10-K

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                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                            ------------------------

                                   FORM 10-K
              ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

                  FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002

                     GLOBALSTAR TELECOMMUNICATIONS LIMITED
                                  CEDAR HOUSE
                                41 CEDAR AVENUE
                             HAMILTON HM12, BERMUDA
                           TELEPHONE: (441) 295-2244
                         COMMISSION FILE NUMBER 0-25456
                     JURISDICTION OF INCORPORATION: BERMUDA
                     IRS IDENTIFICATION NUMBER: 13-3795510

                                GLOBALSTAR, L.P.
                                3200 ZANKER ROAD
                           SAN JOSE, CALIFORNIA 95134
                           TELEPHONE: (408) 933-4000
                       COMMISSION FILE NUMBER: 333-25461
                     JURISDICTION OF REGISTRATION: DELAWARE
                     IRS IDENTIFICATION NUMBER: 13-3759024

          SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

                                      NONE

          SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

                     GLOBALSTAR TELECOMMUNICATIONS LIMITED:
                         COMMON STOCK, $1.00 PAR VALUE

                                (Title of Class)

                               GLOBALSTAR, L.P.:
                                      NONE

     The registrants have filed all reports required to be filed by Section 13
or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
and have been subject to such filing requirements for the past 90 days.

     Disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is
not contained herein, and will not be contained, to the best of the registrants'
knowledge, in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this Form 10-K

     The registrants are not accelerated filers (as defined in Exchange Act Rule
12b-2).

     Aggregate market value of Globalstar Telecommunications Limited common
stock outstanding held by non-affiliates of the registrant as of June 28, 2002
was approximately $6.1 million.

     As of March 17, 2003, there were 113,059,195 shares of Globalstar
Telecommunications Limited common stock outstanding.

                      DOCUMENTS INCORPORATED BY REFERENCE

     None.

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                                     PART I

ITEM 1.  BUSINESS

                                  THE COMPANY

OVERVIEW

     On November 23, 1994, Globalstar Telecommunications Limited ("GTL") was
incorporated to permit public equity ownership in Globalstar, L.P.
("Globalstar"). GTL was incorporated as an exempted company under the Companies
Act 1981 of Bermuda. In 1995, GTL completed an initial public offering of
40,000,000 shares of common stock and purchased 10,000,000 ordinary partnership
interests from Globalstar, L.P. ("Globalstar"), a limited partnership. At
December 31, 2002, GTL owned approximately 42.4% of Globalstar's outstanding
ordinary partnership interests and 100% of the outstanding 8% convertible
redeemable preferred partnership interests ("8% RPPIs") and 100% of the
outstanding 9% convertible redeemable preferred partnership interests ("9%
RPPIs") of Globalstar.

     GTL does not have any operations, personnel or facilities, and does not
manage the day-to-day operations of Globalstar. GTL's sole asset is its
investment in Globalstar, and GTL's results of operations reflect its share of
the results of operations of Globalstar on an equity accounting basis.
Globalstar was founded to design, construct and operate a worldwide, low-earth
orbit satellite-based wireless digital telecommunications system (the
"Globalstar System"). In 2000, Globalstar's losses reduced GTL's investment in
Globalstar ordinary and preferred partnership interests to a book value of zero.
Accordingly, GTL discontinued providing for its allocated share of Globalstar's
net losses and recognized the remaining unallocated losses as a result of its
general partner status in Globalstar. Because GTL is a general partner of
Globalstar, GTL is jointly and severally liable with the other general partner
for the recourse debt and other recourse obligations of Globalstar to the extent
Globalstar is unable to pay such debts. Certain of Globalstar's debt, including
the public debt, is non-recourse to the general partners. On February 15, 2002,
the other general partner of Globalstar, Loral QUALCOMM Satellite Services, L.P.
("LQSS"), filed a voluntary petition under Chapter 11 of Title 11 of the United
States Code (the "Bankruptcy Code"). Effective February 15, 2002, Globalstar
ceased allocating additional losses associated with recourse debt to LQSS. As
the only remaining general partner of Globalstar that has not filed for
bankruptcy protection, GTL has been allocated all losses related to debt that is
recourse to general partners since February 15, 2002. Future funding, if any, or
assets of GTL, may be utilized to fund these general partner liabilities.

     In May 2001, NASDAQ determined that GTL no longer met the requirements for
listing on The NASDAQ National Market and was therefore subject to delisting
from that market. GTL applied to have the listing transferred to The NASDAQ
SmallCap Market. This request was granted and the stock began trading on this
market June 14, 2001. The NASDAQ SmallCap Market suspended trading on November
14, 2001, as it sought additional information from GTL. Since December 2001, GTL
shares have traded on the NASDAQ OTC Bulletin Board under the symbol of
GSTRF.OB.

GLOBALSTAR'S RESTRUCTURING

     On February 15, 2002, Globalstar and certain of its subsidiaries filed
voluntary petitions under Chapter 11 of the Bankruptcy Code, in the United
States Bankruptcy Court for the District of Delaware (the "Bankruptcy Court")
(Case Nos. 02-10499, 02-10501, 02-10503 and 02-10504). Globalstar and its
subsidiaries remain in possession of their assets and properties and continue to
operate their businesses as debtors-in-possession. As a result of Globalstar's
bankruptcy petition, several of Globalstar's debt obligations were accelerated
and became immediately due and payable. GTL does not intend to file an immediate
petition for bankruptcy relief, but will continue to monitor events and govern
its actions accordingly. It has been GTL's view that any hope of providing a
rights offering or other element of value to its shareholders is enhanced by not
filing for bankruptcy at this time. Globalstar's bankruptcy filing and
subsequent financial restructuring will likely leave shares in GTL with very
little or no value. (See the discussion of Globalstar's proposed restructuring
plan below.) These factors, among others, raise substantial doubt about GTL's
ability to continue as a going concern. However, the accompanying financial

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statements have been prepared on a going concern basis, which contemplates the
realization of assets and the satisfaction of liabilities in the normal course
of business.

     Negotiations prior to filing of Globalstar's bankruptcy petition resulted
in a memorandum of understanding ("MOU") and Plan Support Agreement ("PSA")
reached among Loral Space and Communications Ltd. ("Loral"), Globalstar's
informal committee of bondholders, representing approximately 17% of
Globalstar's outstanding senior notes, and Globalstar, regarding the substantive
terms of a proposed financial and legal restructuring of Globalstar's business.
Among other things, the MOU called for the cancellation of all existing
partnership interests in Globalstar, but contemplated, subject to the
satisfaction of certain conditions, a rights offering to GTL's common and
preferred shareholders and Globalstar's creditors, which could have given them
the option to purchase shares in a newly formed company and successor to
Globalstar's business. Because a disclosure statement relating to a plan of
reorganization incorporating the terms of the MOU was not approved by the
Bankruptcy Court by August 13, 2002, each of Loral and the Official Committee of
Unsecured Creditors in Globalstar's Chapter 11 case (the "Creditors' Committee")
had the right for 15 days thereafter to terminate the PSA. As permitted by the
PSA, on August 21, 2002, the Creditors' Committee advised Loral and Globalstar
that it had terminated the PSA as of that date.

     On January 14, 2003, Globalstar and the Creditors' Committee reached an
agreement with New Valley Corporation ("New Valley") providing for
debtor-in-possession financing (the "New Valley DIP Facility") of up to $20
million and a total investment in a reorganized Globalstar of $55 million.
Globalstar filed a motion with the Bankruptcy Court for approval of this new
investment on January 15, 2003 and filed a Form 8-K on the same date. A hearing
to seek Bankruptcy Court approval of the New Valley DIP Facility was scheduled
for January 30, 2003 in Delaware. Prior to the hearing, the Creditors' Committee
informed Globalstar and New Valley that the Creditors' Committee would not
support approval of the New Valley investment, but that a consortium including
certain individual members of the Creditors' Committee was prepared to provide
substitute debtor-in-possession financing. As a consequence, New Valley withdrew
its investment offer as of January 30, 2003. Globalstar filed another Form 8-K
reflecting New Valley's withdrawal on February 4, 2003.

     On February 14, 2003, Globalstar and the consortium of lenders (the "DIP
Lenders") reached agreement on debtor-in-possession financing of $10 million
(the "DIP Facility") and filed a motion with the Bankruptcy Court seeking
approval of such financing. Globalstar also filed a motion defining certain
auction procedures by which Globalstar would conclude its search for an investor
to fund Globalstar's restructuring and exit from bankruptcy. The Bankruptcy
Court provided interim approval of the DIP Facility and approved the auction
procedures on February 20, 2003, and the parties executed the DIP Facility
documents on February 25, 2003. Copies of the DIP Facility, auction procedures
and related documents were filed with a Form 8-K on February 27, 2003. The
Bankruptcy Court granted final approval of the DIP Facility on March 6, 2003. As
a condition to the DIP Lenders obligation to fund draws by Globalstar under the
DIP Facility in excess of $2.0 million, among other things (i) Globalstar was
required to secure from Loral/QUALCOMM Partnership, L.P. ("LQP") a pledge in
favor of the DIP Lenders of LQP's ownership interest in the outstanding stock of
L/Q Licensee, Inc. ("L/Q Licensee"), and (ii) Globalstar was required to reach
an agreement, satisfactory to the DIP Lenders, with respect to specified matters
relating to Loral and certain of its affiliates (the conditions set forth in
clauses (i) and (ii) above, collectively, the "Loral Condition"). The Loral
Condition was initially required to be satisfied by March 7, 2003, but the DIP
Facility was amended to extend the deadline for meeting the Loral Condition to
March 21, 2003. The Loral Condition was satisfied prior to the extended deadline
(see discussion of Developments Relating to Loral and QUALCOMM below).

     Under the approved auction procedures, Globalstar received expressions of
interest from prospective investors in early March 2003, and with the assistance
of its financial advisors and in consultation with the Creditors' Committee,
determined which of them were "qualified" to perform due diligence and make a
definitive proposal for an equity investment in Globalstar or the purchase of
Globalstar's assets. March 21, 2003 was the deadline set for the submission of
investment proposals by the qualified bidders. Globalstar, in consultation with
the Creditors' Committee, expects to choose the highest and best investment
proposal

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in early-April and to file a modified plan of reorganization with the Bankruptcy
Court shortly thereafter. No assurance can be given as to whether this auction
process will ultimately lead to a successful restructuring of Globalstar.

     It is foreseeable that in any financial restructuring, GTL's equity
interest, along with the interests of Globalstar's other partners, will be
eliminated entirely, or at best, severely diluted.

     The $15.3 million cash on hand at December 31, 2002 and the anticipated
revenue from operations are insufficient to fund Globalstar's operations.
Globalstar will require additional financing, beyond the $10 million available
under the DIP Facility, to sustain its current operations until breakeven cash
flow is achieved. There can be no assurance that a successful restructuring will
be completed and that additional financing will be available on terms acceptable
to Globalstar, if at all. If Globalstar is unable to obtain additional
financing, it will likely cease to operate.

NEW BUSINESS PLAN AND RELATED TRANSACTIONS

     Globalstar has developed a business plan in connection with its
restructuring; the business plan will be an integral part of Globalstar's plan
of reorganization. The business plan, which is predicated on an infusion of
funds, assumes the consolidation of certain Globalstar service provider
operations into a new Globalstar company ("New Globalstar"). Several of the
acquisitions contemplated in the business plan were completed during 2001 and
2002. The consolidation strategy has brought additional efficiencies to the
operation of the Globalstar System and allowed for increased geographic coverage
and pricing coordination in Globalstar's service offerings and pricing. In
addition, Globalstar intends to revise its business relationships with the
remaining independent service providers, including exploring the possible
acquisition of their businesses or assets. Globalstar believes that these, and
additional, steps are needed to achieve and maintain financial viability.

     In accordance with Globalstar's consolidation strategy, in December 2001,
Globalstar signed two agreements to acquire certain subsidiaries of Vodafone
Group Plc ("Vodafone") through Globalstar Corporation, a non-debtor subsidiary
of Globalstar. In the first transaction, which closed on December 18, 2001,
Globalstar obtained a majority interest in the Globalstar service provider
company in Canada and a minority interest in the Canadian gateway company. (See
the discussion of the settlement with Loral below.) In the second Vodafone
transaction, which closed on August 19, 2002, Globalstar acquired the United
States and Caribbean service provider and gateway operations from Vodafone at a
cost of $1.9 million. Vodafone is exiting the Globalstar business and has
transferred its service provider interests in Australia and Mexico to third
parties.

     TE.SA.M. provided Globalstar service through gateways in France, Turkey,
Venezuela, Argentina, and Peru. TE.SA.M. is in the process of liquidating and
has exited the Globalstar business. On July 2, 2002 Globalstar, through
Globalstar Corporation, acquired TE.SA.M.'s French gateway and back office
assets related to the provision of Globalstar services in Europe, TE.SA.M.'s
interest in Globalstar and TE.SA.M.'s remaining inventory of approximately
15,000 user terminals. Under the terms of the transaction, both Globalstar and
TE.SA.M. forgave all outstanding obligations between the parties and provided
mutual releases of liability. Also, Globalstar reimbursed TE.SA.M. for the cost
of operating the French gateway from March 1, 2002 through July 1, 2002 at a
cost of approximately 400,000 Euros. The French gateway was operational, but was
not producing revenues at the time of the purchase. Globalstar has restarted the
European business and is earning limited revenue from the French gateway. Local
purchasers in Turkey, Venezuela, Argentina, and Peru have purchased local
service provider operations from TE.SA.M. and have executed letter agreements
with Globalstar that define the terms under which they provide Globalstar
services.

     On December 30, 2002, the Bankruptcy Court approved a settlement agreement
among Globalstar Services Company, Inc. ("GSCI"), Globalstar, Globalstar
Vodafone Network Pty Ltd. Australia and Globalstar Australia Pty Ltd. Under this
settlement, Globalstar consented to the transfer by Vodafone Satellite Services
Limited ("VSSL") to Localstar of the service provider rights in Australia, and
Globalstar entered into a new service provider agreement with Localstar. VSSL
was the original authorized

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service provider for Australia and the operator of three gateways in that
country. In conjunction with this transaction, VSSL agreed to settle certain
pre-petition and post-petition debts with Globalstar. Globalstar received
payments totaling $1.7 million from Vodafone in January 2003.

     On March 25, 2003, Globalstar entered into a settlement and release
agreement with Elsacom S.p.A. ("Elsacom") and a gateway asset purchase agreement
(collectively, the "Elsacom Settlement") with a wholly owned subsidiary of
Elsacom. Elsacom is the primary Globalstar service provider in Central and
Eastern Europe, the operator of the gateway located in Avezzano, Italy and,
through its affiliate, Globalstar Northern Europe, the former operator of the
gateway located in Karkkila, Finland. Although Elsacom had defaulted on its
gateway contract obligations to Globalstar, Elsacom desired to continue
providing Globalstar service to its customers from Avezzano. Accordingly,
Globalstar and Elsacom agreed to negotiate a mutually acceptable plan for paying
certain of the debt, transferring the equipment in Finland to Globalstar and
maintaining Elsacom's service provider rights. Under the terms of the Elsacom
Settlement, Globalstar will receive cash payments totaling $2.4 million in two
installments to be completed by June 2003 and the release of all past payment
obligations due to Elsacom in exchange for liquidation of the gateway contract
payments due to Globalstar from Elsacom. Additionally, Globalstar will retain
title to the gateway equipment installed in Finland. Globalstar intends to
dismantle the Finland gateway and to place the removable parts, which contain
most of the gateway's electronics, in storage for future deployment.

DEVELOPMENTS RELATING TO LORAL AND QUALCOMM

     In order to preserve cash during 2001, Globalstar ceased its payments for
services performed by Space Systems/Loral, Inc. ("SS/L") and QUALCOMM
Incorporated ("QUALCOMM").

     On March 14, 2003, Loral, the Creditors' Committee and Globalstar signed a
term sheet outlining the terms and conditions of a comprehensive settlement of
certain contested matters and a release of claims against Loral (the "Loral
Settlement"). Also on March 14, 2003, Globalstar and the Creditors' Committee
filed a joint motion under Bankruptcy Rule 9019 for an order approving the Loral
Settlement with the Bankruptcy Court. The parties agreed to use their reasonable
best efforts to execute a definitive agreement based on the term sheet by March
26, 2003.

     The Loral Settlement, which will be effected in connection with
Globalstar's restructuring and emergence from bankruptcy, provides the
following, among other items: (1) Loral's subsidiary, SS/L, would transfer to
Globalstar title "as is" to the eight spare satellites that are currently held
in storage by SS/L; (2) certain strategic agreements under which Loral holds
exclusive rights to provide Globalstar services to defense and national security
agencies and in the aviation market would terminate, and a new joint venture
company (to be owned 75% by Globalstar and 25% by Loral) would be formed to
pursue the defense and national security business; (3) L/Q Licensee, a
subsidiary of LQP, would transfer the Federal Communications Commission license
held by it to Globalstar or LQP would transfer operations of L/Q Licensee to
Globalstar; (4) Loral would convey its interests in the Canadian service
provider operations to Globalstar; (5) certain Loral service provider financial
obligations would be settled through a reduction in debt obligations due from
Globalstar Canada Co. ("GCC") to Loral and other financial obligations involving
a Russian joint venture would be restructured; (6) Loral's general unsecured
claims as a creditor in the Globalstar bankruptcy proceeding would be quantified
and allowed; (7) SS/L would return to Globalstar unused advance prepayments
related to the 2 GHz satellite contract ; (8) Loral's designees would resign
from Globalstar's General Partners Committee; and (9) third party claims against
Loral, certain Loral affiliates and all six members of Globalstar's General
Partners' Committee, as provided in the term sheet, would be released. The
motion supporting the Loral Settlement is expected to be heard by the Bankruptcy
Court on April 9, 2003.

     Globalstar and QUALCOMM previously contracted for the design and
development of the Globalstar ground segment pursuant to the Development
Contract dated March 18, 1994 (the "Development Contract") and contracted for
the manufacture, deployment and maintenance of Globalstar Gateways via the
Production Gateway Purchase Agreement dated April 30, 1997 (the "Production
Agreement").

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QUALCOMM purported to terminate the Development Contract and the Production
Agreement for non-payment of invoices on November 29, 2001 and on December 20,
2001 respectively. Globalstar has been in discussions with QUALCOMM regarding a
support agreement that will allow it to utilize the QUALCOMM expertise necessary
to maintain the system. There can be no assurances that Globalstar and QUALCOMM
will renegotiate the mutually satisfactory terms required to secure QUALCOMM's
support to Globalstar's system operations.

BUSINESS SEGMENT

     Globalstar operates in one industry segment, satellite telecommunications,
providing global mobile and fixed wireless voice and data services.

BUSINESS

OVERVIEW

     Globalstar was founded in 1993 by subsidiaries of Loral Corporation, a
predecessor of Loral, and QUALCOMM. Loral is one of the world's leading
satellite communications companies with activities in satellite-based
communications services and satellite manufacturing. QUALCOMM is the leading
developer and supplier of code division multiple access ("CDMA") digital
wireless telecommunications technology. Globalstar is a Delaware limited
partnership whose managing general partner is LQSS; the general partner of LQSS
is LQP, a Delaware limited partnership, the partners of which are subsidiaries
of Loral and QUALCOMM. The managing general partner of LQP is Loral General
Partner, Inc., a subsidiary of Loral. As of December 31, 2002, Loral owned,
directly or indirectly, approximately 38.2% of Globalstar. On February 15, 2002,
LQSS, LQP, Loral General Partner, Inc. and another Loral subsidiary that is a
general partner of LQP also filed voluntary petitions under Chapter 11 of the
Bankruptcy Code in the Bankruptcy Court (Case Nos. 02-10506, 02-10507, and
02-10508).

     Globalstar owns and operates a satellite constellation that forms the
backbone of a global telecommunications network designed to serve virtually
every populated area of the world. Globalstar's worldwide, low-earth orbit
("LEO") satellite-based digital telecommunications system (the "Globalstar
System"), which uses QUALCOMM's patented CDMA technology, provides high-quality
mobile and fixed telephone service to customers who live, work or travel beyond
the reach of adequately developed communications networks.

     The Globalstar System is designed to offer a cost-effective communications
solution for areas underserved or unserved by existing telecommunications
infrastructures. Globalstar mobile phones are simple to use -- just like
ordinary cellular telephones -- and are among the smallest, lightest and least
expensive satellite phones currently available. These phones are multimode,
functioning as cellular phones where cellular service is available and as
satellite phones where cellular service is not available. Globalstar phones
provide this multimode capability without separate modules or plug-ins.
Globalstar pay phones and fixed wireless phones for business and residential use
provide basic telephone service in rural villages and at remote industrial and
residential sites.

     Globalstar phones have familiar features such as phone book, voice-mail,
short messaging service, asynchronous data service, and, in some service areas,
call forwarding and internet services through packet data switching.
Globalstar's utilization of QUALCOMM's CDMA technology will enable it to swiftly
adopt future improvements as wireless technology evolves. In addition, because
the intelligence of the Globalstar System is located on the ground rather than
in satellites, future enhancements are easily implemented.

     Globalstar currently provides satellite-based telephony and narrow band
data services through 24 gateways. These gateways provide coverage to 133
countries, including all of North America and South America (excluding
northwestern Alaska and portions of Canada above 70 degrees North latitude),
Europe, Australia, Russia, most of the Middle East, Central Asia, China and
South Korea. For the year

                                        5


ended December 31, 2002, Globalstar's recorded consolidated revenues of $24.6
million and provided 34.2 million minutes of billable telecommunication
services. Globalstar's revenues during 2002 were not sufficient to fund
Globalstar's operations.

     In late 2002, Globalstar revised the method used to estimate its global
subscribers in order to eliminate roamers from cellular networks being counted
as regular customers. At December 31, 2002, Globalstar estimates it had 77,000
subscribers worldwide, which is slightly less than the number of subscribers
estimated under the previous method. Using the revised method, the number of
subscribers at December 31, 2002 represents an increase of approximately 36%
over the December 31, 2001 estimate of 56,800. The subscriber level estimates do
not change previously reported results of operations.

SALES AND MARKETING ACTIVITIES

     Globalstar's current marketing program, implemented through its United
States, Canadian and French subsidiaries, targets vertical markets and large
corporate accounts within vertical markets. New applications, such as simplex
data services for asset tracking and telemetry, have enhanced conventional
marketing efforts and opened new business opportunities.

     Globalstar's new "bundled" pricing plans in the United States and Canada,
first announced in August 2002, have significantly reduced the effective per
minute price paid by subscribers. A subscriber can effectively pay as little as
$0.17 per minute with a high volume usage plan. These plans are applicable to
both voice and data service. Globalstar's preliminary analysis of the results of
these plans reveals an increase in usage, growth in the subscriber base and an
increase in the monthly average revenue per subscriber since the plans were
introduced in North America. Globalstar has encouraged its service providers
outside of North America to implement similar "bundled" plans in their service
areas.

     Because Globalstar provides services globally, service providers must adapt
their marketing efforts to the needs, characteristics and opportunities within
each of their targeted markets. They have identified a number of key segments of
the addressable marketplace characterized by early expressions of interest in
obtaining the service and by the potential for heavy usage of satellite airtime.
In addition, Globalstar and its service providers are focused on global accounts
that would allow a corporate customer to pay a uniform price for Globalstar
services in multiple locations covered by multiple gateways. Key market segments
include:

          Government.  Globalstar phones and service have been used by United
     States government agencies in peacekeeping operations in the Balkans,
     federal accident investigations, public safety and resource management and
     in emergency search and rescue operations. Globalstar service has been used
     on United States Coast Guard helicopters, by NASA for sending rocket
     telemetry test data and for Remote Piloted Vehicle control research for the
     United States Navy. For the non-military secure communications market,
     Globalstar has introduced two products: the CopyTele DCS-1200 Desktop/
     Handset for voice and data and the CopyTele DCS-1400 miniaturized version
     for voice only.

          Public Safety.  Globalstar has concentrated its marketing efforts on
     agencies responsible for emergencies such as fire and police departments,
     hospitals and emergency response teams. These markets will continue to
     expand in 2003 and additional markets, such as national border patrol and
     aviation safety, will also be targeted. As an example of Globalstar's
     public safety efforts, the 2002 Winter Olympic Games required increased
     levels of security, and over 500 Globalstar phones were provided in support
     of federal, state and local officials operating in and around Salt Lake
     City.

          Maritime.  Globalstar has extended gateway coverage areas to maritime
     customers crossing the North Atlantic, as well as those operating in the
     coastal waters surrounding North America and South America, Europe,
     northeastern Asia and the Middle East. Fishermen value the attractive
     price, coverage, security and privacy offered by a Globalstar call versus
     conventional VHF radio or satellite communications systems. Based on
     recently collected call usage data, approximately 25% of Globalstar's
     current traffic volume is generated from maritime usage, and such usage
     continues to grow.

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          Globalstar and Seatel developed the MCM-8, a multi-channel packet data
     modem capable of 64 kilobits per second ("kbps") in 2001. In 2002, another
     product, the MCM-3, a 28.8 kbps terminal capable of both voice and data
     transmission, was launched by WaveCall, a Seatel affiliate.

          Transportation.  Long distance drivers have a continuous need to
     contact dispatchers and destinations, to obtain information on, and react
     to, changing business demands and weather conditions and simply to stay in
     touch with their families and friends. In certain countries, trains and
     buses are being equipped with Globalstar phones to provide communication
     abilities to their passengers traveling through remote areas.

          Natural Resources.  Globalstar has been targeting resource industries,
     such as oil and gas, mining and forestry, as well as the remote communities
     serving these industries. Oil and gas exploration customers operating in
     the Gulf of Mexico, off the coast of Brazil, in the far east of Russia and
     in the Middle East were early target markets. In 2002, Globalstar
     introduced new data products targeted at these markets.

          Outdoor Enthusiasts.  Globalstar service providers have negotiated
     agreements with specialist resellers in an effort to make Globalstar phones
     part of the basic equipment of wilderness guides and outfitters, addressing
     the growing market for adventure and eco-tourism, as well as the hunting,
     fishing and mountaineering markets.

          Agribusiness.  Large plantations, ranches and other agricultural
     businesses in countries such as Australia, Brazil and Argentina typically
     lie beyond the range of current or planned cellular service. Workers at
     these locations find Globalstar service valuable to coordinate their
     operations.

          Utilities.  Utility companies worldwide need to maintain transmission
     lines across long distances in territories that are often vast and remote.
     Globalstar voice and data features support both on-site and remote
     monitoring of distribution facilities and links. Major utility companies,
     such as ENEL (Ente Nazionale per l'Energia Elettrica) in Italy, use
     Globalstar's service for their maintenance staff in remote areas.

          Aeronautical.  Globalstar is working with QUALCOMM, Geneva Aviation,
     Northern Airborne Technologies and ARNAV Systems, Inc. to make 9.6 kbps
     voice and data products commercially available for installation and use in
     general aviation aircraft. These products will be capable of providing
     cockpit and cabin voice and data communication, as well as integrated data
     services such as weather and graphical flight plan displays.

          Rural Telephony.  The use of fixed terminals for rural telephony is an
     expanding market segment for Globalstar. Initial service was developed
     through prepaid payphone services in remote villages. Globalstar rural
     payphone services had been deployed in several countries, predominately in
     North Africa, South America and Central America. During 2003, Globalstar
     expects to see these payphone services introduced into Eastern Europe,
     Russia, Brazil and the Middle East. In March 2003, Globalstar introduced a
     lower cost fixed terminal designed to penetrate the rural telephony and
     public safety markets in North America.

          Data.  Globalstar has continued deployment of packet and asynchronous
     data service throughout the world. Asynchronous data services are available
     on all Globalstar gateways, and packet data is being deployed progressively
     with commercial service available in North America, Brazil, Peru and Italy.
     During 2003, subject to QUALCOMM's support and cooperation, Globalstar
     plans to roll out packet data services in all of its gateways.

          Globalstar has continued its development of the data market and has
     positioned itself for entry into a number of major segments including fixed
     asset monitoring, mobile asset tracking and telematics. Globalstar also
     entered into a development and production agreement for a low speed simplex
     modem with Aero Astro, an independent development company. This modem,
     which became commercially available in March 2003, is priced below $100 to
     value added resellers in large quantities.

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THE GLOBALSTAR SYSTEM

     The Globalstar System consists of a satellite constellation, owned by
Globalstar, a ground segment known as gateways, currently owned and operated
primarily by Globalstar's service providers, and telephones, owned or leased by
subscribers.

     The Globalstar space segment consists of:

     - 52 low-earth-orbit satellites, including 44 of which are currently in
       revenue service, three failed satellites now serving as in-orbit
       testbeds, one in-plane spare at 1,414km, one in-orbit spare at the 920km
       phasing orbit, and three satellites that are out of service and
       undergoing diagnostic testing and recovery operations;

     - Eight additional on-ground spare satellites in storage held by SS/L,
       seven of which have completed production (see the discussion of the Loral
       Settlement above); and

     - Two state-of-the art satellite and network operations control centers in
       California.

     Satellite Constellation.  The deployment of six satellites in each of eight
orbital planes assures that two to four satellites are visible to each
subscriber at all times from any point on the earth's surface, other than the
extreme northern and southern latitudes. SS/L's patented system design works
with QUALCOMM's CDMA technology to permit dynamic selection of the strongest
signal available from all satellites in view, a technique Globalstar refers to
as path diversity, resulting in superior call clarity and a low incidence of
dropped calls. As the satellites and the user change positions, satellites are
added and dropped seamlessly from the call.

     Globalstar's technology design kept the satellites simple, with the
intelligence of the system accessible on the ground through the Globalstar
gateways and control centers. The Globalstar satellites use a traditional "bent
pipe" design, amplifying and reflecting received signals directly back to earth.

     Globalstar's full constellation has been launched and the satellites have,
in general, been performing well. However, since mid-March 2001 fifteen
satellites experienced anomalous behavior in the S-Band converter. Of these,
nine have been recovered and returned to service, three have been declared
failed (two of which were replaced by spares), and three are currently out of
service and undergoing recovery operations. Although recovery cannot be
guaranteed, the recovery period for those satellites returned to service has
ranged from two weeks to six months, occurring on average in approximately two
months.

     Gateways.  Globalstar satellites relay calls to earth through the
Globalstar gateways, which in turn connect the calls through the public
telephone network or any other wireline or wireless network. Gateways can also
be connected to the Internet to permit the transmission of Internet protocol
data over the satellites. Gateway facilities include three or four large
antennas that send and receive signals to and from the satellites, the
sophisticated call processing equipment that connects calls to the local public
telephone network or any other wireline or wireless network and the software
that implements the Globalstar System's features and supports billing. The
gateway equipment located at these facilities, except for "home location
registers" and certain other off-the-shelf communications equipment, was
designed and manufactured by QUALCOMM and its subcontractors.

     Twenty-six gateways are deployed, all but two of which (the South Africa
and Finland gateways) are operational. The gateway deployed in South Africa has
not yet received the regulatory approvals necessary for it to become
operational, and Elsacom, Globalstar's service provider in Italy, Northern
Europe and part of Eastern Europe, ceased operating its gateway in Karkkila,
Finland in May 2002. As part of the Elsacom Settlement, Globalstar has retained
title to the gateway equipment in Karkkila. (See the discussion of the Elsacom
settlement above). Twelve other gateways owned by Globalstar are in storage in
California and are available for sale and deployment to unserved areas of the
globe.

     Each gateway serves a large geographic area. For example, three gateways
together cover the United States and Canada from Anchorage to Florida and San
Diego to Newfoundland. The operational gateways

                                        8


provide coverage of approximately 68% of the world's land mass and approximately
18% of the world's bodies of water.

     Telephones.  Globalstar mobile phones are like ordinary cellular
telephones. They are simple to use and among the smallest, lightest and least
expensive satellite phones currently available. These phones are multimode,
functioning as satellite phones throughout the Globalstar service network and as
cellular phones where cellular service is available. Globalstar phones provide
this multimode capability without separate modules or plug-ins. Globalstar pay
phones and fixed wireless phones provide basic telephone service for both
business and residential use in rural villages and at remote industrial and
residential sites as well as for special applications customers requiring
back-up communications in an emergency such as the United States Department of
Homeland Security.

     Globalstar phones have familiar features such as phone books, voice-mail,
short messaging service, asynchronous data service and, in some service areas,
call forwarding and Internet services through packet data switching.
Globalstar's utilization of QUALCOMM's CDMA digital wireless telecommunications
technology will enable it to swiftly adopt future improvements as wireless
technology evolves. In addition, because the intelligence of the Globalstar
System is located on the ground, future enhancements can be implemented without
modification to Globalstar's satellite constellation.

     Two manufacturers, QUALCOMM and Telit Mobile Terminals S.p.A. ("Telit"),
produce mobile phones and car kits for Globalstar. QUALCOMM offers a tri-mode
unit that works on AMPS (the North American analog cellular standard) and CDMA
digital cellular networks, as well as on the Globalstar System. The QUALCOMM
phones are packet data-ready. The Telit phones support both the Globalstar
System and the digital cellular GSM protocol currently used throughout Europe
and in many other countries. QUALCOMM also produces a fixed telephone, called
fixed radio access unit or RAU, for business and residential use. These units
provide basic telephone service in rural villages, at remote industrial and
residential sites and on ships at sea. They may also be installed quickly in any
location as backup to existing wireline and wireless systems in case of natural
disasters and other emergencies that render such systems inoperable. The RAUs
can be configured as pay phones that accept tokens, debit cards and credit
cards. Contracts between Ericsson OMC Limited ("Ericsson") and Globalstar that
provided for the manufacture and delivery of both mobile and fixed phones were
terminated during 2001. However, Globalstar has Ericsson fixed access units in
storage that are available for sale.

     Service Providers.  In creating the Globalstar System, Globalstar selected
strategic partners whose marketing, operating and technical expertise were
expected to enhance Globalstar's capabilities. Many of Globalstar's strategic
partners are or were also Globalstar service providers. Under Globalstar's
agreements with these firms, they received exclusive rights to offer Globalstar
service within their assigned territories, with the right to retain their
exclusivity as long as they met minimum performance goals. Globalstar acts as a
wholesaler of capacity on its space segment to its service providers. In
connection with the implementation of its new business plan, Globalstar has
consolidated the operations of certain service providers into those of
Globalstar. Globalstar intends to restructure its business relationships with
the remaining independent service providers. (See the discussion of Globalstar's
New Business Plan and Related Transactions above.) Principal features of the new
relationships are expected to include the reduction or elimination of exclusive
rights and the imposition of consistent global roaming practices.

QUALITY OF SERVICE

     Call success rates for phones used in the system by an experienced operator
with a clear view of the sky should exceed 98% based on Globalstar's extensive
testing program. The actual average for January 2003 based on call data
processed through Globalstar's billing system was 83% for all phone types. In
Globalstar's highest traffic gateway, as the call volume has significantly
increased, the call success rate has climbed to 90%. Globalstar believes that
the lower system average is due to a substantial number of users attempting
calls in adverse environments and circumstances. Fixed phones, not unexpectedly,
had much higher success rates (average of 92%). An individual phone's actual
call success rate is highly dependent upon its use, with variables being the
physical surroundings (e.g., the presence of tall buildings or trees),

                                        9


location of the phone in the service area (e.g., a phone on the very edge of a
large coverage area, as opposed to closer to the gateway) and operator
experience. The system consistently demonstrates excellent voice quality. Single
calls lasting more than two days have been made to confirm the effectiveness of
the system's soft hand-off from satellite to satellite and the completeness of
the satellite coverage.

REGULATION

     United States FCC Regulation.  The Globalstar satellite constellation is
licensed by the United States Federal Communications Commission (the "FCC") as a
mobile satellite service ("MSS").

     Globalstar holds regulatory authorization for two pairs of frequencies on
its current system: user links (from the user to the satellites, and vice versa)
and feeder links (from the gateways to the satellites, and vice versa). The FCC
initially authorized the construction, launch and operation of the Globalstar
System on January 31, 1995 and assigned the 1610-1626.5/2483.5-2500 MHz bands of
the radio frequency spectrum for the user links. However, the FCC currently
restricts operation of the user uplink to the 1610-1621.35 MHz portion of the
band. The portion of the band between 1621.35 and 1626.5 MHz is used by the
Iridium System in competition with Globalstar. This license (the "FCC Big LEO
License") is held by an affiliate of Globalstar, L/Q Licensee, which has agreed
to use the FCC Big LEO License exclusively for the benefit of Globalstar. On
November 19, 1996, the FCC authorized L/Q Licensee to use feeder link
frequencies in the 5091-5250/6875-7055 MHz bands. As part of the Loral
Settlement, the FCC Big LEO License or ownership of L/Q Licensee would be
assigned to New Globalstar.

     Under the FCC's band plan for MSS in Globalstar's frequency bands,
Globalstar must share the frequencies in the United States with other licensed
operators of CDMA systems. The FCC initially licensed Odyssey(TM) Mobile
Satellite System, MCHI Mobile Communications Holdings, Inc. (Ellipso(TM) Mobile
Satellite System) and Constellation Communications Holdings, Inc. to share
Globalstar's band. However, each of these three has either turned its license in
or had its license revoked by the FCC. On January 30, 2003, the FCC opened a
rulemaking proceeding to consider whether the 1610-1626.5 MHz band should be
reassigned between Globalstar and Iridium and whether some portion of the
2483.5-2500 MHz band should be assigned to Iridium or to other terrestrial
wireless operators. The FCC will also consider whether these "Big LEO" bands
should be opened up for new satellite system applications. Globalstar intends to
contest any proposed reduction in its spectrum assignment vigorously. However,
there can be no assurance that Globalstar will be permitted to retain all of its
Big LEO spectrum.

     On July 17, 2001, the FCC granted Globalstar and seven other applicants
authorizations to construct, launch and operate MSS systems in the 2 GHz band,
subject to strict milestone requirements. Each applicant received a base
allocation of 3.5 MHz of paired spectrum with the opportunity to gain additional
spectrum upon launch of its system. Globalstar held this authorization directly.
Systems were required to be constructed in compliance with certain milestones,
the first of which was executing a non-contingent contract to construct the
system by July 17, 2002. Globalstar believes that it met this first milestone by
entering into a non-contingent contract with SS/L on July 16, 2002. Globalstar
requested the FCC to grant certain waivers of later milestones. On January 30,
2003, the FCC's International Bureau denied Globalstar's waivers and declared
the 2 GHz license to be null and void. Globalstar believes that this action by
the FCC's staff is inconsistent with the facts and the law and has requested the
full FCC to review and reverse it. Globalstar has also requested the full FCC to
stay the Bureau's decision pending review.

     The FCC Big LEO License only authorized the construction, launch and
operation of the Globalstar System's satellite constellation. Separate
authorizations were obtained from the FCC by affiliates of the former AirTouch
Satellite Services, later acquired by Vodafone, to operate gateways and
Globalstar phones in the United States. These affiliates, Globalstar USA, LLC
("GUSA") and Globalstar Caribbean Ltd., were acquired by a subsidiary of
Globalstar as of August 19, 2002, pursuant to an FCC authorization issued on
July 2, 2002. These acquisitions, along with the acquisition in December 2001 of
Vodafone's

                                        10


interest in the Canadian Globalstar service provider and the acquisition in July
2002 of TE.SA.M.'s French gateway and service provider business, were
accomplished in accordance with Globalstar's consolidation strategy discussed
above.

     In August 2001, the FCC issued Notices of Proposed Rulemaking in two
proceedings that affect (1) the amount of radio frequency spectrum available in
the future for MSS providers, including Globalstar, and (2) an MSS licensee's
ability to use its spectrum for ancillary terrestrial services ("ATC"). In the
first case, terrestrial wireless carriers asserted that they need more spectrum,
including the 2GHz band, for their third generation services. On January 30,
2003, the FCC issued decisions in both of these proceedings. In the first, the
FCC reassigned 30 MHz of MSS spectrum in the 2 GHz band for terrestrial wireless
use. In the second, the FCC allowed all MSS operators, including Globalstar, to
offer ATC in their assigned MSS spectrum subject to certain conditions. Assuming
that Globalstar succeeds in having its 2 GHz license reinstated, Globalstar does
not believe that the reduction in 2 GHz spectrum available for MSS will have a
materially adverse effect on Globalstar's future services. Globalstar is
currently evaluating whether and how to implement ATC in its Big LEO spectrum;
however, no final business decision is expected to be made pending completion of
Globalstar's restructuring.

     International Coordination.  The Globalstar System operates in frequencies
which were allocated on an international basis for MSS user links and MSS feeder
links. Globalstar is required to engage in international coordination procedures
with other proposed MSS systems under the aegis of the International
Telecommunications Union ("ITU"). Globalstar will also be required to coordinate
the use of its feeder links and any other foreign system that has similar plans.
Both a Russian and a Brazilian LEO MSS system have filed with the ITU their
intention to use the same feeder link spectrum as Globalstar. There can be no
assurance that such coordination will not adversely affect the use of these
bands by Globalstar.

     Pursuant to the Intelsat and Inmarsat treaties, international satellite
operators are required to demonstrate that they will not cause economic or
technical harm to Inmarsat or Intelsat and to coordinate with Intelsat and
Inmarsat under obligations imposed on United States satellite systems by
international treaties. Globalstar has successfully completed the required
coordination with both Intelsat and Inmarsat.

     Regulation of Service Providers.  In order to operate gateways, including
the user uplink frequency, the Globalstar service provider in each country is
required to obtain a license from that country's telecommunications authority.
In addition, the Globalstar service provider must enter into appropriate
interconnection and financial settlement agreements with local and interexchange
telecommunications providers. All of the 24 operating Globalstar gateways
currently in the field are licensed. A potential Globalstar service provider in
South Africa is attempting to secure a license to operate and to reactivate the
gateway in that country.

     United States International Traffic in Arms Regulations.  The United States
International Traffic in Arms Regulations under the United States Arms Export
Control Act authorize the President of the United States to control the export
and import of articles and services that can be used in the production of arms.
Among other things, these regulations limit the ability to export certain
articles and related technical data to certain nations. The scope of these
regulations is very broad and extends to certain spacecraft, associated ground
equipment, and technical data. Certain information involved in the performance
of Globalstar's operations falls within the scope of these regulations. As a
result, Globalstar may have to obtain an export authorization or restrict access
to that information by international companies that are Globalstar service
providers. Globalstar has received and expects to continue to receive export
licenses for its telemetry and control equipment located outside the United
States.

     Other Export Regulation.  Globalstar's operations are subject to certain
regulations of the United States Treasury Department's Office of Foreign Assets
Control (i.e., financial transactions) and the United States Commerce
Department's Bureau of Export Administration (i.e., export of gateways and
Globalstar phones).

                                        11


RESEARCH AND DEVELOPMENT

     Globalstar's Development Contract with QUALCOMM, which QUALCOMM purported
to terminate in November 2001, provided for QUALCOMM to perform certain
development tasks related to the Globalstar System. Globalstar performs certain
in-house engineering tasks that are classified as development costs. Total
development costs incurred for 2002, 2001, and 2000 were $1.9 million, $4.4
million, and $5.3 million, respectively. The lower figures for 2002 and 2001 are
attributable to Globalstar's having substantially completed initial development
and deployment of the Globalstar System and Globalstar's efforts to contain
spending.

PATENTS AND PROPRIETARY RIGHTS

     Globalstar's design and development efforts have yielded 50 patents issued
and 27 patents pending in the United States, as well as 32 patents issued and
more than 94 patents pending internationally for various aspects of
communication satellite system design, implementation and operation. The issued
patents cover, among other things, Globalstar's process of combining signals
received from multiple satellites to improve the signal received and minimize
call fading.

INTERNATIONAL OPERATIONS

     Globalstar earns the majority of its revenue from international operations.
For 2002, Globalstar earned $6.3 million in U.S. revenue and $18.3 million in
international revenue. At December 31, 2002, 2001, and 2000, Globalstar had
substantially all of its long-lived assets located in the United States with the
exception of its in-orbit satellites, its gateway and back office support
systems in France, and support equipment for telemetry and command equipment
located in various other countries. Globalstar also owns 50.1% of the Canadian
service provider operations based in Ontario, Canada. See "Certain Factors that
May Affect Future Results -- Globalstar faces currency risks and special risks
by doing business in developing markets" for a discussion of the risks related
to operating internationally.

EMPLOYEES

     As of December 31, 2002, Globalstar had 146 full-time employees and 2
part-time employees, none of whom is subject to any collective bargaining
agreement. Globalstar considers its employee relations to be satisfactory.

COMPETITION

     Iridium L.L.C. has emerged from bankruptcy with no debt under new ownership
and resumed commercial service in competition with Globalstar in April 2001. It
has secured long term contract from the United States Department of Defense. ICO
Global Communications (Holdings) Limited ("ICO") has also emerged from
bankruptcy, and is expected to complete its system and compete with Globalstar
in the future.

     Existing MSS systems, including those of Mobile Satellite Ventures
(formerly Motient and American Mobile Satellite Corporation) and Inmarsat, and
recently developed systems, including those of ACeS and Thuraya Satellite
Communications Company, also provide competing service on a regional basis at
potentially lower costs.

                 CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS

     This annual report on Form 10-K contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). In addition, from time to time, Globalstar or GTL or their
representatives have made or may make forward-looking statements, orally or in
writing. They can be identified by the use of forward-looking words such as
"believes", "expects", "plans", "may", "will", "should", or "anticipates" or
their negatives or other variations of these words or other comparable words,

                                        12


or by discussions of strategy that involve risks and uncertainties. Such
forward-looking statements may be included in, but are not limited to, various
filings made by Globalstar or GTL with the Securities and Exchange Commission,
press releases or oral statements made by or with the approval of an authorized
executive officer of Globalstar or GTL. Globalstar warns you that
forward-looking statements are only predictions. Actual events or results may
differ materially as a result of risks that Globalstar faces, including those
presented below. The following are representative of factors that could affect
the outcome of the forward-looking statements.

GLOBALSTAR FILED FOR BANKRUPTCY PROTECTION ON FEBRUARY 15, 2002; GTL'S EQUITY
INTEREST IN GLOBALSTAR WILL LIKELY BE ELIMINATED, OR AT BEST, SEVERELY DILUTED,
IN WHICH EVENT IT WILL HAVE LITTLE OR NO VALUE.

     Globalstar and certain of its subsidiaries filed petitions under Chapter 11
of the Bankruptcy Code on February 15, 2002. On February 20, 2003, the
Bankruptcy Court approved certain auction procedures intended to enable
Globalstar to conclude its search for an investor to fund its restructuring and
exit from bankruptcy. However, no assurances can be given as to whether the
auction process will ultimately result in a successful reorganization of
Globalstar. It is very likely that in any financial restructuring, GTL's equity
interest, along with the interests of Globalstar's other partners, would be
eliminated.

GLOBALSTAR HAS LIMITED CASH TO FUND ITS OPERATIONS.

     The $15.3 million cash on hand at December 31, 2002 and the anticipated
revenue from operations are insufficient to fund Globalstar's operations.
Globalstar will require additional financing to sustain its current operations
until breakeven cash flow is achieved. Globalstar will likely require debtor in
possession financing, beyond the $10 million available under the DIP Facility,
to sustain its operations through the conclusion of its bankruptcy case. There
can be no assurance that a successful restructuring will be completed and that
additional financing will be available on terms acceptable to Globalstar, if at
all. If Globalstar is unable to obtain additional financing, it will likely
cease to operate.

GLOBALSTAR HAS DEFAULTED ON CERTAIN DEBT PAYMENTS.

     On January 16, 2001, Globalstar suspended indefinitely principal and
interest payments on its funded debt and dividend payments on its 8% RPPIs and
9% RPPIs in order to conserve cash for operations. Non-payment of interest on
Globalstar's debt instruments, credit facility and vendor financing agreements
when due, and continuance of such non-payment beyond the applicable grace
periods, constitute "events of default" under the terms of each of those debt
instruments. Events of default have occurred under Globalstar's $500 million
credit facility, its vendor financing facility with QUALCOMM, and its 11 3/8%
senior notes due February 15, 2004, its 11 1/4% senior notes due June 15, 2004,
its 10 3/4% senior notes due November 1, 2004, and its 11 1/2% senior notes due
June 1, 2005 (collectively, the "Senior Notes").

     In addition, as a result of Globalstar's bankruptcy petition on February
15, 2002, other debt obligations of Globalstar were accelerated and became
immediately due and payable. Claims in respect of these obligations are
unsecured claims in the bankruptcy proceeding.

THE RATE OF GROWTH FOR THE SERVICE HAS NOT BEEN SUFFICIENT TO SUSTAIN
GLOBALSTAR'S COST OF OPERATIONS.

     Low earth orbit satellite telecommunications systems are an immature
business sector that has not yet achieved commercial success in the marketplace.
Globalstar commenced commercial service in early 2000 but had acquired only
approximately 77,000 commercial subscribers by December 31, 2002, too few to
generate sufficient revenue to cover Globalstar's operating costs and service
its debt. By announcing a financial restructuring and filing for bankruptcy
protection on February 15, 2002, Globalstar became vulnerable to additional
risks, namely, that potential subscribers may defer subscribing for fear that
Globalstar will cease operating in the near future, and that potential
investors, partners and service providers would withhold investment because of
Globalstar's uncertain future. If Globalstar is unable to restructure its debt
obligations in bankruptcy, or ultimately generate positive additional cash flows
from operations, Globalstar is unlikely to survive.

                                        13


GLOBALSTAR MAY BE REQUIRED TO WITHHOLD TAX ON INCOME RESULTING FROM THE
CANCELLATION OF DEBT.

     Any plan of reorganization would likely involve the cancellation of debt in
exchange for equity. The cancellation of debt will give rise to considerable
taxable income that will be allocable to the partners of Globalstar. Under a
certain interpretation of Section 1446 of the Internal Revenue Code of 1986, as
amended, Globalstar may be obligated to pay a 35% withholding tax on all income
allocated to the foreign partners even if they do not receive a cash
distribution. Globalstar believes the imposition of the withholding tax may have
the effect of diverting its assets from its creditors to its foreign partners in
contravention of bankruptcy law. Globalstar expects to enter into an agreement
with the United States Internal Revenue Service pursuant to which, based upon
certain representations and satisfaction of certain terms and conditions,
Globalstar's total withholding obligation on this taxable income will be
significantly reduced. However, there can be no assurances such an agreement
will be reached. Failure to successfully implement such an agreement or
otherwise resolve this tax issue may adversely impact Globalstar's ability to
have a plan of reorganization confirmed.

GLOBALSTAR DEPENDS ON SERVICE PROVIDERS TO MARKET ITS SERVICE AND IMPLEMENT
IMPORTANT PARTS OF ITS SYSTEM.

     Until relatively recently, Globalstar depended entirely on unaffiliated
service providers to purchase, install and operate gateway equipment, to sell
phones and to market Globalstar service in each country where the service
provider holds exclusive rights. Not all of these service providers have been
successful, and in some countries they have not initiated service according to
their schedules or sold as much usage as they originally anticipated. Globalstar
service providers are generally not earning revenues sufficient to fund their
operating costs. Globalstar has implemented its consolidation strategy and
intends to revise its business relationship with the service providers that are
not consolidated. Globalstar believes that the consolidation of certain service
providers completed during 2001 and 2002, and the possible consolidation of
remaining independent service providers contemplated by Globalstar's new
business plan, will increase Globalstar's operating efficiencies and provide for
improved global service coordination. Globalstar has limited experience in
offering Globalstar services at the retail level and may encounter unforeseen
difficulties in assuming retail service provider operations. No assurance can be
given that the consolidation strategy will be successful or that such
efficiencies will be realized over the longer term.

     Globalstar has been unable to find suitable new or replacement service
providers for several important regions and countries, including South Africa,
India, Malaysia and Indonesia, the Philippines and other parts of Southeast
Asia. Globalstar has also not been able to find purchasers for gateways, which
were ordered and later canceled. Globalstar's inability to offer service in
these areas ultimately reduces overall demand for its service and undermines its
value for potential users who require global service or service in Africa,
Southeast Asia and the Indian subcontinent. In addition to the lack of global
service availability, roaming is not yet available in certain countries because
the affected service providers have been unable to date to reach business
arrangements with one another and conclude roaming testing.

     While the assets Globalstar acquired from TE.SA.M. in July 2002 are
operational, TE.SA.M. ceased operating its billing systems, and, therefore,
generating revenue, in Western Europe and Northern Africa in late 2001.
Globalstar has recently reinitiated commercial operations of the Western
European Globalstar service, including distribution networks, billing and
customer care operations. There can be no assurance that TE.SA.M.'s former
customers will continue their subscriptions on the Globalstar network or that
Globalstar's Western European operations will provide revenue sufficient to
cover its cost of operations.

GLOBALSTAR'S CONSOLIDATION OF CERTAIN SERVICE PROVIDERS MIGHT NOT BRING
EFFICIENCIES TO OPERATIONS.

     While Globalstar believes that the consolidation of certain service
providers with Globalstar will increase operating efficiencies and provide for
improved global service coordination, there can be no assurance that such
efficiencies will be realized. (See the discussion of Globalstar's New Business
Plan and Related Transactions above.)

                                        14


GLOBALSTAR IS DEPENDENT ON KEY VENDORS.

     Globalstar is dependent on QUALCOMM for gateway hardware and software, on
QUALCOMM as the exclusive manufacturer of phones using the IS-41 CDMA North
American standard, and on Telit for the manufacture of GSM dual-mode phones.
Ericsson has discontinued manufacturing Globalstar products, and there is no
assurance that QUALCOMM or Telit will not choose to terminate its business
relationship with Globalstar. If either does, Globalstar may not be able to find
a replacement. Even if Globalstar does find a replacement, there may be a
substantial period of time in which its products are not available.

     In late-2001 QUALCOMM purported to terminate its Development Contract with
Globalstar. Globalstar has been in discussions with QUALCOMM regarding a follow
on agreement that will allow it to utilize the QUALCOMM expertise necessary to
maintain the system. There can be no assurances that Globalstar and QUALCOMM
will successfully negotiate mutually satisfactory terms required to secure
QUALCOMM's support to Globalstar's system operations. QUALCOMM has substantially
reduced its staff assigned to Globalstar and is requesting advance payments or
deposits for current and future work.

     Globalstar is currently experiencing shortages of QUALCOMM car kits and
fixed radio access unit or RAU. QUALCOMM has restarted production of these
units, but its current production capacity is limited, and components required
to build the units as currently designed may not be available for future
production. There can be no assurance that Globalstar will have sufficient
QUALCOMM car kits and RAU units to meet anticipated demand for those products
without incurring substantial redesign and inventory costs.

     Telit is itself restructuring in Italy. There can be no assurance at this
time that Telit will continue as a going concern and will continue to
manufacture products for the Globalstar System.

     SS/L completed production of seven of the eight spare satellites. All eight
are in storage in California. Title to those satellites, which is currently held
by SS/L, is expected to be transferred to Globalstar as part of the Loral
Settlement discussed above. However, there can be no assurances that the Loral
Settlement will ultimately be effected.

GTL WILL LIKELY BE UNABLE TO FUND MANDATORY REDEMPTION REQUIREMENTS OF 8% AND 9%
CONVERTIBLE REDEEMABLE PREFERRED STOCK.

     GTL's 8% convertible redeemable preferred stock ("8% Preferred Stock") and
9% convertible redeemable preferred stock ("9% Preferred Stock") have mandatory
redemption dates in 2011. Under the terms of the mandatory redemption, GTL may
make payments to the holders in either cash or common stock or a combination
thereof. Based upon the price of GTL's common stock at December 31, 2002, GTL
has not authorized a sufficient number of shares of common stock to effect
payment in common stock. Accordingly, as of December 31, 2002, GTL classified
$202,865,000 of the 8% and 9% Preferred Stock outside the shareholders' deficit
section of the balance sheet based on GTL's average common stock price in the
10-day period preceding December 31, 2002 (approximately $0.06). The number of
shares of GTL common stock that may be issued on the mandatory redemption date
will depend on factors at the redemption date including the price of GTL's
common stock and the number of shares of 8% Preferred Stock 9% Preferred Stock
outstanding at the time of the redemption. The amount of the 8% Preferred Stock
and 9% Preferred Stock classified outside the shareholders' deficit section will
vary in future periods depending on these variables.

GTL HAS BEEN DE-LISTED BY THE NASDAQ NATIONAL MARKET.

     On June 14, 2001, GTL's listing was transferred to The NASDAQ SmallCap
Market. This change, while still permitting public trading of GTL's shares,
reduced their liquidity and may also have had an adverse effect on their trading
value. Since December 12, 2001, GTL has traded on the Nasdaq OTC Bulletin Board
under the symbol GSTRF.OB. There can be no assurance that there will be any
future trading market for the GTL common stock.

                                        15


LOCKHEED MARTIN IS DISPUTING GLOBALSTAR'S RIGHT TO ISSUE IT A $150 MILLION NOTE
IN SATISFACTION OF PAYMENTS MADE UNDER A GUARANTY.

     On June 30, 2000, Globalstar's $250 million credit facility with The Chase
Manhattan Bank became due and was repaid in full by its guarantors, including
Lockheed Martin Corporation. Pursuant to the relevant agreements, Globalstar
issued to all the guarantors three-year notes in proportion to the principal
amount of the credit facility guaranteed. Lockheed Martin, however, rejected the
notes it received and instead requested that Globalstar issue new securities
with additional rights and enhanced value without waiving its claim that it is
entitled to receive an immediate cash reimbursement by Globalstar of its $150
million payment to the bank lenders. Globalstar disputes Lockheed Martin's
interpretation of the relevant agreements. If the dispute is not resolved,
Globalstar cannot be sure that a court would agree with Globalstar's
interpretation of the agreements. Management believes, however, that a court
would agree with Globalstar's interpretation of the relevant agreements.

GLOBALSTAR'S SATELLITES HAVE A LIMITED USEFUL LIFE AND MAY FAIL PREMATURELY.

     The Globalstar System has performed well, in general. The satellites in
orbit have certain redundant systems in case of failure. However, in-orbit
failure may result from various causes, including:

     - component failure;

     - loss of power or fuel;

     - inability to control positioning of the satellite;

     - solar and other astronomical events; and

     - space debris.

     Repair of satellites in space is not feasible. Factors that affect the
useful lives of Globalstar's satellites include the quality of construction,
gradual degradation of solar panels and the durability of components. Random
failure of satellite components may result in damage to or loss of a satellite
before the end of its expected life. Globalstar has not insured its satellites
against in-orbit failures.

     Since mid-March 2001, fifteen satellites experienced anomalous behavior in
the S-Band converter. Of these, nine have been recovered and returned to
service, three have been declared failed (two of which were replaced by spares),
and three are currently out of service and undergoing recovery operations.
Although recovery cannot be guaranteed, the recovery period for those satellites
returned to service has ranged from two weeks to six months, occurring on
average in approximately two months. If Globalstar is unable to recover those
satellites currently undergoing recovery operations or any satellites that
experienced anomolous behavior in the future are not recovered, Globalstar's
results of operations may be materially adversely affected.

GLOBALSTAR FACES CURRENCY RISKS AND SPECIAL RISKS BY DOING BUSINESS IN
DEVELOPING MARKETS.

     Based on business operations in 2002, in which Globalstar earned about 74%
of its revenue internationally, it expects that most of its business in the
future will be conducted outside the United States. International operations are
subject to changes in domestic and foreign government regulations and
telecommunications standards, tariffs or taxes and other trade barriers.
Political, economic or social instability or other developments, including
currency fluctuations, could also adversely affect Globalstar's operations. In
addition, Globalstar's contracts may be governed by international law or
enforceable only in foreign jurisdictions. As a result, Globalstar may find it
difficult to enforce its rights under these agreements if there is a dispute.

     Globalstar's largest potential markets are in developing countries or
regions that are substantially underserved and are not expected to be served by
existing telecommunications systems. Developing countries are more likely than
industrialized countries to experience market, currency and interest
fluctuations and may have higher inflation. In addition, these countries present
risks relating to government

                                        16


policy, price and wage, exchange control, tax related and social instability,
expropriation and other economic, political and diplomatic conditions.

     The limited availability of United States currency in some local markets
may prevent a service provider from making payments in United States dollars. In
addition, exchange rate fluctuations may affect Globalstar's ability to control
the prices charged for its services.

GLOBALSTAR'S BUSINESS IS REGULATED, CAUSING UNCERTAINTY AND ADDITIONAL COSTS.

     Globalstar's operations are and will continue to be subject to United
States and international regulation. Globalstar's service providers must be
authorized in each of the markets in which they intend to provide service.
Globalstar and its service providers may not be able to obtain or retain all
regulatory approvals needed for operations. For example, Vodafone's affiliate,
Globalstar Southern Africa, has not received a license from the government
although its gateway has been operational for more than three years. Regulatory
changes, such as those resulting from judicial decisions and/or adoption of
treaties, legislation or regulation, in countries where Globalstar intends to
operate, may also significantly affect Globalstar's business.

     See "BUSINESS, Regulation", above for a general description of Globalstar's
regulatory environment and a discussion of certain recent actions by the FCC
that could materially impact Globalstar's future operations.

GLOBALSTAR'S 2 GHZ LICENSE MAY BE NULL AND VOID.

     On July 17, 2001, the FCC granted Globalstar and seven other applicants
authorizations to construct, launch and operate MSS systems in the 2 GHz band,
subject to strict milestone requirements. Each applicant received a base
allocation of 3.5 MHz of paired spectrum with the opportunity to gain additional
spectrum upon launch of its system. Globalstar held this authorization directly.
Systems were required to be constructed in compliance with certain milestones,
the first of which was executing a non-contingent contract to construct the
system by July 17, 2002. Globalstar believes that it met this first milestone by
entering into a non-contingent contract with SS/L on July 16, 2002. Globalstar
requested the FCC to grant certain waivers of later milestones. On January 30,
2003, the FCC's International Bureau denied Globalstar's waivers and declared
the 2 GHz license to be null and void. Globalstar believes that this action by
the FCC's staff is inconsistent with the facts and the law and has requested the
full FCC to review and reverse it. Globalstar has also requested the full FCC to
stay the International Bureau's decision pending review. However, there can be
no assurance that the FCC will ultimately overturn the International Bureau's
decision and reinstate Globalstar's 2GHz license.

     In August 2001, the FCC issued Notices of Proposed Rulemaking in two
proceedings that affect (1) the amount of radio frequency spectrum available in
the future for MSS, including Globalstar and (2) an MSS licensee's ability to
use its spectrum for ATC. In the first case, terrestrial wireless carriers
asserted that they need more spectrum, including the 2GHz band for their third
generation services. On January 30, 2003, the FCC issued decisions in both of
these proceedings. In the first, the FCC reassigned 30 MHz of MSS spectrum in
the 2 GHz band for terrestrial wireless use. In the second, the FCC allowed all
MSS operators, including Globalstar, to offer ATC in their assigned MSS spectrum
subject to certain conditions. Assuming that Globalstar succeeds in having its 2
GHz license reinstated, Globalstar does not believe that the reduction in 2 GHz
spectrum available for MSS will have a materially adverse effect on Globalstar's
future services. Globalstar is currently evaluating whether and how to implement
ATC in its Big LEO spectrum; however, no final business decision will be made
pending completion of Globalstar's restructuring.

GLOBALSTAR MAY HAVE ITS BIG LEO SPECTRUM ALLOCATION REDUCED.

     Under the FCC's band plan for MSS in Globalstar's frequency bands,
Globalstar must share the frequencies in the United States with other licensed
operators of CDMA systems. The FCC initially licensed Odyssey(TM) Mobile
Satellite System, MCHI Mobile Communications Holdings, Inc. (Ellipso(TM)

                                        17


Mobile Satellite System) and Constellation Communications Holdings, Inc. to
share Globalstar's band. However, each of these three has either turned its
license in or had its license revoked by the FCC. On January 30, 2003, the FCC
opened a rulemaking proceeding to consider whether the 1610-1626.5 MHz band
should be reallocated between Globalstar and Iridium and whether some portion of
the 2483.5-2500 MHz band should be assigned to Iridium or to other terrestrial
wireless operators. The FCC will also consider whether these "Big LEO" bands
should be opened up for new satellite system applications. Globalstar intends to
contest any proposed reduction in its spectrum assignment vigorously. There can
be no assurance that Globalstar will be permitted to retain all of its Big LEO
spectrum.

GLOBALSTAR FACES INTENSE COMPETITION FROM BOTH DIRECT AND INDIRECT COMPETITORS,
AND ADDITIONAL DIRECT COMPETITORS PLAN TO ENTER THE MARKET IN THE FUTURE.

     Iridium L.L.C. ("Iridium") has emerged from bankruptcy with no debt under
new ownership and resumed commercial service in competition with Globalstar in
April 2001. It has secured a long-term contract from the United States
Department of Defense. ICO Global Communications has also emerged from
bankruptcy, and is expected to complete its system and compete with Globalstar
in the future.

     Existing MSS systems, including those of Mobile Satellite Ventures
(formerly Motient and American Mobile Satellite Corporation) and Inmarsat, and
recently developed systems, including those of ACeS and Thuraya Satellite
Communications Company, also provide competing service on a regional basis at
potentially lower costs.

TECHNOLOGICAL ADVANCES AND A CONTINUING TREND TOWARD STRATEGIC ALLIANCES IN THE
TELECOMMUNICATIONS INDUSTRY COULD GIVE RISE TO SIGNIFICANT NEW COMPETITORS.

     Satellite-based telecommunications systems are characterized by high
up-front costs and relatively low operating costs. Several systems are being
proposed and, while the proponents of these systems believe that there will be
significant demand for their services, actual demand will not become known until
such systems are operational. If the capacity of Globalstar and competing
systems exceeds demand, price competition could be intense.

NEW TECHNOLOGIES AND THE EXPANSION OF LAND-BASED SYSTEMS MAY REDUCE DEMAND FOR
GLOBALSTAR'S SERVICE.

     Globalstar believes that the extension of land-based telecommunications
services to regions previously underserved or not served by wireline or cellular
services has reduced demand for Globalstar service in those regions. These
land-based telecommunications services have been built more quickly than
Globalstar anticipated; therefore, demand for Globalstar service is expected to
be reduced sooner than Globalstar assumed in formulating earlier business plans.
This development has been responsible, in part, for Globalstar's efforts in 2001
and 2002 to identify and sell into vertical markets and to deploy data products,
rather than focusing more resources on areas formerly underserved by terrestrial
systems. Globalstar may also face competition in the future from companies using
new technologies and new satellite systems. The space and communications
industries are subject to rapid advances and innovations in technology. New
technology could render the Globalstar System obsolete or less competitive by
satisfying consumer demand in more attractive ways or through the introduction
of incompatible standards. In addition, Globalstar depends on technologies
developed by third parties, and Globalstar cannot be certain that these
technologies will continue to be available to New Globalstar on a timely basis
or on commercially reasonable terms.

GLOBALSTAR COULD FACE LIABILITY BASED ON ALLEGED HEALTH RISKS.

     There has been adverse publicity concerning alleged health risks associated
with the use of portable hand-held telephones which have transmitting antennae.
Recent medical studies, however, have again failed to confirm such health risks.
In any event, because hand-held Globalstar telephones will use on average lower
power to transmit signals than traditional cellular telephones, Globalstar does
not believe that any new guidelines from the FCC, or any other regulatory
agency, will require any significant

                                        18


modifications of its system or of its hand-held telephones. Even so, Globalstar
cannot be certain that these guidelines, or any associated health issues, will
not have an adverse effect on Globalstar's business.

GLOBALSTAR RELIES ON KEY PERSONNEL.

     Globalstar must hire and retain highly qualified personnel to operate its
system and manage its business successfully. None of Globalstar's officers has
an employment contract with Globalstar, except that Mr. Olof Lundberg has a
written agreement to serve as chairman of Globalstar's General Partners'
Committee and chief executive officer of Globalstar. In addition, Globalstar
does not maintain "key man" life insurance. The departure of any of its
executives or other key employees could have an adverse effect on Globalstar's
business.

CERTAIN POTENTIAL CONFLICTS OF INTEREST COULD RESULT IN DECISIONS ADVERSE TO
GLOBALSTAR'S INTERESTS.

     Potential conflicts of interest include the following:

     - Globalstar partners, or their affiliates, are suppliers of the major
       parts of the Globalstar System, as well as retail service providers. They
       also manufacture the system elements which are sold to service providers
       and subscribers.

     - Globalstar is dependent upon technologies developed by Loral, QUALCOMM
       and others.

     - Partners and affiliates of Globalstar, including companies affiliated
       with or controlled by Loral, are among Globalstar's main customers.
       Accordingly, they may have conflicts of interest with respect to the
       terms of Globalstar's service provider agreements.

     - Globalstar is currently managed by a committee of its general partners, a
       majority of the representatives on which may be designated by Loral,
       which in turn owns SS/L, a contractor of Globalstar. Loral is also a
       significant creditor of Globalstar.

     - Certain members of Globalstar's Creditors' Committee have loaned money to
       Globalstar and have invested, or are considering investing, in service
       provider operations.

     - On February 25, 2003, the Bankruptcy Court approved a $10 million DIP
       Facility, which provided interim funding from two of Globalstar's
       competitors. Affiliates of Iridium and ICO each contributed to the
       interim financing for Globalstar.

AS A GENERAL PARTNER, GTL IS LIABLE FOR THE RECOURSE DEBT AND OTHER OBLIGATIONS
OF GLOBALSTAR.

     Because GTL is a general partner of Globalstar, GTL is jointly and
severally liable with the other general partner for the recourse debt and other
recourse obligations of Globalstar to the extent Globalstar is unable to pay
such debts. GTL believes that such recourse obligations totaled approximately
$1.4 billion as of December 31, 2002. Globalstar's other general partner, LQSS,
filed for protection under the Bankruptcy Code on February 15, 2002 and is
extremely unlikely to have sufficient funds to pay the portion of Globalstar's
recourse debt previously allocated to it. Certain of Globalstar's debt,
including the public debt, is non-recourse to the general partners.

A CHANGE OF CONTROL OF GTL OR REDUCTION IN GTL'S OWNERSHIP OF GLOBALSTAR COULD
RESULT IN GTL HAVING TO PAY ADDITIONAL TAXES AND BECOMING SUBJECT TO ONEROUS
REQUIREMENTS UNDER THE INVESTMENT COMPANY ACT.

     If either of the following occurs, GTL will become a limited partner in
Globalstar and will no longer appoint representatives to serve on its committee
of general partners:

     - a change of control of GTL at a time when GTL owns less than 50% of the
       Globalstar partnership interests outstanding, including changes in GTL's
       board of directors; or

                                        19


     - a sale or other disposition of partnership interests following which
       GTL's equity interest is reduced to less than 5%, without prior approval
       by the managing general partner of Globalstar or by the limited partners
       of Globalstar.

     If GTL were to become a limited partner in Globalstar, GTL could be deemed
to be an investment company under the Investment Company Act of 1940. If this
happens, GTL would become subject to the registration and other requirements of
that law. In order to register, GTL might be required to reincorporate as a
domestic U.S. corporation and would thereafter be subject to U.S. tax on its
worldwide income. GTL currently intends to conduct its operations so as to avoid
being deemed an investment company under the Investment Company Act of 1940.

HOLDERS OF GTL PREFERRED STOCK WILL HAVE THE RIGHT UNDER CERTAIN CIRCUMSTANCES
TO APPOINT DIRECTORS TO GTL'S BOARD OF DIRECTORS AND TO APPOINT A MEMBER TO
GLOBALSTAR'S GENERAL PARTNERS' COMMITTEE.

     In January 2001, GTL announced that it was suspending indefinitely dividend
payments on its 8% Preferred Stock and its 9% Preferred Stock. Under the terms
of each such series of preferred stock, if GTL should fail to pay dividend
payments on such series for an aggregate of six quarters, holders of the
majority of the outstanding shares of that series will have the right to elect
up to two additional members to GTL's Board of Directors. Globalstar's
partnership agreement further provides that in the event accrued and unpaid
dividends accumulate to an amount equal to six quarterly dividends on the 8%
Preferred Stock and/or the 9% Preferred Stock, holders of the majority of such
outstanding preferred stock, voting together as a class, will have the right to
appoint one additional member to Globalstar's General Partners' Committee.
Dividends have been accrued and not paid for six consecutive quarters on May 15,
2002 and June 1, 2002 for the 8% Preferred Stock and the 9% Preferred Stock,
respectively. As of December 31, 2002, these rights have not been exercised.

PATENTS HELD BY OTHER FIRMS OR INDIVIDUALS MAY BLOCK GLOBALSTAR'S PATENTS.

     Because the U.S. patent application process is confidential, there can be
no assurance that third parties, including competitors of Globalstar, do not
have patents pending or issued that could result in infringement by Globalstar.
In such an event, Globalstar could be required to redesign some part of its
system or pay royalties for use of the third parties' patents, which could
increase cost or delay implementation of certain features or functions.

PUBLICLY TRADED SECURITIES ARE SUBJECT TO VOLATILITY OF MARKET VALUES.

     GTL's stock price and the fair value of Globalstar's Senior Notes
experienced substantial price volatility in the period before Globalstar
announced that it would restructure its debt. This volatility may continue as
Globalstar restructures its debt obligations and increases cash flows from
operations. These factors, as well as general economic conditions, actions of
its competitors, and political conditions may materially adversely affect the
market values of those securities in the future.

GTL IS DEPENDENT UPON PAYMENTS FROM GLOBALSTAR TO MEET ITS OBLIGATIONS.

