Document:

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                                                                    Exhibit 10.7

                             SHAREHOLDERS AGREEMENT

         This SHAREHOLDERS AGREEMENT (the "Agreement") is dated as of September
30, 1998, by and among True Temper Corporation, a Delaware corporation (the
"Company"), True Temper Sports LLC, a Delaware limited liability company
("TTSLLC"), Emhart Industries, Inc., a Connecticut corporation ("EII"), and the
other investors listed in Schedule I hereto.

         As of the date hereof, TTSLLC, EII and the Other Investors each own the
number of shares of the Company's Common Stock and Senior Preferred Stock set
forth opposite their names on Schedule I hereto.

         The Company and the Stockholders (as defined below) desire to enter
into this Agreement for the purposes, among others, of (i) establishing the
composition of the Board (as defined below), (ii) assuring continuity in the
management and ownership of the Company and (iii) limiting the manner and terms
by which the Stockholder Shares (as defined below) may be Transferred (as
defined below).

         NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereby agree as follows:

         1. Definitions. As used herein, the following terms shall have the
following meanings:

         "Affiliate" means, when used with reference to a specified Person, any
Person that, directly or indirectly, controls or is controlled by or is under
common control with the specified Person. As used in this definition, "control"
(including, with its correlative meanings, "controlled by" and "under common
control with") shall mean possession, directly or indirectly, of power to direct
or cause the direction of management or policies (whether through ownership of
securities or partnership or other ownership interests, by contract or
otherwise). With respect to any Person who is an individual, "Affiliates" shall
also include, without limitation, any member of such individual's Family Group.

         "Board" means the Company's board of directors.

         "Business Day" means any day other than a Saturday or Sunday and any
day on which banks in the city of New York, New York are authorized or required
by law or other governmental action to close.

         "Common Stock" means the Company's Common Stock, par value $0.01 per
share, and any other common stock authorized by the Company.

         "EII Holder" means any of EII and its Permitted Transferees.

         "EII Shares" means all Stockholder Shares issued or issuable to any EII
Holder.

         "Family Group" means, with respect to any Person who is an individual,
(i) such Person's spouse, former spouse, ancestors and descendants (whether
natural or adopted), parents and
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their descendants and any spouse of the foregoing persons (collectively,
"relatives") or (ii) the trustee, fiduciary or personal representative of such
Person or any trust solely for the benefit of such Person and/or such Person's
relatives.

         "Investor" means any of the Investors.

         "Investors" means collectively the TTSLLC Investors and the Other
Investors.

         "Investor Shares" means all Stockholder Shares issued or issuable to
any Investor.

         "Other Investors" means collectively any of the other investors listed
in Schedule I hereto or any of their Permitted Transferees.

         "Other Investor Shares" means all Stockholder Shares issued or issuable
to any Other Investor.

         "Person" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization, a governmental entity or any
department, agency or political subdivision thereof or any other entity or
organization.

         "Preferred Stock" means the Company's Senior Preferred Stock, par value
$0.01 per share.

         "Public Offering" means an underwritten public offering and sale of the
Common Stock pursuant to an effective registration statement under the
Securities Act; provided that a Public Offering shall not include an offering
made in connection with a business acquisition or combination pursuant to a
registration statement on Form S-4 or any similar form, or an employee benefit
plan pursuant to a registration statement on Form S-8 or any similar form.

         "Public Sale" means any sale of Stockholder Shares to the public
pursuant to an offering registered under the Securities Act or to the public
pursuant to the provisions of Rule 144 (or any similar rule or rules then in
effect) under the Securities Act.

         "Qualified Public Offering" means any offering by the Corporation of
its Common Stock to the public pursuant to an effective registration statement
under the Securities Act or any comparable statement under any similar federal
statute then in force pursuant to which the public offering price results in
aggregate gross cash proceeds to the Corporation and the selling stockholders,
if any, of at least $50,000,000 (before deduction of underwriting discounts and
expenses) and represents an implied aggregate equity value for the fully diluted
Common Stock of at least $100,000,000.

         "SEC" means the Securities and Exchange Commission.

         "Securities Act" means the Securities Act of 1933, as amended.

         "Stockholder Shares" means (i) all shares of Common Stock held,
directly or indirectly, by the Stockholders, (ii) all shares of Preferred Stock
held, directly or indirectly, by the

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Stockholders, and (iii) all equity securities issued or issuable directly or
indirectly with respect to any Common Stock referred to in clause (i) above or
with respect to any Preferred Stock referred to in clause (ii) above, in each
case, by way of a stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation, share exchange
or other reorganization. As to any particular shares constituting Stockholder
Shares, such shares will cease to be Stockholder Shares when they have been
Transferred in a Public Sale.

         "Stockholders" means collectively the Investors and the EII Holders.

         "Subsidiary" means, with respect to any Person, any corporation,
partnership, limited liability company, association or other business entity of
which (i) if a corporation, a majority of the total voting power of shares of
stock entitled (without regard to the occurrence of any contingency) to vote in
the election of directors thereof is at the time owned or controlled, directly
or indirectly, by that Person or one or more of the other Subsidiaries of that
Person or a combination thereof, or (ii) if a partnership, limited liability
company, association or other business entity, a majority of the partnership or
other similar ownership interests thereof is at the time owned or controlled,
directly or indirectly, by that Person or one or more Subsidiaries of that
Person or a combination thereof. For purposes hereof, a Person or Persons shall
be deemed to have a majority ownership interest in a partnership, limited
liability company, association or other business entity if such Person or
Persons shall be allocated a majority of partnership, limited liability company,
association or other business entity gains or losses or shall be or control the
managing director, managing member, manager or a general partner of such
partnership, limited liability company, association or other business entity.

         "TTSLLC Investor" means any of TTSLLC or any of its Permitted
Transferees.

         "TTSLLC Shares" means all Stockholder Shares issued or issuable to any
TTSLLC Investor.

         "Transfer" means any voluntary or involuntary, direct or indirect sale,
transfer, conveyance, assignment, pledge, hypothecation, gift, delivery or other
disposition, and "Transferred" means any change in ownership by means of a
Transfer.

         "Unaffiliated Third Party" means any Person who, immediately prior to
the contemplated transaction, (i) is not a Person who directly or indirectly
owns in excess of 5% of the outstanding shares of Common Stock on a
fully-diluted basis (a "5% Owner"), (ii) is not controlling, controlled by or
under common control with any such 5% Owner and (iii) is not the spouse or
descendent (by birth or adoption) of any such 5% Owner or a trust for the
benefit of such 5% Owner and/or such other Persons. As used in this definition,
"control" (including, with its correlative meanings, "controlled by" and "under
common control with") shall mean possession, directly or indirectly, of power to
significantly direct management or policies (whether through ownership of
securities or partnership or other ownership interests, by contract or
otherwise).

         2. Board of Directors.

         (a) To the extent permitted by law, each Stockholder shall vote all
voting securities of the Company over which such Stockholder has voting control,
and shall take all other reasonably necessary or desirable actions within such
Stockholder's control (whether in such

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Stockholder's capacity as a stockholder, director, member of a board committee
or officer of the Company or otherwise, and including, without limitation,
attendance at meetings in person or by proxy for purposes of obtaining a quorum
and execution of written consents in lieu of meetings), and the Company shall
take all necessary and desirable actions within its control (including, without
limitation, calling special board and shareholder meetings):

          (i) so that the authorized number of directors of the Board shall be
     five or such other number as determined by TTSLLC;

          (ii) (A) for the election to the Board of three directors designated
     by the holders of record of a majority of the TTSLLC Shares entitled to
     vote for directors of the Board (each a "TTSLLC Director") (the three
     TTSLLC Directors shall initially be Robert Knox, Mark Rossi and Tyler
     Wolfram);

               (B) for the election of the Chief Executive Officer of the
     Company to the Board for so long as he or she may serve in such capacity;
     and

               (C) for the election of one director designated by the holders of
     a majority of the outstanding Common Stock who will initially be Raymond
     DeVita;

          (iii) any director designated pursuant to clause (ii) (A) above shall
     be removed from the Board or any committee thereof (with or without cause)
     at the written request of the holders of a majority of the TTSLLC Shares
     entitled to vote for the election of directors, but only upon such written
     request and under no other circumstances and, in the case of the Chief
     Executive Officer, such person shall be removed from the Board at such
     times as any such person ceases to hold such office, or if earlier, at the
     request of the holders of a majority of Stockholder Shares entitled to vote
     for the election of directors;

          (iv) in the event that any director designated hereunder for any
     reason ceases to serve as a member of the Board or any committee thereof
     during such director's term of office, the resulting vacancy on the Board
     or committee shall be filled by a director designated in a manner
     consistent with clause (ii) above; and

          (v) at the Board's election, the composition of the board of directors
     (or any similar governing body) of any of the Company's Subsidiaries shall
     be the same as that of the Board.

     (b) In addition, the holders of a majority of the TTSLLC Shares shall have
the right to designate one individual to attend each meeting of the Board and
each meeting of any committee thereof as an observer who shall not be a member
of the Board and who shall have no voting rights. Such person shall be entitled
to receive all notices and all information delivered to directors in connection
with meetings of the Board and shall have the same right to reimbursement of
expenses pursuant to clause (c) below as directors of the Board.

     (c) To the extent permitted by law, the Company shall reimburse the
directors of the Board for all reasonable out-of-pocket expenses borne by such
directors in connection with the performance of their duties as directors of the
Company and as members of any committee of the Board.

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     (d) If any party fails to designate in writing a representative to fill a
director position pursuant to the terms of this Section 2, the election of an
individual to such director position shall be accomplished in accordance with
the Company's Certificate of Incorporation and Bylaws and applicable law. In the
event that, at any time, any provision of the Company's Certificate of
Incorporation or Bylaws is inconsistent with the requirements of any provision
of this Section 2, the Stockholders shall take such action as may be necessary
to amend any such provision in the Company's Certificate of Incorporation or
Bylaws, as the case may be, to conform with such requirements.

     (e) The committees of the Board shall include an Audit Committee and a
Compensation Committee. The Audit Committee shall consist of three members, all
of which shall be directors who are not members of the management of the
Company, who shall initially be Mark Rossi, Tyler Wolfram and Raymond DeVita.
The Compensation Committee shall consist of four members, three of which shall
be directors who are not members of the management of the Company, who shall
initially be Scott Hennessy, Robert Knox, Tyler Wolfram and Raymond DeVita.

     (f) The provisions of this Section 2 shall terminate on the date that
TTSLLC and/or its members fail to collectively own at least 50% of the shares of
the Common Stock held by TTSLLC as of the date hereof.

         3. Conflicting Agreements. Each Stockholder represents that such
Stockholder has not granted and is not a party to any proxy, voting trust or
other agreement which is inconsistent with or conflicts with the provisions of
this Agreement, and no holder of Stockholder Shares shall grant any proxy or
become party to any voting trust or other agreement which is inconsistent with
or conflicts with the provisions of this Agreement.

         4. Restrictions on Transfer of Stockholder Shares.

         (a) General Restrictions.

          (i) Prior to the earlier of (x) the first day after the period
     commencing on the date hereof and ending on the day the Company's financial
     statements are filed with the SEC for the first full fiscal quarter after
     the Company consummates a registered offering of its equity or debt
     securities, and (y) the date that is two years after the date hereof, and
     subject to Section 7 hereof, an EII Holder may Transfer shares of Preferred
     Stock only (A) if such EII Holder is exercising a tag-along right granted
     to such EII Holder pursuant to Section 4(c), subject to the requirements of
     Section 4(d)(ii), or (B) pursuant to the terms of Section 5.

          (ii) The EII Holders may not Transfer any shares of Common Stock until
     the earlier of (x) the date on which the Company consummates its initial
     Public Offering, (y) the date that is two years following the date hereof
     and (z) the date on which any TTSLLC Holder sells any of its shares of
     Common Stock to any Person who is not an Affiliate of any TTSLLC Holder
     following the date that is six months following the date hereof, provided
     that EII may only effectuate any such sales (A) in Public Sales, (B) if
     such EII Holder has complied with the terms and requirements of Section
     4(b) or if such EII Holder is exercising a tag-along right granted to such
     EII Holder pursuant to Section 4(c), subject to the requirements of Section
     4(d)(ii), or (C) pursuant to the terms of Section 5. Notwithstanding

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     the foregoing, at such time as the provisions of Section 4(b) have
     terminated in respect of the EII holders, any EII holder may Transfer any
     share of Common Stock following the earlier of the dates specified in
     clauses (x), (y) and (z) of the preceding sentence subject only to
     compliance with the provisions of Section 7(b).

