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PARTNERSHIP INTEREST
PURCHASE
AGREEMENT
among
GSSI, LLC
GLOBALSTAR,
INC.
LORAL/DASA GLOBALSTAR,
L.P.
GLOBALSTAR DO BRASIL
S.A.
LORAL/DASA DO BRASIL
HOLDINGS LTDA.
LORAL HOLDINGS
LLC
GLOBAL DASA
LLC
LGP
(BERMUDA) LTD.
MERCEDES-BENZ DO
BRASIL LTDA.
(f/k/a DAIMLERCHRYSLER DO BRASIL LTDA.)
and
LORAL SPACE &
COMMUNICATIONS INC.
December 21,
2007
1
TABLE OF CONTENTS
2
PARTNERSHIP INTEREST
PURCHASE AGREEMENT
THIS
PARTNERSHIP INTEREST PURCHASE AGREEMENT (the “
Agreement ”) is made and entered into this 21st day of
December, 2007, by and among GSSI, LLC, a Delaware limited
liability company (“ Buyer ”), Globalstar, Inc.,
a Delaware corporation (“ Globalstar ”),
Loral/DASA Globalstar, L.P., a Delaware limited partnership
(“ LDG ”), Globalstar do Brasil, S.A., a
Brazilian corporation (the “ Operating Subsidiary
”), Loral/DASA do Brasil Holdings Ltda., a Brazilian limited
liability company (“ Holdings ”), (LDG, the
Operating Subsidiary and Holdings each, a “ Subsidiary
” and collectively, the “ Subsidiaries ”),
Loral Holdings LLC, a Delaware limited liability company (“
Loral Holdings ”), Global DASA LLC, a Delaware limited
liability company (“ DASA ”) (Loral Holdings and
DASA collectively, “ Sellers ”), LGP (Bermuda)
Ltd., a Bermuda company (“ LGP ”), Mercedes-Benz
do Brasil Ltda. (f/k/a DaimlerChrysler do Brasil Ltda.), a
Brazilian limited liability company (“ MBBras ,”
LGP and MBBras collectively, the “ Quota Sellers
”), and Loral Space & Communications Inc., a Delaware
corporation (“ Loral Space ”).
WHEREAS,
Globalstar is the ultimate parent of Buyer and Loral Space is the
ultimate parent of Loral Holdings and LGP;
WHEREAS,
Sellers own all of the partnership interests of LDG (the “
Interests ”), with Loral Holdings owning a 73.34%
general partner interest and DASA owning a 26.66% limited partner
interest;
WHEREAS,
LDG in turn directly or indirectly owns all of the outstanding
ownership interests of the other Subsidiaries, except for three
single quotas representing less than 0.0001% of Holdings’
total capital, two of which quotas are held by LGP and one of which
quotas is held by MBBras (the “ Quotas ”);
WHEREAS,
the Operating Subsidiary operates three Globalstar gateways in
Manaus, Presidente Prudente and Petrolina, Brasil, and sells mobile
satellite telephony and data services using the Globalstar network
of low earth orbiting satellites (collectively, the “
Business ”);
WHEREAS,
Sellers desire to sell the Interests to Buyer and Buyer desires to
purchase the Interests; and
WHEREAS,
the Quota Sellers desire to assign and transfer the Quotas to Buyer
and Buyer desires to receive the Quotas, so that after Closing
Holdings continues to have two partners, as required by applicable
Brazilian law.
NOW,
THEREFORE, the parties agree as follows:
1.
The Acquisition .
(a)
Purchase and Sale . Subject to the terms and conditions of
this Agreement, at the Closing (as defined below), Sellers will
sell and transfer the Interests to Buyer, free and clear of all
Encumbrances, and Buyer will purchase the Interests from Sellers.
The Interests shall be conveyed through a Transfer Agreement,
substantially in the form of Exhibit A attached
hereto.
(i) At the
Closing, the Quota Sellers shall also transfer the Quotas to Buyer
in exchange for a US$1.00 payment. For such purpose, Buyer, LDG,
LGP and MBBras shall execute an Amendment to the Articles of
Association of Holdings substantially in the form of
Exhibit B-1 attached hereto (the “
Amendment ”). An unofficial English translation of the
Amendment is attached hereto as Exhibit B-2 . The
Amendment shall also provide for a change in the corporate name of
Holdings to “Globalstar do Brasil Holdings Ltda.”
Holdings shall, and Buyer and Globalstar shall cause Holdings to,
timely file the Amendment with the Board of Trade promptly
following the Closing.
(b)
Purchase Price . The purchase price for the Interests (the
“ Purchase Price ”) shall be a number of fully
paid and nonassessable shares of Globalstar, Inc. common stock, par
value US$0.0001 per share (the “ Globalstar Stock
”), equal to the quotient of (i) Six Million Five Hundred
Thousand U.S. Dollars (US$6,500,000) less the Outstanding Service
Fees (as defined below) divided by (ii) the Adjusted
Globalstar Stock Price. The “ Adjusted Globalstar Stock
Price ” means the average of the closing price per share
of the Globalstar Stock as reported by the NASDAQ Stock Market for
the 10 trading-day period ending upon the third trading day
immediately preceding the Closing Date. The “ Outstanding
Service Fees ” means all amounts due to Globalstar on the
Closing Date under that certain Satellite Capacity Leasing
Agreement, Agreement #GLLC-C-04-0161 between Globalstar LLC and the
Operating Subsidiary dated as of May 1, 2004, as amended by
the Amendment thereto dated as of May 1, 2004 and by the
Addendum thereto dated as of May 1, 2004 and as assigned to
LDG pursuant to the Assignment and Assumption Agreement between the
Operating Subsidiary and LDG dated as of July 31, 2005 (as
amended and assigned, the “ Satellite Services
Agreement ”), after giving effect to all and any
discounts, rebates and deductions granted to LDG by Globalstar
(which discounts, rebates and deductions shall be no less than
those accorded by Globalstar to other independent gateway
operators). The parties acknowledge and agree that, as of the date
hereof and after giving effect to all applicable discounts, rebates
and deductions, US$790,407.89 is due and owing from LDG to
Globalstar under the Satellite Services Agreement for services
rendered during periods to and including October 31, 2007 and
that the discount to which LDG is entitled with respect to services
rendered for periods commencing on or after November 1, 2007
is 50% (or such greater discount as may be accorded by Globalstar
to other independent gateway operators for such periods). The
parties further acknowledge and agree that the Operating Subsidiary
has received a portion of the CISA Tax Reimbursements (as defined
below), and, therefore, a portion of the Outstanding Services Fees
shall be paid by LDG (or the Operating Subsidiary at LDG’s
direction) to Globalstar in accordance with Section 7(a) hereof.
