests would have decreased to 27.9%.
In addition, Globalstar may elect to make the preferred distribution on the
8% RPPI's in ordinary partnership interests, versus cash, which would further
dilute LQSS's direct interest in Globalstar's ordinary partnership interests.
F-12
<PAGE> 53
LORAL/QUALCOMM SATELLITE SERVICES, L.P.
(A GENERAL PARTNER OF GLOBALSTAR, L.P.)
NOTES TO BALANCE SHEETS -- (CONTINUED)
4. PARTNERS' CAPITAL
On March 23, 1994, LQSS received capital subscriptions of $50,000,000 for a
42.2% general partnership interest and 57.8% limited partnership interests,
representing all issued and outstanding partnership interests. Of these capital
subscriptions, $38,691,000 was received in cash during 1994 and 1995 and a
capital subscription credit of $11,309,000 was issued to the general and limited
partners as compensation for expenditures incurred by Loral and Qualcomm from
January 1, 1993 through March 22, 1994, relating to the Globalstar System. LQSS
was in turn granted a credit against its capital subscription payable to
Globalstar for the same amount.
On April 14, 1997, LQSS effected a six-for-one split of partnership
interests so that one LQSS partnership interest would represent an effective
ownership of one Globalstar partnership interest. All LQSS interest and per
interest amounts have been restated to reflect the six-for-one split.
5. RELATED PARTY TRANSACTIONS
GLOBALSTAR MANAGING PARTNER'S ALLOCATION
Commencing after the initiation of Globalstar's services, LQSS will receive
a managing partner's allocation equal to 2.5% of Globalstar's revenues up to
$500 million, plus 3.5% of revenues in excess of $500 million. This managing
partner's allocation will be distributed to LQSS's general partner, LQP. Should
Globalstar incur a net loss in any year following commencement of services, the
allocation for that year will be reduced by 50% and Globalstar will be
reimbursed for allocation payments, if any, made in any prior quarter of such
year, sufficient to reduce the management allocation for such year to 50%. No
allocations have been received to date. The allocation may be deferred (with
interest 4% per annum) in any quarter in which Globalstar would report negative
cash flow from operations if the allocation were made.
F-13
<PAGE> 54
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
$500,000,000
<TABLE>
<S> <C>
GLOBALSTAR TELECOMMUNICATIONS GLOBALSTAR, L.P.
LIMITED GLOBALSTAR CAPITAL CORPORATION
COMMON STOCK DEBT SECURITIES
PREFERRED STOCK
WARRANTS
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 55
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the fees and expenses payable by the
Registrants in connection with this offering, other than underwriting discounts
and commissions. All the amounts shown are estimates, except the SEC
registration fee:
<TABLE>
<S> <C>
SEC registration fee........................................ $139,000
Transfer agent and registration fee......................... $ 5,000
Printing fees............................................... $ 10,000
Legal fees and expenses..................................... $ 15,000
Accounting fees and expenses................................ $ 5,000
Miscellaneous fees and expenses............................. $ 1,500
--------
Total............................................. $175,500
========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Bermuda law permits a company to indemnify its directors and officers,
except for any act of fraud or dishonesty. GTL has provided in its Bye-Laws that
its directors and officers will be indemnified out of the funds of GTL against
all civil liabilities, loss, damage or expense (including defending any
proceedings in specified circumstances) incurred or suffered, other than to the
extent such indemnity would be void under Bermuda law.
Bermuda law also permits GTL to purchase insurance for the benefit of its
directors and officers against any liability incurred by them for the failure to
exercise the requisite care, diligence and skill in the exercise of their powers
and the discharge of their duties, or indemnifying them in respect of any loss
arising or liability incurred by them by reason of negligence, default, breach
of duty or breach of trust.
GTL has entered into indemnification agreements with its officers and
directors. To the extent permitted by law, the indemnification agreements may
require GTL, among other things, to indemnify such officers and directors
against liabilities that may arise by reason of their status or service as
directors (other than liabilities arising from willful misconduct of a culpable
nature) and to advance their expenses incurred as a result of any proceedings
against them as to which they could be indemnified.
GTL maintains a directors' and officers' liability insurance policy.
II-1
<PAGE> 56
Globalstar Capital, which is a Delaware corporation, is empowered by the
Delaware General Corporation Law, subject to the procedures and limitations
stated therein, to indemnify any person against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with any threatened, pending or completed action,
suit or proceeding in which such person is made a party by reason of his being
or having been a director, officer, employee or agent of Globalstar Capital. The
statute provides that indemnification pursuant to its provisions is not
exclusive of other rights of indemnification to which a person may be entitled
under any by-law, agreement, vote of stockholders or disinterested directors, or
otherwise. The Certificate of Incorporation and by-laws of Globalstar Capital
provide for indemnification of the directors and officers of such entities to
the full extent permitted by the Delaware General Corporation Law.
Section 17-108 of the Delaware Revised Uniform Limited Partnership Act
empowers Globalstar to indemnify and hold harmless any partner or other person
from and against any and all claims and demands whatsoever.
Globalstar has agreed to indemnify its partners, the partners in LQSS and
LQP, their respective affiliates and all of their respective officers,
directors, partners, controlling shareholders, employees, and agents (each an
"Indemnitee") from and against any and all losses and liabilities arising out of
or incidental to the business of Globalstar so long as such Indemnitee's conduct
did not constitute actual fraud, gross negligence, knowing breach of specific
provisions of the Globalstar partnership agreement or willful or wanton
misconduct. The Globalstar partnership agreement further provides that LQSS,
GTL, the partners in LQSS and LQP, their respective affiliates and all of their
respective officers, directors, partners, controlling shareholders, employees
and agents (each a "General Partner Person") will not be liable to Globalstar or
the limited partners for any losses sustained or liabilities incurred as a
result of any act or omission of a General Partner Person, if such person or
entity acted in good faith and in a manner it or he reasonably believed to be
in, or not opposed to, the best interest of Globalstar and the conduct did not
constitute gross negligence or non-performance. LQSS and GTL, as applicable,
will indemnify the limited partners for losses and liabilities resulting from
conduct of their respective General Partner Person that is found to have
constituted bad faith, gross negligence or non-performance.
II-2
<PAGE> 57
ITEM 16. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- ------- -----------------------
<S> <C>
1.1** Form of Underwriting Agreement for Debt Securities
1.2** Form of Underwriting Agreement for Equity Securities
4.1** Form of Preferred Stock Annex to Bye-Laws of Globalstar
Telecommunications Limited
4.2*** Form of Senior Indenture
4.3*** Form of Subordinated Indenture
4.4*** Form of Secured Indenture
4.5*** Form of Senior Debt Security
4.6*** Form of Subordinated Debt Security
4.7*** Form of Secured Debt Security
4.8** Form of Warrant Agreement to purchase GTL Common Stock
5.1*** Opinion of Appleby, Spurling & Kempe
5.2+ Opinion of Willkie Farr & Gallagher
12* Statement Regarding Computation of Ratios
23.1*** Consent of Deloitte & Touche LLP
23.2*** Consent of Appleby, Spurling & Kempe (included in their
opinion filed as Exhibit 5.1)
23.3+ Consent of Willkie Farr & Gallagher (included in their
opinion filed as Exhibit 5.2)
25.1*** Form of Statement of Eligibility of Senior Trustee on Form
T-1
25.2*** Form of Statement of Eligibility of Subordinated Trustee on
Form T-1
25.3*** Form of Statement of Eligibility of Secured Trustee on Form
T-1
</TABLE>
- -------------------------
+ Previously filed.
* Incorporated by reference from GTL's and Globalstar, L.P.'s Annual Report on
Form 10-K for the year ended December 31, 1998 and the Quarterly Report on
Form 10-Q for the quarterly period ended June 30, 1999.
** To be filed by amendment or incorporated by reference to the extent
applicable in connection with an offering.
*** Filed herewith
II-3
<PAGE> 58
ITEM 17. UNDERTAKINGS
(a) The undersigned registrants hereby undertake:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the SEC pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than a
20% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration
statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
registration statement is on Form S-3 or Form S-8, and the information
required to be included in a post-effective amendment by those paragraphs
is contained in periodic reports filed by the registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrants hereby undertake that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
II-4
<PAGE> 59
registrants' annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the provisions described under item 15 above, or
otherwise, the registrants have been advised that in the opinion of the SEC,
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrants of expenses incurred
or paid by a director, officer or controlling person of the registrants in the
successful defense of any action, suit or proceeding), is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrants will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
II-5
<PAGE> 60
SIGNATURES
(GLOBALSTAR TELECOMMUNICATIONS LIMITED)
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE
REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN THE CITY OF NEW YORK, STATE OF NEW YORK, ON AUGUST 16, 1999.
GLOBALSTAR TELECOMMUNICA-
TIONS LIMITED
By /s/ ERIC J. ZAHLER
--------------------------------------
Eric J. Zahler
Vice President
II-6
<PAGE> 61
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS ON BEHALF OF
GLOBALSTAR TELECOMMUNICATIONS LIMITED IN THE CAPACITIES AND ON THE DATES
INDICATED.
<TABLE>
<CAPTION>
NAME TITLE DATE
---- ----- ----
<C> <S> <C>
* Chairman of the Board, August 16, 1999
- --------------------------------------------------- President and Chief Executive
Bernard L. Schwartz Officer (Principal Executive
Officer)
* Vice Chairman of the Board and August 16, 1999
- --------------------------------------------------- Director
Gregory J. Clark
* Senior Vice President and August 16, 1999
- --------------------------------------------------- Director
Michael P. DeBlasio
Director August 16, 1999
- ---------------------------------------------------
Douglas G. Dwyre
* Director August 16, 1999
- ---------------------------------------------------
Sir Ronald Grierson
* Director August 16, 1999
- ---------------------------------------------------
Robert B. Hodes
* Director August 16, 1999
- ---------------------------------------------------
E. John Peett
</TABLE>
II-7
<PAGE> 62
<TABLE>
<CAPTION>
NAME TITLE DATE
---- ----- ----
<C> <S> <C>
Director August 16, 1999
- ---------------------------------------------------
Michael B. Targoff
* Director August 16, 1999
- ---------------------------------------------------
A. Robert Towbin
* Vice President and Chief August 16, 1999
- --------------------------------------------------- Financial Officer (Principal
Richard J. Townsend Financial Officer)
* Vice President and Controller August 16, 1999
- --------------------------------------------------- (Principal Accounting
Harvey B. Rein Officer)
*By: /s/ ERIC J. ZAHLER
----------------------------------------------
Attorney-in-Fact
</TABLE>
II-8
<PAGE> 63
SIGNATURES
(GLOBALSTAR, L.P.)
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE
REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN THE CITY OF NEW YORK, STATE OF NEW YORK, ON AUGUST 16, 1999.
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/ ERIC J. ZAHLER
----------------------------------------
Eric J. Zahler
Senior Vice President
II-9
<PAGE> 64
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS ON BEHALF OF
LORAL GENERAL PARTNER, INC., THE CORPORATE GENERAL PARTNER OF LORAL/QUALCOMM
PARTNERSHIP, L.P., THE GENERAL PARTNER OF LORAL/QUALCOMM SATELLITE SERVICES,
L.P., THE GENERAL PARTNER OF GLOBALSTAR, L.P., IN THE CAPACITIES AND ON THE
DATES INDICATED.
<TABLE>
<CAPTION>
NAME TITLE DATE
---- ----- ----
<C> <S> <C>
* Chairman of the Board and Chief August 16, 1999
- --------------------------------------------------- Executive Officer (Principal
Bernard L. Schwartz Executive Officer)
* President, Chief Operating August 16, 1999
- --------------------------------------------------- Officer and Director
Gregory J. Clark
/s/ ERIC J. ZAHLER Senior Vice President, August 16, 1999
- --------------------------------------------------- Secretary and Director
Eric J. Zahler
* Senior Vice President and Chief August 16, 1999
- --------------------------------------------------- Financial Officer (Principal
Richard J. Townsend Financial Officer)
* Vice President and Controller August 16, 1999
- --------------------------------------------------- (Principal Accounting
Harvey B. Rein Officer)
*By: /s/ ERIC J. ZAHLER
----------------------------------------------
Attorney-in-Fact
</TABLE>
II-10
<PAGE> 65
SIGNATURES
(GLOBALSTAR CAPITAL CORPORATION)
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE
REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN THE CITY OF NEW YORK, STATE OF NEW YORK, ON AUGUST 16, 1999.
Globalstar Capital Corporation
By /s/ ERIC J. ZAHLER
-----------------------------------
Eric J. Zahler
Senior Vice President
II-11
<PAGE> 66
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS ON BEHALF OF
GLOBALSTAR CAPITAL CORPORATION IN THE CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
NAME TITLE DATE
---- ----- ----
<C> <S> <C>
* Chairman of the Board and Chief August 16, 1999
- --------------------------------------------------- Executive Officer (Principal
Bernard L. Schwartz Executive Officer)
* President, Chief Operating August 16, 1999
- --------------------------------------------------- Officer and Director
Gregory J. Clark
/s/ ERIC J. ZAHLER Senior Vice President, August 16, 1999
- --------------------------------------------------- Secretary and Director
Eric J. Zahler
* Senior Vice President and Chief August 16, 1999
- --------------------------------------------------- Financial Officer (Principal
Richard J. Townsend Financial Officer)
* Vice President and Controller August 16, 1999
- --------------------------------------------------- (Principal Accounting
Harvey B. Rein Officer)
*By: /s/ ERIC J. ZAHLER
----------------------------------------------
Attorney-in-Fact
</TABLE>
II-12
<PAGE> 67
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- ------- -----------------------
<S> <C>
1.1** Form of Underwriting Agreement for Debt Securities
1.2** Form of Underwriting Agreement for Equity Securities
4.1** Form of Preferred Stock Annex to Bye-Laws of Globalstar
Telecommunications Limited
4.2*** Form of Senior Indenture
4.3*** Form of Subordinated Indenture
4.4*** Form of Secured Indenture
4.5*** Form of Senior Debt Security
4.6*** Form of Subordinated Debt Security
4.7*** Form of Secured Debt Security
4.8** Form of Warrant Agreement to purchase GTL Common Stock
5.1*** Opinion of Appleby, Spurling & Kempe
5.2+ Opinion of Willkie Farr & Gallagher
12* Statement Regarding Computation of Ratios
23.1*** Consent of Deloitte & Touche LLP
23.2*** Consent of Appleby, Spurling & Kempe (included in their
opinion filed as Exhibit 5.1)
23.3+ Consent of Willkie Farr & Gallagher (included in their
opinion filed as Exhibit 5.2)
25.1*** Form of Statement of Eligibility of Senior Trustee on Form
T-1
25.2*** Form of Statement of Eligibility of Subordinated Trustee on
Form T-1
25.3*** Form of Statement of Eligibility of Secured Trustee on Form
T-1
</TABLE>
- -------------------------
+ Previously Filed.
* Incorporated by reference from the Registrants' Annual Report on Form 10-K
for the year ended December 31, 1998 and the Quarterly Report on Form 10-Q
for the quarterly period ended June 30, 1999.
** To be filed by amendment or incorporated by reference to the extent
applicable in connection with an offering.
*** Filed herewith
<PAGE> 1
Exhibit 4.2
GLOBALSTAR, L.P.
GLOBALSTAR CAPITAL CORPORATION,
Issuers
%- Senior Notes due ________
INDENTURE
Dated as of
THE BANK OF NEW YORK,
Trustee
<PAGE> 2
TABLE OF CONTENTS
Page
ARTICLE 1. Definitions and Incorporation by Reference
SECTION 1.1. Definitions............................................. 1
SECTION 1.2. Other Definitions....................................... 20
SECTION 1.3. Incorporation by Reference of Trust Indenture Act....... 21
SECTION 1.4. Rules of Construction................................... 21
ARTICLE 2. The Securities
SECTION 2.1. Form and Dating......................................... 22
SECTION 2.2. Execution and Authentication............................ 22
SECTION 2.3. Registrar and Paying Agent.............................. 23
SECTION 2.4. Paying Agent To Hold Money in Trust..................... 23
SECTION 2.5. Securityholder Lists.................................... 24
SECTION 2.6. Transfer and Exchange................................... 24
SECTION 2.7. Replacement Securities.................................. 25
SECTION 2.8. Outstanding Securities.................................. 25
SECTION 2.9. Temporary Securities.................................... 25
SECTION 2.10. Cancellation............................................ 26
SECTION 2.11. Defaulted Interest...................................... 26
SECTION 2.12. CUSIP Numbers........................................... 26
ARTICLE 3. Redemption
SECTION 3.1. Notices to Trustee...................................... 26
SECTION 3.2. Selection of Securities To Be Redeemed.................. 27
SECTION 3.3. Notice of Redemption.................................... 27
SECTION 3.4. Effect of Notice of Redemption.......................... 28
SECTION 3.5. Deposit of Redemption Price............................. 28
SECTION 3.6. Securities Redeemed in Part............................. 28
ARTICLE 4. Covenants
SECTION 4.1. Payment of Securities................................... 28
SECTION 4.2. SEC Reports............................................. 29
SECTION 4.3. Limitation on Consolidated Debt......................... 29
SECTION 4.4. Future Guarantors....................................... 31
SECTION 4.5. Limitation on Restricted Payments....................... 31
SECTION 4.6. Dividend and other Payment Restrictions Affecting
Subsidiaries........................................ 33
SECTION 4.7. Asset Dispositions...................................... 35
SECTION 4.8. Transactions with Affiliates............................ 36
SECTION 4.9. Limitation on Issuances and Sales of Capital, Stock
of Restricted Subsidiaries.......................... 37
SECTION 4.10. Change of Control....................................... 37
SECTION 4.11. Limitation on Liens..................................... 38
(i)
<PAGE> 3
SECTION 4.12. Business Activities..................................... 40
SECTION 4.13. Maintenance of Insurance................................ 40
SECTION 4.14. Compliance certificate; Statement by officers as to
Default............................................. 42
SECTION 4.15. Further Instruments and Acts............................ 42
SECTION 4.16. Business Activities of Globalstar Capital............... 42
SECTION 4.17. Calculation of Original Issue Discount.................. 43
ARTICLE 5. Successor Issuers
SECTION 5.1. When Issuers May Merge or Transfer Assets............... 43
ARTICLE 6. Defaults and Remedies
SECTION 6.1. Events of Default....................................... 44
SECTION 6.2. Acceleration............................................ 46
SECTION 6.3. Other Remedies.......................................... 47
SECTION 6.4. Waiver of Past Defaults................................. 47
SECTION 6.5. Control by Majority..................................... 47
SECTION 6.6. Limitation on Suits..................................... 48
SECTION 6.7. Rights of Holders to Receive Payment.................... 48
SECTION 6.8. Collection Suit by Trustee.............................. 48
SECTION 6.9. Trustee May File Proofs Claim........................... 48
SECTION 6.10. Priorities.............................................. 49
SECTION 6.11. Undertaking for Costs................................... 49
SECTION 6.12. Waiver of Stay or Extension Laws........................ 49
ARTICLE 7. Trustee
SECTION 7.1. Duties of Trustee....................................... 50
SECTION 7.2. Rights of Trustee....................................... 51
SECTION 7.3. Individual Rights of Trustee............................ 52
SECTION 7.4. Trustee's Disclaimer.................................... 52
SECTION 7.5. Notice of Defaults...................................... 52
SECTION 7.6. Reports by Trustee to Holders........................... 52
SECTION 7.7. Compensation and Indemnity.............................. 53
SECTION 7.8. Replacement of Trustee.................................. 53
SECTION 7.9. Successor Trustee by Merger............................. 54
SECTION 7.10. Eligibility: Disqualification........................... 55
SECTION 7.11. Preferential Collection of Claims Against Issuers....... 55
ARTICLE 8. Discharge of Indenture; Defeasance
SECTION 8.1. Discharge of Liability on Securities; Defeasance........ 55
SECTION 8.2. Conditions to Defeasance................................ 56
SECTION 8.3. Application of Trust Money.............................. 57
SECTION 8.4. Repayment to Issuers.................................... 57
SECTION 8.5. Indemnity for Government Obligations.................... 58
SECTION 8.6. Reinstatement........................................... 58
(ii)
<PAGE> 4
ARTICLE 9. Amendments
SECTION 9.1. Without Consent of Holders.............................. 58
SECTION 9.2. With Consent of Holders................................. 59
SECTION 9.3. Compliance with Trust Indenture Act..................... 60
SECTION 9.4. Revocation and Effect of Consents and Waivers........... 60
SECTION 9.5. Notation on or Exchange of Securities................... 60
SECTION 9.6. Trustee To Such Amendments.............................. 60
SECTION 9.7. Payment for Consent..................................... 61
ARTICLE 10. Subsidiary Guaranties
SECTION 10.1. Guaranties.............................................. 61
SECTION 10.2. Limitation on Liability................................. 63
SECTION 10.3. Successors and Assigns.................................. 63
SECTION 10.4. No Waiver............................................... 63
SECTION 10.5. Modification............................................ 64
SECTION 10.6. Release of Subsidiary Guarantor......................... 64
ARTICLE 11. Miscellaneous
SECTION 11.1. Trust Indenture Act Controls............................ 68
SECTION 11.2. Notices................................................. 68
SECTION 11.3. Communication by Holders with Other Holders............. 69
SECTION 11.4. Certificate and opinion as to Conditions Precedent...... 69
SECTION 11.5. Statements Required in Certificate or Opinion........... 69
SECTION 11.6. When Securities Disregarded............................. 70
SECTION 11.7. Rules by Trustee, Paying Agent and Registrar............ 70
SECTION 11.8. Legal Holidays.......................................... 70
SECTION 11.9. Governing Law........................................... 70
SECTION 11.10. No Recourse Against Others.............................. 71
SECTION 11.11. Successors.............................................. 71
SECTION 11.12. Multiple Originals...................................... 71
SECTION 11.13. Table of Contents; Headings............................. 71
(iii)
<PAGE> 5
INDENTURE dated as of , 1999, among Globalstar, L.P.,
a Delaware limited partnership ("Globalstar"), Globalstar Capital
Corporation, a Delaware corporation ("Globalstar Capital" and, together
with Globalstar, the "Issuers") and The Bank of New York, a New York
banking corporation (the "Trustee").
Each party hereto agrees as follows for the benefit of the
other party and for the equal and ratable benefit of the Holders of the
Securities:
ARTICLE 1.
Definitions and Incorporation by Reference
SECTION 1.1. Definitions.
"Acquired Debt" means, with respect to any specified Person,
(i) Debt of any other Person existing at the time such Person merges with or
into or consolidates with or becomes a Restricted Subsidiary of such specified
Person and (ii) Debt secured by a Lien encumbering any asset acquired by such
specified Person, which Debt or Lien was not Incurred in anticipation of, and
was outstanding prior to, such merger, consolidation or acquisition.
"Affiliate" of any Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; provided, however,
that beneficial ownership of 10% or more of the voting securities of a Person
shall be deemed to be control. The terms "controlling" and "controlled" have
meanings correlative to the foregoing.
"Asset Disposition" means any transfer, conveyance, sale,
lease or other disposition (collectively, any "disposition") by the Issuers or
any Restricted Subsidiary (including any disposition by means of a
consolidation, merger or similar transaction) but excluding a disposition by a
Restricted Subsidiary to the Issuers or a Wholly-Owned Restricted Subsidiary or
by the Issuers to a Wholly-Owned Restricted Subsidiary of shares of Capital
Stock or other ownership interests of a Restricted Subsidiary, (ii) all or
substantially all of the assets of the Issuers or any Restricted Subsidiary
representing a division or line of business or (iii) other assets or rights of
such Person or any of its Restricted Subsidiaries other than a disposition (a)
in the ordinary course of business, (b) that constitutes a Restricted Payment
which is permitted pursuant to Section 4.5 or (c) that is subject to the
provisions set forth in
<PAGE> 6
Section 5.1(a); provided, however, that a transaction described in clauses (i),
(ii) and (iii) shall constitute an Asset Disposition only to the extent that the
aggregate consideration for all such transfers, conveyances, sales, leases or
other disposition exceeds $5 million in any 12-month period.
"Attributable Debt" in respect of a Sale and Leaseback
Transaction means, as at the time of determination, the present value
(discounted at the interest rate borne by the Securities, compounded annually)
of the total obligations of the lessee for rental payments during the remaining
term of the lease included in such Sale and Leaseback Transaction (including any
period for which such lease has been extended).
"Average Life" means, as of the date of determination, with
respect to any Debt or Preferred Stock, the quotient obtained by dividing (i)
the sum of the products of the numbers of years from the date of determination
to the dates of each successive scheduled principal payment of such Debt or
redemption or similar payment with respect to such Preferred Stock multiplied by
the amount of such payment by (ii) the sum of all such payments.
"Bank Credit Agreement" means any one or more credit
agreements (which may include or consist of revolving credits) between
Globalstar, Globalstar Capital or any Restricted Subsidiary and one or more
banks or other financial institutions providing financing for the business of
Globalstar and its Restricted Subsidiaries.
"Build-out" means the construction, acquisition, improvement,
operation and development (including all costs related thereto) of the
Globalstar System, until such time as Globalstar shall have constructed at least
for use in the Globalstar System; (ii) launched or attempted to launch (through
"intentional ignition") at least for use in the Globalstar System; and (iii)
commenced commercial service of the Globalstar System with at least in orbit and
Operating.
"Business Day" means each day which is not a Legal Holiday.
"Capital Lease Obligation" of any Person means an obligation
that is required to be classified and accounted for as a capital lease or a
liability on the face of a balance sheet of such Person in accordance with GAAP
(a "Capital Lease"). The Stated Maturity of such obligation shall be the date of
the last payment of rent or any other amount due under such lease prior to the
first date upon which such lease may be terminated by the lessee without payment
of a penalty. The amount of such Debt represented by such obligation shall be
the capitalized amount thereof that would appear on the face of a balance sheet
of such Person in accordance with GAAP.
-2-
<PAGE> 7
"Capital Stock" of any Person means any and all shares,
interests, participations or other equivalents (however designated) of corporate
stock or other equity participations, including partnership interests, whether
general or limited, of such Person and shall (i) include any Special Preferred
obligations and other preferred equivalent obligations and (ii) exclude debt
securities convertible into Capital Stock.
"Change of Control" means:
(i) the sale, lease or transfer, in one transaction or a
series of related transactions, of all or substantially all the assets
of Globalstar and the Restricted Subsidiaries;
(ii) the adoption of a plan relating to the liquidation
or dissolution of Globalstar or Globalstar Capital;
(iii) one or more Dispositions which cause Loral's direct
and indirect equity interest in Globalstar to be reduced by more than
30% as compared to its direct and indirect equity interest in
Globalstar as of December 31, 1996; or
(iv) the first day on which:
(a) Globalstar fails to own, of record and
beneficially, 100% of the equity interests and voting stock of
Globalstar Capital; or
(b) Loral fails to be, or, directly or indirectly,
fails solely to control, the sole managing general partner of
Globalstar.
Notwithstanding clauses (i), (ii) and (iv)(b) above, neither
the acquisition by GTL, Loral or any Wholly Owned Subsidiary of Loral of a
majority of the partnership interests in, or substantially all the assets of,
Globalstar, nor the merger of Globalstar with and into GTL, Loral or any Wholly
Owned Subsidiary of Loral shall constitute a Change of Control; provided,
however, that with respect to clause (iv)(b), Loral continues to control, or is
the corporate successor to, Globalstar.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" means the Securities and Exchange Commission and
any survivor agency.
"Consolidated Cash Flow Available for Fixed Charges" for any
period means the Consolidated Net Income of Globalstar
-3-
<PAGE> 8
and its Restricted Subsidiaries for such period plus Consolidated Interest
Expense of Globalstar and its Restricted Subsidiaries for such period, plus the
following to the extent deducted in calculating such Consolidated Net Income:
(i) Consolidated Income Tax Expense of Globalstar and its Restricted
Subsidiaries for such period, (ii) the consolidated depreciation and
amortization expense included in the income statement of Globalstar and its
Restricted Subsidiaries for such period and (iii) any non-cash expense related
to the issuance to employees of Globalstar or any Restricted Subsidiary of
Globalstar of options to purchase Capital Stock of Globalstar or such Restricted
Subsidiary; provided, however, that there shall be excluded therefrom the
Consolidated Cash Flow Available for Fixed Charges (if positive) of any
Restricted Subsidiary (calculated separately, for such Restricted Subsidiary in
the same manner as provided above for Globalstar) that is subject to a
restriction which prevents the payment of dividends or the making of
distributions to Globalstar or another Restricted Subsidiary to the extent of
such restriction; provided, further, however, that if Consolidated Cash Flow
Available For Fixed Charges for any period shall be less than $1, Consolidated
Cash Flow For Fixed Charges for such period shall be deemed to be $1.
"Consolidated Income Tax Expenses" for any period means the
consolidated provision for income taxes of Globalstar and the Restricted
Subsidiaries for such period calculated on a consolidated basis in accordance
with GAAP.
"Consolidated Interest Expense" means, for any period, the
consolidated interest expense included in a consolidated income statement
(excluding interest income) of Globalstar and the Restricted Subsidiaries for
such period calculated on a consolidated basis in accordance with GAAP, plus, to
the extent not so included, cash dividends paid during such period on Special
Preferred Obligations.
"Consolidated Net Income" means, for any period, the
consolidated net income (or loss) of Globalstar and the Restricted Subsidiaries
for such period determined on a consolidated basis in accordance with GAAP, less
the amount of any cash dividends paid during such period on Special Preferred
Obligations; provided, however, that there shall be excluded therefrom (i) the
net income (or loss) of any Person acquired by Globalstar or a Restricted
Subsidiary in a pooling-of-interests transaction for any period prior to the
date of such transaction, (ii) the net income (and loss) of any Person that is
not a Restricted Subsidiary except to the extent of the amount of dividends or
other distributions actually paid to Globalstar or a Restricted Subsidiary by
such Person during such period, (iii) gains (but not losses) on Asset
Dispositions by Globalstar or any Restricted Subsidiary, (iv) all extraordinary
gains and losses, (v) the cumulative effect of changes in accounting principles,
(vi) non-cash gains or losses resulting from fluctuations in
-4-
<PAGE> 9
currency exchange rates, (vii) any noncash gain or loss realized on the
termination of any employee pension benefit plan and (viii) the tax effect of
any of the items described in clauses (i) through (vii) above; provided further,
however, that for purposes of any determination pursuant to the provisions of
Section 4.5, (a) there shall further be excluded therefrom the net income (but
not net loss) of any Restricted Subsidiary that is subject to a restriction
which prevents the payment of dividends or the making of distributions to
Globalstar or another Restricted Subsidiary of Globalstar to the extent of such
restriction and (b) there shall further be deducted therefrom an amount equal to
the Tax Amount paid by Globalstar during such period.
"Consolidated Net Worth" of any Person means the consolidated
stockholders, equity of such Person, determined on a consolidated basis in
accordance with GAAP, less amounts attributable to Disqualified Stock of such
Person; provided, however, that, with respect to Globalstar, adjustments
following the date of this Indenture to the accounting books and records of
Globalstar in accordance with Accounting Principles Board Opinions Nos. 16 and
17 (or successor opinions thereto) or otherwise resulting from the acquisition
of control of Globalstar by another Person shall not be given effect to.
"Debt" means (without duplication), with respect to any
Person, whether recourse is to all or a portion of the assets of such Person and
whether or not contingent, (i) every obligation of such Person for money
borrowed, (ii) every obligation of such Person evidenced by bonds, debentures,
notes or other similar instruments, including any such obligations Incurred-in
connection with the acquisition of property, assets or businesses, (iii) every
reimbursement obligation of such Person with respect to letters of credit,
bankers, acceptances or similar facilities issued for the account of such
Person, (iv) every obligation of such Person issued or assumed as the deferred
purchase price of property or services (including securities repurchase
agreements but excluding trade accounts payable or accrued liabilities arising
in the ordinary course of business which are not overdue or which are being
contested in good faith), (v) every Capital Lease Obligation of such Person,
(vi) all Receivables Sales of such Person, together with any obligation of such
Person to pay any discount, interest, fees, indemnities, penalties, recourse
expenses or other amounts in connection therewith, (vii) all obligations to
redeem Disqualified Stock issued by such Person, (viii) all Attributable Debt,
(ix) every obligation under Interest Rate and Currency Protection Agreements of
such Person, (x) every obligation of the type referred to in clauses (i) through
(ix) of another Person secured by any Lien on any property or asset of such
Person (whether or not such obligation is assumed by such Person), the amount of
such obligation being deemed to be the lesser of the fair market value of such
property or assets and the amount of
-5-
<PAGE> 10
the obligation so secured and (xi) every obligation of the type referred to in
clauses (i) through (ix) of another Person and all dividends of another Person
the payment of which, in either case, such Person has Guaranteed. The "amount"
or "principal amount", of Debt at any time of determination as used herein
represented by (a) any Debt issued at a price that is less than the principal
amount at maturity thereof, shall be the amount of the liability in respect
thereof determined in accordance with GAAP, (b) any Receivables Sales shall be
the amount of the unrecovered capital or principal investment of the purchaser
(other than Globalstar or a Wholly-Owned Restricted Subsidiary) thereof,
excluding amounts representative of yield or interest earned on such investment,
(c) any Disqualified Stock, shall be the maximum fixed redemption or repurchase
price in respect thereof, (d) any Capital Lease Obligation, shall be determined
in accordance with the definition thereof and (e) any Permitted Interest Rate or
Currency Protection Agreement shall be zero. In no event shall Debt include any
liability for taxes. For purposes of determining any particular amount of Debt,
Guarantees or Liens with respect to letters of credit supporting Debt otherwise
included in the determination of a particular amount shall not be included.
"Default" means an event that is, or after the passing of time
or the giving of notice both would be, an Event of Default.
"Disposition" means (i) the sale, transfer or other conveyance
by Loral or any of its Subsidiaries (other than to a Wholly Owned Subsidiary of
Loral) of (a) Globalstar partnership interests or (b) equity interests in any
entity (an "intermediate entity") which owns, directly or indirectly, Globalstar
partnership interests or (ii) the issue and sale by any such intermediate entity
of its equity securities to one or more third parties if and to the extent the
proceeds of such issue and sale are distributed by such intermediate entity to
Loral or any of its Subsidiaries.
"Disqualified Stock" of any Person means any Capital Stock of
such Person which, by its terms (or by the terms of any security into which it
is convertible or for which it is exchangeable at the option of the holder
thereof), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable
at the option of the holder thereof, in whole or in part, on or prior to the
first anniversary of the final Stated Maturity of the Securities; provided,
however, that any Preferred Stock which would not constitute Disqualified Stock
but for provisions thereof giving holders thereof the right to require
Globalstar to repurchase or redeem such Preferred Stock upon the occurrence of a
change of control occurring prior to the first anniversary of the final Stated
Maturity of the Securities shall not constitute Disqualified Stock if the change
of control
-6-
<PAGE> 11
provisions applicable to such Preferred Stock are no more favorable to the
holders of such Preferred Stock than the provisions applicable to the Securities
contained in Section 4.10 and such Preferred Stock specifically provides that
Globalstar will not repurchase or redeem any such stock pursuant to such
provisions prior to Globalstar's repurchase of such Securities as are required
to be repurchased pursuant to Section 4.10; provided further, however, that all
Special Preferred obligations shall be deemed to be Disqualified Stock.
"ll 3/8 Indenture" means the indenture dated as of February
15, 1997, among Globalstar, Globalstar Capital and The Bank of New York, as
Trustee, pursuant to which the 11 3/8 Notes were issued.
"ll 1/4 Indenture" means the indenture dated as of June 1,
1997, among Globalstar, Globalstar Capital and The Bank of New York, as Trustee,
pursuant to which the 11 1/4 Notes were issued.
"ll 3/8 Notes" means the $500,000,000 aggregate principal
amount of 11-3/8% Senior Notes due 2004 of the Issuers, together with any
Exchange Securities or Private Exchange Securities (as such terms are defined in
the 11 3/8 Indenture) issued pursuant to the 11 3/8 Indenture.
"ll 1/4 Notes" means the $325,000,000 aggregate principal
amount of the 11-1/4% Senior Notes due 2004 of the Issuers, together with any
Exchange Securities or Private Exchange Securities (as such terms are defined in
the 11 1/4 Indenture) issued pursuant to the 11 1/4 Indenture.
"Eligible Institution" means a commercial banking institution
that has combined capital and surplus of not less than $500 million or its
equivalent in foreign currency, whose debt is rated "A-311 or higher or "A--" or
higher according to Moody's Investors Service, Inc. or Standard & Poor's Ratings
Group (or such similar equivalent rating by at least one "nationally recognized
statistical rating organization" (as defined in Rule 436 under the Securities
Act)) respectively, at the time as of which any investment or rollover therein
is made.
"Equity offering" means (i) any sale or issuance for cash by
Globalstar of Globalstar partnership interests to any Person that, as of the
Business Day immediately before and the Business Day immediately after the day
of such sale, has, or whose Parent has, a total market capitalization of at
least $1. billion on a consolidated basis, after giving effect to such sale
(including any Indebtedness incurred in connection with such sale) and (ii) any
offering of GTL common stock in an underwritten sale to the public pursuant to a
registration statement (other than on Form S-8 or any other form relating to
securities issuable under any benefit plan of Globalstar) that is declared
effective by the Commission, all of the net cash
-7-
<PAGE> 12
proceeds of which sale are applied promptly toward the purchase of Globalstar
partnership interests. For purposes of clause [(i)] of this paragraph, any
issuance or sale of Globalstar partnership interests shall be deemed to be "for
cash" only to the extent that the net cash proceeds of such issuance or sale
exceed the value of any amounts paid (in cash or otherwise) by Globalstar to
redeem Globalstar partnership interests during the past six months.
"Event of Default" has the meaning set forth in Section 6.1.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended (or any successor act), and the rules and regulations thereunder.
"GAAP" means generally accepted accounting principles in the
United States of America as in effect as of the Issue Date, including those set
forth in M the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants, (ii) statements and
pronouncements of the Financial Accounting Standards Board, (iii) such other
statements by such other entity as approved by a significant segment of the
accounting profession and (iv) the rules and regulations of the Commission
governing the inclusion of financial statements (including pro forma financial
statements) in periodic reports required to be filed pursuant to Section 13 of
the Exchange Act, including opinions and pronouncements in staff accounting
bulletins and similar written statements from the accounting staff of the
Commission.
"General Partners' Committee" means the committee consisting
of representatives of the general partners of Globalstar that governs the
activities of Globalstar.
"Globalstar System" means Globalstar's worldwide, low-earth
orbit, satellite-based digital telecommunications system as described in the
Prospectus, as defined below.
"Globaltel Russia" means Globalstar-Space Telecommunications,
a Russian closed joint stock company.
"Government Securities" means direct obligations of, or
obligations guaranteed by, the United States of America for the payment of which
obligations or guarantee the full faith and credit of the United States is
pledged and which have a remaining weighted Average Life to maturity of not more
than one year from the date of Investment therein.
"GTL" means Globalstar Telecommunications Limited, a Bermuda
company.
-8-
<PAGE> 13
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person guaranteeing, or having the economic effect of
guaranteeing, any Debt of any other Person, (the "primary obligor") in any
manner, whether directly or indirectly, and including, without limitation, any
obligation of such Person, (i) to purchase or pay (or advance or supply funds
for the purchase or payment of) such Debt or to purchase (or to advance or
supply funds for the purchase of) any security for the payment of such Debt,
(ii) to purchase property, securities or services for the purposes of assuring
the holder of such Debt of the payment of such Debt, or (iii) to maintain
working capital, equity capital or other financial statement condition or
liquidity of the primary obligor so as to enable the primary obligor to pay such
Debt (and "Guaranteed", "Guaranteeing" and "Guarantor" shall have meanings
correlative to the foregoing); provided, however, that the Guarantee by any
Person shall not include endorsements by such Person for collection or deposit,
in either case, in the ordinary course of business.
"Holders" means the registered holders from time to time of
the Securities.
"Incur" means, with respect to any Debt or other obligation of
any Person, to create, issue, incur (by conversion, exchange or otherwise),
assume, Guarantee or otherwise become liable in respect of such Debt or other
obligation including by acquisition of Subsidiaries or the recording, as
required pursuant to GAAP or otherwise, of any such Debt or other obligation on
the balance sheet of such Person (and "Incurrence", "Incurred" and "Incurring"
shall have the meanings correlative to the foregoing); however, that a change in
GAAP that results in an obligation of such Person that exists at such time
becoming Debt shall not be deemed an Incurrence of such Debt and that neither
the accrual of interest nor the accretion of original issue discount shall be
deemed an Incurrence of Debt. Notwithstanding the foregoing, Globalstar may
elect to treat all or any portion of revolving credit debt of Globalstar or a
Subsidiary as being Incurred from and after any date beginning the date the
revolving credit commitment is extended to Globalstar or a Subsidiary, by
furnishing notice thereof to the Trustee, and any borrowings or reborrowings by
Globalstar or a Subsidiary under such commitment up to the amount of such
commitment designated by Globalstar as Incurred shall not be deemed to be new
Incurrence of Debt by Globalstar or such Subsidiary; provided, however, that the
undrawn portion of any such revolving credit debt shall be deemed to be
outstanding Debt until such time as the commitment thereunder is terminated. The
accretion of principal of a non-interest bearing or other discount security
shall not be deemed the Incurrence of Debt.
"Indenture" means this Indenture as amended or supplemented
from time to time.
-9-
<PAGE> 14
"Independent Financial Advisor" means an accounting, appraisal
or investment banking firm of nationally recognized standing that is, in the
judgment of the General Partners' Committee of Globalstar, qualified to perform
the task for which it has been engaged and disinterested and independent with
respect to the Issuers and their Subsidiaries and Affiliates.
"Interest Rate or Currency Protection Agreement" of any Person
means any forward contract, futures contract, swap, option or other financial
agreement or arrangement (including, without limitation, caps, floors, collars
and similar agreements) relating to, or the value of which is dependent upon,
interest rates or currency exchange rates or indices.
"Investment" by any Person means any direct or indirect loan,
advance or other extension of credit or capital contribution (by means of
transfers of cash or other property to others or payments for property or
services for the account or use of others, or otherwise) to, or purchase or
acquisition of Capital Stock, bonds, notes, debentures or other securities or
evidence of Debt issued by, any other Person, including any payment on a
Guarantee of any obligation of such other Person, but excluding any loan,
advance or extension of credit to an employee of Globalstar or any Restricted
Subsidiary in the ordinary course of business, accounts receivables and other
commercially reasonable extensions of trade credit.
"Issue Date" means the date on which the Securities are first
issued and delivered.
"Lien" means, with respect to any property or assets, any
mortgage or deed of trust, pledge, hypothecation, assignment, Receivables Sale,
deposit arrangement, security interest, lien, charge, easement (other than any
easement not materially impairing usefulness or marketability), encumbrance,
preference, priority or other security agreement or preferential arrangement of
any kind or nature whatsoever on or with respect to such property or assets
(including, without limitation, any conditional sale or other title retention
agreement having substantially the same economic effect as any of the foregoing
or any Sale and Leaseback Transaction).
"Loral" means Loral Space & Communications Ltd., a Bermuda
company.
"Marketable Securities" means: (i) Government Securities; (ii)
any time deposit account, money market deposit and certificate of deposit
maturing not more than 270 days after the date of acquisition issued by, or time
deposit of, an Eligible Institution; (iii) commercial paper maturing not more
than 270 days after the date of acquisition issued by a corporation (other than
an Affiliate of Globalstar) with a rating, at the time as of which any
investment therein is made,
-10-
<PAGE> 15
of "P-111 or higher according to Moody's Investors Service, Inc. or "A-111
or higher according to Standard & Poor's Ratings Group (or such similar
equivalent rating by at least one "nationally recognized statistical rating
organization" (as defined in Rule 436 under the Securities Act)); (iv) any
banker's acceptances or money market deposit accounts issued or offered by an
Eligible Institution; (v) repurchase obligations with a term of not more than 7
days for Government Securities entered into with an Eligible Institution; and
(vi) any fund investing exclusively in investments of the types described in
clauses (i) through (v) above.
"Net Available Proceeds" from any Asset Disposition by any
Person means cash or Marketable Securities received (including by way of sale or
discounting of a note, installment receivable or other receivable, but excluding
any other consideration received in the form of assumption by the acquiror of
Debt or other obligations relating to such properties or assets) therefrom by
such Person, net of (i) all legal, title and recording tax expenses, commissions
and other fees and expenses Incurred and all federal, state, provincial, foreign
and local taxes (including taxes payable upon payment or other distribution of
funds from a foreign subsidiary to Globalstar or another Subsidiary of
Globalstar) required to be accrued as a liability as a consequence of such Asset
Disposition, (ii) all payments made by such Person or its Restricted
Subsidiaries on any Debt which is secured by such assets in accordance with the
terms of any Lien upon or with respect to such assets or which must by the terms
of such Lien, or in order to obtain a necessary consent to such Asset
Disposition or by applicable law, be repaid out of the proceeds from such Asset
Disposition, (iii) all distributions and other payments made to minority
interest holders in Restricted Subsidiaries of such Person or joint ventures as
a result of such Asset Disposition, (iv) appropriate amounts to be provided by
such Person or any Restricted Subsidiary thereof, as the case may be, as a
reserve in accordance with GAAP against any liabilities associated with such
assets and retained by such Person or any Restricted Subsidiary thereof, as the
case may be, after such Asset Disposition, including, without limitation,
liabilities under any indemnification obligations and severance and other
employee termination costs associated with such Asset Disposition, in each case
as determined by the General Partners' Committee of Globalstar, in its
reasonable good faith judgment evidenced by a board resolution filed with the
Trustee; provided, however, that any reduction in such reserve within twelve
months following the consummation of such Asset Disposition will be treated for
all purposes of this Indenture and the Securities as a new Asset Disposition at
the time of such reduction with Net Available Proceeds equal to the amount of
such reduction, and (v) any consideration for an Asset Disposition (which would
otherwise constitute Net Available Proceeds) that is required to be held in
escrow pending determination of whether a purchase price adjustment will be
made, but amounts under this clause (v) shall
-11-
<PAGE> 16
become Net Available Proceeds at such time and to the extent such amounts are
released to such Person.
"Net Cash Proceeds", with respect to any issuance or sale of
Capital Stock, means the cash proceeds of such issuance or sale net of
attorneys' fees, accountants' fees, underwriters' or placement agents' fees,
discounts or commissions and brokerage, consultant and other fees actually
incurred in connection with such issuance or sale and net of taxes paid or
payable as a result thereof.
"Non-Recourse Debt" means Debt:
(i) as to which neither the Issuers nor any Restricted
Subsidiary:
(a) provides credit support of any kind (including
any undertaking, agreement or instrument that would constitute
Debt);
(b) is directly or indirectly liable (as a guarantor
or otherwise); or
(c) constitutes the lender;
(ii) no default with respect to which (including any
rights that the holders thereof may have to take enforcement action
against an Issuer or any Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Debt of the
Issuers or any Restricted Subsidiary to declare a default on such other
Debt or cause the payment thereof to be accelerated or payable prior to
its stated maturity; and
(iii) as to which the lenders have been notified in
writing that they will not have any recourse to the stock or assets of
the Issuers or any of their Restricted Subsidiaries.
["Offer to Purchase" means a written offer (the "Offer") sent
by Globalstar by first class mail, postage prepaid, to each holder at his
address appearing in the Securities register on the date of the Offer offering
to purchase up to the principal amount of Securities specified in such offer at
the purchase price specified in such offer (as determined pursuant to this
Indenture). Unless otherwise required by applicable law, the Offer shall specify
an expiration date (the "Expiration Date") of the offer to Purchase which shall
be, subject to any contrary requirements of applicable law, not less than 30
days or more than 60 days after the date of such offer and a settlement date for
purchase of Securities within five Business Days after the Expiration Date. The
Issuers shall notify the Trustee at least 15 Business Days (or such shorter
period as is acceptable
-12-
<PAGE> 17
to the Trustee) prior to the mailing of the Offer of Globalstar's obligation to
make an Offer to Purchase, and the offer shall be mailed by Globalstar or, at
Globalstar's request, by the Trustee in the name and at the expense of
Globalstar. The Offer shall contain information concerning the business of
Globalstar and its Subsidiaries which Globalstar in good faith believes will
enable such holders to make an informed decision with respect to the Offer to
Purchase (which at a minimum will include (i) the most recent annual and
quarterly financial statements and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" contained in the documents
required to be filed with the Trustee pursuant to this Indenture (which
requirements may be satisfied by delivery of such documents together with the
offer), (ii) a description of material developments in Globalstar's business
subsequent to the date of the latest of such financial statements referred to in
clause (i) (including a description of the events requiring Globalstar to make
the Offer to Purchase), (iii) if applicable, appropriate pro forma financial
information concerning the Offer to Purchase and the events requiring Globalstar
to make the Offer to Purchase and (iv) any other information required by
applicable law to be included therein). The Offer shall contain all instructions
and materials necessary to enable such holders to tender Securities pursuant to
the Offer to Purchase.
"Officer" means the Chairman of the Board, the President, any
Vice President, the Treasurer or the Secretary of the Issuers.
"Officers' Certificate" means a certificate signed by two
Officers.
"Operating" means, with respect to any satellite, that at
least 50% of the call circuits of such satellite are operating at design
performance specifications.
"Opinion of Counsel" means an opinion from legal counsel who
is acceptable to the Trustee. The counsel may be an employee of, or counsel to,
the Issuers or the Trustee.
"Parent" means, with regard to any Person, any other entity of
which such Person is a Subsidiary.
"Permitted Interest Rate or Currency Protection Agreement" of
any Person means any Interest Rate or Currency Protection Agreement entered into
with one or more financial institutions in the ordinary course of business that
is designed to protect such Person against fluctuations in interest rates or
currency exchange rates with respect to Debt Incurred and which shall have a
notional amount no greater than the payments due with respect to the Debt being
hedged thereby and not for purposes of speculation.
-13-
<PAGE> 18
"Permitted Investment" means an Investment by an Issuer or any
Restricted Subsidiary (i) in any Person as a result of which such Person becomes
a Restricted Subsidiary, (ii) in Marketable Securities, (iii) in Permitted
Interest Rate or Currency Protection Agreements, (iv) made as a result of the
receipt of noncash consideration from an Asset Disposition that was made
pursuant to and in compliance with Section 4.7 and (v) consisting of loans or
advances to employees made in the ordinary course of business not to exceed $
million in the aggregate outstanding at any one time.
"Person" means any individual, corporation, partnership,
limited liability company, joint venture, association, joint stock company,
trust, unincorporated organization, government or agency or political
subdivision thereof or any other entity.
"Preferred Stock" of any Person means Capital Stock of such
Person of any class or classes (however designated) that ranks prior, as to the
payment of dividends or as to the distribution of assets upon any voluntary or
involuntary liquidation, dissolution or winding up of such Person, to shares of
Capital Stock of any other class of such Person.
"Principal" of a Security means the principal of the Security
plus the premium, if any, payable on the Security which is due or overdue or is
to become due at the relevant time.
"Receivables" means receivables, chattel paper, instruments,
documents or intangibles evidencing or relating to the right to payment of money
in respect of the sale of goods or services.
"Receivables Sale" of any Person means any sale of Receivables
of such Person (pursuant to a purchase facility or otherwise), other than in
connection with a disposition of the business operations of such Person relating
thereto or a disposition of defaulted Receivables for purpose of collection and
not as a financing arrangement.
"Refinance" means in respect of any Debt, to refinance,
extend, renew, refund, repay, prepay, redeem, defease or retire, or to issue
other Debt in exchange or replacement for, such Debt. "Refinanced" and
"Refinance" shall have correlative meanings.
"Refinancing Debt" means Debt that Refinances any Debt of the
Issuers or any Restricted Subsidiary existing on the Issue Date or Incurred in
compliance with this Indenture, including Debt that Refinances Refinancing Debt;
provided, however, that (i) such Refinancing Debt has a Stated Maturity no
earlier than the Stated Maturity of the Debt being Refinanced, (ii) such
Refinancing Debt has an Average Life at the time such Refinancing Debt is
Incurred that is equal to or greater than the Average Life of the Debt being
Refinanced, (iii) such Refinancing Debt
-14-
<PAGE> 19
has an aggregate principal amount (or if Incurred with original issue discount,
an aggregate issue price) that is equal to or less than the aggregate principal
amount (or if Incurred with original issue discount, the aggregate accreted
value) then outstanding or committed (plus fees and expenses, including any
premium and defeasance costs) under the Debt being Refinanced, (iv) in the event
the Debt being Refinanced constitutes a Subordinated Obligation, the Refinancing
Debt is subordinated to the Securities to at least the same extent as the Debt
being Refinanced and (v) Special Preferred Obligations may only be Refinanced
with Preferred Stock (other than Preferred Stock that is Disqualified Stock),
other Special Preferred Obligations or Subordinated obligations; provided,
further, however, that Refinancing Debt shall not include (x) Debt of a
Subsidiary that Refinances Debt of the Issuers or (y) Debt of the Issuers or a
Restricted Subsidiary that Refinances Debt of an Unrestricted Subsidiary.
"Related Person" of any Person means any other Person directly
or indirectly owning (a) 10% or more of the outstanding common equity of such
Person (or, in the case of a Person that is not a corporation, 10% or more of
the equity interest in such Person) or (b) 10% or more of the combined voting
power of the Voting Stock of such Person.
"Restricted Payment" with respect to any Person means (i) the
declaration or payment of any dividends or any other distributions of any sort
in respect of its Capital Stock (including any payment in connection with any
merger or consolidation involving such Person) or similar payment to the direct
or indirect holders of its Capital Stock (other than dividends or distributions
payable solely in its Capital Stock (other than Disqualified Stock) and
dividends or distributions payable solely to the Issuers or a Restricted
Subsidiary, and other than pro rata dividends or other distributions made by a
Subsidiary that is not a Wholly-Owned Restricted Subsidiary to minority
stockholders (or owners of an equivalent interest in the case of a Subsidiary
that is an entity other than a corporation)), (ii) the purchase, redemption or
other acquisition or retirement for value of any Capital Stock of an Issuer held
by any Person or of any Capital Stock of a Restricted Subsidiary held by any
Affiliate of the Issuers (other than a Restricted Subsidiary), including the
exercise of any option to exchange any Capital Stock (other than into Capital
Stock of the Issuers that is not Disqualified Stock), (iii) the purchase,
repurchase, redemption, defeasance or other acquisition or retirement for value,
prior to scheduled maturity, scheduled repayment or scheduled sinking fund
payment of any Subordinated obligations (other than the purchase, repurchase or
other acquisition of Subordinated obligations purchased in anticipation of
satisfying a sinking fund obligation, principal installment or final maturity,
in each case due within one year of the date of
-15-
<PAGE> 20
acquisition) or (iv) the making of any Investment in any Person (other than a
Permitted Investment).
"Restricted Subsidiary" means any Subsidiary of Globalstar,
whether existing on or after the Issue Date, unless such Subsidiary is an
Unrestricted Subsidiary.
"Sale and Leaseback Transaction" means an arrangement relating
to property now owned or hereafter acquired whereby an Issuer or a Restricted
Subsidiary transfers such property to a Person and an Issuer or a Restricted
Subsidiary leases it from such Person.
"Securities" means the Securities issued under this Indenture.
"Securities Act" means the Securities Act of 1933, as amended
(or any successor act) and the rules and regulations thereunder.
"Significant Subsidiary" means a Restricted Subsidiary that is
a "significant subsidiary" as defined in Rule 1-02(w) of Regulation S-X under
the Securities Act and the Exchange Act.
"Special Preferred Obligations" means (i) preferred
partnership interests of Globalstar existing as of the Issue Date and (ii) any
preferred partnership interests, convertible preferred equivalent obligations or
similar preferred obligations of Globalstar issued after the Issue Date to
finance the Build-out; provided, however, that any such preferred partnership
interests, convertible preferred equivalent obligations or similar preferred
obligations of Globalstar issued after the Issue Date shall not constitute
Special Preferred Obligations if such interest or obligation, by its terms (or
by the terms of any
-16-
<PAGE> 21
security into which it is convertible or for which it is exchangeable at the
option of the Holders), or upon the happening of any event, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
is redeemable at the option of the holder thereof, in whole or in part, on or
prior to the final Stated Maturity of the Securities; provided further, however,
that any such interest or obligation which would constitute Special Preferred
Obligations but for provisions thereof giving holders thereof the right to
require Globalstar to repurchase or redeem such interest or obligation upon the
occurrence of a change of control occurring prior to the final Stated Maturity
of the Securities shall constitute Special Preferred Obligations if the change
of control provisions applicable to such interest or obligation are no more
favorable to the holders of such interest or obligation than the provisions
applicable to the Securities contained in Section 4.10 and such interest or
obligation specifically provides that Globalstar will not repurchase or redeem
any such interest or obligation pursuant to such provisions prior to
Globalstar's repurchase of such Securities as are required to be repurchased
pursuant to Section 4.10. Notwithstanding the foregoing, preferred partnership
interests, convertible preferred equivalent obligations or similar preferred
obligations of Globalstar issued after the Issue Date shall not be Special
Preferred Obligations unless, at the time of their issuance, Globalstar shall
certify to the Trustee that such interests or obligations shall be designated
Special Preferred obligations.
"Stated Maturity" means, with respect to any security, the
date specified in such security as the fixed date on which the final payment of
principal of such security is due and payable, including pursuant to any
mandatory redemption provision (but excluding any provision providing for the
repurchase of such security at the option of the holder thereof upon the
happening of any contingency unless such contingency has occurred).
"Subordinated Obligation" means any Debt of the Issuers
(whether outstanding on the Issue Date or thereafter Incurred) which is
subordinate or junior in right of payment to the Securities pursuant to a
written agreement to that effect.
"Subsidiary" of any Person means (i) a corporation more than
50% of the combined voting power of the outstanding Voting Stock of which is
owned, directly or indirectly, by such Person or by one or more other
Subsidiaries of such Person or by such Person and one or more Subsidiaries of
such Person or (ii) any other Person (other than a corporation) in which such
Person, or one or more other Subsidiaries of such Person or such Person and one
or more other Subsidiaries of such Person, directly or indirectly, has at least
a majority ownership and power to direct the policies, management and affairs
thereof.
-17-
<PAGE> 22
"Subsidiary Guaranty" means the Guarantee by a Subsidiary
Guarantor of the Issuers' obligations with respect to the Securities contained
in Article 10 hereof.
"Subsidiary Guarantor" means any Subsidiary which, pursuant to
the terms hereof, has executed a supplemental indenture in a form reasonably
satisfactory to the Trustee and become bound by the terms hereof, including
Article 10 hereof.
"Tax Amount" means, with respect to any year, an amount not to
exceed the sum of the ordinary income from trade or business activities and
other items of income, loss and deduction reported by Globalstar for that year
for United States federal income tax purposes multiplied by a percentage equal
to the sum of (a) the highest applicable federal corporation income tax rate for
that year (expressed as a percentage) plus (b) % multiplied by the excess of
100% over the highest applicable federal corporate income tax for that year
(expressed as a percentage).
"10 3/4 Indenture" means the indenture dated as of October 15,
1997, among Globalstar, Globalstar Capital and The Bank of New York, as trustee,
pursuant to which the 10 3/4 Notes were issued.
"10 3/4 Notes" means the $325,000,000 aggregate principal
amount of 10 3/4% Senior Notes due 2004 of the Issuers, together with any
Exchange Securities or Private Exchange Securities (as such terms are defined in
the 10 3/4 Indenture) issued pursuant to the 10 3/4 Indenture.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. H
77aaa-77bbbb) as in effect on the date of this Indenture, except as provided by
Section 9.3.
"Transitory Equipment Subsidiary" means a Subsidiary of
Globalstar whose only business activity is acquiring equipment from Globalstar
for the sole purpose of selling such equipment to a service provider to
Globalstar; provided, however, that Globalstar retains a security interest in
such equipment so long as it is owned by such Subsidiary; provided further,
however, that such Subsidiary has no Debt outstanding at any time other than
Debt represented by such security interest.
"Trust Officer" means any officer or assistant officer of the
Trustee assigned by the Trustee to administer its corporate trust matters.
"Trustee" means the party named as such in this Indenture
until a successor replaces it and, thereafter, means the successor.
"Uniform Commercial Code" means the New York Uniform
Commercial Code as in effect from time to time.
-18-
<PAGE> 23
"Unrestricted Subsidiary" means (i) any Subsidiary of
Globalstar designated as such by the General Partner's Committee as set forth
below where (a) neither Globalstar nor any of its other Subsidiaries (other than
another Unrestricted Subsidiary) (1) provides credit support for, or Guarantee
of, any Debt of such Subsidiary or any Subsidiary of such Subsidiary (including
any undertaking, agreement or instrument evidencing such Debt), (2) is directly
or indirectly liable for any Debt of such Subsidiary or any Subsidiary of such
Subsidiary, or (3) has any obligation to make additional Investments in such
Subsidiary or any Subsidiary of such Subsidiary, (b) such Subsidiary has no Debt
other than Non-Recourse Debt; provided, however, that if any Unrestricted
Subsidiary Incurs any Debt other than Non-Recourse Debt or any Non-Recourse Debt
Incurred by such Unrestricted Subsidiary shall thereafter cease for any reason
to be Non-Recourse Debt, such event shall be deemed to constitute an Incurrence
of such Debt by Globalstar and such Unrestricted Subsidiary shall be deemed to
be a Restricted Subsidiary for purposes of Section 4.4 and (c) such Subsidiary
and each Subsidiary of such Subsidiary has at least one director on its board of
directors that is not a director or executive officer of Globalstar or any
Restricted Subsidiary and (ii) any Subsidiary of an Unrestricted Subsidiary. The
General Partner's Committee may designate any Subsidiary to be an Unrestricted
Subsidiary unless such Subsidiary or any Subsidiary of such Subsidiary owns any
Capital Stock or Debt of, or owns or holds any Lien on any property of,
Globalstar or any other Subsidiary of Globalstar which is not a Subsidiary of
the Subsidiary to be so designated or otherwise an Unrestricted Subsidiary;
provided, however, that either (A) the Subsidiary to be so designated has total
assets of $1,000 or less or (B) immediately after giving effect to such
designation, Globalstar could incur an additional $1. of Debt pursuant to
Section 4.3(a) and provided further, however, that Globalstar could make a
Restricted Payment in an amount equal to the greater of the fair market value
and the book value of such Subsidiary pursuant to Section 4.5 and such amount is
thereafter treated as a Restricted Payment for the purpose of calculating the
aggregate amount available for Restricted Payments thereunder. The General
Partners' Committee may designate any Unrestricted Subsidiary to be a Restricted
Subsidiary, provided that, immediately after giving effect to such designation,
Globalstar could incur an additional $1. of Debt pursuant to Section 4.3(a).
Notwithstanding the foregoing Globalstar Capital [nor any of its Subsidiaries]
shall be Unrestricted Subsidiaries.
"U.S. Government Obligations" means direct obligations (or
certificates representing an ownership interest in such obligations of the
United States of America (including any agency or instrumentality thereof) (for
the payment of which the full faith and credit of the United States of America
is Pledged and which are not callable or redeemable at the Issuers' option.
-19-
<PAGE> 24
"Vendor Financing Facility" means any agreements between
Globalstar, Globalstar Capital and/or any Restricted Subsidiary and one or more
vendors or lessors of equipment to Globalstar, Globalstar Capital and/or any
Restricted Subsidiary (or any affiliate of any such vendor or lessor) providing
financing for the acquisition by Globalstar or any such Restricted Subsidiary of
equipment from any such vendor or lessor.
"Voting Stock" of any Person means Capital Stock of such
Person which ordinarily has voting power for the election of directors (or
persons performing similar functions) of such Person, whether at all times or
only so long as no senior class of securities has such voting power by reason of
any contingency.
"Wholly-Owned Restricted Subsidiary" means a Restricted
Subsidiary 99% or more of the outstanding Capital Stock or other ownership
interests of which (other than directors' qualifying shares) shall at the time
be owned by Globalstar or by one or more Wholly-Owned Restricted Subsidiaries of
Globalstar or by Globalstar and one or more Wholly-Owned Restricted Subsidiaries
of Globalstar.
SECTION 1.2. Other Definitions.
Defined in
Term Section
"Affiliate Transaction"....................................... 4.8
"Appendix".................................................... 2.1
"Bankruptcy Law".............................................. 6.1
"Cash Insurance".............................................. 4.13
"Covenant Defeasance Option".................................. 8.1(b)
"Custodian"................................................... 6.1
"Debt Coverage Ratio"......................................... 4.3
"Event of Default"............................................ 6.1
"Exchange Securities"......................................... Recital
"Globalstar".................................................. Preamble
"Globalstar Capital".......................................... Preamble
"Initial Securities".......................................... Recital
"In-orbit Insurance Event".................................... 4.13
"Insurance Account"........................................... 4.13
"Insurance Proceeds".......................................... 4.13
"Issuers"..................................................... Preamble
"Legal Defeasance Option"..................................... 8.1(b)
"Legal Holiday"............................................... 11.8
"Notice of Default"........................................... 6.1
"Obligations"................................................. 10.1
"Paying Agent"................................................ 2.3
"Permitted Lien".............................................. 4.11
"Private Exchange Securities"................................. Recital
-20-
<PAGE> 25
"Registrar"................................................... 2.3
"Securities".................................................. Recital
"Successor Issuers"........................................... 5.1
"Trustee"..................................................... Preamble
SECTION 1.3. Incorporation by Reference of Trust Indenture
Act. This Indenture is subject to the mandatory provisions of the TIA which are
incorporated by reference in and made a part of this Indenture. The following
TIA terms have the following meanings:
"Commission" means the Commission;
"Indenture Securities" means the Securities;
"Indenture Security Holder" means a Securityholder;
"indenture to be Qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the
Trustee; and
"obligor" on the indenture securities means the Issuers and
any other obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by
the TIA, defined by TIA reference to another statute or defined by Commission
rule have the meanings assigned to them by such definitions.
