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                                 B Y E - L A W S

                                       of

                      GLOBALSTAR TELECOMMUNICATIONS LIMITED

                                 INTERPRETATION



1.    In these Bye-Laws unless the context otherwise requires

      "Bermuda" means the Islands of Bermuda;

      "Board" means the Board of Directors of the Company or the
Directors present at a meeting of Directors at which there is a quorum;

      "Company" means the company incorporated in Bermuda under the
name of Globalstar Telecommunications Limited on the 23rd day of
November, 1994;

      "the Companies Acts" means every Bermuda statute from time to time in
force concerning companies insofar as the same applies to the Company;

      "Globalstar" means Globalstar, L.P., a limited Partnership
organised under the laws of the State of Delaware, U.S.A.;

      "Independent Directors" means the two Directors of the Company designated
as such by the Shareholders from time to time and who are not employed by, or
otherwise affiliated with, Loral, a Strategic Partner or any of their respective
affiliates;
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      "Loral", means Loral Corporation, a company organised under the
laws of the State of New York, U.S.A.;

      "LQP" means Loral/QUALCOMM  Partnership, L.P., a limited
partnership organised under the laws of the State of Delaware, U.S.A.;

      "LQSS" means Loral/QUALCOMM Satellite Services, L.P., a limited
partnership organised under the laws of the State of Delaware, U.S.A.;

      "paid up" means paid up or credited as paid up;

      "Register" means the Register of Shareholders of the Company;

      "Registered offices" means the registered office for the time
being of the Company;

      "Resolution" means a resolution of the Shareholders or, where required, of
a separate class or separate classes of Shareholders, adopted either in general
meeting or by written resolution, in accordance with the provisions of these
Bye-Laws;

      "Seal" means the common seal of the Company and includes any
duplicate thereof;

      "Secretary" includes a temporary or assistant Secretary and any
person appointed by the Board to perform any of the duties of the
Secretary;

      "Shareholder" means a shareholder or member of the Company;
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      "Strategic Partners" means the limited partners in any of
Globalstar, LQSS and LQP;

      "these Bye-Laws" means these Bye-Laws in their present form or as
from time to time amended;

      for the purposes of these Bye-Laws a corporation shall be deemed to be
present in person if its representative duly authorised pursuant to the
Companies Acts is present;

      words importing the singular number only include the plural
number and vice versa;

      words importing the masculine gender only include the feminine
and neuter genders respectively;

      words importing persons include companies or associations or
bodies of persons, whether corporate or un-incorporate;

      reference to writing shall include typewriting, printing, lithography,
photography and other modes of representing or reproducing words in a legible
and non-transitory form;

      any words or expressions defined in the Companies Acts in force at the
date when these Bye-Laws or any part thereof are adopted shall bear the same
meaning in these Bye-Laws or such part (as the case may be).

                                REGISTERED OFFICE

2. The Registered Office shall be at such place in Bermuda as the Board shall
from time to time appoint.
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                                  SHARE RIGHTS

3. Subject to any special rights conferred on the holders of any share or class
of shares, any share in the Company may be issued with or have attached thereto
such preferred, deferred, qualified or other special rights or such
restrictions, whether in regard to dividend, voting, return of capital or
otherwise, as the Company may by Resolution determine or, if there has not been
any such determination or so far as the same shall not make specific provision,
as the Board may determine.

4. The Board shall be authorized to issue preference shares and such shares may
be issued from time to time, in one or more series with such designations,
preferences and relative, participating, optional or other special rights, and
qualifications, limitations or restrictions thereof, as may be designated by the
Board prior to the issuance of such series, and the Board is hereby expressly
authorized to fix by resolution or resolutions prior to such issuance such
designations, preferences and relative, participating, optional or other special
rights, or qualifications, limitations or restrictions, including without
limiting the generality of the foregoing, the following:

      (i) the designation of such series or class;

      (ii) the dividend rate of such series or class, the conditions and dates
      upon which such dividends will be payable, the relation which such
      dividends will bear to the dividends payable on any other class or classes
      of shares or any other series of any class of shares of
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      the Company, and whether such dividends will be cumulative or non-voting;

      (iii) the redemption provisions and times, prices and other terms and
      conditions of such redemption, if any, for such series or class, which may
      include provisions that they are to be redeemed on the happening of a
      specified event or on a given date, that they are liable to be redeemed at
      the option of the Company or that if authorized by the Memorandum of
      Association of the Company, that they are liable to be redeemed at the
      option of the holder;

      (iv) the terms and amount of any sinking fund provided for the purchase or
      redemption of the shares of such series or class;

      (v) the terms and conditions, if any, on which shares of such series or
      class shall be convertible into, or exchangeable for, shares of the
      Company or any other securities, including the price or prices, or the
      rates of exchange thereof,

      (vi) the voting rights, if any;

      (vii) the restrictions, if any, on the issue or reissue of any additional
      preference shares; and

      (viii) the rights of the holders of such series or class upon the
      liquidation, dissolution, or distribution of assets of the Company.
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The designations, preferences and relative, participating, optional or other
special rights, or qualifications, limitations or restrictions thereof, of each
additional series, if any, may differ from those of any or all other series
already outstanding.

                             MODIFICATION OF RIGHTS

5. Subject to the Companies Acts, all or any of the special rights for the time
being attached to any class of shares for the time being issued may from time to
time (whether or not the Company is being wound up) be altered or abrogated with
the consent in writing of the holders of not less than seventy five percent of
the issued shares of that class or with the sanction of a resolution passed at a
separate general meeting of the holders of such shares voting in person or by
proxy. To any such separate general meeting, all the provisions of these
Bye-Laws as to general meetings of the Company shall mutatis mutandis apply, but
so that the necessary quorum shall be two or more persons holding or
representing by proxy any of the shares of the relevant class, that every holder
of shares of the relevant class shall be entitled on a poll to one vote for
every such share held by him and that any holder of shares of the relevant class
present in person or by proxy may demand a poll; provided, however, that if the
Company or a class of Shareholders shall have only one Shareholder present in
person or by proxy, one Shareholder shall constitute the necessary quorum.

6. The special rights conferred upon the holders of any shares or class of
shares shall not, unless otherwise
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expressly provided in the rights attaching to or the terms of issue of such
shares, be deemed to be altered by the creation or issue of further shares
ranking pari passu therewith.

                                     SHARES

7. Subject to the provisions of these Bye-Laws, the unissued shares of the
Company (whether forming part of the original capital or any increased capital)
shall be at the disposal of the Board, which may offer, allot, grant options
over or otherwise dispose of them to such persons, at such times and for such
consideration and upon such terms and conditions as the Board may determine.

8. The Board may in connection with the issue of any shares exercise all powers
of paying commission and brokerage conferred or permitted by law. 

9. Except as ordered by a court of competent jurisdiction or as required by law,
no person shall be recognised by the Company as holding any share upon trust and
the Company shall not be bound by or required in any way to recognise (even when
having notice thereof) any equitable, contingent, future or partial interest in
any share or any interest in any fractional part of a share or (except only as
otherwise provided in these Bye-Laws or by law) any other right in respect of
any share except an absolute right to the entirety thereof in the registered
holder.

                                  CERTIFICATES
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10. The preparation, issue and delivery of certificates shall be governed by the
Companies Acts. In the case of a share held jointly by several persons, delivery
of a certificate to one of several joint holders shall be sufficient delivery to
all.

11. If a share certificate is defaced, lost or destroyed it may be replaced
without fee but on such terms (if any) as to evidence and indemnity and to
payment of the costs and out of pocket expenses of the Company in investigating
such evidence and preparing such indemnity as the Board may think fit and, in
case of defacement, on delivery of the old certificate to the Company.

12. All certificates for share or loan capital or other securities of the
Company (other than letters of allotment, scrip certificates and other like
documents) shall, except to the extent that the terms and conditions for the
time being relating thereto otherwise provide, be issued under the Seal. The
Board may by resolution determine, either generally or in any particular case,
that any signatures on any such certificates need not be autographic but may be
affixed to such certificates by some mechanical means or may be printed thereon
or that such certificates need not be signed by any persons.

                                      LIEN

13. The Company shall have a first and paramount lien on every share (not being
a fully paid share) for all moneys, whether presently payable or not, called or
payable, at a date fixed by or in accordance with the terms of issue of 
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such share in respect of such share, and the Company shall also have a first and
paramount lien on every share (other than a fully paid share) standing
registered in the name of a Shareholder, whether singly or jointly with any
other person, for all the debts and liabilities of such Shareholder or his
estate to the Company, whether the same shall have been incurred before or after
notice to the Company of any interest of any person other than such Shareholder,
and whether the time for the payment or discharge of the same shall have
actually arrived or not, and notwithstanding that the same are joint debts or
liabilities of such Shareholder or his estate and any other person, whether a
Shareholder or not. The Company's lien on a share shall extend to all dividends
payable thereon. The Board may at any time, either generally or in any
particular case, waive any lien that has arisen or declare any share to be
wholly or in part exempt from the provisions of this Bye-Law.

14. The Company may sell, in such manner as the Board may think fit, any share
on which the Company has a lien but no sale shall be made unless some sum in
respect of which the lien exists is presently payable nor until the expiration
of fourteen days after a notice in writing, stating and demanding payment of the
sum presently payable and giving notice of the intention to sell in default of
such payment, has been served on the holder for the time being of the share.

15. The net proceeds of sale by the Company of any shares on which it has a lien
shall be applied in or towards 
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payment or discharge of the debt or liability in respect of which the lien
exists so far as the same is presently payable, and any residue shall (subject
to a like lien for debts or liabilities not presently payable as existed upon
the share prior to the sale) be paid to the holder of the share immediately
before such sale. For giving effect to any such sale the Board may authorise
some person to transfer the share sold to the purchaser thereof. The purchaser
shall be registered as the holder of the share and he shall not be bound to see
to the application of the purchase money, nor shall his title to the share be
affected by any irregularity or invalidity in the proceedings relating to the
sale.

                            CALLS ON SHARES

16. The Board may from time to time make calls upon the Shareholders in respect
of any moneys unpaid on their shares (whether on account of the par value of the
shares or by way of premium) and not by the terms of issue thereof made payable
at a date fixed by or in accordance with such terms of issue, and each
Shareholder shall (subject to the Company serving upon him at least fourteen
days notice specifying the time or times and place of payment) pay to the
Company at the time or times and place so specified the amount called on his
shares. A call may be revoked or postponed as the Board may determine.

17. A call may be made payable by installments and shall be deemed to have been
made at the time when the resolution of the Board authorizing the call was
passed.
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18. The joint holders of a share shall be jointly and severally liable to pay
all calls in respect thereof.

19. If a sum called in respect of the share shall not be paid before or on the
day appointed for payment thereof the person from whom the sum is due shall pay
interest on the sum from the day appointed for the payment thereof to the time
of actual payment at such rate as the Board may determine, but the Board shall
be at liberty to waive payment of such interest wholly or in part.

20. Any sum which, by the terms of issue of a share, becomes payable on
allotment or at any date fixed by or in accordance with such terms of issue,
whether on account of the nominal amount of the share or by way of premium,
shall for all the purposes of these Bye-Laws be deemed to be a call duly made,
notified and payable on the date on which, by the terms of issue, the same
becomes payable and, in case of non-payment, all the relevant provisions of
these Bye-Laws as to payment of interest, forfeiture or otherwise shall apply as
if such sum had become payable by virtue of a call duly made and notified.

21. The Board may on the issue of shares differentiate between the allottees or
holders as to the amount of calls to be paid and the times of payment.

                              FORFEITURE OF SHARES

22. If a Shareholder fails to pay any call or installment of a call on the day
appointed for payment thereof, the Board may at any time thereafter during such
time as any part of such call or installment remains unpaid serve a
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notice on him requiring payment of so much of the call or installment as is
unpaid, together with any interest which may have accrued.

23. The notice shall name a further day (not being less than 14 days from the
date of the notice) on or before which, and the place where, the payment
required by the notice is to be made and shall state that, in the event of
non-payment on or before the day and at the place appointed, the shares in
respect of which such call is made or installment is payable will be liable to
be forfeited. The Board may accept the surrender of any share liable to be
forfeited hereunder and, in such case, references in these Bye-laws to
forfeiture shall include surrender.

24. If the requirements of any such notice as aforesaid are not complied with,
any share in respect of which such notice has been given may at any time
thereafter, before payment of all calls or installments and interest due in
respect thereof has been made, be forfeited by a resolution of the Board to that
effect. Such forfeiture shall include all dividends declared in respect of the
forfeited shares and not actually paid before the forfeiture.

25. When any share has been forfeited, notice of the forfeiture shall be served
upon the person who was before forfeiture the holder of the share; but no
forfeiture shall be in any manner invalidated by any omission or neglect to give
such notice as aforesaid.

26. A forfeited share shall be deemed to be the property of the Company and may
be sold, re-offered or otherwise 
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disposed of either to the person who was, before forfeiture, the holder thereof
or entitled thereto or to any other person upon such terms and in such manner as
the Board shall think fit, and at any time before a sale, re-allotment or
disposition the forfeiture may be cancelled on such terms as the Board may think
fit.

27. A person whose shares have been forfeited shall thereupon cease to be a
Shareholder in respect of the forfeited shares but shall, notwithstanding the
forfeiture, remain liable to pay to the Company all moneys which at the date of
forfeiture were presently payable by him to the Company in respect of the shares
with interest thereon at such rate as the Board may determine from the date of
forfeiture until payment, and the Company may enforce payment without being
under any obligation to make any allowance for the value of the shares
forfeited.

28. An affidavit in writing that the deponent is a Director or the Secretary and
that a share has been duly forfeited on the date stated in the affidavit shall
be conclusive evidence of the facts therein stated as against all persons
claiming to be entitled to the share. The Company may receive the consideration
(if any) given for the share on the sale, re-allotment or disposition thereof
and the Board may authorise some person to transfer the share to the person to
whom the same is sold, re-allotted or disposed of, and he shall thereupon be
registered as the holder of the share and shall not be bound to see to the
application of the purchase money (if any) nor shall his title to the share be
affected by any irregularity or invalidity in the 
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proceedings relating to the forfeiture, sale, re-allotment or disposal of the
share.

                            REGISTER OF SHAREHOLDERS

29. The Secretary shall establish and maintain the Register of Shareholders at
the Registered Office in the manner prescribed by the Companies Acts. Unless the
Board otherwise determines, the Register of Shareholders shall be open to
inspection in the manner prescribed by the Companies Acts between 10.00 a.m. and
12.00 noon on every working day. Unless the Board so determines, no Shareholder
or intending Shareholder shall be entitled to have entered in the Register any
indication of any trust or any equitable, contingent, future or partial interest
in any share or any interest in any fractional part of a share and if any such
entry exists or is permitted by the Board it shall not be deemed to abrogate any
of the provisions of Bye-Law 9.

                       REGISTER OF DIRECTORS AND OFFICERS

30. The Secretary shall establish and maintain a register of the Directors and
Officers of the Company as required by the Companies Acts. The register of
Directors and Officers shall be open to inspection in the manner prescribed by
the Companies Acts between 10:00 a.m. and 12:00 noon on every working day.
                               TRANSFER OF SHARES

31. Subject to the Companies Acts and to such of the restrictions contained in
these Bye-Laws as may be applicable, any Shareholder may transfer all or any of
his 
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shares by an instrument of transfer in the usual common form or in any other
form which the Board may approve.

32. The instrument of transfer of a share shall be signed by or on behalf of the
transferor and where any share is not fully-paid the transferee, and the
transferor shall be deemed to remain the holder of the share until the name of
the transferee is entered in the Register in respect thereof. All instruments of
transfer when registered may be retained by the Company. The Board may, in its
absolute discretion and without assigning any reason therefor, decline to
register any transfer of any share which is not a fully-paid share.

The Board may also decline to register any transfer unless:-

      (a)   the instrument of transfer is duly stamped and lodged with the
            Company, accompanied by the certificate for the shares to which it
            relates, and such other evidence as the Board may reasonably require
            to show the right of the transferor to make the transfer,

      (b)   the instrument of transfer is in respect of only one class of share,

      (c)   where applicable, the permission of the Bermuda Monetary Authority
            with respect thereto has been obtained.

Subject to any directions of the Board from time to time in force, the Secretary
may exercise the powers and discretions of the Board under this Bye-Law and
Bye-Laws 31 and 33.
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33. If the Board declines to register a transfer it shall, within three months
after the date on which the instrument of transfer was lodged, send to the
transferee notice of such refusal.

34. No fee shall be charged by the Company for registering any transfer,
probate, letters of administration, certificate of death or marriage, power of
attorney, distringas or stop notice, order of court or other instrument relating
to or affecting the title to any share, or otherwise making an entry in the
Register relating to any share.

                             TRANSMISSION OF SHARES

35. In the case of the death of a Shareholder, the survivor or survivors, where
the deceased was a joint holder, and the estate representative, where he was
sole holder, shall be the only person recognised by the Company as having any
title to his shares; but nothing herein contained shall release the estate of a
deceased holder (whether the sole or joint) from any liability in respect of any
share held by him solely or jointly with other persons. For the purpose of this
Bye-Law, estate representative means the person to whom probate or letters of
administration has or have been granted in Bermuda or, failing any such person,
such other person as the Board may in its absolute discretion determine to be
the person recognised by the Company for the purpose of this Bye-Law.

36. Any person becoming entitled to a share in consequence of the death of a
Shareholder or otherwise by operation of 
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applicable law may, subject as hereafter provided and upon such evidence being
produced as may from time to time be required by the Board as to his
entitlement, either be registered himself as the holder of the share or elect to
have some person nominated by him registered as the transferee thereof. If the
person so becoming entitled elects to be registered himself, he shall deliver or
send to the Company a notice in writing signed by him stating that he so elects.
If he shall elect to have his nominee registered, he shall signify his election
by signing an instrument of transfer of such share in favour of his nominee. All
the limitations, restrictions and provisions of these Bye-Laws relating to the
right to transfer and the registration of transfer of shares shall be applicable
to any such notice or instrument of transfer as aforesaid as if the death of the
Shareholder or other event giving rise to the transmission had not occurred and
the notice or instrument of transfer was an instrument of transfer signed by
such Shareholder.

37. A person becoming entitled to a share in consequence of the death of a
Shareholder or otherwise by operation of applicable law shall (upon such
evidence being produced as may from time to time be required by the Board as to
his entitlement) be entitled to receive and may give a discharge for any
dividends or other moneys payable in respect of the share, but he shall not be
entitled in respect of the share to receive notices of or to attend or vote at
general meetings of the Company or, save as aforesaid, to exercise in respect of
the share any of the rights or privileges of a Shareholder until he shall have
become registered as the 
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holder thereof. The Board may at any time give notice requiring such person to
elect either to be registered himself or to transfer the share and if the notice
is not complied with within sixty days the Board may thereafter withhold payment
of all dividends and other moneys payable in respect of the shares until the
requirements of the notice have been complied with.

38. Subject to any directions of the Board from time to time in force, the
Secretary may exercise the powers and discretions of the Board under Bye-Laws
35, 36 and 37.

INCREASE OF CAPITAL

39. The Company may from time to time increase its capital by such sum to be
divided into shares of such par value as the Company by Resolution shall
prescribe.

40. The Company may, by the Resolution increasing the capital, direct that the
new shares or any of them shall be offered in the first instance either at par
or at a premium or (subject to the provisions of the Companies Acts) at a
discount to all the holders for the time being of shares of any class or classes
in proportion to the number of such shares held by them respectively or make any
other provision as to the issue of the new shares.

41. The new shares shall be subject to all the provisions of these Bye-Laws with
reference to lien, the payment of calls, forfeiture, transfer, transmission and
otherwise.

                         ALTERATION OF CAPITAL
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42. The Company may from time to time by Resolution:-

      (a)   divide its shares into several classes and attach thereto
            respectively any preferential, deferred, qualified or special
            rights, privileges or conditions;

      (b)   consolidate and divide all or any of its share capital into shares
            of larger par value than its existing shares;

      (c)   sub-divide its shares or any of them into shares of smaller par
            value than is fixed by its memorandum, so, however, that in the
            sub-division the proportion between the amount paid and the amount,
            if any, unpaid on each reduced share shall be the same as it was in
            the case of the share from which the reduced share is derived;

      (d)   make provision for the issue and allotment of shares which do not
            carry any voting rights;

      (e)   cancel shares which, at the date of the passing of the resolution in
            that behalf, have not been taken or agreed to be taken by any
            person, and diminish the amount of its share capital by the amount
            of the shares so cancelled; and

      (f) change the currency denomination of its share capital.

Where any difficulty arises in regard to any division, consolidation, or
sub-division under this Bye-Law, the Board 
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may settle the same as it thinks expedient and, in particular, may arrange for
the sale of the shares representing fractions and the distribution of the net
proceeds of sale in due proportion amongst the Shareholders who would have been
entitled to the fractions, and for this purpose the Board may authorise some
person to transfer the shares representing fractions to the purchaser thereof,
who shall not be bound to see to the application of the purchase money nor shall
his title to the shares be affected by any irregularity or invalidity in the
proceedings relating to the sale.

43. Subject to the Companies Act and to any confirmation or consent required by
law or these Bye-Laws, the Company may by Resolution from time to time convert
any preference shares into redeemable preference shares.

                              REDUCTION OF CAPITAL

44. Subject to the Companies Acts, its memorandum and any confirmation or
consent required by law or these Bye-Laws, the Company may from time to time by
Resolution authorise the reduction of its issued share capital or any capital
redemption reserve fund or any share premium or contributed surplus account in
any manner.

45. In relation to any such reduction, the Company may by Resolution determine
the terms upon which such reduction is to be effected including in the case of a
reduction of part only of a class of shares, those shares to be affected.