The parties (including Sellers) agree and acknowledge that the
Globalstar Stock issued as the Purchase Price shall be issued by
Globalstar directly to Loral Space (rather than to any of Sellers).
For the avoidance of doubt, the parties hereto acknowledge and
agree that no right of payment from LDG or the Operating Subsidiary
in favor of Sellers or Loral Space shall arise as a result of
treatment of the Outstanding Service Fees provided for herein.
(c)
Closing Account Balance Schedule . Buyer and Globalstar
shall provide to Sellers, the Operating Subsidiary and Loral Space
a notice (the “ Estimated Closing Date Notice ”)
setting forth their good faith estimate as to when the conditions
to Sellers’ Obligations set forth in Section 9 of this
Agreement are expected to be satisfied. Upon receipt of the
Estimated Closing Date Notice, the Operating Subsidiary shall, and
Loral Space shall cause the Operating Subsidiary to, prepare, and,
on the date which is three (3) business days prior to Closing,
the Operating Subsidiary shall, and Loral Space shall cause the
Operating Subsidiary to, deliver to Buyer and Globalstar a schedule
of selected account balances in the form of Exhibit C
attached hereto (the “ Closing Account Balance
Schedule ”) for the Operating Subsidiary, representing
the Operating Subsidiary’s and Loral Space’s good faith
estimate of such selected accounts of the Operating Subsidiary as
of the Closing Date, and including, without limitation,
identification of the liabilities appearing on such Closing Account
Balance Schedule for which Loral Space will be responsible after
Closing in accordance with the terms of this Agreement (the “
Loral Liabilities ”). It is understood and agreed by
Buyer and Globalstar that the Operating Subsidiary and Loral Space
are not making and will not make any representation or warranty as
to the completeness or accuracy of the Closing Account Balance
Schedule, that the actual final amounts of such accounts of the
Operating Subsidiary may differ from Loral Space’s good faith
estimate and that Loral Space shall have no liability and neither
Buyer nor Globalstar shall have any claim for indemnification under
this Agreement based upon, arising out of or otherwise in respect
of the Operating Subsidiary’s and Loral Space’s
delivery of the Closing Account Balance Schedule or the content
thereof.
(d)
Capital Gains Tax . Any capital gains tax imposed by any
governmental authority on Sellers as a result of this Agreement
shall be exclusively borne by Sellers and such cost is deemed by
the parties as included in the Purchase Price provided for by
Section 1(b).
2.
Closing . The closing (“ Closing ”) of
the transactions provided for herein shall take place at the
offices of Taft Stettinius & Hollister LLP, 425 Walnut Street,
Cincinnati, Ohio 45202 at 10:00 a.m. Eastern time, not later
than the tenth business day following the date on which all
conditions precedent (other than those to be fulfilled at the
Closing) have been satisfied as provided in Sections 8 and 9
below or waived, or at such other date and time as may be mutually
agreed by the parties (such date and time of closing to be referred
to herein as the “ Closing Date ”).
3.
Representations and Warranties of Loral Holdings and the
Subsidiaries . As of the date of this Agreement and as of the
Closing Date, Loral Holdings (in its capacity as general partner of
LDG) and each Subsidiary, jointly and severally, represent and
warrant to Buyer and Globalstar as follows, except as otherwise set
forth on a correspondingly numbered schedule delivered by Loral
Holdings and the Subsidiaries to Buyer and Globalstar dated as of
the date hereof, the “ Seller Disclosure Schedule
”):
(a)
Organization . Loral Holdings and each Subsidiary is duly
organized, validly existing and in good standing under the laws of
its jurisdiction of organization. No Subsidiary is required to be
qualified to do business in any jurisdiction other than as set
forth on Section 3(a)(i) of the Seller Disclosure Schedule, which
also describes the corporate structure, name of the partners and
number of shares held by them as to Loral Holdings and each
Subsidiary, except where the failure to be so qualified would not
reasonably be expected to have a material adverse effect on the
Assets or the operation of the Business. Except as otherwise
restrained by existing Encumbrances on the Assets set forth in
Section 3(e) of the Seller Disclosure Schedule, the Operating
Subsidiary has full corporate power and authority to own, lease,
and operate the assets it owns, leases or operates and to carry on
the Business as it has been and is presently conducted. Except as
set forth in Section 3(a)(ii) of the Seller Disclosure
Schedule, Subsidiaries other than the Operating Subsidiary are
holding companies with no liabilities other than liabilities that
with respect to each such Subsidiary do not exceed US$100,000, no
contracts other than contracts with other Subsidiaries or
Globalstar and no employees other than statutory officers. The
copies of the articles of incorporation, by-laws, partnership
agreement or other governing documents of each Subsidiary delivered
pursuant to Section 10(b) are complete and reflect all amendments
thereto through the date hereof.
(b)
Authority .
(i) Each Subsidiary has full power and authority to execute
and deliver this Agreement and each of the other agreements and
documents entered into in connection with this Agreement and the
Closing (collectively, the “ Transaction Documents
”) to which it is or will be a party, and to perform its
obligations hereunder and thereunder. This Agreement and each other
Transaction Document to which any Subsidiary is or will be a party
has been duly authorized by all necessary and proper action of such
Subsidiary and constitute (or, when delivered, will constitute) the
valid and legally binding obligations of such Subsidiary,
enforceable against such Subsidiary in accordance with their
respective terms, except to the extent enforceability may be
limited by bankruptcy, insolvency, moratorium or other similar laws
affecting the enforcement of creditors’ rights generally.
