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EXECUTION COPY
GLOBALSTAR TELECOMMUNICATIONS LIMITED
Up to 3,750,000 Shares of
9% Series B Convertible Redeemable Preferred Stock
due 2011 (Liquidation Preference of $50 Per Share)
REGISTRATION RIGHTS AGREEMENT
New York, New York
December 8, 1999
Bear, Xxxxxxx & Co. Inc.
Banc of America Securities LLC
Xxxxxx Brothers Inc.
X.X. Xxxxxxxxx, Towbin
c/o Bear, Xxxxxxx & Co. Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
Globalstar Telecommunications Limited, a Bermuda company (the
"Company"), proposes to issue and sell to you (the "Purchasers"), upon the terms
set forth in the Purchase Agreement dated December 2, 1999 (the "Purchase
Agreement"), among the Company, Globalstar, L.P., a Delaware limited partnership
("Globalstar") and the Purchasers, up to 3,750,000 shares (including up to
750,000 shares that the Company has granted the Purchasers an option to purchase
pursuant to the Purchase Agreement) of its 9% Series B Convertible Redeemable
Preferred Stock due 2011, par value $0.01 per share, liquidation preference of
$50 per share (the "Preferred Stock") (such issuance and sale, the "Initial
Placement"). The Preferred Stock will be convertible into shares of Common
Stock, par value $1.00 per share, of the Company (the "Common Stock") at the
conversion price set forth in the Final Memorandum (as defined below). For
purposes of this Agreement, the term "Securities" shall refer to the Preferred
Stock, all shares of Common Stock issued (i) as dividends thereon, (ii) on
conversion thereof or (iii) in redemption thereof, and any securities into which
such shares of Preferred Stock or Common Stock shall be converted or into which
they shall be changed by operation of law or otherwise. The Company will use the
proceeds of such sale to purchase preferred partnership interests in Globalstar.
In satisfaction of a condition to
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your obligations under the Purchase Agreement, the Company agrees with you (i)
for your benefit and (ii) for the benefit of the holders of the Securities
(including you) from time to time until the earlier of (i) the second
anniversary of the last Closing Date (as defined below) and (ii) such time as
(A) such Securities shall no longer constitute restricted securities for
purposes of Rule 144(k) of the Act (as defined below) or (B) all such Securities
have been sold pursuant to the Shelf Registration Statement (as defined below)
(each of the foregoing a "Holder" and together the "Holders"), as follows:
1. Definitions. Capitalized terms used herein without
definition shall have their respective meanings set forth in the Purchase
Agreement. As used in this Agreement, the following capitalized defined terms
shall have the following meanings:
"Act" means the Securities Act of 1933 and the rules and
regulations of the Commission promulgated thereunder.
"Affiliate" of any specified person means any other person
that, directly or indirectly, is in control of, is controlled by, or is under
common control with, such specified person. For purposes of this definition,
control of a person means the power, direct or indirect, to direct or cause the
direction of the management and policies of such person whether by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Closing Date" has the meaning set forth in the Purchase
Agreement.
"Commission" means the Securities and Exchange Commission.
"Damages Payment Date" means each of the quarterly dividend
payment dates set forth in the schedule to the Bye-Laws of the Company setting
forth the terms of the Preferred Stock.
"Exchange Act" means the Securities Exchange Act of 1934 and
the rules and regulations of the Commission promulgated thereunder.
"Final Memorandum" has the meaning set forth in the Purchase
Agreement.
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"First Closing Date" has the meaning set forth in the Purchase
Agreement.
"Holder" has the meaning set forth in the preamble hereto.
"Incorporated Documents" means filings made by the Company
with the Commission pursuant to Section 13, 14 or 15 of the Exchange Act and
incorporated by reference in the Shelf Registration Statement.
"Initial Placement" has the meaning set forth in the preamble
hereto.
"Majority Holders" means the Holders of a majority of the
shares of the Preferred Stock registered (or if no shares are registered,
entitled to be registered) under a Shelf Registration Statement; provided,
however, that Holders of Common Stock issued in respect of the Preferred Stock
shall be deemed to be Holders of the number of shares of Preferred Stock which,
when converted, would have resulted in such number of shares of Common Stock.
"Managing Underwriters" means the investment banker or
investment bankers and manager or managers that shall administer an underwritten
offering of the securities covered by the Shelf Registration Statement.
"Preferred Stock" has the meaning set forth in the preamble
hereto.
"Prospectus" means the prospectus included in any Shelf
Registration Statement, as amended or supplemented by any prospectus supplement,
with respect to the terms of the offering of any portion of the Securities or
Common Stock issuable upon conversion thereof covered by such Shelf Registration
Statement, and all amendments and supplements to the Prospectus, including
post-effective amendments.
"Securities" has the meaning set forth in the preamble hereto.
"Shelf Registration" has the meaning set forth in Section 2
hereof.
"Shelf Registration Period" has the meaning set forth in
Section 2(b) hereof.