     Because GTL is a holding company whose only assets are its interests in
Globalstar, GTL is dependent upon payments from Globalstar to meet its
obligations, including those under its preferred stock. Globalstar has made no
such payments, nor is it likely to do so. Further, GTL's rights and the rights
of holders of its securities, including the holders of preferred stock, to
participate in the distribution of assets upon Globalstar's restructuring will
be subject to the prior claims of Globalstar's and GTL's creditors.

GTL HAS NO SOURCE OF FUNDS OTHER THAN THOSE PROVIDED BY GLOBALSTAR.

     GTL is totally dependent on Globalstar for funding of its ongoing operating
costs, including legal fees, transfer agent fees, directors fees and its
restructuring officer fees. Continued funding from Globalstar is subject to
Bankruptcy Court approval and there can be no assurance that future funding of
GTL will be authorized.

                                        20


GLOBALSTAR IS SUBJECT TO EXPORT REGULATION.

     Globalstar's operations are subject to certain regulations of the United
States State Department's Office of Defense Trade Controls (i.e., satellites and
related technical data), United States Treasury Department's Office of Foreign
Assets Control (i.e., financial transactions) and the United States Commerce
Department's Bureau of Export Administration (i.e., gateways and Globalstar
phones). There can be no assurance that such regulations will not adversely
affect or delay Globalstar's operations in a particular country.

AVAILABLE INFORMATION

     Our annual report on Form 10-K, quarterly reports on Form 10-Q, current
reports on Form 8-K, and amendments to those reports, are available free of
charge at http://www.sec.gov once those reports are electronically filed with
the Securities and Exchange Commission.

ITEM 2. PROPERTIES

     Globalstar currently has a lease covering approximately 106,000 square feet
for its headquarters' office space in San Jose, California. This lease expires
on December 31, 2008. Globalstar has two options to extend the initial term of
this lease for five years each. Globalstar is currently in discussions with the
landlord of the office space in San Jose to modify the terms and conditions of
the existing lease. Globalstar leases approximately 12,000 square feet for its
back-up ground operations control center in El Dorado Hills, California. The
lease expires in November 2006 with options to renew for up to an additional six
years. In addition, Globalstar Canada Satellite Co. ("GCSC") leases
approximately 8,000 square feet for its service provider operations in Ontario,
Canada. The lease expires in July 2005.

ITEM 3. LEGAL PROCEEDINGS

     On February 20, 2001, a purported class action lawsuit was filed against
Globalstar and Globalstar Capital Corporation on behalf of the owners of the
10 3/4% senior notes, due November 2004 (the "10 3/4% Senior Notes") in Superior
Court, New Castle County, Delaware. Globalstar Capital Corporation and
Globalstar issued the 10 3/4% Senior Notes as joint obligors. The complaint
alleges that the defendants repudiated the 10 3/4% Senior Notes' registration
statement, prospectus and indenture, without consent of the holders of the
10 3/4% Senior Notes, when Globalstar announced that it was suspending its
future interest payments on the 10 3/4% Senior Notes. On April 23, 2001, the
defendants moved to dismiss the complaint for failure to state a cause of
action. A second similar class action was filed in Delaware on June 5, 2001. The
defendants have also moved to dismiss this complaint. Plaintiffs subsequently
amended the complaint and defendants again moved to dismiss the amended
complaint for failure to state a cause of action. On December 31, 2001, the
court granted defendants' motion to dismiss in part, dismissing plaintiffs'
claims for principal and interest not yet due, but allowing plaintiffs to
proceed with their breach of contract claim based on the interest payments
already missed at the time the amended complaints were filed. Defendants
answered the complaints on January 17, 2002. These proceedings are now
automatically stayed in accordance with Section 362(a) of the Bankruptcy Code.
On August 7, 2001, Globalstar received a petition filed on July 13, 2001 in
Texas state court by L.E. Creel III, a holder of an 11 3/8% senior note due
February 2004 seeking principal payment of the note plus interest. Globalstar
filed an answer contesting the petition. On December 6, 2001, the parties
participated in court ordered mediation, which failed to lead to a settlement of
plaintiff's claim. This proceeding is also stayed pursuant the Bankruptcy Code.

     On February 28, 2001, plaintiff Eric Eismann filed a purported class action
complaint against GTL in the United States District Court for the Southern
District of New York. The other defendants named in the complaint were Loral and
Bernard Schwartz, the former Chief Executive Officer of Globalstar. Globalstar
was not a named defendant in these actions. The complaint alleges that (a) GTL
and Mr. Schwartz violated Section 10(b) of the Exchange Act and Rule 10b-5
promulgated thereunder, by making material misstatements or failing to state
material facts about GTL's business and prospects and

                                        21


(b) that Loral and Mr. Schwartz are secondarily liable for these alleged
misstatements and omissions under Section 20(a) of the Exchange Act as alleged
"controlling persons" of GTL. The class of plaintiffs on whose behalf this
lawsuit has been asserted consists of all buyers of GTL common stock from
December 6, 1999, through October 27, 2000, excluding the defendants, officers
and directors of GTL and certain persons affiliated therewith. Eighteen
additional purported class action complaints were subsequently filed in the
United States District Court for the Southern District of New York. These
complaints were granted class action status and consolidated into a case known
as In Re Globalstar Securities Litigation, 01 Civ. 1748 (SHS). On September 26,
2001, the court appointed The Phillips Family as Lead Plaintiff for the class.
On November 13, 2001, Lead Plaintiff filed a Consolidated Amended Class Action
Complaint and a demand for jury trial. The amended complaint drops the cause of
action against certain individuals and adds causes of action against Globalstar
and its wholly-owned subsidiary, Globalstar Capital. GTL and Globalstar believe
that they have meritorious defenses to these actions and on or about February
25, 2002, filed a motion to dismiss the complaint. The case against Globalstar
and Globalstar Capital is stayed pursuant to the Bankruptcy Code. There are,
however, no assurances that the defenses to these actions will be successful.

     During 2001, Ericsson filed two separate demands for arbitration with the
American Arbitration Association that sought monetary damages in the combined
amount of $64.0 million with respect to two contracts. Ericsson took the
position that Globalstar failed to satisfy minimum purchase requirements for
phones under two contracts, one for the purchase of Fixed Access Units (FAU) and
one for the purchase of mobile R290 units (R290). The parties negotiated a
settlement and liquidation in the amount of $35.0 million, which amount is a
creditor's claim by Ericsson against Globalstar.

     On December 5, 2002, StarMD, LLC ("StarMD") filed a complaint in the
Pennsylvania Court of Common Pleas, Allegheny County, naming GUSA as the
defendant. The complaint alleges four counts: (1) in equity, seeking a mandatory
injunction requiring GUSA to sell to StarMD "as many telephones as its requests
and to provide service to plaintiff's customers . . . ;" (2) in assumpsit, for
lost profits "and related revenue" from the sale of "an estimated 10,800
telephones," in the amount of $31,104,000; (3) in assumpsit, for recovery of the
value of plaintiff's efforts in developing a marketing campaign, for damages "in
excess of $25,000;" and (4) in trespass, for tortiously interfering with
plaintiff's agreement with Globalstar for the development and co-marketing of an
antenna kit for the Globalstar 1600 telephone. In February 2003, GUSA filed
Preliminary Objections requesting the court to dismiss the complaint on grounds
of (1) lack of personal jurisdiction, (2) improper venue, (3) forum non
conveniens, (4) a prior-existing valid and enforceable agreement to arbitrate
and (5) legal insufficiency. The request for dismissal is before the court
awaiting decision.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     None.

                                        22


                                    PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER
        MATTERS

(a) MARKET PRICE AND DIVIDEND INFORMATION

     GTL's common stock is currently traded on the NASDAQ OTC Bulletin Board
under the symbol "GSTRF.OB" The following table presents the reported high and
low bid quotations of GTL's common stock as reported on The NASDAQ National
Market, The NASDAQ SmallCap Market, and the NASDAQ OTC Bulletin Board markets
during 2002 and 2001.



                                                       BID QUOTATIONS
                                              --------------------------------
                                                   2002              2001
                                              --------------    --------------
                                              HIGH      LOW     HIGH      LOW
                                              -----    -----    -----    -----
                                                             
Quarter ended:
  March 31..................................  $0.19    $0.05    $2.28    $0.36
  June 30...................................   0.15     0.06     0.77     0.25
  September 30..............................   0.28     0.06     0.47     0.20
  December 31...............................   0.15     0.01     1.14     0.10


     GTL and Globalstar do not currently anticipate paying any dividends or
distributions (other than to the extent that Globalstar's payment of GTL's
operating expenses related to Globalstar would be treated as a distribution).
GTL has not declared or paid any cash dividends on its common stock, and
Globalstar has not made any distributions on its ordinary partnership interests.
GTL is a holding company, the sole asset of which is its partnership interests
in Globalstar; GTL has no independent means of generating revenues. Globalstar
expects to pay GTL's operating expenses related to Globalstar; such expenses are
not expected to be material. Globalstar's credit agreements and the indentures
related to its Senior Notes restrict, and the DIP Facility eliminates, the
ability of Globalstar to pay cash distributions on its ordinary partnership
interests. On January 16, 2001, Globalstar and GTL suspended indefinitely
dividend payments on their preferred equity interests.

(B) APPROXIMATE NUMBER OF HOLDERS OF COMMON STOCK

     As of March 17, 2003, there were 1,834 holders of record of GTL's common
stock.

                                        23


ITEM 6.  SELECTED FINANCIAL DATA

                     GLOBALSTAR TELECOMMUNICATIONS LIMITED
                     (IN THOUSANDS, EXCEPT PER SHARE DATA)



                                                     YEARS ENDED DECEMBER 31,
                                  --------------------------------------------------------------
                                     2002          2001        2000(1)      1999(2)     1998(3)
                                  -----------   -----------   ----------   ----------   --------
                                                                         
STATEMENT OF OPERATIONS DATA:
Equity in net loss applicable to
  ordinary partnership interests
  of Globalstar, L.P. ..........  $    55,173   $   142,298   $1,667,761   $   81,861   $ 50,561
Equity in net loss applicable to
  preferred partnership
  interests of Globalstar,
  L.P. .........................           --            --      356,944           --         --
Net loss........................       55,173       142,298    2,029,123       32,151     50,561
Net loss applicable to common
  shareholders..................       74,844       168,860    2,059,853       81,861     50,561
Net loss per share -- basic and
  diluted(4)....................         0.66          1.54        20.85         0.99       0.67
CASH FLOW DATA:
Provided by operating
  activities....................           --            --       30,745       22,470         --
Used in investing activities....           --            --      354,326      488,309      1,112
Provided by equity
  transactions..................           --            --      323,581      465,839      1,112
Provided by borrowings..........           --            --           --           --         --
Dividends paid per common
  share.........................           --            --           --           --         --
RATIO OF EARNINGS TO FIXED
  CHARGES.......................          N/A           N/A           1x           1x         1x
Deficiency of earnings to cover
  fixed charges.................       19,671        26,562          N/A          N/A        N/A

                                                           DECEMBER 31,
                                  --------------------------------------------------------------
                                     2002          2001          2000         1999        1998
                                  -----------   -----------   ----------   ----------   --------
                                                                         
BALANCE SHEET DATA:
Investment in Globalstar,
  L.P...........................  $        --   $        --   $       --   $1,034,902   $580,428
Total assets....................           --            --           --    1,034,902    580,428
Convertible redeemable preferred
  stock(4)......................      202,865       220,296           --           --         --
Shareholders' equity
  (deficit).....................   (1,133,216)   (1,075,803)    (686,647)   1,031,579    580,428
Shareholders' equity per common
  share(5)......................       (12.13)       (10.49)       (9.76)        7.46       7.08


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

(1) Includes GTL's share of Globalstar's $2.9 billion charge from the impairment
    of the Globalstar System.

(2) Includes GTL's proportionate share of Globalstar's $29.9 million loss from
    the write-off of excess launch vehicle deposits.

(3) Includes GTL's proportionate share of Globalstar's $17.3 million loss from
    launch failure.

(4) Certain convertible redeemable preferred stock was classified outside of
    shareholders' deficit in 2001.

(5) The 2001, 2000 and 1999 balances exclude the redemption value of the 8%
    Preferred Stock and 9% Preferred Stock.

                                        24


                                GLOBALSTAR, L.P.
            (IN THOUSANDS, EXCEPT PER PARTNERSHIP INTEREST AMOUNTS)



                                                        YEARS ENDED DECEMBER 31,
                                         ------------------------------------------------------
                                         2002(2)      2001      2000(3)     1999(4)    1998(5)
                                         --------   --------   ----------   --------   --------
                                                                        
STATEMENT OF OPERATIONS DATA:
Net revenue............................  $ 24,639   $  6,404   $    3,650   $     --   $     --
Operating expenses.....................   128,110    205,185    3,476,402    186,505    146,684
Interest income........................       101      4,513       16,490      6,141     17,141
Interest expense.......................    46,523    381,170      329,163         --         --
Net loss applicable to ordinary
  partnership interests................   152,846    602,073    3,816,401    232,584    151,740
Net loss per weighted average ordinary
  partnership interest outstanding --
  basic and diluted....................      2.32       9.26        61.23       3.99       2.69
OTHER DATA:
Deficiency of earnings to cover fixed
  charges(1)...........................   152,846    602,073    3,824,533    466,369    330,475
CASH FLOW DATA:
Used in operating activities...........    38,013    120,448      455,741     56,576     24,958
Used in (provided by) investing
  activities...........................     2,328     (3,909)      95,156    721,733    682,884
Provided by partners' capital
  transactions.........................        --         --      331,275    463,329     14,825
Provided by (used in) other financing
  activities...........................        --     (2,237)     266,348    386,432    287,552




                                                          DECEMBER 31,
                                -----------------------------------------------------------------
                                   2002          2001          2000          1999         1998
                                -----------   -----------   -----------   ----------   ----------
                                                                        
BALANCE SHEET DATA:
Cash and cash
  equivalents(6)..............  $    15,284   $    55,625   $   196,849   $  173,921   $   56,739
Globalstar System, net........      198,756       229,774       264,856           --           --
Globalstar System under
  construction................           --            --         1,634    3,181,189    2,302,333
Total assets..................      294,374       456,391       702,276    3,781,459    2,670,025
Vendor financing liability,
  including current portion...           --       869,385       788,423      393,795      371,170
Long-term debt(7).............           --       277,330       262,366    1,799,111    1,396,175
Liabilities subject to
  compromise(8)...............    3,425,921            --            --           --           --
Partners' capital (deficit)...   (3,150,598)   (2,997,753)   (2,395,214)   1,028,329      602,401


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

(1) The ratio of earnings to fixed charges is not meaningful, as Globalstar has
    incurred operating losses.

(2) The results of operations for 2002 include a $18.4 million charge for the
    launch termination penalty and write off of launch related deposits.

(3) The results of operations for 2000 include a $2.9 billion charge from the
    impairment of the Globalstar System.

(4) The results of operations for 1999 include a $29.9 million loss from the
    write-off of excess launch vehicle deposits.

(5) The results of operations for 1998 include a $17.3 million loss from launch
    failure.

(6) Includes restricted cash of $22.4 million and $46.2 million for 2000 and
    1999, respectively, received from service providers for the purchase of
    gateways.

(7) Reflects the classification of $1.9 billion of Senior Notes and term loans
    as current obligations in 2000.

(8) All pre-petition liabilities of Globalstar and its debtor subsidiaries
    constitute unsecured claims and have been classified as liabilities subject
    to compromise.

                                        25


ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 RESULTS OF OPERATIONS AND FINANCIAL CONDITION

     Except for the historical information contained herein, the matters
discussed in the following Management's Discussion and Analysis of Financial
Condition and Results of Operations are not historical facts, but are
"forward-looking statements," as that term is defined in the Private Securities
Litigation Reform Act of 1995. In addition, Globalstar and GTL or its
representatives have made and may continue to make forward-looking statements,
orally or in writing, in other contexts, such as in reports filed with the SEC,
press releases or statements made with the approval of an authorized executive
officer of either Globalstar or GTL. These forward-looking statements can be
identified by the use of forward-looking terminology such as "believes,"
"expects," "plans," "may," "will," "would," "could," "should," "anticipates,"
"estimates," "project," "intend," or "outlook" or the negative of these words or
other variations of these words or other comparable words, or by discussion of
strategy that involve risks and uncertainties. These forward-looking statements
are only predictions, and actual events or results may differ materially as a
result of a wide variety of factors and conditions, many of which are beyond
Globalstar's or GTL's control. Some of these factors and conditions include: (i)
Globalstar filed for bankruptcy protection on February 15, 2002 and GTL's equity
interest in Globalstar will likely be eliminated, or at best, severely diluted,
in which event it will have little or no value; (ii) Globalstar has limited cash
to fund its operations; (iii) Globalstar has defaulted on certain debt payments;
(iv) the rate of growth for the service has not been sufficient to sustain
Globalstar's cost of operations; (v) Globalstar may be required to withhold tax
on income resulting from the cancellation of debt; (vi) Globalstar depends on
service providers to market its service and implement important parts of its
system; (vii) Globalstar's consolidation of certain service providers might not
bring efficiencies to operations; (viii) Globalstar is dependent on key vendors;
(ix) GTL will likely be unable to fund mandatory redemption requirements of 8%
Preferred Stock 9% Preferred Stock; (x) GTL has been de-listed by The NASDAQ
Stock Market; (xi) Lockheed Martin is disputing Globalstar's right to issue it a
$150 million note in satisfaction of payments made under a guaranty; (xii)
Globalstar's satellites have a limited useful life and may fail prematurely;
(xiii) Globalstar faces currency risks and special risks by doing business in
developing markets; (xiv) Globalstar's business is regulated, causing
uncertainty and additional costs; (xv) Globalstar's 2 GHz license may be null
and void; (xvi) Globalstar may have its Big Leo spectrum allocation reduced;
(xvii) Globalstar faces intense competition from both direct and indirect
competitors, and additional direct competitors plan to enter the market in the
future; (xviii) technological advances and a continuing trend toward strategic
alliances in the telecommunications industry could give rise to significant new
competitors; (xix) new technologies and the expansion of land-based systems may
reduce demand for Globalstar's service; (xx) Globalstar could face liability
based on alleged health risks; (xxi) Globalstar relies on key personnel; (xxii)
certain potential conflicts of interest could result in decisions adverse to
Globalstar's interests; (xxiii) as a general partner, GTL is liable for the
recourse debt and other obligations of Globalstar; (xxiv) a change of control of
GTL or reduction in GTL's ownership of Globalstar could result in GTL having to
pay additional taxes and becoming subject to onerous requirements under the
Investment Company Act; (xxv) holders of GTL preferred stock will have the right
under certain circumstances to appoint directors to GTL's Board of Directors and
to appoint a member to Globalstar's General Partners' Committee; (xxvi) patents
held by other firms or individuals may block Globalstar's patents; (xxvii)
publicly traded securities are subject to volatility of market values; (xxviii)
GTL is dependent upon payments from Globalstar to meet its obligations; (xxix)
GTL has no source of funds other than those provided by Globalstar; and (xxx)
Globalstar is subject to export regulation. See Certain Factors That May Affect
Future Results above.

     GTL, a general partner of Globalstar, was created to permit public equity
ownership in Globalstar. GTL does not have any operations, personnel or
facilities, and does not manage the day-to-day operations of Globalstar. GTL's
sole asset is its investment in Globalstar, and GTL's results of operations
reflect its

                                        26


share of the results of operations of Globalstar on an equity accounting basis.
Therefore, matters discussed in this section address the financial condition and
results of operations of Globalstar.

     On February 15, 2002, Globalstar and certain of its subsidiaries filed
voluntary petitions under Chapter 11 of the Bankruptcy Code, in the Bankruptcy
Court. Globalstar and its subsidiaries remain in possession of their assets and
properties and continue to operate their businesses as debtors-in-possession. As
a result of Globalstar's bankruptcy petition, several of Globalstar debt
facilities were accelerated and became immediately due and payable. GTL does not
intend to file an immediate petition for bankruptcy relief, but will continue to
monitor events and govern its actions accordingly. It has been GTL's view that
any hope of providing a rights offering or other element of value to its
shareholders is enhanced by not filing for bankruptcy at this time. Globalstar's
bankruptcy filing and subsequent financial restructuring will likely leave
shares in GTL with very little or no value. (See the discussion of Globalstar's
proposed restructuring plan below.) These factors, among others, raise
substantial doubt about GTL's ability to continue as a going concern. However,
the accompanying financial statements have been prepared on a going concern
basis, which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business.

     On February 14, 2003, Globalstar and the DIP Lenders reached agreement on
debtor-in-possession financing of $10 million and filed a motion with the
Bankruptcy Court seeking approval of such financing. Globalstar also filed a
motion defining certain auction procedures by which Globalstar would conclude
its search for an investor to fund Globalstar's restructuring and exit from
bankruptcy. The Bankruptcy Court provided interim approval of the DIP Facility
and approved the auction procedures on February 20, 2003, and the parties
executed the DIP Facility documents on February 25, 2003. The Bankruptcy Court
granted final approval of the DIP Facility on March 6, 2003. As a condition to
the DIP Lenders obligation to fund draws by Globalstar under the DIP Facility in
excess of $2.0 million, among other things (i) Globalstar was required to secure
from LQP a pledge in favor of the DIP Lenders of LQP's ownership interest in the
outstanding stock of L/Q Licensee, and (ii) Globalstar was required to reach an
agreement, satisfactory to the DIP Lenders, with respect to specified matters
relating to Loral and certain of its affiliates (the conditions set forth in
clauses (i) and (ii) above, collectively, the "Loral Condition"). The Loral
Condition was initially required to be satisfied by March 7, 2003, but the DIP
Facility was amended to extend the deadline for meeting the Loral Condition to
March 21, 2003. The Loral Condition was satisfied prior to the extended deadline
(see discussion of Developments Relating to Loral and QUALCOMM above).

     Under the approved auction procedures, Globalstar received expressions of
interest from prospective investors in early March 2003, and with the assistance
of its financial advisors and in consultation with the Creditors' Committee,
determined which of them were "qualified" to perform due diligence and make a
definitive proposal for an equity investment in Globalstar or the purchase of
Globalstar's assets. March 21, 2003 was the deadline set for the submission of
investment proposals by the qualified bidders. Globalstar, in consultation with
the Creditors' Committee, expects to choose the highest and best investment
proposal in early-April and to file a modified plan of reorganization with the
Bankruptcy Court shortly thereafter. No assurance can be given as to whether
this auction process will ultimately lead to a successful restructuring of
Globalstar.

     Any plan of reorganization is expected to involve the conversion of all
outstanding Globalstar debt into equity of New Globalstar. Moreover, it is
foreseeable that under any such plan of reorganization, GTL's equity interest,
along with the interest of Globalstar's other partners, will be eliminated
entirely.

RESULTS OF OPERATIONS

     Globalstar currently provides satellite-based telephony and narrow band
data services through 24 gateways. These gateways provide coverage to 133
countries, including all of North America and South America (excluding
northwestern Alaska and portions of Canada above 70 degrees North latitude),
Europe, Australia, Russia, most of the Middle East, Central Asia, China and
South Korea. For the year ended December 31, 2002, Globalstar recorded
consolidated revenues of $24.6 million and provided

                                        27


34.2 million minutes of billable telecommunication services as compared to $6.4
million and 23.9 million minutes for the year ended December 31, 2001. As of
December 31, 2002, approximately 77,000 commercial subscribers were using the
Globalstar System. Globalstar's revenues during 2002 were not sufficient to fund
Globalstar's operations.

     Globalstar's revenues have increased significantly during 2002, primarily
through its acquisitions of GUSA and the majority interest in GCSC. The
distribution of Globalstar's 2002, 2001 and 2000 revenue by subsidiary and
affiliated companies is as follows (in thousands):



                                                             YEARS ENDED DECEMBER 31,
                                                           -----------------------------
                                                            2002     2001(1)    2000(1)
                                                           -------   --------   --------
                                                                       
Wholesale -- revenue Globalstar, L.P. ...................  $ 5,776    $5,994     $3,650
Service provider revenue:
  Canada -- Globalstar Canada Satellite Co. .............   15,916       410         --
  United States -- Globalstar USA, LLC...................    6,732        --         --
  Europe -- Globalstar Europe Satellite Services,
     Ltd. ...............................................       72        --         --
Eliminations.............................................   (3,857)       --         --
                                                           -------    ------     ------
     Total revenue.......................................  $24,639    $6,404     $3,650
                                                           =======    ======     ======


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

(1) Includes $0.1 million and $1.5 million of royalty income for 2001 and 2000,
    respectively. There was no royalty revenue in 2002.

  2002 Compared with 2001

     Globalstar, L.P. owns and operates the Globalstar satellite constellation
and earns its revenues primarily through the sale of airtime minutes on a
wholesale basis to Globalstar service providers. During 2002, Globalstar, L.P.
recognized total revenue of $5.8 million, consisting of $5.4 million of service
revenue and $0.4 million related to the sale of subscriber equipment and spare
parts, compared with total revenue of $6.0 million, consisting of $5.9 million
of service revenue and $0.1 million of royalty income, for 2001. The decrease in
service revenue is due to revenue not being recognized in regions where service
provider collections are not certain and is partially offset by increased minute
volume. The Globalstar System's call minute volume increased to 34.2 million
billable minutes during 2002 from 23.9 million for 2001.

     On December 18, 2001, Globalstar acquired an indirect 50.1% interest in
GCSC, Globalstar's Canadian service provider. During 2002, GCSC and its
affiliates recognized total revenue of $15.9 million, consisting of $10.2
million of service revenue and $5.7 million of subscriber equipment sales,
compared to $0.4 million, consisting of $0.2 million of service revenue and $0.2
million of subscriber equipment sales, for 2001. Because Globalstar acquired the
majority interest in GCSC in December 2001, Globalstar earned only very limited
revenue related to its investment in GCSC during 2001.

     GUSA is the Globalstar service provider in the United States and the
Caribbean. GUSA and Globalstar Caribbean Ltd., which holds the Caribbean gateway
license, were acquired by a wholly-owned non-debtor subsidiary of Globalstar,
L.P. on August 19, 2002. From August 19, 2002 through December 31, 2002, GUSA
recognized total revenue of $6.7 million, consisting of $3.6 million of service
revenue and $3.1 million of subscriber equipment sales. Globalstar did not earn
any revenue related to GUSA in 2001.

     Globalstar Europe Satellite Services, Ltd. ("GESS") was formed in July 2002
by Globalstar to restart the commercial Globalstar operations in western Europe
and North Africa. From July 2, 2002 through December 31, 2002, GESS recognized
service revenue of $0.1 million. Globalstar did not earn any revenue related to
GESS in 2001.

                                        28


     Globalstar eliminates revenues recorded on sales between subsidiary
companies and between the parent and subsidiaries. During 2002, $3.9 million of
revenues were eliminated, consisting primarily of wholesale airtime sales from
Globalstar, L.P. to GCSC, GUSA, and GESS of $2.2 million, subscriber equipment
sales between GUSA and GCSC of $1.4 million, and other eliminations of $0.3
million. No such eliminations were recorded in 2001 due to the timing of the
GCSC, GUSA and GESS transactions.

     On a consolidated basis, Globalstar recorded subscriber equipment revenue
of $7.5 million and $0.2 million in 2002 and 2001, respectively. In order to
facilitate service demand, Globalstar typically sells subscriber equipment at or
near its cost. Globalstar's cost of subscriber equipment sold was $5.7 million
and $0.1 million for 2002 and 2001, respectively. No subscriber equipment
revenue or cost of subscriber equipment sold was recorded until December 2001,
when Globalstar acquired the majority interest in GCSC.

     For 2002, operations expenses were $26.4 million as compared to $56.1
million for 2001. The decline is primarily the result of reduced development
costs incurred under Globalstar's development contract with QUALCOMM. Costs
incurred under the QUALCOMM development contract were $23.2 million during 2001
and there were no costs incurred during 2002. The balance of the decrease in
operations expense is the result of cost saving measures implemented during
2001, partially offset by $10.1 million of operations costs incurred by GCSC,
GUSA, and GESS during 2002.

     Marketing, general and administrative expenses decreased to $39.1 million
in 2002 from $101.4 million in 2001. The decline is primarily related to
reductions in promotional activities and cost savings measures implemented in
2001. Marketing, general and administrative expenses in 2001 included a $35
million accrual related to the Ericsson arbitration proceeding and $6.1 million
in equipment write-offs. Additionally, 2001 included $20.7 million of net bad
debt expense related to the sale of Globalstar gateways, versus $9.2 million
incurred in 2002. Exclusive of nonrecurring costs, bad debt expense related to
gateways and costs associated with recently acquired service provider
operations, expenses declined from $39.7 million in 2001 to $17.1 million in
2002. The decrease is partially offset by $12.2 million of additional costs
related to the acquisitions of GCSC, GUSA and the start up of the GESS
operations.

     Restructuring and reorganization costs of $7.7 million were incurred in
2002, compared to $12.0 million in 2001. In 2002, these costs were primarily
fees to Globalstar's restructuring specialists including financial advisors,
legal counsel, and other advisors of $5.4 million, fees to the creditors' legal
counsel and financial advisors of $2.3 million, and employee separation costs of
$0.2 million. Other restructuring costs of $0.1 million, net of interest earned,
were paid in 2002. These costs are partially offset by interest income earned
during Globalstar's Chapter 11 case of $0.3 million. Restructuring and
reorganization costs in 2002 decreased by $4.3 million from 2001 primarily due
to employee separation costs paid in 2001.

     Launch termination costs for 2002 were $18.4 million. Globalstar recorded
$17.2 million in launch termination costs when SS/L terminated the Globalstar
satellite launches on October 31, 2002. Globalstar believes that this
termination liability will not be classified as an administrative claim in its
bankruptcy case, and has recorded the liability as a pre-petition liability
subject to compromise. Also, Globalstar wrote off a deposit of $1.2 million
associated with the future satellite launches. There was no launch termination
expense in 2001.

     Depreciation and amortization was $30.9 million and $35.6 million for 2002
and 2001, respectively. The decrease is primarily the result of the reduction in
the Globalstar System due to the failed satellites being written off and minimal
capital investments in 2002.

     Interest income earned subsequent to the filing of the bankruptcy case on
February 15, 2002 (the "Petition Date") is accounted for as an offset to
restructuring costs. Consequently, only $0.1 million was recorded as interest
income in 2002, prior to the Petition Date. Interest income earned in 2001 was
$4.5 million.

                                        29


     Globalstar ceased recognizing interest expense on pre-petition debts on the
Petition Date. Interest expense recorded from the beginning of the year through
the Petition Date was $46.5 million in 2002. Interest expense of $381.2 million
was recorded 2001.

     The accrual of preferred dividends on the 8% RPPIs and 9% RPPIs ceased on
the Petition Date. Preferred dividends accrued from the beginning of the year
through the Petition Date were $2.9 million in 2002 and preferred dividends
accrued in 2001 were $26.6 million. The decrease is primarily the result of the
change in accounting practice as well as conversions of portions of the 8% RPPIs
and 9% RPPIs. None of the distributions accrued during 2001 or 2002 have been
paid.

     As a result of the above, the net loss applicable to ordinary partnership
interests decreased to $152.8 million for 2002, compared to $602.7 million in
2001.

     Globalstar is organized as a limited partnership with various corporate
subsidiaries. Generally, taxable income or loss, deductions and credits of the
partnership are passed through to its partners. Globalstar's corporate
subsidiaries will provide for a tax provision or benefit using the asset and
liability method of accounting for income taxes as prescribed by SFAS No. 109,
Accounting for Income Taxes. As of December 31, 2002, Globalstar's corporate
subsidiaries had gross deferred tax assets of approximately $6.2 million. A
valuation reserve has been set up to reserve 100% of the deferred tax assets due
to concerns about the ability of Globalstar to generate sufficient income to be
able to utilize the assets.

  2001 Compared with 2000

     For 2001, Globalstar recognized consolidated service revenue of $6.2
million compared to $2.2 million in 2000. The increase in service revenue over
the previous year is due to the increased usage of the Globalstar System as
Globalstar's market penetration increased from approximately 31,000 subscribers
globally on December 31, 2000 to 66,000 subscribers on December 31, 2001.
Subscriber equipment revenue of $152,000 was recorded during the portion of
December 2001 that Globalstar owned a majority interest in the Canadian service
provider; no such revenue was generated in 2000. Royalty income decreased from
$1.4 million in 2000 to $57,000 in 2001 as equipment sales channels filled to
capacity. During 2001, Globalstar recognized total revenue of $6.4 million, an
increase of $2.7 million over the 2000 total revenue of $ 3.7 million.

     For 2001, operations expenses were $56 million as compared to $128 million
for 2000. The decrease is primarily due to the cost saving measures implemented
during 2001. In addition, many of the costs associated with Globalstar's support
to gateway installation and testing and the commencement of commercial
operations of the Globalstar constellation and ground control centers incurred
in 2000 to complete the system, were not necessary in 2001.

     Marketing, general and administrative expenses were $101 million and $81
million for 2001 and 2000, respectively. The increase is primarily the result of
accrued liabilities related to the Ericsson arbitration and increases in bad
debt expense. Globalstar provided a bad debt allowance on gateway and user
terminal receivables of $20.2 million in 2001. However, these increases were
offset partially by significant decreases in advertising and marketing costs and
a 71% decrease in payroll and fringe benefit expenses. Exclusive of the
arbitration and bad debt expense, marketing, general and administrative expenses
declined $35.2 million from 2000 to 2001.

     Depreciation and amortization was $36 million and $328 million for 2001 and
2000, respectively. In 2000, Globalstar took an impairment charge of $2.9
billion dollars against its assets; the reduced depreciation and amortization in
2001 resulted from the reduced cost basis of the assets.

     Interest income decreased to $5 million in 2001 from $16 million in 2000.
The decrease is the result of lower average cash balances available for
investment during 2001, and to a lesser extent, lower interest rates.

     Interest expense increased to $381 million in 2001, as compared to $329
million in 2000. This increase resulted from higher debt accumulation during
2001 as compared to 2000.

                                        30


     Preferred distributions decreased to $27 million in 2001 from $31 million
in 2000, primarily the result of conversions of preferred interests into common
interests. None of the distributions accrued during 2001 were paid.

     During 2001, Globalstar incurred $12 million in restructuring costs.
Globalstar's restructuring costs included employee separation costs, the cost of
financial advisors and legal counsel to both Globalstar and its informal
committee of bondholders and other costs associated with Globalstar's financial
restructuring. Employee separation costs relate to a reduction in workforce from
approximately 439 full-time employees at the beginning of 2001 to 146 full-time
employees and 2 part-time employees on December 31, 2002.

     As a result of the above, the net loss applicable to ordinary partnership
interests decreased to $602 million for 2001, compared to $3.8 billion in 2000.

     Globalstar is organized as a limited partnership with various corporate
subsidiaries. Generally, taxable income or loss, deductions and credits of the
partnership are passed through to its partners. Globalstar's corporate
subsidiaries will provide for a tax provision or benefit using the asset and
liability method of accounting for income taxes as prescribed by SFAS No. 109,
Accounting for Income Taxes. As of December 31, 2001, Globalstar's corporate
subsidiaries had gross deferred tax assets of approximately $0.8 million. A
valuation reserve has been set up to reserve 100% of the deferred tax assets due
to concerns about the ability of Globalstar to generate sufficient income to be
able to utilize the assets.

LIQUIDITY AND CAPITAL RESOURCES

     As of December 31, 2002, Globalstar had approximately $15.3 million in cash
and cash equivalents on hand, including $2.8 million held by GCSC. During 2003,
Globalstar plans to use its available funds to cover its net cash out flow,
which it expects to include costs associated with operating its satellite
constellation, operating gateways, and providing retail services in North
America and portions of Europe.

     The $15.3 million cash on hand at December 31, 2002 and the anticipated
revenue from operations are insufficient to fund Globalstar's operations.
Globalstar will require additional financing, beyond the $10 million available
under the DIP Facility, to sustain its current operations until breakeven cash
flow is achieved. There can be no assurance that a successful restructuring will
be completed and that additional financing will be available on terms acceptable
to Globalstar, if at all. If Globalstar is unable to obtain additional
financing, it will likely cease to operate.

     Cash and cash equivalents decreased from $55.6 million on December 31, 2001
to $15.3 million on December 31, 2002. The decrease is primarily the result of
cash used to fund operations for the year ended December 31, 2002.

     As a result of Globalstar's bankruptcy petition, several of Globalstar's
debt obligations were accelerated and became immediately due and payable.
Globalstar is not authorized to pay any pre-petition liabilities without
Bankruptcy Court approval.

CAPITAL EXPENDITURE REQUIREMENTS

     Following a launch failure in September 1998, Globalstar decided to
purchase eight additional satellites for $148 million (including performance
incentives of up to $16 million) to serve as on-ground spares. As of December
31, 2002, costs of $147 million (including a portion of the performance
incentives) have been recognized for these spare satellites. Seven of the eight
have been completed, and all eight are in storage in California. Title to those
satellites, which is currently held by SS/L, is expected to be transferred to
Globalstar as part of the Loral Settlement discussed above. However, there can
be no assurance that the Loral Settlement will be effected. (See discussion of
Developments Relating to Loral and QUALCOMM above.)

     In 1998, Globalstar secured twelve-month call-up orders for two additional
Delta launch vehicles from SS/L for the purpose of launching spare satellites.
The call-up date for Delta 8 was September 8, 2002, and the call-up date for
Delta 9 was March 31, 2002. During 2002, Globalstar sought and received several

                                        31


no-cost month-to-month deferrals of the call-up deadline for Delta 9. In October
2002, the launch contractor declined to grant additional no-cost extensions.
Globalstar determined that it would be more advantageous to terminate the
launches than to begin to make the required progress payments and requested SS/L
to terminate the launches if further no cost extensions could not be secured.
Consequently, SS/L terminated the Globalstar Delta 8 and 9 launches on October
31, 2002.

     In early 2003, GCSC contracted with QUALCOMM for the manufacture and
delivery of 2,000 fixed units and 5,000 car kits to be sold in the United States
and Canada. The units are scheduled for delivery beginning in March 2003 and
ending in March 2004. The contract values total $5.8 million.

COMMITMENTS AND CONTINGENCIES

     There are pending legal proceedings involving GTL and Globalstar and the
outcome of such proceedings is uncertain. For information concerning such
proceedings, see "Item 3 Legal Proceedings" above. Such information is
incorporated in this Item 7 by reference.

     Any plan of reorganization would likely involve the cancellation of debt in
exchange for equity. The cancellation of debt will give rise to considerable
taxable income that will be allocable to the partners of Globalstar. Under a
certain interpretation of Section 1446 of the Internal Revenue Code of 1986, as
amended, Globalstar may be obligated to pay a 35% withholding tax on all income
allocated to the foreign partners even if they do not receive a cash
distribution. Globalstar believes the imposition of the withholding tax may have
the effect of diverting its assets from its creditors to its foreign partners in
contravention of bankruptcy law. Globalstar expects to enter into an agreement
with the United States Internal Revenue Service pursuant to which, based upon
certain representations and satisfaction of certain terms and conditions,
Globalstar's total withholding obligation on this taxable income will be
significantly reduced. However, there can be no assurances such an agreement
will be reached.

     At the time of their respective acquisitions both GCSC and GUSA were
offering service guarantees to portions of their customer base, under which
certain customers are entitled to cash compensation in the event that Globalstar
services do not remain active and available to them for at least one year after
initial activation. Globalstar has assumed these guarantees since the
acquisition and is continuing them only when necessary for certain accounts. As
of December 31, 2002, Globalstar has maximum contingent obligations with respect
to these service guarantees of approximately $3.1 million, that would come due
in the event that Globalstar services were discontinued in Canada or the United
States.

     On June 30, 2000, Globalstar's $250 million credit facility with The Chase
Manhattan Bank became due and was repaid in full by its guarantors, including
Lockheed Martin Corporation ("Lockheed Martin"), QUALCOMM, DASA Globalstar
Limited Partner, Inc. ("DASA") and SS/L, who had previously received warrants
for GTL common stock in consideration of their guarantee. Pursuant to the
relevant agreements, Globalstar issued three-year notes in the amounts of $206.3
million, $21.9 million, $11.7 million and $10.1 million to Lockheed Martin,
QUALCOMM, SS/L and DASA, respectively, in satisfaction of their subrogation
rights. The notes are due on June 30, 2003 and bear interest, on a deferred
basis, at a rate of LIBOR plus 3%. On the consolidated balance sheet of
Globalstar the notes are presented as liabilities subject to compromise as of
December 31, 2002 and notes payable and notes payable to affiliates as of
December 31, 2001.

     Lockheed Martin, however, rejected the notes it received and instead
requested that Globalstar issue new securities with additional rights and
enhanced value, without waiving its claim that it is entitled to receive an
immediate cash reimbursement by Globalstar of its $150 million payment to the
bank lenders. Globalstar disputes Lockheed Martin's interpretation of the
relevant agreements. If the dispute is not resolved, Globalstar cannot be sure
that if the matter were litigated, the court would agree with Globalstar's
interpretation of the agreements. Management believes, however, that a court
would agree with Globalstar's interpretation of the relevant agreements. The
notes are an unsecured claim in Globalstar's bankruptcy case.

                                        32


     In 2001, an issue was raised as to whether the three-year notes issued to
the guarantors of The Chase Manhattan Bank $250 million credit facility were
prepared in accordance with the recourse provisions of the guarantee
arrangement. Management does not believe the existing notes containing
non-recourse language will need to be replaced with notes not containing the
non-recourse language. If the existing non-recourse notes were replaced with
notes not containing the non-recourse language, the replacement would not impact
Globalstar's results of operations. However, allocations of Globalstar's losses
to general partners would increase by the amount of the increase in recourse
obligations.

     On May 21, 2002, an employee incentive program was approved by the
Bankruptcy Court to recognize and retain key employees. The total value of the
program is $2.9 million of which $0.7 million was paid in July 2002. The balance
of the incentive program will be paid upon the successful reorganization of
Globalstar. Under certain conditions, up to $1.0 million of the remaining
payments may be made in common stock of New Globalstar.

     Globalstar's satellites have a limited useful like and may fail
prematurely. Since mid-March 2001, fifteen satellites in the Globalstar System
experienced anomalous behavior in the S-Band converter. Of these, nine have been
returned to service, three have been declared failed (two of which were replaced
by spares), and three are currently out of service undergoing recovery
operations. Although recovery cannot be guaranteed, the recovery period for
those satellites returned to service has ranged from two weeks to six months,
occurring on average in approximately two months. If Globalstar is unable to
recover those satellites currently undergoing recovery operations or any
satellites that experience anomalous behavior in the future are not recovered,
Globalstar's results of operations may be materially adversely affected.

TAXATION

     GTL will be subject to U.S. federal, state and local corporate tax on its
share of Globalstar's income that is effectively connected with the conduct of a
trade or business in the United States ("U.S. Income") and will be required to
file federal, state and local income tax returns with respect to such U.S.
Income. GTL expects, based on Globalstar's description of its proposed
activities, that most of GTL's income will be from sources outside the United
States and that such income will not be effectively connected with the conduct
of a trade or business within the United States ("Foreign Income"). Thus, GTL
believes that there generally will be no U.S. taxes on its share of Globalstar's
Foreign Income

     In addition, any portion of GTL's income from sources outside the United
States, realized through Globalstar or otherwise, may be subject to taxation by
certain foreign countries. The extent to which these countries may require GTL
or Globalstar to pay tax or to make payments in lieu of tax cannot be determined
in advance. However, based upon its review of current tax laws, including
applicable international tax treaties of certain countries that Globalstar
believes to be among its key potential markets, it expects that a significant
portion of its worldwide income will not be subject to tax by the foreign
countries from which Globalstar derives its income. To the extent that
Globalstar bears a higher foreign tax because any holder of its ordinary
partnership interests (including GTL) is not subject to United States tax on its
share of Globalstar's Foreign Income, the additional foreign tax will be
specially allocated to such partner and will reduce amounts distributed by
Globalstar to such partner with respect to the ordinary partnership interests
held by such partner.

ACCOUNTING PRONOUNCEMENTS

     In June 2001, the Financial Accounting Standards Board (the "FASB") issued
Statement of Financial Accounting Standard ("SFAS") No. 141, Business
Combinations and SFAS No. 142, Goodwill and Other Intangible Assets. SFAS No.
141 requires that business combinations be accounted for under the purchase
method and addresses the initial recognition and measurement of goodwill and
other intangible assets acquired in a business combination. SFAS No. 142
addresses the initial recognition and measurement of intangible assets acquired
outside of a business combination and the accounting for goodwill and other
intangible assets subsequent to their acquisition. SFAS No. 142 provides that
intangible assets with finite useful lives be amortized and that goodwill and
intangible assets with indefinite lives not

                                        33


be amortized, but will rather be tested at least annually for impairment.
Globalstar adopted SFAS No. 142 on January 1, 2002. The adoption of this
pronouncement did not have an impact on its financial position or its results of
operations.

     In August 2001, the FASB issued SFAS No. 144, Accounting for Impairment or
Disposal of Long-Lived Assets. SFAS No. 144 supersedes SFAS No. 121, Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
Of, and addresses financial accounting and reporting for the impairment or
disposal of long-lived assets. Globalstar adopted SFAS No. 144 on January 1,
2002. The adoption of this pronouncement did not have an impact on its financial
position or its results of operations.

     In June 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated
with Exit or Disposal Activities, which addresses accounting for restructuring
and similar costs. SFAS No. 146 supersedes previous accounting guidance,
principally Emerging Issues Task Force ("EITF") Issue No. 94-3. Globalstar will
adopt the provisions of SFAS No. 146 for restructuring activities initiated
after December 31, 2002. SFAS No. 146 requires that the liability for costs
associated with an exit or disposal activity be recognized when the liability is
incurred. Under EITF Issue No. 94-3, a liability for an exit cost was recognized
at the date of the company's commitment to an exit plan. SFAS No. 146 also
establishes that the liability should initially be measured and recorded at fair
value. Accordingly, SFAS No. 146 may affect the timing of recognizing future
restructuring costs as well as the amounts recognized.

     In November 2002, the FASB issued FASB Interpretation ("FIN") No. 45,
"Guarantor's Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others." FIN 45 requires companies to
recognize, at the inception of a guarantee, a liability for the fair value of
the obligation undertaken in issuing the guarantee. Guarantees in existence at
December 31, 2002 are grandfathered for the purposes of recognition and would
only need to be disclosed. Globalstar does not expect that the adoption of FIN
No. 45 will have an effect on its consolidated financial statements. Globalstar
will adopt the initial recognition and measurement provisions of FIN No. 45 for
guarantees issued or modified after December 31, 2002.

     In December 2002, the EITF reached a consensus on EITF Issue No. 00-21,
"Revenue Arrangements with Multiple Deliverables." EITF Issue No. 00-21
addresses certain aspects of the accounting by a vendor for arrangements under
which it will perform multiple revenue-generating activities. In some
arrangements, the different revenue-generating activities (deliveries) are
sufficiently separable and there exists sufficient evidence of their fair values
to separately account for some or all of the deliveries (that is, there are
separate units of accounting). In other arrangements, some or all of the
deliveries are not independently functional, or there is not sufficient evidence
of their fair values to account for them separately. EITF Issue No. 00-21
addresses when, and if so, how an arrangement involving multiple deliverables
should be divided into separate units of accounting. EITF Issue No. 00-21 does
not change otherwise applicable revenue recognition criteria. The guidance in
this Issue is effective for revenue arrangements entered into in fiscal periods
beginning after June 15, 2003. The adoption of EITF Issue No. 00-21 is not
expected to have a material effect on Globalstar's consolidated financial
statements.

     In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation -- Transition and Disclosure, an amendment to FASB Statement No.
123". SFAS No. 148 provides alternative methods of transition for a voluntary
change to the fair value based method of accounting for stock-based employee
compensation. In addition, SFAS No. 148 amends the disclosure requirement of
SFAS No. 123, "Accounting for Stock-Based Compensation", to require prominent
disclosures in both annual and interim consolidated financial statements about
the method of accounting for stock-based employee compensation and the effect of
the method used on reported results. Globalstar adopted the disclosure
provisions of SFAS No. 148 effective December 31, 2002.

SUMMARY OF CRITICAL ACCOUNTING POLICIES AND ESTIMATES

     The preparation of financial statements in conformity with United States
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported

                                        34


amount of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the amount of revenues
and expenses reported for the period. Actual results could differ from
estimates.

     GTL accounts for its investment in Globalstar's ordinary partnership
interests on an equity basis, recognizing its allocated share of net loss for
each period since its initial investment on February 22, 1995. In 2000,
Globalstar's losses reduced GTL's investment in Globalstar ordinary and
preferred partnership interests to zero. Accordingly, GTL discontinued providing
for its allocated share of Globalstar's net losses and recognized the remaining
unallocated losses as a result of its general partner status in Globalstar.

     Because GTL is a general partner of Globalstar, GTL is jointly and
severally liable with the other general partner for the recourse debt and other
recourse obligations of Globalstar to the extent Globalstar is unable to pay
such debts. GTL believes that such recourse obligations totaled approximately
$1.4 billion as of December 31, 2002. Certain of Globalstar's debt, including
the public debt, is non-recourse to the general partners. On February 15, 2002,
LQSS, the other general partner of Globalstar filed a voluntary petition under
Chapter 11 of the Bankruptcy Code. Effective February 15, 2002, Globalstar
ceased allocating additional losses associated with recourse debt to LQSS. As
the only remaining general partner of Globalstar that has not filed for
bankruptcy protection, GTL has been allocated all loses related to debt that is
recourse the general partners since February 15, 2002. As a result of its
general partner status, GTL has recorded a cumulative liability of $880.8
million.

     In 2001, an issue was raised as to whether the three-year notes issued to
the guarantors of The Chase Manhattan Bank $250 million credit facility were
prepared in accordance with the recourse provisions of the guarantee
arrangement. Management does not believe the existing notes containing
non-recourse language will need to be replaced with notes not containing the
non-recourse language. If the existing non-recourse notes were replaced with
notes not containing the non-recourse language, the replacement would not impact
Globalstar's results of operations. However, allocations of Globalstar's losses
to general partners would increase by the amount of the increase in recourse
obligations. Replacement of the notes would not alter the subordinate position
of GTL's shareholders relative to holders of these notes.

     Since the Petition Date, Globalstar's consolidated financial statements
have been prepared in compliance with Statement of Position ("SOP 90-7") on
Financial Reporting by Entities in Reorganization Under the Bankruptcy Code
issued by the American Institute of Certified Public Accountants. Specifically,
all pre-petition liabilities subject to compromise have been segregated on the
balance sheet and classified as liabilities subject to compromise. No interest
expense on pre-petition liabilities or dividends on redeemable preferred
partnership interests since the Petition Date have been accrued or recorded as
these amounts are not expected to be allowed claims. No debt discounts or
deferred financing costs have been amortized since the Petition Date as the
value of the allowed debt has not been fixed by the Bankruptcy Court. Debt
obligations have not been adjusted to reorganization values since the Bankruptcy
Court has not yet confirmed a plan of reorganization. Management expects that
the allowed claims will be established near the date that a final plan of
reorganization is confirmed by the Bankruptcy Court and pre-petition liabilities
will be adjusted as the claims are resolved.

     Globalstar and its subsidiaries remain in possession of their assets and
properties and continue to operate their businesses as debtors-in-possession. As
a result of Globalstar's bankruptcy petition, several of Globalstar's debt
obligations were accelerated and became immediately due and payable. GTL does
not intend to file an immediate petition for bankruptcy relief, but will
continue to monitor events and govern its actions accordingly. Globalstar's
bankruptcy filing and subsequent financial restructuring will likely leave
shares in GTL with very little or no value. These factors, among others, raise
substantial doubt about GTL's ability to function as a going concern.

     Inventory consists of fixed and mobile user terminals, accessories and
gateway spare parts that are held for sale. Inventory is stated at lower of cost
or market. Cost is computed using a standard cost, which approximates actual
cost on a first-in, first-out basis. Inventory write-downs are based on
management's best estimates as they relate to excess and obsolescence. If actual
market conditions are less favorable than those projected by management,
inventory write-downs may be required.

                                        35


     The carrying value of the Globalstar System is reviewed for impairment
whenever events or changes in circumstances indicate that the recorded value of
the space segment and ground segment, taken as a whole, may not be recoverable.
Globalstar looks to current and future undiscounted cash flows, excluding
financing costs, as primary indicators of recoverability. If an impairment is
determined to exist, any related impairment loss is calculated based on fair
value. If Globalstar's estimates of future performance and long term revenue
projections change, management may be required to record additional impairment
charges.

     Long term assets include receivables from service providers associated with
the reimbursement of gateway acquisition and deployment costs previously paid by
Globalstar to QUALCOMM. As of December 31, 2002, these receivables are
delinquent and Globalstar has sent notices of default where appropriate. If the
collection of these payments is unsuccessful, Globalstar may retain title to
these gateways, subject to local restrictions, or Globalstar may receive an
equity position in the service provider company in exchange for debt
forgiveness. The production gateway receivable, net of reserve, is based on the
estimated value of the anticipated recovery of the receivables based on current
discussions between Globalstar and the service providers. As of December 31,
2002, Globalstar has reserved $18.9 million of the production gateway
receivables.

RELATED PARTY DISCLOSURES

     Globalstar has a number of transactions with its affiliates. Such
transactions have been negotiated on an arms-length basis and Globalstar
believes that the arrangements are no less favorable to Globalstar than could be
obtained from unaffiliated parties. The following describes these related-party
transactions.

     The governing body of Globalstar is the General Partners' Committee. The
Committee may have up to seven members, five of whom may be appointed by the
managing general partner of Globalstar, LQSS. The general partner of LQSS is
LQP, a Delaware limited partnership comprised of subsidiaries of Loral and
QUALCOMM. The managing general partner of LQP is Loral General Partner, Inc.
("LGP"), a subsidiary of Loral. As of December 31, 2002, Loral owned, directly
or indirectly, 25,163,207 (approximately 38.2%) of the ordinary partnership
interests of Globalstar, including interests attributable to 9,902,990 shares of
GTL outstanding common stock.

     In order to accelerate the deployment of gateways around the world,
Globalstar agreed to help service providers finance approximately $80 million of
the cost of the initial gateways. Globalstar entered into an agreement with
QUALCOMM for the manufacturing, deployment and maintenance of Globalstar
gateways. Globalstar, in turn, invoiced the service providers for the contract
costs plus a markup. As of December 31, 2002, the collection of $35.2 million of
service provider gateway purchase receivables, which are secured by gateway
assets, are deferred indefinitely, as well as $2.8 million of interest.
Globalstar forgave the debt due from TE.SA.M. from its five gateways in
connection with the July 2, 2002, transaction and settlement described above.
(See discussion of New Business Plan and Related Transactions above.) Currently
due under the production gateway purchase agreement are $4.1 million of gateway
operational costs. The collection of these receivables is delinquent and
Globalstar has sent notices of default where appropriate. If the collection of
these payments is unsuccessful, Globalstar will retain title to these gateways,
subject to local restrictions. As of December 31, 2002, Globalstar has
classified the production gateway purchase receivables as long-term assets and
provided an allowance for doubtful collection of $18.9 million.

     Following a launch failure in September 1998, Globalstar decided to
purchase eight additional satellites for $148 million (including performance
incentives of up to $16 million) to serve as on-ground spares. As of December
31, 2002, costs of $147 million (including a portion of the performance
incentives) have been recognized for these spare satellites. SS/L has not
terminated its satellite contract with Globalstar and has completed seven of the
eight spare satellites. All eight are in storage in the California. Title to
those satellites, which is currently held by SS/L, is expected to be transferred
to Globalstar as part of the Loral Settlement discussed below. However, there
can be no assurance that the Loral Settlement will be effected.

                                        36


     On July 17, 2001, the FCC granted Globalstar and seven other applicants
authorizations to construct, launch and operate MSS systems in the 2 GHz band,
subject to strict milestone requirements. Globalstar entered into a
non-contingent contract with SS/L on July 16, 2002. On January 30, 2003, the
FCC's International Bureau declared the 2 GHz license to be null and void.
Globalstar believes that this action by the FCC's staff is inconsistent with the
facts and the law and has requested the full FCC to review and reverse it.
Globalstar has also requested the full FCC to stay the Bureau's decision pending
review. On January 31, 2003, Globalstar instructed SS/L to stop work on the
contract and requested repayment of the balance of that had not been spent.
Loral is expected to repay this balance in connection with the Loral Settlement
discussed below. However, there can be no assurances that the Loral Settlement
will be effected.

     In May 2000, Globalstar finalized $531.1 million of vendor financing
arrangements (including $31.1 million of accrued interest) with QUALCOMM that
replaced the previous arrangement. As of December 31, 2002, $623.3 million was
outstanding under this facility (including $123.3 million of accrued interest).
This liability, including accrued interest through the Petition Date, has been
included in liabilities subject to compromise. In connection with this
agreement, QUALCOMM received warrants to purchase 3,450,000 Globalstar
partnership interests at an exercise price of $42.25 per interest. The exercise
price was determined by reference to the fair market value of GTL's common stock
on the closing date of the vendor financing, based on an approximate ratio of
one partnership interest for every four shares of GTL common stock. The warrants
are vested and will expire in 2007. The fair value of the vested warrants
totaled approximately $34.0 million and is being amortized over the term of the
vendor financing arrangements. However, in light of Globalstar's Chapter 11
petition, these warrants are likely to be of little or no value.

     In January 2001, Globalstar suspended indefinitely principal and interest
payments on all of its vendor financing, in order to conserve cash for
operations. Under the terms of the QUALCOMM vendor financing facility,
non-payment of interest payments when they become due, and continuance of non-
payment for five days, is an "event of default". An event of default occurred on
January 16, 2001, when Globalstar failed to pay interest with respect to
separate credit extensions made under the QUALCOMM vendor financing facility. As
a result of Globalstar's bankruptcy petition filed on February 15, 2002, this
vendor financing was accelerated and became immediately due and payable. The
vendor financing is an unsecured claim in Globalstar's bankruptcy case.

     SS/L provided $344 million of billings deferred under its construction
contracts with Globalstar, which included $120 million of orbital incentives.
The orbital payments on the replacement satellites are due on a per satellite
basis with 50% due when the satellite is placed in storage. The remaining 50% is
due when Globalstar directs SS/L to ship the satellite to the launch base. Until
such time, interest on the remaining 50% accrues at an interest rate of 10% per
annum. As of December 31, 2002, seven of the eight replacement satellites were
placed in storage and payments became due. No payments were made in 2002, and
interest accrued on the remaining 50% through the Petition Date. Total accrued
interest on the orbitals as of December 31, 2002 was $237,000. Payments were
made on the $134 million of non-interest bearing vendor financing through
January 15, 2001. Penalty fees were accrued at LIBOR plus 3%, through the
Petition Date, and total accrued penalties as of December 31, 2002 were $1.2
million. Interest was being accrued at LIBOR plus 3%, through the Petition Date,
and total accrued interest as of December 31, 2002 was $53.7 million. All of the
construction contract amounts owed to SS/L have been included in liabilities
subject to compromise. The amounts are unsecured claims in Globalstar's
bankruptcy case. Claims of Loral and its affiliates are expected to be resolved
as part of the Loral Settlement discussed below. However, there can be no
assurances that the Loral Settlement will be effected.

                                        37


     Payables and vendor financing due to affiliates is comprised of the
following (in thousands):



                                                  POST PETITION   PRE-PETITION
                                                  DECEMBER 31,    DECEMBER 31,   DECEMBER 31,
                                                      2002            2002           2001
                                                  -------------   ------------   ------------
                                                                        
SS/L............................................     $  409         $278,364       $259,098
Loral...........................................        277              981            961
QUALCOMM........................................         --          637,755        629,139
GCC.............................................      6,770               --          6,199
Other affiliates................................        289            3,249          9,099
                                                     ------         --------       --------
                                                     $7,745         $920,349       $904,496
                                                     ======         ========       ========


     On June 30, 2000, Globalstar's $250 million credit facility with The Chase
Manhattan Bank became due and was repaid in full by its guarantors, including
Lockheed Martin, QUALCOMM, DASA and SS/ L, who had previously received warrants
for GTL common stock in consideration of their guarantee. Pursuant to the
relevant agreements, Globalstar issued three-year notes in the amounts of $206.3
million, $21.9 million, $11.7 million and $10.1 million to Lockheed Martin,
QUALCOMM, SS/L and DASA, respectively, in satisfaction of their subrogation
rights. The notes are due on June 30, 2003 and bear interest, on a deferred
basis, at a rate of LIBOR plus 3%. On the consolidated balance sheet of
Globalstar the notes are presented as liabilities subject to compromise as of
December 31, 2002 and notes payable and notes payable to affiliates as of
December 31, 2001.

     Lockheed Martin, however, rejected the notes it received and instead
requested that Globalstar issue new securities with additional rights and
enhanced value, without waiving its claim that it is entitled to receive an
immediate cash reimbursement by Globalstar of its $150 million payment to the
bank lenders. Globalstar disputes Lockheed Martin's interpretation of the
relevant agreements. If the dispute is not resolved, Globalstar cannot be sure
that if the matter were litigated, the court would agree with Globalstar's
interpretation of the agreements. Management believes, however, that a court
would agree with Globalstar's interpretation of the relevant agreements. The
notes are an unsecured claim in Globalstar's bankruptcy case.

     In 2001, an issue was raised as to whether the three-year notes issued to
the guarantors of The Chase Manhattan Bank $250 million credit facility were
prepared in accordance with the recourse provisions of the guarantee
arrangement. Management does not believe the existing notes containing
non-recourse language will need to be replaced with notes not containing the
non-recourse language. If the existing non-recourse notes were replaced with
notes not containing the non-recourse language, the replacement would not impact
Globalstar's results of operations. However, allocations of Globalstar's losses
to general partners would increase by the amount of the increase in recourse
obligations.

     Prior to filing Chapter 11, in 2001 $5.0 million of the notes payable to
affiliates (Loral) were offset with various receivables from Globalstar.

     On August 5, 1999, Globalstar entered into a $500 million credit agreement
with a group of banks. The creditors' interests under the credit facility were
purchased by a wholly owned subsidiary of Loral on November 17, 2000, which had
previously guaranteed the facility. As of December 31, 2002, all amounts under
the $500 million credit agreement were drawn. Borrowings under the facilities
bear interest, at Globalstar's option, at various rates based on margins over
the lead bank's base rate or the LIBOR for periods of one to six months. The
claims of the Loral subsidiary, in respect of this credit agreement constitute
unsecured claims in Globalstar's bankruptcy case.

     In consideration for the guarantee by Loral in 1999, Loral and certain
Loral subsidiaries received warrants to purchase an aggregate of 3,450,000
Globalstar partnership interests, valued at $141.1 million, (equivalent to
approximately 13.8 million shares of common stock of GTL) at an exercise price
of $91.00 per partnership interest (equivalent to $22.75 per share of GTL common
stock). However, in light of Globalstar's Chapter 11 petition, the warrants are
likely to be of little or no value.

                                        38


     On September 14, 1995, Loral, in its capacity as managing general partner,
granted certain of its officers options to purchase 560,000 shares of the GTL
common stock owned by Loral at an exercise price of $5.00 per share. The
exercise price was greater than the market price at grant date. These options
are immediately exercisable, of which 60,000 options were exercised in 2000, and
expire 12 years from date of grant. In October 1996 and in January 1998, Loral,
in its capacity as managing general partner, granted certain of its officers
options to purchase 608,000 and 20,000 shares, respectively, of GTL common stock
owned by Loral at a price $6.34 and $12.50, below market price on the grant
date. These options vest over a three year period and expire 10 years from date
of grant; 40,000 options were exercised in 1999 and no options were cancelled
during 2002, 2001 and 2000. Loral granted options of Loral common stock to
certain officers and employees of Globalstar as follows: April 1996, 94,000
shares at $10.50 per share, of which 13,200 shares were exercised in 1998 and
1997; April 1997, 5,000 shares at $13.75 per share, of which 1,000 shares were
exercised and 4,000 shares were cancelled in 1998; February 1998, 2,000 shares
at $24.44 per share; October 1998, 600 shares at $13.50 per share; and December
16, 1999, 30,000 shares at $16.00 per share. In light of Globalstar's planned
restructuring, these options are likely to be of little or no value.

     Globalstar has granted to SS/L an irrevocable, royalty-free, non-exclusive
license to use certain intellectual property expressly developed in connection
with the SS/L agreement provided that SS/L will not use, or permit others to
use, such license for the purpose of engaging in any business activity that
would be in material competition with Globalstar. Globalstar has similarly
agreed that it will not license such intellectual property if it will be used
for the purpose of designing or building satellites that would be in competition
with SS/L. If the Loral Settlement is effected, then these mutual promises would
be cancelled with the underlying satellite contract.

     Globalstar has granted to QUALCOMM an irrevocable, non-exclusive, worldwide
perpetual license to intellectual property owned by Globalstar in the Ground
Segment and developed pursuant to the QUALCOMM agreement. QUALCOMM may, pursuant
to such grant, use the intellectual property for applications other than the
Globalstar System provided that QUALCOMM may not for a period of three years
after its withdrawal as a strategic partner or prior to the third anniversary of
the Full Constellation Date (as defined in such grant), whichever is earlier,
engage in any business activity that would be in competition with the Globalstar
System. The grant of intellectual property to QUALCOMM described above is
generally royalty free. Under certain specified circumstances, however, QUALCOMM
will be required to pay a 3% royalty fee on such intellectual property.

     QUALCOMM initially agreed to grant at least one vendor a nonexclusive
worldwide license to use QUALCOMM's intellectual property to manufacture and
sell gateways to Globalstar's service providers. The foregoing license would be
granted by QUALCOMM to one or more such vendors on reasonable terms and
conditions, which will in any event not provide for royalty fees in excess of 7%
of a gateway's sales price (not including the approximately $400,000 per gateway
in recoupment expenses payable to Globalstar). Thus far, no other vendor has
committed to manufacture gateways, and Globalstar does not expect any other
vendor to manufacture gateways. QUALCOMM granted a license to manufacture
Globalstar user terminals to Ericsson and Telit and also agreed to grant a
similar license to at least one additional qualified manufacturer to enable it
to manufacture and sell the Globalstar user terminals to service providers.
However, these rights were granted under the Development Contract, which
QUALCOMM has purported to terminate.

     Subsidiaries of Loral have formed joint ventures with partners that have
executed service provider agreements granting the joint ventures exclusive
rights to provide Globalstar service to users in Brazil, Canada, Mexico, and
Russia as long as specified minimum levels of subscribers are met. In December
2001, a subsidiary of Globalstar acquired a majority interest in the Canadian
service provider business. As a result of this transaction, Globalstar and Loral
are now partners in the Canadian joint venture. Because of the consolidation,
all transactions between Globalstar and GCSC are eliminated in Globalstar's
consolidated financial statements. Founding service provider agreements have
been entered into with certain of Globalstar's limited partners for specific
countries. These service providers will receive certain discounts from
Globalstar's expected pricing schedule generally over a five-year period.
Globalstar has also

                                        39


agreed to provide QUALCOMM, under certain circumstances, with capacity on the
Globalstar System for its OmniTRACS services at its most favorable rates and to
grant to QUALCOMM the exclusive right to utilize the Globalstar System to
provide OmniTRACS-like services.

     In December 2001, a subsidiary of Globalstar purchased all of the
outstanding common shares of Vodafone Satellite Services, Inc., a Delaware
corporation, for $100, plus acquisition costs of $258,000. Globalstar has
renamed the company Globalstar Satellite Services, Inc. ("GSSI"). GSSI
indirectly owns the majority interest in GCSC, a Nova Scotia corporation based
in Ontario, Canada. GCSC is the Globalstar service provider in Canada and
generates its revenue from the provision of Globalstar services in Canada,
billing customers for usage over two Canadian gateways. Loral Holdings Ltd., a
subsidiary of Loral, owns the remaining minority interest in GCSC. Therefore,
the result of this transaction is that Globalstar is now a shareholder with
Loral in GCSC, the Canadian service provider. The acquisition has brought
additional efficiencies to the operation of the Globalstar network and allowed
for increased coordination in the Globalstar service offerings and pricing.
Loral's interest in GCSC is expected to be transferred to Globalstar as part of
the Loral Settlement discussed below. However, there can be no assurances that
the Loral Settlement will be effected.

     On March 14, 2003, Loral, the Creditors' Committee and Globalstar signed a
term sheet outlining to the terms and conditions of a comprehensive settlement
of certain contested matters and a release of the claims against Loral (the
"Loral Settlement"). Also on March 14, 2003, Globalstar and the Creditors'
Committee filed a joint motion under Bankruptcy Rule 9019 for an order approving
the Loral Settlement with the Bankruptcy Court. The parties agreed to use their
reasonable best efforts to execute a definitive agreement based on the term
sheet by March 26, 2003. The Loral Settlement, which will be effected in
connection with Globalstar's restructuring and emergence from bankruptcy,
provides the following, among other items: (1) SS/L would transfer to Globalstar
title "as is" to the eight spare satellites that are currently held in storage
by SS/L; (2) certain strategic agreements under which Loral holds exclusive
rights to provide Globalstar services to defense and national security agencies
and in the aviation market would terminate, and a new joint venture company (to
be owned 75% by Globalstar and 25% by Loral) would be formed to pursue the
defense and national security business; (3) L/Q Licensee would transfer the
Federal Communications Commission license held by it to Globalstar or LQP would
transfer operations of L/Q Licensee to Globalstar; (4) Loral would convey its
interests in the Canadian service provider operations to Globalstar; (5) certain
Loral service provider financial obligations would be settled through a
reduction in debt obligations due from GCC to Loral and other financial
obligations involving a Russian joint venture would be restructured; (6) Loral's
general unsecured claims as a creditor in the Globalstar bankruptcy proceeding
would be quantified and allowed; (7) SS/L would return to Globalstar unused
advance prepayments related to the 2 GHz satellite contract; (8) Loral's
designees would resign from Globalstar's General Partners Committee; and (9)
third party claims against Loral, certain Loral affiliates and all six members
of Globalstar's General Partners' Committee, as provided in the term sheet,
would be released. The motion supporting the Loral Settlement is expected to be
heard by the Bankruptcy Court on April 9, 2003.

     On July 2, 2002, Globalstar closed a transaction with TE.SA.M. under which
a subsidiary of Globalstar acquired TE.SA.M.'s French gateway, back office
assets, inventory and TE.SA.M.'s limited partnership interests. Under the terms
of the transaction, both Globalstar and TE.SA.M. forgave all outstanding
obligations between the parties and provided mutual releases of liability.

     On December 30, 2002, the Bankruptcy Court approved a settlement agreement
among GSCI, Globalstar, Globalstar Vodafone Network Pty Ltd. Australia and
Globalstar Australia Pty Ltd. Under this settlement, Globalstar consented to the
transfer by VSSL to Localstar of the service provider rights in Australia, and
Globalstar entered into a new service provider agreement with Localstar. VSSL
was the original authorized service provider for Australia and the operator of
three gateways in that country. In conjunction with this transaction, VSSL
agreed to settle certain pre-petition and post-petition debts with Globalstar.
Globalstar received payments totaling $1.7 million from Vodafone in January
2003.

                                        40


     On March 25, 2003, Globalstar entered into a settlement and release
agreement with Elsacom and a gateway asset purchase agreement with a wholly
owned subsidiary of Elsacom. Elsacom is the primary Globalstar service provider
in Central and Eastern Europe, the operator of the gateway located in Avezzano,
Italy and, through its affiliate, Globalstar Northern Europe, the former
operator of the gateway located in Karkkila, Finland. Although Elsacom had
defaulted on its gateway contract obligations to Globalstar, Elsacom desired to
continue providing Globalstar service to its customers from Avezzano.
Accordingly, Globalstar and Elsacom agreed to negotiate a mutually acceptable
plan for paying certain of the debt, transferring the equipment in Finland to
Globalstar and maintaining Elsacom's service provider rights. Under the terms of
the Elsacom Settlement, Globalstar will receive cash payments totaling $2.4
million in two installments to be completed by June 2003 and the release of all
past payment obligations due to Elsacom in exchange for liquidation of the
gateway contract payments due to Globalstar from Elsacom. Additionally,
Globalstar will retain title to the gateway equipment installed in Finland.
Globalstar intends to dismantle the Finland gateway and to place the removable
parts, which contain most of the gateway's electronics, in storage for future
deployment.

     Globalstar has entered into various agreements with other service providers
and gateway operators to provide and receive various services related to the
Globalstar business. Currently, Globalstar is providing retail billing support
to its service providers in Mexico and Brazil, on a cost reimbursable basis.
Additionally, Globalstar has agreements in place to provide, also on cost
reimbursable basis, certain information technology and telecommunications
network related support to GCC, in which it holds a minority interest. Also, GCC
bills Globalstar for the monitoring of gateways in the United States, Canada,
and France. In addition, Globalstar is billed for all costs related to the
operations of the gateways located in Canada, as cost recovery mechanism for
GCC. Globalstar also net settles with other service providers roaming charges
that arise from subscribers using gateways other then their home gateway to
complete calls on the Globalstar System.

     Globalstar's limited partnership agreement provides that, LQP, the general
partner of LQSS, would receive a managing partner's allocation equal to 2.5% of
Globalstar's revenues up to $500 million plus 3.5% of revenues in excess of $500
million. Loral and QUALCOMM ultimately would receive 80% and 20% of such
distribution, respectively. As of December 31, 2002, the managing partner's
allocation of $167,000 has been deferred and $108,000 is an unsecured claim in
Globalstar's bankruptcy case.

CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS DISCLOSURE

     As of December 31, 2002, Globalstar had various contractual obligations and
commercial commitments, which are more fully disclosed in the notes to
Globalstar's consolidated financial statements. Commercial commitments are items
that Globalstar could be obligated to pay in the future that are not included in
Globalstar's consolidated balance sheet. The following table discloses aggregate
information

                                        41


about Globalstar's contractual obligations and commercial commitments and the
periods in which payment are due (in thousands):



                                                                                  PAYMENTS DUE BY PERIOD
                                                                    --------------------------------------------------
CONTRACTUAL OBLIGATIONS AND                      TOTAL INCLUDING                                                AFTER
COMMERCIAL COMMITMENTS                           ACCRUED INTEREST   LESS THAN 1 YEAR   1-3 YEARS   4-5 YEARS   5 YEARS
- ---------------------------                      ----------------   ----------------   ---------   ---------   -------
                                                                                                
CONTRACTUAL OBLIGATIONS
Accounts payable...............................     $    2,522         $    2,522       $   --      $   --     $   --
Payable to affiliates..........................          7,745              7,745           --          --         --
Accrued expenses...............................          6,419              6,419           --          --         --
Deferred revenue...............................          2,365              2,365           --          --         --
                                                    ----------         ----------       ------      ------     ------
Total Contractual Obligations..................     $   19,051         $   19,051       $   --      $   --     $   --
                                                    ==========         ==========       ======      ======     ======
LIABILITIES SUBJECT TO COMPROMISE..............     $3,425,921         $3,425,921       $   --      $   --     $   --
                                                    ==========         ==========       ======      ======     ======
COMMERCIAL COMMITMENTS
Operating leases...............................     $   19,680         $    3,235       $6,574      $6,548     $3,323
QUALCOMM inventory purchase commitment(1)......          5,786              5,522          264          --         --
                                                    ----------         ----------       ------      ------     ------
Total Commercial Commitments...................     $   25,466         $    8,757       $6,838      $6,548     $3,323
                                                    ==========         ==========       ======      ======     ======


- ---------------
(1) In 2003, GCSC contracted with QUALCOMM for the manufacture and delivery of
    2,000 fixed units and 5,000 car kits.

ITEM 7a.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     At December 31, 2002 and 2001, the fair value of Globalstar's long-term
debt and interest bearing vendor financing (collectively, "long-term
obligations") was estimated to be $124 million and $201 million, respectively,
using quoted market prices or, in the case of vendor financing and term-loans
with variable interest rates, the ratio of the carrying amount to fair value of
the Senior Notes for 2002 and 2001. The long-term obligations carrying value
exceeded fair value by $3.0 billion and $2.9 billion as of December 31, 2002 and
2001, respectively. Market rate risk on long-term obligations is estimated as
the potential increase in annual interest expense resulting from a hypothetical
one percentage point increase in interest rates and amounted to approximately
$31 million and $30 million for 2002 and 2001, respectively.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     See Index to Consolidated Financial Statements on page F-1.

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

     Not applicable.

                                        42


                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT DIRECTORS

     The following sets forth information concerning GTL's directors as of March
17, 2003.

                     

    Douglas G. Dwyre
                Age:    70
     Director Since:    1999
Business Experience:    Mr. Dwyre was President of Globalstar, L.P. from March 1994
                        until his retirement in March 1999. He also served as Senior
                        Vice President of Globalstar Telecommunications Limited from
                        May 1996 to March 1999.
 Sir Ronald Grierson
                Age:    81
     Director Since:    1996
Business Experience:    Sir Ronald is a member of the General Partners' Committee of
                        Globalstar. In addition, Sir Ronald is the Chairman of the
                        European Advisory Board of The Blackstone Group, which was
                        previously retained by Globalstar, L.P. as a financial
                        advisor. He is the retired Vice-Chairman of General Electric
                        Company plc.
Other Directorships:    Chime Communications plc, Etam Development S.A. and
                        Safic-Alcan S.A. Retired director of Daily Mail and General
                        Trust plc.

       E. John Peett
                Age:    67
     Director Since:    1994
Business Experience:    Mr. Peett was a founder and Executive Director of Vodafone
                        Group Plc. until his retirement in October 1997.
Other Directorships:    Chairman of Cambridge Positioning Systems Limited and
                        Vice-Chairman of PNC Telecom Plc.

  Michael B. Targoff
                Age:    58
     Director Since:    1994
Business Experience:    Mr. Targoff is Founder and Chief Executive Officer of
                        Michael B. Targoff & Co. Prior to that, he was President of
                        Globalstar Telecommunications Limited and Chief Operating
                        Officer of Globalstar, L.P. from May 1996 to January 1998.
                        From April 1996 to January 1998, Mr. Targoff was President
                        and Chief Operating Officer of Loral Space & Communications
                        Ltd. Prior to that time, he served as Senior Vice President
                        and Secretary of Loral Corporation.
Other Directorships:    Leap Wireless International, Infocrossing, Inc., and ViaSat,
                        Inc.



                                        43

                     
    A. Robert Towbin
                Age:    67
     Director Since:    1995
Business Experience:    Mr. Towbin is a member of the General Partners' Committee of
                        Globalstar. Mr. Towbin is a Managing Director of Stephens
                        Inc. From January 1, 2000 to November 2001 he was
                        Co-Chairman of C.E. Unterberg, Towbin and from September
                        1995 to 1999 was Senior Managing Director of C.E. Unterberg,
                        Towbin. From January 1994 to September 1995, Mr. Towbin was
                        President and CEO of the Russian-American Enterprise Fund (a
                        U.S. government-owned investment fund) and later Vice
                        Chairman of its successor fund, The U.S. Russia Investment
                        Fund. He was a Managing Director of Lehman Brothers and Co-
                        Head, High Technology Investment Banking from January 1987
                        until January 1994. Prior to joining Lehman Brothers, Mr.
                        Towbin was Vice Chairman and a Director of L.F. Rothschild,
                        Unterberg, Towbin Holdings Inc. and its predecessor
                        companies from 1959 to 1987. Mr. Towbin received his B.A.
                        from Dartmouth College in 1957
Other Directorships:    Gerber Scientific Inc., Globecomm Systems Inc. and K&F
                        Industries Inc.



     The following sets forth information concerning members of Globalstar's
General Partners' Committee who are not also Directors of GTL as of March 17,
2003.

                     

       Olof Lundberg
                Age:    59
       Member Since:    2001
Business Experience:    Mr. Lundberg is chairman of the General Partners' Committee
                        of Globalstar and Chief Executive Officer of Globalstar
                        since April 2001. Mr. Lundberg was the founding Director
                        General of Inmarsat from 1979 to 1995 and he then served as
                        founding CEO and then Chairman and CEO of ICO Global
                        Communications until 1999. Prior to Inmarsat Mr. Lundberg
                        held management positions at Swedish Telecom, now Telia,
                        mainly in their mobile communications businesses.
Other Directorships:    Actinus Ltd.

     Russell R. Mack
                Age:    48
       Member Since:    2001
Business Experience:    Mr. Mack is a member of the General Partners' Committee of
                        Globalstar. He has been Vice President, Business Ventures of
                        Loral Space & Communications Ltd. since February 1998.
                        Previously, he was Director of Business Planning and
                        Development of Loral Space & Communications Ltd. since April
                        1996.



                                        44

                     
 Bernard L. Schwartz
                Age:    77
       Member Since:    1994
Business Experience:    Mr. Schwartz is a member of the General Partners' Committee
                        of Globalstar. He had previously served as Chief Executive
                        Officer of Globalstar until May 15, 2001 and as Chairman of
                        the Board and Chief Executive Officer of Globalstar
                        Telecommunications Limited until March 8, 2001. Mr. Schwartz
                        has been Chairman of the Board of Directors and Chief
                        Executive Officer of Loral Space & Communications Ltd. since
                        January 1996.
Other Directorships:    Loral Space & Communications Ltd., First Data Corp., K&F
                        Industries, Inc., and Satelites Mexicanos, S.A. de C.V.
                        Trustee of Mount Sinai -- NYU Medical Center and Health
                        System and Thirteen/WNET Educational Broadcasting
                        Corporation.

      Eric J. Zahler
                Age:    52
       Member Since:    2000
Business Experience:    Mr. Zahler is a member of the General Partners' Committee of
                        Globalstar. He had previously served as Vice Chairman of
                        Globalstar Telecommunications Limited until March 8, 2001.
                        Mr. Zahler has been President and Chief Operating Officer of
                        Loral Space & Communications Ltd. since February 2000.
                        Previously, he was Executive Vice President of Loral Space &
                        Communications since October 1999 and Senior Vice President,
                        General Counsel and Secretary of Loral Space &
                        Communications Ltd. since February 1998.
Other Directorships:    Loral Space & Communications Ltd. and Satelites Mexicanos,
                        S.A. de C.V.



     It is expected that Messrs. Mack, Schwartz and Zahler will resign from the
General Partners' Committee as part of the Loral Settlement discussed above.
However, there can be no assurances that the Loral Settlement will be effected.
(See discussion of Developments Relating to Loral and QUALCOMM above.)

DIRECTOR COMPENSATION

     GTL directors are paid a fixed fee of $12,000 per year. Directors are also
paid $1,500 for personal attendance at each meeting. Audit Committee members are
paid $2,000 per year and $1,000 per meeting.

     Members of the Globalstar's General Partners' Committee are each appointed
by a general partner and serve until his successor is appointed by the
appropriate general partner. Members of the General Partners' Committee receive
no compensation for serving on the General Partners' Committee.

     Globalstar has purchased insurance from The Hartford and several other
companies insuring Globalstar and GTL against obligations they might incur as a
result of its indemnification of its officers and directors for certain
liabilities they might incur, and insuring such officers and directors for
additional liabilities against which they might not be indemnified by
Globalstar. Discussions are ongoing between Globalstar and The Hartford to
extend such insurance upon its scheduled expiration date.

EXECUTIVE OFFICERS OF GTL



NAME                                                      AGE                   POSITION
- ----                                                      ---                   --------
                                                          
Ira E. Goldberg.........................................  56    Restructuring Officer


     Mr. Goldberg has been Restructuring Officer of GTL since July 2001. Mr.
Goldberg is an investment banking professional and attorney with extensive
capital markets experience in structuring and negotiating

                                        45


transactions, and in project financing. From 2000 through July 2001, Mr.
Goldberg was an attorney at Robinson, Brog, et al. Prior to that from 1999
through 2000 he worked on the Business Development Team at MuniAucion, Inc. and
from 1997 through 1999 he was the Municipal Finance Group Director at Newcourt
Credit Corporation.

EXECUTIVE OFFICERS OF GLOBALSTAR



NAME                                                      AGE                   POSITION
- ----                                                      ---                   --------
                                                          
Olof Lundberg...........................................  59    Chief Executive Officer
Anthony J. Navarra......................................  55    President
Megan Fitzgerald........................................  43    Senior Vice President, Operations
Terry R. Evans..........................................  55    Senior Vice President, Business
                                                                Development
William F. Adler........................................  57    Vice President, Legal and Regulatory
                                                                Affairs
Daniel P. McEntee.......................................  40    Vice President and Chief Financial
                                                                Officer
Sam Garcia..............................................  46    Vice President -- Human Resources &
                                                                Administration


     Mr. Lundberg has been chairman of the General Partners' Committee of
Globalstar and Chief Executive Officer of Globalstar since April 2001. Mr.
Lundberg was the founding Director General of Inmarsat from 1979 to 1995 and he
then served as founding CEO and then Chairman and CEO of ICO Global
Communications until 1999. Prior to Inmarsat Mr. Lundberg held management
positions at Swedish Telecom, now Telia, mainly in their mobile communications
businesses.

     Mr. Navarra has been President of Globalstar since September 1999. Mr.
Navarra was President of GTL between May 2000 and July 2001. Mr. Navarra was
acting Chief Operating Officer of Globalstar from March 1999 to September 1999
and Executive Vice President of GTL from May 1999 to May 2000. Mr. Navarra had
been Vice President of GTL from 1995 to May 1999 and Executive Vice President,
Strategic Development of Globalstar from March 1994 to March 1999.

     Ms. Fitzgerald has been Senior Vice President, Operations, of Globalstar
since November 2000 and Vice President for Satellite Constellation Establishment
of Globalstar since September 1997. Ms. Fitzgerald has been with Globalstar
since June 1994.

     Mr. Evans has been Senior Vice President, Business Development since June
2000. Prior to that time, Mr. Evans was Vice President, Business Development of
Globalstar since January 1996, and prior to that time, he was Vice President,
Finance since July 1993.

     Mr. Adler has been Vice President of Legal and Regulatory Affairs of
Globalstar since January 1996. He was a partner with Fleischman and Walsh,
L.L.P. from May 1994 to November 1995, specializing in domestic and
international telecommunications law, regulation legislation and policy. Prior
to that, he was the Executive Director of Federal Regulatory Relations with
Pacific Telesis Group.

     Mr. McEntee has been Vice President and Chief Financial Officer of
Globalstar since July 2000. Prior to that time, Mr. McEntee was Vice President
Market Development, New Territories of Globalstar since March 2000, and prior to
that time he was Director, Business Operations, since October 1996. Prior to
that time, Mr. McEntee was Finance Manager for Globalstar since June 1992.

     Mr. Garcia has been Vice President-Human Resources & Administration since
March 1996. Prior to that time, Mr. Garcia was Director of Human Resources for
Loral AeroSys in Seabrook, Maryland from October 1988 to March 1996.

                                        46


SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

     GTL believes that during 2002 all reports for GTL's executive officers,
directors and beneficial owners of more than 10% of the GTL common stock that
were required to be filed under Section 16(a) of the Securities Exchange Act of
1934 were timely filed.

ITEM 11.  EXECUTIVE COMPENSATION

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

     Sir Ronald Grierson and A. Robert Towbin make up the Compensation Committee
of GTL and Globalstar. Neither of the members of the Compensation Committee are
present or former officers or employees of Globalstar, GTL or their respective
subsidiaries. Sir Ronald and Mr. Towbin serve as members of Globalstar's General
Partners' Committee. Sir Ronald is the Chairman of the European Advisory Board
of The Blackstone Group, which previously served as a financial advisor of
Globalstar. Mr. Towbin is a Managing Director of Stephens Inc. and was formerly
Co-Chairman of C.E. Unterberg, Towbin, which has provided advisory, investment
banking and underwriting services to Globalstar and GTL. Mr. Towbin resigned
from that position during 2001.

EXECUTIVE COMPENSATION

     The following table summarizes the compensation paid to the executive
officer of GTL and the Chief Executive officer and four most highly compensated
executive officers of Globalstar (Named Executive Officers).



                                                                             LONG TERM
                                             ANNUAL COMPENSATION            COMPENSATION
                                    -------------------------------------   ------------
                                                                             SECURITIES
                                                               OTHER         UNDERLYING
NAME AND                                                      ANNUAL           STOCK          ALL OTHER
PRINCIPAL POSITION(A)        YEAR    SALARY    BONUS(B)   COMPENSATION(C)     OPTIONS      COMPENSATION(D)
- ---------------------        ----   --------   --------   ---------------   ------------   ---------------
                                                                         
Olof Lundberg..............  2002   $962,760   $     --            --              --         $ 87,911
  Chief Executive Officer
     of                      2001    688,169         --      $300,000              --               --
  Globalstar and Chairman
     of                      2000        N/A        N/A           N/A             N/A              N/A
  Committee of Partners of
  Globalstar

Anthony J. Navarra.........  2002    297,692    190,834            --              --           16,927
  President of Globalstar    2001    301,518    306,666            --              --          113,932
                             2000    293,269         --            --         143,700           10,548

Gloria Everett(a)..........  2002    257,818     24,000            --              --           91,041
  Executive Vice President   2001    273,126    322,400            --              --           49,427
  Corporate Sales of         2000    260,499         --        50,000         175,000            5,722
  Globalstar

Megan Fitzgerald...........  2002    182,144     23,750            --              --            9,102
  Senior Vice President      2001    184,184    239,000            --              --           36,263
  Operations of Globalstar   2000    175,865         --            --         155,000            5,998

William F. Adler...........  2002    173,340     23,125            --              --           10,366
  Senior Vice President      2001    178,047    197,600            --              --           33,261
  Legal and Regulatory       2000    171,720         --            --          89,500            6,086
  Affairs of Globalstar


                                        47




                                                                             LONG TERM
                                             ANNUAL COMPENSATION            COMPENSATION
                                    -------------------------------------   ------------
                                                                             SECURITIES
                                                               OTHER         UNDERLYING
NAME AND                                                      ANNUAL           STOCK          ALL OTHER
PRINCIPAL POSITION(A)        YEAR    SALARY    BONUS(B)   COMPENSATION(C)     OPTIONS      COMPENSATION(D)
- ---------------------        ----   --------   --------   ---------------   ------------   ---------------
                                                                         
Terry R. Evans.............  2002    164,698     21,500            --              --            6,138
  Senior Vice President      2001    170,800    199,000            --              --           73,630
  Business Development       2000    156,880         --            --          50,000            4,685
  of Globalstar

Ira E. Goldberg............  2002    100,000         --            --              --               --
  Restructuring Officer of   2001     50,000         --            --              --               --
  GTL                        2000        N/A        N/A           N/A             N/A              N/A


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

(a) Gloria Everett terminated her employment with Globalstar on November 27,
    2002.

(b) For years prior to 2001, reflects bonuses earned for each of the respective
    fiscal years; these bonuses, however, were paid in the subsequent year.
    Exclusive of patent and retention bonuses, there were no management bonuses
    paid in the fiscal year 2002 or 2001. The 2002 and 2001 bonuses were
    retention bonuses paid during the respective year.

(c) Consists of a signing bonus paid to Mr. Lundberg in the amount of $300,000
    for 2001. Consists of signing bonus paid to Ms. Everett in the amount of
    $50,000 for 2000.

(d) Includes company matching contributions to the savings plan, vacation
    payouts, insurance premiums, relocation and separation pay.

OTHER COMPENSATION ARRANGEMENTS

     On January 31, 2002, a payment was made to Mr. Navarra in the amount of
$153,000 as part of a retention bonus program implemented by Globalstar in
February of 2001 to retain its executives and key employees. This payment was
the final payment due to Globalstar employees under the February 2001 program.
On March 31, 2002, a second and final retention bonus payment was made to 69
employees in the amount of $523,010 as part of the retention bonus program
implemented in October 2001 for employees who did not participate in the
February 2001 retention bonus program for key employees.

     In May 2002, the Bankruptcy Court entered the Stipulation and Agreed Order
Pursuant to Sections 105(a), 363(b) and 503(b)(1) of the Bankruptcy Code
Authorizing Debtors to Adopt and Implement an Employee Incentive Program,
authorizing Globalstar to make two payments totaling approximately $2.9 million
under an Employee Retention Program, including approximately $1.9 million in
cash payments and approximately $1.0 million in non-cash awards. The non-cash
awards will be made in the form of common stock of the New Globalstar, except
that common stock is not (or cannot be) issued without material trading
restrictions, or if New Globalstar is organized as a limited partnership or a
limited liability company, an equivalent value will be awarded in cash. In July
2002, Globalstar distributed the first of two payments to participants under the
Employee Retention Program in an aggregate amount of approximately $0.7 million,
including payments to the Named Executive Officers as follows: Mr. Goldberg, $0;
Mr. Lundberg, $0; Mr. Navarra, $37,500; Ms. Fitzgerald, $23,750; Mr. Evans,
$21,250; Mr. Adler, $23,125; Mr. McEntee, $20,000; and Mr. Garcia, $18,750. A
second payment, totaling approximately $1.2 million in cash and $1.0 million in
stock or cash, will be made only upon successful emergence from restructuring.

     Globalstar's senior management was granted absolute discretion as to the
allocation of all payments under the Employee Retention Program, except that (a)
such allocations must be consistent with the schedule provided to the Creditors'
Committee on May 6, 2002 and (b) if an employee for any reason becomes
ineligible to receive payments under the Employee Retention Program, including
without limitation due to termination of employment prior to the effective date
of a plan of reorganization, the

                                        48


payments allocated to such employee under the Employee Retention Program may not
be reallocated or distributed under the Employee Retention Program. Eight
participants in the Employee Retention Program have terminated their employment
with Globalstar since the inception of this program and are ineligible to
receive future payments under this program.

     During 2001, Olof Lundberg was named the Chief Executive Officer of
Globalstar. The terms of his three year renewable agreement commencing on April
23, 2001 stipulated that he receive a $300,000 signing bonus, an annual salary
of $1.0 million, and an annual target bonus of $500,000, subject to achievement
of performance criteria to be agreed by Globalstar's General Partners'
Committee. If Mr. Lundberg is terminated without cause or resigns for good
reason, Mr. Lundberg will be entitled to salary and target bonus for the
remainder of the three-year term. In 2002, Mr. Lundberg was paid an annual
salary of $1,000,000; however, he did not receive an annual bonus.

     Ira E. Goldberg, GTL Restructuring Officer, is currently being compensated
$25,000 per quarter, payable, in advance, on the first day of each quarter.

OPTION EXERCISES AND YEAR-END VALUE TABLE

  Aggregated Option Exercises in 2002 and Year-End Option Values



                                                               NUMBER OF SECURITIES            VALUE OF UNEXERCISED
                           NUMBER OF                          UNDERLYING UNEXERCISED           IN-THE-MONEY OPTIONS
                            SHARES                          OPTIONS AT FISCAL YEAR-END          AT FISCAL YEAR END
                          ACQUIRED ON       REALIZED       ----------------------------    ----------------------------
NAME                       EXERCISE          VALUE         EXERCISABLE    UNEXERCISABLE    EXERCISABLE    UNEXERCISABLE
- ----                      -----------    --------------    -----------    -------------    -----------    -------------
                                                                                        
Olof Lundberg...........      --               $--                --              --           $--             $--
Anthony J. Navarra......      --               $--           263,025         136,975           $--             $--
Gloria Everett..........      --               $--           221,042         221,042           $--             $--
Megan Fitzgerald........      --               $--           195,833         122,167           $--             $--
William F. Adler........      --               $--           123,542          55,458           $--             $--
Terry R. Evans..........      --               $--            83,958          36,042           $--             $--
Ira E. Goldberg.........      --               $--                --              --           $--             $--


PENSION PLAN

     Globalstar's Retirement Plan (the "Plan") provides a non-contributory
benefit for each year of non-contributory participation, and additional benefits
associated with contributory participation. Globalstar also has a Supplemental
Executive Retirement Plan ("SERP") under which eligible employees receive
benefits which generally make up for certain required reductions in Plan
benefits caused by limitations under the Internal Revenue Code. For
non-contributory participation, the annual retirement benefit is $252 times
credited years of service. For contributory participation, the following table
shows the amounts of annual retirement benefits that would be payable at normal
retirement (age 65 or later). Benefits are shown for various rates of final
average salary, assuming that employee contributions were made for the periods
indicated. Employees who have completed at least one year of service and
attained age 21 will receive the contributory benefit if they contribute to the
Plan at the rate of 1% of salary.



                                                                YEARS OF CONTRIBUTORY SERVICE
                                                                -----------------------------
FINAL AVERAGE SALARY                              15         20         25         30         35         40
- --------------------                           --------   --------   --------   --------   --------   --------
                                                                                    
$100,000.....................................  $ 22,270   $ 29,690   $ 37,110   $ 44,540   $ 51,960   $ 58,460
 125,000.....................................    28,830     38,440     48,050     57,660     67,270     75,400
 150,000.....................................    35,390     47,190     58,990     70,790     82,580     92,330
 175,000.....................................    41,960     55,940     69,930     83,910     97,900    109,270
 200,000.....................................    48,520     64,690     80,860     97,040    113,210    126,210
 225,000.....................................    55,080     73,440     91,800    110,160    128,520    143,150
 250,000.....................................    61,640     82,190    102,740    123,290    143,830    160,080
 275,000.....................................    68,210     90,940    113,680    136,410    159,150    177,020
 300,000.....................................    74,770     99,690    124,610    149,540    174,460    193,960
 350,000.....................................    87,890    117,190    146,490    175,790    205,080    227,830
 400,000.....................................   101,020    134,690    168,360    202,040    235,710    261,710


                                        49


     The table above shows total estimated benefits payable under the Plan and
SERP including amounts attributable to employee contributions, determined on a
straight annuity basis. Such estimated benefits are not subject to any deduction
for Social Security or other offset amounts. The compensation covered by the
Plan and SERP is the employee's base salary, and is identical to compensation
disclosed as "Salary" in the summary compensation table. (See discussion of
Executive Compensation above.) The Plan and SERP benefits are computed on the
basis of the average of an employee's highest five consecutive annual salaries
out of the last ten years contributions are made. Only Globalstar employees are
eligible to participate in the Plan and SERP. As of December 31, 2002, the
contributory credited years of service for each of the Named Executive Officers
are as follows: Olof Lundberg, 0 years; Anthony Navarra, 11 years; Megan
Fitzgerald, 7 years; William Adler, 6 years; Terry Evans, 16 years.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS

     The following table shows, based upon filings made with the Securities and
Exchange Commission, certain information concerning persons who may be deemed
beneficial owners of 5% or more of the outstanding shares of its common stock
because they possessed or shared voting or investing power with respect to the
shares of GTL's common stock:



                                                              AMOUNT AND NATURE OF   PERCENT OF
NAME AND ADDRESS                                              BENEFICIAL OWNERSHIP    CLASS(1)
- ----------------                                              --------------------   ----------
                                                                               
Loral Space & Communications Ltd............................       16,352,855(2)(3)    13.68%
  c/o Loral SpaceCom Corporation
  600 Third Avenue
  New York, New York 10016
Private Capital Management, Inc.............................        9,697,091(4)        8.58%
  3003 Tamiami Trail North
  Naples, Florida 33940


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

(1) Percent of class refers to percentage of class beneficially owned as the
    term beneficial ownership is defined in Rule 13d-3 under the Exchange Act
    and is based upon the number of shares of GTL common stock outstanding as of
    March 17, 2003.

(2) This information is as of March 17, 2003 and includes 6,449,865 shares of
    common stock issuable upon the conversion of GTL's 8% Preferred Stock held
    by Loral.

(3) Of such amount, 1,568,000 shares represent shares of common stock subject to
    options granted by Loral to certain of its executive officers and directors.

(4) A Schedule 13G filed by Private Capital Management, Inc. ("Private Capital")
    and certain of its affiliated persons with the Securities and Exchange
    Commission on February 15, 2001 reported that as of December 31, 2000,
    Private Capital beneficially owned 9,697,091 shares of GTL's common stock.
    Of such shares, Private Capital reported sole voting power over 50,000
    shares, shared voting power over 9,647,091 shares, sole investment power
    over 50,000 shares and shared investment power over 9,647,091 shares.

     The following table presents the number of shares of GTL common stock
beneficially owned by the GTL directors, Globalstar's General Partners'
Committee members, the Named Executive Officers of GTL and Globalstar and all
GTL directors, Globalstar's General Partners' Committee members, Named Executive
Officers and other executive officers as a group on March 17, 2003. Individuals
have sole voting and investment power over the stock unless otherwise indicated
in the footnotes.



                                                               AMOUNT AND NATURE OF     PERCENT OF
NAME OF INDIVIDUAL                                            BENEFICIAL OWNERSHIP(1)     CLASS
- ------------------                                            -----------------------   ----------
                                                                                  
Olof Lundberg...............................................                 0              --
Ira E. Goldberg.............................................                 0              --


                                        50




                                                               AMOUNT AND NATURE OF     PERCENT OF
NAME OF INDIVIDUAL                                            BENEFICIAL OWNERSHIP(1)     CLASS
- ------------------                                            -----------------------   ----------
                                                                                  
William F. Adler............................................           123,542(2)            *
Douglas G. Dwyre............................................           131,244(3)            *
Terry R. Evans..............................................            83,958(4)            *
Megan Fitzgerald............................................           196,273(5)            *
Sir Ronald Grierson.........................................           205,000(6)            *
Russell R. Mack.............................................             5,000(7)            *
Anthony J. Navarra..........................................           267,477(8)            *
E. John Peett...............................................           200,000(9)            *
Bernard L. Schwartz.........................................           710,000(10)           *
Michael B. Targoff..........................................                 0              --
A. Robert Towbin............................................           190,000(11)           *
Eric J. Zahler..............................................           288,012(12)           *
ALL DIRECTORS, AND EXECUTIVE OFFICERS AS A GROUP (16
  PERSONS)..................................................         2,555,115(13)         2.2%


- ---------------
  *  Represents holdings of less than one percent.

 (1) Includes shares which, as of March 17, 2003, may be acquired within sixty
     days upon the exercise of options granted by Loral: 560,000 to Mr.
     Schwartz, 100,000 to Mr. Zahler and 908,000 to all directors and executive
     officers as a group.

 (2) Includes 123,542 shares underlying options granted under GTL's stock option
     plan.

 (3) Includes 130,800 shares underlying options granted under GTL's stock option
     plan.

 (4) Includes 83,958 shares underlying options granted under GTL's stock option
     plan.

 (5) Includes 195,833 shares underlying options granted under GTL's stock option
     plan.

 (6) Includes 190,000 shares underlying options granted under GTL's stock option
     plan.

 (7) Includes 5,000 shares underlying options granted under GTL's stock option
     plan.

 (8) Includes 263,025 shares underlying options granted under GTL's option plan.

 (9) Includes 200,000 shares underlying options granted under GTL's stock option
     plan.

(10) Includes 204,790 shares underlying options granted under GTL's option plan.

(11) Includes 190,000 shares underlying options granted under GTL's stock option
     plan.

(12) Includes 4,452 shares held in a Keogh Account, 3,560 shares held by minor
     children and 260,000 shares underlying options granted under GTL's stock
     option plan.

(13) Includes 1,855,767 shares underlying options granted under GTL's stock
     option plan

                                        51


                     EQUITY COMPENSATION PLAN INFORMATION.

     The following table presents certain aggregate information, as of December
31, 2002, with respect to (i) the GTL's 1994 Stock Option Plan, (ii) options to
purchase GTL common stock that were granted by Loral to certain of its officers,
and (iii) warrants to purchase Globalstar ordinary partnership interests that
were issued to certain non-employees of Globalstar.



                                                 NUMBER OF           WEIGHTED-        NUMBER OF SECURITIES
                                             SECURITIES TO BE    AVERAGE EXERCISE    REMAINING AVAILABLE FOR
                                                ISSUED UPON          PRICE OF         FUTURE ISSUANCE UNDER
                                                EXERCISE OF         OUTSTANDING        EQUITY COMPENSATION
                                                OUTSTANDING          OPTIONS,           PLANS (EXCLUDING
                                             OPTIONS, WARRANTS     WARRANTS AND      SECURITIES REFLECTED IN
PLAN CATEGORY                                   AND RIGHTS            RIGHTS                 COLUMN
- -------------                                -----------------   -----------------   -----------------------
                                                                            
Equity compensation plans approved by
  security holders -- GTL common stock.....      5,408,567            $14.96                  4,490,733
Equity compensation plans not approved by
  security holders -- Globalstar
  partnership interests(1).................      7,835,000            $61.07             Not applicable


- ---------------
(1) In May 2000, in connection with a vendor financing arrangement with
    QUALCOMM, Globalstar issued to QUALCOMM warrants to purchase 3,450,000
    ordinary partnership interests of Globalstar at an exercise price of $42.25
    per interest (approximately 25% of the fair market value of GTL's common
    stock on the date of issuance). The warrants vested 50% on the date of
    issuance, 25% vested in September 2000, and the remaining 25% vested in
    September 2002. The warrants expire in 2007.

    In August 1999, in connection with Loral's guarantee of a $500 million
    credit agreement entered into by Globalstar, Globalstar issued to Loral and
    certain of its subsidiaries warrants to purchase an aggregate of 3,450,000
    ordinary partnership interests of Globalstar at an exercise price of $91.00
    per interest (approximately 25% of the fair market value of GTL's common
    stock on the date of issuance. The warrants vested 50% in February 2000, 25%
    vested in August 2000 and the remaining 25% vested in August 2001. The
    warrants expire in 2006.

    In April 1998, in connection with service provider arrangements in China,
    Globalstar granted China Telecom (Hong Kong) Group Ltd. warrants to acquire
    937,500 ordinary partnership interests of Globalstar at an exercise price of
    $20.00 per interest.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS SECTION

GOVERNANCE

     The governing body of Globalstar is the General Partners' Committee. The
Committee may have up to seven members, five of whom may be appointed by the
managing general partner of Globalstar, LQSS. The general partner of LQSS is
LQP, a Delaware limited partnership comprised of subsidiaries of Loral and
QUALCOMM. The managing general partner of LQP is LGP, a subsidiary of Loral. As
of December 31, 2002, Loral owned, directly or indirectly, 25,163,207
(approximately 38.2%) of the ordinary partnership interests of Globalstar,
including interests attributable to 9,902,990 shares of GTL outstanding common
stock.

LORAL AGREEMENTS

     Following a launch failure in September 1998, Globalstar decided to
purchase eight additional satellites for $148 million (including performance
incentives of up to $16 million) to serve as on-ground spares. As of December
31, 2002, costs of $147 million (including a portion of the performance
incentives) have been recognized for these spare satellites. SS/L has not
terminated its satellite contract with Globalstar and has completed seven of the
eight spare satellites. All eight are in storage in the California. Title to
those satellites, which is currently held by SS/L, is expected to be transferred
to Globalstar as part of the Loral Settlement discussed below. However, there
can be no assurance that the Loral Settlement will be effected.

                                        52


     On July 17, 2001, the FCC granted Globalstar and seven other applicants
authorizations to construct, launch and operate MSS systems in the 2 GHz band,
subject to strict milestone requirements. Globalstar entered into a
non-contingent contract with SS/L on July 16, 2002. On January 30, 2003, the
FCC's International Bureau declared the 2 GHz license to be null and void.
Globalstar believes that this action by the FCC's staff is inconsistent with the
facts and the law and has requested the full FCC to review and reverse it.
Globalstar has also requested the full FCC to stay the Bureau's decision pending
review. On January 31, 2003, Globalstar instructed SS/L to stop work on the
contract and requested repayment of the balance of that had not been spent.
Loral is expected to repay this balance in connection with the Loral Settlement
discussed below. However, there can be no assurance that the Loral Settlement
will be effected.

     Globalstar has granted SS/L an irrevocable, royalty-free, non-exclusive
license to use certain intellectual property expressly developed in connection
with the SS/L agreement provided that SS/L will not use, or permit others to
use, such license for the purpose of engaging in any business activity that
would be in material competition with Globalstar. Globalstar has similarly
agreed that it will not license such intellectual property if it will be used
for the purpose of designing or building satellites that would be in competition
with SS/L.

     SS/L provided $344 million of billings deferred under its construction
contracts with Globalstar, which included $120 million of orbital incentives.
The orbital payments on the replacement satellites are due on a per satellite
basis with 50% due when the satellite is placed in storage. The remaining 50% is
due when Globalstar directs SS/L to ship the satellite to the launch base. Until
such time, interest on the remaining 50% accrues at an interest rate of 10% per
annum. As of December 31, 2002, seven of the eight replacement satellites were
placed in storage and payments became due. No payments were made in 2002 and
interest accrued on the remaining 50% through the Petition Date. Total accrued
interest on the orbitals as of December 31, 2002 was $237,000. Payments were
made on the $134 million of non-interest bearing vendor financing through
January 15, 2001. Penalty fees were accrued at LIBOR plus 3%, through the
Petition Date, and total accrued penalties as of December 31, 2002 were $1.2
million. Interest was being accrued at LIBOR plus 3%, through the Petition Date,
and total accrued interest as of December 31, 2002 was $53.7 million. All of the
construction contract amounts owed to SS/L have been included in liabilities
subject to compromise. The amounts are unsecured claims in Globalstar's
bankruptcy case. Claims of Loral and its affiliates are expected to be resolved
as part of the Loral Settlement discussed below. However, there can be no
assurance that the Loral Settlement will be effected.

     The Loral Settlement, which will be effected in connection with
Globalstar's restructuring and emergence from bankruptcy, provides the
following, among other items: (1) Loral's subsidiary, SS/L, would transfer to
Globalstar title "as is" to the eight spare satellites that are currently held
in storage by SS/L; (2) certain strategic agreements under which Loral holds
exclusive rights to provide Globalstar services to defense and national security
agencies and in the aviation market would terminate, and a new joint venture
company (to be owned 75% by Globalstar and 25% by Loral) would be formed to
pursue the defense and national security business; (3) L/Q Licensee, a
subsidiary of LQP, would transfer the Federal Communications Commission license
held by it to Globalstar or LQP would transfer operations of L/Q Licensee to
Globalstar; (4) Loral would convey its interests in the Canadian service
provider operations to Globalstar; (5) certain Loral service provider financial
obligations would be settled through a reduction in debt obligations due from
Globalstar Canada Co. ("GCC") to Loral and other financial obligations involving
a Russian joint venture would be restructured; (6) Loral's general unsecured
claims as a creditor in the Globalstar bankruptcy proceeding would be quantified
and allowed; (7) SS/L would return to Globalstar unused advance prepayments
related to the 2 GHz satellite contract ; (8) Loral's designees would resign
from Globalstar's General Partners Committee; and (9) third party claims against
Loral, certain Loral affiliates and all six members of Globalstar's General
Partners' Committee, as provided in the term sheet, would be released. The
motion supporting the Loral Settlement is expected to be heard by the Bankruptcy
Court on April 9, 2003

                                        53


QUALCOMM AGREEMENTS

     Globalstar and QUALCOMM contracted for the design and development of the
Globalstar ground segment pursuant to the Development Contract. This contract
provided for the delivery of four pre-production gateways, two ground operations
control centers and 300 pre-production subscriber terminals. The contract
provided for reimbursement to QUALCOMM, subject to a cap for certain joint
development efforts, for contract costs incurred, plus a 12% fee thereon. On
November 29, 2001, QUALCOMM purported to terminate the Development Contract for
non-payment of invoices allegedly in the amount of $9.8 million. Deliverables
contracted under the Development Contract are substantially complete with
certain remaining software warranty and other obligations.

     Globalstar will receive from QUALCOMM or its licensee(s) a payment of
approximately $400,000 for each installed gateway sold to a Globalstar service
provider. As of December 31, 2002, 26 gateways have been sold resulting in a
$7.7 million reduction in costs associated with the Globalstar System. In
addition, Globalstar will receive a payment of up to $10 on each Globalstar user
terminal shipped by the terminal manufacturer, until Globalstar funding of that
design has been recovered.

     Globalstar and QUALCOMM contracted for the manufacture, deployment and
maintenance of Globalstar gateways pursuant to the Production Agreement. This
agreement provides for delivery of thirty-eight Gateways of which twenty-six
have been installed by QUALCOMM at various locations worldwide. All but two of
the twenty-six are operational. Twelve gateways are in storage and are available
for sale and deployment to unserved areas of the globe. On December 20, 2001,
QUALCOMM purported to terminate the Production Agreement for non-payment of
invoices allegedly in the amount of $7.1 million. Remaining activities under
this contract are mainly comprised of warranty obligations.

     On April 2, 1998, Globalstar and QUALCOMM entered into a User Terminal
Agreement. Under this Agreement and other agreements with Globalstar service
providers, QUALCOMM has shipped approximately 148,000 Globalstar handsets,
18,000 car kits and 5,800 Radio Access Units. QUALCOMM maintains the capability
of designing and manufacturing user terminals if and when service providers
place orders for them.

     In May 2000, Globalstar finalized $531.1 million of vendor financing
arrangements (including $31.1 million of accrued interest) with QUALCOMM that
replaced the previous arrangement. As of December 31, 2002, $623.3 million was
outstanding under this facility (including $123.3 million of accrued interest).
This liability, including accrued interest through the Petition Date, has been
included in liabilities subject to compromise. In connection with this
agreement, QUALCOMM received warrants to purchase 3,450,000 Globalstar
partnership interests at an exercise price of $42.25 per interest. The exercise
price was determined by reference to the fair market value of GTL's common stock
on the closing date of the vendor financing, based on an approximate ratio of
one partnership interest for every four shares of GTL common stock. The warrants
are vested and will expire in 2007. The fair value of the vested warrants
totaled approximately $34.0 million and is being amortized over the term of the
vendor financing arrangements. However, in light of Globalstar's Chapter 11
petition, these warrants are likely to be of little or no value.

     In January 2001, Globalstar suspended indefinitely principal and interest
payments on all of its vendor financing, in order to conserve cash for
operations. Under the terms of the QUALCOMM vendor financing facility,
non-payment of interest payments when they become due, and continuance of non-
payment for five days, is an "event of default". An event of default occurred on
January 16, 2001, when Globalstar failed to pay interest with respect to
separate credit extensions made under the QUALCOMM vendor financing facility. As
a result of Globalstar's bankruptcy petition filed on February 15, 2002, this
vendor financing was accelerated and became immediately due and payable. The
vendor financing is an unsecured claim in Globalstar's bankruptcy case.

     In March 1994 Globalstar granted QUALCOMM the worldwide exclusive right to
utilize the Globalstar System to provide OmniTRACS-like services, including
certain data-messaging and position-determination services offered by QUALCOMM,
primarily to fleets of motor vehicles and rail cars and/or

                                        54


vessels and supervisory control and data acquisition services. QUALCOMM has
never exploited these rights, and it is not certain that QUALCOMM remains
interested in providing OmniTRACS-like services over the Globalstar System.
Globalstar has the right to assume, reject or modify this contract with QUALCOMM
in its Chapter 11 case.

PURCHASE OF UNITED STATES SERVICE PROVIDER AND GATEWAY ASSETS

     In December 2001, a subsidiary of Globalstar purchased all of the
outstanding common shares of Vodafone Satellite Services, Inc., a Delaware
corporation, for $100, plus acquisition costs of $258,000. Globalstar has
renamed the company GSSI. GSSI indirectly owns the majority interest in GCSC, a
Nova Scotia corporation based in Ontario, Canada. GCSC is the Globalstar service
provider in Canada and generates its revenue from the provision of Globalstar
services in Canada, billing customers for usage over two Canadian gateways.
Loral Holdings Ltd., a subsidiary of Loral, owns the remaining minority interest
in GCSC. Therefore, the result of this transaction is that Globalstar is now a
shareholder with Loral in GCSC, the Canadian service provider. The acquisition
has brought additional efficiencies to the operation of the Globalstar network
and allowed for increased coordination in the Globalstar service offerings and
pricing. Loral's interest in GCSC is expected to be transferred to Globalstar as
part of the Loral Settlement discussed below. However, there can be no
assurances that the Loral Settlement will be effected.

     On July 2, 2002, Globalstar closed a transaction with TE.SA.M. under which
a subsidiary of Globalstar acquired TE.SA.M.'s French gateway, back office
assets, inventory and TE.SA.M.'s limited partnership interests. Under the terms
of the transaction, both Globalstar and TE.SA.M. forgave all outstanding
obligations between the parties and provided mutual releases of liability.

AUSTRALIA SETTLEMENT

     On December 30, 2002, the Bankruptcy Court approved a settlement agreement
among GSCI, Globalstar, Globalstar Vodafone Network Pty Ltd. Australia and
Globalstar Australia Pty Ltd. Under this settlement, Globalstar consented to the
transfer by VSSL to Localstar of the service provider rights in Australia, and
Globalstar entered into a new service provider agreement with Localstar. VSSL
was the original authorized service provider for Australia and the operator of
three gateways in that country. In conjunction with this transaction, VSSL
agreed to settle certain pre-petition and post-petition debts with Globalstar.
Globalstar received payments totaling $1.7 million from Vodafone in January
2003.

ELSACOM SETTLEMENT

     On March 25, 2003, Globalstar entered into a settlement and release
agreement with Elsacom and a gateway asset purchase agreement with a wholly
owned subsidiary of Elsacom. Elsacom is the primary Globalstar service provider
in Central and Eastern Europe, the operator of the gateway located in Avezzano,
Italy and, through its affiliate, Globalstar Northern Europe, the former
operator of the gateway located in Karkkila, Finland. Although Elsacom had
defaulted on its gateway contract obligations to Globalstar, Elsacom desired to
continue providing Globalstar service to its customers from Avezzano.
Accordingly, Globalstar and Elsacom agreed to negotiate a mutually acceptable
plan for paying certain of the debt, transferring the equipment in Finland to
Globalstar and maintaining Elsacom's service provider rights. Under the terms of
the Elsacom Settlement, Globalstar will receive cash payments totaling $2.4
million in two installments to be completed by June 2003 and the release of all
past payment obligations due to Elsacom in exchange for liquidation of the
gateway contract payments due to Globalstar from Elsacom. Additionally,
Globalstar will retain title to the gateway equipment installed in Finland.
Globalstar intends to dismantle the Finland gateway and to place the removable
parts, which contain most of the gateway's electronics, in storage for future
deployment.

                                        55


SUPPORT AND CONSULTING AGREEMENTS

     Globalstar has entered into various agreements with other service providers
and gateway operators to provide and receive various services related to the
Globalstar business. Currently, Globalstar is providing retail billing support
to its service providers in Mexico and Brazil, on a cost reimbursable basis.
Additionally, Globalstar has agreements in place to provide, also on cost
reimbursable basis, certain information technology and telecommunications
network related support to GCC, in which it holds a minority interest. Also, GCC
bills Globalstar for the monitoring of gateways in the United States, Canada,
and France. In addition, Globalstar is billed for all costs related to the
operations of the gateways located in Canada, as cost recovery mechanism for
GCC. Globalstar also net settles with other service providers roaming charges
that arise from subscribers using gateways other then their home gateway to
complete calls on the Globalstar System.

SERVICE PROVIDER AGREEMENTS

     Partners of Globalstar or their affiliates entered into service provider
agreements with Globalstar granting them the right to provide Globalstar service
to users in designated countries as long as specified minimum levels of
subscribers are met. These service providers received certain discounts from
Globalstar's standard airtime pricing. A number of Globalstar service providers
pre-purchased discounted minutes of use, amounting to approximately $11.7
million in pre-committed gross revenue ($8.8 million net of 25% discount), all
of which had been received prior to 2002. Of the prepaid committed revenue, $6.6
million has been recognized as of December 31, 2002.

CREDIT FACILITIES

     In January 2001, Globalstar suspended indefinitely principal and interest
payments on its funded debt in order to conserve cash for operations.
Non-payment of interest payments when they become due, and continuance of
non-payment for five days, is an "event of default" under the terms of the $500
million credit facility. An event of default occurred on January 16, 2001 under
the $500 million credit facility when Globalstar failed to pay interest with
respect to two separate credit extensions made under the $500 million credit
agreement. As a result of Globalstar's bankruptcy petition filed on February 15,
2002, this credit facility was accelerated and became immediately due and
payable. This debt is an unsecured claim in Globalstar's bankruptcy case.

 $250 Million Credit Agreement

     On June 30, 2000, Globalstar's $250 million credit facility with The Chase
Manhattan Bank became due and was repaid in full by its guarantors, including
Lockheed Martin, QUALCOMM, DASA and SS/L, who had previously received warrants
for GTL common stock in consideration of their guarantee. Pursuant to the
relevant agreements, Globalstar issued three-year notes in the amounts of $206.3
million, $21.9 million, $11.7 million and $10.1 million to Lockheed Martin,
QUALCOMM, SS/L and DASA, respectively, in satisfaction of their subrogation
rights. The notes are due on June 30, 2003 and bear interest, on a deferred
basis, at a rate of LIBOR plus 3%. On the consolidated balance sheet of
Globalstar the notes are presented as liabilities subject to compromise as of
December 31, 2002 and notes payable and notes payable to affiliates as of
December 31, 2001.

     Lockheed Martin, however, rejected the notes it received and instead
requested that Globalstar issue new securities with additional rights and
enhanced value, without waiving its claim that it is entitled to receive an
immediate cash reimbursement by Globalstar of its $150 million payment to the
bank lenders. Globalstar disputes Lockheed Martin's interpretation of the
relevant agreements. If the dispute is not resolved, Globalstar cannot be sure
that if the matter were litigated, the court would agree with Globalstar's
interpretation of the agreements. Management believes, however, that a court
would agree with Globalstar's interpretation of the relevant agreements. The
notes are unsecured claims in Globalstar's bankruptcy case.

                                        56


     In 2001, an issue was raised as to whether the three-year notes issued to
the guarantors of The Chase Manhattan Bank $250 million credit facility were
prepared in accordance with the recourse provisions of the guarantee
arrangement. Management does not believe the existing notes containing
non-recourse language will need to be replaced with notes not containing the
non-recourse language. If the existing non-recourse notes were replaced with
notes not containing the non-recourse language, the replacement would not impact
Globalstar's results of operations. However, allocations of Globalstar's losses
to general partners would increase by the amount of the increase in recourse
obligations.

  $500 Million Credit Agreement with Affiliates

     On August 5, 1999, Globalstar entered into a $500 million credit agreement
with a group of banks. The creditors' interests under the credit facility were
purchased by a wholly owned subsidiary of Loral on November 17, 2000, which had
previously guaranteed the facility. As of December 31, 2002, all amounts under
the $500 million credit agreement were drawn. Borrowings under the facilities
bear interest, at Globalstar's option, at various rates based on margins over
the lead bank's base rate or LIBOR for periods of one to six months. The claims
of the Loral subsidiary, in respect of this credit agreement constitute
unsecured claims in Globalstar's bankruptcy case.

     In consideration for the guarantee by Loral in 1999, Loral and certain
Loral subsidiaries received warrants to purchase an aggregate of 3,450,000
Globalstar partnership interests, valued at $141.1 million, (equivalent to
approximately 13.8 million shares of common stock of GTL) at an exercise price
of $91.00 per partnership interest (equivalent to $22.75 per share of GTL common
stock). The outstanding warrants are vested and expire in 2006. However, in
light of Globalstar's Chapter 11 petition, the warrants are likely to be of
little or no value.

GLOBALSTAR MANAGING PARTNER'S ALLOCATION AND DISTRIBUTION

     Globalstar's limited partnership agreement provides that, LQP, the general
partner of LQSS, would receive a managing partner's allocation equal to 2.5% of
Globalstar's revenues up to $500 million plus 3.5% of revenues in excess of $500
million. Loral and QUALCOMM ultimately would receive 80% and 20% of such
distribution, respectively. As of December 31, 2002, the managing partner's
allocation of $167,000 has been deferred and $108,000 is an unsecured claim in
Globalstar's bankruptcy case.

JOINT VENTURES

     Subsidiaries of Loral have formed joint ventures with partners which have
executed service provider agreements granting the joint ventures the exclusive
rights to provide Globalstar System services to users in Brazil, Canada, Mexico
and Russia. Globalstar holds a 49% legal interest in GlobalTel, the Russian
service provider, for the benefit of Loral. In December 2001, a subsidiary of
Globalstar acquired a majority interest in the Canadian service provider
business. As a result of this transaction, Globalstar and Loral are now partners
in the Canadian joint venture. Founding service providers, including Loral,
receive specified discounts from Globalstar's expected pricing schedule
generally over a five-year period. Loral's interest in the Canadian service
provider is expected to be transferred to Globalstar as part of the Loral
Settlement discussed above. However, there can be no assurances that the Loral
Settlement will be effected. See discussion of the Loral Agreements above.

ITEM 14.  CONTROLS AND PROCEDURES

(a) Globalstar maintains disclosure controls and procedures that are designed to
    ensure that information required to be disclosed in its filings under the
    Exchange Act is recorded, processed, summarized and reported within the
    periods specified in the rules and forms of the Securities and Exchange
    Commission. Such information is accumulated and communicated to Globalstar's
    management, including its chief executive officer and chief financial
    officer, to allow timely decisions regarding

                                        57


    required disclosure. Globalstar's management recognizes that any set of
    controls and procedures, no matter how well designed and operated, can
    provide only reasonable assurance of achieving the desired control
    objectives.

    Within 90 days prior to the filing date of this annual report on Form 10-K,
    Globalstar has carried out an evaluation, under the supervision and with the
    participation of Globalstar's management, including Globalstar's chief
    executive officer and chief financial officer, of the effectiveness of the
    design and operation of Globalstar's disclosure controls and procedures.
    Based on such evaluation, Globalstar's chief executive officer and chief
    financial officer concluded that Globalstar's disclosure controls and
    procedures are effective.

    GTL maintains disclosure controls and procedures that are designed to ensure
    that information required to be disclosed in its filings under the Exchange
    Act is recorded, processed, summarized and reported within the periods
    specified in the rules and forms of the Securities and Exchange Commission.
    Such information is accumulated and communicated to GTL's restructuring
    officer to allow timely decisions regarding required disclosure. GTL's
    restructuring officer recognizes that any set of controls and procedures, no
    matter how well designed and operated, can provide only reasonable assurance
    of achieving the desired control objectives.

    Within 90 days prior to the filing date of this annual report on Form 10-K,
    GTL has carried out an evaluation, under the supervision and with the
    participation of GTL's restructuring officer, of the effectiveness of the
    design and operation of GTL's disclosure controls and procedures. Based on
    such evaluation, GTL's restructuring officer concluded that GTL's disclosure
    controls and procedures are effective.

(b) There have been no significant changes in Globalstar's internal controls or
    in other factors that could significantly affect the internal controls
    subsequent to the date of Globalstar's evaluation in connection with the
    preparation of this annual report on Form 10-K.

    There have been no significant changes in GTL's internal controls or in
    other factors that could significantly affect the internal controls
    subsequent to the date of GTL's evaluation in connection with the
    preparation of this annual report on Form 10-K.

                                        58


                                    PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a) 1. Financial Statements -- See "Index to Consolidated Financial Statements"
on page F-1.

     2. Financial Statement Schedules
       Not applicable.

(A) 3. EXHIBITS



EXHIBIT
NUMBER                     DESCRIPTIONS OF EXHIBIT
- -------                    -----------------------
      
 3.1     Memorandum of Association of Globalstar Telecommunications
         Limited(1)
 3.2     Bye-Laws of Globalstar Telecommunications Limited, as
         amended, and including Schedule III annexed there to
         regarding the 8% Series A Convertible Redeemable Preferred
         Shares due 2011(10)
 3.3     Schedule IV to the Bye-laws of Globalstar Telecommunications
         Limited regarding the 9% Series B Convertible Redeemable
         Preferred Shares due 2001(11)
 4.1     Indenture dated as of February 15, 1997 relating to
         Globalstar's and Globalstar Capital Corporation's 11 3/8%
         Senior Notes due 2004(2)
 4.2     Indenture dated as of June 1, 1997 relating to Globalstar's
         and Globalstar Capital Corporation's 11 1/4% Senior Notes
         due 2004(3)
 4.3     Indenture dated as of October 15, 1997 relating to
         Globalstar's and Globalstar Capital Corporation's 10 3/4%
         Senior Notes due 2004(4)
 4.4     Indenture dated as of May 20, 1998 relating to Globalstar's
         and Globalstar Capital Corporation's 11 1/2% Senior Notes
         due 2005(5)
 4.5     Form of note issued to guarantors of Globalstar's $250
         million credit facility(14)
10.1     Amended and Restated Agreement of Limited Partnership of
         Globalstar L.P., dated as of January 26, 1999, among
         Loral/QUALCOMM Satellite Services, L.P., Globalstar
         Telecommunications Limited, AirTouch Satellite Services,
         Inc., Dacom Corporation, Dacom International, Inc., Hyundai
         Corporation, Hyundai Electronics Industries Co., Ltd.,
         Loral/DASA Globalstar, L.P., Loral Space & Communications
         Ltd., San Giorgio S.p.A., Telesat Limited, TE. SA. M., and
         Vodafone Satellite Services Limited(10)
10.1.2   Amendment dated as of December 8, 1999 to the Amended and
         Restated Agreement of Limited Partnership of Globalstar,
         L.P.(11)
10.1.3   Amendment dated as of February 1, 2000 to the Amended and
         Restated Agreement of Limited Partnership of Globalstar,
         L.P.(13)
10.2     Subscription Agreements by and between Globalstar, L.P., and
         each of AirTouch Communications, Alcatel Spacecom, Loral
         General Partner, Inc., Hyundai/Dacom and Vodastar Limited(1)
10.3     Subscription Agreement by and between Globalstar, L.P. and
         Loral/QUALCOMM Satellite Services, L.P.(1)
10.4     Subscription Agreement by and between Globalstar, L.P. and
         Finmeccanica S.p.A.(1)
10.5     Subscription Agreement by and between Globalstar, L.P. and
         China Telecommunications Broadcast Satellite Corporation(10)
10.6     Form of Service Provider Agreements by and between
         Globalstar, L.P. and each of AirTouch Satellite Services,
         Inc., Finmeccanica S.p.A., Loral Globalstar, L.P.,
         Loral/DASA Globalstar, L.P., Hyundai/Dacom, TE. SA. M., and
         Vodastar Limited(1)
10.7     Development Agreement by and between QUALCOMM Incorporated
         and Globalstar, L.P.(1)
10.8     Contract between Globalstar, L.P. and Space Systems/Loral,
         Inc.(1)
10.9     Contract for the Development of Certain Portions of the
         Ground Operations Control Center between Globalstar and
         Loral Western Development Laboratories(1)


                                        59




EXHIBIT
NUMBER                     DESCRIPTIONS OF EXHIBIT
- -------                    -----------------------
      
10.10    Contract for the Development of Satellite Orbital Operations
         Centers between Globalstar and Loral Aerosys, a division of
         Loral Aerospace Corporation(1)
10.11    1994 Stock Option Plan(6)+
10.12    Amendment to 1994 Stock Option Plan(7)+
10.12.2  Amendment No. 2 to 1994 Stock Option Plan.(13)+
10.13    Revolving Credit Agreement dated as of December 15, 1995, as
         amended on March 25, 1996, among Globalstar, certain banks
         parties thereto and Chemical Bank, as Administrative
         Agent(2)
10.14    Second Amendment to Revolving Credit Agreement dated July
         31, 1997 among Globalstar, certain banks parties thereto and
         The Chase Manhattan Bank, as Administrative Agent(4)
10.15    Third Amendment to Revolving Credit Agreement dated as of
         October 15, 1997 among Globalstar, certain banks parties
         thereto and The Chase Manhattan Bank, as Administrative
         Agent(4)
10.16    Fourth Amendment to Revolving Credit Agreement dated as of
         November 13, 1998 among Globalstar, certain banks parties
         thereto and The Chase Manhattan Bank, as Administrative
         Agent(10)
10.17    Exchange and Registration Rights Agreement, dated as of
         December 31, 1994, among Globalstar, L.P. and AirTouch
         Satellite Services, Inc., Finmeccanica S.p.A., Loral
         Globalstar, L.P., Loral/DASA Globalstar, L.P.,
         Hyundai/Dacom, TE. SA. M., and Vodastar Limited(1)
10.18    Amendment to the Exchange and Registration Rights Agreement,
         dated as of April 8, 1998, among Globalstar, L.P.,
         Globalstar Telecommunications Limited and Telesat
         Limited(10)
10.19    Warrant Agreement dated as of February 19, 1997 relating to
         Warrants to purchase 4,129,000 shares of Common Stock of
         Globalstar Telecommunications Limited(2)
10.20    Registration Rights Agreement dated February 19, 1997
         relating to Globalstar's 11 3/8% Senior Notes due 2004 and
         the Company's Warrants to purchase 4,129,000 shares of
         Common Stock issued in connection therewith(2)
10.21    Registration Rights Agreement dated June 13, 1997 relating
         to Globalstar's and Globalstar Capital Corporation's 11 1/4%
         Senior Notes due 2004(3)
10.22    Registration Rights Agreement dated October 29, 1997
         relating to Globalstar's and Globalstar Capital
         Corporation's 10 3/4% Senior Notes due 2004(4)
10.23    Registration Rights Agreement dated May 20, 1998 relating to
         Globalstar's and Globalstar Capital Corporation's 11 1/2%
         Senior Notes due 2005(5)
10.24    Registration Rights Agreement dated as of July 6, 1998
         relating to 8,400,000 shares of Common Stock by and among
         Globalstar Telecommunications Limited, Loral Space &
         Communications Ltd., Quantum Partners LDC, Quasar Strategic
         Partners LDC and Quantum Industrial Partners LDC.(8)
10.25    Exchange Agreement dated as of September 28, 1998 relating
         to 717,600 shares of Common Stock by and between Loral Space
         & Communications Ltd., DACOM Corporation and DACOM
         International, Inc.(9)
10.26    Registration Rights Agreement dated as of January 26, 1999
         relating to the Company's 8% Convertible Redeemable
         Preferred Stock(10)
10.27    Credit Agreement dated August 5, 1999 among Globalstar,
         L.P., Bank of America, National Association, as
         Administration Agent, Banc of America Securities LLC, as
         Sole Lead Arranger and Sole Book Manager, Credit Lyonnais,
         New York Branch, as Syndication Agent and Lehman Commercial
         Paper Inc., as Documentation Agent(12)
10.28    Registration Rights Agreement dated December 8, 1999
         relating to GTL's 9% Series B Preferred Stock due 2011(11)


                                        60




EXHIBIT
NUMBER                     DESCRIPTIONS OF EXHIBIT
- -------                    -----------------------
      
10.29    Fee Agreement dated as of April 19, 1996 by and among
         Globalstar, Globalstar Telecommunications Limited, Loral
         Corporation, Loral Space & Communications Ltd., QUALCOMM
         Limited Partner, Inc., Space Systems/Loral, Inc. and DASA
         Globalstar Limited Partner, Inc.(14)
10.30    Intercreditor Agreement dated as of April 19, 1996 by and
         among Globalstar, Globalstar Telecommunications Limited,
         Loral Corporation, Loral Space & Communications Ltd.,
         QUALCOMM Limited Partner, Inc., Space Systems/Loral, Inc,
         Inc. and DASA Globalstar Limited Partner, Inc.(14)
10.31    Waiver and Amendment dated as of June 30, 2000 to the Credit
         Agreement, dated as of August 5, 2000 by and among
         Globalstar, Bank of America, National Association, as
         administrative agent, and the several banks and other
         financial institutions from time to time thereto.(14)
10.32    Forbearance and Waiver Agreement dated as of June 30, 2000
         between Globalstar and QUALCOMM Incorporated.(14)
10.33    Purchase Agreement dated as of September 18, 2000 among
         Globalstar Telecommunications Limited, Globalstar, L.P. and
         Bear Sterns International Limited.(15)
10.34    Subscription Agreement dated September 22, 2000 between
         Globalstar Telecommunications Limited and Loral Space &
         Communications Ltd.(16)
10.35    Assignment, Amendment and Release Agreement dated as of
         November 17, 2000 by and among the lenders parties to the
         Globalstar Credit Agreement, Loral Satellite, Inc., Loral
         Satcom Ltd., Loral Space & Communications Ltd., Loral Space
         & Communications Corporation, Globalstar, L.P. and Bank of
         America, National Association.(17)
10.36    Plan Support Agreement Between Loral and Columbia Ventures
         Corp., Loeb Partners Corp., Stonehill Capital Management,
         LLC and Blue River LLC.(18)
10.37    Memorandum Of Understanding -- Proposed Restructuring
         Between Loral and Columbia Ventures Corp., Loeb Partners
         Corp., Stonehill Capital Management, LLC and Blue River
         LLC.(18)
10.38    Investment Agreement with New Valley Corporation pursuant to
         which New Valley would invest $55 million as part of a plan
         of reorganization.(19)
10.39    Debtor-in-possession credit agreement with New Valley
         Corporation.(19)
10.40    Debtor-in-possession credit agreement with Blue River
         Capital LLC, Columbia Ventures Corporation, ICO Investment
         Corp, Iridium Investors, LLC and Loeb Partners
         Corp.(collectively, the "DIP Lenders"), subject to final
         Bankruptcy Court approval, for the DIP lenders to make $10
         million available to Globalstar.*
12       Statement Regarding Computation of Ratios*
21       List of Subsidiaries of the Registrant*
23       Consent of Deloitte & Touche LLP*


- ---------------
 (1) Incorporated by reference to GTL's Registration Statement on Form S-1 (No.
     33-86808).

 (2) Incorporated by reference to GTL's and Globalstar's Annual Report on Form
     10-K for the Year Ended December 31, 1996.

 (3) Incorporated by reference to Globalstar's Registration Statement on Form
     S-4 (No. 333-25461).

 (4) Incorporated by reference to Globalstar's Registration Statement on Form
     S-4 (No. 333-41229).

 (5) Incorporated by reference to Globalstar's Registration Statement on Form
     S-4 (No. 333-57749).

 (6) Incorporated by reference to GTL's Registration Statement on Form S-3 (No.
     333-6477).

 (7) Incorporated by reference to GTL's and Globalstar's Annual Report on Form
     10-K for the Year Ended December 31, 1997.

                                        61


 (8) Incorporated by reference to Schedule 13D filed by Loral Space &
     Communications Ltd. on August 3, 1998.

 (9) Incorporated by reference to Schedule 13D filed by Loral Space &
     Communications Ltd. on February 10, 1999.

(10) Incorporated by reference to GTL's and Globalstar's Annual Report on Form
     10-K for the Year Ended December 31, 1998.

(11) Incorporated by reference to GTL's and Globalstar's Current Report on Form
     8-K filed on December 21, 1999.

(12) Incorporated by reference to GTL's and Globalstar's Current Report on Form
     8-K filed on August 6, 1999.

(13) Incorporated by reference to GTL's and Globalstar's Annual Report on Form
     10-K for the Year Ended December 31, 1999.

(14) Incorporated by reference to GTL's and Globalstar's Current Report on Form
     8-K filed on July 7, 2000.

(15) Incorporated by reference to GTL's and Globalstar's Current Report on Form
     8-K filed on September 19, 2000.

(16) Incorporated by reference to GTL's and Globalstar's Current Report on Form
     8-K filed on September 25, 2000.

(17) Incorporated by reference to GTL's and Globalstar's Current Report on Form
     8-K filed on November 20, 2000.

(18) Incorporated by reference to GTL's and Globalstar's Current Report on Form
     8-K filed on February 19, 2002.

(19) Incorporated by reference to GTL's and Globalstar's Current Report on Form
     8-K filed on January 15, 2003 and February 4, 2003.

   * Filed herewith.

   + Management compensation plan.

(B) REPORTS ON FORM 8-K

     The registrants did not file any reports on Form 8-K during the quarter
ended December 31, 2002. Since that date, the registrants have filed the
following reports on Form 8-K:



DATE OF REPORT                                              DESCRIPTION
- --------------                                              -----------
                                 
January 15, 2003..................  Globalstar reached agreement with New Valley pursuant to
                                    which New Valley would invest $55 million as part of a plan
                                    of reorganization.
February 4, 2003..................  The agreement between Globalstar and New Valley was
                                    terminated due to the inability to reach final agreement
                                    with the official committee of unsecured creditors.
February 27, 2003.................  Globalstar entered into a $10 million debtor-in-possession
                                    credit agreement, subject to the final approval of the
                                    Bankruptcy Court.


                                        62


                                   SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                          GLOBALSTAR TELECOMMUNICATIONS LIMITED
                                          Registrant

                                                  /s/ IRA E. GOLDBERG
                                          --------------------------------------
                                                     Ira E. Goldberg
                                                  Restructuring Officer
                                           and Registrant's Authorized Officer

Date: March 28, 2003

     Pursuant to the requirement of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.



                    SIGNATURES                                    TITLE                      DATE
                    ----------                                    -----                      ----
                                                                                  
                /s/ IRA E. GOLDBERG                  Restructuring Officer              March 28, 2003
- ---------------------------------------------------  (Principal Executive, Financial
                  Ira E. Goldberg                    and Accounting Officer)

                 /s/ DOUGLAS DWYRE                   Director                           March 28, 2003
- ---------------------------------------------------
                   Douglas Dwyre

              /s/ SIR RONALD GRIERSON                Director                           March 28, 2003
- ---------------------------------------------------
                Sir Ronald Grierson

                 /s/ E. JOHN PEETT                   Director                           March 28, 2003
- ---------------------------------------------------
                   E. John Peett

              /s/ MICHAEL B. TARGOFF                 Director                           March 28, 2003
- ---------------------------------------------------
                Michael B. Targoff

               /s/ A. ROBERT TOWBIN                  Director                           March 28, 2003
- ---------------------------------------------------
                 A. Robert Towbin


                                        63


                                 CERTIFICATION

I, Ira E. Goldberg, certify that:

     1.  I have reviewed this annual report on Form 10-K of Globalstar
         Telecommunications Limited;

     2.  Based on my knowledge, this annual report does not contain any untrue
         statement of a material fact or omit to state a material fact necessary
         to make the statements made, in light of the circumstances under which
         such statements were made, not misleading with respect to the period
         covered by this annual report;

     3.  Based on my knowledge, the financial statements, and other financial
         information included in this annual report, fairly present in all
         material respects the financial condition, results of operations and
         cash flows of the registrant as of, and for, the periods presented in
         this annual report;

     4.  The registrant's other certifying officers and I are responsible for
         establishing and maintaining disclosure controls and procedures (as
         defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
         have:

        a) Designed such disclosure controls and procedures to ensure that
           material information relating to the registrant, including its
           consolidated subsidiaries, is made known to us by others within those
           entities, particularly during the period in which this annual report
           is being prepared;

        b) Evaluated the effectiveness of the registrant's disclosure controls
           and procedures as of a date within 90 days prior to the filing date
           of this annual report (the "Evaluation Date"); and

        c) Presented in this annual report our conclusions about the
           effectiveness of the disclosure controls and procedures based on our
           evaluation as of the Evaluation Date;

     5.  The registrant's other certifying officers and I have disclosed, based
         on our most recent evaluation, to the registrant's auditors and the
         audit committee of registrant's board of directors (or persons
         performing the equivalent functions):

        a) All significant deficiencies in the design or operation of internal
           controls which could adversely affect the registrant's ability to
           record, process, summarize and report financial data and have
           identified for the registrant's auditors any material weaknesses in
           internal controls; and

        b) Any fraud, whether or not material, that involves management or other
           employees who have a significant role in the registrant's internal
           controls; and

     6.  The registrant's other certifying officers and I have indicated in this
         annual report whether there were significant changes in internal
         controls or in other factors that could significantly affect internal
         controls subsequent to the date of our most recent evaluation,
         including any corrective actions with regard to significant
         deficiencies and material weaknesses.

                                                  /s/ IRA E. GOLDBERG
                                          --------------------------------------
                                                     Ira E. Goldberg
                                                  Restructuring Officer

Date: March 28, 2003

                                        64


                                   SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized in the City of San
Jose, State of California, on March 28, 2003.

                                          GLOBALSTAR, L.P.

                                                /s/ ANTHONY J. NAVARRA
                                          --------------------------------------
                                                    Anthony J. Navarra
                                                        President

     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated.



                    SIGNATURES                                    TITLE                      DATE
                    ----------                                    -----                      ----
                                                                                  
                 /s/ OLOF LUNDBERG                   Chairman of the General            March 28, 2003
- ---------------------------------------------------    Partners' Committee and Chief
                   Olof Lundberg                       Executive Officer (Principal
                                                       Executive Officer)

              /s/ BERNARD L. SCHWARTZ                Member of the General Partners'    March 28, 2003
- ---------------------------------------------------    Committee
                Bernard L. Schwartz

                /s/ ERIC J. ZAHLER                   Member of the General Partners'    March 28, 2003
- ---------------------------------------------------    Committee
                  Eric J. Zahler

              /s/ SIR RONALD GRIERSON                Member of the General Partners'    March 28, 2003
- ---------------------------------------------------    Committee
                Sir Ronald Grierson

               /s/ A. ROBERT TOWBIN                  Member of the General Partners'    March 28, 2003
- ---------------------------------------------------    Committee
                 A. Robert Towbin

                /s/ RUSSELL R. MACK                  Member of the General Partners'    March 28, 2003
- ---------------------------------------------------    Committee
                  Russell R. Mack

               /s/ DANIEL P. MCENTEE                 Vice President and Chief           March 28, 2003
- ---------------------------------------------------    Financial Officer (Principal
                 Daniel P. McEntee                     Financial and Accounting
                                                       Officer)


                                        65


                                 CERTIFICATIONS

I, Olof Lundberg, certify that:

     1.  I have reviewed this annual report on Form 10-K of Globalstar, L.P.;

     2.  Based on my knowledge, this annual report does not contain any untrue
         statement of a material fact or omit to state a material fact necessary
         to make the statements made, in light of the circumstances under which
         such statements were made, not misleading with respect to the period
         covered by this annual report;

     3.  Based on my knowledge, the consolidated financial statements, and other
         financial information included in this annual report, fairly present in
         all material respects the financial condition, results of operations
         and cash flows of the registrant as of, and for, the periods presented
         in this annual report;

     4.  The registrant's other certifying officers and I are responsible for
         establishing and maintaining disclosure controls and procedures (as
         defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
         have:

        a) Designed such disclosure controls and procedures to ensure that
           material information relating to the registrant, including its
           consolidated subsidiaries, is made known to us by others within those
           entities, particularly during the period in which this annual report
           is being prepared;

        b) Evaluated the effectiveness of the registrant's disclosure controls
           and procedures as of a date within 90 days prior to the filing date
           of this annual report (the "Evaluation Date"); and

        c) Presented in this annual report our conclusions about the
           effectiveness of the disclosure controls and procedures based on our
           evaluation as of the Evaluation Date;

     5.  The registrant's other certifying officers and I have disclosed, based
         on our most recent evaluation, to the registrant's auditors and the
         audit committee of registrant's board of directors (or persons
         performing the equivalent functions):

        a) All significant deficiencies in the design or operation of internal
           controls which could adversely affect the registrant's ability to
           record, process, summarize and report financial data and have
           identified for the registrant's auditors any material weaknesses in
           internal controls; and

        b) Any fraud, whether or not material, that involves management or other
           employees who have a significant role in the registrant's internal
           controls; and

     6.  The registrant's other certifying officers and I have indicated in this
         annual report whether there were significant changes in internal
         controls or in other factors that could significantly affect internal
         controls subsequent to the date of our most recent evaluation,
         including any corrective actions with regard to significant
         deficiencies and material weaknesses.