Except as set forth in Section 3(b) of the Seller Disclosure
Schedule, neither the execution and delivery of this Agreement or
any other Transaction Document by any Subsidiary nor the
consummation of the transactions contemplated hereby or thereby
will violate or conflict with, result in the breach of, accelerate
the performance required by, constitute a default under, or require
the approval or consent of any third party under, (i) any
provision of any order, ruling, judgment or decree of any court or
any agency of government, (ii) the governing documents of any
Subsidiary, or (iii) any mortgage, note, debt instrument,
lease or any other contract or agreement, written or oral, to which
any Subsidiary is a party or by which it or any of its assets or
any of the Interests are bound or affected, or will be an event
which, after notice or lapse of time or both, will result in any
such violation, conflict, breach, acceleration or default, or will
result in the creation of a lien, charge or encumbrance on any of
such Subsidiary’s assets or any of the Interests transferred
hereunder, except, in the case of clause (iii) of this
subsection, for such violations, conflicts, breaches,
accelerations, defaults, approvals or consents that would not
reasonably be expected to have a material adverse effect on the
Assets or the operation of the Business.
(ii) Loral Holdings has full power and authority to execute
and deliver this Agreement and each other Transaction Document to
which it is a party and perform its obligations hereunder and
thereunder. This Agreement and each other Transaction Document to
which it is a party has been duly authorized by all necessary
action of Loral Holdings and constitute (or, when delivered, will
constitute) the valid and legally binding obligations of Loral
Holdings, enforceable against Loral Holdings in accordance with
their respective terms, except to the extent enforceability may be
limited by bankruptcy, insolvency, moratorium or other similar laws
affecting the enforcement of creditors’ rights generally.
Except as set forth in Section 3(b) of the Seller Disclosure
Schedule, neither the execution and delivery of this Agreement or
any other Transaction Document by Loral Holdings nor the
consummation of the transactions contemplated hereby or thereby
will violate or conflict with, result in the breach of, accelerate
the performance required by, constitute a default under, or require
the approval or consent of any third party under, (i) any
provision of any order, ruling, judgment or decree of any court or
any agency of government, (ii) the certificate of
incorporation or bylaws of Loral Holdings, or (iii) any
mortgage, note, debt instrument, lease or any other contract or
agreement, written or oral, to which Loral Holdings is a party or
by which it is bound or affected, or will be an event which, after
notice or lapse of time or both, will result in any such violation,
conflict, breach, acceleration or default, except, in the case of
clause (iii) of this subsection, for such violations,
conflicts, breaches, accelerations, defaults, approvals or consents
that would not reasonably be expected to have a material adverse
effect on the Assets or the operation of the Business.
(c)
Taxes . Except as set forth in Section 3(c) of the Seller
Disclosure Schedule, there are no Encumbrances over the Assets of
the Subsidiaries related to tax matters.
(d)
Ownership .
(i) The Interests are, and will be as of the Closing Date, the
only issued and outstanding partnership interests of LDG. Sellers
are, and will be as of the Closing Date, the record and beneficial
owners of the Interests, free and clear of all Encumbrances. No
legend or references to any purported Encumbrances appear on any
certificate representing the Interests, and none of the Interests
were issued in violation of the Securities Act of 1933, as amended
(the “ Securities Act ”) or regulations
promulgated thereunder. The Interests have been duly authorized and
are fully paid and nonassessable. Except as set forth in Section
3(d) of the Seller Disclosure Schedule, there are no contracts
relating to the issuance, sale, or transfer of any ownership
interests or other securities of LDG. LDG does not own, or have any
contract to acquire, any ownership interests or other securities of
any person or any direct or indirect equity or ownership interest
in any other business, except the other Subsidiaries.
(ii) Except for the LGP Quotas, all of the outstanding
ownership interests and other securities of each Subsidiary not
held by LDG (“ Equity Securities ”) are owned by
one or more Subsidiaries, free and clear of all Encumbrances. No
legend or references to any purported Encumbrances appear on any
certificate representing the Equity Securities, and none of the
Equity Securities were issued in violation of the Securities Act or
regulations promulgated thereunder or any similar law of any
governmental body. The Equity Securities have been duly authorized
and are fully paid and nonassessable. Except as set forth in
Section 3(d) of the Seller Disclosure Schedule, there are no
contracts relating to the issuance, sale or transfer of any Equity
Securities, and no Subsidiary owns, or has any contract to acquire,
any ownership interests or other securities of any person or any
direct or indirect equity or ownership interest in any other
business, except the other Subsidiaries.
(e)
Title to Assets; Sufficiency .
(i) The Operating Subsidiary has good, marketable, fee simple
title to, and has sole possession and control of, each of the
assets owned by it (the “ Assets ”), free and
clear of all mortgages, liens, pledges, charges, claims,
restrictions, defects of title or other encumbrances or rights of
others (collectively, “ Encumbrances ”), except
for any Encumbrances described on Section 3(e) of the Seller
Disclosure Schedule.
(ii) Section 3(e) of the Seller Disclosure Schedule
contains a list of real property in which the Operating Subsidiary
has an ownership interest (the “ Owned Real Property
”), and all leases of real property in which the Operating
Subsidiary has a leasehold interest (the “ Leased Real
Property ” and collectively with the Owned Real Property,
the “ Real Property ”). The Real Property
represents all real properties currently used in the Business.
