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GLOBALSTAR TELECOMMUNICATIONS LIMITED
PURCHASE AGREEMENT
of up to
$105,000,000 of COMMON STOCK
September 18, 2000
BEAR, STEARNS INTERNATIONAL LIMITED
245 Park Avenue
New York, N.Y. 10167
Dear Sirs:
Globalstar Telecommunications Limited, a company organized and
existing under the laws of Bermuda (the "Company"), proposes, subject to the
terms and conditions stated herein, to issue and sell to Bear, Stearns
International Limited ("Bear Stearns") shares of Common Stock of the Company
(the "Common Stock") having an Aggregate Base Price (as herein defined) of
$105,000,000 in a series of tranches (each a "Tranche"). The determination to
take down a Tranche, the number of shares of Common Stock to be included in the
Tranche and the purchase price per share to be paid by Bear Stearns are subject
to the terms and conditions set forth herein. The Company and Bear Stearns
hereby agree as follows:
The following terms as used in this Agreement shall have the
following meanings:
"Additional Service Provider Agreements" means all material
service provider agreements entered into between Globalstar and the additional
service providers after the date of the Founding Service Provider Agreements.
"Aggregate Base Price" is the total number of shares of Common
Stock sold pursuant to this agreement, plus the number of shares of Common Stock
for which a Notice of Sale has been received but which have yet to be sold
("Shares-in-Process") multiplied by their respective Base Price. In the event
that the Base Price is not yet known
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for such Shares-in-Process, it shall be determined based on the Prior VWA Price.
"Applicable Tranche Shares" means, with respect to a Tranche,
the number of shares of Common Stock which Bear Stearns is required to purchase
from the Company, as specified in Section 2(a)(i).
"Base Price" means the price per share paid by Bear Stearns to
the Company, determined, with respect to each Tranche, in accordance with the
provisions of Section 2(a)(ii).
"Base Prospectus" shall mean the base prospectus contained in
the Registration Statement on a Notice Date.
"Business Day" means any day on which trading in the Common
Stock is conducted through NASDAQ.
"Bye-laws" means the bye-laws of the Company.
"Closing Bid Price" means (x) the last bid price as reported by
Bloomberg L.P. or (y) if for any reason Bloomberg L.P. shall not report such
last bid price, the last bid price as reported by the NASDAQ, as of the close of
the afternoon trading session, at approximately 4:00 p.m., as determined by Bear
Stearns in a commercially reasonable manner.
"Commission" means the U.S. Securities and Exchange Commission.
"Common Stock" shall have the meaning assigned thereto in the
first paragraph of this Agreement.
"Communications Act" means the Communications Act of 1934.
"Exchange Act" means the Securities Exchange Act of 1934.
"FCC" means the Federal Communications Commission.
"Final Tranche" shall have the meaning assigned thereto in
Section 2(a)(i).
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"Founding Service Provider Agreements" means the Service
Provider Agreements dated as of January 1, 1995 entered into between Globalstar
and certain founding service providers.
"Globalstar" means Globalstar, L.P., a Delaware limited
partnership.
"Globalstar Credit Agreement" means the Credit Agreement, dated
as of August 5, 1999, among Globalstar, the several financial institutions named
therein and Bank of America, N.A., as administrative agent (referred to herein
as the "Administrative Agent"), as amended or supplemented from time to time
during the term of this agreement.
"Initial Letter" shall have the meaning assigned thereto in
Section 7(i).
"Investment Company Act" means the Investment Company Act of
1940 and the rules and regulations thereunder.
"Lock-up Period" means, with respect to a Tranche, all times
from the applicable Notice Date through the last day on which the applicable
Base Price is determined, inclusive.
"Loral" means Loral Space & Communications Ltd., a company
organized and existing under the laws of Bermuda.
"LQP" means Loral/QUALCOMM Partnership, L.P., a Delaware limited
partnership and the general partner of LQSS.
"LQSS" means Loral/QUALCOMM Satellite Services, L.P., a Delaware
limited partnership and the managing general partner of Globalstar.
"Market Disruption Event" shall have the meaning assigned
thereto in Section 7(m).
"Material Adverse Change" means, with respect to any entity, any
material adverse change in or affecting the business, results of operations,
financial condition, owners' equity (stockholders' equity in the case of a
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corporation and partners' equity in the case of a partnership) or prospects of
such entity, taken as a whole.
"Memorandum of Association" means the memorandum of association
of the Company.
"NASDAQ" means the NASDAQ National Market or the American Stock
Exchange or the New York Stock Exchange if the Common Stock is then traded
thereon.
"Notice Date" means, with respect to each Tranche, the date a
Notice of Sale is executed by the Company and delivered to Bear Stearns.
"Notice of Sale" means the document, the form of which is
attached as Exhibit 1, to be delivered by the Company to Bear Stearns, which
instructs Bear Stearns to offer the Applicable Tranche Shares to the public.
"Officer's Certificate" shall have the meaning assigned thereto
in Section 7(j).
"Partnership Agreement" means the Amended and Restated Agreement
of Limited Partnership of Globalstar, L.P. dated as of March 6, 1996, as amended
as of April 8, 1998, January 26, 1999, and February 1, 2000, among LQSS, the
Company and certain limited partners named therein.
"Pricing Supplement" means the supplement to the Prospectus
which sets forth, with respect to a Tranche, the number of Applicable Tranche
Shares, the anticipated Tranche Closing Date, and any other information mutually
agreed to be included by the Company and Bear Stearns.
"Preferred Partnership Interests" shall have the meaning
assigned thereto in Section 1(r).
"Prior VWA Price" means the arithmetic average of the volume
weighted average price of the Common Stock reported by NASDAQ on the two
Business Days preceding the Notice Date.
"Prospectus" shall mean, on any date, the Base Prospectus and
each prospectus supplement (including any
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Pricing Supplement) relating to the Common Stock offered pursuant to this
agreement filed pursuant to Rule 424(b).
"Purchase Price Option A" means the price which Bear Stearns
pays to the Company on a Tranche Closing Date for the Applicable Tranche Shares
as specified in Section 2(a)(ii)(A).
"Purchase Price Option B" means the price which Bear Stearns
pays to the Company on a Tranche Closing Date for the Applicable Tranche Shares
as specified in Section 2(a)(ii)(B).
"Purchase Price Option C" means the price which Bear Stearns
pays to the Company on a Tranche Closing Date for the Applicable Tranche Shares
as specified in Section 2(a)(ii)(C).
"QUALCOMM" shall have the meaning assigned thereto in
Section 1(d).
"QUALCOMM Agreement" shall have the meaning assigned thereto in
Section 1(l).
"QUALCOMM Facility" shall have the meaning assigned thereto in
Section 1(d).
"Registration Statement" shall mean the registra tion statement
(No. 33-83239) that was originally declared effective on August 18, 1999, as
amended by the post- effective amendment that was declared effective on
September 15, 2000, registering for sale pursuant to Rule 415 certain securities
of the Company and Globalstar, including the filings with the Commission
pursuant to the Exchange Act incorporated therein, as amended on each Notice
Date.
"Revolving Credit Agreement" means the revolving credit
agreement dated as of December 15, 1995, as amended, among Globalstar, Chemical
Bank (now The Chase Manhattan Bank), as administrative agent, and the lenders
signatory thereto.
"Rule 415", "Rule 424" and "Rule 430A" refer to such rules under
the Securities Act.
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"Rule 430A Information" shall mean information with respect to
the Common Stock and the offering thereof permitted to be omitted from the
Registration Statement when it becomes effective pursuant to Rule 430A.
"Rules and Regulations" means the rules and regulations in
effect at any relevant time adopted by the Commission under the Securities Act
or the Exchange Act, as applicable.
"Securities Act" means the Securities Act of 1933.
"Series A Preferred Stock" shall have the meaning assigned
thereto in Section 1(r).
"Series B Preferred Stock" shall have the meaning assigned
thereto in Section 1(r).
"Service Provider Agreements" means the Founding Service
Provider Agreements and the Additional Service Provider Agreements.
"Shares-in-Process" shall have the meaning assigned in the
definition of "Aggregate Base Price".
"SS/L" means Space Systems/Loral Inc., a Delaware corporation.
"SS/L Agreement" shall have the meaning assigned thereto in
Section 1(l).
"Tranche Closing Date" means the third Business Day after
delivery by the Company to Bear Stearns of a Notice of Sale, on which payment
and delivery of the Applicable Tranche Shares occurs, unless extended pursuant
to Section (2)(a)(iv).
"Tranche Period" means, with respect to a Tranche, all times
from the Notice Date through the Tranche Closing Date, inclusive.
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1. Representations, Warranties and Agreements of the
Company and Globalstar. Each of the Company and Globalstar represents, warrants
and agrees that:
(a) The Company meets the requirements for use of Form S-3
under the Securities Act in connection with the offering pursuant to the
Prospectus. The Registration Statement has remained in effect since it was
originally declared effective by the Commission on August 18, 1999, and the
post-effective amendment has remained in effect since it was originally declared
effective by the Commission on September 15, 2000. The Registration Statement
covers, among other securities, the registration under the Securities Act of the
offering and sale of the Common Stock. Upon the offering of each Tranche, the
Company will file with the Commission a Prospectus, or Pricing Supplement in
circumstances where only a Pricing Supplement is required, in accordance with
Rules 415, 424(b) and 430A. As filed, such Prospectus shall contain all
applicable Rule 430A Information, together with all other such required
information, and, except to the extent Bear Stearns shall agree in writing to a
modification, shall be in all substantive respects in the form furnished to Bear
Stearns on or prior to the Notice Date. The Registration Statement, on the
Notice Date, meets the requirements set forth in Rules 415(a)(1)(x) and (a)(4).
(b) As of the date hereof, the Registration Statement did
not, and on each Notice Date and Tranche Closing Date the Prospectus will not,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein not misleading; and on the date of any filing pursuant to Rule 424(b),
any Notice Date and any Tranche Closing Date, the Prospectus will not include
any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided, however,
that the Company and Globalstar make no representations or warranties as to the
information contained in or omitted from the Registration Statement or the
Prospectus in reliance upon and in conformity with information furnished in
writing to the Company by Bear Stearns specifically for inclusion in the
Registration Statement or the Prospectus.