SECTION 1.4. Rules of Construction. Unless the context
otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) "including" means including without limitation;
(5) words in the singular include the plural and words in the
plural include the singular;
(6) unsecured Debt shall not be deemed to be subordinate or
junior to secured Debt merely by virtue of its nature as unsecured
Debt;
(7) the principal amount of any noninterest bearing or other
discount security at any date shall be the principal
-21-
<PAGE> 26
amount thereof that would be shown on a balance sheet of the issuer
dated such date prepared in accordance with GAAP but accretion of
principal on such security shall not be deemed to be the Incurrence of
Indebtedness;
(8) the principal amount of any Preferred Stock shall be (i)
the maximum liquidation value of such Preferred Stock or (ii) the
maximum mandatory redemption or mandatory repurchase price with respect
to such Preferred Stock, whichever is greater;
(9) all references to the date the Securities were originally
issued shall refer to the date the Initial Securities were originally
issued; and
(10) the terms "redemption" and "redeemable" shall not be
deemed to refer to Offers to Purchase or to repurchases pursuant to
Section 4.10 or similar offers or repurchases.
ARTICLE 2.
The Securities
SECTION 2.1. Form and Dating. The Securities and the Trustee's
certificate of authentication shall be substantially in the form of Exhibit A,
which is hereby incorporated in and expressly made a part of this Indenture. The
Securities may have notations, legends or endorsements required by law, stock
exchange rule, agreements to which the Issuers are subject, if any, or usage
(provided that any such notation, legend or endorsement is in a form acceptable
to the Issuers). Each Security shall be dated the date of its authentication.
The terms of the Securities set forth in the Exhibit A are part of the terms of
this Indenture.
SECTION 2.2. Execution and Authentication. Two officers shall
sign the Securities for the Issuers by manual or facsimile signature.
If an officer whose signature is on a Security no longer holds
that office at the time the Trustee authenticates the Security, the Security
shall be valid nevertheless.
A Security shall not be valid until an authorized signatory of
the Trustee manually signs the certificate of authentication on the Security.
The signature shall be conclusive evidence that the Security has been
authenticated under this Indenture.
The Trustee shall authenticate and deliver Securities for
original issue upon a written order of the Issuers signed by two Officers or by
an Officer and either an Assistant Treasurer or an Assistant Secretary of the
Issuers. Such order shall
-22-
<PAGE> 27
specify the amount of the Securities to be authenticated and the date on which
the original issue of Securities is to be authenticated. The aggregate principal
amount of Securities outstanding at any time may not exceed that amount except
as provided in Section 2.7.
The Trustee may appoint an authenticating agent reasonably
acceptable to the Issuers to authenticate the Securities. Unless limited by the
terms of such appointment, an authenticating agent may authenticate Securities
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as any Registrar, Paying Agent or agent
for service of notices and demands.
SECTION 2.3. Registrar and Paying Agent. The Issuers shall
maintain an office or agency where Securities may be presented for registration
of transfer or for exchange (the "Registrar") and an office or agency where
Securities may be presented for payment (the "Paying Agent"). The Registrar
shall keep a register of the Securities and of their transfer and exchange. The
Issuers may have one or more co-registrars and one or more additional paying
agents. The term "Paying Agent" includes any additional paying agent.
The Issuers shall enter into an appropriate agency agreement
with any Registrar, Paying Agent or co-registrar not a party to this Indenture,
which shall incorporate the terms of the TIA. The agreement shall implement the
provisions of this Indenture that relate to such agent. The Issuers shall notify
the Trustee of the name and address of any such agent. If the Issuers fail to
maintain a Registrar or Paying Agent, the Trustee shall act as such and shall be
entitled to appropriate compensation therefor pursuant to Section 7.7. The
Issuers or any of their domestically incorporated Wholly owned Subsidiaries may
act as Paying Agent, Registrar, co-registrar or transfer agent.
The Issuers initially appoint the Trustee as Registrar and
Paying Agent in connection with the Securities.
SECTION 2.4. Paying Agent To Hold Money in Trust. Prior to
each due date of the principal and interest on any Security, the Issuers shall
deposit with the Paying Agent a sum sufficient to pay such principal and
interest when so becoming due. The Issuers shall require each Paying Agent
(other than the Trustee) to agree in writing that the Paying Agent shall hold in
trust for the benefit of Securityholders or the Trustee all money held by the
Paying Agent for the payment of principal of or interest on the Securities and
shall notify the Trustee of any default by the Issuers in making any such
payment. If either Issuer or a Subsidiary acts as Paying Agent, it shall
segregate the money held by it as Paying Agent and hold it as a separate
-23-
<PAGE> 28
trust fund. The Issuers at any time may require a Paying Agent to pay all money
held by it to the Trustee and to account for any funds disbursed by the Paying
Agent. Upon complying with this Section, the Paying Agent shall have no further
liability for the money delivered to the Trustee.
SECTION 2.5. Securityholder Lists. The Trustee shall preserve
in as current a form as is reasonably practicable the most recent list available
to it of the names and addresses of Securityholders. If the Trustee is not the
Registrar, the Issuers shall furnish to the Trustee, in writing at least five
Business Days before each interest payment date and at such other times as the
Trustee may request in writing, a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of Securityholders.
SECTION 2.6. Transfer and Exchange. The Securities shall be
issued in registered form and shall be transferable only upon the surrender of a
Security for registration of transfer. When a Security is presented to the
Registrar or a co-registrar with a request to register a transfer, the Registrar
shall register the transfer as requested if the requirements of Section 8-401(l)
(or any successor provision thereto) of the Uniform Commercial Code are met.
When Securities are presented to the Registrar or a co-registrar with a request
to exchange them for an equal principal amount of Securities of other
denominations, the Registrar shall make the exchange as requested if the same
requirements are met. To permit registration of transfers and exchanges, the
Issuers shall execute and the Trustee shall authenticate Securities at the
Registrar's or co- registrar's request. The Issuers may require payment of a sum
sufficient to pay all taxes, assessments or other governmental charges in
connection with any transfer or exchange pursuant to this Section. The Issuers
shall not be required to make and the Registrar need not register transfers or
exchanges of Securities selected for redemption (except, in the case of
Securities to be redeemed in part, the portion thereof not to be redeemed) or
any Securities for a period of 15 days before a selection of Securities to be
redeemed or 15 days before an interest payment date.
Prior to the due presentation for registration of transfer of
any Security, the Issuers, the Trustee, the Paying Agent, the Registrar or any
co-registrar may deem and treat the person in whose name a Security is
registered as the absolute owner of such Security for the purpose of receiving
payment of principal of and interest on such Security and for all other purposes
whatsoever, whether or not such Security is overdue, and none of the Issuers,
the Trustee, the Paying Agent, the Registrar or any co-registrar shall be
affected by notice to the contrary.
All Securities issued upon any transfer or exchange pursuant
to the terms of this Indenture will evidence the same
-24-
<PAGE> 29
debt and will be entitled to the same benefits under this Indenture as the
Securities surrendered upon such transfer or exchange.
SECTION 2.7. Replacement Securities. If a mutilated Security
is surrendered to the Registrar or if the Holder of a Security claims that the
Security has been lost, destroyed or wrongfully taken, the Issuers shall issue
and the Trustee shall authenticate a replacement Security if the requirements of
Section 8-405 (or any successor provision thereto) of the Uniform Commercial
Code are met and the Holder satisfies any other reasonable requirements of the
Trustee. Such Holder shall furnish an indemnity bond sufficient in the judgment
of the Issuers and the Trustee to protect the Issuers, the Trustee, the Paying
Agent, the Registrar and any co-registrar from any loss which any of them may
suffer if a Security is replaced. The Issuers and the Trustee may charge the
Holder for their expenses in replacing a Security.
Every replacement Security is an additional obligation of the
Issuers.
SECTION 2.8. Outstanding Securities. Securities outstanding at
any time are all Securities authenticated by the Trustee except for those
canceled by it, those delivered to it for cancellation and those described in
this Section as not outstanding. A Security does not cease to be outstanding
because the Issuers or an Affiliate of the Issuers holds the Security.
If a Security is replaced pursuant to Section 2.7, it ceases
to be outstanding unless the Trustee and the Issuers receive proof satisfactory
to them that the replaced Security is held by a bona fide purchaser.
If the Paying Agent segregates and holds in trust, in
accordance with this Indenture, on a redemption date or maturity date money
sufficient to pay all principal and interest payable on that date with respect
to the Securities (or portions thereof) to be redeemed or maturing, as the case
may be, then on and after that date such Securities (or portions thereof) cease
to be outstanding and interest on them ceases to accrue.
SECTION 2.9. Temporary Securities. Until definitive Securities
are ready for delivery, the Issuers may prepare and the Trustee shall
authenticate temporary Securities. Temporary Securities shall be substantially
in the form of definitive Securities but may have variations that the Issuers
consider appropriate for temporary Securities. Without unreasonable delay, the
Issuers shall prepare and the Trustee shall authenticate definitive Securities
and deliver them in exchange for Temporary Securities.
-25-
<PAGE> 30
SECTION 2.10. Cancellation. The Issuers at any time may
deliver Securities to the Trustee for cancellation. The Registrar and the Paying
Agent shall forward to the Trustee any Securities surrendered to them for
registration of transfer, exchange or payment. The Trustee and no one else shall
cancel and may, but shall not be required to, destroy (subject to the record
retention requirements of the Exchange Act) all Securities surrendered for
registration of transfer, exchange, payment or cancellation unless the Issuers
direct the Trustee to deliver canceled Securities to the Issuers. The Issuers
may not issue new Securities to replace securities they have redeemed, paid or
delivered to the Trustee for cancellation.
SECTION 2.11. Defaulted Interest. If the Issuers default in a
payment of interest on the Securities, the Issuers shall pay defaulted interest
(plus interest on such defaulted interest to the extent lawful) in any lawful
manner. The Issuers may pay the defaulted interest to the persons who are
Securityholders on a subsequent special record date. The Issuers shall fix or
cause to be fixed any such special record date and payment date to the
reasonable satisfaction of the Trustee and shall promptly mail to each
Securityholder a notice that states the special record date, the payment date
and the amount of defaulted interest to be paid.
SECTION 2.12. CUSIP Numbers. The Issuers in issuing the
Securities may use "CUSIP" numbers (if then generally in use) and, if so, the
Trustee shall use "CUSIP" numbers in notices of redemption as a convenience to
Holders; provided, however, that any such notice may state that no
representation is made as to the correctness of such numbers either as printed
on the Securities or as contained in any notice of a redemption and that
reliance may be placed only on the other identification numbers printed on the
Securities, and any such redemption shall not be affected by any defect in or
omission of such numbers. The Issuers shall promptly notify the Trustee of any
change in the CUSIP numbers.
ARTICLE 3.
Redemption
SECTION 3.1. Notices to Trustee. If the Issuers elect to
redeem Securities pursuant to paragraph 5 of the Securities, they shall notify
the Trustee in writing of the redemption date, the principal amount of
Securities to be redeemed and the paragraph of the Securities pursuant to which
the redemption will occur.
The Issuers shall give each notice to the Trustee provided for
in this Section at least 60 days before the redemption date unless the Trustee
consents to a shorter period. Such notice shall be accompanied by an Officers'
Certificate and
-26-
<PAGE> 31
an Opinion of Counsel from the Issuers to the effect that such redemption will
comply with the conditions herein.
SECTION 3.2. Selection of Securities To Be Redeemed. If less
than all the Securities are to be redeemed at any time, the Trustee shall select
the Securities to be redeemed by a method that complies with the requirements of
the principal national securities exchange, if any, on which the Securities are
listed, or if the Securities are not listed, on a pro rata basis, by lot or by
such method as the Trustee in its sole discretion shall deem to be fair and
appropriate and in accordance with methods generally used at the time of
selection by fiduciaries in similar circumstances. The Trustee shall make the
selection from outstanding Securities not previously called for redemption. The
Trustee may select for redemption portions of the principal of Securities that
have denominations larger than $1,000. Securities and portions of them the
Trustee selects shall be in amounts of $1,000 or a whole multiple of $1,000.
Provisions of this Indenture that apply to Securities called for redemption also
apply to portions of Securities called for redemption. The Trustee shall notify
the Issuers promptly of the Securities or portions of Securities to be redeemed.
SECTION 3.3. Notice of Redemption. At least 30 days but not
more than 60 days before a date for redemption of Securities, the Issuers shall
mail a notice of redemption by first-class mail to each Holder of Securities to
be redeemed at such Holder's registered address.
The notice shall identify the Securities (including CUSIP
number(s), if any) to be redeemed and shall state:
(1) the redemption date;
(2) the redemption price;
(3) the name and address of the Paying Agent;
(4) that Securities called for redemption must be surrendered
to the Paying Agent to collect the redemption price;
(5) if fewer than all the outstanding Securities are to be
redeemed, the identification and principal amounts of the particular
Securities to be redeemed;
(6) that, unless the Issuers default in making such redemption
payment or the Paying Agent is prohibited from making such payment
pursuant to the terms of this Indenture, interest on Securities (or
portion thereof) called for redemption ceases to accrue on and after
the redemption date;
-27-
<PAGE> 32
(7) the paragraph of the Securities pursuant to which the
Securities called for redemption are being redeemed; and
(8) that no representation is made as to the correctness or
accuracy of the CUSIP number, if any, listed in such notice or printed
on the Securities.
At the Issuers' request, the Trustee shall give the notice of
redemption in the Issuers' name and at the Issuers' expense. In such event, the
Issuers shall provide the Trustee with the information required by this Section.
SECTION 3.4. Effect of Notice of Redemption. Once notice of
redemption is mailed, Securities called for redemption become due and payable on
the redemption date and at the redemption price stated in the notice. Upon
surrender to the Paying Agent, such Securities shall be paid at the redemption
price stated in the notice, plus accrued interest to the redemption date.
Failure to give notice or any defect in the notice to any Holder shall not
affect the validity of the notice to any other Holder.
SECTION 3.5. Deposit of Redemption Price. On or prior to the
redemption date, the Issuers shall deposit with the Paying Agent (or, if an
Issuer or a Subsidiary is the Paying Agent, shall segregate and hold in trust)
money sufficient to pay the redemption price of and accrued interest on all
Securities to be redeemed on that date other than Securities or portions of
Securities called for redemption which have been delivered by the Issuers to the
Trustee for cancellation.
SECTION 3.6. Securities Redeemed in Part. Upon surrender of a
Security that is redeemed in part, the Issuers shall execute and the Trustee
shall authenticate for the Holder (at the Issuers' expense) a new Security equal
in principal amount to the unredeemed portion of the Security surrendered.
ARTICLE 4.
Covenants
SECTION 4.1. Payment of Securities. The Issuers shall promptly
pay the principal of and interest on the Securities on the dates and in the
manner provided in the Securities and in this Indenture. Principal, interest
shall be considered paid on the date due if on such date the Trustee or the
Paying Agent holds in accordance with this Indenture money sufficient to pay all
principal, interest then due.
The Issuers shall pay interest on overdue principal at the
rate specified therefor in the Securities, and shall pay interest on overdue
installments of interest at the same rate to the extent lawful.
-28-
<PAGE> 33
SECTION 4.2. SEC Reports. Notwithstanding that the Issuers may
not be, or may not be required to remain, subject to the reporting requirements
of Section 13 or 15(d) of the Exchange Act, the Issuers shall file with the
Commission (unless the Commission will not accept such filing) and provide the
Trustee and Holders of the Securities with such annual reports and such
information, documents and other reports as are specified in Sections 13 and
15(d) of the Exchange Act and applicable to a U.S. corporation subject to such
Sections, such information, documents and other reports to be so filed and
provided at the times specified for the filing of such information, documents
and reports under such Sections.
In addition, for so long as any Securities remain outstanding,
the Issuers shall furnish to the Holders and to securities analysts and
prospective investors, upon their request, the information required to be
delivered pursuant to Rule 144A(d)(4) under the Securities Act.
Delivery of such reports, information and documents to the
Trustee is for informational purposes only and the Trustee's receipt of such
shall not constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Issuers,
compliance with any of their covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
SECTION 4.3. Limitation on Consolidated Debt. (a) The Issuers
may not, and may not permit any Restricted Subsidiary to, Incur any Debt;
provided, however, that the Issuers or any Restricted Subsidiary may Incur Debt
so long as the ratio of (i) the aggregate consolidated principal amount of Debt
of the Issuers and the Restricted Subsidiaries outstanding as of the most recent
available quarterly or annual balance sheet, after giving pro forma effect to
the Incurrence of such Debt and any other Debt Incurred since such balance sheet
date and the receipt and application of the proceeds thereof to (ii)
Consolidated Cash Flow Available for Fixed Charges for the four full fiscal
quarters ending on the date of such balance sheet determined on a pro forma
basis as if any such Debt had been Incurred and the proceeds thereof had been
applied at the beginning of such four fiscal quarters, would be less than [ ]
(the "Debt Coverage Ratio").
(b) Notwithstanding the foregoing limitation, the Issuers and
any Restricted Subsidiary may Incur the following:
(i) Debt Incurred under any one or more Bank Credit
Agreements, Vendor Financing Facilities or other agreements or
arrangements to finance the Build-out; provided, however, that Debt
Incurred pursuant to this clause (i), other than Debt Incurred pursuant
to a Bank Credit Agreement or a Vendor Financing Facility, shall not
have a Stated Maturity
-29-
<PAGE> 34
on or earlier than the Stated Maturity of the Securities, and shall not
be mandatorily redeemable, pursuant to a sinking fund obligation or
otherwise, or be redeemable at the option of the holder thereof, in
whole or in part, on or prior to the Stated Maturity of the Securities;
(ii) Debt under any one or more Bank Credit Agreements or
other agreements or arrangements to finance working capital
requirements of Globalstar and any Refinancing Debt in respect of such
Debt; provided, however, at the time of the Incurrence of such Debt and
after giving effect thereto, the aggregate principal amount of all Debt
Incurred pursuant to this clause (ii) [and then outstanding shall not
exceed $ ;
(iii) Debt owed by the Issuers to any Wholly-Owned
Restricted Subsidiary or Debt owed by any Wholly-Owned Restricted
Subsidiary to the Issuers or to another Wholly-Owned Restricted
Subsidiary; provided, however, that upon either (x) the transfer or
other disposition by such Wholly-Owned Restricted Subsidiary or the
Issuers of any Debt so permitted to a Person other than the Issuers or
another Wholly-Owned Restricted Subsidiary or (y) the issuance (other
than directors, qualifying shares), sale, lease, transfer or other
disposition of shares of Capital Stock (including by consolidation or
merger) of such Wholly-Owned Restricted Subsidiary to a Person other
than the Issuers or another such Wholly-Owned Restricted Subsidiary,
the provisions of this clause (iii) shall no longer be applicable to
such Debt and such Debt shall be deemed to have been Incurred by the
Issuers thereof at the time of such issuance, sale, lease, transfer or
other disposition;
(iv) Refinancing Debt Incurred to Refinance Debt Incurred
pursuant to the first paragraph of this covenant or pursuant to clause
(i), (vi) or (vii) or this clause (iv) of this paragraph;
(v) Debt consisting of Permitted Interest Rate and
Currency Protection Agreements;
(vi) Debt represented by the Securities;
(vii) Debt outstanding on the Issue Date (other than Debt
described in clause (i), (ii), (iii), (vi) or (viii) of this
paragraph);
(viii) Debt (including Capital Lease Obligations) of
Globalstar or any Restricted Subsidiary financing the purchase, lease
or improvement of property (real or personal) or equipment (whether
through the direct purchase of assets or the Capital Stock of any
Person owning such assets), in each case Incurred no more than 180 days
after
-30-
<PAGE> 35
such purchase, lease or improvement of such property and any
Refinancing Debt in respect of such Debt, provided, however, that (x)
the amount of such Debt (net of original issue discount) does not
exceed, at the time initially Incurred, 90% of the fair market value of
such acquired property or equipment and (y) at the time of the
Incurrence of such Debt and after giving effect thereto, the aggregate
amount of all Debt Incurred pursuant to this clause (viii) and then
outstanding shall not exceed [$ ;]
(ix) Debt consisting of performance and other similar
bonds and reimbursement obligations Incurred in the ordinary course of
business securing the performance of contractual, franchise or license
obligations of the Issuers or a Restricted Subsidiary, or in respect of
a letter of credit obtained to secure such performance; and
(x) Debt in an aggregate principal amount which,
together with all other Debt of the Issuers and the Restricted
Subsidiaries outstanding on the date of such Incurrence (other than
Debt permitted by clauses (i) through (ix) above or Section 4.3(a))
does not exceed [$ .]
(c) For purposes of determining compliance with this Section
4.3, in the event that an item of Debt meets the criteria of more than one of
the types of Debt the Issuers and the Restricted Subsidiaries are permitted to
Incur, the Issuers or such Restricted Subsidiary, as the case may be, shall have
the right, in their sole discretion, to classify such item of Debt at the time
of its Incurrence and shall only be required to include the amount and type of
such Debt under the clause permitting the Debt as so classified.
SECTION 4.4. Future Guarantors. In the event that, after the
Issue Date, Globalstar shall acquire or create a Subsidiary, Globalstar shall
cause such Subsidiary (unless such Subsidiary is a Transitory Equipment
Subsidiary or is an Unrestricted Subsidiary) to become a Subsidiary Guarantor
and to Guarantee the Securities pursuant to a Subsidiary Guaranty.
SECTION 4.5. Limitation on Restricted Payments. (a) The
Issuers may not, and may not permit any Restricted Subsidiary, directly or
indirectly, to make a Restricted Payment if at the time such Issuers or such
Restricted Subsidiary makes such Restricted Payment:
(1) a Default shall have occurred and be continuing (or would
result therefrom);
(2) Globalstar is not able to Incur an additional $1. of Debt
pursuant to Section 4.3(a); or
-31-
<PAGE> 36
(3) the aggregate amount of such Restricted Payment and all
other Restricted Payments since the Issue Date would exceed the sum of:
(A) [ ]%- of the Consolidated Net Income of
Globalstar accrued during the period (treated as one
accounting period) from the beginning of the fiscal quarter
immediately following the fiscal quarter during which the
Issue Date occurs to the end of the most recent fiscal quarter
for which internal financial statements are available at the
time of such Restricted Payment (or, in case such Consolidated
Net Income shall be a deficit, minus [ %] of such deficit);
(B) the aggregate Net Cash Proceeds received by
Globalstar from the issuance or sale of its Capital Stock
(other than Disqualified Stock) subsequent to the Issue Date
(other than an issuance or sale to a Subsidiary of Globalstar
and other than an issuance or sale to an employee stock
ownership plan or to a trust established by Globalstar or any
of its Subsidiaries for the benefit of their employees);
(C) the amount by which Debt of Globalstar is reduced
on the balance sheet of Globalstar upon the conversion or
exchange (other than by a Subsidiary of Globalstar) subsequent
to the Issue Date of any Debt of Globalstar convertible or
exchangeable for Capital Stock (other than Disqualified Stock)
of Globalstar (less the amount of any cash, or the fair value
of any other property, distributed by Globalstar upon such
conversion or exchange); and
(D) an amount equal to the sum of (i) the net
reduction in Investments in Unrestricted Subsidiaries
resulting from dividends, repayments of loans or advances or
other transfers of assets, in each case to Globalstar or any
Restricted Subsidiary from Unrestricted Subsidiaries, and (ii)
the portion (proportionate to Globalstar's equity interest in
such Subsidiary) of the fair market value of the net assets of
an Unrestricted Subsidiary at the time such Unrestricted
Subsidiary is designated a Restricted Subsidiary; provided,
however, that the foregoing sum shall not exceed, in the case
of any Unrestricted Subsidiary, the amount of Investments
previously made (and treated as a Restricted Payment) by
Globalstar or any Restricted Subsidiary in such Unrestricted
Subsidiary.
(b) Notwithstanding the foregoing, Globalstar may subject to
clause (vi) below, pay any dividend on Capital Stock
-32-
<PAGE> 37
of any class within 60 days after the declaration thereof if, on the date when
the dividend was declared, Globalstar could have paid such dividend in
accordance with the foregoing provisions; (ii) repurchase any shares of its
Capital Stock or options to acquire its Capital Stock from Persons who were
formerly officers or employees of Globalstar; provided, however, that the
aggregate amount of all such repurchases made pursuant to this clause (ii) shall
not exceed [$2 million,] plus the aggregate cash proceeds received by Globalstar
since the Issue Date on sale of its Capital Stock or options to acquire its
Capital Stock to members, officers, managers and employees of Globalstar or any
of its Subsidiaries; (iii) Refinance, and permit its Restricted Subsidiaries to
Refinance, any Debt otherwise permitted to be Refinanced by clause (iv) of
Section 4.3(b); (iv) so long as Globalstar is treated as a partnership for U.S.
federal income tax purposes, make distributions in respect of members, or
partners' income tax liability with respect to Globalstar in an amount not to
exceed the Tax Amount; (v) make distributions to GTL to pay GTL's ordinary and
reasonable operating expenses related to Globalstar, as set forth in an
Officers' Certificate delivered to the Trustee; (vi) pay any scheduled dividend
on Special Preferred Obligations; provided, however, that at the time of payment
of any such dividend (other than a dividend paid only by distributions of
additional Special Preferred Obligations), no Default shall have occurred and be
continuing (or result therefrom); (vii) make any Restricted Payment by exchange
for, or out of the proceeds of the substantially concurrent sale of, or capital
contribution in respect of, Capital Stock of Globalstar (other than Disqualified
Stock and other than Capital Stock issued or sold to a Subsidiary of Globalstar
or an employee stock ownership plan or to a trust established by Globalstar or
any of its Subsidiaries for the benefit of their employees); (viii) contribute
its Investment in Globaltel Russia to an Unrestricted Subsidiary; and (ix) make
other Restricted Payments in an aggregate amount not to exceed $ .
(c) Any Restricted Payment made pursuant to clauses (ii),
(iii), (iv), (vi), (vii), (viii) and (ix) of Section 4.5(b) shall be excluded
from the calculation of the aggregate amount of Restricted Payments made since
the Issue Date; provided, however, that the Net Cash Proceeds from the issuance
of Capital Stock pursuant to clauses (ii) and (vii) of Section 4.5(b) shall be
excluded from the calculation of amounts under clause (B) of Section 4.5(a)(3).
SECTION 4.6. Dividend and other Payment Restrictions Affecting
Subsidiaries. (a) The Issuers may not, and may not permit any Restricted
Subsidiary, directly or indirectly, to create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary to:
-33-
<PAGE> 38
(i) pay dividends or make any other distributions to the
Issuers or any of their Restricted Subsidiaries on its Capital Stock or
with respect to any other interest or participation in, or measured by,
its profits;
(ii) pay any indebtedness owed to the Issuers or any
Restricted Subsidiary;
(iii) make loans or advances to the Issuers or any
Restricted Subsidiary; or
(iv) transfer any of its properties or assets to the
Issuers or any Restricted Subsidiary.
(b) Notwithstanding the foregoing, the Issuers may, and may
permit any Restricted Subsidiary to, suffer to exist any such encumbrance or
restriction (i) pursuant to any agreement in effect on the Issue Date; (ii)
pursuant to an agreement relating to any Acquired Debt, which encumbrance or
restriction is not applicable to any Person, or the properties or assets of any
Person, other than the Person so acquired and its Subsidiaries; (iii) pursuant
to an agreement effecting a Refinancing of Debt Incurred pursuant to an
agreement referred to in clause (i) or (ii) above or clause (iv) below,
provided, however, that the provisions contained in such Refinancing agreement
relating to such encumbrance or restriction are no more restrictive taken as a
whole (as determined in good faith by the Chief Financial Officer of Globalstar)
than the provisions contained in the predecessor agreement the subject thereof;
(iv) in the case of clause (iii) of Section 4.6(a), consisting of restrictions
contained in any security agreement (including a Capital Lease Obligation)
securing Debt of the Issuers or a Restricted Subsidiary otherwise permitted
under this Indenture, but only to the extent such encumbrances or restrictions
restrict the transfer of the property subject to such security agreement; (v) in
the case of clause (iv) of Section 4.6(a), consisting of customary nonassignment
provisions entered into in the ordinary course of business in leases governing
leasehold interests, but only to the extent such provisions restrict the
transfer of the lease or the property thereunder; (vi) with respect to a
Restricted Subsidiary, imposed pursuant to an agreement which has been entered
into for the sale or disposition of all or substantially all of the Capital
Stock or assets of such Restricted Subsidiary; provided, however, that after
giving effect to such transaction no Default shall have occurred or be
continuing, that such restriction terminates if such transaction is not
consummated and that such consummation or abandonment of such transaction occurs
within one year of the date such agreement was entered into; (vii) imposed
pursuant to applicable law or regulations; (viii) imposed pursuant to this
Indenture and the Securities; or (ix) consisting of any restriction on the sale
or other disposition of assets or property securing Debt as a result of a
Permitted Lien on such assets or property.
-34-
<PAGE> 39
SECTION 4.7. Asset Dispositions. (a) The Issuers may not, and
may not permit any Restricted Subsidiary to, directly or indirectly, make any
Asset Disposition unless: (i) Globalstar, Globalstar Capital or such Restricted
Subsidiary, as the case may be, receives consideration at the time of such Asset
Disposition at least equal to the fair market value (including as to the value
of all non-cash consideration) of the shares and assets subject to such Asset
Disposition, as determined by the General Partners' Committee of Globalstar in
good faith and evidenced by a resolution filed with the Trustee; (ii) at least
80% of the consideration thereof received by Globalstar, Globalstar Capital or
such Restricted Subsidiary, as the case may be, consists of (a) cash or
Marketable Securities or (b) the assumption of Debt (other than Subordinated
Obligations) of Globalstar, Globalstar Capital or such Restricted Subsidiary and
the release of the Issuers and the Restricted Subsidiaries, as applicable, from
all liability on the Debt assumed; and (iii) all Net Available Proceeds, less
any amounts invested within 180 days of such disposition in assets that comply
with Section 4.12, are applied within 180 days of such disposition (A) first, to
the permanent repayment or reduction of Debt then outstanding under any Bank
Credit Agreement or Vendor Financing Facility, to the extent such agreement or
facility would require such application or prohibit payments pursuant to the
following clause (B), (B) second, to the extent of remaining Net Available
Proceeds, to make an Offer to Purchase outstanding Securities at 100% of their
principal amount plus accrued and unpaid interest to the date of purchase
thereon and, to the extent required by the terms thereof, any other Debt of
Globalstar, Globalstar Capital or a Restricted Subsidiary that ranks pari passu
with the Securities at a price no greater than 100% of the principal amount
thereof plus accrued and unpaid interest to the date of purchase and (C) third,
to the extent of any remaining Net Available Proceeds following the completion
of the offer to Purchase, to the repayment of other Debt of Globalstar or Debt
of a Restricted Subsidiary, to the extent permitted under the terms thereof. To
the extent any Net Available Proceeds remain after such uses, Globalstar and the
Restricted Subsidiaries may use such amounts for any purposes not prohibited by
this Indenture. Notwithstanding the foregoing, these provisions shall not apply
to any Asset Disposition which constitutes a transfer, conveyance, sale, lease
or other disposition of all or substantially all of Globalstar's properties or
assets pursuant to Section 5.1(a).
(b) The Issuers shall comply, to the extent applicable, with
the requirements of Section 14(e) of the Exchange Act and any other securities
laws or regulations in connection with the repurchase of Securities pursuant to
this Section 4.7. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Section 4.7, the Issuers shall
comply with the applicable securities laws and regulations and shall not be
deemed to have breached their obligations under this Section 4.7 by virtue
thereof.
-35-
<PAGE> 40
SECTION 4.8. Transactions with Affiliates. (a) The Issuers may
not, and may not permit any Restricted Subsidiary, directly or indirectly, to
enter into any transactions (or series of related transactions) with an
Affiliate or Related Person of the Issuers (other than the Issuers or a
Wholly-Owned Restricted Subsidiary) (an "Affiliate Transaction") unless:
(i) such Affiliate Transaction is on terms that are no
less favorable to Globalstar, Globalstar Capital or the relevant
Restricted Subsidiary than those that would have been obtained in a
comparable transaction by Globalstar, Globalstar Capital or such
Restricted Subsidiary, as the case may be, with an unrelated Person;
and
(ii) Globalstar delivers to the Trustee:
(A) with respect to any Affiliate Transaction
involving aggregate consideration in excess of $1 million
(other than financing transactions that are not vendor
financing transactions pursuant to a Vendor Financing
Facility) and entered into in connection with the Build-out, a
certificate of the Chief Executive Officer of Globalstar to
the effect that a majority of the disinterested limited
partners of Globalstar have approved such Affiliate
Transaction; provided, however, that there is at least one
disinterested limited partner at the time of such Affiliate
Transaction; provided further, however, that any limited
partner receiving any compensation in respect of its approval
shall be deemed not to be a disinterested limited partner; or
(B) (1) with respect to any Affiliate Transaction
involving aggregate consideration in excess of $ , a
certificate of the Chief Executive officer of Globalstar to
the effect that such Affiliate Transaction complies with
clause (i) above; and (2) with respect to any Affiliate
Transaction involving aggregate consideration in excess of
, an opinion as to the fairness to Globalstar,
Globalstar Capital or such Restricted Subsidiary, as the
case may be, of such Affiliate Transaction from a financial
point of view issued by an Independent Financial Advisor
or, with respect to telecommunications-related matters,
a recognized expert in the satellite telecommunications
industry.
(b) Notwithstanding the foregoing Section 4.8(a), the
following shall be deemed not to be Affiliate Transactions:
(i) employee compensation arrangements entered into in
the ordinary course of business and approved by the General Partners'
Committee of Globalstar;
-36-
<PAGE> 41
(ii) transactions solely between or among the Issuers and
the Restricted Subsidiaries;
(iii) Restricted Payments permitted by Section 4.5;
(iv) Investments by an Affiliate or Related person of
Globalstar or Globalstar Capital in the Capital Stock (other than
Disqualified Stock) of Globalstar or any Restricted Subsidiary; and
(v) an Affiliate or Related Person of the Issuers acting
as agent for the placement or acquisition of launch services or
insurance on behalf of the Issuers or any Restricted Subsidiary.
SECTION 4.9. Limitation on Issuances and Sales of Capital,
Stock of Restricted Subsidiaries. The Issuers may not, and may not permit any
Restricted Subsidiary to, issue, transfer, convey, sell or otherwise dispose of
any shares of Capital Stock of a Restricted Subsidiary or securities convertible
or exchangeable into, or options, warrants, rights or any other interest with
respect to, Capital Stock of a Restricted Subsidiary to any person other than
Globalstar, Globalstar Capital or a Wholly-Owned Restricted Subsidiary except
(i) in a transaction consisting of a sale of all the Capital Stock of such
Restricted Subsidiary and that complies with the provisions of Section 4.7 to
the extent such provisions apply; (ii) if required, the issuance, transfer,
conveyance, sale or other disposition of directors, qualifying shares; (iii) in
a transaction in which, or in connection with which, an Issuer or a Restricted
Subsidiary acquires at the same time sufficient Capital Stock of such Restricted
Subsidiary to at least maintain the same percentage ownership interest it had
prior to such transaction; and (iv) Disqualified Stock of a Restricted
Subsidiary Incurred to Refinance Disqualified Stock of such Restricted
Subsidiary; provided, however, that the amounts of the redemption obligations of
such Disqualified Stock shall not exceed the amounts of the redemption
obligations of, and such Disqualified Stock shall have redemption obligations no
earlier than those required by, the Disqualified Stock being Refinanced.
SECTION 4.10. Change of Control. (a) Upon the occurrence of a
Change of Control, each Holder of Securities shall have the right to require
that the Issuers repurchase such Holder's Securities at a purchase price in cash
equal to 101% of the principal amount thereof plus accrued and unpaid interest
to the date of purchase (subject to the right of Holders of record on the
relevant record date to receive interest due on the relevant interest payment
date).
(b) Within 30 days following any Change of Control, the
Issuers shall mail a notice to each Holder with a copy to the Trustee stating:
-37-
<PAGE> 42
(1) that a Change of Control has occurred and that such Holder
has the right to require the Issuers to purchase such Holder's
Securities at a purchase price in cash equal to 101% of the principal
amount thereof plus accrued and unpaid interest to the date of purchase
(subject to the right of Holders of record on the relevant record date
to receive interest on the relevant interest payment date);
(2) the circumstances and relevant facts regarding such Change
of Control (including information with respect to pro forma historical
income, cash flow and capitalization, each after giving effect to such
Change of Control);
(3) the repurchase date (which shall be no earlier than 30
days nor later than 60 days from the date such notice is mailed); and
(4) the instructions determined by the Issuers, consistent
with this Section 4.10, that a Holder must follow in order to have its
Securities purchased.
(c) Holders electing to have a Security purchased will be
required to surrender the Security, with an appropriate form duly completed, to
the Issuers at the address specified in the notice at least three Business Days
prior to the purchase date. Holders will be entitled to withdraw their election
if the Trustee or the Issuers receive not later than one Business Day prior to
the purchase date, a facsimile transmission or letter setting forth the name of
the Holder, the principal amount of the Security which was delivered for
purchase by the Holder and a statement that such Holder is withdrawing his
election to have such Security purchased.
(d) on the purchase date, all Securities purchased by the
Issuers under this Section shall be delivered by the Trustee for cancellation,
and the Issuers shall pay the purchase price plus accrued and unpaid interest
and Liquidated Damages, if any, to the Holders entitled thereto.
(e) The Issuers shall comply, to the extent applicable, with
the requirements of Section 14(e) of the Exchange Act and any other securities
laws or regulations in connection with the repurchase of Securities pursuant to
this Section. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Section, the Issuers shall comply
with the applicable securities laws and regulations and shall not be deemed to
have breached their obligations under this Section by virtue thereof.
SECTION 4.11. Limitation on Liens. The Issuers may not, and
may not permit any Restricted Subsidiary, directly or indirectly, to Incur or
permit to exist any Lien on any asset now
-38-
<PAGE> 43
owned or hereafter acquired, or any income or profits therefrom or assign or
convey any right to receive income therefrom, except for the following Liens
(each, a "Permitted Lien"):
(i) Liens to secure up to $ million, minus the aggregate
principal amount of Notes issued pursuant to the Initial Purchasers,
over-allotment option, of Debt permitted to be Incurred under this
Indenture (including the Debt outstanding at any time under the 11 3/8
Indenture, the 11 1/4 Indenture and the 10 3/4 Indenture) so long as
effective provision is made to secure the Securities equally and
ratably with (or prior to) the obligations so secured;
(ii) Liens in favor of Holders of the Securities;
(iii) Liens in favor of the Issuers;
(iv) Liens on property or shares of Capital Stock of another
Person at the time such other Person becomes a Subsidiary of such
Person; provided, however, that such Liens are not created, incurred or
assumed in connection with, or in contemplation of, such other Person
becoming such a Subsidiary; provided further, however, that such Lien
may not extend to any other property owned by such Person or any of its
Subsidiaries (other than inventory and receivables generated in the
ordinary course of business and substitute property);
(v) Liens on property at the time such Person or any of its
Subsidiaries acquires such property, including any acquisition by means
of a merger or consolidation with or into such Person or a Subsidiary
of such Person; provided, however, that such Liens are not created,
incurred or assumed in connection with, or in contemplation of, such
acquisition; provided further, however, that the Liens may not extend
to any other property owned by such Person or any of its Subsidiaries;
(vi) Liens securing Debt Incurred pursuant to clause (viii) of
Section 4.3(b); provided, however, that the Lien may not extend to any
assets owned by an Issuer or any Restricted Subsidiary other than (a)
the assets being financed or refinanced and income and proceeds
therefrom and (b) any other assets of such obligor securing other Debt
of such obligor to the same secured party;
(vii) Liens to secure the performance of statutory
obligations, surety or appeal bonds, performance bonds or other
obligations of a like nature incurred in the ordinary course of
business;
(viii) Liens existing on the Issue Date;
-39-
<PAGE> 44
(ix) Liens for taxes, assessments or governmental charges or
claims that are not yet delinquent or that are being contested in good
faith by appropriate proceedings promptly instituted and diligently
concluded; provided, however, that any reserve or other appropriate
provision as shall be required in conformity with GAAP shall have been
made therefor;
(x) Liens incurred in the ordinary course of business of the
Issuers and the Restricted Subsidiaries with respect to obligations
that do not exceed $ million at any one time outstanding and that:
(A) are not incurred in connection with the borrowing
of money or the obtaining of advances or credit (other than
trade credit in the ordinary course of business); and
(B) do not in the aggregate materially detract from
the value of the property or materially impair the use thereof
in the operation of business by the Issuers and the Restricted
Subsidiaries.
SECTION 4.12. Business Activities. The Issuers may not, and
may not permit any Restricted Subsidiary to, engage in any business other than
that which is related to the design, development, procurement, installation,
operation and ownership of telecommunications systems and businesses.
SECTION 4.13. Maintenance of Insurance.
(a) The Issuers shall:
(i) maintain, with respect to each satellite in the
Globalstar System, for the period beginning at least 45 days prior to,
and at all times up to and including, the launch of such satellite,
launch insurance with respect to such satellite in an amount sufficient
to provide for the construction, launch and insurance of a replacement
satellite to be payable in the event of a launch failure; and
(ii) in the event that more than of Globalstar's
satellites have ceased Operating for 90 consecutive days and fewer than
satellites are Operating as part of the Globalstar System (such an
event, an "In-orbit Insurance Event"), obtain (within 60 days of such
In-orbit Insurance Event), and thereafter maintain, in-orbit insurance
in an amount sufficient to provide for the construction, launch and
insurance of replacement satellites for at least of Globalstar's
satellites still operating or, if such in-orbit insurance in such
amount is not then commercially available
-40-
<PAGE> 45
from traditional insurance providers, such lesser amount as is so
available.
(b) The obligation of the Issuers to maintain insurance
pursuant to this covenant may be satisfied by any combination of:
(i) insurance commitments obtained from any recognized
insurance provider;
(ii) insurance commitments obtained from any other entity
if the General Partners' Committee of Globalstar determines in good
faith that such entity is creditworthy and otherwise capable of bearing
the financial risk of providing such insurance;
(iii) unrestricted cash segregated and maintained by
Globalstar in a segregated account (the "Insurance Account") solely for
disbursement in accordance with Section 4.13(d) ("Cash Insurance"); and
(iv) in respect of the insurance described in clause M of
Section 4.13(a), self-insurance for the launch of up to 12 satellites;
provided, however, that no earlier than 60 days prior to the scheduled
launch of any such satellites:
(a) the Issuers deliver an officers, Certificate to
the Trustee certifying that they have sufficient committed
capital to construct, launch and insure at least
[44] satellites, in addition to the satellites with respect to
which the Issuers are self-insuring; and
(b) the Issuers obtain an opinion from an investment
banking firm that is an Independent Financial Advisor to the
effect that the Issuers would be able to raise sufficient
capital in the capital markets to replace, relaunch and insure
such satellites in the event of a failure to successfully
launch such satellites.
(c) Within 30 days following any date on which the Issuers are
required to obtain insurance pursuant to this Indenture, the Issuers will
deliver to the Trustee an insurance certificate certifying the amount of
insurance then carried and an Officers, Certificate stating that such insurance,
together with any other insurance or Cash Insurance maintained by the Issuers,
complies with this Indenture. In addition, the Issuers will cause to be
delivered to the Trustee no less than once each year an insurance certificate
setting forth the amount of insurance then carried, which insurance certificate
shall entitle the Trustee to:
-41-
<PAGE> 46
(i) notice of any claim under any such insurance policy;
and
(ii) at least 30 days, notice from the provider of such
insurance prior to the cancellation of any such insurance.
In the event that the Issuers maintain any Cash Insurance in satisfaction of any
part of their obligation to maintain insurance pursuant to this Section 4.13,
the Issuers shall deliver an Officers' Certificate to the Trustee in lieu of any
insurance certificate otherwise required by this Section 4.13.
(d) In the event that the Issuers receive any proceeds of any
launch or in-orbit insurance that they are required to maintain pursuant to this
Section 4.13, such proceeds shall constitute "Insurance Proceeds". In addition,
if the Issuers maintain any Cash Insurance in satisfaction of any part of their
obligations to maintain in-orbit insurance pursuant to this Section 4.13, then
upon the occurrence of the event (i.e., the in-orbit failure) that would have
entitled the Issuers to the payment of insurance had the Issuers purchased
insurance from an insurance provider, the cash maintained in the Insurance
Account shall constitute "Insurance Proceeds". Promptly following the receipt of
any Insurance Proceeds, the Issuers shall apply such Insurance Proceeds in
accordance with the provisions of Section 4.7; provided, however, that Insurance
Proceeds shall only be required to be so applied to the extent that the
aggregate amount of all Insurance Proceeds received by the Issuers exceeds $5
million in any 12-month period.
SECTION 4.14. Compliance Certificate; Statement by Officers as
to Default. The Issuers shall deliver to the Trustee within 120 days after the
end of each fiscal year of the Issuers an Officers, Certificate, one of the
signers of which shall be the principal executive, principal financial or
principal accounting officer of the Issuers, stating that in the course of the
performance by the signers of their duties as officers of the Issuers they would
normally have knowledge of any Default and whether or not the signers know of
any Default that occurred during such period. If they do, the certificate shall
describe the Default, its status and what action the Issuers are taking or
propose to take with respect thereto. The Issuers also shall comply with TIA
Section 314(a)(4).
SECTION 4.15. Further Instruments and Acts. Upon request of
the Trustee, the Issuers will execute and deliver such further instruments and
do such further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture.
SECTION 4.16. Business Activities of Globalstar Capital.
Globalstar Capital shall not engage in any trade or
-42-
<PAGE> 47
business, and shall conduct no business activity, other than the Incurrence of
Debt permitted by Section 4.3 and the issuance of Capital Stock to Globalstar or
any Wholly Owned Restricted Subsidiary and activities incidental thereto.
SECTION 4.17. Calculation of Original Issue Discount. The
Issuers shall file with the Trustee promptly at the end of each calendar year
(i) a written notice specifying the amount of original issue discount (including
daily rates and accrual periods) accrued on outstanding Securities as of the end
of such year and (ii) such other specific information relating to such original
issue discount as may then be relevant under the Code, as amended from time to
time.
ARTICLE 5.
Successor Issuers
SECTION 5.1. When Issuers May Merge or Transfer Assets. (a)
Neither Globalstar nor Globalstar Capital may consolidate with or merge with or
into, or convey, transfer or lease, in one transaction or a series of
transactions, all or substantially all its assets to any Person; provided,
however, that Globalstar may consolidate with or merge with or into, or convey,
transfer or lease, in one transaction or a series of transactions, all or
substantially all its assets to any Person, if:
(i) the resulting , surviving or transferee Person (the
"Successor Issuer") shall be a Person organized and existing under the
laws of Bermuda the United States of America, any State thereof or the
District of Columbia and the Successor Issuer (if not Globalstar) shall
expressly assume, by an indenture supplemental hereto, executed and
delivered to the Trustee, in form satisfactory to the Trustee, all the
obligations of Globalstar under the Securities and this Indenture;
(ii) immediately after giving effect to such transaction
(and treating any Debt which becomes an obligation of the Successor
Issuer or any Subsidiary as a result of such transaction as having been
Incurred by the Successor Issuer or such Subsidiary at the time of such
transaction), no Default shall have occurred and be continuing;
(iii) immediately after giving effect to such transaction,
the Successor Issuer would be able to Incur an additional $1. of Debt
pursuant to Section 4.3(a);
(iv) immediately after giving effect to such transaction,
the Successor Issuer shall have Consolidated Net Worth in an amount
that is not less than the
-43-
<PAGE> 48
Consolidated Net Worth of Globalstar immediately prior to such
transaction; and
(v) Globalstar shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that such
transaction and such supplemental indenture (if any) comply with this
Indenture.
The Successor Issuer shall be the successor to Globalstar and
shall succeed to, and be substituted for, and may exercise every right and power
of, Globalstar under this Indenture, and Globalstar (other than in the case of a
lease) shall be released from the obligation to pay the principal of and
interest on the Securities.
(b) Globalstar shall not permit any Subsidiary Guarantor to
consolidate with or merge with or into, or convey, transfer or lease, in one
transaction or a series of transactions, all or substantially all of its assets
to any Person unless: (i) the resulting, surviving or transferee Person (if not
such Subsidiary) shall be a Person organized and existing under the laws of the
jurisdiction under which such Subsidiary was organized or under the laws of the
United States of America, or any State thereof or the District of Columbia, and
such Person shall expressly assume, by a guaranty agreement in a form acceptable
to the Trustee, all the obligations of such Subsidiary, if any, under its
Subsidiary Guaranty; (ii) immediately after giving effect to such transaction or
transactions on a pro forma basis (and treating any Debt which becomes an
obligation of the resulting, surviving or transferee Person as a result of such
transaction as having been issued by such Person at the time of such
transaction), no Default shall have occurred and be continuing; and (iii)
Globalstar delivers to the Trustee an Officers' Certificate and an Opinion of
Counsel, each stating that such consolidation, merger or transfer and such
guaranty agreement, if any, complies with this Indenture.
ARTICLE 6.
Defaults and Remedies
SECTION 6.1. Events of Default. An "Event of Default" occurs
if:
(1) the Issuers default in any payment of interest on any
Security when the same becomes due and payable, and such default
continues for a period of 30 days;
(2) the Issuers (i) default in the payment of the principal of
any Security when the same becomes due and payable at its Stated
Maturity, upon optional redemption, upon required repurchase, upon
declaration or otherwise, or
-44-
<PAGE> 49
(ii) fail to redeem or purchase Securities when required pursuant to
this Indenture or the Securities;
(3) the Issuers fail to comply with Section 5.1;
(4) the Issuers fail to comply with Section 4.2, 4.3, 4.4,
4.5, 4.6, 4.7, 4.8, 4.9, 4.10, 4.11, 4.12, 4.13 or 4.16 (other than a
failure to purchase Securities when required under Section 4.7 or 4.10)
and such failure continues for 30 days after the notice specified
below;
(5) the Issuers fail to comply with any of their agreements in
the Securities or this Indenture (other than those referred to in
clause (1), (2), (3) or (4) above) and such failure continues for 60
days after the notice specified below;
(6) Debt of the Issuers or any Significant Subsidiary is not
paid within any applicable grace period after final maturity or is
accelerated by the holders thereof because of a default and the total
amount of such Debt unpaid or accelerated exceeds $ million, or its
foreign currency equivalent at the time and such failure continues for
10 days after the notice specified below;
(7) any Issuer or any Significant Subsidiary pursuant to or
within the meaning of any Bankruptcy Law:
(A) commences a voluntary case;
(B) consents to the entry of an order for relief
against it in an involuntary case;
(C) consents to the appointment of a Custodian of it
or for any substantial part of its property; or
(D) makes a general assignment for the benefit of its
creditors;
or takes any comparable action under any foreign laws relating to
insolvency;
(8) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(A) is for relief against the Issuers or any
Significant Subsidiary in an involuntary case;
(B) appoints a Custodian of the Issuers or any
Significant Subsidiary or for any substantial part of its
property; or
-45-
<PAGE> 50
(C) orders the winding up or liquidation of the
Issuers or any Significant Subsidiary;
or any similar relief is granted under any foreign laws and the order
or decree remains unstayed and in effect for 60 days;
(9) any judgment or decree for the payment of money in excess
of $ million or its foreign currency equivalent at the time is
entered against the Issuers or any Significant Subsidiary, remains
outstanding for a period of 60 days following the entry of such
judgment or decree and is not discharged, waived or the execution
thereof stayed within 10 days after the notice specified below; or
(10) a Subsidiary Guaranty ceases to be in full force and
effect (other than in accordance with the terms of such Subsidiary
Guaranty) or a Subsidiary Guarantor denies or disaffirms its
obligations under its Subsidiary Guaranty.
The foregoing will constitute Events of Default whatever the
reason for any such Event of Default and whether it is voluntary or involuntary
or is effected by operation of law or pursuant to any judgment, decree or order
of any court or any order, rule or regulation of any administrative or
governmental body.
The term "Bankruptcy Law" means Title 11, United States Code,
or any similar Federal or state law for the relief of debtors. The term
"Custodian" means any receiver, trustee, assignee, liquidator, custodian or
similar official under any Bankruptcy Law.
A Default under clauses (4), (5), or (9) is not an Event of
Default until the Trustee or the holders of at least 25% in principal amount of
the outstanding Securities notify the Issuers of the Default and the Issuers do
not cure such Default within the time specified after receipt 6f such notice.
Such notice must specify the Default, demand that it be remedied and state that
such notice is a "Notice of Default".
The Issuers shall deliver to the Trustee, within 30 days after
the occurrence thereof, written notice in the form of an Officers' Certificate
of any Event of Default under clause (6) or (10) and any event which with the
giving of notice or the lapse of time would become an Event of Default under
clause (4), (5) or (9), its status and what action the Issuers are taking or
propose to take with respect thereto.
SECTION 6.2. Acceleration. If an Event of Default (other than
an Event of Default specified in Section 6.1(7) or (8) with respect to the
Issuers) occurs and is continuing, the Trustee by notice to the Issuers, or the
Holders of at least 25%
-46-
<PAGE> 51
in principal amount of the Securities by notice to the Issuers and the Trustee,
may declare the principal of and accrued but unpaid interest on all the
Securities to be due and payable. Upon such a declaration, such principal,
interest shall be due and payable immediately. If an Event of Default specified
in Section 6.1(7) or (8) with respect to the Issuers occurs, the principal of
and interest on all the Securities shall ipso facto become and be immediately
due and payable without any declaration or other act on the part of the Trustee
or any Securityholders. The Holders of a majority in principal amount of the
Securities by notice to the Trustee may rescind an acceleration and its
consequences if the rescission would not conflict with any judgment or decree
and if all existing Events of Default have been cured or waived except
nonpayment of principal or interest that has become due solely because of
acceleration. No such rescission shall affect any subsequent Default or impair
any right consequent thereto.
SECTION 6.3. Other Remedies. If an Event of Default occurs and
is continuing, the Trustee may pursue any available remedy to collect the
payment of principal of or interest on the Securities or to enforce the
performance of any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not
possess any of the Securities or does not produce any of them in the proceeding.
A delay or omission by the Trustee or any Securityholder in exercising any right
or remedy accruing upon an Event of Default shall not impair the right or remedy
or constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative.
SECTION 6.4. Waiver of Past Defaults. The Holders of a
majority in principal amount of the Securities by notice to the Trustee may
waive an existing Default and its consequences except (i) a Default in the
payment of the principal of or interest on a Security or (ii) a Default in
respect of a provision that under Section 9.2 cannot be amended without the
consent of each Securityholder affected. When a Default is waived, it is deemed
cured, but no such waiver shall extend to any subsequent or other Default or
impair any consequent right.
SECTION 6.5. Control by Majority. The Holders of a majority in
principal amount of the Securities may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or of
exercising any trust or power conferred on the Trustee. However, the Trustee may
refuse to follow any direction that conflicts with law or this Indenture or,
subject to Section 7.1, that the Trustee determines is unduly prejudicial to the
rights of other Securityholders or would involve the Trustee in personal
liability; provided, however, that the Trustee may take any other action deemed
proper by the
-47-
<PAGE> 52
Trustee that is not inconsistent with such direction. Prior to taking any action
hereunder, the Trustee shall be entitled to reasonable indemnification
satisfactory to it in its sole discretion against all losses and expenses caused
by taking or not taking such action.
SECTION 6.6. Limitation on Suits. Except to enforce the right
to receive payment of principal, premium (if any) or interest when due, no
Securityholder may pursue any remedy with respect to this Indenture or the
Securities unless:
(1) the Holder gives to the Trustee written notice stating
that an Event of Default is continuing;
(2) the Holders of at least 25% in principal amount of the
Securities make a written request to the Trustee to pursue the remedy;
(3) such Holder or Holders offer to the Trustee reasonable
security or indemnity against any loss, liability or expense;
(4) the Trustee does not comply with the request within 60
days after receipt of the request and the offer of security or
indemnity; and
the Holders of a majority in principal amount of the Securities do not give the
Trustee a direction inconsistent with the request during such 60-day period.
A Securityholder may not use this Indenture to prejudice the
rights of another Securityholder or to obtain a preference or priority over
another Securityholder.
SECTION 6.7. Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any Holder
to receive payment of principal of and interest on the Securities held by such
Holder, on or after the respective due dates expressed in the Securities, or to
bring suit for the enforcement of any such payment on or after such respective
dates, shall not be impaired or affected without the consent of such Holder.
SECTION 6.8. Collection Suit by Trustee. If an Event of
Default specified in Section 6.1(i) or (2) occurs and is continuing, the Trustee
may recover judgment in its own name and as trustee of an express trust against
the Issuers for the whole amount then due and owing (together with interest on
any unpaid interest to the extent lawful) and the amounts provided for in
Section 7.7.
SECTION 6.9. Trustee May File Proofs Claim. The Trustee may
file such proofs of claim and other papers or
-48-
<PAGE> 53
documents as may be necessary or advisable in order to have the claims of the
Trustee and the Securityholders allowed in any judicial proceedings relative to
the Issuers, its creditors or its property and, unless prohibited by law or
applicable regulations, may vote on behalf of the Holders in any election of a
trustee in bankruptcy or other Person performing similar functions, and any
Custodian in any such judicial proceeding is hereby authorized by each Holder to
make payments to the Trustee and, in the event that the Trustee shall consent to
the making of such payments directly to the Holders, to pay to the Trustee any
amount due it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and its counsel, and any other amounts due
the Trustee under Section 7.7.
SECTION 6.10. Priorities. If the Trustee collects any money or
property pursuant to this Article 6, it shall pay out the money or property in
the following order:
FIRST: to the Trustee for amounts due under Section 7.7;
SECOND: to Securityholders for amounts due and unpaid on the
Securities for principal, interest, ratably, without preference or priority of
any kind, according to the amounts due and payable on the Securities for
principal, interest and Liquidated Damages (if any), respectively; and
THIRD: to the Issuers.
The Trustee may fix a record date and payment date for any
payment to Securityholders pursuant to this Section. At least 15 days before
such record date, the Issuers shall mail to each Securityholder and the Trustee
a notice that states the record date, the payment date and amount to be paid.
SECTION 6.11. Undertaking for Costs. In any suit for the
enforcement of any right or remedy under this Indenture or in any suit against
the Trustee for any action taken or omitted by it as Trustee, a court in its
discretion may require the filing by any party litigant in the suit of an
undertaking to pay the costs of the suit, and the court in its discretion may
assess reasonable costs, including reasonable attorneys, fees and expenses,
against any party litigant in the suit, having due regard to the merits and good
faith of the claims or defenses made by the party litigant. This Section does
not apply to a suit by the Trustee, a suit by a Holder pursuant to Section 6.7
or a suit by Holders of more than 10% in principal amount of the Securities.
SECTION 6.12. Waiver of Stay or Extension Laws. The Issuers
(to the extent they may lawfully do so) shall not at any time insist upon, or
plead, or in any manner whatsoever claim or take the benefit or advantage of,
any stay or extension law
-49-
<PAGE> 54
wherever enacted, now or at any time hereafter in force, which may affect the
covenants or the performance of this Indenture; and the Issuers (to the extent
that they may lawfully do so) hereby expressly waive all benefit or advantage of
any such law, and shall not hinder, delay or impede the execution of any power
herein granted to the Trustee, but shall suffer and permit the execution of
every such power as though no such law had been enacted.
ARTICLE 7.
Trustee
SECTION 7.1. Duties of Trustee. (a) If an Event of Default has
occurred and is continuing, the Trustee shall exercise the rights and powers
vested in it by this Indenture and use the same degree of care and skill in
their exercise as a prudent Person would exercise or use under the circumstances
in the conduct of such Person's own affairs.
(b) Except during the continuance of an Event of Default:
(1) the Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture and no
implied covenants or obligations shall be read into this Indenture
against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture. However, in the case of any such certificates or
opinions which by any provision hereof are specifically required to be
furnished to the Trustee, the Trustee shall be under a duty to examine
the same to determine whether or not they conform to the requirements
of this Indenture (but need not confirm or investigate the accuracy of
mathematical calculations or other facts stated therein).
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(1) this paragraph does not limit the effect of paragraph (b)
of this Section;
(2) the Trustee shall not be liable for any error of judgment
made in good faith by a Trust Officer unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts; and
-50-
<PAGE> 55
(3) the Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.5.
(d) Every provision of this Indenture that in any way relates
to the Trustee is subject to paragraphs (a), (b) and (c) of this Section.
(e) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Issuers.
(f) Money held in trust by the Trustee need not be segregated
from other funds except to the extent required by law.
(g) No provision of this Indenture shall require the Trustee
to expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers, if it shall have reasonable grounds to believe that repayment
of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
(h) Every provision of this Indenture relating to the conduct
or affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section and to the provisions of the TIA.
SECTION 7.2. Rights of Trustee. (a) The Trustee may rely on
any document believed by it to be genuine and to have been signed or presented
by the proper person. The Trustee need not investigate any fact or matter stated
in the document.
(b) Before the Trustee acts or refrains from acting, it may
require an officers, Certificate or an opinion of Counsel. The Trustee shall not
be liable for any action it takes or omits to take in good faith in reliance on
the Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee shall not be liable for any action it takes or
omits to take in good faith which it believes to be authorized or within its
rights or powers; provided, however, that the Trustee's conduct does not
constitute wilful misconduct or negligence.
(e) The Trustee may consult with counsel of its selection, and
the advice or opinion of counsel with respect to legal matters relating to this
Indenture and the Securities shall
-51-
<PAGE> 56
be full and complete authorization and protection from liability in respect to
any action taken, omitted or suffered by it hereunder in good faith and in
accordance with the advice or opinion of such counsel.
(f) The Trustee shall not be deemed to have notice of any
Default or Event of Default unless a Trust officer has actual knowledge thereof
or unless written notice of any event which is in fact such a default is
received by the Trustee at the principal corporate trust office of the Trustee,
and such notice references the Securities and this Indenture.
SECTION 7.3. Individual Rights of Trustee. The Trustee in its
individual or any other capacity may become the owner or pledgee of Securities
and may otherwise deal with the Issuers or its Affiliates with the same rights
it would have if it were not Trustee. Any Paying Agent, Registrar, co-registrar
or co-paying agent may do the same with like rights. However, the Trustee must
comply with Sections 7.10 and 7.11.
SECTION 7.4. Trustee's Disclaimer. The Trustee shall not be
responsible for and makes no representation as to the validity or adequacy of
this Indenture or the Securities, it shall not be accountable for the Issuers'
use of the proceeds from the Securities, and it shall not be responsible for any
statement of the Issuers in this Indenture or in any document issued in
connection with the sale of the Securities or in the Securities other than the
Trustee's certificate of authentication.
SECTION 7.5. Notice of Defaults. If a Default occurs and is
continuing and if it is known to the Trustee, the Trustee shall mail to each
Securityholder notice of the Default within 90 days after it occurs. Except in
the case of a Default in payment of principal of or interest on any Security
(including payments pursuant to the mandatory redemption provisions of such
Security, if any), the Trustee may withhold the notice if and so long as a
committee of its Trust Officers in good faith determines that withholding the
notice is in the interests of Securityholders.
SECTION 7.6. Reports by Trustee to Holders. If required by TIA
Section 313(a), as promptly as practicable after each beginning with the
, 1999, and in any event prior to in each year, the Trustee shall mail
to each Securityholder a brief report dated as of that complies with
such TIA Section 313(a). The Trustee also shall comply with TIA Section 313(b).
A copy of each report at the time of its mailing to
Securityholders shall be filed with the Commission and each stock exchange (if
any) on which the Securities are listed. The Issuers agree to notify promptly
the Trustee whenever the Securities become listed on any stock exchange and of
any delisting thereof.
-52-
<PAGE> 57
SECTION 7.7. Compensation and Indemnity. Issuers shall pay to
the Trustee from time to time such compensation as shall be agreed in writing
between the Issuers and the Trustee for its services. The Trustee's compensation
shall not be limited by any law on compensation of a trustee of an express
trust. The Issuers shall reimburse the Trustee upon request for all reasonable
out-of-pocket expenses incurred or made by it, including costs of collection, in
addition to the compensation for its services. Such expenses shall include the
reasonable compensation and expenses, disbursements and advances of the
Trustee's agents, counsel, accountants and experts. The Issuers shall indemnify
the Trustee against any and all loss, damage, claim, liability or reasonable
expense (including reasonable attorneys, fees and expenses) incurred by it in
connection with the acceptance or administration of this trust and the
performance of its duties hereunder. The Trustee shall notify the Issuers
promptly of any claim for which it may seek indemnity. Failure by the Trustee to
so notify the Issuers shall not relieve the Issuers of their obligations
hereunder. The Issuers shall defend the claim and the Trustee may have separate
counsel and the Issuers shall pay the reasonable fees and expenses of such
counsel. The Issuers need not reimburse any expense or indemnify against any
loss, liability or expense incurred by the Trustee through the Trustee's own
wilful misconduct, negligence or bad faith.
To secure the Issuers' payment obligations in this Section,
the Trustee shall have a lien prior to the Securities on all money or property
held or collected by the Trustee other than money or property held in trust to
pay principal of and interest on particular Securities.
The Issuers' payment obligations pursuant to this Section
shall survive the discharge of this Indenture. When the Trustee incurs expenses
after the occurrence of a Default specified in Section 6.1(7) or (8) with
respect to the Issuers, the expenses are intended to constitute expenses of
administration under the Bankruptcy Law.
SECTION 7.8. Replacement of Trustee. The Trustee may resign at
any time by so notifying the Issuers. The Holders of a majority in principal
amount of the Securities may remove the Trustee by so notifying the Trustee and
may appoint a successor Trustee. The Issuers shall remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the
Trustee or its property; or
(4) the Trustee otherwise becomes incapable of acting.
-53-
<PAGE> 58
If the Trustee resigns, is removed by the Issuers or by the
Holders of a majority in principal amount of the Securities and such Holders do
not reasonably promptly appoint a successor Trustee, or if a vacancy exists in
the office of Trustee for any reason (the Trustee in such event being referred
to herein as the retiring Trustee), the Issuers shall promptly appoint a
successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Issuers. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Securityholders. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee, subject to the lien
provided for in Section 7.7.