"Shelf Registration Statement" means a "shelf" registration
statement of the Company pursuant to the
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provisions of Section 2 hereof which covers some or all of the Securities, on an
appropriate form under Rule 415 under the Act or any similar rule that may be
adopted by the Commission, and all amendments and supplements to such
registration statement, including post-effective amendments, in each case
including the Prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein.
"Transfer Agent" means The Bank of New York.
"Transfer Restricted Securities" means each Security until the
earlier of (i) the second anniversary of the last Closing Date and (ii) such
time as (A) such Security shall no longer constitute a restricted security for
purposes of Rule 144(k) of the Act or (B) such Security has been sold pursuant
to the Shelf Registration Statement.
"underwriter" means any underwriter of Securities in
connection with an offering thereof under a Shelf Registration Statement.
2. Shelf Registration; Suspension of Use of Prospectus.
(a) The Company shall prepare and either (i) not later than 90
days following the First Closing Date, file with the Commission and thereafter
use its reasonable efforts to cause to be declared effective under the Act, as
promptly as practicable but no later than 210 days following the First Closing
Date (the "Effectiveness Target Date"), a new registration statement or (ii)
file with the Commission a prospectus supplement to the Company's existing
Registration Statement No. 333-83239 not later than the Effectiveness Target
Date, which, when filed, becomes effective in accordance with Rule 424 under the
Act (such shelf registration statement referred to in clause (i) above or such
Registration Statement No. 333-83239 as supplemented by such prospectus
supplement referred to in clause (ii) above, as applicable, being hereinafter
referred to as the "Shelf Registration Statement"), relating to the offer and
sale of the Transfer Restricted Securities by the Holders from time to time in
accordance with the methods of distribution elected by such Holders and set
forth in such Shelf Registration Statement. The sole and exclusive remedy
available to the Holders in the event that a Shelf Registration Statement is not
filed or, if relevant, declared effective within the time periods specified in
this Section 2(a) is the collection of additional dividends in accordance with
Section 6 and the terms of the Preferred
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Stock.
(b) The Company shall use its reasonable efforts to keep the
Shelf Registration Statement continuously effective in order to permit the
Prospectus forming part thereof to be usable by Holders until the earlier of (i)
the second anniversary of the last Closing Date and (ii) such time as (A) the
Securities shall no longer constitute restricted securities for purposes of Rule
144(k) of the Act or (B) all Securities have been sold pursuant to the Shelf
Registration Statement (in any such case, such period being called the "Shelf
Registration Period"). The Company shall be deemed not to have used its
reasonable efforts to keep the Shelf Registration Statement effective during the
requisite period if it voluntarily takes any action that would result in Holders
of securities covered thereby not to be able to offer and sell such securities
during that period, unless such action is (i) required by applicable law or (ii)
taken pursuant to Section 2(c) hereof, and, in either case, so long as the
Company promptly thereafter complies with the requirements of Section 3(i)
hereof, if applicable.
(c) The Company may suspend the use of the Prospectus for a
period not to exceed 60 days (or such longer period as is reasonably necessary
under the circumstances) in any calendar year for valid business reasons (not
including avoidance of the Company's obligations hereunder), including the
acquisition or divestiture of assets, public filings with the Commission,
pending corporate developments and similar events.
3. Registration Procedures. In connection with any Shelf
Registration Statement, the following provisions shall apply:
(a) The Company shall furnish to you, prior to the filing
thereof with the Commission, a copy of any Shelf Registration
Statement, and each amendment thereof and each amendment or supplement,
if any, to the Prospectus included therein and shall use its best
efforts to reflect in each such document, when so filed with the
Commission, such comments as you reasonably may propose; provided,
however, that the Company shall be required only to furnish an
Incorporated Document to you as promptly as practicable following its
filing with the Commission.
(b) The Company shall ensure that (i) any Shelf Registration
Statement and any amendment thereto and
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any Prospectus forming part thereof and any amendment or supplement
thereto complies in all material respects with the Act, (ii) any Shelf
Registration Statement and any amendment thereto does not, when it
becomes effective, contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading and (iii) any
Prospectus forming part of any Shelf Registration Statement, and any
amendment or supplement to such Prospectus, does not include an untrue
statement of a material fact or omit to state a material fact necessary
in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(c) (1) The Company shall advise you and the Holders and, if
requested by you or any such Holder, confirm such advice in writing:
(i) when a Shelf Registration Statement and any
amendment thereto has been filed with the Commission and when
the Shelf Registration Statement or any post-effective
amendment thereto has become effective; and
(ii) of any request by the Commission for amendments
or supplements to the Shelf Registration Statement or the
Prospectus included therein or for additional information.
(2) The Company shall advise you and the Holders and, if
requested by you or any such Holder, confirm such advice in writing:
(i) of the issuance by the Commission of any stop
order suspending the effectiveness of the Shelf Registration
Statement or the initiation of any proceedings for that
purpose;
(ii) of the receipt by the Company of any
notification with respect to the suspension of the
qualification of the securities included in any Shelf
Registration Statement for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose;
and
(iii) of the suspension of the use of the Prospectus
pursuant to Section 2(c) hereof or of the happening of any
event that requires the making of any changes in the Shelf
Registration
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Statement or the Prospectus so that, as of such date, the
statements therein are not misleading and do not omit to state
a material fact required to be stated therein or necessary to
make the statements therein (in the case of the Prospectus, in
light of the circumstances under which they were made) not
misleading (which advice shall be accompanied by an
instruction to suspend the use of the Prospectus until the
requisite changes have been made); provided that such notice
shall not be required to specify the nature of the event
giving rise to the notice requirement hereunder.