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(c) The Company has been duly incorporated as an exempted
company and is validly existing as an exempted company in good standing under
the laws of Bermuda, with all requisite power and authority and, except as
disclosed in the Prospectus, has all necessary material government
authorizations, licenses, certificates, franchises, permits and approvals
required to own its properties and to conduct its business as described in the
Prospectus; and, since the respective dates as of which information is given in
the Registration Statement and the Prospectus, there has not been, and prior to
any Tranche Closing Date there will not be, any change in the capital stock or
long-term debt of the Company, or any Material Adverse Change, or any
development involving a prospective Material Adverse Change, in or affecting the
general affairs, management, financial position, stockholders' equity or results
of operations of the Company, taken as a whole, otherwise than as set forth or
contemplated, or under arrangements referred to, in the Prospectus.
(d) Globalstar has been duly formed and is validly existing
as a limited partnership in good standing under the laws of the State of
Delaware and has been duly qualified for the transaction of business and is in
good standing under the laws of each other jurisdiction in which it owns or
leases property, or conducts any business, so as to require such qualification
(except where the failure to so qualify would not result in a Material Adverse
Change with respect to Globalstar); and Globalstar has all requisite power and
authority and, except as disclosed in the Prospectus, all necessary material
governmental authorizations, licenses, certificates, franchises, permits and
approvals required to own its properties and to conduct its business as
described in the Prospectus; and, since the respective dates as of which
information is given in the Registration Statement and the Prospectus, there has
not been, and prior to any Tranche Closing Date there will not be, any change in
the partnership interests or long-term debt of Globalstar (except for borrowings
under the Globalstar Credit Agreement, under the vendor financing agreement
between QUALCOMM Inc., a Delaware corporation ("QUALCOMM") or pursuant to other
vendor financing arrangements) and Globalstar dated as of May 5, 2000 (the
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"QUALCOMM Facility"), or any development involving a prospective Material
Adverse Change, with respect to Globalstar, other than as set forth or
contemplated, or under arrangements referred to, in the Prospectus.
(e) Neither the Company nor Globalstar owns any real
property and each of the Company and Globalstar has good and marketable title to
all material personal property owned by them, in each case free and clear of all
liens, encumbrances and defects except such as are described in the Prospectus
or such other liens, encumbrances and defects as will not in the aggregate
result in a Material Adverse Change of the Company or Globalstar, as the case
may be, and do not interfere with the use made and proposed to be made of such
property by the Company or Globalstar, as the case may be, and any material real
property and buildings held under lease by the Company or Globalstar, as the
case may be, are held by them under valid, subsisting and enforceable leases
with such exceptions as are described in the Prospectus or are not material and
do not interfere with the use made and proposed to be made of such real property
and buildings by the Company or Globalstar, as the case may be.
(f) The Company has authorized capital stock as set forth in
the Prospectus, and all the issued shares of Common Stock of the Company have
been duly and validly authorized and issued, are fully paid and not subject to
further calls and conform in all material respects to the description in the
Prospectus; the Common Stock is approved for trading on NASDAQ and is not
subject to any preemptive or similar rights.
(g) The shares of Common Stock to be issued and sold by the
Company to Bear Stearns hereunder have been duly and validly authorized and,
when issued and delivered against payment therefor as provided herein, will be
duly and validly issued, fully paid and not subject to further calls and will
conform in all material respects to the description of the Common Stock in the
Prospectus.
(h) The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby, will not
conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture or other agreement
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or instrument to which the Company or Globalstar is a party or by which the
Company or Globalstar is bound or to which any of the property or assets of the
Company or Globalstar is subject, nor will such actions result in any violation
of the provisions of the Memorandum of Association or the Bye-laws, in each case
as amended, of the Company or the Partnership Agreement, or any statute or any
order, rule or regulation of any court or governmental agency or body having
jurisdiction over the Company or Globalstar or any of their properties or
assets; and no consent, approval, authorization, order, registration, filing or
qualification (other than the required filing with the Bermuda Registrar of
Companies) of or with any court or governmental agency or body is required for
the issue and sale of the Common Stock or the consummation of the other
transactions contemplated by this Agreement, except the registration and filings
under the Securities Act and the Exchange Act of the Common Stock, and such
consents, approvals, authorizations, registrations, filings or qualifications as
may be required under state securities or Blue Sky laws or as may be required by
the laws of any country other than the United States in connection with the
purchase and distribution of the Common Stock by Bear Stearns. The total number
of shares of Common Stock to be issued and sold by the Company to Bear Stearns
hereunder will at no time be equal to or exceed 20% of the number of shares of
common stock of the Company outstanding before this Offering, unless such
issuance is approved by the Company's shareholders in accordance with the
Company's Memorandum of Association and Bye-laws.
(i) There are no legal or governmental proceed ings pending
to which the Company or Globalstar, or to the knowledge of the Company or
Globalstar, any partner of Globalstar, LQSS or LQP is a party or of which any
property of the Company or Globalstar is the subject, except such as are
described or contemplated by the Prospectus which will individually or in the
aggregate be reasonably likely to result in a Material Adverse Change with
respect to the Company or Globalstar, as the case may be; and, to the best of
the Company's and Globalstar's knowledge and except such as are described or
contemplated by the Prospectus, no such proceedings are threatened or
contemplated by others.
(j) There are no contracts or other documents that are
required to be described in the Prospectus or filed
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as exhibits to the Registration Statement which are not described therein or
filed as exhibits thereto.
(k) Globalstar and its partners and equipment suppliers own
or possess adequate patent rights or licenses or other rights to use patent
rights, inventions, trademarks, service marks, trade names and copyrights
(except as otherwise described in the Registration Statement or the Prospectus)
necessary to conduct the general business proposed to be operated by Globalstar
as described in the Prospectus, and, except as described in the Prospectus, none
of Globalstar or its partners or its equipment suppliers has received any notice
of infringement of or conflict with asserted rights of others with respect to
any patent, patent rights, inventions, trademarks, service marks, trade names or
copyrights which, in the aggregate, would result in a Material Adverse Change
with respect to Globalstar.
(l) Except as described in the Prospectus or for defaults
under the Founding Service Provider Agreement between Globalstar and
Hyundai/DACOM, no default exists, and no event has occurred which with notice or
lapse of time, or both, would constitute a default in the due performance and
observance of any term, covenant or condition of the Partnership Agreement, any
Service Provider Agreement for the provision of Globalstar services as described
in the Prospectus, the agreement between Globalstar and QUALCOMM dated March 18,
1994, as amended (the "QUALCOMM Agreement"), the agreement between Globalstar
and SS/L dated February 16, 1994 (the "SS/L Agreement"), the QUALCOMM Facility
or any indenture, mortgage, deed of trust, loan or credit agreement, lease or
other agreement or instrument to which the Company or Globalstar is a party or
by which either of them is bound, except any such default with respect to any
such lease, other agreement or instrument as would not, individually or in the
aggregate, result in a Material Adverse Change with respect to the Company or
Globalstar, as the case may be.
(m) The Company and Globalstar have timely filed all
material tax returns and notices. Except as described in the Prospectus, the
Company and Globalstar have no knowledge, or any reasonable grounds to know, of
any federal, state, county, local or foreign tax deficiencies of any nature
whatsoever which would, in the aggregate, result
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in a Material Adverse Change with respect to the Company or Globalstar, as the
case may be.
(n) Other than as disclosed in the Prospectus, there are no
contracts, agreements or understandings between the Company and any person
granting such person the right (other than rights which have been waived or
satisfied) to require the Company to file a registration statement under the
Securities Act with respect to any securities of the Company owned or to be
owned by such person or to require the Company to include such securities in the
securities registered pursuant to the Registration Statement or in any
securities being registered pursuant to any other registra tion statement filed
by the Company under the Securities Act.
(o) Except as disclosed in the Prospectus, Globalstar
carries or will have the benefit of insurance in such amounts and covering such
risks as is adequate for the conduct of its business and the value of its
properties and as is customary for companies engaging in similar businesses in
similar industries.
(p) Except as described in the Prospectus, no labor
disturbance by the employees of Globalstar exists, or to the knowledge of
Globalstar, is imminent which might be expected to result in a Material Adverse
Change with respect to Globalstar.
(q) Each of the Company and Globalstar is in compliance in
all material respects with all presently applicable provisions of the Employee
Retirement Income Security Act of 1974, as amended, including the regulations
and published interpretations thereunder ("ERISA"); no "reportable event" (as
defined in ERISA) has occurred with respect to any "pension plan" (as defined in
ERISA) for which the Company or Globalstar would have any liability; neither the
Company nor Globalstar has incurred or expects to incur liability under (i)
Title IV of ERISA with respect to termination of, or withdrawal from, any
"pension plan" or (ii) Sections 412 (other than routine minimum funding
obligations), 4971 or 4975 of the Internal Revenue Code of 1986, as amended,
including the regulations and published interpretations thereunder (the "Code");
and nothing has occurred, whether by action or failure to act, with respect
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to the operation of any "pension plan" for which the Company or any of its
subsidiaries would have any liability that is intended to be qualified under
Section 401(a) of the Code that could reasonably be expected to result in the
loss of such qualification.
(r) Except as may otherwise be disclosed in or contemplated
by the Prospectus, since the date as of which information is given in the
Prospectus, neither the Company nor Globalstar has (i) issued or granted any
securities or partnership interests (except pursuant to the exercise of existing
options or warrants), (ii) incurred any material liability or obligation, direct
or contingent, other than liabilities and obligations which were incurred in the
ordinary course of business (except for borrowings under the Globalstar Credit
Agreement, the QUALCOMM Facility or pursuant to other vendor financing
arrangements), (iii) entered into any material transaction not in the ordinary
course of business or (iv) in the case of the Company, declared or paid any
dividend on its capital stock other than with respect to (A) the 8% Series A
Convertible Redeemable Preferred Stock of the Company due 2011 (the "Series A
Preferred Stock") or (B) the 9% Series B Convertible Redeemable Preferred Stock
of the Company due 2011 (the "Series B Preferred Stock") or, in the case of
Globalstar, made any distribution to its partners other than with respect to the
convertible redeemable preferred general partnership interests of Globalstar
issued in connection with the Series A Preferred Stock or Series B Preferred
Stock (the "Preferred Partnership Interests").