                                                   /s/ OLOF LUNDBERG
                                          --------------------------------------
                                                      Olof Lundberg
                                                 Chief Executive Officer

Date: March 28, 2003

                                        66


I, Daniel P. McEntee, certify that:

     1.  I have reviewed this annual report on Form 10-K of Globalstar, L.P.;

     2.  Based on my knowledge, this annual report does not contain any untrue
         statement of a material fact or omit to state a material fact necessary
         to make the statements made, in light of the circumstances under which
         such statements were made, not misleading with respect to the period
         covered by this annual report;

     3.  Based on my knowledge, the consolidated financial statements, and other
         financial information included in this annual report, fairly present in
         all material respects the financial condition, results of operations
         and cash flows of the registrant as of, and for, the periods presented
         in this annual report;

     4.  The registrant's other certifying officers and I are responsible for
         establishing and maintaining disclosure controls and procedures (as
         defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
         have:

        a) Designed such disclosure controls and procedures to ensure that
           material information relating to the registrant, including its
           consolidated subsidiaries, is made known to us by others within those
           entities, particularly during the period in which this annual report
           is being prepared;

        b) Evaluated the effectiveness of the registrant's disclosure controls
           and procedures as of a date within 90 days prior to the filing date
           of this annual report (the "Evaluation Date"); and

        c) Presented in this annual report our conclusions about the
           effectiveness of the disclosure controls and procedures based on our
           evaluation as of the Evaluation Date;

     5.  The registrant's other certifying officers and I have disclosed, based
         on our most recent evaluation, to the registrant's auditors and the
         audit committee of registrant's board of directors (or persons
         performing the equivalent functions):

        a) All significant deficiencies in the design or operation of internal
           controls which could adversely affect the registrant's ability to
           record, process, summarize and report financial data and have
           identified for the registrant's auditors any material weaknesses in
           internal controls; and

        b) Any fraud, whether or not material, that involves management or other
           employees who have a significant role in the registrant's internal
           controls; and

     6.  The registrant's other certifying officers and I have indicated in this
         annual report whether there were significant changes in internal
         controls or in other factors that could significantly affect internal
         controls subsequent to the date of our most recent evaluation,
         including any corrective actions with regard to significant
         deficiencies and material weaknesses.

                                                 /s/ DANIEL P. MCENTEE
                                          --------------------------------------
                                                    Daniel P. McEntee
                                            Vice President and Chief Financial
                                                         Officer

Date: March 28, 2003

                                        67


                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                                                           
Globalstar Telecommunications Limited (A General Partner of
  Globalstar, L.P.)
  Independent Auditors' Report..............................   F-2
  Balance Sheets............................................   F-3
  Statements of Operations..................................   F-4
  Statements of Shareholders' Equity (Deficit)..............   F-5
  Statements of Cash Flows..................................   F-6
  Notes to Financial Statements.............................   F-7
Globalstar, L.P. (A Debtor-in-Possession)
  Independent Auditors' Report..............................  F-16
  Consolidated Balance Sheets...............................  F-17
  Consolidated Statements of Operations.....................  F-18
  Consolidated Statements of Partners' Capital (Deficit)....  F-19
  Consolidated Statements of Cash Flows.....................  F-20
  Notes to Consolidated Financial Statements................  F-21



                                       F-1


                          INDEPENDENT AUDITORS' REPORT

To the Shareholders of Globalstar Telecommunications Limited:

     We have audited the accompanying balance sheets of Globalstar
Telecommunications Limited ("GTL") (a Bermuda company and a General Partner of
Globalstar, L.P.) as of December 31, 2002 and 2001 and the related statements of
operations, shareholders' equity (deficit) and cash flows for each of the three
years in the period ended December 31, 2002. These financial statements are the
responsibility of GTL's management. Our responsibility is to express an opinion
on these financial statements based on our audits.

     We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

     In our opinion, such financial statements present fairly, in all material
respects, the financial position of Globalstar Telecommunications Limited as of
December 31, 2002 and 2001 and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 2002 in conformity
with accounting principles generally accepted in the United States of America.

     The accompanying financial statements have been prepared assuming that GTL
will continue as a going concern. As discussed in Note 2, GTL is dependent upon
Globalstar L.P.'s ("Globalstar") successful financial results and achievement of
profitable operations for the recovery of its investment. On February 15, 2002,
Globalstar and certain of its subsidiaries filed for reorganization under
Chapter 11 of the Federal Bankruptcy Code. These factors raise substantial doubt
about GTL's ability to continue as a going concern. Management's plans
concerning these matters for restructuring are also discussed in Note 2. The
financial statements do not include adjustments that might result from the
outcome of this uncertainty.

DELOITTE & TOUCHE LLP

San Jose, California
February 24, 2003 (March 21, 2003 as to the third and fourth paragraph of Note
2)

                                       F-2


                     GLOBALSTAR TELECOMMUNICATIONS LIMITED
                    (A GENERAL PARTNER OF GLOBALSTAR, L.P.)

                                 BALANCE SHEETS
                       (IN THOUSANDS, EXCEPT SHARE DATA)



                                                                      DECEMBER 31,
                                                              ----------------------------
                                                                  2002            2001
                                                              ------------    ------------
                                                                        
ASSETS......................................................  $        --     $        --
                                                              ===========     ===========
LIABILITIES, CONVERTIBLE REDEEMABLE PREFERRED STOCK AND
  SHAREHOLDERS' (DEFICIT)
Current liabilities:
  Dividends payable.........................................  $    49,541     $    29,870
  Equity losses in excess of partnership interests in
     Globalstar.............................................      880,810         825,637
                                                              -----------     -----------
          Total current liabilities.........................      930,351         855,507
                                                              -----------     -----------
COMMITMENTS AND CONTINGENCIES (NOTE 9)
Convertible Redeemable Preferred Stock:
  8% Series A (3,836,463 and 3,268,796 shares outstanding at
     December 31, 2002 and 2001, respectively, $192 million
     and $163 million redemption value at December 31, 2002
     and 2001, respectively)................................      186,220         158,666
  9% Series B (343,021 and 1,270,075 shares outstanding at
     December 31, 2002 and 2001, respectively, $18 million
     and $64 million redemption value at December 31, 2002
     and 2001, respectively)................................       16,645          61,630
                                                              -----------     -----------
                                                                  202,865         220,296
                                                              -----------     -----------
Shareholders' (deficit):
  Convertible redeemable preferred stock, $.01 par value,
     20,000,000 shares authorized:
     8% Series A convertible redeemable preferred stock,
      (519,832 and 1,089,599 shares outstanding at December
      31, 2002 and 2001, respectively, $26 million and $55
      million redemption value at December 31, 2002 and
      2001, respectively)...................................       25,232          52,888
     9% Series B convertible redeemable preferred stock,
      (46,479 and 423,358 shares outstanding at December 31,
      2002 and 2001, respectively, $2 million and $21
      million redemption value at December 31, 2002 and
      2001, respectively)...................................        2,256          20,544
  Common stock, $1.00 par value, 600,000,000 shares
     authorized (113,059,195 and 110,542,921 shares
     outstanding at December 31, 2002 and 2001,
     respectively)..........................................      113,059         110,543
  Additional paid-in capital................................    1,202,812       1,141,953
  Warrants..................................................       11,268          11,268
  Accumulated deficit.......................................   (2,487,843)     (2,412,999)
                                                              -----------     -----------
          Total shareholders' (deficit).....................   (1,133,216)     (1,075,803)
                                                              -----------     -----------
          Total liabilities and shareholders' (deficit).....  $        --     $        --
                                                              ===========     ===========


                       See notes to financial statements.
                                       F-3


                     GLOBALSTAR TELECOMMUNICATIONS LIMITED
                    (A GENERAL PARTNER OF GLOBALSTAR, L.P.)

                            STATEMENTS OF OPERATIONS
                     (IN THOUSANDS, EXCEPT PER SHARE DATA)



                                                                  YEARS ENDED DECEMBER 31,
                                                              --------------------------------
                                                                2002       2001        2000
                                                              --------   --------   ----------
                                                                           
Equity in net loss applicable to ordinary partnership
  interests of Globalstar, L.P..............................  $ 55,173   $142,298   $1,667,761
Equity in net loss applicable to preferred partnership
  interests of Globalstar, L.P..............................                           356,944
Amortization of excess carrying value in Globalstar, L.P....                            31,840
Dividend income on Globalstar, L.P. redeemable preferred
  partnership interests.....................................                           (27,422)
                                                              --------   --------   ----------
Net loss....................................................    55,173    142,298    2,029,123
Preferred dividends on convertible redeemable preferred
  stock.....................................................    19,671     26,562       30,730
                                                              --------   --------   ----------
Net loss applicable to common shareholders..................  $ 74,844   $168,860   $2,059,853
                                                              ========   ========   ==========
Net loss per share -- basic and diluted.....................  $   0.66   $   1.54   $    20.85
                                                              ========   ========   ==========
Weighted average shares outstanding -- basic and diluted....   112,816    109,778       98,807
                                                              ========   ========   ==========


                       See notes to financial statements.
                                       F-4


                     GLOBALSTAR TELECOMMUNICATIONS LIMITED
                    (A GENERAL PARTNER OF GLOBALSTAR, L.P.)

                  STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)
                                 (IN THOUSANDS)



                                      CONVERTIBLE
                                       REDEEMABLE
                                    PREFERRED STOCK        COMMON STOCK      ADDITIONAL
                                   ------------------   ------------------    PAID-IN                ACCUMULATED
                                   SHARES    AMOUNT     SHARES     AMOUNT     CAPITAL     WARRANTS     DEFICIT        TOTAL
                                   ------   ---------   -------   --------   ----------   --------   -----------   -----------
                                                                                           
Balance, January 1, 2000.........   7,396   $ 358,968    88,743   $ 88,743   $  756,615   $11,539    $  (184,286)  $ 1,031,579
Exercise of warrants.............                            92         92        1,772      (271)                       1,593
Conversion of 8% Series A
  convertible redeemable
  preferred stock................                 (10)        1          1            9
Conversion of 9% Series B
  convertible redeemable
  preferred stock................     (41)     (2,014)       80         80        1,934
Issuance of common stock.........                        17,346     17,346      335,095                                352,441
Exercise of stock options........                            26         26          266                                    292
Dividends on convertible
  redeemable preferred stock.....                         1,737      1,737        5,957                  (30,730)      (23,036)
Change in fair value of stock
  compensation for the benefit of
  Globalstar.....................                                               (20,393)                               (20,393)
Net loss.........................                                                                     (2,029,123)   (2,029,123)
                                   ------   ---------   -------   --------   ----------   -------    -----------   -----------
Balance, December 31, 2000.......   7,355     356,944   108,025    108,025    1,081,255    11,268     (2,244,139)     (686,647)
Conversion of 8% Series A
  convertible redeemable
  preferred stock................     (38)     (1,829)       81         81        1,748
Conversion of 9% Series B
  convertible redeemable
  preferred stock................  (1,265)    (61,387)    2,437      2,437       58,950
Classification of convertible
  redeemable preferred stock
  outside equity.................  (4,539)   (220,296)                                                                (220,296)
Dividends on convertible
  redeemable preferred stock.....                                                                        (26,562)      (26,562)
Net loss.........................                                                                       (142,298)     (142,298)
                                   ------   ---------   -------   --------   ----------   -------    -----------   -----------
Balance, December 31, 2001.......   1,513      73,432   110,543    110,543    1,141,953    11,268     (2,412,999)   (1,075,803)
Conversion of 8% Series A
  convertible redeemable
  preferred stock................      (2)       (102)        5          5           97
Conversion of 9% Series B
  convertible redeemable
  preferred stock................  (1,304)    (63,273)    2,511      2,511       60,762
Classification of convertible
  redeemable preferred stock
  outside equity.................     359      17,431                                                                   17,431
Dividends on convertible
  redeemable preferred stock.....                                                                        (19,671)      (19,671)
Net loss.........................                                                                        (55,173)      (55,173)
                                   ------   ---------   -------   --------   ----------   -------    -----------   -----------
Balance, December 31, 2002.......     566   $  27,488   113,059   $113,059   $1,202,812   $11,268    $(2,487,843)  $(1,133,216)
                                   ======   =========   =======   ========   ==========   =======    ===========   ===========


                       See notes to financial statements.
                                       F-5


                     GLOBALSTAR TELECOMMUNICATIONS LIMITED
                    (A GENERAL PARTNER OF GLOBALSTAR, L.P.)

                            STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)



                                                                   YEARS ENDED DECEMBER 31,
                                                              ----------------------------------
                                                                2002       2001         2000
                                                              --------   ---------   -----------
                                                                            
Operating activities:
  Net loss..................................................  $(55,173)  $(142,298)  $(2,029,123)
  Equity in net loss applicable to ordinary partnership
    interests of Globalstar, L.P. ..........................    55,173     142,298     1,667,761
  Equity in net loss applicable to preferred partnership
    interests of Globalstar, L.P. ..........................                    --       356,944
  Amortization of excess carrying value in Globalstar,
    L.P. ...................................................                    --        31,840
  Dividends accrued on redeemable preferred partnership
    interests...............................................        --          --         3,323
                                                              --------   ---------   -----------
  Net cash provided by operating activities.................        --          --        30,745
                                                              --------   ---------   -----------
Investing activities:
  Purchase of ordinary partnership interests in Globalstar,
    L.P. ...................................................                            (354,326)
                                                              --------   ---------   -----------
  Net cash used in investing activities.....................        --          --      (354,326)
                                                              --------   ---------   -----------
Financing activities:
  Net proceeds from issuance of common stock upon exercise
    of options and warrants.................................                    --         1,885
  Net proceeds from sale of common stock....................                    --       352,441
  Payment of preferred stock dividends......................                    --       (30,745)
                                                              --------   ---------   -----------
  Net cash provided by financing activities.................        --          --       323,581
                                                              --------   ---------   -----------
Net increase in cash and cash equivalents...................        --          --            --
Cash and cash equivalents, beginning of period..............        --          --            --
                                                              --------   ---------   -----------
Cash and cash equivalents, end of period....................  $     --   $      --   $        --
                                                              ========   =========   ===========
Noncash transactions:
  Common stock issued upon conversion of convertible
    preferred securities and related interest and dividend
    make-whole payments.....................................  $ 63,375   $  63,216   $     2,024
                                                              ========   =========   ===========
  Change in fair value of stock compensation for the benefit
    of Globalstar...........................................                         $   (20,393)
                                                                                     ===========
  Common stock issued in lieu of cash payment to preferred
    stockholders............................................                         $     7,694
                                                                                     ===========


                       See notes to financial statements.
                                       F-6


                     GLOBALSTAR TELECOMMUNICATIONS LIMITED
                    (A GENERAL PARTNER OF GLOBALSTAR, L.P.)

                         NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION AND BUSINESS

     On November 23, 1994, Globalstar Telecommunications Limited ("GTL") was
incorporated as an exempted company under the Companies Act 1981 of Bermuda.
GTL's financial statements have been prepared in accordance with accounting
principles generally accepted in the United States of America. GTL's sole
business is acting as a general partner of Globalstar, L.P. ("Globalstar"), a
Delaware limited partnership, which was founded to design, construct and operate
a worldwide, low-earth orbit ("LEO") satellite-based wireless digital
telecommunications system (the "Globalstar System"). The Globalstar System's
worldwide coverage is designed to enable its service providers to extend modern
telecommunications services to millions of people who currently lack basic
telephone service and to enhance wireless communications in areas underserved or
not served by existing or future cellular systems, providing a
telecommunications solution in parts of the world where the build-out of
terrestrial systems cannot be economically justified.

     As of December 31, 2002, GTL owned 27,911,240 (42.4%) of Globalstar's
65,848,740 outstanding ordinary partnership interests, 100% of Globalstar's
outstanding 8% convertible redeemable preferred partnership interests (the "8%
RPPIs") and 100% of Globalstar's outstanding 9% convertible redeemable preferred
partnership interests (the "9% RPPIs") (see Note 5).

     Globalstar operates in one industry segment, satellite telecommunications,
providing global mobile and fixed wireless voice and data services.

     Loral QUALCOMM Satellite Services, L.P. ("LQSS"), an affiliate of Loral
Space & Communications Ltd. ("Loral"), is the managing general partner of
Globalstar. As of December 31, 2002, Loral owned, directly or indirectly,
25,163,207 (approximately 38.2%) of the ordinary partnership interests of
Globalstar, including interests attributable to 9,902,990 shares of GTL's
outstanding common stock.

2. BASIS OF PRESENTATION

     On February 15, 2002 (the "Petition Date"), Globalstar and certain of its
subsidiaries filed voluntary petitions under Chapter 11 of Title 11 of the
United States Code (the "Bankruptcy Code") in the United States Bankruptcy Court
("Bankruptcy Court") for the District of Delaware (Case Nos. 02-10499, 02-10501,
02-10503 and 02-10504). Globalstar and its debtor subsidiaries remain in
possession of their assets and properties and continue to operate their
businesses as debtors-in-possession. As a result of Globalstar's bankruptcy
petition, several of Globalstar's debt obligations were accelerated and became
immediately due and payable. GTL does not intend to file an immediate petition
for bankruptcy relief, but will continue to monitor events and govern its
actions accordingly. It has been GTL's view that any hope of providing a rights
offering or other element of value to its shareholders is enhanced by not filing
for bankruptcy at this time. Globalstar's bankruptcy filing and subsequent
financial restructuring will likely leave shares in GTL with very little or no
value. These factors, among others, raise substantial doubt about GTL's ability
to continue as a going concern. However, the accompanying financial statements
have been prepared on a going concern basis, which contemplates the realization
of assets and the satisfaction of liabilities in the normal course of business.

     On January 14, 2003, Globalstar and the Creditors' Committee reached an
agreement with New Valley Corporation ("New Valley") providing for
debtor-in-possession financing (the "New Valley DIP Facility") of up to $20
million and a total investment in a reorganized Globalstar of $55 million.
Globalstar filed a motion with the Bankruptcy Court for approval of this new
investment on January 15, 2003 and filed a Form 8-K on the same date. A hearing
to seek Bankruptcy Court approval of the New Valley DIP Facility was scheduled
for January 30, 2003 in Delaware. Prior to the hearing, the Creditors' Committee
informed Globalstar and New Valley that the Creditors' Committee would not
support

                                       F-7

                     GLOBALSTAR TELECOMMUNICATIONS LIMITED
                    (A GENERAL PARTNER OF GLOBALSTAR, L.P.)

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

approval of the New Valley investment, but that a consortium including certain
individual members of the Creditors' Committee was prepared to provide
substitute debtor-in-possession financing. As a consequence, New Valley withdrew
its investment offer as of January 30, 2003. Globalstar filed another Form 8-K
reflecting New Valley's withdrawal on February 4, 2003.

     On February 14, 2003, Globalstar and the consortium of lenders (the "DIP
Lenders") reached agreement on debtor-in-possession financing of $10 million
(the "DIP Facility") and filed a motion with the Bankruptcy Court seeking
approval of such financing. Globalstar also filed a motion defining certain
auction procedures by which Globalstar would conclude its search for an investor
to fund Globalstar's restructuring and exit from bankruptcy. The Bankruptcy
Court provided interim approval of the DIP Facility and approved the auction
procedures on February 20, 2003, and the parties executed the DIP Facility
documents on February 25, 2003. Copies of the DIP Facility, auction procedures
and related documents were filed with a Form 8-K on February 27, 2003. The
Bankruptcy Court granted final approval of the DIP Facility on March 6, 2003. As
a condition to the DIP Lenders obligation to fund draws by Globalstar under the
DIP Facility in excess of $2.0 million, among other things (i) Globalstar was
required to secure from Loral/QUALCOMM Partnership, L.P. ("LQP") a pledge in
favor of the DIP Lenders of LQP's ownership interest in the outstanding stock of
L/Q Licensee, Inc. ("L/Q Licensee"), and (ii) Globalstar was required to reach
an agreement, satisfactory to the DIP Lenders, with respect to specified matters
relating to Loral and certain of its affiliates (the conditions set forth in
clauses (i) and (ii) above, collectively, the "Loral Condition"). The Loral
Condition was initially required to be satisfied by March 7, 2003, but the DIP
Facility was amended to extend the deadline for meeting the Loral Condition to
March 21, 2003. The Loral Condition was satisfied prior to the extended
deadline.

     Under the approved auction procedures, Globalstar received expressions of
interest from prospective investors in early March 2003, and with the assistance
of its financial advisors and in consultation with the Creditors' Committee,
determined which of them were "qualified" to perform due diligence and make a
definitive proposal for an equity investment in Globalstar or the purchase of
Globalstar's assets. March 21, 2003 was the deadline set for the submission of
investment proposals by the qualified bidders. Globalstar, in consultation with
the Creditors' Committee, expects to choose the highest and best investment
proposal in early-April and to file a modified plan of reorganization with the
Bankruptcy Court shortly thereafter. No assurance can be given as to whether
this auction process will ultimately lead to a successful restructuring of
Globalstar.

     GTL, a general partner of Globalstar, was created to permit public equity
ownership in Globalstar. GTL does not have any operations, personnel or
facilities, and does not manage the day-to-day operations of Globalstar. GTL's
sole asset is its investment in Globalstar, and GTL's results of operations
reflect its share of the results of operations of Globalstar on an equity
accounting basis. In 2000, Globalstar's losses reduced GTL's investment in
Globalstar's ordinary and preferred partnership interests to a book value of
zero. Accordingly, GTL discontinued providing for its allocated share of
Globalstar's net losses and recognized the remaining unallocated losses as a
result of its general partner status in Globalstar.

     Because GTL is a general partner of Globalstar, GTL is jointly and
severally liable with the other general partner for the recourse debt and other
recourse obligations of Globalstar to the extent Globalstar is unable to pay
such debts. GTL believes that such recourse obligations totaled approximately
$1.4 billion as of December 31, 2002. Certain of Globalstar's debt, including
the public debt, is non-recourse to the general partners. On February 15, 2002,
LQSS, the other general partner of Globalstar, filed a voluntary petition under
Chapter 11 of the Bankruptcy Code. Effective February 15, 2002, Globalstar
ceased allocating additional losses associated with recourse debt to LQSS. As
the only remaining general partner of Globalstar that has not filed for
bankruptcy protection, GTL has been allocated all losses related to debt

                                       F-8

                     GLOBALSTAR TELECOMMUNICATIONS LIMITED
                    (A GENERAL PARTNER OF GLOBALSTAR, L.P.)

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

that is recourse to general partners since February 15, 2002. As a result of its
general partner status, GTL has recorded a cumulative liability of $880.8
million.

     During the year ended December 31, 2001, an issue was raised as to whether
the three-year notes issued to the guarantors of The Chase Manhattan Bank $250
million credit facility were prepared in accordance with the recourse provisions
of the guarantee arrangement. Management does not believe the existing notes
containing non-recourse language will need to be replaced with notes not
containing the non-recourse language. If the existing non-recourse notes were
replaced with notes not containing the non-recourse language, the replacement
would not impact Globalstar's results of operations. However, allocations of
Globalstar's losses to general partners, including GTL, would increase by the
amount of the increase in recourse obligations. Replacement of the notes would
not alter the subordinate position of GTL's shareholders relative to holders of
these notes.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

  Stock Based Compensation

     GTL accounts for stock-based employee compensation in accordance with the
provisions of Accounting Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees," ("APB No. 25") and related interpretations and complies
with the disclosure provisions of Statement of Financial Accounting Standards
No. 123, "Accounting for Stock-Based Compensation," ("SFAS No. 123").

     The following table illustrates the effect on GTL's reported net loss
applicable to common shareholders and net loss per share if GTL had applied the
fair value recognition provision of SFAS No. 123 to stock-based employee
compensation (in thousands, except per share amounts):



                                                                       DECEMBER 31,
                                                              -------------------------------
                                                               2002       2001        2000
                                                              -------   --------   ----------
                                                                          
Net loss, as reported.......................................  $74,844   $168,860   $2,059,853
Less: Total stock-based employee compensation expense
  determined under the fair value method for all awards.....    4,138      9,748       12,495
                                                              -------   --------   ----------
Pro-forma net loss..........................................  $78,982   $178,608   $2,072,348
                                                              =======   ========   ==========
Reported basic and diluted earnings per common share........  $  0.66   $   1.54   $    20.85
                                                              =======   ========   ==========
Pro-forma basic and diluted earnings per common share.......  $  0.70   $   1.63   $    20.97
                                                              =======   ========   ==========


  Income Taxes

     GTL is incorporated in Bermuda. Bermuda does not levy tax on income,
profits or capital gains. As a partner in Globalstar, however, GTL will be
subject to U.S. federal, state and local income taxation at regular corporate
rates plus an additional 30% "branch profits" tax on its share of Globalstar's
income that is effectively connected with the conduct of a trade or business in
the U.S. and may be subject to tax in some foreign jurisdictions on portions of
its share of the partnership's foreign source income. Commencing with its
investment in Globalstar, GTL has been allocated its proportionate share of
partnership tax losses.

  Earnings Per Share

     Due to GTL's net losses in 2002, 2001 and 2000, diluted weighted average
common shares outstanding excludes the weighted average effect of: (i) the
assumed conversion of GTL's 8% Series A convertible redeemable preferred stock,
due 2011, (the "8% Preferred Stock") into 9.4 million common shares for 2002 and
2001 and 9.5 million for 2000, (see Note 5); (ii) the assumed conversion of
GTL's

                                       F-9

                     GLOBALSTAR TELECOMMUNICATIONS LIMITED
                    (A GENERAL PARTNER OF GLOBALSTAR, L.P.)

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

9% Series B convertible redeemable preferred stock, due 2011, (the "9% Preferred
Stock") into 0.8 million, 4.0 million, and 5.7 million common shares for 2002,
2001 and 2000, respectively, (see Note 5); and (iii) the assumed exercise of
outstanding options and warrants, into 12.0 million, 12.0 million and 10.5
million common shares for 2002, 2001 and 2000, respectively, as their effect
would have been anti-dilutive. Accordingly, basic and diluted net loss per share
is based on the net loss applicable to common shareholders and the weighted
average common shares outstanding for 2002, 2001 and 2000.

  Comprehensive Loss

     During the periods presented, GTL had no changes in equity from
transactions or other events and circumstances from non-owner sources.
Accordingly, a statement of comprehensive loss has not been provided.

4. SENIOR NOTE WARRANTS

     As of December 31, 2002, there were outstanding warrants to purchase
3,814,897 shares of GTL common stock relating to Globalstar's senior notes,
which were exercisable at a price of $17.394 per share and expire on February
15, 2004. Any proceeds from the exercise of the warrants will be used to
purchase Globalstar ordinary partnership interests.

5. CONVERTIBLE REDEEMABLE PREFERRED STOCK

     The 8% Preferred Stock and 9% Preferred Stock of GTL have mandatory
redemption dates in 2011. Under the terms of the mandatory redemption, GTL may
make payments to the holders in either cash or common stock, or a combination of
both. Based upon the price of GTL's common stock at December 31, 2002 and 2001,
GTL has not authorized a sufficient number of shares of common stock to effect
payment in common stock. Accordingly, GTL classified $202,865,000 and
$220,296,000 as of December 31, 2002 and 2001, respectively, of the 8% Preferred
Stock and 9% Preferred Stock outside the shareholders' deficit section of the
balance sheet based on GTL's average common stock price in the 10-day period
preceding the end of the period (approximately $0.06 and $0.16, as of December
31, 2002 and 2001, respectively). The number of shares of GTL common stock that
may be issued on the mandatory redemption date will depend on factors at the
redemption date including the price of GTL's common stock and the number of
shares of 8% Preferred Stock and 9% Preferred Stock outstanding at the time of
the redemption. The amount of the 8% Preferred Stock and 9% Preferred Stock
classified outside the shareholders' deficit section will vary in future periods
depending on these variables. No dividends have been paid on this preferred
stock since December 31, 2000.

  8% Preferred Stock

     In 1999, GTL sold seven million shares (face amount of $50 per share) of 8%
Preferred Stock. Dividends accrue at 8% per annum and are payable quarterly. The
8% Preferred Stock is convertible into shares of GTL common stock at a
conversion price of $23.2563 per share, subject to adjustment for certain
antidilution events. Loral purchased 3 million shares ($150 million face amount)
of the 8% Preferred Stock issued, in order to maintain its prior percentage
ownership interest in Globalstar. GTL used the net proceeds of approximately
$340 million to purchase seven million units ($50 per unit face amount) of
Globalstar's 8% RPPIs, which have terms substantially similar to those of the 8%
Preferred Stock.

     The 8% Preferred Stock has limited voting rights. With respect to dividend
rights and rights upon liquidation, winding up and dissolution, the 8% Preferred
Stock ranks pari passu with the 9% Preferred Stock and senior to common stock
and to all other future series of preferred stock or other classes of
                                       F-10

                     GLOBALSTAR TELECOMMUNICATIONS LIMITED
                    (A GENERAL PARTNER OF GLOBALSTAR, L.P.)

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

capital stock of GTL, the terms of which do not expressly provide that such
series or class ranks senior to or on parity with the 8% Preferred Stock. Prior
to its mandatory redemption date, the 8% Preferred Stock is redeemable (at a
premium which declines over time) by GTL beginning in February 2002. Payments
due on the 8% Preferred Stock may be made in cash, GTL common stock or a
combination of both at the option of GTL. In January 2001, GTL suspended
dividend payments on the 8% Preferred Stock. Under the terms of the 8% Preferred
Stock, if accrued and unpaid dividends accumulate to an amount equal to six
quarterly dividends, holders of the majority of the outstanding shares of 8%
Preferred Stock will have the right to elect up to two additional members to
GTL's Board of Directors. Dividends had not been paid for six consecutive
quarters on May 15, 2002. As of December 31, 2002, this right had not been
exercised.

     In 2002, 2,100 shares of the 8% Preferred Stock were converted into 4,508
shares of GTL common stock. As a result of such conversions, the 2,100 8% RPPIs
were converted into 1,113 Globalstar ordinary partnership interests. As of
December 31, 2002, the 8% Preferred Stock had an aggregate liquidation
preference equal to its $218 million aggregate redemption value and a mandatory
redemption date of February 15, 2011. The remaining shares of 8% Preferred Stock
outstanding at December 31, 2002 were convertible into 9,365,807 shares of GTL
common stock.

  9% Preferred Stock

     In 1999, GTL sold three million shares (face amount of $50 per share) of 9%
Preferred Stock. Dividends accrue at 9% per annum and are payable quarterly. The
9% Preferred Stock is convertible into shares of GTL common stock at a
conversion price of $25.9569 per share, subject to adjustment for certain
antidilution events. GTL used the net proceeds of approximately $145 million to
purchase three million units (face amount of $50 per unit) of Globalstar's 9%
RPPIs, which have terms substantially similar to those of the 9% Preferred
Stock.

     The 9% Preferred Stock has limited voting rights. With respect to dividend
rights and rights upon liquidation, winding up and dissolution, the 9% Preferred
Stock ranks pari passu with the 8% Preferred Stock and senior to common stock
and to all other future series of Preferred Stock, or other classes of capital
stock of GTL, the terms of which do not expressly provide that such series or
class ranks senior to or on parity with the 9% Preferred Stock. Prior to its
mandatory redemption date, the 9% Preferred Stock is redeemable (at a premium
which declines over time) by GTL beginning in December 2002. Payments due on the
9% Preferred Stock may be made in cash, GTL common stock or a combination of
both at the option of GTL. In January 2001, GTL suspended dividend payments on
the 9% Preferred Stock. Under the terms of the 9% Preferred Stock, if accrued
and unpaid dividends accumulate to an amount equal to six quarterly dividends,
holders of the majority of the outstanding shares of 9% Preferred Stock will
have the right to elect up to two additional members to GTL's Board of
Directors. Dividends had not been paid for six consecutive quarters on June 1,
2002. As of December 31, 2002, this right had not been exercised.

     In 2002, 1,303,933 shares of 9% Preferred Stock were converted into
2,511,766 shares of GTL common stock. As a result of such conversions, the
1,303,933 9% RPPIs were converted into 620,189 Globalstar ordinary partnership
interests. As of December 31, 2002, the 9% Preferred Stock had an aggregate
liquidation preference equal to its $20 million aggregate redemption value and a
mandatory redemption date of December 1, 2011. The remaining shares of 9%
Preferred Stock outstanding at December 31, 2002 were convertible into 750,213
shares of GTL common stock.

                                       F-11

                     GLOBALSTAR TELECOMMUNICATIONS LIMITED
                    (A GENERAL PARTNER OF GLOBALSTAR, L.P.)

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

6. SHAREHOLDERS' EQUITY

  Common Stock

     GTL's equity securities and convertible securities are represented by
equivalent Globalstar partnership interests on an approximate four-for-one
basis.

     Partners in Globalstar have the right to exchange their ordinary
partnership interests for common stock of GTL on an approximate one-for-four
basis following Globalstar's commencement of service date and after at least two
consecutive quarters of positive net income, subject to certain annual
limitations. GTL has reserved approximately 153.7 million shares for this
purpose.

  Stock Option Arrangements

     Officers, directors and employees of Globalstar are eligible to participate
in GTL's 1994 Stock Option Plan (the "Plan"), which provides for nonqualified
and incentive stock options. The Plan is administered by a stock option
committee (the "Committee"), appointed by GTL's Board of Directors. The
Committee determines the option price, exercise date and the expiration date of
each option (provided no option shall be exercisable after ten years from the
date of grant). Proceeds received by GTL for options exercised will in turn be
used to purchase Globalstar ordinary partnership interests under an approximate
four-for-one exchange arrangement.

     SFAS No. 123 requires the disclosure of pro forma net income and earnings
per share as though GTL had adopted the fair value method. Under SFAS No. 123,
the fair value of stock-based awards to employees is calculated through the use
of option pricing models, even though such models were developed to estimate the
fair value of freely tradable, fully transferable options without vesting
restrictions, which significantly differ from GTL's stock option awards. These
models also require subjective assumptions, including future stock price
volatility and expected time to exercise, which greatly affect the calculated
values. GTL's calculations for the purpose of estimating the fair value of
options (see Note 3) were made using the Black-Scholes option pricing model with
the following weighted average assumptions: expected life, six to twelve months
following vesting; stock volatility, 70% for 2002, 2001 and 2000; risk free
interest rates, 4.4% to 6.6% based on date of grant; and no dividends during the
expected term. GTL's calculations are based on a multiple option valuation
approach and forfeitures are recognized as they occur.

                                       F-12

                     GLOBALSTAR TELECOMMUNICATIONS LIMITED
                    (A GENERAL PARTNER OF GLOBALSTAR, L.P.)

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

     A summary of the status of the Plan for 2002, 2001 and 2000 is presented
below:



                                                                           WEIGHTED
                                                                           AVERAGE
                                                                           EXERCISE
                                                                SHARES      PRICE
                                                              ----------   --------
                                                                     
Outstanding at January 1, 2000..............................   4,643,800    $20.03
Granted (weighted average fair value of $4.04 per share)....   4,566,250      9.76
Forfeited...................................................    (984,750)    16.29
Exercised...................................................     (26,300)    10.72
                                                              ----------    ------
Outstanding at December 31, 2000............................   8,199,000     14.79
Granted.....................................................          --        --
Forfeited...................................................  (1,745,638)    15.50
Exercised...................................................          --        --
                                                              ----------    ------
Outstanding at December 31, 2001............................   6,453,362     14.46
Granted.....................................................          --        --
Forfeited...................................................  (1,044,795)    14.09
Exercised...................................................          --        --
                                                              ----------    ------
Outstanding at December 31, 2002............................   5,408,567    $14.96
                                                              ==========    ======
Outstanding at December 31, 2001............................   2,425,071    $11.87
                                                              ==========    ======
Outstanding at December 31, 2000............................   1,123,816    $14.20
                                                              ==========    ======


     The options generally expire ten years from the date of grant and become
exercisable over the period stated in each option, generally ratably over a
five-year period except for 4,336,250 options granted in 2000 which become
exercisable ratably over a three-year period. All options granted were
non-qualified stock options with an exercise price equal to fair market value at
the date of grant. During 2000, GTL granted stock options to certain
non-employees to purchase 167,000 shares of GTL common stock. The fair value of
such options totaled approximately $290,000 which has been recorded as
additional investment in Globalstar and is being amortized by Globalstar over
the vesting period. The fair value attributable to the unvested portion of such
options is subject to adjustment based upon the future value of GTL's common
stock. As of December 31, 2002, 4,490,733 shares of common stock were available
for future grant under the Plan.

     The following table summarizes information about GTL's outstanding stock
options at December 31, 2002:



                                                   OUTSTANDING                      EXERCISABLE
                                       ------------------------------------    ---------------------
                                                     WEIGHTED
                                                      AVERAGE      WEIGHTED                 WEIGHTED
                                                     REMAINING     AVERAGE                  AVERAGE
                                                    CONTRACTUAL    EXERCISE                 EXERCISE
EXERCISE PRICE RANGE                    NUMBER      LIFE-YEARS      PRICE       NUMBER       PRICE
- --------------------                   ---------    -----------    --------    ---------    --------
                                                                             
$ 3.01 to $ 4.64.....................    198,000       4.03         $ 4.11       195,333     $ 4.13
$ 4.65 to $17.15.....................  3,156,617       6.81           9.73     2,336,892       9.96
$17.16 to $29.03.....................  1,809,450       6.12          23.11     1,058,200      23.28
$29.04 to $31.41.....................    244,500       6.21          30.98       193,750      31.00
                                       ---------                               ---------
                                       5,408,567       6.45         $14.96     3,784,175     $14.46
                                       =========                               =========


                                       F-13

                     GLOBALSTAR TELECOMMUNICATIONS LIMITED
                    (A GENERAL PARTNER OF GLOBALSTAR, L.P.)

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

     GTL and Globalstar have agreed that upon the exercise of options under the
Plan, GTL will use the proceeds from the issuance of GTL common stock pursuant
to such option exercises to purchase one Globalstar ordinary partnership
interest for approximately every four shares of common stock issued to an
optionee. During 2000, GTL purchased 6,825 Globalstar ordinary partnership
interests with such proceeds. No ordinary partnership interests were purchased
during 2002 or 2001.

7. INCOME TAXES

     As a partner in Globalstar, GTL has been allocated its proportionate share
of partnership tax losses. To the extent that these losses are effectively
connected with the conduct of a trade or business in the U.S., they will be
available as a carryforward to offset GTL's share of Globalstar's income that
may be subject to U.S. tax in the future. As of December 31, 2002, GTL had
approximately $746.2 million of such effectively connected losses available for
carryforward which expire at varying dates from 2010 through 2021.

     Since the ultimate realization of these tax loss carryforwards depends upon
the ability of Globalstar to generate sufficient U.S. income in the future, GTL
has established a 100% valuation allowance against the deferred tax asset
related to these loss carryforwards. Accordingly, no income tax expense or
benefit is included in GTL's statements of operations and net deferred taxes are
zero at December 31, 2002 and 2001.

8. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)



                                                                     QUARTER ENDED
                                                     ----------------------------------------------
                                                     MARCH 31,    JUNE 30,    SEPT. 30,    DEC. 31,
                                                     ---------    --------    ---------    --------
                                                        (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                                                                               
2002:
Equity in net loss applicable to ordinary
  partnership interests of Globalstar..............   $18,819     $ 9,151      $ 8,861     $18,342
Net loss...........................................    18,819       9,151        8,861      18,342
Net loss applicable to common shareholders.........    24,104      13,946       13,657      23,137
Net loss per share -- basic and diluted............       .22         .12          .12         .20
2001:
Equity in net loss applicable to ordinary
  partnership interests of Globalstar..............   $25,983     $37,709      $29,925     $48,681
Net loss...........................................    25,983      37,709       29,925      48,681
Net loss applicable to common shareholders.........    33,362      44,302       36,235      54,961
Net loss per share -- basic and diluted............       .31         .40          .33         .50


9. COMMITMENTS AND CONTINGENCIES

     On February 28, 2001, plaintiff Eric Eismann filed a purported class action
complaint against GTL in the United States District Court for the Southern
District of New York. The other defendants named in the complaint were Loral and
Bernard Schwartz, the former Chief Executive Officer of Globalstar. Globalstar
was not a named defendant in these actions. The complaint alleges that (a) GTL
and Mr. Schwartz violated Section 10(b) of the Exchange Act and Rule 10b-5
promulgated thereunder, by making material misstatements or failing to state
material facts about GTL's business and prospects and (b) that Loral and Mr.
Schwartz are secondarily liable for these alleged misstatements and omissions
under Section 20(a) of the Exchange Act as alleged "controlling persons" of GTL.
The class of plaintiffs on whose behalf this lawsuit has been asserted consists
of all buyers of GTL common stock from

                                       F-14

                     GLOBALSTAR TELECOMMUNICATIONS LIMITED
                    (A GENERAL PARTNER OF GLOBALSTAR, L.P.)

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

December 6, 1999, through October 27, 2000, excluding the defendants, officers
and directors of GTL and certain persons affiliated therewith. Eighteen
additional purported class action complaints were subsequently filed in the
United States District Court for the Southern District of New York. These
complaints were granted class action status and consolidated into a case known
as In Re Globalstar Securities Litigation, 01 Civ. 1748 (SHS). On September 26,
2001, the court appointed The Phillips Family as Lead Plaintiff for the class.
On November 13, 2001, Lead Plaintiff filed a Consolidated Amended Class Action
Complaint and a demand for jury trial. The amended complaint drops the cause of
action against certain individuals and adds causes of action against Globalstar
and its wholly-owned subsidiary, Globalstar Capital. GTL and Globalstar believe
that they have meritorious defenses to these actions and on or about February
25, 2002, filed a motion to dismiss the complaint. The case against Globalstar
and Globalstar Capital is stayed pursuant to the Bankruptcy Code. There are,
however, no assurances that the defenses to these actions will be successful.

                                       F-15


                          INDEPENDENT AUDITORS' REPORT

To the Partners of Globalstar, L.P. (a Debtor-in-Possession):

     We have audited the accompanying consolidated balance sheets of Globalstar,
L.P. (a limited partnership) and its subsidiaries (collectively, the
"Partnership") (a Debtor-in-Possession) as of December 31, 2002 and 2001 and the
related consolidated statements of operations, partners' capital (deficit) and
cash flows for each of the three years in the period ended December 31, 2002.
These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

     We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

     In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of the Partnership at December 31,
2002 and 2001 and the results of its operations and its cash flows for each of
the three years in the period ended December 31, 2002 in conformity with
accounting principles generally accepted in the United States of America.

     As discussed in Note 2 to the consolidated financial statements, the
Partnership has filed for reorganization under Chapter 11 of the Federal
Bankruptcy Code. The accompanying consolidated financial statements do not
purport to reflect or provide for the consequences of the bankruptcy
proceedings. In particular, such financial statements do not purport to show (a)
as to assets, their realizable value on a liquidation basis or their
availability to satisfy liabilities; (b) as to pre-petition liabilities, the
amounts that may be allowed for claims or contingencies, or the status and
priority thereof; (c) as to the partnership interests, the effect of any changes
that may be made in the capitalization of the Partnership; or (d) as to the
operations, the effect of any changes that may be made in its business.

     The accompanying consolidated financial statements have been prepared
assuming that the Partnership will continue as a going concern. As discussed in
Note 2 to the consolidated financial statements, on February 15, 2002, the
Partnership filed for reorganization under Chapter 11 of the Federal Bankruptcy
Code. These factors, among others, raise substantial doubt about the
Partnership's ability to continue as a going concern. The consolidated financial
statements do not include adjustments that might result from the outcome of this
uncertainty.

DELOITTE & TOUCHE LLP

San Jose, California
February 24, 2003 (March 25, 2003 as to the fourth and fifth paragraph of Note 2
and Note 20)

                                       F-16


                    GLOBALSTAR, L.P., A DEBTOR-IN-POSSESSION

                          CONSOLIDATED BALANCE SHEETS
                  (IN THOUSANDS, EXCEPT PARTNERSHIP INTERESTS)



                                                                     DECEMBER 31,
                                                              --------------------------
                                                                 2002           2001
                                                              -----------    -----------
                                                                       
ASSETS
Current assets:
  Cash and cash equivalents.................................  $    15,284    $    55,625
  Accounts receivable, net of allowance of $2,030 at
    December 31, 2002 and $2,158 at December 31, 2001.......        4,687          2,282
  Inventory.................................................        1,294          1,090
  Prepaid expenses and other current assets.................        7,899         12,971
                                                              -----------    -----------
    Total current assets....................................       29,164         71,968
                                                              -----------    -----------
Property and equipment:
  Globalstar System, net....................................      198,756        229,774
  Other property and equipment, net.........................        2,143          2,216
                                                              -----------    -----------
                                                                  200,899        231,990
                                                              -----------    -----------
Additional spare satellites.................................       24,236         23,823
Production gateways, net of allowance of $18,943 at December
  31, 2002 and $20,212 at December 31, 2001.................       12,553         28,151
Deferred financing costs....................................           --         68,330
Other assets, net...........................................       27,522         32,129
                                                              -----------    -----------
    Total assets............................................  $   294,374    $   456,391
                                                              ===========    ===========
LIABILITIES AND PARTNERS' (DEFICIT)
Current liabilities:
  Term loans payable to affiliates..........................  $        --    $   400,000
  Revolving credit facility to affiliates...................           --        100,000
  Senior notes payable ($1,450,000 aggregate principal
    amount).................................................           --      1,417,942
  Accounts payable..........................................        2,522          3,752
  Payable to affiliates.....................................        7,745         35,111
  Vendor financing liability................................           --        814,246
  Dividends payable.........................................           --         29,870
  Accrued expenses..........................................        6,419         42,524
  Accrued interest..........................................           --        246,871
  Deferred revenue..........................................        2,365             --
                                                              -----------    -----------
    Total current liabilities...............................       19,051      3,090,316
                                                              -----------    -----------
Deferred revenues...........................................           --         31,359
Vendor financing liability, net of current portion..........           --         55,139
Accrued interest on notes payable...........................           --         32,320
Notes payable...............................................           --        150,000
Notes payable to affiliates.................................           --         95,010
                                                              -----------    -----------
    Total noncurrent liabilities............................           --        363,828
                                                              -----------    -----------
Liabilities subject to compromise...........................    3,425,921             --
Commitments and contingencies (Note 10 and 19)
Partners' (deficit):
  8% Series A convertible redeemable preferred partnership
    interests (4,356,295 and 4,358,395 interests outstanding
    at December 31, 2002 and 2001, respectively, $218
    million redemption value at December 31, 2002 and
    2001....................................................           --             --
  9% Series B convertible redeemable preferred partnership
    interests (389,500 and 1,693,433 interests outstanding
    at December 31, 2002 and 2001, respectively, $20 million
    and $85 million redemption value at December 31, 2002
    and 2001, respectively).................................           --             --
  Ordinary general partnership interests (45,910,604 and
    45,289,938 interests outstanding at December 31, 2002
    and 2001, respectively).................................   (3,114,193)    (2,961,347)
  Ordinary limited partnership interests (19,937,500
    interests outstanding at December 31, 2002 and 2001)....     (239,740)      (239,740)
  Unearned compensation.....................................           --             (1)
  Warrants..................................................      203,335        203,335
                                                              -----------    -----------
    Total partners' (deficit)...............................   (3,150,598)    (2,997,753)
                                                              -----------    -----------
    Total liabilities and partners' (deficit)...............  $   294,374    $   456,391
                                                              ===========    ===========


                See notes to consolidated financial statements.
                                       F-17


                    GLOBALSTAR, L.P., A DEBTOR-IN-POSSESSION

                     CONSOLIDATED STATEMENTS OF OPERATIONS
        (IN THOUSANDS, EXCEPT PER ORDINARY PARTNERSHIP INTEREST AMOUNTS)



                                                                 YEARS ENDED DECEMBER 31,
                                                            ----------------------------------
                                                              2002        2001         2000
                                                            --------    --------    ----------
                                                                           
Revenues:
  Service.................................................  $ 17,182    $  6,195    $    2,223
  Subscriber equipment....................................     7,457         152            --
  Royalty income..........................................        --          57         1,427
                                                            --------    --------    ----------
          Total revenue...................................    24,639       6,404         3,650
                                                            --------    --------    ----------
Operating expenses:
  Cost of subscriber equipment............................     5,650         130            --
  Operations..............................................    26,379      56,074       127,969
  Marketing, general and administrative...................    39,104     101,392        80,705
  Restructuring...........................................     7,694      12,035            --
  Launch termination costs................................    18,379          --            --
  Impairment of assets....................................        --          --     2,939,790
  Depreciation and amortization...........................    30,904      35,554       327,938
                                                            --------    --------    ----------
          Total operating expenses........................   128,110     205,185     3,476,402
                                                            --------    --------    ----------
Operating loss............................................   103,471     198,781     3,472,752
Interest income...........................................       101       4,513        16,490
Interest expense..........................................    46,523     381,170       329,163
                                                            --------    --------    ----------
Loss before taxes.........................................   149,893     575,438     3,785,425
Income tax expense........................................        66          73           246
                                                            --------    --------    ----------
Net loss..................................................   149,959     575,511     3,785,671
Preferred distributions on redeemable preferred
  partnership interests...................................     2,887      26,562        30,730
                                                            --------    --------    ----------
Net loss applicable to ordinary partnership interests.....  $152,846    $602,073    $3,816,401
                                                            ========    ========    ==========
Net loss per ordinary partnership interest -- basic and
  diluted.................................................  $   2.32    $   9.26    $    61.23
                                                            ========    ========    ==========
Weighted average ordinary partnership interests
  outstanding -- basic and diluted........................    65,789      65,040        62,325
                                                            ========    ========    ==========


                See notes to consolidated financial statements.
                                       F-18


                    GLOBALSTAR, L.P., A DEBTOR-IN-POSSESSION

             CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL (DEFICIT)
                                 (IN THOUSANDS)



                                                 CONVERTIBLE
                                                 REDEEMABLE      GENERAL       LIMITED
                                                  PREFERRED     ORDINARY      ORDINARY
                                                 PARTNERSHIP   PARTNERSHIP   PARTNERSHIP     UNEARNED
                                                  INTERESTS     INTERESTS     INTERESTS    COMPENSATION   WARRANTS      TOTAL
                                                 -----------   -----------   -----------   ------------   --------   -----------
                                                                                                   
Capital balances -- January 1, 2000............   $ 358,968    $   481,616    $  34,914      $(16,754)    $169,585   $ 1,028,329
Exercise of warrants (23 interests)............                      1,864                                    (271)        1,593
Stock compensation transactions by managing
  general partner for the benefit of
  Globalstar...................................                                      95                                       95
Sale of ordinary partnership interests in
  connection with GTL stock option exercises (7
  interests)...................................                        293                                                   293
Sale of ordinary partnership interests in
  connection with GTL common stock
  issuance -- February 2000 (1,988
  interests)...................................                    268,471                                               268,471
Sale of ordinary partnership interests in
  connection with GTL stock
  issuance -- September & October 2000 (1,000
  interests)...................................                     27,769                                                27,769
Sale of ordinary partnership interests from
  partner's equity financing -- September 2000
  (1,295 interests)............................                     56,200                                                56,200
Conversion of 9% Series B convertible
  redeemable preferred partnership interests
  into ordinary partnership interests and
  related payment of dividend in stock (269
  interests)...................................      (2,014)         5,344                                                 3,330
Warrants issued for ordinary partnership
  interests in exchange for debt guarantee.....                                                             34,442        34,442
Conversion of 8% Series A convertible
  redeemable preferred partnership interests
  into ordinary partnership interests and
  related payment of dividend in stock (180
  interests)...................................         (10)         4,374                                                 4,364
Change in fair value of stock compensation for
  the benefit of Globalstar....................                    (20,393)                    20,393
Amortization of unearned compensation..........                                                (3,699)                    (3,699)
Net loss applicable to ordinary partnership
  interests -- year ended December 31, 2000....    (356,944)    (3,184,708)    (274,749)                              (3,816,401)
                                                  ---------    -----------    ---------      --------     --------   -----------
Capital balances -- December 31, 2000..........          --     (2,359,170)    (239,740)          (60)     203,756    (2,395,214)
Warrants issued for ordinary partnership
  interests in exchange for debt guarantee.....                                                               (421)         (421)
Conversion of 8% Series A convertible
  redeemable preferred partnership interests
  (20 interests)...............................          --             --
Conversion of 9% Series B convertible
  redeemable preferred partnership interests
  (602 interests)..............................          --             --
Change in fair value of stock compensation for
  the benefit of Globalstar....................                       (104)                       104
Amortization of unearned compensation..........                                                   (45)                       (45)
Net loss applicable to ordinary partnership
  interests -- year ended December 31, 2001....                   (602,073)                                             (602,073)
                                                  ---------    -----------    ---------      --------     --------   -----------
Capital balances -- December 31, 2001..........          --     (2,961,347)    (239,740)           (1)     203,335    (2,997,753)
Conversion of 8% Series A convertible
  redeemable preferred partnership interests (1
  interest)....................................          --             --
Conversion of 9% Series B convertible
  redeemable preferred partnership interests
  (620 interests)..............................          --             --
Amortization of unearned compensation..........                                                     1                          1
Net loss applicable to ordinary partnership
  interests -- year ended December 31, 2002....                   (152,846)                                             (152,846)
                                                  ---------    -----------    ---------      --------     --------   -----------
Capital balances -- December 31, 2002..........   $      --    $(3,114,193)   $(239,740)     $     --     $203,335   $(3,150,598)
                                                  =========    ===========    =========      ========     ========   ===========


                See notes to consolidated financial statements.
                                       F-19


                    GLOBALSTAR, L.P., A DEBTOR-IN-POSSESSION

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)



                                                                     YEARS ENDED DECEMBER 31,
                                                              ---------------------------------------
                                                                2002          2001           2000
                                                              ---------    -----------    -----------
                                                                                 
Operating activities:
 Net loss...................................................  $(149,959)   $  (575,511)   $(3,785,671)
 Impairment of assets.......................................         --             --      2,939,790
 Launch termination costs...................................     18,379             --             --
 Loss on failed satellites and disposal of fixed assets.....      3,553          1,392             --
 Provision for gateway receivables..........................      9,494         20,212             --
 Provision for doubtful accounts............................       (136)         9,419             --
 Provision for inventory....................................         --          5,471             --
 Amortization of unearned compensation......................          1            (45)        (3,604)
 Depreciation and amortization..............................     30,904         35,554        327,938
 Non-cash interest..........................................      8,388         66,426         63,809
 Changes in operating assets and liabilities:
   Accounts receivable......................................       (416)        (3,504)          (422)
   Inventory................................................      2,319            130             --
   Prepaid expenses and other current assets................      2,342        (13,039)        (2,720)
   Other assets.............................................       (142)          (401)        (2,090)
   Accounts payable.........................................       (188)       (10,146)         6,174
   Payable to affiliates....................................     (1,054)        11,278        (25,027)
   Accrued expenses.........................................      2,451         23,204          1,479
   Accrued interest and other...............................     38,125        315,705         12,462
   Deferred revenue.........................................     (2,074)        (6,593)        12,141
                                                              ---------    -----------    -----------
     Net cash used in operating activities..................    (38,013)      (120,448)      (455,741)
                                                              ---------    -----------    -----------
Investing activities:
 Globalstar System..........................................         --         (4,364)       (23,305)
 Payable to affiliates for Globalstar System................         --         (7,673)       (31,399)
 Accounts payable...........................................         --           (253)        (3,536)
 Vendor financing liability.................................         --             --         94,543
                                                              ---------    -----------    -----------
 Cash provided by (used for) Globalstar System..............         --        (12,290)        36,303
 Advances for production gateways and user terminals........         --         (2,120)      (163,547)
 Cash receipts for production gateways and user terminals...        283          3,609        111,875
 Receipt and use of restricted cash, net....................         --         22,448         23,798
 Additional spare satellites, net of vendor financing.......         --         (8,505)      (100,688)
 Construction in progress...................................       (326)            --             --
 Purchases of property and equipment........................       (394)          (604)        (2,897)
 Acquisition, net of cash acquired..........................     (1,891)         1,371             --
                                                              ---------    -----------    -----------
   Net cash provided by (used in) investing activities......     (2,328)         3,909        (95,156)
                                                              ---------    -----------    -----------
Financing activities:
 Sale of ordinary partnership interests upon exercise of
   options and warrants.....................................         --             --        354,326
 Repayment of vendor financing..............................         --         (2,237)       (83,652)
 Distributions on redeemable preferred partnership
   interests................................................         --             --        (23,051)
 Borrowings under credit facilities.........................         --             --        350,000
                                                              ---------    -----------    -----------
   Net cash provided by (used in) financing activities......         --         (2,237)       597,623
                                                              ---------    -----------    -----------
Net increase (decrease) in cash and cash equivalents........    (40,341)      (118,776)        46,726
Cash and cash equivalents, beginning of period..............     55,625        174,401        127,675
                                                              ---------    -----------    -----------
Cash and cash equivalents, end of period....................  $  15,284    $    55,625    $   174,401
                                                              =========    ===========    ===========
Noncash transactions:
 Receivables offset by payables and notes payable...........  $  (2,391)   $   (11,314)
                                                              =========    ===========
 Issuance of notes to guarantors for repayment of revolving
   credit line..............................................                              $   250,000
                                                                                          ===========
 Payables to affiliates converted into vendor financing.....                              $  (368,259)
                                                                                          ===========
 Distributions on redeemable preferred partnership interests
   on GTL common stock......................................                              $    (7,694)
                                                                                          ===========
 Ordinary partnership interests distributed upon conversion
   of redeemable preferred partnership interests and related
   dividend make-whole payments.............................                              $     2,024
                                                                                          ===========
 Warrants issued in connection with QUALCOMM vendor
   financing................................................               $      (421)   $    34,442
                                                                           ===========    ===========
 Dividends accrued..........................................  $   2,887    $    26,562    $       (15)
                                                              =========    ===========    ===========
 Change in fair value of stock compensation for the benefit
   of Globalstar............................................               $       104    $   (20,393)
                                                                           ===========    ===========


                See notes to consolidated financial statements.
                                       F-20


                    GLOBALSTAR, L.P., A DEBTOR-IN-POSSESSION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. ORGANIZATION AND BUSINESS

     Globalstar, L.P. ("Globalstar"), a Delaware limited partnership, was formed
in November 1993, remaining inactive until March 23, 1994, when it received
capital subscriptions for $275 million and commenced operations.

     The governing body of Globalstar is the General Partners' Committee. The
Committee may have up to seven members, five of whom may be appointed by the
managing general partner of Globalstar, Loral/ QUALCOMM Satellite Services, L.P.
("LQSS"). The general partner of LQSS is Loral/QUALCOMM Partnership, L.P.
("LQP"), a Delaware limited partnership comprised of subsidiaries of Loral Space
& Communications Ltd., a Bermuda company (and with its subsidiaries "Loral") and
QUALCOMM Incorporated ("QUALCOMM"). The managing general partner of LQP is Loral
General Partner, Inc. ("LGP"), a subsidiary of Loral. As of December 31, 2002,
Loral owned, directly or indirectly, 25,163,207 (approximately 38.2%) of the
ordinary partnership interests of Globalstar, including interests attributable
to 9,902,990 shares of Globalstar Telecommunications Limited ("GTL") outstanding
common stock.

     Globalstar was founded to design, construct and operate a worldwide,
low-earth orbit satellite-based wireless digital telecommunications system (the
"Globalstar System"). The Globalstar System's worldwide coverage is designed to
enable its service providers to extend modern telecommunications services to
millions of people who currently lack basic telephone service and to enhance
wireless communications in areas underserved or not served by existing or future
cellular systems, providing a telecommunications solution in parts of the world
where the build-out of terrestrial systems cannot be economically justified. In
1995, the United States Federal Communications Commission (the "FCC") granted
the necessary license to a wholly-owned subsidiary of LQP to construct, launch
and operate the Globalstar System. LQP has agreed to use such license for the
exclusive benefit of Globalstar.

     GTL was incorporated in 1994 as an exempted company under the Companies Act
1981 of Bermuda. GTL's sole business is acting as a general partner of
Globalstar and its sole assets consist of its equity interests in Globalstar. As
of December 31, 2002, GTL owned 27,911,240 (42.4%) of Globalstar's outstanding
ordinary partnership interests and 100% of the outstanding 8% and 9% convertible
redeemable preferred partnership interests (the "RPPIs").

     Globalstar operates in one industry segment, satellite telecommunications,
providing global mobile and fixed wireless voice and data services.

2. BASIS OF PRESENTATION

     On February 15, 2002 (the "Petition Date"), Globalstar and certain of its
subsidiaries filed voluntary petitions under Chapter 11 of Title 11 of the
United States Code (the "Bankruptcy Code"), in the United States Bankruptcy
Court ("Bankruptcy Court") for the District of Delaware (Case Nos. 02-10499,
02-10501, 02-10503 and 02-10504). Globalstar and its debtor subsidiaries remain
in possession of their assets and properties and continue to operate their
businesses as debtors-in-possession. Also, on February 15, 2002, the managing
general partner of Globalstar, LQSS, filed a voluntary petition in Delaware
under Chapter 11 of the Bankruptcy Code in the Bankruptcy Court. These factors,
among others, raise substantial doubt about Globalstar's ability to continue as
a going concern. The consolidated financial statements do not include any
adjustments that might result from the outcome of this uncertainty.

     Under Chapter 11, substantially all unsecured liabilities as of the
Petition Date are subject to compromise or other treatment under a plan of
reorganization, which must be approved and confirmed by the Bankruptcy Court.
For financial reporting purposes, those liabilities and obligations whose
treatment and satisfaction are dependent on the outcome of the Chapter 11 case
have been segregated in the condensed consolidated balance sheet as liabilities
subject to compromise. Generally, all actions to enforce
                                       F-21

                    GLOBALSTAR, L.P., A DEBTOR-IN-POSSESSION

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

or otherwise require repayment of Globalstar's pre-petition liabilities are
stayed under Section 362(a) of the Bankruptcy Code while Globalstar continues
its business operations as a debtor-in-possession. The amount and settlement
terms of the pre-petition liabilities subject to compromise are subject to an
approved plan of reorganization and may differ significantly from the amounts as
reflected in these consolidated financial statements.

     On January 14, 2003, Globalstar and the Creditors' Committee reached an
agreement with New Valley Corporation ("New Valley") providing for
debtor-in-possession financing (the "New Valley DIP Facility") of up to $20
million and a total investment in a reorganized Globalstar of $55 million.
Globalstar filed a motion with the Bankruptcy Court for approval of this new
investment on January 15, 2003 and filed a Form 8-K on the same date. A hearing
to seek Bankruptcy Court approval of the New Valley DIP Facility was scheduled
for January 30, 2003 in Delaware. Prior to the hearing, the Creditors' Committee
informed Globalstar and New Valley that the Creditors' Committee would not
support approval of the New Valley investment, but that a consortium including
certain individual members of the Creditors' Committee was prepared to provide
substitute debtor-in-possession financing. As a consequence, New Valley withdrew
its investment offer as of January 30, 2003. Globalstar filed another Form 8-K
reflecting New Valley's withdrawal on February 4, 2003.

     On February 14, 2003, Globalstar and the consortium of lenders (the "DIP
Lenders") reached agreement on debtor-in-possession financing of $10 million
(the "DIP Facility") and filed a motion with the Bankruptcy Court seeking
approval of such financing. Globalstar also filed a motion defining certain
auction procedures by which Globalstar would conclude its search for an investor
to fund Globalstar's restructuring and exit from bankruptcy. The Bankruptcy
Court provided interim approval of the DIP Facility and approved the auction
procedures on February 20, 2003, and the parties executed the DIP Facility
documents on February 25, 2003. Copies of the DIP Facility, auction procedures
and related documents were filed with a Form 8-K on February 27, 2003. The
Bankruptcy Court granted final approval of the DIP Facility on March 6, 2003. As
a condition to the DIP Lenders obligation to fund draws by Globalstar under the
DIP Facility in excess of $2.0 million, among other things (i) Globalstar was
required to secure from Loral/QUALCOMM Partnership, L.P. ("LQP") a pledge in
favor of the DIP Lenders of LQP's ownership interest in the outstanding stock of
L/Q Licensee, Inc. ("L/Q Licensee"), and (ii) Globalstar was required to reach
an agreement, satisfactory to the DIP Lenders, with respect to specified matters
relating to Loral and certain of its affiliates (the conditions set forth in
clauses (i) and (ii) above, collectively, the "Loral Condition"). The Loral
Condition was initially required to be satisfied by March 7, 2003, but the DIP
Facility was amended to extend the deadline for meeting the Loral Condition to
March 21, 2003. The Loral Condition was satisfied prior to the extended
deadline.

     Under the approved auction procedures, Globalstar received expressions of
interest from prospective investors in early March 2003, and with the assistance
of its financial advisors and in consultation with the Creditors' Committee,
determined which of them were "qualified" to perform due diligence and make a
definitive proposal for an equity investment in Globalstar or the purchase of
Globalstar's assets. March 21, 2003 was the deadline set for the submission of
investment proposals by the qualified bidders. Globalstar, in consultation with
the Creditors' Committee, expects to choose the highest and best investment
proposal in early-April and to file a modified plan of reorganization with the
Bankruptcy Court shortly thereafter. No assurance can be given as to whether
this auction process will ultimately lead to a successful restructuring of
Globalstar.

     Globalstar has developed a business plan in connection with its
restructuring; the business plan will be an integral part of Globalstar's plan
of reorganization. The business plan, which is predicated on an infusion of
funds, assumes the consolidation of certain Globalstar service provider
operations into a new Globalstar company ("New Globalstar"). Several of the
acquisitions contemplated in the business plan

                                       F-22

                    GLOBALSTAR, L.P., A DEBTOR-IN-POSSESSION

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

were completed during 2001 and 2002. The consolidation strategy has brought
additional efficiencies to the operation of the Globalstar System and allowed
for increased geographic coverage and pricing coordination in Globalstar's
service offerings and pricing. In addition, Globalstar intends to revise its
business relationships with the remaining independent service providers,
including exploring the possible acquisition of their businesses or assets.
Globalstar believes that these, and additional, steps are needed to achieve and
maintain financial viability (see Note 4).

     Globalstar has incurred cumulative partnership losses of $5.21 billion
through December 31, 2002, which have been funded primarily through the issuance
of partnership interests and debt by Globalstar.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Since the Petition Date, Globalstar's consolidated financial statements
have been prepared in compliance with Statement of Position ("SOP 90-7") on
Financial Reporting by Entities in Reorganization Under the Bankruptcy Code
issued by the American Institute of Certified Public Accountants. Specifically,
all pre-petition liabilities subject to compromise have been segregated on the
balance sheet and classified as liabilities subject to compromise. No interest
expense on pre-petition liabilities or dividends on redeemable preferred
partnership interests since the Petition Date have been accrued or recorded as
these amounts are not expected to be allowed claims. No debt discounts or
deferred financing costs have been amortized since the Petition Date as the
value of the allowed debt has not been fixed by the Bankruptcy Court. Debt
obligations have not been adjusted to reorganization values since the Bankruptcy
Court has not yet confirmed a plan of reorganization. Management expects that
the allowed claims will be established near the date that a final plan of
reorganization is confirmed by the Bankruptcy Court and pre-petition liabilities
will be adjusted as the claims are resolved.

     Adjusting the debt obligations to redemption values may result in a
reorganization charge approximating $102.2 million. Interest income since the
Petition Date has been reported as a reorganization item as the amounts are
considered to be proceeds of the bankruptcy proceedings.

  Pre-petition Debt, Accrued Interest, and Dividends Payable

     Under Chapter 11, substantially all unsecured liabilities as of the
Petition Date are subject to compromise or other treatment under a plan of
reorganization, which must be approved and confirmed by the Bankruptcy Court.
For financial reporting purposes, those liabilities and obligations whose
treatment and satisfaction are dependent on the outcome of the Chapter 11 case
have been segregated in the consolidated balance sheet as liabilities subject to
compromise. Generally, all actions to enforce or otherwise require repayment of
pre-petition liabilities are stayed while Globalstar continues its business
operations as a debtor-in-possession. The amount and settlement terms of the
pre-petition liabilities subject to compromise are subject to an approved plan
of reorganization and may differ significantly from the amounts as reflected in
these consolidated financial statements.

     As a result of the Chapter 11 filing, no principal or interest payments
will be made on unsecured pre-petition debt without Bankruptcy Court approval or
until a plan of reorganization providing for the repayment terms has been
confirmed by the Bankruptcy Court and becomes effective. Interest expense on
pre-petition debt will not be paid during the bankruptcy proceeding and is not
expected to be an allowed claim; therefore, $266.2 million of interest on
pre-petition debt has not been recorded since the Petition Date. In addition,
$15.0 million and $41.0 million of amortization have not been recorded since the
Petition Date on the debt discounts and premiums and deferred financing costs,
respectively. Dividends of $16.8 million on RPPIs since the Petition Date have
not been accrued or recorded as these amounts are not expected to be allowed
claims.

                                       F-23

                    GLOBALSTAR, L.P., A DEBTOR-IN-POSSESSION

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

  Use of Estimates in Preparation of Financial Statements

     The preparation of consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the amounts of expenses reported for the period. Actual results
could differ from estimates.

  Principles of Consolidation

     The consolidated financial statements include the accounts of Globalstar
and its wholly owned and majority owned subsidiaries. All significant
intercompany transactions and balances have been eliminated.

  Reclassifications

     Certain amounts from the prior year have been reclassified to conform to
current year presentation. These reclassifications do not change previously
reported total assets, liabilities, partners' capital (deficit) or net loss.

  Cash and Cash Equivalents

     Cash and cash equivalents consist of cash on hand and highly liquid
investments with original maturities of three months or less.

  Concentration of Credit Risk

     Financial instruments which potentially subject Globalstar to
concentrations of credit risk are cash and cash equivalents. Globalstar's cash
and cash equivalents are maintained with high-credit-quality financial
institutions. The creditworthiness of such institutions is generally substantial
and management believes that its credit evaluation, approval and monitoring
processes mitigate potential credit risks.

  Inventory

     Inventory consists of purchased products, including fixed and mobile user
terminals, accessories and gateway spare parts. Inventory is stated at lower of
cost or market. Cost is computed using a standard cost, which approximates
acquisition cost on a first-in, first-out basis. Globalstar provides inventory
allowances for inventories with a lower market value or which is slow moving.
Unsalable inventory is written off.

     In connection with the Vodafone and TE.S.A.M. transactions (see Note 4),
Globalstar acquired a large number of user terminals and accessories. Management
allocated value only to inventory for which Globalstar forecasts usage through
2003. There is no alternative market for these products.

  Property and Equipment

     Property and equipment are stated at historical cost, less accumulated
depreciation. Depreciation is provided using the straight-line method over the
estimated useful lives of the respective assets, as follows:

                                    
Globalstar System                      Up to periods of 10 years from
                                       commencement of service in the first
                                       quarter of 2000
Furniture, fixtures & equipment        3 to 10 years
Leasehold improvements                 Shorter of lease term or the
                                       estimated useful lives of the
                                       improvements



                                       F-24

                    GLOBALSTAR, L.P., A DEBTOR-IN-POSSESSION

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

  Globalstar System

     The Globalstar System includes costs for the design, manufacture, test, and
launch of a constellation of low-earth orbit satellites, including in-orbit
spare satellites (the "Space Segment"), and ground and satellite operations
control centers, gateways and user terminals (the "Ground Segment").

     Losses from in-orbit failures of Globalstar's satellites, net of insurance
proceeds, are recorded in the period it is determined that the satellite is not
recoverable.

     The carrying value of the Globalstar System is reviewed for impairment
whenever events or changes in circumstances indicate that the recorded value of
the Space Segment and Ground Segment, taken as a whole, may not be recoverable.
Globalstar looks to current and future undiscounted cash flows, excluding
financing costs, as primary indicators of recoverability. If an impairment is
determined to exist, any related impairment loss is calculated based on fair
value.

  Additional Spare Satellites

     Following a launch failure in September 1998, Globalstar decided to
purchase eight additional satellites for $148 million (including performance
incentives of up to $16 million) to serve as on-ground spares. As of December
31, 2002, costs of $147 million (including a portion of the performance
incentives) have been recognized for these spare satellites. Seven of the eight
have been completed, and all eight are in storage in California. Depreciation of
these assets will not begin until the satellites are placed in service.

  Production Gateways

     These assets include $12.6 million and $28.2 million in net receivables at
December 31, 2002 and 2001, respectively, from service providers associated with
the reimbursement of gateway acquisition and deployment costs previously paid by
Globalstar to QUALCOMM. As of December 31, 2002, these receivables are
delinquent and Globalstar has sent notices of default where appropriate. If the
collection of these payments is unsuccessful, Globalstar may retain title to
these gateways, subject to local restrictions, or Globalstar may receive an
equity position in the service provider company in exchange for debt
forgiveness. The production gateway receivable, net of reserve, is based on the
estimated value of the anticipated recovery of the receivables based on current
discussions between Globalstar and the service providers. As of December 31,
2002, Globalstar has reserved $18.9 million of the production gateway
receivables.