If a successor Trustee does not take office within 60 days
after the retiring Trustee resigns or is removed, the retiring Trustee or the
Holders of 10% in principal amount of the Securities may petition, at the
expense of the Issuers, any court of competent jurisdiction for the appointment
of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any
Securityholder may petition any court of competent jurisdiction for the removal
of the Trustee and the appointment of a successor Trustee.
Notwithstanding the replacement of the Trustee pursuant to
this Section, the Issuers, obligations under Section 7.7 shall continue for the
benefit of the retiring Trustee.
SECTION 7.9. Successor Trustee by Merger. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all its corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee.
In case at the time such successor or successors by merger,
conversion or consolidation to the Trustee shall succeed to the trusts created
by this Indenture any of the Securities shall have been authenticated but not
delivered, any such successor to the Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Securities so
authenticated; and in case at that time any of the Securities shall not have
been authenticated, any successor to the Trustee may authenticate such
Securities either in the name of any predecessor hereunder or in the name of the
successor to the Trustee; and in all such cases such certificates shall have
-54-
<PAGE> 59
the full force which it is anywhere in the Securities or in this Indenture
provided that the certificate of the Trustee shall have.
SECTION 7.10. Eligibility: Disqualification. The Trustee shall
at all times satisfy the requirements of TIA Section 310(a). The Trustee shall
have a combined capital and surplus of at least $50,000,000 as set forth in its
most recent published annual report of condition. The Trustee shall comply with
TIA Section 310(b); provided, however, that there shall be excluded from the
operation of TIA Section 310(b)(1) any indenture or indentures under which other
securities or certificates of interest or participation in other securities of
the Issuers are outstanding if the requirements for such exclusion set forth in
TIA Section 310 (b) (1) are met.
SECTION 7.11. Preferential Collection of Claims Against
Issuers. The Trustee shall comply with TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). A Trustee who has resigned
or been removed shall be subject to TIA Section 311(a) to the extent indicated.
ARTICLE 8.
Discharge of Indenture; Defeasance
SECTION 8.1. Discharge of Liability on Securities; Defeasance.
(a) When (i) the Issuers deliver to the Trustee all outstanding Securities
(other than Securities replaced pursuant to Section 2.7) for cancellation or
(ii) all outstanding Securities have become due and payable, whether at maturity
or as a result of the mailing of a notice of redemption pursuant to Article 3
hereof and the Issuers irrevocably deposit with the Trustee funds sufficient to
pay at maturity or upon redemption all outstanding Securities, including
interest thereon to maturity or such redemption date (other than Securities
replaced pursuant to Section 2.7), and if in either case the Issuers pay all
other sums payable hereunder by the Issuers, then this Indenture shall, subject
to Sections 8.1(c), cease to be of further effect. The Trustee shall acknowledge
satisfaction and discharge of this Indenture on demand of the Issuers
accompanied by an Officers, Certificate and an opinion of Counsel and at the
cost and expense of the Issuers.
(b) Subject to Sections 8.1(c) and 8.2, the Issuers at any
time may terminate (i) all their obligations under the Securities and this
Indenture ("legal defeasance option") or (ii) their obligations under Sections
4.2, 4.3, 4.4, 4.5, 4.6, 4.7, 4.8, 4.9, 4.10, 4.11, 4.12, 4.13 and 4.16 and the
operation of Sections 6.1(4), 6.1(6), 6.1(7), 6.1(8), 6.1(9) and 6.1(10) (but,
in the case of Sections 6.1(7) and (8), with respect only to Significant
Subsidiaries) and the limitations contained in Sections 5.1(a)(iii) and (iv)
("covenant defeasance option").
-55-
<PAGE> 60
The Issuers may exercise their legal defeasance option notwithstanding their
prior exercise of their covenant defeasance option.
If the Issuers exercise their legal defeasance option, payment
of the Securities may not be accelerated because of an Event of Default with
respect thereto. If the Issuers exercise their covenant defeasance option,
payment of the Securities may not be accelerated because of an Event of Default
specified in Sections 6.1(4), 6.1(6), 6.1(7), 6.1(8), 6.1(9) and 6.1(10) (but,
in the case of Sections 6.1M and (8), with respect only to Significant
Subsidiaries) or because of the failure of the Issuers to comply with Section
5.1(a)(iii) or (iv). If the Issuers exercise their legal defeasance option or
their covenant defeasance option, each Subsidiary Guarantor, if any, shall be
released from all its obligations with respect to its Subsidiary Guaranty.
Upon satisfaction of the conditions set forth herein and upon
request of the Issuers, the Trustee shall acknowledge in writing the discharge
of those obligations that the Issuers terminate.
(c) Notwithstanding clauses (a) and (b) above, the Issuers'
obligations in Sections 2.3, 2.4, 2.5, 2.6, 2.7, 2.8, 7.7 and 7.8 and in this
Article 8 shall survive until the Securities have been paid in full. Thereafter,
the Issuers, obligations in Sections 7.7, 8.4 and 8.5 shall survive.
SECTION 8.2. Conditions to Defeasance. The Issuers may
exercise their legal defeasance option or their covenant defeasance option only
if:
(1) the Issuers irrevocably deposit in trust with the Trustee
money or U.S. Government Obligations for the payment of principal of
and interest on the Securities to maturity or redemption, as the case
may be;
(2) the Issuers deliver to the Trustee a certificate from a
nationally recognized firm of independent accountants expressing their
opinion that the payments of principal and interest when due and
without reinvestment on the deposited U.S. Government Obligations plus
any deposited money without investment will provide cash at such times
and in such amounts as will be sufficient to pay principal and interest
when due on all the Securities to maturity or redemption, as the case
may be;
(3) 123 days pass after the deposit is made and during the
123-day period no Default specified in Sections 6.1[M] or (8) with
respect to the Issuers occurs which is continuing at the end of the
period;
-56-
<PAGE> 61
(4) the deposit does not constitute a default under any other
agreement binding on the Issuers;
(5) the Issuers deliver to the Trustee an opinion of Counsel
to the effect that the trust resulting from the deposit does not
constitute, or is qualified as, a regulated investment company under
the Investment Issuers Act of 1940;
(6) in the case of the legal defeasance option, the Issuers
shall have delivered to the Trustee an opinion of Counsel stating that
(i) the Issuers have received from, or there has been published by, the
Internal Revenue Service a ruling, or (ii) since the Issue Date there
has been a change in the applicable Federal income tax law, in either
case to the effect that, and based thereon such opinion of Counsel
shall confirm that, the Securityholders will not recognize income, gain
or loss for Federal income tax purposes as a result of such defeasance
and will be subject to Federal income tax on the same amounts, in the
same manner and at the same times as would have been the case if such
defeasance had not occurred;
(7) in the case of the covenant defeasance option, the Issuers
shall have delivered to the Trustee an opinion of Counsel to the effect
that the Securityholders will not recognize income, gain or loss for
Federal income tax purposes as a result of such covenant defeasance and
will be subject to Federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such
covenant defeasance had not occurred; and
(8) the Issuers deliver to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent to the defeasance and discharge of the Securities as
contemplated by this Article 8 have been complied with.
Before or after a deposit, the Issuers may make arrangements
satisfactory to the Trustee for the redemption of Securities at a future date in
accordance with Article 3.
SECTION 8.3. Application of Trust Money. The Trustee shall
hold in trust money or U.S. Government Obligations deposited with it pursuant to
this Article 8. It shall apply the deposited money and the money from U.S.
Government Obligations through the Paying Agent and in accordance with this
Indenture to the payment of principal of and interest on the Securities.
SECTION 8.4. Repayment to Issuers. The Trustee and the Paying
Agent shall promptly turn over to the Issuers upon written request any excess
money or securities held by them at any time.
-57-
<PAGE> 62
Subject to any applicable abandoned property law, the Trustee
and the Paying Agent shall pay to the Issuers upon request any money held by
them for the payment of principal or interest that remains unclaimed for two
years, and, thereafter, Securityholders entitled to the money must look to the
Issuers for payment as general creditors.
SECTION 8.5. Indemnity for Government Obligations. The Issuers
shall pay and shall indemnify the Trustee against any tax, fee or other charge
imposed on or assessed against deposited U.S. Government Obligations or the
principal and interest received on such U.S. Government obligations.
SECTION 8.6. Reinstatement. If the Trustee or Paying Agent is
unable to apply any money or U.S. Government obligations in accordance with this
Article 8 by reason of any legal proceeding or by reason of any order or
judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the Issuers, obligations under this
Indenture and the Securities shall be revived and reinstated as though no
deposit had occurred pursuant to this Article 8 until such time as the Trustee
or Paying Agent is permitted to apply all such money or U.S. Government
obligations in accordance with this Article 8; provided, however, that, if the
Issuers have made any payment of interest on or principal of any Securities
because of the reinstatement of their obligations, the Issuers shall be
subrogated to the rights of the Holders of such Securities to receive such
payment from the money or U.S. Government Obligations held by the Trustee or
Paying Agent.
ARTICLE 9.
Amendments
SECTION 9.1. Without Consent of Holders. The Issuers and the
Trustee may amend this Indenture or the Securities without notice to or consent
of any Securityholder:
(1) to cure any ambiguity, omission, defect or inconsistency;
(2) to comply with Article 5;
(3) to provide for uncertificated Securities in addition to or
in place of certificated Securities; provided, however, that the
uncertificated Securities are issued in registered form for purposes of
Section 163(f) of the Code or in a manner such that the uncertificated
Securities are described in Section 163(f)(2)(B) of the Code;
(4) to add guarantees with respect to the Securities,
including any Subsidiary Guaranties, or to secure the
-58-
<PAGE> 63
Securities or to release such guaranties in accordance with the terms
of Section 4.4;
(5) to add to the covenants of the Issuers for the benefit of
the Holders or to surrender any right or power herein conferred upon
the Issuers;
(6) to comply with any requirements of the Commission in
connection with qualifying, or maintaining the qualification of, this
Indenture under the TIA; or
(7) to make any change that does not adversely affect the
rights of any Securityholder.
After an amendment under this Section becomes effective, the
Issuers shall mail to Securityholders a notice briefly describing such
amendment. The failure to give such notice to all Securityholders, or any defect
therein, shall not impair or affect the validity of an amendment under this
Section.
SECTION 9.2. With Consent of Holders. The Issuers and the
Trustee may amend this Indenture or the Securities without notice to any
Securityholder but with the written consent of the Holders of at least a
majority in principal amount of the Securities then outstanding (including
consents obtained in connection with a tender offer or exchange for the
Securities). However, without the consent of each Securityholder affected
thereby, an amendment may not:
(1) reduce the amount of Securities whose Holders must consent
to an amendment;
(2) reduce the rate of or extend the time for payment of
interest on any Security;
(3) reduce the principal of or extend the Stated Maturity of
any Security;
(4) reduce the premium payable upon the redemption of any
Security or change the time at which any Security may be redeemed in
accordance with Article 3;
(5) make any Security payable in money other than that stated
in the Security;
(6) make any change in Section 6.4 or 6.7 or the second
sentence of this Section; or
(7) make any change in any Subsidiary Guaranty that would
adversely affect the Securityholders.
It shall not be necessary for the consent of the Holders under
this Section to approve the particular form of any
-59-
<PAGE> 64
proposed amendment, but it shall be sufficient if such consent approves the
substance thereof.
After an amendment under this Section becomes effective, the
Issuers shall mail to Securityholders a notice briefly describing such
amendment. The failure to give such notice to all Securityholders, or any defect
therein, shall not impair or affect the validity of an amendment under this
Section.
SECTION 9.3. Compliance with Trust Indenture Act. Every
amendment to this Indenture or the Securities shall comply with the TIA as then
in effect.
SECTION 9.4. Revocation and Effect of Consents and Waivers. A
consent to an amendment or a waiver by a Holder of a Security shall bind the
Holder and every subsequent Holder of that Security or portion of the Security
that evidences the same debt as the consenting Holder's Security, even if
notation of the consent or waiver is not made on the Security. However, any such
Holder or subsequent Holder may revoke the consent or waiver as to such Holder's
Security or portion of the Security if the Trustee receives the notice of
revocation before the date the amendment or waiver becomes effective. After an
amendment or waiver becomes effective, it shall bind every Securityholder. An
amendment or waiver becomes effective upon the execution of such amendment or
waiver by the Trustee.
The Issuers may, but shall not be obligated to, fix a record
date for the purpose of determining the Securityholders entitled to give their
consent or take any other action described above or required or permitted to be
taken pursuant to this Indenture. If a record date is fixed, then
notwithstanding the immediately preceding paragraph, those Persons who were
Securityholders at such record date (or their duly designated proxies), and only
those Persons, shall be entitled to give such consent or to revoke any consent
previously given or to take any such action, whether or not such Persons
continue to be Holders after such record date. No such consent shall be valid or
effective for more than 120 days after such record date.
SECTION 9.5. Notation on or Exchange of Securities. If an
amendment changes the terms of a Security, the Trustee may require the Holder of
the Security to deliver it to the Trustee. The Trustee may place an appropriate
notation on the Security regarding the changed terms and return it to the
Holder. Alternatively, if the Issuers or the Trustee so determines, the Issuers
in exchange for the Security shall issue and the Trustee shall authenticate a
new Security that reflects the changed terms. Failure to make the appropriate
notation or to issue a new security shall not affect the validity of such
amendment.
SECTION 9.6. Trustee To Such Amendments. The Trustee shall
sign any amendment authorized pursuant to this Article 9 if
-60-
<PAGE> 65
the amendment does not adversely affect the rights, duties, liabilities or
immunities of the Trustee. If it does, the Trustee may but need not sign it. In
signing such amendment the Trustee shall be entitled to receive indemnity
reasonably satisfactory to it and to receive, and (subject to Section 7.1) shall
be fully protected in relying upon, an Officers' Certificate and an Opinion of
Counsel stating that such amendment is authorized or permitted by this
Indenture.
SECTION 9.7. Payment for Consent. Neither the Issuers nor any
Affiliate of the Issuers shall, directly or indirectly, pay or cause to be paid
any consideration, whether by way of interest, fee or otherwise, to any Holder
for or as an inducement to any consent, waiver or amendment of any of the terms
or provisions of this Indenture or the Securities unless such consideration is
offered to be paid to all Holders that so consent, waive or agree to amend (and,
if appropriate, tender their Securities) in the time frame set forth in
solicitation documents relating to such consent, waiver or agreement.
ARTICLE 10.
Subsidiary Guaranties
SECTION 10.1. Guaranties. Each Subsidiary Guarantor hereby
unconditionally and irrevocably guarantees, jointly and severally, to each
Holder and to the Trustee and its successors and assigns (a) the full and
punctual payment of principal of and interest on the Securities when due,
whether at maturity, by acceleration, by redemption or otherwise, and all other
monetary obligations of the Issuers under this Indenture and the securities and
(b) the full and punctual performance within applicable grace periods of all
other obligations of the Issuers under this Indenture and the Securities (all
the foregoing being hereinafter collectively called the "Obligations"). Each
Subsidiary Guarantor further agrees that the Obligations may be extended or
renewed, in whole or in part, without notice or further assent from such
Subsidiary Guarantor and that such Subsidiary Guarantor will remain bound under
this Article 10 notwithstanding any extension or renewal of any Obligation.
Each Subsidiary Guarantor waives presentation to, demand of,
payment from and protest to the Issuers of any of the obligations and also
waives notice of protest for nonpayment. Each Subsidiary Guarantor waives notice
of any default under the Securities or the Obligations. The Obligations of each
Subsidiary Guarantor hereunder shall not be affected by (a) the failure of any
Holder or the Trustee to assert any claim or demand or to enforce any right or
remedy against the Issuers or any other Person under this Indenture, the
Securities or any other agreement or otherwise; (b) any extension or renewal of
any thereof; (c) any rescission, waiver, amendment or modification of any of the
terms or provisions of this Indenture, the Securities
-61-
<PAGE> 66
or any other agreement; (d) the release of any security held by any Holder or
the Trustee for the Obligations or any of them; (e) the failure of any Holder or
the Trustee to exercise any right or remedy against any other guarantor of the
Obligations; or (f) any change in the ownership of such Subsidiary Guarantor.
Each Subsidiary Guarantor further agrees that its Subsidiary
Guaranty herein constitutes a guarantee of payment, performance and compliance
when due (and not a guarantee of collection) and waives any right to require
that any resort be had by any Holder or the Trustee to any security held for
payment of the Obligations.
Except as expressly set forth in Sections 8.1(b), 10.2 and
10.6, the obligations of each Subsidiary Guarantor hereunder shall not be
subject to any reduction, limitation, impairment or termination for any reason,
including any claim of waiver, release, surrender, alteration or compromise, and
shall not be subject to any defense of setoff, counterclaim, recoupment or
termination whatsoever or by reason of the invalidity, illegality or
unenforceability of the Obligations or otherwise. Without limiting the
generality of the foregoing, the Obligations of each Subsidiary Guarantor herein
shall not be discharged or impaired or otherwise affected by the failure of any
Holder or the Trustee to assert any claim or demand or to enforce any remedy
under this Indenture, the Securities or any other agreement, by any waiver or
modification of any thereof, by any default, failure or delay, willful or
otherwise, in the performance of the obligations, or by any other act or thing
or omission or delay to do any other act or thing which may or might in any
manner or to any extent vary the risk of such Subsidiary Guarantor or would
otherwise operate as a discharge of such Subsidiary Guarantor as a matter of law
or equity.
Each Subsidiary Guarantor further agrees that its Guarantee
herein shall continue to be effective or be reinstated, as the case may be, if
at any time payment, or any part thereof, of principal of or interest on any
obligation is rescinded or must otherwise be restored by any Holder or the
Trustee upon the bankruptcy or reorganization of the Issuers or otherwise.
In furtherance of the foregoing and not in limitation of any
other right which any Holder or the Trustee has at law or in equity against any
Subsidiary Guarantor by virtue hereof, upon the failure of the Issuers to pay
the principal of or interest on any obligation when and as the same shall become
due, whether at maturity, by acceleration, by redemption or otherwise, or to
perform or comply with any other obligation, each Subsidiary Guarantor hereby
promises to and will, upon receipt of written demand by the Trustee, forthwith
pay, or cause to be paid, in cash, to the Holders or the Trustee an amount equal
to the sum of (i) the unpaid amount of such obligations, (ii) accrued and unpaid
interest on such Obligations (but only to the extent not
-62-
<PAGE> 67
prohibited by law) and (iii) all other monetary Obligations of the Issuers to
the Holders and the Trustee.
Each Subsidiary Guarantor agrees that, as between it, on the
one hand, and the Holders and the Trustee, on the other hand, (x) the maturity
of the Obligations Guaranteed hereby may be accelerated as provided in Article 6
for the purposes of such Subsidiary Guarantor's Subsidiary Guaranty herein,
notwithstanding any stay, injunction or other prohibition preventing such
acceleration in respect of the obligations guaranteed hereby, and (y) in the
event of any declaration of acceleration of such Obligations as provided in
Article 6, such Obligations (whether or not due and payable) shall forthwith
become due and payable by such Subsidiary Guarantor for the purposes of this
Section.
Each Subsidiary Guarantor also agrees to pay any and all costs
and expenses (including reasonable attorneys, fees and expenses) incurred by the
Trustee or any Holder in enforcing any rights under this Section.
SECTION 10.2. Limitation on Liability. Any term or provision
of this Indenture to the contrary notwithstanding, the maximum, aggregate amount
of the obligations guaranteed hereunder by any Subsidiary Guarantor shall not
exceed the maximum amount that can be hereby guaranteed without rendering this
Indenture, as it relates to such Subsidiary Guarantor, voidable under applicable
law relating to fraudulent conveyance or fraudulent transfer or similar laws
affecting the rights of creditors generally.
SECTION 10.3. Successors and Assigns. This Article 10 shall be
binding upon each Subsidiary Guarantor and its successors and assigns and shall
ensure to the benefit of the successors and assigns of the Trustee and the
Holders and, in the event of any transfer or assignment of rights by any Holder
or the Trustee, the rights and privileges conferred upon that party in this
Indenture and in the Securities shall automatically extend to and be vested in
such transferee or assignee, all subject to the terms and conditions of this
Indenture.
SECTION 10.4. No Waiver. Neither a failure nor a delay on the
part of either the Trustee or the Holders in exercising any right, power or
privilege under this Article 10 shall operate as a waiver thereof, nor shall a
single or partial exercise thereof preclude any other or further exercise of any
right, power or privilege. The rights, remedies and benefits of the Trustee and
the Holders herein expressly specified are cumulative and not exclusive of any
other rights, remedies or benefits which either may have under this Article 10
at law, in equity, by statute or otherwise.
-63-
<PAGE> 68
SECTION 10.5. Modification. No modification, amendment or
waiver of any provision of this Article 10, nor the consent to any departure by
any Subsidiary Guarantor therefrom, shall in any event be effective unless the
same shall be in writing and signed by the Trustee, and then such waiver or
consent shall be effective only in the specific instance and for the purpose for
which given. No notice to or demand on any Subsidiary Guarantor in any case
shall entitle such Subsidiary Guarantor to any other or further notice or demand
in the same, similar or other circumstances.
SECTION 10.6. Release of Subsidiary Guarantor. Upon the sale
or other disposition (including by way of consolidation or merger) of a
Subsidiary Guarantor or the sale or disposition of all or substantially all the
assets of such Subsidiary Guarantor (in each case other than to the Issuers or
an Affiliate of the Issuers), such Subsidiary Guarantor shall be deemed released
from all Obligations under this Article 10 without any further action required
on the part of the Trustee or any Holder. At the request of the Issuers, the
Trustee shall execute and deliver an appropriate instrument evidencing such
release.
-64-
<PAGE> 69
ARTICLE ELEVEN
Miscellaneous
SECTION 11.1. Trust Indenture Act Controls. If any provision
of this Indenture limits, qualifies or conflicts with another provision which is
required to be included in this Indenture by the TIA, the required provision
shall control.
SECTION 11.2. Notices. Any notice or communication shall be in
writing and delivered in person or mailed by first-class mail addressed as
follows:
if to the Issuers:
Globalstar, L.P.
Globalstar Capital Corporation
3200 Zanker Road
San Jose, California 95164-0670
Attention: Secretary
Facsimile: (408) 473-5040
-68-
<PAGE> 70
if to the Trustee:
The Bank of New York
101 Barclay Street, Floor 21 West
New York, NY 10286
Attention: Corporate Trust Administration
Facsimile: (212) 815-5915
The Issuers or the Trustee by notice to the other may
designate additional or different addresses for subsequent notices or
communications.
Any notice or communication mailed to a Securityholder shall
be mailed to the Securityholder at the Securityholder's address as it appears on
the registration books of the Registrar and shall be sufficiently given if so
mailed within the time prescribed.
Failure to mail a notice or communication to a Securityholder
or any defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.
SECTION 11.3. Communication by Holders with Other Holders.
Securityholders may communicate pursuant to TIA Section 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Issuers, the Trustee, the Registrar and anyone else shall have
the protection of TIA Section 312(c).
SECTION 11.4. Certificate and opinion as to Conditions
Precedent. Upon any request or application by the Issuers to the Trustee to take
or refrain from taking any action under this Indenture, the Issuers shall
furnish to the Trustee:
(1) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of the
signers, all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with; and
(2) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
SECTION 11.5. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a covenant or
condition provided for in this Indenture shall include:
-69-
<PAGE> 71
(1) a statement that the individual making such certificate or
opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such individual, he
has made such examination or investigation as is necessary to enable
him to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(4) a statement as to whether or not, in the opinion of such
individual, such covenant or condition has been complied with.
SECTION 11.5. When Securities Disregarded. In determining
whether the Holders of the required principal amount of Securities have
concurred in any direction, waiver or consent, Securities owned by the Issuers
or by any Person directly or indirectly controlling or controlled by or under
direct or indirect common control with the Issuers shall be disregarded and
deemed not to be outstanding, except that, for the purpose of determining
whether the Trustee shall be protected in relying on any such direction, waiver
or consent, only Securities which a Trust Officer of the Trustee actually knows
are so owned shall be so disregarded. Also, subject to the foregoing, only
Securities outstanding at the time shall be considered in any such
determination.
SECTION 11.6. Rules by Trustee, Paying Agent and Registrar.
The Trustee may make reasonable rules for action by or a meeting of
Securityholders. The Registrar and the Paying Agent may make reasonable rules
for their functions.
SECTION 11.7. Legal Holidays. A "Legal Holiday" is a Saturday,
a Sunday or a day on which banking institutions are not required to be open in
the State of New York. If a payment date is a Legal Holiday, payment shall be
made on the next succeeding day that is not a Legal Holiday, and no interest
shall accrue for the intervening period. If a regular record date is a Legal
Holiday, the record date shall not be affected.
SECTION 11.8. Governing Law. This Indenture and the Securities
shall be governed by, and construed in accordance with, the laws of the State of
New York but without giving effect to applicable principles of conflicts of law
to the extent that the application of the laws of another jurisdiction would be
required thereby.
-70-
<PAGE> 72
SECTION 11.9. No Recourse Against Others. Any past, present
or future director, officer, partner (including any general partner) employee,
incorporator or stockholder, as such, of the Issuers shall not have any
liability for any obligations of the Issuers under the Securities or this
Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. By accepting a Security, each Securityholder
shall waive and release all such liability. The waiver and release shall be part
of the consideration for the issue of the Securities.
SECTION 11.10. Successors. All agreements of the Issuers in
this Indenture and the Securities shall bind their successors. All agreements of
the Trustee in this Indenture shall bind its successors.
SECTION 11.11. Multiple Originals. The parties may sign any
number of copies of this Indenture. Each signed copy shall be an original, but
all of them together represent the same agreement. One signed copy is enough to
prove this Indenture.
SECTION 11.12. Table of Contents; Headings. The table of
contents, cross-reference sheet and headings of the Articles and Sections of
this Indenture have been inserted for convenience of reference only, are not
intended to be considered a part hereof and shall not modify or restrict any of
the terms or provisions hereof.
-71-
<PAGE> 73
IN WITNESS WHEREOF, the parties have caused this Indenture to
be duly executed as of the date first written above.
GLOBALSTAR, L.P.,
by
LORAL/QUALCOMM SATELLITE
SERVICES, L.P., its managing
general partner,
by
LORAL/QUALCOMM PARTNERSHIP,
L.P. its general partner
by
LORAL GENERAL PARTNER, INC.,
its general partner
by
----------------------------------
Name:
Title:
GLOBALSTAR CAPITAL CORPORATION,
by
----------------------------------
Name:
Title:
THE BANK OF NEW YORK, as Trustee
by
----------------------------------
Name:
Title:
-72-
<PAGE> 74
Dated:
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
THE BANK OF NEW YORK as Trustee, certifies that this is one of the Securities
referred to in the Indenture.
by
----------------------------------
Authorized Signatory
- -------------------
-73-
<PAGE> 1
GLOBALSTAR, L.P.
GLOBALSTAR CAPITAL CORPORATION,
Issuers
%- Subordinated Notes due ________
INDENTURE
Dated as of
THE BANK OF NEW YORK,
Trustee
<PAGE> 2
TABLE OF CONTENTS
Page
ARTICLE 1. Definitions and Incorporation by Reference
SECTION 1.1. Definitions............................................. 1
SECTION 1.2. Other Definitions....................................... 20
SECTION 1.3. Incorporation by Reference of Trust Indenture Act....... 21
SECTION 1.4. Rules of Construction................................... 21
ARTICLE 2. The Securities
SECTION 2.1. Form and Dating......................................... 22
SECTION 2.2. Execution and Authentication............................ 22
SECTION 2.3. Registrar and Paying Agent.............................. 23
SECTION 2.4. Paying Agent To Hold Money in Trust..................... 23
SECTION 2.5. Securityholder Lists.................................... 24
SECTION 2.6. Transfer and Exchange................................... 24
SECTION 2.7. Replacement Securities.................................. 25
SECTION 2.8. Outstanding Securities.................................. 25
SECTION 2.9. Temporary Securities.................................... 25
SECTION 2.10. Cancellation............................................ 26
SECTION 2.11. Defaulted Interest...................................... 26
SECTION 2.12. CUSIP Numbers........................................... 26
ARTICLE 3. Redemption
SECTION 3.1. Notices to Trustee...................................... 26
SECTION 3.2. Selection of Securities To Be Redeemed.................. 27
SECTION 3.3. Notice of Redemption.................................... 27
SECTION 3.4. Effect of Notice of Redemption.......................... 28
SECTION 3.5. Deposit of Redemption Price............................. 28
SECTION 3.6. Securities Redeemed in Part............................. 28
ARTICLE 4. Covenants
SECTION 4.1. Payment of Securities................................... 28
SECTION 4.2. SEC Reports............................................. 29
SECTION 4.3. Limitation on Consolidated Debt......................... 29
SECTION 4.4. Future Guarantors....................................... 31
SECTION 4.5. Limitation on Restricted Payments....................... 31
SECTION 4.6. Dividend and other Payment Restrictions Affecting
Subsidiaries........................................ 33
SECTION 4.7. Asset Dispositions...................................... 35
SECTION 4.8. Transactions with Affiliates............................ 36
SECTION 4.9. Limitation on Issuances and Sales of Capital, Stock
of Restricted Subsidiaries.......................... 37
SECTION 4.10. Change of Control....................................... 37
SECTION 4.11. Limitation on Liens..................................... 38
(i)
<PAGE> 3
SECTION 4.12. Business Activities..................................... 40
SECTION 4.13. Maintenance of Insurance................................ 40
SECTION 4.14. Compliance certificate; Statement by officers as to
Default............................................. 42
SECTION 4.15. Further Instruments and Acts............................ 42
SECTION 4.16. Business Activities of Globalstar Capital............... 42
SECTION 4.17. Calculation of Original Issue Discount.................. 43
ARTICLE 5. Successor Issuers
SECTION 5.1. When Issuers May Merge or Transfer Assets............... 43
ARTICLE 6. Defaults and Remedies
SECTION 6.1. Events of Default....................................... 44
SECTION 6.2. Acceleration............................................ 46
SECTION 6.3. Other Remedies.......................................... 47
SECTION 6.4. Waiver of Past Defaults................................. 47
SECTION 6.5. Control by Majority..................................... 47
SECTION 6.6. Limitation on Suits..................................... 48
SECTION 6.7. Rights of Holders to Receive Payment.................... 48
SECTION 6.8. Collection Suit by Trustee.............................. 48
SECTION 6.9. Trustee May File Proofs Claim........................... 48
SECTION 6.10. Priorities.............................................. 49
SECTION 6.11. Undertaking for Costs................................... 49
SECTION 6.12. Waiver of Stay or Extension Laws........................ 49
ARTICLE 7. Trustee
SECTION 7.1. Duties of Trustee....................................... 50
SECTION 7.2. Rights of Trustee....................................... 51
SECTION 7.3. Individual Rights of Trustee............................ 52
SECTION 7.4. Trustee's Disclaimer.................................... 52
SECTION 7.5. Notice of Defaults...................................... 52
SECTION 7.6. Reports by Trustee to Holders........................... 52
SECTION 7.7. Compensation and Indemnity.............................. 53
SECTION 7.8. Replacement of Trustee.................................. 53
SECTION 7.9. Successor Trustee by Merger............................. 54
SECTION 7.10. Eligibility: Disqualification........................... 55
SECTION 7.11. Preferential Collection of Claims Against Issuers....... 55
ARTICLE 8. Discharge of Indenture; Defeasance
SECTION 8.1. Discharge of Liability on Securities; Defeasance........ 55
SECTION 8.2. Conditions to Defeasance................................ 56
SECTION 8.3. Application of Trust Money.............................. 57
SECTION 8.4. Repayment to Issuers.................................... 57
SECTION 8.5. Indemnity for Government Obligations.................... 58
SECTION 8.6. Reinstatement........................................... 58
(ii)
<PAGE> 4
ARTICLE 9. Amendments
SECTION 9.1. Without Consent of Holders.............................. 58
SECTION 9.2. With Consent of Holders................................. 59
SECTION 9.3. Compliance with Trust Indenture Act..................... 60
SECTION 9.4. Revocation and Effect of Consents and Waivers........... 60
SECTION 9.5. Notation on or Exchange of Securities................... 60
SECTION 9.6. Trustee To Such Amendments.............................. 60
SECTION 9.7. Payment for Consent..................................... 61
ARTICLE 10. Subsidiary Guaranties
SECTION 10.1. Guaranties.............................................. 61
SECTION 10.2. Limitation on Liability................................. 63
SECTION 10.3. Successors and Assigns.................................. 63
SECTION 10.4. No Waiver............................................... 63
SECTION 10.5. Modification............................................ 64
SECTION 10.6. Release of Subsidiary Guarantor......................... 64
ARTICLE 11. Subordination of Securities
SECTION 11.1. Securities Subordinated to Senior Indebtedness.......... 64
SECTION 11.2. Subrogation............................................. 66
SECTION 11.3. Obligation of the Issuers Unconditional................. 66
SECTION 11.4. Payments on Securities Permitted........................ 67
SECTION 11.5. Effectuation of Subordination by Trustee................ 67
SECTION 11.6. Knowledge of Trustee.................................... 67
SECTION 11.7. Trustee May Hold Senior Indebtedness.................... 68
SECTION 11.8. Rights of Holders of Senior Indebtedness Not Impaired... 68
ARTICLE 12. Miscellaneous
SECTION 12.1. Trust Indenture Act Controls............................ 68
SECTION 12.2. Notices................................................. 68
SECTION 12.3. Communication by Holders with Other Holders............. 69
SECTION 12.4. Certificate and opinion as to Conditions Precedent...... 69
SECTION 12.5. Statements Required in Certificate or Opinion........... 69
SECTION 12.6. When Securities Disregarded............................. 70
SECTION 12.7. Rules by Trustee, Paying Agent and Registrar............ 70
SECTION 12.8. Legal Holidays.......................................... 70
SECTION 12.9. Governing Law........................................... 70
SECTION 12.10. No Recourse Against Others.............................. 71
SECTION 12.11. Successors.............................................. 71
SECTION 12.12. Multiple Originals...................................... 71
SECTION 12.13. Table of Contents; Headings............................. 71
(iii)
<PAGE> 5
INDENTURE dated as of , 1999, among Globalstar, L.P.,
a Delaware limited partnership ("Globalstar"), Globalstar Capital
Corporation, a Delaware corporation ("Globalstar Capital" and, together
with Globalstar, the "Issuers") and The Bank of New York, a New York
banking corporation (the "Trustee").
Each party hereto agrees as follows for the benefit of the
other party and for the equal and ratable benefit of the Holders of the
Securities.
ARTICLE 1.
Definitions and Incorporation by Reference
SECTION 1.1. Definitions.
"Acquired Debt" means, with respect to any specified Person,
(i) Debt of any other Person existing at the time such Person merges with or
into or consolidates with or becomes a Restricted Subsidiary of such specified
Person and (ii) Debt secured by a Lien encumbering any asset acquired by such
specified Person, which Debt or Lien was not Incurred in anticipation of, and
was outstanding prior to, such merger, consolidation or acquisition.
"Affiliate" of any Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; provided, however,
that beneficial ownership of 10% or more of the voting securities of a Person
shall be deemed to be control. The terms "controlling" and "controlled" have
meanings correlative to the foregoing.
"Asset Disposition" means any transfer, conveyance, sale,
lease or other disposition (collectively, any "disposition") by the Issuers or
any Restricted Subsidiary (including any disposition by means of a
consolidation, merger or similar transaction) but excluding a disposition by a
Restricted Subsidiary to the Issuers or a Wholly-Owned Restricted Subsidiary or
by the Issuers to a Wholly-Owned Restricted Subsidiary of shares of Capital
Stock or other ownership interests of a Restricted Subsidiary, (ii) all or
substantially all of the assets of the Issuers or any Restricted Subsidiary
representing a division or line of business or (iii) other assets or rights of
such Person or any of its Restricted Subsidiaries other than a disposition (a)
in the ordinary course of business, (b) that constitutes a Restricted Payment
which is permitted pursuant to Section 4.5 or (c) that is subject to the
provisions set forth in
<PAGE> 6
Section 5.1(a); provided, however, that a transaction described in clauses (i),
(ii) and (iii) shall constitute an Asset Disposition only to the extent that the
aggregate consideration for all such transfers, conveyances, sales, leases or
other disposition exceeds $5 million in any 12-month period.
"Attributable Debt" in respect of a Sale and Leaseback
Transaction means, as at the time of determination, the present value
(discounted at the interest rate borne by the Securities, compounded annually)
of the total obligations of the lessee for rental payments during the remaining
term of the lease included in such Sale and Leaseback Transaction (including any
period for which such lease has been extended).
"Average Life" means, as of the date of determination, with
respect to any Debt or Preferred Stock, the quotient obtained by dividing (i)
the sum of the products of the numbers of years from the date of determination
to the dates of each successive scheduled principal payment of such Debt or
redemption or similar payment with respect to such Preferred Stock multiplied by
the amount of such payment by (ii) the sum of all such payments.
"Bank Credit Agreement" means any one or more credit
agreements (which may include or consist of revolving credits) between
Globalstar, Globalstar Capital or any Restricted Subsidiary and one or more
banks or other financial institutions providing financing for the business of
Globalstar and its Restricted Subsidiaries.
"Build-out" means the construction, acquisition, improvement,
operation and development (including all costs related thereto) of the
Globalstar System, until such time as Globalstar shall have constructed at least
for use in the Globalstar System; (ii) launched or attempted to launch (through
"intentional ignition") at least for use in the Globalstar System; and (iii)
commenced commercial service of the Globalstar System with at least in orbit and
Operating.
"Business Day" means each day which is not a Legal Holiday.
"Capital Lease Obligation" of any Person means an obligation
that is required to be classified and accounted for as a capital lease or a
liability on the face of a balance sheet of such Person in accordance with GAAP
(a "Capital Lease"). The Stated Maturity of such obligation shall be the date of
the last payment of rent or any other amount due under such lease prior to the
first date upon which such lease may be terminated by the lessee without payment
of a penalty. The amount of such Debt represented by such obligation shall be
the capitalized amount thereof that would appear on the face of a balance sheet
of such Person in accordance with GAAP.
-2-
<PAGE> 7
"Capital Stock" of any Person means any and all shares,
interests, participations or other equivalents (however designated) of corporate
stock or other equity participations, including partnership interests, whether
general or limited, of such Person and shall (i) include any Special Preferred
obligations and other preferred equivalent obligations and (ii) exclude debt
securities convertible into Capital Stock.
"Change of Control" means:
(i) the sale, lease or transfer, in one transaction or a
series of related transactions, of all or substantially all the assets
of Globalstar and the Restricted Subsidiaries;
(ii) the adoption of a plan relating to the liquidation
or dissolution of Globalstar or Globalstar Capital;
(iii) one or more Dispositions which cause Loral's direct
and indirect equity interest in Globalstar to be reduced by more than
30% as compared to its direct and indirect equity interest in
Globalstar as of December 31, 1996; or
(iv) the first day on which:
(a) Globalstar fails to own, of record and
beneficially, 100% of the equity interests and voting stock of
Globalstar Capital; or
(b) Loral fails to be, or, directly or indirectly,
fails solely to control, the sole managing general partner of
Globalstar.
Notwithstanding clauses (i), (ii) and (iv)(b) above, neither
the acquisition by GTL, Loral or any Wholly Owned Subsidiary of Loral of a
majority of the partnership interests in, or substantially all the assets of,
Globalstar, nor the merger of Globalstar with and into GTL, Loral or any Wholly
Owned Subsidiary of Loral shall constitute a Change of Control; provided,
however, that with respect to clause (iv)(b), Loral continues to control, or is
the corporate successor to, Globalstar.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" means the Securities and Exchange Commission and
any survivor agency.
"Consolidated Cash Flow Available for Fixed Charges" for any
period means the Consolidated Net Income of Globalstar
-3-
<PAGE> 8
and its Restricted Subsidiaries for such period plus Consolidated Interest
Expense of Globalstar and its Restricted Subsidiaries for such period, plus the
following to the extent deducted in calculating such Consolidated Net Income:
(i) Consolidated Income Tax Expense of Globalstar and its Restricted
Subsidiaries for such period, (ii) the consolidated depreciation and
amortization expense included in the income statement of Globalstar and its
Restricted Subsidiaries for such period and (iii) any non-cash expense related
to the issuance to employees of Globalstar or any Restricted Subsidiary of
Globalstar of options to purchase Capital Stock of Globalstar or such Restricted
Subsidiary; provided, however, that there shall be excluded therefrom the
Consolidated Cash Flow Available for Fixed Charges (if positive) of any
Restricted Subsidiary (calculated separately, for such Restricted Subsidiary in
the same manner as provided above for Globalstar) that is subject to a
restriction which prevents the payment of dividends or the making of
distributions to Globalstar or another Restricted Subsidiary to the extent of
such restriction; provided, further, however, that if Consolidated Cash Flow
Available For Fixed Charges for any period shall be less than $1, Consolidated
Cash Flow For Fixed Charges for such period shall be deemed to be $1.
"Consolidated Income Tax Expenses" for any period means the
consolidated provision for income taxes of Globalstar and the Restricted
Subsidiaries for such period calculated on a consolidated basis in accordance
with GAAP.
"Consolidated Interest Expense" means, for any period, the
consolidated interest expense included in a consolidated income statement
(excluding interest income) of Globalstar and the Restricted Subsidiaries for
such period calculated on a consolidated basis in accordance with GAAP, plus, to
the extent not so included, cash dividends paid during such period on Special
Preferred Obligations.
"Consolidated Net Income" means, for any period, the
consolidated net income (or loss) of Globalstar and the Restricted Subsidiaries
for such period determined on a consolidated basis in accordance with GAAP, less
the amount of any cash dividends paid during such period on Special Preferred
Obligations; provided, however, that there shall be excluded therefrom (i) the
net income (or loss) of any Person acquired by Globalstar or a Restricted
Subsidiary in a pooling-of-interests transaction for any period prior to the
date of such transaction, (ii) the net income (and loss) of any Person that is
not a Restricted Subsidiary except to the extent of the amount of dividends or
other distributions actually paid to Globalstar or a Restricted Subsidiary by
such Person during such period, (iii) gains (but not losses) on Asset
Dispositions by Globalstar or any Restricted Subsidiary, (iv) all extraordinary
gains and losses, (v) the cumulative effect of changes in accounting principles,
(vi) non-cash gains or losses resulting from fluctuations in
-4-
<PAGE> 9
currency exchange rates, (vii) any noncash gain or loss realized on the
termination of any employee pension benefit plan and (viii) the tax effect of
any of the items described in clauses (i) through (vii) above; provided further,
however, that for purposes of any determination pursuant to the provisions of
Section 4.5, (a) there shall further be excluded therefrom the net income (but
not net loss) of any Restricted Subsidiary that is subject to a restriction
which prevents the payment of dividends or the making of distributions to
Globalstar or another Restricted Subsidiary of Globalstar to the extent of such
restriction and (b) there shall further be deducted therefrom an amount equal to
the Tax Amount paid by Globalstar during such period.
"Consolidated Net Worth" of any Person means the consolidated
stockholders, equity of such Person, determined on a consolidated basis in
accordance with GAAP, less amounts attributable to Disqualified Stock of such
Person; provided, however, that, with respect to Globalstar, adjustments
following the date of this Indenture to the accounting books and records of
Globalstar in accordance with Accounting Principles Board Opinions Nos. 16 and
17 (or successor opinions thereto) or otherwise resulting from the acquisition
of control of Globalstar by another Person shall not be given effect to.
"Debt" means (without duplication), with respect to any
Person, whether recourse is to all or a portion of the assets of such Person and
whether or not contingent, (i) every obligation of such Person for money
borrowed, (ii) every obligation of such Person evidenced by bonds, debentures,
notes or other similar instruments, including any such obligations Incurred-in
connection with the acquisition of property, assets or businesses, (iii) every
reimbursement obligation of such Person with respect to letters of credit,
bankers, acceptances or similar facilities issued for the account of such
Person, (iv) every obligation of such Person issued or assumed as the deferred
purchase price of property or services (including securities repurchase
agreements but excluding trade accounts payable or accrued liabilities arising
in the ordinary course of business which are not overdue or which are being
contested in good faith), (v) every Capital Lease Obligation of such Person,
(vi) all Receivables Sales of such Person, together with any obligation of such
Person to pay any discount, interest, fees, indemnities, penalties, recourse
expenses or other amounts in connection therewith, (vii) all obligations to
redeem Disqualified Stock issued by such Person, (viii) all Attributable Debt,
(ix) every obligation under Interest Rate and Currency Protection Agreements of
such Person, (x) every obligation of the type referred to in clauses (i) through
(ix) of another Person secured by any Lien on any property or asset of such
Person (whether or not such obligation is assumed by such Person), the amount of
such obligation being deemed to be the lesser of the fair market value of such
property or assets and the amount of
-5-
<PAGE> 10
the obligation so secured and (xi) every obligation of the type referred to in
clauses (i) through (ix) of another Person and all dividends of another Person
the payment of which, in either case, such Person has Guaranteed. The "amount"
or "principal amount", of Debt at any time of determination as used herein
represented by (a) any Debt issued at a price that is less than the principal
amount at maturity thereof, shall be the amount of the liability in respect
thereof determined in accordance with GAAP, (b) any Receivables Sales shall be
the amount of the unrecovered capital or principal investment of the purchaser
(other than Globalstar or a Wholly-Owned Restricted Subsidiary) thereof,
excluding amounts representative of yield or interest earned on such investment,
(c) any Disqualified Stock, shall be the maximum fixed redemption or repurchase
price in respect thereof, (d) any Capital Lease Obligation, shall be determined
in accordance with the definition thereof and (e) any Permitted Interest Rate or
Currency Protection Agreement shall be zero. In no event shall Debt include any
liability for taxes. For purposes of determining any particular amount of Debt,
Guarantees or Liens with respect to letters of credit supporting Debt otherwise
included in the determination of a particular amount shall not be included.
"Default" means an event that is, or after the passing of time
or the giving of notice both would be, an Event of Default.
"Disposition" means (i) the sale, transfer or other conveyance
by Loral or any of its Subsidiaries (other than to a Wholly Owned Subsidiary of
Loral) of (a) Globalstar partnership interests or (b) equity interests in any
entity (an "intermediate entity") which owns, directly or indirectly, Globalstar
partnership interests or (ii) the issue and sale by any such intermediate entity
of its equity securities to one or more third parties if and to the extent the
proceeds of such issue and sale are distributed by such intermediate entity to
Loral or any of its Subsidiaries.
"Disqualified Stock" of any Person means any Capital Stock of
such Person which, by its terms (or by the terms of any security into which it
is convertible or for which it is exchangeable at the option of the holder
thereof), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable
at the option of the holder thereof, in whole or in part, on or prior to the
first anniversary of the final Stated Maturity of the Securities; provided,
however, that any Preferred Stock which would not constitute Disqualified Stock
but for provisions thereof giving holders thereof the right to require
Globalstar to repurchase or redeem such Preferred Stock upon the occurrence of a
change of control occurring prior to the first anniversary of the final Stated
Maturity of the Securities shall not constitute Disqualified Stock if the change
of control
-6-
<PAGE> 11
provisions applicable to such Preferred Stock are no more favorable to the
holders of such Preferred Stock than the provisions applicable to the Securities
contained in Section 4.10 and such Preferred Stock specifically provides that
Globalstar will not repurchase or redeem any such stock pursuant to such
provisions prior to Globalstar's repurchase of such Securities as are required
to be repurchased pursuant to Section 4.10; provided further, however, that all
Special Preferred obligations shall be deemed to be Disqualified Stock.
"ll 3/8 Indenture" means the indenture dated as of February
15, 1997, among Globalstar, Globalstar Capital and The Bank of New York, as
Trustee, pursuant to which the 11 3/8 Notes were issued.
"ll 1/4 Indenture" means the indenture dated as of June 1,
1997, among Globalstar, Globalstar Capital and The Bank of New York, as Trustee,
pursuant to which the 11 1/4 Notes were issued.
"ll 3/8 Notes" means the $500,000,000 aggregate principal
amount of 11-3/8% Senior Notes due 2004 of the Issuers, together with any
Exchange Securities or Private Exchange Securities (as such terms are defined in
the 11 3/8 Indenture) issued pursuant to the 11 3/8 Indenture.
"ll 1/4 Notes" means the $325,000,000 aggregate principal
amount of the 11-1/4% Senior Notes due 2004 of the Issuers, together with any
Exchange Securities or Private Exchange Securities (as such terms are defined in
the 11 1/4 Indenture) issued pursuant to the 11 1/4 Indenture.
"Eligible Institution" means a commercial banking institution
that has combined capital and surplus of not less than $500 million or its
equivalent in foreign currency, whose debt is rated "A-311 or higher or "A--" or
higher according to Moody's Investors Service, Inc. or Standard & Poor's Ratings
Group (or such similar equivalent rating by at least one "nationally recognized
statistical rating organization" (as defined in Rule 436 under the Securities
Act)) respectively, at the time as of which any investment or rollover therein
is made.
"Equity offering" means (i) any sale or issuance for cash by
Globalstar of Globalstar partnership interests to any Person that, as of the
Business Day immediately before and the Business Day immediately after the day
of such sale, has, or whose Parent has, a total market capitalization of at
least $1. billion on a consolidated basis, after giving effect to such sale
(including any Indebtedness incurred in connection with such sale) and (ii) any
offering of GTL common stock in an underwritten sale to the public pursuant to a
registration statement (other than on Form S-8 or any other form relating to
securities issuable under any benefit plan of Globalstar) that is declared
effective by the Commission, all of the net cash
-7-
<PAGE> 12
proceeds of which sale are applied promptly toward the purchase of Globalstar
partnership interests. For purposes of clause [(i)] of this paragraph, any
issuance or sale of Globalstar partnership interests shall be deemed to be "for
cash" only to the extent that the net cash proceeds of such issuance or sale
exceed the value of any amounts paid (in cash or otherwise) by Globalstar to
redeem Globalstar partnership interests during the past six months.
"Event of Default" has the meaning set forth in Section 6.1.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended (or any successor act), and the rules and regulations thereunder.
"GAAP" means generally accepted accounting principles in the
United States of America as in effect as of the Issue Date, including those set
forth in M the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants, (ii) statements and
pronouncements of the Financial Accounting Standards Board, (iii) such other
statements by such other entity as approved by a significant segment of the
accounting profession and (iv) the rules and regulations of the Commission
governing the inclusion of financial statements (including pro forma financial
statements) in periodic reports required to be filed pursuant to Section 13 of
the Exchange Act, including opinions and pronouncements in staff accounting
bulletins and similar written statements from the accounting staff of the
Commission.
"General Partners' Committee" means the committee consisting
of representatives of the general partners of Globalstar that governs the
activities of Globalstar.
"Globalstar System" means Globalstar's worldwide, low-earth
orbit, satellite-based digital telecommunications system as described in the
Prospectus, as defined below.
"Globaltel Russia" means Globalstar-Space Telecommunications,
a Russian closed joint stock company.
"Government Securities" means direct obligations of, or
obligations guaranteed by, the United States of America for the payment of which
obligations or guarantee the full faith and credit of the United States is
pledged and which have a remaining weighted Average Life to maturity of not more
than one year from the date of Investment therein.
"GTL" means Globalstar Telecommunications Limited, a Bermuda
company.
-8-
<PAGE> 13
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person guaranteeing, or having the economic effect of
guaranteeing, any Debt of any other Person, (the "primary obligor") in any
manner, whether directly or indirectly, and including, without limitation, any
obligation of such Person, (i) to purchase or pay (or advance or supply funds
for the purchase or payment of) such Debt or to purchase (or to advance or
supply funds for the purchase of) any security for the payment of such Debt,
(ii) to purchase property, securities or services for the purposes of assuring
the holder of such Debt of the payment of such Debt, or (iii) to maintain
working capital, equity capital or other financial statement condition or
liquidity of the primary obligor so as to enable the primary obligor to pay such
Debt (and "Guaranteed", "Guaranteeing" and "Guarantor" shall have meanings
correlative to the foregoing); provided, however, that the Guarantee by any
Person shall not include endorsements by such Person for collection or deposit,
in either case, in the ordinary course of business.
"Holders" means the registered holders from time to time of
the Securities.
"Incur" means, with respect to any Debt or other obligation of
any Person, to create, issue, incur (by conversion, exchange or otherwise),
assume, Guarantee or otherwise become liable in respect of such Debt or other
obligation including by acquisition of Subsidiaries or the recording, as
required pursuant to GAAP or otherwise, of any such Debt or other obligation on
the balance sheet of such Person (and "Incurrence", "Incurred" and "Incurring"
shall have the meanings correlative to the foregoing); however, that a change in
GAAP that results in an obligation of such Person that exists at such time
becoming Debt shall not be deemed an Incurrence of such Debt and that neither
the accrual of interest nor the accretion of original issue discount shall be
deemed an Incurrence of Debt. Notwithstanding the foregoing, Globalstar may
elect to treat all or any portion of revolving credit debt of Globalstar or a
Subsidiary as being Incurred from and after any date beginning the date the
revolving credit commitment is extended to Globalstar or a Subsidiary, by
furnishing notice thereof to the Trustee, and any borrowings or reborrowings by
Globalstar or a Subsidiary under such commitment up to the amount of such
commitment designated by Globalstar as Incurred shall not be deemed to be new
Incurrence of Debt by Globalstar or such Subsidiary; provided, however, that the
undrawn portion of any such revolving credit debt shall be deemed to be
outstanding Debt until such time as the commitment thereunder is terminated. The
accretion of principal of a non-interest bearing or other discount security
shall not be deemed the Incurrence of Debt.
"Indenture" means this Indenture as amended or supplemented
from time to time.
-9-
<PAGE> 14
"Independent Financial Advisor" means an accounting, appraisal
or investment banking firm of nationally recognized standing that is, in the
judgment of the General Partners' Committee of Globalstar, qualified to perform
the task for which it has been engaged and disinterested and independent with
respect to the Issuers and their Subsidiaries and Affiliates.
"Interest Rate or Currency Protection Agreement" of any Person
means any forward contract, futures contract, swap, option or other financial
agreement or arrangement (including, without limitation, caps, floors, collars
and similar agreements) relating to, or the value of which is dependent upon,
interest rates or currency exchange rates or indices.
"Investment" by any Person means any direct or indirect loan,
advance or other extension of credit or capital contribution (by means of
transfers of cash or other property to others or payments for property or
services for the account or use of others, or otherwise) to, or purchase or
acquisition of Capital Stock, bonds, notes, debentures or other securities or
evidence of Debt issued by, any other Person, including any payment on a
Guarantee of any obligation of such other Person, but excluding any loan,
advance or extension of credit to an employee of Globalstar or any Restricted
Subsidiary in the ordinary course of business, accounts receivables and other
commercially reasonable extensions of trade credit.
"Issue Date" means the date on which the Securities are first
issued and delivered.
"Lien" means, with respect to any property or assets, any
mortgage or deed of trust, pledge, hypothecation, assignment, Receivables Sale,
deposit arrangement, security interest, lien, charge, easement (other than any
easement not materially impairing usefulness or marketability), encumbrance,
preference, priority or other security agreement or preferential arrangement of
any kind or nature whatsoever on or with respect to such property or assets
(including, without limitation, any conditional sale or other title retention
agreement having substantially the same economic effect as any of the foregoing
or any Sale and Leaseback Transaction).
"Loral" means Loral Space & Communications Ltd., a Bermuda
company.
"Marketable Securities" means: (i) Government Securities; (ii)
any time deposit account, money market deposit and certificate of deposit
maturing not more than 270 days after the date of acquisition issued by, or time
deposit of, an Eligible Institution; (iii) commercial paper maturing not more
than 270 days after the date of acquisition issued by a corporation (other than
an Affiliate of Globalstar) with a rating, at the time as of which any
investment therein is made,
-10-
<PAGE> 15
of "P-111 or higher according to Moody's Investors Service, Inc. or "A-111
or higher according to Standard & Poor's Ratings Group (or such similar
equivalent rating by at least one "nationally recognized statistical rating
organization" (as defined in Rule 436 under the Securities Act)); (iv) any
banker's acceptances or money market deposit accounts issued or offered by an
Eligible Institution; (v) repurchase obligations with a term of not more than 7
days for Government Securities entered into with an Eligible Institution; and
(vi) any fund investing exclusively in investments of the types described in
clauses (i) through (v) above.
"Net Available Proceeds" from any Asset Disposition by any
Person means cash or Marketable Securities received (including by way of sale or
discounting of a note, installment receivable or other receivable, but excluding
any other consideration received in the form of assumption by the acquiror of
Debt or other obligations relating to such properties or assets) therefrom by
such Person, net of (i) all legal, title and recording tax expenses, commissions
and other fees and expenses Incurred and all federal, state, provincial, foreign
and local taxes (including taxes payable upon payment or other distribution of
funds from a foreign subsidiary to Globalstar or another Subsidiary of
Globalstar) required to be accrued as a liability as a consequence of such Asset
Disposition, (ii) all payments made by such Person or its Restricted
Subsidiaries on any Debt which is secured by such assets in accordance with the
terms of any Lien upon or with respect to such assets or which must by the terms
of such Lien, or in order to obtain a necessary consent to such Asset
Disposition or by applicable law, be repaid out of the proceeds from such Asset
Disposition, (iii) all distributions and other payments made to minority
interest holders in Restricted Subsidiaries of such Person or joint ventures as
a result of such Asset Disposition, (iv) appropriate amounts to be provided by
such Person or any Restricted Subsidiary thereof, as the case may be, as a
reserve in accordance with GAAP against any liabilities associated with such
assets and retained by such Person or any Restricted Subsidiary thereof, as the
case may be, after such Asset Disposition, including, without limitation,
liabilities under any indemnification obligations and severance and other
employee termination costs associated with such Asset Disposition, in each case
as determined by the General Partners' Committee of Globalstar, in its
reasonable good faith judgment evidenced by a board resolution filed with the
Trustee; provided, however, that any reduction in such reserve within twelve
months following the consummation of such Asset Disposition will be treated for
all purposes of this Indenture and the Securities as a new Asset Disposition at
the time of such reduction with Net Available Proceeds equal to the amount of
such reduction, and (v) any consideration for an Asset Disposition (which would
otherwise constitute Net Available Proceeds) that is required to be held in
escrow pending determination of whether a purchase price adjustment will be
made, but amounts under this clause (v) shall
-11-
<PAGE> 16
become Net Available Proceeds at such time and to the extent such amounts are
released to such Person.
"Net Cash Proceeds", with respect to any issuance or sale of
Capital Stock, means the cash proceeds of such issuance or sale net of
attorneys' fees, accountants' fees, underwriters' or placement agents' fees,
discounts or commissions and brokerage, consultant and other fees actually
incurred in connection with such issuance or sale and net of taxes paid or
payable as a result thereof.
"Non-Recourse Debt" means Debt:
(i) as to which neither the Issuers nor any Restricted
Subsidiary:
(a) provides credit support of any kind (including
any undertaking, agreement or instrument that would constitute
Debt);
(b) is directly or indirectly liable (as a guarantor
or otherwise); or
(c) constitutes the lender;
(ii) no default with respect to which (including any
rights that the holders thereof may have to take enforcement action
against an Issuer or any Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Debt of the
Issuers or any Restricted Subsidiary to declare a default on such other
Debt or cause the payment thereof to be accelerated or payable prior to
its stated maturity; and
(iii) as to which the lenders have been notified in
writing that they will not have any recourse to the stock or assets of
the Issuers or any of their Restricted Subsidiaries.
["Offer to Purchase" means a written offer (the "Offer") sent
by Globalstar by first class mail, postage prepaid, to each holder at his
address appearing in the Securities register on the date of the Offer offering
to purchase up to the principal amount of Securities specified in such offer at
the purchase price specified in such offer (as determined pursuant to this
Indenture). Unless otherwise required by applicable law, the Offer shall specify
an expiration date (the "Expiration Date") of the offer to Purchase which shall
be, subject to any contrary requirements of applicable law, not less than 30
days or more than 60 days after the date of such offer and a settlement date for
purchase of Securities within five Business Days after the Expiration Date. The
Issuers shall notify the Trustee at least 15 Business Days (or such shorter
period as is acceptable
-12-
<PAGE> 17
to the Trustee) prior to the mailing of the Offer of Globalstar's obligation to
make an Offer to Purchase, and the offer shall be mailed by Globalstar or, at
Globalstar's request, by the Trustee in the name and at the expense of
Globalstar. The Offer shall contain information concerning the business of
Globalstar and its Subsidiaries which Globalstar in good faith believes will
enable such holders to make an informed decision with respect to the Offer to
Purchase (which at a minimum will include (i) the most recent annual and
quarterly financial statements and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" contained in the documents
required to be filed with the Trustee pursuant to this Indenture (which
requirements may be satisfied by delivery of such documents together with the
offer), (ii) a description of material developments in Globalstar's business
subsequent to the date of the latest of such financial statements referred to in
clause (i) (including a description of the events requiring Globalstar to make
the Offer to Purchase), (iii) if applicable, appropriate pro forma financial
information concerning the Offer to Purchase and the events requiring Globalstar
to make the Offer to Purchase and (iv) any other information required by
applicable law to be included therein). The Offer shall contain all instructions
and materials necessary to enable such holders to tender Securities pursuant to
the Offer to Purchase.
"Officer" means the Chairman of the Board, the President, any
Vice President, the Treasurer or the Secretary of the Issuers.
"Officers' Certificate" means a certificate signed by two
Officers.
"Operating" means, with respect to any satellite, that at
least 50% of the call circuits of such satellite are operating at design
performance specifications.
"Opinion of Counsel" means an opinion from legal counsel who
is acceptable to the Trustee. The counsel may be an employee of, or counsel to,
the Issuers or the Trustee.
"Parent" means, with regard to any Person, any other entity of
which such Person is a Subsidiary.
"Permitted Interest Rate or Currency Protection Agreement" of
any Person means any Interest Rate or Currency Protection Agreement entered into
with one or more financial institutions in the ordinary course of business that
is designed to protect such Person against fluctuations in interest rates or
currency exchange rates with respect to Debt Incurred and which shall have a
notional amount no greater than the payments due with respect to the Debt being
hedged thereby and not for purposes of speculation.
-13-
<PAGE> 18
"Permitted Investment" means an Investment by an Issuer or any
Restricted Subsidiary (i) in any Person as a result of which such Person becomes
a Restricted Subsidiary, (ii) in Marketable Securities, (iii) in Permitted
Interest Rate or Currency Protection Agreements, (iv) made as a result of the
receipt of noncash consideration from an Asset Disposition that was made
pursuant to and in compliance with Section 4.7 and (v) consisting of loans or
advances to employees made in the ordinary course of business not to exceed $
million in the aggregate outstanding at any one time.
"Person" means any individual, corporation, partnership,
limited liability company, joint venture, association, joint stock company,
trust, unincorporated organization, government or agency or political
subdivision thereof or any other entity.
"Preferred Stock" of any Person means Capital Stock of such
Person of any class or classes (however designated) that ranks prior, as to the
payment of dividends or as to the distribution of assets upon any voluntary or
involuntary liquidation, dissolution or winding up of such Person, to shares of
Capital Stock of any other class of such Person.
"Principal" of a Security means the principal of the Security
plus the premium, if any, payable on the Security which is due or overdue or is
to become due at the relevant time.
"Receivables" means receivables, chattel paper, instruments,
documents or intangibles evidencing or relating to the right to payment of money
in respect of the sale of goods or services.
"Receivables Sale" of any Person means any sale of Receivables
of such Person (pursuant to a purchase facility or otherwise), other than in
connection with a disposition of the business operations of such Person relating
thereto or a disposition of defaulted Receivables for purpose of collection and
not as a financing arrangement.
"Refinance" means in respect of any Debt, to refinance,
extend, renew, refund, repay, prepay, redeem, defease or retire, or to issue
other Debt in exchange or replacement for, such Debt. "Refinanced" and
"Refinance" shall have correlative meanings.
"Refinancing Debt" means Debt that Refinances any Debt of the
Issuers or any Restricted Subsidiary existing on the Issue Date or Incurred in
compliance with this Indenture, including Debt that Refinances Refinancing Debt;
provided, however, that (i) such Refinancing Debt has a Stated Maturity no
earlier than the Stated Maturity of the Debt being Refinanced, (ii) such
Refinancing Debt has an Average Life at the time such Refinancing Debt is
Incurred that is equal to or greater than the Average Life of the Debt being
Refinanced, (iii) such Refinancing Debt
-14-
<PAGE> 19
has an aggregate principal amount (or if Incurred with original issue discount,
an aggregate issue price) that is equal to or less than the aggregate principal
amount (or if Incurred with original issue discount, the aggregate accreted
value) then outstanding or committed (plus fees and expenses, including any
premium and defeasance costs) under the Debt being Refinanced, (iv) in the event
the Debt being Refinanced constitutes a Subordinated Obligation, the Refinancing
Debt is subordinated to the Securities to at least the same extent as the Debt
being Refinanced and (v) Special Preferred Obligations may only be Refinanced
with Preferred Stock (other than Preferred Stock that is Disqualified Stock),
other Special Preferred Obligations or Subordinated obligations; provided,
further, however, that Refinancing Debt shall not include (x) Debt of a
Subsidiary that Refinances Debt of the Issuers or (y) Debt of the Issuers or a
Restricted Subsidiary that Refinances Debt of an Unrestricted Subsidiary.
"Related Person" of any Person means any other Person directly
or indirectly owning (a) 10% or more of the outstanding common equity of such
Person (or, in the case of a Person that is not a corporation, 10% or more of
the equity interest in such Person) or (b) 10% or more of the combined voting
power of the Voting Stock of such Person.