(s) Deloitte & Touche LLP, whose report is incorporated by
reference in the Prospectus, are independent public accountants as required by
the Securities Act and the Rules and Regulations. The financial statements and
schedules (including the related notes and supporting schedules) included (by
incorporation by reference or otherwise) in the Registration Statement and the
Prospectus present fairly the financial condition, results of operations and
changes in financial condition of the entities purported to be shown thereby at
the dates and for the periods indicated and have been prepared in accordance
with generally accepted accounting principles applied on a consistent basis
(except as may be noted therein) throughout the periods indicated.
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(t) Each of the Company and Globalstar (i) makes and keeps
accurate books and records and (ii) maintains internal accounting controls which
provide reasonable assurance that (A) transactions are executed in accordance
with management's authorization, (B) transactions are recorded as necessary to
permit preparation of its financial statements and to maintain accountability
for its assets and (C) access to its assets is permitted only in accordance with
management's authorization.
(u) Except as disclosed in the Prospectus, there has been no
storage, disposal, generation, manufacture, refinement, transportation, handling
or treatment of toxic wastes, medical wastes, hazardous wastes or hazardous
substances by Globalstar (or, to the knowledge of Globalstar, any of
Globalstar's predecessors in interest) at, upon or from any of the property now
or previously owned or leased by Globalstar in violation of any applicable law,
ordinance, rule, regulation, order, judgment, decree or permit or which would
require remedial action under any applicable law, ordinance, rule, regulation,
order, judgment, decree or permit, except for any violation or remedial action
which would not be reasonably likely to result in, singularly or in the
aggregate with all such violations and remedial actions, a Material Adverse
Change with respect to Globalstar; there has been no spill, discharge, leak,
emission, injection, escape, dumping or release of any kind onto such property
or into the environment surrounding such property of any toxic wastes, medical
wastes, solid wastes, hazardous wastes or hazardous substances due to or caused
by Globalstar or any of its predecessors or with respect to which Globalstar has
knowledge, except for any such spill, discharge, leak, emission, injection,
escape, dumping or release which would be reasonably likely to result in,
singularly or in the aggregate with all such spills, discharges, leaks,
emissions, injections, escapes, dumpings and releases, a Material Adverse Change
with respect to Globalstar; and the terms "hazardous wastes", toxic wastes",
"hazardous substances" and "medical wastes" shall have the meanings specified in
any applicable local, state, federal and foreign laws or regulations with
respect to environmental protection.
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(v) The Partnership Agreement, the Service Provider
Agreements, the SS/L Agreement, the QUALCOMM Agreement and the QUALCOMM Facility
have been duly executed by the Company and Globalstar (to the extent that they
are parties thereto) and are valid, binding and enforceable agreements, except
as enforceability may be limited by (i) bankruptcy, insolvency, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally or by general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law) and (ii)
Federal or state securities laws or principles of public policy with regard to
rights to indemnity under the Partnership Agreement to the extent an indemnified
party thereunder may be deemed or alleged to be an underwriter pursuant to such
laws; provided, however, that no representation is made hereunder with respect
to the enforceability of any provisions contained in the Partnership Agreement
or the Service Provider Agreements which state that the parties thereto have
agreed to further negotiate with respect to certain matters as specified therein
or which provide for the grant of exclusive service territories.
(w) Globalstar has entered into service provider agreements
covering at least 125 countries.
(x)(i) The FCC has authorized LQP to construct a mobile
satellite system capable of operating in the 1610-1626.5/2483.5-2500 MHZ
frequency bands, consistent with the technical specifications set forth
in its application, the FCC's rules and the conditions set forth in the
FCC's Order and Authorization (DA 95-128), released January 31, 1995, as
modified by the Erratum, DA 95-373 (released February 29, 1996), as
affirmed and modified by the Memorandum Opinion and Order, FCC 96-279
(released June 27, 1996), as modified by the FCC's Order and
Authorization, DA 96-1924 (released November 19, 1996); however, such
authorization is presently subject to modification, stay or revocation
through judicial appeals.
(ii) Participation by Globalstar in the development and
operation of the Globalstar System as described in the Prospectus does
not violate the Communications Act or the Rules and Regulations.
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(iii) The construction, launch and operation by Globalstar of
the Globalstar satellite constellation authorized by the Order and
Authorization (DA 95-128), released January 31, 1995, as modified by the
Erratum, DA 95-373 (released February 29, 1996), as affirmed and
modified by the Memorandum Opinion and Order, FCC 96-279 (released June
27, 1996), as modified by the FCC's Order and Authorization, DA 96-1924
(released November 19, 1996), does not violate provisions of the
Communications Act or the FCC's rules and policies thereunder relating
to control of FCC authorizations, provided that L/Q Licensee, Inc.
remains in ultimate control of the authorized facilities as defined by
the rules and policies of the FCC and that there is no transfer of
control of L/Q Licensee, Inc. without prior approval of the FCC.
(y) After giving effect to the sale of Common Stock by Bear
Stearns as contemplated by this Agreement, the Company will not be an
"investment company" under the Investment Company Act.
(z) The ordinary partnership interests to be issued and sold
by Globalstar to the Company pursuant to the Partnership Agreement, will be, as
of each Tranche Closing Date, duly and validly authorized, executed, issued and
delivered, in accordance with the terms of the Partnership Agreement, fully paid
and nonassessable and not subject to preemptive rights and will constitute the
valid and binding obligations of Globalstar.
(aa) Neither the Company nor Globalstar or any of their
Affiliates has taken, nor will any of them take, di rectly or indirectly, any
action designed to cause or that would result in, or which constitutes or that
might reasonably be expected to constitute, the stabilization or
manipulation of the price of the Common Stock to facilitate
the sale or resale of the Common Stock.
2. Purchase and Sale of the Securities.
(a) At any time prior to September 18, 2001, the Company may
effect a sale of a Tranche pursuant to, and subject to the terms of, this
Agreement by delivery of a Notice of Sale to Bear Stearns at 245 Park Avenue,
New York,
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NY 10167 by 5:30 p.m. New York time on a Business Day. The Company may consider
delivery made via fax complete upon the verbal confirmation of receipt by Bear
Stearns. Each Notice of Sale shall be executed by an authorized officer of the
Company and shall set forth the following with regard to each Tranche takedown:
(i) the number of shares of Common Stock (the "Applicable
Tranche Shares") to be sold pursuant to such Tranche, which number of
shares shall not be less than 50,000 or greater than the lesser of:
(A) 10% of the total trading volume reported by the
NASDAQ during the two Business Days preceding the Notice Date,
(B) the lesser of (x) 10% of the total number of
shares of Common Stock outstanding as of the date hereof or (y)
10% of the total number of shares of Common Stock outstanding as
of the Notice Date or
(C) a number of shares calculated in accordance with
the following formula:
$105,000,000-- Aggregate Base Price;
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Prior VWA Price
provided, however, in the event that the number of Applicable Tranche
Shares equals the amount calculated in clause (C) of this Section
2(a)(i), then (x) the 50,000 share minimum described above shall not
apply, and (y) the Notice of Sale shall specify such number of
Applicable Tranche Shares, rounded to the next higher integral number of
100 shares, and such Tranche shall be the Final Tranche taken down under
this agreement (the "Final Tranche");
<PAGE> 18
18
(ii) whether the Company has chosen:
(A) Purchase Price Option A, which shall equal
97 1/2% of the arithmetic average of the Closing Bid Price for
the Common Stock on the two Business Days following the Notice
Date, provided, that if any time the Closing Bid Price is not
the high bid price for such day, then such calculation shall
exclude any such bids made by Bear Stearns,
(B) Purchase Price Option B, which shall equal 93%
of the arithmetic average of the volume weighted average price
of the Common Stock as reported by NASDAQ on the two Business
Days following the Notice Date, or
(C) Purchase Price Option C which shall equal 100%
of the lowest trading price for the Common Stock as reported by
NASDAQ on either of the two Business Days following the Notice
Date, excluding trades of less than 10,000 shares and
transactions involving Bear Stearns, in its proprietary
capacity,
for determination of the Base Price of the Applicable Tranche Shares;
(iii) the Tranche Closing Date;
(iv) confirmation that the Common Stock meets the ADTV and
public float value (as therein defined) of Rule 101(c)(1) of Regulation
M under the Exchange Act; provided, however, that if such ADTV and
public float requirements are not met, such Notice of Sale shall state
whether the provisions of paragraph (1) or (2) of the definition of
"restricted period" under Rule 101 of Regulation M is applicable; if
paragraph (1) is applicable, the reference to "on the two Business Days
following the Notice Date" in subparagraphs (A), (B) and (C) of
paragraph (a)(ii) above shall be changed to "on the two Business Days
following one 'business day' (as such term is defined in Rule 100 of
Regulation M under the Exchange Act) subsequent to the Notice Date" and,
if paragraph (2) is applicable, shall be changed to "on the two Business
Days following the five
<PAGE> 19
19
'business days' (as such term is defined in Rule 100 of Regulation M
under the Exchange Act) subsequent to the Notice Date"; and
(v) confirmation that the representations and warranties
contained in Section 1 of this agreement, qualified as to materiality
are true and correct and those not so qualified are true and correct in
all material respects as of such Notice Date, provided, however, that in
all cases any qualifications as to materiality shall be considered in
the aggregate, and the covenants contained in Sections 5 and 6 of this
agreement have been satisfied in all material respects as of such Notice
Date
and shall be accompanied by the Pricing Supplement setting forth information
relating to the Tranche and if any amendments or supplements to the Prospectus
are required, the Prospectus.
(b) The Company shall not issue a Notice of Sale, and any
such Notice of Sale so issued shall be deemed ineffective, unless each of the
following conditions is met:
(i) a Notice of Sale was not issued on the immediately
preceding Business Day;
(ii) Bear Stearns is not subject to a restricted period (as
therein defined) of Rule 101 of Regulation M under the Exchange Act with
regard to the Common Stock; and
(iii) at no time on the Notice Date had the Common Stock
traded at a price of $4.50 or less.
(c) Pursuant to this agreement, Bear Stearns shall not be
obligated to purchase more than $105,000,000 Aggregate Base Price of Common
Stock other than as may result from the Base Price for the Applicable Tranche
Shares being in excess of the Prior VWA Price used in the calculations set forth
in Section 2(a)(i).