                GENERAL MEETINGS AND WRITTEN RESOLUTIONS
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46.  (a)    The Board shall convene and the Company shall hold general
            meetings as Annual General Meetings in accordance with the
            requirements of the Companies Acts at such times and places as the
            Board shall appoint. The Board may, whenever it thinks fit, and
            shall, when required by the Companies Acts, convene general meetings
            other than Annual General Meetings which shall be called Special
            General Meetings.

      (b)   Except in the case of the removal of auditors and
            Directors, anything which may be done by resolution of the
            Company in general meeting or by resolution of a meeting of
            any class of the Shareholders of the Company may, without a
            meeting and without any previous notice being required, be
            done by resolution in writing, signed by all of the
            Shareholders or their proxies, or in the case of a
            Shareholder that is a corporation (whether or not a company
            within the meaning of the Companies Acts) on behalf of such
            Shareholder, being all of the Shareholders of the Company
            who at the date of the resolution in writing would be
            entitled to attend a meeting and vote on the resolution.
            Such resolution in writing may be signed by, or in the case
            of a Shareholder that is a corporation (whether or not a
            company within the meaning of the Companies Acts), on
            behalf of, all the Shareholders of the Company, or any
            class thereof, in as many counterparts as may be necessary.
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      (c)   For the purposes of this Bye-Law, the date of the
            resolution in writing is the date when the resolution is
            signed by, or in the case of a Shareholder that is a
            corporation (whether or not a company within the meaning of
            the Companies Acts), on behalf of, the last Shareholder to
            sign and any reference in any enactment to the date of
            passing of a resolution is, in relation to a resolution in
            writing made in accordance with this section, a reference
            to such date.

      (d)   A resolution in writing made in accordance with this Bye-Law is as
            valid as if it had been passed by the Company in general meeting or,
            if applicable, by a meeting of the relevant class of Shareholders of
            the Company, as the case may be. A resolution in writing made in
            accordance with this section shall constitute minutes for the
            purposes of the Companies Acts and these Bye-Laws.

                           NOTICE OF GENERAL MEETINGS

47. An Annual General Meeting shall be called by not less than five days notice
in writing and a Special General Meeting shall be called by not less than five
days notice in writing. The notice shall be exclusive of the day on which it is
served or deemed to be served and of the day for which it is given, and shall
specify the place, day and time of the meeting, and, in the case of a Special
General Meeting, the general nature of the business to be considered. Notice of
every general meeting shall be given in any manner permitted by Bye-Laws 120 and
121 to all Shareholders other
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than such as, under the provisions of these Bye-Laws or the terms of issue of
the shares they hold, are not entitled to receive such notice from the Company.

Notwithstanding that a meeting of the Company is called by shorter notice than
that specified in this Bye-Law, it shall be deemed to have been duly called if
it is so agreed:-

      (a)   in the case of a meeting called as an Annual General Meeting, by all
            the Shareholders entitled to attend and vote thereat;

      (b)   in the case of any other meeting, by a majority in number of the
            Shareholders having the right to attend and vote at the meeting,
            being a majority together holding not less than 95 percent in
            nominal value of the shares giving that right.

48. The accidental omission to give notice of a meeting or (in cases where
instruments of proxy are sent out with the notice) the accidental omission to
send such instrument of proxy to, or the non-receipt of notice of a meeting or
such instrument of proxy by, any person entitled to receive such notice shall
not invalidate the proceedings at that meeting.

                    PROCEEDINGS AT GENERAL MEETINGS

49. No business shall be transacted at any general meeting unless a quorum is
present when the meeting proceeds to business, but the absence of a quorum shall
not preclude the appointment, choice or election of a chairman which shall not
be treated as part of the business of the meeting. Save as otherwise provided by
these Bye-Laws, at least two 
<PAGE>   24
                                                                              24


Shareholders present in person or by proxy and entitled to vote shall be a
quorum for all purposes; provided, however, that if the Company shall have only
one Shareholder, one Shareholder present in person or by proxy shall constitute
the necessary quorum.

50. If within five minutes (or such longer time as the chairman of the meeting
may determine to wait) after the time appointed for the meeting, a quorum is not
present, the meeting, if convened on the requisition of Shareholders, shall be
dissolved. In any other case, it shall stand adjourned to such other day and
such other time and place as the chairman of the meeting may determine and at
such adjourned meeting two Shareholders present in person or by proxy (whatever
the number of shares held by them) shall be a quorum provided that if the
Company shall have only one Shareholder, one Shareholder present in person or by
proxy shall constitute the necessary quorum. The Company shall give not less
than five days notice of any meeting adjourned through want of a quorum and such
notice shall state that the sole Shareholder or, if more than one, two
Shareholders present in person or by proxy (whatever the number of shares held
by them) shall be a quorum.

51. A meeting of the Shareholders or any class thereof may be held by means of
such telephone, electronic or other communication facilities as permit all
persons participating in the meeting to communicate with each other
simultaneously and instantaneously and participation in such a meeting shall
constitute presence in person at such meeting.
<PAGE>   25
                                                                              25


52. Each Director shall be entitled to attend and speak at any general meeting
of the Company.

53. The Chairman (if any) of the Board or, in his absence, the President shall
preside as chairman at every general meeting. If there is no such Chairman or
President, or if at any meeting neither the Chairman nor the President is
present within five minutes after the time appointed for holding the meeting, or
if neither of them is willing to act as chairman, the Directors present shall
choose one of their number to act or if one Director only is present he shall
preside as chairman if willing to act. If no Director is present, or if each of
the Directors present declines to take the chair, the persons present and
entitled to vote on a poll shall elect one of their number to be chairman.

54. The chairman of the meeting may, with the consent of any meeting at which a
quorum is present (and shall if so directed by the meeting), adjourn the meeting
from time to time and from place to place but no business shall be transacted at
any adjourned meeting except business which might lawfully have been transacted
at the meeting from which the adjournment took place. When a meeting is
adjourned for three months or more, notice of the adjourned meeting shall be
given as in the case of an original meeting.

55. Save as expressly provided by these Bye-Laws, it shall not be necessary to
give any notice of an adjournment or of the business to be transacted at an
adjourned meeting.

                                     VOTING
<PAGE>   26
                                                                              26


56. Save where a greater majority is required by the Companies Acts or these
Bye-Laws, any question proposed for consideration at any general meeting shall
be decided on by a simple majority of votes cast.

57. At any general meeting, a resolution put to the vote of the meeting shall be
decided on a show of hands unless (before or on the declaration of the result of
the show of hands or on the withdrawal of any other demand for a poll) a poll is
demanded by:-

      (a)   the chairman of the meeting; or

      (b)   at least three Shareholders present in person or represented by
            proxy; or

      (c)   any Shareholder or Shareholders present in person or represented by
            proxy and holding between them not less than one tenth of the total
            voting rights of all the Shareholders having the right to vote at
            such meeting; or

      (d)   a Shareholder or Shareholders present in person or represented by
            proxy holding shares conferring the right to vote at such meeting,
            being shares on which an aggregate sum has been paid up equal to not
            less than one tenth of the total sum paid up on all such shares
            conferring such right.

Unless a poll is so demanded and the demand is not withdrawn, a declaration by
the chairman that a resolution has, on a show of hands, been carried or carried
unanimously or by a particular 
<PAGE>   27
                                                                              27


majority or not carried by a particular majority or lost shall be final and
conclusive, and an entry to that effect in the minute book of the Company shall
be conclusive evidence of the fact without proof of the number of votes recorded
for or against such resolution.

58. If a poll is duly demanded, the result of the poll shall be deemed to be the
resolution of the meeting at which the poll is demanded.

59. A poll demanded on the election of a chairman, or on a question of
adjournment, shall be taken forthwith. A poll demanded on any other question
shall be taken in such manner and either forthwith or at such time (being not
later than three months after the date of the demand) and place as the chairman
shall direct. It shall not be necessary (unless the chairman otherwise directs)
for notice to be given of a poll.

60. The demand for a poll shall not prevent the continuance of a meeting for the
transaction of any business other than the question on which the poll has been
demanded and it may be withdrawn at any time before the close of the meeting or
the taking of the poll, whichever is the earlier.

61. On a poll, votes may be cast either personally or by proxy.

62. A person entitled to more than one vote on a poll need not use all his votes
or cast all the votes he uses in the same way.

63. In the case of an equality of votes at a general meeting, whether on a show
of hands or on a poll, the 
<PAGE>   28
                                                                              28


chairman of such meeting shall not be entitled to a second or casting vote.

64. In the case of joint holders of a share, the vote of the senior who tenders
a vote, whether in person or by proxy, shall be accepted to the exclusion of the
votes of the other joint holders, and for this purpose seniority shall be
determined by the order in which the names stand in the Register in respect of
the joint holding.

65. A Shareholder who is a patient for any purpose of any statute or applicable
law relating to mental health or in respect of whom an order has been made by
any Court having jurisdiction for the protection or management of the affairs of
persons incapable of managing their own affairs may vote, whether on a show of
hands or on a poll, by his receiver, committee, curator bonis or other person in
the nature of a receiver, committee or curator bonis appointed by such Court and
such receiver, committee, curator bonis or other person may vote on a poll by
proxy, and may otherwise act and be treated as such Shareholder for the purpose
of general meetings.

66. No Shareholder shall, unless the Board otherwise determines, be entitled to
vote at any general meeting unless all calls or other sums presently payable by
him in respect of shares in the Company have been paid.

67. If (i) any objection shall be raised to the qualification of any voter or
(ii) any votes have been counted which ought not to have been counted or which
might have been rejected or (iii) any votes are not counted which 
<PAGE>   29
                                                                              29


ought to have been counted, the objection or error shall not vitiate the
decision of the meeting or adjourned meeting on any resolution unless the same
is raised or pointed out at the meeting or, as the case may be, the adjourned
meeting at which the vote objected to is given or tendered or at which the error
occurs. Any objection or error shall be referred to the chairman of the meeting
and shall only vitiate the decision of the meeting on any resolution if the
chairman decides that the same may have affected the decision of the meeting.
The decision of the chairman on such matters shall be final and conclusive.

                      PROXIES AND CORPORATE REPRESENTATIVES

68. The instrument appointing a proxy shall be in writing under the hand of the
appointor or of his attorney authorised by him in writing or, if the appointor
is a corporation, either under its seal or under the hand of an officer,
attorney or other person authorised to sign the same.

69. Any Shareholder may appoint a standing proxy or (if a corporation)
representative by depositing at the Registered Office a proxy or (if a
corporation) an authorisation and such proxy or authorisation shall be valid for
all general meetings and adjournments thereof or, resolutions in writing, as the
case may be, until notice of revocation is received at the Registered Office.
Where a standing proxy or authorisation exists, its operation shall be deemed to
have been suspended at any general meeting or adjournment thereof at which the
Shareholder is present or in respect to which the Shareholder has specially
appointed a proxy or
<PAGE>   30
                                                                              30


representative. The Board may from time to time require such evidence as it
shall deem necessary as to the due execution and continuing validity of any such
standing proxy or authorisation and the operation of any such standing proxy or
authorisation shall be deemed to be suspended until such time as the Board
determines that it has received the requested evidence or other evidence
satisfactory to it.

70. Subject to Bye-Law 69, the instrument appointing a proxy together with such
other evidence as to its due execution as the Board may from time to time
require, shall be delivered at the Registered Office (or at such place as may be
specified in the notice convening the meeting or in any notice of any
adjournment or, in either case or the case of a written resolution, in any
document sent therewith) prior to the holding of the relevant meeting or
adjourned meeting at which the person named in the instrument proposes to vote
or, in the case of a poll taken subsequently to the date of a meeting or
adjourned meeting, before the time appointed for the taking of the poll, or, in
the case of a written resolution, prior to the effective date of the written
resolution and in default the instrument of proxy shall not be treated as valid.

71. Instruments of proxy shall be in any common form or in such other form as
the Board may approve and the Board may, if it thinks fit, send out with the
notice of any meeting or any written resolution forms of instruments of proxy
for use at that meeting or in connection with that written resolution. The
instrument of proxy shall be deemed to confer authority to demand or join in
demanding a poll and 
<PAGE>   31
                                                                              31


to vote on any amendment of a written resolution or amendment of a resolution
put to the meeting for which it is given as the proxy thinks fit. The instrument
of proxy shall unless the contrary is stated therein be valid as well for any
adjournment of the meeting as for the meeting to which it relates.

72. A vote given in accordance with the terms of an instrument of proxy shall be
valid notwithstanding the previous death or insanity of the principal, or
revocation of the instrument of proxy or of the authority under which it was
executed, provided that no intimation in writing of such death, insanity or
revocation shall have been received by the Company at the Registered Office (or
such other place as may be specified for the delivery of instruments of proxy in
the notice convening the meeting or other documents sent therewith) one hour at
least before the commencement of the meeting or adjourned meeting, or the taking
of the poll, or the day before the effective date of any written resolution at
which the instrument of proxy is used.

73. Subject to the Companies Acts, the Board may at its discretion waive any of
the provisions of these Bye-Laws related to proxies or authorisations and, in
particular, may accept such verbal or other assurances as it thinks fit as to
the right of any person to attend and vote on behalf of any Shareholder at
general meetings or to sign written resolutions.

                      APPOINTMENT AND REMOVAL OF DIRECTORS
<PAGE>   32
                                                                              32


74. The number of Directors shall be such number not less than five nor more
than fifteen as the Company by Resolution may from time to time determine and,
subject to the Companies Act and these Bye-Laws, shall serve until re-elected or
their successors are appointed at the next Annual General Meeting. The Board
shall nominate for election to the Board at each Annual General Meeting two
independent Directors.

75. Without prejudice to the power of the Company by Resolution in pursuance of
any of the provisions of these Bye-laws to appoint any person to be a Director,
any vacancy on the Board may be filled by the Directors, so long as a quorum of
Directors remains in office.

76. The Company may in a Special General Meeting called for that purpose remove
a Director provided notice of any such meeting shall be served upon the Director
concerned not less than 14 days before the meeting and he shall be entitled to
be heard at that meeting. Any vacancy created by the removal of a Director at a
Special General Meeting may be filled at the Meeting by the election of another
Director in his place or, in the absence of any such election, by the Board.

             RESIGNATION AND DISQUALIFICATION OF DIRECTORS

77. The office of a Director shall be vacated upon the happening of any of the
following events:

      (a)   if he resigns his office by notice in writing delivered to the
            Registered Office or tendered at a meeting of the Board;
<PAGE>   33
                                                                              33


      (b)   if he becomes of unsound mind or a patient for any purpose of any
            statute or applicable law relating to mental health and the Board
            resolves that his office is vacated;

      (c)   if he becomes bankrupt or compounds with his creditors;

      (d)   if he is prohibited by law from being a Director;

      (e)   if he ceases to be a Director by virtue of the Companies Acts or is
            removed from office pursuant to these Bye-Laws.

        DIRECTORS' FEES AND ADDITIONAL REMUNERATION AND EXPENSES

78. The amount, if any, of Directors' fees shall from time to time be determined
by the resolution of the Board (or any committee thereof so authorized by the
Board). Each Director may be paid his reasonable travelling, hotel and
incidental expenses in attending and returning from meetings of the Board or
committees constituted pursuant to these Bye-Laws or general meetings and shall
be paid all expenses properly and reasonably incurred by him in the conduct of
the Company's business or in the discharge of his duties as a Director. Any
Director who, by request, goes or resides abroad for any purposes of the Company
or who performs services which in the opinion of the Board go beyond the
ordinary duties of a Director may be paid such extra remuneration (whether by
way of salary, commission, participation in profits or otherwise) as the Board
may determine, and such extra remuneration shall be in addition 
<PAGE>   34
                                                                              34


to any remuneration provided for by or pursuant to any other Bye-Law.

                              DIRECTORS' INTERESTS

79.  (a)    A Director may hold any other office or place of profit
            with the Company (except that of auditor) in conjunction
            with his office of Director for such period and upon such
            terms as the Board may determine, and may be paid such
            extra remuneration therefor (whether by way of salary,
            commission, participation in profits or otherwise) as the
            Board may determine, and such extra remuneration shall be
            in addition to any remuneration provided for by or pursuant
            to any other Bye-Law.

      (b)   A Director may act by himself or his firm in a professional
            capacity for the Company (otherwise than as auditor) and he
            or his firm shall be entitled to remuneration for
            professional services as if he were not a Director.

      (c)   Subject to the provisions of the Companies Acts, a Director
            may notwithstanding his office be a party to, or otherwise
            interested in, any transaction or arrangement with the
            Company or in which the Company is otherwise interested;
            and be a Director or other officer of, or employed by, or a
            party to any transaction or arrangement with, or otherwise
            interested in, any body corporate promoted by the Company
            or in which the Company is interested.  The Board may also
            cause the voting power conferred 
<PAGE>   35
                                                                              35

            by the shares in any other company held or owned by the
            Company to be exercised in such manner in all respects as it
            thinks fit, including the exercise thereof in favour of any
            resolution appointing the Directors or any of them to be
            directors or officers of such other company, or voting or
            providing for the payment of remuneration to the directors
            or officers of such other company.

      (d)   So long as, where it is necessary, he declares the nature
            of his interest at the first opportunity at a meeting of
            the Board or by writing to the Directors as required by the
            Companies Acts, a Director shall not by reason of his
            office be accountable to the Company for any benefit which
            he derives from any office or employment to which these
            Bye-Laws allow him to be appointed or from any transaction
            or arrangement in which these Bye-Laws allow him to be
            interested, and no such transaction or arrangement shall be
            liable to be avoided on the ground of any interest or
            benefit.

      (e)   Subject to the Companies Acts and any further disclosure
            required thereby, a general notice to the Directors by a
            Director or officer declaring that he is a director or
            officer or has an interest in a person and is to be
            regarded as interested in any transaction or arrangement
            made with that person, shall be a sufficient
<PAGE>   36
                                                                              36


            declaration of interest in relation to any transaction or
            arrangement so made.

                         POWERS AND DUTIES OF THE BOARD

80. Subject to the provisions of the Companies Acts and these Bye-Laws and to
any directions given by the Company by Resolution, the Board shall manage the
business of the Company and may pay all expenses incurred in promoting and
incorporating the Company and may exercise all the powers of the Company. No
alteration of these Bye-Laws and no such direction shall invalidate any prior
act of the Board which would have been valid if that alteration had not been
made or that direction had not been given. The powers given by this Bye-Law
shall not be limited by any special power given to the Board by these Bye-Laws
and a meeting of the Board at which a quorum is present shall be competent to
exercise all the powers, authorities and discretions for the time being vested
in or exercisable by the Board.

81. The Board may exercise all the powers of the Company to borrow money and to
mortgage or charge all or any part of the undertaking, property and assets
(present and future) and uncalled capital of the Company and to issue debentures
and other securities, whether outright or as collateral security for any debt,
liability or obligation of the Company or of any other persons.

82. All cheques, promissory notes, drafts, bills of exchange and other
instruments, whether negotiable or transferable or not, and all receipts for
money paid to the Company shall be signed, drawn, accepted, endorsed or
<PAGE>   37
                                                                              37


otherwise executed, as the case may be, in such manner as the Board shall from
time to time by resolution determine.

83. The Board on behalf of the Company may provide benefits, whether by the
payment of gratuities or pensions or otherwise, for any person including any
Director or former Director who has held any executive office or employment with
the Company or with any body corporate which is or has been a subsidiary or
affiliate of the Company or a predecessor in the business of the Company or of
any such subsidiary or affiliate, and to any member of his family or any person
who is or was dependent on him, and may contribute to any fund and pay premiums
for the purchase or provision of any such gratuity, pension or other benefit, or
for the insurance of any such person.

84. The Board may from time to time appoint one or more of its body to be a
managing director, joint managing director or an assistant managing director or
to hold any other employment or executive office with the Company for such
period and upon such terms as the Board may determine and may revoke or
terminate any such appointments. Any such revocation or termination as aforesaid
shall be without prejudice to any claim for damages that such Director may have
against the Company or the Company may have against such Director for any breach
of any contract of service between him and the Company which may be involved in
such revocation or termination. Any person so appointed shall receive such
remuneration (if any) (whether by way of salary, commission, participation in
profits or otherwise) 
<PAGE>   38
                                                                              38


as the Board may determine, and either in addition to or in lieu of his
remuneration as a Director.

                        DELEGATION OF THE BOARD'S POWERS

85. The Board may by power of attorney appoint any company, firm or person or
any fluctuating body of persons, whether nominated directly or indirectly by the
Board, to be the attorney or attorneys of the Company for such purposes and with
such powers, authorities and discretions (not exceeding those vested in or
exercisable by the Board under these Bye-Laws) and for such period and subject
to such conditions as it may think fit, and any such power of attorney may
contain such provisions for the protection and convenience of persons dealing
with any such attorney and of such attorney as the Board may think fit, and may
also authorise any such attorney to sub-delegate all or any of the powers,
authorities and discretions vested in him.

86. The Board may entrust to and confer upon any Director or officer any of the
powers exercisable by it upon such terms and conditions with such restrictions
as it thinks fit, and either collaterally with, or to the exclusion of, its own
powers, and may from time to time revoke or vary all or any of such powers but
no person dealing in good faith and without notice of such revocation or
variation shall be affected thereby.

87. The Board may delegate any of its powers, authorities and discretions to
committees, consisting of such person or persons (whether a member or members of
its body or not) as it thinks fit. Any committee so formed shall, in the
<PAGE>   39
                                                                              39


exercise of the powers, authorities and discretions so delegated, conform to any
regulations which may be imposed upon it by the Board.

                            PROCEEDINGS OF THE BOARD

88. The Board may meet for the despatch of business, adjourn and otherwise
regulate its meetings as it thinks fit. Questions arising at any meeting shall
be determined by a majority of votes. In the case of an equality of votes the
motion shall be deemed to have been lost. A Director may, and the Secretary on
the requisition of a Director shall, at any time summon a meeting of the Board.

89. Notice of a meeting of the Board shall be deemed to be duly given to a
Director if it is given to him personally or by word of mouth or sent to him by
post, cable, telex, telecopier or other mode of representing or reproducing
words in a legible and non-transitory form at his last known address or any
other address given by him to the Company for this purpose. A Director may waive
notice of any meeting either prospectively or retrospectively.