"Restricted Payment" with respect to any Person means (i) the
declaration or payment of any dividends or any other distributions of any sort
in respect of its Capital Stock (including any payment in connection with any
merger or consolidation involving such Person) or similar payment to the direct
or indirect holders of its Capital Stock (other than dividends or distributions
payable solely in its Capital Stock (other than Disqualified Stock) and
dividends or distributions payable solely to the Issuers or a Restricted
Subsidiary, and other than pro rata dividends or other distributions made by a
Subsidiary that is not a Wholly-Owned Restricted Subsidiary to minority
stockholders (or owners of an equivalent interest in the case of a Subsidiary
that is an entity other than a corporation)), (ii) the purchase, redemption or
other acquisition or retirement for value of any Capital Stock of an Issuer held
by any Person or of any Capital Stock of a Restricted Subsidiary held by any
Affiliate of the Issuers (other than a Restricted Subsidiary), including the
exercise of any option to exchange any Capital Stock (other than into Capital
Stock of the Issuers that is not Disqualified Stock), (iii) the purchase,
repurchase, redemption, defeasance or other acquisition or retirement for value,
prior to scheduled maturity, scheduled repayment or scheduled sinking fund
payment of any Subordinated obligations (other than the purchase, repurchase or
other acquisition of Subordinated obligations purchased in anticipation of
satisfying a sinking fund obligation, principal installment or final maturity,
in each case due within one year of the date of
-15-
<PAGE> 20
acquisition) or (iv) the making of any Investment in any Person (other than a
Permitted Investment).
"Restricted Subsidiary" means any Subsidiary of Globalstar,
whether existing on or after the Issue Date, unless such Subsidiary is an
Unrestricted Subsidiary.
"Sale and Leaseback Transaction" means an arrangement relating
to property now owned or hereafter acquired whereby an Issuer or a Restricted
Subsidiary transfers such property to a Person and an Issuer or a Restricted
Subsidiary leases it from such Person.
"Securities" means the Securities issued under this Indenture.
"Securities Act" means the Securities Act of 1933, as amended
(or any successor act) and the rules and regulations thereunder.
"Senior Indebtedness" means (i) the principal of and premium,
if any, and unpaid interest on indebtedness for money borrowed, (ii) purchase
money and similar obligations, (iii) Capital Lease Obligations, (iv) guarantees,
assumptions or purchase commitments relating to, or other transactions as a
result of which the Issuers are responsible for the payment of, such
indebtedness of others, (v) renewals, extensions and refunding of any such
indebtedness, (vi) interest or obligations in respect of any such indebtedness
accruing after the commencement of any insolvency or bankruptcy proceedings; and
(vii) obligations associated with derivative products such as interest rate and
currency exchange contracts, foreign exchange contracts, commodity contracts,
and similar arrangements, unless, in each case, the instrument by which the
Issuers incurred, assumed or guaranteed the indebtedness or obligations
described in clauses (i) through (vii) hereof expressly provides that such
indebtedness or obligation is subordinate or junior in right of payment to any
other indebtedness or obligations of the Issuers.
"Significant Subsidiary" means a Restricted Subsidiary that is
a "significant subsidiary" as defined in Rule 1-02(w) of Regulation S-X under
the Securities Act and the Exchange Act.
"Special Preferred Obligations" means (i) preferred
partnership interests of Globalstar existing as of the Issue Date and (ii) any
preferred partnership interests, convertible preferred equivalent obligations or
similar preferred obligations of Globalstar issued after the Issue Date to
finance the Build-out; provided, however, that any such preferred partnership
interests, convertible preferred equivalent obligations or similar preferred
obligations of Globalstar issued after the Issue Date shall not constitute
Special Preferred Obligations if such interest or obligation, by its terms (or
by the terms of any
-16-
<PAGE> 21
security into which it is convertible or for which it is exchangeable at the
option of the Holders), or upon the happening of any event, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
is redeemable at the option of the holder thereof, in whole or in part, on or
prior to the final Stated Maturity of the Securities; provided further, however,
that any such interest or obligation which would constitute Special Preferred
Obligations but for provisions thereof giving holders thereof the right to
require Globalstar to repurchase or redeem such interest or obligation upon the
occurrence of a change of control occurring prior to the final Stated Maturity
of the Securities shall constitute Special Preferred Obligations if the change
of control provisions applicable to such interest or obligation are no more
favorable to the holders of such interest or obligation than the provisions
applicable to the Securities contained in Section 4.10 and such interest or
obligation specifically provides that Globalstar will not repurchase or redeem
any such interest or obligation pursuant to such provisions prior to
Globalstar's repurchase of such Securities as are required to be repurchased
pursuant to Section 4.10. Notwithstanding the foregoing, preferred partnership
interests, convertible preferred equivalent obligations or similar preferred
obligations of Globalstar issued after the Issue Date shall not be Special
Preferred Obligations unless, at the time of their issuance, Globalstar shall
certify to the Trustee that such interests or obligations shall be designated
Special Preferred obligations.
"Stated Maturity" means, with respect to any security, the
date specified in such security as the fixed date on which the final payment of
principal of such security is due and payable, including pursuant to any
mandatory redemption provision (but excluding any provision providing for the
repurchase of such security at the option of the holder thereof upon the
happening of any contingency unless such contingency has occurred).
"Subordinated Obligation" means any Debt of the Issuers
(whether outstanding on the Issue Date or thereafter Incurred) which is
subordinate or junior in right of payment to the Securities pursuant to a
written agreement to that effect.
"Subsidiary" of any Person means (i) a corporation more than
50% of the combined voting power of the outstanding Voting Stock of which is
owned, directly or indirectly, by such Person or by one or more other
Subsidiaries of such Person or by such Person and one or more Subsidiaries of
such Person or (ii) any other Person (other than a corporation) in which such
Person, or one or more other Subsidiaries of such Person or such Person and one
or more other Subsidiaries of such Person, directly or indirectly, has at least
a majority ownership and power to direct the policies, management and affairs
thereof.
-17-
<PAGE> 22
"Subsidiary Guaranty" means the Guarantee by a Subsidiary
Guarantor of the Issuers' obligations with respect to the Securities contained
in Article 10 hereof.
"Subsidiary Guarantor" means any Subsidiary which, pursuant to
the terms hereof, has executed a supplemental indenture in a form reasonably
satisfactory to the Trustee and become bound by the terms hereof, including
Article 10 hereof.
"Tax Amount" means, with respect to any year, an amount not to
exceed the sum of the ordinary income from trade or business activities and
other items of income, loss and deduction reported by Globalstar for that year
for United States federal income tax purposes multiplied by a percentage equal
to the sum of (a) the highest applicable federal corporation income tax rate for
that year (expressed as a percentage) plus (b) % multiplied by the excess of
100% over the highest applicable federal corporate income tax for that year
(expressed as a percentage).
"10 3/4 Indenture" means the indenture dated as of October 15,
1997, among Globalstar, Globalstar Capital and The Bank of New York, as trustee,
pursuant to which the 10 3/4 Notes were issued.
"10 3/4 Notes" means the $325,000,000 aggregate principal
amount of 10 3/4% Senior Notes due 2004 of the Issuers, together with any
Exchange Securities or Private Exchange Securities (as such terms are defined in
the 10 3/4 Indenture) issued pursuant to the 10 3/4 Indenture.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. H
77aaa-77bbbb) as in effect on the date of this Indenture, except as provided by
Section 9.3.
"Transitory Equipment Subsidiary" means a Subsidiary of
Globalstar whose only business activity is acquiring equipment from Globalstar
for the sole purpose of selling such equipment to a service provider to
Globalstar; provided, however, that Globalstar retains a security interest in
such equipment so long as it is owned by such Subsidiary; provided further,
however, that such Subsidiary has no Debt outstanding at any time other than
Debt represented by such security interest.
"Trust Officer" means any officer or assistant officer of the
Trustee assigned by the Trustee to administer its corporate trust matters.
"Trustee" means the party named as such in this Indenture
until a successor replaces it and, thereafter, means the successor.
"Uniform Commercial Code" means the New York Uniform
Commercial Code as in effect from time to time.
-18-
<PAGE> 23
"Unrestricted Subsidiary" means (i) any Subsidiary of
Globalstar designated as such by the General Partner's Committee as set forth
below where (a) neither Globalstar nor any of its other Subsidiaries (other than
another Unrestricted Subsidiary) (1) provides credit support for, or Guarantee
of, any Debt of such Subsidiary or any Subsidiary of such Subsidiary (including
any undertaking, agreement or instrument evidencing such Debt), (2) is directly
or indirectly liable for any Debt of such Subsidiary or any Subsidiary of such
Subsidiary, or (3) has any obligation to make additional Investments in such
Subsidiary or any Subsidiary of such Subsidiary, (b) such Subsidiary has no Debt
other than Non-Recourse Debt; provided, however, that if any Unrestricted
Subsidiary Incurs any Debt other than Non-Recourse Debt or any Non-Recourse Debt
Incurred by such Unrestricted Subsidiary shall thereafter cease for any reason
to be Non-Recourse Debt, such event shall be deemed to constitute an Incurrence
of such Debt by Globalstar and such Unrestricted Subsidiary shall be deemed to
be a Restricted Subsidiary for purposes of Section 4.4 and (c) such Subsidiary
and each Subsidiary of such Subsidiary has at least one director on its board of
directors that is not a director or executive officer of Globalstar or any
Restricted Subsidiary and (ii) any Subsidiary of an Unrestricted Subsidiary. The
General Partner's Committee may designate any Subsidiary to be an Unrestricted
Subsidiary unless such Subsidiary or any Subsidiary of such Subsidiary owns any
Capital Stock or Debt of, or owns or holds any Lien on any property of,
Globalstar or any other Subsidiary of Globalstar which is not a Subsidiary of
the Subsidiary to be so designated or otherwise an Unrestricted Subsidiary;
provided, however, that either (A) the Subsidiary to be so designated has total
assets of $1,000 or less or (B) immediately after giving effect to such
designation, Globalstar could incur an additional $1. of Debt pursuant to
Section 4.3(a) and provided further, however, that Globalstar could make a
Restricted Payment in an amount equal to the greater of the fair market value
and the book value of such Subsidiary pursuant to Section 4.5 and such amount is
thereafter treated as a Restricted Payment for the purpose of calculating the
aggregate amount available for Restricted Payments thereunder. The General
Partners' Committee may designate any Unrestricted Subsidiary to be a Restricted
Subsidiary, provided that, immediately after giving effect to such designation,
Globalstar could incur an additional $1. of Debt pursuant to Section 4.3(a).
Notwithstanding the foregoing Globalstar Capital [nor any of its Subsidiaries]
shall be Unrestricted Subsidiaries.
"U.S. Government Obligations" means direct obligations (or
certificates representing an ownership interest in such obligations of the
United States of America (including any agency or instrumentality thereof) (for
the payment of which the full faith and credit of the United States of America
is Pledged and which are not callable or redeemable at the Issuers' option.
-19-
<PAGE> 24
"Vendor Financing Facility" means any agreements between
Globalstar, Globalstar Capital and/or any Restricted Subsidiary and one or more
vendors or lessors of equipment to Globalstar, Globalstar Capital and/or any
Restricted Subsidiary (or any affiliate of any such vendor or lessor) providing
financing for the acquisition by Globalstar or any such Restricted Subsidiary of
equipment from any such vendor or lessor.
"Voting Stock" of any Person means Capital Stock of such
Person which ordinarily has voting power for the election of directors (or
persons performing similar functions) of such Person, whether at all times or
only so long as no senior class of securities has such voting power by reason of
any contingency.
"Wholly-Owned Restricted Subsidiary" means a Restricted
Subsidiary 99% or more of the outstanding Capital Stock or other ownership
interests of which (other than directors' qualifying shares) shall at the time
be owned by Globalstar or by one or more Wholly-Owned Restricted Subsidiaries of
Globalstar or by Globalstar and one or more Wholly-Owned Restricted Subsidiaries
of Globalstar.
SECTION 1.2. Other Definitions.
Defined in
Term Section
"Affiliate Transaction"....................................... 4.8
"Appendix".................................................... 2.1
"Bankruptcy Law".............................................. 6.1
"Cash Insurance".............................................. 4.13
"Covenant Defeasance Option".................................. 8.1(b)
"Custodian"................................................... 6.1
"Debt Coverage Ratio"......................................... 4.3
"Event of Default"............................................ 6.1
"Exchange Securities"......................................... Recital
"Globalstar".................................................. Preamble
"Globalstar Capital".......................................... Preamble
"Initial Securities".......................................... Recital
"In-orbit Insurance Event".................................... 4.13
"Insurance Account"........................................... 4.13
"Insurance Proceeds".......................................... 4.13
"Issuers"..................................................... Preamble
"Legal Defeasance Option"..................................... 8.1(b)
"Legal Holiday"............................................... 12.8
"Notice of Default"........................................... 6.1
"Obligations"................................................. 10.1
"Paying Agent"................................................ 2.3
"Permitted Lien".............................................. 4.11
"Private Exchange Securities"................................. Recital
-20-
<PAGE> 25
"Registrar"................................................... 2.3
"Securities".................................................. Recital
"Successor Issuers"........................................... 5.1
"Trustee"..................................................... Preamble
SECTION 1.3. Incorporation by Reference of Trust Indenture
Act. This Indenture is subject to the mandatory provisions of the TIA which are
incorporated by reference in and made a part of this Indenture. The following
TIA terms have the following meanings:
"Commission" means the Commission;
"Indenture Securities" means the Securities;
"Indenture Security Holder" means a Securityholder;
"indenture to be Qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the
Trustee; and
"obligor" on the indenture securities means the Issuers and
any other obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by
the TIA, defined by TIA reference to another statute or defined by Commission
rule have the meanings assigned to them by such definitions.
SECTION 1.4. Rules of Construction. Unless the context
otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) "including" means including without limitation;
(5) words in the singular include the plural and words in the
plural include the singular;
(6) unsecured Debt shall not be deemed to be subordinate or
junior to secured Debt merely by virtue of its nature as unsecured
Debt;
(7) the principal amount of any noninterest bearing or other
discount security at any date shall be the principal
-21-
<PAGE> 26
amount thereof that would be shown on a balance sheet of the issuer
dated such date prepared in accordance with GAAP but accretion of
principal on such security shall not be deemed to be the Incurrence of
Indebtedness;
(8) the principal amount of any Preferred Stock shall be (i)
the maximum liquidation value of such Preferred Stock or (ii) the
maximum mandatory redemption or mandatory repurchase price with respect
to such Preferred Stock, whichever is greater;
(9) all references to the date the Securities were originally
issued shall refer to the date the Initial Securities were originally
issued; and
(10) the terms "redemption" and "redeemable" shall not be
deemed to refer to Offers to Purchase or to repurchases pursuant to
Section 4.10 or similar offers or repurchases.
ARTICLE 2.
The Securities
SECTION 2.1. Form and Dating. The Securities and the Trustee's
certificate of authentication shall be substantially in the form of Exhibit A,
which is hereby incorporated in and expressly made a part of this Indenture. The
Securities may have notations, legends or endorsements required by law, stock
exchange rule, agreements to which the Issuers are subject, if any, or usage
(provided that any such notation, legend or endorsement is in a form acceptable
to the Issuers). Each Security shall be dated the date of its authentication.
The terms of the Securities set forth in the Exhibit A are part of the terms of
this Indenture.
SECTION 2.2. Execution and Authentication. Two officers shall
sign the Securities for the Issuers by manual or facsimile signature.
If an officer whose signature is on a Security no longer holds
that office at the time the Trustee authenticates the Security, the Security
shall be valid nevertheless.
A Security shall not be valid until an authorized signatory of
the Trustee manually signs the certificate of authentication on the Security.
The signature shall be conclusive evidence that the Security has been
authenticated under this Indenture.
The Trustee shall authenticate and deliver Securities for
original issue upon a written order of the Issuers signed by two Officers or by
an Officer and either an Assistant Treasurer or an Assistant Secretary of the
Issuers. Such order shall
-22-
<PAGE> 27
specify the amount of the Securities to be authenticated and the date on which
the original issue of Securities is to be authenticated. The aggregate principal
amount of Securities outstanding at any time may not exceed that amount except
as provided in Section 2.7.
The Trustee may appoint an authenticating agent reasonably
acceptable to the Issuers to authenticate the Securities. Unless limited by the
terms of such appointment, an authenticating agent may authenticate Securities
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as any Registrar, Paying Agent or agent
for service of notices and demands.
SECTION 2.3. Registrar and Paying Agent. The Issuers shall
maintain an office or agency where Securities may be presented for registration
of transfer or for exchange (the "Registrar") and an office or agency where
Securities may be presented for payment (the "Paying Agent"). The Registrar
shall keep a register of the Securities and of their transfer and exchange. The
Issuers may have one or more co-registrars and one or more additional paying
agents. The term "Paying Agent" includes any additional paying agent.
The Issuers shall enter into an appropriate agency agreement
with any Registrar, Paying Agent or co-registrar not a party to this Indenture,
which shall incorporate the terms of the TIA. The agreement shall implement the
provisions of this Indenture that relate to such agent. The Issuers shall notify
the Trustee of the name and address of any such agent. If the Issuers fail to
maintain a Registrar or Paying Agent, the Trustee shall act as such and shall be
entitled to appropriate compensation therefor pursuant to Section 7.7. The
Issuers or any of their domestically incorporated Wholly owned Subsidiaries may
act as Paying Agent, Registrar, co-registrar or transfer agent.
The Issuers initially appoint the Trustee as Registrar and
Paying Agent in connection with the Securities.
SECTION 2.4. Paying Agent To Hold Money in Trust. Prior to
each due date of the principal and interest on any Security, the Issuers shall
deposit with the Paying Agent a sum sufficient to pay such principal and
interest when so becoming due. The Issuers shall require each Paying Agent
(other than the Trustee) to agree in writing that the Paying Agent shall hold in
trust for the benefit of Securityholders or the Trustee all money held by the
Paying Agent for the payment of principal of or interest on the Securities and
shall notify the Trustee of any default by the Issuers in making any such
payment. If either Issuer or a Subsidiary acts as Paying Agent, it shall
segregate the money held by it as Paying Agent and hold it as a separate
-23-
<PAGE> 28
trust fund. The Issuers at any time may require a Paying Agent to pay all money
held by it to the Trustee and to account for any funds disbursed by the Paying
Agent. Upon complying with this Section, the Paying Agent shall have no further
liability for the money delivered to the Trustee.
SECTION 2.5. Securityholder Lists. The Trustee shall preserve
in as current a form as is reasonably practicable the most recent list available
to it of the names and addresses of Securityholders. If the Trustee is not the
Registrar, the Issuers shall furnish to the Trustee, in writing at least five
Business Days before each interest payment date and at such other times as the
Trustee may request in writing, a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of Securityholders.
SECTION 2.6. Transfer and Exchange. The Securities shall be
issued in registered form and shall be transferable only upon the surrender of a
Security for registration of transfer. When a Security is presented to the
Registrar or a co-registrar with a request to register a transfer, the Registrar
shall register the transfer as requested if the requirements of Section 8-401(l)
(or any successor provision thereto) of the Uniform Commercial Code are met.
When Securities are presented to the Registrar or a co-registrar with a request
to exchange them for an equal principal amount of Securities of other
denominations, the Registrar shall make the exchange as requested if the same
requirements are met. To permit registration of transfers and exchanges, the
Issuers shall execute and the Trustee shall authenticate Securities at the
Registrar's or co- registrar's request. The Issuers may require payment of a sum
sufficient to pay all taxes, assessments or other governmental charges in
connection with any transfer or exchange pursuant to this Section. The Issuers
shall not be required to make and the Registrar need not register transfers or
exchanges of Securities selected for redemption (except, in the case of
Securities to be redeemed in part, the portion thereof not to be redeemed) or
any Securities for a period of 15 days before a selection of Securities to be
redeemed or 15 days before an interest payment date.
Prior to the due presentation for registration of transfer of
any Security, the Issuers, the Trustee, the Paying Agent, the Registrar or any
co-registrar may deem and treat the person in whose name a Security is
registered as the absolute owner of such Security for the purpose of receiving
payment of principal of and interest on such Security and for all other purposes
whatsoever, whether or not such Security is overdue, and none of the Issuers,
the Trustee, the Paying Agent, the Registrar or any co-registrar shall be
affected by notice to the contrary.
All Securities issued upon any transfer or exchange pursuant
to the terms of this Indenture will evidence the same
-24-
<PAGE> 29
debt and will be entitled to the same benefits under this Indenture as the
Securities surrendered upon such transfer or exchange.
SECTION 2.7. Replacement Securities. If a mutilated Security
is surrendered to the Registrar or if the Holder of a Security claims that the
Security has been lost, destroyed or wrongfully taken, the Issuers shall issue
and the Trustee shall authenticate a replacement Security if the requirements of
Section 8-405 (or any successor provision thereto) of the Uniform Commercial
Code are met and the Holder satisfies any other reasonable requirements of the
Trustee. Such Holder shall furnish an indemnity bond sufficient in the judgment
of the Issuers and the Trustee to protect the Issuers, the Trustee, the Paying
Agent, the Registrar and any co-registrar from any loss which any of them may
suffer if a Security is replaced. The Issuers and the Trustee may charge the
Holder for their expenses in replacing a Security.
Every replacement Security is an additional obligation of the
Issuers.
SECTION 2.8. Outstanding Securities. Securities outstanding at
any time are all Securities authenticated by the Trustee except for those
canceled by it, those delivered to it for cancellation and those described in
this Section as not outstanding. A Security does not cease to be outstanding
because the Issuers or an Affiliate of the Issuers holds the Security.
If a Security is replaced pursuant to Section 2.7, it ceases
to be outstanding unless the Trustee and the Issuers receive proof satisfactory
to them that the replaced Security is held by a bona fide purchaser.
If the Paying Agent segregates and holds in trust, in
accordance with this Indenture, on a redemption date or maturity date money
sufficient to pay all principal and interest payable on that date with respect
to the Securities (or portions thereof) to be redeemed or maturing, as the case
may be, then on and after that date such Securities (or portions thereof) cease
to be outstanding and interest on them ceases to accrue.
SECTION 2.9. Temporary Securities. Until definitive Securities
are ready for delivery, the Issuers may prepare and the Trustee shall
authenticate temporary Securities. Temporary Securities shall be substantially
in the form of definitive Securities but may have variations that the Issuers
consider appropriate for temporary Securities. Without unreasonable delay, the
Issuers shall prepare and the Trustee shall authenticate definitive Securities
and deliver them in exchange for Temporary Securities.
-25-
<PAGE> 30
SECTION 2.10. Cancellation. The Issuers at any time may
deliver Securities to the Trustee for cancellation. The Registrar and the Paying
Agent shall forward to the Trustee any Securities surrendered to them for
registration of transfer, exchange or payment. The Trustee and no one else shall
cancel and may, but shall not be required to, destroy (subject to the record
retention requirements of the Exchange Act) all Securities surrendered for
registration of transfer, exchange, payment or cancellation unless the Issuers
direct the Trustee to deliver canceled Securities to the Issuers. The Issuers
may not issue new Securities to replace securities they have redeemed, paid or
delivered to the Trustee for cancellation.
SECTION 2.11. Defaulted Interest. If the Issuers default in a
payment of interest on the Securities, the Issuers shall pay defaulted interest
(plus interest on such defaulted interest to the extent lawful) in any lawful
manner. The Issuers may pay the defaulted interest to the persons who are
Securityholders on a subsequent special record date. The Issuers shall fix or
cause to be fixed any such special record date and payment date to the
reasonable satisfaction of the Trustee and shall promptly mail to each
Securityholder a notice that states the special record date, the payment date
and the amount of defaulted interest to be paid.
SECTION 2.12. CUSIP Numbers. The Issuers in issuing the
Securities may use "CUSIP" numbers (if then generally in use) and, if so, the
Trustee shall use "CUSIP" numbers in notices of redemption as a convenience to
Holders; provided, however, that any such notice may state that no
representation is made as to the correctness of such numbers either as printed
on the Securities or as contained in any notice of a redemption and that
reliance may be placed only on the other identification numbers printed on the
Securities, and any such redemption shall not be affected by any defect in or
omission of such numbers. The Issuers shall promptly notify the Trustee of any
change in the CUSIP numbers.
ARTICLE 3.
Redemption
SECTION 3.1. Notices to Trustee. If the Issuers elect to
redeem Securities pursuant to paragraph 5 of the Securities, they shall notify
the Trustee in writing of the redemption date, the principal amount of
Securities to be redeemed and the paragraph of the Securities pursuant to which
the redemption will occur.
The Issuers shall give each notice to the Trustee provided for
in this Section at least 60 days before the redemption date unless the Trustee
consents to a shorter period. Such notice shall be accompanied by an Officers'
Certificate and
-26-
<PAGE> 31
an Opinion of Counsel from the Issuers to the effect that such redemption will
comply with the conditions herein.
SECTION 3.2. Selection of Securities To Be Redeemed. If less
than all the Securities are to be redeemed at any time, the Trustee shall select
the Securities to be redeemed by a method that complies with the requirements of
the principal national securities exchange, if any, on which the Securities are
listed, or if the Securities are not listed, on a pro rata basis, by lot or by
such method as the Trustee in its sole discretion shall deem to be fair and
appropriate and in accordance with methods generally used at the time of
selection by fiduciaries in similar circumstances. The Trustee shall make the
selection from outstanding Securities not previously called for redemption. The
Trustee may select for redemption portions of the principal of Securities that
have denominations larger than $1,000. Securities and portions of them the
Trustee selects shall be in amounts of $1,000 or a whole multiple of $1,000.
Provisions of this Indenture that apply to Securities called for redemption also
apply to portions of Securities called for redemption. The Trustee shall notify
the Issuers promptly of the Securities or portions of Securities to be redeemed.
SECTION 3.3. Notice of Redemption. At least 30 days but not
more than 60 days before a date for redemption of Securities, the Issuers shall
mail a notice of redemption by first-class mail to each Holder of Securities to
be redeemed at such Holder's registered address.
The notice shall identify the Securities (including CUSIP
number(s), if any) to be redeemed and shall state:
(1) the redemption date;
(2) the redemption price;
(3) the name and address of the Paying Agent;
(4) that Securities called for redemption must be surrendered
to the Paying Agent to collect the redemption price;
(5) if fewer than all the outstanding Securities are to be
redeemed, the identification and principal amounts of the particular
Securities to be redeemed;
(6) that, unless the Issuers default in making such redemption
payment or the Paying Agent is prohibited from making such payment
pursuant to the terms of this Indenture, interest on Securities (or
portion thereof) called for redemption ceases to accrue on and after
the redemption date;
-27-
<PAGE> 32
(7) the paragraph of the Securities pursuant to which the
Securities called for redemption are being redeemed; and
(8) that no representation is made as to the correctness or
accuracy of the CUSIP number, if any, listed in such notice or printed
on the Securities.
At the Issuers' request, the Trustee shall give the notice of
redemption in the Issuers' name and at the Issuers' expense. In such event, the
Issuers shall provide the Trustee with the information required by this Section.
SECTION 3.4. Effect of Notice of Redemption. Once notice of
redemption is mailed, Securities called for redemption become due and payable on
the redemption date and at the redemption price stated in the notice. Upon
surrender to the Paying Agent, such Securities shall be paid at the redemption
price stated in the notice, plus accrued interest to the redemption date.
Failure to give notice or any defect in the notice to any Holder shall not
affect the validity of the notice to any other Holder.
SECTION 3.5. Deposit of Redemption Price. On or prior to the
redemption date, the Issuers shall deposit with the Paying Agent (or, if an
Issuer or a Subsidiary is the Paying Agent, shall segregate and hold in trust)
money sufficient to pay the redemption price of and accrued interest on all
Securities to be redeemed on that date other than Securities or portions of
Securities called for redemption which have been delivered by the Issuers to the
Trustee for cancellation.
SECTION 3.6. Securities Redeemed in Part. Upon surrender of a
Security that is redeemed in part, the Issuers shall execute and the Trustee
shall authenticate for the Holder (at the Issuers' expense) a new Security equal
in principal amount to the unredeemed portion of the Security surrendered.
ARTICLE 4.
Covenants
SECTION 4.1. Payment of Securities. The Issuers shall promptly
pay the principal of and interest on the Securities on the dates and in the
manner provided in the Securities and in this Indenture. Principal, interest
shall be considered paid on the date due if on such date the Trustee or the
Paying Agent holds in accordance with this Indenture money sufficient to pay all
principal, interest then due.
The Issuers shall pay interest on overdue principal at the
rate specified therefor in the Securities, and shall pay interest on overdue
installments of interest at the same rate to the extent lawful.
-28-
<PAGE> 33
SECTION 4.2. SEC Reports. Notwithstanding that the Issuers may
not be, or may not be required to remain, subject to the reporting requirements
of Section 13 or 15(d) of the Exchange Act, the Issuers shall file with the
Commission (unless the Commission will not accept such filing) and provide the
Trustee and Holders of the Securities with such annual reports and such
information, documents and other reports as are specified in Sections 13 and
15(d) of the Exchange Act and applicable to a U.S. corporation subject to such
Sections, such information, documents and other reports to be so filed and
provided at the times specified for the filing of such information, documents
and reports under such Sections.
In addition, for so long as any Securities remain outstanding,
the Issuers shall furnish to the Holders and to securities analysts and
prospective investors, upon their request, the information required to be
delivered pursuant to Rule 144A(d)(4) under the Securities Act.
Delivery of such reports, information and documents to the
Trustee is for informational purposes only and the Trustee's receipt of such
shall not constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Issuers,
compliance with any of their covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
SECTION 4.3. Limitation on Consolidated Debt. (a) The Issuers
may not, and may not permit any Restricted Subsidiary to, Incur any Debt;
provided, however, that the Issuers or any Restricted Subsidiary may Incur Debt
so long as the ratio of (i) the aggregate consolidated principal amount of Debt
of the Issuers and the Restricted Subsidiaries outstanding as of the most recent
available quarterly or annual balance sheet, after giving pro forma effect to
the Incurrence of such Debt and any other Debt Incurred since such balance sheet
date and the receipt and application of the proceeds thereof to (ii)
Consolidated Cash Flow Available for Fixed Charges for the four full fiscal
quarters ending on the date of such balance sheet determined on a pro forma
basis as if any such Debt had been Incurred and the proceeds thereof had been
applied at the beginning of such four fiscal quarters, would be less than [ ]
(the "Debt Coverage Ratio").
(b) Notwithstanding the foregoing limitation, the Issuers and
any Restricted Subsidiary may Incur the following:
(i) Debt Incurred under any one or more Bank Credit
Agreements, Vendor Financing Facilities or other agreements or
arrangements to finance the Build-out; provided, however, that Debt
Incurred pursuant to this clause (i), other than Debt Incurred pursuant
to a Bank Credit Agreement or a Vendor Financing Facility, shall not
have a Stated Maturity
-29-
<PAGE> 34
on or earlier than the Stated Maturity of the Securities, and shall not
be mandatorily redeemable, pursuant to a sinking fund obligation or
otherwise, or be redeemable at the option of the holder thereof, in
whole or in part, on or prior to the Stated Maturity of the Securities;
(ii) Debt under any one or more Bank Credit Agreements or
other agreements or arrangements to finance working capital
requirements of Globalstar and any Refinancing Debt in respect of such
Debt; provided, however, at the time of the Incurrence of such Debt and
after giving effect thereto, the aggregate principal amount of all Debt
Incurred pursuant to this clause (ii) [and then outstanding shall not
exceed $ ;
(iii) Debt owed by the Issuers to any Wholly-Owned
Restricted Subsidiary or Debt owed by any Wholly-Owned Restricted
Subsidiary to the Issuers or to another Wholly-Owned Restricted
Subsidiary; provided, however, that upon either (x) the transfer or
other disposition by such Wholly-Owned Restricted Subsidiary or the
Issuers of any Debt so permitted to a Person other than the Issuers or
another Wholly-Owned Restricted Subsidiary or (y) the issuance (other
than directors, qualifying shares), sale, lease, transfer or other
disposition of shares of Capital Stock (including by consolidation or
merger) of such Wholly-Owned Restricted Subsidiary to a Person other
than the Issuers or another such Wholly-Owned Restricted Subsidiary,
the provisions of this clause (iii) shall no longer be applicable to
such Debt and such Debt shall be deemed to have been Incurred by the
Issuers thereof at the time of such issuance, sale, lease, transfer or
other disposition;
(iv) Refinancing Debt Incurred to Refinance Debt Incurred
pursuant to the first paragraph of this covenant or pursuant to clause
(i), (vi) or (vii) or this clause (iv) of this paragraph;
(v) Debt consisting of Permitted Interest Rate and
Currency Protection Agreements;
(vi) Debt represented by the Securities;
(vii) Debt outstanding on the Issue Date (other than Debt
described in clause (i), (ii), (iii), (vi) or (viii) of this
paragraph);
(viii) Debt (including Capital Lease Obligations) of
Globalstar or any Restricted Subsidiary financing the purchase, lease
or improvement of property (real or personal) or equipment (whether
through the direct purchase of assets or the Capital Stock of any
Person owning such assets), in each case Incurred no more than 180 days
after
-30-
<PAGE> 35
such purchase, lease or improvement of such property and any
Refinancing Debt in respect of such Debt, provided, however, that (x)
the amount of such Debt (net of original issue discount) does not
exceed, at the time initially Incurred, 90% of the fair market value of
such acquired property or equipment and (y) at the time of the
Incurrence of such Debt and after giving effect thereto, the aggregate
amount of all Debt Incurred pursuant to this clause (viii) and then
outstanding shall not exceed [$ ;]
(ix) Debt consisting of performance and other similar
bonds and reimbursement obligations Incurred in the ordinary course of
business securing the performance of contractual, franchise or license
obligations of the Issuers or a Restricted Subsidiary, or in respect of
a letter of credit obtained to secure such performance; and
(x) Debt in an aggregate principal amount which,
together with all other Debt of the Issuers and the Restricted
Subsidiaries outstanding on the date of such Incurrence (other than
Debt permitted by clauses (i) through (ix) above or Section 4.3(a))
does not exceed [$ .]
(c) For purposes of determining compliance with this Section
4.3, in the event that an item of Debt meets the criteria of more than one of
the types of Debt the Issuers and the Restricted Subsidiaries are permitted to
Incur, the Issuers or such Restricted Subsidiary, as the case may be, shall have
the right, in their sole discretion, to classify such item of Debt at the time
of its Incurrence and shall only be required to include the amount and type of
such Debt under the clause permitting the Debt as so classified.
SECTION 4.4. Future Guarantors. In the event that, after the
Issue Date, Globalstar shall acquire or create a Subsidiary, Globalstar shall
cause such Subsidiary (unless such Subsidiary is a Transitory Equipment
Subsidiary or is an Unrestricted Subsidiary) to become a Subsidiary Guarantor
and to Guarantee the Securities pursuant to a Subsidiary Guaranty.
SECTION 4.5. Limitation on Restricted Payments. (a) The
Issuers may not, and may not permit any Restricted Subsidiary, directly or
indirectly, to make a Restricted Payment if at the time such Issuers or such
Restricted Subsidiary makes such Restricted Payment:
(1) a Default shall have occurred and be continuing (or would
result therefrom);
(2) Globalstar is not able to Incur an additional $1. of Debt
pursuant to Section 4.3(a); or
-31-
<PAGE> 36
(3) the aggregate amount of such Restricted Payment and all
other Restricted Payments since the Issue Date would exceed the sum of:
(A) [ ]%- of the Consolidated Net Income of
Globalstar accrued during the period (treated as one
accounting period) from the beginning of the fiscal quarter
immediately following the fiscal quarter during which the
Issue Date occurs to the end of the most recent fiscal quarter
for which internal financial statements are available at the
time of such Restricted Payment (or, in case such Consolidated
Net Income shall be a deficit, minus [ %] of such deficit);
(B) the aggregate Net Cash Proceeds received by
Globalstar from the issuance or sale of its Capital Stock
(other than Disqualified Stock) subsequent to the Issue Date
(other than an issuance or sale to a Subsidiary of Globalstar
and other than an issuance or sale to an employee stock
ownership plan or to a trust established by Globalstar or any
of its Subsidiaries for the benefit of their employees);
(C) the amount by which Debt of Globalstar is reduced
on the balance sheet of Globalstar upon the conversion or
exchange (other than by a Subsidiary of Globalstar) subsequent
to the Issue Date of any Debt of Globalstar convertible or
exchangeable for Capital Stock (other than Disqualified Stock)
of Globalstar (less the amount of any cash, or the fair value
of any other property, distributed by Globalstar upon such
conversion or exchange); and
(D) an amount equal to the sum of (i) the net
reduction in Investments in Unrestricted Subsidiaries
resulting from dividends, repayments of loans or advances or
other transfers of assets, in each case to Globalstar or any
Restricted Subsidiary from Unrestricted Subsidiaries, and (ii)
the portion (proportionate to Globalstar's equity interest in
such Subsidiary) of the fair market value of the net assets of
an Unrestricted Subsidiary at the time such Unrestricted
Subsidiary is designated a Restricted Subsidiary; provided,
however, that the foregoing sum shall not exceed, in the case
of any Unrestricted Subsidiary, the amount of Investments
previously made (and treated as a Restricted Payment) by
Globalstar or any Restricted Subsidiary in such Unrestricted
Subsidiary.
(b) Notwithstanding the foregoing, Globalstar may subject to
clause (vi) below, pay any dividend on Capital Stock
-32-
<PAGE> 37
of any class within 60 days after the declaration thereof if, on the date when
the dividend was declared, Globalstar could have paid such dividend in
accordance with the foregoing provisions; (ii) repurchase any shares of its
Capital Stock or options to acquire its Capital Stock from Persons who were
formerly officers or employees of Globalstar; provided, however, that the
aggregate amount of all such repurchases made pursuant to this clause (ii) shall
not exceed [$2 million,] plus the aggregate cash proceeds received by Globalstar
since the Issue Date on sale of its Capital Stock or options to acquire its
Capital Stock to members, officers, managers and employees of Globalstar or any
of its Subsidiaries; (iii) Refinance, and permit its Restricted Subsidiaries to
Refinance, any Debt otherwise permitted to be Refinanced by clause (iv) of
Section 4.3(b); (iv) so long as Globalstar is treated as a partnership for U.S.
federal income tax purposes, make distributions in respect of members, or
partners' income tax liability with respect to Globalstar in an amount not to
exceed the Tax Amount; (v) make distributions to GTL to pay GTL's ordinary and
reasonable operating expenses related to Globalstar, as set forth in an
Officers' Certificate delivered to the Trustee; (vi) pay any scheduled dividend
on Special Preferred Obligations; provided, however, that at the time of payment
of any such dividend (other than a dividend paid only by distributions of
additional Special Preferred Obligations), no Default shall have occurred and be
continuing (or result therefrom); (vii) make any Restricted Payment by exchange
for, or out of the proceeds of the substantially concurrent sale of, or capital
contribution in respect of, Capital Stock of Globalstar (other than Disqualified
Stock and other than Capital Stock issued or sold to a Subsidiary of Globalstar
or an employee stock ownership plan or to a trust established by Globalstar or
any of its Subsidiaries for the benefit of their employees); (viii) contribute
its Investment in Globaltel Russia to an Unrestricted Subsidiary; and (ix) make
other Restricted Payments in an aggregate amount not to exceed $ .
(c) Any Restricted Payment made pursuant to clauses (ii),
(iii), (iv), (vi), (vii), (viii) and (ix) of Section 4.5(b) shall be excluded
from the calculation of the aggregate amount of Restricted Payments made since
the Issue Date; provided, however, that the Net Cash Proceeds from the issuance
of Capital Stock pursuant to clauses (ii) and (vii) of Section 4.5(b) shall be
excluded from the calculation of amounts under clause (B) of Section 4.5(a)(3).
SECTION 4.6. Dividend and other Payment Restrictions Affecting
Subsidiaries. (a) The Issuers may not, and may not permit any Restricted
Subsidiary, directly or indirectly, to create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary to:
-33-
<PAGE> 38
(i) pay dividends or make any other distributions to the
Issuers or any of their Restricted Subsidiaries on its Capital Stock or
with respect to any other interest or participation in, or measured by,
its profits;
(ii) pay any indebtedness owed to the Issuers or any
Restricted Subsidiary;
(iii) make loans or advances to the Issuers or any
Restricted Subsidiary; or
(iv) transfer any of its properties or assets to the
Issuers or any Restricted Subsidiary.
(b) Notwithstanding the foregoing, the Issuers may, and may
permit any Restricted Subsidiary to, suffer to exist any such encumbrance or
restriction (i) pursuant to any agreement in effect on the Issue Date; (ii)
pursuant to an agreement relating to any Acquired Debt, which encumbrance or
restriction is not applicable to any Person, or the properties or assets of any
Person, other than the Person so acquired and its Subsidiaries; (iii) pursuant
to an agreement effecting a Refinancing of Debt Incurred pursuant to an
agreement referred to in clause (i) or (ii) above or clause (iv) below,
provided, however, that the provisions contained in such Refinancing agreement
relating to such encumbrance or restriction are no more restrictive taken as a
whole (as determined in good faith by the Chief Financial Officer of Globalstar)
than the provisions contained in the predecessor agreement the subject thereof;
(iv) in the case of clause (iii) of Section 4.6(a), consisting of restrictions
contained in any security agreement (including a Capital Lease Obligation)
securing Debt of the Issuers or a Restricted Subsidiary otherwise permitted
under this Indenture, but only to the extent such encumbrances or restrictions
restrict the transfer of the property subject to such security agreement; (v) in
the case of clause (iv) of Section 4.6(a), consisting of customary nonassignment
provisions entered into in the ordinary course of business in leases governing
leasehold interests, but only to the extent such provisions restrict the
transfer of the lease or the property thereunder; (vi) with respect to a
Restricted Subsidiary, imposed pursuant to an agreement which has been entered
into for the sale or disposition of all or substantially all of the Capital
Stock or assets of such Restricted Subsidiary; provided, however, that after
giving effect to such transaction no Default shall have occurred or be
continuing, that such restriction terminates if such transaction is not
consummated and that such consummation or abandonment of such transaction occurs
within one year of the date such agreement was entered into; (vii) imposed
pursuant to applicable law or regulations; (viii) imposed pursuant to this
Indenture and the Securities; or (ix) consisting of any restriction on the sale
or other disposition of assets or property securing Debt as a result of a
Permitted Lien on such assets or property.
-34-
<PAGE> 39
SECTION 4.7. Asset Dispositions. (a) The Issuers may not, and
may not permit any Restricted Subsidiary to, directly or indirectly, make any
Asset Disposition unless: (i) Globalstar, Globalstar Capital or such Restricted
Subsidiary, as the case may be, receives consideration at the time of such Asset
Disposition at least equal to the fair market value (including as to the value
of all non-cash consideration) of the shares and assets subject to such Asset
Disposition, as determined by the General Partners' Committee of Globalstar in
good faith and evidenced by a resolution filed with the Trustee; (ii) at least
80% of the consideration thereof received by Globalstar, Globalstar Capital or
such Restricted Subsidiary, as the case may be, consists of (a) cash or
Marketable Securities or (b) the assumption of Debt (other than Subordinated
Obligations) of Globalstar, Globalstar Capital or such Restricted Subsidiary and
the release of the Issuers and the Restricted Subsidiaries, as applicable, from
all liability on the Debt assumed; and (iii) all Net Available Proceeds, less
any amounts invested within 180 days of such disposition in assets that comply
with Section 4.12, are applied within 180 days of such disposition (A) first, to
the permanent repayment or reduction of Debt then outstanding under any Bank
Credit Agreement or Vendor Financing Facility, to the extent such agreement or
facility would require such application or prohibit payments pursuant to the
following clause (B), (B) second, to the extent of remaining Net Available
Proceeds, to make an Offer to Purchase outstanding Securities at 100% of their
principal amount plus accrued and unpaid interest to the date of purchase
thereon and, to the extent required by the terms thereof, any other Debt of
Globalstar, Globalstar Capital or a Restricted Subsidiary that ranks pari passu
with the Securities at a price no greater than 100% of the principal amount
thereof plus accrued and unpaid interest to the date of purchase and (C) third,
to the extent of any remaining Net Available Proceeds following the completion
of the offer to Purchase, to the repayment of other Debt of Globalstar or Debt
of a Restricted Subsidiary, to the extent permitted under the terms thereof. To
the extent any Net Available Proceeds remain after such uses, Globalstar and the
Restricted Subsidiaries may use such amounts for any purposes not prohibited by
this Indenture. Notwithstanding the foregoing, these provisions shall not apply
to any Asset Disposition which constitutes a transfer, conveyance, sale, lease
or other disposition of all or substantially all of Globalstar's properties or
assets pursuant to Section 5.1(a).
(b) The Issuers shall comply, to the extent applicable, with
the requirements of Section 14(e) of the Exchange Act and any other securities
laws or regulations in connection with the repurchase of Securities pursuant to
this Section 4.7. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Section 4.7, the Issuers shall
comply with the applicable securities laws and regulations and shall not be
deemed to have breached their obligations under this Section 4.7 by virtue
thereof.
-35-
<PAGE> 40
SECTION 4.8. Transactions with Affiliates. (a) The Issuers may
not, and may not permit any Restricted Subsidiary, directly or indirectly, to
enter into any transactions (or series of related transactions) with an
Affiliate or Related Person of the Issuers (other than the Issuers or a
Wholly-Owned Restricted Subsidiary) (an "Affiliate Transaction") unless:
(i) such Affiliate Transaction is on terms that are no
less favorable to Globalstar, Globalstar Capital or the relevant
Restricted Subsidiary than those that would have been obtained in a
comparable transaction by Globalstar, Globalstar Capital or such
Restricted Subsidiary, as the case may be, with an unrelated Person;
and
(ii) Globalstar delivers to the Trustee:
(A) with respect to any Affiliate Transaction
involving aggregate consideration in excess of $1 million
(other than financing transactions that are not vendor
financing transactions pursuant to a Vendor Financing
Facility) and entered into in connection with the Build-out, a
certificate of the Chief Executive Officer of Globalstar to
the effect that a majority of the disinterested limited
partners of Globalstar have approved such Affiliate
Transaction; provided, however, that there is at least one
disinterested limited partner at the time of such Affiliate
Transaction; provided further, however, that any limited
partner receiving any compensation in respect of its approval
shall be deemed not to be a disinterested limited partner; or
(B) (1) with respect to any Affiliate Transaction
involving aggregate consideration in excess of $ , a
certificate of the Chief Executive officer of Globalstar to
the effect that such Affiliate Transaction complies with
clause (i) above; and (2) with respect to any Affiliate
Transaction involving aggregate consideration in excess of
[$10 million], an opinion as to the fairness to Globalstar,
Globalstar Capital or such Restricted Subsidiary, as the case
may be, of such Affiliate Transaction from a financial point
of view issued by an Independent Financial Advisor or, with
respect to telecommunications-related matters, a recognized
expert in the satellite telecommunications industry.
(b) Notwithstanding the foregoing Section 4.8(a), the
following shall be deemed not to be Affiliate Transactions:
(i) employee compensation arrangements entered into in
the ordinary course of business and approved by the General Partners'
Committee of Globalstar;
-36-
<PAGE> 41
(ii) transactions solely between or among the Issuers and
the Restricted Subsidiaries;
(iii) Restricted Payments permitted by Section 4.5;
(iv) Investments by an Affiliate or Related person of
Globalstar or Globalstar Capital in the Capital Stock (other than
Disqualified Stock) of Globalstar or any Restricted Subsidiary; and
(v) an Affiliate or Related Person of the Issuers acting
as agent for the placement or acquisition of launch services or
insurance on behalf of the Issuers or any Restricted Subsidiary.
SECTION 4.9. Limitation on Issuances and Sales of Capital,
Stock of Restricted Subsidiaries. The Issuers may not, and may not permit any
Restricted Subsidiary to, issue, transfer, convey, sell or otherwise dispose of
any shares of Capital Stock of a Restricted Subsidiary or securities convertible
or exchangeable into, or options, warrants, rights or any other interest with
respect to, Capital Stock of a Restricted Subsidiary to any person other than
Globalstar, Globalstar Capital or a Wholly-Owned Restricted Subsidiary except
(i) in a transaction consisting of a sale of all the Capital Stock of such
Restricted Subsidiary and that complies with the provisions of Section 4.7 to
the extent such provisions apply; (ii) if required, the issuance, transfer,
conveyance, sale or other disposition of directors, qualifying shares; (iii) in
a transaction in which, or in connection with which, an Issuer or a Restricted
Subsidiary acquires at the same time sufficient Capital Stock of such Restricted
Subsidiary to at least maintain the same percentage ownership interest it had
prior to such transaction; and (iv) Disqualified Stock of a Restricted
Subsidiary Incurred to Refinance Disqualified Stock of such Restricted
Subsidiary; provided, however, that the amounts of the redemption obligations of
such Disqualified Stock shall not exceed the amounts of the redemption
obligations of, and such Disqualified Stock shall have redemption obligations no
earlier than those required by, the Disqualified Stock being Refinanced.
SECTION 4.10. Change of Control. (a) Upon the occurrence of a
Change of Control, each Holder of Securities shall have the right to require
that the Issuers repurchase such Holder's Securities at a purchase price in cash
equal to 101% of the principal amount thereof plus accrued and unpaid interest
to the date of purchase (subject to the right of Holders of record on the
relevant record date to receive interest due on the relevant interest payment
date).
(b) Within 30 days following any Change of Control, the
Issuers shall mail a notice to each Holder with a copy to the Trustee stating:
-37-
<PAGE> 42
(1) that a Change of Control has occurred and that such Holder
has the right to require the Issuers to purchase such Holder's
Securities at a purchase price in cash equal to 101% of the principal
amount thereof plus accrued and unpaid interest to the date of purchase
(subject to the right of Holders of record on the relevant record date
to receive interest on the relevant interest payment date);
(2) the circumstances and relevant facts regarding such Change
of Control (including information with respect to pro forma historical
income, cash flow and capitalization, each after giving effect to such
Change of Control);
(3) the repurchase date (which shall be no earlier than 30
days nor later than 60 days from the date such notice is mailed); and
(4) the instructions determined by the Issuers, consistent
with this Section 4.10, that a Holder must follow in order to have its
Securities purchased.
(c) Holders electing to have a Security purchased will be
required to surrender the Security, with an appropriate form duly completed, to
the Issuers at the address specified in the notice at least three Business Days
prior to the purchase date. Holders will be entitled to withdraw their election
if the Trustee or the Issuers receive not later than one Business Day prior to
the purchase date, a facsimile transmission or letter setting forth the name of
the Holder, the principal amount of the Security which was delivered for
purchase by the Holder and a statement that such Holder is withdrawing his
election to have such Security purchased.
(d) on the purchase date, all Securities purchased by the
Issuers under this Section shall be delivered by the Trustee for cancellation,
and the Issuers shall pay the purchase price plus accrued and unpaid interest
and Liquidated Damages, if any, to the Holders entitled thereto.
(e) The Issuers shall comply, to the extent applicable, with
the requirements of Section 14(e) of the Exchange Act and any other securities
laws or regulations in connection with the repurchase of Securities pursuant to
this Section. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Section, the Issuers shall comply
with the applicable securities laws and regulations and shall not be deemed to
have breached their obligations under this Section by virtue thereof.
SECTION 4.11. Limitation on Liens. The Issuers may not, and
may not permit any Restricted Subsidiary, directly or indirectly, to Incur or
permit to exist any Lien on any asset now
-38-
<PAGE> 43
owned or hereafter acquired, or any income or profits therefrom or assign or
convey any right to receive income therefrom, except for the following Liens
(each, a "Permitted Lien"):
(i) Liens to secure up to $ million, minus the aggregate
principal amount of Notes issued pursuant to the Initial Purchasers,
over-allotment option, of Debt permitted to be Incurred under this
Indenture (including the Debt outstanding at any time under the 11 3/8
Indenture, the 11 1/4 Indenture and the 10 3/4 Indenture) so long as
effective provision is made to secure the Securities equally and
ratably with (or prior to) the obligations so secured;
(ii) Liens in favor of Holders of the Securities;
(iii) Liens in favor of the Issuers;
(iv) Liens on property or shares of Capital Stock of another
Person at the time such other Person becomes a Subsidiary of such
Person; provided, however, that such Liens are not created, incurred or
assumed in connection with, or in contemplation of, such other Person
becoming such a Subsidiary; provided further, however, that such Lien
may not extend to any other property owned by such Person or any of its
Subsidiaries (other than inventory and receivables generated in the
ordinary course of business and substitute property);
(v) Liens on property at the time such Person or any of its
Subsidiaries acquires such property, including any acquisition by means
of a merger or consolidation with or into such Person or a Subsidiary
of such Person; provided, however, that such Liens are not created,
incurred or assumed in connection with, or in contemplation of, such
acquisition; provided further, however, that the Liens may not extend
to any other property owned by such Person or any of its Subsidiaries;
(vi) Liens securing Debt Incurred pursuant to clause (viii) of
Section 4.3(b); provided, however, that the Lien may not extend to any
assets owned by an Issuer or any Restricted Subsidiary other than (a)
the assets being financed or refinanced and income and proceeds
therefrom and (b) any other assets of such obligor securing other Debt
of such obligor to the same secured party;
(vii) Liens to secure the performance of statutory
obligations, surety or appeal bonds, performance bonds or other
obligations of a like nature incurred in the ordinary course of
business;
(viii) Liens existing on the Issue Date;
-39-
<PAGE> 44
(ix) Liens for taxes, assessments or governmental charges or
claims that are not yet delinquent or that are being contested in good
faith by appropriate proceedings promptly instituted and diligently
concluded; provided, however, that any reserve or other appropriate
provision as shall be required in conformity with GAAP shall have been
made therefor;
(x) Liens incurred in the ordinary course of business of the
Issuers and the Restricted Subsidiaries with respect to obligations
that do not exceed $ million at any one time outstanding and that:
(A) are not incurred in connection with the borrowing
of money or the obtaining of advances or credit (other than
trade credit in the ordinary course of business); and
(B) do not in the aggregate materially detract from
the value of the property or materially impair the use thereof
in the operation of business by the Issuers and the Restricted
Subsidiaries.
SECTION 4.12. Business Activities. The Issuers may not, and
may not permit any Restricted Subsidiary to, engage in any business other than
that which is related to the design, development, procurement, installation,
operation and ownership of telecommunications systems and businesses.
SECTION 4.13. Maintenance of Insurance.
(a) The Issuers shall:
(i) maintain, with respect to each satellite in the
Globalstar System, for the period beginning at least 45 days prior to,
and at all times up to and including, the launch of such satellite,
launch insurance with respect to such satellite in an amount sufficient
to provide for the construction, launch and insurance of a replacement
satellite to be payable in the event of a launch failure; and
(ii) in the event that more than of Globalstar's
satellites have ceased Operating for 90 consecutive days and fewer than
satellites are Operating as part of the Globalstar System (such an
event, an "In-orbit Insurance Event"), obtain (within 60 days of such
In-orbit Insurance Event), and thereafter maintain, in-orbit insurance
in an amount sufficient to provide for the construction, launch and
insurance of replacement satellites for at least of Globalstar's
satellites still operating or, if such in-orbit insurance in such
amount is not then commercially available
-40-
<PAGE> 45
from traditional insurance providers, such lesser amount as is so
available.
(b) The obligation of the Issuers to maintain insurance
pursuant to this covenant may be satisfied by any combination of:
(i) insurance commitments obtained from any recognized
insurance provider;
(ii) insurance commitments obtained from any other entity
if the General Partners' Committee of Globalstar determines in good
faith that such entity is creditworthy and otherwise capable of bearing
the financial risk of providing such insurance;
(iii) unrestricted cash segregated and maintained by
Globalstar in a segregated account (the "Insurance Account") solely for
disbursement in accordance with Section 4.13(d) ("Cash Insurance"); and
(iv) in respect of the insurance described in clause M of
Section 4.13(a), self-insurance for the launch of up to 12 satellites;
provided, however, that no earlier than 60 days prior to the scheduled
launch of any such satellites:
(a) the Issuers deliver an officers, Certificate to
the Trustee certifying that they have sufficient committed
capital to construct, launch and insure at least
[44] satellites, in addition to the satellites with respect to
which the Issuers are self-insuring; and
(b) the Issuers obtain an opinion from an investment
banking firm that is an Independent Financial Advisor to the
effect that the Issuers would be able to raise sufficient
capital in the capital markets to replace, relaunch and insure
such satellites in the event of a failure to successfully
launch such satellites.
(c) Within 30 days following any date on which the Issuers are
required to obtain insurance pursuant to this Indenture, the Issuers will
deliver to the Trustee an insurance certificate certifying the amount of
insurance then carried and an Officers, Certificate stating that such insurance,
together with any other insurance or Cash Insurance maintained by the Issuers,
complies with this Indenture. In addition, the Issuers will cause to be
delivered to the Trustee no less than once each year an insurance certificate
setting forth the amount of insurance then carried, which insurance certificate
shall entitle the Trustee to:
-41-
<PAGE> 46
(i) notice of any claim under any such insurance policy;
and
(ii) at least 30 days, notice from the provider of such
insurance prior to the cancellation of any such insurance.
In the event that the Issuers maintain any Cash Insurance in satisfaction of any
part of their obligation to maintain insurance pursuant to this Section 4.13,
the Issuers shall deliver an Officers' Certificate to the Trustee in lieu of any
insurance certificate otherwise required by this Section 4.13.
(d) In the event that the Issuers receive any proceeds of any
launch or in-orbit insurance that they are required to maintain pursuant to this
Section 4.13, such proceeds shall constitute "Insurance Proceeds". In addition,
if the Issuers maintain any Cash Insurance in satisfaction of any part of their
obligations to maintain in-orbit insurance pursuant to this Section 4.13, then
upon the occurrence of the event (i.e., the in-orbit failure) that would have
entitled the Issuers to the payment of insurance had the Issuers purchased
insurance from an insurance provider, the cash maintained in the Insurance
Account shall constitute "Insurance Proceeds". Promptly following the receipt of
any Insurance Proceeds, the Issuers shall apply such Insurance Proceeds in
accordance with the provisions of Section 4.7; provided, however, that Insurance
Proceeds shall only be required to be so applied to the extent that the
aggregate amount of all Insurance Proceeds received by the Issuers exceeds $5
million in any 12-month period.
SECTION 4.14. Compliance Certificate; Statement by Officers as
to Default. The Issuers shall deliver to the Trustee within 120 days after the
end of each fiscal year of the Issuers an Officers, Certificate, one of the
signers of which shall be the principal executive, principal financial or
principal accounting officer of the Issuers, stating that in the course of the
performance by the signers of their duties as officers of the Issuers they would
normally have knowledge of any Default and whether or not the signers know of
any Default that occurred during such period. If they do, the certificate shall
describe the Default, its status and what action the Issuers are taking or
propose to take with respect thereto. The Issuers also shall comply with TIA
Section 314(a)(4).
SECTION 4.15. Further Instruments and Acts. Upon request of
the Trustee, the Issuers will execute and deliver such further instruments and
do such further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture.
SECTION 4.16. Business Activities of Globalstar Capital.
Globalstar Capital shall not engage in any trade or
-42-
<PAGE> 47
business, and shall conduct no business activity, other than the Incurrence of
Debt permitted by Section 4.3 and the issuance of Capital Stock to Globalstar or
any Wholly Owned Restricted Subsidiary and activities incidental thereto.
SECTION 4.17. Calculation of Original Issue Discount. The
Issuers shall file with the Trustee promptly at the end of each calendar year
(i) a written notice specifying the amount of original issue discount (including
daily rates and accrual periods) accrued on outstanding Securities as of the end
of such year and (ii) such other specific information relating to such original
issue discount as may then be relevant under the Code, as amended from time to
time.
ARTICLE 5.
Successor Issuers
SECTION 5.1. When Issuers May Merge or Transfer Assets. (a)
Neither Globalstar nor Globalstar Capital may consolidate with or merge with or
into, or convey, transfer or lease, in one transaction or a series of
transactions, all or substantially all its assets to any Person; provided,
however, that Globalstar may consolidate with or merge with or into, or convey,
transfer or lease, in one transaction or a series of transactions, all or
substantially all its assets to any Person, if:
(i) the resulting , surviving or transferee Person (the
"Successor Issuer") shall be a Person organized and existing under the
laws of Bermuda the United States of America, any State thereof or the
District of Columbia and the Successor Issuer (if not Globalstar) shall
expressly assume, by an indenture supplemental hereto, executed and
delivered to the Trustee, in form satisfactory to the Trustee, all the
obligations of Globalstar under the Securities and this Indenture;
(ii) immediately after giving effect to such transaction
(and treating any Debt which becomes an obligation of the Successor
Issuer or any Subsidiary as a result of such transaction as having been
Incurred by the Successor Issuer or such Subsidiary at the time of such
transaction), no Default shall have occurred and be continuing;
(iii) immediately after giving effect to such transaction,
the Successor Issuer would be able to Incur an additional $1. of Debt
pursuant to Section 4.3(a);
(iv) immediately after giving effect to such transaction,
the Successor Issuer shall have Consolidated Net Worth in an amount
that is not less than the
-43-
<PAGE> 48
Consolidated Net Worth of Globalstar immediately prior to such
transaction; and
(v) Globalstar shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that such
transaction and such supplemental indenture (if any) comply with this
Indenture.
The Successor Issuer shall be the successor to Globalstar and
shall succeed to, and be substituted for, and may exercise every right and power
of, Globalstar under this Indenture, and Globalstar (other than in the case of a
lease) shall be released from the obligation to pay the principal of and
interest on the Securities.
(b) Globalstar shall not permit any Subsidiary Guarantor to
consolidate with or merge with or into, or convey, transfer or lease, in one
transaction or a series of transactions, all or substantially all of its assets
to any Person unless: (i) the resulting, surviving or transferee Person (if not
such Subsidiary) shall be a Person organized and existing under the laws of the
jurisdiction under which such Subsidiary was organized or under the laws of the
United States of America, or any State thereof or the District of Columbia, and
such Person shall expressly assume, by a guaranty agreement in a form acceptable
to the Trustee, all the obligations of such Subsidiary, if any, under its
Subsidiary Guaranty; (ii) immediately after giving effect to such transaction or
transactions on a pro forma basis (and treating any Debt which becomes an
obligation of the resulting, surviving or transferee Person as a result of such
transaction as having been issued by such Person at the time of such
transaction), no Default shall have occurred and be continuing; and (iii)
Globalstar delivers to the Trustee an Officers' Certificate and an Opinion of
Counsel, each stating that such consolidation, merger or transfer and such
guaranty agreement, if any, complies with this Indenture.
ARTICLE 6.
Defaults and Remedies
SECTION 6.1. Events of Default. An "Event of Default" occurs
if:
(1) the Issuers default in any payment of interest on any
Security when the same becomes due and payable, and such default
continues for a period of 30 days;
(2) the Issuers (i) default in the payment of the principal of
any Security when the same becomes due and payable at its Stated
Maturity, upon optional redemption, upon required repurchase, upon
declaration or otherwise, or
-44-
<PAGE> 49
(ii) fail to redeem or purchase Securities when required pursuant to
this Indenture or the Securities;
(3) the Issuers fail to comply with Section 5.1;
(4) the Issuers fail to comply with Section 4.2, 4.3, 4.4,
4.5, 4.6, 4.7, 4.8, 4.9, 4.10, 4.11, 4.12, 4.13 or 4.16 (other than a
failure to purchase Securities when required under Section 4.7 or 4.10)
and such failure continues for 30 days after the notice specified
below;
(5) the Issuers fail to comply with any of their agreements in
the Securities or this Indenture (other than those referred to in
clause (1), (2), (3) or (4) above) and such failure continues for 60
days after the notice specified below;
(6) Debt of the Issuers or any Significant Subsidiary is not
paid within any applicable grace period after final maturity or is
accelerated by the holders thereof because of a default and the total
amount of such Debt unpaid or accelerated exceeds $ million, or its
foreign currency equivalent at the time and such failure continues for
10 days after the notice specified below;
(7) any Issuer or any Significant Subsidiary pursuant to or
within the meaning of any Bankruptcy Law:
(A) commences a voluntary case;
(B) consents to the entry of an order for relief
against it in an involuntary case;
(C) consents to the appointment of a Custodian of it
or for any substantial part of its property; or
(D) makes a general assignment for the benefit of its
creditors;
or takes any comparable action under any foreign laws relating to
insolvency;
(8) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(A) is for relief against the Issuers or any
Significant Subsidiary in an involuntary case;
(B) appoints a Custodian of the Issuers or any
Significant Subsidiary or for any substantial part of its
property; or
-45-
<PAGE> 50
(C) orders the winding up or liquidation of the
Issuers or any Significant Subsidiary;
or any similar relief is granted under any foreign laws and the order
or decree remains unstayed and in effect for 60 days;
(9) any judgment or decree for the payment of money in excess
of $ million or its foreign currency equivalent at the time is
entered against the Issuers or any Significant Subsidiary, remains
outstanding for a period of 60 days following the entry of such
judgment or decree and is not discharged, waived or the execution
thereof stayed within 10 days after the notice specified below; or
(10) a Subsidiary Guaranty ceases to be in full force and
effect (other than in accordance with the terms of such Subsidiary
Guaranty) or a Subsidiary Guarantor denies or disaffirms its
obligations under its Subsidiary Guaranty.
The foregoing will constitute Events of Default whatever the
reason for any such Event of Default and whether it is voluntary or involuntary
or is effected by operation of law or pursuant to any judgment, decree or order
of any court or any order, rule or regulation of any administrative or
governmental body.
The term "Bankruptcy Law" means Title 11, United States Code,
or any similar Federal or state law for the relief of debtors. The term
"Custodian" means any receiver, trustee, assignee, liquidator, custodian or
similar official under any Bankruptcy Law.
A Default under clauses (4), (5), or (9) is not an Event of
Default until the Trustee or the holders of at least 25% in principal amount of
the outstanding Securities notify the Issuers of the Default and the Issuers do
not cure such Default within the time specified after receipt 6f such notice.
Such notice must specify the Default, demand that it be remedied and state that
such notice is a "Notice of Default".
The Issuers shall deliver to the Trustee, within 30 days after
the occurrence thereof, written notice in the form of an Officers' Certificate
of any Event of Default under clause (6) or (10) and any event which with the
giving of notice or the lapse of time would become an Event of Default under
clause (4), (5) or (9), its status and what action the Issuers are taking or
propose to take with respect thereto.