(d) The Company shall not be obligated to deliver any Common
Stock on any Tranche Closing Date, except upon payment for all the Applicable
Tranche Shares to be
<PAGE> 20
20
purchased on such Tranche Closing Date as provided herein. The previous sentence
notwithstanding, with respect to a Tranche that has yet to close, upon the
occurrence of a Market Disruption Event, or any other event or occurrence which,
in Bear Stearns' reasonable opinion, after consultation with the Company and its
counsel, makes it unlikely that the conditions to the closing on the Tranche
Closing Date will be met, or in the event that a Tranche does not close on the
Tranche Closing Date, the Company shall be obligated to, at Bear Stearns' option
(except that in the case of a Market Disruption Event, only option (A) will be
utilized), either: (A) deliver to Bear Stearns such number of shares of Common
Stock which Bear Stearns sold in the market pursuant to such outstanding Notice
of Sale at the price at which such shares were sold in the market or (B) make a
payment to Bear Stearns in cash in an amount sufficient to make Bear Stearns
whole with regard to the sale of such shares.
3. Commitment Fee. The Company shall pay to Bear Stearns
$5,000,000, in consideration for entering into this agreement. Such payment
shall be made in cash according to the following schedule:
<TABLE>
<CAPTION>
Amount Date
------ ----
<S> <C>
$1,500,000 September 18, 2000;
1,000,000 September 21, 2000;
1,500,000 September 26, 2000;
1,000,000 September 29, 2000.
</TABLE>
If the Company shall fail to make any payment when due, (x) the remainder of
such payments shall become immediately due and payable and (y) Bear Stearns
shall be released from all existing obligations hereunder.
4. Delivery of and Payment for Applicable Tranche Shares.
Delivery of and payment for the Applicable Tranche Shares shall be made at the
offices of Cravath, Swaine & Moore, Worldwide Plaza, 825 Eighth Avenue, New
York, NY 10019 (or such other mutually agreed upon place) at 10:00 a.m., New
York City time, on the third Business Day
<PAGE> 21
21
following the Notice Date or at such other date or place as shall be determined
by agreement between Bear Stearns and the Company. On each Tranche Closing Date,
the Company shall deliver or cause to be delivered certificates representing the
Applicable Tranche Shares to Bear Stearns for its account against payment to or
upon the order of the Company of the purchase price by wire transfer in
certified or official bank check or checks payable in same-day funds. Time shall
be of the essence, and delivery at the time and place specified pursuant to this
Agreement is a further condition of the obligation of Bear Stearns hereunder.
Upon delivery, the Applicable Tranche Shares shall be registered in such names
and in such denominations as Bear Stearns shall request in writing not less than
two Business Days prior to the Tranche Closing Date. For the purpose of
expediting the checking and packaging of the certificates for the Applicable
Tranche Shares, the Company shall make the certificates representing the
Applicable Tranche Shares available for inspection by Bear Stearns in New York,
New York, not later than 2:00 p.m., New York City time, on the Business Day
prior to the Tranche Closing Date. If the Company is unable or unwilling to
comply with the terms of this Section 4, or any other conditions to settlement
(including but not limited to, having the Common Stock delivered pursuant to a
Tranche Closing covered by the Prospectus and Registration Statement), the
Company agrees to indemnify and hold harmless Bear Stearns from and against any
loses incurred, directly or indirectly, as a result (including the costs of
cover).
5. Covenants of the Company. The Company covenants and
agrees:
(a) Prior to the termination of this agreement, the Company
will not file any amendment to the Registration Statement or Prospectus unless
the Company has furnished Bear Stearns a copy for its review prior to filing and
will not file any such proposed amendment or supplement to which Bear Stearns
reasonably objects. The Company will cause the Prospectus, properly completed,
and any supplement thereto to be filed with the Commission pursuant to the
applicable paragraph of Rule 424(b) (if required) within the time period
prescribed and on each Notice Date and will provide evidence satisfactory to
Bear Stearns of such timely filing. The Company will promptly advise Bear
Stearns (1) when the
<PAGE> 22
22
Prospectus shall have been filed (if required) with the Commission pursuant to
Rule 424(b), (2) when, prior to termination of this offering, any amendment to
the Regis tration Statement (including any filing with the Commission of any
document that is incorporated by reference) shall have been filed or become
effective, (3) of any request by the Commission or its staff for any amendment
to the Registration Statement, or for any supplement to the Prospectus or for
any additional information, (4) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or the institu
tion or threatening of any proceeding for that purpose and (5) of the receipt by
the Company of any notification with respect to the suspension of the
qualification of the Common Stock for sale in any jurisdiction or the
institution or threatening of any proceeding for such purpose. The Company will
use its best efforts to prevent the issuance of any such stop order or the
suspension of any such qualification and, if issued, to obtain as soon as
possible the withdrawal thereof.
(b) If, at any time when a prospectus relating to the Common
Stock is required to be delivered under the Securities Act, any event occurs as
a result of which the Prospectus would include any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein in the light of the circumstances under which they were made
not misleading, or if it shall be necessary to amend the Registration Statement
or supplement the Prospectus to comply with the Securities Act or the Exchange
Act or the Rules and Regulations, the Company promptly will (1) notify Bear
Stearns of such event, (2) prepare and file with the Commission, subject to the
first sentence of paragraph (a) of this Section 5, an amendment or supplement
which will correct such statement or omission or effect such compliance and (3)
supply copies of the Prospectus to Bear Stearns in such quantities as it may
reasonably request.
(c) The Company will arrange, if necessary, for the
qualification of the Common Stock for sale under the laws of such jurisdictions
as Bear Stearns may designate, will maintain such qualifications in effect so
long as required for the distribution of the Common Stock and will pay any fee
of the National Association of Securities
<PAGE> 23
23
Dealers, Inc., in connection with its review of the offering; provided, that, in
no event shall the Company be obligated to qualify to do business in any
jurisdiction where it is not now so qualified or to take any action that would
subject it to (a) service of process in suits, other than those arising out of
the offering or sale of the Common Stock, in any jurisdiction where it is not
now so subject or (b) subject it to taxation in any such jurisdiction.
(d) During any applicable Lock-up Period, not to, directly
or indirectly, or announce any intent to, (1) offer for sale, sell, pledge or
otherwise dispose of (or enter into any transaction or device which is designed
to, or could be expected to, result in the disposition by any person during such
period of) any shares of Common Stock or securities convertible into or
exchangeable for Common Stock, or sell or grant options, rights or warrants with
respect to any shares of Common Stock or securities convertible into or
exchangeable for Common Stock other than, in each case, as applicable, (i)
Common Stock, the issuance of which is permitted to satisfy the Company's
dividend, conversion and redemption obligations (including in respect of any
dividend make-whole payments or optional or provisional redemption payments)
pursuant to the terms of the Series A Preferred Stock or Series B Preferred
Stock, (ii) Common Stock, or options to purchase Common Stock, issued in
connection with any employee stock option plan, stock ownership plan or dividend
reinvestment plan, (iii) any transfers of warrants issued in connection with the
Globalstar Credit Agreement or the Revolving Credit Agreement, or shares of
Common Stock issuable upon exercise of such warrants, (iv) warrants issued in
connection with the QUALCOMM Facility, (v) Common Stock issued pursuant to
warrants outstanding on the date hereof, (vi) strategically driven private
placements of the Company's Common Stock with strategic investors and (vii)
Common Stock issued to Globalstar's partners, or (2) enter into any swap or
other derivatives transaction that transfers to another, in whole or in part,
any of the economic benefits or risks of ownership of such shares of Common
Stock, whether any such transaction described in clause (1) or (2) above is to
be settled by delivery of Common Stock or other securities, in cash or
otherwise, in each case without the prior written consent of Bear Stearns;
<PAGE> 24
24
(e) The Company will not take, directly or indirectly, any
action designed to or which has constituted or which might reasonably be
expected to cause or result, under the Exchange Act or otherwise, in
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Common Stock.
(f) For a period of five years following the last Tranche
Closing, the Company shall furnish to Bear Stearns copies of all materials
furnished by the Company to its shareholders and all public reports and all
reports and financial statements furnished by the Company to the NASDAQ or any
other principal national securities exchange upon which the Common Stock may be
listed pursuant to requirements of or agreements with such exchange or to the
Commission pursuant to the Exchange Act or any Rule or Regulation;
(g) The Company shall apply the net proceeds from the sale
of the Common Stock being sold by the Company as set forth in the Prospectus;
and
(h) The Company shall take such steps as shall be necessary
to ensure that it shall not become an "investment company" within the meaning of
such term under the Investment Company Act.
(i) The Company agrees to pay (i) the costs incident to the
authorization, issuance, sale and delivery of the Common Stock and any taxes
payable in that connection; (ii) the costs incident to the preparation, printing
and filing under the Securities Act of the Registration Statement and any
amendments and exhibits thereto; (iii) the costs of distributing the
Registration Statement and any post-effective amendments thereof (including, in
each case, exhibits and filings incorporated by reference), the Prospectus or
any document incorporated by reference therein, all as provided in this
Agreement; (iv) the costs of producing and distributing this Agreement and any
other related documents in connection with the offering, purchase, sale and
delivery of the Common Stock; (v) any filing fees incident to securing any
required review by the National Association of Securities Dealers, Inc. of the
terms of sale of the Common Stock; (vi) any applicable listing or other fees;
(vii) the fees and expenses of
<PAGE> 25
25
qualifying the Common Stock under the securities laws of the several
jurisdictions and of preparing, printing and distributing a Blue Sky Memorandum;
and (viii) all other costs and expenses incident to the performance of the
obligations of the Company under this Agreement; provided, that, except as
provided in this Section 5 and in Section 10 Bear Stearns shall pay their own
costs and expenses, including the costs and expenses of their counsel, any
transfer taxes on the Common Stock which they may sell and the expenses of
advertising any offering of the Common Stock made by Bear Stearns.
(j) The Company will not, prior to the earlier of (i) one
year from the date of this agreement, (ii) the close of the Final Tranche or
(iii) any termination of this agreement pursuant to Section 9 hereunder, enter
into any at-the-market (as defined in Rule 415) offering through any issuer
other than Bear Stearns.