  Deferred Financing Costs and Interest

     Deferred financing costs represent costs incurred in obtaining long-term
credit facilities and the estimated fair value of warrant agreements issued in
connection with these facilities. Prior to the Petition Date, these costs were
classified as long term assets and were being amortized over the terms of the
credit facilities as interest expense. Globalstar ceased the amortization of the
costs on the Petition Date as the value of the debt has not been confirmed by
the Bankruptcy Court. The amortization expense that otherwise would have been
recorded from the Petition Date through December 31, 2002 is $41.0 million. As
of December 31, 2002, the deferred financing costs have been offset with the
related debt and included in the liabilities subject to compromise.

  Other Assets

     Other assets primarily include the fair value of warrants issued to China
Telecom (see Note 12) and expenditures, including license fees, legal fees and
direct engineering and other technical support, for

                                       F-25

                    GLOBALSTAR, L.P., A DEBTOR-IN-POSSESSION

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

obtaining the required FCC licenses. Such amounts are amortized over periods of
up to 10 years, the expected life of the first generation satellites.
Accumulated amortization totaled $9.7 million at December 31, 2002.

  Deferred Revenues

     Customer activation fees are deferred and recognized over one year, the
average life of the customer contract. Globalstar service providers purchased
approximately $11.7 million of gross advance minutes ($8.8 million net of 25%
discount). Approximately $2.2 million of these gross advance minutes were
recognized as service revenue during the year ended December 31, 2002. Prior to
the Petition Date, deferred revenues included the advance payments from
Globalstar's strategic partners to secure exclusive rights to Globalstar service
territories and related to promotional programs. These advance payments were
recoverable by the service providers, through credits against certain service
fees payable to Globalstar, but since the Petition Date they have been
classified as liabilities subject to compromise.

  Preferred Partnership Distributions

     Distributions are accrued on RPPIs at the stated rate per annum.
Distributions are recorded as reductions against the ordinary partnership
capital accounts (see Note 12). Since the Petition Date, the distributions on
RPPIs are no longer accrued. The distributions that otherwise would have been
recorded from the Petition Date through December 31, 2002 are $16.8 million.

  Stock-Based Compensation

     Globalstar accounts for stock-based employee compensation in accordance
with the provisions of Accounting Principles Board Opinion No. 25, "Accounting
for Stock Issued to Employees," ("APB No. 25") and related interpretations and
complies with the disclosure provisions under Statement of Financial Accounting
Standards No. 123, "Accounting for Stock-Based Compensation," ("SFAS No. 123").

     The following table illustrates the effect on Globalstar's reported net
loss applicable to common shareholders and net loss per share if Globalstar had
applied the fair value recognition provision of SFAS No. 123 to stock-based
employee compensation (in thousands, except per share amounts):



                                                                DECEMBER 31,
                                                    ------------------------------------
                                                      2002         2001          2000
                                                    --------   ------------   ----------
                                                                     
Net loss, as reported.............................  $152,846     $602,073     $3,816,401
Less: Total stock-based employee compensation
  expense determined under the fair value method
  for all awards..................................     4,138        9,748         12,495
                                                    --------     --------     ----------
Pro-forma net loss................................  $156,984     $611,821     $3,828,896
                                                    ========     ========     ==========
Reported basic and diluted earnings per common
  share...........................................  $   2.32     $   9.26     $    61.23
                                                    ========     ========     ==========
Pro-forma basic and diluted earnings per common
  share...........................................  $   2.39     $   9.41     $    61.43
                                                    ========     ========     ==========


  Revenue Recognition

     Globalstar owns and operates the Globalstar satellite constellation and
earns its revenues primarily through the sale of airtime minutes on a wholesale
basis to Globalstar service providers. Revenue from services to Globalstar
service providers is recognized based upon airtime minutes processed and
contractual fee arrangements. Service provider airtime revenue, resulting from
recently acquired operations in North America (see Note 4), is recognized at the
close of the monthly billing cycle for each customer. Where collectibility is
uncertain, revenue is recognized on the cash basis.

                                       F-26

                    GLOBALSTAR, L.P., A DEBTOR-IN-POSSESSION

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     Customer activation fees are deferred and recognized over one year, the
average life of the customer contract. Service revenue is presented net of
commissions paid to distributors ($1.3 million for the year ended December 31,
2002).

     Subscriber equipment revenue represents the sale of fixed and mobile user
terminals and accessories. Revenue is recognized upon shipment provided title
and risk of loss had passed to the customer, persuasive evidence of an
arrangement exists, the fee is fixed and determinable and collectibility is
probable.

  Research and Development Expenses

     Globalstar's research and development costs were $1.9 million, $4.4 million
and $5.3 million in 2002, 2001 and 2000, respectively, and are expensed as
incurred as part of operating expenses.

  User Terminal Rebates and Subsidies

     In some cases Globalstar provides rebates to service providers that offer
rebates to end users and subsidies to service providers for user terminal
purchases from manufacturers. These rebates and subsidies are accounted for as
marketing expenses as incurred. These rebates and other financial assistance are
not linked to contractual service periods with either the service providers or
end users and there is no pattern of billable minutes or revenue that suggests a
linkage to these arrangements.

  Net Loss Allocation

     Net losses are allocated among the partners in proportion to their
percentage interests until the adjusted capital account of a partner is reduced
to zero, then in proportion to, and to the extent of, positive adjusted capital
account balances and then to the general partners.

     Under the terms of Globalstar's partnership agreement, adjusted partners'
capital accounts are calculated in accordance with the principles of United
States Treasury regulations governing the allocation of taxable income and loss
including adjustments to reflect the fair market value (including intangibles)
of partnership assets upon certain capital transactions including a sale of
partnership interests. Such adjustments are not permitted under generally
accepted accounting principles and, accordingly, are not reflected in the
accompanying consolidated financial statements.

  Foreign Currency

     Globalstar uses the U.S. dollar as its functional currency. Foreign
currency assets and liabilities are remeasured into U.S. dollars at current
exchange rates and revenue and expenses are translated at the average exchange
rates in effect during each period. Gains or losses are recognized as a
component of other comprehensive income. During the period ended December 31,
2002, net foreign currency transaction gains and losses were not material.

  Income Taxes

     Globalstar is organized as a limited partnership with various corporate
subsidiaries. Generally, taxable income or loss, deductions and credits of the
partnership are passed through to its partners. Globalstar's corporate
subsidiaries will provide for a tax provision or benefit using the asset and
liability method of accounting for income taxes as prescribed by SFAS No. 109,
Accounting for Income Taxes. As of December 31, 2002 and 2001, Globalstar's
corporate subsidiaries have gross deferred tax assets of approximately $6.1
million and $0.8 million, respectively. A valuation reserve has been set up to
reserve 100% of the deferred tax assets due to concerns about the ability to
generate sufficient income to be able to utilize the assets.

                                       F-27

                    GLOBALSTAR, L.P., A DEBTOR-IN-POSSESSION

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

  Earnings Per Ordinary Partnership Interest

     Due to Globalstar's net losses for 2002, 2001 and 2000, diluted weighted
average ordinary partnership interests outstanding excludes the weighted average
effect of: (i) the assumed conversion of the 8% RPPIs into 2.3 million ordinary
partnership interests for 2002, 2001 and 2000; (ii) the assumed conversion of
the 9% RPPIs into 0.2 million, 1.0 million and 1.4 million ordinary partnership
interests for 2002, 2001 and 2000, respectively; and (iii) the assumed issuance
of ordinary partnership interests upon exercise of warrants and GTL's
outstanding options and warrants, totaling 10.8 million for 2002 and 2001, and
9.3 million ordinary partnership interests for 2000, as their effect would have
been anti-dilutive. Accordingly, basic and diluted net loss per ordinary
partnership interest are based on the net loss applicable to ordinary
partnership interests and the weighted average ordinary partnership interests
outstanding for 2002, 2001 and 2000.

  Comprehensive Income

     Comprehensive income (loss) is comprised of two components: net loss and
other comprehensive income (loss). Other comprehensive income (loss) refers to
revenue, expenses, gains and losses that under generally accepted accounting
principles are recorded as an element of partners' capital (deficit), but are
excluded from net loss. Comprehensive income (loss) for the years ended December
31, 2002, 2001 and 2000 was the same as net loss.

  New Accounting Pronouncements

     In June 2001, the Financial Accounting Standards Board (the "FASB") issued
Statement of Financial Accounting Standard ("SFAS") No. 141, Business
Combinations and SFAS No. 142, Goodwill and Other Intangible Assets. SFAS No.
141 requires that business combinations be accounted for under the purchase
method and addresses the initial recognition and measurement of goodwill and
other intangible assets acquired in a business combination. SFAS No. 142
addresses the initial recognition and measurement of intangible assets acquired
outside of a business combination and the accounting for goodwill and other
intangible assets subsequent to their acquisition. SFAS No. 142 provides that
intangible assets with finite useful lives be amortized and that goodwill and
intangible assets with indefinite lives not be amortized, but will rather be
tested at least annually for impairment. Globalstar adopted SFAS No. 142 on
January 1, 2002. The adoption of this pronouncement did not have an impact on
its financial position or its results of operations.

     In August 2001, the FASB issued SFAS No. 144, Accounting for Impairment or
Disposal of Long-Lived Assets. SFAS No. 144 supersedes SFAS No. 121, Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
Of, and addresses financial accounting and reporting for the impairment or
disposal of long-lived assets. Globalstar adopted SFAS No. 144 on January 1,
2002. The adoption of this pronouncement did not have an impact on its financial
position or its results of operations.

     In June 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated
with Exit or Disposal Activities, which addresses accounting for restructuring
and similar costs. SFAS No. 146 supersedes previous accounting guidance,
principally Emerging Issues Task Force ("EITF") Issue No. 94-3. Globalstar will
adopt the provisions of SFAS No. 146 for restructuring activities initiated
after December 31, 2002. SFAS No. 146 requires that the liability for costs
associated with an exit or disposal activity be recognized when the liability is
incurred. Under EITF Issue No. 94-3, a liability for an exit cost was recognized
at the date of the company's commitment to an exit plan. SFAS No. 146 also
establishes that the liability should initially be measured and recorded at fair
value. Accordingly, SFAS No. 146 may affect the timing of recognizing future
restructuring costs as well as the amounts recognized.

                                       F-28

                    GLOBALSTAR, L.P., A DEBTOR-IN-POSSESSION

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     In November 2002, the FASB issued FASB Interpretation ("FIN") No. 45,
"Guarantor's Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others." FIN 45 requires companies to
recognize, at the inception of a guarantee, a liability for the fair value of
the obligation undertaken in issuing the guarantee. Guarantees in existence at
December 31, 2002 are grandfathered for the purposes of recognition and would
only need to be disclosed. Globalstar does not expect that the adoption of FIN
No. 45 will have an effect on its consolidated financial statements. Globalstar
will adopt the initial recognition and measurement provisions of FIN No. 45 for
guarantees issued or modified after December 31, 2002.

     In December 2002, the EITF reached a consensus on EITF Issue No. 00-21,
"Revenue Arrangements with Multiple Deliverables." EITF Issue No. 00-21
addresses certain aspects of the accounting by a vendor for arrangements under
which it will perform multiple revenue-generating activities. In some
arrangements, the different revenue-generating activities (deliveries) are
sufficiently separable and there exists sufficient evidence of their fair values
to separately account for some or all of the deliveries (that is, there are
separate units of accounting). In other arrangements, some or all of the
deliveries are not independently functional, or there is not sufficient evidence
of their fair values to account for them separately. EITF Issue No. 00-21
addresses when, and if so, how an arrangement involving multiple deliverables
should be divided into separate units of accounting. EITF Issue No. 00-21 does
not change otherwise applicable revenue recognition criteria. The guidance in
this Issue is effective for revenue arrangements entered into in fiscal periods
beginning after June 15, 2003. The adoption of EITF Issue No. 00-21 is not
expected to have a material effect on Globalstar's consolidated financial
statements.

     In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation -- Transition and Disclosure, an amendment to FASB Statement No.
123". SFAS No. 148 provides alternative methods of transition for a voluntary
change to the fair value based method of accounting for stock-based employee
compensation. In addition, SFAS No. 148 amends the disclosure requirement of
SFAS No. 123, "Accounting for Stock-Based Compensation", to require prominent
disclosures in both annual and interim consolidated financial statements about
the method of accounting for stock-based employee compensation and the effect of
the method used on reported results. Globalstar adopted the disclosure
provisions of SFAS No. 148 effective December 31, 2002.

4. ACQUISITIONS

     In December 2001, Globalstar signed two agreements to acquire certain
subsidiaries of Vodafone Group Plc ("Vodafone") through Globalstar Corporation,
a non-debtor subsidiary of Globalstar. In the first transaction, completed on
December 18, 2001, Globalstar purchased all of the outstanding common shares of
Vodafone Satellite Services, Inc. ("VSSI"), a Delaware corporation, for $100
plus acquisition costs of $258,000. Globalstar has renamed the company
Globalstar Satellite Services Inc. ("GSSI"). GSSI indirectly owns the majority
interest in Globalstar Canada Satellite Co. ("GCSC"), a Nova Scotia corporation
based in Ontario, Canada. The results of operations of GCSC, since December
2001, are presented in these consolidated financial statements. GCSC is the
Globalstar service provider in Canada and generates its revenue from the
provision of Globalstar services in Canada, billing customers for usage over two
Canadian gateways. Loral Holdings Ltd., a subsidiary of Loral, owns the
remaining minority interest in GCSC. As part of the purchase, Globalstar
released the seller from a portion of a gateway payment guarantee related to
Canadian gateways in exchange for a credit memo to offset expenses from an
affiliated company. Loral's interest in GCSC is expected to be transferred to
Globalstar as part of the Loral Settlement discussed below (see Note 20).
However, there can be no assurances that the Loral Settlement will be effected.

                                       F-29

                    GLOBALSTAR, L.P., A DEBTOR-IN-POSSESSION

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The following table summarizes the estimated values of the assets acquired
and liabilities assumed with the acquisition (in thousands):



                                                              DECEMBER 18, 2001
                                                              -----------------
                                                           
Current assets..............................................       $4,399
Receivables from affiliates.................................        2,134
Property and equipment......................................        1,720
                                                                   ------
     Total assets acquired..................................        8,253
                                                                   ------
Current liabilities.........................................        1,312
Payable to affiliates.......................................        6,683
                                                                   ------
     Total liabilities assumed..............................        7,995
                                                                   ------
     Net assets acquired....................................       $  258
                                                                   ======


     On August 19, 2002, the second transaction with Vodafone was completed to
acquire the United States and Caribbean gateways and sales operations. A
Globalstar subsidiary purchased all the outstanding equity interests of
Globalstar USA, LLC ("GUSA"), a Delaware limited liability company, and all
outstanding common shares of Globalstar Caribbean Ltd. ("GCL"), a Cayman Islands
corporation, for $100 plus acquisition costs of $1.9 million. Included with the
transaction was the transfer of the U.S. operating license for mobile satellite
services. This transaction was part of Globalstar's plan to bring additional
efficiencies to the operation of the Globalstar System. The following table
summarizes the estimated values of the assets acquired and liabilities assumed
with the acquisition (in thousands):



                                                              AUGUST 19, 2002
                                                              ---------------
                                                           
Current assets..............................................      $3,806
                                                                  ------
     Total assets acquired..................................       3,806
                                                                  ------
Current liabilities.........................................       1,137
Payable to affiliates.......................................         778
                                                                  ------
     Total liabilities assumed..............................       1,915
                                                                  ------
     Net assets acquired....................................      $1,891
                                                                  ======


     The operating results of GCSC, GUSA and GCL, since the acquisition dates,
are included in the consolidated statements. The following unaudited pro forma
consolidated amounts give effect to the acquisitions of GUSA and GCL as if they
had occurred on January 1, 2001 and GCSC as if it had occurred on January 1,
2000 by consolidating the results of operations with Globalstar's results for
the years ended December 31, 2002, 2001 and 2000 (in thousands, except per
ordinary partnership interest amounts):



                                                 YEARS ENDED DECEMBER 31,
                                            ----------------------------------
                                              2002        2001         2000
                                            --------    --------    ----------
                                                           
Revenue...................................  $ 32,685    $ 28,775    $   10,383
Net loss..................................  $155,793    $630,091    $3,828,368
Net loss per ordinary partnership
  interest -- basic and diluted...........  $   2.37    $   9.69    $    61.43
Shares used in per share
  calculation -- basic and diluted........    65,789      65,040        62,325


                                       F-30

                    GLOBALSTAR, L.P., A DEBTOR-IN-POSSESSION

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The unaudited pro forma results have been prepared for comparative purposes
only and do not purport to be indicative of the results of operations which
actually would have been achieved had the combination been in effect at the
beginning of the periods presented, or of future results of the operations of
the entities.

     On July 2, 2002 Globalstar, through Globalstar Corporation, acquired
TE.SA.M.'s French gateway and back office assets related to the provision of
Globalstar services in Europe, TE.SA.M.'s limited partnership interests in
Globalstar and TE.SA.M.'s remaining inventory. Under the terms of the
transaction, both Globalstar and TE.SA.M. forgave all outstanding obligations
between the parties and provided mutual releases of liability. Also, Globalstar
reimbursed TE.SA.M. for the cost of operating the French gateway from March 1,
2002 through July 1, 2002 at a cost of approximately 400,000 Euros. The French
gateway was operational, but was not producing revenues at the time of the
purchase. Globalstar has restarted the European business and is earning limited
revenue from the French gateway. TE.SA.M. is in the process of liquidating and
has exited the Globalstar business. TE.SA.M. provided Globalstar service through
gateways in France, Turkey, Venezuela, Argentina, and Peru. Local purchasers in
Turkey, Venezuela, Argentina, and Peru have purchased local service provider
operations from TE.SA.M. and have executed letter agreements with Globalstar
that define the terms under which they provide Globalstar services. As a result
of the TE.SA.M transaction, net gateway receivables of $3.7 million were written
off, $6.6 million in liabilities were forgiven, $1.6 million of inventory was
purchased and $4.4 million of previously provided bad debt allowances were
reversed.

5. PRODUCTION GATEWAYS

     In order to accelerate the deployment of gateways around the world,
Globalstar agreed to help service providers finance approximately $80 million of
the cost of the initial gateways. Globalstar entered into an agreement with
QUALCOMM for the manufacture, deployment and maintenance of Globalstar gateways.
Globalstar, in turn, invoiced the service providers for the contract costs plus
a markup. As of December 31, 2002, the collection of $35.2 million of service
provider gateway purchase receivables, which are secured by gateway assets, are
deferred indefinitely, as well as $2.8 million of interest. Currently due under
the production gateway purchase agreement are $4.1 million of gateway
operational costs. The collection of these receivables is delinquent and
Globalstar has sent notices of default where appropriate. If the collection of
these payments is unsuccessful, Globalstar will retain title to these gateways,
subject to local restrictions. As of December 31, 2002, Globalstar has
classified the production gateway purchase receivables as long-term assets and
provided an allowance for doubtful collection of $18.9 million and $20.2 million
as of December 31, 2002 and 2001, respectively.

6. PROPERTY AND EQUIPMENT



                                                             DECEMBER 31,
                                                         --------------------
                                                           2002        2001
                                                         --------    --------
                                                            (IN THOUSANDS)
                                                               
Globalstar System......................................  $284,151    $288,206
Construction in progress...............................       326          --
Leasehold improvements.................................       388         434
Furniture and office equipment.........................     4,283       3,800
                                                         --------    --------
                                                          289,148     292,440
Accumulated depreciation...............................   (88,249)    (60,450)
                                                         --------    --------
                                                         $200,899    $231,990
                                                         ========    ========


                                       F-31

                    GLOBALSTAR, L.P., A DEBTOR-IN-POSSESSION

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     Globalstar's property and equipment consists of an in-orbit satellite
constellation, ground equipment located in the United States and support
equipment located in various countries around the world. Depreciation expense
for 2002, 2001 and 2000 was $27.2 million, $31.6 million, and $323.9 million,
respectively.

7. ACCRUED EXPENSES

     Accrued expenses at December 31, 2002 consist of the following:



                                                              DECEMBER 31,
                                                            -----------------
                                                             2002      2001
                                                            ------    -------
                                                             (IN THOUSANDS)
                                                                
Accrued professional fees.................................  $3,028    $   617
Accrued compensation and benefits.........................   1,310      3,129
Accrued contract services.................................     608         --
Accrued legal settlement(1)...............................      --     35,000
Other accrued expenses....................................   1,473      3,778
                                                            ------    -------
                                                            $6,419    $42,524
                                                            ======    =======


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

(1) Legal settlement included in liabilities subject to compromise as of
    December 31, 2002.

8. LIABILITIES SUBJECT TO COMPROMISE

     Under Chapter 11, substantially all unsecured liabilities as of the
Petition Date are subject to compromise or other treatment under a plan of
reorganization, which must be approved and confirmed by the Bankruptcy Court.
For financial reporting purposes, those liabilities and obligations whose
treatment and satisfaction are dependent on the outcome of the Chapter 11 case
have been segregated in the condensed consolidated balance sheet as liabilities
subject to compromise. Generally, all actions to enforce or otherwise require
repayment of pre-petition liabilities are stayed while Globalstar continues its
business operations as a debtor-in-possession. The amount and settlement terms
of the pre-petition liabilities subject to compromise are subject to an approved
plan of reorganization and may differ significantly from the amounts as
reflected in these consolidated financial statements.

     As a result of the Chapter 11 filing, no principal or interest payments
will be made on unsecured pre-petition debt without Bankruptcy Court approval or
until a plan or reorganization providing for the repayment terms has been
confirmed by the Bankruptcy Court becomes effective. Therefore, interest expense
on pre-petition debt has not been accrued since the Petition Date.

                                       F-32

                    GLOBALSTAR, L.P., A DEBTOR-IN-POSSESSION

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     Liabilities subject to compromise are comprised of the following (in
thousands):



                                                              DECEMBER 31,
                                                                  2002
                                                              ------------
                                                           
Term loans payable to affiliates............................   $  400,000
Revolving credit facility to affiliates.....................      100,000
Senior notes payable........................................    1,419,283
Notes payable...............................................      150,000
Notes payable to affiliates.................................       95,010
Accounts payable............................................        1,461
Payable to affiliates.......................................       40,287
Vendor financing liability..................................      880,062
Dividends payable...........................................       32,757
Accrued expenses............................................       38,342
Accrued interest............................................      306,639
Deferred revenues...........................................       23,363
Deferred financing costs....................................      (61,283)
                                                               ----------
          Total liabilities subject to compromise...........   $3,425,921
                                                               ==========


     Globalstar recorded a $17.2 million pre-petition liability when it
requested Space Systems/Loral, Inc. ("SS/L") terminate the satellite launch
call-up orders in October 2002. Globalstar believes that this termination
liability will not be classified as an administrative claim in its bankruptcy
case, and has recorded the liability as a pre-petition liability subject to
compromise. In addition, Globalstar wrote off a $1.2 million deposit associated
with the launch call-up orders.

9. PAYABLES TO AFFILIATES AND VENDOR FINANCING

     Payables and vendor financing due to affiliates is comprised of the
following (in thousands):



                                          POST PETITION   PRE-PETITION
                                          DECEMBER 31,    DECEMBER 31,   DECEMBER 31,
                                              2002            2002           2001
                                          -------------   ------------   ------------
                                                                
SS/L....................................     $  409         $278,364       $259,098
Loral...................................        277              981            961
QUALCOMM................................         --          637,755        629,139
GCC.....................................      6,770               --          6,199
Other affiliates........................        289            3,249          9,099
                                             ------         --------       --------
                                             $7,745         $920,349       $904,496
                                             ======         ========       ========


     All payables to affiliates and vendor financing incurred prior to the
Petition Date have been classified as liabilities subject to compromise (see
Note 8). No principal or interest payments will be made on unsecured
pre-petition debt without Bankruptcy Court approval or until a plan of
reorganization providing for the repayment terms has been confirmed by the
Bankruptcy Court and becomes effective. Interest expense of $71.9 million, which
would have been recognized for the period from the Petition Date through
December 31, 2002 under pre-petition accounting practices, has not been accrued.
Debt discounts related to the vendor financing have not been adjusted since the
Petition Date. Under pre-petition accounting practices, the value of vendor
financing debt would have been increased by $5.1 million during the period from
the Petition Date through December 31, 2002.

                                       F-33

                    GLOBALSTAR, L.P., A DEBTOR-IN-POSSESSION

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     In May 2000, Globalstar finalized $531.1 million of vendor financing
arrangements (including $31.1 million of accrued interest) with QUALCOMM that
replaced the previous arrangement. As of December 31, 2002, $623.3 million was
outstanding under this facility (including $123.3 million of accrued interest).
This liability, including accrued interest through the Petition Date, has been
included in liabilities subject to compromise (see Note 8). In connection with
this agreement, QUALCOMM received warrants to purchase 3,450,000 Globalstar
partnership interests at an exercise price of $42.25 per interest. The exercise
price was determined by reference to the fair market value of GTL's common stock
on the closing date of the vendor financing, based on an approximate ratio of
one partnership interest for every four shares of GTL common stock. The warrants
are vested and will expire in 2007. The fair value of the vested warrants
totaled approximately $34.0 million and is being amortized over the term of the
vendor financing arrangements. However, in light of Globalstar's Chapter 11
petition, these warrants are likely to be of little or no value.

     As a result of Globalstar's bankruptcy petition filed on February 15, 2002,
this vendor financing was accelerated and became immediately due and payable and
is included in liabilities subject to compromise.

     SS/L provided $344 million of billings deferred under its construction
contracts with Globalstar, which included $120 million of orbital incentives.
The orbital payments on the replacement satellites are due on a per satellite
basis with 50% due when the satellite is placed in storage. The remaining 50% is
due when Globalstar directs SS/L to ship the satellite to the launch base. Until
such time, interest on the remaining 50% accrues at an interest rate of 10% per
annum. As of December 31, 2002, seven of the eight replacement satellites were
placed in storage and payments became due. No payments were made in 2002 and
interest accrued on the remaining 50% through the Petition Date. Total accrued
interest on the orbitals as of December 31, 2002 was $237,000. Payments were
made on the $134 million of non-interest bearing vendor financing through
January 15, 2001. Penalty fees were accrued at LIBOR plus 3%, through the
Petition Date, and total accrued penalties as of December 31, 2002 were $1.2
million. Interest was being accrued at LIBOR plus 3%, through the Petition Date,
and total accrued interest as of December 31, 2002 was $53.7 million. All of the
construction contract amounts owed to SS/L have been included in liabilities
subject to compromise. Claims of Loral and its affiliates are expected to be
resolved as part of the Loral Settlement discussed below (see Note 20). However,
there can be no assurance that the Loral Settlement will be effected.

10. CREDIT FACILITIES

     As of December 31, 2002, the credit facilities have been included in the
liabilities subject to compromise (see Note 8). No principal or interest
payments will be made on unsecured pre-petition debt without Bankruptcy Court
approval or until a plan of reorganization providing for the repayment terms has
been confirmed by the Bankruptcy Court and becomes effective. Interest expense
of $39.7 million and $12.1 million has not been accrued on the $500 million
credit facility and on the notes issued to the guarantors of The Chase Manhattan
Bank $250 million credit facility, respectively, from the Petition Date through
December 31, 2002. As a result of Globalstar's bankruptcy petition filed on
February 15, 2002, this credit facility was accelerated and became immediately
due and payable.

  $250 Million Credit Agreement

     On June 30, 2000, Globalstar's $250 million credit facility with The Chase
Manhattan Bank became due and was repaid in full by its guarantors, including
Lockheed Martin Corporation ("Lockheed Martin"), QUALCOMM, DASA Globalstar
Limited Partner, Inc. ("DASA") and SS/L, who had previously received warrants
for GTL common stock in consideration of their guarantee. Pursuant to the
relevant agreements, Globalstar issued three-year notes in the amounts of $206.3
million, $21.9 million, $11.7 million and $10.1 million to Lockheed Martin,
QUALCOMM, SS/L and DASA, respectively, in

                                       F-34

                    GLOBALSTAR, L.P., A DEBTOR-IN-POSSESSION

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

satisfaction of their subrogation rights. The notes are due on June 30, 2003 and
bear interest, on a deferred basis, at a rate of London Interbank Offer Rate
("LIBOR") plus 3%. On the consolidated balance sheet of Globalstar the notes are
presented as liabilities subject to compromise as of December 31, 2002 and notes
payable and notes payable to affiliates as of December 31, 2001.

     Lockheed Martin, however, rejected the notes it received and instead
requested that Globalstar issue new securities with additional rights and
enhanced value, without waiving its claim that it is entitled to receive an
immediate cash reimbursement by Globalstar of its $150 million payment to the
bank lenders. Globalstar disputes Lockheed Martin's interpretation of the
relevant agreements. If the dispute is not resolved, Globalstar cannot be sure
that if the matter were litigated, the court would agree with Globalstar's
interpretation of the agreements. Management believes, however, that a court
would agree with Globalstar's interpretation of the relevant agreements. The
notes are unsecured claims in Globalstar's bankruptcy case.

     In 2001, an issue was raised as to whether the three-year notes issued to
the guarantors of The Chase Manhattan Bank $250 million credit facility were
prepared in accordance with the recourse provisions of the guarantee
arrangement. Management does not believe the existing notes containing
non-recourse language will need to be replaced with notes not containing the
non-recourse language. If the existing non-recourse notes were replaced with
notes not containing the non-recourse language, the replacement would not impact
Globalstar's results of operations. However, allocations of Globalstar's losses
to general partners would increase by the amount of the increase in recourse
obligations.

     Prior to filing Chapter 11, $5.0 million of the notes payable to affiliates
(Loral) were offset with various receivables from Globalstar.

  $500 Million Credit Agreement with Affiliates

     On August 5, 1999, Globalstar entered into a $500 million credit agreement
with a group of banks. The creditors' interests under the credit facility were
purchased by a wholly owned subsidiary of Loral on November 17, 2000, which had
previously guaranteed the facility. As of December 31, 2002, all amounts under
the $500 million credit agreement were drawn. Borrowings under the facilities
bear interest, at Globalstar's option, at various rates based on margins over
the lead bank's base rate or the LIBOR for periods of one to six months. The
claims of the Loral subsidiary, in respect of this credit agreement constitute
unsecured claims in Globalstar's bankruptcy case.

     In consideration for the guarantee by Loral in 1999, Loral and certain
Loral subsidiaries received warrants to purchase an aggregate of 3,450,000
Globalstar partnership interests, valued at $141.1 million, (equivalent to
approximately 13.8 million shares of common stock of GTL) at an exercise price
of $91.00 per partnership interest (equivalent to $22.75 per share of GTL common
stock). The outstanding warrants are vested and expire in 2006. However, in
light of Globalstar's Chapter 11 petition, the warrants are likely to be of
little or no value.

11. SENIOR NOTES AND WARRANTS

     As of December 31, 2002, the senior notes have been included in the
liabilities subject to compromise (see Note 8). No principal or interest
payments will be made on unsecured pre-petition debt without Bankruptcy Court
approval or until a plan of reorganization providing for the repayment terms has
been confirmed by the Bankruptcy Court and becomes effective. Therefore,
interest expense of $142.5 million has not been accrued from the Petition Date
through December 31, 2002. Prior to the Petition Date, Globalstar was increasing
the carrying value of the senior notes payable to their ultimate redemption
value over the lives of the notes. On the Petition Date, the note values were
stayed, therefore the carrying value was not increased by $10.0 million for the
period from the Petition Date through December 31, 2002.

                                       F-35

                    GLOBALSTAR, L.P., A DEBTOR-IN-POSSESSION

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     In January 2001, Globalstar suspended indefinitely principal and interest
payments on its funded debt in order to conserve cash for operations. Under the
terms of Globalstar's 11 3/8% senior notes due February 15, 2004, its 11 1/4%
senior notes due June 15, 2004, its 10 3/4% senior notes due November 1, 2004,
and its 11 1/2% senior notes due June 1, 2005 (the "Notes"), non-payment of
interest on the Notes when it becomes due, and continuance of non-payment for 30
days, is an "event of default". As a result of Globalstar's bankruptcy petition
filed on February 15, 2002, these Notes were accelerated and became immediately
due and payable.



                             DECEMBER 31,
                        -----------------------                                             EFFECTIVE
                         2002(1)        2001                                       DUE       INTEREST      INTEREST
                        ----------   ----------     DATE SOLD      PRINCIPAL       DATE        RATE         PAYMENT
                            (IN THOUSANDS)        -------------   ------------   --------   ----------   -------------
                                                                                    
11 3/8% Senior
  Notes(2)............  $  489,217   $  488,642   February 1997   $500,000,000     2004       13.33%     Semi-annually
11 1/4% Senior
  Notes(2)............     314,760      314,301     June 1997      325,000,000     2004       13.57%     Semi-annually
10 3/4% Senior
  Notes(2)............     322,635      322,545   October 1997     325,000,000     2004       11.63%     Semi-annually
11 1/2% Senior
  Notes(3)............     292,671      292,454     May 1998       300,000,000     2005       13.12%     Semi-annually
                        ----------   ----------
                        $1,419,283   $1,417,942
                        ==========   ==========


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

(1) Balance is included as liabilities subject to compromise as of December 31,
    2002, and interest was only accrued through the Petition Date.

(2) Notes are subject to a prepayment premium prior to 2004.

(3) Notes may not be redeemed prior to June 2003 and are subject to a prepayment
    premium prior to 2005.

     As of December 31, 2002, there were outstanding warrants to purchase
3,814,897 shares of GTL common stock which were issued in connection with the
Globalstar's 11 3/8 % Senior Notes, exercisable at a price of $17.394 per share,
which expire on February 15, 2004. However, in light of Globalstar's Chapter 11
petition, the warrants are likely to be of little or no value.

12. ORDINARY PARTNERS' CAPITAL

  Capital Contribution

     China Telecom has a warrant to acquire 937,500 Globalstar ordinary
partnership interests for $18,750,000. Globalstar had previously granted this
and other warrants to China Telecom in connection with service provider
arrangements in China under which China Telecommunications Broadcast Satellite
Corporation acts as the sole distributor of Globalstar service in China. The
fair value of the warrants issued to China Telecom totaled approximately $31.9
million and has been recorded in the accompanying balance sheet in other assets
and is being amortized over ten years, the expected life of the first generation
of satellites. Accumulated amortization as of December 31, 2002 is $8.6 million.

  8% Series A Convertible Redeemable Preferred Partnership Interests

     In 1999, Globalstar sold to GTL seven million units (face amount of $50 per
unit) of 8% RPPIs, in connection with GTL's offering of 7 million shares (face
amount of $50 per share) of 8% Series A convertible redeemable preferred stock
due 2011 (the "8% Preferred Stock"). Dividends on the 8% RPPIs and the 8%
Preferred Stock accrue at 8% per annum and are payable quarterly.

     In 2002, 2,100 shares of the 8% Preferred Stock were converted into 4,508
shares of GTL common stock. As a result of the conversion, the 2,100 8% RPPIs
were converted into 1,113 Globalstar ordinary partnership interests. The
remaining shares of 8% Preferred Stock outstanding at December 31, 2002 were
convertible into 9,365,807 shares of GTL common stock.

                                       F-36

                    GLOBALSTAR, L.P., A DEBTOR-IN-POSSESSION

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     Each 8% RPPI is convertible into .53085 ordinary partnership interests,
subject to adjustment in the event of subdivision, combination, or
reclassification of the ordinary partnership interests. As of December 31, 2002,
the outstanding 8% RPPIs were convertible into 2,312,546 of ordinary partnership
interests.

     The 8% RPPIs rank pari passu with the 9% RPPIs and senior to ordinary
partnership interests and have terms substantially similar to the 8% Preferred
Stock. However, they are subordinate to all existing and future liabilities of
Globalstar, and cash distributions thereon are limited to the amount of the
partnership capital accounts that are maintained for such interests. The 8%
RPPIs will convert to ordinary partnership interests upon any conversion of the
8% Preferred Stock into GTL common stock. Payments due on the 8% RPPIs may be
made in cash, Globalstar ordinary partnership interests or a combination of both
at the option of Globalstar. In January 2001, Globalstar suspended distributions
on the 8% RPPIs. As a result, GTL suspended dividend payments on the 8%
Preferred Stock. The partnership agreement provides that, in the event accrued
and unpaid dividends accumulate to an amount equal to six quarterly dividends on
the 8% Preferred Stock, holders of the majority of the outstanding 8% Preferred
Stock and the holders of any other securities having similar voting rights will
be entitled to elect one additional member to the general partners committee of
Globalstar. As of December 31, 2002, this right has not been exercised.

 9% Series B Convertible Redeemable Preferred Partnership Interests

     On December 2, 1999, Globalstar sold to GTL three million units (face
amount of $50 per unit) of 9% RPPIs in connection with GTL's offering of 3
million shares (face amount of $50 per share) of 9% Series B convertible
redeemable preferred stock due 2011 (the "9% Preferred Stock"). Dividends on the
9% RPPIs and the 9% Preferred Stock accrue at 9% per annum and are payable
quarterly.

     In 2002, 1,303,933 shares of 9% Preferred Stock were converted into
2,511,766 shares of GTL common stock. As a result of such conversions, the
1,303,933 9% RPPIs were converted into 620,189 Globalstar ordinary partnership
interests. As of December 31, 2002, the outstanding 9% Preferred Stock was
convertible into 750,213 shares of GTL common stock.

     Each 9% RPPI is convertible into .47562 ordinary partnership interests,
subject to adjustment in the event of subdivision, combination, or
reclassification of the ordinary partnership interests. As of December 31, 2002,
the outstanding 9% Preferred RPPIs were convertible into 185,171 ordinary
partnership interests.

     The 9% RPPIs rank pari passu with the 8% RPPIs and senior to ordinary
partnership interests and have terms substantially similar to the 9% Preferred
Stock. However, they are subordinate to all existing and future liabilities of
Globalstar, and cash distributions thereon are limited to the amount of the
partnership capital accounts that are maintained for such interests. The 9%
RPPIs will convert to ordinary partnership interests upon any conversion of the
9% Preferred Stock into GTL common stock. Payments due on the 9% RPPIs may be
made in cash, Globalstar ordinary partnership interests or a combination of both
at the option of Globalstar. In January 2001, Globalstar suspended distributions
on the 9% RPPIs. As a result, GTL suspended dividend payments on the 9%
Preferred Stock. The partnership agreement provides that, in the event accrued
and unpaid dividends accumulate to an amount equal to six quarterly dividends on
the 9% Preferred Stock, holders of the majority of the outstanding 9% Preferred
Stock and the holders of any other securities having similar voting rights will
be entitled to elect one additional member to the general partners committee of
Globalstar. As of December 31, 2002, this right has not been exercised.

                                       F-37

                    GLOBALSTAR, L.P., A DEBTOR-IN-POSSESSION

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

  Stock Option Arrangements

     Officers and employees of Globalstar are eligible to participate in GTL's
1994 Stock Option Plan (the "Plan"), which provides for nonqualified and
incentive stock options. The Plan is administered by a stock option committee
(the "Committee"), appointed by the GTL Board of Directors. The Committee
determines the option price, exercise date and the expiration date of each
option (provided no option shall be exercisable after ten years from the date of
grant). Proceeds received by GTL for options exercised will be used to purchase
Globalstar ordinary partnership interests under an approximate four-for-one
exchange arrangement.

     Globalstar issued 6,825 ordinary partnership interests during 2000, in
exchange for proceeds from GTL option exercises. There were no ordinary
partnership interests issued in 2002 and 2001.

     Globalstar accounts for its employee stock-based compensation using the
intrinsic value method in accordance with APB 25, Accounting for Stock Issued to
Employees and its related interpretations. Accordingly, no compensation expense
has been recognized in Globalstar's consolidated financial statements for
employee stock-based compensation; except for $95,000 of compensation expense in
2000, related to the below market option grants issued by Loral. There was no
employee stock-based compensation expense in 2002 and 2001. In addition, during
2000, GTL granted stock options to certain non-employees of Globalstar to
purchase 167,000 shares of GTL common stock. The fair value of such options
totaled approximately $290,000. The fair value attributable to the unvested
portion of such options is subject to adjustment based upon the future value of
GTL's common stock.

     SFAS 123 requires the disclosure of pro forma net income and earnings per
share as if Globalstar adopted the fair value method. Under SFAS 123, the fair
value of stock-based awards to employees is calculated through the use of option
pricing models, even though such models were developed to estimate the fair
value of freely tradable, fully transferable options without vesting
restriction, which significantly differ from Globalstar's stock option awards.
These models also require subjective assumptions, including future stock price
volatility and expected time to exercise, which greatly affect the calculated
values. Globalstar's calculations (see Note 3) were made using the Black-Scholes
option pricing model with the following weighted average assumptions: expected
life, six to twelve months following vesting; stock volatility, 70% for 2002,
2001 and 2000; risk free interest rates, 4.4% to 6.6% based on the date of
grant; and no dividends during the expected term. Globalstar's calculations are
based on a multiple option valuation approach and forfeitures are recognized as
they occur.

                                       F-38

                    GLOBALSTAR, L.P., A DEBTOR-IN-POSSESSION

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     A summary of the status of the Plan for the years ended December 31, 2002,
2001 and 2000 is presented below:



                                                                      WEIGHTED-
                                                                       AVERAGE
                                                                      EXERCISE
                                                          SHARES        PRICE
                                                        ----------    ---------
                                                                
Outstanding at January 1, 2000........................   4,643,800      20.03
Granted (weighted average fair value of $4.04 per
  share)..............................................   4,566,250       9.76
Forfeited.............................................    (984,750)     16.29
Exercised.............................................     (26,300)     10.72
                                                        ----------     ------
Outstanding at December 31, 2000......................   8,199,000      14.79
Granted...............................................          --         --
Forfeited.............................................  (1,745,638)     15.50
Exercised.............................................          --         --
                                                        ----------     ------
Outstanding at December 31, 2001......................   6,453,362      14.46
Granted...............................................          --         --
Forfeited.............................................  (1,044,795)     14.09
Exercised.............................................          --         --
                                                        ----------     ------
Outstanding at December 31, 2002......................   5,408,567     $14.96
                                                        ==========     ======
Outstanding at December 31, 2001......................   2,425,071     $11.87
                                                        ==========     ======
Outstanding at December 31, 2000......................   1,123,816     $14.20
                                                        ==========     ======


     The options generally expire ten years from the date of grant and become
exercisable over the period stated in each option, generally ratably over a
five-year period except for 4,336,250 options granted in 2000 which become
exercisable ratably over a three-year period. All options granted were
non-qualified stock options with an exercise price equal to fair market value at
the date of grant. As of December 31, 2002, 4,490,733 shares of common stock
were available for future grant under the Plan.

     The following table summarizes information about GTL's outstanding stock
options at December 31, 2002:



                                           OUTSTANDING                      EXERCISABLE
                               ------------------------------------    ---------------------
                                             WEIGHTED
                                              AVERAGE      WEIGHTED                 WEIGHTED
                                             REMAINING     AVERAGE                  AVERAGE
                                            CONTRACTUAL    EXERCISE                 EXERCISE
EXERCISE PRICE RANGE            NUMBER      LIFE-YEARS      PRICE       NUMBER       PRICE
- --------------------           ---------    -----------    --------    ---------    --------
                                                                     
$3.01 to $4.64...............    198,000       4.03         $ 4.11       195,333     $ 4.13
$4.65 to $17.15..............  3,156,617       6.81           9.73     2,336,892       9.96
$17.16 to $29.03.............  1,809,450       6.12          23.11     1,058,200      23.28
$29.04 to $31.41.............    244,500       6.21          30.98       193,750      31.00
                               ---------                               ---------
                               5,408,567       6.45         $14.96     3,784,175     $14.46
                               =========                               =========


13. RESTRUCTURING

     Beginning in 2001, Globalstar implemented a number of initiatives designed
to reduce its cost of operations and restructure the company's finances. These
initiatives included reductions in Globalstar's workforce, the development of
financial restructuring plans, negotiations with Globalstar's significant
creditors, and the initiation of Globalstar's Chapter 11 cases on February 15,
2002. As a result of the

                                       F-39

                    GLOBALSTAR, L.P., A DEBTOR-IN-POSSESSION

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

restructuring efforts, Globalstar has recorded cumulative charges totaling $19.7
million through December 31, 2002. Restructuring and reorganization charges
recorded in the quarter ended December 31, 2002 were $2.3 million, including
$1.4 million in Globalstar advisory fees, $0.7 million in creditor advisory
fees, and $0.2 in employee separation costs. Since the Petition Date, all
advisory fees are expensed as incurred as reorganization charges and interest
income is recognized as a reorganization item, consistent with SOP 90-7.

     A summary of the restructuring charges incurred from the beginning of 2001
through December 31, 2002 are as follows (in millions):



                                                         AMOUNTS     AMOUNTS     ACCRUED
                                                         EXPENSED     PAID      LIABILITY
                                                         --------    -------    ---------
                                                                       
Globalstar advisory fees...............................   $10.3       $ 7.7       $2.6
Creditor advisory fees.................................     4.5         3.6        0.9
Employee separation costs..............................     5.1         5.1         --
Other restructuring costs..............................     0.1         0.1         --
                                                          -----       -----       ----
          Total........................................    20.0       $16.5       $3.5
                                                          =====       =====       ====
Less interest income...................................     0.3
                                                          -----
Total..................................................   $19.7
                                                          =====


     Globalstar Advisory Fees -- Globalstar has retained financial advisors,
restructuring counsel and other advisors to assist in the development of its
financial restructuring plans, discussions with its various creditor groups and
preparation for its Chapter 11 bankruptcy petition. The remaining $2.6 million
accrued as of December 31, 2002 related to fees that were incurred, but either
not billed by the advisors or fees that were waiting for court approval to be
paid.

     Creditor Advisory Fees -- At Globalstar's expense, Globalstar's informal
committee of bondholders and later the official Creditors' Committee retained
financial advisors and restructuring counsel. Globalstar discontinued paying the
informal committee's expenses upon formation of the official Creditors'
Committee. The remaining $0.9 million accrued as of December 31, 2002 related to
fees that were incurred, but either not billed by the advisors or fees that were
waiting for court approval to be paid.

     Employee Separation Costs -- Globalstar reduced its workforce from 439
full-time employees as of January 1, 2001 to 146 full-time employees and 2
part-time employees as of December 31, 2002, including 25 GUSA employees added
as of August 19, 2002, primarily through three separate actions in March, July
and September of 2001. Employee separation costs of $4.9 million and $0.2
million were recorded for the year 2001 and 2002, respectively, for employee
severance obligations, payments in accordance with Globalstar's retention bonus
program and fringe benefit costs related to terminated employees.

14. PENSIONS AND OTHER EMPLOYEE BENEFITS

  Pensions

     Globalstar maintains a pension plan and a supplemental executive retirement
plan. These plans are defined benefit pension plans and members in certain
locations may contribute to the pension plan in order to receive enhanced
benefits. Eligibility for participation in these plans varies and benefits are
based on members' compensation and years of service. Globalstar's funding policy
is to fund the pension plan in accordance with the Internal Revenue Code and
regulations thereon and to fund the supplemental retirement plan on an actuarial
basis, including service cost and amortization amounts. Plan assets are
generally invested in United States government and agency obligations and listed
stocks and bonds.

                                       F-40

                    GLOBALSTAR, L.P., A DEBTOR-IN-POSSESSION

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

  Other Benefits

     In addition to providing pension benefits, Globalstar provides certain
health care and life insurance benefits for retired employees and dependents.
Participants are eligible for these benefits when they retire from active
service and meet the eligibility requirements for Globalstar's pension plan. The
life insurance coverage is provided at no cost to retirees and the health care
coverage is funded primarily on a pay-as-you-go basis with the retiree generally
paying a portion of the cost through contributions, deductibles and coinsurance
provisions.

     The following tables provide a reconciliation of the changes in the plans'
benefit obligations and fair value of assets for 2002 and 2001, and a statement
of the funded status as of December 31, 2002 and 2001, respectively.



                                               PENSION BENEFITS       OTHER BENEFITS
                                              ------------------    ------------------
                                               2002       2001       2002       2001
                                              -------    -------    -------    -------
                                                           (IN THOUSANDS)
                                                                   
Reconciliation of benefit obligation
Obligation at January 1.....................  $11,328    $ 9,337    $ 1,856    $ 1,407
Service cost................................      427        695         77        154
Interest cost...............................      831        793         84        129
Participant contributions...................       84        170         37         31
Actuarial (gain) loss.......................      647        893       (471)       147
Benefit payments............................     (459)      (560)       (29)       (12)
                                              -------    -------    -------    -------
Obligation at December 31...................  $12,858    $11,328    $ 1,554    $ 1,856
                                              -------    -------    -------    -------
Reconciliation of fair value of plan assets
Fair value of plan assets at January 1......  $ 7,151    $ 7,760    $    39    $    37
Actual return on plan assets................     (683)      (666)         1          2
Employer contributions......................    1,064        447         (8)       (19)
Participant contributions...................       84        170         36         31
Benefit payments............................     (459)      (560)       (29)       (12)
                                              -------    -------    -------    -------
Fair value of plan assets at December 31....  $ 7,157    $ 7,151    $    39    $    39
                                              -------    -------    -------    -------
Funded status
Funded (unfunded) status at December 31.....  $(5,701)   $(4,177)   $(1,515)   $(1,817)
Unrecognized (gain) loss....................    4,615      2,629       (116)       334
Unrecognized prior service cost.............       --                   328        364
Unrecognized transition obligation
  (asset)...................................     (133)      (173)        --         --
                                              -------    -------    -------    -------
Net amount recognized in accrued
  liabilities...............................  $(1,219)   $(1,721)   $(1,303)   $(1,119)
                                              =======    =======    =======    =======


                                       F-41

                    GLOBALSTAR, L.P., A DEBTOR-IN-POSSESSION

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The following table provides the components of net periodic benefit cost
for the plans for the years ended December 31, 2002, 2001 and 2000, respectively
(in thousands):



                                        PENSION BENEFITS           OTHER BENEFITS
                                     -----------------------    --------------------
                                     2002     2001     2000     2002    2001    2000
                                     -----    -----    -----    ----    ----    ----
                                                              
Service cost.......................  $ 427    $ 695    $ 532    $ 77    $154    $100
Interest cost......................    831      793      662      84     129     101
Expected return on plan assets.....   (723)    (720)    (796)     (3)     (4)     (3)
Amortization of net (gain) loss....    (40)     (40)     (40)     38      38      38
Recognized actuarial (gain) loss...     66        4      (51)    (19)     10       4
                                     -----    -----    -----    ----    ----    ----
Net periodic benefit cost..........  $ 561    $ 732    $ 307    $177    $327    $240
                                     =====    =====    =====    ====    ====    ====


     The principal actuarial assumptions were:



                                                              2002    2001    2000
                                                              ----    ----    ----
                                                                     
Discount rate...............................................  6.75%   7.50%   7.75%
Expected return on plan assets..............................  9.00%   9.50%   9.50%
Rate of compensation increase...............................  4.25%   4.25%   4.25%


     Actuarial assumptions used a health care cost trend rate of 11.0%
decreasing gradually to 4.5% by 2009. Assumed health care cost trend rates have
a significant effect on the amounts reported for the health care plans. A 1%
change in assumed health care cost trend rates for 2002 would have the following
effects:



                                                              1% INCREASE    1% DECREASE
                                                              -----------    -----------
                                                                       
Effect on total service and interest cost components of net
  periodic postretirement health care benefit cost..........   $ 36,353       $ (28,057)
Effect on the health care component of the accumulated
  postretirement benefit obligation.........................    193,216        (152,413)


  Employee Savings Plan

     In 1996, Globalstar adopted an employee savings plan which provides that
Globalstar match the contributions of participating employees up to a designated
level. Under this plan, the matching contributions were approximately $347,000,
$432,000 and $701,000 for 2002, 2001 and 2000, respectively.

                                       F-42

                    GLOBALSTAR, L.P., A DEBTOR-IN-POSSESSION

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

15. TAXES

     Globalstar is organized as a limited partnership with various corporate
subsidiaries. Generally, taxable income or loss, deductions and credits of the
partnership are passed through to its partners. Globalstar's corporate
subsidiaries provision (benefit) for income taxes consists of (in thousands):



                                                              YEARS ENDED DECEMBER 31,
                                                              ------------------------
                                                              2002      2001      2000
                                                              -----     -----     ----
                                                                         
Current
  Federal...................................................  $  --     $  37     $186
  State.....................................................     --         8       28
  Foreign tax...............................................     66        28       32
                                                              -----     -----     ----
     Total..................................................  $  66     $  73     $246
                                                              -----     -----     ----
Deferred
  Federal...................................................  $  --     $  --     $ --
  State.....................................................     --        --       --
  Foreign tax...............................................     --        --       --
     Total..................................................  $  --     $  --     $ --
                                                              -----     -----     ----
     Total..................................................  $  66     $  73     $246
                                                              =====     =====     ====


     The components of the net deferred income tax assets as of December 31,
were as follows (in thousands):



                                                               2002      2001
                                                              -------    -----
                                                                   
Net operating loss/credit carryforwards.....................  $ 1,720    $  69
Fixed assets................................................    2,211      412
Accruals and reserves.......................................    2,258      339
                                                              -------    -----
Gross deferred tax asset....................................    6,189      820
Valuation allowance.........................................   (6,189)    (820)
                                                              -------    -----
  Net deferred tax asset....................................  $    --    $  --
                                                              =======    =====


     As of December 31, 2002, Globalstar's corporate subsidiaries have
cumulative net operating loss carryforwards for federal income tax reporting
purposes of approximately $3,271,000. The federal net operating loss
carryforwards expire in varying dates in 2021 and 2022. Under current tax law,
net operating loss carryforwards available in any given year may be limited upon
the occurrence of certain events, including significant changes in ownership
interest resulting from significant stock transactions.

                                       F-43

                    GLOBALSTAR, L.P., A DEBTOR-IN-POSSESSION

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The actual provision for income taxes differs from the statutory U.S.
federal income tax rate as follows (in thousands):



                                                        YEARS ENDED DECEMBER 31,
                                                  ------------------------------------
                                                    2002        2001          2000
                                                  --------    ---------    -----------
                                                                  
Provision at U.S. statutory rate of 35%.........  $(52,485)   $(201,429)   $(1,324,985)
Nontaxable partnership income...................    46,680      201,346      1,321,708
State income taxes, net of federal benefit......       (32)           8             29
Change in valuation allowance...................     5,369           65          3,318
Effect of foreign income tax at various rates...       421           16             --
Other...........................................       113           67            176
                                                  --------    ---------    -----------
     Total......................................  $     66    $      73    $       246
                                                  ========    =========    ===========


16. REVENUE INFORMATION

     Globalstar's revenue by subsidiary and affiliated companies is presented
for purposes of disseminating the distribution of Globalstar's revenue and is as
follows (in thousands):



                                                            YEARS ENDED DECEMBER 31,
                                                          -----------------------------
                                                           2002      2001(1)    2000(1)
                                                          -------    -------    -------
                                                                       
Wholesale revenue -- Globalstar, L.P. ..................  $ 5,776    $5,994     $3,650
Service provider revenue:
  Canada -- Globalstar Canada Satellite Co..............   15,916       410         --
  United States -- Globalstar USA, LLC..................    6,732        --         --
  Europe -- Globalstar Europe Satellite Services,
     Ltd. ..............................................       72        --         --
Eliminations............................................   (3,857)       --         --
                                                          -------    ------     ------
     Total revenue......................................  $24,639    $6,404     $3,650
                                                          =======    ======     ======


     The following table provides Globalstar, L.P.'s net wholesale revenue by
geographical location for the years ended December 31, 2002, 2001 and 2000 (in
thousands):



                                                            YEARS ENDED DECEMBER 31,
                                                           --------------------------
                                                            2002      2001      2000
                                                           ------    ------    ------
                                                                      
Canada...................................................  $1,436    $1,135    $  500
Brazil...................................................     857     1,536       356
United States............................................     773       566       270
East Asia................................................     645       160        35
Saudi Arabia.............................................     494       320        41
Russia...................................................     363       361        75
Caribbean................................................     234       192        16
Mexico...................................................     169       243       167
Other(1).................................................     805     1,481     2,190
                                                           ------    ------    ------
Service revenue..........................................  $5,776    $5,994    $3,650
                                                           ======    ======    ======


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

(1) Includes $0.1 million and $1.5 million of royalty income for 2001 and 2000,
    respectively. There was no royalty revenue in 2002.

                                       F-44

                    GLOBALSTAR, L.P., A DEBTOR-IN-POSSESSION

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

17. FINANCIAL INSTRUMENTS

     The following methods and assumptions were used to estimate the fair value
of each class of financial instruments for which it is practicable to estimate
fair value.

     The carrying amounts of cash and cash equivalents approximates fair value
because of the short maturity of those instruments. The fair value of the senior
notes is based on market quotations. The fair value of the vendor financing,
notes payable, notes payable to affiliates, and the credit agreement is based on
the ratio of the carrying amount to fair value of the senior notes.

     The estimated fair values of Globalstar's financial instruments are as
follows (in thousands):



                                             DECEMBER 31, 2002      DECEMBER 31, 2001
                                            -------------------    -------------------
                                            CARRYING     FAIR      CARRYING     FAIR
                                             AMOUNT      VALUE      AMOUNT      VALUE
                                            --------    -------    --------    -------
                                                                   
Cash and cash equivalents.................  $ 15,284    $15,284    $ 55,625    $55,625
Vendor financing..........................   880,062     35,202     869,385     56,510
10 3/4% Senior notes......................   322,635     13,000     322,545     21,125
11 1/4% Senior notes......................   314,760     13,000     314,301     21,125
11 3/8% Senior notes......................   489,217     20,000     488,642     32,500
11 1/2% Senior notes......................   292,671     12,000     292,454     19,500
Notes payable.............................   170,832      6,833     169,787     11,036
Notes payable to affiliates...............   108,204      4,328     107,543      6,990
Revolving credit facility.................   100,000      4,000     100,000      6,500
Term Loan A...............................   100,000      4,000     100,000      6,500
Term Loan B...............................   300,000     12,000     300,000     19,500


18. RELATED PARTY TRANSACTIONS

     In addition to the transactions described in Notes 4, 5, 7, 8, 9, 10, 11,
12, 13 and 14, Globalstar has a number of other transactions with its
affiliates. Such transactions have been negotiated on an arms-length basis and
Globalstar believes that the arrangements are no less favorable to Globalstar
than could be obtained from unaffiliated parties. The following describes these
related-party transactions.

     Globalstar has granted to SS/L an irrevocable, royalty-free, non-exclusive
license to use certain intellectual property expressly developed in connection
with the SS/L agreement provided that SS/L will not use, or permit others to
use, such license for the purpose of engaging in any business activity that
would be in material competition with Globalstar. Globalstar has similarly
agreed that it will not license such intellectual property if it will be used
for the purpose of designing or building satellites that would be in competition
with SS/L.

     On July 17, 2001, the FCC granted Globalstar and seven other applicants
authorizations to construct, launch and operate MSS systems in the 2 GHz band,
subject to strict milestone requirements. Globalstar entered into a
non-contingent contract with SS/L on July 16, 2002. On January 30, 2003, the
FCC's International Bureau declared the 2 GHz license to be null and void.
Globalstar believes that this action by the FCC's staff is inconsistent with the
facts and the law and has requested the full FCC to review and reverse it.
Globalstar has also requested the full FCC to stay the Bureau's decision pending
review. On January 31, 2003, Globalstar instructed SS/L to stop work on the
contract and requested repayment of the balance of the payment that had not been
spent.

     In 1998, Globalstar secured twelve-month call-up orders for two additional
Delta launch vehicles from SS/L for the purpose of launching spare satellites.
The call-up date for Delta 8 was September 8, 2002,

                                       F-45

                    GLOBALSTAR, L.P., A DEBTOR-IN-POSSESSION

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

and the call-up date for Delta 9 was March 31, 2002. During 2002, Globalstar
sought and received several no-cost month-to-month deferrals of the call-up
deadline for Delta 9. In October 2002, the launch contractor declined to grant
additional no-cost extensions. Globalstar determined that it would be more
advantageous to terminate the launches than to begin to make the required
progress payments and requested SS/L to terminate the launches if further no
cost extensions could not be secured. Consequently, SS/L terminated the
Globalstar Delta 8 and 9 launches on October 31, 2002.

     Globalstar has requested further information from SS/L related to the
termination including SS/L's actual costs related to the termination and the
disposition of Globalstar unique hardware related to these launch vehicles. In
the fourth quarter of 2002, Globalstar wrote off the deposit of $1.2 million
related to the additional Delta launch vehicles. Additionally, SS/L has advised
Globalstar that SS/L will invoice Globalstar for $17.2 million of remaining
termination liability related to these launches. Globalstar believes that this
termination liability will not be classified as an administrative claim in its
bankruptcy case, and has recorded the liability as a pre-petition liability
subject to compromise.

     Globalstar has granted to QUALCOMM an irrevocable, non-exclusive, worldwide
perpetual license to intellectual property owned by Globalstar in the Ground
Segment and developed pursuant to the QUALCOMM agreement. QUALCOMM may, pursuant
to such grant, use the intellectual property for applications other than the
Globalstar System provided that QUALCOMM may not for a period of three years
after its withdrawal as a strategic partner or prior to the third anniversary of
the Full Constellation Date (as defined is such grant), whichever is earlier,
engage in any business activity that would be in competition with the Globalstar
System. The grant of intellectual property to QUALCOMM described above is
generally royalty free. Under certain specified circumstances, however, QUALCOMM
will be required to pay a 3% royalty fee on such intellectual property.

     Globalstar entered into agreements with certain limited partners, for the
integration and testing of the Globalstar System at certain of the partners'
gateways. Costs incurred under these arrangements for the years ended December
31, 2001 and 2000 were approximately $374,000 and $1,050,000, for 2001 and 2000,
respectively. There were no costs incurred in 2002.

     QUALCOMM initially agreed to grant at least one vendor a nonexclusive
worldwide license to use QUALCOMM's intellectual property to manufacture and
sell gateways to Globalstar's service providers. The foregoing license would be
granted by QUALCOMM to one or more such vendors on reasonable terms and
conditions, which will in any event not provide for royalty fees in excess of 7%
of a gateway's sales price (not including the approximately $400,000 per gateway
in recoupment expenses payable to Globalstar). Thus far, no other vendor has
committed to manufacture gateways, and Globalstar does not expect any other
vendor to manufacture gateways. QUALCOMM granted a license to manufacture
Globalstar user terminals to Ericsson and Telit and also agreed to grant a
similar license to at least one additional qualified manufacturer to enable it
to manufacture and sell the Globalstar user terminals to service providers.
However, these rights were granted under the Development Contract, which
QUALCOMM has purported to terminate.

     Subsidiaries of Loral have formed joint ventures with partners which have
executed service provider agreements granting the joint ventures exclusive
rights to provide Globalstar service to users in Brazil, Canada, Mexico, and
Russia as long as specified minimum levels of subscribers are met. In December
2001, a subsidiary of Globalstar acquired a majority interest in the Canadian
service provider business. As a result of this transaction, Globalstar and Loral
are now partners in the Canadian joint venture. Because of the consolidation,
all transactions with GCSC are eliminated. Founding service provider agreements
have been entered into with certain of Globalstar's limited partners for
specific countries. These service providers will receive certain discounts from
Globalstar's expected pricing schedule generally over a five-year period.
Globalstar has also agreed to provide QUALCOMM, under certain circumstances,
with

                                       F-46

                    GLOBALSTAR, L.P., A DEBTOR-IN-POSSESSION

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

capacity on the Globalstar System for its OmniTRACS services at its most
favorable rates and to grant to QUALCOMM the exclusive right to utilize the
Globalstar System to provide OmniTRACS-like services.

     On December 30, 2002, the Bankruptcy Court approved a settlement agreement
among Globalstar Services Company, Inc. ("GSCI"), Globalstar, Globalstar
Vodafone Network Pty Ltd. Australia and Globalstar Australia Pty Ltd. Under this
settlement, Globalstar consented to the transfer by Vodafone Satellite Services
Limited ("VSSL") to Localstar of the service provider rights in Australia, and
Globalstar entered into a new service provider agreement with Localstar. VSSL
was the original authorized service provider for Australia and the operator of
three gateways in that country. In conjunction with this transaction, VSSL
agreed to settle certain pre-petition and post-petition debts with Globalstar.
Globalstar received payments totaling $1.7 million from Vodafone in January
2003.

     Globalstar has entered into various agreements with other service providers
and gateway operators to provide and receive various services related to the
Globalstar business. Currently, Globalstar is providing retail billing support
to its service providers in Mexico and Brazil, on a cost reimbursable basis.
Additionally, Globalstar has agreements in place to provide, also on cost
reimbursable basis, certain information technology and telecommunications
network related support to GCC, in which it holds a minority interest. Also, GCC
bills Globalstar for the monitoring of gateways in United States, Canada, and
France. In addition, Globalstar is billed for all costs related to the
operations of the gateways located in Canada, as cost recovery mechanism for
GCC. Globalstar also net settles with other service providers roaming charges
that arise from subscribers using gateways other then their home gateway to
complete calls on the Globalstar System. During 2002, Globalstar billed $0.5
million under these agreements.

     Total gross receivables due from affiliates for amounts financed under the
production gateway contracts, usage, and other services is as follows (in
thousands):



                                                              DECEMBER 31,
                                                           ------------------
                                                            2002       2001
                                                           -------    -------
                                                                
SS/L.....................................................  $ 1,586    $   325
Loral....................................................    4,994      6,535
Other affiliates.........................................   25,682     48,109
                                                           -------    -------
                                                           $32,262    $54,969
                                                           =======    =======


     Total purchases from affiliates is as follows (in thousands):



                                                  YEARS ENDED DECEMBER 31,
                                               ------------------------------
                                                2002       2001        2000
                                               -------    -------    --------
                                                            
SS/L.........................................  $   864    $15,756    $ 74,082
Loral........................................      704      2,642       3,872
QUALCOMM.....................................    4,056     40,629      99,988
GCC..........................................    5,831         --         335
Other affiliates.............................      132     14,078       6,569
                                               -------    -------    --------
                                               $11,587    $73,105    $184,846
                                               =======    =======    ========


     Total usage revenue recognized from other affiliates is $2.3 million, $5.2
million and $1.9 million for the years ended December 31, 2002, 2001, and 2000,
respectively.

     Starting with commencement of service by Globalstar and upon receipt of
revenue, LQP, the general partner of LQSS, receives a managing partner's
allocation equal to 2.5% of Globalstar's revenues up to $500 million plus 3.5%
of revenues in excess of $500 million. Loral and QUALCOMM ultimately will
receive 80% and 20%, respectively, of such distribution. Should Globalstar incur
a net loss in any year

                                       F-47

                    GLOBALSTAR, L.P., A DEBTOR-IN-POSSESSION

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

following commencement of operations, the allocation for that year will be
reduced by 50% and LQP will reimburse Globalstar for allocation payments, if
any, received in any prior quarter of such year, sufficient to reduce its
management allocation for the year to 50%. The managing partners allocation may
be deferred (with interest at 4% per annum) in any quarter in which Globalstar
would report negative cash flow from operations if the managing partner's
allocation were made. As of December 31, 2002, the managing partner's allocation
of $167,000 has been deferred and $108,000 has been classified as a liability
subject to compromise.

19. COMMITMENTS AND CONTINGENCIES

     Globalstar currently has three leases for facilities, two in California and
one in Ontario, Canada. The leases expire in July 2005, November 2006 and
December 2008, respectively. The following table presents the future minimum
lease payments (in thousands):

                                                           
2003........................................................  $ 3,235
2004........................................................    3,271
2005........................................................    3,303
2006........................................................    3,306
2007........................................................    3,242
Thereafter..................................................    3,323
                                                              -------
Total minimum lease payments................................  $19,680
                                                              =======



     Rent expense for 2002, 2001 and 2000, was approximately $3.5 million, $3.9
million, and $4.1 million, respectively. Included in rent expense are payments
to Lockheed Martin of $3.0 million, $3.5 million, and $3.7 million for 2002,
2001 and 2000, respectively.

     On February 20, 2001, a purported class action lawsuit was filed against
Globalstar and Globalstar Capital Corporation on behalf of the owners of the
10 3/4% senior notes, due November 2004 (the "10 3/4% Senior Notes") in Superior
Court, New Castle County, Delaware. Globalstar Capital Corporation and
Globalstar issued the 10 3/4% Senior Notes as joint obligors. The complaint
alleges that the defendants repudiated the 10 3/4% Senior Notes' registration
statement, prospectus and indenture, without consent of the holders of the
10 3/4% Senior Notes, when Globalstar announced that it was suspending its
future interest payments on the 10 3/4% Senior Notes. On April 23, 2001, the
defendants moved to dismiss the complaint for failure to state a cause of
action. A second similar class action was filed in Delaware on June 5, 2001. The
defendants have also moved to dismiss this complaint. Plaintiffs subsequently
amended the complaint and defendants again moved to dismiss the amended
complaint for failure to state a cause of action. On December 31, 2001, the
court granted defendants' motion to dismiss in part, dismissing plaintiffs'
claims for principal and interest not yet due, but allowing plaintiffs to
proceed with their breach of contract claim based on the interest payments
already missed at the time the amended complaints were filed. Defendants
answered the complaints on January 17, 2002. These proceedings are now
automatically stayed in accordance with Section 362(a) of the Bankruptcy Code.
On August 7, 2001, Globalstar received a petition filed on July 13, 2001 in
Texas state court by L.E. Creel III, a holder of an 11 3/8% senior note due
February 2004 seeking principal payment of the note plus interest. Globalstar
filed an answer contesting the petition. On December 6, 2001, the parties
participated in court ordered mediation, which failed to lead to a settlement of
plaintiff's claim. This proceeding is also stayed pursuant the Bankruptcy Code.

     On February 28, 2001, plaintiff Eric Eismann filed a purported class action
complaint against GTL in the United States District Court for the Southern
District of New York. The other defendants named in the complaint were Loral and
Bernard Schwartz, the former Chief Executive Officer of Globalstar.

                                       F-48

                    GLOBALSTAR, L.P., A DEBTOR-IN-POSSESSION

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Globalstar was not a named defendant in these actions. The complaint alleges
that (a) GTL and Mr. Schwartz violated Section 10(b) of the Exchange Act and
Rule 10b-5 promulgated thereunder, by making material misstatements or failing
to state material facts about GTL's business and prospects and (b) that Loral
and Mr. Schwartz are secondarily liable for these alleged misstatements and
omissions under Section 20(a) of the Exchange Act as alleged "controlling
persons" of GTL. The class of plaintiffs on whose behalf this lawsuit has been
asserted consists of all buyers of GTL common stock from December 6, 1999,
through October 27, 2000, excluding the defendants, officers and directors of
GTL and certain persons affiliated therewith. Eighteen additional purported
class action complaints were subsequently filed in the United States District
Court for the Southern District of New York. These complaints were granted class
action status and consolidated into a case known as In Re Globalstar Securities
Litigation, 01 Civ. 1748 (SHS). On September 26, 2001, the court appointed The
Phillips Family as Lead Plaintiff for the class. On November 13, 2001, Lead
Plaintiff filed a Consolidated Amended Class Action Complaint and a demand for
jury trial. The amended complaint drops the cause of action against certain
individuals and adds causes of action against Globalstar and its wholly-owned
subsidiary, Globalstar Capital. GTL and Globalstar believe that they have
meritorious defenses to these actions and on or about February 25, 2002, filed a
motion to dismiss the complaint. The case against Globalstar and Globalstar
Capital is stayed pursuant to the Bankruptcy Code. There are, however, no
assurances that the defenses to these actions will be successful.

     On December 5, 2002, StarMD, LLC ("StarMD") filed a complaint in the
Pennsylvania Court of Common Pleas, Allegheny County, naming GUSA as the
defendant. The complaint alleges four counts: (1) in equity, seeking a mandatory
injunction requiring GUSA to sell to StarMD "as many telephones as its requests
and to provide service to plaintiff's customers . . . ;" (2) in assumpsit, for
lost profits "and related revenue" from the sale of "an estimated 10,800
telephones," in the amount of $31,104,000; (3) in assumpsit, for recovery of the
value of plaintiff's efforts in developing a marketing campaign, for damages "in
excess of $25,000;" and (4) in trespass, for tortiously interfering with
plaintiff's agreement with Globalstar for the development and co-marketing of an
antenna kit for the Globalstar 1600 telephone. In February 2003, GUSA filed
Preliminary Objections requesting the court to dismiss the complaint on grounds
of (1) lack of personal jurisdiction, (2) improper venue, (3) forum non
conveniens, (4) a prior-existing valid and enforceable agreement to arbitrate
and (5) legal insufficiency. The request for dismissal is before the court
awaiting decision.

     Any plan of reorganization would likely involve the cancellation of debt in
exchange for equity. The cancellation of debt will give rise to considerable
taxable income that will be allocable to the partners of Globalstar. Under a
certain interpretation of Section 1446 of the Internal Revenue Code of 1986, as
amended, Globalstar may be obligated to pay a 35% withholding tax on all income
allocated to the foreign partners even if they do not receive a cash
distribution. Globalstar believes the imposition of the withholding tax may have
the effect of diverting its assets from its creditors to its foreign partners in
contravention of bankruptcy law. Globalstar expects to enter into an agreement
with the United States Internal Revenue Service pursuant to which, based upon
certain representations and satisfaction of certain terms and conditions,
Globalstar's total withholding obligation on this taxable income will be
significantly reduced. However, there can be no assurances such an agreement
will be reached.