90.  (a)    The quorum necessary for the transaction of the business of
            the Board may be fixed by the Board and, unless so fixed at
            any other number, shall be two individuals. Any Director
            who ceases to be a Director at a meeting of the Board may
            continue to be present and to act as a Director and be
            counted in the quorum until the termination of the meeting
            if no other Director objects and if otherwise a quorum of
            Directors would not be present.
<PAGE>   40
                                                                              40


      (b)   A Director who to his knowledge is in any way, whether
            directly or indirectly, interested in a contract or
            proposed contract, transaction or arrangement with the
            Company and has complied with the provisions of the
            Companies Acts and these Bye-Laws with regard to disclosure
            of his interest shall be entitled to vote in respect of any
            contract, transaction or arrangement in which he is so
            interested and if he shall do so his vote shall be counted,
            and he shall be taken into account in ascertaining whether
            a quorum is present.

91. So long as a quorum of Directors remains in office, the continuing Directors
may act notwithstanding any vacancy in the Board but, if no such quorum remains,
the continuing Directors or a sole continuing Director may act only for the
purpose of calling a general meeting.

92. The Chairman (if any) of the Board or, in his absence, the President shall
preside as chairman at every meeting of the Board. If there is no such Chairman
or President, or if at any meeting the Chairman or the President is not present
within five minutes after the time appointed for holding the meeting, or is not
willing to act as chairman, the Directors present may choose one of their number
to be chairman of the meeting.

93. The meetings and proceedings of any committee consisting of two or more
members shall be governed by the provisions contained in these Bye-Laws for
regulating the meetings and proceedings of the Board so far as the same are
<PAGE>   41
                                                                              41


applicable and are not superseded by any regulations imposed by the Board.

94. A resolution in writing signed by all the Directors for the time being
entitled to receive notice of a meeting of the Board or by all the members of a
committee for the time being shall be as valid and effectual as a resolution
passed at a meeting of the Board or, as the case may be, of such committee duly
called and constituted. Such resolution may be contained in one document or in
several documents in the like form each signed by one or more of the Directors
or members of the committee concerned.

95. A meeting of the Board or a committee appointed by the Board may be held by
means of such telephone, electronic or other communication facilities as permit
all persons participating in the meeting to communicate with each other
simultaneously and instantaneously and participation in such a meeting shall
constitute presence in person at such meeting.

96. All acts done by the Board or by any committee or by any person acting as a
Director or member of a committee or any person duly authorised by the Board or
any committee, shall, notwithstanding that it is afterwards discovered that
there was some defect in the appointment of any member of the Board or such
committee or person acting as aforesaid or that they or any of them were
disqualified or had vacated their office, be as valid as if every such person
had been duly appointed and was qualified and had continued to be a Director,
member of such committee or person so authorised.
<PAGE>   42
                                                                              42


                                    OFFICERS

97. The officers of the Company shall include a President and a Vice-President
or a Chairman and a Deputy Chairman who shall be Directors and shall be elected
by the Board as soon as possible after the statutory meeting and each Annual
General Meeting. In addition, the Board may appoint any person whether or not he
is a Director to hold such office as the Board may from time to time determine.
Any person elected or appointed pursuant to this Bye-Law shall hold office for
such period and upon such terms as the Board may determine and the Board may
revoke or terminate any such election or appointment. Any such revocation or
termination shall be without prejudice to any claim for damages that such
officer may have against the Company or the Company may have against such
officer for any breach of any contract of service between him and the Company
which may be involved in such revocation or termination. Save as provided in the
Companies Acts or these Bye-Laws, the powers and duties of the officers of the
Company shall be such (if any) as are determined from time to time by the Board.

                                     MINUTES

98. The Directors shall cause minutes to be made and books kept for the purpose
of recording -

      (a)   all appointments of officers made by the
Directors;

      (b)   the names of the Directors and other persons (if any) present at
            each meeting of Directors and of any committee;
<PAGE>   43
                                                                              43


      (c)   of all proceedings at meetings of the Company, of the holders of any
            class of shares in the Company, and of committees;

      (d) of all proceedings of managers (if any).

                                   SECRETARY

99. The Secretary shall be appointed by the Board at such remuneration (if any)
and upon such terms as it may think fit and any Secretary so appointed may be
removed by the Board.

The duties of the Secretary shall be those prescribed by the Companies Acts
together with such other duties as shall from time to time be prescribed by the
Board.

100. A provision of the Companies Acts or these Bye-Laws requiring or
authorising a thing to be done by or to a Director and the Secretary shall not
be satisfied by its being done by or to the same person acting both as Director
and as, or in the place of, the Secretary.

                                    THE SEAL

101.  (a)   The Seal shall consist of a circular metal device with the
            name of the Company around the outer margin thereof and the
            country and year of incorporation across the centre
            thereof.  Should the Seal not have been received at the
            Registered Office in such form at the date of adoption of
            this Bye-Law then, pending such receipt, any document
            requiring to be sealed with the Seal 
<PAGE>   44
                                                                              44


            shall be sealed by affixing a red wafer seal to the document with
            the name of the Company, and the country and year of incorporation
            type written across the centre thereof.

      (b)   The Board shall provide for the custody of every Seal.  A
            Seal shall only be used by authority of the Board or of a
            committee constituted by the Board.  Subject to these
            Bye-laws, any instrument to which a Seal is affixed shall
            be signed by two Directors or the Secretary and one
            Director, or by any two persons whether or not Directors or
            the Secretary, who have been authorised either generally or
            specifically to attest to the use of a Seal; provided that
            the Secretary or a Director may affix a Seal attested with
            his signature only to authenticate copies of these
            Bye-Laws, the minutes of any meeting or any other documents
            requiring authentication.

                          DIVIDENDS AND OTHER PAYMENTS

102. The Board may from time to time declare cash dividends or distributions out
of contributed surplus to be paid to the Shareholders according to their rights
and interests including such interim dividends as appear to the Board to be
justified by the position of the Company. The Board may also pay any fixed cash
dividend which is payable on any shares of the Company half yearly or on such
other dates, whenever the position of the Company, in the opinion of the Board,
justifies such payment.
<PAGE>   45
                                                                              45


103. Except insofar as the rights attaching to, or the terms of issue of, any
share otherwise provide:-

      (a)   all dividends or distributions out of contributed surplus may be
            declared and paid according to the amounts paid up on the shares in
            respect of which the dividend or distribution is paid, and an amount
            paid up on a share in advance of calls may be treated for the
            purpose of this Bye-Law as paid-up on the share;

      (b)   dividends or distributions out of contributed surplus may be
            apportioned and paid pro rata according to the amounts paid-up on
            the shares during any portion or portions of the period in respect
            of which the dividend or distribution is paid.

104. The Board may deduct from any dividend, distribution or other moneys
payable to a Shareholder by the Company on or in respect of any shares all sums
of money (if any) presently payable by him to the Company on account of calls or
otherwise in respect of shares of the Company.

105. No dividend, distribution or other moneys payable by the Company on or in
respect of any share shall bear interest against the Company.

106. Any dividend, distribution, interest or other sum payable in cash to the
holder of shares may be paid by cheque or warrant sent through the post
addressed to the holder at his address in the Register or, in the case of joint
holders, addressed to the holder whose name stands 
<PAGE>   46
                                                                              46


first in the Register in respect of the shares at his registered address as
appearing in the Register or addressed to such person at such address as the
holder or joint holders may in writing direct. Every such cheque or warrant
shall, unless the holder or joint holders otherwise direct, be made payable to
the order of the holder or, in the case of joint holders, to the order of the
holder whose name stands first in the Register in respect of such shares, and
shall be sent at his or their risk and payment of the cheque or warrant by the
bank on which it is drawn shall constitute a good discharge to the Company. Any
one of two or more joint holders may give effectual receipts for any dividends,
distributions or other moneys payable or property distributable in respect of
the shares held by such joint holders.

107. Any dividend or distribution out of contributed surplus unclaimed for a
period of six years from the date of declaration of such dividend or
distribution shall be forfeited and shall revert to the Company and the payment
by the Board of any unclaimed dividend, distribution, interest or other sum
payable on or in respect of the share into a separate account shall not
constitute the Company a trustee in respect thereof.

108. With the sanction of a Resolution the Board may direct payment or
satisfaction of any dividend or distribution out of contributed surplus wholly
or in part by the distribution of specific assets, and in particular of paid-up
shares or debentures of any other company, and where any difficulty arises in
regard to such distribution or dividend the Board 
<PAGE>   47
                                                                              47


may settle it as it thinks expedient, and in particular, may authorise any
person to sell and transfer any fractions or may ignore fractions altogether,
and may fix the value for distribution or dividend purposes of any such specific
assets and may determine that cash payments shall be made to any Shareholders
upon the footing of the values so fixed in order to secure equality of
distribution and may vest any such specific assets in trustees as may seem
expedient to the Board.

                                    RESERVES

109. The Board may, before recommending or declaring any dividend or
distribution out of contributed surplus, set aside such sums as it thinks proper
as reserves which shall, at the discretion of the Board, be applicable for any
purpose of the Company and pending such application may, also at such
discretion, either be employed in the business of the Company or be invested in
such investments as the Board may from time to time think fit. The Board may
also without placing the same to reserve carry forward any sums which it may
think it prudent not to distribute.
<PAGE>   48
                                                                              48


                            CAPITALIZATION OF PROFITS

110. The Board may, at any time and from time to time pass a resolution to the
effect that it is desirable to capitalize all or any part of any amount for the
time being standing to the credit of any reserve or fund which is available for
distribution or to the credit of any share premium account or any capital
redemption reserve fund. Accordingly such amount may by resolution of the Board
be set free for distribution amongst the Shareholders or any class of
Shareholders who would be entitled thereto if distributed by way of dividend and
in the same proportions, on the footing that the same be not paid in cash but be
applied either in or towards paying up amounts for the time being unpaid on any
shares in the Company held by such Shareholders respectively or in payment up in
full of unissued shares, debentures or other obligations of the Company, to be
allotted and distributed credited as fully paid among such Shareholders, or
partly in one way and partly in the other, provided that for purpose of this
Bye-law, a share premium account and a capital redemption reserve fund may be
applied only in paying up of unissued shares to be issued to such Shareholders
credited as fully paid and provided further that any sum standing to the credit
of a share premium account may only be applied in crediting as fully paid shares
of the same class as that from which the relevant share premium was derived.

111. Where any difficulty arises in regard to any distribution under the last
preceding Bye-Law, the Board may settle the same as it thinks expedient and, in
particular, 
<PAGE>   49
                                                                              49


may authorise any person to sell and transfer any fractions or may resolve that
the distribution should be as nearly as may be practicable in the correct
proportion but not exactly so or may ignore fractions altogether, and may
determine that cash payments should be made to any Shareholders in order to
adjust the rights of all parties, as may seem expedient to the Board. The Board
may appoint any person to sign on behalf of the persons entitled to participate
in the distribution any contract necessary or desirable for giving effect
thereto and such appointment shall be effective and binding upon the
Shareholders.

                                  RECORD DATES

112. Notwithstanding any other provisions of these Bye-Laws, the Company may by
Resolution or the Board may fix any date as the record date for any dividend,
distribution, allotment or issue and for the purpose of identifying the persons
entitled to receive notices of general meetings. Any such record date may be on
or at any time before or after any date on which such dividend, distribution,
allotment or issue is declared, paid or made or such notice is despatched.

                               ACCOUNTING RECORDS

113. The Board shall cause to be kept accounting records sufficient to give a
true and fair view of the state of the Company's affairs and to show and explain
its transactions, in accordance with the Companies Acts.

114. The records of account shall be kept at the Registered Office or at such
other place or places as the Board thinks 
<PAGE>   50
                                                                              50


fit, and shall at all times be open to inspection by the Directors: PROVIDED
that if the records of account are kept at some place outside Bermuda, there
shall be kept at an office of the Company in Bermuda such records as will enable
the Directors to ascertain with reasonable accuracy the financial position of
the Company at the end of each three month period. No Shareholder (other than an
officer of the Company) shall have any right to inspect any accounting record or
book or document of the Company except as conferred by law or authorised by the
Board or by Resolution.

115. A copy of every balance sheet and statement of income and expenditure,
including every document required by law to be annexed thereto, which is to be
laid before the Company in general meeting, together with a copy of the
auditors' report, shall be sent to each person entitled thereto in accordance
with the requirements of the Companies Acts.

                                      AUDIT

116. Save and to the extent that an audit is waived in the manner permitted by
the Companies Acts, auditors shall be appointed and their duties regulated in
accordance with the Companies Acts, any other applicable law and such
requirements not inconsistent with the Companies Acts as the Board may from time
to time determine.

                     SERVICE OF NOTICES AND OTHER DOCUMENTS

117. Any notice or other document (including a share certificate) may be served
on or delivered to any Shareholder by the Company either personally or by
sending
<PAGE>   51
                                                                              51


it through the post (by airmail where applicable) in a pre-paid letter addressed
to such Shareholder at his address as appearing in the Register or by delivering
it to or leaving it at such registered address. In the case of joint holders of
a share, service or delivery of any notice or other document on or to one of the
joint holders shall for all purposes be deemed as sufficient service on or
delivery to all the joint holders. Any notice or other document if sent by post
shall be deemed to have been served or delivered seven days after it was put in
the post, and in proving such service or delivery, it shall be sufficient to
prove that the notice or document was properly addressed, stamped and put in the
post.

118. Any notice of a general meeting of the Company shall be deemed to be duly
given to a Shareholder if it is sent to him by cable, telex, telecopier or other
mode of representing or reproducing words in a legible and non-transitory form
at his address as appearing in the Register or any other address given by him to
the Company for this purpose. Any such notice shall be deemed to have been
served twenty-four hours after its despatch.

119. Any notice or other document delivered, sent or given to a Shareholder in
any manner permitted by these Bye-Laws shall, notwithstanding that such
Shareholder is then dead or bankrupt or that any other event has occurred, and
whether or not the Company has notice of the death or bankruptcy or other event,
be deemed to have been duly served or delivered in respect of any share
registered in the name of such Shareholder as sole or joint holder unless his
name shall,
<PAGE>   52
                                                                              52


at the time of the service or delivery of the notice or document, have been
removed from the Register as the holder of the share, and such service or
delivery shall for all purposes be deemed as sufficient service or delivery of
such notice or document on all persons interested (whether jointly with or as
claiming through or under him) in the share.

                                   WINDING UP

120. If the Company shall be wound up, the liquidator may, with the sanction of
a Resolution of the Company and any other sanction required by the Companies
Acts, divide amongst the Shareholders in specie or kind the whole or any part of
the assets of the Company (whether they shall consist of property of the same
kind or not) and may for such purposes set such values as he deems fair upon any
property to be divided as aforesaid and may determine how such division shall be
carried out as between the Shareholders or different classes of Shareholders.
The liquidator may, with the like sanction, vest the whole or any part of such
assets in trustees upon such trust for the benefit of the contributories as the
liquidator, with the like sanction, shall think fit, but so that no Shareholder
shall be compelled to accept any shares or other assets upon which there is any
liability.

                               INDEMNITY

121. Subject to the proviso below, every Director, officer of the Company and
member of a committee constituted under Bye-Law 90 shall be indemnified out of
the funds of the 
<PAGE>   53
                                                                              53


Company against all civil liabilities, loss, damage or expense (including but
not limited to liabilities under contract, tort and statute or any applicable
foreign law or regulation and all reasonable legal and other costs and expenses
properly payable) incurred or suffered by him as such Director, officer or
committee member and the indemnity contained in this Bye-Law shall extend to any
person acting as a Director, officer or committee member in the reasonable
belief that he has been so appointed or elected notwithstanding any defect in
such appointment or election PROVIDED ALWAYS that the indemnity contained in
this Bye-Law shall not extend to any matter which would render it void pursuant
to the Companies Acts.

122. Every Director, officer and member of a committee duly constituted under
Bye-Law 90 of the Company shall be indemnified out of the funds of the Company
against all liabilities incurred by him as such Director, officer or committee
member in defending any proceedings, whether civil or criminal, in which
judgment is given in his favour, or in which he is acquitted, or in connection
with any application under the Companies Acts in which relief from liability is
granted to him by the court.

123. To the extent that any Director, officer or member of a committee duly
constituted under Bye-Law 90 is entitled to claim an indemnity pursuant to these
Bye-Laws in respect of amounts paid or discharged by him, the relative indemnity
shall take effect as an obligation of the Company to reimburse the person making
such payment or effecting such discharge.
<PAGE>   54
                                                                              54


                             ALTERATION OF BYE-LAWS

124. These Bye-Laws may be amended from time to time in the manner provided for
in the Companies Acts.
<PAGE>   55
                                                                              55


ANNEX
                                  SCHEDULE III

      8% Series A Convertible Redeemable Preferred Shares due 2011

            Globalstar Telecommunications Limited, an exempted company organized
under the laws of Bermuda (the "Company"), certifies that pursuant to the
authority contained in its Memorandum of Association (the "Memorandum of
Association") and its Bye-Laws (the "Bye-Laws"), and in accordance with Bermuda
law, the Board of Directors (or a duly authorized committee thereof) of the
Company at meetings duly called and held on January 13, 1999, and January 20,
1999, duly approved and adopted the following resolution, which resolution
remains in full force and effect on the date hereof:

            RESOLVED, that pursuant to the authority vested in the Board of
Directors by the Memorandum of Association and Bye-Laws, the Board of Directors
does hereby designate, create, authorize and provide for the issue of a series
of preference stock having the following designation, voting powers, preferences
and relative, participating, optional and other special rights:

            Capitalized terms used herein are defined in Section 15.

            1. Number and Designation. The Company shall have a class of
preference shares, which shall be designated as its 8% Series A Convertible
Redeemable Preferred Shares due 2011 (the "Series A Preferred Shares"), par
value U.S.$0.01 per share, with 8,400,000 shares initially 
<PAGE>   56
                                                                              56


authorized and, subject to the limitations set forth herein, such number of
additional shares as are authorized from time to time by resolution of the Board
of Directors of the Company and as set forth in the Bye-Laws of the Company.
Unless otherwise specified, references herein to any "Section" refer to the
Section number specified in this Schedule III.

            2. Issuance. The Company may issue Series A Preferred Shares from
time to time as may be determined by the Board of Directors (or any committee
thereof) of the Company.

            3. Registered Form; Liquidation Preference; Registrar. Certificates
for Series A Preferred Shares shall be issuable only in registered form and only
with a liquidation preference of U.S.$50 per share. The Company hereby appoints
The Bank of New York as its initial Registrar and Transfer Agent (the
"Registrar") for the Series A Preferred Shares.

            4. Registration; Transfer. (a) The Series A Preferred Shares have
not been registered under the United States Securities Act of 1933 (the
"Securities Act") and may not be resold, pledged or otherwise transferred prior
to the date when they no longer constitute "restricted securities" for purposes
of Rule 144(k) under the Securities Act other than (i) to the Company, (ii) to
"qualified institutional buyers" ("QIBs") pursuant to and in compliance with
Rule 144A ("Rule 144A") under the Securities Act, (iii) pursuant to and in
compliance with Rule 904 of Regulation S under the Securities Act, (iv) to
"accredited
<PAGE>   57
                                                                              57


investors" as defined in Rule 501(a) under the Securities Act, (v) pursuant to
an exemption from registration under the Securities Act, or (vi) pursuant to an
effective registration statement under the Securities Act, in each case in
accordance with any applicable securities laws of Bermuda or any state of the
United States. Until such time as determined by the Company and the Registrar,
certificates evidencing the Series A Preferred Shares shall contain a legend
(the "Restricted Shares Legend") evidencing the foregoing restrictions in
substantially the form set forth on the form of Series A Preferred Share
attached hereto as Exhibit A.

            (b) Series A Preferred Shares issued to QIBs in reliance on Rule
144A, as provided in the Purchase Agreement, shall be issued in the form of one
or more permanent global Series A Preferred Shares in definitive, fully
registered form with the global legend (the "Global Shares Legend") and the
Restricted Shares Legend set forth on the form of Series A Preferred Share
attached hereto as Exhibit A (each, a "Global Series A Preferred Share"), which
shall be deposited on behalf of the holders of the Series A Preferred Shares
represented thereby with the Registrar, at its New York office, as custodian for
The Depository Trust Company, New York, New York ("DTC") or its nominee and
their respective successors (the "Depositary"), and registered in the name of
the Depositary or a nominee of the Depositary, duly executed by the Company and
countersigned and registered by the Registrar as hereinafter provided. The
aggregate liquidation preference of the Global Series A Preferred Share may from
time to time be increased or 
<PAGE>   58
                                                                              58


decreased by adjustments made on the records of the Registrar and the Depositary
or its nominee as hereinafter provided.

            (c) This paragraph shall apply only to a Global Series A Preferred
Share deposited with or on behalf of the Depositary. The Company shall execute
and the Registrar shall, in accordance with this Section, countersign and
deliver initially one or more Global Series A Preferred Shares that (i) shall be
registered in the name of Cede & Co. or other nominee of the Depositary and (ii)
shall be delivered by the Registrar to Cede & Co. or pursuant to instructions
received from Cede & Co. or held by the Registrar as custodian for the
Depositary pursuant to an agreement between the Depositary and the Registrar.
Members of, or participants in, the Depositary ("Agent Members") shall have no
rights under this Schedule with respect to any Global Series A Preferred Share
held on their behalf by the Depositary or by the Registrar as the custodian of
the Depositary or under such Global Series A Preferred Share, and the Depositary
may be treated by the Company, the Registrar and any agent of the Company or the
Registrar as the absolute owner of such Global Series A Preferred Share for all
purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent
the Company, the Registrar or any agent of the Company or the Registrar from
giving effect to any written certification, proxy or other authorization
furnished by the Depositary or impair, as between the Depositary and its Agent
Members, the operation of customary practices of the Depositary governing the
exercise of the rights of a holder of a beneficial interest in any Global 
<PAGE>   59
                                                                              59


Series A Preferred Share. Except as provided in Section 5(b), owners of
beneficial interests in Global Series A Preferred Shares will not be entitled to
receive physical delivery of certificated Series A Preferred Shares.