6. Covenants of Globalstar. Globalstar covenants and agrees
with Bear Stearns that:
(a) During any applicable Lock-up Period, Globalstar shall
not, except with the prior written consent of Bear Stearns, offer, sell or
contract to sell or otherwise dispose of, directly or indirectly, or announce
the offering of, any partnership interests, any options, rights or warrants with
respect to such interests or any securities convertible into, or exchangeable
for, such interests other than, in each case, as applicable, (i) partnership
interests, the issuance of which is permitted to satisfy Globalstar's dividend,
conversion and redemption obligations (including in respect of any dividend
make-whole payments or optional dividend cash payments) pursuant to the terms of
the Series A Preferred Stock or Series B Preferred Stock, (ii) partnership
interests issued in connection with any of the Company's employee option plan,
stock ownership plan or dividend reinvestment plan, (iii) any transfers of
warrants issued in connection with the Globalstar Credit Agreement, or the
Revolving Credit Agreement or partnership interests issuable upon exercise of
such warrants, (iv) warrants issued in connection with the QUALCOMM Facility,
(v) partnership interests issued pursuant to options or warrants outstanding on
the date hereof, (vi) strategically driven private placements of the
<PAGE> 26
26
partnership interests with strategic investors, (vii) the issuance of
partnership interests to Globalstar's partners and, (viii) any other issuance of
a number of partnership interests to GTL that corresponds to the number of
shares of Common Stock issued by GTL pursuant to an offering permitted under
Section 5(d) hereof.
(b) Globalstar shall apply the proceeds of the sale of its
partnership interests to the Company substantially as set forth in the
Prospectus.
7. Conditions of Bear Stearns' Obligations. The obligations
of Bear Stearns hereunder are subject to the accuracy, when made and on each
Notice Date and Tranche Closing Date, of the representations and warranties of
the Company and Globalstar contained herein, to the performance by the Company
and Globalstar of their obligations hereunder and to the following additional
terms and conditions:
(a) Each Prospectus will be filed in the manner and within
the time period required by Rule 424(b); and no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been instituted or threatened.
(b) Bear Stearns shall not have discovered and disclosed to
the Company on or prior to each such date that the Registration Statement or the
Prospectus or any amendment or supplement thereto contains an untrue statement
of a fact which, in the opinion of Bear Stearns, is material or omits to state a
fact which, in Bear Stearns' opinion, is material and is required to be stated
therein or is necessary to make the statements therein not misleading.
(c) All corporate proceedings and other legal matters
incident to the authorization, form and validity of this Agreement, the Common
Stock, the Registration Statement and the Prospectus, and all other legal
matters relating to this Agreement and the transactions contemplated hereby
shall be reasonably satisfactory in all material respects to counsel for Bear
Stearns, and the Company shall have furnished to such counsel all documents and
information that they may reasonably request to enable them to pass upon such
matters.
<PAGE> 27
27
(d) On the date hereof and on each Tranche Closing Date
there shall have been furnished to Bear Stearns an opinion of Willkie Farr &
Gallagher, counsel to the Company and Globalstar, dated the date hereof or such
Tranche Closing Date, as applicable, and in form and sub stance satisfactory to
counsel for Bear Stearns, to the effect that:
(i) Globalstar has been duly formed and is validly existing
as a limited partnership in good standing under the laws of the State of
Delaware, and has been duly qualified for the transaction of business
and is in good standing under the laws of each other jurisdiction in
which it owns or leases property, or conducts any business, so as to
require such qualification (except where the failure to so qualify would
not have a material adverse effect on Globalstar); and Globalstar has
all requisite power and authority and, except as disclosed in the
Prospectus, all material governmental authorizations, licenses,
certificates, franchises, permits and approvals required to own its
properties and to conduct its business as described in the Prospectus;
(ii) To such counsel's knowledge, except as described in the
Prospectus, the Company has not granted any outstanding options,
warrants or commitments with respect to any shares of the capital stock
of the Company, whether issued or unissued, and Globalstar, LQSS and LQP
have not granted any rights or options to other persons with respect to
partnership interests of Globalstar;
(iii) The Common Stock conforms in all material respects to
the description thereof contained in the Prospectus;
(iv) To such counsel's knowledge, no litigation or
governmental proceedings are pending or threatened against the Company
or Globalstar which would adversely affect the Company's or Globalstar's
ability to perform its obligations under this Agreement or is required
to be disclosed in the Prospectus and which is not disclosed and
correctly summarized therein;
<PAGE> 28
28
(v) This Agreement has been duly authorized, executed and
delivered by the Company and Globalstar;
(vi) The execution, delivery and performance by the Company
and Globalstar of this Agreement, and the consummation by the Company of
the sales of the Common Stock thereby will not (A) conflict with or
constitute a breach of any of the terms or provisions of, or a default
under, the Partnership Agreement or the amended and restated agreement
of partnership of LQP dated as of March 23, 1994, as amended on March
24, 1998, the Service Provider Agreements, the Memorandum of Association
or Bye-laws, the SS/L Agreement, the Qualcomm Agreement or any
indenture, mortgage, deed of trust, loan agreement or other material
agreement or instrument known to such counsel to which the Company or
Globalstar is a party or by which they or their property is bound or (B)
(assuming compliance with all applicable state securities and Blue Sky
laws in those jurisdictions in the United States in which the Common
Stock is being sold and compliance with all non-U.S. applicable
securities laws and regulations of any country in which Common Stock may
be offered or sold outside the U.S.) violate or conflict with any
provision of law or regulation applicable to the Company (1) of the
State of New York, (2) of the United States of America or (3) set forth
in the Revised Uniform Limited Partnership Act of the State of Delaware;
(vii) No consent, approval, authorization or order of any
court, regulatory body, administrative agency or other governmental body
is required to be obtained for the sale of the Common Stock as
contemplated by the Prospectus under any provision of law or regulation
applicable to the Company of the State of New York or the United States
of America, except as may be required under the various state securities
or Blue Sky laws or the consent of the Bermuda Monetary Authority;
(viii) There is no restriction upon the voting or transfer of
any Common Stock acquired hereunder pursuant to the Company's Memorandum
of Association or Bye-laws, in each case as amended, or in any agreement
or other instrument of which such counsel has knowledge
<PAGE> 29
29
except as described in the Prospectus; and no holders of securities of
the Company have rights to the registration thereof under the
Registration Statement except as described in the Prospectus;
(ix) Such counsel has read all contracts referred to in the
Registration Statement and the Prospectus and all other loan agreements
to which the Company or Globalstar is a party of which such counsel has
knowledge and to the extent material such contracts are fairly
summarized as disclosed therein, conform in all material respects to the
descriptions thereof contained therein, and are filed as exhibits
thereto;
(x) The statements set forth in the Prospectus under the
heading "Taxation--United States Tax Considerations" insofar as such
statements constitute a summary of the legal matters, documents or
proceedings referred to therein relating to the laws of the United
States fairly present the information referred to therein with respect
to such legal matters, documents and proceedings; the statements set
forth therein under the heading "Description of Common Stock", insofar
as such statements purport to summarize provisions of the Common Stock,
provide a fair summary of such provisions;
(xi) The Registration Statement was declared effective under
the Securities Act as of the date and time specified in such opinion,
the Prospectus was filed with the Commission pursuant to the
subparagraph of Rule 424(b) of the Rules and Regulations specified in
such opinion on the date specified therein and no stop order suspending
the effectiveness of the Registration Statement has been issued and, to
the knowledge of such counsel, no proceeding for that purpose is pending
or threatened by the Commission;
(xii) The Registration Statement and the Prospectus, as
amended or supplemented (other than the financial statements and related
schedules therein, as to which such counsel need express no opinion)
comply as to form in all material respects with the requirements of the
Securities Act and the Rules and Regulations; and the documents
incorporated by
<PAGE> 30
30
reference in the Prospectus and any further amendment or supplement to
any such incorporated document made by the Company prior to such Tranche
Closing Date (other than the financial statements and related schedules
therein, as to which such counsel need express no opinion), when they
were filed with the Commission, complied as to form in all material
respects with the requirements of the Securities Act or the Exchange
Act, as applicable, and the Rules and Regulations;
(xiii) To such counsel's knowledge, there are no contracts or
other documents which are required to be described in the Prospectus or
filed as exhibits to the Registration Statement by the Securities Act or
by the Rules and Regulations which have not been described or filed as
exhibits to the Registration Statement or incorporated therein by
reference as permitted by the Rules and Regulations;
(xiv) The Partnership Agreement has been duly and validly
authorized, executed and delivered by the Company, LQSS, Loral, and
Loral/DASA Globalstar, L.P. and each of the Service Provider Agreements,
the SS/L Agreement and the Qualcomm Agreement have been duly and validly
authorized, executed and delivered by Globalstar and, to such counsel's
knowledge, the other parties to each of the aforementioned agreements
have authorized, executed and delivered such agreements and assuming
such authorization, execution and delivery by such other parties, such
agreements constitute valid and legally binding obligations enforceable
against the parties thereto, except as enforceability may be limited by
(I) bankruptcy, insolvency, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally or by general
equitable principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law) and (II) Federal or
state securities laws or principles of public policy with regard to
rights to indemnity; provided, however, that no opinion need be given
with respect to the enforceability of any provisions contained in the
Partnership Agreement or the Service Provider Agreements which state
that the parties thereto have agreed to further negotiate with respect
to certain matters as specified therein;
<PAGE> 31
31
(xv) LQP has agreed to use the license to operate mobile
satellite services in the 1610-1626.5 MHZ L-band and the 2483.5-2500 MHZ
S-band granted by the FCC for the exclusive benefit of Globalstar;
(xvi) After giving effect to the sale of the Common Stock by
Bear Stearns as contemplated in the Prospectus, the Company will not be
an "investment company" under the Investment Company Act.