          (iii) Subject to Section 7 hereof, an Investor may Transfer
     Stockholder Shares only (A) in Public Sales, (B) if such Investor has
     complied with the terms and requirements of Sections 4(b) and 4(c), to the
     extent applicable, or if such Investor is exercising a tag-along right
     granted to such Investor pursuant to Section 4(c), subject to the
     requirements of Section 4(d)(ii), or (C) pursuant to the terms of Section
     5.

         (b) Right of First Offer Granted to the Company and the TTSLLC
Investors. Subject to Section 4(d)(i) (all terms defined in this Section 4(b)
shall be for purposes of this Section 4(b) only):

          (i) If at any time any Stockholder other than a TTSLLC Investor (a
     "Selling Holder") proposes to Transfer any Stockholder Shares (other than
     pursuant to a Public Sale, pursuant to the terms of Section 5, or if such
     Selling Holder is exercising a tag-along right granted to such Selling
     Holder pursuant to Section 4(c)), then such Selling Holder will, not fewer
     than twenty-five (25) business days prior to making such Transfer, give
     notice (the "Transfer Notice") to the TTSLLC Investors and to the Company
     specifying (x) the Stockholder Shares proposed to be Transferred (the
     "Offered Shares"), and (y) the price (the "Offered Price") and the other
     terms and conditions upon which such Selling Holder proposes to Transfer
     such Offered Shares, and (z) if known at the time the Transfer Notice is
     given, the proposed Transferee(s).

          (ii) Subject to the provisions of Section 4(b)(v), the Transfer Notice
     will constitute an irrevocable offer (for the time periods set forth in
     items (iii) and (iv) below) to Transfer any of the Offered Shares to the
     Company and the TTSLLC Investors at the Offered Price and on the terms
     specified in the Transfer Notice (the "Offer to Sell"), except that if the
     proposed Transfer is to be wholly or partly for consideration other than
     cash, then the Offer to Sell will constitute an offer to Transfer the
     Offered Shares to the Company and the TTSLLC Investors for a cash purchase
     price equal to the amount of cash (if any) specified in the Transfer
     Notice, plus the fair market value determined in the good faith judgement
     of the Board, at the date of the Transfer Notice, of such non-cash
     consideration.

          (iii) The Company will have ten (10) business days after its receipt
     of the Transfer Notice (the "Company Exercise Period") during which to
     notify the Selling Holder and the TTSLLC Investors in writing of its
     election to purchase all or any portion of the Offered Shares (an
     "Acceptance Notice").

          (iv) If the Company has not elected to purchase all of the Offered
     Shares, the TTSLLC Investors will have ten (10) business days after its
     receipt of the Transfer Notice (the "TTSLLC Exercise Period") during which
     to notify the Selling Holder and the Company in writing of its election to
     purchase all or a portion of the Offered Shares which the Company has not
     elected to purchase (such shares, the "TTSLLC Offered Shares") (such
     written notice, also an "Acceptance Notice"). Any TTSLLC Investor who
     delivers an Acceptance Notice shall be referred to herein as a "Purchasing
     TTSLLC Investor". If the

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     Purchasing TTSLLC Investors elect to purchase in the aggregate more than
     the TTSLLC Offered Shares, then the TTSLLC Offered Shares shall be sold
     among the Purchasing TTSLLC Investors pro rata based upon the number of
     Stockholder Shares then owned by such Purchasing TTSLLC Investors or in
     such other manner as the Purchasing TTSLLC Investors may agree.

          (v) In the event that following the expiration of the Company Exercise
     Period and the TTSLLC Exercise Period the Company and the TTSLLC Investors
     have elected to purchase some but not all of the Offered Shares, the
     Selling Holder, within ten (10) business days after the expiration of the
     TTSLLC Exercise Period may elect to cancel the Transfer Notice in which
     case the offer to Transfer Offered Shares to the Company and the TTSLLC
     Investors at the Offered Price shall be void and of no force and effect.
     Assuming that the Selling Holder does not cancel the Transfer Notice in
     accordance with the preceding sentence, upon the delivery of the Acceptance
     Notice(s), the Company and/or the Purchasing TTSLLC Investor(s), as the
     case may be, and the Selling Holder shall be firmly bound to consummate the
     purchase and sale of the applicable Offered Shares in accordance with the
     Transfer Notice, the Acceptance Notice(s) and the terms hereof. Subject to
     the provisions hereof, within thirty (30) days after the Selling Holder's
     receipt of the last Acceptance Notice, the Company and/or the Purchasing
     TTSLLC Investor(s), as the case may be, shall purchase and the Selling
     Holder shall sell the applicable Offered Shares at a mutually agreeable
     time and place (the "Offered Shares Closing").

          (vi) At the Offered Shares Closing, the Selling Holder shall deliver
     to the Company and/or the Purchasing TTSLLC Investor(s), as the case may
     be, certificates representing the Offered Shares (which Offered Shares
     shall be free and clear of any liens or encumbrances) to be purchased by
     the Company and/or the Purchasing TTSLLC Investor(s), as the case may be,
     and the Company and/or the Purchasing TTSLLC Investor(s), as the case may
     be, shall deliver to the Selling Holder the applicable purchase price for
     such Offered Shares by wire transfer of immediately available funds to an
     account(s) designated by such Selling Holder.

          (vii) If the Company and the TTSLLC Investors collectively do not
     elect to purchase any or all of the Offered Shares in accordance with
     Section 4(b)(iii) and 4(b)(iv), then, provided the Selling Holder also has
     complied with the provisions of Section 4(c), if applicable, and no
     Transferee is an Affiliate of the Selling Holder, the Selling Holder may
     Transfer any or all of such Offered Shares (unless reduced pursuant to the
     exercise of rights granted to other Stockholders in Section 4(c)), at a
     price which is not less than the price specified in the Transfer Notice and
     on other terms and conditions which are not materially more favorable in
     the aggregate to any Transferee thereof than those specified in the
     Transfer Notice, to any Person(s) (whether or not identified as a potential
     Transferee in the Transfer Notice), but only to the extent that a binding
     purchase and sale agreement has been executed between such Selling Holder
     and such Transferee within one hundred twenty (120) days after expiration
     of the TTSLLC Exercise Period. Any Stockholder Shares not Transferred
     pursuant to such an agreement within such 120-day period will be subject to
     the provisions of this Section 4(b) upon subsequent Transfer.

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          (viii) The provisions of this Section 4(b) shall terminate upon the
     consummation of a Qualified Public Offering; provided, that with respect to
     any EII Holder, the provisions of this Section 4(b) shall terminate upon
     the consummation of an initial Public Offering.

         (c) Tag Along Rights.

         (i) Tag Along Rights in the event of certain Transfers by the TTSLLC
Investors. Subject to Section 4(d)(i), at least ten (10) business days prior to
the Transfer by any of the TTSLLC Investors (collectively, the "TTSLLC
Transferring Stockholder") of any TTSLLC Shares to a Person that is not an
Affiliate of any TTSLLC Investor (other than pursuant to a Public Sale, pursuant
to the terms of Section 5 or any Transfer consummated prior to the date that is
six months following the date hereof), the TTSLLC Transferring Stockholder shall
deliver a written notice (the "TTSLLC Sale Notice") to EII and the Other
Investors (collectively, the "Tagging Investors") and to the Company, specifying
in reasonable detail the identity of the prospective transferee(s), the class
and the number of the Stockholder Shares to be Transferred, and the other
material terms and conditions of such contemplated Transfer. Any of the Tagging
Investors may elect to participate in such contemplated Transfer by delivering
written notice to the TTSLLC Transferring Stockholder within ten (10) business
days after its receipt of the TTSLLC Sale Notice. If any of the Tagging
Investors elects to participate in such Transfer, each of the Tagging Investors
shall be entitled to sell in such contemplated Transfer, at the same price and
on the same terms, up to a number of each class of Stockholder Shares to be
Transferred equal to the product of (I) a fraction, the numerator of which is
the number of Stockholder Shares held by such Tagging Investor and the
denominator of which is the aggregate number of Stockholder Shares owned by the
TTSLLC Transferring Stockholder and all Tagging Investors immediately prior to
such Transfer, multiplied by (II) the total number of Stockholder Shares to be
sold in connection with such Transfer. Each Stockholder who is Transferring any
Stockholder Shares pursuant to this Section 4(c)(i) shall pay its pro rata share
(based on the number of Stockholder Shares to be sold) of the expenses incurred
by the Stockholders in connection with such Transfer and shall take all
necessary and desirable actions as reasonably directed by the TTSLLC
Transferring Stockholder in connection with the consummation of such Transfer,
including without limitation executing the applicable purchase agreement. The
TTSLLC Transferring Stockholder shall cause all applicable transferee(s) to
execute a joinder to this Agreement with respect to all Stockholder Shares
Transferred pursuant to this Section 4(c)(i). Any Transfer made by a TTSLLC
Transferring Stockholder pursuant to this Section 4(c)(i) or pursuant to Section
4(c)(ii) shall satisfy the following conditions, (i) upon the consummation of
such Transfer, each Stockholder participating in such Transfer will be entitled
to receive (x) the same form and amount (on a share-for-share basis) of
consideration, with respect to each share of Common Stock sold in such Transfer
and (y) the same form and amount (on a share-for-share basis) of consideration,
with respect to each shares of Preferred Stock in such Transfer and (ii) if any
holder of a Common Stock or Preferred Stock is given the option as to the form
and amount of consideration to be received in connection with such Transfer,
then each holder of Common Stock or Preferred Stock, as the case may be, shall
be given the same option. In connection with any Transfer made pursuant to this
Section 4(c) EII and each Other Investor shall be entitled to receive, and the
Company and/or the TTSLLC Transferring Stockholder shall deliver all information
relating to the Company and its Subsidiaries as EII or such Other Investor shall
reasonably request. The TTSLLC Transferring Stockholder shall deliver to EII and
each Other Investor a copy of the acquisition agreement (and related documents)
relating to any Transfer subject to this Section 4(c) in a reasonably timely
manner to allow for adequate review by EII and each of the Other Investors and
shall include in the disclosure schedules attached thereto any information
reasonably requested

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to be included therein by EII and such Other Investor. The right of the EII
Investors to participate in a Transfer pursuant to this Section 4(c) shall not
be contingent upon such Investor providing any indemnity in connection with any
such Transfer, unless the TTSLLC Transferring Stockholder and all other sellers
provide such an indemnity, and in the event that all sellers are required to
provide an indemnity in connection with such Transfer, all parties hereto agree
to enter into a contribution agreement among themselves which provides that no
Investor shall be liable for more than the lesser of (A) its pro rata shares of
any such indemnification payments (based upon the total consideration received
by such Investor divided by the total consideration received by all sellers in
such Transfer) and (B) the net proceeds actually received by such Investor as
consideration for its shares of Common Stock in such Transfer.

          (ii) The provisions of Sections 4(c)(i) shall terminate upon the
     consummation of a Qualified Public Offering.

          (d) Permitted Transfers.

          (i) The restrictions contained in Sections 4(a), 4(b) and 4(c) shall
     not apply with respect to any Transfer of Stockholder Shares by any
     Stockholder (A) in the case of an individual Stockholder, pursuant to
     applicable laws of descent and distribution or to any member of such
     Stockholder's Family Group, (B) in the case of a non-individual
     Stockholder, to its employees or Affiliates, (C) in the case of TTSLLC, to
     its members or any subsequent transfer by such member to its
     securityholders in connection with a distribution by TTSLLC of Stockholder
     Shares held by it; provided, in each case, that any such transferee shall
     have complied with the requirements of Section 4(d)(ii).

          (ii) Prior to any proposed transferee's acquisition of Stockholder
     Shares pursuant to a Transfer permitted by Section 4(a)(i)(A), 4(a)(ii)(B)
     or 4(a)(iii)(B) or Section 4(d)(i), such proposed transferee must agree to
     take such Stockholder Shares subject to and to be fully bound by the terms
     of this Agreement applicable to such Stockholder Shares by executing a
     joinder to this Agreement substantially in the form attached hereto as
     Exhibit A and delivering such executed joinder to the Secretary of the
     Company prior to the effectiveness of such Transfer (unless such Transfer
     is pursuant to applicable laws of descent and distribution, in which case,
     such executed joinder shall be delivered to the Secretary of the Company as
     soon as reasonably possible after such Transfer). All transferees acquiring
     Stockholder Shares and executing a joinder in compliance with this Section
     4(d)(ii) are collectively referred to herein as "Permitted Transferees".

