Contributing Service Certain service providers will contribute their
Providers businesses and all assets associated with the
operations of their businesses free and clear of
all liens, claims and encumbrances, and will
provide certain financial support (to be
determined), to Globalstar or NewCo or one of
their wholly owned subsidiaries (collectively, the
"Contributing Service Providers"). The terms under
which such transfers will be made (certain of
which may be consummated before Globalstar
commences a chapter 11 case under the Bankruptcy
Code) will be governed by separate documentation
and structured to ensure that the substance of the
benefits associated with licenses, PSTN
interconnect agreements and other tangible and
intangible assets required to operate the
businesses of the Contributing Service Providers
are transferred to Globalstar, NewCo or one of
their wholly-owned subsidiaries in a manner that
is fully effective and enforceable against the
applicable counter-parties to the respective
agreements. The Contributing Service Providers
will be required to provide an indemnity from a
creditworthy party for the benefit of Globalstar
or NewCo and their affiliates, as applicable, with
respect to any and all liabilities not expressly
transferred or assumed.
For the purposes of this MOU, the Contributing
Service Providers shall include:
- Vodafone Limited (including any
affiliates, "Vodafone"), with respect to
its 100% interest in GUSA, 50.1%
interest in Globalstar Canada Satellite
Co. and 100% interest in Globalstar
Caribbean Ltd.
- Loral Space & Communications Ltd.
(including any affiliates, "Loral"),
with respect to its 49.9% interest in
Globalstar Canada Satellite Co.,
ATSS/Loral Netherlands B.V. and any
other equity interests or contractual
rights primarily relating to the
ownership or operation of Globalstar
gateways or service providers in Canada
(the "Loral Canadian Interest"). The
principal terms for Loral's contribution
of the Loral Canadian Interest are as
follows:
(i) Loral's contribution of the Loral
Canadian Interest shall be effected
pursuant to the Plan;
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(ii) Loral will receive a 3% equity
interest in NewCo (prior to dilution by
the IGO Option Plan and the Management
Option Plan referred to below) on
account of the contribution of the Loral
Canadian Interest;
(iii) the credit facility between
Globalstar Canada Co. and the Royal Bank
of Canada ("RBC") (including any
replacement bank(s) that Loral and/or
Globalstar secures in the event the
credit agreement with RBC is not
renewed) will remain in place for up to
four years following consummation of the
Plan and Loral will continue to maintain
its credit support for the credit
agreement in the form of a letter of
credit, currently estimated at C$15
million. It is anticipated that Loral's
obligation to provide credit support
will be reduced from time to time as the
credit facility is paid down in the
ordinary course of operations of NewCo.
Effective on consummation of the Plan,
Loral shall provide a complete waiver
and release of any and all obligations
or liabilities of Globalstar Canada Co.
("GCC"), and any and all indirect
successor obligations or liabilities, if
any, of Newco or its subsidiaries, under
that certain Agreement to Issue
Guarantee dated September 15, 1997 among
GCC, Loral, Airtouch Satellite Services,
Inc. and Airtouch Communications, Inc.
or any other agreement under which GCC
or the other companies contained in the
meaning of "Loral Canadian Interest" or
Newco or its subsidiaries are obligated
to reimburse Loral for payments it may
make or liability it may incur in
connection with its credit support of
the RBC credit facility;
(iv) to the extent amounts due to
Globalstar L.P. from Globalstar Canada
Co. in connection with the gateway
procurement contract are attributable to
Loral's ownership interest in Globalstar
Canada Co., such amounts not to exceed
$2.5 million shall be subject to offset
against amounts otherwise due prior to
the commencement of Globalstar's chapter
11 cases by Globalstar L.P. or any of
its subsidiaries to Loral or any of its
subsidiaries; and
(v) Loral will provide an indemnity to
NewCo to cover 49.9% of the liabilities
of Globalstar Canada Satellite Co. and
to cover Loral's proportionate share of
the liabilities of the other Globalstar
Canadian companies or the other
companies contained in the meaning of
"Loral Canadian Interest" in which it
has an interest, in either case, which
liabilities (i) arise or accrue and (ii)
are not expressly transferred or
assumed, in each case, as of the date of
consummation of the Plan (it being
understood that such indemnity shall not
apply to trade liabilities arising in
the ordinary course of business).
There may be additional Contributing Service
Providers in the future. The terms of such
additional rollup transactions shall be negotiated
on a case-by-case basis.
Certain service providers that do not constitute
Contributing Service Providers may choose to
continue to operate as independent gateway
operators ("IGOs") and purchase wholesale airtime
(at rates described in Globalstar's business plan)
from Globalstar (and/or after the Plan is
consummated, from NewCo) and resell it in their
existing territories. Such future IGO
relationships will be governed by new agreements
between Globalstar (subject to the consent of
Loral and the Informal Committee solely to the
extent such agreements are to be entered into
after execution of this MOU and prior to
commencement of Globalstar's chapter 11 cases) or
NewCo (subject to Board approval), as the case may
be, and the respective IGOs that will contain
terms relating to, among other things,
coordination of rates, billing and the
non-exclusive nature of their rights to provide
Globalstar services in their respective
territories. |