(xvii) The Partnership Agreement has been duly amended in
accordance with the requirements thereof in a manner which permits the
creation, issuance and sale by Globalstar of the ordinary partnership
interests to be issued in connection with the offering of the Common
Stock, and the making of distributions by Globalstar in respect thereof;
no further consents, votes or approvals of Globalstar, or the partners
in Globalstar, or any stockholders in such partners, are required
pursuant to the Partnership Agreement and applicable Delaware law to
give effect to such amendment other than those consents, votes or
approvals (including the consent of the Committee, Consent of the
Partners, the Consent of the Disinterested Partners and the consent of a
GTL Independent Director (as such terms are defined in the Partnership
Agreement)), which have been duly obtained; and
(xviii) the ordinary partnership interests to be issued and
sold to the Company pursuant to the Partner ship Agreement have been
duly and validly authorized, and when issued and delivered, in
accordance with the terms of the Partnership Agreement, will be validly
issued, fully paid and nonassessable and will constitute the valid and
binding obligations of Globalstar.
In rendering such opinions, such counsel may limit its opinion
to the laws of the State of New York, the laws of the United States and the
Delaware Revised Uniform Limited Partnership Act and as to matters of fact, such
counsel may rely to the extent deemed proper, on certifi cates of responsible
officers of the Company or Globalstar and public officials.
<PAGE> 32
32
Such counsel shall also make a statement to the following
effect: In the course of preparation by the Company of the Prospectus, such
counsel participated in conferences with certain officers of the Company and
Globalstar, with the independent auditors of the Company's and of Globalstar's
financial statements and representatives of Bear Stearns. While such counsel has
not independently verified the accuracy, completeness or fairness of the
statements made in the Prospectus and does not assume any responsibility
therefor (except insofar as set forth in Section 7(d)(iii), (viii) and (ix)
above and except for statements made therein related to such counsel), nothing
has come to its attention that would lead it to believe that the Prospectus, as
of the date hereof, or, for any opinion delivered on a Tranche Closing Date,
throughout such Tranche Period (other than the financial statements and notes
thereto and the supporting schedules and other financial data derived therefrom
included or incorporated by reference therein or the matters addressed by the
opinion of Crowell & Moring (set forth in Section 7(f) hereof) and matters
addressed in the opinion of Appleby, Spurling & Kempe (set forth in Section 7(e)
hereof) as to Bermuda law matters) contained an untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading. Such counsel may also
state, in any opinion other than the opinion delivered on the date hereof, the
extent to which such conferences, if any, have been limited.
(e) On the date hereof there shall have been furnished to
Bear Stearns an opinion of Appleby, Spurling & Kempe, counsel to the Company,
dated the date hereof, and in form and substance satisfactory to counsel for the
Bear Stearns to the effect that:
(i) The Company has been duly incorporated as an exempted
company and is validly existing as an exempted company in good standing
under the laws of Bermuda, and has full power and authority and has
obtained all Bermuda governmental authorizations, licenses,
certificates, franchises, permits and approvals required to own its
properties and to conduct its business as described in the Prospectus;
<PAGE> 33
33
(ii) Assuming that no more than 23,400,000 shares are sold
pursuant to this agreement, the Company has authorized capital stock as
set forth in the Registration Statement, and all the issued shares of
Common Stock of the Company have been duly and validly authorized and
issued and are fully paid and not subject to further calls; the Common
Stock has been duly authorized and, when delivered to Bear Stearns
against payment therefor as provided by this Agreement, will have been
validly issued and will be fully paid and not subject to further calls;
the issuance of the Common Stock is not subject to any preemptive or
similar rights under the Company's Memorandum of Association or
Bye-laws, in each case as amended; the Common Stock conforms to the
descriptions thereof in the Prospectus;
(iii) To such counsel's knowledge, no litigation or
governmental proceeding is pending or threatened against the Company in
Bermuda which would adversely affect the Company's ability to perform
its obligations under this Agreement;
(iv) The execution, delivery and performance by the Company
of this Agreement has been duly authorized and the consummation by the
Company of the sale of the Common Stock in accordance therewith will not
(A) conflict with the Company's Memorandum of Association or Bye-Laws,
in each case as amended, or (B) violate or conflict with any provision
of law or regulation of Bermuda applicable to the Company;
(v) No consent, approval, authorization or order of any
court, regulatory body, administrative agency or other governmental body
is required to be obtained for the sale of Common Stock under any
provision of law or regulation of Bermuda applicable to the Company or
for the consummation of the transactions contemplated by this Agreement;
(vi) There is no restriction upon the voting or transfer of
any Common Stock pursuant to (A) the law of Bermuda, (B) the Company's
Memorandum of Association or
<PAGE> 34
34
Bye-laws, in each case as amended, or (C) any agreement or other
instrument of which such counsel has knowledge except as described in
the Prospectus;
(vii) The statements set forth in the Base Prospectus under
the headings "Description of Common Stock--Bermuda Law", insofar as such
statements describe the Common Stock and constitute a summary of the
legal matters referred to therein fairly present the information
referred to therein with respect to such legal matters;
(viii) A final and conclusive judgment of a New York court
under which a sum of money is payable (not being a sum payable in
respect of taxes or other charges of a like nature, in respect of a fine
or other penalty or in respect of multiple damages as defined in The
Protection of Trading Interest Act, 1981) may be the subject of
enforcement proceedings in the Supreme Court of Bermuda under the common
law doctrine of obligation by action for the debt evidenced by the New
York court's judgment; assuming that (1) the court that gave such
judgment was competent to hear the action in accordance with private
international law principles as applied by the courts in Bermuda and (2)
such judgment is not contrary to public policy in Bermuda, has not been
obtained by fraud or in proceedings contrary to natural justice and is
not based on an error in Bermuda law, such counsel believes that, on
general principle such a judgment would be enforceable in the Supreme
Court of Bermuda; and enforcement of such a judgment against assets in
Bermuda may involve the conversion of the judgment into Bermuda dollars,
but the Bermuda Monetary Authority's policy is to give the consents
necessary to enable recovery in the currency of the obligation;
(ix) The submission by the Company to the jurisdiction of the
State and federal courts sitting in the City of New York contained in
this Agreement constitutes a legal, valid and binding obligation of the
Company, provided that such submission is valid under New York law;
<PAGE> 35
35
(x) The choice of the laws of the State of New York to
govern this Agreement is a valid choice of law under Bermuda law.
(f) On each Tranche Closing Date, there shall have been
furnished to Bear Stearns a letter of Appleby, Spurling & Kempe, dated such
Tranche Closing Date, stating that Bear Stearns is, as of such Tranche Closing
Date, entitled to rely on its opinion described in Section (7)(e), above, as if
it were dated such Tranche Closing Date.
(g) On the date hereof and on each Tranche Closing Date
there shall have been furnished to Bear Stearns an opinion of Crowell & Moring,
special communications counsel to the Company, dated the date hereof or such
Tranche Closing Date, as applicable, in form and substance satisfactory to
counsel for Bear Stearns to the effect that:
(i) To such counsel's knowledge, except for the statements
set forth in the Company's offering memorandum dated January 21, 1999,
regarding the offering of the Series A Preferred Stock, under the
heading "Regulation -- United States FCC Regulation" and the Annual
Report of the Company for the fiscal year ended December 31, 1999, under
the heading "Business--Licensing" or except as described in the
Prospectus, there are no pending or threatened proceedings which could
have a material adverse effect on the validity of the authorization for
construction, launch and operation of the Globalstar satellite
constellation;
(ii) The FCC has authorized LQP to construct a mobile
satellite system capable of operating in the 1610-1626.5/2483.5-2500 MHZ
frequency bands, consistent with the technical specifications set forth
in its application, the FCC's rules and the conditions set forth in the
FCC's Order and Authorization (DA 95-128), released January 31, 1995, as
modified by the Erratum, DA 95-373 (released February 29, 1996), as
affirmed and modified by the Memorandum Opinion and Order, FCC 96-279
(released June 27, 1996), as modified by the FCC's Order and
Authorization, DA 96-1924 (released November 19, 1996); and pursuant to
FCC approval, LQP
<PAGE> 36
36
has assigned such authorization to L/Q Licensee, Inc.; however, such
authorization is presently subject to modification, stay or revocation
as a result of pending judicial appeals;
(iii) The construction, launch and operation by Globalstar, of
the Globalstar satellite constellation authorized by the Order and
Authorization, DA 95-128 (released Jan. 31, 1995), as modified by the
Erratum, DA 95-373 (released February 28, 1995), as affirmed and
modified by the Memorandum Opinion and Order, FCC 96-279 (released June
27, 1996), as modified by the FCC's Order and Authorization, DA 96-1924
(released November 19, 1996), would not violate provisions of the
Communications Act or the FCC's rules and policies thereunder relating
to control of FCC authorizations, provided that L/Q Licensee, Inc.
remains in ultimate control of the authorized facilities as defined by
the rules and policies of the FCC and that there is no transfer of
control of L/Q Licensee, Inc. without prior approval of the FCC, and
(iv) That such opinion shall be considered true, valid and
current throughout the duration of this agreement, unless counsel shall
have delivered to Bear Stearns, and Bear Stearns shall have confirmed
receipt of, notification to the contrary.
(h) Bear Stearns shall have received from Cravath, Swaine &
Moore, counsel for Bear Stearns, such opinion and letters, dated the date
hereof, with respect to the issuance and sale of the Common Stock, the
Registration Statement, the Prospectus and other related matters as Bear Stearns
may reasonably require, and the Company shall have furnished to such counsel
such documents as they reasonably request for the purpose of enabling them to
pass upon such matters.
(i) At the time of execution of this Agreement, Bear Stearns
shall have received from Deloitte & Touche LLP ("Deloitte") a letter (the
"Initial Letter"), in form and substance satisfactory to the Bear Stearns,
addressed to Bear Stearns and the Board of Directors of the Company and dated
the date hereof (i) confirming that they are independent public accountants
within the meaning of the
<PAGE> 37
37
Securities Act and are in compliance with the applicable requirements relating
to the qualification of accountants under Rule 2-01 of Regulation S-X of the
Commission, (ii) stating, as of the date hereof (or, with respect to matters
involving changes or developments since the respective dates as of which
specified financial information is given in the Prospectus, as of a date not
more than five days prior to the date hereof), the conclusions and findings of
such firm with respect to the financial information and other matters ordinarily
covered by accountants' "comfort letters" to underwriters in connection with
registered public offerings.
