Exhibit 10.1
SETTLEMENT AGREEMENT AND RELEASE
This SETTLEMENT AGREEMENT AND RELEASE ("SETTLEMENT AGREEMENT")
is made this 8th day of April 2003 by and among Globalstar, L.P., a Delaware
limited partnership ("GLP"), its debtor subsidiaries Globalstar Capital
Corporation, a Delaware corporation, Globalstar Services Company, Inc., a
Delaware corporation, and Globalstar, L.L.C., a Delaware limited liability
company, each of the foregoing entities a debtor and debtor-in-possession
(collectively, the "Debtors"), Globalstar USA, LLC, a Delaware limited liability
company ("GUSA"), the official committee of unsecured creditors appointed in the
Debtors' Chapter 11 cases (the "Creditors Committee"), Loral Space &
Communications Ltd., a Bermuda company ("Loral"), Space Systems/Loral, Inc., a
Delaware corporation ("SS/L"), the other Loral Entities on the signature pages
hereof, Loral/QUALCOMM Partnership, L.P., a Delaware limited partnership ("LQP")
and Loral General Partner, Inc., a Delaware corporation ("LGP").
BACKGROUND
WHEREAS, on February 15, 2002, the Debtors (this and other
capitalized terms being defined in Article 1) and the GP Debtors each filed
voluntary petitions pursuant to chapter 11 of the Bankruptcy Code in the United
States Bankruptcy Court for the District of Delaware; and
WHEREAS, on March 5, 2002, the United States Trustee appointed
the Creditors Committee; and
WHEREAS, certain Loral Entities are creditors or equity
holders of, and/or parties to executory contracts with, certain of the Debtors;
and
WHEREAS, the Loral Entities, collectively and without
duplication, have asserted approximately $882 million of liquidated plus
substantial unliquidated Claims against the Debtors, as set forth on Schedule
1.46 hereto; and
WHEREAS, the Creditors Committee has conducted an
investigation of the Loral Entities' relationships and dealings with the Debtors
and, based on such review, asserts that: (a) all or a portion of the Loral
Entities' Claims should be disallowed or equitably subordinated to General
Unsecured Claims; and (b) certain of the Loral Entities have substantial
liabilities to the Debtors; and
WHEREAS, the Loral Entities dispute the Creditors Committee's
assertions and, in any event, assert that the Loral Entities' valid Claims
exceed any valid claims the Debtors might assert against the Loral Entities; and
WHEREAS, all or substantially all of the liabilities of the GP
Debtors also are liabilities owed to the Debtors' creditors and are based on the
GP Debtors' status as direct or indirect general partners of GLP; and
WHEREAS, the GP Debtors hold certain assets, rights and
licenses that are critical to the reorganization of the Debtors, but are
otherwise of limited or no value to the GP Debtors; and
WHEREAS, the Parties hereby acknowledge and agree that it is
in the Parties' mutual best interests to enter into this Settlement Agreement
and thereby resolve all issues between the Loral Entities on the one hand and
the Creditors Committee and the Debtors on the other hand, on the terms set
forth herein; and
WHEREAS, the Parties hereby acknowledge and agree that the
intent and purpose of this Settlement Agreement is to resolve and settle
outstanding issues between the Loral Entities and the GP Debtors on the one hand
and the Creditors Committee and the Debtors on the other hand, and that each of
the elements of this Settlement Agreement is an integral element of this
Settlement Agreement, without which this Settlement Agreement would not have
been entered into by the Parties; and
2
WHEREAS, the Bankruptcy Court has jurisdiction over these
cases and this matter pursuant to 28 U.S.C.Section 157 and 1334;
NOW, THEREFORE, it is hereby stipulated and agreed, by and
among the undersigned Parties in consideration of the promises and the mutual
covenants and agreements herein contained as follows:
ARTICLE 1 -- DEFINITIONS
The following terms used in this Settlement Agreement shall
have the definitions set forth below:
1.1. "ADDITIONAL AMOUNT" means the amount, if any, by which
$57 million exceeds the aggregate amount of the Vendor Financing Claims.
1.2. "ALLOWED CLAIM" means
a. a Claim that (i) has been listed by a particular Debtor on
its schedules as other than disputed, contingent or unliquidated and (ii) is not
otherwise a disputed Claim;
b. a Claim (i) for which a proof of Claim or request for
payment of administrative Claim has been filed by the applicable bar date or
otherwise been deemed timely filed under applicable law and (ii) that is not
otherwise a disputed Claim; or
3
c. a Claim that is allowed: (i) in any stipulation executed by
the applicable Debtor and Claim holder on or after the Effective Date; (ii) in
any contract, instrument or other agreement entered into in connection with the
Plan and, if prior to the Effective Date, approved by the Bankruptcy Court;
(iii) in a Final Order; or (iv) pursuant to the terms of the Plan.
1.3. "ALLOWED...CLAIM" means an Allowed Claim in the
particular class or category specified under the Plan. Any reference herein to a
particular Allowed Claim includes both the secured and unsecured portions of
such Claim.
1.4. "APPROVAL DATE" means the date of entry of the Approval
Order.
1.5. "APPROVAL ORDER" means an order of the Bankruptcy Court
authorizing and approving this Settlement Agreement.
1.6. "ASSUMED CONTRACT" means any contract between a Debtor
and a Loral Entity that is assumed pursuant to Section 365 of the Bankruptcy
Code.
1.7. "BANKRUPTCY CODE" means title 11 of the United States
Code, 11 U.S.C. Section 101-1330, as now in effect or hereafter amended.
1.8. "BANKRUPTCY COURT" means the United States Bankruptcy
Court for the District of Delaware or such other Court having jurisdiction over
the relevant issue in the Reorganization Cases or the GP Debtors' chapter 11
cases, as applicable.
1.9. "BANKRUPTCY RULES" means the Federal Rules of Bankruptcy
Procedure and the local rules of the Bankruptcy Court, as now in effect or
hereafter amended.
1.10. "BENEFITS" means the benefits of the Strategic
Agreements and the FCC Big Xxx License on terms not materially less favorable
than exist in favor of GLP as of the date hereof (other than, as to the
Strategic Agreements, the provisions of Section 2.2 hereof).
4
1.11. "BRAZIL SERVICE PROVIDERS" means Loral/DASA Globalstar,
L.P., Loral/DASA Brasil Holdings Ltda., and Globalstar do Brasil, S.A.
1.12. "BUSINESS DAY" means any day, other than a Saturday,
Sunday or legal holiday (as defined in Bankruptcy Rule 9006(a)).
1.13. "CANADIAN SERVICE PROVIDERS" means GCSC, ATSS/Loral
Netherlands BV, and Globalstar Canada.
1.14. "CAUSE OF ACTION" means any action, cause of action,
suit, account, controversy, agreement, promise, right to legal remedy, right to
an equitable remedy (including, without limitation, any equitable subordination
and recharacterization of claims actions), right to payment or claim, whether
known or unknown, reduced to judgment, not reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed,
secured, unsecured and whether asserted or assertable directly, indirectly or
derivatively, in law, equity or otherwise.
1.15. "CLAIM" means a claim, as defined in Section 101(5) of
the Bankruptcy Code, against any Debtor. 1.16. "CLOSING DATE" means the first
business day on which the Approval Order becomes a Final Order, such later date
as may be agreed upon by the Creditors Committee, GLP and Loral, or such earlier
date following the Approval Date as to which Loral may agree, in each case
provided that on such date substantial consummation of the transactions provided
for in this Settlement Agreement occurs.
1.17. "CONFIRMATION DATE" means the date of entry of the
Confirmation Order by the Bankruptcy Court.
5
1.18. "CONFIRMATION ORDER" means the order of the Bankruptcy
Court confirming a Plan pursuant to Section 1129 of the Bankruptcy Code.
1.19. "CONVENIENCE CLAIMS" means "Convenience Claims" or other
similar term as defined in the Plan, as amended from time to time, referring to
Allowed General Unsecured Claims below a limited US dollar threshold.
1.20. "COOPERATION COVENANT" shall have the meaning ascribed
to it in Section 5.1 hereof.
1.21. "COOPERATION PERIOD" means the time from the Approval
Date through the earliest to occur of the (a) the Effective Date of a Plan, (b)
the date of entry of an order converting GLP's Reorganization Case to a case
under chapter 7 of the Bankruptcy Code, and (c) the Deadline.
1.22. "CREDITORS COMMITTEE" shall have the meaning ascribed to
it in the preamble.
1.23. "DEADLINE" means December 31, 2003 or such other date as
may be agreed to in writing by GLP, the Creditors Committee and Loral.
1.24. "DEBTORS" means shall have the meaning ascribed to it in
the preamble.
1.25. "EFFECTIVE DATE" means the effective date of a Plan.
1.26. "FCC" means the Federal Communications Commission.