(d) The Company shall use its reasonable best efforts to
obtain the withdrawal of any order suspending the effectiveness of any
Shelf Registration Statement at the earliest possible time.
(e) The Company shall furnish to each Holder of Securities
included within the coverage of any Shelf Registration Statement,
without charge, at least one copy of such Shelf Registration Statement
and any post-effective amendment thereto, including documents
incorporated by reference therein, financial statements and schedules,
and, if the Holder so requests in writing, all exhibits (including
those incorporated by reference).
(f) The Company shall, during the Shelf Registration Period,
deliver to each Holder of Securities included within the coverage of
any Shelf Registration Statement, without charge, as many copies of the
Prospectus (including each preliminary Prospectus) included in such
Shelf Registration Statement and any amendment or supplement thereto as
such Holder may reasonably request; and the Company consents to the use
of the Prospectus or any amendment or supplement thereto by each of the
selling Holders of Securities in connection with the offering and sale
of the Securities covered by the Prospectus or any amendment or
supplement thereto.
(g) Prior to any offering of securities pursuant to any Shelf
Registration Statement, the Company shall register or qualify or
cooperate with the Holders of Securities included therein and their
respective counsel in connection with the registration or qualification
of such Securities for offer and sale under the securities or blue sky
laws of such jurisdictions as any such Holders reasonably request in
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writing and do any and all other acts or things reasonably necessary or
advisable to enable the offer and sale in such jurisdictions of the
Securities covered by such Shelf Registration Statement; provided,
however, that the Company will not be required to qualify generally to
do business in any jurisdiction where it is not then so qualified or to
take any action which would subject it to general service of process or
to taxation in any such jurisdiction where it is not then so subject.
(h) The Company shall cooperate with the Holders of Securities
to facilitate the timely preparation and delivery of certificates
representing Securities to be sold pursuant to any Shelf Registration
Statement free of any restrictive legends and in such denominations and
registered in such names as Holders may request prior to sales of
Securities pursuant to such Shelf Registration Statement.
(i) Upon the occurrence of any event contemplated by paragraph
(c)(2)(iii) above, the Company shall, if required pursuant to the Act
or paragraph (c)(2)(iii) above, as promptly as practicable prepare a
post-effective amendment to any Shelf Registration Statement or an
amendment or supplement to the related Prospectus or file any other
required document so that, as thereafter delivered to purchasers of the
Securities included therein, the Prospectus will not include an untrue
statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(j) Not later than the effective date of any Shelf
Registration Statement hereunder, the Company shall provide a CUSIP
number for each class of Securities registered under such Shelf
Registration Statement, and provide the Transfer Agent with printed
certificates for such Securities, in a form eligible for deposit with
The Depository Trust Company.
(k) The Company shall use its best efforts to comply with all
applicable rules and regulations of the Commission and shall make
generally available to its security holders as soon as practicable
after the effective date of the applicable Shelf Registration Statement
an earnings statement satisfying the provisions of Section 11(a) of the
Act.
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(l) The Company may require each Holder of Securities to be
sold pursuant to any Shelf Registration Statement to furnish to the
Company such information regarding the Holder and the distribution of
such Securities as the Company may from time to time reasonably require
for inclusion in such Shelf Registration Statement. Any Holder who
fails to provide such information shall not be entitled to use the
Prospectus.
(m) The Company shall, if requested, promptly incorporate in a
prospectus supplement or post-effective amendment to a Shelf
Registration Statement, such information as the Managing Underwriters
and Majority Holders reasonably agree should be included therein and
shall make all required filings of such prospectus supplement or
post-effective amendment as soon as notified of the matters to be
incorporated in such prospectus supplement or post-effective amendment.
(n) The Company and Globalstar shall enter into such
agreements (including underwriting agreements) and take all other
appropriate actions in order to expedite or facilitate the registration
or the disposition of any Securities, and in connection therewith, if
an underwriting agreement is entered into, cause the same to contain
indemnification provisions and procedures no less favorable than those
set forth in Section 5 (or such other provisions and procedures
acceptable to the Majority Holders and the Managing Underwriters, if
any), with respect to all parties to be indemnified pursuant to Section
5, it being understood that all underwriting discounts and commissions,
and all other underwriting fees, associated with such agreement in
connection with such offering of the Securities shall, except as
otherwise expressly agreed herein (including those expenses covered by
Section 4), be for the account of the Holders or the underwriters.