SECTION 6.2. Acceleration. If an Event of Default (other than
an Event of Default specified in Section 6.1(7) or (8) with respect to the
Issuers) occurs and is continuing, the Trustee by notice to the Issuers, or the
Holders of at least 25%
-46-
<PAGE> 51
in principal amount of the Securities by notice to the Issuers and the Trustee,
may declare the principal of and accrued but unpaid interest on all the
Securities to be due and payable. Upon such a declaration, such principal,
interest shall be due and payable immediately. If an Event of Default specified
in Section 6.1(7) or (8) with respect to the Issuers occurs, the principal of
and interest on all the Securities shall ipso facto become and be immediately
due and payable without any declaration or other act on the part of the Trustee
or any Securityholders. The Holders of a majority in principal amount of the
Securities by notice to the Trustee may rescind an acceleration and its
consequences if the rescission would not conflict with any judgment or decree
and if all existing Events of Default have been cured or waived except
nonpayment of principal or interest that has become due solely because of
acceleration. No such rescission shall affect any subsequent Default or impair
any right consequent thereto.
SECTION 6.3. Other Remedies. If an Event of Default occurs and
is continuing, the Trustee may pursue any available remedy to collect the
payment of principal of or interest on the Securities or to enforce the
performance of any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not
possess any of the Securities or does not produce any of them in the proceeding.
A delay or omission by the Trustee or any Securityholder in exercising any right
or remedy accruing upon an Event of Default shall not impair the right or remedy
or constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative.
SECTION 6.4. Waiver of Past Defaults. The Holders of a
majority in principal amount of the Securities by notice to the Trustee may
waive an existing Default and its consequences except (i) a Default in the
payment of the principal of or interest on a Security or (ii) a Default in
respect of a provision that under Section 9.2 cannot be amended without the
consent of each Securityholder affected. When a Default is waived, it is deemed
cured, but no such waiver shall extend to any subsequent or other Default or
impair any consequent right.
SECTION 6.5. Control by Majority. The Holders of a majority in
principal amount of the Securities may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or of
exercising any trust or power conferred on the Trustee. However, the Trustee may
refuse to follow any direction that conflicts with law or this Indenture or,
subject to Section 7.1, that the Trustee determines is unduly prejudicial to the
rights of other Securityholders or would involve the Trustee in personal
liability; provided, however, that the Trustee may take any other action deemed
proper by the
-47-
<PAGE> 52
Trustee that is not inconsistent with such direction. Prior to taking any action
hereunder, the Trustee shall be entitled to reasonable indemnification
satisfactory to it in its sole discretion against all losses and expenses caused
by taking or not taking such action.
SECTION 6.6. Limitation on Suits. Except to enforce the right
to receive payment of principal, premium (if any) or interest when due, no
Securityholder may pursue any remedy with respect to this Indenture or the
Securities unless:
(1) the Holder gives to the Trustee written notice stating
that an Event of Default is continuing;
(2) the Holders of at least 25% in principal amount of the
Securities make a written request to the Trustee to pursue the remedy;
(3) such Holder or Holders offer to the Trustee reasonable
security or indemnity against any loss, liability or expense;
(4) the Trustee does not comply with the request within 60
days after receipt of the request and the offer of security or
indemnity; and
the Holders of a majority in principal amount of the Securities do not give the
Trustee a direction inconsistent with the request during such 60-day period.
A Securityholder may not use this Indenture to prejudice the
rights of another Securityholder or to obtain a preference or priority over
another Securityholder.
SECTION 6.7. Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any Holder
to receive payment of principal of and interest on the Securities held by such
Holder, on or after the respective due dates expressed in the Securities, or to
bring suit for the enforcement of any such payment on or after such respective
dates, shall not be impaired or affected without the consent of such Holder.
SECTION 6.8. Collection Suit by Trustee. If an Event of
Default specified in Section 6.1(i) or (2) occurs and is continuing, the Trustee
may recover judgment in its own name and as trustee of an express trust against
the Issuers for the whole amount then due and owing (together with interest on
any unpaid interest to the extent lawful) and the amounts provided for in
Section 7.7.
SECTION 6.9. Trustee May File Proofs Claim. The Trustee may
file such proofs of claim and other papers or
-48-
<PAGE> 53
documents as may be necessary or advisable in order to have the claims of the
Trustee and the Securityholders allowed in any judicial proceedings relative to
the Issuers, its creditors or its property and, unless prohibited by law or
applicable regulations, may vote on behalf of the Holders in any election of a
trustee in bankruptcy or other Person performing similar functions, and any
Custodian in any such judicial proceeding is hereby authorized by each Holder to
make payments to the Trustee and, in the event that the Trustee shall consent to
the making of such payments directly to the Holders, to pay to the Trustee any
amount due it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and its counsel, and any other amounts due
the Trustee under Section 7.7.
SECTION 6.10. Priorities. If the Trustee collects any money or
property pursuant to this Article 6, it shall pay out the money or property in
the following order:
FIRST: to the Trustee for amounts due under Section 7.7;
SECOND: to Securityholders for amounts due and unpaid on the
Securities for principal, interest, ratably, without preference or priority of
any kind, according to the amounts due and payable on the Securities for
principal, interest and Liquidated Damages (if any), respectively; and
THIRD: to the Issuers.
The Trustee may fix a record date and payment date for any
payment to Securityholders pursuant to this Section. At least 15 days before
such record date, the Issuers shall mail to each Securityholder and the Trustee
a notice that states the record date, the payment date and amount to be paid.
SECTION 6.11. Undertaking for Costs. In any suit for the
enforcement of any right or remedy under this Indenture or in any suit against
the Trustee for any action taken or omitted by it as Trustee, a court in its
discretion may require the filing by any party litigant in the suit of an
undertaking to pay the costs of the suit, and the court in its discretion may
assess reasonable costs, including reasonable attorneys, fees and expenses,
against any party litigant in the suit, having due regard to the merits and good
faith of the claims or defenses made by the party litigant. This Section does
not apply to a suit by the Trustee, a suit by a Holder pursuant to Section 6.7
or a suit by Holders of more than 10% in principal amount of the Securities.
SECTION 6.12. Waiver of Stay or Extension Laws. The Issuers
(to the extent they may lawfully do so) shall not at any time insist upon, or
plead, or in any manner whatsoever claim or take the benefit or advantage of,
any stay or extension law
-49-
<PAGE> 54
wherever enacted, now or at any time hereafter in force, which may affect the
covenants or the performance of this Indenture; and the Issuers (to the extent
that they may lawfully do so) hereby expressly waive all benefit or advantage of
any such law, and shall not hinder, delay or impede the execution of any power
herein granted to the Trustee, but shall suffer and permit the execution of
every such power as though no such law had been enacted.
ARTICLE 7.
Trustee
SECTION 7.1. Duties of Trustee. (a) If an Event of Default has
occurred and is continuing, the Trustee shall exercise the rights and powers
vested in it by this Indenture and use the same degree of care and skill in
their exercise as a prudent Person would exercise or use under the circumstances
in the conduct of such Person's own affairs.
(b) Except during the continuance of an Event of Default:
(1) the Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture and no
implied covenants or obligations shall be read into this Indenture
against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture. However, in the case of any such certificates or
opinions which by any provision hereof are specifically required to be
furnished to the Trustee, the Trustee shall be under a duty to examine
the same to determine whether or not they conform to the requirements
of this Indenture (but need not confirm or investigate the accuracy of
mathematical calculations or other facts stated therein).
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(1) this paragraph does not limit the effect of paragraph (b)
of this Section;
(2) the Trustee shall not be liable for any error of judgment
made in good faith by a Trust Officer unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts; and
-50-
<PAGE> 55
(3) the Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.5.
(d) Every provision of this Indenture that in any way relates
to the Trustee is subject to paragraphs (a), (b) and (c) of this Section.
(e) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Issuers.
(f) Money held in trust by the Trustee need not be segregated
from other funds except to the extent required by law.
(g) No provision of this Indenture shall require the Trustee
to expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers, if it shall have reasonable grounds to believe that repayment
of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
(h) Every provision of this Indenture relating to the conduct
or affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section and to the provisions of the TIA.
SECTION 7.2. Rights of Trustee. (a) The Trustee may rely on
any document believed by it to be genuine and to have been signed or presented
by the proper person. The Trustee need not investigate any fact or matter stated
in the document.
(b) Before the Trustee acts or refrains from acting, it may
require an officers, Certificate or an opinion of Counsel. The Trustee shall not
be liable for any action it takes or omits to take in good faith in reliance on
the Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee shall not be liable for any action it takes or
omits to take in good faith which it believes to be authorized or within its
rights or powers; provided, however, that the Trustee's conduct does not
constitute wilful misconduct or negligence.
(e) The Trustee may consult with counsel of its selection, and
the advice or opinion of counsel with respect to legal matters relating to this
Indenture and the Securities shall
-51-
<PAGE> 56
be full and complete authorization and protection from liability in respect to
any action taken, omitted or suffered by it hereunder in good faith and in
accordance with the advice or opinion of such counsel.
(f) The Trustee shall not be deemed to have notice of any
Default or Event of Default unless a Trust officer has actual knowledge thereof
or unless written notice of any event which is in fact such a default is
received by the Trustee at the principal corporate trust office of the Trustee,
and such notice references the Securities and this Indenture.
SECTION 7.3. Individual Rights of Trustee. The Trustee in its
individual or any other capacity may become the owner or pledgee of Securities
and may otherwise deal with the Issuers or its Affiliates with the same rights
it would have if it were not Trustee. Any Paying Agent, Registrar, co-registrar
or co-paying agent may do the same with like rights. However, the Trustee must
comply with Sections 7.10 and 7.11.
SECTION 7.4. Trustee's Disclaimer. The Trustee shall not be
responsible for and makes no representation as to the validity or adequacy of
this Indenture or the Securities, it shall not be accountable for the Issuers'
use of the proceeds from the Securities, and it shall not be responsible for any
statement of the Issuers in this Indenture or in any document issued in
connection with the sale of the Securities or in the Securities other than the
Trustee's certificate of authentication.
SECTION 7.5. Notice of Defaults. If a Default occurs and is
continuing and if it is known to the Trustee, the Trustee shall mail to each
Securityholder notice of the Default within 90 days after it occurs. Except in
the case of a Default in payment of principal of or interest on any Security
(including payments pursuant to the mandatory redemption provisions of such
Security, if any), the Trustee may withhold the notice if and so long as a
committee of its Trust Officers in good faith determines that withholding the
notice is in the interests of Securityholders.
SECTION 7.6. Reports by Trustee to Holders. If required by TIA
Section 313(a), as promptly as practicable after each beginning with the
, 1999, and in any event prior to in each year, the Trustee shall mail
to each Securityholder a brief report dated as of that complies with
such TIA Section 313(a). The Trustee also shall comply with TIA Section 313(b).
A copy of each report at the time of its mailing to
Securityholders shall be filed with the Commission and each stock exchange (if
any) on which the Securities are listed. The Issuers agree to notify promptly
the Trustee whenever the Securities become listed on any stock exchange and of
any delisting thereof.
-52-
<PAGE> 57
SECTION 7.7. Compensation and Indemnity. Issuers shall pay to
the Trustee from time to time such compensation as shall be agreed in writing
between the Issuers and the Trustee for its services. The Trustee's compensation
shall not be limited by any law on compensation of a trustee of an express
trust. The Issuers shall reimburse the Trustee upon request for all reasonable
out-of-pocket expenses incurred or made by it, including costs of collection, in
addition to the compensation for its services. Such expenses shall include the
reasonable compensation and expenses, disbursements and advances of the
Trustee's agents, counsel, accountants and experts. The Issuers shall indemnify
the Trustee against any and all loss, damage, claim, liability or reasonable
expense (including reasonable attorneys, fees and expenses) incurred by it in
connection with the acceptance or administration of this trust and the
performance of its duties hereunder. The Trustee shall notify the Issuers
promptly of any claim for which it may seek indemnity. Failure by the Trustee to
so notify the Issuers shall not relieve the Issuers of their obligations
hereunder. The Issuers shall defend the claim and the Trustee may have separate
counsel and the Issuers shall pay the reasonable fees and expenses of such
counsel. The Issuers need not reimburse any expense or indemnify against any
loss, liability or expense incurred by the Trustee through the Trustee's own
wilful misconduct, negligence or bad faith.
To secure the Issuers' payment obligations in this Section,
the Trustee shall have a lien prior to the Securities on all money or property
held or collected by the Trustee other than money or property held in trust to
pay principal of and interest on particular Securities.
The Issuers' payment obligations pursuant to this Section
shall survive the discharge of this Indenture. When the Trustee incurs expenses
after the occurrence of a Default specified in Section 6.1(7) or (8) with
respect to the Issuers, the expenses are intended to constitute expenses of
administration under the Bankruptcy Law.
SECTION 7.8. Replacement of Trustee. The Trustee may resign at
any time by so notifying the Issuers. The Holders of a majority in principal
amount of the Securities may remove the Trustee by so notifying the Trustee and
may appoint a successor Trustee. The Issuers shall remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the
Trustee or its property; or
(4) the Trustee otherwise becomes incapable of acting.
-53-
<PAGE> 58
If the Trustee resigns, is removed by the Issuers or by the
Holders of a majority in principal amount of the Securities and such Holders do
not reasonably promptly appoint a successor Trustee, or if a vacancy exists in
the office of Trustee for any reason (the Trustee in such event being referred
to herein as the retiring Trustee), the Issuers shall promptly appoint a
successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Issuers. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Securityholders. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee, subject to the lien
provided for in Section 7.7.
If a successor Trustee does not take office within 60 days
after the retiring Trustee resigns or is removed, the retiring Trustee or the
Holders of 10% in principal amount of the Securities may petition, at the
expense of the Issuers, any court of competent jurisdiction for the appointment
of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any
Securityholder may petition any court of competent jurisdiction for the removal
of the Trustee and the appointment of a successor Trustee.
Notwithstanding the replacement of the Trustee pursuant to
this Section, the Issuers, obligations under Section 7.7 shall continue for the
benefit of the retiring Trustee.
SECTION 7.9. Successor Trustee by Merger. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all its corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee.
In case at the time such successor or successors by merger,
conversion or consolidation to the Trustee shall succeed to the trusts created
by this Indenture any of the Securities shall have been authenticated but not
delivered, any such successor to the Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Securities so
authenticated; and in case at that time any of the Securities shall not have
been authenticated, any successor to the Trustee may authenticate such
Securities either in the name of any predecessor hereunder or in the name of the
successor to the Trustee; and in all such cases such certificates shall have
-54-
<PAGE> 59
the full force which it is anywhere in the Securities or in this Indenture
provided that the certificate of the Trustee shall have.
SECTION 7.10. Eligibility: Disqualification. The Trustee shall
at all times satisfy the requirements of TIA Section 310(a). The Trustee shall
have a combined capital and surplus of at least $50,000,000 as set forth in its
most recent published annual report of condition. The Trustee shall comply with
TIA Section 310(b); provided, however, that there shall be excluded from the
operation of TIA Section 310(b)(1) any indenture or indentures under which other
securities or certificates of interest or participation in other securities of
the Issuers are outstanding if the requirements for such exclusion set forth in
TIA Section 310 (b) (1) are met.
SECTION 7.11. Preferential Collection of Claims Against
Issuers. The Trustee shall comply with TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). A Trustee who has resigned
or been removed shall be subject to TIA Section 311(a) to the extent indicated.
ARTICLE 8.
Discharge of Indenture; Defeasance
SECTION 8.1. Discharge of Liability on Securities; Defeasance.
(a) When (i) the Issuers deliver to the Trustee all outstanding Securities
(other than Securities replaced pursuant to Section 2.7) for cancellation or
(ii) all outstanding Securities have become due and payable, whether at maturity
or as a result of the mailing of a notice of redemption pursuant to Article 3
hereof and the Issuers irrevocably deposit with the Trustee funds sufficient to
pay at maturity or upon redemption all outstanding Securities, including
interest thereon to maturity or such redemption date (other than Securities
replaced pursuant to Section 2.7), and if in either case the Issuers pay all
other sums payable hereunder by the Issuers, then this Indenture shall, subject
to Sections 8.1(c), cease to be of further effect. The Trustee shall acknowledge
satisfaction and discharge of this Indenture on demand of the Issuers
accompanied by an Officers, Certificate and an opinion of Counsel and at the
cost and expense of the Issuers.
(b) Subject to Sections 8.1(c) and 8.2, the Issuers at any
time may terminate (i) all their obligations under the Securities and this
Indenture ("legal defeasance option") or (ii) their obligations under Sections
4.2, 4.3, 4.4, 4.5, 4.6, 4.7, 4.8, 4.9, 4.10, 4.11, 4.12, 4.13 and 4.16 and the
operation of Sections 6.1(4), 6.1(6), 6.1(7), 6.1(8), 6.1(9) and 6.1(10) (but,
in the case of Sections 6.1(7) and (8), with respect only to Significant
Subsidiaries) and the limitations contained in Sections 5.1(a)(iii) and (iv)
("covenant defeasance option").
-55-
<PAGE> 60
The Issuers may exercise their legal defeasance option notwithstanding their
prior exercise of their covenant defeasance option.
If the Issuers exercise their legal defeasance option, payment
of the Securities may not be accelerated because of an Event of Default with
respect thereto. If the Issuers exercise their covenant defeasance option,
payment of the Securities may not be accelerated because of an Event of Default
specified in Sections 6.1(4), 6.1(6), 6.1(7), 6.1(8), 6.1(9) and 6.1(10) (but,
in the case of Sections 6.1M and (8), with respect only to Significant
Subsidiaries) or because of the failure of the Issuers to comply with Section
5.1(a)(iii) or (iv). If the Issuers exercise their legal defeasance option or
their covenant defeasance option, each Subsidiary Guarantor, if any, shall be
released from all its obligations with respect to its Subsidiary Guaranty.
Upon satisfaction of the conditions set forth herein and upon
request of the Issuers, the Trustee shall acknowledge in writing the discharge
of those obligations that the Issuers terminate.
(c) Notwithstanding clauses (a) and (b) above, the Issuers'
obligations in Sections 2.3, 2.4, 2.5, 2.6, 2.7, 2.8, 7.7 and 7.8 and in this
Article 8 shall survive until the Securities have been paid in full. Thereafter,
the Issuers, obligations in Sections 7.7, 8.4 and 8.5 shall survive.
SECTION 8.2. Conditions to Defeasance. The Issuers may
exercise their legal defeasance option or their covenant defeasance option only
if:
(1) the Issuers irrevocably deposit in trust with the Trustee
money or U.S. Government Obligations for the payment of principal of
and interest on the Securities to maturity or redemption, as the case
may be;
(2) the Issuers deliver to the Trustee a certificate from a
nationally recognized firm of independent accountants expressing their
opinion that the payments of principal and interest when due and
without reinvestment on the deposited U.S. Government Obligations plus
any deposited money without investment will provide cash at such times
and in such amounts as will be sufficient to pay principal and interest
when due on all the Securities to maturity or redemption, as the case
may be;
(3) 123 days pass after the deposit is made and during the
123-day period no Default specified in Sections 6.1[M] or (8) with
respect to the Issuers occurs which is continuing at the end of the
period;
-56-
<PAGE> 61
(4) the deposit does not constitute a default under any other
agreement binding on the Issuers;
(5) the Issuers deliver to the Trustee an opinion of Counsel
to the effect that the trust resulting from the deposit does not
constitute, or is qualified as, a regulated investment company under
the Investment Issuers Act of 1940;
(6) in the case of the legal defeasance option, the Issuers
shall have delivered to the Trustee an opinion of Counsel stating that
(i) the Issuers have received from, or there has been published by, the
Internal Revenue Service a ruling, or (ii) since the Issue Date there
has been a change in the applicable Federal income tax law, in either
case to the effect that, and based thereon such opinion of Counsel
shall confirm that, the Securityholders will not recognize income, gain
or loss for Federal income tax purposes as a result of such defeasance
and will be subject to Federal income tax on the same amounts, in the
same manner and at the same times as would have been the case if such
defeasance had not occurred;
(7) in the case of the covenant defeasance option, the Issuers
shall have delivered to the Trustee an opinion of Counsel to the effect
that the Securityholders will not recognize income, gain or loss for
Federal income tax purposes as a result of such covenant defeasance and
will be subject to Federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such
covenant defeasance had not occurred; and
(8) the Issuers deliver to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent to the defeasance and discharge of the Securities as
contemplated by this Article 8 have been complied with.
Before or after a deposit, the Issuers may make arrangements
satisfactory to the Trustee for the redemption of Securities at a future date in
accordance with Article 3.
SECTION 8.3. Application of Trust Money. The Trustee shall
hold in trust money or U.S. Government Obligations deposited with it pursuant to
this Article 8. It shall apply the deposited money and the money from U.S.
Government Obligations through the Paying Agent and in accordance with this
Indenture to the payment of principal of and interest on the Securities.
SECTION 8.4. Repayment to Issuers. The Trustee and the Paying
Agent shall promptly turn over to the Issuers upon written request any excess
money or securities held by them at any time.
-57-
<PAGE> 62
Subject to any applicable abandoned property law, the Trustee
and the Paying Agent shall pay to the Issuers upon request any money held by
them for the payment of principal or interest that remains unclaimed for two
years, and, thereafter, Securityholders entitled to the money must look to the
Issuers for payment as general creditors.
SECTION 8.5. Indemnity for Government Obligations. The Issuers
shall pay and shall indemnify the Trustee against any tax, fee or other charge
imposed on or assessed against deposited U.S. Government Obligations or the
principal and interest received on such U.S. Government obligations.
SECTION 8.6. Reinstatement. If the Trustee or Paying Agent is
unable to apply any money or U.S. Government obligations in accordance with this
Article 8 by reason of any legal proceeding or by reason of any order or
judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the Issuers, obligations under this
Indenture and the Securities shall be revived and reinstated as though no
deposit had occurred pursuant to this Article 8 until such time as the Trustee
or Paying Agent is permitted to apply all such money or U.S. Government
obligations in accordance with this Article 8; provided, however, that, if the
Issuers have made any payment of interest on or principal of any Securities
because of the reinstatement of their obligations, the Issuers shall be
subrogated to the rights of the Holders of such Securities to receive such
payment from the money or U.S. Government Obligations held by the Trustee or
Paying Agent.
ARTICLE 9.
Amendments
SECTION 9.1. Without Consent of Holders. The Issuers and the
Trustee may amend this Indenture or the Securities without notice to or consent
of any Securityholder:
(1) to cure any ambiguity, omission, defect or inconsistency;
(2) to comply with Article 5;
(3) to provide for uncertificated Securities in addition to or
in place of certificated Securities; provided, however, that the
uncertificated Securities are issued in registered form for purposes of
Section 163(f) of the Code or in a manner such that the uncertificated
Securities are described in Section 163(f)(2)(B) of the Code;
(4) to add guarantees with respect to the Securities,
including any Subsidiary Guaranties, or to secure the
-58-
<PAGE> 63
Securities or to release such guaranties in accordance with the terms
of Section 4.4;
(5) to add to the covenants of the Issuers for the benefit of
the Holders or to surrender any right or power herein conferred upon
the Issuers;
(6) to comply with any requirements of the Commission in
connection with qualifying, or maintaining the qualification of, this
Indenture under the TIA; or
(7) to make any change that does not adversely affect the
rights of any Securityholder.
After an amendment under this Section becomes effective, the
Issuers shall mail to Securityholders a notice briefly describing such
amendment. The failure to give such notice to all Securityholders, or any defect
therein, shall not impair or affect the validity of an amendment under this
Section.
SECTION 9.2. With Consent of Holders. The Issuers and the
Trustee may amend this Indenture or the Securities without notice to any
Securityholder but with the written consent of the Holders of at least a
majority in principal amount of the Securities then outstanding (including
consents obtained in connection with a tender offer or exchange for the
Securities). However, without the consent of each Securityholder affected
thereby, an amendment may not:
(1) reduce the amount of Securities whose Holders must consent
to an amendment;
(2) reduce the rate of or extend the time for payment of
interest on any Security;
(3) reduce the principal of or extend the Stated Maturity of
any Security;
(4) reduce the premium payable upon the redemption of any
Security or change the time at which any Security may be redeemed in
accordance with Article 3;
(5) make any Security payable in money other than that stated
in the Security;
(6) make any change in Section 6.4 or 6.7 or the second
sentence of this Section; or
(7) make any change in any Subsidiary Guaranty that would
adversely affect the Securityholders.
It shall not be necessary for the consent of the Holders under
this Section to approve the particular form of any
-59-
<PAGE> 64
proposed amendment, but it shall be sufficient if such consent approves the
substance thereof.
After an amendment under this Section becomes effective, the
Issuers shall mail to Securityholders a notice briefly describing such
amendment. The failure to give such notice to all Securityholders, or any defect
therein, shall not impair or affect the validity of an amendment under this
Section.
SECTION 9.3. Compliance with Trust Indenture Act. Every
amendment to this Indenture or the Securities shall comply with the TIA as then
in effect.
SECTION 9.4. Revocation and Effect of Consents and Waivers. A
consent to an amendment or a waiver by a Holder of a Security shall bind the
Holder and every subsequent Holder of that Security or portion of the Security
that evidences the same debt as the consenting Holder's Security, even if
notation of the consent or waiver is not made on the Security. However, any such
Holder or subsequent Holder may revoke the consent or waiver as to such Holder's
Security or portion of the Security if the Trustee receives the notice of
revocation before the date the amendment or waiver becomes effective. After an
amendment or waiver becomes effective, it shall bind every Securityholder. An
amendment or waiver becomes effective upon the execution of such amendment or
waiver by the Trustee.
The Issuers may, but shall not be obligated to, fix a record
date for the purpose of determining the Securityholders entitled to give their
consent or take any other action described above or required or permitted to be
taken pursuant to this Indenture. If a record date is fixed, then
notwithstanding the immediately preceding paragraph, those Persons who were
Securityholders at such record date (or their duly designated proxies), and only
those Persons, shall be entitled to give such consent or to revoke any consent
previously given or to take any such action, whether or not such Persons
continue to be Holders after such record date. No such consent shall be valid or
effective for more than 120 days after such record date.
SECTION 9.5. Notation on or Exchange of Securities. If an
amendment changes the terms of a Security, the Trustee may require the Holder of
the Security to deliver it to the Trustee. The Trustee may place an appropriate
notation on the Security regarding the changed terms and return it to the
Holder. Alternatively, if the Issuers or the Trustee so determines, the Issuers
in exchange for the Security shall issue and the Trustee shall authenticate a
new Security that reflects the changed terms. Failure to make the appropriate
notation or to issue a new security shall not affect the validity of such
amendment.
SECTION 9.6. Trustee To Such Amendments. The Trustee shall
sign any amendment authorized pursuant to this Article 9 if
-60-
<PAGE> 65
the amendment does not adversely affect the rights, duties, liabilities or
immunities of the Trustee. If it does, the Trustee may but need not sign it. In
signing such amendment the Trustee shall be entitled to receive indemnity
reasonably satisfactory to it and to receive, and (subject to Section 7.1) shall
be fully protected in relying upon, an Officers' Certificate and an Opinion of
Counsel stating that such amendment is authorized or permitted by this
Indenture.
SECTION 9.7. Payment for Consent. Neither the Issuers nor any
Affiliate of the Issuers shall, directly or indirectly, pay or cause to be paid
any consideration, whether by way of interest, fee or otherwise, to any Holder
for or as an inducement to any consent, waiver or amendment of any of the terms
or provisions of this Indenture or the Securities unless such consideration is
offered to be paid to all Holders that so consent, waive or agree to amend (and,
if appropriate, tender their Securities) in the time frame set forth in
solicitation documents relating to such consent, waiver or agreement.
ARTICLE 10.
Subsidiary Guaranties
SECTION 10.1. Guaranties. Each Subsidiary Guarantor hereby
unconditionally and irrevocably guarantees, jointly and severally, to each
Holder and to the Trustee and its successors and assigns (a) the full and
punctual payment of principal of and interest on the Securities when due,
whether at maturity, by acceleration, by redemption or otherwise, and all other
monetary obligations of the Issuers under this Indenture and the securities and
(b) the full and punctual performance within applicable grace periods of all
other obligations of the Issuers under this Indenture and the Securities (all
the foregoing being hereinafter collectively called the "Obligations"). Each
Subsidiary Guarantor further agrees that the Obligations may be extended or
renewed, in whole or in part, without notice or further assent from such
Subsidiary Guarantor and that such Subsidiary Guarantor will remain bound under
this Article 10 notwithstanding any extension or renewal of any Obligation.
Each Subsidiary Guarantor waives presentation to, demand of,
payment from and protest to the Issuers of any of the obligations and also
waives notice of protest for nonpayment. Each Subsidiary Guarantor waives notice
of any default under the Securities or the Obligations. The Obligations of each
Subsidiary Guarantor hereunder shall not be affected by (a) the failure of any
Holder or the Trustee to assert any claim or demand or to enforce any right or
remedy against the Issuers or any other Person under this Indenture, the
Securities or any other agreement or otherwise; (b) any extension or renewal of
any thereof; (c) any rescission, waiver, amendment or modification of any of the
terms or provisions of this Indenture, the Securities
-61-
<PAGE> 66
or any other agreement; (d) the release of any security held by any Holder or
the Trustee for the Obligations or any of them; (e) the failure of any Holder or
the Trustee to exercise any right or remedy against any other guarantor of the
Obligations; or (f) any change in the ownership of such Subsidiary Guarantor.
Each Subsidiary Guarantor further agrees that its Subsidiary
Guaranty herein constitutes a guarantee of payment, performance and compliance
when due (and not a guarantee of collection) and waives any right to require
that any resort be had by any Holder or the Trustee to any security held for
payment of the Obligations.
Except as expressly set forth in Sections 8.1(b), 10.2 and
10.6, the obligations of each Subsidiary Guarantor hereunder shall not be
subject to any reduction, limitation, impairment or termination for any reason,
including any claim of waiver, release, surrender, alteration or compromise, and
shall not be subject to any defense of setoff, counterclaim, recoupment or
termination whatsoever or by reason of the invalidity, illegality or
unenforceability of the Obligations or otherwise. Without limiting the
generality of the foregoing, the Obligations of each Subsidiary Guarantor herein
shall not be discharged or impaired or otherwise affected by the failure of any
Holder or the Trustee to assert any claim or demand or to enforce any remedy
under this Indenture, the Securities or any other agreement, by any waiver or
modification of any thereof, by any default, failure or delay, willful or
otherwise, in the performance of the obligations, or by any other act or thing
or omission or delay to do any other act or thing which may or might in any
manner or to any extent vary the risk of such Subsidiary Guarantor or would
otherwise operate as a discharge of such Subsidiary Guarantor as a matter of law
or equity.
Each Subsidiary Guarantor further agrees that its Guarantee
herein shall continue to be effective or be reinstated, as the case may be, if
at any time payment, or any part thereof, of principal of or interest on any
obligation is rescinded or must otherwise be restored by any Holder or the
Trustee upon the bankruptcy or reorganization of the Issuers or otherwise.
In furtherance of the foregoing and not in limitation of any
other right which any Holder or the Trustee has at law or in equity against any
Subsidiary Guarantor by virtue hereof, upon the failure of the Issuers to pay
the principal of or interest on any obligation when and as the same shall become
due, whether at maturity, by acceleration, by redemption or otherwise, or to
perform or comply with any other obligation, each Subsidiary Guarantor hereby
promises to and will, upon receipt of written demand by the Trustee, forthwith
pay, or cause to be paid, in cash, to the Holders or the Trustee an amount equal
to the sum of (i) the unpaid amount of such obligations, (ii) accrued and unpaid
interest on such Obligations (but only to the extent not
-62-
<PAGE> 67
prohibited by law) and (iii) all other monetary Obligations of the Issuers to
the Holders and the Trustee.
Each Subsidiary Guarantor agrees that, as between it, on the
one hand, and the Holders and the Trustee, on the other hand, (x) the maturity
of the Obligations Guaranteed hereby may be accelerated as provided in Article 6
for the purposes of such Subsidiary Guarantor's Subsidiary Guaranty herein,
notwithstanding any stay, injunction or other prohibition preventing such
acceleration in respect of the obligations guaranteed hereby, and (y) in the
event of any declaration of acceleration of such Obligations as provided in
Article 6, such Obligations (whether or not due and payable) shall forthwith
become due and payable by such Subsidiary Guarantor for the purposes of this
Section.
Each Subsidiary Guarantor also agrees to pay any and all costs
and expenses (including reasonable attorneys, fees and expenses) incurred by the
Trustee or any Holder in enforcing any rights under this Section.
SECTION 10.2. Limitation on Liability. Any term or provision
of this Indenture to the contrary notwithstanding, the maximum, aggregate amount
of the obligations guaranteed hereunder by any Subsidiary Guarantor shall not
exceed the maximum amount that can be hereby guaranteed without rendering this
Indenture, as it relates to such Subsidiary Guarantor, voidable under applicable
law relating to fraudulent conveyance or fraudulent transfer or similar laws
affecting the rights of creditors generally.
SECTION 10.3. Successors and Assigns. This Article 10 shall be
binding upon each Subsidiary Guarantor and its successors and assigns and shall
ensure to the benefit of the successors and assigns of the Trustee and the
Holders and, in the event of any transfer or assignment of rights by any Holder
or the Trustee, the rights and privileges conferred upon that party in this
Indenture and in the Securities shall automatically extend to and be vested in
such transferee or assignee, all subject to the terms and conditions of this
Indenture.
SECTION 10.4. No Waiver. Neither a failure nor a delay on the
part of either the Trustee or the Holders in exercising any right, power or
privilege under this Article 10 shall operate as a waiver thereof, nor shall a
single or partial exercise thereof preclude any other or further exercise of any
right, power or privilege. The rights, remedies and benefits of the Trustee and
the Holders herein expressly specified are cumulative and not exclusive of any
other rights, remedies or benefits which either may have under this Article 10
at law, in equity, by statute or otherwise.
-63-
<PAGE> 68
SECTION 10.5. Modification. No modification, amendment or
waiver of any provision of this Article 10, nor the consent to any departure by
any Subsidiary Guarantor therefrom, shall in any event be effective unless the
same shall be in writing and signed by the Trustee, and then such waiver or
consent shall be effective only in the specific instance and for the purpose for
which given. No notice to or demand on any Subsidiary Guarantor in any case
shall entitle such Subsidiary Guarantor to any other or further notice or demand
in the same, similar or other circumstances.
SECTION 10.6. Release of Subsidiary Guarantor. Upon the sale
or other disposition (including by way of consolidation or merger) of a
Subsidiary Guarantor or the sale or disposition of all or substantially all the
assets of such Subsidiary Guarantor (in each case other than to the Issuers or
an Affiliate of the Issuers), such Subsidiary Guarantor shall be deemed released
from all Obligations under this Article 10 without any further action required
on the part of the Trustee or any Holder. At the request of the Issuers, the
Trustee shall execute and deliver an appropriate instrument evidencing such
release.
ARTICLE 11.
Subordination of Securities
SECTION 11.1. Securities Subordinated to Senior Indebtedness.
The Issuers covenant and agree, and each Holder of Securities, by his acceptance
thereof, likewise covenants and agrees, that the indebtedness represented by the
Securities and the payment of the principal of (and premium, if any) and
interest and any Additional Amounts payable in respect of each and all of the
Securities is hereby expressly subordinated, to the extent and in the manner
hereinafter set forth, in right of payment to the prior payment in full of
Senior Indebtedness.
In the event (a) of any distribution of assets of the Issuers
upon any dissolution, winding up, liquidation or reorganization of the Issuers
whether in bankruptcy, insolvency, reorganization or receivership proceeding or
upon an assignment for the benefit of creditors or any other marshalling of the
assets and liabilities of the Issuers or otherwise, except a distribution in
connection with a merger or consolidation or a conveyance or transfer of all or
substantially all of the properties of the Issuers which complies with the
requirements of Article 4, or (b) that a default shall have occurred and be
continuing with respect to the payment of principal of (or premium, if any) or
interest on or any Additional Amounts payable in respect of any Senior
Indebtedness, or (c) that the principal of the Securities of any series (or in
the case of Original Issue Discount Securities, the portion of the principal
amount thereof referred to in Section 502) shall have been declared due and
payable pursuant to Section 502 and such declaration shall not
-64-
<PAGE> 69
have been rescinded and annulled as provided in Section 502, then:
(1) in a circumstance described in the foregoing clause (a) or
(b) the holders of all Senior Indebtedness, and in the circumstance
described in the foregoing clause (c) the holders of all Senior
Indebtedness outstanding at the time the principal of such Securities
(or in the case of Original Issue Discount Securities, such portion of
the principal amount) shall have been so declared due and payable,
shall first be entitled to receive payment of the full amount due
thereon in respect of principal, premium (if any), Interest and
Additional Amounts, or provision shall be made for such payment in
money or money's worth, before the Holders of any of the Securities are
entitled to receive any payment on account of the principal of (or
premium, if any) or interest on or any Additional Amounts in respect of
the indebtedness evidenced by the Securities;
(2) any payment by, or distribution of assets of, the Issuers
of any kind or character, whether in cash, property or securities
(other than securities of the Issuers as reorganized or readjusted or
securities of the Issuers or any other corporation provided for by a
plan of reorganization or readjustment the payment of which is
subordinate, at least to the extent provided in this Article with
respect to the securities, to the payment of all Senior Indebtedness,
provided that the rights of the holders of the Senior Indebtedness are
not altered by such reorganization or readjustment), to which the
Holders of any of the Securities would be entitled except for the
provisions of this Article shall be paid or delivered by the person
making such payment or distribution, whether a trustee in bankruptcy, a
receiver or liquidating trustee or otherwise, directly to the holders
of such Senior Indebtedness or their representative or representatives
or to the trustee or trustees under any indenture under which any
instrument evidencing any of such Senior Indebtedness may have been
issued, ratably according to the aggregate amounts remaining unpaid on
account of such Senior Indebtedness held or represented by each, to the
extent necessary to make payment in full of all Senior Indebtedness
remaining unpaid after giving effect to any concurrent payment or
distribution (or provision therefor) to the holders of such Senior
Indebtedness, before any payment or distribution is made to the Holders
of the indebtedness evidenced by the Securities under this Indenture;
and
(3) in the event that, notwithstanding the foregoing, any
payment by, or distribution of assets of, the Issuers of any kind or
character, whether in cash, property or securities (other than
securities of the Issuers as reorganized or readjusted or securities of
the Issuers or
-65-
<PAGE> 70
any other corporation provided for by a plan of reorganization or
readjustment the payment of which is subordinate, at least to the
extent provided in this Article with respect to the Securities, to the
payment of all Senior Indebtedness, provided that the rights of the
holders of Senior Indebtedness are not altered by such reorganization
or readjustment), shall be received by the Holders of any of the
Securities before all Senior Indebtedness is paid in full, such payment
or distribution shall be paid over to the holders of such Senior
Indebtedness or their representative or representatives or to the
trustee or trustees under any indenture under which any instruments
evidencing any of such Senior Indebtedness may have been issued,
ratably as aforesaid, for application to the payment of all Senior
Indebtedness remaining unpaid until all such Senior Indebtedness shall
have been paid in full, after giving effect to any concurrent payment
or distribution (or provision therefor) to the holders of such Senior
Indebtedness.
SECTION 11.2. Subrogation. Subject to the payment in full of
all Senior Indebtedness to which the indebtedness evidenced by the Securities is
in the circumstances subordinated, as provided in Section 11.1, the Holders of
the Securities shall be subrogated to the rights of the holders of such Senior
Indebtedness to receive payments or distributions of cash, property or
securities of the Issuers applicable to such Senior Indebtedness until all
amounts owing on the Securities shall be paid in full, and, as between the
Issuers, their creditors other than holders of such Senior Indebtedness, and the
Holders of the Securities, no such payment or distribution made to the holders
of such Senior Indebtedness by virtue of this Article which otherwise would have
been made to the Holders of the Securities shall be deemed to be a payment by
the Issuers on account of such Senior Indebtedness, it being understood that the
provisions of this Article are and are intended solely for the purpose of
defining the relative rights of the Holders of the Securities, on the one hand,
and the holders of Senior Indebtedness.
SECTION 11.3. Obligation of the Issuers Unconditional. Nothing
contained in this Article or elsewhere in this Indenture or in the Securities is
intended to or shall impair, as between the Issuers, their creditors other than
the holders of Senior Indebtedness, and the Holders of the Securities, the
obligation of the Issuers, which is absolute and unconditional, to pay to the
Holders of the Securities the principal of (and premium, if any) and interest on
and any Additional Amounts in respect of the Securities as and when the same
shall become due and payable in accordance with their terms, or is intended to
or shall affect the relative rights of the Holders of the Securities and
creditors of the Issuers other than the holders of Senior Indebtedness nor shall
anything herein or therein prevent the Trustee or the Holder of any Security
from exercising all
-66-
<PAGE> 71
remedies otherwise permitted by applicable law upon default under this
Indenture, subject to the rights, if any, under this Article of the holders of
Senior Indebtedness in respect of cash, property or securities of the Issuers
received upon the exercise of any such remedy.
Upon any payment or distribution of assets of the Issuers
referred to in this Article, the Trustee and the Holders of the Securities shall
be entitled to rely upon any order or decree made by any court of competent
jurisdiction in which any such dissolution, winding up, liquidation or
reorganization proceeding affecting the affairs of the Issuers is pending or
upon a certificate of the trustee in bankruptcy, receiver, assignee for the
benefit of creditors, liquidating trustee or agent or other person making any
payment or distribution, delivered to the Trustee or to the Holders of the
Securities, for the purpose of ascertaining the persons entitled to participate
in such payment or distribution, the holders of the Senior Indebtedness and
other indebtedness of the Issuers, the amount thereof or payable thereon, the
amount paid or distributed thereon and all other facts pertinent thereto or to
this Article.
SECTION 11.4. Payments on Securities Permitted. Nothing
contained in this Article or elsewhere in this Indenture, or in any of the
Securities, shall affect the obligation of the Issuers to make, or prevent the
Issuers from making, payment of the principal of (or premium, if any) or
interest on or any Additional Amounts in respect of the Securities in accordance
with the provisions hereof and thereof, except as otherwise provided in this
Article.
SECTION 11.5. Effectuation of Subordination by Trustee. Each
Holder of the Securities, by his acceptance thereof, authorizes and directs the
Trustee in his behalf to take such action as may be necessary or appropriate to
effectuate the subordination provided in this Article and appoints the Trustee
his attorney-in-fact for any and all such purposes.
SECTION 11.6. Knowledge of Trustee. Notwithstanding the
provisions of this Article or any other provisions of this Indenture, the
Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior
Indebtedness and shall not be charged with knowledge of the existence of any
facts which would prohibit the making of any payment or moneys to or by the
Trustee, or the taking of any other action by the Trustee, unless and until the
Trustee shall have received written notice thereof from the Issuers, any Holder
of Securities, any paying or conversion agent of the Issuers or the holder or
representative of any class of Senior Indebtedness; provided, however, that if
the Trustee shall not have received the notice provided for in this Section at
least 3 Business Days prior to the date upon which, by the terms hereof, any
money may become payable for any purpose (including, without limitation, the
payment of the
-67-
<PAGE> 72
principal of (or premium, if any) or interest on, or Additional Amounts in
respect of, any Security) then, anything herein contained to the contrary
notwithstanding, the Trustee shall have all power and authority to receive such
money and to apply the same to the purpose for which such money was received and
shall not be affected by any notice to the contrary which may be received by it
during or after such 3 Business Day period.
SECTION 11.7. Trustee May Hold Senior Indebtedness. The
Trustee in its individual capacity shall be entitled to all the rights set forth
in this Article with respect to any Senior Indebtedness at the time held by it,
to the same extent as any other holder of Senior Indebtedness, and nothing in
Section 313 of the Trust Indenture Act or elsewhere in this Indenture shall
deprive the Trustee of any of its rights as such holder.
Nothing in this Article shall subordinate any claims of, or
payments to, the Trustee (under or pursuant to Section 7.7) to Senior
Indebtedness.
SECTION 11.8. Rights of Holders of Senior Indebtedness Not
Impaired. No right of any present or future holder of any Senior Indebtedness to
enforce the subordination herein shall at any time or in any way be prejudiced
or impaired by any act or failure to act on the part of the Issuers or by any
non-compliance by the Issuers with the terms, provisions and covenants of this
Indenture, regardless or any knowledge thereof any such holder may have or be
otherwise charged with.
ARTICLE 12.
Miscellaneous
SECTION 12.1. Trust Indenture Act Controls. If any provision
of this Indenture limits, qualifies or conflicts with another provision which is
required to be included in this Indenture by the TIA, the required provision
shall control.
SECTION 12.2. Notices. Any notice or communication shall be in
writing and delivered in person or mailed by first-class mail addressed as
follows:
if to the Issuers:
Globalstar, L.P.
Globalstar Capital Corporation
3200 Zanker Road
San Jose, California 95164-0670
Attention: Secretary
Facsimile: (408) 473-5040
-68-
<PAGE> 73
if to the Trustee:
The Bank of New York
101 Barclay Street, Floor 21 West
New York, NY 10286
Attention: Corporate Trust Administration
Facsimile: (212) 815-5915
The Issuers or the Trustee by notice to the other may
designate additional or different addresses for subsequent notices or
communications.
Any notice or communication mailed to a Securityholder shall
be mailed to the Securityholder at the Securityholder's address as it appears on
the registration books of the Registrar and shall be sufficiently given if so
mailed within the time prescribed.
Failure to mail a notice or communication to a Securityholder
or any defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.
SECTION 12.3. Communication by Holders with Other Holders.
Securityholders may communicate pursuant to TIA Section 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Issuers, the Trustee, the Registrar and anyone else shall have
the protection of TIA Section 312(c).
SECTION 12.4. Certificate and opinion as to Conditions
Precedent. Upon any request or application by the Issuers to the Trustee to take
or refrain from taking any action under this Indenture, the Issuers shall
furnish to the Trustee:
(1) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of the
signers, all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with; and
(2) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
SECTION 12.5. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a covenant or
condition provided for in this Indenture shall include:
-69-
<PAGE> 74
(1) a statement that the individual making such certificate or
opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such individual, he
has made such examination or investigation as is necessary to enable
him to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(4) a statement as to whether or not, in the opinion of such
individual, such covenant or condition has been complied with.
SECTION 12.6. When Securities Disregarded. In determining
whether the Holders of the required principal amount of Securities have
concurred in any direction, waiver or consent, Securities owned by the Issuers
or by any Person directly or indirectly controlling or controlled by or under
direct or indirect common control with the Issuers shall be disregarded and
deemed not to be outstanding, except that, for the purpose of determining
whether the Trustee shall be protected in relying on any such direction, waiver
or consent, only Securities which a Trust Officer of the Trustee actually knows
are so owned shall be so disregarded. Also, subject to the foregoing, only
Securities outstanding at the time shall be considered in any such
determination.
SECTION 12.7. Rules by Trustee, Paying Agent and Registrar.
The Trustee may make reasonable rules for action by or a meeting of
Securityholders. The Registrar and the Paying Agent may make reasonable rules
for their functions.
SECTION 12.8. Legal Holidays. A "Legal Holiday" is a Saturday,
a Sunday or a day on which banking institutions are not required to be open in
the State of New York. If a payment date is a Legal Holiday, payment shall be
made on the next succeeding day that is not a Legal Holiday, and no interest
shall accrue for the intervening period. If a regular record date is a Legal
Holiday, the record date shall not be affected.
SECTION 12.9. Governing Law. This Indenture and the Securities
shall be governed by, and construed in accordance with, the laws of the State of
New York but without giving effect to applicable principles of conflicts of law
to the extent that the application of the laws of another jurisdiction would be
required thereby.
-70-
<PAGE> 75
SECTION 12.10. No Recourse Against Others. Any past, present
or future director, officer, partner (including any general partner) employee,
incorporator or stockholder, as such, of the Issuers shall not have any
liability for any obligations of the Issuers under the Securities or this
Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. By accepting a Security, each Securityholder
shall waive and release all such liability. The waiver and release shall be part
of the consideration for the issue of the Securities.
SECTION 12.11. Successors. All agreements of the Issuers in
this Indenture and the Securities shall bind their successors. All agreements of
the Trustee in this Indenture shall bind its successors.
SECTION 12.12. Multiple Originals. The parties may sign any
number of copies of this Indenture. Each signed copy shall be an original, but
all of them together represent the same agreement. One signed copy is enough to
prove this Indenture.
SECTION 12.13. Table of Contents; Headings. The table of
contents, cross-reference sheet and headings of the Articles and Sections of
this Indenture have been inserted for convenience of reference only, are not
intended to be considered a part hereof and shall not modify or restrict any of
the terms or provisions hereof.
-71-
<PAGE> 76
IN WITNESS WHEREOF, the parties have caused this Indenture to
be duly executed as of the date first written above.
GLOBALSTAR, L.P.,
by
LORAL/QUALCOMM SATELLITE
SERVICES, L.P., its managing
general partner,
by
LORAL/QUALCOMM PARTNERSHIP,
L.P. its general partner
by
LORAL GENERAL PARTNER, INC.,
its general partner
by
----------------------------------
Name:
Title:
GLOBALSTAR CAPITAL CORPORATION,
by
----------------------------------
Name:
Title:
THE BANK OF NEW YORK, as Trustee
by
----------------------------------
Name:
Title:
-72-
<PAGE> 77
Dated:
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
THE BANK OF NEW YORK as Trustee, certifies that this is one of the Securities
referred to in the Indenture.
by
----------------------------------
Authorized Signatory
- -------------------
*/ If the Security is to be issued in global form add the Global Securities
Legend from Exhibit 1 to the Rule 144A Appendix and the attachment from such
Exhibit 1 captioned "[TO BE ATTACHED TO GLOBAL SECURITIES] - SCHEDULE OF
INCREASES OR DECREASES IN GLOBAL SECURITY".
**/ If the Security is a Private Exchange Security issued in a Private Exchange
to an Initial Purchaser holding an unsold portion of its initial allotment, add
the Restricted Securities Legend from Exhibit 1 to the Rule 144A Appendix and
replace the Assignment Form included in this Exhibit A with the Assignment Form
included in such Exhibit 1.
-73-
<PAGE> 1
Exhibit 4.4
GLOBALSTAR, L.P.
GLOBALSTAR CAPITAL CORPORATION,
Issuers
% Secured Notes due 200
INDENTURE
Dated as of
THE BANK OF NEW YORK,
Trustee
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
ARTICLE 1.
Definitions and Incorporation by Reference
<S> <C> <C>
SECTION 1.1. Definitions............................................................................1
SECTION 1.2. Other Definitions.....................................................................20
SECTION 1.3. Incorporation by Reference of Trust Indenture Act.....................................20
SECTION 1.4. Rules of Construction.................................................................21
ARTICLE 2.
The Securities
SECTION 2.1. Form and Dating.......................................................................22
SECTION 2.2. Execution and Authentication..........................................................22
SECTION 2.3. Registrar and Paying Agent............................................................23
SECTION 2.4. Paying Agent To Hold Money in Trust...................................................23
SECTION 2.5. Securityholder Lists..................................................................23
SECTION 2.6. Transfer and Exchange.................................................................24
SECTION 2.7. Replacement Securities................................................................24
SECTION 2.8. Outstanding Securities................................................................25
SECTION 2.9. Temporary Securities..................................................................25
SECTION 2.10. Cancellation..........................................................................25
SECTION 2.11. Defaulted Interest....................................................................25
SECTION 2.12. CUSIP Numbers.........................................................................26
ARTICLE 3.
Redemption
SECTION 3.1. Notices to Trustee....................................................................26
SECTION 3.2. Selection of Securities To Be Redeemed................................................26
SECTION 3.3. Notice of Redemption..................................................................27
SECTION 3.4. Effect of Notice of Redemption........................................................27
SECTION 3.5. Deposit of Redemption Price...........................................................28
SECTION 3.6. Securities Redeemed in Part...........................................................28
ARTICLE 4.
Covenants
SECTION 4.1. Payment of Securities.................................................................28
SECTION 4.2. SEC Reports...........................................................................28
</TABLE>
(2)
<PAGE> 3
<TABLE>
<CAPTION>
<S> <C> <C>
SECTION 4.3. Limitation on Consolidated Debt.......................................................29
SECTION 4.4. Future Guarantors.....................................................................31
SECTION 4.5. Limitation on Restricted Payments.....................................................31
SECTION 4.6. Dividend and other Payment Restrictions Affecting Subsidiaries........................33
SECTION 4.7. Asset Dispositions....................................................................34
SECTION 4.8. Transactions with Affiliates..........................................................35
SECTION 4.9. Limitation on Issuances and Sales of Capital, Stock of Restricted Subsidiaries........36
SECTION 4.10. Change of Control.....................................................................37
SECTION 4.11. Limitation on Liens...................................................................38
SECTION 4.12. Business Activities...................................................................40
SECTION 4.13. Maintenance of Insurance..............................................................40
SECTION 4.14. Compliance certificate; Statement by officers as to Default...........................42
SECTION 4.15. Further Instruments and Acts..........................................................42
SECTION 4.16. Business Activities of Globalstar Capital.............................................42
SECTION 4.17. Calculation of Original Issue Discount................................................42
ARTICLE 5.
Successor Issuers
SECTION 5.1. When Issuers May Merge or Transfer Assets.............................................42
ARTICLE 6.
Defaults and Remedies
SECTION 6.1. Events of Default.....................................................................44
SECTION 6.2. Acceleration..........................................................................46
SECTION 6.3. Other Remedies........................................................................46
SECTION 6.4. Waiver of Past Defaults...............................................................47
SECTION 6.5. Control by Majority...................................................................47
SECTION 6.6. Limitation on Suits...................................................................47
SECTION 6.7. Rights of Holders to Receive Payment..................................................48
SECTION 6.8. Collection Suit by Trustee............................................................48
SECTION 6.9. Trustee May File Proofs Claim.........................................................48
SECTION 6.10. Priorities............................................................................48
SECTION 6.11. Undertaking for Costs.................................................................49
SECTION 6.12. Waiver of Stay or Extension Laws......................................................49
ARTICLE 7.
Trustee
SECTION 7.1. Duties of Trustee.....................................................................49
</TABLE>
(3)
<PAGE> 4
<TABLE>
<CAPTION>
<S> <C> <C>
SECTION 7.2. Rights of Trustee.....................................................................50
SECTION 7.3. Individual Rights of Trustee..........................................................51
SECTION 7.4. Trustee's Disclaimer..................................................................51
SECTION 7.5. Notice of Defaults....................................................................51
SECTION 7.6. Reports by Trustee to Holders.........................................................52
SECTION 7.7. Compensation and Indemnity............................................................52
SECTION 7.8. Replacement of Trustee................................................................53
SECTION 7.9. Successor Trustee by Merger...........................................................54
SECTION 7.10. Eligibility: Disqualification.........................................................54
SECTION 7.11. Preferential Collection of Claims Against Issuers.....................................54
ARTICLE 8.
Discharge of Indenture; Defeasance
SECTION 8.1. Discharge of Liability on Securities; Defeasance......................................54
SECTION 8.2. Conditions to Defeasance..............................................................55
SECTION 8.3. Application of Trust Money............................................................57
SECTION 8.4. Repayment to Issuers..................................................................57
SECTION 8.5. Indemnity for Government Obligations..................................................57
SECTION 8.6. Reinstatement.........................................................................57
ARTICLE 9.
Amendments
SECTION 9.1. Without Consent of Holders............................................................57
SECTION 9.2. With Consent of Holders...............................................................58
SECTION 9.3. Compliance with Trust Indenture Act...................................................59
SECTION 9.4. Revocation and Effect of Consents and Waivers.........................................59
SECTION 9.5. Notation on or Exchange of Securities.................................................60
SECTION 9.6. Trustee To Such Amendments............................................................60
SECTION 9.7. Payment for Consent...................................................................60
ARTICLE 10.
Security
SECTION 10.1. Security Documents....................................................................60
SECTION 10.2. Opinions of Counsel...................................................................61
SECTION 10.3. Release and Substitution of Collateral................................................61
SECTION 10.4. Certificates of the Issuers...........................................................62
SECTION 10.5. Authorization of Actions to be Taken by the Trustee Under the Security
Documents.........................................................................63
SECTION 10.6. Authorization of Receipt of Funds by the Trustee Under the Security Documents.........63
SECTION 10.7. Release Upon Termination of the Issuers' Obligations..................................63
</TABLE>
(4)
<PAGE> 5
<TABLE>
<CAPTION>
<S> <C> <C>
ARTICLE 11.
Subsidiary Guaranties
SECTION 11.1. Guaranties............................................................................64
SECTION 11.2. Limitation on Liability...............................................................66
SECTION 11.3. Successors and Assigns................................................................66
SECTION 11.4. No Waiver.............................................................................66
SECTION 11.5. Modification..........................................................................66
SECTION 11.6. Release of Subsidiary Guarantor.......................................................66
ARTICLE 12.
Miscellaneous
SECTION 12.1. Trust Indenture Act Controls..........................................................67
SECTION 12.2. Notices...............................................................................67
SECTION 12.3. Communication by Holders with Other Holders...........................................67
SECTION 12.4. Certificate and opinion as to Conditions Precedent....................................68
SECTION 12.5. Statements Required in Certificate or Opinion.........................................68
SECTION 12.6. When Securities Disregarded...........................................................68
SECTION 12.7. Rules by Trustee, Paying Agent and Registrar..........................................69
SECTION 12.8. Legal Holidays........................................................................69
SECTION 12.9. Governing Law.........................................................................69
SECTION 12.10. No Recourse Against Others............................................................69
SECTION 12.11. Successors............................................................................69
SECTION 12.12. Multiple Originals....................................................................69
SECTION 12.13. Table of Contents; Headings...........................................................69
</TABLE>
(5)
<PAGE> 6
INDENTURE dated as of , , among Globalstar, L.P., a
Delaware limited partnership ("Globalstar"), Globalstar Capital Corporation, a
Delaware corporation ("Globalstar Capital" and, together with Globalstar, the
"Issuers") and The Bank of New York, a New York banking corporation (the
"Trustee").
Each party hereto agrees as follows for the benefit of the other party
and for the equal and ratable benefit of the Holders of the Securities.
ARTICLE 1.
Definitions and Incorporation by Reference
SECTION 1.1. Definitions.
"Acquired Debt" means, with respect to any specified Person, (i) Debt
of any other Person existing at the time such Person merges with or into or
consolidates with or becomes a Restricted Subsidiary of such specified Person
and (ii) Debt secured by a Lien encumbering any asset acquired by such specified
Person, which Debt or Lien was not Incurred in anticipation of, and was
outstanding prior to, such merger, consolidation or acquisition.
"Affiliate" of any Person means any other Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
such specified Person. For the purposes of this definition, "control" when used
with respect to any Person means the power to direct the management and policies
of such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; provided, however, that beneficial
ownership of 10% or more of the voting securities of a Person shall be deemed to
be control. The terms "controlling" and "controlled" have meanings correlative
to the foregoing.
"Asset Disposition" means any transfer, conveyance, sale, lease or
other disposition (collectively, any "disposition") by the Issuers or any
Restricted Subsidiary (including any disposition by means of a consolidation,
merger or similar transaction) but excluding a disposition by a Restricted
Subsidiary to the Issuers or a Wholly-Owned Restricted Subsidiary or by the
Issuers to a Wholly-Owned Restricted Subsidiary of shares of Capital Stock or
other ownership interests of a Restricted Subsidiary, (ii) all or substantially
all of the assets of the Issuers or any Restricted Subsidiary representing a
division or line of business or (iii) other assets or rights of such Person or
any of its Restricted Subsidiaries other than a disposition (a) in the ordinary
course of business, (b) that constitutes a Restricted Payment which is permitted
pursuant to Section 4.5 or (c) that is subject to the provisions set forth in
Section 5.1(a); provided, however, that a transaction described in clauses (i),
(ii) and (iii) shall constitute an Asset Disposition only to the extent that the
aggregate consideration for all such transfers, conveyances, sales, leases or
other disposition exceeds $5 million in any 12-month period.
"Attributable Debt" in respect of a Sale and Leaseback Transaction
means, as at the time of determination, the present value (discounted at the
interest
-6-
<PAGE> 7
rate borne by the Securities, compounded annually) of the total obligations of
the lessee for rental payments during the remaining term of the lease included
in such Sale and Leaseback Transaction (including any period for which such
lease has been extended).
"Average Life" means, as of the date of determination with respect to
any Debt or Preferred Stock, the quotient obtained by dividing (i) the sum of
the products of the numbers of years from the date of determination to the dates
of each successive scheduled principal payment of such Debt or redemption or
similar payment with respect to such Preferred Stock multiplied by the amount of
such payment by (ii) the sum of all such payments.
"Bank Credit Agreement" means any one or more credit agreements (which
may include or consist of revolving credits) between Globalstar, Globalstar
Capital or any Restricted Subsidiary and one or more banks or other financial
institutions providing financing for the business of Globalstar and its
Restricted Subsidiaries.
"Build-out" means the construction, acquisition, improvement, operation
and development (including all costs related thereto) of the Globalstar System,
until such time as Globalstar shall have constructed at least satellites
for use in the Globalstar System; (ii) launched or attempted to launch (through
"intentional ignition") at least satellites for use in the Globalstar
System; and (iii) commenced commercial service of the Globalstar System with at
least satellites in orbit and Operating.
"Business Day" means each day which is not a Legal Holiday.
"Capital Lease Obligation" of any Person means an obligation that is
required to be classified and accounted for as a capital lease or a liability on
the face of a balance sheet of such Person in accordance with GAAP (a "Capital
Lease"). The Stated Maturity of such obligation shall be the date of the last
payment of rent or any other amount due under such lease prior to the first date
upon which such lease may be terminated by the lessee without payment of a
penalty. The amount of such Debt represented by such obligation shall be the
capitalized amount thereof that would appear on the face of a balance sheet of
such Person in accordance with GAAP.
"Capital Stock" of any Person means any and all shares, interests,
participations or other equivalents (however designated) of corporate stock or
other equity participations, including partnership interests, whether general or
limited, of such Person and shall (i) include any Special Preferred obligations
and other preferred equivalent obligations and (ii) exclude debt securities
convertible into Capital Stock.
"Change of Control" means:
(i) the sale, lease or transfer, in one transaction or a
series of related transactions, of all or substantially all the assets
of Globalstar and the Restricted Subsidiaries;
-7-
<PAGE> 8
(ii) the adoption of a plan relating to the liquidation
or dissolution of Globalstar or Globalstar Capital;
(iii) one or more Dispositions which cause Loral's direct
and indirect equity interest in Globalstar to be reduced by more than
30% as compared to its direct and indirect equity interest in
Globalstar as of December 31, 1996; or
(iv) the first day on which:
(a) Globalstar fails to own, of record and beneficially, 100% of the equity
interests and voting stock of Globalstar Capital; or
(b) Loral fails to be, or, directly or indirectly, fails solely to control, the
sole managing general partner of Globalstar.
Notwithstanding clauses (i), (ii) and (iv)(b) above, neither the
acquisition by GTL, Loral or any Wholly Owned Subsidiary of Loral of a majority
of the partnership interests in, or substantially all the assets of, Globalstar,
nor the merger of Globalstar with and into GTL, Loral or any Wholly Owned
Subsidiary of Loral shall constitute a Change of Control; provided, however,
that with respect to clause (iv)(b), Loral continues to control, or is the
corporate successor to, Globalstar.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral" means any assets of the Issuers or any of their
Subsidiaries defined as "Collateral" in any of the Security Documents and assets
from time to time in which a Lien exists as security for any of the Obligations
of the Securities.
"Collateral Agent" means the Collateral Agent as defined in the
Security Agreement.
"Commission" means the Securities and Exchange Commission and any
survivor agency.
"Consolidated Cash Flow Available for Fixed Charges" for any period
means the Consolidated Net Income of Globalstar and its Restricted Subsidiaries
for such period plus Consolidated Interest Expense of Globalstar and its
Restricted Subsidiaries for such period, plus the following to the extent
deducted in calculating such Consolidated Net Income: (i) Consolidated Income
Tax Expense of Globalstar and its Restricted Subsidiaries for such period, (ii)
the consolidated depreciation and amortization expense included in the income
statement of Globalstar and its Restricted Subsidiaries for such period and
(iii) any non-cash expense related to the issuance to employees of Globalstar or
any Restricted Subsidiary of Globalstar of options to purchase Capital Stock of
Globalstar or such Restricted Subsidiary; provided, however, that there shall be
excluded therefrom the Consolidated Cash Flow Available for Fixed Charges (if
positive) of any Restricted Subsidiary (calculated separately, for such
Restricted Subsidiary in the same manner as provided above for Globalstar) that
is subject to a restriction which prevents the payment of dividends or the
making of
-8-
<PAGE> 9
distributions to Globalstar or another Restricted Subsidiary to the extent of
such restriction; provided, further, however, that if Consolidated Cash Flow
Available For Fixed Charges for any period shall be less than $1, Consolidated
Cash Flow For Fixed Charges for such period shall be deemed to be $1.
"Consolidated Income Tax Expenses" for any period means the
consolidated provision for income taxes of Globalstar and the Restricted
Subsidiaries for such period calculated on a consolidated basis in accordance
with GAAP.
"Consolidated Interest Expense" means, for any period, the consolidated
interest expense included in a consolidated income statement (excluding interest
income) of Globalstar and the Restricted Subsidiaries for such period calculated
on a consolidated basis in accordance with GAAP, plus, to the extent not so
included, cash dividends paid during such period on Special Preferred
Obligations.
"Consolidated Net Income" means, for any period, the consolidated net
income (or loss) of Globalstar and the Restricted Subsidiaries for such period
determined on a consolidated basis in accordance with GAAP, less the amount of
any cash dividends paid during such period on Special Preferred Obligations;
provided, however, that there shall be excluded therefrom (i) the net income (or
loss) of any Person acquired by Globalstar or a Restricted Subsidiary in a
pooling-of-interests transaction for any period prior to the date of such
transaction, (ii) the net income (and loss) of any Person that is not a
Restricted Subsidiary except to the extent of the amount of dividends or other
distributions actually paid to Globalstar or a Restricted Subsidiary by such
Person during such period, (iii) gains (but not losses) on Asset Dispositions by
Globalstar or any Restricted Subsidiary, (iv) all extraordinary gains and
losses, (v) the cumulative effect of changes in accounting principles, (vi)
non-cash gains or losses resulting from fluctuations in currency exchange rates,
(vii) any noncash gain or loss realized on the termination of any employee
pension benefit plan and (viii) the tax effect of any of the items described in
clauses (i) through (vii) above; provided further, however, that for purposes of
any determination pursuant to the provisions of Section 4.5, (a) there shall
further be excluded therefrom the net income (but not net loss) of any
Restricted Subsidiary that is subject to a restriction which prevents the
payment of dividends or the making of distributions to Globalstar or another
Restricted Subsidiary of Globalstar to the extent of such restriction and (b)
there shall further be deducted therefrom an amount equal to the Tax Amount paid
by Globalstar during such period.