         (e) If (i) any event occurs pursuant to which The Black & Decker
Corporation ceases to beneficially own, directly or indirectly, the EII Shares,
(ii) any Transfer of a majority interest in the residual equity securities of a
Stockholder owning Stockholder Shares occurs other than a Transfer to an
Affiliate of the transferring Stockholder, or (iii) any Stockholder Transfers
Stockholder Shares to an Affiliate and an event occurs which causes such
Affiliate to cease to be an Affiliate of such Stockholder, such event or
Transfer shall be deemed a Transfer of Stockholder Shares subject to all of the
restrictions on Transfers of Stockholder Shares set forth in this Agreement,
including without limitation, this Section 4.

         5 Approved Sale.

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         (a) If the holders of a majority of the shares of voting Stockholder
Shares then outstanding, voting together as if a single class, (the "Approving
Stockholders") approve a sale of all or substantially all of the Company's
assets determined on a consolidated basis or a sale of all (or, for accounting,
tax or other reasons, substantially all) of the Company's outstanding capital
stock (other than capital stock which is not Common Stock or convertible into
Common Stock) (whether by merger, recapitalization, consolidation, share
exchange, reorganization, combination or otherwise) to an Unaffiliated Third
Party or group of Unaffiliated Third Parties (each such sale, an "Approved
Sale"), then each holder of Stockholder Shares will vote for, consent to and
raise no objections against such Approved Sale subject to the terms set forth
below. In connection with any Stockholders exercising their rights under this
Section 5(a), such Stockholders shall send a written notice at least ten (10)
business days prior to any Approved Sale to all other Stockholders setting forth
the principal terms of the proposed Approved Sale. If the Approved Sale is
structured as (i) a merger, share exchange or consolidation, each holder of
Stockholder Shares will waive any dissenters' rights, appraisal rights or
similar rights in connection with such merger, share exchange or consolidation
or (ii) a sale of stock, each holder of Stockholder Shares will agree to sell
all of its Stockholder Shares and rights to acquire Stockholder Shares on the
same terms and conditions as applicable to all of the Stockholder Shares held by
the Approving Stockholders. Each holder of Stockholder Shares will take all
reasonably necessary or desirable actions in connection with the consummation of
the Approved Sale as reasonably requested by the Stockholders approving such
Approved Sale including without limitation (but subject to Section 5(c))
executing any applicable purchase agreement.

         (b) Each Stockholder will bear their pro-rata share (based upon the
number of Stockholder Shares sold) of the costs of any sale of Stockholder
Shares pursuant to an Approved Sale to the extent such costs are incurred for
the benefit of all holders of Stockholder Shares and are not otherwise paid by
the Company or the acquiring party. Costs incurred by any Stockholder on their
own behalf will not be considered costs of the transaction hereunder.

         (c) The obligations of the Stockholders with respect to any Approved
Sale are subject to the satisfaction of the following conditions: (i) in
connection with the consummation of such Approved Sale, each Stockholder will be
entitled to receive (x) the same form and amount (on a share-for-share basis) of
consideration, with respect to each share of Common Stock sold in such Approved
Sale and (y) the same form and amount (on a share-for-share basis) of
consideration, with respect to each share of Preferred Stock sold in such
Approved Sale, (ii) if any holder of Common Stock or Preferred Stock is given
the option as to the form and amount of consideration to be received in
connection with such Approved Sale, then each holder of Common Stock or
Preferred Stock, as the case may be, shall be given the same option, (iii) if
TTSLLC or any Affiliate of TTSLLC owns directly or indirectly more than 5% of
any class of capital stock of any of the Third Parties involved in such Approved
Sale, then such Approved Sale shall have been approved by the holders of a
majority of the shares of Common Stock of the Company held, directly or
indirectly, by persons who do not own more than 5% of any class of capital stock
of any such Third Party and the Board shall have received a fairness opinion
from a nationally recognized investment banking firm with respect to the terms
of such Approved Sale, and (iv) no Stockholder shall be required to provide an
indemnity in connection with any Approved Sale, unless all sellers in such
Approved Sale provide such an indemnity, and in the event that all sellers are
required to provide an indemnity in connection with the Approved Sale, all
parties hereto agree to enter into a contribution agreement among themselves
which provides that no Stockholder shall be liable for more than the lesser of
(A) its pro rata share of such indemnification payments (based upon the total
consideration received by

                                      -10-
<PAGE>   11

such holder divided by the total consideration received by all Sellers in such
Approved Sale) and (B) the net proceeds actually received by such holder as
consideration for its shares of proceeds actually received by such holder as a
consideration for its shares of capital stock of the Company in such Approved
Sale. In connection with any Approved Sale, each Stockholder shall be entitled
to receive, and the Company shall deliver all information relating to the
Company and its Subsidiaries as such Stockholder shall reasonably request. The
Company shall deliver to each Stockholder a copy of the acquisition agreement
(and related documents) relating to any Approved Sale in a reasonably timely
manner to allow for adequate review by the Stockholders and shall include in the
disclosure schedules attached thereto any information reasonably requested to be
included therein by such Stockholder. Notwithstanding anything contained herein
to the contrary, the term "consideration" as used in this subsection (c) shall
not include any management, advisory, closing, legal or similar fees received by
any Stockholder or any Affiliate of any Stockholder in connection with an
Approved Sale.

     (d) The provisions of this Section 5 will terminate upon the occurrence of
the consummation of a Qualified Public Offering.

     6 Financial Statements and Access to Information.

         (a) Financial Statements(a) Financial Statements. The Company shall
deliver to each Stockholder who holds more than 5% of the then outstanding
shares of Common Stock and to EII so long as EII and its Affiliates continue to
own all of the shares of Common Stock and Preferred Stock listed on Schedule I
as owned by EII:

               (i) within 60 days after the end of each quarterly accounting
period in each fiscal year of the Company, unaudited consolidated statements of
income and cash flows of the Company and its Subsidiaries for such quarterly
period and unaudited consolidated balance sheets of the Company and its
Subsidiaries as of the end of such quarterly period. Such financial statements
shall be prepared in accordance with generally accepted accounting principles,
consistently applied, subject to the absence of footnote disclosures and to
normal year-end adjustments; and

               (ii) within 120 days after the end of each fiscal year of the
Company, audited consolidated statements of income and cash flows of the Company
and its Subsidiaries for such fiscal year, and audited consolidated balance
sheets of the Company and its Subsidiaries as of the end of such fiscal year.
Such financial statement shall be prepared in accordance with generally accepted
accounting principles, consistently applied.

         (b) Access to Information(b) Access to Information. The Company shall
permit any Stockholder who holds more than 10% of the then outstanding shares of
Common Stock and its representatives (including, without limitation, its legal
counsel, accountants and governmental authorities to which it is subject) and
EII so long as EII and its Affiliates continue to own all of the shares of
Common Stock and Preferred Stock listed on Schedule I as owned by EII, during
normal business hours and such other times as any such holder may reasonably
request, to (i) visit and inspect any of the properties of the Company and its
Subsidiaries, (ii) examine the corporate and financial records of the Company
and its Subsidiaries and make copies thereof or extracts therefrom and (iii)
discuss the affairs, finances and accounts of any such entities with any of the
executive officers of the Company.

                                      -11-
<PAGE>   12

          7 Legend; Additional Restriction on Transfer.

          (a) Each certificate or instrument evidencing Stockholder Shares and
each certificate or instrument issued in exchange for or upon the Transfer of
any Stockholder Shares (if such securities remain Stockholder Shares (as defined
herein) after such Transfer) shall be stamped or otherwise imprinted with a
legend in substantially the following form:

          "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
          REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
          AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE
          REGISTRATION STATEMENT UNDER THE ACT OR AN EXEMPTION FROM REGISTRATION
          THEREUNDER. THE TRANSFER OF THE SECURITIES REPRESENTED BY THIS
          CERTIFICATE IS SUBJECT TO A SHAREHOLDERS AGREEMENT DATED AS OF
          SEPTEMBER 30, 1998, AS MAY BE AMENDED FROM TIME TO TIME, BY AND AMONG
          THE ISSUER AND CERTAIN OF THE ISSUER'S STOCKHOLDERS. A COPY OF SUCH
          SHAREHOLDERS AGREEMENT WILL BE FURNISHED WITHOUT CHARGE BY THE ISSUER
          TO THE HOLDER HEREOF UPON WRITTEN REQUEST."

The legend set forth above regarding the Shareholders Agreement shall be removed
from the certificates evidencing any securities which cease to be Stockholder
Shares. Upon the request of any holder of Stockholder Shares, the Company shall
remove the Securities Act legend set forth above from the certificate or
certificates for such Stockholder Shares; provided, that such Stockholder Shares
are eligible for sale pursuant to Rule 144(k) (or any similar rule or rules then
in effect) under the Securities Act.

         (b) Unless waived by the Company, no Stockholder may Transfer any
Stockholder Shares (except pursuant to an effective registration statement under
the Securities Act) without first delivering to the Company an opinion of
counsel reasonably acceptable in form and substance to the Company (which
counsel will be reasonably acceptable to the Company) that registration under
the Securities Act is not required in connection with such Transfer.

     8 Transfers in Violation of Agreement. Any Transfer or attempted Transfer
of any Stockholder Shares in violation of any provision of this Agreement shall
be null and void, and the Company shall not record such Transfer on its books or
treat any purported transferee of such Stockholder Shares as the owner of such
securities for any purpose.

     9 Preemptive Rights.

         (a) If at any time prior to the consummation of a Qualified Public
Offering the Company wishes to issue any Common Stock or any options, warrants
or other rights to acquire Common Stock or any notes or other securities
convertible or exchangeable into Common Stock (all such Common Stock and other
rights and securities, collectively, the "Equity Equivalents") to any Person or
Persons, the Company shall promptly deliver a notice of intention to sell (the
"Company's Notice of Intention to Sell") to each Stockholder setting forth a
description

                                      -12-
<PAGE>   13

and the number of the Equity Equivalents proposed to be issued and the proposed
purchase price and terms of sale. Upon receipt of the Company's Notice of
Intention to Sell, each Stockholder shall have the right to elect to purchase,
at the price and on the terms stated in the Company's Notice of Intention to
Sell, a number of the Equity Equivalents equal to the product of (i) such
Stockholder's proportionate ownership of the outstanding shares of Common Stock
(calculated on a fully-diluted basis assuming all holders of then outstanding
warrants, options and convertible securities of the Company which are in the
money had converted such convertible securities or exercised such warrants or
options immediately prior to the taking of the record of the holders of Common
Stock for the purpose of determining whether they are entitled to receive such
offer) held by all Persons multiplied by (ii) the number of Equity Equivalents
proposed to be issued (as described in the applicable Company's Notice of
Intention to Sell). Such election shall be made by the electing Stockholder by
written notice to the Company within fifteen (15) business days after receipt by
such Stockholder of the Company's Notice of Intention to Sell (the "Acceptance
Period"). In the event that any Equity Equivalents proposed to be issued at any
time as contemplated by this Section 9 are either voting securities or
securities which are convertible, exercisable or exchangeable for voting
securities and for any reason one or more of the Stockholders determines in its
sole discretion that it would be detrimental to such Stockholder or its
Affiliates to purchase such Equity Equivalents as provided hereby, then the
Company shall make available to any such Stockholder an amount of alternative
securities equal to the amount of such Equity Equivalents as such Stockholder
has elected to purchase pursuant to the terms hereof which are identical to such
Equity Equivalents in all respects except for the fact that such alternate
securities shall be non-voting securities or convertible, exercisable or
otherwise exchangeable for non-voting securities (the "Alternative Securities")
upon such terms and conditions as such Stockholder may request.