Except as set forth on Section 3(a) of the Seller Disclosure
Schedule, use of the Real Property for the various purposes for
which it is presently being used is permitted as of right under all
applicable zoning legal requirements. All improvements to the Real
Property are in compliance in all material respects with all
applicable laws and regulations and are, and on the Closing Date
will be, in all material respects, in a condition that allows them
to be used to operate the Business as currently conducted. No part
of any improvement to the Real Property encroaches on any real
property not included in the Real Property, and there are no
buildings, structures, fixtures or other improvements primarily
situated on adjoining property which encroach on any part of the
Real Property. Each parcel of Real Property abuts on and has direct
vehicular access to a public road or has access to a public road
via a permanent, irrevocable, appurtenant easement benefiting such
Real Property and comprising a part of the Real Property, is
supplied with public or quasi-public utilities and other services
appropriate for the operation of the facilities located
thereon.
(iii) The Assets, together with the other rights held by the
Subsidiaries, constitute all of the assets and rights necessary to
operate the Business in all material respects as currently
conducted.
(f)
Machinery, Equipment, Etc. The Operating Subsidiary has good
title to all machinery, equipment and any other tangible personal
property owned by the Operating Subsidiary or used in the Business,
which have been, and until the Closing will be, maintained in all
material respects in accordance with good maintenance policies and
practices and are, and on the Closing Date will be, in all material
respects, in a condition that allows them to be used to operate the
Business as currently conducted.
(g)
Financial Statements; Undisclosed Liabilities . Prior to
Closing, LDG, the Operating Subsidiary and Holdings will deliver to
Buyer true and correct copies of (i) an unaudited separate
company balance sheet of such Subsidiary at December 31, 2006
(each a “ Balance Sheet ” and collectively, the
“ Balance Sheets ”), and the related unaudited
statements of income, shareholders’ equity and cash flows for
the 12 months then ended, including the notes thereto, and
(ii) an unaudited separate company balance sheet of such
Subsidiary at June 30, 2007, and the related unaudited
statements of income, shareholders’ equity, and cash flows
for the six months then ended (collectively, the “
Financial Information ”). All of the Financial
Information, when delivered, will be true and complete and will
fairly present in all material respects the assets, liabilities,
financial condition and results of operations of each Subsidiary at
such dates and for such periods, all in accordance with U.S. or
Brazil (as the case may be) generally accepted accounting
principles consistently applied throughout the periods involved
(except as set forth on Section 3(g) of the Seller Disclosure
Schedule and, in the case of interim statements, which do not
contain footnotes and are subject to year-end adjustments). No
Subsidiary has any liabilities, obligations or contingencies
(whether absolute, accrued or contingent) (each a “
Liability ” and collectively, “
Liabilities ”) of a type described in clauses (x),
(y) or (z) of Section 12(a) hereof, and, to each
Subsidiary’s knowledge, no such Subsidiary has any other
Liabilities, except in each case (i) Liabilities that are
accrued or reserved against in its most recent balance sheet or as
otherwise indicated or reflected in the notes thereto; (ii)
additional Liabilities reserved against since the date of such
balance sheet (the “ Balance Sheet Date ”) that
have arisen in the ordinary course of business and are accrued or
reserved against on the books and records of such Subsidiary;
(iii) additional Liabilities that are expressly provided for
in any Contracts that are not required to be reflected in such
Subsidiary’s financial statements under U.S. or Brazil (as
the case may be) generally accepted accounting principles; and
(iv) other potential or actual Liabilities directly or
indirectly related to or resulting from the issues and matters
listed in Section 3(g) of the Seller Disclosure Schedule.
(h)
Inventory . Upon the consummation of the transactions
contemplated hereunder, the inventory of the Subsidiaries
(including any inventory located in the United States and/or
Canada) shall be indirectly acquired by Buyer “as is.”
Except as set forth on Section 3(h) of the Seller Disclosure
Schedule, the Subsidiaries are not in possession of any inventory
not owned by them, including goods already sold. A list of the
inventory of the Subsidiaries located outside Brazil as of
October 16, 2007 is set forth on Section 3(h) of the Seller
Disclosure Schedule.
(i)
Casualty . Since December 31, 2006, the Assets have not
been affected by any theft, fire, explosion, accident, flood,
drought, storm, earthquake, embargo, act of God or any public enemy
or other casualty, whether or not insured, that in any way has
materially impaired or could reasonably be expected to impair
materially the Business or has materially adversely affected or
could reasonably be expected to materially affect the value of any
of such Assets.
(j)
Insurance. The Operating Subsidiary has provided or made
available to Buyer a copy of all insurance policies and all
self-insurance programs and arrangements relating to the Business
and the Assets. All premiums due and payable under all such
policies have been paid and the Operating Subsidiary is not
otherwise in material default under the terms of such policies. As
of the date of this Agreement, the Operating Subsidiary had not
received notice of any threatened termination of, or premium
increase with respect to, any such policies.
(k)
Contracts . Section 3(k) of the Seller Disclosure Schedule
lists all of the contracts and agreements in effect as of
September 30, 2007 to which any Subsidiary is a party or by
which any of the Assets are bound (the “ Contracts
”). Each of the Contracts listed or described in Section 3(k)
of the Seller Disclosure Schedule is in full force and effect and
is a legal, binding and enforceable obligation by or against a
Subsidiary, except where the failure to be in full force and effect
would not reasonably be expected to have a material adverse effect
on the Assets or operation of the Business. Except for
noncompliance due to Constellation Service Matters (as defined in
Section 8(c)) and except as set forth on Section 3(k) of the
Seller Disclosure Schedule, each Subsidiary is in material
compliance, and to each Subsidiary’s knowledge, each
counterparty is in material compliance, with the terms of such
Contracts. The consummation of the transactions contemplated
hereunder and the sale of the Interests to Buyer shall not trigger
the acceleration or early maturity of any contractual obligation to
which any Subsidiary is bound. The Operating Subsidiary has
delivered or made available to Buyer correct and complete copies of
each Contract listed on Section 3(k) of the Seller Disclosure
Schedule and all amendments thereto, modifications thereof and
material correspondence in connection therewith.