1.27. "FCC BIG XXX LICENSE" means the FCC license issued to
LQP, and currently held by L/Q Licensee, to provide mobile satellite services in
the 1610-1626.5/2483.5-2500 MHz bands.
1.28. "FINAL ORDER" means: (a) an order of the Bankruptcy
Court as to which the time to appeal, petition for certiorari or move for
reargument or rehearing has expired and as
6
to which no appeal, petition for certiorari or other proceedings for reargument
or rehearing shall then be pending; or (b) if an appeal, writ of certiorari,
reargument or rehearing thereof has been filed or sought, or order of the
Bankruptcy Court that shall have been affirmed by the highest court to which
such order was appealed, or as to which certiorari shall have been denied or
reargument or rehearing shall have been denied or which resulted in no
modification of such order, and the time to take any further appeal, petition
for certiorari or move for reargument or rehearing shall have expired; provided,
however, that the possibility that a motion under Rule 59 or Rule 60 of the
Federal Rules of Civil Procedure, or any analogous rule under the Bankruptcy
Rules, may be filed with respect to such order shall not cause such order not to
be a Final Order.
1.29. "GCSC" means Globalstar Canada Satellite Co., a Nova
Scotia, Canada corporation.
1.30. "GENERAL UNSECURED CLAIMS" means all unsecured Claims
against the Debtors other than a claim entitled to priority pursuant to Section
507 of the Bankruptcy Code.
1.31. "GENERAL PARTNERS COMMITTEE" means the governing body of
GLP under the Amended and Restated Agreement of Limited Partnership of
Globalstar, L.P., which is currently comprised of the following six members:
Xxxx Xxxxxxxx, Chairman, Xxx Xxxxxx Xxxxxxxx, A. Xxxxxx Xxxxxx, and, subject to
Section 5.2 hereof, Xxxxxxx X. Xxxx, Xxxxxxx X. Xxxxxxxx, and Xxxx X. Xxxxxx.
1.32. "GLOBALSTAR CANADA" means Globalstar Canada Co., a Nova
Scotia, Canada company.
1.33. "GLOBALSTAR ENTITIES" means the Debtors and all of their
respective subsidiaries.
7
1.34. "GLOBALTEL" means GlobalTel C.J.S.C., a Russian closed
joint-stock company.
1.35. "GLP" shall have the meaning ascribed to it in the
preamble.
1.36. "GLP PARTNERSHIP INTERESTS" means the ordinary
partnership interests and both classes of redeemable preferred partnership
interests in GLP (including all ordinary partnership interests which are
reserved to provide for purchases of interests by GTL upon exercise of options
to purchase GTL common stock).
1.37. "GP DEBTORS" means LGP Bermuda, Loral/QUALCOMM Satellite
Services, L.P., LQP and LGP.
1.38. "GSLLC" means Government Services, LLC, a Delaware
limited liability company.
1.39. "GTL" means Globalstar Telecommunications Limited, a
Bermuda exempted company, and a general partner of GLP.
1.40. "GUSA" means Globalstar USA, LLC, a Delaware limited
liability company.
1.41. "INTEREST" means any capital stock, partnership
interest, limited liability company membership interest, or other ownership
interest.
1.42. "LGP" means Loral General Partner, Inc., a Delaware
corporation.
1.43. "LGP BERMUDA" means LGP (Bermuda) Ltd., a Bermuda
company.
1.44. "LORAL" means Loral Space & Communications Ltd., a
Bermuda company.
1.45. "LORAL CANADIAN INTEREST" means the Loral Entities' (i)
49.9% interests in GCSC and ATSS/Loral Netherlands BV, (ii) 23% interest in
Globalstar Canada, and (iii) any
8
other equity interests or contractual rights primarily related to the ownership
or operation of the Globalstar gateways or service providers in Canada.
1.46. "LORAL CLAIMS" means all Claims of the Loral Entities.
1.47. "LORAL DESIGNEES" means Xxxxxxx X. Xxxx, Xxxxxxx X.
Xxxxxxxx, and Xxxx X. Xxxxxx.
1.48. "LORAL ENTITIES" mean, collectively: (a) Loral; (b)
Loral Space & Communications Corporation; (c) SS/L; (d) Loral/DASA Globalstar,
L.P.; (e) Loral SpaceCom Corporation; (f) Loral Satellite, Inc.; (g) Loral
CyberStar International, Inc.; and (h) all of the respective current direct and
indirect subsidiaries and affiliates of the entities identified in subclauses
(a) through (g) of this Section 1.48 (other than the Debtors, their Non-Debtor
Subsidiaries, the Canadian Service Providers, GlobalTel, the Mexico Service
Providers, the Brazil Service Providers and the GP Debtors).
1.49. "LORAL RELEASE" means the release to be granted pursuant
to Section 8.1 hereof.
1.50. "L/Q LICENSEE" means L/Q Licensee, Inc., a Delaware
corporation.
1.51. "LQP" means Loral/QUALCOMM Partnership, L.P, a Delaware
limited partnership.
1.52. "MEXICO SERVICE PROVIDERS" means ATTS/Loral Mexico,
L.P.; Mexico Satellite LLC; Globalstar de Mexico S. de X.X. de C.V.; and
Servicios Corporativos Alcance S.A. de C.V.
1.53. "NEW GLOBALSTAR" means the reorganized Debtors,
successors to the Debtors under a Plan, or the purchaser of the Debtors' assets,
in each case that will, directly or
9
through subsidiaries, contain all or a substantial portion of the Debtors'
assets after the Effective Date.
1.54. "NON-DEBTOR SUBSIDIARIES" mean all of the Debtors'
non-debtor subsidiaries, in which the Debtors own or acquire a controlling
interest through and including the Effective Date, including, without
limitation, Globalstar Corporation, Globalstar Europe Satellite Services Ltd.,
Globalstar Republica Dominicana, S.A., Globalstar Japan, K.K., Globalstar
Holdings, Ltd., Globalstar International Services Ltd., Xxxxxxxxxxx Holdings NV,
Globalstar Offshore Co., GCSC, ATSS/Loral Netherlands B.V., ATSS Canada, Inc.,
Globalstar Satellite Services, Inc., Mobile Satellite Services B.V., Globalstar
Europe S.A.R.L., Globalstar USA, LLC, Globalstar Caribbean Ltd. and the Canadian
Service Providers.
1.55. "PARTIES" means the Debtors, the Creditors Committee,
the GP Debtors, and the Loral Entities that are signatories to this Settlement
Agreement.
1.56. "PERSON" shall have the meaning set forth in section
101(41) of the Bankruptcy Code.
1.57. "PLAN" means a chapter 11 plan for the Debtors.
1.58. "QUALCOMM" means XXXXXXXX Xxxxxxxxxxxx.
1.59. "RECOVERY ACTION" means, collectively and individually:
(a) preference actions, fraudulent conveyance actions, rights of setoff and
other claims or causes of action under Sections 510, 544, 547, 548, 549, 550 and
553 of the Bankruptcy Code and other applicable bankruptcy or non-bankruptcy
law; (b) claims or causes of action arising out of illegal dividends or similar
theories of liability; (c) claims or causes of action based on piercing the
corporate veil, alter ego liability or similar legal or equitable theories of
recovery arising out of the ownership or operation of the Debtors; (d) claims or
causes of action based on unjust enrichment; (e) claims or
10
causes of action for breach of fiduciary duty, mismanagement, malfeasance or
fraud; and (f) claims or causes of action relating to the provision of retiree
medical benefits and the provision of director and officer liability insurance
or indemnification.
1.60. "REORGANIZATION CASE" means: (a) when used with
reference to a particular Debtor, the chapter 11 case pending for that Debtor in
the Bankruptcy Court; and (b) when used with reference to all Debtors, the
chapter 11 cases pending for the Debtors in the Bankruptcy Court.
1.61. "REORGANIZATION PLAN" means a Plan that provides for all
or a substantial portion of the Debtors to continue as a going concern.
1.62. "REPLACEMENT NOTE" means the note to be issued to Loral
or its designee by Globalstar Canada pursuant to Section 3.4 hereof.
1.63. "REPRESENTATIVE(S)" means for any entity, any and all of
its officers, directors, employees, members of a general partners' committee
(including as to the Debtors, the General Partners Committee), the direct or
indirect general partners, direct or indirect limited partners, attorneys,
advisors, and investment bankers, in each case, solely in their capacity as
such.
1.64. "RULE 9019 MOTION" means a motion pursuant to Rule 9019
of the Bankruptcy Rules filed in the Debtors' Reorganization Cases or in the GP
Debtors' chapter 11 cases seeking approval of this Settlement Agreement.
1.65. "RUSSIAN DEBT" means the net amount owed by GlobalTel to
GLP as of the Closing Date. For the avoidance of doubt, the amount of the
Russian Debt, as of January 26, 2003, is approximately $1.6 million.
11
1.66. "RUSSIAN NOTE" means the note to be issued to Loral by
Globalstar Canada pursuant to Article 3 of this Settlement Agreement.