         (b) To the extent an effective election to purchase has not been
received from a Stockholder pursuant to subsection (a) above in respect of the
Equity Equivalents proposed to be issued pursuant to the applicable Company's
Notice of Intention to Sell, the Company may, at its election, during a period
of one hundred and twenty (120) days following the expiration of the applicable
Acceptance Period, issue and sell the remaining Equity Equivalents to be issued
and sold to any Person at a price and upon terms not more favorable to such
Person than those stated in the applicable Company's Notice of Intention to
Sell; provided, however, that failure by a Stockholder to exercise its option to
purchase with respect to one issuance and sale of Equity Equivalents shall not
affect its option to purchase Equity Equivalents in any subsequent offering,
sale and purchase. In the event the Company has not sold any Equity Equivalents
covered by a Company's Notice of Intention to Sell, or entered into a binding
agreement to sell such Equity Equivalents, within such one hundred and twenty
(120) day period, the Company shall not thereafter issue or sell such Equity
Equivalents, without first offering such Equity Equivalents to each Stockholder
in the manner provided in this Section 9.

         (c) If a Stockholder gives the Company notice, pursuant to the
provisions of this Section 9, that such Stockholder desires to purchase any
Equity Equivalents or Alternative Securities, payment therefor shall be by check
or wire transfer of immediately available funds, against delivery of the
securities (which securities shall be issued free and clear of any liens or
encumbrances) at the executive offices of the Company at the closing date fixed
by the Company for the sale of all such Equity Equivalents. In the event that
any proposed sale is for a consideration other than cash, such Stockholders may
pay cash in lieu of all (but not part) of such other consideration, in the
amount determined reasonably and in good faith by the Board to represent the
fair value of such consideration other than cash.

                                      -13-
<PAGE>   14

         (d) The preemptive rights contained in this Section 9 shall not apply
to (i) the issuance of shares or units of Equity Equivalents as a stock dividend
or upon any subdivision, split or combination of the outstanding shares of
Common Stock; (ii) the issuance of Equity Equivalents upon conversion, exchange
or redemption of any outstanding convertible or exchangeable securities; (iii)
the issuance of Equity Equivalents upon exercise of any then outstanding options
or warrants; (iv) the issuance of Equity Equivalents to any employee or director
of the Company or any of its subsidiaries in his or her capacity as such; or (v)
the issuance of warrants and the issuance of Common Stock issued pursuant to
such warrants issued in connection with the Securities Purchase Agreement
between the Company and Emhart Inc. dated as of the date hereof and the
Securities Purchase Agreement between True Temper Sports, Inc. and DLJ Bridge
Financing, Inc. dated as of the date hereof.

         (e) The provisions of this Section 9 shall terminate upon the
consummation of a Qualified Public Offering.

     10 Amendment and Waiver. No modification, amendment or waiver of any
provision of this Agreement shall be effective against the Company or the
Stockholders unless such modification, amendment or waiver is approved in
writing by, respectively, the Company or the holders of at least a majority of
the Stockholder Shares; provided, that no amendment shall be effective without
the consent of a Stockholder to the extent that such amendment would adversely
affect the rights or obligations of such Stockholder hereunder. The failure of
any party to enforce any of the provisions of this Agreement shall in no way be
construed as a waiver of such provisions and shall not affect the right of such
party thereafter to enforce each and every provision of this Agreement in
accordance with its terms. Each Stockholder shall remain a party to this
Agreement only so long as such person is the holder of record of Stockholder
Shares.

     11 Severability. Whenever possible, each provision of this Agreement shall
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any other jurisdiction, but this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.

     12 Entire Agreement. Except as otherwise expressly set forth herein, this
document embodies the complete agreement and understanding among the parties
hereto with respect to the subject matter hereof and supersedes and preempts any
prior understandings, agreements or representations by or among the parties,
written or oral, which may have related to the subject matter hereof in any way.

     13 Termination. This Agreement will automatically terminate and be of no
further force or effect immediately after the consummation of an Approved Sale.

     14 Successors and Assigns. Except as otherwise provided herein, this
Agreement shall bind and inure to the benefit of and be enforceable by the
Company and its successors and assigns and the Stockholders and any subsequent
holders of Stockholder Shares and

                                      -14-
<PAGE>   15

the respective successors, heirs and permitted assigns of each of them, so long
as they hold Stockholder Shares.

     15 Counterparts. This Agreement may be executed in separate counterparts
each of which shall be an original and all of which taken together shall
constitute one and the same agreement.

     16 Remedies. The parties hereto shall be entitled to enforce their rights
under this Agreement specifically to recover damages by reason of any breach of
any provision of this Agreement and to exercise all other rights existing in
their favor. The parties hereto agree and acknowledge that money damages may not
be an adequate remedy for any breach of the provisions of this Agreement and
that the Company and any Stockholder may in his, hers, or its sole discretion
apply to any court of law or equity of competent jurisdiction for specific
performance and/or injunctive relief (without posting a bond or other security)
in order to enforce or prevent any violation of the provisions of this
Agreement.

     17 Notices. All notices, demands or other communications to be given or
delivered under or by reason of the provisions of this Agreement will be in
writing and will be deemed to have been given when delivered if delivered
personally, sent via a nationally recognized overnight courier, or sent via
facsimile to the recipient, or if sent by certified or registered mail, return
receipt requested, will be deemed to have been given two business days
thereafter. Such notices, demands and other communications will be sent to the
address indicated below:

                  To the Company:

                           True Temper Corporation
                           8275 Tournament Drive, Suite 200
                           Memphis, TN  38125
                           Attention:       President
                           Telecopy No.:    (901) 746-2162

                  With a copy, which shall not constitute notice, to:

                           True Temper Sports LLC
                           c/o Cornerstone Equity Investors, LLC
                           717 Fifth Avenue, Suite 1100
                           New York, NY  10022
                           Attention:       Mark Rossi
                                            Tyler Wolfram
                           Telecopy No.:    (212) 826-6798

                           Kirkland & Ellis
                           Citicorp Center
                           153 East 53rd Street
                           New York, New York  10022
                           Attention:       Frederick Tanne, Esq.
                           Telecopy No.:    (212) 446-4900

                                      -15-
<PAGE>   16

                    To EII:

                           Emhart Industries, Inc.
                           c/o The Black & Decker Corporation
                           701 East Joppa Road
                           Towson, MD  21286
                           Attention:       Senior Vice President and
                                            Chief Financial Officer
                           Telecopy No.:    (401) 716-3318

                    With a copy, which shall not constitute notice, to:

                           Miles & Stockbridge P.C.
                           10 Light Street
                           Baltimore, MD  21202
                           Attention:       Glenn C. Campbell
                           Telecopy No.:    (410) 385-3700

                    To TTSLLC:

                           True Temper Sports LLC
                           c/o Cornerstone Equity Investors, LLC
                           717 Fifth Avenue, Suite 1100
                           New York, NY  10022
                           Attention:        Mark Rossi
                                             Tyler Wolfram
                           Telecopy No.:     (212) 826-6798

                    With a copy, which shall not constitute notice, to:

                           Kirkland & Ellis
                           Citicorp Center
                           153 East 53rd Street
                           New York, New York  10022
                           Attention:        Frederick Tanne, Esq.
                           Telecopy No.:     (212) 446-4900

If to any Other Stockholder to the address set forth opposite such Person's name
on Schedule I attached hereto or, in any such case, such other address or to the
attention of such other person as the recipient party shall have specified by
prior written notice to the sending party.

     18 GOVERNING LAW. THE CORPORATE LAW OF THE STATE OF DELAWARE WILL GOVERN
ALL QUESTIONS CONCERNING THE RELATIVE RIGHTS OF THE COMPANY AND ITS
STOCKHOLDERS. ALL OTHER QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY AND
INTERPRETATION OF THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING
EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE
STATE OF NEW YORK OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF
THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK.

                                      -16-
<PAGE>   17

     19 Descriptive Headings. The descriptive headings of this Agreement are
inserted for convenience only and do not constitute a part of this Agreement.

                                    * * * * *

<PAGE>   18

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.

                                   TRUE TEMPER CORPORATION

                                   By:
                                            Name:
                                            Title:

                                   TRUE TEMPER SPORTS LLC

                                   By:     Cornerstone Equity Investors IV, L.P.
                                   Its:    Authorized Member

                                   By:      Cornerstone IV, LLC
                                   Its:     General Partner

                                   By:
                                            Name:
                                            Title:

                                   EMHART INDUSTRIES, INC.

                                   By:
                                            Name:
                                            Title:

                                   ----------------------------------------
                                   Scott Hennessy

                                   ----------------------------------------
                                   William R. Beatty

<PAGE>   19

                                    ----------------------------------------
                                    Stephen M. Brown

                                    ----------------------------------------
                                    James T. Davidson, III

                                    ----------------------------------------
                                    David N. Hallford

                                    ----------------------------------------
                                    Fred Geyer

                                    ----------------------------------------
                                    Howard A. Lindsay

                                    ----------------------------------------
                                    Adrian H. McCall

<PAGE>   20

                                   SCHEDULE I

<TABLE>
<CAPTION>
              NAME                            ADDRESS                    COMMON STOCK           PREFERRED STOCK

<S>                               <C>                                    <C>                    <C>
Scott Hennessy                    9580 Fox Hill Circle                     367,444                     0
                                  Memphis, TN 38139

Howard A. Lindsay                 2176 Gallina Circle                       22,965                     0
                                  Collierville, TN 37017

Adrian H. McCall                  2156 Johnson Street                       21,933                     0
                                  Germantown, TN 38139

Fred Geyer                        935 Turnberry Cove                        15,482                     0
                                  Collierville, TN 38017

David Hallford                    9189 Bluff Top Cove                       12,902                     0
                                  Cordova, TN 38018

James T. Davidson, III            314 11th Avenue North                     6,709                      0
                                  Amory, MS 38821

William R. Beatty                 1876 Newton, Nook                         6,193                      0
                                  Collierville, TN 38017

Stephen M. Brown                  6981 Hearth Side Cove                     5,677                      0
                                  Memphis, TN 38119
</TABLE>

<PAGE>   21

                                                                       EXHIBIT A

                               FORM OF JOINDER TO
                             SHAREHOLDERS AGREEMENT

     This JOINDER TO SHAREHOLDERS AGREEMENT (the "Joinder") dated as of        ,
by and among True Temper Corporation, a Delaware corporation (the "Company"),
and certain stockholders of the Company (the "Agreement"), is made and entered
into as of _________ by and between the Company and _________________
("Holder"). Capitalized terms used herein but not otherwise defined shall have
the meanings set forth in the Agreement.

     WHEREAS, Holder has acquired certain Stockholder Shares and the Agreement
and the Company require Holder, as a holder of such Stockholder Shares, to
become a party to the Agreement, and Holder agrees to do so in accordance with
the terms hereof.

     NOW, THEREFORE, in consideration of the mutual covenants contained herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties to this Joinder hereby agree as follows:

     1 Agreement to be Bound. Holder hereby agrees that upon execution of this
Joinder, it shall become a party to the Agreement and shall be fully bound by,
and subject to, all of the covenants, terms and conditions of the Agreement as
though an original party thereto and shall be deemed a [TTSLLC INVESTOR/EII
INVESTOR/OTHER INVESTOR] and a Stockholder for all purposes thereof. In
addition, Holder hereby agrees that all Common Stock and Preferred Stock held by
Holder shall be deemed [TTSLLC/EII/OTHER INVESTORS] Shares and Stockholder
Shares for all purposes of the Agreement.

     2 Successors and Assigns. Except as otherwise provided herein, this Joinder
shall bind and inure to the benefit of and be enforceable by the Company and its
successors, heirs and assigns and Holder and any subsequent holders of
Stockholder Shares and the respective successors, heirs and permitted assigns of
each of them, so long as they hold any Stockholder Shares.

     3 Counterparts. This Joinder may be executed in separate counterparts each
of which shall be an original and all of which taken together shall constitute
one and the same agreement.

     4 Notices. For purposes of Section 17 of the Agreement, all notices,
demands or other communications to the Holder shall be directed to:

                  [NAME]
                  [ADDRESS]
                  [FACSIMILE NUMBER]

     5 GOVERNING LAW. THE CORPORATE LAW OF THE STATE OF DELAWARE SHALL GOVERN
ALL ISSUES CONCERNING THE RELATIVE RIGHTS OF THE COMPANY AND ITS STOCKHOLDERS.
ALL OTHER

<PAGE>   22

QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY AND INTERPRETATION OF THIS
JOINDER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE DOMESTIC LAWS
OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICT
OF LAW PROVISION OR RULE (WHETHER OF THE STATE OF NEW YORK OR ANY OTHER
JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION
OTHER THAN THE STATE OF NEW YORK.