(o) The Company and Globalstar shall (i) make reasonably
available for inspection by Holders of Securities to be registered
thereunder and any Managing Underwriter participating in any
disposition pursuant to such Shelf Registration Statement, and any
attorney, accountant or other agent retained by the Majority Holders of
Securities to be registered thereunder or by any such Managing
Underwriter all relevant financial and other records, pertinent
corporate documents and properties of the Company or Globalstar, as the
case may be; (ii) cause the officers, directors and
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employees of the Company or Globalstar, as the case may be, to supply
all relevant information reasonably requested by any such Holders or
Managing Underwriter, attorney, accountant or agent in connection with
such Shelf Registration Statement as is customary for similar due
diligence examinations; provided, however, that any information that is
designated in writing by the Company or Globalstar, as the case may be,
in good faith, as confidential at the time of delivery of such
information shall be kept confidential by any such Holders and Managing
Underwriter, attorney, accountant or agent, unless disclosure thereof
is made in connection with a court proceeding or required by law, or
such information has become available (not in violation of this
Agreement) to the public generally or through a third party without an
accompanying obligation of confidentiality; (iii) make such
representations and warranties to the Holders of securities registered
thereunder and the underwriters, if any, in form, substance and scope
as are customarily made by issuers to underwriters in primary
underwritten offerings and covering matters including those set forth
in the Purchase Agreement; (iv) obtain opinions of counsel to the
Company and Globalstar and updates thereof (which counsel and opinions
(in form, scope and substance) shall be reasonably satisfactory to the
Holders and Managing Underwriter, if any) addressed to each selling
Holder and the underwriters, if any, covering such matters as are
customarily covered in opinions requested in underwritten offerings and
such other matters as may be reasonably requested by the Majority
Holders of the securities covered by such Shelf Registration Statement
and by such Managing Underwriter; (v) obtain "cold comfort" letters and
updates thereof from the independent certified public accountants of
the Company and Globalstar, as the case may be (and, if necessary, use
its reasonable best efforts to retain any other independent certified
public accountants of any subsidiary of the Company or Globalstar or of
any business acquired by the Company or Globalstar for which financial
statements and financial data are, or are required to be, included in
the Shelf Registration Statement), addressed to each selling Holder of
Securities registered thereunder and the underwriters, if any, in
customary form and covering matters of the type customarily covered in
"cold comfort" letters in connection with primary underwritten
offerings; and (vi) deliver such documents and certificates as may be
reasonably requested by the Majority Holders and the Managing
Underwriters, if any,
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including those to evidence compliance with Section 3(i) and with any
customary conditions contained in the underwriting agreement or other
agreement entered into by the Company or Globalstar. The foregoing
actions set forth in clauses (iii), (iv), (v) and (vi) of this Section
3(o) shall be performed at (A) the effectiveness of such Shelf
Registration Statement and each post-effective amendment thereto and
(B) each closing under any underwriting or similar agreement as and to
the extent required thereunder.
4. Registration Expenses. Globalstar shall bear all expenses
incurred in connection with the performance of the Company's obligations under
Sections 2 and 3 hereof and shall reimburse the Holders for the reasonable and
duly documented fees and disbursements of (i) counsel designated by the Majority
Holders to act as counsel for the Holders in connection therewith or (ii) in the
absence of such selection of counsel by the Majority Holders, one firm
designated by the underwriters to act as counsel for the Holders in connection
therewith. It is understood, however, that as except provided in this Section 4,
the Holders shall pay all their own costs and expenses, including stock transfer
taxes due upon resale by them of any of the securities covered by a Shelf
Registration Statement and any advertising expenses incurred in connection with
any offers and sales they make.
5. Indemnification and Contribution. (a) In connection with
any Shelf Registration Statement, the Company and Globalstar (the
"Indemnitors"), jointly and severally, agree to indemnify and hold harmless each
Holder of securities covered thereby (including the Purchasers), the directors,
officers, employees and agents of each such Holder and each person who controls
any such Holder within the meaning of either the Act or the Exchange Act against
any and all losses, claims, damages or liabilities, joint or several, to which
they or any of them may become subject under the Act, the Exchange Act or other
Federal or state statutory law or regulation, at common law or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the Shelf Registration Statement as
originally filed or in any amendment thereof, or in any preliminary Prospectus
or Prospectus, or in any amendment thereof or supplement thereto, or arise out
of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and agrees to
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reimburse each such indemnified party, as incurred, for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that (i) the Indemnitors will not be liable in any case to the extent that any
such loss, claim, damage or liability arises out of or is based upon any such
untrue statement or alleged untrue statement or omission or alleged omission
made therein in reliance upon and in conformity with written information
furnished to the Indemnitors by or on behalf of any such Holder specifically for
inclusion therein, (ii) the Indemnitors shall not be liable to any indemnified
party under this indemnity agreement with respect to any Shelf Registration
Statement or Prospectus to the extent that any such loss, claim, damage or
liability of such indemnified party results solely from an untrue statement of a
material fact contained in, or the omission of a material fact from, the Shelf
Registration Statement or Prospectus which untrue statement or omission was
corrected in an amended or supplemented Shelf Registration Statement or
Prospectus, if the person alleging such loss, claim, damage or liability was not
sent or given, at or prior to the written confirmation of such sale, a copy of
the amended or supplemented Shelf Registration Statement or Prospectus if the
Indemnitors had previously furnished copies thereof to such indemnified party
and if such delivery of a prospectus is finally judicially determined to be
required by the Act and was not so made and (iii) the Indemnitors will not be
liable to any indemnified party under this indemnity agreement with respect to
any Shelf Registration Statement or Prospectus to the extent that any such loss,
claim, damage or liability of such indemnified party results (a) from the use of
a Shelf Registration Statement during a period when a stop order has been issued
in respect thereof or any proceedings for that purpose have been initiated or
(b) from the use of the Prospectus during a period when the use of the
Prospectus has been suspended in accordance with Section 3(c)(2)(iii) hereof,
provided, in each case, that Holders received prior notice of such stop order,
initiation of proceedings or suspension. This indemnity agreement will be in
addition to any liability which the Indemnitors may otherwise have.