1.67. "SATELLITE CONTRACT" means Contract for the Design and
Delivery of the Globalstar Satellite System, Contract No. GS-C-94-008, dated
February 16, 1994 (as amended, modified, and supplemented).
1.68. "SECTION 363 SALE" means a sale of all or a substantial
portion of the Debtors' assets as a going concern under Section 363 of the
Bankruptcy Code.
1.69. "SETTLEMENT AGREEMENT" shall have the meaning set forth
in the introductory paragraph hereof.
1.70. "SETTLEMENT MOTION" means the Rule 9019 Motion filed by
the Creditors Committee and the Debtors in the Bankruptcy Court seeking approval
of this Settlement Agreement.
1.71. "SPARE SATELLITES" means the eight spare satellites
remaining to be delivered to GLP under the Satellite Contract.
1.72. "SS/L" means Space Systems/Loral, Inc., a Delaware
corporation.
1.73. "STRATEGIC AGREEMENTS" means (a) the Strategic
Agreement, dated as of March 23, 1994 between LQP and Airtouch Communications;
(b) the Memorandum of Understanding - US Government and Aviation - between GUSA
and LQP, dated as November 1999; and (c) the Globalstar Service Reseller
Agreement between GUSA and Government Services, LLC dated April 1, 2000.
1.74. "THIRD PARTY RELEASES" means a release providing that
each (a) of the Non-Debtor Subsidiaries and (b) holder of (i) a Claim (whether
or not allowed) against or Interest in a Debtor or (ii) a GLP Partnership
Interest, and (c) Person participating in exchanges
12
and distributions under or pursuant to the Plan, shall be enjoined from
commencing and continuing any Cause of Action, Recovery Action, employment of
process or act to collect, offset or recover and shall release any Claim or
Cause of Action and/or Recovery Action arising from the beginning of time
through the Confirmation Date against the Loral Entities or any Representative
thereof in any way directly or indirectly relating to or concerning the Debtors,
including, without limitation, their management and operations, the
Reorganization Cases, or the Plan (other than (i) claims arising after the
Confirmation Date under any Assumed Contract; (ii) claims for all sums due in
connection with ordinary course postpetition commercial transactions between any
Loral Entity and any Globalstar Entity; and/or (iii) claims arising under this
Settlement Agreement).
1.75. "2GHZ AGREEMENT" means the Contract Between Globalstar,
L.P. and SS/L for the Globalstar Second Generation Satellite System, No.
GS-C-02-0612, dated July 16, 2002, providing for the design and construction of
a mobile satellite system in the 2GHz band.
1.76. "UNDERTAKING" shall have the meaning ascribed to it in
Section 5.2 hereof.
1.77. "VENDOR FINANCING CLAIMS" means the pass through vendor
financing Claims of third party subcontractors to SS/L, as listed on Schedule
7.1 hereto, including those arising under the Satellite Contract.
ARTICLE 2 -- TREATMENT OF EXISTING AGREEMENTS
2.1. Satellite Contract.
2.1.1 Rejection. On the Approval Date, but subject to the
occurrence of the Closing Date, the Satellite Contract shall hereby be rejected
by the Debtors.
13
2.1.2 Transfer. On the Closing Date, SS/L will deliver to GLP
title to the Spare Satellites and one dispenser covered by the Satellite
Contract. The Spare Satellites shall be transferred as is, where is.
2.1.3 Completion of 8th Satellite. After the Closing Date,
upon request of GLP, SS/L shall provide GLP with proposed contract terms in
reasonable detail, including a price, not to exceed $1,000,000, to complete the
eighth Spare Satellite. GLP and SS/L will negotiate such terms in good faith,
but failure to reach final agreement shall not constitute a breach of this
Settlement Agreement by either party.
2.1.4 Modification/Maintenance/Storage. After the Closing
Date, SS/L will, if GLP so requests, provide GLP with proposed contract terms to
retrofit or modify any of the Spare Satellites and to maintain and store the
Spare Satellites. GLP and SS/L will negotiate such terms in good faith, but
failure to reach final agreement shall not constitute a breach of this
Settlement Agreement by either party. GLP and SS/L shall use their reasonable
best efforts to reach an agreement prior to the Closing Date for the maintenance
and storage of the Spare Satellites for the period after the Closing Date. If
such an agreement has not been reached by the Closing Date then for a period of
at least 180 days after the Closing Date, SS/L shall store and maintain the
Spare Satellites in accordance with the standards provided for in the Satellite
Contract and GLP shall be liable to pay monthly for the reasonable value of any
such maintenance or storage of the Spare Satellites.
2.1.5 Launch Services. After the Closing Date, if GLP so
requests, SS/L will provide GLP with proposed contract terms to provide launch
services for the Spare Satellites for a fee based on time and materials. GLP and
SS/L will negotiate such terms in good faith, but failure to reach final
agreement shall not constitute a breach of this Agreement by either party.
14
2.2. Strategic Agreements.
2.2.1 Termination. On the Closing Date, each of the Strategic
Agreements shall terminate (unless any of such agreements previously expired or
terminated in accordance with its terms), except as provided in Section 2.2.2
hereof.
2.2.2 Joint Venture. On or as soon as practicable after the
Closing Date, LGP, as the sole member of GSLLC, shall amend GSLLC's Limited
Liability Company Agreement to designate GLP or its designee as a member with
the right to own and control seventy-five (75) percent of GSLLC's membership
interests and appoint seventy-five (75) percent of the directors and all of the
officers of GSLLC and designate Loral or its affiliate designee with the right
to own and control the other twenty five (25) percent of GSLLC's membership
interests. Said amendment shall be in form and substance reasonably acceptable
to the Parties, shall provide that GLP or its designee shall have management
control over the joint venture, including budget matters, which includes all
pricing and related matters, and shall include minority protections in favor of
Loral or its affiliate designee crafted to ensure that Loral or its affiliate
designee will receive its proportionate share of distributions of the net income
of GSLLC and other economic value of GSLLC and not be treated disproportionately
to the treatment of GLP or its designee as a member of GSLLC, it being
understood by the Parties that the amendment otherwise shall not provide Loral
or its designee with independent rights to control GSLLC generally or otherwise
have consent rights in connection with such events as financings, acquisitions,
or merger or other change of control transactions. The parties shall use their
reasonable best efforts to agree on the form of agreement governing the joint
venture prior to the Closing Date. As of the effective date of said amendment,
GUSA and LQP will assign to GSLLC their respective rights under the
15
Strategic Agreements relating to government services, but not commercial and
general aviation services, which commercial and general aviation rights shall
revert to GUSA.
2.2.3 Exclusive Right to Offer Certain Services. For the
avoidance of doubt, GSLLC shall have the exclusive right to offer (i) Globalstar
services in the United States to the United States Department of Defense, and
other United States national security agencies; and (ii) encrypted and / or
secure Globalstar services to all federal, state and local government
subscribers in the United States who require encrypted or end-to-end services;
including without limitation, to the United States customers specified in the
list attached as Exhibit A-1 to the GUSA Globalstar Service Reseller Agreement,
dated as of April 1, 2000.
2.2.4 Exploitation. Pending creation of the joint venture, GLP
and GSLLC each shall coordinate their respective performance under the Strategic
Agreements with one another and, consistent with the terms thereof, will not
take any material actions thereunder without the consent of the other party;
provided, however, that GLP and GUSA may continue to add subscribers for the
credit of GSLLC in accordance with existing subscription practices and
procedures.
2.2.5 Deemed Valuation. Unless otherwise agreed by GLP and
Loral, the valuation of the joint venture for purposes of any new equity
investments in the joint venture by any Loral Entity or by GLP or any of its
affiliates shall be supported by a valuation opinion (or other appropriate
substitute opinion) of a nationally recognized investment banking firm selected
by GLP and Loral, such opinion to be at the expense of the joint venture. Loral
shall have the right to participate in any such new equity investment in the
joint venture in accordance with such valuation opinion for the purpose of
maintaining its proportionate ownership interest in the joint venture.
16
2.3. 2GHz Agreement.
2.3.1 Refund. On the Closing Date, SS/L shall refund
$2,260,000 and retain $740,000 paid by GLP under the 2GHz Agreement and, subject
to the other provisions of this Section 2.3, such payments shall be in full
satisfaction of the parties' respective obligations to date under the 2GHz
Agreement.
2.3.2 Termination Fee. On the Closing Date, SS/L shall waive
the $250,000 termination fee under the 2GHz Agreement except as to a termination
after the agreement is reinstated pursuant to Section 2.3.3 hereof.
2.3.3 Reinstatement. The 2GHz Agreement shall not be deemed
terminated in connection with this settlement; provided, however, that prior to
GLP being able to rescind its stop work order thereunder, GLP shall be required
to reinstate SS/L's right to a $250,000 termination fee for any future
termination under the 2GHz Agreement and the reinstatement otherwise shall be on
terms acceptable to SS/L and GLP, subject to the requirement that in no event
shall GLP be required to prepay more $2,260,000.