     6 DESCRIPTIVE HEADINGS. The descriptive headings of this Joinder are
inserted for convenience only and do not constitute a part of this Joinder.

                                    * * * * *

<PAGE>   23

     IN WITNESS WHEREOF, the parties hereto have executed this Joinder as of the
date first above written.

                                     TRUE TEMPER CORPORATION

                                     By:
                                     Name:
                                     Title:

                                     [HOLDER]

                                     By:
                                     Name:
                                     Title:<PAGE>   1
                             SHAREHOLDERS AGREEMENT

                           DATED AS OF MARCH 29, 2000

                                 BY AND BETWEEN

                           LOCKHEED MARTIN CORPORATION

                                       AND

                        LORAL SPACE & COMMUNICATIONS LTD.
<PAGE>   2
                             SHAREHOLDERS AGREEMENT

         This SHAREHOLDERS AGREEMENT is entered into as of March 29, 2000 (this
"Agreement"), by and between Lockheed Martin Corporation, a Maryland Corporation
("LMC"), and Loral Space & Communications Ltd., a Bermuda Company (the
"Company"). LMC and those of its Affiliates (as defined in Section 1.1(a)
hereof), if any, that are transferees with respect to any of the Equity
Securities (as defined in Section 1.1(e)) are collectively referred to herein as
the "Shareholders."

                                    RECITALS

         WHEREAS, LMC owns 45,896,978 shares of Series A Convertible Preferred
Stock, par value $.01 per share (the "Preferred Stock"), of the Company
(together with the shares of common stock of the Company into which the
Preferred Stock is convertible, the "Shares");

         WHEREAS, the Company completed an offering of 8,000,000 shares of 6%
Series D Convertible Redeemable Preferred Stock due 2007 (with an underwriters'
overallotment option to purchase an additional 1,600,000 shares of Preferred
Stock) on February 18, 2000, at a price of $50.00 per share (the "Rule 144A
Offering") pursuant to Rule 144A under the Securities Act of 1933, as amended
(the "Securities Act");

         WHEREAS, LMC desires to effect the sale of the Shares but has agreed to
withdraw its demand registration request and has agreed not to effect sales of
the Shares from the date of the Letter Agreement (as defined below) until the
earlier of (i) 90 days (or such shorter period as the Company shall advise is
required, upon the advice of its investment bankers) after the closing of the
Rule 144A Offering or (ii) May 31, 2000 (the "Lock Up Period"), subject to
certain terms and conditions contained in a letter agreement between LMC and the
Company dated February 11, 2000 (the "Letter Agreement");

         WHEREAS, LMC, as the successor in interest to Loral Corporation, and
the Company entered into a Shareholders Agreement dated April 23, 1996 (the
"Original Shareholders Agreement"); and

         WHEREAS, LMC and the Company wish to terminate the Original
Shareholders Agreement and replace it with this Agreement;

         NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, the parties hereto agree as follows:
<PAGE>   3
                                       I.

                        STANDSTILL AND VOTING PROVISIONS

         1.1.     Restrictions on Certain Actions by the Shareholders.

                  (a) During the Term (as defined in Article III below), each
Shareholder will not, and will cause each of its Affiliates (such term, as used
in this Agreement, as defined in Rule 12b-2 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as amended (the "Exchange Act")), not
to, singly or as part of a partnership, limited partnership, syndicate or other
group (as those terms are used in Section 13(d)(3) of the Exchange Act),
directly or indirectly:

                           (i) acquire, offer to acquire, or agree to acquire,
         by purchase, gift or otherwise, any Equity Securities, except pursuant
         to a stock split, stock dividend, rights offering, recapitalization,
         reclassification, merger, consolidation, corporate reorganization or
         similar transaction; provided that at any time in which the
         Shareholders hold, in the aggregate, less than twenty percent (20%) of
         the Total Voting power, then the Shareholders may acquire Equity
         Securities so that the Shareholders hold, in the aggregate, up to
         twenty percent (20%) of the Total Voting Power;

                           (ii) make, or in any way actively participate in, any
         "solicitation" of "proxies" to vote (as such terms are defined in Rule
         14a-1 under the Exchange Act), solicit any consent or communicate with
         or seek to advise or influence any third party with respect to the
         voting of any Equity Securities or become a "participant" in any
         "election contest" (as such terms are defined or used in Rule 14a-11
         under the Exchange Act), in each case with respect to the Company;

                           (iii) form, join or encourage the formation of, any
         "person" or "group" within the meaning of Section 13(d) of the Exchange
         Act with respect to any Equity Securities; provided that this Section
         1.1(a)(iii) shall not prohibit any such arrangement solely among the
         Shareholders and any of their respective Affiliates;

                           (iv) deposit any Equity Securities into a voting
         trust or subject any such Equity Securities to any arrangement or
         agreement with respect to the voting thereof; provided that this
         Section 1.1(a)(iv) shall not prohibit any such arrangement solely among
         the Shareholders and any of their respective Affiliates;

                           (v) initiate, propose or otherwise solicit
         Shareholders for the approval of one or more shareholder proposals with
         respect to the Company as described in Rule 14a-8 under the Exchange
         Act, or induce or attempt to induce any other third party to initiate
         any shareholder proposal;

                           (vi) seek to place a representative on the Board of
         Directors of the Company or seek the removal of any member of the Board
         of Directors of the Company, except with the approval of the Board of
         Directors or management of the Company;

                                       2
<PAGE>   4
                           (vii) except with the approval of the Board of
         Directors or management of the Company, call or seek to have called any
         meeting of the shareholders of the Company;

                           (viii) otherwise act to seek to control the
         management or policies of the Company, except with the approval of the
         Board of Directors or management of the Company;

                           (ix) sell or otherwise transfer in any manner any
         Equity Securities to any "person" (within the meaning of Section
         13(d)(3) of the Exchange Act) who, immediately following such sale or
         transfer, would, to the best of the Shareholder's knowledge, own more
         than four percent (4%) of any class of Equity Securities or who,
         without the approval of the Board of Directors of the Company, (A) has
         publicly proposed a business combination or similar transaction with,
         or a change of control of, the Company or who has publicly proposed a
         tender offer for Equity Securities or (B) who has discussed with the
         Company or any of its respective Affiliates the possibility of
         proposing a business combination or similar transaction with, or a
         change in control of, the Company;

                           (x) sell or otherwise transfer in any manner to any
         person (as defined in clause (ix) above) in any single transaction or
         series of related transactions more than 2% of the outstanding Equity
         Securities;

                           (xi) solicit, seek to effect, negotiate with or
         provide any information to any other party with respect to, or make any
         statement or proposal, whether written or oral, to the Board of
         Directors of the Company or any director or officer of the Company or
         otherwise make any public announcement or proposal whatsoever with
         respect to, any form of business combination transaction involving the
         Company, including, without limitation, a merger, exchange offer or
         liquidation of the Company's assets, or any corporate reorganization or
         similar transaction with respect to the Company, except in each case
         with the approval of the Board of Directors or management of the
         Company; or

                           (xii) instigate or encourage any third party to do
         any of the foregoing.

         Notwithstanding clauses (ix) and (x) of this Section 1.1(a), the
Shareholders (A) may effect any transaction under the Registration Statement (as
defined in Section 2.1 hereof) in a bona fide underwritten offering reasonably
calculated to achieve broad distribution, (B) also may effect any transaction
(other than an underwritten offering) under the Registration Statement so long
as it does not violate the provisions of clause (ix) of this Section 1.1(a), and
(C) also may sell any number of the Shares to an investment banking firm for
resale so long as such investment banking firm agrees that any resales of the
Shares will be made in a manner consistent with the restrictions of clauses (ix)
and (x) of this Section 1.1(a).

                                       3
<PAGE>   5
                  (b) The parties agree that the provisions of Section 1.1(a)
(except clauses (ix) and (x) thereof) and Section 1.3 may not be amended to
expand the Shareholders' rights thereunder.

                  (c) In addition to the restrictions set forth in Section
1.1(a) hereof, the Shareholders agree not to sell or transfer or enter into any
agreement to sell or transfer any of the Shares during the Lock Up Period;
provided, however, that the Shareholders may sell or transfer or enter into an
agreement to sell or transfer all or any portion of the Shares during the Lock
Up Period if during the Lock Up Period the Company (i) effects a Conflicting
Sale (as defined in Section 2.1(c) hereof) or (ii) files any registration
statement (other than registration statements relating to the Shares, shares
issued in the Rule 144A Offering and the shares issuable in respect thereof, and
shares issued under registration statements relating solely to stock option,
executive compensation or benefit plans, and no other shares; provided, however,
that in any event, no securities other than the Shares shall be included in the
prospectus that covers the Shares) for the benefit of any party (including
itself) other than the Shareholders.

                  (d) Notwithstanding the provisions of this Section 1.1,
nothing herein shall apply with respect to any Equity Securities acquired from
any person other than a Shareholder (i) held by any pension, retirement or other
benefit plan managed by any Shareholder or any of its subsidiaries or other
Affiliates or (ii) held in any account managed for the benefit of another
person, by any subsidiary or other Affiliate of any of the Shareholders which is
engaged in the financial services business. In addition, notwithstanding the
provisions of this Section 1.1, nothing herein shall prohibit or restrict any
(i) transfer of Equity Securities to or among any of the subsidiaries or other
Affiliates of any of the Shareholders (provided that such subsidiary or
Affiliate agrees to be bound to the provisions of this Agreement, upon which
such subsidiary or Affiliate shall be entitled to all rights and benefits, and
shall be subject to all obligations, of a Shareholder under this Agreement);
(ii) assignment, pledge, mortgage, hypothecation, or other encumbrance or
transfer of all or any of a Shareholder's Equity Securities in connection with
any bona fide financing arrangement entered into by such person or otherwise in
connection with any indebtedness owed by such Shareholder; provided that in the
event that the Shareholder in question defaults, the creditor's rights and
obligations with respect to the voting and transfer of such Equity Securities
shall be the same as the Shareholder in question had under the provisions of
this Agreement and the creditor in question shall be deemed to be a Shareholder
under this Agreement for such purposes; or (iii) transfer of Equity Securities
pursuant to any merger, consolidation, corporate reorganization, restructuring
or any other similar transaction affecting the Company or pursuant to any
involuntary transfer.

                  (e) For the purposes of this Agreement, (i) the term "Equity
Securities" shall mean the Preferred Stock and any securities entitled to vote
generally in the election of directors of the Company, or any direct or indirect
rights or options to acquire any such securities or any securities convertible
or exercisable into or exchangeable for such securities; (ii) the term "Voting
Power" shall mean the voting power in the general election of directors of the
Company; (iii) the term "Total Voting Power" shall mean the total combined
Voting Power of all the Equity Securities then outstanding, including, without
limitation, the Preferred Stock, and, insofar as the Preferred Stock is
concerned, it is deemed to have Voting Power equal to that of the Common Stock
into which it is convertible; (iv) the term "Change of Control" shall mean the
occurrence

                                       4
<PAGE>   6
of any of the following events: (A) any "person" or "group" (as such terms are
used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the
beneficial owner of Equity Securities which represent at least forty percent
(40%) of the Total Voting Power, or (B) during any one-year period, individuals
who at the beginning of such period constituted the Board of Directors of the
Company (together with any new directors whose election by such Board of
Directors or whose nomination for election by the shareholders of the Company
was approved by a vote of a majority of the directors of the Company then still
in office who were either directors at the beginning of such period or whose
election or nomination for election was previously so approved) cease for any
reason to constitute a majority of the Board of Directors of the Company then in
office; and (v) the term "beneficial owner," and terms having similar import,
shall mean any direct or indirect "beneficial owner," as such term is defined in
Rules 13d-3 and 13d-5 under the Exchange Act.