(l)
Governmental Licenses, Permits, and Approvals . Section 3(l)
of the Seller Disclosure Schedule lists all of the licenses,
registrations and permits issued to the Operating Subsidiary by
Brazil’s Agência Nacional de
Telecomunicações (“ Anatel ”)
which are required for the Operating Subsidiary to operate the
Business as currently conducted. Except as set forth on Section
3(l) of the Seller Disclosure Schedule, no registration with,
approval by, clearance from or pre-notification to Anatel, nor any
Anatel permit or license, is required in connection with the
execution and performance of this Agreement by Sellers. Except as
set forth on Section 3(l) of the Seller Disclosure Schedule, all
other government licenses that would materially affect operations
of the Business and cannot be replaced within thirty (30) days
for under US$10,000 are in full force and effect, and such full
force and effect status will not be materially adversely affected
by the sale of the Interests to Buyer or the other transactions
contemplated by this Agreement.
(m)
Employee Matters .
(i) Section 3(m) of the Seller Disclosure Schedule
contains a complete and accurate list of the names, titles, and
compensation of all employees of each Subsidiary as of the date
hereof (collectively, the “ Employees ”). In
addition, Section 3(m) of the Seller Disclosure Schedule contains a
complete and accurate description of any promised increases in
compensation of the Employees that have not yet been effected.
(ii) Section 3(m) of the Seller Disclosure Schedule
contains a list of each employment agreement, non-competition
agreement or similar contract entered into between a Subsidiary or
Seller and any Employee other than the standard employment
agreements entered into by the Operating Subsidiary with its
Employees (the “ Employment Agreements ”).
(iii) Except as set forth on Section 3(m) of the Seller
Disclosure Schedule, no unwritten material amendments have been
made, whether by oral communication, pattern of conduct or
otherwise, with respect to the Employment Agreements or any
employee policies and procedures currently in effect.
(iv) Each Subsidiary (A) has been and is in material
compliance with all laws, rules, regulations and ordinances
respecting employment and employment practices, terms and
conditions of employment and wages and hours, and (B) is not
liable in any material amount for any arrears of wages or penalties
for failure to comply with any of the foregoing. Except as set
forth on Section 3(m) of the Seller Disclosure Schedule, there are
no (1) unfair labor practice charges, discrimination charges
or other complaints pending or, to Loral Holdings’ and each
Subsidiary’s knowledge, threatened against any Subsidiary
before any governmental authority or arbitral body or
(2) existing or threatened material labor strikes, disputes,
grievances or controversies against or relating to any Subsidiary
or any Employees.
(v) LDG is not and has not been a party to any agreement with
any union, labor organization or collective bargaining unit.
Section 3(m) of the Seller Disclosure Schedule lists the unions to
which Holdings, the Operating Subsidiary and their Employees are
associated and the collective bargaining agreements to which they
are currently bound.
(vi) Except as set forth on Section 3(m) of the Seller
Disclosure Schedule, no Subsidiary has any services, consulting,
representation, agency or commission agreement or relationship (the
“ Agency Relationships ”) that may be deemed to
grant to the other parties thereto or their partners or
shareholders rights similar to the ones provided under Brazilian
law to Employees. Each Subsidiary has fully paid all commissions,
fees, reimbursable expenses and indemnification and severance fees
arising from or in connection with the Agency Relationships.
(n)
Employee Benefit Matters . Section 3(n) of the Seller
Disclosure Schedule lists each employee benefit, equity incentive
plan or compensation plan or program covering currently active
former, or retired employees of any Subsidiary (“ Plan
”). The Operating Subsidiary has provided or made available
to Globalstar a copy of each Plan document (or, if there is no Plan
document, a written description), and where applicable, any related
trust agreement, annuity or insurance contract and, where
applicable, the three most recent annual reports filed with the
applicable governmental authority, including all attachments and
schedules thereto. To Loral Holdings’ and each
Subsidiary’s knowledge, each Plan complies with, and has been
maintained and administered in material compliance with, its terms
and with the requirements prescribed by all applicable laws,
statutes, orders, rules and regulations. Except as set forth on
Section 3(n) of the Seller Disclosure Schedule, there are no
pending or anticipated claims against or otherwise involving any of
the Plans (excluding claims for benefits incurred in the ordinary
course of Plan activities) and no suit, action or other litigation
has been brought against or with respect to any Plan. Except as set
forth on Section 3(n) of the Seller Disclosure Schedule, all
contributions, reserves or premium payments to each Plan accrued to
the date hereof, have been made or provided for. Except as provided
under the laws, rules and regulations of Brazil, there are no
restrictions on the rights of any Subsidiary to amend or terminate
any Plan without incurring any liability under it (other than
ordinary administrative expenses). There have been no unwritten or
unexpected amendments to, written interpretation of, or
announcements (whether or not written) by any Subsidiary relating
to coverage under, any Plan.
(o)
Compliance with Laws . Except for the Loral Tax Liabilities,
each Subsidiary (and in the case of the U.S. Foreign Corrupt
Practices Act (“ FCPA ”), Loral Holdings and
Loral Space) has complied in all material respects with all of the
laws, regulations, rules, orders, judgments, decrees or other
requirements imposed by any governmental authority applicable to it
or to the operation of the Business (including, without limitation,
the FCPA), and no Subsidiary has received any notice or citation
for noncompliance by the Business with any of the foregoing. No
Subsidiary has any knowledge of any condition or event which, after
notice or lapse of time, or both, would constitute noncompliance
with any of the foregoing.
(p)
Brokers . Neither any Subsidiary nor Loral Holdings has
expressly or impliedly engaged any broker, finder or agent with
respect to any transaction contemplated by this Agreement.