2.4. Other Executory Contracts.
2.4.1 Assumption/Rejection. Except with respect to a contract
specifically addressed in this Article 2, (i) by the Approval Date, GLP shall
determine on a non-binding basis whether to assume or reject all contracts with
Loral Entities and advise Loral of those determinations, and (ii) the Debtors
shall assume or reject all of the contracts with the Loral Entities on or before
the earlier of: (a) the Confirmation Date; or (b) 30 days after the date of
approval of a Section 363 Sale by the Bankruptcy Court.
2.5. Claims Under Existing Agreements.
17
2.5.1 Cure. Each contract with a Loral Entity assumed by the
Debtors shall be treated in accordance with Section 365 of the Bankruptcy Code
for purposes of cure determinations upon assumption.
2.5.2 Rejection/Termination. With respect to each contract
with a Loral Entity in existence prior to the date hereof that is rejected or
otherwise terminated by the Debtors: (a) the applicable Loral Entity shall have
no rejection, damage or any other Claim except as provided in this Settlement
Agreement; and (b) the Debtors shall have no claims against the Loral Entities,
including, without limitation, any warranty claims.
2.5.3 Cooperation. Commencing on the Closing Date, the Loral
Entities and the Debtors each shall provide reasonable cooperation to the other
in the turnover and use of technical information in accordance with contracts
existing on the Approval Date, whether or not such contracts are rejected by the
Debtors. Without limitation, SS/L and GLP will enter into an intellectual
property agreement providing for the transfers of certain Globalstar-related
patents from SS/L to GLP, subject to a non-exclusive and non-transferable
(except to an affiliate of SS/L), perpetual, royalty-free license therein being
granted back to SS/L, and the retention by SS/L of rights to use the Globalstar
system-related intellectual property developed under such contracts (including,
without limitation, the Satellite Contract). GLP and SS/L will negotiate the
terms of such intellectual property agreement in good faith, but failure to
reach final agreement shall not constitute a breach of this Settlement Agreement
by either party.
ARTICLE 3 -- CANADIAN SERVICE PROVIDER
3.1. Transfer of Loral Canadian Interest. On the Closing Date,
the applicable Loral Entities shall transfer the Loral Canadian Interest to GLP
and Loral shall take such steps necessary to cause the applicable Loral Entities
to effect such transfer.
18
3.2. Releases. On the Closing Date, except as provided in
Section 3.4 hereof, each of the Canadian Service Providers on the one hand and
each of the Loral Entities on the other hand shall have no further liability or
indemnity obligations to each other.
3.3. Globalstar Canada. On or after the Approval Date, to the
extent not previously acquired, GCSC may acquire Canadian Satellite
Communications Inc.'s direct or indirect interest in Globalstar Canada using
GCSC's cash on terms reasonably acceptable to GLP, Loral and the Creditors
Committee. After the Closing Date, Loral will cooperate with GLP in supporting
such acquisition.
3.4. Treatment of Loral's $10 Million Claim. On the Closing
Date, the $10 million owed by Globalstar Canada to Loral shall be replaced by
the issuance by Globalstar Canada to Loral or to Loral's affiliate designee of
the Replacement Note and Russian Note having the following terms:
3.4.1 Replacement Note
(i) The Replacement Note shall be in the principal
amount of $10 million less the sum of (a) the
aggregate amount of net Brazil and net Mexico
Service Providers debt due to GLP as of the
Approval Date, (for the avoidance of doubt, such
amounts being approximately $5 million and
$600,000, respectively, as of January 26, 2003),
plus (b) the principal amount of the Russian Note.
For the avoidance of doubt, as of January 26, 2003
the principal amount of the Replacement Note would
have been approximately $2.8 million.
(ii) The Replacement Note shall bear interest at 6% per
annum payable quarterly in arrears.
(iii) The Replacement Note shall be amortized in twelve
equal quarterly installments payable in arrears
during the three years commencing with the second
anniversary of the Closing Date with the first
such payment being due at the end of the quarter
in which occurs the second anniversary of the
Closing Date.
(iv) The Replacement Note shall have customary terms as
may be agreed upon among Loral, the Creditors
Committee and GLP,
19
including, without limitation, events of default
and acceleration upon non-payment of principal or
interest.
3.4.2 Russian Note
(i) The Russian Note shall be in the principal amount
of the Russian Debt (for the avoidance of doubt,
such amount being approximately $1.6 million as of
January 26, 2003).
(ii) The Russian Note shall bear interest at 6% per
annum payable quarterly in arrears; provided,
however, that for interest accruing during the
period from the Closing Date through the first
anniversary of the Closing Date, such interest
shall be payable and paid only to the extent, if
any, that GLP receives payments on the Russian
Debt during such period.
(iii) From and after the Closing Date, amounts paid on
invoices by GLP or its affiliates or subsidiaries
for services or equipment provided to GlobalTel
after the Closing Date may not be applied to the
Russian Debt.
(iv) At any time after the first anniversary of the
Closing Date, Globalstar Canada shall have the
right to satisfy any unpaid portion of the Russian
Note by causing GLP to assign an equivalent amount
of the unpaid portion of the Russian Debt to Loral
(pursuant to an assignment in a form reasonably
acceptable to Loral), which shall reduce the
amount of the Russian Note by the amount of the
Russian Debt so assigned.
(v) Except as set forth above, the Russian Note shall
contain the same terms as the Replacement Note.
(vi) GLP shall use its reasonable best efforts promptly
to collect (and after an assignment of the Russian
Debt to Loral, to cooperate with Loral's efforts
to collect) the Russian Debt.
ARTICLE 4 -- BRAZIL, MEXICO AND RUSSIA SERVICE PROVIDERS
4.1. Loral to Retain Ownership. On the Closing Date, the Loral
Entities will retain their respective ownership interests in the Brazil and
Mexico Service Providers and GlobalTel. Promptly following a written request
from Loral, the Debtors will assign or cause to be assigned to Loral or its
affiliate designee each of the Globalstar Entities' respective actual or
asserted interests, if any, (i) in GlobalTel as of the Closing Date, and (ii)
any interest in the
20
Brazil Service Providers owned by the GP Debtors that is described in Section
6.3 hereof and that is assigned to GLP in connection with this settlement or
acquired by GLP as part of substantive consolidation with the GP Debtors.
4.2. Most Favored Nation Status. From and after the Closing
Date, the Debtors (and their Non-Debtor Subsidiaries) shall provide the Brazil
Service Providers, Mexico Service Providers and GlobalTel with most favored
nation status, e.g., the Debtors will provide Globalstar service on terms,
including price, payment terms, and quality of service, no less favorable than
the Debtors provide to any other service provider for similar types and
quantities of services, and upon request, shall enter into written contracts
with the Brazil Service Providers, Mexico Service Providers and GlobalTel
reflecting those terms.
4.3. Assignment of Debt. On the Closing Date, the net amounts
due to GLP by Brazil or Mexico Service Providers (to the extent of the amounts
of the reductions to the principal amount of the Replacement Note made pursuant
to Section 3.4.1(i)(a) hereof) shall be assigned to Loral or its affiliate
designee pursuant to assignments in forms reasonably acceptable to Loral.
4.4. Prepaid Minutes. Through March 31, 2004, Globalstar will
honor the prepaid minutes in existence as of the Approval Date of the Brazil and
Mexico Service Providers as well as GlobalTel.
ARTICLE 5 -- ADDITIONAL LORAL OBLIGATIONS
5.1. Cooperation Covenant. Provided that the Loral Designees
have resigned from the Globalstar GP Committee, during the Cooperation Period,
Loral shall: (a) use its reasonable best efforts to consummate any debtor in
possession financing proposal or third party investment proposal for the Debtors
that is supported in writing by the Creditors Committee; and (b) regarding any
Plan or motion for a Section 363 Sale for Globalstar filed in the Bankruptcy
Court,
21
vote against and not support such Plan or motion if the Creditors Committee
files an objection to such Plan or motion, and for so long as the Creditors
Committee does not withdraw such objection (the "Cooperation Covenant").
5.2. Loral Designees' Resignations. On the Closing Date,
subject to the Approval Order becoming a Final Order and expressly approving the
Loral Release and authorizing the resignations of the Loral Designees, Loral
shall cause the Loral Designees to resign from their respective seats on the
General Partners Committee. If such resignations are not authorized by the
Bankruptcy Court or otherwise are prohibited by applicable law or agreements,
then the Creditors Committee, GLP and Loral shall agree on alternative
management arrangements consistent with the Cooperation Covenant. In any event,
prior to and after the resignation of any Loral Designees from the General
Partners Committee, Loral shall take, and cause the Loral Designees to take,
subject to their fiduciary duties, such action as may be reasonably requested by
GLP to ensure that: (a) the General Partners Committee continues, following such
resignations, to have the legal ability to manage and direct the business and
affairs of GLP; and (b) actions taken by GLP based on the approval and direction
of the GLP Committee as it exists following such resignations will be duly
authorized to the same extent as if such actions were approved and directed by
the General Partners Committee as it exists today (the "Undertaking"). Requested
actions may include, among other things, a reduction in the size of the General
Partners Committee and the filling of vacancies on the Globalstar GP Committee.