            (d) Purchasers of Series A Preferred Shares who are not QIBs will
receive certificated Series A Preferred Shares bearing the Restricted Shares
Legend ("Restricted Series A Preferred Shares"). Restricted Series A Preferred
Shares will bear a Restricted Shares Legend unless removed in accordance with
Section 5 and may not be exchanged for a Global Series A Preferred Share, or
interest therein, at any time, except as set forth in clause (iv) of paragraph
(b) of Section 5.

            (e) No certificate evidencing Series A Preferred Shares shall be
valid unless it bears the countersignature of the Registrar.

            5. Paying Agent and Conversion Agent. (a) The Company shall maintain
in the Borough of Manhattan, City of New York, State of New York (i) an office
or agency where Series A Preferred Shares may be presented for payment (the
"Paying Agent") and (ii) an office or agency where Series A Preferred Shares may
be presented for conversion (the "Conversion Agent"). The Company may appoint
the Registrar, the Paying Agent and the Conversion Agent and may appoint one or
more additional paying agents and one or more additional conversion agents in
such other locations as it shall determine. The term "Paying Agent" includes any
additional paying agent and, with respect to payments hereunder by delivery of
Common Shares, may include the 
<PAGE>   60
                                                                              60


Common Share Transfer Agent, and the term "Conversion Agent" includes any
additional conversion agent. The Company may change any Paying Agent or
Conversion Agent without prior notice to any holder. The Company shall notify
the Registrar of the name and address of any Paying Agent or Conversion Agent
appointed by the Company. If the Company fails to appoint or maintain another
entity as Paying Agent or Conversion Agent, the Registrar shall act as such. The
Company or any of its Affiliates may act as Paying Agent, Registrar, coregistrar
or Conversion Agent.

            Neither the Company nor the Registrar shall be required (A) to
issue, countersign or register the transfer of or exchange any Series A
Preferred Share during a period beginning at the opening of business 15 days
before the day of the mailing of a notice of redemption of Series A Preferred
Shares selected for redemption under Section 10 and ending at the close of
business on the day of such mailing or (B) to register the transfer of or
exchange any Series A Preferred Share so selected for redemption in whole or in
part, except the unredeemed portion of any Series A Preferred Share being
redeemed in part.
<PAGE>   61
                                                                              61


            (b) Notwithstanding any provision to the contrary herein, so long as
a Global Series A Preferred Share remains outstanding and is held by or on
behalf of the Depositary, transfers of a Global Series A Preferred Share, in
whole or in part, or of any beneficial interest therein, shall only be made in
accordance with Section 4 and this Section 5; provided, however, that beneficial
interests in a Global Series A Preferred Share may be transferred to persons who
take delivery thereof in the form of a beneficial interest in the same Global
Series A Preferred Share in accordance with the transfer restrictions set forth
in the Restricted Shares Legend:

            (i) Except for transfers or exchanges made in accordance with any of
      clauses (b)(ii) through (v) of this Section 5, transfers of a Global
      Series A Preferred Share shall be limited to transfers of such Global
      Series A Preferred Share in whole, but not in part, to nominees of the
      Depositary or to a successor of the Depositary or such successor's
      nominee.

          (ii) If an owner of a beneficial interest in a Global Series A
    Preferred Share deposited with the Depositary or with the Registrar as
    custodian for the Depositary wishes at any time to transfer its interest in
    such Global Series A Preferred Share to a person who is required to take
    delivery thereof in the form of Restricted Series A Preferred Shares, such
    owner may, subject to the rules and procedures of the Depositary, cause the
    exchange of such interest for one or more certificates evidencing such
    Restricted Series A 
<PAGE>   62
                                                                              62


    Preferred Shares. Upon receipt by the Registrar, at its office in The City
    of New York of (A) instructions from the Depositary directing the Registrar
    to countersign and deliver one or more Restricted Series A Preferred Shares
    equal in number of shares to the beneficial interest in the Global Series A
    Preferred Share to be exchanged, such instructions to contain the name or
    names of the designated transferee or transferees, the number of Restricted
    Series A Preferred Shares to be so issued and appropriate delivery
    instructions, (B) a certificate in the form of Exhibit B attached hereto
    given by the transferor, to the effect set forth therein, (C) if such
    transfer is made pursuant to Section 4(a)(iv), a certificate in the form of
    Exhibit C attached hereto given by the person acquiring the Restricted
    Series A Preferred Shares for which such interest is being exchanged, to the
    effect set forth therein, and (D) such other certifications, legal opinions
    or other information as the Company, the Depositary or the Registrar may
    reasonably require to confirm that such transfer is being made pursuant to
    an exemption from, or in a transaction not subject to, the registration
    requirements of the Securities Act, then the Registrar will instruct the
    Depositary to reduce or cause to be reduced such Global Series A Preferred
    Share by the number of shares of the beneficial interest therein to be
    exchanged and to debit or cause to be debited from the account of the person
    making such transfer the beneficial interest in the Global Series A
    Preferred Share that is being transferred, and 
<PAGE>   63
                                                                              63


    concurrently with such reduction and debit, the Company shall execute, and
    the Registrar shall countersign and deliver, one or more Restricted Series A
    Preferred Shares representing the same number of shares in accordance with
    the instructions referred to above.

            (iii) If a holder of Restricted Series A Preferred Shares wishes at
    any time to transfer all or part of such Restricted Series A Preferred
    Shares to a person who is required to take delivery thereof in the form of
    Restricted Series A Preferred Shares, such holder may, subject to the
    restrictions on transfer set forth herein and in the certificate
    representing such Restricted Series A Preferred Shares, cause the exchange
    of such Restricted Series A Preferred Shares for one or more certificates
    evidencing such Restricted Series A Preferred Shares. Upon receipt by the
    Registrar, at its office in The City of New York of (A) such Restricted
    Series A Preferred Shares, duly endorsed as provided herein, (B)
    instructions from such holder directing the Registrar to authenticate and
    deliver one or more certificates evidencing Restricted Series A Preferred
    Shares, such instructions to contain the name of the transferee and the
    number of the Restricted Series A Preferred Shares to be so issued and
    appropriate delivery instructions, (C) a certificate from the holder of the
    Restricted Series A Preferred Shares to be exchanged in the form of Exhibit
    B attached hereto given by the transferor, to the effect set forth therein,
    (D) if such transfer is made pursuant to clause 
<PAGE>   64
                                                                              64


    4(a)(iv), a certificate in the form of Exhibit C attached hereto given by
    the person acquiring the Restricted Series A Preferred Shares for which such
    shares are being exchanged, to the effect set forth therein, and (E) such
    other certifications, legal opinions or other information as the Company or
    the Registrar may reasonably require to confirm that such transfer is being
    made pursuant to an exemption from, or in a transaction not subject to, the
    registration requirements of the Securities Act, then the Registrar shall
    cancel or cause to be canceled such Restricted Series A Preferred Share and
    concurrently therewith, the Company shall execute, and the Registrar shall
    countersign and deliver, one or more Restricted Series A Preferred Shares
    representing the number of shares transferred in accordance with the
    instructions referred to above.

            (iv) If a holder of Restricted Series A Preferred Shares wishes at
    any time to transfer all or part of such Restricted Series A Preferred
    Shares to a person who is eligible to take delivery thereof in the form of a
    beneficial interest in a Global Series A Preferred Share, such holder may,
    subject to the restrictions on transfer set forth herein and in the
    certificate representing such Restricted Series A Preferred Shares, cause
    the exchange of such Restricted Series A Preferred Shares for beneficial
    interests in a Global Series A Preferred Share. Upon receipt by the
    Registrar, at its office in The City of New York of (A) such Restricted
<PAGE>   65
                                                                              65


    Series A Preferred Shares, duly endorsed as provided herein, (B)
    instructions from such holder directing the Registrar to increase the Global
    Series A Preferred Share, such instructions to contain the name of the
    transferee and appropriate account information, (C) a certificate from the
    holder of the Restricted Series A Preferred Shares to be exchanged in the
    form of Exhibit B attached hereto given by the transferor, to the effect set
    forth therein, and (D) such other certifications, legal opinions or other
    information as the Company, the Depositary or the Registrar may reasonably
    require to confirm that such transfer is being made pursuant to an exemption
    from, or in a transaction not subject to, the registration requirements of
    the Securities Act, then the Registrar shall cancel or cause to be canceled
    such Restricted Series A Preferred Shares and concurrently therewith, the
    Registrar will instruct the Depositary to increase or cause to be increased
    the Global Series A Preferred Share by the aggregate number of shares of the
    Restricted Series A Preferred Shares to be exchanged and to credit or cause
    to be credited to the account of the transferee the beneficial interest in
    the Global Series A Preferred Share that is being transferred.

            (v) In the event that a Global Series A Preferred Share is exchanged
    for Series A Preferred Shares in definitive registered form pursuant to this
    Section, prior to the effectiveness of a Shelf Registration Statement with
    respect to such Series A Preferred Shares, such Series A Preferred Shares
    may be exchanged
<PAGE>   66
                                                                              66


    only in accordance with such procedures as are substantially consistent with
    the provisions of clauses (ii), (iii) and (iv) above (including the
    certification requirements intended to ensure that such transfers comply
    with Rule 144A or are otherwise exempt under the Securities Act, as the case
    may be) and such other procedures as may from time to time be adopted by the
    Company, the Depositary or the Registrar.

            (c) Except in connection with a Shelf Registration Statement
contemplated by and in accordance with the terms of the Registration Rights
Agreement relating to the Series A Preferred Shares, Common Shares issuable (A)
as dividends thereon, (B) on conversion thereof or (C) in redemption thereof,
and any securities into which such Series A Preferred Shares or Common Shares
shall be converted or into which they shall be changed by operation of law or
otherwise (collectively, the "Registrable Securities"), if Series A Preferred
Shares are issued upon the transfer, exchange or replacement of Series A
Preferred Shares bearing the Restricted Shares Legend, or if a request is made
to remove such Restricted Shares Legend on Series A Preferred Shares, the Series
A Preferred Shares so issued shall bear the Restricted Shares Legend, or the
Restricted Shares Legend shall not be removed, as the case may be, unless there
is delivered to the Company and the Registrar such satisfactory evidence, which
may include an opinion of counsel licensed to practice law in the State of New
York, as may be reasonably required by the Company or the Registrar, that
neither the legend nor the restrictions on transfer set forth therein are
required to ensure that transfers thereof 
<PAGE>   67
                                                                              67


comply with the provisions of Rule 144A or Rule 144 or, with respect to
Restricted Series A Preferred Shares, that such Series A Preferred Shares are
not "restricted securities" within the meaning of Rule 144 under the Securities
Act. Upon provision of such satisfactory evidence, the Registrar, at the
direction of the Company, shall countersign and deliver Series A Preferred
Shares that do not bear the Restricted Shares Legend.

            (d) The Registrar shall have no responsibility for any actions taken
or not taken by the Depositary.

            (e) Each holder of a Series A Preferred Share agrees to indemnify
the Company and the Registrar against any liability that may result from the
transfer, exchange or assignment of such holder's Series A Preferred Share in
violation of any provision of this Schedule and/or applicable U.S. Federal or
State securities law; provided, however, that such indemnity shall not apply to
acts of wilful misconduct or gross negligence on the part of the Company or the
Registrar, as the case may be.

            (f) Payments (whether in cash or, as permitted by Section 11, in
Common Shares) due on the Series A Preferred Shares shall be payable at the
office or agency of the Company maintained for such purpose in The City of New
York and at any other office or agency maintained by the Company for such
purpose. If any such payment is in cash, it shall be payable by United States
dollar check drawn on, or wire transfer (provided that appropriate wire
instructions have been received by the Registrar at least 15 days prior to the
applicable date of payment) to a United States dollar
<PAGE>   68
                                                                              68


account maintained by the holder with, a bank located in New York City; provided
that at the option of the Company payment of dividends in cash may be made by
check mailed to the address of the person entitled thereto as such address shall
appear in the Series A Preferred Share Register.

            6. Dividend Rights. (a) The Company shall pay, and the holders of
the Series A Preferred Shares shall be entitled to receive, cumulative dividends
from the date of initial issuance of such Series A Preferred Shares at a rate of
8% per annum on the amount of the liquidation preference of the Series A
Preferred Shares. Dividends will be computed on the basis of a 360-day year of
twelve 30-day months and will be payable quarterly, subject to Section 11, (i)
in cash, (ii) by delivery of Common Shares or (iii) through any combination of
the foregoing in arrears on February 15, May 15, August 15 and November 15 of
each year (each a "Dividend Payment Date"), commencing May 15, 1999, until the
liquidation preference thereof is paid or made available for payment provided,
however., that if such date is not a Business Day, then the Dividend Payment
Date shall be the next Business Day. The Company may elect not to declare
dividend payments on any Dividend Payment Date; provided, however, that
dividends on the Series A Preferred Shares will accrue whether or not the
Company has earnings or profits, whether or not there are funds legally
available for the payment of such dividends and whether or not dividends are
declared. Dividends will accumulate to the extent they are not paid on the
Dividend Payment Date for the period to which they relate. The Company will take
all actions required or permitted under The Companies Act 1981
<PAGE>   69
                                                                              69


of Bermuda (the "Companies Act") to permit the payment of dividends on the
Series A Preferred Shares. Arrearages of unpaid dividends ("Accumulated
Dividends") will not themselves bear interest or be added to the liquidation
preference of the Series A Preferred Shares.

            (b) Pursuant to the terms of the Registration Rights Agreement, if

            (i) on or prior to April 26, 1999, a shelf registration statement
      (the "Shelf Registration Statement") with respect to resales of the
      Registrable Securities has not been filed with the SEC;

            (ii) on or prior to August 24, 1999, the Shelf Registration
      Statement is not declared effective; or

            (iii) the Shelf Registration Statement has been declared effective
      by the SEC and such Shelf Registration Statement ceases to be effective or
      to be usable as contemplated by Section 2(b) of the Registration Rights
      Agreement at any time during the Shelf Registration Period (as defined in
      the Registration Rights Agreement) (without being succeeded by a
      post-effective amendment to such Shelf Registration Statement that cures
      such failure and that is itself declared effective) for any period of 10
      consecutive days or for any 20 days in any 180-day period in connection
      with resales of Transfer Restricted Securities (provided, that the Company
      will have the option of suspending the effectiveness of the Shelf
      Registration Statement, or of notifying holders 
<PAGE>   70
                                                                              70


      of Transfer Restricted Securities that the Shelf Registration Statement
      shall be deemed not to be effective without becoming obligated to pay
      Preferred Stock Liquidated Damages for periods of up to a total of 60 days
      in any calendar year if the Board of Directors of the Company determines
      that compliance with the disclosure obligations necessary to maintain the
      effectiveness of the Shelf Registration Statement at such time could
      reasonably be expected to have an adverse effect on the Company or a
      pending corporate transaction) (each of the foregoing clauses (i) through
      (iii), a "Registration Default"), additional dividends ("Preferred Stock
      Liquidated Damages") will accrue on the Series A Preferred Shares, from
      and including the date of such Registration Default to but excluding the
      day on which such Registration Default has been cured. In the event of
      each such Registration Default, the Company shall pay Preferred Stock
      Liquidated Damages to each holder of Series A Preferred Shares that are
      Transfer Restricted Securities at a rate of 0.50% per annum of the
      liquidation preference of such Series A Preferred Shares, which shall
      accrue from the date of the Registration Default to and including the 30th
      day following such Registration Default and increase by 0.50% for each
      subsequent 30 day period; provided, however, that such Preferred Stock
      Liquidated Damages may not accrue at any time at a rate greater than 2.00%
      per annum of the liquidation preference of the Series A Preferred Shares.
      Following the cure of all Registration Defaults, the accrual of Preferred
      Stock 
<PAGE>   71
                                                                              71


      Liquidated Damages with respect to such Series A Preferred Shares shall
      cease (without in any way limiting the effect of any subsequent
      Registration Default).

            7. Payment of Dividend; Mechanics of Payment; Dividend Rights
Preserved. (a) Dividends on any Series A Preferred Share which are payable, and
are punctually paid or duly provided for, on any Dividend Payment Date shall be
paid in arrears to the person in whose name such Series A Preferred Share (or
one or more predecessor Series A Preferred Shares) is registered at the close of
business on the next preceding February 1, May 1, August 1 and November 1 (each,
together with any record date established for the payment of Accumulated
Dividends, a "Dividend Record Date").

            (b) No dividend whatsoever shall be declared or paid upon, or any
sum set apart for the payment of dividends upon, any outstanding share of the
Series A Preferred Shares with respect to any dividend period unless all
dividends for all preceding dividend periods have been declared and paid, or
declared and a sufficient sum set apart for the payment of such dividends, upon
all outstanding Series A Preferred Shares. Unless full cumulative dividends on
all outstanding Series A Preferred Shares for all past dividend periods shall
have been declared and paid, or declared and a sufficient sum for the payment
thereof set apart, then:

            (i) no dividend (other than (A) with respect to Junior Shares or
      Parity Shares, a dividend payable solely in any Junior Shares or Parity
      Shares, respectively, or (B) with respect to Parity Shares,
<PAGE>   72
                                                                              72


      a partial dividend paid pro rata on such Parity Shares and the Series A
      Preferred Shares) shall be declared or paid upon, or any sum set apart for
      the payment of dividends upon, any Junior Shares or Parity Shares,
      respectively;

            (ii) no other distribution shall be declared or made upon, or any
      sum set apart for the payment of any distribution upon, any Junior Shares
      or Parity Shares, other than a distribution consisting solely of Junior
      Shares or Parity Shares, respectively;

            (iii) no Junior Shares or Parity Shares or any warrants, rights,
      calls or options exercisable for or convertible into any Parity Share or
      Junior Share shall be purchased, redeemed or otherwise acquired (other
      than in exchange for other Junior Shares or Parity Shares, respectively)
      by the Company or any of its subsidiaries; and

            (iv) no monies shall be paid into or set apart or made available for
      a sinking or other like fund for the purchase, redemption or other
      acquisition of any Junior Shares or Parity Shares or any warrants, rights,
      calls or options exercisable for or convertible into any Parity Share or
      Junior Share by the Company or any of its subsidiaries.

            Holders of the Series A Preferred Shares will not be entitled to any
dividends, whether payable in cash, property or stock, in excess of the full
cumulative 
<PAGE>   73
                                                                              73


dividends as herein described. In the event that the Company fails to pay the
dividends due for an aggregate of six quarterly payments (whether or not
consecutive), the holders will have the rights and remedies set forth in Section
8.

            (c) Dividends (including Accumulated Dividends) may be paid, subject
to Section 11, (i) in cash, (ii) by delivery of Common Shares or (iii) through
any combination of the foregoing. The Company will notify the Registrar and make
a public announcement no later than the close of business on the tenth Business
Day prior to the Record Date for each dividend as to whether it will pay such
dividend and, if so, the form of consideration it will use to make such payment.

            (d) Any Accumulated Dividends on any Series A Preferred Share may be
paid, subject to Section 11, by the Company in any lawful manner (which shall
include the establishment of a record date not more then 45 days prior to the
payment thereof) not inconsistent with the requirements of any securities
exchange on which the Series A Preferred Shares may be listed, and upon such
notice (which shall precede the record date by at least ten Business Days) as
may be required by such exchange, if, after notice given by the Company to the
Registrar of the proposed payment pursuant to this clause (d), such manner of
payment shall be deemed practicable by the Registrar.

            (e) Subject to the foregoing provisions of this Section 7, each
Series A Preferred Share delivered under this Schedule upon registration of
transfer of or in 
<PAGE>   74
                                                                              74


exchange for or in lieu of any other Series A Preferred Share shall carry the
rights to dividends accumulated and unpaid, and to accrue, which were carried by
such other Series A Preferred Share.

            (f) The holder of record of a Series A Preferred Share at the close
of business on a Dividend Record Date with respect to the payment of dividends
on the Series A Preferred Shares will be entitled to receive such dividends with
respect to such Series A Preferred Share on the corresponding Dividend Payment
Date, notwithstanding the conversion of such share after such Dividend Record
Date and prior to such Dividend Payment Date. A Series A Preferred Share
surrendered for conversion during the period from the close of business on any
Dividend Record Date to the opening of business of the corresponding Dividend
Payment Date must be accompanied by a payment in cash, Common Shares or a
combination thereof, depending on the method of payment that the Company has
chosen to pay such dividend, in an amount equal to such dividend payable on such
Dividend Payment Date, unless such Series A Preferred Share has been called for
redemption on a redemption date occurring during the period from the close of
business on any Dividend Record Date to the close of business on the Business
Day immediately following the corresponding Dividend Payment Date. The dividend
payment with respect to a Series A Preferred Share called for redemption on a
date during the period from the close of business on any Dividend Record Date to
the close of business on the Business Day immediately following the
corresponding Dividend Payment Date will be payable on such Dividend Payment
Date to the 
<PAGE>   75
                                                                              75


record holder of such share on such Dividend Record Date if such share has been
converted after such Dividend Record Date and prior to such Dividend Payment
Date. Notwithstanding the immediately preceding three sentences of this Section
7(f), no payment shall be owed or payable to or by any converting holder if the
Board of Directors of the Company shall have elected to defer the dividend
payment to be made on such Dividend Payment Date pursuant to Section 6(a).
Fractional Common Shares will not be issued upon conversion, but in lieu thereof
the Company will pay a cash adjustment in the manner set forth in Section 11(c).

            (g) Except as provided with respect to a Provisional Redemption, no
payment or adjustment will be made upon conversion of Series A Preferred Shares
for accumulated and unpaid dividends or for dividends with respect to the Common
Shares issued upon such conversion.