         1.2.     HSR Clearance.

                  (a) At any time after the date hereof (but subject to the
provisions of Section 1.2(b) hereof), following a written request by LMC to the
Company (such request, the "HSR Notice"), the Company and the Shareholders will
(i) take promptly all actions necessary to make the filings required of the
Shareholders, the Company or any of their respective Affiliates under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules
and regulations thereunder (the "HSR Act") with respect to the right to convert
Preferred Stock and continue to own the securities so received, the ownership
and voting of Equity Securities by the Shareholders, any of the transactions
contemplated by this Agreement or any other similar matters (all such exercise,
ownership, voting, transaction and other similar matters, the "Filing Matters"),
(ii) comply at the earliest practicable date with any request for additional
information or documentary material received by the Company or the Shareholders
or any of their Affiliates from any of the Federal Trade Commission, the
Antitrust Division of the Department of Justice, state attorneys general, the
Securities and Exchange Commission ("SEC"), or other governmental or regulatory
authorities (all such authorities, the "Antitrust Authorities"), and (iii)
cooperate with each other in connection with any of the filings referred to in
clause (i) above and in connection with resolving any investigation or other
inquiry commenced by any of the Antitrust Authorities. To the extent reasonably
requested by LMC, the Company shall use all reasonable efforts to resolve such
objections, if any, as may be asserted with respect to the Filing Matters. If
any administrative, judicial or legislative action or proceeding is instituted
(or threatened to be instituted) challenging any aspect of the Filing Matters as
violative of any antitrust law, each of the Shareholders and the Company shall
cooperate with each other to contest and resist any such action or proceeding,
and to have vacated, lifted, reversed or overturned any decree, judgment,
injunction or other order (whether temporary, preliminary or permanent) (an
"Action") that is in effect and that restricts, prevents or prohibits the
exercise by the Shareholders of the right to convert Preferred Stock and
continue to own the securities so received, or the exercise by LMC of its rights
with respect to the ownership and voting of Equity Securities or any of the
transactions contemplated by this Agreement (any such decree, judgment,
injunction or other order is hereafter referred to as an "Order"), including,
without limitation, by pursuing all reasonable avenues of administrative and
judicial appeal, provided that nothing contained in this Section 1.2(a) shall be
construed to require any party hereto to hold separate or divest any of their
respective assets or businesses or agree to any substantive

                                       5
<PAGE>   7
restriction thereon or on the conduct thereof. Each of the Company and LMC shall
promptly inform the other party of any material communication received by such
party from any Antitrust Authority regarding any of the Filing Matters or any of
the other transactions contemplated hereby. For the purposes this Agreement, the
term "HSR Clearance Date" shall mean the first date on which (x) any applicable
waiting period under the HSR Act with respect to the Filing Matters shall have
expired or been terminated, (y) there shall not be pending any Action commenced
by any Antitrust Authority relating to any of the Filing Matters or any of the
other transactions contemplated hereby, and (z) there shall not be in effect any
Order.

                  (b) Notwithstanding the provisions of Section 1.2(a) above, in
the event that LMC delivers the HSR Notice to the Company, the Company shall be
entitled to postpone for a reasonable period of time (but in no event later than
45 days), any filing referred to in Section 1.2(a)(i) above if the Company
determines in its reasonable judgment and in good faith that such filing would
delay the obtaining of any approval from an Antitrust Authority with respect to
any announced or imminent material acquisition or disposition which would
require a filing by the Company under the HSR Act. In the event of such
postponement, the Company shall have the right to withdraw its HSR Notice and
may deliver any such HSR Notice at any time thereafter.

                  (c) LMC and the Company acknowledge that the waiting period
under the HSR Act expired on March 5, 2000.

         1.3      Voting and Related Matters.

                  (a) General Voting Provisions. Prior to the HSR Clearance
Date, no Shareholder shall have the right to convert Preferred Stock into common
stock or the right to vote any Equity Securities with respect to the election of
directors of the Company. Following the HSR Clearance Date, each Shareholder
shall have the right to vote its Equity Securities to the extent permitted by
the terms thereof on any matters submitted to a vote of the shareholders of the
Company, provided that following the HSR Clearance Date any Shareholder shall
have the right to vote any Equity Securities to the extent permitted by the
terms thereof with respect to the election of directors of the Company without
restriction, provided that in the event of an "election contest" (as such term
is used in Rule 14a-11 under the Exchange Act) each Shareholder shall have the
right to vote in the election contest only (i) as recommended by the Board of
Directors or management of the Company or (ii) in the same proportions as the
holders of Equity Securities (other than Shareholders) vote their Equity
Securities. On each matter with respect to which a Shareholder is entitled to
vote pursuant to this Section 1.3, each such Shareholder shall be present, in
person or represented by proxy, at all such shareholder meetings of the Company
so that all Equity Securities beneficially owned by it shall be counted for the
purpose of determining the presence of a quorum at such meetings. For purposes
of this Section 1.3, all references to the term "vote" shall include the
execution and delivery of any written consent with respect to the taking of any
shareholder action in lieu of a meeting of shareholders.

                  (b) Special Limitation on Company Actions. The Company will
not propose, and will use its best efforts to prevent, the adoption of any
amendment to the charter documents of the Company that would adversely affect
the rights of the Shareholders under this Agreement.

                                       6
<PAGE>   8
         1.4 Certain Notices. Promptly, but in any event within 15 days
following any repurchase by the Company of any of its outstanding Equity
Securities, which repurchase has the effect of increasing the Total Voting Power
of all Shareholders to an amount in excess of 20% of the Total Voting Power of
all persons, the Company shall give written notice thereof to each Shareholder.

                                                            II.

                 REGISTRATION RIGHTS; SALES OF EQUITY SECURITIES

         2.1      Registration and Blackout Period.

                  (a) On or before April 15, 2000, the Company shall prepare and
file on Form S-3 if permitted, or otherwise on the appropriate form, a
registration statement (the "Registration Statement") under the Securities Act
(the securities subject to such registration being referred to as the "Subject
Securities") to register the Shares or other securities of the Company held by
LMC or any Shareholder (any such Shareholder being referred to as a "Registering
Shareholder"). Such registration shall be effected in accordance with the
intended method or methods of disposition specified by the Registering
Shareholder (including, but not limited to, Rule 415 (or any successor rule to
similar effect) promulgated under the Securities Act). In connection therewith,
the Company (i) shall use its best efforts to cause such securities to be
registered under the Securities Act as soon as reasonably practicable with the
objective of having the Registration Statement declared effective on or before
the end of the Lock Up Period; (ii) shall prepare and timely file with the SEC
periodic reports required to be filed by the Company under the Exchange Act, and
such amendments and post-effective amendments, supplements and other filings
under the Securities Act, and otherwise use its best efforts to maintain the
effectiveness of the Registration Statement for a period of 12 months following
the end of the Lock Up Period (or any longer period as contemplated in this
Section 2.1(a)) and ensure that the Registration Statement and related
prospectus comply with the requirements of the securities laws; (iii) shall
arrange, in good faith consultation with LMC to accommodate prior commitments
and critical business needs, for senior management of the Company who generally
participate in "road shows" for the Company (including those individuals
participating in the road show for the Rule 144A Offering), to be available to
the Registering Shareholders and prospective investors for road show
presentations to substantially the same extent with respect to at least one
underwritten public offering (it being understood that the Company will in good
faith consider a request for a second road show, provided that the Company shall
not have an obligation for a second road show) consistent with those generally
conducted by the Company when it issues equity securities for its own account,
with all reasonable expenses (expenses customarily borne by the Company in
connection with the offering of securities for its own account being deemed
reasonable) to be borne by the Registering Shareholders; and (iv) covenants and
agrees not to make any Conflicting Sale (as defined in Section 2.1(c) hereof)
during the period commencing on the date of the Letter Agreement and ending on
the later of the six month anniversary of the end of the Lock Up Period or the
date that is six months after the Registration Statement is declared effective
(the "Loral Lock Up Period"). Notwithstanding the foregoing to the contrary, (x)
the Loral Lock Up Period will be extended for a period equal to any Blackout
Period (as defined below) occurring during the Loral Lock Up Period and (y) the
period during which the Company is required to use its best efforts in
maintaining the

                                       7
<PAGE>   9
effectiveness of the Registration Statement in clause (ii) of the third sentence
will be extended for a period equal to any Blackout Period occurring during the
time the Registration Statement is to be effective.

         Notwithstanding the restrictions in clauses (ii), (iii) and (iv) of
this Section 2.1(a), on the day that the Shareholders no longer beneficially own
at least 3,000,000 shares of the Company's common stock (including all shares
issuable upon conversion of any Preferred Stock that the Shareholders own) (the
"Early Termination Date"), clauses (ii), (iii) and (iv) of this Section 2.1(a)
shall be of no further force or effect, provided that if the Shareholders shall
have completed an underwritten public offering of the Company's common stock
within 90 days of the Early Termination Date and the managing underwriter of
that offering so requests in writing, the provisions of clause (iv) shall
nonetheless survive in accordance with their terms until the earliest of: (A)
the 90th day following the Early Termination Date, (B) the date such clause
would have otherwise expired, (C) if the Shareholders have any Shares remaining
after that offering, the date the lock-up period agreed to by the Shareholders
and their underwriters with respect to their remaining Shares terminates or is
earlier released, and (D) the date the Shareholders' managing underwriter
releases the Company from such lock-up provisions.

         Each Registering Shareholder agrees to provide all such information and
materials and to take all such action as may be reasonably required in order to
permit the Company to comply with all applicable requirements of the Securities
Act and the SEC and to obtain any desired acceleration of the effective date of
the Registration Statement. If the offering is to be underwritten, the managing
underwriter or underwriters shall be selected by LMC and shall be reasonably
satisfactory to the Company.

                  (b) Following the Loral Lock Up Period and for so long as the
Company is required to use its best efforts to maintain the effectiveness of the
Registration Statement in accordance with Section 2.1(a) hereof, each of the
Shareholders and the Company will refrain from selling or transferring or
entering into an agreement to sell or transfer any shares of the Company's
common stock or any securities convertible into or exchangeable for shares of
the Company's common stock (other than sales or transfers pursuant to the terms
of securities outstanding on the date of receipt of the written request
contemplated by this Section 2.1(b) and sales or transfers pursuant to stock
option or other executive compensation or benefit plans) upon one (but not more
than one) written request (such written request to be made in accordance with
Section 4.4 hereof) made by the other party in connection with any offering of
the Company's common stock or securities convertible into or exchangeable for
the Company's common stock in a public offering or Rule 144A transaction until
after the close of business on the 21st day following receipt of such written
request.

                  (c)      For the purposes of this Article II,

                           (i) the term "Blackout Period" means (A) any period
         that the Registration Statement cannot be used by the Registering
         Shareholders as a result of a stop order issued by the SEC or
         developments in the business or affairs of the Company that the Company
         advises LMC in writing must be reflected in an amendment or supplement
         to the Registration Statement or the related prospectus and (B) with
         respect

                                       8
<PAGE>   10
         solely to clause (ii) of the third sentence of Section 2.1(a), for any
         period during which sales of Shares are prohibited by Section 2.1(b);
         and

                           (ii) the term "Conflicting Sale" means any sale or
         transfer, or entering into an agreement to sell or transfer, by the
         Company of any shares of the Company's common stock or any securities
         convertible into or exchangeable for shares of the Company's common
         stock (other than a sale or transfer in the Rule 144A Offering, sales
         or transfers pursuant to the terms of securities outstanding on the
         date of the Letter Agreement (as such terms exist on the date thereof)
         and sales or transfers pursuant to stock option or other executive
         compensation or benefit plans) (A) in any offering registered under the
         Securities Act of 1933, (B) in any offering pursuant to Rule 144A or
         (C) in a private placement, unless the purchaser agrees (I) not to make
         any offer or sale of, or to enter into any agreement to offer or sell,
         any such shares or securities for at least one year or such longer
         period as the Company is required to use its best efforts to maintain
         the effectiveness of the Registration Statement, and (II) not to
         otherwise sell or transfer or enter into any agreement to sell or
         transfer any such shares or securities except to a person who agrees in
         writing to the same restrictions. The Company warrants and agrees not
         to waive or amend the agreements contemplated by clauses (I) and (II)
         of the preceding sentence without LMC's prior written consent, which
         may be given or withheld in LMC's sole discretion, (y) to take such
         actions (including placing a restrictive legend on any certificates
         representing any securities) as may be reasonable and customary in
         connection with restrictions of the type set forth in clauses (I) and
         (II), and (z) to direct the registrar and transfer agent for its
         securities (including the Company itself if it is acting as its own
         registrar or transfer agent) not to issue any securities upon transfer
         without a written acknowledgement from the Company confirming that the
         transfer is not in violation of clause (I) or (II). Notwithstanding the
         foregoing, a "Conflicting Sale" shall not include the issuance in one
         or more transactions by the Company of shares of its common stock to
         holders of its 6% Series C Convertible Redeemable Preferred Stock (the
         "Series C Preferred") in connection with the exchange by such holders
         of their shares of Series C Preferred for the Company's common stock,
         provided that the total number of shares of the Company's common stock
         to be issued in such exchanges shall not exceed in the aggregate the
         sum of (x) the shares of the Company's common stock issuable upon
         conversion of the Series C Preferred and (y) three million shares of
         the Company's common stock.