The Creditors Committee and Globalstar shall fully cooperate in Loral's efforts
to fulfill the Undertaking. The sole remedy for any breach by Loral of such
Undertaking shall be to require specific performance.
22
5.3. Plan Votes. The Loral Entities shall vote for and support
any Plan that is consistent with the terms and conditions of this Settlement
Agreement (including, without limitation, containing the provisions in Articles
8 and 10 and containing no other terms materially adverse to the Loral
Entities); provided, however, that in respect of the Vendor Financing Claims,
any vote shall be subject to obtaining any requisite consents.
5.4. Waiver. Loral shall waive any right to assert there has
been a waiver of any valid and enforceable attorney client privilege of GLP or
the Creditors Committee due to the fact the Creditors Committee and the Debtors
exchanged information for purposes of the Settlement Motion regarding potential
claims against the Loral Entities.
ARTICLE 6 -- GP DEBTORS' OBLIGATIONS
6.1. Big Xxx License. On or as soon as practicable after the
Closing Date, subject to FCC approval, LQP either will (i) cause L/Q Licensee to
assign the FCC Big Xxx License to GLP or (ii) assign its 100% stock ownership
interest in L/Q Licensee to GLP. The Creditors Committee, and after the
resignation of the Loral Designees, the Creditors Committee and GLP, shall
determine which option is chosen unless regulatory restrictions preclude one
option. Loral, the GP Debtors, the Creditors Committee and GLP each shall use
their reasonable best efforts to obtain any regulatory approvals required for
the transfer to GLP of the FCC Big Xxx License or the L/Q Licensee stock.
6.2. Strategic Agreements. On the Closing Date, the GP Debtors
shall consent to the termination and assignment of the Strategic Agreements
contemplated by Section 2.2 hereof.
6.3. Brazil Service Providers. On the Closing Date, LGP
Bermuda shall assign to GLP or GLP's designee, LGP Bermuda's equity interests in
Loral Skynet do Brasil, Ltda. (.00003%) and Loral Space do Brasil Ltda.
(.0003%), subject to any applicable third party or regulatory constraints, which
shall then be immediately assigned, subject to any applicable third party or
23
regulatory constraints, to the Loral Entities in accordance with Section 4.1
hereof.
ARTICLE 7 -- TREATMENT OF LORAL CLAIMS
7.1. Vendor Financing Claims. The Vendor Financing Claims
shall be Allowed General Unsecured Claims in the amounts submitted by Loral,
subject to Creditors Committee good faith review, and shall be treated the same
as all other General Unsecured Claims other than Convenience Claims; provided,
however, in no event shall the aggregate amount of the Allowed Vendor Financing
Claims exceed $57 million.
7.2. Other Loral Claims. The Claims of the Loral Entities
including any contract rejection claims, but excluding the Vendor Financing
Claims, shall be Allowed General Unsecured Claims in the aggregate amount of
$875 million. None of such Allowed Claims shall be subject to defenses such as
set-off, recoupment, equitable subordination, equitable recharacterization, or
any similar defenses, but such Allowed Claims shall be subject to reduction in
accordance with Articles 8 and 10 hereof.
ARTICLE 8 -- RELEASES
8.1. Release by the Globalstar Entities. Subject only to
Sections 8.4 and 9.4 hereof, effective upon the Closing Date, the Globalstar
Entities, on behalf of themselves, their officers, directors, agents, employees,
successors, assigns, and affiliates hereby fully and finally release, acquit and
forever discharge the Loral Entities and the GP Debtors, each of their
respective subsidiaries and affiliates (other than the Globalstar Entities), and
their respective Representatives, successors and assigns, from any and all past
and present, demands, obligations, actions, causes of action, rights or damages
with respect to the Debtors and the operation of their businesses (other than
(i) claims arising after the Closing Date under any Assumed Contract or defenses
arising under such Assumed Contract to any claim for cure under Section 365 of
the
24
Bankruptcy Code; (ii) claims for all sums due in connection with ordinary course
postpetition commercial transactions between any Loral Entity or GP Debtor or
one of their respective Representatives on the one hand and any Globalstar
Entity on the other hand; (iii) claims arising under this Settlement Agreement
and (iv) claims for indemnification covered by insurance policies to the extent
of such insurance coverage), under any legal theory, including without
limitation, under contract, tort, or otherwise, which they now have, may claim
to have or ever had, whether such claims are currently known, unknown, foreseen
or unforeseen, which any of such parties may now have or have ever had from the
beginning of time through and including the Approval Date, including, without
limitation, any and all claims arising under Chapter 5 of the Bankruptcy Code or
as defined in Section 101(5) of the Bankruptcy Code and Causes of Action,
Recovery Actions, derivative claims (including any claims that might be asserted
by the Creditors Committee), alter-ego claims, and recharacterization claims.
8.2. Release by the Loral Entities and GP Debtors. Subject
only to Sections 8.4 and 9.4 hereof, effective upon the Closing Date, the Loral
Entities and the GP Debtors, on behalf of themselves, their officers, directors,
agents, employees, successors, assigns, and affiliates, hereby fully and finally
release, acquit and forever discharge the Globalstar Entities, and their
respective Representatives, successors and assigns, from any and all past and
present claims, defaults, demands, obligations, actions, causes of action,
rights or damages with respect to the Debtors and the operation of their
businesses (other than (i) claims arising after the Closing Date under or for
cure under Section 365 of the Bankruptcy Code regarding any Assumed Contract;
(ii) claims for all sums due in connection with ordinary course postpetition
commercial transactions between any Loral Entity or GP Debtor on the one hand
and any Globalstar Entity on the other hand; (iii) claims arising under this
Settlement Agreement; and
25
(iv) claims for indemnification covered by insurance policies to the extent of
such insurance coverage), under any legal theory, including without limitation,
under contract, tort, or otherwise, which they now have, may claim to have or
ever had, whether such claims are currently known, unknown, foreseen or
unforeseen, which any of such parties may now have or have ever had, from the
beginning of time through and including the Approval Date, including, without
limitation, any and all claims arising under Chapter 5 of the Bankruptcy Code or
as defined in Section 101(5) of the Bankruptcy Code, derivative claims
(including those that may be asserted by shareholders) and alter ego claims.
Nothing in this Section 8.2 shall obligate any Person to participate in the
defense of any claim that is unreleased due to insurance coverage.
8.3. Covenant Not to Xxx. Subject only to Sections 8.4 and 9.4
hereof, the Globalstar Entities and Loral Entities each hereby covenant and
agree that neither they nor any of their respective affiliates will hereafter
xxx or seek to establish liability against any of the released parties based in
whole or in part upon any of the claims released in Sections 8.1 and 8.2 hereof.
8.4. Potential Revocation of Loral Release, etc. If (a) by the
Deadline (i) no Section 363 Sale has been approved and (ii) no Reorganization
Plan has been confirmed or (b) GLP's Reorganization Case is converted to one
under chapter 7, then GLP, the Creditors Committee, or a trustee on behalf of
GLP shall have the right, for a period of 120 days after the earlier of such
Deadline or conversion, to file a motion in the GLP Reorganization Case seeking
to revoke the Loral Release, subject to each of the following, with the effect
that any such revoked Loral Release and any reciprocal release shall be null and
void ab initio and of no force and effect:
(a) any such motion shall seek and be conditioned on the
agreement to return to the Loral Entities all consideration and nullify
any releases provided by the Loral Entities
26
in connection with the Approval Order and to otherwise place the GP
Debtors, the Loral Entities, GLP and the Creditors Committee in the
same position they would have been in had the Approval Order not been
entered (including, without limitation, undoing the reduction and
allowance of Loral's claims, rescinding the releases in Sections 8.1
and 8.2 hereof, and transferring back the eight Spare Satellites, the
Loral Canadian Interest, the Replacement Note, the Russian Note, the
2GHz Agreement refund, and the FCC Big Xxx License and Strategic
Agreement contract rights); provided, however, that such reinstatement
obligation shall not include Loral's reinstatement of members of the
Loral Designees onto the General Partners Committee (which
reinstatement of the Loral Designees shall be within Loral's control to
implement);
(b) the sole basis for granting the relief requested shall be
that Loral materially breached the Cooperation Covenant during the
Cooperation Period;
(c) GLP, the Creditors Committee or the chapter 7 trustee for
GLP, as applicable, shall have the burden of proving any such material
breach of the Cooperation Covenant;
(d) in such matter, no evidence of the Loral Entities' or
Loral Designees' conduct prior to the Approval Date shall be
admissible;
(e) it shall not be evidence of any breach of the Cooperation
Covenant that during the Cooperation Period, the Loral Entities did any
or any combination of the following: (i) met with potential investors
in or bidders for the Debtors or their assets (including, without
limitation, any discussion of Loral participating in or supporting any
potential investor or bidder's proposal); (ii) rejected a request from
any party to make concessions not provided for in this Settlement
Agreement (except for requested concessions that are both noneconomic
and not material to the Loral Entities); or (iii) participated in or
27
supported a potential investor's proposal or plan with the Creditors
Committee's prior consent;
(f) it shall be evidence of a breach of the Cooperation
Covenant that during the Cooperation Period Loral participated in or
otherwise endorsed (i) a potential investor's proposal without the
Creditors Committee's prior consent or (ii) a GLP Plan as to which the
Creditors Committee has filed a written objection to confirmation that
has not been withdrawn; and
(g) consummation of (i) a Reorganization Plan or (ii) a
Section 363 Sale (in each case, at any time, including after the
Deadline) or the inability to return to any party any consideration or
nullify any release that it provided pursuant to the Settlement
Agreement (e.g., such as confirmation of a Plan for GLP that utilizes
assets contributed by the Loral Entities) shall preclude any such
motion to revoke the Loral Release.