(q)
Absence of Certain Changes and Conduct of Business . Except
as otherwise listed in Section 3(q) of the Seller Disclosure
Schedule, since June 30, 2007, there has been no material
adverse change in the Assets, or the financial condition, results
of operations or prospects of the Business, and neither any
Subsidiary nor Loral Holdings has any knowledge of any occurrence,
circumstances or combination thereof which might reasonably be
expected to result in any such material adverse change. Without
limiting the foregoing, since June 30, 2007 and except as
otherwise listed in Section 3(q) of the Seller Disclosure Schedule,
no Subsidiary has:
(i) contracted for the purchase of any capital assets, or paid
any capital expenditures, except in the ordinary course of business
consistent with past practice and in an amount, individually or in
a series of related transactions, not higher than US$100,000;
(ii) incurred any indebtedness for borrowed money or issued or
sold any debt securities, except in the ordinary course of business
consistent with past practice and in an amount, individually or in
a series of related transactions, not higher than US$100,000;
(iii) except as would be permitted by Section 7(a)(C),
incurred or discharged any liabilities or obligations except in the
ordinary course of business consistent with past practice;
(iv) forgiven or canceled any third party debts or claims or
released or waived any third party rights or claims, except in the
ordinary course of business consistent with past practice and in an
amount, individually or in a series of related transactions, not
higher than US$ 100,000;
(v) mortgaged, pledged or subjected to any security interest,
lien, lease or other charge or encumbrance any of its assets in an
amount, individually or collectively, higher than US$100,000;
(vi) suffered any damage or destruction to or loss of its
assets (whether or not covered by insurance) that has materially
adversely affected, or could materially adversely affect, the
Business;
(vii) acquired or disposed of any assets except in the
ordinary course of business consistent with past practice and in an
amount, individually or in a series of related transactions, not
higher than US$100,000;
(viii) increased the compensation of any Employee except in
accordance with Section 3(m) of the Seller Disclosure Schedule;
(ix) made any payments to any person or entity except for
payments related to the Loral Liabilities (including the Loral Tax
Liabilities) or in the ordinary course of business consistent with
past practice or loaned any money to any person or entity (other
than ordinary course advances of expenses to employees consistent
with past practice);
(x) formed or acquired or disposed of any interest in any
corporation, company, partnership, joint venture or other
entity;
(xi) redeemed, purchased or otherwise acquired, or sold,
granted or otherwise disposed of, directly or indirectly, any of
its capital stock or securities or any rights to acquire such
capital stock or securities, or agreed to change the terms and
conditions of any such rights or paid any dividends or made any
distribution to the holders of any Subsidiary’s capital
stock, ownership interests or other securities;
(xii) entered into or terminated any material agreement with
any person or group, or modified or amended in any material respect
the terms of any existing agreement except in the ordinary course
of business consistent with past practice and in an amount,
individually or in a series of related transactions, not higher
than US$100,000;
(xiii) entered into, adopted or materially amended any
employee benefit plan;
(xiv) materially changed its accounting methods; or
(xv) entered into any agreement (written or oral) to do any of
the foregoing.
(r)
Litigation . Except as otherwise listed in Section 3(r) of
the Seller Disclosure Schedule, there is no claim, action, suit or
proceeding, administrative or judicial, pending or, to Loral
Holdings’ and each Subsidiary’s knowledge, threatened,
against or affecting any Subsidiary or involving any of the Assets
or the Business, at law or in equity or before any governmental
authority or arbitral body, including, without limitation, any
claim, proceeding or suit for the purpose of enjoining or
preventing the consummation of the transactions contemplated by
this Agreement. No Subsidiary is subject to or in default under any
order, writ, injunction or decree of any court or any governmental
authority.
(s)
Environmental Matters . Each Subsidiary has been and is in
material compliance in with all applicable laws relating to
pollution or protection of human health or the environment
(including, without limitation, air, surface water, ground water,
land surface, subsurface strata, and natural resources)
(collectively, “ Environmental Law ”). No
Subsidiary has received notice of or is the subject of any pending
or threatened actions, causes of action, claims, investigations,
demands or notices by any person or entity alleging liability
under, or non-compliance with, any Environmental Law. There are no
present circumstances that jeopardize the validity of or ability of
any Subsidiary to obtain, maintain and comply with all material
permits and authorizations required under Environmental Law. No
Subsidiary has disposed of or released, or caused or allowed the
disposal or release of any pollutant, contaminant, substance or
material that is regulated under applicable Environmental Law as
harmful or potentially harmful to human health, natural resources
or the environment (“ Hazardous Material ”) (at
a concentration or level, or in a quantity, which requires a
response action or remedial action under any Environmental Law) at
the Real Property. No Subsidiary has received notice of any alleged
liability, non-compliance or requirement to conduct a response or
remedial action under any Environmental Law with respect to the
Real Property. There is currently no (i) aboveground or
underground storage tank used or formerly used to store any
Hazardous Material, or (ii) other Hazardous Materials or
Hazardous Material-containing equipment or material at the Real
Property. No Subsidiary has received any notice of any alleged
liability of any Subsidiary under any Environmental Law with
respect to any disposal or release of any Hazardous Material (at a
concentration or level, or in a quantity, which requires a response
action or remedial action under any Environmental Law) at any other
real property. The Operating Subsidiary has delivered or made
available to Buyer copies of all relevant material environmental
documentation (other than attorney-client or work-product
privileged materials), if any, that is not older than ten years and
that is in the possession and/or under the control of any
Subsidiary relating to the Real Property or the Business.
(t)
True Copies . All documents furnished to Buyer by any
Subsidiary or Loral Holdings pursuant to this Agreement are true
and correct copies, and there are no amendments, modifications or
side letters thereto except as set forth in such documents.
(u)
Proprietary Rights .
(i) Except as would not reasonably be expected to have a
material adverse effect on the Assets or the operation of the
Business, the Operating Subsidiary owns all patents, trademarks,
service marks, copyrights, trade secrets, domain names and other
proprietary rights and technology (collectively, “
Proprietary Rights ”), necessary to conduct the
Business as it is currently conducted, or possesses adequate
licenses or other rights (including licenses for the use of
non-customized software), if any, therefor, without conflict with
the rights of others.
(ii) The Operating Subsidiary has the right to use the
Proprietary Rights as they are currently used without, to the
knowledge of the Operating Subsidiary, infringing or violating the
rights of any third parties. No claim has been asserted by any
person to the ownership of or right to use any Proprietary Right or
challenging or questioning the validity or effectiveness of any
license or agreement constituting a part of any Proprietary Right.