"Consolidated Net Worth" of any Person means the consolidated
stockholders, equity of such Person, determined on a consolidated basis in
accordance with GAAP, less amounts attributable to Disqualified Stock of such
Person; provided, however, that, with respect to Globalstar, adjustments
following the date of this Indenture to the accounting books and records of
Globalstar in accordance with Accounting Principles Board Opinions Nos. 16 and
17 (or successor opinions thereto) or otherwise resulting from the acquisition
of control of Globalstar by another Person shall not be given effect to.
-9-
<PAGE> 10
"Debt" means (without duplication), with respect to any Person, whether
recourse is to all or a portion of the assets of such Person and whether or not
contingent, every obligation of such Person for money borrowed, (ii) every
obligation of such Person evidenced by bonds, debentures, notes or other similar
instruments, including any such obligations Incurred in connection with the
acquisition of property, assets or businesses, (iii) every reimbursement
obligation of such Person with respect to letters of credit, bankers,
acceptances or similar facilities issued for the account of such Person, (iv)
every obligation of such Person issued or assumed as the deferred purchase price
of property or services (including securities repurchase agreements but
excluding trade accounts payable or accrued liabilities arising in the ordinary
course of business which are not overdue or which are being contested in good
faith), (v) every Capital Lease Obligation of such Person, (vi) all Receivables
Sales of such Person, together with any obligation of such Person to pay any
discount, interest, fees, indemnities, penalties, recourse expenses or other
amounts in connection therewith, (vii) all obligations to redeem Disqualified
Stock issued by such Person, (viii) all Attributable Debt, (ix) every obligation
under Interest Rate and Currency Protection Agreements of such Person, (x) every
obligation of the type referred to in clauses (i) through (ix) of another Person
secured by any Lien on any property or asset of such Person (whether or not such
obligation is assumed by such Person), the amount of such obligation being
deemed to be the lesser of the fair market value of such property or assets and
the amount of the obligation so secured and (xi) every obligation of the type
referred to in clauses (i) through (ix) of another Person and all dividends of
another Person the payment of which, in either case, such Person has Guaranteed.
The "amount" or "principal amount", of Debt at any time of determination as used
herein represented by (a) any Debt issued at a price that is less than the
principal amount at maturity thereof, shall be the amount of the liability in
respect thereof determined in accordance with GAAP, (b) any Receivables Sales
shall be the amount of the unrecovered capital or principal investment of the
purchaser (other than Globalstar or a Wholly-Owned Restricted Subsidiary)
thereof, excluding amounts representative of yield or interest earned on such
investment, (c) any Disqualified Stock, shall be the maximum fixed redemption or
repurchase price in respect thereof, (d) any Capital Lease Obligation, shall be
determined in accordance with the definition thereof and (e) any Permitted
Interest Rate or Currency Protection Agreement shall be zero. In no event shall
Debt include any liability for taxes. For purposes of determining any particular
amount of Debt, Guarantees or Liens with respect to letters of credit supporting
Debt otherwise included in the determination of a particular amount shall not be
included.
"Default" means an event that is, or after the passing of time or the
giving of notice both would be, an Event of Default.
"Disposition" means (i) the sale, transfer or other conveyance by Loral
or any of its Subsidiaries (other than to a Wholly Owned Subsidiary of Loral) of
(a) Globalstar partnership interests or (b) equity interests in any entity (an
"intermediate entity") which owns, directly or indirectly, Globalstar
partnership interests or (ii) the issue and sale by any such intermediate entity
of its equity securities to one or more third parties if and to the extent the
proceeds of such issue and sale are distributed by
-10-
<PAGE> 11
such intermediate entity to Loral or any of its Subsidiaries.
"Disqualified Stock" of any Person means any Capital Stock of such
Person which, by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable at the option of the holder
thereof), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable
at the option of the holder thereof, in whole or in part, on or prior to the
first anniversary of the final Stated Maturity of the Securities; provided,
however, that any Preferred Stock which would not constitute Disqualified Stock
but for provisions thereof giving holders thereof the right to require
Globalstar to repurchase or redeem such Preferred Stock upon the occurrence of a
change of control occurring prior to the first anniversary of the final Stated
Maturity of the Securities shall not constitute Disqualified Stock if the change
of control provisions applicable to such Preferred Stock are no more favorable
to the holders of such Preferred Stock than the provisions applicable to the
Securities contained in Section 4.10 and such Preferred Stock specifically
provides that Globalstar will not repurchase or redeem any such stock pursuant
to such provisions prior to Globalstar's repurchase of such Securities as are
required to be repurchased pursuant to Section 4.10; provided further, however,
that all Special Preferred obligations shall be deemed to be Disqualified Stock.
"11 3/8 Indenture" means the indenture dated as of February 15, 1997,
among Globalstar, Globalstar Capital and The Bank of New York, as Trustee,
pursuant to which the 11 3/8 Notes were issued.
"11 1/4 Indenture" means the indenture dated as of June 1, 1997, among
Globalstar, Globalstar Capital and The Bank of New York, as Trustee, pursuant to
which the 11 1/4 Notes were issued.
"11 3/8 Notes" means the $500,000,000 aggregate principal amount of
11-3/8% Senior Notes due 2004 of the Issuers, together with any Exchange
Securities or Private Exchange Securities (as such terms are defined in the 11
3/8 Indenture) issued pursuant to the 11 3/8 Indenture.
"11 1/4 Notes" means the $325,000,000 aggregate principal amount of the
11-1/4% Senior Notes due 2004 of the Issuers, together with any Exchange
Securities or Private Exchange Securities (as such terms are defined in the 11
1/4 Indenture) issued pursuant to the 11 1/4 Indenture.
"Eligible Institution" means a commercial banking institution that has
combined capital and surplus of not less than $500 million or its equivalent in
foreign currency, whose debt is rated "A-311 or higher or "A--" or higher
according to Moody's Investors Service, Inc. or Standard & Poor's Ratings Group
(or such similar equivalent rating by at least one "nationally recognized
statistical rating organization" (as defined in Rule 436 under the Securities
Act)) respectively, at the time as of which any investment or rollover therein
is made.
"Equity offering" means (i) any sale or issuance for cash by
Globalstar of
-11-
<PAGE> 12
Globalstar partnership interests to any Person that, as of the Business Day
immediately before and the Business Day immediately after the day of such sale,
has, or whose Parent has, a total market capitalization of at least $1. billion
on a consolidated basis, after giving effect to such sale (including any
Indebtedness incurred in connection with such sale) and (ii) any offering of GTL
common stock in an underwritten sale to the public pursuant to a registration
statement (other than on Form S-8 or any other form relating to securities
issuable under any benefit plan of Globalstar) that is declared effective by the
Commission, all of the net cash proceeds of which sale are applied promptly
toward the purchase of Globalstar partnership interests. For purposes of clause
[(i)] of this paragraph, any issuance or sale of Globalstar partnership
interests shall be deemed to be "for cash" only to the extent that the net cash
proceeds of such issuance or sale exceed the value of any amounts paid (in cash
or otherwise) by Globalstar to redeem Globalstar partnership interests during
the past six months.
"Event of Default" has the meaning set forth in Section 6.1.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
(or any successor act) and the rules and regulations thereunder.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect as of the Issue Date, including those set forth
in M the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants, (ii) statements and
pronouncements of the Financial Accounting Standards Board, (iii) such other
statements by such other entity as approved by a significant segment of the
accounting profession and (iv) the rules and regulations of the Commission
governing the inclusion of financial statements (including pro forma financial
statements) in periodic reports required to be filed pursuant to Section 13 of
the Exchange Act, including opinions and pronouncements in staff accounting
bulletins and similar written statements from the accounting staff of the
Commission.
"General Partners' Committee" means the committee consisting of
representatives of the general partners of Globalstar that governs the
activities of Globalstar.
"Globalstar System" means Globalstar's worldwide, low-earth orbit,
satellite-based digital telecommunications system as described in the
Prospectus, as defined below.
"Globaltel Russia" means Globalstar-Space Telecommunications, a Russian
closed joint stock company.
"Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America for the payment of which obligations
or guarantee the full faith and credit of the United States is pledged and which
have a remaining weighted Average Life to maturity of not more than one year
from the date of Investment therein.
-12-
<PAGE> 13
"GTL" means Globalstar Telecommunications Limited, a Bermuda company.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person guaranteeing, or having the economic effect of
guaranteeing, any Debt of any other Person, (the "primary obligor") in any
manner, whether directly or indirectly, and including, without limitation, any
obligation of such Person, (i) to purchase or pay (or advance or supply funds
for the purchase or payment of) such Debt or to purchase (or to advance or
supply funds for the purchase of) any security for the payment of such Debt,
(ii) to purchase property, securities or services for the purposes of assuring
the holder of such Debt of the payment of such Debt, or (iii) to maintain
working capital, equity capital or other financial statement condition or
liquidity of the primary obligor so as to enable the primary obligor to pay such
Debt (and "Guaranteed", "Guaranteeing" and "Guarantor" shall have meanings
correlative to the foregoing); provided, however, that the Guarantee by any
Person shall not include endorsements by such Person for collection or deposit,
in either case, in the ordinary course of business.
"Holders" means the registered holders from time to time of the
Securities.
"Incur" means, with respect to any Debt or other obligation of any
Person, to create, issue, incur (by conversion, exchange or otherwise), assume,
Guarantee or otherwise become liable in respect of such Debt or other obligation
including by acquisition of Subsidiaries or the recording, as required pursuant
to GAAP or otherwise, of any such Debt or other obligation on the balance sheet
of such Person (and "Incurrence", "Incurred" and "Incurring" shall have the
meanings correlative to the foregoing); however, that a change in GAAP that
results in an obligation of such Person that exists at such time becoming Debt
shall not be deemed an Incurrence of such Debt and that neither the accrual of
interest nor the accretion of original issue discount shall be deemed an
Incurrence of Debt. Notwithstanding the foregoing, Globalstar may elect to treat
all or any portion of revolving credit debt of Globalstar or a Subsidiary as
being Incurred from and after any date beginning the date the revolving credit
commitment is extended to Globalstar or a Subsidiary, by furnishing notice
thereof to the Trustee, and any borrowings or reborrowings by Globalstar or a
Subsidiary under such commitment up to the amount of such commitment designated
by Globalstar as Incurred shall not be deemed to be new Incurrence of Debt by
Globalstar or such Subsidiary; provided, however, that the undrawn portion of
any such revolving credit debt shall be deemed to be outstanding Debt until such
time as the commitment thereunder is terminated. The accretion of principal of a
non-interest bearing or other discount security shall not be deemed the
Incurrence of Debt.
"Indenture" means this Indenture as amended or supplemented from time
to time.
"Independent Financial Advisor" means an accounting, appraisal or
investment banking firm of nationally recognized standing that is, in the
judgment of the General Partners' Committee of Globalstar, qualified to perform
the task for which it has
-13-
<PAGE> 14
been engaged and disinterested and independent with respect to the Issuers and
their Subsidiaries and Affiliates.
"Interest Rate or Currency Protection Agreement" of any Person means
any forward contract, futures contract, swap, option or other financial
agreement or arrangement (including, without limitation, caps, floors, collars
and similar agreements) relating to, or the value of which is dependent upon,
interest rates or currency exchange rates or indices.
"Investment" by any Person means any direct or indirect loan, advance
or other extension of credit or capital contribution (by means of transfers of
cash or other property to others or payments for property or services for the
account or use of others, or otherwise) to, or purchase or acquisition of
Capital Stock, bonds, notes, debentures or other securities or evidence of Debt
issued by, any other Person, including any payment on a Guarantee of any
obligation of such other Person, but excluding any loan, advance or extension of
credit to an employee of Globalstar or any Restricted Subsidiary in the ordinary
course of business, accounts receivables and other commercially reasonable
extensions of trade credit.
"Issue Date" means the date on which the Securities are first issued
and delivered.
"Lien" means, with respect to any property or assets, any mortgage or
deed of trust, pledge, hypothecation, assignment, Receivables Sale, deposit
arrangement, security interest, lien, charge, easement (other than any easement
not materially impairing usefulness or marketability), encumbrance, preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever on or with respect to such property or assets (including,
without limitation, any conditional sale or other title retention agreement
having substantially the same economic effect as any of the foregoing or any
Sale and Leaseback Transaction).
"Loral" means Loral Space & Communications Ltd., a Bermuda company.
"Marketable Securities" means: (i) Government Securities; (ii) any time
deposit account, money market deposit and certificate of deposit maturing not
more than 270 days after the date of acquisition issued by, or time deposit of,
an Eligible Institution; (iii) commercial paper maturing not more than 270 days
after the date of acquisition issued by a corporation (other than an Affiliate
of Globalstar) with a rating, at the time as of which any investment therein is
made, of "P-111 or higher according to Moody's Investors Service, Inc. or "A-111
or higher according to Standard & Poor's Ratings Group (or such similar
equivalent rating by at least one "nationally recognized statistical rating
organization" (as defined in Rule 436 under the Securities Act)); (iv) any
banker's acceptances or money market deposit accounts issued or offered by an
Eligible Institution; (v) repurchase obligations with a term of not more than 7
days for Government Securities entered into with an Eligible Institution; and
(vi) any fund investing exclusively in investments of the types described in
clauses (i) through (v) above.
-14-
<PAGE> 15
"Net Available Proceeds" from any Asset Disposition by any Person means
cash or Marketable Securities received (including by way of sale or discounting
of a note, installment receivable or other receivable, but excluding any other
consideration received in the form of assumption by the acquiror of Debt or
other obligations relating to such properties or assets) therefrom by such
Person, net of (i) all legal, title and recording tax expenses, commissions and
other fees and expenses Incurred and all federal, state, provincial, foreign and
local taxes (including taxes payable upon payment or other distribution of funds
from a foreign subsidiary to Globalstar or another Subsidiary of Globalstar)
required to be accrued as a liability as a consequence of such Asset
Disposition, (ii) all payments made by such Person or its Restricted
Subsidiaries on any Debt which is secured by such assets in accordance with the
terms of any Lien upon or with respect to such assets or which must by the terms
of such Lien, or in order to obtain a necessary consent to such Asset
Disposition or by applicable law, be repaid out of the proceeds from such Asset
Disposition, (iii) all distributions and other payments made to minority
interest holders in Restricted Subsidiaries of such Person or joint ventures as
a result of such Asset Disposition, (iv) appropriate amounts to be provided by
such Person or any Restricted Subsidiary thereof, as the case may be, as a
reserve in accordance with GAAP against any liabilities associated with such
assets and retained by such Person or any Restricted Subsidiary thereof, as the
case may be, after such Asset Disposition, including, without limitation,
liabilities under any indemnification obligations and severance and other
employee termination costs associated with such Asset Disposition, in each case
as determined by the General Partners' Committee of Globalstar, in its
reasonable good faith judgment evidenced by a board resolution filed with the
Trustee; provided, however, that any reduction in such reserve within twelve
months following the consummation of such Asset Disposition will be treated for
all purposes of this Indenture and the Securities as a new Asset Disposition at
the time of such reduction with Net Available Proceeds equal to the amount of
such reduction, and (v) any consideration for an Asset Disposition (which would
otherwise constitute Net Available Proceeds) that is required to be held in
escrow pending determination of whether a purchase price adjustment will be
made, but amounts under this clause (v) shall become Net Available Proceeds at
such time and to the extent such amounts are released to such Person.
"Net Cash Proceeds", with respect to any issuance or sale of Capital
Stock, means the cash proceeds of such issuance or sale net of attorneys' fees,
accountants' fees, underwriters' or placement agents' fees, discounts or
commissions and brokerage, consultant and other fees actually incurred in
connection with such issuance or sale and net of taxes paid or payable as a
result thereof.
"Non-Recourse Debt" means Debt:
(i) as to which neither the Issuers nor any Restricted
Subsidiary:
(a) provides credit support of any kind (including any
undertaking, agreement or
-15-
<PAGE> 16
instrument that would constitute Debt);
(b) is directly or indirectly liable (as a guarantor or
otherwise); or
(c) constitutes the lender;
(ii) no default with respect to which (including any rights that
the holders thereof may have to take enforcement action against an
Issuer or any Unrestricted Subsidiary) would permit (upon notice,
lapse of time or both) any holder of any other Debt of the Issuers or
any Restricted Subsidiary to declare a default on such other Debt or
cause the payment thereof to be accelerated or payable prior to its
stated maturity; and
(iii) as to which the lenders have been notified in writing that
they will not have any recourse to the stock or assets of the Issuers
or any of their Restricted Subsidiaries.
"Offer to Purchase" means a written offer (the "Offer") sent by
Globalstar by first class mail, postage prepaid, to each holder at his address
appearing in the Securities register on the date of the Offer offering to
purchase up to the principal amount of Securities specified in such offer at the
purchase price specified in such offer (as determined pursuant to this
Indenture). Unless otherwise required by applicable law, the Offer shall specify
an expiration date (the "Expiration Date") of the offer to Purchase which shall
be, subject to any contrary requirements of applicable law, not less than 30
days or more than 60 days after the date of such offer and a settlement date for
purchase of Securities within five Business Days after the Expiration Date. The
Issuers shall notify the Trustee at least 15 Business Days (or such shorter
period as is acceptable to the Trustee) prior to the mailing of the Offer of
Globalstar's obligation to make an Offer to Purchase, and the offer shall be
mailed by Globalstar or, at Globalstar's request, by the Trustee in the name and
at the expense of Globalstar. The Offer shall contain information concerning the
business of Globalstar and its Subsidiaries which Globalstar in good faith
believes will enable such holders to make an informed decision with respect to
the Offer to Purchase (which at a minimum will include (i) the most recent
annual and quarterly financial statements and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" contained in the
documents required to be filed with the Trustee pursuant to this Indenture
(which requirements may be satisfied by delivery of such documents together with
the offer), (ii) a description of material developments in Globalstar's business
subsequent to the date of the latest of such financial statements referred to in
clause (i) (including a description of the events requiring Globalstar to make
the Offer to Purchase), (iii) if applicable, appropriate pro forma financial
information concerning the Offer to Purchase and the events requiring Globalstar
to make the Offer to Purchase and (iv) any other information required by
applicable law to be included therein). The Offer shall contain all instructions
and materials necessary to enable such holders to tender Securities pursuant to
the Offer to Purchase.
"Officer" means the Chairman of the Board, the President, any Vice
-16-
<PAGE> 17
President, the Treasurer or the Secretary of the Issuers.
"Officers' Certificate" means a certificate signed by two Officers.
"Operating" means, with respect to any satellite, that at least 50% of
the call circuits of such satellite are operating at design performance
specifications.
"Opinion of Counsel" means an opinion from legal counsel who is
acceptable to the Trustee. The counsel may be an employee of, or counsel to, the
Issuers or the Trustee.
"Parent" means, with regard to any Person, any other entity of which
such Person is a Subsidiary.
"Permitted Interest Rate or Currency Protection Agreement" of any
Person means any Interest Rate or Currency Protection Agreement entered into
with one or more financial institutions in the ordinary course of business that
is designed to protect such Person against fluctuations in interest rates or
currency exchange rates with respect to Debt Incurred and which shall have a
notional amount no greater than the payments due with respect to the Debt being
hedged thereby and not for purposes of speculation.
"Permitted Investment" means an Investment by an Issuer or any
Restricted Subsidiary (i) in any Person as a result of which such Person becomes
a Restricted Subsidiary, (ii) in Marketable Securities, (iii) in Permitted
Interest Rate or Currency Protection Agreements, (iv) made as a result of the
receipt of noncash consideration from an Asset Disposition that was made
pursuant to and in compliance with Section 4.7 and (v) consisting of loans or
advances to employees made in the ordinary course of business not to exceed $__
million in the aggregate outstanding at any one time.
Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint stock company, trust,
unincorporated organization, government or agency or political subdivision
thereof or any other entity.
"Preferred Stock" of any Person means Capital Stock of such Person of
any class or classes (however designated) that ranks prior, as to the payment of
dividends or as to the distribution of assets upon any voluntary or involuntary
liquidation, dissolution or winding up of such Person, to shares of Capital
Stock of any other class of such Person.
"Principal" of a Security means the principal of the Security plus the
premium, if any, payable on the Security which is due or overdue or is to become
due at the relevant time.
"Receivables" means receivables, chattel paper, instruments, documents
or intangibles evidencing or relating to the right to payment of money in
respect of the sale of goods or services.
-17-
<PAGE> 18
"Receivables Sale" of any Person means any sale of Receivables of such
Person (pursuant to a purchase facility or otherwise), other than in connection
with a disposition of the business operations of such Person relating thereto or
a disposition of defaulted Receivables for purpose of collection and not as a
financing arrangement.
"Refinance" means in respect of any Debt, to refinance, extend, renew,
refund, repay, prepay, redeem, defease or retire, or to issue other Debt in
exchange or replacement for, such Debt. "Refinanced" and "Refinance" shall have
correlative meanings.
"Refinancing Debt" means Debt that Refinances any Debt of the Issuers
or any Restricted Subsidiary existing on the Issue Date or Incurred in
compliance with this Indenture, including Debt that Refinances Refinancing Debt;
provided, however, that (i) such Refinancing Debt has a Stated Maturity no
earlier than the Stated Maturity of the Debt being Refinanced, (ii) such
Refinancing Debt has an Average Life at the time such Refinancing Debt is
Incurred that is equal to or greater than the Average Life of the Debt being
Refinanced, (iii) such Refinancing Debt has an aggregate principal amount (or if
Incurred with original issue discount, an aggregate issue price) that is equal
to or less than the aggregate principal amount (or if Incurred with original
issue discount, the aggregate accreted value) then outstanding or committed
(plus fees and expenses, including any premium and defeasance costs) under the
Debt being Refinanced, (iv) in the event the Debt being Refinanced constitutes a
Subordinated Obligation, the Refinancing Debt is subordinated to the Securities
to at least the same extent as the Debt being Refinanced and (v) Special
Preferred Obligations may only be Refinanced with Preferred Stock (other than
Preferred Stock that is Disqualified Stock), other Special Preferred Obligations
or Subordinated obligations; provided, further, however, that Refinancing Debt
shall not include (x) Debt of a Subsidiary that Refinances Debt of the Issuers
or (y) Debt of the Issuers or a Restricted Subsidiary that Refinances Debt of an
Unrestricted Subsidiary.
"Related Person" of any Person means any other Person directly or
indirectly owning (a) 10% or more of the outstanding common equity of such
Person (or, in the case of a Person that is not a corporation, 10% or more of
the equity interest in such Person) or (b) 10% or more of the combined voting
power of the Voting Stock of such Person.
"Restricted Payment" with respect to any Person means (i) the
declaration or payment of any dividends or any other distributions of any sort
in respect of its Capital Stock (including any payment in connection with any
merger or consolidation involving such Person) or similar payment to the direct
or indirect holders of its Capital Stock (other than dividends or distributions
payable solely in its Capital Stock (other than Disqualified Stock) and
dividends or distributions payable solely to the Issuers or a Restricted
Subsidiary, and other than pro rata dividends or other distributions made by a
Subsidiary that is not a Wholly-Owned Restricted Subsidiary to minority
stockholders (or owners of an equivalent interest in the case of a Subsidiary
that is an entity other than a corporation)), (ii) the purchase, redemption or
other acquisition or retirement for value of any Capital Stock of an Issuer held
by any Person or of any Capital Stock of a
-18-
<PAGE> 19
Restricted Subsidiary held by any Affiliate of the Issuers (other than a
Restricted Subsidiary), including the exercise of any option to exchange any
Capital Stock (other than into Capital Stock of the Issuers that is not
Disqualified Stock), (iii) the purchase, repurchase, redemption, defeasance or
other acquisition or retirement for value, prior to scheduled maturity,
scheduled repayment or scheduled sinking fund payment of any Subordinated
obligations (other than the purchase, repurchase or other acquisition of
Subordinated obligations purchased in anticipation of satisfying a sinking fund
obligation, principal installment or final maturity, in each case due within one
year of the date of acquisition) or (iv) the making of any Investment in any
Person (other than a Permitted Investment).
"Restricted Subsidiary" means any Subsidiary of Globalstar, whether
existing on or after the Issue Date, unless such Subsidiary is an Unrestricted
Subsidiary.
"Sale and Leaseback Transaction" means an arrangement relating to
property now owned or hereafter acquired whereby an Issuer or a Restricted
Subsidiary transfers such property to a Person and an Issuer or a Restricted
Subsidiary leases it from such Person.
"Securities" means the Securities issued under this Indenture.
"Securities Act" means the Securities Act of 1933, as amended (or any
successor act) and the rules and regulations thereunder.
"Security Agreements" means each Security Agreement between the Issuers
and the Collateral Agent or between certain Subsidiaries of the Issuers and the
Collateral Agent, as the case may be.
"Security Documents" means, collectively, the Security Agreements and
any other document, instrument or agreement executed or delivered by the Issuers
or any of their Subsidiaries from time to time pursuant to which the Issuers or
any such Subsidiary shall grant a Lien on any of their respective properties,
assets or revenues to secure payment of the Obligations hereunder and under the
Securities.
"Significant Subsidiary" means a Restricted Subsidiary that is a
"significant subsidiary" as defined in Rule 1-02(w) of Regulation S-X under the
Securities Act and the Exchange Act.
"Special Preferred Obligations" means (i) preferred partnership
interests of Globalstar existing as of the Issue Date and (ii) any preferred
partnership interests, convertible preferred equivalent obligations or similar
preferred obligations of Globalstar issued after the Issue Date to finance the
Build-out; provided, however, that any such preferred partnership interests,
convertible preferred equivalent obligations or similar preferred obligations of
Globalstar issued after the Issue Date shall not constitute Special Preferred
Obligations if such interest or obligation, by its terms (or by the terms of any
security into which it is convertible or for which it is exchangeable at the
option of
-19-
<PAGE> 20
the Holders), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable
at the option of the holder thereof, in whole or in part, on or prior to the
final Stated Maturity of the Securities; provided further, however, that any
such interest or obligation which would constitute Special Preferred Obligations
but for provisions thereof giving holders thereof the right to require
Globalstar to repurchase or redeem such interest or obligation upon the
occurrence of a change of control occurring prior to the final Stated Maturity
of the Securities shall constitute Special Preferred Obligations if the change
of control provisions applicable to such interest or obligation are no more
favorable to the holders of such interest or obligation than the provisions
applicable to the Securities contained in Section 4.10 and such interest or
obligation specifically provides that Globalstar will not repurchase or redeem
any such interest or obligation pursuant to such provisions prior to
Globalstar's repurchase of such Securities as are required to be repurchased
pursuant to Section 4.10. Notwithstanding the foregoing, preferred partnership
interests, convertible preferred equivalent obligations or similar preferred
obligations of Globalstar issued after the Issue Date shall not be Special
Preferred Obligations unless, at the time of their issuance, Globalstar shall
certify to the Trustee that such interests or obligations shall be designated
Special Preferred obligations.
"Stated Maturity" means, with respect to any security, the date
specified in such security as the fixed date on which the final payment of
principal of such security is due and payable, including pursuant to any
mandatory redemption provision (but excluding any provision providing for the
repurchase of such security at the option of the holder thereof upon the
happening of any contingency unless such contingency has occurred).
"Subordinated Obligation" means any Debt of the Issuers (whether
outstanding on the Issue Date or thereafter Incurred) which is subordinate or
junior in right of payment to the Securities pursuant to a written agreement to
that effect.
"Subsidiary" of any Person means (i) a corporation more than 50% of the
combined voting power of the outstanding Voting Stock of which is owned,
directly or indirectly, by such Person or by one or more other Subsidiaries of
such Person or by such Person and one or more Subsidiaries of such Person or
(ii) any other Person (other than a corporation) in which such Person, or one or
more other Subsidiaries of such Person or such Person and one or more other
Subsidiaries of such Person, directly or indirectly, has at least a majority
ownership and power to direct the policies, management and affairs thereof.
"Subsidiary Guaranty" means the Guarantee by a Subsidiary Guarantor of
the Issuers' obligations with respect to the Securities contained in Article 10
hereof.
"Subsidiary Guarantor" means any Subsidiary which, pursuant to the
terms hereof, has executed a supplemental indenture in a form reasonably
satisfactory to the Trustee and become bound by the terms hereof, including
Article 10 hereof.
"Tax Amount" means, with respect to any year, an amount not to exceed
-20-
<PAGE> 21
the sum of the ordinary income from trade or business activities and other items
of income, loss and deduction reported by Globalstar for that year for United
States federal income tax purposes multiplied by a percentage equal to the sum
of (a) the highest applicable federal corporation income tax rate for that year
(expressed as a percentage) plus (b) [ ]% multiplied by the excess of 100% over
the highest applicable federal corporate income tax for that year (expressed as
a percentage).
"10 3/4 Indenture" means the indenture dated as of October 15, 1997,
among Globalstar, Globalstar Capital and The Bank of New York, as trustee,
pursuant to which the 10 3/4 Notes were issued.
"10 3/4 Notes" means the $325,000,000 aggregate principal amount of 10
3/4% Senior Notes due 2004 of the Issuers, together with any Exchange Securities
or Private Exchange Securities (as such terms are defined in the 10 3/4
Indenture) issued pursuant to the 10 3/4 Indenture.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. H 77aaa-77bbbb)
as in effect on the date of this Indenture, except as provided by Section 9.3.
"Transitory Equipment Subsidiary" means a Subsidiary of Globalstar
whose only business activity is acquiring equipment from Globalstar for the sole
purpose of selling such equipment to a service provider to Globalstar; provided,
however, that Globalstar retains a security interest in such equipment so long
as it is owned by such Subsidiary; provided further, however, that such
Subsidiary has no Debt outstanding at any time other than Debt represented by
such security interest.
"Trust Officer" means any officer or assistant officer of the Trustee
assigned by the Trustee to administer its corporate trust matters.
"Trustee" means the party named as such in this Indenture until a
successor replaces it and, thereafter, means the successor.
"Uniform Commercial Code" means the New York Uniform Commercial Code as
in effect from time to time.
"Unrestricted Subsidiary" means (i) any Subsidiary of Globalstar
designated as such by the General Partner's Committee as set forth below where
(a) neither Globalstar nor any of its other Subsidiaries (other than another
Unrestricted Subsidiary) (1) provides credit support for, or Guarantee of, any
Debt of such Subsidiary or any Subsidiary of such Subsidiary (including any
undertaking, agreement or instrument evidencing such Debt), (2) is directly or
indirectly liable for any Debt of such Subsidiary or any Subsidiary of such
Subsidiary, or (3) has any obligation to make additional Investments in such
Subsidiary or any Subsidiary of such Subsidiary, (b) such Subsidiary has no Debt
other than Non-Recourse Debt; provided, however, that if any Unrestricted
Subsidiary Incurs any Debt other than Non-Recourse Debt or any Non-Recourse Debt
Incurred by such Unrestricted Subsidiary shall thereafter cease for any reason
to be Non-Recourse Debt, such event shall be deemed to constitute an
-21-
<PAGE> 22
Incurrence of such Debt by Globalstar and such Unrestricted Subsidiary shall be
deemed to be a Restricted Subsidiary for purposes of Section 4.4 and (c) such
Subsidiary and each Subsidiary of such Subsidiary has at least one director on
its board of directors that is not a director or executive officer of Globalstar
or any Restricted Subsidiary and (ii) any Subsidiary of an Unrestricted
Subsidiary. The General Partner's Committee may designate any Subsidiary to be
an Unrestricted Subsidiary unless such Subsidiary or any Subsidiary of such
Subsidiary owns any Capital Stock or Debt of, or owns or holds any Lien on any
property of, Globalstar or any other Subsidiary of Globalstar which is not a
Subsidiary of the Subsidiary to be so designated or otherwise an Unrestricted
Subsidiary; provided, however, that either (A) the Subsidiary to be so
designated has total assets of $1,000 or less or (B) immediately after giving
effect to such designation, Globalstar could incur an additional $1. of Debt
pursuant to Section 4.3(a) and provided further, however, that Globalstar could
make a Restricted Payment in an amount equal to the greater of the fair market
value and the book value of such Subsidiary pursuant to Section 4.5 and such
amount is thereafter treated as a Restricted Payment for the purpose of
calculating the aggregate amount available for Restricted Payments thereunder.
The General Partners' Committee may designate any Unrestricted Subsidiary to be
a Restricted Subsidiary., provided that, immediately after giving effect to such
designation, Globalstar could incur an additional $1. of Debt pursuant to
Section 4.3(a). Notwithstanding the foregoing, Globalstar Capital shall not be
an Unrestricted Subsidiary.
"U.S. Government Obligations" means direct obligations (or certificates
representing an ownership interest in such obligations of the United States of
America (including any agency or instrumentality thereof) for the payment of
which the full faith and credit of the United States of America is Pledged and
which are not callable or redeemable at the issuer's option.
"Vendor Financing Facility" means any agreements between Globalstar,
Globalstar Capital and/or any Restricted Subsidiary and one or more vendors or
lessors of equipment to Globalstar, Globalstar Capital and/or any Restricted
Subsidiary (or any affiliate of any such vendor or lessor) providing financing
for the acquisition by Globalstar or any such Restricted Subsidiary of equipment
from any such vendor or lessor.
"Voting Stock" of any Person means Capital Stock of such Person which
ordinarily has voting power for the election of directors (or persons performing
similar functions) of such Person, whether at all times or only so long as no
senior class of securities has such voting power by reason of any contingency.
"Wholly-Owned Restricted Subsidiary" means a Restricted Subsidiary 99%
or more of the outstanding Capital Stock or other ownership interests of which
(other than directors' qualifying shares) shall at the time be owned by
Globalstar or by one or more Wholly-Owned Restricted Subsidiaries of Globalstar
or by Globalstar and one or more Wholly-Owned Restricted Subsidiaries of
Globalstar.
SECTION 1.2. Other Definitions.
-22-
<PAGE> 23
<TABLE>
<CAPTION>
Defined in
Term Section
---- -------
<S> <C>
"Affiliate Transaction" ................................... 4.8
"Appendix" ................................................ 2.1
"Bankruptcy Law" .......................................... 6.1
"Cash Insurance" .......................................... 4.13
"Covenant Defeasance Option" .............................. 8.1(b)
"Custodian" ............................................... 6.1
"Debt Coverage Ratio" ..................................... 4.3
"Event of Default" ........................................ 6.1
"Exchange Securities" ..................................... Recital
"Globalstar" .............................................. Preamble
"Globalstar Capital" ...................................... Preamble
"Initial Securities" ...................................... Recital
"In-orbit Insurance Event" ................................ 4.13
"Insurance Account" ....................................... 4.13
"Insurance Proceeds" ...................................... 4.13
"Issuers" ................................................. Preamble
"Legal Defeasance Option" ................................. 8.1(b)
"Legal Holiday" ........................................... 12.8
"Notice of Default" ....................................... 6.1
"Obligations" ............................................. 10.1
"Paying Agent" ............................................ 2.3
"Permitted Lien" .......................................... 4.11
"Private Exchange Securities" ............................. Recital
"Registrar" ............................................... 2.3
"Securities" .............................................. Recital
"Successor Issuers" ....................................... 5.1
"Trustee" ................................................. Preamble
</TABLE>
SECTION 1.3. Incorporation by Reference of Trust Indenture Act. This
Indenture is subject to the mandatory provisions of the TIA which are
incorporated by reference in and made a part of this Indenture. The following
TIA terms have the following meanings:
"Commission" means the Commission;
"Indenture Securities" means the Securities;
"Indenture Security Holder" means a Securityholder;
-23-
<PAGE> 24
"indenture to be Qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee; and
"obligor" on the indenture securities means the Issuers and any other
obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by Commission rule have
the meanings assigned to them by such definitions.
SECTION 1.4. Rules of Construction. Unless the context otherwise
requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) "including" means including without limitation;
(5) words in the singular include the plural and words in the
plural include the singular;
(6) unsecured Debt shall not be deemed to be subordinate or
junior to secured Debt merely by virtue of its nature as unsecured
Debt;
(7) the principal amount of any noninterest bearing or other
discount security at any date shall be the principal amount thereof
that would be shown on a balance sheet of the issuer dated such date
prepared in accordance with GAAP but accretion of principal on such
security shall not be deemed to be the Incurrence of Indebtedness;
(8) the principal amount of any Preferred Stock shall be (i) the
maximum liquidation value of such Preferred Stock or (ii) the maximum
mandatory redemption or mandatory repurchase price with respect to
such Preferred Stock, whichever is greater;
(9) all references to the date the Securities were originally
issued shall refer to the date the Initial Securities were originally
issued; and
(10) the terms "redemption" and "redeemable" shall not be deemed
to refer to Offers to Purchase or to repurchases pursuant to Section
4.10 or similar offers or repurchases.
ARTICLE 2.
-24-
<PAGE> 25
The Securities
SECTION 2.1. Form and Dating. The Securities and the Trustee's
certificate of authentication shall be substantially in the form of Exhibit A,
which is hereby incorporated in and expressly made a part of this Indenture. The
Securities may have notations, legends or endorsements required by law, stock
exchange rule, agreements to which the Issuers are subject, if any, or usage
(provided that any such notation, legend or endorsement is in a form acceptable
to the Issuers). Each Security shall be dated the date of its authentication.
The terms of the Securities set forth in the Exhibit A are part of the terms of
this Indenture.
SECTION 2.2. Execution and Authentication. Two officers shall sign the
Securities for the Issuers by manual or facsimile signature.
If an officer whose signature is on a Security no longer holds that
office at the time the Trustee authenticates the Security, the Security shall be
valid nevertheless.
A Security shall not be valid until an authorized signatory of the
Trustee manually signs the certificate of authentication on the Security. The
signature shall be conclusive evidence that the Security has been authenticated
under this Indenture.
The Trustee shall authenticate and deliver Securities for original
issue upon a written order of the Issuers signed by two Officers or by an
Officer and either an Assistant Treasurer or an Assistant Secretary of the
Issuers. Such order shall specify the amount of the Securities to be
authenticated and the date on which the original issue of Securities is to be
authenticated. The aggregate principal amount of Securities outstanding at any
time may not exceed that amount except as provided in Section 2.7.
The Trustee may appoint an authenticating agent reasonably acceptable
to the Issuers to authenticate the Securities. Unless limited by the terms of
such appointment, an authenticating agent may authenticate Securities whenever
the Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. An authenticating agent has the
same rights as any Registrar, Paying Agent or agent for service of notices and
demands.
SECTION 2.3. Registrar and Paying Agent. The Issuers shall maintain an
office or agency where Securities may be presented for registration of transfer
or for exchange (the "Registrar") and an office or agency where Securities may
be presented for payment (the "Paying Agent"). The Registrar shall keep a
register of the Securities and of their transfer and exchange. The Issuers may
have one or more co-registrars and one or more additional paying agents. The
term "Paying Agent" includes any additional paying agent.
The Issuers shall enter into an appropriate agency agreement with any
Registrar, Paying Agent or co-registrar not a party to this Indenture, which
shall incorporate the terms of the TIA. The agreement shall implement the
provisions of this Indenture that relate to such agent. The Issuers shall notify
the Trustee of the name
-25-
<PAGE> 26
and address of any such agent. If the Issuers fail to maintain a Registrar or
Paying Agent, the Trustee shall act as such and shall be entitled to appropriate
compensation therefor pursuant to Section 7.7. The Issuers or any of their
domestically incorporated Wholly owned Subsidiaries may act as Paying Agent,
Registrar, co-registrar or transfer agent.
The Issuers initially appoint the Trustee as Registrar and Paying Agent
in connection with the Securities.
SECTION 2.4. Paying Agent To Hold Money in Trust. Prior to each due
date of the principal and interest on any Security, the Issuers shall deposit
with the Paying Agent a sum sufficient to pay such principal and interest when
so becoming due. The Issuers shall require each Paying Agent (other than the
Trustee) to agree in writing that the Paying Agent shall hold in trust for the
benefit of Securityholders or the Trustee all money held by the Paying Agent for
the payment of principal of or interest on the Securities and shall notify the
Trustee of any default by the Issuers in making any such payment. If either
Issuer or a Subsidiary acts as Paying Agent, it shall segregate the money held
by it as Paying Agent and hold it as a separate trust fund. The Issuers at any
time may require a Paying Agent to pay all money held by it to the Trustee and
to account for any funds disbursed by the Paying Agent. Upon complying with this
Section, the Paying Agent shall have no further liability for the money
delivered to the Trustee.
SECTION 2.5. Securityholder Lists. The Trustee shall preserve in as
current a form as is reasonably practicable the most recent list available to it
of the names and addresses of Securityholders. If the Trustee is not the
Registrar, the Issuers shall furnish to the Trustee, in writing at least five
Business Days before each interest payment date and at such other times as the
Trustee may request in writing, a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of Securityholders.
SECTION 2.6. Transfer and Exchange. The Securities shall be issued in
registered form and shall be transferable only upon the surrender of a Security
for registration of transfer. When a Security is presented to the Registrar or a
co-registrar with a request to register a transfer, the Registrar shall register
the transfer as requested if the requirements of Section 8-401(l) (or any
successor provision thereto) of the Uniform Commercial Code are met. When
Securities are presented to the Registrar or a co-registrar with a request to
exchange them for an equal principal amount of Securities of other
denominations, the Registrar shall make the exchange as requested if the same
requirements are met. To permit registration of transfers and exchanges, the
Issuers shall execute and the Trustee shall authenticate Securities at the
Registrar's or co- registrar's request. The Issuers may require payment of a sum
sufficient to pay all taxes, assessments or other governmental charges in
connection with any transfer or exchange pursuant to this Section. The Issuers
shall not be required to make and the Registrar need not register transfers or
exchanges of Securities selected for redemption (except, in the case of
Securities to be redeemed in part, the portion thereof not to be redeemed) or
any Securities for a period of 15 days before a selection of
-26-
<PAGE> 27
Securities to be redeemed or 15 days before an interest payment date.
Prior to the due presentation for registration of transfer of any
Security, the Issuers, the Trustee, the Paying Agent, the Registrar or any
co-registrar may deem and treat the person in whose name a Security is
registered as the absolute owner of such Security for the purpose of receiving
payment of principal of and interest on such Security and for all other purposes
whatsoever, whether or not such Security is overdue, and none of the Issuers,
the Trustee, the Paying Agent, the Registrar or any co-registrar shall be
affected by notice to the contrary.
All Securities issued upon any transfer or exchange pursuant to the
terms of this Indenture will evidence the same debt and will be entitled to the
same benefits under this Indenture as the Securities surrendered upon such
transfer or exchange.
SECTION 2.7. Replacement Securities. If a mutilated Security is
surrendered to the Registrar or if the Holder of a Security claims that the
Security has been lost, destroyed or wrongfully taken, the Issuers shall issue
and the Trustee shall authenticate a replacement Security if the requirements of
Section 8-405 (or any successor provision thereto) of the Uniform Commercial
Code are met and the Holder satisfies any other reasonable requirements of the
Trustee. Such Holder shall furnish an indemnity bond sufficient in the judgment
of the Issuers and the Trustee to protect the Issuers, the Trustee, the Paying
Agent, the Registrar and any co-registrar from any loss which any of them may
suffer if a Security is replaced. The Issuers and the Trustee may charge the
Holder for their expenses in replacing a Security.
Every replacement Security is an additional obligation of the Issuers.
SECTION 2.8. Outstanding Securities. Securities outstanding at any time
are all Securities authenticated by the Trustee except for those canceled by it,
those delivered to it for cancellation and those described in this Section as
not outstanding. A Security does not cease to be outstanding because the Issuers
or an Affiliate of the Issuers holds the Security.
If a Security is replaced pursuant to Section 2.7, it ceases to be
outstanding unless the Trustee and the Issuers receive proof satisfactory to
them that the replaced Security is held by a bona fide purchaser.
If the Paying Agent segregates and holds in trust, in accordance with
this Indenture, on a redemption date or maturity date money sufficient to pay
all principal and interest payable on that date with respect to the Securities
(or portions thereof) to be redeemed or maturing, as the case may be, then on
and after that date such Securities (or portions thereof) cease to be
outstanding and interest on them ceases to accrue.
SECTION 2.9. Temporary Securities. Until definitive Securities are
ready for delivery, the Issuers may prepare and the Trustee shall authenticate
temporary Securities. Temporary Securities shall be substantially in the form of
definitive
-27-
<PAGE> 28
Securities but may have variations that the Issuers consider appropriate for
temporary Securities. Without unreasonable delay, the Issuers shall prepare and
the Trustee shall authenticate definitive Securities and deliver them in
exchange for Temporary Securities.
SECTION 2.10. Cancellation. The Issuers at any time may deliver
Securities to the Trustee for cancellation. The Registrar and the Paying Agent
shall forward to the Trustee any Securities surrendered to them for registration
of transfer, exchange or payment. The Trustee and no one else shall cancel and
may, but shall not be required to, destroy (subject to the record retention
requirements of the Exchange Act) all Securities surrendered for registration of
transfer, exchange, payment or cancellation unless the Issuers direct the
Trustee to deliver canceled Securities to the Issuers. The Issuers may not issue
new Securities to replace securities they have redeemed, paid or delivered to
the Trustee for cancellation.
SECTION 2.11. Defaulted Interest. If the Issuers default in a payment
of interest on the Securities, the Issuers shall pay defaulted interest (plus
interest on such defaulted interest to the extent lawful) in any lawful manner.
The Issuers may pay the defaulted interest to the persons who are
Securityholders on a subsequent special record date. The Issuers shall fix or
cause to be fixed any such special record date and payment date to the
reasonable satisfaction of the Trustee and shall promptly mail to each
Securityholder a notice that states the special record date, the payment date
and the amount of defaulted interest to be paid.
SECTION 2.12. CUSIP Numbers. The Issuers in issuing the Securities may
use "CUSIP" numbers (if then generally in use) and, if so, the Trustee shall use
"CUSIP" numbers in notices of redemption as a convenience to Holders; provided,
however, that any such notice may state that no representation is made as to the
correctness of such numbers either as printed on the Securities or as contained
in any notice of a redemption and that reliance may be placed only on the other
identification numbers printed on the Securities, and any such redemption shall
not be affected by any defect in or omission of such numbers. The Issuers shall
promptly notify the Trustee of any change in the CUSIP numbers.
ARTICLE 3.
Redemption
SECTION 3.1. Notices to Trustee. If the Issuers elect to redeem
Securities pursuant to paragraph 5 of the Securities, they shall notify the
Trustee in writing of the redemption date, the principal amount of Securities to
be redeemed and the paragraph of the Securities pursuant to which the redemption
will occur.
The Issuers shall give each notice to the Trustee provided for in this
Section at least 60 days before the redemption date unless the Trustee consents
to a shorter period. Such notice shall be accompanied by an Officers'
Certificate and an Opinion of Counsel from the Issuers to the effect that such
redemption will comply with
-28-
<PAGE> 29
the conditions herein.
SECTION 3.2. Selection of Securities To Be Redeemed. If less than all
the Securities are to be redeemed at any time, the Trustee shall select the
Securities to be redeemed by a method that complies with the requirements of the
principal national securities exchange, if any, on which the Securities are
listed, or if the Securities are not listed, on a pro rata basis, by lot or by
such method as the Trustee in its sole discretion shall deem to be fair and
appropriate and in accordance with methods generally used at the time of
selection by fiduciaries in similar circumstances. The Trustee shall make the
selection from outstanding Securities not previously called for redemption. The
Trustee may select for redemption portions of the principal of Securities that
have denominations larger than $1,000. Securities and portions of them the
Trustee selects shall be in amounts of $1,000 or a whole multiple of $1,000.
Provisions of this Indenture that apply to Securities called for redemption also
apply to portions of Securities called for redemption. The Trustee shall notify
the Issuers promptly of the Securities or portions of Securities to be redeemed.
SECTION 3.3. Notice of Redemption. At least 30 days but not more than
60 days before a date for redemption of Securities, the Issuers shall mail a
notice of redemption by first-class mail to each Holder of Securities to be
redeemed at such Holder's registered address.
The notice shall identify the Securities (including CUSIP number(s), if
any) to be redeemed and shall state:
(1) the redemption date;
(2) the redemption price;
(3) the name and address of the Paying Agent;
(4) that Securities called for redemption must be surrendered to
the Paying Agent to collect the redemption price;
(5) if fewer than all the outstanding Securities are to be
redeemed, the identification and principal amounts of the particular
Securities to be redeemed;
(6) that, unless the Issuers default in making such redemption
payment or the Paying Agent is prohibited from making such payment
pursuant to the terms of this Indenture, interest on Securities (or
portion thereof) called for redemption ceases to accrue on and after
the redemption date;
(7) the paragraph of the Securities pursuant to which the
Securities called for redemption are being redeemed; and
(8) that no representation is made as to the correctness or
accuracy of the CUSIP number, if any, listed in such notice or printed
on the Securities.
-29-
<PAGE> 30
At the Issuers' request, the Trustee shall give the notice of
redemption in the Issuers' name and at the Issuers' expense. In such event, the
Issuers shall provide the Trustee with the information required by this Section.
SECTION 3.4. Effect of Notice of Redemption. Once notice of redemption
is mailed, Securities called for redemption become due and payable on the
redemption date and at the redemption price stated in the notice. Upon surrender
to the Paying Agent, such Securities shall be paid at the redemption price
stated in the notice, plus accrued interest to the redemption date. Failure to
give notice or any defect in the notice to any Holder shall not affect the
validity of the notice to any other Holder.
SECTION 3.5. Deposit of Redemption Price. On or prior to the redemption
date, the Issuers shall deposit with the Paying Agent (or, if an Issuer or a
Subsidiary is the Paying Agent, shall segregate and hold in trust) money
sufficient to pay the redemption price of and accrued interest on all Securities
to be redeemed on that date other than Securities or portions of Securities
called for redemption which have been delivered by the Issuers to the Trustee
for cancellation.
SECTION 3.6. Securities Redeemed in Part. Upon surrender of a Security
that is redeemed in part, the Issuers shall execute and the Trustee shall
authenticate for the Holder (at the Issuers' expense) a new Security equal in
principal amount to the unredeemed portion of the Security surrendered.
ARTICLE 4.
Covenants
SECTION 4.1. Payment of Securities. The Issuers shall promptly pay the
principal of and interest on the Securities on the dates and in the manner
provided in the Securities and in this Indenture. Principal, interest shall be
considered paid on the date due if on such date the Trustee or the Paying Agent
holds in accordance with this Indenture money sufficient to pay all principal,
interest then due.
The Issuers shall pay interest on overdue principal at the rate
specified therefor in the Securities, and shall pay interest on overdue
installments of interest at the same rate to the extent lawful.
SECTION 4.2. SEC Reports. Notwithstanding that the Issuers may not be,
or may not be required to remain, subject to the reporting requirements of
Section 13 or 15(d) of the Exchange Act, the Issuers shall file with the
Commission (unless the Commission will not accept such filing) and provide the
Trustee and Holders of the Securities with such annual reports and such
information, documents and other reports as are specified in Sections 13 and
15(d) of the Exchange Act and applicable to a U.S. corporation subject to such
Sections, such information, documents and other reports to be so filed and
provided at the times specified for the filing of such information, documents
and reports under such Sections.
-30-
<PAGE> 31
In addition, for so long as any Securities remain outstanding,
the Issuers shall furnish to the Holders and to securities analysts and
prospective investors, upon their request, the information required to be
delivered pursuant to Rule 144A(d)(4) under the Securities Act.
Delivery of such reports, information and documents to the
Trustee is for informational purposes only and the Trustee's receipt of such
shall not constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Issuers,
compliance with any of their covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
SECTION 4.3. Limitation on Consolidated Debt. (a) The Issuers
may not, and may not permit any Restricted Subsidiary to, Incur any Debt;
provided, however, that the Issuers or any Restricted Subsidiary may Incur Debt
so long as the ratio of (i) the aggregate consolidated principal amount of Debt
of the Issuers and the Restricted Subsidiaries outstanding as of the most recent
available quarterly or annual balance sheet, after giving pro forma effect to
the Incurrence of such Debt and any other Debt Incurred since such balance sheet
date and the receipt and application of the proceeds thereof to (ii)
Consolidated Cash Flow Available for Fixed Charges for the four full fiscal
quarters ending on the date of such balance sheet determined on a pro forma
basis as if any such Debt had been Incurred and the proceeds thereof had been
applied at the beginning of such four fiscal quarters, would be less than to
(the "Debt Coverage Ratio").
(b) Notwithstanding the foregoing limitation, the Issuers and
any Restricted Subsidiary may Incur the following:
(i) Debt Incurred under any one or more Bank Credit
Agreements, Vendor Financing Facilities or other agreements or
arrangements to finance the Build-out; provided, however, that Debt
Incurred pursuant to this clause (i), other than Debt Incurred pursuant
to a Bank Credit Agreement or a Vendor Financing Facility, shall not
have a Stated Maturity on or earlier than the Stated Maturity of the
Securities, and shall not be mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or be redeemable at the option of
the holder thereof, in whole or in part, on or prior to the Stated
Maturity of the Securities;
(ii) Debt under any one or more Bank Credit Agreements or
other agreements or arrangements to finance working capital
requirements of Globalstar and any Refinancing Debt in respect of such
Debt; provided, however, at the time of the Incurrence of such Debt and
after giving effect thereto, the aggregate principal amount of all Debt
Incurred pursuant to this clause (ii) and then outstanding shall not
exceed $ million;
(iii) Debt owed by the Issuers to any Wholly-Owned
Restricted
-31-
<PAGE> 32
Subsidiary or Debt owed by any Wholly-Owned Restricted Subsidiary to
the Issuers or to another Wholly-Owned Restricted Subsidiary; provided,
however, that upon either (x) the transfer or other disposition by such
Wholly-Owned Restricted Subsidiary or the Issuers of any Debt so
permitted to a Person other than the Issuers or another Wholly-Owned
Restricted Subsidiary or (y) the issuance (other than directors,
qualifying shares), sale, lease, transfer or other disposition of
shares of Capital Stock (including by consolidation or merger) of such
Wholly-Owned Restricted Subsidiary to a Person other than the Issuers
or another such Wholly-Owned Restricted Subsidiary, the provisions of
this clause (iii) shall no longer be applicable to such Debt and such
Debt shall be deemed to have been Incurred by the Issuers thereof at
the time of such issuance, sale, lease, transfer or other disposition;
(iv) Refinancing Debt Incurred to Refinance Debt
Incurred pursuant to the first paragraph of this covenant or pursuant
to clause (i), (vi) or (vii) or this clause (iv) of this paragraph;
(v) Debt consisting of Permitted Interest Rate and
Currency Protection Agreements;
(vi) Debt represented by the Securities;
(vii) Debt outstanding on the Issue Date (other than
Debt described in clause (i), (ii), (iii), (vi) or (viii) of this
paragraph);
(viii) Debt (including Capital Lease Obligations) of
Globalstar or any Restricted Subsidiary financing the purchase, lease
or improvement of property (real or personal) or equipment (whether
through the direct purchase of assets or the Capital Stock of any
Person owning such assets), in each case Incurred no more than 180 days
after such purchase, lease or improvement of such property and any
Refinancing Debt in respect of such Debt, provided, however, that (x)
the amount of such Debt (net of original issue discount) does not
exceed, at the time initially Incurred, 90% of the fair market value of
such acquired property or equipment and (y) at the time of the
Incurrence of such Debt and after giving effect thereto, the aggregate
amount of all Debt Incurred pursuant to this clause (viii) and then
outstanding shall not exceed [$ million;]
(ix) Debt consisting of performance and other similar
bonds and reimbursement obligations Incurred in the ordinary course of
business securing the performance of contractual, franchise or license
obligations of the Issuers or a Restricted Subsidiary, or in respect of
a letter of credit obtained to secure such performance; and
(x) Debt in an aggregate principal amount which,
together with all other Debt of the Issuers and the Restricted
Subsidiaries outstanding on the date of such Incurrence (other than
Debt permitted by clauses (i) through (ix) above or Section 4.3(a))
does not exceed [$ million.]
-32-
<PAGE> 33
(c) For purposes of determining compliance with this Section
4.3, in the event that an item of Debt meets the criteria of more than one of
the types of Debt the Issuers and the Restricted Subsidiaries are permitted to
Incur, the Issuers or such Restricted Subsidiary, as the case may be, shall have
the right, in their sole discretion, to classify such item of Debt at the time
of its Incurrence and shall only be required to include the amount and type of
such Debt under the clause permitting the Debt as so classified.
SECTION 4.4. Future Guarantors. In the event that, after the
Issue Date, Globalstar shall acquire or create a Subsidiary, Globalstar shall
cause such Subsidiary (unless such Subsidiary is a Transitory Equipment
Subsidiary or is an Unrestricted Subsidiary) to become a Subsidiary Guarantor
and to Guarantee the Securities pursuant to a Subsidiary Guaranty.
SECTION 4.5. Limitation on Restricted Payments. (a) The
Issuers may not, and may not permit any Restricted Subsidiary, directly or
indirectly, to make a Restricted Payment if at the time such Issuers or such
Restricted Subsidiary makes such Restricted Payment:
(1) a Default shall have occurred and be continuing (or would
result therefrom);
(2) Globalstar is not able to Incur an additional $1. of Debt
pursuant to Section 4.3(a); or
(3) the aggregate amount of such Restricted Payment and all
other Restricted Payments since the Issue Date would exceed the sum of:
(A) % of the Consolidated Net Income of Globalstar accrued
during the period (treated as one accounting period) from the
beginning of the fiscal quarter immediately following the
fiscal quarter during which the Issue Date occurs to the end
of the most recent fiscal quarter for which internal
financial statements are available at the time of such
Restricted Payment (or, in case such Consolidated Net Income
shall be a deficit, minus % of such deficit);
(B) the aggregate Net Cash Proceeds received by Globalstar from
the issuance or sale of its Capital Stock (other than
Disqualified Stock) subsequent to the Issue Date (other than
an issuance or sale to a Subsidiary of Globalstar and other
than an issuance or sale to an employee stock ownership plan
or to a trust established by Globalstar or any of its
Subsidiaries for the benefit of their employees);
(C) the amount by which Debt of Globalstar is reduced on the
balance sheet of Globalstar upon the conversion or exchange
(other than by a Subsidiary of Globalstar) subsequent to the
Issue Date of any Debt of Globalstar convertible or
exchangeable for Capital Stock (other than Disqualified
Stock) of Globalstar (less the amount of any cash, or the
fair value of any other property, distributed by Globalstar
upon such conversion or exchange); and
-33-
<PAGE> 34
(D) an amount equal to the sum of (i) the net reduction in
Investments in Unrestricted Subsidiaries resulting from
dividends, repayments of loans or advances or other transfers
of assets, in each case to Globalstar or any Restricted
Subsidiary from Unrestricted Subsidiaries, and (ii) the
portion (proportionate to Globalstar's equity interest in such
Subsidiary) of the fair market value of the net assets of an
Unrestricted Subsidiary at the time such Unrestricted
Subsidiary is designated a Restricted Subsidiary; provided,
however, that the foregoing sum shall not exceed, in the case
of any Unrestricted Subsidiary, the amount of Investments
previously made (and treated as a Restricted Payment) by
Globalstar or any Restricted Subsidiary in such Unrestricted
Subsidiary.
(b) Notwithstanding the foregoing, Globalstar may subject to
clause (vi) below, pay any dividend on Capital Stock of any class within 60 days
after the declaration thereof if, on the date when the dividend was declared,
Globalstar could have paid such dividend in accordance with the foregoing
provisions; (ii) repurchase any shares of its Capital Stock or options to
acquire its Capital Stock from Persons who were formerly officers or employees
of Globalstar; provided, however, that the aggregate amount of all such
repurchases made pursuant to this clause (ii) shall not exceed [$__ million,]
plus the aggregate cash proceeds received by Globalstar since the Issue Date on
sale of its Capital Stock or options to acquire its Capital Stock to members,
officers, managers and employees of Globalstar or any of its Subsidiaries; (iii)
Refinance, and permit its Restricted Subsidiaries to Refinance, any Debt
otherwise permitted to be Refinanced by clause (iv) of Section 4.3(b); (iv) so
long as Globalstar is treated as a partnership for U.S. federal income tax
purposes, make distributions in respect of members, or partners' income tax
liability with respect to Globalstar in an amount not to exceed the Tax Amount;
(v) make distributions to GTL to pay GTL's ordinary and reasonable operating
expenses related to Globalstar, as set forth in an Officers' Certificate
delivered to the Trustee; (vi) pay any scheduled dividend on Special Preferred
Obligations; provided, however, that at the time of payment of any such dividend
(other than a dividend paid only by distributions of additional Special
Preferred Obligations), no Default shall have occurred and be continuing (or
result therefrom); (vii) make any Restricted Payment by exchange for, or out of
the proceeds of the substantially concurrent sale of, or capital contribution in
respect of, Capital Stock of Globalstar (other than Disqualified Stock and other
than Capital Stock issued or sold to a Subsidiary of Globalstar or an employee
stock ownership plan or to a trust established by Globalstar or any of its
Subsidiaries for the benefit of their employees); [(viii) contribute its
Investment in Globaltel Russia to an Unrestricted Subsidiary; ] and (ix) make
other Restricted Payments in an aggregate amount not to exceed [$__ million.]
(c) Any Restricted Payment made pursuant to clauses (ii),
(iii), (iv), (vi), (vii), (viii) and (ix) of Section 4.5(b) shall be excluded
from the calculation of the aggregate amount of Restricted Payments made since
the Issue Date; provided, however, that the Net Cash Proceeds from the issuance
of Capital Stock pursuant to clauses (ii) and (vii) of Section 4.5(b) shall be
excluded from the calculation of amounts
-34-
<PAGE> 35
under clause (B) of Section 4.5(a)(3).
SECTION 4.6. Dividend and other Payment Restrictions Affecting
Subsidiaries. (a) The Issuers may not, and may not permit any Restricted
Subsidiary, directly or indirectly, to create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary to:
(i) pay dividends or make any other distributions to the
Issuers or any of their Restricted Subsidiaries on its Capital Stock or
with respect to any other interest or participation in, or measured by,
its profits;
(ii) pay any indebtedness owed to the Issuers or any
Restricted Subsidiary;
(iii) make loans or advances to the Issuers or any
Restricted Subsidiary; or
(iv) transfer any of its properties or assets to the
Issuers or any Restricted Subsidiary.
(b) Notwithstanding the foregoing, the Issuers may, and may
permit any Restricted Subsidiary to, suffer to exist any such encumbrance or
restriction (i) pursuant to any agreement in effect on the Issue Date; (ii)
pursuant to an agreement relating to any Acquired Debt, which encumbrance or
restriction is not applicable to any Person, or the properties or assets of any
Person, other than the Person so acquired and its Subsidiaries; (iii) pursuant
to an agreement effecting a Refinancing of Debt Incurred pursuant to an
agreement referred to in clause (i) or (ii) above or clause (iv) below,
provided, however, that the provisions contained in such Refinancing agreement
relating to such encumbrance or restriction are no more restrictive taken as a
whole (as determined in good faith by the Chief Financial Officer of Globalstar)
than the provisions contained in the predecessor agreement the subject thereof;
(iv) in the case of clause (iii) of Section 4.6(a), consisting of restrictions
contained in any security agreement (including a Capital Lease Obligation)
securing Debt of the Issuers or a Restricted Subsidiary otherwise permitted
under this Indenture, but only to the extent such encumbrances or restrictions
restrict the transfer of the property subject to such security agreement; (v) in
the case of clause (iv) of Section 4.6(a), consisting of customary nonassignment
provisions entered into in the ordinary course of business in leases governing
leasehold interests, but only to the extent such provisions restrict the
transfer of the lease or the property thereunder; (vi) with respect to a
Restricted Subsidiary, imposed pursuant to an agreement which has been entered
into for the sale or disposition of all or substantially all of the Capital
Stock or assets of such Restricted Subsidiary; provided, however, that after
giving effect to such transaction no Default shall have occurred or be
continuing, that such restriction terminates if such transaction is not
consummated and that such consummation or abandonment of such transaction occurs
within one year of the date such agreement was entered into; (vii) imposed
-35-
<PAGE> 36
pursuant to applicable law or regulations; (viii) imposed pursuant to this
Indenture and the Securities; or (ix) consisting of any restriction on the sale
or other disposition of assets or property securing Debt as a result of a
Permitted Lien on such assets or property.
SECTION 4.7. Asset Dispositions. (a) The Issuers may not, and
may not permit any Restricted Subsidiary to, directly or indirectly, make any
Asset Disposition unless: (i) Globalstar, Globalstar Capital or such Restricted
Subsidiary, as the case may be, receives consideration at the time of such Asset
Disposition at least equal to the fair market value (including as to the value
of all non-cash consideration) of the shares and assets subject to such Asset
Disposition, as determined by the General Partners' Committee of Globalstar in
good faith and evidenced by a resolution filed with the Trustee; (ii) at least
80% of the consideration thereof received by Globalstar, Globalstar Capital or
such Restricted Subsidiary, as the case may be, consists of (a) cash or
Marketable Securities or (b) the assumption of Debt (other than Subordinated
Obligations) of Globalstar, Globalstar Capital or such Restricted Subsidiary and
the release of the Issuers and the Restricted Subsidiaries, as applicable, from
all liability on the Debt assumed; and (iii) all Net Available Proceeds, less
any amounts invested within 180 days of such disposition in assets that comply
with Section 4.12, are applied within 180 days of such disposition (A) first, to
the permanent repayment or reduction of Debt then outstanding under any Bank
Credit Agreement or Vendor Financing Facility, to the extent such agreement or
facility would require such application or prohibit payments pursuant to the
following clause (B), (B) second, to the extent of remaining Net Available
Proceeds, to make an Offer to Purchase outstanding Securities at 100% of their
principal amount plus accrued and unpaid interest to the date of purchase
thereon and, to the extent required by the terms thereof, any other Debt of
Globalstar, Globalstar Capital or a Restricted Subsidiary that ranks pari passu
with the Securities at a price no greater than 100% of the principal amount
thereof plus accrued and unpaid interest to the date of purchase and (C) third,
to the extent of any remaining Net Available Proceeds following the completion
of the offer to Purchase, to the repayment of other Debt of Globalstar or Debt
of a Restricted Subsidiary, to the extent permitted under the terms thereof. To
the extent any Net Available Proceeds remain after such uses, Globalstar and the
Restricted Subsidiaries may use such amounts for any purposes not prohibited by
this Indenture. Notwithstanding the foregoing, these provisions shall not apply
to any Asset Disposition which constitutes a transfer, conveyance, sale, lease
or other disposition of all or substantially all of Globalstar's properties or
assets pursuant to Section 5.1(a).