8.5. Tolling Agreement. On or after the Approval Date and
subject to the occurrence of the Closing Date, if GLP and the Creditors
Committee so request, Loral shall enter into a tolling agreement, in a form
reasonably satisfactory to Loral, the Creditors Committee and GLP, pursuant to
which the statute of limitations with respect to any claims that GLP or its
estate may have as of the Approval Date against Loral and its affiliates
(excluding the GP Debtors) shall be extended through and including the earlier
of: (a) April 30, 2004; or (b) the date of the consummation of any transaction
contemplated by an order of the Bankruptcy Court approving a Section 363 Sale or
confirming a Reorganization Plan.
8.6. General Partners Committee Members. If the Loral Release
is delivered, then Messrs. Xxxxxxxx, Xxxxxxxx and Towbin, in their capacities as
members of the General Partners Committee, shall receive releases on the same
terms and subject to the same conditions
28
as the Loral Release as well as subject to the additional condition subsequent
for each of Messrs. Xxxxxxxx, Grierson and Towbin that he not voluntarily resign
or be terminated for cause as a member of the General Partners Committee until
the Effective Date. 8.7. Reciprocity. Should a Person who is the beneficiary of
a release under this Settlement Agreement assert a claim relating to the Debtors
that has been released under this Settlement Agreement against any Person
providing a release under this Settlement Agreement, then such release with
respect to the Person asserting such claim shall be automatically revoked unless
and until the beneficiary's claim is withdrawn with prejudice.
ARTICLE 9 -- PROCESS
9.1. Rule 9019 Motions. The relief set forth in this
Settlement Agreement shall be sought by way of Rule 9019 Motions filed in the
respective chapter 11 cases of the GP Debtors and the Debtors. If either of
Sections 6.1 or 6.2 hereof concerning the Strategic Agreements and the Big Xxx
License are not approved by the Bankruptcy Court in connection with the Rule
9019 Motions, then this settlement still may be approved and consummated, and
the Creditors Committee, GLP and Loral shall be obligated to use their
reasonable best efforts to seek the same relief, in connection with a Plan for
GLP, a Section 363 Sale, or a chapter 11 plan for the GP Debtors.
9.2. Substantive Consolidation Motion. If substantive problems
arise with obtaining the relief contemplated in Sections 6.1 and 6.2 hereof in
connection with the Plan and/or with the chapter 11 plan of the GP Debtors,
then, at Loral's request, GLP, the GP Debtors, the Creditors Committee, and
Loral shall use their reasonable best efforts to obtain substantive
consolidation of the GP Debtors with GLP unless such substantive consolidation
would have a material adverse impact on GLP or its creditors.
29
9.3. Alternative Arrangements. If either of Sections 6.1 or
6.2 hereof is not approved by the Bankruptcy Court in connection with the Rule
9019 Motions, a Plan, a plan for the GP Debtors, a Section 363 Sale, or a motion
for substantive consolidation of the GP Debtors and GLP, then the Creditors
Committee or GLP may require Loral to satisfy such elements by, as selected by
agreement of the Creditors Committee, GLP, and Loral (which agreement such
parties shall use their best efforts to reach), one of the following (so long as
the option chosen would provide GLP with the Benefits): (a) assignment to New
Globalstar of the Loral Entities' entire equity interest in LQP; (b) obtaining
dismissal of the chapter 11 cases of one or more of the GP Debtors as
appropriate and then a transfer of the Benefits to GLP or New Globalstar, as
applicable; (c) continuing to hold such license and/or agreements for the
benefit of GLP or New Globalstar, as applicable, to the same extent held today
for GLP; or (d) such other means as may be determined to be reasonably
satisfactory by GLP or New Globalstar, Loral and the Creditors Committee.
9.4. Release Revocation Motion.
9.4.1 Motion. If notwithstanding all of the above, the
Benefits have not been realized by GLP on or before the Deadline, then GLP, the
Creditors Committee, or a trustee on behalf of GLP shall have the right, for a
period of 120 days after such Deadline, to file a motion in the Reorganization
Case seeking to revoke the Loral Release, with the sole basis for granting the
relief requested being the failure of GLP to realize the Benefits prior to the
Deadline, and with the effect that any such revoked Loral Release and any
reciprocal release shall be null and void ab initio and of no force and effect.
9.4.2 Defenses. Notwithstanding the failure of Globalstar to
realize the Benefits before the Deadline, such revocation motion shall be denied
if: (a) such Benefits were in fact
30
received by GLP or New Globalstar; (b) such inability to realize the Benefits
was caused by (x) the inability to obtain any requisite FCC or other required
regulatory approvals; (y) the material breach by GLP or the Creditors Committee
of any of its respective obligations hereunder; or (z) the selection by the
Creditors Committee and/or GLP of one bidder despite the fact that another
qualifying bidder, whose bid is not materially less favorable to GLP as an
economic matter, would not have precluded GLP's ability to obtain the Benefits;
or (c) such motion is not conditioned on compliance with the terms of Section
8.4(a) hereof.
9.4.3 Process. In connection with any such release revocation
motion:
(a) No evidence of the Loral Entities' or Loral
Designees' conduct prior to the Approval Date shall
be admissible;
(b) GLP, the Creditors Committee or a chapter 7 trustee
for GLP, as applicable, shall have the burden of
making a prima facie case that GLP did not realize
the Benefits on or before the Deadline and if that
burden has been met, Loral shall have the burden of
proof to establish that GLP did receive such Benefits
or to establish any of the other defenses above that
would prevent revocation of the Loral Release
notwithstanding GLP's failure to realize such
Benefits; and
(c) consummation of (i) a Reorganization Plan or (ii)
a Section 363 Sale (in each case, at any time,
including after the Deadline) or the inability to
return to any party any consideration or nullify any
release that it provided pursuant to the Rule 9019
settlement (e.g., such as confirmation of a
reorganization plan for GLP that utilizes assets
contributed by Loral) shall preclude any such motion
to revoke the Loral Release.
31
9.4.4 Further Assurances. Following the Closing Date, each of
the Parties will cooperate as another Party may reasonably request with all
applications for all regulatory approvals necessary or appropriate to effect the
consummation of the contemplated transactions.
ARTICLE 10 -- THE PLAN(S)
To the extent, if any, any of the following terms do not
result from the Rule 9019 Motions, any motion for substantive consolidation of
GLP and the GP Debtors, a Section 363 Sale, and/or a chapter 11 plan for the GP
Debtors, the Parties shall use their reasonable best efforts to develop and seek
confirmation of a Plan containing the following provisions and including no
other provisions in such Plan inconsistent with this Settlement Agreement:
10.1. GP Debtors Release. All claims against the GP Debtors
based solely on any such entity being a direct or indirect general partner of
the Debtors shall be released in exchange for LQP transferring to GLP LQP's
stock ownership interest in L/Q Licensee or authorizing the assignment by L/Q
Licensee of the FCC Big Xxx license to GLP and such GP Debtors consenting to the
termination of the Strategic Agreements to the extent provided in this
Settlement Agreement or such other resolution of such issues permissible under
this Settlement Agreement.
10.2. New Globalstar Board Seats. The Creditors Committee of
GLP shall have the right to designate individuals to fill not less than four
seats on the board (or similar governance body) of New Globalstar. Loral shall
receive the right to designate an individual to fill one of those four board
seats. Notwithstanding the introductory paragraph of Article 10, solely as to
the first sentence of this Section 10.2, GLP's obligation shall be limited to
not taking any action to impair efforts to achieve the right to those four
seats. The good faith approval by the Creditors Committee of an investment or
sale proposal for GLP that would preclude such four seats on the board shall not
constitute a breach of this Settlement Agreement.