The Indemnitors also agree to indemnify or contribute to
Losses, as provided in Section 5(d), of any underwriters of Securities
registered under a Shelf Registration Statement, their officers and directors
and each person who controls such underwriters on substantially the same basis
as that of the indemnification of the Holders provided in this Section 5(a) and
shall, if requested by any
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Xxxxxx, enter into an underwriting agreement reflecting such agreement, as
provided in Section 3(n) hereof.
(b) Each Holder of securities covered by a Shelf Registration
Statement (including the Purchasers) severally agrees to indemnify and hold
harmless (i) the Indemnitors, (ii) each of their respective directors, (iii)
each of their respective officers who signs such Shelf Registration Statement
and (iv) each person who controls either of the Indemnitors within the meaning
of either the Act or the Exchange Act to the same extent as the foregoing
indemnity from the Indemnitors to each such Holder, but only with reference to
written information relating to such Holder furnished to the Indemnitors by or
on behalf of such Holder specifically for inclusion in the documents referred to
in the foregoing indemnity. This indemnity agreement will be in addition to any
liability which any such Holder may otherwise have.
(c) Promptly after receipt by an indemnified party under this
Section 5 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 5, notify the indemnifying party in writing of the
commencement thereof; but the failure so to notify the indemnifying party (i)
will not relieve it from liability under paragraph (a) or (b) above unless and
to the extent it did not otherwise learn of such action and such failure results
in the forfeiture by the indemnifying party of substantial rights and defenses
and (ii) will not, in any event, relieve the indemnifying party from any
obligations to any indemnified party other than the indemnification obligation
provided in paragraph (a) or (b) above. The indemnifying party shall be entitled
to appoint counsel of the indemnifying party's choice at the indemnifying
party's expense to represent the indemnified party in any action for which
indemnification is sought (in which case the indemnifying party shall not
thereafter be responsible for the fees and expenses of any separate counsel
retained by the indemnified party or parties except as set forth below);
provided, however, that such counsel shall be reasonably satisfactory to the
indemnified party. Notwithstanding the indemnifying party's election to appoint
counsel to represent the indemnified party in an action, the indemnified party
shall have the right to employ separate counsel (including local counsel), and
the indemnifying party shall bear the reasonable fees, costs and expenses of
such separate counsel (and local counsel) if (i) the use of counsel chosen by
the indemnifying party to represent the indemnified party would present such
counsel with a conflict
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of interest, (ii) the actual or potential defendants in, or targets of, any such
action include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be legal
defenses available to it and/or other indemnified parties which are different
from or additional to those available to the indemnifying party, (iii) the
indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of the institution of such action or (iv) the indemnifying party
shall authorize the indemnified party to employ separate counsel at the expense
of the indemnifying party. An indemnifying party will not, without the prior
written consent of the indemnified parties, settle or compromise or consent to
the entry of any judgment with respect to any pending or threatened claim,
action, suit or proceeding in respect of which indemnification or contribution
may be sought hereunder (whether or not the indemnified parties are actual or
potential parties to such claim or action) unless such settlement, compromise or
consent includes an unconditional release of each indemnified party from all
liability arising out of such claim, action, suit or proceeding.