(b) The Issuers shall comply, to the extent applicable, with
the requirements of Section 14(e) of the Exchange Act and any other securities
laws or regulations in connection with the repurchase of Securities pursuant to
this Section 4.7. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Section 4.7, the Issuers shall
comply with the applicable securities laws and regulations and shall not be
deemed to have breached their obligations under this Section 4.7 by virtue
thereof.
-36-
<PAGE> 37
SECTION 4.8. Transactions with Affiliates. (a) The Issuers may
not, and may not permit any Restricted Subsidiary, directly or indirectly, to
enter into any transactions (or series of related transactions) with an
Affiliate or Related Person of the Issuers (other than the Issuers or a
Wholly-Owned Restricted Subsidiary) (an "Affiliate Transaction") unless:
(i) such Affiliate Transaction is on terms that are no
less favorable to Globalstar, Globalstar Capital or the relevant
Restricted Subsidiary than those that would have been obtained in a
comparable transaction by Globalstar, Globalstar Capital or such
Restricted Subsidiary, as the case may be, with an unrelated Person;
and
(ii) Globalstar delivers to the Trustee:
(A) with respect to any Affiliate Transaction involving aggregate consideration
in excess of $__ million (other than financing transactions that are not vendor
financing transactions pursuant to a Vendor Financing Facility) and entered into
in connection with the Build-out, a certificate of the Chief Executive Officer
of Globalstar to the effect that a majority of the disinterested limited
partners of Globalstar have approved such Affiliate Transaction; provided,
however, that there is at least one disinterested limited partner at the time of
such Affiliate Transaction; provided further, however, that any limited partner
receiving any compensation in respect of its approval shall be deemed not to be
a disinterested limited partner; or
(B) (1) with respect to any Affiliate Transaction involving aggregate
consideration in excess of $__ million, a certificate of the Chief Executive
officer of Globalstar to the effect that such Affiliate Transaction complies
with clause (i) above; and (2) with respect to any Affiliate Transaction
involving aggregate consideration in excess of [$10 million], an opinion as to
the fairness to Globalstar, Globalstar Capital or such Restricted Subsidiary, as
the case may be, of such Affiliate Transaction from a financial point of view
issued by an Independent Financial Advisor or, with respect to
telecommunications-related matters, a recognized expert in the satellite
telecommunications industry.
(b) Notwithstanding the foregoing Section 4.8(a), the
following shall be deemed not to be Affiliate Transactions:
(i) employee compensation arrangements entered into in
the ordinary course of business and approved by the General Partners'
Committee of Globalstar;
(ii) transactions solely between or among the Issuers and
the Restricted Subsidiaries;
(iii) Restricted Payments permitted by Section 4.5;
-37-
<PAGE> 38
(iv) Investments by an Affiliate or Related person of
Globalstar or Globalstar Capital in the Capital Stock (other than
Disqualified Stock) of Globalstar or any Restricted Subsidiary; and
(v) an Affiliate or Related Person of the Issuers acting
as agent for the placement or acquisition of launch services or
insurance on behalf of the Issuers or any Restricted Subsidiary.
SECTION 4.9. Limitation on Issuances and Sales of Capital,
Stock of Restricted Subsidiaries. The Issuers may not, and may not permit any
Restricted Subsidiary to, issue, transfer, convey, sell or otherwise dispose of
any shares of Capital Stock of a Restricted Subsidiary or securities convertible
or exchangeable into, or options, warrants, rights or any other interest with
respect to, Capital Stock of a Restricted Subsidiary to any person other than
Globalstar, Globalstar Capital or a Wholly-Owned Restricted Subsidiary except
(i) in a transaction consisting of a sale of all the Capital Stock of such
Restricted Subsidiary and that complies with the provisions of Section 4.7 to
the extent such provisions apply; (ii) if required, the issuance, transfer,
conveyance, sale or other disposition of directors, qualifying shares; (iii) in
a transaction in which, or in connection with which, an Issuer or a Restricted
Subsidiary acquires at the same time sufficient Capital Stock of such Restricted
Subsidiary to at least maintain the same percentage ownership interest it had
prior to such transaction; and (iv) Disqualified Stock of a Restricted
Subsidiary Incurred to Refinance Disqualified Stock of such Restricted
Subsidiary; provided, however, that the amounts of the redemption obligations of
such Disqualified Stock shall not exceed the amounts of the redemption
obligations of, and such Disqualified Stock shall have redemption obligations no
earlier than those required by, the Disqualified Stock being Refinanced.
SECTION 4.10. Change of Control. (a) Upon the occurrence of a
Change of Control, each Holder of Securities shall have the right to require
that the Issuers repurchase such Holder's Securities at a purchase price in cash
equal to 101% of the principal amount thereof plus accrued and unpaid interest
to the date of purchase (subject to the right of Holders of record on the
relevant record date to receive interest due on the relevant interest payment
date).
(b) Within 30 days following any Change of Control, the
Issuers shall mail a notice to each Holder with a copy to the Trustee stating:
(1) that a Change of Control has occurred and that such Holder has the
right to require the Issuers to purchase such Holder's Securities at a
purchase price in cash equal to 101% of the principal amount thereof
plus accrued and unpaid interest to the date of purchase (subject to
the right of Holders of record on the relevant record date to receive
interest on the relevant interest payment date);
(2) the circumstances and relevant facts regarding such Change of Control
(including information with respect to pro forma historical income,
cash flow and capitalization,
-38-
<PAGE> 39
each after giving effect to such Change of Control);
(3) the repurchase date (which shall be no earlier than 30 days nor later
than 60 days from the date such notice is mailed); and
(4) the instructions determined by the Issuers, consistent with this
Section 4.10, that a Holder must follow in order to have its Securities
purchased.
(c) Holders electing to have a Security purchased will be
required to surrender the Security, with an appropriate form duly completed, to
the Issuers at the address specified in the notice at least three Business Days
prior to the purchase date. Holders will be entitled to withdraw their election
if the Trustee or the Issuers receive not later than one Business Day prior to
the purchase date, a facsimile transmission or letter setting forth the name of
the Holder, the principal amount of the Security which was delivered for
purchase by the Holder and a statement that such Holder is withdrawing his
election to have such Security purchased.
(d) on the purchase date, all Securities purchased by the
Issuers under this Section shall be delivered by the Trustee for cancellation,
and the Issuers shall pay the purchase price plus accrued and unpaid interest,
if any, to the Holders entitled thereto.
(e) The Issuers shall comply, to the extent applicable, with
the requirements of Section 14(e) of the Exchange Act and any other securities
laws or regulations in connection with the repurchase of Securities pursuant to
this Section. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Section, the Issuers shall comply
with the applicable securities laws and regulations and shall not be deemed to
have breached their obligations under this Section by virtue thereof.
SECTION 4.11. Limitation on Liens. The Issuers may not, and
may not permit any Restricted Subsidiary, directly or indirectly, to Incur or
permit to exist any Lien on any asset now owned or hereafter acquired, or any
income or profits therefrom or assign or convey any right to receive income
therefrom, except for the following Liens (each, a "Permitted Lien"):
(i) Liens to secure up to $___ million, minus the
aggregate principal amount of Notes issued pursuant to the Initial
Purchasers, over-allotment option, of Debt permitted to be Incurred
under this Indenture (including the Debt outstanding at any time under
the 11 3/8 Indenture, the 11 1/4 Indenture and the 10 3/4 Indenture) so
long as effective provision is made to secure the Securities equally
and ratably with (or prior to) the obligations so secured;
(ii) Liens in favor of Holders of the Securities;
(iii) Liens in favor of the Issuers;
(iv) Liens on property or shares of Capital Stock of
another Person at
-39-
<PAGE> 40
the time such other Person becomes a Subsidiary of such Person;
provided, however, that such Liens are not created, incurred or assumed
in connection with, or in contemplation of, such other Person becoming
such a Subsidiary; provided further, however, that such Lien may not
extend to any other property owned by such Person or any of its
Subsidiaries (other than inventory and receivables generated in the
ordinary course of business and substitute property);
(v) Liens on property at the time such Person or any of
its Subsidiaries acquires such property, including any acquisition by
means of a merger or consolidation with or into such Person or a
Subsidiary of such Person; provided, however, that such Liens are not
created, incurred or assumed in connection with, or in contemplation
of, such acquisition; provided further, however, that the Liens may not
extend to any other property owned by such Person or any of its
Subsidiaries;
(vi) Liens securing Debt Incurred pursuant to clause
(viii) of Section 4.3(b); provided, however, that the Lien may not
extend to any assets owned by an Issuer or any Restricted Subsidiary
other than (a) the assets being financed or refinanced and income and
proceeds therefrom and (b) any other assets of such obligor securing
other Debt of such obligor to the same secured party;
(vii) Liens to secure the performance of statutory
obligations, surety or appeal bonds, performance bonds or other
obligations of a like nature incurred in the ordinary course of
business;
(viii) Liens existing on the Issue Date;
(ix) Liens for taxes, assessments or governmental charges
or claims that are not yet delinquent or that are being contested in
good faith by appropriate proceedings promptly instituted and
diligently concluded; provided, however, that any reserve or other
appropriate provision as shall be required in conformity with GAAP
shall have been made therefor;
(x) Liens incurred in the ordinary course of business of
the Issuers and the Restricted Subsidiaries with respect to obligations
that do not exceed $___ million at any one time outstanding and that:
(A) are not incurred in connection with the borrowing of money or the obtaining
of advances or credit (other than trade credit in the ordinary course of
business); and
(B) do not in the aggregate materially detract from the value of the property or
materially impair the use thereof in the operation of business by the Issuers
and the Restricted Subsidiaries.
SECTION 4.12. Business Activities. The Issuers may not, and
may not permit any Restricted Subsidiary to, engage in any business other than
that which is related to the design, development, procurement, installation,
operation and ownership of
-40-
<PAGE> 41
telecommunications systems and businesses.
SECTION 4.13. Maintenance of Insurance.
(a) The Issuers shall:
(i) maintain, with respect to each satellite in the
Globalstar System, for the period beginning at least 45 days prior to,
and at all times up to and including, the launch of such satellite,
launch insurance with respect to such satellite in an amount sufficient
to provide for the construction, launch and insurance of a replacement
satellite to be payable in the event of a launch failure; and
(ii) in the event that more than of
Globalstar's satellites have ceased Operating for 90 consecutive days
and fewer than satellites are Operating as part of the
Globalstar System (such an event, an "In-orbit Insurance Event"),
obtain (within 60 days of such In-orbit Insurance Event), and
thereafter maintain, in-orbit insurance in an amount sufficient to
provide for the construction, launch and insurance of replacement
satellites for at least of Globalstar's satellites still
operating or, if such in-orbit insurance in such amount is not then
commercially available from traditional insurance providers, such
lesser amount as is so available.
(b) The obligation of the Issuers to maintain insurance
pursuant to this covenant may be satisfied by any combination of:
(i) insurance commitments obtained from any
recognized insurance provider;
(ii) insurance commitments obtained from any other
entity if the General Partners' Committee of Globalstar determines in
good faith that such entity is creditworthy and otherwise capable of
bearing the financial risk of providing such insurance;
(iii) unrestricted cash segregated and maintained by
Globalstar in a segregated account (the "Insurance Account") solely for
disbursement in accordance with Section 4.13(d) ("Cash Insurance"); and
(iv) in respect of the insurance described in clause
M of Section 4.13(a), self-insurance for the launch of up to
satellites; provided, however, that no earlier than 60 days prior to
the scheduled launch of any such satellites:
(a) the Issuers deliver an officers, Certificate to the Trustee certifying that
they have sufficient committed capital to construct, launch and insure at least
satellites, in addition to the satellites with respect to which the Issuers
are self-insuring; and
(b) the Issuers obtain an opinion from an investment banking firm that is an
Independent Financial Advisor to the effect that the Issuers would be able to
raise sufficient capital in
-41-
<PAGE> 42
the capital markets to replace, relaunch and insure such satellites in the event
of a failure to successfully launch such satellites.
(c) Within 30 days following any date on which the
Issuers are required to obtain insurance pursuant to this Indenture, the Issuers
will deliver to the Trustee an insurance certificate certifying the amount of
insurance then carried and an Officers, Certificate stating that such insurance,
together with any other insurance or Cash Insurance maintained by the Issuers,
complies with this Indenture. In addition, the Issuers will cause to be
delivered to the Trustee no less than once each year an insurance certificate
setting forth the amount of insurance then carried, which insurance certificate
shall entitle the Trustee to:
(i) notice of any claim under any such insurance
policy; and
(ii) at least 30 days, notice from the provider of
such insurance prior to the cancellation of any such insurance.
In the event that the Issuers maintain any Cash Insurance in satisfaction of any
part of their obligation to maintain insurance pursuant to this Section 4.13,
the Issuers shall deliver an Officers' Certificate to the Trustee in lieu of any
insurance certificate otherwise required by this Section 4.13.
(d) In the event that the Issuers receive any
proceeds of any launch or in-orbit insurance that they are required to maintain
pursuant to this Section 4.13, such proceeds shall constitute "Insurance
Proceeds". In addition, if the Issuers maintain any Cash Insurance in
satisfaction of any part of their obligations to maintain in-orbit insurance
pursuant to this Section 4.13, then upon the occurrence of the event (i.e., the
in-orbit failure) that would have entitled the Issuers to the payment of
insurance had the Issuers purchased insurance from an insurance provider, the
cash maintained in the Insurance Account shall constitute "Insurance Proceeds".
Promptly following the receipt of any Insurance Proceeds, the Issuers shall
apply such Insurance Proceeds in accordance with the provisions of Section 4.7;
provided, however, that Insurance Proceeds shall only be required to be so
applied to the extent that the aggregate amount of all Insurance Proceeds
received by the Issuers exceeds $5 million in any 12-month period.
SECTION 4.14. Compliance certificate; Statement by officers as
to Default. The Issuers shall deliver to the Trustee within 120 days after the
end of each fiscal year of the Issuers an Officers, Certificate, one of the
signers of which shall be the principal executive, principal financial or
principal accounting officer of the Issuers, stating that in the course of the
performance by the signers of their duties as officers of the Issuers they would
normally have knowledge of any Default and whether or not the signers know of
any Default that occurred during such period. If they do, the certificate shall
describe the Default, its status and what action the Issuers are taking or
propose to take with respect thereto. The Issuers also shall comply with TIA
Section 314(a)(4).
SECTION 4.15. Further Instruments and Acts. Upon request of
the Trustee,
-42-
<PAGE> 43
the Issuers will execute and deliver such further instruments and do such
further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture.
SECTION 4.16. Business Activities of Globalstar Capital.
Globalstar Capital shall not engage in any trade or business, and shall conduct
no business activity, other than the Incurrence of Debt permitted by Section 4.3
and the issuance of Capital Stock to Globalstar or any Wholly Owned Restricted
Subsidiary and activities incidental thereto.
SECTION 4.17. Calculation of Original Issue Discount. The
Issuers shall file with the Trustee promptly at the end of each calendar year
(i) a written notice specifying the amount of original issue discount (including
daily rates and accrual periods) accrued on outstanding Securities as of the end
of such year and (ii) such other specific information relating to such original
issue discount as may then be relevant under the Code, as amended from time to
time.
ARTICLE 5.
Successor Issuers
SECTION 5.1. When Issuers May Merge or Transfer Assets. (a)
Neither Globalstar nor Globalstar Capital may consolidate with or merge with or
into, or convey, transfer or lease, in one transaction or a series of
transactions, all or substantially all its assets to any Person; provided,
however, that Globalstar may consolidate with or merge with or into, or convey,
transfer or lease, in one transaction or a series of transactions, all or
substantially all its assets to any Person, if:
(i) the resulting, surviving or transferee Person (the
"Successor Issuer") shall be a Person organized and existing under the
laws of Bermuda the United States of America, any State thereof or the
District of Columbia and the Successor Issuer (if not Globalstar) shall
expressly assume, by an indenture supplemental hereto, executed and
delivered to the Trustee, in form satisfactory to the Trustee, all the
obligations of Globalstar under the Securities and this Indenture;
(ii) immediately after giving effect to such transaction
(and treating any Debt which becomes an obligation of the Successor
Issuer or any Subsidiary as a result of such transaction as having been
Incurred by the Successor Issuer or such Subsidiary at the time of such
transaction), no Default shall have occurred and be continuing;
(iii) immediately after giving effect to such transaction,
the Successor Issuer would be able to Incur an additional $1 of Debt
pursuant to Section 4.3(a);
(iv) immediately after giving effect to such transaction,
the Successor Issuer shall have Consolidated Net Worth in an amount
that is not less than the
-43-
<PAGE> 44
Consolidated Net Worth of Globalstar immediately prior to such
transaction; and
(v) Globalstar shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that such
transaction and such supplemental indenture (if any) comply with this
Indenture.
The Successor Issuer shall be the successor to Globalstar and
shall succeed to, and be substituted for, and may exercise every right and power
of, Globalstar under this Indenture, and Globalstar (other than in the case of a
lease) shall be released from the obligation to pay the principal of and
interest on the Securities.
(b) Globalstar shall not permit any Subsidiary Guarantor to
consolidate with or merge with or into, or convey, transfer or lease, in one
transaction or a series of transactions, all or substantially all of its assets
to any Person unless: (i) the resulting, surviving or transferee Person (if not
such Subsidiary) shall be a Person organized and existing under the laws of the
jurisdiction under which such Subsidiary was organized or under the laws of the
United States of America, or any State thereof or the District of Columbia, and
such Person shall expressly assume, by a guaranty agreement in a form acceptable
to the Trustee, all the obligations of such Subsidiary, if any, under its
Subsidiary Guaranty; (ii) immediately after giving effect to such transaction or
transactions on a pro forma basis (and treating any Debt which becomes an
obligation of the resulting, surviving or transferee Person as a result of such
transaction as having been issued by such Person at the time of such
transaction), no Default shall have occurred and be continuing; and (iii)
Globalstar delivers to the Trustee an Officers' Certificate and an Opinion of
Counsel, each stating that such consolidation, merger or transfer and such
guaranty agreement, if any, complies with this Indenture.
ARTICLE 6.
Defaults and Remedies
SECTION 6.1. Events of Default. An "Event of Default" occurs
if:
(1) the Issuers default in any payment of interest on any
Security when the same becomes due and payable, and such default
continues for a period of 30 days;
(2) the Issuers (i) default in the payment of the principal of
any Security when the same becomes due and payable at its Stated
Maturity, upon optional redemption, upon required repurchase, upon
declaration or otherwise, or (ii) fail to redeem or purchase Securities
when required pursuant to this Indenture or the Securities;
(3) the Issuers fail to comply with Section 5.1;
(4) the Issuers fail to comply with Section 4.2, 4.3, 4.4,
4.5, 4.6, 4.7,
-44-
<PAGE> 45
4.8, 4.9, 4.10, 4.11, 4.12, 4.13 or 4.16 (other than a failure to
purchase Securities when required under Section 4.7 or 4.10) and such
failure continues for 30 days after the notice specified below;
(5) the Issuers fail to comply with any of their agreements in
the Securities or this Indenture (other than those referred to in
clause (1), (2), (3) or (4) above) and such failure continues for 60
days after the notice specified below;
(6) Debt of the Issuers or any Significant Subsidiary is not
paid within any applicable grace period after final maturity or is
accelerated by the holders thereof because of a default and the total
amount of such Debt unpaid or accelerated exceeds [$___ million], or
its foreign currency equivalent at the time and such failure continues
for 10 days after the notice specified below;
(7) any Issuer or any Significant Subsidiary pursuant to or
within the meaning of any Bankruptcy Law:
(A) commences a voluntary case;
(B) consents to the entry of an order for relief against it in an involuntary
case;
(C) consents to the appointment of a Custodian of it or for any substantial part
of its property; or
(D) makes a general assignment for the benefit of its creditors;
or takes any comparable action under any foreign laws relating to
insolvency;
(8) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(A) is for relief against the Issuers or any Significant Subsidiary in an
involuntary case;
(B) appoints a Custodian of the Issuers or any Significant Subsidiary or for any
substantial part of its property; or
(C) orders the winding up or liquidation of the Issuers or any Significant
Subsidiary;
or any similar relief is granted under any foreign laws and the order
or decree remains unstayed and in effect for 60 days;
(9) any judgment or decree for the payment of money in excess
of or its foreign currency equivalent at the time is entered
against the Issuers or any Significant Subsidiary, remains outstanding
for a period of 60 days following the entry of such judgment or decree
and is not discharged, waived or the execution thereof stayed within 10
days after the notice specified below; or
-45-
<PAGE> 46
(10) a Subsidiary Guaranty ceases to be in full force and
effect (other than in accordance with the terms of such Subsidiary
Guaranty) or a Subsidiary Guarantor denies or disaffirms its
obligations under its Subsidiary Guaranty.
The foregoing will constitute Events of Default whatever the
reason for any such Event of Default and whether it is voluntary or involuntary
or is effected by operation of law or pursuant to any judgment, decree or order
of any court or any order, rule or regulation of any administrative or
governmental body.
The term "Bankruptcy Law" means Title 11, United States Code,
or any similar Federal or state law for the relief of debtors. The term
"Custodian" means any receiver, trustee, assignee, liquidator, custodian or
similar official under any Bankruptcy Law.
A Default under clauses (4), (5), or (9) is not an Event of
Default until the Trustee or the holders of at least 25% in principal amount of
the outstanding Securities notify the Issuers of the Default and the Issuers do
not cure such Default within the time specified after receipt 6f such notice.
Such notice must specify the Default, demand that it be remedied and state that
such notice is a "Notice of Default".
The Issuers shall deliver to the Trustee, within 30 days after
the occurrence thereof, written notice in the form of an Officers' Certificate
of any Event of Default under clause (6) or (10) and any event which with the
giving of notice or the lapse of time would become an Event of Default under
clause (4), (5) or (9), its status and what action the Issuers are taking or
propose to take with respect thereto.
SECTION 6.2. Acceleration. If an Event of Default (other than
an Event of Default specified in Section 6.1(7) or (8) with respect to the
Issuers) occurs and is continuing, the Trustee by notice to the Issuers, or the
Holders of at least 25% in principal amount of the Securities by notice to the
Issuers and the Trustee, may declare the principal of and accrued but unpaid
interest on all the Securities to be due and payable. Upon such a declaration,
such principal, interest shall be due and payable immediately. If an Event of
Default specified in Section 6.1(7) or (8) with respect to the Issuers occurs,
the principal of and interest on all the Securities shall ipso facto become and
be immediately due and payable without any declaration or other act on the part
of the Trustee or any Securityholders. The Holders of a majority in principal
amount of the Securities by notice to the Trustee may rescind an acceleration
and its consequences if the rescission would not conflict with any judgment or
decree and if all existing Events of Default have been cured or waived except
nonpayment of principal or interest that has become due solely because of
acceleration. No such rescission shall affect any subsequent Default or impair
any right consequent thereto.
SECTION 6.3. Other Remedies. If an Event of Default occurs and
is continuing, the Trustee may pursue any available remedy to collect the
payment of principal of or interest on the Securities or to enforce the
performance of any provision of the Securities or this Indenture.
-46-
<PAGE> 47
The Trustee may maintain a proceeding even if it does not
possess any of the Securities or does not produce any of them in the proceeding.
A delay or omission by the Trustee or any Securityholder in exercising any right
or remedy accruing upon an Event of Default shall not impair the right or remedy
or constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative.
SECTION 6.4. Waiver of Past Defaults. The Holders of a
majority in principal amount of the Securities by notice to the Trustee may
waive an existing Default and its consequences except (i) a Default in the
payment of the principal of or interest on a Security or (ii) a Default in
respect of a provision that under Section 9.2 cannot be amended without the
consent of each Securityholder affected. When a Default is waived, it is deemed
cured, but no such waiver shall extend to any subsequent or other Default or
impair any consequent right.
SECTION 6.5. Control by Majority. The Holders of a majority in
principal amount of the Securities may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or of
exercising any trust or power conferred on the Trustee. However, the Trustee may
refuse to follow any direction that conflicts with law or this Indenture or,
subject to Section 7.1, that the Trustee determines is unduly prejudicial to the
rights of other Securityholders or would involve the Trustee in personal
liability; provided, however, that the Trustee may take any other action deemed
proper by the Trustee that is not inconsistent with such direction. Prior to
taking any action hereunder, the Trustee shall be entitled to reasonable
indemnification satisfactory to it in its sole discretion against all losses and
expenses caused by taking or not taking such action.
SECTION 6.6. Limitation on Suits. Except to enforce the right
to receive payment of principal, premium (if any) or interest when due, no
Securityholder may pursue any remedy with respect to this Indenture or the
Securities unless:
(1) the Holder gives to the Trustee written notice stating
that an Event of Default is continuing;
(2) the Holders of at least 25% in principal amount of the
Securities make a written request to the Trustee to pursue the remedy;
(3) such Holder or Holders offer to the Trustee reasonable
security or indemnity against any loss, liability or expense;
(4) the Trustee does not comply with the request within 60
days after receipt of the request and the offer of security or
indemnity; and
the Holders of a majority in principal amount of the Securities do not give the
Trustee a direction inconsistent with the request during such 60-day period.
A Securityholder may not use this Indenture to prejudice the
rights of another Securityholder or to obtain a preference or priority over
another Securityholder.
-47-
<PAGE> 48
SECTION 6.7. Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any Holder
to receive payment of principal of and interest on the Securities held by such
Holder, on or after the respective due dates expressed in the Securities, or to
bring suit for the enforcement of any such payment on or after such respective
dates, shall not be impaired or affected without the consent of such Holder.
SECTION 6.8. Collection Suit by Trustee. If an Event of
Default specified in Section 6.1(i) or (2) occurs and is continuing, the Trustee
may recover judgment in its own name and as trustee of an express trust against
the Issuers for the whole amount then due and owing (together with interest on
any unpaid interest to the extent lawful) and the amounts provided for in
Section 7.7.
SECTION 6.9. Trustee May File Proofs Claim. The Trustee may
file such proofs of claim and other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee and the Securityholders
allowed in any judicial proceedings relative to the Issuers, its creditors or
its property and, unless prohibited by law or applicable regulations, may vote
on behalf of the Holders in any election of a trustee in bankruptcy or other
Person performing similar functions, and any Custodian in any such judicial
proceeding is hereby authorized by each Holder to make payments to the Trustee
and, in the event that the Trustee shall consent to the making of such payments
directly to the Holders, to pay to the Trustee any amount due it for the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and its counsel, and any other amounts due the Trustee under Section
7.7.
SECTION 6.10. Priorities. If the Trustee collects any money or
property pursuant to this Article 6, it shall pay out the money or property in
the following order:
FIRST: to the Trustee for amounts due under Section 7.7;
SECOND: to Securityholders for amounts due and unpaid on the
Securities for principal, interest, ratably, without preference or priority of
any kind, according to the amounts due and payable on the Securities for
principal, interest, respectively; and
THIRD: to the Issuers.
The Trustee may fix a record date and payment date for any
payment to Securityholders pursuant to this Section. At least 15 days before
such record date, the Issuers shall mail to each Securityholder and the Trustee
a notice that states the record date, the payment date and amount to be paid.
SECTION 6.11. Undertaking for Costs. In any suit for the
enforcement of any right or remedy under this Indenture or in any suit against
the Trustee for any action taken or omitted by it as Trustee, a court in its
discretion may require the filing by any party litigant in the suit of an
undertaking to pay the costs of the suit, and the court in its discretion may
assess reasonable costs, including reasonable attorneys, fees and
-48-
<PAGE> 49
expenses, against any party litigant in the suit, having due regard to the
merits and good faith of the claims or defenses made by the party litigant. This
Section does not apply to a suit by the Trustee, a suit by a Holder pursuant to
Section 6.7 or a suit by Holders of more than 10% in principal amount of the
Securities.
SECTION 6.12. Waiver of Stay or Extension Laws. The Issuers
(to the extent they may lawfully do so) shall not at any time insist upon, or
plead, or in any manner whatsoever claim or take the benefit or advantage of,
any stay or extension law wherever enacted, now or at any time hereafter in
force, which may affect the covenants or the performance of this Indenture; and
the Issuers (to the extent that they may lawfully do so) hereby expressly waive
all benefit or advantage of any such law, and shall not hinder, delay or impede
the execution of any power herein granted to the Trustee, but shall suffer and
permit the execution of every such power as though no such law had been enacted.
ARTICLE 7.
Trustee
SECTION 7.1. Duties of Trustee. (a) If an Event of Default has
occurred and is continuing, the Trustee shall exercise the rights and powers
vested in it by this Indenture and use the same degree of care and skill in
their exercise as a prudent Person would exercise or use under the circumstances
in the conduct of such Person's own affairs.
(b) Except during the continuance of an Event of Default:
(1) the Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture and no
implied covenants or obligations shall be read into this Indenture
against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture. However, in the case of any such certificates or
opinions which by any provision hereof are specifically required to be
furnished to the Trustee, the Trustee shall be under a duty to examine
the same to determine whether or not they conform to the requirements
of this Indenture (but need not confirm or investigate the accuracy of
mathematical calculations or other facts stated therein).
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(1) this paragraph does not limit the effect of paragraph (b)
of this Section;
-49-
<PAGE> 50
(2) the Trustee shall not be liable for any error of judgment
made in good faith by a Trust Officer unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts; and
(3) the Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.5.
(d) Every provision of this Indenture that in any way relates
to the Trustee is subject to paragraphs (a), (b) and (c) of this Section.
(e) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Issuers.
(f) Money held in trust by the Trustee need not be segregated
from other funds except to the extent required by law.
(g) No provision of this Indenture shall require the Trustee
to expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers, if it shall have reasonable grounds to believe that repayment
of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
(h) Every provision of this Indenture relating to the conduct
or affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section and to the provisions of the TIA.
SECTION 7.2. Rights of Trustee. (a) The Trustee may rely on
any document believed by it to be genuine and to have been signed or presented
by the proper person. The Trustee need not investigate any fact or matter stated
in the document.
(b) Before the Trustee acts or refrains from acting, it may
require an officers, Certificate or an opinion of Counsel. The Trustee shall not
be liable for any action it takes or omits to take in good faith in reliance on
the Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee shall not be liable for any action it takes or
omits to take in good faith which it believes to be authorized or within its
rights or powers; provided, however, that the Trustee's conduct does not
constitute willful misconduct or negligence.
(e) The Trustee may consult with counsel of its selection, and
the advice or opinion of counsel with respect to legal matters relating to this
Indenture and
-50-
<PAGE> 51
the Securities shall be full and complete authorization and protection from
liability in respect to any action taken, omitted or suffered by it hereunder in
good faith and in accordance with the advice or opinion of such counsel.
(f) The Trustee shall not be deemed to have notice of any
Default or Event of Default unless a Trust officer has actual knowledge thereof
or unless written notice of any event which is in fact such a default is
received by the Trustee at the principal corporate trust office of the Trustee,
and such notice references the Securities and this Indenture.
SECTION 7.3. Individual Rights of Trustee. The Trustee in its
individual or any other capacity may become the owner or pledgee of Securities
and may otherwise deal with the Issuers or its Affiliates with the same rights
it would have if it were not Trustee. Any Paying Agent, Registrar, co-registrar
or co-paying agent may do the same with like rights. However, the Trustee must
comply with Sections 7.10 and 7.11.
SECTION 7.4. Trustee's Disclaimer. The Trustee shall not be
responsible for and makes no representation as to the validity or adequacy of
this Indenture or the Securities, it shall not be accountable for the Issuers'
use of the proceeds from the Securities, and it shall not be responsible for any
statement of the Issuers in this Indenture or in any document issued in
connection with the sale of the Securities or in the Securities other than the
Trustee's certificate of authentication.
SECTION 7.5. Notice of Defaults. If a Default occurs and is
continuing and if it is known to the Trustee, the Trustee shall mail to each
Securityholder notice of the Default within 90 days after it occurs. Except in
the case of a Default in payment of principal of or interest on any Security
(including payments pursuant to the mandatory redemption provisions of such
Security, if any), the Trustee may withhold the notice if and so long as a
committee of its Trust Officers in good faith determines that withholding the
notice is in the interests of Securityholders.
SECTION 7.6. Reports by Trustee to Holders. If required by TIA
Section 313(a), as promptly as practicable after each beginning with the ,
, and in any event prior to in each year, the Trustee shall mail to each
Securityholder a brief report dated as of that complies with such TIA
Section 313(a). The Trustee also shall comply with TIA Section 313(b).
A copy of each report at the time of its mailing to
Securityholders shall be filed with the Commission and each stock exchange (if
any) on which the Securities are listed. The Issuers agree to notify promptly
the Trustee whenever the Securities become listed on any stock exchange and of
any delisting thereof.
SECTION 7.7. Compensation and Indemnity. Issuers shall pay to
the Trustee from time to time such compensation as shall be agreed in writing
between the Issuers and the Trustee for its services. The Trustee's compensation
shall not be limited by any law on compensation of a trustee of an express
trust. The Issuers shall reimburse the Trustee upon request for all reasonable
out-of-pocket expenses incurred
-51-
<PAGE> 52
or made by it, including costs of collection, in addition to the compensation
for its services. Such expenses shall include the reasonable compensation and
expenses, disbursements and advances of the Trustee's agents, counsel,
accountants and experts. The Issuers shall indemnify the Trustee against any and
all loss, damage, claim, liability or reasonable expense (including reasonable
attorneys, fees and expenses) incurred by it in connection with the acceptance
or administration of this trust and the performance of its duties hereunder. The
Trustee shall notify the Issuers promptly of any claim for which it may seek
indemnity. Failure by the Trustee to so notify the Issuers shall not relieve the
Issuers of their obligations hereunder. The Issuers shall defend the claim and
the Trustee may have separate counsel and the Issuers shall pay the reasonable
fees and expenses of such counsel. The Issuers need not reimburse any expense or
indemnify against any loss, liability or expense incurred by the Trustee through
the Trustee's own willful misconduct, negligence or bad faith.
To secure the Issuers' payment obligations in this Section,
the Trustee shall have a lien prior to the Securities on all money or property
held or collected by the Trustee other than money or property held in trust to
pay principal of and interest on particular Securities.
The Issuers' payment obligations pursuant to this Section
shall survive the discharge of this Indenture. When the Trustee incurs expenses
after the occurrence of a Default specified in Section 6.1(7) or (8) with
respect to the Issuers, the expenses are intended to constitute expenses of
administration under the Bankruptcy Law.
SECTION 7.8. Replacement of Trustee. The Trustee may resign at
any time by so notifying the Issuers. The Holders of a majority in principal
amount of the Securities may remove the Trustee by so notifying the Trustee and
may appoint a successor Trustee. The Issuers shall remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the
Trustee or its property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns, is removed by the Issuers or by the
Holders of a majority in principal amount of the Securities and such Holders do
not reasonably promptly appoint a successor Trustee, or if a vacancy exists in
the office of Trustee for any reason (the Trustee in such event being referred
to herein as the retiring Trustee), the Issuers shall promptly appoint a
successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Issuers. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee
-52-
<PAGE> 53
shall mail a notice of its succession to Securityholders. The retiring Trustee
shall promptly transfer all property held by it as Trustee to the successor
Trustee, subject to the lien provided for in Section 7.7.
If a successor Trustee does not take office within 60 days
after the retiring Trustee resigns or is removed, the retiring Trustee or the
Holders of 10% in principal amount of the Securities may petition, at the
expense of the Issuers, any court of competent jurisdiction for the appointment
of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any
Securityholder may petition any court of competent jurisdiction for the removal
of the Trustee and the appointment of a successor Trustee.
Notwithstanding the replacement of the Trustee pursuant to
this Section, the Issuers, obligations under Section 7.7 shall continue for the
benefit of the retiring Trustee.
SECTION 7.9. Successor Trustee by Merger. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all its corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee.
In case at the time such successor or successors by merger,
conversion or consolidation to the Trustee shall succeed to the trusts created
by this Indenture any of the Securities shall have been authenticated but not
delivered, any such successor to the Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Securities so
authenticated; and in case at that time any of the Securities shall not have
been authenticated, any successor to the Trustee may authenticate such
Securities either in the name of any predecessor hereunder or in the name of the
successor to the Trustee; and in all such cases such certificates shall have the
full force which it is anywhere in the Securities or in this Indenture provided
that the certificate of the Trustee shall have.
SECTION 7.10. Eligibility: Disqualification. The Trustee shall
at all times satisfy the requirements of TIA Section 310(a). The Trustee shall
have a combined capital and surplus of at least $50,000,000 as set forth in its
most recent published annual report of condition. The Trustee shall comply with
TIA Section 310(b); provided, however, that there shall be excluded from the
operation of TIA Section 310(b)(1) any indenture or indentures under which other
securities or certificates of interest or participation in other securities of
the Issuers are outstanding if the requirements for such exclusion set forth in
TIA Section 310 (b) (1) are met.
SECTION 7.11. Preferential Collection of Claims Against
Issuers. The Trustee shall comply with TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). A Trustee who has resigned
or been removed shall be subject to TIA Section 311(a) to the extent indicated.
-53-
<PAGE> 54
ARTICLE 8.
Discharge of Indenture; Defeasance
SECTION 8.1. Discharge of Liability on Securities; Defeasance.
(a) When (i) the Issuers deliver to the Trustee all outstanding Securities
(other than Securities replaced pursuant to Section 2.7) for cancellation or
(ii) all outstanding Securities have become due and payable, whether at maturity
or as a result of the mailing of a notice of redemption pursuant to Article 3
hereof and the Issuers irrevocably deposit with the Trustee funds sufficient to
pay at maturity or upon redemption all outstanding Securities, including
interest thereon to maturity or such redemption date (other than Securities
replaced pursuant to Section 2.7), and if in either case the Issuers pay all
other sums payable hereunder by the Issuers, then this Indenture shall, subject
to Sections 8.1(c), cease to be of further effect. The Trustee shall acknowledge
satisfaction and discharge of this Indenture on demand of the Issuers
accompanied by an Officers, Certificate and an opinion of Counsel and at the
cost and expense of the Issuers.
(b) Subject to Sections 8.1(c) and 8.2, the Issuers at any
time may terminate (i) all their obligations under the Securities and this
Indenture ("legal defeasance option") or (ii) their obligations under Sections
4.2, 4.3, 4.4, 4.5, 4.6, 4.7, 4.8, 4.9, 4.10, 4.11, 4.12, 4.13 and 4.16 and the
operation of Sections 6.1(4), 6.1(6), 6.1(7), 6.1(8), 6.1(9) and 6.1(10) (but,
in the case of Sections 6.1(7) and (8), with respect only to Significant
Subsidiaries) and the limitations contained in Sections 5.1(a)(iii) and (iv)
("covenant defeasance option"). The Issuers may exercise their legal defeasance
option notwithstanding their prior exercise of their covenant defeasance option.
If the Issuers exercise their legal defeasance option, payment
of the Securities may not be accelerated because of an Event of Default with
respect thereto. If the Issuers exercise their covenant defeasance option,
payment of the Securities may not be accelerated because of an Event of Default
specified in Sections 6.1(4), 6.1(6), 6.1(7), 6.1(8), 6.1(9) and 6.1(10) (but,
in the case of Sections 6.1M and (8), with respect only to Significant
Subsidiaries) or because of the failure of the Issuers to comply with Section
5.1(a)(iii) or (iv). If the Issuers exercise their legal defeasance option or
their covenant defeasance option, each Subsidiary Guarantor, if any, shall be
released from all its obligations with respect to its Subsidiary Guaranty.
Upon satisfaction of the conditions set forth herein and upon
request of the Issuers, the Trustee shall acknowledge in writing the discharge
of those obligations that the Issuers terminate.
(c) Notwithstanding clauses (a) and (b) above, the Issuers'
obligations in Sections 2.3, 2.4, 2.5, 2.6, 2.7, 2.8, 7.7 and 7.8 and in this
Article 8 shall survive until the Securities have been paid in full. Thereafter,
the Issuers, obligations in Sections
-54-
<PAGE> 55
7.7, 8.4 and 8.5 shall survive.
SECTION 8.2. Conditions to Defeasance. The Issuers may
exercise their legal defeasance option or their covenant defeasance option only
if:
(1) the Issuers irrevocably deposit in trust with the Trustee
money or U.S. Government Obligations for the payment of principal of
and interest on the Securities to maturity or redemption, as the case
may be;
(2) the Issuers deliver to the Trustee a certificate from a
nationally recognized firm of independent accountants expressing their
opinion that the payments of principal and interest when due and
without reinvestment on the deposited U.S. Government Obligations plus
any deposited money without investment will provide cash at such times
and in such amounts as will be sufficient to pay principal and interest
when due on all the Securities to maturity or redemption, as the case
may be;
(3) 123 days pass after the deposit is made and during the
123-day period no Default specified in Sections 6.1[M] or (8) with
respect to the Issuers occurs which is continuing at the end of the
period;
(4) the deposit does not constitute a default under any other
agreement binding on the Issuers;
(5) the Issuers deliver to the Trustee an opinion .of Counsel
to the effect that the trust resulting from the deposit does not
constitute, or is qualified as, a regulated investment company under
the Investment Issuers Act of 1940;
(6) in the case of the legal defeasance option, the Issuers
shall have delivered to the Trustee an opinion of Counsel stating that
(i) the Issuers have received from, or there has been published by, the
Internal Revenue Service a ruling, or (ii) since the Issue Date there
has been a change in the applicable Federal income tax law, in either
case to the effect that, and based thereon such opinion of Counsel
shall confirm that, the Securityholders will not recognize income, gain
or loss for Federal income tax purposes as a result of such defeasance
and will be subject to Federal income tax on the same amounts, in the
same manner and at the same times as would have been the case if such
defeasance had not occurred;
(7) in the case of the covenant defeasance option, the Issuers
shall have delivered to the Trustee an opinion of Counsel to the effect
that the Securityholders will not recognize income, gain or loss for
Federal income tax purposes as a result of such covenant defeasance and
will be subject to Federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such
covenant defeasance had not occurred; and
(8) the Issuers deliver to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent to the defeasance
-55-
<PAGE> 56
and discharge of the Securities as contemplated by this Article 8 have
been complied with.
Before or after a deposit, the Issuers may make arrangements
satisfactory to the Trustee for the redemption of Securities at a future date in
accordance with Article 3.
SECTION 8.3. Application of Trust Money. The Trustee shall
hold in trust money or U.S. Government Obligations deposited with it pursuant to
this Article 8. It shall apply the deposited money and the money from U.S.
Government Obligations through the Paying Agent and in accordance with this
Indenture to the payment of principal of and interest on the Securities.
SECTION 8.4. Repayment to Issuers. The Trustee and the Paying
Agent shall promptly turn over to the Issuers upon written request any excess
money or securities held by them at any time.
Subject to any applicable abandoned property law, the Trustee
and the Paying Agent shall pay to the Issuers upon request any money held by
them for the payment of principal or interest that remains unclaimed for two
years, and, thereafter, Securityholders entitled to the money must look to the
Issuers for payment as general creditors.
SECTION 8.5. Indemnity for Government Obligations. The Issuers
shall pay and shall indemnify the Trustee against any tax, fee or other charge
imposed on or assessed against deposited U.S. Government Obligations or the
principal and interest received on such U.S. Government obligations.
SECTION 8.6. Reinstatement. If the Trustee or Paying Agent is
unable to apply any money or U.S. Government obligations in accordance with this
Article 8 by reason of any legal proceeding or by reason of any order or
judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the Issuers, obligations under this
Indenture and the Securities shall be revived and reinstated as though no
deposit had occurred pursuant to this Article 8 until such time as the Trustee
or Paying Agent is permitted to apply all such money or U.S. Government
obligations in accordance with this Article 8; provided, however, that, if the
Issuers have made any payment of interest on or principal of any Securities
because of the reinstatement of their obligations, the Issuers shall be
subrogated to the rights of the Holders of such Securities to receive such
payment from the money or U.S. Government Obligations held by the Trustee or
Paying Agent.
ARTICLE 9.
Amendments
SECTION 9.1. Without Consent of Holders. The Issuers and the
Trustee may amend this Indenture or the Securities without notice to or consent
of any
-56-
<PAGE> 57
Securityholder:
(1) to cure any ambiguity, omission, defect or inconsistency;
(2) to comply with Article 5;
(3) to provide for uncertificated Securities in addition to or
in place of certificated Securities; provided, however, that the
uncertificated Securities are issued in registered form for purposes of
Section 163(f) of the Code or in a manner such that the uncertificated
Securities are described in Section 163(f)(2)(B) of the Code;
(4) to add guarantees with respect to the Securities,
including any Subsidiary Guaranties, or to secure the Securities or to
release such guaranties in accordance with the terms of Section 4.4;
(5) to add to the covenants of the Issuers for the benefit of
the Holders or to surrender any right or power herein conferred upon
the Issuers;
(6) to comply with any requirements of the Commission in
connection with qualifying, or maintaining the qualification of, this
Indenture under the TIA; or
(7) to make any change that does not adversely affect the
rights of any Securityholder.
After an amendment under this Section becomes effective, the
Issuers shall mail to Securityholders a notice briefly describing such
amendment. The failure to give such notice to all Securityholders, or any defect
therein, shall not impair or affect the validity of an amendment under this
Section.
SECTION 9.2. With Consent of Holders. The Issuers and the
Trustee may amend this Indenture or the Securities without notice to any
Securityholder but with the written consent of the Holders of at least a
majority in principal amount of the Securities then outstanding (including
consents obtained in connection with a tender offer or exchange for the
Securities). However, without the consent of each Securityholder affected
thereby, an amendment may not:
(1) reduce the amount of Securities whose Holders must consent
to an amendment;
(2) reduce the rate of or extend the time for payment of
interest on any Security;
(3) reduce the principal of or extend the Stated Maturity of
any Security;
(4) reduce the premium payable upon the redemption of any
Security
-57-
<PAGE> 58
or change the time at which any Security may be redeemed in accordance
with Article 3;
(5) make any Security payable in money other than that stated
in the Security;
(6) make any change in Section 6.4 or 6.7 or the second
sentence of this Section; or
(7) make any change in any Subsidiary Guaranty that would
adversely affect the Securityholders.
It shall not be necessary for the consent of the Holders under
this Section to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent approves the substance thereof.
After an amendment under this Section becomes effective, the
Issuers shall mail to Securityholders a notice briefly describing such
amendment. The failure to give such notice to all Securityholders, or any defect
therein, shall not impair or affect the validity of an amendment under this
Section.
SECTION 9.3. Compliance with Trust Indenture Act. Every
amendment to this Indenture or the Securities shall comply with the TIA as then
in effect.
SECTION 9.4. Revocation and Effect of Consents and Waivers. A
consent to an amendment or a waiver by a Holder of a Security shall bind the
Holder and every subsequent Holder of that Security or portion of the Security
that evidences the same debt as the consenting Holder's Security, even if
notation of the consent or waiver is not made on the Security. However, any such
Holder or subsequent Holder may revoke the consent or waiver as to such Holder's
Security or portion of the Security if the Trustee receives the notice of
revocation before the date the amendment or waiver becomes effective. After an
amendment or waiver becomes effective, it shall bind every Securityholder. An
amendment or waiver becomes effective upon the execution of such amendment or
waiver by the Trustee.
The Issuers may, but shall not be obligated to, fix a record
date for the purpose of determining the Securityholders entitled to give their
consent or take any other action described above or required or permitted to be
taken pursuant to this Indenture. If a record date is fixed, then
notwithstanding the immediately preceding paragraph, those Persons who were
Securityholders at such record date (or their duly designated proxies), and only
those Persons, shall be entitled to give such consent or to revoke any consent
previously given or to take any such action, whether or not such Persons
continue to be Holders after such record date. No such consent shall be valid or
effective for more than 120 days after such record date.
SECTION 9.5. Notation on or Exchange of Securities. If an
amendment changes the terms of a Security, the Trustee may require the Holder of
the Security to deliver it to the Trustee. The Trustee may place an appropriate
notation on the Security
-58-
<PAGE> 59
regarding the changed terms and return it to the Holder. Alternatively, if the
Issuers or the Trustee so determines, the Issuers in exchange for the Security
shall issue and the Trustee shall authenticate a new Security that reflects the
changed terms. Failure to make the appropriate notation or to issue a new
security shall not affect the validity of such amendment.
SECTION 9.6. Trustee To Such Amendments. The Trustee shall
sign any amendment authorized pursuant to this Article 9 if the amendment does
not adversely affect the rights, duties, liabilities or immunities of the
Trustee. If it does, the Trustee may but need not sign it. In signing such
amendment the Trustee shall be entitled to receive indemnity reasonably
satisfactory to it and to receive, and (subject to Section 7.1) shall be fully
protected in relying upon, an Officers' Certificate and an Opinion of Counsel
stating that such amendment is authorized or permitted by this Indenture.
SECTION 9.7. Payment for Consent. Neither the Issuers nor any
Affiliate of the Issuers shall, directly or indirectly, pay or cause to be paid
any consideration, whether by way of interest, fee or otherwise, to any Holder
for or as an inducement to any consent, waiver or amendment of any of the terms
or provisions of this Indenture or the Securities unless such consideration is
offered to be paid to all Holders that so consent, waive or agree to amend (and,
if appropriate, tender their Securities) in the time frame set forth in
solicitation documents relating to such consent, waiver or agreement.
ARTICLE 10.
Security
SECTION 10.1. Security Documents.
The due and punctual payment of the principal and premium, if
any, of, and interest on, the Securities when and as the same shall be due and
payable, by acceleration, repurchase, redemption or otherwise, interest on the
overdue principal of and interest (to the extent permitted by law), if any, on
the Securities and under this Indenture and performance of all other Obligations
with respect to the Securities, shall be secured as provided in the Security
Documents.
The Issuers shall, and shall cause each of its Restricted
Subsidiaries to, do or cause to be done all such acts and things as may be
necessary or proper, or as may be required by the provisions of the Security
Documents, to assure and confirm to the Collateral Agent the security interest
in the Collateral contemplated hereby and by the Security Documents, as from
time to time constituted, so as to render the same available for the security
and benefit of this Indenture and of the Securities secured hereby and thereby,
according to the intent and purposes herein and therein expressed. The Issuers
shall, and shall cause each of its Restricted Subsidiaries to, take, upon
request of the Trustee or the Collateral Agent, any and all actions required to
cause the Security Documents to create and maintain, as security for the
Obligations with respect to the Securities, valid and enforceable, perfected
(except as expressly
-59-
<PAGE> 60
provided herein or therein), Liens in and on all the Collateral, in favor of the
Collateral Agent, superior to and prior to the rights of all third Persons, and
subject to no other Liens, other than as provided herein and therein.
Each Holder of a Security, by its acceptance thereof, consents
and agrees to the terms of the Security Documents (including, without
limitation, the provisions providing for the foreclosure and release of
Collateral and indemnification of the Collateral Agent) as the same may be in
effect or may be amended from time to time in accordance with their terms, and
authorizes and directs (i) the Collateral Agent, with respect to each of the
Security Documents, and (ii) the Trustee, [with respect to the Intercreditor
Agreement], to perform their respective obligations and exercise their
respective rights thereunder in accordance therewith; [provided, however, that
upon qualification of this Indenture with the TIA, if any provision of the
Intercreditor Agreement limits, qualifies or conflicts with the duties imposed
by the provisions of the TIA, the TIA shall control.]
SECTION 10.2. Opinions of Counsel.
To the extent required by the TIA, the Issuers shall furnish
to the Trustee within days after each anniversary of the Issue Date, an
Opinion of Counsel, dated as of such date, stating either that (i) in the
opinion of such counsel, all action has been taken with respect to the
recording, registering, filing, re-recording, re-registering and refiling of all
supplemental indentures, financing statements, continuation statements or other
instruments of further assurance as is necessary to maintain the Liens of the
Security Documents and reciting the details of such action or (ii) in the
opinion of such counsel, no such action is necessary to effect and maintain the
validity and perfection of such Liens in full force and effect.
SECTION 10.3. Release and Substitution of Collateral.
(a) Subject to subsections (b) and (c) of this Section 10.3,
(i) in the event that any Collateral is sold, transferred or otherwise disposed
of in an Asset Disposition or any other transaction permitted by this Indenture,
such Collateral shall, concurrently with the disposition of such Collateral
automatically be released from the Lien of the relevant Security Documents and
(ii) the Issuers and their Subsidiaries may from time to time substitute
property or securities released from the Lien of the Security Documents in
connection with the sale, transfer or other disposition thereof for other
property or securities to be subjected to the Lien of the Security Documents, in
each case in accordance with the provisions of the Security Documents.
(b) At any time when an Event of Default shall have occurred
and be continuing and the maturity of the Securities shall have been accelerated
(whether by declaration or otherwise) and such acceleration shall not have been
rescinded or annulled, no release of Collateral pursuant to the provisions of
this Indenture or of the Security Documents shall be effective as against the
Holders of the securities without the consent of the Collateral Agent. The
Trustee shall promptly notify the Collateral Agent of any rescission or
annulment, pursuant to Section 6.4 hereof, of an
-60-
<PAGE> 61
acceleration of the Securities.
(c) The release of any Collateral from the terms of the
Security Documents will not be deemed to impair the security under this
Indenture in contravention of the provisions hereof if and to the extent the
Collateral is released pursuant to the Security Documents. At all time after
qualification of this Indenture under the TIA, to the extent applicable, the
Issuers shall cause TIA Section 314(d) relating to the release of property or
securities from the Lien of the Security Documents and relating to the
substitution therefor of any property or securities to be subjected to the Lien
of the Security Documents to be complied with. Any certificate or opinion
required by TIA Section 314(d) may be made by Officers of the Issuers, except in
cases where TIA Section 4314(d) requires that such certificate or opinion be
made by an independent Person, which Person shall be an independent engineer,
appraiser or other expert selected or approved by the Trustee in the exercise of
reasonable care.
SECTION 10.4. Certificates of the Issuers.
The Issuers shall furnish to the Trustee prior to each
proposed release of Collateral other than by reason of transactions referred to
in Section 10.3(b), all documents required by TIA Section 314(d). The Trustee
may, to the extent permitted by Sections 7.1 and 7.2 hereof, accept as
conclusive evidence of compliance with the foregoing provisions the appropriate
statements contained in such instruments. Any certificate or opinion required by
TIA Section 314(d) may be made by Officers of the Issuers except in cases where
TIA Section 314(d) requires that such certificate or opinion be made by an
independent engineer, appraiser or other such expert within the meaning of TIA
Section 314(d).
SECTION 10.5. Authorization of Actions to be Taken by the
Trustee Under the Security Documents.
Subject to the provisions of the Security Documents [and the
Intercreditor Agreement], the Trustee may, in its sole discretion and without
the consent of the Holders, on behalf of the Holders, take all actions it deems
necessary or appropriate in order to (a) enforce any of the terms of the
Security Documents and (b) collect and receive any and all amounts payable in
respect of the Obligations of the Company under the Securities. The Trustee
shall have the power to institute and to maintain such suits and proceedings as
it may deem expedient to prevent any impairment of the Collateral by any acts
that may be unlawful or in violation of the Security Documents or to preserve or
protect its interest and the interests of the Holders in the Collateral
(including power to institute and maintain suits or proceedings to restrain the
enforcement of or compliance with any legislative or other governmental
enactment, rule or order that may be unconstitutional or otherwise invalid if
the enforcement of or compliance with such enactment, rule or order would impair
the security interest hereunder or be prejudicial to the interests of the
Holders or the Trustee).
SECTION 10.6. Authorization of Receipt of Funds by the Trustee
Under the Security Documents.
-61-
<PAGE> 62
The Trustee is authorized to receive any funds for the benefit
of the Holders distributed under the Security Documents, and to make further
distributions of such funds to the Holders according to the provisions of this
Indenture and the Security Documents.
SECTION 10.7. Release Upon Termination of the Issuers'
Obligations.
(a) If (i) the Issuers deliver Officers' Certificates
certifying that all of their obligations under this Indenture have been
indefeasably satisfied and discharged by complying with the provisions of
Article Eight hereof or (ii) all outstanding Securities issued under this
Indenture shall be surrendered to the Trustee for cancellation, the Trustee
shall deliver to the Collateral Agent a notice stating that the Trustee, for
itself and on behalf of the Holders, disclaims and has given up any and all
rights it has in or to the Collateral, and any rights it has under the Security
Documents, and, upon and after the receipt by the Collateral Agent of such
notice, the Collateral Agent shall no longer be deemed to hold the Lien in the
Collateral on behalf of the Trustee for the benefit of itself and the Holders.
(b) Any release of Collateral made in compliance with this
Section 10.7 shall not be deemed to impair the Lien under the Security Documents
or the Collateral thereunder in contravention of the provisions of this
Indenture or the Security Documents.
ARTICLE 11.
Subsidiary Guaranties
SECTION 11.1. Guaranties. Each Subsidiary Guarantor hereby
unconditionally and irrevocably guarantees, jointly and severally, to each
Holder and to the Trustee and its successors and assigns (a) the full and
punctual payment of principal of and interest on the Securities when due,
whether at maturity, by acceleration, by redemption or otherwise, and all other
monetary obligations of the Issuers under this Indenture and the securities and
(b) the full and punctual performance within applicable grace periods of all
other obligations of the Issuers under this Indenture and the Securities (all
the foregoing being hereinafter collectively called the "Obligations"). Each
Subsidiary Guarantor further agrees that the Obligations may be extended or
renewed, in whole or in part, without notice or further assent from such
Subsidiary Guarantor and that such Subsidiary Guarantor will remain bound under
this Article 11 notwithstanding any extension or renewal of any Obligation.
Each Subsidiary Guarantor waives presentation to, demand of,
payment from and protest to the Issuers of any of the obligations and also
waives notice of protest for nonpayment. Each Subsidiary Guarantor waives notice
of any default under the Securities or the Obligations. The Obligations of each
Subsidiary Guarantor hereunder shall not be affected by (a) the failure of any
Holder or the Trustee to assert any claim or demand or to enforce any right or
remedy against the Issuers or any other Person under this Indenture, the
Securities or any other agreement or otherwise; (b)
-62-
<PAGE> 63
any extension or renewal of any thereof; (c) any rescission, waiver, amendment
or modification of any of the terms or provisions of this Indenture, the
Securities or any other agreement; (d) the release of any security held by any
Holder or the Trustee for the Obligations or any of them; (e) the failure of any
Holder or the Trustee to exercise any right or remedy against any other
guarantor of the Obligations; or (f) any change in the ownership of such
Subsidiary Guarantor.
Each Subsidiary Guarantor further agrees that its Subsidiary
Guaranty herein constitutes a guarantee of payment, performance and compliance
when due (and not a guarantee of collection) and waives any right to require
that any resort be had by any Holder or the Trustee to any security held for
payment of the Obligations.
Except as expressly set forth in Sections 8.1(b), 11.2 and
11.6, the obligations of each Subsidiary Guarantor hereunder shall not be
subject to any reduction, limitation, impairment or termination for any reason,
including any claim of waiver, release, surrender, alteration or compromise, and
shall not be subject to any defense of setoff, counterclaim, recoupment or
termination whatsoever or by reason of the invalidity, illegality or
unenforceability of the Obligations or otherwise. without limiting the
generality of the foregoing, the Obligations of each Subsidiary Guarantor herein
shall not be discharged or impaired or otherwise affected by the failure of any
Holder or the Trustee to assert any claim or demand or to enforce any remedy
under this Indenture, the Securities or any other agreement, by any waiver or
modification of any thereof, by any default, failure or delay, willful or
otherwise, in the performance of the obligations, or by any other act or thing
or omission or delay to do any other act or thing which may or might in any
manner or to any extent vary the risk of such Subsidiary Guarantor or would
otherwise operate as a discharge of such Subsidiary Guarantor as a matter of law
or equity.
Each Subsidiary Guarantor further agrees that its Guarantee
herein shall continue to be effective or be reinstated, as the case may be, if
at any time payment, or any part thereof, of principal of or interest on any
obligation is rescinded or must otherwise be restored by any Holder or the
Trustee upon the bankruptcy or reorganization of the Issuers or otherwise.
In furtherance of the foregoing and not in limitation of any
other right which any Holder or the Trustee has at law or in equity against any
Subsidiary Guarantor by virtue hereof, upon the failure of the Issuers to pay
the principal of or interest on any obligation when and as the same shall become
due, whether at maturity, by acceleration, by redemption or otherwise, or to
perform or comply with any other obligation, each Subsidiary Guarantor hereby
promises to and will, upon receipt of written demand by the Trustee, forthwith
pay, or cause to be paid, in cash, to the Holders or the Trustee an amount equal
to the sum of (i) the unpaid amount of such obligations, (ii) accrued and unpaid
interest on such Obligations (but only to the extent not prohibited by law) and
(iii) all other monetary Obligations of the Issuers to the Holders and the
Trustee.
Each Subsidiary Guarantor agrees that, as between it, on the
one hand,
-63-
<PAGE> 64
and the Holders and the Trustee, on the other hand, (x) the maturity of the
Obligations Guaranteed hereby may be accelerated as provided in Article 6 for
the purposes of such Subsidiary Guarantor's Subsidiary Guaranty herein,
notwithstanding any stay, injunction or other prohibition preventing such
acceleration in respect of the obligations guaranteed hereby, and (y) in the
event of any declaration of acceleration of such Obligations as provided in
Article 6, such Obligations (whether or not due and payable) shall forthwith
become due and payable by such Subsidiary Guarantor for the purposes of this
Section.
Each Subsidiary Guarantor also agrees to pay any and all costs
and expenses (including reasonable attorneys, fees and expenses) incurred by the
Trustee or any Holder in enforcing any rights under this Section.
SECTION 11.2. Limitation on Liability. Any term or provision
of this Indenture to the contrary notwithstanding, the maximum, aggregate amount
of the obligations guaranteed hereunder by any Subsidiary Guarantor shall not
exceed the maximum amount that can be hereby guaranteed without rendering this
Indenture, as it relates to such Subsidiary Guarantor, voidable under applicable
law relating to fraudulent conveyance or fraudulent transfer or similar laws
affecting the rights of creditors generally.
SECTION 11.3. Successors and Assigns. This Article 11 shall be
binding upon each Subsidiary Guarantor and its successors and assigns and shall
ensure to the benefit of the successors and assigns of the Trustee and the
Holders and, in the event of any transfer or assignment of rights by any Holder
or the Trustee, the rights and privileges conferred upon that party in this
Indenture and in the Securities shall automatically extend to and be vested in
such transferee or assignee, all subject to the terms and conditions of this
Indenture.
SECTION 11.4. No Waiver. Neither a failure nor a delay on the
part of either the Trustee or the Holders in exercising any right, power or
privilege under this Article 11 shall operate as a waiver thereof, nor shall a
single or partial exercise thereof preclude any other or further exercise of any
right, power or privilege. The rights, remedies and benefits of the Trustee and
the Holders herein expressly specified are cumulative and not exclusive of any
other rights, remedies or benefits which either may have under this Article 11
at law, in equity, by statute or otherwise.
SECTION 11.5. Modification. No modification, amendment or
waiver of any provision of this Article 11, nor the consent to any departure by
any Subsidiary Guarantor therefrom, shall in any event be effective unless the
same shall be in writing and signed by the Trustee, and then such waiver or
consent shall be effective only in the specific instance and for the purpose for
which given. No notice to or demand on any Subsidiary Guarantor in any case
shall entitle such Subsidiary Guarantor to any other or further notice or demand
in the same, similar or other circumstances.
SECTION 11.6. Release of Subsidiary Guarantor. Upon the sale
or other disposition (including by way of consolidation or merger) of a
Subsidiary Guarantor or
-64-
<PAGE> 65
the sale or disposition of all or substantially all the assets of such
Subsidiary Guarantor (in each case other than to the Issuers or an Affiliate of
the Issuers), such Subsidiary Guarantor shall be deemed released from all
Obligations under this Article 11 without any further action required on the
part of the Trustee or any Holder. At the request of the Issuers, the Trustee
shall execute and deliver an appropriate instrument evidencing such release.
ARTICLE 12.
Miscellaneous
SECTION 12.1. Trust Indenture Act Controls. If any provision
of this Indenture limits, qualifies or conflicts with another provision which is
required to be included in this Indenture by the TIA, the required provision
shall control.
SECTION 12.2. Notices. Any notice or communication shall be in
writing and delivered in person or mailed by first-class mail addressed as
follows:
if to the Issuers:
Globalstar, L.P.
Globalstar Capital Corporation
3200 Zanker Road
San Jose, California 95164-0670
Attention: Secretary
Facsimile: (408) 473-5040
if to the Trustee:
The Bank of New York
101 Barclay Street, Floor 21 West
New York, NY 10286
Attention: Corporate Trust Administration
Facsimile: (212) 815-5915
The Issuers or the Trustee by notice to the other may
designate additional or different addresses for subsequent notices or
communications.
Any notice or communication mailed to a Securityholder shall
be mailed to the Securityholder at the Securityholder's address as it appears on
the registration books of the Registrar and shall be sufficiently given if so
mailed within the time prescribed.
Failure to mail a notice or communication to a Securityholder
or any defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.
-65-
<PAGE> 66
SECTION 12.3. Communication by Holders with Other Holders.
Securityholders may communicate pursuant to TIA Section 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Issuers, the Trustee, the Registrar and anyone else shall have
the protection of TIA Section 312(c).