     At the time of their respective acquisitions both GCSC and GUSA were
offering service guarantees to portions of their customer base, under which
certain customers are entitled to cash compensation in the event that Globalstar
services do not remain active and available to them for at least one year after
initial activation. Globalstar has assumed these guarantees since the
acquisition and is continuing them only when necessary for certain accounts. As
of December 31, 2002, Globalstar has maximum contingent obligations with respect
to these service guarantees of approximately $3.1 million, that would come due
in the event that Globalstar services were discontinued in Canada or the United
States. Globalstar believes service will continue, therefore no accrual was
recorded.
                                       F-49

                    GLOBALSTAR, L.P., A DEBTOR-IN-POSSESSION

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     On May 21, 2002, an employee incentive program was approved by the
Bankruptcy Court to recognize and retain key employees. The total value of the
program is $2.9 million of which $0.7 million was paid in July 2002. The balance
of the incentive program will be paid upon the successful reorganization of
Globalstar. Under certain conditions, up to $1.0 million of the remaining
payments may be made in common stock of New Globalstar.

20. SUBSEQUENT EVENTS

     On March 14, 2003, Loral, the Creditors' Committee and Globalstar signed a
term sheet outlining to the terms and conditions of a comprehensive settlement
of certain contested matters and a release of the claims against Loral (the
"Loral Settlement"). Also on March 14, 2003, Globalstar and the Creditors'
Committee filed a joint motion under Bankruptcy Rule 9019 for an order approving
the Loral Settlement with the Bankruptcy Court. The parties agreed to use their
reasonable best efforts to execute a definitive agreement based on the term
sheet by March 26, 2003. The Loral Settlement, which will be effected in
connection with Globalstar's restructuring and emergence from bankruptcy,
provides the following, among other items: (1) SS/L would transfer to Globalstar
title "as is" to the eight spare satellites that are currently held in storage
by SS/L; (2) certain strategic agreements under which Loral holds exclusive
rights to provide Globalstar services to defense and national security agencies
and in the aviation market would terminate, and a new joint venture company (to
be owned 75% by Globalstar and 25% by Loral) would be formed to pursue the
defense and national security business; (3) L/Q Licensee, a subsidiary of LQP,
would transfer the Federal Communications Commission license held by it to
Globalstar or LQP would transfer operations of L/Q Licensee to Globalstar; (4)
Loral would convey its interests in the Canadian service provider operations to
Globalstar; (5) certain Loral service provider financial obligations would be
settled through a reduction in debt obligations due from GCC to Loral and other
financial obligations involving a Russian joint venture would be restructured;
(6) Loral's general unsecured claims as a creditor in the Globalstar bankruptcy
proceeding would be quantified and allowed; (7) SS/L would return to Globalstar
unused advance prepayments related to the 2 GHz satellite contract; (8) Loral's
designees would resign from Globalstar's General Partners Committee; and (9)
third party claims against Loral, certain Loral affiliates and all six members
of Globalstar's General Partners' Committee, as provided in the term sheet,
would be released. The motion supporting the Loral Settlement is expected to be
heard by the Bankruptcy Court on April 9, 2003.

     On March 25, 2003, Globalstar entered into a settlement and release
agreement with Elsacom S.p.A. ("Elsacom") and a gateway asset purchase agreement
(collectively the "Elsacom Settlement") with a wholly owned subsidiary of
Elsacom. Elsacom is the primary Globalstar service provider in Central and
Eastern Europe, the operator of the gateway located in Avezzano, Italy and,
through its affiliate, Globalstar Northern Europe, the former operator of the
gateway located in Karkkila, Finland. Although Elsacom had defaulted on its
gateway contract obligations to Globalstar, Elsacom desired to continue
providing Globalstar service to its customers from Avezzano. Accordingly,
Globalstar and Elsacom agreed to negotiate a mutually acceptable plan for paying
certain of the debt, transferring the equipment in Finland to Globalstar and
maintaining Elsacom's service provider rights. Under the terms of the Elsacom
Settlement, Globalstar will receive cash payments totaling $2.4 million in two
installments to be completed by June 2003 and the release of all past payment
obligations due to Elsacom in exchange for liquidation of the gateway contract
payments due to Globalstar from Elsacom. Additionally, Globalstar will retain
title to the gateway equipment installed in Finland. Globalstar intends to
dismantle the Finland gateway and to place the removable parts, which contain
most of the gateway's electronics, in storage for future deployment.

                                       F-50


                                 EXHIBIT INDEX



EXHIBIT
NUMBER                     DESCRIPTIONS OF EXHIBIT
- -------                    -----------------------
      
3.1      Memorandum of Association of Globalstar Telecommunications
         Limited(1)
3.2      Bye-Laws of Globalstar Telecommunications Limited, as
         amended, and including Schedule III annexed there to
         regarding the 8% Series A Convertible Redeemable Preferred
         Shares due 2011(10)
3.3      Schedule IV to the Bye-laws of Globalstar Telecommunications
         Limited regarding the 9% Series B Convertible Redeemable
         Preferred Shares due 2001(11)
4.1      Indenture dated as of February 15, 1997 relating to
         Globalstar's and Globalstar Capital Corporation's 11 3/8%
         Senior Notes due 2004(2)
4.2      Indenture dated as of June 1, 1997 relating to Globalstar's
         and Globalstar Capital Corporation's 11 1/4% Senior Notes
         due 2004(3)
4.3      Indenture dated as of October 15, 1997 relating to
         Globalstar's and Globalstar Capital Corporation's 10 3/4%
         Senior Notes due 2004(4)
4.4      Indenture dated as of May 20, 1998 relating to Globalstar's
         and Globalstar Capital Corporation's 11 1/2% Senior Notes
         due 2005(5)
4.5      Form of note issued to guarantors of Globalstar's $250
         million credit facility(14)
10.1     Amended and Restated Agreement of Limited Partnership of
         Globalstar L.P., dated as of January 26, 1999, among
         Loral/QUALCOMM Satellite Services, L.P., Globalstar
         Telecommunications Limited, AirTouch Satellite Services,
         Inc., Dacom Corporation, Dacom International, Inc., Hyundai
         Corporation, Hyundai Electronics Industries Co., Ltd.,
         Loral/DASA Globalstar, L.P., Loral Space & Communications
         Ltd., San Giorgio S.p.A., Telesat Limited, TE. SA. M., and
         Vodafone Satellite Services Limited(10)
10.1.2   Amendment dated as of December 8, 1999 to the Amended and
         Restated Agreement of Limited Partnership of Globalstar,
         L.P.(11)
10.1.3   Amendment dated as of February 1, 2000 to the Amended and
         Restated Agreement of Limited Partnership of Globalstar,
         L.P.(13)
10.2     Subscription Agreements by and between Globalstar, L.P., and
         each of AirTouch Communications, Alcatel Spacecom, Loral
         General Partner, Inc., Hyundai/Dacom and Vodastar Limited(1)
10.3     Subscription Agreement by and between Globalstar, L.P. and
         Loral/QUALCOMM Satellite Services, L.P.(1)
10.4     Subscription Agreement by and between Globalstar, L.P. and
         Finmeccanica S.p.A.(1)
10.5     Subscription Agreement by and between Globalstar, L.P. and
         China Telecommunications Broadcast Satellite Corporation(10)
10.6     Form of Service Provider Agreements by and between
         Globalstar, L.P. and each of AirTouch Satellite Services,
         Inc., Finmeccanica S.p.A., Loral Globalstar, L.P.,
         Loral/DASA Globalstar, L.P., Hyundai/Dacom, TE. SA. M., and
         Vodastar Limited(1)
10.7     Development Agreement by and between QUALCOMM Incorporated
         and Globalstar, L.P.(1)
10.8     Contract between Globalstar, L.P. and Space Systems/Loral,
         Inc.(1)
10.9     Contract for the Development of Certain Portions of the
         Ground Operations Control Center between Globalstar and
         Loral Western Development Laboratories(1)
10.10    Contract for the Development of Satellite Orbital Operations
         Centers between Globalstar and Loral Aerosys, a division of
         Loral Aerospace Corporation(1)
10.11    1994 Stock Option Plan(6)+
10.12    Amendment to 1994 Stock Option Plan(7)+
10.12.2  Amendment No. 2 to 1994 Stock Option Plan.(13)+





EXHIBIT
NUMBER                     DESCRIPTIONS OF EXHIBIT
- -------                    -----------------------
      
10.13    Revolving Credit Agreement dated as of December 15, 1995, as
         amended on March 25, 1996, among Globalstar, certain banks
         parties thereto and Chemical Bank, as Administrative
         Agent(2)
10.14    Second Amendment to Revolving Credit Agreement dated July
         31, 1997 among Globalstar, certain banks parties thereto and
         The Chase Manhattan Bank, as Administrative Agent(4)
10.15    Third Amendment to Revolving Credit Agreement dated as of
         October 15, 1997 among Globalstar, certain banks parties
         thereto and The Chase Manhattan Bank, as Administrative
         Agent(4)
10.16    Fourth Amendment to Revolving Credit Agreement dated as of
         November 13, 1998 among Globalstar, certain banks parties
         thereto and The Chase Manhattan Bank, as Administrative
         Agent(10)
10.17    Exchange and Registration Rights Agreement, dated as of
         December 31, 1994, among Globalstar, L.P. and AirTouch
         Satellite Services, Inc., Finmeccanica S.p.A., Loral
         Globalstar, L.P., Loral/DASA Globalstar, L.P.,
         Hyundai/Dacom, TE. SA. M., and Vodastar Limited(1)
10.18    Amendment to the Exchange and Registration Rights Agreement,
         dated as of April 8, 1998, among Globalstar, L.P.,
         Globalstar Telecommunications Limited and Telesat
         Limited(10)
10.19    Warrant Agreement dated as of February 19, 1997 relating to
         Warrants to purchase 4,129,000 shares of Common Stock of
         Globalstar Telecommunications Limited(2)
10.20    Registration Rights Agreement dated February 19, 1997
         relating to Globalstar's 11 3/8% Senior Notes due 2004 and
         the Company's Warrants to purchase 4,129,000 shares of
         Common Stock issued in connection therewith(2)
10.21    Registration Rights Agreement dated June 13, 1997 relating
         to Globalstar's and Globalstar Capital Corporation's 11 1/4%
         Senior Notes due 2004(3)
10.22    Registration Rights Agreement dated October 29, 1997
         relating to Globalstar's and Globalstar Capital
         Corporation's 10 3/4% Senior Notes due 2004(4)
10.23    Registration Rights Agreement dated May 20, 1998 relating to
         Globalstar's and Globalstar Capital Corporation's 11 1/2%
         Senior Notes due 2005(5)
10.24    Registration Rights Agreement dated as of July 6, 1998
         relating to 8,400,000 shares of Common Stock by and among
         Globalstar Telecommunications Limited, Loral Space &
         Communications Ltd., Quantum Partners LDC, Quasar Strategic
         Partners LDC and Quantum Industrial Partners LDC.(8)
10.25    Exchange Agreement dated as of September 28, 1998 relating
         to 717,600 shares of Common Stock by and between Loral Space
         & Communications Ltd., DACOM Corporation and DACOM
         International, Inc.(9)
10.26    Registration Rights Agreement dated as of January 26, 1999
         relating to the Company's 8% Convertible Redeemable
         Preferred Stock(10)
10.27    Credit Agreement dated August 5, 1999 among Globalstar,
         L.P., Bank of America, National Association, as
         Administration Agent, Banc of America Securities LLC, as
         Sole Lead Arranger and Sole Book Manager, Credit Lyonnais,
         New York Branch, as Syndication Agent and Lehman Commercial
         Paper Inc., as Documentation Agent(12)
10.28    Registration Rights Agreement dated December 8, 1999
         relating to GTL's 9% Series B Preferred Stock due 2011(11)
10.29    Fee Agreement dated as of April 19, 1996 by and among
         Globalstar, Globalstar Telecommunications Limited, Loral
         Corporation, Loral Space & Communications Ltd., QUALCOMM
         Limited Partner, Inc., Space Systems/Loral, Inc. and DASA
         Globalstar Limited Partner, Inc.(14)





EXHIBIT
NUMBER                     DESCRIPTIONS OF EXHIBIT
- -------                    -----------------------
      
10.30    Intercreditor Agreement dated as of April 19, 1996 by and
         among Globalstar, Globalstar Telecommunications Limited,
         Loral Corporation, Loral Space & Communications Ltd.,
         QUALCOMM Limited Partner, Inc., Space Systems/Loral, Inc,
         Inc. and DASA Globalstar Limited Partner, Inc.(14)
10.31    Waiver and Amendment dated as of June 30, 2000 to the Credit
         Agreement, dated as of August 5, 2000 by and among
         Globalstar, Bank of America, National Association, as
         administrative agent, and the several banks and other
         financial institutions from time to time thereto.(14)
10.32    Forbearance and Waiver Agreement dated as of June 30, 2000
         between Globalstar and QUALCOMM Incorporated.(14)
10.33    Purchase Agreement dated as of September 18, 2000 among
         Globalstar Telecommunications Limited, Globalstar, L.P. and
         Bear Sterns International Limited.(15)
10.34    Subscription Agreement dated September 22, 2000 between
         Globalstar Telecommunications Limited and Loral Space &
         Communications Ltd.(16)
10.35    Assignment, Amendment and Release Agreement dated as of
         November 17, 2000 by and among the lenders parties to the
         Globalstar Credit Agreement, Loral Satellite, Inc., Loral
         Satcom Ltd., Loral Space & Communications Ltd., Loral Space
         & Communications Corporation, Globalstar, L.P. and Bank of
         America, National Association.(17)
10.36    Plan Support Agreement Between Loral and Columbia Ventures
         Corp., Loeb Partners Corp., Stonehill Capital Management,
         LLC and Blue River LLC.(18)
10.37    Memorandum Of Understanding -- Proposed Restructuring
         Between Loral and Columbia Ventures Corp., Loeb Partners
         Corp., Stonehill Capital Management, LLC and Blue River
         LLC.(18)
10.38    Investment Agreement with New Valley Corporation pursuant to
         which New Valley would invest $55 million as part of a plan
         of reorganization.(19)
10.39    Debtor-in-possession credit agreement with New Valley
         Corporation.(19)
10.40    Debtor-in-possession credit agreement with Blue River
         Capital LLC, Columbia Ventures Corporation, ICO Investment
         Corp, Iridium Investors, LLC and Loeb Partners
         Corp.(collectively, the "DIP Lenders"), subject to final
         Bankruptcy Court approval, for the DIP lenders to make $10
         million available to Globalstar.*
12       Statement Regarding Computation of Ratios*
21       List of Subsidiaries of the Registrant*
23       Consent of Deloitte & Touche LLP*


- ---------------
 (1) Incorporated by reference to GTL's Registration Statement on Form S-1 (No.
     33-86808).

 (2) Incorporated by reference to GTL's and Globalstar's Annual Report on Form
     10-K for the Year Ended December 31, 1996.

 (3) Incorporated by reference to Globalstar's Registration Statement on Form
     S-4 (No. 333-25461).

 (4) Incorporated by reference to Globalstar's Registration Statement on Form
     S-4 (No. 333-41229).

 (5) Incorporated by reference to Globalstar's Registration Statement on Form
     S-4 (No. 333-57749).

 (6) Incorporated by reference to GTL's Registration Statement on Form S-3 (No.
     333-6477).

 (7) Incorporated by reference to GTL's and Globalstar's Annual Report on Form
     10-K for the Year Ended December 31, 1997.

 (8) Incorporated by reference to Schedule 13D filed by Loral Space &
     Communications Ltd. on August 3, 1998.

 (9) Incorporated by reference to Schedule 13D filed by Loral Space &
     Communications Ltd. on February 10, 1999.


(10) Incorporated by reference to GTL's and Globalstar's Annual Report on Form
     10-K for the Year Ended December 31, 1998.

(11) Incorporated by reference to GTL's and Globalstar's Current Report on Form
     8-K filed on December 21, 1999.

(12) Incorporated by reference to GTL's and Globalstar's Current Report on Form
     8-K filed on August 6, 1999.

(13) Incorporated by reference to GTL's and Globalstar's Annual Report on Form
     10-K for the Year Ended December 31, 1999.

(14) Incorporated by reference to GTL's and Globalstar's Current Report on Form
     8-K filed on July 7, 2000.

(15) Incorporated by reference to GTL's and Globalstar's Current Report on Form
     8-K filed on September 19, 2000.

(16) Incorporated by reference to GTL's and Globalstar's Current Report on Form
     8-K filed on September 25, 2000.

(17) Incorporated by reference to GTL's and Globalstar's Current Report on Form
     8-K filed on November 20, 2000.

(18) Incorporated by reference to GTL's and Globalstar's Current Report on Form
     8-K filed on February 19, 2002.

(19) Incorporated by reference to GTL's and Globalstar's Current Report on Form
     8-K filed on January 15, 2003 and February 4, 2003.

  *  Filed herewith.

  +  Management compensation plan.

EX-10.40

                                                                  EXHIBIT  10.40

                                                                  EXECUTION COPY

                                   $10,000,000

                   SECURED SUPER-PRIORITY DEBTOR IN POSSESSION
                                CREDIT AGREEMENT

                          Dated as of February 24, 2003

                                      among

                                GLOBALSTAR, L.P.,

                                   as Borrower

                  The Subsidiaries of the Borrower Party Hereto
                                  as Guarantors

                                       and

                              ICO INVESTMENT CORP.,
                             BLUE RIVER CAPITAL LLC,
                             IRIDIUM INVESTORS, LLC,
                               LOEB PARTNERS CORP.
                          COLUMBIA VENTURES CORPORATION

                                   as Lenders



                                Table of Contents



                                                                                                                   Page
                                                                                                                   ----
                                                                                                                
ARTICLE I DEFINITIONS AND ACCOUNTING TERMS......................................................................     1
         Section 1.1 Defined Terms..............................................................................     1
         Section 1.2 Computation of Time Periods................................................................    14
         Section 1.3 Accounting Terms...........................................................................    15
         Section 1.4 Certain Terms..............................................................................    15

ARTICLE II AMOUNTS AND TERMS OF THE LOANS.......................................................................    15
         Section 2.1 The Term Loans.............................................................................    15
         Section 2.2 Making the Loans...........................................................................    16
         Section 2.3 Repayment..................................................................................    16
         Section 2.4 Prepayments................................................................................    16
         Section 2.5 Interest...................................................................................    17
         Section 2.6 Payments and Computations..................................................................    17
         Section 2.7 Application of Payments....................................................................    17
         Section 2.8 Taxes......................................................................................    17

ARTICLE III CONDITIONS OF LENDING...............................................................................    18
         Section 3.1 Conditions Precedent to Interim Loans......................................................    18
         Section 3.2 Conditions Precedent to Term Loans Under Final Financing Order.............................    18
         Section 3.3 Conditions Precedent to Each Loan..........................................................    20

ARTICLE IV REPRESENTATIONS AND WARRANTIES.......................................................................    20
         Section 4.1 Corporate Existence: Compliance with Law...................................................    20
         Section 4.2 Corporate Power: Authorization: Enforceable Obligations....................................    21
         Section 4.3 Ownership of Subsidiaries..................................................................    21
         Section 4.4 Secured, Super Priority Obligations........................................................    22
         Section 4.5 Use of Proceeds............................................................................    22
         Section 4.6 Intellectual Property......................................................................    23
         Section 4.7 Pledged Collateral.........................................................................    23

ARTICLE V AFFIRMATIVE COVENANTS.................................................................................    24
         Section 5.1 Compliance with Laws., Etc.................................................................    24
         Section 5.2 Maintenance of Existence...................................................................    24
         Section 5.3 Access.....................................................................................    24
         Section 5.4 Keeping of Books...........................................................................    25
         Section 5.5 Use of Proceeds............................................................................    25
         Section 5.6 Further Assurances.........................................................................    25
         Section 5.7 Secured Indebtedness.......................................................................    25

ARTICLE VI NEGATIVE COVENANTS...................................................................................    25
         Section 6.1 Liens, Etc.................................................................................    25
         Section 6.2 Indebtedness...............................................................................    26
         Section 6.3 Mergers, Sale of Assets, Etc...............................................................    26
         Section 6.4 Investments................................................................................    26
         Section 6.5 Restricted Payments........................................................................    27


                                       i



                                Table of Contents
                                   (continued)



                                                                                                                   Page
                                                                                                                   ----
                                                                                                                
         Section 6.6 Transactions With Affiliates...............................................................    27
         Section 6.7 Capital Expenditures.......................................................................    27
         Section 6.8 Amendment of Charter or Bylaws.............................................................    27
         Section 6.9 Prohibition on No Shop Clauses.............................................................    27

ARTICLE VII TERMINATION.........................................................................................    28
         Section 7.1 Termination; Acceleration..................................................................    28
         Section 7.2 Standstill Period: Exercise of Remedies....................................................    28
         Section 7.3 Commitment Fee.............................................................................    28
         Section 7.4 Other Termination..........................................................................    29

ARTICLE VIII GUARANTY...........................................................................................    30
         Section 8.1 The Guaranty...............................................................................    30
         Section 8.2 Nature of Liability........................................................................    30
         Section 8.3 Independent Obligation.....................................................................    30
         Section 8.4 Authorization..............................................................................    31
         Section 8.5 Reliance...................................................................................    31
         Section 8.6 Subordination..............................................................................    31
         Section 8.7 Waiver.....................................................................................    32

ARTICLE IX SECURITY.............................................................................................    32
         Section 9.1 Security...................................................................................    32
         Section 9.2 Perfection of Security Interests...........................................................    34
         Section 9.3 Rights of Lenders: Limitations on Lenders' Obligations.....................................    34
         Section 9.4 Covenants of the Grantors with Respect to Collateral.......................................    35
         Section 9.5 Performance by Administrative Agent of the Grantors' Obligations...........................    39
         Section 9.6 Limitation on Administrative Agent's Duty in Respect of Collateral.........................    39
         Section 9.7 Remedies, Rights Upon Event of Default.....................................................    39
         Section 9.8 The Appointment of Administrative Agent as Attorney-in-Fact................................    42
         Section 9.9 FCC-Related Requirements of Law............................................................    43

ARTICLE X MISCELLANEOUS.........................................................................................    44
         Section 10.1 Amendments, Etc...........................................................................    44
         Section 10.2 Notices, Etc..............................................................................    44
         Section 10.3 No Waiver: Remedies.......................................................................    46
         Section 10.4 Costs: Expenses: Indemnities..............................................................    46
         Section 10.5 Right of Set-off..........................................................................    46
         Section 10.6 Binding Effect............................................................................    47
         Section 10.7 Governing Law.............................................................................    47
         Section 10.8 Section Titles............................................................................    47
         Section 10.9 Execution in Counterparts.................................................................    47
         Section 10.10 Entire Agreement.........................................................................    47
         Section 10.11 Confidentiality..........................................................................    47
         Section 10.12 Jurisdiction.............................................................................    48
         Section 10.13 Waiver of Jury Trial.....................................................................    48




                                Table of Contents
                                   (continued)



                                                                                                                   Page
                                                                                                                   ----
                                                                                                                
         Section 10.14 Non-Assignment...........................................................................    48

ARTICLE XI ADMINISTRATIVE AGENT.................................................................................    48
         Section 11.1 Appointment and Authorization of Administrative Agent.....................................    48
         Section 11.2 Delegation of Duties......................................................................    49
         Section 11.3 Liability of Administrative Agent.........................................................    49
         Section 11.4 Reliance by Administrative Agent..........................................................    49
         Section 11.5 Notice of Default.........................................................................    50
         Section 11.6 Credit Decision; Disclosure of Information by Administrative Agent........................    50
         Section 11.7 Administrative Agent in its Individual Capacity...........................................    50
         Section 11.8 Administrative Agent May File Proofs of Claim.............................................    51
         Section 11.9 Collateral and Guaranty Matters...........................................................    51
         Section 11.10 Payments to Lenders......................................................................    52
         Section 11.11 Notices..................................................................................    52
         Section 11.12 Sharing of Payments......................................................................    52

ARTICLE XII REQUIRED CONSENTS; RIGHTS OF PARTICIPANTS...........................................................    52
         Section 12.1 Required Lenders Consents.................................................................    52
         Section 12.2 Unanimous Consent of the Lenders..........................................................    52
         Section 12.3 Right of Lenders to Bring Action for Repayment............................................    53


                        
SCHEDULES
Schedule 1                 - FCC Licenses
Schedule 4.1               - Corporate Existence; Compliance with Law
Schedule 4.2               - Corporate Power; Authorization; Enforceable Obligation
Schedule 4.3               - Ownership of Subsidiaries
Schedule 4.6               - Intellectual Property
Schedule 4.7               - Pledged Collateral

EXHIBITS

Exhibit A-1                - Form of Term Loan Note
Exhibit A-2                - Form of Term PIK Interest Note
Exhibit B                  - Form of Approved Budget
Exhibit C-1                - Form of Interim Financing Order
Exhibit C-2                - Form of Final Financing Order
Exhibit D                  - Form of Notice of Borrowing





                  SECURED SUPER-PRIORITY DEBTOR IN POSSESSION CREDIT AGREEMENT,
dated as of February 24, 2003, between GLOBALSTAR, L.P., a Delaware limited
partnership, as debtor and debtor in possession under chapter 11 of the
Bankruptcy Code (as hereinafter defined) (the "Borrower"), the Subsidiaries (as
defined below) of the Borrower listed on the signature pages hereto as
Guarantors, as debtors and debtors in possession under chapter 11 of the
Bankruptcy Code (the "Guarantors") and ICO INVESTMENT CORP., BLUE RIVER CAPITAL
LLC, IRIDIUM INVESTORS, LLC, LOEB PARTNERS CORP. and COLUMBIA VENTURES
CORPORATION (collectively, the "Lenders").

                              W I T N E S S E T H:

                  WHEREAS, on February 15, 2002 (the "Petition Date"), the
Borrower and the Guarantors each filed a voluntary petition for relief
commencing a reorganization case under chapter 11 of the Bankruptcy Code (as
defined herein) with the United States Bankruptcy Court for the District of
Delaware;

                  WHEREAS, in connection with the consummation of this
Agreement, the Borrower and the Guarantors are continuing to operate their
respective businesses and manage their respective properties as debtors and
debtors in possession under sections 1107 and 1108 of the Bankruptcy Code;

                  WHEREAS, an immediate and ongoing need exists for the Borrower
to obtain additional funds to continue the operation of its and its
Subsidiaries' respective businesses and, accordingly, the Borrower has requested
that the Lenders provide a secured super-priority debtor in possession credit
facility;

                  WHEREAS, the Lenders are willing to make funds available to
the Borrower pursuant to sections 364(c)(1), (c)(2) and (c)(3) of the Bankruptcy
Code, but only for the purposes and upon the terms and subject to the conditions
set forth in this Agreement; and

                  WHEREAS, each of the Guarantors has agreed to guaranty the
obligations of the Borrower hereunder and the Borrower and the Guarantors have
agreed to secure their obligations to the Lenders in connection with such
facility with, inter alia, security interests in, and liens on, substantially
all of their respective property and assets, whether real or personal, tangible
or intangible, as provided herein;

                  NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreement, hereinafter contained, the parties hereto agree
as follows:

                                   ARTICLE I

                        DEFINITIONS AND ACCOUNTING TERMS

                  Section 1.1 Defined Terms. As used in this Agreement, the
following terms have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):

                  "Account" has the meaning specified in Article 9 of the UCC.



                  "Account Debtor" has the meaning specified in Article 9 of the
UCC.

                  "Accounts Receivable" means all rights to payment, whether or
not earned by performance, for goods or other property sold, leased, licensed,
assigned or otherwise disposed of, or services rendered or to be rendered,
including, without limitation, all such rights constituting or evidenced by any
Account, Chattel Paper, Instrument, General Intangible or Investment Property,
together with all of the Grantor's right, title and interest, if any, in any
goods or other property giving rise to such right to payment, including any
rights to stoppage in transit, replevin, reclamation and resales, and all
related security interests, Liens and pledges, whether voluntary or involuntary,
in each case whether now existing or owned or hereafter arising or acquired, and
all Collateral Support and Supporting Obligations related to the foregoing and
all Accounts Receivable Records.

                  "Accounts Receivable Records" means (a) all original copies of
all documents, instruments or other writings or electronic records or other
Records evidencing the Accounts Receivable, (b) all books, correspondence,
credit or other files, Records, ledger sheets or cards, invoices, and other
papers relating to Accounts Receivable, including, without limitation, all
tapes, cards, computer tapes, computer discs, computer runs, record keeping
systems and other papers and documents relating to the Accounts Receivable,
whether in the possession or under the control of Grantor or any computer bureau
or agent from time to time acting for Grantor or otherwise, (c) all evidences of
the filing of financing statements and the registration of other instruments in
connection therewith, and amendments, supplements or other modifications
thereto, notices to other creditors or Lenders, and certificates,
acknowledgments, or other writings, including, without limitation, lien search
reports, from filing or other registration officers, (d) all credit information,
reports and memoranda relating thereto and (e) all other written, electronic or
other non-written forms of information related in any way to the foregoing or
any Accounts Receivable.

                  "Administrative Agent" means Blue River Capital LLC in its
capacity as Administrative Agent under the Loan Documents.

                  "Administrative Expenses" means any right to payment
constituting a cost or expense of administration of any of the Reorganization
Cases allowed under sections 503(b) and 507(a)(1) of the Bankruptcy Code and
fees required to be paid to the Office of the United States Trustee under
section 1930(a), title 28, United States Code.

                  "Affiliate" means, with respect to any Person, any other
Person which, directly or indirectly, controls, is controlled by or is under
common control with such Person, each officer, director, general partner or
joint venturer of such Person, and each Person who is the beneficial owner of 5%
or more of any class of voting Stock of such Person. For the purposes of this
definition, "control" means the possession of the power to direct or cause the
direction of management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.

                  "Agent-Related Person" means the Administrative Agent and its
officers, directors, employees and agents.

                                       2



                  "Aggregate Commitments" means the total of all Commitments of
all the Lenders.

                  "Agreement" means this Secured Super-Priority Debtor In
Possession Credit Agreement.

                  "Approved Budget" means that certain operating budget of the
Borrower and the Guarantors for the period ending April 27, 2003, attached
hereto as Exhibit B and each supplemental budget approved by the Required
Lenders (each an "Approved Budget") which supplemental budgets will only be
submitted by Borrower to the extent funds remain available for borrowing.

                  "Avoidance Actions" means any Claim or cause of action of any
Grantor arising under chapter 5 of the Bankruptcy Code and any proceeds, monies
or property of any kind recovered therefrom.

                  "Bankruptcy Code" means title 11, United State Code, as
amended from time to time.

                  "Bankruptcy Court" means the United States Bankruptcy Court
for the District of Delaware and any other court having competent jurisdiction
over the Reorganization Cases.

                  "Bankruptcy Rules" means the Federal Rules of Bankruptcy
Procedure and the Local Rules of the Bankruptcy Court, each as amended from time
to time.

                  "Big LEO License" means the FCC license issued to LQP, and
currently held by L/Q Licensee, to provide mobile satellite services in the
1610-1626.5/2483.5-2500 MHz bands.

                  "Borrower" has the meaning specified in the preamble to this
Agreement.

                  "Borrowing" means a Term Loan Borrowing.

                  "Business Day" means a day of the year on which banks are not
required or authorized to close in New York, New York.

                  "Capital Lease Obligations" means, as to any Person, the
capitalized amount of all obligations of such Person or any of its Subsidiaries
under any lease of property by such Person as lessee which would be accounted
for as a capital lease on a balance sheet of such Person in conformity with GAAP
(a "Capital Lease").

                  "Chattel Paper" has the meaning specified in Article 9 of the
UCC.

                  "Claim" has the meaning specified in section 101(5) of the
Bankruptcy Code.

                  "Closing Date" means the first date on which all of the
conditions precedent specified in Section 3.2 are satisfied.

                                       3



                  "Code" means the Internal Revenue Code of 1986 (or any
successor legislation thereto), as amended from time to time.

                  "Collateral" has the meaning specified in Section 9.1.

                  "Collateral Support" means all property (real or personal)
assigned, hypothecated or otherwise securing any of items (i) through (xxi) in
the definition of Collateral set forth in Section 9.1 and includes any security
agreement or other agreement granting a Lien or security interest in such real
or personal property.

                  "Commitment" means, as to each Lender, its obligation to make
Term Loans to the Borrower pursuant to Section 2.1. The Commitment of each of
the Lenders is $2,000,000.

                  "Commitment Fee" has the meaning specified in Section 7.3.

                  "Committee" means the official statutory committee of
unsecured creditors appointed in the Reorganization Cases pursuant to section
1102 of the Bankruptcy Code.

                  "Continuing Satellite Anomalous Event" means, with respect to
any particular satellite in the Borrower's satellite constellation, one or more
satellite anomalous events that cause such satellite to remain out of service
for at least 30 consecutive calendar days.

                  "Contracts" means, with respect to any Grantor, any and all
"contracts", as such term is defined in Article 1 of the UCC, of such Grantor.

                  "Contractual Obligation" means, with respect to a Person, any
obligation, agreement, undertaking or similar provision of any security issued
by such Person or of any agreement, undertaking, contract, lease, indenture,
mortgage, deed of trust or other instrument (excluding a Loan Document) to which
such Person is a party or by which it or any of its property is bound or to
which any of its properties is subject.

                  "Copyright" means (a) all copyrights arising under the laws of
the United States, any other country or any political subdivision thereof,
whether registered or unregistered and whether published or unpublished, all
registrations and recordings thereof, and all applications in connection
therewith, including all registrations, recordings and applications in the
United States Copyright Office or in any foreign counterparts thereof and (b)
the right to obtain all renewals thereof.

                  "Copyright Licenses" means any written agreement naming any
Grantor as licensor or licensee granting any right under any Copyright,
including the grant of rights to copy, publicly perform, create derivative
works, manufacture, distribute, exploit and sell materials derived from any
Copyright.

                  "Credit Party" means the Borrower, each Guarantor, LQP and
each other Person that grants a security interest in any property to secure the
Obligations.

                  "Default" means any event which with the passing of time or
the giving of notice or both would become an Event of Default.

                                       4



                  "Documents" has the meaning specified in Article 9 of the UCC.

                  "Dollars" and the sign "$" each mean the lawful money of the
United States of America.

                  "Domestic Subsidiary" means any Subsidiary of the Borrower
that is incorporated within the United States of America.

                  "Escrow Agreement" means that certain Escrow Agreement among
the Lenders, the Borrower, the Guarantors and Katten Muchin Zavis Rosenman, as
escrow agent, dated the date hereof.

                  "Effective Date" means the date upon which a Plan of
Reorganization becomes effective.

                  "Equipment" has the meaning specified in Article 9 of the UCC.

                  "ERISA" means the Employee Retirement Income Security Act of
1974 (or any successor legislation thereto), as amended from time to time.

                  "Event of Default" means any of the following events:

                  (a)      The Borrower shall fail to pay any principal of any
Loan or any interest on any Loan on the Maturity Date or within five (5)
Business Days after the same otherwise becomes due and payable; or

                  (b)      Any material representation or warranty made or
deemed made by any Credit Party in any Loan Document shall prove to have been
incorrect, false or misleading in any respect when made or deemed made; or

                  (c)      Any Credit Party shall fail to perform or observe (i)
any term, covenant or agreement contained in Article V or VI or (ii) any
material term, covenant or agreement contained in any other Loan Document and,
in either case, such failure shall remain unremedied for five (5) Business Days
after the earlier of the date on which (A) a Responsible Officer of the Borrower
or a Guarantor becomes aware of such failure or (B) written notice thereof shall
have been given to the Borrower or a Guarantor by the Lenders; or

                  (d)      Any of the Reorganization Cases shall be dismissed or
converted to a case under chapter 7 of the Bankruptcy Code or a trustee shall be
appointed in any of the Reorganization Cases; or

                  (e)      The Borrower shall cease operations and/or commence
liquidation or wind down of its operations provided that the timely filing of a
Section 363 Sale Motion shall not constitute an Event of Default under this
subparagraph (e); or

                  (f)      The Bankruptcy Court or any court of competent
jurisdiction shall have entered an order, which order is a Final Order,
amending, supplementing, vacating or otherwise modifying the Financing Order
without the consent of the Lenders; or

                                       5



                  (g)      The Borrower shall bring a motion before the
Bankruptcy Court to obtain additional financing or incur Indebtedness arising
from such additional financing that is secured by a Lien that is equal or senior
to any one or more Liens granted hereunder or hereafter granted to the Lenders
and such additional financings or Indebtedness is not contemplated to be used to
pay the Obligations in full; or

                  (h)      The Borrower or any Guarantor shall fail to file a
Plan of Reorganization and disclosure statement by April 30, 2003, provided
however that if Borrower and Guarantors file a Section 363 Sale Motion by April
30, 2003 and such Section 363 Sale closes within 40 days after the filing of
such motion, then Lenders shall not be entitled to exercise their rights and
remedies upon the failure of the Borrower and Guarantors to file a Plan of
Reorganization and disclosure statement during such 40-day period. If such
Section 363 Sale does not close within 40 days, Lenders may exercise their
rights and remedies as a result of such default; or

                  (i)      The Effective Date of the Plan of Reorganization of
Borrower or any Guarantor shall not have occurred by July 15, 2003.

                  "FCC" means the Federal Communications Commission.

                  "FCC Licenses" means the FCC licenses issued to the Borrower,
LQP or any of their respective Subsidiaries by the FCC and listed on Schedule 1.

                  "Final Order" means an order of the Bankruptcy Court entered
on the docket of the Clerk of the Bankruptcy Court, that is in effect and not
stayed, and as to which the time to appeal, petition for certiorari, or move for
reargument or rehearing has expired and as to which no appeal, petition for
certiorari or other proceedings for reargument or rehearing shall then be
pending or as to which any right to appeal, petition for certiorari, reargue or
rehear shall have been waived, or if an appeal, reargument, petition for
certiorari, or rehearing thereof has been sought, the order of the Bankruptcy
Court shall have been affirmed by the highest court to which the order was
appealed, from which the reargument or rehearing was sought, or certiorari has
been denied, and the time to take any further appeal, petition for certiorari or
move for reargument or rehearing shall have expired.

                  "Final Financing Order" means that certain Final Order issued
by the Bankruptcy Court pursuant to section 364 and other applicable provisions
of the Bankruptcy Code approving this Agreement and the other Loan Documents and
authorizing the incurrence by the Borrower and the Guarantors of the Obligations
and the other transactions hereunder, including the granting of the
super-priority status, the security interest and liens, and the payment of all
fees constituting Obligations hereunder, and authorizing the Lenders to exercise
their rights and remedies hereunder, and which is substantially in the form of
Exhibit C-1 and otherwise in form and substance satisfactory to the Required
Lenders. The Final Financing Order may not be amended or modified in any respect
without the prior written consent of the Required Lenders.

                  "Fiscal Quarter" means each of the three-month periods ending
on March 31, June 30, September 30 and December 31.

                                       6



                  "GAAP" means generally accepted accounting principles in the
United States of America as in effect from time to time set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and the statements and pronouncements
of the Financial Accounting Standards Board, or in such other statements by such
other entity as may be in general use by significant segments of the accounting
profession, which are applicable to the circumstances as of the date of
determination.

                  "General Intangible" has the meaning specified in Article 9 of
the UCC.

                  "Goods" has the meaning specified in Article 9 of the UCC.

                  "Governmental Authority" means any nation, sovereign or
government, any state or other political subdivision thereof and any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.

                  "Globalstar Canada Transaction" means the consummation of the
transaction whereby the Borrower, Globalstar Canada Satellite Co. or any of
their respective Subsidiaries exercises a right of first refusal to purchase
Canadian Satellite Communications Inc.'s interest in Globalstar Canada Holding
Co. under Shareholders' Agreements with respect to Globalstar Canada Holding Co.
and Globalstar Canada Co., each dated as of March 27, 1997.

                  "Grantor" means the Borrower and each Guarantor.

                  "Guarantor" has the meaning specified in the preamble hereto.

                  "Guaranty" means the guaranty of the Obligations of the
Borrower made by the Guarantors pursuant to Article VIII.

                  "Guaranty Obligation" means, as applied to any Person, any
direct or indirect liability, contingent or otherwise, of such Person with
respect to any Indebtedness of another Person, if the purpose or intent of such
Person in incurring the Guaranty Obligation is to provide assurance to the
obligee of such Indebtedness that such Indebtedness will be paid or discharged,
or that any agreement relating thereto will be complied with, or that any holder
of such Indebtedness will be protected (in whole or in part) against loss in
respect thereof, including (a) the direct or indirect guaranty, endorsement
(other than for collection or deposit in the ordinary course of business),
co-making, discounting with recourse or sale with recourse by such Person of
Indebtedness of another Person and (b) any liability of such Person for
Indebtedness of another Person through any agreement (contingent or otherwise)
(i) to purchase, repurchase or otherwise acquire such Indebtedness or any
security therefor, or to provide funds for the payment or discharge of such
Indebtedness (whether in the form of a loan, advance, stock purchase, capital
contribution or otherwise), (ii) to maintain the solvency or any balance sheet
item, level of income or financial condition of another Person, (iii) to make
take-or-pay or similar payments, if required, regardless of non-performance by
any other party or parties to an agreement, (iv) to purchase, sell or lease (as
lessor or lessee) property, or to purchase or sell services, primarily for the
purpose of enabling the debtor to make payment of such Indebtedness or to assure
the holder of such Indebtedness against loss, or (v) to supply funds to or in
any other manner invest in such other Person (including to pay for property or
services irrespective of whether such property is

                                       7



received or such services are rendered), if in the case of any agreement
described under subclauses (i), (ii), (iii), (iv) or (v) of clause (b) of this
sentence the primary purpose or intent thereof is as described in the preceding
sentence. The amount of any Guaranty Obligation shall be equal to the amount of
the Indebtedness so guaranteed or otherwise supported.

                  "Hedging Contracts" means all interest rate contracts, foreign
exchange contracts, currency swap or option agreements, forward contracts,
commodity swap, purchase or option agreements, other commodity price hedging
arrangements, and all other similar agreements or arrangements designed to alter
the risks of any Person arising from fluctuations in interest rates, currency
values or commodity prices.

                  "Indebtedness" of any Person means without duplication (a) all
indebtedness of such Person for borrowed money, all reimbursement and all other
obligations with respect to surety bonds, performance bonds, letters of credit
and bankers' acceptances, whether or not matured, and all indebtedness for the
deferred purchase price of property or services, other than trade payables
incurred in the ordinary course of business that are not overdue, (b) all
obligations of such Person evidenced by notes, bonds, debentures or similar
instruments or which bear interest, (c) all indebtedness of such Person created
or arising under any conditional sale or other title retention agreement with
respect to property acquired by such Person (even though the rights and remedies
of the seller or lender under such agreement in the event of default are limited
to repossession or sale of such property), (d) all Capital Lease Obligations of
such Person and the present value of future rental payments under all synthetic
leases, (e) all obligations of such Person to purchase, redeem, retire, defease
or otherwise acquire for value any Stock or Stock equivalents of such Person,
valued, in the case of redeemable preferred stock, at the greater of its
voluntary or involuntary liquidation preference plus accrued and unpaid
dividends, (f) all payments that such Person would have to make in the event of
an early termination on the date Indebtedness of such Person is being determined
in respect of Hedging Contracts of such Person and (g) all Indebtedness referred
to in clause (a), (b), (c), (d), (e) or (f) above secured by (or for which the
holder of such Indebtedness has an existing right, contingent or otherwise, to
be secured by) any Lien upon or in property (including, without limitation,
Accounts and General Intangibles) owned by such Person, even though such Person
has not assumed or become liable for the payment of such Indebtedness.

                  "Instrument" has the meaning specified in Article 9 of the UCC
other than instruments that constitute, or are a part of a group of writings
that constitute, Chattel Paper.

                  "Intellectual Property" means, collectively, all rights,
priorities and privileges of any Grantor relating to intellectual property,
whether arising under United States, multinational or foreign laws or otherwise,
including Copyrights, Copyright Licenses, Patents, Patent Licenses, Trademarks,
Trademark Licenses and trade secrets, and all rights to sue at law or in equity
for any infringement or other impairment thereof, including the right to receive
all proceeds and damages therefrom.

                  "Interest Payment Date" means the last Business Day of each
Fiscal Quarter during the term of this Agreement.

                                       8



                  "Interim Financing Order" means that certain order issued by
the Bankruptcy Court pursuant to section 364 and other applicable provisions of
the Bankruptcy Code approving this Agreement and the other Loan Documents on an
interim basis and authorizing the incurrence by the Borrower and the Guarantors
of the Obligations subject to a final hearing, and which is substantially in the
form of Exhibit C-2 and otherwise in form and substance satisfactory to the
Required Lenders. The Interim Financing Order may not be amended or modified in
any respect without the prior written consent of the Required Lenders.

                  "Interim Loans" means those Loans under the Term Loan
Commitment authorized in an Interim Financing Order.

                  "Inventory" has the meaning specified in Article 9 of the UCC,
wherever located.

                  "Investment Property" means, with respect to any Grantor, any
and all "investment property", as such term is defined in Article 9 of the UCC,
of such Grantor, wherever located.

                  "IRS" means the Internal Revenue Service of the United States
of America, or any successor thereto.

                  "L/Q Licensee" has the meaning specified in Section 3.2(c)(i).

                  "Lenders" has the meaning specified in the preamble to this
Agreement.

                  "Lien" means any mortgage, deed of trust, pledge,
hypothecation, assignment, charge, deposit arrangement, encumbrance, lien
(statutory or other), security interest or preference, priority or other
security agreement or preferential arrangement of any kind or nature whatsoever
intended to assure payment of any Indebtedness or other obligation, including,
without limitation, any conditional sale or other title retention agreement, the
interest of a lessor under a Capital Lease, any financing lease having
substantially the same economic effect as any of the foregoing, and the filing
of any financing statement under the UCC or comparable law of any jurisdiction,
naming the owner of the asset to which such Lien relates as debtor.

                  "Loan" means a Term Loan.

                  "Loan Documents" means, collectively, this Agreement, the
Notes, the LQP Pledge Agreement and each certificate, agreement or document
executed by the Borrower or any other Credit Party and delivered to the Lenders.

                  "Loral" has the meaning specified in Section 3.2(c)(ii).

                  "LQP" means Loral/QUALCOMM Partnership, L.P., a Delaware
limited partnership.

                  "LQP Pledge Agreement" means the Pledge Agreement dated as of
the date hereof between LQP, as pledgor, and the Lenders, as pledgee.

                                       9



                  "Material Adverse Effect" means any change, effect, event or
condition that has had or would reasonably be expected to have a material
adverse effect on the assets or operations of the Borrower and its Subsidiaries,
taken as a whole; provided, however, that the loss of satellite availability
shall not constitute a "Material Adverse Effect" unless, following the date
hereof, (i) more than two additional satellites in the Borrower's satellite
constellation shall have been declared "failed" or (ii) five or more additional
satellites in the Borrower's satellite constellation shall simultaneously be
experiencing Continuing Satellite Anomalous Events.

                  "Maturity Date" means the earliest to occur of the Effective
Date, the closing of a Section 363 Sale and July 15, 2003.

                  "Maximum Aggregate Adjustment Amount" has the meaning
specified in Section 2.2(a).

                  "Maximum Line Item Adjustment Amount" has the meaning
specified in Section 2.2(a).

                  "Notes" mean collectively, the Term Loan Notes and the PIK
Interest Notes.

                  "Notice of Borrowing" has the meaning specified in Section
2.2(a).

                  "Obligation" means the Loans and all other advances, debts,
liabilities, fees, obligations, covenants and duties of any kind and
description, now existing or hereafter arising, whether due or not due, absolute
or contingent, liquidated or unliquidated, direct or indirect, express or
implied, individually or jointly with others, howsoever evidenced or acquired
owing by the Borrower to the Lenders, arising under or pursuant to this
Agreement, the Escrow Agreement or any other Loan Document.

                  "Partnership" means any partnership in which any Credit Party
has an interest.

                  "Patents" means (a) all letters patent of the United States,
any other country or any political subdivision thereof and all reissues and
extensions thereof, (b) all applications for letters patent of the United States
or any other country and all divisions, continuations and continuations-in-part
thereof, and (c) all rights to obtain any reissues or extensions of the
foregoing.

                  "Patent License" means all agreements, whether written or
oral, providing for the grant by or to any Grantor of any right to manufacture,
use, import, sell or offer for sale any invention covered in whole or in part by
a Patent.

                  "Payment Intangible" has the meaning specified in Article 9 of
the UCC.

                  "Permitted Expenditures" means the cash expenditures set forth
in an Approved Budget. Any unused portion of Permitted Expenditures for any
given month may be carried over as additional Permitted Expenditures in the
immediately subsequent month.

                  "Permitted Liens" has the meaning specified in Section 6.1.

                                       10



                  "Person" means an individual, partnership, corporation
(including, without limitation, a business trust), joint stock company, estate,
trust, limited liability company, unincorporated association, joint venture or
other entity, or a Governmental Authority.

                  "Petition Date" has the meaning specified in the recitals
hereto.

                  "PIK Interest Note " means a promissory note of the Borrower,
payable to the order of any Lender, substantially in the form of Exhibit A-2,
evidencing the aggregate Indebtedness of the Borrower to such Lender resulting
from the capitalization of accrued interest payable on the Term Loans owing to
such Lender pursuant to Section 2.5(b).

                  "Plan of Reorganization" means a proposed plan or plans of
reorganization for the Borrower and the Guarantors whether filed with or
confirmed by order of the Bankruptcy Court that provides for payment in full of
all Obligations under this Agreement, including any Commitment Fee.

                  "Pledged Collateral" means, collectively, the Pledged Notes,
the Pledged Stock, the Pledged Partnership Interests, the Pledged LLC Interests,
any other Investment Property of any Grantor, all certificates or other
instruments representing any of the foregoing, all Security Entitlements of any
Grantor in respect of any of the foregoing, all dividends, interest
distributions, cash, warrants, rights, instruments and other property or
Proceeds from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of the foregoing. Pledged Collateral
may be General Intangibles or Investment Property.

                  "Pledged LLC Interests" means all of any Grantor's right,
title and interest as a member of any limited liability company and all of such
Grantor's right, title and interest in, to and under any limited liability
company agreement to which it is a party.

                  "Pledged Notes" means all right, title and interest of any
Grantor in the Instruments evidencing all Indebtedness owed to such Grantor
issued by the obligors named therein, and all interest, cash, Instruments and
other property or Proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such Indebtedness.

                  "Pledged Partnership Interests" means all of any Grantor's
right, title and interest as a limited and/or general partner in all
Partnerships and all of such Grantor's right, title and interest in, to and
under any partnership agreements to which it is a party.

                  "Pledged Stock" means the shares of Stock owned by each
Grantor (except Globaltel Joint Stock Company), including all shares of Stock
listed on Schedule 4.7; provided, however, that only the outstanding Stock of a
Subsidiary that is not a Domestic Subsidiary possessing up to but not exceeding
65% of the voting power of all classes of Stock of such controlled foreign
corporation entitled to vote shall be deemed to be pledged hereunder.

                  "Proceeds" has the meaning specified in Article 9 of the UCC.

                  "Pro Rata Share" means, with respect to each Lender at any
time, a fraction (expressed as a percentage, carried out to the fourth decimal
place), the numerator of which is the

                                       11



amount of the Commitment of such Lender and the denominator of which is the
amount of the Aggregate Commitments.

                  "Real Property" means all of those plots, pieces or parcels of
land now owned or hereafter acquired by the Borrower or any of its Subsidiaries
(the "Land"), together with the right, title and interest of the Borrower, if
any, in and to the streets, the land lying in the bed of any streets, roads or
avenues, opened or proposed, in front of, the air space and development rights
pertaining to the Land and the right to use such air space and development
rights, all rights of way, privileges, liberties, tenements, hereditaments and
appurtenances belonging or in any way appertaining thereto, all fixtures, all
easements now or hereafter benefiting the Land and all royalties and rights
appertaining to the use and enjoyment of the Land, including, without
limitation, all alley, vault, drainage, mineral, water, oil and gas rights,
together with all of the buildings and other improvements now or hereafter
erected on the Land, and any fixtures appurtenant thereto.

                  "Reorganization Cases" means the cases of the Borrower and the
Guarantors pursuant to chapter 11 of the Bankruptcy Code pending in the
Bankruptcy Court.

                  "Required Lenders" means, as of any date of determination, the
Lenders having a majority of the Aggregate Commitments.

                  "Requirement of Law" means, as to any Person, the certificate
of incorporation and by-laws or other organizational or governing documents of
such Person, and all federal, state and local laws, rules and regulations, and
all orders, judgments, decrees or other determinations of any Governmental
Authority or arbitrator, applicable to or binding upon such Person or any of its
property or to which such Person or any of its property is subject.

                  "Responsible Officer" means, with respect to any Person, any
of the principal executive officers, managing members or general partners of
such Person but in any event, with respect to financial matters, the chief
financial officer, treasurer or controller of such Person.

                  "Section 363 Sale Motion" means a motion for the sale of all
or substantially all of the assets of the Borrower pursuant to Section 363 of
the Bankruptcy Code which shall be reasonably acceptable to the Required Lenders
and the proceeds of which shall be sufficient to pay all Obligations under this
Agreement.

                  "Section 363 Sale" means a sale of all or substantially all of
the assets of the Borrower pursuant to Section 363 of the Bankruptcy Code.

                  "Securities Entitlement" has the meaning specified in Article
8 of the UCC.

                  "Standstill Period" has the meaning specified in Section 7.2.

                  "Stock" means shares of capital stock (whether denominated as
common stock or preferred stock), beneficial, partnership or membership
interests, participations or other equivalents (regardless of how designated) of
or in a corporation, partnership, limited liability company or equivalent
entity, whether voting or non-voting.

                                       12



                  "Strategic Agreements" means, collectively, (i) the Strategic
Agreement, dated as of March 23, 1994, between LQP and Airtouch Communications,
(ii) the Memorandum of Understanding - U.S. Government and Aviation dated
November 1999 between Globalstar USA, Inc. ("GUSA") and LQP, and (iii) the
Globalstar Service Reseller Agreement entered into as of April 1, 2000, between,
GUSA and Government Services, LLC.

                  "Subordination Cap" has the meaning specified in the
definition of Wind-Down Funds in this Section 1.1.

                  "Subsidiary" means, with respect to any Person, any
corporation, partnership or other business entity of which an aggregate of 50%
or more of the outstanding Stock having ordinary voting power to elect a
majority of the board of directors, managers, trustees or other controlling
persons, is, at the time, directly or indirectly, owned or controlled by such
Person and/or one or more Subsidiaries of such Person (irrespective of whether,
at the time, Stock of any other class or classes of such entity shall have or
might have voting power by reason of the happening of any contingency). As used
herein, unless the context requires otherwise, "Subsidiary" means a direct or
indirect Subsidiary of the Borrower.

                  "Supporting Obligations" has the meaning specified in Article
9 of the UCC.

                  "Taxes" has the meaning specified in Section 2.8(a).

                  "Term Loan" has the meaning specified in Section 2.1.

                  "Term Loan Borrowing" means a borrowing consisting of Term
Loans made on the same day.

                  "Term Loan Commitment" means the Commitment of Lenders to loan
up to a maximum aggregate principal amount of $10,000,000 to Borrower on the
terms provided herein.

                  "Term Loan Draw Conditions" means all of the conditions
precedent to the obligation of the Lenders to make Term Loans set forth in
Section 3.1 and Section 3.2.

                  "Term Loan Note" means a promissory note of the Borrower,
payable to the order of any Lender in a principal amount equal to the amount of
such Lender's Term Loan Commitment, substantially in the form of Exhibit A-1,
evidencing the aggregate Indebtedness of the Borrower to such Lender resulting
from the Term Loans owing to such Lender.

                  "Trademarks" means (a) all trademarks, trade names, corporate
names, company names, business names, fictitious business names, trade styles,
service marks, logos and other source or business identifiers, and all goodwill
associated therewith, now existing or hereafter adopted or acquired, all
registrations and recordings thereof; and all applications in connection
therewith, whether in the United States Patent and Trademark Office or in any
similar office or agency of the United States, any State thereof or any other
country or any political subdivision thereof, or otherwise, and all common-law
rights related thereto, and (b) the right to obtain all renewals thereof.

                                       13



                  "Trademark License" means any agreement, whether written or
oral, providing for the grant by or to any Grantor of any right to use any
Trademark.

                  "UCC" means the Uniform Commercial Code as the same may, from
time to time, be in effect in the State of New York.

                  "Wind-Down Budget" means that certain Wind-Down Budget dated
February 20, 2003 provided by Borrower to Lenders.

                  "Wind-Down Costs" means the Administrative Expenses and
wind-down costs to liquidate Borrower and Guarantors set forth in the Wind-Down
Budget; provided, however, that the wind-down costs listed under the "Nonlabor
Costs" heading in the Wind-Down Budget may increase by an amount up to $500,000
so long as the wind-down costs under the "Working Capital" heading in the
Wind-Down Budget decrease by a like amount and vice-versa; provided further,
however, notwithstanding anything to the contrary in the Wind-Down Budget,
Wind-Down Costs do not include the fees, costs and expenses of investigating,
pursuing and prosecuting Avoidance Actions.

                  "Wind-Down Funds" means sum of (i) the amount of cash-on-hand
of the Borrower and its wholly-owned Subsidiaries as of the date of entry of the
Interim Financing Order, (ii) the "Prepaids, Deposits and Retainers" in the
amount of $1,178,000 identified in the Wind-Down Budget, (iii) when available,
the recovery of the payments on account of the 2 GHz contract with Space
Systems/Loral, Inc. (the "Loral Refund"), and (iv) when available, the proceeds
from the settlement with Elsacom S.p.A. and/or its affiliates as described in
the related motion filed by the Borrower and the Guarantors filed with the
Bankruptcy Court on January 22, 2003, that shall be available to pay the
Wind-Down Costs up to a maximum amount of $15,000,000 (the "Subordination Cap").
Upon the entry of the Interim Financing Order (i) the Borrower shall notify the
Administrative Agent in writing of the amount of the cash-on-hand constituting
Wind-Down Funds and (ii) such cash-on-hand constituting the Wind-Down Funds will
be segregated from other cash of the Borrower. To the extent the Borrower
receives the Loral Refund or the Elsacom settlement proceeds such Wind-Down
Funds will also be segregated. If the Borrower pays non-recurring Wind-Down
Costs (i.e., items of a type within the Wind-Down Budget not projected to recur
in an Approved Budget prior to the Maturity Date) from funds other than the
Wind-Down Funds, including from funds obtained through the operation of the
Borrower's business, the Subordination Cap will be reduced, dollar for dollar,
for the Wind-Down Costs so paid. If the Borrower pays recurring Wind-Down Costs
(i.e., items of a type within the Wind-Down Budget, including professional fees,
projected to recur in an Approved Budget prior to the Maturity Date), from funds
other than the Wind-Down Funds, including, without limitation, by virtue of the
last sentence of Section 2.2(a) of this Agreement, such payments will not reduce
the Subordination Cap.

                  Section 1.2 Computation of Time Periods. In this Agreement, in
the computation of periods of time from a specified date to a later specified
date, the word "from" means "from and including" and the words "to" and "until"
each mean "to but excluding" and the word "through" means "to and including."

                                       14



                  Section 1.3 Accounting Terms. All accounting terms not
specifically defined herein shall be construed in conformity with GAAP and all
accounting determinations required to be made pursuant hereto shall, unless
expressly otherwise provided herein, be made in conformity with GAAP.

                  Section 1.4 Certain Terms. (a) The words "herein," "hereof "
and "hereunder" and other words of similar import refer to this Agreement as a
whole, and not to any particular Article, Section, subsection or clause in this
Agreement.

                  (b)      References herein to an Exhibit, Schedule, Article,
Section, subsection or clause refer to the appropriate Exhibit or Schedule to,
or Article, Section, subsection or clause in this Agreement.

                  (c)      Each agreement defined in this Article I shall
include all appendices, exhibits and schedules thereto and any references in
this Agreement to such agreement shall be to such agreement as so amended,
restated, supplemented or modified from time to time.

                  (d)      References in this Agreement to any statute shall be
to such statute as amended or modified and in effect at the time any such
reference is operative.

                  (e)      The terms "Lender" and "Administrative Agent" include
their respective successors and each permitted assignee of such Lenders who
becomes a party hereto pursuant to Section 10.14.

                  (f)      Terms not otherwise defined herein and defined in the
UCC are used herein with the meanings specified in the UCC.

                                   ARTICLE II

                         AMOUNTS AND TERMS OF THE LOANS

                  Section 2.1 The Term Loans.

                  (a)      Subject to the terms and conditions set forth herein,
each Lender severally agrees to make term loans (each such loan, a "Term Loan")
to the Borrower from time to time, on any Business Day during the period from
the date of satisfaction or waiver of all Term Loan Draw Conditions until the
Maturity Date in an aggregate principal amount not to exceed such Lender's
Commitment; provided, however, that after giving effect to any borrowing, (i)
the total outstanding Term Loans shall not exceed the Aggregate Commitments and
(ii) the Aggregate Term Loans of any Lender shall not exceed such Lender's
Commitment. The Aggregate Commitments will be held in an account by Katten
Muchin Zavis Rosenman pursuant to an escrow agreement reasonably satisfactory to
the Administrative Agent, the Borrower and Katten Muchin Zavis Rosenman. The
Lenders may not withdraw funds deposited in such account after the date of entry
of an Interim Financing Order; provided, however, that the Administrative Agent
may return any unused portion of the Aggregate Commitment to the Lenders at the
Maturity Date or at the direction of the Required Lenders prior to the Maturity
Date upon termination of the Term Loan Commitment or termination of the
Agreement under the terms of this Agreement. Borrower and Guarantors agree that,
notwithstanding Katten Muchin Zavis

                                       15



Rosenman's role as escrow agent, Katten Muchin Zavis Rosenman may continue to
represent the Administrative Agent and the Lenders in this transaction in
connection with this Agreement, including the enforcement of rights and remedies
of the Administrative Agent and the Lenders.

                  (b)      The Term Loans shall be evidenced by the Term Loan
Notes.

                  Section 2.2 Making the Loans.

                  (a)      Each Term Loan Borrowing (other than with respect to
the initial Borrowing made hereunder) shall be made on notice, given by the
Borrower to Administrative Agent not later than 11:00 a.m. (New York City time)
at least two (2) Business Days prior to the proposed Term Loan Borrowing. Each
such notice (a "Notice of Borrowing") shall be in substantially the form of
Exhibit D, which Notice of Borrowing shall specify (i) the date of the requested
Borrowing, (ii) the amount of such Borrowing, and (iii) the Permitted
Expenditures to be paid with the proceeds of such Borrowing. In connection with
submission of a Notice of Borrowing, the Borrower may request one or more
modifications to an Approved Budget, provided that the Permitted Expenditures
set forth in such Approved Budget may be adjusted by (x) an amount equal to 10%
of such Permitted Expenditures in the aggregate (the "Maximum Aggregate
Adjustment Amount") (provided that no single line item for Permitted
Expenditures in the Approved Budget may be adjusted by an amount in excess of
50% of the Maximum Aggregate Adjustment Amount (the Maximum Line Item Adjusted
Amount)), plus (y) the amount by which the actual cash revenues, including user
terminal and other receipts, exceed the forecasted cash revenue set forth in the
Approved Budget, without the written consent of the Required Lenders.

                  (b)      Each Term Loan Borrowing shall be in an aggregate
amount of the lesser of $2,000,000 and the remaining Aggregate Commitment and no
more than one Term Loan Borrowing shall be made during any 15 day period;
provided, however, that any Interim Loans pursuant to an Interim Financing Order
shall be limited to $4,000,000 in the aggregate.

                  (c)      Each Notice of Borrowing shall be irrevocable and
binding on the Borrower.

                  Section 2.3 Repayment. The Borrower shall repay the entire
unpaid principal amount of the Term Loans and all other outstanding Obligations
on the Maturity Date.

                  Section 2.4 Prepayments. (a) The Borrower shall have no right
to prepay the principal amount of any Term Loan other than as provided in this
Section 2.4.

                  (b)      The Borrower may, upon at least three Business Days'
prior notice to the Administrative Agent stating the proposed date and aggregate
principal amount of the prepayment, prepay the outstanding principal amount of
the Loans in whole or in part, together with accrued interest to the date of
such prepayment on the principal amount prepaid; provided, however, that each
partial prepayment shall be in an aggregate principal amount not less than
$250,000 or integral multiples of $50,000 in excess thereof. Upon the giving of
such notice of prepayment, the principal amount of the Loans specified to be
prepaid shall become due and

                                       16



payable on the date specified for such prepayment. Any such prepayment of a Loan
shall result in a permanent reduction in the Commitment.

                  Section 2.5 Interest. (a) All Loans and the outstanding amount
of all other Obligations shall bear interest, in the case of Loans, on the
unpaid principal amount thereof from the date such Loans are made and, in the
case of such other Obligations, from the date such other Obligations are due
and payable until, in all cases, paid in full, at a rate equal to 10% per annum.

                  (b)      Interest accrued on the Loans shall be capitalized on
each Interest Payment Date and added to the outstanding principal amount of the
Loans, which capitalized interest shall be evidenced by the PIK Interest Notes.
Each Lender is hereby authorized to endorse on the grid attached to such
Lender's PIK Interest Note the amount of interest capitalized and evidenced by
such Lender's PIK Interest Note.

                  Section 2.6 Payments and Computations. (a) The Borrower shall
make each payment hereunder and under the Notes not later than 1:00 P.M. (New
York City time) on the day when due, in Dollars, to the Administrative Agent at
the address set forth in Section 10.2 in immediately available funds without
set-off or counterclaim. The Administrative Agent shall disburse any such
payment to the Lenders as provided in Section 11.10.

                  (b)      All computations of interest shall be on the basis of
a year of 365 days for the actual number of days occurring in the period for
which such interest is payable.

                  (c)      Whenever any payment hereunder or under the Notes
shall be stated to be due on a day other than a Business Day, such payment shall
be made on the next succeeding Business Day, and such extension of time shall in
such case be included in the computation of payment of interest.

                  (d)      If a Final Financing Order is not entered and/or the
conditions set forth in Section 3.2 are not satisfied or waived by the Lenders
on or before March 7, 2003, the Borrower shall repay any outstanding Obligations
from the Wind-Down Funds within one Business Day thereafter.

                  Section 2.7 Application of Payments. All payments (including
prepayments) on the Loans or any other Obligations (other than the
capitalization of interest as set forth in Section 2.5(b)) shall be made to the
Administrative Agent for application against the Obligations as follows
(regardless of how the Lenders may treat such payments for purposes of their
own accounting), in each case in proportion to each Lender's Pro Rata Share:
first to then due and outstanding fees, expenses or other charges of the
Lenders under this Agreement or any of the other Loan Documents to the extent
payable by the Borrower; second to then due interest on any principal amount of
Loans prepaid, if any; third to the principal balance of the Term Loans
evidenced by the PIK Interest Notes; and fourth to the principal balance of the
Term Loans.

                  Section 2.8 Taxes. (a) Any and all payments by the Borrower
under each Loan Document shall be made free and clear of and without deduction
for any and all present or future taxes, levies, imposts, deductions, charges
or withholdings, and all liabilities with respect thereto, excluding, in the
case of each Lender, taxes measured by its net income, and franchise taxes

                                       17



imposed on it, by the jurisdiction under the laws of which such Lender is
organized or any political subdivision thereof (all such non-excluded taxes,
levies, imposts, deductions, charges, withholdings and liabilities being
hereinafter referred to as "Taxes"). If the Borrower shall be required by law to
deduct any Taxes from or in respect of any sum payable hereunder to any Lender
(i) the sum payable shall be increased as may be necessary so that after making
all required deductions (including, without limitation, deductions applicable to
additional sums payable under this Section 2.8) such Lender receives an amount
equal to the sum they would have received had no such deductions been made, (ii)
the Borrower shall make such deductions, (iii) the Borrower shall pay the full
amount deducted to the relevant taxing authority or other authority in
accordance with applicable law and (iv) the Borrower shall deliver to such
Lender evidence of such payment to the relevant taxation or other authority.

                  (b)      In addition, the Borrower agrees to pay any present
or future stamp or documentary taxes or any other excise or property taxes,
charges or similar levies of the United States or any political subdivision
thereof or any applicable foreign jurisdiction which arise from any payment
made under any Loan Document or, from the execution, delivery or registration
of, or otherwise with respect to, any Loan Document.

                                   ARTICLE III

                              CONDITIONS OF LENDING

                  Section 3.1 Conditions Precedent to Interim Loans. The
obligation of each Lender to make the Interim Loans requested to be made by it
on an interim basis pursuant to an Interim Financing Order is subject to the
satisfaction of all the following conditions precedent:

                  (a)      Financing Order and Bankruptcy Court Proceedings. The
Interim Financing Order shall have been entered by the Bankruptcy Court on or
before February 25, 2003, and any or all provisions of such order shall not have
been stayed or vacated.

                  (b)      Certain Documents. The Administrative Agent shall
have received the following documents:

                           (i)      On or before February 25, 2003, this
         Agreement, duly executed and delivered by the Borrower and each
         Guarantor;

                           (ii)     On or before February 25, 2003, the Notes,
         duly executed and delivered by the Borrower; and

                           (iii)    On the date of each Term Loan Borrowing, a
         certificate, signed by a Responsible Officer of each Credit Party
         except LQP, stating that as of each such date each of the conditions
         specified in Sections 3.3(a), (b) and (c) has been satisfied.

                  Section 3.2 Conditions Precedent to Term Loans Under Final
Financing Order. The obligation of each Lender to make the Loans requested to be
made by it pursuant to the Term Loan Commitment on the Closing Date is subject
to the satisfaction of all the following conditions precedent:

                                       18



                  (a)      Financing Order and Bankruptcy Court Proceedings. The
Final Financing Order shall have been entered by the Bankruptcy Court on or
before March 7, 2003 and any or all provisions of such order shall not have been
stayed or vacated.

                  (b)      Certain Documents. The Administrative Agent shall
have received the following documents:

                           (i)      On or before March 7, 2003, this Agreement,
         duly executed and delivered by the Borrower and each Guarantor;

                           (ii)     On or before March 7, 2003, the Notes, duly
         executed and delivered by the Borrower;

                           (iii)    On or before March 7, 2003, the LQP Pledge
         Agreement, duly executed and delivered by LQP, in form and substance
         satisfactory to the Lenders; and

                           (iv)     On the date of each Term Loan Borrowing, a
         certificate, signed by a Responsible Officer of each Credit Party,
         stating that as of each such date each of the conditions specified in
         Sections 3.3(a), (b) and (c) has been satisfied.

                  (c)      Other Actions.

                           (i)      On or before March 7, 2003, the United
         States Bankruptcy Court for the District of Delaware having
         jurisdiction over the cases of LQP and certain of its Affiliates shall
         have entered an order, in form and substance reasonably satisfactory to
         the Required Lenders, approving LQP's pledge of its ownership interest
         in the outstanding Stock of L/Q Licensee, Inc. ("L/Q Licensee")
         pursuant to the LQP Pledge Agreement.

                           (ii)     On or before March 7, 2003, the Lenders
         shall have received satisfactory evidence of an agreement between the
         Borrower and Loral Space & Communications Ltd. ("Loral"), which
         agreement may be in the form of an executed term sheet signed by the
         Borrower, the Committee and Loral, on terms and conditions reasonably
         satisfactory to the Required Lenders, with respect to the following:

                           (A)      the delivery of eight ground spare
         satellites to the Borrower currently held by Loral;

                           (B)      the termination or modification, as the case
         may be, of each of the Strategic Agreements;

                           (C)      the transfer by L/Q Licensee to the Borrower
         of the Big LEO License and all rights thereunder; and

                           (D)      the transfer by Loral to the Borrower of all
         of its ownership interest in the Stock of all entities owning or
         operating the Borrower's gateway and operations in Canada and the
         treatment of the Indebtedness owed to Loral by such entities in a
         manner reasonably satisfactory to the Lenders.

                                       19



                  Section 3.3 Conditions Precedent to Each Loan. The obligation
of each Lender to make any Loan on any date (including the Closing Date) shall
be subject to the satisfaction of all of the following conditions precedent:

                  (a)      The representations and warranties set forth in
Article IV and in the other Loan Documents shall be true and correct on and as
of such date as though made on and as of such date other than any such
representations and warranties that, by their terms, refer to an earlier date;

                  (b)      The making of the Loans on such date shall not
violate any Requirement of Law and is not subject to any stay or injunction,
whether temporary, preliminary or permanent;

                  (c)      No Default or Event of Default shall have occurred
and be continuing; and

                  (d)      Each of the Term Loan Draw Conditions in Section 3.1
or 3.2 hereof, as the case may be, shall have been satisfied or waived by the
Required Lenders.

                                   ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES

                  To induce the Lenders to enter into this Agreement, the
Borrower and each Guarantor represents and warrants to the Lenders that on the
Closing Date:

                  Section 4.1 Corporate Existence: Compliance with Law. (a) The
Borrower is a limited partnership duly organized, validly existing and in good
standing under the laws of the State of Delaware. Each of the Borrower's
Subsidiaries that is (i) a corporation is duly incorporated, validly existing
and in good standing under the laws of the jurisdiction of its incorporation,
(ii) a limited liability company is duly organized, validly existing and in good
standing under the jurisdiction of its formation and (iii) a limited partnership
is duly organized and validly existing under the laws of the jurisdiction of its
formation.