            8. Voting Rights. (a) Holders of Series A Preferred Shares will not
be entitled to any voting rights unless (i) required by law or (ii) the Company
has not paid scheduled dividend payments for an aggregate of six quarterly
payments, whether or not consecutive (a "Voting Rights Triggering Event"). If a
Voting Rights Triggering Event occurs while any Series A Preferred Shares are
outstanding, the number of directors constituting the Board of Directors of the
Company will be adjusted to permit the holders of the then Outstanding Series A
Preferred Shares, voting separately and as a class, to elect such number of
members to the Board of Directors of the Company as will constitute at least 20%
of the then existing Board of 
<PAGE>   76
                                                                              76


Directors before such election (rounded to the nearest whole number), provided,
however, that such number shall be no less than one nor greater than two (the
"Series A Preferred Share Directors"), and the number of members of the
Company's Board of Directors will be immediately and automatically increased by
one or two, as the case may be. The voting rights set forth in the preceding
sentence will continue until such time as all dividends in arrears on the Series
A Preferred Shares are paid in full, at which time the term of any Series A
Preferred Share Director shall terminate. At any time after voting power to
elect Directors shall have become vested and be continuing in the holders of the
Series A Preferred Shares pursuant to the second preceding sentence, or if a
vacancy shall exist in the offices of Series A Preferred Share Directors, the
Board of Directors may, and upon written request of the holders of record of at
least 25% of the Outstanding Series A Preferred Shares addressed to the Chairman
of the Board of the Company, shall, call a special meeting of the holders of the
Series A Preferred Shares for the purpose of electing the Series A Preferred
Share Directors that such holders are entitled to elect. At any meeting held for
the purpose of electing Series A Preferred Share Directors, the presence in
person or by proxy of the holders of at least a majority of the Outstanding
Series A Preferred Shares shall be required to constitute a quorum of such
Series A Preferred Shares. Any vacancy occurring in the office of a Series A
Preferred Share Director may be filled by the remaining Series A Preferred Share
Director unless and until such vacancy shall be filled by the holders of the
Series A Preferred Shares. 
<PAGE>   77
                                                                              77


The Series A Preferred Share Directors shall agree, prior to their election to
office, to resign upon any termination of the right of the holders of Series A
Preferred Shares to vote as a class for Directors as herein provided, and upon
such termination the Series A Preferred Share Directors then in office shall
forthwith resign.

            (b) In addition to the voting rights set forth above, the approval
of the holders of at least two-thirds of the then Outstanding Series A Preferred
Shares voting or consenting, as the case may be, as one class, will be required
for the Company to (i) amend the Memorandum of Association, this Schedule or the
Bye-Laws or (ii) so long as the Company owns preferred partnership interests of
Globalstar purchased with the proceeds of the issuance of Series A Preferred
Shares, to waive any rights under, or agree to the modification of the terms of
such preferred partnership interests, in either case (i) or (ii), so as to
affect adversely the rights, preferences, privileges or voting rights of holders
of the Series A Preferred Shares or authorize the issuance of any additional
Series A Preferred Shares (other than Series A Preferred Shares to be sold
pursuant to the Purchase Agreement); provided, however, that no such
modification or amendment may, without the consent of the holders of each
Outstanding Series A Preferred Share affected thereby, (i) change the Mandatory
Redemption Date, or the due date of any dividend on, any Series A Preferred
Shares, or reduce the liquidation preference or redemption price thereof or the
rate of dividends thereon, or change the place of payment where, or the coin or
currency in which, any Series A Preferred Share or any payment thereon 
<PAGE>   78
                                                                              78


is payable, or impair the right to institute suit for the enforcement of any
such payment on or after the Mandatory Redemption Date (or on or after other
redemption dates), or adversely affect the rights to convert any Series A
Preferred Share as provided in Section 12, or adversely affect the right to
require the Company to redeem the Series A Preferred Shares as provided in
Section 10, or modify the provisions of this Schedule with respect to the
ranking of the Series A Preferred Shares in a manner adverse to the holders,
(ii) alter the voting rights with respect to the Series A Preferred Stock or
reduce the percentage of the Outstanding Series A Preferred Shares the consent
of whose holders is required for any such modification, or the consent of whose
holders is required for any waiver of compliance with provisions of this
Schedule or (iii) modify any of the provisions of this Section 8 except to
increase any such percentage or to provide that certain other provisions of this
Schedule cannot be modified or waived without the consent of the holder of each
Outstanding Series A Preferred Share affected thereby.

            (c) The Company will not authorize or issue any new class of Senior
Shares or any obligation or security convertible or exchangeable into or
evidencing a right to purchase shares of any class or series of Senior Shares,
without the approval of the holders of at least two-thirds of the then
Outstanding Series A Preferred Shares, voting or consenting, as the case may be,
as one class.

            (d) Except as set forth in Section 8(c) with respect to Senior
Shares, neither (i) the creation, 
<PAGE>   79
                                                                              79


authorization or issuance of any Junior Shares, Parity Shares or Senior Shares
or (ii) the increase or decrease in the amount of authorized capital stock of
any class, including any preference shares, shall require the consent of the
holders of the Series A Preferred Shares or shall be deemed to affect adversely
the rights, preferences, privileges, special rights or voting rights of holders
of Series A Preferred Shares. Furthermore, the consent of the holders of Series
A Preferred Shares will not be required for the Company to authorize, create (by
way of reclassification or otherwise) or issue any Parity Shares or any
obligation or security convertible or exchangeable into, or evidencing a right
to purchase, shares of any class or series of Parity Shares.

            9. Ranking. (a) The Series A Preferred Shares will, with respect to
dividend rights and rights on liquidation, winding-up and dissolution, rank (i)
senior to all Common Shares (whether issued in one or more classes) and to each
other class of capital stock or series of preference shares created after
January 21, 1999 by the Company, the terms of which do not expressly provide
that it ranks on a parity with the Series A Preferred Shares as to dividend
rights and rights on liquidation, winding-up and dissolution of the Company
(collectively referred to, together with all Common Shares (whether issued in
one or more classes) of the Company, as "Junior Shares"); (ii) on a parity with
additional Series A Preferred Shares issued by the Company and each other class
of capital stock or series of preference shares created after January 21, 1999
by the Company, the terms of which expressly provide that such 
<PAGE>   80
                                                                              80


class or series will rank on a parity with the Series A Preferred Shares as to
dividend rights and rights on liquidation, winding-up and dissolution of the
Company (collectively referred to as "Parity Shares"); and (iii) junior to each
class of capital stock or series of preference shares created after January 21,
1999 in compliance with Section 8(c) by the Company, the terms of which
expressly provide that such class or series will rank senior to the Series A
Preferred Shares as to dividend rights and rights upon liquidation, winding-up
and dissolution of the Company (collectively referred to as "Senior Shares").

            (b) No dividend whatsoever shall be declared or paid upon, or any
sum set apart for the payment of dividends upon, any outstanding share of the
Series A Preferred Shares with respect to any dividend period unless all
dividends for all preceding dividend periods have been declared and paid, or
declared and a sufficient sum set apart for the payment of such dividends, upon
all outstanding Senior Shares.

            (c) In the event of any liquidation, dissolution or winding-up of
the Company, whether voluntary or involuntary, the holders of the Series A
Preferred Shares then Outstanding shall be entitled to receive, prior and in
preference to any distribution of any of the assets of the Company to the
holders of Common Shares or Junior Shares by reason of their ownership thereof,
an amount equal to $50 per share for each outstanding Series A Preferred Share,
plus, without duplication, an amount in cash equal to all accumulated and unpaid
dividends (including Preferred
<PAGE>   81
                                                                              81


Stock Liquidated Damages) thereon to the date fixed for liquidation, dissolution
or winding-up (including an amount equal to a pro rata dividend for the period
from the last Dividend Payment Date to the date fixed for liquidation,
dissolution or winding-up). If upon the occurrence of such event the assets thus
distributed among the holders of Series A Preferred Shares shall be insufficient
to permit the payment to such holders of the full preferential amount, the
entire assets of the Company legally available for distribution shall be
distributed ratably based upon their respective liquidation preference, among
the holders of the Series A Preferred Shares pari passu with the holders of all
Parity Shares. After payment of the full preferential amount (and, if
applicable, an amount equal to a pro rata dividend to the holders of Outstanding
Series A Preferred Shares), such holders shall not be entitled to any further
participation in any distribution of assets of the Company.

            10. Redemption. (a) The Company may redeem, in whole or in part (the
"Provisional Redemption"), at any time on or prior to February 15, 2002, at the
redemption price of 104.6% of the aggregate liquidation preference of the Series
A Preferred Shares to be redeemed (the "Provisional Redemption Date"), in the
event that the Current Market Value of the Common Stock equals or exceeds the
following Trigger Percentages of the prevailing Conversion Price then in effect
for at least 20 trading days in any consecutive 30-day trading day period ending
on the trading day prior to the date of mailing of the notice of Provisional
Redemption (the "Notice Date"), if redeemed in the 12-month period ending on
February 15 of the following years:
<PAGE>   82
                                                                              82


      Year                                Trigger Percentage
      ----                                ------------------

      2000                                      170%
      2001                                      160%
      2002                                      150%

            Upon any Provisional Redemption, the Company will make an additional
payment (the "Dividend Make-Whole Payment") with respect to the Series A
Preferred Shares called for redemption, whether or not such Series A Preferred
Shares are converted into Common Shares between the Notice Date and the
Provisional Redemption Date, in an amount equal to the sum of (i) the present
value of the aggregate amount of dividends that would otherwise have accrued
from the Provisional Redemption Date through February 15, 2002 (the "Dividend
Make-Whole Period") and (ii) the amount of any accumulated and unpaid dividends
(including a prorated dividend for any partial dividend period) and Preferred
Stock Liquidated Damages, if any, to the Provisional Redemption Date. Such
present value shall be calculated using the bond equivalent yield on U.S.
Treasury notes or bills having a remaining term nearest in length to that of the
Dividend Make-Whole Period as of the Notice Date.
<PAGE>   83
                                                                              83


            (b) The Series A Preferred Shares may be redeemed at any time
commencing on or after February 20, 2002, in whole or from time to time in part,
at the election of the Company (the "Optional Redemption"), at a redemption
price equal to the percentage of the liquidation preference set forth below plus
accumulated and unpaid dividends (including an amount equal to a prorated
dividend for any partial dividend period) and Preferred Stock Liquidated
Damages, if any, to the date of redemption (the "Optional Redemption Date"), if
redeemed in the 12-month period commencing on the dates set forth below:

Date                                                 Percentage
----                                                 ----------
February 20, 2002                                      104.6%
February 19, 2003                                      103.4%
February 19, 2004                                      102.3%
February 19, 2005                                      101.1%
February 19, 2006 and thereafter                       100.0%

      (c) The Series A Preferred Shares (if not earlier redeemed or converted)
shall be mandatorily redeemed by the Company on February 15, 2011 (the
"Mandatory Redemption Date" provided, however, that is such date is not a
Business Day, then the Mandatory Redemption Date shall be the next Business
Day), at a redemption price of 100% of the liquidation preference per share plus
accumulated and unpaid dividends and Preferred Stock Liquidated Damages, if any,
to the Mandatory Redemption Date.

      (d) The Company may, as provided in Section 11, make any payments in
respect of the liquidation preference due on
<PAGE>   84
                                                                              84


the Series A Preferred Shares on the Provisional Redemption Date, the Optional
Redemption Date or the Mandatory Redemption Date, (i) in cash, (ii) by delivery
of Common Shares or (iii) through any combination of the foregoing.

      (e) No Provisional Redemption or Optional Redemption may be authorized or
made unless, prior to giving the applicable redemption notice, all accumulated
and unpaid dividends for periods ended prior to the date of such redemption
notice shall have been paid in cash or, subject to Section 11, in Common Shares.

      (f) In the event of a redemption of fewer than all the Series A Preferred
Shares, the Series A Preferred Shares will be chosen for redemption by the
Registrar from the Outstanding Series A Preferred Shares not previously called
for redemption, pro rata or by lot or by such other method as the Registrar
shall deem fair and appropriate, provided that the Company may redeem (an
"Odd-lot Redemption") all shares held by holders of fewer than 100 Series A
Preferred Shares (or by holders that would hold fewer than 100 Series A
Preferred Shares following such redemption) prior to its redemption of other
Series A Preferred Shares. If fewer than all the Series A Preferred Shares
represented by any share certificate are so to be redeemed, (i) the Company
shall issue a new certificate for the shares not redeemed and (ii) if any shares
represented thereby are converted before termination of the conversion right
with respect to such shares, such converted shares shall be deemed (so far as
may be) to be the shares represented by such share certificate that was selected
for redemption. Series A 
<PAGE>   85
                                                                              85


Preferred Shares which have been converted during a selection of Series A
Preferred Shares to be redeemed shall be treated by the Registrar as outstanding
for the purpose of such selection but not for the purpose of the payment of the
Redemption Price.

      (g) In the event the Company elects to effect a Provisional Redemption or
an Optional Redemption, the Company shall (i) make a public announcement of the
redemption (including a statement of the form of consideration it will use to
effect the same) and (ii) give a redemption notice (the "Redemption Notice") to
the holders not fewer than 30 days nor more than 60 days before the redemption
date (the "Redemption Date"). Whenever a Redemption Notice is required to be
delivered to the holders, such Notice shall provide the information set forth
below and be given by first class mail, postage prepaid to each holder of Series
A Preferred Shares to be redeemed, at such holder's address appearing in the
Series A Preferred Share Register. All Redemption Notices shall identify the
Series A Preferred Shares to be redeemed (including CUSIP number) and shall
state:

      (i) the Redemption Date;

      (ii) the redemption price (the "Redemption Price") and the form
 of consideration the Company will use to satisfy the Redemption Price;

      (iii) if fewer than all the outstanding Series A Preferred Shares are to
 be redeemed, the identification (and, in the case of partial redemption, the
 certificate 
<PAGE>   86
                                                                              86


 number, the total number of shares represented thereby and the
 number of such shares being redeemed on the Redemption Date) of the particular
 Series A Preferred Shares to be redeemed;

      (iv) that on the Redemption Date the Redemption Price, together with
 (subject to Section 10(k)) dividends accumulated and unpaid to the Redemption
 Date (including an amount equal to a prorated dividend for any partial dividend
 period), will become due and payable upon each such Series A Preferred Share to
 be redeemed and that dividends thereon will cease to accrue on and after said
 date;

      (v) the conversion price (and, if applicable, the amount of cash payable
 on conversion pursuant to Section 12(d)(xii)), the date on which the right to
 convert Series A Preferred Shares to be redeemed will terminate and the place
 or places where such Series A Preferred Shares may be surrendered for
 conversion; and

      (vi) the place or places where such Series A Preferred Shares are to be
 surrendered for payment of the Redemption Price.

      The Redemption Notice shall be given by the Company or, at the Company's
request, by the Registrar in the name and at the expense of the Company;
provided that if the Company so requests, it shall provide the Registrar
adequate time, as reasonably determined by the Registrar, to deliver such
notices in a timely fashion.
<PAGE>   87
                                                                              87


      (h) Prior to any Redemption Date, the Company shall deposit with the
Registrar or with a Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust) an amount of consideration sufficient to pay
the Redemption Price of and (except to the extent payable to a holder of Series
A Preferred Shares on a Dividend Record Date prior to the Redemption Date)
accrued but unpaid dividends (including an amount equal to a prorated dividend
for any partial dividend period) on all the Series A Preferred Shares which are
to be redeemed on that date other than any Series A Preferred Shares called for
redemption on that date which have been converted in Common Shares prior to the
date of such deposit. If any Series A Preferred Share called for redemption is
converted, any consideration deposited with the Registrar or with any Paying
Agent or so segregated and held in trust for the redemption of such Series A
Preferred Share shall (subject to any right of the holder of such Series A
Preferred Share or any predecessor Series A Preferred Share to receive accrued
but unpaid dividends thereon as provided in Section 7(f) or a Dividend
Make-Whole Payment as provided in Section 10(a)) be paid or delivered to the
Company upon Company Order or, if then held by the Company, shall be discharged
from such trust.

      (i) Notice of redemption having been given as aforesaid, the Series A
Preferred Shares so to be redeemed shall, on the Redemption Date, become due and
payable at the Redemption Price therein specified, and from and after such date
(unless the Company shall default in the payment of the Redemption Price and
accrued but unpaid dividends) dividends on such Series A Preferred Shares shall
cease to accrue and 
<PAGE>   88
                                                                              88


such shares shall cease to be convertible into Common Shares. Upon surrender of
any such Series A Preferred Shares for redemption in accordance with said
notice, such Series A Preferred Shares shall be redeemed, subject to Section
7(f), by the Company at the Redemption Price, together with (except to the
extent payable to a holder of Series A Preferred Shares on a Dividend Record
Date prior to the Redemption Date) accrued but unpaid dividends and Preferred
Stock Liquidated Damages, if any, to the Redemption Date. If any Series A
Preferred Share called for redemption shall not be so paid upon surrender
thereof for redemption, the Redemption Price thereof, exclusive of accrued but
unpaid dividends, shall, until paid, bear interest from the Redemption Date at
the dividend rate payable on the Series A Preferred Shares.

      (j) Any certificate that represents more than one Series A Preferred Share
and is to be redeemed only in part shall be surrendered at any office or agency
of the Company designated for that purpose (with, if the Company or the
Registrar so requires, due endorsement by, or a written instrument of transfer
in form satisfactory to the Company and the Registrar duly executed by, the
holder thereof or his attorney duly authorized in writing), and the Company
shall execute, and the Registrar shall countersign and deliver to the holder of
such Series A Preferred Share without service charge, a new Series A Preferred
Share certificate or certificates, representing any number of Series A Preferred
Shares as requested by such holder, in aggregate amount equal to and in exchange
for the number of
<PAGE>   89
                                                                              89


shares not redeemed and represented by the Series A Preferred Share certificate
so surrendered.

      (k) If a Series A Preferred Share is redeemed subsequent to a Dividend
Record Date with respect to any Dividend Payment Date specified above and on or
prior to such Dividend Payment Date, then any accumulated but unpaid dividends
will be paid to the person in whose name such Series A Preferred Share is
registered at the close of business on such Dividend Record Date.

      11.  Method of Payments.

      The Company may make any payments due on the Series A Preferred Shares,
including dividend payments and redemption payments described in Section 11(b),
(i) in cash, (ii) by delivery of Common Shares or (iii) through any combination
of the foregoing, provided, however, that if Globalstar shall have paid the
scheduled distribution or redemption payment on the Preferred Partnership
Interests corresponding to such payment in cash, the Company shall make such
payment in cash. The Company, at its option, may make dividend payments
notwithstanding the fact that it shall not have received a distribution on the
Preferred Partnership Interests for the corresponding Dividend Payment Date.

      (b) The Company will make each dividend payment, Provisional Redemption
payment (including the associated Dividend Make-Whole Payment), Optional
Redemption payment and Mandatory Redemption payment on the Series A Preferred
Shares in cash, except to the extent it has elected to make all or any portion
of such payment in Common Shares. The 
<PAGE>   90
                                                                              90


Company may not make any such payment, or any portion thereof (other than a
Mandatory Redemption payment, or portion thereof), in Common Shares unless, on
the date of such payment, the Shelf Registration Statement covers the resale of
such shares and is effective or is no longer required to be effective. If the
Company elects to make any such payment, or any portion thereof, in Common
Shares, such shares shall be valued for such purpose (i) in the case of any
dividend payment, Provisional Redemption payment, Dividend Make-Whole Payment,
Optional Redemption payment, or portion thereof, at 95% of the Average Market
Value and (ii) in the case of any Mandatory Redemption payment, or portion
thereof (A) if on the date of such payment the Shelf Registration Statement
covers the resale of such shares and is effective or, pursuant to the
Registration Rights Agreement, is no longer required to be effective, at 100% of
the Average Market Value and (B) otherwise, at 90% of the Average Market Value.
If, as a matter of Bermuda law, the Company is not able to issue Common Shares
in payment of the Mandatory Redemption price, then the Company may, at its
option, cause the Series A Preferred Shares to be converted on the Mandatory
Redemption Date into the same number of Common Shares as the Company could
otherwise have issued in satisfaction of the Mandatory Redemption price,
provided that the Company has given the holders of Series A Preferred Shares
notice of the exercise of such option at least 30 days prior to the Mandatory
Redemption Date.

      (c) No fractional Common Shares will be delivered to the holders, but the
Company will instead pay a cash adjustment to each holder that would otherwise
be entitled
<PAGE>   91
                                                                              91


to a fraction of a Common Share. The amount of such cash adjustment will be
determined based on the proceeds received by the Registrar from the sale of that
number of Common Shares, which the Company will deliver to the Registrar for
such purpose, equal to the aggregate of all such fractions (round up to the
nearest whole share). The Registrar is authorized and directed to sell such
shares at the best available prices and distribute the proceeds to the holders
in proportion to their respective interests therein. The Company will pay the
expenses of the Registrar with respect to such sale, including brokerage
commissions.

      (d) Any portion of any payment on or in respect of the Series A Preferred
Shares that is declared and not paid through the delivery of Common Shares will
be paid in cash.

      (e) Prior to the issuance of any Common Shares pursuant to this Section
11, the Company shall have provided for the listing or quotation of such Common
Shares on the Nasdaq National Market or any other securities exchange in the
United States upon which the Common Shares are then listed or quoted.

      12. Conversion. (a) Subject to and upon compliance with the provisions of
this Schedule, at the option of the holder thereof, any Series A Preferred Share
may be converted at any time on or after March 22, 1999 at the liquidation
preference thereof into fully paid and nonassessable Common Shares (calculated
as to each conversion to the nearest 1/100 of a share), at the Conversion Price,
determined as hereinafter provided, in effect at the time of conversion. Such
conversion right 
<PAGE>   92
                                                                              92


shall expire at the close of business on the Business Day next preceding the
Mandatory Redemption Date. In case a Series A Preferred Share is called for
redemption, such conversion right in respect of the Series A Preferred Share so
called shall expire at the close of business on the Business Day next preceding
the Redemption Date, unless the Company defaults in making the payment due upon
redemption.