Each of the Proprietary Rights is valid and subsisting, has not
been canceled, abandoned or otherwise terminated and, if
applicable, has been duly issued or filed.
(v)
Accounts Receivable . All accounts receivable of the
Operating Subsidiary that are reflected in its financial statements
(other than accounts receivable due from other Subsidiaries)
represent or will represent valid obligations arising from sales
actually made or services actually performed by the Operating
Subsidiary in the ordinary course of business.
(w)
Information Supplied . None of the information supplied or
to be supplied by any Subsidiary or Loral Holdings for inclusion or
incorporation by reference in the Form S-4 contemplated by Section
7(f) will, at the time the Form S-4 is filed with the SEC, at any
time it is amended or supplemented or at the time it becomes
effective under the Securities Act, contain any untrue statement of
a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading.
4.
Representations and Warranties of LGP and Loral Space . As
of the date of this Agreement and as of the Closing Date, LGP and
Loral Space jointly and severally represent and warrant to Buyer
and Globalstar as follows:
(a)
Organization . Each of LGP and Loral Space is duly
organized, validly existing and in good standing under the laws of
its jurisdiction of organization, with full corporate power and
authority to own, lease, and operate its properties and to carry on
its business as it has been and is presently conducted.
(b)
Authority . Each of LGP and Loral Space has full corporate
power and authority to execute and deliver this Agreement and the
other Transaction Documents to which it is a party, and perform its
respective obligations hereunder and thereunder, and this Agreement
and the other Transaction Documents to which it is a party have
been duly authorized by all necessary and proper corporate action
of each of LGP and Loral Space. This Agreement constitutes, and the
other Transaction Documents to which LGP or Loral Space is a party,
when delivered, will constitute, the valid and legally binding
obligations of LGP or Loral Space, as the case may be, enforceable
against such party in accordance with their respective terms,
except to the extent enforceability may be limited by bankruptcy,
insolvency, moratorium, or other similar laws affecting the
enforcement of creditors’ rights generally. Neither the
execution and delivery of this Agreement by LGP and Loral Space,
nor the consummation of the transactions contemplated hereby, will
violate or conflict with, result in the breach of, accelerate the
performance required by, or constitute a default under,
(i) any provision of any order, ruling, judgment or decree of
any court or any agency of government, (ii) the governing
documents of LGP and Loral Space, as the case may be, or
(iii) any mortgage, note, debt instrument, lease or any other
contract or agreement, written or oral, to which LGP or Loral Space
is a party or by which it or any of its properties is bound or
affected, except, in the case of clause (iii) hereof, for such
violations, conflicts, breaches, accelerations or defaults that
would not reasonably be expected to have a material adverse effect
on the Assets or the operation of the Business.
(c)
Brokers . Neither LGP nor Loral Space has expressly or
impliedly engaged any broker, finder or agent with respect to any
transaction contemplated by this Agreement.
(d)
Information Supplied . None of the information supplied or
to be supplied by LGP or Loral Space for inclusion or incorporation
by reference in the Form S-4 contemplated by Section 7(f) will, at
the time the Form S-4 is filed with the SEC, at any time it is
amended or supplemented or at the time it becomes effective under
the Securities Act, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading.
(e)
Quotas . LGP owns two of the Quotas free and clear of
Encumbrances.
5.
Representations and Warranties of DASA . As of the date of
this Agreement and as of the Closing Date, DASA represents and
warrants to Buyer and Globalstar as follows:
(a)
Organization . DASA is duly organized, validly existing and
in good standing under the laws of its jurisdiction of
organization, with full corporate power and authority to own,
lease, and operate its properties and to carry on its business as
it has been and is presently conducted.
(b)
Authority . DASA has full corporate power and authority to
execute and deliver this Agreement and the other Transaction
Documents to which it is a party, and perform its respective
obligations hereunder and thereunder, and this Agreement and the
other Transaction Documents to which it is a party have been duly
authorized by all necessary and proper corporate action of DASA.
This Agreement constitutes, and the other Transaction Documents to
which DASA is a party, when delivered, will constitute, the valid
and legally binding obligations of DASA, enforceable against DASA
in accordance with their respective terms, except to the extent
enforceability may be limited by bankruptcy, insolvency,
moratorium, or other similar laws affecting the enforcement of
creditors’ rights generally. Neither the execution and
delivery of this Agreement by DASA, nor the consummation of the
transactions contemplated hereby, will violate or conflict with,
result in the breach of, accelerate the performance required by, or
constitute a default under, (i) any provision of any order,
ruling, judgment or decree of any court or any agency of
government, (ii) the governing documents of DASA, or
(iii) any mortgage, note, debt instrument, lease or any other
contract or agreement, written or oral, to which DASA is a party or
by which it or any of its properties is bound or affected, except,
in the case of clause (iii) hereof, for such violations, conflicts,
breaches, accelerations or defaults that would not reasonably be
expected to have a material adverse effect on the Assets or the
operation of the Business.
(c)
Brokers . DASA has not expressly or impliedly engaged any
broker, finder or agent with respect to any transaction
contemplated by this Agreement.
5A.
Representations and Warranties of MBBras . As of the date of
this Agreement and as of the Closing Date, MBBras represents and
warrants to Buyer and Globalstar as follows:
(d)
Organization . MBBras is duly organized, validly existing
and in good standing under the laws of its jurisdiction of
organization, with full corporate power and authority to own,
lease, and operate its properties and to carry on its business as
it has been and is presently conducted.
(e)
Authority . MBBras has full corporate power and authority to
execute and deliver this Agreement and the other Transaction
Documents to which it is a party, and perform its respective
obligations hereunder and thereunder, and this Agreement and the
other Transaction Documents to which it is a party have been duly
authorized by all necessary and proper corporate action of MBBras.