(j) On each Tranche Closing Date, Bear Stearns shall have
received from Deloitte a letter, addressed to Bear Stearns and the Board of
Directors of the Company and dated such Tranche Closing Date (i) confirming that
they are independent public accountants within the meaning of the Securities Act
and are in compliance with the applicable requirements relating to the
qualification of accountants under Rule 2-01 of Regulation S-X of the
Commission, (ii) stating, as of the Tranche Closing Date, or, with respect to
matters involving changes or developments since the respective dates as of which
specified financial information is given in the Prospectus, as of a date not
more than five days prior to the date of the Tranche Closing Date, the
conclusions and findings of such firm with respect to the financial information
and other matters covered by the Initial Letter, (iii) confirming in all
material respects the conclusions and findings set forth in the Initial Letter
and (iv) updating the Initial Letter with any information which would have been
included in such Initial Letter had it been given on such Tranche Closing Date.
(k) The Company and Globalstar shall each furnish to Bear
Stearns as of the date hereof and shall have furnished to Bear Stearns on each
Tranche Closing Date a certificate, dated such date, of its (x) Chairman of the
Board, its President or a Vice President and its chief financial officer or
Treasurer or (y) the Chairman of the Board, the President or a Vice-President
and the Chief Financial Officer or Treasurer of the Managing General
<PAGE> 38
38
Partner of Globalstar (the "Officer's Certificate") stating that:
(i) The representations and warranties of the Company in
Section 1 of this Agreement qualified as to materiality are true and
correct and those not so qualified are true and correct in all material
respects as if made at and of the date hereof, or, if the Officer's
Certificate is being delivered on a Tranche Closing Date, have been
throughout the Tranche Period, true and correct provided, however, that
in all cases any qualifications as to materiality shall be considered in
the aggregate; the Company has in all material respects complied with
all its agreements contained herein; and the Company has in all respects
satisfied the conditions on its part to be complied with or satisfied at
such date; and
(ii) They have carefully examined the Registration Statement
and the Prospectus and, in their opinion (A) as of such date, the
Registration Statement and Prospectus did not include any untrue
statement of a material fact and did not omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading, and (B) since such date no event has occurred
which should have been set forth in a supplement or amendment to the
Registration Statement or the Prospectus.
(l) (i) Neither the Company nor Globalstar shall have sustained
since the date of the latest audited financial statements included or
incorporated by reference in the Prospectus at the date of the Agreement any
loss or interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor dispute or
court or governmental action, order or decree, otherwise than as set forth or
contemplated in the Prospectus or (ii) since such date there shall not have been
any change in the capital stock, partnership interests or long-term debt of the
Company or Globalstar or any change, or any development involving a prospective
change, in or affecting the general affairs, management, financial position,
stockholders' equity or results of operations of the Company and Globalstar,
otherwise than as set forth or contemplated in the Prospectus, the effect of
<PAGE> 39
39
which, in any such case described in clause (i) or (ii), is, in the judgment of
Bear Stearns, so material and adverse as to make it impracticable or inadvisable
to proceed with the public offering or the delivery of the Common Stock being
delivered on such Tranche Closing Date on the terms and in the manner
contemplated in the Prospectus.
(m) Subsequent to the execution and delivery of this
Agreement there shall not have occurred any of the following: (i) trading in
securities generally on the New York Stock Exchange or the American Stock
Exchange or in the over-the-counter market, or trading in any securities of the
Company on any exchange or in the over-the-counter market, shall have been
suspended (which shall not include any limitation on program trading pursuant to
the rules of the New York Stock Exchange) or minimum prices shall have been
established on any such exchange or such market by the Commission, by such
exchange or by any other regulatory body or governmental authority having
jurisdiction, (ii) a banking moratorium shall have been declared by Federal or
state authorities, (iii) the United States shall have become engaged in
hostilities, there shall have been an escalation in hostilities involving the
United States or there shall have been a declaration of a national emergency or
war by the United States or (iv) there shall have occurred such a material
adverse change in general economic, political or financial conditions (or the
effect of international conditions on the financial markets in the United States
shall be such) (each a "Market Disruption Event") as to make it, in the judgment
of Bear Stearns, impracticable or inadvisable to proceed with the public
offering or delivery of the Common Stock being delivered on such Tranche Closing
Date on the terms and in the manner contemplated in the Prospectus.
All such opinions, certificates, letters and documents shall be
in compliance with the provisions hereof only if they are reasonably
satisfactory in form and sub stance to Bear Stearns and its counsel. The Company
shall furnish to Bear Stearns conformed copies of such opinions, certificates,
letters and other documents in such number as Bear Stearns shall reasonably
request. If any of the conditions specified in this Section 7 shall not have
been fulfilled when and as required by this Agreement, this Agreement and all
obligations of Bear Stearns hereunder may
<PAGE> 40
40
be canceled at, or at any time prior to, each Tranche Closing Date, by Bear
Stearns. Any such cancellation shall be without liability of Bear Stearns to the
Company. Notice of such cancellation shall be given to the Company in writing,
or by telecopy or telephone and confirmed in writing.
8. Indemnification and Contribution. (a) The Company and
Globalstar, jointly and severally, shall indemnify and hold harmless Bear
Stearns, its officers and employees and each person, if any, who controls Bear
Stearns within the meaning of the Securities Act, from and against any loss,
claim, damage or liability, joint or several, or any action in respect thereof
(including, but not limited to, any loss, claim, damage, liability or action
relating to purchases and sales of Common Stock), to which Bear Stearns and each
such officer, employee or controlling person may become subject, under the
Securities Act or otherwise, insofar as such loss, claim, damage, liability or
action arises out of, or is based upon, (i) any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement or
the Prospectus or (ii) the omission or alleged omission to state in the
Registration Statement or the Prospectus any material fact required to be stated
therein or necessary to make the statements therein not misleading, and shall
reimburse Bear Stearns and each such officer, employee or controlling person
promptly upon demand for any legal or other expenses reasonably incurred by Bear
Stearns and each such officer, employee or controlling person in connection with
investigating or defending or preparing to defend against any such loss, claim,
damage, liability or action as such expenses are incurred; provided, however,
that the Company and Globalstar shall not be liable in any such case to the
extent that any such loss, claim, damage, liability or action arises out of, or
is based upon, any untrue statement or alleged untrue statement or omission or
alleged omission made in the Registration Statement or the Prospectus, in
reliance upon and in conformity with written information concerning Bear Stearns
furnished to the Company by or on behalf of Bear Stearns specifically for
inclusion therein which information consists solely of the information specified
in Section 8(e); and provided further that as to any Base Prospectus or any
preliminary prospectus this indemnity agreement shall not inure to the benefit
of Bear Stearns on
<PAGE> 41
41
account of any loss, claim, damage, liability or action arising from the sale of
Common Stock to any person by Bear Stearns if Bear Stearns failed to send or
give a copy of the Prospectus, as the same may be amended or supplemented, to
that person within the time required by the Securities Act, and the untrue
statement or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact in such Base Prospectus was corrected in the
Prospectus, unless such failure resulted from non-compliance by the Company with
Section 5(c) herein. The foregoing indemnity agreement is in addition to any
liability which the Company or Globalstar may otherwise have to Bear Stearns or
to any officer, employee or controlling person of Bear Stearns.
(b) Bear Stearns shall indemnify and hold harmless the
Company, its officers and employees, each of its directors, and each person, if
any, who controls the Company within the meaning of the Securities Act, from and
against any loss, claim, damage or liability, joint or several, or any action in
respect thereof, to which the Company or any such director, officer or
controlling person may become subject, under the Securities Act or otherwise,
insofar as such loss, claim, damage, liability or action arises out of, or is
based upon, (i) any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement or the Prospectus or (ii) the
omission or alleged omission to state in the Registration Statement or the
Prospectus, any material fact required to be stated therein or necessary to make
the statements therein not misleading, but in each case only to the extent that
the untrue statement or alleged untrue statement or omission or alleged omission
was made in reliance upon and in conformity with written information concerning
Bear Stearns furnished to the Company by or on behalf of Bear Stearns
specifically for inclusion therein, and shall reimburse the Company and any such
director, officer or controlling person for any legal or other expenses
reasonably incurred by the Company or any such director, officer or controlling
person in connection with investigating or defending or preparing to defend
against any such loss, claim, damage, liability or action as such expenses are
incurred. The foregoing indemnity agreement is
<PAGE> 42
42
in addition to any liability which Bear Stearns may otherwise have to the
Company or any such director, officer, employee or controlling person.
(c) Promptly after receipt by an indemnified party under
this Section 8 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under this Section 8, notify the indemnifying party in
writing of the claim or the commencement of that action; provided, however, that
the failure to notify the indemnifying party shall not relieve it from any
liability which it may have under this Section 8 except to the extent it has
been materially prejudiced by such failure, and provided further, that the
failure to notify the indemnifying party shall not relieve it from any liability
which it may have to an indemnified party otherwise than under this Section 8.
If any such claim or action shall be brought against an indemnified party, and
it shall notify the indemnifying party thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it wishes, jointly with
any other similarly notified indemnifying party, to assume the defense thereof
with counsel reasonably satisfactory to the indemnified party. After notice from
the indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 8 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that
any indemnified party shall have the right to employ separate counsel in any
such action and to participate in the defense thereof but the fees and expenses
of such counsel shall be at the expense of such indemnified party unless (i) the
employment thereof has been specifically authorized by the indemnifying party in
writing, (ii) such indemnified party shall have been advised by such counsel
that there may be one or more legal defenses available to it which are different
from or additional to those available to the indemnifying party and in the
reasonable judgment of such counsel it is advisable for such indemnified party
to employ separate counsel or (iii) the indemnifying party has failed to assume
the defense of such action and employ counsel reasonably satisfactory to the
<PAGE> 43
43
indemnified party, in which case, if such indemnified party promptly notifies
the indemnifying party in writing that it elects to employ separate counsel at
the expense of the indemnifying party, the indemnifying party shall not have the
right to assume the defense of such action on behalf of such indemnified party,
it being understood, however, that the indemnifying party shall not, in
connection with any one such action or separate but substantially similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the reasonable fees and expenses of
more than one separate firm of attorneys (in addition to local counsel) at any
time for all such indemnified parties, which firm shall be designated in writing
by Bear Stearns, or by the Company, if the indemnified parties under this
Section consist of the Company or Globalstar. No indemnifying party shall be
liable for any settlement of any such action effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff in any such action, the indemnifying party agrees to indemnify the
indemnified party from and against any loss or liability by reason of such
settlement or judgment.