      The price at which Common Shares shall be delivered upon conversion
(herein called the "Conversion Price") shall be initially $23.2563 per Common
Share. The Conversion Price shall be adjusted in certain instances as provided
in Section 12(d) and Section 12(e).

      (b) In order to exercise the conversion privilege, the holder of any
Series A Preferred Share to be converted shall surrender the certificate for
such share, duly endorsed or assigned to the Company or in blank, at any office
or agency of the Company maintained for that purpose, accompanied by written
notice to the Company at such office or agency that the holder elects to convert
such share or, if fewer than all the Series A Preferred Shares represented by a
single share certificate are to be converted, the number of shares represented
thereby to be converted. Except as provided in Section 10(a) or 7(f), no payment
or adjustment shall be made upon any conversion on account of any dividends
accrued on the Series A Preferred Shares surrendered for conversion or on
account of any dividends on the Common Shares issued upon conversion. In no
event shall the Company be obligated to pay any converting holder any unpaid
Accumulated Dividends upon conversion.
<PAGE>   93
                                                                              93


      Series A Preferred Shares shall be deemed to have been converted
immediately prior to the close of business on the day of surrender of such
shares for conversion in accordance with the foregoing provisions, and at such
time the rights of the holders of such shares as holders shall cease, and the
person or persons entitled to receive the Common Shares issuable upon conversion
shall be treated for all purposes as the record holder or holders of such Common
Shares at such time. As promptly as practicable on or after the conversion date,
the Company shall issue and shall deliver at such office or agency a certificate
or certificates for the number of full Common Shares issuable upon conversion,
together with payment in lieu of any fraction of a share, as provided in Section
12(c).

      In the case of any conversion of fewer than all the Series A Preferred
Shares evidenced by a certificate, upon such conversion the Company shall
execute and the Registrar shall countersign and deliver to the holder thereof,
at the expense of the Company, a new certificate or certificates representing
the number of unconverted Series A Preferred Shares.

      (c) No fractional Common Shares shall be issued upon the conversion of a
Series A Preferred Share. If more than one Series A Preferred Share shall be
surrendered for conversion at one time by the same holder, the number of full
Common Shares which shall be issuable upon conversion thereof shall be computed
on the basis of the aggregate number of Series A Preferred Shares so
surrendered. Instead of any fractional Common Share which would otherwise be
<PAGE>   94
                                                                              94


issuable upon conversion of any Series A Preferred Share, the Company shall pay
a cash adjustment in respect of such fraction in an amount equal to the same
fraction of the closing price (as defined in Section 12(d)(vii)) per Common
Share at the close of business on the Business Day prior to the day of
conversion.

      (d) The conversion price shall be adjusted from time to time by the
Company as follows:

      (i) if the Company shall hereafter pay a dividend or make a distribution
 to holders of the outstanding Common Shares in Common Shares, the Conversion
 Price in effect at the opening of business on the date following the date fixed
 for the determination of shareholders entitled to receive such dividend or
 other distribution shall be reduced by multiplying such Conversion Price by a
 fraction of which the numerator shall be the number of Common Shares
 outstanding at the close of business on the Common Share Record Date (as
 defined in Section 12(d)(vii)) fixed for such determination and the denominator
 shall be the sum of such number of shares and the total number of shares
 constituting such dividend or other distribution, such reduction to become
 effective immediately after the opening of business on the day following the
 Common Share Record Date. If any dividend or distribution of the type described
 in this Section 12(d)(i) is declared but not so paid or made, the Conversion
 Price shall again be adjusted to the Conversion Price which would then be in
 effect if such dividend or distribution had not been declared;
<PAGE>   95
                                                                              95


      (ii) if the Company shall offer or issue rights or warrants to holders of
 its outstanding Common Shares entitling them to subscribe for or purchase
 Common Shares at a price per share less than the Current Market Price (as
 defined in Section 12(d)(vii)) on the Common Share Record Date fixed for the
 determination of shareholders entitled to receive such rights or warrants, the
 Conversion Price shall be adjusted so that the same shall equal the price
 determined by multiplying the Conversion Price in effect at the opening of
 business on the date after such Common Share Record Date by a fraction of which
 the numerator shall be the number of Common Shares outstanding at the close of
 business on the Common Share Record Date plus the number of Common Shares which
 the aggregate offering price of the total number of Common Shares subject to
 such rights or warrants would purchase at such Current Market Price and of
 which the denominator shall be the number of Common Shares outstanding at the
 close of business on the Common Share Record Date plus the total number of
 additional Common Shares subject to such rights or warrants for subscription or
 purchase. Such adjustment shall become effective immediately after the opening
 of business on the day following the Common Share Record Date fixed for
 determination of shareholders entitled to purchase or receive such rights or
 warrants. To the extent that Common Shares are not delivered pursuant to such
 rights or warrants, upon the expiration or termination of such rights or
 warrants the Conversion Price shall again be adjusted to be the Conversion
 Price which would then be in effect had the adjustments made upon the issuance
 of such rights or 
<PAGE>   96
                                                                              96


 warrants been made on the basis of delivery of only the number of Common Shares
 actually delivered. If such rights or warrants are not so issued, the
 Conversion Price shall again be adjusted to be the Conversion Price which would
 then be in effect if such date fixed for the determination of shareholders
 entitled to receive such rights or warrants had not been fixed. In determining
 whether any rights or warrants entitle the holders to subscribe for or purchase
 Common Shares at less than such Current Market Price, and in determining the
 aggregate offering price of such Common Shares, there shall be taken into
 account any consideration received for such rights or warrants, with the value
 of such consideration, if other than cash, to be determined by the Board of
 Directors;

      (iii) if the outstanding Common Shares shall be subdivided into a greater
 number of Common Shares, the Conversion Price in effect at the opening of
 business on the day following the day upon which such subdivision becomes
 effective shall be proportionately reduced, and, conversely, if the outstanding
 Common Shares shall be combined into a smaller number of Common Shares, the
 Conversion Price in effect at the opening of business on the day following the
 day upon which such combination becomes effective shall be proportionately
 increased, such reduction or increase, as the case may be, to become effective
 immediately after the opening of business on the day following the day upon
 which such subdivision or combination becomes effective;
<PAGE>   97
                                                                              97


      (iv) if the Company shall, by dividend or otherwise, distribute to holders
 of its Common Shares any class of capital stock of the Company (other than any
 dividends or distributions to which Section 12(d)(i) applies) or evidences of
 its indebtedness, cash or other assets (including securities, but excluding any
 rights or warrants of a type referred to in Section 12(d)(ii) and dividends and
 distributions paid exclusively in cash and excluding any capital stock,
 evidences of indebtedness, cash or assets distributed upon a merger or
 consolidation to which Section 12(e) applies) (the foregoing hereinafter in
 this Section 12(d)(iv) called the "Distributed Securities"), then, in each such
 case, the Conversion Price shall be reduced so that the same shall be equal to
 the price determined by multiplying the Conversion Price in effect immediately
 prior to the close of business on the Common Share Record Date (as defined in
 Section 12(d)(vii)) with respect to such distribution by a fraction of which
 the numerator shall be the Current Market Price (determined as provided in
 Section 12(d)(vii)) on such date less the fair market value (as determined by
 the Board of Directors, whose determination shall be conclusive and described
 in a resolution of the Board of Directors) on such date of the portion of the
 Distributed Securities 
<PAGE>   98
                                                                              98


 so distributed applicable to one Common Share and the denominator shall be such
 Current Market Price, such reduction to become effective immediately prior to
 the opening of business on the day following the Common Share Record Date;
 provided, however, that, in the event the then fair market value (as so
 determined) of the portion of the Distributed Securities so distributed
 applicable to one Common Share is equal to or greater than the Current Market
 Price on the Common Share Record Date, in lieu of the foregoing adjustment,
 adequate provision shall be made so that each holder of Series A Preferred
 Shares shall have the right to receive upon conversion of a Series A Preferred
 Share (or any portion thereof) the amount of Distributed Securities such holder
 would have received had such holder converted such Series A Preferred Share (or
 portion thereof) immediately prior to such Common Share Record Date. If such
 dividend or distribution is not so paid or made, the Conversion Price shall
 again be adjusted to be the Conversion Price which would then be in effect if
 such dividend or distribution had not been declared. If the Board of Directors
 determines the fair market value of any distribution for purposes of this
 Section 12(d)(iv) by reference to the actual or when issued trading market for
 any securities constituting all or part of such distribution, it must in doing
 so consider the prices in such market over the same period used in computing
 the Current Market Price pursuant to Section 12(d)(vii) to the extent possible.

      Rights or warrants distributed by the Company to holders of Common Shares
 entitling the holders thereof to subscribe for or purchase shares of the
 Company's capital stock (either initially or under certain circumstances),
 which rights or warrants, until the occurrence of a specified event or events
 ("Dilution Trigger Event"): (A) are deemed to be transferred with such Common
 Shares; (B) are not exercisable; and (C) are also issued in respect
<PAGE>   99
                                                                              99


 of future issuances of Common Shares, shall be deemed not to have been
 distributed for purposes of this Section 12(d)(iv) (and no adjustment to the
 Conversion Price under this Section 12(d)(iv) shall be required) until the
 occurrence of the earliest Dilution Trigger Event, whereupon such rights and
 warrants shall be deemed to have been distributed and an appropriate adjustment
 to the Conversion Price under this Section 12(d)(iv) shall be made. If any such
 rights or warrants, including any such existing rights or warrants distributed
 prior to the first issuance of Series A Preferred Shares, are subject to
 subsequent events, upon the occurrence of each of which such rights or warrants
 shall become exercisable to purchase different securities, evidences of
 indebtedness or other assets, then the occurrence of each such event shall be
 deemed to be such date of issuance and record date with respect to new rights
 or warrants (and a termination or expiration of the existing rights or
 warrants, without exercise by the holder thereof). In addition, in the event of
 any distribution (or deemed distribution) of rights or warrants, or any
 Dilution Trigger Event with respect thereto, that was counted for purposes of
 calculating a distribution amount for which an adjustment to the Conversion
 Price under this Section 12(d) was made, (1) in the case of any such rights or
 warrants which shall all have been redeemed or repurchased without exercise by
 any holders thereof, the Conversion Price shall be readjusted upon such final
 redemption or repurchase to give effect to such distribution or Dilution
 Trigger Event, as the case may be, as though it were a cash distribution, equal
 to the 
<PAGE>   100
                                                                             100


 per share redemption or repurchase price received by a holder or holders of
 Common Shares with respect to such rights or warrants (assuming such holder had
 retained such rights or warrants), made to all holders of Common Shares as of
 the date of such redemption or repurchase, and (2) in the case of such rights
 or warrants which shall have expired or been terminated without exercise by any
 holders thereof, the Conversion Price shall be readjusted as if such rights and
 warrants had not been issued.

      Notwithstanding any other provision of this Section 12(d)(iv) to the
 contrary, rights, warrants, evidences of indebtedness, other securities, cash
 or other assets (including, without limitation, any rights distributed pursuant
 to any shareholder rights plan) shall be deemed not to have been distributed
 for purposes of this Section 12(d)(iv) if the Company makes proper provision so
 that each holder of Series A Preferred Shares who converts a Series A Preferred
 Share (or any portion thereof) after the date fixed for determination of
 shareholders entitled to receive such distribution shall be entitled to receive
 upon such conversion, in addition to the Common Shares issuable upon such
 conversion, the amount and kind of such distributions that such holder would
 have been entitled to receive if such holder had, immediately prior to such
 determination date, converted such Series A Preferred Share into a Common
 Share.

      For purposes of this Section 12(d)(iv) and Sections 12(d)(i) and (ii), any
 dividend or distribution to which this Section 12(d)(iv) is applicable that
 also 
<PAGE>   101
                                                                             101


 includes Common Shares, or rights or warrants to subscribe for or purchase
 Common Shares to which Section 12(d)(ii) applies (or both), shall be deemed
 instead to be (A) a dividend or distribution of the evidences of indebtedness,
 assets, shares of capital stock, rights or warrants other than such Common
 Shares or rights or warrants to which Section 12(d)(ii) applies (and any
 Conversion Price reduction required by this Section 12(d)(iv) with respect to
 such dividend or distribution shall then be made) immediately followed by (B) a
 dividend or distribution of such Common Shares or such rights or warrants (and
 any further Conversion Price reduction required by Sections 12(d)(i) or
 12(d)(ii) with respect to such dividend or distribution shall then be made),
 except that (1) the Common Share Record Date of such dividend or distribution
 shall be substituted as "the date fixed for the determination of stockholders
 entitled to receive such dividend or other distribution", "the Common Share
 Record Date fixed for such determination" and "the Common Share Record Date"
 within the meaning of Section 12(d)(i) and as "the date fixed for the
 determination of shareholders entitled to receive such rights or warrants",
 "the Common Share Record Date fixed for the determination of the shareholders
 entitled to receive such rights or warrants" and "such Common Share Record
 Date" for purposes of Section 12(d)(ii), and (2) any Common Shares included in
 such dividend or distribution shall not be deemed "outstanding at the close of
 business on the date fixed for such determination" for the purposes of Section
 12(d)(i).
<PAGE>   102
                                                                             102


      (v) If the Company shall, by dividend or otherwise, distribute to holders
 of its Common Shares cash (excluding any cash that is distributed upon a merger
 or consolidation to which Section 12(e) applies or as part of a distribution
 referred to in Section 12(d)(iv)) in an aggregate amount that, combined
 together with (A) the aggregate amount of any other such distributions to
 holders of its Common Shares made exclusively in cash within the 12 months
 preceding the date of payment of such distribution, and in respect of which no
 adjustment pursuant to this Section 12(d)(v) has been made, and (B) the
 aggregate of any cash plus the fair market value (as determined by the Board of
 Directors, whose determination shall be conclusive and described in a
 resolution of the Board of Directors) of consideration payable in respect of
 any tender offer by the Company for all or any portion of the Common Shares
 concluded within the 12 months preceding the date of payment of such
 distribution, and in respect of which no adjustment pursuant to Section
 12(d)(vi) has been made, exceeds 20% of the product of the Current Market Price
 (determined as provided in Section 12(d)(vii)) on the Common Share Record Date
 with respect to such distribution times the number of Common Shares outstanding
 on such date, then, and in each such case, immediately after the close of
 business on such date, the Conversion Price shall be reduced so that the same
 shall equal the price determined by multiplying the Conversion Price in effect
 immediately prior to the close of business on such Common Share Record Date by
 a fraction (1) the numerator of which shall be equal to the Current Market
 Price on the Common Share 
<PAGE>   103
                                                                             103


 Record Date less an amount equal to the quotient of (x) the excess of such
 combined amount over such 20% and (y) the number of Common Shares outstanding
 on the Common Share Record Date and (2) the denominator of which shall be equal
 to the Current Market Price on such Common Share Record Date; provided,
 however, that, if the portion of the cash so distributed applicable to one
 Common Share is equal to or greater than the Current Market Price of the Common
 Shares on the Common Share Record Date, in lieu of the foregoing adjustment,
 adequate provision shall be made so that each holder of Series A Preferred
 Shares shall have the right to receive upon conversion of a Series A Preferred
 Share (or any portion thereof) the amount of cash such holder would have
 received had such holder converted such Series A Preferred Share (or portion
 thereof) immediately prior to such Common Share Record Date. If such dividend
 or distribution is not so paid or made, the Conversion Price shall again be
 adjusted to be the Conversion Price which would then be in effect if such
 dividend or distribution had not been declared. Any cash distribution to
 holders of Common Shares as to which the Company makes the election permitted
 by Section 12(d)(xii) and as to which the Company has complied with the
 requirements of such Section 12(d)(xii) shall be treated as not having been
 made for all purposes of this Section 12(d)(v).

      (vi) if a tender offer made by the Company or any of its subsidiaries for
 all or any portion of the Common Shares expires and such tender offer (as
 amended upon the expiration thereof) requires the payment to shareholders
<PAGE>   104
                                                                             104


 (based on the acceptance (up to any maximum specified in the terms of the
 tender offer) of Purchased Shares) of an aggregate consideration having a fair
 market value (as determined by the Board of Directors, whose determination
 shall be conclusive and described in a resolution of the Board of Directors)
 that, combined together with (A) the aggregate of the cash plus the fair market
 value (as determined by the Board of Directors, whose determination shall be
 conclusive and described in a resolution of the Board of Directors), as of the
 expiration of such tender offer, of consideration payable in respect of any
 other tender offers, by the Company or any of its subsidiaries for all or any
 portion of the Common Shares expiring within the 12 months preceding the
 expiration of such tender offer and in respect of which no adjustment pursuant
 to this Section 12(d)(vi) has been made and (B) the aggregate amount of any
 distributions to all holders of the Common Shares made exclusively in cash
 within 12 months preceding the expiration of such tender offer and in respect
 of which no adjustment pursuant to Section 12(d)(v) has been made, exceeds 20%
 of the product of the Current Market Price (determined as provided in Section
 12(d)(vii)) as of the last time (the "Expiration Time") tenders could have been
 made pursuant to such tender offer (as it may be amended) times the number of
 Common Shares outstanding (including any tendered shares) at the Expiration
 Time, then, and in each such case, immediately prior to the opening of business
 on the day after the date of the Expiration Time, the Conversion Price shall be
 adjusted so that the same shall equal the price determined by multiplying the
<PAGE>   105
                                                                             105


 Conversion Price in effect immediately prior to the close of business on the
 date of the Expiration Time by a fraction of which the numerator shall be the
 number of Common Shares outstanding (including any tendered shares) at the
 Expiration Time multiplied by the Current Market Price of the Common Shares on
 the trading day next succeeding the Expiration Time and the denominator shall
 be the sum of (x) the fair market value (determined as aforesaid) of the
 aggregate consideration payable to shareholders based on the acceptance (up to
 any maximum specified in the terms of the tender offer) of all shares validly
 tendered and not withdrawn as of the Expiration Time (the shares deemed so
 accepted, up to any such maximum, being referred to as the "Purchased Shares")
 and (y) the product of the number of Common Shares outstanding (less any
 Purchased Shares) at the Expiration Time and the Current Market Price of the
 Common Shares on the trading day next succeeding the Expiration Time, such
 reduction (if any) to become effective immediately prior to the opening of
 business on the day following the Expiration Time. If the Company is obligated
 to purchase shares pursuant to any such tender offer, but the Company is
 permanently prevented by applicable law from effecting any such purchases or
 all such purchases are rescinded, the Conversion Price shall again be adjusted
 to be the Conversion Price which would then be in effect if such tender offer
 had not been made. If the application of this Section 12(d)(vi) to any tender
 offer would result in an increase in the Conversion Price, no adjustment shall
 be made for such tender offer under this Section 12(d)(vi).
<PAGE>   106
                                                                             106


      (vii) For purposes of this Section 12(d), the following terms shall have
 the meaning indicated:

            "closing price" with respect to any securities on any day means the
      closing price on such day or, if no such sale takes place on such day, the
      average of the reported high and low prices on such day, in each case on
      the Nasdaq National Market or the New York Stock Exchange, as applicable,
      or, if such security is not listed or admitted to trading on such national
      market or exchange, on the principal national securities exchange or
      quotation system in the United States on which such security is quoted or
      listed or admitted to trading, or, if not quoted or listed or admitted to
      trading on any national securities exchange or quotation system in the
      United States, the average of the high and low prices of such security on
      the over-the-counter market on the day in question as reported by the
      National Quotation Bureau Incorporated or a similar generally accepted
      reporting service in the United States, or, if not so available, in such
      manner as furnished by any New York Stock Exchange member firm selected
      from time to time by the Board of Directors for that purpose, or a price
      determined in good faith by the Board of Directors, whose determination
      shall be conclusive and described in a resolution of the Board of
      Directors.

            "Common Share Record Date" shall mean, with respect to any dividend,
      distribution or other transaction or event in which the holders of Common
<PAGE>   107
                                                                             107


      Shares have the right to receive any cash, securities or other property or
      in which the Common Shares (or other applicable security) is exchanged for
      or converted into any combination of cash, securities or other property,
      the date fixed for determination of shareholders entitled to receive such
      cash, securities or other property (whether such date is fixed by the
      Board of Directors or by statute, contract or otherwise).