This Agreement constitutes, and the other Transaction Documents to
which MBBras is a party, when delivered, will constitute, the valid
and legally binding obligations of MBBras, enforceable against
MBBras in accordance with their respective terms, except to the
extent enforceability may be limited by bankruptcy, insolvency,
moratorium, or other similar laws affecting the enforcement of
creditors’ rights generally. Neither the execution and
delivery of this Agreement by MBBras, nor the consummation of the
transactions contemplated hereby, will violate or conflict with,
result in the breach of, accelerate the performance required by, or
constitute a default under, (i) any provision of any order,
ruling, judgment or decree of any court or any agency of
government, (ii) the governing documents of MBBras, or
(iii) any mortgage, note, debt instrument, lease or any other
contract or agreement, written or oral, to which is a party or by
which it or any of its properties is bound or affected, except, in
the case of clause (iii) hereof, for such violations, conflicts,
breaches, accelerations or defaults that would not reasonably be
expected to have a material adverse effect on the Assets or the
operation of the Business.
(f)
Brokers . MBBras has not expressly or impliedly engaged any
broker, finder or agent with respect to any transaction
contemplated by this Agreement.
(g)
Quotas . MBBras owns one of the Quotas free and clear of
Encumbrances.
6.
Representations and Warranties of Buyer and Globalstar . As
of the date of this Agreement and as of the Closing Date, Buyer and
Globalstar jointly and severally represent and warrant to Sellers
as follows:
(a)
Organization . Globalstar is a corporation duly
incorporated, validly existing and in good standing under the laws
of the state of Delaware, with full corporate power and authority
to own, lease, and operate its properties and to carry on its
business as it has been and is presently conducted. Buyer is a
limited liability company duly organized, validly existing and in
good standing under the laws of Delaware, with full corporate power
and authority to own, lease, and operate its properties and to
carry on its business as it has been and is presently
conducted.
(b)
Authority . Each of Buyer and Globalstar has full corporate
power and authority to execute and deliver this Agreement and the
other Transaction Documents to which it is a party, and perform its
respective obligations hereunder and thereunder, and this Agreement
and the other Transaction Documents to which it is a party have
been duly authorized by all necessary and proper corporate action
of each of Buyer and Globalstar. This Agreement constitutes, and
the other Transaction Documents to which Buyer or Globalstar is a
party, when delivered, will constitute, the valid and legally
binding obligations of Buyer or Globalstar, as the case may be,
enforceable against such party in accordance with their respective
terms, except to the extent enforceability may be limited by
bankruptcy, insolvency, moratorium, or other similar laws affecting
the enforcement of creditors’ rights generally. Neither the
execution and delivery of this Agreement by Buyer and Globalstar,
nor the consummation of the transactions contemplated hereby, will
violate or conflict with, result in the breach of, accelerate the
performance required by, or constitute a default under,
(i) any provision of any order, ruling, judgment or decree of
any court or any agency of government, (ii) the governing
documents of Buyer or Globalstar, or (iii) any mortgage, note,
debt instrument, lease or any other contract or agreement, written
or oral, to which Buyer or Globalstar is a party or by which it or
any of its properties is bound or affected.
(c)
Brokers . Neither Buyer nor Globalstar has expressly or
impliedly engaged any broker, finder or agent with respect to any
transaction contemplated by this Agreement.
(d)
Globalstar Capitalization . The authorized capital stock of
Globalstar consists of (A) 800,000,000 shares of common stock,
par value US$0.0001 per share, of which 82,671,224 shares were
issued and outstanding as of November 8, 2007, and
(B) 100,000,000 shares of preferred stock, par value US$0.0001
per share, none of which are issued or outstanding as of the date
of this Agreement. All of the issued and outstanding shares of
Globalstar stock are, and all shares reserved for issuance will be,
upon issuance in accordance with the terms specified in the
instruments or agreements pursuant to which they are issuable, duly
authorized, validly issued, fully paid and nonassessable.
Globalstar is the sole owner of Buyer.
(e)
Issuance . The Globalstar Stock to be issued in payment of
the Purchase Price has been duly and validly authorized, reserved
for issuance and, when issued, sold and delivered by Globalstar in
accordance with the terms of this Agreement for the consideration
provided for herein, will have been duly and validly issued, fully
paid and nonassessable and issued in compliance with all applicable
federal and state securities laws and will be free of any
Encumbrance and free of any restrictions on transfer except any
applicable restrictions under Rule 145 of the Securities Act.
(f)
Information Supplied . The Form S-4 contemplated by Section
7(f) will not, at the time it becomes effective under the
Securities Act, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading; provided
that neither Globalstar nor Buyer makes any representation or
warranty with respect to any information supplied or to be supplied
by any Subsidiary, Seller, Quota Seller or Loral Space for
inclusion or incorporation by reference in the Form S-4.
(g)
Due Diligence . Buyer and Globalstar either directly or
through their respective representatives and advisors have
conducted due diligence on the Subsidiaries, the Assets, the
Business and the Interests. To Buyer and Globalstar’s
knowledge, all documents, records and books pertaining to the
Subsidiaries have been made and are available to Buyer and
Globalstar and their representatives and advisors, and each of
Buyer and Globalstar has had an opportunity to ask questions of and
receive answers from executives of the Subsidiaries, the Sellers
and Loral Space concerning the Subsidiaries, the Assets, the
Business and the Interests. Pursuant to Section 7(b) of this
Agreement, prior to Closing, Buyer and Globalstar shall continue to
analyze all relevant matters pertaining to the Subsidiaries, the
Assets, the Business and the Interests, including but not limited
to those subject of representations and warranties provided
hereunder by Sellers, the Subsidiaries, LGP and Loral Space.
Globalstar is the owner and operator of the Globalstar network of
low earth orbiting satellites related to the Business and of other
Globalstar service providers (similar to the Operating Subsidiary)
and is therefore fully familiar with the overall nature of the
Business. Each of Buyer and Globalstar or its advisors have such
knowledge and experience in financial and business matters that
they are capable of evaluating the merits and risks of consummating
the transactions contemplated hereunder. Nothing in this
representation and warranty shall limit Buyer or Globalsta
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