(d) In the event that the indemnity provided in paragraph (a)
or (b) of this Section 5 is unavailable to or insufficient to hold harmless an
indemnified party for any reason, then each applicable indemnifying party, in
lieu of indemnifying such indemnified party, shall have a joint and several
obligation to contribute to the aggregate losses, claims, damages and
liabilities (including legal or other expenses reasonably incurred in connection
with investigating or defending same) (collectively, "Losses") to which such
indemnified party may be subject in such proportion as is appropriate to reflect
the relative benefits received by such indemnifying party, on the one hand, and
such indemnified party, on the other hand, from the Initial Placement and the
Shelf Registration Statement which resulted in such Losses; provided, however,
that in no case shall the Purchasers be responsible, in the aggregate, for any
amount in excess of the purchase discount or commission applicable to such
Security, nor shall any underwriter be responsible for any amount in excess of
the underwriting discount or commission applicable to the securities purchased
by such underwriter under the Shelf Registration Statement which resulted in
such Losses. If the allocation provided by the immediately preceding sentence is
unavailable for any reason, the indemnifying party and the indemnified party
shall contribute in such proportion as is appropriate to reflect not only such
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relative benefits but also the relative fault of such indemnifying party, on the
one hand, and such indemnified party, on the other hand, in connection with the
statements or omissions which resulted in such Losses as well as any other
relevant equitable considerations. Benefits received by the Indemnitors shall be
deemed to be equal to the total net proceeds from the Initial Placement (before
deducting expenses). Benefits received by the Purchasers shall be deemed to be
equal to the total purchase discounts and commissions, and benefits received by
any other Holders shall be deemed to be equal to the value such Holders realize
by receiving Securities registered under the Act. Benefits received by any
underwriter shall be deemed to be equal to the total underwriting discounts and
commissions, as set forth on the cover page of the Prospectus forming a part of
the Shelf Registration Statement which resulted in such Losses. Relative fault
shall be determined by reference to whether any alleged untrue statement or
omission relates to information provided by the indemnifying party, on the one
hand, or by the indemnified party, on the other hand. The parties agree that it
would not be just and equitable if contribution were determined by pro rata
allocation or any other method of allocation which does not take account of the
equitable considerations referred to above. Notwithstanding the provisions of
this paragraph (d), no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. For purposes of
this Section 5, each person who controls a Holder within the meaning of either
the Act or the Exchange Act and each director, officer, employee and agent of
such Holder shall have the same rights to contribution as such Holder, and each
person who controls either of the Indemnitors within the meaning of either the
Act or the Exchange Act, each officer of the Company or Globalstar who shall
have signed the Shelf Registration Statement and each director of the Company or
Globalstar shall have the same rights to contribution as the Company or
Globalstar, as the case may be, subject in each case to the applicable terms and
conditions of this paragraph (d).
(e) The provisions of this Section 5 will remain in full force
and effect, regardless of any investigation made by or on behalf of any Holder
or the Indemnitors or any of the officers, directors or controlling persons
referred to in Section 5 hereof, and will survive the sale by a Holder of
securities covered by a Shelf Registration Statement.
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6. Liquidated Damages.
(a) The Company and the Purchasers agree that the Holders of
Transfer Restricted Securities shall suffer damages if the Company fails to
fulfill its obligations pursuant to Section 2 hereof and that it would not be
possible to ascertain the extent of such damages. Accordingly, the Company
hereby agrees to pay liquidated damages ("Preferred Stock Liquidated Damages")
to each Holder of Transfer Restricted Securities under the circumstances and to
the extent set forth below:
(i) from 90 days following the First Closing Date, if the
Shelf Registration Statement is not effective on or prior to the
Effectiveness Target Date and the shelf registration statement
described in Section 2(a)(i) is filed with the Commission after 90 days
following the First Closing Date; and
(ii) from the Effectiveness Target Date if the Shelf
Registration Statement is not effective on or prior to the
Effectiveness Target Date; and
(iii) if the Shelf Registration Statement has been declared
effective by the Commission and such Shelf Registration Statement
ceases to be effective or to be usable as contemplated by Section 2(b)
at any time during the Shelf Registration Period (without being
succeeded by a post-effective amendment to such Shelf Registration
Statement that cures such failure and that is itself immediately
declared effective) for any period of ten consecutive trading days that
are also business days or for any 20 trading days that are also
business days in any 180-day period in connection with resales of
Transfer Restricted Securities (provided, that the Company will have
the option of suspending the effectiveness of the Shelf Registration
Statement, without becoming obligated to pay Preferred Stock Liquidated
Damages, for periods of up to a total of 60 days in any calendar year
if the Board of Directors of the Company determines that compliance
with the disclosure obligations necessary to maintain the effectiveness
of the Shelf Registration Statement at such time could reasonably be
expected to have an adverse effect on the Company or a pending
corporate transaction)
(each of the foregoing clauses (i) through (iii), a "Registration Default").
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(b) In the event of each such Registration Default, the
Company shall pay Preferred Stock Liquidated Damages to each Holder of shares of
Preferred Stock that are Transfer Restricted Securities at a rate of 0.50% of
the liquidation preference of the shares of Preferred Stock constituting
Transfer Restricted Securities, which shall accrue from the date of the
Registration Default to and including the 30th day following such Registration
Default and increase by 0.50% for each subsequent 30 day period; provided,
however, that the rate of such Preferred Stock Liquidated Damages may not exceed
2.00% of the Liquidation Preference of the Preferred Stock at any time.
Following the cure of all Registration Defaults relating to any shares of
Preferred Stock that are Transfer Restricted Securities, the accrual of
Preferred Stock Liquidated Damages with respect to such shares of Preferred
Stock that are Transfer Restricted Securities shall cease (without in any way
limiting the effect of any subsequent Registration Default). A Registration
Default under clause 6(a)(i) above shall be cured on the date that the Shelf
Registration Statement is filed with the Commission. A Registration Default
under clause 6(a)(ii) above shall be cured on the date that the Shelf
Registration Statement is declared effective by the Commission. A Registration
Default under clause 6(a)(iii) above shall be cured on the date the Shelf
Registration Statement is declared effective or becomes usable.