32
10.3. Vendor Financing Claims. The Vendor Financing Claims
allowed pursuant to Section 7.2 hereof shall be treated the same as all other
Allowed General Unsecured Claims (other than Convenience Claims).
10.4. Third Party Releases. The Loral Entities and their
Representatives and the General Partners Committee Members shall be the
beneficiaries of the broadest Third Party Releases available by law.
10.5. Loral Claims Other Than Vendor Financing Claims.
10.5.1 Reduction of Loral Claims Upon Full Third Party
Release. Provided that the Loral Entities' Allowed General Unsecured Claims are
treated the same as all other Allowed General Unsecured Claims (other than
Convenience Claims), when a Confirmation Order consistent with this Settlement
Agreement, and not containing terms otherwise materially adverse to Loral,
becomes a Final Order, the Loral Entities' Allowed General Unsecured Claims
(exclusive of the Vendor Financing Claims) shall be reduced by $437.5 million
(i.e., from $875 million to $437.5 million plus the Additional Amount), and the
consideration payable under the Plan in regard to the Loral Entities' remaining
Claims (i.e., $437.5 million) shall be reallocated among the parties (other than
the Loral Entities) bound by the Third Party Releases granted in favor of the
Loral Entities under the Plan.
10.5.2 Reduction of Loral Claims Upon Limited Third Party
Release. If the Loral Entities do not receive Third Party Releases that bind all
creditors and equity holders of the Debtors, then, instead of the Loral Entities
Allowed General Unsecured Claims being reduced from $875 million to $437.5
million plus the Additional Amount, the Loral Entities' Allowed General
Unsecured Claims shall be reduced to an Allowed General Unsecured Claim of $455
million plus the Additional Amount, and the distributions allocable to the
remainder of the Loral
33
Entities' Allowed General Unsecured Claims (i.e., $420 million) shall be
allocated among the creditors (other than the Loral Entities) who are bound by
the Third Party Releases.
10.5.3 GTL Warrants. To the extent, if any, warrants in New
Globalstar are to be issued under the Plan and distributed to holders of GTL
equity, such warrants shall be distributed to Loral or its designee (unless such
receipt materially would impact on confirmation of the Plan); provided, however,
that all such warrants must be distributed to GTL equity holders or surrendered
to New Globalstar.
10.6. Extension of Releases Pursuant to Plan. This Settlement
Agreement shall be ratified and the releases granted pursuant hereto, including
the Loral Release and the releases of the members of the General Partners
Committee, shall be extended to cover the period from the Approval Date through
the Confirmation Date.
ARTICLE 11 -- CONDITIONS TO CLOSING; TERMINATION
11.1. Conditions to Closing. Except for Articles 11, 12, and
13 hereof, the obligations of the Parties hereunder are conditioned upon the
satisfaction of each of the following conditions, which conditions are for the
mutual benefit of the Parties:
11.1.1 As of the Closing Date, the Approval Order shall have
become a Final Order, unless such condition is waived in writing by Loral.
11.1.2 All requisite consents to the transactions contemplated by this
Settlement Agreement under credit agreements and indentures to which Loral or
any of its subsidiaries is a party shall have been duly obtained. Loral shall
seek any such consents as soon as practicable and update the other Parties from
time to time regarding the status of such consents.
11.2. Termination. This Settlement Agreement may be terminated
only as provided below:
34
11.2.1 GLP, the Creditors Committee and Loral may terminate
this Settlement Agreement by mutual written consent at any time prior to the
Closing Date.
11.2.2 Loral, GLP or the Creditors Committee may terminate
this Settlement Agreement at any time upon written notice to each other if the
Approval Date has not occurred by May 30, 2003.
11.3. Effect of Termination. In the event of the termination
of this Settlement Agreement pursuant Section 11.2 hereof, all obligations of
the Parties hereunder will terminate without any liability of any Party to any
other Party under this Settlement Agreement, and the Parties shall retain all
rights, remedies, defenses, obligations and liabilities existing as of the date
immediately prior to the execution of this Settlement Agreement.
ARTICLE 12 -- REPRESENTATIONS AND WARRANTIES
12.1. Legal Capacity to Contract. Subject to entry of the
Approval Order and, as to the GP Debtors, a corresponding order in their chapter
11 cases, each Party represents that it has the requisite power, authority and
legal capacity to make, execute, enter into and deliver this Settlement
Agreement and to fully perform its duties and obligations under this Settlement
Agreement, and that neither this Settlement Agreement nor the performance by the
Parties of any duty or obligation under this Settlement Agreement will violate
any other contract, contract amendment, supplement, agreement, covenant or
restriction by which such Party is bound.
12.2. No Prior Interests. Each Party represents that it has
not transferred or assigned to any third party any right, interest, claim,
obligation, or Cause of Action being transferred, conveyed, released or
compromised pursuant to this Settlement Agreement, and such Party shall
indemnify all other Parties from and against any third party claim asserting
such a transfer or assignment of any such right, interest, claim, obligation, or
Cause of Action.
35
12.3. No Admission of Liability. The execution of this
Settlement Agreement by any Party does not constitute, imply or evidence the
truth of any claim, the admission of any liability, the validity of any defense
or the existence of any circumstances or fact, which could constitute a basis
for any claim, liability or defense, other than the purpose of enforcing the
terms and provisions of this Settlement Agreement.
12.4. No Other Representations and Warranties. Each Party
agrees that no representations, warranties, or promises other than those set
forth in this Settlement Agreement were made by any Party or any employee, agent
or legal counsel of any Party to induce said Party to execute this Settlement
Agreement.
12.5. Loral Representations.
12.5.1 Operation of the Globalstar Satellite Constellation.
Loral represents that, to the best of its knowledge as of the date hereof, other
than as described in the Anomaly Investigation Final Report, dated May 7, 2002,
in the Memorandum, dated February 28, 2003, from Xxxx Xxxxxxxx to Xxxx Xxxx
Xxxxxxx Xxxxx & Xxxx LLP and in the Memorandum, dated April 8, 2003 from Xxxx
Xxxxxxxx to Akin Gump Xxxxxxx Xxxxx & Xxxx LLP, Loral is not aware of any facts,
conditions, or anomalies that would have a material adverse effect on the
operation of the Globalstar satellite constellation. The foregoing
representation shall not constitute a warranty as to the condition of the
Globalstar satellite constellation or otherwise and shall expire upon the
earlier of: (a) the consummation of a GLP Plan or a Section 363 Sale; or (b)
December 31, 2004.
12.5.2 Spare Satellites. SS/L represents that, to its
knowledge as of the date hereof, during the periods the Spare Satellites were in
SS/L's possession they were stored in a manner not materially less favorable to
GLP than the standards provided for in the Satellite
36
Contract. The foregoing representation shall not constitute a warranty as to the
condition or otherwise regarding the Spare Satellites and shall expire on the
Closing Date.
ARTICLE 13 -- MISCELLANEOUS
13.1. Independent Parties. The Globalstar Entities, the GP
Debtors and the Loral Entities are independent parties and nothing herein shall
make any of the Globalstar Entities, the GP Debtors, or the Loral Entities an
agent, partner or joint venturer of the other, except to the extent expressly
provided herein.
13.2. Successors. The provisions of this Settlement Agreement
shall be binding upon and inure to the benefit of the Parties and the respective
successors and assigns of each of the Parties, including, without limitation,
any trustee appointed in the Reorganization Cases as the representative of the
estates of the Debtors, or any other Representative of the Parties who qualifies
in a case under the Bankruptcy Code or in connection with any other state,
provincial, or federal proceeding. Without limiting the generality of the
foregoing, GLP may assign its rights and obligations under this Settlement
Agreement to New Globalstar, including pursuant to a Section 363 Sale or in
accordance with the terms of a Confirmation Order. The terms and conditions of
this Settlement Agreement shall survive:
(a) the entry of any subsequent order converting all or
any of the Reorganization Cases from chapter 11 cases
under the Bankruptcy Code to chapter 7 cases under
the Bankruptcy Code;
(b) the appointment of any trustee in all or any of the
Reorganization Case or in any ensuing chapter 7 cases
under the Bankruptcy Code;
(c) the confirmation of a Plan under the Bankruptcy Code
in all or any of the Reorganization Cases;
(d) the dismissal of all or any of the Reorganization
Cases or entry of an order withdrawing the reference
of all or any of the Reorganization Cases from the
Bankruptcy Court; or
37
(e) an order from the Bankruptcy Court abstaining from
handling all or any of the Reorganization Cases.
13.3. Notice. All notices and communications concerning this
Settlement Agreement shall be in writing, be effective upon receipt, and
addressed to the parties hereto as follows:
If to the Creditors Committee:
Xxxxxx X. Xxxxxx, Esq.