                  (d) The Company shall not grant to any other holder of its
securities, whether currently outstanding or issued in the future, any
incidental or piggyback registration rights with respect to the Registration
Statement, and without the prior consent of the Registering Shareholders, the
Company will not itself, and will not permit any other holder of its securities
to, participate in any offering made pursuant to the Registration Statement
(except as contemplated by Section 1.1(c)). If the Registering Shareholders
consent to the inclusion of offers and sales of any other securities in the
Registration Statement pursuant to this Section 2.1 and the underwriter(s)
retained in connection with such registration subsequently advise the
Registering Shareholders that such offering would be adversely affected by the
inclusion of such other securities, the Registering Shareholders may in their
sole discretion exclude all or some of such securities from such registration.

                                       9
<PAGE>   11
                  (e) The registration contemplated by this Agreement shall not
be deemed to have been effected (and, therefore, not requested for purposes of
this Section 2.1), (i) unless it has become effective or (ii) if after it has
become effective such registration is interfered with by any stop order,
injunction or other order or requirement of the SEC or other governmental agency
or court for any reason other than a misrepresentation or an omission by the
Registering Shareholders and, as a result thereof, the Subject Securities
requested to be registered cannot be completely distributed in accordance with
the plan of distribution set forth in the Registration Statement.

                  (f) Except for the pending transfer of the Shares by LMC to
its wholly owned subsidiary, Lockheed Martin Investments Inc., LMC represents to
the Company that, on or prior to the date hereof, LMC has not sold, assigned,
pledged, mortgaged, hypothecated or otherwise encumbered or transferred, and has
not entered into any agreements or arrangements with any third party to sell,
assign, pledge, mortgage, hypothecate or otherwise encumber or transfer any of
the Shares.

         2.2 Non-Affiliate. The Company agrees to accept an opinion of LMC's
in-house counsel to the effect that neither LMC nor any other Shareholder is an
"affiliate" of the Company within the meaning of Rule 144 under the Securities
Act, and covenants and agrees upon receipt of such opinion to (a) deliver a
letter or certificate to LMC or such other Shareholder for distribution to
potential purchasers confirming the foregoing, (b) direct the registrar and
transfer agent for its Shares to issue certificates without restrictive legends
to purchasers of the Shares, (c) acknowledge the ability under this Agreement of
LMC and such other Shareholders to sell the Shares without volume limitations
other than the limitations contemplated by clauses (ix) and (x) of Section
1.1(a), and (d) otherwise take no actions inconsistent with offers or sales of
Shares by the Shareholders in accordance with this Agreement.

         2.3      Registration Mechanics.

                  (a) In connection with any offering of Subject Securities
registered pursuant to Section 2.1 herein, the Company shall (i) furnish to the
Registering Shareholders such number of copies of any prospectus (including
preliminary and summary prospectuses) and conformed copies of the Registration
Statement (including amendments or supplements thereto and, in each case, all
exhibits) and such other documents as any Registering Shareholder may reasonably
request; (ii) (A) use its best efforts to register or qualify the Subject
Securities covered by the Registration Statement under such blue sky or other
state securities laws for offer and sale as the Registering Shareholders shall
reasonably request and (B) keep such registration or qualification in effect for
so long as the Registration Statement remains in effect; provided that the
Company shall not be obligated to qualify to do business as a foreign
corporation under the laws of any jurisdiction in which it shall not then be
qualified or to file any general consent to service of process in any
jurisdiction in which such a consent has not been previously filed or subject
itself to taxation in any jurisdiction wherein it would not otherwise be subject
to tax but for the requirements of this Section 2.3; (iii) use its best efforts
to cause all Subject Securities covered by the Registration Statement to be
registered with or approved by such other federal or state government agencies
or authorities as may be necessary, in the opinion of counsel to the

                                       10
<PAGE>   12
Registering Shareholders, to enable the Registering Shareholders to consummate
the disposition of such Subject Securities; (iv) notify the Registering
Shareholders any time when a prospectus relating thereto is required to be
delivered under the Securities Act upon discovery that, or upon the happening of
any event as a result of which, the prospectus included in the Registration
Statement, as then in effect, includes an untrue statement of a material fact or
omits to state any material fact required to be stated therein or necessary to
make the statements therein not misleading, in the light of the circumstances
under which they were made, and (subject to the good faith determination of the
Company's Board of Directors as to whether to permit sales under the
Registration Statement), at the request of any Registering Shareholder promptly
prepare and furnish to it a reasonable number of copies of a supplement to or an
amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such securities, such prospectus shall not
include an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, in light of the circumstances under which they were made; (v)
otherwise use its best efforts to comply with all applicable rules and
regulations of the SEC; (vi) use its best efforts to list the Subject Securities
covered by such registration statement on the New York Stock Exchange or on any
other exchange on which the Subject Securities are then listed, if required by
the rules of any such exchange; (vii) use its best efforts to obtain a "cold
comfort" letter from the independent public accountants for the Company in
customary form and covering matters of the type customarily covered by such
letters as may be reasonably requested by the Registering Shareholders in the
event of a registration effected pursuant to Section 2.1 hereof; (viii) execute
and deliver all instruments and documents (including in an underwritten offering
an underwriting agreement in customary form) and take such other actions and
obtain such certificates and opinions as the Registering Shareholders reasonably
request in order to effect an underwritten public offering; and (ix) before
filing the Registration Statement or any amendment or supplement thereto, and as
far in advance as is reasonably practicable, furnish to each Registering
Shareholder and its counsel copies of such documents. In connection with any
offering of Subject Securities registered pursuant to Section 2.1, the Company
shall (x) furnish to the underwriter, if any, unlegended certificates
representing ownership of the Subject Securities being sold in such
denominations as requested and (y) instruct any transfer agent and registrar of
the Subject Securities to release any stop transfer orders with respect to such
Subject Securities.

                  (b) Before filing with the SEC the Registration Statement or
any amendments or supplements thereto, the Company shall furnish to the
Registering Shareholders or their respective counsel copies of all such
documents proposed to be filed, in order to give the Registering Shareholders or
their respective counsel sufficient time to review such documents, and such
documents may thereafter be filed subject to any timely and reasonable comments
of the Registering Shareholders or their respective counsel. The Company shall
(i) deliver promptly to the Registering Shareholders or their respective counsel
copies of all written communications between the Company and the SEC relating to
such registration statement, and (ii) advise the Registering Shareholders or
their respective counsel promptly of, and provide the Registering Shareholders
or their respective counsel with the opportunity to participate in (to the
extent reasonably practicable), all telephonic and other non-written
communications between the Company and the SEC relating to such registration
statement. The Company shall respond promptly to any comments from the SEC with
respect thereto, after consultation with the Registering Shareholders or their
respective counsel, and shall take such other actions as shall be

                                       11
<PAGE>   13
reasonably required in order to have such registration statement declared
effective under the Securities Act as soon as reasonably practicable as set
forth in Section 2.1(a).

                  (c) Each Registering Shareholder agrees that upon receipt of
any notice from the Company of the happening of any event of the kind described
in clause (iv) of Section 2.3(a), it will forthwith discontinue its disposition
of Subject Securities pursuant to the Registration Statement relating to such
Subject Securities until its receipt of the copies of the supplemented or
amended prospectus contemplated by clause (iv) of Section 2.3(a) and, if so
directed by the Company, will deliver to the Company all copies (other than
permanent file copies) then in its possession of the prospectus relating to such
Subject Securities current at the time of receipt of such notice. If any
Registering Shareholder's disposition of Subject Securities is discontinued
pursuant to the foregoing sentence, unless the Company thereafter extends the
effectiveness of the Registration Statement to permit dispositions of Subject
Securities by the Registering Shareholder for an aggregate of 60 days (or 90
days, if the Company is eligible to use a Form S-3, or successor form), whether
or not consecutive, or, if longer, the period contemplated by Section 2.1(a),
the registration contemplated by this Agreement shall not be deemed to have been
effected.

         2.4 Expenses. The Registering Shareholders shall pay all agent fees and
commissions and underwriting discounts and commissions related to Subject
Securities being sold by the Registering Shareholders and the fees and
disbursements of its counsel and accountants and the Company to the extent
permitted by applicable law shall pay all fees and disbursements of its counsel
and accountants in connection with the Registration Statement. All other fees
and expenses in connection with the Registration Statement (including, without
limitation, all registration and filing fees, all printing costs, all fees and
expenses of complying with securities or blue sky laws) shall to the extent
permitted by applicable law be borne equally by the Registering Shareholders and
the Company; provided that the Registering Shareholders shall not be obligated
to pay any expenses relating to work that would otherwise be incurred by the
Company including, but not limited to, the preparation and filing of periodic
reports with the SEC.

         2.5      Indemnification and Contribution.

                  (a) In the case of any offering registered pursuant to this
Article II, the Company agrees to indemnify and hold each Registering
Shareholder, each underwriter, if any, of the Subject Securities under such
registration and each person who controls any of the foregoing within the
meaning of Section 15 of the Securities Act, and any officer, employee or
partner of the foregoing, harmless against any and all losses, claims, damages,
or liabilities (including reasonable legal fees and other reasonable expenses
incurred in the investigation and defense thereof) to which they or any of them
may become subject under the Securities Act or otherwise (collectively
"Losses"), insofar as any such Losses shall arise out of or shall be based upon
(i) any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement relating to the sale of such Subject
Securities (as amended if the Company shall have filed with the SEC any
amendment thereof), or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading or (ii) any untrue statement or alleged untrue statement
of a

                                       12
<PAGE>   14
material fact contained in the prospectus relating to the sale of such Subject
Securities (as amended or supplemented if the Company shall have filed with the
SEC any amendment thereof or supplement thereto), or the omission or alleged
omission to state therein a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading; provided that the indemnification contained in this Section 2.5
shall not apply to such Losses which shall arise primarily out of or shall be
based primarily upon any such untrue statement or alleged untrue statement, or
any such omission or alleged omission, which shall have been made in reliance
upon and in conformity with information furnished in writing to the Company by
the Registering Shareholders or any such underwriter, as the case may be,
specifically for use in connection with the preparation of the Registration
Statement or prospectus contained in the registration statement or any such
amendment thereof or supplement therein.

                  (b) In the case of each offering registered pursuant to this
Article II, the Registering Shareholders and each underwriter, if any,
participating therein shall agree, substantially in the same manner and to the
same extent as set forth in the preceding paragraph, severally to indemnify and
hold harmless the Company and each person, if any, who controls the Company
within the meaning of Section 15 of the Securities Act, and the directors and
executive officers of the Company, with respect to any statement in or omission
from the Registration Statement or the prospectus contained in the Registration
Statement (as amended or as supplemented, if amended or supplemented as
aforesaid) if such statement or omission shall have been made in reliance upon
or in conformity with information furnished in writing to the Company by the
Registering Shareholders or such underwriter, as the case may be, specifically
for use in connection with the preparation of the Registration Statement or the
prospectus contained in the Registration Statement or any such amendment thereof
or supplement thereto.