SECTION 12.4. Certificate and opinion as to Conditions
Precedent. Upon any request or application by the Issuers to the Trustee to take
or refrain from taking any action under this Indenture, the Issuers shall
furnish to the Trustee:
(1) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of the
signers, all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with; and
(2) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
SECTION 12.5. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a covenant or
condition provided for in this Indenture shall include:
(1) a statement that the individual making such certificate or
opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such individual, he
has made such examination or investigation as is necessary to enable
him to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(4) a statement as to whether or not, in the opinion of such
individual, such covenant or condition has been complied with.
SECTION 12.6. When Securities Disregarded. In determining
whether the Holders of the required principal amount of Securities have
concurred in any direction, waiver or consent, Securities owned by the Issuers
or by any Person directly or indirectly controlling or controlled by or under
direct or indirect common control with the Issuers shall be disregarded and
deemed not to be outstanding, except that, for the purpose of determining
whether the Trustee shall be protected in relying on any such direction, waiver
or consent, only Securities which a Trust Officer of the Trustee actually knows
are so owned shall be so disregarded. Also, subject to the foregoing, only
Securities outstanding at the time shall be considered in any such
determination.
SECTION 12.7. Rules by Trustee, Paying Agent and Registrar.
The Trustee
-66-
<PAGE> 67
may make reasonable rules for action by or a meeting of Securityholders. The
Registrar and the Paying Agent may make reasonable rules for their functions.
SECTION 12.8. Legal Holidays. A "Legal Holiday" is a Saturday,
a Sunday or a day on which banking institutions are not required to be open in
the State of New York. If a payment date is a Legal Holiday, payment shall be
made on the next succeeding day that is not a Legal Holiday, and no interest
shall accrue for the intervening period. If a regular record date is a Legal
Holiday, the record date shall not be affected.
SECTION 12.9. Governing Law. This Indenture and the Securities
shall be governed by, and construed in accordance with, the laws of the State of
New York but without giving effect to applicable principles of conflicts of law
to the extent that the application of the laws of another jurisdiction would be
required thereby.
SECTION 12.10. No Recourse Against Others. Any past, present
or future director, officer, partner (including any general partner) employee,
incorporator or stockholder, as such, of the Issuers shall not have any
liability for any obligations of the Issuers under the Securities or this
Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. By accepting a Security, each Securityholder
shall waive and release all such liability. The waiver and release shall be part
of the consideration for the issue of the Securities.
SECTION 12.11. Successors. All agreements of the Issuers in
this Indenture and the Securities shall bind their successors. All agreements of
the Trustee in this Indenture shall bind its successors.
SECTION 12.12. Multiple Originals. The parties may sign any
number of copies of this Indenture. Each signed copy shall be an original, but
all of them together represent the same agreement. One signed copy is enough to
prove this Indenture.
SECTION 12.13. Table of Contents; Headings. The table of
contents, cross-reference sheet and headings of the Articles and Sections of
this Indenture have been inserted for convenience of reference only, are not
intended to be considered a part hereof and shall not modify or restrict any of
the terms or provisions hereof.
-67-
<PAGE> 68
IN WITNESS WHEREOF, the parties have caused this Indenture to
be duly executed as of the date first written above.
GLOBALSTAR, L.P.,
by
----------------------------------------------------
LORAL/QUALCOMM SATELLITE SERVICES, L.P., its
managing general partner,
by
----------------------------------------------------
LORAL/QUALCOMM PARTNERSHIP, L.P. its general partner
by
----------------------------------------------------
LORAL GENERAL PARTNER, INC., its general partner
by
----------------------------------------------------
Name:
Title:
GLOBALSTAR CAPITAL CORPORATION,
by
----------------------------------------------------
Name:
Title:
THE BANK OF NEW YORK, as Trustee
by
----------------------------------------------------
Name:
Title:
-68-
<PAGE> 69
Dated:
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
THE BANK OF NEW YORK as Trustee, certifies that this is one of the Securities
referred to in the Indenture.
by
-------------------------------------------
Authorized Signatory
- -------------------
-69-
<PAGE> 70
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
TIA Indenture
Section Section
------- ---------
<S> <C>
310 (a)(1)..................................................................................... 7.10
(a)(2)..................................................................................... 7.10
(a)(3)..................................................................................... N.A.
(a)(4)..................................................................................... N.A.
(b)........................................................................................ N.A.
(c)........................................................................................ N.A.
311 (a)........................................................................................ 7.11
(b)........................................................................................ N.A.
(c)........................................................................................ N.A.
312 (a)........................................................................................ N.A.
(b)........................................................................................ 11.3
(c)........................................................................................ 11.3
313 (a)........................................................................................ 7.6
(b)(1)..................................................................................... N.A.
(b)(2)..................................................................................... 7.6
(c)........................................................................................ N.A.
(d)........................................................................................ N.A.
314 (a)........................................................................................ N.A.
314 (a)(4)..................................................................................... 4.14
(b)........................................................................................ N.A.
(c)(1)..................................................................................... N.A.
(c)(2)..................................................................................... N.A.
(c)(3)..................................................................................... N.A.
(d)........................................................................................ N.A.
(e)........................................................................................ N.A.
(f)........................................................................................ N.A.
315 (a)........................................................................................ N.A.
(b)........................................................................................ N.A.
(c)........................................................................................ N.A.
(d)........................................................................................ N.A.
(e)........................................................................................ N.A.
316 (a)(last sentence)......................................................................... N.A.
(a)(1)(A).................................................................................. N.A.
(a)(1)(B).................................................................................. N.A.
(a)(2)..................................................................................... N.A.
(b)........................................................................................ N.A.
317 (a)(1)..................................................................................... N.A.
(a)(2)..................................................................................... N.A.
(b)........................................................................................ N.A.
318 (a)........................................................................................ N.A.
</TABLE>
N.A. means Not Applicable.
-70-
<PAGE> 71
- ------------------
Note: This Cross-Reference Table shall not, for any purpose be deemed to be part
of this Indenture.
-71-
<PAGE> 1
Exhibit 4.5
(FORM OF REVERSE SIDE OF SECURITY]
-----% Senior Note due
1. Interest
Globalstar, L.P., a Delaware limited partnership and
Globalstar Capital Corporation, a Delaware corporation (such limited partnership
and such corporation, and their successors and assigns under the Indenture
hereinafter referred to, being herein called the "Issuers"), promise to pay
interest on the principal amount of this Security at the rate per annum shown
above;
2. Method of Payment
The Issuers will pay interest on the Securities (except
defaulted interest) to the Persons who are registered holders of Securities at
the close of business on the --------------- or ------------------ next
preceding the interest payment date even if Securities are canceled after the
record date and on or before the interest payment date. Holders must surrender
Securities to a Paying Agent to collect principal payments. The Issuers will pay
principal and interest in money of the United States that at the time of payment
is legal tender for payment of public and private debts. Payments in respect of
Securities (including principal, premium, interest will be made by wire transfer
of immediately available funds to the accounts specified by the holders thereof
or, if no U.S. dollar account maintained by the payee with a bank in the United
States is designated by any holder to the Trustee or the Paying Agent at least
30 days prior to the relevant due date for payment (or such other date as the
Trustee may accept in its discretion), by mailing a check to the registered
address of such holder.
<PAGE> 2
3. Paying Agent and Registrar
Initially, The Bank of New York, a New York banking
corporation ("Trustee"), will act as Paying Agent and Registrar. The Issuers may
appoint and change any Paying Agent, Registrar or co-registrar without notice.
The Issuers or any of their domestically incorporated Wholly Owned Subsidiaries
may act as Paying Agent, Registrar or co-registrar.
4. Indenture
The Issuers issued the Securities under an Indenture dated as
of ------------ ("Indenture"), between the Issuers and the Trustee. The terms of
the Securities include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C.
Sections 77aaa-77bbbb) as in effect on the date of the Indenture (the
"Act"). Terms defined in the Indenture and not defined herein have the meanings
ascribed thereto in the Indenture. The Securities are subject to all such terms,
and Securityholders are referred to the Indenture and the Act for a statement of
those terms.
The Securities are unsecured senior obligations of the Issuers
limited to $----------- aggregate principal amount (subject to Section 2.07 of
the Indenture). The Indenture contains certain covenants which, among other
things, limit (a) the incurrence of additional debt by the Issuers and certain
of its subsidiaries and the issuance of capital stock by such subsidiaries, (b)
the payment of dividends on capital stock of certain subsidiaries and the
purchase, redemption or retirement of capital stock or subordinated
indebtedness, (c) certain investments, (d) certain transactions with affiliates,
(e) the incurrence of liens, (f) sales of assets, including capital stock of
subsidiaries, (g) certain consolidations and mergers, (h) the Issuers' and
certain of their subsidiaries, lines of business and (i) the Issuers' ability to
operate without certain insurance coverage. The Indenture also will prohibit
certain restrictions on distributions from subsidiaries. In addition, the
Issuers may be obligated, under certain circumstances, to offer to repurchase
Securities at a purchase price equal to 101% of the principal amount of the
Securities plus accrued and unpaid interest to the date of repurchase.
-2-
<PAGE> 3
5. Optional Redemption
The Securities will not be redeemable at the Issuers' option
prior to ___________. On and after that date, the Issuers may redeem the
Securities in whole or in part, at any time or from time to time at the
following redemption prices (expressed in percentages of principal amount), plus
accrued and unpaid interest to the redemption date (subject to the right of
Holders of record on the relevant record date to receive interest due on the
related interest payment date):
If redeemed during the 12-month period commencing of
the years set forth below:
<TABLE>
<CAPTION>
Period Percentage
<S> <C>
200 ......................................................
200 ......................................................
</TABLE>
In the event that, on or before ____________, Globalstar
receives net proceeds from any Equity Offering by Globalstar or GTL, up to a
maximum of 33-1/3% of the aggregate principal amount of the Notes originally
issued will, at the option of Globalstar, be redeemable from the net cash
proceeds of such sale at a redemption price equal to ______ of the stated
principal amount thereof, plus accrued and unpaid interest, if any, to the date
of redemption; provided, however, that (i) at least 66-2/3% of the original
aggregate principal amount of the Notes remains outstanding after such
redemption and (ii) such redemption shall occur within 90 days of the date of
such offering.
6. Notice of Redemption
Notice of redemption will be mailed by first-class mail at
least 30 days but not more than 60 days before the redemption date to each
Holder of Securities to be redeemed at his registered address. Securities in
denominations larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000. If money sufficient to pay the redemption price of and
accrued interest on all Securities (or portions thereof) to be redeemed on the
redemption date is deposited with the Paying Agent on or before the redemption
date and certain other conditions are satisfied, on and after such date
interest ceases to accrue on such Securities (or such portions thereof) called
for redemption.
-3-
<PAGE> 4
7. Put Provisions
Upon a Change of Control, any Holder of Securities will have
the right to cause the Issuers to repurchase all or any part of the Securities
Of such Holder at a repurchase price equal to 101% of the principal amount of
the Securities plus accrued and unpaid interest and Liquidated Damages (if any)
to be repurchased (subject to the right of holders of record on the relevant
record date to receive interest due on the relevant interest payment date) as
provided in, and subject to the terms of, the Indenture.
8. Guarantees
This Security may be jointly and severally guaranteed by
certain Subsidiaries of the Issuers to the extent provided in the Indenture. The
Issuers have covenanted pursuant to the Indenture to cause any Subsidiary
created or acquired after the date of the Indenture (unless such Subsidiary is a
Transitory Equipment Subsidiary or is an Unrestricted Subsidiary), to execute
and deliver to the Trustee a Subsidiary Guaranty pursuant to which such
Subsidiary will guaranty this Security on the same terms and conditions as those
set forth in the Indenture.
9. Denominations; Transfer; Exchange
The Securities are in registered form without coupons in
denominations of $1,000 and whole multiples of $1,000. A Holder may transfer or
exchange Securities in accordance with the Indenture. The Registrar may require
a Holder, among other things, to furnish appropriate endorsements or transfer
documents and to pay any taxes and fees required by law or permitted by the
Indenture. The Issuers are not required to transfer or exchange any Securities
selected for redemption (except, in the case of a Security to be redeemed in
part, the portion of the security not to be redeemed) or any Securities for a
period of 15 days before a selection of Securities to be redeemed.
10. Persons Deemed Owners
The registered Holder of this Security may be treated as the
owner of it for all purposes.
11. Unclaimed Money
If money for the payment of principal or interest remains
unclaimed for two years, the Trustee or Paying Agent shall pay the money back to
the Company at its written request unless an abandoned property law designates
another Person. After any such payment, Holders entitled to the money must look
only to the Issuers and not to the Trustee for payment.
-4-
<PAGE> 5
12. Discharge and Defeasance
Subject to certain conditions, the Issuers at any time may
terminate some or all of their obligations under the Securities and the
Indenture if the Issuers deposit with the Trustee money or U.S. Government
Obligations for the payment of principal and interest on the Securities to
redemption or maturity, as the case may be.
13. Amendment, Waiver
Subject to certain exceptions set forth in the Indenture, (i)
the Indenture or the Securities may be amended with the written consent of the
Holders of at least a majority in principal amount outstanding of the Securities
and (ii) any default or noncompliance with any provision may be waived with the
written consent of the Holders of a majority in principal amount outstanding of
the Securities. Subject to certain exceptions set forth in the Indenture,
without the consent of any Securityholder, the Issuers and the Trustee may amend
the Indenture or the Securities to cure any ambiguity, omission, defect or
inconsistency, to provide for the assumption by a successor corporation of the
obligations of Globalstar under the Indenture, to provide for uncertificated
Securities in addition to or in place of certificated Securities, to add
guarantees with respect to the Securities, to release such guarantees, to secure
the Securities, to add to the covenants of the Issuers for the benefit of the
Holders of the Securities or to surrender any right or power conferred upon the
Issuers, to make any change that does not adversely affect the rights of any
Holder of the Securities or to comply with any requirement of the SEC in
connection with the qualification of the Indenture under the Trust Indenture
Act.
14. Defaults and Remedies
Under the Indenture, Events of Default include (i) default for
30 days in payment of interest on the Securities; (ii) default in payment of
principal on the Securities, upon redemption pursuant to paragraph 5 of the
Securities, upon required repurchase upon declaration or otherwise, or failure
by the Issuers to redeem or purchase Securities when required; (iii) failure by
the Issuers to comply with other agreements in the Indenture or the Securities,
in certain cases subject to notice and lapse of time; (iv) certain
accelerations (including failure to pay within any grace period after final
maturity) of other Debt of the Issuers if the amount accelerated (or so unpaid)
exceeds $__ million; M certain events of bankruptcy or insolvency with respect
to the Issuers and the Significant Subsidiaries; (vi) certain judgments or
decrees for the payment of money in excess of $__ million, subject to lapse of
time and notice; and (vii) certain events with respect to the guarantees of the
Issuers' obligations under the Securities by certain of their subsidiaries.
However, a default under clauses
-5-
<PAGE> 6
certain of their subsidiaries. However, a default under clauses (iii) and (vi)
will not constitute an Event of Default until the Trustee or the Holders of at
least 25% in principal amount of the Securities outstanding notify the Issuers
of the default and the Issuers do not cure such default within the time
specified after receipt of such notice. If an Event of Default occurs and is
continuing, the Trustees or the Holders of at least 25% in principal amount of
the Securities outstanding may declare the principal of and all accrued but
unpaid interest on all the Securities to be due and payable immediately.
Certain events of bankruptcy, insolvency or reorganization are Events of
Default which will result in the Securities being due and payable immediately
upon the occurrence of such Events of Default.
Securityholders may not enforce the Indenture or the
Securities except as provided in the Indenture. The Trustee may refuse to
enforce the Indenture or the Securities unless it receives reasonable indemnity
or security. Subject to certain limitations, Holders of a majority in principal
amount of the Securities may direct the Trustee in its exercise of any trust or
power. The Trustee may withhold from Securityholders notice of any continuing
Default (except a Default in payment of principal or interest) if it determines
that withholding notice is in the interest of the Holders.
15. Trustee Dealings with the Issuers
Subject to certain limitations imposed by the Act, the Trustee
under the Indenture, in its individual or any other capacity, may become the
owner or pledgee of Securities and may otherwise deal with the Issuers or their
Affiliates with the same rights it would have if it were not Trustee.
16. No Recourse Against Others
Any past, present or future director, officer, partner
(including general partners) employee, incorporator or stockholder, as such, of
the Issuers or the Trustee shall not have any liability for any obligations of
the Issuers under the Securities or the Indenture or for any claim based on, in
respect of or by reason of such obligations or their creation. By accepting a
Security, each Securityholder waives and releases all such liability. The waiver
and release are part of the consideration for the issue of the Securities.
17. Authentication
This Security shall not be valid until an authorized signatory
of the Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Security.
-6-
<PAGE> 7
18. Abbreviations
Customary abbreviations may be used in the name of a
Securityholder or an assignee, such as TEN COM (=tenants in common), TEN ENT
(=tenants by the entireties), JT TEN (=joint tenants with rights of survivorship
and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to
Minors Act).
19. CUSIP Numbers
Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures, the Issuers have caused CUSIP
numbers to be printed on the Securities and have directed the Trustee to use
CUSIP numbers in notices of redemption as a convenience to Securityholders. No
representation is made as to the accuracy of such numbers either as printed on
the Securities or as contained in any notice of redemption and reliance may be
placed only on the other identification numbers placed thereon.
20. Governing Law
THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO
APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF
THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
The Issuers will furnish to any Securityholder upon written
request and without charge to the Securityholder a copy of the Indenture.
Requests may be made to:
Globalstar, L.P.
3200 Zanker Road
Box 640670
San Jose, CA 95164-0670
-7-
<PAGE> 8
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint agent to transfer this Security
on the books of Globalstar. The agent may substitute another to act for him.
Date: Your Signature:
------------------------------ ---------------------------
- --------------------------------------------------------------------------------
Sign exactly as your name appears on the other side of this Security.
<PAGE> 9
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the
Issuers pursuant to Section 4.07 or 4.10 of the Indenture, check the box: / /
If you want to elect to have only part of this Security
purchased by the Issuers pursuant to Section 4.07 or 4.10 of the Indenture,
state the amount:
Date: Your Signature:
------------------------------ ---------------------------
- --------------------------------------------------------------------------------
Sign exactly as your name appears on the other side of the Security.
Signature Guarantee:
-----------------------------------------------------------
[Signature must be guaranteed by an eligible
Guarantor Institution (banks, stock brokers, savings
and loan associations and credit unions) with
membership in an approved guarantee medallion program
pursuant to Securities and Exchange Commission Rule
17Ad-15]
<PAGE> 10
CROSS-REFERENCE TABLE
TIA Indenture
Section Section
310(a)(1)..................................................... 7.10
(a)(2)..................................................... 7.10
(a)(3)..................................................... N.A.
(a)(4)..................................................... N.A.
(b)........................................................ N.A.
(c)........................................................ N.A.
311(a)........................................................ 7.11
(b)........................................................ N.A.
(c)........................................................ N.A.
312(a)........................................................ N.A.
(b)........................................................ 11.3
(c)........................................................ 11.3
313(a)........................................................ 7.6
(b)(1)..................................................... N.A.
(b)(2)..................................................... 7.6
(c)........................................................ N.A.
(d)........................................................ N.A.
314(a)........................................................ N.A.
314(a)(4)..................................................... 4.14
(b)........................................................ N.A.
(c)(1)..................................................... N.A.
(c)(2)..................................................... N.A.
(c)(3)..................................................... N.A.
(d)........................................................ N.A.
(e)........................................................ N.A.
(f)........................................................ N.A.
315(a)........................................................ N.A.
(b)........................................................ N.A.
(c)........................................................ N.A.
(d)........................................................ N.A.
(e)........................................................ N.A.
316(a)(last sentence)......................................... N.A.
(a)(1)(A).................................................. N.A.
(a)(1)(B).................................................. N.A.
(a)(2)..................................................... N.A.
(b)........................................................ N.A.
317(a)(1)..................................................... N.A.
(a)(2)..................................................... N.A.
(b)........................................................ N.A.
318(a)........................................................ N.A.
N.A. means Not Applicable.
- ------------------
Note: This Cross-Reference Table shall not, for any purpose be deemed to be part
of this Indenture.
<PAGE> 1
Exhibit 4.6
(FORM OF REVERSE SIDE OF SECURITY]
-----% Senior Note due
1. Interest
Globalstar, L.P., a Delaware limited partnership and
Globalstar Capital Corporation, a Delaware corporation (such limited partnership
and such corporation, and their successors and assigns under the Indenture
hereinafter referred to, being herein called the "Issuers"), promise to pay
interest on the principal amount of this Security at the rate per annum shown
above;
2. Method of Payment
The Issuers will pay interest on the Securities (except
defaulted interest) to the Persons who are registered holders of Securities at
the close of business on the --------------- or ------------------ next
preceding the interest payment date even if Securities are canceled after the
record date and on or before the interest payment date. Holders must surrender
Securities to a Paying Agent to collect principal payments. The Issuers will pay
principal and interest in money of the United States that at the time of payment
is legal tender for payment of public and private debts. Payments in respect of
Securities (including principal, premium, interest will be made by wire transfer
of immediately available funds to the accounts specified by the holders thereof
or, if no U.S. dollar account maintained by the payee with a bank in the United
States is designated by any holder to the Trustee or the Paying Agent at least
30 days prior to the relevant due date for payment (or such other date as the
Trustee may accept in its discretion), by mailing a check to the registered
address of such holder.
<PAGE> 2
3. Paying Agent and Registrar
Initially, The Bank of New York, a New York banking
corporation ("Trustee"), will act as Paying Agent and Registrar. The Issuers may
appoint and change any Paying Agent, Registrar or co-registrar without notice.
The Issuers or any of their domestically incorporated Wholly Owned Subsidiaries
may act as Paying Agent, Registrar or co-registrar.
4. Indenture
The Issuers issued the Securities under an Indenture dated as
of ------------ ("Indenture"), between the Issuers and the Trustee. The terms of
the Securities include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C.
Sections 77aaa-77bbbb) as in effect on the date of the Indenture (the
"Act"). Terms defined in the Indenture and not defined herein have the meanings
ascribed thereto in the Indenture. The Securities are subject to all such terms,
and Securityholders are referred to the Indenture and the Act for a statement of
those terms.
The Securities are unsecured subordinated obligations of the Issuers
limited to $----------- aggregate principal amount (subject to Section 2.07 of
the Indenture). The Indenture contains certain covenants which, among other
things, limit (a) the incurrence of additional debt by the Issuers and certain
of its subsidiaries and the issuance of capital stock by such subsidiaries, (b)
the payment of dividends on capital stock of certain subsidiaries and the
purchase, redemption or retirement of capital stock or subordinated
indebtedness, (c) certain investments, (d) certain transactions with affiliates,
(e) the incurrence of liens, (f) sales of assets, including capital stock of
subsidiaries, (g) certain consolidations and mergers, (h) the Issuers' and
certain of their subsidiaries, lines of business, (i) the Issuers' ability to
operate without certain insurance coverage and (j) certain provisions relating
to the subordination of the Securities. The Indenture also will prohibit certain
restrictions on distributions from subsidiaries. In addition, the Issuers may be
obligated, under certain circumstances, to offer to repurchase Securities at a
purchase price equal to 101% of the principal amount of the Securities plus
accrued and unpaid interest to the date of repurchase.
-2-
<PAGE> 3
5. Optional Redemption
The Securities will not be redeemable at the Issuers' option
prior to ___________. On and after that date, the Issuers may redeem the
Securities in whole or in part, at any time or from time to time at the
following redemption prices (expressed in percentages of principal amount), plus
accrued and unpaid interest to the redemption date (subject to the right of
Holders of record on the relevant record date to receive interest due on the
related interest payment date):
If redeemed during the 12-month period commencing of
the years set forth below:
<TABLE>
<CAPTION>
Period Percentage
<S> <C>
200 ......................................................
200 ......................................................
</TABLE>
In the event that, on or before ____________, Globalstar
receives net proceeds from any Equity Offering by Globalstar or GTL, up to a
maximum of 33-1/3% of the aggregate principal amount of the Notes originally
issued will, at the option of Globalstar, be redeemable from the net cash
proceeds of such sale at a redemption price equal to ______ of the stated
principal amount thereof, plus accrued and unpaid interest, if any, to the date
of redemption; provided, however, that (i) at least 66-2/3% of the original
aggregate principal amount of the Notes remains outstanding after such
redemption and (ii) such redemption shall occur within 90 days of the date of
such offering.
6. Notice of Redemption
Notice of redemption will be mailed by first-class mail at
least 30 days but not more than 60 days before the redemption date to each
Holder of Securities to be redeemed at his registered address. Securities in
denominations larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000. If money sufficient to pay the redemption price of and
accrued interest on all Securities (or portions thereof) to be redeemed on the
redemption date is deposited with the Paying Agent on or before the redemption
date and certain other conditions are satisfied, on and after such date
interest ceases to accrue on such Securities (or such portions thereof) called
for redemption.
-3-
<PAGE> 4
7. Put Provisions
Upon a Change of Control, any Holder of Securities will have
the right to cause the Issuers to repurchase all or any part of the Securities
Of such Holder at a repurchase price equal to 101% of the principal amount of
the Securities plus accrued and unpaid interest to be repurchased (subject to
the right of holders of record on the relevant record date to receive interest
due on the relevant interest payment date) as provided in, and subject to the
terms of, the Indenture.
8. Guarantees
This Security may be jointly and severally guaranteed by
certain Subsidiaries of the Issuers to the extent provided in the Indenture. The
Issuers have covenanted pursuant to the Indenture to cause any Subsidiary
created or acquired after the date of the Indenture (unless such Subsidiary is a
Transitory Equipment Subsidiary or is an Unrestricted Subsidiary), to execute
and deliver to the Trustee a Subsidiary Guaranty pursuant to which such
Subsidiary will guaranty this Security on the same terms and conditions as those
set forth in the Indenture.
9. Denominations; Transfer; Exchange
The Securities are in registered form without coupons in
denominations of $1,000 and whole multiples of $1,000. A Holder may transfer or
exchange Securities in accordance with the Indenture. The Registrar may require
a Holder, among other things, to furnish appropriate endorsements or transfer
documents and to pay any taxes and fees required by law or permitted by the
Indenture. The Issuers are not required to transfer or exchange any Securities
selected for redemption (except, in the case of a Security to be redeemed in
part, the portion of the security not to be redeemed) or any Securities for a
period of 15 days before a selection of Securities to be redeemed.
10. Persons Deemed Owners
The registered Holder of this Security may be treated as the
owner of it for all purposes.
11. Unclaimed Money
If money for the payment of principal or interest remains
unclaimed for two years, the Trustee or Paying Agent shall pay the money back to
the Company at its written request unless an abandoned property law designates
another Person. After any such payment, Holders entitled to the money must look
only to the Issuers and not to the Trustee for payment.
-4-
<PAGE> 5
12. Discharge and Defeasance
Subject to certain conditions, the Issuers at any time may
terminate some or all of their obligations under the Securities and the
Indenture if the Issuers deposit with the Trustee money or U.S. Government
Obligations for the payment of principal and interest on the Securities to
redemption or maturity, as the case may be.
13. Amendment, Waiver
Subject to certain exceptions set forth in the Indenture, (i)
the Indenture or the Securities may be amended with the written consent of the
Holders of at least a majority in principal amount outstanding of the Securities
and (ii) any default or noncompliance with any provision may be waived with the
written consent of the Holders of a majority in principal amount outstanding of
the Securities. Subject to certain exceptions set forth in the Indenture,
without the consent of any Securityholder, the Issuers and the Trustee may amend
the Indenture or the Securities to cure any ambiguity, omission, defect or
inconsistency, to provide for the assumption by a successor corporation of the
obligations of Globalstar under the Indenture, to provide for uncertificated
Securities in addition to or in place of certificated Securities, to add
guarantees with respect to the Securities, to release such guarantees, to secure
the Securities, to add to the covenants of the Issuers for the benefit of the
Holders of the Securities or to surrender any right or power conferred upon the
Issuers, to make any change that does not adversely affect the rights of any
Holder of the Securities or to comply with any requirement of the SEC in
connection with the qualification of the Indenture under the Trust Indenture
Act.
14. Defaults and Remedies
Under the Indenture, Events of Default include (i) default for
30 days in payment of interest on the Securities; (ii) default in payment of
principal on the Securities, upon redemption pursuant to paragraph 5 of the
Securities, upon required repurchase upon declaration or otherwise, or failure
by the Issuers to redeem or purchase Securities when required; (iii) failure by
the Issuers to comply with other agreements in the Indenture or the Securities,
in certain cases subject to notice and lapse of time; (iv) certain
accelerations (including failure to pay within any grace period after final
maturity) of other Debt of the Issuers if the amount accelerated (or so unpaid)
exceeds $__ million; M certain events of bankruptcy or insolvency with respect
to the Issuers and the Significant Subsidiaries; (vi) certain judgments or
decrees for the payment of money in excess of $__ million, subject to lapse of
time and notice; and (vii) certain events with respect to the guarantees of the
Issuers' obligations under the Securities by certain of their subsidiaries.
However, a default under clauses
-5-
<PAGE> 6
certain of their subsidiaries. However, a default under clauses (iii) and (vi)
will not constitute an Event of Default until the Trustee or the Holders of at
least 25% in principal amount of the Securities outstanding notify the Issuers
of the default and the Issuers do not cure such default within the time
specified after receipt of such notice. If an Event of Default occurs and is
continuing, the Trustees or the Holders of at least 25% in principal amount of
the Securities outstanding may declare the principal of and all accrued but
unpaid interest on all the Securities to be due and payable immediately.
Certain events of bankruptcy, insolvency or reorganization are Events of
Default which will result in the Securities being due and payable immediately
upon the occurrence of such Events of Default.
Securityholders may not enforce the Indenture or the
Securities except as provided in the Indenture. The Trustee may refuse to
enforce the Indenture or the Securities unless it receives reasonable indemnity
or security. Subject to certain limitations, Holders of a majority in principal
amount of the Securities may direct the Trustee in its exercise of any trust or
power. The Trustee may withhold from Securityholders notice of any continuing
Default (except a Default in payment of principal or interest) if it determines
that withholding notice is in the interest of the Holders.
15. Trustee Dealings with the Issuers
Subject to certain limitations imposed by the Act, the Trustee
under the Indenture, in its individual or any other capacity, may become the
owner or pledgee of Securities and may otherwise deal with the Issuers or their
Affiliates with the same rights it would have if it were not Trustee.
16. No Recourse Against Others
Any past, present or future director, officer, partner
(including general partners) employee, incorporator or stockholder, as such, of
the Issuers or the Trustee shall not have any liability for any obligations of
the Issuers under the Securities or the Indenture or for any claim based on, in
respect of or by reason of such obligations or their creation. By accepting a
Security, each Securityholder waives and releases all such liability. The waiver
and release are part of the consideration for the issue of the Securities.
17. Authentication
This Security shall not be valid until an authorized signatory
of the Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Security.
-6-
<PAGE> 7
18. Abbreviations
Customary abbreviations may be used in the name of a
Securityholder or an assignee, such as TEN COM (=tenants in common), TEN ENT
(=tenants by the entireties), JT TEN (=joint tenants with rights of survivorship
and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to
Minors Act).
19. CUSIP Numbers
Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures, the Issuers have caused CUSIP
numbers to be printed on the Securities and have directed the Trustee to use
CUSIP numbers in notices of redemption as a convenience to Securityholders. No
representation is made as to the accuracy of such numbers either as printed on
the Securities or as contained in any notice of redemption and reliance may be
placed only on the other identification numbers placed thereon.
20. Governing Law
THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO
APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF
THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
The Issuers will furnish to any Securityholder upon written
request and without charge to the Securityholder a copy of the Indenture.
Requests may be made to:
Globalstar, L.P.
3200 Zanker Road
Box 640670
San Jose, CA 95164-0670
-7-
<PAGE> 8
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint agent to transfer this Security
on the books of Globalstar. The agent may substitute another to act for him.
Date: Your Signature:
------------------------------ ---------------------------
- --------------------------------------------------------------------------------
Sign exactly as your name appears on the other side of this Security.
<PAGE> 9
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the
Issuers pursuant to Section 4.07 or 4.10 of the Indenture, check the box: / /
If you want to elect to have only part of this Security
purchased by the Issuers pursuant to Section 4.07 or 4.10 of the Indenture,
state the amount:
Date: Your Signature:
------------------------------ ---------------------------
- --------------------------------------------------------------------------------
Sign exactly as your name appears on the other side of the Security.
Signature Guarantee:
-----------------------------------------------------------
[Signature must be guaranteed by an eligible
Guarantor Institution (banks, stock brokers, savings
and loan associations and credit unions) with
membership in an approved guarantee medallion program
pursuant to Securities and Exchange Commission Rule
17Ad-15]
<PAGE> 10
CROSS-REFERENCE TABLE
TIA Indenture
Section Section
310(a)(1)..................................................... 7.10
(a)(2)..................................................... 7.10
(a)(3)..................................................... N.A.
(a)(4)..................................................... N.A.
(b)........................................................ N.A.
(c)........................................................ N.A.
311(a)........................................................ 7.11
(b)........................................................ N.A.
(c)........................................................ N.A.
312(a)........................................................ N.A.
(b)........................................................ 11.3
(c)........................................................ 11.3
313(a)........................................................ 7.6
(b)(1)..................................................... N.A.
(b)(2)..................................................... 7.6
(c)........................................................ N.A.
(d)........................................................ N.A.
314(a)........................................................ N.A.
314(a)(4)..................................................... 4.14
(b)........................................................ N.A.
(c)(1)..................................................... N.A.
(c)(2)..................................................... N.A.
(c)(3)..................................................... N.A.
(d)........................................................ N.A.
(e)........................................................ N.A.
(f)........................................................ N.A.
315(a)........................................................ N.A.
(b)........................................................ N.A.
(c)........................................................ N.A.
(d)........................................................ N.A.
(e)........................................................ N.A.
316(a)(last sentence)......................................... N.A.
(a)(1)(A).................................................. N.A.
(a)(1)(B).................................................. N.A.
(a)(2)..................................................... N.A.
(b)........................................................ N.A.
317(a)(1)..................................................... N.A.
(a)(2)..................................................... N.A.
(b)........................................................ N.A.
318(a)........................................................ N.A.
N.A. means Not Applicable.
- ------------------
Note: This Cross-Reference Table shall not, for any purpose be deemed to be part
of this Indenture.
<PAGE> 1
Exhibit 4.7
Principal Amount
CUSIP No.: _____________ $_______________
______% Secured Note due 20___
1. Interest
Globalstar, L.P., a Delaware limited partnership and
Globalstar Capital Corporation, a Delaware corporation (such limited partnership
and such corporation, and their successors and assigns under the Indenture
hereinafter referred to, being herein called the "Issuers"), promise to pay
interest on the principal amount of this Security at the rate per annum shown
above;
2. Method of Payment
The Issuers will pay interest on the Securities (except
defaulted interest) to the Persons who are registered holders of Securities at
the close of business on the _________ or _________ next preceding the interest
payment date even if Securities are canceled after the record date and on or
before the interest payment date. Holders must surrender Securities to a Paying
Agent to collect principal payments. The Issuers will pay principal and interest
in money of the United States that at the time of payment is legal tender for
payment of public and private debts. Payments in respect of Securities
(including principal, premium, interest will be made by wire transfer of
immediately available funds to the accounts specified by the holders thereof or,
if no U.S. dollar account maintained by the payee with a bank in the United
States is designated by any holder to the Trustee or the Paying Agent at least
30 days prior to the relevant due date for payment (or such other date as the
Trustee may accept in its discretion), by mailing a check to the registered
address of such holder.
3. Paying Agent and Registrar
Initially, The Bank of New York, a New York banking
corporation ("Trustee"), will act as Paying Agent and Registrar. The Issuers may
appoint and change any Paying Agent, Registrar or co-registrar without notice.
The Issuers or any of their domestically incorporated Wholly Owned Subsidiaries
may act as Paying Agent, Registrar or co-registrar.
4. Indenture
The Issuers issued the Securities under an Indenture dated as
of _______________ ("Indenture"), between the Issuers and the Trustee. The terms
of the Securities include those stated in the Indenture and those made part of
the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C.
Sections 77aaa-77bbbb) as in effect on the date of the Indenture (the "Act").
Terms defined in the Indenture and not defined herein have the meanings ascribed
thereto in the Indenture. The Securities are subject to all such terms, and
Securityholders are referred to the Indenture and the Act for a statement of
those terms.
<PAGE> 2
The Securities are Secured obligations of the Issuers limited
to $_____________ aggregate principal amount. The Indenture contains certain
covenants which, among other things, limit (a) the incurrence of additional debt
by the Issuers and certain of its subsidiaries and the issuance of capital stock
by such subsidiaries, (b) the payment of dividends on capital stock of certain
subsidiaries and the purchase, redemption or retirement of capital stock or
subordinated indebtedness, (c) certain investments, (d) certain transactions
with affiliates, (e) the incurrence of liens, (f) sales of assets, including
capital stock of subsidiaries, (g) certain consolidations and mergers, (h) the
Issuers' and certain of their subsidiaries, lines of business and the Issuers'
ability to operate without certain insurance coverage. The Indenture also will
prohibit certain restrictions on distributions from subsidiaries. In addition,
the Issuers may be obligated, under certain circumstances, to offer to
repurchase Securities at a purchase price equal to 101% of the principal amount
of the Securities plus accrued and unpaid interest to the date of repurchase.
5. Optional Redemption
The Securities will not be redeemable at the Issuers' option
prior to _____________. On and after that date, the Issuers may redeem the
Securities in whole or in part, at any time or from time to time at the
following redemption prices (expressed in percentages of principal amount), plus
accrued and unpaid interest to the redemption date (subject to the right of
Holders of record on the relevant record date to receive interest due on the
related interest payment date):
If redeemed during the 12-month period commencing
______________ of the years set forth below:
<TABLE>
<CAPTION>
Period Percentage
------ ----------
<S> <C>
[ ]%
[ ]%
</TABLE>
In the event that, on or before _______________, Globalstar
receives net proceeds from any Equity Offering by Globalstar or GTL, up to a
maximum of [ ]% of the aggregate principal amount of the Notes originally issued
will, at the option of Globalstar, be redeemable from the net cash proceeds of
such sale at a redemption price equal to [ ]% of the stated principal amount
thereof, plus accrued and unpaid interest, if any, to the date of redemption;
provided, however, that (i) at least [ ]% of the original aggregate principal
amount of the Notes remains outstanding after such redemption and (ii) such
redemption shall occur within 90 days of the date of such offering.
6. Notice of Redemption
-2-
<PAGE> 3
Notice of redemption will be mailed by first-class mail at
least 30 days but not more than 60 days before the redemption date to each
Holder of Securities to be redeemed at his registered address. Securities in
denominations larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000. If money sufficient to pay the redemption price of and
accrued interest on all Securities (or portions thereof) to be redeemed on the
redemption date is deposited with the Paying Agent on or before the redemption
date and certain other conditions are satisfied, on and after such date interest
ceases to accrue on such Securities (or such portions thereof) called for
redemption.
7. Put Provisions
Upon a Change of Control, any Holder of Securities will have
the right to cause the Issuers to repurchase all or any part of the Securities
Of such Holder at a repurchase price equal to 101% of the principal amount of
the Securities plus accrued and unpaid interest to be repurchased (subject to
the right of holders of record on the relevant record date to receive interest
due on the relevant interest payment date) as provided in, and subject to the
terms of, the Indenture.
8. Security
The due and punctual payment of the principal and premium, if
any, of, and interest on, this Security is secured by the Collateral described
in the Security Agreement and other Security Documents.
9. Guarantees
This Security may be jointly and severally guaranteed by
certain Subsidiaries of the Issuers to the extent provided in the Indenture. The
Issuers have covenanted pursuant to the Indenture to cause any Subsidiary
created or acquired after the date of the Indenture (unless such Subsidiary is a
Transitory Equipment Subsidiary or is an Unrestricted Subsidiary), to execute
and deliver to the Trustee a Subsidiary Guaranty pursuant to which such
Subsidiary will guaranty this Security on the same terms and conditions as those
set forth in the Indenture.
10. Denominations; Transfer; Exchange
The Securities are in registered form without coupons in
denominations of $1,000 and whole multiples of $1,000. A Holder may transfer or
exchange Securities in accordance with the Indenture. The Registrar may require
a Holder, among other things, to furnish appropriate endorsements or transfer
documents and to pay any taxes and fees required by law or permitted by the
Indenture. The Issuers are not required to transfer or exchange any Securities
selected for redemption (except, in the case of a Security to be redeemed in
part, the portion of the security not to be redeemed) or any Securities for a
period of 15 days before a selection of Securities to be redeemed.
11. Persons Deemed Owners
-3-
<PAGE> 4
The registered Holder of this Security may be treated as the
owner of it for all purposes.
12. Unclaimed Money
If money for the payment of principal or interest remains
unclaimed for two years, the Trustee or Paying Agent shall pay the money back to
the Company at its written request unless an abandoned property law designates
another Person. After any such payment, Holders entitled to the money must look
only to the Issuers and not to the Trustee for payment.
13. Discharge and Defeasance
Subject to certain conditions, the Issuers at any time may
terminate some or all of their obligations under the Securities and the
Indenture if the Issuers deposit with the Trustee money or U.S. Government
Obligations for the payment of principal and interest on the Securities to
redemption or maturity, as the case may be.
14. Amendment, Waiver
Subject to certain exceptions set forth in the Indenture, (i)
the Indenture or the Securities may be amended with the written consent of the
Holders of at least a majority in principal amount outstanding of the Securities
and (ii) any default or noncompliance with any provision may be waived with the
written consent of the Holders of a majority in principal amount outstanding of
the Securities. Subject to certain exceptions set forth in the Indenture,
without the consent of any Securityholder, the Issuers and the Trustee may amend
the Indenture or the Securities to cure any ambiguity, omission, defect or
inconsistency, to provide for the assumption by a successor corporation of the
obligations of Globalstar under the Indenture, to provide for uncertificated
Securities in addition to or in place of certificated Securities, to add
guarantees with respect to the Securities, to release such guarantees, to secure
the Securities, to add to the covenants of the Issuers for the benefit of the
Holders of the Securities or to surrender any right or power conferred upon the
Issuers, to make any change that does not adversely affect the rights of any
Holder of the Securities or to comply with any requirement of the SEC in
connection with the qualification of the Indenture under the Trust Indenture
Act.
15. Defaults and Remedies
Under the Indenture, Events of Default include (i) default for
30 days in payment of interest on the Securities; (ii) default in payment of
principal on the Securities, upon redemption pursuant to paragraph 5 of the
Securities, upon required repurchase upon declaration or otherwise, or failure
by the Issuers to redeem or purchase Securities when required; (iii) failure by
the Issuers to comply with other agreements in the Indenture or the Securities,
in certain cases subject to notice and lapse of time; (iv) certain accelerations
(including failure to pay within any grace period
-4-
<PAGE> 5
after final maturity) of other Debt of the Issuers if the amount accelerated (or
so unpaid) exceeds $_____ million; certain events of bankruptcy or insolvency
with respect to the Issuers and the Significant Subsidiaries; (vi) certain
judgments or decrees for the payment of money in excess of $_____ million,
subject to lapse of time and notice; and (vii) certain events with respect to
the guarantees of the Issuers' obligations under the Securities by certain of
their subsidiaries. However, a default under clauses (iii) and (vi) will not
constitute an Event of Default until the Trustee or the Holders of at least
_____% in principal amount of the Securities outstanding notify the Issuers of
the default and the Issuers do not cure such default within the time specified
after receipt of such notice. If an Event of Default occurs and is continuing,
the Trustees or the Holders of at least ____% in principal amount of the
Securities outstanding may declare the principal of and all accrued but unpaid
interest on all the Securities to be due and payable immediately. Certain events
of bankruptcy, insolvency or reorganization are Events of Default which will
result in the Securities being due and payable immediately upon the occurrence
of such Events of Default.
Securityholders may not enforce the Indenture or .the
Securities except as provided in the Indenture. The Trustee may refuse to
enforce the Indenture or the Securities unless it receives reasonable indemnity
or security. Subject to certain limitations, Holders of a majority in principal
amount of the Securities may direct the Trustee in its exercise of any trust or
power. The Trustee may withhold from Securityholders notice of any continuing
Default (except a Default in payment of principal or interest) if it determines
that withholding notice is in the interest of the Holders.
16. Trustee Dealings with the Issuers
Subject to certain limitations imposed by the Act, the Trustee
under the Indenture, in its individual or any other capacity, may become the
owner or pledgee of Securities and may otherwise deal with the Issuers or their
Affiliates with the same rights it would have if it were not Trustee.
17. No Recourse Against Others
Any past, present or future director, officer, partner
(including general partners)i employee, incorporator or stockholder, as such, of
the Issuers or the Trustee shall not have any liability for any obligations of
the Issuers under the Securities or the Indenture or for any claim based on, in
respect of or by reason of such obligations or their creation. By accepting a
Security, each Securityholder waives and releases all such liability. The waiver
and release are part of the consideration for the issue of the Securities.
18. Authentication
This Security shall not be valid until an authorized signatory
of the Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Security.
-5-
<PAGE> 6
19. Abbreviations
Customary abbreviations may be used in the name of a
Securityholder or an assignee, such as TEN COM (=tenants in common), TEN ENT
(=tenants by the entireties), JT TEN (=joint tenants with rights of survivorship
and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to
Minors Act).
20. CUSIP Numbers
Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures, the Issuers have caused CUSIP
numbers to be printed on the Securities and have directed the Trustee to use
CUSIP numbers in notices of redemption as a convenience to Securityholders. No
representation is made as to the accuracy of such numbers either as printed on
the Securities or as contained in any notice of redemption and reliance may be
placed only on the other identification numbers placed thereon.
21. Governing Law
THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO
APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF
THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
The Issuers will furnish to any Securityholder upon written
request and without charge to the Securityholder a copy of the Indenture.
Requests may be made to:
Globalstar, L.P.
3200 Zanker Road
Box 640670
San Jose, CA 95164-0670
Attention:
-6-
<PAGE> 7
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint agent to transfer this
Security on the books of Globalstar. The agent may substitute another to act
for him.
________________________________________________________________________________
Date: Your Signature:
________________________________________________________________________________
Sign exactly as your name appears on the other side of this Security.
-7-
<PAGE> 8
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the
Issuers pursuant to Section 4.07 or 4.10 of the Indenture, check the box:
If you want to elect to have only part of this Security
purchased by the Issuers pursuant to Section 4.07 or 4.10 of the Indenture,
state the amount:
Date: Your Signature:
________________________________________________________________________________
Sign exactly as your name appears on the other side of the Security.
Signature Guarantee: [Signature must be guaranteed by an eligible
Guarantor Institution (banks, stock brokers,
savings and loan associations and credit
unions) with membership in an approved
guarantee medallion program pursuant to
Securities and Exchange Commission Rule
17Ad-15]
-8-
<PAGE> 9
CROSS-REFERENCE TABLE
TIA Indenture
Section Section
------- -------
310 (a)(1) 7.10
(a)(2) 7.10
(a)(3) N.A.
(a)(4) N.A.
(b) N.A.
(c) N.A.
311 (a) 7.11
(b) N.A.
(c) N.A.
312 (a) N.A.
(b) 11.3
(c) 11.3
313 (a) 7.6
(b)(1) N.A.
(b)(2) 7.6
(c) N.A.
(d) N.A.
314 (a) N.A.
314 (a)(4) 4.14
(b) N.A.
(c)(1) N.A.
(c)(2) N.A.
(c)(3) N.A.
(d) N.A.
(e) N.A.
(f) N.A.
315 (a) N.A.
(b) N.A.
(c) N.A.
(d) N.A.
(e) N.A.
316 (a)(last sentence) N.A.
(a)(1)(A) N.A.
(a)(1)(B) N.A.
(a)(2) N.A.
(b) N.A.
317 (a)(1) N.A.
(a)(2) N.A.
(b) N.A.
318 (a) N.A.
N.A. means Not Applicable.
-9-
<PAGE> 10
- ------------------
Note: This Cross-Reference Table shall not, for any purpose be deemed to be
part of this Indenture.
-10-
<PAGE> 1
EXHIBIT 5.1
16 August 1999
Globalstar Telecommunications Limited
Cedar House
41 Cedar Avenue
Hamilton HM 12
Bermuda
Dear Sirs:
GLOBALSTAR TELECOMMUNICATIONS LIMITED (THE "COMPANY")
We have acted as legal counsel in Bermuda to the Company and this opinion as to
Bermuda law is addressed to you in connection with the filing by the Company
with the Securities and Exchange Commission, Washington D.C. 20549 of a
Registration Statement (No. 333-83239) (the "Registration Statement") and
related documents in relation to the issue from time to time of some or all of
the following securities, in any combination: (i) preferred stock, par value
$0.01 per share ("Preferred Stock"), common stock, par value $0.01 per share
("Common Stock") and warrants to purchase the Preferred Stock or the Common
Stock (the "Equity Warrants") which may be issued by the Company; and (ii) debt
securities which may be issued by Globalstar L.P., a Delaware Limited
Partnership ("Globalstar") and Globalstar Capital Corporation, a Delaware
corporation ("Globalstar Capital"). The Preferred Stock, Common Stock and Equity
Warrants are herein referred to collectively as the "Equity Securities". The
Equity Securities may be issued from time to time by the Company after the
Registration Statement becomes effective.
For the purposes of this opinion we have examined and relied upon the documents
listed in the Schedule to this opinion (the "Documents"). Unless otherwise
defined herein, capitalised terms have the meanings assigned to them in the
Registration Statement.
ASSUMPTIONS
In stating our opinion we have assumed:-
(a) the authenticity, accuracy and completeness of all Documents submitted
to us as originals and the conformity to authentic original Documents
of all Documents submitted to us as certified, conformed, notarised,
faxed or photostatic copies;
<PAGE> 2
-2-
GLOBALSTAR TELECOMMUNICATIONS LIMITED 16 August 1999
(b) the genuineness of all signatures on the Documents;
(c) the authority, capacity and power of each of the persons signing the
Documents (other than the Company in respect of the Registration
Statement);
(d) that any factual statements made in any of the Documents are true,
accurate and complete;
(e) that the Registration Statement is in the proper legal form required
under the US Federal securities laws;
(f) that there are no provisions of the laws or regulations of any
jurisdiction other than Bermuda which would be contravened by the
signature or filing of the Registration Statement or which would have
any implication in relation to the opinion expressed herein and that,
in so far as any obligation under, or action to be taken under, the
Registration Statement is required to be performed or taken in any
jurisdiction outside Bermuda, the performance of such obligation or the
taking of such action will constitute a valid and binding obligation of
the Company under the laws of that jurisdiction and will not be illegal
by virtue of the laws of that jurisdiction;
(g) that the search made on 13 August 1999 of the Register of Companies at
the office of the Registrar of Companies referred to in paragraph 3 of
the First Schedule to this opinion was complete and accurate at the
time of such search and disclosed all information which is material for
the purposes of this opinion and such information has not since such
date been materially altered;
(h) that the search made on 13 August 1999 in the Supreme Court Causes Book
at the Registry of the Supreme Court referred to in paragraph 4 of the
First Schedule to this opinion was complete and accurate at the time of
such search and disclosed all information which is material for the
purposes of this opinion and such information has not since such date
been materially altered;
(i) that the Resolutions (defined in the Schedule hereto) are in full force
and effect and have not been rescinded, either in whole or in part,
accurately record the resolutions passed by the Board of Directors of
the Company in a meeting which was duly convened and at which a duly
constituted quorum was present and voting throughout;
(j) that each Director of the Company , when the Board of Directors of the
Company passed the Resolutions, discharged his fiduciary duty owed to
the Company and acted honestly and in good faith with a view to the
best interests of the Company;
<PAGE> 3
-3-
GLOBALSTAR TELECOMMUNICATIONS LIMITED 16 August 1999
(k) that the Company will be entering into its obligations under the
Registration Statement, when duly signed on behalf of the Company, in
good faith for the purpose of carrying on its business and that, at the
time it will do so, there will be reasonable grounds for believing that
the transactions contemplated by the Registration Statement would
benefit the Company;
OPINION
Based upon and subject to the foregoing and subject to the reservations set out
below and to any matters not disclosed to us, we are of the opinion that:-
(1) The Company is an exempted company incorporated with limited liability
and existing under the laws of Bermuda. The Company possesses the
capacity to sue and be sued in its own name and is in good standing
under the laws of Bermuda.
(2) The Company has all requisite corporate power and authority to sign the
Registration Statement.
(3) The signing of the Registration Statement on behalf of the Company has
been duly authorised by all necessary corporate action on the part of
the Company.
(4) The Registration Statement is legally and validly binding upon the
Company.
(5) When duly authorised, issued and paid for pursuant to and in accordance
with the terms of the Registration Statement and the Resolutions, the
Equity Securities will be validly issued, fully paid, and (other than
the Equity Warrants) non-assessable shares of the Company.
(6) No consent or authorisation of, filing with, or other act by or in
respect of, any governmental authority or court of Bermuda is required
to be obtained by the Company in connection with the signing by the
Company of the Registration Statement or the issue of the Equity
Securities except that:-
(i) the permission of the Bermuda Monetary Authority will
be required for the issue of the Equity Securities by
the Company; and
(ii) any Prospectus relating to the issue of the Equity
Securities by the Company will be required to be
filed with the Registrar of Companies pursuant to the
requirements of Part III of the Companies Act 1981.
(7) The signing by the Company of the Registration Statement does not and
will not
<PAGE> 4
-4-
GLOBALSTAR TELECOMMUNICATIONS LIMITED 16 August 1999
violate, conflict with or constitute a default under (i) any
requirement of any law or any regulation of Bermuda or (ii) the
Constitutional Documents as that term is defined in paragraph 5 of the
Schedule to this opinion.
(8) The transactions contemplated by the Registration Statement are not
subject to any currency deposit or reserve requirements in Bermuda. The
Company has been designated as "non-resident" for the purposes of the
Exchange Control Act 1972 and regulations made thereunder and there is
no restriction or requirement of Bermuda binding on the Company which
limits the availability or transfer of foreign exchange (i.e. monies
denominated in currencies other than Bermuda dollars) for the purposes
of the performance by the Company of its obligations under the
Registration Statement.
(9) The statements in the Registration Statement under the heading "Bermuda
Law" insofar as they purport to describe the provisions of the laws of
Bermuda referred to therein, are accurate and correct in all material
respects.
RESERVATIONS
We have the following reservations:-
(a) The term "enforceable" as used in this opinion means that there is a
way of ensuring that each party performs an agreement or that there are
remedies available for breach.
(b) We express no opinion as to the availability of equitable remedies such
as specific performance or injunctive relief, or as to any matters
which are within the discretion of the courts of Bermuda in respect of
any obligations of the Company as set out in the Registration
Statement. Further, we express no opinion as to the validity or binding
effect of any waiver of or obligation to waive either any provision of
law (whether substantive or procedural) or any right or remedy.
(c) Enforcement of the obligations of the Company under the Registration
Statement may be limited or affected by applicable laws from time to
time in effect relating to bankruptcy, insolvency or liquidation or any
other laws or other legal procedures affecting generally the
enforcement of creditors' rights.
(d) Enforcement of the obligations of the Company may be the subject of a
statutory limitation of the time within which such proceedings may be
brought.
(e) We express no opinion as to any law other than Bermuda law and none of
the opinions expressed herein relates to compliance with or matters
governed by the laws of any jurisdiction except Bermuda. This opinion
is limited to Bermuda law
<PAGE> 5
-5-
GLOBALSTAR TELECOMMUNICATIONS LIMITED 16 August 1999
as applied by the Courts of Bermuda at the date hereof.
(f) Where an obligation is to be performed in a jurisdiction other than
Bermuda, the courts of Bermuda may refuse to enforce it to the extent
that such performance would be illegal under the laws of, or contrary
to public policy of, such other jurisdiction.
(g) We express no opinion as to the validity, binding effect or
enforceability of any provision incorporated into the Registration
Statement by reference to a law other than that of Bermuda, or as to
the availability in Bermuda of remedies which are available in other
jurisdictions.
(h) In order to issue this opinion we have carried out the search referred
to in paragraph 3 of the Schedule to this opinion on 13 August 1999 and
have not enquired as to whether there has been any change since that
date.
(i) In order to issue this opinion we have carried out the search referred
to in paragraph 4 of the Schedule to this opinion on 13 August 1999 and
have not enquired as to whether there has been any change since that
date.
(j) In paragraph (1) above, the term "good standing" means that the Company
has received a Certificate of Compliance from the Registrar of
Companies.
(k) Any reference in this opinion to shares being "non-assessable" shall
mean, in relation to fully-paid shares of the Company and subject to
any contrary provision in any agreement in writing between the Company
and the holder of shares, that no shareholder shall be obliged to
contribute further amounts to the capital of the Company, either in
order to complete payment for their shares, to satisfy claims of
creditors of the Company, or otherwise; and no shareholder shall be
bound by an alteration of the Memorandum of Association or Bye-Laws of
the Company after the date on which he became a shareholder, if and so
far as the alteration requires him to take, or subscribe for additional
shares, or in any way increases his liability to contribute to the
share capital of, or otherwise to pay money to, the Company.
DISCLOSURE
This opinion is addressed to you in connection with the filing of the
Registration Statement with the Securities and Exchange Commission and is not to
be made available to, or relied on by any other person or entity, or for any
other purpose, without our prior written consent. We consent to the filing of
this opinion as an exhibit to the Registration Statement. We also consent to the
reference to our Firm under the caption "Bermuda Law" in the Registration
Statement.
<PAGE> 6
-6-
GLOBALSTAR TELECOMMUNICATIONS LIMITED 16 August 1999
This opinion is addressed to you solely for your benefit and is neither to be
transmitted to any other person, nor relied upon by any other person or for any
other purpose nor quoted or referred to in any public document nor filed with
any governmental agency or person, without our prior written consent, except as
may be required by law or regulatory authority. Further, this opinion speaks as
of its date and is strictly limited to the matters stated herein and we assume
no obligation to review or update this opinion if applicable laws or the
existing facts or circumstances should change.
This opinion is governed by and is to be construed in accordance with Bermuda
law.
Yours faithfully
APPLEBY SPURLING & KEMPE
<PAGE> 7
-7-
SCHEDULE
1. Copy of the Registration Statement filed 20 July 1999 with the
Securities and Exchange Commission (the "Registration Statement").
2. Certified copy of the Unanimous Written Consent of the Board of
Directors of the Company dated 15 July 1999 (the "Resolutions");
3. The entries and filings shown in respect of the Company on the file of
the Company maintained in the Register of Companies at the office of
the Registrar of Companies in Hamilton, Bermuda, as revealed by a
search on 13 August 1999.
4. The entries and filings shown in the Supreme Court Causes Book
maintained at the Registry of the Supreme Court in Hamilton, Bermuda,
as revealed by a search on 13 August 1999 in respect of the Company.
5. Certified copies of the Certificate of Incorporation, Memorandum of
Association and Bye-laws adopted 28 April 1988 for the Company
(collectively referred to as the "Constitutional Documents").
6. A Certificate of Compliance, dated 13 August 1999 issued by the
Ministry of Finance in respect of the Company.
<PAGE> 1
EXHIBIT 23.1
CONSENT OF DELOITTE & TOUCHE LLP
We consent to the incorporation by reference in Amendment No. 2 to Registration
Statement No. 333-83239 of Globalstar Telecommunications Limited, Globalstar,
L.P., and Globalstar Capital Corporation on Form S-3 of our reports dated
February 16, 1999, on the consolidated financial statements of Globalstar, L.P.
and the financial statements of Globalstar Telecommunications Limited included
in the Annual Report on Form 10-K of Globalstar Telecommunications Limited and
Globalstar, L.P. for the year ended December 31, 1998 and the use of our reports
dated February 16, 1999, on the balance sheets of Globalstar Capital Corporation
and Loral/Qualcomm Satellite Services, L.P. as of December 31, 1998 and 1997,
appearing in the Prospectus, which is part of the Registration Statement. We
also consent to the reference to us under the heading "Experts" in such
Prospectus
DELOITTE & TOUCHE LLP
San Jose, California
August 16, 1999
<PAGE> 1
EXHIBIT 25.1
25.2
THIS CONFORMING PAPER FORMAT DOCUMENT IS BEING SUBMITTED 25.3
PURSUANT TO RULE 902(d) OF REGULATION S-T
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2)
----------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
----------------
GLOBALSTAR, L.P.
(Exact name of obligor as specified in its charter)
Delaware 13-3759824
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
GLOBALSTAR CAPITAL CORPORATION
(Exact name of obligor as specified in its charter)
Delaware 13-3876323
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
3700 Zanker Road, P.O. Box 640670 95164
San Jose, California
================================================================================
<PAGE> 2
(Address of principal executive executive offices) (Zip Code)
% Senior Notes due
(Title of the indenture securities)
2
1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE.
(a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO
WHICH IT IS SUBJECT.
- --------------------------------------------------------------------------------
Name Address
- --------------------------------------------------------------------------------
Superintendent of Banks of the State 2 Rector Street, New York,
of New York N.Y. 10006, and Albany,
N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York New York 10005
(b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Yes.
2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
None.
16. LIST OF EXHIBITS.
EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION,
ARE INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO
RULE 7a-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND 17
C.F.R. 229.10(d).
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which contains
the authority to commence business and a grant of powers to
exercise corporate trust powers. (Exhibit 1 to Amendment No. 1 to
Form T-1 filed with Registration Statement No. . Exhibits 1a
and 1b to Form T-1 filed with Registration Statement No.
and Exhibit 1 to Form T-1 filed with Registration Statement
No. .)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to
Form T-1 filed with Registration Statement No. .)
-2-
3
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement
No. .)
<PAGE> 3
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or
examining authority.
-3-
4 SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New
York, a corporation organized and existing under the laws of the State of New
York, has duly caused this statement of eligibility to be signed on its behalf
by the undersigned, thereunto duly authorized, all in The City of New York, and
State of New York, on the 30th day of October, 1997.
THE BANK OF NEW YORK
By:
--------------------------------
Name:
Title
-4-
EXHIBIT 7
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
[TO COME]
<PAGE> 1
EXHIBIT 25.1
25.2
THIS CONFORMING PAPER FORMAT DOCUMENT IS BEING SUBMITTED 25.3
PURSUANT TO RULE 902(d) OF REGULATION S-T
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2)
----------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
----------------
GLOBALSTAR, L.P.
(Exact name of obligor as specified in its charter)
Delaware 13-3759824
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
GLOBALSTAR CAPITAL CORPORATION
(Exact name of obligor as specified in its charter)
Delaware 13-3876323
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
3700 Zanker Road, P.O. Box 640670 95164
San Jose, California
================================================================================
<PAGE> 2
(Address of principal executive executive offices) (Zip Code)
% Senior Notes due
(Title of the indenture securities)
2
1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE.
(a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO
WHICH IT IS SUBJECT.
- --------------------------------------------------------------------------------
Name Address
- --------------------------------------------------------------------------------
Superintendent of Banks of the State 2 Rector Street, New York,
of New York N.Y. 10006, and Albany,
N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York New York 10005
(b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Yes.
2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
None.
16. LIST OF EXHIBITS.
EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION,
ARE INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO
RULE 7a-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND 17
C.F.R. 229.10(d).
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which contains
the authority to commence business and a grant of powers to
exercise corporate trust powers. (Exhibit 1 to Amendment No. 1 to
Form T-1 filed with Registration Statement No. . Exhibits 1a
and 1b to Form T-1 filed with Registration Statement No.
and Exhibit 1 to Form T-1 filed with Registration Statement
No. .)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to
Form T-1 filed with Registration Statement No. .)
-2-
3
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement
No. .)
<PAGE> 3
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or
examining authority.
-3-
4 SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New
York, a corporation organized and existing under the laws of the State of New
York, has duly caused this statement of eligibility to be signed on its behalf
by the undersigned, thereunto duly authorized, all in The City of New York, and
State of New York, on the 30th day of October, 1997.
THE BANK OF NEW YORK
By:
--------------------------------
Name:
Title
-4-
EXHIBIT 7
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
[TO COME]
<PAGE> 1
EXHIBIT 25.1
25.2
THIS CONFORMING PAPER FORMAT DOCUMENT IS BEING SUBMITTED 25.3
PURSUANT TO RULE 902(d) OF REGULATION S-T
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2)
----------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
----------------
GLOBALSTAR, L.P.
(Exact name of obligor as specified in its charter)
Delaware 13-3759824
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
GLOBALSTAR CAPITAL CORPORATION
(Exact name of obligor as specified in its charter)
Delaware 13-3876323
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
3700 Zanker Road, P.O. Box 640670 95164
San Jose, California
================================================================================
<PAGE> 2
(Address of principal executive executive offices) (Zip Code)
% Senior Notes due
(Title of the indenture securities)
2
1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE.
(a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO
WHICH IT IS SUBJECT.
- --------------------------------------------------------------------------------
Name Address
- --------------------------------------------------------------------------------
Superintendent of Banks of the State 2 Rector Street, New York,
of New York N.Y. 10006, and Albany,
N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York New York 10005
(b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Yes.
2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
None.
16. LIST OF EXHIBITS.
EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION,
ARE INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO
RULE 7a-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND 17
C.F.R. 229.10(d).
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which contains
the authority to commence business and a grant of powers to
exercise corporate trust powers. (Exhibit 1 to Amendment No. 1 to
Form T-1 filed with Registration Statement No. . Exhibits 1a
and 1b to Form T-1 filed with Registration Statement No.
and Exhibit 1 to Form T-1 filed with Registration Statement
No. .)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to
Form T-1 filed with Registration Statement No. .)
-2-
3
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement
No. .)
<PAGE> 3
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or
examining authority.
-3-
4 SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New
York, a corporation organized and existing under the laws of the State of New
York, has duly caused this statement of eligibility to be signed on its behalf
by the undersigned, thereunto duly authorized, all in The City of New York, and
State of New York, on the 30th day of October, 1997.
THE BANK OF NEW YORK
By:
--------------------------------
Name:
Title
-4-
EXHIBIT 7
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
[TO COME]