            "Current Market Price" means the average of the daily closing prices
      per Common Share for the 10 consecutive trading days immediately prior to
      the date in question; provided, however, that (A) if the "ex" date (as
      hereinafter defined) for any event (other than the issuance or
      distribution requiring such computation) that requires an adjustment to
      the Conversion Price pursuant to Section 12(d)(i), (ii), (iii), (iv), (v)
      or (vi) occurs during such 10 consecutive trading days, the closing price
      for each trading day prior to the "ex" date for such other event shall be
      adjusted by multiplying such closing price by the same fraction by which
      the Conversion Price is so required to be adjusted as a result of such
      other event, (B) if the "ex" date for any event (other than the issuance
      or distribution requiring such computation) that requires an adjustment to
      the Conversion Price pursuant to Section 12(d)(i), (ii), (iii), (iv), (v)
      or (vi) occurs on or after the "ex" date for the issuance or distribution
      requiring such computation and prior to the day in question, the 
<PAGE>   108
                                                                             108


      closing price for each trading day on and after the "ex" date for such
      other event shall be adjusted by multiplying such closing price by the
      reciprocal of the fraction by which the Conversion Price is so required to
      be adjusted as a result of such other event and (C) if the "ex" date for
      the issuance or distribution requiring such computation is prior to the
      day in question, after taking into account any adjustment required
      pursuant to clause (A) or (B) of this proviso, the closing price for each
      trading day on or after such "ex" date shall be adjusted by adding thereto
      the amount of any cash and the fair market value (as determined by the
      Board of Directors in a manner consistent with any determination of such
      value for purposes of Section 12(d)(iv) or (v), whose determination shall
      be conclusive and described in a resolution of the Board of Directors) of
      the evidences of indebtedness, shares of capital stock or assets being
      distributed applicable to one Common Share as of the close of business on
      the day before such "ex" date. For purposes of any computation under
      Section 12(d)(vi), the Current Market Price on any date shall be deemed to
      be the average of the daily closing prices per Common Share for such day
      and the next two succeeding trading days; provided, however, that, if the
      "ex" date for any event (other than the tender offer requiring such
      computation) that requires an adjustment to the Conversion Price pursuant
      to Section 12(d)(i), (ii), (iii), (iv), (v) or (vi) occurs on or after the
      Expiration Time for the tender or 
<PAGE>   109
                                                                             109


      exchange offer requiring such computation and prior to the day in
      question, the closing price for each trading day on and after the "ex"
      date for such other event shall be adjusted by multiplying such closing
      price by the reciprocal of the fraction by which the Conversion Price is
      so required to be adjusted as a result of such other event. For purposes
      of this paragraph, the term "ex" date (1) when used with respect to any
      issuance or distribution, means the first date on which the Common Shares
      trade regular way on the relevant exchange or in the relevant market from
      which the closing price was obtained without the right to receive such
      issuance or distribution, (2) when used with respect to any subdivision or
      combination of Common Shares, means the first date on which the Common
      Shares trade regular way on such exchange or in such market after the time
      at which such subdivision or combination becomes effective and (3) when
      used with respect to any tender or exchange offer means the first date on
      which the Common Shares trade regular way on such exchange or in such
      market after the Expiration Time of such offer. Notwithstanding the
      foregoing, whenever successive adjustments to the Conversion Price are
      called for pursuant to this Section 12(d), such adjustments shall be made
      to the Current Market Price as may be necessary or appropriate to
      effectuate the intent of this Section 12(d) and to avoid unjust or
      inequitable results, as determined in good faith by the Board of
      Directors.
<PAGE>   110
                                                                             110


            "fair market value" shall mean the amount which a willing buyer
      would pay a willing seller in an arm's-length transaction.

      (viii) No adjustment in the Conversion Price shall be required unless such
 adjustment would require an increase or decrease of at least 1% in such price;
 provided, however, that any adjustments which by reason of this Section
 12(d)(viii) are not required to be made shall be carried forward and taken into
 account in any subsequent adjustment. All calculations under this Section 12
 shall be made by the Company and shall be made to the nearest cent. No
 adjustment need be made for a change in the par value or no par value of the
 Common Shares.

      (ix) Whenever the Conversion Price is adjusted as herein provided, the
 Company shall promptly file with the Registrar an Officers' Certificate setting
 forth the Conversion Price after such adjustment and setting forth a brief
 statement of the facts requiring such adjustment. Promptly after delivery of
 such certificate, the Company shall prepare a notice of such adjustment of the
 Conversion Price setting forth the adjusted Conversion Price and the date on
 which each adjustment becomes effective and shall mail such notice of such
 adjustment of the Conversion Price to each holder of Series A Preferred Shares
 at such holder's last address appearing on the register of holders maintained
 for that purpose within 20 days of the effective date of such adjustment.
 Failure to deliver such notice shall not affect the legality or validity of any
 such adjustment.
<PAGE>   111
                                                                             111


      (x) In any case in which this Section 12(d) provides that an adjustment
 shall become effective immediately after a Common Share Record Date for an
 event, the Company may defer until the occurrence of such event issuing to the
 holder of any Series A Preferred Share converted after such Common Share Record
 Date and before the occurrence of such event the additional Common Shares
 issuable upon such conversion by reason of the adjustment required by such
 event over and above the Common Shares issuable upon such conversion before
 giving effect to such adjustment.

      (xi) For purposes of this Section 12(d), the number of Common Shares at
 any time outstanding shall not include shares held in the treasury of the
 Company. The Company shall not pay any dividend or make any distribution on
 Common Shares held in the treasury of the Company.

      (xii) In lieu of making any adjustment to the Conversion Price pursuant to
 Section 12(d)(v), the Company may elect to reserve an amount of cash for
 distribution to the holders of Series A Preferred Shares upon the conversion of
 the Series A Preferred Shares so that any such holder converting Series A
 Preferred Shares will receive upon such conversion, in addition to the Common
 Shares and other items to which such holder is entitled, the full amount of
 cash which such holder would have received if such holder had, immediately
 prior to the Common Share Record Date for such distribution of cash, converted
 its Series A Preferred Shares into Common Shares, together with any interest
 accrued with respect to such amount, in accordance with this Section
 12(d)(xii). The 
<PAGE>   112
                                                                             112


 Company may make such election by providing an Officers' Certificate to the
 Registrar to such effect on or prior to the payment date for any such
 distribution and depositing with the Registrar on or prior to such date an
 amount of cash equal to the aggregate amount that the holders of Series A
 Preferred Shares would have received if such holders had, immediately prior to
 the Common Share Record Date for such distribution, converted all the Series A
 Preferred Shares into Common Shares. Any such funds so deposited by the Company
 with the Registrar shall be invested by the Registrar in unconditional U.S.
 Government obligations with a maturity not more than three months from the date
 of issuance. Upon conversion of Series A Preferred Shares by a holder thereof,
 such holder shall be entitled to receive, in addition to the Common Shares
 issuable upon conversion, an amount of cash equal to the amount such holder
 would have received if such holder had, immediately prior to the Common Share
 Record Date for such distribution, converted its Series A Preferred Shares into
 Common Shares, along with such holder's pro rata share of any accrued interest
 earned as a consequence of the investment of such funds. Promptly after making
 an election pursuant to this Section 12(d)(xii), the Company shall give or
 shall cause to be given notice to all holders of Series A Preferred Shares of
 such election, which notice shall state the amount of cash per Series A
 Preferred Share such holders shall be entitled to receive (excluding interest)
 upon conversion of the Series A Preferred Shares as a consequence of the
 Company having made such election.
<PAGE>   113
                                                                             113


      (e) Subject to Section 13, in case of any consolidation of the Company
with, or merger of the Company into, any other corporation, or in case of any
merger of another corporation into the Company (other than a merger which does
not result in any reclassification, conversion, exchange or cancelation of
outstanding shares of Common Shares of the Company), or in case of any sale,
conveyance or transfer of all or substantially all the assets of the Company,
the holder of each Series A Preferred Share then outstanding shall have the
right thereafter, during the period such Series A Preferred Share shall be
convertible as specified in Section 12(a), to convert such Series A Preferred
Share only into the kind and amount of securities, cash and other property
receivable upon such consolidation, merger, 
<PAGE>   114
                                                                             114


conveyance or transfer by a holder of the number of shares of Common Shares of
the Company into which such Series A Preferred Share might have been converted
immediately prior to such consolidation, merger, conveyance or transfer,
assuming such holder of Common Shares of the Company failed to exercise his
rights of election, if any, as to the kind or amount of securities, cash and
other property receivable upon such consolidation, merger, conveyance or
transfer (provided that, if the kind or amount of securities, cash and other
property receivable upon such consolidation, merger, conveyance or transfer is
not the same for each Common Share of the Company in respect of which such
rights of election shall not have been exercised ("nonelecting share"), then for
the purpose of this Section 12 the kind and amount of securities, cash and other
property receivable upon such consolidation, merger, conveyance or transfer by
each nonelecting share shall be deemed to be the kind and amount so receivable
per share by a plurality of the nonelecting shares). Such securities shall
provide for adjustments which, for events subsequent to the effective date of
the triggering event, shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Section 12. The above provisions of this
Section 12 shall similarly apply to successive consolidations, mergers,
conveyances or transfers.

      (f)  In case:

      (i) the Company shall declare a dividend (or any other distribution) on
 its Common Shares payable otherwise than in cash out of its earned surplus; or

      (ii) the Company shall authorize the granting to all holders of its Common
 Shares of rights or warrants to subscribe for or purchase any shares of capital
 stock of any class or of any other rights; or

      (iii) of any reclassification of the Common Shares of the Company (other
 than a subdivision or combination of its outstanding Common Shares), or of any
 consolidation or merger to which the Company is a party and for which approval
 of any shareholders of the Company is required, or the sale, conveyance or
 transfer of all or substantially all the assets of the Company; or

      (iv) of the voluntary or involuntary dissolution, liquidation or
 winding-up of the Company;
<PAGE>   115
                                                                             115


then the Company shall cause to be filed with the Registrar and at each office
or agency maintained for the purpose of conversion of Series A Preferred Shares,
and shall cause to be mailed to all holders at their last addresses as they
shall appear in the Series A Preferred Shares Register, at least 20 Business
Days (or 10 Business Days in any case specified in clause (i) or (ii) above)
prior to the applicable date hereinafter specified, a notice stating (x) the
date on which a record is to be taken for the purpose of such dividend,
distribution, rights or warrants, or, if a record is not to be taken, the date
as of which the holders of Common Shares of record to be entitled to such
dividend, distribution, rights or warrants are to be determined or (y) the date
on which such reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding-up is expected to become effective, and the
date as of which it is expected that holders of Common Shares of record shall be
entitled to exchange their Common Shares for securities, cash or other property
deliverable upon such reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding-up. Failure to give the notice required by
this Section 12(f) or any defect therein shall not affect the legality or
validity of any dividend, distribution, right, warrant, reclassification,
consolidation, merger, sale, transfer, dissolution, liquidation or winding-up,
or the vote upon any such action.

      (g) The Company shall at all times reserve and keep available, free from
preemptive rights, out of its authorized but unissued Common Shares, for the
purpose of
<PAGE>   116
                                                                             116


effecting the conversion of Series A Preferred Shares, the full number of Common
Shares then issuable upon the conversion of all outstanding Series A Preferred
Shares.

      (h) The Company will pay any and all taxes that may be payable in respect
of the issue or delivery of Common Shares on conversion of Series A Preferred
Shares pursuant hereto. The Company shall not, however, be required to pay any
tax which may be payable in respect of any transfer involved in the issue and
delivery of Common Shares in a name other than that of the holder of the Series
A Preferred Share or Series A Preferred Shares to be converted, and no such
issue or delivery shall be made unless and until the Person requesting such
issue has paid to the Company the amount of any such tax, or has established to
the satisfaction of the Company that such tax has been paid or is not payable.

      13. Consolidation, Merger, Conveyance or Transfer. Without the vote or
consent of the holders of a majority of the then Outstanding Series A Preferred
Shares, the Company may not consolidate or merge with or into, or sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of its
assets to, any person unless (a) the entity formed by such consolidation or
merger (if other than the Company) or to which such sale, assignment, transfer,
lease, conveyance or other disposition shall have been made (in any such case,
the "resulting entity") is a corporation organized and existing under the laws
of Bermuda, the United States or any State thereof or the District of Columbia;
(b) if the Company is not the resulting entity, the Series A Preferred Shares
are
<PAGE>   117
                                                                             117


converted into or exchanged for and become shares of such resulting entity,
having in respect of such resulting entity the same (or more favorable) powers,
preferences and relative, participating, optional or other special rights that
the Series A Preferred Shares had immediately prior to such transaction; (c)
immediately after giving effect to such transaction, no Voting Rights Triggering
Event has occurred and is continuing and (d) the Company shall have delivered to
the Registrar an Officers' Certificate and an opinion of counsel, each stating
that such consolidation, merger, conveyance or transfer complies with this
Section 13 and that all conditions precedent herein provided for relating to
such transaction have been complied with.

      14. SEC Reports; Reports by Company. So long as any Series A Preferred
Shares are outstanding, the Company shall file with the SEC and, within 15 days
after it files them with the SEC, with the Registrar and, if requested, furnish
to the holders of Series A Preferred Shares all annual and quarterly reports and
the information, documents, and other reports that the Company is required to
file with the SEC pursuant to Section 13(a) or 15(d) of the Exchange Act ("SEC
Reports"). In the event the Company is not required or shall cease to be
required to file SEC Reports, pursuant to the Exchange Act, the Company will
nevertheless file such reports with the SEC (unless the SEC will not accept such
a filing). Whether or not required by the Exchange Act to file SEC Reports with
the SEC, so long as any Series A Preferred Shares are Outstanding, the Company
will furnish or cause to be furnished copies of the SEC Reports to the holders
of Series A Preferred Shares at the time the Company 
<PAGE>   118
                                                                             118


is required to make such information available to the Registrar and to
prospective investors who request it in writing. In addition, the Company has
agreed that, for so long as any Series A Preferred Shares remain outstanding, it
will furnish to the holders and to securities analysts and prospective
investors, upon their request, the information required to be delivered pursuant
to Rule 144A(d)(4) under Securities Act.
<PAGE>   119
                                                                             119


      15. Definitions. For purposes of this Schedule, the following terms shall
have the meaning set forth below:

      "Accumulated Dividends" has the meaning set forth in Section 6(a).

      "Agent Members" has the meaning set forth in Section 4(c).

      "Average Market Value" of the Common Shares means the arithmetic average
of the Current Market Value of the Common Shares for the ten trading days ending
on the fifth Business Day prior to (i) in the case of the payment of any
dividend, the Record Date for such dividend and (ii) in the case of any other
payment, the date of such payment.

      "Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which banking institutions in The City of New York are
authorized or obligated by law or executive order to be closed.

      "Bye-Laws" has the meaning set forth in the Recitals.

      "Closing Date" means any Closing Date under the Purchase
Agreement.

      "closing price" has the meaning set forth in Section 12(d)(vii).

      "Common Share Record Date" has the meaning set forth in Section
12(d)(vii).

      "Common Shares" means common shares of the Company, par value
$1.00 per share.
<PAGE>   120
                                                                             120


      "Companies Act" has the meaning set forth in Section 6(a).

      "Company" has the meaning set forth in the Recitals.

      "Company Order" means a written request or order signed in the name of the
Company by its Chairman of the Board, its President or a Vice President and by
its Treasurer, an Assistant Treasurer, its Secretary or an Assistant Secretary.

      "Conversion Agent" has the meaning set forth in Section 5(a).

      "Conversion Price" has the meaning set forth in Section 12(a).

      "Current Market Value" of the Common Shares means the average of the high
and low sale prices of the Common Shares as reported on the Nasdaq National
Market or any national securities exchange in the United States upon which the
Common Shares are then listed, for the trading day in question.

      "Current Market Price" has the meaning set forth in Section
12(d)(vii).

      "Depositary" has the meaning set forth in Section 4(b).

      "Dilution Trigger Event" has the meaning set forth in Section
12(d)(iv).

      "Distributed Securities" has the meaning set forth in Section
12(d)(iv).
<PAGE>   121
                                                                             121


      "Dividend Make-Whole Payment" has the meaning set forth in
Section 10(a).

      "Dividend Make-Whole Period" has the meaning set forth in Section
10(a).

      "Dividend Payment Date" means each February 15, May 15, August 15 and
November 15 ; provided, however, that if such date shall not be a Business Day,
then such date shall be the next Business Day.

      "Dividend Record Date" has the meaning set forth in Section 7(a).

      "DTC" has the meaning set forth in Section 4(b).

      "Expiration Time" has the meaning set forth in Section 12(d)(vi).

      "fair market value" has the meaning set forth in Section
12(d)(vii).

      "Global Series A Preferred Share" has the meaning set forth in
Section 4(b).

      "Global Shares Legend" has the meaning set forth in Section 4(b).

      "Globalstar" means Globalstar, L.P., a Delaware limited
partnership.

      "Initial Purchasers" means Bear, Stearns & Co. Inc., Donaldson,
Lufkin & Jenrette Securities Corporation, Lehman Brothers Inc., C.E.
Unterberg, Towbin, CIBC Oppenheimer Corp. and ING Baring Furman Selz
LLC.
<PAGE>   122
                                                                             122


      "Junior Shares" has the meaning set forth in Section 9(a).

      "Mandatory Redemption Date" has the meaning set forth in Section 10(c);
provided, however, that if such date shall not be a Business Day, then such date
shall be the next Business Day.

      "Memorandum of Association" has the meaning set forth in the
Recitals.

      "nonelecting share" has the meaning set forth in Section 12(e).

      "Notice Date" has the meaning set forth in Section 10(a).

      "Odd-lot Redemption" has the meaning set forth in Section 10(f).

      "Officers' Certificate" means a certificate of the Company signed in the
name of the Company by its Chairman of the Board, its President or a Vice
President and by its Treasurer, an Assistant Treasurer, its Secretary or an
Assistant Secretary.

      "Optional Redemption" has the meaning set forth in Section 10(b).

      "Optional Redemption Date" has the meaning set forth in Section
10(b).

      "Ordinary Partnership Interests" means the ordinary partnership
interests of Globalstar.
<PAGE>   123
                                                                             123


      "Outstanding" means when used with respect to Series A Preferred Shares
means, as of the date of determination, all Series A Preferred Shares
theretofore authenticated and delivered under this Schedule, except (a) Series A
Preferred Shares theretofore converted into Common Shares in accordance with
Section 12 and Series A Preferred Shares theretofore canceled by the Registrar
or delivered to the Registrar for cancelation; (b) Series A Preferred Shares for
whose payment or redemption money in the necessary amount has been theretofore
deposited with the Registrar or any Paying Agent (other than the Company) in
trust or set aside and segregated in trust by the Company (if the Company shall
act as its own Paying Agent) for the holders of such Series A Preferred Shares;
provided that, if such Series A Preferred Shares are to be redeemed, notice of
such redemption has been duly given pursuant to this Schedule or provision
therefor satisfactory to the Registrar has been made; and (c) Series A Preferred
Shares (x) that are mutilated, destroyed, lost or stolen which the Company has
decided to pay or (y) in exchange for or in lieu of which other Series A
Preferred Shares have been authenticated and delivered pursuant to this
Schedule; provided, however, that, in determining whether the holders of the
Series A Preferred Shares have given any request, demand, authorization,
direction, notice, consent or waiver or taken any other action hereunder, Series
A Preferred Shares owned by the Company or any other obligor upon the Series A
Preferred Shares or any affiliate (other than, in the case of Section 8(b) and
Section 8(c), Loral and its subsidiaries) of the Company or of such other
obligor shall 
<PAGE>   124
                                                                             124


be disregarded and deemed not to be Outstanding, except that, in determining
whether the Registrar shall be protected in relying upon any such request,
demand, authorization, direction, notice, consent, waiver or other action, only
Series A Preferred Shares which the Registrar has actual knowledge of being so
owned shall be so disregarded. Series A Preferred Shares so owned which have
been pledged in good faith may be regarded as Outstanding if the pledgee
establishes to the satisfaction of the Registrar the pledgee's right so to act
with respect to such Series A Preferred Shares and that the pledgee is not the
Company or any other obligor upon the Series A Preferred Shares or any affiliate
of the Company or of such other obligor.

      "Parity Shares" has the meaning set forth in Section 9(a).

      "Paying Agent" has the meaning set forth in Section 5(a).

      "Preferred Partnership Interests" means the 8% Convertible Redeemable
Preferred Partnership Interests of Globalstar purchased by the Company with the
proceeds of the issuance of the Series A Preferred
Shares.

      "Preferred Stock Liquidated Damages" has the meaning set forth in
Section 6(b).

      "Provisional Redemption" has the meaning set forth in
Section 10(a).

      "Provisional Redemption Date" has the meaning set forth in
Section 10(a).
<PAGE>   125
                                                                             125


      "Purchase Agreement" means the Purchase Agreement dated
January 21, 1999, among the Company, Globalstar, Loral Space &
Telecommunications Ltd. and the Initial Purchasers.

      "Purchased Shares" has the meaning set forth in Section 12(d)(vi).

      "QIBs" has the meaning set forth in Section 4(a).

      "Redemption Date" has the meaning set forth in Section 10(g).

      "Redemption Notice" has the meaning set forth in Section 10(g).

      "Redemption Price" has the meaning set forth in Section 10(g).

      "Registrar" has the meaning set forth in Section 3.

      "Registrable Securities" has the meaning set forth in
Section 5(c).

      "Registration Default" has the meaning set forth in Section 6(b).

      "Registration Rights Agreement" means the Registration Rights Agreement
dated as of January 26, 1999, among the Company, Globalstar and the Initial
Purchasers.

      "Restricted Series A Preferred Shares" has the meaning set forth
in Section 4(d).

      "Restricted Shares Legend" has the meaning set forth in
Section 4(a).
<PAGE>   126
                                                                             126


      "resulting entity" has the meaning set forth in Section 13.

      "Rule 144A" has the meaning set forth in Section 4(a).

      "SEC" means the Securities and Exchange Commission, as from time to time
constituted, created under the Securities Exchange Act of 1934, or, if at any
time after the adoption of this Schedule such commission is not existing and
performing the duties now assigned to it, then the body performing such duties
at such time.

      "SEC Reports" has the meaning set forth in Section 14.

      "Securities Act" has the meaning set forth in Section 4(a).

      "Senior Shares" has the meaning set forth in Section 9(a).

      "Series A Preferred Share Directors" has the meaning set forth in
Section 8(a).

      "Series A Preferred Shares" has the meaning set forth in Section
1.

      "Shelf Registration Statement" means the shelf registration statement in
respect of the Registrable Securities (other than Registrable Securities
beneficially owned by Loral) required pursuant to the Registration Rights
Agreement to be filed with the SEC with respect to resales of the Registrable
Securities (other than Registrable Securities beneficially owned by Loral).
<PAGE>   127
                                                                             127


      "Transfer Restricted Securities" means each Registrable Security (other
than Registrable Securities beneficially owned by Loral) until the later of (A)
the second anniversary of the last Closing Date pursuant to the Purchase
Agreement and (B) such time as (1) such Registrable Security shall no longer
constitute a restricted security for purposes of Rule 144(k) of the Securities
Act or (2) such Registrable Security has been sold pursuant to the Shelf
Registration Statement.