                  (c) Each party indemnified under this Section 2.5 shall,
promptly after receipt of notice of the commencement of any claim ("Claim")
against such indemnified party in respect of which indemnity may be sought
hereunder, notify the indemnifying party in writing of the commencement thereof.
The failure of any indemnified party to so notify an indemnifying party shall
not relieve the indemnifying party from any liability in respect of such Claim
which it may have to such indemnified party on account of the indemnity
contained in this Section 2.5, unless (and only in the event) the indemnifying
party was materially prejudiced by such failure, and in no event shall such
failure relieve the indemnifying party from any other liability which it may
have to such indemnified party. In case any Claim in respect of which
indemnification may be sought hereunder shall be brought against any indemnified
party and it shall notify an indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate therein and, to the extent
that it may desire, jointly with any other indemnifying party similarly notified
to assume the defense thereof through counsel reasonably satisfactory to the
indemnified party by notifying the indemnified party in writing of such election
within 10 days after receipt of the indemnified party's initial notice of the
Claim, and after such notice from the indemnifying party to such indemnified
party of its election so to assume the defense thereof, the indemnifying party
shall not be liable to such indemnified party under this Section 2.5 for any
legal or other expenses subsequently incurred by such indemnified party in
connection with the defense thereof, other than reasonable costs of
investigation (unless such indemnified party reasonably objects to such
assumption on the grounds that there may be defenses available to it

                                       13
<PAGE>   15
which are different from or in addition to those available to such indemnifying
party in which event the indemnified party shall be reimbursed by the
indemnifying party for the reasonable expenses incurred in connection with
retaining separate legal counsel). If the indemnifying party undertakes to
defend against such Claim within such 10-day period, the indemnifying party
shall control the investigation, defense and settlement thereof; provided that
(i) the indemnifying party shall use its reasonable efforts to defend and
protect the interests of the indemnified party with respect to such Claim, (ii)
the indemnified party, prior to or during the period in which the indemnifying
party assumes control of such matter, may take such reasonable actions as the
indemnified party deems necessary to preserve any and all rights with respect to
such matter, without such actions being construed as a waiver of the indemnified
party's rights to defense and indemnification pursuant to this Agreement, and
(iii) the indemnifying party shall not, without the prior written consent of the
indemnified party, consent to any settlement which (A) imposes any Losses on the
indemnified party (other than those Losses which the indemnifying party agrees
to promptly pay or discharge), and (B) with respect to any non-monetary
provision of such settlement, would be likely, in the indemnified party's
reasonable judgment, to have an adverse effect on the business operations,
assets, properties or prospects of any Shareholder (in the event that
Registering Shareholder or any of its Affiliates is the indemnified party), or
the Company (in the event that the Company is an indemnified party) or such
indemnified party. If the indemnifying party does not undertake within such
10-day period to defend against such Claim, then the indemnifying party shall
have the right to participate in any such defense at its sole costs and expense,
but the indemnified party shall control the investigation, defense and
settlement thereof (provided that the indemnified party may not settle any such
Claim without obtaining the prior written consent of the indemnifying party
(which consent shall not be unreasonably withheld by the indemnifying party;
provided that in the event that the indemnifying party is in material breach at
such time of the provisions of this Section 2.5, then the indemnified party
shall not be obligated to obtain such prior written consent of the indemnifying
party) at the reasonable cost and expense of the indemnifying party (which shall
be paid by the indemnifying party promptly upon presentation by the indemnified
party of invoices or other documentation evidencing the amounts to be
indemnified). In addition to the foregoing, no indemnifying party shall, without
the prior written consent of the indemnified party, affect any settlement of any
pending or threatened proceeding in respect of which the indemnified party could
have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability arising out of such claim or
proceeding.

                  (d) If the indemnification provided for in this Section 2.5 is
unavailable to an indemnified party or is insufficient to hold such indemnified
party harmless from any Losses in respect of which this Section 2.5 would
otherwise apply by its terms (other than by reason of exceptions provided
herein), then each applicable indemnifying party, in lieu of indemnifying such
indemnified party, shall have a joint and several obligation to contribute to
the amount paid or payable by such indemnified party as a result of such Losses,
in such proportion as is appropriate to reflect the relative benefits received
by and fault of the indemnifying party, on the one hand, and such indemnified
party, on the other hand, in connection with the offering to which such
contribution relates as well as any other relevant equitable considerations. The
relative benefit shall be determined by reference to, among other things, the
amount of proceeds received by each party from the offering to which such
contribution relates. The relative fault

                                       14
<PAGE>   16
shall be determined by reference to, among other things, each party's relative
knowledge and access to information concerning the matter with respect to which
the claim was asserted, and the opportunity to correct and prevent any statement
or omission. The amount paid or payable by a party as a result of any Losses
shall be deemed to include any legal or other fees or expenses incurred by such
party in connection with any investigation or proceeding, to the extent such
party would have been indemnified for such expenses if the indemnification
provided for in this Section 2.5 was available to such party.

                  (e) The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 2.5 were determined by pro
rata allocation or by any other method of allocation that does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.

         2.6 Rule 144. The Company covenants that it will file the reports
required to be filed by it under the Securities Act and the Exchange Act and the
rules and regulations adopted by the SEC thereunder (or, if the Company is not
required to file such reports, it will, upon the request of any Shareholder,
make publicly available other information), and it will take such further action
as any Shareholder may reasonably request, all to the extent required from time
to time to enable such Shareholder to sell Subject Securities without
registration under the Securities Act within the limitation of the exemptions
provided by (i) Rule 144 under the Securities Act, as such Rule may be amended
from time to time, or (ii) any similar rule or regulation hereafter adopted by
the SEC. Upon the request of any Shareholder, the Company will deliver to such
Shareholder a written statement as to whether it has complied with such
requirements.

                                      III.

                                      TERM

         3.1 Term. The term (the "Term") of this Agreement shall commence on the
date hereof and shall continue, unless specifically provided otherwise in this
Agreement, until the earlier of (a) the date on which LMC and its Affiliates, on
a fully diluted basis, beneficially own no Equity Security, (b) April 23, 2006,
or (c) a Change in Control (as defined in Section 1.1(e) hereof). Upon
expiration of the Term, the provisions of this Agreement shall terminate, and be
of no further force or effect, automatically without any further action on the
part of any parties hereto, provided that the provisions of Article II and
Article IV shall continue without regard to the term limitation set forth in
this sentence; provided further that no such termination shall relieve any party
of any liability to the other party hereto, to the extent such liability is
incurred prior to the expiration of the Term.
                                       IV.

                                  MISCELLANEOUS

         4.1 Entire Agreement. This Agreement constitutes the entire agreement
among the parties with respect to the subject matter hereof and supersedes all
other prior negotiations,

                                       15
<PAGE>   17
commitments, agreements and understandings, including the Letter Agreement, both
written and oral, between the parties or any of them with respect to the subject
matter hereof.

         4.2 Fees and Expenses. Except as otherwise provided in this Agreement,
all costs and expenses incurred by the Shareholders and the Company in
connection with consummating such party's obligations hereunder or otherwise
shall be paid by the party incurring such cost or expense.

         4.3 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED
AND ENFORCED IN ACCORDANCE WITH THE SUBSTANTIVE LAWS OF THE STATE OF NEW YORK
WITHOUT GIVING EFFECT TO THE CHOICE OF LAW PRINCIPLES THEREOF (EXCEPT IN THOSE
CIRCUMSTANCES WHERE THE CORPORATE LAW OF THE COMPANY'S JURISDICTION OF
ORGANIZATION REQUIRES THE APPLICATION OF THE LAW OF THE COMPANY'S JURISDICTION
OF ORGANIZATION WITH RESPECT TO A PARTICULAR MATTER).

         4.4 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given upon (a) transmitter's confirmation of a
receipt of a facsimile transmission, (b) confirmed delivery by a standard
overnight carrier or when delivered by hand or (c) the expiration of five
business days after the day when mailed by certified or registered mail, postage
prepaid, addressed at the following addresses (or at such other address for a
party as shall be specified by like notice):

                  (a)      If to any of the Shareholders, to:

                           c/o Lockheed Martin Corporation
                           6801 Rockledge Drive
                           Bethesda, MD  20817
                           Telephone:  (301) 897-6125
                           Telecopy No.:  (301) 897-6333
                           Attention:  General Counsel

                           with a copy to:

                           King & Spalding
                           1730 Pennsylvania Avenue, NW
                           Washington, DC  20006
                           Telephone:  (202) 737-0500
                           Telephone:  (202) 626-3737
                           Attention:    Glenn C. Campbell

                  (b)      If to the Company, to:

                           Loral Space & Communications Ltd.
                           c/o Loral SpaceCom Corporation
                           600 Third Avenue

                                       16
<PAGE>   18
                           New York, NY
                           Telephone:  (212) 697-1105
                           Telecopy No.:  (212) 602-9805
                           Attention:  General Counsel

                           with a copy to:

                           Willkie Farr & Gallagher
                           787 Seventh Avenue
                           New York, NY  10019
                           Telephone:  (212) 821-8000
                           Telecopy No.:  (212) 821-8111
                           Attention:  Bruce R. Kraus, Esq.

In addition to providing any notice required to be given by the Company pursuant
to its Certificate of Incorporation in the manner specified therein, the Company
shall send to each Shareholder by telecopy in accordance with this Section 4.4 a
copy of each such notice.

         4.5 Successors and Assigns; Reclassifications; No Third Party
Beneficiaries. This Agreement and all of the provisions hereof shall be binding
upon and inure to the benefit of the parties and their respective successors and
permitted assigns, but neither this Agreement nor any of the rights, interests
or obligations hereunder shall be assigned by any party hereto (whether by
operation of law or otherwise) without the prior written consent of the other
parties hereto (which consent may not be reasonably withheld), except that any
party shall have the right, without the consent of any other party hereto, to
assign all or a portion of its rights, interests, and obligations hereunder to
one or more direct or indirect subsidiaries, but no such assignment of
obligation shall relieve the assigning party from its responsibility therefor.
In the event of any recapitalization or reclassification of any Equity
Securities, or any merger, consolidation or other transaction with like effect,
the securities issued in replacement or exchange for such Equity Securities
shall be deemed Equity Securities hereunder. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person any rights, benefits or remedies of any nature whatsoever under or by
reason of this Agreement; provided that the indemnified parties referred to in
Section 2.5 hereof are intended to be third party beneficiaries of the
provisions of Section 2.5 hereof, and shall have the right to enforce such
provisions as if they were parties hereto.

         4.6 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

         4.7 Further Assurances. Each party hereto or person subject hereto
shall do and perform or cause to be done and performed all such further acts and
things and shall execute and deliver all such other agreements, certificates,
instruments and documents as any other party hereto or person subject hereto may
reasonably request in order to carry out the intent and

                                       17
<PAGE>   19
accomplish the purpose of this Agreement and the consummation of the
transactions contemplated hereby.

         4.8 Interpretation. The descriptive headings herein are inserted for
convenience of reference only and are not intended to be part of or to affect
the meaning or interpretation of this Agreement. Unless otherwise specified in
this Agreement, all references in this Agreement to "days" shall be deemed to be
references to calendar days.

         4.9 Legal Enforceability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
affecting the validity or enforceability of the remaining provisions hereof. Any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. If any provision
of this Agreement is so broad as to be unenforceable, the provision shall be
interpreted to be only so broad as is enforceable.

         4.10 Consent to Jurisdiction. Each of the parties hereto irrevocably
and unconditionally (a) agrees that all suits, actions or other legal
proceedings arising out of this Agreement or any of the transactions
contemplated hereby (a "Suit") shall be brought and adjudicated solely in the
United States District Court for the District of Delaware, or, if such court
will not accept jurisdiction, in the Delaware Chancery Court or any court of
competent civil jurisdiction sitting in New Castle County, Delaware, (b) submits
to the non-exclusive jurisdiction of any such court for the purpose of any such
Suit and (c) waives and agrees not to assert by way of motion, as a defense or
otherwise in any such Suit, any claims that it is not subject to the
jurisdiction of the above courts, that such Suit is brought in an inconvenient
forum or that the venue of such Suit is improper. Each of the parties hereto
also irrevocably and unconditionally consents to the service of any process,
summons, pleadings, notices or other papers in a manner permitted by the notice
provisions of Section 4.4 hereof and agrees that any such form of service shall
be effective in connection with any such Suit; provided that nothing contained
in this Section 4.10 shall affect the right of any party to serve process,
pleadings, notices or other papers in any other manner permitted by applicable
law.

         4.11 Specific Performance. Each of the parties hereto acknowledges and
agrees that in the event of any breach of this Agreement, each non-breaching
party would be irreparably and immediately harmed and could not be made whole by
monetary damages. It is accordingly agreed that the parties hereto (a) will
waive, in any action for specified performance, the defense of adequacy of a
remedy at law and (b) shall be entitled, in addition to any other remedy to
which they may be entitled at law or in equity, to compel specific performance
of this Agreement in any action instituted in any court referred to in Section
4.10 hereof.

                                       18
<PAGE>   20
         IN WITNESS WHEREOF, each of the parties has caused this Shareholders
Agreement to be executed on its behalf by its officers thereunto duly
authorized, all as of the day and year first above written.

                               LOCKHEED MARTIN CORPORATION

                               By:    /s/ Janet McGregor
                               Name:
                               Title:

                               LORAL SPACE & COMMUNICATIONS LTD.

                               By:    /s/ Avi Katz
                               Name:
                               Title:

                                       19

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