(c) The Company shall notify the Transfer Agent within one
business day after (i) each and every date on which a Registration Default
occurs and (ii) in the event of a Registration Default under Section 6(a)(i),
the Effectiveness Target Date. Preferred Stock Liquidated Damages shall be paid
by the Company to the record Holders of shares of Preferred Stock that are
Transfer Restricted Securities on each Damages Payment Date by mailing checks to
their registered addresses as they appear in the Preferred Stock register if no
such accounts have been specified on or before the Damages Payment Date;
provided that any Preferred Stock Liquidated Damages accrued with respect to any
Preferred Stock or portion thereof called for redemption on a redemption date or
converted into Common Stock on a conversion date prior to the Damages Payment
Date, shall, in any such event, be paid instead to the Holder that submitted
such Preferred Stock for redemption or conversion on the applicable redemption
date or conversion date, as the case may be, on such date (promptly following
the conversion date, in the case of conversion of Preferred Stock). Each
obligation to pay Preferred Stock Liquidated Damages shall be deemed to commence
accruing on the date of the applicable Registration Default and to cease
accruing when all
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Registration Defaults have been cured.
(d) All Preferred Stock Liquidated Damages with respect to any
shares of Preferred Stock that are Transfer Restricted Securities, that remain
unpaid when such Securities cease to be Transfer Restricted Securities or cease
to be outstanding, shall remain unpaid obligations of the Company until they
have been paid in full.
7. Rules 144 and 144A. The Company shall use its reasonable
efforts to file the reports required to be filed under the Act and the Exchange
Act in a timely manner and, if at any time the Company is not required to file
such reports, will, upon the request of any Holder of Transfer Restricted
Securities, make publicly available other information so long as necessary to
permit sales of its securities pursuant to Rules 144 and 144A. The Company
covenants that it will take such further action as any Holder of Transfer
Restricted Securities may reasonably request, all to the extent required from
time to time to enable such Holder to sell Transfer Restricted Securities
without registration under the Act within the limitation of the exemptions
provided by Rules 144 and 144A (including the requirements of Rule 144A(d)(4)).
The Company will provide a copy of this Agreement to prospective purchasers of
Securities identified to the Company by the Purchasers upon request. Upon the
request of any Holder of Transfer Restricted Securities, the Company shall
deliver to such Holder a written statement as to whether it has complied with
such requirements. Notwithstanding the foregoing, nothing in this Section 7
shall be deemed to require the Company to register any of its securities
pursuant to the Exchange Act.
8. Miscellaneous.
(a) No Inconsistent Agreements. The Company has not, as of the
date hereof, entered into, nor shall it, on or after the date hereof,
enter into, any agreement with respect to its securities that is
inconsistent with the rights granted to the Holders herein or otherwise
conflicts with the provisions hereof.
(b) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended,
qualified, modified or supplemented, and waivers or consents to
departures from the provisions hereof may not be given, unless the
Company has obtained the written consent of the Majority Holders;
provided that, with respect to any
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matter that directly or indirectly affects the rights of the Purchasers
hereunder, the Company shall obtain the written consent of the
Purchasers against which such amendment, qualification, supplement,
waiver or consent is to be effective. Notwithstanding the foregoing
(except the foregoing proviso), a waiver or consent to departure from
the provisions hereof with respect to a matter that relates exclusively
to the rights of Holders whose Securities are being sold pursuant to a
Shelf Registration Statement and that does not directly or indirectly
affect the rights of other Holders may be given by the Majority
Holders, determined on the basis of securities being sold rather than
registered under such Shelf Registration Statement.
(c) Notices. All notices and other communications provided for
or permitted hereunder shall be made in writing by hand-delivery,
first-class mail, telecopier, or air courier guaranteeing overnight
delivery:
(1) if to a Holder, at the most current address given
by such holder to the Company in accordance with the
provisions of this Section 8(c), which address initially is,
with respect to each Holder, the address of such Holder
maintained by the Registrar of the Securities, with a copy in
like manner to Bear, Xxxxxxx & Co. Inc.;
(2) if to you, initially at the address set forth in
the Purchase Agreement; and
(3) if to the Company or Globalstar, initially at its
address set forth in the Purchase Agreement.
All such notices and communications shall be deemed to have
been duly given when received.
The Purchasers or the Company by notice to the other may
designate additional or different addresses for subsequent notices or
communications.
(d) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of
the parties, including, without the need for an express assignment or
any consent by the Company or Globalstar thereto,
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subsequent Holders of Securities. The Company and Globalstar hereby
agree to extend the benefits of this Agreement to any Holder of
Securities and any such Holder may specifically enforce the provisions
of this Agreement as if an original party hereto.
(e) Counterparts. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and
all of which taken together shall constitute one and the same
agreement.
(f) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect
the meaning hereof.
(g) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO THE CONFLICT OF LAW RULES THEREOF.