Xxxxxxx X. Xxxx, Esq.
Akin Gump Xxxxxxx Xxxxx & Xxxx LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
If to any Globalstar Entity:
Xxxxxxx Xxxxx, Esq.
Globalstar, L.P.
0000 Xxxxxx Xxxx
Xxx Xxxx, XX 00000
With a copy to:
Xxxx X. Xxxxx, Esq.
Xxxxx Day Xxxxxx & Xxxxx
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
If to any Loral Entity:
c/o Xxxxxxx Xxxx
Loral Space & Communications Ltd.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
With a copy to:
Xxx Xxxx, Esq.
Vice President, General Counsel and Secretary
Loral Space & Communications Ltd.
38
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Xxxx X. Xxxxxx, Esq.
Xxxxxxx Xxxx & Xxxxxxxxx
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
If to any GP Debtor:
Xxx Xxxx, Esq.
Vice President, General Counsel and Secretary
Loral Space & Communications Ltd.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
With a copy to:
Xxxxx Xxxxxxxx, Esq.
Xxxxxx Xxxxxxxx
0000 Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxxx, XX 00000
or at such other address as may be designated in writing to the Parties hereto.
13.4. Governing Law. This Settlement Agreement and the rights
and duties of the Parties arising hereunder shall be governed by, and construed,
enforced and performed in accordance with, the laws of the State of New York,
without giving effect to principles of conflicts of laws that would require the
application of the law of any other jurisdiction. Notwithstanding anything to
the contrary, however, any Assumed Agreements shall continue to be governed by
the laws of the jurisdiction as set forth in the "Choice of Law" provisions in
each of such agreements.
39
13.5. Retention of Jurisdiction. The parties agree that,
during the period from the date hereof until the date on which the Debtors'
Reorganization Cases are closed or dismissed (the "Bankruptcy Period"), the
Bankruptcy Court shall have exclusive jurisdiction to resolve any controversy,
claim or dispute arising out of or relating to this Settlement Agreement or any
other agreement entered into in connection herewith, or the breach hereof or
thereof. The parties further agree that, following the Bankruptcy Period, any
action or proceeding with respect to such controversy, claim or dispute may be
brought against any of the parties exclusively in the United States District
Court for the Southern District of New York, and each of the parties hereby
consents to the personal jurisdiction of such court and the Bankruptcy Court
(and to the appropriate appellate courts) in any such action or proceeding and
waives any objection, including, without limitation, any objection to the laying
of venue or on the grounds of forum non conveniens, which any of them may now or
hereafter have to the bringing of such action or proceeding in such respective
jurisdictions. Each party hereby irrevocably consents to the service of process
of any of the aforesaid courts in any such action or proceeding by the mailing
of copies thereof by registered or certified mail, postage prepaid, to the other
parties to such action or proceeding. Each party acknowledges and agrees that
any controversy which may arise under this Settlement Agreement is likely to
involve complicated and difficult issues, and therefore each party hereby
irrevocably and unconditionally waives any right such party may have to a trial
by jury.
13.6. Entire Agreement; Amendments; Joint Work Product. This
Settlement Agreement constitute the complete agreement between the Parties
related to the subject matter hereof, and supersede any prior or contemporaneous
agreements or representations affecting the same subject matter, including,
without limitation, the Settlement Term Sheet, dated as of March
40
14, 2003. No amendment, modification or change to this Settlement Agreement
shall be enforceable unless it: (a) is reduced to a writing that is executed by
the Parties against whom such amendment, modification or change is sought to be
enforced; and (b) specifically references this Settlement Agreement. This
Settlement Agreement is the joint work product of the Parties and has been
negotiated by the Parties and their respective counsel and shall be fairly
interpreted in accordance with its terms and, in the event of any ambiguities,
no inferences shall be drawn against any Party. The Parties will execute and
deliver such further agreements and other documents, seek the entry of such
court orders, and take such other actions as any of the other Parties may
reasonably request or as may be necessary or appropriate to consummate or
implement the terms of this Settlement Agreement or to evidence such events or
matters.
13.7. Counterparts. This Settlement Agreement may be executed
simultaneously in any number of counterparts, each of which when so executed and
delivered shall be taken to be an original, but such counterparts shall together
constitute but one and the same document.
13.8. Facsimile Delivery. This Settlement Agreement may be
delivered by facsimile transmission of an executed counterpart signature page
hereof, and after attachment of such transmitted signature page to a copy of
this Settlement Agreement, such copy shall have the same effect and evidentiary
value as copies delivered with original signatures. Any Party delivering this
Settlement Agreement by facsimile transmission shall deliver to the other
Parties, as soon as practicable after such delivery, an original executed
counterpart signature page of this Settlement Agreement.
13.9. Expedited Approval. Each of the Parties agrees to use
its reasonable best efforts to obtain entry of the Approval Order on or before
April 10, 2003.
41
IN WITNESS WHEREOF, the Debtors, the Creditors Committee and
the Loral Entities listed below have executed this Settlement Agreement
effective as of April 8, 2003.
Dated: April 8, 2003
OFFICIAL COMMITTEE OF UNSECURED CREDITORS
By: /s/ Xxx Xxxxxxxxxx
------------------------------
Name: Xxx Xxxxxxxxxx
----------------------------
Title: Chair
---------------------------
GLOBALSTAR, L.P.
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------
Name: Xxxxxxx X. Xxxxxxx
------------------------------
Title: President
------------------------------
GLOBALSTAR CAPITAL CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------
Name: Xxxxxxx X. Xxxxxxx
------------------------------
Title: President
------------------------------
GLOBALSTAR SERVICES COMPANY
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------
Name: Xxxxxxx X. Xxxxxxx
------------------------------
Title: President
------------------------------
GLOBALSTAR, L.L.C.
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------
Name: Xxxxxxx X. Xxxxxxx
------------------------------
Title: President
------------------------------
GLOBALSTAR USA, L.L.C.
By: /s/ Xxxxxxx X. Xxxxx
------------------------------
Name: Xxxxxxx X. Xxxxx
------------------------------
Title: Director
------------------------------
42
LORAL SPACE & COMMUNICATIONS LTD.
By: /s/ Xxxx X. Xxxxxx
------------------------------
Name: Xxxx X. Xxxxxx
Title: President and COO
SPACE SYSTEMS/LORAL, INC.
By: /s/ Xxxx X. Xxxxxx
------------------------------
Name: Xxxx X. Xxxxxx
Title: President and COO
LORAL/QUALCOMM PARTNERSHIP, L.P.
By: /s/ Xxxx X. Xxxxxx
------------------------------
Name: Xxxx X. Xxxxxx
Title: President and COO
LORAL GENERAL PARTNER, INC.
By: /s/ Xxxx X. Xxxxxx
------------------------------
Name: Xxxx X. Xxxxxx
Title: President and COO
LORAL SPACE & COMMUNICATION CORPORATION
By: /s/ Xxxx X. Xxxxxx
------------------------------
Name: Xxxx X. Xxxxxx
Title: President and COO
LORAL/DASA GLOBALSTAR, L.P.
By: /s/ Xxxx X. Xxxxxx
------------------------------
Name: Xxxx X. Xxxxxx
Title: President and COO
43
LORAL SPACECOM CORPORATION
By: /s/ Xxxx X. Xxxxxx
------------------------------
Name: Xxxx X. Xxxxxx
Title: President and COO
LORAL SATELLITE, INC.
By: /s/ Xxxx X. Xxxxxx
------------------------------
Name: Xxxx X. Xxxxxx
Title: President and COO
LORAL CYBERSTAR INTERNATIONAL, INC.
By: /s/ Xxxx X. Xxxxxx
------------------------------
Name: Xxxx X. Xxxxxx
Title: President and COO
44
SCHEDULE 1.46 - LORAL CLAIMS
FILED LIQUIDATED CLAIMS
Loral Space and Communications Ltd. $59,112,191
Loral Space & Communications $207,023,640
Corporation
Loral Satellite, Inc. $557,593,848
Space Systems/Loral, Inc. $97,167,475
Loral/DASA Globalstar, L.P. $800,000
Loral Cyberstar International, Inc. $78,930
------------
SUBTOTAL $921,776,074
LESS: MAXIMUM AMOUNT OF
VENDOR FINANCING CLAIMS $(57,000,000)
------------
$864,776,074
NOTE: THE AGGREGATE AMOUNT OF ALLOWED LORAL CLAIMS (INCLUDING
UNLIQUIDATED AND REJECTION CLAIMS) UNDER THE SETTLEMENT AGREEMENT
IS $875 MILLION, SUBJECT TO REDUCTION.
45
SCHEDULE 7.1
VENDOR FINANCING CLAIMS
(IN USD)
Alcatel Cannes 5,016,381
Alcatel Toulouse 24,834,508
DASA 20,488,334
Alenia 2,073,993
TOTAL 52,413,216
46