                  (b)      Except as set forth in Schedule 4.1, each of the
Borrower and its Subsidiaries (i) is duly qualified or licensed as a foreign
limited partnership, limited liability company or corporation, as applicable,
in each jurisdiction in which its ownership of properties or the conduct of its
business requires such qualification or licensing except for failures to be so
qualified or licensed which in the aggregate would not reasonably be expected
to have a Material Adverse Effect; (ii) has all requisite limited partnership,
limited liability company or corporate power, as applicable, and authority and
the legal right to own, pledge, mortgage and operate its properties, to lease
the property it operates under lease and to conduct its business as now or
currently proposed to be conducted; (iii) is in compliance with its certificate
of limited partnership and partnership agreement, certificate of formation of
limited liability company and limited liability company agreement, or
certificate of incorporation and by-laws, as applicable; (iv) is in compliance
with all other applicable Requirements of Law, except for such noncompliances
as in the aggregate would not reasonably be expected to have a Material Adverse
Effect and Requirements of Law that are stayed as a result of the commencement
of the

                                       20



Reorganization Cases; and (v) has made all necessary filings with, and has given
all necessary notices to, the FCC to the extent required for such ownership and
use with respect to the FCC Licenses, except for failures to file or give notice
which in the aggregate would not reasonably be expected to have a Material
Adverse Effect.

                  Section 4.2 Corporate Power: Authorization: Enforceable
Obligations. Except as set forth in Schedule 4.2:

                  (a)      The execution, delivery and performance by the
Borrower and each Guarantor of the Loan Documents to which it is a party and the
consummation of the transactions related to the financing contemplated hereby:

                           (i)      are within its limited partnership, limited
         liability company or corporate powers, as applicable;

                           (ii)     have been duly authorized by all necessary
         limited partnership, limited liability company or corporate action, as
         applicable;

                           (iii)    do not and will not (A) contravene its
         respective certificate of limited partnership or partnership agreement,
         certificate of limited liability company or limited liability company
         agreement, or certificate of incorporation or by-laws, as applicable,
         (B) upon entry of the Financing Order by the Bankruptcy Court violate
         any other applicable or enforceable Requirement of Law, or any
         applicable or enforceable order or decree of any Governmental Authority
         or arbitrator, (C) result in the breach of, or constitute a default
         under, or result in or permit the termination or acceleration of, any
         Contractual Obligation of the Borrower or any Guarantor, the effect of
         which will not be subject to the automatic stay pursuant to section 362
         of the Bankruptcy Code or (D) result in the creation or imposition of
         any Lien upon any of its property other than Liens in favor of the
         Lenders pursuant to the Loan Documents; and

                           (iv)     do not require the consent of, authorization
         by, approval of, notice to, acts by or filing or registration with, any
         Governmental Authority or any other Person, except as otherwise ordered
         by the Bankruptcy Court or required by the Bankruptcy Code or the
         Bankruptcy Rules.

                  (b)      This Agreement has been, and each of the other Loan
Documents will have been upon delivery thereof pursuant to Section 3.1 and
Section 3.2, duly executed and delivered for the benefit of or on behalf of each
Credit Party party thereto. This Agreement and the other Loan Documents will be,
when delivered pursuant hereto, the legal, valid and binding obligation of such
Credit Party, enforceable against it in accordance with its terms, the Interim
Financing Order and the Final Financing Order.

                  Section 4.3 Ownership of Subsidiaries. Set forth on Schedule
4.3 is a complete and accurate list, as of the date hereof, of all Subsidiaries
of the Borrower and, as to each such Subsidiary, the exact legal name,
jurisdiction of its incorporation or organization, taxpayer identification
number, the number of shares authorized (in the case of capital stock) and the
number and/or percentage of such outstanding shares of each such class or
partnership or limited

                                       21



liability company interests owned (directly or indirectly) by the Borrower, any
other Grantor or any other owner. Except as set forth in Schedule 4.3, no Stock
of any Subsidiary of the Borrower is subject to any outstanding option, warrant,
right of conversion or purchase or any similar right. All of the outstanding
Stock of each Subsidiary of the Borrower owned (directly or indirectly) by the
Borrower (including the Pledged Stock) has been duly and validly issued and is
owned by the Borrower or a Subsidiary of the Borrower, free and clear of all
Liens except those created under the Loan Documents and the Financing Order. All
of outstanding shares of Stock that are owned by the Borrower or each Subsidiary
that is a corporation are fully paid and nonassessable. All partnership or
limited liability company interests of each Subsidiary that is a limited
partnership or limited liability company, as the case may be, owned by the
Borrower are fully paid and nonassessable to the extent required as of the date
of this Agreement. Neither the Borrower nor any such Subsidiary is a party to,
or has knowledge of, any agreement restricting the transfer or hypothecation of
any Stock of any such Subsidiary, other than the Loan Documents.

                  Section 4.4 Secured, Super Priority Obligations. (a) On and
after (i) the entry of the Interim Financing Order with respect to the Interim
Loans and (ii) the entry of the Final Financing Order with respect to all Loans,
the provisions of the Loan Documents and the Interim Financing Order or Final
Financing Order, as the case may be, are effective to create in favor of the
Administrative Agent for the ratable benefit of the Lenders, legal, valid and
perfected Liens on and security interests (having the priority provided for
herein and in the Interim Financing Order and Final Financing Order) in all
right, title and interest in the Collateral, enforceable against each Grantor
that owns interest in such Collateral.

                  (b)      All Obligations and all other amounts owing by the
Borrower hereunder and under the other Loan Documents and by the Guarantors
under the Guaranty in respect thereof will be secured pursuant to section
364(c)(2) of the Bankruptcy Code, the Interim Financing Order and the Final
Financing Order, by a first priority perfected security interest in and Lien on,
and mortgage against, all of the Collateral and all Proceeds, rents and products
of all of the foregoing and all distributions thereon that are unencumbered as
of the date hereof.

                  (c)      All Obligations and all other amounts owing by the
Borrower hereunder and under the other Loan Documents and by the Guarantors
under the Guaranty in respect thereof will be secured pursuant to section
364(c)(3) of the Bankruptcy Code, the Interim Financing Order and the Final
Financing Order, by a perfected junior security interest in and Lien on, and
mortgage against, all of the Collateral that is subject to the Permitted Liens.

                  (d)      Pursuant to section 364(c)(1) of the Bankruptcy Code,
the Interim Financing Order and the Final Financing Order, all Obligations and
other amounts owing by the Borrower hereunder and under the other Loan Documents
and by Guarantors under the Guaranty in respect thereof at all times will
constitute allowed super-priority administrative expense claims in the
Reorganization Cases having priority over all administrative expenses of the
kind specified in sections 503(b) or 507(b) of the Bankruptcy Code and including
chapter 7 administrative expenses. The foregoing super-priority administrative
claims shall not be paid from the Avoidance Actions.

                  Section 4.5 Use of Proceeds. The proceeds of the Loans shall
be used solely by the Borrower to pay the costs and expenses of the
administration of the Reorganization Cases,

                                       22



including Permitted Expenditures and other obligations, as set forth in the
Approved Budget, and to pay such other obligations as contemplated by this
Agreement, ordered by the Bankruptcy Court or required by the Bankruptcy Code or
Bankruptcy Rules. The Permitted Expenditures set forth in the Approved Budget
may be adjusted in accordance with Section 2.2(a).

                  Section 4.6 Intellectual Property.

                  (a)      Except as set forth in Schedule 4.6, the Borrower and
its Subsidiaries own or license or otherwise have the right to use all
Intellectual Property that is necessary for the operation of their respective
businesses, without infringement upon or conflict with the rights of any other
Person with respect thereto, including all trade names associated with any
private label brands of the Borrower or any of its Subsidiaries, except where
the failure to so own or license or otherwise obtain the right to use,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect or where any such infringement or conflict, individually
or in the aggregate, would not reasonably be expected to have a Material Adverse
Effect. Except as set forth in Schedule 4.6, to the actual knowledge of the
Borrower following reasonable inquiry by its Responsible Officers, no slogan or
other advertising device, product, process, method, substance, part or
component, or other material now employed, or now contemplated to be employed,
in the ordinary course of business by the Borrower or any of its Subsidiaries
infringes upon or conflicts with any rights owned by any other Person, except
where any such infringement or conflict, individually or in the aggregate, would
not reasonably be expected to have a Material Adverse Effect, and no material
claim or litigation regarding any of the foregoing is pending or threatened.

                  (b)      Except as set forth on Schedule 4.6, no Grantor owns
any material Trademarks, Patents or Copyrights or has any material Trademarks,
Patents or Copyrights registered in, or the subject of pending applications in,
the United States Patent and Trademark Office or any similar office or agency in
any other country or any political subdivision thereof. The registrations for
the Collateral disclosed on Schedule 4.6 are valid and subsisting and in full
force and effect to the extent they are necessary for the operation of the
business of such Grantor in the reasonable business judgment of such Grantor and
material to the assets, properties, condition (financial or otherwise),
operations or prospects of the Borrower and its Subsidiaries taken as a whole,
except where the failure to maintain a valid and subsisting registration with
respect to such collateral, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect. None of the material
Patents or Copyrights necessary for the operation of the business of such
Grantor in the reasonable business judgment of such Grantor have been abandoned
or dedicated, except where such abandonment or dedication, individually or in
the aggregate, would not reasonably be expected to have a Material Adverse
Effect.

                  Section 4.7 Pledged Collateral.

                  (a)      The Pledged Stock, Pledged Partnership Interests and
Pledged LLC Interests pledged hereunder by each Grantor constitutes that
percentage of the issued and outstanding equity of all classes of each issuer
thereof as set forth on Schedule 4.7.

                  (b)      (i) All of the Pledged Stock, Pledged Partnership
Interests and Pledged LLC Interests have been duly and validly issued and (ii)
all of the Pledged Stock are fully paid

                                       23



and nonassessable and, to the extent required as of the date of this Agreement,
all of the Pledged Partnership Interests and Pledged LLC Interests are fully
paid and nonassessable.

                  (c)      Each of the Pledged Notes constitutes the legal,
valid and binding obligation of the obligor with respect thereto, enforceable in
accordance with its terns, subject to the effects of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally, and general equitable
principles (whether considered in a proceeding in equity or at law).

                  (d)      All Pledged Collateral consisting of certificated
securities has been delivered to the Administrative Agent on or prior to the
date of entry of an Interim Financing Order to the extent requested by the
Administrative Agent.

                  (e)      Other than the Pledged Partnership Interests and the
Pledged LLC Interests that constitute General Intangibles, there is no Pledged
Collateral other than that represented by certificated securities in the
possession of the Administrative Agent on the date of entry of an Interim
Financing Order.

                  (f)      No Person other than the Administrative Agent for the
ratable benefit of the Lenders has control within the meaning of the UCC over
any Investment Property of such Grantor.

                                    ARTICLE V

                              AFFIRMATIVE COVENANTS

                  As long as any of the Obligations or any portion of the
Commitment remains outstanding, unless the Lenders otherwise consent in writing,
the Borrower and each Guarantor agrees with the Lenders that:

                  Section 5.1 Compliance with Laws., Etc. The Borrower and each
Guarantor shall comply in all material respects with all applicable laws, rules,
regulations and orders, except where (a) the failure to comply would not
reasonably be expected to have a Material Adverse Effect or (b) compliance is
prohibited by, in conflict with, or excused by, the Bankruptcy Code, the
Bankruptcy Rules or order of the Bankruptcy Court.

                  Section 5.2 Maintenance of Existence. The Borrower and each
Guarantor shall maintain and preserve, in each case as in effect on the date
hereof, its respective existence as a corporation or other form of business
organization in good standing, as the case may be, and all material rights,
privileges, FCC Licenses, Patents, Patent Licenses, Copyrights, Copyright
Licenses, Trademarks, Trademark Licenses, trade names and franchises necessary
in the reasonable business judgment of such Credit Party to the operations of
the business of such Credit Party, except where the failure to do so results
solely from the commencement of the Reorganization Cases and except as permitted
in Section 6.3.

                  Section 5.3 Access. Subject to the provisions of Section 10.11
and any Non-Disclosure Agreements, the Borrower and each Guarantor shall, at any
reasonable time and from time to time, upon prior reasonable notice, permit the
Lenders, or any agents or representatives

                                       24



thereof; to (a) examine and make copies of and abstracts from its records and
books of account, (b) visit its properties and inspect the Collateral of such
Grantor, (c) discuss its affairs, finances and accounts with any of its
respective officers or directors and (d) communicate directly with its
independent certified public accountants.

                  Section 5.4 Keeping of Books. The Borrower and each Guarantor
shall keep proper books of record and account, in which full and correct entries
in all material respects shall be made of all of its financial transactions,
assets and business in conformity with GAAP and all Requirements of Law.

                  Section 5.5 Use of Proceeds. The Borrower shall use the entire
amount of the proceeds of the Loans as provided in Section 4.5; provided,
however, that the Borrower shall not use the proceeds from any Loans for any
purpose that is improper under the Bankruptcy Code.

                  Section 5.6 Further Assurances. The Borrower and each
Guarantor shall perform, make, execute and deliver all such additional and
further acts, things, deeds, occurrences and instruments as the Lenders may
reasonably require to document and consummate the transactions contemplated
hereby and to vest completely in and ensure the Lenders their respective rights
under this Agreement, the Notes and the other Loan Documents.

                  Section 5.7 Secured Indebtedness. To the knowledge of the
Borrower, there exists no indebtedness of the Borrower for borrowed money
secured by any Lien upon or in property owned by the Borrower as of the date
hereof.

                                   ARTICLE VI

                               NEGATIVE COVENANTS

                  As long as any of the Obligations or any portion of the
Commitment remains outstanding, without the written consent of the Lenders, the
Borrower and each Guarantor agrees with the Lenders that:

                  Section 6.1 Liens, Etc. Neither the Borrower nor any of it
Subsidiaries shall create or suffer to exist any Lien upon or with respect to
any of its properties, whether now owned or hereafter acquired, or assign any
right to receive income, except for (collectively, the following are hereinafter
referred to as the "Permitted Liens"): (a) Liens created pursuant to the Loan
Documents and authorized by the Financing Order; (b) purchase money Liens upon
or in any property hereinafter acquired by the Borrower or such Subsidiary in
the ordinary course of business not inconsistent with the Approved Budget to
secure the purchase price of such property or to secure Indebtedness incurred
solely for the purpose of financing the acquisition of such property, including
Liens to secure Capital Lease Obligations; (c) any Lien securing the renewal,
extension or refunding of any Indebtedness or other Obligation secured by any
Lien permitted by subsection (b) of this Section 6.1 without any increase in the
amount secured thereby or in the assets subject to such Lien; (d) Liens arising
by operation of law in favor of materialmen, mechanics, warehousemen, carriers,
lessors or other similar Persons incurred by the Borrower or such Subsidiary in
the ordinary course of business which secure its obligations to such Person; (e)
Liens securing taxes, assessments or governmental charges or levies, exclusive
of any such

                                       25



Liens asserted by the FCC; (f) Liens incurred or pledges and deposits made in
the ordinary course of business in connection with workers' compensation,
unemployment insurance, old-age pensions and other social security benefits; (g)
Liens securing the performance of statutory obligations, surety and appeal bonds
and other obligations of like nature, incurred as an incident to and in the
ordinary course of business, and judgment liens; (h) zoning restrictions,
easements, licenses, reservations, restrictions on the use of real property or
minor irregularities incident thereto which do not in the aggregate materially
detract from the value or use of the property or assets of the Borrower or such
Subsidiary or impair, in any material manner, the use of such property for the
purposes for which such property is held by the Borrower or such Subsidiary; and
(i) valid, perfected and enforceable Liens of record existing immediately prior
to the Petition Date.

                  Section 6.2 Indebtedness. Neither the Borrower nor any
Guarantor shall create or suffer to exist any Indebtedness except: (i) the
Obligations; (ii) Indebtedness outstanding on the Petition Date; (iii) current
liabilities in respect of taxes, assessments and governmental charges or levies
incurred, or Claims for labor, materials, inventory, services, supplies and
rentals incurred, or for goods or services purchased in the ordinary course of
business of the Borrower or such Guarantor; (iv) Indebtedness arising under any
performance bond reimbursement obligation entered into by the Borrower or such
Guarantor; (v) Indebtedness constituting Administrative Expenses or other
administrative expense obligations incurred in the Reorganization Cases, unless
disallowed by the Bankruptcy Court; (vi) Indebtedness otherwise permitted under
this Agreement; and (vii) Indebtedness secured by Permitted Liens.

                  Section 6.3 Mergers, Sale of Assets, Etc. Except in connection
with a Plan of Reorganization and except for the Globalstar Canada Transaction,
neither the Borrower nor any of its Subsidiaries shall (a) directly or
indirectly, by operation of law or otherwise, merge with, consolidate with,
acquire all or substantially all of the assets or Stock, or otherwise combine
with, any Person or form any Subsidiary, (b) sell, convey, transfer, lease or
otherwise dispose of any of its assets or Stock or any interest therein to any
Person, or permit or suffer any other Person to acquire any interest in any of
the assets of the Borrower or such Subsidiary, except (i) the sale or
disposition of Inventory or other assets in the ordinary course of business or
other tangible personal property which has become obsolete or is replaced in the
ordinary course of business, and (ii) the rejection or assumption and assignment
of executory contracts and unexpired leases pursuant to section 365 of the
Bankruptcy Code; provided that all necessary approvals, including the approval
of the Bankruptcy Court, have been obtained, or (c) enter into agreements in
respect of any of the foregoing prohibited transactions.

                  Section 6.4 Investments. Neither the Borrower nor any of its
Subsidiaries shall make or commit to make any loan, extension of credit or
capital contribution to, or purchase of any stock, bonds, notes, debentures or
other securities of, or make any other investment in any Person (all such
transactions being called "Investments") except:

                  (a)      Investments in cash equivalents;

                  (b)      Investments existing on the date hereof; or

                                       26



                  (c)      Investments made in any Person that are not
inconsistent with the Approved Budget.

                  Section 6.5 Restricted Payments. Neither the Borrower nor any
of its Subsidiaries shall, except to the extent not inconsistent with the
Approved Budget, (a) declare, pay or make or permit any Subsidiary to declare,
pay or make (i) any dividends or other distributions with respect to Stock or
rights to acquire Stock or any payment on account of such Stock, or (ii) any
payment of principal or payment of interest on account of any of its
Indebtedness incurred prior to the commencement of the Reorganization Cases,
except as otherwise ordered by the Bankruptcy Court, (b) set apart assets for a
sinking or any analogous fund for the purchase, redemption, or retirement or
other acquisition of, any shares of its Stock or rights to acquire Stock or any
of its Indebtedness or (c) purchase, defease, acquire, or redeem any of its
Indebtedness; provided that the Borrower may make required or permitted payments
or prepayments on the Loans.

                  Section 6.6 Transactions With Affiliates. Neither the Borrower
nor any of its Subsidiaries shall enter into any transaction, including any
purchase, sale, lease or exchange of property or the rendering of any service,
with any Affiliate or employee, except transactions that are (a) contemplated by
this Agreement or (b) in the ordinary course of the Borrower's or such
Subsidiary's business and are not inconsistent with the Approved Budget.

                  Section 6.7 Capital Expenditures. Neither the Borrower nor
any of its Subsidiaries shall make any capital expenditures inconsistent with
the Approved Budget.

                  Section 6.8 Amendment of Charter or Bylaws. Neither the
Borrower nor any of its Subsidiaries shall, except as set forth in the Plan of
Reorganization, amend its partnership agreement, certificate or articles of
incorporation or other equivalent organizational documents to revise, in any
material respect from their form on the date hereof.

                  Section 6.9 Prohibition on No Shop Clauses. Prior to the
selection of an investor pursuant to an auction of all or substantially all of
the Borrower's assets or for the right to make an investment in the Borrower
sanctioned and approved by the Bankruptcy Court, neither the Borrower nor any of
the Guarantors shall enter into any agreement or agree to any provision that
prohibits, or in any way limits, the ability of the Borrower or Guarantors to:
(a) negotiate with Lenders, any member or affiliate of Lenders or any other
Party with respect to investment in the Borrower and Guarantors or acquisition
of assets of the Borrower and Guarantors; (b) negotiate a plan of reorganization
with Lenders, or any of its members or affiliates; and (c) respond to
unsolicited offers from Lenders, any member or affiliate of Lenders or any other
Party. This Section 6.9 shall survive any payment or prepayment of the Loans.
Notwithstanding the foregoing, nothing in this Section 6.9 shall prohibit or
limit the Borrower or any Guarantor from including in the documents governing an
investment in, or acquisition of the assets of, the Borrower and the Guarantors
provisions that would prevent the Borrower and the Guarantors from soliciting
further offers so long as such provisions allow them to respond to unsolicited
offers and to terminate such investment or acquisition in order to accept a
transaction determined by the Borrower to be more favorable to the stakeholders
of the Borrower and the Guarantors, even if such termination would result in the
payment of a breakup fee and/or the reimbursement of expenses by the Borrower or
the Guarantors.

                                       27



                                   ARTICLE VII

                                   TERMINATION

                  Section 7.1 Termination; Acceleration. Upon the occurrence and
during the continuation of any Event of Default, without further order of,
application to, or action by, the Bankruptcy Court and without limiting any
other right or remedy, at the direction of the Required Lenders, the
Administrative Agent may by written notice to the Borrower and the Committee in
accordance with Section 10.2 (a) declare that all or any portion of the Term
Loan Commitment be terminated, whereupon the obligation of the Lenders to make
Loans shall immediately terminate, and (b) declare the Loans, the PIK Interest
Notes, all accrued interest thereon and all other amounts and Obligations
payable under this Agreement to be forthwith due and payable, whereupon the
Loans, the PIK Interest Notes, all such interest and all such amounts and
Obligations shall become and be forthwith due and payable, without presentment,
demand, protest or further notice of any kind, all of which are hereby expressly
waived by the Borrower.

                  Section 7.2 Standstill Period: Exercise of Remedies. Thirty
days (the "Standstill Period") following the Administrative Agent's written
notice of termination and acceleration given pursuant to Section 7.1, the
automatic stay provided in section 362 of the Bankruptcy Code shall be deemed
automatically vacated without further action or order of the Bankruptcy Court
and the Administrative Agent for the benefit of the Lenders shall be entitled to
exercise all of its rights and remedies under the Loan Documents and applicable
law, including, without limitation, all rights and remedies with respect to the
Collateral and the Guarantors; provided however that upon the occurrence of the
Maturity Date, the Standstill Period shall be five Business Days. The Lenders
shall not be required to make any Loans to Borrower under this Agreement during
the Standstill Period and Borrower shall not use the cash collateral (as that
term is defined in Section 363 of the Bankruptcy Code) of Lenders during the
Standstill Period, except for the Wind-Down Fund, as to which the Lenders' Liens
and super-priority claims are subordinated, provided however that the use of the
Wind-Down Funds during the Standstill Period for any purpose will result in a
dollar-for-dollar reduction in the Subordination Cap for any such funds so used.
The Administrative Agent shall have the right to seek an order of the Bankruptcy
Court on as little as one Business Day's notice to the Borrower and the
Committee, terminating the Standstill Period if the Required Lenders believe in
good faith that the Collateral and/or its value are in jeopardy.

                  Section 7.3 Commitment Fee. In consideration for Lenders'
agreement to give the Term Loan Commitment, except as provided in Section 7.4,
the Lenders shall be entitled to receive as a commitment fee (such amount, the
"Commitment Fee"): (1) upon the Effective Date of a Plan of Reorganization or
the first date distributions are made to unsecured creditors, if made other than
under Plan of Reorganization $250,000 (or under circumstances in Section 7.4
hereof, $125,000 at the time provided for in such Section 7.4) in cash or, if of
greater value, (2) a portion of the consideration otherwise to be distributed to
the general unsecured creditors of the Borrower and Guarantors under a Plan of
Reorganization or otherwise, determined as follows: (a) to the extent the value
of such distributions does not exceed $55,000,000, the Lenders shall not be
entitled to any of such consideration; (b) to the extent the value of such
distributions exceeds $55,000,000, the Lenders shall be entitled to receive 10%
of such distributions in excess of $55,000,000 but not in excess of
$155,000,000; and (c) to the extent the value of such distributions exceeds
$155,000,000, the Lenders shall also be entitled to receive 5% of such

                                       28



distributions in excess of $155,000,000. In the event the Lenders are entitled
to receive a portion of the distributions to be made to general unsecured
creditors under a Plan of Reorganization or otherwise, as contemplated in clause
(2) of this Section 7.3, the distributions to the Lenders shall be made on a pro
rata basis in accordance with each Lender's Pro Rata Share, contemporaneously
with the distributions to general unsecured creditors and subject to any terms
and conditions set forth in the Plan of Reorganization regarding the making of
such distributions. To the extent the consideration to be distributed to the
general unsecured creditors of the Borrowers and Guarantors consists of
different forms of consideration and the Lenders are to receive a portion
thereof pursuant to clause (2) of this Section 7.3, the Lenders shall receive
the different forms of consideration in the same proportions as the general
unsecured creditors. The fees, costs and expenses incurred by the lead and local
counsel for the Lenders in connection with negotiating, documenting and
obtaining approval of this Agreement and all related documents as permitted in
Section 10.4 up to a maximum amount of $100,000 (the "Documentation Fee") shall
be due and payable upon entry of an Interim Order of the Bankruptcy Court
approving this Agreement and the financing provided herein and shall be deducted
from the first draw made by Borrower under this Agreement. The cap on the amount
of the Documentation Fee shall not otherwise affect the Lenders' right to
payment of their other fees, costs and expenses payable under Section 10.4 or
the amount thereof. For purposes of this Section 7.3, any non-cash consideration
to be distributed pursuant to a Plan of Reorganization shall be deemed to have
the value set forth for such consideration in the disclosure statement relating
to such Plan of Reorganization. If the Required Lenders dispute the valuation,
they shall have the right to object to such valuation in conjunction with a
determination of the adequacy of the disclosure statement and the value of such
non-cash consideration shall be determined by the Bankruptcy Court; provided,
however, so long as the rights of Lenders to a final determination of valuation
are preserved, in recognition that such a valuation determination may take
considerable time of the Bankruptcy Court, the Lenders shall not object to the
approval and dissemination to creditors of Borrower and Guarantors of a
disclosure statement that appropriately discloses the existence of the valuation
dispute. If the distributions to unsecured creditors are made other than
pursuant to a Plan of Reorganization, then, absent an agreement of the Borrowers
or any Chapter 7 Trustee and the Required Lenders as to the value of the
non-cash consideration, the Bankruptcy Court shall determine the value of any
non-cash consideration. In the event a Final Order resolving the dispute over
value is not entered by the time non-cash consideration is to be distributed to
creditors (whether pursuant to a Plan of Reorganization or otherwise), the full
amount of non-cash consideration asserted by the Administrative Agent (on behalf
of the Lenders) to be payable shall be reserved and segregated at that time and
held for the benefit of the Lenders. The Administrative Agent will notify the
Borrower and the Committee whether the Required Lenders will contest the value
of any non-cash consideration within 5 business days after receiving written
notice of the value placed thereon by the Borrower. The terms of this Section
7.3 shall survive any payment of this Loan, including any prepayment. Except as
provided in Section 7.4, the Commitment Fee is payable regardless of any
prepayment or payment in full of the Loans.

                  Section 7.4 Other Termination. In the event the Term Loan Draw
Conditions have not been met or otherwise waived with respect to any Interim
Loans on or before February 25, 2003 and with respect to any other Loans on or
before March 7, 2003, either the Lenders or the Borrower may, by written notice
to each other and the Committee, terminate this Agreement. Upon such
termination, neither the Lenders nor any Credit Party shall have any

                                       29



further obligation hereunder, or under any other Loan Document; provided that,
notwithstanding anything else to the contrary in this Agreement, if the
Agreement is terminated as a result of the failure to satisfy the Term Loan Draw
Conditions set forth in Section 3.2, the Borrower shall be obligated to pay all
outstanding Obligations plus a Commitment Fee of $125,000 in cash which shall be
paid to the Administrative Agent from the Wind-Down Funds within one Business
Day of termination.

                                  ARTICLE VIII

                                    GUARANTY

                  Section 8.1 The Guaranty. In order to induce the Lenders to
enter into this Agreement and to extend credit hereunder and in recognition of
the direct benefits to be received by each Guarantor from the proceeds of the
Loans, each Guarantor hereby agrees with the Lenders that such Guarantor hereby
unconditionally and irrevocably, jointly and severally, guarantees as primary
obligor and not merely as surety the full and prompt payment and performance by
the Borrower when due, whether upon maturity, by acceleration or otherwise, of
any and all of the Obligations of the Borrower to the Lenders. If any or all of
the Obligations of the Borrower to the Lenders become due and payable hereunder,
each Guarantor, jointly and severally, unconditionally promises to pay such
Obligations to the Lenders, or order, on demand, together with any and all
reasonable expenses which may be incurred by the Lenders in collecting any of
the Obligations.

                  Section 8.2 Nature of Liability. The liability of each
Guarantor hereunder is exclusive and independent of any security for or other
guaranty of the Obligations of the Borrower whether executed by such Guarantor,
any other Guarantor, any other guarantor or by any other party, and the
liability of each Guarantor hereunder shall not be affected or impaired by (a)
any direction as to application of payment by the Borrower or by any other
party, or (b) any other continuing or other guaranty, undertaking or maximum
liability of a guarantor or of any other party as to the Obligations of the
Borrower, or (c) any payment on or in reduction of any such other guaranty or
undertaking, or (d) any dissolution, termination or increase, decrease or change
in personnel by the Borrower, or (e) any payment made to the Lenders in respect
of the Obligations which the Lenders are required to repay to the Borrower
pursuant to court order in any bankruptcy, reorganization, arrangement,
moratorium or other debtor relief proceeding, and each Guarantor waives any
right to the deferral or modification of its obligations hereunder by reason of
any such proceeding.

                  Section 8.3 Independent Obligation. The obligations of each
Guarantor hereunder are independent of the obligations of any other Guarantor,
any other, guarantor or the Borrower, and a separate action or actions may be
brought and prosecuted against each Guarantor whether or not action is brought
against any other Guarantor, any other guarantor or the Borrower and whether or
not any other Guarantor, any other guarantor or the Borrower be joined in any
such action or actions. Each Guarantor waives, to the fullest extent permitted
by law, the benefit of any statute of limitations affecting its liability
hereunder or the enforcement thereof. Any payment by the Borrower or other
circumstance which operates to toll any statute of limitations as to the
Borrower shall operate to toll the statute of limitations as to the Guarantor.

                                       30



                  Section 8.4 Authorization. Each Guarantor authorizes the
Lenders without notice or demand (except as shall be required by applicable
statute and cannot be waived), and without affecting or impairing its liability
hereunder, from time to time to:

                  (a)      change the manner or place of payment of, and/or
change or extend the time of payment of, renew, accelerate or alter, any of the
Obligations, any security therefor, or any liability incurred directly or
indirectly in respect thereof, and the Guaranty herein made shall apply to the
Obligations as so changed, extended, renewed or altered;

                  (b)      take and hold security for the payment of the
Obligations and sell, exchange, release, surrender, realize upon or otherwise
deal with in any manner and in any order any property by whomsoever at any time
pledged or mortgaged to secure, or howsoever securing, the Obligations or any
liabilities (including any of those hereunder) incurred directly or indirectly
in respect thereof or hereof, and/or any offset there against;

                  (c)      exercise or refrain from exercising any rights
against the Borrower or others or otherwise act or refrain from acting;

                  (d)      release or substitute any one or more endorsers,
guarantors, the Borrower or other obligors;

                  (e)      settle or compromise any of the Obligations, any
security therefor or any liability (including any of those hereunder) incurred
directly or indirectly in respect thereof or hereof, or subordinate the payment
of all or any part thereof to the payment of any liability (whether due or not)
of the Borrower to its creditors;

                  (f)      apply any sums by whomsoever paid or howsoever
realized to any liability or liabilities of the Borrower to the Lenders
regardless of what liability or liabilities of such Guarantor or the Borrower
remain unpaid; and/or

                  (g)      consent to or waive any breach of, or any act,
omission or default under, this Agreement or any of the instruments or
agreements referred to herein, or otherwise amend, modify or supplement this
Agreement or any of such other instruments or agreements.

                  Section 8.5 Reliance. It is not necessary for the Lenders to
inquire into the capacity or powers of the Borrower or its Subsidiaries or the
officers, directors, partners or agents acting or purporting to act on its
behalf; and any Obligations made or created in reliance upon the professed
exercise of such powers shall be guaranteed hereunder.

                  Section 8.6 Subordination. Any of the Indebtedness of the
Borrower now or hereafter owing to any Guarantor is hereby subordinated to the
Obligations of the Borrower; provided, however, that payment may be made by the
Borrower on any such Indebtedness owing to such Guarantor so long as the same is
not prohibited by this Agreement; and provided further, that if the Lenders so
request at a time when an Event of Default exists, all such Indebtedness of the
Borrower to such Guarantor shall be collected, enforced and received by such
Guarantor as trustee for the Lenders and be paid over to the Lenders on account
of the Obligations of the Borrower to the Lenders, but without affecting or
impairing in any manner the liability of such Guarantor under the other
provisions of this Guaranty. Prior to the transfer by any Guarantor of

                                       31



any note or negotiable instrument evidencing any of the Indebtedness of the
Borrower to such Guarantor, such Guarantor shall mark such note or negotiable
instrument with a legend that the same is subject to this subordination.

                  Section 8.7 Waiver. Subject to Section 9.9, the expiration of
the applicable Standstill Period and the giving of notice as required by the
Interim Financing Order or the Final Financing Order:

                  (a)      Each Guarantor waives any right (except as shall be
required by applicable statute and cannot be waived) to require the Lenders to
(i) proceed against the Borrower, any other Guarantor, any other guarantor or
any other party, (ii) proceed against or exhaust any security granted by the
Borrower, any other Guarantor, any other guarantor or any other party or (iii)
pursue any other remedy in the Lenders' power whatsoever. Each Guarantor waives
(except as shall be required by applicable statute and cannot be waived) any
defense based on or arising out of any defense of the Borrower, any other
Guarantor, any other guarantor or any other party other than payment in full of
the Obligations, including, without limitation, any defense based on or arising
out of the disability of the Borrower, any other Guarantor, any other guarantor
or any other party, or the unenforceability of the Obligations or any part
thereof from any cause, or the cessation from any cause of the liability of the
Borrower other than payment in full of the Obligations. The Lenders may, at
their election, foreclose on any security held by the Lenders by one or more
judicial or nonjudicial sales (to the extent such sale is permitted by
applicable law), or exercise any other right or remedy the Lenders may have
against the Borrower or any other party, or any security, without affecting or
impairing in any way the liability of any Guarantor hereunder except to the
extent the Obligations have been paid. Each Guarantor waives any defense arising
out of any such election by the Lenders, even though such election operates to
impair or extinguish any right of reimbursement or subrogation or other right or
remedy of such Guarantor against the Borrower or any other party or any
security.

                  (b)      Each Guarantor waives all presentments, demands for
performance, protests and notices, including without limitation notices of
nonperformance, notices of protest, notices of dishonor, notices of acceptance
of this Guaranty, and notices of the existence, creation or incurring of new or
additional Obligations. Each Guarantor assumes all responsibility for being and
keeping itself informed of the Borrower's financial condition and assets, and of
all other circumstances bearing upon the risk of nonpayment of the Obligations
and the nature, scope and extent of the risks which such Guarantor assumes and
incurs hereunder, and agrees that the Lenders shall have no duty to advise such
Guarantor of information known to it regarding such circumstances or risks.

                                   ARTICLE IX

                                    SECURITY

                  Section 9.1 Security.

                  (a)      To induce the Lenders to make the Loans, each Grantor
hereby grants to the Administrative Agent, for the ratable benefit of the
Lenders, as security for the full and prompt payment when due (whether at stated
maturity, by acceleration or otherwise) of the

                                       32



Obligations, a continuing first (or junior, as the case may be) priority Lien
and security interest (subject only to the Permitted Liens) in accordance with
sections 364(c)(2) and (3) of the Bankruptcy Code in and to all Collateral of
such Grantor. For purposes of this Agreement, all of the following property now
owned or at any time hereafter acquired by a Grantor or in which a Grantor now
has or at any time in the future may acquire any right, title or interests is
collectively referred to as the "Collateral":

                           (i)      All cash and cash equivalents;

                           (ii)     all Accounts;

                           (iii)    all Accounts Receivable and Accounts
         Receivable Records;

                           (iv)     all books and Records pertaining to the
         property described in this Section 9.1;

                           (v)      all Chattel Paper;

                           (vi)     all Documents;

                           (vii)    all Equipment;

                           (viii)   all General Intangibles, including all
         Intellectual Property and that portion of the Pledged Collateral
         constituting General Intangibles (provided, however, that
         notwithstanding any other provision in this Agreement or any other Loan
         Document, the Collateral shall not include any FCC Licenses now owned
         or at any time hereafter acquired by any Grantor);

                           (ix)     all Instruments;

                           (x)      all Insurance;

                           (xi)     all Inventory;

                           (xii)    all Investment Property and that portion of
         the Pledged Collateral constituting Investment Property;

                           (xiii)   all other Goods and personal property of
         such Grantor, whether tangible or intangible, wherever located;

                           (xiv)    all Payment Intangibles;

                           (xv)     all property of any Grantor held by the
         Lenders, including all property of every description, in the possession
         or custody of or in transit to the Lenders for any purpose, including
         safekeeping, collection or pledge, for the account of such Grantor, or
         as to which such Grantor may have any right or power;

                           (xvi)    all Real Property;

                                       33



                           (xvii)   to the extent not otherwise included, all
         monies and other property of any kind which is, after the Closing Date,
         received by such Grantor in connection with refunds with respect to
         taxes, assessments and governmental charges imposed on such Grantor or
         any of its property or income;

                           (xviii)  all causes of action expressly excluding the
         Avoidance Actions and all monies and other property of any kind
         received therefrom, and all monies and other property of any kind
         recovered by any Grantor;

                           (xix)    to the extent not otherwise included, all
         Pledged Collateral;

                           (xx)     to the extent not otherwise included, all
         Collateral Support and Supporting Obligations; and

                           (xxi)    to the extent not otherwise included, all
         Proceeds of each of the foregoing and the sale of the FCC Licenses and
         all accessions to, substitutions and replacements for, and rents,
         profits and products of, each of the foregoing, any and all proceeds of
         insurance, indemnity, warranty or guaranty payable to any Grantor from
         time to time with respect to any of the foregoing.

                  (b)      The Lenders agree that upon entry of a Final
Financing Order and satisfaction of the conditions set forth in Section 3.2, the
super-priority administrative claims provided to the Lenders herein shall be
subordinated to the Wind-Down Costs, and the security interests and Liens
provided to the Lenders herein shall not be enforceable against the Wind-Down
Funds, but such subordination and unenforceability shall be limited to Wind-Down
Costs and Wind-Down Funds within and as limited by the Subordination Cap (as the
same may be reduced from time to time in accordance with the terms of this
Agreement). The Lenders further agree that the Lenders' super-priority
administrative claims provided herein shall not be paid from the Avoidance
Actions.

                  Section 9.2 Perfection of Security Interests. The Liens and
security interests granted herein shall be deemed valid, enforceable and
perfected by entry of the Interim Financing Order and the Final Financing Order.
No financing statement, notice of lien, mortgage, deed of trust or similar
instrument in any jurisdiction or filing office need be filed or any other
action taken in order to validate, perfect, maintain, protect or enforce the
Liens and security interests granted by or pursuant to this Agreement and the
Financing Order.

                  Section 9.3 Rights of Lenders: Limitations on Lenders'
Obligations. Subject to Section 9.9, the expiration of the applicable Standstill
Period and the giving of notice as required by the Interim Financing Order or
the Final Financing Order and in any event not inconsistent with the Applicable
Budget:

                  (a)      Subject to each Grantor's rights and duties under the
Bankruptcy Code (including section 365 of the Bankruptcy Code), it is expressly
agreed by each Grantor that, anything herein to the contrary notwithstanding,
such Grantor shall remain liable under its Contracts to observe and perform all
the conditions and obligations to be observed and performed by it thereunder.
The Administrative Agent and the Lenders shall not have any

                                       34



obligation or liability under any Contract by reason of or arising out of this
Agreement, the Loan Documents, or the granting to the Administrative Agent (for
the ratable benefit of the Lenders) of a security interest therein or the
receipt by the Administrative Agent or the Lenders of any payment relating to
any Contract pursuant hereto, nor shall the Administrative Agent or the Lenders
be required or obligated in any manner to perform or fulfill any of the
obligations of any Grantor under or pursuant to any Contract, or to make any
payment, or to make any inquiry as to the nature or the sufficiency of any
payment received by it or the sufficiency of any performance by any party under
any Contract, or to present or file any claim, or to take any action to collect
or enforce any performance or the payment of any amounts which may have been
assigned to it or to which it may be entitled at any time or times.

                  (b)      Subject to Section 9.5, the Administrative Agent
authorizes each Grantor to collect its Accounts, provided that such collection
is performed in accordance with such Grantor's customary procedures, and the
Administrative Agent may, upon the occurrence and during the continuation of any
Event of Default and without notice limit or terminate said authority at any
time.

                  (c)      The Administrative Agent may at any time, upon the
occurrence and during the continuation of any Event of Default, after first
notifying the Borrower of its intention to do so, notify Account Debtors, notify
the other parties to the Contracts of the Borrower or any other Grantor, notify
obligors of Instruments and Investment Property of the Borrower or any other
Grantor and notify obligors in respect of Chattel Paper of the Borrower or any
other Grantor that the right, title and interest of the Borrower or such Grantor
in and under such Accounts, such Contracts, such Instruments, such Investment
Property and such Chattel Paper have been assigned to the Administrative Agent
and that payments shall be made directly to the Administrative Agent. Upon the
request of the Administrative Agent, the Borrower or such other Grantor will so
notify such Account Debtors, such parties to Contracts, obligors of such
Instruments and Investment Property and obligors in respect of such Chattel
Paper. Upon the occurrence and during the continuation of an Event of Default,
the Administrative Agent may in its own name, or in the name of others,
communicate with such parties to such Accounts, Contracts, Instruments,
Investment Property and Chattel Paper to verify with such Persons to the
Administrative Agent's reasonable satisfaction the existence, amount and terms
of any such Accounts, Contracts, Instruments, Investment Property or Chattel
Paper.

                  Section 9.4 Covenants of the Grantors with Respect to
Collateral. Subject to Section 9.9, the expiration of the applicable Standstill
Period and the giving of notice as required by the Interim Financing Order and
the Final Financing Order and in any event not inconsistent with the Applicable
Budget, each Grantor hereby covenants and agrees with the Administrative Agent
that from and after the date of this Agreement and until the Obligations are
fully satisfied:

                  (a)      Limitations on Modifications of Accounts. Such
Grantor will not, without the Administrative Agent's prior written consent,
grant any extension of the time of payment of any of the Accounts, Chattel Paper
or Instruments, compromise, compound or settle the same for less than the full
amount thereof, release, wholly or partly, any Person liable for the payment
thereof, or allow any credit or discount whatsoever thereon other than any of
the foregoing which are done in the ordinary course of business, consistent with
past practices and trade discounts granted in the ordinary course of business of
such Grantor.

                                       35



                  (b)      Notices. Such Grantor will advise the Administrative
Agent promptly, in reasonable detail, (i) of any Lien asserted against any of
the Collateral other than Permitted Liens, and (ii) of the occurrence of any
other event which would result in a material adverse change with respect to the
aggregate value of the Collateral or on the security interests created
hereunder.

                  (c)      Pledged Collateral.

                           (i)      Upon request of the Administrative Agent,
         such Grantor will deliver to the Administrative Agent, all certificates
         representing or evidencing any Pledged Collateral, whether now arising
         or hereafter acquired, in suitable form for transfer by delivery or, as
         applicable, accompanied by such Grantor's endorsement, where necessary,
         or duly executed instruments of transfer or assignment in blank, all in
         form and substance satisfactory to the Administrative Agent. Upon the
         occurrence and during the continuation of an Event of Default, the
         Administrative Agent shall have the right, at any time in its
         discretion and without notice to the Grantor, to transfer to or to
         register in its name or in the name of its nominees any or all of the
         Pledged Collateral. The Administrative Agent shall have the right at
         any time to exchange certificates or instruments representing or
         evidencing any of the Pledged Collateral for certificates or
         instruments of smaller or larger denominations.

                           (ii)     Except as provided in Section 9.7, such
         Grantor shall be entitled to receive all cash dividends paid in respect
         of the Pledged Collateral (other than liquidating or distributing
         dividends) with respect to the Pledged Collateral. Any sums paid upon
         or in respect of any of the Pledged Collateral upon the liquidation or
         dissolution of any issuer of any of the Pledged Collateral, any
         distribution of capital made on or in respect of any of the Pledged
         Collateral or any property distributed upon or with respect to any of
         the Pledged Collateral pursuant to the recapitalization or
         reclassification of the capital of any issuer of Pledged Collateral or
         pursuant to the reorganization thereof shall, unless otherwise subject
         to a perfected security interest in favor of the Administrative Agent,
         be delivered to the Administrative Agent to be held by it hereunder as
         additional collateral security for the Obligations. If any sums of
         money or property so paid or distributed in respect of any of the
         Pledged Collateral shall be received by such Grantor, such Grantor
         shall, until such money or property is paid or delivered to the
         Administrative Agent, hold such money or property in trust for the
         Administrative Agent, segregated from other funds of such Grantor, as
         additional security for the Obligations.

                           (iii)    Except as provided in Section 9.7, such
         Grantor will be entitled to exercise all voting, consent and corporate
         rights with respect to the Pledged Collateral; provided that no vote
         shall be cast, consent given or right exercised or other action taken
         by such Grantor which would impair the Collateral or which would be
         inconsistent with or result in any violation of any provision of this
         Agreement or any other Loan Document or, without prior notice to the
         Administrative Agent, to enable or take any other action to permit any
         issuer of Pledged Collateral to issue any stock or other equity
         securities of any nature or to issue any other securities convertible
         into or granting the right to purchase or

                                       36



         exchange for any stock or other equity securities of any nature of any
         issuer of Pledged Collateral.

                           (iv)     In the case of each Grantor which is an
         issuer of Pledged Collateral, such Grantor, agrees to be bound by the
         terms of this Agreement relating to the Pledged Collateral issued by it
         and will comply with such terms insofar as such terms are applicable to
         it. In the case of each Grantor which is a partner in a Partnership,
         such Grantor hereby consents to the extent required by the applicable
         Partnership agreement to the pledge by each other Grantor, pursuant to
         the terms hereof, of the Pledged Partnership Interests in such
         Partnership pursuant to the terms hereof and to the transfer of such
         Pledged Partnership Interests to the Administrative Agent or its
         nominee and to the substitution of the Administrative Agent or its
         nominee as a substituted partner in such Partnership, subject to the
         terms hereof, with all the rights, powers and duties of a general
         partner or a limited partner, as the case may be. In the case of each
         Grantor which is a member of a limited liability company, such Grantor
         hereby consents to the extent required by the applicable limited
         liability company agreement to the pledge by each other Grantor,
         pursuant to the terms hereof, of the Pledged LLC Interests in such
         limited liability company and to the transfer of such Pledged LLC
         Interests to the Administrative Agent or its nominee and to the
         substitution of the Administrative Agent or its nominee as a
         substituted member of the limited liability company pursuant to the
         terms hereof with all the rights, powers and duties of a member of the
         limited liability company in question.

                           (v)      Such Grantor will not agree to any amendment
         of a constituent document that in any way adversely affects the
         perfection of the security interest of the Administrative Agent in the
         Pledged Partnership Interests or Pledged LLC Interests pledged by such
         Grantor hereunder, including electing to treat the membership interest
         or partnership interest of such Grantor as a security under section
         8-103 of the UCC.

                  (d)      Intellectual Property.

                           (i)      Such Grantor will (i) continue to use each
         Trademark that is material Intellectual Property in order to maintain
         such Trademark in full force and effect with respect to each class of
         goods for which such Trademark is currently used in the ordinary course
         of business, free from any claim of abandonment for non-use, (ii)
         maintain as in the past the quality of products and services offered
         under such Trademark in the ordinary course of business, (iii) use such
         Trademark in the ordinary course of business with the appropriate
         notice of registration and all other notices and legends required by
         applicable Requirements of Law, (iv) not adopt or use any mark in the
         ordinary course of business which is confusingly similar or a colorable
         imitation of such Trademark unless the Administrative Agent shall
         obtain a perfected security interest in such mark pursuant to this
         Agreement and (v) not do any act or knowingly omit to do any act
         whereby such Trademark may become invalidated or impaired in any way in
         the ordinary course of business.

                           (ii)     Such Grantor will not do any act, or omit to
         do any act, whereby any Patent which is material Intellectual Property
         may become forfeited,

                                       37



         abandoned or dedicated to the public unless such act or omission would
         not reasonably be expected to have a Material Adverse Effect.

                           (iii)    Such Grantor (i) will not (and will not
         permit any licensee or sublicensee thereof to) do any act or omit to do
         any act whereby any portion of the Copyrights which is material
         Intellectual Property may become invalidated or otherwise impaired and
         (ii) will not (either itself or through licensees) do any act whereby
         any portion of the Copyrights which is material Intellectual Property
         may fall into the public domain unless such act or omission would not
         reasonably be expected to have a Material Adverse Effect.

                           (iv)     Such Grantor will not do any act, or omit to
         do any act, whereby any trade secret which is material Intellectual
         Property may become publicly available or otherwise unprotectable
         unless such act or omission would not reasonably be expected to have a
         Material Adverse Effect.

                           (v)      Such Grantor will not do any act that
         knowingly uses any material Intellectual Property to infringe the
         intellectual property rights of any other Person unless such act or
         omission would not reasonably be expected to have a Material Adverse
         Effect.

                           (vi)     Such Grantor will notify the Administrative
         Agent immediately if it knows, or has reason to know, that any
         application or registration relating to any material Intellectual
         Property may become forfeited, abandoned or dedicated to the public, or
         of any adverse determination or development (including the institution
         of, or any such determination or development in, any proceeding in the
         United States Patent and Trademark Office, the United States Copyright
         Office or any court or tribunal in any country) regarding such
         Grantor's ownership of; right to use, interest in, or the validity of;
         any material Intellectual Property or such Grantor's right to register
         the same or to own and maintain the same, unless such event would not
         reasonably be expected to have a Material Adverse Effect.

                           (vii)    Whenever such Grantor, either by itself or
         through any agent, licensee or designee, shall file an application for
         the registration of any material Intellectual Property with the United
         States Patent and Trademark Office, the United States Copyright Office
         or any similar office or agency within or outside the United States,
         such Grantor shall report such filing to the Administrative Agent
         within five Business Days after the last day of the fiscal quarter in
         which such filing occurs.

                           (viii)   Such Grantor will take all reasonable
         actions necessary or requested by the Administrative Agent, including
         in any proceeding before the United States Patent and Trademark Office,
         the United States Copyright Office or any similar office or agency, to
         maintain and pursue each application (and to obtain the relevant
         registration) and to maintain each registration of any Copyright,
         Trademark or Patent that is material Intellectual Property, including
         filing of applications for renewal, affidavits of use, affidavits of
         incontestability and opposition and interference and cancellation
         proceedings.

                                       38



                           (ix)     In the event that any material Intellectual
         Property is infringed upon or misappropriated or diluted by a third
         party and such event would be reasonably likely to result in a Material
         Adverse Effect, such Grantor shall notify the Administrative Agent
         promptly after such Grantor learns thereof. Such Grantor shall take
         appropriate action in response to such infringement, misappropriation
         or dilution, including promptly bringing suit for infringement,
         misappropriation or dilution and to recover any and all damages for
         such infringement, misappropriation or dilution, and shall take such
         other actions may be appropriate in its reasonable judgment under the
         circumstances to protect such material Intellectual Property.

                  Section 9.5 Performance by Administrative Agent of the
Grantors' Obligations. Subject to Section 9.9, the expiration of the applicable
Standstill Period and the giving of notice as required by the Financing Order,
if any Grantor fails to perform or comply with any of its agreements contained
herein and the Administrative Agent, as provided for by the terms of this
Agreement, shall itself perform or comply, or otherwise cause performance or
compliance, with such agreement, the expenses of the Administrative Agent
incurred in connection with such performance or compliance, together with
interest thereon at the rate then in effect in respect of the Loan, shall be
payable by such Grantor to the Administrative Agent on demand and shall
constitute Obligations secured by the Collateral. Performance of such Grantor's
obligations as permitted under this Section 9.5 shall in no way constitute a
violation of the automatic stay provided by section 362 of the Bankruptcy Code
and each Grantor hereby waives applicability thereof.

                  Section 9.6 Limitation on Administrative Agent's Duty in
Respect of Collateral. The Administrative Agent shall not have any duty as to
any Collateral in its possession or control or in the possession or control of
any agent or nominee of it or any income thereon or as to the preservation of
rights against prior parties or any other rights pertaining thereto, except that
the Administrative Agent shall, with respect to the Collateral in its possession
or under its control, deal with such Collateral in the same manner as the
Administrative Agent deals with similar property for its own account. Upon
request of the Borrower, the Administrative Agent shall account for any moneys
received by it in respect of any foreclosure on or disposition of the Collateral
of any Grantor.

                  Section 9.7 Remedies, Rights Upon Event of Default. Subject to
Section 9.9, the expiration of the applicable Standstill Period and the giving
of notice as required by the Interim Financing Order or the Final Financing
Order:

                  (a)      If any Event of Default shall occur and be
continuing, the Administrative Agent may exercise in addition to all other
rights and remedies granted to it in this Agreement and in any other Loan
Document, all rights and remedies of a secured party under the UCC. Without
limiting the generality of the foregoing, each Grantor expressly agrees that in
any such event the Administrative Agent, without demand of performance or other
demand, advertisement or notice of any kind (except the notice specified below
of time and place of public or private sale) to or upon such Grantor or any
other Person (all and each of which demands, advertisements and/or notices are
hereby expressly waived to the maximum extent permitted by the UCC and other
applicable law), may forthwith collect, receive, appropriate and realize upon
the Collateral, or any part thereof, and/or may forthwith sell, lease, assign,
give an option or

                                       39



options to purchase, or sell or otherwise dispose of and deliver said Collateral
(or contract to do so), or any part thereof, in one or more parcels at public or
private sale or sales, at any exchange or broker's board or at any of the
Administrative Agent's offices or elsewhere at such prices at it may deem best,
for cash or on credit or for future delivery without assumption of any credit
risk. The Administrative Agent shall have the right upon any such public sale or
sales to purchase the whole or any part of said Collateral so sold, free of any
right or equity of redemption, which equity of redemption each Grantor hereby
releases to the extent permitted by applicable law. Each Grantor further agrees,
at the Administrative Agent's request, to assemble the Collateral and make it
available to the Administrative Agent at places which the Administrative Agent
shall reasonably select, whether at such Grantor's premises or elsewhere. The
Administrative Agent shall apply the proceeds of any such collection, recovery,
receipt, appropriation, realization or sale (net of all expenses incurred by the
Administrative Agent in connection therewith, including, without limitation,
attorney's fees and expenses), to the Obligations in any order deemed
appropriate by the Administrative Agent, such Grantor remaining liable for any
deficiency remaining unpaid after such application, and only after so paying
over such net proceeds and after the payment by the Administrative Agent of any
other amount required by any provision of law, including, without limitation,
the UCC, need the Administrative Agent account for the surplus, if any, to such
Grantor. To the maximum extent permitted by applicable law, each Grantor waives
all claims, damages, and demands against the Administrative Agent arising out of
the repossession, retention or sale of the Collateral except such as arise out
of the gross negligence or willful misconduct of the Administrative Agent. Each
Grantor agrees that the Administrative Agent need not give more than ten (10)
days' notice to the Borrower (which notification shall be deemed given when
mailed or delivered on an overnight basis, postage prepaid, addressed to the
Borrower at its address set forth in Section 10.2) of the time and place of any
public sale of Collateral or of the time after which a private sale may take
place and that such notice is reasonable notification of such matters. The
Administrative Agent and its agents shall have the right to enter upon any real
property owned or leased by any Grantor to exercise any of its rights or
remedies under this Agreement. The Administrative Agent shall not be obligated
to make any sale of Collateral regardless of notice of sale having been given.
The Administrative Agent may adjourn any public or private sale from time to
time by announcement at the time and place fixed therefor, and any such sale
may, without further notice, be made at the time and place to which it was
adjourned. Each Grantor shall remain liable for any deficiency if the proceeds
of any sale or disposition of the Collateral are insufficient to pay its
Obligations and all other amounts to which the Administrative Agent is entitled,
the Grantors also being liable for the fees and expenses of any attorneys
employed by the Administrative Agent to collect such deficiency.

                  (b)      Each Grantor hereby waives presentment, demand,
protest or any notice (to the maximum extent permitted by applicable law) of any
kind in connection with this Agreement or any Collateral.

                  (c)      Pledged Collateral.

                           (i)      During the continuance of an Event of
         Default, if the Administrative Agent shall give notice of its intent to
         exercise such rights to the relevant Grantor or Grantors, (i) the
         Administrative Agent shall have the right to receive any and all cash
         dividends, payments or other Proceeds paid in respect of the Pledged
         Collateral

                                       40



         and make application thereof to the Obligations in the order set forth
         herein, and (ii) the Administrative Agent or their nominee may exercise
         (A) all voting, consent, corporate and other rights pertaining to the
         Pledged Collateral at any meeting of shareholders, partners or members,
         as the case may be, of the relevant issuer or issuers of Pledged
         Collateral or otherwise and (B) any and all rights of conversion,
         exchange and subscription and any other rights, privileges or options
         pertaining to the Pledged Collateral as if it were the absolute owner
         thereof (including the right to exchange at its discretion any and all
         of the Pledged Collateral upon the merger, consolidation,
         reorganization, recapitalization or other fundamental change in the
         corporate structure of any issuer of Pledged Collateral, the right to
         deposit and deliver any and all of the Pledged Collateral with any
         committee, depositary, transfer agent, registrar or other designated
         agency upon such terms and conditions as the Administrative Agent may
         determine), all without liability except to account for property
         actually received by it, but the Administrative Agent shall have no
         duty to any Grantor to exercise any such right, privilege or option and
         shall not be responsible for any failure to do so or delay in so doing.

                           (ii)     In order to permit the Administrative Agent
         to exercise the voting and other consensual rights which they may be
         entitled to exercise pursuant hereto and to receive all dividends and
         other distributions which it may be entitled to receive hereunder, (i)
         each Grantor shall promptly execute and deliver (or cause to be
         executed and delivered) to the Administrative Agent all such proxies,
         dividend payment orders and other instruments as the Administrative
         Agent may from time to time reasonably request and (ii) without
         limiting the effect of clause (i) above, such Grantor hereby grants to
         the Administrative Agent an irrevocable proxy to vote all or any part
         of the Pledged Collateral and to exercise all other rights, powers,
         privileges and remedies to which a holder of the Pledged Collateral
         would be entitled (including giving or withholding written consents of
         shareholders, partners or members, as the case may be, calling special
         meetings of shareholders, partners or members, as the case may be, and
         voting at such meetings), which proxy shall be effective, automatically
         and without the necessity of any action (including any transfer of any
         Pledged Collateral on the record books of the issuer thereof) by any
         other person (including the issuer of such Pledged Collateral or any
         officer or agent thereof) during the continuance of an Event of Default
         and which proxy shall only terminate upon the payment in full of the
         Obligations.

                           (iii)    Each Grantor hereby expressly authorizes and
         instructs each issuer of any Pledged Collateral pledged hereunder by
         such Grantor to (i) comply with any instruction received by it from the
         Administrative Agent in writing that (A) states that an Event of
         Default has occurred and is continuing and (B) is otherwise in
         accordance with the terms of this Agreement, without any other or
         further instructions from such Grantor, and each Grantor agrees that
         such issuer shall be fully protected in so complying and (ii) unless
         otherwise expressly permitted hereby, pay any dividends or other
         payments with respect to the Pledged Collateral directly to the
         Administrative Agent.

                                       41



                  Section 9.8 The Appointment of Administrative Agent as
Attorney-in-Fact. Subject to Section 9.9, the expiration of the applicable
Standstill Period and the giving of notice as required by the Financing Order:

                  (a)      Each Grantor hereby irrevocably constitutes and
appoints the Administrative Agent and any officer or agent thereof, with full
power of substitution, as its and its Subsidiaries true and lawful
attorney-in-fact with full irrevocable power and authority in the place and
stead of such Grantor and in the name of such Grantor, or in its own name, from
time to time in the Administrative Agent's discretion, for the purpose of
carrying out the terms of this Agreement, to take any and all appropriate action
and to execute and deliver any and all documents and instruments which may be
necessary and desirable to accomplish the purposes of this Agreement and the
transactions contemplated hereby, and, without limiting the generality of the
foregoing, hereby gives the Administrative Agent the power and right, on behalf
of such Grantor, without notice to or assent by such Grantor to do the
following:

                           (i)      to ask, demand, collect, receive and give
         acquittances and receipts for any and all moneys due and to become due
         under any Collateral and, in the name of such Grantor, its own name or
         otherwise, to take possession of and endorse and collect any checks,
         drafts, notes, acceptances or other Instruments for the payment of
         moneys due under any Collateral and to file any claim or to take any
         other action or proceeding in any court of law or equity or otherwise
         deemed appropriate by the Administrative Agent for the purpose of
         collecting any and all such moneys due under any Collateral whenever
         payable and to file any claim or to take any other action or proceeding
         in any court of law or equity or otherwise deemed appropriate by the
         Administrative Agent for the purpose of collecting any and all such
         moneys due under any Collateral whenever payable;

                           (ii)     to pay or discharge taxes, liens, security
         interests or other encumbrances levied or placed on or threatened
         against the Collateral, to effect any repairs or any insurance called
         for by the terms of this Agreement and to pay all or any part of the
         premiums therefor and the costs thereof; and

                           (iii)    (A) to direct any party liable for any
         payment under any of the Collateral to make payment of any and all
         moneys due and to become due thereunder, directly to the Administrative
         Agent or as the Administrative Agent shall direct; (B) to receive
         payment of and receipt for any and all moneys, claims and other amounts
         due, and to become due at any time, in respect of or arising out of any
         Collateral; (C) to sign and indorse any invoices, freight or express
         bills, bills of lading, storage or warehouse receipts, drafts against
         debtors, assignments, verifications and notices in connection with
         accounts and other documents constituting or relating to the
         Collateral; (D) to commence and prosecute any suits, actions or
         proceedings at law or equity in any court of competent jurisdiction to
         collect the Collateral or any part thereof and to enforce any other
         right in respect of any Collateral; (E) to defend any suit, action or
         proceeding brought against any Grantor with respect to any Collateral
         of such Grantor; (F) to settle, compromise or adjust any suit, action
         or proceeding described above and, in connection therewith, to give
         such discharges or releases as the Administrative Agent may deem
         appropriate; (G) to license or, to the extent permitted by an
         applicable license, sublicense, whether general, special

                                       42



         or otherwise, and whether on an exclusive or non-exclusive basis, any
         trademarks, throughout the world for such term or terms, on such
         conditions, and in such manner, as the Administrative Agent shall in
         its sole discretion determine; and (H) generally to sell, transfer,
         pledge, make any agreement with respect to or otherwise deal with any
         of the Collateral as fully and completely as though the Administrative
         Agent was the absolute owner thereof for all purposes, and to do, at
         the Administrative Agent's option and such Grantor's expense, at any
         time, or from time to time, all acts and things which the
         Administrative Agent reasonably deems necessary to protect, preserve or
         realize upon the Collateral and the Administrative Agent's Lien
         therein, in order to effect the intent of this Agreement, all as fully
         and effectively as such Grantor might do.

                  (b)      The Administrative Agent agrees that it will forbear
from exercising the power of attorney or any rights granted to the
Administrative Agent pursuant to this Section 9.8, except upon the occurrence or
during the continuation of an Event of Default. The Grantors hereby ratify, to
the extent permitted by law, all that said attorneys shall lawfully do or cause
to be done by virtue hereof, The power of attorney granted pursuant to this
Section 9.8 is a power coupled with an interest and shall be irrevocable until
the Obligations are indefeasibly paid in full.

                  (c)      The powers conferred on the Administrative Agent
hereunder are solely to protect the Administrative Agent's interests in the
Collateral and shall not impose any duty upon it to exercise any such powers.
The Administrative Agent shall be accountable only for amounts that it actually
receives as a result of the exercise of such powers and neither it nor any of
its officers, directors, employees or agents shall be responsible to any Grantor
for any act or failure to act, except for its own gross negligence or willful
misconduct.

                  (d)      Each Grantor also authorizes the Administrative
Agent, at any time and from time to time upon the occurrence and during the
continuation of any Event of Default or as otherwise expressly permitted by this
Agreement, (i) to communicate in its own name or the name of its Subsidiaries
with any party to any Contract with regard to the assignment of the right, title
and interest of such Grantor in and under the Contracts hereunder and other
matters relating thereto and (ii) to execute any endorsements, assignments or
other instruments of conveyance or transfer with respect to the Collateral.

                  Section 9.9 FCC-Related Requirements of Law. The
Administrative Agent and the Lenders acknowledge that the effectiveness of
certain provisions set forth in this Agreement or in any other Loan Document
(including the provisions relating to the exercise of the Administrative Agent's
rights with respect to Pledged Collateral and effectiveness or the exercise of
the power of attorney conferred on the Administrative Agent) may be subject to
prior FCC approval and, to the extent such FCC approval is required,
notwithstanding any other provision in this Agreement or any other Loan Document
to the contrary, such provisions shall not be effective until such FCC approval
is obtained. The Administrative Agent and the Lenders agree to not exercise any
of its rights or powers hereunder or under any other Loan Document unless and
until such FCC approval, if required, is obtained.

                                       43



                                   ARTICLE X

                                 MISCELLANEOUS

                  Section 10.1 Amendments, Etc. No amendment or waiver of any
provision of this Agreement nor consent to any departure by the Borrower or any
Guarantor therefrom shall in any event be effective unless the same shall be in
writing and signed by the Required Lenders, and then any such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given.

                  Section 10.2 Notices, Etc. Any notice or other communication
permitted or required to be given hereunder will be in writing, and sent by
reputable courier service (with proof of delivery), by hand delivery or by
facsimile (followed by delivery by courier service (with proof of delivery) or
by hand delivery), addressed as follows:

                  If to the Lenders:

                  Blue River Capital, LLC, as
                  Administrative Agent
                  C/O Van D. Greenfield
                  360 East 88th Street, Suite 2D
                  New York, NY 10128
                  Fax: (212) 426-5677

                  With copies to:

                  Katten Muchin Zavis Rosenman
                  575 Madison Avenue
                  New York, New York 10022-2585
                  Attention: Jeff J. Friedman, Esq.
                  Fax: (212) 940-8776

                  If to the Borrower or any Guarantor:

                  Globalstar, L.P.
                  3200 Zanker Road
                  San Jose, California 95134
                  Attention: William Adler, Esq.
                  Fax: (408) 933-4950

                                       44



                  With copies to:

                  Jones Day
                  222 East 41st Street
                  New York, New York 10017
                  Attention: Paul D. Leake, Esq.
                  Telecopy number: (212) 755-7306

                  and

                                       45



                  The Committee
                  c/o Akin Gump
                  590 Madison Avenue
                  New York, New York 10022
                  Attention: Stephen B. Kuhn, Esq. and Daniel H. Golden, Esq.
                  Telecopy number: (212) 872-1002

                  All such notices and communications shall, when mailed,
telecopied, or delivered, be effective when deposited in the mails, or delivered
by hand to the addressee or its agent, respectively, except that notices and
communications to the Lenders pursuant to Article II or VIII shall not be
effective until received by the Lenders.

                  Section 10.3 No Waiver: Remedies. No failure on the part of
the Lenders to exercise, and no delay in exercising, any right hereunder or
under any Note shall operate as a waiver thereof; nor shall any single or
partial exercise of any such right preclude any other or further exercise
thereof or the exercise of any other right. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.

                  Section 10.4 Costs: Expenses: Indemnities. (a) Subject to
Section 7.3 in respect of the Documentation Fee and Section 12.3, the Borrower
shall pay upon demand all reasonable, documented out-of-pocket expenses of the
Lenders (but the Borrower shall not be required to pay the fees and
disbursements of Lenders' counsel other than lead and local counsel, Katten
Muchin Zavis Rosenman and Connolly Bove Lodge & Hutz LLP, respectively) in
connection with the preparation and administration of this Agreement and the
documents related thereto or amendment thereof, including enforcement of the
Lenders' rights and remedies under this Agreement. Upon the Effective Date of a
Plan of Reorganization or the first date distributions are made to unsecured
creditors, if made other than under Plan of Reorganization, the Borrower shall
pay any such reasonable, documented out-of-pocket expenses not previously paid.

                  (b)     The Borrower and each Guarantor agree to jointly and
severally indemnify the Lenders and their directors, officers, agents and
employees (each "Indemnitee") and hold each Indemnitee harmless from and against
any and all liabilities, losses, damages and expenses of any kind, including the
reasonable fees and disbursements of counsel, which are incurred by such
Indemnitee in connection with any investigative, administrative or judicial
proceeding (whether or not such Indemnitee shall be designated a party thereto)
brought or threatened relating to or arising out of this Agreement or any actual
or proposed use of proceeds of Loans hereunder; provided, however, that nothing
in this Section 10.4(b) shall obligate the Borrower or any Guarantor to
indemnify the Lenders for any liabilities, losses, damages or expenses resulting
from the gross negligence or willful misconduct of the Lenders.

                  Section 10.5 Right of Set-off. Upon the occurrence and during
the continuance of any Event of Default and following the expiration of the
applicable Standstill Period and the giving of notice as required by the
Financing Order, the Lenders, after prompt notice thereof to the Borrower, are
hereby authorized at any time and from time to time, to the fullest extent
permitted by law, to set off and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held and other indebtedness at
any time owing by the Lenders to or for the credit or the account of the
Borrower or any Guarantor against any and all of the

                                       46



Obligations now or hereafter existing whether or not the Lenders shall have made
any demand under this Agreement or any Note or other Loan Document and although
such Obligations may be unmatured.

                  Section 10.6 Binding Effect. This Agreement shall become
effective when it shall have been executed by the Borrower and each Guarantor
and the Lenders and thereafter shall be binding upon and inure to the benefit of
the Borrower and each Guarantor and the Lenders and their respective successors
and assigns, subject to Section 10.14.

                  Section 10.7 Governing Law. This Agreement and the Notes and
the rights and obligations of the parties hereto and thereto shall be governed
by, and construed and interpreted in accordance with, the laws of the State of
New York and, to the extent applicable, the Bankruptcy Code.

                  Section 10.8 Section Titles. The Section titles contained in
this Agreement are and shall be without substantive meaning or content of any
kind whatsoever and are not a part of the agreement between the parties hereto.

                  Section 10.9 Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement. Facsimile signatures shall be effective to bind a party to this
Agreement and such facsimile signatures shall have the same force and effect as
original signatures.

                  Section 10.10 Entire Agreement. This Agreement, together with
all of the other Loan Documents and all certificates and documents delivered
hereunder or thereunder, embodies the entire agreement of the parties and
supersedes all prior agreements and understandings relating to the subject
matter hereof.

                  Section 10.11 Confidentiality. Each of the Administrative
Agent and the Lenders agrees to keep information obtained by it pursuant hereto
and the other Loan Documents confidential in accordance with customary practices
and agrees that it will only use such information in connection with the
transactions contemplated by this Agreement and not disclose any of such
information other than (i) to such Person's employees, representatives and
agents who are or are expected to be involved in the evaluation of such
information in connection with the transactions contemplated by this Agreement
and who are advised of the confidential nature of such information, (ii) to the
extent such information presently is or hereafter becomes available to such
Persons on a nonconfidential basis from a source other than the Borrower, (iii)
to the extent disclosure is required by law, regulation or judicial order or
requested or required by bank regulators or auditors or (iv) to assignees or
participants or potential assignees or participants who agree to be bound by the
provisions of this sentence. Notwithstanding any provision of this Section 10.11
each Lender that has entered into a Non-Disclosure Agreement on or prior to the
date hereof shall be subject to the terms thereof, it being understood that such
terms shall govern in the event of a conflict between such terms and the
provisions of this Section 10.11. Each of Blue River Capital, LLC, Loeb Partners
Corp. and Columbia Ventures Corp., each in its capacity as a Lender hereunder,
and each of their respective principals,

                                       47



partners, employees, attorneys, advisors or representatives, shall not provide
any information in their possession, or that comes into their possession during
the term of this Agreement, that Borrower has designated as "confidential" or
"proprietary," either orally or in writing, to any other Lender without the
express written consent of Borrower.

                  Section 10.12 Jurisdiction. Any legal action or proceeding
with respect to this Agreement or any other Loan Document may be brought in the
Bankruptcy Court, and, by execution and delivery of this Agreement, the Borrower
hereby accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the Bankruptcy Court. The parties hereto
hereby irrevocably waive any objection, including any objection to the laying of
venue or based on the grounds of forum non conveniens, which any of them may now
or hereafter have to the bringing of any such action or proceeding in such
respective jurisdictions.