(h) Jurisdiction. EACH OF THE COMPANY AND GLOBALSTAR HEREBY
IRREVOCABLY AND UNCONDITIONALLY CONSENTS TO SUBMIT TO THE EXCLUSIVE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND OF THE UNITED
STATES DISTRICT COURTS LOCATED IN THE CITY OF NEW YORK FOR ANY
LAWSUITS, CLAIMS OR OTHER PROCEEDINGS ARISING OUT OF OR RELATING TO
THIS AGREEMENT AND AGREES NOT TO COMMENCE ANY SUCH LAWSUIT, CLAIM OR
OTHER PROCEEDING EXCEPT IN SUCH COURTS. EACH OF THE COMPANY AND
GLOBALSTAR HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY OBJECTION
TO THE LAYING OF VENUE OF ANY LAWSUIT, CLAIM, OR OTHER PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT IN THE COURTS OF THE STATE
OF NEW YORK OR THE UNITED STATES DISTRICT COURTS LOCATED IN THE CITY OF
NEW YORK, AND HEREBY FURTHER IRREVOCABLY AND UNCONDITIONALLY WAIVES AND
AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH LAWSUIT,
CLAIM OR OTHER PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN
AN INCONVENIENT FORUM. EACH OF THE COMPANY AND GLOBALSTAR HAS APPOINTED
XXXX X. XXXXXX AT 000 XXXXX XXXXXX, XXX XXXX, XXX XXXX 00000, X.X.X.
(HEREINAFTER REFERRED TO IN EACH SUCH CAPACITY AS THE "PROCESS AGENT"),
AS ITS AUTHORIZED AGENT UPON WHOM PROCESS MAY BE SERVED IN ANY SUCH
SUIT OR PROCEEDING. EACH OF THE COMPANY AND GLOBALSTAR REPRESENTS TO
YOU THAT IT HAS NOTIFIED THE PROCESS AGENT OF SUCH DESIGNATION AND
APPOINTMENT AND THAT THE PROCESS AGENT HAS ACCEPTED THE SAME IN
WRITING. EACH
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OF THE COMPANY AND GLOBALSTAR HAS AUTHORIZED AND DIRECTED THE PROCESS
AGENT TO ACCEPT SUCH SERVICE. IF THE PROCESS AGENT SHALL CEASE TO ACT
AS THE COMPANY'S OR GLOBALSTAR'S AGENT FOR SERVICE OF PROCESS, THE
COMPANY OR GLOBALSTAR, AS APPLICABLE, SHALL APPOINT WITHOUT DELAY
ANOTHER SUCH AGENT AND NOTIFY YOU OF SUCH APPOINTMENT. EACH OF THE
COMPANY AND GLOBALSTAR FURTHER AGREES THAT SERVICE OF PROCESS UPON THE
PROCESS AGENT AND WRITTEN NOTICE OF SAID SERVICE TO THE COMPANY OR
GLOBALSTAR, AS APPLICABLE, MAILED BY FIRST CLASS MAIL OR DELIVERED TO
THE PROCESS AGENT SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF
PROCESS UPON IT IN ANY SUCH SUIT OR PROCEEDING. NOTHING HEREIN SHALL
AFFECT YOUR RIGHT OR THE RIGHT OF ANY PERSON CONTROLLING ANY OF YOU TO
SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW. EACH OF THE COMPANY
AND GLOBALSTAR AGREES THAT A FINAL ACTION IN ANY SUCH SUIT OR
PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER
JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER LAWFUL MANNER.
(i) Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any
circumstances, is held invalid, illegal or unenforceable in any respect
for any reason, the validity, legality and enforceability of any such
provision in every other respect and of the remaining provisions hereof
shall not be in any way impaired or affected thereby, it being intended
that all of the rights and privileges of the parties shall be
enforceable to the fullest extent permitted by law.
(j) Securities Held by the Company or Globalstar, etc.
Whenever the consent or approval of Holders of a specified percentage
of principal amount or liquidation preference, as the case may be, of
Securities is required hereunder, Securities held by the Company,
Globalstar or their respective Affiliates (other than subsequent
Holders of Securities if such subsequent Holders are deemed to be
Affiliates solely by reason of their holdings of such Securities) shall
not be counted in determining whether such consent or approval was
given by the Holders of such required percentage.
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EXECUTION COPY
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Please confirm that the foregoing correctly sets forth the
agreement between the Company and you.
Very truly yours,
GLOBALSTAR TELECOMMUNICATIONS LIMITED,
by:
/s/ Xxx Xxxx
-------------------------------------
Name: Xxx Xxxx
Title: Vice President and Secretary
GLOBALSTAR, L.P., by
LORAL/QUALCOMM SATELLITE SERVICES, L.P.,
its general partner, by
LORAL/QUALCOMM PARTNERSHIP, L.P., its
general partner, by
LORAL GENERAL PARTNER, INC., its general
partner,
by
/s/ Xxx Xxxx
-------------------------------------
Name: Xxx Xxxx
Title: Vice President and Secretary
Accepted in New York, New York
December 8, 1999
BEAR, XXXXXXX & CO. INC.
BANC OF AMERICA SECURITIES LLC
XXXXXX BROTHERS INC.
X.X. XXXXXXXXX, XXXXXX
by BEAR, XXXXXXX & CO. INC.
by
/s/ Xxxxxxx Xxxxxx
---------------------------------
Name: Xxxxxxx Xxxxxx
Title: Senior Managing Director