(d) If the indemnification provided for in this Section 8
shall for any reason be unavailable to or insufficient to hold harmless an
indemnified party under Section 8(a) or 8(b) in respect of any loss, claim,
damage or liability, or any action in respect thereof, referred to therein, then
each indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a result
of such loss, claim, damage or liability, or action in respect thereof, (i) in
such proportion as shall be appropriate to reflect the relative benefits
received by the Company and Globalstar on the one hand and Bear Stearns on the
other from the offering of the Common Stock or (ii) if the allocation provided
by clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company and Globalstar on the one hand
and Bear Stearns on the other with respect to the statements or omissions which
resulted in such loss, claim, damage or liability, or action in respect thereof,
as well as any other relevant equitable considerations. The relative benefits
received by the
<PAGE> 44
44
Company and Globalstar on the one hand and Bear Stearns on the other with
respect to such offering shall be deemed to be in the same proportion as the
total net proceeds from a Tranche purchased under this Agreement (before
deducting expenses) received by the Company and Globalstar, on the one hand, and
the pro rata share of the commitment fee (which shall equal the Base Price
multiplied by the number of Applicable Tranche Shares for such Tranche) and the
total trading profits earned by Bear Stearns with respect to the shares of the
Common Stock of such Tranche purchased under this Agreement, on the other hand,
bear to the total gross proceeds from the offering of the shares of the Common
Stock of such Tranche under this Agreement. The relative fault shall be
determined by reference to whether the untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied by the Company and Globalstar or Bear Stearns, the
intent of the parties and their relative knowledge, access to information and
opportunity to correct or prevent such statement or omission. For purposes of
the preceding two sentences, the net proceeds deemed to be received by the
Company shall be deemed to be also for the benefit of the Globalstar and
information supplied by the Company shall also be deemed to have been supplied
by the Globalstar. The Company and Globalstar and Bear Stearns agree that it
would not be just and equitable if contributions pursuant to this Section 8 were
to be determined by pro rata allocation or by any other method of allocation
which does not take into account the equitable considerations referred to
herein. The amount paid or payable by an indemnified party as a result of the
loss, claim, damage or liability, or action in respect thereof, referred to
above in this Section shall be deemed to include, for purposes of this Section
8(d), any legal or other expenses reasonably incurred by such indemnified party
in connection with investigating or defending any such action or claim. No
person guilty of fraudulent misrepresentation (within the meaning of Section
8(d) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
(e) Bear Stearns confirms and the Company acknowledges that
the statements with respect to the public offering of the Common Stock by Bear
Stearns set forth on
<PAGE> 45
45
the cover page and in the "Plan of Distribution" section of the Prospectus are
correct and constitute the only information concerning Bear Stearns furnished in
writing to the Company by or on behalf of Bear Stearns specifically for
inclusion in the Registration Statement and the Prospectus.
9. Termination. The obligations of Bear Stearns hereunder
may be terminated by notice given to and received by the Company after the
closing of a Tranche but before the issuance of an additional Notice of Sale if,
prior to that time, any of the events described in Sections 7(l) or 7(m), shall
have occurred or if Bear Stearns shall decline to purchase the Common Stock for
any reason permitted under this Agreement.
10. Reimbursement of Bear Stearns' Expenses. If, on any
Tranche Closing Date, the Company shall fail to tender the Common Stock for
delivery to Bear Stearns by reason of any failure, refusal or inability on the
part of the Company to perform any agreement on its part to be performed, or
because any other condition of Bear Stearns' obligations hereunder required to
be fulfilled by the Company is not fulfilled, the Company will reimburse Bear
Stearns for all reasonable out-of-pocket expenses (including the costs of cover
and fees and disbursements of counsel) incurred by Bear Stearns in connection
with this Agreement and the proposed purchase of the Common Stock, and upon
demand the Company shall pay the full amount thereof to Bear Stearns.
11. Assignment. Bear Stearns may assign all or any portion
of its rights under this agreement to Bear Stearns & Co. Inc.
12. Notices, etc. All statements, requests, notices and
agreements hereunder shall be in writing, and:
(a) to the Company:
Cedar House
41 Cedar Avenue
Hamilton HM12
Bermuda
Attention: Avi Katz
<PAGE> 46
46
(b) to Globalstar:
3200 Zanker Road
San Jose, California 95164-0670
Attention: Avi Katz
(c) to the Bear Stearns:
c/o Bear, Stearns & Co. Inc.
245 Park Avenue
New York, New York 10167
Attention: Stephen D. Meyer, Senior
Managing Director, Equity
Derivatives Department
13. Persons Entitled to Benefit of Agreement. This Agreement
shall inure to the benefit of and be binding upon Bear Stearns and the Company
and Globalstar. This Agreement and the terms and provisions hereof are for the
sole benefit of only those persons, except that (A) the representations,
warranties, indemnities and agreements of the Company contained in this
Agreement shall also be deemed to be for the benefit of the person or persons,
if any, who control Bear Stearns within the meaning of Section 15 of the
Securities Act and (B) the indemnity agreement of Bear Stearns contained in
Section 8(b) of this Agreement shall be deemed to be for the benefit of
directors of the Company, officers of the Company who have signed the
Registration Statement and any person controlling the Company within the meaning
of Section 15 of the Securities Act. Nothing in this Agreement is intended or
shall be construed to give any person, other than the persons referred to in
this Section 13, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision contained herein.
14. Survival. The respective indemnities, representations,
warranties and agreements of the Company, Globalstar and Bear Stearns contained
in this Agreement or made by or on behalf on them, respectively, pursuant to
this Agreement, shall survive the delivery of and payment for the Common Stock
and shall remain in full force and effect
<PAGE> 47
47
regardless of any investigation made by or on behalf of any of them or any
person controlling any of them.
15. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF NEW YORK.
16. CONSENT TO JURISDICTION. EACH PARTY IRREVOCABLY AGREES
THAT ANY LEGAL SUIT, ACTION OR PROCEEDING ARISING OUT OF OR BASED UPON THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY ("RELATED PROCEEDINGS") MAY BE
INSTITUTED IN THE FEDERAL COURTS OF THE UNITED STATES OF AMERICA LOCATED IN THE
CITY OF NEW YORK OR THE COURTS OF THE STATE OF NEW YORK IN EACH CASE LOCATED IN
THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK (COLLECTIVELY, THE "SPECIFIED
COURTS"), AND IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION (EXCEPT FOR
PROCEEDINGS INSTITUTED IN REGARD TO THE ENFORCEMENT OF A JUDGMENT OF ANY SUCH
COURT (A "RELATED JUDGMENT"), AS TO WHICH SUCH JURISDICTION IS NON-EXCLUSIVE) OF
SUCH COURTS IN ANY SUCH SUIT, ACTION OR PROCEEDING. THE PARTIES FURTHER AGREE
THAT SERVICE OF ANY PROCESS, SUMMONS, NOTICE OR DOCUMENT BY MAIL TO SUCH PARTY'S
ADDRESS SET FORTH ABOVE SHALL BE EFFECTIVE SERVICE OF PROCESS FOR ANY LAWSUIT,
ACTION OR OTHER PROCEEDING BROUGHT IN ANY SUCH COURT. THE PARTIES HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY OBJECTION TO THE LAYING OF VENUE OF
ANY LAWSUIT, ACTION OR OTHER PROCEEDING IN THE SPECIFIED COURTS, AND HEREBY
FURTHER IRREVOCABLY AND UNCONDITIONALLY WAIVE AND AGREE NOT TO PLEAD OR CLAIM IN
ANY SUCH COURT THAT ANY SUCH LAWSUIT, ACTION OR OTHER PROCEEDING BROUGHT IN ANY
SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. THE COMPANY HEREBY
IRREVOCABLY APPOINTS CT CORPORATION SYSTEM, BROADWAY, NEW YORK, NY 10019, AS ITS
AGENT TO RECEIVE SERVICE OF PROCESS OR OTHER LEGAL SUMMONS FOR PURPOSES OF ANY
SUCH ACTION OR PROCEEDING THAT MAY BE INSTITUTED IN ANY STATE OR FEDERAL COURT
IN THE CITY AND STATE OF NEW YORK.
17. Waiver of Immunity. With respect to any Related
Proceeding, each party irrevocably waives, to the fullest extent permitted by
applicable law, all immunity (whether on the basis of sovereignty or otherwise)
from jurisdiction, service of process, attachment (both before and after
judgment) and execution to which it might otherwise be entitled in the Specified
Courts, and with respect to any Related Judgment, each party waives any such
<PAGE> 48
48
immunity in the Specified Courts or any other court of competent jurisdiction,
and will not raise or claim or cause to be pleaded any such immunity at or in
respect of any such Related Proceeding or Related Judgment, including, without
limitation, any immunity pursuant to the United States Foreign Sovereign
Immunities Act of 1976, as amended.
18. Counterparts. This Agreement may be executed in one or
more counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original but all such counterparts
shall together constitute one and the same instrument.
19. Headings. The headings herein are inserted for
convenience of reference only and are not intended to be part of, or to affect
the meaning or interpretation of, this Agreement.
<PAGE> 49
49
Please confirm, by signing and returning to the Company two
counterparts of this Agreement, that the foregoing correctly sets forth the
agreement among the Company, Globalstar and Bear Stearns.
Very truly yours,
GLOBALSTAR TELECOMMUNICATIONS
LIMITED
By: /s/ Richard J. Townsend
--------------------------------
Name: Richard J. Townsend
Title: Vice President and
Chief Financial Officer
GLOBALSTAR, L.P. by LORAL/QUALCOMM
SATELLITE SERVICES, L.P., its
general partner by LORAL/QUALCOMM
PARTNERSHIP, L.P. its managing
general partner by LORAL GENERAL
PARTNER, INC. its general partner,
By: /s/ Richard J. Townsend
--------------------------------
Name: Richard J. Townsend
Title: Senior Vice President and
Chief Financial Officer
Confirmed and accepted as of
the date first above mentioned:
BEAR, STEARNS INTERNATIONAL LIMITED
By: /s/ Steve Meyer
----------------------------------
Authorized Signatory