                  Section 10.13 Waiver of Jury Trial. Each of the parties hereto
irrevocably waives trial by jury in any action or proceeding with respect to
this Agreement or any other Loan Document.

                  Section 10.14 Non-Assignment. Neither the Borrower nor any
Guarantor may assign this Agreement without the prior written consent of the
Lenders. No Lender may assign its interest in this Agreement to a competitor of
Borrower without the prior written consent of Borrower provided that if an Event
of Default has occurred and the Standstill Period has expired, then any such
Lender shall not be required to obtain Borrower's consent to any assignment of
this Agreement.

                                   ARTICLE XI

                              ADMINISTRATIVE AGENT

                  Section 11.1 Appointment and Authorization of Administrative
Agent. Each Lender hereby irrevocably appoints, designates and authorizes the
Administrative Agent to take such action on its behalf and in its stead under
the provisions of this Agreement and each other Loan Document and to exercise
such powers and perform such duties as are expressly delegated to it by the
terms of this Agreement or any other Loan Document, together with such powers as
are reasonably incidental thereto. Notwithstanding any provision to the contrary
contained elsewhere herein or in any other Loan Document, the Administrative
Agent shall not have any duties or responsibilities, except those expressly set
forth herein, nor shall the Administrative Agent have or be deemed to have any
fiduciary relationship with any Lender or participant, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be read
into this Agreement or any other Loan Document or otherwise exist against the
Administrative Agent. Without limiting the generality of the foregoing sentence,
the use of the term "agent" herein and in the other Loan Documents with
reference to the Administrative Agent is not intended to connote any fiduciary
or other implied (or express) obligations arising under agency doctrine of any
applicable law. Instead, such term is used merely as a matter of market custom,
and is intended to create or reflect only an administrative relationship between
independent contracting parties.

                                       48



                  Section 11.2 Delegation of Duties. The Administrative Agent
may execute any of its duties under this Agreement or any other Loan Document by
or through agents, employees or attorneys-in-fact and shall be entitled to
advice of counsel and other consultants or experts concerning all matters
pertaining to such duties. The Administrative Agent shall not be responsible for
the negligence or misconduct of any agent or attorney-in-fact that it selects in
the absence of gross negligence or willful misconduct.

                  Section 11.3 Liability of Administrative Agent. No
Agent-Related Person shall (i) be liable for any action taken or omitted to be
taken by any of them under or in connection with this Agreement or any other
Loan Document or the transactions contemplated hereby (except for its own gross
negligence or willful misconduct in connection with its duties expressly set
forth herein), or (ii) be responsible in any manner to any Lender or participant
for any recital, statement, representation or warranty made by any Credit Party
or any officer thereof, contained herein or in any other Loan Document, or in
any certificate, report, statement or other document referred to or provided for
in, or received by the Administrative Agent under or in connection with, this
Agreement or any other Loan Document, or the validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other Loan
Document, or for any failure of any Credit Party or any other party to any Loan
Document to perform its obligations hereunder or thereunder. No Agent-Related
Person shall be under any obligation to any Lender or participant to ascertain
or to inquire as to the observance or performance of any of the agreements
contained in, or conditions of, this Agreement or any other Loan Document, or to
inspect the properties, books or records of any Credit Party.

                  Section 11.4 Reliance by Administrative Agent.

                  (a)     The Administrative Agent shall be entitled to rely,
and shall be fully protected in relying, upon any writing, communication,
signature, resolution, representation, notice, consent, certificate, affidavit,
letter, telegram, facsimile, telex or telephone message, electronic mail
message, statement or other document or conversation believed by it to be
genuine and correct and to have been signed, sent or made by the proper Person
or Persons, and upon advice and statements of legal counsel. Except as provided
in Section 11.5, the Administrative Agent shall be fully justified in failing or
refusing to take any action under any Loan Document unless it shall first

receive such required consent of the Lenders under the Loan Documents. The
Administrative Agent shall in all cases be fully protected in acting, or in
refraining from acting, under this Agreement or any other Loan Document in
accordance with an appropriate request or consent of the Lenders except if it
shall fail to exercise rights demanded after and during the continuation of an
Event of Default after receipt of the demand described in Section 11.5.

                  (b)     For purposes of determining compliance with the
conditions specified in Section 3.1(b), each Lender that has signed this
Agreement shall be deemed to have consented to, approved or accepted or to be
satisfied with, each document or other matter required thereunder to be
consented to or approved by or acceptable or satisfactory to a Lender unless the
Administrative Agent shall have received notice from such Lender prior to the
proposed Closing Date specifying its objection thereto.

                                       49



                  Section 11.5 Notice of Default. The Administrative Agent shall
not be deemed to have knowledge or notice of the occurrence of any Event of
Default, except with respect to any Event of Default arising from defaults in
the payment of principal, interest and fees required to be paid to the
Administrative Agent for the account of the Lenders, unless the Administrative
Agent shall have received written notice from a Lender or the Borrower referring
to this Agreement, describing such Event of Default and stating that such notice
is a "Notice of Event of Default." The Administrative Agent will notify the
Lenders of its receipt of any such notice. If an Event of Default occurs and is
continuing, and if the Required Lenders demand it in writing, the Administrative
Agent shall, subject to the provisions of Sections 7.1 and 7.2, and as soon as
legally permitted, enforce the Lenders' rights to immediately collect the Loans
and interest and other sums due the Lenders, and enforce all of their rights
against the Collateral, the Guarantors or any other Persons. Subject to the
provisions of Sections 7.1 and 7.2, in the event the Administrative Agent fails
to take such action after such demand, any of the Lenders may take such action
on behalf of the Lenders. The Administrative Agent or the Lender enforcing such
rights shall have all the powers given to such Lender in the Credit Agreement or
provided by law or equity to enforce such rights.

                  Section 11.6 Credit Decision; Disclosure of Information by
Administrative Agent. Each Lender acknowledges that no Agent-Related Person has
made any representation or warranty to it, and that no act by the Administrative
Agent hereafter taken, including any consent to and acceptance of any assignment
or review of the affairs of any Credit Party or any Affiliate thereof, shall be
deemed to constitute any representation or warranty by any Agent-Related Person
to any Lender as to any matter, including whether Agent-Related Persons have
disclosed material information in their possession. Each Lender represents to
the Administrative Agent that it has, independently and without reliance upon
any Agent-Related Person and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of the Credit Parties and their respective Subsidiaries, and
all applicable regulatory Laws relating to the transactions contemplated hereby,
and made its own decision to enter into this Agreement and to extend credit to
the Borrower and the other Credit Parties hereunder. Each Lender also represents
that it will, independently and without reliance upon any Agent-Related Person
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement and the other Loan Documents,
and to make such investigations as it deems necessary to inform itself as to the
business, prospects, operations, property, financial and other condition and
creditworthiness of the Borrower and the other Credit Parties. Except for
notices, reports and other documents expressly required to be furnished to the
Lenders by the Administrative Agent herein, the Administrative Agent shall not
have any duty or responsibility to provide any Lender with any credit or other
information concerning the business, prospects, operations, property, financial
and other condition or creditworthiness of any of the Credit Parties or any of
their respective Affiliates which may come into the possession of any
Agent-Related Person.

                  Section 11.7 Administrative Agent in its Individual Capacity.
With respect to its Loans, Blue River Capital LLC shall have the same rights and
powers under this Agreement as any other Lender and may exercise such rights and
powers as though it were not the

                                       50



Administrative Agent and the terms "Lender" and "Lenders" include Blue River
Capital LLC in its individual capacity.

                  Section 11.8 Administrative Agent May File Proofs of Claim. In
case of the pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial
proceeding relative to any Credit Party, the Administrative Agent (irrespective
of whether the principal of any Loan shall then be due and payable as herein
expressed or by declaration or otherwise and irrespective of whether the
Administrative Agent shall have made any demand on the Borrower) shall be
entitled and empowered, by intervention in such proceeding or otherwise:

                  (a)     to file and prove a claim for the whole amount of the
principal and interest owing and unpaid in respect of the Loans, and all other
Obligations that are owing and unpaid and to file such other documents as may be
necessary or advisable in order to have the claims of the Lenders and the
Administrative Agent (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Lenders and the Administrative Agent
and their respective agents and counsel and all other amounts due the Lenders
and the Administrative Agent allowed in such judicial proceeding; and

                  (b)     to collect and receive any monies or other property
payable or deliverable on any such claims and to distribute the same; and any
custodian, receiver, assignee, trustee, liquidator, sequestrator or other
similar official in any such judicial proceeding is hereby authorized by each
Lender to make such payments to the Administrative Agent and, in the event that
the Administrative Agent shall consent to the making of such payments directly
to the Lenders, to pay to the Administrative Agent any amount due for the
reasonable compensation, expenses, disbursements and advances of the
Administrative Agent and its agents and counsel, and any other amounts due the
Administrative Agent.

Nothing contained herein shall be deemed to authorize the Administrative Agent
to authorize or consent to or accept or adopt on behalf of any Lender any plan
of reorganization, arrangement, adjustment or composition affecting the
Obligations or the rights of any Lender or to authorize the Administrative Agent
to vote in respect of the claim of any Lender in any such proceeding.

                  Section 11.9 Collateral and Guaranty Matters. The Lenders
irrevocably authorize the Administrative Agent, upon written approval of the
Required Lenders:

                  (a)     to release any Lien on any property granted to or held
by the Administrative Agent under any Loan Document;

                  (b)     to subordinate any Lien on any property granted to or
held by the Administrative Agent under any Loan Document;

                  (c)     to release any Collateral for value; and

                  (d)     to collect, receive, appropriate or realize any
Collateral upon an Event of Default; and

                                       51



                  (e)     upon request by the Administrative Agent at any time,
the Required Lenders will confirm in writing the Administrative Agent's
authority to release or subordinate its interest in particular types or items of
property, or to release any Guarantor from its obligations under the Guaranty
pursuant to this Section.

                  Section 11.10 Payments to Lenders. Notwithstanding any other
provision of this Agreement, each payment to be made by the Borrower under this
Agreement shall be made to Administrative Agent for the pro rata benefit of the
Lenders, and Administrative Agent shall disburse such payments to the Lenders
not more than 24 hours after its receipt thereof.

                  Section 11.11 Notices. Notwithstanding any provision of the
Credit Agreement to the contrary, each Notice required to be given to any Lender
shall be given instead to the Administrative Agent on behalf of each Lender.

                  Section 11.12 Sharing of Payments. If, other than as expressly
provided elsewhere herein, any Lender shall obtain on account of the Term Loans
made by it, any payment (whether voluntary, involuntary, through the exercise of
any right of set-off, or otherwise) in excess of its ratable share (or other
share contemplated hereunder) thereof, such Lender shall immediately (a) notify
the Administrative Agent of such fact, and cooperate to make the necessary
payments so that each Lender shall have received its Pro Rata Share of payments
on the Obligation and the Obligation of Borrower to each Lender shall be
adjusted as necessary.

                                  ARTICLE XII

                    REQUIRED CONSENTS; RIGHTS OF PARTICIPANTS

                  Section 12.1 Required Lenders Consents. Notwithstanding any
provision of the Credit Agreement to the contrary, the consent of the Required
Lenders shall be required for:

                  (a)     any modifications or amendments of the Approved
Budget;

                  (b)     any modification or amendment to, or waiver of any
provision of, the Credit Agreement, including, without limitation, any extension
of time periods for performance under any provisions thereof, or any payment
schedule thereto; and

                  (c)     the acceleration of any payments due under this
Agreement and the exercise of any and all remedies upon an Event of Default,
including realization of any Collateral.

                  Section 12.2 Unanimous Consent of the Lenders. Notwithstanding
any provision of this Agreement to the contrary, the consent of all of the
Lenders shall be required for:

                  (a)     any forgiveness, in part or in whole, of any
Obligations, including any interest due thereon; and

                  (b)     the termination of any Loan Document.

                                       52



                  Section 12.3 Right of Lenders to Bring Action for Repayment.
Upon the Maturity Date, if Borrower does not make the repayment as set forth in
Section 2.3, the Borrower hereby agrees that each Lender may, in his or its
individual capacity, bring an action against the Borrower to recover his or its
Pro Rata Share of (a) the Aggregate Commitments, including any interest thereon,
(b) any other Obligations due and owing, and (c) the reasonable attorneys fees
and costs relating to seeking such recovery.

                                       53



                  IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly authorized,
as of the date first above written.

                                    Borrower:

                                    GLOBALSTAR, L.P.,
                                    a Debtor and Debtor in Possession

                                    By:
                                         _______________________________________
                                         Name:
                                         Title: Chief Executive Officer

                                    Guarantors:

                                    GLOBALSTAR CAPITAL CORPORATION,
                                    a Debtor and Debtor in Possession

                                    By:
                                         _______________________________________
                                         Name:
                                         Title:

                                    GLOBALSTAR SERVICES COMPANY, INC.,
                                    a Debtor and Debtor in Possession

                                    By:
                                         _______________________________________
                                         Name:
                                         Title:

                                    GLOBALSTAR, L.L.C.,
                                    a Debtor and Debtor in Possession

                                    By:
                                         _______________________________________
                                         Name:
                                         Title:

                                    Lenders:

                                    ICO INVESTMENT CORP.

                                    By:
                                         _______________________________________
                                         Name:
                                         Title:

                                       54



                                    BLUE RIVER CAPITAL LLC

                                    By:
                                         _______________________________________
                                         Name:
                                         Title:

                                    IRIDIUM INVESTORS, LLC

                                    By:
                                         _______________________________________
                                         Name:
                                         Title:

                                    LOEB PARTNERS CORP.

                                    By:
                                         _______________________________________
                                         Name:
                                         Title:

                                    COLUMBIA VENTURES CORPORATION

                                    By:
                                         _______________________________________
                                         Name:
                                         Title:

                                       55



                                   EXHIBIT A-1

                                FORM OF TERM NOTE

U.S. $[_____________]                                 Dated: February ____, 2003

         FOR VALUE RECEIVED, the undersigned, GLOBALSTAR, L.P. (the "Borrower"),
HEREBY PROMISES TO PAY to the order of [___________] ("Lender") the principal
sum of [__________] United States Dollars [($___________)], or if less, the
unpaid principal amount of the Loans (as defined in the Agreement referred to
below) of the Lender to the Borrower pursuant to the Commitment (as defined in
the Agreement referred to below), payable at such times, and in such amounts, as
are specified in the Agreement.

         The Borrower promises to pay interest on the unpaid principal amount
hereof from the date when made until such principal amount is paid in full, at
such interest rates, and payable at such times, as are specified in the
Agreement. The date and amount of each Loan made by the Lender pursuant to the
Commitment and each payment made on account of the principal thereof shall be
recorded on Annex A hereto.

         Both principal and interest are payable in lawful money of the United
States of America to the Lenders in immediately available funds.

         This Note is one of the Term Loan Notes referred to in, and is entitled
to the benefits of, the Secured Super-Priority Debtor in Possession Credit
Agreement, dated as of February ___, 2003 (as it may be amended or otherwise
modified from time to time, the "Agreement"), among the Borrower, the
Subsidiaries (as defined therein) of the Borrower listed on the signature pages
thereto as Guarantors (as defined therein), the Lender and the other lenders
that are signatories thereto, and the other Loan Documents referred to therein
and entered into pursuant thereto. The Agreement, among other things, (i)
provides for the Term Loans of the Lender in an amount not to exceed the United
States Dollar amount first above mentioned, the Indebtedness (as defined in the
Agreement) of the Borrower resulting from such Term Loans being evidenced by
this Note and (ii) contains provisions for acceleration of the unpaid principal
amount of this Note upon the happening of certain stated events and also for
prepayments on account of the principal hereof prior to the maturity hereof upon
the terms and conditions therein specified.

         This Note is secured as provided in the Agreement.

         Except as otherwise provided for in the Agreement and applicable law,
the Borrower waives presentment, demand and protest and notice of presentment,
protest, default, nonpayment, maturity, release, compromise, settlement,
extension or renewal of any or all commercial paper, accounts, contract rights,
documents, instruments, chattel paper and guaranties at any time held by the
Lender on which the Borrower may in any way be liable and hereby ratify and
confirm whatever the Lender may do in this regard.

                                   Ex. A-1-1



         This Note shall be governed by, and construed and interpreted in
accordance with, the law of the State of New York.

                                           GLOBALSTAR, L.P., a Debtor and Debtor
                                           in Possession

                                           By:__________________________________
                                           Title: Chief Executive Officer

                                   Ex. A-1-2



                                                                         ANNEX A



                           AMOUNT OF PRINCIPAL
DATE     AMOUNT OF LOAN      PAID OR PREPAID       NOTATION MADE BY
- -------------------------------------------------------------------
                                          


                                   Ex. A-1-3



                                   EXHIBIT A-2

                                     FORM OF
                                PIK INTEREST NOTE

                                                      Dated: February ___, 2003

         FOR VALUE RECEIVED, the undersigned, GLOBALSTAR, L.P. (the "Borrower"),
HEREBY PROMISES TO PAY to the order of [_____________] (the "Lender") the
principal amount equal to the amount of accrued interest on the Term Loans (as
defined in the Agreement referred to below) capitalized in accordance with
Section 2.5(b) of the Agreement and evidenced by this Note. The Lender is hereby
authorized to endorse on Annex A hereto the amounts of interest capitalized in
accordance with Section 2.5(b) of the Agreement. Any such endorsement shall be
conclusive and binding in the absence of manifest error.

         Interest on the unpaid principal amount hereof shall be capitalized
pursuant to Section 2.5(b) of the Agreement until such principal amount is paid
in full, at such interest rates, and payable at such times, as are specified in
the Agreement.

         Payments hereunder shall be in lawful money of the United States of
America to the Lender in immediately available funds.

         This Note is one of the PIK Interest Notes referred to in, and is
entitled to the benefits of, the Secured Super-Priority Debtor in Possession
Credit Agreement, dated as of February __, 2003 (as it may be amended or
otherwise modified from time to time, the "Agreement"), among the Borrower, the
Subsidiaries (as defined therein) and the Lender and the other Lender
signatories to the Agreement, and the other Loan Documents referred to therein
and entered into pursuant thereto. The Agreement, among other things, (i)
provides for the aggregate Indebtedness of the Borrower to the Lender resulting
from the capitalization of accrued interest payable on the Loans being evidenced
by this Note and (ii) contains provisions for acceleration of the maturity of
the unpaid principal amount of this Note upon the happening of certain stated
events and also for prepayments on account of the principal hereof prior to the
maturity hereof upon the terms and conditions therein specified.

         This Note is secured as provided in the Agreement.

         Except as otherwise provided for in the Agreement and applicable law,
the Borrower waives presentment, demand and protest and notice of presentment,
protest, default, nonpayment, maturity, release, compromise, settlement,
extension or renewal of any or all commercial paper, accounts, contracts rights,
documents, instruments, chattel paper and guaranties at any time held by the
Lender on which the Borrower may in any way be liable and hereby ratifies and
confirms whatever the Lender may do in this regard.



         This Note shall be governed by, and construed and interpreted in
accordance with, the law of the State of New York.

                                               GLOBALSTAR, L.P.,
                                               a Debtor and Debtor in Possession

                                               By:______________________________
                                               Title: Chief Executive Officer

                                 Exhibit A-2-2



                                                                         ANNEX A



   Date            Amount of Interest Capitalized            Notation Made by
- --------------------------------------------------------------------------------
                                                       


                                 Exhibit A-2-3


[GLOBALSTAR LOGO]
                                   DIP BUDGET
- --------------------------------------------------------------------------------
                                ($ IN THOUSANDS)



                                                         2002                                        2003
                                       ---------------------------------------   ----------------------------------------------
                                         ACT        ACT        ACT               FRCST     FRCST     FRCST               FRCST
                                         OCT        NOV        DEC       Q4       JAN       FEB       MAR        Q1       APR
                                                                                             
SOURCES OF FUNDS
REVENUE
   SERVICE REVENUE
      Globalstar USA                      $889       $911      $913     $2,713   $1,021    $1,005    $1,064     $3,090   $1,140
      Globalstar Europe                     --         27        45         72       --        --        50         50       60
      Globalstar Canada/IGO/Other          243        488       522      1,252    1,096       340       373      1,809      361
                                       --------   --------  --------  --------- -------   --------  --------   --------  -------
      SUBTOTAL                           1,132      1,425     1,480      4,037    2,117     1,345     1,488      4,950    1,560

   EQUIPMENT REVENUE
      Globalstar USA                       627        531       591      1,749      407       519       519      1,445      778
      Cash Cost of Equipment Sales        (259)      (188)     (227)      (674)    (122)     (213)     (213)      (549)    (320)
                                       --------   --------  --------  --------- -------   --------  --------   --------  -------
      NET CASH EQUIPMENT REVENUE           368        343       364      1,075      285       305       305        896      458
                                       --------   --------  --------  --------- -------   --------  --------   --------  -------
   TOTAL REVENUE                         1,500      1,769     1,844      5,112    2,402     1,651     1,793      5,846    2,018

User Terminal Receipts/Other Receipts      100        140       130        370    1,088       100       100      1,288      175
Financing                                   --         --        --         --       --     2,000     4,000      6,000    4,000
                                       --------   --------  --------  --------- -------   --------  --------   --------  -------
TOTAL SOURCES OF FUNDS                  $1,600     $1,909    $1,974     $5,482   $3,489    $3,751    $5,893    $13,133   $6,193
                                       ========   ========  ========  ========= ========  ========  ========  ========= ========
USES OF FUNDS
GLOBALSTAR SAN JOSE OPERATIONS          (2,846)    (3,005)   (3,974)    (9,824)  (2,595)   (3,722)   (3,986)   (10,303)  (3,013)

GLOBALSTAR USA OPERATIONS                 (821)      (703)   (1,156)    (2,680)    (665)     (901)   (1,107)    (2,672)    (905)

GLOBALSTAR EUROPE OPERATIONS              (229)      (229)     (408)      (867)    (159)     (469)     (549)    (1,177)    (323)

OTHER USES OF FUNDS
   Restructuring Costs                    (634)      (802)     (924)    (2,360)    (786)     (814)     (900)    (2,500)    (750)
   Change in Working Capital               977        163     1,055      2,194    1,217      (384)   (1,027)      (194)  (1,305)
   Interest Income/(Expense)                19         12         7         38        7         7         9         23        5
                                       --------   --------  --------  --------- -------   --------  --------   --------  -------
TOTAL USES OF FUNDS                    $(3,534)   $(4,564)  $(5,400)  $(13,498) $(2,981)  $(6,282)  $(7,560)  $(16,824) $(6,291)
                                       ========   ========  ========  ========= ========  ========  ========  ========= ========
BEGINNING CASH                         $20,046    $18,111   $15,456    $20,046  $12,030   $12,538   $10,006    $12,030   $8,339
NET CASH FLOW                          $(1,935)   $(2,655)  $(3,426)   $(8,016)    $508   $(2,532)  $(1,667)   $(3,691)    $(97)
                                       --------   --------  --------  --------- -------   --------  --------   --------  -------
ENDING CASH                            $18,111    $15,456   $12,030    $12,030  $12,538   $10,006    $8,339     $8,339   $8,242


NOTE:
     Months based on Globalstar accounting calendar (Qtr 4/4/5 weeks: Month
     Ended Jan 26, Feb 23, Mar 31, Apr 27) Projection includes Globalstar and
     wholly owned subsidiaries. Canadian entities are not consolidated. Not
     prepared in accordance with GAAP

                                     Ex B-1


                     IN THE UNITED STATES BANKRUPTCY COURT

                          FOR THE DISTRICT OF DELAWARE

In re:                                      )   Chapter 11
                                            )
Globalstar Capital Corporation, et al.,(1)  )   Case No. 02-10499 (PJW)
                                            )
                                Debtors.    )   Jointly Administered
                                            )
                                            )   REF. DOCKET NO. 714

          INTERIM ORDER PURSUANT TO SECTION 364(c) OF THE BANKRUPTCY CODE
                  AND BANKRUPTCY RULE 4001 AUTHORIZING DEBTORS
                    TO OBTAIN SECURED POSTPETITION FINANCING

     A hearing having been held on February 20, 2003 (the "Hearing") to
consider the motion, dated February 14, 2003 (the "Motion"), of Globalstar,
L.P. ("Globalstar"), Globalstar Capital Corporation, Globalstar Services
Company, Inc. and Globalstar L.L.C., as debtors and debtors in possession
(collectively, the "Debtors"), seeking an order approving pursuant to section
364(c) of title 11, United States Code (the "Bankruptcy Code"), and Fed. R.
Bankr. P. 4001(c), that certain Secured Super-Priority Debtor in Possession
Credit Agreement, by and among Globalstar, as borrower, the subsidiaries of
Globalstar, party thereto, as guarantors, and ICO Investment Corp., Blue River
Capital LLC, Iridium Investors, LLC, Loeb Partners Corp. and Columbia Ventures
Corporation, the lender parties thereto (collectively, the "Lenders")
(substantially in the form attached to the Motion and as the same may be
amended, supplemented or otherwise modified from time to time, the "DIP
Facility"),(2) and authorizing the Debtors to

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

(1)  The following affiliates of Globalstar Capital Corporation have filed
     voluntary petitions for relief and their cases are being jointly
     administered in these proceedings: Globalstar, LAX., Globalstar Services
     Company, Inc. and Globalstar, L.P.

(2)  Capitalized terms used herein and not otherwise defined herein shall have
     the meanings ascribed thereto in the DIP Facility.



                                    Ex-C-1-1

obtain under the DIP Facility postpetition loans up to an aggregate principal
amount of $10,000,000, subject, upon final approval and timely satisfaction of
the conditions in Section 3.2 of the DIP Facility, to the subordination to the
Wind-Down Costs (as such term is defined in the DIP Facility) (1) secured
pursuant to sections 364(c)(2) and 364(c)(3) of the Bankruptcy Code by (a)
first priority liens on all of the Debtors' unencumbered assets and a junior
lien on any of the Debtors' assets encumbered by Permitted Liens (in each case,
other than the Avoidance Actions, as defined in paragraph 5 below, and FCC
licenses), in each case, in which a lien may be legally granted; (b) a pledge
of the equity interest in the outstanding capital stock of L/Q Licensee, Inc.
(subject to approval by the bankruptcy court in the case of Loral/QUALCOMM
Partnership, L.P.) and (c) all proceeds of sale of all FCC licenses held by the
Debtors (collectively, the "Collateral"), in the case of each of the foregoing
clauses (a), (b) and (c), subject and subordinate to Permitted Liens, and (2)
entitled to administrative expense priority with priority over all other
administrative expenses pursuant to section 364(c)(1) of the Bankruptcy Code,
and the Court having considered the Motion and the Exhibits thereto, the DIP
Facility and the Schedules and Exhibits thereto; and the appearances of all
interested parties having been noted in the record of the Hearing; and upon the
Motion, papers in support thereof, the record of the Hearing; and after due
deliberation and sufficient cause appearing therefor, it is

     HEREBY FOUND AND DETERMINED:

     A.   This Court has jurisdiction over this proceeding and the parties in
interest and properties and interests in properties affected by the Motion
pursuant to 28 U.S.C. Sections 157 and 1334. Consideration of this Motion is a
core proceeding under 28 U.S.C. Section 157(b). Venue of this proceeding is
proper in this district pursuant to 28 U.S.C. Sections 1408 and 1049.


                                     C-1-2



     B.  Good and sufficient notice of the Hearing to consider entry of this
Order (including service of a copy of the Motion and the Exhibits thereto) has
been given. Such notice is sufficient for all purposes under the Bankruptcy
Code, including, without limitation, sections 102(1), 363 and 364 of the
Bankruptcy Code and the applicable Federal Rules of Bankruptcy Procedure,
including, without limitation, Fed. R. Bankr. P. 2002, 4001(c) and 6004 in
respect of the relief requested in the Motion.

     C.  On February 15, 2002, each of the Debtors filed with this Court a
voluntary petition for relief under chapter 11 of the Bankruptcy Code. The
Debtors remain in possession of their assets and are authorized to continue the
operation and management of their businesses as debtors in possession pursuant
to sections 1107(a) and 1108 of the Bankruptcy Code.

     D.  The Debtors do not possess sufficient unencumbered cash to manage and
operate their business without further loans or credit. An immediate need exists
for the Debtors to obtain funds in order to continue operations and administer
their estates under the Bankruptcy Code. The Debtors are incurring significant
operating losses and cannot continue to fund these losses from their cash
reserves without significantly increasing the risk that they will have
insufficient funds to pursue an orderly winding down of the estates. In
addition, absent postpetition financing, the Debtors have insufficient available
funds to fund the costs and expenses of their chapter 11 cases. Absent
postpetition financing, the Debtors and their estates will be faced with the
prospect of the commencement of the immediate liquidation of their assets and
wind down of their estates and thereby will suffer immediate and irreparable
harm. The transaction contemplated by the DIP Facility will allow the Debtors to
continue operating their business as a going concern while they formulate a plan
of reorganization.

                                     C-1-3

     E.   The Debtors have been unsuccessful in their attempts to obtain
postpetition financing from sources other than the Lenders on terms more
favorable to the Debtors than the financing made available under the DIP
Facility. The Debtors have been unable to obtain postpetition unsecured credit
solely under section 503(b)(1) of the Bankruptcy Code as an administrative
expense. New credit is unavailable to the Debtors without securing such new
credit and other obligations with liens on and security interests in all
property and interests in the Collateral, subject and subordinate to the
Permitted Liens.

     F.   The availability of funding under the DIP Facility to finance the
Debtors' business operations is in the best interests of the Debtors and their
respective creditors and estates because the DIP Facility does not
significantly increase the risk of administrative insolvency (as a result of
the Lenders' agreement to the carve-outs from the lien and priority granted
hereunder) and provides the Debtors with the opportunity to solicit offers to
fund a plan.

     G.   The DIP Facility and the transactions contemplated thereby,
including, without limitation, the use of loan proceeds for the purposes set
forth therein and on the attached Schedules and Exhibits, have no intended
effect that is improper under the Bankruptcy Code. The DIP Facility has been
negotiated in good faith and at arm's length between the Debtors and the
Lenders, with the consent and support of the Committee, and any credit extended
and loans made to, or for the benefit of, any of the Debtors by the Lenders,
including, without limitation, the Loans, shall be deemed to have been extended
and made in good faith within the meaning of section 364(e) of the Bankruptcy
Code.

     H.   The terms of the DIP Facility are fair, reasonable and adequate under
the circumstances.


                                     C-1-4

     1.   The relief requested in the Motion, including approval of the Loans
on an interim basis, is in the best interests of the Debtors and their
respective creditors and estates, and is necessary to the continued operations
and successful reorganization of the Debtors. The Debtors require financing in
the amount of up to $4,000,000 to avoid immediate and irreparable harm to the
estates pending a final hearing.

     For all of the foregoing findings of fact, and after due deliberation and
sufficient cause appearing therefor, the Court ORDERS, ADJUDGES AND DECREES
THAT:

     1.   The Motion is granted on an interim basis subject to a final hearing.

     2.   The DIP Facility, annexed to the Motion as Exhibit A, and each of the
other Loan Documents are authorized and approved on an interim basis and the
Debtors are (a) authorized to execute, if not previously executed, and deliver
to the Administrative Agent each of the Loan Documents including, without
limitation, the DIP Facility, and (b) authorized to comply with their
respective obligations under each of the Loan Documents. Each of the Debtors is
authorized to effect all actions, to execute and deliver all agreements,
instruments, and documents and to pay all present and future fees, costs,
expenses, and taxes which may be required, necessary, or appropriate for the
complete performance of its Loan Obligations under the DIP Facility and each of
the other Loan Documents, including the Notes. The Debtors are authorized to
cooperate and comply with any reasonable requests as made by the Lender under
the terms of the DIP Facility.

     3.   Globalstar is authorized to borrow up to $4,000,000 in the aggregate
on an interim basis pending the final hearing to avoid immediate and
irreparable harm to the estate. The proceeds of the Loans shall be used solely
as provided in the DIP Facility.

                                     C-1-5


     4.  The DIP Facility and each of the Loan Documents, respectively, shall
constitute and evidence the valid and binding Obligations of each of the
Debtors, which obligations shall be enforceable against each of the Debtors in
accordance with their terms and the terms of this Order.

     5.  Except with respect to the pledge of the equity interest in the
outstanding capital stock of L/Q Licensee, Inc. (which requires approval of the
bankruptcy court in the chapter 11 case of Loral/QUALCOMM Partnership, L.P.),
the pledges of, liens on, and security interests in, the Collateral granted by
the Debtors as security for their obligations under the Loan Documents are
approved in all respects. The Collateral does not include claims and causes of
action arising under the chapter 5 of the Bankruptcy Code or the proceeds
thereof or monies or properly recovered therefrom or the proceeds thereof (the
"Avoidance Actions").

     6.  The Debtors agree that no cost or expense which is incurred by the
Debtors in connection with or on account of the preservation or disposition of
any Collateral or which otherwise could be chargeable to the Lenders or the
Collateral pursuant to section 506(c) of the Bankruptcy Code or otherwise,
shall be chargeable to Lenders or the Collateral.

     7.  As security for the full and complete repayment, performance and
satisfaction of the Debtors' Loan obligations arising under the DIP Facility,
the Administrative Agent for the ratable benefit of the Lenders is hereby
granted, effective immediately and without the necessity of the execution by
the Debtors, or the Lenders, or filing or recordation by any party, of
financing statements, mortgages, security agreements, or otherwise pursuant to
sections 364(c)(2) and 364(c)(3) of the Bankruptcy Code, first priority
perfected lien on and security interests in all of the Collateral, subject and
subordinate to Permitted Liens. Notwithstanding the foregoing sentence, the
Administrative Agent, on behalf of the Lenders, may, in its sole


                                     C-1-6

discretion, file or cause the Debtors to file at the sole expense of the
Debtors, such financing statements, mortgages, notices of liens, or similar
documents or instruments or otherwise confirm perfection of such liens,
security interests, and mortgages as the Administrative Agent may require, and
the automatic stay imposed under section 362 of the Bankruptcy Code shall be
deemed modified for such purposes, and all such financing statements,
mortgages, notices of liens, or similar documents or instruments shall be
deemed to have been filed or recorded at the time and on the date of entry of
this Order. In addition, the Obligations under the DIP Facility are entitled,
pursuant to section 364(c)(1) of the Bankruptcy Code, to administrative
priority with priority over all other administrative expenses, including
chapter 7 administrative expenses, except that the Lender's administrative
expense claims shall not be satisfied from the Avoidance Actions.
Notwithstanding anything herein to the contrary, if a final order approving the
DIP Facility is not entered or the conditions to the Lenders' obligation to
make Loans thereunder following entry of such final order have not been
satisfied by March 7, 2003 then the Debtors shall repay all amounts borrowed
pursuant to this Order and any other Obligations (as such term is defined in
the DIP Facility) owing pursuant to the DIP Facility from the Wind-Down Funds
within one Business Day thereafter.

     8.   The security interests and liens granted to the Administrative Agent
hereunder shall not be, in right of payment or priority, subordinated to, or
pari passu with, any security interest or lien granted pursuant to section
364(c), 364(4), 546(c) of the Bankruptcy Code, or otherwise, other than
Permitted Liens.

     9.   The Debtors are (a) authorized to execute and deliver to the
Administrative Agent any and all nonmaterial amendments to the DIP Facility as
approved by

                                     C-1-7



the Required Lenders and the Debtors, without further order of the Court, and
(b) authorized to comply with their respective obligations under any such
amendment or amendments.

     10.  Subject to the provisions of the DIP Facility, the automatic stay
provisions of section 362 of the Bankruptcy Code are modified to the extent
necessary to permit the Lender to exercise, upon the occurrence of an Event of
Default, and the giving of written notice thereof, all rights and remedies
provided for the DIP Facility and this Order; provided that in the event final
approval of the DIP Facility is not obtained or the conditions in Section 3.2
of the DIP Facility not satisfied by March 7, 2003 and the Debtors fail to
repay the Obligations as provided in Paragraph 7 of this Order, such remedies
may be exercised immediately and without regard to any Standstill Period that
may otherwise be provided in the DIP Facility.

     11.  The provisions of this Order shall be binding upon and inure to the
benefit of the Lenders, the Administrative Agent, the Debtors, and their
respective successors and assigns including, without limitation, any trustee
hereinafter appointed for any of the estates of any of the Debtors.

     12.  If any or all of the provisions of this Order or the DIP Facility are
hereafter reversed, modified, vacated, or stayed by subsequent order of this
Court or by any other court, such reversal, modification, vacatur, or stay shall
not affect the validity of any obligation to the Lenders that is or was incurred
by any of the Debtors pursuant to this Order and that is or was incurred prior
to the effective date of such reversal, modification, vacatur, or stay, and
shall not affect the validity and enforceability of any security interest, lien,
or priority authorized, created, or granted by this Order or the DIP Facility,
and notwithstanding such reversal, modification, vacatur, or stay, any
obligations of the Debtors pursuant to this Order or the DIP Facility arising
prior to the effective date of such reversal, modification, vacatur, or stay
shall be


                                     C-1-8

governed in all respects by the provisions of this Order and DIP Facility, and
the validity of any such obligation incurred, or security interest or lien
authorized to the protection accorded by section 364(c) of the Bankruptcy Code.

     13. The failure of the Administrative Agent or the Lenders to seek relief
or otherwise exercise their rights and remedies under the DIP Facility or this
Order shall not constitute a waiver of any of the rights of the Administrative
Agent or Lenders hereunder, thereunder, or otherwise.

     14. With the exception of the inapplicability of the Standstill Periods
ordered above, in the event of any inconsistency between the terms and
conditions of (i) the DIP Facility, any Loan Document, or any order of this
Court entered prior to or on the date hereof, and (ii) this Order, the
provisions of the DIP Facility shall govern and control.

     15. To the extent any of the foregoing findings of fact constitute
conclusions of law, they are adopted as such. To the extent any of the
foregoing conclusions of law constitute findings of fact, they are adopted as
such.

     16. A final hearing on the Motion will be held on March 6, 2003 at 9:30
a.m. Any opposition to the Motion must be filed and served so that it is
received by 4:00 p.m. on February 28, 2003. Any reply must be filed and served
so that it is received by 4:00 p.m. on March 3, 2003.

Dated: Wilmington, Delaware
       February 20, 2003

                                           /s/ Peter J. Walsh
                                           ------------------------------
                                           Peter J. Walsh
                                           Chief United States Bankruptcy Judge

                                     C-1-9

                     IN THE UNITED STATES BANKRUPTCY COURT

                          FOR THE DISTRICT OF DELAWARE


In re:                                            Chapter 11

Globalstar Capital Corporation, et al.,(1)        Case No. 02-10499 (PJW)

                               Debtors.           Jointly Administered

                                                  Ref. Docket No. 714 & 738


         FINAL ORDER PURSUANT TO SECTION 364(c) OF THE BANKRUPTCY CODE
                  AND BANKRUPTCY RULE 4001 AUTHORIZING DEBTORS
                    TO OBTAIN SECURED POSTPETITION FINANCING


     A hearing having been held on March 6, 2003 (the "Hearing") to consider

the motion, dated February 14, 2003 (the "Motion"), of Globalstar, L.P.

("Globalstar"), Globalstar Capital Corporation, Globalstar Services Company,

Inc. and Globalstar L.L.C., as debtors and debtors in possession (collectively,

the "Debtors"), seeking an order approving pursuant to section 364(c) of

title 11, United States Code (the "Bankruptcy Code"), and Fed. R. Bankr. P.

4001(c), that certain Secured Super-Priority Debtor in Possession Credit

Agreement, dated as of February 24, 2003, by and among Globalstar, as borrower,

the subsidiaries of Globalstar party thereto, as guarantors, and ICO Investment

Corp., Blue River Capital LLC, Iridium Investors, LLC, Loeb Partners Corp. and

Columbia Ventures Corporation, the lender parties thereto (collectively, the

"Lenders") (as the same may be amended, supplemented or otherwise modified



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

(1) The following affiliates of Globalstar Capital Corporation have filed
    voluntary petitions for relief and their cases are being jointly
    administered in these proceedings:  Globalstar, LLC, Globalstar Services
    Company, Inc. and Globalstar, L.P.



                                     C-2-1



from time to time, the "DIP Facility"),(2) and authorizing the Debtors to obtain
under the DIP Facility postpetition loans up to an aggregate principal amount
of $10,000,000 (1) secured pursuant to sections 364(c)(2) and 364(c)(3) of the
Bankruptcy Code by (a) first priority liens on all of the Debtors' unencumbered
assets and a junior lien on any of the Debtors' assets encumbered by Permitted
Liens (in each case, other than the Avoidance Actions, as defined in paragraph
5 below, and FCC licenses), in each case, in which a lien may be legally
granted; (b) a pledge of the equity interest in the outstanding capital stock
of L/Q Licensee, Inc. (subject to approval by the bankruptcy court in the case
of Loral/QUALCOMM Partnership, L.P.) and (c) all proceeds of sale of all FCC
licenses held by the Debtors (collectively, the "Collateral"), in the case of
each of the foregoing clauses (a), (b) and (c), subject and subordinate to
Permitted Liens and as otherwise provided in paragraph 7 hereof, and (2)
entitled to administrative expense priority with priority over all other
administrative expenses pursuant to section 364(c)(1) of the Bankruptcy Code,
except as otherwise provided in paragraph 7 hereof, and the Court having
considered the Motion and the Exhibits thereto, the DIP Facility and the
Schedules and Exhibits thereto; and the appearances of all interested parties
having been noted in the record of the Hearing; and upon the Motion, papers in
support thereof, the record of the Hearing; and after due deliberation and
sufficient cause appearing therefor, it is

     HEREBY FOUND AND DETERMINED:

     A.   This Court has jurisdiction over this proceeding and the parties in
interest and properties and interests in properties affected by the Motion
pursuant to 28 U.S.C. Sections 157 and 1334. Consideration of this Motion is a
core proceeding under 28 U.S.C. Sections 157(b). Venue of this proceeding is
proper in this district pursuant to 28 U.S.C. Sections 1408 and 1409.

- ---------

(2)  Capitalized terms used herein and not otherwise defined herein shall have
     the meanings ascribed thereto in the DIP Facility.

                                     C-2-2

     B.  Good and sufficient notice of the Hearing to consider entry of this
Order (including service of a copy of the Motion and the Exhibits thereto) has
been given. Such notice is sufficient for all purposes under the Bankruptcy
Code, including, without limitation, sections 102(1), 363 and 364 of the
Bankruptcy Code and the applicable Federal Rules of Bankruptcy Procedure,
including, without limitation, Fed. R. Bankr. P. 2002, 4001(c) and 6004 in
respect of the relief requested in the Motion.

     C.  On February 15, 2002, each of the Debtors filed with this Court a
voluntary petition for relief under chapter 11 of the Bankruptcy Code. The
Debtors remain in possession of their assets and are authorized to continue the
operation and management of their businesses as debtors in possession pursuant
to sections 1107(a) and 1108 of the Bankruptcy Code.

     D.  The Debtors do not possess sufficient unencumbered cash to manage and
operate their business without further loans or credit. An immediate need exists
for the Debtors to obtain funds in order to continue operations and administer
their estates under the Bankruptcy Code. The Debtors are incurring significant
operating losses and cannot continue to fund these losses from their cash
reserves without significantly increasing the risk that they will have
insufficient funds to pursue an orderly winding down of the estates. In
addition, absent postpetition financing, the Debtors have insufficient available
funds to fund the costs and expenses of their chapter 11 cases. Absent
postpetition financing, the Debtors and their estates will be faced with the
prospect of the commencement of the immediate liquidation of their assets and
wind down of their estates and thereby will suffer immediate and irreparable
harm. The transaction contemplated by the DIP Facility will allow the Debtors to
continue operating their business as a going concern while they formulate a plan
of reorganization.


                                     C-2-3

     E.   The Debtors have been unsuccessful in their attempts to obtain
postpetition financing from sources other than the Lenders on terms more
favorable to the Debtors than the financing made available under the DIP
Facility. The Debtors have been unable to obtain postpetition unsecured credit
solely under section 503(b)(1) of the Bankruptcy Code as an administrative
expense. New credit is unavailable to the Debtors without securing such new
credit and other obligations with liens on and security interests in all
property and interests in the Collateral, subject and subordinate to the
Permitted Liens and as otherwise provided in paragraph 7 hereof.

     F.   The availability of funding under the DIP Facility to finance the
Debtors' business operations is in the best interests of the Debtors and their
respective creditors and estates because the DIP Facility does not
significantly increase the risk of administrative insolvency (as a result of
the Lenders' agreement to the carve-outs from the lien and priority granted
hereunder) and provides the Debtors with the opportunity to solicit offers to
fund a plan.

     G.   The DIP Facility and the transactions contemplated thereby, including,
without limitation, the use of loan proceeds for the purposes set forth therein
and on the attached Schedules and Exhibits, have no intended effect that is
improper under the Bankruptcy Code. The DIP Facility has been negotiated in
good faith and at arm's length between the Debtors and the Lenders, with the
consent and support of the Committee, and any credit extended and loans made
to, or for the benefit of, any of the Debtors by the Lenders, including,
without limitation, the Loans, shall be deemed to have been extended and made
in good faith within the meaning of section 364(e) of the Bankruptcy Code.

     H.   The terms of the DIP Facility are fair, reasonable and adequate under
the circumstances.

                                     C-2-4

     1. The relief requested in the Motion, including approval of the Loans on
an interim basis, is in the best interests of the Debtors and their respective
creditors and estates, and is necessary to the continued operations and
successful reorganization of the Debtors.

     For all of the foregoing findings of fact, and after due deliberation and
sufficient cause appearing therefor, the Court ORDERS, ADJUDGES AND DECREES
THAT:

     1. The Motion is granted.

     2. The DIP Facility, annexed hereto as Exhibit A, and each of the other
Loan Documents are authorized and approved and the Debtors are (a) authorized
to execute, if not previously executed, and deliver to the Administrative Agent
each of the Loan Documents including, without limitation, the DIP Facility, and
(b) authorized to comply with their respective obligations under each of the
Loan Documents. Each of the Debtors is authorized to effect all actions, to
execute and deliver all agreements, instruments, and documents and to pay all
present and future fees, costs, expenses, and taxes which may be required,
necessary, or appropriate for the complete performance of its Loan Obligations
under the DIP Facility and each of the other Loan Documents, including the
Notes. The Debtors are authorized to cooperate and comply with any reasonable
requests as made by the Lender under the terms of the DIP Facility.

     3. All amounts provided for in the DIP Facility (up to an aggregate amount
of $10,000,000) are to be available for the purposes provided in the DIP
Facility, which purposes shall not be improper under the Bankruptcy Code. The
proceeds of the Loans shall be used solely as provided in the DIP Facility.

     4. The DIP Facility and each of the Loan Documents, respectively, shall
constitute and evidence the valid and binding Obligations of each of the
Debtors, which obligations shall be enforceable against each of the Debtors in
accordance with their terms and the terms of this Order.

                                     C-2-5

     5.  Except with respect to the pledge of the equity interest in the
outstanding capital stock of L/Q Licensee, Inc. (which requires approval of the
bankruptcy court in the chapter 11 case of Loral/QUALCOMM Partnership, L.P.),
the pledges of, liens on, and security interests in, the Collateral granted by
the Debtors as security for their obligations under the Loan Documents are
approved in all respects. The Collateral does not include claims and causes of
action arising under chapter 5 of the Bankruptcy Code or the proceeds thereof
or monies or property recovered therefrom or the proceeds thereof (the
"Avoidance Actions").

     6.  The Debtors agree that no cost or expense which is incurred by the
Debtors in connection with or on account of the preservation or disposition of
any Collateral or which otherwise could be chargeable to the Lenders or the
Collateral pursuant to section 506(c) of the Bankruptcy Code or otherwise,
shall be chargeable to Lenders or the Collateral.

     7.  As security for the full and complete repayment, performance and
satisfaction of the Debtor's Loan obligations arising under the DIP Facility,
the Administrative Agent for the ratable benefit of the Lenders is hereby
granted, effective immediately and without the necessity of the execution by
the Debtors, or the Lenders, or filing or recordation by any party, of
financing statements, mortgages, security agreements, or otherwise, pursuant to
sections 364(c)(2) and 364(c)(3) of the Bankruptcy Code, first priority
perfected lien on and security interests in all of the Collateral, subject and
subordinate to Permitted Liens and as otherwise provided for in this
paragraph 7. Notwithstanding the foregoing sentence, the Administrative Agent,
on behalf of the Lenders may, in its sole discretion, file or cause the Debtors
to file at the sole expense of the Debtors, such financing statements,
mortgages, notices of liens, or similar documents or instruments or otherwise
confirm perfection of such liens, security interests, and mortgages as the
Administrative Agent may require, and the automatic stay imposed under
section 362 of the Bankruptcy Code shall be deemed modified for such purposes,
and all such


                                     C-2-6

financing statements, mortgages, notices of liens, or similar documents or
instruments shall be deemed to have been filed or recorded at the time and on
the date of entry of this Order. In addition, the Obligations under the DIP
Facility are entitled, pursuant to section 364(c)(1) of the Bankruptcy Code to
administrative priority with priority over all other administrative expenses,
including chapter 7 administrative expenses, except that the Lender's
administrative expense claims shall not be satisfied from the Avoidance
Actions. Notwithstanding anything else herein to the contrary, upon entry of
this Order and timely satisfaction of the conditions set forth in Section 3.2
of the DIP Facility, the super-priority administrative claims provided to the
Lenders herein and in the DIP Facility shall be subordinated to the Wind-Down
Costs (as defined in the DIP Facility), and the security interests and liens
provided to the Lenders herein and in the DIP Facility shall not be enforceable
against the Wind-Down Funds (as defined in the DIP Facility), but such
subordination and unenforceability shall be limited to Wind-Down Costs and
Wind-Down Funds within and as limited by the Subordination Cap (as the same may
be reduced from time to time in accordance with the terms of the DIP Facility).

     8.   The security interests and liens granted to the Administrative Agent
hereunder shall not be, in right of payment or priority, subordinated to, or
pari passu with, any security interest or lien granted pursuant to section
364(c), 364(d), 546(c) of the Bankruptcy Code, or otherwise, other than
Permitted Liens.

     9.   The Debtors are (a) authorized to execute and deliver to the
Administrative Agent any and all nonmaterial amendments to the DIP Facility as
approved by the Required Lenders and the Debtors, without further order of the
Court, and (b) authorized to comply with their respective obligations under any
such amendment or amendments.

     10.  Subject to the provisions of the DIP Facility, the automatic stay
provisions of section 362 of the Bankruptcy Code are modified to the extent
necessary to permit the Lender

                                     C-2-7

to exercise, upon the occurrence of an Event of Default, and the giving of
written notice thereof, all rights and remedies provided for in the DIP
Facility and this Order; provided that such remedies may not be exercised until
expiration of the applicable Standstill Period as provided in the DIP Facility.
The Standstill Period starts upon the delivery of the Administrative Agent's
written notice of termination and acceleration.

     11.  The provisions of this Order shall be binding upon the inure to the
benefit of the Lenders, the Administrative Agent, the Debtors, and their
respective successors and assigns including, without limitation, any trustee
hereinafter appointed for any of the estates of any of the Debtors.

     12.  If any or all of the provisions of this Order or the DIP Facility are
hereafter reversed, modified, vacated, or stayed by subsequent order of this
Court or by any other court, such reversal, modification, vacatur, or stay
shall not affect the validity of any obligation to the Lenders that is or was
incurred by any of the Debtors pursuant to this Order and that is or was
incurred prior to the effective date of such reversal, modification, vacatur,
or stay, and shall not affect the validity and enforceability of any security
interest, lien, or priority authorized, created, or granted by this Order or
the DIP Facility, and notwithstanding such reversal, modification, vacatur, or
stay, any obligations of the Debtors pursuant to this Order or the DIP Facility
arising prior to the effective date of such reversal, modification, vacatur, or
stay shall be governed in all respects by the provisions of this Order and the
DIP Facility, and the validity of any such obligation incurred, or security
interest or lien authorized, shall be entitled to the protection accorded by
section 364(e) of the Bankruptcy Code.

     13.  The failure of the Administrative Agent or the Lenders to seek relief
or otherwise exercise their rights and remedies under the DIP Facility or this
Order shall not

                                     C-2-8

constitute a waiver of any of the rights of the Administrative Agent or Lenders
hereunder, thereunder, or otherwise.

     14.  In the event of any inconsistency between the terms and conditions of
(i) the DIP Facility, any Loan Document, or any order of this Court entered
prior to or on the date hereof, and (ii) this Order, the provisions of the DIP
Facility shall govern and control.

     15.  To the extent any of the foregoing findings of fact constitute
conclusions of law, they are adopted as such. To the extent any of the
foregoing conclusions of law constitute findings of fact, they are adopted as
such.

Dated:    Wilmington, Delaware
          March 6, 2003

                                        /s/ Peter J. Walsh
                                        ------------------
                                        The Honorable Peter J. Walsh
                                        Chief United States Bankruptcy Judge

                                     C-2-9



                                    EXHIBIT D

                                     FORM OF
                               NOTICE OF BORROWING

[DATE]

Blue River Capital, LLC, as
Administrative Agent for Lenders
c/o Van D. Greenfield
360 East 88th Street, Suite 2D
New York, NY 10128

Ladies and Gentlemen:

         The undersigned, GLOBALSTAR, L.P. (the "Borrower"), refers to the
Secured Super-Priority Debtor in Possession Credit Agreement, dated as of
February __, 2003, among the Borrower, the Subsidiaries (as defined therein) of
the Borrower listed on the signature pages thereto as Guarantors (as defined
therein) and the Lenders (as it may be amended or otherwise modified from time
to time, the "Agreement"; and capitalized terms not defined herein but defined
therein being used herein as therein defined), and hereby gives you notice,
irrevocably, pursuant to Section 2.2 of the Agreement that the undersigned
hereby request a Borrowing under the Agreement, and in that connection sets
forth below the information relating to such Borrowing (the "Proposed
Borrowing") as required by Section 2.2 of the Agreement:

         (i)      The Business Day of the Proposed Borrowing
is_________________, 200__.

         (ii)     The aggregate amount of the Loans constituting the Proposed
Borrowing is $_____________.

         (iii)    The Permitted Expenditures to be paid with the proceeds of the
Proposed Borrowing are______________.

         The undersigned hereby certifies that the following statements are true
on the date hereof, and will be true on the date of the Proposed Borrowing,
before and after giving effect thereto and to the application of the proceeds
therefrom:

         (A)      the representations and warranties contained in Article IV of
the Agreement and in each of the other Loan Documents are true and correct as
though made

                                    Ex. D-1



on and as of such date, other than any such representations and warranties that,
by their terms, refer to an earlier date;

         (B)      no Default or Event of Default will result from the Proposed
Borrowing;

         (C)      the making of the Loans on the date of the Proposed Borrowing
shall not violate any Requirement of Law and is not subject to any stay or
injunction, whether temporary, preliminary or permanent; and

         (D)      no Default or Event of Default has occurred or is continuing.

Very truly yours,

GLOBALSTAR, L.P.
as Borrower

By:___________________________
Title:________________________

                                    Ex. D-2





         AMENDMENT NO. 1, dated as of March 7, 2003, to Secured Super-Priority
Debtor In Possession Credit Agreement, dated as of February 24, 2003 (the "DIP
Agreement"), between GLOBALSTAR, L.P., as debtor and debtor in possession under
chapter 11 of the Bankruptcy Code (the "Borrower"), the Subsidiaries of the
Borrower listed on the signature pages hereto as Guarantors, as debtors and
debtors in possession under chapter 11 of the Bankruptcy Code (the "Guarantors")
and ICO INVESTMENT CORP., BLUE RIVER CAPITAL LLC (the "Adminstrative Agent"),
IRIDIUM INVESTORS, LLC, LOEB PARTNERS CORP. and COLUMBIA VENTURES CORPORATION
(collectively, the "Lenders"). All capitalized terms not defined herein shall
have the meaning given to them in the DIP Agreement.

         WHEREAS Borrower and Lenders have entered into the DIP Agreement
pursuant to approval obtained from the United States Bankruptcy Court for the
District of Delaware (the "Court") which has jurisdiction over the pending cases
under chapter 11 of the Bankruptcy Code commenced by the Borrowers and the
Guarantors;

         WHEREAS interim approval authorizing the Borrower and the Guarantors to
enter into the DIP Agreement was granted by an order of the Court dated February
20, 2003 and final approval was granted by an order of the Court dated March 6,
2003 (the "Final Order");

         WHEREAS Lenders have previously made Term Loans to the Borrower
aggregating $2 million;

         WHEREAS Borrower has requested that the March 7, 2003 deadline by which
the conditions in Sections 3.2(b)(iii) and 3.2(c)(ii) of the DIP Agreement
(collectively, the "Loral Conditions") must be satisfied, be extended to and
including March 14, 2003 and that satisfaction of such conditions by such date
be considered "timely satisfaction" of such conditions for purposes of paragraph
7 of the Final Order, which extension requires the written consent of the
Required Lenders;

         WHEREAS the Required Lenders are willing to extend the March 7, 2003
deadline subject to certain conditions.

         NOW THEREFORE, for good and sufficient consideration, the receipt of
which is acknowledged, the parties hereby agree as follows:

         1. The March 7, 2003 deadline for satisfaction of the Loral Conditions
is hereby extended to and including March 14, 2003. Satisfaction of the Loral
Conditions by March 14, 2003 shall be deemed "timely satisfaction" thereof for
purposes of paragraph 7 of the Final Order.

         2. Notwithstanding anything to the contrary in the DIP Agreement or
otherwise, Lenders shall have no obligation to make any further Loans under the
DIP Agreement until the Loral Conditions are timely satisfied.

         3. Section 3.2(b)(iv) of the DIP Agreement shall be amended to read in
its entirety as follows: "On the date of each Term Loan Borrowing, a
certificate, signed by a Responsible Officer of each Credit Party except LQP,
stating that as of each such date each of the conditions specified in Sections
3.3(a), (b), (c) and (d) has been satisfied."


         4. The Borrower and the Guarantors shall remain fully bound to the DIP
Agreement and all of their Obligations thereunder and the Guarantors hereby
reaffirm their respective guarantees of the Borrower's Obligations.

         5. The Administrative Agent shall hereafter be authorized and empowered
to execute amendments and modifications of the DIP Agreement on behalf of the
Lenders which require only the consent of the Required Lenders, upon receiving
the requisite written consents from the Required Lenders, including by e-mail,
fax or other electronic form.

         6. The extension of time provided for in paragraph 1 hereof is without
prejudice to and shall not constitute a waiver of any other rights, claims or
defenses of the Lenders under the DIP Agreement, and all other provisions of the
DIP Agreement shall remain in full force and effect as originally executed by
the parties.

         7. This Amendment may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement. Facsimile signatures shall be effective
to bind a party to this Agreement and such facsimile signatures shall have the
same force and effect as original signatures.

         8. This Amendment and the rights and obligations of the parties hereto
and thereto shall be governed by, and construed and interpreted in accordance
with, the laws of the State of New York and, to the extent applicable, the
Bankruptcy Code.

                            [signatures on next page]








                                       2



                  IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly authorized,
as of the date first above written.


                                         Borrower:
                                         ---------

                                         GLOBALSTAR, L.P.,
                                         a Debtor and Debtor in Possession


                                         By:
                                               ---------------------------------
                                               Name:
                                               Title:  Chief Executive Officer

                                         Guarantors:
                                         -----------

                                         GLOBALSTAR CAPITAL CORPORATION,
                                         a Debtor and Debtor in Possession


                                         By:
                                               --------------------------------
                                               Name:
                                               Title:

                                         GLOBALSTAR SERVICES COMPANY, INC.,
                                         a Debtor and Debtor in Possession


                                         By:
                                               ---------------------------------
                                               Name:
                                               Title:


                                          GLOBALSTAR, L.L.C.,
                                          a Debtor and Debtor in Possession


                                           By:
                                                 -------------------------------
                                                 Name:
                                                 Title:







                                     Lenders:
                                     --------

                                     ICO INVESTMENT CORP.


                                     By:
                                              ----------------------------------
                                              Name:
                                              Title:

                                     BLUE RIVER CAPITAL LLC


                                     By:
                                              ----------------------------------
                                              Name:
                                              Title:

                                     IRIDIUM INVESTORS, LLC


                                     By:
                                              ----------------------------------
                                              Name:
                                              Title:

                                     LOEB PARTNERS CORP.


                                     By:
                                              ----------------------------------
                                              Name:
                                              Title:

                                     COLUMBIA VENTURES CORPORATION


                                     By:
                                              ----------------------------------
                                              Name:
                                              Title:




                                       4



         AMENDMENT NO. 2, dated as of March 14, 2003, to Secured Super-Priority
Debtor In Possession Credit Agreement, dated as of February 24, 2003 (the "DIP
Agreement"), between GLOBALSTAR, L.P., as debtor and debtor in possession under
chapter 11 of the Bankruptcy Code (the "Borrower"), the Subsidiaries of the
Borrower listed on the signature pages hereto as Guarantors, as debtors and
debtors in possession under chapter 11 of the Bankruptcy Code (the "Guarantors")
and ICO INVESTMENT CORP., BLUE RIVER CAPITAL LLC (the "Adminstrative Agent"),
IRIDIUM INVESTORS, LLC, LOEB PARTNERS CORP. and COLUMBIA VENTURES CORPORATION
(collectively, the "Lenders"). All capitalized terms not defined herein shall
have the meaning given to them in the DIP Agreement.

         WHEREAS Borrower and Lenders have entered into the DIP Agreement
pursuant to approval obtained from the United States Bankruptcy Court for the
District of Delaware (the "Court") which has jurisdiction over the pending cases
under chapter 11 of the Bankruptcy Code commenced by the Borrowers and the
Guarantors;

         WHEREAS interim approval authorizing the Borrower and the Guarantors to
enter into the DIP Agreement was granted by an order of the Court dated February
20, 2003 and final approval was granted by an order of the Court dated March 6,
2003 (the "Final Order");

         WHEREAS Lenders have previously made Term Loans to the Borrower
aggregating $2 million;

         WHEREAS Borrower and Lenders agreed to extend to March 14, 2003, the
March 7, 2003 deadline (the "Loral Conditions Deadline") by which the conditions
in Sections 3.2(b)(iii) and 3.2(c)(ii) of the DIP Agreement (collectively, the
"Loral Conditions") must be satisfied, and that satisfaction of such conditions
by such date be considered "timely satisfaction" of such conditions for purposes
of paragraph 7 of the Final Order;

         WHEREAS Borrower has requested that the Lenders further extend the
Loral Conditions Deadline to March 21, 2003 and the Required Lenders are willing
to do so subject to certain conditions;

         WHEREAS one of the Loral Conditions is that Loral/Qualcomm Partnership,
L.P. ("LQP") pledge, as additional collateral for Borrower's Obligations, the
stock of L/Q Licensee, Inc. (the "Stock") which owns the so-called "Big Leo"
license issued by the FCC (the "Big Leo License");

         WHEREAS LQP, as pledgor, and the Administrative Agent, as pledgee have
agreed to the terms of the LQP Pledge Agreement, subject to Borrower's agreement
to modify the DIP Agreement to deal with certain issues because of, among other
things, the non-recourse nature of LQP's obligations.

         NOW THEREFORE, for good and sufficient consideration, the receipt of
which is acknowledged, the parties hereby agree as follows:

         1. The Loral Conditions Deadline is hereby extended to and including
March 21, 2003. Satisfaction of the Loral Conditions by March 21, 2003 shall be
deemed "timely satisfaction" thereof for purposes of paragraph 7 of the Final
Order.

         2. Notwithstanding anything to the contrary in the DIP Agreement or
otherwise, Lenders shall have no obligation to make any further Loans under the
DIP Agreement until the Loral Conditions are timely satisfied.



         3. Notwithstanding Section 3.2(b)(iv) of the DIP Agreement, no
officer's certification shall be required with respect to the condition in
Section 3.2(b)(iii) thereof regarding the due execution of an LQP Pledge
Agreement satisfactory to the Required Lenders, or with respect to the condition
in Section 3.2(c)(ii) thereof as it relates to the reasonable acceptability to
the Required Lenders of that certain term sheet among Borrower, Loral and the
Creditors' Committee, dated March 14, 2003 (the "Loral Term Sheet").

         4. All monetary obligations of LQP to the Administrative Agent under
the LQP Pledge Agreement, including, without limitation rights to reimbursement
of expenses and costs, and irrespective of whether the Administrative Agent has
recourse to LQP for such obligations (beyond the Stock), shall constitute
additional Obligations of Borrower under the DIP Agreement.

         5. In the event that the Stock is transferred by LQP to Borrower as
contemplated by the LQP Pledge Agreement and the Loral Term Sheet, then Borrower
shall be deemed to have executed the LQP Pledge Agreement and shall be deemed
the "Pledgor" thereunder; provided, however, that all obligations of Borrower as
successor to LQP under the LQP Pledge Agreement shall be with full recourse to
Borrower, notwithstanding any provision in the LQP Pledge Agreement to the
contrary; provided further, however, that upon the request of the Administrative
Agent, Borrower shall execute an amendment to the LQP Pledge Agreement for
purposes of conforming such agreement in light of Borrower becoming the Pledgor
of the Stock and the intention of the parties hereto. In the event that the Big
Leo License is transferred to Borrower, it shall be considered as Collateral to
the same extent as other FCC Licenses pursuant to Section 9.1(a) of the DIP
Agreement.

         6. In accordance with the DIP Agreement, Borrower and Guarantors
acknowledge that any material breach or violation of the terms and provisions of
the LQP Pledge Agreement by LQP (or, if the Stock is transferred to Borrower, by
Borrower as Pledgor thereunder) shall constitute an Event of Default under the
DIP Agreement.

         7. Lenders shall be entitled to deduct from any Loan made under the DIP
Agreement expenses and costs for which they are entitled to be reimbursed under
the DIP Agreement, including, without limitation, legal expenses as provided in
Section 10.4 thereof.

         8. The Borrower and the Guarantors shall remain fully bound to the DIP
Agreement and all of their Obligations thereunder and the Guarantors hereby
reaffirm their respective guarantees of the Borrower's Obligations.

         9. The modifications provided herein are without prejudice to and shall
not constitute a waiver of any other rights, claims or defenses of the Lenders
under the DIP Agreement, and all other provisions of the DIP Agreement shall
remain in full force and effect as originally executed by the parties.

         10. This Amendment may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement. Facsimile signatures shall be effective
to bind a party to this Agreement and such facsimile signatures shall have the
same force and effect as original signatures.

         11. This Amendment and the rights and obligations of the parties hereto
and thereto shall be governed by, and construed and interpreted in accordance
with, the laws of the State of New York and, to the extent applicable, the
Bankruptcy Code.

                                       2



         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.


                                    Borrower:
                                    ---------

                                    GLOBALSTAR, L.P.,
                                    a Debtor and Debtor in Possession


                                    By:
                                             -----------------------------------
                                             Name:
                                             Title:  Chief Executive Officer

                                    Guarantors:
                                    ----------

                                    GLOBALSTAR CAPITAL CORPORATION,
                                    a Debtor and Debtor in Possession


                                    By:
                                             -----------------------------------
                                             Name:
                                             Title:

                                    GLOBALSTAR SERVICES COMPANY, INC.,
                                    a Debtor and Debtor in Possession


                                    By:
                                             -----------------------------------
                                             Name:
                                             Title:


                                    GLOBALSTAR, L.L.C.,
                                    a Debtor and Debtor in Possession


                                    By:
                                             -----------------------------------
                                             Name:
                                             Title:







                                    Lenders:
                                    --------

                                    ICO INVESTMENT CORP.


                                    By:
                                             -----------------------------------
                                             Name:
                                             Title:

                                    BLUE RIVER CAPITAL LLC


                                    By:
                                             -----------------------------------
                                             Name:
                                             Title:

                                    IRIDIUM INVESTORS, LLC


                                    By:
                                             -----------------------------------
                                             Name:
                                             Title:

                                    LOEB PARTNERS CORP.


                                    By:
                                             -----------------------------------
                                             Name:
                                             Title:

                                    COLUMBIA VENTURES CORPORATION


                                    By:
                                             -----------------------------------
                                             Name:
                                             Title:

EX-12

                                                                      EXHIBIT 12

                   STATEMENT REGARDING COMPUTATION OF RATIOS

                     GLOBALSTAR TELECOMMUNICATIONS LIMITED
                       RATIO OF EARNINGS TO FIXED CHARGES



                                                                YEARS ENDED DECEMBER 31,
                                                          ------------------------------------
                                                            2002        2001          2000
                                                          --------    ---------    -----------
                                                                          
Earnings:
  Net loss..............................................  $(55,173)   $(142,298)   $(2,029,123)
     Add:
       Equity in loss applicable to ordinary partnership
          interests of Globalstar, L.P. ................    55,173      142,298      1,667,761
       Equity in loss applicable to preferred
          partnership Interests of Globalstar, L.P. ....        --           --        356,944
       Amortization of excess carrying value in
          Globalstar, L.P. .............................        --           --         31,840
                                                          --------    ---------    -----------
Earnings available to cover fixed charges(1)............  $     --    $      --    $    27,422
                                                          ========    =========    ===========
Fixed charges -- preferred dividends....................  $ 19,671    $  26,562    $    27,422
                                                          ========    =========    ===========
Ratio of earnings to fixed charges......................       N/A          N/A             1x
                                                          ========    =========    ===========
Deficiency of earnings to cover fixed charges...........  $ 19,671    $  26,562            N/A
                                                          ========    =========    ===========


- ---------------
(1) The earnings of GTL available to cover fixed charges, consist solely of
    dividends from Globalstar, L.P. on the redeemable preferred partnership
    interests held by GTL.

                                GLOBALSTAR, L.P.

                 DEFICIENCY OF EARNINGS TO COVER FIXED CHARGES



                                                               YEARS ENDED DECEMBER 31,
                                                         -------------------------------------
                                                           2002         2001          2000
                                                         ---------    ---------    -----------
                                                                          
Net loss...............................................  $(149,959)   $(575,511)   $(3,785,671)
Distributions on redeemable preferred partnership
  interests............................................     (2,887)     (26,562)       (30,730)
Capitalized interest...................................         --           --         (8,132)
                                                         ---------    ---------    -----------
Deficiency of earnings to cover fixed charges..........  $(152,846)   $(602,073)   $(3,824,533)
                                                         =========    =========    ===========

EX-21

                                                                      EXHIBIT 21

                                GLOBALSTAR, L.P.

     As of March 17, 2003 active subsidiaries, all 100% owned directly or
indirectly (except as noted below) consist of the following:

                                                  
GLOBALSTAR CAPITAL CORPORATION.....................  DELAWARE
GLOBAL TRAK PTY. LTD. .............................  AUSTRALIA
GLOBALSTAR SERVICES COMPANY, INC. .................  DELAWARE
GLOBALSTAR CORPORATION.............................  DELAWARE
GLOBALSTAR (MAURITIUS).............................  MAURITIUS
GLOBALSTAR, L.L.C. ................................  DELAWARE
GLOBALSTAR INTERNATIONAL SERVICES LTD. ............  HUNGARY
STONESTREET HOLDING N.V. ..........................  NETHERLANDS ANTILLES
GLOBALSTAR HOLDINGS LTD. ..........................  CYPRUS
GLOBALSTAR SATELLITE SERVICES, INC. ...............  DELAWARE
GLOBALSTAR JAPAN K.K. .............................  JAPAN
ATSS CANADA, INC. .................................  DELAWARE
GLOBALSTAR EUROPE SATELLITE SERVICES, LTD. ........  IRELAND
GLOBALSTAR EUROPE S.A.R.L. ........................  FRANCE
MOBILE SATELLITE SERVICES, B.V. ...................  NETHERLANDS
GLOBALSTAR CARIBBEAN, LTD. ........................  CAYMAN ISLANDS
GLOBALSTAR USA, LLC................................  DELAWARE
GLOBALSTAR REPUBLICA DOMINICANA, S.A. .............  DOMINICAN REPUBLIC
ATSS/LORAL NETHERLANDS, B.V.(50.1%)................  NETHERLANDS
GLOBALSTAR CANADA SATELLITE CO.(50.1%).............  CANADA

EX-23

                                                                      EXHIBIT 23

                        CONSENT OF DELOITTE & TOUCHE LLP

     We consent to the incorporation by reference in Registration Statement Nos.
333-06477, 333-22063, 333-25457, 333-67731, 333-75677, 333-83239 and 333-96145
on Form S-3 and Nos. 333-29447 and 333-91143 on Form S-8 of Globalstar
Telecommunications Limited of our report dated February 24, 2003 (March 21, 2003
as to the third and fourth paragraph of Note 2) on the financial statements of
Globalstar Telecommunications Limited (which expresses an unqualified opinion
and includes an explanatory paragraph which expresses substantial doubt as to
the ability of Globalstar Telecommunications Limited to continue as a going
concern) and our report dated February 24, 2003 (March 25, 2003 as to the fourth
and fifth paragraph of Note 2 and Note 20) on the consolidated financial
statements of Globalstar, L.P., a Debtor-in-Possession, (which expresses an
unqualified opinion and includes explanatory paragraphs relating to filing for
reorganization under Chapter 11 of the Federal Bankruptcy Code and substantial
doubt as to the ability of Globalstar, L.P. to continue as a going concern)
appearing in this Annual Report on Form 10-K of Globalstar Telecommunications
Limited and Globalstar, L.P. for the year ended December 31, 2002.

/s/ DELOITTE & TOUCHE LLP

San Jose, California
March 31, 2003