      "Voting Rights Triggering Event" has the meaning set forth in
Section 8(a).

      IN WITNESS WHEREOF, the Company has caused this Schedule to be duly
executed by Gregory J. Clark, President of the Company, and attested by Eric J.
Zahler, Vice President and Secretary of the Company, this 26th day of January,
1999.

                              GLOBALSTAR TELECOMMUNICATIONS
                              LIMITED


                              by:   /s/ Gregory J. Clark
                                   ________________________
                                    Name: Gregory J. Clark
                                    Title: President
ATTEST:


by: /s/ Eric J. Zahler  
 ______________________
 Name: Eric J. Zahler
 Title: Vice President and
        Secretary
<PAGE>   128
                                                                             128


                                                                       EXHIBIT A



                                FACE OF SECURITY

[Restricted Shares Legend (include if Security is not registered under the U.S.
Securities Act of 1933): THE SECURITY EVIDENCED HEREBY (OR ITS PREDECESSOR) (AND
(1) THE COMMON STOCK INTO WHICH THIS SECURITY IS CONVERTIBLE AND (2) THE COMMON
STOCK ISSUABLE IN PAYMENT OF DIVIDENDS OR REDEMPTION OBLIGATIONS ON THIS
SECURITY) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER
SECTION 5 OF THE UNITED STATES SECURITIES ACT OF 1933 (THE "SECURITIES ACT") AND
MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF
SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THE
SECURITY EVIDENCED HEREBY (AND (1) THE COMMON STOCK INTO WHICH THIS SECURITY IS
CONVERTIBLE AND (2) THE COMMON STOCK ISSUABLE IN PAYMENT OF DIVIDENDS OR
REDEMPTION OBLIGATIONS ON THIS SECURITY) IS HEREBY NOTIFIED THAT THE SELLER MAY
BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES
ACT PROVIDED BY RULE 144A THEREUNDER (OTHER THAN WITH RESPECT TO THE COMMON
STOCK). THE HOLDER OF THE SECURITY EVIDENCED HEREBY (AND (1) THE COMMON STOCK
INTO WHICH THIS SECURITY IS CONVERTIBLE AND (2) THE COMMON STOCK ISSUABLE IN
PAYMENT OF DIVIDENDS OR REDEMPTION OBLIGATIONS ON THIS SECURITY) AGREES FOR THE
BENEFIT OF THE COMPANY THAT (A) SUCH SECURITY (AND (1) THE COMMON STOCK INTO
WHICH THIS SECURITY IS CONVERTIBLE AND (2) THE COMMON STOCK ISSUABLE IN PAYMENT
OF DIVIDENDS OR REDEMPTION OBLIGATIONS ON THIS SECURITY) MAY BE RESOLD, PLEDGED
OR OTHERWISE TRANSFERRED, 
<PAGE>   129
                                                                             129


ONLY (1) (a) OTHER THAN WITH RESPECT TO THE COMMON STOCK, TO A PERSON WHO THE
SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING
OF RULE 144A UNDER THE SECURITIES ACT PURCHASING FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (b) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" AS
DEFINED IN RULE 501(A)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS
ACQUIRING SUCH SECURITY FOR INVESTMENT PURPOSES AND NOT FOR DISTRIBUTION IN A
MINIMUM LIQUIDATION PREFERENCE OF NOT LESS THAN $250,000, (c) OUTSIDE THE UNITED
STATES TO A NON-U.S. PERSON IN A TRANSACTION COMPLYING WITH RULE 904 OF
REGULATION S UNDER THE SECURITIES ACT, (d) PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF
AVAILABLE) OR (e) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT (AND, IN EACH CASE, BASED UPON AN OPINION OF
COUNSEL IF THE COMPANY SO REQUESTS) (2) TO THE COMPANY OR (3) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND, IN EACH CASE, IN
ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED
STATES AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO,
NOTIFY ANY PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE
RESTRICTIONS SET FORTH IN CLAUSE (A) ABOVE.

IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND
TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH REGISTRAR AND
TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH
THE FOREGOING RESTRICTIONS.]
<PAGE>   130
                                                                             130


[Global Shares Legend (include if Security is issued as a global certificate):
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW YORK, TO
THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OF PAYMENT, AND
ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS
MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC) ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO. HAS AN INTEREST HEREIN.

TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT
NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S
NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO
TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE PREFERRED
STOCK SCHEDULE REFERRED TO BELOW.

IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND
TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH REGISTRAR AND
TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH
THE FOREGOING RESTRICTIONS.]

Number of Shares
Number: ________ Shares

144A CUSIP NO.: 379364 50 8
IAI CUSIP NO.: 379364 60 7
<PAGE>   131
                                                                             131



      Series A 8% Convertible Redeemable Preferred Stock due 2011

                                       of

                      GLOBALSTAR TELECOMMUNICATIONS LIMITED

      GLOBALSTAR TELECOMMUNICATIONS LIMITED, an exempted company organized under
the laws of Bermuda (the "Company"), hereby certifies that [HOLDER] (the
"Holder") is the registered owner of fully paid and non-assessable preference
securities of the Company designated the Series A 8% Convertible Redeemable
Preferred Stock due 2011, par value U.S.$0.01 and liquidation preference
U.S.$50.00 per share (the "Preferred Stock"). The shares of Preferred Stock are
transferable on the books and records of the Registrar, in person or by a duly
authorized attorney, upon surrender of this certificate duly endorsed and in
proper form for transfer. The designation, rights, privileges, restrictions,
preferences and other terms and provisions of the Preferred Stock represented
hereby are issued and shall in all respects be subject to the provisions of the
schedule to the Bye-Laws of the Company dated January 26, 1999, as the same may
be amended from time to time in accordance with its terms (the "Preferred Stock
Schedule"). Capitalized terms used herein but not defined shall have the meaning
given them in the Preferred Stock Schedule. The Company will provide a copy of
the Preferred Stock Schedule to a Holder without charge upon written request to
the Company at its principal place of business.
<PAGE>   132
                                                                             132


      Reference is hereby made to select provisions of the Preferred Stock set
forth on the reverse hereof, and to the Preferred Stock Schedule, which select
provisions and the Preferred Stock Schedule shall for all purposes have the same
effect as if set forth at this place.

      Upon receipt of this certificate, the Holder is bound by the Preferred
Stock Schedule and is entitled to the benefits thereunder.

      Unless the Transfer Agent's valid countersignature appears hereon, the
shares of Preferred Stock evidenced hereby shall not be entitled to any benefit
under the Preferred Stock Schedule or be valid or obligatory for any purpose.
<PAGE>   133
                                                                             133


      IN WITNESS WHEREOF, the Company has executed this certificate as of the
date set forth below.



                  GLOBALSTAR TELECOMMUNICATIONS LIMITED,


                  By:  ____________________________
                        Name:
                        Title:

[Seal]

                  By:  ____________________________
                        Name:
                        Title:

                  Dated:


COUNTERSIGNED AND REGISTERED


THE BANK OF NEW YORK
as Transfer Agent,


By:
      Authorized Signatory

Dated:
<PAGE>   134

                               REVERSE OF SECURITY

                      GLOBALSTAR TELECOMMUNICATIONS LIMITED

Series A 8% Convertible Redeemable Preferred Stock due 2011

      Dividends on each share of Preferred Stock shall be payable at a rate per
annum set forth in the face hereof or as provided in the Preferred Stock
Schedule (including Preferred Stock Liquidated Damages). Dividends may be paid,
at the option of the Company, in cash, or, subject to certain limitations, in
shares of Common Stock of the Company or a combination of cash and shares of
Common Stock of the Company.

      The shares of Preferred Stock shall be redeemable as provided in the
Preferred Stock Schedule. The shares of Convertible Preferred Stock shall be
convertible into the Company's Common Stock in the manner and according to the
terms set forth in the Preferred Stock Schedule.

      The Company shall furnish to any Holder upon request and without charge, a
full summary statement of the designations, voting rights preferences,
limitations and special rights of the shares of each class or series authorized
to be issued by the Company so far as they have been fixed and determined and
the authority of the Board of Directors to fix and determine the designations,
voting rights, preferences, limitations and special rights of the class and
series of shares of the Company.

                                   ASSIGNMENT

      FOR VALUE RECEIVED, the undersigned assigns and transfers the shares of
Preferred Stock evidenced hereby to:
<PAGE>   135

(Insert assignee's social security or tax identification number)



(Insert address and zip code of assignee)

and irrevocably appoints:



agent to transfer the shares of Preferred Stock evidenced hereby on the books of
the Transfer Agent and Registrar. The agent may substitute another to act for
him or her.

Date:

Signature: ______________________________

(Sign exactly as your name appears on the other side of this Convertible
Preferred Stock Certificate)
<PAGE>   136

Signature Guarantee:______________________________*

--------
      *Signature must be guaranteed by an "eligible guarantor institution"
(i.e., a bank, stockbroker, savings and loan association or credit union)
meeting the requirements of the Registrar, which requirements include membership
or participation in the Securities Transfer Agents Medallion Program ("STAMP")
or such other "signature guarantee program" as may be determined by the
Registrar in addition to, or in substitution for, STAMP, all in accordance with
the Securities Exchange Act of 1934.
<PAGE>   137

                              NOTICE OF CONVERSION

                    (To be Executed by the Registered Holder

                    in order to Convert the Preferred Stock)

The undersigned hereby irrevocably elects to convert (the "Conversion")
_________ shares of Series A 8% Convertible Redeemable Preferred Stock due 2011
(the "Preferred Stock"), represented by stock certificate No(s). (the "Preferred
Stock Certificates") into shares of common stock, par value U.S.$1.00 per share
("Common Stock"), of Globalstar Telecommunications Limited (the "Company")
according to the conditions of the schedule to the Company's Bye-Laws
establishing the terms of the Preferred Stock (the "Preferred Stock Schedule"),
as of the date written below. If shares are to be issued in the name of a person
other than the undersigned, the undersigned will pay all transfer taxes payable
with respect thereto and is delivering herewith such certificates. No fee will
be charged to the holder for any conversion, except for transfer taxes, if any.
A copy of each Preferred Stock Certificate is attached hereto (or evidence of
loss, theft or destruction thereof).*

The undersigned represents and warrants that all offers and sales by the
undersigned of the shares of Common Stock issuable to the undersigned upon
conversion of the Preferred Stock shall be made pursuant to registration of the
Common Stock under the Securities Act of 1933 (the "Act"), or pursuant to any
exemption from registration under the Act.

Any holder, upon the exercise of its conversion rights in accordance with the
terms of the Preferred Stock Schedule 
<PAGE>   138

and the Preferred Stock, agrees to be bound by the terms of the Registration
Rights Agreement.

Capitalized terms used but not defined herein shall have the meanings ascribed
thereto in or pursuant to the Preferred Stock Schedule.

                  Date of Conversion:___________________________________

                  Applicable Conversion Price:__________________________

                  Number of shares of
                  Preferred Stock to be Converted:______________________

                  Number of shares of
                  Common Stock to be Issued:____________________________

                  Signature:____________________________________________

                  Name:_________________________________________________

                  Address:**____________________________________________

                  Fax No.:______________________________________________

*The Company is not required to issue shares of Common Stock until the original
Preferred Stock Certificate(s) (or evidence of loss, theft or destruction
thereof) to be converted are received by the Company or its Transfer Agent. The
Company shall issue and deliver shares of Common Stock to an overnight courier
not later than three business days following receipt of the original Preferred
Stock Certificate(s) to be converted.

**Address where shares of Common Stock and any other payments or certificates
shall be sent by the Company.
<PAGE>   139

                                                                               3


[Global Share Schedule: (include if Security is issued as a global
certificate)]

                                                                      SCHEDULE A

                SCHEDULE OF EXCHANGES FOR GLOBAL SECURITY

      The initial number of Series A Preferred Shares represented by this Global
Series A Preferred Share shall be _______. The following exchanges of a part of
this Global Series A Preferred Share have been made:

-------------------------------------------------------------------------

                                               Number of
                                                shares
                  Amount of                   represented
                 decrease in    Amount of       by this
                  number of    increase in      Global
                   shares       number of      Series A
                 represented      shares       Preferred
                   by this     represented       Share
                   Global        by this       following   Signature of
                  Series A    Global Series      such       authorized
   Date of        Preferred    A Preferred    decrease or   officer of
   Exchange         Share         Share        increase      Registrar
-------------------------------------------------------------------------
-------------------------------------------------------------------------



-------------------------------------------------------------------------
-------------------------------------------------------------------------



-------------------------------------------------------------------------
-------------------------------------------------------------------------



-------------------------------------------------------------------------
-------------------------------------------------------------------------



-------------------------------------------------------------------------
-------------------------------------------------------------------------
<PAGE>   140

                                                                               4



                                                                       EXHIBIT B

                          FORM OF TRANSFER CERTIFICATE

                       (Transfers pursuant to ' 5(b)(ii),

               ' 5(b)(iii) or ' 5(b)(iv) of the Schedule)

The Bank of New York, as Transfer Agent
101 Barclay Street, Floor 21 West
New York, New York 10286
Att: Stock Transfer
       Administration

Re:   Globalstar Telecommunications Limited
      8% Series A Convertible Redeemable Preferred Shares due 2011 (the
      "Series A Preferred Shares")

      Reference is hereby made to Schedule III (the "Schedule") to the Bye-laws
of Globalstar Telecommunications Limited. Capitalized terms used but not defined
herein shall have the meanings given them in the Schedule.

      This letter relates to __________ Series A Preferred Shares (the
"Securities") which are held [in the form of the [Restricted] [Global] Security
(CUSIP No. __) with the 
<PAGE>   141

                                                                               5


Depositary]** in the name of [name of transferor] (the "Transferor") to effect
the transfer of the Securities.

      In connection with such request, and in respect of Securities, the
Transferor does hereby certify the Securities are being transferred (i) in
accordance with applicable securities laws of any state of the United States or
any other jurisdiction and (ii) in accordance with their terms:

CHECK ONE BOX BELOW:

 (1)              to a transferee that the Transferor reasonably believes is a
                  qualified institutional buyer within the meaning of Rule 144A
                  under the Securities Act purchasing for its own account or for
                  the account of a qualified institutional buyer in a
                  transaction meeting the requirements of Rule 144A;
<PAGE>   142
                                                                               6


 (2)              to a transferee that the Transferor reasonably believes is
                  an institutional "accredited investor" as defined in Rule
                  501(a)(1), (2), (3) or (7) under the Securities Act that is
                  acquiring such Securities for investment purposes and not for
                  distribution and is acquiring at least $250,000 aggregate
                  liquidation preference of Series A Preferred Shares for its
                  own account or for one or more accounts (each of which is
                  acquiring at least $250,000 aggregate liquidation preference)
                  as to which the transferee exercises sole investment
                  discretion;

 (3)              outside the United States to a Non-U.S. Person
                  in a transaction complying with Rule 904 of
                  Regulation S under the Securities Act;

 (4)              pursuant to an exemption from registration
                  under the Securities Act provided by Rule 144
                  thereunder (if available); or

 (5)              in accordance with another exemption from the registration
                  requirements of the Securities Act (based upon an opinion of
                  counsel if the Company so requests).
<PAGE>   143
                                                                               7


                              [Name of Transferor]



                              by: ________________________
                                      Name:
                                     Title:

Dated:


cc:  Globalstar Telecommunications Limited
 Cedar House
 41 Cedar Avenue
 Hamilton HM12 Bermuda
 Att.:  Corporate Secretary
<PAGE>   144

                                                                       EXHIBIT C

               FORM OF ACCREDITED INVESTOR TRANSFEREE CERTIFICATE

                      (Transfers pursuant to ' 5(b)(ii) or

                          ' 5(b)(iii) of the Schedule)



The Bank of New York, as Transfer Agent
101 Barclay Street, Floor 21 West
New York, New York 10286

Att: Stock Transfer
 Administration

Re:  Globalstar Telecommunications Limited
      8% Series A Convertible Redeemable Preferred Shares due 2011 ( the "Series
A Preferred Shares")

      Reference is hereby made to Schedule III (the "Schedule") to the Bye-laws
of Globalstar Telecommunications, Limited. Capitalized terms used but not
defined herein shall have the meanings given them in the Schedule.

      This letter relates to ________ Series A Preferred Shares (the
"Securities") which are held [in the form of the [Restricted] [Global] Series A
Preferred Share (CUSIP No. ___) with the Depositary] in the name of [name of
transferor] (the "Transferor") to effect the transfer of the Securities to the
undersigned.

      In connection with such request, and in respect of the Securities, we
confirm that:

      1. We understand that the Securities have not been registered under the
U.S. Securities Act of 1933 (the "Securities 
<PAGE>   145
                                                                               2


Act"), and are being sold to us in a transaction that is exempt from the
registration requirements of the Securities Act.

      2. We are a corporation, partnership or other entity having such knowledge
and experience in financial and business matters as to be capable of evaluating
the merits and risks of an investment in the Securities, and we are (or any
account for which we are purchasing under paragraph 4 below is) an accredited
investor as defined in Rule 501(a) under the Securities Act, able to bear the
economic risk of the proposed investment in the Securities.

      3. We are acquiring the Securities for our own account (or for accounts as
to which we exercise sole investment discretion and have authority to make, and
do make, the statements contained in this letter) and not with a view to any
distribution of the Securities, subject, nevertheless, to the understanding that
the disposition of our property shall at all times be and remain within our
control.

      4. We are, and each account (if any) for which we are purchasing
Securities is, purchasing Securities having an aggregate liquidation preference
of not less than $250,000.

      5. We understand that (a) the Securities will be delivered to us in
registered form only and that the certificate delivered with respect to the
Securities will bear a legend substantially to the following effect:

THE SECURITY EVIDENCED HEREBY (OR ITS PREDECESSOR) (AND (1) THE COMMON STOCK
INTO WHICH THIS SECURITY IS CONVERTIBLE AND (2)
<PAGE>   146
                                                                               3


THE COMMON STOCK ISSUABLE IN PAYMENT OF DIVIDENDS OR REDEMPTION OBLIGATIONS ON
THIS SECURITY) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION
UNDER SECTION 5 OF THE UNITED STATES SECURITIES ACT OF 1933 (THE "SECURITIES
ACT") AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH
PURCHASER OF THE SECURITY EVIDENCED HEREBY (AND (1) THE COMMON STOCK INTO WHICH
THIS SECURITY IS CONVERTIBLE AND (2) THE COMMON STOCK ISSUABLE IN PAYMENT OF
DIVIDENDS OR REDEMPTION OBLIGATIONS ON THIS SECURITY) IS HEREBY NOTIFIED THAT
THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF
THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER (OTHER THAN WITH RESPECT TO
THE COMMON STOCK). THE HOLDER OF THE SECURITY EVIDENCED HEREBY (AND (1) THE
COMMON STOCK INTO WHICH THIS SECURITY IS CONVERTIBLE AND (2) THE COMMON STOCK
ISSUABLE IN PAYMENT OF DIVIDENDS OR REDEMPTION OBLIGATIONS ON THIS SECURITY)
AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH SECURITY (AND (1) THE COMMON
STOCK INTO WHICH THIS SECURITY IS CONVERTIBLE AND (2) THE COMMON STOCK ISSUABLE
IN PAYMENT OF DIVIDENDS OR REDEMPTION OBLIGATIONS ON THIS SECURITY) MAY BE
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1) (a) OTHER THAN WITH RESPECT
TO THE COMMON STOCK, TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A
QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE
SECURITIES ACT PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (b)
TO AN INSTITUTIONAL "ACCREDITED INVESTOR" AS DEFINED IN RULE 501(A)(1), (2), (3)
OR (7) UNDER THE SECURITIES ACT THAT IS ACQUIRING SUCH SECURITY FOR INVESTMENT
PURPOSES AND
<PAGE>   147
                                                                               4


NOT FOR DISTRIBUTION IN A MINIMUM LIQUIDATION PREFERENCE OF NOT LESS THAN
$250,000, (c) OUTSIDE THE UNITED STATES TO A NON-U.S. PERSON IN A TRANSACTION
COMPLYING WITH RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (d) PURSUANT
TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144
THEREUNDER (IF AVAILABLE) OR (e) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND, IN EACH CASE, BASED UPON
AN OPINION OF COUNSEL IF THE COMPANY SO REQUESTS) (2) TO THE COMPANY OR (3)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND, IN
EACH CASE, IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF
THE UNITED STATES AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS
REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY OF
THE RESALE RESTRICTIONS SET FORTH IN CLAUSE (A) ABOVE.

IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND
TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH REGISTRAR AND
TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH
THE FOREGOING RESTRICTIONS.

      and (b) such certificates will be reissued without the foregoing legend
only in accordance with the terms of the Schedule.

      6. We agree that in the event that at some future time we wish to dispose
of any of the Securities, we will not do so unless:
<PAGE>   148
                                                                               5


      (a) the Securities are sold to the Company;

      (b) the Securities are sold to a qualified institutional buyer in
 compliance with Rule 144A under the Securities Act;

      (c) the Securities are sold to an accredited investor, as defined in Rule
 501(a) under the Securities Act, acquiring at least $250,000 liquidation
 preference of the Securities that, prior to such transfer, furnishes to the
 Transfer Agent a signed letter containing certain representations and
 agreements relating to the restrictions on transfer of the Securities (the form
 of which letter can be obtained from such Transfer Agent);

      (d) the Securities are sold outside the United States in compliance with
 Rule 903 or Rule 904 under the Securities Act;

      (e) the Securities are sold by us pursuant to Rule 144 under the
 Securities Act; or

      (f) the Securities are sold pursuant to an effective registration
 statement under the Securities Act.


                               Very truly yours,
                              [PURCHASER]


                               by: __________________________
                                    Name:
                                    Title:

Dated:


cc:   Globalstar Telecommunications Limited
      Cedar House
      41 Cedar Avenue
      Hamilton HM12 Bermuda